Exhibit 10.6

 

MONOGRAM RESIDENTIAL TRUST, INC.

 

SECOND AMENDED AND RESTATED INCENTIVE AWARD PLAN

(Adopted November 14, 2006,
Amended and Restated March 14, 2008,
Amended and Restated August 12, 2014)

 

Section 1.

PURPOSE

 

The purpose of this Plan is to promote the interests of the Company by providing
the opportunity to purchase or receive Shares, or to receive compensation that
is based upon appreciation in the value of Shares to Eligible Recipients in
order to attract and retain Eligible Recipients by providing an incentive to
work to increase the value of Shares and a stake in the future of the Company
that corresponds to the stake of each of the Company’s stockholders.  The Plan
provides for the grant of ISOs, NQSOs, Restricted Stock Awards, Restricted Stock
Units, Stock Appreciation Rights, Dividend Equivalents and Other Stock-Based
Awards to aid the Company in obtaining these goals.

 

Section 2.

DEFINITIONS

 

Each term set forth in this Section shall have the meaning set forth opposite
such term for purposes of this Plan and any Incentive Award Agreements under
this Plan (unless noted otherwise), and for purposes of such definitions, the
singular shall include the plural and the plural shall include the singular, and
reference to one gender shall include the other gender.  Note that some
definitions may not be used in this Plan, and may be inserted here solely for
possible use in Incentive Award Agreements issued under this Plan.

 

2.1                               Board means the Board of Directors of the
Company.

 

2.2                               Cause shall mean an act or acts by an Eligible
Recipient involving (a) the use for profit or disclosure to unauthorized persons
of confidential information or trade secrets of the Company, a Parent or a
Subsidiary, (b) the breach of any contract with the Company, a Parent or a
Subsidiary, (c) the violation of any fiduciary obligation to the Company, a
Parent or a Subsidiary, (d) the unlawful trading in the securities of the
Company, a Parent or a Subsidiary, or of another corporation based on
information gained as a result of the performance of services for the Company, a
Parent or a Subsidiary, (e) a felony conviction or the failure to contest
prosecution of a felony, or (f) willful misconduct, dishonesty, embezzlement,
fraud, deceit or civil rights violations, or other unlawful acts.

 

2.3                               Change of Control means either of the
following:

 

(a)                                 any transaction or series of transactions
pursuant to which the Company sells, transfers, leases, exchanges or disposes of
substantially all (i.e., at least eighty-five percent (85%)) of its assets for
cash or property, or for a combination of cash and property, or for other
consideration; or

 

(b)                                 any transaction pursuant to which persons
who are not current stockholders of the Company acquire by merger,
consolidation, reorganization, division or other business combination

 

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or transaction, or by a purchase of an interest in the Company, an interest in
the Company so that after such transaction, the stockholders of the Company
immediately prior to such transaction no longer have a controlling (i.e., 50% or
more) voting interest in the Company.

 

2.4                               Code means the Internal Revenue Code of 1986,
as amended.

 

2.5                               Committee means any committee appointed by the
Board to administer the Plan, as specified in Section 5 hereof.  Any such
committee shall be comprised entirely of Directors or such other persons as
permitted under applicable law.

 

2.6                               Common Stock means the common stock of the
Company.

 

2.7                               Company means Monogram Residential
Trust, Inc., a Maryland corporation, and any successor to such organization.

 

2.8                               Constructive Discharge means a termination of
employment with the Company by an Employee due to any of the following events if
the termination occurs within thirty (30) days of such event:

 

(a)                                 Forced Relocation or Transfer.  The Employee
may continue employment with the Company, a Parent or a Subsidiary (or a
successor employer), but such employment is contingent on the Employee’s being
transferred to a site of employment which is located further than 50 miles from
the Employee’s current site of employment.  For this purpose, an Employee’s site
of employment shall be the site of employment to which they are assigned as
their home base, from which their work is assigned, or to which they report, and
shall be determined by the Committee in its sole discretion on the basis of the
facts and circumstances.

 

(b)                                 Decrease in Salary or Wages.  The Employee
may continue employment with the Company, a Parent or a Subsidiary (or a
successor employer), but such employment is contingent upon the Employee’s
acceptance of a salary or wage rate which is less than the Employee’s prior
salary or wage rate.

 

(c)                                  Significant and Substantial Reduction in
Benefits.  The Employee may continue employment with the Company, a Parent or a
Subsidiary (or a successor employer), but such employment is contingent upon the
Employee’s acceptance of a reduction in the pension, welfare or fringe benefits
provided which is both significant and substantial when expressed as a dollar
amount or when expressed as a percentage of the Employee’s cash compensation. 
The determination of whether a reduction in pension, welfare or fringe benefits
is significant and substantial shall be made on the basis of all pertinent facts
and circumstances, including the entire benefit (pension, welfare and fringe)
package provided to the Employee, and any salary or wages paid to the Employee. 
However, notwithstanding the preceding, any modification or elimination of
benefits which results solely from the provision of new benefits to an Employee
by a successor employer as a result of a change of the Employee’s employment
from employment with the Company to employment with such successor shall not be
deemed a Significant and Substantial Reduction in Benefits where such new
benefits are identical to the benefits provided to similarly situated Employees
of the successor.

 

2.9                               Director means a member of the Board.

 

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2.10                        Dividend Equivalents mean a right to receive
payments based on the dividends paid by the Company to its stockholders pursuant
to the terms of Section 7.6.

 

2.11                        Eligible Recipient means an Employee and/or a Key
Person.

 

2.12                        Employee means a common law employee of the Company,
a Subsidiary or a Parent.

 

2.13                        Exchange Act means the Securities Exchange Act of
1934, as amended.

 

2.14                        Exercise Price means the price that shall be paid to
purchase one (1) Share upon the exercise of an Option granted under this Plan.

 

2.15                        Fair Market Value of each Share on any date means
the price determined below as of the close of business on such date (provided,
however, if for any reason, the Fair Market Value per share cannot be
ascertained or is unavailable for such date, the Fair Market Value per share
shall be determined as of the nearest preceding date on which such Fair Market
Value can be ascertained):

 

(a)                                 If the Share is listed or traded on any
established stock exchange or a national market system, its Fair Market Value
shall be the closing sale price for the Share (or the mean of the closing bid
and ask prices, if no sales were reported), on such exchange or system on the
date of such determination, as reported in The Wall Street Journal or such other
source as the Board deems reliable; or

 

(b)                                 If the Share is not listed or traded on any
established stock exchange or a national market system, its Fair Market Value
shall be the average of the closing dealer “bid” and “ask” prices of a Share as
reflected on a national quotation system on the date of such determination; or

 

(c)                                  In the absence of an established public
trading market for the Share, the Fair Market Value of a Share shall be
determined in good faith by the Board.

 

2.16                        FLSA Exclusion means the provisions of
Section 7(e) of the Fair Labor Standards Act of 1938 (the “FLSA”) that exempt
certain stock-based compensation from inclusion in overtime determinations under
the FLSA.

 

2.17                        Incentive Award means an ISO, a NQSO, a Restricted
Stock Award, a Restricted Stock Unit, a Stock Appreciation Right, a Dividend
Equivalent or an Other Stock-Based Award.

 

2.18                        Incentive Award Agreement means an agreement between
the Company, a Parent or a Subsidiary, and a Participant evidencing an award of
an Incentive Award.

 

2.19                        Insider means an individual who is, on the relevant
date, an officer, director or ten percent (10%) beneficial owner of any class of
the Company’s equity securities that is registered pursuant to Section 12 of the
Exchange Act, all as defined under Section 16 of the Exchange Act.

 

2.20                        ISO means an option granted under this Plan to
purchase Shares that is intended by the Company to satisfy the requirements of
Code §422 as an incentive stock option.

 

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2.21                        Key Person means (1) an officer of the Company who
is not an Employee or a member of the Board who is not an Employee, or (2) a
consultant or advisor; provided, however, that such consultant or advisor must
be a natural person who is providing or will be providing bona fide services to
the Company, a Subsidiary or a Parent with such services (1) not being in
connection with the offer or sale of securities in a capital-raising
transaction, and (2) not directly or indirectly promoting or maintaining a
market for securities of the Company, a Subsidiary or a Parent, within the
meaning of the general instructions to SEC Form S-8.

 

2.22                        NQSO means an option granted under this Plan to
purchase Shares that is not intended by the Company to satisfy the requirements
of Code §422.

 

2.23                        Option means an ISO or a NQSO.

 

2.24                        Other Stock-Based Awards means such other Incentive
Awards other than those specifically described in the Plan that may be
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on, or related to, Shares and granted pursuant to the terms of
Section 7.7

 

2.25                        Outside Director means a Director who is not an
Employee and, effective upon the Company registering any of its equity
securities under the 1934 Act, who qualifies as (1) a “non-employee director”
under Rule 16b-3(b)(3) under the 1934 Act, as amended from time to time, and
(2) an “outside director” under Code §162(m) and the regulations promulgated
thereunder.

 

2.26                        Parent means a “parent corporation” as defined under
Code §424(e).

 

2.27                        Participant means an individual who receives an
Incentive Award hereunder.

 

2.28                        Performance-Based Exception means the
performance-based exception from the tax deductibility limitations of Code
§162(m).

 

2.29                        Plan means the Monogram Residential Trust, Inc.
Second Amended and Restated Incentive Award Plan, as it may be amended from time
to time.

 

2.30                        Restricted Stock Award means an award of Shares
granted to a Participant under this Plan whereby the Participant has immediate
rights of ownership in the Shares underlying the award, but such Shares are
subject to restrictions in accordance with the terms and provisions of this Plan
and the Incentive Award Agreement pertaining to the award and may be subject to
forfeiture by the individual until the earlier of (a) the time such restrictions
lapse or are satisfied, or (b) the time such shares are forfeited, pursuant to
the terms and provisions of the Incentive Award Agreement pertaining to the
award.

 

2.31                        Restricted Stock Unit means a contractual right
granted to a Participant under this Plan to receive a Share, or cash in an
amount equal to the Fair Market Value of one Share, that is subject to
restrictions of this Plan and the applicable Incentive Award Agreement.

 

2.32                        SAR Exercise Price means the amount per Share
specified in an Incentive Award Agreement with respect to a Stock Appreciation
Right, the excess of the Fair Market Value of a Share

 

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over and above such amount, the holder of such Stock Appreciation Right may be
able to receive upon the exercise or payment of such Stock Appreciation Right.

 

2.33                        Share means a share of the Common Stock of the
Company.

 

2.34                        Stock Appreciation Right or SAR means a right
granted to a Participant pursuant to the terms and provisions of this Plan
whereby the individual, without payment to the Company (except for any
applicable withholding or other taxes), receives cash, Shares, a combination
thereof, or such other consideration as the Board may determine, in an amount
equal to the excess of the Fair Market Value per Share on the date on which the
Stock Appreciation Right is exercised over the exercise price per Share noted in
the Stock Appreciation Right for each Share subject to the Stock Appreciation
Right.

 

2.35                        Subsidiary means a “subsidiary corporation” as
defined under Code §424(f).

 

2.36                        Ten Percent Stockholder means a person who owns
(after taking into account the attribution rules of Code §424(d)) more than ten
percent (10%) of the total combined voting power of all classes of shares of
stock of either the Company, a Subsidiary or a Parent.

 

Section 3.

SHARES SUBJECT TO INCENTIVE AWARDS

 

3.1                               Shares Subject to Incentive Awards.  The total
number of Shares that may be issued pursuant to Incentive Awards under this Plan
(and the total number of Shares that may be issued pursuant to the exercise of
ISOs under this Plan) shall not exceed twenty million, as adjusted pursuant to
Section 10.  Such Shares shall be reserved, to the extent that the Company deems
appropriate, from authorized but unissued Shares, and from Shares which have
been reacquired by the Company.

 

3.2                               Availability of Shares not Delivered.  Any
Shares subject to an Incentive Award that have not been issued under such
Incentive Award as of the date of the cancellation, expiration or exchange of
such Incentive Award thereafter shall again become available for grant under
this Plan.  If any Shares issued pursuant to an Incentive Award are forfeited
back to or repurchased by the Company, including, but not limited to, any
repurchase or forfeiture caused by the failure to meet a contingency or
condition required for the vesting of such Shares, then the Shares forfeited
back or repurchased shall revert to and again become available for issuance
under the Plan.

 

If any Incentive Award, is settled for cash and does not result in the issuance
of all or a portion of the Shares subject to such Incentive Award, the Shares
shall, to the extent of such cash settlement, again be available for grant under
the Plan, subject to the last sentence of this paragraph.  Notwithstanding
anything in this Section 3.2 to the contrary and solely for purposes of
determining whether Shares are available for the grant of ISOs, the maximum
aggregate number of shares that may be granted under this Plan shall be
determined without regard to any Shares restored pursuant to this Section 3.2
that, if taken into account, would cause the Plan to fail the requirement under
Code §422 that the Plan designate a maximum aggregate number of shares that may
be issued.

 

3.3                               Annual Limitation on Grants to Participants. 
Notwithstanding anything herein to the contrary, after Incentive Awards granted
under the Plan are subject to the tax deductibility limitations of
Section 162(m) of the Code, no Participant may be granted Incentive Awards
covering an aggregate

 

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number of Shares in excess of five million, or payable in cash in an amount in
excess of five million dollars, in any calendar year, and any Shares subject to
an Incentive Award which again become available for use under this Plan after
the cancellation, expiration or exchange of such Incentive Award thereafter
shall continue to be counted in applying this calendar year Participant
limitation.  Notwithstanding the foregoing, the Share and dollar limits
specified in the immediately preceding sentence are (a) doubled when applied to
Incentive Awards granted to any Eligible Recipient during the fiscal year in
which such Eligible Recipient first commences service with the Company or any
Subsidiary or Parent; and (b) multiplied by the number of fiscal years over
which the applicable performance period spans if such performance period is
longer than 12 months’ duration.

 

Section 4.

EFFECTIVE DATE

 

The Plan will be effective on the date it is approved by a majority of the votes
cast at a stockholder meeting, provided the stockholders of the Company so
approve this Plan within twelve (12) months from August 12, 2014.

 

Section 5.

ADMINISTRATION

 

5.1                               General Administration.  This Plan shall be
administered by the Board.  The Board, acting in its absolute discretion, shall
exercise such powers and take such action as expressly called for under this
Plan.  The Board shall have the power to interpret this Plan and, subject to the
terms and provisions of this Plan, to take such other action in the
administration and operation of the Plan as it deems equitable under the
circumstances.  The Board’s actions shall be binding on the Company, on each
affected Eligible Recipient, and on each other person directly or indirectly
affected by such actions.

 

5.2                               Authority of the Board.  Except as limited by
law or by the Articles of Incorporation or Bylaws of the Company, and subject to
the provisions herein, the Board shall have full power to select Eligible
Recipients who shall participate in the Plan; to determine the sizes and types
of Incentive Awards in a manner consistent with the Plan; to determine the terms
and conditions of Incentive Awards in a manner consistent with the Plan; to
construe and interpret the Plan and any agreement or instrument entered into
under the Plan; to correct any defect, supply any omission or reconcile any
inconsistency in the Plan or any Incentive Award Agreement; to establish, amend
or rescind rules, regulations, subplans, or supplements for the Plan’s
administration; and to amend the terms and conditions of any outstanding
Incentive Awards as allowed under the Plan and such Incentive Awards.  Further,
the Board may make all other determinations that may be necessary or advisable
for the administration of the Plan.  The Board’s determinations under the Plan
need not be uniform and may be made selectively among Incentive Awards or
Eligible Recipients, whether or not the Eligible Recipients are similarly
situated.

 

5.3                               Delegation of Authority.  The Board may
delegate its authority under the Plan, in whole or in part, to a Committee
appointed by the Board consisting of not less than one (1) Director or to a
Committee of one or more other persons to whom the powers of the Board hereunder
may be delegated in accordance with applicable law.  The members of the
Committee and any other persons to whom authority has been delegated shall be
appointed from time to time by, and shall serve at the

 

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discretion of, the Board.  The Committee or other delegate (if appointed) shall
act according to the policies and procedures set forth in the Plan and to those
policies and procedures established by the Board, and the Committee or other
delegate shall have such powers and responsibilities as are set forth by the
Board.  Reference to the Board in this Plan shall specifically include reference
to the Committee or other delegate where the Board has delegated its authority
to the Committee or other delegate, and any action by the Committee or other
delegate pursuant to a delegation of authority by the Board shall be deemed an
action by the Board under the Plan.  Notwithstanding the above, the Board may
assume the powers and responsibilities granted to the Committee or other
delegate at any time, in whole or in part.  With respect to Committee
appointments and composition, only a Committee (or a sub-committee thereof)
comprised solely of two (2) or more Outside Directors may grant Incentive Awards
that will meet the Performance-Based Exception, and only a Committee comprised
solely of Outside Directors may grant Incentive Awards to Insiders that will be
exempt from Section 16(b) of the Exchange Act.

 

5.4                               Decisions Binding.  All determinations and
decisions made by the Board (or its delegate) pursuant to the provisions of this
Plan and all related orders and resolutions of the Board shall be final,
conclusive and binding on all persons, including the Company, its stockholders,
Directors, Eligible Recipients, Participants, and their estates and
beneficiaries.  Notwithstanding the foregoing, after a Change of Control, any
determination by the Board as to whether Cause or Good Reason (as may be defined
in the Incentive Award Agreement) exists will be subject to de novo review by a
court of competent jurisdiction.

 

5.5                               Exculpation and Indemnification. In addition
to such other rights of exculpation as they may have as members of the Board or
the Committee or as officers or employees of the Company, a Subsidiary or a
Parent, neither the Board nor the Committee, nor any member of either or any
delegate thereof, shall be liable for any act, omission, interpretation,
construction or determination made in good faith in connection with the Plan,
and the members of the Board and the Committee (and any delegates thereof) shall
be entitled in all cases to indemnification, advancement and reimbursement by
the Company in respect of any claim, loss, damage or expense (including, without
limitation, reasonable attorneys’ fees) arising or resulting therefrom to the
fullest extent permitted by law and/or under the Company’s Articles of
Incorporation or Bylaws or any directors’ and officers’ liability insurance
coverage which may be in effect from time to time and/or any indemnification
agreement between such individual and the Company.

 

Section 6.

ELIGIBILITY

 

Eligible Recipients selected by the Board shall be eligible for the grant of
Incentive Awards under this Plan, but no Eligible Recipient shall have the right
to be granted an Incentive Award under this Plan merely as a result of his or
her status as an Eligible Recipient.  Only Employees of the Company, a Parent or
a Subsidiary, shall be eligible to receive a grant of ISOs.  The Board may grant
Incentive Awards to an Eligible Recipient in connection with hiring, recruiting,
or otherwise before the date the Eligible Recipient first performs bona fide
services for the Company, a Subsidiary or a Parent, so long as the Incentive
Awards do not become vested or exercisable, and no Shares are issued to such
Eligible Recipient, before the date the Eligible Recipient begins performing
such services, and such Incentive Awards are exempt from or comply with
Section 409A of the Code.

 

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Section 7

TERMS OF INCENTIVE AWARDS

 

7.1                               Terms and Conditions of All Incentive Awards.

 

(a)                                 Grants of Incentive Awards.  The Board, in
its absolute discretion, shall grant Incentive Awards, individually or in
tandem, under this Plan from time to time and shall have the right to grant new
Incentive Awards in exchange for outstanding Incentive Awards, including, but
not limited to, exchanges of Options for the purpose of achieving a lower
Exercise Price.  Incentive Awards shall be granted to Eligible Recipients
selected by the Board, and the Board shall be under no obligation whatsoever to
grant any Incentive Awards, or to grant Incentive Awards to all Eligible
Recipients, or to grant all Incentive Awards subject to the same terms and
conditions.

 

(b)                                 Shares Subject to Incentive Awards.  The
number of Shares as to which an Incentive Award shall be granted shall be
determined by the Board in its sole discretion, subject to the provisions of
Section 3 as to the total number of Shares available for grants under the Plan.

 

(c)                                  Incentive Award Agreements.  Each Incentive
Award shall be evidenced by an Incentive Award Agreement executed by the
Company, a Parent or a Subsidiary, and the Participant, which shall be in such
form and contain such terms and conditions as the Board in its discretion may,
subject to the provisions of the Plan, from time to time determine.

 

(d)                                 Date of Grant.  The date an Incentive Award
is granted shall be the date on which the Board (1) has approved the terms and
conditions of the Incentive Award Agreement, (2) has determined the recipient of
the Incentive Award and the number of Shares covered by the Incentive Award and
(3) has taken all such other action necessary to direct the grant of the
Incentive Award.

 

(e)                                  Discretion to Permit Transfers Other than
for Value.  Except as otherwise restricted by applicable law, the Board may, but
need not, permit an Incentive Award, other than an ISO or a tandem Stock
Appreciation Right granted with respect to an ISO, to be transferred to a
Participant’s Family Member (as defined below) as a gift or pursuant to a
domestic relations order in settlement of marital property rights.  The Board
shall not permit any transfer of an Incentive Award for value.  For purposes of
this Section 7.1(e), “Family Member” means any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing the
Participant’s household (other than a tenant or employee), a trust in which
these persons have more than fifty percent (50%) of the beneficial interest, a
foundation in which these persons (or the Participant) control the management of
assets, and any other entity in which these persons (or the Participant) own
more than fifty percent (50%) of the voting interests.  The following
transactions are not prohibited transfers for value: (i) a transfer under a
domestic relations order in settlement of marital property rights; and (ii) a
transfer to an entity in which more than fifty percent of the voting interests
are owned by Family Members (or the Participant) in exchange for an interest in
that entity.

 

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7.2                               Terms and Conditions of Options.

 

(a)                                 Necessity of Incentive Award Agreements. 
Each grant of an Option shall be evidenced by an Incentive Award Agreement that
shall specify whether the Option is an ISO or NQSO, and incorporate such other
terms and conditions as the Board, acting in its absolute discretion, deems
consistent with the terms of this Plan, including (without limitation) a
restriction on the number of Shares subject to the Option that first become
exercisable during any calendar year.  The Board and/or the Company shall have
complete discretion to modify the terms and provisions of an Option in
accordance with Section 12 of this Plan even though such modification may change
the Option from an ISO to a NQSO.

 

(b)                                 Determining Optionees.  In determining
Eligible Recipient(s) to whom an Option shall be granted and the number of
Shares to be covered by such Option, the Board may take into account the
recommendations of the Chief Executive Officer of the Company and its other
officers, the duties of the Eligible Recipient, the present and potential
contributions of the Eligible Recipient to the success of the Company, and other
factors deemed relevant by the Board, in its sole discretion, in connection with
accomplishing the purpose of this Plan.  An Eligible Recipient who has been
granted an Option to purchase Shares, whether under this Plan or otherwise, may
be granted one or more additional Options.  If the Board grants an ISO and a
NQSO to an Eligible Recipient on the same date, the right of the Eligible
Recipient to exercise one such Option shall not be conditioned on his or her
failure to exercise the other such Option.

 

(c)                                  Exercise Price.  Subject to adjustment in
accordance with Section 10 and the other provisions of this Section, the
Exercise Price shall be as set forth in the applicable Incentive Award
Agreement.  With respect to each grant of an ISO to a Participant who is not a
Ten Percent Stockholder, the Exercise Price shall not be less than the Fair
Market Value on the date the ISO is granted.  With respect to each grant of an
ISO to a Participant who is a Ten Percent Stockholder, the Exercise Price shall
not be less than one hundred ten percent (110%) of the Fair Market Value on the
date the ISO is granted.  If an Option is a NQSO, the Exercise Price for each
Share shall be no less than the Fair Market Value on the date the NQSO is
granted, provided that an NQSO may be granted with any Exercise Price less than
the Fair Market Value, so long as the NQSO contains (i) such additional terms as
necessary to comply with or be exempt under Section 409A of the Code; (ii) the
Exercise Price is equal to or greater than the minimum price required by
applicable state law or the minimum price required by the Company’s governing
instrument and (iii) if the NQSO is intended to meet the FLSA Exclusion, the
NQSO must be granted with an Exercise Price equivalent to or greater than
eighty-five percent (85%) of the Fair Market Value of the Shares subject thereto
on the date granted determined as of the date of such grant.  Any Option
intended to meet the Performance-Based Exception must be granted with an
Exercise Price equal to or greater than the Fair Market Value of the Shares
subject thereto determined as of the date of such grant.

 

(d)                                 Option Term.  Each Option granted under this
Plan shall be exercisable in whole or in part at such time or times as set forth
in the related Incentive Award Agreement, but no Incentive Award Agreement
shall:

 

(i)                                     make an Option exercisable before the
date such Option is granted; or

 

(ii)                                  make an Option exercisable after the
earlier of:

 

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(A)                               the date such Option is exercised in full, or

 

(B)                               the date that is the tenth (10th) anniversary
of the date such Option is granted, if such Option is a NQSO or an ISO granted
to a non-Ten Percent Stockholder, or the date that is the fifth (5th)
anniversary of the date such Option is granted, if such Option is an ISO granted
to a Ten Percent Stockholder.  An Incentive Award Agreement may provide for the
exercise of an Option after the employment of an Employee has terminated for any
reason whatsoever, including death or disability.  The Employee’s rights, if
any, upon termination of employment will be set forth in the applicable
Incentive Award Agreement.

 

(e)                                  Payment.  Options shall be exercised by the
delivery of a written notice of exercise to the Company, setting forth the
number of Shares with respect to which the Option is to be exercised accompanied
by full payment for the Shares.  Payment for shares of Stock purchased pursuant
to exercise of an Option shall be made in (i) cash (including by check or money
order), (ii) unless the Incentive Award Agreement provides otherwise, by
delivery to the Company of a number of Shares (either previously owned Shares or
Shares from those to be received upon exercise of the Option (i.e., a “net
exercise”)) having an aggregate Fair Market Value equal to the amount to be
tendered to the extent the use of such Shares does not have any adverse
consequences to the Company for financial accounting purposes (as determined by
the Committee), (iii) any other legal form of consideration deemed acceptable by
the Board, or (iv) a combination thereof.  In addition, unless the Incentive
Award Agreement provides otherwise, the Option may be exercised through a
brokerage transaction following registration of the Company’s equity securities
under Section 12 of the Exchange Act as permitted under the provisions of
Regulation T applicable to cashless exercises promulgated by the Federal Reserve
Board, unless prohibited by Section 402 of the Sarbanes-Oxley Act of 2002. 
However, notwithstanding the foregoing, with respect to any Option recipient who
is an Insider, a tender of shares or a cashless exercise must (1) have met the
requirements of an exemption under Rule 16b-3 promulgated under the Exchange
Act, or (2) be a subsequent transaction the terms of which were provided for in
a transaction initially meeting the requirements of an exemption under
Rule 16b-3 promulgated under the Exchange Act.  Unless the Incentive Award
Agreement provides otherwise, the foregoing exercise payment methods shall be
subsequent transactions approved by the original grant of an Option.  Except as
provided in subparagraph (f) below, payment shall be made at the time that the
Option or any part thereof is exercised, and no Shares shall be issued or
delivered upon exercise of an Option until full payment has been made by the
Participant.  The holder of an Option, as such, shall have none of the rights of
a stockholder.

 

(f)                                   Conditions to Exercise of an Option.  Each
Option granted under the Plan shall vest and shall be exercisable at such time
or times, or upon the occurrence of such event or events, and in such amounts,
as the Board shall specify in the Incentive Award Agreement; provided, however,
that subsequent to the grant of an Option, the Board, at any time before
complete termination of such Option, may accelerate the time or times at which
such Option may vest or be exercised in whole or in part.  Notwithstanding the
foregoing, an Option intended to meet the FLSA Exclusion shall not be
exercisable for at least six (6) months following the date it is granted, except
by reason of death, disability, retirement, a change in corporate ownership or
other circumstances permitted under regulations promulgated under the FLSA
Exclusion.  Furthermore, if the recipient of an Option receives a hardship
distribution from a Code §401(k) plan of the Company, or any Parent or
Subsidiary, the Option may not be exercised during the six (6) month period
following the hardship distribution, unless the Company determines that such
exercise would not jeopardize the tax-

 

10

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qualification of the Code §401(k) plan.  The Board may impose such restrictions
on any Shares acquired pursuant to the exercise of an Option as it may deem
advisable, including, without limitation, vesting or performance-based
restrictions, rights of the Company to re-purchase Shares acquired pursuant to
the exercise of an Option, voting restrictions, investment intent restrictions,
restrictions on transfer, “first refusal” rights of the Company to purchase
Shares acquired pursuant to the exercise of an Option prior to their sale to any
other person, “drag along” rights requiring the sale of shares to a third party
purchaser in certain circumstances, “lock up” type restrictions in the case of
an initial public offering of the Company’s stock, restrictions or limitations
or other provisions that would be applied to stockholders under any applicable
agreement among the stockholders, and restrictions under applicable federal
securities laws, under the requirements of any stock exchange or market upon
which such Shares are then listed and/or traded, and/or under any blue sky or
state securities laws applicable to such Shares.

 

(g)                                  Transferability of Options.  An Option
shall not be transferable or assignable except by will or by the laws of descent
and distribution and shall be exercisable, during the Participant’s lifetime,
only by the Participant; provided, however, that in the event the Participant is
incapacitated and unable to exercise his or her Option, if such Option is a
NQSO, such Option may be exercised by such Participant’s legal guardian, legal
representative, or other representative whom the Board deems appropriate based
on applicable facts and circumstances.  The determination of incapacity of a
Participant and the determination of the appropriate representative of the
Participant who shall be able to exercise the Option if the Participant is
incapacitated shall be determined by the Board in its sole and absolute
discretion.  Notwithstanding the foregoing, except as otherwise provided in the
Incentive Award Agreement, a NQSO may also be transferred by a Participant as a
bona fide gift (i) to his spouse, lineal descendant or lineal ascendant,
siblings and children by adoption, (ii) to a trust for the benefit of one or
more individuals described in clause (i) and no other persons, or (iii) to a
partnership of which the only partners are one or more individuals described in
clause (i), in which case the transferee shall be subject to all provisions of
the Plan, the Incentive Award Agreement and other agreements with the
Participant in connection with the exercise of the Option and purchase of
Shares.  In the event of such a gift, the Participant shall promptly notify the
Board of such transfer and deliver to the Board such written documentation as
the Board may in its discretion request, including, without limitation, the
written acknowledgment of the donee that the donee is subject to the provisions
of the Plan, the Incentive Award Agreement and other agreements with the
Participant.

 

(h)                                 Special Provisions for Certain Substitute
Options.  Notwithstanding anything to the contrary in this Section, any Option
in substitution for a stock option previously issued by another entity, which
substitution occurs in connection with a transaction to which Code §424(a) is
applicable, may provide for an Exercise Price computed in accordance with Code
§424(a) and the regulations thereunder and may contain such other terms and
conditions as the Board may prescribe to cause such substitute Option to contain
as nearly as possible the same terms and conditions (including the applicable
vesting and termination provisions) as those contained in the previously issued
stock option being replaced thereby.

 

(i)                                     ISO Tax Treatment Requirements.  With
respect to any Option that purports to be an ISO, to the extent that the
aggregate Fair Market Value (determined as of the date of grant of such Option)
of stock with respect to which such Option is exercisable for the first time by
any individual during any calendar year exceeds one hundred thousand dollars
($100,000.00), such Option

 

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shall not be treated as an ISO in accordance with Code §422(d) and instead shall
be treated as a NQSO.  The rule of the preceding sentence is applied in the
order in which Options are granted.

 

(j)                                    Repricing of Stock Options.  With respect
to any Option granted pursuant to, and under, this Plan, approval of the
Stockholders of the Company is required for any repricing of all or any portion
of existing outstanding Options, unless such repricing is in connection with a
corporate transaction as set forth in Section 10.  For this purpose, “repricing”
of Options shall include, but not be limited to, any of the following actions
(or any similar action): (1) lowering the Exercise Price of an existing Option;
(2) any action which would be treated as a “repricing” under generally accepted
accounting principles; or (3) canceling of an existing Option at a time when its
Exercise Price exceeds the Fair Market Value of the underlying stock subject to
such Option, in exchange for another Option, a Restricted Stock Award, or other
equity in the Company.

 

7.3                               Terms and Conditions of Stock Appreciation
Rights.  A Stock Appreciation Right may be granted in connection with all or any
portion of a previously or contemporaneously granted Option or not in connection
with an Option.  A Stock Appreciation Right shall entitle the Participant to
receive upon exercise or payment the excess of the Fair Market Value of a
specified number of Shares at the time of exercise, over a SAR Exercise Price
that shall be not less than the Exercise Price for that number of Shares in the
case of a Stock Appreciation Right granted in connection with a previously or
contemporaneously granted Option, or in the case of any other Stock Appreciation
Right, not less than one hundred percent (100%) of the Fair Market Value of that
number of Shares at the time the Stock Appreciation Right was granted.  The
exercise of a Stock Appreciation Right shall result in a pro rata surrender of
the related Option to the extent the Stock Appreciation Right has been
exercised.

 

(a)                                 Payment.  Upon exercise or payment of a
Stock Appreciation Right, the Company shall pay to the Participant the
appreciation in cash or Shares (at the aggregate Fair Market Value on the date
of payment or exercise) as provided in the Incentive Award Agreement or, in the
absence of such provision, as the Board may determine.

 

(b)                                 Conditions to Exercise.  Each Stock
Appreciation Right granted under the Plan shall be exercisable at such time or
times, or upon the occurrence of such event or events, and in such amounts, as
the Board shall specify in the Incentive Award Agreement; provided, however,
that subsequent to the grant of a Stock Appreciation Right, the Board, at any
time before complete termination of such Stock Appreciation Right, may
accelerate the time or times at which such Stock Appreciation Right may be
exercised in whole or in part.  Furthermore, if the recipient of a Stock
Appreciation Right receives a hardship distribution from a Code §401(k) plan of
the Company, or any Parent or Subsidiary, the Stock Appreciation Right may not
be exercised during the six (6) month period following the hardship
distribution, unless the Company determines that such exercise would not
jeopardize the tax-qualification of the Code §401(k) plan.

 

(c)                                  Transferability of Stock Appreciation
Rights.  Except as otherwise provided in a Participant’s Incentive Award
Agreement, no Stock Appreciation Right granted under the Plan may be sold,
transferred, pledged, assigned or otherwise alienated or hypothecated, other
than by will or by the laws of descent and distribution.  Further, except as
otherwise provided in a Participant’s Incentive Award Agreement, all Stock
Appreciation Rights granted to a Participant under the Plan shall be
exercisable, during the Participant’s lifetime, only by the Participant;
provided, however, that in the event the Participant is incapacitated and unable
to exercise his or her Stock Appreciation Right, such

 

12

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Stock Appreciation Right may be exercised by such Participant’s legal guardian,
legal representative, or other representative whom the Board deems appropriate
based on applicable facts and circumstances in accordance with the terms and
provisions of the Incentive Award Agreement governing such Stock Appreciation
Right.  The determination of incapacity of a Participant and the determination
of the appropriate representative of the Participant shall be determined by the
Board in its sole and absolute discretion.  Notwithstanding the foregoing,
except as otherwise provided in the Incentive Award Agreement, (A) a Stock
Appreciation Right which is granted in connection with the grant of a NQSO may
be transferred, but only with the NQSO, and (B) a Stock Appreciation Right which
is not granted in connection with the grant of a NQSO, may be transferred by the
Participant as a bona fide gift (i) to his spouse, lineal descendant or lineal
ascendant, siblings and children by adoption, (ii) to a trust for the benefit of
one or more individuals described in clause (i), or (iii) to a partnership of
which the only partners are one or more individuals described in clause (i), in
which case the transferee shall be subject to all provisions of the Plan, the
Incentive Award Agreement and other agreements with the Participant in
connection with the exercise of the Stock Appreciation Right.  In the event of
such a gift, the Participant shall promptly notify the Board of such transfer
and deliver to the Board such written documentation as the Board may in its
discretion request, including, without limitation, the written acknowledgment of
the donee that the donee is subject to the provisions of the Plan, the Incentive
Award Agreement and other agreements with the Participant in connection with the
exercise of the Stock Appreciation Right.

 

(d)                                 Special Provisions for Tandem SARs.  A Stock
Appreciation Right granted in connection with an Option may only be exercised to
the extent that the related Option has not been exercised.  A Stock Appreciation
Right granted in connection with an ISO (1) will expire no later than the
expiration of the underlying ISO, (2) may be for no more than the difference
between the Exercise Price of the underlying ISO and the Fair Market Value of
the Shares subject to the underlying ISO at the time the Stock Appreciation
Right is exercised, (3) may be transferable only when, and under the same
conditions as, the underlying ISO is transferable, and (4) may be exercised only
(i) when the underlying ISO could be exercised and (ii) when the Fair Market
Value of the Shares subject to the ISO exceeds the Exercise Price of the ISO.

 

(e)                                  Code §409A Requirements.  A Stock
Appreciation Right must meet certain restrictions contained in Code §409A if it
is to avoid taxation under Code §409A as a “nonqualified deferred compensation
plan.”  No Stock Appreciation Right should be granted under this Plan without
careful consideration of the impact of Code §409A with respect to such grant
upon both the Company and the recipient of the Stock Appreciation Right.

 

(f)                                   Repricing of Stock Appreciation Rights. 
With respect to any Stock Appreciation Right granted pursuant to, and under,
this Plan, approval of the Stockholders of the Company is required for any
repricing of all or any portion of existing outstanding Stock Appreciation
Rights, unless such repricing is in connection with a corporate transaction as
set forth in Section 10.  For this purpose, “repricing” of Stock Appreciation
Rights shall include, but not be limited to, any of the following actions (or
any similar action): (1) lowering the SAR Exercise Price of an existing Stock
Appreciation Right; (2) any action which would be treated as a “repricing” under
generally accepted accounting principles; or (3) canceling of an existing Stock
Appreciation Right at a time when its SAR Exercise Price exceeds the Fair Market
Value of the underlying stock subject to such Stock Appreciation Right, in
exchange for another Stock Appreciation Right, a Restricted Stock Award, or
other equity in the Company.

 

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7.4                               Terms and Conditions of Restricted Stock
Awards.

 

(a)                                       Grants of Restricted Stock Awards. 
Shares awarded pursuant to Restricted Stock Awards shall be subject to any or no
restrictions as determined by the Board for periods determined by the Board. 
Restricted Stock Awards issued under the Plan may have restrictions which lapse
based upon the service of a Participant, or based upon the attainment (as
determined by the Board) of performance goals established by the Board, which
goals shall be pursuant to the business criteria listed in Section 14 to the
extent the Board intends the Restricted Stock Award to meet the
Performance-Based Exception, or based upon any other criteria that the Board may
determine appropriate or based upon a combination of the foregoing.  Any
Restricted Stock Award that vests based on the attainment of performance goals
must be granted by a Committee, must have its performance goals determined by
such a Committee based upon one or more of the business criteria listed in
Section 14, and must have the attainment of such performance goals certified in
writing by such a Committee in order to meet the Performance-Based Exception. 
The Board may require a cash payment from the Participant in exchange for the
grant of a Restricted Stock Award or may grant a Restricted Stock Award without
the requirement of a cash payment to the extent permitted under applicable law;
provided, however, if the recipient of a Restricted Stock Award receives a
hardship distribution from a Code §401(k) plan of the Company, or any Parent or
Subsidiary, the recipient may not pay any amount for such Restricted Stock Award
during the six (6) month period following the hardship distribution, unless the
Company determines that such payment would not jeopardize the tax-qualification
of the Code §401(k) plan.

 

(b)                                       Acceleration of Award.  The Board
shall have the power to permit, in its discretion, an acceleration of the
expiration of the applicable restrictions or the applicable period of such
restrictions with respect to any part or all of the Shares awarded to a
Participant.

 

(c)                                        Necessity of Incentive Award
Agreement.  Each grant of a Restricted Stock Award shall be evidenced by an
Incentive Award Agreement that shall specify the terms, conditions and
restrictions regarding the Shares awarded to a Participant, and shall
incorporate such other terms and conditions as the Board, acting in its absolute
discretion, deems consistent with the terms of this Plan.  The Board shall have
complete discretion to modify the terms and provisions of Restricted Stock
Awards in accordance with Section 12 of this Plan.

 

(d)                                       Restrictions on Shares Awarded. 
Shares awarded pursuant to Restricted Stock Awards shall be subject to any or no
restrictions as determined by the Board for periods determined by the Board. 
The Board may impose such restrictions on any Shares acquired pursuant to a
Restricted Stock Award as it may deem advisable, including, without limitation,
vesting or performance-based restrictions, rights of the Company to re-purchase
Shares acquired pursuant to the Restricted Stock Award, voting restrictions,
investment intent restrictions, restrictions on transfer, “first refusal” rights
of the Company to purchase Shares acquired pursuant to the Restricted Stock
Award prior to their sale to any other person, “drag along” rights requiring the
sale of shares to a third party purchaser in certain circumstances, “lock up”
type restrictions in connection with public offerings of the Company’s stock,
restrictions or limitations or other provisions that would be applied to
stockholders under any applicable agreement among the stockholders, and
restrictions under applicable federal securities laws, under the requirements of
any stock exchange or market upon which such Shares are then listed and/or
traded, and/or under any blue sky or state securities laws applicable to such
Shares.

 

14

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(e)                                        Transferability of Restricted Stock
Awards.  Except as otherwise permitted in the Incentive Award Agreement, a
Restricted Stock Award may not be transferred by the holder Participant, except
upon the death of the holder Participant by will or by the laws of descent and
distribution.

 

(f)                                         Voting, Dividend & Other Rights. 
Unless the applicable Incentive Award Agreement provides otherwise, holders of
Restricted Stock Awards shall be entitled to vote and shall receive dividends
during the periods of restriction.  Cash dividends declared payable on the
Shares covered by a Restricted Stock Award shall be (1) paid at the dividend
payment date in cash or in unrestricted Shares having a Fair Market Value equal
to the amount of such dividends or (2) deferred to such later date as determined
by the Board and the amount or value thereof automatically deemed reinvested in
additional Shares subject to the Restricted Stock Award, other Incentive Awards
or other investment vehicles, as the Board shall determine or permit the
Participant to elect.  Notwithstanding the foregoing, dividends declared payable
on Shares covered by a Restricted Stock Award with conditions intended to meet
the Performance-Based Exception shall be held by the Company and made subject to
forfeiture at least until achievement of the applicable performance goal related
to such Restricted Stock Award.  Common Stock or other property distributed in
connection with a stock split or stock dividend shall be subject to the same
restrictions and risk of forfeiture as the Shares covered by the Restricted
Stock Award with respect to which such Common Stock or other property has been
distributed.  As soon as is practicable after the date on which restrictions on
any Shares covered by the Restricted Stock Award lapse, the Company shall
deliver to the Participant the certificates for such Shares or shall cause the
Shares to be registered in the Participant’s name in book-entry form, in either
case with the restrictions removed, so long as the Participant complies with all
conditions for delivery of such Shares contained in the Incentive Award
Agreement or otherwise reasonably required by the Company.

 

7.5                               Terms and Conditions of Restricted Stock
Units.

 

(a)                                 Grants of Restricted Stock Units.  A
Restricted Stock Unit shall entitle the Participant to receive one Share or cash
in an amount equal to the Fair Market Value of one Share at such future time and
upon such terms as specified by the Board in the Incentive Award Agreement
evidencing such award.  Restricted Stock Units issued under the Plan may have
restrictions which lapse based upon the service of a Participant, or based upon
other criteria that the Board may determine appropriate.  The Board may require
a cash payment from the Participant in exchange for the grant of Restricted
Stock Units or may grant Restricted Stock Units without the requirement of a
cash payment; provided, however, if the recipient of a Restricted Stock Unit
receives a hardship distribution from a Code §401(k) plan of the Company, or any
Parent or Subsidiary, no payment for the Restricted Stock Unit may be made by
the recipient during the six (6) month period following the hardship
distribution, unless the Company determines that such payment would not
jeopardize the tax-qualification of the Code §401(k) plan.

 

(b)                                 Vesting of Restricted Stock Units.  The
Board shall establish the vesting schedule applicable to Restricted Stock Units
and shall specify the times, vesting and performance goal requirements, if any. 
Until the end of the period(s) of time specified in the vesting schedule and/or
the satisfaction of any performance criteria, the Restricted Stock Units subject
to such Incentive Award Agreement shall remain subject to forfeiture.  The
performance goals established by the Board shall be

 

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pursuant to the terms and the business criteria listed in Section 14 to the
extent the Board intends the Restricted Stock Unit to meet the Performance-Based
Exception.

 

(c)                                  Acceleration of Award.  The Board shall
have the power to permit, in its sole discretion, an acceleration of the
applicable restrictions or the applicable period of such restrictions with
respect to any part or all of the Restricted Stock Units awarded to a
Participant.

 

(d)                                 Necessity of Incentive Award Agreement. 
Each grant of Restricted Stock Unit(s) shall be evidenced by an Incentive Award
Agreement that shall specify the terms, conditions and restrictions regarding
the Participant’s right to receive Share(s) in the future, and shall incorporate
such other terms and conditions as the Board, acting in its sole discretion,
deems consistent with the terms of this Plan.  The Board shall have sole
discretion to modify the terms and provisions of Restricted Stock Unit(s) in
accordance with Section 12 of this Plan.

 

(e)                                  Transferability of Restricted Stock Units. 
Except as otherwise provided in a Participant’s Incentive Award Agreement, no
Restricted Stock Unit granted under the Plan may be sold, transferred, pledged,
assigned or otherwise alienated or hypothecated by the holder Participant,
except upon the death of the holder Participant by will or by the laws of
descent and distribution.

 

(f)                                   Voting, Dividend & Other Rights.  Unless
the applicable Incentive Award Agreement provides for dividend equivalents
pursuant to Section 7.5(h) below, holders of Restricted Stock Units shall not be
entitled to vote or to receive dividends until they become owners of the Shares
pursuant to their Restricted Stock Units.

 

(g)                                  Code §409A Requirements.  A Restricted
Stock Unit must meet certain restrictions contained in Code §409A if it is to
avoid taxation under Code §409A as a “nonqualified deferred compensation plan.” 
Restricted Stock Units shall be granted with terms that require the delivery of
the Shares or cash, as applicable, no later than two and one-half months after
the respective Restricted Stock Units vest, unless such Restricted Stock Units
have been drafted to comply with or otherwise be exempt from Code §409A.

 

(h)                                 Dividend Equivalents.  Unless otherwise
determined by the Board at date of grant, any Dividend Equivalents that are
granted with respect to any Restricted Stock Units shall be either (A) paid with
respect to such Restricted Stock Units at the dividend payment date in cash or
in unrestricted Shares having a Fair Market Value equal to the amount of such
dividends or (B) deferred with respect to such Restricted Stock Units and the
amount or value thereof automatically deemed reinvested in additional Restricted
Stock Units, other Incentive Awards or other investment vehicles, as the Board
shall determine or permit the Participant to elect.  For the avoidance of doubt,
payment of any Dividend Equivalents that relate to Restricted Stock Units with
conditions intended to meet the Performance-Based Exception may be deferred at
least until achievement of the applicable performance goal related to such
Restricted Stock Units.

 

7.6                               Dividend Equivalents.  The Board is authorized
to grant Dividend Equivalents to any Eligible Recipient entitling the Eligible
Recipient to receive cash, Shares, other Awards, or other property equal in
value to dividends paid with respect to a specified number of Shares, or other
periodic payments.  Dividend Equivalents may be awarded on a free-standing basis
or in connection with another Incentive Award.  The terms of an award of
Dividend Equivalents shall be set forth in a

 

16

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written Incentive Award Agreement which shall contain provisions determined by
the Board and not inconsistent with the Plan.  The Board may provide that
Dividend Equivalents shall be paid or distributed when accrued or shall be
deemed to have been reinvested in additional Stock, Awards, or other investment
vehicles, and subject to such restrictions on transferability and risks of
forfeiture, as the Board may specify.  Notwithstanding any other provision of
the Plan, unless otherwise exempt from Section 409A of the Code or otherwise
specifically determined by the Board, each Dividend Equivalent shall be
structured to avoid the imposition of any excise tax under Section 409A of the
Code.

 

7.7                               Other Stock-Based Awards.  The Board is
authorized, subject to limitations under applicable law, to grant to any
Eligible Recipient such other Incentive Awards that may be denominated or
payable in, valued in whole or in part by reference to, or otherwise based on,
or related to, Shares, as deemed by the Board to be consistent with the purposes
of the Plan, including, without limitation, convertible or exchangeable debt
securities, other rights convertible or exchangeable into Shares, purchase
rights for Shares, Incentive Awards with value and payment contingent upon
performance of the Company or any other factors designated by the Board, and
Incentive Awards valued by reference to the book value of Shares or the value of
securities of or the performance of specified affiliates or business units.  The
Board shall determine the terms and conditions of such Other Stock-Based
Awards.  The terms of any Incentive Award pursuant to this Section shall be set
forth in a written Incentive Award Agreement which shall contain provisions
determined by the Board and not inconsistent with the Plan.  Shares delivered
pursuant to an Incentive Award in the nature of a purchase right granted under
this Section shall be purchased for such consideration (including without
limitation loans from the Company or an affiliate), paid for at such times, by
such methods, and in such forms, including, without limitation, cash, Shares,
other Incentive Awards or other property, as the Board shall determine.  Cash
awards, as an element of or supplement to any other Award under the Plan, may
also be granted pursuant to this Section.  Notwithstanding any other provision
of the Plan, unless otherwise exempt from Section 409A of the Code or otherwise
specifically determined by the Board, each such Award shall be structured to
avoid the imposition of any excise tax under Section 409A of the Code.

 

Section 8.

SECURITIES REGULATION

 

Each Incentive Award Agreement may provide that, upon the receipt of Shares as a
result of the exercise of an Incentive Award or otherwise, the Participant
shall, if so requested by the Company, hold such Shares for investment and not
with a view of resale or distribution to the public and, if so requested by the
Company, shall deliver to the Company a written statement satisfactory to the
Company to that effect.  Each Incentive Award Agreement may also provide that,
if so requested by the Company, the Participant shall make a written
representation to the Company that he or she will not sell or offer to sell any
of such Shares unless a registration statement shall be in effect with respect
to such Shares under the Securities Act of 1933, as amended (“1933 Act”), and
any applicable state securities law or, unless he or she shall have furnished to
the Company an opinion, in form and substance satisfactory to the Company, of
legal counsel acceptable to the Company, that such registration is not
required.  Certificates representing the Shares transferred upon the exercise of
an Incentive Award granted under this Plan may at the discretion of the Company
bear a legend to the effect that such Shares have not been registered under the
1933 Act or any applicable state securities law and that such Shares may not be
sold or offered for sale in the absence of an effective registration

 

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statement as to such Shares under the 1933 Act and any applicable state
securities law or an opinion, in form and substance satisfactory to the Company,
of legal counsel acceptable to the Company, that such registration is not
required.

 

Section 9.

LIFE OF PLAN

 

No Incentive Award shall be granted under this Plan on or after the earlier of:

 

(a)                                 the tenth (10th) anniversary of the
effective date of this Plan (as determined under Section 4 of this Plan), in
which event this Plan otherwise thereafter shall continue in effect until all
outstanding Incentive Awards have been exercised in full or no longer are
exercisable, or

 

(b)                                 the date on which all of the Shares reserved
under Section 3 of this Plan have (as a result of the exercise of Incentive
Awards granted under this Plan or lapse of all restrictions under a Restricted
Stock Award or Restricted Stock Unit) been issued or no longer are available for
use under this Plan, in which event this Plan also shall terminate on such date.

 

This Plan shall continue in effect until all outstanding Incentive Awards have
been exercised in full or are no longer exercisable and all Restricted Stock
Awards or Restricted Stock Units have vested or been forfeited.  Notwithstanding
the continuation of the Plan, no Incentive Award (other than an Option or Stock
Appreciation Right) that is designed to qualify for the Performance-Based
Exception shall be granted on or after the fifth anniversary of the effective
date of the Plan unless the material terms of the applicable performance goals
are approved by the stockholders of the Company no later than the first
stockholder meeting that occurs in the fifth year following the effective date
of the Plan.

 

Section 10.

ADJUSTMENT AND CORPORATE TRANSACTION

 

Notwithstanding anything in Section 12 to the contrary, the number of Shares
reserved under Section 3 of this Plan, the limit on the number of Shares that
may be granted during a calendar year to any individual under Section 3 of this
Plan, the number of Shares subject to Incentive Awards granted under this Plan,
and the Exercise Price of any Options and the SAR Exercise Price of any Stock
Appreciation Rights, shall be adjusted by the Board in an equitable manner to
reflect any change in the capitalization of the Company, including, but not
limited to, such changes as stock dividends or stock splits.  Furthermore, the
Board shall adjust (in a manner that satisfies the requirements of Code §424(a))
the number of Shares reserved under Section 3, and the number of Shares subject
to Incentive Awards granted under this Plan, and the Exercise Price of any
Options and the SAR Exercise Price of any Stock Appreciation Rights in the event
of any corporate transaction described in Code §424(a) that provides for the
substitution or assumption of such Incentive Awards.  If any adjustment under
this Section creates a fractional Share or a right to acquire a fractional
Share, such fractional Share shall be disregarded, and the number of Shares
reserved under this Plan and the number subject to any Incentive Awards granted
under this Plan shall be the next lower number of Shares, rounding all fractions
downward.  An adjustment made under this Section by the Board shall be
conclusive and binding on all affected persons and, further, shall not
constitute an increase in the number of Shares reserved under Section 3.

 

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In the event of a corporate transaction described in Code §424(a) other than
such corporate transaction that also qualifies as a Change of Control, all
Incentive Awards shall be either assumed, continued or substituted for in
connection with the corporate transaction.  Any assumption or substitution shall
not result in any decrease in the benefits or economic value provided under each
Incentive Award.

 

Section 11.

CHANGE OF CONTROL OF THE COMPANY

 

11.1                        General Rule for Options.  Except as otherwise
provided in an Incentive Award Agreement, if a Change of Control occurs, and if
the agreements effectuating the Change of Control do not provide for the
assumption or substitution of all Options granted under this Plan, with respect
to any Option granted under this Plan that is not so assumed or substituted (a
“Non-Assumed Option”), the Committee, in its sole and absolute discretion, may,
with respect to any or all of such Non-Assumed Options, take any or all of the
following actions to be effective as of the date of the Change of Control (or as
of any other date fixed by the Committee occurring within the thirty (30) day
period ending on the date of the Change of Control, but only if such action
remains contingent upon the effectuation of the Change of Control) (such date
referred to as the “Action Effective Date”):

 

(a)                                 Accelerate the vesting and/or exercisability
of such Non-Assumed Option; and/or

 

(b)                                 Unilaterally cancel any such Non-Assumed
Option which has not vested and/or which has not become exercisable as of the
Action Effective Date; and/or

 

(c)                                  Unilaterally cancel such Non-Assumed Option
in exchange for:

 

(i)                                           whole and/or fractional Shares (or
for whole Shares and cash in lieu of any fractional Share) that, in the
aggregate, are equal in value to the excess of the Fair Market Value of the
Shares that could be purchased subject to such Non-Assumed Option determined as
of the Action Effective Date (taking into account vesting and/or exercisability)
over the aggregate Exercise Price for such Shares; or

 

(ii)                                  cash or other property equal in value to
the excess of the Fair Market Value of the Shares that could be purchased
subject to such Non-Assumed Option determined as of the Action Effective Date
(taking into account vesting and/or exercisability) over the aggregate Exercise
Price for such Shares; and/or

 

(d)                                 Unilaterally cancel such Non-Assumed Option
after providing the holder of such Option with (1) an opportunity to exercise
such Non-Assumed Option to the extent vested and/or exercisable within a
specified period prior to the date of the Change of Control, and (2) notice of
such opportunity to exercise prior to the commencement of such specified period;
and/or

 

(e)                                  Unilaterally cancel such Non-Assumed Option
and notify the holder of such Option of such action, but only if the Fair Market
Value of the Shares that could be purchased subject to such Non-Assumed Option
determined as of the Action Effective Date (taking into account vesting and/or
exercisability) does not exceed the aggregate Exercise Price for such Shares.

 

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However, notwithstanding the foregoing, to the extent that the recipient of a
Non-Assumed Option is an Insider and subject to Section 16 of the Exchange Act
at the time of the Change of Control, payment of cash in lieu of whole or
fractional Shares or shares of a successor may only be made to the extent that
such payment (1) has met the requirements of an exemption under Rule 16b-3
promulgated under the Exchange Act, or (2) is a subsequent transaction the terms
of which were provided for in a transaction initially meeting the requirements
of an exemption under Rule 16b-3 promulgated under the Exchange Act.  Unless an
Incentive Award Agreement provides otherwise, the payment of cash in lieu of
whole or fractional Shares or in lieu of whole or fractional shares of a
successor shall be considered a subsequent transaction approved by the original
grant of an Option.

 

11.2                        General Rule for SARs.  Except as otherwise provided
in an Incentive Award Agreement, if a Change of Control occurs, and if the
agreements effectuating the Change of Control do not provide for the assumption
or substitution of all Stock Appreciation Rights granted under this Plan, with
respect to any Stock Appreciation Right granted under this Plan that is not so
assumed or substituted (a “Non-Assumed SAR”), the Committee, in its sole and
absolute discretion, may, with respect to any or all of such Non-Assumed SARs,
take either or both of the following actions to be effective as of the date of
the Change of Control (or as of any other date fixed by the Committee occurring
within the thirty (30) day period ending on the date of the Change of Control,
but only if such action remains contingent upon the effectuation of the Change
of Control) (such date referred to as the “Action Effective Date”):

 

(a)                                 Accelerate the vesting and/or exercisability
of such Non-Assumed SAR; and/or

 

(b)                                 Unilaterally cancel any such Non-Assumed SAR
which has not vested or which has not become exercisable as of the Action
Effective Date; and/or

 

(c)                                  Unilaterally cancel such Non-Assumed SAR in
exchange for:

 

(i)                                     whole and/or fractional Shares (or for
whole Shares and cash in lieu of any fractional Share) that, in the aggregate,
are equal in value to the excess of the Fair Market Value of the Shares subject
to such Non-Assumed SAR determined as of the Action Effective Date (taking into
account vesting and/or exercisability) over the SAR Exercise Price for such
Non-Assumed SAR; or

 

(ii)                                  cash or other property equal in value to
the excess of the Fair Market Value of the Shares subject to such Non-Assumed
SAR determined as of the Action Effective Date (taking into account vesting
and/or exercisability) over the SAR Exercise Price for such Non-Assumed SAR;
and/or

 

(d)                                 Unilaterally cancel such Non-Assumed SAR
after providing the holder of such SAR with (1) an opportunity to exercise such
Non-Assumed SAR to the extent vested and/or exercisable within a specified
period prior to the date of the Change of Control, and (2) notice of such
opportunity to exercise prior to the commencement of such specified period;
and/or

 

(e)                                  Unilaterally cancel such Non-Assumed SAR
and notify the holder of such SAR of such action, but only if the Fair Market
Value of the Shares that could be purchased subject to such Non-Assumed SAR
determined as of the Action Effective Date (taking into account vesting and/or
exercisability) does not exceed the SAR Exercise Price for such Non-Assumed SAR.

 

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However, notwithstanding the foregoing, to the extent that the recipient of a
Non-Assumed SAR is an Insider and subject to Section 16 of the Exchange Act at
the time of the Change of Control, payment of cash in lieu of whole or
fractional Shares or shares of a successor may only be made to the extent that
such payment (1) has met the requirements of an exemption under Rule 16b-3
promulgated under the Exchange Act, or (2) is a subsequent transaction the terms
of which were provided for in a transaction initially meeting the requirements
of an exemption under Rule 16b-3 promulgated under the Exchange Act.  Unless an
Incentive Award Agreement provides otherwise, the payment of cash in lieu of
whole or fractional Shares or in lieu of whole or fractional shares of a
successor shall be considered a subsequent transaction approved by the original
grant of a SAR.

 

11.3                        General Rule for Restricted Stock Units.  Except as
otherwise provided in an Incentive Award Agreement, if a Change of Control
occurs, and if the agreements effectuating the Change of Control do not provide
for the assumption or substitution of all Restricted Stock Units granted under
this Plan, with respect to any Restricted Stock Unit granted under this Plan
that is not so assumed or substituted (a “Non-Assumed RSU”), the Committee, in
its sole and absolute discretion, may, with respect to any or all of such
Non-Assumed RSUs, take either or both of the following actions to be effective
as of the date of the Change of Control (or as of any other date fixed by the
Committee occurring within the thirty (30) day period ending on the date of the
Change of Control, but only if such action remains contingent upon the
effectuation of the Change of Control) (such date referred to as the “Action
Effective Date”):

 

(a)                                 Accelerate the vesting of such Non-Assumed
RSU; and/or

 

(b)                                 Unilaterally cancel any such Non-Assumed RSU
which has not vested as of the Action Effective Date; and/or

 

(c)                                  Unilaterally cancel such Non-Assumed RSU in
exchange for:

 

(i)                                     whole and/or fractional Shares (or for
whole Shares and cash in lieu of any fractional Share) that are equal to the
number of Shares subject to such Non-Assumed RSU determined as of the Action
Effective Date (taking into account vesting); or

 

(ii)                                  cash or other property equal in value to
the Fair Market Value of the Shares subject to such Non-Assumed RSU determined
as of the Action Effective Date (taking into account vesting); and/or

 

(d)                                 Unilaterally cancel such Non-Assumed RSU and
notify the holder of such RSU of such action, but only if the Fair Market Value
of the Shares that were subject to such Non-Assumed RSU determined as of the
Action Effective Date (taking into account vesting) is zero.

 

However, notwithstanding the foregoing, to the extent that the recipient of a
Non-Assumed RSU is an Insider and subject to Section 16 of the Exchange Act at
the time of the Change of Control, payment of cash in lieu of whole or
fractional Shares or shares of a successor may only be made to the extent that
such payment (1) has met the requirements of an exemption under Rule 16b-3
promulgated under the Exchange Act, or (2) is a subsequent transaction the terms
of which were provided for in a transaction initially meeting the requirements
of an exemption under Rule 16b-3 promulgated under the Exchange Act.  Unless an
Incentive Award Agreement provides otherwise, the payment of cash in lieu of
whole

 

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or fractional Shares or in lieu of whole or fractional shares of a successor
shall be considered a subsequent transaction approved by the original grant of
an RSU.

 

11.4                        General Rule for Restricted Stock Awards.  Except as
otherwise provided in an Incentive Award Agreement, if a Change of Control
occurs, and if the agreements effectuating the Change of Control do not provide
for the assignment of the forfeiture or repurchase rights for all Restricted
Stock Awards granted under this Plan, with respect to any Restricted Stock Award
granted under this Plan where the forfeiture or repurchase rights are not
assigned (a “Non-Assumed Restricted Stock Award”), the Committee, in its sole
and absolute discretion, may, with respect to any or all of such Non-Assumed
Restricted Stock Award, take either or both of the following actions to be
effective as of the date of the Change of Control (or as of any other date fixed
by the Committee occurring within the thirty (30) day period ending on the date
of the Change of Control, but only if such action remains contingent upon the
effectuation of the Change of Control) (such date referred to as the “Action
Effective Date”):

 

(a)                                 Accelerate the vesting of such Non-Assumed
Restricted Stock Award (i.e., cancel any forfeiture or repurchase right); and/or

 

(b)                                 Unilaterally exercise the forfeiture or
repurchase right for any such Non-Assumed Restricted Stock Award which has not
vested as of the Action Effective Date; and/or

 

(c)                                  Unilaterally repurchase such Non-Assumed
Restricted Stock Award in exchange for cash or other property equal in value to
the Fair Market Value of the Shares subject to such Non-Assumed Restricted Stock
Award determined as of the Action Effective Date (taking into account vesting);
and/or

 

(d)                                 Unilaterally cancel such Non-Assumed
Restricted Stock Award and notify the holder of such Restricted Stock Award of
such action, but only if the Fair Market Value of the Shares that were subject
to such Non-Assumed Restricted Stock Award determined as of the Action Effective
Date (taking into account vesting) is zero.

 

However, notwithstanding the foregoing, to the extent that the recipient of a
Non-Assumed Restricted Stock Award is an Insider and subject to Section 16 of
the Exchange Act at the time of the Change of Control, payment of cash in lieu
of whole or fractional Shares or shares of a successor may only be made to the
extent that such payment (1) has met the requirements of an exemption under
Rule 16b-3 promulgated under the Exchange Act, or (2) is a subsequent
transaction the terms of which were provided for in a transaction initially
meeting the requirements of an exemption under Rule 16b-3 promulgated under the
Exchange Act.  Unless an Incentive Award Agreement provides otherwise, the
payment of cash in lieu of whole or fractional Shares or in lieu of whole or
fractional shares of a successor shall be considered a subsequent transaction
approved by the original grant of a Restricted Stock Award.

 

11.5                        General Rule for Other Incentive Award Agreements. 
If a Change of Control occurs, then, except to the extent otherwise provided in
the Incentive Award Agreement pertaining to a particular Incentive Award or as
otherwise provided in this Plan, each Incentive Award shall be governed by
applicable law and the documents effectuating the Change of Control.

 

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Section 12.

AMENDMENT OR TERMINATION

 

This Plan may be amended by the Board from time to time to the extent that the
Board deems necessary or appropriate; provided, however, no such amendment shall
be made absent the approval of the stockholders of the Company (a) to increase
the number of Shares reserved under Section 3, except as set forth in
Section 10, (b) to extend the maximum life of the Plan under Section 9 or the
maximum exercise period under Section 7, (c) to decrease the minimum Exercise
Price under Section 7, (d) to change the designation of Eligible Recipients
eligible for Incentive Awards under Section 6, or (e) to eliminate or modify the
prohibition set forth in Section 7.2(j) and Section 7.3(f) on repricing of
Options and Stock Appreciation Rights.  Stockholder approval of other material
amendments (such as an expansion of the types of awards available under the
Plan, an extension of the term of the Plan, a change to the method of
determining the Exercise Price of Options issued under the Plan, or a change to
the provisions of Section 7.2(j)) may also be required pursuant to
rules promulgated by an established stock exchange or a national market system
if the Company is, or become, listed or traded on any such established stock
exchange or national market system, or for the Plan to continue to be able to
issue Incentive Awards which meet the Performance-Based Exception.  The Board
also may suspend the granting of Incentive Awards under this Plan at any time
and may terminate this Plan at any time.  The Company shall have the right to
modify, amend or cancel any Incentive Award after it has been granted if (I) the
modification, amendment or cancellation does not diminish the rights or benefits
of the Incentive Award recipient under the Incentive Award (provided, however,
that a modification, amendment or cancellation that results solely in a change
in the tax consequences with respect to an Incentive Award shall not be deemed
as a diminishment of rights or benefits of such Incentive Award), (II) the
Participant consents in writing to such modification, amendment or cancellation,
(III) there is a dissolution or liquidation of the Company, (IV) this Plan
and/or the Incentive Award Agreement expressly provides for such modification,
amendment or cancellation, or (V) the Company would otherwise have the right to
make such modification, amendment or cancellation by applicable law.

 

Section 13.

MISCELLANEOUS

 

13.1                        Stockholder Rights.  No Participant shall have any
rights as a stockholder of the Company as a result of the grant of an Incentive
Award to him or to her under this Plan or his or her exercise of such Incentive
Award pending the actual delivery of Shares subject to such Incentive Award to
such Participant.

 

13.2                        No Guarantee of Continued Relationship.  The grant
of an Incentive Award to a Participant under this Plan shall not constitute a
contract of employment and shall not confer on a Participant any rights upon his
or her termination of employment or relationship with the Company in addition to
those rights, if any, expressly set forth in the Incentive Award Agreement that
evidences his or her Incentive Award.

 

13.3                        Withholding.  The Company shall have the power and
the right to deduct or withhold, or require a Participant to remit to the
Company as a condition precedent for the fulfillment of any Incentive Award, an
amount sufficient to satisfy Federal, state and local taxes, domestic or
foreign, required by law or regulation to be withheld with respect to any
taxable event arising as a result of this

 

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Plan and/or any action taken by a Participant with respect to an Incentive
Award.  Whenever Shares are to be issued to a Participant upon exercise of an
Option or a Stock Appreciation Right, or satisfaction of conditions under a
Restricted Stock Unit, or grant of or substantial vesting of a Restricted Stock
Award, the Company shall have the right to require the Participant to remit to
the Company, as a condition of exercise of the Option or Stock Appreciation
Right, or as a condition to the fulfillment of the Restricted Stock Unit, or as
a condition to the grant or substantial vesting of the Restricted Stock Award,
an amount in cash (or, unless the Incentive Award Agreement provides otherwise,
in Shares) sufficient to satisfy federal, state and local withholding tax
requirements at the time of such exercise, satisfaction of conditions, or grant
or substantial vesting.  However, notwithstanding the foregoing, to the extent
that a Participant is an Insider, satisfaction of withholding requirements by
having the Company withhold Shares may only be made to the extent that such
withholding of Shares (1) has met the requirements of an exemption under
Rule 16b-3 promulgated under the Exchange Act, or (2) is a subsequent
transaction the terms of which were provided for in a transaction initially
meeting the requirements of an exemption under Rule 16b-3 promulgated under the
Exchange Act.  Unless the Incentive Award Agreement provides otherwise, the
withholding of shares to satisfy federal, state and local withholding tax
requirements shall be a subsequent transaction approved by the original grant of
an Incentive Award.  Notwithstanding the foregoing, in no event shall payment of
withholding taxes be made by a retention of Shares by the Company unless the
Company retains only Shares with a Fair Market Value equal to the minimum amount
of taxes required to be withheld.

 

13.4                        Notification of Disqualifying Dispositions of ISO
Options.  If a Participant sells or otherwise disposes of any of the Shares
acquired pursuant to an Option that is an ISO on or before the later of (1) the
date two (2) years after the date of grant of such Option, or (2) the date one
(1) year after the exercise of such Option, then the Participant shall
immediately notify the Company in writing of such sale or disposition and shall
cooperate with the Company in providing sufficient information to the Company
for the Company to properly report such sale or disposition to the Internal
Revenue Service.  The Participant acknowledges and agrees that he may be subject
to federal, state and/or local tax withholding by the Company on the
compensation income recognized by Participant from any such early disposition,
and agrees that he shall include the compensation from such early disposition in
his gross income for federal tax purposes.  Participant also acknowledges that
the Company may condition the exercise of any Option that is an ISO on the
Participant’s express written agreement with these provisions of this Plan.

 

13.5                        Transfer.  The transfer of an Employee between or
among the Company, a Subsidiary or a Parent shall not be treated as a
termination of his or her employment under this Plan.  However, notwithstanding
the foregoing, a termination of employment may nonetheless occur for purposes of
determining whether an Option will satisfy the requirements of the Code to be an
ISO.

 

13.6                        Construction.  This Plan shall be construed under
the laws of the State of Maryland.

 

13.7                        Recovery of Amounts Paid.  Except as otherwise
provided by the Board, Incentive Awards granted under the Plan shall be subject
to any and all policies, guidelines, codes of conduct, or other agreement or
arrangement adopted by the Board or Committee with respect to the recoupment,
recovery or clawback of compensation (collectively, the “Recoupment Policy”)
and/or to any provisions set forth in the applicable Incentive Award Agreement
under which Company may recover from current and former Participants, any
amounts paid or Shares issued under an Incentive Award and

 

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any proceeds therefrom under such circumstances as the Board or Committee
determines appropriate.  The Board or Committee may apply the Recoupment Policy
to Incentive Awards granted before the policy is adopted to the extent required
by applicable law or rule of any securities exchange or market on which Shares
are listed or admitted for trading, as determined by the Board or Committee in
its sole discretion.

 

Section 14.

PERFORMANCE CRITERIA

 

14.1                        Performance Goal Business Criteria.  Unless and
until the Board proposes for stockholder vote and stockholders approve a change
in the general performance criteria set forth in this Section, with respect to
which the attainment of goals may determine the degree of payout and/or vesting
with respect to Incentive Awards to Employees and Key Persons pursuant to this
Plan which are designed to qualify for the Performance-Based Exception, the
performance criteria to be used by a Committee composed of two (2) or more
Outside Directors for purposes of such grants shall be chosen from among the
following:

 

(a)                                 Earnings per share;

 

(b)                                 Net income (before or after taxes);

 

(c)                                  Return measures (including, but not limited
to, return on assets, equity or sales);

 

(d)                                 Cash flow return on investments which equals
net cash flows divided by owners’ equity;

 

(e)                                  Earnings before or after taxes,
depreciation and/or amortization;

 

(f)                                   Gross revenues;

 

(g)                                  Net or gross operating income (before or
after taxes) or growth thereof, including same store net operating income;

 

(h)                                 Total stockholder returns;

 

(i)                                     Corporate performance indicators
(indices based on the level of certain services provided to customers);

 

(j)                                    Cash generation, profit and/or revenue
targets;

 

(k)                                 Growth measures, including revenue growth
and growth of adjusted or modified funds from operations;

 

(l)                                     Share price (including, but not limited
to, growth measures and total stockholder return);

 

(m)                             Pre-tax profits;

 

(n)                                 Net asset value;

 

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(o)                                 Total property return;

 

(p)                                 Capital expenditure;

 

(q)                                 Expense levels or ratios and reduction of
expenses and costs;

 

(r)                                    Customer satisfaction; and/or

 

(s)                                   Strategic metrics, including capital
allocation and investment strategy, execution of transition and development
plans, branding or rebranding, management effectiveness, staffing development,
team building and management, office relocation, management of legal and
regulatory matters, management of co-investment relationships and joint
ventures.

 

Performance goals may be applied on a per share or absolute basis and relative
to one or more performance criteria, or any combination thereof, and may be
measured pursuant to U.S. generally accepted accounting principles (“GAAP”),
non-GAAP or other objective standards in a manner consistent with the Company’s,
Parent’s, or Subsidiary’s established accounting policies, and may be compared
with a peer group or other benchmark, all as the Committee shall determine at
the time the performance goal for a performance period is established.  The
Committee may, in its sole discretion, provide that one or more objectively
determinable adjustments shall be made to the manner in which one or more of the
performance goals is to be calculated or measured to take into account, or
ignore, any change in accounting standards or any extraordinary, unusual or
nonrecurring item, as determined by the Committee, occurring after the
establishment of the performance goals.  Each such adjustment, if any, shall be
made solely for the purpose of providing a consistent basis from period to
period for the calculation of performance goals in order to prevent the dilution
or enlargement of the Participant’s rights with respect to an Incentive Award. 
The performance goals established by the Committee for an Incentive Award
designed to qualify for the Performance-Based Exception shall be objective such
that a third party having knowledge of the relevant facts could determine
whether or not any performance goal has been achieved, or the extent of such
achievement, and the amount, if any, which has been earned by the Participant
based on such achievement.

 

14.2                        Discretion in Formulation of Performance Goals.  The
Board shall have the discretion to adjust the determinations of the degree of
attainment of the pre-established performance goals; provided, however, that
Incentive Awards that are to qualify for the Performance-Based Exception may not
be adjusted upward (although the Committee shall retain the discretion to adjust
such Incentive Awards downward).

 

14.3                        Performance Periods.  The Board shall have the
discretion to determine the period during which any performance goal must be
attained with respect to an Incentive Award.  Such period may be of any length,
and must be established prior to the start of such period or within the first
ninety (90) days of such period (provided that the performance criteria is not
in any event set after 25% or more of such period has elapsed).

 

14.4                        Modifications to Performance Goal Business
Criteria.  In the event that the applicable tax and/or securities laws change to
permit Board discretion to alter the governing performance measures noted above
without obtaining stockholder approval of such changes, the Board shall have
sole discretion to make such changes without obtaining stockholder approval.  In
addition, in the event that the Board determines that it is advisable to grant
Incentive Awards that shall not qualify for the

 

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Performance-Based Exception, the Board may make such grants without satisfying
the requirements of Code §162(m); otherwise, a Committee composed exclusively of
two (2) of more Outside Directors must make such grants.

 

14.5                        Certification and Payment.  Following completion of
the applicable performance period, and prior to any, as applicable, grant,
vesting, lapse of restrictions on or payment of an Incentive Award designed to
qualify for the Performance-Based Exception, a Committee composed exclusively of
two (2) of more Outside Directors shall determine in accordance with the terms
of the Incentive Award Agreement and shall certify in writing whether the
applicable performance goal(s) were achieved, or the level of such achievement,
and the amount, if any, earned by the Participant based upon such performance. 
For this purpose, approved minutes of the meeting of the Committee at which
certification is made shall be sufficient to satisfy the requirement of a
written certification.  No Incentive Awards designed to qualify for the
Performance-Based Exception will be granted, become vested, have restrictions
lapse or be paid, as applicable, for a performance period until such
certification is made by the Committee.  The amount of an Incentive Awards
designed to qualify for the Performance-Based Exception actually granted,
vested, or paid to a Participant, or on which restrictions shall lapse, may be
less than the amount determined by the applicable performance goal formula, at
the discretion of the Committee to take into account additional factors that the
Committee may deem relevant to the assessment of individual or corporate
performance for the performance period or otherwise, subject to the terms and
conditions of the applicable Incentive Award Agreement.

 

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