ENTERTAINMENT PROPERTIES
TRUST
2007 EQUITY INCENTIVE
PLAN
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1
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1
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1
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1
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1.4 Plan Subject to Shareholder
Approval
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1
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1
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1
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2.2 General Interpretive Principles
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8
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SECTION 3 PLAN ADMINISTRATION
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8
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3.1 Composition of Committee
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8
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3.2 Authority of Committee
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8
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9
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3.4 Determination Under the Plan
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9
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SECTION 4 SHARES SUBJECT TO THE PLAN
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9
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9
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4.2 Unused and Forfeited Shares
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10
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4.3 Adjustments in Authorized Shares
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10
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4.4 General Adjustment Rules
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10
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11
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11
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5.2 Types of Grants; Limits
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11
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11
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5.4 Restrictive Covenants
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12
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12
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12
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12
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6.3 Shareholder Privileges
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16
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SECTION 7 SHARE APPRECIATION RIGHTS
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16
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16
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16
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7.3 Exercise of Tandem SARs
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16
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7.4 Exercise of Freestanding SARs
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17
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17
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7.6 Payment of SAR Amount
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17
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i
Table of
Contents
(continued)
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Page
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SECTION 8 AWARDS OF RESTRICTED SHARE AND
RESTRICTED SHARE UNITS
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17
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8.1 Restricted Share Awards Granted by
Committee
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17
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8.2 Restricted Share Unit Awards Granted by
Committee
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17
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18
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8.4 Privileges of a Shareholder,
Transferability
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18
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8.5 Enforcement of Restrictions
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18
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8.6 Termination of Service, Death, Disability,
etc
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19
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SECTION 9 PERFORMANCE SHARES, PERFORMANCE UNITS,
BONUS SHARES AND DEFERRED SHARES
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19
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9.1 Awards Granted by Committee
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19
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9.2 Terms of Performance Shares or Performance
Units
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19
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19
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SECTION 10 PERFORMANCE AWARDS; SECTION 162(M)
PROVISIONS
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20
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10.1 Terms of Performance Awards
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20
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20
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21
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22
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10.5 Section 162(m) Limitations
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22
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SECTION 11 REORGANIZATION, CHANGE IN CONTROL OR
LIQUIDATION
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22
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SECTION 12 RIGHTS OF EMPLOYEES;
PARTICIPANTS
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23
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23
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SECTION 13 GENERAL RESTRICTIONS
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24
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13.1 Investment Representations
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13.2 Compliance with Securities Laws
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13.3 Share Restriction Agreement
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24
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SECTION 14 OTHER EMPLOYEE BENEFITS
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25
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SECTION 15 PLAN AMENDMENT, MODIFICATION AND
TERMINATION
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25
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15.1 Amendment, Modification, and
Termination
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25
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15.2 Adjustment Upon Certain Unusual or
Nonrecurring Events
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25
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15.3 Awards Previously Granted
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25
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25
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16.1 Withholding Requirement
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25
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16.2 Withholding with Shares
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25
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ii
Table of
Contents
(continued)
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Page
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SECTION 17 NONEXCLUSIVITY OF THE PLAN
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26
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17.1 Nonexclusivity of the Plan
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26
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SECTION 18 REQUIREMENTS OF LAW
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iii
ENTERTAINMENT PROPERTIES
TRUST
2007 EQUITY INCENTIVE PLAN
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1.1
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Establishment
. Entertainment
Properties Trust, a Maryland real estate investment trust (the
“Company”), hereby establishes the Entertainment
Properties Trust 2007 Equity Incentive Plan (the
“Plan”) for certain employees, non-employee trustees
and consultants of the Company.
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1.2
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Purpose . The purpose of this Plan is to
encourage employees of the Company and its affiliates and
subsidiaries, and non-employee trustees of the Company to acquire a
proprietary and vested interest in the growth and performance of
the Company. The Plan also is designed to assist the Company in
attracting and retaining employees, non-employee trustees and
consultants by providing them with the opportunity to participate
in the success and profitability of the Company.
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1.3
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Duration . The Plan shall commence on the
Effective Date and shall remain in effect, subject to the right of
the Board to amend or terminate the Plan at any time pursuant to
Section 15 hereof, until all Shares subject to the Plan shall
have been issued, purchased or acquired according to the
Plan’s provisions. Unless the Plan shall be reapproved by the
shareholders of the Company and the Board renews the continuation
of the Plan, no Awards shall be issued pursuant to the Plan after
the tenth (10 th ) anniversary of the Effective
Date.
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1.4
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Plan Subject to Shareholder
Approval .
Although the Plan is effective on the Effective Date, the
Plan’s continued existence is subject to the Plan being
approved by the Company’s shareholders within 12 months
of the Effective Date. Any Awards granted under the Plan after the
Effective Date but before the approval of the Plan by the
Company’s shareholders will become null and void if the
Company’s shareholders do not approve this Plan within such
12-month period.
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2.1
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Definitions . The following terms shall have the
meanings set forth below.
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“ 1933
Act ” means the Securities Act of 1933.
“ 1934
Act ” means the Securities Exchange Act of
1934.
“
Affiliate ” of the Company means any Person that
directly, or indirectly through one or more intermediaries,
Controls or is Controlled by, or is under common Control with the
Company.
1
“
Award ” means a grant made under this Plan in any
form, which may include but is not limited to, Share Options,
Restricted Shares, Restricted Shares Units, Bonus Shares, Deferred
Shares, Performance Shares, Share Appreciation Rights and
Performance Units.
“ Award
Agreement ” means a written agreement or instrument
between the Company and a Holder evidencing an Award.
“
Beneficiary ” means the person, persons, trust or
trusts which have been designated by a Holder in his or her most
recent written beneficiary designation filed with the Company to
receive the benefits specified under this Plan upon the death of
the Holder, or, if there is no designated beneficiary or surviving
designated beneficiary, then the Person or Persons entitled by will
or the laws of descent and distribution to receive such
benefits.
“
Board ” means the Board of Trustees of the
Company.
“ Bonus
Shares ” means Shares that are awarded to a Participant
without cost and without restriction in recognition of past
performance (whether determined by reference to another employee
benefit plan of the Company or otherwise) or as an incentive to
become an employee of the Company or a Subsidiary.
“
Cause ” means, unless otherwise defined in an Award
Agreement or otherwise defined in a Participant’s employment
agreement (in which case such definition will apply) any of the
following:
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(i)
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Participant’s conviction of,
plea of guilty to, or plea of nolo contendere to a felony or other
crime that involves fraud or dishonesty;
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(ii)
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Any
willful action or omission by a Participant which would constitute
grounds for immediate dismissal under the employment policies of
the Company by which Participant is employed, including
intoxication with alcohol or illegal drugs while on the premises of
the Company, or violation of sexual harassment laws or the internal
sexual harassment policy of the Company by which Participant is
employed;
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(iii)
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Participant’s habitual neglect
of duties, including repeated absences from work without reasonable
excuse; or
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(iv)
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Participant’s willful and
intentional material misconduct in the performance of his duties
that results in financial detriment to the Company;
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provided, however, that for purposes
of clauses (ii), (iii) and (iv), “Cause” shall not
include any one or more of the following: bad judgment, negligence
or any act or omission believed by the Participant in good faith to
have been in or not opposed to the interest of the Company (without
intent of the Participant to gain, directly or indirectly, a profit
to which the Participant was not legally entitled). A Participant
who agrees to resign from his affiliation with the Company in lieu
of being terminated for Cause may be deemed, in the sole discretion
of the Committee, to have been terminated for Cause for purposes of
this Plan.
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2
“ Change
in Control ” means the first to occur of the following
events:
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(i)
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Incumbent Trustees cease for any
reason to constitute at least a majority of the Board.
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(ii)
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Any
“person” (as defined in Section 3(a)(9) of the
1934 Act and as used in Sections 13(d)(3) and 14(d)(2) of the
1934 Act) or “group” (within the contemplation of
Section 13(d)(3) of the 1934 Act and Rule 13d-5
thereunder) is or becomes a “beneficial owner” (as
defined in Rule 13d-3 under the 1934 Act) or controls the
voting power, directly or indirectly, of shares of the Company
representing 25% or more of the Company Voting Securities, other
than (1) an acquisition of Company Voting Securities by an
underwriter pursuant to an offering of shares by the Company,
(2) a Non-Qualifying Transaction, or (3) an acquisition
of Company Voting Securities directly from the Company which is
approved by a majority of the Incumbent Trustees.
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(iii)
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A
Business Combination, other than a Non-Qualifying Transaction, is
consummated.
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(iv)
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The
shareholders of the Company approve a plan of complete liquidation
or dissolution of the Company.
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(v)
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The
acquisition of direct or indirect Control of the Company by any
“person” or “group.”
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(vi)
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Any
transaction or series of transactions which results in the Company
being “closely held” within the meaning of the REIT
provisions of the Code, after any applicable grace period, and with
respect to which the Board has either waived or failed to enforce
the “Excess Share” provisions of the Company’s
Amended and Restated Declaration of Trust.
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For purposes of
this Change in Control definition:
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A.
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“Company Voting
Securities” shall mean the outstanding shares of the Company
eligible to vote in the election of trustees of the
Company.
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B.
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“Company 25%
Shareholder” shall mean any “person” or
“group” which beneficially owns or has voting control
of 25% or more of the Company Voting Securities.
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C.
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“Business Combination”
shall mean a merger, consolidation, acquisition, sale of all or
substantially all of the Company’s assets or properties,
statutory share exchange or similar transaction involving the
Company or any of its subsidiaries that requires the approval of
the Company’s shareholders, whether for the transaction
itself or the issuance or exchange of securities in the
transaction.
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D.
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“Incumbent Trustees”
shall mean (1) the trustees of the Company as of the Effective
Date or (2) any trustee elected subsequent to the Effective
Date whose
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3
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election or nomination was approved
by a vote of at least two-thirds of the Incumbent Trustees then on
the Board (either by specific vote or approval of a proxy statement
of the Company in which such person is named as a nominee for
trustee).
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E.
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“Parent Corporation”
shall mean the ultimate parent entity that directly or indirectly
has beneficial ownership or voting control of a majority of the
outstanding voting securities eligible to elect directors of a
Surviving Corporation.
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F.
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“Surviving Corporation”
shall mean the entity resulting from a Business
Combination.
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G.
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“Non-Qualifying
Transaction” shall mean a Business Combination in which all
of the following criteria are met: (1) more than 50% of the
total voting power of the Surviving Corporation or, if applicable,
the Parent Corporation, is represented by Company Voting Securities
that were outstanding immediately prior to the Business Combination
(or, if applicable, is represented by shares into which the Company
Voting Securities were converted pursuant to the Business
Combination and held in substantially the same proportion as the
Company Voting Securities were held immediately prior to the
Business Combination), (2) no “person” or
“group” (other than a Company 25% Shareholder or any
employee benefit plan (or related trust) sponsored or maintained by
the Surviving Corporation or the Parent Corporation) would become
the beneficial owner, directly or indirectly, of 25% or more of the
total voting power of the outstanding voting securities eligible to
elect directors of the Parent Corporation (or, if there is no
Parent Corporation, the Surviving Corporation) and no Company 25%
Shareholder would increase its percentage of such total voting
power as a result of the transaction, and (3) at least a
majority of the members of the board of directors or similar
governing body of the Parent Corporation (or, if there is no Parent
Corporation, the Surviving Corporation) following the consummation
of the Business Combination were Incumbent Trustees at the time of
the Board’s approval of the Business Combination.
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Notwithstanding the foregoing, a
Change in Control shall not be deemed to occur solely because any
“person” or “group” acquires beneficial
ownership or voting control of more than 25% of the Company Voting
Securities as a result of any acquisition of Company Voting
Securities by the Company, but if after that acquisition by the
Company the “person” or “group” becomes the
beneficial owner or obtains voting control of any additional
Company Voting Securities, a Change in Control shall be deemed to
occur unless otherwise exempted as set forth above.
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“
Code ” means the Internal Revenue Code of 1986, as it
may be amended from time to time, and the rules and regulations
promulgated thereunder.
“
Committee ” means (i) the Board, or (ii) one
or more committees of the Board to whom the Board has delegated all
or part of its authority under this Plan. Initially, the Committee
shall
4
be the
Compensation Committee of the Board which is delegated all of the
Board’s authority under this Plan as contemplated by clause
(ii) above.
“
Company ” means Entertainment Properties Trust, a
Maryland real estate investment trust, and any successor
thereto.
“
Control ” means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership
of voting securities, by contract or otherwise.
“ Covered
Employee ” means an Employee that meets the definition of
“covered employee” under Section 162(m)(3) of the
Code.
“ Date of
Grant ” or “ Grant Date ” means, with
respect to any Award, the date as of which such Award is granted
under the Plan.
“
Deferred Shares ” means Shares that are awarded to a
Participant on a deferred basis pursuant to
Section 9.4.
“
Disabled ” or “ Disability ” means
an individual (i) is unable to engage in any substantial
gainful activity by reason of any medically determinable physical
or mental impairment which can be expected to result in death or
can be expected to last for a continuous period of not less than
twelve (12) months or (ii) is, by reason of any medically
determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period
of not less than twelve (12) months, receiving income
replacement benefits for a period of not less than 3 months
under a Company-sponsored accident and health plan. Notwithstanding
the above, with respect to an Incentive Share Option and the period
of time following a separation from service in which a Holder may
exercise such Incentive Share Option, “disabled” shall
have the same meaning as defined in Code section
22(e)(3).
“
Effective Date ” means April 2, 2007.
“
Eligible Employees ” means all Employees (including
officers and trustees who are also Employees) of the Company or an
Affiliate upon whose judgment, initiative and efforts the Company
depends, or will depend, for the successful conduct of the
Company’s business.
“
Employee ” means a common law employee of the Company
or an Affiliate.
“
Executive Officer ” means (i) the president of
the Company, any vice president of the Company, including any vice
president of the Company in charge of a principal business unit,
division or function (such as sales, administration, or finance),
any other officer who performs a policy making function or any
other person who performs similar policy making functions for the
Company, (ii) Executive Officers (as defined in part
(i) of this definition) of subsidiaries of the Company who
perform policy making functions for the Company, and (iii) any
Person designated or identified by the Board as being an Executive
Officer for purposes of the 1933 Act or the 1934 Act, including any
Person designated or identified by the Board as being a
Section 16 Person.
5
“ Fair
Market Value ” means, as of any date, the value of a
Share determined in good faith, from time to time, by the Committee
in its sole discretion, and for this purpose the Committee may
adopt such formulas as in its opinion shall reflect the true fair
market value of such Share from time to time and may rely on such
independent advice with respect to such fair market value as the
Committee shall deem appropriate. In the event that the Shares of
the Company are traded on a national securities exchange, the
Committee may determine that the Fair Market Value of the Share
shall be based upon the closing price on the trading day of the
applicable date as reported in The Wall Street Journal and
consistently applied. If the securities exchange is closed on the
applicable date, the closing price on the next day the securities
exchange is open will be the Fair Market Value.
“
Freestanding SAR ” means any SAR that is granted
independently of any Option.
“
Holder ” means a Participant, Beneficiary or Permitted
Transferee who is in possession of an Award Agreement representing
an Award that (i) in the case of a Participant has been
granted to such individual, (ii) in the case of a Beneficiary
has been transferred to such person under the laws of descent and
distribution, or (iii) in the case of a Permitted Transferee,
has been transferred to such person as permitted by the Committee,
and, with respect to all of the above cases (i), (ii) and
(iii), such Award Agreement has not expired, been canceled or
terminated. “Incentive Share Option” means any Option
designated as such and granted in accordance with the requirements
of Section 422 of the Code.
“
Nonqualified Share Option ” means any Option to
purchase Shares that is not an Incentive Share Option.
“
Option ” means a right to purchase Shares at a stated
price for a specified period of time. Such definition includes both
Nonqualified Share Options and Incentive Share Options.
“ Option
Agreement ” or “ Option Award Agreement
” means a written agreement or instrument between the Company
and a Holder evidencing an Option.
“ Option
Exercise Price ” means the price at which Shares subject
to an Option may be purchased, determined in accordance with
Section 6.2(b).
“
Optionee ” shall have the meaning as set forth in
Section 6.2. For the avoidance of any doubt, in situations
where the Option has been transferred to a Permitted Transferee or
passed to a Beneficiary in accordance with the laws of descent and
distribution, the Optionee will not be the same person as the
Holder of the Option.
“
Participant ” means a Service Provider of the Company
designated by the Committee from time to time during the term of
the Plan to receive one or more Awards under the Plan.
“
Performance Award ” means any Award that will be
issued or granted, or become vested or payable, as the case may be,
upon the achievement of certain performance goals (as described in
Section 10) to a Participant pursuant to
Section 10.
“
Performance Period ” means the period of time as
specified by the Committee during which any performance goals are
to be measured.
6
“
Performance Shares ” means an Award made pursuant to
Section 9 which entitles a Holder to receive Shares, their
cash equivalent, or a combination thereof based on the achievement
of performance targets during a Performance Period.
“
Performance Units ” means an Award made pursuant to
Section 9 which entitles a Holder to receive cash, Shares or a
combination thereof based on the achievement of performance goals
during a Performance Period.
“
Person ” shall have the meaning ascribed to such term
in Section 3(a)(9) of the 1934 Act and used in Sections 13(d)
and 14(d) thereof, including “group” as defined in
Section 13(d) thereof.
“
Plan ” means the Entertainment Properties Trust 2007
Equity Incentive Plan, as set forth in this instrument and as
hereafter amended from time to time.
“
Restricted Shares ” means Shares granted under
Section 8 that are subject those restrictions set forth
therein and the Award Agreement.
“
Restricted Shares Unit ” means an Award granted under
Section 8 evidencing the Holder’s right to receive a
Share (or, at the Committee’s discretion, a cash payment
equal to the Fair Market Value of a Share) at some future date and
that is subject those restrictions set forth therein and the Award
Agreement.
“
Rule 16b-3 ” means Rule 16b-3 promulgated
under the 1934 Act.
“ SAR
” or “ Share Appreciation Right ” means an
Award, granted either alone or in connection with an Option, that
is designated as a SAR pursuant to Section 7.
“ SAR
Holder ” shall have the meaning as set forth in
Section 7.2.
“
Section 16 Person ” means a Person who is subject
to obligations under Section 16 of the 1934 Act with respect
to transactions involving equity securities of the
Company.
“ Service
Provider ” means an Eligible Employee, a non-employee
trustee of the Company or consultant of the Company.
“
Shares ” means the shares of beneficial interest in
the Company.
“
Subsidiary ” means (i) in the case of an
Incentive Share Option a “subsidiary corporation,”
whether now or hereafter existing, as defined in section 424(f) of
the Code, and (ii) in the case of any other type of Award, in
addition to a subsidiary corporation as defined in clause (i), a
limited liability company, partnership or other entity in which the
Company controls fifty percent (50%) or more of the voting power or
equity interests.
“ Tandem
SAR ” means a SAR which is granted in connection with, or
related to, an Option, and which requires forfeiture of the right
to purchase an equal number of Shares under the related Option upon
the exercise of such SAR; or alternatively, which requires the
cancellation of an equal amount of SARs upon the purchase of the
Shares subject to the Option.
7
“ Vested
Option ” means any Option, or portion thereof, which is
exercisable by the Holder. Vested Options remain exercisable only
for that period of time as provided for under this Plan and any
applicable Option Award Agreement. Once a Vested Option is no
longer exercisable after otherwise having been exercisable, the
Option shall become null and void.
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2.2
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General Interpretive
Principles .
(i) Words in the singular shall include the plural and vice
versa, and words of one gender shall include the other gender, in
each case, as the context requires; (ii) the terms
“hereof,” “herein,” and
“herewith” and words of similar import shall, unless
otherwise stated, be construed to refer to this Plan and not to any
particular provision of this Plan, and references to Sections are
references to the Sections of this Plan unless otherwise specified;
(iii) the word “including” and words of similar
import when used in this Plan shall mean “including, without
limitation,” unless otherwise specified; and (iv) any
reference to any U.S. federal, state, or local statute or law shall
be deemed to also refer to all amendments or successor provisions
thereto, as well as all rules and regulations promulgated under
such statute or law, unless the context otherwise
requires.
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SECTION 3
PLAN ADMINISTRATION
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3.1
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Composition of Committee
. The Plan shall be
administered by the Committee. To the extent the Board considers it
desirable for transactions relating to Awards to be eligible to
qualify for an exemption under Rule 16b-3, the Committee shall
consist of two or more trustees of the Company, all of whom qualify
as “non-employee directors” within the meaning of
Rule 16b-3. To the extent the Board considers it desirable for
compensation delivered pursuant to Awards to be eligible to qualify
for an exemption from the limit on tax deductibility of
compensation under section 162(m) of the Code, the Committee shall
consist of two or more trustees of the Company, all of whom shall
qualify as “outside directors” within the meaning of
Code section 162(m).
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3.2
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Authority of Committee
. Subject to the terms
of the Plan and applicable law, and in addition to other express
powers and authorizations conferred on the Committee by the Plan,
the Committee shall have full power and authority to:
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(a)
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select the Service Providers to whom
Awards may from time to time be granted hereunder;
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(b)
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determine the type or types of
Awards to be granted to eligible Service Providers;
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(c)
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determine the number of Shares to be
covered by, or with respect to which payments, rights, or other
matters are to be calculated in connection with, Awards;
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(d)
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determine the terms and conditions
of any Award;
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(e)
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determine whether, and to what
extent, and under what circumstances Awards may be settled or
exercised in cash, Shares, other securities, other Awards or other
property;
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(f)
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determine whether, and to what
extent, and under what circumstance Awards may be canceled,
forfeited, or suspended and the method or methods by which Awards
may be settled, exercised, canceled, forfeited, or
suspended;
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(g)
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correct any defect, supply an
omission, reconcile any inconsistency and otherwise interpret and
administer the Plan and any instrument or Award Agreement relating
to the Plan or any Award hereunder;
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(h)
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modify and amend the Plan,
establish, amend, suspend, or waive such rules, regulations and
procedures of the Plan, and appoint such agents as it shall deem
appropriate for the proper administration of the Plan;
and
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(i)
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make any other determination and
take any other action that the Committee deems necessary or
desirable for the administration of the Plan.
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3.3
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Committee Delegation
. The Committee may
delegate to any member of the Board or committee of Board members
such of its powers as it deems appropriate, including the power to
sub-delegate, except that, pursuant to such delegation or
sub-delegation, only a member of the Board (or a committee thereof)
may grant Awards from time to time to specified categories of
Service Providers in amounts and on terms to be specified by the
Board or the Committee; provided that no such grants shall be made
other than by the Board or the Committee to individuals who are
then Section 16 Persons or other than by the Committee to
individuals who are then or are deemed likely to become a
“covered employee” within the meaning of Code section
162(m). A majority of the members of the Committee may determine
its actions and fix the time and place of its meetings.
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3.4
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Determination Under the
Plan . Unless
otherwise expressly provided in the Plan, all designations,
determinations, adjustments, interpretations, and other decisions
under or with respect to the Plan, any Award or Award Agreement
shall be within the sole discretion of the Committee, may be made
at any time and shall be final, conclusive, and binding upon all
persons, including the Company, any Participant, any Holder, and
any shareholder. No member of the Committee shall be liable for any
action, determination or interpretation made in good faith, and all
members of the Committee shall, in addition to their rights as
trustees, be fully protected by the Company with respect to any
such action, determination or interpretation.
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SECTION 4
SHARES SUBJECT TO THE PLAN
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4.1
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Number of Shares
. Subject to adjustment
as provided in Section 4.3 and subject to the maximum amount
of Shares that may be granted to an individual in a calendar year
as set forth in Section 5.5, no more than a total of One
Million Nine Hundred and Fifty Thousand (1,950,000) Shares are
authorized for issuance under the Plan in accordance with the
provisions of the Plan and subject to such restrictions or other
provisions as the Committee may from time to time deem necessary.
Any Shares issued hereunder may consist, in whole or in part, of
authorized and unissued shares or treasury shares. The Shares may
be divided among the various Plan components as the Committee
shall
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determine.
Shares that are subject to an underlying Award and Shares that are
issued pursuant to the exercise of an Award shall be applied to
reduce the maximum number of Shares remaining available for use
under the Plan. The Company shall at all times during the term of
the Plan and while any Awards are outstanding retain as authorized
and unissued Shares, or as treasury Shares, at least the number of
Shares from time to time required under the provisions of the Plan,
or otherwise assure itself of its ability to perform its
obligations hereunder.
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4.2
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Unused and Forfeited
Shares . Any
Shares that are subject to an Award under this Plan that are not
used because the terms and conditions of the Award are not met,
including any Shares that are subject to an Award that expires or
is terminated for any reason, or any Shares that are not used
because the Award is settled in cash, shall automatically become
available for use under the Plan. Notwithstanding the foregoing,
any Shares used for full or partial payment of the purchase price
of the Shares with respect to which an Option is exercised, and any
Shares retained by the Company pursuant to Section 16.2 will
still be considered as having been granted for purposes of
determining whether the Share limitation provided for in Section
4.1 has been reached.
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4.3
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Adjustments in Authorized
Shares . If,
without the receipt of consideration therefore by the Company, the
Company shall at any time increase or decrease the number of its
outstanding Shares or change in any way the rights and privileges
of such Shares such as, but not limited to, the payment of a share
dividend or any other distribution upon such Shares payable in
Shares, or through a share split, subdivision, consolidation,
combination, reclassification or recapitalization involving the
Shares, such that an adjustment is necessary in order to prevent
dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, then in relation to
the Shares that are affected by one or more of the above events,
the numbers, rights and privileges of (i) the Shares as to
which Awards may be granted under the Plan, (ii) the exercise
or purchase price of each outstanding Award, and (iii) the
Shares then included in each outstanding Award granted hereunder,
shall be increased, decreased or changed in like manner, as if the
Shares underlying the Award had been issued and outstanding, fully
paid and non assessable at the time of such occurrence. The manner
in which Awards are adjusted pursuant to this Section 4.3 is
to be determined by the Board or the Committee; provided that all
adjustments must be determined by the Board or Committee in good
faith, and must be effectuated so as to preserve the value that any
Participant has in outstanding Awards as of the time of the event
giving rise to any potential dilution or enlargement of
rights.
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4.4
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General Adjustment Rules
.
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(a)
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If
any adjustment or substitution provided for in this Section 4
shall result in the creation of a fractional Share under any Award,
such fractional Share shall be rounded to the nearest whole Share
and fractional Shares shall not be issued.
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(b)
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In
the case of any such substitution or adjustment affecting an Option
or a SAR (including a Nonqualified Share Option) such substitution
or adjustments shall be made in a manner that is in accordance with
the substitution and assumption rules
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set
forth in Treasury Regulations 1.424-1 and the applicable guidance
relating to Code section 409A.
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5.1
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Basis of Grant
. Participants in the
Plan shall be those Service Providers, who, in the judgment of the
Committee, have performed, are performing, or during the term of
their incentive arrangement will perform, important services in the
management, operation and development of the Company, and
significantly contribute, or are expected to significantly
contribute, to the achievement of long-term corporate economic
objectives.
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</</tr> |
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