RECKSON ASSOCIATES REALTY CORP. 2005 STOCK OPTION PLAN

 

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                                                                    Exhibit 10.1

 

                         RECKSON ASSOCIATES REALTY CORP.

                             2005 STOCK OPTION PLAN

 

ARTICLE 1. GENERAL

 

      1.1. Purpose. The purpose of the Reckson Associates Realty Corp. 2005

Stock Option Plan (the "Plan") is to provide for certain officers, directors and

employees of Reckson Associates Realty Corp. (the "Company") and certain of its

Affiliates (as defined below) an equity-based incentive to maintain and enhance

the performance and profitability of the Company. It is the further purpose of

this Plan to permit the granting of awards that will constitute performance

based compensation for certain executive officers, as described in Section

162(m) of the Internal Revenue Code of 1986, as amended (the "Code"), and

regulations promulgated thereunder.

 

      1.2. Administration.

 

      (a) The Plan shall be administered by the Compensation Committee (the

"Committee") of the Board of Directors of the Company (the "Board"), which

Committee shall consist of two or more directors, or by the Board. It is

intended that the directors appointed to serve on the Committee shall be

"non-employee directors" (within the meaning of Rule 16b-3 promulgated under the

Securities Exchange Act of 1934 (the "Act")), "outside directors" (within the

meaning of Code Section 162(m)) and "independent directors" (within the meaning

of Section 303A of the Listed Company Manual of the New York Stock Exchange,

Inc.); however, the mere fact that a Committee member shall fail to qualify

under any of these requirements shall not invalidate any award made by the

Committee which award is otherwise validly made under the Plan. The members of

the Committee shall be appointed by, and may be changed at any time and from

time to time in the discretion of, the Board.

 

      (b) The Committee shall have the authority (i) to exercise all of the

powers granted to it under the Plan, (ii) to construe, interpret and implement

the Plan and any Plan Agreements (as defined below) executed pursuant to the

Plan, (iii) to prescribe, amend and rescind rules relating to the Plan, (iv) to

make any determination necessary or advisable in administering the Plan, (v) to

correct any defect, supply any omission and reconcile any inconsistency in the

Plan and (vi) to delegate to the Company's Chief Executive Officer (the "Proper

Officer") its authority to grant awards under the Plan to employees, excluding

those employees who are executive officers ("Non-Executive Officers"), provided

that (a) the aggregate number of shares of Common Stock and/or OP Units granted

to any Non-Executive Officer during any calendar year shall not exceed an

aggregate of 100,000 shares and/or units and (b) the Proper Officer shall report

annually to the Committee regarding the material terms of awards granted to any

Non-Executive Officers.

 

      (c) The determination of the Committee on all matters relating to the Plan

or any Plan Agreement shall be conclusive.

 

      (d) No member of the Committee shall be liable for any action or

determination made in good faith with respect to the Plan or any award

hereunder.

 

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      (e) Notwithstanding anything to the contrary contained herein, the Board

may, in its sole discretion, at any time and from time to time, resolve to

administer the Plan, in which case, the term Committee as used herein shall be

deemed to mean the Board.

 

      1.3. Persons Eligible for Awards. Awards under the Plan may be made to

such officers, directors and employees of the Company or its Affiliates as the

Committee shall from time to time in its sole discretion select. No member of

the Board who is not an officer or employee of the Company or an Affiliate (an

"Independent Director") shall be eligible to receive any Awards under the Plan,

except for restricted stock and/or restricted stock unit awards granted (i)

automatically or (ii) at the discretion of the Committee under the provisions of

Article 5 of the Plan.

 

      1.4. Types of Awards Under Plan.

 

      (a) Awards may be made under the Plan in the form of (i) stock options

("options"), (ii) restricted stock awards, (iii) unrestricted stock awards, (iv)

restricted stock unit awards and (v) LTIP Unit awards, all as more fully set

forth in Articles 2 and 3. The Committee also may grant such other awards that

are denominated or payable in, valued in whole or in part by reference to, or

otherwise based on or related to, shares of Common Stock as are deemed by the

Committee to be consistent with the purposes of the Plan. Grants made under the

Plan may also be made in lieu of cash fees otherwise payable to Directors of the

Company or cash bonuses payable to employees of the Company or any Affiliate.

 

      (b) Options granted under the Plan may be either (i) "nonqualified" stock

options ("NQSOs") or (ii) options intended to qualify for incentive stock option

treatment described in Code Section 422 ("ISOs").

 

      (c) All options when granted are intended to be NQSOs, unless the

applicable Plan Agreement explicitly states that the option is intended to be an

ISO. If an option is intended to be an ISO, and if for any reason such option

(or any portion thereof) shall not qualify as an ISO, then, to the extent of

such nonqualification, such option (or portion) shall be regarded as a NQSO

appropriately granted under the Plan provided that such option (or portion)

otherwise meets the Plan's requirements relating to NQSOs.

 

      1.5. Shares/Units Available for Awards.

 

      (a) Subject to Section 4.5 (relating to adjustments upon changes in

capitalization), as of any date the total number of shares of Common Stock

and/or OP Units with respect to which awards may be granted under the Plan,

shall equal the excess (if any) of an aggregate of 2,000,000 shares of Common

Stock and/or OP Units, over (i) the number of shares of Common Stock and/or OP

Units subject to outstanding awards, (ii) the number of shares and/or units in

respect of which options have been exercised, grants of restricted or

unrestricted Common Stock, LTIP Units or restricted stock units have been made

pursuant to the Plan and (iii) the number of shares and/or units issued subject

to forfeiture restrictions which have lapsed. In any calendar year, a person

eligible for awards under the Plan may not be granted options under the Plan

covering a total of more than 250,000 shares of Common Stock.

 

 

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      In accordance with (and without limitation upon) the preceding sentence,

awards may be granted in respect of the following shares of Common Stock and/or

OP Units: shares covered by previously-granted awards that have expired,

terminated or been cancelled for any reason whatsoever (other than by reason of

exercise or vesting).

 

      (b) Shares of Common Stock and/or OP Units that shall be subject to

issuance pursuant to the Plan shall be authorized and unissued or treasury

shares of Common Stock or OP Units, or shares of Common Stock purchased on the

open market or from stockholders of the Company for such purpose, or OP Units

purchased from unitholders of Reckson Operating Partnership, L.P. (the

"Operating Partnership"), the Company's operating partnership, for such purpose.

 

      1.6. Definitions of Certain Terms.

 

      (a) The term "Affiliate" as used herein means the Operating Partnership,

Reckson FS Limited Partnership, RANY Management Group, Inc., Reckson Finance,

Inc., Reckson Management Group, Inc., Reckson Construction Group, Inc., Reckson

Construction Group New York Inc., Reckson Construction & Development, LLC,

Metropolitan Partners LLC, any person or entity that directly, or indirectly

through one or more intermediaries, controls, is controlled by, or is under

common control with, the Company, or any other person or entity as subsequently

approved by the Board.

 

      (b) The term "Cause" shall mean a finding by the Committee that the

recipient of an award under the Plan has (i) acted with gross negligence or

willful misconduct in connection with the performance of his or her material

duties to the Company or its Affiliates; (ii) defaulted in the performance of

his or her material duties to the Company or its Affiliates and has not

corrected such action within 15 days of receipt of written notice thereof; (iii)

willfully acted against the best interests of the Company or its Affiliates,

which act has had a material and adverse impact on the financial affairs of the

Company or its Affiliates; or (iv) been convicted of a felony or committed a

material act of common law fraud against the Company, its Affiliates or their

employees and such act or conviction has, or the Committee reasonably determines

will have, a material adverse effect on the interests of the Company or its

Affiliates.

 

      (c) The term "Common Stock" as used herein means the shares of common

stock of the Company as constituted on the effective date of the Plan, and any

other shares into which such common stock shall thereafter be changed by reason

of a recapitalization, merger, consolidation, split up, combination, exchange of

shares or the like.

 

      (d) The "fair market value" (or "FMV") as of any date and in respect of

any share of Common Stock shall be:

 

          (i) if the Common Stock is listed for trading on the New York Stock

          Exchange, the closing price, regular way, of the Common Stock as

          reported on the New York Stock Exchange Composite Tape, or if no such

          reported sale of the Common Stock shall have occurred on such date, on

          the next preceding date on which there was such a reported sale; or

 

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          (ii) if the Common Stock is not so listed but is listed on another

          national securities exchange or authorized for quotation on the

          National Association of Securities Dealers Inc.'s NASDAQ National

          Market System ("NASDAQ/NMS"), the closing price, regular way, of the

          Common Stock on such exchange or NASDAQ/NMS, as the case may be, on

          which the largest number of shares of Common Stock have been traded in

          the aggregate on the preceding twenty trading days, or if no such

          reported sale of the Common Stock shall have occurred on such date on

          such exchange or NASDAQ/NMS, as the case may be, on the preceding date

          on which there was such a reported sale on such exchange or

          NASDAQ/NMS, as the case may be; or

 

          (iii) if the Common Stock is not listed for trading on a national

          securities exchange or authorized for quotation on NASDAQ/NMS, the

          average of the closing bid and asked prices as reported by the

          National Association of Securities Dealers Automated Quotation System

          ("NASDAQ") or, if no such prices shall have been so reported for such

          date, on the next preceding date for which such prices were so

          reported.

 

      (e) The term "LTIP Unit" shall mean an OP Unit, granted to a grantee

pursuant to Article 3, that is subject to the restrictions set forth in such

Article.

 

      (f) The term "OP Unit" shall mean a unit of partnership interest in the

Operating Partnership.

 

      (a) The term "Restricted Period" shall mean, in relation to shares of

restricted stock, restricted stock units, LTIP Units or Common Stock received

upon the exercise of options, the period determined by the Committee, during

which restrictions on the transferability of such shares of restricted stock,

restricted stock units, LTIP Units or Common Stock received upon the exercise of

options are in effect.

 

      (g) The term "restricted stock unit" shall mean a right, granted to a

grantee pursuant to Article 3, to receive either (i) an amount in cash equal to

the FMV of one share of Common Stock or (ii) one share of Common Stock, as

provided by the Committee at the time of grant.

 

      1.7. Agreements Evidencing Awards.

 

      (a) Option, restricted stock, LTIP Unit and restricted stock unit awards

granted under the Plan shall be evidenced by written agreements. Any such

written agreements shall (i) contain such provisions not inconsistent with the

terms of the Plan as the Committee may in its sole discretion deem necessary or

desirable and (ii) be referred to herein as "Plan Agreements."

 

      (b) Each Plan Agreement shall set forth the number of shares of Common

Stock or OP Units, as applicable, subject to the award granted thereby.

 

      (c) Each Plan Agreement with respect to the granting of an option shall

set forth the amount (the "option exercise price") payable by the grantee to the

Company in connection with the exercise of the option evidenced thereby. The

option exercise price per share shall not be less than 100% of the fair market

value of a share of Common Stock on the date the option is granted.

 

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ARTICLE 2. STOCK OPTIONS

 

      2.1. Option Awards.

 

      (a) Grant of Stock Options. The Committee may grant options to purchase

shares of Common Stock in such amounts and subject to such terms and conditions

as the Committee shall from time to time in its sole discretion determine,

subject to the terms of the Plan.

 

      (b) Dividend Equivalent Rights. To the extent expressly provided by the

Committee at the time of the grant, each NQSO granted under this Section 2.1

shall also generate Dividend Equivalent Rights ("DERs"), which shall entitle the

grantee to receive an additional share of Common Stock for each DER received

upon the exercise of the NQSO, at no additional cost, based on the formula set

forth herein. As of the last business day of each calendar quarter, the amount

of dividends paid by the Company on each share of Common Stock with respect to

that quarter shall be divided by the FMV per share to determine the actual

number of DERs accruing on each share subject to the NQSO. Such amount of DERs

shall be multiplied by the number of shares covered by the NQSO to determine the

number of DERs which accrued during such quarter. The provisions of this Section

2.1(b) shall not be amended more than once every six months other than to

comport with changes in applicable law.

 

      For example. Assume that a grantee holds a NQSO to purchase 600 shares of

Common Stock. Further assume that the dividend per share for the first quarter

was $0.10, and that the FMV per share on the last business day of the quarter

was $20. Therefore, .005 DER would accrue per share for that quarter and such

grantee would receive three DERs for that quarter (600 X .005). For purposes of

determining how many DERs would accrue during the second quarter, the NQSO would

be considered to be for 603 shares of Common Stock.

 

      2.2. Exercisability of Options. Subject to the other provisions of the

Plan:

 

      (a) Exercisability Determined by Plan Agreement. Each Plan Agreement shall

set forth the period during which and the conditions subject to which the option

shall be exercisable (including, but not limited to vesting of such options), as

determined by the Committee in its discretion.

 

      (b) Partial Exercise Permitted. Unless the applicable Plan Agreement

otherwise provides, an option granted under the Plan may be exercised from time

to time as to all or part of the full number of shares for which such option is

then exercisable, in which event the DERs relating to the portion of the option

being exercised shall also be exercised.

 

      (c) Notice of Exercise; Exercise Date.

 

          (i) An option shall be exercisable by the filing of a written notice

          of exercise with the Company, on such form and in such manner as the

          Committee shall in its sole discretion prescribe, and by payment in

          accordance with Section 2.4.

 

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          (ii) Unless the applicable Plan Agreement otherwise provides, or the

          Committee in its sole discretion otherwise determines, the date of

          exercise of an option shall be the date the Company receives such

          written notice of exercise and payment.

 

      2.3. Limitation on Exercise. Notwithstanding any other provision of the

Plan, no Plan Agreement shall permit an ISO to be exercisable more than 10 years

after the date of grant.

 

      2.4. Payment of Option Price.

 

      (a) Tender Due Upon Notice of Exercise. Unless the applicable Plan

Agreement otherwise provides or the Committee in its sole discretion otherwise

determines, any written notice of exercise of an option shall be accompanied by

payment of the full purchase price for the shares being purchased.

 

      (b) Manner of Payment. Payment of the option exercise price shall be made

in any combination of the following:

 

          (i) by certified or official bank check payable to the Company (or the

          equivalent thereof acceptable to the Committee);

 

          (ii) by personal check (subject to collection), which may in the

          Committee's discretion be deemed conditional;

 

          (iii) with the consent of the Committee in its sole discretion, by

          delivery of previously acquired shares of Common Stock owned by the

          grantee for at least six months having a fair market value (determined

          as of the option exercise date) equal to the portion of the option

          exercise price being paid thereby, provided that the Committee may

          require the grantee to furnish an opinion of counsel acceptable to the

          Committee to the effect that such delivery would not result in the

          grantee incurring any liability under Section 16(b) of the Act and

          does not require any Consent (as defined in Section 4.2); and

 

          (iv) by withholding shares of Common Stock from the shares otherwise

          issuable pursuant to the exercise.

 

      (c) Issuance of Shares. As soon as practicable after receipt of full

payment, the Company shall, subject to the provisions of Section 4.2, deliver to

the grantee one or more certificates for the shares of Common Stock so

purchased, which certificates may bear such legends as the Company may deem

appropriate concerning restrictions on the disposition of the shares in

accordance with applicable securities laws, rules and regulations or otherwise.

 

      2.5. Default Rules Concerning Termination of Employment.

 

      Subject to the other provisions of the Plan and unless the applicable Plan

Agreement otherwise provides:

 

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      (a) General Rule. All options granted to a grantee shall terminate upon

the gra