RESTRICTED STOCK AGREEMENT
Exhibit
10.2
THIS
AGREEMENT is
made between ______________________ (the “Employee”) and Realty Income
Corporation, a Maryland corporation (the “Company”), as of ______, 2007 (the
“Effective Date”).
RECITALS
(1) Pursuant
to the 2003 Incentive Award Plan of Realty Income Corporation, as amended (the
“Plan”), the Company has granted to Employee an award of _________ shares of
restricted common stock of the Company (the “Shares”).
(2) As
a condition to Employee’s grant of restricted stock, Employee must execute this
Restricted Stock Agreement, which sets forth the rights and obligations of
the
parties with respect to the Shares.
(3) The
Plan’s terms are hereby incorporated herein by reference. Capitalized
terms not defined herein shall have the meanings ascribed to them in the
Plan.
1. Forfeiture;
Vesting.
(a) Except
as provided
in Subsections 1(c) and (d), if Employee’s employment with the Company is
terminated for any reason, including, but not limited to for Cause (as defined
below), death, and disability, all unvested Shares (the “Unvested Shares”) as of
the date of such termination shall immediately be forfeited and shall be
transferred to the Company; provided that as to Shares that would have vested
at
the subsequent Vesting anniversary of the Effective Date (each such anniversary,
a “Vesting Date”), such Shares shall vest on a prorated basis based on the
number of days elapsed from the prior Vesting Date through the date of
termination and rounding down to the nearest Share.
(b) Except
as provided
in Subsections 1(c) and (d), the Unvested Shares issued hereunder shall vest
over [ten (10) years1] [five (5) years2] [four (4)
years3] [three (3) years4] [two (2) years5]
[one (1) year6] [immediately7] on the following dates,
provided Employee is still an employee on that date:
Shares
|
Vest
Date
|
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|
___/___/_____
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|
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___/___/_____
|
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|
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|
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|
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|
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___/___/_____
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___/___/_____
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(c) Notwithstanding
the
provisions of Section 1(b) hereof, in the event of a Change in Control all
Unvested Shares shall immediately become vested immediately prior to the
consummation of such Change in Control.
(d) Notwithstanding
the
provisions of Subsections 1(a) and (b) hereof, in the event of Employee’s
termination of employment without Cause or Employee’s Constructive Termination
(each as defined below), in either case within eighteen months following a
merger or consolidation of the Company with or into another corporation in
a
transaction that is not a Change in Control (a “Non-CIC Merger”), then all
Unvested Shares (or any unvested rights to cash or other property for which
the
Unvested Shares were substituted or exchanged in connection with the Non-CIC
Merger) shall immediately become vested.
(e) For
purposes of
this Agreement, “Cause,” “Change in Control” and “Good Reason” shall have the
following defined meanings:
(i) “Cause”
means
(a)
theft, dishonesty or falsification of any employment or Company records; (b)
malicious or reckless disclosure of the Company’s confidential or proprietary
information; (c) commission of any immoral or illegal act or any gross or
willful misconduct, where the Company reasonably determines that such act or
misconduct has (1) seriously undermined the ability of the Company’s management
to entrust Employee with important matters or otherwise work effectively with
Employee, (2) contributed to the Company’s loss of significant revenues or
business opportunities, or (3) significantly and detrimentally effected the
business or reputation of the Company or any of its subsidiaries; and/or
(d) Employee’s failure or refusal to work diligently to perform tasks or
achieve goals reasonably requested by the Board, provided such breach,
failure or refusal continues after the receipt of reasonable notice in writing
of such failure or refusal and an opportunity to correct the
problem. “Cause” shall not mean a physical or mental
disability.
(ii) “Change
in Control”
shall mean the occurrence of any of the following:
(a) an
acquisition in one transaction or a series of related transactions (other than
directly from the Company or pursuant to awards granted under the Plan or
compensatory options or other similar awards granted by the Company) of the
Company’s voting securities by any individual or entity (a “Person”),
immediately after which such Person has beneficial ownership of fifty
percent
2
(50%)
or more of the
combined voting power of the Company’s then outstanding voting securities (other
than a Non-Control Transaction, as defined below);
(b) the
individuals who, immediately prior to the Effective Date, are members of the
Board (the “Incumbent Board”), cease for any reason to constitute at least a
majority of the members of the Board; provided, however, that if the
election, or nomination for election, by the Company’s common stockholders, of
any new director was approved by a vote of at least a majority of the Incumbent
Board, such new director shall, for purposes of this Agreement, be considered
as
a member of the Incumbent Board; provided further, however, that no
individual shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an actual or
threatened “Election Contest” (as described in Rule 14a-11 promulgated under the
Securities Exchange Act of 1934, as amended) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than
the
Board (a “Proxy Contest”) including by reason of any agreement intended to avoid
or settle any Election Contest or Proxy Contest; or
(c) the
consummation of
(i) a
merger, consolidation or reorganization involving the Company
unless:
(A) the
stockholders of
the Company, immediately before such merger, consolidation or reorganization,
own, directly or indirectly, immediately following such merger,
consolidation or reorganization, more than fifty percent (50%) of the combined
voting power of the outstanding voting securities of the corporation resulting
from such merger or consolidation or reorganization (the “Surviving
Corporation”) in substantially the same proportion as their ownership of the
Company’s voting securities immediately before such merger, consolidation or
reorganization,
(B) the
individuals who
were members of the Incumbent Board immediately prior to the execution of the
agreement providing for such merger, consolidation or reorganization constitute
at least a majority of the members of the board of directors of the Surviving
Corporation, or a corporation beneficially owning, directly or indirectly,
a
majority of the voting securities of the Surviving Corporation, and
(C) no
Person,
other than (i) the Company, (ii) any employee benefit plan (or any
trust forming a part thereof) that, immediately prior to such merger,
consolidation or reorganization, was maintained by the Company, the Surviving
Corporation, or any related entity or (iii) any Person who, together with its
Affiliates, immediately prior to such merger, consolidation or reorganization
had beneficial ownership of fifty percent (50%) or more of the Company’s then
outstanding voting securities, owns, together with its Affiliates, beneficial
ownership of fifty percent (50%) or more of the combined voting power of the
Surviving Corporation’s then outstanding voting securities.
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(A
transaction
described in clauses (A) through (C) above is referred to herein as a
“Non-Control Transaction”);
(d) a
complete liquidation or dissolution of the Company; or
(e) an
agreement for the sale or other disposition of all or substantially all of
the
assets or business of the Company to any Person.
For
purposes of
this Agreement, “Affiliate” shall mean, with respect to any Person, any other
Person that, directly or indirectly, controls, is controlled by, or is under
common control with, such Person. Neither the Company nor any Person
controlled by the Company shall be deemed to be an Affiliate of any holder
of
Common Stock.
(iii) “Constructive
Termination” means Employee’s resignation of employment within sixty (60) days
of one or more of the following events which remains uncured thirty (30) days
after Employee’s delivery of written notice thereof:
(a) the
delegation to Employee of duties or the reduction of Employee’s duties, either
of which substantially reduces the nature, responsibility, or character of
Employee’s position immediately prior to such delegation or
reduction;
(b) a
material reduction by the Company in Employee’s base salary in effect
immediately prior to such reduction;
(c) a
material reduction by the Company in the kind or level of employee benefits
or
fringe benefits to which Employee was entitled prior to such reduction; or
the
taking of any action by the Company that would adversely affect Employee’s
participation in any plan, program or policy generally applicable to employees
of equivalent seniority; and
(d) the
Company’s relocation of Employee’s principal office location to a place more
than forty (40) miles from the Company’s present headquarters location (except
that reasonably required travel on the Company’s business shall not be
considered a relocation).
2. Transfer
of Shares. Unless permitted by the Administrator,
Unvested Shares or any interest or right therein or part thereof shall not
be
liable for the debts, contracts or engagements of the Employee or his or her
successors in interest and shall not 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 this
Section 2 shall not apply to vested Shares and shall not prevent transfers
by
will or by applicable laws of descent and distribution. In the case
of a permitted transfer of Unvested Shares, the transferee or other recipient
shall receive and hold the Unvested Shares so transferred subject to the
provisions of this Agreement, and there shall be no further transfer of such
Shares except in accordance with the terms of this Section. Any
transferee shall acknowledge the same
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by
signing a copy
of this Agreement. Transfer or sale of the Shares is subject to
restrictions on transfer imposed by any applicable state and federal securities
laws. The Unvested Shares will be held in book entry form by the
Company’s Stock Transfer Agent, The Bank of New York. As Shares vest
annually, the Transfer Agent will be given instructions to issue a certificate
to the Employee for the vested Shares.
3. Change
in Control Adjustment. In addition to the actions
permitted under Section 11.3 of the Plan upon a Change in Control the
Administrator may, in its sole discretion, provide that the Unvested Shares
be
assumed by the successor or survivor corporation or other entity, or a parent
or
subsidiary thereof, or be substituted for by similar options, rights or awards
covering cash or the stock or other equity interests of the successor or
survivor corporation or other entity, or a parent or subsidiary thereof, with
appropriate adjustments as to the number and kind of shares or cash payment
rights.
4. Dividends
and Voting Rights. Employee shall be entitled to any and
all distributions on the Shares, payable from the Effective
Date. Employee shall have all voting rights with respect to
Shares.
5. Ownership
Rights, Duties. This Agreement shall not affect in any
way the ownership, voting rights or other rights or duties of Employee, except
as specifically provided herein.
6. Legends. The
certificate evidencing the Shares issued shall be endorsed with any legend
required under applicable federal and state securities laws and the Company’s
Articles of Incorporation.
7. Adjustment
for Stock Splits, Etc. All references to the number of
Shares in this Agreement shall be appropriately adjusted to reflect any stock
split, stock dividend or other recapitalization or change in the Shares which
may be made by the Company after the date of this Agreement in accordance with
the Plan. Any and all shares of Common Stock received by the Employee
with respect to such Shares as a result of stock dividends, stock splits or
any
other form of recapitalization shall also be subject to this
Agreement.
8. Notices. Notices
required hereunder shall be given in person or by registered mail to the address
of the Employee shown on the records of the Company, and to the Company at
its
principal executive office.
9. Survival
of Terms. This Agreement shall apply to and bind
Employee and the Company and their respective permitted assignees and
transferees, heirs, legatees, executors, administrators and legal successors,
including without limitation the Company’s acquirer in a Change in
Control.
10.
Tax
Withholding. Notwithstanding anything to the contrary in
this Agreement, the Company shall be entitled to require payment in cash or
deduction from other compensation payable to the Employee of any sums required
by federal, state or local tax law to be withheld with respect to the issuance,
lapsing of restrictions on or exercise of the Shares. The Company
may, in its discretion, allow the Employee to deliver shares of Common Stock
owned by the Employee duly endorsed for transfer to the Company with an
aggregate Fair Market Value on the date of delivery equal to the statutory
minimum sums to be withheld. The Company shall not
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be
obligated to
deliver any new certificate representing vested Shares to the Employee or his
or
her legal representative unless and until the Employee or his or her legal
representative shall have paid or otherwise satisfied in full the amount of
all
federal, state and local taxes applicable to the taxable income of the Employee
resulting from the grant of the Shares or their vesting.
11. No
Section 83(b) Elections. Because such election could
have an impact on the Company’s ability to continue as a real estate investment
trust under the Code (defined below), Employee agrees that Employee will not
file an election under Section 83(b) of the Internal Revenue Code of 1986,
as
amended (the “Code”), with respect to the Shares. If Employee does
file a Section 83(b) election then such election shall cause the forfeiture
of
all of the Shares, without proration (notwithstanding Section
1(a)).
12. Representations. Employee
has reviewed with his or her own tax advisors the federal, state, local and
foreign tax consequences of this investment and the transactions contemplated
by
this Agreement. Employee is relying solely on such advisors and not
on any statements or representations of the Company or any of its
agents. Employee understands that he/she (and not the Company) shall
be responsible for his/her own tax liability that may arise as a result of
the
grant of Shares or the transactions contemplated by this Agreement.
13. Governing
Law. This Agreement shall be governed by and construed
and enforced in accordance with California law, without giving effect to
the principles of conflict of laws thereof.
Employee
represents
that he/she has read this Agreement and is familiar with its terms and
provisions. Employee hereby agrees to accept as binding, conclusive
and final all decisions or interpretations of the Company’s Board of Directors
or the Compensation Committee thereof upon any questions arising under this
Agreement.
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IN
WITNESS WHEREOF, this Agreement is deemed made as of the date first set forth
above.
“COMPANY”
REALTY
INCOME
CORPORATION
By:______________________________________________
Name: Xxxxxxx
X. Xxxxxxxx
Title: Executive
Vice President, General Counsel
“EMPLOYEE”
______________________________________
Address:
______________________________________
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