PERFORMANCE AWARD AGREEMENT
Exhibit
99.1
THIS
PERFORMANCE AWARD AGREEMENT (this “Agreement”) is
made effective as of April __, 2005, between Xxxxxxx Properties, Inc., a
Maryland corporation (the “Company”),
Xxxxxxx Properties, L.P., a Maryland limited partnership (the “Partnership”) and
____________ (the “Grantee”).
WHEREAS,
the Company maintains the Amended and Restated 2003 Incentive Award Plan of
Xxxxxxx Properties, Inc., Xxxxxxx Properties Services, Inc. and Xxxxxxx
Properties, L.P. (the “Plan”);
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);
WHEREAS,
the Plan provides for the issuance of performance or incentive awards that may
be paid in cash, Common Stock or a combination of both (a “Performance
Award”);
WHEREAS,
the Committee, appointed to administer the Plan, has determined that it would be
to the advantage and in the best interest of the Company and its stockholders to
issue the Performance Award provided for herein to the Grantee as an inducement
to enter into or remain in the service of the Company, the Partnership, the
Services Company or any Subsidiary, and as an incentive for increased efforts
during such service, and has advised the Company thereof and instructed the
undersigned officer to issue said Performance Award; and
WHEREAS,
certain capitalized terms used herein are defined in Section 12 below; and
WHEREAS,
all capitalized terms used herein without definition shall have the meanings
ascribed to such terms in the Plan.
NOW,
THEREFORE, in consideration of the mutual covenants herein contained and for
other good and valuable consideration, receipt of which is hereby acknowledged,
the parties hereto do hereby agree as follows:
1.
Grant
of Performance Award.
(a) For good
and valuable consideration, effective as of the date hereof (the “Grant
Date”), the
Company hereby grants to the Grantee the Performance Award upon the terms and
conditions set forth in this Agreement. Notwithstanding anything to the contrary
anywhere else in this Agreement, the Performance Award is subject to the terms,
definitions and provisions of the Plan, which is incorporated herein by
reference.
(b) The
Performance Award represents a potential incentive bonus that may become vested
and earned based upon the Grantee’s continued employment and the achievement of
the performance goals set forth in Section 2 hereof. The actual amount of the
Performance Award, if any, will be based on the Grantee’s vested interest in a
portion of the Performance Award Pool. The Grantee’s right in the Performance
Award represents a mere unfunded and
unsecured
contingent promise to pay by the Company or the Partnership, as applicable.
Neither the Performance Award nor any interest therein may be transferred,
assigned, alienated or anticipated.
2.
Vesting
of Performance Award.
(a)
Provided that the Grantee remains continuously employed by the Company, the
Partnership, the Services Company or any Subsidiary until the applicable vesting
date set forth below (each, a “Vesting
Date”), the
Performance Award shall become vested and payable as follows:
(i) In
the event that the Company achieves a compound annual Total Shareholder Return
equivalent to at least 15% during the period commencing on April 1, 2005 and
ending on March 31, 2008 (the “Three
Year TSR Target”), the
Performance Award shall become vested as of March 31, 2008 with respect to a
dollar amount equal the product of (x) the amount of the Performance Award Pool,
calculated as of such date, multiplied by (y) the Grantee’s Performance Award
Percentage;
(ii) In
the event that the Company does not achieve the Three Year TSR Target but
achieves a compound annual Total Shareholder Return equivalent to at least 12%
during the period commencing on April 1, 2005 and ending on March 31, 2009 (the
“Four
Year TSR Target”), the
Performance Award shall become vested as of March 31, 2009 with respect to a
dollar amount equal the product of (x) the amount of the Performance Award Pool,
calculated as of such date, multiplied by (y) the Grantee’s Performance Award
Percentage; and
(iii) In
the event that the Company does not achieve the Three Year TSR Target or the
Four Year TSR Target but achieves a compound annual Total Shareholder Return
equivalent to at least 9% during the period commencing on April 1, 2005 and
ending on March 31, 2010 (the “Five
Year TSR Target”), the
Performance Award shall become vested as of March 31, 2010 with respect to a
dollar amount equal the product of (x) the amount of the Performance Award Pool,
calculated as of such date, multiplied by (y) the Grantee’s Performance Award
Percentage.
(iv)
Notwithstanding the foregoing, in the event that the Company achieves the Three
Year TSR Target and/or the Four Year TSR Target, and the Company subsequently
achieves the Four Year TSR Target and/or the Five Year TSR Target, as
applicable, the Performance Award shall become vested as of the applicable
subsequent Vesting Date with respect to an additional amount equal to the
excess, if any, between (x) the dollar amount of the Performance Award that
would have become vested as of such subsequent Vesting Date pursuant to
paragraph (ii) or (iii) above had the Three Year TSR Target and the Four Year
TSR Target, as applicable, not previously been achieved, and (y) the dollar
amount of the Performance Award that has previously become vested pursuant to
paragraph (i) and/or (ii) above, as applicable.
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(b)
Notwithstanding the foregoing, if (1) a Change in Control occurs prior to March
31, 2010 and the Grantee remains continuously employed by the Company, the
Partnership, the Services Company or any Subsidiary until the date of such
Change in Control (the “Change
in Control Date”), and
(2) the Company achieves a compound annual Total Shareholder Return equivalent
to at least 9% during the period commencing on April 1, 2005 and ending on the
Change in Control Date, the Performance Award (determined as set forth below)
shall become vested as of the Change in Control Date, and all obligations to the
Grantee in respect of the Performance Award shall be satisfied in full upon
payment thereof. The dollar amount of the Performance Award that shall become
vested as of such date shall equal the product of (x) the amount of the
Performance Award Pool, calculated as of such date, multiplied by (y) the
Grantee’s Performance Award Percentage, less the dollar amount of any portion of
the Performance Award that has previously become vested pursuant to Section 2(a)
above. In determining the dollar amount of the Performance Award that shall
become vested upon a Change in Control, the actual compound annual Total
Shareholder Return greater than 9% for the period ending on the Change in
Control Date shall be considered and not a hypothetical Three Year TSR Target,
Four Year TSR Target, or Five Year TSR Target, even if the Change in Control
occurs on or after the first, second, or third Vesting Date.
(c)
Notwithstanding the foregoing, in the event of the Grantee’s Termination of
Employment for any reason, then, to the extent the Performance Award (or a
portion thereof) has not yet become vested under Section 2(a) or (b) above, the
Grantee’s right to receive any portion of the Performance Award will thereupon
be forfeited by the Grantee, and the Company will have no obligations to the
Grantee with respect thereto.
3.
Payment
of Performance Award. Not
later than 30 days after the applicable Vesting Date (or Change in Control Date,
if applicable) with respect to which the Performance Award (or any portion
thereof) has become vested, the Company or the Partnership will distribute the
amount or value of such vested Performance Award (as determined under Section 2)
to the Grantee in the form of shares of Common Stock, subject to the limits set
forth in Article II of the Plan; provided,
however, that in
no event shall the number of shares of Common Stock distributed with respect to
the Performance Award, when combined with the number of shares of Common Stock
distributed with respect to all other similar Performance Awards granted under
the Plan, exceed 3,000,000 shares (subject to adjustment as provided in Section
11.3 of the Plan); provided,
further, that the
Administrator, in its sole and absolute discretion, may elect to distribute some
or all of such vested Performance Award in cash, and any portion of the
Performance Award that is not distributed in the form of shares of Common Stock
by reason of the limit set forth in this Section 3 or the limits set forth in
Article II of the Plan shall be distributed in cash. With respect to any portion
of the Performance Award that is satisfied by the distribution of shares of
Common Stock, the value of such shares shall be equal to the Fair Market Value
(as defined in the Plan) on the date the Performance Award (or portion thereof)
became vested.
4.
Determinations
by Administrator.
Notwithstanding anything contained herein, all determinations, interpretations
and assumptions relating to the vesting and calculation of the Performance Award
(including, without limitation, determinations, interpretations and assumptions
with respect to shareholder value, shareholder return and the Performance Award
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Pool)
shall be made by the Administrator. In making such determinations, the
Administrator may employ attorneys, consultants, accountants, appraisers,
brokers, or other persons, and the Administrator, the Board, the Company, the
Partnership and their officers and directors shall be entitled to rely upon the
advice, opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Administrator or the Board in
good faith and absent manifest error shall be final and binding upon the
Grantee, the Company and all other interested persons. In addition, the
Administrator, in its discretion, may adjust or modify the methodology for
calculating of the Performance Award (including, without limitation, the
methodology for calculating shareholder value, shareholder return and the
Performance Award Pool), other than the Performance Award Percentage, as
necessary or desirable to account for events affecting the value of the Common
Stock which, in the discretion of the Administrator, are not considered
indicative of Company performance, such as the issuance of new Common Stock,
stock repurchases, stock splits, issuances and/or exercises of stock grants or
stock options, and similar events, all in order to properly reflect the
Company’s intent with respect to the performance objectives underlying the
Performance Award or to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available with respect to the Performance
Award.
5.
No
Rights as Stockholder.
Provided that any portion of the Performance Award that becomes vested and
payable is timely distributed in accordance with Section 3 above, the Grantee
shall not be, nor have any of the rights or privileges of, a stockholder of the
Company in respect of any shares issued upon payment of the Performance Award
(or any portion thereof) unless and until certificates representing such shares
shall have been issued by the Company or the Partnership, as applicable, to the
Grantee or unless and until such stock ownership is properly entered on the
records of the duly authorized transfer agent of the Company.
6.
Compliance
With Law. The
Grantee acknowledges that the Plan and this Agreement are intended to conform to
the extent necessary with all provisions of all applicable federal and state
laws, rules and regulations (including, but not limited to 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 the
applicable exemptive conditions of Rule 16b-3) and to such approvals by any
listing, regulatory or other governmental authority as may, in the opinion of
counsel for the Company or the Partnership, be necessary or advisable in
connection therewith. Notwithstanding anything herein to the contrary, the Plan
shall be administered, and the Performance Award is granted, only in such a
manner as to conform to such laws, rules and regulations. To the extent
permitted by applicable law, the Plan, this Agreement and the Performance Award
shall be deemed amended to the extent necessary to conform to such laws, rules
and regulations.
7.
Amendment. This
Agreement and the Plan may be amended without the consent of the Grantee;
provided,
however, that no
amendment to this Agreement shall, without the consent of the Grantee, adversely
affect or impair any rights of the Grantee under this Agreement
8.
Severability. In the
event that one or more of the provisions of this Agreement may be invalidated
for any reason by a court, any provision so invalidated will be deemed to be
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separable
from the other provisions hereof, and the remaining provisions hereof will
continue to be valid and fully enforceable.
9.
Governing
Law. This
Agreement shall be administered, interpreted and enforced under the internal
laws of the State of California without regard to conflicts of laws
thereof.
10.
Tax
Withholding. The
Company or the Partnership, as applicable, shall be entitled to require payment
in cash or deduction from compensation (including the Performance Award) payable
to the Grantee of any sums required by federal, state or local tax law to be
withheld with respect to the issuance, vesting, or payment of the Performance
Award. The Administrator may in its discretion and in satisfaction of the
foregoing requirement allow the Grantee to elect to have the Company or the
Partnership, as applicable, withhold shares of Common Stock otherwise issuable
under the Performance Award (or allow the return of shares of Common Stock)
having a Fair Market Value equal to the sums required to be withheld.
Notwithstanding any other provision of the Plan or this Agreement, the number of
shares of Common Stock which may be withheld with respect to the issuance,
vesting or payment of the Performance Award in order to satisfy the Grantee’s
federal and state income and payroll tax liabilities with respect to the
issuance, vesting or payment of the Performance Award shall be limited to the
number of shares which have a Fair Market Value on the date of withholding or
repurchase equal to the aggregate amount of such liabilities based on the
minimum statutory withholding rates for federal and state tax income and payroll
tax purposes that are applicable to such supplemental taxable
income
11.
No Tax
Advice. Neither
the Company nor the Partnership has made any warranty or representation to the
Grantee with respect to the income tax consequences of the transactions
contemplated by this Agreement, and the Grantee is in no manner relying on the
Company, the Partnership or any of their representatives for an assessment of
such tax consequences. The Grantee is advised to consult with his or her own tax
advisor with respect to such tax consequences and the issuance, vesting and
payment of the Performance Award.
12.
Certain
Definitions. As used
herein, the following terms shall have the meanings specified below, unless the
context clearly indicates otherwise.
(a)
“Base
Price” means
$23.91, which represents the average of the closing trading prices of a share of
Common Stock on the New York Stock Exchange during the ten consecutive trading
days ending on March 31, 2005.
(b)
“Excess
Shareholder Value” means
the sum of (x) 50% of the Xxxxxxx Excess Shareholder Value, plus (y) 50% of the
NAREIT Excess Shareholder Value.
(c)
“Xxxxxxx
Excess Shareholder Value” means,
with respect to the total number of shares of Common Stock and limited
partnership units of the Partnership outstanding as of the applicable Valuation
Date, the aggregate positive dollar value, if any, of the compound annual Total
Shareholder Return (as applied to such stock and units) for the applicable
Performance Period in excess of a compound annual Total Shareholder Return
equivalent to 9% for such
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Performance
Period. A negative Xxxxxxx Excess Shareholder Value shall be disregarded for
purposes of computing Excess Shareholder Value.
(d)
“NAREIT
Excess Shareholder Value” means,
with respect to the total number of shares of Common Stock and limited
partnership units of the Partnership outstanding as of the applicable Valuation
Date, the aggregate positive dollar value, if any, of the compound annual Total
Shareholder Return (as applied to such stock and units) for the applicable
Performance Period in excess of the greater of (i) the corresponding compound
annual shareholder return of the market-value weighted NAREIT Office Index for
such Performance Period, assuming the reinvestment of dividends from the date of
issue through the applicable Valuation Date, and (ii) a compound annual Total
Shareholder Return equivalent to 9% for such Performance Period. A negative
NAREIT Excess Shareholder Value shall be disregarded for purposes of computing
Excess Shareholder Value.
(e)
“NAREIT
Office Index” means
the composite of the stock price performance, including the reinvestment of
dividends, of office real estate investment trusts as complied by the National
Association of Real Estate Investment Trusts; provided,
however, that the
NAREIT Office Index shall not include the Company.
(f)
“Performance
Award Percentage” means
______%.
(g)
“Performance
Award Pool”
means:
(i) 10%
of the Excess Shareholder Value if the compound annual Total Shareholder Return
for the applicable Performance Period equals or exceeds 15%;
(ii) 5%
of the Excess Shareholder Value if the compound annual Total Shareholder Return
for the applicable Performance Period is equal to or greater than 12% but less
than 15%; and
(iii)
2.5% of the Excess Shareholder Value if the compound annual Total Shareholder
Return for the applicable Performance Period is equal to or greater than 9% but
less than 12%;
provided,
however, that in
no event shall the aggregate amount of the Performance Award Pool exceed
$50,000,000 (or, in
the event that more than one Performance Award payment becomes payable pursuant
to Section 2 above, then in no event shall the sum of all Performance Award
Pools exceed $50,000,000).
(h)
“Performance
Period” means
the period beginning on April 1, 2005 and ending on the applicable Valuation
Date.
(i)
“Total
Shareholder Return” means
the percentage by which the Trailing Average Fair Market Value, as of the
applicable Valuation Date, of a share of Common Stock outstanding as of April 1,
2005, increased or decreased, as applicable, by an amount that would be realized
if all cash dividends paid on a share of Common Stock during the applicable
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Performance
Period were reinvested in Common Stock on the
applicable dividend payment date, exceeds the Base Price; provided,
however, that for
purposes of calculating the Total Shareholder Return in the event of a Change in
Control under Section 2(b) above, Total Shareholder Return shall mean the
percentage by which the price per share of Common Stock paid in connection with
such Change in Control, increased by an amount that would be realized if all
cash dividends paid on a share of Common Stock during the applicable Performance
Period were reinvested in Common Stock on the applicable dividend payment date,
exceeds the Base Price.
(j)
“Trailing
Average Fair Market Value” means
the average of the closing trading prices of a share of Common Stock on the
principal exchange on which such shares are then traded during the ten
consecutive trading days ending on the applicable Valuation Date (or ending on
the last trading day preceding such Valuation Date if the Valuation Date does
not fall on a trading day).
(k)
“Valuation
Date” means,
with respect to a given Performance Period, March 31, 2008, March 31, 2009, or
March 31, 2010, as applicable; provided,
however, that in
the event of a Change in Control that occurs prior to March 31, 2010, the
Valuation Date shall mean the Change in Control Date.
[Signature
Page Follows]
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IN WITNESS
WHEREOF, this Agreement has been executed and delivered by the parties
hereto.
|
GRANTEE
_____________________________
[Name]
|
XXXXXXX
PROPERTIES, INC.,
a
Maryland corporation
By:_____________________________
Name:
Title:
XXXXXXX
PROPERTIES, L.P.,
a
Maryland limited partnership
By: Xxxxxxx
Properties, Inc., a Maryland corporation
Its: General
Partner
By:
_____________________________
Name:
Title: |
