Exhibit 99.02
FORM OF
SHARE OPTION AGREEMENT
(Stock Option Grant to a Non-Employee Director)
THIS AGREEMENT is made as of _________, by and between
DEVELOPERS DIVERSIFIED REALTY CORPORATION, an Ohio corporation (the "Company"),
and _________, an individual (the "Holder").
W I T N E S S E T H:
WHEREAS, the Company desires to provide the Holder, a member
of the Board of Directors of the Company, with an option to purchase ________
Common Shares, without par value, of the Company (the "Shares"); and
WHEREAS, the Holder desires to accept such option;
NOW, THEREFORE, in consideration of the mutual covenants
herein set forth, the parties hereto hereby agree as follows:
1. GRANT OF OPTION. The Company does hereby irrevocably grant
to the Holder, and the Holder does hereby accept, the right and option (the
"Option") to purchase, at the option of the Holder, ________ Shares at the
option price of $_______ per Share and upon and subject to the other terms and
conditions hereof. Notwithstanding the foregoing, if at any or from time to time
the number of Common Shares of the Company are increased or decreased, or
changed into or exchanged for a different number or kind of shares of stock or
other securities of the Company or of another corporation (whether as a result
of a stock split, stock dividend, combination or exchange of shares, exchange
for other securities, reclassification, reorganization, redesignation, merger,
consolidation, recapitalization or otherwise), then (i) there shall
automatically be substituted, for each Share for which the Option has not been
exercised, the number and kind of shares of stock or other securities into which
each outstanding share shall be changed or for which each such share shall be
exchanged, and (ii) the option price per Share shall be increased or decreased
proportionately so that the aggregate purchase price for the Shares subject to
the Option shall remain the same as immediately prior to such event. In addition
to the foregoing, the Company shall be entitled in the event of any such
increase, decrease or exchange of Common Shares to make adjustments to this
Agreement (including adjustments which may provide for the elimination of
fractional shares), where necessary to preserve the terms and conditions hereof.
2. TERM OF THE OPTION. Subject to the other conditions hereof,
the Option shall vest with respect to one-third of the Shares per year on each
anniversary of the date hereof, and is exercisable, in whole or in part, only
with respect to those Shares for which the Option has vested. Shares for which
the Option has become exercisable shall be referred to herein as "Vested
Shares." The Option shall terminate on the tenth anniversary of the date hereof
and must be exercised, if at all, on or before such date and shall not
thereafter be exercisable,
notwithstanding anything herein to the contrary. Notwithstanding anything
contained herein to the contrary, it shall be a condition to the Holder's right
to exercise the Option with respect to any Vested Shares that there shall have
been filed with the Securities and Exchange Commission an effective registration
statement on Form S-8 (or such other form as the Company shall deem necessary)
with respect to the Shares to be receivable upon exercise of the Option.
3. EXERCISE. (i) Subject to the other terms and conditions
hereof, the Option shall be exercisable, provided payment is made as provided
below, from time to time by written notice to the Company (in the form required
by the Company, the covenants and substantive provisions of which are hereby
made part of this Agreement) which shall:
(a) state that the Option is thereby being exercised, the
number of Shares with respect to which the Option is being exercised,
each person in whose name any certificates for the Shares should be
registered and such person's address and social security number;
(b) be signed by the person or persons entitled to exercise
the Option and, if the Option is being exercised by anyone other than
the Holder, be accompanied by proof satisfactory to counsel for the
Company of the right of such person or persons to exercise the Option
under the Plan and all applicable laws and regulations; and
(c) be accompanied by such representations, warranties or
agreements with respect to the investment intent of such person or
persons exercising the Option as the Company may reasonably request, in
form and substance satisfactory to counsel for the Company.
(ii) Payment of the Option price may be made, in the
discretion of the person exercising the Option, in one of the following manners,
or in any other manner approved by the Company, in its sole discretion:
(a) the written notice to the Company described above may be
accompanied by full payment of the option price in cash or by check,
or, with the consent of the Company, in whole or in part with a
surrender of previously acquired Common Shares of the Company having a
Fair Market Value (as defined below) on the date of exercise equal to
that portion of the purchase price for which payment in cash or check
is not made. The latter of the dates on which such notice and payment
are received by the Company shall be the date of exercise of the
Option; and
(b) within five (5) days of the giving of the written notice
to the Company described above, the funds to pay for exercise of the
Option may be delivered to the Company by a broker acting on behalf of
the person exercising the Option either in connection with the sale of
the Shares underlying the Option or in connection with the making of a
margin loan to such person to enable
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payment of the exercise price of the Option. The latter of the dates on
which such notice and payment are received by the Company shall be the
date of exercise of the Option. In connection with any such exercise,
the Company will provide a copy of the notice of exercise of the Option
to the aforesaid broker upon receipt by the Company and such notice and
will deliver to such broker, within five (5) business days of the
delivery of such notice to the Company, a certificate or certificates
(as requested by the broker) representing the number of Shares
underlying the Option that have been sold by such broker for the person
exercising the Option.
(iii) For purposes hereof, the "Fair Market Value" of a Common
Share as of a given date shall be (in order of applicability): (a) the closing
price of a Common Share on the principal exchange on which the Common Shares are
then trading, if any, on the day immediately prior to such date, or if Common
Shares were not traded on the day previous to such date, then on the next
preceding trading day during which a sale occurred; or (b) if Common Shares are
not traded on an exchange but are quoted on NASDAQ or a successor quotation
system, (1) the last sale price (if Common Shares are then listed as a National
Market Issue under the NASD National Market System); or (2) if Common Shares are
not then so listed, the mean between the closing representative bid and asked
prices for Common Shares on the day previous to such date as reported by NASDAQ
or such successor quotation system; or (3) if Common Shares are not publicly
traded on an exchange and not quoted on NASDAQ or a successor quotation system,
the mean between the closing bid and asked prices for Common Shares, on the day
previous to such date, as determined in good faith by the Administrator; or (4)
if Common Shares are not publicly traded, the fair market value established by
the Board of Directors of the Company acting in good faith.
(iv) As conditions to the exercise of the Option and the
obligation of the Company to issue Shares upon the exercise thereof, the
proposed recipient of the Shares shall make any representation or warranty to
comply with any applicable law or regulation or to confirm any factual matters
reasonably requested by the Company or its counsel.
(v) Upon exercise of the Option and the satisfaction of all
conditions thereto, the Company shall deliver a certificate or certificates for
Shares to the specified person or persons at the specified time upon receipt of
payment for such Shares as set forth above.
4. DEATH AND DISABILITY. Upon the death or permanent and total
disability of the Holder, the Option must be exercised, if at all, within the
one-year period ending on the anniversary of such death or permanent and total
disability. In the case of death, the Option shall be exercised by the Holder's
estate or the person designated by the Holder by will, or as otherwise
designated by the laws of descent and distribution. Notwithstanding the
foregoing, in no event shall the Option be exercisable after ________, and in
the case of exercise(s) made after the Holder's death, only with respect to
Shares which are Vested Shares at the time of the Holder's death. For purposes
hereof, "permanent and total disability" means a permanent and total disability
as defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended
(the "Code").
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5. TRANSFERABILITY. No Option shall be transferable by any
participant other than by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order (as defined in the Code or the
Employment Retirement Income Security Act of 1974, as amended) except that the
participant may transfer the Option, other than an Incentive Stock Option,
during his lifetime to one or more members of his family, to one or more trusts
for the benefit of one or more members of his family, or to a partnership or
partnerships of members of his family, or to a charitable organization as
defined in Section 501(c)(3) of the Code, provided that the transfer would not
result in the loss of any exemption under Rule 16b-3 of the Exchange Act with
respect to any Option. The transferee of an Option will be subject to all
restrictions, terms and conditions applicable to the Option prior to its
transfer, except that the Option will not be further transferable by the
transferee other than by will or by the laws of descent and distribution. All
Options shall be exercisable, during the participant's lifetime, only by the
participant or by the participant's authorized legal representative if the
participant is unable to exercise an Option as a result of the participant's
Disability or pursuant to this section, by a transferee according to the
preceding sentence.
6. TAXES. The Holder hereby agrees to pay to the Company any
federal, state or local taxes of any kind that may be required by law to be
withheld and remitted by the Company with respect to the Option and any exercise
thereof. If the Holder does not make such payment to the Company, the Company,
to the extent required or permitted by law, shall have the right to withhold
from any payment of any kind otherwise due to the Holder from the Company, any
federal, state or local taxes of any kind required by law to be withheld with
respect to the Option or the Shares which are the subject of such Option. The
Company, in its sole discretion, may permit the Holder to pay such taxes through
the withholding of Shares otherwise deliverable to the Holder upon exercise of
the Option or the delivery to the Company of Common Shares otherwise acquired by
the Holder. The fair market value of Common Shares withheld by the Company or
tendered to the Company for the satisfaction of any tax withholding obligations
determined to exist under this Paragraph 6 shall be determined on the date such
Common Shares are withheld or tendered.
7. INTENT. The Option does not, and is not intended to,
qualify as an "Incentive Stock Option" for purposes of Section 422A(b) of the
Code. The Option shall be construed and exercised consistent with such
intention.
8. SECURITIES LAW COMPLIANCE. Notwithstanding any provision of
this Agreement to the contrary, the Option shall not be exercisable unless, at
the time the Holder attempts to exercise the Option, in the opinion of counsel
for the Company, all applicable securities laws, rules and regulations have been
complied with. The Holder agrees that the Company may impose such restrictions
on the Shares as are deemed advisable by the Company, including, without
limitation, restrictions relating to listing or trading requirements. The Holder
further agrees that certificates representing the Shares may bear such legends
and statements as the Company shall deem appropriate or advisable to assure,
among other things, compliance with applicable securities laws, rules and
regulations.
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9. RIGHTS OF THE HOLDER. The granting of the Option in and of
itself does not confer any right on the Holder to continue as a director of the
Company. The Holder shall have no dividend, voting or other rights of a
shareholder with respect to the Shares which are subject to the Option prior to
the purchase of such Shares upon exercise of the Option and the execution and
delivery of all other documents and instruments deemed necessary or desirable by
the Company.
10. MISCELLANEOUS. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio, except to the extent
otherwise governed by Federal law.
IN WITNESS WHEREOF, the parties have subscribed their names
hereto as of the date first above written.
DEVELOPERS DIVERSIFIED REALTY
CORPORATION, an Ohio corporation
By: ___________________________________
Name: _________________________________
Title: ________________________________
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[SIGNATURE]
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