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                                                                    Exhibit 10.2

                           DIRECTOR STOCK OPTION PLAN

                         OF MACK-CALI REALTY CORPORATION


SECTION 1. PURPOSE.

         The 1994 Director Stock Option Plan was established by Cali Realty
Corporation ("Cali") in 1994 as the "1994 Director Stock Option Plan of Cali
Realty Corporation" and was subsequently amended and restated in 1996 as the
"Director Stock Option Plan of Cali Realty Corporation" (the "Director Stock
Option Plan"). The Director Stock Option Plan is being amended and restated in
its entirety and renamed the "Director Stock Option Plan of Mack-Cali Realty
Corporation (the "Plan") in order to reflect the change of Cali's name to
Mack-Cali Realty Corporation in December 1997 in connection with the acquisition
of certain office properties from The Mack Company and Patriot American Office
Group, to incorporate previously authorized amendments to the Plan and to
clarify certain procedures and definitions under the Plan.

         The purpose of the Plan is to promote the growth and profitability of
Mack-Cali Realty Corporation (the "Corporation") by providing directors and
Advisory Board members of the Corporation, or its Subsidiaries if so designated,
with an incentive to achieve corporate objectives, to attract and retain
directors and Advisory Board members of outstanding competence and to provide
such individuals with an equity interest in the Corporation. The Plan, as
amended and restated effective as of December 1, 1998, and as set forth herein,
is intended to be construed as an employee benefit plan that satisfies the
requirements for exemption from the restrictions of Section 16(b) of the
Securities Exchange Act of 1934, as amended, pursuant to the applicable rules
promulgated thereunder.


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         SECTION 2. DEFINITIONS.

         The following definitions are applicable to the Plan:

         2.1      ADMINISTRATIVE COMMITTEE.

         "Administrative Committee" means the committee appointed pursuant to
Section 3 hereof or, if no such committee is appointed, the Board.

         2.2      ADVISORY BOARD.

         "Advisory Board" shall mean the Advisory Board of the Corporation which
was established in December 1997.

         2.3      BENEFICIARY.

         "Beneficiary" means the beneficiary or beneficiaries designated by a
Participant in accordance with Section 7.8 hereof to receive the amount, if any,
payable under the Plan upon the death of such Participant.

         2.4      BOARD.
         "Board" means the Board of Directors of the Corporation.

         2.5      CAUSE.

         "Cause" means termination for fraud or willful misconduct as determined
by the Administrative Committee or the Board.

         2.6      CODE.

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

         2.7      COMMON STOCK.

         "Common Stock" means the shares of common stock, $.01 par value per
share, of the Corporation.

         2.8      CORPORATION.


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         "Corporation" means Mack-Cali Realty Corporation.

         2.9      DIRECTOR'S OPTION.

         "Director's Option" means a Non-qualified Stock Option granted pursuant
to Section 6.2 hereof.

         2.10     DISABILITY.

         "Disability" means a mental or physical condition rendering a
Participant unable to perform his or her regular duties as determined by the
Administrative Committee or the Board.

         2.11     DISCRETIONARY OPTION.

         "Discretionary Option" means a Non-qualified Stock Option granted
pursuant to Section 6.3 hereof.

         2.12     ELIGIBLE ADVISORY BOARD MEMBERS.

         "Eligible Advisory Board Members" means non-employee members of the
Advisory Board.

         2.13     ELIGIBLE DIRECTORS.

         "Eligible Directors" means a non-employee members of the Board. In
addition, Eligible Director shall include any non-employee members of the Board
of Directors of a Subsidiary of the Company, if and only if, and only to the
extent, such Board of Directors is designated by the Board as eligible to
participate in the Plan.

         2.14     EXCHANGE ACT.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended.
References to a particular section of, or rule under the Exchange Act include
references to successor provisions.


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         2.15     FAIR MARKET VALUE.

         "Fair Market Value" means the closing price as quoted on the New York
Stock Exchange at the end of the last business day preceding the Grant Date or
other date of determination as reported in the New York Edition of the WALL
STREET JOURNAL.

         2.16     INCENTIVE STOCK OPTION.

         "Incentive Stock Option" means an option to purchase Common Stock that
satisfies the requirements of Section 422 of the Code.

         2.17     IMMEDIATE FAMILY.

         "Immediate Family" means, with respect to a particular Participant, the
Participant's spouse, children and grandchildren.

         2.18     MATURE SHARES.

         "Mature Shares" means Shares for which the holder thereof has good
title, free and clear of all liens and encumbrances, and which such holder
either (i) has held for at least six (6) months or (ii) has purchased from the
open market.

         2.19     NON-QUALIFIED STOCK OPTION.

         "Non-qualified Stock Option" means an option to purchase Common Stock
that does not qualify as an Incentive Stock Option.

         2.20     OPTION.

         "Option" means a Director's Option or Discretionary Option granted
under the Plan.

         2.21     OPTION AGREEMENT.

         "Option Agreement" means the written agreement by which an Option shall
be evidenced.


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         2.22     OPTION PRICE.

         "Option Price" means the purchase price per Share of an Option.

         2.23     OPTION TERM.

         "Option Term" means the period beginning on the Grant Date of an Option
and ending on the expiration date of such Option, as specified in the Option
Agreement for such Option and as may, in the discretion of the Administrative
Committee, and consistent with the provisions of the Plan, be extended from time
to time.

         2.24     PARTICIPANT.

         "Participant" means an Eligible Director or Eligible Advisory Board
Member who has been granted an Award or a Permitted Transferee.

         2.25     PERMITTED TRANSFEREE.

         "Permitted Transferee" means a person to whom an Option may be
transferred or assigned in accordance with Section 7.8 hereof.

         2.26     PLAN.

         "Plan" means the Director Stock Option Plan of Mack-Cali Realty
Corporation as amended and restated herein, and as may be amended from time to
time.

         2.27     RETIREMENT.

         "Retirement" means separation from service as a director or member of
the Advisory Board on or after age 65 or at such other time as the Board may
designate.

         2.28     RULE 16B-3.

         "Rule 16b-3" means Rule 16b-3 of the SEC under the Exchange Act, as
amended from time to time, together with any successor rule.


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         2.29     SEC.

         "SEC" means the Securities and Exchange Commission.

         2.30     SHARE.

         "Share" means a share of Common Stock.

         2.31     SUBSIDIARY.

         "Subsidiary" means a corporation or other entity with respect which the
Corporation (i) owns, directly or indirectly, fifty percent (50%) or more of the
then outstanding common stock in any corporation or (ii) has a fifty percent
(50%) or more ownership interest in any other entity.

SECTION 3.  ADMINISTRATION.

         The Plan shall be administered by a committee (the "Administrative
Committee), which shall consist of two or more directors of the Corporation, all
of whom qualify as "Non-Employee Directors" as defined in Rule 16b-3 of the
Exchange Act. The number of members of the Administrative Committee shall from
time to time be increased or decreased, and shall be subject to such conditions,
in each case as the Board deems appropriate to permit transactions in Shares
pursuant to the Plan to satisfy such conditions of Rule 16b-3 as then in effect.
In the event that the Compensation Committee of the Board (the "Compensation
Committee) meets the requirements set forth in this Section 3 hereof, such
Compensation Committee shall be the Administrative Committee hereunder unless
otherwise determined by the Board.

         A majority of the members of the Administrative Committee shall
constitute a quorum. The Administrative Committee may act at a meeting,
including a telephonic meeting, by action of a majority of the members present,
or without a meeting by unanimous


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written consent.

         Subject to the express provisions of the Plan, the Committee shall have
full and final authority and discretion as follows:

                  (i)      select the Eligible Directors and Eligible Advisory
                           Board Members entitled to receive Discretionary
                           Options pursuant to Section 6.3 hereof;

                  (ii)     grant Discretionary Options to those Participants it
                           selects in such amounts as it shall determine,
                           subject to the terms and conditions of the Plan;

                  (iii)    determine the number of Shares to be covered by each
                           Discretionary Option granted under the Plan and the
                           time or times when and the manner in which such
                           Discretionary Option shall be exercisable;

                  (iv)     to amend or cancel, with the consent of the
                           Participant, any outstanding Option(s) and to grant
                           new Option(s) in substitution therefor;

                  (v)      to accelerate the exercisability (including
                           exercisability within a period of less than one year
                           after the Grant Date) of, and to accelerate or waive
                           any or all of the terms and conditions applicable to,
                           any Option or any group of Options for any reason and
                           at any time, including in connection with a
                           termination of service (other than for Cause);

                  (vi)     subject to the provisions of the Plan, to extend the
                           time during which any Option or group of Options may
                           be exercised;

                  (vii)    to interpret the Plan and make all determinations
                           necessary or advisable for the administration of the
                           Plan including the establishment, amendment or
                           revocation from time to time of guidelines or
                           regulations for the administration of the Plan, to
                           cause appropriate records to be established, and to
                           make all determinations and take all other actions
                           considered necessary or advisable for the
                           administration of the Plan; and

                  (viii)   to take any other action with respect to any matters
                           relating to the Plan for which it is responsible.

         All decisions, actions or interpretations of the Administrative
Committee on all matters relating to the Plan or any Option Agreement shall be
final, binding and conclusive upon all parties. No member of the Administrative
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any Option.


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SECTION 4. PARTICIPATION.

         4.1      DIRECTOR'S OPTIONS.

         All Eligible Directors shall automatically be eligible to receive
Director's Options under the Plan .

         4.2      DISCRETIONARY OPTIONS.

         The Administrative Committee, may, in its discretion grant
Discretionary Options to any Eligible Director or Eligible Advisory Board
Member, whether or not he or she has previously received an Option. No such
Eligible Directors or Eligible Advisory Board Members shall at any time have the
right to receive a Discretionary Option unless selected by the Administrative
Committee pursuant to the Plan. No Participant, having been granted an Option,
shall have the right to an additional Option in the future unless such Option is
granted by the Administrative Committee.

SECTION 5. MAXIMUM NUMBER OF SHARES AVAILABLE FOR OPTIONS.

         Subject to adjustment in accordance with Section 7.2 hereof, the
maximum number of Shares for which grants under the Plan shall be available is
400,000. In the event any Options granted under the Plan shall be forfeited,
terminate or expire, the number of Shares no longer subject to such Option, to
the extent of such forfeiture, termination or expiration, shall thereafter again
be available for grant under the Plan. The Common Stock distributed under the
Plan may be authorized and unissued shares, shares held in the treasury of the
Corporation, or shares purchased on the open market by the Corporation (at such
time or times and in such manner as it may determine). The Corporation shall be
under no obligation to acquire Common Stock for distribution to Participants
before payment in Common Stock


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is due and distributable.

SECTION 6.  GRANTS OF OPTIONS.

         6.1      GENERAL CONDITIONS TO GRANTS.

         The Grant Date of a Director's Option shall be the date on which the
Eligible Director is initially elected or appointed to the Board and the Grant
Date of a Discretionary Option shall be the date on which the Administrative
Committee grants the Option or such later date as specified in advance by the
Administrative Committee. All Options shall be evidenced by an Option Agreement
and any terms and conditions of an Option not set forth in the Plan shall be set
forth in the Option Agreement related to that Option. All Options granted under
this Plan shall be Non-qualified Stock Options.

         6.2      GRANT OF DIRECTORS' OPTIONS.

         Each Eligible Director shall be granted, upon his or her initial
election or appointment to the Board, a Non-qualified Stock Option to purchase
5,000 Shares (a "Director's Option"). The grant of a Director's Option shall not
be subject to the discretion of the Administrative Committee.

         6.3      GRANT OF DISCRETIONARY OPTIONS.

         Subject to the limitations of the Plan, the Administrative Committee
may, in its discretion, grant an Eligible Director or Eligible Advisory Board
Member a Non-qualified Stock Option to purchase such amount of Shares as shall
be determined by the Administrative Committee in its sole discretion (a
"Discretionary Option"). A Discretionary Option granted under this Section 6.3
may be in addition to the Director's Option granted to an Eligible Director
pursuant to Section 6.2 hereof.

         6.4      TERMS AND CONDITIONS OF OPTIONS.


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         Except as otherwise provided in a Participant's Option Agreement, each
Option granted under the Plan shall be subject to the following express terms
and conditions and to such other terms and conditions consistent therewith as
the Administrative Committee may deem appropriate.

         (a) OPTION TERM. The Option Term for each Option granted under the Plan
shall be ten (10) years and each Option shall automatically expire on the tenth
(10th) anniversary of the Grant Date.

         (b) OPTION PRICE. The Option Price of each Share as to which an Option
may be exercised shall be the Fair Market Value of the Share of the Grant Date.

         (c) EXERCISE OF OPTION. Except as otherwise provided under the Plan, no
part of any Option may be exercised until the Participant shall have remained a
member of the Board or Advisory Board, as the case may be, for the periods set
forth below:

                  (i)      DIRECTOR'S OPTIONS. One year from the Grant Date.

                  (ii)     DISCRETIONARY OPTIONS. The period, if any, determined
                           by the Administrative Committee in its sole
                           discretion.

         (d) PAYMENT OF PURCHASE PRICE UPON EXERCISE. Each Option shall provide
that the Option Price of the Shares as to which an Option shall be exercised
shall be paid to the Corporation at the time of exercise either (i) in cash,
certified check or wire transfer, or (ii) in such other consideration as the
Administrative Committee deems appropriate including, but not limited to, loans
from the Corporation or a third party, (iii) subject to approval of the
Administrative Committee, in Mature Shares having a total fair market value, as
determined by the Administrative


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Committee, equal to the Option Price for such Shares, or a combination of cash
and Mature Shares having a total fair market value, as so determined, equal to
the Option Price for such Shares, (iv) subject to the approval of the
Administrative Committee, in its sole discretion, by delivering a properly
executed exercise notice in a form approved by the Administrative Committee,
together with an irrevocable notice of exercise and irrevocable instructions to
a broker to promptly deliver to the Corporation the amount of applicable sale or
loan proceeds sufficient to pay the purchase price for such Shares, together
with the amount of federal, state and local withholding taxes payable by
Participant by reason of such exercise or (v) any combination of the foregoing.

         (e) EXERCISE IN THE EVENT OF DEATH, DISABILITY, RETIREMENT OR OTHER
TERMINATION OF SERVICE. Subject to Subsection 6.4(f) hereof, the following
provisions shall apply upon termination of a Participant's status as a member of
the Board or Advisory Board:

                  (i)      UPON TERMINATION DUE TO DEATH, DISABILITY OR
                           RETIREMENT. If Participant's status as a member of
                           the Board or the Advisory Board shall terminate
                           because of his or her death, Disability or
                           Retirement, the Participant, Beneficiary or legal
                           representative shall have the right to exercise all
                           Options regardless of whether such Options are
                           vested, at any time and from time to time, but not
                           later than (x) one year following the date of death
                           or Disability, (ii) one year following the date of
                           Retirement, or (iii) the expiration date specified in
                           Section 6.4(a) hereof, whichever is earlier.

                  (ii)     UPON TERMINATION FOR ANY REASON OTHER THAN DUE TO
                           DEATH, DISABILITY, RETIREMENT OR FOR CAUSE. If a
                           Participant' s status as a member of the Board or
                           Advisory Board shall terminate for any reason other
                           than due to the Participant's death, Disability,
                           Retirement or termination for Cause, such Participant
                           shall have the right to exercise his or her Options,
                           to the extent that such Participant shall have been
                           entitled to do so on the date of such termination, at
                           any time and from time to time, but not later than
                           (i) on the expiration date specified in Section
                           6.4(a) hereof or (ii) three (3) months after the date
                           of such termination of service, whichever date is
                           earlier and the portion of any Option granted
                           hereunder that is not vested and exercisable as of
                           the date of such termination of service shall
                           automatically expire and be forfeited as of the date
                           of such termination of service.

                  (iii)    UPON TERMINATION FOR CAUSE. If a Participant's status
                           as a member of the Board or Advisory Board shall
                           terminate for Cause, all Options regardless of
                           whether such Options are vested or not shall be
                           forfeited and canceled on the date of such
                           termination.


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         (f) TRANSFER OF SERVICE FROM BOARD TO ADVISORY BOARD OR VICE VERSA. For
purposes of determining the exercise period and vesting of Options granted
hereunder, (i) a Participant who resigns as a member of the Board in order to
become a member of the Advisory Board shall be deemed during his or her period
of service as a member of the Advisory Board to be a continuing member of the
Board and (ii) a Participant who resigns as a member of the Advisory Board in
order to become a member of the Board shall be deemed during his or her period
of service as a member of the Board to be a continuing member of the Advisory
Board.

         (g) TRANSFERABILITY OF OPTIONS. Subject to Section 7.8 hereof, no
Options granted under the Plan shall be transferable other than by will or by
the laws of descent and distribution. During the lifetime of the Participant, an
Option shall be exercisable only by such Participant.

         (h) PARTICIPANTS TO HAVE NO RIGHTS AS STOCKHOLDERS. No Participant
shall have any rights as a stockholder with respect to any Common Stock subject
to his or her Option prior to the date of issuance to him or her of such Common
Stock.

         (i) INVESTMENT REPRESENTATION. Each Option Agreement for an Option
shall provide that, upon demand by the Administrative Committee for such a
representation, the Participant (or any person acting under Subsection 6.4(e)
hereof) shall deliver to the Administrative Committee, at the time of any
exercise of an Option or portion thereof, a written representation that the
Shares to be acquired upon such exercise are to be acquired for investment and
not for resale or with a view to the distribution thereof. Upon such demand,
delivery of such representation prior to the delivery of any Common Stock issued
upon exercise of an Option and prior to the expiration of the Option Term shall
be a condition


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precedent to the right of the Participant or such other person to purchase any
Common Stock. In the event certificates for Common Stock are delivered under the
Plan with respect to which such an investment representation has been obtained,
the Administrative Committee may cause a legend or legends to be placed on such
certificates to make appropriate reference to such representations and to
restrict transfer in the absence of compliance with applicable federal or state
securities laws.

         (j) OTHER OPTION PROVISIONS. The Administrative Committee may require a
Participant to agree, as a condition to receiving an Option under the Plan, that
part or all of any Options previously granted to such Participant under the Plan
be terminated.

         SECTION 6.5       EXERCISE OF OPTIONS.

         An Option shall be exercised by the delivery to the Corporation during
the Option Term of (x) written notice of intent to purchase a specific number of
Shares subject to the Option and (y) payment in full of the Option Price of such
specific number of Shares.

SECTION 7. GENERAL PROVISIONS.

         7.1      GENERAL CREDITOR STATUS.

         Participants shall have no right, title, or interest whatsoever in or
to any investments which the Corporation may make to aid it in meeting its
obligations under the Plan. Nothing contained in the Plan, and no action taken
pursuant to its provisions, shall create or be construed to create a trust of
any kind, or a fiduciary relationship between the Corporation and any
Participant, Beneficiary, legal representative or any other person. To the
extent that any person acquires a right to receive payments from the Corporation
under the Plan, such right shall be no greater than the right of an unsecured
general creditor of the Corporation. All payments to be made hereunder shall be
paid from the general funds of the Corporation


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and no special or separate fund shall be established and no segregation of
assets shall be made to assure payment of such amounts except as expressly set
forth in the Plan; PROVIDED, HOWEVER, that in its sole discretion, the
Administrative Committee may authorize the creation of trusts or other
arrangements to meet the obligations created under the Plan to deliver Common
Stock; PROVIDED, FURTHER, HOWEVER, that, unless the Administrative Committee
otherwise determines with the consent of the affected Participant, the existence
of such trusts or other arrangements shall be consistent with the "unfunded"
status of the Plan.

         7.2      CERTAIN ADJUSTMENTS TO SHARES.

         In the event of any change in the Common Stock by reason of any stock
dividend, recapitalization, reorganization, spin-off, split-off, merger,
consolidation, stock split, reverse stock split, combination or exchange of
shares, or any rights offering to purchase Common Stock at a price substantially
below fair market value, or of any similar change affecting the Common Stock of
or by the Corporation, the number and kind of Shares available for Options under
the Plan and the Option Price per Share thereof shall be appropriately adjusted
consistent with such change in such manner as the Administrative Committee may
deem equitable to prevent substantial dilution or enlargement of the rights
granted to, or available for, the Participants hereunder. The Administrative
Committee shall give notice to each Participant of any adjustment made pursuant
to this Section and, upon notice, such adjustment shall be effective and binding
for all purposes of the Plan.

         7.3      SUCCESSOR CORPORATION.

         The obligations of the Corporation under the Plan shall be binding upon
any successor corporation or organization resulting from the merger,
consolidation or other reorganization of the Corporation, or upon any successor
corporation or organization succeeding to


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substantially all of the assets and business of the Corporation. The Corporation
agrees that it will make appropriate provision for the preservation of
Participants' rights under the Plan in any agreement or plan which it may enter
into or adopt to effect any such merger, consolidation, reorganization or
transfer of assets.

         7.4      NO CLAIM OR RIGHT UNDER THE PLAN.

         Neither the Plan nor any action taken thereunder shall be construed as
giving any director or Advisory Board member any right to a continuation of
membership on the Board or the Advisory Board, as applicable.

         7.5      OPTIONS NOT TREATED AS COMPENSATION UNDER BENEFIT.

         No Option shall be considered as compensation under any employee
benefit plan of the Corporation, except as specifically provided in any such
plan or as otherwise determined by the Board.

         7.6      LISTING AND QUALIFICATION OF COMMON STOCK.

         The Corporation, in its discretion, may postpone the issuance or
delivery of Common Stock upon any exercise of an Option until completion of such
stock exchange listing or other qualification of such shares under any state or
federal law, rule or regulation as the Corporation may consider appropriate, and
may make such representations and furnish such information as it may consider
appropriate in connection with the issuance or delivery of the Shares in
compliance with applicable laws, rules and regulations.

         7.7      WITHHOLDING TAXES.

         The Corporation may make such provisions and take such steps as it may
deem necessary or appropriate for the withholding of all federal, state and
local taxes required by law to be withheld with respect to Options granted
pursuant to the Plan including, but not


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limited to (i) accepting a remittance from the Participant in cash, or in the
Administrative Committee's discretion in Mature Shares, (ii) deducting the
amount required to be withheld from any other amount then or thereafter payable
by the Corporation to a Participant, Beneficiary or legal representative or from
any Shares due to the Participant under the Plan, (iii) requiring a Participant,
Beneficiary or legal representative to pay to the Corporation the amount
required to be withheld as a condition of releasing Common Stock or (iv) any
combination of the foregoing. In addition, subject to such rules and regulations
as the Administrative Committee shall from time to time establish, Participants
shall be permitted to satisfy federal, state and local taxes, if any, imposed
upon the payment of Options in Common Stock at a rate up to such Participant's
maximum marginal tax rate with respect to each such tax by (i) irrevocably
electing to have the Corporation deduct from the number of Shares otherwise
deliverable in payment of an Option such number of Shares as shall have a value
equal to the amount of tax to be withheld, (ii) delivering to the Corporation
such portion of the Common Stock delivered in payment of the Option as shall
have a value equal to the amount of tax to be withheld, or (iii) delivering to
the Corporation such number of Mature Shares or combination of Mature Shares and
cash as shall have a value equal to the amount of tax to be withheld.

         7.8      NON-TRANSFERABILITY/DESIGNATION AND CHANGE OF BENEFICIARY.

         (a) An Option granted hereunder shall not be assignable or transferable
other than by will or by the laws of descent and distribution and may be
exercised during the Participant's lifetime only by the Participant or his or
her guardian or legal representative, except that a Participant may, if
permitted by the Administrative Committee, in its discretion, transfer an
Option, or portion thereof, to one or more members of the Participant's


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Immediate Family.

         (b) Each Participant shall file with the Administrative Committee a
written designation of one or more persons as the Beneficiary who shall be
entitled to receive the amount, if any, payable under the Plan upon his or her
death. A Participant may, from time to time, revoke or change his or her
Beneficiary by filing a new designation with the Administrative Committee. The
last such designation received by the Administrative Committee shall be
controlling; PROVIDED, HOWEVER, that no designation, or change or revocation
thereof, shall be effective unless received by the Administrative Committee
prior to the Participants' death, and in no event shall it be effective as of a
date prior to such receipt.

         7.9      PAYMENTS TO PERSONS OTHER THAN A PARTICIPANT.

         If the Administrative Committee shall find that any person to whom any
amount is payable under the Plan is unable to care for his or her affairs
because of illness or accident, or is a minor, or has died, then any payment due
to such person or his or her estate (unless a prior claim therefor has been made
by a duly appointed legal representative), may, if the Administrative Committee
so direct the Corporation, be paid to his or her spouse, a child, a relative, an
institution maintaining or having custody of such person, or any other person
deemed by the Administrative Committee to be a proper recipient on behalf of
such person otherwise entitled to payment. Any such payment shall be a complete
discharge of the liability of the Administrative Committee and the Corporation
thereof.

         7.10     NO LIABILITY OF ADMINISTRATIVE COMMITTEE MEMBERS.

         No member of the Administrative Committee shall be personally liable by
reason of any contract or other instrument executed by such member or on his or
her behalf in his or her capacity as a member of the Administrative Committee
nor for any mistake of judgment


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made in good faith, and the Corporation shall indemnify and hold harmless each
employee, officer or director of the Corporation to whom any duty or power
relating to the administration or interpretation of the Plan may be allocated or
delegated, against any cost or expense (including counsel fees) or liability
(including any sum paid in settlement of a claim with the approval of the Board
of Directors) arising out of any act or omission to act in connection with the
Plan unless arising out of such person's own fraud or bad faith. The
indemnification provided for in this Section 7.10 shall be in addition to any
rights of indemnification such Administration Committee member has as a director
of officer pursuant to law, under the Certificate of Incorporation or By-Laws of
the Corporation.

         7.11     AMENDMENT OR TERMINATION.

         Except as to matters that in the opinion of the Corporation's legal
counsel require stockholder approval, any provision of the Plan may be modified
as to a Participant by an individual agreement approved by the Administrative
Committee. The Board may, with prospective or retroactive effect, amend, suspend
or terminate the Plan or any portion thereof at any time; PROVIDED, HOWEVER,
that (i) no amendment that would materially increase the cost of the Plan to the
Corporation may be made by the Board without the approval of the stockholders of
the Corporation and (ii) no amendment, suspension or termination of the Plan
shall deprive any Participant of any rights to Options previously made under the
Plan without his or her written consent. Subject to earlier termination pursuant
to the provisions of this Section, and unless the stockholders of the
Corporation shall have approved an extension of the Plan beyond such date, no
further Options shall be made under the Plan after the tenth (10th) anniversary
of the original effective date of the Plan specified in Section 7.15 hereof.




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         7.12     UNFUNDED PLAN.

         The Plan is intended to constitute an unfunded deferred compensation
arrangement.

         7.13     GOVERNING LAW.

         The Plan shall be governed by and construed in accordance with the laws
of the State of Maryland, without reference to the principles of conflicts of
law thereof.

         7.14     NON-UNIFORM DETERMINATIONS.

         The Administrative Committee's determinations under the Plan need not
be uniform and may be made by the Administrative Committee selectively among
persons who receive, or are eligible to receive Discretionary Options, whether
or not such persons are similarly situated. Without limiting the generality of
the foregoing, the Administrative Committee shall be entitled, to enter into
non-uniform and selective Option Agreements as to (a) the identity of the
Participant, (b) the terms and provisions of Options, and (c) the treatment of
termination of service.

         7.15 EFFECTIVE DATE. The 1994 Director Stock Option Plan was originally
effective as of August 31, 1994 and was subsequently amended and restated in its
entirety effective December 1, 1998.

         7.16     NO ILLEGAL TRANSACTIONS.

         The Plan and all Options granted pursuant to it are subject to all
applicable laws and regulations. Notwithstanding any provision of the Plan or
any Option, Participants shall not be entitled to exercise or receive benefits
under, any Option, and the Corporation shall not be obligated to deliver any
Shares or deliver any benefits to a Participant, if such exercise or delivery
would constitute a violation by the Participant or the Corporation of any
applicable law or regulation.


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<PAGE>

         7.17     SEVERABILITY.

         If any part of the Plan is declared by any court of governmental
authority to be unlawful or invalid, such unlawfulness or invalidity shall not
invalidate any other part of the Plan. Any Section or part of a Section so
declared to be unlawful or invalid shall, if possible, be construed in manner
which will give effect to the terms of such Section to the fullest extent
possible while remaining lawful and valid.






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