EXHIBIT 10.6
LUMINENT MORTGAGE CAPITAL, INC.
2003 OUTSIDE ADVISORS STOCK INCENTIVE PLAN, AS AMENDED
1. PURPOSE OF PLAN
The purpose of the Luminent Mortgage Capital, Inc. 2003 Outside Advisors Stock
Incentive Plan (this “Plan”) is to provide an additional means to compensate the
Corporation’s Management Company and to provide an additional incentive for the
Management Company and certain of its directors, employees and other eligible
persons to enhance the value of the Common Stock and to help further align their
interests with those of the Corporation’s stockholders. As used herein,
“Corporation” means Luminent Mortgage Capital, Inc., a Maryland corporation. As
used herein, “Management Company” means Seneca Capital Management, LLC, or any
affiliate of Seneca Capital Management, LLC, who shall succeed as the manager of
the Corporation under that certain Management Agreement, dated on or about
June 11, 2003, by and between the Corporation and Seneca Capital Management,
LLC.
2. ELIGIBILITY

  2.1   Eligible Persons. The Administrator (as such term is defined in
Section 3.1) may grant awards under this Plan only to those persons that the
Administrator determines to be Eligible Persons. An “Eligible Person” is the
Management Company, any affiliate or subsidiary of the Management Company, and
any person who is either: (a) an officer (whether or not a director) or employee
of the Management Company or one of its affiliates or subsidiaries; or (b) a
director of the Management Company or one of its affiliates or subsidiaries. An
Eligible Person who has been granted an award (a “participant”) may, if
otherwise eligible, be granted additional awards if the Administrator shall so
determine.     2.2   Ownership Limit. Notwithstanding anything else contained
herein or in any award hereunder to the contrary, no Person may receive Common
Stock upon the grant, exercise or payment of an award to the extent that it will
cause such Person to Beneficially Own or Constructively Own Capital Stock in
excess of the Ownership Limit. If a Person would be entitled to receive or
acquire shares of Common Stock but for the limitation of the preceding sentence,
the Corporation shall have the right to deliver to the Person, in lieu of Common
Stock, a check or cash in the amount equal to the value of the Common Stock
otherwise deliverable, subject to any applicable tax withholding or other
authorized deductions. For purposes of this limitation, the terms “Person,”
“Beneficially Own,” “Constructively Own,” “Capital Stock,” and “Ownership Limit”
are used as defined in the Corporation’s Articles of Incorporation.

3. PLAN ADMINISTRATION

  3.1   The Administrator. This Plan shall be administered by and all awards
under this Plan shall be authorized by the Administrator. The “Administrator”
means the Board of Directors of the Corporation (the “Board”) or one or more
committees appointed by the Board or another committee (within its delegated
authority) to administer all or certain aspects of this Plan. Any such committee
shall be comprised solely of one or more directors or such number of directors
as may be required under applicable law. A committee may delegate some or all of
its authority to another committee so constituted. The Board may delegate
different levels of authority to different committees with administrative and
grant authority under this Plan. Unless otherwise provided in the Bylaws of the
Corporation or the applicable charter of any Administrator: (a) a majority of
the members of the acting Administrator shall constitute a quorum, and (b) the
vote of a majority of the members present assuming the presence of a quorum or
the unanimous written consent of the members of the Administrator shall
constitute action by the acting Administrator.

 

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  3.2   Powers of the Administrator. Subject to the express provisions of this
Plan and compliance with Section 2-203 of the Maryland General Corporation Law,
the Administrator is authorized and empowered to do all things necessary or
desirable in connection with the authorization of awards and the administration
of this Plan (in the case of a committee, within the authority delegated to that
committee), including, without limitation, the authority to:

  (a)   determine eligibility and, from among those persons determined to be
eligible, the particular Eligible Persons who will receive an award under this
Plan;     (b)   grant awards to Eligible Persons, determine the price at which
securities will be offered or awarded and the number of securities to be offered
or awarded to any of such persons, determine the other specific terms and
conditions of such awards consistent with the express limits of this Plan,
establish the installments (if any) in which such awards shall become
exercisable or shall vest (which may include, without limitation, performance
and/or time-based schedules), or determine that no delayed exercisability or
vesting is required, establish any applicable performance targets, and establish
the events of termination or reversion of such awards;     (c)   approve the
forms of award agreements (which need not be identical either as to type of
award or among participants);     (d)   construe and interpret this Plan and any
agreements defining the rights and obligations of the Corporation and
participants under this Plan, further define the terms used in this Plan, and
prescribe, amend and rescind rules and regulations relating to the
administration of this Plan or the awards granted under this Plan;     (e)  
cancel, modify, or waive the Corporation’s rights with respect to, or modify,
discontinue, suspend, or terminate any or all outstanding awards, subject to any
required consent under Section 8.6.5;     (f)   accelerate or extend the vesting
or exercisability or extend the term of any or all such outstanding awards (in
the case of options or stock appreciation rights, within the maximum ten-year
term of such awards) in such circumstances as the Administrator may deem
appropriate (including, without limitation, in connection with a termination of
employment or services or other events of a personal nature) subject to any
required consent under Section 8.6.5;     (g)   adjust the number of shares of
Common Stock subject to any award, adjust the price of any or all outstanding
awards, reprice any or all outstanding awards (by amendment, exchange or other
means) or otherwise change previously imposed terms and conditions, in such
circumstances as the Administrator may deem appropriate, in each case subject to
Sections 4 and 8.6;     (h)   determine the date of grant of an award, which may
be a designated date after but not before the date of the Administrator’s action
(unless otherwise designated by the Administrator, the date of grant of an award
shall be the date upon which the Administrator took the action granting an
award);     (i)   determine whether, and the extent to which, adjustments are
required pursuant to Section 7 hereof and authorize the termination, conversion,
substitution or succession of awards upon the occurrence of an event of the type
described in Section 7;     (j)   acquire or settle (subject to Sections 7 and
8.6) rights under awards in cash, stock of equivalent value, or other
consideration; and     (k)   determine the fair market value of the Common Stock
or awards under this Plan from time to time and/or the manner in which such
value will be determined.

  3.3   Binding Determinations. Any action taken by, or inaction of, the
Corporation or any of its subsidiaries, or the Administrator relating or
pursuant to this Plan and within its authority hereunder or under applicable law
shall be within the absolute discretion of that entity or body and shall be
conclusive and binding upon all persons. Neither the Board nor any Board
committee, nor any member thereof or person acting at the direction thereof,
shall be liable for any act, omission, interpretation, construction or
determination made in good faith in connection with this Plan (or any award made
under this Plan), and all such persons shall be entitled to indemnification and
reimbursement by the Corporation in respect of any claim, loss, damage or
expense (including, without limitation, attorneys’ fees) arising or resulting
therefrom to the fullest extent permitted by law and/or under any directors and
officers liability insurance coverage that may be in effect from time to time.

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  3.4   Reliance on Experts. In making any determination or in taking or not
taking any action under this Plan, the Board or a committee, as the case may be,
may obtain and may rely upon the advice of experts, including employees and
professional advisors to the Corporation. No director, officer or agent of the
Corporation shall be liable for any such action or determination taken or made
or omitted in good faith.     3.5   Delegation. The Administrator may delegate
ministerial, non-discretionary functions to individuals who are officers or
employees of the Corporation or to third parties.

4. SHARES OF COMMON STOCK SUBJECT TO THE PLAN; SHARE LIMITS

  4.1   Shares Available. Subject to the provisions of Section 7.1, the capital
stock that may be delivered under this Plan shall be shares of the Corporation’s
authorized but unissued Common Stock and any shares of its Common Stock held as
treasury shares. For purposes of this Plan, “Common Stock” shall mean the common
stock of the Corporation and such other securities or property as may become the
subject of awards under this Plan, or may become subject to such awards,
pursuant to an adjustment made under Section 7.1.     4.2   Share Limits. The
maximum number of shares of Common Stock that may be delivered pursuant to
awards granted to Eligible Persons under this Plan (the “Share Limit”) is
150,000 shares. The foregoing numerical limit is subject to adjustment as
contemplated by Section 4.3, Section 7.1 and Section 8.10.     4.3   Awards
Settled in Cash, Reissue of Awards and Shares. To the extent that an award is
settled in cash or a form other than shares of Common Stock, the shares that
would have been delivered had there been no such cash or other settlement shall
not be counted against the shares available for issuance under this Plan. In the
event that shares are delivered in respect of a dividend equivalent, stock
appreciation right, or other award, only the actual number of shares delivered
with respect to the award shall be counted against the share limits of this
Plan. Shares that are subject to or underlie awards which expire or for any
reason are cancelled or terminated, are forfeited, fail to vest, or for any
other reason are not paid or delivered under this Plan shall again be available
for subsequent awards under this Plan. Shares that are exchanged by a
participant or withheld by the Corporation as full or partial payment in
connection with any award under this Plan, as well as any shares exchanged by a
participant or withheld by the Corporation to satisfy the tax withholding
obligations related to any award under this Plan, shall be available for
subsequent awards under this Plan.     4.4   Reservation of Shares; No
Fractional Shares; Minimum Issue. The Corporation shall at all times reserve a
number of shares of Common Stock sufficient to cover the Corporation’s
obligations and contingent obligations to deliver shares with respect to awards
then outstanding under this Plan (exclusive of any dividend equivalent
obligations to the extent the Corporation has the right to settle such rights in
cash). No fractional shares shall be delivered under this Plan. The
Administrator may pay cash in lieu of any fractional shares in settlements of
awards under this Plan. No fewer than one hundred (100) shares may be purchased
on exercise of any award (or, in the case of stock appreciation or purchase
rights, no fewer than one hundred (100) rights may be exercised at any one time)
unless the total number purchased or exercised is the total number at the time
available for purchase or exercise under the award.

5. AWARDS

  5.1   Type and Form of Awards. The Administrator shall determine the type or
types of award(s) to be made to each selected Eligible Person. Awards may be
granted singly, in combination or in tandem. Awards also may be made in
combination or in tandem with, in replacement of, as alternatives to, or as the
payment form for grants or rights under any other employee or compensation plan
of the Corporation. The types of awards that may be granted under this Plan are:

5.1.1 Stock Options. A stock option is the grant of a right to purchase a
specified number of shares of Common Stock during a specified period as
determined by the Administrator. The maximum term of each option shall be ten
(10) years. The per share exercise price for each option shall be determined by
the Administrator and set forth in the applicable award agreement. When an
option is exercised, the exercise price for the shares to be purchased shall be
paid in full in cash or such other method permitted by the Administrator
consistent with Section 5.4.

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5.1.2 Stock Appreciation Rights. A stock appreciation right or “SAR” is a right
to receive a payment, in cash and/or Common Stock, equal to the excess of the
fair market value of a specified number of shares of Common Stock on the date
the SAR is exercised over a per share amount (the “base price”) determined by
the Administrator and set forth in the applicable award agreement. The maximum
term of an SAR shall be ten (10) years. The Administrator may grant limited SARs
which are exercisable only upon a change in control or other specified event and
may be payable based on the spread between the base price of the SAR and the
fair market value of a share of Common Stock during a specified period or at a
specified time within a specified period before, after or including the date of
such event.
5.1.3 Other Awards. The other types of awards that may be granted under this
Plan include: (a) stock bonuses, restricted stock, performance stock, stock
units, phantom stock, dividend equivalents, or similar rights to purchase or
acquire shares, whether at a fixed or variable price or ratio related to the
Common Stock, upon the passage of time, the occurrence of one or more events, or
the satisfaction of performance criteria or other conditions, or any combination
thereof; or (b) any similar securities with a value derived from the value of or
related to the Common Stock and/or returns thereon.

  5.2   Award Agreements. Each award shall be evidenced by a written award
agreement in the form approved by the Administrator and executed on behalf of
the Corporation and, if required by the Administrator, executed by the recipient
of the award. The Administrator may authorize any officer of the Corporation
(other than the particular award recipient) to execute any or all award
agreements on behalf of the Corporation. The award agreement shall set forth the
material terms and conditions of the award as established by the Administrator
consistent with the express limitations of this Plan.     5.3   Deferrals and
Settlements. Payment of awards may be in the form of cash, Common Stock, other
awards or combinations thereof as the Administrator shall determine, and with
such restrictions as it may impose. The Administrator may also require or permit
participants to elect to defer the issuance of shares or the settlement of
awards in cash under such rules and procedures as it may establish under this
Plan. The Administrator may also provide that deferred settlements include the
payment or crediting of interest or other earnings on the deferral amounts, or
the payment or crediting of dividend equivalents where the deferred amounts are
denominated in shares.     5.4   Consideration for Common Stock or Awards. The
purchase price for any award granted under this Plan or the Common Stock to be
delivered pursuant to an award, as applicable, may be paid by means of any
lawful consideration as determined by the Administrator, including, without
limitation, one or a combination of the following methods:

  •   services rendered by the recipient of such award;     •   cash, check
payable to the order of the Corporation, or electronic funds transfer;     •  
notice and third party payment in such manner as may be authorized by the
Administrator;     •   the delivery of previously owned shares of Common Stock;
    •   by a reduction in the number of shares otherwise deliverable pursuant to
the award;     •   by delivery of one or more promissory notes from the Eligible
Person, provided that any such note shall be subject to terms and conditions
established by the Administrator and the requirements of applicable law; or    
•   subject to such procedures as the Administrator may adopt, pursuant to a
“cashless exercise” with a third party who provides financing for the purposes
of (or who otherwise facilitates) the purchase or exercise of awards.

In no event shall any shares newly-issued by the Corporation be issued for less
than the minimum lawful consideration for such shares or for consideration other
than consideration permitted by applicable state law. In the event that the
Administrator allows a participant to exercise an award by delivering shares of
Common Stock previously owned by such participant and unless otherwise expressly
provided by the Administrator, any shares delivered which were initially
acquired by the participant from the Corporation (upon exercise of a stock
option or otherwise) must have been owned by the participant at least six months
as of the date of delivery. Shares of Common Stock used to satisfy the exercise
price of an option shall be valued at their fair market value on the date of
exercise. The Corporation will not be obligated to deliver any shares unless and
until it receives full payment of the exercise or purchase price therefor and
any related withholding obligations under Section 8.5 and any other conditions
to exercise or purchase have been satisfied. Unless otherwise expressly provided
in the applicable award agreement, the Administrator may at any time eliminate
or limit a participant’s ability to pay the purchase or exercise price of any
award or shares by any method other than cash payment to the Corporation.

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  5.5   Definition of Fair Market Value. For purposes of this Plan, “fair market
value” shall mean, unless otherwise determined or provided by the Administrator
in the circumstances: (a) the closing price of a share of Common Stock as
reported on the composite tape of the principal national securities exchange on
which the Common Stock is listed or admitted to trade (the “Exchange”) for the
date in question or, if no sales of Common Stock were made on the Exchange on
that date (or if the market has not closed at the applicable time), the closing
price of a share of Common Stock as reported on the composite tape of the
Exchange for the next preceding day on which sales of Common Stock were made on
the Exchange; or (b) if the stock is not listed or admitted to trade on a
national securities exchange, then the last trading price for a share of Common
Stock for the date in question (or as of the most recent trading date if there
were no sales of Common Stock on the date in question or if the market has not
closed at the applicable time) as furnished by the National Association of
Securities Dealers, Inc. (“NASD”). The Administrator may, however, provide with
respect to one or more awards that the fair market value shall equal the last
closing or trading price of a share of Common Stock as reported on the composite
tape of the Exchange or by the NASD available on the date in question or the
average of the high and low prices, or the average of the bid and asked prices,
of a share of Common Stock as reported on the composite tape of the Exchange or
by the NASD (or by a similar organization if the NASD is no longer reporting
such information) for the date in question or the most recent trading day. If
the Common Stock is not listed or admitted to trade on a national securities
exchange and if prices for the Common Stock are not furnished by the NASD, or if
the Common Stock is not actively traded as of the applicable date, the fair
market value of the Common Stock shall be the value as reasonably determined by
the Administrator for purposes of the award in the circumstances. The
Administrator also may adopt a different methodology for determining fair market
value with respect to one or more awards if a different methodology is necessary
or advisable to secure any intended favorable tax, legal or other treatment for
the particular award(s) (for example, and without limitation, the Administrator
may provide that fair market value for purposes of one or more awards will be
based on an average of closing prices (or the average of high and low daily
trading prices) for a specified period preceding the relevant date).     5.6  
Transfer Restrictions.

5.6.1 Limitations on Exercise and Transfer. Unless otherwise expressly provided
in (or pursuant to) this Section 5.6, by applicable law and by the award
agreement, as the same may be amended, (a) all awards are non-transferable and
shall not be subject in any manner to sale, transfer, anticipation, alienation,
assignment, pledge, encumbrance or charge; (b) awards shall be exercised only by
the participant; and (c) amounts payable or shares issuable pursuant to any
award shall be delivered only to (or for the account of) the participant.
5.6.2 Further Exceptions to Limits on Transfer. The exercise and transfer
restrictions in Section 5.6.1 shall not apply to:

  (a)   transfers to the Corporation,     (b)   the designation of a beneficiary
to receive benefits in the event of the participant’s death or, if the
participant has died, transfers to or exercise by the participant’s beneficiary,
or, in the absence of a validly designated beneficiary, transfers by will or the
laws of descent and distribution,     (c)   transfers by gift to “immediate
family” as that term is defined in Rule 16a-1(e) promulgated under the
Securities Exchange Act of 1934, as amended,     (d)   if the participant has
suffered a disability, permitted transfers or exercises on behalf of the
participant by his or her legal representative, or     (e)   the authorization
by the Administrator of “cashless exercise” procedures with third parties who
provide financing for the purpose of (or who otherwise facilitate) the exercise
of awards consistent with applicable laws and the express authorization of the
Administrator.

Notwithstanding the foregoing or anything in Section 5.6.1, restricted stock
awards shall be subject to any and all additional transfer restrictions under
the Code to the extent necessary to maintain the intended tax consequences of
such awards. Notwithstanding clause (c) above but subject to compliance with all
applicable laws, any contemplated transfer by gift to “immediate family” as
referenced in clause (c) above is subject to the condition precedent that the
transfer be approved by the Administrator in order for it to be effective.

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  5.7   Tandem Awards. The Administrator may grant an award to the Management
Company and a corresponding “tandem” award to another Eligible Person and
provide with respect to such awards that the Management Company’s award shall
not be payable or exercisable unless and until the related tandem award
terminates and/or that an exercise or payment of either of such award shall
result in a corresponding reduction in the number of shares subject to or other
potential benefits in respect of the other award. Any such awards shall be
subject to such other terms and conditions as the Administrator shall prescribe
in the circumstances.

6. EFFECT OF TERMINATION OF EMPLOYMENT OR SERVICE ON AWARDS

  6.1   General. The Administrator shall establish the effect of a termination
of employment or service on the rights and benefits under each award under this
Plan and in so doing may make distinctions based upon, inter alia, the cause of
termination and type of award.     6.2   Events Not Deemed Terminations of
Employment. Unless the Administrator otherwise provides, the employment
relationship shall not be considered terminated in the case of (a) sick leave,
(b) military leave, or (c) any other leave of absence authorized by the
Management Company or the Administrator; provided that unless reemployment upon
the expiration of such leave is guaranteed by contract or law, such leave is for
a period of not more than ninety (90) days. In the case of any employee of the
Management Company on an approved leave of absence, continued vesting of the
award while on leave from the employ of the Management Company may be suspended
until the employee returns to service, unless the Administrator otherwise
provides or applicable law otherwise requires. In no event shall an award be
exercised after the expiration of the term set forth in the award agreement.    
6.3   Effect of Change of Subsidiary Status. For purposes of this Plan and any
award, if an entity ceases to be a subsidiary of or other entity controlled by
the Management Company a termination of employment or service shall be deemed to
have occurred with respect to each Eligible Person in respect of such entity who
does not continue as an Eligible Person in respect of another entity within the
Management Company after giving effect to the entity’s change in status.

7. ADJUSTMENTS; ACCELERATION

  7.1   Adjustments. Upon or in contemplation of: any reclassification,
recapitalization, stock split (including a stock split in the form of a stock
dividend) or reverse stock split (“stock split”); any merger, combination,
consolidation, or other reorganization; any spin-off, split-up, or similar
extraordinary dividend distribution in respect of the Common Stock (whether in
the form of securities or property); any exchange of Common Stock or other
securities of the Corporation, or any similar, unusual or extraordinary
corporate transaction in respect of the Common Stock; or a sale of all or
substantially all the business or assets of the Corporation as an entirety; then
the Administrator shall, in such manner, to such extent (if any) and at such
time as it deems appropriate and equitable in the circumstances:

  (a)   proportionately adjust any or all of (1) the number and type of shares
of Common Stock (or other securities) that thereafter may be made the subject of
awards (including the specific share limits, maximums and numbers of shares set
forth elsewhere in this Plan), (2) the number, amount and type of shares of
Common Stock (or other securities or property) subject to any or all outstanding
awards, (3) the grant, purchase, or exercise price (which term includes the base
price of any SAR or similar right) of any or all outstanding awards, (4) the
securities, cash or other property deliverable upon exercise or payment of any
outstanding awards, or (5) (subject to Section 7.7) the performance standards
applicable to any outstanding awards, or     (b)   make provision for a cash
payment or for the assumption, substitution or exchange of any or all
outstanding share-based awards or the cash, securities or property deliverable
to the holder of any or all outstanding share-based awards, based upon the
distribution or consideration payable to holders of the Common Stock upon or in
respect of such event.

The Administrator may adopt such valuation methodologies for outstanding awards
as it deems reasonable in the event of a cash or property settlement and, in the
case of options, SARs or similar rights, but without limitation on other
methodologies, may base such settlement solely upon the excess if any of the per
share amount payable upon or in respect of such event over the exercise or base
price of the award.
In any of such events, the Administrator may take such action prior to such
event to the extent that the Administrator deems the action necessary to permit
the participant to realize the benefits intended to be conveyed with respect to
the underlying shares in the same manner as is or will be available to
stockholders generally. In the case of any stock split or reverse stock split,
if no

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action is taken by the Administrator, the proportionate adjustments contemplated
by clause (a) above shall nevertheless be made.

  7.2   Automatic Acceleration of Awards. Upon a dissolution of the Corporation
or other event described in Section 7.1 that the Corporation does not survive
(or does not survive as a public company in respect of its Common Stock), then
each then outstanding option and SAR shall become fully vested, all shares of
restricted stock then outstanding shall fully vest free of restrictions, and
each other award granted under this Plan that is then outstanding shall become
payable to the holder of such award; provided that such acceleration provision
shall not apply, unless otherwise expressly provided by the Administrator, with
respect to any award to the extent that the Administrator has made a provision
for the substitution, assumption, exchange or other continuation or settlement
of the award, or the award would otherwise continue in accordance with its
terms, in the circumstances.     7.3   Possible Acceleration of Awards. Without
limiting Section 7.2, in the event of a Change in Control Event (as defined
below), the Administrator may, in its discretion, provide that any outstanding
option or SAR shall become fully vested, that any share of restricted stock then
outstanding shall fully vest free of restrictions, and that any other award
granted under this Plan that is then outstanding shall be payable to the holder
of such award. The Administrator may take such action with respect to all awards
then outstanding or only with respect to certain specific awards identified by
the Administrator in the circumstances. For purposes of this Plan, “Change in
Control Event” means any of the following:

  (a)   The acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (a “Person”)) of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act of 1934, as amended) of 20% or
more of either (1) the then-outstanding shares of common stock of the
Corporation (the “Outstanding Company Common Stock”) or (2) the combined voting
power of the then-outstanding voting securities of the Corporation entitled to
vote generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however, that, for purposes of this definition, the
following acquisitions shall not constitute a Change in Control Event; (A) any
acquisition directly from the Corporation, (B) any acquisition by the
Corporation, (C) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Corporation or any affiliate of the Corporation
or a successor, or (D) any acquisition by any entity pursuant to a transaction
that complies with Sections (c)(1), (2) and (3) below;     (b)   Individuals
who, as of the Effective Date, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the Effective
Date whose election, or nomination for election by the Corporation’s
stockholders, was approved by a vote of at least two-thirds of the directors
then comprising the Incumbent Board (including for these purposes, the new
members whose election or nomination was so approved, without counting the
member and his predecessor twice) shall be considered as though such individual
were a member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board;     (c)   Consummation of a
reorganization, merger, statutory share exchange or consolidation or similar
corporate transaction involving the Corporation or any of its Subsidiaries, a
sale or other disposition of all or substantially all of the assets of the
Corporation, or the acquisition of assets or stock of another entity by the
Corporation or any of its Subsidiaries (each, a “Business Combination”), in each
case unless, following such Business Combination, (1) all or substantially all
of the individuals and entities that were the beneficial owners of the
Outstanding Company Common Stock and the Outstanding Company Voting Securities
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of the then-outstanding shares of common stock and the
combined voting power of the then-outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the entity
resulting from such Business Combination (including, without limitation, an
entity that, as a result of such transaction, owns the Corporation or all or
substantially all of the Corporation’s assets directly or through one or more
subsidiaries (a “Parent”)) in substantially the same proportions as their
ownership immediately prior to such Business Combination of the Outstanding
Company Common Stock and the Outstanding Company Voting Securities, as the case
may be, (2) no Person (excluding any entity resulting from such Business
Combination or a Parent or any employee benefit plan (or related trust) of the
Corporation or such entity resulting from such Business Combination or Parent)
beneficially owns, directly or indirectly, 20% or more of, respectively, the
then-outstanding shares of common stock of the entity resulting from such
Business Combination or the combined voting power of the then-outstanding voting
securities of such entity, except to the extent that the ownership in excess of
20% existed prior to the Business Combination, and (3) at least a majority of
the members of the board of

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directors or trustees of the entity resulting from such Business Combination or
a Parent were members of the Incumbent Board at the time of the execution of the
initial agreement or of the action of the Board providing for such Business
Combination; or

  (d)   Approval by the stockholders of the Corporation of a complete
liquidation or dissolution of the Corporation other than in the context of a
transaction that does not constitute a Change in Control Event under clause
(c) above.

  7.4   Early Termination of Awards. Any award that has been accelerated as
required or contemplated by Section 7.2 or 7.3 (or would have been so
accelerated but for Section 7.5, 7.6 or 7.7) shall terminate upon the related
event referred to in Section 7.2 or 7.3, as applicable, subject to any provision
that has been expressly made by the Administrator, through a plan of
reorganization or otherwise, for the survival, substitution, assumption,
exchange or other continuation or settlement of such award and provided that, in
the case of options and SARs that will not survive, be substituted for, assumed,
exchanged, or otherwise continued or settled in the transaction, the holder of
such award shall be given reasonable advance notice of the impending termination
and a reasonable opportunity to exercise his or her outstanding options and SARs
in accordance with their terms before the termination of such awards (except
that in no case shall more than ten days’ notice of accelerated vesting and the
impending termination be required and any acceleration may be made contingent
upon the actual occurrence of the event).     7.5   Other Acceleration Rules.
Any acceleration of awards pursuant to this Section 7 shall comply with
applicable legal requirements and, if necessary to accomplish the purposes of
the acceleration or if the circumstances require, may be deemed by the
Administrator to occur a limited period of time not greater than thirty
(30) days before the event. Without limiting the generality of the foregoing,
the Administrator may deem an acceleration to occur immediately prior to the
applicable event and/or reinstate the original terms of an award if an event
giving rise to an acceleration does not occur. The Administrator may override
the provisions of Section 7.2, 7.3, 7.4 and/or 7.6 by express provision in the
award agreement and may accord any Eligible Person a right to refuse any
acceleration, whether pursuant to the award agreement or otherwise, in such
circumstances as the Administrator may approve.     7.6   Possible Rescission of
Acceleration. If the vesting of an award has been accelerated expressly in
anticipation of an event or upon stockholder approval of an event and the
Administrator later determines that the event will not occur, the Administrator
may rescind the effect of the acceleration as to any then outstanding and
unexercised or otherwise unvested awards.     7.7   Golden Parachute Limitation.
Notwithstanding anything else contained in this Section 7 to the contrary, in no
event shall an award be accelerated under this Plan to an extent or in a manner
which would not be fully deductible by the Corporation for federal income tax
purposes because of Section 280G of the Code, nor shall any payment hereunder be
accelerated to the extent any portion of such accelerated payment would not be
deductible by the Corporation because of Section 280G of the Code. If a
participant would be entitled to benefits or payments hereunder and under any
other plan or program that would constitute “parachute payments” as defined in
Section 280G of the Code, then the participant may by written notice to the
Corporation designate the order in which such parachute payments will be reduced
or modified so that the Corporation is not denied federal income tax deductions
for any “parachute payments” because of Section 280G of the Code.
Notwithstanding the foregoing, an employment or other agreement with the
participant may expressly provide for benefits in excess of amounts determined
by applying the foregoing Section 280G limitations.

8. OTHER PROVISIONS

  8.1   Compliance with Laws. This Plan, the granting and vesting of awards
under this Plan, the offer, issuance and delivery of shares of Common Stock, the
acceptance of promissory notes and/or the payment of money under this Plan or
under awards are subject to compliance with all applicable federal and state
laws, rules and regulations (including but not limited to state and federal
securities law, federal margin requirements) and to such approvals by any
listing, regulatory or governmental authority as may, in the opinion of counsel
for the Corporation, be necessary or advisable in connection therewith. The
person acquiring any securities under this Plan will, if requested by the
Corporation, provide such assurances and representations to the Corporation as
the Administrator may deem necessary or desirable to assure compliance with all
applicable legal and accounting requirements.     8.2   Employment Status. No
person shall have any claim or rights to be granted an award (or additional
awards, as the case may be) under this Plan, subject to any express contractual
rights (set forth in a document other than this Plan) to the contrary.

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  8.3   No Employment/Service Contract. Nothing contained in this Plan (or in
any other documents under this Plan or in any award) shall confer upon any
Eligible Person or other participant any right to continue in the employ or
other service of the Corporation or the Management Company or the affiliates of
either of them, constitute any contract or agreement of employment or other
service or affect an employee’s status as an employee at will, nor shall
interfere in any way with the right of the Corporation, the Management Company,
or their respective affiliates to change a person’s compensation or other
benefits, or to terminate his or her employment or other service, with or
without cause. Nothing in this Section 8.3, however, is intended to adversely
affect any express independent right of such person under a separate employment
or service contract other than an award agreement.     8.4   Plan Not Funded.
Awards payable under this Plan shall be payable in shares or from the general
assets of the Corporation, and no special or separate reserve, fund or deposit
shall be made to assure payment of such awards. No participant, beneficiary or
other person shall have any right, title or interest in any fund or in any
specific asset (including shares of Common Stock, except as expressly otherwise
provided) of the Corporation by reason of any award hereunder. Neither the
provisions of this Plan (or of any related documents), nor the creation or
adoption of this Plan, nor any action taken pursuant to the provisions of this
Plan shall create, or be construed to create, a trust of any kind or a fiduciary
relationship between the Corporation and any participant, beneficiary or other
person. To the extent that a participant, beneficiary or other person acquires a
right to receive payment pursuant to any award hereunder, such right shall be no
greater than the right of any unsecured general creditor of the Corporation.    
8.5   Tax Withholding. Upon any exercise, vesting, or payment of any award, the
Corporation shall have the right at its option to:

  (a)   require the participant (or the participant’s personal representative or
beneficiary, as the case may be) to pay or provide for payment of at least the
minimum amount of any taxes which the Corporation or its affiliates may be
required to withhold with respect to such award event or payment; or     (b)  
deduct from any amount otherwise payable in cash to the participant (or the
participant’s personal representative or beneficiary, as the case may be) the
minimum amount of any taxes which the Corporation or its affiliates may be
required to withhold with respect to such cash payment.

In any case where a tax is required to be withheld in connection with the
delivery of shares of Common Stock under this Plan, the Administrator may in its
sole discretion (subject to Section 8.1) grant (either at the time of the award
or thereafter) to the participant the right to elect, pursuant to such rules and
subject to such conditions as the Administrator may establish, to have the
Corporation reduce the number of shares to be delivered by (or otherwise
reacquire) the appropriate number of shares, valued in a consistent manner at
their fair market value or at the sales price in accordance with authorized
procedures for cashless exercises, necessary to satisfy the minimum applicable
withholding obligation on exercise, vesting or payment. In no event shall the
shares withheld exceed the minimum whole number of shares required for tax
withholding under applicable law. The Corporation may, with the Administrator’s
approval, accept one or more promissory notes from any Eligible Person in
connection with taxes required to be withheld upon the exercise, vesting or
payment of any award under this Plan; provided that any such note shall be
subject to terms and conditions established by the Administrator and the
requirements of applicable law.

  8.6   Effective Date, Termination and Suspension, Amendments.

8.6.1 Effective Date. This Plan is effective as of June 4, 2003, the date of its
approval by the Board (the “Effective Date”). This Plan shall be submitted for
and subject to stockholder approval no later than twelve months after the
Effective Date. Unless earlier terminated by the Board, this Plan shall
terminate at the close of business on the day before the tenth anniversary of
the Effective Date. After the termination of this Plan either upon such stated
expiration date or its earlier termination by the Board, no additional awards
may be granted under this Plan, but previously granted awards (and the authority
of the Administrator with respect thereto, including the authority to amend such
awards) shall remain outstanding in accordance with their applicable terms and
conditions and the terms and conditions of this Plan.
8.6.2 Board Authorization. The Board may, at any time, terminate or, from time
to time, amend, modify or suspend this Plan, in whole or in part. No awards may
be granted during any period that the Board suspends this Plan.

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8.6.3 Stockholder Approval. To the extent then required by applicable law or any
applicable listing agency or required under Sections 422 or 424 of the Code to
preserve the intended tax consequences of this Plan, or deemed necessary or
advisable by the Board, any amendment to this Plan shall be subject to
stockholder approval.
8.6.4 Amendments to Awards. Without limiting any other express authority of the
Administrator under (but subject to) the express limits of this Plan, the
Administrator by agreement or resolution may waive conditions of or limitations
on awards to participants that the Administrator in the prior exercise of its
discretion has imposed, without the consent of a participant, and (subject to
the requirements of Sections 3.2 and 8.6.5) may make other changes to the terms
and conditions of awards. Any amendment or other action that would constitute a
repricing of an award is subject to the limitations set forth in Section 3.2(g).
8.6.5 Limitations on Amendments to Plan and Awards. No amendment, suspension or
termination of this Plan or change of or affecting any outstanding award shall,
without written consent of the participant, affect in any manner materially
adverse to the participant any rights or benefits of the participant or
obligations of the Corporation under any award granted under this Plan prior to
the effective date of such change. Changes, settlements and other actions
contemplated by Section 7 shall not be deemed to constitute changes or
amendments for purposes of this Section 8.6.

  8.7   Privileges of Stock Ownership. Except as otherwise expressly authorized
by the Administrator or this Plan, a participant shall not be entitled to any
privilege of stock ownership as to any shares of Common Stock not actually
delivered to and held of record by the participant. No adjustment will be made
for dividends or other rights as a stockholder for which a record date is prior
to such date of delivery.     8.8   Governing Law; Severability.

8.8.1 Choice of Law. This Plan, the awards, all documents evidencing awards and
all other related documents shall be governed by, and construed in accordance
with the laws of the State of Maryland.
8.8.2 Severability. If a court of competent jurisdiction holds any provision
invalid and unenforceable, the remaining provisions of this Plan shall continue
in effect.

  8.9   Captions. Captions and headings are given to the sections and
subsections of this Plan solely as a convenience to facilitate reference. Such
headings shall not be deemed in any way material or relevant to the construction
or interpretation of this Plan or any provision thereof.     8.10  
Non-Exclusivity of Plan. Nothing in this Plan shall limit or be deemed to limit
the authority of the Board or the Administrator to grant awards or authorize any
other compensation, with or without reference to the Common Stock, under any
other plan or authority.     8.11   No Corporate Action Restriction. The
existence of this Plan, the award agreements and the awards granted hereunder
shall not limit, affect or restrict in any way the right or power of the Board
or the stockholders of the Corporation to make or authorize: (a) any adjustment,
recapitalization, reorganization or other change in the capital structure or
business of the Corporation or any subsidiary, (b) any merger, amalgamation,
consolidation or change in the ownership of the Corporation or any subsidiary,
(c) any issue of bonds, debentures, capital, preferred or prior preference stock
ahead of or affecting the capital stock (or the rights thereof) of the
Corporation or any subsidiary, (d) any dissolution or liquidation of the
Corporation or any subsidiary, (e) any sale or transfer of all or any part of
the assets or business of the Corporation or any subsidiary, or (f) any other
corporate act or proceeding by the Corporation or any subsidiary. No
participant, beneficiary or any other person shall have any claim under any
award or award agreement against any member of the Board or the Administrator,
or the Corporation or any employees, officers or agents of the Corporation or
any subsidiary, as a result of any such action.         8.12 Other Corporation
Benefit and Compensation Programs. Payments and other benefits received by a
participant under an award made pursuant to this Plan shall not be deemed a part
of a participant’s compensation for purposes of the determination of benefits
under any other employee welfare or benefit plans or arrangements, if any,
provided by the Corporation, except where the Administrator expressly otherwise
provides or authorizes in writing. Awards under this Plan may be made in
addition to, in combination with, as alternatives to or in payment of grants,
awards or commitments under any other plans or arrangements of the Corporation.

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