Exhibit 10.1

 

 

AMERICAN BANK HOLDINGS, INC.

 

2004 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN

 

 

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TABLE OF CONTENTS

 

1.

PURPOSE

 

2.

DEFINITIONS

 

3.

ADMINISTRATION OF THE PLAN

 

 

3.1.

Board

 

 

3.2.

Committee.

 

 

3.3.

Terms of Awards.

 

 

3.4.

No Liability.

 

 

3.5.

Book Entry

 

4.

STOCK SUBJECT TO THE PLAN

 

5.

EFFECTIVE DATE, DURATION AND AMENDMENTS

 

 

5.1.

Effective Date.

 

 

5.2.

Term.

 

 

5.3.

Amendment and Termination of the Plan

 

6.

AWARD ELIGIBILITY AND LIMITATIONS

 

 

6.1.

Outside Directors

 

 

6.2.

Successive Awards.

 

7.

AWARD AGREEMENT

 

8.

TERMS AND CONDITIONS OF OPTIONS

 

 

8.1.

Annual Option Grants

 

 

8.2.

Additional Option Grants

 

 

8.3.

Option Price

 

 

8.4.

Vesting.

 

 

8.5.

Term.

 

 

8.6.

Termination of Service.

 

 

8.7.

Limitations on Exercise of Option.

 

 

8.8.

Method of Exercise.

 

 

8.9.

Rights of Holders of Options

 

 

8.10.

Delivery of Stock Certificates.

 

 

8.11.

Transferability of Options

 

 

8.12.

Family Transfers.

 

9.

FORM OF PAYMENT FOR OPTIONS

 

 

9.1.

General Rule.

 

 

9.2.

Surrender of Stock.

 

 

9.3.

Cashless Exercise.

 

 

9.4.

Other Forms of Payment.

 

10.

REQUIREMENTS OF LAW

 

 

10.1.

General.

 

 

10.2.

Rule 16b-3.

 

11.

EFFECT OF CHANGES IN CAPITALIZATION

 

 

11.1.

Changes in Stock.

 

 

11.2.

Reorganization in Which the Company Is the Surviving Entity Which does not
Constitute a Corporate Transaction.

 

 

11.3.

Corporate Transaction.

 

 

11.4.

Adjustments.

 

 

11.5.

No Limitations on Company.

 

12.

GENERAL PROVISIONS

 

 

12.1.

Disclaimer of Rights

 

 

12.2.

Nonexclusivity of the Plan

 

 

12.3.

Withholding Taxes

 

 

12.4.

Captions

 

 

12.5.

Other Provisions

 

 

12.6.

Number and Gender

 

 

12.7.

Severability

 

 

12.8.

Governing Law

 

 

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AMERICAN BANK HOLDINGS, INC.

 

2004 NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN

 

American Bank Holdings, Inc., a Maryland corporation (the “Company”), sets forth
herein the terms of its 2004 Non-Employee Directors Stock Option Plan (the
“Plan”), as follows:

 

1.                                      PURPOSE

 

The Plan is intended to enhance the Company’s and its Affiliates’ (as defined
herein) ability to attract and retain highly qualified directors to motivate
such directors to serve the Company and its Affiliates and to expend maximum
effort to improve the business results and earnings of the Company, by providing
to such 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 which are non-qualified stock
options.

 

2.                                      DEFINITIONS

 

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

 

2.1                                 “Affiliate” means, with respect to the
Company, any company or other trade or business that controls, is controlled by
or is under common control with the Company within the meaning of Rule 405 of
Regulation C under the Securities Act, including, without limitation, any
subsidiary.

 

2.2                                 “Award” means a grant of an Option under the
Plan.

 

2.3                                 “Award Agreement” means the written
agreement between the Company and a Grantee that evidences and sets out the
terms and conditions of an Award.

 

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.

 

2.7                                 “Company” means American Bank Holdings, Inc.

 

2.8                                 “Corporate Transaction” means (i) the
dissolution or liquidation of the Company or a merger, consolidation, or
reorganization of the Company with one or more other entities in which the
Company is not the surviving entity, (ii) a sale of substantially all of the
assets of the Company to another person or entity, or (iii) any transaction
(including without limitation a merger or reorganization in which the Company is
the surviving entity) which results in any person or entity (other than persons
who are stockholders or Affiliates immediately prior to the transaction) owning
50% or more of the combined voting power of all classes of stock of the Company.

 

2.9                                 “Effective Date” means November 9, 2004, the
date the Plan is approved by the Board.

 

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

 

2.11                           “Fair Market Value” means the value of a share of
Stock as determined by the Board in good faith.

 

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2.12                           “Family Member” means a person who is a spouse,
former spouse, child, stepchild, grandchild, parent, stepparent, grandparent,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother, sister, brother-in-law, or sister-in-law, including adoptive
relationships, of the Grantee, any person sharing the Grantee’s household (other
than a tenant or employee), a trust in which any one or more of these persons
have more than fifty percent of the beneficial interest, a foundation in which
any one or more of these persons (or the Grantee) control the management of
assets, and any other entity in which one or more of these persons (or the
Grantee) own more than fifty percent of the voting interests.

 

2.13                           “Grant Date” means, as determined by the Board,
the latest to occur of (i) the date as of which the Board approves an Award,
(ii) the date on which the recipient of an Award first becomes eligible to
receive an Award under Section 6 hereof, or (iii) such other date as may be
specified by the Board.

 

2.14                           “Grantee” means a person who receives or holds an
Award under the Plan.

 

2.15                           “Non-qualified Stock Option” means an Option that
is not an Incentive Stock Option.

 

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

 

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

 

2.18                           “Other Agreement” shall have the meaning set
forth in Section 10 hereof.

 

2.19                           “Outside Director” means a member of the Board
who is not an officer or employee of the Company.

 

2.20                           “Plan” means this American Bank Holdings, Inc.
2004 Non-Employee Directors Stock Option Plan.

 

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

 

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

 

2.23                           “Service” means service as an Outside Director to
the Company.  Subject to the preceding sentence, whether a termination of
Service shall have occurred for purposes of the Plan shall be determined by the
Board, which determination shall be final, binding and conclusive.

 

2.24                           “Stock” means the common stock, par value $1.00
per share, of the Company.

 

2.25                           “Termination Date” means the date upon which an
Option shall terminate or expire, as set forth in Section 8.5 hereof.

 

3.                                      ADMINISTRATION OF THE PLAN

 

3.1.                            Board

 

The Board 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 Board shall have full power and authority to
take all actions and to make all determinations required or provided for under
the Plan, any Award or any Award Agreement, and shall have full power and
authority to take all such other actions and make all such other determinations
not inconsistent with the specific terms and provisions of the Plan that the
Board deems to be necessary or appropriate to the administration of the Plan,
any Award or any Award Agreement.  All such actions and determinations shall be
by the affirmative vote of a majority of the members of the Board present at a
meeting or by unanimous consent of the Board executed in writing in accordance
with the Company’s articles of incorporation and by-laws

 

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and applicable law.  The interpretation and construction by the Board of any
provision of the Plan, any Award or any Award Agreement shall be final, binding
and conclusive.

 

3.2.                            Committee.

 

The Board from time to time may delegate to the Committee such powers and
authorities related to the administration and implementation of the Plan, as set
forth in Section 3.1 above and other applicable provisions, as the Board shall
determine, consistent with the articles of incorporation and by-laws of the
Company and applicable law.  In the event that the Plan, any Award or any Award
Agreement entered into hereunder provides for any action to be taken by or
determination to be made by the Board, such action may be taken or such
determination may be made by the Committee if the power and authority to do so
has been delegated to the Committee by the Board as provided for in this
Section.  Unless otherwise expressly determined by the Board, any such action or
determination by the Committee shall be final, binding and conclusive.  To the
extent permitted by law, the Committee may delegate its authority under the Plan
to a member of the Board.

 

3.3.                            Terms of Awards.

 

Subject to the other terms and conditions of the Plan, the Board shall have full
and final authority to:

 

(i)                                     designate Grantees,

 

(ii)                                  determine the number of shares of Stock to
be subject to an Award,

 

(iii)                               establish the terms and conditions of each
Award (including, but not limited to, the exercise price of any Option, the
nature and duration of any restriction or condition (or provision for lapse
thereof) relating to the vesting, exercise, transfer, or forfeiture of an Award
or the shares of Stock subject thereto, and any terms or conditions that may be
necessary to qualify Options as Incentive Stock Options),

 

(iv)                              prescribe the form of each Award Agreement
evidencing an Award, and

 

(v)                                 amend, modify, or supplement the terms of
any outstanding Award.  Such authority specifically includes the authority, in
order to effectuate the purposes of the Plan but without amending the Plan, to
modify Awards 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.  Notwithstanding the foregoing, no
amendment, modification or supplement of any Award shall, without the consent of
the Grantee, impair the Grantee’s rights under such Award.

 

As a condition to any subsequent Award, the Board shall have the right, at its
discretion, to require Grantees to return to the Company Awards previously made
under the Plan.  Subject to the terms and conditions of the Plan, any such new
Award shall be upon such terms and conditions as are specified by the Board at
the time the new Award is made.  The Board shall have the right, in its
discretion, to make Awards in substitution or exchange for any other award under
another plan of the Company, any Affiliate, or any business entity to be
acquired by the Company or an Affiliate.  The grant of any Award shall be
contingent upon the Grantee executing the appropriate Award Agreement.

 

Notwithstanding the foregoing, no amendment or modification may be made to an
outstanding Option which reduces the Option Price, either by lowering the Option
Price or by canceling the outstanding Option and granting a replacement Option
with a lower exercise price without the approval of the stockholders of the
Company, provided, that, appropriate adjustments may be made to outstanding
Options pursuant to Section 11.

 

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 Award or Award
Agreement.

 

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3.5.                            Book Entry

 

Notwithstanding any other provision of this Plan to the contrary, the Company
may elect to satisfy any requirement under this Plan for the delivery of stock
certificates through the use of book-entry.

 

4.                                      STOCK SUBJECT TO THE PLAN

 

Subject to adjustment as provided in Section 11 hereof, the number of shares of
Stock available for issuance under the Plan shall be one hundred and fifty
thousand (150,000).    Stock issued or to be issued under the Plan shall be
authorized but unissued shares; or, to the extent permitted by applicable law,
issued shares that have been reacquired by the Company.  If any shares covered
by an Award are not purchased or are forfeited, or if an Award 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 Award shall, to the extent of any such forfeiture
or termination, again be available for making Awards under the Plan.

 

5.                                      EFFECTIVE DATE, DURATION AND AMENDMENTS

 

5.1.                            Effective Date.

 

The Plan shall be effective as of the Effective Date, subject to approval of the
Plan by the Company’s stockholders within one year of the Effective Date.  Upon
approval of the Plan by the stockholders of the Company as set forth above, all
Awards made under the Plan on or after the Effective Date shall be fully
effective as if the stockholders of the Company had approved the Plan on the
Effective Date.  If the stockholders fail to approve the Plan within one year
after the Effective Date, any Awards made hereunder shall be null and void and
of no effect.

 

5.2.                            Term.

 

The Plan shall terminate automatically ten (10) years after its adoption by the
Board and may be terminated on any earlier date as provided in Section 5.3.

 

5.3.                            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 Awards have not been made.  An
amendment shall be contingent on approval of the Company’s stockholders to the
extent stated by the Board, required by applicable law or required by applicable
stock exchange listing requirements.  No Awards shall be made after termination
of the Plan.  No amendment, suspension, or termination of the Plan shall,
without the consent of the Grantee, impair rights or obligations under any Award
theretofore awarded under the Plan.

 

6.                                      AWARD ELIGIBILITY AND LIMITATIONS

 

6.1.                            Outside Directors

 

Awards may be made under the Plan to Outside Directors of the Company.

 

6.2.                            Successive Awards.

 

An eligible person may receive more than one Award, subject to such restrictions
as are provided herein.

 

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7.                                      AWARD AGREEMENT

 

Each Award granted pursuant to the Plan shall be evidenced by an Award
Agreement, in such form or forms as the Board 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.

 

8.                                      TERMS AND CONDITIONS OF OPTIONS

 

8.1.                            Annual Option Grants

 

Each Outside Director, including any Outside Director who becomes an Outside
Director prior to such meeting, shall be granted an Option to purchase 2,500
shares of Stock (subject to adjustment as provided in Section 11 hereof) on the
day of the Company’s annual meeting.  In addition, an Option to purchase an
additional 7,500 shares of Stock (subject to adjustment as provided in Section
11 hereof) shall be granted to the Chairman of the Board each year on the day of
the Company’s annual meeting.

 

8.2.                            Additional Option Grants

 

An Option shall be granted under the Plan to the following Outside Directors on
the day of the Company’s annual meeting in 2004, in recognition of their recent
extraordinary services to the Company:

 

Name

 

Number of Shares

 

 

 

 

 

J.R. Schuble, Jr.

 

25,000

 

Howard J. Postal

 

11,000

 

Bruce S. Cook

 

8,000

 

Douglas M. Bregman

 

6,000

 

 

8.3.                            Option Price

 

The Option Price of each Option shall be fixed by the Board and stated in the
Award Agreement evidencing such Option.  The Option Price of each Option shall
be at least the Fair Market Value on the Grant Date of a share of Stock.  In no
case shall the Option Price of any Option be less than the par value of a share
of Stock.

 

8.4.                            VESTING.

 

Options granted under the Plan shall be fully vested and nonforfeitable as of
the Grant Date.

 

8.5.                            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 Board and
stated in the Award Agreement relating to such Option (the “Termination Date”).

 

8.6.                            TERMINATION OF SERVICE.

 

Each Award Agreement shall set forth the extent to which the Grantee shall have
the right to exercise the Option following termination of the Grantee’s
Service.  Such provisions shall be determined in the sole discretion of the
Board, need not be uniform among all Options issued pursuant to the Plan, and
may reflect distinctions based on the reasons for termination of Service.

 

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8.7.                            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
stockholders of the Company as provided herein or after the occurrence of an
event referred to in Section 11 hereof which results in termination of the
Option.

 

8.8.                            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, on the form specified by the Company.  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 of the Option Price of the
shares for which the Option is being exercised 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 an Award.  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.

 

8.9.                            RIGHTS OF HOLDERS OF OPTIONS

 

Unless otherwise stated in the applicable Award Agreement, an individual holding
or exercising an Option shall have none of the rights of a stockholder (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 11 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.

 

8.10.                     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.

 

8.11.                     TRANSFERABILITY OF OPTIONS

 

Except as provided in Section 8.12, during the lifetime of a Grantee, only the
Grantee (or, in the event of legal incapacity or incompetency, the Grantee’s
guardian or legal representative) may exercise an Option.  Except as provided in
Section 8.12, no Option shall be assignable or transferable by the Grantee to
whom it is granted, other than by will or the laws of descent and distribution.

 

8.12.                     FAMILY TRANSFERS.

 

If authorized in the applicable Award Agreement, a Grantee may transfer, not for
value, all or part of an Option to any Family Member.  For the purpose of this
Section 8.12, a “not for value” transfer is a transfer which is (i) a gift, (ii)
a transfer under a domestic relations order in settlement of marital property
rights; or (iii) a transfer to an entity in which more than fifty percent of the
voting interests are owned by Family Members (or the Grantee) in exchange for an
interest in that entity.  Following a transfer under this Section 8.12, any such
Option shall continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer.  Subsequent transfers of transferred
Options are prohibited except to Family Members of the original Grantee in
accordance with this Section 8.12 or by will or the laws of descent and
distribution.  The events of termination of Service of Section 8.6 hereof shall
continue to be applied with respect to the original Grantee, following which the
Option shall be exercisable by the transferee only to the extent, and for the
periods specified, in Section 8.6.

 

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9.                                      FORM OF PAYMENT FOR OPTIONS

 

9.1.                            GENERAL RULE.

 

Payment of the Option Price for the shares purchased pursuant to the exercise of
an Option shall be made in cash or in cash equivalents acceptable to the
Company.

 

9.2.                            SURRENDER OF STOCK.

 

To the extent the Award Agreement so provides, payment of the Option Price for
shares purchased pursuant to the exercise of an Option may be made all or in
part through the tender to the Company of shares of Stock, which shares, if
acquired from the Company and if so required by the Company, shall have been
held for at least six months at the time of tender and which 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 surrender.

 

9.3.                            CASHLESS EXERCISE.

 

To the extent permitted by law and to the extent the Award Agreement so
provides, payment of the Option Price for shares purchased pursuant to the
exercise of an Option may be made all or in part by delivery (on a form
acceptable to the Board) of an irrevocable direction to a licensed securities
broker acceptable to the Company to sell shares of Stock and to deliver all or
part of the sales proceeds to the Company in payment of the Option Price and any
withholding taxes described in Section 12.3.

 

9.4.                            OTHER FORMS OF PAYMENT.

 

To the extent the Award Agreement so provides, payment of the Option Price for
shares purchased pursuant to exercise of an Option may be made in any other form
that is consistent with applicable laws, regulations and rules.

 

10.                               REQUIREMENTS OF LAW

 

10.1.                     GENERAL.

 

The Company shall not be required to sell or issue any shares of Stock under any
Award 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 qualification of any shares  subject to an Award 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 Award 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
Award.  Specifically, in connection with the Securities Act, upon the exercise
of any Option or the delivery of any shares of Stock underlying an Award, unless
a registration statement under such Act is in effect with respect to the shares
of Stock covered by such Award, the Company shall not be required to sell or
issue such shares unless the Board 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 Board 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

 

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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.

 

10.2.                     RULE 16B-3.

 

During any time when the Company has a class of equity security registered under
Section 12 of the Exchange Act, it is the intent of the Company that Awards
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 Board 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 Board, 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.

 

11.                               EFFECT OF CHANGES IN CAPITALIZATION

 

11.1.                     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 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 Awards 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 outstanding Option, as
applicable, but shall include a corresponding proportionate adjustment in the
Option Price per share.  The conversion of any convertible securities of the
Company shall not be treated as an increase in shares effected without receipt
of consideration.   Notwithstanding the foregoing, in the event of any
distribution to the Company’s stockholders of securities of any other entity or
other assets (including an extraordinary cash dividend but excluding a
non-extraordinary dividend payable in cash or in stock of the Company) without
receipt of consideration by the Company, the Company may, in such manner as the
Company deems appropriate, adjust (i) the number and kind of shares subject to
outstanding Awards and/or (ii) the exercise price of outstanding Options to
reflect such distribution.

 

11.2.                     REORGANIZATION IN WHICH THE COMPANY IS THE SURVIVING
ENTITY WHICH DOES NOT CONSTITUTE A CORPORATE TRANSACTION.

 

Subject to Section 11.3 hereof, if the Company shall be the surviving entity in
any reorganization, merger, or consolidation of the Company with one or more
other entities which does not constitute a Corporate Transaction, 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 an Award, any
restrictions applicable to such Award shall apply as well to any replacement
shares received by the Grantee as a result of the reorganization, merger or
consolidation.

 

11.3.                     CORPORATE TRANSACTION.

 

Subject to the exceptions set forth in the last sentence of this Section 11.3
and the last sentence of Section 11.4, upon the occurrence of a Corporate
Transaction the Board may elect, in its sole discretion, to cancel any
outstanding Options and pay or deliver, or cause to be paid or delivered, to the
holder thereof an amount in cash or securities having a value (as determined by
the Board acting in good faith), equal to the product of the number of shares

 

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of Stock subject to the Option (the “Award Shares”) multiplied by the amount, if
any, by which (I) the formula or fixed price per share paid to holders of shares
of Stock pursuant to such transaction exceeds (II) the Option Price applicable
to such Award Shares.

 

This Section 11.3 shall not apply to any Corporate Transaction to the extent
that provision is made in writing in connection with such Corporate Transaction
for the assumption or continuation of the Options theretofore granted, or for
the substitution for such Options for new common stock options relating to the
stock of a successor entity, or a parent or subsidiary thereof, with appropriate
adjustments as to the number of shares (disregarding any consideration that is
not common stock) and option exercise price, in which event the Plan and Options
theretofore granted shall continue in the manner and under the terms so
provided.

 

11.4.                     ADJUSTMENTS.

 

Adjustments under this Section 11 related to shares of Stock or securities of
the Company shall be made by the Board, 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.  The Board may provide in the Award
Agreements at the time of grant, or any time thereafter with the consent of the
Grantee, for different provisions to apply to an Award in place of those
described in Sections 11.1, 11.2 and 11.3.

 

11.5.                     NO LIMITATIONS ON COMPANY.

 

The making of Awards 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.

 

12.                               GENERAL PROVISIONS

 

12.1.                     DISCLAIMER OF RIGHTS

 

                                                No provision in the Plan or in
any Award or Award Agreement shall be construed to confer upon any individual
the right to remain an Outside Director 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 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
Award granted under the Plan shall be affected by any change of duties or
position of the Grantee, so long as such Grantee continues to be an Outside
Director of the Company or an Affiliate.  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 Grantee or
beneficiary under the terms of the Plan.

 

12.2.                     NONEXCLUSIVITY OF THE PLAN

 

Neither the adoption of the Plan nor the submission of the Plan to the
stockholders 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.

 

12.3.                     WITHHOLDING TAXES

 

The Company or an Affiliate, 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 an Award or upon the
issuance of any shares of Stock upon the

 

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exercise of an Option or pursuant to an Award.  At the time of such vesting,
lapse, or exercise, the Grantee shall pay to the Company or the Affiliate, as
the case may be, any amount that the Company or the Affiliate may reasonably
determine to be necessary to satisfy such withholding obligation.  Subject to
the prior approval of the Company or the Affiliate, which may be withheld by the
Company or the Affiliate, 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 Affiliate to withhold shares of Stock otherwise
issuable to the Grantee or (ii) by delivering to the Company or the Affiliate
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 shall be determined by the Company or the Affiliate 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 12.3 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.

 

12.4.                     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.

 

12.5.                     OTHER PROVISIONS

 

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

 

12.6.                     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.

 

12.7.                     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.

 

12.8.                     GOVERNING LAW

 

The validity and construction of this Plan and the instruments evidencing the
Award hereunder shall be governed by the laws of the State of Maryland, other
than any conflicts or choice of law rule or principle that might otherwise refer
construction or interpretation of this Plan and the instruments evidencing the
Awards granted hereunder to the substantive laws of any other jurisdiction.

 

*    *    *

 

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