Document:

exv10w3

 

Exhibit 10.3

[Form of Employee Stock Grant and Restricted Stock Agreement]

AVALONBAY COMMUNITIES, INC.

STOCK GRANT AND RESTRICTED STOCK AGREEMENT

In consideration for services
rendered and to be rendered to AvalonBay Communities, Inc. (the “Company”) and
for other good and valuable consideration, which the Company has determined to
be equal to the fair market value of the Shares, as defined below, the Company
is issuing to the Employee named below contemporaneously herewith the Shares,
upon the terms and conditions set forth herein and in the Restricted Stock
Agreement Terms (the “Terms”) which are attached hereto and incorporated herein
in their entirety. Capitalized terms used but not defined herein shall have
the respective meanings ascribed thereto in the Terms.

	 	 	 	 
	Employee:

	 	 	 
	Award Date:

	 	 	 
	Vesting Commencement Date:

	 	 	 
	Number of Shares Granted (“Shares”):

	 	 	 

	 	 	 	 	 
	Vesting Schedule:	 	Subject to the provisions of the Terms and the discretion of the
Company to accelerate the vesting schedule, the Employee’s
ownership interest in the Shares shall vest, and the status of
the Shares as Restricted Stock and all Restrictions with respect
to the Shares shall terminate, in accordance with the following
schedule of events:
	

	 	Vesting Event
	 	Shares Vested
	 
	 	 	 	 
	

	 	March 1, 200_  [Year of Grant]	 	[20%]
	

	 	March 1, 200_  [Second Year]	 	[20%]
	

	 	March 1, 200_  [Third Year]	 	[20%]
	

	 	March 1, 200_  [Fourth Year]	 	[20%]
	

	 	March 1, 200_  [Fifth Year]	 	[20%]
	 
	 	 	 	 
	

	 	Termination of the Employee’s	 	 
	

	 	Employment by the Company, other than	 	 
	

	 	for Cause
	 	[Total RSA]*
	 
	 	 	 	 
	

	 	The death or disability of the Employee
	 	[Total RSA]*
	 

	

	 	The Retirement of the Employee
	 	[Total RSA]*
	 
	 	 	 	 
	

	 	If earlier than any of the above events,	 	 
	

	 	a Change of Control
	 	[Total RSA]*
	 
	 	 	 	 
	

	 	
 	 	 
	

	 	*or, if fewer, all Restricted Shares	 	 

Additional Terms/Acknowledgements: The undersigned Employee acknowledges
receipt of, and understands and agrees to, this Stock Grant and Restricted
Stock Agreement, including, without limitation, the Terms. Employee further
acknowledges that as of the Award Date, this Stock Grant and Restricted Stock
Agreement, including, without limitation, the Terms, sets forth the entire
understanding between Employee and the Company regarding the stock grant
described herein and supersedes all prior oral and written agreements on that
subject.

	 	 	 
	AVALONBAY COMMUNITIES, INC.

	 	EMPLOYEE:
	 
	 	 
	By:                                                                               

	 	                                                                                                  
	Signature

	 	Signature
	
Title:                                                                            

	 	
Name (Print):                                                                            
	
Date:                                                                            

	 	
Date:                                                                                         

ATTACHMENT: Restricted Stock Agreement Terms

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AVALONBAY COMMUNITIES, INC.

RESTRICTED STOCK AGREEMENT TERMS

ARTICLE I

DEFINITIONS

Section 1.1 - Cause

     “Cause” means and shall be limited to a vote of the Board of Directors
resolving that the Employee should be dismissed as a result of (i) any material
breach by the Employee of any agreement to which the Employee and the Company
are parties, (ii) any act (other than retirement) or omission to act by the
Employee which may have a material and adverse effect on the business of the
Company or any Subsidiary (as hereinafter defined) or on the Employee’s ability
to perform services for the Company or any Subsidiary, including, without
limitation, the Employee being convicted of any crime (other than ordinary
traffic violations) or (iii) any material misconduct or neglect of duties by
the Employee in connection with the business or affairs of the Company or any
Subsidiary.

Section 1.2 - Change of Control

     “Change of Control” means the occurrence of any one of the following
events:

       (i)     any “person,” as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the “Act”) (other
than the Company, any of its Subsidiaries, or any trustee, fiduciary or
other person or entity holding securities under any employee benefit plan
or trust of the Company or any of its Subsidiaries), together with all
“affiliates” and “associates” (as such terms are defined in Rule 12b-2
under the Act) of such person, shall become the “beneficial owner” (as
such term is defined in Rule 13d-3 under the Act), directly or
indirectly, of securities of the Company representing 30% or more of
either (A) the combined voting power of the Company’s then outstanding
securities having the right to vote in an election of the Company’s Board
of Directors (“Voting Securities”) or (B) the then outstanding shares of
Common Stock (as hereinafter defined), in either such case other than as
a result of an acquisition of securities directly from the Company; or

     (ii)      persons who, as of the Award Date, constitute the Company’s
Board of Directors (the “Incumbent Directors”) cease for any reason,
including, without limitation, as a result of a tender offer, proxy
contest, merger, acquisition of Voting Securities or similar transaction,
to constitute at least a majority of the Board of Directors, provided
that any person becoming a director of the Company subsequent to the
Award Date whose election or nomination for election was approved by a
vote of at least a majority of the Incumbent Directors shall, for
purposes of this Agreement, be considered an Incumbent Director; or

     (iii)     the stockholders of the Company shall approve (A) any
consolidation or merger of the Company or any Subsidiary where the
stockholders of the Company, immediately prior to the consolidation or
merger, would not, immediately after the consolidation or merger,
beneficially own (as such term is defined in Rule 13d-3 under the Act),
directly or indirectly, shares representing in the aggregate 30% of the
voting shares of the corporation or other entity issuing cash or
securities in the consolidation or merger (or of its ultimate parent
corporation or other entity, if any), (B) any sale, lease, exchange or
other transfer (in one transaction or a series of transactions
contemplated or arranged by any party as a single plan) of all or
substantially all of the assets of the Company or (C) any plan or
proposal for the liquidation or dissolution of the Company.

     Notwithstanding the foregoing, a “Change of Control” shall not be deemed
to have occurred for purposes of the foregoing clause (i) solely as the result
of an acquisition of securities by the Company which, by reducing the number of
shares of Common Stock or other Voting Securities outstanding, increases (x)
the proportionate number of shares of Common Stock beneficially owned by any
person to 30% or more of the shares of Common Stock then
outstanding or (y) the proportionate voting power represented by the Voting
Securities beneficially owned by any

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person to 30% or more of the combined
voting power of all then outstanding Voting Securities; provided,
however, that if any person referred to in clause (x) or (y) of this
sentence shall thereafter become the beneficial owner of any additional shares
of Common Stock or other Voting Securities (other than pursuant to a stock
split, stock dividend, or similar transaction), then a “Change of Control”
shall be deemed to have occurred for purposes of the foregoing clause (i).

Section 1.3 - Common Stock

     “Common Stock” shall mean the common stock of the Company, $.01 par value.

Section 1.4 - Fair Market Value

     “Fair Market Value” on any given date means the last reported sale price
at which the Common Stock is traded on such date or, if no Common Stock is
traded on such date, the most recent date on which Common Stock was traded, as
reflected on the New York Stock Exchange or, if applicable, any other national
stock exchange on which the Common Stock is traded.

Section 1.5  - Restricted Stock

     “Restricted Stock” shall mean the Shares issued under this Agreement for
as long as such shares are subject to the Restrictions (as hereinafter defined)
imposed by this Agreement.

Section 1.6 - Restrictions

     “Restrictions” shall mean the restrictions set forth in Article III of
this Agreement.

Section 1.7 – Retirement

     “Retirement” in accordance with the Plan shall mean:

the Employee’s termination of employment with the Company and its
Subsidiaries, other than for Cause, following the date on which the
sum of (i) the number of full months the Employee has been employed
by the Company and any Predecessor Company (as defined in the Plan)
and (ii) the Employee’s age on the date of termination, equals or
exceeds 70 years, provided that:

	(x)	 	the Employee has been employed by the
Company and any Predecessor Company for a period of at
least 120 contiguous full months at the time of
termination;
	 
	(y)	 	the Employee gives at least six
months’ prior written notice to the Company of his
intention to retire; and
	 
	(z)	 	upon termination of employment, the
Employee enters into a “Non-Compete and Non-Solicitation
Agreement” (as defined in the Plan) and a general
release of all claims in a form reasonably satisfactory
to the Company.

Section 1.7 - Secretary

     “Secretary” shall mean the secretary of the Company.

Section 1.8 - Subsidiary

     “Subsidiary” means any corporation or other entity (other than the
Company) in any unbroken chain of corporations or other entities, beginning
with the Company if each of the corporations or entities (other than the last
corporation or entity in the unbroken chain) owns stock or other interests
possessing 50% or more of the economic interest or the total combined voting power of all classes of stock or
other interests in one of the other corporations or entities in the chain.

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ARTICLE II

RESTRICTED STOCK

Section 2.1 - Restricted Stock

     Any shares of Common Stock granted pursuant to this Agreement which vest
on a date other than the Award Date shall be considered Restricted Stock for
purposes of this Agreement and shall be subject to the Restrictions until such
time or times and except to the extent that the Employee’s ownership interest
in Shares vests in accordance with the Vesting Schedule set forth on the first
page of this Agreement.

Section 2.2 - Escrow

     The Secretary or such other escrow holder as the Company may from time to
time appoint shall retain physical custody of the certificates representing
Restricted Stock, including shares of Restricted Stock issued pursuant to
Section 3.5, until all of the Restrictions expire or shall have been removed;
provided, however, that in no event shall the Employee retain physical custody
of any certificates representing Restricted Stock issued to him.

Section 2.3 - Rights as Stockholder

     From and after the Award Date, the Employee shall have all the rights of a
stockholder with respect to the Shares, subject to the Restrictions herein
(including the provisions of Article IV), including the right to vote the
Shares and to receive all dividends or other distributions paid or made with
respect to the Shares unless and to the extent that the Employee’s interest in
Restricted Stock shall have terminated and the Restricted Stock reverts to the
Company as provided in Section 3.1 of this Agreement.

ARTICLE III

RESTRICTIONS

Section 3.1 - Reversion of Restricted Stock

     Except as provided in Section 2.3, this Section 3.1, and the Vesting
Schedule set forth on the first page of this Agreement, the Restricted Stock
shall be the property of the Company for as long as and to the extent that the
Shares are Restricted Stock pursuant to Section 2.1. In the event that the
Employee’s employment by the Company terminates for any reason other than (a)
death, (b) disability or (c) termination of the Employee’s employment by the
Company other than for Cause, any interest of the Employee in Shares that are
Restricted Stock shall thereupon immediately terminate and all rights with
respect to the Restricted Stock shall immediately revert to and unconditionally
be the property of the Company; provided, however, that the Employee shall be
entitled to retain any cash dividends paid before the date of such event on the
Restricted Stock.

Section 3.2 - Restricted Stock Not Transferable

     No Restricted Stock or any interest or right therein or part thereof shall
be liable for the debts, contracts or engagements of the Employee or his
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means
whether such disposition be voluntary or involuntary or by operation of law or
judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect; provided, however, that the Employee may
designate one or more trusts or other similar arrangements for the benefit of
the Employee or members of his immediate family as the registered holders of
Restricted Stock if and as long as the Employee acts as trustee or in a similar
capacity with respect to such trust or arrangement. Any Restricted Stock so
registered shall for all purposes hereunder be deemed to be held of record by
the Employee and shall be subject to all of the terms and conditions of this Agreement,
including but not limited to the Restrictions and the provisions of Article III
of this Agreement.

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Section 3.3 - Legend

     (a)      Certificates representing shares of Restricted Stock issued pursuant
to this Agreement shall, until all Restrictions lapse and new certificates are
issued pursuant to Section 3.4, bear the following legend:

	 	 	 	 	 
	

	 	“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN VESTING REQUIREMENTS AND MAY BE
SUBJECT TO FORFEITURE TO AVALONBAY COMMUNITIES, INC.
(THE “COMPANY”) UNDER THE TERMS OF THAT CERTAIN
RESTRICTED STOCK AGREEMENT BY AND BETWEEN THE COMPANY
AND THE HOLDER OF THE SECURITIES. PRIOR TO VESTING OF
OWNERSHIP IN THE SECURITIES, THEY MAY NOT BE, DIRECTLY
OR INDIRECTLY, OFFERED, TRANSFERRED, SOLD, ASSIGNED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNDER
ANY CIRCUMSTANCES. COPIES OF THE ABOVE REFERENCED
AGREEMENT ARE ON FILE AT AND MAY BE OBTAINED ON
REQUEST AND WITHOUT CHARGE FROM THE OFFICES OF THE
COMPANY AT 2900 EISENHOWER AVENUE, SUITE 300,
ALEXANDRIA, VA 22314.”	 	 

     (b)      Certificates representing any shares of Common Stock issued pursuant
to this Agreement shall bear the following or substantially similar legend:

	 	 	 	 	 
	

	 	“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”). NO SALE,
HYPOTHECATION, TRANSFER OR OTHER DISPOSITION OF THESE
SECURITIES MAY BE MADE UNLESS EITHER (A) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR (B) PURSUANT TO AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.”	 	 

Section 3.4 - Lapse of Restrictions

     Upon the vesting of some or all of the Restricted Stock as provided in the
Vesting Schedule set forth on the first page of this Agreement, and subject to
the conditions to issuance set forth in Article IV, the Company shall cause new
certificates to be issued with respect to such vested Shares and delivered to
the Employee or his legal representative, free from the legend provided for in
Section 3.3(a).

Section 3.5 - Restrictions on New Shares

     In the event that the outstanding shares of the Company’s Common Stock are
changed into or exchanged for a different number or kind of shares or other
securities of the Company, or a stock split-up or stock dividend, such new,
additional or different shares or securities which are held or received by the
Employee (or his designee) in his capacity as a holder of Restricted Stock
shall be considered to be Restricted Stock and shall be subject to all of the
terms and conditions of this Agreement, including but not limited to the
Restrictions.

ARTICLE IV

MISCELLANEOUS

Section 4.1
- Conditions to Issuance of Stock Certificates

     The Company shall not be required to issue or deliver any certificate or
certificates for shares of stock pursuant to this Agreement prior to
fulfillment of all of the following conditions:

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     (a)     The admission of such shares to listing on all stock exchanges
on which such class of stock is then listed; and

     (b)     The completion of any registration or other qualification of
such shares under any state or Federal law or under rulings or
regulations of the Securities and Exchange Commission or of any other
governmental regulatory body, which the Company shall deem necessary or
advisable; and

     (c)     The obtaining of any approval or other clearance from any state
or Federal governmental agency which the Company shall, in its absolute
discretion, determine to be necessary or advisable; and

     (d)     The payment by the Employee of all amounts required to be
withheld under federal, state and local tax laws, with respect to the
issuance of Restricted Stock and/or the lapse or removal of any of the
Restrictions; and

Section 4.2 - Notices

       Any notice to be given under the terms of this Agreement to the Company
shall be addressed to the Company in care of its Secretary, and any notice to
be given to the Employee shall be addressed to him at his address as set forth
in the Company’s records. By a notice given pursuant to this Section 4.2,
either party may hereafter designate a different address for notices to be
given to it or him. Any notice which is required to be given to the Employee
shall, if the Employee is then deceased, be given to the Employee’s personal
representative if such representative has previously informed the Company of
his status and address by written notice under this Section 4.2. Any notice
shall have been deemed duly given when enclosed in a properly sealed envelope
or wrapper addressed as aforesaid and deposited (with postage prepaid) in a
post office or branch post office regularly maintained by the United States
Postal Service.

Section 4.3 - Titles

       Titles and captions are provided herein for convenience only and are not
to serve as a basis for interpretation or construction of this Agreement.

Section 4.4 - Amendment

       This Agreement may be amended only by a writing executed by the parties
hereto which specifically states that it is amending this Agreement.

Section 4.5 - Tax Withholding

       The Company’s obligation (i) to issue or deliver to the Employee any
certificate or certificates for unrestricted shares of stock or (ii) to pay to
the Employee any dividends or make any distributions with respect to the Common
Stock issued under this Agreement is expressly conditioned on the Company’s
satisfaction of its obligation, if any, to withhold taxes. The Company may, if
the employee so elects in writing, withhold from any distribution made to the
Employee under this Agreement shares of Common Stock valued at Fair Market
Value on the date of such withholding to cover any applicable withholding and
employment taxes. In lieu of withholding shares of Common Stock, the Employee
may elect to pay to the Company any amounts required to be withheld in cash.

Section 4.6 - Governing Law

       The laws of the State of Maryland shall govern the interpretation,
validity, administration, enforcement and performance of the terms of this
Agreement regardless of the law that might be applied under principles of
conflicts of laws.

Section 4.7 - Counterparts

       This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

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Section 4.8 - No Special Employment Rights

       This Agreement does not, and shall not be interpreted to, create any right
on the part of the Employee to continue in the employ of the Company or any
subsidiary or affiliate thereof, nor to any continued compensation,
prerequisites or other current or future benefits or other incidents of
employment.

[End of Text]

7exv10w4

 

Exhibit 10.4

[Form of Director Restricted Unit Agreement]

AVALONBAY COMMUNITIES, INC.

RESTRICTED UNIT AGREEMENT

Pursuant to the terms of the AvalonBay
Communities, Inc. Amended and Restated 1994
Stock Incentive Plan (as amended from time
to time, the “Plan”), in consideration for
services rendered and to be rendered to
AvalonBay Communities, Inc. (the
“Company”), in order to advance the
interests of the Company and its
stockholders and effect the intended
purposes of the Plan, and for other good
and valuable consideration, which the
Company has determined to be equal to the
fair market value of the Units, as defined
below, the Company is awarding to the
Director named below contemporaneously
herewith the Units, upon the terms and
conditions set forth herein and in the
Restricted Unit Agreement Terms (the
“Terms”) which are attached hereto and
incorporated herein in their entirety.
Capitalized terms used but not defined
herein shall have the respective meanings
ascribed thereto in the Terms

	 	 	 	 
	Director:

	 	 	 
	Award Date:

	 	 	 
	Number of Shares of Deferred Stock
(“Units”) Awarded:

	 	 	 
	Conversion Date or Event for Units

(previously elected by Director)

	 	[Specify date or 30 days after ceasing to be a
director 
of the Company for any reason]	 
	 	 	 	 

	 	 	 	 	 	 	 
	Vesting Schedule:	 	Subject to the provisions of the Terms, the Director’s
ownership interest in the Units shall vest, and the status of the Units as
Unvested Units and all Restrictions with respect to the Units shall
terminate, in accordance with the following schedule of events:
	 
	 	 	 	 	 	 
	

	 	Vesting Event
	 	Shares Vested

	 
	 	 	 	 	 	 
	

	 	Award Date
	 	 	20	%
	

	 	First Anniversary of Award Date
	 	 	40	%
	

	 	Second Anniversary of Award Date
	 	 	60	%
	

	 	Third Anniversary of Award Date
	 	 	80	%
	

	 	Fourth Anniversary of Award Date
	 	 	100	%
	 
	 	 	 	 	 	 
	

	 	Termination of the Director’s service as a
director by vote of the Company’s stockholders
for any reason other than Cause
	 	 	100	%
	 
	 	 	 	 	 	 
	

	 	Failure by the Board of Directors or any authorized
committee thereof to nominate the Director for
re-election for any reason other than for Cause
	 	 	100	%
	 
	 	 	 	 	 	 
	

	 	Failure of the Company’s stockholders to re-elect
the Director
	 	 	100	%
	 
	 	 	 	 	 	 
	

	 	Death or Disability of the Director
	 	 	100	%
	 
	 	 	 	 	 	 
	

	 	If earlier than any of the above events,
a Change of Control
	 	 	100	%

Additional Terms/Acknowledgements: The undersigned Director acknowledges
receipt of, and understands and agrees to, this Restricted Unit Agreement,
including, without limitation, the Terms. The Director further acknowledges
that as of the Award Date, this Restricted Unit Agreement, including, without
limitation, the Terms, sets forth the entire understanding between the Director
and the Company regarding the grant of Units described herein and supersedes
all prior oral and written agreements on that subject.

	 	 	 
	AVALONBAY COMMUNITIES, INC.

	 	DIRECTOR:
	 
	 	 
	By:                                                                               

	 	                                                                                                  
	Signature

	 	Signature
	
Title:                                                                            

	 	
Name (Print):                                                                            
	
Date:                                                                            

	 	
Date:                                                                                         

ATTACHMENT: Restricted Unit Agreement Terms

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AVALONBAY COMMUNITIES, INC.

RESTRICTED UNIT AGREEMENT TERMS

ARTICLE I

DEFINITIONS

     The following terms used below in this Agreement shall have the meaning
specified below unless the context clearly indicates to the contrary.
Capitalized terms not otherwise defined herein shall have the meanings set
forth in the Plan.

Section 1.1 - Cause

     “Cause” means and shall be limited to (a) an affirmative vote of the
holders of at least 75 percent of the shares entitled to vote at a meeting of
stockholders called for the purpose, resolving that the Director should be
removed from office or (b) a vote of the Board of Directors, the Nominating
Committee, if any, or any other authorized committee of the Board of Directors
resolving that the Director should not be nominated for re-election as a
director, in either case, as a result of (i) conviction of a felony, (ii)
declaration of unsound mind by order of a court, (iii) gross dereliction of
duty, (iv) commission of any act involving moral turpitude or (v) commission of
an act that constitutes intentional misconduct or a knowing violation of law if
such action in either event results in both an improper substantial personal
benefit to such Director and a material injury to the Company.

Section 1.2 - Common Stock

     “Common Stock” shall mean the common stock of the Company, $.01 par value.

Section 1.3 – Deferred Stock

     “Deferred Stock” shall mean phantom stock of the Company. Each share of
Deferred Stock shall have the same value as each share of Common Stock and
shall be ultimately distributed to the Director in the form of Common Stock.

Section 1.4 - Restrictions

     “Restrictions” shall mean the restrictions set forth in Article III of
this Agreement.

Section 1.5 - Secretary

     “Secretary” shall mean the secretary of the Company.

Section 1.6  - Unvested Units

     “Unvested Units” shall mean the Units (as defined in the Restricted Unit
Agreement)

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issued under this Agreement for as long as such Units are subject to the
Restrictions (as hereinafter defined) imposed by this Agreement.

ARTICLE II

RESTRICTED UNITS

Section 2.1 - Unvested Units

     Any Units granted on the Award Date pursuant to this Agreement shall be
considered Unvested Units for purposes of this Agreement and shall be subject
to the Restrictions until such time or times and except to the extent that the
Director’s ownership interest in Units vests in accordance with the Vesting
Schedule set forth on the first page of this Agreement.

Section 2.2 - Rights as Stockholder

     From and after the Award Date, the Director shall not have any of the
rights of a stockholder with respect to the Units until the Units are
distributed to the Director in the form of Common Stock, except with respect to
Dividend Equivalent Rights as set forth on Section 2.3.

Section 2.3 – Dividend Equivalent Rights

     All Units granted hereunder shall carry Dividend Equivalent Rights which
shall entitle the Director to receive additional Units, based on the amount of
actual dividends payable by the Company with respect to the Common Stock. The
amount of dividend equivalents credited to the Director’s Units following each
calendar quarter shall be converted to additional Units based on the Fair
Market Value of the Common Stock on the last day of such calendar quarter.
Such additional Units shall also carry Dividend Equivalent Rights. All
additional Units credited to a Director’s account pursuant to this Section 2.3
shall be fully vested at all times.

ARTICLE III

RESTRICTIONS

Section 3.1 - Reversion of Unvested Units

     Except as provided in clauses (a) through (e) of this sentence or in the
following paragraph, any interest of the Director in Units that are Unvested
Units shall immediately terminate if the Director’s service as a director of
the Company terminates for any reason, unless such termination of service
results from (a) death of the Director, (b) Disability of the Director, (c)
removal of the Director from office by vote of the Company’s stockholders for
any reason other than for Cause, (d) failure by the Board of Directors or any
authorized committee thereof to nominate the Director for re-election for any
reason other than for Cause or (e) failure of the Company’s stockholders to
re-elect the Director.

     In the event that the Director resigns or declines to accept nomination
for re-election, any Units that are Unvested Units shall continue to vest on
the dates provided in this Agreement as if

3

 

the Director continued to serve on the Board of Directors unless the Board
of Directors or any authorized committee thereof determines in good faith that
there exist reasonable grounds on which the stockholders of the Company could
remove the Director for Cause (in which case any interest of the Director in
Units that are Unvested Units shall immediately upon such determination
terminate).

     Notwithstanding the provisions of the preceding two paragraphs, in the
event that any Unvested Units are forfeited, the Director shall be entitled to
retain any Units credited to his account pursuant to the Dividend Equivalent
Rights accrued on the Unvested Units in accordance with Section 2.3 before the
date of such event.

Section 3.2 – Units Not Transferable

     No Units, whether vested or unvested, or any interest or right therein or
part thereof shall be liable for the debts, contracts or engagements of the
Director or his successors in interest or shall be subject to disposition by
transfer, alienation, anticipation, pledge, encumbrance, assignment or any
other means whether such disposition be voluntary or involuntary or by
operation of law or judgment, levy, attachment, garnishment or any other legal
or equitable proceedings (including bankruptcy), and any attempted disposition
thereof shall be null and void and of no effect; provided, however, that this
Section 3.2 shall not prevent transfers by will or by applicable laws of
descent and distribution until the Units are distributed to the Director in
shares of Common Stock. Until such time when the shares of Common Stock are
distributed to the Director, the Director’s rights under this Agreement shall
be similar to that of an unsecured creditor of the Company.

Section 3.3 – Adjustments; Restrictions on New Units

     In the event that the outstanding shares of the Company’s Common Stock are
changed into or exchanged for a different number or kind of shares or other
securities of the Company, or a stock split-up or stock dividend, the Committee
shall make an appropriate adjustment to the number of Units credited to the
Director. Any such additional Units attributable to Unvested Units shall be
considered to be Unvested Units and shall be subject to all of the terms and
conditions of this Agreement, including but not limited to the Restrictions.

Section 3.4 – Timing and Form of Distribution

     The Units shall be exchanged into shares of Common Stock on a one-for-one
basis and shall be distributed to the Director at such time as the Director may
have previously elected in writing to the Company. Any fractional Unit shall
be distributed in cash at the same time.

ARTICLE IV

MISCELLANEOUS

Section 4.1 - Conditions to Issuance of Stock Certificates

4

 

     The Company shall not be required to issue or deliver any certificate or
certificates for shares of stock pursuant to this Agreement prior to
fulfillment of all of the following conditions:

     (a)     The admission of such shares to listing on all stock exchanges
on which such class of stock is then listed; and

     (b)     The completion of any registration or other qualification of
such shares under any state or Federal law or under rulings or
regulations of the Securities and Exchange Commission or of any other
governmental regulatory body, which the Company shall deem necessary or
advisable; and

     (c)     The obtaining of any approval or other clearance
from any state or Federal governmental agency which the
Company shall, in its absolute discretion, determine to be
necessary or advisable.

Section 4.2 - Administration

     The Committee shall have the power to interpret the Plan, this Agreement
and all other documents relating to Unvested Stock and to adopt such rules for
the administration, interpretation and application of the Plan as are
consistent therewith and to interpret, amend or revoke any such rules. All
actions taken and all interpretations and determinations made by the Committee
in good faith shall be final and binding upon the Director, the Company and all
other interested person. No member of the Committee shall be personally liable
for any action, determination or interpretation made in good faith with respect
to the Plan or Unvested Stock and all members of the Committee shall be fully
protected by the Company in respect to any such action, determination or
interpretation. The Board shall have no right to exercise any of the rights or
duties of the Committee under the Plan and this Agreement.

Section 4.3 - Notices

     Any notice to be given under the terms of this Agreement to the Company
shall be addressed to the Company in care of its Secretary, and any notice to
be given to the Director shall be addressed to him at the address maintained in
the Company’s records. By a notice given pursuant to this Section 4.3, either
party may hereafter designate a different address for notices to be given to it
or him. Any notice which is required to be given to the Director shall, if the
Director is then deceased, be given to the Director’s personal representative
if such representative has previously informed the Company of his status and
address by written notice under this Section 4.3. Any notice shall have been
deemed duly given when enclosed in a properly sealed envelope or wrapper
addressed as aforesaid and deposited (with postage prepaid) in a post office or
branch post office regularly maintained by the United States Postal Service.

Section 4.4 - Titles

     Titles and captions are provided herein for convenience only and are not
to serve as a basis for interpretation or construction of this Agreement.

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Section 4.5 - Amendment

     This Agreement may be amended only by a writing executed by the parties
hereto which specifically states that it is amending this Agreement.

Section 4.6 - Governing Law

     The laws of the State of Maryland shall govern the interpretation,
validity, administration, enforcement and performance of the terms of this
Agreement regardless of the law that might be applied under principles of
conflicts of laws.

Section 4.7 - Counterparts

     This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.

Section 4.8 - No Special Rights

     This Agreement does not, and shall not be interpreted to, create any right
on the part of the Director to nomination, election or continued service as a
director of the Company or any subsidiary or affiliate thereof, nor to any
continued compensation, prerequisites or other current or future benefits or
other incidents of such service nor shall it interfere with or restrict in any
way any right or power, which is hereby expressly reserved, to remove or not to
renominate the Director at any time for any reason whatsoever, with or without
cause.

[End of Text]

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