Exhibit 10.26


 


KITE REALTY GROUP TRUST


 


2004 EQUITY INCENTIVE PLAN


 
















 


TABLE OF CONTENTS


 


	
  1.

  	
  PURPOSE

  	
   

  
	
  2.

  	
  DEFINITIONS

  	
   

  
	
  3.

  	
  ADMINISTRATION
  OF THE PLAN

  	
   

  
	
   

  	
  3.1.    Board

  	
   

  
	
   

  	
  3.2.    Committee

  	
   

  
	
   

  	
  3.3.    Terms
  of Awards

  	
   

  
	
   

  	
  3.4.    Book-Entry

  	
   

  
	
   

  	
  3.5.    Deferral
  Arrangement

  	
   

  
	
   

  	
  3.6.    No
  Liability

  	
   

  
	
   

  	
  3.7.    Issuance
  of Units - Options

  	
   

  
	
   

  	
  3.8.    Issuance
  of Partnership Units - Restricted Shares or Unrestricted Shares

  	
   

  
	
   

  	
  3.9.    Issuance
  of Partnership Units - Other Awards

  	
   

  
	
   

  	
  3.10.  Form of Payment For Options And Restricted Share

  	
   

  
	
  4.

  	
  SHARES SUBJECT TO
  THE PLAN

  	
   

  
	
  5.

  	
  EFFECTIVE DATE,
  DURATION AND AMENDMENTS

  	
   

  
	
   

  	
  5.1.    Effective
  Date

  	
   

  
	
   

  	
  5.2.    Term

  	
   

  
	
   

  	
  5.3.    Amendment
  and Termination of the Plan

  	
   

  
	
  6.

  	
  AWARD ELIGIBILITY AND LIMITATIONS

  	
   

  
	
   

  	
  6.1.    Service
  Providers and Other Persons

  	
   

  
	
   

  	
  6.2.    Successive
  Awards

  	
   

  
	
   

  	
  6.3.    Limitation
  on Shares Subject to Awards and Cash Awards

  	
   

  
	
   

  	
  6.4.    Limitations
  on Incentive Stock Options

  	
   

  
	
   

  	
  6.5.    Stand-Alone,
  Additional, Tandem, and Substitute Awards

  	
   

  
	
  7.

  	
  AWARD AGREEMENT

  	
   

  
	
  8.

  	
  OPTIONS

  	
   

  
	
   

  	
  8.1.    Option
  Price

  	
   

  
	
   

  	
  8.2.    Vesting

  	
   

  
	
   

  	
  8.3.    Term

  	
   

  
	
   

  	
  8.4.    Termination
  of Service

  	
   

  
	
   

  	
  8.5.    Limitations
  on Exercise of Option

  	
   

  
	
   

  	
  8.6.    Method
  of Exercise

  	
   

  
	
   

  	
  8.7.    Rights
  of Holders of Options

  	
   

  
	
   

  	
  8.8.    Delivery
  of Share Certificates

  	
   

  
	
   

  	
  8.9.    Transferability
  of Options

  	
   

  
	
   

  	
  8.10.  Family
  Transfers

  	
   

  
	
  9.

  	
  SHARE APPRECIATION RIGHTS

  	
   

  
	
   

  	
  9.1.    Right
  to Payment

  	
   

  
	
   

  	
  9.2.    Other
  Terms

  	
   

  
	
  10.

  	
  RESTRICTED SHARES AND
  SHARE UNITS

  	
   

  
	
   

  	
  10.1.  Grant
  of Restricted Shares or Share Units

  	
   

  



 


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  10.2.   Restrictions

  	
   

  
	
   

  	
  10.3.   Restricted
  Share Certificates

  	
   

  
	
   

  	
  10.4.   Rights
  of Holders of Restricted Shares

  	
   

  
	
   

  	
  10.5.   Rights
  of Holders of Share Units

  	
   

  
	
   

  	
   

  	
  10.5.1.    Voting
  and Dividend Rights

  	
   

  
	
   

  	
   

  	
  10.5.2.    Creditor’s
  Rights

  	
   

  
	
   

  	
  10.6.   Termination
  of Service

  	
   

  
	
   

  	
  10.7.   Purchase
  of Restricted Shares

  	
   

  
	
   

  	
  10.8.   Delivery
  of Share

  	
   

  
	
  11.

  	
  UNRESTRICTED SHARE AWARDS

  	
   

  
	
  12.

  	
  DIVIDEND EQUIVALENT RIGHTS

  	
   

  
	
   

  	
  12.1.   Dividend
  Equivalent Rights

  	
   

  
	
   

  	
  12.2.   Termination
  of Service

  	
   

  
	
  13.

  	
  PERFORMANCE AND
  ANNUAL INCENTIVE AWARDS

  	
   

  
	
   

  	
  13.1.   Performance
  Conditions

  	
   

  
	
   

  	
  13.2.   Performance
  or Annual Incentive Awards Granted to Designated Covered Employees

  	
   

  
	
   

  	
   

  	
  13.2.1.    Performance
  Goals Generally

  	
   

  
	
   

  	
   

  	
  13.2.2.    Business
  Criteria

  	
   

  
	
   

  	
   

  	
  13.2.3.    Timing
  For Establishing Performance Goals

  	
   

  
	
   

  	
   

  	
  13.2.4.    Performance
  or Annual Incentive Award Pool

  	
   

  
	
   

  	
   

  	
  13.2.5.    Settlement
  of Performance or Annual Incentive Awards; Other Terms

  	
   

  
	
   

  	
  13.3.   Written
  Determinations

  	
   

  
	
   

  	
  13.4.   Status
  of Section 13.2 Awards Under Code Section 162(m)

  	
   

  
	
  14.

  	
  PARACHUTE
  LIMITATIONS

  	
   

  
	
  15.

  	
  REQUIREMENTS
  OF LAW

  	
   

  
	
   

  	
  15.1.   General

  	
   

  
	
   

  	
  15.2.   Rule
  16b-3

  	
   

  
	
  16.

  	
  EFFECT OF
  CHANGES IN CAPITALIZATION

  	
   

  
	
   

  	
  16.1.   Changes
  in Shares

  	
   

  
	
   

  	
  16.2.   Certain
  Reorganizations That are Not Corporate Transactions

  	
   

  
	
   

  	
  16.3.   Corporate
  Transaction

  	
   

  
	
   

  	
  16.4.   Adjustments

  	
   

  
	
   

  	
  16.5.   No
  Limitations on Company

  	
   

  
	
  17.

  	
  GENERAL
  PROVISIONS

  	
   

  
	
   

  	
  17.1.   Disclaimer
  of Rights

  	
   

  
	
   

  	
  17.2.   Nonexclusivity
  of the Plan

  	
   

  
	
   

  	
  17.3.   Withholding
  Taxes

  	
   

  
	
   

  	
  17.4.   Captions

  	
   

  
	
   

  	
  17.5.   Other
  Provisions

  	
   

  
	
   

  	
  17.6.   Number
  and Gender

  	
   

  
	
   

  	
  17.7.   Severability

  	
   

  
	
   

  	
  17.8.   Governing
  Law

  	
   

  



 


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KITE REALTY GROUP TRUST


 


2004 EQUITY INCENTIVE PLAN


 


Kite Realty Group Trust (the “Company”) sets forth herein the terms of
its 2004 Equity Incentive Plan (the “Plan”), as follows:


 


1.                                      PURPOSE


 


The Plan is intended to enhance the Company’s and its Affiliates’ (as
defined herein) ability to attract and retain highly qualified officers,
directors, trustees, key employees, and other persons, and to motivate such
officers, directors, trustees, key employees and other persons to serve the
Company and its Affiliates and to expend maximum effort to improve the business
results and earnings of the Company, by providing to such persons an
opportunity to acquire or increase a direct proprietary interest in the
operations and future success of the Company. 
To this end, the Plan provides for the grant of share options, share
appreciation rights, restricted shares, share units, unrestricted shares,
dividend equivalent rights and cash awards. 
Any of these awards may, but need not, be made as performance incentives
to reward attainment of annual or long-term performance goals in accordance
with the terms hereof.  Share options
granted under the Plan may be non-qualified stock options or incentive stock
options, as provided herein.


 


2.                                      DEFINITIONS


 


For purposes of interpreting the Plan and related documents (including
Award Agreements), the following definitions shall apply:


 


2.1                                 “Affiliate” means, with respect to the Company, any
company or other trade or business that controls, is controlled by or is under
common control with the Company within the meaning of Rule 405 of Regulation C
under the Securities Act, including, without limitation, any Subsidiary.  Notwithstanding
the foregoing, the persons listed on Exhibit A, as such Exhibit A
is updated from time to time by the Company, shall not be affiliates of the
Company.


 


2.2                                 “Annual Incentive Award” means an Award made subject to attainment of
performance goals (as described in Section 13)
over a performance period of up to one year (the fiscal year, unless otherwise
specified by the Committee).


 


2.3                                 “Award” means a grant of an Option, Share
Appreciation Right, Restricted Share, Unrestricted Share, Share Unit, Dividend
Equivalent Right or cash award  under the Plan.


 


2.4                                 “Award Agreement” means the written agreement between the
Company and a Grantee that evidences and sets out the terms and conditions of
an Award.


 


2.5                                 “Benefit Arrangement” shall have the meaning set forth in Section 14 hereof.


 
















 


2.6                                 “Board” means the Board of Trustees of the Company.


 


2.7                                 “Cause”  means, as determined by the Board and unless
otherwise provided in an applicable agreement with the Company or an Affiliate,
(i) gross negligence or willful misconduct in connection with the performance of
duties; (ii) conviction of a criminal offense (other than minor traffic
offenses); or (iii) material breach of any term of any employment, consulting
or other services, confidentiality, intellectual property or non-competition
agreements, if any, between the Service Provider and the Company or an
Affiliate.


 


2.8                                 “Code” means the Internal Revenue Code of 1986, as
now in effect or as hereafter amended.


 


2.9                                 “Committee” means a committee of the Board, designated
from time to time by resolution of the Board, in accordance with Section 3.2.


 


2.10                           “Company” means Kite Realty Group Trust, a Maryland
real estate investment trust.


 


2.11                           “Conversion Factor” shall have the
meaning set forth in Article I of the Limited Partnership Agreement.


 


2.12                           “Corporate Transaction” means (a) the dissolution or liquidation of
the Company or a merger, consolidation, or reorganization of the Company with
one or more other entities in which the Company is not the surviving entity,
(b) a sale of all or substantially all of the assets of the Company to another
person or entity, (c) any transaction (including without limitation a merger or
reorganization in which the Company is the surviving entity) that results in
any person or entity (other than persons who are shareholders or Affiliates
immediately prior to the transaction) owning thirty percent (30%) or more of
the combined voting power of all classes of shares of the Company or (d) individuals
who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a trustee subsequent to the date hereof whose election, or
nomination for election by the Company’s shareholders, was approved by a vote
of at least a majority of the trustees then comprising the Incumbent Board
(either by a specific vote or by approval of the proxy statement of the Company
in which such person is named as a nominee for trustee, without written
objection to such nomination) shall be considered as though such individual
were a member of the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an actual
or threatened election contest with respect to the election or removal of
trustees or other actual or threatened solicitation of proxies or contests by
or on behalf of a person other than the Board.


 


2.13                           “Covered Employee” means a Grantee who is a Covered Employee
within the meaning of Section 162(m)(3) of the Code.


2.14                           “Disability” means the Grantee is unable to perform each
of the essential duties of such Grantee’s position by reason of a medically
determinable physical or mental impairment that is potentially permanent in
character or that can be expected to last for a continuous period 


 


2
















 


of not less than 12 months; provided, however, that, with respect to
rules regarding expiration of an Incentive Stock Option following termination
of the Grantee’s Service, Disability shall mean the Grantee is unable to engage
in any substantial gainful activity by reason of a medically determinable
physical or mental impairment which can be expected to result in death or that
has lasted or can be expected to last for a continuous period of not less than
12 months.


 


2.15                           “Dividend Equivalent Right” means a right, granted to a Grantee under Section 12 hereof, to receive cash, Shares, other Awards or
other property equal in value to dividends paid with respect to a specified
number of Shares, or other periodic payments.


 


2.16                           “Effective Date” means July 23, 2004, the date the Plan is
approved by the Board.


 


2.17                           “Exchange Act” means the Securities Exchange Act of 1934,
as now in effect or as hereafter amended.


 


2.18                           “Fair Market Value” means the value of a Share, determined as
follows:  if on the Grant Date or other
determination date the Shares are listed on an established national or regional
stock exchange, are admitted to quotation on The Nasdaq Stock Market, Inc. or
are publicly traded on an established securities market, the Fair Market Value
of a Share shall be the closing price of the Shares on such exchange or in such
market (if there is more than one such exchange or market the Board shall
determine the appropriate exchange or market) on the Grant Date or such other
determination date (or if there is no such reported closing price, the Fair
Market Value shall be the mean between the highest bid and lowest asked prices
or between the high and low sale prices on such trading day) or, if no sale of
Shares is reported for such trading day, on the next preceding day on which any
sale shall have been reported.  If the
Shares are not listed on such an exchange, quoted on such system or traded on
such a market, Fair Market Value shall be the value of the Shares as determined
by the Board in good faith.


 


2.19                           “Family Member” means a person who is a spouse, former
spouse, child, stepchild, grandchild, parent, stepparent, grandparent, niece,
nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother,
sister, brother-in-law, or sister-in-law, including adoptive relationships, of
the Grantee, any person sharing the Grantee’s household (other than a tenant or
employee), a trust in which any one or more of these persons have more than
fifty percent of the beneficial interest, a foundation in which any one or more
of these persons (or the Grantee) control the management of assets, and any
other entity in which one or more of these persons (or the Grantee) own more
than fifty percent (50%) of the voting interests.


 


2.20                           “Grant Date” means, as determined by the Board, the
latest to occur of  (a) the date
as of which the Board approves an Award, (b) the date on which the recipient of
an Award first becomes eligible to receive an Award under Section 6
hereof, or (c) such other date as may be specified by the Board.


 


2.21                           “Grantee” means a person who receives or holds an
Award under the Plan.


 


3
















 


2.22                           “Incentive Stock Option” means an “incentive stock option” within the
meaning of Section 422 of the Code, or the corresponding provision of any
subsequently enacted tax statute, as amended from time to time.


 


2.23                           “Limited Partnership” means Kite Realty Group, L.P., a Delaware
limited partnership.


 


2.24                           “Limited Partnership
Agreement” means the Limited
Partnership’s Amended and Restated Agreement of Limited Partnership, as amended
and/or restated from time to time.


 


2.25                           “Limited Partnership
Employee” means any person
determined by the Board to be an employee of the Limited Partnership or any
Limited Partnership Subsidiary.


 


2.26                           “Limited Partnership
Subsidiary” means an entity
at least fifty percent (50%) of the total equity or ownership interests of
which are owned by the Limited Partnership either directly or through one or
more Limited Partnership Subsidiaries.


 


2.27                           “Non-qualified Share Option” means an Option that is not an Incentive
Stock Option.


 


2.28                           “Option” means an option to purchase one or more
Shares pursuant to the Plan.


 


2.29                           “Option Price” means the exercise price for each Share
subject to an Option.


 


2.30                           “Other Agreement” shall have the meaning set forth in Section 14 hereof.


 


2.31                           “Outside Trustee” means a member of the Board who is not an
officer or employee of the Company.


 


2.32                           “Partnership Unit” means a “Partnership Unit” as that term is
defined in the Limited Partnership Agreement.


 


2.33                           “Performance Award” means an Award made subject to the
attainment of performance goals (as described in Section 13)
over a performance period of up to ten (10) years.


 


2.34                           “Plan” means this Kite Realty Group Trust 2004
Equity Incentive Plan.


 


2.35                           “Purchase Price” means the purchase price for each Share
pursuant to a grant of Restricted Shares or Unrestricted Shares.


 


2.36                           “REIT Employee” means any person determined by the Committee
to be an employee of the Company or any REIT Subsidiary.


 


4
















 


2.37                           “REIT Subsidiary” means a corporation at least fifty percent
(50%) of the total combined voting power of all classes of shares that is owned
by the Company either directly or through one or more REIT Subsidiaries.


 


2.38                           “Reporting Person” means a person who is required to file
reports under Section 16(a) of the Exchange Act.


 


2.39                           “Restricted Share” means Shares awarded to a Grantee pursuant
to Section 10 hereof.


 


2.40                           “SAR Exercise Price” means the per Share exercise price of an SAR
granted to a Grantee under Section 9
hereof.


 


2.41                           “Securities Act” means the Securities Act of 1933, as now in
effect or as hereafter amended.


 


2.42                           “Service” means service as a Service Provider to the
Company or an Affiliate.  Unless
otherwise stated in the applicable Award Agreement, a Grantee’s change in
position or duties shall not result in interrupted or terminated Service, so
long as such Grantee continues to be a Service Provider to the Company or an
Affiliate.  Subject to the preceding
sentence, whether a termination of Service shall have occurred for purposes of
the Plan shall be determined by the Board, which determination shall be final,
binding and conclusive.


 


2.43                           “Service Provider” means an employee, officer, director or
trustee of the Company or an Affiliate, or a consultant or adviser currently
providing services to the Company or an Affiliate.


 


2.44                           “Share” means the common shares of beneficial
interest, par value $0.01 per share, of the Company.


 


2.45                           “Share Appreciation Right” or “SAR” means a
right granted to a Grantee under Section 9
hereof.


 


2.46                           “Share Unit” means a bookkeeping entry representing the
equivalent of a Share awarded to a Grantee pursuant to Section 10
hereof.


 


2.47                           “Subsidiary” means any “subsidiary corporation” of the
Company within the meaning of Section 424(f) of the Code.


 


2.48                           “Termination Date” means the date upon which an Option shall terminate
or expire, as set forth in Section 8.3
hereof.


2.49                           “Ten Percent Shareholder” means an individual who owns more than ten
percent (10%) of the total combined voting power of all classes of outstanding
shares of the 


 


5
















 


Company, its parent or any
of its Subsidiaries.  In determining
share ownership, the attribution rules of Section 424(d) of the Code shall be
applied.


 


2.50                            “Unrestricted Share” means an Award of Shares to a Grantee
pursuant to Section 11 hereof.


 


3.                                      ADMINISTRATION OF THE PLAN


 


3.1.                            Board


 


The Board shall have such powers and authorities related to the
administration of the Plan as are consistent with the Company’s governing documents and applicable
law.  The Board shall have full power and
authority to take all actions and to make all determinations required or
provided for under the Plan, any Award or any Award Agreement, and shall have
full power and authority to take all such other actions and make all such other
determinations not inconsistent with the specific terms and provisions of the
Plan that the Board deems to be necessary or appropriate to the administration
of the Plan, any Award or any Award Agreement. 
All such actions and determinations shall be by the affirmative vote of
a majority of the members of the Board present at a meeting or by unanimous
consent of the Board executed in writing in accordance with the Company’s governing documents and applicable
law.  The interpretation and construction
by the Board of any provision of the Plan, any Award or any Award Agreement
shall be final, binding and conclusive. 
Notwithstanding any other provision of the Plan, the Board shall not
take any action or make any Awards hereunder that could cause the Company to
fail to qualify as a real estate investment trust for Federal income tax
purposes.


 


3.2.                            Committee


 


The Board from time to time may delegate to the Committee such powers
and authorities related to the administration and implementation of the Plan,
as set forth in Section 3.1 above and other
applicable provisions, as the Board shall determine, consistent with the Company’s governing documents and
applicable law.


 


(a)                                  Except as provided in Subsection (b) and
except as the Board may otherwise determine, the Committee shall be the Compensation
Committee of the Board.


 


(b)                                 The Board may also appoint one or more
separate committees of the Board, each composed of one or more directors of the
Company who need not be Trustees, who may administer the Plan with respect to
employees or other Service Providers who are not officers or directors of the
Company, may grant Awards under the Plan to such employees or other Service
Providers, and may determine all terms of such Awards.


 


In
the event that the Plan, any Award or any Award Agreement entered into
hereunder provides for any action to be taken by or determination to be made by
the Board, such action may be taken or such determination may be made by the
Committee if the power and authority to do so has been delegated to the
Committee by the Board as provided for in this Section.  Unless otherwise 


 


6
















 


expressly
determined by the Board, any such action or determination by the Committee
shall be final, binding and conclusive. 
To the extent permitted by law, the Committee may delegate its authority
under the Plan to a member of the Board.


 


3.3.                            Terms of Awards


 


Subject to the other terms and conditions of the Plan, the Board shall
have full and final authority to:


 


(a)                                  designate Grantees;


 


(b)                                 determine the type or types of Awards to be
made to a Grantee;


 


(c)                                  determine the number of Shares to be subject
to an Award;


 


(d)                                 establish the terms and conditions of each
Award (including, but not limited to, the exercise price of any Option, the
nature and duration of any restriction or condition (or provision for lapse
thereof) relating to the vesting, exercise, transfer, or forfeiture of an Award
or the Shares subject thereto, and any terms or conditions that may be
necessary to qualify Options as Incentive Stock Options);


 


(e)                                  prescribe the form of each Award Agreement
evidencing an Award; and


 


(f)                                    amend, modify, or supplement the terms of any
outstanding Award.  Such authority
specifically includes the authority, to effectuate the purposes of the Plan but
without amending the Plan, to modify Awards to eligible individuals who are
foreign nationals or are individuals who are employed outside the
United States to recognize differences in local law, tax policy, or
custom.


 


As a condition to any subsequent Award, the Board shall have the right,
at its discretion, to require Grantees to return to the Company Awards
previously made under the Plan.  Subject
to the terms and conditions of the Plan, any such new Award shall be upon such
terms and conditions as are specified by the Board at the time the new Award is
made.  The Board shall have the right, in
its discretion, to make Awards in substitution or exchange for any other award
under another plan of the Company, any Affiliate, or any business entity to be
acquired by the Company or an Affiliate. 
The Company may retain the right in an Award Agreement to cause a
forfeiture of the gain realized by a Grantee on account of actions taken by the
Grantee in violation or breach of or in conflict with any employment agreement,
non-competition agreement, any agreement prohibiting solicitation of employees
or clients of the Company or any Affiliate  thereof or any
confidentiality obligation with respect to the Company or any Affiliate  thereof or otherwise in competition with the Company or any
Affiliate thereof, to the extent specified in such Award Agreement applicable
to the Grantee.  Furthermore, the Company
may retain the right in an Award Agreement to annul an Award if the Grantee is
an employee of the Company or an Affiliate thereof and is terminated for Cause
as defined in the applicable Award Agreement or the Plan, as applicable.  The grant of any Award shall be contingent
upon the Grantee executing the appropriate Award Agreement.


 


7
















 


The Board may not make an amendment or modification to an outstanding
Option or SAR that reduces the Option Price or SAR Exercise Price, either by
lowering the Option Price or SAR Exercise Price or by canceling the outstanding
Option or SAR and granting a replacement Option or SAR with a lower exercise
price without shareholder approval; provided, that, appropriate adjustments may
be made to outstanding Options and SARs pursuant to Section 16.


 


3.4.                            Book-Entry


 


Notwithstanding any other provision of the Plan to the contrary, the
Company may elect to satisfy any requirement under the Plan for the delivery of
share certificates through the use of book-entry.


 


3.5.                            Deferral Arrangement


 


The Board may permit or require the deferral of any Award payment into
a deferred compensation arrangement, subject to such rules and procedures as it
may establish, which may include provisions for the payment or crediting of
interest or dividend equivalents, including converting such credits into
deferred Share equivalents and restricting deferrals to comply with hardship
distribution rules affecting 401(k) plans. 
The Company may, but is not obligated to, contribute the Shares that
would otherwise be issuable pursuant to an Award to a rabbi trust.  Shares issued to a rabbi trust pursuant to
this Section 3.5 may ultimately be
issued to the Grantee in accordance with the terms of the deferred compensation
plan or the Award Agreement.


 


3.6.                            No Liability


 


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
Award or Award Agreement.


 


3.7.                            Issuance of Units - Options


 


(a)                                            Issuance of Partnership Units and Capital
Account Adjustments.  Upon the exercise of an Option, the Limited Partnership
shall issue to the Company a number of Partnership Units equal to (i) the
number of Shares issued to the Grantee, divided by (ii) the Conversion
Multiple.  The Company’s Limited
Partnership capital account in the Limited Partnership shall be credited with
an amount equal to the Fair Market Value of the number of Shares issued upon
the exercise of an Option.


 


(b)                                           Cash Contributions by the Company.  Upon
the exercise of an Option, the Company shall contribute to the Limited
Partnership an amount of cash equal to the aggregate Option Price paid by the
Grantee for the Shares issued upon exercise, regardless of whether the Grantee
pays the Option Price in cash, Shares or a combination thereof; provided, that
to the extent the Option Price is paid with a promissory note of the Grantee in
accordance with the Plan, the amount of cash contributed to the Limited
Partnership pursuant to this Subsection shall be contributed to the Limited
Partnership only upon receipt by the Company of any installment and interest
due under such promissory note and shall be limited to the amount of such
installment and 


 


8
















 


interest and provided that, if the Grantee pays with Shares, the
Company shall have the right to cancel the Shares received, in which event
Partnership Units held by the Company in an amount equal to the Shares canceled
multiplied by the Conversion Multiple shall be canceled by the Limited
Partnership.  The Company’s contribution
of cash to the Limited Partnership pursuant to the preceding sentence shall not
be treated as a contribution to capital and the Company’s capital account in
the Limited Partnership shall not be credited with the amount of cash so
contributed.


 


(c)                                            Fractional Share Cash Reimbursements by the
Limited Partnership and Treatment Thereof.  The Limited Partnership shall
reimburse the Company for any cash paid with respect to a fractional Share upon
the surrender of an Option in accordance with the Plan.  Such reimbursement shall be treated as the
reimbursement of an expense incurred by the Company on behalf of the Limited
Partnership, shall not be treated as a distribution by the Limited Partnership
to the Company and shall not reduce the Company’s Limited Partnership capital
account.


 


3.8.                            Issuance of Partnership Units –
Restricted Shares or Unrestricted Shares


 


Upon the grant of Restricted Shares and Unrestricted Shares, the
Limited Partnership shall issue to the Company a corresponding number of
Partnership Units, equal to (a) the number of Shares awarded to the Grantee
pursuant to the corresponding Award, divided by (b) the Conversion Multiple,
that are subject to the same restrictions or conditions as those applicable to
the corresponding Award.  Upon the lapse
of restrictions or payment (as applicable) of the Award, the restrictions
applicable to the corresponding restricted Partnership Units referred to in
this Section 3.8 also shall
lapse.  The Company’s capital account in
the Limited Partnership shall be adjusted, as appropriate, to reflect the
issuance of Shares, and such capital account also shall be adjusted, as
appropriate, in the event that the Shares subject to the Award are forfeited or
the restrictions thereon lapse.


 


3.9.                            Issuance
of Partnership Units –Other Awards


 


Upon the payment of Share Units, SARs payable in Shares or Awards other
than Options payable in Shares, the Limited Partnership shall issue to the
Company a corresponding number of Partnership Units, equal to (a) the number of
Shares awarded to the Grantee pursuant to the corresponding Award, divided by
(b) the Conversion Multiple, that are subject to the same restrictions or
conditions as those applicable to the corresponding Award.  The Company’s capital account in the Limited
Partnership shall be adjusted, as appropriate, to reflect the issuance of
Shares.


 


3.10.                     Form of Payment For Options And Restricted
Share


 


(a)                                  General
Rule.  Payment of the Option Price for the Shares purchased pursuant to the
exercise of an Option or the Purchase Price for Restricted Shares shall be made
in cash or in cash equivalents acceptable to the Company.


 


(b)                                 Surrender of Share.  To
the extent the Award Agreement so provides, payment of the Option Price for
Shares purchased pursuant to the exercise of an Option or the Purchase Price
for Restricted Shares may be made all or in part through the tender to the 


 


9
















 


Company of Shares, which Shares, if acquired from the Company, shall
have been held for at least six months at the time of tender and which shall be
valued, for purposes of determining the extent to which the Option Price or
Purchase Price has been paid thereby, at their Fair Market Value on the date of
exercise or surrender.


 


(c)                                  Cashless Exercise.  With
respect to an Option only (and not with respect to Restricted Shares), to the
extent the Award Agreement so provides and to the extent permitted by law,
payment of the Option Price for Shares purchased pursuant to the exercise of an
Option may be made all or in part by delivery (on a form acceptable to the
Board) of an irrevocable direction to a licensed securities broker acceptable
to the Company to sell Shares and to deliver all or part of the sales proceeds
to the Company in payment of the Option Price and any withholding taxes described
in Section 17.3


 


(d)                                 Other Forms of Payment.  To
the extent the Award Agreement so provides, payment of the Option Price for
Shares purchased pursuant to exercise of an Option or the Purchase Price for
Restricted Shares may be made in any other form that is consistent with
applicable laws, regulations and rules.


 


4.                                      SHARES SUBJECT TO THE PLAN


 


Subject to adjustment as provided in Section 16
hereof, the number of Shares available for issuance under the Plan shall be
2,000,000.  Shares issued or to be issued
under the Plan shall be authorized but unissued Shares or issued Shares that
have been reacquired by the Company.  If
any Shares covered by an Award are not purchased or are forfeited, or if an
Award otherwise terminates without delivery of any Share subject thereto, then
the number of Shares counted against the aggregate number of Shares available
under the Plan with respect to such Award shall, to the extent of any such
forfeiture or termination, again be available for making Awards under the Plan.


 


The Board shall have the right to substitute or assume Awards in
connection with mergers, reorganizations, separations, or other transactions to
which Section 424(a) of the Code applies, provided such substitutions and
assumptions are permitted by Section 424 of the Code and the regulations
promulgated thereunder.  The number of
Shares reserved pursuant to Section 4 may be increased by the corresponding
number of Awards assumed and, in the case of a substitution, by the net
increase in the number of Shares subject to Awards before and after the
substitution.


 


5.                                      EFFECTIVE DATE, DURATION AND AMENDMENTS


 


5.1.                            Effective Date


 


The Plan shall be effective as of the Effective Date, subject to
approval of the Plan by the Company’s shareholders within one year of the Effective
Date.  Upon approval of the Plan by the
shareholders of the Company as set forth above, all Awards made under the Plan
on or after the Effective Date shall be fully effective as if the shareholders
of the Company had approved the Plan on the Effective Date.  If the shareholders fail to approve the Plan
within one year after the Effective Date, any Awards made hereunder shall be
null and void and of no effect.


 


10
















 


5.2.                            Term


 


The Plan shall terminate automatically ten (10) years after its
adoption by the Board and may be terminated on any earlier date as provided in Section 5.3.


 


5.3.                            Amendment and Termination of the Plan


 


The Board may, at any time and from time to time, amend, suspend, or
terminate the Plan as to any Shares as to which Awards have not been made.  An amendment shall be contingent on approval
of the Company’s shareholders to the extent stated by the Board, required by
applicable law or required by applicable stock exchange listing requirements.  No Awards shall be made after termination of
the Plan.  No amendment, suspension, or
termination of the Plan shall, without the consent of the Grantee, impair
rights or obligations under any Award theretofore awarded under the Plan.


 


6.                                      AWARD ELIGIBILITY
AND LIMITATIONS


 


6.1.                            Service Providers and Other Persons


 


Subject to this Section 6,
Awards may be made under the Plan to: (a) any Service Provider to the Company
or of any Affiliate, including any Service Provider who is an officer, director
or trustee of the Company or of any Affiliate, as the Board shall determine and
designate from time to time, (b) any Outside Trustee, and (c) any other
individual whose participation in the Plan is determined to be in the best
interests of the Company by the Board.


 


6.2.                            Successive Awards


 


An eligible person may receive more than one Award, subject to such
restrictions as are provided herein.


 


6.3.                            Limitation on Shares Subject to Awards
and Cash Awards


 


During any time when the Company has a class of equity securities
registered under Section 12 of the Exchange Act,


 


(a)                                  the maximum number of Shares subject to
Options or SARs that can be awarded under the Plan to any person eligible for
an Award under Section 6hereof is five hundred
thousand (500,000) per calendar year;


 


(b)                                 the maximum number of Shares that can be
awarded under the Plan, other than pursuant to an Option or SARs, to any person
eligible for an Award under Section 6
hereof is five hundred thousand (500,000) per calendar year;


 


(c)                                  the maximum amount that may be earned as an
Annual Incentive Award or other cash Award in any calendar year by any one
Grantee shall be $2,000,000 and the maximum amount that may be earned as a
Performance Award or other cash Award in respect of a performance period by any
one Grantee shall be $5,000,000.


 


 


11
















 


The
preceding limitations in this Section 6.3are
subject to adjustment as provided in Section 16
hereof.


 


6.4.                            Limitations on Incentive Stock
Options


 


An Option shall constitute an Incentive Stock Option only (a) if the
Grantee of such Option is an employee of the Company or any Subsidiary of the
Company; (b) to the extent specifically provided in the related Award
Agreement; and (c) to the extent that the aggregate Fair Market Value
(determined at the time the Option is granted) of the Shares with respect to
which all Incentive Stock Options held by such Grantee become exercisable for
the first time during any calendar year (under the Plan and all other plans of
the Grantee’s employer and its Affiliates) does not exceed $100,000.  This limitation shall be applied by taking
Options into account in the order in which they were granted.


 


6.5.                            Stand-Alone,
Additional, Tandem, and Substitute Awards


 


Awards granted under the Plan may, in the discretion of the Board, be
granted either alone or in addition to, in tandem with, or in substitution or
exchange for, any other Award or any award granted under another plan of the
Company, any Affiliate, or any business entity to be acquired by the Company or
an Affiliate, or any other right of a Grantee to receive payment from the
Company or any Affiliate.  Such
additional, tandem, and substitute or exchange Awards may be granted at any
time.  If an Award is granted in
substitution or exchange for another Award, the Board shall require the
surrender of such other Award in consideration for the grant of the new
Award.  In addition, Awards may be
granted in lieu of cash compensation, including in lieu of cash amounts payable
under other plans of the Company or any Affiliate, in which the value of Shares
subject to the Award is equivalent in value to the cash compensation (for
example, Share Units or Restricted Shares), or in which the Option Price, grant
price or purchase price of the Award in the nature of a right that may be
exercised is equal to the Fair Market Value of the underlying Share minus the
value of the cash compensation surrendered (for example, Options granted with
an Option Price “discounted” by the amount of the cash compensation
surrendered).


 


7.                                      AWARD AGREEMENT


 


Each Award granted pursuant to the Plan shall be evidenced by an Award
Agreement, in such form or forms as the Board shall from time to time
determine.  Award Agreements entered into
from time to time or at the same time need not contain similar provisions but
shall be consistent with the terms of the Plan.


 


8.                                      OPTIONS


 


The Board is authorized to grant Options on the following terms and
conditions:


 


12
















 


8.1.                            Option Price


 


The Option Price of each Option shall be fixed by the Board and stated
in the Award Agreement evidencing such Option. 
The Option Price of each Option shall be at least the Fair Market Value
on the Grant Date of a Share; provided, however, that in the
event that a Grantee is a Ten Percent Shareholder, the Option Price of an
Option granted to such Grantee that is intended to be an Incentive Stock Option
shall be not less than one hundred ten percent (110%) of the Fair Market Value
of a Share on the Grant Date.  In no case
shall the Option Price of any Option be less than the par value of a Share.


 


8.2.                            Vesting


 


Subject to Sections 8.3 and 16.3
hereof, each Option granted under the Plan shall become exercisable at such
times and under such conditions as shall be determined by the Board and stated
in the Award Agreement.  For purposes of
this Section 8.2, fractional numbers of
Shares subject to an Option shall be rounded down to the next nearest whole
number.


 


8.3.                            Term


 


Each Option granted under the Plan shall terminate, and all rights to
purchase Shares thereunder shall cease, upon the expiration of ten years from
the date such Option is granted, or under such circumstances and on such date
prior thereto as is set forth in the Plan or as may be fixed by the Board and
stated in the Award Agreement relating to such Option (the “Termination Date”);
provided, however, that in the event that the Grantee is a Ten
Percent Shareholder, an Option granted to such Grantee that is intended to be
an Incentive Stock Option shall not be exercisable after the expiration of five
years from its Grant Date.


 


8.4.                            Termination of Service


 


Each Award Agreement shall set forth the extent to which the Grantee
shall have the right to exercise the Option following termination of the Grantee’s
Service.  Such provisions shall be
determined in the sole discretion of the Board, need not be uniform among all
Options issued pursuant to the Plan, and may reflect distinctions based on the
reasons for termination of Service.


 


8.5.                            Limitations on Exercise of Option


 


Notwithstanding any other provision of the Plan, in no event may any
Option be exercised, in whole or in part, prior to the date the Plan is
approved by the shareholders of the Company as provided herein or after the
occurrence of an event referred to in Section 16
hereof that results in termination of the Option.


 


8.6.                            Method of Exercise


 


An Option that is exercisable may be exercised by the Grantee’s
delivery to the Company of written notice of exercise on any business day, at
the Company’s principal office, on the form specified by the Company.  Such notice shall specify the number of
Shares with respect to which 


 


13
















 


the Option is being exercised and shall be accompanied by payment in
full of the Option Price of the Shares for which the Option is being exercised
plus if applicable, any withholding taxes described in Section 17.3.


 


8.7.                            Rights of Holders of Options


 


Unless otherwise stated in the applicable Award Agreement, an individual
holding or exercising an Option shall have none of the rights of a shareholder
(for example, the right to receive cash or dividend payments or distributions
attributable to the subject Shares or to direct the voting of the subject
Shares) until the Shares covered thereby are fully paid and issued to him.  Except as provided in Section 16
hereof, no adjustment shall be made for dividends, distributions or other
rights for which the record date is prior to the date of such issuance.


 


8.8.                            Delivery of Share Certificates


 


Promptly after the exercise of an Option by a Grantee and the payment
in full of the Option Price, such Grantee shall be entitled to the issuance of
a share certificate or certificates evidencing his or her ownership of the
Shares subject to the Option.


 


8.9.                            Transferability of Options


 


Except as provided in Section 8.10,
during the lifetime of a Grantee, only the Grantee (or, in the event of legal
incapacity or incompetency, the Grantee’s guardian or legal representative) may
exercise an Option.  Except as provided
in Section 8.10, no Option shall be
assignable or transferable by the Grantee to whom it is granted, other than by
will or the laws of descent and distribution.


 


8.10.                     Family Transfers


 


If authorized in the applicable Award Agreement, a Grantee may
transfer, not for value, all or part of an Option that is not an Incentive
Stock Option to any Family Member.  For
the purpose of this Section 8.10, a
“not for value” transfer is a transfer that is (a) a gift, (b) a transfer under
a domestic relations order in settlement of marital property rights; or (c) a
transfer to an entity in which more than fifty percent (50%) of the voting
interests are owned by Family Members (or the Grantee) in exchange for an
interest in that entity.  Following a
transfer under this Section 8.10,
any such Option shall continue to be subject to the same terms and conditions
as were applicable immediately prior to transfer.  Subsequent transfers of transferred Options
are prohibited except to Family Members of the original Grantee in accordance
with this Section  8.10 or by will or the laws of descent and distribution.  The events of termination of Service of Section 8.4 hereof shall continue to be applied with respect
to the original Grantee, following which the Option shall be exercisable by the
transferee only to the extent, and for the periods specified, in Section 8.4.


 


 


14
















 


9.                                      SHARE APPRECIATION RIGHTS


 


The Board is authorized to grant Share Appreciation Rights (“SARs”) on
the following terms and conditions:


 


9.1.                            Right to Payment


 


A SAR shall confer on the Grantee to whom it is granted a right to
receive, upon exercise thereof, the excess of (a) the Fair Market Value of one
Share on the date of exercise over (b) the grant price of the SAR as determined
by the Board.  The Award Agreement for a
SAR shall specify the grant price of the SAR, which may be fixed at the Fair
Market Value of a Share on the date of grant or may vary in accordance with a
predetermined formula while the SAR is outstanding.  A SAR granted in tandem with an outstanding
Option following the Grant Date of such Option may have a grant price that is
equal to the Option Price, even if such grant price is less than the Fair
Market Value of a Share on the grant date of the SAR.


 


9.2.                            Other Terms


 


The Board shall determine at the date of grant or thereafter, the time
or times at which and the circumstances under which a SAR may be exercised in
whole or in part (including based on achievement of performance goals and/or
future service requirements), the time or times at which SARs shall cease to be
or become exercisable following termination of Service or upon other
conditions, the method of exercise, method of settlement, form of consideration
payable in settlement, method by or forms in which Share will be delivered or
deemed to be delivered to Grantees, whether or not a SAR shall be in tandem or
in combination with any other Award, and any other terms and conditions of any
SAR.


 


10.                               RESTRICTED SHARES AND SHARE UNITS


 


10.1.                     Grant of Restricted Shares
or Share Units


 


The Board is authorized to grant Restricted Shares or Share Units,
subject to such restrictions, conditions and other terms, if any, as the Board
may determine.  Awards of Restricted
Shares may be made for no consideration (other than par value of the Shares
which may be deemed paid by Services already rendered).


 


10.2.                     Restrictions


 


At the time a grant of Restricted Shares or Share Units is made, the
Board may, in its sole discretion, establish a period of time (a “restricted
period”) applicable to such Restricted Shares or Share Units.  Each Award of Restricted Shares or Share
Units may be subject to a different restricted period.  The Board may, in its sole discretion, at the
time a grant of Restricted Shares or Share Units is made, prescribe
restrictions in addition to or other than the expiration of the restricted
period, including the satisfaction of corporate or individual performance
objectives, which may be applicable to all or any portion of the Restricted
Shares or Share Units in accordance with Section 13.1 and 13.2.  Neither
Restricted Shares nor Share Units may be sold, transferred, 


 


15
















 


assigned, pledged or otherwise encumbered or disposed of during the
restricted period or prior to the satisfaction of any other restrictions
prescribed by the Board with respect to such Restricted Shares or Share Units.


 


10.3.                     Restricted Share Certificates


 


The Company shall issue, in the name of each Grantee to whom Restricted
Shares have been granted, share certificates representing the total number of
Restricted Shares granted to the Grantee, as soon as reasonably practicable
after the Grant Date.  The Board may
provide in an Award Agreement that either (a) the Secretary of the Company
shall hold such certificates for the Grantee’s benefit until such time as the
Restricted Shares are forfeited to the Company or the restrictions lapse or (b)
such certificates shall be delivered to the Grantee, provided, however,
that such certificates shall bear a legend or legends that comply with the
applicable securities laws and regulations and make appropriate reference to
the restrictions imposed under the Plan and the Award Agreement.


 


10.4.                     Rights of Holders of Restricted
Shares


 


Unless the Board otherwise provides in an Award Agreement, holders of
Restricted Shares shall have the right to vote such Shares and the right to
receive any dividends declared or paid with respect to such Shares.  The Board may provide in the Award Agreement
that any dividends paid on Restricted Shares must be reinvested in Shares,
which may or may not be subject to the same vesting conditions and restrictions
applicable to such Restricted Shares. 
All distributions, if any, received by a Grantee with respect to
Restricted Shares as a result of any share split, share dividend, combination
of Shares, or other similar transaction shall be subject to the restrictions
applicable to the original Grant.


 


10.5.                     Rights of Holders of Share Units


 


10.5.1.             Voting and
Dividend Rights


 


Unless the Board otherwise provides in an Award Agreement, holders of
Share Units shall have no rights as shareholders of the Company.  The Board may provide in an Award Agreement
evidencing a grant of Share Units that the holder of such Share Units shall be
entitled to receive, upon the Company’s payment of a cash dividend on its
outstanding Shares, a cash payment for each Share Unit held equal to the
per-share dividend paid on the Shares. 
Such Award Agreement may also provide that such cash payment will be
deemed reinvested in additional Share Units at a price per unit equal to the
Fair Market Value of a Share on the date that such dividend is paid.


 


10.5.2.             Creditor’s Rights


 


A holder of Share Units shall have no rights other than those of a
general creditor of the Company.  Share
Units represent an unfunded and unsecured obligation of the Company, subject to
the terms and conditions of the applicable Award Agreement.


 


16
















 


10.6.                     Termination of Service


 


Unless the Board otherwise provides in an Award Agreement or in writing
after the Award Agreement is issued, upon the termination of a Grantee’s
Service, any Restricted Shares or Share Units held by such Grantee that have
not vested, or with respect to which all applicable restrictions and conditions
have not lapsed, shall immediately be deemed forfeited.  Upon forfeiture of Restricted Shares or Share
Units, the Grantee shall have no further rights with respect to such Award,
including but not limited to any right to vote Restricted Shares or any right
to receive dividends with respect to Restricted Shares or Share Units.


 


10.7.                     Purchase of Restricted Shares


 


The Grantee shall be required, to the extent required by applicable
law, to purchase the Restricted Shares from the Company at a Purchase Price
equal to the greater of (a) the aggregate par value of the Shares represented
by such Restricted Shares or (b) the Purchase Price, if any, specified in the
Award Agreement relating to such Restricted Shares.  The Purchase Price shall be payable in a form
described in Section 3.10 or, in the discretion
of the Board, in consideration for past Services rendered to the Company or an
Affiliate.


 


10.8.                     Delivery of Share


 


Upon the expiration or termination of any restricted period and the
satisfaction of any other conditions prescribed by the Board, the restrictions
applicable to Restricted Shares or Share Units settled in Shares shall lapse,
and, unless otherwise provided in the Award Agreement, a share certificate for
such Shares shall be delivered, free of all such restrictions, to the Grantee
or the Grantee’s beneficiary or estate, as the case may be.


 


11.                               UNRESTRICTED SHARE AWARDS


 


The Board is authorized to grant (or sell at par value or such other
higher purchase price determined by the Board) an Unrestricted Share Award
pursuant to which the Grantee may receive Shares free of any restrictions
(“Unrestricted Share”) under the Plan. 
Unrestricted Share Awards may be granted or sold as described in the
preceding sentence in respect of past services and other valid consideration,
or in lieu of, or in addition to, any cash compensation due to such Grantee.


 


12.                               DIVIDEND EQUIVALENT RIGHTS


 


12.1.                     Dividend Equivalent Rights


 


The Board may from time to time grant Dividend Equivalent Rights,
subject to such restrictions, conditions and other terms, if any, as the Board
may determine.  A Dividend Equivalent
Right is an Award entitling the recipient to receive credits based on cash
distributions that would have been paid on the Shares specified in the Dividend
Equivalent Right (or other award to which it relates) if such Shares had been
issued to and held by the recipient.  A
Dividend Equivalent Right may be granted hereunder to any Grantee as a
component of another Award or as a freestanding award.  The terms and conditions of Dividend
Equivalent Rights shall 


 


17
















 


be specified in the Award Agreement. 
Dividend equivalents credited to the holder of a Dividend Equivalent
Right may be paid currently or may be deemed to be reinvested in additional
Shares, which may thereafter accrue additional equivalents.  Any such reinvestment shall be at Fair Market
Value on the date of reinvestment. 
Dividend Equivalent Rights may be settled in cash or Shares or a
combination thereof, in a single installment or installments, all determined in
the sole discretion of the Board.  A
Dividend Equivalent Right granted as a component of another Award may provide
that such Dividend Equivalent Right shall be settled upon exercise, settlement,
or payment of, or lapse of restrictions on, such other award, and that such
Dividend Equivalent Right shall expire or be forfeited or annulled under the
same conditions as such other award.  A
Dividend Equivalent Right granted as a component of another Award may also
contain terms and conditions different from such other award.


 


12.2.                     Termination
of Service


 


Except as may otherwise be provided by the Board either in the Award
Agreement or in writing after the Award Agreement is issued, a Grantee’s rights
in all Dividend Equivalent Rights or interest equivalents shall automatically
terminate upon the Grantee’s termination of Service for any reason.


 


13.                               PERFORMANCE
AND ANNUAL INCENTIVE AWARDS


 


13.1.                     Performance Conditions


 


The right of a Grantee to exercise or receive a grant or settlement of
any Award, and the timing thereof, may be subject to such performance
conditions as may be specified by the Board. 
The Board may use such business criteria and other measures of
performance as it may deem appropriate in establishing any performance
conditions, and may exercise its discretion to reduce the amounts payable under
any Award subject to performance conditions, except as limited under Section 13.2 hereof in the case of a Performance Award or
Annual Incentive Award intended to qualify under Code Section 162(m).  If and to the extent required under Code
Section 162(m), any power or authority relating to a Performance Award or
Annual Incentive Award intended to qualify under Code Section 162(m), shall be
exercised by the Committee and not the Board.


 


13.2.                     Performance or Annual Incentive Awards
Granted to Designated Covered Employees


 


If and to the extent that the Committee determines that a Performance
or Annual Incentive Award to be granted to a Grantee who is designated by the
Committee as likely to be a Covered Employee should qualify as
“performance-based compensation” for purposes of Code Section 162(m), the
grant, exercise and/or settlement of such Performance or Annual Incentive Award
shall be contingent upon achievement of pre-established performance goals and
other terms set forth in this Section 13.2.


 


18
















 


13.2.1.             Performance Goals
Generally


 


The performance goals for such Performance or Annual Incentive Awards
shall consist of one or more business criteria and a targeted level or levels
of performance with respect to each of such criteria, as specified by the
Committee consistent with this Section 13.2.  Performance goals shall be objective and
shall otherwise meet the requirements of Code Section 162(m) and regulations
thereunder including the requirement that the level or levels of performance
targeted by the Committee result in the achievement of performance goals being
“substantially uncertain.”  The Committee
may determine that such Performance or Annual Incentive Awards shall be
granted, exercised and/or settled upon achievement of any one performance goal
or that two or more of the performance goals must be achieved as a condition to
grant, exercise and/or settlement of such Performance or Annual Incentive
Awards.  Performance goals may differ for
Performance or Annual Incentive Awards granted to any one Grantee or to
different Grantees.


 


13.2.2.             Business Criteria


 


One or more of the following business criteria for the Company, on a
consolidated basis, and/or specified subsidiaries or business units of the
Company (except with respect to the total shareholder return and earnings per share
criteria), shall be used exclusively by the Committee in establishing
performance goals for such Performance or Annual Incentive Awards: (a) total
shareholder return; (b) such total shareholder return as compared to total
return (on a comparable basis) of a publicly available index such as, but not
limited to, the Standard & Poor’s 500 Stock Index; (c) net income; (d)
pretax earnings; (e) earnings before interest expense, taxes, depreciation and
amortization; (f) pretax operating earnings after interest expense and before
bonuses, service fees, and extraordinary or special items; (g) operating
margin; (h) earnings per share; (i) return on equity; (j) return on capital;
(k) return on investment; (l) operating earnings; (m) working capital; (n)
ratio of debt to shareholders’ equity, (o) revenue; (p) funds from operations
and (q) acquisitions;


 


13.2.3.                       Timing For Establishing
Performance Goals


 


Performance goals shall be established not later than 90 days after the
beginning of any performance period applicable to such Performance or Annual
Incentive Awards, or at such other date as may be required or permitted for
“performance-based compensation” under Code Section 162(m).


 


13.2.4.                       Performance or Annual Incentive
Award Pool


 


The Committee may establish a Performance or Annual Incentive Award
pool, which shall be an unfunded pool, for purposes of measuring Company
performance in connection with Performance or Annual Incentive Awards.


 


19
















 


13.2.5.                       Settlement of Performance or Annual
Incentive Awards; Other Terms


 


Settlement of such Performance or Annual Incentive Awards shall be in
cash, Shares, other Awards or other property, in the discretion of the
Committee.  The Committee may, in its
discretion, reduce the amount of a settlement otherwise to be made in
connection with such Performance or Annual Incentive Awards.  The Committee shall specify the circumstances
in which such Performance or Annual Incentive Awards shall be paid or forfeited
in the event of termination of Service by the Grantee prior to the end of a
performance period or settlement of Performance Awards.


 


13.3.                     Written Determinations


 


All determinations by the Committee as to the establishment of
performance goals, the amount of any Performance Award pool or potential
individual Performance Awards and as to the achievement of performance goals
relating to Performance Awards, and the amount of any Annual Incentive Award
pool or potential individual Annual Incentive Awards and the amount of final Annual
Incentive Awards, shall be made in writing in the case of any Award intended to
qualify under Code Section 162(m).  To
the extent required to comply with Code Section 162(m), the Committee may
delegate any responsibility relating to such Performance Awards or Annual
Incentive Awards.


 


13.4.                     Status of Section 13.2 Awards
Under Code Section 162(m)


 


It is the intent of the Company that Performance Awards and Annual
Incentive Awards under Section 13.2
hereof granted to persons who are designated by the Committee as likely to be
Covered Employees within the meaning of Code Section 162(m) and regulations
thereunder shall, if so designated by the Committee, constitute “qualified
performance-based compensation” within the meaning of Code Section 162(m) and
regulations thereunder.  Accordingly, the
terms of Section 13.2, including the definitions
of Covered Employee and other terms used therein, shall be interpreted in a
manner consistent with Code Section 162(m) and regulations thereunder.  The foregoing notwithstanding, because the
Committee cannot determine with certainty whether a given Grantee will be a
Covered Employee with respect to a fiscal year that has not yet been completed,
the term Covered Employee as used herein shall mean only a person designated by
the Committee, at the time of grant of Performance Awards or an Annual
Incentive Award, as likely to be a Covered Employee with respect to that fiscal
year.  If any provision of the Plan or
any agreement relating to such Performance Awards or Annual Incentive Awards
does not comply or is inconsistent with the requirements of Code Section 162(m)
or regulations thereunder, such provision shall be construed or deemed amended
to the extent necessary to conform to such requirements.


 


14.                               PARACHUTE LIMITATIONS


 


Notwithstanding any other provision of the Plan or of any other
agreement, contract, or understanding heretofore entered into by a Grantee with
the Company or any Affiliate, except to the 


 


20
















 


extent otherwise provided for by an agreement, contract, or
understanding hereafter entered into that modifies or excludes application of
this paragraph (an “Other Agreement”), and notwithstanding any formal or
informal plan or other arrangement for the direct or indirect provision of
compensation to the Grantee (including groups or classes of Grantees or
beneficiaries of which the Grantee is a member), whether or not such
compensation is deferred, is in cash, or is in the form of a benefit to or for
the Grantee (a “Benefit Arrangement”), if the Grantee is a “disqualified
individual,” as defined in Section 280G(c) of the Code, any Award held by
that Grantee and any right to receive any payment or other benefit under the
Plan shall not become exercisable or vested (a) to the extent that such
right to exercise, vesting, payment, or benefit, taking into account all other
rights, payments, or benefits to or for the Grantee under the Plan, all Other
Agreements, and all Benefit Arrangements, would cause any payment or benefit to
the Grantee under the Plan to be considered a “parachute payment” within the
meaning of Section 280G(b)(2) of the Code as then in effect (a “Parachute
Payment”) and (b) if, as a result of receiving a Parachute Payment,
the aggregate after-tax amounts received by the Grantee from the Company under
the Plan, all Other Agreements, and all Benefit Arrangements would be less than
the maximum after-tax amount that could be received by the Grantee without
causing any such payment or benefit to be considered a Parachute Payment.  In the event that the receipt of any such
right to exercise, vesting, payment, or benefit under the Plan, in conjunction
with all other rights, payments, or benefits to or for the Grantee under any Other
Agreement or any Benefit Arrangement would cause the Grantee to be considered
to have received a Parachute Payment under the Plan that would have the effect
of decreasing the after-tax amount received by the Grantee as described in
clause (b) of the preceding sentence, then the Grantee shall have the
right, in the Grantee’s sole discretion, to designate those rights, payments,
or benefits under the Plan, any Other Agreements, and any Benefit Arrangements
that should be reduced or eliminated so as to avoid having the payment or
benefit to the Grantee under this Plan be deemed to be a Parachute Payment.


 


15.                               REQUIREMENTS OF LAW


 


15.1.                     General


 


The Company shall not be required to sell or issue any Shares under any
Award if the sale or issuance of such Shares would constitute a violation by
the Grantee, any other individual exercising an Option, or the Company of any
provision of any law or regulation of any governmental authority, including
without limitation any federal or state securities laws or regulations.  If at any time the Company shall determine,
in its discretion, that the listing, registration or qualification of any
Shares subject to an Award upon any securities exchange or under any
governmental regulatory body is necessary, appropriate or desirable as a
condition of, or in connection with, the issuance or purchase of Shares
hereunder, no Shares may be issued or sold to the Grantee or any other
individual exercising an Option pursuant to such Award unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Company, and any delay
caused thereby shall in no way affect the date of termination of the
Award.  Specifically, in connection with
the Securities Act, upon the exercise of any Option or the delivery of any
Shares underlying an Award, unless a registration statement under such Act is
in effect with respect to the Shares covered by such Award, the Company shall
not be 


 


21
















 


required to sell or issue such Shares unless the Board has received
evidence satisfactory to it that the Grantee or any other individual exercising
an Option may acquire such Shares pursuant to an exemption from registration
under the Securities Act.  Any
determination in this connection by the Board shall be final, binding, and
conclusive.  The Company may, but shall
in no event be obligated to, register any securities covered hereby pursuant to
the Securities Act.  The Company shall
not be obligated to take any affirmative action to cause the exercise of an
Option or the issuance of Shares pursuant to the Plan to comply with any law or
regulation of any governmental authority. 
As to any jurisdiction that expressly imposes the requirement that an
Option shall not be exercisable until the Shares covered by such Option are
registered or are exempt from registration, the exercise of such Option (under
circumstances in which the laws of such jurisdiction apply) shall be deemed
conditioned upon the effectiveness of such registration or the availability of
such an exemption.


 


15.2.                     Rule 16b-3


 


During any time when the Company has a class of equity security
registered under Section 12 of the Exchange Act, it is the intent of the
Company that Awards pursuant to the Plan and the exercise of Options granted
hereunder will qualify for the exemption provided by Rule 16b-3 under the
Exchange Act.  To the extent that any
provision of the Plan or action by the Board does not comply with the
requirements of Rule 16b-3, it shall be deemed inoperative to the extent
permitted by law and deemed advisable by the Board, and shall not affect the
validity of the Plan.  In the event that
Rule 16b-3 is revised or replaced, the Board may exercise its discretion to modify
the Plan in any respect necessary, appropriate or desirable to satisfy the
requirements of, or to take advantage of any features of, the revised exemption
or its replacement.


 


16.                               EFFECT OF CHANGES IN CAPITALIZATION


 


16.1.                     Changes in Shares


 


If the number of outstanding Shares is increased or decreased or the
Shares are changed into or exchanged for a different number or kind of shares
or other securities of the Company on account of any recapitalization,
reclassification, share split, reverse split, combination of shares, exchange
of shares, share dividend or other distribution payable in capital shares, or
other increase or decrease in such shares effected without receipt of
consideration by the Company occurring after the Effective Date, the number and
kinds of Shares for which grants of Options and other Awards may be made under
the Plan shall be adjusted proportionately and accordingly by the Company.  In addition, the number and kind of Shares
for which Awards are outstanding shall be adjusted proportionately and
accordingly so that the proportionate interest of the Grantee immediately
following such event shall, to the extent practicable, be the same as
immediately before such event.  Any such
adjustment in outstanding Options or SARs shall not change the aggregate Option
Price or SAR Exercise Price payable with respect to Shares that are subject to
the unexercised portion of an outstanding Option or SAR, as applicable, but
shall include a corresponding proportionate adjustment in the Option Price or
SAR Exercise Price per Share.  The conversion
of any convertible securities of the Company shall not be treated as an
increase in Shares affected without receipt of consideration.   Notwithstanding the foregoing, in the event
of any distribution to the Company’s shareholders of securities of any other
entity or other assets without receipt of consideration by the 


 


22
















 


Company, the Company may, in such manner as the Company deems
necessary, appropriate or desirable, adjust (a) the number and kind of Shares
subject to outstanding Awards and/or (b) the exercise price of outstanding
Options and Share Appreciation Rights to reflect such distribution.


 


16.2.                     Certain Reorganizations That are
Not Corporate Transactions


 


                                                Subject to Section 16.3
hereof, if the Company is the surviving entity in any reorganization, merger,
or consolidation of the Company with one or more other entities and such
transaction does not constitute a Corporate Transaction, any Option or SAR
theretofore granted pursuant to the Plan shall pertain to and apply to the
securities to which a holder of the number of Share subject to such Option or
SAR would have been entitled immediately following such reorganization, merger,
or consolidation, with a corresponding proportionate adjustment of the Option
Price or SAR Exercise Price per Share so that the aggregate Option Price or SAR
Exercise Price thereafter shall be the same as the aggregate Option Price or
SAR Exercise Price of the Shares remaining subject to the Option or SAR
immediately prior to such reorganization, merger, or consolidation.  Subject to any contrary language in an Award
Agreement evidencing an Award, any restrictions applicable to such Award shall
apply as well to any replacement shares received by the Grantee as a result of
the reorganization, merger or consolidation. 
In the event of a transaction described in this Section 16.2, Share Units shall be adjusted so as to apply
to the securities that a holder of the number of Shares subject to the Share
Units would have been entitled to receive immediately following such
transaction.


 


16.3.                       Corporate Transaction


 


Subject to the exceptions set forth in the last sentence of this Section 16.3 and the last sentence of Section
16.4, upon the occurrence of a Corporate Transaction:


 


(a)                                  all outstanding Restricted Shares and Share
Units shall be deemed to have vested, and all restrictions and conditions
applicable to such Restricted Shares and Share Units shall be deemed to have
lapsed and the Share Units shall be delivered, immediately prior to the
occurrence of such Corporate Transaction, and


 


(b)                                 fifteen days prior to the scheduled
consummation of a Corporate Transaction, all Options and SARs outstanding
hereunder shall become immediately exercisable and shall remain exercisable for
a period of fifteen days.


 


With respect to the Company’s establishment of an exercise window, (a)
any exercise of an Option or SAR during such fifteen-day period shall be
conditioned upon the consummation of the event and shall be effective only
immediately before the consummation of the event, and (b) upon consummation of
any Corporate Transaction, the Plan and all outstanding but unexercised Options
and SARs shall terminate.  The Board
shall send written notice of an event that will result in such a termination to
all individuals who hold Options and SARs not later than the time at which the
Company gives notice thereof to its shareholders.  This Section 16.3
shall not apply to any Corporate Transaction to the extent that (i) provision
is made in writing in connection with such Corporate Transaction for the
assumption or continuation of the Options, SARs, Share Units, Restricted Shares
theretofore granted, or for the substitution for such Options, SARs, Restricted
Shares, and Share Units for new common share options and share appreciation
rights and new 


 


23
















 


common restricted shares and share units relating to the shares of a
successor entity, or a parent or subsidiary thereof, with appropriate
adjustments as to the number of Shares (disregarding any consideration that is
not common shares) of the successor and option and share appreciation right
exercise prices, in which event the Plan, Options, SARs, Restricted Shares, and
Share Units theretofore granted shall continue in the manner and under the
terms so provided or (ii) the Board may elect, in its sole discretion, to
cancel any outstanding Awards of Options, Restricted Shares, Share Units and/or
SARs and pay or deliver, or cause to be paid or delivered, to the holder
thereof an amount in cash or securities having a value (as determined by the
Board acting in good faith), in the case of Restricted Shares, or Share Units,
equal to the formula or fixed price per share paid to holders of Shares and, in
the case of Options or SARs, equal to the product of the number of Shares
subject to the Option or SAR (the “Award Shares”) multiplied by the amount, if
any, by which (A) the formula or fixed price per share paid to holders of
Shares pursuant to such transaction exceeds (B) the Option Price or SAR
Exercise Price applicable to such Award Shares.


 


16.4.                     Adjustments


 


Adjustments under this Section 16
related to Shares or securities of the Company shall be made by the Board,
whose determination in that respect shall be final, binding and
conclusive.  No fractional shares or
other securities shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated in each case
by rounding downward to the nearest whole share. The Board shall determine the
effect of a Corporate Transaction upon Awards other than Options, SARs,
Restricted Shares, and Share Units and such effect shall be set forth in the
appropriate Award Agreement.  The Board
may provide in the Award Agreements at the time of grant, or any time
thereafter with the consent of the Grantee, for different provisions to apply
to an Award in place of those described in Sections 16.1, 16.2
and 16.3.


 


16.5.                     No Limitations on Company


 


The making of Awards pursuant to the Plan shall not affect or limit in
any way the right or power of the Company to make adjustments,
reclassifications, reorganizations, or changes of its capital or business
structure or to merge, consolidate, dissolve, or liquidate, or to sell or
transfer all or any part of its business or assets.


 


17.                               GENERAL PROVISIONS


 


17.1.                     Disclaimer of Rights


 


No provision in the Plan or in any Award or Award Agreement shall be
construed to confer upon any individual the right to remain in the employ or
service of the Company or any Affiliate, or to interfere in any way with any
contractual or other right or authority of the Company either to increase or
decrease the compensation or other payments to any individual at any time, or
to terminate any employment or other relationship between any individual and
the Company.  In addition,
notwithstanding anything contained in the Plan to the contrary, unless
otherwise stated in the applicable Award Agreement, no Award granted under the Plan
shall be affected by any change of duties or position of the Grantee, so long
as such Grantee continues to be a trustee, director, 


 


24
















 


officer, consultant or employee of the Company or an Affiliate.  The obligation of the Company to pay any
benefits pursuant to the Plan shall be interpreted as a contractual obligation
to pay only those amounts described herein, in the manner and under the
conditions prescribed herein.  The Plan
shall in no way be interpreted to require the Company to transfer any amounts
to a third party trustee or otherwise hold any amounts in trust or escrow for
payment to any Grantee or beneficiary under the terms of the Plan.


 


17.2.                     Nonexclusivity of the Plan


 


Neither the adoption of the Plan nor the submission of the Plan to the
shareholders of the Company for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable
either generally to a class or classes of individuals or specifically to a
particular individual or particular individuals) as the Board in its discretion
determines desirable, including, without limitation, the granting of share
options otherwise than under the Plan.


 


17.3.                     Withholding Taxes


 


The Company or an Affiliate, as the case may be, shall have the right
to deduct from payments of any kind otherwise due to a Grantee any federal,
state, or local taxes of any kind required by law to be withheld with respect
to the vesting of or other lapse of restrictions applicable to an Award or upon
the issuance of any Shares upon the exercise of an Option or pursuant to an
Award.  At the time of such vesting,
lapse, or exercise, the Grantee shall pay to the Company or the Affiliate, as the
case may be, any amount that the Company or the Affiliate may reasonably
determine to be necessary to satisfy such withholding obligation.  Subject to the prior approval of the Company
or the Affiliate, which may be withheld by the Company or the Affiliate, as the
case may be, in its sole discretion, the Grantee may elect to satisfy such
obligations, in whole or in part, (a) by causing the Company or the
Affiliate to withhold Shares otherwise issuable to the Grantee or (b) by
delivering to the Company or the Affiliate Shares already owned by the
Grantee.  The Shares so delivered or
withheld shall have an aggregate Fair Market Value equal to such withholding
obligations.  The Fair Market Value of
the Shares used to satisfy such withholding obligation shall be determined by
the Company or the Affiliate as of the date that the amount of tax to be
withheld is to be determined.  A Grantee
who has made an election pursuant to this Section 17.3
may satisfy his or her withholding obligation only with Shares that are not
subject to any repurchase, forfeiture, unfulfilled vesting, or other similar
requirements.


 


17.4.                     Captions


 


The use of captions in the Plan or any Award Agreement is for the
convenience of reference only and shall not affect the meaning of any provision
of the Plan or such Award Agreement.


 


17.5.                     Other Provisions


 


Each Award granted under the Plan may contain such other terms and
conditions not inconsistent with the Plan as may be determined by the Board, in
its sole discretion.


 


25
















 


17.6.                     Number and Gender


 


With respect to words used in the Plan, the singular form shall include
the plural form, the masculine gender shall include the feminine gender, etc.,
as the context requires.


 


17.7.                     Severability


 


If any provision of the Plan or any Award Agreement shall be determined
to be illegal or unenforceable by any court of law in any jurisdiction, the
remaining provisions hereof and thereof shall be severable and enforceable in
accordance with their terms, and all provisions shall remain enforceable in any
other jurisdiction.


 


17.8.                     Governing Law


 


The validity and construction of this Plan and the instruments
evidencing the Award hereunder shall be governed by the laws of the State of
Maryland, other than any conflicts or choice of law rule or principle that
might otherwise refer construction or interpretation of this Plan and the
instruments evidencing the Awards granted hereunder to the substantive laws of
any other jurisdiction.


 


*    *    *


 


26
















 


To record adoption of the Plan by the Board as of July 23, 2004, and
approval of the Plan by the shareholders on July 23, 2004, the Company has
caused its authorized officer to execute the Plan.


 


 


	
   

  	
  KITE
  REALTY GROUP TRUST

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  JOHN A. KITE

  
	
   

  	
  Name:

  	
  John
  A. Kite

  
	
   

  	
  Title:

  	
  President
  and Chief 

  Executive Officer

  



 


27
















 


 


EXHIBIT A


 


Exclusion From Affiliates


 


126th Street Medical, LLC


126th Street Medical II, LLC


Brentwood Land Partners, LLC


Kite South-Bend, LLC


Kite 126th Street Medical,
LLC


Kite 126th Street Medical
II, LLC


KSK Scottsdale Mall, LP


99 & Eddy, LLC


Circle Block Partners, LLC


Circle Block Investor, LLC


Circle Block Funding, Inc


KM Circle Block, Inc.


Kite, Inc.


Kitley Realty, LLC


KMI Management, LLC


GBK Development, LLC


GKP Iowa,LLC


HK Partners, LLC


Kite Iowa, LLC


Kite McCarty, Inc.


Kite McCarty Holdings, LLC


Kite Capital, LLC


Kite Convention, LLC


Kite Faris, LLC


Kite Glendale - WG, LLC


Kite Magellan, LLC


Kite Noblesville, LLC


Kite Properties, Inc.


Kite-WG, LLC


KMI Holdings, LLC


KP Northwest, LLC


Post 70 Partners, LP


SK, LLC


Titusville Development, L.P.


WSE, LLC


Associated Properties


Convention Hotel Partners,
LLC


Convention Hotel Partners,
Inc.


GPJ, LLC


Kite Acquisitions, LLC


Kite Plano, LLP