Document:

EX-10b

 Exhibit 10(b) 

ONCOR ELECTRIC DELIVERY COMPANY LLC 

LONG-TERM INCENTIVE PLAN AWARD AGREEMENT 

This Long-Term Incentive Plan Award Agreement (the “Agreement”) is entered into as of January 1, 20    
(the “Grant Date”), by and between Oncor Electric Delivery Company LLC (the “Company”) and [Name] (the “Participant”). 

WHEREAS, the Company has adopted the Oncor Electric Delivery Company LLC Long-Term Incentive Plan (the “Plan”); and 

WHEREAS, the Plan Administrator has determined that it is in the best interests of the Company to grant a Long-Term Incentive Award to
the Participant as provided for herein. 
 NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as follows: 

SECTION 1.    LONG-TERM INCENTIVE AWARD: The Company hereby grants to the Participant a Long-Term Incentive Award, subject
to the terms set forth herein, as follows: 
  

			
	  Performance Period:
	  	January 1, 20     – December 31, 20    
		
	  Target Opportunity:
	  	$[Target Award Amount]

 The amount of the Long-Term Incentive Award that the Participant actually earns for the Performance Period (if any) will be
determined by the Plan Administrator in its discretion based on the level of achievement of the Performance Goals at the end of the Performance Period, as determined by the Plan Administrator in accordance with Exhibit A attached hereto.
Capitalized terms that are used but not defined herein shall have the meanings ascribed to them in the Plan. 
 SECTION
2.    PERFORMANCE GOALS: 
  

	 	(a)	 The particular Performance Goals and associated potential Long-Term Incentive Award determination procedures
are set forth in Exhibit A. All determinations of whether the Performance Goals have been achieved, the amount of the Long-Term Incentive Award earned by the Participant (if any), and all other matters related to this Agreement shall be made
by the Plan Administrator in its sole discretion. 

  

	 	(b)	 As soon as possible following completion of the Performance Period, but not later than 90 days following the
end of the Performance Period, the Plan Administrator will review and certify (i) whether, and to what extent, the Performance Goals for the Performance Period have been achieved and (ii) the amount of the Long-Term Incentive Award (if
any) that the Participant shall earn. Such certification shall be final, conclusive, and binding on the Participant and on all other persons, to the maximum extent permitted by law. 

SECTION 3.    VESTING: The Long-Term Incentive Award is subject to forfeiture until it vests. Except as specified under
Section 4 of this Agreement, the Long-Term Incentive Award will vest on the last day of the Performance Period, subject to (a) the achievement of the applicable Performance Goal thresholds for payout set forth in Exhibit A attached
hereto and (b) 

  
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the Participant’s continuous service with the Company from the Grant Date through the last day of the Performance Period. The amount of the Long-Term Incentive Award that vests and becomes
payable under this Agreement, if any, shall be determined by the Plan Administrator based on the level of achievement of the Performance Goals set forth in Exhibit A and shall be rounded to the nearest whole dollar. 

SECTION 4.    TERMINATION OF EMPLOYMENT: 
  

	 	(a)	 If the Participant is employed by the Company on the last day of the Performance Period, and the
Participant’s employment with the Company terminates for any reason other than by the Company for Cause prior to payment of the Long-Term Incentive Award for the Performance Period, the Participant will receive the Long-Term Incentive Award (if
any) for the closed Performance Period at the same time as paid to current employees. Notwithstanding anything to the contrary, the Participant will forfeit any unpaid Long-Term Incentive Award upon a termination for Cause. 

 

	 	(b)	 Notwithstanding subsection (a) above, in the event of the Participant’s death, Disability,
Retirement, or Termination following a Change in Control prior to the end of the Performance Period, the vesting, determination and payment of the Long-Term Incentive Award shall be governed by the terms of Section 7 of the Plan.

 SECTION 5.    PAYMENT OF LONG-TERM INCENTIVE AWARD: Payment of the vested Long-Term Incentive Award
earned for the Performance Period (if any) shall be paid on or about April 1 following the end of the Performance Period, unless provided otherwise upon Termination following a Change in Control under the terms of the Plan. 

SECTION 6.    TRANSFERABILITY: Subject to any exceptions set forth in this Agreement or the Plan, the Long-Term Incentive
Award may not be sold, assigned, transferred, discounted, pledged as collateral for a loan, or otherwise anticipated by the Participant, except by will or the laws of descent and distribution in which case the transferee shall hold the Long-Term
Incentive Award subject to all of the terms and conditions that were applicable to the Participant immediately prior to such transfer. 
 SECTION
7.    NO EMPLOYMENT OR OTHER RIGHTS: Neither the Plan nor this Agreement shall confer upon the Participant any right to be retained in any position, as an employee, consultant, or director of the Company. Further,
nothing in the Plan or this Agreement shall be construed to limit the discretion of the Company to terminate the Participant’s employment, with or without Cause. 

SECTION 8.    LONG-TERM INCENTIVE AWARD SUBJECT TO THE PLAN: This Agreement is subject to the Plan. The terms and provisions
of the Plan as it may be amended from time to time are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the
Plan will govern and prevail. 
 SECTION 9.    APPLICABLE LAW: This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without regard to its principles of conflict of law. 

  
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 SECTION 10.    INTERPRETATION: Any dispute regarding the interpretation of
this Agreement shall be submitted by the Participant or the Company to the Plan Administrator for review. The resolution of such dispute by the Plan Administrator shall be final and binding on the Participant and the Company. 

SECTION 11.    WITHHOLDING: The Participant shall be required to pay to the Company, and the Company shall have the
right to deduct from any compensation paid to the Participant pursuant to the Plan, the amount of any required withholding taxes in respect of the Long-Term Incentive Award and to take all such other action as the Plan Administrator deems necessary
to satisfy all obligations for the payment of such withholding taxes. Notwithstanding any action the Company takes with respect to any or all income tax, social insurance, payroll tax, or other tax-related
withholding (“Tax-Related Items”), the ultimate liability for all Tax-Related Items is and remains the Participant’s responsibility and the Company
(a) makes no representation or undertakings regarding the treatment of any Tax-Related Items in connection with the grant, vesting, or payment of the Long-Term Incentive Award and (b) does not commit
to structure the Long-Term Incentive Award to reduce or eliminate the Participant’s liability for Tax-Related Items. 

SECTION 12.    NOTICES: Any notice required to be delivered to the Company under this Agreement shall be in writing and
addressed to the Chief Human Resources Officer of the Company at the Company’s principal corporate offices. Any notice required to be delivered to the Participant under this Agreement shall be in writing and addressed to the Participant at the
Participant’s address as shown in the records of the Company. Either party may designate another address in writing (or by such other method approved by the Company) from time to time. 

SECTION 13.    HEADINGS: Headings are given to the Sections of this Agreement solely as a convenience to facilitate
reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Agreement or any provisions thereof. 

SECTION 14.    SUCCESSORS AND ASSIGNS: The Company may assign any of its rights under this Agreement. This Agreement will be
binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement will be binding upon the Participant and the Participant’s beneficiaries, executors,
administrators, and the person(s) to whom the Long-Term Incentive Award may be transferred by will or the laws of descent or distribution. 
 SECTION
15.    SEVERABILITY: The invalidity or unenforceability of any provision of the Plan or this Agreement shall not affect the validity or enforceability of any other provision of the Plan or this Agreement, and each
provision of the Plan and this Agreement shall be severable and enforceable to the extent permitted by law. 
 SECTION
16.    DISCRETIONARY NATURE OF PLAN: 
  

	 	(a)	 The Plan and the Long-Term Incentive Award are discretionary and may be altered, amended, suspended, or
terminated by the Board at any time, in its discretion; provided, that, no such amendment or termination may, without the consent of the Participant, terminate or adversely affect any material right or material obligation under the Long-Term
Incentive Award granted under this Agreement, except as provided pursuant to the terms of the Plan.  

  
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	 	(b)	 The grant of the Long-Term Incentive Award in this Agreement does not create any contractual right or other
right to receive any Long-Term Incentive Award or other Awards in the future. Future Long-Term Incentive Awards, if any, will be at the sole discretion of the Company. Any amendment, modification, or termination of the Plan shall not constitute a
change or impairment of the terms and conditions of the Participant’s employment with the Company. 

 SECTION
17.    SECTION 409A: This Agreement is intended to comply with the applicable requirements of section 409A of the Code and its corresponding regulations and related guidance (“Section 409A”) or an
exemption thereunder and shall be construed and interpreted in a manner that is consistent with the requirements for avoiding additional taxes or penalties under Section 409A. Notwithstanding the foregoing, the Company makes no representations
that the payments and benefits provided under this Agreement comply with Section 409A and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest, or other expenses that may be incurred by the
Participant on account of non-compliance with Section 409A. 
 SECTION
18.    COUNTERPARTS: This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Counterpart signature pages to this
Agreement transmitted by facsimile transmission, by electronic mail in portable document format (pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as
physical delivery of the paper document bearing an original signature. 
 SECTION 19.    ACCEPTANCE: The Participant
hereby acknowledges receipt of a copy of the Plan and this Agreement. The Participant has read and understands the terms and provisions thereof, and accepts the Long-Term Incentive Award subject to all of the terms and conditions of the Plan and
this Agreement. The Participant acknowledges that there may be adverse tax consequences upon the vesting or payment of the Long-Term Incentive Award and that the Participant has been advised to consult a tax advisor prior to such vesting or payment.

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

 

									
	Oncor Electric Delivery Company LLC:	 		 	Participant:
					
	By:	 	
                     
                                         
                                   
	 		 	By:	 	
                     
                                         
                               

									
	Name:	 	  
	 		 	Name:	 	[Name]
	Title:	 	  
	 		 		 	

  
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 Exhibit A 

20     – 20     Performance Goals 

(Measured at the End of the Performance Period) 

 

					
	Performance Goals
			
	 Weighting
	  	 Performance Metric
	  	 Performance Level

	 45%
	  	Safety: Measured by DART (Days Away, Restricted or Transferred) Rate; average	  	 Threshold
 Superior

Aspirational

			
	 45%
	  	Reliability: Measured by non-storm System Average Interruption Duration Index (SAIDI) in minutes; cumulative	  	 Threshold
 Superior

Aspirational

			
	 100%
	  	Net income growth: Percentage growth of net income (as defined by the Plan Administrator) measured during the Performance Period, using the year before the three year period as the beginning value and final year of the
three year period as the ending value; weather normalized and excluding extraordinary items	  	

 Calculation of Award: The applicable Long-Term Incentive Award is equal to the product of (1) the Target
Opportunity amount described in Section 1 of this Agreement, multiplied by (2) the Final Funding Percentage. 
 Definitions: 

Final Funding Percentage: The Final Funding Percentage is equal to the Weighted Performance Goal Percentage unless
the Weighted Performance Goal Percentage is less than 50% or more than 150%, in which case the Final Funding Percentage is 50% or 150%, respectively. 

Performance Goal Percentages: The Performance Goal Percentage with respect to each of the Safety and Reliability Performance
Metrics for a Performance Period shall equal 50% if the respective Performance Metric is equal to or does not meet the Threshold level, 150% if the Superior level is met, or 200% if the Aspirational goal is met or exceeded. The applicable percentage
for performance between the Threshold and Superior performance levels, and the Superior and Aspirational performance levels, shall be determined on a straight line interpolation basis. 

The Performance Goal Percentage with respect to the Net Income Growth Performance Metric for a Performance Period shall equal the Net Income Growth
Performance Metric (which is expressed as a percentage). 

  
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 Weighted Performance Goal Percentage: To determine the Weighted Performance Goal
Percentage, each individual Performance Goal Percentage is multiplied by the Performance Goal weighting level indicated in the table above and adjusted by any modifiers set by the Plan Administrator for the Performance Period. The result of each of
these calculations shall then be added together to determine the Weighted Performance Goal Percentage. 

  
 6stardescriptionofregiste

          DESCRIPTION OF COMMON STOCK AND PREFERRED STOCK   General         iStar Inc.'s ("we," "our" or, "us") charter provides that we may issue up to 200,000,000 shares  of common stock, $0.001 par value, and 30,000,000 shares of preferred stock, $0.001 par value, of  which 4,000,000 shares are initially classified as 8.00% Series D Cumulative Redeemable Preferred  Stock, 3,200,000 shares are initially classified as 7.65% Series G Cumulative Redeemable Preferred  Stock, and 5,000,000 shares are initially classified as 7.50% Series I Cumulative Redeemable  Preferred Stock.  As of February 21, 2020, we had 77,810,077 shares of common stock, 4,000,000  shares of Series D Preferred Stock, 3,200,000 shares of Series G Preferred Stock and 5,000,000 shares  of Series I Preferred Stock outstanding. Under Maryland law, stockholders are not generally liable for  our debts or obligations solely as a result of their status as stockholders.         The following summary of the terms and provisions of our capital stock, our charter and  bylaws and Maryland law does not purport to be complete and is qualified in its entirety by reference  to the pertinent sections of Maryland law and to our charter, the articles supplementary creating each  series of preferred stock and our bylaws, each of which is filed or incorporated by reference as  exhibits to our Annual Report on Form 10-K for the year ended December 31, 2019, as the same  maybe amended or supplemented from time to time.   Common Stock         Holders of common stock unclassified as to series will be entitled to receive distributions on  common stock if, as and when our board of directors authorizes, and we declare, distributions.  However, rights to distributions may be subordinated to the rights of holders of preferred stock, when  preferred stock is issued and outstanding. In the event of our liquidation, dissolution or winding up,  each outstanding share of common stock unclassified as to series will entitle its holder to a  proportionate share of the assets that remain after we pay our liabilities and any preferential  distributions owed to preferred stockholders.         Holders of common stock unclassified as to series are entitled to one vote for each share on  all matters submitted to a stockholder vote. Holders of Series D preferred stock are entitled to 0.25 of  a vote for each share on all matters submitted to a stockholder vote. They will vote with the common  stock as a single class. Each of our directors is elected by our stockholders to serve until the next  annual meeting and until his or her successor is duly elected and qualifies. There is no cumulative  voting in the election of directors.         Holders of shares of common stock generally have no preference, conversion, sinking fund,  redemption, appraisal or exchange rights or any preemptive rights to subscribe for any of our  securities. All shares of common stock unclassified as to series have equal dividend, distribution,  liquidation and other rights.   Preferred Stock         General.  Our board of directors has adopted articles supplementary to our charter  establishing the number and fixing the terms, designations, powers, preferences, rights, limitations  and restrictions of three series of our preferred stock classified as 8.00% Series D Cumulative  Redeemable Preferred Stock, 7.65% Series G Cumulative Redeemable Preferred Stock and 7.50%  Series I Cumulative Redeemable Preferred Stock. Our board of directors has authorized up to  4,000,000 shares of Series D Preferred Stock, 3,200,000 shares of Series G Preferred Stock and  5,000,000 shares of Series I Preferred Stock.          Ranking.  Each of the Series D, G and I Preferred Stock will rank senior to our common  stock and on a parity with each other with respect to the payment of dividends.                                        - 1 -                                      

 

      Dividends.  Holders of shares of the Series D, G and I Preferred Stock shall be entitled to  receive, when and as authorized by our board of directors, out of funds legally available for the  payment of dividends, cumulative preferential cash dividends at the rate of 8.00%, in the case of the  Series D Preferred Stock, 7.65% in the case of the Series G Preferred Stock and 7.50% in the case of  the Series I Preferred Stock, per annum of the $25.00 liquidation preference of each share. Such  dividends are cumulative and are payable to investors quarterly in arrears on or before the 15th day of  each March, June, September and December or, if not a business day, the next succeeding business  day (each, a "Dividend Payment Date"). Any dividend payable for any partial dividend period will be  computed on the basis of a 360-day year consisting of twelve 30-day months. Dividends will be  payable to holders of record as they appear in our stock records at the close of business on the  applicable record date, which shall be the first day of the calendar month in which the applicable  Dividend Payment Date falls or on such other date designated by our board of directors for the  payment of dividends that is not more than 30 nor less than 10 days prior to such Dividend Payment  Date (each, a "Dividend Record Date").         No dividends on shares of Series D, G and I Preferred Stock shall be declared by us or paid or  set apart for payment by us at such time as the terms and provisions of any of our agreements,  including any agreement relating to our indebtedness, prohibit such declaration, payment or setting  apart for payment or provide that such declaration, payment or setting apart for payment would  constitute a breach thereof or a default thereunder, or if such declaration or payment shall be restricted  or prohibited by law.         Notwithstanding the foregoing, dividends on the Series D, G and I Preferred Stock will accrue  whether or not we have earnings, whether or not there are funds legally available for the payment of  such dividends and whether or not such dividends are declared. Accrued but unpaid dividends will  accumulate as of the Dividend Payment Date on which they first become payable.         Except as set forth in the next sentence, unless full cumulative dividends on the Series D, G  and I Preferred Stock have been or contemporaneously are declared and paid or declared and a sum  sufficient for the payment thereof is set apart for payment for all past dividend periods and the then  current dividend period, no dividends (other than in shares of common stock or in shares of any series  of preferred stock ranking junior to the Series D, G and I Preferred Stock as to dividends and upon  liquidation) shall be declared or paid or set aside for payment nor shall any other distribution be  declared or made upon any of our common stock or preferred stock ranking junior to or on a parity  with the Series D, G and I Preferred Stock as to dividends or upon liquidation, nor shall any shares of  our common stock or preferred stock ranking junior to or on a parity with the Series D, G and I  Preferred Stock as to dividends or upon liquidation be redeemed, purchased or otherwise acquired for  any consideration (or any moneys be paid to or made available for a sinking fund for the redemption  of any such shares) by us (except by conversion into or exchange for our other capital stock ranking  junior to the Series D, G and I Preferred Stock as to dividends and upon liquidation and except for  transfers made pursuant to the provisions of our charter relating to restrictions on ownership and  transfers of our capital stock).         When dividends are not paid in full (or a sum sufficient for such full payment is not so set  apart) upon the Series D, G and I Preferred Stock and the shares of any other series of preferred stock  ranking on a parity as to dividends with the Series D, G and I Preferred Stock, all dividends declared  upon the Series D, G and I Preferred Stock and any other series of preferred stock ranking on a parity  as to dividends with the Series D, G and I Preferred Stock shall be declared pro rata so that the  amount of dividends declared per share of Series D, G and I Preferred Stock and such other series of  preferred stock shall in all cases bear to each other the same ratio that accrued dividends per share on  the Series D, G and I Preferred Stock and such other series of preferred stock (which shall not include  any accrual in respect of unpaid dividends for prior dividend periods if such preferred stock does not  have a cumulative dividend) bear to each other. No interest, or sum of money in lieu of interest, shall  be payable in respect of any dividend payment or payments on the Series D, G and I Preferred Stock  which may be in arrears.                                        - 2 -                                      

 

      Liquidation Preference.  Upon any voluntary or involuntary liquidation, dissolution or  winding up of our affairs, the holders of shares of each of Series D, G and I Preferred Stock are  entitled to be paid out of our assets that are legally available for distribution to our stockholders a  liquidation preference of $25.00 per share, plus an amount equal to any accrued and unpaid dividends  to the date of payment, before any distribution of assets is made to holders of our common stock or  any series of our preferred stock that ranks junior to the Series D, G and I Preferred Stock as to  liquidation rights.         In the event that, upon any such voluntary or involuntary liquidation, dissolution or winding  up, our available assets are insufficient to pay the amount of the liquidating distributions on all  outstanding shares of Series D, G and I Preferred Stock and the corresponding amounts payable on all  shares of other classes or series of our capital stock ranking on a parity with the Series D, G and I  Preferred Stock in the distribution of assets, then the holders of the Series D, G and I Preferred Stock  and all other such classes or series of capital stock shall share ratably in any such distribution of assets  in proportion to the full liquidating distributions to which they would otherwise be respectively  entitled         After payment of the full amount of the liquidating distributions to which they are entitled,  the holders of Series D, G and I Preferred Stock will have no right or claim to any of our remaining  assets. The consolidation or merger of us with or into any other corporation, trust or entity or of any  other corporation with or into us, or the sale, lease or conveyance of all or substantially all of our  assets or business, shall not be deemed to constitute a liquidation, dissolution or winding up of us.          Redemption.  We may redeem, at our option upon not less than 30 nor more than 60 days'  written notice, shares of the Series D, G and I Preferred Stock, in whole or in part, at any time or from  time to time, for cash at a redemption price of $25.00 per share, plus all accrued and unpaid dividends  thereon to and including the date fixed for redemption (except as provided below), without interest.   The redemption price of the Series D Preferred Stock will be payable solely out of the sale proceeds  of other capital stock of the company.         Unless full cumulative dividends on all shares of Series D, G and I Preferred Stock shall have  been or contemporaneously are declared and paid or declared and a sum sufficient for the payment  thereof set apart for payment for all past dividend periods and the then current dividend period, no  shares of any one or more of such series shall be redeemed unless all outstanding shares of the  applicable series are simultaneously redeemed and we shall not purchase or otherwise acquire directly  or indirectly any shares of such series (except by exchange for our capital stock ranking junior to the  shares of such series as to dividends and upon liquidation); provided, however, that the foregoing  shall not prevent the purchase by us of shares transferred to a charitable trust in accordance with our  charter to ensure we remain qualified as a REIT for federal income tax purposes, or the purchase or  acquisition of shares of such series pursuant to a purchase or exchange offer made on the same terms  to holders of all outstanding shares of such series.         None of the Series D, G and I Preferred Stock has a stated maturity or is subject to any  sinking fund or mandatory redemption.          Voting Rights.  Holders of the Series D Preferred Stock have 0.25 votes per share on all  matters submitted to a stockholder vote.  The Series D Preferred Stock will vote as a single class with  our common stock on all such matters.  Other than the voting rights of the Series D Preferred Stock  described in the preceding sentences, holders of the Series D, G and I Preferred Stock will not have  any voting rights, except as set forth below.         Whenever dividends on any shares of any of the Series D, G and I Preferred Stock shall be in  arrears for six or more quarterly periods (a "Preferred Dividend Default"), the holders of shares of  such series (voting separately as a class with all other series of preferred stock ranking on a parity  with such shares as to dividends or upon liquidation ("Parity Preferred") upon which like voting rights                                        - 3 -                                      

 

have been conferred and are exercisable) will be entitled to vote for the election of a total of two  additional members of our board of directors (the "Preferred Stock Directors"), and the number of  directors on the board of directors shall increase by two, at a special meeting called by the holders of  record of at least 20% of the shares of such series or any other series of Parity Preferred so in arrears  (unless such request is received less than 90 days before the date fixed for the next annual or special  meeting of the stockholders) or at the next annual meeting of stockholders, and at each subsequent  annual meeting until all dividends accumulated on such shares for the past dividend periods and the  dividend for the then current dividend period shall have been fully paid or declared and a sum  sufficient for the payment thereof set aside for payment.         If and when all accumulated dividends and the dividend for the then current dividend period  on the Series D, G and I Preferred Stock, as applicable, shall have been paid in full or set aside for  payment in full, the holders thereof shall be divested of the foregoing voting rights (subject to  revesting in the event of each and every subsequent Preferred Dividend Default) and, if all  accumulated dividends and the dividend for the then current dividend period have been paid in full or  set aside for payment in full on all series of Parity Preferred upon which like voting rights have been  conferred and are exercisable, the term of office of each Preferred Stock Director so elected shall  terminate and the number of directors on the board of directors shall decrease by two. Any Preferred  Stock Director may be removed at any time with or without cause by, and shall not be removed  otherwise than by the vote of, the holders of record of a majority of the outstanding shares of the  Series D, G or I Preferred Stock when they have the voting rights described above (voting separately  as a class with all series of Parity Preferred upon which like voting rights have been conferred and are  exercisable). So long as a Preferred Dividend Default shall continue, any vacancy in the office of a  Preferred Stock Director may be filled by the written consent of the Preferred Stock Directors  remaining in office, or if none remains in office, by a vote of the holders of record of a majority of the  outstanding shares of Series D, G or I Preferred Stock when they have the voting rights described  above (voting separately as a class with all series of Parity Preferred upon which like voting rights  have been conferred and are exercisable). The Preferred Stock Directors shall each be entitled to one  vote per director on any matter.         So long as any shares of Series D, G and I Preferred Stock remain outstanding, we will not,  without the affirmative vote or consent of the holders of at least two-thirds of the shares of the  applicable series Stock outstanding at the time, given in person or by proxy, either in writing or at a  meeting (voting separately as a class with all series of Parity Preferred upon which like voting rights  have been conferred and are exercisable), (a) authorize or create, or increase the authorized or issued  amount of, any class or series of capital stock ranking prior to the Series D, G and I Preferred Stock,  as applicable, with respect to payment of dividends or the distribution of assets upon liquidation,  dissolution or winding up or reclassify any of our authorized capital stock into such shares, or create,  authorize or issue any obligation or security convertible into or evidencing the right to purchase any  such shares; or (b) amend, alter or repeal the provisions of our charter, whether by merger,  consolidation or otherwise (an "Event"), so as to materially and adversely affect any right, preference,  privilege or voting power of the Series D, G and I Preferred Stock, as applicable; provided, however,  with respect to the occurrence of any Event set forth in (b) above, so long as the Series D, G and I  Preferred Stock, as applicable, remains outstanding with the terms thereof materially unchanged, the  occurrence of any such Event shall not be deemed to materially and adversely affect such rights,  preferences, privileges or voting power of holders of the applicable series and, provided further, that  any increase in the amount of the authorized preferred stock, including the Series D, G and I Preferred  Stock, or the creation or issuance of any additional Series D, G and I Preferred Stock or other series of  preferred stock, or any increase in the amount of authorized shares of such series, in each case ranking  on a parity with or junior to the Series D, G and I Preferred Stock, as applicable with respect to  payment of dividends or the distribution of assets upon liquidation, dissolution or winding up, shall  not be deemed to materially and adversely affect such rights, preferences, privileges or voting powers.         The foregoing voting provisions will not apply if, at or prior to the time when the act with  respect to which such vote would otherwise be required shall be effected, all outstanding shares of                                        - 4 -                                      

 

Series D, G and I Preferred Stock, as applicable, shall have been redeemed or called for redemption  upon proper notice and sufficient funds shall have been deposited in trust to effect such redemption.   Conversion         None of the Series D, G and I Preferred Stock is convertible into or exchangeable for any  other of our property or securities.   Certain Provisions of our Charter and Maryland Law         We may be dissolved if our board of directors, by resolution adopted by a majority of our  entire board of directors, declares the dissolution advisable and directs that the proposed dissolution  be submitted for consideration at either an annual or special meeting of stockholders. Dissolution will  occur once it is approved by the affirmative vote of holders of shares of stock entitled to cast a  majority of all the votes entitled to be cast on the matter.         Our charter grants our board of directors the power to authorize the issuance of additional  authorized but unissued shares of common stock and preferred stock. Our board of directors may also  classify or reclassify unissued shares of common stock or preferred stock and authorize their issuance.         Our charter also provides that, to the extent permitted by the Maryland General Corporate  Law, our board of directors may, without any action by the stockholders, amend our charter from time  to time to increase or decrease the aggregate number of shares of stock or the number of shares of  stock of any class or series that we have authority to issue.         We believe that these powers of our board of directors provide increased flexibility in  structuring possible future financings and acquisitions and in meeting other needs which might arise.  Nonetheless, our board of directors could authorize the issuance of a class or series that could delay,  defer or prevent a change of control or other transaction that might involve a premium price for the  common stock or otherwise be in the best interest of the stockholders.   Restrictions on Ownership and Transfer         To maintain our REIT qualification under the Internal Revenue Code of 1986, as amended, or  the Internal Revenue Code, no group of five or fewer individuals can own, actually or constructively,  more than 50% in value of our issued and outstanding stock at any time during the last half of a  taxable year, which we refer to as the 5/50 Test. Additionally, at least 100 persons must beneficially  own our stock during at least 335 days of a taxable year (determined without reference to any rules of  attribution). To assist us in meeting these tests, our charter provides that no person other than persons  who were our stockholders as of November 3, 1999 or persons exempted by our board of directors  may beneficially or constructively own more than 9.8% of our capital stock, by value or number of  shares, whichever is more restrictive; these provisions constitute the Ownership Limit.  Our board has  granted a waiver to UBS Financial Services to own up to 15% of the outstanding shares of our  common stock on behalf of clients.         Each person who is a beneficial or constructive owner of shares of stock and each person,  including the stockholder of record, who is holding shares of stock for a beneficial or constructive  owner must provide us in writing any information with respect to direct, indirect and constructive  ownership of shares of stock as our board of directors deems reasonably necessary to comply with the  provisions of the Internal Revenue Code applicable to a REIT, to determine our qualification as a  REIT, and to comply with the requirements of any taxing authority or governmental agency or to  determine any such compliance.         Any issuance or transfer of shares of our stock that would result in (1) us being "closely held"  within the meaning of Section 856(h) of the Internal Revenue Code, (2) our stock being beneficially                                        - 5 -                                      

 

owned by fewer than 100 persons, determined without reference to any rules of attribution, or (3) us  otherwise failing to qualify as a REIT, shall be void and the intended transferee shall acquire no rights  in such shares of our stock. Shares of our stock issued or transferred that would cause any stockholder  to own more than the Ownership Limit or cause us to be "closely held" within the meaning of  Section 856(h) of the Internal Revenue Code or otherwise cause us to fail to qualify as a REIT, which  stockholder we refer to as a Prohibited Owner will be automatically transferred, without action by the  Prohibited Owner, to a trust for the exclusive benefit of one or more charitable beneficiaries that we  select, and the Prohibited Owner will not acquire any rights in the shares of such stock. Such  automatic transfer shall be deemed to be effective as of the close of business on the business day prior  to the date of the transfer causing a violation. If the transfer to the trust would not be effective for any  reason to prevent a stockholder from owning more than the Ownership Limit or cause us to be  "closely held" within the meaning of Section 856(h) of the Internal Revenue Code or otherwise cause  us to fail to qualify as a REIT, then the transfer of that number of shares necessary to cause such  ownership or failure will be void and the intended transferee shall acquire no rights in such shares of  our stock. The trustee of the trust shall be appointed by us and must be independent of us and the  Prohibited Owner. The Prohibited Owner shall have no right to receive dividends or other  distributions with respect to, or be entitled to vote, any stock held in the trust. Any dividend or other  distribution paid prior to the discovery by us that excess stock has been transferred to the trust must be  paid by the recipient of the dividend or other distribution to the trustee for the benefit of the charitable  beneficiaries, and any dividend or other distribution authorized but unpaid shall be paid when due to  the trust for the benefit of the charitable beneficiaries. The trust shall have all dividend and voting  rights with respect to the shares of stock held in the trust, which rights shall be exercised for the  exclusive benefit of the charitable beneficiary. Any dividend or other distribution so paid to the trust  shall be held in trust for the charitable beneficiary.         Within 60 days after the latest of (i) the date of the transfer which resulted in the transfer to  the charitable trust and (ii) the date our board of directors determines in good faith that a transfer  resulting in the transfer to the charitable trust has occurred, the trustee will sell the stock held in the  trust to a person whose ownership of the shares will not violate the ownership limitations set forth in  our charter. Upon such sale, any interest of the charitable beneficiary in the stock sold shall terminate  and the trustee shall distribute the net proceeds of the sale to the Prohibited Owner and to the  charitable beneficiary as follows. The Prohibited Owner shall receive the lesser of (a) the price paid  by the Prohibited Owner for the excess stock (or if no value was given for such shares held by the  charitable trust, the Market Price (as defined in our charter) on the day of the event causing the shares  to be held by the trust, and (b) the price received by the trustee from the sale or other disposition of  the stock held in the trust. Any net sale proceeds in excess of the amount payable to the Prohibited  Owner shall be paid to the charitable beneficiary. Shares of our stock held by the charitable trust shall  be deemed to have been offered for sale to us, or our designee, at a price per share equal to the lesser  of (i) the price per share in the transaction that created such shares held by the trust (or, in the case of  a devise, gift or other transaction in which no value was given for such shares held by the trust, the  Market Price at the time of such devise, gift or other transaction) and (ii) the Market Price of the  shares of our stock to which such shares held by the trust relates on the date we, or our designee,  accepts such offer. We shall have the right to accept such offer until the trustee has sold the shares of  our stock held in the charitable trust. Upon such a sale, the interest of the charitable beneficiary in the  shares of stock sold shall terminate and the trustee shall distribute the net proceeds of the sale to the  purported record transferee of such shares. If any of the foregoing restrictions on transfer of our shares  held by the trust are determined to be void or invalid, then the purported record transferee of such  shares may be deemed, at our option, to have acted as our agent in acquiring such shares and to hold  such shares on our behalf.         These restrictions on ownership and transfer will not apply to our stock if our board of  directors determines that it is no longer in our best interests to continue to qualify as a REIT.                                        - 6 -                                      

 

      These restrictions on ownership and transfer could delay, defer or prevent a transaction or a  change of control of us that might involve a premium price for shares of our stock or otherwise be in  the best interest of our stockholders.   Business Combinations         Under the MGCL, certain "business combinations" (including a merger, consolidation, share  exchange or, in certain circumstances, an asset transfer or issuance or reclassification of equity  securities) between a Maryland corporation and an interested stockholder (defined generally as any  person who beneficially owns, directly or indirectly, 10% or more of the voting power of the  corporation's outstanding voting stock or an affiliate or associate of the corporation who, at any time  within the two-year period prior to the date in question, was the beneficial owner of 10% or more of  the voting power of the then outstanding stock of the corporation) or an affiliate of such an interested  stockholder are prohibited for five years after the most recent date on which the interested stockholder  becomes an interested stockholder. Thereafter, any such business combination must generally be  recommended by the board of directors of such corporation and approved by the affirmative vote of at  least (i) 80% of the votes entitled to be cast by holders of outstanding voting stock of the corporation  and (ii) two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other  than shares held by the interested stockholder with whom (or with whose affiliate) the business  combination is to be effected or held by an affiliate or associate of the interested stockholder, unless,  among other conditions, the corporation's common stockholders receive a minimum price (as defined  in the MGCL) for their shares and the consideration is received in cash or in the same form as  previously paid by the interested stockholder for its shares. A person is not an interested stockholder  under the statute if the board of directors approved in advance the transaction by which the person  otherwise would have become an interested stockholder. The board of directors may provide that its  approval is subject to compliance with any terms and conditions determined by it.         These provisions of the MGCL do not apply, however, to business combinations that are  approved or exempted by a board of directors prior to the time that the interested stockholder becomes  an interested stockholder. Pursuant to the statute, our board of directors has by resolution exempted  business combinations between us and any other person and, consequently, the five-year prohibition  and the supermajority vote requirements will not apply to business combinations between us and any  person as described above. As a result, any person described above may be able to enter into business  combinations with us that may not be in the best interest of our stockholders without compliance by  our company with the supermajority vote requirements and other provisions of the statute.         We cannot assure you our board of directors will not opt to be subject to such business  combination provisions in the future. However, an alteration or repeal of the resolution described  above will not have any effect on any business combinations that have been consummated or upon  any agreements existing at the time of such modification or repeal. If our board of directors opts back  into the business combination statute, the business combination statute may discourage others from  trying to acquire control of us and increase the difficulty of consummating any offer.   Control Share Acquisitions         The MGCL provides that "control shares" of a Maryland corporation acquired in a "control  share acquisition" have no voting rights except to the extent approved by the affirmative vote of two- thirds of the votes entitled to be cast on the matter, excluding shares of stock in a corporation in  respect of which any of the following persons is entitled to exercise or direct the exercise of the voting  power of such shares in the election of directors: (i) a person who makes or proposes to make a  control share acquisition; (ii) an officer of the corporation; or (iii) an employee of the corporation who  is also a director of the corporation. "Control shares" are voting shares of stock which, if aggregated  with all other such shares of stock previously acquired by the acquirer, or in respect of which the  acquirer is able to exercise or direct the exercise of voting power (except solely by virtue of a  revocable proxy), would entitle the acquirer to exercise voting power in electing directors within one                                        - 7 -                                      

 

of the following ranges of voting power: (a) one-tenth or more but less than one-third; (b) one-third or  more but less than a majority; or (c) a majority or more of all voting power. Control shares do not  include shares that the acquiring person is then entitled to vote as a result of having previously  obtained stockholder approval or shares acquired directly from the corporation. A "control share  acquisition" means the acquisition, directly or indirectly, of ownership of, or the power to direct the  exercise of voting power with respect to, issued and outstanding control shares, subject to certain  exceptions.         A person who has made or proposes to make a control share acquisition, upon satisfaction of  certain conditions (including an undertaking to pay expenses and making an "acquiring person  statement" as described in the MGCL), may compel the corporation to call a special meeting of  stockholders to be held within 50 days of demand to consider the voting rights of the shares. If no  request for a meeting is made, the corporation may itself present the question at any stockholders'  meeting.         If voting rights are not approved at the meeting or if the acquiring person does not deliver an  "acquiring person statement" as required by the statute, then, subject to certain conditions and  limitations, the corporation may redeem any or all of the control shares (except those for which voting  rights have previously been approved) for fair value determined, without regard to the absence of  voting rights for the control shares, as of the date of the last control share acquisition by the acquirer  or of any meeting of stockholders at which the voting rights of such shares are considered and not  approved. If voting rights for control shares are approved at a stockholders meeting and the acquirer  becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise  appraisal rights. The fair value of the shares as determined for purposes of such appraisal rights may  not be less than the highest price per share paid by the acquirer in the control share acquisition.         The control share acquisition statute does not apply to (i) shares acquired in a merger,  consolidation or share exchange if the corporation is a party to the transaction or (ii) acquisitions  approved or exempted by the charter or bylaws of the corporation.         Our bylaws contain a provision exempting from the control share acquisition statute any  acquisitions by any person of shares of our stock. There is no assurance that such provision will not be  amended or eliminated at any time in the future.   Subtitle 8         Subtitle 8 of Title 3 of the MGCL permits a Maryland corporation with a class of equity  securities registered under the Exchange Act and at least three independent directors to elect to be  subject, by provision in its charter or bylaws or a resolution of its board of directors and  notwithstanding any contrary provision in the charter or bylaws, to any or all of five provisions:        a classified board;        a two-thirds vote requirement for removing a director;        a requirement that the number of directors be fixed only by vote of the directors;        a requirement that a vacancy on the board be filled only by the remaining directors and for the        remainder of the full term of class of directors in which the vacancy occurred; and        a majority requirement for the calling of a special meeting of stockholders.         We have not elected to be subject to any of the provisions of Subtitle 8. Moreover, our charter  provides that, without the affirmative vote of a majority of the votes cast on the matter by our                                        - 8 -                                      

 

stockholders entitled to vote generally in the election of directors, we may not elect to be subject to  any of the provisions of Subtitle 8.   Advance Notice of Director Nominations and New Business         Our bylaws provide that, with respect to an annual meeting of stockholders, nominations of  individuals for election to our board of directors and the proposal of other business to be considered  by stockholders may be made only (i) pursuant to our notice of the meeting, (ii) by or at the direction  of our board of directors or (iii) by a stockholder who is a stockholder of record as of the record date  for the meeting, at the time of giving the notice required by our bylaws and at the time of the meeting,  who is entitled to vote at the meeting in the election of each individual so nominated or on such other  business and who has complied with the advance notice provisions set forth in our bylaws.         With respect to special meetings of stockholders, only the business specified in our notice of  meeting may be brought before the meeting. Nominations of individuals for election to our board of  directors may be made only (i) by or at the direction of our board of directors or (ii) provided that the  meeting has been called in accordance with our bylaws for the purpose of electing directors, by a  stockholder who is a stockholder of record as of the record date for the meeting, at the time of giving  the notice required by our bylaws and at the time of the meeting, who is entitled to vote at the meeting  in the election of each individual so nominated and who has complied with the advance notice  provisions set forth in our bylaws.         Although our bylaws do not give our board of directors any power to disapprove stockholder  nominations for the election of directors or proposals recommending certain action, they may have the  effect of precluding a contest for the election of directors or the consideration of stockholder  proposals if proper procedures are not followed and of discouraging or deterring a third party from  conducting a solicitation of proxies to elect its own slate of directors or to approve its own proposal  without regard to whether consideration of such nominees or proposals might be harmful or beneficial  to us and our stockholders.   Anti-Takeover Effect of Certain Provisions of Maryland Law and of Our Charter and Bylaws         Our charter and bylaws and Maryland law contain provisions that may delay, defer or prevent  a change in control or other transaction that might involve a premium price for our shares of common  stock or otherwise be in the best interest of our stockholders, including restrictions on ownership and  transfer of our stock and advance notice requirements for director nominations and stockholder  proposals. Likewise, if the provision in the bylaws opting out of the control share acquisition  provisions of the MGCL were rescinded, if we were to opt into the business combination provisions  of the MGCL, or if our stockholders were to approve our election to be subject to a classified board or  other provisions of Subtitle 8, these provisions of the MGCL could have similar anti-takeover effects.   Limitations of Liability and Indemnification of Directors and Officers         The Maryland General Corporation Law (the "MGCL") permits a Maryland corporation to  include in its charter a provision eliminating the liability of its directors and officers to the corporation  and its stockholders for money damages except for liability resulting from (a) actual receipt of an  improper benefit or profit in money, property or services or (b) active and deliberate dishonesty  established by a final judgment as being material to the cause of action. Our charter contains such a  provision which eliminates such liability to the maximum extent permitted by the MGCL.         Our charter obligates us to indemnify (i) our directors and officers, whether serving us, or at  our request, any other entity, to the full extent required or permitted by the MGCL, as currently or  hereafter in effect, including the advance or reimbursement of reasonable expenses as incurred  (including reasonable attorney's fees) under the procedures and to the full extent permitted by law and  (ii) other employees and agents to the extent authorized by our board of directors or our bylaws and                                        - 9 -                                      

 

permitted by law. Our bylaws obligate us, to the maximum extent permitted by Maryland law, to  indemnify and to pay or reimburse reasonable expenses in advance of final disposition of a  proceeding to (a) any present or former director or officer who is made or is threatened to be made a  party to, or witness in, the proceeding by reason of his or her service in that capacity or (b) any  individual who, while a director or officer and at our request, serves or has served as a director,  officer, trustee, member, manager or partner of another corporation, real estate investment trust,  limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise  and who is made or threatened to be made a party to or witness in the proceeding by reason of his or  her service in that capacity. Our Bylaws also permit us, with the approval of our board of directors, to  indemnify and advance expenses to any person who served a predecessor of ours in any of the  capacities described above and to any employee or agent of us or a predecessor of us.         The MGCL requires a corporation (unless its charter provides otherwise, which our charter  does not) to indemnify a director or officer who has been successful, on the merits or otherwise, in the  defense of any proceeding to which he is made, or threatened to be made, a party by reason of his or  her service in that capacity. The MGCL permits a corporation to indemnify its present and former  directors and officers, among others, against judgments, penalties, fines, settlements and reasonable  expenses actually incurred by them in connection with any proceeding to which they may be made, or  threatened to be made, a party by reason of their service in those or other capacities unless it is  established that (a) the act or omission of the director or officer was material to the matter giving rise  to the proceeding and (i) was committed in bad faith or (ii) was the result of active and deliberate  dishonesty, (b) the director or officer actually received an improper personal benefit in money,  property or services or (c) in the case of any criminal proceeding, the director or officer had  reasonable cause to believe that the act or omission was unlawful. However, under the MGCL, a  Maryland corporation may not indemnify for an adverse judgment in a suit by or in the right of the  corporation or for a judgment of liability on the basis that personal benefit was improperly received,  unless in either case a court orders indemnification and then only for expenses. In addition, the  MGCL permits a corporation to advance reasonable expenses to a director or officer upon the  corporation's receipt of (a) a written affirmation by the director or officer of his or her good faith  belief that he has met the standard of conduct necessary for indemnification by the corporation and  (b) a written undertaking by him or her or on his or her behalf to repay the amount paid or reimbursed  by the corporation if it shall ultimately be determined that the standard of conduct was not met.   Exclusive Forum         Our bylaws provide that, unless we consent in writing to the selection of an alternative forum,  the sole and exclusive forum for: (a) any derivative action or proceeding brought on our behalf; (b)  any action asserting a claim of breach of any duty owed by us or by any director or officer or other  employee to us or to our stockholders; (c) any action asserting a claim against us or any director or  officer or other employee arising pursuant to any provision of the Maryland General Corporation Law  or our charter or bylaws; or (d) any action asserting a claim against us or any director or officer or  other employee that is governed by the internal affairs doctrine shall be the Circuit Court for  Baltimore City, Maryland, or, if that Court does not have jurisdiction, the United States District Court  for the District of Maryland, Baltimore Division. This forum selection provision may limit the ability  of stockholders of our company to obtain a judicial forum that they find favorable for disputes with  our company or our directors, officers, employees, if any, or other stockholders.   Transfer Agent and Registrar         The transfer agent and registrar for our common stock and preferred stock is Computershare  Trust Company, N.A.                                        - 10 -

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