Document:

Exhibit 10.11

 

2004 LONG TERM INCENTIVE COMPENSATION PLAN OPTION AWARD FOR
EMPLOYEE WITH EMPLOYMENT AGREEMENT

 

EXTRA SPACE STORAGE INC.

2004 LONG TERM INCENTIVE COMPENSATION PLAN

 

OPTION AWARD AGREEMENT

 

AGREEMENT
by and between Extra Space Storage Inc., a self-administered Maryland
corporation (the “Company”) and                     
(the “Optionee”), dated as of the 12th day of August, 2004.

 

WHEREAS,
the Company maintains the Extra Space Storage Inc. 2004 Long Term Incentive
Compensation Plan (as amended from time to time, the “Plan”) (capitalized terms
used but not defined herein shall have the respective meanings ascribed thereto
by the Plan (which are set forth in Appendix A, attached hereto for your
convenience));

 

WHEREAS,
the Optionee is an employee of the Company or its Subsidiaries; and

 

WHEREAS,
the Committee has determined that it is in the best interests of the Company
and its shareholders to grant a stock option to the Optionee subject to the
terms and conditions set forth below.

 

NOW,
THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

 

1.
Grant of Stock Option.

 

The
Company hereby grants the Optionee an Option to purchase         
shares of Common Stock, subject to the following terms and conditions and
subject to the provisions of the Plan. The Plan is hereby incorporated herein
by reference as though set forth herein in its entirety.

 

The
Option is not intended to be and shall not be qualified as an “incentive stock
option” under Section 422 of the Code.

 

2.
Option Price.

 

The
Option Price per Share shall be $12.50.

 

 

3. Initial Exercisability.

 

(a)             Subject to paragraph 5 below,
the Option, to the extent that there has been no termination of the Optionee’s
employment and the Option has not otherwise expired or been forfeited, shall
become exercisable as follows:

 

	
  For the Period Ending On

  	
   

  	
  Percent of the Grant Exercisable

  
	
  August 12, 2005

  	
   

  	
  25%

  
	
  August 12, 2006

  	
   

  	
  25%

  
	
  August 12, 2007

  	
   

  	
  25%

  
	
  August 12, 2008

  	
   

  	
  25%

  

 

(b)            Notwithstanding the
foregoing, the Option shall also become exercisable and otherwise vested (i) if
and as provided in the employment agreement between the Optionee and the
Company, dated as of 
            
, as amended from time to time (the “Employment Agreement”) to the same extent
as they would were the provisions of the Employment Agreement relating to such
exercisability and vesting applicable by their terms to the Options, if and to
the extent the Employment Agreement is in effect at the relevant time, and
nothing herein shall limit any of the Optionee’s rights under the Employment Agreement
and (ii) upon a Change in Control while the Optionee is employed.

 

4.
Exercisability Upon and After Termination of Optionee.

 

(a)             In the event of the
Optionee’s Termination of Service other than a termination by the Optionee
without Good Reason (as defined in the Employment Agreement, if and to the
extent the Employment Agreement is in effect at the relevant time), termination
by the Company and its Subsidiaries for Cause (as defined in the Employment
Agreement, if and to the extent the Employment Agreement is in effect at the
relevant time) or termination by reason of death, Retirement or Disability, no
exercise of the Option may occur after the expiration of the three-month period
to follow such termination, or if earlier, the expiration of the term of the
Option set forth in paragraph 5 below; provided that, if the Optionee should
die after a Termination of Service, but while the Option is still in effect,
the Option (if and to the extent otherwise exercisable under paragraph 3(a) above)
may be exercised in the manner provided by the Plan until the earlier of (i) one
year from the date of the Termination of Service of the Optionee, or (ii) the
date on which the term of the Option expires in accordance with paragraph 5
below.

 

(b)            In the event the Optionee has
a Termination of Service on account of death, Disability or Retirement, the
Option may be exercised until the earlier of (i) one year from the date of
the Termination of Service of the Optionee, or (ii) the date on which the
term of the Option expires as provided under paragraph 5 below.

 

(c)             Notwithstanding any other
provision of this Agreement, if (i) the Optionee has a Termination of
Service by the Company or a Subsidiary for Cause or (ii) the Optionee
terminates employment with the Company and its Subsidiaries without Good Reason
(other than on account of death, Retirement or Disability), the Optionee’s
Options, to the extent then unexercised, shall thereupon cease to be
exercisable and shall be forfeited forthwith.

 

(d)            Other than as specified below,
no Option (or portion thereof) which had not become exercisable at the time of
cessation of employment shall ever be or become exercisable. No provision of
this paragraph 4 is intended to or shall permit the exercise of the Option to
the extent the Option was not exercisable upon cessation of employment.

 

(e)             The Committee may, in its
sole discretion, accelerate all or a portion of the vesting of any Option upon
the cessation of the Optionee’s employment for any reason (other than a
termination by the Company for Cause).

 

2

 

5. Term.

 

Unless
earlier forfeited, the Option shall, notwithstanding any other provision of
this Agreement, expire in its entirety upon the 10th anniversary of the date
hereof. The Option shall also expire and be forfeited at such earlier times and
in such circumstances as otherwise provided hereunder or under the Plan.

 

6.
Miscellaneous.

 

(a)             THIS
AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF MARYLAND WITHOUT
REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS.  The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect. This Agreement may
not be amended or modified except by a written agreement executed by the
parties hereto or their respective successors and legal representatives. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement.

 

(b)            The Committee may make such rules and
regulations and establish such procedures for the administration of this
Agreement as it deems appropriate. Without limiting the generality of the
foregoing, the Committee may interpret this Agreement, with such
interpretations to be conclusive and binding on all persons and otherwise
accorded the maximum deference permitted by law, provided that the Committee’s
interpretation shall not be entitled to deference on and after a Change in
Control except to the extent that such interpretations are made exclusively by
members of the Committee who are individuals who served as Committee members
before the Change in Control. In the event of any dispute or disagreement as to
the interpretation of this Agreement or of any rule, regulation or procedure,
or as to any question, right or obligation arising from or related to this
Agreement, the decision of the Committee shall be final and binding upon all
persons.

 

(c)             All notices hereunder shall
be in writing, and if to the Company or the Committee, shall be delivered to
the Board or mailed to its principal office, addressed to the attention of the
Board; and if to the Optionee, shall be delivered personally, sent by email or
facsimile transmission or mailed to the Optionee at the address appearing in
the records of the Company. Such addresses may be changed at any time by
written notice to the other party given in accordance with this paragraph 6(c).

 

(d)            The failure of the Optionee
or the Company to insist upon strict compliance with any provision of this
Agreement or the Plan, or to assert any right the Optionee or the Company,
respectively, may have under this Agreement or the Plan, shall not be deemed to
be a waiver of such provision or right or any other provision or right of this
Agreement or the Plan.

 

(e)             The Optionee agrees that, at
the request of the Committee, the Optionee shall represent to the Company in
writing that the Shares being acquired are acquired for investment only and not
with a view to distribution and that such Shares will be disposed of only if
registered for sale under the Securities Act or if there is an available
exemption for such disposition. The Optionee expressly understands and agrees
that, in the event of such a request, the making of such representation shall
be a condition precedent to receipt of Shares upon exercise of the Option.

 

(f)               Nothing in this Agreement
shall confer on the Optionee any right to continue in the employ of the Company
or its Subsidiaries or interfere in any way with the right of the Company or
its Subsidiaries to terminate the Optionee’s employment at any time.

 

(g)            This Agreement contains the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all prior agreements, written or oral, with respect thereto,
other than the Employment Agreement if and to the extent the Employment
Agreement is in effect at the relevant time.

 

3

 

IN
WITNESS WHEREOF, the C ompany and the Optionee have executed this Agreement as
of the day and year first above written.

 

 

	
  EXTRA
  SPACE STORAGE INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  [Optionee’s
  Name]

  	
   

  

 

Appendix A

 

Please
note, the definitions contained in this Appendix A are provided for your
convenience, and at all times, such definitions shall have the meaning ascribed
thereto under the Plan, as may be amended from time to time.

 

“Award
Agreement” means a written agreement in a form approved by the Committee to be
entered into between the Company and the Participant as provided in Section 3
of the Plan.

 

“Board”
means the Board of Directors of the Company.

 

“Change
in Control” means the happening of any of the following:

 

(i) any
“person,” including a “group” (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act, but excluding (A) the Company, (B) any
entity controlling, controlled by or under common control with the Company, (C) any
employee benefit plan of the Company or any entity described in clause (B), (D) with
respect to any particular Participant, the Participant and any “group” (as such
term is used in Section 13(d)(3) of the Exchange Act) of which the
Participant is a member), (E) Kenneth M. Woolley, his affiliates,
associates and people acting in concert with any of the foregoing and (F) Spencer
F. Kirk, his affiliates, associates and people acting in concert with any of
the foregoing, is or becomes the “beneficial owner” (as defined in Rule 13(d)(3) under
the Exchange Act), directly or indirectly, of securities of the Company
representing 20% or more of either (1) the combined voting power of the
Company’s then outstanding securities or (2) the then outstanding Shares
(in either such case other than as a result of an acquisition of securities
directly from the Company); provided, however, that, in no event shall a Change
in Control be deemed to have occurred upon an initial public offering of the
Common Stock under the Securities Act; or

 

(ii) any
consolidation or merger of the Company where the shareholders 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 Exchange Act), directly or indirectly, shares representing in the
aggregate 50% or more of the combined voting power of the securities of the
corporation issuing cash or securities in the consolidation or merger (or of
its ultimate parent corporation, if any); or

 

(iii) there
shall occur (A) 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

 

4

 

the
assets of the Company, other than a sale or disposition by the Company of all
or substantially all of the Company’s assets to an entity, at least 50% of the
combined voting power of the voting securities of which are owned by “persons”
(as defined above) in substantially the same proportion as their ownership of
the Company immediately prior to such sale or (B) the approval by
shareholders of the Company of any plan or proposal for the liquidation or
dissolution of the Company; or

 

(iv) the
members of the Board at the beginning of any consecutive 24-calendar-month
period (the “Incumbent Directors”) cease for any reason other than due to death
to constitute at least a majority of the members of the Board; provided that
any director whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the members of
the Board then still in office who were members of the Board at the beginning
of such 24-calendar-month period, shall be deemed to be an Incumbent Director.

 

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

 

“Committee”
means the Committee appointed by the Board under Section 3 of the Plan.

 

“Common
Stock” means the Company’s Common Stock, par value $.01 per share, either
currently existing or authorized hereafter.

 

“Director”
means a non-employee director of the Company or its Subsidiaries.

 

“Disability”
means the occurrence of an event which would entitle an employee of the Company
to the payment of disability income under one of the Company’s approved
long-term disability income plans or, in the absence of such a plan, unless
otherwise provided by the Committee in the Participant’s Award Agreement, a
disability which renders the Participant incapable of performing all of his or
her material duties for a period of at least 180 consecutive or non-consecutive
days during any consecutive twelve-month period.

 

“Grantee”
means an employee, Director and consultant granted Restricted Stock, Phantom
Shares or Dividend Equivalent Rights or such other equity-based Awards as may
be granted pursuant to Section 9 of the Plan.

 

“Option”
means the right to purchase, at a price and for the term fixed by the Committee
in accordance with the Plan, and subject to such other limitations and
restrictions in the Plan and the applicable Award Agreement, a number of Shares
determined by the Committee.

 

“Option
Price” means the exercise price per Share.

 

“Participant”
means a Grantee or Optionee.

 

“Retirement”
means the Termination of Service of a Participant with the Company under
circumstances which would entitle an employee of the Company to an immediate
pension under one of the Company’s approved retirement plans, or, in the
absence of such a plan, unless otherwise provided by the Committee in the
Participant’s Award Agreement, the Termination of Service (other than for
Cause) of a Participant on or after the Participant’s attainment of age 65 or
on or after the Participant’s attainment of age 55 with five consecutive years
of service with the Company and or its Subsidiaries or its affiliates.

 

“Securities
Act” means the Securities Act of 1933, as amended.

 

5

 

“Shares” means shares of Common Stock of the Company.

 

“Subsidiary”
means any corporation (other than the Company), partnership or other entity at
least 50% of the economic interest in the equity of which is owned by the Company
or by another subsidiary.

 

“Successor
of the Optionee” means the legal representative of the estate of a deceased
Optionee or the person or persons who shall acquire the right to exercise an
Option by bequest or inheritance or by reason of the death of the Optionee.

 

“Termination
of Service” means a Participant’s termination of employment or other service,
as applicable, with the Company and its Subsidiaries. Cessation of service as
an officer, or employee, Director and consultant shall not be treated as a
Termination of Service if the Participant continues without interruption to
serve thereafter in another one (or more) of such other capacities.

 

6

 

Schedule
to Exhibit 10.11

 

As of the date of filing
this report, the Company has entered into this form of Long Term Incentive
Compensation Plan Option Award Agreement with the following current or former
executive officers (each of whom had an employment agreement with the Company
at the time):  Kenneth M. Woolley, Kent
W. Christensen, Charles L. Allen and Karl Haas. 
In accordance with Instruction 2 to Item 601 of Regulation S-K, the
Company has filed only the form of such agreement as the award agreements are
substantially identical in all material respects, except as to the parties
thereto, the dates of execution, the number of stock options awarded and the
exercise price of such options.  The
Company agrees to furnish the agreements at the request of the SEC.Exhibit 10.12

 

2004 LONG TERM INCENTIVE COMPENSATION PLAN OPTION AWARD FOR
EMPLOYEE WITHOUT EMPLOYMENT AGREEMENT

 

EXTRA SPACE STORAGE INC.

2004 LONG TERM INCENTIVE COMPENSATION PLAN

 

OPTION AWARD AGREEMENT

 

AGREEMENT
by and between Extra Space Storage Inc., a self-administered Maryland
corporation (the “Company”) and                     
(the “Optionee”), dated as of the 12th day of August, 2004.

 

WHEREAS,
the Company maintains the Extra Space Storage Inc. 2004 Long Term Incentive
Compensation Plan (as amended from time to time, the “Plan”) (capitalized terms
used but not defined herein shall have the respective meanings ascribed thereto
by the Plan (which are set forth in Appendix A, attached hereto for your
convenience));

 

WHEREAS,
the Optionee is an employee of the Company or its Subsidiaries; and

 

WHEREAS,
the Committee has determined that it is in the best interests of the Company
and its shareholders to grant a stock option to the Optionee subject to the
terms and conditions set forth below.

 

NOW,
THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

 

1.
Grant of Stock Option.

 

The
Company hereby grants the Optionee an Option to purchase         
shares of Common Stock, subject to the following terms and conditions and
subject to the provisions of the Plan. The Plan is hereby incorporated herein
by reference as though set forth herein in its entirety.

 

The
Option is not intended to be and shall not be qualified as an “incentive stock
option” under Section 422 of the Code.

 

2.
Option Price.

 

The
Option Price per Share shall be $12.50.

 

 

3. Initial Exercisability.

 

(c)             Subject to paragraph 5 below,
the Option, to the extent that there has been no termination of the Optionee’s
employment and the Option has not otherwise expired or been forfeited, shall
become exercisable as follows:

 

	
  For the Period Ending On

  	
   

  	
  Percent of the Grant Exercisable

  
	
  August 12, 2005

  	
   

  	
  25%

  
	
  August 12, 2006

  	
   

  	
  25%

  
	
  August 12, 2007

  	
   

  	
  25%

  
	
  August 12, 2008

  	
   

  	
  25%

  

 

(d)            Notwithstanding the
foregoing, the Option shall also become exercisable and otherwise vested upon a
Change in Control while the Optionee is employed.

 

4.
Exercisability Upon and After Termination of Optionee.

 

(a)             In the event of the
Optionee’s Termination of Service other than a termination by the Optionee for
any reason, termination by the Company and its Subsidiaries for Cause or
termination by reason of death, Retirement or Disability, no exercise of the
Option may occur after the expiration of the three-month period to follow such
termination, or if earlier, the expiration of the term of the Option set forth
in paragraph 5 below; provided that, if the Optionee should die after a
Termination of Service, but while the Option is still in effect, the Option (if
and to the extent otherwise exercisable under paragraph 3(a) above) may be
exercised in the manner provided by the Plan until the earlier of (i) one
year from the date of the Termination of Service of the Optionee, or (ii) the
date on which the term of the Option expires in accordance with paragraph 5
below.

 

(b)            In the event the Optionee has
a Termination of Service on account of death, Disability or Retirement, the
Option may be exercised until the earlier of (i) one year from the date of
the Termination of Service of the Optionee, or (ii) the date on which the
term of the Option expires as provided under paragraph 5 below.

 

(c)             Notwithstanding any other
provision of this Agreement, if (i) the Optionee has a Termination of
Service by the Company or a Subsidiary for Cause or (ii) the Optionee
terminates employment with the Company and its Subsidiaries for any reason
(other than on account of death, Retirement or Disability), the Optionee’s
Options, to the extent then unexercised, shall thereupon cease to be
exercisable and shall be forfeited forthwith.

 

(d)            Other than as specified
below, no Option (or portion thereof) which had not become exercisable at the
time of cessation of employment shall ever be or become exercisable. No
provision of this paragraph 4 is intended to or shall permit the exercise of
the Option to the extent the Option was not exercisable upon cessation of
employment.

 

(e)             The Committee may, in its
sole discretion, accelerate all or a portion of the vesting of any Option upon
the cessation of the Optionee’s employment for any reason (other than a
termination by the Company for Cause).

 

5.
Term.

 

Unless
earlier forfeited, the Option shall, notwithstanding any other provision of
this Agreement, expire in its entirety upon the 10th anniversary of the date
hereof. The Option shall also expire and be forfeited at such earlier times and
in such circumstances as otherwise provided hereunder or under the Plan.

 

6.
Miscellaneous.

 

(a)             THIS
AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF MARYLAND WITHOUT
REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS.  The captions of this Agreement are not part
of the provisions hereof and shall have no force or effect. This Agreement may
not be amended or modified except by a written agreement executed

 

2

 

by
the parties hereto or their respective successors and legal representatives.
The invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement.

 

(b)            The Committee may make such rules and
regulations and establish such procedures for the administration of this
Agreement as it deems appropriate. Without limiting the generality of the
foregoing, the Committee may interpret this Agreement, with such
interpretations to be conclusive and binding on all persons and otherwise
accorded the maximum deference permitted by law, provided that the Committee’s
interpretation shall not be entitled to deference on and after a Change in
Control except to the extent that such interpretations are made exclusively by members
of the Committee who are individuals who served as Committee members before the
Change in Control. In the event of any dispute or disagreement as to the
interpretation of this Agreement or of any rule, regulation or procedure, or as
to any question, right or obligation arising from or related to this Agreement,
the decision of the Committee shall be final and binding upon all persons.

 

(c)             All notices hereunder shall
be in writing, and if to the Company or the Committee, shall be delivered to
the Board or mailed to its principal office, addressed to the attention of the
Board; and if to the Optionee, shall be delivered personally, sent by email or
facsimile transmission or mailed to the Optionee at the address appearing in
the records of the Company. Such addresses may be changed at any time by
written notice to the other party given in accordance with this paragraph 6(c).

 

(d)            The failure of the Optionee
or the Company to insist upon strict compliance with any provision of this
Agreement or the Plan, or to assert any right the Optionee or the Company,
respectively, may have under this Agreement or the Plan, shall not be deemed to
be a waiver of such provision or right or any other provision or right of this
Agreement or the Plan.

 

(e)             The Optionee agrees that, at
the request of the Committee, the Optionee shall represent to the Company in
writing that the Shares being acquired are acquired for investment only and not
with a view to distribution and that such Shares will be disposed of only if
registered for sale under the Securities Act or if there is an available
exemption for such disposition. The Optionee expressly understands and agrees
that, in the event of such a request, the making of such representation shall
be a condition precedent to receipt of Shares upon exercise of the Option.

 

(f)               Nothing in this Agreement
shall confer on the Optionee any right to continue in the employ of the Company
or its Subsidiaries or interfere in any way with the right of the Company or
its Subsidiaries to terminate the Optionee’s employment at any time.

 

(g)            This Agreement contains the
entire agreement between the parties with respect to the subject matter hereof
and supersedes all prior agreements, written or oral, with respect thereto.

 

IN
WITNESS WHEREOF, the Company and the Optionee have executed this Agreement as
of the day and year first above written.

 

 

	
  EXTRA
  SPACE STORAGE INC.

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  [Optionee’s
  Name]

  	
   

  

 

3

 

Appendix A

 

Please
note, the definitions contained in this Appendix A are provided for your
convenience, and at all times, such definitions shall have the meaning ascribed
thereto under the Plan, as may be amended from time to time.

 

“Award
Agreement” means a written agreement in a form approved by the Committee to be
entered into between the Company and the Participant as provided in Section 3
of the Plan.

 

“Board”
means the Board of Directors of the Company.

 

“Cause”
means, unless otherwise provided in the Participant’s Award Agreement, (i) engaging
in (A) willful or gross misconduct or (B) willful or gross neglect, (ii) repeatedly
failing to adhere to the directions of superiors or the Board or the written
policies and practices of the Company or its Subsidiaries or its affiliates, (iii) the
commission of a felony or a crime of moral turpitude, or any crime involving
the Company or its Subsidiaries, or any affiliate thereof, (iv) fraud,
misappropriation or embezzlement, (v) a material breach of the Participant’s
employment agreement (if any) with the Company or its Subsidiaries or its
affiliates, or (vi) any illegal act detrimental to the Company or its
Subsidiaries or its affiliates; provided, however, that, if at any particular
time the Participant is subject to an effective employment agreement with the
Company, then, in lieu of the foregoing definition, “Cause” shall at that time
have such meaning as may be specified in such employment agreement.

 

“Change
in Control” means the happening of any of the following:

 

(i) any
“person,” including a “group” (as such terms are used in Sections 13(d) and
14(d) of the Exchange Act, but excluding (A) the Company, (B) any
entity controlling, controlled by or under common control with the Company, (C) any
employee benefit plan of the Company or any entity described in clause (B), (D) with
respect to any particular Participant, the Participant and any “group” (as such
term is used in Section 13(d)(3) of the Exchange Act) of which the
Participant is a member), (E) Kenneth M. Woolley, his affiliates,
associates and people acting in concert with any of the foregoing and (F) Spencer
F. Kirk, his affiliates, associates and people acting in concert with any of
the foregoing, is or becomes the “beneficial owner” (as defined in Rule 13(d)(3) under
the Exchange Act), directly or indirectly, of securities of the Company
representing 20% or more of either (1) the combined voting power of the
Company’s then outstanding securities or (2) the then outstanding Shares
(in either such case other than as a result of an acquisition of securities
directly from the Company); provided, however, that, in no event shall a Change
in Control be deemed to have occurred upon an initial public offering of the
Common Stock under the Securities Act; or

 

(ii) any
consolidation or merger of the Company where the shareholders 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 Exchange Act), directly or indirectly, shares representing in the
aggregate 50% or more of the combined voting power of the securities of the
corporation issuing cash or securities in the consolidation or merger (or of
its ultimate parent corporation, if any); or

 

(iii) there
shall occur (A) 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,
other than a sale or disposition by the Company of all or substantially all of
the Company’s assets to an entity, at least 50% of the combined voting power of
the voting securities of which are owned by “persons” (as defined above) in
substantially the same proportion as their ownership of the Company immediately
prior to such sale or (B) the approval by shareholders of the Company of
any plan or proposal for the liquidation or dissolution of the Company; or

 

 

(iv) the members of the Board at the beginning
of any consecutive 24-calendar-month period (the “Incumbent Directors”) cease
for any reason other than due to death to constitute at least a majority of the
members of the Board; provided that any director whose election, or nomination
for election by the Company’s shareholders, was approved by a vote of at least
a majority of the members of the Board then still in office who were members of
the Board at the beginning of such 24-calendar-month period, shall be deemed to
be an Incumbent Director.

 

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

 

“Committee”
means the Committee appointed by the Board under Section 3 of the Plan.

 

“Common
Stock” means the Company’s Common Stock, par value $.01 per share, either
currently existing or authorized hereafter.

 

“Director”
means a non-employee director of the Company or its Subsidiaries.

 

“Disability”
means the occurrence of an event which would entitle an employee of the Company
to the payment of disability income under one of the Company’s approved
long-term disability income plans or, in the absence of such a plan, unless
otherwise provided by the Committee in the Participant’s Award Agreement, a
disability which renders the Participant incapable of performing all of his or
her material duties for a period of at least 180 consecutive or non-consecutive
days during any consecutive twelve-month period.

 

“Grantee”
means an employee, Director and consultant granted Restricted Stock, Phantom
Shares or Dividend Equivalent Rights or such other equity-based Awards as may
be granted pursuant to Section 9 of the Plan.

 

“Option”
means the right to purchase, at a price and for the term fixed by the Committee
in accordance with the Plan, and subject to such other limitations and
restrictions in the Plan and the applicable Award Agreement, a number of Shares
determined by the Committee.

 

“Option
Price” means the exercise price per Share.

 

“Participant”
means a Grantee or Optionee.

 

“Retirement”
means the Termination of Service of a Participant with the Company under
circumstances which would entitle an employee of the Company to an immediate
pension under one of the Company’s approved retirement plans, or, in the
absence of such a plan, unless otherwise provided by the Committee in the
Participant’s Award Agreement, the Termination of Service (other than for
Cause) of a Participant on or after the Participant’s attainment of age 65 or
on or after the Participant’s attainment of age 55 with five consecutive years
of service with the Company and or its Subsidiaries or its affiliates.

 

“Securities
Act” means the Securities Act of 1933, as amended.

 

“Shares”
means shares of Common Stock of the Company.

 

2

.

“Subsidiary” means any corporation (other than the
Company), partnership or other entity at least 50% of the economic interest in
the equity of which is owned by the Company or by another subsidiary.

 

“Successor
of the Optionee” means the legal representative of the estate of a deceased
Optionee or the person or persons who shall acquire the right to exercise an
Option by bequest or inheritance or by reason of the death of the Optionee.

 

“Termination
of Service” means a Participant’s termination of employment or other service,
as applicable, with the Company and its Subsidiaries. Cessation of service as
an officer, or employee, Director and consultant shall not be treated as a
Termination of Service if the Participant continues without interruption to
serve thereafter in another one (or more) of such other capacities.

 

3

 

Schedule
to Exhibit 10.12

 

As of the date of filing
this report, the Company has entered into this form of Long Term Incentive
Compensation Plan Option Award Agreement with its employees other than Kenneth
M. Woolley, Kent W. Christensen, Charles L. Allen and Karl Haas (each of whom
had an employment agreement with the Company). 
In accordance with Instruction 2 to Item 601 of Regulation S-K, the
Company has filed only the form of such agreement as the award agreements are
substantially identical in all material respects, except as to the parties
thereto, the dates of execution, the number of stock options awarded and the
exercise price of such options.  The
Company agrees to furnish the agreements at the request of the SEC.

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