Exhibit 10.2

NEXPOINT RESIDENTIAL TRUST, INC.

2016 LONG TERM INCENTIVE PLAN

1. Purpose. The purpose of this 2016 Long Term Incentive Plan is to enable the
Company and its Affiliates and Subsidiaries to attract and retain directors,
officers and other key employees and advisors and to provide to such persons
incentives and rewards for performance.

2. Definitions. As used in this Plan:

(a) “Advisor” means NexPoint Real Estate Advisors, L.P., or any subsequent
external advisor to the Company hired to perform similar services.

(b) “Affiliate” means any corporation, partnership, joint venture or other
entity, directly or indirectly, through one or more intermediaries, controlling,
controlled by, or under common control with the Company as determined by the
Committee or the Board, as applicable, in its discretion. For purposes of this
Plan, “Affiliate” includes the Advisor and the Operating Partnership.

(c) “Appreciation Right” means a right granted pursuant to Section 5 of this
Plan, and will include Tandem Appreciation Rights and Free-Standing Appreciation
Rights.

(d) “Award Agreement” means an agreement, certificate, resolution or other type
or form of writing or other evidence approved by the Committee that sets forth
the terms and conditions of the awards granted under the Plan. An Award
Agreement may be in an electronic medium, may be limited to notation on the
books and records of the Company and, unless otherwise determined by the
Committee, need not be signed by a representative of the Company or a
Participant.

(e) “Base Price” means the price to be used as the basis for determining the
Spread upon the exercise of a Free-Standing Appreciation Right or a Tandem
Appreciation Right.

(f) “Board” means the Board of Directors of the Company.

(g) “Cash Incentive Award” means a cash award granted pursuant to Section 8 of
this Plan.

(h) “Change in Control” has the meaning set forth in Section 12 of this Plan.

(i) “Code” means the Internal Revenue Code of 1986, as amended from time to
time.

(j) “Committee” means a committee of the Board designated by the Board to
administer the Plan pursuant to Section 10 of this Plan consisting solely of no
fewer than two non-employee Directors (within the meaning of Rule 16b-3
promulgated under the Exchange Act) and, to the extent of any delegation by the
Committee to a subcommittee pursuant to Section 10 of this Plan, such
subcommittee.

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(k) “Company” means NexPoint Residential Trust, Inc., a Maryland corporation,
and its successors.

(l) “Covered Employee” means a Participant who is, or is determined by the
Committee likely to become, a “covered employee” within the meaning of
Section 162(m) of the Code (or any successor provision).

(m) “Date of Grant” means the date specified by the Committee on which a grant
of Option Rights, Appreciation Rights, Performance Shares, Performance Units,
Cash Incentive Awards, or other awards contemplated by Section 9 of this Plan,
or a grant or sale of Restricted Stock, Restricted Stock Units, or other awards
contemplated by Section 9 of this Plan, will become effective (which date will
not be earlier than the date on which the Committee takes action with respect
thereto).

(n) “Director” means a member of the Board.

(o) “Effective Date” means the date this Plan is approved by the Shareholders of
the Company.

(p) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder, as such law, rules and regulations may be
amended from time to time.

(q) “Free-Standing Appreciation Right” means an Appreciation Right granted
pursuant to Section 5 of this Plan that is not granted in tandem with an Option
Right.

(r) “Incentive Stock Option” means an Option Right that is intended to qualify
as an “incentive stock option” under Section 422 of the Code or any successor
provision.

(s) “Management Objectives” means the measurable performance objective or
objectives established pursuant to this Plan for Participants who have received
grants of Performance Shares, Performance Units or Cash Incentive Awards or,
when so determined by the Committee, Option Rights, Appreciation Rights,
Restricted Stock, Restricted Stock Units, dividend equivalents or other awards
pursuant to this Plan. Management Objectives may be described in terms of
Company-wide objectives or objectives that are related to the performance of the
individual Participant or of one or more of the Subsidiaries, Affiliates,
divisions, departments, regions, functions or other organizational units within
the Company or its Subsidiaries. The Management Objectives may be made relative
to the performance of other companies or subsidiaries, divisions, departments,
regions, functions or other organizational units within such other companies,
and may be made relative to an index or one or more of the performance
objectives themselves. The Committee may grant awards subject to Management
Objectives that are either Qualified Performance-Based Awards or are not
Qualified Performance-Based Awards. The Management Objectives applicable to any
Qualified Performance-Based Award to a Covered Employee will be based on one or
more, or a combination, of the following metrics (including relative or growth
achievement regarding such metrics):

 

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  (i) Profits (e.g., operating income, EBIT, EBT, net income, earnings per
share, residual or economic earnings, economic profit – these profitability
metrics could be measured before certain specified special items and/or subject
to GAAP definition);

 

  (ii) Cash Flow (e.g., EBITDA, free cash flow, free cash flow with or without
specific capital expenditure target or range, including or excluding divestments
and/or acquisitions, total cash flow, cash flow in excess of cost of capital or
residual cash flow or cash flow return on investment);

 

  (iii) Returns (e.g., profits or cash flow returns on: assets, invested
capital, net capital employed, and equity; total shareholder return; stock price
appreciation);

 

  (iv) Profit Margins (e.g., profits divided by revenues, gross margins and
material margins divided by revenues);

 

  (v) Liquidity Measures (e.g., debt-to-capital, debt-to-EBITDA, total debt
ratio); and

 

  (vi) REIT Operating Metrics (e.g., funds from operations, adjusted funds from
operations, funds from operations per share, adjusted funds from operations per
share, net operating income; same store results, growth in rent or units rented,
goals relating to acquisition or divestitures).

In the case of a Qualified Performance-Based Award, each Management Objective
will be objectively determinable to the extent required under Section 162(m) of
the Code, and, unless otherwise determined by the Committee and to the extent
consistent with Code Section 162(m), will exclude the effects of certain
designated items identified at the time of grant. If the Committee determines
that a change in the business, operations, corporate structure or capital
structure of the Company, or the manner in which it conducts its business, or
other events or circumstances render the Management Objectives unsuitable, the
Committee may in its discretion modify such Management Objectives or the related
minimum acceptable level of achievement, in whole or in part, as the Committee
deems appropriate and equitable, except in the case of a Qualified
Performance-Based Award (other than in connection with a Change in Control)
where such action would result in the loss of the otherwise available exemption
of the award under Section 162(m) of the Code. In such case, the Committee will
not make any modification of the Management Objectives or minimum acceptable
level of achievement with respect to such Covered Employee.

(t) “Market Value per Share” means, as of any particular date, the closing price
of a Share as reported for that date on the New York Stock Exchange or, if the
Shares are not then listed on the New York Stock Exchange, on any other national
securities exchange on which the Shares are listed, or if there are no sales on
such date, on the next preceding trading day during which a sale occurred. If
there is no regular public trading market for the Shares, then the Market Value
per Share shall be the fair market value as determined in good faith by the
Committee. The Committee is authorized to adopt another fair market value
pricing method provided such method is stated in the Award Agreement and is in
compliance with the fair market value pricing rules set forth in Section 409A of
the Code.

 

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(u) “Operating Partnership” means NexPoint Residential Operating Partnership,
L.P., a Delaware limited partnership of which the Company is the sole general
partner.

(v) “OP Interests” means limited partnership interests in the Operating
Partnership that may be exchanged or redeemed for Shares on a one-for-one basis,
or any profits interest in the Operating Partnership that may be exchanged or
converted into such limited partnership interests.

(w) “Optionee” means the optionee named in an Award Agreement evidencing an
outstanding Option Right.

(x) “Option Price” means the purchase price payable on exercise of an Option
Right.

(y) “Option Right” means the right to purchase Shares upon exercise of an option
granted pursuant to Section 4 of this Plan.

(z) “Participant” means a person who is selected by the Committee to receive
benefits under this Plan and who is at the time (i) an officer or other key
employee of the Company or any Affiliate or Subsidiary, including a person who
has agreed to commence serving in such capacity within 90 days of the Date of
Grant, (ii) a person who provides services to the Company or any Affiliate or
Subsidiary that are equivalent to those typically provided by an employee
(provided that such person satisfies the Form S-8 definition of an “employee”),
or (iii) a non-employee Director.

(aa) “Performance Period” means, in respect of a Cash Incentive Award,
Performance Share or Performance Unit, a period of time established pursuant to
Section 8 of this Plan within which the Management Objectives relating to such
Cash Incentive Award, Performance Share or Performance Unit are to be achieved.

(bb) “Performance Share” means a bookkeeping entry that records the equivalent
of one Share awarded pursuant to Section 8 of this Plan.

(cc) “Performance Unit” means a bookkeeping entry awarded pursuant to Section 8
of this Plan that records a unit equivalent to $1.00 or such other value as is
determined by the Committee.

(dd) “Person” means any individual, entity or group, within the meaning of
Section 3(a)(9) of the Exchange Act as used in Section 13(d)(3) or 14(d)(2) of
the Exchange Act.

(ee) “Plan” means this Nexpoint Residential Trust, Inc. 2016 Long Term Incentive
Plan.

 

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(ff) “Qualified Performance-Based Award” means any Cash Incentive Award or award
of Performance Shares, Performance Units, Restricted Stock, Restricted Stock
Units or other awards contemplated under Section 9 of this Plan, or portion of
such award, to a Covered Employee that is intended to satisfy the requirements
for “qualified performance-based compensation” under Section 162(m) of the Code.

(gg) “Restricted Stock” means Shares granted or sold pursuant to Section 6 of
this Plan as to which neither the substantial risk of forfeiture nor the
prohibition on transfers has expired.

(hh) “Restricted Stock Units” means an award made pursuant to Section 7 of this
Plan of the right to receive Shares, cash or a combination thereof at the end of
a specified period.

(ii) “Restriction Period” means the period of time during which Restricted Stock
Units are subject to restrictions, as provided in Section 7 of this Plan.

(jj) “Shareholder” means an individual or entity that owns one or more Shares.

(kk) “Shares” means the shares of common stock, par value $0.01 per share, of
the Company or any security into which such common stock may be changed by
reason of any transaction or event of the type referred to in Section 11 of this
Plan.

(ll) “Spread” means the excess of the Market Value per Share on the date when an
Option Right or Appreciation Right is exercised over the Option Price or Base
Price provided for in the related Option Right or Appreciation Right,
respectively.

(mm) “Subsidiary” means a corporation, company or other entity (i) more than 50
percent of whose outstanding shares or securities (representing the right to
vote for the election of directors or other managing authority) are, or
(ii) which does not have outstanding shares or securities (as may be the case in
a partnership, joint venture, limited liability company, or unincorporated
association), but more than 50 percent of whose ownership interest representing
the right generally to make decisions for such other entity is, now or
hereafter, owned or controlled, directly or indirectly, by the Company;
provided, however, that for purposes of determining whether any person may be a
Participant for purposes of any grant of Incentive Stock Options, “Subsidiary”
means any corporation (as defined in Treasury Regulation §1.421-1(i)) in which
at the time the Company owns or controls, directly or indirectly, more than 50
percent of the total combined Voting Power represented by all classes of stock
issued by such corporation.

(nn) “Tandem Appreciation Right” means an Appreciation Right granted pursuant to
Section 5 of this Plan that is granted in tandem with an Option Right.

(oo) “Voting Power” means at any time, the combined voting power of the
then-outstanding securities entitled to vote generally in the election of
Directors in the case of the Company, or members of the board of directors or
similar body in the case of another entity.

 

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3. Shares Available Under the Plan.

 

  (a) Maximum Shares Available Under Plan.

 

  (i) Subject to adjustment as provided in Section 11 of this Plan and the share
counting rules set forth in Section 3(b) of this Plan, the number of Shares
available under the Plan for awards of (A) Option Rights or Appreciation Rights,
(B) Restricted Stock, (C) Restricted Stock Units, (D) Performance Shares or
Performance Units, (E) awards contemplated by Section 9 of this Plan, or
(F) dividend equivalents paid with respect to awards made under the Plan will
not exceed in the aggregate 2,100,000 Shares. Such shares will be shares of
original issuance.

 

  (ii) The aggregate number of Shares available for issuance or transfer under
Section 3(a)(i) of this Plan will be reduced by one Share for every one Share
subject to an award granted under this Plan.

 

  (b) Share Counting Rules.

 

  (i) If any award granted under this Plan is cancelled or forfeited, expires or
is settled for cash (in whole or in part), the Shares subject to such award
will, to the extent of such cancellation, forfeiture, expiration, or cash
settlement, again be available under Section 3(a)(i) above.

 

  (ii) Notwithstanding anything to the contrary contained herein: (A) Shares
withheld by the Company, tendered or otherwise used in payment of the Option
Price of an Option Right will not be added back to the aggregate number of
Shares available under Section 3(a)(i) above; (B) Shares withheld by the Company
or otherwise used to satisfy a tax withholding obligation will not be added (or
added back, as applicable) to the aggregate number of Shares available under
Section 3(a)(i) above; (C) Shares subject to an Appreciation Right that are not
actually issued in connection with its settlement of Shares on exercise thereof
will not be added back to the aggregate number of Shares available under
Section 3(a)(i) above; and (D) Shares reacquired by the Company on the open
market or otherwise using cash proceeds from the exercise of Option Rights will
not be added back to the aggregate number of Shares available under
Section 3(a)(i) above. If, under this Plan, a Participant has elected to give up
the right to receive compensation in exchange for Shares based on fair market
value, such Shares will not count against the aggregate limit under
Section 3(a)(i) above.

(c) Limit on Incentive Stock Options. Notwithstanding anything in this Section 3
or elsewhere in this Plan to the contrary, and subject to adjustment as provided
in Section 11 of this Plan, the aggregate number of Shares actually issued or
transferred by the Company upon the exercise of Incentive Stock Options will not
exceed 2,100,000 Shares.

 

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(d) Individual Participant Limits. Notwithstanding anything in this Section 3 or
elsewhere in this Plan to the contrary, and subject to adjustment as provided in
Section 11 of this Plan:

 

  (i) No Participant will be granted Option Rights and/or Appreciation Rights,
in the aggregate, for more than 850,000 Shares during any calendar year.

 

  (ii) No Participant will be granted Qualified Performance-Based Awards of
Restricted Stock, Restricted Stock Units, Performance Shares and/or other awards
under Section 9 of this Plan, in the aggregate, for more than 850,000 Shares
during any calendar year.

 

  (iii) In no event will any Participant in any calendar year receive Qualified
Performance-Based Awards of Performance Units and/or other awards payable in
cash under Section 9 of this Plan having an aggregate maximum value as of their
respective Dates of Grant in excess of $200,000.

 

  (iv) In no event will any Participant in any calendar year receive Qualified
Performance-Based Awards that are Cash Incentive Awards having an aggregate
maximum value in excess of $200,000.

 

  (v) No non-employee Director will be granted, in any period of one calendar
year, awards under the Plan having an aggregate maximum value in excess of
$200,000.

(e) Notwithstanding anything in this Plan to the contrary, up to 5% of the
maximum number of Shares available for awards under this Plan as provided for in
Section 3(a) of this Plan, as may be adjusted under Section 11 of this Plan, may
be used for awards granted under Section 4 through Section 9 of this Plan that
do not at the Date of Grant comply with the applicable one-year minimum vesting
requirements set forth in such sections of this Plan.

4. Option Rights. The Committee may, from time to time and upon such terms and
conditions as it may determine, authorize the granting to Participants of Option
Rights. Each such grant may utilize any or all of the authorizations, and will
be subject to all of the requirements, contained in the following provisions:

(a) Each grant will specify the number of Shares to which it pertains subject to
the limitations set forth in Section 3 of this Plan.

(b) Each grant will specify an Option Price per share, which (except with
respect to awards under Section 22 of this Plan) may not be less than the Market
Value per Share on the Date of Grant.

 

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(c) Each grant will specify whether the Option Price will be payable (i) in cash
or by check acceptable to the Company or by wire transfer of immediately
available funds, (ii) by the actual or constructive transfer to the Company of
Shares owned by the Optionee (or other consideration authorized pursuant to
Section 4(d) of this Plan) having a value at the time of exercise equal to the
total Option Price, (iii) subject to any conditions or limitations established
by the Committee, the Company’s withholding of Shares otherwise issuable upon
exercise of an Option Right pursuant to a “net exercise” arrangement, (iv) by a
combination of such methods of payment, or (v) by such other methods as may be
approved by the Committee.

(d) To the extent permitted by law, any grant may provide for deferred payment
of the Option Price from the proceeds of sale through a bank or broker on a date
satisfactory to the Company of some or all of the Shares to which such exercise
relates.

(e) Successive grants may be made to the same Participant whether or not any
Option Rights previously granted to such Participant remain unexercised.

(f) Each grant will specify the period or periods of continuous service by the
Optionee with the Company or any Subsidiary that is necessary before the Option
Rights or installments thereof will become exercisable; provided, that, except
as otherwise described in this subsection, no grant of Option Rights may become
exercisable sooner than after one year. A grant of Option Rights may provide for
the earlier exercise of such Option Rights, including in the event of the
retirement, death or disability of a Participant or in the event of a Change in
Control only where either (i) within a specified period the Participant’s
service is involuntarily terminated for reasons other than for cause or the
Participant terminates his or her employment or service for good reason or
(ii) such Option Rights are not assumed or converted into replacement awards in
a manner described in the Award Agreement.

(g) Any grant of Option Rights may specify Management Objectives that must be
achieved as a condition to the exercise of such rights.

(h) Option Rights granted under this Plan may be (i) options, including, without
limitation, Incentive Stock Options, that are intended to qualify under
particular provisions of the Code, (ii) options that are not intended to
qualify, or (iii) combinations of the foregoing. Incentive Stock Options may
only be granted to Participants who meet the definition of “employees” under
Section 3401(c) of the Code.

(i) The exercise of an Option Right will result in the cancellation on a
share-for-share basis of any Tandem Appreciation Right authorized under
Section 5 of this Plan.

(j) No Option Right will be exercisable more than 10 years from the Date of
Grant; provided, that, in the case of Incentive Stock Options granted to 10%
Shareholders, no such Option Right shall be exercisable more than 5 years from
the Date of Grant.

(k) Option Rights granted under this Plan may not provide for any dividends or
dividend equivalents thereon.

 

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(l) Each grant of Option Rights will be evidenced by an Award Agreement. Each
Award Agreement will be subject to this Plan and will contain such terms and
provisions, consistent with this Plan, as the Committee may approve.

5. Appreciation Rights.

(a) The Committee may, from time to time and upon such terms and conditions as
it may determine, authorize the granting (i) to any Optionee, of Tandem
Appreciation Rights in respect of Option Rights granted hereunder, and (ii) to
any Participant, of Free-Standing Appreciation Rights. A Tandem Appreciation
Right will be a right of the Optionee, exercisable by surrender of the related
Option Right, to receive from the Company an amount determined by the Committee,
which will be expressed as a percentage of the Spread (not exceeding 100
percent) at the time of exercise. Tandem Appreciation Rights may be granted at
any time prior to the exercise or termination of the related Option Rights;
provided, however, that a Tandem Appreciation Right awarded in relation to an
Incentive Stock Option must be granted concurrently with such Incentive Stock
Option. A Free-Standing Appreciation Right will be a right of the Participant to
receive from the Company an amount determined by the Committee, which will be
expressed as a percentage of the Spread (not exceeding 100 percent) at the time
of exercise.

(b) Each grant of Appreciation Rights may utilize any or all of the
authorizations, and will be subject to all of the requirements, contained in the
following provisions:

 

  (i) Each grant may specify that the amount payable on exercise of an
Appreciation Right will be paid by the Company in cash, Shares or any
combination thereof.

 

  (ii) Any grant may specify that the amount payable on exercise of an
Appreciation Right may not exceed a maximum specified by the Committee at the
Date of Grant.

 

  (iii) Any grant may specify waiting periods before exercise and permissible
exercise dates or periods.

 

  (iv) Each grant may specify the period or periods of continuous service by the
Participant with the Company or any Subsidiary that is necessary before the
Appreciation Rights or installments thereof will become exercisable; provided,
that, except as otherwise described in this subsection, no grant of Appreciation
Rights may become exercisable sooner than after one year. A grant of
Appreciation Rights may provide for the earlier exercise of such Appreciation
Rights, including in the event of the retirement, death or disability of a
Participant or in the event of a Change in Control only where either (A) within
a specified period the Participant’s service is involuntarily terminated for
reasons other than for cause or the Participant terminates his or her employment
or service for good reason or (B) such Appreciation Rights are not assumed or
converted into replacement awards in a manner described in the Award Agreement.

 

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  (v) Any grant of Appreciation Rights may specify Management Objectives that
must be achieved as a condition of the exercise of such Appreciation Rights.

 

  (vi) Each grant of Appreciation Rights will be evidenced by an Award
Agreement, which Award Agreement will describe such Appreciation Rights,
identify the related Option Rights (if applicable), and contain such other terms
and provisions, consistent with this Plan, as the Committee may approve.

(c) Any grant of Tandem Appreciation Rights will provide that such Tandem
Appreciation Rights may be exercised only at a time when the related Option
Right is also exercisable and at a time when the Spread is positive, and by
surrender of the related Option Right for cancellation. Successive grants of
Tandem Appreciation Rights may be made to the same Participant regardless of
whether any Tandem Appreciation Rights previously granted to the Participant
remain unexercised.

(d) Appreciation Rights granted under this Plan may not provide for any
dividends or dividend equivalents thereon.

(e) Regarding Free-Standing Appreciation Rights only:

 

  (i) Each grant will specify in respect of each Free-Standing Appreciation
Right a Base Price, which (except with respect to awards under Section 22 of
this Plan) may not be less than the Market Value per Share on the Date of Grant;

 

  (ii) Successive grants may be made to the same Participant regardless of
whether any Free-Standing Appreciation Rights previously granted to the
Participant remain unexercised; and

 

  (iii) No Free-Standing Appreciation Right granted under this Plan may be
exercised more than 10 years from the Date of Grant.

6. Restricted Stock. The Committee may, from time to time and upon such terms
and conditions as it may determine, authorize the grant or sale of Restricted
Stock to Participants. Each such grant or sale may utilize any or all of the
authorizations, and will be subject to all of the requirements, contained in the
following provisions:

(a) Each such grant or sale will constitute an immediate transfer of the
ownership of Shares to the Participant in consideration of the performance of
services, entitling such Participant to voting, dividend and other ownership
rights, but subject to the substantial risk of forfeiture and restrictions on
transfer hereinafter referred to.

 

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(b) Each such grant or sale may be made without additional consideration or in
consideration of a payment by such Participant that is less than the Market
Value per Share at the Date of Grant.

(c) Each such grant or sale will provide that the Restricted Stock covered by
such grant or sale will be subject to a “substantial risk of forfeiture” within
the meaning of Section 83 of the Code for a period to be determined by the
Committee at the Date of Grant or until achievement of Management Objectives
referred to in subparagraph (e) below. If the elimination of restrictions is
based only on the passage of time rather than the achievement of Management
Objectives, the period of time will be no shorter than one year.

(d) Each such grant or sale will provide that during or after the period for
which such substantial risk of forfeiture is to continue, the transferability of
the Restricted Stock will be prohibited or restricted in the manner and to the
extent prescribed by the Committee at the Date of Grant (which restrictions may
include, without limitation, rights of repurchase or first refusal in the
Company or provisions subjecting the Restricted Stock to a continuing
substantial risk of forfeiture in the hands of any transferee).

(e) Any grant of Restricted Stock may specify Management Objectives that, if
achieved, will result in termination or early termination of the restrictions
applicable to such Restricted Stock; provided, however, that notwithstanding
subparagraph (c) above, restrictions relating to Restricted Stock that vest upon
the achievement of Management Objectives may not terminate sooner than after one
year.

(f) Notwithstanding anything to the contrary contained in this Plan (including
minimum vesting requirements), any grant or sale of Restricted Stock may provide
for the earlier termination of restrictions on such Restricted Stock, including
in the event of the retirement, death or disability of a Participant or in the
event of a Change in Control only where either (i) within a specified period the
Participant’s service is involuntarily terminated for reasons other than for
cause or the Participant terminates his or her employment or service for good
reason or (ii) such Restricted Stock is not assumed or converted into
replacement awards in a manner described in the Award Agreement; provided,
however, that no award of Restricted Stock intended to be a Qualified
Performance-Based Award will provide for such early termination of restrictions
(other than in connection with the death or disability of the Participant or a
Change in Control) to the extent such provisions would cause such award to fail
to be a Qualified Performance-Based Award.

(g) Any such grant or sale of Restricted Stock may require that any or all
dividends or other distributions paid thereon during the period of such
restrictions be automatically deferred and reinvested in additional Restricted
Stock, which may be subject to the same restrictions as the underlying award;
provided, however, that dividends or other distributions on Restricted Stock
with restrictions that lapse as a result of the achievement of Management
Objectives will be deferred until and paid contingent upon the achievement of
the applicable Management Objectives.

(h) Each grant or sale of Restricted Stock will be evidenced by an Award
Agreement and will contain such terms and provisions, consistent with this Plan,
as the Committee may approve. Unless otherwise directed by the Committee,
(i) all certificates

 

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representing Restricted Stock will be held in custody by the Company until all
restrictions thereon will have lapsed, together with a stock power or powers
executed by the Participant in whose name such certificates are registered,
endorsed in blank and covering such shares or (ii) all Restricted Stock will be
held at the Company’s transfer agent in book entry form with appropriate
restrictions relating to the transfer of such Restricted Stock.

7. Restricted Stock Units. The Committee may, from time to time and upon such
terms and conditions as it may determine, authorize the granting or sale of
Restricted Stock Units to Participants. Each such grant or sale may utilize any
or all of the authorizations, and will be subject to all of the requirements,
contained in the following provisions:

(a) Each such grant or sale will constitute the agreement by the Company to
deliver Shares or cash, or a combination thereof, to the Participant in the
future in consideration of the performance of services, but subject to the
fulfillment of such conditions (which may include the achievement of Management
Objectives) during the Restriction Period as the Committee may specify.

(b) If a grant of Restricted Stock Units specifies that the Restriction Period
will terminate only upon the achievement of Management Objectives or that the
Restricted Stock Units will be earned based on the achievement of Management
Objectives, then, notwithstanding anything to the contrary contained in
subparagraph (d) below, the applicable Restriction Period may not be a period of
less than one year.

(c) Each such grant or sale may be made without additional consideration or in
consideration of a payment by such Participant that is less than the Market
Value per Share at the Date of Grant.

(d) If the Restriction Period lapses only by the passage of time rather than the
achievement of Management Objectives as provided in subparagraph (b) above, each
such grant or sale will be subject to a Restriction Period of not less than one
year.

(e) Notwithstanding anything to the contrary contained in this Plan (including
minimum vesting requirements), any grant or sale of Restricted Stock Units may
provide for the earlier lapse or other modification of the Restriction Period,
including in the event of the retirement, death or disability of a Participant
or in the event of a Change in Control only where either (i) within a specified
period the Participant’s service is involuntarily terminated for reasons other
than for cause or the Participant terminates his or her employment or service
for good reason or (ii) such Restricted Stock Units are not assumed or converted
into replacement awards in a manner described in the Award Agreement; provided,
however, that no award of Restricted Stock Units intended to be a Qualified
Performance-Based Award will provide for such early lapse or modification of the
Restriction Period (other than in connection with the death or disability of the
Participant or a Change in Control) to the extent such provisions would cause
such award to fail to be a Qualified Performance-Based Award.

(f) During the Restriction Period, the Participant will have no right to
transfer any rights under his or her award and will have no rights of ownership
in the Shares deliverable upon payment of the Restricted Stock Units and will
have no right to vote them, but the Committee may, at or after the Date of
Grant, authorize the payment of dividend equivalents on

 

12

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such Restricted Stock Units on either a current or deferred or contingent basis,
either in cash or in additional Shares; provided, however, that dividend
equivalents or other distributions on Shares underlying Restricted Stock Units
with restrictions that lapse as a result of the achievement of Management
Objectives will be deferred until and paid contingent upon the achievement of
the applicable Management Objectives.

(g) Each grant or sale of Restricted Stock Units will specify the time and
manner of payment of the Restricted Stock Units that have been earned. Each
grant or sale will specify that the amount payable with respect thereto will be
paid by the Company in Shares or cash, or a combination thereof.

(h) Each grant or sale of Restricted Stock Units will be evidenced by an Award
Agreement and will contain such terms and provisions, consistent with this Plan,
as the Committee may approve.

8. Cash Incentive Awards, Performance Shares and Performance Units. The
Committee may, from time to time and upon such terms and conditions as it may
determine, authorize the granting of Cash Incentive Awards, Performance Shares
and Performance Units. Each such grant may utilize any or all of the
authorizations, and will be subject to all of the requirements, contained in the
following provisions:

(a) Each grant will specify the number or amount of Performance Shares or
Performance Units, or amount payable with respect to Cash Incentive Awards, to
which it pertains, which number or amount may be subject to adjustment to
reflect changes in compensation or other factors; provided, however, that no
such adjustment will be made in the case of a Qualified Performance-Based Award
(other than in connection with the death or disability of the Participant or a
Change in Control) where such action would result in the loss of the otherwise
available exemption of the award under Section 162(m) of the Code.

(b) The Performance Period with respect to each Cash Incentive Award,
Performance Share or Performance Unit will be such period of time (with respect
to each Performance Share or Performance Unit not less than one year) as will be
determined by the Committee at the time of grant, which may be subject to
earlier lapse or other modification, including in the event of the retirement,
death or disability of a Participant or in the event of a Change in Control only
where either (i) within a specified period the Participant’s service is
involuntarily terminated for reasons other than for cause or the Participant
terminates his or her employment or service for good reason or (ii) such Cash
Incentive Awards, Performance Shares or Performance Units are not assumed or
converted into replacement awards in a manner described in the Award Agreement;
provided, however, that no such adjustment will be made in the case of a
Qualified Performance-Based Award (other than in connection with the death or
disability of the Participant or a Change in Control) where such action would
result in the loss of the otherwise available exemption of the award under
Section 162(m) of the Code. In such event, the Award Agreement will specify the
time and terms of delivery.

(c) Each grant of Cash Incentive Awards, Performance Shares or Performance Units
will specify Management Objectives which, if achieved, will result in payment or
early payment of the award, and each grant may specify in respect of such
specified Management Objectives a minimum acceptable level or levels of
achievement and may set forth a formula for

 

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determining the number of Performance Shares or Performance Units, or amount
payable with respect to Cash Incentive Awards, that will be earned if
performance is at or above the minimum or threshold level or levels, or is at or
above the target level or levels, but falls short of maximum achievement of the
specified Management Objectives.

(d) Each grant will specify the time and manner of payment of Cash Incentive
Awards, Performance Shares or Performance Units that have been earned. Any grant
may specify that the amount payable with respect thereto may be paid by the
Company in cash, in Shares, in Restricted Stock or Restricted Stock Units or in
any combination thereof.

(e) Any grant of Cash Incentive Awards, Performance Shares or Performance Units
may specify that the amount payable or the number of Shares, shares of
Restricted Stock or Restricted Stock Units with respect thereto may not exceed a
maximum specified by the Committee at the Date of Grant.

(f) The Committee may, at the Date of Grant of Performance Shares, provide for
the payment of dividend equivalents to the holder thereof either in cash or in
additional Shares, subject in all cases to deferral and payment on a contingent
basis based on the Participant’s earning of the Performance Shares with respect
to which such dividend equivalents are paid.

(g) Each grant of Cash Incentive Awards, Performance Shares or Performance Units
will be evidenced by an Award Agreement and will contain such other terms and
provisions, consistent with this Plan, as the Committee may approve.

9. Other Awards.

(a) Subject to applicable law and the applicable limits set forth in Section 3
of this Plan, the Committee may grant to any Participant Shares or such other
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 or factors that may
influence the value of such shares, including, without limitation, convertible
or exchangeable debt securities, other rights convertible or exchangeable into
Shares, purchase rights for Shares, awards with value and payment contingent
upon performance of the Company or specified Subsidiaries, Affiliates or other
business units thereof or any other factors designated by the Committee, awards
valued by reference to the book value of the Shares or the value of securities
of, or the performance of specified Subsidiaries or Affiliates or other business
units of the Company, and awards that are membership interests in a Subsidiary
or Operating Partnership, and OP Interests. The Committee will determine the
terms and conditions of such awards. Shares delivered pursuant to an award in
the nature of a purchase right granted under this Section 9 will be purchased
for such consideration, paid for at such time, by such methods, and in such
forms, including, without limitation, Shares, other awards, notes or other
property, as the Committee determines.

(b) Cash awards, as an element of or supplement to any other award granted under
this Plan, may also be granted pursuant to this Section 9.

(c) The Committee may grant Shares as a bonus, or may grant other awards in lieu
of obligations of the Company or a Subsidiary to pay cash or deliver other
property under this Plan or under other plans or compensatory arrangements,
subject to such terms as will be determined by the Committee in a manner that
complies with Section 409A of the Code.

 

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(d) If the earning or vesting of, or elimination of restrictions applicable to,
an award granted under this Section 9 is based only on the passage of time
rather than the achievement of Management Objectives, the period of time shall
be no shorter than one year. If the earning or vesting of, or elimination of
restrictions applicable to, awards granted under this Section 9 is based on the
achievement of Management Objectives, the earning, vesting or restriction period
may not terminate sooner than after one year.

(e) Notwithstanding anything to the contrary contained in this Plan (including
minimum vesting requirements), any grant of an award under this Section 9 may
provide for the earning or vesting of, or earlier elimination of restrictions
applicable to, such award, including in the event of the retirement, death or
disability of a Participant or in the event of a Change in Control only where
either (i) within a specified period the Participant’s service is involuntarily
terminated for reasons other than for cause or the Participant terminates his or
her employment or service for good reason or (ii) such awards are not assumed or
converted into replacement awards in a manner described in the Award Agreement;
provided, however, that no such adjustment will be made in the case of a
Qualified Performance-Based Award (other than in connection with the death or
disability of the Participant or a Change in Control) where such action would
result in the loss of the otherwise available exemption of the award under
Section 162(m) of the Code. In such event, the Award Agreement will specify the
time and terms of delivery.

10. Administration of this Plan.

(a) This Plan will be administered by the Committee. The Committee may from time
to time delegate all or any part of its authority under this Plan to a
subcommittee thereof. To the extent of any such delegation, references in this
Plan to the Committee will be deemed to be references to such subcommittee.

(b) The interpretation and construction by the Committee of any provision of
this Plan or of any Award Agreement (or related documents) and any determination
by the Committee pursuant to any provision of this Plan or of any such
agreement, notification or document will be final and conclusive. No member of
the Committee shall be liable for any such action or determination made in good
faith. In addition, the Committee is authorized to take any action it determines
in its sole discretion to be appropriate subject only to the express limitations
contained in this Plan, and no authorization in any provision of this Plan is
intended or may be deemed to constitute a limitation on the authority of the
Committee.

(c) To the extent permitted by law, the Committee may delegate to one or more of
its members or to one or more officers of the Company, or to one or more agents
or advisors, such administrative duties or powers as it may deem advisable, and
the Committee, the subcommittee, or any person to whom duties or powers have
been delegated as aforesaid, may employ one or more persons to render advice
with respect to any responsibility the Committee, the subcommittee or such
person may have under the Plan. The Committee may, by resolution, authorize one
or more officers of the Company to do one or both of the following on the same
basis as the Committee: (i) designate employees to be recipients of awards under
this Plan; and

 

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(ii) determine the size of any such awards; provided, however, that (A) the
Committee will not delegate such responsibilities to any such officer for awards
granted to an employee who is an officer, Director, or more than 10% Beneficial
Owner (as defined in Section 12 below) of any class of the Company’s equity
securities that is registered pursuant to Section 12 of the Exchange Act, as
determined by the Committee in accordance with Section 16 of the Exchange Act,
or any Covered Employee; (B) the resolution providing for such authorization
sets forth the total number of Shares such officer(s) may grant; and (C) the
officer(s) will report periodically to the Committee regarding the nature and
scope of the awards granted pursuant to the authority delegated.

11. Adjustments. The Committee shall make or provide for such adjustments in the
numbers of Shares covered by outstanding Option Rights, Appreciation Rights,
Restricted Stock, Restricted Stock Units, Performance Shares and Performance
Units granted hereunder and, if applicable, in the number of Shares covered by
other awards granted pursuant to Section 9 hereof, in the Option Price and Base
Price provided in outstanding Option Rights and Appreciation Rights,
respectively, in the kind of shares covered thereby, in Cash Incentive Awards,
and in other award terms, as the Committee, in its sole discretion, exercised in
good faith, shall determine is equitably required to prevent dilution or
enlargement of the rights of Participants or Optionees that otherwise would
result from (a) any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Company,
(b) any merger, consolidation, spin-off, split-off, spin-out, split-up,
reorganization, partial or complete liquidation or other distribution of assets,
issuance of rights or warrants to purchase securities, or (c) any other
corporate transaction or event having an effect similar to any of the foregoing.
Moreover, in the event of any such transaction or event or in the event of a
Change in Control, the Committee shall provide in substitution for any or all
outstanding awards under this Plan such alternative consideration (including
cash), if any, as it, in good faith, may determine to be equitable in the
circumstances and may require in connection therewith the surrender of all
awards so replaced in a manner that complies with Section 409A of the Code. In
addition, for each Option Right or Appreciation Right with an Option Price or
Base Price, respectively, greater than the consideration offered in connection
with any such transaction or event or Change in Control, the Committee may in
its discretion elect to cancel such Option Right or Appreciation Right without
any payment to the person holding such Option Right or Appreciation Right. The
Committee shall also make or provide for such adjustments in the numbers of
shares specified in Section 3 of this Plan as the Committee in its sole
discretion, exercised in good faith, shall determine is appropriate to reflect
any transaction or event described in this Section 11; provided, however, that
any such adjustment to the number specified in Section 3(c) will be made only if
and to the extent that such adjustment would not cause any Option Right intended
to qualify as an Incentive Stock Option to fail to so qualify.

12. Change in Control. For purposes of this Plan, except as may be otherwise
prescribed by the Committee in an Award Agreement made under this Plan, a
“Change in Control” will be deemed to have occurred upon the occurrence (after
the Effective Date) of any of the following events:

(i) individuals who, on the Effective Date, constitute the Board (the “Incumbent
Directors”) cease for any reason to constitute at least a majority of such
Board, provided that any person becoming a Director after the Effective Date and
whose election or

 

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nomination for election was approved by a vote of at least a majority of the
Incumbent Directors then on the Board shall be an Incumbent Director; provided,
however, that no individual initially elected or nominated as a Director of the
Company as a result of an actual or threatened election contest with respect to
the election or removal of Directors (“Election Contest”) or other actual or
threatened solicitation of proxies or consents by or on behalf of any Person
other than the Board (“Proxy Contest”), including by reason of any agreement
intended to avoid or settle any Election Contest or Proxy Contest, shall be
deemed an Incumbent Director;

(ii) any Person becomes a Beneficial Owner (as such term is defined in the Rule
13d-3 of the General Rules and Regulations under the Exchange Act), directly or
indirectly, of either (A) 35% or more of the then-outstanding shares of common
stock of the Company (“Company Common Stock”) or (B) securities of the Company
representing 35% or more of the combined Voting Power of the Company’s then
outstanding securities eligible to vote for the election of directors (the
“Company Voting Securities”); provided, however, that for purposes of this
subsection (ii), the following acquisitions of Company Common Stock or Company
Voting Securities shall not constitute a Change in Control: (w) an acquisition
directly from the Company, (x) an acquisition by the Company or a Subsidiary,
(y) an acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any Subsidiary, or (z) an acquisition pursuant to a
Non-Qualifying Transaction (as defined in subsection (iii) below);

(iii) the consummation of a reorganization, merger, consolidation, statutory
share exchange or similar form of corporate transaction involving the Company or
a Subsidiary (a “Reorganization”), or the sale or other disposition of all or
substantially all of the Company’s assets (a “Sale”) or the acquisition of
assets or stock of another corporation or other entity (an “Acquisition”),
unless immediately following such Reorganization, Sale or Acquisition: (A) all
or substantially all of the individuals and entities who were the Beneficial
Owners, respectively, of the outstanding Company Common Stock and outstanding
Company Voting Securities immediately prior to such Reorganization, Sale or
Acquisition beneficially own, directly or indirectly, more than 35% of,
respectively, the then outstanding shares of common stock and the combined
Voting Power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the entity
resulting from such Reorganization, Sale or Acquisition (including, without
limitation, an entity which as a result of such transaction owns the Company or
all or substantially all of the Company’s assets or stock either directly or
through one or more subsidiaries) (the “Surviving Entity”) in substantially the
same proportions as their ownership, immediately prior to such Reorganization,
Sale or Acquisition, of the outstanding Company Common Stock and the outstanding
Company Voting Securities, as the case may be, and (B) no Person (other than
(x) the Company or any Subsidiary, (y) the Surviving Entity or its ultimate
parent entity, or (z) any employee benefit plan (or related trust) sponsored or
maintained by any of the foregoing) is the Beneficial Owner, directly or
indirectly, of 35% or more of the total common stock or 35% or more of the total
Voting Power of the outstanding voting securities eligible to elect directors of
the Surviving Entity, and (C) at least a majority of the members of the board of
directors of the Surviving Entity were Incumbent Directors at the time of the
Board’s approval of the execution of the initial agreement providing for such
Reorganization, Sale or Acquisition (any Reorganization, Sale or Acquisition
which satisfies all of the criteria specified in (A), (B) and (C) above shall be
deemed to be a “Non-Qualifying Transaction”);

 

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(iv) approval by the Shareholders of the Company of a complete liquidation or
dissolution of the Company; or

(v) termination of the Advisor.

13. Detrimental Activity and Recapture Provisions. Any Award Agreement may
provide for the cancellation or forfeiture of an award or the forfeiture and
repayment to the Company of any gain related to an award, or other provisions
intended to have a similar effect, upon such terms and conditions as may be
determined by the Committee from time to time, if a Participant, either
(a) during employment or other service with the Company or a Subsidiary, or
(b) within a specified period after termination of such employment or service,
shall engage in any detrimental activity. In addition, notwithstanding anything
in this Plan to the contrary, any Award Agreement may also provide for the
cancellation or forfeiture of an award or the forfeiture and repayment to the
Company of any gain related to an award, or other provisions intended to have a
similar effect, upon such terms and conditions as may be required by the
Committee or under Section 10D of the Exchange Act and any applicable rules or
regulations promulgated by the Securities and Exchange Commission or any
national securities exchange or national securities association on which the
Shares may be traded.

14. Non U.S. Participants. In order to facilitate the making of any grant or
combination of grants under this Plan, the Committee may provide for such
special terms for awards to Participants who are foreign nationals or who are
employed by the Company or any Subsidiary outside of the United States of
America or who provide services to the Company or any Subsidiary under an
agreement with a foreign nation or agency, as the Committee may consider
necessary or appropriate to accommodate differences in local law, tax policy or
custom. Moreover, the Committee may approve such supplements to or amendments,
restatements or alternative versions of this Plan (including, without
limitation, sub-plans) as it may consider necessary or appropriate for such
purposes, without thereby affecting the terms of this Plan as in effect for any
other purpose, and the secretary or other appropriate officer of the Company may
certify any such document as having been approved and adopted in the same manner
as this Plan. No such special terms, supplements, amendments or restatements,
however, will include any provisions that are inconsistent with the terms of
this Plan as then in effect unless this Plan could have been amended to
eliminate such inconsistency without further approval by the Shareholders.

15. Transferability.

(a) Except as otherwise determined by the Committee, no Option Right,
Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Share,
Performance Unit, Cash Incentive Award, award contemplated by Section 9 of this
Plan or dividend equivalents paid with respect to awards made under this Plan
will be transferable by the Participant except (i) if it is made by the
Participant for no consideration to Immediate Family Members or to a bona fide
trust, partnership or other entity controlled by and for the benefit of one or
more Immediate Family Members (“Immediate Family Members” mean the Participant’s
spouse, children, stepchildren, parents, stepparents, siblings (including half
brothers and sisters), in-laws, and other individuals who have a relationship to
the Participant arising because of legal adoption; however, no transfer may be
made to the extent that transferability would cause Form

 

18

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S-8 or any successor form thereto not to be able to register Shares related to
an award) or (ii) by will or the laws of descent and distribution. In no event
will any such award granted under the Plan be transferred for value. Except as
otherwise determined by the Committee, Option Rights and Appreciation Rights
will be exercisable during the Participant’s lifetime only by him or her or, in
the event of the Participant’s legal incapacity to do so, by his or her guardian
or legal representative acting on behalf of the Participant in a fiduciary
capacity under state law or court supervision.

(b) The Committee may specify at the Date of Grant that part or all of the
Shares that are (i) to be issued or transferred by the Company upon the exercise
of Option Rights or Appreciation Rights, upon the termination of the Restriction
Period applicable to Restricted Stock Units or upon payment under any grant of
Performance Shares or Performance Units or (ii) no longer subject to the
substantial risk of forfeiture and restrictions on transfer referred to in
Section 6 of this Plan, will be subject to further restrictions on transfer.

16. Withholding Taxes. To the extent that the Company is required to withhold
federal, state, local or foreign taxes in connection with any payment made or
benefit realized by a Participant or other person under this Plan, and the
amounts available to the Company for such withholding are insufficient, it will
be a condition to the receipt of such payment or the realization of such benefit
that the Participant or such other person make arrangements satisfactory to the
Company for payment of the balance of such taxes required to be withheld, which
arrangements (in the discretion of the Committee) may include relinquishment of
a portion of such benefit. If a Participant’s benefit is to be received in the
form of Shares, and such Participant fails to make arrangements for the payment
of tax, then, unless otherwise determined by the Committee, the Company will
withhold Shares having a value equal to the amount required to be withheld.
Notwithstanding the foregoing, when a Participant is required to pay the Company
an amount required to be withheld under applicable income and employment tax
laws, the Participant may elect, unless otherwise determined by the Committee,
to satisfy the obligation, in whole or in part, by having withheld, from the
Shares required to be delivered to the Participant, Shares having a value equal
to the amount required to be withheld or by delivering to the Company other
Shares held by such Participant. The Shares used for tax withholding will be
valued at an amount equal to the market value of such Shares on the date the
benefit is to be included in Participant’s income. In no event will the market
value of the Shares to be withheld and delivered pursuant to this Section to
satisfy applicable withholding taxes in connection with the benefit exceed the
minimum amount of taxes required to be withheld. Participants will also make
such arrangements as the Company may require for the payment of any withholding
tax obligation that may arise in connection with the disposition of Shares
acquired upon the exercise of Option Rights.

17. Compliance with Section 409A of the Code.

(a) To the extent applicable, it is intended that this Plan and any grants made
hereunder comply with the provisions of Section 409A of the Code, so that the
income inclusion provisions of Section 409A(a)(1) of the Code do not apply to
the Participants. This Plan and any grants made hereunder will be administered
in a manner consistent with this intent. Any reference in this Plan to
Section 409A of the Code will also include any regulations or any other formal
guidance promulgated with respect to such Section by the U.S. Department of the
Treasury or the Internal Revenue Service.

 

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(b) Neither a Participant nor any of a Participant’s creditors or beneficiaries
will have the right to subject any deferred compensation (within the meaning of
Section 409A of the Code) payable under this Plan and grants hereunder to any
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment or garnishment. Except as permitted under Section 409A of the Code,
any deferred compensation (within the meaning of Section 409A of the Code)
payable to a Participant or for a Participant’s benefit under this Plan and
grants hereunder may not be reduced by, or offset against, any amount owing by a
Participant to the Company or any of its Subsidiaries.

(c) If, at the time of a Participant’s separation from service (within the
meaning of Section 409A of the Code), (i) the Participant will be a specified
employee (within the meaning of Section 409A of the Code and using the
identification methodology selected by the Company from time to time) and
(ii) the Company makes a good faith determination that an amount payable
hereunder constitutes deferred compensation (within the meaning of Section 409A
of the Code) the payment of which is required to be delayed pursuant to the
six-month delay rule set forth in Section 409A of the Code in order to avoid
taxes or penalties under Section 409A of the Code, then the Company will not pay
such amount on the otherwise scheduled payment date but will instead pay it,
without interest, on the fifth business day of the seventh month after such
separation from service.

(d) Notwithstanding any provision of this Plan and grants hereunder to the
contrary, in light of the uncertainty with respect to the proper application of
Section 409A of the Code, the Company reserves the right to make amendments to
this Plan and grants hereunder as the Company deems necessary or desirable to
avoid the imposition of taxes or penalties under Section 409A of the Code. In
any case, a Participant will be solely responsible and liable for the
satisfaction of all taxes and penalties that may be imposed on a Participant or
for a Participant’s account in connection with this Plan and grants hereunder
(including any taxes and penalties under Section 409A of the Code), and neither
the Company nor any of its Affiliates will have any obligation to indemnify or
otherwise hold a Participant harmless from any or all of such taxes or
penalties.

18. Amendments.

(a) The Board may at any time and from time to time amend this Plan in whole or
in part; provided, however, that if an amendment to this Plan (i) would
materially increase the benefits accruing to Participants under this Plan,
(ii) would materially increase the number of securities which may be issued
under this Plan, (iii) would materially modify the requirements for
participation in this Plan, or (iv) must otherwise be approved by the
Shareholders in order to comply with applicable law or the rules of the New York
Stock Exchange or, if the Shares are not traded on the New York Stock Exchange,
the principal national securities exchange upon which the Shares are traded or
quoted, then, such amendment will be subject to Shareholder approval and will
not be effective unless and until such approval has been obtained.

 

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(b) Except in connection with a corporate transaction or event described in
Section 11 of this Plan, the terms of outstanding awards may not be amended to
reduce the Option Price of outstanding Option Rights or the Base Price of
outstanding Appreciation Rights, or cancel outstanding Option Rights or
Appreciation Rights in exchange for cash, other awards or Option Rights or
Appreciation Rights with an Option Price or Base Price, as applicable, that is
less than the Option Price of the original Option Rights or Base Price of the
original Appreciation Rights, as applicable, without Shareholder approval. This
Section 18(b) is intended to prohibit the repricing of “underwater” Option
Rights and Appreciation Rights and will not be construed to prohibit the
adjustments provided for in Section 11 of this Plan. Notwithstanding any
provision of this Plan to the contrary, this Section 18(b) may not be amended
without approval by the Shareholders.

(c) If permitted by Section 409A of the Code and Section 162(m) of the Code, but
subject to the paragraph that follows, notwithstanding the Plan’s minimum
vesting requirements, and including in the case of termination of employment by
reason of death, disability or retirement, or in the case of unforeseeable
emergency or other special circumstances or in the event of a Change in Control,
to the extent a Participant holds an Option Right or Appreciation Right not
immediately exercisable in full, or any Restricted Stock as to which the
substantial risk of forfeiture or the prohibition or restriction on transfer has
not lapsed, or any Restricted Stock Units as to which the Restriction Period has
not been completed, or any Cash Incentive Awards, Performance Shares or
Performance Units which have not been fully earned, or any other awards made
pursuant to Section 9 subject to any vesting schedule or transfer restriction,
or who holds Shares subject to any transfer restriction imposed pursuant to
Section 15(b) of this Plan, the Committee may, in its sole discretion,
accelerate the time at which such Option Right, Appreciation Right or other
award may be exercised or the time at which such substantial risk of forfeiture
or prohibition or restriction on transfer will lapse or the time when such
Restriction Period will end or the time at which such Cash Incentive Awards,
Performance Shares or Performance Units will be deemed to have been fully earned
or the time when such transfer restriction will terminate or may waive any other
limitation or requirement under any such award, except in the case of a
Qualified Performance-Based Award where such action would result in the loss of
the otherwise available exemption of the award under Section 162(m) of the Code.

(d) Subject to Section 18(b) hereof, the Committee may amend the terms of any
award theretofore granted under this Plan prospectively or retroactively, except
in the case of a Qualified Performance-Based Award (other than in connection
with the Participant’s death or disability, or a Change in Control) where such
action would result in the loss of the otherwise available exemption of the
award under Section 162(m) of the Code. In such case, the Committee will not
make any modification of the Management Objectives or the level or levels of
achievement with respect to such Qualified Performance-Based Award. Subject to
Section 11 above, no such amendment will impair the rights of any Participant
without his or her consent. The Board may, in its discretion, terminate this
Plan at any time. Termination of this Plan will not affect the rights of
Participants or their successors under any awards outstanding hereunder and not
exercised in full on the date of termination.

 

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19. Governing Law. This Plan and all grants and awards and actions taken
hereunder will be governed by and construed in accordance with the internal
substantive laws of the State of Delaware.

20. Effective Date/Termination. This Plan will be effective as of the Effective
Date. No grant will be made under this Plan after the tenth anniversary of the
Effective Date, but all grants made on or prior to such date will continue in
effect thereafter subject to the terms thereof and of this Plan.

21. Miscellaneous Provisions.

(a) The Company will not be required to issue any fractional Shares pursuant to
this Plan. The Committee may provide for the elimination of fractions or for the
settlement of fractions in cash.

(b) This Plan will not confer upon any Participant any right with respect to
continuance of employment or other service with the Company or any Subsidiary,
nor will it interfere in any way with any right the Company or any Subsidiary
would otherwise have to terminate such Participant’s employment or other service
at any time.

(c) Except with respect to Section 21(e), to the extent that any provision of
this Plan would prevent any Option Right that was intended to qualify as an
Incentive Stock Option from qualifying as such, that provision will be null and
void with respect to such Option Right. Such provision, however, will remain in
effect for other Option Rights and there will be no further effect on any
provision of this Plan.

(d) No award under this Plan may be exercised by the holder thereof if such
exercise, and the receipt of cash or stock thereunder, would be, in the opinion
of counsel selected by the Company, contrary to law or the regulations of any
duly constituted authority having jurisdiction over this Plan.

(e) Absence on leave approved by a duly constituted officer of the Company or
any of its Subsidiaries will not be considered interruption or termination of
service of any employee for any purposes of this Plan or awards granted
hereunder.

(f) No Participant will have any rights as a shareholder with respect to any
shares subject to awards granted to him or her under this Plan prior to the date
as of which he or she is actually recorded as the holder of such shares upon the
stock records of the Company.

(g) The Committee may condition the grant of any award or combination of awards
authorized under this Plan on the surrender or deferral by the Participant of
his or her right to receive a cash bonus or other compensation otherwise payable
by the Company or a Subsidiary to the Participant.

(h) Except with respect to Option Rights and Appreciation Rights, the Committee
may permit Participants to elect to defer the issuance of Shares under the Plan
pursuant to such rules, procedures or programs as it may establish for purposes
of this Plan and which are intended to comply with the requirements of
Section 409A of the Code. The Committee also may provide that deferred issuances
and settlements include the payment or crediting of dividend equivalents or
interest on the deferral amounts.

 

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(i) If any provision of this Plan is or becomes invalid, illegal or
unenforceable in any jurisdiction, or would disqualify this Plan or any award
under any law deemed applicable by the Committee, such provision will be
construed or deemed amended or limited in scope to conform to applicable laws
or, in the discretion of the Committee, it will be stricken and the remainder of
this Plan will remain in full force and effect.

22. Stock-Based Awards in Substitution for Option Rights or Awards Granted by
Other Company. Notwithstanding anything in this Plan to the contrary:

(a) Awards may be granted under this Plan in substitution for or in conversion
of, or in connection with an assumption of, stock options, stock appreciation
rights, restricted stock, restricted stock units or other stock or stock-based
awards held by awardees of an entity engaging in a corporate acquisition or
merger transaction with the Company or any Subsidiary. Any conversion,
substitution or assumption will be effective as of the close of the merger or
acquisition, and, to the extent applicable, will be conducted in a manner that
complies with Section 409A of the Code. The awards so granted may reflect the
original terms of the awards being assumed or substituted or converted for and
need not comply with other specific terms of this Plan, and may account for
Shares substituted for the securities covered by the original awards and the
number of shares subject to the original awards, as well as any exercise or
purchase prices applicable to the original awards, adjusted to account for
differences in stock prices in connection with the transaction.

(b) In the event that a company acquired by the Company or any Subsidiary or
with which the Company or any Subsidiary merges has shares available under a
pre-existing plan previously approved by Shareholders and not adopted in
contemplation of such acquisition or merger, the shares available for grant
pursuant to the terms of such plan (as adjusted, to the extent appropriate, to
reflect such acquisition or merger) may be used for awards made after such
acquisition or merger under the Plan; provided, however, that awards using such
available shares may not be made after the date awards or grants could have been
made under the terms of the pre-existing plan absent the acquisition or merger,
and may only be made to individuals who were not employees or directors of the
Company or any Subsidiary prior to such acquisition or merger.

(c) Any Shares that are issued or transferred by, or that are subject to any
awards that are granted by, or become obligations of, the Company under
Sections 22(a) or 22(b) above will not reduce the Shares available for issuance
or transfer under the Plan or otherwise count against the limits contained in
Section 3 of the Plan. In addition, no Shares that are issued or transferred by,
or that are subject to any awards that are granted by, or become obligations of,
the Company under Sections 22(a) or 22(b) above will be added to the aggregate
limit contained in Section 3(a)(i) of the Plan.

23. REIT Status. This Plan shall be interpreted and construed in a manner
consistent with the Company’s status as a REIT. No award shall be granted or
awarded, and with respect to any award granted under this Plan, such award shall
not vest, be exercisable or be settled: (i) to the extent that the grant,
vesting, exercise or settlement could cause the Participant or any other person
to be in violation of the share ownership limit or any other limitation on
ownership or transfer prescribed by the Company’s charter, or (ii) if, in the
discretion of the Committee, the grant, vesting, exercise or settlement of the
award could impair the Company’s status as a REIT.

 

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The foregoing is hereby acknowledged as being the 2016 Long Term Incentive Plan
as adopted by the Board on March 7, 2016, and by the Shareholders on June 15,
2016.

 

NEXPOINT RESIDENTIAL TRUST, INC. By:       /s/ Brian Mitts

Name: Brian Mitts Title:  

Chief Financial Officer, Executive VP-

Finance and Treasurer

 

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