Exhibit 10.12
XXXXXXX PACIFIC PROPERTIES, INC.
PHANTOM SHARES AGREEMENT
Dated as of August 1, 1999
Xxxxxxx Pacific Properties, Inc., a corporation organized under the
laws of Maryland (the "Company"), hereby awards to J. Xxxxx Xxxxxx (the
"Participant"), as of August 1, 1999, a Phantom Shares Award (the "Award"),
to provide a long term incentive for the Executive to remain with the Company
and to further align his interests with the interests of the Company's
stockholders, covering the right to receive 237,037 Phantom Shares, subject
to the terms and conditions set forth below.
1. AWARD SUBJECT TO ACCEPTANCE OF AGREEMENT. The Award shall not be valid
and binding unless the Participant accepts this Agreement by executing
it in the space provided below and returning such original execution
copy to the Company.
2. VESTING OF AWARD. Except as set forth in Section 3 of this Agreement,
and subject to the discretion of the Board of Directors or its
Compensation Committee (the "Committee") to accelerate the vesting
schedule hereunder, this Award shall be vested and nonforfeitable with
respect to the following number of Phantom Shares on the dates
indicated:
Number of Phantom Shares
Subject to Vesting Date Restrictions Lapse
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23,704 August 1, 2000
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23,704 August 1, 2001
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23,704 August 1, 2002
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23,704 August 1, 2003
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23,704 August 1, 2004
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23,704 August 1, 2005
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23,704 August 1, 2006
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23,703 August 1, 2007
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23,703 August 1, 2008
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23,703 August 1, 2009
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3. a. TERMINATION OF EMPLOYMENT. If the Participant's employment
by the Company or any of its subsidiaries or affiliates (an
"Affiliate") is terminated for any reason prior to one or more
of the dates on which the restrictions lapse as set
forth above, the Participant shall forfeit all Phantom Shares
which have not yet vested, except as provided in (b) or (c)
below. The Committee's determination of the reason for
termination of the Participant's employment shall be
conclusive and binding on the Participant and his legal
representatives and legatees.
b. TERMINATION DUE TO DEATH. If the Participant's employment
terminates by reason of death prior to the dates the
restrictions lapse as set forth above, the Participant's
estate shall become fully vested in all the Phantom Shares.
c. TERMINATION DUE TO DISABILITY. If the Participant's employment
terminates by reason of disability (as defined in Section
22(e)(3) of the Internal Revenue Code of 1986, as amended (the
"Code")) prior to the dates the restrictions lapse as set
forth above, the Participant shall become fully vested in all
the Phantom Shares.
d. CHANGE OF CONTROL. Notwithstanding any other provision hereof
to the contrary, the Participant shall become fully vested in
all the Phantom Shares upon the occurrence of a Change of
Control of the Company. For purposes of this Agreement, a
"Change of Control" shall mean the occurrence of any one of
the following events:
(i) any "person," as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the "Act") (other than the
Company, any of its subsidiaries, or any trustee,
fiduciary or other person or entity holding
securities under any employee benefit plan or trust
of the Company or any of its subsidiaries), together
with all "affiliates" and "associates" (as such terms
are defined in Rule 12b-2 under the Act) of such
person, shall become the "beneficial owner" (as such
term is defined in Rule 13d-3 under the Act),
directly or indirectly, of securities of the Company
representing thirty percent (30%) or more of either
(A) the combined voting power of the Company's then
outstanding securities having the right to vote in an
election of the Company's Board of Directors ("Voting
Securities") or (B) the then outstanding shares of
the Company's common stock, $.01 par value per share
("Common Stock") (in either case other than as a
result of an acquisition of securities directly from
the Company); or
(ii) persons who, as of June 19, 1999,
constitute the Company's Board of Directors (the
"Incumbent Directors") cease for any reason,
including, without limitation, as a result of a
tender offer, proxy contest, merger or similar
transaction, to constitute at least a majority of the
Board, provided that any person becoming a director
of the Company subsequent to June 19, 1999 shall be
considered an Incumbent Director if such person's
election was approved by or such person was nominated
for election by a vote of at least a majority of the
Incumbent Directors; but provided further, that any
such person whose initial assumption of office
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is in connection with an actual or threatened
election contest relating to the election of members
of the Board of Directors or other actual or
threatened solicitation of proxies or consents by or
on behalf of a person other than the Board, including
by reason of agreement intended to avoid or settle
any such actual or threatened contest or
solicitation, shall not be considered an Incumbent
Director; or
(iii) the stockholders of the Company shall
approve (A) any consolidation or merger of the
Company where the stockholders of the Company,
immediately prior to the consolidation or merger,
would not, immediately after the consolidation or
merger, beneficially own (as such term is defined in
Rule 13d-3 under the Act), directly or indirectly,
shares representing in the aggregate fifty percent
(50%) or more of the voting shares of the corporation
issuing cash or securities in the consolidation or
merger (or of its ultimate parent corporation, if
any), (B) any sale, lease, exchange or other transfer
(in one transaction or a series of transactions
contemplated or arranged by any party as a single
plan) of all or substantially all of the assets of
the Company or (C) any plan or proposal for the
liquidation or dissolution of the Company.
Notwithstanding the foregoing, a "Change of Control" shall not
be deemed to have occurred for purposes of the foregoing clause (i)
solely as the result of an acquisition of securities by the Company
which, by reducing the number of shares of Common Stock or other Voting
Securities outstanding, increases the proportionate number of shares
beneficially owned by any person to thirty percent (30%) or more of
either (A) the combined voting power of all then outstanding Voting
Securities or (B) PROVIDED, HOWEVER, that if any person referred to in
this sentence shall thereafter become the beneficial owner of any
additional shares of Voting Securities (other than pursuant to a stock
split, stock dividend, or similar transaction or as a result of an
acquisition of securities directly from the Company) and immediately
thereafter beneficially owns thirty percent (30%) or more of Voting
Securities or Common Stock, then a "Change of Control" shall be deemed
to have occurred for purposes of the foregoing clause (i).
4. REDEMPTION OF PHANTOM SHARES. Upon any portion of the Participant's
Phantom Shares becoming vested, the Company shall redeem all, but not
less than all, such vested Phantom Shares at a price for each Phantom
Share equal to the "Fair Market Value" (as defined in Section 3(c) of
the Xxxxxxx Pacific Properties, Inc. Stock Option and Incentive Plan)
of one share of Common Stock determined as of such vesting date. Any
payment to be made pursuant to this Section 4 shall be made in cash in
a lump sum with ten (10) days of the vesting date.
5. ADDITIONAL TERMS AND CONDITIONS OF AWARD.
a. NATURE OF PHANTOM SHARES. The Phantom Shares granted under
this Agreement shall be used solely as a device for the
measurement and determination of
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certain amounts to be paid to the Participant as provided
herein. Phantom Shares shall not constitute or be treated as
property or as a trust fund of any kind or as Common Stock,
stock options or other form of equity or security for any
purpose. The Participant shall have only those rights set
forth in this Agreement with respect to Phantom Shares
credited to the Participant and shall have no rights as a
shareholder of the Company by virtue of having been granted
Phantom Shares. Any benefits which become payable hereunder
shall be paid from the general assets of the Company.
Notwithstanding the foregoing, prior to redemption, the
Participant shall be entitled to receive in cash amounts
equivalent to the amounts paid as actual cash dividends with
respect to a number of shares of Common Stock equal to the
number of the Participant's Phantom Shares.
b. DECISIONS OF COMMITTEE. The Committee shall have the right to
resolve all questions which may arise in connection with the
Award, the lapse of the restrictions or this Agreement. Any
interpretation, determination or other action made or taken by
the Committee regarding this Agreement shall be final, binding
and conclusive.
c. CHANGE IN CAPITAL STRUCTURE. The terms of this Phantom Shares
Award shall be adjusted as the Committee determines is
equitably required in the event the Company effects one or
more stock dividends, stock split-ups, subdivisions or
consolidations of shares or other similar changes in
capitalization.
6. TAX WITHHOLDING. The Participant shall, not later than the date as of
which the vesting of this Award becomes a taxable event for Federal
income tax purposes, pay to the Company or make arrangements
satisfactory to the Committee for payment of any Federal, state, and
local taxes required by law to be withheld on account of such taxable
event.
7. MISCELLANEOUS PROVISIONS.
a. SUCCESSORS. This Agreement shall be binding upon and inure to
the benefit of any successor or successors of the Company and
any person or persons who shall, upon the death of the
Participant, acquire any rights hereunder in accordance with
this Agreement.
b. NOTICES. All notices, requests or other communications
provided for in this Agreement shall be made, if to the
Company, to the Corporate Secretary of the Company at the
Company's principal executive office, and if to the
Participant, to his or her address on the books of the Company
(or to such other address as the Company or the Participant
may give to the other for purposes of notice hereunder).
All notices, requests or other communications provided for in
this Agreement shall be made in writing either (a) by personal
delivery to the party entitled
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thereto, (b) by facsimile with confirmation of receipt, (c) by
mailing in the United States mail to the last known address of
the party entitled thereto or (d) by express courier service.
The notice, request or other communication shall be deemed to
be received upon personal delivery, upon confirmation of
receipt of facsimile transmission or upon receipt by the party
entitled thereto if by United States mail or express courier
service; provided, however, that if a notice, request or other
communication in not received during regular business hours,
it shall be deemed to be received on the next succeeding
business day of the Company.
c. GOVERNING LAW. This Agreement and all determinations made and
actions taken pursuant hereto and thereto, to the extent not
governed by the laws of the United States, shall be governed
by the laws of the State of Maryland and construed in
accordance therewith without giving effect to principles of
conflicts of laws.
d. COUNTERPARTS. This Agreement may be executed in two
counterparts, each of which shall be deemed an original and
both of which together shall constitute one and the same
instrument.
e. FORCE AND EFFECT. The various provisions of this Agreement are
severable in their entirety. Any determination of invalidity
or unenforceability of any one provision shall have no effect
on the continuing force and effect of the remaining
provisions.
f. FURTHER ASSURANCES. The Company and the Participant shall
execute and deliver such further instruments and take such
additional action as each party may reasonably request to
effect, consummate, confirm or evidence the grant of the Award
to the Participant, and they shall each execute such documents
as may be reasonably necessary to assist each other in
preserving or perfecting their respective rights in the Award.
g. NO RIGHT TO CONTINUED EMPLOYMENT. This Award does not confer
upon the Participant any right to continue in the employ of
the Company or an Affiliate, nor shall it interfere in any way
with the right of the Company or an Affiliate to terminate
such employment at any time.
XXXXXXX PACIFIC PROPERTIES, INC.
By: /s/ Xxxxxx X. Xxxxx
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Title: Chief Financial Officer
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Accepted this 1st day of August, 1999.
/s/ J. Xxxxx Xxxxxx
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J. Xxxxx Xxxxxx
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