EXECUTION COPY
THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS THIRD AMENDED AND RESTATED EXECUTIVE EMPLOYMENT AGREEMENT is dated
as of January 14, 2000, effective as of January 1, 2000, by and between First
Washington Realty Trust, Inc., a Maryland corporation (the "REIT"), and Xxxxxxx
X. Xxxxx (the "Employee").
RECITALS
A. WHEREAS, the REIT and the Employee executed an Executive Employment
Agreement dated as of June 26, 1994, and subsequently executed an Amended and
Restated Executive Employment Agreement dated as of June 30, 1996, and a Second
Amended and Restated Employment Agreement dated as of May 1, 1998 (the "Amended
Agreement");
B. WHEREAS, the REIT and the Employee mutually desire to amend and
restate the Amended Agreement pursuant to the terms set forth herein; and
C. WHEREAS, the REIT wishes to contract for the managerial and business
skills possessed by the Employee and the Employee desires to be employed by the
REIT upon the terms and subject to the conditions herein provided.
NOW, THEREFORE, in consideration of the foregoing premises and mutual
covenants and conditions hereinafter set forth, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereby agree as follows:
AGREEMENT
1. Employment and Duties
(a) Position and Duties. The Employee shall serve as the President and
Chief Executive Officer of the REIT, with such duties and authority as are
customary for, and commensurate with, such position, including developing
policy, supervising staff, directing day- to-day operations, and such other
duties as the Board of Directors of the REIT (the "Board") prescribes. The
Employee shall have such other duties and authority as may from time to time be
delegated or assigned to him by the Board.
(b) Preclusion of Outside Business Activities. During the Term, the
Employee shall devote substantially all of his professional energies, interest,
abilities and productive work time to the performance of duties pursuant to this
Agreement. The Employee shall not, without the prior written consent of the
Board, perform other professional services of any kind or engage in any other
business activity, with or without compensation; provided, however, that the
Employee
shall be allowed (i) to continue to engage in the development of First
Washington Management, Inc., a Maryland corporation ("FWM"), at a level
consistent with past duties; (ii) to engage in administering the business and
activities of First Washington Realty Limited Partnership, a Maryland limited
partnership (the "Operating Partnership"); (iii) to serve as a director on the
boards of up to three (3) non-competing companies; and (iv) to engage in passive
investments that the Employee may make from time to time for his personal
account, so long as the activities described in clauses (i) through (iv) do not
detract or adversely affect the Employee's duties and responsibilities under
this Agreement. The Employee shall not, without the prior written consent of the
Board, engage in any activity adverse to the REIT's interests.
2. Term of Employment
(a) Term. This Agreement shall continue in full force and effect until
June 30, 2002, unless sooner terminated or extended as hereinafter provided (the
"Term").
(b) Extension of Term. The employment term set forth in a paragraph
2(a) above may be extended by written amendment to this Agreement signed by both
parties. The parties agree that they will use their best efforts to negotiate
the extension of this Agreement, if both parties desire such an extension, not
later than twelve months before the scheduled end of the Term.
(c) Termination by the REIT.
(i) Without Cause. The REIT may terminate the Employee's
employment at any time for any reason other than with Cause (as
hereinafter defined) or for no reason at all upon at least two weeks
prior written notice to the Employee; provided, however, that in
connection with such a termination of employment, the REIT may elect
to require the Employee to continue to perform his duties under this
Agreement for an additional sixty (60) days commencing on the date the
Employee receives notice of such termination. In connection with the
termination of the Employee's employment pursuant to this Section
2(c)(i), the Employee shall (A) be paid salary and any bonus payable
to him in accordance with Sections 3(a) and 3(b) hereof accrued
through the effective date of termination; (B) be entitled to the
benefits set forth in Sections 3(c) through 3(e) hereof in accordance
with the terms thereof ; (C) be entitled to the benefits set forth in
Sections 3(f) through 3(h) hereof accrued through the effective date
of such termination in accordance with such plans, programs and
arrangements; (D) receive the Termination Compensation specified in
Section 5(b) hereof; and (E) be entitled to the continuation of
benefits specified in Section 5(d) hereof.
(ii) With Cause. The REIT may terminate the Employee's employment
with Cause immediately upon delivery of notice thereof. In connection
with the termination of the Employee's employment pursuant to this
Section 2(c)(ii), the Employee shall (A) be paid salary and any bonus
payable to him in accordance with Sections 3(a) and 3(b) hereof
accrued through the effective date of termination; (B) be entitled to
the benefits set forth in Sections 3(c) through 3(e) hereof in
accordance with the terms thereof; and (C) be
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entitled to the benefits set forth in Sections 3(f) through 3(h)
hereof accrued through the effective date of such termination in
accordance with such plans, programs and arrangements. For purposes of
this Agreement, "Cause" shall mean the Employee's (A) material
incompetence in the performance of his duties or obligations
hereunder, including, without limitation, those duties and obligations
specified in Section 1(a) hereof; (B) commission of any act which is
materially injurious to the REIT; (C) personal dishonesty, willful
misconduct, or breach of fiduciary duty involving personal profit; (D)
intentional and material failure to perform his stated duties for the
REIT; (E) willful violation of any law which violation materially
adversely affects his ability to discharge his duties for the REIT or
has an adverse effect on the REIT's interest or (F) breach in any
material respect of any of the terms of this Agreement or any
confidentiality or proprietary information agreement between the
Employee and FWM, the Operating Partnership or the REIT; provided,
however, that "Cause" shall not exist unless and until the Board
provides the Employee with (X) at least 15 days prior written notice
of its intention to terminate his employment with Cause, together with
a certified copy of the resolution of the Board approving the
termination of the Employee's employment with Cause by the affirmative
vote of not less than a majority of the Board, and a written statement
describing the nature of the Cause, and (Y) a reasonable opportunity
and a reasonable period of time to cure any curable acts or omissions
on which the finding of Cause is based. If the Employee cures the acts
or omissions on which the finding of Cause is based, the REIT shall
not have Cause to terminate the Employee's employment hereunder.
(d) Termination by the Employee.
(i) With Good Reason or After Change of Control. The Employee may
terminate this Agreement prior to the expiration of the Term upon two
weeks prior written notice to the REIT with Good Reason (as
hereinafter defined) at any time (including within twenty-four (24)
months following any Change of Control (as hereinafter defined) of the
REIT). The Employee shall continue to perform, at the election of the
REIT, his duties under this Agreement for an additional thirty (30)
days following the REIT's receipt of his notice of termination in
accordance with this Section 2(d). In connection with termination of
the Employee's employment pursuant to this Section 2(d), the Employee
shall (A) be paid salary and any bonus otherwise payable to him in
accordance with Sections 3(a) and 3(b) hereof accrued through the
effective date of such termination; (B) be entitled to the benefits
set forth in Sections 3(c) through 3(e) hereof in accordance with the
terms thereof; (C) be entitled to the benefits set forth in Sections
3(f) through 3(h) hereof accrued through the effective date of such
termination in accordance with such plans, programs and arrangements;
(D) receive the Termination Compensation specified in Section 5(b)
hereof; and (E) be entitled to the continuation of benefits specified
in Section 5(d) hereof.
(ii) For purposes of this Section 2(d), "Good Reason" shall mean
(A) the breach by the REIT of any of its obligations hereunder and the
failure of the REIT to cure such breach within sixty (60) days after
receipt by the REIT of a written notice of the
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Employee specifying in reasonable detail the nature of the alleged
breach or (B) any material diminution in the scope of Employee's
responsibilities and duties without his consent.
(iii) For purposes of this Section 2(d), a "Change of Control"
shall mean the first occurrence of any of the following events: (A)
any "person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), other than a trustee or
other fiduciary holding securities under an employee benefit plan of
the REIT, a corporation owned directly or indirectly by the
stockholders of the REIT in substantially the same proportions as
their ownership of stock of the REIT, the Employee or Xxxxxxx X.
Xxxxx, or any of their respective affiliates, becomes the "beneficial
owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities representing 50% or more of the total voting
power represented by the then outstanding securities which vote
generally in the election of directors (referred to herein as "Voting
Securities") of the REIT; (B) during any period of two consecutive
years, individuals who at the beginning of such period constitute the
Board and any new directors whose election by the Board or nomination
for election by the REIT's stockholders was approved by a vote of at
least two-thirds (2/3) the directors then still in office who either
were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute a majority of the Board; (C) the stockholders of
the REIT approve a merger or consolidation of the REIT with any other
entity, other than a merger or consolidation which would result in the
Voting Securities of the REIT outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into Voting Securities of the surviving entity) at least 50%
of the total voting power represented by the Voting Securities of the
REIT or such surviving entity outstanding immediately after such
merger or consolidation; or (D) the stockholders of the REIT approve a
plan of complete liquidation of the REIT or an agreement for the sale
or disposition by the REIT of (in one transaction or a series of
transactions) all or substantially all of the REIT's assets.
(e) Termination Due to Death or Disability. The Employee's employment
hereunder shall terminate immediately upon his death prior to the expiration of
the Term. In the event that by reason of injury, illness or other physical or
mental impairment the Employee shall be: (i) completely unable to perform his
services hereunder for more than six consecutive months or (ii) unable to
perform his services hereunder for fifty percent or more of the normal working
day throughout twelve consecutive months (each of (i) and (ii) constituting the
"Disability" of the Employee for purposes of this Agreement), then the REIT may
terminate the Employee's employment hereunder immediately upon delivery of
notice thereof. In the event of the termination of the Employee's employment
pursuant to this Section 2(e), the Employee or the Employee's beneficiaries,
estate, heirs, representatives or assigns, as appropriate, shall be (A) be paid
the salary and any other bonus otherwise payable to the Employee in accordance
with Sections 3(a) and 3(b) hereof accrued through the effective date of such
termination; (B) be entitled to the benefits set forth in Sections 3(c) through
3(e) hereof in accordance with the terms thereof; (C) receive the Termination
Compensation specified in Section 5(b) hereof; (D) receive the proceeds, if any,
due under any REIT-paid life insurance policy held by the Employee, as
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determined by and in accordance with the terms of any such policy; and (E)
solely in the event of the Employee's Disability, be entitled to the
continuation of benefits specified in Section 5(d) hereof.
(f) Removal as Director. Notwithstanding any other provision of this
Agreement, if the Employee shall be removed from (or fail to be re-elected to)
office as a director of the REIT at any time during the Term, then the Employee
may notify the REIT in writing of his election to terminate this Agreement upon
written notice to the REIT and such notice shall be effective immediately upon
receipt by the REIT. In connection with the Employee's termination of employment
pursuant to this Section 2(f), the Employee shall (A) be paid the salary and any
bonus payable to him in accordance with Sections 3(a) and 3(b) hereof accrued
through the effective date of such termination; (B) be entitled to the benefits
set forth in Sections 3(c) through 3(e) hereof in accordance with the terms
thereof ; (C) be entitled to the benefits set forth in Sections 3(f) through
3(h) hereof accrued through the effective date of such termination in accordance
with such plans, programs and arrangements; (D) receive the Termination
Compensation specified in Section 5(b) hereof and (E) be entitled to the
continuation of benefits specified in Section 5(d) hereof; provided, however,
that the Employee shall not be entitled to the payments and benefits described
in subsections (D) and (E) above if he is removed as a director for cause under
the corporation law of the State of Maryland.
3. Compensation and Related Matters.
(a) Salary. The Employee's annual base salary during the Term shall be
$300,000 per annum effective January 1, 1998. Such salary shall be reviewed by
the Board annually during the first quarter of fiscal year of the REIT during
the Term, and the Employee shall receive such salary increases, if any, as the
Board, in its sole discretion, shall determine; provided, however, that the
Employee's annual base salary shall not be less than $400,000 effective January
1, 2000 and thereafter. Such salary shall be payable in accordance with the
REIT's normal payment practices, but in no event shall such salary be payable
less frequently than monthly in equal installments.
(b) Bonus. Effective January 1, 1999 and thereafter, the Employee shall
be eligible to receive an Annual Incentive Bonus in accordance with the Plan set
forth on Annex A hereto.
(c) Options.
(i) Provided that he is employed by the REIT as of January 1,
2000, effective as of such date the Employee shall be granted, and
hereby is granted, an option to purchase 250,000 shares of Common
Stock at an exercise price equal to the Fair Market Value (as defined
in the Option Plan) of a share of Common Stock on January 1, 2000 (the
"Option") subject to the terms and provisions of the 1994 Stock Option
Plan for Officers, Directors and Employees of First Washington Realty
Trust, Inc., First Washington Realty Limited Partnership and First
Washington Management, Inc. (the "Option Plan") (or a successor option
plan then maintained by the REIT) and a written Stock Option Agreement
between the Employee and the REIT (the "Stock Option
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Agreement"). The Stock Option Agreement shall provide that the Option
shall become exercisable in equal cumulative installments of one-third
each on each of the first three anniversaries of the date of grant
(subject to the Employee's continued employment by the REIT on such
dates) and shall be subject to immediate vesting in the event of the
Employee's termination of employment pursuant to Section 2(c)(i),
2(d), 2(e) or 2(f) (other than in connection with Employee's removal
as a director for cause under the corporation law of the State of
Maryland) or by reason of expiration of the Term without renewal
(collectively an "Early Termination") and shall be the Stock Option
Agreement attached hereto as Annex C.
(ii) If the Employee's employment is terminated in an Early
Termination prior to January 1, 2000, then, effective as January 1,
2000, the Employee shall be granted, and hereby is granted the Option
to purchase 250,000 shares of Common Stock at an exercise price equal
to the Fair Market Value of a share of Common Stock on January 1, 2000
subject, if permitted by the terms thereof, to the Option Plan (or a
successor option plan then maintained by the REIT), and, in any event,
the written Stock Option Agreement between the Employee and the REIT.
The Stock Option Agreement shall provide that the Option shall be
fully exercisable as of the date of grant and shall expire on the date
specified in Section 2(a) herein and shall be the Stock Option
Agreement attached hereto as Annex C.
(d) Restricted Stock.
(i) Provided that he is employed by the REIT as of January 1,
2000, effective as of such date the Employee shall be granted, and
hereby is granted, 150,000 shares of common stock of the REIT (the
"Restricted Stock") subject to the terms and conditions of the First
Washington Realty Trust, Inc. Restricted Stock Plan (the "Stock Plan")
and a written Restricted Stock Agreement between the Employee and the
REIT (the "Restricted Stock Agreement"). The Restricted Stock
Agreement shall provide that shares of the Restricted Stock shall
become vested in cumulative installments of one-sixth, one-third and
one-half, respectively, on each of the first three anniversaries of
the date of grant (subject to the Employee's continued employment by
the REIT on such dates) and shall be subject to immediate vesting in
the event of the Employee's termination of employment in an Early
Termination and shall be the Restricted Stock Agreement attached
hereto as Annex D.
(ii) If the Employee's employment is terminated in an Early
Termination prior to January 1, 2000, then effective immediately prior
to such termination the Employee shall be granted, and hereby is
granted, the 150,000 shares of Restricted Stock subject to the terms
and conditions of the Stock Plan and, in any event, the written
Restricted Stock Agreement between the Employee and the REIT. The
Restricted Stock Agreement shall provide that shares of the Restricted
Stock shall be fully vested on the date of grant and shall be the
Restricted Stock Agreement attached hereto as Annex D.
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(e) Contingent Stock. As provided in the Amended and Restated
Contingent Stock Agreement dated as of May 1, 1998 by and between the REIT and
the Employee attached hereto as Annex E, as amended from time to time (the
"Contingent Stock Agreement"), the Employee shall be entitled to receive shares
of Contingent Stock (as defined therein) pursuant to such agreement. In
accordance with Section 3.2(a) of the Contingent Stock Agreement, the
Compensation Committee of the Board has established the "Performance Goals" (as
defined therein) for fiscal years 2000 through 2003 applicable to the award of
Contingent Stock in the event of the Employee's termination of employment in an
Early Termination during the period beginning on January 1, 2000 and ending on
March 31, 2003 (the "Contingent Stock Period"). In the event of the Employee's
termination of employment in an Early Termination during the Contingent Stock
Period, the Compensation Committee shall certify in writing, as of the effective
date of such Early Termination, whether the REIT's annual operating income for
the portion of the then current fiscal year completed prior to such date equals
or exceeds 80% of the product of (1) the REIT's annual operating income for
fiscal year 1999 and (2) the ratio of (A) the number of days elapsed in the then
current fiscal year prior to the date of Early Termination to (B) the number 365
(the "Early Termination Performance Goal"). If the Early Termination Performance
Goal has been met, the Employee shall receive, within 5 days following the
effective date of such Early Termination, that number of shares of Contingent
Stock equal to (x) 75,000 minus (y) the number of shares of Contingent Stock
awarded to the Employee under Section 3.2 of the Contingent Stock Agreement
prior to such date.
(f) Benefits. During the Term the Employee shall be entitled to
participate in or receive benefits under any employee benefit plan or other
arrangement (including, but not limited to, any medical, dental, retirement,
disability, life insurance, sick leave and vacation plans or arrangements and
the REIT's executive deferred compensation plan) made available by the REIT to
any of its employees, subject to and on a basis consistent with the terms,
conditions and overall administration of such plans or arrangements.
(g) Expenses. The REIT shall promptly pay directly or reimburse the
Employee for all reasonable travel and other business expenses incurred by the
Employee in the performance of his duties to the REIT under this Agreement.
(h) Vacation. The Employee shall be entitled to vacation benefits in
accordance with the REIT's normal vacation policies, but in no event shall he
receive less than four weeks of paid vacation each calendar year during the
Term.
(i) Professional Memberships. The REIT shall promptly pay directly or
reimburse the Employee for all reasonable expenses incurred by the Employee with
respect to professional memberships maintained by him during the Term.
(j) Automobile Allowance. During the Term, the REIT shall provide the
Employee with an automobile allowance for a company automobile of comparable
quality as automobiles customarily provided to executive officers in the
industry. Expenses relating to such automobile will be paid in accordance with
the normal and customary practices of the REIT.
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(k) Deductions and Withholdings. All amounts payable or which become
payable under any provision of this Agreement shall be subject to all deductions
authorized by the Employee and to all deductions and withholdings required by
law.
4. Covenant Not to Compete or Solicit
(a) Non-Competition.
(i) The Employee agrees that during the Term he will not directly
or indirectly engage in (whether as an employee, consultant,
proprietor, partner, director, member or otherwise), or have any
ownership interest in, or participate in the financing, operation,
management or control of, any person, firm, corporation or business
that engages in or intends to engage in a Restricted Business.
"Restricted Business" shall mean any business that is engaged in or
(to the Employee's knowledge after due inquiry) preparing to engage in
the real estate business of the acquisition, development, management
and operation of principally retail shopping centers; provided,
however, that "Restricted Business" shall not include the operation
and management of those properties listed on Annex B hereto.
(ii) The Employee further agrees that for the eighteen (18) month
period following the end of the Term, he will not directly or
indirectly engage in (whether as an employee, consultant, proprietor,
partner, director, member or otherwise), or have any ownership
interest in, or participate in the financing, operation, management or
control of, any person, firm, corporation or business that engages in
or intends to engage in a Post-Employment Restricted Business.
"Post-Employment Restricted Business" shall mean any business that is
engaged in or (to the Employee's knowledge after due inquiry)
preparing to engage in the real estate business of the acquisition,
development, management and operation of principally retail shopping
centers within twenty-five (25) miles of a retail property owned,
directly or through one or more subsidiaries or otherwise, by the
REIT, the Operating Partnership or FWM at the end of the Term;
provided, however, that "Post-Employment Restricted Business" shall
not include the operation and management of those properties listed on
Annex B hereto.
(iii) Ownership of (A) no more than one percent (1%) of the
outstanding voting stock of a publicly traded entity or (B) any stock
owned by the Employee as of June 26, 1994 shall not constitute a
violation of this Section 4(a).
(iv) This Section 4(a) shall not prohibit the Employee from
working for a division or subsidiary of a company which division or
subsidiary does not engage in a Restricted Business or a
Post-Employment Restricted Business, even though other divisions or
subsidiaries of such company do engage in a Restricted Business or
Post- Employment Restricted Business, provided that the REIT receives
adequate assurances as it may request that the Employee has no
involvement with the divisions or subsidiaries engaged in the
Restricted Business or Post-Employment Restricted Business.
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(b) Non-Solicitation. The Employee agrees that during the Term he will
not (i) solicit, encourage or take any other action which is intended to induce
any other employee of the REIT to terminate his or her employment with the REIT
or (ii) interfere in any manner with the contractual or other employment
relationship between the REIT and any such employee of the REIT.
(c) Severability. The parties intend that the covenants contained in
the preceding paragraphs of this Section 4 shall be construed as a series of
separate covenants, one for each county of Maryland, Virginia, Pennsylvania,
North Carolina, South Carolina and Delaware, and to the District of Columbia,
each state of the United States of America and each nation. Except for
geographic coverage, each such separate covenant shall be deemed identical in
terms to the covenant contained in the preceding paragraphs. If, in any judicial
proceeding, a court shall refuse to enforce any of the separate covenants (or
any part thereof) deemed included in said paragraphs, then such unenforceable
covenant (or such part) shall be deemed eliminated from this Agreement for the
purpose of those proceedings to the extent necessary to permit the remaining
separate covenants (or portions thereof) to be enforced. In the event that the
provisions of this Section 4 should ever be deemed to exceed the time, scope or
geographic limitation permitted by applicable law, then such provisions shall be
reformed to the maximum time, scope or geographic limitations, as the case may
be, permitted by applicable law.
5. Termination.
(a) If the Employee's employment is terminated by reason of expiration
of the Term without renewal, then the Employee shall be paid, within 90 days
following the date of expiration of the Term, a lump sum amount (the
"Termination Compensation") equal to 300% of the sum of (i) the Employee's rate
of annual base salary at the time of such expiration of the Term (as determined
pursuant to Section 3(a)) and (ii) the average annual bonus (if any) paid to the
Employee (or, if not yet paid, to which the Employee was entitled) with respect
to the last three calendar years of the Term.
(b) If the Employee's employment is terminated in an Early Termination
other than by reason of expiration of the Term without renewal, then the
Employee shall be paid, within 90 days of the effective date of such
termination, a lump sum amount (the "Severance Compensation") equal to the sum
of:
(i) an amount equal to, and computed in the same manner as, the
Termination Compensation set forth in Section 5(a), as if the
Employee's employment were terminated by reason of the expiration of
the Term without renewal, and
(ii) an amount equal to the greater of:
(A) 200% of the sum of (I) the Employee's rate of annual
base salary at the time of such termination (as determined
pursuant to Section 3(a)) and (II) the average annual bonus (if
any) paid to the Employee (or, if not yet paid, to which the
Employee was entitled) with respect to the last three calendar
years of the Term; or
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(B) the sum of (I) the aggregate annual base salary (as
determined pursuant to Section 3(a)) the Employee would otherwise
be entitled to receive from the effective time of such
termination through the scheduled end of the Term (as determined
pursuant to Section 2(a)) and (II) the average annual bonus (if
any) paid to the Employee (or, if not yet paid, to which the
Employee was entitled) with respect to the last three calendar
years of the Term.
(c) No Termination Compensation shall be paid if the Employee's
employment is terminated during the Term (i) by the REIT with Cause pursuant to
Section 2(c)(ii) hereof or (ii) by the Employee other than in accordance with
Section 2(d) or Section 2(e) or Section 2(f) in connection with the Employee's
failure to be re-elected as a director or his removal as a director without
cause.
(d) If the Employee's employment is terminated prior to the expiration
of the Term for any reason other than pursuant to Section 2(c)(ii) or pursuant
to Section 2(f) in connection with the Employee's removal as a director for
cause under the corporation law of the State of Maryland, the REIT will continue
to provide to the Employee comparable medical, disability and life insurance
benefits as were in effect at the time of termination until such time as the
Term would otherwise have expired if the Employee had not been terminated (but
in no event for a period of less than twenty-four months).
(e) Survival. The expiration or termination of the Term shall not
impair the rights or obligations of any party hereto which shall have accrued
hereunder prior to such expiration, nor shall such expiration or termination
impair the rights and obligations of any party hereto that are intended by their
terms to survive such expiration or termination.
(f) Mitigation of Damages. In the event of any termination of the
Employee's employment with the REIT for any reason, the Employee shall not be
required to seek other employment to mitigate damages, and any income earned by
the Employee from other employment or self-employment shall not be offset
against any obligations of the REIT to the Employee under this Agreement.
6. Excise Taxes
(a) If it is determined (as hereafter provided) that by reason of any
payment or distribution to the Employee, including, without limitation, any
stock option or award of stock or similar right, or the lapse or termination of
any restriction on, or the vesting of, any of the foregoing, occurring pursuant
to the terms of this Agreement (or otherwise under any other agreement, plan or
program) (collectively a "Payment") the Employee would be subject to the excise
tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended
(the "Code) by reason of being considered "contingent on a change in ownership
or control" of the REIT within the meaning of Code Section 280G or to any
similar tax imposed by state or local law or any interest or penalties with
respect to such tax (such taxes, together with any such interest and penalties,
the "Excise Tax"), then the Employee shall be entitled to receive an
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additional payment or payments (a "Gross-Up Payment") in an amount such that,
after payment by the Employee of all taxes (including any Excise Tax) imposed
upon the Gross-Up Payment, the Employee retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payment.
(b) Subject to the provisions of Section 6(f) hereof, all
determinations required to be made under this Section 6, including whether an
Excise Tax is payable by the Employee and the amount of such Excise Tax and
whether a Gross-Up Payment is required and the amount of such Gross-Up Payment,
shall be made by a nationally recognized firm of certified public accountants
(the "Accounting Firm") selected by the REIT. The Accounting Firm shall be
directed by the REIT or the Employee to submit its preliminary determination and
detailed supporting calculations to both the REIT and the Employee within 15
calendar days after the determination date. If the Accounting Firm determines
that any Excise Tax is payable by the Employee, the REIT shall pay the required
Gross-Up Payment to, the Employee within five business days after receipt of
such determination and calculations. If the Accounting Firm determines that no
Excise Tax is payable by the Employee, it shall, at the same time as it makes
such determination, furnish the Employee with an opinion that the Employee has
substantial authority not to report any Excise Tax on his federal tax return. As
a result of the uncertainty in the application of Code Section 4999 at the time
of any determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments that will not have been made by the REIT should have been made
(an "Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the REIT exhausts or fails to pursue its remedies
pursuant to Section 6(f) hereof and the Employee thereafter is required to make
a payment of any Excise Tax, the Employee shall direct the Accounting Firm to
determine the amount of the Underpayment that has occurred and to submit its
determination and detailed supporting calculations to both the REIT and the
Employee as promptly as possible. Any such Underpayment shall be promptly paid
by the REIT to, or for the benefit of, the Employee within five business days
after receipt of such determination and calculations.
(c) The REIT and the Employee shall each provide the Accounting Firm
access to and copies of any books, records and documents in the possession of
the REIT or the Employee, as the case may be, reasonably requested by the
Accounting Firm, and otherwise cooperate with the Accounting Firm in connection
with the preparation and issuance of the determination contemplated by Section
6(b) hereof. Any final determination by the Accounting Firm as to the amount of
the Gross-Up Payment shall be binding upon the REIT and Employee.
(d) The federal, state and local income or other tax returns filed by
the Employee (or any filing made by a consolidated tax group which includes the
REIT) shall be prepared and filed on a basis consistent with the determination
of the Accounting Firm with respect to the Excise Tax payable by the Employee.
The Employee shall make proper payment of the amount of any Excise Tax, and at
the request of the REIT, provide to the REIT true and correct copies (with any
amendments) of his federal income tax return as filed with the Internal Revenue
Service and corresponding state and local tax returns, if relevant, and such
other documents reasonably requested by the REIT, evidencing such payment. If
prior to the filing of the Employee's federal income tax return, or
corresponding state or local return, if relevant, the Accounting Firm
- 11 -
determines in good faith that the amount of the Gross-Up Payment should be
reduced, the Employee shall within five business days pay to the REIT the amount
of such reduction.
(e) The fees and expenses of the Accounting Firm for its services in
connection with the determinations and calculations contemplated by Section 6(b)
hereof shall be borne by the REIT.
(f) In the event that the Internal Revenue Service or any other taxing
authority claims that any payment or benefit received by the Employee from the
REIT constitutes an "excess parachute payment" within the meaning of Code
Section 280G(b)(1), the Employee shall notify the REIT in writing of such claim.
Such notification shall be given as soon as practicable but not later than 10
business days after the Employee is informed in writing of such claim and shall
apprize the REIT of the nature of such claim and the date on which such claim is
requested to be paid. The Employee shall not pay such claim prior to the
expiration of the 30 day period following the date on which the Employee gives
such notice to the REIT (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the REIT notifies the
Employee in writing prior to the expiration of such period that it desires to
contest such claim, the Employee shall (i) give the REIT any information
reasonably requested by the REIT relating to such claim; (ii) take such action
in connection with contesting such claim as the REIT shall reasonably request in
writing from time to time, including without limitation, accepting legal
representation with respect to such claim by an attorney reasonably selected by
the REIT and reasonably satisfactory to the Employee; (iii) cooperate with the
REIT in good faith in order to effectively contest such claim; and (iv) permit
the REIT to participate in any proceedings relating to such claim; provided,
however, that the REIT shall bear and pay directly all costs and expenses
(including, but not limited to, additional interest and penalties and related
legal, consulting or other similar fees) incurred in connection with such
contest and shall indemnify and hold the Employee harmless, on an after-tax
basis, for and against for any Excise Tax or income tax or other tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses.
(g) The REIT shall control all proceedings taken in connection with
such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
the Employee to pay the tax claimed and xxx for a refund or contest the claim in
any permissible manner and the Employee agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the REIT shall determine;
provided, however, that if the REIT directs the Employee to pay such claim and
xxx for a refund, the REIT shall advance the amount of such payment to the
Employee on an interest-free basis, and shall indemnify and hold the Employee
harmless, on an after tax basis, from any Excise Tax (or other tax including
interest and penalties with respect thereto) imposed with respect to such
advance or with respect to any imputed income with respect to such advance; and
provided, further, that if the Employee is required to extend the statue of
limitations to enable the REIT to contest such claim, the Employee may limit
this extension solely to such contested amount. The REIT's control of the
contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Employee
- 12 -
shall be entitled to settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing authority. In
addition, no position may be taken nor any final resolution be agreed to by the
REIT without the Employee's consent if such position or resolution could
reasonably be expected to adversely affect the Employee unrelated to matters
covered hereto.
(h) If, after the receipt by Employee of an amount advanced by the REIT
in connection with the contest of the Excise Tax claim, the Employee receives
any refund with respect to such claim, the Employee shall promptly pay to the
REIT the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto); provided, however, if the amount of
that refund exceeds the amount advanced by the REIT the Employee may retain such
excess. If, after the receipt by the Employee of an amount advanced by the REIT
in connection with an Excise Tax claim, a determination is made that the
Employee shall not be entitled to any refund with respect to such claim and the
REIT does not notify the Employee in writing of its intent to contest the denial
of such refund prior to the expiration of 30 days after such determination such
advance shall be forgiven and shall not be required to be repaid, and shall
offset, to the extent thereof, the amount of Gross-Up Payment required to be
paid by the REIT to Employee pursuant to this Section 6.
7. The Employee's Representations. The Employee represents and warrants to the
REIT as follows:
(a) The Employee is familiar with and approves the covenants not to
compete and not to solicit set forth in Section 4, including, without
limitation, the reasonableness of the length of time, scope and geographic
coverage of these covenants.
(b) Notwithstanding any "what-if" scenarios of the future results of
operations and stock prices of the REIT under certain assumptions which the
parties may have discussed, the Employee has not relied on any such scenarios or
any forecasts or projections provided by the REIT and understands that neither
the REIT nor FWM has made any representation or warranty whatsoever regarding
any forecasts or projections to the Employee.
8. Miscellaneous.
(a) Notices. Any notice, report or other communication required or
permitted to be given hereunder shall be in writing and shall be deemed given
and received on the date of delivery, if delivered in person, or three days
after mailing, if mailed first-class mail, postage prepaid, to the following
addresses:
If to the Employee:
0000 Xxxx-Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx
- 13 -
If to the REIT:
0000 Xxxx-Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attn: General Counsel
or to such other address as any party hereto may designate by notice given as
herein provided.
(b) Entire Agreement. This Agreement contains the entire understanding
and sole and entire agreement between the parties with respect to the subject
matter hereof, and supersedes any and all prior agreements, negotiations and
discussions between the parties hereto with respect to the subject matter
covered hereby. Each party to this Agreement acknowledges that no
representations, inducements, promises or agreements, oral or otherwise, have
been made by any party, or anyone acting on behalf of any party, which are not
embodied herein, and that no other agreement, statement or promise not contained
in this Agreement shall be valid or binding. This Agreement may not be modified
or amended by oral agreement, but only by an agreement in writing signed by the
REIT and by the Employee, and which states the intent of the parties to amend
this Agreement.
(c) Assignment and Binding Effect. Neither this Agreement nor the
rights or obligations hereunder shall be assignable by the Employee. The REIT
may assign this Agreement to any successor of the REIT, and upon such assignment
any such successor shall be deemed substituted for the REIT upon the terms and
subject to the conditions hereof, provided, that substantially all of the assets
of the REIT are also transferred to the same party.
(d) Successor to the REIT. The REIT will require any successor or
assign (whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all the business and/or assets of the REIT,
as the case may be, by agreement in form and substance reasonably satisfactory
to the Employee, expressly, absolutely and unconditionally to assume and agree
to perform this Agreement in the same manner and to the same extent that the
REIT would be required to perform it if no such succession or assignment had
taken place. Any failure of the REIT to obtain such agreement prior to the
effectiveness of any such succession or assignment shall be a material breach of
this Agreement. This Agreement shall inure to the benefit of and be enforceable
by the Employee's personal and legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If the Employee should
die while any amounts are still payable to the Employee hereunder, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to the Employee's devisee, legatee or other designee or,
if there be no such designee, to the Employee's estate.
(e) Arbitration. The parties agree that any and all disputes (contract,
tort or statutory, whether under federal, state or local law) between the
Employee and the REIT (including other REIT employees, officers, directors and
representatives) arising out of the Employee's employment with the REIT, the
termination of that employment or this Agreement, shall be submitted to final
and binding arbitration. The arbitration shall take place in the County of
Xxxxxxxxxx, State of Maryland and may be compelled and enforced according to the
Maryland Arbitration Act. Unless the parties mutually agree otherwise, the
arbitration shall be conducted
- 14 -
before the American Arbitration Association, according to its Commercial
Arbitration Rules. Judgment on the award the arbitrator renders may be entered
in any court having jurisdiction over the parties. Arbitration shall be
initiated in accordance with the Commercial Arbitration Rules of the American
Arbitration Association.
(f) Amendments; Waivers. This Agreement may not be modified, amended,
or terminated except by an instrument in writing, approved by the Board and
signed by the Employee and the REIT. By an instrument in writing similarly
executed, the Employee or the REIT may waive compliance by the other party or
parties with any provision of this Agreement that such other party was or is
obligated to comply with or perform; provided, however, that such waiver shall
not operate as a waiver of, or estoppel with respect to, any other or subsequent
failure. No failure to exercise and no delay in exercising any right, remedy or
power hereunder shall preclude any other, or further, exercise of any right,
remedy or power provided herein or by law or equity.
(g) Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Maryland as applied to
agreements made and performed in Maryland by residents of Maryland.
(h) Effectiveness. This Agreement shall become effective on January 1,
2000.
(i) Attorneys' Fees. In the event of any arbitration or legal action or
proceeding to enforce or interpret the provisions hereof, the prevailing party
shall be entitled to reasonable attorneys' fees, whether or not the proceeding
results in a final judgment.
(j) Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same agreement.
(k) Effect of Headings. The section headings herein are for convenience
only and shall not affect the construction or interpretation of this Agreement.
(l) Severability. The provisions of this Agreement are severable. If
any provision of this Agreement shall be held to be invalid or otherwise
unenforceable in whole or in part, the remainder of the provisions or
enforceable parts hereof shall not be affected thereby and shall be enforced to
the fullest extent permitted by law.
- 15 -
IN WITNESS WHEREOF, the parties hereto have executed this Third Amended
and Restated Executive Employment Agreement as of the date first written above.
ATTEST: FIRST WASHINGTON REALTY TRUST, INC.,
a Maryland corporation
/s/ Xxxxxxx X. Xxxxxxxxxx By: /s/ Xxxxxx X. Xxxxxxx
------------------------------- -----------------------------
Xxxxxxx X. Xxxxxxxxxx, Secretary Xxxxxx X. Xxxxxxx
Chairman
EMPLOYEE:
/s/ Xxxxxxx X. Xxxxx
----------------------------
Xxxxxxx X. Xxxxx
0000 Xxxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxxx 00000
- 16 -
ANNEX A
SENIOR EXECUTIVE INCENTIVE BONUS PROGRAM
APPENDIX TO THIRD AMENDED AND RESTATED EMPLOYMENT AGREEMENT
1. PURPOSE
The senior executive incentive bonus program (the "Incentive Plan") is
designed to provide meaningful quantitative performance standards and to ensure
that the bonuses paid hereunder are deductible without limit under Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), and the
regulations and interpretations promulgated thereunder.
2. THE COMMITTEE
The "Committee" shall be the Compensation Committee of the Board or
another committee appointed by and serving at the pleasure of the Board, and
shall consist of at least two members of the Board who shall each qualify as
both "outside directors" under Section 162(m) of the Code and as "non-employee
directors" as defined under Rule 16b-3 promulgated under the Securities Exchange
Act of 1934, as amended. The Committee shall have the sole discretion and
authority to administer and interpret the Incentive Plan.
3. BONUS DETERMINATIONS
The Executive may receive a bonus payment under the Incentive Plan
based upon the attainment of performance objectives which are established by the
Committee and relate to one or more of the following company performance goals
(the "Performance Goals"): funds from operations, total return (measured as the
sum of the annual dividend plus increases in the market price of the Common
Stock); portfolio growth (measured as increases in the aggregate value of the
real property in the REIT's portfolio, based upon the original cost of such
property); stock price; operating income; cost reductions and savings; and
earnings before any one or more of the following: interest, taxes, depreciation
or amortization.
Any bonus payable to the Executive under the Incentive Plan shall be
based upon objectively determinable bonus formulas that tie such bonuses to one
or more objective performance criteria relating to the Performance Goals. Bonus
formulas for each fiscal year commencing on or after January 1, 1999 through
December 31, 2002 shall be established by the Committee no later than the latest
time permitted by Section 162(m) of the Code (generally, for performance periods
of one year or more, no later than 90 days after the commencement of the
performance period). No bonuses shall be paid to the Executive unless and until
the Committee makes a certification in writing with respect to the attainment of
the performance objectives as required by Section 162(m) of the Code. Although
the Committee may in its sole discretion reduce a bonus payable to the Executive
pursuant to the applicable bonus formula, the Committee shall have no discretion
to increase the amount of the Executive's bonus as determined under the
applicable bonus formula.
The target annual incentive bonus payable to the Executive under the
Incentive Plan with respect to any fiscal year of the REIT shall be 50% of his
base salary as in effect at the start of the applicable year, and shall not
exceed 100% of such base salary.
The payment of a bonus to the Executive with respect to a performance
period shall be conditioned upon the Executive's employment by the REIT on the
last day of the performance period; provided, however, that the Committee may
make exceptions to this requirement, in its sole discretion, in the case of the
Executive's retirement, death or disability.
4. AMENDMENT AND TERMINATION
The Incentive Plan may be amended or terminated only by written
agreement executed by the Employee and the REIT. Any amendments to the Incentive
Plan shall require stockholder approval only to the extent required by Section
162(m) of the Code.
5. STOCKHOLDER APPROVAL
No bonuses shall be paid under the Incentive Plan unless and until the
REIT's stockholders shall have approved the Incentive Plan and the Performance
Goals as required by Section 162(m) of the Code. So long as the Incentive Plan
shall not have been previously terminated by the Board, it shall be resubmitted
for approval by the REIT's stockholders, to the extent required by Section
162(m) of the Code, if it is amended in any way which materially modifies the
Performance Goals or increases the maximum bonus payable under the Incentive
Plan.
2
ANNEX B
LIST OF PROPERTIES AND ENTITIES EMPLOYEE MAY CONTINUE TO OWN AND PARTICIPATE IN
THE OPERATION AND MANAGEMENT OF:
1. 000 00xx Xxxxxx
2. Properties currently owned by Mid-Atlantic Centers Limited Partnership
a. Tarrytown Mall
b. Quality Center
ANNEX C
INCENTIVE STOCK OPTION AGREEMENT
THIS INCENTIVE STOCK OPTION AGREEMENT, dated as of May 1, 1998, is made
by and between First Washington Realty Trust, Inc., a Maryland corporation (the
"Company"), and Xxxxxxx X. Xxxxx (the "Optionee"), an employee of the Company:
WHEREAS, the Company has adopted The Amended and Restated 1994 Stock
Option Plan for Officers, Directors and Employees of First Washington Realty
Trust, Inc., First Washington Realty Limited Partnership and First Washington
Management, Inc., as amended from time to time (the "Plan"), for the benefit of
its eligible employees and directors; and
WHEREAS, the Company wishes to afford the Optionee the opportunity to
purchase shares of its Common Stock; and
WHEREAS, the Company wishes to carry out the Plan (the terms of which
are hereby incorporated by reference and made a part of this Agreement); and
WHEREAS, the Committee appointed to administer the Plan has determined
that it would be to the advantage and best interest of the Company and its
stockholders to grant the Incentive Stock Option provided for herein to the
Optionee to enable the Company to obtain and retain the services of the Optionee
considered essential to the long-range success of the Company and to provide an
additional incentive for the Optionee to further the growth, development and
financial success of the Company by rewarding the Optionee for such growth,
development and financial success through the ownership of Company stock;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
The masculine pronoun shall include the feminine and neuter, and the
singular the plural, unless the context clearly indicates otherwise. Capitalized
terms used herein and not otherwise defined shall have the meanings ascribed to
them in the Plan. Whenever the following terms are used in this Agreement, they
shall have the meaning specified below unless the context clearly indicates to
the contrary.
SECTION 1.1 - EMPLOYMENT AGREEMENT
"Employment Agreement" shall mean that certain Second Amended and
Restated Employment Agreement between the Optionee and the Company dated as of
May 1, 1998.
SECTION 1.2 - OFFICER
"Officer" shall mean an officer of the Company, as defined in Rule
16a-1(f) under the Exchange Act, as such Rule may be amended in the future.
SECTION 1.3 - OPTION
"Option" shall mean the incentive stock option to purchase Common Stock
of the Company granted under this Agreement, which option is intended to qualify
as an "incentive stock option" under Section 422 of the Code.
SECTION 1.4 - SECRETARY
"Secretary" shall mean the Secretary of the Company.
SECTION 1.5 - TERMINATION OF EMPLOYMENT
"Termination of Employment" shall mean the time when the
employee-employer relationship between the Optionee and the Company or a Company
Subsidiary is terminated for any reason, with or without cause, including, but
not by way of limitation, a termination by resignation, discharge, death,
permanent and total disability or retirement, but excluding (i) any termination
where there is a simultaneous reemployment or continuing employment by the
Company or a Company Subsidiary and (ii) at the sole and absolute discretion of
the Committee, a termination that results in a temporary severance of the
employee-employer relationship that does not exceed one (1) year. The Committee,
in its sole and absolute discretion, shall determine the effect of all other
matters and questions relating to Termination of Employment, including, but not
by way of limitation, all questions of whether a particular leave of absence
constitutes a Termination of Employment; provided, however, that a leave of
absence shall constitute a Termination of Employment if, and to the extent that,
such leave of absence interrupts employment for purposes of Section 422(a)(2) of
the Code and the then applicable regulations and rulings under said Section.
Notwithstanding any other provision of the Plan, the right of the Company or any
Company Subsidiary to terminate the Optionee's employment is subject to the
terms of the Employment Agreement.
- 2 -
ARTICLE II
GRANT OF OPTION
SECTION 2.1 - GRANT OF OPTION
In partial consideration of the Optionee's past services to the Company
and/or the Optionees' agreement to remain in the employ of the Company or a
Company Subsidiary pursuant to the Employment Agreement and for other good and
valuable consideration, provided that the Optionee is employed by the REIT as of
January 1, 2000, then the Company shall irrevocably grant to the Optionee, and
hereby does grant to the Optionee, effective as of January 1, 2000, the option
to purchase any part or all of an aggregate of two-hundred fifty thousand
(250,000) shares of its Common Stock upon the terms and conditions set forth in
this Agreement.
SECTION 2.2 - PURCHASE PRICE
The purchase price of the shares of stock covered by the Option shall
be a price per share equal to the Fair Market Value (as defined in the Plan) of
a share of Common Stock on January 1, 2000, without commission or other charge.
SECTION 2.3 - CONSIDERATION TO COMPANY
In consideration of the granting of this Option by the Company, the
Optionee agrees to render faithful and efficient services to the Company or a
Company Subsidiary, with such duties and responsibilities as the Company or such
Company Subsidiary shall from time to time prescribe, pursuant to the Employment
Agreement. Nothing in this Agreement or in the Plan shall confer upon the
Optionee any right to continue in the employ of the Company or any Company
Subsidiary.
SECTION 2.4 - ADJUSTMENTS IN OPTION
In the event that the outstanding shares of the stock subject to the
Option are changed into or exchanged for a different number or kind of shares of
the Company or other securities of the Company by reason of merger,
consolidation, recapitalization, reclassification, stock split up, stock
dividend or combination of shares, the Committee shall make an appropriate and
equitable adjustment in the number and kind of shares as to which the Option, or
portions thereof then unexercised, shall be exercisable, to the end that after
such event the Optionee's proportionate interest shall be maintained as before
the occurrence of such event. Such adjustment in the Option shall be made
without change in the total price applicable to the unexercised portion of the
Option (except for any change in the aggregate price resulting from rounding-off
of share quantities or prices) and with any necessary corresponding adjustment
in the Option price per share; provided, however, that each such adjustment
shall be made in such manner as not to constitute a "modification" within the
meaning of Section 424(h)(3) of the Code. Any such adjustment made by the
Committee shall be final and binding upon the Optionee, the Company and all
other interested persons.
- 3 -
ARTICLE III
PERIOD OF EXERCISABILITY
SECTION 3.1 - COMMENCEMENT OF EXERCISABILITY
(a) Subject to Sections 3.4 and 5.6, the Option shall become
exercisable in three (3) cumulative installments as follows:
(1) The first installment shall consist of thirty-three and
one-third percent (33- 1/3%) of the shares covered by the Option
(rounded down to the nearest one (1) share) and shall become
exercisable on the first anniversary of the date that the Option is
granted.
(2) The second installment shall consist of thirty-three and
one-third percent (33-1/3%) of the shares covered by the Option
(rounded down to the nearest one (1) share) and shall become
exercisable on the second anniversary of the date that the Option is
granted.
(3) The third installment shall consist of the balance of the
shares covered by the Option and shall become exercisable on the third
anniversary of the date that the Option is granted.
(b) Except to the extent expressly provided otherwise elsewhere in
writing, no portion of the Option that is unexercisable at Termination of
Employment shall thereafter become exercisable.
SECTION 3.2 - DURATION OF EXERCISABILITY
The installments provided for in Section 3.1 are cumulative. Each such
installment that becomes exercisable pursuant to Section 3.1 shall remain
exercisable until it becomes unexercisable under Section 3.3.
SECTION 3.3 - EXPIRATION OF OPTION
The Option may not be exercised to any extent by anyone after the first
to occur of the following events:
(a) The expiration of ten (10) years from the date that the Option was
granted; or
(b) If the Optionee owned (within the meaning of Section 424(d) of the
Code), at the time the Option was granted, more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or any
Company Subsidiary, the expiration of five (5) years from the date that the
Option was granted.
- 4 -
SECTION 3.4 - DURATION OF EXERCISABILITY
This Option shall be exercisable as to all of the shares covered
hereby, notwithstanding that this Option may not yet have become fully
exercisable under Section 3.1 (a) in the event the employee-employer
relationship between the Optionee and the Company is terminated (i) by the
Company pursuant to Section 2(c)(i) of the Employment Agreement; (ii) by the
Optionee pursuant to Section 2(d) of the Employment Agreement; (iii) by the
Optionee pursuant to Section 2(e) of the Employment Agreement; (iv) by the
Optionee pursuant to Section 2(f) of the Employment Agreement (other than in
connection with Optionee's removal as a director for cause under the corporation
law of the State of Maryland); or (v) due to the fact that the Employment
Agreement expires and its not renewed pursuant to Section 2(b) of the Employment
Agreement; provided, however, that this acceleration of exercisability shall not
take place if:
(a) This Option becomes unexercisable under Section 3.3 prior to said
effective date; or
(b) In connection with such an event, provision is made for an
assumption of this Option or a substitution therefor of a new option by an
employer corporation, or a parent or subsidiary of such corporation, so that
such assumption or substitution complies with the provisions of Section 424(a)
of the Code; and
provided, further, that nothing in this Section 3.4 shall make this Option
exercisable if it is otherwise unexercisable by reason of Section 5.6.
The Committee may make such determinations and adopt such rules and
conditions as it, in its absolute discretion, deems appropriate in connection
with such acceleration of exercisability, including, but not by way of
limitation, provisions to ensure that any such acceleration and resulting
exercise shall be conditioned upon the consummation of the contemplated
corporate transaction, and terminations regarding whether provisions for
assumption or substitution have been made as defined in subsection (b) above.
SECTION 3.5 - TERMINATION OF EMPLOYMENT PRIOR TO JANUARY 1, 2000
Notwithstanding anything to the contrary contained herein, if the
Optionee's employment with the Company is terminated in an Early Termination (as
defined in the Employment Agreement) prior to January 1, 2000, then the Company
shall irrevocably grant to the Optionee, and hereby does grant to the Optionee,
effective as of January 1, 2000, the Option to purchase
-5-
any part or all of the 250,000 shares of Common Stock, and this Option shall
become fully exercisable as of the date of grant and shall expire on December
31, 2002.
SECTION 3.6 - SPECIAL TAX CONSEQUENCES
(a) The Optionee acknowledges that, to the extent that the aggregate
fair market value of stock with respect to which "incentive stock options"
(within the meaning of Section 422 of the Code, but without regard to Section
422(d) of the Code), including the Option, are exercisable for the first time by
the Optionee during any calendar year (under the Plan and all other incentive
stock option plans of the Company and any Company Subsidiary) exceeds $100,000,
such options shall be treated as not qualifying under Section 422 of the Code
but rather shall be treated as non-qualified options to the extent required by
Section 422 of the Code. The Optionee further acknowledges that the rule set
forth in the preceding sentence shall be applied by taking options into account
in the order in which they were granted. For purposes of these rules, the fair
market value of stock shall be determined as of the time the option with respect
to such stock is granted.
(b) The Optionee acknowledges that if any portion of the Option is not
exercised within the applicable time period specified in Section 422 of the Code
following a Termination of Employment, then such portion shall be treated as not
qualifying under Section 422 of the Code but rather shall be treated as
non-qualified options to the extent required under Section 422 of the Code.
ARTICLE IV
EXERCISE OF OPTION
SECTION 4.1 - PERSON ELIGIBLE TO EXERCISE
During the lifetime of the Optionee, only he or his guardian or legal
representative may exercise the Option or any portion thereof. After the death
of the Optionee, any exercisable portion of the Option may, prior to the time
when the Option becomes unexercisable under Section 3.3, be exercised by his
Beneficiary.
SECTION 4.2 - PARTIAL EXERCISE
Any exercisable installment of the Option or the entire Option, if then
wholly exercisable, may be exercised in whole or in part at any time prior to
the time when the Option or portion thereof becomes unexercisable under Section
3.3; provided, however, that each partial exercise shall be for not less than
1,000 shares (or the minimum installment set forth in Section 3.1, if a smaller
number of shares) and shall be for whole shares only.
SECTION 4.3 - MANNER OF EXERCISE
The Option, or any exercisable portion thereof, may be exercised only
on the first business day of a calendar month and solely by delivery to the
Secretary or his office of all of the following prior to the time when the
Option or such portion becomes unexercisable under Section 3.3:
(a) Notice in writing signed by the Optionee or the other person
then entitled to exercise the Option or portion, stating that the
Option or portion is thereby exercised, such notice complying with all
applicable rules established by the Committee; and
- 6 -
(b) Full payment for the shares with respect to which such Option
or portion thereof is exercised, by:
(1) Cash or check; or
(2) With the consent of the Committee, (A) shares of the
Company's Common Stock owned by the Optionee duly endorsed for
transfer to the Company or (B) shares of the Company's Common
Stock issuable to the Optionee upon exercise of the Option, with
a fair market value (as determined under Section 1.15 of the
Plan) on the date of Option exercise equal to the aggregate
purchase price of the shares with respect to which such Option or
portion is exercised; or
(3) With the consent of the Committee, any combination of
the consideration provided in the foregoing subparagraphs (1) and
(2) or through delivery of property of any kind which constitutes
good and valuable consideration, consistent with the provisions
of the Plan; and
(c) A bona fide written representation and agreement, in a form
satisfactory to the Committee, signed by the Optionee or other person
then entitled to exercise such Option or portion, stating that:
(1) the shares of stock are being acquired for his own
account, for investment and without any present intention of
distributing or reselling said shares or any of them except as
may be permitted under the Securities Act and then applicable
rules and regulations thereunder; and
(2) that the Optionee or other person then entitled to
exercise such Option or portion will indemnify the Company
against and hold it free and harmless from any loss, damage,
expense or liability resulting to the Company if any sale or
distribution of the shares by such person is contrary to the
representation and agreement referred to above. The Committee
may, in its absolute discretion, take whatever additional actions
it deems appropriate to insure the observance and performance of
such representation and agreement and to effect compliance with
the Securities Act and any other federal or state securities laws
or regulations. Without limiting the generality of the foregoing,
the Committee may require an opinion of counsel acceptable to it
to the effect that any subsequent transfer of shares acquired on
an Option exercise does not violate the Securities Act, and may
issue stop-transfer orders covering such shares. Share
certificates
- 7 -
evidencing stock issued on exercise of this Option shall bear an
appropriate legend referring to the provisions of this subsection
(c) and the agreements herein. The written representation and
agreement referred to in the first sentence of this subsection
(c) shall, however, not be required if the shares to be issued
pursuant to such exercise have been registered under the
Securities Act, and such registration is then effective in
respect of such shares; and
(d) In the event the Option or portion shall be exercised
pursuant to Section 4.1 by any person or persons other than the
Optionee, appropriate proof of the right of such person or persons to
exercise the Option.
SECTION 4.4 - CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES
The shares of stock deliverable upon the exercise of the Option, or any
portion thereof, may be either previously authorized but unissued shares or
issued shares that have then been reacquired by the Company. Such shares shall
be fully paid and nonassessable. The Company shall not be required to issue or
deliver any certificate or certificates for shares of stock purchased upon the
exercise of the Option or portion thereof 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, that the Committee shall, in its sole
and absolute discretion, deem necessary or advisable; and
(c) The obtaining of any approval or other clearance from any
state or federal governmental agency that the Committee shall, in its
sole and absolute discretion, determine to be necessary or advisable;
and
-8-
(d) The payment to the Company (or other employer corporation) of
all amounts that, under federal, state or local tax law, it is
required to withhold upon exercise of the Option; and
(e) The lapse of such reasonable period of time following the
exercise of the Option as the Committee may from time to time
establish for reasons of administrative convenience.
SECTION 4.5 - RIGHTS AS STOCKHOLDER
The holder of the Option shall not be, nor have any of the rights or
privileges of, a stockholder of the Company in respect of any shares purchasable
upon the exercise of any part of the Option unless and until certificates
representing such shares shall have been issued by the Company to such holder.
SECTION 4.6 - OWNERSHIP AND TRANSFER RESTRICTIONS
Shares acquired through the exercise of an Option shall be subject to
the restrictions on ownership and transfer set forth in the Company's Amended
and Restated Charter, as in effect from time to time.
SECTION 4.7 - RESTRICTIONS ON EXERCISE OF OPTION
An Option is not exercisable if the exercise of such Option would
likely result in any of the following:
(a) the Optionee's ownership of Capital Stock being in violation
of the Stock Ownership Limit set forth in the Company's Amended and
Restated Charter, as in effect from time to time.
(b) income to the Company that could impair the Company's status
as a real estate investment trust, within the meaning of Section 856
through 860 of the Code; or
(c) a transfer, at any one time, of more than one-tenth of one
percent (0.1%) (measured in value or in number of shares, whichever is
more restrictive) of the Company's total Capital Stock from the
Company to First Washington Management, Inc. or to the Partnership
pursuant to Section 5.5(a) or 5.6(a)(i) of the Plan, respectively.
-9-
Notwithstanding any other provision of this Agreement, the Optionee
shall have no rights under this Agreement or the Plan to acquire
Common Stock that would otherwise be prohibited under the Company's
Amended and Restated Charter, as in effect from time to time.
ARTICLE V
OTHER PROVISIONS
SECTION 5.1 - ADMINISTRATION
The Committee shall have the power to interpret the Plan and this
Agreement and to adopt such rules for the administration, interpretation and
application of the Plan as are consistent therewith and to interpret 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
Optionee, the Company and all other interested persons. 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 the Option.
SECTION 5.2 - OPTION NOT TRANSFERABLE
Neither the Option nor any interest or right therein or part thereof
shall be liable for the debts, contracts or engagements of the Optionee 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 by
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, subject to the Stock
Ownership Limit, this Section 5.2 shall not prevent transfers by will or by the
applicable laws of descent and distribution.
SECTION 5.3 - SHARES TO BE RESERVED
The Company shall at all times during the term of the Option reserve
and keep available such number of shares of stock as will be sufficient to
satisfy the requirements of this Agreement.
SECTION 5.4 - NOTICES
Any notice to be given by the Optionee 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 Optionee shall be addressed to him
at the address given beneath his signature hereto. By a notice given pursuant to
this Section 5.4, either party may hereafter designate a different address for
notices to be given to him. Any notice that is required to be given to the
Optionee shall, if the Optionee is then deceased, be given to the Optionee's
personal representative if such representative has previously informed the
Company of his status and address by written notice under this Section 5.4. Any
notice shall be deemed duly given when enclosed in a properly sealed envelope or
wrapper addressed as aforesaid, deposited (with postage prepaid) in a post
office or branch post office regularly maintained by the United States Postal
Service.
SECTION 5.5 - TITLES
Titles are provided herein for convenience only and are not to serve as
a basis for interpretation or construction of this Agreement.
SECTION 5.6 - STOCKHOLDER APPROVAL
The Plan will be submitted for approval by the Company's stockholders
within twelve (12) months after the date that the Plan was initially adopted by
the Board. This Option may not be exercised to any extent by anyone prior to the
time when the Plan is approved by the stockholders, and if such approval has not
been obtained by the end of said twelve-month period,
- 10 -
this Option shall thereupon be canceled and become null and void. The Company
shall take such actions as may be necessary to satisfy the requirements of Rule
16b-3(b).
SECTION 5.7 - NOTIFICATION OF DISPOSITION
The Optionee shall give prompt notice to the Company of any disposition
or other transfer of any shares of stock acquired under this Agreement if such
disposition or transfer is made (a) within two (2) years from the date of
granting the Option with respect to such shares or (b) within one (1) year after
the transfer of such shares to him. Such notice shall specify the date of such
disposition or other transfer and the amount realized, in cash, other property,
assumption of indebtedness or other consideration, by the Optionee in such
disposition or other transfer.
SECTION 5.8 - GOVERNING LAW
This Agreement shall be administered, interpreted and enforced under
the internal laws of the State of Maryland without regard to conflicts of laws
thereof.
- 11 -
SECTION 5.9 - CONFORMITY TO SECURITIES LAWS
The Optionee acknowledges that the Plan is intended to conform to the
extent necessary with all provisions of the Securities Act and the Exchange Act
and any and all regulations and rules promulgated by the Securities and Exchange
Commission thereunder, including without limitation Rule 16b-3. Notwithstanding
anything herein to the contrary, the Plan shall be administered, and the Option
is granted and may be exercised, only in such a manner as to conform to such
laws, rules and regulations. To the extent permitted by applicable law, the Plan
and this Agreement shall be deemed amended to the extent necessary to conform to
such laws, rules and regulations.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties hereto.
FIRST WASHINGTON REALTY TRUST, INC.,
a Maryland corporation
By:_______________________________________
Title: Secretary
------------------------------------------
Optionee
------------------------------------------
------------------------------------------
Address
Optionee's Taxpayer Identification Number:
------------------------------------------
- 12 -
ANNEX D
RESTRICTED STOCK AGREEMENT
THIS RESTRICTED STOCK AGREEMENT, dated as of May 1, 1998, is made by
and between First Washington Realty Trust, Inc., a Maryland corporation (the
"Company"), and Xxxxxxx X. Xxxxx, an officer of the Company (the "Employee"):
WHEREAS, the Company has established the First Washington Trust, Inc.
Restricted Stock Plan, as amended from time to time, (the "Plan"); and
WHEREAS, the Company wishes to carry out the Plan (the terms of which
are hereby incorporated by reference and made a part of this Agreement); and
WHEREAS, the Plan provides for the issuance of shares of the Company's
Common Stock (as defined herein) subject to certain restrictions thereon
(hereinafter referred to as the "Restricted Stock"); and
WHEREAS, the Compensation Committee of the Company's Board of Directors
(the "Committee"), has determined that it would be to the advantage and in the
best interest of the Company and its stockholders to issue certain shares of the
Company's Common Stock, par value $0.01 per share (the "Common Stock") to the
Employee in partial consideration of past services to the Company and/or as an
incentive to remain as an employee of the Company, subject to the restrictions
set forth herein, and has advised the Company thereof.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 -"EMPLOYMENT AGREEMENT" shall mean that certain Second Amended and
Restated Executive Employment Agreement between Employee and the Company dated
as of May 1, 1998.
SECTION 1.2 - "FAIR MARKET VALUE" of a share of the Company's stock as of a
given date shall be: (i) the closing price of the Common Stock on the New York
Stock Exchange on such date, or, if shares were not traded on such date, then on
the next preceding trading day during which a sale occurred; or (ii) if such
stock is not traded on an exchange but is quoted on Nasdaq or a successor
quotation system, (1) the last sales price (if the stock is then listed as a
National Market Issue under the NASD National Market System) or (2) the mean
between the closing representative bid and asked prices (in all other cases) for
the stock on the day previous to such date as reported by Nasdaq or such
successor quotation system; or (iii) if such stock is not publicly traded on an
exchange and not quoted on Nasdaq or a successor quotation system, the mean
between the
closing bid and asked prices for the stock, on the day previous to such date, as
determined in good faith by the Committee; or (iv) if the Company's stock is not
publicly traded, the fair market value established by the Committee acting in
good faith. In determining the Fair Market Value of the Company's Common Stock
under Paragraph (i) of this Section 1.2, the Committee may rely on the closing
price as reported in the New York Stock Exchange composite transactions
published in the Wall Street Journal.
SECTION 1.3 - "RESTRICTED STOCK" shall mean Common Stock of the Company issued
under this Agreement and subject to the Restrictions imposed hereunder.
SECTION 1.4 - "RESTRICTIONS" shall mean the reacquisition and transferability
restrictions imposed upon Restricted Stock under this Agreement.
SECTION 1.5 - "RULE 16B-3" shall mean that certain Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as such Rule
may be amended in the future.
ARTICLE II
ISSUANCE OF RESTRICTED STOCK
SECTION 2.1 - ISSUANCE OF RESTRICTED STOCK. In partial consideration of
Employee's past services to the Company and/or Employee's agreement to remain in
the employ of the Company pursuant to the Employment Agreement and for other
good and valuable consideration which the Committee has determined to be equal
to the par value of its Common Stock provided that the Employee is employed by
the REIT as of January 1, 2000, then the Company shall issue to the Employee,
and hereby does issue to the Employee, effective as of January 1, 2000, one
hundred fifty thousand (150,000) shares of its Common Stock upon the terms and
conditions set forth in this Agreement.
ARTICLE III
RESTRICTIONS
SECTION 3.1 - REACQUISITION OF RESTRICTED STOCK; ACCELERATION; VESTING. (a)
Reacquisition. All shares of Restricted Stock issued to the Employee pursuant to
Section 2.1 are initially subject to reacquisition by the Company immediately if
the employee-employer relationship between the Employee and the Company is
terminated: (i) by the Company pursuant to Section 2(c)(ii) of the Employment
Agreement or (ii) by Employee other than (A) pursuant to Section 2(d) of the
Employment Agreement, (B) pursuant to Section 2(e) of the Employment Agreement
or (C) pursuant to Section 2(f) of the Employment Agreement (other than in
connection with Employee's removal as a director for cause under the corporation
laws of the State of Maryland), or (D) due to the fact that the Employment
Agreement expired and was not renewed pursuant to Section 2(b) of the Employment
Agreement. Following such a reacquisition by the Company, the Company shall
promptly pay to the Employee an amount equal to the product of $.01 times the
number of shares of Restricted Stock reacquired. The restriction that such
shares of
2
Restricted Stock be subject to reacquisition by the Company shall not apply to
any "Vested Shares" held by the Employee.
(b) Acceleration. All shares of Restricted Stock shall immediately
fully vest and all Restrictions with respect to such shares of Restricted Stock
shall immediately expire if the employee-employer relationship between the
Employee and the Company is terminated (i) by the Company pursuant to Section
2(c)(i) of the Employment Agreement; (ii) by the Employee pursuant to Section
2(d) of the Employment Agreement; (iii) by the Employee pursuant to Section 2(e)
of the Employment Agreement; or (iv) by the Employee pursuant to Section 2(f) of
the Employment Agreement (other than in connection with Employee's removal as a
director for cause under the corporation law of the State of Maryland); or (v)
due to the fact that the Employment Agreement expires and is not renewed
pursuant to Section 2(b) of the Employment Agreement.
(c) Vesting. The shares of Restricted Stock shall vest, and all
Restrictions with respect to such shares shall expire, in accordance with the
schedule set forth below. "Vested Shares" shall mean that number of shares of
Restricted Stock which have vested and are no longer subject to Restrictions.
Number of Aggregate Number of
Vesting Date Vested Shares Vested Shares
------------ ------------- -------------
January 1, 2001 25,000 25,000
January 1, 2002 50,000 75,000
January 1, 2003 75,000 150,000
SECTION 3.2 - 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 3.3, bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
VESTING REQUIREMENTS AND MAY BE SUBJECT TO REACQUISITION BY THE COMPANY
UNDER THE TERMS OF THAT CERTAIN RESTRICTED STOCK AGREEMENT BY AND
BETWEEN FIRST WASHINGTON REALTY TRUST, INC. (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 THE OFFICES OF THE COMPANY AT 0000 XXXX-XXXX
XXXXXXX, XXXXX 000, XXXXXXXX, XXXXXXXX 00000."
(b) Unless such shares shall have been registered pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
certificates representing
3
shares of Restricted Stock issued pursuant to this Agreement shall
also bear the following 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 3.3 - LAPSE OF RESTRICTIONS. Upon the vesting of the shares of
Restricted Stock as provided in Section 3.1 and subject to Section 4.3, 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 3.2(a) and any of the other Restrictions. Such
Vested Shares shall cease to be considered Restricted Stock subject to the terms
and conditions of this Agreement.
SECTION 3.4 - TERMINATION OF EMPLOYMENT PRIOR TO JANUARY 1, 2000.
Notwithstanding anything to the contrary contained herein, if the Employee's
employment with the Company is terminated in an Early Termination (as defined in
the Employment Agreement) prior to January 1, 2000, then the Company shall issue
to the Employee, and hereby does issue to the Employee, effective as of the date
immediately prior to such Early Termination, the 150,000 shares of Restricted
Stock, and all of such shares of Restricted Stock shall be fully vested on the
date of such issuance.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1 - ADMINISTRATION. The Committee shall have the power to interpret
the Plan, this Agreement and all other documents relating to Restricted Stock
and to adopt such rules for the administration, interpretation and application
of this Agreement as are consistent herewith 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
Employee, the Company and all other interested persons. 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 the Restricted
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 4.2 - 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 by judgment, levy, attachment, garnishment
or any other legal
4
or equitable proceedings (including bankruptcy) unless and until any such share
of Restricted Stock is a Vested Share, and any attempted disposition thereof
prior to such vesting, shall be null and void and of no effect; provided,
however, that this Section 4.2 shall not prevent transfers by will or by
applicable laws of descent and distribution.
SECTION 4.3 - 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:
(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 Committee shall, in its absolute discretion, deem necessary or
advisable; and
(c) The obtaining of any approval or other clearance from any state or
Federal governmental agency which the Committee 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
(e) The lapse of such reasonable period of time as the Committee may
from time to time establish for reasons of administrative convenience.
SECTION 4.4 - ESCROW. The Secretary of the Company or such other escrow holder
as the Committee may appoint shall retain physical custody of the certificates
representing Restricted Stock 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 4.5 - 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 the address
given beneath his signature hereto. By a notice given pursuant to this Section
4.5, 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 4.5. Any notice shall
have been deemed duly given when enclosed in a properly sealed envelope or
wrapper addressed as aforesaid, deposited (with postage prepaid) in a post
office or branch post office regularly maintained by the United States Postal
Service.
5
SECTION 4.6 - RIGHTS AS STOCKHOLDER. Upon delivery of the shares of Restricted
Stock from the escrow holder pursuant to Section 4.4, the Employee shall have
all the rights of a stockholder with respect to said shares, subject to the
restrictions herein, including the right to vote the shares and to receive all
dividends or other distributions paid or made with respect to the shares.
SECTION 4.7 - TITLES. Titles are provided herein for convenience only and are
not to serve as a basis for interpretation or construction of this Agreement.
SECTION 4.8 - CONFORMITY TO SECURITIES LAWS. This Agreement is intended to
conform to the extent necessary with all provisions of the Securities Act of
1933, as amended, and the Exchange Act and any and all regulations and rules
promulgated by the Securities and Exchange Commission thereunder, including
without limitation Rule 16b-3. Notwithstanding anything herein to the contrary,
this Agreement shall be administered, and the Restricted Stock shall be issued,
only in such a manner as to conform to such laws, rules and regulations. To the
extent permitted by applicable law, this Agreement and the Restricted Stock
issued hereunder shall be deemed amended to the extent necessary to conform to
such laws, rules and regulations.
SECTION 4.9 - 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 4.10 - APPROVAL OF PLAN BY STOCKHOLDERS. The Plan will be submitted for
the approval of the Company's stockholders within twelve months after the date
of the Board's initial adoption of the Plan. Restricted Stock issued following
the adoption of the Plan but prior to such stockholder approval shall not vest
prior to the time when the Plan is approved by the stockholders; provided, that
if such approval has not been obtained at the end of said twelve- month period,
all Restricted Stock issued during such time period under the Agreement shall
thereupon be cancelled and become null and void. The Company and the Employee
shall take such action with respect to the Plan and this Agreement as may be
necessary to satisfy the requirements of Rule 16b-3(b).
SECTION 4.11 - 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 Restricted Stock, is expressly conditioned upon receipt from the
Employee, on or prior to the date the same is required to be withheld, of:
(a) Full payment (in cash or by check) of any amount that must be
withheld by the Company for federal, state and/or local tax purposes; or
(b) Subject to the Committee's consent and Section 4.10(c), full
payment by delivery to the Company of unrestricted shares of the Company's
Common Stock previously owned by the Employee duly endorsed for transfer to the
Company by the Employee with an aggregate Fair Market Value (determined, as
applicable, as of the date of the lapse of the restrictions or vesting, or as of
the date of the distribution) equal to the amount that must be withheld by the
Company for federal, state and/or local tax purposes; or
6
(c) With respect to the withholding obligation for shares of Restricted
Stock that become unrestricted shares of stock as of a certain date (the
"Vesting Date"), subject to the Committee's consent and to the timing
requirements set forth in this Section 4.10(c), full payment by retention by the
Company of a portion of such shares of Restricted Stock which become
unrestricted or vested with an aggregate Fair Market Value (determined as of the
Vesting Date) equal to the amount that must be withheld by the Company for
federal, state and/or local tax purposes; or
(d) Subject to the Committee's consent, any combination of payments
provided for in the foregoing subsections (a), (b) or (c).
SECTION 4.12 - CHANGES IN COMPANY'S SHARES. In the event that the outstanding
shares of Common Stock of the Company are hereafter changed into or exchanged
for a different number or kind of shares or other securities of the Company, or
of another corporation, by reason of reorganization, merger, consolidation,
recapitalization, reclassification, or the number of shares is increased or
decreased by reason of a stock split-up, stock dividend, combination of shares
or any other increase or decrease in the number of such shares of Common Stock
effected without receipt of consideration by the Company (provided, however,
that conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration"), the Committee shall
make appropriate adjustments in the number and kind of shares of Restricted
Stock which may be issued.
SECTION 4.13 - 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.
7
IN WITNESS HEREOF, this Agreement has been executed and delivered by
the parties hereto.
FIRST WASHINGTON REALTY TRUST, INC.
By: ________________________________
Its: _______________________________
___________________________
Employee
___________________________
___________________________
Address
8
