Document:

Exhibit 10.1

 

 

SIMON PROPERTY GROUP, L.P.

 

1998 STOCK INCENTIVE PLAN

 

(As Amended September 29, 2006)

 

 

SIMON PROPERTY GROUP, L.P.

1998 STOCK INCENTIVE PLAN

 

(As Amended September 29, 2006)

 

TABLE OF CONTENTS

 

	
  

  	
   

  	
  Page Number

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 1 GENERAL

  	
   

  	
  1

  
	
  1.1

  	
   

  	
  Purpose

  	
   

  	
  1

  
	
  1.2

  	
   

  	
  Administration

  	
   

  	
  1

  
	
  1.3

  	
   

  	
  Persons Eligible for
  Awards

  	
   

  	
  2

  
	
  1.4

  	
   

  	
  Types of Awards Under
  Plan

  	
   

  	
  2

  
	
  1.5

  	
   

  	
  Shares Available for
  Awards

  	
   

  	
  2

  
	
  1.6

  	
   

  	
  Definitions of
  Certain Terms

  	
   

  	
  3

  
	
  1.7

  	
   

  	
  Agreements Evidencing
  Awards

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  2 STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

  	
   

  	
  5

  
	
  2.1

  	
   

  	
  Grants of Stock
  Options

  	
   

  	
  5

  
	
  2.2

  	
   

  	
  Grant of Reload
  Options

  	
   

  	
  5

  
	
  2.3

  	
   

  	
  Grant of Stock
  Appreciation Rights

  	
   

  	
  5

  
	
  2.4

  	
   

  	
  Exercise of Related
  Stock Appreciation Right Reduces Shares Subject to Option

  	
   

  	
  6

  
	
  2.5

  	
   

  	
  Exercisability of
  Options and Stock Appreciation Rights

  	
   

  	
  6

  
	
  2.6

  	
   

  	
  Payment of Option
  Price

  	
   

  	
  8

  
	
  2.7

  	
   

  	
  Termination of
  Service

  	
   

  	
  9

  
	
  2.8

  	
   

  	
  Special ISO
  Requirements

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  3 AWARDS OTHER THAN STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

  	
   

  	
  11

  
	
  3.1

  	
   

  	
  Restricted Stock
  Awards

  	
   

  	
  11

  
	
  3.2

  	
   

  	
  Common Stock Awards

  	
   

  	
  12

  
	
  3.3

  	
   

  	
  Performance Units

  	
   

  	
  12

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  4 GRANTS OF RESTRICTED STOCK TO ELIGIBLE DIRECTORS

  	
   

  	
  12

  
	
  4.1

  	
   

  	
  Grants to Eligible
  Directors

  	
   

  	
  12

  
	
  4.2

  	
   

  	
  Amount of Awards

  	
   

  	
  12

  
	
  4.3

  	
   

  	
  Terms of Restricted
  Stock Awards

  	
   

  	
  13

  
	
  4.4

  	
   

  	
  Change of Control

  	
   

  	
  14

  
	
  4.5

  	
   

  	
  Deferred Delivery;
  Reinvestment of Dividends

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE
  5 MISCELLANEOUS

  	
   

  	
  14

  
	
  5.1

  	
   

  	
  Amendment of the
  Plan; Modification of Awards

  	
   

  	
  14

  
	
  5.2

  	
   

  	
  Limitation on
  Exercise

  	
   

  	
  15

  
	
  5.3

  	
   

  	
  Restrictions

  	
   

  	
  15

  
	
  5.4

  	
   

  	
  Nontransferability

  	
   

  	
  15

  

 i
 

 

 

	
  5.5

  	
   

  	
  Withholding Taxes

  	
   

  	
  16

  
	
  5.6

  	
   

  	
  Adjustments Upon
  Changes in Capitalization

  	
   

  	
  16

  
	
  5.7

  	
   

  	
  Right of Discharge
  Reserved

  	
   

  	
  17

  
	
  5.8

  	
   

  	
  No Rights as a
  Stockholder

  	
   

  	
  17

  
	
  5.9

  	
   

  	
  Nature of Payments

  	
   

  	
  17

  
	
  5.10

  	
   

  	
  Non-Uniform
  Determinations

  	
   

  	
  17

  
	
  5.11

  	
   

  	
  Other Payments or
  Awards

  	
   

  	
  18

  
	
  5.12

  	
   

  	
  Reorganization

  	
   

  	
  18

  
	
  5.13

  	
   

  	
  Section Headings

  	
   

  	
  18

  
	
  5.14

  	
   

  	
  Term of Plan

  	
   

  	
  18

  
	
  5.15

  	
   

  	
  Governing Law

  	
   

  	
  18

  
	
  5.16

  	
   

  	
  Repricing
  of Options

  	
   

  	
  19

  
	
  5.17

  	
   

  	
  Exception to Certain Limitations

  	
   

  	
  19

  
	
  5.18

  	
   

  	
  Code Section 409A

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

 ii

SIMON PROPERTY GROUP, L.P.

1998 STOCK INCENTIVE PLAN

(As Amended September 29, 2006)

ARTICLE 1

GENERAL

1.1                                 Purpose.

The
purpose of this 1998 Stock Incentive Plan (the “Plan”) is to provide for
certain key personnel (as defined in Section 1.3) of Simon Property Group, L.P.
(the “Partnership”) and certain of its Affiliates (as defined in Section 1.6)
an equity-based incentive to maintain and enhance the performance and
profitability of the Partnership and Simon Property Group, Inc. (the “Company”).
It is intended that awards granted under this Plan may provide
performance-based compensation within the meaning of section 162(m) of the
Internal Revenue Code of 1986, as amended and the regulations promulgated
thereunder from time-to-time (the “Code”), to the extent applicable.

1.2                                 Administration.

(a)           The Plan shall be
administered by a committee (the “Committee”) appointed by the Partnership, by
action of its General Partner, which Committee shall consist of two or more
directors of the Company.  A majority of
the Committee shall constitute a quorum, and the acts of a majority of the
members present at any meeting at which a quorum is present or acts approved in
writing by all members of the Committee without a meeting, shall be acts of the
Committee.  The members of the Committee
shall be appointed by and may be changed at any time and from time to time in
the discretion of, the Partnership, by action of its General Partner.

(b)           The Committee shall
have the authority (i) to exercise all of the powers granted to it under
the Plan, (ii) to construe, interpret and implement the Plan and any Plan
agreements executed pursuant to the Plan, (iii) to prescribe, amend and
rescind rules relating to the Plan, (iv) to make any determination
necessary or advisable in administering the Plan, and (v) to correct any
defect, supply any omission and reconcile any inconsistency in the Plan.

(c)           The determination of
the Committee on all matters relating to the Plan or any Plan agreement shall
be conclusive.

(d)           No member of the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any award hereunder.

(e)           Notwithstanding
anything to the contrary contained herein: (i) until the Partnership shall
appoint the members of the Committee, the Plan shall be administered by the
General Partner, and (ii) the General Partner may, in its sole discretion,
at any time and from time to time, resolve to administer the Plan. In either of
the foregoing events, the term Committee as used herein shall be deemed to mean
the General Partner.

 

1.3                                 Persons Eligible for Awards.

Awards
under Articles 2 and 3 of the Plan may be made to such officers,
employee-directors, Eligible Directors, executive, managerial, professional or
other employees, advisors and consultants (“key personnel”) of the Partnership
or its Affiliates, other than Melvin Simon and Herbert Simon, as the Committee
shall from time to time in its sole discretion select. Eligible Directors shall
also receive awards as provided in Article 4 of the Plan.

1.4                                 Types of Awards Under Plan.

(a)           Awards may be made under the Plan in
the form of (i) stock options (“options”), (ii) stock appreciation
rights related to an option (“related stock appreciation rights”),
(iii) stock appreciation rights not related to any option (“unrelated
stock appreciation rights”), (iv) restricted stock awards and
(v) performance units, all as more fully set forth in Articles 2, 3 and 4.

(b)           Options granted under the Plan may be
either (i) ”nonqualified” stock options subject to the provisions of
section 83 of the Code or (ii) options intended to qualify for incentive
stock option treatment described in Code section 422.

(c)           All options when granted are intended
to be nonqualified stock options, unless the applicable Plan agreement
explicitly states that the option is intended to be an incentive stock
option.  If an option is intended to be
an incentive stock option, and if for any reason such option (or any portion
thereof) shall not qualify as an incentive stock option, then, to the extent of
such nonqualification, such option (or portion) shall be regarded as a
nonqualified stock option appropriately granted under the Plan provided that
such option (or portion) otherwise meets the Plan’s requirements relating to
nonqualified stock options.

(d)           In the event the Company or an
Affiliate consummates a transaction described in Code section 424(a),
persons who become key personnel or directors on account of such transaction
may be granted options in substitution or as a replacement for options granted
by the former employer. The Committee, in its sole discretion and consistent
with Code section 424(a), shall determine the exercise price of the
substitute options.

1.5                                 Shares Available for Awards.

(a)           Subject to Section 5.6 (relating to
adjustments upon changes in capitalization), the aggregate number of shares of
Common Stock (as defined in Section 1.6) which may be delivered under the
Plan pursuant to awards hereunder shall not exceed 11,300,000 shares.  The number of unrestricted shares acquired
pursuant to the exercise of any related stock appreciation right pursuant to
the Plan shall be deemed to be equal to the number of shares surrendered, or as
to which the grantee’s right to purchase, acquire or receive is surrendered, in
connection with such exercise, and, to the extent that any payment to a grantee
upon exercise of any stock appreciation right is made in the form of restricted
shares, the portion of the shares surrendered, or as to which such grantee’s
right to purchase, acquire or receive is surrendered, which is related to
payment in the form of restricted shares shall not be deemed to be unrestricted
shares acquired pursuant to the Plan until such restricted shares become
unrestricted. Upon unconditional vesting of the right of any grantee to payment
pursuant to any performance unit in cash or any other form (other than
restricted or unrestricted shares), a number of unrestricted shares, equal to
the portion 

 2
 

 

of the shares subject to such
performance unit to which such payment relates, shall be deemed to be delivered
pursuant to the Plan in connection therewith. The number of shares delivered in
full or partial payment of any option exercise price under the Plan shall be
deducted from the number of shares delivered to the grantee pursuant to such
option for purposes of determining the number of unrestricted shares delivered
pursuant to the Plan.  Without limiting
the generality of the foregoing, shares of Common Stock covered by awards granted
under the Plan which expire or terminate for any reason (other than an option
or part thereof which is canceled by the Committee and for which cash is paid
in respect thereof pursuant to Section 2.5(f)) shall again become
available for award under the Plan.

(b)           Shares of Common Stock that shall be
subject to issuance pursuant to the Plan shall be authorized and unissued or
treasury shares of Common Stock.

(c)           Without limiting the generality of
the foregoing, the Committee may, with the grantee’s consent, cancel any award
under the Plan and issue a new award in substitution therefor upon such terms
as the Committee may in its sole discretion determine, provided that the
substituted award shall satisfy all applicable Plan requirements as of the date
such new award is made.

1.6                                 Definitions of Certain Terms.

(a)           The term “Affiliate” as used herein
means any person or entity which, at the time of reference, directly, or
indirectly through one or more intermediaries, controls, is controlled by, or
is under common control with, the Partnership, as determined by the Committee
in its sole discretion; provided, however, that the Company and Affiliates of
the Company shall be considered Affiliates of the Partnership.

(b)           The term “Common Stock” as used
herein means the shares of common stock, par value $0.0001 per share, of Simon
Property Group, Inc., as constituted on the effective date of the Plan, all
rights which trade with such shares of common stock, and any other shares into
which such common stock shall thereafter be changed by reason of a recapitalization,
merger, consolidation, split-up, combination, exchange of shares or the like.

(c)           The term “Eligible Director” means a
director of the Company who is not an employee of the Partnership or any of its
Affiliates.

(d)           Except as provided in Article 4,
the “fair market value” as of any date and in respect of any share of Common
Stock shall be the mean between the high and low sales prices of a share of
Common Stock as reported on the New York Stock Exchange if shares of Common
Stock are then trading upon such exchange, or if not, then such average on such
other stock exchange on which shares of the Common Stock are principally
trading, on such date. In no event shall the fair market value of any share be
less than its par value.

(e)           The term “Performance Cycle” means
the period of time established by the Committee within which Performance Goals
are required to be attained or satisfied.

(f)            The term “Performance Goals” means
the performance goals established by the Committee with respect to the Company,
the Partnership or any Affiliates, in the Committee’s 

 3
 

 

sole discretion, in writing,
based on any one or any combination of the following business criteria:
(a) earnings per share; (b) return on equity; (c) return on
assets; (d) market value per share; (e) funds from operations;
(f) return to stockholders (including dividends); (g) revenues;
(h) market share; (i) cash flow; and (j) cost reduction
goals.  Awards shall be delivered only after
it is certified, in writing, by the Committee that the Performance Goals as
established by the Committee have been attained or otherwise satisfied within
the Performance Cycle.

1.7                                 Agreements Evidencing Awards

(a)           Options, stock appreciation rights
and restricted stock awards granted under the Plan shall be evidenced by
written agreements.  Other awards granted
under the Plan shall be evidenced by written agreements to the extent the
Committee may in its sole discretion deem necessary or desirable.  Any such written agreements shall
(i) contain such provisions not inconsistent with the terms of the Plan as
the Committee may in its sole discretion deem necessary or desirable and
(ii) be referred to herein as “Plan agreements.”

(b)           Each Plan agreement shall set forth
the number of shares of Common Stock subject to the award granted thereby.

(c)           Each Plan agreement with respect to
the granting of a related stock appreciation right shall set forth the number
of shares of Common Stock subject to the related option which shall also be
subject to the related stock appreciation right granted thereby.

(d)           Each Plan agreement with respect to
the granting of an option shall set forth the amount (the “option exercise
price”) payable by the grantee in connection with the exercise of the option
evidenced thereby.  The option exercise
price per share shall not be less than the fair market value of a share of
Common Stock on the date the option is granted.

(e)           Each Plan agreement with respect to a
stock appreciation right shall set forth the amount (the “appreciation base”)
over which appreciation will be measured upon exercise of the stock
appreciation right evidenced thereby. 
The appreciation base per share of Common Stock subject to a stock
appreciation right shall not be less than (i) in the case of an unrelated
stock appreciation right, the fair market value of a share of Common Stock on
the date the stock appreciation right is granted, or (ii) in the case of a
related stock appreciation right, the higher of the fair market value of a
share of Common Stock on the date the stock appreciation right is granted or
the option exercise price per share of Common Stock subject to the related
option.

(f)            Despite any other provision of this
Plan to the contrary, the Committee shall not grant any awards with terms or
conditions that would subject the grantee to gross income inclusion, interest,
or additional tax pursuant to Code section 409A.

 4

 

ARTICLE 2

STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

2.1                                 Grants of Stock Options.

The
Committee may grant options to purchase shares of Common Stock in such amounts
and subject to such terms and conditions as the Committee shall from time to
time in its sole discretion determine, subject to the terms of the Plan;
provided, however, that (i) the maximum number of shares subject to all awards
granted to any Plan participant pursuant to the Plan shall not exceed 600,000
in any calendar year and (ii) the exercise price of any options shall not be
less than fair market value on the date of grant.

2.2                                 Grant of Reload Options.

The
Committee may, subject to Sections 1.5 and 2.1, grant a Reload Option to
any grantee holding an unexercised option. 
For purposes of the Plan. a “Reload Option” shall mean an option to
purchase a number of shares of Common Stock granted in connection with the
exercise of the grantee’s option (the “Exercised Options”) upon the payment of
the option exercise price for such Exercised Option with shares of Common Stock
that have a fair market value equal to not less than 100% of the option
exercise price for such Exercised Option. 
The Reload Option with respect to an Exercised Option shall be for a
number of shares of Common Stock equal to the number of shares of Common Stock
tendered to exercise the Exercised Option plus, if so provided by the
Committee, the number of shares of Common Stock, if any, retained by the
Partnership in connection with the exercise of the Exercised Option to satisfy
any federal, state, or local tax withholding requirements.  Reload options shall be subject to the
following terms and conditions:

(i)            the grant date for
each Reload Option shall be the date of exercise of the Exercised Option to
which it relates;

(ii)           the Reload Option
may be exercised at any time during the unexpired term of the original
Exercised Option to which it relates (subject to earlier termination thereof as
provided in the Plan and in the applicable Plan agreement); and

(iii)          the terms of the Reload
Option shall be the same as the terms of the Exercised Option to which it
relates, except that (1) the option exercise price shall be the fair
market value of the Common Stock on the grant date of the Reload Option and
(2) no Reload Option may be exercised within one year from the date on
which such Reload Option was granted.

2.3                                 Grant of Stock Appreciation Rights.

(a)           Related Stock
Appreciation Rights. The Committee may grant a related stock appreciation right
in connection with all or any part of an option granted under the Plan, either
at the time the related option is granted or any time thereafter prior to the
exercise, termination or cancellation of such option, and subject to such terms
and conditions as the Committee shall from time to time in its sole discretion
determine, subject to the terms of the Plan. 
The grantee of a related stock appreciation right shall, subject to the
terms of the Plan and the applicable Plan agreement, have the right to surrender
to the Partnership for cancellation all or a portion of the 

 5
 

 

related option granted under the Plan, but only to the extent that such
option is then exercisable, and to be paid therefor an amount equal to the
excess (if any) of (i) the aggregate fair market value of the shares of
Common Stock subject to such option or portion thereof (determined as of the
date of exercise of such stock appreciation right), over (ii) the
aggregate appreciation base (determined pursuant to Section 1.7(e)) of the
shares of Common Stock subject to such stock appreciation right or portion
thereof.

(b)           Unrelated Stock
Appreciation Rights. The Committee may grant an unrelated stock appreciation
right in such amount and subject to such terms and conditions, as the Committee
shall from time to time in its sole discretion determine, subject to the terms
of the Plan.  The grantee of an unrelated
stock appreciation right shall, subject to the terms of the Plan and the
applicable Plan agreement, have the right to surrender to the Partnership for
cancellation all or a portion of such stock appreciation right, but only to the
extent that such stock appreciation right is then exercisable, and to be paid
therefor an amount equal to the excess (if any) of (i) the aggregate fair
market value of the shares of Common Stock subject to such stock appreciation
right or portion thereof (determined as of the date of exercise of such stock
appreciation right), over (ii) the aggregate appreciation base (determined
pursuant to Section 1.7(e)) of the shares of Common Stock subject to such
stock appreciation right or portion thereof.

(c)           Payment. Unless the Plan agreement
provides otherwise, payment due to the grantee upon exercise of a stock
appreciation right shall be made in cash and/or in Common Stock (valued at the
fair market value thereof as of the date of exercise) as determined by the
Committee in its sole discretion.

2.4                                 Exercise of Related Stock Appreciation
Right Reduces Shares Subject to Option.

Upon any exercise of a related stock appreciation
right or any portion thereof, the number of shares of Common Stock subject to
the related option shall be reduced by the number of shares of Common Stock in
respect of which such stock appreciation right shall have been exercised.

2.5                                 Exercisability of Options and Stock
Appreciation Rights.

Subject to the other provisions of the Plan:

(a)           Exercisability Determined by Plan
Agreement. Each Plan agreement shall set forth the period during which and the
conditions subject to which the option or stock appreciation right evidenced
thereby shall be exercisable, as determined by the Committee in its sole
discretion.

(b)           Default Provisions. Unless the
applicable Plan agreement otherwise specifies:

(i)            no option or stock appreciation
right shall be exercisable prior to the first anniversary of the date of grant;

(ii)           each option or stock appreciation
right granted under the Plan shall become cumulatively exercisable with respect
to 40% of the shares of Common Stock subject thereto, rounded down to the next
lower full share, on the first 

 6
 

 

anniversary of the date of
grant, and with respect to an additional 30% of shares of Common Stock subject
thereto, rounded down to the next lower full share, on the second anniversary
of the date of the grant;

(iii)          each option or stock appreciation
right shall become 100% exercisable on the third anniversary of the date of
grant;

(iv)          except as provided in Section 2.7 each
option or stock appreciation right shall remain 100% exercisable through the
day prior to the tenth anniversary of the date of grant, after which such option
or stock appreciation right shall terminate and cease to be exercisable; and

(v)           no option or stock appreciation right
shall be exercisable to the extent that such exercise will cause the
Partnership or Affiliate to pay any amount that would be nondeductible by the
Partnership or such Affiliate by reason of Code section 162(m).

(c)           Exercise of Related Stock
Appreciation Right.  Unless the
applicable Plan agreement otherwise provides, a related stock appreciation
right shall be exercisable at any time during the period that the related
option may be exercised.

(d)           Partial Exercise Permitted. Unless
the applicable Plan agreement otherwise provides, an option or stock
appreciation right granted under the Plan may be exercised from time to time as
to all or part of the full number of shares as to which such option or stock
appreciation right shall then be exercisable. 
No option shall be exercised with respect to less than 50 shares of
Common Stock unless the option is being exercised with respect to the full
number of shares issuable hereunder.

(e)           Notice of Exercise; Exercise Date.

(i)            An option or stock appreciation
right shall be exercisable by the filing of a written notice of exercise with
the Partnership, on such form and in such manner as the Committee shall in its
sole discretion prescribe, and by payment in accordance with Section 2.6.

(ii)           Unless the applicable Plan agreement
otherwise provides or the Committee in its sole discretion otherwise
determines, the date of exercise of an unrelated stock appreciation right shall
be the date the Partnership receives such written notice of exercise.

(iii)          For purposes of the Plan, the “option
exercise date” shall be deemed to be the sixth business day immediately
following the date written notice of exercise is received by the Partnership.

(f)            Cashout of Options.  If and to the extent that the applicable Plan
agreement so provides: At any time after receipt of written notice of exercise
of an option and prior to the “option exercise date” (as defined in Section 2.5(e)),
the Committee in its sole 

 7
 

 

discretion may by written
notice to the grantee, cancel the option or any part thereof if the Committee
in its sole discretion determines that tax, legal or contractual restrictions
or brokerage or other market considerations would make the acquisition of
Common Stock, or the grantee’s sale of Common Stock to the public markets
illegal, impracticable or inadvisable. 
If the Committee cancels such option or any part thereof, the
Partnership shall pay to the grantee, as soon as practicable thereafter, an
amount equal in cash to the excess of (i) the aggregate fair market value
of the shares of Common Stock subject to the option or part thereof canceled
(determined as of the option exercise date), over (ii) the aggregate option
exercise price of the shares of Common Stock subject to the option or part
thereof canceled.

2.6                                 Payment of Option Price.

(a)           Tender Due Upon Notice of Exercise.
Unless the applicable Plan agreement otherwise provides or the Committee in its
sole discretion otherwise determines, (i) any written notice of exercise
of an option shall be accompanied by payment of the full purchase price for the
shares being purchased, and (ii) the grantee shall have no right to
receive shares of Common Stock with respect to an option exercise prior to the
option exercise date.

(b)           Manner of Payment. Payment of the
option exercise price shall be made in any combination of the following:

(i)            by certified or official bank check
payable to the Company (or the equivalent thereof acceptable to the Committee);

(ii)           with the consent of the Committee in
its sole discretion, by personal check (subject to collection), which may in
the Committee’s sole discretion be deemed conditional;

(iii)          if and to the extent provided in the
applicable Plan agreement, by delivery of previously acquired shares of Common
Stock owned by the grantee for at least six months (or such other period as the
Committee may prescribe) having a fair market value (determined as of the
option exercise date) equal to the portion of the option exercise price being
paid thereby, provided that the Committee may require the grantee to furnish an
opinion of counsel acceptable to the Committee to the effect that such delivery
would not result in the grantee incurring any liability under
Section 16(b) of the Act and does not require any Consent (as defined in
Section 5.3);

(iv)          with the consent of the committee in
its sole discretion, by the promissory note and agreement of the grantee
providing for payment with interest on the unpaid balance accruing at a rate
not less than that needed to avoid the imputation of income under Code
section 7872 and upon such terms and conditions (including the security,
if any, therefor) as the Committee may determine in its sole discretion; provided,
however, no grantee who is subject to Section 402 of the Sarbanes-Oxley
Act of 2002 (the “S-O Act”) may pay pursuant to this clause (iv); or

(v)           by any other means which the
Committee, in its sole discretion, determines to be consistent with the purposes
of the Plan.

 8
 

 

(c)           Cashless Exercise.  For any grantee who is not subject to
Section 402 of the S-O Act, payment in accordance with clause (i) of
Section 2.6(b) may be deemed to be satisfied, if and to the extent
provided in the applicable Plan agreement, by delivery to the Company of an
assignment of a sufficient amount of the proceeds from the sale of Common Stock
acquired upon exercise to pay for all of the Common Stock acquired upon
exercise and an authorization to the broker or selling agent to pay that amount
to the Company, which sale shall be made at the grantee’s direction at the time
of exercise.

(d)           Issuance of Shares. As soon as
practicable after receipt of full payment, the Company shall, subject to the
provisions of Section 5.3, deliver to the grantee one or more certificates
for the shares of Common Stock so purchased, which certificates may bear such
legends as the Company may deem appropriate concerning restrictions on the
disposition of the shares in accordance with applicable securities laws, rules
and regulations or otherwise.

2.7                                 Termination of Service.

For purposes of the Plan, “termination of service”
means, in the case of an employee, the termination of the employment
relationship between the employee and the Partnership and all Affiliates; and
in the case of an individual who is not an employee, the termination of the
service relationship between the individual and the Partnership and all
Affiliates. Subject to the other provisions of the Plan and unless the
applicable Plan agreement otherwise provides:

(a)           General Rule.  All options and stock appreciation rights
granted to a grantee shall terminate upon his termination of service for any
reason (including death) except to the extent post-service exercise of the
vested portion of an option or stock appreciation right is permitted in
accordance with this Section 2.7. 
The “vested portion” of any option or stock appreciation right shall
mean the portion thereof which is exercisable immediately prior to the grantee’s
termination of service for any reason.

(b)           Improper Activity. All options and
stock appreciation rights granted to a grantee shall terminate and expire on
the day of the grantee’s termination of service for cause, whether or not the
grantee is a party to a written service contract.  For purposes of this Section 2.7, a
grantee’s service shall be deemed to be terminated for “cause” if he is
discharged (i) on account of fraud, embezzlement or other unlawful or
tortious conduct, whether or not involving or against the Partnership or any
Affiliate, (ii) for violation of a policy of the Partnership or any
Affiliate, (iii) for serious and willful acts of misconduct detrimental to
the business or reputation of the Partnership or any Affiliate or (iv) for “cause”
or any like term as defined in any written contract with the grantee.

(c)           Regular Termination; Leaves of
Absence. If the grantee’s service terminates for reasons other than as provided
in subsection (b) or (d) of this Section 2.7, the portion of options and
stock appreciation rights granted to such grantee which were exercisable
immediately prior to such termination of service may be exercised until the
earlier of (i) 30 days after his termination of service or (ii) the date
on which such options and stock appreciation rights terminate or expire in
accordance with the provisions of the Plan (other than this Section 2.7)
and the Plan agreement; provided, that the Committee may in its sole discretion
determine such other period for exercise in the case of an individual whose
service terminates solely because the 

 9
 

 

employer ceases to be an
Affiliate or the grantee transfers employment with the Partnership’s consent to
a purchaser of a business disposed of by the Partnership.  The Committee may in its sole discretion
determine (i) whether any leave of absence (including short-term or
long-term disability or medical leave) shall constitute a termination of
service for purposes of the Plan, and (ii) the impact, if any, of any such
leave on outstanding awards under the Plan. 
The Committee shall not, however, have the discretion to grant any
extension of an exercise or expiration period that would subject the grantee to
gross income inclusion, interest, or additional tax pursuant to Code
section 409A.

(d)           Death; Disability; Retirement. If a
grantee’s service terminates by reason of death, disability, or retirement at
or after age 65, the portion of options and stock appreciation rights granted
to such grantee which were exercisable immediately prior to such termination of
service may be exercised until the earlier of (i) one year after his
termination of service in the case of death or disability or three years after
his termination of service by reason of retirement, or (ii) the date on
which such options and stock appreciation rights terminate or expire in
accordance with the Plan agreement. For purposes of this Section 2.7, the
term “disability” shall mean, with respect to any grantee, a “permanent and
total disability” as defined in section 22(e)(3) of the Code.

2.8                                 Special ISO Requirements.

In order for a grantee to receive special tax
treatment with respect to stock acquired under an option intended to be an
incentive stock option, the grantee of such option must be, at all times during
the period beginning on the date of grant and ending on the day three months
before the date of exercise of such option, an employee of the Company or any
of the Company’s parent or subsidiary corporations (within the meaning of Code
section 424), or of a corporation or a parent or subsidiary corporation of such
corporation issuing or assuming a stock option in a transaction to which Code
section 424(a) applies.  The aggregate
fair market value, determined as of the date an option is granted, of the
Common Stock for which any grantee may be awarded incentive stock options which
are first exercisable by the grantee during any calendar year under the Plan
(and any other stock option plan to be taken into account under Code
section 422(d)) shall not exceed $100,000. 
If an option granted under the Plan is intended to be an incentive stock
option, and if the grantee, at the time of grant, owns stock possessing 10% or
more of the total combined voting power of all classes of stock of the grantee’s
employer corporation or of its parent or subsidiary corporation, then
(i) the option exercise price per share shall in no event be less than
110% of the fair market value of the Common Stock on the date of such grant and
(ii) such option shall not be exercisable after the expiration of five
years after the date such option is granted.

 

 10

 

ARTICLE 3

AWARDS OTHER THAN STOCK OPTIONS AND STOCK
APPRECIATION RIGHTS

3.1                                 Restricted Stock Awards.

(a)           Grant of
Awards.  The Committee may grant
restricted stock awards, alone or in tandem with other awards, under the Plan
in such amounts and subject to such terms and conditions as the Committee shall
from time to time in its sole discretion determine.  The vesting of a restricted stock award
granted under the Plan may be conditioned upon the completion of a specified
period of service with the Partnership or any Affiliate, upon the attainment of
specified Performance Goals within specified Performance Cycles, and/or upon
such other criteria as the Committee may determine in its sole discretion;
provided, however; that subject to Section 5.17, every restricted stock award
which is based on completion of a specified period of service must have a
minimum period of service of thirty-six consecutive months and any restricted
stock award which is based on the achievement of specified Performance Goals
must relate to a Performance Cycle of not less than twelve consecutive months.

(b)           Payment. Each Plan
agreement with respect to a restricted stock award shall set forth the amount
(if any) to be paid by the grantee with respect to such award. If a grantee
makes any payment for a restricted stock award which does not vest, appropriate
payment may be made to the grantee following the forfeiture of such award on
such terms and conditions as the Committee may determine.

(c)           Forfeiture Upon
Termination of Service. Unless the applicable Plan agreement otherwise provides
or the Committee otherwise determines, (i) if a grantee’s service
terminates for any reason (other than death) before all of his restricted stock
awards have vested, such unvested awards shall terminate and expire upon such
termination of service, and (ii) in the event any condition to the vesting
of restricted stock awards is not satisfied within the period of time permitted
therefor, such restricted shares shall be returned to the Partnership.  If a grantee’s service terminates by reason
of death, any unvested portion of a restricted stock award which has been
earned as a result of the attainment of applicable Performance Goals shall be
fully vested as of the awardee’s date of death.

(d)           Issuance of Shares. The
Committee may provide that one or more certificates representing restricted
stock awards shall be registered in the grantee’s name and bear an appropriate
legend specifying that such shares are not transferable and are subject to the
terms and conditions of the Plan and the applicable Plan agreement, or that
such certificate or certificates shall be held in escrow by the Partnership on
behalf of the grantee until such shares vest or are forfeited, all on such
terms and conditions as the Committee may determine. Unless the applicable Plan
agreement otherwise provides, no share of restricted stock may be assigned,
transferred, otherwise encumbered or disposed of by the grantee until such
share has vested in accordance with the terms of such award.  Subject to the provisions of Section 5.4, as
soon as practicable after any restricted stock award shall vest, the
Partnership shall issue or reissue to the grantee (or to his designated
beneficiary in the event of the grantee’s death) one or more certificates for
the Common Stock represented by such restricted stock award without such
restricted legend.

(e)           Grantees’ Rights
Regarding Restricted Stock. Unless the applicable Plan agreement otherwise
provides, (i) a grantee may vote and receive dividends on restricted stock
awarded under the Plan, and (ii) any stock received as a dividend on, or
in connection with a stock split of, a restricted stock award shall be subject
to the same restrictions as such restricted stock.

 11
 

 

3.2                                 Common Stock Awards.

The
Committee may issue awards under the Plan, payable in Common Stock, including,
but not limited to awards of Common Stock equal to dividends declared on Common
Stock, alone or in tandem with other awards, in such amounts and subject to
such terms and conditions as the Committee shall from time to time in its sole
discretion determine. Such Common Stock awards under the Plan shall relate to a
specified maximum number of shares granted as, or in payment of, a bonus, or to
provide incentives or recognize special achievements or contributions.

3.3                                 Performance Units.

(a)           Grant of Units. The
Committee may grant performance units under the Plan to acquire shares of
Common Stock in such amounts and subject to such terms and conditions as the
Committee shall from time to time in its sole discretion determine, subject to
the terms of the Plan.

(b)           Performance Units.
Each performance unit under the Plan shall relate to a specified maximum number
of shares, and shall be exchangeable for all or a portion of such shares, or
cash (or such other form of consideration as may be determined by the Committee
in its sole discretion equivalent in value thereto) in up to an amount equal to
the fair market value of an equal number of unrestricted shares, at the end of
a specified Performance Cycle as may be established by the Committee.  The number of such shares which may be
deliverable pursuant to such performance unit shall be based upon the degree of
attainment of Performance Goals over a Performance Cycle as may be established
by the Committee.  The Committee may
provide for full or partial credit, prior to completion of such Performance
Cycle or achievement of the degree of attainment of the Performance Goals
specified in connection with such performance unit, in the event of the
participant’s death, normal retirement, early retirement, or total or permanent
disability, or in such other circumstances as the  Committee may determine in its sole
discretion to be fair and equitable to the participant or in the interest of
the Partnership and its Affiliates.

ARTICLE 4

GRANTS OF RESTRICTED STOCK TO ELIGIBLE DIRECTORS

4.1                                 Grants to Eligible Directors.

Effective
May 11, 2006, each Eligible Director of the Company shall be granted
restricted stock awards in accordance with this Article 4.

4.2                                 Amount of Awards.

Each
person who serves as an Eligible Director shall receive the following awards of
restricted stock:

(a)           Initial
Election.  Each Eligible Director who is
elected or appointed a director of the Company and who has not previously
served as a director of the Company or its predecessors, shall be granted a
restricted stock award on the first day of the first calendar month 

 12
 

 

following the month in which such person first become an Eligible
Director for that number of shares of stock having a value on such date of
grant equal to $82,500.

(b)           Reelection. As of
the date of each annual meeting of the Company’s stockholders (the “Annual
Meeting”), each Eligible Director shall be granted a restricted stock award for
that number of shares of stock having a value on such date of grant equal to
$82,500 (the “Subsequent Awards”); provided, however, that if a person is
elected, appointed or otherwise becomes an Eligible Director during a period 60
days prior to the Annual Meeting in any year, then such Eligible Director will
receive no Subsequent Awards, and provided, further, that each Eligible
Director receiving Subsequent Awards must continue to serve as a director of
the Company after such Annual Meeting.

(c)           Committee
Chairs.  Each Eligible Director who is
serving as the chairperson of the Audit Committee of the Board of Directors as
of the date of the Annual Meeting shall be granted a restricted stock award for
that number of shares of stock having a value on such date of grant equal to
$10,000.  Each Eligible Director who is
serving as the chairperson of any other standing committee of the Board of
Directors as of the date of the Annual Meeting shall be granted a restricted
stock award for that number of shares of stock having a value on such date of
grant equal to $7,500.

(d)           Lead
Director.  The Eligible Director who is serving as the Lead Director of the Board
of Directors as of the date of the Annual Meeting shall be granted a restricted
stock award for that number of shares of stock having a value on such date of
grant equal to $12,500.

(e)           Valuation.  The number of shares of stock included in any
award of restricted stock under this Article 4 shall be determined by dividing
the cash value of such award by a number representing the 20 trading day average
per share closing price of the Common Stock ending on the trading day
immediately preceding the date of any such award.

4.3                                 Terms of Restricted Stock Awards.

(a)           Vesting.  Unless the 5% exception provided for in
Section 5.17 has been exceeded, each award of restricted stock under this
Article 4 shall fully vest on the first anniversary of the date of grant
of such award.  Except as provided in
Section 4.4, if an Eligible Director’s service as a director terminates before
all of his or her restricted stock awards have vested, any unvested portion of
an award shall terminate and expire upon such termination of service.  If the 5% exception provided for in Section
5.17 has been exceeded, the vesting period for subsequent grants shall increase
to the third anniversary of the date of the grant.  If an Eligible Director’s service terminates
by reason of death or disability or after an Eligible Director has served a
minimum of five annual terms as director of the Company, its predecessors or
successors, any unvested portion of a restricted stock award, may, upon
determination of the Committee or the Board of Directors of the Company and
subject to the limitations of Section 5.17, become fully vested without
completion of the minimum period of service requirement.

(b)           Grantee’s
Rights.  A grantee may vote and receive
dividends on the restricted stock awards granted hereunder.  Any stock or other property paid as a
dividend on, or in 

 13
 

 

connection with a stock split of, a restricted stock award, shall be
subject to the same restrictions that apply to such restricted stock award.

(c)           Issuance of
Shares.  One or more certificates
representing restricted stock awards shall be registered in the Eligible
Director’s name and bear an appropriate legend specifying that such shares are
not transferable and are subject to the terms and conditions of the Plan.  No shares of restricted stock may be
assigned, transferred, otherwise encumbered or disposed of by the grantee until
such award has vested and only after the underlying shares of Common Stock have
been delivered pursuant to Section 4.5 hereof.

4.4                                 Change of Control.

In the event of a Change of Control prior to the date a restricted
stock award granted under this Article 4 fully vests, all shares of
restricted stock not previously vested shall become immediately vested and
deferred pursuant to Section 4.5. 
For this purpose, a “Change of Control” shall mean (i) a merger or
consolidation of the Company with another corporation, whether or not the
Company is the surviving corporation, where there is a change in the rights,
preferences or control of outstanding shares of Common Stock by reason of such
merger or consolidation, (ii) an acquisition of all or substantially all
of the assets of the Company by another person, or (iii) a reorganization
or liquidation of the Company.

4.5                                 Deferred Delivery; Reinvestment of
Dividends.

Upon vesting, the delivery of the shares of Common Stock underlying any
restricted stock awards shall be deferred in accordance with the terms of the
Director Deferred Compensation Plan until an Eligible Director’s service as a
director of the Company terminates. 
During the deferral period, all cash dividends payable with respect to
such shares of Common Stock shall be reinvested in shares of Common Stock
pursuant to terms of the Company’s Dividend Reinvestment Plan and delivery of
any such shares shall also be deferred pursuant to the Director Deferred
Compensation Plan.

ARTICLE 5

MISCELLANEOUS

5.1                                 Amendment of the Plan; Modification of
Awards.

(a)           Plan Amendments. The
Partnership, by action of its General Partner, may, without approval of other
partners in the Partnership, at any time and from time to time suspend,
discontinue or amend the Plan in any respect whatsoever, except that no such
amendment shall impair any rights under any award theretofore made under the
Plan without the consent of the grantee of such award.  Furthermore, the General Partner shall submit
for stockholder approval any amendment (other than an amendment pursuant to the
adjustment provisions of Section 1.6) required to be submitted for stockholder
approval by law, regulation or applicable stock exchange requirements or that
otherwise would:  (i) increase the
maximum number of shares of Common Stock that may be awarded in Section 1.5(a);
(ii) extend the term of this Plan; or (iii) change the class of persons
eligible to be participants.  Any Plan
amendment shall be obtained in such a manner and to such a degree as is
required by applicable law or regulation.

 14
 

 

(b)           Award Modifications.
With the consent of the grantee and subject to the terms and conditions of the
Plan (including Section 5.1(a)), the Committee may amend outstanding Plan
agreements with such grantee, including, without limitation, any amendment
which would (i) accelerate the time or times at which an award may vest or
become exercisable but only in case of death, disability, retirement or as a
result of a Change in Control and/or (ii) extend the scheduled termination or
expiration date of the award; provided, however, that the Committee shall not
enter into any amendments of outstanding agreements that would subject the
grantee to gross income inclusion, interest, or additional tax pursuant to Code
section 409A.

5.2                                 Limitation on Exercise.

No
option or stock appreciation right shall be exercisable to the extent that such
exercise will cause the Partnership or any Affiliate to pay any amount which
would be nondeductible by the Partnership or such Affiliate by reason of Code
section 162(m).

5.3                                 Restrictions.

(a)           Consent
Requirements.  If the Committee shall at
any time determine in its sole discretion that any Consent (as hereinafter
defined) is necessary or desirable as a condition of, or in connection with,
the granting of any award under the Plan, the acquisition, issuance or purchase
of shares or other rights hereunder or the taking of any other action hereunder
(each such action being hereinafter referred to as a “Plan Action”), then such
Plan Action shall not be taken, in whole or in part, unless and until such
Consent shall have been effected or obtained to the full satisfaction of the
Committee.  Without limiting the
generality of the foregoing, if (i) the Committee may make any payment
under the Plan in cash, Common Stock or both, and (ii) the Committee
determines that Consent is necessary or desirable as a condition of, or in
connection with, payment in any one or more of such forms, then the Committee
shall be entitled to determine not to make any payment whatsoever until such
Consent has been obtained.

(b)           Consent
Defined.  The term “Consent” as used
herein with respect to any Plan Action means (i) any and all listings,
registrations or qualifications in respect thereof upon any securities exchange
or other self-regulatory organization or under any federal, state or local law,
rule or regulation, (ii) the expiration, elimination or satisfaction of
any prohibitions, restrictions or limitations under any federal, state or local
law, rule or regulation or the rules of any securities exchange or other
self-regulatory organization, (iii) any and all written agreements and
representations by the grantee with respect to the disposition of shares, or
with respect to any other matter, which the Committee shall deem necessary or
desirable to comply with the terms of any such listing, registration or
qualification or to obtain an exemption from the requirement that any such
listing, qualification or registration be made, and (iv) any and all
consents, clearances and approvals in respect of a Plan Action by any
governmental or other regulatory bodies or any parties to any loan agreements
or other contractual obligations of the Partnership or any Affiliate.

5.4                                 Nontransferability.

Except
as expressly authorized by the Committee in the Plan agreement, no award
granted to any grantee under the Plan shall be assignable or transferable by
the grantee other than by will or by the laws of 

 15
 

 

descent and distribution and during the lifetime
of the grantee, all rights with respect to any option or stock appreciation
right granted to the grantee under the Plan shall be exercisable only by the
grantee.

5.5                                 Withholding Taxes.

(a)           Whenever under the
Plan shares of Common Stock are to be delivered pursuant to an award, the
Committee may require as a condition of delivery that the grantee remit an
amount sufficient to satisfy all federal, state and other governmental
withholding tax requirements related thereto. 
Whenever cash is to be paid under the Plan (whether upon the exercise of
stock appreciation right or otherwise), the Partnership may, as a condition of
its payment, deduct therefrom, or from any salary or other payments due to the
grantee, an amount sufficient to satisfy all federal, state and other
governmental withholding tax requirements related thereto or to the delivery of
any shares of Common Stock under the Plan.

(b)           Without limiting the
generality of the foregoing, (i) a grantee may elect to satisfy all or
part of the foregoing withholding requirements by delivery of unrestricted
shares of Common Stock owned by the grantee for at least six months (or such
other period as the Committee may determine in its sole discretion) having a
fair market value (determined as of the date of such delivery by the grantee)
equal to all or part of the amount to be so withheld, provided that the
Committee may require, as a condition of accepting any such delivery, the
grantee to furnish an opinion of counsel acceptable to the Committee to the
effect that such delivery would not result in the grantee incurring any
liability under Section 16(b) of the Act; and (ii) the Committee may
permit any such delivery to be made by withholding shares of Common Stock from
the shares otherwise issuable pursuant to the award giving rise to the tax
withholding obligation (in which event the date of delivery shall be deemed the
date such award was exercised).

5.6                                 Adjustments Upon Changes in
Capitalization.

If
and to the extent specified by the Committee, the number of shares of Common
Stock which may be issued pursuant to awards under the Plan, the number of
shares of Common Stock subject to awards, the option exercise price and
appreciation base of options and stock appreciation rights theretofore granted
under the Plan, and the amount payable by a grantee in respect of an award,
shall be appropriately adjusted (as the Committee may determine) for any change
in the number of issued shares of Common Stock resulting from the subdivision
or combination of shares of Common Stock or other capital adjustments, or the
payment of a stock dividend after the effective date of the Plan, or other
change in such shares of Common Stock effected without receipt of consideration
by the Company; provided that any awards covering fractional shares of Common
Stock resulting from any such adjustment shall be eliminated and provided
further, that each incentive stock option granted under the Plan shall not be
adjusted in a manner that causes such option to fail to continue to qualify as
an “incentive stock option” within the meaning of Code section 422. Adjustments
under this Section shall be made by the Committee, whose determination as to
what adjustments shall be made, and the extent thereof, shall be final, binding
and conclusive.

 16
 

 

5.7                                 Right of Discharge Reserved.

Nothing
in the Plan or in any Plan agreement shall confer upon any person the right to
continue in the service of the Partnership or any Affiliate or affect any right
which the Partnership or any Affiliate may have to terminate the service of
such person.

5.8                                 No Rights as a Stockholder.

No
grantee or other person shall have any of the rights of a stockholder of the
Company with respect to shares subject to an award until the issuance of a
stock certificate to him for such shares. Except as otherwise provided in
Section 5.6, no adjustment shall be made for dividends, distributions or other
rights (whether ordinary or extraordinary, and whether in cash, securities or
other property) for which the record date is prior to the date such stock
certificate is issued. In the case of a grantee of an award which has not yet
vested, the grantee shall have the rights of a stockholder of the Company if
and only to the extent provided in the applicable Plan agreement.

5.9                                 Nature of Payments.

(a)           Any and all awards
or payments hereunder shall be granted, issued, delivered or paid, as the case
may be, in consideration of services performed for the Partnership or its
Affiliates by the grantee.

(b)           No such awards and
payments shall be considered special incentive payments to the grantee or,
unless otherwise determined by the Committee, be taken into account in
computing the grantee’s salary or compensation for the purposes of determining
any benefits under (i) any pension, retirement, life insurance or other
benefit plan of the Partnership or any Affiliate or (ii) any agreement
between the Partnership or any Affiliate and the grantee.

(c)           By accepting an
award under the Plan, the grantee shall thereby waive any claim to continued
exercise or vesting of an award or to damages or severance entitlement related
to non-continuation of the award beyond the period provided herein or in the
applicable Plan agreement, notwithstanding any contrary provision in any
written contract with the grantee, whether any such contract is executed before
or after the grant date of the award.

5.10                           Non-Uniform Determinations.

The
Committee’s determinations under the Plan need not be uniform and may be made
by it selectively among persons who receive, or are eligible to receive, awards
under the Plan (whether or not such persons are similarly situated). Without
limiting the generality of the foregoing, the Committee shall be entitled,
among other things, to make non-uniform and selective determinations, and to
enter into non-uniform and selective Plan agreements, as to (a) the
persons to receive awards under the Plan, (b) the terms and provisions of
awards under the Plan, (c) the exercise by the Committee of its discretion
in respect of the exercise of stock appreciation rights pursuant to the terms
of the Plan, and (d) the treatment of leaves of absence pursuant to
Section 2.7(c).

 17
 

 

5.11                           Other Payments or Awards.

Nothing
contained in the Plan shall be deemed in any way to limit or restrict the
Partnership, any Affiliate or the Committee from making any award or payment to
any person under any other plan, arrangement or understanding, whether now
existing or hereafter in effect.

5.12                           Reorganization.

(a)           In the event that
the Company is merged or consolidated with another corporation and, whether or
not the Company shall be the surviving corporation, there shall be any change
in the shares of Common Stock by reason of such merger or consolidation, or in
the event that all or substantially all of the assets of the Company are
acquired by another person, or in the event of a reorganization or liquidation
of the Company (each such event being hereinafter referred to as a “Reorganization
Event”) or in the event that the Board of Directors of the Company (the “Board”)
shall propose that the Company enter into a Reorganization Event, then the
Committee may in its sole discretion, by written notice to a grantee, provide
that his options and stock appreciation rights will be terminated unless
exercised within 30 days (or such longer period as the committee shall
determine in its sole discretion) after the date of such notice; provided that
if the Committee takes such action the Committee also shall accelerate the
dates upon which all outstanding options and stock appreciation rights of such
grantee shall be exercisable.  The
Committee also may in its sole discretion by written notice to a grantee
provide that all or some of the restrictions on any of his awards may lapse in
the event of a Reorganization Event upon such terms and conditions as the
Committee may determine.

(b)           Whenever deemed
appropriate by the Committee, the actions referred to in Section 5.12(a)
may be made conditional upon the consummation of the applicable Reorganization
Event.

5.13                           Section Headings.

The
section headings contained herein are for the purposes of convenience only and
are not intended to define or limit the contents of said sections.

5.14                           Term of Plan.

This Plan shall
terminate on September 24, 2008 and no awards shall thereafter be made
under the Plan.  Notwithstanding the
foregoing, all awards made under the Plan prior to such termination date shall
remain in effect until such awards have been satisfied or terminated in
accordance with the terms and provisions of the Plan and the applicable Plan
agreement.

5.15                           Governing Law.

THE
PLAN SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.

 18
 

 

5.16                           Repricing of
Options.

Nothing in this Plan
shall permit the repricing of any outstanding options other than (a) with the
prior approval of the Company’s stockholders, or (b) pursuant to Section
5.6.  The foregoing restriction shall
also apply to any other transaction which would be treated as a repricing of
outstanding options under generally accepted accounting principles.

5.17                           Exception
to Certain Limitations.

Notwithstanding the limitations contained in the
proviso to the second sentence of Section 3.1(a) concerning minimum periods of
service for vesting or minimum periods for Performance Cycles and the
provisions of Section 4.3(a) which permit the Company or the Board to reduce
the three-year vesting period if grantee dies or becomes disabled, restricted
stock awards may be made with vesting periods based on service periods of less
than thirty-six consecutive months or Performance Cycles of less than twelve
consecutive months as long as the aggregate number of shares subject to such
shorter periods does not exceed five percent of the maximum number of shares
set forth in Section 1.5(a).

5.18                           Code
Section 409A.

(a)           If as of the date his employment
terminates, a grantee is a “key employee” within the meaning of Code
section 416(i), without regard to paragraph 416(i)(5) thereof, and if
the Company has stock that is publicly traded on an established securities
market or otherwise, any deferred compensation payments otherwise payable under
this Plan because of his termination of service (for reasons other than death
or disability) will be suspended until, and will be paid to the grantee on, the
first day of the seventh month following the month in which the grantee’s last
day of employment occurs.  For purposes
of this Plan, “deferred compensation” means compensation provided under a
nonqualified deferred compensation plan as defined in, and subject to, Code
section 409A.

(b)           The Plan and any award agreements
shall be interpreted and applied in a manner consistent with the applicable standards
for nonqualified deferred compensation plans established by Code
section 409A and its interpretive regulations and other regulatory
guidance.  To the extent that any terms
of the Plan or an award agreement would subject the grantee to gross income
inclusion, interest, or additional tax pursuant to Code section 409A, those
terms are to that extent superseded by, and shall be adjusted to the minimum
extent necessary to satisfy, the applicable Code section 409A standards.

 

 19Exhibit 10.1

SEVERANCE
PAY AGREEMENT

This Agreement is made this            
day of December 2005, by and between Eschelon Telecom, Inc., a Delaware
corporation, and its affiliates and subsidiaries (the “Company”) and                                             
(the “Executive”).

Whereas
the Executive is the                                                                  (Title)
as of the date of this Agreement; and

Whereas
the Company desires to retain the Executive in its employ; and

Whereas
the Company believes that it is essential to preserve and maintain the
stability and continuity of management of the Company by providing the
Executive with economic security in light of the significant uncertainties in
the telecommunications industry;

Now
therefore, in consideration of the foregoing and of the mutual promises of the
parties hereto, the Company and the Executive agree as follows:

1).                                   Eligibility for Severance Pay.  The
Executive shall be eligible to receive severance benefits as described in paragraph
3, if:

a).                                   the Executive’s employment with the Company and any
of its subsidiaries or affiliates is terminated; and

b).                                  the Executive’s termination of employment was not:

(i)                         on
account of the Executive’s death;

(ii)                      on
account of a physical or mental condition that entitles the Executive to
benefits under any long-term disability plan maintained by the Company or any
of its affiliates or subsidiaries, as then in effect;

(iii)                   for
conduct involving willful misconduct (such as commission by the Executive of a
felony or a common law fraud against the Company) which is detrimental in a
significant way to the business of the Company or any of its subsidiaries; or

(iv)                  on
account of the Executive’s voluntary resignation; provided that a resignation
shall not be considered to be voluntary for the purposes of this Agreement if
it occurs subsequent to a Change of Control as defined in section 2) below, or
if subsequent to a change in control there has been:  (1) a reduction in the Executive’s base
compensation in effect immediately preceding the Change in Control ; (2) a
change in the place in which the Executive is required to perform his or her
duties, if the new place is more than 50 miles from the place Executive
performed his or her services immediately prior to the Change in Control.

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2)              Change
in Control.  For the purposes of this Agreement, a “Change
in Control” shall be deemed to have occurred if:

(a)          there occurs
any sale or other disposition to a person unrelated to the Company or any of
the holders of its securities of (I) representing after sale or disposition,
more than 50% of the outstanding voting securities of the Company as measured
by voting power on an as if converted basis or (ii) more than 50% of the
aggregate assets of the Company and its subsidiaries, in the single transaction
or series of transactions; or

(b)         the Company
or any combination of the Company and its subsidiaries aggregating more than
fifty percent (50%) of the consolidated assets of the Company and its
wholly-owned subsidiaries becomes a party to any merger or consolidation
(excluding a merger or consolidation where the Company or one of such
subsidiaries is the surviving corporation).

3)              Severance
Benefits.  Notwithstanding the termination of employment
as an executive of the Company, the Executive shall continue on the Company’s
payroll as an employee for a period of one year (the “Benefit Period”) so long
as the Executive meets the requirements of section 4) below.  During that year, the Company shall continue
to pay the Executive’s then current salary and shall provide benefits on the
same terms and conditions as the Company pays salary and provides benefits to
its then current executives.  Such
benefits include but are not limited to health care, dental, 401(k), life
insurance, group life insurance, disability, and health club reimbursement.

4)              Cooperation.  During the
Benefit Period, the Executive must:  (a)
honor the terms of any non-compete, non-solicitation, non-disclosure and any
other agreement the Executive has with the Company; and (b) cooperate in the
transfer of the Executive’s responsibilities to others.

5)              Rights
in Event of Dispute.  If a claim or dispute arises concerning the
rights of the Executive or a beneficiary to benefits under this Agreement, the
prevailing party in such dispute shall be entitled to recover its costs,
including reasonable attorneys’ fees.

6)              Amendment.  This
Agreement may not be amended or modified except by a written instrument signed
by both parties.

7)              Successors.  The Company
will require any successor (whether direct or indirect, by purchase, merger,
consolidation, or otherwise) to all or substantially all of the business or
assets of the Company, to expressly assume and agree to perform the Company’s
obligations under this Agreement 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 unless, in the opinion of legal counsel mutually acceptable to the
Company and the Executive, such obligations have been assumed by the successor
as 

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a matter of law.  Failure of the Company to obtain such
agreement prior to the effectiveness of any such succession (unless the
foregoing opinion is rendered to the Executive) shall entitle the Executive to
resign from his or her position and to receive the benefits set out in section
3) above.  As used in this Agreement, “Company”
shall mean the Company, as presently constituted, and any successor to its
business and/or assets which executes and delivers the agreement provided for
in this section 7) or which otherwise becomes bound by all the terms and
provisions of this Agreement as a matter of law.  The Executive’s right under this Agreement
shall inure to the benefit of, and shall be enforceable by, the Executive’s
legal representative or other successors in interest, but shall not otherwise
be assignable or transferable.

8)              Waiver.  Any waiver
of any breach of any of the provisions of this Agreement shall not operate as a
waiver of any other breach of such provisions or any other provisions, nor
shall any failure to enforce any provision of this Agreement operate as a
waiver of any party’s right to enforce such provision or any other provision.

9)              Severability.  If any
provision, or the application of any provision, of this Agreement is held
invalid or unenforceable by a court of competent jurisdiction, the invalidity
or unenforceability thereof shall not affect any other provisions or
applications of this Agreement which can be given effect without the invalid or
unenforceable provision or application.

10)        Governing
Law.  The validity, interpretation, construction,
and performance of this Agreement shall be governed by the laws of the State of
Minnesota.

The
parties hereto have executed this Agreement as of the day and year written above.

	
  Company:

  	
  Eschelon Telecom, Inc.

  
	
   

  	
   

  
	
   

  	
  By 

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Richard A. Smith, CEO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Executive:

  	
   

  	
   

  	
   

  

 

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