HC Government Realty trust, Inc.
2016 Long Term Incentive Plan
1. Purpose and Effective
Date.
(a) The purpose of the
HC Government Realty Trust, Inc. 2016 Long Term Incentive Plan (the
“Plan”) is to further the long-term stability and
financial success of HC Government Realty Trust, Inc., a Maryland
corporation (the “Company”), by attracting and
retaining personnel and entities, including employees, directors,
officers, consultants, managers, advisors and executives for the
Company and its Subsidiaries, through the use of equity incentives.
The Company believes that an ownership interest in the Company will
stimulate the efforts of those persons and entities upon whose
judgment, interest and efforts the Company and its Subsidiaries are
and will be largely dependent for the successful conduct of their
respective businesses and will further align those persons’
interests with the interests of the Company’s
stockholders.
(b) The Plan was
adopted by the Board of Directors of the Company and became
effective on October 20, 2016.
2. Definitions.
In
addition to other terms defined herein, the terms as used herein
shall have the following meanings:
(a) Act. The Securities Exchange
Act of 1934, as amended.
(b) Affiliate. When used with
reference to a specified Person, (i) any Person that directly or
indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the specified Person;
(ii) any Person who, from time to time, an Immediate Family Member
of a specified Person; (iii) any Person who, from time to time, is
an officer or director or manager of a specified Person; or (iv)
any Person who, directly or indirectly, is the beneficial owner of
50% or more of any class of equity securities or other ownership
interests of the specified Person, or of any Person of which the
specified Person is directly or indirectly the owner of 50% or more
of any class of equity securities or other ownership
interests.
(c) Applicable Withholding Taxes.
The aggregate amount of federal, state and local income and payroll
taxes that the Company or any Subsidiary is required to withhold
(based on the minimum applicable statutory withholding rates) in
connection with any exercise of an Option or Stock Appreciation
Right, the grant, lapse of restrictions or payment with respect to
an Award under the Plan.
(d) Award. The award of an Option,
Restricted Stock, Stock Appreciation Right Other Equity-Based Award
or Cash Incentive Award under the Plan.
(e) Board. The Board of Directors
of the Company.
(f) Cash Incentive Award. The award
of a right to receive a payment of cash, determined on an
individual basis or as an allocation of an incentive pool (or
Company Stock having a value equivalent to the cash otherwise
payable) that is contingent on the achievement of performance
objectives established by the Committee.
(g) Cause. As defined in a written
agreement between an employee or Consultant and the Company or any
of its Subsidiaries or Affiliates, including without limitation the
Manager, that is in effect at the time of termination of the
employee. If there is no such agreement that defines the term,
Cause shall mean:
(i) any material breach
of a representation, warranty or covenant by the employee of a
material term or obligation of his or her employment agreement (if
any), or any other agreement between the employee and the Company
or any of its Subsidiaries, including without limitation material
failure to perform a substantial portion of his or her duties and
responsibilities thereunder, which breach is not cured within ten
(10) days after written notice thereof by the Company or any
Subsidiary to the employee specifically describing such alleged
breach;
(ii) any
material violation by the employee of a written directive from the
Board or the officer or other supervisory personnel of the Company,
the Manager or any Subsidiary to whom such employee reports which
is not due to the Disability of the employee;
(iii) commission
by the employee of a (A) felony, (B) crime of moral turpitude or
(C) misdemeanor involving fraud, breach of trust or
misappropriation, whether or not the commission of such felony,
crime or misdemeanor is in connection with the business of the
Company or any Subsidiary; or
(iv) gross
incompetence, gross negligence, or gross or willful misconduct in
office or breach of a fiduciary duty owed to the Company or any
Subsidiary.
(h) Change in Control. The
occurrence after the date of adoption of this Plan by the Board of
any of the following events:
(i) The consummation of
the acquisition by any person (as such term is defined in Section
13(d) or 14(d) of the Act) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Act) of fifty percent
(50%) or more of the combined voting power of the then outstanding
voting securities of the Company;
(ii) Within
any twelve (12) month period, the individuals who are members of
the Board at the beginning of such period cease for any reason to
constitute a majority of the Board, unless the election, or
nomination for election by the stockholders, of any new director
was approved by a vote of a majority of the Board, and such new
director shall, for purposes of this Agreement, be considered as a
member of the Board; or
(iii) The
consummation of: (A) a merger or consolidation if Company
stockholders immediately before such merger or consolidation do
not, as a result of such merger or consolidation, own, directly or
indirectly, more than fifty percent (50%) of the combined voting
power of the then outstanding voting securities of the entity
resulting from such merger or consolidation in substantially the
same proportion to each other as their ownership of the combined
voting power of the voting securities of the Company outstanding
immediately before such merger or consolidation; or (B) a complete
liquidation or dissolution or an agreement for the sale or other
disposition of fifty percent (50%) or more of the consolidated
assets of the Company and its Subsidiaries.
Notwithstanding the
foregoing, a Change in Control shall not be deemed to occur if any
of the foregoing transactions occurs with a Subsidiary or Affiliate
of the Company.
If a
Change in Control constitutes a payment event with respect to any
Award that provides for the deferral of compensation and is subject
to Section 409A of the Code, no payment will be made under
that Award on account of a Change in Control unless the event
described in (i), (ii) or (iii) above, as applicable, constitutes
“change in the ownership or effective control” of the
Company or “a change in the ownership of a substantial
portion of the assets” of the Company under Treasury
Regulation Section 1.409A-3(i)(5).
(i) Code. The Internal Revenue Code
of 1986, as amended and any rules, regulations and guidance
promulgated thereunder, as modified from time to time.
(j) Committee. The Committee
appointed by the Board to administer the Plan, or if no such
Committee has been appointed, the Board.
(k) Company. HC Government Realty
Trust, Inc., a Maryland corporation, its successors and
assigns.
(l) Company Stock. The
Company’s common stock, $0.01 par value per share. If the par
value of the Company Stock is changed, or in the event of a change
in the capital structure of the Company (as provided in Section
15 below), the shares resulting from
such a change shall be deemed to be Company Stock within the
meaning of the Plan.
(m) Consultant. An individual or
entity rendering services to the Company or any Subsidiary who is
not an “employee” for purposes of employment tax
withholding under the Code.
(n) Control (including the terms
Controlling, Controlled by and under common Control with).
shall mean the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a
Person through the ownership of Voting Power, by contract or
otherwise.
(o) Date of Grant. The effective
date of an Award granted by the Committee.
(p) Disability or Disabled. As to
an Incentive Stock Option, a Disability within the meaning of Code
Section 22(e)(3). As to all other Awards, the terms
“Disability” or “Disabled” shall have the
meaning ascribed to such term or terms in the agreement or
instrument approved by the committee to evidence such
Award.
(q) Fair Market Value.
(i) If the Company
Stock is (A) listed on any established stock exchange,
(B) traded in the NASDAQ system, or (C) otherwise traded
in the national over-the-counter securities market, then its Fair
Market Value shall be the per share price reported as the last
trade for such stock on the applicable date, as reported by such
exchange, NASDAQ or by a market maker for the Company Stock in the
national over-the-counter securities market, as the case may be;
or, if there are no trades of Company Stock so reported on the
applicable date, then the Fair Market Value for purposes of the
particular Award shall be the per share price so reported on the
next preceding trading day on which there was a trade on such
exchange, as reported over NASDAQ or as reported by a market maker
of the Company’s Stock in the national over-the-counter
securities market, as the case may be.
(ii) If
the Company Stock is not publicly traded, the Fair Market Value
shall be determined in good faith by the Committee, using any
reasonable method.
(r) Immediate
Family Member. Person’s
spouse, parents, children, brothers, sisters, grandparents,
grandchildren and any such Person who is so related by marriage
such that this includes “step-” and
“-in-law” relations as well as such Persons so related
by adoption.
(s) Incentive Stock Option. An
Option intended to meet the requirements of, and qualify for
favorable federal income tax treatment under, Code Section
422.
(t) Limitation Amount. An amount
equal to $100,000.00.
(u) LTIP Unit. An “LTIP
Unit” as defined in the Operating Partnership’s
partnership agreement, as amended from time to time.
(v) Manager. Holmwood Capital
Advisors, LLC, or any successor as external manager or adviser of
the Company.
(w) Nonstatutory Stock Option. An
Option that does not meet the requirements of Code Section 422, or
that is otherwise not intended to be an Incentive Stock Option and
is so designated.
(x) Operating Partnership. HC
Government Realty Holdings, L.P., a Delaware limited partnership,
its successors and assigns.
(y) Option. A right to purchase
Company Stock granted under the Plan, at a price determined in
accordance with the Plan.
(z) Other Equity-Based Award. Any
Award, other than an Option, Stock Appreciation Right, Cash
Incentive Award or Restricted Stock which, subject to such terms
and conditions as may be prescribed by the Committee, entitles a
Participant to receive Company Stock or rights or units (which may
be settled in Company Stock, cash or a combination thereof) valued
in whole or in part by reference to, or otherwise based on, Company
Stock (including securities convertible into Company Stock) or
other equity interests including LTIP Units.
(aa) Participant.
Any person who is granted an Award under the Plan.
(bb) Person.
Any individual, partnership, corporation, limited liability
company, joint venture, association, trust, unincorporated
organization or other governmental or legal entity.
(cc) Restricted
Stock. Company Stock awarded upon the terms and subject to
the restrictions set forth in Section 8 below.
(dd) [Reserved].
(ee) 10%
Stockholder. A person who owns, directly or indirectly,
stock possessing more than 10% of the total combined voting power
of all voting securities of the Company, or any parent or
Subsidiary. Indirect ownership of such voting securities shall be
determined in accordance with Code Section 424(d).
(ff) Securities
Act. The Securities Act of 1933, as amended.
(gg) Stock
Appreciation Rights. An Award, subject to Sections 9(b) and
9(c), as applicable, the value of which is based upon an increase
in the Fair Market Value of the Company Stock on the Date of Grant
and a date specified in, or determinable in accordance with, the
agreement or instrument approved by the Committee to evidence such
Award.
(hh) Subsidiary
or Subsidiaries. The Operating Partnership, any affiliated
corporation or any other business entity in which the Company,
directly or indirectly, owns voting securities possessing at least
fifty percent (50%) of the combined voting power of all classes of
voting securities of such affiliated corporation or
entity.
(ii) Voting
Power. Voting securities or other voting interests
ordinarily (and apart from rights accruing under special
circumstances) having the right to vote in the election of board
members or Persons performing substantially equivalent tasks and
responsibilities with respect to a particular entity.
(a) Awards. Awards of Options,
Restricted Stock, Stock Appreciation Rights, Other Equity-Based
Awards or Cash Incentive Awards may be granted under the Plan.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options; provided, however, that Incentive Stock
Options may only be granted to employees of the Company or its
Subsidiaries and Affiliates.
(b) Dividend Equivalents. Any Award
under the Plan may provide the Participant with the right to
receive dividend payments or dividend equivalent payments with
respect to shares of Company Stock subject to the Award, which
payments may be either made currently or credited to an account for
the Participant, may be settled in cash or Company Stock and may be
subject to restrictions similar to the underlying
Award.
(c) Repricing of Awards. Except for
adjustments pursuant to Section 15 (relating to the adjustment of
shares), and reductions of the exercise price approved by the
Company’s stockholders, the exercise price for any
outstanding Option or Stock Appreciation Right may not be decreased
after the date of grant nor may an outstanding Option or Stock
Appreciation Right granted under the Plan be surrendered to the
Company as consideration for the grant of a replacement Option or
Stock Appreciation Right with a lower exercise price.
(d) No Rights to Specific
Assets. Neither a Participant nor any
other person shall by reason of participation in the Plan acquire
any right in, or title to, any assets, funds or property of the
Company or any Subsidiary whatsoever, including any specific funds,
assets or other property which the Company or any Subsidiary, 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 Stock or amounts, if any, payable or distributable under the
Plan, unsecured by any assets of the Company or any Subsidiary, and
nothing contained in the Plan shall constitute a guarantee that the
assets of the Company or any Subsidiary shall be sufficient to pay
any benefits to any person.
(e) No Contractual Right to Employment or
Future Awards. The Plan does not constitute a
contract of employment, and selection as a Participant will not
give any participating employee the right to be retained in the
employ of the Company or any Subsidiary or any right or claim to
any benefit under the Plan, unless such right or claim has
specifically accrued under the terms of the Plan. No individual
shall have the right to be selected to receive an Award under this
Plan, or, having been so selected, to receive a future Award under
this Plan.
(f) No Rights as a Stockholder.
Except as otherwise provided in the Plan, no Award under the Plan
shall confer upon the holder thereof any rights as a stockholder of
the Company prior to the date on which the individual fulfills all
conditions for receipt of such rights.
4. Company Stock.
(a) Subject to
Section 15, there shall be
reserved for issuance under the Plan an aggregate of 1,000,000
shares of Company Stock, which may include authorized, but
unissued, shares. To the extent any shares of Company Stock covered
by an Award (including Other Equity Awards), under the Plan are
forfeited or are not delivered to a Participant or beneficiary
because the Award is forfeited, canceled or settled in cash, or if
any shares of Company Stock are not delivered because the shares
are used to satisfy the Applicable Withholding Taxes, such shares
shall not be deemed to have been delivered, or issued, for purposes
of determining the maximum number of shares of Company Stock
available for issuance under the Plan and such shares shall again
become eligible for issuance under the Plan. Other Equity-Based
Awards that are LTIP Units shall reduce the number of shares of
Company Stock that may be issued under this plan on a one-for-one
basis, i.e., each such LTIP
Unit shall be treated as an Award of one share of Company Stock.
With respect to Stock Appreciation Rights that are settled in
Company Stock, only actual shares delivered shall be counted for
purposes of these limitations. If the exercise price of any Option
granted under the Plan is satisfied by tendering shares of Company
Stock to the Company (whether by actual delivery or attestation,
and whether or not such surrendered shares were acquired pursuant
to any Award granted under the Plan), only the number of shares of
Company Stock issued net of the shares of Company Stock tendered
shall be deemed delivered for purposes of determining the maximum
number of shares available for issuance under the
Plan.
(b) [Reserved].
5. Eligibility. Any employee of,
officer or director of, or Consultant to, the Company or any
Subsidiary, the Manager, any employee, member, officer or manager
of, or Consultant to, the Manager who, in the judgment of the
Committee, has contributed, or can be expected to contribute, to
the profits or growth of the Company or any such Subsidiary is
eligible to become a Participant. The Committee shall have the
power and complete discretion, as provided in Section 17, to select
eligible Participants and to determine for each Participant the
terms, conditions and nature of the Award and the number of shares
of Company Stock to be allocated to, or ascribed to, the Award;
provided, however, that any
Award made to a member of the Committee must be approved by the
Board.
6. Stock Options.
(a) Whenever the
Committee deems it appropriate to grant Options, the Options shall
be evidenced by a stock option agreement between the Company and
the Participant, which shall be subject to the applicable
provisions of this Plan and to such other provisions as the
Committee may determine. Such agreement shall be given to the
Participant and shall state the number of shares of Company Stock
for which Options are granted, the exercise price per share,
whether the Options are Incentive Stock Options or Nonstatutory
Stock Options, and the conditions to which the grant and exercise
of the Options are subject.
(b) The Committee shall
establish the exercise price of Options, provided, however, that (i) the
exercise price of an Option shall be not less than 100% of the Fair Market Value of the
shares of Company Stock to which the Award pertains on the Date of
Grant, or (ii) in the case of an Incentive Stock Option
granted to a Participant who is a 10% Stockholder, not less than
110% of the Fair Market Value of such shares on the Date of
Grant.
(c) Subject to Section
6(d) below, Options may be exercised
in whole or in part at such times as may be specified by the
Committee in the Participant’s stock option agreement. The
Committee may impose such vesting conditions and other requirements
as the Committee deems appropriate, and the Committee may include
such provisions regarding a Change in Control as the Committee
deems appropriate.
(d) The Committee
shall establish the term of each Option in the Participant’s
stock option agreement. The term of an Option shall not be longer
than ten (10) years from the Date of Grant, except that an
Incentive Stock Option granted to a 10% Stockholder shall not have a term
in excess of five (5) years. No Option may be exercised after the
expiration of its term or, except as set forth in the
Participant’s stock option agreement, after the termination
of the Participant’s employment or service. The Committee
shall set forth in the Participant’s stock option agreement
when, and under what circumstances, an Option may be exercised
after termination of the Participant’s employment or service.
The Committee, in its sole discretion, may amend a previously
granted Incentive Stock Option to provide for more liberal exercise
provisions; provided however that if the Incentive Stock Option as
amended no longer meets the requirements of Code Section 422, and,
as a result the Option no longer qualifies for favorable federal
income tax treatment under Code Section 422, the amendment shall
not become effective without the written consent of the
Participant.
(e) By its terms, an
Incentive Stock Option shall be exercisable in any calendar year
only to the extent that the aggregate Fair Market Value (determined
at the Date of Grant) of the Company Stock with respect to which
Incentive Stock Options are exercisable by the Participant for the
first time during the calendar year does not exceed the Limitation
Amount. Incentive Stock Options granted under the Plan and all
other plans of the Company or any Subsidiary shall be aggregated
for purposes of determining whether the Limitation Amount has been
exceeded. The Board may impose such conditions as it deems
appropriate in an Incentive Stock Option agreement to ensure that
the foregoing requirement is met. If Incentive Stock Options that
first become exercisable in a calendar year exceed the Limitation
Amount, the excess Options will be treated as Nonstatutory Stock
Options to the extent permitted by law.
(f) If a
Participant’s employment or services is terminated by the
Company for Cause, the Participant’s Options, whether vested
or unvested, shall terminate as of the date of the termination of
employment or service.
(g) Upon exercise of an
Option that is awarded in connection with Stock Appreciation Rights
and surrender of the related portion of the underlying Stock
Appreciation Right, the Stock Appreciation Right, to the extent
surrendered, shall not thereafter be exercisable.
7. Method of Exercise of
Options.
(a) Options may be
exercised by giving written notice of the exercise to the Company,
stating the number of shares the Participant has elected to
purchase under the Option. Such notice shall be effective only if
accompanied by payment of the exercise price in full in immediately
available funds or, subject to limitations imposed by applicable
law, by such other means as the Committee may from time to time
permit, including: (i) by tendering, either actually or by
attestation, shares of Company Stock acceptable to the Committee,
and valued at Fair Market Value on the date of exercise;
(ii) by irrevocably authorizing a third party, acceptable to
the Committee, to sell shares of Stock (or a sufficient portion of
the shares) acquired upon exercise of the Option and to remit to
the Company a sufficient portion of the sale proceeds to pay the
entire exercise price and any Applicable Withholding Taxes
resulting from such exercise; (iii) payment through a net exercise
such that, without the payment of any funds, the Participant may
exercise the Option and receive the net number of shares of Company
Stock equal in value to (A) the number of shares of Company
Stock as to which the option is being exercised, multiplied by (B)
a fraction, the numerator of which is the Fair Market Value (on
such date as is determined by the Committee) less the exercise
price, and the denominator of which is such Fair Market Value (the
number of net shares of Company Stock to be received shall be
rounded down to the nearest whole number of shares of Company
Stock); (iv) by personal, certified or cashiers’ check;
(v) by other property deemed acceptable by the Committee; or
(vi) by any combination thereof.
(b) The Company may
place on any certificate representing Company Stock (or note on the
transfer ledger in the instance of common stock issued in
non-certificated form) issued upon the exercise of an Option any
legend deemed desirable by the Company’s counsel to comply
with federal or state securities laws. The Company may require of
the Participant a customary indication of his or her investment
intent. A Participant shall not possess stockholder rights with
respect to shares of Company Stock subject to an Option until the
Participant has exercised the Option and made any required payment,
including payment of Applicable Withholding Taxes, and the Company
has issued a certificate for the shares of Company Stock
acquired.
8. Restricted Stock
Awards.
(a) Whenever the
Committee deems it appropriate to grant a Restricted Stock Award,
notice shall be given to the Participant stating the number of
shares of Restricted Stock for which the Award is granted, the Date
of Grant, and the terms and conditions to which the Award is
subject. Certificates representing the shares pertaining to a
Restricted Stock Award may, but are not required, to be issued in
the name of the Participant, subject to the restrictions imposed by
the Plan and the Committee. A Restricted Stock Award may be made by
the Committee in its discretion without cash
consideration.
(b) The Committee
may place such restrictions on the transferability and vesting of
Restricted Stock as the Committee deems appropriate, including, but
not limited to, restrictions relating to continued employment or
service with the Company or its Subsidiaries or financial or other
performance goals. Without limiting the foregoing, the Committee
may provide performance or Change in Control vesting acceleration
parameters under which all, or a portion, of the Restricted Stock
will vest on the Company’s achievement of established
performance objectives. Restricted Stock may not be sold, assigned,
transferred, disposed of, pledged, hypothecated or otherwise
encumbered until the restrictions on such shares shall have lapsed
or shall have been removed pursuant to Section 8(c).
(c) As to each
Restricted Stock Award the Committee shall establish the terms and
conditions upon which the restrictions set forth in Section
8(b)
shall lapse. Such terms and conditions may include without
limitation the passage of time, the meeting of performance goals,
the lapsing of such restrictions as a result of the Disability,
death or retirement of the Participant, or the occurrence of a
Change in Control.
(d) A Participant shall
hold shares of Restricted Stock subject to the restrictions set
forth in the Award agreement pertaining thereto and in the Plan. In
other respects, the Participant shall have all the rights of a
stockholder with respect to the shares of Restricted Stock,
including, but not limited to, the right to receive all cash
dividends and other distributions paid thereon. Certificates
representing Restricted Stock shall bear a legend referring to the
restrictions set forth in the Plan and the Participant’s
Award agreement. If stock dividends are declared on Restricted
Stock or other distributions are made in respect thereof, such
stock dividends or other distributions may, in the discretion of
the Committee as reflected in the applicable Award agreement, be
subject to the same restrictions as the underlying shares of
Restricted Stock.
9. Stock Appreciation
Rights.
(a) Whenever the
Committee deems it appropriate, Stock Appreciation Rights may be
granted in connection with all or any part of an Option or in a
separate Award.
(b) The following
provisions apply to all Stock Appreciation Rights that are not
granted in connection with Options:
(i) Stock Appreciation
Rights shall entitle the participant, upon exercise of all or any
part of the Stock Appreciation Rights, to receive in exchange from
the Company an amount in cash or shares of Company Stock (as
provided in the applicable Stock Appreciation Right agreement)
equal to the excess of (A) the Fair Market Value on the Stock
Appreciation Right exercise date of the shares of Company Stock to
which the Stock Appreciation Right appertains over (B) the Fair
Market Value of the Company Stock to which the Stock Appreciation
Right appertains on the Date of Grant (sometimes referred to herein
as the exercise price). In the Stock Appreciation Rights Agreement
the Committee may prescribe that the participant will be entitled
to receive a lesser amount upon exercise of the Stock Appreciation
Rights (e.g., the exercise
price may be set at a value greater than the Fair Market Value on
the date of grant or the aggregate spread between the date of grant
and the date of exercise may be subject to a limit).
(ii) A
Stock Appreciation Right may only be exercised or paid at a time
when the Fair Market Value of the Company Stock covered by the
Stock Appreciation Right exceeds the Fair Market Value of the
Company Stock on the Date of Grant of the Stock Appreciation
Right.
(c) The following
provisions apply to all Stock Appreciation Rights that are awarded
in connection with Options:
(i) Stock Appreciation
Rights that are awarded in connection with Options shall entitle
the participant to exercise all or any part of the Stock
Appreciation Rights, and in connection therewith to surrender to
the Company unexercised that portion of the underlying Option
relating to the same number of shares of Company Stock as is
covered by the Stock Appreciation Rights (or the portion of the
Stock Appreciation Rights so exercised) and to receive in exchange
from the Company an amount in cash or shares of Company Stock (as
provided in the applicable Stock Appreciation Right agreement)
equal to the excess of (A) the Fair Market Value on the date of
exercise of the Company Stock covered by the surrendered portion of
the underlying Option over (B) the exercise price of the
Company Stock covered by the surrendered portion of the underlying
Option. The Committee may prescribe that the participant will be
entitled to receive a lesser amount upon exercise of the Stock
Appreciation Right.
(ii) Upon
the exercise of a Stock Appreciation Right that is awarded in
connection with Options and surrender of the related portion of the
underlying Option, the Option, to the extent surrendered, shall not
thereafter be exercisable.
(iii) Subject
to any further conditions upon exercise imposed by the Committee, a
Stock Appreciation Right issued in tandem with an Option shall be
exercisable only to the extent that the related Option is
exercisable.
(iv) A
Stock Appreciation Right awarded in connection with Options may
only be exercised at a time when the Fair Market Value of the
Company Stock covered by the Stock Appreciation Right exceeds the
exercise price of the Company Stock covered by the underlying
Option.
(d) The manner in which
the Company’s obligation arising upon the exercise of a Stock
Appreciation Right shall be paid shall be determined by the
Committee and shall be set forth in the Stock Appreciation Rights
agreement or in the Option agreement or the related Stock
Appreciation Rights agreement, if the Stock Appreciation Rights in
question are being awarded in connection with Options. The
Committee may provide for payment in Company Stock or cash, or a
combination of Company Stock and cash, or the Committee may reserve
the right to determine the manner of payment at the time the Stock
Appreciation Right is exercised. Shares of Company Stock issued
upon the exercise of a Stock Appreciation Right shall be valued at
their Fair Market Value on the date of exercise.
10. Other Equity-Based
Awards.
(a) Whenever the
Committee deems it appropriate to grant an Other Equity-Based
Award, notice shall be given to the Participant stating the number
of shares of Company Stock or other equity interests (including
LTIP Units) for which the Award is granted, the Date of Grant, and
the terms and conditions to which the Award is subject;
provided, however, that the
grant of LTIP Units must satisfy the requirements of the
partnership agreement of the Operating Partnership as in effect on
the Date of Grant. Certificates representing any shares of Company
Stock or other equity interests (including LTIP Units) granted as
Other-Stock Based Award may, but are not required to, be issued in
the name of the Participant, subject to the restrictions imposed by
the Plan, the Committee and, if applicable, the partnership
agreement of the Operating Partnership.
(b) The Committee
may place such restrictions on the transferability and vesting of
Other Equity-Based Awards as the Committee deems appropriate,
including, but not limited to, restrictions relating to continued
employment or service or financial or other performance goals.
Without limiting the foregoing, the Committee may provide
performance or Change in Control vesting acceleration parameters
under which all, or a portion of, the Other Equity-Based Award will
vest on the Company’s achievement of established performance
objectives. Other Equity-Based Awards may not be sold, assigned,
transferred, disposed of, pledged, hypothecated or otherwise
encumbered until the restrictions on the Other Equity-Based Award
shall have lapsed or shall have been removed pursuant to
Section 10(c).
(c) As to each
Other Equity-Based Award the Committee shall establish the terms
and conditions upon which the restrictions, if any, on
transferability set forth in Section 10(b) shall
lapse. Such terms and conditions may include, without limitation,
the passage of time, the meeting of performance goals, the lapsing
of such restrictions as a result of the Disability, death or
retirement of the Participant, or the occurrence of a Change in
Control.
(d) A Participant shall
hold the Other Equity-Based Award subject to the restrictions set
forth in the Award agreement. A Participant, as a result of
receiving an Other Equity-Based Award, shall not have any rights as
a stockholder until, and then only to the extent that, the Other
Equity-Based Award is earned and settled in Company Stock or
Company Stock is issued with respect to the grant of the Other
Equity-Based Award, in which case the Participant shall have all
the rights of a stockholder with respect to such shares of Company
Stock, including, but not limited to, the right to receive all cash
dividends and other distributions paid thereon. Certificates
representing shares of Company Stock issued with respect to the
grant of an Other Equity-Based Award shall bear a legend referring
to the restrictions set forth in the Plan, the Participant’s
Award agreement and, if applicable, the partnership agreement of
the Operating Partnership. If stock dividends are declared on
Company Stock issued with respect to an Other Equity-Based Award,
such stock dividends may, in the discretion of the Committee as
reflected in the applicable Award agreement, be subject to the same
restrictions as the underlying shares of Company Stock subject to
the Other Equity-Based Award.
(e) Other Equity-Based
Awards valued in whole or in part by reference to, or otherwise
based on, Company Stock, shall be payable or settled in shares of
Company Stock, cash or a combination of Company Stock and cash, as
determined by the Committee in its discretion; provided, however, that any shares of
Company Stock that are issued on account of the conversion of LTIP
Units into Company Stock shall not be issued under the Plan
(i.e., the grant of the
LTIP Unit shall reduce the number of shares of Company Stock
issuable under this Plan but the issuance of Company Stock upon the
conversion of LTIP Units shall not further reduce the number of
shares of Company Stock issuable under this Plan). Other
Equity-Based Awards denominated as equity interest other than
shares of Company Stock may be paid or settled in shares or units
of such equity interests or cash or a combination of both as
determined by the Committee in its discretion.
11. [Reserved].
12. Applicable Withholding Taxes.
Each Participant shall agree, as a condition of receiving an Award,
to pay to the Company, or make arrangements satisfactory to the
Company regarding the payment of, all Applicable Withholding Taxes
with respect to the Award. Until the Applicable Withholding Taxes
have been paid or arrangements satisfactory to the Company have
been made, no stock certificates (or, in the case of Restricted
Stock, no stock certificates free of a restrictive legend) shall be
issued to the Participant and no payments in respect of Stock
Appreciation rights that have been exercised or otherwise would be
payable to the Participant. As an alternative to making a cash
payment to the Company to satisfy Applicable Withholding Tax
obligations, the Committee may establish procedures permitting the
Participant to elect to (a) deliver shares of Company Stock at
the time beneficially and of record owned by the Participant, or
(b) if the applicable withholding taxes are arising in
connection with the recognition of income with respect to an Award,
deliver to the Company or have the Company retain that number of
shares of Company Stock that would satisfy all or a specified
portion of the Applicable Withholding Taxes. Any such election
shall be made only in accordance with procedures established by the
Committee to avoid a charge to earnings for financial accounting
purposes.
13. Nontransferability of
Awards.
(a) In general,
Awards, by their terms, shall not be transferable by the
Participant except by will or by the laws of descent and
distribution or except as described below. Options shall be
exercisable, during the Participant’s lifetime, only by the
Participant or by his guardian or legal
representative.
(b) Notwithstanding the
provisions of Section 13(a) and subject to federal and state
securities laws, the Committee may grant Stock Appreciation Rights
(other than Stock Appreciation Rights granted in relationship to an
Incentive Stock Option) or Nonstatutory Stock Options that permit,
or amend outstanding Nonstatutory Stock Options to permit, a
Participant to transfer such Stock Appreciation Rights or Options
to one or more Immediate Family Members, to a trust for the benefit
of Immediate Family Members, or to a partnership, limited liability
company, or other entity, the only partners, members, or
interest-holders of which are among the Participant’s
Immediate Family Members. Consideration may not be paid for such
transfer. The transferee shall be subject to all conditions
applicable to the Stock Appreciation Right or Nonstatutory Stock
Option prior to its transfer. The agreement granting the Stock
Appreciation Right or Nonstatutory Stock Option shall set forth the
transfer conditions and restrictions. The Committee may impose on
any transferable Option and on stock issued upon the exercise of an
Option such limitations and conditions as the Committee deems
appropriate. Options and related Stock Appreciation Rights must be
transferred to the same transferee and the transferee may not
transfer such Options or Stock Appreciation Rights (except by will
or the laws of descent and distribution).
14. Termination, Modification,
Change. If not sooner terminated by the Board, this Plan
shall terminate at the close of business on October 21, 2026. No
Awards shall be made under the Plan after its termination. The
Board may terminate the Plan or may amend the Plan in such respects
as it shall deem advisable; provided, that, unless authorized by
the holders of Company Stock, no change shall be made that
(a) increases the total number of shares of Company Stock
reserved for issuance pursuant to Awards (except pursuant to
Section 15), in the aggregate or
as Incentive Stock Options, (b) expands the class of persons
eligible to receive Awards, (c) materially increases the
benefits accruing to Participants under the Plan,
(d) re-prices an Option or Stock Appreciation Right, as
provided in Section 3(c), or
(e) otherwise requires stockholder approval under the rules of
a domestic exchange on which Company Stock is traded.
Notwithstanding any provision in this Plan or any Award agreement
to the contrary, the Committee may amend the Plan or an Award
agreement, to take effect retroactively or otherwise, as deemed
necessary or advisable for the purpose of (i) conforming the
Plan or the Award agreement to any present or future law relating
to plans of this or similar nature (including, but not limited to,
Code Section 409A) or (ii) causing Incentive Stock
Options to meet the requirements of the Code and regulations
thereunder. Except as provided in the preceding sentence, a
termination or amendment of the Plan shall not, without the consent
of the Participant, adversely affect a Participant’s rights
under an Award previously granted to him. By accepting an award
under this Plan, each Participant agrees and consents to any
amendment made pursuant to this Section 14 to any Award granted under this Plan
without further consideration or action.
15. Change in Capital
Structure.
(a) The
maximum number of shares of Company Stock as to which Options,
Restricted Stock, Stock Appreciation Rights and Other Equity-Based
Awards may be granted and the terms of outstanding Awards
(including, but not limited to, the number and kind of securities
subject to an Award and any exercise price) shall be adjusted as
the Board determines as may be required to proportionately and
uniformly reflect such transaction in the event that the Company
(i) effects one or more nonreciprocal transactions between the
Company and its stockholders such as a share dividend,
extra-ordinary cash dividend, share split-up, subdivision or
consolidation of shares of Company Stock that affects the number or
kind of Company Stock (or other securities of the Company) and
causes a change in the Fair Market Value of the Company Stock
subject to outstanding Awards or (ii) engages in a merger,
consolidation, reorganization, spinoff or other transaction to
which Section 424 of the Code applies. Any determination made
under this Section 15 by the Board shall be nondiscretionary,
final and conclusive.
(b)
The issuance by the
Company of shares of Company Stock or securities convertible into
shares of Company Stock, for cash or property or for labor or
services, either upon direct sale or upon the exercise of rights or
warrants to subscribe therefor, or upon conversion of shares of
Company Stock or other securities, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the
maximum number of shares of Company Stock to which Options,
Restricted Stock, Stock Appreciation Rights and Other Equity-Based
Awards may be granted or the terms of outstanding
Awards.
16. Change in Control. Subject to
the terms of the applicable Award Agreement, in the event of a
Change in Control, the Committee, without the consent of the
Participant, may take such actions with respect to Awards as the
Committee deems necessary or appropriate. These actions may
include, but shall not be limited to, the following:
(a) Providing
for the acceleration of the vesting schedule relating to the
exercise or realization of the Award so that the Award may be
exercised or realized in full on or before a date initially fixed
by the Committee;
(b) Providing
for the purchase or settlement of any such Award by the Company for
any amount of cash equal to the amount which could have been
obtained upon the exercise of such Award or realization of a
Participant’s rights had such Award been exercisable and
payable immediately before such Change of Control;
(c) Making
adjustments to Awards then outstanding as the Committee deems
appropriate to reflect such Change in Control; provided, however,
that, such adjustments shall be made so that both (i) the aggregate
intrinsic value of an Award immediately after the adjustment is not
materially less than or greater than the Award’s aggregate
intrinsic value before the Award (other than a lesser intrinsic
value because the adjusted Award covers a whole number of shares or
units and disregards any fractional share or unit that would have
resulted from the adjustment) and
(ii) the ratio of any exercise price per share to the market value
per share is not reduced materially; or
(d) Causing
any such Award then outstanding to be assumed, or new rights
substituted therefor, by the acquiring or surviving corporation or
other business entity, regardless of how organized in such Change
in Control; provided, however, that such assumed or new rights
shall provide that (i) the aggregate intrinsic value of an Award
immediately after the assumption or grant of the new right is not
materially less than or greater than the Award’s intrinsic
value before the assumption or grant of the new
rights (other than an immaterial lesser intrinsic value
because the assumed or new rights cover a whole number of shares or
units and not a fractional share or unit and (ii) the ratio
of any exercise price per share to the market value per share is
not reduced materially.
17. Administration of the
Plan.
(a) The Plan shall be
administered by the Committee. Subject to the Plan and the terms of
any outstanding Award agreement, the Committee shall have the
authority to impose such limitations or conditions upon an Award as
the Committee deems appropriate to achieve the objectives of the
Award and the Plan. Without limiting the generality of the
foregoing and in addition to the powers set forth elsewhere in the
Plan, the Committee shall have the power and complete discretion to
determine (i) which eligible persons shall receive an Award
and the nature of the Award, (ii) the number of shares of
Company Stock to be covered by each Award, subject to the number of
shares in the Plan, (iii) whether Options shall be Incentive
Stock Options or Nonstatutory Stock Options, (iv) the Fair
Market Value of Company Stock, (v) the time or times when an
Award shall be granted, (vi) whether an Award shall become
vested over a period of time, according to a performance-based or
other vesting schedule or otherwise, and when it shall be fully
vested, (vii) the terms and conditions under which
restrictions imposed upon an Award shall lapse, (viii) whether
a Change in Control exists, (ix) factors relevant to the
satisfaction, termination or lapse of restrictions on Restricted
Stock, Stock Appreciation Rights, Options, Other Equity-Based
Awards or Cash Incentive Awards, (x) when Options or Stock
Appreciation Rights may be exercised, (xi) whether to approve
a Participant’s election with respect to Applicable
Withholding Taxes, (xii) conditions relating to the length of
time before disposition of Company Stock received in connection
with an Award is permitted, (xiii) notice provisions relating
to the sale of Company Stock acquired under the Plan, and
(xiv) any additional requirements relating to Awards that the
Committee deems necessary or appropriate. Notwithstanding the
foregoing, no “tandem stock options” (where two stock
options are issued together and the exercise of one option affects
the right to exercise the other option) may be issued in connection
with Incentive Stock Options.
(b) In addition to, and
not as a limitation upon, the provisions of Section 13 hereof, the Committee shall have the power
to amend the terms of previously granted Awards so long as the
terms as amended are consistent with the terms of the Plan and,
where applicable, consistent with the qualification of an Option as
an Incentive Stock Option. Notwithstanding the next preceding
sentence, the consent of the Participant must be obtained with
respect to any amendment that would affect adversely the
Participant’s rights under the Award, except that such
consent shall not be required if such amendment is for the purpose
of complying with any requirement of the Code applicable to the
Award.
(c) The Committee may
adopt rules and regulations for carrying out the Plan. The
Committee shall have the express discretionary authority to
construe and interpret the Plan and the Award agreements, to
resolve any ambiguities, to define any terms, and to make any other
determinations required by the Plan or an Award agreement. The
interpretation and construction of any provisions of the Plan or an
Award agreement by the Committee shall be final and conclusive. The
Committee may consult with counsel, who may be counsel to the
Company, and shall not incur any liability for any action taken in
good faith in reliance upon the advice of counsel.
(d) A majority of the
members of the Committee shall constitute a quorum, and all actions
of the Committee shall be taken by a majority of the members
present. Any action may be taken by a written instrument signed by
all of the members, and any action so taken shall be fully
effective as if it had been taken at a meeting.
(e) Except to the
extent prohibited by applicable law or the applicable rules of a
stock exchange or the Plan, the 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. The acts of such delegates shall be treated hereunder as acts
of the Committee and such delegates shall report regularly to the
Committee regarding the delegated duties and responsibilities and
any Awards so granted. Any such allocation or delegation may be
revoked by the Committee at any time.
18. Delivery of Shares. Delivery of
shares of Company Stock or other securities or amounts under the
Plan shall be subject to the following:
(a) Compliance with Applicable
Laws. Notwithstanding any other provision of the Plan, the
Company shall have no obligation to deliver any shares of Company
Stock or make any other distribution of benefits under the Plan
unless such delivery or distribution complies with all applicable
laws (including, the requirements of the Securities Act), and the
applicable requirements of any securities exchange or similar
entity.
(b) Certificates. To the extent
that the Plan provides for the issuance of shares of Company Stock,
the issuance may be effected on a non-certificated basis, to the
extent not prohibited by applicable law or the applicable rules of
any stock exchange.
19. Compliance with Code
Section 409A.
Notwithstanding
anything to the contrary contained herein, to the extent
applicable, this Plan is intended to comply with Section 409A
of the Code, and the Committee shall interpret and administer the
Plan in accordance therewith. In addition, any provision, including
without limitation any definition in this Plan that is determined
to violate the requirements of Section 409A of the Code shall
be void and without effect and any provision, including without
limitation any definition that is required to appear in this Plan
document under Section 409A of the Code that is not expressly
set forth shall be deemed to be set forth herein, and the Plan
shall be administered in all respects as if such provisions were
expressly set forth herein. In addition, to, and not as a
limitation upon the other provisions of this Section 19, the timing of certain payment of benefits
provided for under this Plan shall be revised as necessary for
compliance with Section 409A of the Code.
20. Notice. Unless otherwise
provided in an Award Agreement, all written notices and all other
written communications to the Company provided for in the Plan, or
any Award agreement, shall be delivered personally or sent by
registered or certified mail, return receipt requested, postage
prepaid (provided that international mail shall be sent via
overnight or two-day delivery), or sent by prepaid overnight
courier to the Company at the address set forth below:
HC
Government Realty Trust, Inc.
1819
Main Street, Suite 212
Sarasota,
Florida 34236
Such
notices, demands, claims and other communications shall be deemed
given:
(a) in the case of
delivery by overnight service with guaranteed next day delivery,
the next day or the day designated for delivery;
(b) in the case of
certified or registered U.S. mail, five (5) days after deposit in
the U.S. mail; or
(c) in the case of
facsimile, the date upon which the transmitting party received
confirmation of receipt by facsimile, telephone or
otherwise;
provided, however, that in no event
shall any such communications be deemed to be given later than the
date they are actually received, provided they are actually
received. In the event a communication is not received, it shall
only be deemed received upon the showing of an original of the
applicable receipt, registration or confirmation from the
applicable delivery service provider. Communications that are to be
delivered by the U.S. mail or by overnight service to the Company
shall be directed to the attention of the Company’s senior
human resource officer and Corporate Secretary.
21. Indemnification.
To the
fullest extent permitted by law, each person who is or shall have
been a member of the Committee, or of the Board, or an officer of
the Company to whom authority was delegated in accordance with
Section 17(e), or an employee of
the Company shall be indemnified and held harmless by the Company
against and from any loss (including amounts paid in settlement),
cost, liability or expense (including reasonable attorneys’
fees) that may be imposed upon or reasonably incurred by him or her
in connection with or resulting from any claim, action, suit, or
proceeding to which he or she may be a party or in which he or she
may be involved by reason of any action taken or failure to act
under the Plan and against and from any and all amounts paid by him
or her in settlement thereof, with the Company’s approval, or
paid by him or her in satisfaction of any judgment in any such
action, suit, or proceeding against him or her, provided he or she
shall give the Company an opportunity, at its own expense, to
handle and defend the same before he or she undertakes to handle
and defend it on his or her own behalf, unless such loss, cost,
liability, or expense is a result of his or her own willful
misconduct or except as expressly provided by statute. The
foregoing right of indemnification shall not be exclusive of any
other rights of indemnification to which such persons may be
entitled under the Company’s charter or bylaws, as a matter
of law, or otherwise, or any power that the Company may have to
indemnify them or hold them harmless.
22. Interpretation and Governing
Law. The terms of this Plan and Awards granted pursuant to
the Plan shall be governed, construed and administered in
accordance with the laws of the State of Maryland, without
reference to principles of conflict of law, except as superceded by
federal law. The Plan and Awards are subject to all present and
future applicable provisions of the Code. If any provision of the
Plan or an Award conflicts with any such Code provision or ruling,
the Committee shall cause the Plan to be amended, and shall modify
any agreement theretofore executed in connection with an Award, so
as to comply or, if for any reason amendments cannot be so made,
that provisions of the Plan or any such agreement in such conflict
shall be deemed to be, and shall be, void and of no
effect.
[Remainder
of Page Intentionally Left Blank]
IN
WITNESS WHEREOF, the Company has caused this Plan to be adopted
this 21st
day of October, 2016
HC
GOVENRMENT REALTY TRUST, INC.
Name:
Edwin M.
Stanton
Its:
Chief Executive
Officer