Exhibit 10.1

CHOICE HOTELS INTERNATIONAL, INC.

2006 LONG-TERM INCENTIVE PLAN

ARTICLE I

PURPOSE AND EFFECTIVE DATE

1.01. Purpose.    The purpose of the Choice Hotels International, Inc. 2006
Long-Term Incentive Plan is to provide to eligible employees, officers and
directors who are primarily responsible for the continued growth and success of
Choice Hotels International, Inc. an opportunity to increase their (or acquire
a) proprietary interest in the Company. The Plan also enables the Company to
continue to attract, retain and reward the best available talent for the
Company’s continued profitable performance.

1.02. Effective Date and Duration of Plan.    Unless terminated earlier by the
Board, this Plan is effective for a 10-year period beginning on the date on
which the Plan is adopted by the Board; provided that no Shares may be awarded
prior to stockholder approval of the Plan and any other Awards granted prior
thereto are expressly conditioned upon such approval. Any Awards that are made
under the Plan prior to the termination date shall continue in effect in
accordance with the terms of the Agreement after that date.

ARTICLE II

DEFINITIONS

2.01. Affiliate means any corporation, partnership, limited liability company,
limited liability partnership, business trust, or other entity controlling,
controlled by or under common control with the Company. Notwithstanding the
preceding sentence, except as otherwise provided by the Committee, this term
shall not include any entity of which at least fifty percent (50%) of the
combined voting power of the entity’s outstanding securities is owned, directly
or indirectly, by the Bainum Family Group.

2.02. Agreement means a written agreement (including any amendment or supplement
thereto) between the Company and a Participant specifying the terms and
conditions of a Stock Award, an award of Phantom Shares or an Option granted to
such Participant.

2.03. Award means any Stock Award, award of Phantom Shares or Option granted
under the Plan.

2.04. Bainum Family Group means (a) Stewart Bainum, his wife, their lineal
descendants (and their spouses so long as they remain spouses) and the estate of
any of the foregoing persons, and (b) any partnership, trust, corporation or
other entity to the extent any shares (or their equivalent) of such entity are
considered to be beneficially owned by any person or estate referred to in
subsection (a) above.

2.05. Board means the Board of Directors of the Company.

2.06. Cause means (i) dishonesty; (ii) gross negligence or willful misconduct;
(iii) fraudulent or unethical conduct; (iv) unreasonable neglect or refusal to
perform the Participant’s duties; (v) Participant’s unauthorized use for his or
her own benefit or transfer to a third-party of any confidential or proprietary
information of the Company or any Affiliate, (vi) a breach of the terms of
Participant’s employment or other agreement with the Company (or any Affiliate);
(vii) a violation of the established policies of the Company (or any Affiliate);
(viii) conduct constituting a felony or other crime involving moral turpitude;
or (ix) willful or malicious conduct which causes injury to the Company’s (or an
Affiliate’s) business or reputation or otherwise adversely affects the interests
of the Company or an Affiliate.

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2.07. Change in Control means the earliest date on which:

(a) There shall be a change in the ownership or control of the Company effected
through either the acquisition, directly or indirectly, by any person or group
of persons acting in concert (other than (i) the Company or any Affiliate,
(ii) any trustee or other fiduciary holding securities under an employee benefit
plan of the Company or any Affiliate, or (iii) the Bainum Family Group) of
beneficial ownership (within the meaning of Rule 13d-3 of the Securities
Exchange Act of 1934) of securities possessing more than fifty (50%) percent of
the combined voting power of the Company’s outstanding securities pursuant to a
tender or exchange offer made directly to the Company’s stockholders or
otherwise, who do not own fifty percent (50%) on the date this Plan is adopted;

(b) There is a consolidation or merger of the Company with another entity (other
than an Affiliate) in which the Company’s shareholders (determined as of
immediately prior to the consummation of the consolidation or merger) own
(directly or indirectly) less than fifty percent (50%) of the shares of the
surviving entity;

(c) The complete liquidation or dissolution of the Company;

(d) The sale or other disposition of all or substantially all of the assets of
the Company to another person or entity (other than an Affiliate);

(e) The date as of which less than fifty percent (50%) of the Company’s Board is
no longer made up of individuals who were, as of the date this Plan was approved
by the stockholders, members of that Board (the “Incumbent Board”), provided,
however, that if the election, or nomination for election by the Company’s
stockholders, of any new director was approved by a vote of at least fifty
percent (50%) of the Incumbent Board, such new Director shall, for purposes of
the Plan, be considered as a member of the Incumbent Board (excluding any such
individual whose initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or consents by or on
behalf of a person other than the Board); or

Notwithstanding the foregoing, in the event that the Bainum Family Group cease
(in the aggregate) to own, directly or indirectly, at least thirty-three percent
(33%) of the combined voting power of the Company’s outstanding securities,
“fifty percent (50%)” shall be replaced by “thirty-three percent (33%)” wherever
it appears in subsection (a) above.

2.08. Code means the Internal Revenue Code of 1986, as amended from time to
time.

2.09. Committee means the Committee or Committees referred to in Section 4.01 of
the Plan; provided, that the Board may, in its sole discretion consistent with
applicable law, act in the place of the Committee in making Awards or taking any
other actions hereunder. If at any time no Committee shall be in office or
exist, the functions of the Committee specified in the Plan shall be exercised
by the Board.

2.10. Company means Choice Hotels International, Inc., a Delaware corporation,
or any successor corporation.

2.11. Covered Employee means an employee who is a “covered employee” within the
meaning of Section 162(m) of the Code.

2.12. Director means a member of the Board or the board of directors (or other
governing board) of any Affiliate.

2.13. Disability means total and permanent disability as defined in
Section 22(e)(3) of the Code.

 

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2.14. Employee means all persons employed as an employee by the Company or any
Affiliate, whether full-time or part-time.

2.15. Exchange Act means the Securities Exchange Act of 1934, as amended, and in
effect.

2.16. Fair Market Value means, on any given date, the value of a Share as
determined by the Committee in good faith. Unless otherwise determined by the
Committee, the Fair Market Value of a Share as of any date is the amount equal
to the mean between the high and low prices reported on the New York Stock
Exchange (or on any other national securities exchange, including the Nasdaq
National Market, on which the Stock is then listed) for that date or, if no
Shares were traded on that date, the mean between the high and low prices as
reported for the first day prior thereto in which Shares were traded.
Notwithstanding the foregoing, the Committee shall, to extent that Section 409A
of the Code applies, use a valuation methodology that meets the requirements of
Section 409A.

2.17. Grant Date means the date on which an Award is approved by the Committee
or such later date as may be directed by the Committee.

2.18. Incentive Stock Option means any Option granted under this Plan that
qualifies as an “incentive stock option” under Section 422 of the Code.

2.19. Nonqualified Stock Option means any Option granted under this Plan that
does not qualify as an “incentive stock option” under Section 422 of the Code.

2.20. Option means an option that entitles the holder to purchase from the
Company a stated number of Shares at the Option Price set forth in an Agreement.

2.21. Option Price means the per-Share price at which a Share may be purchased
under an Option or, in the case of a SAR, the per-Share price specified in the
SAR Agreement.

2.22. Participant means an Employee or Director who is selected by the Committee
in accordance with Article V to receive a Stock Award, an award of Phantom
Shares, an Option or a combination thereof.

2.23. Performance Goals means the written goals established by the Committee for
a Performance Period as provided in Section 9.04.

2.24. Performance Period means a period of time selected by the Committee over
which the attainment of one or more Performance Goals will be measured.

2.25. Phantom Shares means an award of either (a) Stock Units or (b) Stock
Appreciation Rights under Article VIII.

2.26. Plan means the Choice Hotels International, Inc. 2006 Long-Term Incentive
Plan.

2.27. Qualified Performance-Based Awards means those Stock Awards and Stock Unit
Awards intended to qualify as “performance-based compensation” under
Section 162(m) of the Code as provided in Article IX of the Plan.

2.28. Securities Act means the Securities Act of 1933, as amended and in effect.

2.29. Share means one share of Stock, as adjusted in accordance with
Section 11.01.

2.30. Stock means the common stock of the Company.

 

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2.31. Stock Appreciation Right or SAR means a right to receive payment of the
amount by which the Fair Market Value of a Share on the last trading day
preceding the date of exercise exceeds the Option Price.

2.32. Stock Award means Stock awarded to a Participant under Article VII.

2.33. Stock Unit means a bookkeeping entry representing the equivalent of one
Share.

2.34. Stock Unit Award means Stock Units awarded to a Participant under Article
VI.

2.35. Ten Percent Shareholder means an individual who owns more than ten percent
of the total combined voting power of all classes of stock of the Company or an
Affiliate as provided in Section 422(b)(6) of the Code.

ARTICLE III

STOCK SUBJECT TO PLAN

3.01. Stock Subject to Plan.

(a) Subject to the provisions of Section 11.01, the maximum number of Shares for
which Options and Stock Awards may be granted (or which may be issued in
settlement of Phantom Shares) pursuant to this Plan is three million two hundred
thousand 3,200,000) Shares.

(b) Subject to the provisions of Section 11.01, the maximum number of Shares
that may be issued as Stock Awards or Stock Unit Awards is one million two
hundred thousand (1,200,000) Shares.

(c) Subject to the provisions of Section 11.01, the maximum number of Shares for
which Incentive Stock Options may be granted pursuant to this Plan is three
million two hundred thousand 3,200,000) Shares.

(d) The Shares that may be issued or delivered under the Plan may, as determined
by the Committee from time to time, be authorized but unissued Shares,
reacquired Shares or both.

3.02. Reallocation and Share Usage.    If (a) an Option or SAR is terminated, in
whole or in part, for any reason other than its exercise or (b) any other Award
is forfeited, in whole or in part, the number of Shares allocated to the
terminated or forfeited Award shall again be available for Awards under this
Plan. Notwithstanding the anything herein to the contrary, Shares subject to an
Award under the Plan may not again be made available for issuance under Awards
if such shares are: (i) shares that were subject to a Stock-settled Stock
Appreciation Right or Option and that were not issued upon the net settlement or
net exercise of such Stock Appreciation Right or Option, or (ii) shares
delivered to or retained by the Company to pay the Option Price or withholding
taxes related to an Award.

ARTICLE IV

ADMINISTRATION

4.01. Administration.

(a) The Plan shall be administered by the Compensation Committee of the Board
(or other committee or subcommittee designated by the Board from time to time in
its sole discretion). Members of the Committee shall serve for such period of
time as the Board may determine and shall be subject to removal by the Board at
any time. The Committee’s composition may be structured so that (i) Awards to
persons who are subject to Section 16 of the Exchange Act are exempt from
liability under Section 16(b) of that Act and (ii) Awards to Covered Employees
can be structured to qualify as performance-based compensation as provided under
Section 162(m) of the Code.

 

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(b) Notwithstanding subsection (a), the Board (i) shall be solely responsible
for making any Awards under the Plan to non-Employee Directors and (ii) may, at
any time, otherwise exercise any of the powers and responsibilities assigned the
Committee under the Plan, and when so acting, all applicable Plan provisions
pertaining to the Committee shall apply.

(c) The Committee shall have the authority to grant Stock Awards, Phantom Shares
and Options upon such terms (not inconsistent with the provisions of this Plan),
as the Committee may consider appropriate. Such terms may include conditions (in
addition to those contained in this Plan) on the exercisability of all or any
part of an Option or on the exercisability, transferability or forfeitability of
a Stock Award or an award of Phantom Shares. Notwithstanding any such condition,
the Committee may accelerate the time at which any Option may be exercised, or
the time at which a Stock Award may become transferable or nonforfeitable or the
time at which an award of Phantom Shares may be exercised and/or settled.

(d) The Committee shall hold its meetings at such times and places as may be
determined by the Committee Chairman. A majority of the Committee shall
constitute a quorum. All actions of the Committee shall be taken by a majority
of the members at a meeting duly called by its Chairman; provided, however, any
action taken by a written document signed by a majority of the members of the
Committee shall be as effective as action taken by the Committee at a meeting
duly called and held.

(e) Subject to the express provisions of this Plan, the Committee shall have
complete authority to (i) interpret all provisions of this Plan; (ii) prescribe
the terms of any Agreement (which need not be identical), (iii) adopt, amend,
and rescind rules and regulations pertaining to the administration of the Plan,
(iv) amend any Agreement, (v) correct any defect, supply any omission, or
reconcile any inconsistency in the Plan or any Agreement, (vi) determine which
persons are Participants, to which of such Participants, if any, Awards shall be
granted hereunder and the timing of any such Awards, (vii) grant Awards to
Participants and determine the terms and conditions thereof, including the
number of Shares subject to Awards and the Option Price for, or purchase price
of, such Shares and the circumstances under which Awards become exercisable or
vested or are forfeited or expire, which terms may but need not be conditioned
upon the passage of time, continued employment, the satisfaction of performance
criteria, the occurrence of certain events, or other factors, (viii) establish
and verify the extent of satisfaction of any performance goals or other
conditions applicable to the grant, issuance, exercisability, vesting and/or
ability to retain any Award, (ix) determine whether, and the extent to which,
adjustments are required pursuant to Section 11.01 and (x) make all other
determinations necessary or advisable in administering this Plan.

(f) The Committee shall also have the discretion to determine the effect upon an
Award and upon an individual’s status as an employee under the Plan (including
whether a Participant shall be deemed to have experienced a termination of
employment or other change in status) and upon the vesting, expiration or
forfeiture of an Award in the case of (i) any individual who is employed by an
entity that ceases to be a Subsidiary of the Company, (ii) any leave of absence
approved by the Company or a Subsidiary, (iii) any transfer between locations of
employment with the Company or a Subsidiary or between the Company and any
Subsidiary or between any Subsidiaries, (iv) any change in the Participant’s
status from an employee to a consultant or member of the Board of Directors, or
vice versa, and (v) at the request of the Company or a Subsidiary, any employee
who becomes employed by any partnership, joint venture, corporation or other
entity not meeting the requirements of a Subsidiary.

(g) The express grant in the Plan of any specific power to the Committee shall
not be construed as limiting any power or authority of the Committee under the
Plan. Any decision made, or action taken, by the Committee in connection with
the administration of this Plan shall be final and conclusive on all affected
parties. The Committee shall consider such factors as it deems relevant, in its
sole and absolute discretion, to making such decisions, determinations and
interpretations including, without limitation, the recommendations or advice of
any officer or other employee of the Company and such attorneys, consultants and
accountants as it may select. A Participant or other holder of an Award may
contest a decision or action by the Committee with respect

 

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to such person or Award only on the grounds that such decision or action was
arbitrary or capricious or was unlawful, and any review of such decision or
action shall be limited to determining whether the Committee’s decision or
action was arbitrary or capricious or was unlawful. Neither the Committee nor
any Employee or Director shall be liable for any act done in good faith with
respect to this Plan or any Agreement, Option, Stock Award or award of Phantom
Shares.

ARTICLE V

ELIGIBILITY FOR GRANTS AND AWARDS

5.01. Eligibility. Any Employee or Director is eligible to receive an Award
under this Plan. The Committee shall have full discretionary authority to
determine the persons to whom Awards will be made and the time or times at which
such grants will be made.

5.02. Grants and Awards.

(a) The Plan is intended to permit the grant of (i) both Incentive Stock Options
and Nonqualified Stock Options, (ii) Stock Awards and (iii) Phantom Shares;
provided, that Incentive Stock Options may only be granted to Employees.

(b) The grant of an Award under this Plan shall be entirely in the discretion of
the Committee and nothing in the Plan shall be construed as giving any Employee,
Director or other person any right receive any Award.

(c) The Committee may accept the cancellation of outstanding Awards and grant a
new Awards for the same or different number of shares (if applicable) and under
the same or different terms and conditions. Notwithstanding the preceding
sentence, except as otherwise provided in Section 11.01, the Committee may not,
without stockholder approval, either (i) reduce the Option Price of an Option or
SAR, (ii) amend or cancel an Option or SAR for the purpose of repricing,
replacing or regranting such Option or SAR with an exercise price that is less
than the original exercise price of such Option or SAR, or (iii) take any other
action (whether in the form of an amendment, cancellation or replacement grant)
that has the effect of repricing an Option or SAR.

(d) Options shall not be granted under the Plan in consideration for and shall
not be conditioned upon the delivery of Shares to the Corporation in payment of
the exercise price and/or tax withholding obligation under any other employee
stock option.

5.03. Grants to Foreign Nationals.    The Committee may grant Options or make
other awards under the Plan to eligible individuals who are foreign nationals on
such additional or different terms and conditions as may, in the sole judgment
of the Committee, be necessary or appropriate to comply with the provisions of
any applicable laws of a foreign country.

ARTICLE VI

OPTIONS

6.01. Award.

(a) In accordance with Article V, the Committee may (i) designate each
individual to whom an Option is to be granted, (ii) specify the type of Option
being granted and the number of Shares covered by each such Award, and
(iii) establish the Option Price and such other terms and conditions as it may
deem appropriate for each Option consistent with the Plan. The terms and
conditions of any Option granted under the Plan shall be set forth in an
Agreement.

 

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(b) Subject to adjustment under Section 11.01, in no event may the number of
Shares covered by all Option Awards granted to any one person in any calendar
year exceed 250,000.

(c) No Option that is intended to be an Incentive Stock Option shall be invalid
for failure to qualify as such and the Company shall honor any such Option as a
Nonqualified Stock Option.

6.02. Share Price.    The Option Price shall be determined by the Committee, but
shall not be less than the Fair Market Value of a Share as of the Grant Date;
provided, however, that the Option Price with respect to an Option that is
granted in connection with a merger or other acquisition as a substitute or
replacement award for options held by optionees of the acquired entity may be
less than the Fair Market Value of the Shares on the date such Option is granted
if such Option Price is based on a formula set forth in the terms of the options
held by such optionees or in the terms of the agreement providing for such
merger or other acquisition. If an Incentive Stock Option is granted to an
individual who is a Ten Percent Shareholder on the Grant Date, the purchase
price of the Shares subject to such Option shall not be less than 110% of the
Fair Market Value as of the Grant Date.

6.03. Special Rules for Incentive Stock Options.

(a) The aggregate Fair Market Value (determined as of an Option’s Grant Date)
for all Incentive Stock Options granted under the Plan (and all other plans of
the Company and its Affiliates) that are first exercisable by a Participant in a
calendar year shall not exceed $100,000.

6.04. Vesting.    Except as otherwise provided in this Plan or by the Committee,
a Participant shall only be entitled to exercise an Option at such time or times
as set forth in the applicable Agreement. Unless provided otherwise in the
applicable Agreement, to the extent that the Committee determines that an
approved leave of absence or employment on a less than full-time basis is not a
termination of employment, the vesting period and/or exercisability of an Option
may be adjusted by the Committee during or to reflect the effects of any period
during which the Participant is on an approved leave of absence or is employed
on a less than full-time basis.

6.05. Maximum Option Period.    The maximum period during which an Option may be
exercised shall be determined by the Committee, except that no Incentive Stock
Option shall be exercisable for a period of more than ten years from the date
such Option was granted; provided, that the maximum period in which an Option
may be exercised shall be five years in the case of an Incentive Stock Option
granted to an individual who on the Grant Date is a Ten Percent Shareholder.

6.06. Nontransferability.    Except as provided in Section 13.08, each Option
granted under this Plan shall be nontransferable except by will or by the laws
of descent and distribution and during the lifetime of the Participant to whom
the Option is granted, the Option may be exercised only by the Participant (or
the Participant’s personal representative). No right or interest of a
Participant in any Option shall be liable for, or subject to, any lien,
obligation, or liability of such Participant.

6.07. Termination of Employment.

(a) Except as provided in subsections (b) or (c) below, in the event a
Participant ceases to be an Employee or Director, the Participant may, to the
extent he or she was otherwise entitled to exercise any Options at the date of
termination, exercise any Options for a period of ninety (90) days (or other
period provided in the Agreement or by the Committee) following the date the
Participant ceases to be such (but in no event later than the expiration date of
such Option as set forth in the Agreement). To the extent that the Participant
was not entitled to exercise the Option as of the date he or she ceases to be an
Employee or Director, the Option shall (except as otherwise provided in the
Agreement or by the Committee) shall automatically terminate at that time.

(b) In the event a Participant ceases to be an Employee or Director due to
Disability, the Participant may, to the extent he or she otherwise was entitled
to exercise any Options at the date of such termination, exercise the Option for
a period of twelve (12) months (or other period provided in the Agreement or by
the

 

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Committee) following date he or she ceases to be such (but in no event later
than the expiration date of such Option as set forth in the Agreement). To the
extent that the Participant was not entitled to exercise the Option at the date
of his or her termination as an Employee or Director, the Option shall (except
as otherwise provided in the Agreement or by the Committee) automatically
terminate at that time.

(c) In the event that a Participant dies while an Employee or Director, any
Options held by the Participant at death may, to the extent the Participant
would have otherwise been entitled to exercise the Option at the date of death,
be exercised by the Participant’s estate or by any person who acquired the right
to exercise the Option by bequest or inheritance (the “Option Beneficiary”) for
a period of twelve (12) months (or other period provided in the Agreement or by
the Committee) following date of death (but in no event later than the
expiration date of such Option as set forth in the Agreement). To the extent
that, at the time of death, the Participant was not entitled to exercise the
Option, the Option shall (except as otherwise provided in the Agreement or by
the Committee) automatically terminate at that time.

6.08. Exercise.    Subject to the other provisions of this Plan and the
applicable Agreement, an Option may be exercised in whole at any time or in part
from time to time at such times and in compliance with such requirements as may
be set out in the Agreement or established by the Committee. An Option granted
under this Plan may be exercised with respect to any number of whole Shares less
than the full number for which the Option could be exercised. A partial exercise
of an Option shall not affect the right to exercise the Option from time to time
in accordance with this Plan and the applicable Agreement with respect to the
remaining shares subject to the Option.

6.09. Payment.

(a) Except as otherwise provided in the Agreement or by the Committee, payment
of the Option Price shall be made in cash or a cash equivalent acceptable to the
Committee. To the extent provided in the Agreement or permitted by the
Committee, payment of all or part of the Option Price may be made by
surrendering Stock to the Company or through withholding of Shares otherwise
deliverable upon exercise of the Option. If Stock is used to pay all or part of
the Option Price, the sum of the cash (and cash equivalent) and the Fair Market
Value (determined as of the last trading day preceding the date of surrender) of
the surrendered Shares must not be less than the total Option Price of the
Shares for which the Option is being exercised.

(b) To the extent permitted in the Agreement or by the Committee, an Option may,
in accordance with such rules and procedures as may be established by the
Committee, be exercised through a cashless exercise procedure involving a broker
or dealer to pay the Option Price and/or to satisfy any withholding tax
obligations related to the Option.

6.10. Shareholder Rights.    No Participant shall have any rights as a
shareholder to Shares subject to an Option until the date the Shares for which
an Option has been exercised have been issued to the Participant, except that
the Committee may authorize dividend equivalent accruals with respect to such
Shares.

6.11. Disposition of Stock.    A Participant shall notify the Company of any
sale or other disposition of Shares acquired pursuant to an Incentive Stock
Option if such sale or disposition occurs (i) within two years of the grant of
an Option or (ii) within one year of the issuance of the Stock to the
Participant. Such notice shall be in writing and directed to the Secretary of
the Company (or the Secretary’s designee).

ARTICLE VII

STOCK AWARDS

7.01. Award.

(a) In accordance with Article V, the Committee may (i) designate each
individual to whom a Stock Award is to be made, (ii) specify the number of
Shares covered by each such Award and (iii) establish such other

 

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terms and conditions as it may deem appropriate for each Award. If, as a
condition for a Stock Award, the Participant is required to make payment for the
awarded Shares, such purchase price shall be paid as provided in the Agreement.
The terms and conditions of any Stock Award under the Plan shall be set forth in
an Agreement.

(b) Subject to the provisions of Section 11.01, in no event may the number of
Shares covered by all Stock Awards granted to any one person in any calendar
year exceed 250,000.

7.02. Vesting.

(a) Except as otherwise provided by the Committee, a Participant’s rights in a
Stock Award shall be forfeitable or otherwise restricted for such period of
time, until the satisfaction of such performance conditions or until the
satisfaction of such other conditions or requirements as may be set forth in the
Agreement.

(b) Except as provided in the Agreement or by the Committee, a nonvested Stock
Award shall terminate and be forfeited as of the date the Participant ceases to
be an Employee or Director.

7.03. Shareholder Rights.    Except as otherwise provided in the Agreement,
during the period that the Shares granted pursuant to a Stock Award are
forfeitable, a Participant shall have all rights of a shareholder with respect
to such Shares (unless and until forfeited), including the right to receive
dividends and vote the Shares; provided, however, that during such period (i) a
Participant may not (except as provided in Section 13.08) sell, transfer,
pledge, exchange, hypothecate, or otherwise dispose of Shares granted pursuant
to a Stock Award, (ii) the Company shall retain custody of the Shares granted
pursuant to a Stock Award, and (iii) the Participant shall deliver to the
Company a stock power (endorsed in blank) or take such other actions as may be
required by the Committee with respect to each Stock Award. The Committee will
determine whether any dividends or distributions for such Shares will be
automatically reinvested in additional Shares and subject to the same
restrictions on transferability as the Stock Award with respect to which they
were distributed or whether such dividends or distributions will be paid in
cash. The preceding limitations shall cease to apply as of the date the Shares
subject to the Stock Award become transferable and cease to be forfeitable.

ARTICLE VIII

PHANTOM SHARE AWARDS

8.01. Award.

(a) In accordance with the provisions of Article V, the Committee may
(i) designate each individual to whom an Award of Stock Units or SARs is to be
made, (ii) specify the number of Shares covered by each such Award and
(iii) establish such other terms and conditions as it may deem appropriate for
each Award. The terms and conditions of any such award under the Plan shall be
set forth in an Agreement.

(b) Subject to the provisions of Section 11.01, in no event may the number of
Shares covered by all Phantom Share Awards granted to any one person in any
calendar year exceed 250,000.

8.02. Provisions Applicable to SARs.

(a) SARs may be granted to Participants from time to time either in tandem with
or as a component of other Awards granted under the Plan (“tandem SARs”) or not
in conjunction with other Awards (“freestanding SARs”) and may, but need not,
relate to a specific Option granted under Section 6.01. Any SAR granted in
tandem with an Award may be granted at the same time such Award is granted or at
any time thereafter before exercise or expiration of such Award. All tandem SARs
shall have the same Option Price, vesting, exercisability, forfeiture and
termination provisions as the Award to which they relate.

 

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(b) Subject to the other provisions of this Plan and the applicable Agreement, a
freestanding SAR may be exercised in whole at any time or in part from time to
time at such times and in accordance with such requirements as may be set out in
the Agreement or established by the Committee; provided that a freestanding SAR
may only be exercised when the value of a Share exceeds the per-Share Option
Price.

(c) A freestanding SAR granted under this Plan may be exercised with respect to
any number of whole Shares less than the full number for which the freestanding
SAR could be exercised. A partial exercise of a freestanding SAR shall not
affect the right to exercise the SAR from time to time in accordance with this
Plan and the applicable Agreement with respect to the remaining shares subject
to the freestanding SAR.

(d) To the extent not previously exercised, all vested freestanding SARs shall
(except as otherwise provided in the Agreement) automatically be exercised on
the last trading day prior to expiration, unless the Participant instructs the
Company otherwise in writing before that date.

(e) In addition, all freestanding SARs shall be granted subject to the same
terms and conditions applicable to Options as set forth in Sections 6.02, 6.05
and 6.07.

8.03. Payment.    The amount payable under a Phantom Share Award may be paid or
settled (i) by the Company by issuing Stock (in whole Shares) and cash for any
fractional Share, (ii) in cash or (iii) in a combination thereof

8.04. Shareholder Rights.    No Participant shall, as a result of receiving an
Award of Phantom Shares, have any rights as a shareholder until and to the
extent the Shares are issued to a Participant as payment of a Phantom Share
award, except that the Committee may authorize dividend equivalent accruals with
respect to such Awards.

8.05. Nontransferability.    Except as provided in Section 13.08, Phantom Shares
granted under this Plan shall be nontransferable except by will or by the laws
of descent and distribution. No right or interest of a Participant in any
Phantom Shares shall be liable for, or subject to, any lien, obligation, or
liability of such Participant.

8.06. Forfeiture of Stock Unit Awards.    Except as provided in the Agreement or
by the Committee, a nonvested Stock Unit Award shall terminate and be forfeited
as of the date the Participant ceases to be an Employee or Director.

ARTICLE IX

QUALIFIED PERFORMANCE-BASED AWARDS

9.01. Scope and Purpose.    The purpose of this Article is to enable the
Committee to make Awards that are structured to qualify as “performance-based
compensation” under Section 162(m)(4)(C) of the Code; provided, however, that
the failure to designate an Award as a Qualified Performance-Based Award shall
not mean that such Award does not constitute “performance-based compensation” if
the Award otherwise meets the requirements under Section 162(m) or any
regulations thereunder. The Committee shall establish such additional terms and
conditions as it may deem appropriate for such an Award. Notwithstanding
anything herein to the contrary, Awards that are not intended to be structured
to qualify as “performance-based compensation” under Section 162(m)(4)(C) of the
Code may be subject to such performance-based vesting and other conditions as
the Committee may determine in addition to or separate from those described in
this Article.

9.02. Applicability.    Grants may be made under this Article to Covered
Employees or to those Employees who the Committee determines may become Covered
Employees in the period covered by an Award.

 

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9.03. Awards.

(a) The Committee shall establish the applicable Performance Period and
Performance Goal(s) for each Award. The Committee may establish (i) different
Performance Periods for different Participants and (ii) concurrent or
overlapping Performance Periods.

(b) A Participant will, as determined by the Committee, be entitled to the grant
made under a Qualified Performance-Based Award only if (and to the extent) the
applicable Performance Goal(s) are achieved within the applicable Performance
Period; provided that the Committee may reduce or eliminate a Qualified
Performance-Based Award to the extent it deems necessary or appropriate.

(c) The maximum Qualified Performance-Based Award payment to any one Participant
under the Plan for a Performance Period shall be the Share limit set forth in
Sections 6.01(b), 7.01(b) or 8.01(b), whichever is applicable.

(d) No adjustment of any Qualified Performance-Based Award pursuant to
Section 11.01 shall be made except on such basis, if any, as will not cause such
Award to cease to qualify as “performance-based compensation” within the meaning
of Section 162(m) of the Code.

9.04. Establishment of Performance Goals.

(a) All Performance Goals shall (i) be objective, (ii) be established not later
than ninety (90) days after the beginning of any applicable Performance Period
(or at such other date as may be required or permitted for “performance-based
compensation” under Section 162(m)) and (iii) otherwise meet the requirements of
Section 162(m) of the Code, including the requirement that the outcome of the
Performance Goals be substantially uncertain at the time established.

(b) The Committee shall establish the applicable Performance Goals for a
Performance Period based upon the applicable performance criteria set forth in
subsection (c) below. After the end of the applicable Performance Period, the
Committee shall certify (in writing) the extent to which any such Performance
Goals have been satisfied, and the amount payable as a result thereof, prior to
payment, settlement or vesting of any Award that is intended to satisfy the
requirements for “performance-based compensation” under Section 162(m) of the
Code. Notwithstanding satisfaction of any Performance Goals, the number of
Shares issued under or the amount paid under an award may be reduced by the
Committee on the basis of such further considerations as the Committee shall
determine.

(c) For purposes of this Article, “performance criteria” shall mean any one or
more of the following performance criteria, either individually, alternatively
or in any combination, applied to either the Company as a whole or to a business
unit or Subsidiary, either individually, alternatively or in any combination,
and measured either annually or cumulatively over a period of years, on an
absolute basis or relative to a pre-established target, to previous years’
results or to a designated comparison group, in each case as specified by the
Committee: (i) operating income; (ii) earnings before interest, taxes,
depreciation and amortization (“EBITDA”); (iii) earnings; (iv) cash flow;
(v) market share; (vi) sales or revenue; (vii) expenses; (viii) profit/loss or
profit margin; (ix) working capital; (x) return on equity or capital;
(xi) earnings per share; (xii) stock price; (xiii) price/earnings ratio;
(xiv) debt or debt-to-equity; (xv) balance sheet measurements; (xvi) cash or
assets; (xvii) liquidity; (xviii) economic value added (“EVA”);
(xix) operations; (xx) mergers and acquisitions or divestitures; and/or
(xxi) franchisee operations and other industry-specific factors (such as average
daily room rates, room occupancy rates, room turnover, customer satisfaction,
revenue and/or royalties per available room, executed franchise contracts,
number of franchises and like factors).

(d) To the extent consistent with Section 162(m) of the Code, the Committee (i)
may appropriately establish performance criteria that either disregards or takes
into account the effects of charges for restructurings,

 

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discontinued operations, extraordinary items and all items of gain, loss or
expense determined to be extraordinary or unusual in nature or related to the
disposal of a segment of a business or related to a change in accounting
principle all as determined in accordance with standards established by opinion
No. 30 of the Accounting Principles Board or other applicable or successor
accounting provisions, as well as the cumulative effect of accounting changes,
in each case as determined in accordance with generally accepted accounting
principles or identified in the Company’s financial statements or notes to the
financial statements, and (ii) may appropriately establish performance criteria
that either includes or excludes gains and losses related to any of the
following events that occurs during a performance period: (A) the sale of
assets, (B) litigation, claims, judgments or settlements, (C) the effect of
changes in tax law or other such laws or provisions affecting reported results,
(D) accruals for reorganization and restructuring programs and (E) accruals of
any amounts for payment under this Plan or any other compensation arrangement
maintained by the Company.

ARTICLE X

DEFERRAL OF PAYMENTS

10.01. Deferral Elections.    To the extent permitted in the Agreement or by the
Committee, a Participant may elect to defer all or any portion of an Award
(other than an Option or SAR). Such election shall be made at such time and upon
such terms as the Committee may establish consistent with Section 409A of the
Code.

10.02. Deferral Account.    The deferred Awards shall be credited to a
bookkeeping account maintained by the Company in the name of the Participant.
Any dividends or other distributions on credited Shares also shall be credited
to that account. Such amounts may, as provided in the Agreement or determined by
the Committee, be credited with a reasonable rate of interest or invested in
additional deferred Shares.

10.03. Applicable Legal Requirements.    The deferral of any Award under this
Article shall comply and be administered consistent with Section 409A of the
Code. Notwithstanding anything herein to the contrary, in no event will any
deferral of the delivery of Shares or any other payment (or the acceleration of
the delivery of deferred Shares or other deferred payments) for any Award be
allowed if the Committee determines that the deferral would result in a
violation of the requirements of Section 409A for deferral elections and/or the
timing of payments. Any Agreement may be reformed by the Committee to the extent
necessary or appropriate to comply with the requirements of Section 409A.

ARTICLE XI

ADJUSTMENTS

11.01. Adjustments for Changes in Capital Structure.    The maximum number of
Shares as to which Awards may be granted under this Plan, the annual Award
limits and the terms of any outstanding Award may be proportionately (or
otherwise equitably) adjusted as the Committee shall determine in the event that
(i) the Company (A) effects one or more dividends or distributions of
securities, property or cash (other than regular, quarterly cash dividends),
stock split-ups, subdivisions or consolidations of Stock or (B) engages in a
reorganization, reclassification or spin-off or (ii) there occurs any other
event or transaction that affects the number or kind of Shares outstanding,
which the Committee determines that such adjustments are necessary or
appropriate to prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under the Plan. Any adjustments required
hereunder for Options may be made in accordance with Section 424(a) of the Code
and/or Section 409A of the Code, or, except as otherwise expressly provided in
this Plan, may be designed to treat the Shares available under the Plan and
subject to Awards as if they were all outstanding on the record date for such
event or transaction or to increase the number of such Shares to reflect a
deemed reinvestment in Shares of the amount distributed to the Company’s
securityholders.

 

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ARTICLE XII

CHANGE IN CONTROL

12.01. Change of Control.

(a) In the event of a Change of Control, the Committee may take any one or more
of the following actions with respect to one or more of the outstanding Awards:

(i) Provide that such Awards shall be assumed, or equivalent Awards shall be
substituted, by the acquiring or succeeding corporation (or an affiliate
thereof), provided that any such Options substituted for Incentive Stock Options
may be structured to satisfy, in the determination of the Committee, the
requirements of Code section 424(a);

(ii) Provide that such Awards shall terminate upon consummation of the Change of
Control and each Participant shall receive, in exchange therefor, a payment in
securities, cash or a combination of the two equal to:

(A) in the case of an Option, the Fair Market Value of the Shares payable under
such Option as of the last trading day preceding the date on which the Change in
Control takes place (net of the Option Price);

(B) in the case of a SAR, the amount payable under the SAR as of the last
trading day preceding the date on which the Change in Control takes place; or

(C) in the case of any other Award, the Fair Market Value of the Shares subject
to the Award as of the last trading day preceding the date on which the Change
in Control takes place.

(iii) vest Awards and require that any Options or SARs be exercised at such time
and upon such conditions as the Committee may determine (with any unexercised
Awards terminating upon expiration of the time period for exercise).

Notwithstanding the foregoing, the time for payment of an Award shall not be
accelerated under this Section to the extent such acceleration would be contrary
to the payment timing or other rules under Section 409A of the Code.

12.02. Vesting Upon a Change in Control.

(a) Notwithstanding any other provision of the Plan to the contrary, if a
“Change of Control” occurs and the Participant’s employment with the Company
terminates as described in subsection (b) below, the following shall (except as
otherwise provided by the Committee or in the Agreement) occur:

(i) All Options and SARs that are outstanding at the time the Participant’s
employment with the Company terminates shall become fully vested and exercisable
in full;

(ii) All Stock and Stock Unit Awards (including any Qualified Performance-Based
Awards) that are outstanding at the time the Participant’s employment with the
Company terminates shall become fully vested and any restrictions shall lapse,
and;

(iii) for any Awards with performance-based requirements that are outstanding at
the time the Participant’s employment with the Company terminates, all
uncompleted performance periods at the time of such Change of Control shall be
deemed to have been completed, the maximum level of performance set forth under
the Agreement shall be deemed to have been attained and each such outstanding
Award granted to each Participant for all outstanding Performance Periods shall
become payable to each Participant.

Notwithstanding the foregoing, the time for payment of an Award shall not be
accelerated under this Section to the extent such acceleration would be contrary
to the payment timing or other rules under Section 409A of the

 

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Code, and, in the case of a Participant to whom Section 409A(a)(2)(B)(i)
applies, payment shall, to the extent required under that Section 409A, be
delayed for six months following the Participant’s termination as an Employee.

(b) This Section shall (except as otherwise provided by the Committee or in the
Agreement) apply in the event that the Participant’s employment terminates
within two years of the Change of Control under either of the circumstances
described below:

(i) The Participant’s employment as an Employee is terminated by the Company
other than for Cause: or

(ii) The Participant terminates his or her employment as an Employee for good
reason (as defined in subsection (c) below).

(c) For purposes of this Section, “good reason” shall mean (i) a significant
reduction in the scope of a Participant’s authority, position, title, functions,
duties or responsibilities, (ii) the relocation of a Participant’s office
location to a location more than 25 miles from the Participant’s prior principal
place of employment, (iii) any reduction in a Participant’s base salary, (iv) a
significant change in the Company’s annual bonus program adversely affecting the
Participant, or (v) a significant reduction in the other employee benefits
provided to a Participant.

12.03. Gross-up Payment.    In the event of a Change of Control as defined under
Section 280G of the Code, if the vesting of Awards and/or payment of Awards
under this Plan and/or payments of amounts under any other agreement with or
plan of the Company (in the aggregate the “Total Payments”) subject all or any
part of the Total Payments to the tax (the “Excise Tax”) imposed by Section 4999
of the Code (or any similar tax that may hereafter be imposed), the Company
shall (except as otherwise provided by the Committee or in the Agreement) pay to
the Participant in cash an additional amount (the “Additional Payment”) such
that the net amount retained by the Participant, after deduction of any Excise
Tax imposed upon the Total Payments and any federal, state and local income tax
and Excise Tax upon the Additional Payment provided for by this Paragraph C, and
any employment tax (including FICA and FUTA) upon such Additional Payment, shall
be equal to the amount of Total Payments prior to such taxes. Such Additional
Payment shall be made by the Company to the Participant as soon as practicable
but in no event later than two and one-half (2 1/2) months after the year in
which such Excise Tax or other tax liability is incurred. The determination of
whether any of the Total Payments to a Participant will be subject to the Excise
Tax, the calculation of parachute value under Section 280G of the Code of the
Total Payments, and calculation of the Additional Payment, shall be made by a
Certified Public Accounting firm jointly agreed to by the Company and the
Participant.

ARTICLE XIII

OTHER PROVISIONS FOR GRANTS AND AWARDS

13.01. Tax Withholding Requirements.

(a) To the extent required by applicable federal, state, local or foreign law, a
Participant shall make arrangements satisfactory to the Company for the
satisfaction of any required statutory federal, state and/or local withholding
tax obligations that arise by reason of an Option exercise or other Award prior
to delivery of any Shares. The obligations of the Company under the Plan shall
be conditional on satisfaction of all such withholding obligations and the
Company shall, to the extent permitted by law, have the right to deduct any such
taxes from any payment of any kind otherwise due to the Participant.

(b) To the extent provided in the Agreement or permitted by the Committee, the
Participant may (to the extent permitted under Section 409A of the Code) elect
to have any such withholding obligations satisfied, in whole or in part, by
having the Company’s withhold Shares subject to the Option or other Award, but
not to exceed an amount equal to the minimum prescribed statutory withholding
amount. The value of any Shares so

 

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withheld shall be determined based on the Fair Market Value as of the last
trading day preceding the date the Shares are withheld for this purpose.

(c) Notwithstanding anything else herein to the contrary, in the event of a
cashless exercise of an Option, the Fair Market Value for tax withholding
purposes shall be the per-Share price at which the Shares were sold by the
broker in executing the cashless exercise.

13.02. Withdrawal.    A Participant may at any time elect in writing to abandon
an Award under the Plan.

13.03. Forfeiture Upon Termination For Cause.    In the event that a
Participant’s status as an Employee or Director is terminated for Cause, all of
the Participant’s outstanding unexercised Options and unpaid Awards shall
(except as otherwise provided in the Agreement or by the Committee)
automatically terminate as of the date he or she ceases to be an Employee or
Director.

13.04. Registration, Listing and Qualification of Stock.

(a) No Option or SAR shall be exercisable, no Stock shall be issued or
delivered, and no payment shall be made under this Plan except in compliance
with all applicable federal and state laws and regulations (including, without
limitation, withholding tax requirements), any listing agreement to which the
Company is a party, and the rules of all domestic stock exchanges on which the
Shares may be listed. The Company shall have the right to rely on an opinion of
its counsel as to such compliance.

(b) Any Shares issued pursuant to this Plan may bear such legends and statements
as the Committee may deem advisable to assure compliance with federal and state
laws and regulations. No Awards shall be granted, Options or SARs shall be
exercised, Shares shall be issued and no payment shall be made under this Plan
until the Company has obtained such consent or approval as the Committee may
deem advisable from regulatory bodies having jurisdiction over such matters.

(c) Any person exercising an Option or SAR or receiving Stock under any other
Award shall make such representations, warranties and agreements and furnish
such information as the Committee or the Company may request to assure
compliance with the foregoing or any other applicable legal requirements.

13.05. Corporate Restrictions.

(a) Any Stock to be issued pursuant to an Award shall be subject to all
restrictions upon the transfer thereof which may be now or hereafter imposed by
the charter, certificate or articles, and by-laws, of the Company.

(b) The Committee may provide that the Shares issued upon exercise of an Option
or SAR or otherwise subject to or issued under an Award shall be subject to such
further agreements, restrictions, conditions or limitations as the Committee in
its discretion may specify prior to the exercise of such Option or SAR or the
grant, vesting or settlement of such Award, including without limitation,
conditions on vesting or transferability, forfeiture or repurchase provisions
and method of payment for the Shares issued upon exercise, vesting or settlement
of such Award (including the actual or constructive surrender of Shares already
owned by the Participant) or payment of taxes arising in connection with an
Award. Without limiting the foregoing, such restrictions may address the timing
and manner of any resales by the Participant or other subsequent transfers by
the Participant of any Shares issued under an Award, including without
limitation (i) restrictions under an insider trading policy or pursuant to
applicable law, (ii) restrictions designed to delay and/or coordinate the timing
and manner of sales by Participant and holders of other Company equity
compensation arrangements, (iii) restrictions as to the use of a specified
brokerage firm for such resales or other transfers and (iv) provisions requiring
Shares to be sold on the open market or to the Company in order to satisfy tax
withholding or other obligations.

 

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13.06. Investment Representations.    The Company shall be under no obligation
to issue any Shares pursuant to any Award unless the Shares have been
effectively registered under the Securities Act of 1933 or the Participant shall
have made such written representations to the Company (upon which the Company
believes it may reasonably rely) as the Company may deem necessary or
appropriate for purposes of confirming that the issuance of such Shares will be
exempt from the registration requirements of that Act and any applicable state
securities laws and otherwise in compliance with all applicable laws, rules and
regulations. To the extent the Company is unable to or the Committee deems it
infeasible to obtain authority from any regulatory body having jurisdiction,
which authority is deemed by the Company’s counsel to be necessary to the lawful
issuance and sale of any Shares hereunder, the Company and its Subsidiaries
shall be relieved of any liability with respect to the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.
No Option shall be exercisable and no Shares shall be issued and/or transferable
under any other Award unless a registration statement with respect to the Shares
underlying such Option is effective and current or the Company has determined
that such registration is unnecessary.

13.07. Registration.    If the Company shall deem it necessary or desirable to
register under the Securities Act of 1933 or other applicable statutes any Stock
issued or to be issued pursuant to an Award, or to qualify any such Stock for
exemption from the Securities Act of 1933, as amended or other applicable
statutes, the Company shall take such action at its own expense. The Company may
require from each Participant such information in writing for use in any
registration statement, prospectus, preliminary prospectus or offering circular
as is reasonably necessary for that purpose.

13.08. Transferability of Options, Stock Awards and Phantom
Shares.    Notwithstanding any other provision of the Plan, the Committee may
permit a Nonqualified Stock Option, Stock Award or Phantom Share Award to be
transferred by a Participant to a family member (as defined in the General
Instructions for the Form S-8) as a gift (or otherwise without payment of any
consideration) on such terms and conditions as may be permitted under applicable
law (or otherwise established by the Committee). Except as otherwise established
by the Committee, the transferee shall be bound by the terms and conditions set
forth in the Agreement for the transferred Award; provided, however that such
transferee may not transfer Option or award except by will or the laws of
descent and distribution.

13.09. Applicable Legal Requirements.    All Awards shall, to extent applicable,
comply and be administered in accordance with the rules and requirements of
Section 409A of the Code. To extent necessary to ensure such compliance, the
Committee may reform any Agreement to the extent it determines that the
Agreement does not comply with Section 409A.

ARTICLE XIV

AMENDMENT AND TERMINATION

14.01. Amendment.

(a) The Board shall have the right to amend the Plan at any time and from time
to time; provided, that no such amendment of the Plan shall, without stockholder
approval, be effective if stockholder approval of the amendment is required at
such time to qualify for any exemption from Section 16 of the Exchange Act or by
any other applicable law, regulation, rule or order.

(b) No amendment may be made that would cause an Option or other Award not to
qualify for exemption under Section 16 of the Exchange Act.

(c) Except as otherwise provided in the Plan or the Agreement, no amendment of
the Plan shall, without the written consent of a Participant adversely affect
the rights of the Participant with respect to an Option or other Award prior to
the date of the amendment or termination (except to the extent necessary to
comply with any applicable law, regulation, rule or order).

(d) Notwithstanding anything herein or in any Agreement to the contrary, the
Board shall have the power to amend the Plan in any manner deemed necessary or
advisable for Options or any other Awards made under the Plan to qualify for any
exemption provided under Section 16 of the Exchange Act and any such

 

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amendment shall, to the extent deemed necessary or advisable by the Board, be
applicable to any outstanding Options or other Award previously issued under the
Plan. In the event of such an amendment to the Plan, the holder of any Option or
other Award shall, upon request of the Board and as a condition for exercising
of such Option, obtaining such other award, execute a conforming amendment in
the form prescribed by the Board to the Agreement within such reasonable period
of time as the Board shall specify in such request.

14.02. Termination.    The Board shall have the right to terminate the Plan at
any time; provided, that no such termination shall, except as otherwise provided
in any Agreement, terminate any outstanding Option or other award previously
granted under the Plan or adversely affect the rights of such Participant
without his or her written consent. No new Awards may be granted under the Plan
on or after the date of termination.

ARTICLE XV

GENERAL PROVISIONS

15.01. Government Regulations.    The rights of Participants and the obligations
of the Company hereunder shall be subject to all applicable laws, rules, and
regulations and to such approvals as may be required by any governmental agency.

15.02. Unfunded Plan.    The Plan, insofar as it provides for Awards, shall be
unfunded, and the Company shall not be required to segregate any assets that may
at any time be represented by grants under this Plan. Any liability of the
Company to any person with respect to any grant under this Plan shall be based
solely upon any contractual obligations that may be created pursuant to this
Plan. No such obligation of the Company shall be deemed to be secured by any
pledge of, or other encumbrance on, any property of the Company. The Company
shall not be required to establish any special or separate fund or to make any
other segregation of assets to assure payment of any grant under the Plan.

15.03. Effect on Employment and Service.    Neither the adoption of this Plan,
its operation, nor the issuance of any Awards hereunder shall confer upon any
individual any right to continue as an Employee or Director of the Company or an
Affiliate, or in any way affect any right and power of the Company or an
Affiliate to terminate the employment or discontinue the service of any
individual at any time with or without assigning a reason therefor.

15.04. Costs and Expenses.    Except as otherwise provided by the Board, all
costs and expenses of administering the Plan shall be paid by the Company.

15.05. Proceeds from Sale of Stock.    Proceeds from the purchase of Shares by a
Participant under the Plan may be used by the Company for any business purpose.

15.06. Governing Law.    This Plan shall be governed by and construed in
accordance with the laws of the State of Delaware (without regard to the
conflicts of laws principles thereof). The Committee may provide that any
dispute as to any Award shall be presented and determined in such forum as the
Committee may specify, including through binding arbitration. Any reference in
this Plan or in the agreement evidencing any Award to a provision of law or to a
rule or regulation shall be deemed to include any successor law, rule or
regulation of similar effect or applicability.

15.07. Rules of Construction.    Headings are given to the articles and sections
of this Plan solely as a convenience to facilitate reference. The reference to
any statute, regulation, or other provision of law shall be construed to refer
to any amendment to or successor of such provision of law and any regulation,
rule or other formal guidance thereunder.

15.08. Invalidity.    If any provision of the Plan shall be held invalid or
unlawful for any reason, such event shall not affect or render invalid or
unenforceable the remaining provisions of the Plan.

 

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