AMENDMENT NO. 1 TO AMENDED AND RESTATED MASTER EXCHANGE AGREEMENT
EXHIBIT 99.3
(Trust Manager Form)
AMENDMENT NO. 1 TO AMENDED AND RESTATED
MASTER EXCHANGE AGREEMENT
MASTER EXCHANGE AGREEMENT
This Amendment No. 1 to the Amended and Restated Master Exchange Agreement (this “Amendment”)
is made by Camden Property Trust (the “Company”) and is effective as of the date on which it is
approved and adopted by the Compensation Committee of the Board of Trust Managers of the Company.
WHEREAS, the Company previously entered into an Amended and Restated Master Exchange
Agreement, which is an Option Agreement for purposes of the KEYSOP (the “Option Agreement”), with
the Recipient pursuant to which the Recipient was granted certain Modified Rights to Repurchase
relating to the repurchase of Restricted Shares and certain options to acquire marketable
securities pursuant to the KEYSOP (collectively, “Options”); and
WHEREAS, Section 409A (“Code Section 409A”) of the Internal Revenue Code of 1986, as amended
(the “Code”), was enacted on October 22, 2004, and related Treasury Regulations were published
April 10, 2007 and are effective January 1, 2008, and are applicable to deferred compensation,
including the Options and certain other equity compensation rights, that vest after December 31,
2004; and
WHEREAS, the Modified Rights to Repurchase that vested on and before December 31, 2004 (the
“Grandfathered Modified Rights to Repurchase”) are not subject to Code Section 409A, provided they
are not materially modified on or after October 3, 2004; and
WHEREAS, the Modified Rights to Repurchase that vest after December 31, 2004 (the
“Non-Grandfathered Modified Rights to Repurchase”) are subject to Code Section 409A; and
WHEREAS, the Committee has the authority, pursuant to Section 4.3 of the KEYSOP, to amend an
Option Agreement issued pursuant to the KEYSOP if the Committee determines that an amendment is
necessary or advisable as a result of, among other things, a change in the Code or any regulation,
which occurs after the grant date and applies to the Option; and
WHEREAS, the Committee has determined it to be necessary and advisable to amend certain
provisions of the Option Agreement to (i) cause the Non-Grandfathered Modified Rights to Repurchase
to comply with applicable provisions of Code Section 409A and the Treasury Regulations issued
thereunder and (ii) provide that the Grandfathered Modified Rights to Repurchase will not be
materially modified after October 3, 2004; and
WHEREAS, the Company and the Committee intend that this Amendment and the Option Agreement be
interpreted and administered consistent with Code Section 409A and the Treasury Regulations issued
thereunder;
NOW, THEREFORE, the Committee does hereby amend the Option Agreement as follows:
1. Section 3 of the Option Agreement is hereby amended and restated to read in its entirety as
follows:
“The Restricted Shares are (and shall continue to be) held in a rabbi trust (the
“Trust”) established by and for the benefit of the Company. The Trust shall be
administered by an independent trustee selected by the Company. Unless otherwise
agreed by Recipient and the Company, the Company agrees, whenever any dividend is
declared on common shares of beneficial interest of the Company, $.01 par value per
share (the “Common Shares”), to pay to the Recipient an amount per Restricted Share
held hereunder as of such date(s) by the Trust equal to the amount per Common Share
paid to the holders of record of Common Shares of the Company (the “Dividend
Equivalents”). The Recipient may elect that any Dividend Equivalents payable on
account of dividends declared on the Common Shares shall be paid to the Trust
instead of to the Recipient. In such event, the Dividend Equivalents shall be paid
into the Trust on a quarterly basis and shall be subject to a six month vesting
period beginning on the date that the Dividend Equivalents are deposited into the
Trust. The Trustee will invest the Dividend Equivalents in marketable securities
selected at the discretion of the Committee, and the Recipient will receive an
option to purchase assets from the Trust in accordance with the terms of the KEYSOP.
Any such election to pay Dividend Equivalents to the Trust must be made no later
than December 31 of the year preceding the year in which the Dividend Equivalents
may be payable on account of dividends declared on the Common Shares during such
succeeding calendar year, and shall be irrevocable for those Dividend Equivalents;
provided, however, upon the occurrence of any event that results in the Recipient no
longer being a trust manager of the Company which is a Separation from Service (as
defined in Code Section 409A) of the Recipient (a “Termination Event”), then solely
with respect to Dividend Equivalents that would otherwise be subject to such an
election after the Recipient’s Separation from Service, such an election shall
terminate as of the date of the Recipient’s Separation from Service. The Dividend
Equivalents payable under this Section 3 shall be distributed directly to the
Recipient via payroll or to the Trust, as elected, on a quarterly basis. Upon the
occurrence of a Termination Event, no Dividend Equivalents shall be payable on any
Restricted Shares that are forfeited by the Recipient. Any Dividend Equivalents paid
to the Trust shall accumulate in the Trust and be subject to the terms and
provisions of the KEYSOP. In this regard, the Committee shall invest such Dividend
Equivalents in marketable securities.”
2. The first sentence of Section 4 of the Option Agreement is hereby amended and restated to
read in its entirety as follows:
“Pursuant to the Modified Rights to Repurchase, the Recipient shall have the right
to purchase all or any part of any fully-vested Restricted Shares related to such
Modified Right to Repurchase held in the Trust.”
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3. Section 5 of the Option Agreement is hereby amended to delete the last sentence thereof.
4. Section 7 of the Option Agreement is hereby amended and restated to read in its entirety as
follows:
“The Committee shall not exchange or substitute any Common Shares or Designated
Property subject to a Modified Right to Repurchase or an Option.”
5. Section 8 of the Option Agreement is hereby amended and restated to read in its entirety as
follows:
“8. The Modified Rights to Repurchase shall be exercisable as described in
this Section 8. Subject to Section 14 hereof, if a Termination Event occurs
before the vesting of the Modified Rights to Repurchase, the Modified Rights to
Repurchase not theretofore vested shall terminate on the date of the
Termination Event (the “Termination Date”). Any unexercised Modified Rights to
Repurchase that are not exercised within the requisite time period prescribed
in this Section 8 shall terminate and be of no further force and effect. |
| a. | This Section 8.a. is applicable to Grandfathered
Modified Rights to Repurchase. Recipient’s vested Grandfathered
Modified Rights to Repurchase shall be exercisable for a period of time
following the Termination Date equal to the lesser of: |
| (i) | the expiration of the Post Termination
Period (as hereinbelow defined), and |
| (ii) | Thirty (30) years after the applicable vesting
date. |
For purposes hereof, the “Post Termination Period” means, as to the
Recipient, the period commencing on the day immediately following
the Termination Date and ending on the later of (i) one year from
the Termination Date or (ii) the number of complete years of service
by the Recipient as a trust manager of the Company through the
Termination Date (provided, that, if the Recipient has completed at
least ten (10) complete years of service as a trust manager, as
calculated hereunder, then such period shall end with respect to
each Grandfathered Modified Right to Repurchase thirty (30) years
from the applicable vesting date). For purposes hereof, any period
of service by a Recipient as a trust manager that is less than one
year shall be disregarded in calculating the Post Termination
Period. In the event of any merger of any entity with and into the
Company or any of its subsidiaries, any former trust manager or
director of such merged entity who becomes a trust manager of the
Company may, in the
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sole discretion of the Committee, receive credit for all or a
portion of such director’s or trust manager’s complete years of
service as a trust manager or director with such merged entity for
purposes of calculating the Post Termination Period hereunder. In
the event that Recipient was a trust manager of the Company and
there was a Termination Event with respect to such Recipient and
later the Recipient became a trust manager of the Company again,
then, unless a waiver (in writing) is granted to the Recipient by
the Committee, for purposes of calculating the Post Termination
Period, only the complete years of service by the Recipient
immediately preceding the current Termination Event shall be
considered (i.e. the Post Termination Period will be calculated
based on the period beginning upon the date that such Recipient
re-commenced service as a trust manager of the Company and ending
upon the date of the later Termination Event). Notwithstanding any
provision hereof to the contrary, (i) upon the date that is six
months after the date of the death of a Recipient (the “Six Month
Date”), and at any time thereafter, the Post Termination Period
applicable to such Recipient’s Grandfathered Modified Rights to
Repurchase held by any person or entity other than the surviving
spouse of the Recipient or a trust in which such surviving spouse is
a then-living beneficiary (a “Specified Beneficiary”), including
without limitation any such Grandfathered Modified Rights to
Repurchase that were originally held by a Specified Beneficiary on
the Six Month Date that are no longer so held due to the death of
the surviving spouse or any subsequent transfer of such
Grandfathered Modified Rights to Repurchase, shall be equal to the
shorter of (A) the Post Termination Period (as calculated above) and
(B) one year from the Six Month Date, or if the Grandfathered
Modified Rights to Repurchase were held by a Specified Beneficiary
on the Six Month Date, one year from the first date thereafter that
such Grandfathered Modified Rights to Repurchase are no longer held
by a Specified Beneficiary; and (ii) in the event that the Committee
determines that any act or omission of the Recipient constitutes
fraud or a violation of applicable law or any act or omission of the
Recipient in connection with the business or affairs of the Company
constitutes gross negligence or intentional misconduct (including,
without limitation, any violation of a Company policy in any
material respect), then the Committee in its sole discretion, may,
upon delivery of written notice to the Recipient, reduce the Post
Termination Period to the shorter of (A) the Post Termination Period
and (B) sixty (60) days from the date that the Committee determines
that the Recipient has committed such act or omission.
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| b. | This Section 8.b. is applicable to Non-Grandfathered
Modified Rights to Repurchase. The Recipient to whom such a
Non-Grandfathered Modified Right to Repurchase was awarded shall make
an election, no later than December 31, 2007, as to the date on which
such Non-Grandfathered Modified Right to Repurchase will be
exercisable. The Recipient may make a separate election, no later than
December 31, 2007, as to the date on which such Non-Grandfathered
Modified Right to Repurchase will be exercisable following the
Recipient’s Separation from Service or the occurrence of a change in
control (as defined in Code Section 409A and referred to herein as a
“409A Change in Control”), provided, however, that in the event of a
Recipient’s Separation from Service, the Non-Grandfathered Modified
Right to Repurchase may not be exercised before the expiration of six
months from the date of the Recipient’s Separation from Service. If no
such elections are made, such Non-Grandfathered Modified Right to
Repurchase shall be exercisable on the later of the following dates: |
| (i) | The later of January 1, 2012, or two
years following the date on which the Non-Grandfathered
Modified Right to Repurchase vests; or |
| (ii) | The earlier of the 16th month following
the month in which the Recipient Separates from Service or the
16th month following the month in which a 409A Change in
Control occurs. |
The exercise date elected by the Recipient with respect to a
Non-Grandfathered Modified Right to Repurchase may not be prior to
January 1, 2008 and may not be later than 30 years following the
date on which the Non-Grandfathered Modified Right to Repurchase
vests. In the event of the Recipient’s Separation from Service, the
exercise date applicable to the Recipient’s Separation from Service
may not be later than the date on which the Post-Termination Period
expires. If the Recipient Separates from Service prior to the
otherwise applicable exercise date and the exercise date applicable
to the Recipient’s Separation from Service is later than the date on
which the Post-Termination Period expires, such elected exercise
date shall be disregarded and the exercise date related to a
Separation from Service shall be the date on which the
Post-Termination Period expires. For purposes of this Section 8.b.,
the Post-Termination Period shall have the meaning described in the
first paragraph of Section 8 hereof, except that a Recipient’s
Termination Date shall be the date on which the
Recipient Separates from Service and a Termination Event must be
caused by a Separation from Service.
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With respect to a Non-Grandfathered Modified Right to Repurchase,
the Recipient may elect, on and after January 1, 2008, to defer the
date on which such Non-Grandfathered Modified Right to Repurchase is
exercisable if the following requirements are satisfied:
| (i) | An election to defer the exercise date
must be submitted to the Employer no later than twelve (12)
months and one day prior to the otherwise scheduled exercise
date; |
| (ii) | The election must defer the exercise
date to a date no earlier than five years from the otherwise
scheduled exercise date; and |
| (iii) | The election will not be effective for
at least twelve (12) months following the date on which the
election is filed. |
Such an election may not defer the exercise date to a date later
than 30 years following the date on which the Non-Grandfathered
Modified Right to Repurchase vests or the expiration of the
Post-Termination Period, if applicable. If the Recipient Separates
from Service prior to the otherwise applicable exercise date and the
exercise date elected by the Recipient with respect to Separation
from Service is later than the date on which the Post-Termination
Period expires, such elected exercise date shall be disregarded and
the exercise date related to a Separation from Service shall be the
date on which the Post-Termination Period expires.
The Non-Grandfathered Modified Right to Repurchase may be exercised
on the applicable exercise date or within the 90-day period that
begins with the exercise date. Following December 31 of the year in
which the exercise date occurs, the Non-Grandfathered Modified Right
to Repurchase expires and is no longer exercisable.
6. The sixth sentence of Section 16 of the Option Agreement is hereby amended and restated to
read in its entirety as follows:
“Without limiting any other remedies available to the Company, upon a failure by a
Recipient or his or her transferees or assignees to timely pay any such Costs of
Administration, (i) the Committee may cancel one or more of the Grandfathered
Modified Rights to Repurchase originally issued to the Recipient and deliver the
underlying Company shares to the Company to fund such Costs of Administration; (ii)
the Committee may cancel one or more of the Non-
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Grandfathered Rights to Repurchase originally issued to the Recipient, one day
following the date that is six months from the Recipient’s Separation from Service,
and deliver the underlying Company shares to the Company to fund such Costs of
Administration; and/or (iii) the Committee may withhold an amount equal to such
Costs of Administration from the Dividend Equivalents otherwise payable to the
Recipient or his transferees or assignees and apply such withheld Dividend
Equivalents to the payment of the Costs of Administration.
7. Section 17 of the Option Agreement is hereby deleted.
8. This Amendment shall be construed in accordance with the laws of the State of Texas.
9. To the extent any provision of this Amendment is held to be unenforceable, illegal or
invalid under any current or future law, such provision shall be fully separable and this Amendment
shall be construed and enforced as if such illegal, invalid or unenforceable provision had never
comprised a part thereof, the remaining provisions of this Amendment shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable provision or by its
severance therefrom. In lieu of such illegal, invalid or unenforceable provision, there shall be
added automatically as a part of this Amendment, a legal, valid and enforceable provision as
similar in terms to such illegal, invalid or unenforceable provision as may be possible, and the
parties hereto request the court or any arbitrator to whom disputes relating to this Amendment are
submitted to reform the otherwise illegal, invalid or unenforceable provision in accordance with
this Section 9.
10. The terms of the written award documents executed by the Company with respect to the
Modified Rights to Repurchase (an “Award Agreement”) have been amended contemporaneously with
adoption of this Amendment to reflect any applicable changes made hereunder for compliance with
Code Section 409A, as attached hereto as Exhibit B. To the extent any provisions of this
Amendment conflict with (i) the provisions of any employment agreement entered into between the
Company or any subsidiary thereof and the Recipient, the terms of the employment agreement shall
control or (ii) the terms of any Award Agreement, the terms of the Award Agreement shall control;
provided, however, that with regard to both (i) and (ii), to the extent required for compliance
with Code Section 409A, the provisions of this Amendment shall control. For purposes hereof, the
Option Agreement shall not constitute an Award Agreement.
11. Capitalized terms used and not defined herein shall have the meanings assigned to such
terms in the Option Agreement.
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IN WITNESS WHEREOF this Amendment has been executed on and effective as of November 27, 2007.
| CAMDEN PROPERTY TRUST | ||||
| By: | ||||
| Xxxxxx X. Xxxxx Chief Financial Officer, Senior Vice President-Finance and Secretary |
||||
ACKNOWLEDGED BY THE RECIPIENT:
|
||
Name: |
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