THE TAUBMAN COMPANY
LONG-TERM PERFORMANCE
COMPENSATION PLAN
(AS AMENDED AND RESTATED
EFFECTIVE JANUARY 1, 2000)
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THE TAUBMAN COMPANY
LONG-TERM PERFORMANCE
COMPENSATION PLAN
(AS AMENDED AND RESTATED
EFFECTIVE JANUARY 1, 2000)
TABLE OF CONTENTS
Page
ARTICLE 1 PURPOSE OF THE PLAN; AMENDMENT AND
RESTATEMENT; TERM........................................ 1
1.1 Purpose of the Plan........................................ 1
1.2 Amendment and Restatement and Term......................... 1
ARTICLE 2 DEFINITIONS................................................ 1
ARTICLE 3 ADMINISTRATION............................................. 6
3.1 Administration............................................. 6
3.2 Binding Effect of Decisions................................ 6
3.3 Expenses of Administration................................. 6
3.4 Indemnification............................................ 6
ARTICLE 4 PARTICIPATION AND GRANTS; CONVERSION OF
NOTIONAL SHARES TO CASH AWARDS............................. 6
4.1 Participation.............................................. 6
4.2 Power to Grant Cash Awards................................. 7
4.3 Conversion of Notional Share Awards to Cash Awards......... 7
4.4 No Dividend Equivalents on Cash Awards..................... 7
4.5 Participant to Have No Rights as a Shareholder
in TCO or a Partner in TRG................................. 7
ARTICLE 5 ESTABLISHMENT, MAINTENANCE AND VESTING
OF SUB ACCOUNTS........................................... 7
5.1 Agreements Evidencing Cash Awards.......................... 7
5.2 Plan Provisions Control Cash Award Terms................... 7
5.3 Establishment of Sub Accounts.............................. 8
5.4 Vesting of Each Sub Account................................ 8
5.5 Death, Disability or Retirement During the Vesting Period.. 8
5.6 Acceleration of Vesting.................................... 9
5.7 Forfeiture of Sub Accounts................................. 9
5.8 Statement of Accounts...................................... 10
ARTICLE 6 CALCULATION, PAYMENT AND WITHDRAWAL OF SUB ACCOUNTS........ 10
6.1 1996 and 1997 Notional Unit Awards......................... 10
6.2 1998 and 1999 Notional Share Awards Which
Are Not Converted to Cash Awards........................... 10
6.3 Cash Awards................................................ 10
6.4 Crediting of Interest During Deferral Period............... 11
6.5 Time and Manner of Payment................................. 11
6.6 Deferral of Settlement Date................................ 12
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6.7 Early Termination of Deferral Period....................... 12
6.8 Taxes...................................................... 12
6.9 Dealings with Beneficiaries or Representatives
of a Participant.......................................... 13
ARTICLE 7 AMENDMENT AND TERMINATION OF THE PLAN...................... 13
7.1 Amendment of the Plan...................................... 13
7.2 Termination of the Plan.................................... 13
7.3 Dissolution of TRG......................................... 13
7.4 Termination of Management Contract/
Change of Control Event................................... 13
ARTICLE 8 BENEFICIARY DESIGNATION.................................... 14
8.1 Beneficiary Designation.................................... 14
8.2 In the Event of No Valid Designation....................... 14
ARTICLE 9 GENERAL PROVISIONS......................................... 14
9.1 Compliance with Applicable Laws and Regulations............ 14
9.2 Status of Each Participant is that of an Unsecured
General Creditor.......................................... 14
9.3 Nonassignability........................................... 15
9.4 No Right to Continued Employment........................... 15
9.5 Inspection of Records...................................... 15
9.6 Word Meanings.............................................. 15
9.7 Section Titles............................................. 15
9.8 Severability............................................... 15
9.9 Strict Construction........................................ 15
9.10 Choice of Law.............................................. 15
9.11 Execution.................................................. 16
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THE TAUBMAN COMPANY
LONG-TERM PERFORMANCE
COMPENSATION PLAN
(As Amended and Restated
Effective January 1, 2000)
Article 1
Purpose of the Plan; Amendment and Restatement; Term.
1.1 Purpose of the Plan. The Taubman Company Long-Term Performance
Compensation Plan, as the same may be amended from time to time (the "Plan"), is
intended to provide deferred compensation to certain key employees of The
Taubman Company Limited Partnership, a Delaware limited partnership (the
"Company"), to provide incentives to employees of the Company to remain in the
employ of the Company and to attract new employees with outstanding
qualifications to serve the Company. The Plan has been amended from time to time
including an amendment and restatement of the Plan effective January 1, 1999
("Prior Plan").
1.2 Amendment and Restatement and Term. The Plan is hereby amended and
restated effective as of January 1, 2000 to change the method of valuing awards
granted under the Plan from that based upon the value of shares of TCO Common
Stock to cash awards which may appreciate based on the compound annual growth
rate of TCO's per share FFO over the applicable vesting period. The Plan will
remain in effect until terminated or abandoned by action of the Compensation
Committee.
Article 2
Definitions
In the Plan, whenever the context so indicates, the singular or plural
number, and the masculine, feminine or neuter gender shall each be deemed to
include the other, the terms "he," "his," and "him" shall refer to a
Participant, and the capitalized terms shall have the following meanings:
2.1 "Award" means a Notional Share Award granted under the Prior Plan
or a Cash Award granted pursuant to the terms of the Plan.
2.2 "Beneficiary" means (i) an individual, trust, estate, or family
trust who or which, by will, trust document or by operation of the laws of
descent and distribution, succeeds to the rights and obligations of a
Participant under the Plan upon the Participant's death; or (ii) an individual
who, as a result of designation by a Participant in a Beneficiary Designation,
or as otherwise provided in Article 8, succeeds to the rights and obligations of
such Participant under the Plan upon such Participant's death.
2.3 "Beneficiary Designation" is defined in Section 8.1 hereof.
2.4 "Board of Directors" means the Board of Directors of TCO, including
any Committee or Committees of the Board established pursuant to the By-Laws of
TCO.
2.5 "Business Day" means any Day on which the New York Stock Exchange
is open for trading.
2.6 "Cash Award" means an Award granted to a Participant pursuant to
Article 5 of the Plan.
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2.7 "Change of Control Event" means:
(a) Any removal or election of a member
of the Board of Directors, which removal or election was not approved
by a vote of at least 70% of the directors comprising the Board of
Directors on the date immediately preceding the removal or election, or
(b) The acquisition by any person or group
or persons (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") other
than A. Alfred Taubman or any of his immediate family members or lineal
descendants, any heir of the foregoing, any trust for the benefit
of any of the foregoing, any private charitable foundation or any
partnership, limited liability company or corporation owned or
controlled by some or all of the foregoing, of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 40% or more of the outstanding voting capital stock of TCO.
2.8 "Code" means the Internal Revenue Code of 1986, as amended from
time to time (or any corresponding provisions of succeeding law).
2.9 "Common Stock" means the common stock of TCO, par value $.01 per
share.
2.10 "Company" means The Taubman Company Limited Partnership, a
Delaware limited partnership, the present constituency of which is Taub-Co
Management, Inc., a Michigan corporation, and TRG, and any successor interest to
the business of the Company that has, by agreement, adopted the Plan.
2.11 "Compensation Committee" or "Committee" means the Compensation
Committee of the Board of Directors of TCO.
2.12 "Date of Grant" means, with respect to a Notional Share Award or a
Cash Award, January 1st of the year in which the Compensation Committee awards
such Notional Share Award or Cash Award pursuant to the Plan, unless the
Compensation Committee specifically provides otherwise.
2.13 "Day" means each calendar day, including Saturdays, Sundays, and
legal holidays; provided, however, that if the Day on which a period of time for
consent or approval or other action ends is not a Business Day, such period
shall end on the next Business Day.
2.14 "Deemed Dividend Date" means any date on which each Notional Share
Sub Account established pursuant to the Prior Plan is credited with a Dividend
Equivalent with respect to the aggregate number of Notional Shares then credited
to such Sub Account and shall coincide with the date(s) on which actual
dividends are made with respect to shares of Common Stock.
2.15 "Deferral Period" means, with respect to a Sub Account, the period
following the Vesting Date of a Sub Account, for which a Participant elects to
defer the Settlement Date pursuant to Section 6.6.
2.16 "Disability" or "Disabled" means, with respect to an Employee, a
physical or mental condition resulting from any medically determinable physical
or mental impairment that renders such Employee incapable of engaging in any
substantial gainful employment and that can be expected to result in death or
that has lasted or can be expected to last for a
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continuous period of not less than three hundred sixty-five (365) Days.
Notwithstanding the foregoing, an Employee shall not be deemed to be Disabled as
a result of any condition that:
(a) was contracted, suffered, or incurred while such
Employee was engaged in, or resulted from such Employee having engaged
in, a felonious activity;
(b) resulted from an intentionally self-inflicted
injury or an addiction to drugs, alcohol, or substances which are not
administered under the direction of a licensed physician as part of a
medical treatment plan; or
(c) resulted from service in the Armed Forces of the
United States for which such Employee received or is receiving a
disability benefit or pension from the United States, or from service
in the armed forces of any other country irrespective of any disability
benefit or pension.
The Disability of an Employee and the date upon
which an Employee ceases to be employed by reason of Disability shall be
determined by the Company, in accordance with uniform principles consistently
applied, upon the basis of such evidence as the Compensation Committee and the
Company deem necessary and desirable, and its good faith determination shall be
conclusive for all purposes of this Plan. The Compensation Committee or the
Company shall have the right to require an Employee to submit to an examination
by a physician or physicians and to submit to such reexaminations as the
Compensation Committee or the Company shall require in order to make a
determination concerning the Employee's physical or mental condition; provided,
however, that (i) an Employee may not be required to undergo a medical
examination more often than once each one hundred eighty (180) Days nor at any
time after the normal date of the Employee's Retirement, and (ii) the fees and
expenses of any such medical examination(s) shall be considered expenses of
administering the Plan. If any Employee engages in any occupation or employment
(except for rehabilitation as determined by the Compensation Committee, upon the
recommendation from the Company) for remuneration or profit, which activity
would be inconsistent with the finding of Disability, or if the Compensation
Committee, upon the recommendation from the Company, determines on the basis of
a medical examination that an Employee no longer has a Disability, or if an
Employee refuses to submit to any medical examination properly requested by the
Compensation Committee or the Company, then in any such event, the Employee
shall be deemed to have recovered from such Disability.
2.17 "Dividend Equivalent" is defined in Section 4.4 hereof.
2.18 "Effective Date" of the Plan, as amended and restated, means
January 1, 2000.
2.19 "Employee" means an individual who is and continues to be employed
by the Company or an affiliate of the Company. An Employee shall cease to be an
Employee upon the voluntary or involuntary termination of his employment with
the Company or an affiliate of the Company for any reason, including death,
Disability, Retirement, or with or without cause. Transfers of employment
between the Company and an affiliate of the Company, or between affiliates of
the Company, shall not affect an individual's status as an Employee for purposes
of the Plan and shall not be treated as a cessation of employment provided that
the cessation of employment with the Company or an affiliate of the Company is
immediately followed by employment with the Company or another affiliate of the
Company. Whether an authorized leave of absence, or an absence due to military
or government service, Disability, or any other reason, constitutes a cessation
of employment shall be determined by the Company.
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2.20 "Fair Market Value of the Common Stock" means the per share value
of the Common Stock on the applicable date, and is determined as follows:
(a) If the Common Stock is listed or admitted for
trading on any national securities exchange, the Fair Market Value of
the Common Stock is the closing price per share on such exchange on
such date (or, if listed on more than one exchange, the principal said
exchange).
(b) If the Common Stock is not traded on any national
securities exchange, but is quoted on the National Association of
Securities Dealers, Inc. Automated Quotation System (NASDAQ System) or
any similar system of automated dissemination of quotations of prices
in common use, the Fair Market Value of the Common Stock is the price
per share equal to the mean between the closing high bid and the
closing low bid on such system on such date.
(c) If neither paragraph (a) nor paragraph (b) of
this definition is applicable, the Fair Market Value of the Common
Stock is the fair market value per share, on the applicable date, as
determined by, or in accordance with a method or formula or process
established from time to time by, the Board of Directors (or by the
Compensation Committee if the Board of Directors so directs), in good
faith and in accordance with uniform principles consistently applied.
2.21 "FFO" means funds from operations, as publicly reported by TCO,
subject to reasonable adjustments such as changes in accounting policies and
extraordinary or non-recurring items. FFO will be calculated after the costs of
the Plan.
2.22 "FFO Per Share Growth Rate" means the compound annual growth rate
of TCO's per share FFO over the designated period of time, which except as
provided in Section 5.5 or Article 7, is the 3 year Vesting Period.
2.23 "LTPC Award" means the Cash Award granted to a Participant plus
the Premium, if any, credited to such Award pursuant to Article 6.
2.24 "Notional Share Award" means an award under the Prior Plan of a
Notional Share of Common Stock.
2.25 "Notional Share of Common Stock" or "Notional Share" means a
phantom share of Common Stock granted under the Prior Plan and shall not
represent any ownership interest in any actual shares of Common Stock.
2.26 "Participant" means an Employee who is designated by the
Compensation Committee to participate in this Plan and who has received an Award
pursuant to this Plan.
2.27 "Partnership Agreement" means The Second Amendment and Restatement
of Agreement of Limited Partnership of The Taubman Realty Group Limited
Partnership, as the same may be amended and/or supplemented.
2.28 "Payout Value" means, with respect to a Sub Account, the amount
credited to such Sub Account as of the Settlement Date of such Sub Account in
accordance with the provisions of Article 6. The Payout Value and the Vesting
Date Value for a Sub Account shall be the same if the Participant does not elect
to defer distribution of such Sub Account beyond the Vesting Date for such Sub
Account.
2.29 "Person" or "Persons" means an individual, a partnership (general
or limited), corporation, joint venture, business trust, cooperative,
association, or other form of business organization, whether or not regarded as
a legal entity under applicable law, a trust (inter
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vivos or testamentary), an estate of a deceased, insane, or incompetent person,
a quasi-governmental entity, a government or any agency, authority, political
subdivision, or other instrumentality thereof, or any other entity.
2.30 "Plan" means The Taubman Company Long-Term Performance
Compensation Plan as amended and restated effective January 1, 2000.
2.31 "Premium" means the amount added to a Participant's Cash Award if
the FFO Per Share Growth Rate over the Vesting Period equals or exceeds 10%.
2.32 "Prior Plan" means The Taubman Company Long-Term Performance
Compensation Plan effective January 1, 1996 and, as amended and restated
effective January 1, 1999.
2.33 "Retirement" means the termination of employment by an Employee
after the attainment of the age of sixty-two (62) years or upon such earlier
date as required by local law or as otherwise determined or approved by the
Chief Executive Officer of the Company.
2.34 "Settlement Date" means, with respect to a Sub Account, the date
on which the Award credited to such Sub Account becomes vested or, in the case
of an Award for which the Participant has elected to defer distribution, the
date on which the Deferral Period expires or is otherwise terminated under the
provisions of the Plan.
2.35 "Sub Account" means the account established for each Notional
Share Award granted under the Prior Plan or Cash Award granted under the Plan.
Each Sub Account will be utilized solely as a device for the measurement and
determination of the amount(s) to be paid to or for the benefit of the
Participant pursuant to this Plan, and will not under any circumstances
constitute or be treated as a trust fund of any kind. A separate Sub Account
will be established for each Award, which Sub Account will be maintained and
will vest and be paid out, or be terminated or forfeited in accordance with the
terms of the Plan.
2.36 "TCO" means Taubman Centers, Inc., a Michigan corporation.
2.37 "Termination for Cause" means termination of employment by reason
of a Participant's action or repeated acts, including without limitation, the
commission of a felony, fraud, or willful misconduct, which has resulted, or is
likely to result, in damage to the Company, an affiliate of the Company, or TRG,
as the Company may conclusively determine.
2.38 "TRG" means The Taubman Realty Group Limited Partnership a
Delaware limited partnership.
2.39 "Vesting Date" means, with respect to a Notional Share Award or a
Cash Award, the date that is the third anniversary of the Date of Grant of such
Award, except as otherwise provided in the Plan.
2.40 "Vesting Date Value" means the value of a Sub Account on the
Vesting Date for such Sub Account and is calculated in accordance with Section
6.1, 6.2 or 6.3.
2.41 "Vesting Period" means, with respect to an Award, the three-year
period following the Date of Grant of such Award.
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Article 3
Administration.
3.1 Administration. The Plan shall be administered by the Compensation
Committee in accordance with this Article 3. Except as otherwise provided in the
Partnership Agreement or this Plan, the Compensation Committee shall have the
sole discretionary authority (i) to select the Employees who are to be granted
Awards under the Plan, (ii) to determine the number of Cash Awards to be granted
to Employees and the manner of making or determining such grant, (iii) to
authorize the granting of Cash Awards, (iv) to interpret the Plan, (v) to
establish and modify administrative rules for the Plan, (vi) to impose such
conditions and restrictions on Awards as it determines appropriate, and (vii) to
take any other actions in connection with the Plan and the Awards and to make
all determinations under the Plan as it may deem necessary or advisable.
It is anticipated that the Compensation Committee will act upon a
recommendation from the Company in exercising the discretion granted to the
Compensation Committee under this Plan. Action taken or not taken by the Company
or the Compensation Committee on one or more occasions shall be without
obligation to take or not take such action on any other occasion(s).
The Compensation Committee may delegate to one or more Persons any of
its powers, hereinbefore or hereinafter, provided or conferred, or designate one
or more Persons to do or perform those matters to be done or performed by the
Compensation Committee, including administration of the Plan. Any Person or
Persons delegated or designated by the Compensation Committee shall be subject
to the same obligations and requirements imposed on the Compensation Committee
and its members under the Plan.
3.2 Binding Effect of Decisions. The decision or action of the Company
(including that of the Compensation Committee) in respect of any question
arising out of or in connection with the administration, interpretation and
application of this Plan and the rules and regulations promulgated hereunder
shall be final and conclusive and binding upon all Persons having any interest
in this Plan.
3.3 Expenses of Administration. The Company shall pay all costs and
expenses of administering the Plan.
3.4 Indemnification. The Board of Directors, the Compensation
Committee, members of the Board of Directors and the Compensation Committee, and
each Person or Persons designated or delegated by the Board of Directors or the
Compensation Committee, and the Company and each affiliate of the Company and
the officers or agents of the Company and each partner of the Company and of TRG
and the officers, directors, committee members and agents of each such partner
shall be entitled to indemnification and reimbursement from the Company and from
TRG for any action or any failure to act in connection with services performed
by or on behalf of the Compensation Committee or the Company to the fullest
extent provided or permitted by the Partnership Agreement, the partnership
agreement of the Company and by any insurance policy or other agreement intended
for the benefit of the Compensation Committee or an indemnified Person
hereunder, or by any applicable law.
Article 4
Participation and Grants; Conversion of Notional Shares to Cash Awards
4.1 Participation. All Employees shall be eligible to receive Cash
Awards under the Plan. The Participants shall be such Employees as the
Compensation Committee may select (who may include executive officers of the
Company). Participation under the Plan shall be based upon the past and/or
expected future contribution of such Employee to the Company.
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4.2 Power to Grant Cash Awards. The Compensation Committee may
determine the pool of Cash Awards to be granted under the Plan at such time or
times, and in such quantity and subject to such terms and conditions not
inconsistent with the terms of the Plan, as the Compensation Committee shall
determine. The Company shall then allocate Cash Awards in such amount and to
such Employees as the Company shall determine. In allocating Cash Awards to
Participants, the Company shall consider individual performance and such other
criteria as the Company deems relevant. Such allocation shall be subject to
confirmation by the Compensation Committee.
4.3 Conversion of Notional Share Awards to Cash Awards. Notional Share
Awards granted effective January 1, 1998 and January 1, 1999 (the "1998 and 1999
Notional Share Awards") will be converted into Cash Awards upon the Company's
receipt of a Participant's consent. The 1998 and 1999 Notional Share Awards will
be converted into Cash Awards by multiplying the total number of Notional Shares
granted in 1998 and 1999 (excluding any additions thereto by virtue of Dividend
Equivalents) by $13.75 per share. The converted Cash Awards will be valued at
the Vesting Date pursuant to Section 6.3 and distributed in accordance with the
provisions of Sections 6.5 and 6.6.
4.4 No Dividend Equivalents on Cash Awards. Notional Share Awards
converted into Cash Awards pursuant to Section 4.3 above and Cash Awards granted
on or after January 1, 2000 will not be credited with Dividend Equivalents.
However, Notional Share Awards effective January 1, 1996 and January 1, 1997
which a Participant has elected to defer (or, subject to Section 6.4, those
Notional Share Awards which a Participant elected not to have converted pursuant
to Section 4.3 above) will, subject to the terms of the Prior Plan, continue to
be credited, as of each Deemed Dividend Date, with that number of Notional
Shares (a "Dividend Equivalent") having a then fair market value equal to the
product of (a) the dividend amount paid with respect to each actual share of
Common Stock on such Deemed Dividend Date, and (b) the number of Notional Shares
credited to such Sub Account as of the Day immediately preceding such Deemed
Dividend Date.
4.5 Participant to Have No Rights as a Shareholder in TCO or a Partner
in TRG. A Participant shall have no rights at any time as a shareholder in TCO
or a partner in TRG with respect to Dividend Equivalents, Notional Shares of
Common Stock, or Cash Awards under the Prior Plan or this Plan.
Article 5
Establishment, Maintenance and Vesting
of Sub Accounts
5.1 Agreements Evidencing Cash Awards. The terms of each Cash Award
shall be evidenced by a written agreement (an "Award Agreement"), in such form
as the Company may from time to time determine, executed by the Company and the
Participant. Such agreement shall state the Cash Award granted to the
Participant, the vesting schedule of the Award and such other terms as the
Company shall determine. Each Award Agreement shall comply with and be subject
to the terms and conditions of the Plan and such other terms and conditions as
the Company may deem appropriate. No Person shall have any rights under any
Award granted under the Plan unless and until the Company and the Participant
have executed an Award Agreement setting forth the grant and the terms and
conditions of the Award.
5.2 Plan Provisions Control Cash Award Terms. The terms of the Plan
shall govern all Cash Awards granted under the Plan and Notional Share Awards
granted under the Prior Plan. In the event that any provision of an Award
granted under the Plan or the
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Award Agreement shall conflict with any term in the Plan as constituted on the
Date of Grant of such Award, the term in the Plan shall control.
5.3 Establishment of Sub Accounts. A separate Cash Award Sub Account
shall be established for each Cash Award granted to a Participant on or after
January 1, 2000, and for those Notional Share Awards which have been converted
into Cash Awards pursuant to Section 4.3. The Sub Account shall be deemed
established as of the Date of Grant. Each Sub Account shall vest as provided in
Section 5.4, and, subject to the provisions of the Plan, shall be paid to the
Participant as provided in Article 6.
5.4 Vesting of Each Sub Account. Subject to the provisions of Section
5.6 and 5.7, each Sub Account (including those Sub Accounts established under
the Prior Plan) shall not vest to any extent until the third anniversary of the
Date of Grant at which time each such Sub Account shall vest 100% (the "Vesting
Date"), provided the Participant is still in the employ of the Company.
Notwithstanding the foregoing, each Sub Account shall vest 100% upon the death,
Retirement or Disability of the Participant for whom such Sub Account is
maintained, dissolution of TRG, occurrence of a Change of Control Event, or
termination (without renewal) of the Master Services Agreement (as defined in
the Partnership Agreement).
5.5 Death, Disability or Retirement During the Vesting Period. In the
event that a Participant dies, becomes Disabled or terminates employment by
reason of Retirement during a Vesting Period, such Participant's Cash Award Sub
Accounts (which have become 100% vested pursuant to Section 5.4) shall be
calculated as of the date of the Participant's death, Disability or Retirement
in accordance with the provisions of this Section 5.5.
(a) Cash Awards. With respect to Cash Awards which are in the
first two years of their applicable Vesting Periods, such Participant shall
receive the Cash Award only with no Premium added to such Award. With respect to
Cash Awards which are in the final year of the Vesting Period, the Participant's
Cash Award shall be valued as follows:
(i) If the Participant dies, becomes Disabled,
or retires within the first 275 days of the
final year of the Vesting Period of an
Award, the Premium, if any, added to his
Cash Award shall be calculated based on the
FFO Per Share Growth Rate for the three full
calendar year period preceding the date of
his death, Disability or Retirement.
(ii) If the Participant dies, becomes Disabled or
retires during the last 90 days of the final
year of the Vesting Period of an Award, the
Premium, if any, added to his Cash Award
shall be calculated based on the FFO Per
Share Growth Rate for the normal three year
Vesting Period for such Award.
(b) Notional Share Awards. In the event a Participant has
Notional Share Sub Accounts (either Notional Shares awarded in 1998 or 1999 not
converted pursuant to Section 4.3 or Notional Shares awarded prior to 1998, the
Sub Accounts for which have been deferred), such Participant's Notional Share
Sub Accounts shall be calculated as of the date of the Participant's death,
Disability or Retirement by multiplying the number of Notional Shares credited
to the Participant's Notional Share Sub Accounts by the average of the Fair
Market Value of Common Stock for the twenty (20) Business Days immediately
preceding the date of death, Disability or Retirement.
(c) Timing for Payment. A Participant's Cash Award Sub
Accounts, and if applicable, Notional Share Sub Accounts shall be paid in a lump
sum cash payment as soon as administratively practicable following the
Participant's death or Retirement and the
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determination of the FFO Per Share Growth Rate. In the event of a Participant's
Disability only, the Company, in its sole discretion, may elect to distribute
such Participant's Sub Accounts (i) as soon as administratively practicable
following the date of Disability; (ii) following the determination of the FFO
Per Share Growth Rate; or (iii) in January of the calendar year following the
year in which the Participant became Disabled.
Example: The Company maintains four different Sub Accounts for
John Smith, a Participant in the Plan. John has one Notional
Share Sub Account representing his 1997 Notional Share Award
which he elected to defer under the Plan, and three Cash Award
Sub Accounts, two representing his 1998 and 1999 Notional
Share Awards which have been converted into Cash Awards, and
one Sub Account established in connection with his 2000 Cash
Award. John's 1999 Cash Award and 2000 Cash Award are $10,000
each.
John Smith dies February 1, 2001. John is 100% vested in his
1999 and 2000 Cash Award Sub Accounts (his 1997 and 1998 Sub
Accounts would already be vested by February 1, 2001). The
value of John's 1997 Notional Share Sub Account is calculated
by multiplying the total number of Notional Shares credited to
such Sub Account by the average Fair Market Value of TCO
Common Stock for the 20 Business Days preceding February 1,
2001.
Assuming that the FFO Per Share Growth Rate for the three year
period ending December 31, 2000 is 10% or more, the value of
John's 1998 Cash Award Account is calculated by multiplying
the Cash Award by 1.5 times the FFO Per Share Growth Rate over
the three year period ending December 31, 2000 to obtain the
Premium and then adding the Premium to his 1998 Cash Award.
See Section 6 for more detailed example.
The value of John's 1999 Cash Award of $10,000 is calculated
by using the FFO Per Share Growth Rate over the three year
period preceding his death which ends December 31, 2000 (i.e.,
calendar years 1998, 1999 and 2000) because John died in the
first 275 days of 2001, which was the final year of the
Vesting Period of his 1999 Cash Award.
The value of John's 2000 Cash Award of $10,000 remains at
$10,000. No Premium is credited to his 2000 Cash Award because
such Award is in the second year, not the final year, of the
Vesting Period.
5.6 Acceleration of Vesting. Notwithstanding anything to the contrary
in the Plan, including Section 5.4 hereof, the Compensation Committee, in its
discretion, upon the recommendation from the Company, may accelerate at any time
the vesting of an Award that has not previously become vested.
5.7 Forfeiture of Sub Accounts.
(a) If the employment of a Participant with the Company is
terminated for any reason other than death, Disability, or Retirement, then such
Participant's rights with respect to any Sub Accounts which have not become
vested on or prior to the date of the Participant's termination of employment
will terminate and be forfeited, and neither the Participant nor his heirs,
personal representatives, successors or assigns shall have any rights with
respect to any such Sub Accounts.
(b) Notwithstanding any other provision of the Plan, all
rights to any payments hereunder to a Participant will be discontinued and
forfeited, and the Company will have no further obligation hereunder to such
Participant (including with respect to vested
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Sub Accounts), if the Participant is discharged from employment with the Company
and such discharge constitutes a Termination for Cause.
5.8 Statement of Accounts. Within 100 days after the end of each
calendar year, the Company shall submit to only those Participants who have
elected to defer the payment of one or more Sub Accounts a statement setting
forth the Deferral Period for each Sub Account and the balance of the
Participant's Sub Accounts.
Article 6
Calculation, Payment and Withdrawal of Sub Accounts
6.1 1996 and 1997 Notional Unit Awards. Except as provided in this
Section 6.1, Notional Unit Awards granted effective January 1, 1996 and January
1, 1997 under the Prior Plan, which Awards have been deferred, will continue to
be governed by the terms of the Prior Plan and shall be credited with Dividend
Equivalents through the Settlement Date of such Sub Accounts. The value of such
Sub Accounts shall continue to be based on the Fair Market Value of Common Stock
through the Settlement Date of such Sub Accounts; provided, however, that the
Payout Value of those Sub Accounts shall be calculated by multiplying (a) the
number of Notional Shares credited to a Sub Account(s), by (b) the average of
the Fair Market Value of the Common Stock for the twenty (20) Business Days
preceding the Settlement Date.
6.2 1998 and 1999 Notional Share Awards Which Are Not Converted to Cash
Awards. As soon as administratively practicable following the Vesting Date of
any Sub Account established for Notional Share Awards granted effective January
1, 1998 or January 1, 1999 which a Participant elected not to have converted
into Cash Awards pursuant to Section 4.3, the Company shall calculate the
Vesting Date Value of such Sub Account by multiplying the number of Notional
Shares credited to such Sub Account on the Vesting Date by the average of the
Fair Market Value of Common Stock for the twenty (20) Business Days immediately
preceding the Vesting Date of such Sub Account. The Company shall then pay such
amount to the Participant in a lump sum cash payment unless the Participant has
elected to defer the payment of his Sub Account in accordance with the
provisions of Section 6.6.
6.3 Cash Awards. As soon as administratively practicable following the
determination of the FFO Per Share Growth Rate, the Company will calculate the
Vesting Date Value of any Sub Account established for Cash Awards granted on or
after January 1, 2000, or for any Sub Accounts which were converted into Cash
Awards pursuant to Section 4.3. The Company will calculate the Vesting Date
Value by adding the Premium, if any, to Cash Awards credited to such Sub
Account. The Premium is calculated in accordance with the following formula:
Cash Award x 1.5 x FFO Per Share Growth Rate
Notwithstanding the foregoing, if the FFO Per Share Growth Rate over the
applicable 3 year Vesting Period is less than 10%, the Vesting Date Value will
be an amount equal to the Cash Award and no Premium will be added to such Cash
Award, and if the FFO Per Share Growth Rate exceeds 20%, the Premium will be
calculated based on a maximum 20% FFO Per Share Growth Rate.
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Example 1: Mary Black receives a 2000 Cash Award equal to
$10,000. Her 2000 Award vests on January 1, 2003.
Assume the FFO Per Share Growth Rate over the 3 year
Vesting Period (2000-2002) is 10%. The Vesting Date
Value of Mary's 2000 Cash Award is $11,500 calculated
as follows:
$10,000 Cash Award x 1.5 x 10% = $1,500 (Premium)
$1,500 + $10,000 = $11,500
Example 2: Jim Jones receives a 2001 Cash Award equal to
$20,000. His 2001 Award vests on January 1, 2004,.
Assume that the FFO Per Share Growth Rate over the 3
year Vesting Period (2001-2003) is 9%. The Vesting
Date Value of Jim's 2001 Award is $20,000, the amount
of his 2001 Cash Award, because the FFO Per Share
Growth Rate over the applicable vesting period was
less than 10% and no Premium is added to Jim's 2001
Cash Award.
Example 3: Vicky White receives a 2002 Cash Award equal to
$30,000. Her 2002 Award vests on January 1, 2005.
Assume that the FFO Per Share Growth Rate over the 3
year Vesting Period (2002-2004) is 15%. The Vesting
Date Value of Vicky's 2002 Award is $36,750,
calculated as follows:
$30,000 x 1.5 x 15% = $6,750 (Premium)
$6,750 + $30,000 = $36,750
Example 4: Ray Green receives a 2003 Cash Award equal to
$20,000. His 2003 Award vests on January 1, 2006.
Assume that the FFO Per Share Growth Rate over the 3
year Vesting Period (2003-2005) is 25%. The Vesting
Date Value of Ray's 2003 Award is $26,000, calculated
as follows:
$20,000 x 1.5 x 20%* = $6,000 (Premium)
$6,000 + $20,000 = $26,000
*The FFO Per Share Growth Rate is capped at the 20%
maximum rate.
6.4 Crediting of Interest During Deferral Period. Effective for a)
Notional Share Awards effective January 1, 1998 which a Participant elects to
convert to Cash Awards pursuant to Section 4.3; (b) Notional Share Awards
effective January 1, 1999 (whether or not converted into Cash Awards); and (c)
any Cash Award granted on or after January 1, 2000, the Vesting Date Value will
be calculated as of the Vesting Date of that Sub Account. Any Sub Account which
a Participant elects to defer beyond the Vesting Date shall be credited with a
uniform interest rate determined by the Chief Executive Officer of the Company.
6.5 Time and Manner of Payment. As soon as administratively practicable
following the Settlement Date for a Sub Account of a Participant and the
determination of the FFO Per Share Growth Rate, the Company shall pay to the
Participant the Payout Value of such Sub Account (which will be the same as the
Vesting Date Value if the Sub Account is not deferred). Payment to the
Participant of the Payout Value shall be made in cash in a lump sum. Any and all
amounts due under the Plan shall be the sole obligation of the Company, and
neither TRG nor TCO shall have any liability to Participants or Beneficiaries
under this Plan.
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6.6 Deferral of Settlement Date.
(a) Deferral for One to Five Years. Subject to the provisions
of Section 7.2 of the Plan, each Participant may make, with respect to each
Award (i.e., the Sub Account established in respect of such Award), an election
to defer the Settlement Date that would otherwise occur on the Vesting Date of
such Award. Effective for Notional Share Awards granted on or after January 1,
1999, and Cash Awards granted on or after January 1, 2000, a Participant can
elect to defer until the earlier of (i) the January 1st which is one to five (1
- 5) years after the Vesting Date of such Award; and (ii) the date on which the
Participant's employment with the Company terminates for any reason.
(b) Deferral Beyond Five Years. Provided the Company has
received advice of its counsel that such an election would not cause the Plan to
become subject to the nondiscrimination, funding, and fiduciary provisions of
the Employee Retirement Income Security Act of 1974, as amended, any Participant
whose total cash compensation (paid in the previous calendar year) determined as
of the date on which the deferral election is made, exceeds $120,000 (or such
other amount as counsel to the Company may advise from time to time) may, in
lieu of deferring the Settlement Date for the aforementioned one to five year
period, make an election to defer the Settlement Date for an Award until the
earlier of (i) any January 1st selected by the Employee at the time of such
deferral election; and (ii) the date on which the Participant's employment with
the Company terminates for any reason.
(c) Election to Divide Sub Account in Half. A Participant may
also elect to divide a Sub Account in half and receive 50% of his Sub Account
(rounded up to the nearest whole dollar) as soon as administratively practicable
following the Vesting Date of such Sub Account and the determination of the FFO
Per Share Growth Rate. The remaining 50% of the Participant's vested Sub Account
shall be deferred until the Settlement Date elected pursuant to a valid deferral
election under this Section 6.6
(d) Deadline for Deferral Election. Any election by a
Participant to defer the Settlement Date for a Sub Account pursuant to this
Section 6.6 must be made at least one year prior to the Vesting Date for such
Sub Account. An election to defer the Settlement Date for a Sub Account shall
become irrevocable one year prior to the Vesting Date for such Sub Account.
6.7 Early Termination of Deferral Period. Any Deferral Period elected
pursuant to Section 6.6 hereof shall terminate immediately upon the occurrence
of any of the following events: termination of the employment of the Participant
for any reason, the dissolution of TRG, a Change of Control Event, or
termination (without renewal) of the Master Services Agreement (as defined in
the Partnership Agreement). Any Sub Accounts which a Participant has elected to
defer shall be valued as of the Settlement Date in accordance with Section 6.1,
6.2 or 6.3, as applicable, and shall be distributed in a lump sum payment as
soon as administratively practicable following the termination of the Deferral
Period, and if applicable, the determination of the FFO Per Share Growth Rate.
6.8 Taxes. To the extent required by the law in effect at the relevant
time, the Company shall withhold from payments made hereunder or from other
amounts otherwise payable to the Participant by the Company (or secure payment
from a Participant or Beneficiary in lieu of withholding) the amount of any
withholding or other tax required by federal or any state or local law to be
withheld or paid by the Company with respect to such Participant's Sub Accounts.
The amount of any such withholding or other tax shall be determined by the
Company.
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6.9 Dealings with Beneficiaries or Representatives of a Participant.
The Company may require such proper proof of death and such evidence of the
right of any Person other than a Participant to receive payment of the Payout
Value of a Sub Account established under the Plan, as the Company deems
necessary or advisable. The Company's determination of death or Disability and
of the right of any Person other than a Participant to receive payment of the
Payout Value of a Sub Account established under the Plan shall be conclusive.
The payment of and acceptance of any cash pursuant to Article 6 hereof shall
constitute a complete acquittance and discharge of full liability of the Company
under the Plan, and the Company shall be entitled to demand a receipt and/or
acquittance in full satisfaction of all claims against the Company.
Article 7
Amendment and Termination of the Plan
7.1 Amendment of the Plan. The Compensation Committee may from time to
time suspend or discontinue the Plan or revise or amend the Plan in any respect
whatsoever; provided, however, that except with the written consent of a
Participant or as otherwise specifically provided herein, no amendment or
suspension of the Plan shall alter or impair any Award previously granted to
such Participant under the Plan.
7.2 Termination of the Plan. The Compensation Committee shall have the
right and power to terminate the Plan at any time, and no Award shall be granted
under the Plan after such termination. Upon termination of the Plan by the
Compensation Committee, no further deferral elections pursuant to Section 6.6
shall be permitted unless the Compensation Committee specifically provides
otherwise. In connection with any termination of the Plan pursuant to this
Section 7.2, the Compensation Committee may, in its sole discretion, cause all
existing Deferral Periods for Sub Accounts then outstanding under the Plan to
also terminate, thereby accelerating the Settlement Date for such Sub Accounts.
Subject to the Compensation Committee's authority to terminate all existing
Deferral Periods upon termination of the Plan, any Awards outstanding at the
time of termination of the Plan shall vest and become payable to the same extent
and subject to the same terms and conditions, as provided in Article 6 hereof,
that would have applied to such Award if the Plan had not been terminated.
7.3 Dissolution of TRG. The dissolution of TRG (provided that TRG is
not reconstituted as provided in the Partnership Agreement) shall cause the Plan
to terminate immediately without any further action on the part of the
Compensation Committee, and each outstanding Sub Account which is not then
vested to vest immediately and fully. In addition, the dissolution of TRG shall
cause all existing Deferral Periods for Sub Accounts then outstanding under the
Plan to terminate immediately, thereby accelerating the occurrence of the
Settlement Date for each such Sub Account. Upon the dissolution of TRG, each
Participant shall be paid the aggregate Payout Value of his or her Sub Accounts,
as provided in Article 6 hereof. The grant of any Awards pursuant to the Plan
shall not affect in any way the right or power of the Company or TRG to make
changes to its business structure, or to merge, dissolve, or terminate, or to
sell or transfer any or all of its assets.
7.4 Termination of Management Contract/Change of Control Event. Upon
the termination of the Master Services Agreement (as defined in the Partnership
Agreement) between TRG and the Company, for any reason, without a renewal of
such Master Services Agreement, or upon the occurrence of a Change of Control
Event, the Plan shall terminate immediately, without any further action on the
part of the Compensation Committee, and each outstanding Sub Account which is
not then vested shall vest immediately and fully. In addition, all existing
Deferral Periods for Sub Accounts then outstanding under the Plan shall
terminate immediately, thereby accelerating the Settlement Date for such Sub
Accounts; and
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each Participant shall be paid the aggregate Payout Value of his or her Sub
Accounts as provided in Article 6 of the Plan.
Article 8
Beneficiary Designation
8.1 Beneficiary Designation. Each Participant may, at any time,
designate any Person or Persons as such Participant's Beneficiary or
Beneficiaries (both principal as well as contingent) to whom payment under this
Plan will be made in the event of such Participant's death prior to distribution
of the benefits due such Participant under this Plan. Such designation may be
changed at any time prior to the Participant's death, without consent of any
previously designated beneficiary. Any designation must be made in writing
("Beneficiary Designation"). A Beneficiary Designation shall be effective only
if properly completed and only upon receipt by the Company. Any properly
completed Beneficiary Designation received by the Company prior to the
Participant's death shall automatically revoke any prior Beneficiary
Designation. In the event of divorce, the person from whom such divorce has been
obtained shall be deemed to have predeceased the Participant in determining who
shall be entitled to receive payment pursuant to such Participant's Beneficiary
Designation, unless the Participant completes and submits after the divorce a
Beneficiary Designation which designates the former spouse as the Participant's
Beneficiary for purposes of the Plan.
8.2 In the Event of No Valid Designation. If a Participant fails to
designate a Beneficiary as provided above, or if all designated Beneficiaries
predecease (or are deemed to predecease) such Participant or die prior to
distribution of such Participant's benefits, then such Participant's designated
Beneficiary shall be deemed to be the Person or Persons surviving such
Participant in the first of the following classes in which there is a survivor,
share and share alike:
(a) Such Participants' surviving spouse, but if there is no such
surviving spouse.
(b) Such Participant's children, except that if any of such
Participant's children predecease the Participant but leave issue surviving,
then such issue shall take, by right of representation, the share their parent
would have taken if living; but if there are no such children or issue. The term
"children" shall include natural or adopted children but shall not include a
child (or children) whom the Participant has placed for adoption or foster care.
(c) Such Participant's estate.
Article 9
General Provisions
9.1 Compliance with Applicable Laws and Regulations. The Plan, the
grant of Awards under the Plan, and the obligation of the Company to deliver
payment in cash in settlement of Sub Accounts established under the Plan shall
be subject to all applicable federal and state laws, rules, and regulations and
to such approvals by any government or regulatory agency as may be required.
9.2 Status of Each Participant is that of an Unsecured General
Creditor. Each Participant and his or her Beneficiaries, heirs, successors and
assigns shall have no legal or equitable rights, interest or claims in any
specific property or assets of the Company, TRG or TCO, nor of any entity for
which the Company or any affiliate of the Company provides services. Assets of
the Company or such other entities shall not be held under any trust for the
benefit of any Participant or his or her Beneficiaries, heirs, successors or
assigns, or held
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in any way as collateral security for the fulfilling of the obligations of the
Company under this Plan. Any and all of the Company's and such other entities'
assets shall be, and remain, the general unrestricted assets of the Company or
such other entities. The Company's sole obligation under this Plan shall be
merely that of an unfunded and unsecured promise of the Company to pay money in
the future, subject to the conditions and provisions hereof.
9.3 Nonassignability. A Participant's rights and interests under the
Plan may not be assigned or transferred other than by will or the laws of
descent and distribution. No part of the amounts payable hereunder shall, prior
to actual payment, be subject to seizure or sequestration for the payment of any
debts, judgments, alimony or separate maintenance owed by a Participant or any
other Person, or be transferable by operation of law in the event of a
Participant's or any other Person's bankruptcy or insolvency.
9.4 No Right to Continued Employment. No Employee or any other Person
shall have any claim or right to be granted an Award under the Plan. Neither the
adoption and maintenance of the Plan nor the granting of Awards pursuant to the
Plan nor the execution of an Award Agreement shall be deemed to constitute a
contract of employment between the Company, an affiliate of the Company or TRG
or TCO and any Employee or to be a condition of the employment of any Person.
The Plan and any Award granted under the Plan shall not confer upon any
Participant any right with respect to continued employment by the Company or an
affiliate of the Company, nor shall they interfere in any way with the right of
the Company or an affiliate of the Company to terminate the employment of any
Participant at any time, and for any reason, with or without cause, it being
acknowledged, unless expressly provided otherwise in writing, that the
employment of any Participant is "at will."
9.5 Inspection of Records. Copies of the Plan, records reflecting each
Participant's Sub Account balances, and any other documents and records that a
Participant is entitled by law to inspect shall be open to inspection by the
Participant and his duly authorized representative(s) at the office of the
Company at any reasonable business hour.
9.6 Word Meanings. The words such as "herein," "hereinafter," "hereof,"
and "hereunder" refer to this Plan as a whole and not merely to a subdivision in
which such words appear unless the context otherwise requires.
9.7 Section Titles. Section titles are for descriptive purposes only
and shall not control or alter the meaning of the Plan as set forth in the text.
9.8 Severability. Whenever possible, each provision in the Plan and
every Award at any time granted under the Plan shall be interpreted in such a
manner as to be effective and valid under applicable law, but if any provision
of the Plan or any Award at any time granted under the Plan shall be held to be
prohibited or invalid under applicable law, then, (i) such provision shall be
deemed amended to accomplish the objectives of the provision as originally
written to the fullest extent permitted by law, and (ii) all other provisions of
the Plan and every other Award at any time granted under the Plan shall remain
in full force and effect.
9.9 Strict Construction. No rule of strict construction shall be
implied against TRG, the Partnership Committee, the Compensation Committee, or
any other Person in the interpretation of any of the terms of the Plan, any
Award granted under the Plan or any rule or procedure established by the
Compensation Committee or the Company.
9.10 Choice of Law. All determinations made and actions taken pursuant
to the Plan shall be governed by the internal laws of the State of Michigan and
construed in accordance therewith.
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9.11 Execution. To record the adoption of the Plan, the Company has
caused the execution hereof this 5th day of April 2000.
THE TAUBMAN COMPANY LIMITED PARTNERSHIP,
a Delaware limited partnership
By: TAUB-CO MANAGEMENT, INC.,
a Michigan corporation,
general partner
By: /s/ Robert S. Taubman
----------------------------
Its: President
