ESSEX PROPERTY TRUST, INC. ESSEX PORTFOLIO, L.P.
[Executives]
modification
which adversely affects the Grantee must be consented to by the Grantee to
be
effective as against him.
any
kind
required by law to be withheld with respect to such amount. The
obligations of the Company under this Agreement will be conditional on such
payment or arrangements, and the Company and its affiliates shall, to the
extent
permitted by law, have the right to deduct any such taxes from any payment
otherwise due to the Grantee.
ESSEX
PROPERTY TRUST, INC.
ESSEX
PORTFOLIO, L.P.
2007
OUTPERFORMANCE PLAN
AWARD
AGREEMENT
Name
of
Grantee: (“Grantee”)
No. of
LTIP Units:
Participation
Percentage:
Grant
Date: ____________________,
2007
RECITALS
A. The
Grantee is an executive of Essex Property Trust, Inc., a Maryland corporation
(the “Company”), which is the general partner of Essex Portfolio, L.P., a
California limited partnership through which the Company conducts substantially
all of its operations (“EPLP”).
B. EPLP
has
adopted the 2007 Outperformance Plan (the “Outperformance Plan”) to provide the
Company’s executives with incentive compensation. The Outperformance Plan
was adopted effective as of December 4, 2007 by the Board of Directors of the
Company (the “Board”). The Board has delegated to the Compensation Committee of
the Board (the “Committee”) the authority to administer the Outperformance Plan,
including the authority to grant LTIP Units (as defined herein). This
award agreement (this “Agreement”) evidences an award to the Grantee under the
Outperformance Plan (the “Award”), which is subject to the terms and conditions
set forth herein.
C. The
Grantee was selected by the Committee to receive the Award. The
Committee, effective as of December 4, 2007, caused EPLP to (1) issue to
the Grantee the number of LTIP Units (as defined herein) set forth above and
(2) to award the Grantee the percentage of the Outperformance Pool (as
defined herein) set forth above.
NOW,
THEREFORE, the Company, EPLP and the Grantee agree as
follows:
1. Administration. The
Outperformance Plan and all awards thereunder, including this Award, shall
be
administered by the Committee, which in the administration of the Outperformance
Plan shall have all the powers and authority it has in the administration of
the
2004 Plan as set forth in the 2004 Plan.
2. Definitions. Capitalized
terms used herein without definitions shall have the meanings given to those
terms in the 2004 Plan. In addition, as used herein:
“2004
Plan” means the Essex Property Trust, Inc. 2004 Stock Incentive Plan, as
amended, modified or supplemented from time to time.
“Additional
Share Baseline Value” means, with respect to an Additional Share, the gross
proceeds received by the Company or EPLP upon the issuance of such Additional
Share, which amount shall be deemed to equal the price to the public if such
Additional Share is issued in a public offering or, if such Additional Share
is
issued in exchange for assets or upon the acquisition of another entity, the
cash value imputed to such Additional Share for purposes of such transaction
by
the parties thereto, as determined by the Committee, or, if no such value can
be
imputed, the Common Stock Price on the date of issuance.
“Additional
Shares” means (without double counting) the sum of (A) the number of shares
of Common Stock plus (B) the product of the Conversion Factor then in effect
multiplied by the number of Units (other than those issued to the Company),
in
the case of each (A) and (B), to the extent issued after December 4, 2007 and
on
or before the Valuation Date in a capital raising transaction, in exchange
for
assets or upon the acquisition of another entity, but specifically excluding,
without limitation, (i) shares of Common Stock issued upon exercise of stock
options or upon the exchange (directly or indirectly) of Z Units or other Units
issued to employees, non-employee directors, consultants, advisors or other
person or entities as incentive compensation, (ii) restricted shares of Common
Stock issued to employees or other persons or entities in exchange for services
provided to the Company, (iii) currently unvested restricted shares of Common
Stock awarded to employees or other person or entities in exchange for services
provided as they become vested, (iv) Common Units issued upon conversion
of
Z
Units
or other Units issued to employees, non-employee directors, consultants,
advisors or other persons or entities as compensation, and (v) Z Units or other
Units issued to employees, non-employee directors, consultants, advisors or
other persons or entities as compensation.
“Agreement”
has the meaning set forth in Recital B.
“Award”
has the meaning set forth in Recital B.
“Award
LTIP Units” has the meaning set forth in Section 3
hereof.
“Baseline”
means, as of the Valuation Date, an amount representing (a) the Baseline
Value, multiplied by (I) the Initial Shares less any Initial Shares that have
been redeemed or retired between December 4, 2007 and the Valuation Date, and
(II) the sum of 100% plus the Target Return Percentage, plus
(b) with respect to each Additional Share that has not been redeemed or
retired prior to the Valuation Date, the product of (I) the Additional Share
Baseline Value of such Additional Share, multiplied by (II) the sum of
(A) 100% plus (B) the product of the Target Return Percentage,
multiplied by a fraction the numerator of which is the number of days prior
to
and including such Valuation Date during which such Additional Share has been
outstanding and the denominator of which is the number of days from and
including December 4, 2007 to and including the Measurement Date;
provided, that if the Valuation Date occurs prior to December 3, 2010
(other than as a result of clause (iii) of the definition of the Valuation
Date), then for purposes of this definition in connection with the calculation
of the Outperformance Pool as of the Valuation Date, the Measurement Date shall
be the Valuation Date and the Target Return Percentage shall be multiplied
by
the Fraction.
“Baseline
Value” means $98.91, which is the per share closing price of the Common
Stock on the Effective Date.
2
“Board”
has the meaning set forth in Recital B.
“Change
of Control” has the meaning assigned to it in the Seventh Amendment to the
Partnership Agreement.
“Code”
means the Internal Revenue Code of 1986, as amended.
“Committee”
has the meaning set forth in Recital B.
“Common
Stock” means the Company’s Common Stock, par value $0.0001 per share, either
currently existing or authorized hereafter.
“Common
Stock Price” means, as of a particular date, the average of the Fair Market
Values of one share of the Common Stock for the twenty (20) days ending on,
and
including, such date (or, if such date is not a trading day, the most recent
trading day immediately preceding such date); provided, however, that
if such date is the date upon which a Change of Control occurs, the Common
Stock
Price as of such date shall be equal to the fair market value in cash, as
determined by the Committee, of the total consideration paid or payable in
the
transaction resulting in the Change of Control for one share of Common
Stock.
“Common
Unit” has the meaning assigned to it in the Partnership
Agreement.
“Company”
has the meaning set forth in Recital A.
“Conversion
Factor” has the meaning given to that term in the Partnership
Agreement.
“Disability”
has the meaning given to that term in the 2004 Plan.
“Effective
Date” means December 4, 2007.
“EPLP”
has the meaning set forth in Recital A.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended.
“Fair
Market Value” has the meaning given to that term in the 2004
Plan.
“Family
Member” of a Grantee, means the Grantee’s child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, ▇▇▇▇▇▇▇, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law,
or
sister-in-law, including adoptive relationships, any person sharing the
Grantee’s household (other than a tenant of the Grantee), a trust in which these
persons (or the Grantee) have more than 50 percent of the beneficial interest,
a
foundation in which these persons (or the Grantee) control the management of
assets, and any other entity in which these persons (or the Grantee) own more
than 50 percent of the voting interests.
“Fraction”
means the number of whole calendar months that have elapsed between the
Effective Date and the Valuation Date divided by 36.
3
“Initial
Shares” means shares of Common Stock and Units (other
those held by the Company, with the number of Units multiplied by the Conversion
Factor in effect as of the Effective Date) which are deemed to be outstanding
as
of the Effective Date. For the avoidance of doubt, such number
excludes (i) shares of Common Stock issuable upon exercise of stock options
or
upon the exchange (directly or indirectly) of Z Units or other Units issued
to
employees, non-employee directors, consultants, advisors or other persons or
entities as incentive compensation, (iii) currently unvested restricted shares
of Common Stock awarded to employees or other persons or entities in exchange
for services provided to the Company, and (iv) Z Units or other Units issued
to
employees, non-employee directors, consultants, advisors or other persons or
entities as incentive compensation.
“LTIP
Units” means an LTIP Unit of limited partnership interest in EPLP with the
rights set forth in the Partnership Agreement and issued pursuant to this
Agreement as profits interests under the Outperformance Plan.
“Maximum
Outperformance Pool Amount” means, as of the Valuation Date, $25,000,000,
multiplied by the Total Participation Percentage as of the Valuation
Date.
“Measurement
Date” means December 3, 2010, except as otherwise defined for purposes of
the definition of Baseline in certain circumstances, as described in such
definition.
“OPP
Unit Equivalent” has the meaning set forth in Section 3
hereof.
“Outperformance
Plan” has the meaning set forth in Recital B.
“Outperformance
Pool” means, as of the Valuation Date, a dollar amount calculated as
follows: subtract the Baseline from the Total Return, in each case as of such
Valuation Date, and multiply the resulting amount (or, if the resulting amount
would be negative, zero) by 10%; provided, however, that in no event
shall the Outperformance Pool as of such Valuation Date exceed the Maximum
Outperformance Pool Amount as of such Valuation Date.
“Participation
Percentage” means, as of the Valuation Date, the Grantee’s share of the
Outperformance Pool as set forth above in the recitals in this
Agreement.
“Partnership
Agreement” means the First Amended and Restated Agreement of Limited
Partnership of EPLP, entered into as of September 30, 1997, among the Company
and the limited partner party thereto, as amended from time to
time.
“Partnership
Units” means Partnership Units as such term is defined in the Partnership
Agreement.
“Securities
Act” shall mean the Securities Act of 1933, as amended.
“Target
Return Percentage” means 30%, except as otherwise defined for purposes of
the definition of Baseline in certain circumstances, as described in such
definition.
“Total
Participation Percentage” means the aggregate initial participation
percentage of all awards granted and not forfeited under the Outperformance
Plan.
4
“Total
Return” means (without double counting), as of a particular date, an amount
equal to the sum of (a) the Total Shares, multiplied by the Common Stock
Price as of such date, plus (b) an amount equal to the sum of the total of
all dividends and other distributions actually paid between December 4, 2007
and
such date (excluding dividends and distributions paid in the form of additional
shares of Common Stock or Units), in respect of (i) the Initial Shares and
(ii)
the Additional Shares if and to the extent such Additional Shares were
outstanding on the record date with respect to the applicable dividend or
distribution so paid.
“Total
Shares” means (without double counting), as of a particular date of
determination, the sum of: (a) the number of shares of Common Stock
included in the Initial Shares and the Additional Shares, plus (b) the
product of the Conversion Factor then in effect multiplied by the number of
Units included in the Initial Shares and Additional Shares (other than those
owned by the Company), in the case of each (a) and (b), to the extent
outstanding on the Valuation Date.
“Transfer”
has the meaning set forth in Section 6 hereof.
“Units”
means all Partnership Units, outstanding or issuable upon the conversion,
exercise, exchange or redemption of any securities of any kind convertible,
exercisable, exchangeable or redeemable for Common Units (other than LTIP Units
issued under this Agreement or LTIP Units issued under any similar agreement
prior to the determination of any performance based vesting hurdles with respect
thereto).
“Valuation
Date” means the earliest of (i) the Measurement Date, (ii) the date upon
which a Change of Control shall occur, and (iii) the last day of a 30
consecutive calendar day period, which occurs in the six-month period
immediately preceding the Measurement Date, during which on each day in that
30-day period, the Outperformance Pool would have reached the Maximum
Outperformance Pool Amount if such day had been the Valuation
Date.
“Z
Units” means the Series Z Incentive Units and Series Z-1 Incentive Units, as
these terms are defined in the Partnership Agreement.
3. Outperformance
Award.
(a) The
Grantee is hereby granted an Award consisting of the number of LTIP Units set
forth above (“Award LTIP Units”), which (A) shall be subject to forfeiture or
increase to the extent provided in this Section 3 as set forth below and (B)
will be subject to vesting as provided in Sections 4 and 7 hereof.
(b) As
soon
as practicable following the Valuation Date, but as of the Valuation Date,
the
Committee shall determine the Outperformance Pool (if any) and then perform
the
following calculations with respect to this Award: Multiply (w) the
Outperformance Pool calculated as of the Valuation Date by (x) the Grantee’s
Participation Percentage as of the Valuation Date, then divide the result by
the
product of (y) the Common Stock Price calculated as of the Valuation Date,
multiplied by (z) the Conversion Factor on the Valuation Date; the resulting
number is hereafter referred to as the “OPP Unit
Equivalent”;
5
(c) If
the
OPP Unit Equivalent is smaller than the number of Award LTIP Units, then the
Grantee, as of the Valuation Date, shall forfeit a number of Award LTIP Units
equal to the difference and thereafter the term Award LTIP Units will refer
only
to the remaining Award LTIP Units that were not forfeited. If the OPP Unit
Equivalent is greater than the number of Award LTIP Units, then, upon the
performance of such calculation: (A) the Grantee, as of the Valuation
Date, shall be automatically granted a number of additional LTIP Units equal
to
the difference, and such additional LTIP Units shall be added to the Award
LTIP
Units and thereby become part of this Award, (B) the Company and EPLP shall
take
such corporate or partnership action as is necessary to accomplish the grant
of
such additional LTIP Units, (C) the Grantee shall execute and deliver in
connection with such grant such documents, comparable to the documents executed
and delivered in connection with this Agreement, as the Company and/or EPLP
reasonably request in order to comply with all applicable legal requirements,
including, without limitation, federal and state securities laws and (D)
thereafter the term Award LTIP Units will refer collectively to the Award LTIP
Units prior to such additional grant plus such additional LTIP Units. If
the OPP Unit Equivalent is the same as the number of Award LTIP Units, then
there will be no change to this Award.
(d) Any
forfeitures by the Grantee shall be retained by the Company.
4. Termination
of ▇▇▇▇▇▇▇’s Position as Employee; Vesting; Change of
Control.
(a) If
at any
time the Grantee shall cease to be an employee of the Company for any reason,
then all Award LTIP Units that remain unvested at such time shall automatically
and immediately be forfeited by the Grantee, except that in the case of the
death or Disability of the Grantee, the provisions of Section 7 shall
apply, and except as provided in Sections 4(c) hereof.
(b) The
Award
LTIP Units granted to Grantees shall vest as follows: 33% of the
Award LTIP Units shall become vested on December 4, 2010, and an additional
thirty-three percent (33%) and thirty-four percent (34%) of the Award LTIP
Units
shall become vested on each of the first (1st) and second (2nd) anniversaries
thereof, respectively.
(c) Anything
in Section 4(b) hereof to the contrary notwithstanding, all unvested Award
LTIP
Units that have not previously been forfeited shall vest immediately upon the
occurrence of a Change of Control, or the Grantee’s death or
Disability.
5. Distributions. The
Grantee holding the Award LTIP Units shall be entitled to receive distributions
with respect to such Award LTIP Units to the extent provided for in the
Partnership Agreement.
6. Restrictions
on Transfer. None of the Award LTIP
Units shall be sold, assigned, transferred, pledged, hypothecated, given away
or
in any other manner disposed of, encumbered, whether voluntarily or by operation
of law (each such action a “Transfer”), or redeemed in accordance with the
Partnership Agreement unless such Transfer is in connection with a Change of
Control and such Transfer is in accordance with the applicable terms and
conditions of the Partnership Agreement; provided that, upon the approval of,
and subject to the terms and conditions specified by, the Committee, vested
Award LTIP Units may be Transferred
6
and
unvested Award LTIP Units that have been held for a period of at least two
(2) years beginning on the date of grant specified above may be Transferred
to the Grantee’s Family Members, provided that the transferee agrees in writing
with the Company and EPLP to be bound by all of the terms and conditions
of this
Agreement. In connection with any Transfer of Award LTIP Units, EPLP may
require the Grantee to provide an opinion of counsel, satisfactory to EPLP,
that
such Transfer is in compliance with all federal and state securities laws
(including, without limitation, the Securities Act). Any attempted
Transfer of Award LTIP Units not in accordance with the terms and conditions
of
this Section 6 shall be null and void, and EPLP shall not reflect on its
records any change in record ownership of any LTIP Units as a result of any
such
Transfer, shall otherwise refuse to recognize any such Transfer and shall
not in
any way give effect to any such Transfer of any LTIP Units. This
Agreement is personal to the Grantee, is non-assignable and is not transferable
in any manner, by operation of law or otherwise, other than by will or the
laws
of descent and distribution.
7. Death
or Disability.
(a) Notwithstanding
any other provision herein, if, prior to the Valuation Date, the Grantee shall
cease to be an employee of the Company as a result of his death or Disability,
then (i) with respect to the Grantee the calculations provided in
Section 3 shall be performed with respect to this Award immediately as if a
Change of Control had occurred (with respect to the Grantee only) on the date
of
his death or Disability and (ii) all of the Award LTIP Units comprising
this Award (after giving effect to the issuance of additional LTIP Units or
forfeiture of Award LTIP Units pursuant to Section 3) shall automatically
and immediately vest.
(b) Notwithstanding
any other provision herein, if, on or after the Valuation Date, the Grantee
shall cease to be an employee of the Company as a result of his death or
Disability, then all of the Grantee’s Award LTIP Units shall automatically and
immediately vest.
8. Changes
in Capital Structure. If (i) the
Company shall at any time be involved in a merger, consolidation, dissolution,
liquidation, reorganization, exchange of shares, sale of all or substantially
all of the assets or stock of the Company or a transaction similar thereto,
(ii) any stock dividend, stock split, reverse stock split, stock
combination, reclassification, recapitalization, significant repurchases of
stock or other similar change in the capital structure of the Company, or any
distribution to holders of Common Stock other than regular cash dividends,
shall
occur or (iii) any other event shall occur which in the judgment of the
Committee necessitates action by way of adjusting the terms of the Award, then
the Committee shall take such action as in its discretion shall be necessary
to
maintain the Grantee’s rights hereunder so that they are substantially
proportionate to the rights existing under this Agreement prior to such event,
including, without limitation, adjustments in Award LTIP Units, Additional
Shares, Baseline Value, dividends or distributions paid with respect to the
Initial Shares and Additional Shares, Common Stock Price, Maximum Outperformance
Pool Amount, Total Shares and Total Return.
9. Miscellaneous.
(a) Amendments. This
Agreement may be amended or modified only with the consent of EPLP acting
through the Committee; provided that any amendment or
7
(b) Incorporation
of Plan. The provisions of the 2004
Plan are hereby incorporated by reference as if set forth herein. If and
to the extent that any provision contained in this Agreement is inconsistent
with the 2004 Plan, this Agreement shall govern.
(c) Effectiveness. The
Grantee shall be admitted as a partner of EPLP with beneficial ownership of
the
Award LTIP Units as of the grant date set forth above by (i) signing and
delivering to EPLP a copy of this Agreement, and (ii) signing, as a Limited
Partner, and delivering to EPLP a counterpart signature page to the Partnership
Agreement (attached hereto as Exhibit A). The Partnership
Agreement shall be amended to reflect the issuance to the Grantee of the Award
LTIP Units, whereupon the Grantee shall have all the rights of a Limited Partner
of EPLP with respect to the number of LTIP Units specified above, as set forth
in the Partnership Agreement, subject, however, to the restrictions and
conditions specified herein and in the Partnership Agreement.
(d) Status
of LTIP Units under the 2004 Plan. The
Award LTIP Units may, but need not, be granted as equity securities under the
2004 Plan insofar as the Outperformance Plan has been established as an
incentive program of EPLP. The Company will have the right, as set
forth in the Partnership Agreement, to issue shares of Common Stock in exchange
for Common Units into which such Award LTIP Units may have been converted,
pursuant to the Partnership Agreement, subject to certain limitations set forth
in the Partnership Agreement, and such shares of Common Stock may be issued
under the 2004 Plan. The Grantee must be eligible to receive the Award
LTIP Units in compliance with applicable federal and state securities laws
and
to that effect is required to complete, execute and deliver certain covenants,
representations and warranties (attached hereto as Exhibit B).
The Committee may, in its sole and absolute discretion, seek to have
the LTIP
Units become part of the 2004 Plan at a future time, whereby this Award may
be
considered an award under the 2004 Plan. The Grantee acknowledges that if
the Committee so elects, in its sole discretion, the Grantee will have no right
to approve or disapprove such change.
(e) Legend. The
records of EPLP evidencing the Award LTIP Units shall bear an appropriate
legend, as determined by EPLP in its sole discretion, to the effect that such
LTIP Units are subject to restrictions as set forth herein and in the
Partnership Agreement.
(f) Compliance
With Law. EPLP and the Grantee will
make reasonable efforts to comply with all applicable securities laws. In
addition, notwithstanding any provision of this Agreement to the contrary,
no
LTIP Units will become vested or be paid at a time that such vesting or payment
would result in a violation of any such law.
(g) Investment
Representation. The Grantee hereby
makes the covenants, representations and warranties and set forth on
Exhibit B attached hereto. All of such covenants, warranties
and representations shall survive the execution and delivery of this Agreement
by the Grantee. EPLP will have no obligation to register under the
Securities Act any LTIP Units or any other securities issued pursuant to this
Agreement or upon conversion or exchange of LTIP Units.
8
(h) Section 83(b) Election. The
Grantee hereby agrees to make an election to include in gross income in the
year
of transfer the Award LTIP Units pursuant to Section 83(b) of the Code
substantially in the form attached hereto as Exhibit C to this
Agreement and to supply the necessary information in accordance with the
regulations promulgated thereunder.
(i) Section
409A. If and only to the extent that
any compensation provided by this Agreement may result in the application of
Section 409A of the Code, the Company in its sole discretion shall modify this
Agreement with respect to such Grantee in order, where applicable:
(i) to
exclude such compensation from the definition of “deferred compensation” within
the meaning of such Section 409A of the Code, or
(ii) to
comply
with the provisions of Section 409A of the Code, other applicable provision(s)
of the Code and/or any rules, regulations or other regulatory guidance issued
under such statutory provisions;
provided,
however, that the Company makes no representation that the compensation
or benefits provided under this Agreement will be exempt from Section 409A
of
the Code and makes no undertakings to preclude Section 409A of the Code from
applying to the benefits provided under this Agreement.
(j) 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 separable from the other provisions hereof, and the remaining
provisions hereof will continue to be valid and fully enforceable.
(k) Governing
Law. This Agreement is made under, and
will be construed in accordance with, the laws of the State of California,
without giving effect to the principle of conflict of laws of such
State.
(l) No
Obligation to Continue Position as an Officer or to
Employ. Neither the Company nor any
affiliate is obligated by or as a result of this Agreement to continue to have
the Grantee as an officer or to employ the Grantee, and this Agreement shall
not
interfere in any way with the right of the Company or any affiliate to terminate
the Grantee as an officer or employee at any time.
(m) Notices. Notices
hereunder shall be mailed or delivered to EPLP at its principal place of
business and shall be mailed or delivered to the Grantee at the address on
file
with EPLP or, in either case, at such other address as one party may
subsequently furnish to the other party in writing.
(n) Withholding
and Taxes. No later than the date as of
which an amount first becomes includible in the gross income of the Grantee
for
income tax purposes or subject to Federal Insurance Contributions Act
withholding with respect to the Award, the Grantee will pay to the Company
or,
if appropriate, any of its affiliates, or make arrangements satisfactory to
the
Committee regarding the payment of, any United States federal, state or local
or
foreign taxes of
9
(o) Successors
and Assigns. This Agreement shall be
binding upon EPLP’s successors and assigns, whether or not this Agreement is
expressly assumed.
[signature
page follows]
10
IN
WITNESS WHEREOF, the undersigned have caused this Award Agreement to be executed
as of the 4th day of December 2007.
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ESSEX
PROPERTY TRUST, INC.
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By:
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Name:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title:
Executive Vice President and Chief Financial Officer
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ESSEX
PORTFOLIO, L.P.
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By:
Essex Property Trust, Inc., its general partner
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By:
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Name:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title:
Executive Vice President and Chief Financial Officer
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Grantee
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Name:
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11
EXHIBIT A
FORM OF
LIMITED PARTNER SIGNATURE PAGE
The
Grantee, desiring to become one of the within named Limited Partners of Essex
Portfolio, L.P., hereby becomes a party to the First Amended and Restated
Agreement of Limited Partnership of Essex Portfolio, L.P., as amended through
the date hereof (the “Partnership Agreement”). The Grantee agrees
that this signature page may be attached to any counterpart of Essex
Portfolio, L.P.’s Partnership Agreement.
Signature
Line for Limited Partner:
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Name:
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Date:
December , 2007
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Address
of Limited Partner:
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EXHIBIT B
GRANTEE’S
COVENANTS, REPRESENTATIONS AND WARRANTIES
The
Grantee hereby represents, warrants and covenants as follows:
(a) The
Grantee has received and had an opportunity to review the following documents
(the “Background Documents”):
(i) The
latest Annual Report to Stockholders of Essex Property Trust, Inc., a Maryland
corporation (the “Company”);
(ii) The
Company’s Proxy Statement for its most recent Annual Meeting of
Stockholders;
(iii) The
Company’s Report on Form 10-K for the fiscal year most recently
ended;
(iv) The
Company’s Form 10-Q for the most recently ended quarter filed by the
Company with the Securities and Exchange Commission since the filing of the
Form 10-K described in clause (iii) above;
(v) Each
of the Company’s Current Report(s) on Form 8-K, if any, filed since the end
of the fiscal year most recently ended for which a Form 10-K has been filed
by the Company;
(vi) First
Amended and Restated Agreement of Limited Partnership of Essex Portfolio, L.P.,
as amended (the “Partnership Agreement”);
(vii) The
Essex Property Trust, Inc. 2004 Stock Incentive Plan (the “2004 Plan”);
and
(viii) The
Company’s Articles of Amendment and Restatement, as amended.
The
Grantee also acknowledges that any delivery of the Background Documents and
other information relating to the Company and Essex Portfolio, L.P., a
California limited partnership (“EPLP”), prior to the determination by
EPLP of the suitability of the Grantee as a holder of LTIP Units shall not
constitute an offer of LTIP Units until such determination of suitability shall
be made.
(b) The
Grantee hereby represents and warrants that
(i) The
Grantee either (A) is an “accredited investor” as defined in
Rule 501(a) under the Securities Act of 1933, as amended (the
“Securities Act”), or (B) by reason of the business and financial
experience of the Grantee, together with the business and financial experience
of those persons, if any, retained by the Grantee to represent or advise him
with respect to the grant to him of LTIP Units, the potential conversion of
LTIP
Units into
Partnership
Units of EPLP (the “Common Units”) and the potential
redemption of such Common Units for shares of Common Stock (“REIT
Shares”), has such knowledge, sophistication and experience in financial and
business matters and in making investment decisions of this type that the
Grantee (I) is capable of evaluating the merits and risks of an investment
in
EPLP and potential investment in the Company and of making an informed
investment decision, (II) is capable of protecting his own interest or has
engaged representatives or advisors to assist him in protecting his interests,
and (III) is capable of bearing the economic risk of such
investment.
(ii) The
Grantee understands that (A) the Grantee is responsible for consulting his
own tax advisors with respect to the application of the U.S. federal income
tax
laws, and the tax laws of any state, local or other taxing jurisdiction to
which
the Grantee is or by reason of the award of LTIP Units may become subject,
to
his particular situation; (B) the Grantee has not received or relied upon
business or tax advice from the Company, EPLP or any of their respective
employees, agents, consultants or advisors, in their capacity as such;
(C) the Grantee provides services to EPLP on a regular basis and in such
capacity has access to such information, and has such experience of and
involvement in the business and operations of EPLP, as the Grantee believes
to
be necessary and appropriate to make an informed decision to accept this Award
of LTIP Units; and (D) an investment in EPLP and/or the Company involves
substantial risks. The Grantee has been given the opportunity to make a
thorough investigation of matters relevant to the LTIP Units and has been
furnished with, and has reviewed and understands, materials relating to EPLP
and
the Company and their respective activities (including, but not limited to,
the
Background Documents). The Grantee has been afforded the opportunity to
obtain any additional information (including any exhibits to the Background
Documents) deemed necessary by the Grantee to verify the accuracy of information
conveyed to the Grantee. The Grantee confirms that all documents, records,
and books pertaining to his receipt of LTIP Units which were requested by the
Grantee have been made available or delivered to the Grantee. The Grantee
has had an opportunity to ask questions of and receive answers from EPLP and
the
Company, or from a person or persons acting on their behalf, concerning the
terms and conditions of the LTIP Units. The Grantee has relied upon, and
is making his decision solely upon, the Background Documents and other written
information provided to the Grantee by EPLP or the
Company.
(iii) The
LTIP Units to be issued, Common Units issuable upon conversion of the LTIP
Units
and any REIT Shares issued in connection with the redemption of any such Common
Units will be acquired for the account of the Grantee for investment only and
not with a current view to, or with any intention of, a distribution or resale
thereof, in whole or in part, or the grant of any participation therein, without
prejudice, however, to the Grantee’s right (subject to the terms of the LTIP
Units, the 2004 Plan and this Agreement) at all times to sell or otherwise
dispose of all or any part of his LTIP Units, Common Units or REIT Shares in
compliance with the Securities Act, and applicable state securities laws, and
subject, nevertheless, to the disposition of his assets being at all times
within his control.
(iv) The
Grantee acknowledges that (A) neither the LTIP Units to be issued, nor the
Common Units issuable upon conversion of the LTIP Units, have been registered
under the Securities Act or state securities laws by reason of a specific
exemption or exemptions from registration under the Securities Act and
applicable state securities laws and, if such LTIP Units
or
Common
Units are represented by certificates, such certificates will bear a legend
to
such effect, (B) the reliance by EPLP and the Company on such exemptions is
predicated in part on the accuracy and completeness of the representations
and
warranties of the Grantee contained herein, (C) such LTIP Units or Common
Units, therefore, cannot be resold unless registered under the Securities
Act
and applicable state securities laws, or unless an exemption from registration
is available, (D) there is no public market for such LTIP Units or Common
Units, and (E) neither EPLP nor the Company has any obligation or intention
to register such LTIP Units or such Common Units under the Securities Act
or any
state securities laws or to take any action that would make available any
exemption from the registration requirements of such laws, except, that,
upon
the redemption of the Common Units for REIT Shares, the Company may issue
such
REIT Shares under the 2004 Plan and pursuant to a Registration Statement
on
Form S-8 under the Securities Act, to the extent that (I) the Grantee is
eligible to receive such REIT Shares under the 2004 Plan at the time of such
issuance, (II) the Company has filed a Form S-8 Registration Statement with
the Securities and Exchange Commission registering the issuance of such REIT
Shares and (III) such Form S-8 is effective at the time of the issuance of
such REIT Shares. The Grantee hereby acknowledges that because of the
restrictions on transfer or assignment of such LTIP Units acquired hereby
and
the Common Units issuable upon conversion of the LTIP Units which are set
forth
in the Partnership Agreement, the 2004 Plan or this Agreement, the Grantee
may
have to bear the economic risk of his ownership of the LTIP Units acquired
hereby and the Common Units issuable upon conversion of the LTIP Units for
an
indefinite period of time.
(v) The
Grantee has determined that the LTIP Units are a suitable investment for the
Grantee.
(vi) No
representations or warranties have been made to the Grantee by EPLP or the
Company, or any officer, director, shareholder, agent, or affiliate of any
of
them, and the Grantee has received no information relating to an investment
in
EPLP or the LTIP Units except the information specified in Paragraph
(b) above.
(c) So
long as the Grantee holds any LTIP Units, the Grantee shall disclose to EPLP
in
writing such information as may be reasonably requested with respect to
ownership of LTIP Units as EPLP may deem reasonably necessary to ascertain
and
to establish compliance with provisions of the Internal Revenue Code of 1986,
as
amended (the “Code”), applicable to EPLP or to comply with requirements
of any other appropriate taxing authority.
(d) The
Grantee hereby agrees to make an election under Section 83(b) of the
Code with respect to the LTIP Units awarded hereunder, and has delivered with
this Agreement a completed, executed copy of the election form attached hereto
as Exhibit D . The Grantee agrees to file the election (or to
permit EPLP to file such election on the Grantee’s behalf) within
thirty (30) days after the award of the LTIP Units hereunder with the IRS
Service Center at which such Grantee files his personal income tax returns,
and
to file a copy of such election with the Grantee’s U.S. federal income tax
return for the taxable year in which the LTIP Units are awarded to the
Grantee.
(e) The
address set forth on the signature page of this Agreement is the address of
the Grantee’s principal residence, and the Grantee has no present intention of
becoming a resident of any country, state or jurisdiction other than the country
and state in which such residence is sited.
EXHIBIT C
ELECTION
TO INCLUDE IN GROSS INCOME IN YEAR OF
TRANSFER
OF PROPERTY PURSUANT TO SECTION 83(B)
OF
THE INTERNAL REVENUE CODE
The
undersigned hereby makes an election pursuant to Section 83(b) of the
Internal Revenue Code with respect to the property described below and supplies
the following information in accordance with the regulations promulgated
thereunder:
1. The
name, address and taxpayer identification number of the undersigned
are:
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Name:
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(the
“Taxpayer”)
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Address:
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Social
Security No./Taxpayer Identification No.:
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2. Description
of property with respect to which the election is being made:
The
election is being made with respect to
LTIP Units in Essex Portfolio, L.P. (the “Partnership”).
3. The
date on which the LTIP Units were transferred is December 4, 2007. The
taxable year to which this election relates is calendar year 2007.
4. Nature
of restrictions to which the LTIP Units are subject:
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(a)
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With
limited exceptions, until the LTIP Units vest, the Taxpayer may not
transfer in any manner any portion of the LTIP Units without the
consent
of EPLP.
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(b)
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The
Taxpayer’s LTIP Units vest in accordance with the vesting provisions
described in the Schedule attached hereto. Unvested LTIP Units
are forfeited in accordance with the vesting provisions described
in the
Schedule attached hereto.
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5. The
fair market value at time of transfer (determined without regard to any
restrictions other than restrictions which by their terms will never lapse)
of
the LTIP Units with respect to which this election is being made was $0 per
LTIP
Unit.
6. The
amount paid by the Taxpayer for the LTIP Units was $0 per LTIP
Unit.
7. A
copy of this statement has been furnished to Essex Portfolio, L.P. and Essex
Property Trust, Inc.
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Dated:
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Name:
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SCHEDULE A
Vesting
Provisions of LTIP Units
LTIP
Units are subject to time-based and performance-based vesting with the final
vesting percentage equaling the product of the time-based vesting percentage
and
the performance-based vesting percentage. Performance-based vesting will
be from 0-100% based on the Essex Property Trust, Inc.’s (the “Company’s”)
per-share total return to shareholders for the period from December 4, 2007
to
December 3, 2010 (or earlier in certain circumstances). Thirty-three
percent (33%), thirty-three percent (33%) and thirty-four percent (34%) of
the
LTIP Units that remain outstanding following the determination of
performance-based vesting will vest on December 4, 2010, and on the first and
the second anniversaries thereof, respectively, provided that the Taxpayer
remains an employee of the Company through such dates, subject to acceleration
in the event of certain change of control transactions or termination of the
Taxpayer’s status as an employee under specified circumstances. Unvested
LTIP Units are subject to forfeiture in the event of failure to vest if the
Taxpayer is not employed on the applicable vesting date or performance-based
vesting conditions are not satisfied.
[Non-Employee
Directors]
ESSEX
PROPERTY TRUST, INC.
ESSEX
PORTFOLIO, L.P.
2007
OUTPERFORMANCE PLAN
AWARD
AGREEMENT
Name
of
Grantee:
(“Grantee”)
No. of
LTIP Units:
Participation
Percentage:
Grant
Date:
__________________,
2007
RECITALS
A. The
Grantee is a non-employee member of the Board of Directors (a “Non-Employee
Director”) of Essex Property Trust, Inc., a Maryland corporation (the
“Company”), which is the general partner of Essex Portfolio, L.P., a California
limited partnership through which the Company conducts substantially all
of its
operations (“EPLP”).
B. EPLP
has
adopted the 2007 Outperformance Plan (the “Outperformance Plan”) to provide the
Company’s executives with incentive compensation and to provide Non-Employee
Directors with compensation in lieu of their annual stock option grants.
The Outperformance Plan was adopted effective as of December 4, 2007 by the
Board of Directors of the Company (the “Board”). The Board has
delegated to the Compensation Committee of the Board (the Committee”) the
authority to administer the Outperformance Plan, including the authority
to
grant LTIP Units (as defined herein). This award agreement (this
“Agreement”) evidences an award to the Grantee under the Outperformance Plan
(the “Award”), which is subject to the terms and conditions set forth
herein.
C. The
Committee, effective as of December 4, 2007, caused EPLP to (1) issue to
the Grantee the number of LTIP Units (as defined herein) set forth above
and
(2) to award the Grantee the percentage of the Outperformance Pool (as
defined herein) set forth above.
NOW,
THEREFORE, the Company, EPLP and the Grantee agree as
follows:
1. Administration. The
Outperformance Plan and all awards thereunder, including this Award, shall
be
administered by the Committee, which in the administration of the Outperformance
Plan shall have all the powers and authority it has in the administration
of the
2004 Plan as set forth in the 2004 Plan.
2. Definitions. Capitalized
terms used herein without definitions shall have the meanings given to those
terms in the 2004 Plan. In addition, as used herein:
“2004
Plan” means the Essex Property Trust, Inc. 2004 Stock Incentive Plan, as
amended, modified or supplemented from time to time.
“Additional
Share Baseline Value” means, with respect to an Additional Share, the gross
proceeds received by the Company or EPLP upon the issuance of such Additional
Share, which amount shall be deemed to equal the price to the public if such
Additional Share is issued in a public offering or, if such Additional Share
is
issued in exchange for assets or upon the acquisition of another entity,
the
cash value imputed to such Additional Share for purposes of such transaction
by
the parties thereto, as determined by the Committee, or, if no such value
can be
imputed, the Common Stock Price on the date of issuance.
“Additional
Shares” means (without double counting) the sum of (A) the number of shares
of Common Stock plus (B) the product of the Conversion Factor then in effect
multiplied by the number of Units (other than those issued to the Company),
in
the case of each (A) and (B), to the extent issued after December 4, 2007
and on
or before the Valuation Date in a capital raising transaction, in exchange
for
assets or upon the acquisition of another entity, but specifically excluding,
without limitation, (i) shares of Common Stock issued upon exercise of stock
options or upon the exchange (directly or indirectly) of Z Units or other
Units
issued to employees, non-employee directors, consultants, advisors or other
person or entities as incentive compensation, (ii) restricted shares of Common
Stock issued to employees or other persons or entities in exchange for services
provided to the Company, (iii) currently unvested restricted shares of Common
Stock awarded to employees or other person or entities in exchange for services
provided as they become vested, (iv) Common Units issued upon conversion
of
Z
Units
or other Units issued to employees, non-employee directors, consultants,
advisors or other persons or entities as compensation, and (v) Z Units or
other
Units issued to employees, non-employee directors, consultants, advisors
or
other persons or entities as compensation.
“Agreement”
has the meaning set forth in Recital B.
“Award”
has the meaning set forth in Recital B.
“Award
LTIP Units” has the meaning set forth in Section 3
hereof.
“Baseline”
means, as of the Valuation Date, an amount representing (a) the Baseline
Value, multiplied by (I) the Initial Shares less any Initial Shares that
have
been redeemed or retired between December 4, 2007 and the Valuation Date,
and
(II) the sum of 100% plus the Target Return Percentage, plus
(b) with respect to each Additional Share that has not been redeemed or
retired prior to the Valuation Date, the product of (I) the Additional Share
Baseline Value of such Additional Share, multiplied by (II) the sum of
(A) 100% plus (B) the product of the Target Return Percentage,
multiplied by a fraction the numerator of which is the number of days prior
to
and including such Valuation Date during which such Additional Share has
been
outstanding and the denominator of which is the number of days from and
including December 4, 2007 to and including the Measurement Date;
provided, that if the Valuation Date occurs prior to December 3, 2010
(other than as a result of clause (iii) of the definition of the Valuation
Date), then for purposes of this definition in connection with the calculation
of the Outperformance Pool as of the Valuation Date, the Measurement Date
shall
be the Valuation Date and the Target Return Percentage shall be multiplied
by
the Fraction.
“Baseline
Value” means $98.91, which is the per share closing price of the Common
Stock on the Effective Date.
2
“Board”
has the meaning set forth in Recital B.
“Change
of Control” has the meaning assigned to it in the Seventh Amendment to the
Partnership Agreement.
“Code”
means the Internal Revenue Code of 1986, as amended.
“Committee”
has the meaning set forth in Recital B.
“Common
Stock” means the Company’s Common Stock, par value $0.0001 per share, either
currently existing or authorized hereafter.
“Common
Stock Price” means, as of a particular date, the average of the Fair Market
Values of one share of the Common Stock for the twenty (20) days ending on,
and
including, such date (or, if such date is not a trading day, the most recent
trading day immediately preceding such date); provided, however, that
if such date is the date upon which a Change of Control occurs, the Common
Stock
Price as of such date shall be equal to the fair market value in cash, as
determined by the Committee, of the total consideration paid or payable in
the
transaction resulting in the Change of Control for one share of Common
Stock.
“Common
Unit” has the meaning assigned to it in the Partnership
Agreement.
“Company”
has the meaning set forth in Recital A.
“Conversion
Factor” has the meaning given to that term in the Partnership
Agreement.
“Disability”
has the meaning given to that term in the 2004 Plan.
“Effective
Date” means December 4, 2007.
“EPLP”
has the meaning set forth in Recital A.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended.
“Fair
Market Value” has the meaning given to that term in the 2004
Plan.
“Family
Member” of a Grantee, means the Grantee’s child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, ▇▇▇▇▇▇▇, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law,
or
sister-in-law, including adoptive relationships, any person sharing the
Grantee’s household (other than a tenant of the Grantee), a trust in which these
persons (or the Grantee) have more than 50 percent of the beneficial interest,
a
foundation in which these persons (or the Grantee) control the management
of
assets, and any other entity in which these persons (or the Grantee) own
more
than 50 percent of the voting interests.
“Fraction”
means the number of whole calendar months that have elapsed between the
Effective Date and the Valuation Date divided by 36.
3
“Initial
Shares” means shares of Common Stock and Units (other
those held by the Company, with the number of Units multiplied by the Conversion
Factor in effect as of the Effective Date) which are deemed to be outstanding
as
of the Effective Date. For the avoidance of doubt, such number
excludes (i) shares of Common Stock issuable upon exercise of stock options
or
upon the exchange (directly or indirectly) of Z Units or other Units issued
to
employees, non-employee directors, consultants, advisors or other persons
or
entities as incentive compensation, (iii) currently unvested restricted shares
of Common Stock awarded to employees or other persons or entities in exchange
for services provided to the Company, and (iv) Z Units or other Units issued
to
employees, non-employee directors, consultants, advisors or other persons
or
entities as incentive compensation.
“LTIP
Units” means an LTIP Unit of limited partnership interest in EPLP with the
rights set forth in the Partnership Agreement and issued pursuant to this
Agreement as profits interests under the Outperformance Plan.
“Maximum
Outperformance Pool Amount” means, as of the Valuation Date, $25,000,000,
multiplied by the Total Participation Percentage as of the Valuation
Date.
“Measurement
Date” means December 3, 2010, except as otherwise defined for purposes of
the definition of Baseline in certain circumstances, as described in such
definition.
“OPP
Unit Equivalent” has the meaning set forth in Section 3
hereof.
“Outperformance
Plan” has the meaning set forth in Recital B.
“Outperformance
Pool” means, as of the Valuation Date, a dollar amount calculated as
follows: subtract the Baseline from the Total Return, in each case as of
such
Valuation Date, and multiply the resulting amount (or, if the resulting amount
would be negative, zero) by 10%; provided, however, that in no event
shall the Outperformance Pool as of such Valuation Date exceed the Maximum
Outperformance Pool Amount as of such Valuation Date.
“Participation
Percentage” means, as of the Valuation Date, the Grantee’s share of the
Outperformance Pool as set forth above in the recitals in this
Agreement.
“Partnership
Agreement” means the First Amended and Restated Agreement of Limited
Partnership of EPLP, entered into as of September 30, 1997, among the Company
and the limited partner party thereto, as amended from time to
time.
“Partnership
Units” means Partnership Units as such term is defined in the Partnership
Agreement.
“Securities
Act” shall mean the Securities Act of 1933, as amended.
“Target
Return Percentage” means 30%, except as otherwise defined for purposes of
the definition of Baseline in certain circumstances, as described in such
definition.
“Total
Participation Percentage” means the aggregate initial participation
percentage of all awards granted and not forfeited under the Outperformance
Plan.
4
“Total
Return” means (without double counting), as of a particular date, an amount
equal to the sum of (a) the Total Shares, multiplied by the Common Stock
Price as of such date, plus (b) an amount equal to the sum of the total of
all dividends and other distributions actually paid between December 4, 2007 and
such date (excluding dividends and distributions paid in the form of additional
shares of Common Stock or Units), in respect of (i) the Initial Shares and
(ii)
the Additional Shares if and to the extent such Additional Shares were
outstanding on the record date with respect to the applicable dividend or
distribution so paid.
“Total
Shares” means (without double counting), as of a particular date of
determination, the sum of: (a) the number of shares of Common Stock
included in the Initial Shares and the Additional Shares, plus (b) the
product of the Conversion Factor then in effect multiplied by the number
of
Units included in the Initial Shares and Additional Shares (other than those
owned by the Company), in the case of each (a) and (b), to the extent
outstanding on the Valuation Date.
“Transfer”
has the meaning set forth in Section 6 hereof.
“Units”
means all Partnership Units, outstanding or issuable upon the conversion,
exercise, exchange or redemption of any securities of any kind convertible,
exercisable, exchangeable or redeemable for Common Units (other than LTIP
Units
issued under this Agreement or LTIP Units issued under any similar agreement
prior to the determination of any performance based vesting hurdles with
respect
thereto).
“Valuation
Date” means the earliest of (i) the Measurement Date, (ii) the date upon
which a Change of Control shall occur, and (iii) the last day of a 30
consecutive calendar day period, which occurs in the six-month period
immediately preceding the Measurement Date, during which on each day in that
30-day period, the Outperformance Pool would have reached the Maximum
Outperformance Pool Amount if such day had been the Valuation
Date.
“Z
Units”
means the Series Z Incentive Units and Series Z-1 Incentive Units, as these
terms are defined in the Partnership Agreement.
3. Outperformance
Award.
(a) The
Grantee is hereby granted an Award consisting of the number of LTIP Units
set
forth above (“Award LTIP Units”), which (A) shall be subject to forfeiture or
increase to the extent provided in this Section 3 as set forth below and
(B)
will be subject to vesting as provided in Sections 4 and 7 hereof.
(b) As
soon
as practicable following the Valuation Date, but as of the Valuation Date,
the
Committee shall determine the Outperformance Pool (if any) and then perform
the
following calculations with respect to this Award: Multiply (w) the
Outperformance Pool calculated as of the Valuation Date by (x) the Grantee’s
Participation Percentage as of the Valuation Date, then divide the result
by the
product of (y) the Common Stock Price calculated as of the Valuation Date,
multiplied by (z) the Conversion Factor on the Valuation Date; the resulting
number is hereafter referred to as the “OPP Unit
Equivalent”;
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(c) If
the
OPP Unit Equivalent is smaller than the number of Award LTIP Units, then
the
Grantee, as of the Valuation Date, shall forfeit a number of Award LTIP Units
equal to the difference and thereafter the term Award LTIP Units will refer
only
to the remaining Award LTIP Units that were not forfeited. If the OPP Unit
Equivalent is greater than the number of Award LTIP Units, then, upon the
performance of such calculation: (A) the Grantee, as of the Valuation
Date, shall be automatically granted a number of additional LTIP Units equal
to
the difference, and such additional LTIP Units shall be added to the Award
LTIP
Units and thereby become part of this Award, (B) the Company and EPLP shall
take
such corporate or partnership action as is necessary to accomplish the grant
of
such additional LTIP Units, (C) the Grantee shall execute and deliver in
connection with such grant such documents, comparable to the documents executed
and delivered in connection with this Agreement, as the Company and/or EPLP
reasonably request in order to comply with all applicable legal requirements,
including, without limitation, federal and state securities laws and (D)
thereafter the term Award LTIP Units will refer collectively to the Award
LTIP
Units prior to such additional grant plus such additional LTIP Units. If
the OPP Unit Equivalent is the same as the number of Award LTIP Units, then
there will be no change to this Award.
(d) Any
forfeitures by the Grantee shall be retained by the Company.
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4.
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Termination of
▇▇▇▇▇▇▇’s Position as a Non-Employee Director; Vesting; Change of
Control.
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(a) If
at any
time the Grantee shall cease to be a Non-Employee Director for any reason,
then
all Award LTIP Units that remain unvested at such time shall automatically
and
immediately be forfeited by the Grantee, except that in the case of the death
or
Disability of the Grantee, the provisions of Section 7 shall apply, and
except as provided in Sections 4(c) hereof.
(b) The
Award
LTIP Units granted to the Grantee shall vest on December 4, 2010.
(c) Anything
in Section 4(b) hereof to the contrary notwithstanding, all unvested Award
LTIP
Units that have not previously been forfeited shall vest immediately upon
the
occurrence of a Change of Control, or the Grantee’s death or
Disability.
5. Distributions. The
Grantee holding the Award LTIP Units shall be entitled to receive distributions
with respect to such Award LTIP Units to the extent provided for in the
Partnership Agreement.
6. Restrictions
on Transfer. None of the Award LTIP
Units shall be sold, assigned, transferred, pledged, hypothecated, given
away or
in any other manner disposed of, encumbered, whether voluntarily or by operation
of law (each such action a “Transfer”), or redeemed in accordance with the
Partnership Agreement unless such Transfer is in connection with a Change
of
Control and such Transfer is in accordance with the applicable terms and
conditions of the Partnership Agreement; provided that, upon the approval
of,
and subject to the terms and conditions specified by, the Committee, vested
Award LTIP Units may be Transferred and unvested Award LTIP Units that have
been
held for a period of at least two (2) years beginning on the date of grant
specified above may be Transferred to the Grantee’s Family Members, provided
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that
the
transferee agrees in writing with the Company and EPLP to be bound by all
of the
terms and conditions of this Agreement. In connection with any Transfer of
Award LTIP Units, EPLP may require the Grantee to provide an opinion of
counsel,
satisfactory to EPLP, that such Transfer is in compliance with all federal
and
state securities laws (including, without limitation, the Securities Act).
Any attempted Transfer of Award LTIP Units not in accordance with the terms
and
conditions of this Section 6 shall be null and void, and EPLP shall not
reflect on its records any change in record ownership of any LTIP Units
as a
result of any such Transfer, shall otherwise refuse to recognize any such
Transfer and shall not in any way give effect to any such Transfer of any
LTIP
Units. This Agreement is personal to the Grantee, is non-assignable
and is not transferable in any manner, by operation of law or otherwise,
other
than by will or the laws of descent and distribution.
7. Death
or Disability.
(a) Notwithstanding
any other provision herein, if, prior to the Valuation Date, the Grantee
shall
cease to be a Non-Employee Director as a result of his death or Disability,
then
(i) with respect to the Grantee the calculations provided in Section 3
shall be performed with respect to this Award immediately as if a Change
of
Control had occurred (with respect to the Grantee only) on the date of his
death
or Disability and (ii) all of the Award LTIP Units comprising this Award
(after giving effect to the issuance of additional LTIP Units or forfeiture
of
Award LTIP Units pursuant to Section 3) shall automatically and immediately
vest.
(b) Notwithstanding
any other provision herein, if, on or after the Valuation Date, the Grantee
shall cease to be a Non-Employee Director as a result of his death or
Disability, then all of the Grantee’s Award LTIP Units shall automatically and
immediately vest.
8. Changes
in Capital Structure. If (i) the
Company shall at any time be involved in a merger, consolidation, dissolution,
liquidation, reorganization, exchange of shares, sale of all or substantially
all of the assets or stock of the Company or a transaction similar thereto,
(ii) any stock dividend, stock split, reverse stock split, stock
combination, reclassification, recapitalization, significant repurchases
of
stock or other similar change in the capital structure of the Company, or
any
distribution to holders of Common Stock other than regular cash dividends,
shall
occur or (iii) any other event shall occur which in the judgment of the
Committee necessitates action by way of adjusting the terms of the Award,
then
the Committee shall take such action as in its discretion shall be necessary
to
maintain the Grantee’s rights hereunder so that they are substantially
proportionate to the rights existing under this Agreement prior to such event,
including, without limitation, adjustments in Award LTIP Units, Additional
Shares, Baseline Value, dividends or distributions paid with respect to the
Initial Shares and Additional Shares, Common Stock Price, Maximum Outperformance
Pool Amount, Total Shares and Total Return.
9. Miscellaneous.
(a) Amendments. This
Agreement may be amended or modified only with the consent of EPLP acting
through the Committee; provided that any amendment or modification
which adversely affects the Grantee must be consented to by the Grantee to
be
effective as against him.
7
(b) Incorporation
of Plan. The provisions of the 2004
Plan are hereby incorporated by reference as if set forth herein. If and
to the extent that any provision contained in this Agreement is inconsistent
with the 2004 Plan, this Agreement shall govern.
(c) Effectiveness. The
Grantee shall be admitted as a partner of EPLP with beneficial ownership
of the
Award LTIP Units as of the grant date set forth above by (i) signing and
delivering to EPLP a copy of this Agreement, and (ii) signing, as a Limited
Partner, and delivering to EPLP a counterpart signature page to the Partnership
Agreement (attached hereto as Exhibit A). The Partnership
Agreement shall be amended to reflect the issuance to the Grantee of the
Award
LTIP Units, whereupon the Grantee shall have all the rights of a Limited
Partner
of EPLP with respect to the number of LTIP Units specified above, as set
forth
in the Partnership Agreement, subject, however, to the restrictions and
conditions specified herein and in the Partnership Agreement.
(d) Status
of LTIP Units under the 2004 Plan. The
Award LTIP Units may, but need not, be granted as equity securities under
the
2004 Plan insofar as the Outperformance Plan has been established as an
incentive program of EPLP. The Company will have the right, as set
forth in the Partnership Agreement, to issue shares of Common Stock in exchange
for Common Units into which such Award LTIP Units may have been converted,
pursuant to the Partnership Agreement, subject to certain limitations set
forth
in the Partnership Agreement, and such shares of Common Stock may be issued
under the 2004 Plan. The Grantee must be eligible to receive the Award
LTIP Units in compliance with applicable federal and state securities laws
and
to that effect is required to complete, execute and deliver certain covenants,
representations and warranties (attached hereto as Exhibit B).
The Committee may, in its sole and absolute discretion, seek to have
the LTIP
Units become part of the 2004 Plan at a future time, whereby this Award may
be
considered an award under the 2004 Plan. The Grantee acknowledges that if
the Committee so elects, in its sole discretion, the Grantee will have no
right
to approve or disapprove such change.
(e) Legend. The
records of EPLP evidencing the Award LTIP Units shall bear an appropriate
legend, as determined by EPLP in its sole discretion, to the effect that
such
LTIP Units are subject to restrictions as set forth herein and in the
Partnership Agreement.
(f) Compliance
With Law. EPLP and the Grantee will
make reasonable efforts to comply with all applicable securities laws. In
addition, notwithstanding any provision of this Agreement to the contrary,
no
LTIP Units will become vested or be paid at a time that such vesting or payment
would result in a violation of any such law.
(g) Investment
Representation. The Grantee hereby
makes the covenants, representations and warranties and set forth on
Exhibit B attached hereto. All of such covenants, warranties
and representations shall survive the execution and delivery of this Agreement
by the Grantee. EPLP will have no obligation to register under the
Securities Act any LTIP Units or any other securities issued pursuant to
this
Agreement or upon conversion or exchange of LTIP Units.
(h) Section 83(b) Election. The
Grantee hereby agrees to make an election to include in gross income in the
year
of transfer the Award LTIP Units pursuant to Section 83(b) of the Code
substantially in the form attached hereto as Exhibit C to this
Agreement and to supply the necessary information in accordance with the
regulations promulgated thereunder.
8
(i) Section
409A. If and only to the extent that
any compensation provided by this Agreement may result in the application
of
Section 409A of the Code, the Company in its sole discretion shall modify
this
Agreement with respect to such Grantee in order, where applicable:
(i) to
exclude such compensation from the definition of “deferred compensation” within
the meaning of such Section 409A of the Code, or
(ii) to
comply
with the provisions of Section 409A of the Code, other applicable provision(s)
of the Code and/or any rules, regulations or other regulatory guidance issued
under such statutory provisions;
provided,
however, that the Company makes no representation that the compensation
or benefits provided under this Agreement will be exempt from Section 409A
of
the Code and makes no undertakings to preclude Section 409A of the Code from
applying to the benefits provided under this Agreement.
(j) 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 separable from the other provisions hereof, and the remaining
provisions hereof will continue to be valid and fully enforceable.
(k) Governing
Law. This Agreement is made under, and
will be construed in accordance with, the laws of the State of California,
without giving effect to the principle of conflict of laws of such
State.
(l) No
Obligation to Continue Position as a Non-Employee Director or to
Employ. Neither the Company nor any
affiliate is obligated by or as a result of this Agreement to continue to
have
the Grantee as a Non-Employee Director or to employ the Grantee.
(m) Notices. Notices
hereunder shall be mailed or delivered to EPLP at its principal place of
business and shall be mailed or delivered to the Grantee at the address on
file
with EPLP or, in either case, at such other address as one party may
subsequently furnish to the other party in writing.
(n) Taxes
and Self-Employment Payments. The Grantee shall be
solely responsible for and shall file on a timely basis tax returns and payments
required to be filed or made with respect the receipt of compensation under
this
Agreement, including, without limitation, tax returns and payments to United
States federal, state and local income taxes, and payroll tax authorities,
and
social security, unemployment or disability insurance payments. No
federal, state or local income tax of any kind shall be withheld or paid
by the
Company with respect to the issuance of any securities hereunder or any
amount paid to the Grantee under this Agreement.
(o) Successors
and Assigns. This Agreement shall be
binding upon EPLP’s successors and assigns, whether or not this Agreement is
expressly assumed.
[signature
page follows]
9
IN
WITNESS WHEREOF, the undersigned have caused this Award Agreement to be executed
as of the 4th day of December 2007.
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ESSEX
PROPERTY TRUST, INC.
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By:
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Name:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title:
Executive Vice President and Chief Financial Officer
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ESSEX
PORTFOLIO, L.P.
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By:
Essex Property Trust, Inc., its general partner
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By:
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Name:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title:
Executive Vice President and Chief Financial Officer
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Grantee
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Name:
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10
EXHIBIT A
FORM OF
LIMITED PARTNER SIGNATURE PAGE
The
Grantee, desiring to become one of the within named Limited Partners of Essex
Portfolio, L.P., hereby becomes a party to the First Amended and Restated
Agreement of Limited Partnership of Essex Portfolio, L.P., as amended through
the date hereof (the “Partnership Agreement”). The Grantee agrees
that this signature page may be attached to any counterpart of Essex
Portfolio, L.P.’s Partnership Agreement.
Signature
Line for Limited Partner:
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Name:
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Date:
December, 2007
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Address
of Limited Partner:
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EXHIBIT B
GRANTEE’S
COVENANTS, REPRESENTATIONS AND WARRANTIES
The
Grantee hereby represents, warrants and covenants as follows:
(a) The
Grantee has received and had an opportunity to review the following documents
(the “Background Documents”):
(i) The
latest Annual Report to Stockholders of Essex Property Trust, Inc., a Maryland
corporation (the “Company”);
(ii) The
Company’s Proxy Statement for its most recent Annual Meeting of
Stockholders;
(iii) The
Company’s Report on Form 10-K for the fiscal year most recently
ended;
(iv) The
Company’s Form 10-Q for the most recently ended quarter filed by the
Company with the Securities and Exchange Commission since the filing of the
Form 10-K described in clause (iii) above;
(v) Each
of the Company’s Current Report(s) on Form 8-K, if any, filed since the end
of the fiscal year most recently ended for which a Form 10-K has been filed
by the Company;
(vi) First
Amended and Restated Agreement of Limited Partnership of Essex Portfolio,
L.P.,
as amended (the “Partnership Agreement”);
(vii) The
Essex Property Trust, Inc. 2004 Stock Incentive Plan (the “2004 Plan”);
and
(viii) The
Company’s Articles of Amendment and Restatement, as amended.
The
Grantee also acknowledges that any delivery of the Background Documents and
other information relating to the Company and Essex Portfolio, L.P., a
California limited partnership (“EPLP”), prior to the determination by
EPLP of the suitability of the Grantee as a holder of LTIP Units shall not
constitute an offer of LTIP Units until such determination of suitability
shall
be made.
(b) The
Grantee hereby represents and warrants that
(i) The
Grantee either (A) is an “accredited investor” as defined in
Rule 501(a) under the Securities Act of 1933, as amended (the
“Securities Act”), or (B) by reason of the business and financial
experience of the Grantee, together with the business and financial experience
of those persons, if any, retained by the Grantee to represent or advise
him
with respect to the grant to him of LTIP Units, the potential conversion
of LTIP
Units into
Partnership
Units of EPLP (the “Common Units”) and the potential
redemption of such Common Units for shares of Common Stock (“REIT
Shares”), has such knowledge, sophistication and experience in financial and
business matters and in making investment decisions of this type that the
Grantee (I) is capable of evaluating the merits and risks of an investment
in
EPLP and potential investment in the Company and of making an informed
investment decision, (II) is capable of protecting his own interest or
has
engaged representatives or advisors to assist him in protecting his interests,
and (III) is capable of bearing the economic risk of such
investment.
(ii) The
Grantee understands that (A) the Grantee is responsible for consulting his
own tax advisors with respect to the application of the U.S. federal income
tax
laws, and the tax laws of any state, local or other taxing jurisdiction to
which
the Grantee is or by reason of the award of LTIP Units may become subject,
to
his particular situation; (B) the Grantee has not received or relied upon
business or tax advice from the Company, EPLP or any of their respective
employees, agents, consultants or advisors, in their capacity as such;
(C) the Grantee provides services to EPLP on a regular basis and in such
capacity has access to such information, and has such experience of and
involvement in the business and operations of EPLP, as the Grantee believes
to
be necessary and appropriate to make an informed decision to accept this
Award
of LTIP Units; and (D) an investment in EPLP and/or the Company involves
substantial risks. The Grantee has been given the opportunity to make a
thorough investigation of matters relevant to the LTIP Units and has been
furnished with, and has reviewed and understands, materials relating to EPLP
and
the Company and their respective activities (including, but not limited to,
the
Background Documents). The Grantee has been afforded the opportunity to
obtain any additional information (including any exhibits to the Background
Documents) deemed necessary by the Grantee to verify the accuracy of information
conveyed to the Grantee. The Grantee confirms that all documents, records,
and books pertaining to his receipt of LTIP Units which were requested by
the
Grantee have been made available or delivered to the Grantee. The Grantee
has had an opportunity to ask questions of and receive answers from EPLP
and the
Company, or from a person or persons acting on their behalf, concerning the
terms and conditions of the LTIP Units. The Grantee has relied upon, and
is making his decision solely upon, the Background Documents and other written
information provided to the Grantee by EPLP or the
Company.
(iii) The
LTIP Units to be issued, Common Units issuable upon conversion of the LTIP
Units
and any REIT Shares issued in connection with the redemption of any such
Common
Units will be acquired for the account of the Grantee for investment only
and
not with a current view to, or with any intention of, a distribution or resale
thereof, in whole or in part, or the grant of any participation therein,
without
prejudice, however, to the Grantee’s right (subject to the terms of the LTIP
Units, the 2004 Plan and this Agreement) at all times to sell or otherwise
dispose of all or any part of his LTIP Units, Common Units or REIT Shares
in
compliance with the Securities Act, and applicable state securities laws,
and
subject, nevertheless, to the disposition of his assets being at all times
within his control.
(iv) The
Grantee acknowledges that (A) neither the LTIP Units to be issued, nor the
Common Units issuable upon conversion of the LTIP Units, have been registered
under the Securities Act or state securities laws by reason of a specific
exemption or exemptions from registration under the Securities Act and
applicable state securities laws and, if such LTIP Units
or
Common
Units are represented by certificates, such certificates will bear a legend
to
such effect, (B) the reliance by EPLP and the Company on such exemptions is
predicated in part on the accuracy and completeness of the representations
and
warranties of the Grantee contained herein, (C) such LTIP Units or Common
Units, therefore, cannot be resold unless registered under the Securities
Act
and applicable state securities laws, or unless an exemption from registration
is available, (D) there is no public market for such LTIP Units or Common
Units, and (E) neither EPLP nor the Company has any obligation or intention
to register such LTIP Units or such Common Units under the Securities Act
or any
state securities laws or to take any action that would make available any
exemption from the registration requirements of such laws, except, that,
upon
the redemption of the Common Units for REIT Shares, the Company may issue
such
REIT Shares under the 2004 Plan and pursuant to a Registration Statement
on
Form S-8 under the Securities Act, to the extent that (I) the Grantee is
eligible to receive such REIT Shares under the 2004 Plan at the time of
such
issuance, (II) the Company has filed a Form S-8 Registration Statement with
the Securities and Exchange Commission registering the issuance of such
REIT
Shares and (III) such Form S-8 is effective at the time of the issuance of
such REIT Shares. The Grantee hereby acknowledges that because of the
restrictions on transfer or assignment of such LTIP Units acquired hereby
and
the Common Units issuable upon conversion of the LTIP Units which are set
forth
in the Partnership Agreement, the 2004 Plan or this Agreement, the Grantee
may
have to bear the economic risk of his ownership of the LTIP Units acquired
hereby and the Common Units issuable upon conversion of the LTIP Units
for an
indefinite period of time.
(v) The
Grantee has determined that the LTIP Units are a suitable investment for
the
Grantee.
(vi) No
representations or warranties have been made to the Grantee by EPLP or the
Company, or any officer, director, shareholder, agent, or affiliate of any
of
them, and the Grantee has received no information relating to an investment
in
EPLP or the LTIP Units except the information specified in Paragraph
(b) above.
(c) So
long as the Grantee holds any LTIP Units, the Grantee shall disclose to EPLP
in
writing such information as may be reasonably requested with respect to
ownership of LTIP Units as EPLP may deem reasonably necessary to ascertain
and
to establish compliance with provisions of the Internal Revenue Code of 1986,
as
amended (the “Code”), applicable to EPLP or to comply with requirements
of any other appropriate taxing authority.
(d) The
Grantee hereby agrees to make an election under Section 83(b) of the
Code with respect to the LTIP Units awarded hereunder, and has delivered
with
this Agreement a completed, executed copy of the election form attached hereto
as Exhibit D . The Grantee agrees to file the election (or to
permit EPLP to file such election on the Grantee’s behalf) within
thirty (30) days after the award of the LTIP Units hereunder with the IRS
Service Center at which such Grantee files his personal income tax returns,
and
to file a copy of such election with the Grantee’s U.S. federal income tax
return for the taxable year in which the LTIP Units are awarded to the
Grantee.
(e) The
address set forth on the signature page of this Agreement is the address of
the Grantee’s principal residence, and the Grantee has no present intention of
becoming a resident of any country, state or jurisdiction other than the
country
and state in which such residence is sited.
EXHIBIT C
ELECTION
TO INCLUDE IN GROSS INCOME IN YEAR OF
TRANSFER
OF PROPERTY PURSUANT TO SECTION 83(B)
OF
THE INTERNAL REVENUE CODE
The
undersigned hereby makes an election pursuant to Section 83(b) of the
Internal Revenue Code with respect to the property described below and supplies
the following information in accordance with the regulations promulgated
thereunder:
1. The
name, address and taxpayer identification number of the undersigned
are:
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(the
“Taxpayer”)
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Address:
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Social
Security No./Taxpayer Identification No.:
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2. Description
of property with respect to which the election is being made:
The
election is being made with respect to
LTIP Units in Essex Portfolio, L.P. (the “Partnership”).
3. The
date on which the LTIP Units were transferred is December 4, 2007. The
taxable year to which this election relates is calendar year 2007.
4. Nature
of restrictions to which the LTIP Units are subject:
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(a)
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With
limited exceptions, until the LTIP Units vest, the Taxpayer may
not
transfer in any manner any portion of the LTIP Units without the
consent
of EPLP.
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(b)
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The
Taxpayer’s LTIP Units vest in accordance with the vesting provisions
described in the Schedule attached hereto. Unvested LTIP Units
are forfeited in accordance with the vesting provisions described
in the
Schedule attached hereto.
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5. The
fair market value at time of transfer (determined without regard to any
restrictions other than restrictions which by their terms will never lapse)
of
the LTIP Units with respect to which this election is being made was $0 per
LTIP
Unit.
6. The
amount paid by the Taxpayer for the LTIP Units was $0 per LTIP
Unit.
7. A
copy of this statement has been furnished to Essex Portfolio, L.P. and Essex
Property Trust, Inc.
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Dated:
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Name:
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SCHEDULE A
Vesting
Provisions of LTIP Units
LTIP
Units are subject to time-based and performance-based vesting with the final
vesting percentage equaling the product of the time-based vesting percentage
and
the performance-based vesting percentage. Performance-based vesting will
be from 0-100% based on the Essex Property Trust, Inc.’s (the “Company’s”)
per-share total return to shareholders for the period from December 4, 2007
to
December 3, 2010 (or earlier in certain circumstances). One hundred
percent (100%) of the LTIP Units that remain outstanding following the
determination of performance-based vesting will vest on December 4, 2010,
provided that the Taxpayer remains a non-employee member of the Board of
Directors of the Company through such dates, subject to acceleration in the
event of certain change of control transactions or termination of the Taxpayer’s
status as a non-employee director under specified circumstances. Unvested
LTIP Units are subject to forfeiture in the event of failure to vest if the
Taxpayer is not a non-employee director on the applicable vesting date or
performance-based vesting conditions are not satisfied.