Document:

exv10w02

 

Exhibit 10.02

2005 CRESCENT REAL ESTATE EQUITIES LIMITED PARTNERSHIP LONG-TERM

INCENTIVE PLAN

ARTICLE I

THE PLAN

     1.1 Name. This plan shall be known as the “2005 Crescent Real Estate Equities Limited
Partnership Long-Term Incentive Plan.”

     1.2 Purpose. The purpose of the 2005 Plan is to promote the growth and general prosperity of
the Partnership by permitting the Partnership to grant to Officers Awards of Partnership Units and
associated Partnership Interests that qualify as profits interests under the Code.

     1.3 Effective Date. The Plan shall become effective upon the Effective Date.

     1.4 Eligibility to Participate. Any Officer shall be eligible to participate in the 2005
Plan.

     1.5 Number of Partnership Units Subject to Awards. Subject to adjustment pursuant to the
provisions of Section 4.2, and subject to any additional restrictions elsewhere in the 2005 Plan,
the maximum aggregate number of Partnership Units that may be granted from time to time under the
2005 Plan shall be 1,275,000 (2,550,000 Common Share equivalents). If unvested Partnership Units
granted under the 2005 Plan are forfeited, cancelled or reacquired by the Partnership, those
Partnership Units shall again be available for grant under the 2005 Plan.

     1.6 Reservation of Shares. During the term of the 2005 Plan, Crescent Equities shall at all
times reserve and keep available such number of Common Shares as may be necessary to satisfy the
requirements of the 2005 Plan and the number of Partnership Units granted hereunder. In addition,
Crescent Equities shall from time to time, as is necessary to accomplish the purposes of the 2005
Plan, use its best efforts to obtain from any regulatory agency having jurisdiction any requisite
authority necessary to issue Common Shares upon the exercise of Exchange Rights related to
Partnership Interests granted hereunder. The inability of Crescent Equities to obtain from any
regulatory agency having jurisdiction the authority deemed by Crescent Equities’ counsel to be
necessary for the lawful issuance of any Common Shares shall relieve Crescent Equities of any
liability in respect of the nonissuance of Common Shares as to which the requisite authority has
not been obtained.

     1.7 Tax Withholding. Grants of Awards under the 2005 Plan are subject to the condition that
if at any time the General Partner determines, in its discretion, that the satisfaction of
withholding tax or other withholding liabilities under any federal, state or local law is necessary
or desirable as a condition of, or in connection with such issuances, then the issuances shall not
be effective unless the withholding has been effected or obtained in a manner acceptable to the
General Partner.

     1.8 Effect on Employment. Nothing in the 2005 Plan or in any Award granted hereunder shall
confer upon any Participant any right to continued employment by the Partnership, the General
Partner, Crescent Equities or any of their subsidiaries or limit in any way the right of

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the Partnership, the General Partner, Crescent Equities or any subsidiary at any time to
terminate or alter the terms of that employment.

ARTICLE II

ADMINISTRATION

     2.1 In General. The Plan and Awards granted under the 2005 Plan shall be administered by the
Compensation Committee as set forth in the Grant Agreements.

     2.2 Eligibility. Subject to the other provisions of the 2005 Plan, the General Partner shall
have the sole discretion and authority to determine from time to time, taking into account
recommendations from the Compensation Committee, the Officers to whom Awards shall be granted and
the number of Partnership Units subject to each Award.

     2.3 Grants After Effective Date. The General Partner’s discretion and authority to make
grants (with the same vesting schedule and other terms as set forth in the attached model Grant
Agreements) shall continue until the termination of the 2005 Plan; provided, however, that in the
case of Awards other than the initial Awards granted under the 2005 Plan, the Compensation
Committee shall have the right to approve the recipients of such grants in its discretion.

     2.4 Discretion with Respect to Certain Transactions. The Compensation Committee shall have at
all times the discretionary authority, in the event of an actual or threatened Change in Control of
Company (as defined in the model Grant Agreement attached hereto as Exhibit A) to direct the
General Partner to (i) accelerate the vesting of all or a portion of the Award, (ii) waive any
conditions or restrictions applicable to any Award, or (iii) repurchase the unvested portion of any
Award for an amount not less than (x) the taxes paid by the Participant on the Participant’s share
of the Partnership’s income reduced by (y) the amount, if any, of prior distributions with respect
to such unvested portion.

ARTICLE III

AWARDS

     3.1 Terms and Conditions. The terms and conditions of each Award granted under the 2005 Plan
shall be set forth in a written Grant Agreement, which generally shall be in the form of the model
Grant Agreement attached hereto as Exhibit A.

     3.2 Disclaimers. A Participant may disclaim all or any portion of the unvested portion of the
Award, in which case the Award or such portion of the Award shall be treated the same as if it had
been forfeited.

ARTICLE IV

TERMINATION, AMENDMENT AND ADJUSTMENT

     4.1 Termination and Amendment. The Plan shall terminate at 6:00 p.m., Fort Worth, Texas time,
on June 30, 2010. No Awards shall be granted under the 2005 Plan after that date of termination,
although Awards granted prior to such date, to the extent they are vested, shall remain outstanding
in accordance with their terms. Subject to the provisions of the 2005 Plan and the applicable
Grant Agreement, the General Partner shall have the sole discretion and

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authority to modify or amend the 2005 Plan and any outstanding Grant Agreement; provided,
however, that the Grant Agreement (and the 2005 Plan to the extent that the amendment affects the
Grant Agreement) may be amended only by an instrument in writing signed by both the Partnership and
the Participant.

     4.2 Adjustment. If the outstanding Common Shares are increased, decreased, changed into or
exchanged for a different number or kind of shares or securities through merger, consolidation,
combination, exchange of shares, other reorganization, recapitalization, reclassification, stock
dividend, stock split or reverse stock split, an appropriate and proportionate adjustment shall be
made to the Exchange Rights provided under the Awards granted hereunder in accordance with the
Partnership Agreement and in the number of Partnership Units that may be granted under the 2005
Plan.

ARTICLE V

MISCELLANEOUS

     5.1 Other Compensation Plans. The adoption of the 2005 Plan shall not affect any other
incentive or other compensation plans in effect for the Partnership, the General Partner or
Crescent Equities, nor shall the 2005 Plan preclude Crescent Equities, the General Partner or the
Partnership, or any of their respective subsidiaries, from establishing any other forms of
incentive or other compensation.

     5.2 Plan Binding on Successors. The Plan shall be binding upon the successors and assigns of
the Partnership and the General Partner.

     5.3 Number and Gender. Whenever used herein, nouns in the singular shall include the plural
where appropriate, and the masculine pronoun shall include the feminine gender.

     5.4 Headings. Headings of articles and sections hereof are inserted for convenience of
reference and constitute no part of the 2005 Plan.

ARTICLE VI

DEFINITIONS

     As used herein with initial capital letters, the following terms have the meanings set forth
unless the context clearly indicates to the contrary. All capitalized terms used but not defined
herein shall have the meanings ascribed to those terms in the Partnership Agreement.

     6.1 “2005 Plan” means this 2005 Crescent Real Estate Equities Limited Partnership Long-Term
Incentive Plan, as amended from time to time.

     6.2 “Award” means a grant of Partnership Units and an associated Partnership Interest.

     6.3 “Code” means the Internal Revenue Code of 1986, as amended.

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     6.4 “Compensation Committee” means the Compensation Committee of the General Partner or, if
requested by the General Partner as to any particular act or determination, the Executive
Compensation Committee of the Board of Trust Managers of Crescent Equities.

     6.5 “Common Shares” means REIT Shares or, in the event that the outstanding REIT Shares are
hereafter changed into or exchanged for shares of a different stock or security of Crescent
Equities or some other corporation, such other stock or security.

     6.6 “Crescent Equities” means Crescent Real Estate Equities Company, a Texas real estate
investment trust, or any successor thereto.

     6.7 “Effective Date” means May 16, 2005.

     6.8 “Officer” means an officer of Crescent Equities or of the General Partner.

     6.9 “Participant” means an Officer to whom an Award has been granted hereunder.

     6.10 “Partnership” means Crescent Real Estate Equities Limited Partnership, a Delaware limited
partnership.

     6.11 “Partnership Agreement” means the Third Amended and Restated Agreement of Limited
Partnership of Crescent Real Estate Limited Partnership (as the same has been and in the future may
be amended and/or restated).

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EXHIBIT A

CRESCENT REAL ESTATE EQUITIES

LIMITED PARTNERSHIP

GRANT AGREEMENT

FOR

PARTNERSHIP UNITS AND

PARTNERSHIP INTEREST

 

[NAME OF OFFICER]

 

Effective as of

[DATE OF GRANT]

 

 

CRESCENT REAL ESTATE EQUITIES LIMITED PARTNERSHIP

GRANT AGREEMENT

     This Grant Agreement (this “Grant Agreement”) is being made and entered into effective as of
[DATE OF GRANT] (the “Grant Date”), by and between Crescent Real Estate Equities Limited
Partnership, a Delaware limited partnership (the “Partnership”), and [NAME OF OFFICER] (“Grantee”).

RECITALS

     Grantee is a valued officer of Crescent Real Estate Equities, Ltd. (the “General Partner”),
the sole general partner of the Partnership, or of Crescent Real Estate Equities Company (“Crescent
Equities”), the sole stockholder of the General Partner and owner of a majority of the limited
partner interests in the Partnership, and in that capacity provides services to the Partnership.

     Section 4.7.D of the Third Amended and Restated Agreement of Limited Partnership of Crescent
Real Estate Equities Limited Partnership (as the same has been or in the future may be amended
and/or restated, the “Partnership Agreement”), authorizes the General Partner to adopt incentive
compensation plans, including plans granting “Partnership Interests” and “Partnership Units” (as
defined therein) for the benefit of employees, agents or consultants of any member of the Crescent
Group (as defined therein) or the Partnership in respect of services performed, directly or
indirectly, for the Crescent Group or the Partnership, upon such terms and conditions as might be
deemed necessary or appropriate by the General Partner.

     The General Partner has adopted the 2005 Crescent Real Estate Equities Limited Partnership
Long-Term Incentive Plan (the “Plan”) pursuant to Section 4.7.D of the Partnership Agreement
authorizing the grant of Partnership Interests and Partnership Units subject to certain conditions.
The General Partner believes that the Plan and this Grant Agreement come within the scope of that
authorization.

     To reward Grantee for services he has rendered in the past and to induce Grantee to continue
his involvement with, and enthusiastic and productive efforts for, the benefit of Crescent
Equities, the General Partner and the Partnership, the General Partner has directed, that Grantee
be issued a Partnership Interest and Partnership Units pursuant to the Plan and on the terms and
subject to the conditions set forth in this Grant Agreement.

     All capitalized terms used in this Grant Agreement but not defined herein have the meanings
ascribed to those terms in the Partnership Agreement or the Plan.

AGREEMENT

     In consideration of the foregoing recitals and mutual promises and covenants made herein, the
parties hereby agree as follows:

     1. Grant of Partnership Interest and Partnership Units. Subject to the terms and conditions
hereof, pursuant to Section 4.7.D of the Partnership Agreement
and the Plan, the Part-

 

 

nership awards and grants to Grantee ___Partnership Units and an associated
Partnership Interest (together, the “Award”). The amount of the Partnership Interest for the Award
shall be calculated in accordance with the provisions of the Partnership Agreement.

     2. Vesting.

     (a) Stock Price Performance Targets. The Award shall vest in increments equal
to 20% of the overall Award (each such increment being a “Tranche”) when the trailing forty
(40) trading-day average of the last sale price of Common Shares, as reported on the New
York Stock Exchange, reaches each of the levels set forth below:

	 	 	 
	Trailing 40-
	Trading Day
	Average Sale Price
	$21.00
	$22.50
	$24.00
	$25.50
	$27.00

Vesting prices are subject to appropriate adjustments, to be determined by the General
Partner in its good faith, reasonable discretion, for events such as stock splits and stock
dividends.

If (i) Crescent Equities enters into, or the shareholders of Crescent Equities approve
Crescent Equities’ entry into, an agreement to dispose of all or substantially all of the
assets of Crescent Equities by means of a sale, merger or other reorganization, or (ii) the
shareholders receive a tender offer for at least 15% of the Common Shares, the price per
share to be paid pursuant to such agreement or tender offer (as determined by the General
Partner in good faith either (A) based on the overall value of the transaction or (B) if
applicable, using the value attributed to Common Shares in the context of the transaction)
shall be treated as the trailing forty (40) trading-day average last sale price per share of
Common Shares on the date that the agreement becomes effective or the tender offer
commences.

     (b) Annual Performance Targets. In addition, the General Partner may, but
shall not be obligated to, establish one or more objective annual performance targets for
Crescent Equities for any fiscal year within 90 days following beginning of each year. As
soon as possible after the end of the fiscal year, the Compensation Committee will determine
in good faith whether such targets were achieved or surpassed. In the event that any such
target is achieved or surpassed, then an additional Tranche of the Award shall vest with
respect to such fiscal year, with such vesting being effective as of the last day of such
fiscal year.

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Except as specifically provided in this Section 2 or below or in the Partnership Agreement,
the fact that the Award is not vested shall have no effect on Grantee’s rights and
obligations under the Partnership Agreement.

     (c) Effect of Certain Transactions. Any portion of the Award that is not
already vested shall become fully vested:

     (i) in the event of a Company Capital Transaction unless (A) there is a
surviving entity and (B) Grantee receives Exchange Rights in the surviving entity
and rights to distributions upon vesting and special tax loss allocations on
expiration or forfeiture with respect to the Award on substantially the same terms
and conditions as contained in this Grant Agreement, the current Plan, and the
current Partnership Agreement (with appropriate adjustments to reflect the
transaction, provided that that they do not reduce the value of the Exchange Rights
or Grantee’s right to distributions upon vesting); or

     (ii) in the event of a Partnership Capital Transaction unless (A) there is a
surviving entity and (B) the surviving entity provides or agrees to provide a
replacement award that contains tax allocation, book-up and other provisions
enabling Grantee to obtain Exchange Rights, distributions upon vesting, and special
tax loss allocations on expiration or forfeiture, with respect to the Award on
substantially the same terms and conditions as contained in this Grant Agreement,
the current Plan, and the current Partnership Agreement (with appropriate
adjustments to reflect the transaction, provided that that they do not reduce the
value of the Exchange Rights or Grantee’s right to distributions upon vesting).

     3. Term of Award. The unvested portion of the Award shall expire at 6:00 p.m., Fort Worth,
Texas time, on June 30, 2010 or at such earlier time, if any, as Grantee is no longer an officer of
the General Partner or Crescent Equities, and Grantee shall have no further rights under such
unvested portion after that date. Grantee shall not be treated as having terminated employment
with the General Partner for this purpose if such termination

     (a) occurs because of Grantee’s death or Disability, provided that the unvested portion
of the Award shall then expire at 6:00 pm on the Applicable Anniversary of the date of death
or the date of Grantee’s first absence as a result of incapacity due to mental or physical
illness or injury giving rise to the determination of Disability; or

     (b) occurs upon or within twelve (12) months following a Change in Control, Change in
Management, Company Capital Transaction, or Partnership Capital Transaction, and is without
Just Cause and either (i) involuntary on the part of Grantee or (ii) voluntary on the part
of Grantee but with Good Reason; provided that no Company Capital Transaction or Partnership
Capital Transaction shall be deemed to have occurred for this purpose on account of any
agreement of merger or other reorganization when the shareholders of Crescent Equities
immediately before the consummation of the transaction will own at least fifty percent (50%)
of the total combined voting power of all classes

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of stock entitled to vote of the surviving entity immediately after the consummation of
the transaction.

     4. Compliance with Securities Laws. No portion of the Award shall be granted unless the grant
complies with all relevant provisions of federal and state law, including without limitation the
Securities Act of 1933, as amended, the rules and regulations promulgated thereunder and the
requirements of any stock exchange upon which the Shares might then be listed, and shall be further
subject to the approval of counsel for Crescent Equities with respect to such compliance. The
General Partner may also require Grantee to furnish evidence satisfactory to the General Partner
and Crescent Equities, including, without limitation, a written and signed representation letter
and consent to be bound by any transfer restrictions imposed by law, legend, condition or
otherwise, and a representation that the Partnership Interest and Partnership Units that comprise
the Award are being acquired only for investment and without any present intention to sell or
distribute them in violation of any federal or state law, rule or regulation. Further, Grantee
hereby consents to the imposition of a legend on any certificate representing the Partnership
Interest and Partnership Units and any Common Shares issued upon the exchange therefore restricting
their transferability as required by law, the Partnership Agreement, the constitutive documents of
Crescent Equities or this Section 4.

     5. Compliance with Partnership Agreement. The Partnership Interest and Partnership Units that
comprise the Award are governed by, and subject to each of the terms and conditions of, the
Partnership Agreement. Upon the grant of the Award, Grantee shall be admitted to the Partnership
in accordance with the terms of the Partnership Agreement and the procedures established by the
General Partner. Grantee accepts and agrees to be bound by all of the terms and conditions of the
Partnership Agreement, including, without limitation, the power of attorney granted in Section 2.4
of the Partnership Agreement.

     6. Transferability. No portion of the Award shall be transferable other than by will or by
the laws of descent and distribution, even if such transfer is otherwise permitted by Article 11 of
the Partnership Agreement. However, beginning two (2) years after the Grant Date, Grantee, with
the approval of the General Partner, may transfer all or a portion of an Award for no consideration
to or for the benefit of Grantee’s Immediate Family (including, without limitation, to a trust for
the benefit of Grantee’s Immediate Family or to a partnership or limited liability company for one
or more members of Grantee’s Immediate Family), subject to such limits as the General Partner may
establish, and the transferee shall remain subject to all the terms and conditions applicable to
the Award before such transfer. If the original Grantee ceases to be an officer of the General
Partner or Crescent Equities, the Award in the hands of the transferee shall be subject to the same
treatment as if it were still held by the original Grantee. The term “Immediate Family” shall mean
Grantee’s spouse, parents, children, stepchildren, adoptive relationships, sisters, brothers and
grandchildren (and, for this purpose, shall also include Grantee). The General Partner may
withhold its approval only if it determines, in its discretion, that permitting the transfer could
create or contribute to a risk of adverse tax or similar consequences for the Partnership,
including but not limited to a risk that the Partnership will be treated as a publicly-traded
partnership within the meaning of the Internal Revenue Code (the “Code”).

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     7. Application of Certain Provisions in Partnership Agreement.

     (a) Exchange Rights. The Exchange Rights associated with the Award shall be
determined under the Partnership Agreement in the same manner as they are determined with
respect to other Partnership Interests; provided, however, that (i) Grantee may not exercise
the Exchange Rights until two (2) years after the Grant Date, (ii) Grantee may not exercise
the Exchange Rights unless and until, as a result of one or more book-up events after the
Grant Date or otherwise, the portion of Grantee’s Capital Account associated with the vested
portion of the Award (relative to the size of the Partnership Interest associated with such
vested portion) is at least equal to the Capital Account of Crescent Equities (relative to
the size of its Partnership Interest) (the date on which such Capital Account equivalence is
achieved referred to hereinafter as the “Capital Account Equivalence Date”), and (iii)
Grantee may not exercise the Exchange Rights with respect to any unvested portion of the
Award. In addition, the Partnership Units shall be exchangeable solely for cash (and
Crescent Equities may not refuse to accept the Notice of Exchange under Section 8.6.B. of
the Partnership Agreement) unless and until all of the following have occurred:

	 	(A)	 	the obtaining of approval from the shareholders of Crescent
Equities of the Exchange Rights associated with the Award;
	 
	 	(B)	 	the admission of the Common Shares to listing on all stock
exchanges on which Common Shares are then listed, unless the General Partner
determines in its sole discretion that such listing is neither necessary nor
advisable;
	 
	 	(C)	 	the completion of any registration or other qualification of
the sale of the Common Shares under any federal or state law or under the
rulings or regulations of the Securities and Exchange Commission or any other
governmental regulatory body that the General Partner in its sole discretion
deems necessary or advisable; and
	 
	 	(D)	 	the obtaining of any approval or other clearance from any
federal or state governmental agency that the General Partner in its sole
discretion determines to be necessary or advisable.

As soon as practicable after the date of approval of the Exchange Rights by the shareholders
of Crescent Equities, the General Partner shall, at its own expense, cause the sale of the
Common Shares to be registered under applicable federal and state laws. No exchange for
cash may occur until at least six (6) months after the date that the portion of the Award to
which it applies becomes vested.

     (b) Transactions Described in Section 11.2B of the Partnership Agreement. If a
transaction described in Section 11.2B(1) of the Partnership Agreement occurs before the
Capital Account Equivalence Date, the consideration paid in such transaction to Grantee with
respect to the Award shall be limited to the amount that Grantee
would re-

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ceive if the Partnership (i) sold its assets at a value determined by the General
Partner in good faith either (A) based on the overall value of such transaction, taking into
account any allocations that occur in connection with such transaction or that would occur
in connection with such transaction if the assets of the Partnership were sold at the price
paid or to be paid in such transaction or (B) if applicable, using the value attributed to
the Partnership Interest and Units in the context of such transaction, and (ii) immediately
thereafter distributed the proceeds in liquidation under Section 13.2 of the Partnership
Agreement. If a transaction described in Section 11.2B(2) of the Partnership Agreement
occurs before the Capital Account Equivalence Date, the General Partner will use
commercially reasonable best efforts to enter into an agreement with the successor entity
that will contain tax allocation, book-up and other provisions enabling Grantee to obtain
Exchange Rights, distributions upon vesting, and special tax loss allocations on expiration
or forfeiture with respect to the Award on substantially the same terms and conditions as
contained in this Grant Agreement, the Plan, and the Partnership Agreement (with appropriate
adjustments to reflect the transaction provided that that they do not reduce the value of
the Exchange Rights or Grantee’s right to distributions upon vesting).

     8. Administration.

     (a) Compensation Committee. This Grant Agreement and the Plan shall be
administered by the Compensation Committee. Subject to the provisions of this Grant
Agreement and the Plan, the Compensation Committee shall have the sole discretion and
authority to interpret this Grant Agreement and the Plan, to prescribe, amend and rescind
any rules and regulations necessary or appropriate for the administration of this Grant
Agreement and the Plan, to determine and interpret the details and provisions of this Grant
Agreement and the Plan, to modify or amend this Grant Agreement and the Plan or waive any
conditions or restrictions applicable to the Award, and to make all other determinations
necessary or advisable for the administration of this Grant Agreement and the Plan;
provided, however, that this Grant Agreement (and the Plan to the extent that the amendment
affects this Grant Agreement) may be amended only by an instrument in writing signed by both
the Partnership and Grantee.

     (b) Delegation of Authority. The Compensation Committee may delegate all or
any portion of its authority under paragraph (a) of this Section 8 to the General Partner to
the extent consistent with the regulations of the Code, the rules of the NYSE in effect at
such time and other applicable law or regulation, in which case appropriate references
herein to the Compensation Committee that relate to the administration of this Grant
Agreement and the Plan shall be deemed to be references to the General Partner.

     (c) Assistance. The Partnership shall supply full and timely information to
the General Partner and/or the Compensation Committee on all matters relating to Grantee,
his employment, death, retirement, Disability or other termination of employment, and such
other pertinent facts as the General Partner or the Compensation Committee might require.
The Partnership shall furnish the General Partner and the Compensation Committee with such
clerical and other assistance as is necessary to the performance of its duties.

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     9. Certain Definitions. The following terms, to the extent used herein with an initial
capital letter and not otherwise defined, shall have the meanings set forth in this Section 9,
unless the context clearly requires otherwise.

     (a) The term “Just Cause” means (i) an act or acts of or at the direction of
Grantee involving a felony, fraud, willful misconduct, commission of any act that causes or
reasonably may be expected to cause substantial injury to the Partnership, the General
Partner or Crescent Equities, or (ii) commission of any act that is against the material
best interests of the Operating Partnership, the General Partner or Crescent Equities, or
(iii) any uncured breach of any of Grantee’s material duties under any written employment or
other personal services contract with the Operating Partnership or its affiliates or (iv)
any uncured breach of any material provision of any written non-competition agreement
between the Operating Partnership or any of its affiliates and the Grantee.

     (b) The term “Change in Control” refers to the acquisition of fifteen percent
(15%) or more of the voting securities of Crescent Equities by any Person or by Persons
acting as a group within the meaning of Section 13(d)(3) of the Exchange Act (other than an
acquisition by (x) a Person or group meeting the requirements of clauses (i) and (ii) of
Rule 13d-l(b)(1) promulgated under the Exchange Act, or (y) any employee pension benefit
plan (within the meaning of Section 3(2) of ERISA) of Crescent Equities, the Partnership or
of the subsidiaries of either, including a trust established pursuant to such plan);
provided that no Change in Control will be deemed to have occurred (i) if, before the
acquisition of, or offer to acquire, fifteen percent (15%) or more of the voting securities
of Crescent Equities, there has not been a Change in Management of Crescent Equities and the
full Board of Trust Managers of Crescent Equities has adopted by not less than a two-thirds
vote a resolution specifically approving such acquisition or offer or (ii) from either (A) a
transfer of the voting securities by Richard E. Rainwater (“Rainwater”) or a Person, trust
or other entity described in any of the following clauses (A)(i) through (A)(v) of this
subsection to (i) a member of Rainwater’s immediate family (within the meaning of Rule
16a-1(e) of the Exchange Act) either during Rainwater’s lifetime or by will or the laws of
descent and distribution; (ii) any trust as to which Rainwater or a member (or members) of
his immediate family (within the meaning of Rule 16a-1(e) of the Exchange Act) is the
beneficiary; (iii) any trust as to which Rainwater is the settlor with sole power to revoke;
(iv) any entity over which Rainwater has the power, directly or indirectly, to direct or
cause the direction of the management and policies of the entity, whether through the
ownership of voting securities, by contract or otherwise; (v) any charitable trust,
foundation or corporation under Section 501(c)(3) of the Code that is funded by Rainwater;
or (vi) Rainwater; or (B) the acquisition of voting securities of Crescent Equities by
either (i) Rainwater or (ii) a Person, trust or other entity described in any of the
foregoing clauses (A)(i) through (A)(v) of this subsection.

     (c) The term “Change in Management” shall be deemed to occur upon the
replacement of a majority of the members of the Board of Trust Managers of Crescent Equities
over any consecutive 24-month period, unless a majority of the members of the Board of Trust
Managers of Crescent Equities at the end of such 24-month period consists of trust managers
who either also were serving as trust managers at the beginning of

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the 24-month period or whose election or nomination to the Board of Trust Managers of
Crescent Equities was previously approved by a majority of such trust managers then still in
office.

     (d) The term “Disability” means the absence of the Grantee from the Grantee’s
duties with the General Partner on a full time basis for 180 consecutive business days as a
result of incapacity due to mental or physical illness or injury which renders Grantee
unable to perform all of the material and substantial duties of his employment, as it
existed immediately prior to such illness or injury, and which is reasonably expected to be
permanent.

     (e) The term “Applicable Anniversary” means (i) the first anniversary for a
Grantee that is a Vice President or Senior Vice President at the time of the Award, (ii) the
second anniversary for a Grantee that is a Managing Director at the time of the Award, or
(iii) the third anniversary for a Grantee that is the Chief Executive Officer or Chief
Operating Officer at the time of the Award.

     (f) The term “Good Reason” means the occurrence, without Grantee’s prior
written consent, of one or more of the following events:

     (i) (A) the assignment of Grantee to any employment status or position other
than a position reasonably equivalent to the position or offices that the Grantee
performs (including without limitation a diminution in the nature or scope of
Grantee’s authority or responsibilities, his reporting responsibilities or the
duties that Grantee performs), or (B) an adverse change in Grantee’s titles or
offices (including without limitation, membership on the Board of Trust Managers of
Crescent Equities);

     (ii) a reduction in Grantee’s aggregate cash compensation (including base
salary and any bonus potential); or

     (iii) with regard to the CEO, COO or a Managing Director only, the relocation
of such Grantee’s office from its present location to a location more than 50 miles
from its current location without his prior written consent;

Grantee’s continued employment shall not constitute consent to, or a waiver of rights with
respect to, any event or condition constituting Good Reason. Grantee must give written
notice of a termination with Good Reason to the Compensation Committee at least 30 days
before the effective date of such termination, and give the Partnership, the General Partner
and Crescent Equities (or their successors) the opportunity to cure, if curable, the
circumstances that otherwise would constitute Good Reason within such 30-day period.

     (g) A “Company Capital Transaction” occurs when Crescent Equities enters into,
or the shareholders of Crescent Equities approve Crescent Equities’ entry into, (i) an
agreement to merge, consolidate or otherwise combine with or into or
be acquired by an-

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other Person, regardless of whether Crescent Equities is the surviving entity, or sell
all or substantially all of its assets, or (ii) any plan or proposal for the
reclassification, recapitalization or exchange of outstanding Common Shares or (iii) any
plan or proposal for the liquidation or dissolution of Crescent Equities. A
“Partnership Capital Transaction” occurs when the Partnership enters into, or the
partners of the Partnership approve the Partnership’s entry into (A) an agreement to merge,
consolidate or otherwise combine with or into or be acquired by another Person, regardless
of whether the Partnership is the surviving entity, or sell all or substantially all of its
assets, or (B) any plan or proposal for the liquidation or dissolution of the Partnership.

     10. Acknowledgements by Grantee. Grantee acknowledges that neither this Grant Agreement nor
the Plan grants him any right of continued employment with the Partnership, the General Partner or
Crescent Equities. Accordingly, he may be removed as an employee and/or officer of the
Partnership, the General Partner or Crescent Equities in accordance with applicable law. Grantee
agrees that no duty of good faith or fair dealing shall be read into this Grant Agreement or the
Plan against the Partnership. Grantee understands and intends that neither this Grant Agreement
nor the Plan creates a partnership, joint venture, or fiduciary relationship between Grantee and
the Partnership except as set forth in the Partnership Agreement.

     11. Power of Attorney. Grantee constitutes and appoints the General Partner and authorized
officers and attorneys-in-fact of each, and each of those acting singly, in each case with full
power of substitution, as its true and lawful agent and attorney-in-fact, with full power and
authority in its name, place and stead to execute, swear to, acknowledge, deliver, file and record
in the appropriate public offices all certificates, documents and other instruments (including,
without limitation, an amendment to the Partnership Agreement) that the General Partner deems
appropriate or necessary in connection with the grant of the Award.

     12. Miscellaneous. This Grant Agreement shall be construed and enforced in accordance with
the laws of the State of Delaware, and shall be binding upon and inure to the benefit of any
successor or assign of the Partnership and any executor, administrator, trustee, guarantor or other
legal representative of Grantee. Headings of Sections and paragraphs of this Grant Agreement are
inserted for convenience of reference and constitute no part of this Grant Agreement. The
Partnership shall request Crescent Equities to furnish to Grantee copies of annual reports, proxy
statements and all other reports sent to Crescent Equities’ shareholders and, upon Grantee’s
written request, a copy of its most recent Annual Report on Form 10-K and each quarterly report to
shareholders issued since the end of Crescent Equities’ most recent fiscal year.

- 10 -

 

     Executed as of the day and year first written above.

	 	 	 	 	 	 	 
	 	 	CRESCENT REAL ESTATE EQUITIES	 	 
	 	 	LIMITED PARTNERSHIP	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Crescent Real Estate Equities, Ltd.	 	 
	 

	 	 	 	its General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	John C. Goff, Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	[NAME OF OFFICER]	 	 

- 11 -exv10w03

 

EXHIBIT 10.03

UNIT OPTION AGREEMENT

     This Unit Option Agreement (this “Agreement”) is being made and entered as of May 16, 2005, by
and between Crescent Real Estate Equities Limited Partnership, a Delaware limited partnership, and
Paul R. Smith (“Optionee”).

RECITALS

     As part of the goals of Crescent Real Estate Equities Limited Partnership and its Affiliates
(collectively, the “Operating Partnership”) to provide long term incentives to retain the valuable
skills of Optionee, the Operating Partnership, acting through its General Partner, wishes to
provide Optionee the ability to earn the right to purchase units of the Operating Partnership in
order to encourage Optionee to carry out his duties with vigor.

     Sections 4.7.A and 4.7.D of the Third Amended and Restated Agreement of Limited Partnership of
the Operating Partnership (as amended, the “Partnership Agreement”), authorize the Operating
Partnership to adopt a compensation plan for its employees, agents or consultants, or employees,
agents or consultants of Affiliates of the Operating Partnership, pursuant to which the Operating
Partnership may grant “Limited Partnership Interests” and “Units” (as defined therein) or options
to acquire Limited Partnership Interests and Units, to one or more of its employees, agents or
consultants, or employees, agents or consultants of Affiliates of the Operating Partnership, upon
such terms and conditions as might be deemed necessary or appropriate by the General Partner. The
General Partner believes that this Agreement comes within the scope of that authorization.

     The right to earn the options described herein is intended to compensate Optionee for services
performed by Optionee for the Operating Partnership from and after May 16, 2005 and thereafter for
the post-employment obligations of Optionee, including confidentiality and noncompetition.
Optionee’s ability to earn the Options hereunder shall be prospective only and shall be earned
while the Optionee’s employment with the Operating Partnership and the General Partner continues.

     Crescent Real Estate Equities Company (“Crescent”) and the Operating Partnership has
previously discussed these matters with Optionee, and Optionee desires to continue his employment
on such terms.

     In order to induce Optionee to make enthusiastic and productive efforts for the benefit of the
Operating Partnership, the General Partner has recommended that Optionee be provided the right to
earn unit options on the terms and subject to the conditions set forth in this Agreement.

     All capitalized terms used in this Agreement but not defined herein have the meanings ascribed
to those terms in the Partnership Agreement.

     In consideration of the foregoing recitals and mutual promises and covenants made herein, the
parties hereby agree as follows:

     1. Option. Subject to the terms and conditions hereof, the Optionee has the right to earn an
option (the “Option”) to purchase from the Operating Partnership all or any part of a total

 

 

of One Hundred Thousand (100,000) Units at a price of $35.80 per Unit. Accordingly, the number of
Units to be associated with Optionee’s Limited Partnership Interest when he is admitted to the
Operating Partnership as an “Employee Limited Partner” (as defined in the Partnership
Agreement) as a result of having exercised the Option shall be equal to the number of Units subject
to the Option. Optionee’s Limited Partnership Interest shall be calculated in accordance with the
provisions of the Partnership Agreement based upon the number of Units, determined as set forth in
the preceding sentence, to be associated with such Limited Partnership Interest.

     2. Character of Option. The Option is not an “incentive stock option” within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

     3. Term of Option. Subject to earlier termination as provided herein, the Option shall expire
at 6:00 p.m., Fort Worth, Texas time, ten (10) years after the date on which the Option is granted,
and Optionee shall have no further rights under the Option after that date.

     4. Vesting. The earning of the Option and its vesting is contingent on the continuation of
Optionee’s employment relationship with Crescent and is intended to retain Optionee as an employee
of the Operating Partnership. The right to exercise options in the future may be earned by
Optionee from and after the date of this Agreement on a year-by-year basis, in accordance with the
terms of this Agreement and in consideration of his future services to be provided by Optionee
after the date of the this Agreement. Furthermore, Optionee’s ability to earn Options hereunder
shall be prospective only. The Option shall be earned and become vested according to the following
schedule:

	 	 	 
	Number of Units	 	 
	With Respect to Which Option is	 	 
	Earned and Vested	 	Date Earned, Vested and Exercisable
	20,000

20,000

20,000

20,000

20,000
	 	May 16, 2006

May 16, 2007

May 16, 2008

May 16, 2009

May 16, 2010

If Optionee ceases to serve as an employee of all of the Operating Partnership, the General Partner
and Crescent, further vesting under the Option shall cease. Notwithstanding the foregoing
provisions of this Section, the following special provisions shall apply:

     (a) Mergers and Reorganizations. If Crescent or its shareholders enter into an
agreement to dispose of all or substantially all of the assets of Crescent by means of a
sale, merger or other reorganization, liquidation or otherwise in a transaction in which
Crescent is not the surviving entity, the Option shall become fully vested during the period
commencing as of the date agreed to dispose of all or substantially all of the assets of
Crescent and ending when the disposition of assets contemplated by that agreement is
consummated or the Option otherwise terminates in accordance with its provisions or the
provisions hereof, whichever occurs first; provided that the Option shall not become
fully vested under this paragraph on account of any agreement of merger or other

- 2 -

 

reorganization when the shareholders of Crescent immediately before the consummation of the
transaction will own at least 50% of the total combined voting power of all classes of
securities entitled to vote of the surviving entity immediately after the consummation of
the transaction. The Option shall not become immediately exercisable if the transaction
contemplated in the agreement is a merger or reorganization in which Crescent will survive.

     (b) Termination of Employment; Change in Control. The Option shall become fully vested
in the event of either (i) the termination of Optionee’s employment with the Operating
Partnership, the General Partner and Crescent, or their successors, for any reason other
than Just Cause within 24 months following a Change in Control or (ii) the voluntary
resignation by Optionee from employment with the Operating Partnership, the General Partner
and Crescent, or their successors, for Good Reason within 24 months following a Change in
Control (“Resignation for Good Reason”). For purposes of this paragraph:

     (i) “Good Reason” shall mean (A) a reduction in the amount of Optionee’s
aggregate cash compensation (including base salary and any bonus) payable within any
twelve-month period following a Change in Control below the amount of such aggregate
cash compensation paid to, or accrued by the General Partner with respect to,
Optionee in the twelve-month period immediately preceding the change in control; (B)
the assignment of Optionee to any employment status other than a position having
duties comparable to those exercised by Optionee immediately before the change in
duties comparable to those exercised by Optionee immediately before the Change in
Control, or (C) a geographical relocation or attempted relocation of Optionee to an
office more than fifty (50) miles distant from Fort Worth, Texas, without Optionee’s
consent.

     (ii) “Just Cause” shall mean (A) an act, acts, or omission involving a felony,
fraud, willful misconduct, or gross negligence, or (B) commission of any act that
causes or reasonably might be expected to cause substantial injury to the Operating
Partnership or the General Partner or is against the material best interests of the
Operating Partnership or the General Partner.

     (iii) “Change in Control” shall mean the acquisition of 15% or more of the
voting securities of Crescent by any person or by persons acting as a group within
the meaning of Section 13(d)(3) of the Exchange Act (other than an acquisition by a
person or group meeting the requirements of clauses (i) and (ii) of Rule 13d-1(b)(1)
promulgated under the Exchange Act, or by any employee pension benefit plan (within
the meaning of Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended (“ERISA”)) of Crescent or of its subsidiaries, including a trust
established pursuant to such plan; provided that no change in control or threatened
change in control shall be deemed to have occurred (A) if before the acquisition of,
or offer to acquire, 15% or more of the voting securities of Crescent, the full
Board of Directors of Crescent (the “Board”) has adopted by not less than two-thirds
vote a resolution specifically approving such acquisition
or offer or (B) from (I) a transfer of Crescent’s voting securities by Richard
E. Rainwater (“Rainwater”) to (a) a member of Rainwater’s immediate family

- 3 -

 

(within
the meaning of Rule 16a-1(e) of the Exchange Act) either during Rainwater’s lifetime
or by will or the laws of descent and distribution; (b) any trust as to which
Rainwater or a member (or members) of his immediate family (within the meaning of
Rule 16a-1(e) of the Exchange Act) is the beneficiary; (c) any trust as to which
Rainwater is the settlor with sole power to revoke; (d) any entity over which
Rainwater has the power, directly or indirectly, to direct or cause the direction of
the management and policies of the entity, whether through the ownership of voting
securities, by contract or otherwise; or (e) any charitable trust, foundation or
corporation under Section 501(c)(3) of the Code that is funded by Rainwater; or (II)
the acquisition of voting securities of Crescent by either (a) Rainwater or (b) a
person, trust or other entity described in the foregoing clauses (I)(a)-(e) of this
subparagraph. The term “person” shall mean an individual or a corporation,
partnership, trust, association, joint venture, pool, syndicate, sole
proprietorship, unincorporated organization or any other form of entity not
specifically listed herein.

     (c) Retirement. The Option shall become fully vested in the event of Optionee’s
Retirement. “Retirement” shall be deemed to occur if Optionee’s employment terminates on or
after the date on which he attains age 70.

     (d) Death or Disability. The Option shall become fully vested in the event of
Optionee’s death or Disability. “Disability” shall mean the absence of the Optionee from
the Optionee’s duties with the Operating Partnership, General Partner and Crescent on a
full-time basis for 180 consecutive business days as a result of incapacity due to mental or
physical illness or injury which renders Optionee unable to perform all of the material and
substantial duties of his employment, as it existed immediately prior to such illness or
injury, and which is reasonably expected to be permanent.

     5. Method of Exercise. The Option shall be exercisable only to the extent that it is vested.
The Option may not be exercised for a fraction of a Unit. The purchase price of any Units
purchased shall be paid at the time of exercise of the Option either (i) in cash, (ii) by certified
or cashier’s check, (iii) by delivery to the Operating Partnership (either directly or by
attestation) of Units already owned (for at least six months) by Optionee, valued at the then Fair
Market Value, or (iv) in the discretion of the General Partner and to the extent permitted under
the Sarbanes-Oxley Act of 2002, by delivery of a copy of irrevocable instructions from Optionee to
a broker or dealer, reasonably acceptable to the General Partner, to sell certain of the common
shares of beneficial interest, par value $.01 per share, of the Company (“Shares”) acquired
upon exercise of the Option and the exercise of “Exchange Rights” (as defined in the
Partnership Agreement) or to pledge them as collateral for a loan and promptly deliver to Crescent
the amount of sale or loan proceeds necessary to pay such purchase price. If any portion of the
purchase price at the time of exercise is paid in Units, those Units shall be valued at the then
Fair Market Value. “Fair Market Value” shall mean such value as will be determined by the
General Partner on the basis of such factors as it deems appropriate. The Option shall be deemed
to be exercised when written notice of exercise has been received by the Operating Partnership at
its principal office from the person entitled to exercise the Option and payment for the Units with
respect to which the Option is exercised has been received by the Operating Partnership in
accordance with this Section 5.

- 4 -

 

     6. Transferability. The Option shall not be transferable other than by will or by the laws of
descent and distribution and may be exercised during the lifetime of Optionee only by Optionee or
by his legally authorized representative.

     7. Compliance with Securities Laws. Units shall not be issued upon the exercise of the Option
unless the issuance and delivery of the Units (and the exercise of the Option) complies with all
relevant provisions of federal and state law, including without limitation the Securities Act of
1933, as amended, the rules and regulations promulgated thereunder and the requirements of any
stock exchange upon which the Shares might then be listed, and shall be further subject to the
approval of counsel for Crescent with respect to such compliance. The General Partner may also
require Optionee to furnish evidence satisfactory to the General Partner and Crescent, including,
without limitation, a written and signed representation letter and consent to be bound by any
transfer restrictions imposed by law, legend, condition or otherwise, and a representation that the
Units are being acquired only for investment and without any present intention to sell or
distribute the Units in violation of any federal or state law, rule or regulation. Further,
Optionee shall consent to the imposition of a legend on the certificate representing the Units
issued upon the exercise of the Option and Shares issued upon the exchange therefore restricting
their transferability as required by law or by this Section.

     8. Compliance with Partnership Agreement. All Units and Exchange Rights issued upon the
exercise of the Option are governed by, and subject to each of the terms and conditions of, the
Partnership Agreement. Upon exercising the Option, Optionee shall be admitted to the Operating
Partnership as an Employee Limited Partner pursuant to Section 4.7 of the Partnership Agreement in
accordance with the terms of the Partnership Agreement and the procedures established by the
General Partner for the admission of an Employee Limited Partner thereunder, and shall be deemed to
have accepted and agreed to be bound by all the terms and conditions of the Partnership Agreement.
The General Partner, in its sole and absolute discretion, may make the exercise of the Option
subject to such further terms and conditions, including, without limitation, such additional terms
and conditions for admission to the Operating Partnership or the exercise of Exchange Rights, as
the General Partner may deem necessary, advisable or appropriate at the time of the exercise. Such
additional terms and conditions may be set forth in resolutions adopted by the Board of Directors
of the General Partner and/or Crescent, or in such other manner or document as the General Partner,
in its sole and absolute discretion, deems necessary, advisable or appropriate.

     9. Exchange Rights. The Units issued upon the exercise of the Option shall have the Exchange
Rights associated with the Limited Partnership Interest represented by the Units. Optionee
acknowledges that, upon exercise of the Exchange Rights, Crescent pursuant to the Partnership
Agreement has the option in its sole discretion to deliver cash or Shares in exchange for Units as
to which Optionee exercises Exchange Rights. Crescent will deliver cash in exchange for the Units
as to which the Optionee has exercised Exchange Rights in lieu of the issuance or delivery of any
certificate for the Shares upon the exercise of Exchange Rights unless:

     (a) the Shares have been admitted to listing on all stock exchanges on which Shares are
then listed, unless the General Partner determines in its sole discretion that such listing
is neither necessary nor advisable;

- 5 -

 

     (b) all required registration or other qualification of the sale of the Shares under
any federal or state law or under the rulings or regulations of the Securities and Exchange
Commission or any other governmental regulatory body that the General Partner in its sole
discretion deems necessary or advisable has been obtained; and

     (c) all approvals or other clearances from federal or state governmental agency that
the General Partner in its sole discretion determines to be necessary or advisable have been
obtained.

     10. Reservation of Shares. Crescent shall at all times reserve and keep available such number
of Shares as might be necessary to satisfy the requirements of
Sections 9 and 10 hereof and the
number of Units as to which the Option is granted. In addition, Crescent shall from time to time,
as is necessary to accomplish the purposes of this Agreement, use its best efforts to obtain from
any regulatory agency having jurisdiction any requisite authority necessary to issue Shares upon
the exercise of Exchange Rights related to the Units as to which the Option is granted. The
inability of Crescent to obtain from any regulatory agency having jurisdiction the authority deemed
by Crescent’s counsel to be necessary for the lawful issuance of any Shares shall relieve Crescent
of any liability in respect of the nonissuance of Shares as to which the requisite authority has
not been obtained.

     11. Tax Withholding.

     (a) Condition Precedent. The issuance of Units upon the exercise of the Option
is subject to the condition that if at any time the General Partner determines, in its
discretion, that the satisfaction of withholding tax or other withholding liabilities under
any federal, state or local law is necessary or desirable as a condition of, or in
connection with such issuances, then the issuances shall not be effective unless the
withholding has been effected or obtained in a manner acceptable to the General Partner.

     (b) Manner of Satisfying Withholding Obligation. If Optionee is required to
pay to the Operating Partnership an amount required to be withheld under applicable income
tax laws in connection with the exercise of the Option, such payment may be made (i) in
cash, (ii) by check, (iii) by delivery to the Operating Partnership or the General Partner
of Units already owned by Optionee having a Fair Market Value on the date the amount of tax
to be withheld is to be determined (the “Tax Date”) equal to the amount required to
be withheld, (iv) through the withholding by the Operating Partnership (“Partnership
Withholding”) of a portion of the Units acquired upon the exercise of the Option or (v)
in any other form of valid consideration, as permitted by the General Partner in its
discretion.

     12. Administration.

     (a) General Partner. This Agreement shall be administered by the General
Partner. Subject to the provisions of this Agreement, the General Partner shall have the
discretion and authority to prescribe, amend and rescind any reasonable rules and
regulations necessary or appropriate for the administration of this Agreement; to
modify or amend this Agreement or waive any conditions or restrictions applicable to the
Option (or the exercise thereof); and, to make all other determinations as advisable for the

- 6 -

 

administration of this Agreement; provided, however, that any amendment or modification of
this Agreement shall require the consent of the Optionee which may be given or withheld in
his discretion, with any such amendment to be made effective only by an instrument in
writing signed by both the Operating Partnership and Optionee.

     (b) Committee. The General Partner may delegate its authority under paragraph
(a) of this Section to a Committee appointed by the General Partner, in which case all
references herein to the General Partner that relate to the administration of this Agreement
shall be deemed to be references to the Committee. As used herein, “Committee” shall mean a
committee consisting of two or more members of the Board. A majority of the members of the
Committee shall constitute a quorum, and any action taken by a majority present at a meeting
at which a quorum is present or any action taken without a meeting evidenced by a writing
executed by all members of the Committee shall constitute the action of the Committee.
Meetings of the Committee may take place by telephone conference call.

     (c) Assistance. The Operating Partnership shall supply full and timely
information to the General Partner and/or the Committee on all matters relating to Optionee,
his employment, death, retirement, Disability or other termination of employment, and such
other pertinent facts as the General Partner or the Committee might require. The Operating
Partnership shall furnish the General Partner and the Committee with such clerical and other
assistance as is necessary to the performance of its duties, and Optionee as the Chief
Executive Officer of the Operating Partnership, shall in now way interfere with or restrain
the ability of the Operating Partnership in this regard.

     13. Acknowledgements by Optionee. Optionee acknowledges he may be removed as an officer of
the Operating Partnership, the General Partner or Crescent in accordance with applicable law; if
such event occurs while the Option is not fully vested, Section 6 herein shall govern the full or
partial forfeiture of the Option. Optionee agrees that no duty of good faith or fair dealing shall
be read into this Agreement against the Operating Partnership, the General Partner or Crescent.
Optionee understands and intends that this Agreement does not create a partnership or joint venture
between Optionee and the Operating Partnership.

     14. Miscellaneous.

     (a) Construction. This Agreement shall be construed in accordance with the
laws of the State of Delaware, and shall be binding upon and inure to the benefit of any
successor or assign of the Operating Partnership and any executor, administrator, trustee,
guarantor or other legal representative of Optionee.

     (b) Choice of Forum. The parties hereto agree that should any suit, action or
proceeding arising out of this Agreement be instituted by any party hereto (other than a
suit, action or proceeding to enforce or realize upon any final court judgment arising out
of this Agreement), such suit, action or proceeding shall be instituted only in a state or
federal court in Tarrant County, Texas. Each of the parties hereto consents to the in
personam jurisdiction of any such state or federal court in Tarrant County, Texas and waives
any objection to the venue of any suit, action or proceeding. The parties

- 7 -

 

recognize that
courts outside Tarrant County, Texas may also have jurisdiction over suits, actions or
proceedings arising out of this Agreement, and in the event that any party hereto shall
institute a proceeding involving this Agreement in a jurisdiction outside Tarrant County,
Texas, the party instituting such proceeding shall indemnify any other party hereto for any
losses and expenses that may result from the breach of the foregoing covenant to institute
such proceeding only in a state or federal court in Tarrant County, Texas, including without
limitation additional expenses incurred as a result of litigating in another jurisdiction,
such as reasonable fees and expenses of local counsel and travel and lodging expenses for
parties, witnesses, experts and support personnel.

     (c) Headings. Headings of Sections and paragraphs of this Agreement are
inserted for convenience of reference and constitute no part of this Agreement.

     (d) Crescent Reports. The Operating Partnership shall request Crescent to
furnish to Optionee copies of annual reports, proxy statements and all other reports sent to
Crescent’s shareholders and, upon Optionee’s written request, a copy of its most recent
Annual Report on Form 10-K and each quarterly report to shareholders issued since the end of
Crescent’s most recent fiscal year.

     (e) Change in Capitalization. If the outstanding Units or Shares are
increased, decreased, changed into or exchanged for a different
number or kind of units, shares or securities through merger, consolidation, combination, exchange, other
reorganization, recapitalization, reclassification, dividend, split or reverse split, an
appropriate and proportionate adjustment shall be made to the Option. Any such adjustment
shall be made without change in the aggregate purchase price applicable to the unexercised
portion of the Option, but with a corresponding adjustment in the price for each Unit
purchasable under the Option. The foregoing adjustments and the manner of application of
the foregoing provisions shall be determined solely by the General Partner, and any such
adjustment may provide for the elimination of fractional share interests.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

- 8 -

 

     Executed as of the day and year first written above.

	 	 	 	 	 	 	 
	 	 	CRESCENT REAL ESTATE EQUITIES	 	 
	 	 	LIMITED PARTNERSHIP	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	Crescent Real Estate Equities, Ltd.	 	 
	 

	 	 	 	its General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ David M. Dean	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	David M. Dean, Managing Director, Law	 	 
	 

	 	 	 	and Secretary	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	/s/ Paul R.Smith	 	 
	 	 	 	 	 
	 

	 	 	 	Paul R. Smith	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Social Security Number of Paul R. Smith	 	 

- 9 -

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