<PAGE>
PROLOGIS TRUST
1997 LONG-TERM INCENTIVE PLAN
(As Amended and Restated effective
as of May 18, 2000)
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TABLE OF CONTENTS
<TABLE>
<S> <C>
SECTION 1.........................................................................................................1
GENERAL..................................................................................................1
1.1. Purpose.......................................................................................1
1.2. Participation.................................................................................1
SECTION 2.........................................................................................................2
OPTIONS..................................................................................................2
2.1. Definitions...................................................................................2
2.2. Eligibility...................................................................................2
2.3. Price.........................................................................................2
2.4. Exercise......................................................................................4
2.5. Post-Exercise Limitations.....................................................................4
2.6. Expiration Date...............................................................................4
SECTION 3.........................................................................................................6
DIVIDEND EQUIVALENT UNITS................................................................................6
3.1. Award of Dividend Equivalent Units............................................................6
3.2. Terms and Conditions of Dividend Equivalent
Units..........................................................................................6
SECTION 4.........................................................................................................7
SHARE PURCHASE PROGRAM...................................................................................7
4.1. Purchase of Shares............................................................................7
4.2. Matching Shares and Options...................................................................7
4.3. Restrictions on Shares........................................................................7
4.4. Purchase Loans................................................................................7
SECTION 5.........................................................................................................8
SHARE AWARDS.............................................................................................8
5.1. Definition....................................................................................8
5.2. Eligibility...................................................................................9
5.3. Terms and Conditions of Awards................................................................9
SECTION 6........................................................................................................10
OPERATION AND ADMINISTRATION............................................................................10
6.1. Effective Date..............................................................................10
6.2. Shares Subject to Plan......................................................................10
6.3. Individual Limits on Awards.................................................................10
6.4. Adjustments to Shares.......................................................................11
6.5. Change in Control...........................................................................13
6.6. Limit on Distribution.......................................................................14
6.7. Liability for Cash Payments.................................................................15
6.8. Performance-Based Compensation..............................................................15
6.9. Withholding.................................................................................16
6.10. Transferability..............................................................................16
6.11. Notices......................................................................................16
6.12. Form and Time of Elections...................................................................16
6.13. Agreement With Trust or Related Company......................................................17
6.14. Limitation of Implied Rights.................................................................17
6.15. Evidence.....................................................................................17
6.16. Action by Trust or Related Company...........................................................17
6.17. Gender and Number............................................................................17
6.18. Applicable Law...............................................................................18
6.19. Foreign Employees............................................................................18
SECTION 7........................................................................................................18
COMMITTEES..............................................................................................18
7.1. Administration...............................................................................18
7.2. Selection of Trust Committee.................................................................18
7.3. Powers of Committees.........................................................................18
7.4. Delegation by Committee......................................................................19
7.5. Information to be Furnished to Committees....................................................19
7.6. Liability and Indemnification of Committees..................................................19
SECTION 8........................................................................................................20
AMENDMENT AND TERMINATION...............................................................................20
</TABLE>
<PAGE>
PROLOGIS TRUST
1997 LONG-TERM INCENTIVE PLAN
(As Amended and Restated Effective
as of May 18, 2000)
SECTION 1
GENERAL
1.1. Purpose. ProLogis Trust (formerly known as Security Capital
Industrial Trust), a Maryland real estate investment trust (the "Trust"),
established the Security Capital Industrial Trust 1997 Long-Term Incentive Plan
effective September 8, 1997 and renamed it the ProLogis Trust 1997 Long-Term
Incentive Plan effective July 1, 1998 (the "Plan"). The provisions that follow
constitute an amendment and restatement of the Plan as in effect immediately
prior to May 18, 2000, the "Effective Date" of the Plan as set forth herein. The
Plan was established by the Trust to:
(a) attract and retain employees and other persons providing
services to the Trust and the Related
Companies (as defined below);
(b) motivate Participants (as defined in subsection 1.2), by means
of appropriate incentives, to achieve long-range goals;
(c) provide incentive compensation opportunities that are
competitive with those of other corporations and real estate
investment trusts; and
(d) further identify Participants' interests with those of the
Trust's other shareholders through compensation that is based
on the value of the Trust's common shares;
and thereby promote the long-term financial interest of the Trust and the
Related Companies, including the growth in value of the Trust's equity and
enhancement of long-term shareholder return. The term "Related Company" means
any company during any period in which it is a "subsidiary corporation" (as that
term is defined in section 424(f) of the Internal Revenue Code of 1986, as
amended (the "Code")), with respect to the Trust or any affiliate of the Trust
which is designated as a Related Company by the Committee, including, without
limitation, any subsidiary of the Trust.
1.2. Participation. Subject to the terms and conditions of the Plan,
the Committees (as described in Section 7) shall determine and designate, from
time to time, from among the Eligible Individuals (as defined below), those
persons who will be granted one or more awards under Sections 2, 3, 4 or 5 of
the Plan (an "Award"), and thereby become "Participants" in the Plan. In the
discretion of the granting Committee, and subject to the terms of the Plan, a
Participant may be granted any Award permitted under the provisions of the Plan,
and more than one Award may be granted to a Participant. Except as otherwise
agreed by the Trust and the Participant, or except as otherwise provided in the
Plan, an Award under the Plan shall not affect any previous Award under the Plan
or an award under any other plan maintained by the Trust or the Related
Companies. For purposes of the Plan, the term "Eligible Individual" shall mean
any employee of the Trust or a Related Company; provided, however, that a member
of the Board of Trustees of the Trust (the "Board") who is not an employee of
the Trust or a Related Company shall not be an "Eligible Individual".
SECTION 2
OPTIONS
2.1. Definition The grant of an "Option" under this Section 2 entitles
the Participant to purchase common shares of beneficial interest of the Trust
("Shares") at a price fixed at the time the Option is granted, subject to the
terms of this Section. Options granted under this Section may be either
Incentive Share Options or Non-Qualified Share Options, as determined in the
discretion of the Trust Committee. An "Incentive Share Option" is an Option that
is intended to satisfy the requirements applicable to an "incentive stock
option" described in section 422 of the Code. A "Non-Qualified Share Option" is
an Option that is not intended to be an Incentive Share Option.
<PAGE>
2.2. Eligibility. Each Committee shall designate the Participants to
whom Options are to be granted under this Section and shall determine the number
of Shares subject to each such Option. If the Trust Committee grants Incentive
Share Options, to the extent that the aggregate fair market value of Shares with
respect to which Incentive Share Options are exercisable for the first time by
any individual during any calendar year (under all plans of the Trust and all
related companies within the meaning of section 424(f) of the Code) exceeds
$100,000, such options shall be treated as Non-Qualified Share Options, to the
extent required by section 422 of the Code.
2.3. Price. The determination and payment of the purchase
price of a Share under each Option granted under this Section shall be
subject to the following:
(a) The purchase price shall be established by the granting
Committee at the time the Option is granted; provided,
however, that in no event shall such price be less than the
par value of a Share on such date; further, provided, in no
event shall the purchase price of a Share under an Incentive
Share Option be less than the Fair Market Value (defined
below) of a Share at the time the Option is granted.
(b) Subject to the following provisions of this subsection, the
full purchase price of each Share purchased upon the exercise
of any Option shall be paid at the time of such exercise (or
such later date as may be permitted by the granting Committee
in the case of a cashless exercise) and, as soon as
practicable thereafter (subject to an election under
subsection 2.4), a certificate representing the Shares so
purchased shall be delivered to the person entitled thereto.
(c) The purchase price shall be payable in cash or by tendering
Shares by actual delivery or attestation (valued at Fair
Market Value as of the day of exercise) that have been held by
the Participant at least six months, or in any combination
thereof, as determined by the granting Committee.
(d) The "Fair Market Value" of a Share as of any date shall be
determined in accordance with the following rules:
(i) If the Shares are at the time listed or admitted to
trading on any stock exchange, then the Fair Market
Value shall be the average of the highest and lowest
sales price per Share on such date on the principal
exchange on which the Shares are then listed or
admitted to trading or, if no such sale is reported
on that date, on the last preceding date on which a
sale was so reported.
(ii) If the Shares are not at the time listed or admitted
to trading on a stock exchange, the Fair Market Value
shall be the average of the lowest reported bid price
and highest reported asked price of the Shares on the
date in question in the over-the-counter market, as
such prices are reported in a publication of general
circulation selected by the granting Committee and
regularly reporting the market price of Shares in
such market.
(iii) If the Shares are not listed or admitted to trading
on any stock exchange or traded in the
over-the-counter market, the Fair Market Value shall
be as determined by the granting Committee in good
faith.
(iv) For purposes of determining the Fair Market Value of
Shares that are sold pursuant to a cashless exercise
program, Fair Market Value shall be the price at
which such Shares are sold.
<PAGE>
2.4. Exercise. Except as otherwise expressly provided in the Plan, an
Option granted under this Section shall be exercisable in accordance with the
following terms of this subsection:
(a) The terms and conditions relating to exercise of an Option
shall be established by the granting Committee, and may
include, without limitation, conditions relating to completion
of a specified period of service (subject to paragraph (b)
below), achievement of performance standards prior to exercise
of the Option or the achievement of Share ownership objectives
by the Participant. The granting Committee, in its sole
discretion, may accelerate the vesting of any Option under
circumstances designated by it at the time the Option is
granted or thereafter.
(b) No Option may be exercised by a Participant after the
Expiration Date (as defined in subsection 2.6) applicable to
that Option.
(c) Prior to the date the Shares would otherwise be transferred
pursuant to the exercise of an Option, to the extent permitted by
the granting Committee, a Participant may irrevocably elect to
defer receipt of such Shares until the last date of a later
calendar year, but in no event later than the Participant's Date
of Termination (as defined in subsection 2.6), provided, that if
the Date of Termination of a Participant who is a member of a
select group of management or a highly compensated employee
within the meaning of section 401(a)(1) of the Employee
Retirement Income Security Act of 1974, as amended, occurs by
reason of Retirement (as defined in subsection 2.6), the
Participant may elect to defer receipt for a period up to the
last day of the calendar year in which occurs the fifteenth
anniversary of the Participant's Retirement. Any such deferral
election shall be made in such form and at such times as the
Committee may determine and shall be subject to such other terms,
conditions and limitations as the Committee may establish,
provided, however, any election to defer payment beyond a
Participant's Retirement which has not been on file at least 12
months prior to the Participant's Retirement shall be
disregarded.
2.5. Post-Exercise Limitations. The granting Committee, in its
discretion, may impose such restrictions on Shares acquired pursuant to the
exercise of an Option as it determines to be desirable, including, without
limitation, restrictions relating to disposition of the shares and forfeiture
restrictions based on service, performance, Share ownership by the Participant
and such other factors as the granting Committee determines to be appropriate.
2.6. Expiration Date. The "Expiration Date" with respect to an Option
means the date established as the Expiration Date by the granting Committee at
the time of the grant; provided, however, that unless determined otherwise by
the Committee, the Expiration Date with respect to any Option shall not be later
than the earliest to occur of:
(a) the ten-year anniversary of the date on which the Option is
granted;
(b) if the Participant's Date of Termination occurs by reason of
death, Disability or Retirement, the one-year anniversary of
such Date of Termination;
(c) if the Participant's Date of Termination occurs for reasons
other than Retirement, death, Disability or Cause, the
three-month anniversary of such Date of Termination; or
(d) if the Participant's Date of Termination occurs for reasons of
Cause, such Date of Termination.
For purposes of the Plan, a Participant's "Date of Termination" shall be the
date on which he both ceases to be an employee of the Trust and the Related
Companies and ceases to perform material services for the Trust and the Related
Companies, regardless of the reason for the cessation; provided that a "Date of
Termination" shall not be considered to have occurred during the period in which
the reason for the cessation of services is a leave of absence approved by the
Trust or the Related Company which was the recipient of the Participant's
<PAGE>
services. Except as otherwise provided by the granting Committee, a Participant
shall be considered to have a "Disability" during the period in which he is
unable, by reason of a medically determinable physical or mental impairment, to
engage in the material and substantial duties of his regular occupation, which
condition is expected to be permanent. "Retirement" of a Participant shall mean
the occurrence of a Participant's Date of Termination after providing at least
five years of service to the Trust or the Related Companies and attaining age
60. For purposes of the Plan, "Cause" shall mean, in the reasonable judgment of
the granting Committee (i) the willful and continued failure by the Participant
to substantially perform his duties with the Company or any Related Company
after written notification by the Company or Related Company, (ii) the willful
engaging by the Participant in conduct which is demonstrably injurious to the
Company or any Related Company, monetarily or otherwise, or (iii) the engaging
by the Participant in egregious misconduct involving serious moral turpitude.
For purposes hereof, no act, or failure to act, on the Participant's part shall
be deemed "willful" unless done, or omitted to be done, by the Participant not
in good faith and without reasonable belief that such action was in the best
interest of the Company or Related Company.
SECTION 3
DIVIDEND EQUIVALENT UNITS
3.1. Award of Dividend Equivalent Units. Unless determined otherwise by
the granting Committee, a Participant who is awarded an Option under the Plan
(other than a matching Option awarded under subsection 4.2) shall also be
entitled to receive "Dividend Equivalent Units" with respect to such Option, as
follows:
(a) Annual crediting of Dividend Equivalent Units. Annual
crediting of Dividend Equivalent Units. As of the last day of
each calendar year, the Optionee shall be credited with a number
of Dividend Equivalent Units equal to (i) the Trust's annual
dividend for such calendar year, multiplied by (ii) the number of
Shares underlying the Optionee's outstanding Options that are
entitled to awards under this Section 3 during such calendar year
(reduced pro rata to reflect Shares underlying such Options that
were not outstanding on the record date with respect to each
dividend payment date during such year) and divided by (iii) the
Trust's average Share price for such calendar year.
(b) Additional credits to reflect dividend payments on Dividend
Equivalent Units. As of the last day of each calendar year,
each Optionee shall be credited with a number of additional
Dividend Equivalent Units equal to (i) the Trust's annual
dividend for such calendar year, multiplied by (ii) the number
of Dividend Equivalent Units outstanding during such calendar
year (reduced pro rata to reflect Dividend Equivalent Units
that were not outstanding on each dividend payment date during
such year) and divided by (iii) the Trust's average Share
price for such calendar year.
3.2. Terms and Conditions of Dividend Equivalent Units. Unless
determined otherwise by the granting Committee, Dividend Equivalent Units shall
be subject to the following terms and conditions:
(a) Dividend Equivalent Units shall vest in accordance with the
vesting schedule applicable to the Option with respect to
which the Dividend Equivalent Unit was awarded.
(b) Each vested Dividend Equivalent Unit shall entitle the
holder thereof to a Share on the last day of the calendar year in
which occurs the first of (i) the date the Participant exercises
the Option with respect to which the Dividend Equivalent Unit was
awarded, or (ii) the date such Option expires by its terms
(whether by reason of termination of employment or otherwise);
provided, however, prior to the date the Shares would otherwise
be payable, to the extent permitted by the granting Committee, a
Participant may irrevocably elect to defer receipt of such Shares
until the last date of a later calendar year, but in no event
later than the last day of the calendar year in which occurs the
tenth anniversary of the grant of the underlying Option. Any such
deferral election shall be made in such form and at such times as
the Committee may determine and shall be subject to such other
terms, conditions and limitations as the Committee may establish.
(c) All Dividend Equivalent Units which are not vested upon the
Participant's Date of Termination shall be forfeited.
(d) Settlement of all Dividend Equivalent Units shall be made in
the form of whole Shares. Any fractional Shares shall be
settled in cash.
<PAGE>
SECTION 4
SHARE PURCHASE PROGRAM
4.1. Purchase of Shares. Each Committee may, from time to time,
establish one or more programs under which Participants will be permitted to
purchase Shares under the Plan and shall designate the Participants eligible to
participate under such Share purchase programs. The purchase price for Shares
available under such programs, and other terms and conditions of such programs,
shall be established by the Committee, provided that the purchase price may not
be less than par value.
4.2. Matching Shares and Options. Except as otherwise provided in
subsection 4.1, any Share purchase program established by a Committee under this
Section may provide for the award of matching Shares or Options in the amount,
if any, determined by the Committee.
4.3. Restrictions on Shares. The granting Committee may impose such
restrictions with respect to Shares purchased under subsection 4.1, or matching
Shares or Options awarded pursuant to subsection 4.2, as the Committee
determines to be appropriate. Such restrictions may include, without limitation,
restrictions of the type that may be imposed with respect to Share Awards under
Section 5.
4.4. Purchase Loans. In connection with the purchase of Shares under
this Section 4, the granting Committee, in its sole discretion, may determine
that the Trust or the Related Company, as applicable, shall, at the
Participant's election, make a loan (a "Loan") to the Participant for all or a
portion of the purchase price of the Shares purchased. The Loan may be used only
for the purpose of financing the purchase, subject to the following:
(a) Each Loan shall be evidenced by a promissory note and pledge
agreement in such form as the granting Committee shall
approve; provided, that the note shall (i) provide full
recourse to the Participant, (ii) provide for interest at a
rate to be determined by the granting Committee, (iii) be
secured, pursuant to a pledge agreement, by the purchased
Shares, and (iv) comply with all applicable laws, regulations
and rules of the Board of Governors of the Federal Reserve
System and any other governmental agency having jurisdiction.
(b) Each Loan shall provide for a term of no more than 10 years.
(c) All principal and interest outstanding under a Loan with
respect to any Participant will automatically become due and
payable (i) 90 days after the date the Participant
terminates employment with the Trust and Related Companies
for any reason other than death, Disability, Retirement or
Cause, provided that such termination is not following a
Change in Control, (ii) 365 days after the date on which the
Participant's employment with the Trust and Related
Companies terminates by reason of death, Disability or
Retirement, (iii) 180 days after the Participant's
employment with the Trust and Related Companies terminates
following a Change in Control of the Trust for reasons other
than Cause, or (iv) immediately upon a sale of the Shares
which are pledged as collateral for the loan or if the
Participant's employment with the Trust and Related
Companies is terminated for Cause.
(d) Each Loan shall contain such other terms, conditions and
limitations as may be determined by the granting Committee in
its sole discretion.
<PAGE>
SECTION 5
SHARE AWARDS
5.1. Definition. Subject to the terms of this Section, a Share Award
under the Plan is a grant of Shares to a Participant, the earning, vesting or
distribution of which is subject to one or more conditions established by the
Trust Committee. Such conditions may relate to events (such as performance or
continued employment) occurring before or after the date the Share Award is
granted, or the date the Shares are earned by, vested in or delivered to the
Participant. If the vesting of Share Awards is subject to conditions occurring
after the date of grant, the period beginning on the date of grant of a Share
Award and ending on the vesting or forfeiture of such Shares (as applicable) is
referred to as the "Restricted Period". To the extent that the vesting of a
Share Award is contingent on performance, the performance shall be measured over
a period of not less than one year. Share Awards may provide for delivery of the
shares of Shares at the time of grant or may provide for a deferred delivery
date. A Share Award may, but need not, be made in conjunction with a cash-based
incentive compensation program maintained by the Trust and may, but need not, be
in lieu of cash otherwise awardable under such program.
5.2. Eligibility. The Trust Committee shall designate the Participants
to whom Share Awards are to be granted and the number of Shares that are subject
to each such Award.
5.3. Terms and Conditions of Awards. Share Awards granted to
Participants under the Plan shall be subject to the following terms and
conditions:
(a) Beginning on the date of grant (or, if later, the date of
distribution) of Shares comprising a Share Award, and
including any applicable Restricted Period, the Participant as
owner of such Shares shall have the right to vote such Shares.
(b) Payment of dividends with respect to Share Awards shall be subject
to the following:
(i) On and after the date that a Participant has a fully
earned and vested right to the Shares comprising a
Share Award and the Shares have been distributed to
the Participant, the Participant shall have all
dividend rights (and other rights) of a shareholder
with respect to such Shares.
(ii) Prior to the date that a Participant has a fully
earned and vested right to the shares comprising a
Share Award, the Trust Committee, in its sole
discretion, may award Dividend Rights with respect to
such shares.
(iii) On and after the date that a Participant has a fully
earned and vested right to the Shares comprising a
Share Award, but before the Shares have been
distributed to the Participant, the Participant shall
be entitled to Dividend Rights with respect to such
Shares, at the time and in the form determined by the
Trust Committee.
(iv) A "Dividend Right" with respect to shares comprising
a Share Award shall entitle the Participant, as of
each dividend payment date, to an amount equal to the
dividends payable with respect to a Share multiplied
by the number of such Shares. Dividend Rights shall
be settled in cash or in Shares valued at Fair Market
Value as of the date of settlement, as determined by
the Trust Committee, shall be payable at the time
determined by the Committee and shall be subject to
such other terms and conditions as the Committee may
determine.
<PAGE>
SECTION 6
OPERATION AND ADMINISTRATION
6.1. Effective Date. The Plan was originally effective as of the date
it was adopted by the Board; provided, however, that Awards granted under the
Plan prior to its approval by shareholders were contingent on approval of the
Plan by the Trust's shareholders. The Plan shall be unlimited in duration and,
in the event of Plan termination, shall remain in effect as long as any Shares
awarded under it are outstanding and not fully vested; provided, however, that
no new Awards shall be made under the Plan on or after the tenth anniversary of
the date on which the Plan is adopted by the Board.
6.2. Shares Subject to Plan. The Shares with respect to which Awards
may be made under the Plan shall be shares currently authorized but unissued or
currently held or subsequently acquired by the Trust as treasury shares,
including shares purchased in the open market or in private transactions.
Subject to the provisions of subsection 6.4, the number of Shares which may be
issued with respect to Awards under the Plan shall not exceed 14,600,000 Shares
in the aggregate. Except as otherwise provided herein, any Shares subject to an
Award which for any reason expires or is terminated without issuance of Shares
(including Shares that are not issued because Shares are tendered pursuant to
subsection 2.3(c) or 6.9) shall again be available under the Plan.
6.3. Individual Limits on Awards. Notwithstanding any other provision
of the Plan to the contrary, no Participant shall receive any Award of an Option
under the Plan to the extent that the sum of:
(a) the number of Shares subject to such Award;
(b) the number of Shares subject to all other prior Awards of
Options under the Plan during the one-year period ending on
the date of the Award; and
(c) the number of Shares subject to all other prior share options
granted to the Participant under other plans or arrangements
of the Trust during the one-year period ending on the date of
the Award; would exceed the Participant's Individual
Limit under the Plan. The determination made under the
foregoing provisions of this subsection shall be based on
the Shares subject to the Awards at the time of grant,
regardless of when the Awards become exercisable. Subject to
the provisions of subsection 6.4, a Participant's "Individual
Limit" shall be 500,000 Shares.
6.4. Adjustments to Shares.
(a) If the Trust shall effect any subdivision or
consolidation of Shares or other capital readjustment,
payment of stock dividend, stock split, combination of
shares or recapitalization or other increase or reduction of
the number of Shares outstanding without receiving
compensation therefor in money, services or property, then
the Trust Committee shall equitably adjust (i) the number of
Shares available under the Plan; (ii) the number of shares
available under any individual or other limits; (iii) the
number of Shares subject to outstanding Awards; and (iv) the
per-share price under any outstanding Award to the extent
that the Participant is required to pay a purchase price per
share with respect to the Award.
(b) If the Trust is reorganized, merged or consolidated or is
party to a plan of exchange with another corporation,
pursuant to which reorganization, merger, consolidation or
plan of exchange, the shareholders of the Trust receive any
shares of stock or other securities or property, or the
Trust shall distribute securities of another corporation to
its shareholders, there shall be substituted for the shares
subject to outstanding Awards an appropriate number of
shares of each class of stock or amount of other securities
or property which were distributed to the shareholders of
the Trust in respect of such shares, subject to the
following:
<PAGE>
(i) If the Trust Committee determines that the
substitution described in accordance with the
foregoing provisions of this paragraph would not be
fully consistent with the purposes of the Plan or the
purposes of the outstanding Awards under the Plan,
the Committee may make such other adjustments to the
Awards to the extent that the Committee determines
such adjustments are consistent with the purposes of
the Plan and of the affected Awards.
(ii) All or any of the Awards may be cancelled by the
Trust Committee on or immediately prior to the effective
date of the applicable transaction, but only if the
Committee gives reasonable advance notice of the
cancellation to each affected Participant, and only if
either: (A) the Participant is permitted to exercise all
Awards that will be cancelled (without regard to whether
such Awards would otherwise be exercisable) for a reasonable
period prior to the effective date of the cancellation; or
(B) the Participant receives payment or other benefits that
the Committee determines to be reasonable compensation for
the value of all cancelled Awards (without regard to whether
such Awards would otherwise be vested).
(iii) Upon the occurrence of a reorganization of the Trust
or any other event described in this paragraph (b),
any successor to the Trust shall be substituted for
the Trust to the extent that the Trust and the
successor agree to such substitution.
(c) Upon (or, in the discretion of the Trust Committee,
immediately prior to) the sale to (or exchange with) a third
party unrelated to the Trust of all or substantially all of
the assets of the Trust, all Awards shall be cancelled. If
Awards are cancelled under this paragraph, then, with respect
to any affected Participant, either:
(i) the Participant shall be provided with reasonable
advance notice of the cancellation, and the
Participant shall be permitted to exercise all Awards
that will be cancelled (without regard to whether
such awards would otherwise be exercisable) for a
reasonable period prior to the effective date of the
cancellation; or
(ii) the Participant shall receive payment or other
benefits that the Committee determines to be
reasonable compensation for the value of all
cancelled Awards (without regard to whether such
cancelled Awards would otherwise be vested).
The foregoing provisions of this paragraph shall also apply to
the sale of all or substantially all of the assets of the
Trust to a related party, if the Committee determines such
application is appropriate. Notwithstanding the foregoing
provisions of this paragraph (c), in lieu of cancellation of
outstanding Awards, the Committee and the purchaser of all or
substantially all of the Trust's assets may provide that an
appropriate number of shares or securities of the purchaser or
its affiliates shall be substituted for Shares with respect to
outstanding Awards under the Plan, provided that such
substituted awards shall be comparable in value and contain
terms and conditions similar to the Awards.
(d) In determining what action, if any, is necessary or
appropriate under the foregoing provisions of this subsection,
the Trust Committee shall act in a manner that it determines
to be consistent with the purposes of the Plan and of the
affected Awards and, where applicable or otherwise
appropriate, in a manner that it determines to be necessary to
preserve the benefits and potential benefits of the affected
Awards for the Participants and the Trust.
(e) The existence of this Plan and the Awards granted hereunder shall
not affect in any way the right or power of the Trust or its
shareholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the
Trust's capital structure or its business, any merger or
consolidation of the Trust, any issue of bonds, debentures,
preferred or prior preference stocks ahead of or affecting the
Trust's Shares or the rights thereof, the dissolution or
liquidation of the Trust, any sale or transfer of all or any part
of its assets or business, or any other corporate act or
proceeding, whether of a similar character or otherwise.
<PAGE>
(f) Except as expressly provided by the terms of this Plan, the
issue by the Trust of shares of stock of any class, or
securities convertible into shares of stock of any class, for
cash or property or for labor or services, either upon direct
sale, upon the exercise of rights or warrants to subscribe
therefor or upon conversion of shares or obligations of the
Trust convertible into such shares or other securities, shall
not affect, and no adjustment by reason thereof, shall be made
with respect to Awards then outstanding hereunder.
(g) Awards under the Plan are subject to adjustment under this
subsection only during the period in which they are considered
to be outstanding under the Plan. For purposes of this
subsection, an Award is considered "outstanding" on any date
if the Participant's ability to obtain all benefits with
respect to the Award is subject to limits imposed by the Plan
(including any limits imposed by the Agreement reflecting the
Award). The determination of whether an Award is outstanding
shall be made by the Trust Committee.
6.5. Change in Control. In the event that (i) a Participant's
employment is terminated by the Trust or the successor to the Trust or an
affiliated entity which is his or her employer for reasons other than Cause
following a Change in Control of the Trust (as defined below) or (ii) the Plan
is terminated by the Trust or its successor following a Change in Control
without provision for the continuation of outstanding Awards hereunder, all
Options and related Awards which have not otherwise expired shall become
immediately exercisable and all other Awards shall become fully vested. For
purposes of the Plan, a "Change in Control" means the happening of any of the
following:
(a) the shareholders of the Trust approve a definitive agreement to merge the
Trust into or consolidate the Trust with another entity, sell or otherwise
dispose of all or substantially all of its assets or adopt a plan of
liquidation, provided, however, that a Change in Control shall not be
deemed to have occurred by reason of a transaction, or a substantially
concurrent or otherwise related series of transactions, upon the completion
of which 50% or more of the beneficial ownership of the voting power of the
Trust, the surviving corporation or corporation directly or indirectly
controlling the Trust or the surviving corporation, as the case may be, is
held by the same persons (as defined below) (although not necessarily in
the same proportion) as held the beneficial ownership of the voting power
of the Trust immediately prior to the transaction or the substantially
concurrent or otherwise related series of transactions, except that upon
the completion thereof, employees or employee benefit plans of the Trust
may be a new holder of such beneficial ownership; provided, further, that
any transaction described in this paragraph (a) with an "Affiliate" of the
Trust (as defined in the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) shall not be treated as a Change in Control; or
(b) the "beneficial ownership" (as defined in Rule 13d-3 under the
Exchange Act) of securities representing 50% or more of the
combined voting power of the Trust is acquired, other than
from the Trust, by any "person" as defined in Sections 13(d)
and 14(d) of the Exchange Act (other than any trustee or other
fiduciary holding securities under an employee benefit or
other similar stock plan of the Trust) provided, that any
purchase by Security Capital Group Incorporated or any of its
affiliates of securities representing 50% or more of the
combined voting power of the Trust shall not be treated as a
Change in Control; or
(c) at any time during any period of two consecutive years,
individuals who at the beginning of such period were members
of the Board of Trustees of the Trust cease for any reason to
constitute at least a majority thereof (unless the election,
or the nomination for election by the Trust's shareholders, of
each new trustee was approved by a vote of at least two-thirds
of the trustees still in office at the time of such election
or nomination who were trustees at the beginning of such
period).
For purposes of this subsection, a Participant's employment shall be deemed to
be terminated by the Trust or the successor to the Trust or an affiliated entity
if the Participant terminates employment after (i) a substantial adverse
alteration in the nature of the Participant's status or responsibilities from
those in effect immediately prior to the Change in Control, or (ii) a material
reduction in the Participant's annual base salary and target bonus, if any, as
in effect immediately prior to the Change in Control. If, upon a Change in
Control, awards in other shares or securities are substituted for outstanding
Awards pursuant to Section 6.4, and immediately following the Change in Control
the Participant becomes employed by the entity into which the Trust merged, or
the purchaser of substantially all of the assets of the Trust, or a successor to
such entity or purchaser, the Participant shall not be treated as having
terminated employment for purposes of this Section 6.5 until such time as the
Participant terminates employment with the merged entity or purchaser (or
successor), as applicable.
<PAGE>
6.6. Limit on Distribution. Distribution of Shares or other
amounts under the Plan shall be subject to the following:
(a) Notwithstanding any other provision of the Plan, the Trust
shall have no liability to deliver any Shares under the Plan
or make any other distribution of benefits under the Plan
unless such delivery or distribution would comply with all
applicable laws and the applicable requirements of any
securities exchange or similar entity.
(b) In the case of a Participant who is subject to Section 16(a)
and 16(b) of the Exchange Act, the Trust Committee may, at any
time, add such conditions and limitations to any Award to such
Participant, or any feature of any such Award, as the
Committee, in its sole discretion, deems necessary or
desirable to comply with Section 16(a) or 16(b) and the rules
and regulations thereunder or to obtain any exemption
therefrom.
(c) To the extent that the Plan provides for issuance of
certificates to reflect the transfer of Shares, the transfer
of such Shares may be effected on a non-certificated basis, to
the extent not prohibited by applicable law or the rules of
any stock exchange.
6.7. Liability for Cash Payments. Subject to the provisions of this
Section, each Related Company shall be liable for payment of cash due under the
Plan with respect to any Participant to the extent that such benefits are
attributable to the service rendered for that Related Company by the
Participant. Any disputes relating to liability of a Related Company for cash
payments shall be resolved by the Trust Committee.
6.8. Performance-Based Compensation. To the extent that the Trust
Committee determines that it is necessary or desirable to conform any Awards
under the Plan with the requirements applicable to "Performance-Based
Compensation", as that term is used in Code section 162(m)(4)(C), it may, at or
prior to the time an Award is granted, take such steps and impose such
restrictions with respect to such Award as it determines to be necessary to
satisfy such requirements including, without limitation:
(a) The establishment of performance goals that must be satisfied
prior to the payment or distribution of benefits under such
Awards.
(b) The submission of such Awards and performance goals to the
Trust's shareholders for approval and making the receipt of
benefits under such Awards contingent on receipt of such
approval.
(c) Providing that no payment or distribution be made under such
Awards unless the Committee certifies that the goals and the
applicable terms of the Plan and Agreement reflecting the
Awards have been satisfied.
To the extent that the Committee determines that the foregoing requirements
relating to Performance-Based Compensation do not apply to Awards under the Plan
because the Awards constitute Options, the Committee may, at the time the Award
is granted, conform the Awards to alternative methods of satisfying the
requirements applicable to Performance-Based Compensation.
6.9. Withholding. All Awards and other payments under the Plan are
subject to withholding of all applicable taxes, which withholding obligations
may be satisfied, with the consent of the granting Committee, through the
surrender of Shares which the Participant already owns or to which a Participant
is otherwise entitled under the Plan; provided, however, previously-owned Shares
that have been held by the Participant less than six months or Shares to which
the Participant is entitled under the Plan may only be used to satisfy the
minimum tax withholding required by applicable law.
6.10. Transferability. Awards under the Plan are not transferable
except as designated by the Participant by will or by the laws of descent and
distribution or, to the extent provided by the granting Committee, pursuant to a
qualified domestic relations order (within the meaning of the Code and
applicable rules thereunder). To the extent that the Participant who receives an
Award under the Plan has the right to exercise such Award, the Award may be
exercised during the lifetime of the Participant only by the Participant.
Notwithstanding the foregoing provisions of this subsection, the Committee may
permit Awards under the Plan to be transferred to or for the benefit of the
Participant's family (including, without limitation, to a trust or partnership
for the benefit of a Participant's family), subject to such procedures as the
Committee may establish. In no event shall an Incentive Share Option be
transferable to the extent that such transferability would violate the
requirements applicable to such option under Code section 422.
<PAGE>
6.11. Notices. Any notice or document required to be filed with a
Committee under the Plan will be properly filed if delivered or mailed by
registered mail, postage prepaid, to the Committee, in care of the Trust or the
Related Company, as applicable, at its principal executive offices. The
Committee may, by advance written notice to affected persons, revise such notice
procedure from time to time. Any notice required under the Plan (other than a
notice of election) may be waived by the person entitled to notice.
6.12. Form and Time of Elections. Unless otherwise specified herein,
each election required or permitted to be made by any Participant or other
person entitled to benefits under the Plan, and any permitted modification or
revocation thereof, shall be in writing filed with the applicable Committee at
such times, in such form, and subject to such restrictions and limitations, not
inconsistent with the terms of the Plan, as the Committee shall require.
6.13. Agreement With Trust or Related Company. At the time of an Award
to a Participant under the Plan, the granting Committee may require a
Participant to enter into an agreement with the Trust or the Related Company, as
applicable (the "Agreement"), in a form specified by the granting Committee,
agreeing to the terms and conditions of the Plan and to such additional terms
and conditions, not inconsistent with the Plan, as the granting Committee may,
in its sole discretion, prescribe.
6.14. Limitation of Implied Rights.
(a) Neither a Participant nor any other person shall, by reason of the
Plan, acquire any right in or title to any assets, funds or property of the
Trust or any Related Company whatsoever, including, without limitation, any
specific funds, assets, or other property which the Trust or any Related
Company, in its sole discretion, may set aside in anticipation of a liability
under the Plan. A Participant shall have only a contractual right to the
amounts, if any, payable under the Plan, unsecured by any assets of the Trust
and any Related Company. Nothing contained in the Plan shall constitute a
guarantee by the Trust or any Related Company that the assets of such companies
shall be sufficient to pay any benefits to any person.
(b) The Plan does not constitute a contract of employment, and
selection as a Participant will not give any employee the right to be retained
in the employ of the Trust or any Related Company, nor any right or claim to any
benefit under the Plan, unless such right or claim has specifically accrued
under the terms of the Plan. Except as otherwise provided in the Plan, no Award
under the Plan shall confer upon the holder thereof any right as a shareholder
of the Trust prior to the date on which he fulfills all service requirements and
other conditions for receipt of such rights and Shares are registered in his
name.
6.15. Evidence. Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person acting on
it considers pertinent and reliable, and signed, made or presented by the proper
party or parties.
6.16. Action by Trust or Related Company. Any action required or
permitted to be taken by the Trust or any Related Company shall be by resolution
of its board of trustees or directors, as applicable, or by action of one or
more members of the board (including a committee of the board) who are duly
authorized to act for the board or (except to the extent prohibited by
applicable law or the rules of any stock exchange) by a duly authorized officer
of the Trust.
6.17. Gender and Number. Where the context admits, words in any gender
shall include any other gender, words in the singular shall include the plural
and the plural shall include the singular.
6.18. Applicable Law. The provisions of the Plan shall be construed in
accordance with the laws of the State of Maryland, without giving effect to
choice of law principles.
6.19. Foreign Employees. Notwithstanding any other provision of the
Plan to the contrary, a Committee may grant Awards to eligible persons who are
foreign nationals on such terms and conditions different from those specified in
the Plan as may, in the judgment of the Committee, be necessary or desirable to
foster and promote achievement of the purposes of the Plan. In furtherance of
such purposes, the Committee may make such modifications, amendments, procedures
and subplans as may be necessary or advisable to comply with provisions of laws
in other countries or jurisdictions in which the Trust or a Related Company
operates or has employees.
SECTION 7
COMMITTEES
7.1. Administration. The authority to control and manage the operation
and administration of the Plan shall be vested in the Trust Committee and the
Related Companies' Committees (the "Committees") in accordance with this Section
7.
<PAGE>
7.2. Selection of Trust Committee. So long as the Trust is subject to
Section 16 of the Exchange Act, the Trust Committee shall be selected by the
Board and shall consist of not fewer than two members of the Board or such
greater number as may be required for compliance with Rule 16b-3 issued under
the Exchange Act, none of whom shall be eligible to receive Awards under the
Plan.
7.3. Powers of Committees. The authority to manage and control
the operation and administration of the Plan shall be vested in the Committees,
subject to the following:
(a) Subject to the provisions of the Plan, the Trust Committee
will have the authority and discretion to select which
employees of the Trust are eligible to receive Awards and
each Related Company Committee will have the authority and
discretion to select which employees of the Related Company
are eligible to receive Awards. Each Committee shall have
the authority to determine the time or times of receipt, to
determine the types of Awards and the number of shares
covered by the Awards, to establish the terms, conditions,
performance criteria, restrictions, and other provisions of
such Awards, and to cancel or suspend Awards. In making
such Award determinations, the Committee may take into
account the nature of services rendered by the respective
employee, the individual's present and potential contribution
to the Trust's or the Related Company's success and such other
factors as the Committee deems relevant.
(b) Subject to the provisions of the Plan, the Trust Committee
will have the authority and discretion to determine the extent
to which Awards under the Plan will be structured to conform
to the requirements applicable to Performance-Based
Compensation, and to take such action, establish such
procedures, and impose such restrictions at the time such
Awards are granted as the Committee determines to be necessary
or appropriate to conform to such requirements.
(c) Subject to the provisions of the Plan, the Trust Committee
will have the authority and discretion to interpret the Plan,
to establish, amend and rescind any rules and regulations
relating to the Plan, to determine the terms and provisions of
any agreements made pursuant to the Plan and to make all other
determinations that may be necessary or advisable for the
administration of the Plan.
(d) Any interpretation of the Plan by a Committee and any decision
made by it under the Plan is final and binding on all persons.
(e) Except as otherwise expressly provided in the Plan, where a
Committee is authorized to make a determination with respect
to any Award, such determination shall be made at the time the
Award is made, except that the Committee may reserve the
authority to have such determination made by the Committee in
the future (but only if such reservation is made at the time
the Award is granted and is expressly stated in the Agreement
reflecting the Award).
7.4. Delegation by Committee. Except to the extent prohibited by
applicable law or the rules of any stock exchange or NASDAQ (if appropriate), a
Committee may allocate all or any portion of its responsibilities and powers to
any one or more of its members and may delegate all or any part of its
responsibilities and powers to any person or persons selected by it. Any such
allocation or delegation may be revoked by the Committee at any time.
7.5. Information to be Furnished to Committees. The Trust and Related
Companies shall furnish each Committee such data and information as may be
required for it to discharge its duties. The records of the Trust and Related
Companies as to an employee's or Participant's employment (or other provision of
services), termination of employment (or cessation of the provision of
services), leave of absence, reemployment and compensation shall be conclusive
on all persons unless determined to be incorrect. Participants and other persons
entitled to benefits under the Plan must furnish the Committees such evidence,
data or information as the Committees consider desirable to carry out the terms
of the Plan.
<PAGE>
7.6. Liability and Indemnification of Committees. No member or
authorized delegate of any Committee shall be liable to any person for any
action taken or omitted in connection with the administration of the Plan unless
attributable to his own fraud or willful misconduct; nor shall the Trust or any
Related Company be liable to any person for any such action unless attributable
to fraud or willful misconduct on the part of a trustee or employee of the Trust
or Related Company. Each Committee, the individual members thereof, and persons
acting as the authorized delegates of the Committee under the Plan, shall be
indemnified by the Trust against any and all liabilities, losses, costs and
expenses (including legal fees and expenses) of whatsoever kind and nature which
may be imposed on, incurred by or asserted against the Committee or its members
or authorized delegates by reason of the performance of a Committee function if
the Committee or its members or authorized delegates did not act dishonestly or
in willful violation of the law or regulation under which such liability, loss,
cost or expense arises. This indemnification shall not duplicate but may
supplement any coverage available under any applicable insurance.
SECTION 8
AMENDMENT AND TERMINATION
Subject to obtaining such approvals as may be required under the Code,
Federal securities law, Maryland corporate law or stock exchange requirements,
the Board may, at any time, amend or terminate the Plan, provided that, subject
to subsection 6.4 (relating to certain adjustments to shares), no amendment or
termination may materially adversely affect the rights of any Participant or
beneficiary under any Award made under the Plan prior to the date such amendment
is adopted by the Board.
