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                                   ELDERTRUST


                      1999 SHARE OPTION AND INCENTIVE PLAN
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                                TABLE OF CONTENTS

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SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS..............................................................1


SECTION 2. ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT PARTICIPANTS AND DETERMINE AWARDS...........2


SECTION 3. SHARES ISSUABLE UNDER THE PLAN; RECAPITALIZATIONS; MERGERS; SUBSTITUTE AWARDS.........................3


SECTION 4. ELIGIBILITY...........................................................................................4


SECTION 5. SHARE OPTIONS.........................................................................................4


SECTION 6. RESTRICTED SHARE AWARDS...............................................................................6


SECTION 7. DEFERRED SHARE AWARDS.................................................................................7


SECTION 8. UNRESTRICTED SHARE AWARDS.............................................................................8


SECTION 9. PERFORMANCE SHARE AWARDS..............................................................................8


SECTION 10. DISTRIBUTION EQUIVALENT RIGHTS.......................................................................8


SECTION 11. TAX WITHHOLDING......................................................................................9


SECTION 12. TRANSFER, LEAVE OF ABSENCE, ETC......................................................................9


SECTION 13. AMENDMENTS AND TERMINATION...........................................................................9


SECTION 14. STATUS OF PLAN.......................................................................................10


SECTION 15. CHANGE OF CONTROL PROVISIONS.........................................................................10


SECTION 16. GENERAL PROVISIONS...................................................................................11


SECTION 17. EFFECTIVE DATE OF PLAN...............................................................................11


SECTION 18. GOVERNING LAW........................................................................................11
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                                   ELDERTRUST

                      1999 SHARE OPTION AND INCENTIVE PLAN



SECTION 1.        GENERAL PURPOSE OF THE PLAN; DEFINITIONS

         The name of the plan is the ElderTrust 1999 Share Option and Incentive
Plan (the "Plan"). The purpose of the Plan is to encourage and enable the
officers, employees, Non-Employee Trustees and other key persons of ElderTrust
(the "Company"), and the employees and other key persons of ElderTrust Operating
Limited Partnership (the "Operating Partnership") and the Company's other
Subsidiaries, upon whose judgment, initiative and efforts the Company largely
depends for the successful conduct of its business to acquire a proprietary
interest in the Company. It is anticipated that providing such persons with a
direct stake in the Company's welfare will assure a closer identification of
their interests with those of the Company, thereby stimulating their efforts on
the Company's behalf and strengthening their desire to remain with the Company.

         The following terms shall be defined as set forth below:

         "Act" means the Securities Exchange Act of 1934, as amended from time
to time.

         "Administrator" means either the Board or the Committee, to the extent
the Committee has been delegated authority pursuant to Section 2.

         "Award" or "Awards," except where referring to a particular category of
grant under the Plan, shall include Incentive Share Options, Non-Qualified Share
Options, Restricted Share Awards, Deferred Share Awards, Unrestricted Share
Awards, Performance Share Awards and Distribution Equivalent Rights.

         "Board" means the Board of Trustees of the Company as constituted from
time to time.

         "Change of Control" is defined in Section 15.

         "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor Code, and related rules, regulations and
interpretations.

         "Committee" means the Committee of the Board referred to in Section
2(b).

         "Company" means ElderTrust, a Maryland real estate investment trust,
and any successor thereto.

         "Deferred Share Award" means Awards granted pursuant to Section 7.

         "Distribution Equivalent Right" means Awards granted pursuant to
Section 10.

         "Effective Date" means the date on which the Plan is initially approved
by Shareholders as set forth in Section 17.

         "Fair Market Value" on any given date means the last reported sale
price at which Shares are traded on such date or, if no Shares are traded on
such date, the next preceding date on which Shares were traded, as reflected on
the principal stock exchange or, if applicable, any other national stock
exchange on which the Shares are traded or admitted to trading.

         "Incentive Share Option" means any Share Option that qualifies as and
is designated in writing in the related Option agreement as constituting an
"incentive stock option" as defined in Section 422 of the Code.


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         "Non-Employee Trustee" means a member of the Board who is not also an
employee of the Company or any Subsidiary.

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

         "Operating Partnership" means ElderTrust Operating Limited Partnership,
a Delaware limited partnership, and any successor thereto.

         "Option" or "Share Option" means any option to purchase Shares granted
pursuant to Section 5.

         "Performance Share Award" means Awards granted pursuant to Section 9.

         "Restricted Share Award" means Awards granted pursuant to Section 6.

         "Shares" means the common shares of beneficial interest, par value $.01
per share, of the Company, subject to adjustments pursuant to Section 3.

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

         "Unrestricted Share Award" means any Award granted pursuant to Section
8.


SECTION 2. ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT
PARTICIPANTS AND DETERMINE AWARDS

         (a) The Plan shall be administered by the Board, which shall have the
full power and authority to take all actions and to make all determinations
required or provided for under the Plan or any Award granted or agreement
entered into hereunder and all such other actions and determinations not
inconsistent with the specific terms and provisions of the Plan deemed by the
Board to be necessary or appropriate to the administration of the Plan or any
Award granted or agreement entered into hereunder.

         (b) The Board from time to time may appoint a Committee consisting of
two or more members of the Board who, in the sole discretion of the Board, may
be the same trustees who serve on the Compensation Committee, or may appoint the
Compensation Committee to serve as the Committee. The Board, in its sole
discretion, may provide that the role of the Committee shall be limited to
making recommendations to the Board concerning any determinations to be made and
actions to be taken by the Board pursuant to or with respect to the Plan, or the
Board may delegate to the Committee such powers and authorities related to the
administration of the Plan, as set forth in Section 2(a) above, as the Board
shall determine, consistent with the By-Laws of the Company and applicable law.
In the event that the Plan or any Award granted or 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 by 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 2.


         (c) Powers of Administrator. The Administrator shall have the power and
authority to grant Awards consistent with the terms of the Plan, including the
power and authority:

                  (i) to select the individuals to whom Awards may from time to
         time be granted;

                  (ii) to determine the time or times of grant, and the extent,
         if any, of Incentive Share Options, Non-Qualified Share Options,
         Restricted Share Awards, Deferred Share Awards,


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         Unrestricted Share Awards, Performance Share Awards and Distribution
         Equivalent Rights, or any combination of the foregoing, granted to any
         one or more participants;

                  (iii) to determine the number of Shares to be covered by any
         Award;

                  (iv) to determine and modify from time to time the terms and
         conditions, including restrictions, not inconsistent with the terms of
         the Plan, of any Award, which terms and conditions may differ among
         individual Awards and participants, and to approve the form of written
         instruments evidencing the Awards;

                  (v) to accelerate at any time the exercisability or vesting of
         all or any portion of any Award;

                  (vi) subject to the provisions of Section 5(a)(ii), to extend
         at any time the post-termination period in which Share Options may be
         exercised;

                  (vii) to determine at any time whether, to what extent, and
         under what circumstances Shares and other amounts payable with respect
         to an Award shall be deferred either automatically or at the election
         of the participant and whether and to what extent the Company shall pay
         or credit amounts constituting deemed interest (at rates determined by
         the Administrator) or distributions or deemed distributions on such
         deferrals; and

                  (viii) at any time to adopt, alter and repeal such rules,
         guidelines and practices for administration of the Plan and for its own
         acts and proceedings as it shall deem advisable; to interpret the terms
         and provisions of the Plan and any Award (including related written
         instruments); to make all determinations it deems advisable for the
         administration of the Plan; to decide all disputes arising in
         connection with the Plan; and to otherwise supervise the administration
         of the Plan.

         All decisions and interpretations of the Administrator shall be made in
the Administrator's sole and absolute discretion and shall be final and binding
on all persons, including the Company and Plan participants.


SECTION 3. SHARES ISSUABLE UNDER THE PLAN; RECAPITALIZATIONS; MERGERS;
SUBSTITUTE AWARDS

         (a) Shares Issuable. The maximum number of Shares reserved and
available for issuance under the Plan shall be 350,000 Shares. For purposes of
this limitation, if any portion of an Award is forfeited, canceled, reacquired
by the Company, satisfied without the issuance of Shares or otherwise
terminated, the Shares underlying such portion of the Award shall be added back
to the Shares available for issuance under the Plan. Subject to such overall
limitation, Shares may be issued up to such maximum number pursuant to any type
or types of Award; provided, however, that, Shares Options with respect to no
more than 250,000 Shares may be granted to any one individual participant during
any one calendar year period. The Shares available for issuance under the Plan
may be authorized but unissued Shares or Shares reacquired by the Company.

         (b) Recapitalizations. If, through, or as a result of any merger,
consolidation, sale of all or substantially all of the assets of the Company,
reorganization, recapitalization, reclassification, share dividend, share split,
reverse share split or other similar transaction, the outstanding Shares are
increased or decreased or are exchanged for a different number or kind of shares
or other securities of the Company, or additional shares or new or different
shares or other securities of the Company or other non-cash assets are
distributed with respect to such Shares or other securities, the Administrator
may make an appropriate or proportionate adjustment in (i) the maximum number of
Shares reserved for issuance under the Plan, (ii) the number of Share Options
that can be granted to any one individual participant, (iii) the number and kind
of shares or other securities subject to any then outstanding Awards under the
Plan, and (iv) the price for each share subject to any then outstanding Share
Options under the Plan, without changing the aggregate exercise price (i.e., the
exercise price multiplied by the number of Share Options) as to which such Share
Options remain exercisable. The adjustment by the Administrator shall be

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final, binding and conclusive. No fractional Shares shall be issued under the
Plan resulting from any such adjustment, but the Administrator in its discretion
may make a cash payment in lieu of fractional shares.

         (c) Mergers. In contemplation of and subject to the consummation of a
consolidation or merger or sale of all or substantially all of the assets of the
Company in which outstanding Shares are exchanged for securities, cash or other
property of an unrelated corporation or business entity or in the event of a
liquidation of the Company (in each case, a "Transaction"), the Board, or the
board of directors of any entity assuming the obligations of the Company, may,
in its discretion, take any one or more of the following actions, as to
outstanding Awards: (i) provide that such Awards shall be assumed or equivalent
awards shall be substituted, by the acquiring or succeeding corporation (or an
affiliate thereof), and/or (ii) upon written notice to the participants, provide
that all Awards will terminate immediately prior to the consummation of the
Transaction. In the event that, pursuant to clause (ii) above, Awards will
terminate immediately prior to the consummation of the Transaction, all vested
Awards, other than Share Options, shall be fully settled in cash or in kind at
such appropriate consideration as determined by the Administrator in its sole
discretion after taking into account the consideration payable per Share
pursuant to the business combination (the "Merger Price") and all Share Options
shall be fully settled, in cash or in kind, in an amount equal to the difference
between (A) the Merger Price times the number of Shares subject to such
outstanding Share Options (to the extent then exercisable at prices not in
excess of the Merger Price) and (B) the aggregate exercise price of all such
outstanding Share Options; provided, however, that each participant shall be
permitted, within a specified period determined by the Administrator prior to
the consummation of the Transaction, to exercise all outstanding Share Options,
including those that are not then exercisable, subject to the consummation of
the Transaction.

         (d) Substitute Awards. The Administrator may grant Awards under the
Plan in substitution for Shares and Share based awards held by employees of
another corporation who become employees of the Company or a Subsidiary as the
result of a merger or consolidation of the employing corporation with the
Company or a Subsidiary or the acquisition by the Company or a Subsidiary of
property or Shares of the employing corporation. The Administrator may direct
that the substitute awards be granted on such terms and conditions as the
Administrator considers appropriate in the circumstances.


SECTION 4. ELIGIBILITY

         Participants in the Plan will be such full or part-time officers and
other employees, Non-Employee Trustees and key persons of the Company, the
Operating Partnership and the Company's other Subsidiaries who are responsible
for or contribute to the management, growth or profitability of the Company, the
Operating Partnership and the Company's other Subsidiaries as are selected from
time to time by the Administrator in its sole discretion.


SECTION 5. SHARE OPTIONS

         Any Share Option granted under the Plan shall be in such form as the
Administrator may from time to time approve.

         Share Options granted under the Plan may be either Incentive Share
Options or Non-Qualified Share Options. Incentive Share Options may be granted
only to employees of the Company or any Subsidiary that is a "subsidiary
corporation" within the meaning of Section 424(f) of the Code. To the extent
that any Option does not qualify as an Incentive Share Option, it shall be
deemed a Non-Qualified Share Option.

         No Incentive Share Option shall be granted under the Plan after April
15, 2009.

         (a) Share Options Granted to Employees and Key Persons and Non-Employee
Trustees. The Administrator in its discretion may grant Share Options to
eligible employees and key persons of the Company or any Subsidiary and to
Non-Employee Trustees. Share Options granted pursuant to this Section 5(a) 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 Administrator shall deem desirable. If the Administrator so determines,
Share Options

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may be granted in lieu of cash compensation at the participant's election,
subject to such terms and conditions as the Administrator may establish, as well
as in addition to other compensation.

                           (i) Exercise Price. The exercise price per share for
                  the Shares covered by a Share Option granted pursuant to this
                  Section 5(a) shall be determined by the Administrator at the
                  time of grant but shall not be less than 100 percent of the
                  Fair Market Value on the date of grant in the case of
                  Incentive Share Options, or par value in the case of
                  Non-Qualified Share Options. If an employee owns or is deemed
                  to own (by reason of the attribution rules of Section 424(d)
                  of the Code) more than 10 percent of the combined voting power
                  of all classes of Shares of the Company or any parent or
                  subsidiary corporation and an Incentive Share Option is
                  granted to such employee, the exercise price of such Incentive
                  Share Option shall be not less than 110 percent of the Fair
                  Market Value on the grant date.

                           (ii) Option Term. The term of each Share Option shall
                  be fixed by the Administrator, but no Incentive Share Option
                  shall be exercisable more than ten years after the date the
                  Share Option is granted. If an employee owns or is deemed to
                  own (by reason of the attribution rules of Section 424(d) of
                  the Code) more than 10 percent of the combined voting power of
                  all classes of Shares of the Company or any parent or
                  subsidiary corporation and an Incentive Share Option is
                  granted to such employee, the term of such Share Option shall
                  be no more than five years from the date of grant.

                           (iii) Exercisability; Rights of a Shareholder. Share
                  Options shall become exercisable at such time or times,
                  whether or not in installments, as shall be determined by the
                  Administrator at or after the grant date; provided, however,
                  that Share Options granted in lieu of compensation shall be
                  exercisable in full as of the grant date unless the
                  Administrator otherwise provides in the Option Award
                  agreement. The Administrator may at any time accelerate the
                  exercisability of all or any portion of any Share Option. A
                  participant shall have the rights of a Shareholder only as to
                  Shares acquired upon the exercise of a Share Option and not as
                  to unexercised Share Options.

                           (iv) Method of Exercise. Share Options may be
                  exercised in whole or in part, by giving written notice of
                  exercise to the Company, specifying the number of shares to be
                  purchased. Payment of the purchase price may be made by one or
                  more of the following methods to the extent provided in the
                  Option Award agreement:

                                    (A) In cash, by certified or bank check or
                           other instrument acceptable to the Administrator;

                                    (B) In the form of Shares that are not then
                           subject to restrictions under any Company plan and
                           that have been beneficially owned by the participant
                           for at least six months, if permitted by the
                           Administrator in its discretion. Such surrendered
                           Shares shall be valued at Fair Market Value on the
                           exercise date;

                                    (C) By the participant delivering to the
                           Company a properly executed exercise notice together
                           with irrevocable instructions to a broker to promptly
                           deliver to the Company cash or a check payable and
                           acceptable to the Company to pay the purchase price;
                           provided that in the event the participant chooses to
                           pay the purchase price as so provided, the
                           participant and the broker shall comply with such
                           procedures and enter into such agreements of
                           indemnity and other agreements as the Administrator
                           shall prescribe as a condition of such payment
                           procedure; or

                                    (D) By the participant delivering to the
                           Company a promissory note if the Administrator has
                           expressly authorized the loan of funds to the
                           participant for the purpose of enabling or assisting
                           the participant to effect the exercise of his Share
                           Option; provided that at least so much of the
                           exercise price as represents the par value of the
                           Shares shall be paid other than with a promissory
                           note.


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                  Payment instruments will be received subject to collection.
                  The delivery of certificates representing the Shares to be
                  purchased pursuant to the exercise of a Share Option will be
                  contingent upon receipt from the participant (or a purchaser
                  acting in his stead in accordance with the provisions of the
                  Share Option) by the Company of the full purchase price for
                  such shares and the fulfillment of any other requirements
                  contained in the Share Option or applicable provisions of
                  laws.

                           (v) Annual Limit on Incentive Share Options. To the
                  extent required for "incentive stock option" treatment under
                  Section 422 of the Code, the aggregate Fair Market Value
                  (determined as of the time of grant) of the Shares with
                  respect to which Incentive Share Options granted under this
                  Plan and any other plan of the Company or its parent and
                  subsidiary corporations become exercisable for the first time
                  by a participant during any calendar year shall not exceed
                  $100,000. To the extent that any Share Option exceeds this
                  limit, it shall constitute a Non-Qualified Share Option.

         (b) Reload Options. At the discretion of the Administrator and subject
to such restrictions, terms and conditions as the Administrator may establish,
Options granted under the Plan may include a "reload" feature pursuant to which
a participant exercising a Share Option by the delivery of a number of Shares in
accordance with Section 5(a)(iv)(B) hereof would automatically be granted an
additional Share Option (with an exercise price equal to the Fair Market Value
of the Shares on the date the additional Share Option is granted and with such
other terms as the Administrator may provide) to purchase that number of Shares
equal to the number delivered to exercise the original Share Option with an
Option term equal to the remainder of the original Option term unless the
Administrator otherwise determines in the Option Award agreement for the
original grant.

         (c) Non-transferability of Share Options. No Share Option shall be
transferable by the participant otherwise than by will or by the laws of descent
and distribution and all Share Options shall be exercisable, during the
participant's lifetime, only by the participant. Notwithstanding the foregoing,
the Administrator, in its sole discretion, may provide in the Award agreement
regarding a given Share Option that the participant may transfer, without
consideration for the transfer, his Non-Qualified Share Options to members of
his family, to trusts for the benefit of such family members, or to partnerships
in which such family members are the only partners, provided that the transferee
agrees in writing with the Company to be bound by all of the terms and
conditions of this Plan and the applicable Option Award agreement.

         (d) Termination. Except as may otherwise be provided by the
Administrator either in the Award agreement, or, subject to Section 13 below, in
writing after the Award agreement is issued, a participant's rights in all Share
Options shall automatically terminate upon the participant's termination of
employment (or cessation of business relationship) with the Company and its
Subsidiaries for any reason.


SECTION 6.        RESTRICTED SHARE AWARDS

         (a) Nature of Restricted Share Awards. A Restricted Share Award is an
Award entitling the recipient to acquire, at par value or such other higher
purchase price determined by the Administrator, Shares subject to such
restrictions and conditions as the Administrator may determine at the time of
grant ("Restricted Shares"). Conditions may be based on continuing employment
(or other business relationship) and/or achievement of pre-established
performance goals and objectives. Such performance goals and objectives shall be
established in writing by the Administrator prior to the ninetieth day of the
year in which the grant is made and while the outcome is substantially
uncertain. Performance goals and objectives shall be based on Share price,
market share, sales, earnings per Share, return on equity, costs, or any
combination of these factors. Performance goals and objectives may include
positive results, maintaining the status quo or limiting economic losses. The
grant of a Restricted Share Award is contingent on the participant executing the
Restricted Share Award agreement. The terms and conditions of each such
agreement shall be determined by the Administrator, and such terms and
conditions may differ among individual Awards and participants.

         (b) Rights as a Shareholder. Upon execution of the Restricted Share
Award agreement and paying any applicable purchase price, a participant shall
have the rights of a Shareholder with respect to the voting of the

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Restricted Share, subject to such terms and conditions as may be contained in
the Restricted Share Award agreement. Unless the Administrator shall otherwise
determine, certificates evidencing the Restricted Shares shall remain in the
possession of the Company until such Restricted Shares are vested as provided in
Section 6(d) below, and the participant shall be required, as a condition of the
grant, to deliver to the Company a Share power endorsed in blank.

         (c) Restrictions. Restricted Shares may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein or in the Restricted Share Award agreement. If a
participant's employment (or other business relationship) with the Company and
its Subsidiaries terminates for any reason, the Company shall have the right to
repurchase Restricted Shares that have not vested at the time of termination at
their original purchase price, from the participant or the participant's legal
representative.

         (d) Vesting of Restricted Shares. The Administrator at the time of
grant shall specify the date or dates and/or the attainment of pre-established
performance goals, objectives and other conditions on which the
non-transferability of the Restricted Shares and the Company's right of
repurchase or forfeiture shall lapse. Subsequent to such date or dates and/or
the attainment of such pre-established performance goals, objectives and other
conditions, the shares on which all restrictions have lapsed shall no longer be
Restricted Shares and shall be deemed "vested." Except as may otherwise be
provided by the Administrator either in the Award agreement or, subject to
Section 13 below, in writing after the Award agreement is issued, a
participant's rights in any shares of Restricted Shares that have not vested
shall automatically terminate upon the participant's termination of employment
(or other business relationship) with the Company and its Subsidiaries and such
shares shall be subject to the Company's right of repurchase as provided in
Section 6(c) above.

         (e) Waiver, Deferral and Reinvestment of Distributions. The Restricted
Share Award agreement may require or permit the immediate payment, waiver,
deferral or reinvestment (in the form of additional Restricted Shares) of
distributions paid on the Restricted Shares.


SECTION 7. DEFERRED SHARE AWARDS

         (a) Nature of Deferred Share Awards. A Deferred Share Award is an Award
of phantom Share units to a participant, subject to restrictions and conditions
as the Administrator may determine at the time of grant. Conditions may be based
on continuing employment (or other business relationship) and/or achievement of
pre-established performance goals and objectives. The grant of a Deferred Share
Award is contingent on the participant executing the Deferred Share Award
agreement. The terms and conditions of each such agreement shall be determined
by the Administrator, and such terms and conditions may differ among individual
Awards and participants. At the end of the deferral period, the Deferred Share
Award, to the extent vested, shall be paid to the participant in the form of
Shares.

         (b) Election to Receive Deferred Share Awards in Lieu of Compensation.
The Administrator may, in its sole discretion, permit a participant to elect to
receive a portion of the cash compensation or Restricted Share Award otherwise
due to such participant in the form of a Deferred Share Award. Any such election
shall be made in writing and shall be delivered to the Company no later than the
date specified by the Administrator and in accordance with rules and procedures
established by the Administrator. The Administrator shall have the sole right to
determine whether and under what circumstances to permit such elections and to
impose such limitations and other terms and conditions thereon as the
Administrator deems appropriate.

         (c) Rights as a Shareholder. During the deferral period, a participant
shall have no rights as a Shareholder; provided, however, that the participant
may be credited with Distribution Equivalent Rights with respect to the phantom
Share units underlying his Deferred Share Award, subject to such terms and
conditions as the Administrator may determine.

         (d) Restrictions. A Deferred Share Award may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of during the deferral
period.


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         (e) Termination. Except as may otherwise be provided by the
Administrator either in the Award agreement or, subject to Section 13 below, in
writing after the Award agreement is issued, a participant's right in all
Deferred Share Awards that have not vested shall automatically terminate upon
the participant's termination of employment (or cessation of business
relationship) with the Company and its Subsidiaries for any reason.


SECTION 8. UNRESTRICTED SHARE AWARDS

         Grant or Sale of Unrestricted Shares. The Administrator may, in its
sole discretion, grant (or sell at par value or such other higher purchase price
determined by the Administrator) an Unrestricted Share Award to any participant
pursuant to which such participant may receive Shares free of any restrictions
("Unrestricted Shares") under the Plan. Unrestricted Share Awards may be granted
or sold as described in the preceding sentence in respect of past services or
other valid consideration, or in lieu of any cash compensation due to such
participant.


SECTION 9. PERFORMANCE SHARE AWARDS

         (a) Nature of Performance Share Awards. A Performance Share Award is an
Award entitling the recipient to acquire Shares upon the attainment of specified
performance goals. The Administrator may make Performance Share Awards
independent of or in connection with the granting of any other Award under the
Plan. The Administrator in its sole discretion shall determine whether and to
whom Performance Share Awards shall be made, the performance goals applicable
under each such Award, the periods during which performance is to be measured,
and all other limitations and conditions applicable to the awarded Performance
Shares; provided, however, that the Administrator may rely on the performance
goals and other standards applicable to other performance unit plans of the
Company in setting the standards for Performance Share Awards under the Plan.

         (b) Rights as a Shareholder. A participant receiving a Performance
Share Award shall have the rights of a Shareholder only as to shares actually
received by the participant under the Plan and not with respect to shares
subject to the Award but not actually received by the participant. A participant
shall be entitled to receive a Share certificate evidencing the acquisition of
Shares under a Performance Share Award only upon satisfaction of all conditions
specified in the written instrument evidencing the Performance Share Award (or
in a performance plan adopted by the Administrator).

         (c) Termination. Except as may otherwise be provided by the
Administrator either in the Award agreement or, subject to Section 13 below, in
writing after the Award agreement is issued, a participant's rights in all
Performance Share Awards shall automatically terminate upon the participant's
termination of employment (or cessation of business relationship) with the
Company and its Subsidiaries for any reason.

         (d) Acceleration, Waiver, Etc. At any time prior to the participant's
termination of employment (or other business relationship) by the Company and
its Subsidiaries, the Administrator may in its sole discretion accelerate, waive
or, subject to Section 13, amend any or all of the goals, restrictions or
conditions imposed under any Performance Share Award.


SECTION 10. DISTRIBUTION EQUIVALENT RIGHTS

         (a) Distribution Equivalent Rights. A Distribution 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 Distribution Equivalent
Right (or other award to which it relates) if such shares had been issued to and
held by the recipient. A Distribution Equivalent Right may be granted hereunder
to any participant as a component of another Award or as a freestanding award.
The terms and conditions of Distribution Equivalent Rights shall be specified in
the grant. Distribution equivalents credited to the holder of a Distribution
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.
Distribution Equivalent Rights may be settled in cash or Shares or a combination
thereof, in a single installment or installments, all determined in the sole

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discretion of the Administrator. A Distribution Equivalent Right granted as a
component of another Award may provide that such Distribution Equivalent Right
shall be settled upon exercise, settlement, or payment of, or lapse of
restrictions on, such other award, and that such Distribution Equivalent Right
shall expire or be forfeited or annulled under the same conditions as such other
award. A Distribution Equivalent Right granted as a component of another Award
may also contain terms and conditions different from such other award.

         (b) Interest Equivalents. Any Award under this Plan that is settled in
whole or in part in cash on a deferred basis may provide in the grant for
interest equivalents to be credited with respect to such cash payment. Interest
equivalents may be compounded and shall be paid upon such terms and conditions
as may be specified by the grant.

         (c) Termination. Except as may otherwise be provided by the
Administrator either in the Award agreement or, subject to Section 13 below, in
writing after the Award agreement is issued, a participant's rights in all
Distribution Equivalent Rights or interest equivalents shall automatically
terminate upon the participant's termination of employment (or cessation of
business relationship) with the Company and its Subsidiaries for any reason.


SECTION 11. TAX WITHHOLDING

         (a) Payment by Participant. Each participant shall, no later than the
date as of which the value of an Award or of any Shares or other amounts
received thereunder first becomes includable in the gross income of the
participant for Federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Administrator regarding payment of, any
Federal, state, or local taxes of any kind required by law to be withheld with
respect to such income. The Company and its Subsidiaries 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. The Company's obligation to deliver
Share certificates to any participant is subject to and conditioned on tax
obligations being satisfied by the participant.

         (b) Payment in Shares. Subject to approval by the Administrator, a
participant may elect to have such tax withholding obligation satisfied, in
whole or in part, by (i) authorizing the Company to withhold from Shares to be
issued pursuant to any Award a number of shares with an aggregate Fair Market
Value (as of the date the withholding is effected) that would satisfy the
withholding amount due, or (ii) transferring to the Company Shares owned by the
participant with an aggregate Fair Market Value (as of the date the withholding
is effected) that would satisfy the withholding amount due.


SECTION 12. TRANSFER, LEAVE OF ABSENCE, ETC.

         For purposes of the Plan, the following events shall not be deemed a
termination of employment:

         (a) a transfer to the employment of the Company from a Subsidiary or
from the Company to a Subsidiary, or from one Subsidiary to another; or

         (b) an approved leave of absence for military service or sickness, or
for any other purpose approved by the Company, if the employee's right to
reemployment is guaranteed either by a statute or by contract or under the
written policy pursuant to which the leave of absence was granted or if the
Administrator otherwise so provides in writing.


SECTION 13. AMENDMENTS AND TERMINATION

         The Board may, at any time, amend or discontinue the Plan and the
Administrator may, at any time, amend or cancel any outstanding Award for the
purpose of satisfying changes in law or for any other lawful purpose, but no
such action shall adversely affect rights under any outstanding Award without
the holder's written consent. The


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Administrator may provide substitute Awards at the same or reduced exercise or
purchase price or with no exercise or purchase price in a manner not
inconsistent with the terms of the Plan, but such price, if any, must satisfy
the requirements which would apply to the substitute or amended Award if it were
then initially granted under this Plan, but no such action shall adversely
affect rights under any outstanding Award without the holder's written consent.
Nothing in this Section 13 shall limit the Board's authority to take any action
permitted pursuant to Section 3(c).


SECTION 14. STATUS OF PLAN

         Unless the Administrator shall otherwise expressly determine in
writing, with respect to the portion of any Award which has not been exercised
and any payments in cash, Shares or other consideration not received by a
participant, a participant shall have no rights greater than those of a general
creditor of the Company. In its sole discretion, the Administrator may authorize
the creation of trusts or other arrangements to meet the Company's obligations
to deliver Shares or make payments with respect to Awards hereunder, provided
that the existence of such trusts or other arrangements is consistent with the
foregoing sentence.


SECTION 15. CHANGE OF CONTROL PROVISIONS

         (a) Upon the occurrence of a Change of Control as defined in this
Section 15 or as otherwise defined in the Award agreement, each Award shall be
subject to such terms, if any, with respect to a Change of Control as have been
provided by the Administrator either in the Award agreement or, subject to
Section 13 above, in writing after the Award agreement is issued.

         (b) "Change of Control" shall mean the occurrence of any one of the
following events:

(i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Act),
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Act),
directly or indirectly, of securities of the Company representing fifty percent
(50%) or more of the combined voting power of the Company's then outstanding
securities; (ii) during any two (2) year period, individuals who at the
beginning of such period constitute the Board of Trustees, including for this
purpose any new trustee whose election resulted from a vacancy on the Board of
Trustees caused by the mandatory retirement, death, or disability of a trustee
and was approved by a vote of at least two-thirds (2/3rds) of the trustees then
still in office who were trustees at the beginning of the period, cease for any
reason to constitute a majority thereof; (iii) notwithstanding clauses (i) or
(v) of this Section 15(b), the Company consummates a merger or consolidation of
the Company with or into another corporation or trust, the result of which is
that the shareholders of the Company at the time of the execution of the
agreement to merge or consolidate own less than eighty percent (80%) of the
total equity of the entity surviving or resulting from the merger or
consolidation or of a entity owning, directly or indirectly, one hundred percent
(100%) of the total equity of such surviving or resulting entity; (iv) the sale
in one or a series of transactions of all or substantially all of the assets of
the Company; (v) any person, has commenced a tender or exchange offer, or
entered into an agreement or received an option to acquire beneficial ownership
of fifty percent (50%) or more of the total number of voting shares of the
Company unless the Board of Trustees has made a determination that such action
does not constitute and will not constitute a change in the persons in control
of the Company; or (vi) there is a change of control in the Company of a nature
that would be required to be reported in response to Item 6(e) of Schedule 14A
of Regulation 14A promulgated under the Act other than in circumstances
specifically covered by clauses (i) - (v) above.


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SECTION 16. GENERAL PROVISIONS

         (a) No Distribution; Compliance with Legal Requirements. The
Administrator may require each person acquiring Shares pursuant to an Award to
represent to and agree with the Company in writing that such person is acquiring
the shares without a view to distribution thereof.

         No Shares shall be issued pursuant to an Award until all applicable
securities law and other legal and stock exchange or similar requirements have
been satisfied. The Administrator may require the placing of such stop-orders
and restrictive legends on certificates for Shares and Awards as it deems
appropriate.

         (b) Delivery of Share Certificates. Share certificates to be delivered
to participants under this Plan shall be deemed delivered for all purposes when
the Company or a Share transfer agent of the Company shall have mailed such
certificates in the United States mail, addressed to the participant, at the
participant's last known address on file with the Company.

         (c) Other Compensation Arrangements; No Employment Rights. Nothing
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of this
Plan and the grant of Awards shall not confer upon any employee any right to
continued employment with the Company or any Subsidiary and shall not interfere
in any way with the right of the Company or any Subsidiary to terminate the
employment of any of its employees at any time.

         (d) Trading Policy Restrictions. Option exercises and other Awards
under the Plan shall be subject to such Company insider-trading-policy-related
restrictions, terms and conditions as may be established by the Administrator,
or in accordance with policies set by the Administrator, from time to time.


SECTION 17. EFFECTIVE DATE OF PLAN

         This Plan shall become effective upon approval by the holders of a
majority of the votes cast at a meeting of Shareholders at which a quorum is
present. Subject to such approval by the Shareholders and to the requirement
that no Share may be issued hereunder prior to such approval, Share Options and
other Awards may be granted hereunder on and after adoption of this Plan by the
Board.


SECTION 18. GOVERNING LAW

         This Plan and all Awards and actions taken thereunder shall be governed
by, and construed in accordance with, the laws of the State of Maryland, applied
without regard to conflict of law principles.


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