Document:

Exhibit
10.2

 

	
   

  

 

LONG-TERM INCENTIVE PLAN

 

OF

 

CHEVRON PHILLIPS CHEMICAL COMPANY LLC

 

(As Amended and Restated Effective January 1, 2001)

 

	
   

  

 

 

LONG-TERM INCENTIVE PLAN

OF

CHEVRON PHILLIPS CHEMICAL COMPANY LLC

(As Amended and Restated Effective January 1, 2001)

 

 

TABLE OF CONTENTS

 

	
  1.

  	
   

  	
  Interpretation and Definitions

  
	
   

  	
  1.1

  	
   

  	
  General

  
	
   

  	
  1.2

  	
   

  	
  Definitions

  
	
  2.

  	
   

  	
  Administration

  
	
  3.

  	
   

  	
  Eligibility and
  Participation

  
	
  4.

  	
   

  	
  Grants and Exercise of
  Grants

  
	
   

  	
  4.1

  	
   

  	
  Grant
  and Exercise of Relative Performance Awards and Strategic Performance Awards

  
	
   

  	
  4.2

  	
   

  	
  Exercise
  of Phantom Share Options

  
	
   

  	
  4.3

  	
   

  	
  Exercise of Target
  Awards

  
	
   

  	
  4.4

  	
   

  	
  Provisions
  Common to Options and Awards

  
	
  5.

  	
   

  	
  Amendment or Discontinuance

  
	
  6.

  	
   

  	
  Recapitalization,
  Merger, and Consolidation; Change in Control

  
	
  7.

  	
   

  	
  Miscellaneous

  
						

 

i

 

LONG-TERM INCENTIVE PLAN

OF

CHEVRON PHILLIPS CHEMICAL COMPANY LLC

(As Amended and Restated Effective January 1, 2001)

 

PURPOSE

 

The purpose of this amended and restated Long-Term Incentive Plan (the
“Plan”) is to attract, motivate, and retain qualified management personnel by
providing to them a long-term incentive compensation plan that will provide
competitive compensation opportunities similar to those of comparable companies
in the chemical industry, align the interests of key management with the
interests of the Company’s owners, and encourage the creation of additional
owner value.

 

The Plan is intended to be a “bonus program” within the meaning of
Labor Reg. § 2510.3-2(c) and; therefore, is not intended to be subject to the
requirements of ERISA.

 

The amended and restated Plan shall be effective as of January 1, 2001.

 

1.                                      Interpretation and Definitions

 

1.1                               General

 

(a)                                  Interpretation.  Unless a clear contrary intention appears,
for purposes of construction of this Plan and all related Plan Documents:

 

(1)                                  the
singular number includes the plural number and vice versa;

 

(2)                                  reference
to any person includes such person’s successors and assigns but, if applicable,
only if such successors and assigns are permitted by the Plan Documents, and reference
to a person in a particular capacity excludes such person in any other capacity
or individually;

 

(3)                                  reference
to any gender includes the other gender;

 

(4)                                  reference
to any Plan Document or any other agreement, document or instrument means the applicable
Plan Document or such other agreement, document or instrument as amended or
modified and in effect from time to time in accordance with the terms thereof;

 

(5)                                  reference
to any law means such law as amended, modified, codified, replaced or reenacted,
in whole or in part, and in effect from time to time, including rules and
regulations promulgated thereunder, and reference to any section or other
provision of any law means that provision of such law from time to time in
effect and constituting the

 

1

 

substantive amendment,
modification, codification, replacement or reenactment of such section or other
provision;

 

(6)                                  reference
in any Plan Document to any article, section, appendix, schedule or exhibit
means such article or section thereof or appendix, schedule or exhibit thereto;

 

(7)                                  “hereunder”,
“hereof”, and words of similar import shall be deemed references to a Plan
Document as a whole and not to any particular article, section or other provision
thereof;

 

(8)                                  “including”
(and with the correlative meaning “include”) means including without limiting
the generality of any description preceding such term;

 

(9)                                  “or”
is not exclusive;

 

(10)                            relative
to the determination of any period of time, “from” means “from and including”
and “to” means “to but excluding;” and

 

(11)                            references
to days, weeks, months, quarters and years are references to such periods as
determined by the Gregorian calendar.

 

(b)                                 Accounting
Terms.  In each Plan
Document, unless expressly otherwise provided, accounting terms shall be
construed and interpreted, and accounting determinations and computations shall
be made, in accordance with generally accepted accounting principles.

 

(c)                                  Conflict in
Plan Documents.  If there is
any conflict between any two or more Plan Documents, such Plan Documents shall
be interpreted and construed, if possible, so as to avoid or minimize such
conflict but, to the extent (and only to the extent) of such conflict, the Plan
Document dealing most specifically with the matter as to which there is a
conflict shall prevail and control.  If
it cannot be determined which Plan Document deals most specifically with a
matter as to which there is a conflict then the Plan shall prevail and control.

 

1.2                               Definitions

 

(a)                                  “Average
Return on Assets” means the statistical mean of the Returns on Assets earned by
a company in each year of a given Performance Cycle.

 

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

 

(c)                                  “Capital
Charge” means the Company’s cost of capital as determined by the Committee from
time to time.

 

2

 

(d)                                 “Change
in Control” of the Company shall mean an occurrence which the Board determines,
in its sole discretion, to be a change of control and generally may include
instances when: (A) any person or persons acting together as a single entity,
other than ChevronTexaco Corporation or ConocoPhillips, acquires more than
fifty percent (50%) of the Company’s assets or voting ownership interests; (B)
a merger or consolidation of the Company with any other corporation or entity
is consummated; or (C) the owners of the Company approve a plan of complete
liquidation or dissolution of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company’s assets.

 

(e)                                  “ChevronTexaco”
means ChevronTexaco Corporation, or such entity as may be controlled by
ChevronTexaco, that directly or indirectly holds a membership interest in the
Company.

 

(f)                                    “Committee”
means the Compensation Committee of the Board.

 

(g)                                 “Company”
means the Chevron Phillips Chemical Company LLC and any successor entity.

 

(h)                                 “ConocoPhillips”
means ConocoPhillips, or such entity as may be controlled by ConocoPhillips,
that directly or indirectly holds a membership interest in the Company.

 

(i)                                     “Date
of Grant” means the effective date on which a Phantom Share Option, Target
Award, Relative Performance Award or a Strategic Performance Award, as the case
may be, is granted to a Participant.

 

(j)                                     “Date
of Termination” means the date on which a Participant ceases to be a regular,
full-time Employee.

 

(k)                                  “Deferred
Compensation Plan” means the Chevron Phillips Chemical Company LP Executive
Deferred Compensation Plan.

 

(l)                                     “Disability”
means disability as determined under the Chevron Phillips Chemical Company LP
Long-Term Disability Plan.

 

(m)                               “EBITDA”
means earnings before interest, taxes, depreciation, and amortization as
reported in the financial records of the Company, or the financial records of
any other company, or segment thereof, against whom the performance of the
Company is being compared.

 

(n)                                 “EBITDA
Multiple” means the average of the quotients obtained by dividing the market
value of each company listed from time to time on Exhibit A as of any relevant
date by the EBITDA of that company as of the same date. For purposes of the
foregoing calculation, the “market value” of a company shall be deemed to be
the product of the publicly quoted price per share of common stock

 

3

 

of that company as of the close of business on the
relevant date (or, in the event that such day is not a day on which shares of
such company are traded on the principal exchange on which such shares are
listed, on the next day preceding the relevant date on which such shares are
traded) multiplied by the number of issued and outstanding shares of such
company. In the event that the EBITDA Multiple of a segment of a company, as
opposed to the company as a whole, is being obtained, the Committee may make
such determinations, as to market value and other considerations, as it deems
necessary for purposes of arriving at an EBITDA Multiple which it deems fair
and appropriate in all the circumstances.

 

(o)                                 “Effective
Date” means, for purposes of this Plan, January 1, 2001, the effective date of
the amendment and restatement of the Plan.

 

(p)                                 “Employee”
means any full-time employee of a Participating Employer.

 

(q)                                 “ERISA”
means the Employee Retirement Income Security Act of 1974, as amended.

 

(r)                                    “EVA”
or “Economic Value Added” means EBITDA minus the product of Capital Charge
multiplied by Total Assets .

 

(s)                                  “Grant”
means the award of a Phantom Share Option, Target Award, Relative Performance
Award or a Strategic Performance Award, as the case may be, subject to such
terms and conditions as may be set forth in a Grant Agreement accompanying such
award.  Notwithstanding the foregoing,
effective for Performance Cycles beginning on or after January 1, 2003 Grants
of Phantom Share Options and Target Awards will no longer be available under
the Plan.

 

(t)                                    “Grant
Agreement” or “Agreement” means:

 

(1)                                  in
the case of a Grant of Phantom Share Options the agreement accompanying such
Grant which sets forth the number of Phantom Shares, the initial Market Value
Per Share, vesting, exercise rights, and other terms and conditions pertaining
to that Grant as established by the Committee;

 

(2)                                  in
the case of a Grant of a Target Award, Relative Performance Award or a
Strategic Performance Award the agreement accompanying such Grant which sets
forth the Performance Schedule, Performance Cycle vesting and other terms and
conditions pertaining to that Grant, as established by the Committee;

 

(u)                                 “Market
Value” means the estimated market value of the Company as determined as of each
Valuation Date by the Committee by multiplying the Company’s average annual
EBITDA by the EBITDA Multiple of the group of comparable chemical companies.
For the calculation to be made January 1, 2001,

 

4

 

the Committee shall use the Company’s EBITDA for the
preceding twelve (12) months, and for the calculation, if any, to be made July
1, 2001, the Committee shall use the Company’s EBITDA for the preceding
eighteen (18) months. Thereafter, the Committee shall utilize the Company’s
EBITDA for the preceding twenty-four (24) months.

 

(v)                                 “Market
Value Per Share” means the Company’s Market Value divided by one hundred
million (100,000,000).

 

(w)                               “Parent
Company” means ChevronTexaco Corporation, ConocoPhillips, and their respective
successors.

 

(x)                                   “Participant”
means an Employee to whom a Phantom Share Option, Target Award, Relative
Performance Award and/or a Strategic Performance Award, as the case may be, may
be granted pursuant to the Plan.

 

(y)                                 “Participating
Employer” means any direct or indirect subsidiary entity of the Company which,
with the Company’s consent, has adopted the Plan.

 

(z)                                   “Performance
Award” means the amount payable to a Participant based on the Company’s
Relative Return during a Performance Cycle, calculated as described in the
Performance Schedule of the Grant Agreement accompanying the Participant’s
Target Award. Notwithstanding any other provision of this Plan to the contrary,
effective for Performance Cycles beginning on or after January 1, 2003 Grants
of Performance Awards will no longer be available under the Plan.

 

(aa)                            “Performance
Cycle” means the continuous period as established in the respective Grant
Agreement during which a Target Award, Relative Performance Award or a
Strategic Performance Award is earned by a Participant.

 

(bb)                          “Performance
Schedule” means with respect to a Target Award the schedule relating a
Participant’s Performance Award amount to the Company’s Relative Return during
the applicable Performance Cycle. “Performance Schedule” means with respect to
a Participant’s Relative Performance Award the schedule relating a
Participant’s Relative Performance Award amount to the Company’s Relative
Performance during the applicable Performance Cycle. “Performance Schedule”
means with respect to a Participant’s Strategic Performance Award the schedule
relating a Participant’s Strategic Performance Award amount to the Company’s
Strategic Performance during the applicable Performance Cycle.

 

(cc)                            “Phantom
Share” means a fictitious share of Company stock, having a value, as of each
Valuation Date, equal to the Company’s Market Value Per Share.

 

5

 

(dd)                          “Phantom
Share Option” or “Option” means the right to receive the gain in the Company’s
Market Value Per Share for each Phantom Share granted. Notwithstanding any
other provision of this Plan to the contrary, effective for Performance Cycles
beginning on or after January 1, 2003 Grants of Phantom Share Options will no
longer be available under the Plan.

 

(ee)                            “Plan”
means the Chevron Phillips Chemical Company LLC Long-Term Incentive Plan.

 

(ff)                                “Plan
Document” means this Plan, any Grant Agreement executed in respect of any
award, and any other document defining the rights and liabilities of any
Participant.

 

(gg)                          “Relative
Performance” means any measure established by the Committee in its sole and
absolute discretion that compares the Company’s performance to a group of peer
companies. Relative Performance measures considered may include by are not
limited to EBITDA divided by Total Assets; comparison to Chem Systems Leader or
other relevant third party data; and/or EVA. 
The evaluation by the Committee may consider adjustments to normalize
portfolio and geographic differences and to account for special events.

 

(hh)                          “Relative
Performance Award” means the award which will be paid to a Participant, if the
Company’s Relative Performance for a Performance Cycle satisfies the
Performance Schedule contained in a Grant Agreement.

 

(ii)                                  “Relative
Return” means the percentile ranking of the Company’s Average Return on Assets,
as measured at the end of a Performance Cycle, based on the Average Returns on
Assets earned by a group of comparable chemical companies.

 

(jj)                                  “Retirement”
means an Employee’s Termination of Service in connection with the attainment of
any applicable early retirement age or normal retirement age as defined in (A)
the Chevron Phillips Chemical Company LP Retirement Plan, (B) any retirement
plan of any Participating Employer, or (C) the retirement plan of any Parent
Company or any of its respective subsidiaries other than Chevron Phillips
Chemical Company LLC. A Participant whose Termination of Service occurs while
eligible to retire under any of such plans, but who does not elect to
immediately commence the receipt of benefits thereunder, shall nevertheless be
deemed to have retired under such plan for purposes of this Plan.

 

(kk)                            “Return
on Assets” means operating income of a company divided by the average of that
company’s assets over the fiscal period during which such operating income was
earned.  The operating income and assets
data to be used shall be derived from publicly available information reported
by the Company and each component company of a group of comparable chemical
companies, with allowance  for such
adjustments, as are deemed necessary by the Committee (A) to achieve a degree
of  accuracy acceptable to the Committee
and (B) to

 

6

 

ensure that the results obtained are consistent with
the return on assets calculations made for purposes of the Employee Incentive
Plan available generally to Employees.

 

(ll)                                  “Strategic
Performance” means any measure established by the Committee in its sole and
absolute discretion that compares the Company’s performance to the attainment
of internal strategic objectives. Strategic Performance measures may initially
include but are not limited to gap closure/synergies; major projects; portfolio
management, effective management of capital projects, unit cost reductions
versus baseline measurements, reliability versus baseline measurements, and
achievement of effective growth goals. 
The Committee will annually review the internal strategic objectives to
be measured for each succeeding Performance Cycle and may alter, amend or
revise, in its sole and absolute discretion, such measures.

 

(mm)                      “Strategic
Performance Award” means the award which will be paid to a Participant, if the
Company’s Strategic Performance for a Performance Cycle when compared to
attainment of defined, internal, strategic objectives satisfies the Performance
Schedule contained in a Grant Agreement.

 

(nn)                          “Target
Award” means the Performance Award which will be paid to a Participant,
assuming that the Company’s actual Relative Return equals the Relative Return
level required for the payment of awards at a one hundred percent (100%) level,
as established by the Committee at the beginning of each Performance Cycle, and
as set forth in Participants’ Grant Agreements. Notwithstanding any other
provision of this Plan to the contrary, effective for Performance Cycles
beginning on or after January 1, 2003 Grants of Target Awards will no longer be
available under the Plan.

 

(oo)                          “Termination
of Service” occurs when a Participant ceases to serve as an Employee for any
reason.

 

(pp)                          “Total
Assets” means the sum of current and long-term assets owned by a  company.

 

(qq)                          “Valuation
Date” means each January 1, July 1 or such other date as the Committee may
select.

 

(rr)                                “Vest,”
and the correlative term “Vested,” shall mean that the holding period for
Options described in Section 4.2(b) has been satisfied.

 

2.                                      Administration

 

(a)                                  The
Plan shall be administered by the Committee.

 

(b)                                 The
Committee may establish, from time to time and at any time, subject to the
limitations of the Plan as set forth herein, such rules and regulations and

 

7

 

amendments and supplements thereto, as it deems
necessary to comply with applicable law and for the proper administration of
the Plan.

 

(c)                                  The
Committee shall from time to time determine the names of those executives or
other key Employees who, in its opinion, should receive Phantom Share Options,
Target Awards, Relative Performance Awards, and/or Strategic Performance
Awards, and shall determine the value of the Phantom Share Options, Target
Awards, Relative Performance Awards and/or Strategic Performance Awards which
should be granted to such person, and the terms and conditions of any such Grant
to be made; provided, in those cases in which the Committee has delegated to
the Chief Executive Officer of the Company (the “CEO”) or other officers of the
Company the authority to make such determination with respect to certain
classes of Employees, such determinations shall be made by the CEO or such
officers, as applicable. 
Notwithstanding the foregoing, if a Participant who received a Grant of
Phantom Share Options and/or Target Awards for the 2001 and the 2002
Performance Cycle fails to execute a written consent agreeing to exchange such
Phantom Share Options and/or Target Awards for the 2001 and the 2002
Performance Cycle for new Relative Performance Awards and/or Strategic
Performance Awards, as applicable, for the 2001 and the 2002 Performance
Cycles, such Participant’s total Grants under the Plan shall be limited to the
Phantom Share Options and/or Target Awards for the 2001 and the 2002
Performance Cycles, and the Participant will not be eligible to receive Grants
under the Plan for any Performance Cycle which begins on or after January 1,
2003.

 

(d)                                 Phantom
Share Options, Target Awards, Relative Performance Awards and/or Strategic
Performance Awards shall be granted to an Employee by the Company only upon the
prior approval of the Committee and upon the execution of a Grant Agreement
between the Company and the Participant. All such Grant Agreements may be
entered into by the Company as agent for the Participating Employers, and all
Phantom Share Options, Target Awards, Relative Performance Awards and/or
Strategic Performance Awards shall be and remain the liability of the
Participating Employer employing the Participant at the time of such Grants.

 

(e)                                  The
Committee’s interpretation and construction of the provisions of the Plan and
rules and regulations adopted by the Committee shall be final.  No member of the Committee or the Board
shall be liable for any action taken, or determination made, in respect of the
Plan in good faith. Each member of the Committee and each member of the Board
shall be fully justified in relying upon or acting in good faith upon any
opinion, report, or information furnished in connection with the Plan by any
accountant, counsel, or other specialist (including financial officers of the
Company, whether or not such persons are Participants in the Plan).

 

8

 

(f)                                    This
Plan may be adopted by such subsidiary entities of the Company as the Board or
Committee may approve, whereupon such entities shall become Participating Employers.

 

(g)                                 The
Committee shall periodically evaluate the effectiveness of the various forms of
Grants available under the Plan in meeting the purposes for which the Plan was
adopted. Subject to the limitations and requirements of Section 5, the
Committee, based on such an evaluation, may in its sole and absolute
discretion, add a new optional form of Grant, eliminate an optional form of
Grant, modify the terms of an existing form of Grant, or offer one form of
Grant in exchange for an existing Grant made to a Participant for a Performance
Cycle.  Any exchange of an existing
Grant for a new Grant under the Plan shall be for good and valuable
consideration and subject to consent of the Participant and the provisions of
Section 5.

 

3.                                      Eligibility and Participation

 

(a)                                  Any
Employee (including an Employee who is also a director or an officer) is
eligible to participate in the Plan. Participants shall be selected, however,
in consideration of the purpose of the Plan. Notwithstanding the foregoing, if
a Participant who received a Grant of Phantom Share Options and/or Target
Awards for the 2001 and the 2002 Performance Cycles fails to execute a written
consent agreeing to exchange such Phantom Share Options and/or Target Awards
for the 2001 and the 2002 Performance Cycles for new Relative Performance
Awards and/or Strategic Performance Awards, as applicable, for the 2001 and the
2002 Performance Cycles, such Participant may not continue to participate in
the Plan, except with respect to Grants already received, and will not be
eligible to receive Grants under the Plan for any Performance Cycle beginning
on or after January 1, 2003.

 

(b)                                 The
Committee, upon its own action, may grant, but shall not be required to grant,
Phantom Share Options, Target Awards, Relative Performance Awards and/or
Strategic Performance Awards to any Employee. 
Grants may be made by the Committee at any time and from time to time to
new Participants, or to then Participants, or to a greater or lesser number of
Participants, and may include or exclude previous Participants, as the
Committee shall determine. 
Notwithstanding any other provision of this Plan to the contrary,
effective for Performance Cycles beginning on or after January 1, 2003 Grants
of Phantom Share Options and Target Awards will no longer be available under
the Plan.

 

(c)                                  Each
Grant shall be evidenced by a Grant Agreement in such form and with such terms
and conditions, as the Committee may from time to time determine. The rights of
a Participant with respect to any Grant shall at all times be subject to the
terms and conditions set forth in the Grant Agreement relating thereto and in
the Plan Documents. Except as required by this Plan, different Grants need not
contain terms or conditions similar to any Grant made prior thereto or
contemporaneously therewith.  The
Committee’s determinations under

 

9

 

the Plan (including determinations of which Employees,
if any, are to receive Grants, the form, amount and timing of such Grants, the terms
and provisions of such Grants and the agreements evidencing same) need not be
uniform and may be made by it selectively among Employees who receive, or are
eligible to receive, Grants under the Plan.

 

4.                                      Grants and Exercise of Grants

 

4.1                               Grant and Exercise of Relative
Performance Awards and Strategic Performance Awards

 

(a)                                  The
Performance Schedule for each Relative Performance Award and Strategic
Performance Award (for purposes of this Section 4.1, collectively the “Award”
or “Awards”) shall be established by the Committee at the time of Grant.  At the conclusion of each Performance Cycle,
Grants shall, subject to the provisions of the Plan Documents, become payable.

 

(b)                                 Each
Performance Cycle, subject to the other limitations set forth in the Plan, may
extend for a period of up to three (3) years from the Date of Grant.  The length of each Performance Cycle shall
be determined by the Committee at the time of Grant; provided, however, if no
term is established by the Committee the term of the Performance Cycle shall be
three (3) years from the Date of Grant.

 

(c)                                  Except
as provided in Sections 4.1(d) and 4.4(c), upon a Participant’s voluntary or
involuntary Termination of Service, the Participant’s Grants and all rights
thereunder shall terminate effective at the close of business on the date the
Participant’s Date of Termination; provided, however, that in the case of a
Participant’s Termination of Service due to Retirement, transfer to a Parent
Company, Disability or death, the Participant shall be entitled, with respect
to each Grant of a Strategic Performance Award still outstanding, to a
pro-rated Strategic Performance Award for the period beginning as of the Date
of Grant for each respective Strategic Performance Award and ending on the date
of the Participant’s Termination of Service, based on the Committee’s
evaluation of the Company’s Strategic Performance through the end of the active
Performance Cycle applicable to each such Grant.

 

A Participant’s
Termination of Service due to Retirement, Disability or death, shall have no
effect on any Grant of a Relative Performance Award still outstanding as of the
date of such Termination of Service.  If
a Participant’s Termination of Service is a result of the Participant’s
transferring to a Parent Company, the Participant shall be entitled, with
respect to each Grant of a Relative Performance Award still outstanding, to a
pro-rated Relative Performance Award for the period beginning as of the Date of
Grant for each respective Relative Performance award and ending on the date the
Participant transfers to the Parent Company, based on the Committee’s
evaluation of the Company’s Relative Performance through the end of the active
Performance Cycle applicable to each such Grant.

 

10

 

(d)                                 Notwithstanding
Section 4.1(c), in the event a Participant (i) takes a leave of absence from
the Company for personal reasons or as a result of entry into the Armed Forces
of the United States, or (ii) terminates employment for reasons which, in the
judgment of the Committee, are deemed to be special circumstances, the
Committee may consider such circumstances and may take such action in respect
of the related Grant and Grant Agreement as it may deem appropriate under the
circumstances, including extending the rights of a Participant to continue
participation in the Plan beyond his Date of Termination; provided in no event
may participation be extended beyond the term of the Performance Cycle.

 

(e)                                  At
the end of each Performance Cycle, the Committee shall evaluate the Company’s
Relative Performance for the purpose of the Relative Performance Awards and the
Company’s Strategic Performance for purpose of the Strategic Performance Awards
to determine the percent, if any, of the Performance Schedule applicable to the
respective award to be earned for the Performance Cycle.  Any resultant award may be further adjusted
as a result of the application of the provisions in Section 4.1(c) or by the
Committee in its sole and absolute discretion either in individual cases or in
the aggregate.

 

(f)                                    Unless
modified by the Committee pursuant to the authority granted to it herein,
Relative Performance Awards reward Participants for changes in the Company’s
Relative Performance compared to a group of peer companies as initially
composed of the chemical companies, or chemical segments thereof, set forth in
Exhibit C.

 

(g)                                 Unless
modified by the Committee pursuant to the authority granted to it herein,
Strategic Performance Awards reward Participants based on the Company’s
Strategic Performance compared to defined strategic objectives.

 

(h)                                 Upon
final determination by the Committee of a Participant’s right to receive a
distribution of a Relative Performance Award or a Strategic Performance Award,
the distribution shall be paid in cash as a lump sum as soon as practicable
after such final determination by the Committee.

 

(i)                                     If
a participant is eligible to participate in the Deferred Compensation Plan,
then the Participant may voluntarily elect to defer receipt of his Award and to
cause such amount to be credited to his account with the Deferred Compensation
Plan.  The rules and procedures
governing the Deferred Compensation shall govern and be binding upon any
Participants who elect to make such deferrals.

 

11

 

4.2                               Grants and Exercise of Phantom Share
Options

 

(a)                                  Upon
the Grant of any Phantom Share Options, the Committee shall establish a Market
Value Per Share for the fictitious shares underlying such Options.

 

(b)                                 Except
as otherwise provided in this Section 4.2 or in any other Plan Document, (i)
one third (1/3) of the Phantom Share Options granted pursuant to any Grant
Agreement shall become exercisable by the Participant twelve (12) months,
twenty-four (24) months, and thirty-six (36) months, respectively, following
the effective Date of Grant, and (ii) Phantom Share Options which have become
exercisable shall remain exercisable until the tenth (10th) anniversary of the
effective Date of Grant.  Notwithstanding
any provision to the contrary in this Section 4.2, Phantom Share Options may
not be increased after the tenth (10th) anniversary of the effective Date of
Grant.

 

(c)                                  Upon
a Participant’s Retirement or Termination of Service due to transfer to a
Parent Company, all Phantom Share Options previously granted shall Vest
according to the schedule described in Section 4.2(b), and all Options granted
must be exercised within three (3) years of the Participant’s date of
Retirement. In the event a Participant does not elect to exercise any such
Option prior to the expiration of such period, the same shall be deemed to have
been exercised on the final day thereof.

 

(d)                                 Upon
a Participant’s other voluntary Termination of Service, the Participant shall
be deemed to have elected to exercise all Vested Options, and the value thereof
shall be paid to the Participant as promptly as reasonably practicable
following the calculation of such value. All Options not Vested as of the
Participant’s Date of Termination shall be forfeited.

 

(e)                                  Upon
a Participant’s involuntary Termination of Service, the Participant shall have
a period of ninety (90) days from the Participant’s Date of Termination within
which to exercise all Vested Options, and the value thereof shall be paid to
the Participant as promptly as reasonably practicable following such exercise
and the calculation of such value. In the event a Participant does not elect to
exercise any such Option prior to the expiration of such period, the same shall
be deemed to have been exercised on the final day thereof. All Options not
Vested as of the Participant’s Date of Termination shall be forfeited.

 

(f)                                    Upon
a Participant’s Disability, the Participant shall have a period of twelve (12)
months from the Participant’s date of Disability within which to exercise all
Vested Options, and the value thereof shall be paid to the Participant as
promptly as reasonably practicable following such exercise and the calculation
of such value. In the event a Participant does not elect to exercise any such
Option prior to the expiration of such period, the same shall be deemed to have
been exercised on the final day thereof. All Options not Vested as of the
Participant’s date of Disability shall be forfeited.

 

12

 

(g)                                 Upon
a Participant’s death, the Participant’s beneficiary, executor, administrator
or other personal representative, as the case may be, shall have a period of
three (3) years from the Participant’s date of death within which to exercise
all Vested Options, and the value thereof shall be paid to the Participant’s
beneficiary or estate as promptly as reasonably practicable following such
exercise and the calculation of such value. In the event a Participant’s
beneficiary, executor, administrator or other personal representative does not
exercise any such Option prior to the expiration of such period, the same shall
be deemed to have been exercised on the final day thereof. All Options not
Vested as of the Participant’s date of death shall be forfeited.

 

(h)                                 Notwithstanding
the foregoing provisions of this Section 4.2, in the event a Phantom Share
Option holder (i) takes a leave of absence for personal reasons or as a result
of entry into the Armed Forces of the United States, or (ii) terminates
employment for reasons which, in the judgment of the Committee are deemed to be
special circumstances, the Committee may consider such circumstances and may
take such action in respect of the related Grant and Grant Agreement as it may
deem appropriate, including reducing or canceling such Grant, and accelerating
and/or extending the time rights with respect to previously granted Phantom
Share Options may be exercised; provided in no event may any Option be
exercised after the expiration of the term of the Option.

 

(i)                                     The
Committee shall determine the Market Value of the Company as of each Valuation
Date.  For purposes of such
determination, the comparator group shall be initially composed of the
publicly-traded chemical companies set forth in Exhibit B.  The Committee, in its sole discretion and
judgment, may make such changes to the comparator group from time to time as it
deems advisable to reflect industry merger and acquisition activity, shifts in
market or business strategy, or other considerations which could influence the
Company’s Market Value determination.

 

(j)                                     The
Market Value Per Share shall always be based upon the most recent calculation
as set forth in Section 4.2(i).  The
calculated Market Value Per Share will always be in effect for a period of six
(6) months and until such time as a new calculation is made based upon
publicly-available market and financial data. 
The calculated Market Value Per Share shall be the prevailing value for
all grant and exercise activity pursuant to the Plan.

 

(k)                                  A
Phantom Share Option holder desiring to exercise rights with respect to an
Option shall notify the Company in writing in such manner as shall be specified
in the Grant Agreement.

 

(l)                                     The
Phantom Share Option holder must be Vested with respect to the number of
Phantom Share Options he elects to exercise as set forth in the Grant

 

13

 

Agreement and must make each election to exercise on
or before the end of the Option’s term.

 

(m)                               Upon
the exercise of rights with respect to a Phantom Share Option, the Participant
will receive the appreciation in value, if any, between the Company’s Market
Value Per Share on the Date of Grant and the date of exercise.  The Market Value Per Share on the date of
exercise will be based upon the same calculation methodology as is set forth in
Section 4.2(i).  Except as otherwise
provided, the appreciation in value, if any, will be paid to the Participant in
the form of cash as a lump sum as soon as is practicable following the
Participant’s written notification to the Company of his exercise
election.  Such cash payment will be
made consistent with the Company’s regular payroll policy and procedures and
will be subject to applicable tax and withholding regulations and procedures in
effect at that time.

 

(n)                                 On
a date at least six (6) months in advance of the Participant’s election to
exercise a Grant, the Participant may voluntarily elect to defer receipt of his
Phantom Share appreciation and to cause such amount to be credited to his
account with the Company’s nonqualified deferred compensation plan for
executives.  The rules and procedures
governing the nonqualified deferred compensation plan shall govern and be
binding upon any Participants who elect to make such deferrals.

 

(o)                                 A
Participant shall not make payment for or in any way contribute to the exercise
of a Phantom Share Option.  Any
applicable withholding and payroll taxes may be taken from the applicable
appreciation in Market Value Per Share due to the Participant following
exercise.

 

(p)                                 Notwithstanding
the foregoing, effective for Performance Cycles beginning on or after January
1, 2003, Grants of Phantom Share Options will no longer be made under the Plan.

 

4.3                               Grant and Exercise of Target Awards

 

(a)                                  The
Performance Schedule for each Target Award will be established by the Committee
at the time of Grant.  At the conclusion
of each Performance Cycle, Grants shall, subject to the provisions of the Plan
Documents, become payable.

 

(b)                                 Each
Performance Cycle, subject to the other limitations set forth in the Plan, may
extend for a period of up to three (3) years from the Date of Grant.  The length of each Performance Cycle shall
be determined by the Committee at the time of Grant: provided, if no term is
established by the Committee the term of the Performance Cycle shall be three
(3) years from the Date of Grant.

 

(c)                                  Except
as provided in Sections 4.3(e) and 4.4(c), upon voluntary or involuntary
Termination of Service, the Participant’s Target Award and all rights

 

14

 

thereunder shall terminate effective at the close of
business on the date the Participant’s Date of Termination; provided, in the
case of termination due to Retirement, transfer to a Parent Company, Disability
or death, the Participant shall be entitled to a pro-rated Performance Award
based on the Relative Return of the Company through the end of the year in
which the Date of Termination occurs.

 

(d)                                 Notwithstanding
Section 4.3(d), in the event a Participant (i) takes a leave of absence from
the Company for personal reasons or as a result of entry into the Armed Forces
of the United States, or (ii) terminates employment for reasons which, in the
judgment of the Committee, are deemed to be special circumstances, the
Committee may consider such circumstances and may take such action in respect
of the related Grant and Grant Agreement as it may deem appropriate under the
circumstances, including extending the rights of a Participant to continue
participation in the Plan beyond his Date of Termination; provided in no event
may participation be extended beyond the term of the Performance Cycle.

 

(e)                                  At
the end of each year, the Committee shall determine the Return on Assets earned
by the Company and each of the companies composing the group of comparable
chemical companies selected by the Committee for each complete fiscal year
covered by the relevant Performance Cycle. The comparator group shall be
initially composed of the chemical companies, or chemical segments thereof, set
forth in Exhibit A.

 

(f)                                    The
statistical mean average of the Company’s Return on Assets for the duration of
the Performance Cycle (the Average Return on Assets) will be compared to those
of each of the component companies of the group of comparable companies
selected by the Committee.  The
comparison of the Company’s results against those of the component companies
will yield a percentile ranking, which will be used to determine the amount of
the Performance Award as a percentage of Participants’ Target Award. The
Committee may make such further adjustments in such calculations as it deems
appropriate with respect to individual Participants or to Participants in the
aggregate.

 

(g)                                 For
purposes of assessing the Company’s Relative Return, only companies against
which relative performance can be reasonably determined for each component year
of the Performance Cycle shall be considered.

 

(h)                                 Upon
final determination of the Participants’ Performance awards by the Committee,
Participants will become eligible to receive payment.  Performance Award amounts shall be paid in cash as a lump sum as
soon as practicable after the final determination by the Committee.

 

(i)                                     On
a date at least six (6) months in advance of the end of a given Performance
Cycle, the Participant may voluntarily elect to defer receipt of his

 

15

 

Performance Award and to cause such amount to be
credited to his account with the Company’s nonqualified deferred compensation
plan for executives.  The rules and
procedures governing the nonqualified deferred compensation plan shall govern
and be binding upon any Participants who elect to make such deferrals.

 

(j)                                     Notwithstanding
the foregoing, effective for Performance Cycles beginning on or after January
1, 2003, Grants of Target Awards will no longer be made under the Plan.

 

4.4                               Provisions Common to Options and Awards

 

(a)                                  Phantom
Share Options, Relative Performance Awards, Strategic Performance Awards and
Target Awards shall be nontransferable and nonassignable, except that any such
Grant may be transferred (i) to such beneficiary as the Participant may
designate in the event of death, Disability or other incapacity, or (ii) by
testamentary instrument or by the laws of descent and distribution. The
Committee shall prescribe the form and manner in which beneficiary designations
shall be made, revoked or amended. Any valid beneficiary designation on file
with the Company shall take priority over any conflicting provision of any
testamentary or similar instrument.

 

(b)                                 The
establishment of the Plan shall not confer any legal rights upon any Employee
or other person to continued of employment, nor shall it interfere with the
right of any Participating Employer (which right is hereby reserved) to discharge
any Employee and to treat  him  without regard to the effect which that
treatment might have upon him  as a Participant or potential Participant.

 

(c)                                  In
the event that any Participant engages in any activity which the Committee
judges to be detrimental to the Company or any Participating Employer, or
otherwise fails to substantially perform his or her obligations as an Employee,
the Committee may, at any time prior to payment of an award to a Participant,
cancel or reduce the award in whole or in part.

 

(d)                                 If,
during a Performance Cycle, an Employee is promoted to a pay grade of 90 or
above the Employee becomes eligible to participate in the Plan.  If the Employee is otherwise selected by the
Committee to participate in the Plan, the Employee will receive a Grant of a
Relative Performance Award and/or a Strategic Performance Award for the most
recent, active Performance Cycle.  Such
Grant will be pro-rated for the period which begins on the Date of Grant and
ends as of the end of the applicable Performance Cycle.  If, during a Performance Cycle, an
individual is hired as an Employee in a pay grade of 90 or above the Employee
becomes eligible to participate in the Plan. 
If the Employee is otherwise selected by the Committee to participate in
the Plan, the Employee will receive a Grant of a Relative Performance Award
and/or a Strategic Performance Award for the most recent, active Performance
Cycle.  Such Grant will be pro-rated for
the period which begins on the Date of Grant and ends as of the end of the
applicable Performance Cycle. 
Notwithstanding the foregoing, when an 

 

16

 

Employee is hired in a pay grade of 90 or above, the
CEO will have the authority to give pro-rated Grants for all active Performance
Cycles when required for competitive reasons. 
In the event a Participant is demoted to a pay grade lower than 90,
outstanding Grants will be pro-rated for all active Performance Cycles to which
such outstanding Grants apply.  For this
purpose, the pro-ration period will begin as of the Date of Grant for each
applicable Grant Award and will end on the effective date of the Employee’s
demotion

 

5.                                      Amendment or Discontinuance

 

Subject to the limitations set forth in this Section
5, the Board may at any time and from time to time, without the consent of the
Participants, alter, amend, revise, suspend, or discontinue the Plan in whole
or in part.  Any such amendment shall,
to the extent deemed necessary or advisable by the Committee, be applicable to
any outstanding Grants theretofore awarded under the Plan, notwithstanding any
contrary provisions contained in any Grant Agreement.  In the event of any such amendment to the Plan, the holder of any
Grant outstanding under the Plan shall, upon request of the Committee and as a
condition to the exercisability thereof, execute a conforming amendment in the
form prescribed by the Committee to any Grant Agreement relating thereto.  Notwithstanding anything contained in this
Plan to the contrary, unless required by law, no action contemplated or
permitted by this Section 5 shall adversely affect any rights of Participants
or obligations of the Company to Participants with respect to any award
theretofore granted under the Plan without the consent of the affected Participant.

 

6.                                      Recapitalization, Merger, and Consolidation; Change in
Control

 

(a)                                  The
existence of this Plan and the awards granted hereunder shall not affect in any
way the right or power of the Company or those entities holding membership
interests in the Company to make or authorize any or all adjustments,
reorganizations, or other changes in the Company’s capital structure and its
business, or any merger or consolidation of the Company, or the dissolution or
liquidation of the Company, or any sale or transfer of all or part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.

 

(b)                                 In
the event of a Change in Control, all Grants outstanding shall thereupon
automatically be accelerated and payable in full. In the case of Performance
Awards, payment shall be made at a Relative Return level determined by the
Committee, which shall be deemed payment in full.  In the case of Relative Performance Awards, payment will be based
on the Company’s Relative Performance as of the date of the Change in Control
as determined by the Committee in its sole and absolute discretion. In the case
of Strategic Performance Awards, payment will be based on the Company’s
Strategic Performance as of the date of the Change in Control as determined by
the Committee in its sole and absolute discretion.  The determination of the Committee that any of the foregoing
conditions has been met shall be binding and conclusive on all parties. Notwithstanding
the foregoing, in the event that,

 

17

 

incident to a Change in Control, provision is made for
the transfer of rights under this Plan to another or successor Plan,
Participants shall be allowed to make such transfer.

 

7.                                      Miscellaneous

 

(a)                                  Neither
the adoption of this Plan nor any action of the Board or the Committee shall be
deemed to give any person any right to be granted an award or any other rights
except as may be evidenced by a Grant Agreement, or any amendment thereto, duly
authorized by the Committee and executed on behalf of the Company, and then
only to the extent and upon the terms and conditions expressly set forth
therein.

 

(b)                                 The
Company shall have the right to deduct from all amounts hereunder paid in cash,
any federal, state, local, or other taxes required by law to be withheld with
respect to such payments.

 

(c)                                  THE
VALIDITY, CONSTRUCTION AND EFFECT OF THE PLAN, ANY PLAN DOCUMENTS, AND ANY
ACTIONS TAKEN OR RELATING TO THE PLAN SHALL BE DETERMINED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF TEXAS APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED
WITHIN SUCH STATE.

 

(d)                                 The
Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company, expressly to assume and agree to perform the
Company’s obligations under this Plan in the same manner and to the same extent
that the Company would be required to perform them if no such succession had
taken place.

 

(e)                                  The
Plan shall be unfunded. Neither the Company, any Participating Employer, the
Committee, nor the Board shall be required to segregate any assets or secure
any liability that may at any time be represented by Grants made pursuant to
the Plan.

 

(f)                                    
The Plan shall have a term of ten (10) years from its Effective Date.  After termination of the Plan, no future
Grants may be made, but Grants made before that date will continue to be
effective in accordance the terms and conditions of the respective Grant
Agreement.

 

18

 

EXHIBIT A

 

INITIAL

COMPARATOR COMPANIES

PERFORMANCE AWARDS

 

 

The following companies, or the chemicals segments thereof, shall be
the initial comparator companies for purposes of Performance Awards:

 

1.                                       BP,
p.l.c. (chemicals segment)

 

2.                                       Borealis
(polyolefins & chemicals segment)

 

3.                                       The
Dow Chemical Company

 

4.                                       Eastman
Chemical Company

 

5.                                       Equistar
Chemicals, LP

 

6.                                       ExxonMobil
Corporation (chemicals segment)

 

7.                                       Georgia
Gulf Corporation

 

8.                                       NOVA
Chemicals Corporation

 

9.                                       Royal
Dutch/Shell Group (chemicals segment)

 

10.                                 Solutia
Inc.

 

11.                                 Sunoco,
Inc. (chemicals segment)

 

THIS
EXHIBIT A MAY BE MODIFIED FROM TIME TO TIME BY THE COMMITTEE IN ITS SOLE AND
ABSOLUTE DISCRETION.

 

19

 

EXHIBIT B

 

INITIAL

COMPARATOR COMPANIES

PHANTOM SHARE OPTIONS

 

The following companies shall be the initial comparator companies for
purposes of Phantom Share Options:

 

1.               Air Products and
Chemicals, Inc.

 

2.               The Dow Chemical
Company

 

3.               E.I. du Pont de
Nemours and Company

 

4.               Eastman Chemical
Company

 

5.               Georgia Gulf
Corporation

 

6.               Lyondell Chemical
Company

 

7.               Millennium
Chemicals Inc.

 

8.               NOVA Chemicals
Corporation

 

9.               Rhom and Haas
Company

 

10.         Solutia Inc.

 

THIS
EXHIBIT B MAY BE MODIFIED FROM TIME TO TIME BY THE COMMITTEE IN ITS SOLE AND
ABSOLUTE DISCRETION.

 

20

 

EXHIBIT C

 

INITIAL

COMPARATOR COMPANIES

RELATIVE PERFORMANCE AWARDS

 

 

The following companies, or the chemicals segments thereof, shall be
the initial comparator companies for purposes of Performance Awards:

 

1.                                       The
Dow Chemical Company

 

2.                                       Borealis
(polyolefins & chemicals segment)

 

3.                                       NOVA
Chemicals Corporation

 

4.                                       Equistar
Chemicals, LP

 

5.                                       ExxonMobil
Corporation (chemicals segment)

 

6.                                       BP,
p.l.c. (chemicals segment)

 

7.                                       Royal
Dutch/Shell Group (chemicals segment)

 

Chem Systems Data or other relevant third-party data may also be used
to determine relative performance.

 

THIS
EXHIBIT C MAY BE MODIFIED FROM TIME TO TIME BY THE COMMITTEE IN ITS SOLE AND
ABSOLUTE DISCRETION.

 

21Exhibit
10.1.2

 

THIRTEENTH
AMENDMENT TO

SECOND
AMENDED AND RESTATED

LIMITED
PARTNERSHIP AGREEMENT OF

CORPORATE
OFFICE PROPERTIES, L.P.

 

 

THIS THIRTEENTH AMENDMENT (the “Amendment”) to the
Second Amended and Restated Limited Partnership Agreement of Corporate Office
Properties, L.P., a Delaware limited partnership (the “Partnership”), is made
and entered into as of August 11, 2003, by and among the undersigned parties.

 

Recitals

 

A.            The
Partnership is a limited partnership organized under the Delaware Revised
Uniform Limited Partnership Act (the “Act”) and governed by that certain Second
Amended and Restated Limited Partnership Agreement dated as of January, 1999,
as amended by that certain First Amendment to Second Amended and Restated
Limited Partnership Agreement dated as of December 21, 1999, that certain
Second Amendment to Second Amended and Restated Limited Partnership Agreement
dated as of December 21, 1999, that certain Third Amendment to Second Amended
and Restated Limited Partnership Agreement dated as of September 29, 2000, that
certain Fourth Amendment to Second Amended and Restated Limited Partnership
Agreement dated as of November 27, 2000, that certain Fifth Amendment to Second
Amended and Restated Limited Partnership Agreement dated as of January 25,
2001, that certain Sixth Amendment to Second Amended and Restated Limited
Partnership Agreement dated as of April 6, 2001, that certain Seventh Amendment
to the Second Amended and Restated Partnership Agreement dated as of August 30,
2001, that certain Eighth Amendment to the Second Amended and Restated
Partnership Agreement dated September 14, 2001, that certain Ninth Amendment to
the Second Amended and Restated Partnership Agreement dated October 16, 2001,
that certain Tenth Amendment to the Second Amended and Restated Partnership
Agreement dated December 29, 2001, that certain Eleventh Amendment to the
Second Amended and Restated Partnership Agreement dated December 15, 2002 and
that certain Twelfth Amendment to the Second Amended and Restated Partnership
Agreement dated June 2, 2003 (as amended, the “Agreement”).

 

B.            The
sole general partner of the Partnership is Corporate Office Properties Trust, a
real estate investment trust formed under the laws of the State of Maryland
(the “General Partner”).

 

C.            The
General Partner has issued 2,200,000 of its 8% Series G Cumulative Redeemable
Preferred Shares (the “Series G Preferred REIT Shares”) in a public offering
(the “Offering”).

 

D.            As
required under Sections 4.2(B) and (C) of the Agreement, the General Partner
intends to transfer the net proceeds of the Offering (or cause them to be
transferred) to or for the benefit of the Partnership in exchange for
additional Partnership

 

 

Interests in the Partnership having designations, rights and
preferences substantially similar to the economic rights of the holders of the
Series G Preferred REIT Shares (the “Series G Preferred Units”).

 

E.             The
General Partner desires to amend the Agreement to acknowledge the contribution
of the net proceeds of the Offering by the General Partner to the Partnership
in exchange for the Series G Preferred Units. 
Unless otherwise defined herein, all capitalized terms used in this
Amendment shall have the same meanings as set forth in the Agreement.

 

NOW THEREFORE, in consideration of the foregoing and
of the mutual premises set forth herein, the General Partner, intending to be
legally bound hereby, hereby amends the Agreement as follows, effective as of
the date set forth above.

 

1.             The
foregoing recitals to this Amendment are hereby incorporated in and made a part
of this Amendment.

 

(a)           Upon
consummation of the Offering, the General Partner shall contribute the net
proceeds of the Offering to the Partnership.

 

(b)           Upon
the contribution of the net proceeds of the Offering to the Partnership by the
General Partner, and in accordance with Section 4.2(B) of the Agreement, the
Partnership shall issue to the General Partner 2,200,000 Series G Preferred
Units, equal to the number of Series G Preferred REIT Shares issued by the
General Partner in connection with the Offering.

 

(c)          
For purposes of the Agreement, including the maintenance of Capital Accounts,
the General Partner shall be treated as making a Capital Contribution of
$53,548,000, equal to the product of $24.34 times the number of Series G
Preferred Units issued to the General Partner.

 

(d)           The
General Partner is hereby amending Exhibit 1 to the Agreement by substituting
for the existing addendum to Exhibit 1 the Addendum to Exhibit 1
in the form attached hereto to reflect the issuance of the Series G Preferred
Units to the General Partner.

 

2.             Except
as explicitly modified by this Amendment, all of the provisions of the
Agreement are hereby ratified and confirmed, and shall remain in full force and
effect.

 

3.             This
Amendment shall take effect upon the contribution of the net proceeds of the
Offering to the Partnership by the General Partner, and in the event such
contribution is not made, this Amendment shall be of no force or effect.

 

(SIGNATURE PAGE FOLLOWS)

 

2

 

In witness whereof, the General Partner has executed
this Amendment as of the day and year first above written.

 

 

	
   

  	
   

  	
  CORPORATE OFFICE PROPERTIES TRUST,

  
	
   

  	
   

  	
  a Maryland Real Estate Investment Trust

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ John Harris Gurley

  
	
   

  	
   

  	
  Name:

  	
  John Harris Gurley

  
	
   

  	
   

  	
  Title:

  	
  Sr. Vice Pres.

  
					

 

3

 

Exhibit 1 Addendum

 

	
  Series

  Preferred

  Units

  	
   

  	
  Preferred
  Limited

  Partner

  	
   

  	
  No. of

  Preferred

  Units

  	
   

  	
  Liquidation

  Preference

  Per

  Preferred

  Unit

  	
   

  	
  Priority

  Percentage

  Return *

  	
   

  	
  Priority

  	
   

  	
  Conversion

  Factor

  	
   

  	
  Conversion

  Commencement

  Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  B

  	
   

  	
  General
  Partner

  	
   

  	
  1,250,000

  	
   

  	
  $

  	
  25

  	
   

  	
  2.50

  	
  %

  	
  Senior

  	
   

  	
  None

  	
   

  	
  N/A

  	
   

  
	
  D

  	
   

  	
  General
  Partner

  	
   

  	
  544,000

  	
   

  	
  $

  	
  25

  	
   

  	
  1.00

  	
  %

  	
  Senior

  	
   

  	
   

  	
  **

  	
   

  	
  **

  
	
  E

  	
   

  	
  General
  Partner

  	
   

  	
  1,150,000

  	
   

  	
  $

  	
  25

  	
   

  	
  2.5625

  	
  %

  	
  Senior

  	
   

  	
  None

  	
   

  	
  N/A

  	
   

  
	
  F

  	
   

  	
  General
  Partner

  	
   

  	
  1,425,000

  	
   

  	
  $

  	
  25

  	
   

  	
  10.25

  	
  %

  	
  Senior

  	
   

  	
  None

  	
   

  	
  N/A

  	
   

  
	
  G

  	
   

  	
  General
  Partner

  	
   

  	
  2,200,000

  	
   

  	
  $

  	
  25

  	
   

  	
  8

  	
  %

  	
  Senior

  	
   

  	
  None

  	
   

  	
  N/A

  	
   

  

 

*          Priority Return Percentage is expressed as a percentage of
the Liquidation Preference per Distribution Period.  See the Agreement for the definitions of “Priority Return
Percentage,” “Liquidation Preference” and “Distribution Period.”

 

**         With respect to any series of Preferred Units issued to the
General Partner pursuant to Section 4.2(B) of the Agreement, the Conversion
Commencement Date and the applicable Conversion Factor shall correspond to the
conversion commencement date and conversion factor of the related issuance of
securities by the General Partner as provided in Section 4.2(B) of the
Agreement.  See Section 9.8(A)(1) of the
Agreement.

 

4

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