Exhibit 10.3

 

STARWOOD WAYPOINT RESIDENTIAL TRUST

MANAGER EQUITY PLAN

 

1.                                      Purpose; Types of Awards.

 

The purpose of the Starwood Waypoint Residential Trust Manager Equity Plan (the
“Plan”) is to issue equity-based incentives to SWAY Management LLC, a Delaware
limited liability company (the “Manager”), which may in turn issue incentives to
the directors, officers, employees of, or advisors or consultants to, the
Manager or an Affiliate (as defined in Section 2) of the Manager, in order to
increase their efforts on behalf of the Company and to promote the success of
the Company’s business. The Plan provides for the grant of share options, share
appreciation rights, restricted common shares, restricted share units, LTIP
units, dividend equivalent rights and other equity-based awards.

 

2.                                      Definitions.

 

For purposes of the Plan, the following terms shall be defined as set forth
below:

 

(a)                                 “Affiliate” means (i) any Person directly or
indirectly controlling, controlled by, or under common control with such other
Person, (ii) any executive officer or general partner of such other Person and
(iii) any legal entity for which such Person acts as an executive officer or
general partner.

 

(b)                                 “Award” means any Option, Share Appreciation
Right, Restricted Share, Restricted Share Unit, LTIP unit or Other Share-Based
Award granted under the Plan.

 

(c)                                  “Award Agreement” means any written
agreement, contract or other instrument or document evidencing an Award.

 

(d)                                 “Board” means the Board of Trustees of the
Company.

 

(e)                                  “Change of Control” means a change in
ownership or effective control of the Company, or a change in the ownership of a
substantial portion of the assets of the Company, in any case, within the
meaning of Section 409A of the Code; provided, however, that a transaction or
series of transactions effected with the Manager and/or any Affiliate of the
Manager, through the acquisition of Shares or other Company securities
(regardless of the form of such transaction or series of transactions), changes
to the membership of the Board or otherwise, shall not constitute a Change of
Control for purposes of the Plan or any Award.

 

(f)                                   “Code” means the Internal Revenue Code of
1986, as amended from time to time, and the rules and regulations promulgated
thereunder.

 

(g)                                  “Committee” means the committee established
by the Board to administer the Plan, the composition of which shall at all times
consist of “non-employee trustees” within the meaning of Rule 16b-3 under the
Exchange Act.

 

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(h)                                 “Company” means Starwood Waypoint
Residential Trust, a Maryland real estate investment trust, or any successor
trust.

 

(i)                                     “Effective Date” means January 16, 2014,
the date on which the Plan was adopted by the Board, subject to obtaining the
approval of the Company’s shareholders.

 

(j)                                    “Exchange Act” means the Securities
Exchange Act of 1934, as amended from time to time, and the rules and
regulations promulgated thereunder.

 

(k)                                 “Fair Market Value” means, with respect to
Shares or other property, the fair market value of such Share or other property
determined by such methods or procedures as shall be established from time to
time by the Board. Unless otherwise determined by the Board in good faith, the
per share Fair Market Value of Shares as of a particular date shall mean (i) the
closing sales price per share of Shares on the national securities exchange on
which the Shares are principally traded, for the last preceding date on which
there was a sale of such Shares on such exchange; (ii) if the Shares are then
traded in an over-the-counter market, the average of the closing bid and asked
prices for the Shares in such over-the-counter market for the last preceding
date on which there was a sale of such Shares in such market; or (iii) if the
Shares are not then listed on a national securities exchange or traded in an
over-the-counter market, such value as the Board, in its sole discretion, shall
determine.

 

(l)                                     “LTIP Unit” means an OP Unit, granted to
the Manager under Section 6(b)(v), subject to the restrictions set forth in such
Section.

 

(m)                             “Management Agreement” means the Management
Agreement, to be dated as of January 31, 2014, by and between the Company and
the Manager, as such may be amended from time to time.

 

(n)                                 “Manager” means SWAY Management LLC, a
Delaware limited liability company.

 

(o)                                 “Operating Partnership” means Starwood
Waypoint Residential Partnership, L.P., a Delaware limited partnership.

 

(p)                                 “Option” means a right, granted to the
Manager under Section 6(b)(i), to purchase Shares.

 

(q)                                 “OP Unit” means a unit of partnership
interest in the Operating Partnership.

 

(r)                                    “Other Share-Based Award” means a right
or other interest granted to the Manager that may be denominated or payable in,
valued in whole or in part by reference to, or otherwise based on, or related
to, Shares, including but not limited to unrestricted Shares or dividend
equivalent rights.

 

(s)                                   “Person” means any natural person,
corporation, partnership, association, limited liability company, estate, trust,
joint venture, any federal, state or municipal government or any bureau,
department or agency thereof or any other legal entity and any fiduciary acting
in such capacity on behalf of the foregoing.

 

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(t)                                    “Plan” means this Starwood Waypoint
Residential Trust Manager Equity Plan, as amended from time to time.

 

(u)                                 “Restricted Shares” means an Award of Shares
to the Manager under Section 6(b)(iii) that may be subject to certain
restrictions and to a risk of forfeiture.

 

(v)                                 “Restricted Share Unit” or “RSU” means a
right granted to the Manager under Section 6(b)(iv) to receive Shares, cash or
other property at the end of a specified period, which right may be conditioned
on the satisfaction of specified performance or other criteria.

 

(w)                               “Securities Act” means the Securities Act of
1933, as amended from time to time, and the rules and regulations promulgated
thereunder.

 

(x)                                 “Share” means a common share, par value
$0.01 per share, of the Company.

 

(y)                                 “Share Appreciation Right” or “SAR” means
the right granted to the Manager under Section 6(b)(ii) to be paid an amount
measured by the appreciation in the Fair Market Value of Shares from the date of
grant to the date of exercise of the right.

 

3.                                      Administration.

 

The Plan shall be administered by the Board. Except with respect to the
amendment, modification, suspension or early termination of the Plan, the Board
may appoint a Committee to administer all or a portion of the Plan. To the
extent that the Board so delegates its authority, references herein to the Board
shall be deemed references to the Committee. The Board may delegate to one or
more agents such administrative duties as it may deem advisable, and the
Committee or any other person to whom the Board has delegated duties as
aforesaid may employ one or more persons to render advice with respect to any
responsibility the Board or such Committee or person may have under the Plan. No
member of the Board or Committee shall be liable for any action taken or
determination made in good faith with respect to the Plan or any Award granted
hereunder.

 

The Board shall have the authority in its discretion, subject to and not
inconsistent with the express provisions of the Plan, to administer the Plan and
to exercise all the powers and authorities either specifically granted to it
under the Plan or necessary or advisable in the administration of the Plan,
including, without limitation, the authority to: (i) grant Awards;
(ii) determine the type and number of Awards to be granted, the number of Shares
to which an Award may relate and the terms, conditions, restrictions and
performance criteria relating to any Award; (iii) determine whether, to what
extent, and under what circumstances an Award may be settled, cancelled,
forfeited, exchanged, or surrendered; (iv) make adjustments in the terms and
conditions of Awards; (v) construe and interpret the Plan and any Award;
(vi) prescribe, amend and rescind rules and regulations relating to the Plan;
(vii) determine the terms and provisions of the Award Agreements (which need not
be identical for each grant); and (viii) make all other determinations deemed
necessary or advisable for the administration of the Plan. All decisions,
determinations and interpretations of the Board shall be final and binding on
all persons, including but not limited to the Company, any parent or subsidiary
of the Company, the Manager (or any person claiming any rights under the Plan
from or through the Manager) and any shareholder. Notwithstanding any provision
of the Plan or any Award Agreement to the contrary,

 

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except as provided in the second paragraph of Section 5, neither the Board nor
the Committee shall, without obtaining the approval of the Company’s
shareholders, (i) reduce the purchase or base price of any previously granted
Option or SAR, (ii) cancel any previously granted Option or SAR in exchange for
another Option or SAR with a lower purchase or base price or (iii) cancel any
previously granted Option or SAR in exchange for cash or another award if the
purchase or base price of such Option or SAR exceeds the Fair Market Value of a
Share on the date of such cancellation, in each case other than in connection
with a Change of Control.

 

4.                                      Eligibility.

 

Awards under the Plan may be granted only to the Manager. In determining the
type of Award to be granted and the terms and conditions of such Award
(including the number of Shares to be covered by such Award), the Board shall
take into account such factors as the Board shall deem relevant in connection
with accomplishing the purposes of the Plan.

 

5.                                      Shares and OP Units Subject to the Plan.

 

The maximum number of Shares and/or OP Units reserved for the grant of Awards
under the Plan on or after the Effective Date shall be equal to 2,932,697, less
any Shares and/or OP Units issued or subject to awards granted under the
Company’s Equity Plan on or after the Effective Date, subject to adjustment as
provided herein. Shares issued under the Plan may, in whole or in part, be
authorized but unissued shares or shares that shall have been or may be
reacquired by the Company in the open market, in private transactions or
otherwise. If any vested Award granted under the Plan is paid or otherwise
settled without the issuance of Shares and/or OP Units, or if Shares and/or OP
Units are surrendered to or withheld by the Company as payment of either the
exercise price of an Award and/or withholding taxes in respect of an Award, the
Shares and/or OP Units that were subject to such Award shall not again be
available for Awards under the Plan. If any Shares and/or OP Units subject to an
Award are forfeited, cancelled, exchanged or surrendered or if an Award
terminates or expires without a distribution of Shares and/or OP Units to the
Manager (other than as provided in the immediately preceding sentence), the
Shares and/or OP Units with respect to such Award shall, to the extent of any
such forfeiture, cancellation, exchange, surrender, termination or expiration,
again be available for Awards under the Plan. Upon the exercise of any Award
granted in tandem with any other Award, such related Award shall be cancelled to
the extent of the number of Shares and/or OP Units as to which the Award is
exercised and, notwithstanding the foregoing, such number of Shares and/or OP
Units shall no longer be available for Awards under the Plan. Upon the
redemption of any OP Units issued pursuant to an Award in exchange for Shares,
such Shares shall no longer be available for Awards under the Plan; however,
such OP Units shall again be available for issuance pursuant to Awards granted
under the Plan.

 

In the event that the Board shall determine that any dividend or other
distribution (whether in the form of cash, Shares, OP Units or other property),
recapitalization, share split, reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share exchange, or other
similar corporate transaction or event, affects the Shares and/or OP Units such
that an adjustment is appropriate in order to prevent dilution or enlargement of
the rights of the Manager under the Plan, then the Board shall make equitable
changes or adjustments to any or all of: (i) the number and kind of Shares, OP
Units or other property (including cash) that may

 

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thereafter be issued in connection with Awards; (ii) the number and kind of
Shares, OP Units or other property (including cash) issued or issuable in
respect of outstanding Awards; (iii) the exercise price, base price or purchase
price relating to any Award and (iv) the performance goals, if any, applicable
to outstanding Awards. In addition, the Board may determine that any such
equitable adjustment may be accomplished by making a payment to the Award
holder, in the form of cash or other property (including but not limited to
Shares and/or OP Units ).

 

6.                                      Terms of Awards.

 

(a)                                 General. The term of each Award shall be for
such period as may be determined by the Board. Subject to the terms of the Plan
and any applicable Award Agreement, payments to be made by the Company upon the
grant, vesting, maturation or exercise of an Award may be made in such forms as
the Board shall determine at the date of grant or thereafter, including, without
limitation, cash, Shares, OP Units or other property, and may be made in a
single payment or transfer, in installments or on a deferred basis. The Board
may make rules relating to installment or deferred payments with respect to
Awards, including the rate of interest to be credited with respect to such
payments. In addition to the foregoing, the Board may impose on any Award or the
exercise thereof, at the date of grant or thereafter, such additional terms and
conditions, not inconsistent with the provisions of the Plan, as the Board shall
determine.

 

(b)                                 Terms of Specified Awards. The Board is
authorized to grant the Awards described in this Section 6(b), under such terms
and conditions as deemed by the Board to be consistent with the purposes of the
Plan. Such Awards may be granted with vesting, value and/or payment contingent
upon attainment of one or more performance goals. Except as otherwise set forth
herein or as may be determined by the Board, each Award granted under the Plan
shall be evidenced by an Award Agreement containing such terms and conditions
applicable to such Award as the Board shall determine at the date of grant or
thereafter.

 

(i)                                     Options. The Board is authorized to
grant Options to the Manager on the following terms and conditions:

 

(A)                               Exercise Price. The exercise price of a Share
purchasable under an Option shall be determined by the Board, but in no event
shall the per share exercise price of any Option be less than 100% of the Fair
Market Value of a Share on the date of grant of such Option. The exercise price
for Shares subject to an Option may be paid in cash or by an exchange of Shares
previously owned by the Manager, through a “broker cashless exercise” procedure
approved by the Board (to the extent permitted by law) or a combination of the
above, in any case in an amount having a combined value equal to such exercise
price; provided that the Board may require that any Shares exchanged by the
Manager have been owned by the Manager for at least six months as of the date of
exercise. An Award Agreement may provide that the Manager may pay all or a
portion of the aggregate exercise price by having Shares with a Fair Market
Value on the date of exercise equal to the aggregate exercise price withheld by
the Company.

 

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(B)                               Term and Exercisability of Options. The date
on which the Board adopts a resolution expressly granting an Option shall be
considered the day on which such Option is granted. Options shall be exercisable
over the exercise period (which shall not exceed ten years from the date of
grant), at such times and upon such conditions as the Board may determine, as
reflected in the Award Agreement; provided, that the Board shall have the
authority to accelerate the exercisability of any outstanding Option at such
time and under such circumstances as it, in its sole discretion, deems
appropriate. An Option may be exercised to the extent of any or all full Shares
as to which the Option has become exercisable, by giving written notice of such
exercise to the Board or its designated agent.

 

(C)                               Other Provisions. Options may be subject to
such other conditions including, but not limited to, restrictions on
transferability of the Shares acquired upon exercise of such Options, as the
Board may prescribe in its discretion or as may be required by applicable law.

 

(ii)                                  Share Appreciation Rights. The Board is
authorized to grant SARs to the Manager on the following terms and conditions:

 

(A)                               In General. Unless the Board determines
otherwise, an SAR granted in tandem with an Option may be granted at the time of
grant of the related Option or at any time thereafter. An SAR granted in tandem
with an Option shall be exercisable only to the extent the underlying Option is
exercisable. Payment of an SAR may be made in cash, Shares, or property as
specified in the Award or as determined by the Board.

 

(B)                               Right Conferred. An SAR shall confer on the
Manager a right to receive an amount with respect to each Share subject thereto,
upon exercise thereof, equal to the excess of (1) the Fair Market Value of one
Share on the date of exercise over (2) the base price of the SAR (which in the
case of an SAR granted in tandem with an Option shall be equal to the exercise
price of the underlying Option, and which in the case of any other SAR shall be
such price as the Board may determine, provided it is no less than 100% of the
Fair Market Value of a Share on the date of grant of such SAR).

 

(C)                               Term and Exercisability of SARs. The date on
which the Board adopts a resolution expressly granting an SAR shall be
considered the day on which such SAR is granted. SARs shall be exercisable over
the exercise period (which shall not exceed the lesser of ten years from the
date of grant or, in the case of a tandem SAR, the expiration of its related
Award), at such times and upon such conditions as the Board may determine, as
reflected in the Award Agreement; provided, that the Board shall have the
authority to accelerate the exercisability of any outstanding SAR at such time
and under such circumstances as it, in its sole discretion, deems appropriate.
An SAR may be exercised to the extent of any or all

 

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full Shares as to which the SAR (or, in the case of a tandem SAR, its related
Award) has become exercisable, by giving written notice of such exercise to the
Board or its designated agent.

 

(D)                               Other Provisions. SARs may be subject to such
other conditions including, but not limited to, restrictions on transferability
of the Shares acquired upon exercise of such SARs, as the Board may prescribe in
its discretion or as may be required by applicable law.

 

(iii)                               Restricted Shares. The Board is authorized
to grant Restricted Shares to the Manager on the following terms and conditions:

 

(A)                               Issuance and Restrictions. Restricted Shares
shall be subject to such restrictions on transferability and other restrictions,
if any, as the Board may impose at the date of grant or thereafter, which
restrictions may lapse separately or in combination at such times, under such
circumstances, in such installments, or otherwise, as the Board may determine.
The Board may place restrictions on Restricted Shares that shall lapse, in whole
or in part, only upon the attainment of one or more performance goals. Unless
otherwise determined by the Board, following a grant of Restricted Shares, the
Manager shall have all of the rights of a shareholder including, without
limitation, the right to vote Restricted Shares and the right to receive
dividends thereon.

 

(B)                               Certificates for Shares. Restricted Shares
granted under the Plan may be evidenced in such manner as the Board shall
determine. If certificates representing Restricted Shares are registered in the
name of the Manager, such certificates shall bear an appropriate legend
referring to the terms, conditions and restrictions applicable to such
Restricted Shares, and the Company shall retain physical possession of the
certificate.

 

(C)                               Dividends/Distributions. Unless otherwise
determined by the Board, dividends or distributions paid on Restricted Shares
shall be paid at the dividend or distribution payment date, provided that such
payments may be deferred to such date as determined by the Board, and in any
event shall be payable in cash or in Shares having a Fair Market Value equal to
the amount of such dividends or distributions. Unless otherwise determined by
the Board, Shares distributed in connection with a share split or share
dividend, and other property distributed as a dividend or distribution, shall be
subject to restrictions and a risk of forfeiture to the same extent as the
Restricted Shares with respect to which such Shares or other property have been
distributed.

 

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(iv)                              Restricted Share Units. The Board is
authorized to grant RSUs to the Manager, subject to the following terms and
conditions:

 

(A)                               Award and Restrictions. Delivery of Shares,
cash or other property, as determined by the Board, will occur upon expiration
of the period specified for RSUs by the Board during which forfeiture conditions
apply, or such later date as the Board shall determine. The Board may place
restrictions on RSUs that shall lapse, in whole or in part, only upon the
attainment of one or more performance goals.

 

(B)                               Dividend/Distribution Equivalents. The Board
is authorized to grant to the Manager the right to receive dividend equivalent
payments and/or distribution equivalent payments for the period prior to
settlement of the RSU. Dividend equivalents or distribution equivalents may be
paid currently or credited to an account for the Manager, and may be settled in
cash or Shares, as determined by the Board. Any such settlements, and any such
crediting of dividend equivalents or distribution equivalents or reinvestment in
Shares, may be subject to such conditions, restrictions and contingencies as the
Board shall establish, including the reinvestment of such credited amounts in
Share equivalents. Unless otherwise determined by the Board, any such dividend
equivalents or distribution equivalents shall be paid or credited, as
applicable, on the dividend payment date to the Manager as though each RSU held
by such Manager were an outstanding Share.

 

(v)                                 LTIP Units. The Board is authorized to grant
LTIP Units to the Manager, subject to the following terms and conditions:

 

(A)                               Award and Restrictions. Delivery of OP Units,
Shares, cash or other property, and the right to convert vested units to Shares,
as determined by the Board, will occur upon expiration of the period specified
for LTIP Units by the Board during which forfeiture conditions apply, or such
later date as the Board shall determine. The Board may place restrictions on
LTIP Units that shall lapse, in whole or in part, only upon the attainment of
one or more performance goals.

 

(B)                               Forfeiture. Subject to Section 8, upon
termination of the Management Agreement prior to the vesting of an LTIP Unit, or
upon failure to satisfy any other conditions precedent to the delivery of OP
Units, Shares or cash to which such LTIP Units relate, all LTIP Units and any
accrued but unpaid distributions or allocations that are then subject to
restriction shall be forfeited; provided that the Board may provide, by rule or
regulation or in any Award Agreement, or may determine in any individual case,
that restrictions or forfeiture conditions relating to LTIP Units will be waived
in whole or in part in the event of termination resulting from specified causes,
and the Board may in other cases waive in whole or in part the forfeiture of
LTIP Units.

 

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(C)                               Certificates for LTIP Units. LTIP Units
granted under the Plan may be evidenced in such manner as the Board shall
determine. If certificates representing LTIP Units are registered in the name of
the Manager, such certificates shall bear an appropriate legend referring to the
terms, conditions and restrictions applicable to such LTIP Units, and the
Company shall retain physical possession of the certificate.

 

(D)                               Distributions. Unless otherwise determined by
the Board, distributions and allocations with respect to LTIP Units shall be
paid or made at the distribution or allocation payment date, as applicable,
provided that such payments or allocations may be held by the Company until such
date as determined by the Board, and in any event shall be payable in cash or
reinvested by the Company in Shares purchased from the Company for the Fair
Market Value of such Shares on the payment date of such distribution or
allocation. Unless otherwise determined by the Board, Shares and/or OP Units
distributed in connection with a share split or share distribution, and other
property distributed as a distribution, shall be subject to restrictions and a
risk of forfeiture to the same extent as the LTIP Units with respect to which
such Shares or other property has been distributed.

 

(vi)                              Other Share-Based Awards. The Board is
authorized to grant Awards to the Manager in the form of Other Share-Based
Awards, as deemed by the Board to be consistent with the purposes of the Plan.
Awards granted pursuant to this paragraph may be granted with vesting, value
and/or payment contingent upon the attainment of one or more performance goals.
The Board shall determine the terms and conditions of such Awards at the date of
grant or thereafter. Without limiting the generality of this paragraph, Other
Share-Based Awards may include grants of Shares that are not subject to any
restrictions or a substantial risk of forfeiture. Subject to Section 8, upon
termination of service to the Company prior to the vesting of an Other
Share-Based Award, or upon failure to satisfy any other conditions precedent to
the delivery of Shares or cash to which such Other Share-Based Award relates,
all Other Share-Based Awards that are then subject to deferral or restriction
shall be forfeited; provided, that the Board may provide, by rule or regulation
or in any Award Agreement, or may determine in any individual case, that
restrictions or forfeiture conditions relating to such Other Share-Based Award
will be waived in whole or in part in the event of termination resulting from
specified causes, and the Board may in other cases waive in whole or in part the
forfeiture of such Other Share-Based Award.

 

7.                                      Termination of Management Agreement.
Upon termination of the Management Agreement either (i) by the Company for cause
(within the meaning of Section 13 of the Management Agreement) or (ii) by the
Manager for any reason other than due to an adverse change in the Manager’s
compensation thereunder, all unvested Awards then held by the Manager and all
accrued and unpaid dividends or dividend equivalents related thereto shall be
immediately cancelled and forfeited without consideration. Upon termination of
the Management Agreement for any reason other than as enumerated in the
immediately preceding sentence, any Award that was not previously vested will
become fully vested and/or payable, and any

 

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performance conditions imposed with respect to the Award will be deemed to be
fully achieved; provided, however, that for any Award subject to Section 409A of
the Code, no payment may be made to the Manager unless the termination of the
Management Agreement also constitutes a “separation from service” within the
meaning of Section 409A of the Code.

 

8.                                      Change of Control. In the event of a
Change of Control, any Award that was not previously vested will become fully
vested and/or payable, and any performance conditions imposed with respect to
the Award will be deemed to be fully achieved; provided, however, that for any
Award subject to Section 409A of the Code, no payment may be made to the Manager
unless the transaction constituting a Change of Control also constitutes, within
the meaning of Section 409A of the Code, a “change in the ownership or effective
control” of the Company or a “change in the ownership of a substantial portion
of the assets” of the Company.

 

9.                                      General Provisions.

 

(a)                                 Nontransferability. Awards granted to the
Manager under the Plan shall not be transferable by the Manager and shall be
exercisable only by the Manager.

 

(b)                                 No Right to Continued Service. Nothing in
the Plan or in any Award, any Award Agreement or other agreement entered into
pursuant hereto shall confer upon the Manager the right to continue to provide
services to the Company or any parent or subsidiary of the Company or to be
entitled to any remuneration or benefits not set forth in the Plan or such Award
Agreement or other agreement or to interfere with or limit in any way the right
of the Company to terminate the Management Agreement in accordance with its
terms.

 

(c)                                  Taxes. The Company or any parent or
subsidiary of the Company is authorized to withhold from any Award granted, any
payment relating to an Award under the Plan, including from a distribution of
Shares, or any other payment to the Manager, amounts of withholding and other
taxes due in connection with any transaction involving an Award, and to take
such other action as the Board may deem advisable to enable the Company and the
Manager to satisfy obligations for the payment of withholding taxes and other
tax obligations relating to any Award.

 

(d)                                 Effective Date; Amendment and Termination.

 

(i)                                     The Plan shall take effect upon the
Effective Date, subject to the approval of the Company’s shareholders.

 

(ii)                                  The Board may at any time and from time to
time terminate, amend, modify or suspend the Plan in whole or in part; provided,
however, that unless otherwise determined by the Board, an amendment that
requires shareholder approval in order for the Plan to comply with any law,
regulation or securities exchange requirement shall not be effective unless
approved by the requisite vote of shareholders. The Board may at any time and
from time to time amend any outstanding Award in whole or in part.
Notwithstanding the foregoing sentence of this clause (ii), no amendment or
modification to or suspension or termination of the Plan or amendment of any
Award shall affect adversely any of the rights of the Manager, without the
Manager’s consent, under any Award theretofore granted under the Plan.

 

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(e)                                  Expiration of Plan. Unless earlier
terminated by the Board pursuant to the provisions of the Plan, the Plan shall
expire on the tenth anniversary of the Effective Date. No Awards shall be
granted under the Plan after such expiration date. The expiration of the Plan
shall not affect adversely any of the rights of the Manager, without the
Manager’s consent, under any Award theretofore granted.

 

(f)                                   No Rights to Awards; No Shareholder
Rights. The Manager shall have no claim to be granted any Award under the Plan.
Each Award may be subject to different terms and conditions, as determined by
the Board. Except as provided specifically herein, the Manager shall have no
rights as a shareholder with respect to any Shares covered by an Award until the
date of the issuance of a share certificate to the Manager for such Shares.

 

(g)                                  Unfunded Status of Awards. The Plan is
intended to constitute an “unfunded” plan for incentive and deferred
compensation. With respect to any payments not yet made to the Manager pursuant
to an Award, nothing contained in the Plan or any Award shall give the Manager
any rights that are greater than those of a general creditor of the Company.

 

(h)                                 No Fractional Shares. No fractional shares
shall be issued or delivered pursuant to the Plan or any Award. The Board shall
determine whether cash, other Awards or other property shall be issued or paid
in lieu of such fractional shares or whether such fractional shares or any
rights thereto shall be forfeited or otherwise eliminated.

 

(i)                                     Regulations and Other Approvals.

 

(i)                                     The obligation of the Company to sell or
deliver Shares and/or OP Units with respect to any Award granted under the Plan
shall be subject to all applicable laws, rules and regulations, including all
applicable federal and state securities laws, and the obtaining of all such
approvals by governmental agencies as may be deemed necessary or appropriate by
the Board.

 

(ii)                                  Each Award is subject to the requirement
that, if at any time the Board determines, in its absolute discretion, that the
listing, registration or qualification of Shares and/or OP Units issuable
pursuant to the Plan is required by any securities exchange or under any state
or federal law, or the consent or approval of any governmental regulatory body
is necessary or desirable as a condition of, or in connection with, the grant of
an Award or the issuance of Shares and/or OP Units, no such Award shall be
granted or payment made or Shares and/or OP Units issued, in whole or in part,
unless listing, registration, qualification, consent or approval has been
effected or obtained free of any conditions not acceptable to the Board.

 

(iii)                               In the event that the disposition of Shares
and/or OP Units acquired pursuant to the Plan is not covered by a then-current
registration statement under the Securities Act and is not otherwise exempt from
such registration, such Shares and/or OP Units shall be restricted against
transfer to the extent required by the Securities Act or regulations thereunder,
and the Board may require the Manager receiving Shares pursuant to the Plan, as
a condition precedent to receipt of such Shares and/or OP Units, to

 

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represent to the Company in writing that the Shares and/or OP Units acquired by
the Manager is acquired for investment only and not with a view to distribution.

 

(iv)                              The Board may require the Manager, as a
condition precedent to receipt of an Award or of Shares and/or OP Units, to
enter into a shareholder agreement or “lock-up” agreement in such form as the
Board shall determine is necessary or desirable to further the Company’s
interests.

 

(j)                                    Governing Law. The Plan and all
determinations made and actions taken pursuant hereto shall be governed by the
laws of Maryland without giving effect to the conflict of laws principles
thereof.

 

(k)                                 Section 409A. It is intended that the
payments and benefits under the Plan comply with, or as applicable, constitute a
short-term deferral or otherwise be exempt from, the provisions of Section 409A
of the Code. The Plan will be administered and interpreted in a manner
consistent with this intent, and any provision that would cause the Plan or any
Award to fail to satisfy Section 409A of the Code will have no force and effect
until amended to comply therewith (which amendment may be retroactive to the
extent permitted by Section 409A of the Code).

 

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