<PAGE>
                                                                   Exhibit 10.25

                         AMERICAN FINANCIAL REALTY TRUST

                           2002 EQUITY INCENTIVE PLAN

<PAGE>


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                           Page No.
                                                                                                           -------
<S>                                                                                                        <C>
ARTICLE 1. DEFINITIONS......................................................................................1
     1.1    General.........................................................................................1
ARTICLE 2. COMMON SHARES SUBJECT TO PLAN....................................................................5
     2.1    Common Shares Subject to Plan...................................................................5
     2.2    Add-back of Grants..............................................................................5
ARTICLE 3. ELIGIBILITY; GRANTS; AWARD AGREEMENTS............................................................6
     3.1    Eligibility.....................................................................................6
     3.2    Grants..........................................................................................6
     3.3    Provisions Applicable to Section 162(m) Participants............................................6
     3.4    Award Agreement.................................................................................7
ARTICLE 4. OPTIONS..........................................................................................8
     4.1    Award Agreement for Option Grant................................................................8
     4.2    Option Price....................................................................................8
     4.3    Qualification for Incentive Stock Options.......................................................8
     4.4    Change in Incentive Stock Option Grant..........................................................8
     4.5    Option Term.....................................................................................9
     4.6    Option Vesting..................................................................................9
     4.7    Fair Market Value...............................................................................9
ARTICLE 5. EXERCISE OF OPTIONS.............................................................................10
     5.1    Partial Exercise...............................................................................10
     5.2    Manner of Exercise.............................................................................10
     5.3    Conditions to Issuance of Common Shares........................................................11
     5.4    Rights as Shareholders.........................................................................12
     5.5    Ownership and Transfer Restrictions............................................................12
     5.6    Limitations on Exercise of Options.............................................................12
ARTICLE 6. AWARD OF RESTRICTED COMMON SHARES...............................................................12
     6.1    Award Agreement................................................................................12
     6.2    Award of Restricted Common Shares..............................................................12
     6.3    Rights as Shareholders.........................................................................13
     6.4    Restriction....................................................................................14
     6.5    Lapse of Restrictions..........................................................................14
     6.6    Repurchase of Restricted Common Shares.........................................................14
     6.7    Escrow.........................................................................................14
     6.8    Legend.........................................................................................14
ARTICLE 7. ADMINISTRATION..................................................................................14
     7.1    Committee......................................................................................14
     7.2    Duties and Powers of Committee.................................................................15
</TABLE>

                                       (i)

<PAGE>

<TABLE>
<S>                                                                                                        <C>
     7.3    Compensation; Professional Assistance; Good Faith Actions......................................15
ARTICLE 8. MISCELLANEOUS PROVISIONS........................................................................15
     8.1    Not Transferable...............................................................................15
     8.2    Amendment, Suspension or Termination of this Plan..............................................15
     8.3    Changes in Common Shares or Assets of the Company, Acquisition or Liquidation of the Company
            and Other Corporate Events.....................................................................16
     8.4    Approval of Plan by Shareholders...............................................................18
     8.5    Continued Employment...........................................................................18
     8.6    Tax Withholding................................................................................18
     8.7    Loans..........................................................................................19
     8.8    Forfeiture Provisions..........................................................................19
     8.9    Limitations Applicable to Section 16 Persons and Performance-Based Compensation................19
     8.10   Restrictions...................................................................................19
     8.11   Restrictive Legend.............................................................................20
     8.12   Effect of Plan Upon Option and Compensation Plans..............................................21
     8.13   Compliance with Laws...........................................................................21
     8.14   Titles.........................................................................................21
     8.15   Governing Law..................................................................................21
</TABLE>

                                      (ii)

<PAGE>


                         AMERICAN FINANCIAL REALTY TRUST
                           2002 EQUITY INCENTIVE PLAN

        American Financial Realty Trust, a Maryland real estate investment trust
(the "Company"), adopts the American Financial Realty Trust 2002 Equity
Incentive Plan (the "Plan"), effective September 10, 2002, for the benefit of
Employees, Consultants and Trustees of the Company and First States Group, L.P.

        The purposes of this Plan are (a) to recognize and compensate selected
Employees, Consultants and Trustees who contribute to the development and
success of the Company and its Affiliates and Subsidiaries, (b) to maintain the
competitive position of the Company and its Affiliates and Subsidiaries by
attracting and retaining, Employees, Consultants and Trustees, and (c) to
provide incentive compensation to Employees, Consultants and Trustees based upon
the Company's and/or Affiliate's and Subsidiary's performance.

                             ARTICLE 1. DEFINITIONS

        1.1     General. Wherever the following initially capitalized terms are
used in this Plan they shall have the meanings specified below, unless the
context clearly indicates otherwise.

        "Administrator" shall mean the President and Chief Executive Officer of
the Company.

        "Affiliate" shall mean any entity that directly or indirectly through
one or more intermediaries, controls, is controlled by, or is under common
control with the Company, including without limitation, FS OP.

        "Award" shall mean the grant or award of Options or Restricted Common
Shares under this Plan.

        "Award Agreement" shall mean the agreement granting Options or awarding
Restricted Common Shares. Such Award Agreement shall be executed by an officer
of the Company and the Employee, Consultant or Trustee receiving such grant.

        "Award Limit" shall mean 1,516,000 of Common Shares subject to an Option
and 600,000 shares of Restricted Common Shares awarded to a Participant in any
Plan Year.

        "Board" shall mean the Board of Trustees of American Financial Realty
Trust, as comprised from time to time.

        "Cause" shall, except as otherwise defined in the Employee's Employment
Agreement, mean (i) the conviction of the Employee of, or the entry of a plea of
guilty or nolo contendere by the Employee to, a felony (exclusive of any felony
relating to negligent operation of a motor vehicle and not including a
conviction, plea of guilty or nolo contendere arising solely under a statutory
provision imposing criminal liability upon the Employee on a per se basis due to
the Company offices held by the Employee, so long as any act or omission of the
Employee with respect to such matter was not taken or omitted in contravention
of any applicable policy or directive of the Board), (ii) a willful breach of
his duty of loyalty which is materially detrimental

<PAGE>


to the Company, (iii) a willful failure to perform or adhere to explicitly
stated duties that are consistent with the terms of his position with the
Company, or the Company's reasonable and customary guidelines of employment or
reasonable and customary corporate governance guidelines or policies, including
without limitation any business code of ethics adopted by the Board, or to
follow the lawful directives of the Board (provided such directives are
consistent with the terms of the Participant's Employment Agreement), which, in
any such case, continues for thirty (30) days after written notice from the
Board to the Employee, or (iv) gross negligence or willful misconduct in the
performance of the Employee's duties. No act, or failure to act, on the
Employee's part will be deemed "gross negligence" or "willful misconduct" unless
done, or omitted to be done, by the Employee not in good faith and without a
reasonable belief that the Employee's act, or failure to act, was in the best
interest of the Company. The Committee shall determine, in good faith, if an
Employee has been terminated for Cause.

        "Change in Control" shall, except as otherwise defined in the
Participant's Employment Agreement, mean the occurrence of any of the following
events: (a) any person, entity or affiliated group, excluding the Company or any
employee benefit plan of the Company, acquiring more than 50% of the then
outstanding voting shares of the Company, (b) the consummation of any merger or
consolidation of the Company into another company, such that the holders of the
voting shares of the Company immediately after such merger or consolidation are
less than 50% of the voting power of the surviving company or the parent of the
surviving company, (c) the complete liquidation of the Company or the sale or
disposition of all or substantially all of the Company's assets, such that after
the transaction, the holders of the voting shares of the Company immediately
prior to the transaction is less than 50% of the voting securities of the
acquiror or the parent of the acquiror, or (d) a majority of the Board votes in
favor of a decision that a Change in Control has occurred.

        "Code" shall mean the Internal Revenue Code of 1986, as amended.

        "Committee" shall mean the Compensation Committee of the Board.

        "Common Shares" shall mean the common shares of beneficial ownership,
par value $0.001 per share, of the Company.

        "Company" shall mean American Financial Realty Trust, a Maryland real
estate investment trust, or any business organization which succeeds to its
business and elects to continue this Plan. For purposes of this Plan, the term
Company shall include, where applicable, the employer of the Employee or
Consultant, including without limitation FS OP or such other Affiliate or
Subsidiary who employs the Employee or the Consultant.

        "Consultant" shall mean a professional or technical expert, consultant
or independent contractor who provides services to the Company or an Affiliate
or Subsidiary, and who may be selected to participate in the Plan.

        "Employee" shall mean any employee (as defined in accordance with the
regulations and revenue rulings then applicable under Section 2401(c) of the
Code) of the Company or an

                                      - 2 -

<PAGE>

Affiliate or Subsidiary of the Company, whether such employee is so employed at
the time this Plan is adopted or becomes so employed subsequent to the adoption
of this Plan.

        "Employment Agreement" shall mean the employment, consulting or similar
contractual agreement entered into by the Employee or the Consultant, as the
case may be, and the Company governing the terms of the Employee's or
Consultant's employment with the Company, if any.

        "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

        "Fair Market Value" of a share of Commons Shares, as of a given date,
shall be determined pursuant to Section 4.7.

        "FS OP" means First State Group, L.P., of which the Company is a limited
partner and the sole owner of the general partner.

        "Good Reason" shall only apply, and shall only have the meaning, as
contained in the Participant's Employment Agreement. Any provision herein that
relates to a Termination of Employment by the Participant for Good Reason shall
have no effect if there is no Employment Agreement or the Employment Agreement
does not contain a provision permitting the Participant to terminate for Good
Reason.

        "Grant" shall mean the granting of Options and/or Restricted Common
Shares by the Committee to an eligible Employee, Consultant or Trustee.

        "Grant Date" shall mean the date as of which an Award is granted.

        "Incentive Stock Option" shall mean an option which conforms to the
applicable provisions of Section 422 of the Code and which is designated as an
Incentive Stock Option by the Committee.

        "Independent Trustee" shall mean a member of the Board who would not
otherwise be classified as an Employee except for his or her position as a
member of the Board.

        "Non-Qualified Stock Option" shall mean an Option which the Committee
does not designate as an Incentive Stock Option.

        "144A Offering" means the private placement of Common Shares of
beneficial ownership of the Company pursuant to the formation of the Company.

        "Option" shall mean an option to purchase Common Shares that is granted
under Article 4 of this Plan. An option granted under this Plan shall, as
determined by the Committee, be either a Non-Qualified Stock Option or an
Incentive Stock Option; provided, however, that Options granted to Independent
Trustees shall be Non-Qualified Stock Options.

        "Option Period" shall have the meaning ascribed thereto in Section 8.10.

                                      - 3 -

<PAGE>

        "Participant" shall mean an Employee, Consultant or Trustee who has been
determined as eligible to receive a Grant pursuant to Section 3.2.1.

        "Permanent Disability" or "Permanently Disabled" shall, except as
otherwise defined in the Participant's Employment Agreement, mean the inability
of an Employee, Consultant or a Trustee due to a physical or mental impairment
to perform the material services of his position with the Company for a period
of six (6) months, whether or not consecutive, during any 365-day period. A
determination of Permanent Disability shall be made in good faith by the
Committee. Notwithstanding the foregoing, if a Participant is determined to be
Permanently Disabled pursuant to the terms of his Employment Agreement, he shall
be Permanently Disabled for purposes of this Plan.

        "Plan" shall mean the American Financial Realty Trust 2002 Equity
Incentive Plan, as embodied herein and as amended from time to time.

        "Plan Year" shall mean the fiscal year of the Company.

        "Restricted Common Shares" shall mean Common Shares awarded under
Article 6 of this Plan.

        "Retirement" or "Retire" shall, except as otherwise defined in the
Participant's Employment Agreement, mean an Employee's Termination of Employment
with the Company on or after his 65 birthday.

        "Rule 16b-3" shall mean that certain Rule 16b-3 under the Exchange Act,
as such rule may be amended from time to time.

        "Section 162(m) Participant" shall mean any Employee the Committee
designates to receive a Grant whose compensation for the fiscal year in which
the Employee is so designated or a future fiscal year may be subject to the
limit on deductible compensation imposed by Section 162(m) of the Code, as
determined by the Committee in its sole discretion.

        "Subsidiary" shall mean an entity in an unbroken chain beginning with
the Company if each of the entities other than the last entity in the unbroken
chain owns 50 percent or more of the total combined voting power of all classes
of equity in one of the other entities in such chain.

        "Ten Percent Owner" shall mean a person who owns, or is deemed within
the meaning of Section 422(b)(6) of the Code to own, stock possessing more than
10% of the total combined voting power of all classes of shares of the Company
(or any Affiliate). Whether a person is a Ten Percent Owner shall be determined
with respect to each Option based on the facts existing immediately prior to the
Grant Date of such Option.

        "Termination of Employment" shall mean the date on which the
employee-employer, contractual or similar relationship between a Participant and
the Company is terminated for any reason, with or without Cause, including, but
not by way of limitation, a termination of employment by resignation, discharge,
death, Permanent Disability or Retirement, but excluding (i) termination of
employment where there is a simultaneous reemployment or continuing

                                      - 4 -

<PAGE>

employment of a Participant by the Company, and (ii) at the discretion of the
Committee, termination of employment which result in a temporary severance of
the employee-employer relationship. The Committee, in its absolute discretion,
shall determine the effect of all matters and questions relating to a
Termination of Employment (subject to the provisions of any Employment Agreement
between a Participant and the Company), including, but not limited to all
questions of whether particular leaves of absence constitute a Termination of
Employment; provided, however, that, unless otherwise determined by the
Committee in its discretion, a leave of absence, change in status from an
employee to an independent contractor or other change the employee-employer,
contractual or similar relationship shall constitute a Termination of Employment
if, and to the extent that, such leave of absence, change in status or other
change interrupts employment for the purposes of Section 422(a)(2) of the Code
and the then applicable regulations and revenue rulings under said Section.

        "Trustee" shall mean a member of the Company's Board of Trustees.

        "Vest", "Vested" or "Vesting" shall mean the percentage by which a
Participant shall vest in his Grant in accordance with his Award Agreement.

                    ARTICLE 2. COMMON SHARES SUBJECT TO PLAN

        2.1     Common Shares Subject to Plan.

                2.1.1   The Common Shares subject to an Option or award of
                        Restricted Common Shares shall be shares of the
                        Company's authorized but unissued, reacquired, or
                        treasury Common Shares. The aggregate number of such
                        shares which may be issued upon exercise of such Options
                        is 3,125,000 Common Shares and the number of such shares
                        which may be granted as Restricted Common Shares is
                        1,500,000. 2.1.2 The maximum number of Common Shares
                        which may be awarded to any individual in any calendar
                        year shall not exceed the Award Limit. To the extent
                        required by Section 162(m) of the Code, Common Shares
                        subject to Options which are canceled continue to be
                        counted against the Award Limit and if, after grant of
                        an Option, the price of Common Shares subject to such
                        Option is reduced, the transaction is treated as a
                        cancellation of the Option and a grant of a new Option,
                        both the Option deemed to be canceled and the Option
                        deemed to be granted are counted against the Award
                        Limit.

        2.2     Add-back of Grants. If any Option expires or is canceled without
having been fully exercised, or is exercised in whole or in part for cash as
permitted by this Plan, the number of Common Shares subject to such Option but
as to which such Option or other right was not exercised prior to its
expiration, cancellation or exercise may again

                                      - 5 -

<PAGE>

be optioned, granted or awarded hereunder, subject to the limitations of Section
2.1. Furthermore, any Common Shares subject to a Grant which are adjusted
pursuant to Section 8.3 and become exercisable with respect to shares of stock
of another entity shall be considered canceled and may again be optioned,
granted or awarded hereunder, subject to the limitations of Section 2.1. Shares
of Common Shares which are delivered by the Participant or withheld by the
Company upon the exercise of any Option or other award under this Plan, in
payment of the exercise price thereof, may again be optioned, granted or awarded
hereunder, subject to the limitations of Section 2.1. If any share of Restricted
Common Shares is forfeited by the Participant, such Common Shares may again be
optioned, granted or awarded hereunder, subject to the limitations of Section
2.1. Notwithstanding the provisions of this Section 2.2, no shares of Common
Shares may again be optioned, granted or awarded if such action would cause an
Incentive Stock Option to fail to qualify as an Incentive Stock Option under
Section 422 of the Code.

                ARTICLE 3. ELIGIBILITY; GRANTS; AWARD AGREEMENTS

        3.1     Eligibility. Any Employee, Consultant or Trustee selected to
participate pursuant to Section 3.2.1 shall be eligible to participate in the
Plan.

        3.2     Grants. The Administrator shall determine which Employees,
Consultants and/or Trustees, other than himself, shall receive a Grant, whether
the Employee, Consultant or Trustee will receive Options and/or Restricted
Common Shares, whether the Option Grant shall be of Incentive Stock Options
and/or Non-Qualified Stock Options, and the number of Common Shares subject to
such Grant, subject to Committee review and approval. The Committee shall
determine the terms of any Grant to the Administrator, the number of Common
Shares subject to such Grant, whether the Administrator shall receive Options
and/or Restricted Common Shares, and whether the Option Grant shall be of
Incentive Stock Options and/or Non-Qualified Stock Options, in accordance with
the terms of the Participant's Employment Agreement, if any. Notwithstanding the
foregoing, the terms and conditions of a Grant intended to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of the Code
shall include, but not be limited to, such terms and conditions as may be
necessary to meet the applicable provisions of Section 162(m) of the Code.

        3.3     Provisions Applicable to Section 162(m) Participants.

                3.3.1   Notwithstanding anything in the Plan to the contrary,
                        the Committee may grant Options and/or Restricted Common
                        Shares to a Section 162(m) Participant that Vest upon
                        the attainment of performance targets for the Company
                        which are related to one or more of the following
                        performance goals: (i) pre-tax income, (ii) operating
                        income, (iii) cash flow, (iv) earnings per share, (v)
                        return on equity, and/or (vi) return on invested capital
                        or assets, (vii) cost reductions or savings, (vii) such
                        other identifiable and measurable performance
                        objectives, as determined by the Committee or, if
                        applicable, the Administrator, pursuant to the terms of
                        a Participant's Employment Agreement and subject to
                        Committee review and approval.

                3.3.2   To the extent necessary to comply with the
                        performance-based compensation requirements of Section
                        162(m)(4)(C) of the Code, no later than ninety (90) days
                        following the commencement of any fiscal year in

                                      - 6 -

<PAGE>

                        question or any other designated fiscal period (or such
                        other time as may be required or permitted by Section
                        162(m) of the Code), the Committee or, if applicable,
                        the Administrator pursuant to a Participant's Employment
                        Agreement and subject to Committee review and approval,
                        shall, in writing, (i) designate one or more Section
                        162(m) Participants, (ii) select the performance goal or
                        goals applicable to the fiscal year or other designated
                        fiscal period, (iii) establish the various targets and
                        bonus amounts which may be earned for such fiscal year
                        or other designated fiscal period and (iv) specify the
                        relationship between performance goals and targets and
                        the amounts to be earned by each Section 162(m)
                        Participant for such fiscal year or other designated
                        fiscal period. Following the completion of each fiscal
                        year or other designated fiscal period, the Committee or
                        if applicable, the Administrator, shall certify in
                        writing whether the applicable performance targets have
                        been achieved for such fiscal year or other designated
                        fiscal period. In determining the amount earned by a
                        Section 162(m) Participant, the Committee or, if
                        applicable, the Administrator, shall have the right to
                        reduce (but not to increase) the amount payable at a
                        given level of performance to take into account
                        additional factors that the Committee or, if applicable,
                        the Administrator, may deem relevant to the assessment
                        of individual or corporate performance for the fiscal
                        year or other designated fiscal period.

        3.4     Award Agreement. Upon the selection of an Employee, Consultant
or Trustee to become a Participant and receive a Grant, the Committee shall
cause a written Award Agreement to be issued to such individual encompassing the
terms and conditions of such Grant, as determined by the Committee in its sole
discretion; provided, however, that if applicable, the terms of such Award
Agreement shall comply with the terms of such Participant's Employment
Agreement, if any. Such Award Agreement shall provide for the exercise price for
Options and the purchase price for Restricted Common Shares, the Vesting
schedule, payment terms and such other terms and conditions of such Grant, as
determined by the Committee in its sole discretion. Notwithstanding the
foregoing, the Committee may, in its discretion and on such terms as it deems
appropriate, require as a condition on the grant of an Option that the
Participant surrender for cancellation some or all of the unexercised Options or
awards of Restricted Common Shares which have been previously granted to him
under this Plan or otherwise. An Option, the grant of which is conditioned upon
such surrender, may have an Option price lower (or higher) than the exercise
price of such surrendered Option, may cover the same (or a lesser or greater)
number of Common Shares as such surrendered Option or other award, may contain
such other terms as the Committee deems appropriate, and shall be exercisable in
accordance with its terms, without regard to the number of Common Shares, price,
exercise period or any other term or condition of such surrendered Option or
award of Restricted Common Shares. Each Award Agreement shall be executed by the
Participant and an officer or a Director (other than the Participant) of the
Company authorized to sign such Award Agreement and shall contain such terms and
conditions that are consistent with the Plan, including but not limited to the
Vesting schedule, if any, as the Committee in its sole discretion shall
determine

                                      - 7 -

<PAGE>

                               ARTICLE 4. OPTIONS

        4.1     Award Agreement for Option Grant. Option grants shall be
evidenced by an Award Agreement, pursuant to Section 3.4. Award Agreements
evidencing Options intended to qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code shall contain such terms and
conditions as may be necessary to meet the applicable provisions of Section
162(m) of the Code. Award Agreements evidencing Incentive Stock Options shall
contain such terms and conditions as may be necessary to meet the applicable
provisions of Section 422 of the Code.

        4.2     Option Price. The price per share of the Common Shares subject
to each Option shall be set by the Committee; provided, however, that such price
shall be no less than the par value of a share of Common Shares, unless
otherwise permitted by applicable state law, and (i) in the case of Incentive
Stock Options and Options intended to qualify as performance-based compensation
as described in Section 162(m)(4)(C) of the Code, such price shall not be less
than 100% of the Fair Market Value of a share of Common Shares on the date the
Option is granted, (ii) in the case of Incentive Stock Options granted to an
individual then owning (within the meaning of Section 424(d) of the Code) more
than 10% of the total combined voting power of all classes of shares of the
Company or any Subsidiary or parent corporation thereof (within the meaning of
Section 422 of the Code) such price shall not be less than 110% of the Fair
Market Value of a share of Common Shares on the date the Option is granted, and
(iii) in the case of Non-Qualified Stock Options granted to Independent Trustees
after the Company is subject to the Exchange Act, such price shall equal 100% of
the Fair Market Value of a share of Common Shares on the date the Option is
granted.

        4.3     Qualification for Incentive Stock Options. The Committee may
grant an Incentive Stock Option to an individual if such person (i) is an
Employee, and (ii) at the time the Incentive Stock Option is granted, the
Participant does not own Common Shares possessing more than ten percent (10%) of
the total combined voting power of all classes of shares of the Company or any
then existing Subsidiary or parent corporation (within the meaning of Section
422 of the Code), unless such Incentive Stock Option conforms to the applicable
provisions of Section 422 of the Code.

        4.4     Change in Incentive Stock Option Grant. Any Incentive Stock
Option granted under this Plan may be modified by the Committee to disqualify
such Option from treatment as an Incentive Stock Option under Section 422 of the
Code. To the extent that the aggregate Fair Market Value of Common Shares with
respect to which Incentive Stock Options (within the meaning of Section 422 of
the Code, but without regard to Section 422(d) of the Code) are exercisable for
the first time by a Participant during any calendar year (under the Plan and all
other Incentive Stock Option plans of the Company) exceeds $100,000, such
Options shall be treated as Non-Qualified Stock Options to the extent required
or permitted by Section 422 of the Code. The rule set forth in the preceding
sentence shall be applied by taking Options into account in the order in which
they were Granted. For purposes of this Section 4.4, the Fair Market Value of
Common Shares shall be determined as of the time the Option with respect to such
Common Shares is granted, pursuant to Section 4.7.

                                      - 8 -

<PAGE>

        4.5     Option Term. The term of an Option shall be set by the Committee
in its discretion; provided, however, in the case of Incentive Stock Options,
the term shall not be more than ten (10) years from the date the Incentive Stock
Option is granted, or five (5) years from such date if the Incentive Stock
Option is granted to an Employee then owning (within the meaning of Section
424(d) of the Code) more than 10% of the total combined voting power of all
classes of shares of the Company or any Subsidiary or parent corporation thereof
(within the meaning of Section 422 of the Code). Such Incentive Stock Options
shall be subject to Section 5.6, except as limited by the requirements of
Section 422 of the Code and regulations and rulings thereunder applicable to
Incentive Stock Options.

        4.6     Option Vesting.

                4.6.1   The period during which the right to exercise an Option
                        in whole or in part vests in the Participant shall be
                        set by the Committee and shall be as provided for in the
                        Award Agreement. At any time after the grant of an
                        Option, the Committee may, in its sole and absolute
                        discretion and subject to whatever terms and conditions
                        it selects, accelerate the period during which an Option
                        Vests.

                4.6.2   In each Award Agreement, the Committee shall indicate
                        whether the portion of the Options, if any, that remains
                        non-vested upon the Participant's Termination of
                        Employment with the Company are forfeited. In so
                        specifying, the Committee may differentiate between the
                        reason for the Participant's Termination of Employment.

                4.6.3   Any Options which are not Vested upon the occurrence of
                        a Change in Control, shall become 100% vested, unless
                        the Award Agreement or the Participant's Employment
                        Agreement provides otherwise.

        4.7     Fair Market Value. The Fair Market Value of a share of Commons
Shares as of a given date shall be (i) the closing price of a share of Common
Shares on the principal exchange on which shares of Common Shares are then
trading, if any (or as reported on any composite index which includes such
principal exchange), on the trading day previous to such date, or if Common
Shares were not traded on the trading day previous to such date, then on the
next preceding date on which a trade occurred, or (ii) if Common Shares are not
traded on an exchange but are quoted on NASDAQ or a successor quotation system,
either the (a) closing sale price, or (b) the mean between the closing
representative bid and asked prices for the Common Shares on the trading day
previous to such date as reported by NASDAQ or such successor quotation systems,
as may be appropriate, or (iii) if Common Shares are not publicly traded on an
exchange and not quoted on NASDAQ or a successor quotation system, the Fair
Market Value of a share of Common Shares as established by the Company acting in
good faith. The Fair Market Value as determined by the Company in good faith and
in the absence of fraud shall be binding and conclusive upon all parties hereto,
and in any event the Participant agrees to accept and shall not challenge any
determination of Fair Market Value made by the Company. If the Company
subdivides (by split, dividend or otherwise) the Common Shares into a greater
number of Common Shares, or combines (by reverse split or otherwise) the Common
Shares into

                                      - 9 -

<PAGE>

a smaller number of Common Shares after the Company shall have determined the
Fair Market Value for the Common Shares subject to a Grant (without taking into
consideration such subdivision or combination) and prior to the consummation of
the purchase, the Fair Market Value shall be appropriately adjusted to reflect
such subdivision or combination, and the Company's good faith determination as
to any such adjustment shall be binding and conclusive on all parties hereto.

                         ARTICLE 5. EXERCISE OF OPTIONS

        5.1     Partial Exercise. At any time and from time to time prior to the
time when any exercisable Option or portion thereof becomes unexercisable under
the Plan or the Award Agreement, such Option or portion thereof may be exercised
in whole or in part; provided, however, that the Company shall not be required
to issue fractional Common Shares and the Committee may, by the terms of the
Option, require any partial exercise to be with respect to a minimum number of
Common Shares.

        5.2     Manner of Exercise. An exercisable Option, or any exercisable
portion thereof, may be exercised solely by delivery to the Company of all of
the following prior to the time when such Option or such portion becomes
unexercisable under the Plan or the Award Agreement:

                5.2.1   A written notice signed by the Participant or other
                        person then entitled to exercise such Option or portion
                        thereof, stating that such Option or portion is being
                        exercised, provided such notice complies with all
                        applicable rules established by the Committee from time
                        to time;

                5.2.2   Such representations and documents as the Committee, in
                        its absolute discretion, deems necessary or advisable to
                        effect compliance with all applicable provisions of the
                        Securities Act of 1933, as amended, and any other
                        federal or state securities laws or regulations. The
                        Committee may, in its absolute discretion, also take
                        whatever additional actions it deems appropriate to
                        effect such compliance including, without limitation,
                        causing legends to be placed on Common Share
                        certificates and issuing stop-transfer notices to agents
                        and registrars;

                5.2.3   In the event that the Option shall be exercised pursuant
                        to Section 8.1 by any person or persons other than the
                        Participant, appropriate proof of the right of such
                        person or persons to exercise the Option or portion
                        thereof; and

                5.2.4   Full payment (in cash or by a certified check) for the
                        Common Shares with respect to which the Option or
                        portion thereof is exercised, unless with the prior
                        written consent of the Committee:

                        5.2.4.1.  payment is delayed for up to thirty (30) days
                                  from the date the Option or portion thereof is
                                  exercised;

                                     - 10 -

<PAGE>

                        5.2.4.2.  payment, in whole or in part, is made through
                                  the delivery of shares of Common Shares owned
                                  by the Participant, duly endorsed for transfer
                                  to the Company with a Fair Market Value on the
                                  date of delivery equal to the aggregate
                                  exercise price of the Option or exercised
                                  portion thereof;

                        5.2.4.3.  payment, in whole or in part, is made through
                                  the surrender of shares of Common Shares then
                                  issuable upon exercise of the Option having a
                                  Fair Market Value on the date of Option
                                  exercise equal to the aggregate exercise price
                                  of the Option or exercised portion thereof;

                        5.2.4.4.  payment, in whole or in part, is made through
                                  the delivery of property of any kind which
                                  constitutes good and valuable consideration;

                        5.2.4.5.  payment, in whole or in part, is made through
                                  the delivery of a full recourse promissory
                                  note bearing interest (at no less than such
                                  rate as shall then preclude the imputation of
                                  interest under the Code) and payable upon such
                                  terms as may be prescribed by the Committee in
                                  its sole discretion; or

                        5.2.4.6.  payment is made through any combination of the
                                  consideration provided for in this Section
                                  5.2.4. In the case of a promissory note, the
                                  Committee may also prescribe the form of such
                                  note and the security to be given for such
                                  note. The Option may not be exercised,
                                  however, by delivery of a promissory note or
                                  by a loan from the Company when or where such
                                  loan or other extension of credit is
                                  prohibited by law.

        5.3     Conditions to Issuance of Common Shares. The Company shall not
be required to issue or deliver any certificate or other indicia evidencing
ownership of shares of Common Shares purchased upon the exercise of any Option
or portion thereof prior to fulfillment of all of the following conditions:

                5.3.1   The obtaining of any approval or other clearance from
                        any state or federal governmental agency which the
                        Committee shall, in its sole discretion, determine to be
                        necessary or advisable;

                5.3.2   The lapse of such reasonable period of time following
                        the exercise of the Option as the Committee may
                        establish from time to time for reasons of
                        administrative convenience;

                5.3.3   The receipt by the Company of full payment for such
                        Common Shares, including payment of any applicable
                        withholding tax; and

                                     - 11 -

<PAGE>

                5.3.4   The Participant agreeing to the terms and conditions of
                        the Plan and the Award Agreement.

        5.4     Rights as Shareholders. The holders of Options shall not be, nor
have any of the rights or privileges of, shareholders of the Company in respect
of any Common Shares purchasable upon the exercise of any part of an Option
unless and until certificates or other indicia representing such Common Shares
have been issued by the Company to such holders.

        5.5     Ownership and Transfer Restrictions. The Committee, in its
absolute discretion, may impose at the time of Grant such restrictions on the
ownership and transferability of the Common Shares purchasable upon the exercise
of an Option as it deems appropriate. Any such restriction shall be set forth in
the Award Agreement and may be referred to on the certificates or other indicia
evidencing such Common Shares.

        5.6     Limitations on Exercise of Options.

                5.6.1   Vested Incentive Stock Options may not be exercised
                        after the earlier of (i) their expiration date, (ii)
                        twelve (12) months from the date of the Participant's
                        death, (iii) twelve (12) months from the date of the
                        Participant's Termination of Employment by reason of his
                        Permanent Disability, or (iv) the expiration of three
                        (3) months from the date of the Participant's
                        Termination of Employment for any reason other than such
                        Participant's death or Permanent Disability, unless the
                        Participant dies within said three-month period. Leaves
                        of absence for less than 90 days shall not cause a
                        Termination of Employment for purposes of Incentive
                        Stock Options.

                5.6.2   Non-Qualified Stock Options may be exercised up until
                        their expiration date, unless the Committee provides
                        otherwise in the Award Agreement.

                  ARTICLE 6. AWARD OF RESTRICTED COMMON SHARES

        6.1     Award Agreement. Grants of Restricted Common Shares shall be
evidenced by an Award Agreement, pursuant to Section 3.4. Award Agreements
evidencing Restricted Common Shares intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall contain such
terms and conditions as may be necessary to meet the applicable provisions of
Section 162(m) of the Code.

        6.2     Award of Restricted Common Shares.

                6.2.1   The Committee may from time to time, in its absolute
                        discretion, consistent with this Plan:

                        6.2.1.1.  Determine the aggregate number of Common
                                  Shares to be awarded as Restricted Common
                                  Shares to Employees, Consultants and/or
                                  Trustees;

                                     - 12 -

<PAGE>

                        6.2.1.2.  Determine the purchase price, if any, and
                                  other terms and conditions applicable to such
                                  Restricted Common Shares, and

                        6.2.1.3.  Determine when the restrictions lapse.

                        6.2.1.4.  The Administrator shall determine which
                                  Employees, Consultants and/or Trustees shall
                                  receive a Grant of Restricted Common Shares
                                  and the amount of such Grant, subject to
                                  Committee review and approval.

                6.2.2   Notwithstanding the foregoing, and excluding a Grant of
                        Restricted Common Shares to Independent Trustees in
                        connection with the 144A Offering, no Restricted Common
                        Share Awards shall be made until the date immediately
                        after the closing of any private or public offering or
                        series of offerings of Common Shares effected subsequent
                        to the 144A Offering and in connection with raising new
                        equity capital for the Company or any Affiliate, or
                        Common Shares are issued in connection with the
                        acquisition or any series of acquisitions of real estate
                        assets, or any combination thereof, with aggregate net
                        proceeds or an aggregate net value of at least $150
                        million, or any combination of offerings or acquisitions
                        with aggregate net proceeds or an aggregate net value of
                        at least $150 million.

                6.2.3   The Committee may establish the purchase price, if any,
                        and form of payment for Restricted Common Shares. If the
                        Committee establishes a purchase price, the purchase
                        price shall be no less than the par value of the Common
                        Shares to be purchased, unless otherwise permitted by
                        applicable state law.

                6.2.4   Upon the selection of an Employee, Consultant or Trustee
                        to be awarded Restricted Common Shares, the Committee
                        shall instruct the Secretary of the Company to issue
                        such Restricted Common Shares and may impose such
                        conditions on the issuance of such Restricted Common
                        Shares as it deems appropriate.

                6.2.5   Restricted Common Share Grants shall vest pursuant to
                        the Award Agreement.

        6.3     Rights as Shareholders. Upon delivery of the shares of
Restricted Common Shares to the Participant or the escrow holder pursuant to
Section 6.7, the Participant shall have, unless otherwise provided by the
Committee in the Award Agreement, all the rights of an owner of Common Shares,
subject to the restrictions and provisions of his Award Agreement, including the
right to receive all dividends and other distributions paid or made with respect
to the Common Shares; provided, however, that in the discretion of the
Committee, any extraordinary distributions with respect to the Common Shares
shall be subject to the restrictions set forth in Section 6.4.

                                     - 13 -

<PAGE>

        6.4     Restriction. All shares of Restricted Common Shares issued under
this Plan (including any Common Shares received by holders thereof with respect
to shares of Restricted Common Shares as a result of stock dividends, stock
splits or any other form of recapitalization, if any) shall at the time of
Grant, in the terms of each individual Award Agreement, be subject to such
restrictions as the Committee shall, in its sole discretion, determine, which
restrictions may include, without limitation, restrictions concerning voting
rights, transferability, Vesting, Company performance and individual
performance; provided, however, that by action taken subsequent to the time
Restricted Common Shares are issued, the Committee may, on such terms and
conditions as it may determine to be appropriate, remove any or all of the
restrictions imposed by the terms of the Award Agreement. Restricted Common
Shares may not be sold or encumbered until all restrictions are terminated or
expire.

        6.5     Lapse of Restrictions. The restrictions shall lapse in
accordance with the terms of the Award Agreement. In the Award Agreement, the
Committee shall indicate whether Restricted Common Shares then subject to
restrictions are forfeited or if the restrictions shall lapse upon the
Participant's Termination of Employment. In so specifying, the Committee may
differentiate between the reason for the Participant's Termination of
Employment.

        6.6     Repurchase of Restricted Common Shares. The Committee may
provide in the terms of the Award Agreement awarding Restricted Common Shares
that the Company shall have call rights, a right of first offer and/or a right
of refusal regarding Restricted Common Shares then subject to restrictions.

        6.7     Escrow. The Company may appoint an escrow holder to retain
physical custody of each certificate or control of each other indicia
representing Restricted Common Shares until all of the restrictions imposed
under the Award Agreement with respect to the Common Shares evidenced by such
certificate expire or shall have been removed.

        6.8     Legend. In order to enforce the restrictions imposed upon shares
of Restricted Common Shares hereunder, the Committee shall cause a legend or
restrictions to be placed on certificates of Restricted Common Shares that are
still subject to restrictions under Award Agreements, which legend or
restrictions shall make appropriate reference to the conditions imposed thereby.

                           ARTICLE 7. ADMINISTRATION

        7.1     Committee. The Plan shall be administered by the Compensation
Committee of the Board, except to the extent otherwise provided for herein with
respect to the Administrator. The Board may remove members, add members, and
fill vacancies on the Committee from time to time, all in accordance with the
Company's Articles of Incorporation, by-laws, and with applicable law. The
majority vote of the Committee, or for acts taken in writing without a meeting
by the unanimous written consent of the members of the Committee, shall be valid
acts of the Committee. Appointment of Committee members shall be effective upon
acceptance of appointment. Committee members may resign at any time by
delivering written notice to the Board.

                                     - 14 -

<PAGE>

        7.2     Duties and Powers of Committee. It shall be the duty of the
Committee to conduct the general administration of this Plan in accordance with
its provisions. The Committee shall have the power to interpret this Plan and
the agreements pursuant to which Options or Restricted Common Shares are granted
or awarded, and to adopt such rules for the administration, interpretation, and
application of this Plan as are consistent therewith and to interpret, amend or
revoke any such rules. Any such Grant or Award under this Plan need not be the
same with respect to each Participant. Any such interpretations and rules with
respect to Incentive Stock Options shall be consistent with the provisions of
Section 422 of the Code.

        7.3     Compensation; Professional Assistance; Good Faith Actions.
Unless otherwise determined by the Board, members of the Committee shall receive
no compensation for their services. All expenses and liabilities which members
of the Committee incur in connection with the administration of this Plan shall
be borne by the Company. The Committee may, with the approval of the Board,
employ attorneys, consultants, accountants, appraisers, brokers, or other
persons. The Committee, the Company and the Company's officers and Trustees
shall be entitled to rely upon the advice, opinions or valuations of any such
persons. All actions taken and all interpretations and determinations made by
the Committee or the Board in good faith shall be final and binding upon all
Participants, the Company and all other interested persons. No members of the
Committee or Board shall be personally liable for any action, determination or
interpretation made in good faith with respect to this Plan and any Grants made
hereunder, and all members of the Committee and the Board shall be fully
protected by the Company in respect of any such action, determination or
interpretation.

                      ARTICLE 8. MISCELLANEOUS PROVISIONS

        8.1     Not Transferable. No Option or Restricted Common Share or any
right therein or part thereof shall be liable for the debts, contracts or
engagements of the Participant or his successors in interest or shall be subject
to disposition by transfer, alienation, anticipation, pledge, encumbrance,
assignment or any other means, whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy, attachment, garnishment or
any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect; provided,
however, that nothing in this Section 8.1 shall prevent transfers by will or by
the applicable laws of descent and distribution. The Committee shall not be
required to accelerate the exercisabilty of a Grant or otherwise take any action
pursuant to a divorce or similar proceeding in the event Participant's spouse is
determined to have acquired a community property interest in all or any portion
of a Grant. During the lifetime of the Participant, only he may exercise a Grant
(or any portion thereof) granted to him under the Plan. After the death of the
Participant, any exercisable portion of a Grant, prior to the time when such
portion becomes unexercisable under the Plan or the applicable Award Agreement
or other agreement, may be exercised by his personal representative or by any
person empowered to do so under the deceased Participant's will or under the
then applicable laws of descent and distribution.

        8.2     Amendment, Suspension or Termination of this Plan.

                                     - 15 -

<PAGE>

                8.2.1   Except as otherwise provided in this Section 8.2, this
                        Plan may be wholly or partially amended or otherwise
                        modified, suspended or terminated at any time or from
                        time to time by the Board or the Committee; provided,
                        however, no action of the Board or the Committee may be
                        taken that would otherwise require shareholder approval
                        as a matter of applicable law, regulation or rule,
                        without the consent of the shareholders. No amendment,
                        suspension or termination of this Plan shall, without
                        the consent of the Participant, impair any rights or
                        obligations under any Grant theretofore made to the
                        Participant, unless such right has been reserved in the
                        Plan or the Award Agreement. No Grant may be made during
                        any period of suspension or after termination of this
                        Plan. In no event may any Grant be made under this Plan
                        after the first to occur of the following events:

                        8.2.1.1.  the expiration of ten (10) years from the
                                  initial date the Plan is adopted by the Board;
                                  or

                        8.2.1.2.  the expiration of ten (10) years from the date
                                  the Plan initially is approved by the
                                  Company's shareholders under Section 8.4.

                8.2.2   Notwithstanding the foregoing, the Board or the
                        Committee may take any action necessary to comply with a
                        change in applicable law, irrespective of the status of
                        any Grant as Vested or unvested, exercisable or
                        unexercisable, at the time of such change in applicable
                        law.

        8.3     Changes in Common Shares or Assets of the Company, Acquisition
or Liquidation of the Company and Other Corporate Events.

                8.3.1   In the event that the Committee determines, in its sole
                        discretion, that any dividend or other distribution
                        (whether in the form of cash, Common Shares, other
                        securities, or other property), on account of a
                        recapitalization, reclassification, stock split, reverse
                        stock split, reorganization, merger, consolidation,
                        split-up, spin-off, combination, repurchase,
                        liquidation, dissolution, or sale, transfer, exchange or
                        other disposition of all or substantially all of the
                        assets of the Company, or exchange of Common Shares or
                        other securities of the Company, issuance of warrants or
                        other rights to purchase Common Shares or other
                        securities of the Company, or other similar event,
                        affects the Common Shares such that an adjustment is
                        appropriate in order to prevent dilution or enlargement
                        of the benefits or potential benefits intended to be
                        made available under the Plan, then the Committee may,
                        in such manner as it may deem equitable, adjust any or
                        all of the following:

                        8.3.1.1.  the number and kind of Company shares with
                                  respect to which a Grant may be made under the
                                  Plan;

                                     - 16 -

<PAGE>

                        8.3.1.2.  the number and kind of Company shares subject
                                  to an outstanding Grant; and

                        8.3.1.3.  the exercise price or purchase price with
                                  respect to any Grant.

                8.3.2   In the event of any transaction or event described in
                        Section 8.3.1 or any unusual or nonrecurring
                        transactions or events affecting the Company, any
                        Affiliate, or the financial statements of the Company or
                        any Affiliate, or of changes in applicable laws,
                        regulations, or accounting principles, the Committee in
                        its discretion is hereby authorized to take any one or
                        more of the following actions whenever the Committee
                        determines, in its sole discretion, that such action is
                        appropriate in order to prevent dilution or enlargement
                        of the benefits or potential benefits intended to be
                        made available under the Plan or with respect to any
                        Grant, right or other award under this Plan, to
                        facilitate such transactions or events or to give effect
                        to such changes in laws, regulations or principles:

                        8.3.2.1.  the Committee may provide, either by the terms
                                  of the Award Agreement or by action taken
                                  prior to the occurrence of such transaction or
                                  event and either automatically or upon the
                                  Participant's request, for (i) the purchase of
                                  any such Grant for the payment of an amount of
                                  cash equal to the amount that could have been
                                  attained upon the exercise of such Grant or
                                  realization of the Participant's rights had
                                  such Grant been currently exercisable,
                                  payable, fully Vested or the restrictions
                                  lapsed, or (ii) the replacement of such Grant
                                  with other rights or property selected by the
                                  Committee;

                        8.3.2.2.  the Committee may provide in the terms of such
                                  Award Agreement that the Grant cannot be
                                  exercised after such event;

                        8.3.2.3.  the Committee may provide, by the terms of
                                  such Grant or by action taken prior to the
                                  occurrence of such transaction or event, that
                                  for a specified period of time prior to such
                                  transaction or event, such Grant shall be
                                  exercisable, notwithstanding anything to the
                                  contrary in Section 4.6 or the provisions of
                                  such Grant;

                        8.3.2.4.  the Committee may provide, by the terms of
                                  such Grant or by action taken prior to the
                                  occurrence of such transaction or event, that
                                  upon such event, such Grant be assumed by the
                                  successor or survivor corporation, or a parent
                                  or subsidiary thereof, or shall be substituted
                                  for by similar Grants covering the shares of
                                  the successor or survivor corporation, or a
                                  parent or subsidiary thereof, with appropriate
                                  adjustments as to the number and kind of
                                  shares and prices;

                                     - 17 -

<PAGE>

                        8.3.2.5.  the Committee may make adjustments in the
                                  number and type of shares of Common Shares
                                  subject to outstanding Options and in the
                                  number and kind of outstanding Restricted
                                  Common Shares and/or in the terms and
                                  conditions of (including the grant or exercise
                                  price), and the criteria included in,
                                  outstanding Grants, and rights and awards
                                  which may be granted in the future; and

                        8.3.2.6.  the Committee may provide either by the terms
                                  of a Restricted Common Share Award or by
                                  action taken prior to the occurrence of such
                                  event that, for a specified period of time
                                  prior to such event, the restrictions imposed
                                  under an Award Agreement upon some or all
                                  shares of the Restricted Common Shares may be
                                  terminated, and some or all shares of such
                                  Restricted Common Shares may cease to be
                                  subject to forfeiture under Section 6.5 or
                                  repurchase under Section 6.6 after such event.

                8.3.3   Subject to Section 8.8, the Committee may, in its sole
                        discretion, at the time of Grant, include such further
                        provisions and limitations in any Award Agreement or
                        certificate, as it may deem appropriate and in the best
                        interests of the Company; provided, however, that no
                        such provisions or limitations shall be contrary to the
                        terms of the Participant's Employment Agreement or the
                        terms of this Plan.

                8.3.4   Notwithstanding the foregoing, in the event of a
                        transaction or event described in Sections 8.3.1 or any
                        unusual or nonrecurring transactions or events affecting
                        the Company, no action pursuant to this Section 8.3
                        shall be taken that is specifically prohibited under
                        applicable law, the rules and regulations of any
                        governing governmental agency or national securities
                        exchange, or the terms of the Participant's Employment
                        Agreement.

        8.4     Approval of Plan by Shareholders. This Plan will be submitted
for the approval of the Company's shareholders within twelve (12) months after
the date of the Board's initial adoption of this Plan. If the shareholders fail
to approve this Plan, all Options granted hereunder shall be Non-Qualified Stock
Options.

        8.5     Continued Employment. Nothing in this Plan or in any Award
Agreement hereunder shall confer upon any Participant any right to continue his
employment, consulting or similar relationship with the Company or an Affiliate,
whether as an Employee, Consultant, Trustee or otherwise, or shall interfere
with or restrict in any way the rights of the Company or an Affiliate, which are
hereby expressly reserved, to discharge or terminate the relationship with any
Participant at any time for any reason whatsoever, subject to the terms of any
Employment Agreement entered into by the Participant and the Company.

        8.6     Tax Withholding. The Company shall be entitled to require
payment in cash or deduction from other compensation payable to each Participant
of any sums required by federal, state or local tax law to be withheld with
respect to the issuance, Vesting, exercise of any Option,

                                     - 18 -

<PAGE>

or the lapse of restrictions on Restricted Common Shares. The Committee may, in
its sole discretion and in satisfaction of the foregoing requirement, allow such
Participant to elect to have the Company withhold shares of Common Shares
otherwise issuable under such Option (or allow the return of shares of Common
Shares) having a Fair Market Value equal to the sums required to be withheld.

        8.7     Loans. The Committee may, in its discretion, extend one or more
loans to Participants in connection with the exercise or receipt of an Option
granted under this Plan, or the issuance of Restricted Common Shares awarded
under this Plan; provided, however, that no such loan shall be made if
prohibited by law. The terms and conditions of any such loan shall be set by the
Committee.

        8.8     Forfeiture Provisions. Pursuant to its general authority to
determine the terms and conditions applicable to Grants, the Committee shall
have the right to provide, in the terms of such Grant, or to require the
recipient to agree by separate written instrument, that (i) any proceeds, gains
or other economic benefit actually or constructively received by the recipient
upon any receipt or resale of any Common Shares underlying such Grant, must be
paid to the Company until such time the Company becomes publicly traded, and
(ii) the Grant shall terminate and any unexercised portion of such Grant
(whether or not Vested) shall be forfeited, if (a) a Termination of Employment
occurs prior to a specified date, or within a specified time period following
receipt or exercise of the Grant, (b) the recipient at any time, or during a
specified time period, engages in any activity in competition with the Company,
or which is inimical, contrary or harmful to the interests of the Company, as
further defined by the Committee or as specified in the Participant's Employment
Agreement, or (c) the Company terminates the Employee with or without Cause.

        8.9     Limitations Applicable to Section 16 Persons and
Performance-Based Compensation. Notwithstanding any other provision of this
Plan, any Option and Restricted Common Shares granted or awarded to any
individual who is then subject to Section 16 of the Exchange Act shall be
subject to any additional limitations set forth in any applicable exemptive rule
under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of
the Exchange Act). To the extent permitted by applicable law, Options granted or
awarded hereunder shall be deemed amended to the extent necessary to conform to
such applicable exemptive rule. Furthermore, notwithstanding any other provision
of this Plan to the contrary, any Grant which is granted to a Section 162(m)
Participant and is intended to qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code shall be subject to any additional
limitations set forth in Section 162(m) of the Code (including any amendment to
Section 162(m) of the Code) or any regulations or rulings issued thereunder that
are requirements for qualification as performance-based compensation as
described in Section 162(m)(4)(C) of the Code, and this Plan shall be deemed
amended to the extent necessary to conform to such requirements.

        8.10    Restrictions.

                8.10.1  Except as otherwise provided for in the Award Agreement,
                        upon any Termination of Employment, for a one year
                        period thereafter, the

                                     - 19 -

<PAGE>

                        Company shall have the right, but not the obligation, to
                        purchase all Common Shares awarded hereunder or acquired
                        pursuant to a Grant, for their Fair Market Value at the
                        time of purchase by the Company. These rights shall be
                        in addition to the right of first refusal pursuant to
                        Section 8.10.2; provided, however, that in the event the
                        Company decides not to exercise its rights pursuant to
                        Section 8.10.2, the provisions of this Section 8.10.1
                        shall cease to apply with respect to those Common Shares
                        that were offered to the Company and sold in accordance
                        with the provisions of Section 8.10.2.

                8.10.2  Except as otherwise provided for in the Award Agreement,
                        if an individual desires and is permitted to sell,
                        encumber, or otherwise dispose of shares of Common
                        Shares awarded hereunder or acquired pursuant to a
                        Grant, the individual shall first offer the shares to
                        the Company by giving the Company written notice
                        disclosing: (i) the name of the proposed transferee of
                        the Common Shares, (ii) the certificate number and
                        number of shares of Common Shares proposed to be
                        transferred or encumbered, (iii) the proposed price,
                        (iv) all other terms of the proposed transfer, and (v) a
                        written copy of the proposed offer. Within 60 days after
                        receipt of such notice, the Company shall have the
                        option to purchase all or part of such Common Shares
                        same price and on the same terms as contained in such
                        notice (the "Option Period"). In the event the Company
                        does not exercise the option to purchase the Common
                        Shares, as provided above, the individual shall have the
                        right to sell, encumber or otherwise dispose of his
                        shares of Common Shares on the terms of the transfer set
                        forth in the written notice to the Company, provided
                        such transfer is effected within 30 days after the
                        expiration of the Option Period. If the transfer is not
                        effected within such period, the Company must again be
                        given an option to purchase, as provided above.

                8.10.3  On and after the date a class of the Company's
                        securities are registered under Sections 12(b) or 12(g)
                        of the Securities Exchange Act of 1934, as amended, the
                        Company shall have no further right to purchase shares
                        of Common Shares under this Section 8.10, and its
                        limitations shall be null and void.

                8.10.4  Notwithstanding the foregoing, the Committee may require
                        that a Participant execute any other documents it deems
                        necessary or desirable with respect to any Common Shares
                        distributed or purchased pursuant to this Plan.

        8.11    Restrictive Legend. All of the Common Shares now outstanding or
hereafter issued and/or owned shall be held and transferred subject to the terms
of the restrictions herein contained and every certificate representing a share
of Common Shares shall contain the following legend: "These shares are held
subject to the terms of a certain Company plan and

                                     - 20 -

<PAGE>

such shares may only be transferred in accordance with the terms thereof. A copy
of such plan is available at the office of the Company."

        8.12    Effect of Plan Upon Option and Compensation Plans. The adoption
of this Plan shall not affect any other compensation or incentive plans in
effect for the Company. Nothing in this Plan shall be construed to limit the
right of the Company (i) to establish any other forms of incentives or
compensation for Employees, Consultants or Trustees, or (ii) to grant or assume
options or other rights otherwise than under this Plan in connection with any
proper corporate purpose including but not by way of limitation, the grant or
assumption of options in connection with the acquisition by purchase, lease,
merger, consolidation or otherwise, of the business, stock or assets of any
corporation, partnership, limited liability company, firm or association.

        8.13    Compliance with Laws. This Plan, the granting and Vesting of
Grants under this Plan and the issuance and delivery of shares of Common Shares
and the payment of money under this Plan or under Grants awarded hereunder are
subject to compliance with all applicable federal and state laws, rules and
regulations (including but not limited to state and federal securities law and
federal margin requirements) and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith. Any securities delivered under
this Plan shall be subject to such restrictions, and the person acquiring such
securities shall, if requested by the Company, provide such assurances and
representations to the Company as the Company may deem necessary or desirable to
assure compliance with all applicable legal requirements. To the extent
permitted by applicable law, the Plan shall be deemed amended to the extent
necessary to conform to such laws, rules and regulations.

        8.14    Titles. Titles are provided herein for convenience only and are
not to serve as a basis for interpretation or construction of this Plan.

        8.15    Governing Law. This Plan and any agreements hereunder shall be
administered, interpreted and enforced under the laws of the Commonwealth of
Pennsylvania, without regard to conflicts of laws thereof.

                                   * * * * * *

        I hereby certify that the foregoing Plan was duly adopted by the Board
of Trustees of American Financial Realty Trust on September 5, 2002.

        Executed on this ___ day of September, 2002


                                        --------------------------------------

                                        Nicholas S. Schorsch
                                        President, Chief Executive Officer and
                                        Vice Chairman of the Board of Trustees

                                     - 21 -