As filed with the Securities and Exchange Commission on January 6, 2000
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Wilshire Real Estate Investment Inc.
(Exact name of registrant as specified in its charter)
Maryland
(State or other jurisdiction of incorporation or organization)
52-2081138
(I.R.S. Employer Identification Number)
1310 SW 17th Street
Portland, OR 97201
(Address of principal executive offices) (Zip code)
Wilshire Real Estate Investment Trust Inc.
1998 Stock Option Plan
(Full Title of Plan)
Lawrence A. Mendelsohn
1310 SW 17th Street
Portland, OR 97201
(503) 721-6500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies of all communications to:
James M. Waddington, Esq.
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
CALCULATION OF REGISTRATION FEE
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Title of Amount Proposed Proposed maximum Amount of
securities to be maximum aggregate Registration
to be registered offering price offering Fee
registered per share(1) price(1)
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Common Stock, 3,500,000 $2.1875 $7,656,250 $2,021.25
par value shares
$.0001 per
share
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) calculated on the basis of the high and low sale
prices of the Common Stock as reported on the Nasdaq National Market on
January 3, 2000.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents By Reference.
The following documents filed with the Securities and Exchange Commission
by Wilshire Real Estate Investment Inc., a Maryland corporation (the
"Corporation" or the "Registrant"), are incorporated herein by reference:
(1) The Corporation's Annual Report filed on Form 10-K for the
fiscal year ended December 31, 1998;
(2) The Corporation's Annual Report filed on Form 10-K/A for the
fiscal year ended December 31, 1998;
(3) The Corporation's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1999;
(4) The Corporation's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1999;
(5) The Corporation's Quarterly Report on Form 10-Q/A for the
quarter ended June 30, 1999;
(6) The Corporation's Current Report on Form 8-K dated September
30, 1999;
(7) The Corporation's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1999;
(8) The Corporation's Current Report on Form 8-K dated November
12, 1999;
(9) The Corporation's Current Report on Form 8-K dated December
13, 1999;
(10) The Corporation's Current Report on Form 8-K dated December
15, 1999; and
(11) the description of the Corporation's common stock, par value
$.0001 per share, contained in the Company's Registration Statement filed
on Form 8-A pursuant to Section 12 of the Securities Exchange Act of 1934.
All documents subsequently filed by the Corporation pursuant to Section
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 (the "Exchange
Act"), prior to the filing of a
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post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference in this Registration Statement and to be part
thereof from the date of filing such documents. Any statement in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for the purposes of this Registration Statement to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Registration Statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interest of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
The Corporation's Amended and Restated Articles of Incorporation (the
"Charter") limits the liability of its directors and officers to the Corporation
and its stockholders to the fullest extent permitted from time to time by
Maryland law. Maryland law presently permits the liability of directors and
officers to a corporation or its stockholders for money damages to be limited,
except (i) to the extent that it is proved that the director or officer actually
received an improper benefit or profit in money, property or services for the
amount of the benefit or profit in money, property or services actually
received, or (ii) if a judgment or other final adjudication is entered in a
proceeding based on a finding that the director's or officer's action, or
failure to act, was the result of active and deliberate dishonesty and was
material to the cause of action adjudicated in the proceeding. This provision
does not limit the ability of the Corporation or its stockholders to obtain
other relief, such as an injunction or rescission. The Charter and the
Corporation's Bylaws require the Corporation to indemnify and hold harmless and,
without requiring a determination of the ultimate entitlement to
indemnification, pay reasonable expenses in advance of the final disposition of
any proceeding to its present and former directors and officers and certain
other parties to the fullest extent permitted from time to time by Maryland law.
The Maryland General Corporation Law ("MGCL") permits a corporation to indemnify
its directors, officers and certain other parties against judgments, penalties,
fines, settlements and reasonable expenses incurred by them in connection with
any proceeding to which they may be made a party by reason of their service to
or at the request of the corporation, unless it is established that (i) the act
or omission of the indemnified party was material to the matter giving rise to
the proceeding and (x) was committed in bad faith or (y) was the result of
active and deliberate dishonesty, (ii) the indemnified party actually received
an improper personal benefit in money, property or services or (iii) in the case
of any criminal proceeding, the indemnified party had reasonable cause to
believe that the act or omission was unlawful. Indemnification may be
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made against judgments, penalties, fines, settlements and reasonable expenses
actually incurred by the director or officer in connection with the proceeding.
Indemnification is limited to court ordered reimbursement for expenses; however,
if the proceeding is one by or in the right of the corporation, and the director
or officer was adjudged to be liable to the corporation or if the proceeding is
one charging improper personal benefit to the director or officer and the
director or officer was adjudged to be liable on the basis that personal benefit
was improperly received. The termination of any proceeding by conviction, or
upon a plea of nolo contendere or its equivalent, or an entry of any order of
probation prior to judgment, creates a rebuttal presumption that the director or
officer did not meet the requisite standard of conduct required for
indemnification to be permitted. Maryland law requires a corporation (unless its
charter provides otherwise, which the Corporation's Charter does not) to
indemnify a director or officer who has been successful, on the merits or
otherwise, in the defense of any proceeding to which he is made a party by
reason of his service in that capacity. It is the position of the Securities and
Exchange Commission that indemnification of directors and officers for
liabilities arising under the Securities Act of 1933, as amended (the
"Securities Act") is against public policy and is unenforceable pursuant to
Section 14 of the Securities Act.
The Corporation maintains an insurance policy providing directors' and
officers' liability insurance for any liability its directors or officers or the
directors or officers of any of its subsidiaries may incur in their capacities
as such.
Item 7. Exemption from Registration Claimed.
Not Applicable.
Item 8. Exhibits.
3.1 Amended and Restated Articles of Incorporation of the Corporation
(incorporated by reference to Exhibit 3.1 to the Corporation's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1999
3.2 Bylaws of the Corporation (incorporated by reference to Exhibit 3.2 of
the Corporation's Registration Statement on Form S-11 (Registration
No. 333-39035) dated February 27, 1998
4.1 Wilshire Real Estate Investment Trust Inc. 1998 Employee Stock Option
Plan
5 Opinion of Proskauer Rose LLP
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Proskauer Rose LLP (included in Exhibit 5)
24 Powers of Attorney (included on signature page)
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Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) to file, during any period in which offers or sales
are being made, a post-effective amendment to this registration
statement;
(i) to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in value of securities offered (if just the
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume or price represent no more than a
20 percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement;
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3, Form S-8 or Form F-3,
and the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at the
time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
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(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933,
each filing of the Registrant's annual report pursuant to section 13(a) or
section 15(d) of the Securities Exchange Act of 1934 that is incorporated
by reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Portland, State of Oregon on December 29, 1999.
WILSHIRE REAL ESTATE INVESTMENT INC.
By:/s/ Andrew A. Wiederhorn
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Andrew A. Wiederhorn
Chairman and Chief Executive Officer
POWERS OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each director and officer whose
signature appears below constitutes and appoints Andrew A. Wiederhorn and
Lawrence A. Mendelsohn, or either of them, his true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution, to act, without
the other, for him and in his name, place, and stead, in any and all capacities,
to sign a Registration Statement on Form S-8 and any or all amendments
(including post-effective amendments) thereto, relating to the registration,
under the Securities Act of 1933, as amended, of shares of common stock of the
Corporation to be issued pursuant to the Corporation's 1998 Stock Option Plan
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as full to all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, their substitute or substitutes may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signatures Title Date
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/s/ Andrew A. Wiederhorn Chairman of the Board, December 29, 1999
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Andrew A. Wiederhorn and a Director
(principal executive officer)
/s/ Lawrence A. Mendelsohn President and a Director December 29, 1999
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Lawrence A. Mendelsohn
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Signatures Title Date
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Executive Vice President and December 29, 1999
/s/ Chris Tassos Chief Financial Officer
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Chris Tassos Accounting Officer)
/s/ David C. Egelhoff Director December 29, 1999
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David C. Egelhoff
/s/ Jordan D. Schnitzer Director December 29, 1999
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Jordan D. Schnitzer
/s/ Patrick Terrell Director December 29, 1999
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Patrick Terrell
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EXHIBIT 5
December 29, 1999
Wilshire Real Estate Investment Inc.
1310 SW 17th Street
Portland, OR 97201
Dear Sirs:
We are acting as counsel to Wilshire Real Estate Investment Inc., a
Maryland corporation (the "Company"), in connection with the Registration
Statement on Form S-8 with exhibits thereto (the "Registration Statement") filed
by the Company under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, relating to the registration of 3,500,000 shares (the
"Shares") of Common Stock, par value $.0001 per share, of the Company. The
Shares are to be issued by the Company pursuant to the Company's 1998 Stock
Option Plan (the "Plan").
As such counsel, we have participated in the preparation of the
Registration Statement and have reviewed the corporate proceedings in connection
with the adoption of the Plans and have also examined and relied upon originals
or copies, certified or otherwise authenticated to our satisfaction, of all such
corporate records, documents, agreements, and instruments relating to the
Company, and certificates of public officials and of representatives of the
Company, and have made such investigations of law, and have discussed with
representatives of the Company and such other persons such questions of fact, as
we have deemed proper and necessary as a basis for rendering this opinion.
Based upon, and subject to, the foregoing, we are of the opinion that the
Shares are duly authorized and, upon issuance of the Shares in accordance with
the Plan, will be, assuming no change in the applicable law or pertinent facts,
validly issued, fully paid, and non-assessable.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement. In giving the foregoing consent, we do not admit that we
are in the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission promulgated thereunder.
Very truly yours,
/s/ Proskauer Rose LLP
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Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated March 19, 1999
included in the Company's Form 10-K and Form 10-K/A for the year ended December
31, 1998.
Arthur Andersen LLP
Los Angeles, California
December 22, 1999
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WILSHIRE REAL ESTATE INVESTMENT TRUST INC.
1998 STOCK OPTION PLAN
<PAGE>
TABLE OF CONTENTS
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ARTICLE I. PURPOSE.........................................................1
ARTICLE II. DEFINITIONS.....................................................1
ARTICLE III. ADMINISTRATION..................................................4
ARTICLE IV. SHARES AND OTHER LIMITATIONS....................................7
ARTICLE V. ELIGIBILITY.....................................................9
ARTICLE VI. STOCK OPTIONS...................................................9
ARTICLE VII. STOCK APPRECIATION RIGHTS......................................11
ARTICLE VIII. RESTRICTED STOCK...............................................13
ARTICLE IX. INDEPENDENT DIRECTOR AND NONEMPLOYEE DIRECTOR
STOCK OPTIONS..................................................15
ARTICLE X. NONTRANSFERABILITY.............................................17
ARTICLE XI. TERMINATION PROVISIONS.........................................17
ARTICLE XII. CHANGE IN CONTROL..............................................18
ARTICLE XIII. TERMINATION OR AMENDMENT OF PLAN...............................20
ARTICLE XIV. UNFUNDED PLAN..................................................21
ARTICLE XV. GENERAL PROVISIONS.............................................21
ARTICLE XVI. EFFECTIVE DATE OF PLAN.........................................24
ARTICLE XVII. TERM OF PLAN...................................................24
ARTICLE XVIII. NAME OF PLAN...................................................24
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Wilshire Real Estate Investment Trust Inc.
1998 Stock Option Plan
ARTICLE I.
PURPOSE
The purpose of the Wilshire Real Estate Investment Trust Inc. 1998 Stock
Option Plan (the "Plan") is to enhance the profitability and value of Wilshire
Real Estate Investment Trust Inc. (the "Company") for the benefit of its
stockholders by enabling the Company: (i) to offer stock based incentives and
other equity interests to Independent Directors, Non-Employee Directors and/or
Managers of the Company thereby attracting, retaining and rewarding such
Independent Directors, Non-Employee Directors and Managers and strengthening the
mutuality of interests between such individuals and the Company's stockholders
and (ii) to make automatic grants of Stock Options to Independent Directors and
Non-Employee Directors, thereby attracting, retaining and rewarding such
individuals and strengthening the mutuality of interests between such
individuals and the Company's stockholders.
ARTICLE II.
DEFINITIONS
For purposes of the Plan, the following terms shall have the following
meanings:
2.1. "Affiliate" shall mean: (i) any person directly or indirectly
owning, controlling, or holding, with power to vote ten percent (10%) or
more of the outstanding voting securities of such other person, (ii) any
person ten percent (10%) or more of whose outstanding voting securities are
directly or indirectly owned, controlled, or held, with power to vote, by
such other person, (iii) any person directly or indirectly controlling,
controlled by, or under common control with such other person, (iv) any
executive officer, director, trustee or general partner of such other
person, and (v) any legal entity for which such person acts as an executive
officer, director, trustee or general partner. For purposes of this
definition, the term "person" means and includes any natural person,
corporation, partnership, association, limited liability company or any
other legal entity. For purposes of this definition, an indirect
relationship shall include circumstances in which a person's spouse,
children, parents, siblings or mothers-, fathers-, sisters- or
brothers-in-law is or has been associated with a person.
2.2. "Award" shall mean any award under the Plan of any Stock
Option, Restricted Stock or Stock Appreciation Right. All Awards shall be
confirmed by, and subject to the terms of, a written agreement executed by
the Company and the Participant.
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2.3. "Board" shall mean the Board of Directors of the Company or
an authorized committee thereof.
2.4. "Cause" shall mean, with respect to a Participant's
Termination of Directorship, an act or failure to act that constitutes
"cause" for removal of a director under applicable Maryland law.
2.5. "Change in Control" shall have the meaning set forth in
Article XII.
2.6. "Code" shall mean the Internal Revenue Code of 1986, as
amended. Any reference to any section of the Code shall also be a reference
to any successor provision.
2.7. "Common Stock" shall mean the common stock, par value $0.0001
per share, of the Company.
2.8. "Company" shall mean Wilshire Real Estate Investment Trust
Inc., a Maryland corporation, and its successors and assigns.
2.9. "Disability" shall mean a total and permanent disability, as
defined in Section 22(e)(3) of the Code.
2.10. "Effective Date" shall mean the effective date of the Plan
as defined in Article XV.
2.11. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
2.12. "Fair Market Value" for purposes of the Plan, unless
otherwise required by any applicable provision of the Code or any
regulations issued thereunder, shall mean, as of any date, the last sales
price reported for the Common Stock on the applicable date: (i) as reported
on the principal national securities exchange on which it is then traded or
the Nasdaq Stock Market, Inc., or (ii) if not traded on any such national
securities exchange or the Nasdaq Stock Market, Inc., as quoted on an
automated quotation system sponsored by the National Association of
Securities Dealers. If the Common Stock is not readily tradable on a
national securities exchange, the Nasdaq Stock Market, Inc., or any
automated quotation system sponsored by the National Association of
Securities Dealers, its Fair Market Value shall be set in good faith by the
Board. For purposes of the grant of any Stock Option, the applicable date
shall be the date on which the Option is granted or, if the sale of the
Common Stock shall not have been reported or quoted on such date, on the
first day prior thereto on which the sale of the Common Stock was reported
or quoted. For purposes of the exercise of any Stock Appreciation Right the
applicable date shall be the date a notice of exercise is received by the
Board or, if not a day on which the applicable market is open, the next day
that it is open.
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2.13. "Independent Director" shall mean a director who within the
last two years, has not (i) been employed by WFSG or any of its Affiliates,
(ii) been an officer or director of WFSG or any of its Affiliates, (iii) or
whose business or employer within the last two years has not performed
services for WFSG or any of its Affiliates that annually exceeded the
lesser of (a) the dollar amount provided in Item 404(a) of Regulation S-K
or (b) 10% of the gross revenue of the entity that provided such services,
or (iv) had any material business or professional relationship with WFSG or
any of its Affiliates.
2.14. "Manager" shall mean WRSC, or any other person or entity
that the Board determines, in its sole discretion, to be a manager of the
Company.
2.15. "Non-Employee Director" shall mean any director of the
Company who is neither an employee of the Company nor an Independent
Director.
2.16. "Non-Tandem Stock Appreciation Right" shall mean a Stock
Appreciation Right entitling the holder to receive an amount in cash or
stock equal to the excess of: (i) the Fair Market Value of a share of
Common Stock as of the date such right is exercised, over (ii) the
aggregate exercise price of such right, otherwise than on surrender of a
Stock Option.
2.17. "Participant" shall mean any Independent Director,
Non-Employee Director or Manager to whom an Award has been made under the
Plan.
2.18. "Reference Stock Option" shall have the meaning set forth in
Section 7.2.
2.19. "Restricted Stock" shall mean an award of shares of Common
Stock under the Plan that is subject to restrictions under Article VIII.
2.20. "Restriction Period" shall have the meaning set forth in
Subsection 8.3(a) with respect to Restricted Stock.
2.21. "Rule 16b-3" shall mean Rule 16b-3 under Section 16(b) of
the Exchange Act as then in effect or any successor provisions.
2.22. "Stock Appreciation Right" shall mean the right pursuant to
an Award granted under Article VII.
2.23. "Stock Option" or "Option" shall mean any Option to
purchase shares of Common Stock granted to any Independent Director,
Non-Employee Director or Manager pursuant to Article VI or to any
Independent Director or Non-Employee Director pursuant to Article IX.
2.24. "Tandem Stock Appreciation Right" shall mean a Stock
Appreciation Right entitling the holder to surrender to the Company all (or
a portion) of a Stock Option in exchange for an amount in cash or stock
equal to the excess of: (i) the Fair Market
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Value, on the date such Stock Option (or such portion thereof) is
surrendered, of the Common Stock covered by such Stock Option (or such
portion thereof), over (ii) the aggregate exercise price of such Stock
Option (or such portion thereof).
2.25. "Termination of Directorship" shall mean, with respect to
an Independent Director or Non-Employee Director, that the Independent
Director or Non-Employee Director has ceased to be a director of the
Company.
2.26. "Termination as a Manager" shall mean, with respect to a
Manager, that the Manager has ceased to be a Manager of the Company.
2.27. "Transfer" or "Transferred" shall mean anticipate,
alienate, attach, sell, assign, pledge, encumber, charge or otherwise
transfer.
2.28. "WFSG" shall mean the Wilshire Financial Services Group
Inc.
2.29. "WRSC" shall mean the Wilshire Realty Services Corporation.
ARTICLE III.
ADMINISTRATION
3.1. The Board. The Plan shall be administered and interpreted by the
Board.
3.2. Awards. The Board shall have full authority to grant, pursuant to
the terms of the Plan (including Article V hereof), Stock Options, Restricted
Stock and Stock Appreciation Rights to any Independent Director, Non-Employee
Director or Manager and to otherwise administer the Plan. In particular, the
Board shall, except with regard to awards of Stock Options to Independent
Directors and Non-Employee Directors pursuant to Article IX, have the authority:
(a) to select the Independent Directors, Non-Employee Directors and
Managers to whom Stock Options, Restricted Stock and Stock Appreciation
Rights may from time to time be granted hereunder;
(b) to determine whether and to what extent Stock Options,
Restricted Stock and Stock Appreciation Rights are to be granted hereunder
to one or more Independent Directors, Non-Employee Directors and Managers;
(c) to determine, in accordance with the terms of the Plan, the
number of shares of Common Stock to be covered by each such Award granted
to an Independent Director, Non-Employee Director or Manager;
(d) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any Award granted hereunder to an Independent
Director, Non-Employee
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Director or Manager (including, but not limited to, the exercise or
purchase price (if any), any restriction or limitation, any vesting
schedule or acceleration thereof, or any forfeiture restrictions or waiver
thereof, regarding any Award, and the shares of Common Stock relating
thereto, based on such factors, if any, as the Board shall determine, in
its sole discretion);
(e) to determine whether and under what circumstances a Stock
Option may be settled in cash and/or Common Stock under Section
6.3(d)(iii);
(f) to determine whether, to what extent and under what
circumstances to provide loans (which may be on a recourse basis and shall
bear interest at the rate the Board shall provide) to Independent
Directors, Non-Employee Directors and Managers in order to purchase shares
of Common Stock under the Plan;
(g) to determine whether a Stock Appreciation Right shall be a
Tandem Stock Appreciation Right or a Non-Tandem Stock Appreciation Right;
(h) to modify, extend or renew an Award, subject to Article XIII
hereof, provided, however, that if an Award is modified, extended or
renewed and thereby deemed to be the issuance of a new Award under the Code
or the applicable accounting rules, the exercise price of such Award may
continue to be the original exercise price even if less than the Fair
Market Value of the Common Stock at the time of such modification,
extension or renewal; and
(i) to offer to buy out an Award previously granted, based on such
terms and conditions as the Board shall establish and communicate to the
Participant at the time such offer is made.
3.3. Guidelines. Subject to Article XIII hereof, the Board shall have
the authority to adopt, alter and repeal such administrative rules, guidelines
and practices governing the Plan and perform all acts, including the delegation
of its administrative responsibilities, as it shall, from time to time, deem
advisable; to construe and interpret the terms and provisions of the Plan and
any Award issued under the Plan (and any agreements relating thereto); and to
otherwise supervise the administration of the Plan. The Board may correct any
defect, supply any omission or reconcile any inconsistency in the Plan or in any
agreement relating thereto in the manner and to the extent it shall deem
necessary to carry the Plan into effect, but only to the extent any such action
would be permitted under the applicable provisions of Rule 16b-3. The Board may
adopt special guidelines and provisions for persons who are residing in, or
subject to, the taxes of, countries other than the United States to comply with
applicable tax and securities laws. To the extent applicable, the Plan is
intended to comply with the applicable requirements of Rule 16b-3 and shall be
limited, construed and interpreted in a manner so as to comply therewith.
3.4. Decisions Final. Any decision, interpretation or other action made
or taken in good faith by or at the direction of the Company or the Board (or
any of its members) arising out of or in connection with the Plan shall be
within the absolute discretion of the Company or the
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Board, as the case may be, and shall be final, binding and conclusive on the
Company and all employees and Participants and their respective heirs,
executors, administrators, successors and assigns.
3.5. Reliance on Counsel. The Company or the Board may consult with
legal counsel, who may be counsel for the Company or other counsel, with respect
to its obligations or duties hereunder, or with respect to any action or
proceeding or any question of law, and shall not be liable with respect to any
action taken or omitted by it in good faith pursuant to the advice of such
counsel.
3.6. Designation of Consultants/Liability.
------------------------------------
(a) The Board may designate employees of the Company and
professional advisors to assist the Board in the administration of the Plan
and may grant authority to employees to execute agreements or other
documents on behalf of the Board.
(b) The Board may employ such legal counsel, consultants and
agents as it may deem desirable for the administration of the Plan and may
rely upon any opinion received from any such counsel or consultant and any
computation received from any such consultant or agent. Expenses incurred
by the Board in the engagement of any such counsel, consultant or agent
shall be paid by the Company. The Board, its members and any person
designated pursuant to paragraph (a) above shall not be liable for any
action or determination made in good faith with respect to the Plan. To the
maximum extent permitted by applicable law, no officer of the Company or
member or former member of the Board shall be liable for any action or
determination made in good faith with respect to the Plan or any Awards
granted under it. To the maximum extent permitted by applicable law and the
Certificate of Incorporation and By-Laws of the Company and to the extent
not covered by insurance, each officer and member or former member of the
Board shall be indemnified and held harmless by the Company against any
cost or expense (including reasonable fees of counsel reasonably acceptable
to the Company) or liability (including any sum paid in settlement of a
claim with the approval of the Company), and advanced amounts necessary to
pay the foregoing at the earliest time and to the fullest extent permitted,
arising out of any act or omission to act in connection with the Plan,
except to the extent arising out of such officer's, member's or former
member's own fraud or bad faith. Such indemnification shall be in addition
to any rights of indemnification the officers, directors or members or
former officers, directors or members may have under applicable law or
under the Certificate of Incorporation or ByLaws of the Company.
Notwithstanding anything else herein, this indemnification will not apply
to the actions or determinations made by an individual with regard to
Awards granted to him under the Plan.
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ARTICLE IV.
SHARES AND OTHER LIMITATIONS
4.1. Shares.
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(a) The aggregate number of shares of Common Stock which may be
issued or used for preference purposes under the Plan shall not exceed
3,500,000 shares, of which 500,000 shares are reserved for Independent
Directors and Non-Employee Directors (subject to any increase or decrease
pursuant to Section 4.2), which may be either authorized and unissued
Common Stock or Common Stock held in or acquired for the treasury of the
Company or both. If any Stock Option or Stock Appreciation Right granted
under the Plan expires, terminates or is cancelled for any reason without
having been exercised in full, the number of shares of Common Stock
underlying the unexercised Stock Option or Stock Appreciation Right shall
again be available for the purposes of Awards under the Plan. If any shares
of Restricted Stock awarded under the Plan to a Participant are forfeited
or repurchased by the Company for any reason, the number of forfeited or
repurchased shares of Restricted Stock shall again be available for the
purposes of Awards under the Plan. If a Tandem Stock Appreciation Right
granted in tandem with an Option is granted under the Plan, such grant
shall only apply once against the maximum number of shares of Common Stock
which may be issued under the Plan. In determining the number of shares of
Common Stock available for Awards, if Common Stock has been exchanged by a
Participant as full or partial payment to the Company, or for withholding,
in connection with the exercise of an Award or the number shares of Common
Stock otherwise deliverable has been reduced for withholding, the number of
shares of Common Stock exchanged as payment in connection with the exercise
or for withholding or reduced shall again be available under the Plan. Any
shares of Common Stock that are issued by the Company for, and any awards
that are granted through the assumption of or in substitution for,
outstanding awards previously granted by an acquired entity shall not be
counted against the shares of Common Stock available for issuance under the
Plan.
4.2. Changes.
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(a) The existence of the Plan and the Awards granted hereunder
shall not affect in any way the right or power of the Board or the
stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any
issue of bonds, debentures, preferred or prior preference stock ahead of or
affecting Common Stock, the authorization or issuance of additional shares
of Common Stock, the dissolution or liquidation of the Company, any sale or
transfer of all or part of its assets or business or any other corporate
act or proceeding.
(b) In the event of any change in the capital structure or
business of the Company by reason of any stock dividend or extraordinary
dividend, stock split or reverse
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stock split, recapitalization, reorganization, merger, consolidation,
split-up, combination or exchange of shares, non-cash distributions with
respect to its outstanding Common Stock or capital stock other than Common
Stock, reclassification of its capital stock, any sale or transfer of all
or part of the Company's assets or business, or any similar change
affecting the Company's capital structure or business and the Board
determines in good faith that an adjustment is necessary or appropriate
under the Plan to prevent substantial dilution or enlargement of the rights
granted to, or available for, Participants under the Plan or as otherwise
necessary to reflect the change, then the aggregate number and kind of
shares which thereafter may be issued under the Plan, the number and kind
of shares or other property (including cash) to be issued upon exercise of
an outstanding Option or other Award granted under the Plan and the
purchase or exercise price thereof shall be appropriately adjusted
consistent with such change in such manner as the Board may deem equitable
to prevent substantial dilution or enlargement of the rights granted to, or
available for, Participants under the Plan or as otherwise necessary to
reflect the change, and any such adjustment determined by the Board in good
faith shall be binding and conclusive on the Company and all Participants
and employees and their respective heirs, executors, administrators,
successors and assigns.
(c) Fractional shares of Common Stock resulting from any
adjustment in an Award pursuant to Section 4.2(a) or (b) shall be
aggregated until, and eliminated at, the time of exercise. No fractional
shares of Common Stock shall be issued under the Plan. The Board may, in
its sole discretion, pay cash in lieu of any fractional shares of Common
Stock in settlement of awards under the Plan. Notice of any adjustment
shall be given by the Board to each Participant whose Award has been
adjusted and such adjustment (whether or not such notice is given) shall be
effective and binding for all purposes of the Plan.
(d) In the event of a merger or consolidation in which the
Company is not the surviving entity or in the event of any transaction that
results in the acquisition of all or substantially all of the Company's
outstanding Common Stock by a single person or entity or by a group of
persons and/or entities acting in concert, or in the event of the sale or
transfer of all or substantially all of the Company's assets (all of the
foregoing being referred to as "Acquisition Events"), then the Board may,
in its sole discretion, terminate all outstanding Options and Stock
Appreciation Rights of Independent Directors, Non- Employee Directors and
Managers, effective as of the date of the Acquisition Event, by delivering
notice of termination to each such Participant at least twenty (20) days
prior to the date of consummation of the Acquisition Event; provided, that
during the period from the date on which such notice of termination is
delivered to the consummation of the Acquisition Event, each such
Participant shall have the right to exercise in full all of his Options and
Stock Appreciation Rights that are then outstanding (whether vested or not
vested and without regard to any limitations on exercisability otherwise
contained in the Option) but contingent on the occurrence of the
Acquisition Event, and, provided that, if the Acquisition Event does not
take place within a specified period after giving such notice for any
reason whatsoever, the notice and exercise shall be null and void. If an
Acquisition Event occurs, to the extent the Board does not terminate the
outstanding
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Options and Stock Appreciation Rights pursuant to this Section 4.2(d), then
the provisions of Section 4.2(b) shall apply.
4.3. Purchase Price. Notwithstanding any provision of the Plan to the
contrary, if authorized but previously unissued shares of Common Stock are
issued under the Plan, such shares shall not be issued for a consideration which
is less than as permitted under applicable law.
ARTICLE V.
ELIGIBILITY
5.1. Discretionary Awards. Independent Directors, Non-Employee
Directors and Managers of the Company are eligible to be granted Stock Options,
Restricted Stock and Stock Appreciation Rights under the Plan. Eligibility under
the Plan will be determined by the Board in its sole discretion.
5.2. Automatic Awards. Independent Directors and Non-Employee Directors
will automatically be granted Stock Options in accordance with Article IX of the
Plan.
ARTICLE VI.
STOCK OPTIONS
6.1. Options. Stock Options granted hereunder shall be non-qualified
stock options.
6.2. Grants. The Board shall have the authority to grant any
Independent Director, Non-Employee Director or Manager one or more Stock Options
under the Plan (with or without Stock Appreciation Rights).
6.3. Terms of Options. Options granted under the Plan shall be
subject to the following terms and conditions, and shall be in such form and
contain such additional terms and conditions, not inconsistent with the terms of
the Plan, as the Board shall deem desirable:
(a) Exercise Price. The exercise price per share of Common
Stock subject to a Stock Option shall be determined by the Board at the
time of grant, but shall not be less than 100% of the Fair Market Value of
a share of Common Stock at the time of grant.
(b) Option Term. The term of each Stock Option shall be fixed
by the Board, but no Stock Option shall be exercisable more than ten (10)
years after the date the Option is granted.
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(c) Exercisability. Stock Options shall be exercisable at such
time or times and subject to such terms and conditions as shall be
determined by the Board at grant. If the Board provides, in its discretion,
that any Stock Option is exercisable subject to certain limitations
(including, without limitation, that it is exercisable only in installments
or within certain time periods), the Board may waive such limitations on
the exercisability at any time at or after grant in whole or in part
(including, without limitation, that the Board may waive the installment
exercise provisions or accelerate the time at which Options may be
exercised), based on such factors, if any, as the Board shall determine, in
its sole discretion.
(d) Method of Exercise. Subject to whatever installment
exercise and waiting period provisions apply under subsection (c) above,
Stock Options may be exercised in whole or in part at any time during the
Option term, by giving written notice of exercise to the Company specifying
the number of shares to be purchased, accompanied by payment in full of the
exercise price. Common Stock purchased pursuant to the exercise of a Stock
Option shall be paid for at the time of exercise as follows: (i) in cash or
by check, bank draft or money order payable to the order of Company; (ii)
if the Common Stock is traded on a national securities exchange, the Nasdaq
Stock Market, Inc., or quoted on a national quotation system sponsored by
the National Association of Securities Dealers, through the delivery of
irrevocable instructions to a broker to deliver promptly to the Company an
amount equal to the purchase price; or (iii) on such other terms and
conditions as may be acceptable to the Board (which may include payment in
full or part in the form of Common Stock owned by the Participant for a
period of at least six (6) months (and for which the Participant has good
title free and clear of any liens and encumbrances) based on the Fair
Market Value of the Common Stock on the payment date as determined by the
Board or the surrender of vested Options owned by the Participant). No
shares of Common Stock shall be issued until payment therefor, as provided
herein, has been made or provided for.
(e) Form, Modification, Extension and Renewal of Options.
Subject to the terms and conditions and within the limitations of the Plan,
an Option shall be evidenced by such form of Stock Option agreement as is
approved by the Board, and the Board may modify, extend or renew
outstanding Options granted under the Plan, or accept the surrender of
outstanding Options (up to the extent not theretofore exercised) and
authorize the granting of new Options in substitution therefor (to the
extent not theretofore exercised).
(f) Other Terms and Conditions. Options may contain such other
provisions, which shall not be inconsistent with any of the foregoing terms
of the Plan, as the Board shall deem appropriate.
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ARTICLE VII.
STOCK APPRECIATION RIGHTS
7.1. Stock Appreciation Rights. The Board may, in its sole
discretion, grant Stock Appreciation Rights to any Independent Director,
Non-Employee Director or Manager.
7.2. Tandem Stock Appreciation Rights. A Tandem Stock Appreciation
Right may be granted in conjunction with all or part of any Stock Option (a
"Reference Stock Option") granted under Article VI of the Plan either at or
after the time of the grant of such Reference Stock Option.
7.3. Terms and Conditions of Tandem Stock Appreciation Rights. Tandem
Stock Appreciation Rights shall be subject to such terms and conditions, not
inconsistent with the provisions of the Plan, as shall be determined from time
to time by the Board, including Article X and Article XI and the following:
(a) Term. A Tandem Stock Appreciation Right or applicable
portion thereof granted with respect to a Reference Stock Option shall
terminate and no longer be exercisable upon the termination or exercise of
the Reference Stock Option, except that, unless otherwise determined by the
Board, in its sole discretion, at the time of grant, a Tandem Stock
Appreciation Right granted with respect to less than the full number of
shares covered by the Reference Stock Option shall not be reduced until and
then only to the extent the exercise or termination of the Reference Stock
Option causes the number of shares covered by the Tandem Stock Appreciation
Right to exceed the number of shares remaining available and unexercised
under the Reference Stock Option.
(b) Exercisability. Tandem Stock Appreciation Rights shall be
exercisable only at such time or times and to the extent that the Reference
Stock Options to which they relate shall be exercisable in accordance with
the provisions of Article VI and this Article VII.
(c) Method of Exercise. A Tandem Stock Appreciation Right may
be exercised by an optionee by surrendering the applicable portion of the
Reference Stock Option. Upon such exercise and surrender, the Participant
shall be entitled to receive an amount determined in the manner prescribed
in this Section 7.3 and the Reference Stock Option or part thereof to which
such Stock Appreciation Right is related shall be deemed to have been
exercised for the purpose of the limitation set forth in Article IV of the
Plan on the number of shares of Common Stock to be issued under the Plan.
The Stock Options which have been so surrendered, in whole or in part,
shall no longer be exercisable to the extent the related Tandem Stock
Appreciation Rights have been exercised.
(d) Payment. Upon the exercise of a Tandem Stock Appreciation
Right a Participant shall be entitled to receive an amount in cash and/or
Common Stock (as
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chosen by the Board in its sole discretion) equal in value to the excess of
the Fair Market Value of one share of Common Stock over the exercise price
per share specified in the Reference Stock Option multiplied by the number
of shares in respect of which the Tandem Stock Appreciation Right shall
have been exercised, with the Board having the right to determine the form
of payment.
7.4. Non-Tandem Stock Appreciation Rights. Non-Tandem Stock
Appreciation Rights may also be granted without reference to any Stock Options
granted under Article VI of the Plan.
7.5. Terms and Conditions of Non-Tandem Stock Appreciation
Rights. Non-Tandem Stock Appreciation Rights shall be subject to such terms and
conditions, not inconsistent with the provisions of the Plan, as shall be
determined from time to time by the Board, including Article X and Article XI
and the following:
(a) Term. The term of each Non-Tandem Stock Appreciation Right
shall be fixed by the Board, but shall not be greater than ten (10) years
after the date the right is granted.
(b) Exercisability. Non-Tandem Stock Appreciation Rights shall
be exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Board at grant. If the Board
provides, in its discretion, that any such right is exercisable subject to
certain limitations (including, without limitation, that it is exercisable
only in installments or within certain time periods), the Board may waive
such limitation on the exercisability at any time at or after grant in
whole or in part (including, without limitation, that the Board may waive
the installment exercise provisions or accelerate the time at which rights
may be exercised), based on such factors, if any, as the Board shall
determine, in its sole discretion.
(c) Method of Exercise. Subject to whatever installment
exercise and waiting period provisions apply under subsection (b) above,
Non-Tandem Stock Appreciation Rights may be exercised in whole or in part
at any time during its term, by giving written notice of exercise to the
Company specifying the number of Non-Tandem Stock Appreciation Rights to be
exercised.
(d) Payment. Upon the exercise of a Non-Tandem Stock
Appreciation Right a Participant shall be entitled to receive, for each
right exercised, an amount in cash and/or Common Stock (as chosen by the
Board in its sole discretion) equal in value to the excess of the Fair
Market Value of one share of Common Stock on the date the right is
exercised over the Fair Market Value of one share of Common Stock on the
date the right was awarded to the Participant.
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ARTICLE VIII.
RESTRICTED STOCK
8.1. Awards of Restricted Stock. The Board shall have the authority
to grant shares of Restricted Stock to any Independent Director, Non-Employee
Director or Manager which may be issued either alone or in addition to other
Awards granted under the Plan. The Board shall, subject to the provisions of
Article V and Section 8.4 below, determine the eligible Independent Directors,
Non-Employee Directors and Managers to whom, and the time or times at which,
grants of Restricted Stock will be made, the number of shares to be awarded, the
price (if any) to be paid by the recipient (subject to Section 8.2), the time or
times within which such Awards may be subject to forfeiture, the vesting
schedule and rights to acceleration thereof, and all other terms and conditions
of the Awards. The Board may condition the grant of Restricted Stock upon the
attainment of specified performance goals or such other factors as the Board may
determine, in its sole discretion.
8.2. Awards and Certificates. The prospective Participant
selected to receive a Restricted Stock Award shall not have any rights with
respect to such Award, unless and until such Participant has delivered a fully
executed copy of the agreement evidencing the Award to the Company and has
otherwise complied with the applicable terms and conditions of such Award.
Further, such Award shall be subject to the following conditions:
(a) Purchase Price. The purchase price of Restricted Stock
shall be fixed by the Board. Subject to Section 4.3, the purchase price for
shares of Restricted Stock may be zero to the extent permitted by
applicable law, and, to the extent not so permitted, such purchase price
may not be less than par value.
(b) Acceptance. Awards of Restricted Stock must be accepted
within a period of sixty (60) days (or such shorter period as the Board may
specify at grant) after the Award date, by executing a Restricted Stock
Award agreement and by paying whatever price (if any) the Board has
designated thereunder.
(c) Legend. Each Participant receiving a Restricted Stock Award
shall be issued a stock certificate in respect of such shares of Restricted
Stock. Such certificate shall be registered in the name of such
Participant, and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Award, substantially in the
following form:
"The anticipation, alienation, attachment, sale, transfer, assignment,
pledge, encumbrance or charge of the shares of stock represented hereby are
subject to the terms and conditions (including forfeiture) of the Wilshire
Real Estate Investment Trust Inc. 1998 Stock Option Plan and an Agreement
entered into between the registered owner and the Company dated
___________________________. Copies of such Plan and Agreement are on file
at the principal office of the Company."
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(d) Custody. The Board shall require that the stock
certificates evidencing such shares be held in custody by the Company until
the restrictions thereon shall have lapsed, and that, as a condition of any
Restricted Stock Award, the Participant shall have delivered a duly signed
stock power, endorsed in blank, relating to the Common Stock covered by
such Award.
8.3. Restrictions and Conditions on Restricted Stock Awards. The
shares of Restricted Stock awarded pursuant to the Plan shall be subject to
Article XII and the following restrictions and conditions:
(a) Restriction Period; Vesting and Acceleration of Vesting.
The Participant shall not be permitted to Transfer shares of Restricted
Stock awarded under the Plan during a period set by the Board commencing
with the date of such Award (the "Restriction Period"), as set forth in the
Award agreement and such Award agreement shall set forth a vesting schedule
and any events which would accelerate vesting of the shares of Restricted
Stock. Within these limits, based on service, performance and/or such other
factors or criteria as the Board may determine in its sole discretion, the
Board may provide for the lapse of such restrictions in installments in
whole or in part, or may accelerate the vesting of all or any part of any
Restricted Stock Award and/or waive the deferral limitations for all or any
part of such Award.
(b) Rights as Stockholder. Except as provided in this
subsection (b) and subsection (a) above, the Participant shall have, with
respect to the shares of Restricted Stock, all of the rights of a holder of
shares of Common Stock of the Company including, without limitation, the
right to receive any dividends and the right to vote or tender such shares.
The Board, in its sole discretion, as determined at the time of Award, may
permit or require the payment of dividends to be deferred.
(c) Lapse of Restrictions. If and when the Restriction Period
expires without a prior forfeiture of the Restricted Stock subject to such
Restriction Period, the certificates for such shares shall be delivered to
the Participant. All legends shall be removed from said certificates at the
time of delivery to the Participant.
8.4. Termination of Directorship or Termination as a Manager. Subject
to the applicable provisions of the Award agreement and the Plan, upon a
Participant's Termination of Directorship or Termination as a Manger, as
applicable, for any reason during the relevant Restriction Period, all
Restricted Stock still subject to restriction will vest or be forfeited in
accordance with the terms and conditions established by the Board at grant or
thereafter.
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ARTICLE IX.
INDEPENDENT DIRECTOR AND NON-EMPLOYEE DIRECTOR STOCK OPTIONS
9.1. Options. This Article IX shall apply only to Stock Options
granted to Independent Directors and Non-Employee Directors pursuant to this
Article IX.
9.2. Non-Qualified Stock Options. Stock Options granted hereunder shall
be non- qualified stock options.
9.3. Awards. Without further action by the Board or the stockholders of
the Company, each Independent Director or Non-Employee Director shall, subject
to the terms of the Plan, be granted:
(a) Stock Options to purchase 1,500 shares of Common Stock on
the last trading date of each calendar quarter of the Company.
(b) Stock Options to purchase 5,000 shares of Common Stock on:
(i) the date on which the offering price in connection with the initial
public offering of the Common Stock is established (the "IPO Price"); or
(ii) if later, the date on which the Independent Director or Non-Employee
Director commences service as an Independent Director or Non- Employee
Director.
9.4. Terms of Options. Options granted under this Article shall be
subject to the following terms and conditions and shall be in such form and
contain such additional terms and conditions, not inconsistent with terms of the
Plan, as the Board shall deem desirable:
(a) Exercise Price. The exercise price per share of Common
Stock subject to an Option granted pursuant to Section 9.3(a) shall be
equal to one hundred ten percent (110%) of the Fair Market Value of the
Common Stock at the time of grant. The exercise price per share of Common
Stock subject to an Option granted pursuant to Section 9.3(b)(i) shall be
equal to the IPO Price. The exercise price per share of Common Stock
subject to an Option granted pursuant to Section 9.3(b)(ii) shall be equal
to the Fair Market Value at the time of grant.
(b) Exercisability. Except as otherwise provided herein,
one-third (1/3) of the Stock Options granted pursuant to Section 9.3(a)
shall vest and become exercisable on each anniversary of the date of grant,
provided that the Participant has not incurred a Termination of
Directorship prior to the applicable dates. Stock Options granted pursuant
to Section 9.3(b) shall be fully vested and exercisable at the time of
grant. Notwithstanding the foregoing, Options granted pursuant to this
Article IX shall fully vest and become exercisable upon the occurrence of a
Change in Control.
(c) Method of Exercise. Subject to whatever installment
exercise and waiting period provisions apply under Article IX, Stock
Options may be exercised in whole or in
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part at any time during the Option term, by giving written notice of
exercise to the Company specifying the number of shares to be purchased,
accompanied by payment in full of the exercise price. Common Stock
purchased pursuant to the exercise of a Stock Option shall be paid for at
the time of exercise in cash or by check, bank draft or money order payable
to the order of Company or by delivery of Common Stock owned by the
Participant for a period of at least six (6) months (and for which the
Participant has good title free and clear of any liens and encumbrances) or
by such other method approved by the Board. No shares of Common Stock shall
be issued until payment therefor, as provided herein, has been made or
provided for.
(d) Term. Except as otherwise provided herein, if not
previously exercised each Option shall expire upon the tenth anniversary of
the date of the grant thereof.
(e) Termination of Directorship. The following rules apply with
regard to Stock Options granted under this Article IX upon the Termination
of Directorship of a Participant:
(i) Termination by Reason of Death or Disability. If a
Participant's Termination of Directorship is by reason or death or
Disability, any Stock Option held by such Participant may be
exercised, to the extent exercisable at the Participant's
Termination of Directorship, by the Participant or the legal
representative of the estate at any time within a period of two (2)
years from the date of such Termination of Directorship, but in no
event beyond the expiration of the stated term of such Stock Option.
(ii) Otherwise Ceasing to be an Independent Director or
Non- Employee Director other than for Cause. Upon the Termination of
Directorship, on account of resignation, failure to stand for
reelection or failure to be reelected or otherwise other than as set
forth in (i) above or (iii) below, all outstanding Stock Options
then exercisable and not exercised by the Participant prior to
such Termination of Directorship shall remain exercisable, to the
extent exercisable at the Termination of Directorship, at any time
within a period of one (1) year from the date of such Termination of
Directorship, at any time within a period of one (1) year from the
date of such Termination of Directorship, but in no event beyond the
expiration of the stated term of such Stock Option.
(iii) Cause. Upon removal, failure to stand for reelection
or failure to be renominated for Cause, or if the Company obtains or
discovers information after Termination of Directorship that such
Participant had engaged in conduct that would have justified a
removal for Cause during such directorship, all outstanding Stock
Options of such Participant shall immediately terminate and shall be
null and void.
(iv) Cancellation of Stock Options. No Stock Options that
were not exercisable during the period such person serves as an
Independent Director or
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Non-Employee Director shall thereafter become exercisable upon a
Termination of Directorship for any reason or no reason whatsoever,
and such Stock Options shall terminate and become null and void upon
a Termination of Directorship.
ARTICLE X.
NON-TRANSFERABILITY
10.1. Non-Transferability. Except as provided in the last sentence of
this Section 10.1, no Award shall be Transferred by the Participant otherwise
than by will or by the laws of descent and distribution. All Stock Options and
Stock Appreciation Rights shall be exercisable, during the Participant's
lifetime, only by the Participant. Shares of Restricted Stock under Article VIII
may not be Transferred prior to the date on which such shares are issued, or, if
later, the date on which any applicable restriction, performance or deferral
period lapses. No Award shall, except as otherwise specifically provided by law
or herein, be Transferred in any manner, and any attempt to Transfer any such
Award shall be void, and no such Award shall in any manner be used for the
payment of, subject to, or otherwise encumbered by or hypothecated for the
debts, contracts, liabilities, engagements or torts of any person who shall be
entitled to such Award, nor shall it be subject to attachment or legal process
for or against such person. Notwithstanding the foregoing, the Board may
determine at the time of grant or thereafter, that a Stock Option (other than a
Stock Option granted pursuant to Article IX) that is otherwise not transferable
pursuant to this Article X is transferable in whole or part and in such
circumstances, and under such conditions, as specified by the Board.
ARTICLE XI.
TERMINATION PROVISIONS
11.1. Termination of Directorship. The following rules apply with
regard to Stock Options granted under Article VI and Article IX and Stock
Appreciation Rights granted under Article VII upon the Termination of
Directorship of a Participant:
(a) Termination by Reason of Death or Disability. If a
Participant's Termination of Directorship is by reason of death or
Disability, any Stock Option or Stock Appreciation Right held by such
Participant, unless otherwise determined by the Board at grant, or if no
rights of the Participant or his estate are reduced, thereafter, may be
exercised, to the extent exercisable at the Participant's Termination of
Directorship, by the Participant or the legal representative of the estate
at any time within a period of two (2) years from the date of such
Termination of Directorship, but in no event beyond the expiration of the
stated term of such Stock Option or Stock Appreciation Right.
(b) Otherwise Ceasing to be an Independent Director or
Non-Employee Director other than for Cause. Upon the Termination of
Directorship, on account of
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resignation, failure to stand for reelection or failure to be reelected or
otherwise other than as set forth in (a) above or (c) below, all
outstanding Stock Options and Stock Appreciation Rights then exercisable
and not exercised by the Participant prior to such Termination of
Directorship, unless otherwise determined by the Board at grant, or if no
rights of the Participant or his estate are reduced, thereafter, shall
remain exercisable, to the extent exercisable at the Termination of
Directorship, at any time within a period of one (1) year from the date of
such Termination of Directorship, but in no event beyond the expiration of
the stated term of such Stock Option or Stock Appreciation Right.
(c) Cause. Upon removal, failure to stand for reelection or
failure to be renominated for Cause, or if the Company obtains or discovers
information after Termination of Directorship that such Participant had
engaged in conduct that would have justified a removal for Cause during
such directorship, all outstanding Stock Options and Stock Appreciation
Rights of such Participant, unless otherwise determined by the Board at
grant, or if no rights of the Participant are reduced, thereafter, shall
immediately terminate and shall be null and void.
(d) Cancellation of Stock Options. No Stock Options or Stock
Appreciation Rights that were not exercisable during the period such person
serves as an Independent Director or Non-Employee Director, unless
otherwise determined by the Board at grant, or if no rights of the
Participant are reduced, thereafter, shall become exercisable upon a
Termination of Directorship for any reason or no reason whatsoever, and
such Stock Options and Stock Appreciation Rights shall terminate and become
null and void upon a Termination of Directorship.
11.2. Termination as a Manager. Subject to the applicable provisions
of the Award agreement and the Plan, upon a Participant's Termination as a
Manager, for any reason, all Stock Options and Stock Appreciation Rights will
vest or be forfeited in accordance with the terms and conditions established by
the Board at grant or thereafter.
ARTICLE XII.
CHANGE IN CONTROL
12.1. Benefits. In the event of a Change in Control of the Company (as
defined below), except as otherwise provided by the Board upon the grant of an
Award (other than an Award granted pursuant to Article IX hereof), or, if no
rights of the Participant are reduced, thereafter, the Participant shall be
entitled to the following benefits:
(a) Subject to paragraph (c) below with regard to Options
granted pursuant to Article VI, all outstanding Stock Options and Stock
Appreciation Rights granted prior to the Change in Control shall be fully
vested and immediately exercisable in their entirety. The Board, in its
sole discretion, may provide for the purchase of any such Stock Options and
Stock Appreciation Rights by the Company for an amount of cash equal to the
excess
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of the Change in Control Price (as defined below) of the shares of Common
Stock covered by such Stock Options and Stock Appreciation Rights, over the
aggregate exercise price of such Stock Options and Stock Appreciation
Rights. For purposes of this Section 12.1, Change in Control Price shall
mean the higher of (i) the highest price per share of Common Stock paid in
any transaction related to a Change in Control of the Company, or (ii) the
highest Fair Market Value per share of Common Stock at any time during the
sixty (60) day period preceding a Change in Control.
(b) The restrictions to which any shares of Restricted Stock of
such Participant granted prior to the Change in Control are subject shall
lapse as if the applicable Restriction Period had ended upon such Change in
Control.
12.2. Change in Control. For purposes of the Plan, a "Change in
Control" shall be deemed to have occurred:
(a) upon any person (as defined in Section 3(a)(9) of the
Exchange Act and as used in Sections 13(d) and 14(d) thereof) excluding the
Company or any employee benefit plan sponsored or maintained by the Company
(including any trustee of any such plan acting in his capacity as trustee),
becoming the beneficial owner (as defined in Rule 13(d)-3 under the
Exchange Act), directly or indirectly, of securities of the Company having
at least twenty-five percent (25%) of the total number of votes that may be
cast for the election of directors of the Company;
(b) during any period of two (2) consecutive years, individuals
who at the beginning of such period constitute the Board, and any new
director (other than a director designated by a person who has entered into
an agreement with the Company to effect a transaction described in
paragraph (a), (c), or (d) of this section) or a director whose initial
assumption of office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a person other than
the Board whose election by the Board or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors at the
beginning of the two (2) year period or whose election or nomination for
election was previously so approved, cease for any reason to constitute at
least a majority of the Board;
(c) upon the merger or consolidation of the Company with any
other corporation, other than a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more than
fifty percent (50%) of the combined voting power of the voting securities
of the Company or such surviving entity outstanding immediately after such
merger or consolidation, provided, however, that a merger or consolidation
effected to implement a recapitalization of the Company (or similar
transaction) in which no person acquires more than fifty percent (50%) of
the combined voting power of the
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Company's then outstanding securities shall not constitute a Change in
Control of the Company; or
(d) upon the stockholder's of the Company approval of a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets other than the sale of all or substantially all of the assets of the
Company to a person or persons who beneficially own, directly or
indirectly, at least fifty percent (50%) or more of the combined voting
power of the outstanding voting securities of the Company at the time of
the sale.
Notwithstanding anything herein to the contrary, the initial public offering of
the Common Stock will not constitute a Change in Control.
ARTICLE XIII.
TERMINATION OR AMENDMENT OF PLAN
13.1. Termination or Amendment. Notwithstanding any other provision of the
Plan, the Board may at any time, and from time to time, amend, in whole or in
part, any or all of the provisions of the Plan (including any amendment deemed
necessary to ensure that the Company may comply with any regulatory requirement
referred to in this Article XIII), or suspend or terminate it entirely,
retroactively or otherwise; provided, however, that, unless otherwise required
by law or specifically provided herein, the rights of a Participant with respect
to Awards granted prior to such amendment, suspension or termination, may not be
impaired without the consent of such Participant and, provided further, that the
Plan may not be amended without the approval of the stockholders of the Company
in accordance with the laws of the State of Maryland and the applicable
provisions of Rule 16b-3, to: (i) increase the aggregate number of shares of
Common Stock that may be issued under the Plan (subject to Section 4.2); (ii)
decrease the minimum Option price of any Award; (iii) change the class of
persons eligible to receive Awards under the Plan; (iv) modify the period within
which Awards may be granted; (v) modify the period within which Awards may be
exercised; (vi) modify the terms upon which Awards may be exercised; (vii)
increase the material benefits accruing to the Participants under the Plan; or
(viii) make any other amendment that would require stockholder approval under
the rules of any exchange or system on which the Company's securities are then
listed or traded.
Except with regard to Awards under Article IX, the Board may amend the
terms of any Awards theretofore granted, prospectively or retroactively, but,
subject to Article IV above or as otherwise specifically provided herein, no
such amendment or other action by the Board shall impair the rights of any
Option holder without the Option holder's consent.
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ARTICLE XIV.
UNFUNDED PLAN
14.1. Unfunded Status of Plan. The Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments as to which a Participant has a fixed and vested interest but which are
not yet made to a Participant by the Company, nothing contained herein shall
give any such Participant any rights that are greater than those of a general
creditor of the Company.
ARTICLE XV.
GENERAL PROVISIONS
15.1. Legend. The Board may require each person receiving shares of
Common Stock pursuant to the exercise of an Award under the Plan to represent to
and agree with the Company in writing that the Participant is acquiring the
shares of Common Stock without a view to distribution thereof. In addition to
any legend required by the Plan, the certificates for such shares of Common
Stock may include any legend which the Board deems appropriate to reflect any
restrictions on Transfer.
All certificates for shares of Common Stock delivered under the Plan shall
be subject to such stock transfer orders and other restrictions as the Board may
deem advisable under the rules, regulations and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Common
Stock is then listed or any national securities association system upon whose
system the Common Stock is then quoted, any applicable Federal or state
securities law, and any applicable corporate law, and the Board may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.
15.2. Other Plans. Nothing contained in the Plan shall prevent the
Board from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases.
15.3. No Right to Serve as an Independent Director, Non-Employee
Director or Manager. Neither the Plan nor the grant or exercise of any Awards
hereunder shall impose any obligations on the Company to retain any Participant
as an Independent Director, Non-Employee Director or as a Manager nor shall it
impose on the part of any Participant any obligation to continue to serve as an
Independent Director, Non-Employee Director or as a Manager of the Company.
15.4. Withholding of Taxes. The Company shall have the right to deduct
from any payment to be made to a Participant, or to otherwise require, prior to
the issuance or delivery of
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any shares of Common Stock or the payment of any cash hereunder, payment by the
Participant of, any Federal, state or local taxes required by law to be
withheld.
The Board may permit any such withholding obligation with regard to any
Participant to be satisfied by reducing the number of shares of Common Stock
otherwise deliverable or by delivering shares of Common Stock already owned. Any
fraction of a share of Common Stock required to satisfy such tax obligations
shall be disregarded and the amount due shall be paid instead in cash by the
Participant.
15.5. Listing and Other Conditions.
(a) Unless otherwise determined by the Board, as long as the
Common Stock is listed on a national securities exchange or system
sponsored by a national securities association, the issue of any shares of
Common Stock pursuant to the exercise of an Award shall be conditioned upon
such shares being listed on such exchange or system. Notwithstanding the
foregoing, the grant of an Award hereunder is not intended to be
conditional and the Company shall have no obligation to issue such shares
unless and until such shares are so listed; provided, however, that any
delay in the issuance of such shares shall be based solely on a reasonable
business decision and the right to exercise any Award with respect to such
shares shall be suspended until such listing has been effected.
(b) If at any time counsel to the Company shall be of the
opinion that any sale or delivery of shares of Common Stock pursuant to the
exercise of an Award is or may in the circumstances be unlawful or result
in the imposition of excise taxes on the Company under the statutes, rules
or regulations of any applicable jurisdiction, the Company shall have no
obligation to make such sale or delivery, or to make any application or to
effect or to maintain any qualification or registration under the
Securities Act of 1933, as amended, or otherwise with respect to shares of
Common Stock or Awards, and the right to exercise any Option shall be
suspended until, in the opinion of said counsel, such sale or delivery
shall be lawful or will not result in the imposition of excise taxes on the
Company.
(c) Upon termination of any period of suspension under this
Section 15.5, any Award affected by such suspension which shall not then
have expired or terminated shall be reinstated as to all shares available
before such suspension and as to shares which would otherwise have become
available during the period of such suspension, but no such suspension
shall extend the term of any Awards.
(d) A Participant shall be required to supply the
Company with any certificates, representations and information that the
Company requests and otherwise cooperate with the Company in obtaining
any listing, registration, qualification, exemption, consent or
approval the Company deems necessary or appropriate.
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(e) If any sale or delivery of shares of Common Stock pursuant
to an Award is or may cause the Company to not qualify as a real estate
investment trust within the meaning of Sections 856 through 860 of the
Code, the Company shall have no obligation to make such sale or delivery
until such sale or delivery will no longer cause such disqualification.
15.6. Governing Law. The Plan shall be governed and construed in
accordance with the laws of the State of Maryland (regardless of the law that
might otherwise govern under applicable Maryland principles of conflict of
laws).
15.7. Construction. Wherever any words are used in the Plan in the
masculine gender they shall be construed as though they were also used in the
feminine gender in all cases where they would so apply, and wherever any words
are used herein in the singular form they shall be construed as though they were
also used in the plural form in all cases where they would so apply.
To the extent applicable, the Plan shall be limited, construed and
interpreted in a manner so as to comply with the applicable requirements of Rule
16b-3; however, noncompliance with Rule 16b-3 shall have no impact on the
effectiveness of an Award under the Plan.
15.8. Other Benefits. No Award granted or exercised under the Plan
shall be deemed compensation for purposes of computing benefits under any
retirement plan of the Company nor affect any benefits under any other benefit
plan now or subsequently in effect under which the availability or amount of
benefits is related to the level of compensation.
15.9. Costs. The Company shall bear all expenses included in
administering the Plan, including expenses of issuing Common Stock pursuant to
the exercise of any Awards hereunder.
15.10. No Right to Same Benefits. The provisions and terms of Awards need
not be the same with respect to each Participant, and the Awards granted to
individual Participants need not be the same in subsequent years.
15.11. Death/Disability. The Board may in its discretion require the
transferee of a Participant's Awards to supply it with written notice of the
Participant's death or Disability and to supply it with a copy of the will (in
the case of the Participant's death) or such other evidence as the Board deems
necessary to establish the validity of the Transfer of an Award. The Board may
also require the agreement of the transferee to be bound by all of the terms and
conditions of the Plan.
15.12. Severability of Provisions. If any provision of the Plan shall be
held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof, and the Plan shall be construed and enforced
as if such provisions had not been included.
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15.13. Headings and Captions. The headings and captions herein are provided
for reference and convenience only, shall not be considered part of the Plan,
and shall not be employed in the construction of the Plan.
ARTICLE XVI.
EFFECTIVE DATE OF PLAN
The Plan has been adopted by the Board effective as of ____________,
subject to and conditioned upon the approval of the Plan by the stockholders of
the Company in accordance with the laws of the State of Maryland and the
requirements of any applicable national securities exchange or automated
quotation system.
ARTICLE XVII.
TERM OF PLAN
No Award shall be granted pursuant to the Plan on or after the tenth
anniversary of the earlier of the Effective Date or the date of stockholder
approval, but such Awards granted prior to such date may extend beyond that
date.
ARTICLE XVIII.
NAME OF PLAN
The Plan shall be known as the "Wilshire Real Estate Investment Trust Inc.
1998 Stock Option Plan."
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