Form of Performance-Vested Restricted Share Unit Grant Agreement under the CubeSmart 2007 Equity Incentive Plan
Exhibit 10.6
Grant No.: _____
CUBESMART
2007 EQUITY INCENTIVE PLAN
PERFORMANCE-VESTED RESTRICTED SHARE UNIT GRANT AGREEMENT
CubeSmart, a Maryland real estate investment trust (the “Company”), grants performance-vested Restricted Share Units (“PSUs”) to the individual named below (“you”), as of the Grant Date set forth below. Each PSU represents an unfunded, unsecured right to receive one (1) Share, subject to the vesting and performance conditions set forth in the attached agreement (the “Agreement”). The PSUs will vest on the attainment of certain Company performance metrics, and additional terms and conditions of the grant are set forth in this cover sheet, in the Agreement, and in the Company’s 2007 Equity Incentive Plan, as may be amended from time to time (the “Plan”).
Grant Date:
Name of Participant:
Number of PSUs:
Maximum: (2x Target)
Target:
Threshold: (1/2x Target)
Performance Period: January 1, 20__ – December 31, 20__
By signing this cover sheet, you agree to all of the terms and conditions described in the Agreement and the Plan. A copy of the Plan will be provided on request. You acknowledge that you have carefully reviewed the Plan, and agree that the Plan will control in the event that any provision of this Agreement should appear to be inconsistent with the terms of the Plan.
Participant:
Name:
Company:____________________________________
Name: Christopher P. Marr
President and Chief Executive Officer
This is not a share certificate or a negotiable instrument.
CUBESMART
2007 EQUITY INCENTIVE PLAN
PERFORMANCE-VESTED RESTRICTED SHARE UNIT GRANT AGREEMENT
PSUs/ Non- transferability | The grant is an award of PSUs for up to the maximum number of PSUs set forth on the cover sheet, subject to the vesting conditions described below (the “Grant”). Your PSUs may not be transferred, assigned, pledged or hypothecated, whether by operation of law or otherwise, nor may the PSUs be made subject to execution, attachment or similar process. |
Issuance and Vesting | Up to the maximum number of PSUs will vest on the last day of the Performance Period, provided that you continue to be employed or in service with the Company through the last day of the Performance Period. The number of PSUs that vest, if any, and the number of Shares deliverable following vesting shall be based on the Company’s total shareholder return (appreciation in share price and dividends) (“TSR”), as measured by the average closing stock price during the thirty (30) trading days immediately preceding the first day of the performance period and the average closing stock price during the last thirty (30) trading days of the Performance Period, plus aggregate dividends, compared to the TSR of the peer group (consisting of all equity REIT’s) as set forth below: If the Company’s TSR for the Performance Period falls in the: The number of PSUs that vest shall be: Upper Quartile (75th percentile and above) 200% of Target Third Quartile (50th to 74th percentile) Target Second Quartile (25th to 49th percentile) 50% of Target Lower Quartile (below 25th percentile) 0% The number of PSUs that vest for results (i) above the 25th percentile but less than the 50th percentile and (ii) above the 50th percentile but less than the 75th percentile, will be interpolated. Within thirty (30) days following the date on which a PSU vests hereunder, the Company will, in settlement of such vested PSU, issue to you one (1) Share, unless you made a timely election to defer settlement of the PSUs pursuant to the Company’s Executive Deferred |
-2-
Compensation Plan, in which case such Shares will be issued to you on the date or dates elected by you pursuant to that plan. Other than pursuant to the terms of this Agreement, no additional PSUs will vest after your employment or service has terminated for any reason unless otherwise provided in a severance plan adopted by the Company in which you are eligible to participate or as determined by the Committee. | |
Change in Control | In the event of a Change in Control, where the Company is not the surviving corporation and ultimate parent company, before the last day of the Performance Period, your unvested PSUs shall vest, subject to your continued employment or service through the Change in Control, immediately prior to the Change in Control based on the greater of (a) actual performance through the date of the Change in Control, and (b) Target performance. |
Termination by Death or Disability | If your employment or service terminates as a result of your death or due to your “Disability” before the last day of the Performance Period, a pro-rated amount of your PSUs will vest on the last day of the Performance Period, equal to the product of (x) times (y), rounded down to the nearest whole PSU, where (x) is the Target number of PSUs, and (y) is a fraction, the numerator of which is the number of days that elapse from January 1, 20__, to the date on which you terminate from employment or service, and the denominator of which is the total number of days in the Performance Period. For purposes of this Agreement, the term “Disability” shall have the meaning assigned to such term in any applicable Company severance plan in which you are an eligible employee, or in the absence of such severance plan, then it shall have the meaning assigned to such term in the Plan. |
Retirement | If your employment or service terminates because of your “Retirement” and on the “Effective Date of Retirement” you enter into the Restrictive Covenant Agreement attached as Exhibit A hereto, then a pro-rated amount of your unvested PSUs immediately prior to your Effective Date of Retirement will vest on the last day of the Performance Period, equal to the product of (x) times (y), rounded down to the nearest whole PSU, where (x) is the number of PSUs that would have vested on the last day of the Performance Period as determined on the same basis as if you had continued in active service through the last day of the Performance Period, and (y) is a fraction, the numerator of which is the number of days that elapsed from January 1, 20__, to the Effective Date of Retirement, and the denominator of which is the total number of days in the Performance Period. For purposes of this Agreement, (a) the term “Retirement” shall mean the attainment of the age of sixty (60) plus a minimum of ten (10) years |
-3-
of employment or service with the Company or any of its Subsidiaries or Affiliates, and (b)the term “Effective Date of Retirement” shall mean the date that is at least six (6) months following your delivery of written notice to the Company notifying the Company of the effective date of your Retirement. | |
Forfeiture of Unvested PSUs | Except as provided in this Agreement, the Plan, or any severance plan adopted by the Company in which you are eligible to participate, in the event that your employment or service terminates for any reason other than your death, Disability, or Retirement, you will forfeit to the Company all unvested PSUs. For the avoidance of doubt, in connection with a termination for “Cause” you will forfeit all then-outstanding PSUs to the Company for no consideration. For purposes of this Agreement, the term “Cause” shall have the meaning assigned to such term in any applicable Company severance plan in which you are an eligible employee, or in the absence of such severance plan, then it shall have the meaning assigned to such term in the Plan. |
Recoupment | The PSUs granted pursuant to this Agreement and the Shares delivered to you pursuant to this Agreement shall be subject to any clawback policy maintained by the Company or any Affiliate from time to time as necessary to comply with applicable law or exchange listing requirements. |
Withholding | You agree, as a condition of this Grant, that you will make acceptable arrangements to pay any withholding or other taxes that may be due as a result of the issuance of Shares under this Grant. In the event that the Company determines that any federal, state, local or foreign tax or withholding payment is required relating to the issuance of Shares arising from this grant, the Company shall have the right to: (i) require you to make a cash payment to the Company, (ii) withhold such amounts from other payments due to you from the Company or any Affiliate, or (iii) withhold a number of Shares otherwise issuable to you having an aggregate Fair Market Value equal to the amount of the withholding or other taxes due. |
Retention Rights | This Agreement does not give you the right to be retained by the Company (or any parent, Subsidiaries or Affiliates) in any capacity. Furthermore, nothing in the Plan or this Agreement shall be construed to limit the discretion of the Company to terminate your employment or service with the Company at any time, with or without Cause. |
No Impact on Other Benefits | The value of your PSUs is not part of your normal or expected compensation for purposes of calculating any severance, retirement, welfare, insurance or similar employee benefit. |
-4-
Dividend Equivalents | On each of the Company’s regular dividend payment dates occurring after the Grant Date and prior to the date on which Shares are issued to you in respect of the PSUs granted hereunder, the Company shall credit to a bookkeeping account, solely for the purposes of recordkeeping, a number of PSUs equal to the quotient of (x) divided by (y), where (x) is an amount equal to the dividends payable with respect to the number of Shares underlying the outstanding PSUs subject to this Grant, and (y) is the closing price of the Shares on such dividend payment date, rounded down to the nearest whole PSU. On each applicable vesting date of the PSUs, PSUs credited to the bookkeeping account (“Dividend Equivalents”) shall vest or be forfeited, as applicable, to the extent that the PSUs to which they relate vest or are forfeited. Vested Dividend Equivalents shall be paid in Shares at the same time and subject to the same terms as the underlying vested PSUs. |
Shareholder | You do not have the right to vote the Shares in respect of your PSUs, and you do not have any of the rights of a shareholder with respect to the PSUs, unless and until the Shares relating to the PSUs are issued to you. Any distributions of stock or other property you receive as a result of any split, stock dividend, combination of Shares or other similar transaction shall be deemed to be a part of the Shares and subject to the same conditions and restrictions applicable thereto. You do not have the right to make an election pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended. |
Adjustments | In the event of a split, a dividend or a similar change in the Shares, the number of Shares covered by this Grant may be adjusted pursuant to the Plan. Your PSUs shall be subject to the terms of the agreement of merger, liquidation or reorganization in the event the Company is subject to such corporate activity. |
Successors and Assigns | The Company may assign any of its rights under this Agreement. This Agreement will be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement will be binding upon you and your beneficiaries, executors, administrators and the person(s) to whom the PSUs may be transferred by will or the laws of descent or distribution. |
The Plan | The Plan is discretionary and may be amended, canceled or terminated by the Company at any time, in its discretion. The Grant of the PSUs under this Agreement does not create any contractual right or other right to receive any PSUs or other grants in the future. Future grants, if any, will be at the sole discretion of the Company. Any amendment, modification, or termination of the Plan shall not constitute a change or impairment of the terms and conditions of your employment or service with the Company. |
-5-
The text of the Plan is incorporated in this Agreement by reference. Except as otherwise noted, capitalized terms used in this Agreement, and not otherwise defined in this Agreement, have the meaning set forth in the Plan. This Agreement, the Plan, and any applicable Company severance plan in which you are an eligible employee, constitute the entire understanding between you and the Company with regard to the PSUs granted pursuant to this Agreement. Any prior agreements, commitments or negotiations concerning the PSUs to which this Agreement applies, are superseded. | |
Notices | Any notice required to be delivered to the Company under this Agreement shall be in writing and addressed to the Corporate Secretary of the Company at the Company’s principal corporate offices. Any notice required to be delivered to you under this Agreement shall be in writing and addressed to you at your address as shown in the records of the Company. Either party may designate another address in writing (or by such other method approved by the Company) from time to time. |
Applicable Law | This Agreement will be interpreted and enforced under the laws of the State of Maryland, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction. |
Severability | The invalidity or unenforceability of any provision of this Agreement or the Plan shall not affect the validity or enforceability of any other provision of this Agreement or the Plan, and each provision of this Agreement and the Plan shall be severable and enforceable to the extent permitted by law. |
Data Privacy | In order to administer the Plan, the Company may process personal data about you. Such data includes, but is not limited to, the information provided in this Agreement and any changes thereto, other appropriate personal and financial data about you such as home address and business addresses and other contact information, payroll information and any other information that might be deemed appropriate by the Company to facilitate the administration of the Plan. By accepting this Grant, you give explicit consent to the Company to process any such personal data. You also give explicit consent to the Company to transfer any such personal data outside the country in which you work or are employed, including, with respect to non-U.S. resident Grantees, to the United States, to transferees who shall include the Company and other persons who are designated by the Company to administer the Plan. |
-6-
Consent to Electronic Delivery | The Company may choose to deliver certain statutory materials relating to the Plan in electronic form. By accepting this Grant, you agree that the Company may deliver the Plan prospectus and the Company’s annual report to you in an electronic format. If at any time you would prefer to receive paper copies of these documents, as you are entitled to, the Company would be pleased to provide copies. Please contact the Corporate Secretary of the Company to request paper copies of these documents. |
By signing the cover sheet of this Agreement, you agree to all of the terms and conditions described above and in the Plan.
-7-
EXHIBIT A
RESTRICTIVE COVENANT AGREEMENT
THIS RESTRICTIVE COVENANT AGREEMENT (this “Agreement”) is entered into as of , 20__ by and between CubeSmart, a Maryland real estate investment trust (the “Company”), and (the “Executive”).
WHEREAS, the Executive is the recipient of one or more grants of common shares of the Company pursuant to those written grant agreements dated , 20__, by and between the Company and the Executive (the “Grant Agreements”), which Grant Agreements were entered into pursuant to the terms and conditions of the Company’s 2007 Equity Incentive Plan.
WHEREAS, the Executive’s employment with the Company, CubeSmart, L.P., a Delaware limited partnership of which the Company is the general partner, or any of their direct or indirect subsidiaries (collectively, the “REIT”) terminated because of the Executive’s retirement on ___________, 20__ (“Retirement Date”).
WHEREAS, as a condition to participating in the provisions of the Retirement section of the Grant Agreement (“Retirement Benefits”), the Company and the Executive agree that the Executive will not engage in competition with the Company and will refrain from taking certain other actions pursuant to the terms and conditions hereof in an effort to protect the Company’s legitimate business interests and goodwill and for other business purposes.
NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto agree as follows:
1
-2-
Please take notice that federal law provides criminal and civil immunity to federal and state claims for trade secret misappropriation to individuals who disclose a trade secret to their attorney, a court, or a government official in certain, confidential circumstances that are set forth at 18 U.S.C. §§ 1833(b)(1) and 1833(b)(2), related to the reporting or investigation of a suspected violation of the law, or in connection with a lawsuit for retaliation for reporting a suspected violation of the law.
The Executive shall assign to the Company all rights to trade secrets and other products relating to the Company’s business developed by him alone or in conjunction with others at any time while employed by the Company.
-3-
-4-
(i)if to the Executive, to the address set forth in the records of the Company; and
(ii)if to the Company:
CubeSmart
5 Old Lancaster Road
Malvern, PA 19355
Attn: Chief Human Resources Officer
Facsimile No.: (610) 293-5720
[Signature Page Follows]
-5-
-6-
IN WITNESS WHEREOF, each of the undersigned has executed and delivered this Agreement, or caused this Agreement to be duly executed on its behalf, as of the date first set forth above.
THE EXECUTIVE: |
|
|
|
|
THE COMPANY: |
|
CUBESMART |
|
|
By: |
Name: |
-7-