DEVELOPERS DIVERSIFIED REALTY CORP
EX-10.11
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<TYPE>EX-10.11
<SEQUENCE>12
<FILENAME>l22661aexv10w11.htm
<DESCRIPTION>EX-10.11
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<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;10.11</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>OUTPERFORMANCE LONG-TERM INCENTIVE PLAN AGREEMENT</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Outperformance Long-Term Incentive Plan Agreement (this &#147;Agreement&#148;) is effective as of
January&nbsp;1, 2005, by and between Developers Diversified Realty Corporation, an Ohio corporation (the
&#147;Company&#148;), and William H. Schafer (the &#147;Grantee&#148;).
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>WHEREAS, </B>the Company desires to incentivize the Grantee to assist in causing the Company to
achieve superior financial performance, and the Grantee desires to be so incentivized;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>NOW, THEREFORE, </B>in consideration of the mutual agreements and covenants set forth in this
Agreement, and other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, it is hereby agreed as follows:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. <U>Background</U>; <U>Purpose</U>. The Company maintains the Developers Diversified
Realty Corporation Equity-Based Award Plan (as amended, modified or supplemented from time to time,
the &#147;Plan&#148;). Among the forms of compensation contemplated by the Plan are grants of common shares
and performance awards. This Agreement is adopted in furtherance of the authority to make such
grants and provides for grants of common shares (each, an &#147;Award&#148;) to certain senior executives of
the Company based on the achievement of certain goals over a specified period of time. The Award
shall be subject to the terms and conditions set forth herein and in the Plan and shall be
evidenced by this Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. <U>Administration</U>. This Agreement and the Award shall be administered by the
Executive Compensation Committee (the &#147;Committee&#148;) of the Board of Directors of the Company in
accordance with the Plan. In the event of any merger, acquisition, consolidation, reorganization,
combination, strategic redirection or other corporate or capitalization change; any material
changes in accounting practices, in tax law or interpretation or other applicable law or
regulation; or any extraordinary losses, gains or other similar events, the Committee shall make
such substitutions or adjustments, if any, as are deemed necessary or equitable in its sole
discretion to preserve the intent of the Plan and to avoid any unintended windfalls or hardships
with respect to the number or valuation of Award Shares (as hereinafter defined). Without limiting
the generality of the foregoing, if no Metric is achieved in total during the Measurement Period,
but after the Measurement Date the Committee determines in its sole discretion that any or all of
the Metrics have been substantially achieved during the Measurement Period, then the Committee
shall have the discretion to award to the Grantee an Award (in such form as the Committee in its
sole discretion shall determine) equal to 25% of the Award Value that would have been awarded had
all Metrics been achieved in total.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. <U>Definitions</U>. Capitalized terms used herein without definitions shall have the
meanings given to those terms in the Plan. In addition, as used herein:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Award Shares</U>&#148; shall mean the Common Shares issued by the Company in payment of the
Award.
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Award Value</U>&#148; shall mean the sum of (i)&nbsp;the FFO Award Value and (ii)&nbsp;the value,
calculated as of the Valuation Date, of the Equity Appreciation Shares.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Cause</U>&#148; shall mean (i)&nbsp;the Grantee&#146;s fraud, commission of a felony or an act or series
of acts which result in material injury to the business reputation of the Company, commission of an
act or series of repeated acts of dishonesty which are materially inimical to the best interests of
the Company, or the Grantee&#146;s willful and repeated failure to perform his duties as an employee of
the Company, which failure has not been cured within fifteen (15)&nbsp;days after the Company gives
notice thereof to the Grantee; or (ii)&nbsp;the Grantee&#146;s material breach of any provision of this
Agreement, which breach has not been cured in all substantial respects within ten (10)&nbsp;days after
the Company gives notice thereof to the Grantee.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Change in Control</U>&#148; shall mean the occurrence of any of the following: (i)&nbsp;the
business day immediately preceding the day on which a consolidation or merger in which the Company
is not the surviving corporation, the sale of substantially all of the assets of the Company, or
the liquidation or dissolution of the Company is scheduled to occur; provided, however, that prior
to such business day (A)&nbsp;the shareholders of the Company shall have approved such consolidation,
merger, sale, liquidation or dissolution and (B)&nbsp;there shall not exist on such business day any
fact or circumstance that shall make it reasonably unlikely that such closing shall not occur as
scheduled; or (ii)&nbsp;any person or other entity (other than the Company or a Subsidiary or any
Company employee benefit plan (including any trustee of any such plan acting in its capacity as
trustee)) becomes the beneficial owner of securities of the Company representing 51% or more of the
voting power of the Company&#146;s outstanding securities; or (iii)&nbsp;during any two-year period,
individuals who at the beginning of such period constitute the entire Board cease to constitute a
majority of the Board, unless the election or the nomination for election of each new director is
approved by at least two-thirds of the directors then still in office who were directors at the
beginning of that period.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Code</U>&#148; shall mean the Internal Revenue Code of 1986, as amended.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Common Share</U>&#148; shall mean a common share, without par value, of the Company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Disabled</U>&#148; shall be the Grantee&#146;s permanent disability and deemed to have occurred
after one hundred twenty (120)&nbsp;days in the aggregate during any consecutive twelve (12)&nbsp;month
period, or after ninety (90)&nbsp;consecutive days, during which one hundred twenty (120)&nbsp;or ninety (90)
days, as the case may be, the Grantee, by reason of his physical or mental disability or illness,
shall have been unable to discharge his duties as an employee of the Company. The date of
disability shall be such one hundred twentieth (120<SUP style="font-size: 85%; vertical-align: text-top">th</SUP>) or ninetieth (90<SUP style="font-size: 85%; vertical-align: text-top">th</SUP>)
day, as the case may be. In the event either the Company or the Grantee, after receipt of notice
of the Grantee&#146;s disability from the other, dispute that the Grantee&#146;s permanent disability shall
have occurred, the Grantee shall promptly submit to a physical examination by the chief of medicine
of any major accredited hospital in the Cleveland, Ohio area and, unless such physician shall issue
his written statement to the effect that in his opinion, based on his diagnosis, the Grantee is
capable of resuming his employment and devoting his full time and energy to
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">discharging his duties within thirty (30)&nbsp;days after the date of such statement, such permanent
disability shall be deemed to have occurred.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Effective Date</U>&#148; shall mean January&nbsp;1, 2005.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Equity Appreciation</U>&#148; shall mean the increase in price of a Common Share during the
Measurement Period.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Equity Appreciation Metrics</U>&#148; shall mean the performance criteria designated as such
set forth on Schedule&nbsp;A attached hereto.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Equity Appreciation Shares</U>&#148; shall mean (i)&nbsp;if both of the Equity Appreciation Metrics
are achieved by the Company, 12,850 Common Shares, (ii)&nbsp;if one of the Equity Appreciation Metrics
is achieved by the Company, 8,000 Common Shares, and (iii)&nbsp;if none of the Equity Appreciation
Metrics is achieved by the Company, no Common Shares; provided, however, that if the number of
Equity Appreciation Shares shall be determined pursuant to clause (i)&nbsp;and the value, calculated as
of the Valuation Date, of the Common Shares to be awarded shall be greater than $1,028,000, then
the number of such Common Shares shall be equal to $1,028,000 divided by the Share Price with
fractional Common Shares rounded up to the nearest whole number of Common Shares; and provided
further, that if the number of Equity Appreciation Shares shall be determined pursuant to clause
(ii)&nbsp;and the value, calculated as of the Valuation Date, of the Common Shares to be awarded shall
be greater than $640,000, then the number of such Common Shares shall be equal to $640,000 divided
by the Share Price with fractional Common Shares rounded up to the nearest whole number of Common
Shares.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Equivalent Amount of Cash</U>&#148; shall mean an amount of cash equal to the Award Value.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>FFO Award Percentage</U>&#148; shall mean (i)&nbsp;if the FFO Metric is achieved by the Company,
100%, and (ii)&nbsp;if the FFO Metric is not achieved by the Company, 0%.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>FFO Award Value</U>&#148; shall mean the FFO Outperformance Amount multiplied by the FFO Award
Percentage.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>FFO Growth</U>&#148; shall mean the growth in the Company&#146;s funds from operations per Common
Share during the Measurement Period. FFO Growth shall be measured by assuming that (a)&nbsp;the
Company&#146;s funds from operations per Common Share on the Effective Date equaled the Company&#146;s funds
from operations per Share for the fiscal year ended December&nbsp;31, 2004 and (b)&nbsp;the Company&#146;s funds
from operations per Common Share on the Valuation Date equaled the Company&#146;s funds from operations
per Common Share for the fiscal year ended December&nbsp;31, 2009; provided, however, that if the
Valuation Date shall be the date on which a Change in Control occurs, then the Company&#146;s funds from
operations per Common Share on such Valuation Date shall equal the higher of (i)&nbsp;the Company&#146;s
funds from operations for the immediately preceding fiscal year or (ii)&nbsp;the Company&#146;s funds from
operations budgeted for the fiscal year in which such Change in Control occurs.
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>FFO Metric</U>&#148; shall mean the performance criteria designated as such set forth on
Schedule&nbsp;A attached hereto.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>FFO Outperformance Amount</U>&#148; shall mean $417,000.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Measurement Date</U>&#148; shall mean December&nbsp;31, 2009.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Measurement Period</U>&#148; shall mean the period commencing on the Effective Date and ending
on the Valuation Date.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Metrics</U>&#148; shall mean the FFO Metric and the Equity Appreciation Metrics.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Peer Group</U>&#148; shall mean the companies listed in Schedule&nbsp;B.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Share Price</U>&#148; shall mean the greater of (i)&nbsp;the average closing price of a Common
Share as reported on the New York Stock Exchange over the 20 trading days ending on the Valuation
Date and (ii)&nbsp;the closing price of a Common Share as reported on the New York Stock Exchange on the
trading day immediately preceding the Valuation Date.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Valuation Date</U>&#148; shall mean, with respect to the Grantee, the earlier of (i)&nbsp;the
Measurement Date and (ii)&nbsp;the date on which a Change in Control occurs.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Vesting Date</U>&#148; shall mean (i)&nbsp;if the Valuation Date shall be the Measurement Date,
March&nbsp;1, 2010, and (ii)&nbsp;if the Valuation Date shall be the date on which a Change in Control
occurs, the Valuation Date.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. <U>Award Grant</U>. The Grantee is hereby granted an Award consisting of a number of
Common Shares, calculated and valued as of the Valuation Date, equal to the sum of (i)&nbsp;the FFO
Award Value divided by the Share Price with fractional Common Shares rounded up to the nearest
whole number of Common Shares and (ii)&nbsp;the number of Equity Appreciation Shares; provided, however,
that if during the Measurement Period the Grantee shall die or become Disabled, or the employment
of the Grantee shall be terminated by the Company without Cause, then the Award shall consist of a
number of Common Shares, calculated and valued as of the Valuation Date, equal to the product of
(a)&nbsp;the sum of (i)&nbsp;the FFO Award Value divided by the Share Price with fractional Common Shares
rounded up to the nearest whole number of Common Shares plus (ii)&nbsp;the number of Equity Appreciation
Shares, multiplied by (b)&nbsp;a fraction, the numerator of which shall be the number of days in the
Measurement Period occurring before the date of such death, Disability or termination of employment
without Cause and the denominator of which shall equal the total number of days in the Measurement
Period.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. <U>Vesting</U>. The Award shall vest on the Vesting Date, provided that the Grantee
remains in continuous employment with the Company through the Vesting Date other than by reason of
death, Disability or termination of employment without Cause.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6. <U>Effect of Certain Events During the Measurement Period</U>. In the event the Grantee&#146;s
employment with the Company is terminated for Cause during the Measurement
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Period or in the event the Grantee voluntarily terminates his or her employment with the Company
for any reason during the Measurement Period, the Grantee will immediately forfeit the Award, and
any rights the Grantee had in Award Shares will terminate without further action.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7. <U>Transferability</U>. This Agreement, the Award and the Award Shares will not be
assignable or transferable by the Grantee; <U>provided</U>, <U>however</U>, that no provision in
this Agreement will prevent the transfer of the Award or the Award Shares underlying such awards by
will or the laws of descent and distribution in the event of the death of the Grantee.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8. <U>Payment</U>.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The Company will issue to the Grantee (or to the estate, guardian or beneficiary of the
Grantee, as the case may be) the Award Shares underlying the Award or the Equivalent Amount of
Cash, at the Company&#146;s option, as soon as reasonably practicable following the Vesting Date.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Except to the extent provided by Section&nbsp;409A of the Code and permitted by the Company, no
Common Shares may be issued to the Grantee at a time earlier than otherwise expressly provided in
this Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;The Company&#146;s obligations to the Grantee with respect to the Award will be satisfied in
full upon the issuance of the Award Shares or the Equivalent Amount of Cash corresponding to the
Award.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9. <U>Shareholder Rights and Restrictions</U>.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;The Grantee shall have no rights as a shareholder of the Company (including, without
limitation, the right to receive dividends or voting rights) with respect to the Award or the Award
Shares until the date on which a stock certificate (or certificates) representing Award Shares
shall be issued.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;The obligations of the Company under this Agreement will be merely that of an unfunded and
unsecured promise of the Company to deliver Award Shares (or cash) in the future, and the rights of
the Grantee will be no greater than that of an unsecured general creditor. No assets of the
Company will be held or set aside as security for the obligations of the Company under this
Agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10. <U>American Jobs Creation Act</U>. It is intended that this Agreement comply with the
provisions of Section&nbsp;409A of the Code. The Agreement will be administered in a manner that is
intended to comply with Section&nbsp;409A of the Code. Any provisions in this Agreement or in the Plan
that would cause the Agreement to fail to satisfy Section&nbsp;409A of the Code shall have no force and
effect until amended to comply with Section&nbsp;409A of the Code (which amendment may be retroactive to
the extent permitted by Section&nbsp;409A of the Code and may be made by the Company without the consent
of the Grantee). The Company is authorized to adopt rules or regulations deemed necessary or
appropriate in connection therewith to anticipate and/or comply with the requirements thereof.
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11. <U>Interpretation</U>. Any reference in this Agreement to Section&nbsp;409A of the Code will
also include any proposed, temporary or final regulations, or any other guidance, promulgated with
respect to such Section by the U.S. Department of Treasury or the Internal Revenue Service.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12. <U>No Employment Rights</U>. This award will not confer upon the Grantee any right with
respect to continuance of employment by the Company.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13. <U>Severability</U>. In the event that one or more of the provisions of this Agreement
shall be invalidated for any reason by a court of competent jurisdiction, any provision so
invalidated shall be deemed to be separable from the other provisions hereof, and the remaining
provisions hereof shall continue to be valid and fully enforceable.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14. <U>Subject to Plan</U>. This award is subject to the terms of the Plan, and the Grantee
is being delivered a copy of the Plan with this Agreement. To the extent any provision of this
Agreement violates or is inconsistent with an express provisions of the Plan, the Plan provision
will govern and any inconsistent provision in this Agreement will have no force or effect.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;15. <U>Taxes</U>. No later than the date as of which an amount first becomes includable in
the gross income of the Grantee for federal income tax purposes with respect to the Award or the
issuance of Award Shares pursuant to the Award, the Grantee shall pay to the Company, or make
arrangements satisfactory to the Committee regarding the payment of, any federal, state or local
taxes or other items of any kind required by law to be withheld with respect to that amount.
Subject to the following sentence, unless otherwise determined by the Committee, withholding
obligations may be settled with Award Shares. Notwithstanding the foregoing, any election by a
Grantee subject to Section&nbsp;16 of the Securities Act of 1934, as amended, to settle any tax
withholding obligation with Award Shares shall be subject to approval by the Committee in its sole
discretion. The obligations of the Company with respect to the Award shall be conditional on those
payments or arrangements and the Company shall, to the extent permitted by law, have the right to
deduct any such taxes from any payment of any kind otherwise payable to the Grantee.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16. <U>Governing Law</U>. The laws of the State of Ohio will govern this award and all
matters related hereto. If either party institutes a suit or other legal proceedings, whether in
law or equity, the Company and the Grantee hereby irrevocably consent to the jurisdiction of the
Common Pleas Court of the State of Ohio (Cuyahoga County) or the United States District Court for
the Northern District of Ohio.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;17. <U>Counterparts</U>. This Agreement may be executed in two or more counterparts, each of
which will be an original but all of which together will represent one and the same agreement.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;18. <U>Amendments/Entire Agreement</U>. Any amendment to the Plan will be deemed to be an
amendment to this Agreement. Except as provided in this Agreement, no
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">amendment will reduce the FFO Outperformance Amount or adversely affect the number or value of the
Grantee&#146;s Award Shares or the Grantee&#146;s rights with respect to vesting without the Grantee&#146;s
written consent. This Agreement cannot be changed or terminated orally. The Agreement and the
Plan contain the entire agreement between the parties relating to the subject matter hereof.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;19. <U>Notices</U>. Notices, required or permitted to be made under this Agreement shall be
sufficiently made if (a)&nbsp;sent by (i)&nbsp;registered or certified mail, (ii)&nbsp;a nationally recognized
courier service or (iii)&nbsp;facsimile, and (b)&nbsp;addressed (x)&nbsp;to the Grantee at his or her address as
set forth in the books and records of the Company or (y)&nbsp;to the Company or the Committee at the
principal office of the Company. The Grantee is required to notify the Company promptly of any
change of address.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;20. <U>Binding on Successors</U>. The terms and provisions of the Plan and this Agreement
will be binding on any successor in interest to the Grantee, whether such successor attains such
status through inheritance, the laws of descent or otherwise.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="45%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>DEVELOPERS DIVERSIFIED REALTY</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>CORPORATION</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">DATE OF AWARD: February&nbsp;23, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Nan R. Zieleniec
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Senior Vice President
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>ACCEPTANCE OF AGREEMENT</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Grantee hereby: (a)&nbsp;acknowledges that he or she has received a copy of the Plan and a
copy of the Company&#146;s most recent Annual Report and other communications routinely distributed to
the Company&#146;s shareholders; (b)&nbsp;accepts this Agreement and the Award granted under this Agreement,
subject to all provisions of the Plan and this Agreement; (c)&nbsp;represents and warrants to the
Company that he or she is accruing the Award and the underlying Award Shares for his or her own
account, for investment, and not with a view to or any present intention of selling or distributing
the Award or the Award Shares either now or at any specific or determinable future time or period
or upon the occurrence or nonoccurrence of any predetermined or reasonably foreseeable event; and
(d)&nbsp;agrees that no transfer of the Award or Common Shares acquired upon vesting of the Award will
be made unless the Award Shares have been duly registered under all applicable Federal and State
securities laws pursuant to a then-effective registration which contemplates the proposed transfer
or unless the Company has received a written opinion or other evidence satisfactory to its legal
counsel that the proposed transfer is exempt form such registration.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="45%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="39%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="39%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date: February&nbsp;23, 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ William H. Schafer
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Name of Grantee: William H. Schafer
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>SCHEDULE A</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>Equity Appreciation Metrics</U>&#148; shall mean (a)&nbsp;Equity Appreciation during the
Measurement Period equal to or exceeding 8% per annum, calculated on a cumulative, compounded
basis, and (b)&nbsp;Equity Appreciation during the Measurement Period equal to or exceeding the
appreciation during the Measurement Period (calculated in the same manner as the Company&#146;s Equity
Appreciation) of the common stock of not less than 75% of the companies in the Peer Group.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;<U>FFO Metric</U>&#148; shall mean FFO Growth during the Measurement Period equal to or exceeding
8% per annum, calculated on a cumulative, compounded basis.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>SCHEDULE B</B></U>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><U><B>Peer Group</B></U>

</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">Federal Realty Investment Trust<BR>
Heritage Property Investment Trust, Inc.<BR>
Kimco Realty Corporation<BR>
New Plan Excel Realty Trust<BR>
Regency Centers Corporation<BR>
Weingarten Realty Investors<BR>
Pan Pacific Retail Properties<BR>
Macerich<BR>
Taubman Centers, Inc.<BR>
PREIT<BR>
Mills<BR>
Simon Properties Group<BR>
CBL &#038; Associates Properties, Inc.<BR>
General Growth Properties, Inc.<BR>
Glimcher Realty Trust
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>


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