TRUSTEE RESTRICTED COMMON SHARE GRANT AGREEMENT
Exhibit
10.12
(TIME
VESTED)
THIS
RESTRICTED COMMON SHARE GRANT AGREEMENT (TIME VESTED) (this “Agreement”)
is entered into as of March
25, 2009 (the “Effective
Date”), by and between Whitestone REIT, a Maryland real estate investment
trust (the “Company”),
and Xxxx X. Xxxxxxxx (the
“Trustee”).
WHEREAS,
the Trustee serves on the Board of Trustees of the Company and in connection
therewith has rendered or will render services for and on behalf of the Company
and/or its subsidiaries or affiliates;
WHEREAS,
the Company believes the Trustee should have interests that are aligned with the
interests of the Company’s shareholders; and
WHEREAS,
the Company desires to compensate to grant the Trustee common shares of
beneficial interest, par value $0.001 per share, of the Company (the “Common
Shares”).
NOW,
THEREFORE, IT IS AGREED, by and between the Company and the Trustee, as
follows:
1.
Restricted
Common Share Grant. The Trustee is hereby granted 5,000
Common
Shares (the “Shares”)
subject to the restrictions and on the terms and conditions set forth in this
Agreement (the “Grant”).
2.
Restriction
on the Shares.
(a)
Period
of Restriction. Except as otherwise set forth herein, all the Shares
issued to the Trustee pursuant to this Agreement shall be subject to a period of
restriction (the “Period
of Restriction”) during which the Trustee’s rights in and to such Shares
shall be subject to the limitations and obligations set forth in this Section
2.
(b)
Lapse
of Period of Restriction. The Period of Restriction shall lapse in
accordance with the provisions of Exhibit
A, which is attached hereto and forms part of this Agreement. During the
period that the Shares are subject to the Period of Restriction, such Shares are
referred to herein as “Restricted
Common Shares.”
(c)
Termination
of Trustee. Notwithstanding any other provision of this Agreement to the
contrary, if the Trustee’s position as trustee of the Company terminates for any
reason (or no reason), other than the Trustee’s death or Disability (defined as
a disability that would qualify as a total and permanent disability under the
Company’s then current long-term disability plan), any Restricted Common Shares
that are subject to the Period of Restriction on the date of the Trustee’s
termination shall be immediately forfeited by the Trustee and shall be
automatically transferred to and reacquired by the Company at no cost to the
Company, and neither the Trustee nor his or her heirs, executors, administrators
or successors shall have any right or interest in such Restricted Common Shares.
In the event of the Trustee’s death or Disability, any Restricted Common Shares
that are subject to the Period of Restriction on the date of death or Disability
shall immediately vest and the Trustee or his or her heirs, executors,
administrators or successors shall have the right and interest in such
Restricted Common Shares.
(d)
Escrow.
Upon the Trustee’s execution and delivery of this Agreement, the Trustee agrees
to concurrently deliver one or more executed stock powers as requested by the
Company, duly endorsed in blank for transfer, in the form attached hereto as
Exhibit
B, which shall be deposited with the Company during the Period of
Restriction. Each certificate representing Restricted Common Shares shall bear
the following legend until the lapse of the Period of Restriction with respect
to the shares represented by such certificate:
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Transfer
of this certificate and the shares represented hereby is restricted
pursuant to the terms of the Restricted Common Share Grant Agreement
pertaining to the shares represented hereby, dated as of _________ ,
200[_], (the “Agreement”). Copies of the Agreement are on file at the
offices of Whitestone
REIT.
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The
certificates representing the Restricted Common Shares along with the stock
power(s) shall be held in escrow by the Company until such time as either (i)
the Period of Restriction with respect to all of such Restricted Common Shares
lapses in accordance with this Agreement, in which case the shares shall be
delivered to the Trustee, or (ii) any such Restricted Common Shares are
forfeited pursuant to this Agreement, in which case such shares shall be
transferred to and reacquired by the Company in accordance with Section 2(c) of
this Agreement.
(e)
Distributions.
All cash distributions on the Restricted Common Shares shall be paid directly to
the Trustee and shall not be held in escrow. Any new, substituted or additional
securities or other property issued in respect of Restricted Common Shares shall
be held in escrow, together, where applicable, with appropriate stock powers,
assignments or other transfer documents which the Trustee hereby agrees to
execute as a condition to receipt of such securities or other property. If the
Restricted Common Shares in respect of which such securities or other property
was issued are forfeited to the Company pursuant to Section 2(c) of this
Agreement, then such securities or other property shall be immediately forfeited
to the Company and automatically transferred to and reacquired by the Company at
no cost to the Company, to the same extent and in accordance with Section 2(c)
of this Agreement as if such securities or other property were Restricted Common
Shares hereunder.
3. Rights
as a Shareholder. Upon the Trustee’s execution and delivery of this
Agreement and until such time as the Restricted Common Shares are forfeited to
the Company as set forth herein, the Trustee shall be the record owner of the
Restricted Common Shares and, subject to the terms of this Agreement, shall have
all rights of a shareholder with respect to the Restricted Common Shares,
including the right to vote the Restricted Common Shares and subject to the
terms of Section 2 hereof, to receive dividends and distributions with respect
to the Restricted Common Shares.
4. Change
in Control. Notwithstanding Section 2 of this Agreement, if the Trustee
holds Restricted Common Shares at the time a Change in Control (as defined
below) occurs, the Period of Restriction with respect to such Restricted Common
Shares granted in Section 1 shall automatically lapse immediately prior to the
consummation of such Change in Control.
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A Change
of Control is defined as any of the following events:
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(i)
any person or entity, including a “group” as defined in Section 13(d)(3)
of the Securities Exchange Act of 1934, other than the Company or a
wholly-owned subsidiary thereof or any employee benefit plan of the
Company or any of its subsidiaries, becomes the beneficial owner of the
Company’s securities having 35% or more of the combined voting power of
the then outstanding securities of the Company that may be cast for the
election of trustees of the Company (other than as a result of an issuance
of securities initiated by the Company in the ordinary course of
business);
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(ii)
as the result of, or in connection with, any cash tender or exchange
offer, merger or other business combination or contested election, or any
combination of the foregoing transactions, less than a majority of the
combined voting power of the then outstanding securities of the Company or
any successor company or entity entitled to vote generally in the election
of the trustees of the Company or such other corporation or entity after
such transaction are held in the aggregate by the holders of the Company’s
securities entitled to vote generally in the election of trustees of the
Company immediately prior to such transaction;
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(iii)
during any period of two (2) consecutive years, individuals who at the
beginning of any such period constitute the Board of Trustees of the
Company cease for any reason to constitute at least a majority thereof,
unless the election, or the nomination for election by the Company’s
shareholders, of each trustee of the Company first elected during such
period was approved by a vote of at least two-thirds (2/3rds) of the
trustees of the Company then still in office who were (a) trustees of the
Company at the beginning of any such period, and (b) not initially (1)
appointed or elected to office as result of either an actual or threatened
election and/or proxy contest by or on behalf of a person other than the
Board of Trustees of the Company, or (2) designated by a person who has
entered into an agreement with the Company to effect a transaction
described in (i) or (ii) above or (iv) or (v) below;
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(iv)
a complete liquidation or dissolution of the Company; or
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(v)
the sale or other disposition of all or substantially all of the assets of
the Company to any Person (other than a transfer to a
subsidiary)).
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5.
Withholding.
If the Trustee makes an election under Section 83(b) of the Internal Revenue
Code of 1986 (the “Code”)
with respect to the Restricted Common Shares, the grant made pursuant to this
Grant shall be conditioned upon the prompt payment to the Company of any
applicable withholding obligations or withholding taxes by the Trustee (“Withholding
Taxes”). Failure by the Trustee to pay such Withholding Taxes will render
this Grant null and void ab
initio and the Restricted Common Shares granted hereunder will
immediately be canceled. If the Trustee does not make an election under Section
83(b) of the Code with respect to the Restricted Common Shares, upon the lapse
of the Period of Restriction with respect to any portion of the Restricted
Common Shares (or property distributed with respect thereto), the Company shall
satisfy the required Withholding Taxes as set forth in the Internal Revenue
Service guidelines for the employer’s minimum statutory withholding with respect
to Trustee and issue vested shares to the Trustee without restriction. In the
sole discretion of the Company, the Company may satisfy the required Withholding
Taxes by withholding from the Restricted Common Shares included in the Grant
that number of whole shares necessary to satisfy such taxes as of the date the
restriction lapse with respect to such Restricted Common Shares based on the
Fair Market Value of the Shares (defined for purposes of this Grant, as of any
date (i) the average of the closing sales prices of the Common Shares on all
national securities exchanges on which the Common Shares may at the time be
listed, or any other such exchange on which the Common Shares are traded, on
such date, or in the absence of reported sales on such date, the average closing
sales prices on the immediately preceding date on which sales were reported,
(ii) if on any day the Common Shares shall not be quoted on a national
securities exchange, the average of the high and low bid and asked prices on
such day in the over-the-counter market as reported by National Quotation Bureau
Incorporated, or any similar successor organization, or (iii) in the event there
is no public market or over-the-counter market for the Common Shares on such
date, the fair market value as determined, in good faith, by the Board of
Trustees of the Company in its sole discretion).
6.
Restrictions
on Transfer. During the Period of Restriction, the Trustee shall not
sell, transfer, pledge, hypothecate, assign, exchange or otherwise dispose of
the Restricted Common Shares. Any attempted sale, transfer, pledge,
hypothecation, assignment, exchange or other disposition shall be null and void
and of no force or effect and the Company shall have the right to disregard the
same on its books and records and to issue “stop transfer” instructions to its
transfer agent.
7.
Consent
to Electronic Delivery. The Company may choose to deliver certain
statutory materials relating to the Grant in electronic form. By accepting this
Agreement, the Trustee agrees that the Company may deliver any documents
required by the Securities and Exchange Commission and the Company’s annual
report to the Trustee in an electronic format. If at any time the Trustee would
prefer to receive paper copies of these documents, please contact Chief
Financial Officer of the Company to request paper copies of these
documents.
8.
No
Rights Conferred. Nothing in this Agreement shall give the Trustee any
right to continue in the employ or service of the Company, any affiliate or any
subsidiary and/or as a member of the Company’s Board of Trustees or in any other
capacity, or interfere in any way with the right of the Company, any affiliate
or any subsidiary to terminate the employment or services of the
Trustee.
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9.
Adjustments.
All references to the number and class of shares covered by this Agreement and
other terms in this Agreement may be appropriately adjusted, by a vote of the
majority of the members of the Board of Trustees of the Company, in the event of
certain unusual or non-recurring transactions, including an unusual or
non-recurring dividend or other distribution (whether in the form of an
extraordinary cash dividend, dividend of Common Shares, other securities or
other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase or exchange of Common Shares or other securities of the Company,
issuance of warrants or other rights to purchase Common Shares or other
securities of the Company, or other similar corporate transaction or event
affects the Common Shares. In such an event, the Board of Trustees of the
Company may in an equitable and proportionate manner (and, as applicable, in
such equitable and proportionate manner as is consistent with Sections 422 and
409A of the Internal Revenue Code of 1986, as amended from time to time (the
“Code”) and the regulations thereunder and with Section 162(m) of the Code)
either: (i) adjust the number of Shares, provided that the number of Shares
shall always be a whole number; (ii) provide for an equivalent award in respect
of securities of the surviving entity of any merger, consolidation or other
transaction or event having a similar effect; or (iii) make provision for a cash
payment to the Trustee for the Shares.
10.
Compliance
with Section 409A of the Code. The Trustee hereby consents (without
further consideration) to any change to this Agreement or the Grant so the
Trustee can avoid paying penalties under Section 409A of the Code, even if those
changes affect the terms and conditions of this Agreement of the Grant and
reduce its value or potential value.
11.
Binding
Effect. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, successors and permitted assigns. This Agreement may not be
assigned or transferred in whole or in part by the Trustee, nor may the Trustee
delegate any duty or obligation under this Agreement, and any attempt to so
assign, transfer or delegate shall be null and void and of no force or
effect.
12.
Interpretation
of this Agreement. All determinations and interpretations made by the
Board of Trustees of the Company with regard to any questions arising under this
Agreement shall be final, binding and conclusive as to all persons, including
without limitation the Trustee and any person claiming rights from or through
the Trustee.
13.
Venue.
Each party to this Agreement hereby irrevocably (i) consents and submits to the
exclusive jurisdiction of the state and federal courts in Xxxxxx County, Texas
in connection with any disputes arising out of this Agreement, and (ii) waives
any objection based on venue or inconvenient forum with respect to any action
instituted therein arising under this Agreement or the transactions contemplated
hereby, and agrees that any dispute with respect to such matters shall be heard
only in the courts described above.
14.
Governing
Law; Entire Agreement; Amendment. This Agreement shall be governed by and
construed in accordance with the laws of the State of Maryland, without regard
to such state’s conflict of laws principles. This Agreement constitutes the
entire agreement between the parties with respect to the subject matter hereof
and supersede all prior understandings and agreements, written or oral, of the
parties hereto with respect to the subject matter hereof. This Agreement may be
amended by a majority of the members of the Board of Trustees, subject to the
Trustee’s consent if such amendment materially and adversely affects the rights
of the Trustee, except that the consent of the Trustee shall not be required for
any amendment made pursuant to Section 10 of this Agreement.
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15.
Tax
Elections. THE TRUSTEE UNDERSTANDS THAT HE OR SHE (AND NOT THE COMPANY)
SHALL BE RESPONSIBLE FOR THE TRUSTEE’S OWN TAX LIABILITY THAT MAY ARISE AS A
RESULT OF THE ACQUISITION OF THE SHARES HEREUNDER. THE TRUSTEE ACKNOWLEDGES AND
AGREES THAT HE OR SHE HAS CONSIDERED THE ADVISABILITY OF ALL TAX ELECTIONS IN
CONNECTION WITH THE ISSUANCE OF THE SHARES, INCLUDING THE MAKING OF AN ELECTION
UNDER SECTION 83(b) OF THE CODE. THE TRUSTEE FURTHER ACKNOWLEDGES AND AGREES
THAT, IF THE TRUSTEE DETERMINES TO MAKE AN ELECTION UNDER SECTION 83(b) OF THE
CODE, (i) THE TRUSTEE (AND NOT THE COMPANY) IS SOLELY RESPONSIBLE FOR PROPERLY
AND TIMELY COMPLETING AND FILING ANY SUCH SECTION 83(b) ELECTION, AND (ii) THE
TRUSTEE AGREES TO TIMELY PROVIDE A COPY OF THE ELECTION TO THE COMPANY AS
REQUIRED UNDER THE CODE.
16.
Notices.
Any notice, demand or request required or permitted to be given under this
Agreement shall be in writing and shall be deemed given (i) when delivered
personally, or (ii) three days after being deposited in the United States mail,
by certified or registered mail, postage prepaid, or (iii) the next business day
after sent by nationally recognized overnight delivery service, and addressed,
if to the Company, at its principal place of business, Attention: Chief
Financial Officer, and if to the Trustee, at his or her most recent address as
shown in the employment or stock records of the Company.
IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first written above.
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By:
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/s/ Xxxxx X. Xxxxxxxxxx | |
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Name:
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Xxxxx X. Xxxxxxxxxx | |
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Title:
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Chairman of the Board of Trustees | |
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Trustee:
/s/ Xxxx X. Xxxxxxxx
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Date:
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March 25, 2009 | |
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Exhibit
A
LAPSE
OF PERIOD OF RESTRICTION
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Number
of Shares
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Vesting
Date
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Percentage
of
Shares
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5,000
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March
25, 2010
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34%
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March
25, 2011
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33%
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March
25, 2012
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33%
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Exhibit
B
STOCK
POWER
For value
received, I hereby sell, assign and transfer unto ___________________________
Common Shares of Whitestone REIT standing in my name on the books of said
Company represented by Certificate(s) Number(s) ______ herewith, and do hereby
irrevocably constitute and appoint ______ attorney to transfer the said stock on
the books of said Company with full power of substitution in the
premises.
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Date:
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Printed
Name:
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Signature:
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Witness
Signature:
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