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                          CORRECTIONAL PROPERTIES TRUST

                       1999 EMPLOYEE SHARE INCENTIVE PLAN


         SECTION 1. PURPOSE.

         The purpose of the Correctional Properties Trust 1999 Employee Share
Incentive Plan (the "Plan") is to advance the interests of Correctional
Properties Trust, a Maryland real estate investment trust, and its affiliates
and subsidiaries, if any (herein referred to collectively as the "Company"), by
enabling the Company to attract and retain executive officers and other key
employees of and consultants to the Company and to provide incentives to such
persons to maximize the Company's Funds from Operations. The Company believes
these purposes will be achieved under the Plan by offering such officers,
employees and consultants performance-based share incentives and/or other equity
interests or equity-based incentives in the Company, as well as
performance-based incentives payable in cash.

         SECTION 2. DEFINITIONS.

         For purposes of the Plan, the following terms shall have the meanings
set forth below:

         (a) "Affiliate" means any entity other than the Company and its
Subsidiaries that is designated by the Board as a participating employer under
the Plan, provided that the Company directly or indirectly owns at least 20% of
the combined voting power of all classes of stock of such entity or at least 20%
of the ownership interests in such entity.

         (b) "Board" means the Board of Trustees of the Company.

         (c) "Book Value" means, as of any given date, on a per share basis (i)
the shareholders' equity in the Company as of the end of the immediately
preceding fiscal year as reflected in the Company's consolidated balance sheet,
subject to such adjustments as the Committee shall specify at or after grant,
divided by (ii) the number of then outstanding Common Shares as of such year-end
date (as adjusted by the Committee for subsequent events).

         (d) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.



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         (e) "Committee" means the Committee referred to in Section 3 of the
Plan. If at any time no Committee shall be in office, then the functions of the
Committee specified in the Plan shall be exercised by the Board.

         (f) "Common Shares" means the common shares of beneficial interest, par
value $.001 per share, of the Company.

         (g) "Company" means Correctional Properties Trust, a Maryland real
estate investment trust, or any successor trust or corporation.

         (h) "Deferral Period" means the period described in Section 9(a) below.

         (i) "Deferred Shares" means an award made pursuant to Section 9 below
of the right to receive Common Shares at the end of a specified Deferral Period.

         (j) "Disability" means a condition which the Committee determines,
based upon medical evidence, is due to injury or sickness and restricts an
individual from performing the material and substantive duties of his or her
regular occupation to an extent that prevents the individual from engaging in
such occupation.

         (k) "Fair Market Value" means, as of any given date, unless otherwise
determined by the Committee in good faith, the reported closing price of the
Common Shares on the New York Stock Exchange or, if no such sale of Common
Shares is reported on the New York Stock Exchange on such date, the fair market
value of the Common Shares as determined by the Committee in good faith.

         (l) "Funds from Operations" means, in accordance with the resolution
adopted by the Board of Governors of NAREIT, net income (loss) (computed in
accordance with generally accepted accounting principles), excluding significant
non-recurring items, gains (or losses) from debt restructuring and sales of
property, plus depreciation and amortization on real estate assets, and after
adjustments for unconsolidated partnerships and joint ventures.

         (m) "Immediate Family Member" means a person described in Section
6(b)(v) below.

         (n) "Incentive Option" means any Share Option intended to be and
designated as an "Incentive Stock Option" within the meaning of Section 422 of
the Code.

         (o) "Non-Qualified Option" means any Share Option that is not an
Incentive Option.

         (p) "Normal Retirement" means retirement from active employment with
the Company and any Subsidiary or Affiliate on or after age 60.

         (q) "Other Share-Based Award" means an award under Section 11 below
that is valued in whole or in part by reference to, or is otherwise based on,
Common Shares.

         (r) "Plan" means this Correctional Properties Trust 1999 Employee Share
Incentive Plan, as hereinafter amended from time to time.

         (s) "Restricted Shares" means an award of Common Shares that is subject
to restrictions under Section 8 below.


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         (s) "Restriction Period" means the period described in Section 8(c)
below.

         (t) "Retirement" means Normal Retirement.

         (u) "Share Appreciation Right" means the right pursuant to an award
granted under Section 7 below to receive upon exercise an amount equal to the
excess of the Fair Market Value of one Common Share over the price per share
specified in the award agreement multiplied by the number of Common Shares in
respect of which a Share Appreciation Right has been exercised.

         (v) "Share Option" or "Option" means any option to purchase Common
Shares (including Restricted Shares and Deferred Shares, if the Committee so
determines) granted pursuant to Section 6 below.

         (w) "Subsidiary" means any corporation (or other entity) in an unbroken
chain of corporations and other entities beginning with the Company if each of
the corporations and other entities (other than the last corporation or other
entity in the unbroken chain) owns equity interests possessing more than 50% of
the total combined voting power of all classes of equity interests in one of the
other corporations or entities in the chain.

         In addition, the terms "Change in Control," "Potential Change in
Control" and "Change in Control Price" shall have meanings set forth,
respectively, in Sections 11(b), (c) and (d) below.

         SECTION 3. ADMINISTRATION.

         The Plan shall be administered by a committee (the "Committee") to be
appointed by the Board of Trustees of the Company (the "Board"), consisting of
two or more independent outside trustees (each of whom qualifies as an "outside
director" under Section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), and as a "non-employee director" under Rule 16b- 3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")). In the event
a Committee of two or more qualifying trustees cannot be formed, the Plan shall
be administered by the Board. No member of the Board or of the Committee shall
be liable for any action or determination made in good faith with respect to the
Plan or any option granted or option agreement entered into hereunder.

         The Committee shall have full authority to grant, pursuant to the terms
of the Plan, to officers, employees and consultants eligible under Section 5:
(i) Share Options, (ii) Share Appreciation Rights, (iii) Restricted Shares, (iv)
Deferred Shares, and/or (v) Other Share-Based Awards.

         In particular, the Committee shall have the authority:


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                  (i)    to select the officers, employees and consultants of
         the Company and its Subsidiaries and Affiliates to whom Share Options,
         Share Appreciation Rights, Restricted Shares, Deferred Shares and/or
         Other Share-Based Awards may from time to time be granted hereunder;

                  (ii)   to determine whether and to what extent Share Options,
         Share Appreciation Rights, Restricted Shares, Deferred Shares and/or
         Other Share-Based Awards, or any combination thereof, are to be granted
         hereunder to one or more officers, employees and consultants of the
         Company and its Subsidiaries and Affiliates;

                  (iii)  to determine the number of shares to be covered by each
         such award granted hereunder;

                  (iv)   to determine the terms and conditions, not inconsistent
         with the terms of the Plan, of any award granted hereunder (including,
         but not limited to, the share price, vesting schedule and any other
         restriction or limitation, or any vesting acceleration or waiver of
         forfeiture restrictions regarding any Share Option or other award
         and/or the Common Shares relating thereto, based in each case on such
         factors as the Committee shall determine, in its sole discretion);

                  (v)    to determine whether and under what circumstances a
         Share Option may be settled in cash, Restricted Shares and/or Deferred
         Shares;

                  (vi)   to determine whether, to what extent and under what
         circumstances Option grants and/or other awards under the Plan and/or
         other cash awards made by the Company are to be made, and operate, on a
         tandem basis vis-a-vis other awards under the Plan and/or cash awards
         made outside of the Plan, or on an additive basis; and

                  (vii)  to determine whether, to what extent and under what
         circumstances Common Shares and other amounts payable with respect to
         an award under this Plan shall be deferred either automatically or at
         the election of the participant (including providing for and
         determining the amount (if any) of any deemed earnings on any deferred
         amount during any deferral period).

         The Committee shall have the authority to adopt, alter and repeal such
rules, guidelines and practices governing the Plan as it shall, from time to
time, deem advisable; to interpret the terms and provisions of the Plan and any
award issued under the Plan (and any agreements relating thereto); and to
otherwise supervise the administration of the Plan. All decisions made by the
Committee pursuant to the provisions of the Plan shall be made in the
Committee's sole discretion and shall be final and binding on all persons,
including the Company and Plan participants.


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         SECTION 4. COMMON SHARES SUBJECT TO PLAN.

         The total number of Common Shares reserved and available for
distribution under the Plan shall be 400,000 shares. Such Common Shares may
consist, in whole or in part, of authorized and unissued Common Shares. The
maximum number of Common Shares with respect to which share-based awards may be
granted during any calendar year to any one individual shall not exceed 150,000
shares.

         Subject to Section 6 below, if any Common Shares that have been
optioned cease to be subject to a Share Option, or if any such Common Shares
that are subject to any Restricted Shares or Deferred Shares award or Other 
Share-Based Award granted hereunder are forfeited or any such award otherwise 
terminates without a payment being made to the participant in the form of Common
Shares, such Common Shares shall again be available for distribution in 
connection with future awards under the Plan.

         In the event of any merger, reorganization, consolidation,
recapitalization, Common Share dividend, Common Share split or other change in
corporate structure affecting the Common Shares, an adjustment shall be made in
the aggregate number of Common Shares reserved for issuance under the Plan, in
the number and option price of Common Shares subject to outstanding Options
granted under the Plan, in the number and purchase price of Common Shares
subject to outstanding Share Purchase Rights under the Plan, and in the number
of Common Shares subject to other outstanding awards granted under the Plan as
may be determined to be appropriate by the Committee, in its sole discretion,
provided that the number of Common Shares subject to any award shall always be a
whole number. Such adjusted option price shall also be used to determine the
amount payable by the Company upon the exercise of any Share Appreciation Right
associated with any Share Option.

         SECTION 5. ELIGIBILITY.

         All officers, employees and consultants of the Company and its
Subsidiaries and Affiliates who are responsible for or contribute to the
management, growth and/or profitability of the business of the Company and/or
its Subsidiaries and Affiliates are eligible to be granted awards under the
Plan.

         SECTION 6. SHARE OPTIONS.

         (a) Grant and Exercise. Share options may be granted alone, in addition
to or in tandem with other awards granted under the Plan and/or cash awards made
outside of the Plan. Any Share Option granted under the Plan shall be in such
form as the Committee may from time to time approve. Share Options granted under
the Plan may be of two types: (i) Incentive Options and (ii) Non-Qualified
Options. The Committee shall have the authority to grant to any optionee
Incentive Options, Non-Qualified Options, or both types of Share Options (in
each case with or without Share Appreciation Rights); provided, however, that
Incentive Options may only be granted to employees.



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         (b) Terms and Conditions. Options granted under the Plan shall be
subject to the following terms and conditions and shall contain such additional
terms and conditions, not inconsistent with the terms of the Plan, as the
Committee shall deem desirable:

                  (i)   Option Price. The option price per Common Share
         purchasable under a Share Option shall be determined by the Committee
         at the time of grant but shall be not less than 100% of the Fair Market
         Value of the Common Shares at the time of grant.

                  (ii)  Option Term. The term of each Share Option shall be
         fixed by the Committee, but no Share Option shall be exercisable more
         than ten years after the date the Option is granted.

                  (iii) Exercisability. Share Options shall be exercisable at
         such time or times and subject to such terms and conditions as shall be
         determined by the Committee at or after grant; provided, however, that,
         except as provided in Section 6(b)(vi) and (b)(vii) and Section 11,
         unless otherwise determined by the Committee at or after grant, Share
         Options shall be exercisable as follows: 25% on the date of grant and
         25% each on the first three anniversaries of the date of grant. If the
         Committee provides, in its sole discretion, that any Share Option is
         exercisable only in installments, the Committee may waive such
         installment exercise provisions at any time at or after grant in whole
         or in part, based on such factors as the Committee shall determine, in
         its sole discretion.

                  (iv)  Method of Exercise. Subject to whatever installment
         exercise provisions apply under Section 6(b)(iii), Share Options may be
         exercised in whole or in part at any time during the option period, by
         giving written notice of exercise to the Company specifying the number
         of shares to be purchased. Such notice shall be accompanied by payment
         in full of the purchase price, either by check, note or such other
         instrument as the Committee may accept. As determined by the Committee,
         in its sole discretion, at or after grant, payment in full or in part
         may also be made in the form of a Share Option or unrestricted Common
         Shares already owned by the optionee or, in the case of the exercise of
         a Non-Qualified Option, Restricted Shares or Deferred Shares subject to
         an award hereunder (based, in each case, on the Fair Market Value of
         the Share Option or the Common Shares on the date the option is
         exercised, as determined by the Committee).

                  If payment of the option exercise price of a Non-Qualified
         Option is made in whole or in part in the form of Restricted Shares or
         Deferred Shares, such Restricted Shares or Deferred Shares (and any
         replacement shares relating thereto) shall remain (or be) restricted or
         deferred, as the case may be, in accordance with the original terms of
         the Restricted Shares award or Deferred Shares award in question, and
         any additional Common Shares received upon the exercise shall be
         subject to the same forfeiture restrictions or deferral limitations,
         unless otherwise determined by the Committee, in its sole discretion,
         at or after grant.



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                  No Common Shares shall be issued until full payment therefor
         has been made. An optionee shall generally have the rights to dividends
         or other rights of a shareholder with respect to shares subject to the
         Option when the optionee has given written notice of exercise, has paid
         in full for such shares, and, if requested, has given the
         representation described in Section 15(a).

                  (v)    Transferability of Options. Incentive Options shall be
         transferable by the optionee only by will or by the laws of descent and
         shall be exercisable, during the optionee's lifetime, only by the
         optionee. Non-Qualified Options shall be transferable by the optionee
         by will or by the laws of descent or, with the consent of the
         Committee, to (i) the spouse, children or grandchildren of the optionee
         ("Immediate Family Members"), (ii) a trust or trusts for the exclusive
         benefit of such Immediate Family Members, (iii) a partnership in which
         such Immediate Family Members are the only partners, or (iv) one or
         more entities in which the optionee has a 10% or greater equity
         interest, provided that (x) the share option agreement pursuant to
         which such Non-Qualified Options are granted must be approved by the
         Committee, and (y) subsequent transfers of transferred Non-Qualified
         Options shall be prohibited except those in accordance with this
         subparagraph (iv). Following transfer, any such Non-Qualified Options
         shall continue to be subject to the same terms and conditions as were
         applicable immediately prior to transfer, provided that for purposes of
         this Plan or the option agreement executed pursuant hereto, the term
         "optionee" shall be deemed to refer to the transferee.

                  (vi)   Termination by Death. Subject to Section 6(x), if an
         optionee's employment by the Company and any Subsidiary or Affiliate
         terminates by reason of death, all Share Options held by such optionee
         shall vest immediately and may thereafter be exercised by the legal
         representative of the estate or by the legatee of the optionee under
         the will of the optionee, for a period of two years (or such other
         period as the Committee may specify at grant) from the date of such
         death or until the expiration of the stated term of such Share Option,
         whichever period is the shorter.

                  (vii)  Termination by Reason of Retirement. Subject to Section
         6(x), if an optionee's employment by the Company and any Subsidiary or
         Affiliate terminates by reason of Retirement, any Share Option held by
         such optionee shall vest immediately and may thereafter be exercised by
         the optionee, from the date of such termination until the expiration of
         the stated term of such Share Option. In the event of termination of
         employment by reason of Retirement, if an Incentive Option is exercised
         after the expiration of the exercise periods that apply for purposes of
         Section 422 of the Code, the option will thereafter be treated as a
         Non-Qualified Option.

                  (viii) Termination for Cause. Unless otherwise determined by
         the Committee (or pursuant to procedures established by the Committee)
         at or after grant, if an optionee's employment by the Company and any
         Subsidiary or Affiliate terminates for cause, all Share


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         Options held by the optionee shall thereupon terminate. For purposes of
         this paragraph, "cause" shall mean the following:

                           (a)      Embezzlement, fraud or criminal misconduct;

                           (b)      Gross negligence;

                           (c)      Willful or continuing disregard for the
                                    safety or soundness of the Company;

                           (d)      Willful or continuing violation of the
                                    published rules of the Company; or

                           (e)      A request from a state or federal
                                    governmental agency having regulatory
                                    authority over the Company that the services
                                    of the optionee be terminated.

                  (ix) Termination by Other than Death, Retirement or Cause.
         Subject to Section 6(x), if an optionee's employment by the Company and
         any Subsidiary or Affiliate terminates other than by death, Retirement
         or cause, any vested Share Option held by such optionee may thereafter
         be exercised by the optionee, to the extent it was exercisable at the
         time of termination or on such accelerated basis as the Committee may
         determine at or after grant (or as may be determined in accordance with
         procedures established by the Committee), for a period of two years
         from the date of such termination or until the expiration of the stated
         term of such Share Option, whichever period is the shorter. In the
         event of such termination of employment, if an Incentive Option is
         exercised after the expiration of the exercise periods that apply for
         purposes of Section 422 of the Code, such Share Option will thereafter
         be treated as a Non-Qualified Option.

                  (x)  Incentive Options. Anything in the Plan to the contrary
         notwithstanding, no term of this Plan relating to Incentive Options
         shall be interpreted, amended or altered, nor shall any discretion or
         authority granted under the Plan be so exercised, so as to disqualify
         the Plan under Section 422 of the Code, or, without the consent of the
         optionee(s) affected, to disqualify any Incentive Option under such
         Section 422.

                  If an Incentive Option granted under this Plan is first
         exercisable in any calendar year to obtain Common Shares having a fair
         market value (determined at the time of grant) in excess of $100,000,
         the option is treated as an Incentive Option for Common Shares having a
         fair market value (determined at the time of grant) equal to $100,000
         and as a Non-Qualified Option for the remaining Common Shares. In
         making this determination, the rules specified in Section 422(d) of the
         Code shall be determinative, including the aggregate of all Incentive
         Options which are first exercisable in that calendar year under any
         plan of the Company.

                  To the extent permitted under Section 422 of the Code or the
         applicable regulations thereunder or any applicable Internal Revenue
         Service pronouncement:



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                           (1) if (x) a participant's employment is terminated
                  by reason of death, Disability or Retirement and (y) the
                  portion of any Incentive Option that is otherwise exercisable
                  during the post-termination period specified under Section
                  6(f), (g) or (h), applied without regard to the $100,000
                  limitation contained in Section 422(b)(7) of the Code, is
                  greater than the portion of such option that is immediately
                  exercisable as an "Incentive Stock Option" during such
                  post-termination period under Section 422, such excess shall
                  be treated as a Non-Qualified Option; and

                           (2) if the exercise of an Incentive Option is
                  accelerated by reason of a Change in Control, any portion of
                  such option that is not exercisable as an Incentive Option by
                  reason of the $100,000 limitation contained in Section
                  422(b)(7) of the Code shall be treated as a Non-Qualified
                  Option.

                           An employee who owns Common Shares representing more
                  than ten percent (10%) of the total combined voting power of
                  all classes of shares of the Company shall not be eligible to
                  receive an Incentive Option.

                  (xi)  Buyout Provisions. The Committee may at any time offer
         to buy out for a payment in cash, Common Shares, Deferred Shares or
         Restricted Shares an option previously granted, based on such terms and
         conditions as the Committee shall establish and communicate to the
         optionee at the time that such offer is made.

                  (xii) Settlement Provisions. If the option agreement so
         provides at grant or is amended after grant and prior to exercise to so
         provide (with the optionee's consent), the Committee may require that
         all or part of the shares to be issued with respect to the spread value
         of an exercised Option take the form of Deferred Shares or Restricted
         Shares, which shall be valued on the date of exercise on the basis of
         the Fair Market Value (as determined by the Committee) of such Deferred
         Shares or Restricted Shares determined without regard to the deferral
         limitations and/or forfeiture restrictions involved.

         SECTION 7. SHARE APPRECIATION RIGHTS.

         (a) Grant and Exercise. Share Appreciation Rights may be granted either
alone, in addition to or in conjunction with other awards granted under the
Plan. A Share Appreciation Right may be exercised by a right holder, subject to
Section 7(b), in accordance with the procedures established by the Committee for
such purpose. Upon such exercise, the right holder shall be entitled to receive
an amount determined in the manner prescribed in Section 7(b).

         (b) Terms and Conditions. Share Appreciation Rights shall be subject to
such terms and conditions, not inconsistent with the provisions of the Plan, as
shall be determined from time to time by the Committee, including the following:



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                  (i)   Exercisability. Share Appreciation Rights shall be
         exercisable at such time or times and subject to such terms and
         conditions as shall be determined by the Committee at or after grant;
         provided, however, that, except as provided in Section 7(b)(iv) and (v)
         and Section 11, unless otherwise determined by the Committee at or
         after grant, Share Appreciation Rights shall be exercisable as follows:
         25% on the date of grant and 25% each on the first three anniversaries
         of the date of grant. The exercise of Share Appreciation Rights held by
         right holders who are subject to Section 16(b) of the Exchange Act
         shall comply with Rule 16b-3 thereunder, to the extent applicable.

                  (ii)  Method of Exercise. Upon the exercise of a Share
         Appreciation Right, a right holder shall be entitled to receive an
         amount in cash (or, if expressly provided in the award agreement, an
         amount in cash and/or Common Shares) equal in value to the excess of
         the Fair Market Value of one Common Share over the price per share
         specified in the award agreement multiplied by the number of Common
         Shares in respect of which the Share Appreciation Right shall have been
         exercised. The amount of cash and, if applicable, the number of Common
         Shares to be paid shall be calculated on the basis of the Fair Market
         Value of the Common Shares on the date of exercise.

                  (iii) Non-transferability of Share Appreciation Rights. Share
         Appreciation Rights shall not be transferable by the right holder.

                  (iv)  Termination by Death. Except as otherwise provided in
         the award agreement, if a right holder's employment by the Company and
         any Subsidiary or Affiliate terminates by reason of death, all Share
         Appreciation Rights held by such right holder shall vest immediately
         and may thereafter be exercised by the legal representative of the
         estate or by the legatee of the right holder under the will of the
         right holder, for a period of two years (or such other period as the
         Committee may specify at grant) from the date of such death or until
         the expiration of the stated term of such Share Appreciation Right,
         whichever period is the shorter.

                  (v)   Termination by Reason of Retirement. Except as otherwise
         provided in the award agreement, if a right holder's employment by the
         Company and any Subsidiary or Affiliate terminates by reason of
         Retirement, any Share Appreciation Right held by such


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         right holder shall vest immediately and may thereafter be exercised by
         the right holder, from the date of such termination until the
         expiration of the stated term of such Share Appreciation Right.

                  (vi)   Termination for Cause. Unless otherwise determined by
         the Committee (or pursuant to procedures established by the Committee)
         at or after gant, if the right holder's employment by the Company and
         for cause, all Share Appreciation Rights held by the right holder shall
         thereupon terminate. For purposes of this paragraph "cause" shall mean
         the following:

                           (a)      Embezzlement, fraud or criminal misconduct;

                           (b)      Gross negligence;

                           (c)      Willful or continuing disregard for the
                                    safety or soundness of the Company;

                           (d)      Willful or continuing violation of the
                                    published rules of the Company; or

                           (e)      A request from a state or federal
                                    governmental agency having regulatory
                                    authority over the Company that the services
                                    of the right holder be terminated.

                  (vii)  Termination by Other than Death, Retirement or Cause.
         Except as otherwise provided in the award agreement, if a right
         holder's employment by the Company and any Subsidiary of Affiliate
         terminates other than by death, Retirement or cause, any vested Share
         Appreciation Right held by such right holder may thereafter be
         exercised by the right holder, to the extent it was exercisable at the
         time of termination or on such accelerated basis as the Committee may
         determine at or after grant (or as may be determined in accordance with
         procedures established by the Committee), for a period of two years
         from the date of such termination or until the expiration of the stated
         term of such Share Appreciation Right, whichever period is shorter.

                  (viii) Limited Share Appreciation Rights. In its sole
         discretion, the Committee may grant "Limited" Share Appreciation Rights
         under this Section 7, i.e., Share Appreciation Rights that become
         exercisable only in the event of a Change in Control and/or a Potential
         Change in Control, subject to such terms and conditions as the
         Committee may specify at grant. Such Limited Share Appreciation Rights
         shall be settled solely in cash.

                  (ix)   Settlement Provisions. The Committee, in its sole
         discretion, may also provide that, in the event of a Change in Control
         and/or a Potential Change in Control, the amount to be paid upon the
         exercise of a Share Appreciation Right or Limited Share Appreciation
         Right shall be based on the Change in Control Price, subject to such
         terms and conditions as the Committee may specify at grant.



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         SECTION 8. RESTRICTED SHARES.

         (a) Administration. Shares of Restricted Shares may be issued either
alone, in addition to or in tandem with other awards granted under the Plan
and/or cash awards made outside the Plan. The Committee shall determine the
eligible persons to whom, and the time or times at which, grants of Restricted
Shares will be made, the number of shares to be awarded, the price (if any) to
be paid by the recipient of Restricted Shares (subject to Section 8(b)), the
time or times within which such awards may be subject to forfeiture, and all
other terms and conditions of the awards. The Committee may condition the grant
of Restricted Shares upon the attainment of specified performance goals or such
other factors as the Committee may determine, in its sole discretion. The
provisions of Restricted Shares awards need not be the same with respect to each
recipient.

         (b) Awards and Certificates. The prospective recipient of a Restricted
Shares award shall not have any rights with respect to such award, unless and
until such recipient has executed an agreement evidencing the award and has
delivered a fully executed copy thereof to the Company, and has otherwise
complied with the applicable terms and conditions of such award.

                  (i)   The purchase price for Restricted Shares shall be equal
         to or less than their par value and may be zero.

                  (ii)  Awards of Restricted Shares must be accepted within a
         period of 60 days (or such shorter period as the Committee may specify
         at grant) after the award date, by executing a Restricted Shares Award
         Agreement and paying whatever price (if any) is required under Section
         8(b)(i).

                  (iii) Each participant receiving a Restricted Shares award
         shall be issued a share certificate in respect of such shares of
         Restricted Shares. Such certificate shall be registered in the name of
         such participant, and shall bear an appropriate legend referring to the
         terms, conditions, and restrictions applicable to such award.

                  (iv)  The Committee shall require that the share certificates
         evidencing such shares be held in custody by the Company until the
         restrictions thereon shall have lapsed, and that, as a condition of any
         Restricted Shares award, the participant shall have delivered a share
         power, endorsed in blank, relating to the Common Shares covered by such
         award.

         (c) Restrictions and Conditions. The Restricted Shares awarded pursuant
to this Section 8 shall be subject to the following restrictions and conditions:

                  (i)   Subject to the provisions of this Plan and the award
         agreement, during a period set by the Committee commencing with the
         date of such award (the "Restriction Period"), the participant shall
         not be permitted to sell, transfer, pledge or assign shares of
         Restricted Shares awarded under the Plan. Within these limits, the
         Committee, in its sole discretion, may provide for the lapse of such
         restrictions in installments and may accelerate


                                       12

<PAGE>   13



         or waive such restrictions in whole or in part, based on service,
         performance and/or such other factors or criteria as the Committee may
         determine, in its sole discretion.

                  (ii)  Except as provided in this paragraph (ii) and Section
         8(c)(i), the participant shall have, with respect to the Restricted
         Shares, all of the rights of a shareholder of the Company, including
         the right to vote the shares and the right to receive any cash
         dividends. The Committee, in its sole discretion, as determined at the
         time of award, may permit or require the payment of cash dividends to
         be deferred and, if the Committee so determines, reinvested, subject to
         Section 15(e), in additional Restricted Shares to the extent shares are
         available under Section 4, or otherwise reinvested. Pursuant to Section
         4 above, share dividends issued with respect to Restricted Shares shall
         be treated as additional shares of Restricted Shares that are subject
         to the same restrictions and other terms and conditions that apply to
         the shares with respect to which such dividends are issued.

                  (iii) Subject to the applicable provisions of the award
         agreement and this Section 8, upon termination of a participant's
         employment with the Company and any Subsidiary or Affiliate for any
         reason during the Restriction Period, all shares still subject to
         restriction shall vest, or be forfeited, in accordance with the terms
         and conditions established by the Committee at or after grant.

                  (iv)  If and when the Restriction Period expires without a
         prior forfeiture of the Restricted Shares, certificates for an
         appropriate number of unrestricted shares shall be promptly delivered
         to the participant.

         (d) Minimum Value Provisions. In order to better ensure that award
payments actually reflect the performance of the Company and service of the
participant, the Committee may provide, in its sole discretion, for a tandem
performance-based or other award designed to guarantee a minimum value, payable
in cash or Common Shares to the recipient of a Restricted Shares award, subject
to such performance, future service, deferral and other terms and conditions as
may be specified by the Committee.

         SECTION 9. DEFERRED SHARES.

         (a) Administration. Deferred Shares may be awarded either alone, in
addition to or in tandem with other awards granted under the Plan and/or cash
awards made outside of the Plan. The Committee shall determine the eligible
persons to whom and the time or times at which Deferred Common Shares shall be
awarded, the number of Deferred Shares to be awarded to any person, the duration
of the period (the "Deferral Period") during which, and the conditions under
which, receipt of the Common Shares will be deferred, and the other terms and
conditions of the award in addition to those set forth in Section 9(b).

         The Committee may condition the grant of Deferred Shares upon the
attainment of specified performance goals or such other factors or criteria as
the Committee shall determine, in its sole


                                       13

<PAGE>   14



discretion. The provisions of Deferred Shares awards need not be the same with
respect to each recipient.

         (b) Terms and Conditions. The shares of Deferred Shares awarded
pursuant to this Section 9 shall be subject to the following terms and
conditions:

                  (i)   Subject to the provisions of this Plan and the award
         agreement referred to in Section 9(b)(vi) below, Deferred Shares awards
         may not be sold, assigned, transferred, pledged or otherwise encumbered
         during the Deferral Period. At the expiration of the Deferral Period
         (or the Elective Deferral Period referred to in Section 9(b)(v), where
         applicable), share certificates shall be delivered to the participant
         or his legal representative, in a number equal to the shares covered by
         the Deferred Shares award.

                  (ii)  Unless otherwise determined by the Committee at grant,
         amounts equal to any dividends declared during the Deferral Period with
         respect to the number of shares covered by a Deferred Shares award will
         be paid to the participant currently, or deferred and deemed to be
         reinvested in additional Deferred Shares, or otherwise reinvested, all
         as determined at or after the time of the award by the Committee, in
         its sole discretion.

                  (iii) Subject to the provisions of the award agreement and
         this Section 9, upon termination of a participant's employment with the
         Company and any Subsidiary or Affiliate for any reason during the
         Deferral Period for a given award, the Deferred Shares in question
         shall vest, or be forfeited, in accordance with the terms and
         conditions established by the Committee at or after grant.

                  (iv)  Based on service, performance and/or such other factors
         or criteria as the Committee may determine, the Committee may, at or
         after grant, accelerate the vesting of all or any part of any Deferred
         Shares award and/or waive the deferral limitations for all or any part
         of such award.

                  (v)   A participant may elect to further defer receipt of an
         award (or an installment of an award) for a specified period or until a
         specified event (the "Elective Deferral Period"), subject in each case
         to the Committee's approval and to such terms as are determined by the
         Committee, all in its sole discretion. Subject to any exceptions
         adopted by the Committee, such election must generally be made at least
         12 months prior to completion of the Deferral Period for such Deferred
         Shares award (or such installment).

                  (vi)  Each award shall be confirmed by, and subject to the
         terms of, a Deferred Shares agreement executed by the Company and the
         participant.

         (c) Minimum Value Provisions. In order to better ensure that award
payments actually reflect the performance of the Company and the service of the
participant, the Committee may provide, in its sole discretion, for a tandem
performance-based or other award designed to guarantee


                                       14

<PAGE>   15



a minimum value, payable in cash or Common Shares to the recipient of a Deferred
Shares award, subject to such performance, future service, deferral and other
terms and conditions as may be specified by the Committee.

         SECTION 10. OTHER SHARE-BASED AWARDS.

         (a) Administration. Other awards of Common Shares and other awards that
are valued in whole or in part by reference to, or are otherwise based on,
Common Shares ("Other Share-Based Awards"), including, without limitation,
performance shares, convertible preferred stock, convertible debentures,
exchangeable securities and Common Share awards or options valued by reference
to Book Value or subsidiary performance, may be granted either alone or in
addition to or in tandem with Share Options, Share Appreciation Rights,
Restricted Shares or Deferred Shares granted under the Plan and/or cash awards
made outside of the Plan.

         Subject to the provisions of the Plan, the Committee shall have
authority to determine the persons to whom and the time or times at which such
awards shall be made, the number of Common Shares to be awarded pursuant to such
awards, and all other conditions of the awards. The Committee may also provide
for the grant of Common Shares upon the completion of a specified performance
period. The provisions of Other Share-Based Awards need not be the same with
respect to each recipient.



                                       15

<PAGE>   16



         (b) Terms and Conditions. Other Share-Based Awards made pursuant to
this Section 11 shall be subject to the following terms and conditions:

                  (i)   Subject to the provisions of this Plan and the award
         agreement referred to in Section 10(b)(v) below, shares subject to
         awards made under this Section 10 may not be sold, assigned,
         transferred, pledged or otherwise encumbered prior to the date on which
         the shares are issued, or, if later, the date on which any applicable
         restriction, performance or deferral period lapses.

                  (ii)  Subject to the provisions of this Plan and the award
         agreement and unless otherwise determined by the Committee at grant,
         the recipient of an award under this Section 10 shall be entitled to
         receive, currently or on a deferred basis, interest or dividends or
         interest or dividend equivalents with respect to the number of shares
         covered by the award, as determined at the time of the award by the
         Committee, in its sole discretion, and the Committee may provide that
         such amounts (if any) shall be deemed to have been reinvested in
         additional Common Shares or otherwise reinvested.

                  (iii) Any award under this Section 10 and any Common Shares
         covered by any such award shall vest or be forfeited to the extent so
         provided in the award agreement, as determined by the Committee, in its
         sole discretion.

                  (iv)  In the event of the participant's Retirement, Disability
         or death, or in cases of special circumstances, the Committee may, in
         its sole discretion, waive in whole or in part any or all of the
         remaining limitations imposed hereunder (if any) with respect to any or
         all of an award under this Section 10.

                  (v)   Each award under this Section 10 shall be confirmed by,
         and subject to the terms of, an agreement or other instrument by the
         Company and by the participant.

                  (vi)  Common Shares (including securities convertible into
         Common Shares) issued on a bonus basis under this Section 11 may be
         issued for no cash consideration. 

         SECTION 11. CHANGE IN CONTROL PROVISIONS.

         (a)      Impact of Event.  In the event of:

                  (1) a "Change in Control" as defined in Section 11(b), or

                  (2) a "Potential Change in Control" as defined in section
11(c), but only if and to the extent so determined by the Committee or the Board
at or after grant (subject to any right of


                                       16

<PAGE>   17



approval expressly reserved by the Committee or the Board at the time of such
determination), the following acceleration and valuation provisions shall apply:

                  (i)   Any Share Appreciation Rights (including, without
         limitation, any Limited Share Appreciation Rights) outstanding for at
         least six months and any Share Option awarded under the Plan not
         previously exercisable and vested shall become fully exercisable and
         vested.

                  (ii)  The restrictions and deferral limitations applicable to
         any Restricted Shares, Deferred Shares and Other Share-Based Awards, in
         each case to the extent not already vested under the Plan, shall lapse
         and such shares and awards shall be deemed fully vested.

                  (iii) The value of all outstanding Share Options, Share
         Appreciation Rights, Restricted Shares, Deferred Shares and Other
         Share-Based Awards, in each case to the extent vested, shall, unless
         otherwise determined by the Committee in its sole discretion at or
         after grant but prior to any Change in Control, be cashed out on the
         basis of the "Change in Control Price" as defined in Section 11(d) as
         of the date such Change in Control or such Potential Change in Control
         is determined to have occurred or such other date as the Committee may
         determine prior to the Change in Control.

         (b) Definition of "Change in Control." For purposes of Section 11(a), a
"Change in Control" means the happening of any of the following:

                  (i)   any person or entity, including a "group" as defined in
         Section 13(d)(3) of the Exchange Act, other than the Company or a
         wholly-owned subsidiary thereof or any employee benefit plan of the
         Company or any of its Subsidiaries, becomes the beneficial owner of the
         Company's securities having 20% or more of the combined voting power of
         the then outstanding securities of the Company that may be cast for the
         election of trustees of the Company (other than as a result of an
         issuance of securities initiated by the Company in the ordinary course
         of business); or

                  (ii)  as the result of, or in connection with, any cash tender
         or exchange offer, merger or other business combination, sale of assets
         or contested election, or any combination of the foregoing transactions
         less than a majority of the combined voting power of the then
         outstanding securities of the Company or any successor corporation or
         entity entitled to vote generally in the election of the trustees of
         the Company or such other corporation or entity after such transaction
         are held in the aggregate by the holders of the Company's securities
         entitled to vote generally in the election of trustees of the Company
         immediately prior to such transaction; or

                  (iii) during any period of two consecutive years, individuals
         who at the beginning of any such period constitute the Board cease for
         any reason to constitute at least a majority


                                       17

<PAGE>   18



         thereof, unless the election, or the nomination for election by the
         Company's shareholders, of each trustee of the Company first elected
         during such period was approved by a vote of at least two-thirds of the
         trustees of the Company then still in office who were trustees of the
         Company at the beginning of any such period.

         (c) Definition of "Potential Change in Control." For purposes of
Section 11(a), a "Potential Change in Control" means the happening of any one of
the following:

                  (i)  The approval by shareholders of an agreement by the
         Company, the consummation of which would result in a Change in Control
         of the Company as defined in Section 11(b); or

                  (ii) The acquisition of beneficial ownership, directly or
         indirectly, by any entity, person or group (other than the Company or a
         Subsidiary or any Company employee benefit plan (including any trustee
         of such plan acting as such trustee)) of securities of the Company
         representing 10% or more of the combined voting power of the Company's
         outstanding securities and the adoption by the Board of a resolution to
         the effect that a Potential Change in Control of the Company has
         occurred for purposes of this Plan.

         (d) Definition of "Change in Control Price." For purposes of this
Section 11, "Change in Control Price" means the highest price per share paid in
any transaction reported on the New York Stock Exchange or paid or offered in
any bona fide transaction related to a potential or actual Change in Control of
the Company at any time during the 60 day period immediately preceding the
occurrence of the Change in Control (or, where applicable, the occurrence of the
Potential Change in Control event), in each case as determined by the Committee
except that, in the case of Incentive Options and Share Appreciation Rights
relating to Incentive Options, such price shall be based only on transactions
reported for the date on which the optionee exercises such Share Appreciation
Rights (or Limited Share Appreciation Rights) or, where applicable, the date on
which a cashout occurs under Section 11(a)(2)(iii).

         SECTION 12. OWNERSHIP LIMITATION.

         All awards hereunder shall be subject to the ownership limitations set
forth in the Amended and Restated Declaration of Trust of the Company as such
may be amended from time to time. Without limiting the generality of the
foregoing, any award which causes a recipient, or any constructive or beneficial
owner of Shares (as determined under Sections 318 and 544, respectively, of the
Code), to own or be deemed to own shares in excess of such ownership limitations
shall be void.




                                       18

<PAGE>   19




         SECTION 13. AMENDMENTS AND TERMINATION.

         The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made which would impair the rights of an
optionee or participant under a Share Option, Share Appreciation Right (or
Limited Share Appreciation Right), Restricted or Deferred Shares award, Share
Purchase Right or Other Share-Based Award theretofore granted, without the
optionee's or participant's consent, or which, without the approval of the
Company's shareholders, would: (a) except as expressly provided in this Plan,
increase the total number of shares reserved for the purpose of the Plan; or (b)
change the employees or class of employees eligible to participate in the Plan.

         The Committee may amend the terms of any Share Option or other award
theretofore granted, prospectively or retroactively, but, subject to Section 4
above, no such amendment shall impair the rights of any holder without the
holder's consent. The Committee may also substitute new Share Options for
previously granted Share Options (on a one for one or other basis), including
previously granted Share Options having higher option exercise prices. Subject
to the above provisions, the Board shall have broad authority to amend the Plan
to take into account changes in applicable securities and tax laws and
accounting rules, as well as other developments.

         SECTION 14. UNFUNDED STATUS OF PLAN.

         The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Company, nothing contained herein shall give any
such participant or optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Common Shares or payments in lieu of or with respect to
awards hereunder; provided, however, that, unless the Committee otherwise
determines with the consent of the affected participant, the existence of such
trusts or other arrangements is consistent with the "unfunded" status of the
Plan.

         SECTION 15. GENERAL PROVISIONS.

         (a) The Committee may require each person purchasing shares pursuant to
a Share Option or other award under the Plan to represent to and agree with the
Company in writing that the optionee or participant is acquiring the shares
without a view to distribution thereof. The certificates for such shares may
include any legend which the Committee deems appropriate to reflect any
restrictions on transfer.

         All certificates for Common Shares or other securities delivered under
the Plan shall be subject to such stock-transfer orders and other restrictions
as the Committee may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any


                                       19

<PAGE>   20



stock exchange upon which the Common Shares are then listed, and any applicable
Federal or state securities law, and the Committee may cause a legend or legends
to be put on any such certificates to make appropriate reference to such
restrictions.

         (b) Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to shareholder
approval if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases.

         (c) The adoption of the Plan shall not confer upon any employee of the
Company or any Subsidiary or Affiliate any right to continued employment with
the Company or a Subsidiary or Affiliate, as the case may be, nor shall it
interfere in any way with the right of the Company or a Subsidiary or Affiliate
to terminate the employment of any of its employees at any time.

         (d) No later than the date as of which an amount first becomes
includable in the gross income of the participant for Federal income tax
purposes with respect to any award under the Plan, the participant shall pay to
the Company, or make arrangements satisfactory to the Committee regarding the
payment of, any Federal, state, or local taxes of any kind required by law to be
withheld with respect to such amount. Unless otherwise determined by the
Committee, withholding obligations may be settled with Common Shares, including
Common Shares that are part of the award that gives rise to the withholding
requirement. The obligations of the Company under the Plan shall be conditional
on such payment or arrangements and the Company and its Subsidiaries or
Affiliates shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment of any kind otherwise due to the participant.

         (e) The actual or deemed reinvestment of dividends or dividend
equivalents in additional Restricted Shares (or in Deferred Shares or other
types of Plan awards) at the time of any dividend payment shall only be
permissible if sufficient Shares are available under Section 4 for such
reinvestment (taking into account then outstanding Share Options, Share Purchase
Rights and other Plan awards).

         (f) The Plan and all awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Maryland.

         SECTION 16. EFFECTIVE DATE OF PLAN.

         The Plan shall be effective as of January 21, 1999, the date of the
Plan's approval by the Board.


         SECTION 17. TERM OF PLAN.

         No Share Option, Share Appreciation Right, Restricted Shares award,
Deferred Shares award or Other Share-Based Award shall be granted pursuant to
the Plan on or after


                                       20

<PAGE>   21


the tenth anniversary of the effective date as set forth in Section 17 above,
but awards granted prior to such tenth anniversary may extend beyond that date.

         SECTION 18. RESTRICTIONS ON TRANSFER.

         Awards of derivative securities (as defined in Rule 16a-1(c) under the
Exchange Act or any successor definition adopted by the Securities and Exchange
Commission) granted under the Plan shall not be transferable except (a) by will
or the laws of descent and distribution, or (b) as provided in Sections 6(e) and
7(b)(iii) of the Plan.




                                       21