Exhibit 10.6
CARRAMERICA REALTY
CORPORATION
1997 STOCK OPTION AND INCENTIVE
PLAN
CarrAmerica Realty Corporation, a
Maryland corporation (the “Company”), sets forth herein
the terms of its 1997 Stock Option and Incentive Plan (the
“Plan”) as follows:
1. PURPOSE
The Plan is intended to enhance the
Company’s ability to attract and retain highly qualified
officers, key employees, and other persons to advance the interests
of the Company by providing such persons with stronger incentives
to continue to serve the Company and its affiliates (as defined
herein) and to expend maximum effort to improve the business
results and earnings of the Company. The Plan is intended to
accomplish this objective by providing to eligible persons an
opportunity to acquire or increase a direct proprietary interest in
the operations and future success of the Company. To this end, the
Plan provides for the grant of stock options, restricted stock and
restricted stock units in accordance with the terms hereof. Stock
options granted under the Plan may be non-qualified stock options
or incentive stock options, as provided herein.
2. DEFINITIONS
For purposes of interpreting the
Plan and related documents (including Award Agreements), the
following definitions shall apply:
2.1 “affiliate” of, or
person “affiliated” with, a person means any company or
other trade or business that controls, is controlled by or is under
common control with such person within the meaning of Rule 405 of
Regulation C under the Securities Act (as defined
herein).
2.2 “Award Agreement”
means the stock option agreement, restricted stock agreement,
restricted stock unit agreement or other written agreement between
the Company and a Grantee that evidences and sets out the terms and
conditions of a Grant.
2.3 “Benefit
Arrangement” shall have the meaning set forth in
Section 14 hereof.
2.4 “Board” means the
Board of Directors of the Company.
2.5 “Code” means the
Internal Revenue Code of 1986, as now in effect or as hereafter
amended.
2.6 “Committee” means a
Committee of, and designated from time to time by resolution of,
the Board, which shall consist of no fewer than two members of the
Board, none of whom shall be an officer or other salaried employee
of the Company or any affiliate, and each of whom shall qualify in
all respects as a “non-employee director” within the
meaning of Rule 16b-3 under the Exchange Act or any successor rule
or regulation. Commencing on the Effective Date, and until such
time as the Board shall determine otherwise, the Committee shall be
the Executive Compensation Committee of the Board.
2.7 “Company” means
CarrAmerica Realty Corporation.
2.8 “Effective Date”
means
, 1997, the date on which the Plan was adopted by the
Board.
2.9 “Exchange Act” means
the Securities Exchange Act of 1934, as now in effect or as
hereafter amended.
2.10 “Fair Market Value”
means the value of a share of Stock, determined as follows: if on
the Grant Date or other determination date the Stock is listed on
an established national or regional stock exchange, is admitted to
quotation on the Nasdaq National Market, or is publicly traded on
an established securities market, the Fair Market Value of a share
of Stock shall be the closing price of the Stock on such exchange
or in such market (the highest such closing price if there is more
than one such exchange or market) on the Grant Date or such other
determination date (or if there is no such reported closing price,
the Fair Market Value shall be the mean between the highest bid and
lowest asked prices or between the high and low sale prices on such
trading day) or, if no sale of Stock is reported for such trading
day, on the next preceding day on which any sale shall have been
reported. If the Stock is not listed on such an exchange, quoted on
such system or traded on such a market, Fair Market Value shall be
the value of the Stock as determined by the Committee in good
faith.
2.11 “Grant” means an
award of an Option, Restricted Stock or Restricted Stock Units
under the Plan.
2.12 “Grant Date” means
the date as of which the Committee approves a Grant.
2.13 “Grantee” means a
person who receives or holds an Option, Restricted Stock or
Restricted Stock Units under the Plan.
2.14 “Incentive Stock
Option” means an “incentive stock option” within
the meaning of Section 422 of the Code, or the corresponding
provision of any subsequently enacted tax statute, as amended from
time to time.
2.15 “Option” means an
option to purchase one or more shares of Stock pursuant to the
Plan.
2.16 “Option Period”
means the period during which Options may be exercised as set forth
in Section 11 hereof.
2.17 “Option Price”
means the purchase price for each share of Stock subject to an
Option.
2.18 “Other Agreement”
shall have the meaning set forth in Section 13
hereof.
2.19 “Plan” means the
CarrAmerica Realty Corporation 1997 Stock Option and Incentive
Plan.
2.20 “Reporting Person”
means a person who is required to file reports under
Section 16(a) of the Exchange Act.
2.21 “Restricted Period”
means the period during which Restricted Stock or Restricted Stock
Units are subject to restrictions or conditions pursuant to
Section 12.2 hereof.
2
2.22 “Restricted Stock”
means shares of Stock, awarded to a Grantee pursuant to
Section 12 hereof, that are subject to restrictions and to a
risk of forfeiture.
2.23 “Restricted Stock
Unit” means a unit awarded to a Grantee pursuant to
Section 12 hereof, which represents a conditional right to
receive a share of Stock in the future, and which is subject to
restrictions and to a risk of forfeiture.
2.24 “Securities Act”
means the Securities Act of 1933, as now in effect or as hereafter
amended.
2.25 “Service Provider”
means a consultant or adviser to the Company, a manager of the
Company’s properties or affairs, or other similar service
provider or affiliate of the Company, and employees of any of the
foregoing, as such persons may be designated from time to time by
the Committee pursuant to Section 6 hereof.
2.26 “Stock” means the
common stock, par value $0.10 per share, of the Company.
2.27 “Subsidiary” means
Carr Realty, L.P., CarrAmerica Realty, L.P., CarrAmerica Realty
Services, Inc., CarrAmerica Realty LP Holdings, Inc., CarrAmerica
Realty GP Holdings, Inc. and any “subsidiary
corporation” of the Company within the meaning of
Section 425(f) of the Code.
2.28 “Termination Date”
shall be the date upon which an Option shall terminate or expire,
as set forth in Section 11.2 hereof.
3. ADMINISTRATION OF THE
PLAN
3.1 General. The Plan shall be
administered by the Committee. The Board may remove members, add
members, and fill vacancies on the Committee from time to time, all
in accordance with the Company’s articles of incorporation
and by-laws and applicable law; provided, however, that each member
of the Committee shall at all times qualify in all respects as a
“non-employee director” within the meaning of Rule
16b-3 under the Exchange Act or any successor rule or regulation.
Notwithstanding the foregoing, to the extent that shares of Stock
are then available for grant and issuance under the Plan, the
President of the Company, acting on behalf of the Board of
Directors, shall have the authority to grant to employees of or
consultants to the Company options to purchase such number of
shares of Stock as determined by the Committee from time to time,
at such times and on such terms as are set forth in or determined
pursuant to the Plan.
3.2 Plenary Authority of the
Committee. The Committee shall have such powers and authorities
related to the administration of the Plan as are consistent with
the Company’s articles of incorporation and by-laws and
applicable law. The Committee shall have full power and authority
to take all actions and to make all determinations required or
provided for under the Plan, any Grant or any Award Agreement, and
shall have full power and authority to take all such other actions
and determinations not inconsistent with the specific terms and
provisions of the Plan that the Committee deems to be necessary or
appropriate to the administration of the Plan, any Grant or any
Award Agreement. All such actions and determinations shall be by
the affirmative vote of a majority of the members of the Committee
present at a meeting or by unanimous consent of the Committee
executed in writing in accordance with the Company’s articles
of incorporation and by-laws and applicable law. The interpretation
and construction by the Committee of any provision of the Plan, any
Grant or any Award Agreement shall be final and
conclusive.
3.3 Grants. Subject to the other
terms and conditions of the Plan, the Committee shall have full and
final authority (i) to designate Grantees, (ii) to
determine the type or types of Grant to be made to a Grantee,
(iii) to determine the number of shares of Stock to be subject
to a Grant, (iv) to establish the terms and conditions of each
Grant (including, but not limited to, the exercise price of any
Option,
3
the nature and duration of any restriction or
condition (or provision for lapse thereof) relating to the vesting,
exercise, transfer, or forfeiture of a Grant or the shares of Stock
subject thereto, and any terms or conditions that may be necessary
to qualify Options as Incentive Stock Options), (v) to
prescribe the form of each Award Agreement evidencing a Grant, and
(vi) to amend, modify, or supplement the terms of any
outstanding Grant. Such authority specifically includes the
authority, in order to effectuate the purposes of the Plan but
without amending the Plan, to modify Grants to eligible individuals
who are foreign nationals or are individuals who are employed
outside the United States to recognize differences in local law,
tax policy, or custom. As a condition to any subsequent Grant, the
Committee shall have the right, at its discretion, to require
Grantees to return to the Company Grants previously awarded under
the Plan. Subject to the terms and conditions of the Plan, any such
new Grant shall be upon such terms and conditions as are specified
by the Committee at the time the new Grant is made.
3.4 No Liability. No member of the
Board or of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any
Grant or Award Agreement.
3.5 Applicability of Rule 16b-3.
Those provisions of the Plan that make express reference to Rule
16b-3 under the Exchange Act shall apply only to Reporting
Persons.
4. STOCK SUBJECT TO THE
PLAN
Subject to adjustment as provided in
Section 16 hereof, the number of shares of Stock available for
issuance under the Plan shall be 3,000,000. Stock issued or to be
issued under the Plan shall be authorized but unissued shares. If
any shares covered by a Grant are not purchased or are forfeited,
or if a Grant otherwise terminates without delivery of any Stock
subject thereto, then the number of shares of Stock counted against
the aggregate number of shares available under the Plan with
respect to such Grant shall, to the extent of any such forfeiture
or termination, again be available for making Grants under the
Plan.
5. EFFECTIVE DATE AND TERM OF THE
PLAN
5.1 Effective Date. The Plan shall
be effective as of the Effective Date, subject to approval of the
Plan within one year of the Effective Date, by a majority of the
votes cast on the proposal at a meeting of shareholders, provided
that the total votes cast represent a majority of all shares
entitled to vote. Upon approval of the Plan by the shareholders of
the Company as set forth above, all Grants made under the Plan on
or after the Effective Date shall be fully effective as if the
shareholders of the Company had approved the Plan on the Effective
Date. If the shareholders fail to approve the Plan within one year
after the Effective Date, any Grants made hereunder shall be null
and void and of no effect.
5.2 Term. The Plan has no
termination date; however, no Incentive Stock Option may be granted
on or after the tenth anniversary of the Effective Date.
6. OPTION GRANTS
6.1 Company or Subsidiary Employees.
Grants (including Grants of Incentive Stock Options) may be made
under the Plan to any employee of the Company or of any Subsidiary,
including any such employee who is an officer or director of the
Company or of any Subsidiary, as the Committee shall determine and
designate from time to time.
6.2 Successive Grants. An eligible
person may receive more than one Grant, subject to such
restrictions as are provided herein.
4
7. LIMITATIONS ON GRANTS
7.1 Limitation on Shares of Stock
Subject to Grants. The maximum number of shares of Stock subject to
Options that can be awarded under the Plan to any person eligible
for a Grant under Section 6 hereof is 500,000 per year.
The maximum number of shares of Restricted Stock that can be
awarded under the Plan (including for this purpose any shares of
Stock represented by Restricted Stock Units) to any person eligible
for a Grant under Section 6 hereof is 500,000 per
year.
7.2 Limitations on Incentive Stock
Options. An Option shall constitute an Incentive Stock Option only
(i) if the Grantee of such Option is an employee of the
Company or any Subsidiary of the Company; (ii) to the extent
specifically provided in the related Award Agreement; and
(iii) to the extent that the aggregate Fair Market Value
(determined at the time the Option is granted) of the shares of
Stock with respect to which all Incentive Stock Options held by
such Grantee become exercisable for the first time during any
calendar year (under the Plan and all other plans of the
Grantee’s employer and its affiliates) does not exceed
$100,000. This limitation shall be applied by taking Options into
account in the order in which they were granted.
8. AWARD AGREEMENT
Each Grant pursuant to the Plan
shall be evidenced by an Award Agreement, to be executed by the
Company and by the Grantee, in such form or forms as the Committee
shall from time to time determine. Award Agreements granted from
time to time or at the same time need not contain similar
provisions but shall be consistent with the terms of the Plan. Each
Award Agreement evidencing a Grant of Options shall specify whether
such Options are intended to be non-qualified stock options or
Incentive Stock Options.
9. OPTION PRICE
The Option Price of each Option
shall be fixed by the Committee and stated in the Award Agreement
evidencing such Option. The Option Price shall be the aggregate
Fair Market Value on the Grant Date of the shares of Stock subject
to the Option or such other price as the Committee, in its
discretion, shall determine; provided, however, that in the event
that a Grantee would otherwise be ineligible to receive an
Incentive Stock Option by reason of the provisions of Sections
422(b)(6) and 424(d) of the Code (relating to ownership of more
than ten percent of the Company’s outstanding Stock), the
Option Price of an Option granted to such Grantee that is intended
to be an Incentive Stock Option shall be not less than the greater
of the par value of a share of Stock or 110 percent of the Fair
Market Value of a share of Stock on the Grant Date. In no case
shall the Option Price of any Option be less than the par value of
a share of Stock.
10. VESTING, TERM AND EXERCISE OF
OPTIONS
10.1 Vesting and Option Period.
Subject to Section 10.2 hereof, each Option granted under the
Plan shall become exercisable at such times and under such
conditions as shall be determined by the Committee and stated in
the Award Agreement. For purposes of this Section 10.1,
fractional numbers of shares of Stock subject to an Option shall be
rounded down to the next nearest whole number. The period during
which any Option shall be exercisable shall constitute the
“Option Period” with respect to such Option.
10.2 Term. Each Option granted under
the Plan shall terminate, and all rights to purchase shares of
Stock thereunder shall cease, upon the expiration of ten years from
the date such Option is granted, or under such circumstances and on
such date prior thereto as is set forth in the Plan or as may be
fixed by the Committee and stated in the Award Agreement relating
to such Option (the “Termination Date”); provided,
however, that in the event that the Grantee would otherwise be
ineligible to receive an Incentive Stock Option by reason of the
provisions of Sections 422(b)(6) and 424(d) of the Code (relating
to ownership of more than ten percent of the outstanding Stock), an
Option
5
granted to such Grantee that is intended to be
an Incentive Stock Option shall not be exercisable after the
expiration of five years from its Grant Date.
10.3 Acceleration. Any limitation on
the exercise of an Option contained in any Award Agreement may be
rescinded, modified or waived by the Committee, in its sole
discretion, at any time and from time to time after the Grant Date
of such Option, so as to accelerate the time at which the Option
may be exercised. Notwithstanding any other provision of the Plan,
no Option shall be exercisable in whole or in part prior to the
date the Plan is approved by the shareholders of the Company as
provided in Section 5.1 hereof.
10.4 Termination of Employment or
Other Relationship. Upon the termination of a Grantee’s
employment with the Company other than by reason of death or
“permanent and total disability” (within the meaning of
Section 22(e)(3) of the Code), any Option or portion thereof
held by such Grantee that has not vested in accordance with the
provisions of Section 10.1 hereof shall terminate immediately,
and any Option or portion thereof that has vested in accordance
with the provisions of Section 10.1 hereof but has not been
exercised shall terminate at the close of business on the 365th day
following the Grantee’s termination of employment, unless the
Committee, in its discretion, extends the period during which the
Option may be exercised (which period may not be extended beyond
the original term of the Option). Upon termination of an Option or
portion thereof, the Grantee shall have no further right to
purchase shares of Stock pursuant to such Option or portion
thereof. Whether a leave of absence or leave on military or
government service shall constitute a termination of employment for
purposes of the Plan shall be determined by the Committee, which
determination shall be final and conclusive. For purposes of the
Plan, a termination of employment, service or other relationship
shall not be deemed to occur if the Grantee is immediately
thereafter a director of the Company.
10.5 Rights in the Event of Death.
If a Grantee dies while employed by the Company, all Options
granted to such Grantee shall fully vest on the date of death, and
the executors or administrators or legatees or distributees of such
Grantee’s estate shall have the right, at any time within one
year after the date of such Grantee’s death (or such longer
period as the Committee, in its discretion, may determine prior to
the expiration of such one-year period) and prior to termination of
the Option pursuant to Section 10.2 above, to exercise any
Option held by such Grantee at the date of such Grantee’s
death.
10.6 Rights in the Event of
Disability. If a Grantee terminates employment with the Company by
reason of the “permanent and total disability” (within
the mean
