Exhibit 10.6

 

CARRAMERICA REALTY CORPORATION

 

1997 STOCK OPTION AND INCENTIVE PLAN

 

CarrAmerica Realty Corporation, a Maryland corporation (the “Company”), sets
forth herein the terms of its 1997 Stock Option and Incentive Plan (the “Plan”)
as follows:

 

1. PURPOSE

 

The Plan is intended to enhance the Company’s ability to attract and retain
highly qualified officers, key employees, and other persons to advance the
interests of the Company by providing such persons with stronger incentives to
continue to serve the Company and its affiliates (as defined herein) and to
expend maximum effort to improve the business results and earnings of the
Company. The Plan is intended to accomplish this objective by providing to
eligible persons an opportunity to acquire or increase a direct proprietary
interest in the operations and future success of the Company. To this end, the
Plan provides for the grant of stock options, restricted stock and restricted
stock units in accordance with the terms hereof. Stock options granted under the
Plan may be non-qualified stock options or incentive stock options, as provided
herein.

 

2. DEFINITIONS

 

For purposes of interpreting the Plan and related documents (including Award
Agreements), the following definitions shall apply:

 

2.1 “affiliate” of, or person “affiliated” with, a person means any company or
other trade or business that controls, is controlled by or is under common
control with such person within the meaning of Rule 405 of Regulation C under
the Securities Act (as defined herein).

 

2.2 “Award Agreement” means the stock option agreement, restricted stock
agreement, restricted stock unit agreement or other written agreement between
the Company and a Grantee that evidences and sets out the terms and conditions
of a Grant.

 

2.3 “Benefit Arrangement” shall have the meaning set forth in Section 14 hereof.

 

2.4 “Board” means the Board of Directors of the Company.

 

2.5 “Code” means the Internal Revenue Code of 1986, as now in effect or as
hereafter amended.

 

2.6 “Committee” means a Committee of, and designated from time to time by
resolution of, the Board, which shall consist of no fewer than two members of
the Board, none of whom shall be an officer or other salaried employee of the
Company or any affiliate, and each of whom shall qualify in all respects as a
“non-employee director” within the meaning of Rule 16b-3 under the Exchange Act
or any successor rule or regulation. Commencing on the Effective Date, and until
such time as the Board shall determine otherwise, the Committee shall be the
Executive Compensation Committee of the Board.

 

2.7 “Company” means CarrAmerica Realty Corporation.

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2.8 “Effective Date” means                                         , 1997, the
date on which the Plan was adopted by the Board.

 

2.9 “Exchange Act” means the Securities Exchange Act of 1934, as now in effect
or as hereafter amended.

 

2.10 “Fair Market Value” means the value of a share of Stock, determined as
follows: if on the Grant Date or other determination date the Stock is listed on
an established national or regional stock exchange, is admitted to quotation on
the Nasdaq National Market, or is publicly traded on an established securities
market, the Fair Market Value of a share of Stock shall be the closing price of
the Stock on such exchange or in such market (the highest such closing price if
there is more than one such exchange or market) on the Grant Date or such other
determination date (or if there is no such reported closing price, the Fair
Market Value shall be the mean between the highest bid and lowest asked prices
or between the high and low sale prices on such trading day) or, if no sale of
Stock is reported for such trading day, on the next preceding day on which any
sale shall have been reported. If the Stock is not listed on such an exchange,
quoted on such system or traded on such a market, Fair Market Value shall be the
value of the Stock as determined by the Committee in good faith.

 

2.11 “Grant” means an award of an Option, Restricted Stock or Restricted Stock
Units under the Plan.

 

2.12 “Grant Date” means the date as of which the Committee approves a Grant.

 

2.13 “Grantee” means a person who receives or holds an Option, Restricted Stock
or Restricted Stock Units under the Plan.

 

2.14 “Incentive Stock Option” means an “incentive stock option” within the
meaning of Section 422 of the Code, or the corresponding provision of any
subsequently enacted tax statute, as amended from time to time.

 

2.15 “Option” means an option to purchase one or more shares of Stock pursuant
to the Plan.

 

2.16 “Option Period” means the period during which Options may be exercised as
set forth in Section 11 hereof.

 

2.17 “Option Price” means the purchase price for each share of Stock subject to
an Option.

 

2.18 “Other Agreement” shall have the meaning set forth in Section 13 hereof.

 

2.19 “Plan” means the CarrAmerica Realty Corporation 1997 Stock Option and
Incentive Plan.

 

2.20 “Reporting Person” means a person who is required to file reports under
Section 16(a) of the Exchange Act.

 

2.21 “Restricted Period” means the period during which Restricted Stock or
Restricted Stock Units are subject to restrictions or conditions pursuant to
Section 12.2 hereof.

 

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2.22 “Restricted Stock” means shares of Stock, awarded to a Grantee pursuant to
Section 12 hereof, that are subject to restrictions and to a risk of forfeiture.

 

2.23 “Restricted Stock Unit” means a unit awarded to a Grantee pursuant to
Section 12 hereof, which represents a conditional right to receive a share of
Stock in the future, and which is subject to restrictions and to a risk of
forfeiture.

 

2.24 “Securities Act” means the Securities Act of 1933, as now in effect or as
hereafter amended.

 

2.25 “Service Provider” means a consultant or adviser to the Company, a manager
of the Company’s properties or affairs, or other similar service provider or
affiliate of the Company, and employees of any of the foregoing, as such persons
may be designated from time to time by the Committee pursuant to Section 6
hereof.

 

2.26 “Stock” means the common stock, par value $0.10 per share, of the Company.

 

2.27 “Subsidiary” means Carr Realty, L.P., CarrAmerica Realty, L.P., CarrAmerica
Realty Services, Inc., CarrAmerica Realty LP Holdings, Inc., CarrAmerica Realty
GP Holdings, Inc. and any “subsidiary corporation” of the Company within the
meaning of Section 425(f) of the Code.

 

2.28 “Termination Date” shall be the date upon which an Option shall terminate
or expire, as set forth in Section 11.2 hereof.

 

3. ADMINISTRATION OF THE PLAN

 

3.1 General. The Plan shall be administered by the Committee. The Board may
remove members, add members, and fill vacancies on the Committee from time to
time, all in accordance with the Company’s articles of incorporation and by-laws
and applicable law; provided, however, that each member of the Committee shall
at all times qualify in all respects as a “non-employee director” within the
meaning of Rule 16b-3 under the Exchange Act or any successor rule or
regulation. Notwithstanding the foregoing, to the extent that shares of Stock
are then available for grant and issuance under the Plan, the President of the
Company, acting on behalf of the Board of Directors, shall have the authority to
grant to employees of or consultants to the Company options to purchase such
number of shares of Stock as determined by the Committee from time to time, at
such times and on such terms as are set forth in or determined pursuant to the
Plan.

 

3.2 Plenary Authority of the Committee. The Committee shall have such powers and
authorities related to the administration of the Plan as are consistent with the
Company’s articles of incorporation and by-laws and applicable law. The
Committee shall have full power and authority to take all actions and to make
all determinations required or provided for under the Plan, any Grant or any
Award Agreement, and shall have full power and authority to take all such other
actions and determinations not inconsistent with the specific terms and
provisions of the Plan that the Committee deems to be necessary or appropriate
to the administration of the Plan, any Grant or any Award Agreement. All such
actions and determinations shall be by the affirmative vote of a majority of the
members of the Committee present at a meeting or by unanimous consent of the
Committee executed in writing in accordance with the Company’s articles of
incorporation and by-laws and applicable law. The interpretation and
construction by the Committee of any provision of the Plan, any Grant or any
Award Agreement shall be final and conclusive.

 

3.3 Grants. Subject to the other terms and conditions of the Plan, the Committee
shall have full and final authority (i) to designate Grantees, (ii) to determine
the type or types of Grant to be made to a Grantee, (iii) to determine the
number of shares of Stock to be subject to a Grant, (iv) to establish the terms
and conditions of each Grant (including, but not limited to, the exercise price
of any Option,

 

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the nature and duration of any restriction or condition (or provision for lapse
thereof) relating to the vesting, exercise, transfer, or forfeiture of a Grant
or the shares of Stock subject thereto, and any terms or conditions that may be
necessary to qualify Options as Incentive Stock Options), (v) to prescribe the
form of each Award Agreement evidencing a Grant, and (vi) to amend, modify, or
supplement the terms of any outstanding Grant. Such authority specifically
includes the authority, in order to effectuate the purposes of the Plan but
without amending the Plan, to modify Grants to eligible individuals who are
foreign nationals or are individuals who are employed outside the United States
to recognize differences in local law, tax policy, or custom. As a condition to
any subsequent Grant, the Committee shall have the right, at its discretion, to
require Grantees to return to the Company Grants previously awarded under the
Plan. Subject to the terms and conditions of the Plan, any such new Grant shall
be upon such terms and conditions as are specified by the Committee at the time
the new Grant is made.

 

3.4 No Liability. No member of the Board or of the Committee shall be liable for
any action or determination made in good faith with respect to the Plan or any
Grant or Award Agreement.

 

3.5 Applicability of Rule 16b-3. Those provisions of the Plan that make express
reference to Rule 16b-3 under the Exchange Act shall apply only to Reporting
Persons.

 

4. STOCK SUBJECT TO THE PLAN

 

Subject to adjustment as provided in Section 16 hereof, the number of shares of
Stock available for issuance under the Plan shall be 3,000,000. Stock issued or
to be issued under the Plan shall be authorized but unissued shares. If any
shares covered by a Grant are not purchased or are forfeited, or if a Grant
otherwise terminates without delivery of any Stock subject thereto, then the
number of shares of Stock counted against the aggregate number of shares
available under the Plan with respect to such Grant shall, to the extent of any
such forfeiture or termination, again be available for making Grants under the
Plan.

 

5. EFFECTIVE DATE AND TERM OF THE PLAN

 

5.1 Effective Date. The Plan shall be effective as of the Effective Date,
subject to approval of the Plan within one year of the Effective Date, by a
majority of the votes cast on the proposal at a meeting of shareholders,
provided that the total votes cast represent a majority of all shares entitled
to vote. Upon approval of the Plan by the shareholders of the Company as set
forth above, all Grants made under the Plan on or after the Effective Date shall
be fully effective as if the shareholders of the Company had approved the Plan
on the Effective Date. If the shareholders fail to approve the Plan within one
year after the Effective Date, any Grants made hereunder shall be null and void
and of no effect.

 

5.2 Term. The Plan has no termination date; however, no Incentive Stock Option
may be granted on or after the tenth anniversary of the Effective Date.

 

6. OPTION GRANTS

 

6.1 Company or Subsidiary Employees. Grants (including Grants of Incentive Stock
Options) may be made under the Plan to any employee of the Company or of any
Subsidiary, including any such employee who is an officer or director of the
Company or of any Subsidiary, as the Committee shall determine and designate
from time to time.

 

6.2 Successive Grants. An eligible person may receive more than one Grant,
subject to such restrictions as are provided herein.

 

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7. LIMITATIONS ON GRANTS

 

7.1 Limitation on Shares of Stock Subject to Grants. The maximum number of
shares of Stock subject to Options that can be awarded under the Plan to any
person eligible for a Grant under Section 6 hereof is 500,000 per year. The
maximum number of shares of Restricted Stock that can be awarded under the Plan
(including for this purpose any shares of Stock represented by Restricted Stock
Units) to any person eligible for a Grant under Section 6 hereof is 500,000 per
year.

 

7.2 Limitations on Incentive Stock Options. An Option shall constitute an
Incentive Stock Option only (i) if the Grantee of such Option is an employee of
the Company or any Subsidiary of the Company; (ii) to the extent specifically
provided in the related Award Agreement; and (iii) to the extent that the
aggregate Fair Market Value (determined at the time the Option is granted) of
the shares of Stock with respect to which all Incentive Stock Options held by
such Grantee become exercisable for the first time during any calendar year
(under the Plan and all other plans of the Grantee’s employer and its
affiliates) does not exceed $100,000. This limitation shall be applied by taking
Options into account in the order in which they were granted.

 

8. AWARD AGREEMENT

 

Each Grant pursuant to the Plan shall be evidenced by an Award Agreement, to be
executed by the Company and by the Grantee, in such form or forms as the
Committee shall from time to time determine. Award Agreements granted from time
to time or at the same time need not contain similar provisions but shall be
consistent with the terms of the Plan. Each Award Agreement evidencing a Grant
of Options shall specify whether such Options are intended to be non-qualified
stock options or Incentive Stock Options.

 

9. OPTION PRICE

 

The Option Price of each Option shall be fixed by the Committee and stated in
the Award Agreement evidencing such Option. The Option Price shall be the
aggregate Fair Market Value on the Grant Date of the shares of Stock subject to
the Option or such other price as the Committee, in its discretion, shall
determine; provided, however, that in the event that a Grantee would otherwise
be ineligible to receive an Incentive Stock Option by reason of the provisions
of Sections 422(b)(6) and 424(d) of the Code (relating to ownership of more than
ten percent of the Company’s outstanding Stock), the Option Price of an Option
granted to such Grantee that is intended to be an Incentive Stock Option shall
be not less than the greater of the par value of a share of Stock or 110 percent
of the Fair Market Value of a share of Stock on the Grant Date. In no case shall
the Option Price of any Option be less than the par value of a share of Stock.

 

10. VESTING, TERM AND EXERCISE OF OPTIONS

 

10.1 Vesting and Option Period. Subject to Section 10.2 hereof, each Option
granted under the Plan shall become exercisable at such times and under such
conditions as shall be determined by the Committee and stated in the Award
Agreement. For purposes of this Section 10.1, fractional numbers of shares of
Stock subject to an Option shall be rounded down to the next nearest whole
number. The period during which any Option shall be exercisable shall constitute
the “Option Period” with respect to such Option.

 

10.2 Term. Each Option granted under the Plan shall terminate, and all rights to
purchase shares of Stock thereunder shall cease, upon the expiration of ten
years from the date such Option is granted, or under such circumstances and on
such date prior thereto as is set forth in the Plan or as may be fixed by the
Committee and stated in the Award Agreement relating to such Option (the
“Termination Date”); provided, however, that in the event that the Grantee would
otherwise be ineligible to receive an Incentive Stock Option by reason of the
provisions of Sections 422(b)(6) and 424(d) of the Code (relating to ownership
of more than ten percent of the outstanding Stock), an Option

 

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granted to such Grantee that is intended to be an Incentive Stock Option shall
not be exercisable after the expiration of five years from its Grant Date.

 

10.3 Acceleration. Any limitation on the exercise of an Option contained in any
Award Agreement may be rescinded, modified or waived by the Committee, in its
sole discretion, at any time and from time to time after the Grant Date of such
Option, so as to accelerate the time at which the Option may be exercised.
Notwithstanding any other provision of the Plan, no Option shall be exercisable
in whole or in part prior to the date the Plan is approved by the shareholders
of the Company as provided in Section 5.1 hereof.

 

10.4 Termination of Employment or Other Relationship. Upon the termination of a
Grantee’s employment with the Company other than by reason of death or
“permanent and total disability” (within the meaning of Section 22(e)(3) of the
Code), any Option or portion thereof held by such Grantee that has not vested in
accordance with the provisions of Section 10.1 hereof shall terminate
immediately, and any Option or portion thereof that has vested in accordance
with the provisions of Section 10.1 hereof but has not been exercised shall
terminate at the close of business on the 365th day following the Grantee’s
termination of employment, unless the Committee, in its discretion, extends the
period during which the Option may be exercised (which period may not be
extended beyond the original term of the Option). Upon termination of an Option
or portion thereof, the Grantee shall have no further right to purchase shares
of Stock pursuant to such Option or portion thereof. Whether a leave of absence
or leave on military or government service shall constitute a termination of
employment for purposes of the Plan shall be determined by the Committee, which
determination shall be final and conclusive. For purposes of the Plan, a
termination of employment, service or other relationship shall not be deemed to
occur if the Grantee is immediately thereafter a director of the Company.

 

10.5 Rights in the Event of Death. If a Grantee dies while employed by the
Company, all Options granted to such Grantee shall fully vest on the date of
death, and the executors or administrators or legatees or distributees of such
Grantee’s estate shall have the right, at any time within one year after the
date of such Grantee’s death (or such longer period as the Committee, in its
discretion, may determine prior to the expiration of such one-year period) and
prior to termination of the Option pursuant to Section 10.2 above, to exercise
any Option held by such Grantee at the date of such Grantee’s death.

 

10.6 Rights in the Event of Disability. If a Grantee terminates employment with
the Company by reason of the “permanent and total disability” (within the
meaning of Section 22(e)(3) of the Code) of such Grantee, such Grantee’s Options
shall continue to vest, and shall be exercisable to the extent that they are
vested, for a period of one year after such termination of employment or service
(or such longer period as the Committee, in its discretion, may determine prior
to the expiration of such one-year period), subject to earlier termination of
the Option as provided in Section 10.2 above. Whether a termination of
employment or service is to be considered by reason of “permanent and total
disability” for purposes of the Plan shall be determined by the Committee, which
determination shall be final and conclusive.

 

10.7 Limitations on Exercise of Option. Notwithstanding any other provision of
the Plan, in no event may any Option be exercised, in whole or in part, prior to
the date the Plan is approved by the shareholders of the Company as provided
herein, or after ten years following the date upon which the Option is granted,
or after the occurrence of an event referred to in Section 16 hereof which
results in termination of the Option.

 

10.8 Method of Exercise. An Option that is exercisable may be exercised by the
Grantee’s delivery to the Company of written notice of exercise on any business
day, at the Company’s principal office, addressed to the attention of the
Committee. Such notice shall specify the number of shares of Stock with respect
to which the Option is being exercised and shall be accompanied by payment in
full

 

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of the Option Price of the shares for which the Option is being exercised. The
minimum number of shares of Stock with respect to which an Option may be
exercised, in whole or in part, at any time shall be the lesser of (i) 100
shares or such lesser number set forth in the applicable Award Agreement and
(ii) the maximum number of shares available for purchase under the Option at the
time of exercise. Payment of the Option Price for the shares purchased pursuant
to the exercise of an Option shall be made (i) in cash or in cash equivalents;
(ii) through the tender to the Company of shares of Stock, which shares shall be
valued, for purposes of determining the extent to which the Option Price has
been paid thereby, at their Fair Market Value on the date of exercise; or
(iii) by a combination of the methods described in (i) and (ii). The Committee
may provide, by inclusion of appropriate language in an Award Agreement, that
payment in full of the Option Price need not accompany the written notice of
exercise provided that the notice of exercise directs that the certificate or
certificates for the shares of Stock for which the Option is exercised be
delivered to a licensed broker acceptable to the Company as the agent for the
individual exercising the Option and, at the time such certificate or
certificates are delivered, the broker tenders to the Company cash (or cash
equivalents acceptable to the Company) equal to the Option Price for the shares
of Stock purchased pursuant to the exercise of the Option plus the amount (if
any) of federal and/or other taxes which the Company may in its judgment, be
required to withhold with respect to the exercise of the Option. An attempt to
exercise any Option granted hereunder other than as set forth above shall be
invalid and of no force and effect. Unless otherwise stated in the applicable
Award Agreement, an individual holding or exercising an Option shall have none
of the rights of a shareholder (for example, the right to receive cash or
dividend payments or distributions attributable to the subject shares of Stock
or to direct the voting of the subject shares of Stock) until the shares of
Stock covered thereby are fully paid and issued to him. Except as provided in
Section 16 hereof, no adjustment shall be made for dividends, distributions or
other rights for which the record date is prior to the date of such issuance.

 

10.9 Delivery of Stock Certificates. Promptly after the exercise of an Option by
a Grantee and the payment in full of the Option Price, such Grantee shall be
entitled to the issuance of a stock certificate or certificates evidencing his
or her ownership of the shares of Stock subject to the Option.

 

11. TRANSFERABILITY OF OPTIONS

 

Each Option granted pursuant to this Plan shall, during a Grantee’s lifetime, be
exercisable only by the Grantee or his or her permitted transferees, and neither
the Option nor any right thereunder shall be transferable by the Grantee, by
operation of law or otherwise, other than as may be provided in the Award
Agreement evidencing such Option or as may be provided by will or the laws of
descent and distribution. Except as may be provided in the Award Agreement
evidencing an Option, no Option shall be pledged or hypothecated (by operation
of law or otherwise) or subject to execution, attachment or similar processes.

 

12. RESTRICTED STOCK

 

12.1 Grant of Restricted Stock or Restricted Stock Units. The Committee may from
time to time grant Restricted Stock or Restricted Stock Units to persons
eligible to receive Grants under Section 6 hereof, subject to such restrictions,
conditions and other terms as the Committee may determine.

 

12.2 Restrictions. At the time a Grant of Restricted Stock or Restricted Stock
Units is made, the Committee shall establish a period of time (the “Restricted
Period”) applicable to such Restricted Stock or Restricted Stock Units. Each
Grant of Restricted Stock or Restricted Stock Units may be subject to a
different Restricted Period. The Committee may, in its sole discretion, at the
time a Grant of Restricted Stock or Restricted Stock Units is made, prescribe
restrictions in addition to or other than the expiration of the Restricted
Period, including the satisfaction of corporate or individual performance
objectives, which may be applicable to all or any portion of the Restricted
Stock or Restricted Stock Units. Such performance objectives shall be
established in writing by the Committee prior to the

 

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ninetieth day of the year in which the Grant is made and while the outcome is
substantially uncertain. Performance objectives shall be based on Stock price,
market share, sales, earnings per share, return on equity or costs. Performance
objectives may include positive results, maintaining the status quo or limiting
economic losses. Subject to the second sentence of this Section 12.2, the
Committee also may, in its sole discretion, shorten or terminate the Restricted
Period or waive any other restrictions applicable to all or a portion of the
Restricted Stock or Restricted Stock Units. Neither Restricted Stock nor
Restricted Stock Units may be sold, transferred, assigned, pledged or otherwise
encumbered or disposed of during the Restricted Period or prior to the
satisfaction of any other restrictions prescribed by the Committee with respect
to such Restricted Stock or Restricted Stock Units.

 

12.3 Restricted Stock Certificates. The Company shall issue, in the name of each
Grantee to whom Restricted Stock has been granted, stock certificates
representing the total number of shares of Restricted Stock granted to the
Grantee, as soon as reasonably practicable after the Grant Date. The Secretary
of the Company shall hold such certificates for the Grantee’s benefit until such
time as the Restricted Stock is forfeited to the Company, or the restrictions
lapse.

 

12.4 Rights of Holders of Restricted Stock. Unless the Committee otherwise
provides in an Award Agreement, holders of Restricted Stock shall have the right
to vote such Stock and the right to receive any dividends declared or paid with
respect to such Stock. The Committee may provide that any dividends paid on
Restricted Stock must be reinvested in shares of Stock, which may or may not be
subject to the same vesting conditions and restrictions applicable to such
Restricted Stock. All distributions, if any, received by a Grantee with respect
to Restricted Stock as a result of any stock split, stock dividend, combination
of shares, or other similar transaction shall be subject to the restrictions
applicable to the original Grant.

 

12.5 Rights of Holders of Restricted Stock Units. Unless the Committee otherwise
provides in an Award Agreement, holders of Restricted Stock Units shall have no
rights as stockholders of the Company. The Committee may provide in an Award
Agreement evidencing a Grant of Restricted Stock Units that the holder of such
Restricted Stock Units shall be entitled to receive, upon the Company’s payment
of a cash dividend on its outstanding Stock, a cash payment for each Restricted
Stock Unit held equal to the per-share dividend paid on the Stock. Such Award
Agreement may also provide that such cash payment will be deemed reinvested in
additional Restricted Stock Units at a price per unit equal to the Fair Market
Value of a share of Stock on the date that such dividend is paid.

 

12.6 Termination of Employment. Upon the termination of a Grantee’s employment
with the Company other than by reason of death or “permanent and total
disability” (within the meaning of Section 22(e)(3) of the Code), any Restricted
Stock or Restricted Stock Units held by such Grantee that has not vested, or
with respect to which all applicable restrictions and conditions have not
lapsed, shall immediately be deemed forfeited, unless the Committee, in its
discretion, determines otherwise. Upon forfeiture of Restricted Stock or
Restricted Stock Units, the Grantee shall have no further rights with respect to
such Grant, including but not limited to any right to vote Restricted Stock or
any right to receive dividends with respect to shares of Restricted Stock or
Restricted Stock Units. Whether a leave of absence or leave on military or
government service shall constitute a termination of employment for purposes of
the Plan shall be determined by the Committee, which determination shall be
final and conclusive. For purposes of the Plan, a termination of employment,
service or other relationship shall not be deemed to occur if the Grantee is
immediately thereafter a director of the Company.

 

12.7 Rights in the Event of Death. If a Grantee dies while employed by the
Company, all Restricted Stock or Restricted Stock Units granted to such Grantee
shall fully vest on the date of death, and the shares of Stock represented
thereby shall be deliverable in accordance with the terms of the Plan to the
executors, administrators, legatees or distributees of the Grantee’s estate.

 

12.8 Rights in the Event of Disability. If a Grantee terminates employment with
the Company by reason of the “permanent and total disability” (within the
meaning of Section 22(e)(3) of

 

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the Code) of such Grantee, such Grantee’s Restricted Stock or Restricted Stock
Units shall continue to vest in accordance with the applicable Award Agreement
for a period of one year after such termination of employment or service (or
such longer period as the Committee, in its discretion, may determine prior to
the expiration of such one-year period), subject to the earlier forfeiture of
such Restricted Stock or Restricted Stock Units in accordance with the terms of
the applicable Award Agreement. Whether a termination of employment or service
is to be considered by reason of “permanent and total disability” for purposes
of the Plan shall be determined by the Committee, which determination shall be
final and conclusive.

 

12.9 Delivery of Stock and Payment Therefor. Upon the expiration or termination
of the Restricted Period and the satisfaction of any other conditions prescribed
by the Committee, the restrictions applicable to shares of Restricted Stock or
Restricted Stock Units shall lapse, and, upon payment by the Grantee to the
Company, in cash or by check, of the aggregate par value of the shares of Stock
represented by such Restricted Stock or Restricted Stock Units, a stock
certificate for such shares shall be delivered, free of all such restrictions,
to the Grantee or the Grantee’s beneficiary or estate, as the case may be.

 

13. PARACHUTE LIMITATIONS

 

Notwithstanding any other provision of this Plan or of any other agreement,
contract, or understanding heretofore or hereafter entered into by a Grantee
with the Company or any Subsidiary, except an agreement, contract, or
understanding hereafter entered into that expressly modifies or excludes
application of this paragraph (an “Other Agreement”), and notwithstanding any
formal or informal plan or other arrangement for the direct or indirect
provision of compensation to the Grantee (including groups or classes of
participants or beneficiaries of which the Grantee is a member), whether or not
such compensation is deferred, is in cash, or is in the form of a benefit to or
for the Grantee (a “Benefit Arrangement”), if the Grantee is a “disqualified
individual,” as defined in Section 280G(c) of the Code, any Option, Restricted
Stock or Restricted Stock Unit held by that Grantee and any right to receive any
payment or other benefit under this Plan shall not become exercisable or vested
(i) to the extent that such right to exercise, vesting, payment, or benefit,
taking into account all other rights, payments, or benefits to or for the
Grantee under this Plan, all Other Agreements, and all Benefit Arrangements,
would cause any payment or benefit to the Grantee under this Plan to be
considered a “parachute payment” within the meaning of Section 280G(b)(2) of the
Code as then in effect (a “Parachute Payment”) and (ii) if, as a result of
receiving a Parachute Payment, the aggregate after-tax amounts received by the
Grantee from the Company under this Plan, all Other Agreements, and all Benefit
Arrangements would be less than the maximum after-tax amount that could be
received by the Grantee without causing any such payment or benefit to be
considered a Parachute Payment. In the event that the receipt of any such right
to exercise, vesting, payment, or benefit under this Plan, in conjunction with
all other rights, payments, or benefits to or for the Grantee under any Other
Agreement or any Benefit Arrangement would cause the Grantee to be considered to
have received a Parachute Payment under this Plan that would have the effect of
decreasing the after-tax amount received by the Grantee as described in clause
(ii) of the preceding sentence, then the Grantee shall have the right, in the
Grantee’s sole discretion, to designate those rights, payments, or benefits
under this Plan, any Other Agreements, and any Benefit Arrangements that should
be reduced or eliminated so as to avoid having the payment or benefit to the
Grantee under this Plan be deemed to be a Parachute Payment.

 

14. REQUIREMENTS OF LAW

 

14.1 General. The Company shall not be required to sell or issue any shares of
Stock under any Grant if the sale or issuance of such shares would constitute a
violation by the Grantee, any other individual exercising an Option, or the
Company of any provision of any law or regulation of any governmental authority,
including without limitation any federal or state securities laws or
regulations. If at any time the Company shall determine, in its discretion, that
the listing, registration or

 

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qualification of any shares subject to a Grant upon any securities exchange or
under any governmental regulatory body is necessary or desirable as a condition
of, or in connection with, the issuance or purchase of shares hereunder, no
shares of Stock may be issued or sold to the Grantee or any other individual
exercising an Option pursuant to such Grant unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Company, and any delay caused thereby shall
in no way affect the date of termination of the Grant. Specifically, in
connection with the Securities Act, upon the exercise of any Option or the
delivery of any shares of Restricted Stock or Stock underlying Restricted Stock
Units, unless a registration statement under such Act is in effect with respect
to the shares of Stock covered by such Grant, the Company shall not be required
to sell or issue such shares unless the Committee has received evidence
satisfactory to it that the Grantee or any other individual exercising an Option
may acquire such shares pursuant to an exemption from registration under the
Securities Act. Any determination in this connection by the Committee shall be
final, binding, and conclusive. The Company may, but shall in no event be
obligated to, register any securities covered hereby pursuant to the Securities
Act. The Company shall not be obligated to take any affirmative action in order
to cause the exercise of an Option or the issuance of shares of Stock pursuant
to the Plan to comply with any law or regulation of any governmental authority.
As to any jurisdiction that expressly imposes the requirement that an Option
shall not be exercisable until the shares of Stock covered by such Option are
registered or are exempt from registration, the exercise of such Option (under
circumstances in which the laws of such jurisdiction apply) shall be deemed
conditioned upon the effectiveness of such registration or the availability of
such an exemption.

 

14.2 Rule 16b-3. It is the intent of the Company that Grants pursuant to the
Plan and the exercise of Options granted hereunder will qualify for the
exemption provided by Rule 16b-3 under the Exchange Act. To the extent that any
provision of the Plan or action by the Committee does not comply with the
requirements of Rule 16b-3, it shall be deemed inoperative to the extent
permitted by law and deemed advisable by the Committee, and shall not affect the
validity of the Plan. In the event that Rule 16b-3 is revised or replaced, the
Board may exercise its discretion to modify this Plan in any respect necessary
to satisfy the requirements of, or to take advantage of any features of, the
revised exemption or its replacement.

 

15. AMENDMENT AND TERMINATION OF THE PLAN

 

The Board may, at any time and from time to time, amend, suspend, or terminate
the Plan as to any shares of Stock as to which Grants have not been made;
provided, however, that the Board shall not, without approval of the Company’s
shareholders, amend the Plan such that it does not comply with the Code. The
Company may retain the right in an Award Agreement to cause a forfeiture of the
gain realized by a Grantee on account of the Grantee taking actions in
“competition with the Company,” as defined in the applicable Award Agreement.
Furthermore, the Company may annul a Grant if the Grantee is an employee of the
Company or an affiliate and is terminated “for cause” as defined in the
applicable Award Agreement. Except as permitted under this Section 15 or
Section 16 hereof, no amendment, suspension, or termination of the Plan shall,
without the consent of the Grantee, alter or impair rights or obligations under
any Grant theretofore awarded under the Plan.

 

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16. EFFECT OF CHANGES IN CAPITALIZATION

 

16.1 Changes in Stock. If the number of outstanding shares of Stock is increased
or decreased or the shares of Stock are changed into or exchanged for a
different number or kind of shares or other securities of the Company on account
of any recapitalization, reclassification, stock split, reverse split,
combination of shares, exchange of shares, stock dividend or other distribution
payable in capital stock, or other increase or decrease in such shares effected
without receipt of consideration by the Company occurring after the Effective
Date, the number and kinds of shares for which Grants of Options, Restricted
Stock and Restricted Stock Units may be made under the Plan shall be adjusted
proportionately and accordingly by the Company. In addition, the number and kind
of shares for which Grants are outstanding shall be adjusted proportionately and
accordingly so that the proportionate interest of the Grantee immediately
following such event shall, to the extent practicable, be the same as
immediately before such event. Any such adjustment in outstanding Options shall
not change the aggregate Option Price payable with respect to shares that are
subject to the unexercised portion of an Option outstanding but shall include a
corresponding proportionate adjustment in the Option Price per share.

 

16.2 Reorganization in Which the Company Is the Surviving Entity and in Which No
Change of Control Occurs. Subject to Section 16.3 hereof, if the Company shall
be the surviving entity in any reorganization, merger, or consolidation of the
Company with one or more other entities, any Option theretofore granted pursuant
to the Plan shall pertain to and apply to the securities to which a holder of
the number of shares of Stock subject to such Option would have been entitled
immediately following such reorganization, merger, or consolidation, with a
corresponding proportionate adjustment of the Option Price per share so that the
aggregate Option Price thereafter shall be the same as the aggregate Option
Price of the shares remaining subject to the Option immediately prior to such
reorganization, merger, or consolidation. Subject to any contrary language in an
Award Agreement evidencing a Grant of Restricted Stock, any restrictions
applicable to such Restricted Stock shall apply as well to any replacement
shares received by the Grantee as a result of the reorganization, merger or
consolidation.

 

16.3 Reorganization, Sale of Assets or Sale of Stock Which Involves a Change of
Control. Upon the dissolution or liquidation of the Company or upon a merger,
consolidation, or reorganization of the Company with one or more other entities
in which the Company is not the surviving entity, or upon a sale of
substantially all of the assets of the Company to another entity, or upon any
transaction (including, without limitation, a merger or reorganization in which
the Company is the surviving entity) approved by the Board that results in any
person or entity (or person or entities acting as a group or otherwise in
concert, owning [fifty percent] or more of the combined voting power of all
classes of securities of the Company, (i) all outstanding shares of Restricted
Stock and Restricted Stock Units shall be deemed to have vested, and all
restrictions and conditions applicable to such shares of Restricted Stock and
Restricted Stock Units shall be deemed to have lapsed, immediately prior to the
occurrence of such event, and (ii) all Options outstanding hereunder shall
become immediately exercisable for a period of fifteen days immediately prior to
the scheduled consummation of the event. Any exercise of an Option during such
fifteen-day period shall be conditioned upon the consummation of the event and
shall be effective only immediately before the consummation of the event. Upon
consummation of any such event, the Plan and all outstanding but unexercised
Options shall terminate, except to the extent provision is made in writing in
connection with such transaction for the continuation of the Plan or the
assumption of such Options theretofore granted, or for the substitution for such
Options of new options covering the stock of a successor Company, or a parent or
subsidiary thereof, with appropriate adjustments as to the number and kinds of
shares or units and exercise prices, in which event the Plan and Options
theretofore granted shall continue in the manner and under the terms so
provided. The Committee shall send written notice of an event that will result
in such a termination to all individuals who hold Options not later than the
time at which the Company gives notice thereof to its shareholders.

 

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16.4 Adjustments. Adjustments under this Section 16 related to shares of Stock
or securities of the Company shall be made by the Committee, whose determination
in that respect shall be final, binding and conclusive. No fractional shares or
other securities shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated in each case by
rounding downward to the nearest whole share.

 

16.5 No Limitations on Company. The making of Grants pursuant to the Plan shall
not affect or limit in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations, or changes of its capital or
business structure or to merge, consolidate, dissolve, or liquidate, or to sell
or transfer all or any part of its business or assets.

 

17. DISCLAIMER OF RIGHTS

 

No provision in the Plan or in any Grant or Award Agreement shall be construed
to confer upon any individual the right to remain in the employ or service of
the Company or any affiliate, or to interfere in any way with any contractual or
other right or authority of the Company either to increase or decrease the
compensation or other payments to any individual at any time, or to terminate
any employment or other relationship between any individual and the Company. In
addition, notwithstanding anything contained in the Plan to the contrary, unless
otherwise stated in the applicable Award Agreement, no Grant awarded under the
Plan shall be affected by any change of duties or position of the Optionee, so
long as such Grantee continues to be a director, officer, consultant or employee
of the Company. The obligation of the Company to pay any benefits pursuant to
this Plan shall be interpreted as a contractual obligation to pay only those
amounts described herein, in the manner and under the conditions prescribed
herein. The Plan shall in no way be interpreted to require the Company to
transfer any amounts to a third party trustee or otherwise hold any amounts in
trust or escrow for payment to any participant or beneficiary under the terms of
the Plan. No Grantee shall have any of the rights of a shareholder with respect
to the shares of Stock subject to an Option except to the extent the
certificates for such shares of Stock shall have been issued upon the exercise
of the Option.

 

18. NONEXCLUSIVITY OF THE PLAN

 

Neither the adoption of the Plan nor the submission of the Plan to the
shareholders of the Company for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or specifically to a particular
individual or particular individuals) as the Board in its discretion determines
desirable, including, without limitation, the granting of stock options
otherwise than under the Plan.

 

19. WITHHOLDING TAXES

 

The Company or a Subsidiary, as the case may be, shall have the right to deduct
from payments of any kind otherwise due to a Grantee any Federal, state, or
local taxes of any kind required by law to be withheld with respect to the
vesting of or other lapse of restrictions applicable to Restricted Stock or
Restricted Stock Units or upon the issuance of any shares of Stock upon the
exercise of an Option. At the time of such vesting, lapse, or exercise, the
Grantee shall pay to the Company or the Subsidiary, as the case may be, any
amount that the Company or the Subsidiary may reasonably determine to be
necessary to satisfy such withholding obligation. Subject to the prior approval
of the Company or the Subsidiary, which may be withheld by the Company or the
Subsidiary, as the case may be, in its sole discretion, the Grantee may elect to
satisfy such obligations, in whole or in part, (i) by causing the Company or the
Subsidiary to withhold shares of Stock otherwise issuable to the Grantee or (ii)
by delivering to the Company or the Subsidiary shares of Stock already owned by
the Grantee. The shares of Stock so delivered or withheld shall have an
aggregate Fair Market Value equal to such withholding obligations. The Fair
Market Value of the shares of Stock used to satisfy such withholding obligation

 

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shall be determined by the Company or the Subsidiary as of the date that the
amount of tax to be withheld is to be determined. A Grantee who has made an
election pursuant to this Section 19 may satisfy his or her withholding
obligation only with shares of Stock that are not subject to any repurchase,
forfeiture, unfulfilled vesting, or other similar requirements.

 

20. CAPTIONS

 

The use of captions in this Plan or any Award Agreement is for the convenience
of reference only and shall not affect the meaning of any provision of the Plan
or such Award Agreement.

 

21. OTHER PROVISIONS

 

Each Grant awarded under the Plan may contain such other terms and conditions
not inconsistent with the Plan as may be determined by the Committee, in its
sole discretion.

 

22. NUMBER AND GENDER

 

With respect to words used in this Plan, the singular form shall include the
plural form, the masculine gender shall include the feminine gender, etc., as
the context requires.

 

23. SEVERABILITY

 

If any provision of the Plan or any Award Agreement shall be determined to be
illegal or unenforceable by any court of law in any jurisdiction, the remaining
provisions hereof and thereof shall be severable and enforceable in accordance
with their terms, and all provisions shall remain enforceable in any other
jurisdiction.

 

24. GOVERNING LAW

 

The validity and construction of this Plan and the instruments evidencing the
Grants awarded hereunder shall be governed by the laws of the State of Maryland.

 

* * *

 

The Plan was duly adopted and approved by the Board of Directors of the Company
as of the              day of                             , 1997.

 

/S/

[Name]

[Title]

 

The Plan was duly approved by the shareholders of the Company on the
             day of                             , 1997.

 

/S/

[Name]

[Title]

 

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