exv10w1



 







Exhibit 10.1




2005 SHARE INCENTIVE PLAN




     1. Purpose; Eligibility.



          1.1 General Purpose. The name of this plan is the Prentiss Properties Trust 2005
Share Incentive Plan (the “Plan”). The purpose of the Plan is to assist Prentiss Properties Trust,
a real estate investment trust organized under the laws of Maryland (the “Company”), and any
Affiliate to recruit and retain the services of key Employees who will contribute to the Company’s
long range success and to associate their interests with those of the Company and its Shareholders
by providing incentives which are linked directly to increases in share value which will inure to
the benefit of all Shareholders of the Company.



          1.2 Eligible Award Recipients. The persons eligible to receive Awards are the
Employees of the Company and its Affiliates that the Administrator, in its sole discretion,
determines have contributed significantly or can be expected to contribute significantly to the
profits or growth of the Company or an Affiliate. A Trustee of the Company who is an Employee of
the Company or an Affiliate may be selected to participate in this Plan.



          1.3 Available Awards. The purpose of the Plan is to provide a means by which eligible
recipients of Awards may be given an opportunity to benefit from increases in value of the Company
Shares through the granting of one or more of the following Awards: (a) Nonstatutory Share
Options, (c) Restricted Share Awards, (d) Unrestricted Share Awards, (e) Performance Share Awards,
(f) Share Appreciation Rights, (g) Incentive Awards and (h) Share-Based Awards.



     2. Definitions.



          2.1 “409A Award” means a grant or an Award that is considered “nonqualified deferred
compensation” within the meaning of Section 409A of the Code and Section 8 of this Plan.



          2.2 “Administrator” means the Board or the Committee appointed by the Board in accordance with
Section 3.5.



          2.3 “Affiliate” means any entity under common control with the Company, within the meaning of
Sections 414(b) and (c) of the Code and any “parent corporation” or “subsidiary corporation” of the
Company, whether now or hereafter existing, as those terms are defined in Sections 424(e) and (f),
respectively, of the Code.



          2.4 “Award” means any right granted under the Plan, including an Option, a Restricted Share
Award, an Unrestricted Share Award, a Performance Share Award, a Share Appreciation Right, an
Incentive Award or a Share-Based Award.



          2.5 “Award Agreement” means a written agreement (including any amendment or supplement
thereto) between the Company and a Participant evidencing the terms and conditions of an Award to
such individual. Each Award Agreement shall be subject to the terms and conditions of the Plan.



          2.6 “Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5
under the Exchange Act, except that in calculating the beneficial ownership of any particular
“person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” shall be
deemed to have beneficial ownership of all securities that such “person” has the right to acquire
by conversion or exercise of other securities, whether such right is currently exercisable or is
exercisable only after the passage of time. The terms “Beneficially Owns” and “Beneficially Owned”
have a corresponding meaning.



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



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          2.8 “Cause” means, (a) with respect to any Participant who is a party to an employment or
service agreement or employment policy manual with the Company or its Affiliates and such agreement
or policy manual provides for a definition of Cause, as defined therein and (b) with respect to all
other Participants, (i) the commission of, or plea of guilty or no contest to, a felony or a crime
involving moral turpitude or the commission of any other act involving willful malfeasance or
material fiduciary breach with respect to the Company or an Affiliate, (ii) conduct tending to
bring the Company into substantial public disgrace, or disrepute, or (iii) gross negligence or
willful misconduct with respect to the Company or an Affiliate. The Administrator, in its absolute
discretion, shall determine the effect of all matters and questions relating to whether a
Participant has been discharged for Cause.



          2.9 “Change in Control” shall mean



               (a) the direct or indirect sale, transfer, conveyance or other disposition (other than by way
of merger or consolidation), in one or a series of related transactions, of all or substantially
all of the properties or assets of the Company to any “person” (as that term is used in Section
13(d)(3) of the Exchange Act) other than the Permitted Holders;



               (b) the adoption of a plan relating to the liquidation or dissolution of the Company;



               (c) the consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any “person” or “group” (as such terms are used in
Section 13(d) of the Exchange Act), becomes the Beneficial Owner directly or indirectly of more
than 50% of the voting power of the Company; or



               (d) Incumbent Trustees cease for any reason to constitute at least a majority of the Board; and



               (e) The foregoing notwithstanding, a transaction shall not constitute a Change in Control if
(1) its sole purpose is to change the state of the Company’s incorporation or to create a holding
company that will be owned in substantially the same proportions by the persons who held the
Company’s securities immediately before such transaction or (2) it constitutes an initial public
offering or a secondary public offering that results in any security of the Company being listed
(or approved for listing) on any securities exchange or designated (or approved for designation) as
a national market security on an interdealer quotation system.



          2.10 “Code” means the Internal Revenue Code of 1986, as amended.



          2.11 “Committee” means a committee of one or more members of the Board appointed by the Board
to administer the Plan in accordance with Section 3.5.



          2.12 “Company” means Prentiss Properties Trust, a Maryland real estate investment trust.



          2.13 “Consultant” means any person, including an advisor, (a) engaged by the Company or an
Affiliate to render consulting or advisory services and who is compensated for such services or who
provides bona fide services to the Company or an Affiliate pursuant to a written agreement or (b)
who is a member of the Board of Trustees of an Affiliate; provided that, such person is a natural
person and such services are not in connection with the offer or sale of securities in a capital
raising transaction and do not directly or indirectly promote or maintain a market for the
Company’s securities.



          2.14 “Continuous Service” means that the Participant’s service with the Company or an
Affiliate, whether as an Employee, Trustee or Consultant, is not interrupted or terminated. The
Participant’s Continuous Service shall not be deemed to have terminated merely because of a change
in the capacity in which the Participant renders service to the Company or an Affiliate as an
Employee,



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Consultant or Trustee or a change in the entity for which the Participant renders such
service, provided that there is no interruption or termination of the Participant’s Continuous
Service. For example, a change in status from an Employee of the Company to a Consultant of an
Affiliate or a Trustee will not constitute an interruption of Continuous Service. The
Administrator or the chief executive officer of the Company, in that party’s sole discretion, may
determine whether Continuous Service shall be considered interrupted in the case of any leave of
absence approved by that party, including sick leave, military leave or any other personal leave.




          2.15 “Covered Employee” means the chief executive officer and the four other highest
compensated officers of the Company for whom total compensation is required to be reported to
Shareholders under the Exchange Act, as determined for purposes of Section 162(m) of the Code.



          2.16 “Date of Grant” means the date on which the Administrator adopts a resolution expressly
granting and fixing the relevant terms of an Award to a Participant or, if a different date is set
forth in such resolution as the Date of Grant, then such date as is set forth in such resolution.



          2.17 “Disability” means that the Optionee is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment. The determination
of whether an individual has a Disability shall be determined under procedures established by the
Plan Administrator. Except in situations where the Plan Administrator is determining whether a
Participant is Disabled within the separate definition in Section 8.4(b) hereof, the Plan
Administrator may rely on any determination that a Participant is disabled for purposes of benefits
under any long-term disability plan maintained by the Company or any Affiliate in which a
Participant participates.



          2.18 “Effective Date” shall mean May 11, 2005.



          2.19 “Employee” means any person employed by the Company or an Affiliate. Mere service as a
Trustee or payment of a Trustee’s fee by the Company or an Affiliate shall not be sufficient to
constitute “employment” by the Company or an Affiliate.



          2.20 “Exchange Act” means the Securities Exchange Act of 1934, as amended.



          2.21 “Fair Market Value” means, as of any date, the value of the Common Share as determined in
good faith by the Administrator; provided, however, that (i) if the Common Share is admitted to
quotation on the National Association of Securities Dealers Automated Quotation System (“Nasdaq”),
the Fair Market Value on any given date shall not be less than the average of the highest bid and
lowest asked prices of the Common Share reported for such date or, if no bid and asked prices were
reported for such date, for the last day preceding such date for which such prices were reported or
(ii) if the Common Share is admitted to trading on a national securities exchange or the Nasdaq
National Market or Nasdaq Small Cap Market, the Fair Market Value on any date shall not be less
than the closing price reported for the Common Share on such exchange or system for such date or,
if no sales were reported for such date, for the last date preceding the date for such a sale was
reported.



          2.22 “Incentive Award” means an Award granted pursuant to Section 7.5 which, pursuant to the
terms of the Award Agreement, will entitle the Participant to receive a cash payment from the
Company or an Affiliate.



          2.23 “Incumbent Trustees” means individuals who, on the Effective Date, constitute the Board,
provided that any individual becoming a Trustee subsequent to the Effective Date whose election or
nomination for election to the Board was approved by a vote of at least two-thirds of the Incumbent
Trustees then on the 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 objection to such
nomination) shall be an Incumbent Trustee. No individual initially elected or nominated as a
Trustee of the Company as a result of an actual or threatened election contest with respect to
Trustees or as a result of any



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other actual or threatened solicitation of proxies by or on behalf of any person other than
the Board shall be an Incumbent Trustee.




          2.24 “Listing Date” means the first date upon which any security of the Company is listed (or
approved for listing) upon notice of issuance on any securities exchange or designated (or approved
for designation) upon notice of issuance as a national market security on an interdealer quotation
system.



          2.25 “Non-Employee Trustee” means a Trustee who satisfies the requirements for a “non-employee
director” within the meaning of Rule 16b-3(b)(3).



          2.26 “Nonstatutory Share Option” means an Option not intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.



          2.27 “Officer” means (a) before the Listing Date, any person designated by the Company as an
officer and (b) on and after the Listing Date, a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.



          2.28 “Option” means a Nonstatutory Share Option granted pursuant to the Plan that entitles the
holder to purchase from the Company a stated number of Shares at the price set forth in the Option
Agreement.



          2.29 “Option Agreement” means a written agreement between the Company and an Optionholder
evidencing the terms and conditions of an individual Option grant. Each Option Agreement shall be
subject to the terms and conditions of the Plan and need not be identical.



          2.30 “Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if
applicable, such other person who holds an outstanding Option.



          2.31 “Outside Trustee” means a Trustee who is an “outside director” within the meaning of
Section 162(m) of the Code and Treasury Regulations Section 1.162-27(e)(3).



          2.32 “Participant” means an Employee, including an employee who is a Trustee, to whom an Award
is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding
Award.



          2.33 “Performance Share Award” means Awards granted pursuant to Section 7.3 which, pursuant to
the terms of the Award Agreement, will entitle the Participant to receive cash or a Share Award or
a combination thereof.



          2.34 “Plan” means this Prentiss Properties Trust 2005 Share Incentive Plan.



          2.35 “Restricted Share Award” means any Award of Shares granted pursuant to Section 7.1 that
are nontransferable and subject to a substantial risk of forfeiture. Shares shall cease to be
Restricted Share Awards when, in accordance with the terms of the Award Agreement, they become
vested (free of a substantial risk of forfeiture) and transferable.



          2.36 “Right of Repurchase” means the Company’s option to repurchase unvested Common Shares
acquired under the Plan upon the Participant’s termination of Continuous Service pursuant to
Section 11.8.



          2.37 “Rule 16b-3” means SEC Rule 16b-3 promulgated under the Exchange Act or any successor to
Rule 16b-3, as in effect from time to time.



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          2.38 “SEC” means the Securities and Exchange Commission.



          2.39 “Securities Act” means the Securities Act of 1933, as amended.



          2.40 “Shares” means the common shares of the Company.



          2.41 “Share Appreciation Right” or “SAR” means the right pursuant to an Award granted under
Section 7.4 to receive an amount equal to the excess, if any, of (A) the Fair Market Value, as of
the date such Share Appreciation Right or portion thereof is surrendered, of the Shares covered by
such right or such portion thereof, over (B) the aggregate SAR exercise price of such right or such
portion thereof.



          2.42 “Share-Based Award” means an Award pursuant to Section 7.6 that is valued in whole or in
part by reference to, or is otherwise calculated by reference to or based on, Shares, including
without limitation, Units, or membership interests in an Affiliate or operating partnership, which
(i) are valued by reference to book value, fair value or performance parameters relative to the
Company or any Affiliate or group of Affiliates, (ii) may be convertible, exchangeable or
redeemable, and/or (iii) constitute any class of profits interest or limited liability company
membership interest created or issued pursuant to the terms of a partnership agreement, limited
liability company operating agreement or otherwise by an Affiliate that has elected to be treated
as a partnership for federal income tax purposes and qualifies as a “profits interest” within the
meaning of Revenue Procedure 93 27 with respect to a Participant who is rendering services to the
issuing Affiliate.



          2.43 “Trustee” means a member of the Board of Trustees of the Company.



          2.44 “Unit” means a unit or units of Class G limited partnership interest in, and provided
under the terms of the agreement of limited partnership of, Prentiss Properties Acquisition
Partners, L.P., a Delaware limited partnership and the entity through which the Company conducts a
significant portion of its business.



          2.45 “Unrestricted Award” means any Award granted pursuant to Section 7.2.



     3. Administration.



          3.1 Administration by Board. The Plan shall be administered by the Board unless and
until the Board delegates administration to a Committee, as provided in Section 3.5 (the group that
administers the Plan is referred to as the “Administrator”).



          3.2 Powers of Administrator. The Administrator shall have the power and authority to
select and grant to Participants, Awards pursuant to the terms of the Plan.



          3.3 Specific Powers. In particular, the Administrator shall have the authority: (i)
to construe and interpret the Plan and apply its provisions; (ii) to promulgate, amend and rescind
rules and regulations relating to the administration of the Plan; (iii) to authorize any person to
execute, on behalf of the Company, any instrument required to carry out the purposes of the Plan;
(iv) to determine when Awards are to be granted under the Plan; (v) from time to time to select,
subject to the limitations set forth in this Plan, those Participants to whom Awards shall be
granted; (vi) to determine the number of Shares to be made subject to each Award; (vii) to
prescribe the terms and conditions of each Award, including, without limitation, the exercise price
and medium of payment, vesting provisions and Right of Repurchase provisions, and to specify the
provisions of the Award Agreement relating to such grant or sale; (viii) to amend any outstanding
Awards for the purpose of modifying the time or manner of vesting, the purchase price or exercise
price, as the case may be, subject to Shareholder consent for any amendment, cancellation, regrant,
replacement or modification that results in a repricing that reduces the exercise price of any
outstanding Share Option (other than an adjustment under Section 12.1); provided, however, that if
any such amendment impairs a Participant’s rights or increases a Participant’s obligations under
his or her



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Award, such amendment shall also be subject to the Participant’s consent (provided, however, a
cancellation of an Award where the Participant receives a payment equal in value to the Fair Market
Value of the vested Award or, in the case of vested Options, the difference between the Fair Market
Value of the Common Share subject to a Share Option and the exercise price, shall not constitute an
impairment of the Participant’s rights that requires consent); (ix) to determine the duration and
purpose of leaves of absences which may be granted to a Participant without constituting
termination of their employment for purposes of the Plan; (x) to make decisions with respect to
outstanding Awards that may become necessary upon a change in corporate control or an event that
triggers anti-dilution adjustments; and (xi) to exercise discretion to make any and all other
determinations which it determines to be necessary or advisable for administration of the Plan.




          3.4 Decisions Final. All decisions made by the Administrator pursuant to the
provisions of the Plan shall be final and binding on the Company and the Participants, unless such
decisions are determined to be arbitrary and capricious.



          3.5 The Committee.



               (a) General. The Board may delegate administration of the Plan to a Committee or
Committees of one or more members of the Board, and the term “Committee” shall apply to any person
or persons to whom such authority has been delegated. If administration is delegated to a
Committee, the Committee shall have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board, including the power to delegate to a subcommittee any of the
administrative powers the Committee is authorized to exercise (and references in this Plan to the
Board or the Plan Administrator shall thereafter be to the Committee or subcommittee), subject,
however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted
from time to time by the Board. The Board may abolish the Committee at any time and revest in the
Board the administration of the Plan. The members of the Committee shall be appointed by and to
serve at the pleasure of the Board. From time to time, the Board may increase or decrease the size
of the Committee, add additional members to, remove members (with or without cause) from, appoint
new members in substitution therefor, and fill vacancies, however caused, in the Committee. The
Committee shall act pursuant to a vote of the majority of its members or, in the case of a
committee comprised of only two members, the unanimous consent of its members, whether present or
not, or by the written consent of the majority of its members and minutes shall be kept of all of
its meetings and copies thereof shall be provided to the Board. Subject to the limitations
prescribed by the Plan and the Board, the Committee may establish and follow such rules and
regulations for the conduct of its business as it may determine to be advisable.



               (b) Committee Composition when Common Share is Publicly Traded. At such time as the
Common Share is publicly traded, in the discretion of the Board, a Committee may consist solely of
two or more Non-Employee Trustees who are also Outside Trustees. The Board shall have discretion
to determine whether or not it intends to comply with the exemption requirements of Rule 16b-3 of
the Exchange Act and/or Section 162(m) of the Code. However, if the Board intends to satisfy such
exemption requirements, with respect to awards to any Covered Employee and with respect to any
insider subject to Section 16 of the Exchange Act, the Committee shall be a compensation committee
of the Board that at all times consists solely of two or more Non-Employee Trustees who are also
Outside Trustees. Within the scope of such authority, the Board or the Committee may (i) delegate
to a committee of one or more members of the Board who are not Outside Trustees the authority to
grant Share Rights to eligible persons who are either (A) not then Covered Employees and are not
expected to be Covered Employees at the time of recognition of income resulting from such Share
Award or (B) not persons with respect to whom the Company wishes to comply with Section 162(m) of
the Code or (ii) delegate to a committee of one or more members of the Board who are not
Non-Employee Trustees the authority to grant Share Awards to eligible persons who are not then
subject to Section 16 of the Exchange Act.



          3.6 Indemnification. In addition to such other rights of indemnification as they may
have as Trustees or members of the Committee, and to the extent allowed by applicable law, the
Administrator and each of the Administrator’s consultants shall be indemnified by the Company
against the reasonable expenses, including attorney’s fees, actually incurred in connection with
any action, suit or



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proceeding or in connection with any appeal therein, to which the Administrator or any of its
consultants may be party by reason of any action taken or failure to act under or in connection
with the Plan or any option granted under the Plan, and against all amounts paid by the
Administrator or any of its consultants in settlement thereof (provided that the settlement has
been approved by the Company, which approval shall not be unreasonably withheld) or paid by the
Administrator or any of its consultants in satisfaction of a judgment in any such action, suit or
proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such Administrator or any of its consultants did not act in good faith and in a
manner which such person reasonably believed to be in the best interests of the Company, and in the
case of a criminal proceeding, had no reason to believe that the conduct complained of was
unlawful; provided, however, that within 60 days after institution of any such action, suit or
proceeding, such Administrator or any of its consultants shall, in writing, offer the Company the
opportunity at its own expense to handle and defend such action, suit or proceeding.




     4. Shares Subject to the Plan.



          4.1 Share Reserve. Subject to the provisions of Section 12.1 relating to adjustments
upon changes in Shares, the Shares that may be issued pursuant to Awards shall consist of the
Company’s authorized but unissued Shares, and the maximum aggregate amount of such Shares which may
be issued upon exercise of all Awards under the Plan shall not exceed 2,206,120 Shares and/or
Units. The maximum amount of Shares and/or Units that may be issued under the Plan specified above
shall be reduced by the total number of Shares underlying options granted and outstanding on the
Effective Date (“Prior Outstanding Options”) under the terms of the Prentiss Properties Trust 1996
Share Incentive Plan (the “1996 Plan”). If, prior to the termination of the Plan, a Prior
Outstanding Option shall expire, be forfeited or terminate for any reason without having been
exercised in full, the Shares subject to such expired, forfeited or terminated option shall again
be available for purposes of this Plan and the number of Shares which may be issued upon the
exercise of Awards under the Plan shall be increased by the number of Shares underlying such
expired, forfeited or terminated Prior Outstanding Options that become eligible for Awards under
this Plan. In no event, however, will the maximum aggregate amount of Shares which may be issued
upon exercise of all grants and awards under the Plan, including Prior Outstanding Options that
terminate and become available under this Plan, exceed 2,206,120 Shares, subject to adjustment in
accordance with Section 12.1 hereof. For purposes of determining the Share reserve and for
purposes of the individual limitation in Section 5.2, one Unit shall be deemed to be equivalent to
one Share.



          4.2 Reversion of Shares or Units to the Share Reserve. If any Award shall for any
reason expire or otherwise terminate, in whole or in part, without having been exercised in full,
the Shares or Units not acquired under such Award shall revert to and again become available for
issuance under the Plan. If Shares or Units issued under the Plan are reacquired by the Company
pursuant to the terms of a Right of Repurchase or other forfeiture provision, such Shares or Units
shall again be available for issuance under the Plan.



          4.3 Source of Shares. The Shares subject to the Plan may be authorized but unissued
Shares or reacquired Shares, bought on the market, pursuant to any Right of Repurchase or other
forfeiture provision, or otherwise. Units subject to the Plan shall be Class G limited partnership
interests provided under the terms of the agreement of limited partnership of Prentiss Properties
Acquisition Partners, L.P., a Delaware limited partnership.



     5. Eligibility.



          5.1 Eligibility for Specific Awards. Eligible Award recipients who are selected by
the Administrator shall be eligible for Awards hereunder, subject to limitations set forth in this
Plan.



          5.2 Section 162(m) Limitation. Subject to the provisions of Section 12.1 relating to
adjustments upon changes in the Shares, no Employee shall be eligible to be granted Options or
Share Appreciation Rights covering more than 390,000 Shares and/or Units during any calendar year.
This Section 5.2 shall not apply prior to the Listing Date and, following the Listing Date, this
Section 5.2 shall not apply until (a) the earliest of: (i) the first material modification of the
Plan (including any increase in



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the number of Shares reserved for issuance under the Plan in accordance with Section 4.1);
(ii) the issuance of all of the Shares reserved for issuance under the Plan; (iii) the expiration
of the Plan; or (iv) the first meeting of Shareholders at which Trustees are to be elected that
occurs after the close of the third calendar year following the calendar year in which occurred the
first registration of an equity security under Section 12 of the Exchange Act; or (b) such other
date required by Section 162(m) of the Code and the rules and regulations promulgated thereunder.




     6. Option Provisions.



          Each Option shall be in such form and shall contain such terms and conditions as the
Administrator shall deem appropriate. Notwithstanding the foregoing, the Company shall have no
liability to any Participant or any other person if an Option is determined to constitute
“nonqualified deferred compensation” within the meaning of Section 409A of the Code and the terms
of such Option do not satisfy the additional conditions applicable to nonqualified deferred
compensation under Section 409A of the Code and Section 8 of the Plan. The provisions of separate
Options need not be identical, but each Option shall include (through incorporation of provisions
hereof by reference in the Option or otherwise) the substance of each of the following provisions:



          6.1 Term. No Option shall be exercisable after the expiration of 10 years from the
date it was granted.



          6.2 Exercise Price of an Option. The exercise price of each Nonstatutory Share Option
shall be not less than 100% of the Fair Market Value of the Shares subject to the Option on the day
preceding the date the Option is granted; provided, however, any Nonstatutory Share Option with an
exercise price less than the Fair Market Value of the Common Share subject to the Option on the
date the Option is granted shall be a 409A Award and shall be subject to the additional
requirements of Section 8. Notwithstanding the foregoing, a Nonstatutory Share Option may be
granted with an exercise price lower than that set forth in the preceding sentence if such Option
is granted pursuant to an assumption or substitution for another option in a manner satisfying the
provisions of Section 424(a) of the Code.



          6.3 Consideration. The purchase price of Shares acquired pursuant to an Option shall
be paid, to the extent permitted by applicable statutes and regulations, either (i) in cash or by
certified or bank check at the time the Option is exercised or (ii) or in the discretion of the
Administrator, upon such terms as the Administrator shall approve, the exercise price may be paid:
(1) by delivery to the Company of other Shares, duly endorsed for transfer to the Company, with a
Fair Market Value on the date of delivery equal to the exercise price (or portion thereof) due for
the number of Shares being acquired, or by means of attestation whereby the Participant identifies
for delivery specific Shares that have been held for more than six months (or such longer or
shorter period of time required to avoid a charge to earnings for financial accounting purposes)
that have a Fair Market Value on the date of attestation equal to the exercise price (or portion
thereof) and receives a number of Shares equal to the difference between the number of Shares
thereby purchased and the number of identified attestation Shares (a “Share For Share Exchange”);
(2) during any period for which the Shares are publicly traded (i.e., the Shares are listed on any
established stock exchange or a national market system, including without limitation the Nasdaq
National Market, or if the Shares are quoted on the Nasdaq System (but not on the Nasdaq National
Market) or any similar system whereby the Shares are regularly quoted by a recognized securities
dealer but closing sale prices are not reported), by a copy of instructions to a broker directing
such broker to sell the Shares for which such Option is exercised, and to remit to the Company the
aggregate Exercise Price of such Options (a “Cashless Exercise”); (3) in any other form of legal
consideration that may be acceptable to the Administrator, provided, however, if applicable law
requires, the par value (if any) of Shares, if newly issued, shall be paid in cash or cash
equivalents. Unless otherwise specifically provided in the Option, the purchase price of Shares
acquired pursuant to an Option that is paid by delivery (or attestation) to the Company of other
Shares acquired, directly or indirectly from the Company, shall be paid only by Shares of the
Company that have been held for more than six months (or such longer or shorter period of time
required to avoid a charge to earnings for financial accounting purposes). Notwithstanding the
forgoing, during any period for which the Shares are publicly traded (i.e., the Shares are listed
on any established stock exchange or a national market system, including without limitation the
Nasdaq National



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Market, or if the Common Share is quoted on the Nasdaq System (but not on the Nasdaq National
Market) or any similar system whereby the Shares are regularly quoted by a recognized securities
dealer but closing sale prices are not reported), a Cashless Exercise or other transaction by a
Trustee or executive officer that involves or may involve a direct or indirect extension of credit
or arrangement of an extension of credit by the Company, or an Affiliate in violation of Section
402(a) of the Sarbanes-Oxley Act (codified as Section 13(k) of the Securities Exchange Act of 1934,
15 U.S.C. § 78m(k)) shall be prohibited with respect to any Award under this Plan.




          6.4 Transferability of an Option. An Option shall not be transferable except by will
or by the laws of descent and distribution and shall be exercisable during the lifetime of the
Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by
delivering written notice to the Company, in a form satisfactory to the Company, designate a third
party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise
the Option.



          6.5 Vesting Generally. The Option may, but need not, vest and therefore become
exercisable in periodic installments that may, but need not, be equal. The Option may be subject
to such other terms and conditions on the time or times when it may be exercised (which may be
based on performance or other criteria) as the Administrator may deem appropriate. The vesting
provisions of individual Options may vary. No Option may be exercised for a fraction of a Share.
The Administrator may, but shall not be required to, provide for an acceleration of vesting and
exercisability in the terms of any Option Agreement upon the occurrence of a Change in Control of
the Company.



          6.6 Termination of Continuous Service. Unless otherwise provided in an Option
Agreement or in an employment agreement the terms of which have been approved by the Administrator,
in the event an Optionholder’s Continuous Service terminates (other than upon the Optionholder’s
death or Disability or termination by the Company for Cause), the Optionholder may exercise his or
her Option (to the extent that the Optionholder was entitled to exercise such Option as of the date
of termination) but only within such period of time ending on the earlier of (a) the date three
months following the termination of the Optionholder’s Continuous Service, or (b) the expiration of
the term of the Option as set forth in the Option Agreement. If, after termination, the
Optionholder does not exercise his or her Option within the time specified in the Option Agreement,
the Option shall terminate. Outstanding Options that are not exercisable at the time an
Optionholder’s Continuous Service terminates for any reason other than for Cause (including an
Optionholder’s death or Disability) shall be forfeited and expire at the close of business on the
date of such termination. If the Optionholder’s Continuous Service terminates for Cause, all
outstanding Options shall be forfeited (whether or not vested) and expire as of the beginning of
business on the date of such termination for Cause.



          6.7 Employment by a Competitor. Unless otherwise provided in an Option Agreement or
in an employment agreement the terms of which have been approved by the Administrator, in the event
an Optionholder (i) voluntarily resigns his or her employment with the Company and its Affiliates
and (ii) thereafter is employed by any person or entity that is engaged in any line of business in
which the Company or any Affiliate is engaged as of the date of such resignation (a “Competitor”),
then all Options held by such Optionholder shall expire on the later of the 30th day following the
Optionholders termination of Continuous Service or the commencement of such Optionholder’s
employment with such Competitor, irrespective of whether such Optionholder’s employment with the
Competitor continues through such 30-day period.



          6.8 Extension of Termination Date. An Optionholder’s Option Agreement may also
provide that if the exercise of the Option following the termination of the Optionholder’s
Continuous Service for any reason other than Cause (including upon the Optionholder’s death or
Disability) would be prohibited at any time because the issuance of Shares would violate the
registration requirements under the Securities Act or any other state or federal securities law,
then the Option shall terminate on the earlier of (a) the expiration of the term of the Option in
accordance with Section 6.1 or (b) the expiration of a period after termination of the
Participant’s Continuous Service that is three months after the end of the period during which the
exercise of the Option would be in violation of such registration or other securities law
requirements.



9









 





          6.9 Death of Optionholder. Unless otherwise provided in an Option Agreement, in the
event an Optionholder’s Continuous Service terminates as a result of the Optionholder’s death, then
the Option may be exercised (to the extent the Optionholder was entitled to exercise such Option as
of the date of death) by the Optionholder’s estate, by a person who acquired the right to exercise
the Option by bequest or inheritance or by a person designated to exercise the Option upon the
Optionholder’s death, but only within the period ending on the earlier of (a) the date 12 months
following the date of death or (b) the expiration of the term of such Option as set forth in the
Option Agreement. If, after death, the Option is not exercised within the time specified herein,
the Option shall terminate.



          6.10 Disability of Optionholder. Unless otherwise provided in an Option Agreement, in
the event that an Optionholder’s Continuous Service terminates as a result of the Optionholder’s
Disability, the Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of termination), but only within such period of
time ending on the earlier of (a) the date 12 months following such termination or (b) the
expiration of the term of the Option as set forth in the Option Agreement. If, after termination,
the Optionholder does not exercise his or her Option within the time specified herein, the Option
shall terminate.



          6.11 Early Exercise. The Option may, but need not, include a provision whereby the
Optionholder may elect at any time before the Optionholder’s Continuous Service terminates to
exercise the Option as to any part or all of the Shares subject to the Option prior to the full
vesting of the Option. In such case, the Shares acquired on exercise shall be subject to the
vesting schedule that otherwise would apply to determine the exercisability of the Option. Any
unvested Shares so purchased may be subject to a Right of Repurchase in favor of the Company or to
any other restriction the Administrator determines to be appropriate. The Company will not be
required to exercise its Right of Repurchase until at least six months (or such longer or shorter
period of time required to avoid a charge to earnings for financial accounting purposes) have
elapsed following exercise of the Option unless the Administrator otherwise specifically provides
in the Option.



          6.12 Additional Requirements Under Section 409A. Each Option agreement shall include
a provision whereby, notwithstanding any provision of the Plan or the Option agreement to the
contrary, the Option shall satisfy the additional conditions applicable to nonqualified deferred
compensation under Section 409A of the Code, in accordance with Section 8 hereof, in the event any
Option under this Plan is granted with an exercise price less than Fair Market Value of the Common
Share subject to the Option on the date the Option is granted (regardless of whether or not such
exercise price is intentionally or unintentionally priced at less than Fair Market Value, or is
materially modified at a time when the Fair Market Value exceeds the exercise price), or is
otherwise determined to constitute “nonqualified deferred compensation” within the meaning of
Section 409A of the Code.



     7. Provisions of Awards Other Than Options.



          7.1 Restricted Share Awards. The Administrator may from time to time award (or sell
at a purchase price determined by the Administrator) Restricted Share Awards under the Plan to
eligible Participants. Restricted Share Awards may not be sold, assigned, transferred or otherwise
disposed of, pledged or hypothecated as collateral for a loan or as security for the performance of
any obligation or for any other purpose for such period (the “Restricted Period”) as the
Administrator shall determine. Each Restricted Share Award Agreement shall be in such form and
shall contain such terms, conditions and Restricted Periods as the Administrator shall deem
appropriate. The terms and conditions of the Restricted Share Award Agreements may change from
time to time, and the terms and conditions of separate Restricted Share Award Agreements need not
be identical, but each Restricted Share Award Agreement shall include (through incorporation of
provisions hereof by reference in the agreement or otherwise) the substance of each of the
following provisions:



               (a) Purchase Price. The purchase price of Restricted Share Awards shall be determined
by the Administrator, and may be stated as cash, property, a contract for future services or prior
services.



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               (b) Consideration. The consideration for Shares acquired pursuant to the Restricted
Share Award Agreement shall be paid either: (i) in cash at the time of purchase; or (ii) in any
other form of legal consideration that may be acceptable to the Administrator in its discretion
including, without limitation, property or a Share For Share Exchange, a contract for future
services or prior services that the Administrator determines have a value at least equal to the
Fair Market Value of such Shares.



               (c) Vesting. Shares acquired under the Restricted Share Award Agreement may, but need
not, be subject to a Restricted Period that specifies a Right of Repurchase in favor of the Company
in accordance with a vesting schedule to be determined by the Administrator, or forfeiture in the
event the consideration was in the form of prior or future services. The Administrator in its
discretion may provide for an acceleration of vesting in the terms of any Restricted Share Award
Agreement in the event a Change in Control occurs.



               (d) Termination of Participant’s Continuous Service. Unless otherwise provided in an
Option Agreement or a Restricted Share Award Agreement or in an employment agreement the terms of
which have been approved by the Administrator, in the event a Participant’s Continuous Service
terminates for any reason, the Company may exercise its Right of Repurchase or otherwise reacquire,
or the Participant shall forfeit unvested shares acquired in consideration of prior or future
services, and any or all of the Shares held by the Participant which have not vested as of the date
of termination under the terms of the Option Agreement or Restricted Share Award Agreement shall be
forfeited and the Participant shall have no rights with respect to the forfeited Award.



               (e) Transferability. Rights to acquire Shares under the Restricted Share Award
Agreement shall be transferable by the Participant only upon such terms and conditions as are set
forth in the Restricted Share Award Agreement, as the Administrator shall determine in its
discretion, so long as Shares awarded under the Restricted Share Award Agreement remain subject to
the restrictions of the Restricted Share Award Agreement.



               (f) Concurrent Tax Payment. The Administrator, in its sole discretion, may (but shall
not be required to) provide for payment of a concurrent cash award in an amount equal, in whole or
in part, to the estimated after tax amount required to satisfy applicable federal, state or local
tax withholding obligations arising from the receipt and deemed vesting of Restricted Share Awards
for which an election under Section 83(b) of the Code may be required.



               (g) Lapse of Restrictions. Upon the expiration or termination of the Restricted
Period and the satisfaction of any other conditions prescribed by the Administrator, the
restrictions applicable to the Restricted Share Award shall lapse and a Share certificate for the
number of Shares with respect to which the restrictions have lapsed shall be delivered, free of any
restrictions except those that may be imposed by law, to the Participant or the Participant’s
beneficiary or estate, as the case may be. The Company shall not be required to deliver any
fractional Share but will pay, in lieu thereof, the Fair Market Value of such fractional Share in
cash to the Participant or the Participant’s beneficiary or estate, as the case may be. The Share
certificate shall be issued and delivered and the Participant shall be entitled to the beneficial
ownership rights of such Shares not later than (i) the date that is 2-1/2 months after the end of
the Participant’s taxable year for which the Restricted Period ends and the Participant has a
legally binding right to such amounts; or (ii) the date that is 2-1/2 months after the end of the
Company’s taxable year for which the Restricted Period ends and the Participant has a legally
binding right to such amounts, whichever is later.



          7.2 Unrestricted Awards.



               (a) Grant or Sale of Unrestricted Awards. The Administrator may, in its sole
discretion, award (or sell at a purchase price determined by the Administrator) an Unrestricted
Award to any Participant, pursuant to which such individual may receive Shares free of any vesting
and transfer restrictions (“Unrestricted Shares”) under the Plan. Unrestricted 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 individual. The Share certificate
for Unrestricted Shares shall be issued and



11









 




delivered and the Participant shall be entitled to the beneficial ownership rights of such
Shares not later than (i) the date that is 2-1/2 months after the end of the Participant’s taxable
year for which services rendered as consideration were provided and in which the Participant has a
legally binding right to such amounts; or (ii) the date that is 2-1/2 months after the end of the
Company’s taxable year for which services rendered as consideration were provided and in which the
Participant has a legally binding right to such amounts, whichever is later.




          7.3 Performance Share Awards.



               (a) Nature of Performance Share Awards. A Performance Share Award is an Award
entitling the recipient to acquire actual Shares or hypothetical Share units having a value equal
to the Fair Market Value of an identical number of 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. Performance Share Awards may be
granted under the Plan to any Participant, including those who qualify for awards under other
performance plans of the Company. The Administrator in its sole discretion shall determine whether
and to whom Performance Share Awards shall be made, the performance goals applicable under each
Award, the periods during which performance is to be measured, and all other limitation and
conditions applicable to the awarded 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. Performance goals shall be
based on a pre-established objective formula or standard that specifies the manner of determining
the number of Performance Share Award shares that will be granted or will vest if the performance
goal is attained. Performance goals will be determined by the Administrator prior to the time 25%
of the service period has elapsed and may be based on one or more business criteria that apply to a
Participant, a business unit or the Company and its Affiliates. Such business criteria may
include, by way of example and without limitation, revenue, earnings before interest, taxes,
depreciation and amortization (EBITDA), funds from operations, funds from operations per share,
operating income, pre or after tax income, cash available for distribution, cash available for
distribution per share, net earnings, earnings per share, return on equity, return on assets, share
price performance, improvements in the Company’s attainment of expense levels, and implementing or
completion of critical projects, or improvement in cash-flow (before or after tax). A performance
goal may be measured over a performance period on a periodic, annual, cumulative or average basis
and may be established on a corporate-wide basis or established with respect to one or more
operating units, divisions, subsidiaries, acquired businesses, minority investments, partnerships
or joint ventures. More than one performance goal may be incorporated in a performance objective,
in which case achievement with respect to each performance goal may be assessed individually or in
combination with each other. The Administrator may, in connection with the establishment of
performance objectives for a performance period, establish a matrix setting forth the relationship
between performance on two or more performance goals and the amount of the Performance Share Award
payable for that performance period. The level or levels of performance specified with respect to
a performance goal may be established in absolute terms, as objectives relative to performance in
prior periods, as an objective compared to the performance of one or more comparable companies or
an index covering multiple companies, or otherwise as the Administrator may determine. Performance
objectives shall be objective and, if the Company is publicly traded, shall otherwise meet the
requirements of Section 162(m) of the Code. Performance objectives may differ for Performance
Share Awards granted to any one Participant or to different Participants. A Performance Share
Award to a Participant who is a Covered Employee shall (unless the Administrator determines
otherwise) provide that in the event of the Participant’s termination of Continuous Service prior
to the end of the performance period for any reason, such Award will be payable only (i) if the
applicable performance objectives are achieved and (ii) to the extent, if any, as the Administrator
shall determine. Such objective performance goals do not have to be based on increases in a
specific business criteria, but may be based on maintaining the status quo or limiting economic
losses.



               (b) Restrictions on Transfer. Performance Share Awards and all rights with respect to
such Performance Share Awards may not be sold, assigned, transferred, pledged or otherwise
encumbered. No right or interest of a Participant in a Performance Share Award shall be liable
for, or subject to, any lien, obligation or liability of such Participant.



12









 





               (c) 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). The Share certificate shall be issued and delivered and the
Participant shall be entitled to the beneficial ownership rights of such Shares not later than (i)
the date that is 2-1/2 months after the end of the Participant’s taxable year for which the
Administrator certifies that the Performance Share Award conditions have been satisfied and the
Participant has a legally binding right to such amounts; or (ii) the date that is 2-1/2 months
after the end of the Company’s taxable year for which the Administrator certifies that the
Performance Share Award conditions have been satisfied and the Participant has a legally binding
right to such amounts, whichever is later.



               (d) Termination. Except as may otherwise be provided by the Administrator at any
time, a Participant’s rights in all Performance Share Awards shall automatically terminate upon the
Participant’s termination of employment (or business relationship) with the Company and its
Affiliates for any reason.



               (e) Acceleration, Waiver, Etc. At any time prior to the Participant’s termination of
employment (or other business relationship) by the Company and its Affiliates, 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. The Administrator in
its discretion may provide for an acceleration of vesting in the terms of any Performance Share
Award in the event a Change in Control occurs.



               (f) Certification. Following the completion of each performance period, the
Administrator shall certify in writing, in accordance with the requirements of Section 162(m) of
the Code, whether the performance objectives and other material terms of a Performance Share Award
have been achieved or met. Unless the Administrator determines otherwise, Performance Share Awards
shall not be settled until the Administrator has made the certification specified under this
Section 7.3(f).



          7.4 Share Appreciation Rights.



               (a) General. Share Appreciation Rights may be granted either alone (“Free Standing
Rights”) or, provided the requirements of Section 7.4(b) are satisfied, in tandem with all or part
of any Option granted under the Plan (“Related Rights”). In the case of a Nonstatutory Share
Option, Related Rights may be granted either at or after the time of the grant of such Share
Option.



               (b) Grant Requirements. A Share Appreciation Right may only be granted if the Share
Appreciation Right: (1) does not provide for the deferral of compensation within the meaning of
Section 409A of the Code; or (2) satisfies the requirements of Section 7.4(h) and Section 8 hereof.
A Share Appreciation Right does not provide for a deferral of compensation if: (i) the floor for
determining the appreciation component of the Share Appreciation Right that will be paid to the
Participant (i.e., the amount used to determine the appreciation in excess of the value of the
Common Share that the holder is entitled to receive upon exercise (hereinafter, the “SAR exercise
price”)) may never be less than the Fair Market Value of the underlying Common Share on the date
the right is granted, (ii) the Common Share subject to the right is traded on an established
securities market, (iii) only such traded Common Share may be delivered in settlement of the right
upon exercise, and (iv) the right does not include any feature for the deferral of compensation
other than the deferral of recognition of income until the exercise of the right.



               (c) Exercise and Payment. Upon exercise thereof, the holder of a Share Appreciation
Right shall be entitled to receive from the Company, an amount equal to the product of (i) the
excess of the Fair Market Value, on the date of such written request, of one share of Common Share
over the SAR exercise price per share specified in such Share Appreciation Right or its related
Option, multiplied by (ii) the number of shares for which such Share Appreciation Right shall be
exercised.



13









 




Payment with respect to the exercise of a Share Appreciation Right that satisfies the
requirements of Section 7.4(b)(1) shall be paid on the date of exercise and made in Shares (with or
without restrictions as to substantial risk of forfeiture and transferability, as determined by the
Administrator in its sole discretion), valued at Fair Market Value on the date of exercise.
Payment with respect to the exercise of a Share Appreciation Right that does not satisfy the
requirements of Section 7.4(b)(1) shall be paid at the time specified in the Award in accordance
with the provisions of Section 7.4(h) and Section 8. Payment may be made in the form of Shares
(with or without restrictions as to substantial risk of forfeiture and transferability, as
determined by the Administrator in its sole discretion), cash or a combination thereof, as
determined by the Administrator.




               (d) Exercise Price. The exercise price of a Free Standing Share Appreciation Right
shall be determined by the Administrator, but shall not be less than 100% of the Fair Market Value
of one share of Common Share on the Date of Grant of such Share Appreciation Right. A Related
Share Appreciation Right granted simultaneously with or subsequent to the grant of an Option and in
conjunction therewith or in the alternative thereto shall have the same exercise price as the
related Option, shall be transferable only upon the same terms and conditions as the related
Option, and shall be exercisable only to the same extent as the related Option; provided, however,
that a Share Appreciation Right, by its terms, shall be exercisable only when the Fair Market Value
per share of Common Share subject to the Share Appreciation Right and related Option exceeds the
exercise price per share thereof and no Share Appreciation Rights may be granted in tandem with an
Option unless the Administrator determines that the requirements of Section 7.4(b)(1) are
satisfied.



               (e) Reduction in the Underlying Option Shares. Upon any exercise of a Share
Appreciation Right, the number of Shares for which any related Option shall be exercisable shall be
reduced by the number of shares for which the Share Appreciation Right shall have been exercised.
The number of Shares for which a Share Appreciation Right shall be exercisable shall be reduced
upon any exercise of any related Option by the number of Shares for which such Option shall have
been exercised.



               (f) Written Request. Any election by an Optionholder to receive cash in full or
partial settlement of a Share Appreciation Right, and any exercise of such Share Appreciation Right
for cash, may be made only by a written request filed with the Corporate Secretary of the Company
during the period beginning on the third business day following the date of release for publication
by the Company of quarterly or annual summary statements of earnings and ending on the twelfth
business day following such date. Within 30 days of the receipt by the Company of a written
request to receive cash in full or partial settlement of a Share Appreciation Right or to exercise
such Share Appreciation Right for cash, the Administrator shall, in its sole discretion, either
consent to or disapprove, in whole or in part, such written request. A written request to receive
cash in full or partial settlement of a Share Appreciation Right or to exercise a Share
Appreciation Right for cash may provide that, in the event the Administrator shall disapprove such
written request, such written request shall be deemed to be an exercise of such Share Appreciation
Right for Shares.



               (g) Disapproval by Administrator. If the Administrator disapproves in whole or in
part any election by an Optionholder to receive cash in full or partial settlement of a Share
Appreciation Right or to exercise such Share Appreciation Right for cash, such disapproval shall
not affect such Optionholder’s right to exercise such Share Appreciation Right at a later date, to
the extent that such Share Appreciation Right shall be otherwise exercisable, or to elect the form
of payment at a later date, provided that an election to receive cash upon such later exercise
shall be subject to the approval of the Administrator. Additionally, such disapproval shall not
affect such Optionholder’s right to exercise any related Option.



               (h) Additional Requirements under Section 409A. A Share Appreciation Right that is
not intended to or fails to satisfy the requirements of Section 7.4(b)(1) shall satisfy the
requirements of this Section 7.4(h) and the additional conditions applicable to nonqualified
deferred compensation under Section 409A of the Code, in accordance with Section 8 hereof. The
requirements herein shall apply in the event any Share Appreciation Right under this Plan is
granted with an SAR exercise price less than Fair Market Value of the Common Share underlying the
award on the date the



14









 




Share Appreciation Right is granted (regardless of whether or not such SAR exercise price is
intentionally or unintentionally priced at less than Fair Market Value, or is materially modified
at a time when the Fair Market Value exceeds the SAR exercise price), provides that it is settled
in cash, or is otherwise determined to constitute “nonqualified deferred compensation” within the
meaning of Section 409A of the Code. Any such Share Appreciation Right may provide that it is
exercisable at any time permitted under the governing written instrument, but such exercise shall
be limited to fixing the measurement of the amount, if any, by which the Fair Market Value of a
share of Common Share on the date of exercise exceeds the SAR exercise price (the “SAR Amount”).
However, once the Share Appreciation Right is exercised, the SAR Amount may only be paid on the
fixed time, payment schedule or other event specified in the governing written instrument or in
Section 8.1 hereof.




          7.5 Incentive Awards. An Incentive Award is an Award entitling the Participant to
receive a cash payment from the Company or an Affiliate, according to the terms specified by the
Administrator in the Award Agreement.



               (a) Terms and Conditions. The Administrator, at the time an Incentive Award is
granted, shall specify the terms and conditions which govern the Award. Such terms and conditions
may prescribe, by way of example and not of limitation, that the Incentive Award shall be earned
only to the extent that the Company or an Affiliate, during a performance measurement period,
achieves stated performance-goals. Performance goals shall be based on a pre-established objective
formula or standard that specifies the manner of determining the number of Performance Share Award
shares that will be granted or will vest if the performance goal is attained. Performance goals
will be determined by the Administrator prior to the time 25% of the service period has elapsed and
may be based on one or more business criteria that apply to a Participant, a business unit or the
Company and its Affiliates. Such business criteria may include, by way of example and without
limitation, revenue, earnings before interest, taxes, depreciation and amortization (EBITDA), funds
from operations, funds from operations per share, operating income, pre or after tax income, cash
available for distribution, cash available for distribution per share, net earnings, earnings per
share, return on equity, return on assets, Share price performance, improvements in the Company’s
attainment of expense levels, and implementing or completion of critical projects, or improvement
in cash-flow (before or after tax). A performance goal may be measured over a performance period
on a periodic, annual, cumulative or average basis and may be established on a corporate-wide basis
or established with respect to one or more operating units, divisions, subsidiaries, acquired
businesses, minority investments, partnerships or joint ventures. More than one performance goal
may be incorporated in a performance objective, in which case achievement with respect to each
performance goal may be assessed individually or in combination with each other. The Administrator
may, in connection with the establishment of performance objectives for a performance period,
establish a matrix setting forth the relationship between performance on two or more performance
goals and the amount of the Incentive Award payable for that performance period. The level or
levels of performance specified with respect to a performance goal may be established in absolute
terms, as objectives relative to performance in prior periods, as an objective compared to the
performance of one or more comparable companies or an index covering multiple companies, or
otherwise as the Administrator may determine. Performance objectives shall be objective and, if
the Company is publicly traded, shall otherwise meet the requirements of Section 162(m) of the
Code. Performance objectives may differ for Incentive Awards granted to any one Participant or to
different Participants. An Incentive Award to a Participant who is a Covered Employee shall
(unless the Administrator determines otherwise) provide that in the event of the Participant’s
termination of Continuous Service prior to the end of the performance period for any reason, such
Award will be payable only (i) if the applicable performance objectives are achieved and (ii) to
the extent, if any, as the Administrator shall determine. Such objective performance goals do not
have to be based on increases in a specific business criteria, but may be based on maintaining the
status quo or limiting economic losses.



               (b) Restrictions on Transfer. Incentive Awards and all rights with respect to such
Incentive Awards may not be sold, assigned, transferred, pledged or otherwise encumbered. No right
or interest of a Participant in an Incentive Award shall be liable for, or subject to, any lien,
obligation or liability of such Participant.



15









 





               (c) Rights as a Shareholder. A Participant receiving an Incentive Award shall not
have any rights as a Shareholder of the Company or an Affiliate on account of such Award.



               (d) Additional Considerations Under Section 409A of the Code. Any Incentive Award
that the Administrator determines the Participant is entitled shall be paid not later than (i) the
date that is 2-1/2 months after the end of the Participant’s taxable year for which the
Administrator certifies that the Incentive Award conditions have been satisfied and the Participant
has a legally binding right to such amounts; or (ii) the date that is 2-1/2 months after the end of
the Company’s taxable year for which the Administrator certifies that the Incentive Award
conditions have been satisfied and the Participant has a legally binding right to such amounts,
whichever is later.



          7.6 Share-Based Awards. The Administrator may, in its sole discretion, award (or sell
at a purchase price determined by the Administrator) Share-Based Awards under the Plan to eligible
Participants. Each Share-Based Award Agreement shall be in such form and shall contain such terms
and conditions as the Administrator shall deem appropriate. Share-Based Awards may be issued
either alone or in addition to other Awards granted under the Plan and shall be evidenced by an
Award Agreement. Conditions may be based on continuing employment (or other service relationship),
computation of financial metrics and/or achievement of pre-established performance goals and
objectives. The Administrator may require that Share-Based Awards be held through a limited
partnership, or similar “look-through” entity, and the Administrator may require such limited
partnership or similar entity to impose restrictions on its partners or other beneficial owners
that are not inconsistent with the provisions of this Section 7.6. The terms and conditions of the
Share-Based Award Agreements may change from time to time, and the terms and conditions of separate
Share-Based Award Agreements need not be identical, but each Share-Based Award Agreement shall
include (through incorporation of provisions hereof by reference in the agreement or otherwise) the
substance of each of the following provisions:



          (a) Nature of Share-Based Awards. The Administrator shall calculate in good faith,
for purposes of establishing the number of Shares underlying a Share-Based Award relative to the
total number of Shares reserved and available for issuance under Section 4.1, the maximum number of
Shares to which a grantee of such Share-Based Award may be entitled upon fulfillment of all
applicable conditions set forth in the relevant Share-Based Award Agreement, including vesting,
accretion factors, conversion ratios, exchange ratios and the like. If and when any such
conditions are no longer capable of being met, in whole or in part, the number of Shares underlying
such Share-Based Award shall be reduced accordingly by the Administrator and the related Shares
shall be added back to the Shares available for issuance under the Plan.



          (b) Purchase Price. The purchase price, if any, of Share-Based Awards shall be
determined by the Administrator, and may be stated as cash, property, a contract for future
services or prior services.



          (c) Consideration. The consideration for Shares acquired pursuant to the Share-Based
Award Agreement shall be paid either: (i) in cash at the time of purchase; or (ii) in any other
form of legal consideration that may be acceptable to the Administrator in its discretion
including, without limitation, property or a Share For Share Exchange, a contract for future
services or prior services that the Administrator determines have a value at least equal to the
Fair Market Value of such Shares.



          (d) Vesting. A Share-Based Award may, but need not, vest in periodic installments
that may, but need not, be equal. Vesting schedules may be based, among other things, on the
attainment of performance goals and, in such case, such performance goals shall be based on a
pre-established objective formula or standard that specifies the manner of determining the number
of Share-Based Awards that will be granted or will vest if the performance goal is attained.
Performance goals will be determined by the Administrator prior to the time 25% of the service
period has elapsed and may be based on one or more business criteria that apply to a Participant, a
business unit or the Company and its Affiliates. Such business criteria may include, by way of
example and without limitation, revenue, earnings before interest, taxes, depreciation and
amortization (EBITDA), funds from operations, funds from operations per share, operating income,
pre or after tax income, cash available for distribution, cash



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available for distribution per share, net earnings, earnings per share, return on equity,
return on assets, share price performance, improvements in the Company’s attainment of expense
levels, and implementing or completion of critical projects, or improvement in cash-flow (before or
after tax). A performance goal may be measured over a performance period on a periodic, annual,
cumulative or average basis and may be established on a corporate-wide basis or established with
respect to one or more operating units, divisions, subsidiaries, acquired businesses, minority
investments, partnerships or joint ventures. More than one performance goal may be incorporated in
a performance objective, in which case achievement with respect to each performance goal may be
assessed individually or in combination with each other. The Administrator may, in connection with
the establishment of performance objectives for a performance period, establish a matrix setting
forth the relationship between performance on two or more performance goals and the amount of the
Share-Based Awards payable for that performance period. The level or levels of performance
specified with respect to a performance goal may be established in absolute terms, as objectives
relative to performance in prior periods, as an objective compared to the performance of one or
more comparable companies or an index covering multiple companies, or otherwise as the
Administrator may determine. Performance objectives shall be objective and, if the Company is
publicly traded, shall otherwise meet the requirements of Section 162(m) of the Code. Performance
objectives may differ for Share-Based Awards granted to any one Participant or to different
Participants. A Share-Based Award to a Participant who is a Covered Employee shall (unless the
Administrator determines otherwise) provide that in the event of the Participant’s termination of
Continuous Service prior to the end of the performance period for any reason, such Award will be
payable only (i) if the applicable performance objectives are achieved and (ii) to the extent, if
any, as the Administrator shall determine. Such objective performance goals do not have to be
based on increases in a specific business criteria, but may be based on maintaining the status quo
or limiting economic losses.




               (e) Non-Transferability. Share-Based Awards may not be sold, assigned, transferred or
otherwise disposed of, pledged or hypothecated as collateral for a loan or as security for the
performance of any obligation or for any other purpose except as the Administrator shall determine.



               (f) Termination of Employment or Service. In the event that a recipient ceases to be
employed by or to provide services to the Company, or any Affiliate, any outstanding Share-Based
Awards previously granted to such recipient shall be subject to such terms and conditions as set
forth in the Share-Based Award Agreement. Except as may otherwise be provided by the Administrator
either in the Share-Based Award Agreement, or, subject to Section 13 below, in writing after the
Share-Based Award Agreement is issued, a grantee’s rights in all Share-Based Awards that have not
vested shall automatically terminate upon the grantee’s termination of employment (or cessation of
service relationship) with the Company and its Affiliates for any reason.




	 	8.	 	Additional Conditions Applicable to Nonqualified Deferred Compensation Under
Section 409A of the Code.





          In the event any Option under this Plan is granted with an exercise price less than Fair
Market Value of the Common Share subject to the grant or award on the Grant Date (regardless of
whether or not such exercise price is intentionally or unintentionally priced at less than Fair
Market Value, or such grant is materially modified and deemed a new grant at a time when the Fair
Market Value exceeds the exercise price), or any Award is otherwise determined to constitute
“nonqualified deferred compensation” within the meaning of Section 409A of the Code (a “409A
Award”), the following additional conditions shall apply and shall supersede any contrary
provisions of this Plan or the terms of any 409A Award agreement.



          8.1 Exercise and Distribution. No 409A Award shall be exercisable or distributable
earlier than upon one of the following:



               (a) Specified Time. A specified time or a fixed schedule set forth in the written
instrument evidencing the 409A Award, but not later than after the expiration of 10 years from the
Award Date or Grant Date. If the written grant instrument does not specify a fixed time or
schedule, such time shall be the date that is the fifth anniversary of the Award Date or Grant
Date.



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               (b) Separation from Service. Separation from service (within the meaning of Section
409A of the Code) by the 409A Award recipient; provided however, if the 409A Award recipient is a
“key employee” (as defined in Section 416(i) of the Code without regard to paragraph (5) thereof)
and any of the Company’s Share is publicly traded on an established securities market or otherwise,
exercise or distribution under this Section 8.1(b) may not be made before the date which is six
months after the date of separation from service.



               (c) Death. The date of death of the 409A Award recipient.



               (d) Disability. The date the 409A Award recipient becomes disabled (within the
meaning of Section 8.4(b) hereof).



               (e) Unforeseeable Emergency. The occurrence of an unforeseeable emergency (within the
meaning of Section 8.4(c) hereof), but only if the net value (after payment of the exercise price)
of the number of Shares that become issuable does not exceed the amounts necessary to satisfy such
emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the exercise,
after taking into account the extent to which the emergency is or may be relieved through
reimbursement or compensation by insurance or otherwise or by liquidation of the participant’s
other assets (to the extent such liquidation would not itself cause severe financial hardship).



               (f) Change in Control Event. The occurrence of a Change in Control Event (within the
meaning of Section 8.4(a) hereof), including the Company’s discretionary exercise of the right to
accelerate vesting of such grant upon a Change in Control Event or to terminate the Plan or any
409A Award granted hereunder within 12 months of the Change in Control Event.



          8.2 Term. Notwithstanding anything to the contrary in this Plan or the terms of any
409A Award agreement, the term of any 409A Award shall expire and such Award shall no longer be
exercisable on the date that is the later of: (a) 2-1/2 months after the end of the Company’s
taxable year in which the 409A Award first becomes exercisable or distributable pursuant to Section
8 hereof and is not subject to a substantial risk of forfeiture; or (b) 2-1/2 months after the end
of the 409A Award recipient’s taxable year in which the 409A Award first becomes exercisable or
distributable pursuant to Section 8 hereof and is not subject to a substantial risk of forfeiture,
but not later than the earlier of (i) the expiration of 10 years from the date the 409A Award was
granted, or (ii) the term specified in the 409A Award agreement.



          8.3 No Acceleration. A 409A Award may not be accelerated or exercised prior to the
time specified in Section 8 hereof, except in the case of one of the following events:



               (a) Domestic Relations Order. The 409A Award may permit the acceleration of the
exercise or distribution time or schedule to an individual other than the Participant as may be
necessary to comply with the terms of a domestic relations order (as defined in Section
414(p)(1)(B) of the Code).



               (b) Conflicts of Interest. The 409A Award may permit the acceleration of the exercise
or distribution time or schedule as may be necessary to comply with the terms of a certificate of
divestiture (as defined in Section 1043(b)(2) of the Code).



               (c) Change in Control Event. The Administrator may exercise the discretionary right
to accelerate the vesting of such 409A Award upon a Change in Control Event or to terminate the
Plan or any 409A Award granted thereunder within 12 months of the Change in Control Event and
cancel the 409A Award for compensation. In addition, the Administrator may exercise the
discretionary right to accelerate the vesting of such 409A Award provided that the such
acceleration does not change the time or schedule of payment of such Award and otherwise satisfies
the requirements of this 8 and the requirements of Section 409A of the Code.



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          8.4 Definitions. Solely for purposes of this Section 8 and not for other purposes of
the Plan, the following terms shall be defined as set forth below:



               (a) “Change in Control Event” means the occurrence of a change in the ownership of the
Company, a change in effective control of the Company, or a change in the ownership of a
substantial portion of the assets of the Company (as defined in IRS Notice 2005-1, Q&A-11, Q&A-12,
Q&A-13 and Q&A-14).



               (b) “Disabled” means a Participant (i) is unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period of not less than 12 months, or
(ii) is, by reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period of not less than 12
months, receiving income replacement benefits for a period of not less than three months under an
accident and health plan covering Employees.



               (c) “Unforeseeable Emergency” means a severe financial hardship to the Participant resulting
from an illness or accident of the Participant, the Participant’s spouse, or a dependent (as
defined in Section 152(a) of the Code) of the Participant, loss of the Participant’s property due
to casualty, or similar extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Participant.



     9. Covenants of the Company.



          9.1 Availability of Shares. During the terms of the Awards, the Company shall keep
available at all times the number of Shares required to satisfy such Awards.



          9.2 Securities Law Compliance. Each Share Option Agreement and Award Agreement shall
provide that no Shares shall be purchased or sold thereunder unless and until (i) any then
applicable requirements of state or federal laws and regulatory agencies shall have been fully
complied with to the satisfaction of the Company and its counsel and (ii) if required to do so by
the Company, the Participant shall have executed and delivered to the Company a letter of
investment intent in such form and containing such provisions as the Administrator may require.
The Company shall use reasonable efforts to seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to grant Awards and to
issue and sell Shares upon exercise of the Awards; provided, however, that this undertaking shall
not require the Company to register under the Securities Act the Plan, any Award or any Common
Share issued or issuable pursuant to any such Award. If, after reasonable efforts, the Company is
unable to obtain from any such regulatory commission or agency the authority which counsel for the
Company deems necessary for the lawful issuance and sale of Common Share under the Plan, the
Company shall be relieved from any liability for failure to issue and sell Common Share upon
exercise of such Awards unless and until such authority is obtained.



     10. Use of Proceeds from Share.



          Proceeds from the sale of Common Share pursuant to Awards shall constitute general funds of
the Company.



     11. Miscellaneous.



          11.1 Acceleration of Exercisability and Vesting. Subject to the requirements of
Section 8, the Administrator shall have the power to accelerate the time at which an Award may
first be exercised or the time during which an Award or any part thereof will vest in accordance
with the Plan, notwithstanding the provisions in the Award stating the time at which it may first
be exercised or the time during which it will vest.



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          11.2 Shareholder Rights. No Participant shall be deemed to be the holder of, or to
have any of the rights of a holder with respect to, any Shares subject to such Award unless and
until such Participant has satisfied all requirements for exercise of the Award pursuant to its
terms and no adjustment shall be made for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions of other rights for which the record date is prior
to the date such Share certificate is issued, except as provided in Section 12.1, hereof.



          11.3 No Employment or other Service Rights. Nothing in the Plan or any instrument
executed or Award granted pursuant thereto shall confer upon any Participant any right to continue
to serve the Company or an Affiliate in the capacity in effect at the time the Award was granted or
shall affect the right of the Company or an Affiliate to terminate (a) the employment of an
Employee with or without notice and with or without Cause, (b) the service of a Consultant pursuant
to the terms of such Consultant’s agreement with the Company or an Affiliate or (c) the service of
a Trustee pursuant to the Bylaws of the Company or an Affiliate, and any applicable provisions of
the corporate law of the state in which the Company or the Affiliate is incorporated, as the case
may be.



          11.4 Transfer, Approved Leave of Absence. For purposes of the Plan, no termination of
employment by an Employee shall be deemed to result from either (a) a transfer to the employment of
the Company from an Affiliate or from the Company to an Affiliate, or from one Affiliate 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 re-employment is guaranteed either by a
statute or by contract or under the policy pursuant to which the leave of absence was granted or if
the Administrator otherwise so provides in writing.



          11.5 Investment Assurances. The Company may require a Participant, as a condition of
exercising or acquiring Shares under any Award, (a) to give written assurances satisfactory to the
Company as to the Participant’s knowledge and experience in financial and business matters and/or
to employ a purchaser representative reasonably satisfactory to the Company who is knowledgeable
and experienced in financial and business matters and that he or she is capable of evaluating,
alone or together with the purchaser representative, the merits and risks of exercising the Award;
and (b) to give written assurances satisfactory to the Company stating that the Participant is
acquiring Shares subject to the Award for the Participant’s own account and not with any present
intention of selling or otherwise distributing the Common Share. The foregoing requirements, and
any assurances given pursuant to such requirements, shall be inoperative if (i) the issuance of the
Shares upon the exercise or acquisition of Common Share under the Award has been registered under a
then currently effective registration statement under the Securities Act or (ii) as to any
particular requirement, a determination is made by counsel for the Company that such requirement
need not be met in the circumstances under the then applicable securities laws. The Company may,
upon advice of counsel to the Company, place legends on Share certificates issued under the Plan as
such counsel deems necessary or appropriate in order to comply with applicable securities laws,
including, but not limited to, legends restricting the transfer of the Common Share.



          11.6 Withholding Obligations. To the extent provided by the terms of an Award
Agreement and subject to the discretion of the Administrator, the Participant may satisfy any
federal, state or local tax withholding obligation relating to the exercise or acquisition of
Shares under an Award by any of the following means (in addition to the Company’s right to withhold
from any compensation paid to the Participant by the Company) or by a combination of such means:
(a) tendering a cash payment; (b) authorizing the Company to withhold Shares from the Shares
otherwise issuable to the Participant as a result of the exercise or acquisition of Shares under
the Award, provided, however, that no Shares are withheld with a value exceeding the minimum amount
of tax required to be withheld by law; or (c) delivering to the Company previously owned and
unencumbered Shares of the Company.



          11.7 Transfer of Shares Acquired Under Plan. Notwithstanding anything to the contrary
herein, a Participant may not transfer Shares acquired under this Plan to the Company within six
months after the purchase of such Common Share (the “Six Months Holding Period”), other than, if
permitted by the Administrator in its discretion, to satisfy minimum tax withholding requirements.



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          11.8 Right of Repurchase. Each Award Agreement may provide that, following a
termination of the Participant’s Continuous Service, the Company may repurchase the Participant’s
unvested Shares acquired under the Plan as provided in this Section 11.8 (the “Right of
Repurchase”). In the case of unvested Shares, the Right of Repurchase shall be exercisable at a
price equal to the lesser of the purchase price at which such Shares were acquired under the Plan
or the Fair Market Value of such Shares. The Award Agreement may specify the period of time
following a termination of the Participant’s Continuous Service during which the Right of
Repurchase may be exercised, provided that such exercise may in any event be extended to a date
that is within 60 days after the date the Six Months Holding Period has been satisfied. In the
case of unvested Shares purchased in exchange for services, the Company shall be entitled to
forfeit such Unvested Shares without regard to the exercise of its Right of Repurchase and without
payment of any consideration.



     12. Adjustments Upon Changes in Shares.



          12.1 Capitalization Adjustments. If any change is made in the Shares or Units (solely
for purposes of this Section 12.1, references to Shares shall be deemed to include Units, unless
the context indicates otherwise) subject to the Plan, or subject to any Award, without the receipt
of consideration by the Company (through merger, consolidation, reorganization, recapitalization,
reincorporation, Share dividend, dividend in property other than cash, Share split, liquidating
dividend, combination of shares, exchange of shares, change in corporate structure or other
transaction not involving the receipt of consideration by the Company), then (i) the aggregate
number of Shares or class of Shares which may be purchased pursuant to Awards granted hereunder;
(ii) the number and/or class of Shares covered by outstanding Options and Awards; (iii) the maximum
number of Shares with respect to which Options or Share Appreciation Rights may be granted to any
single Participant during any calendar year; and (iv) the exercise price of any Share Option in
effect prior to such change shall be proportionately adjusted by the Administrator to reflect any
increase or decrease in the number of issued Shares or change in the Fair Market Value of such
Shares resulting from such transaction; provided, however, that any fractional Shares resulting
from the adjustment shall be eliminated. The Administrator shall make such adjustments, and its
determination shall be final, binding and conclusive. The conversion of any convertible securities
of the Company shall not be treated as a transaction “without receipt of consideration” by the
Company.



          12.2 Dissolution or Liquidation. In the event of a dissolution or liquidation of the
Company, then all outstanding Awards shall terminate immediately prior to such event.



          12.3 Change in Control and Other Corporate Transactions. In the event of a Change in
Control, dissolution or liquidation of the Company, or any corporate separation or division,
including, but not limited to, a split-up, a split-off or a spin-off, or a sale of substantially
all of the assets of the Company; a merger or consolidation in which the Company is not the
surviving entity; or a reverse merger in which the Company is the surviving entity, but the Shares
outstanding immediately preceding the merger are converted by virtue of the merger into other
property, whether in the form of securities, cash or otherwise (collectively, a “Corporate
Transaction”), then, the Company, to the extent permitted by applicable law, but otherwise in the
sole discretion of the Administrator may provide for: (i) the continuation of outstanding Awards by
the Company (if the Company is the surviving entity); (ii) the assumption of the Plan and such
outstanding Awards by the surviving entity or its parent; (iii) the substitution by the surviving
entity or its parent of Awards with substantially the same terms (including an Award to acquire the
same consideration paid to the shareholders in the Corporate Transaction described in this Section
12.3) for such outstanding grants and, if appropriate, subject to the equitable adjustment
provisions of Section 12.1 hereof; (iv) the cancellation of such outstanding Awards in
consideration for a payment equal in value to the Fair Market Value of vested Awards, or in the
case of an Option, the difference between the Fair Market Value and the exercise price for all
Shares subject to exercise (i.e., to the extent vested) under any outstanding Option; or (v) the
cancellation of such outstanding Awards without payment of any consideration. Any such payment may
be paid in cash or such other consideration payable to the holders of outstanding Shares of the
Company in connection with such Corporate Transaction. If vested Awards would be canceled without
consideration, the Participant shall have the right, exercisable during the later of the ten-day
period ending on the fifth day prior to such Corporate Transaction or ten days after the
Administrator provides the grant holder a notice of cancellation, to



21









 




exercise such Awards in whole or in part without regard to any installment exercise provisions
in the Award Agreement. In addition, the Administrator, in its discretion, may provide for
acceleration of unvested Awards in connection with any of the alternatives described above.




          12.4 Issuance of Shares Upon Conversion of Convertible Securities. Each Award
Agreement may provide that, upon conversion of any security of the Company into additional Shares,
the number of Shares issuable pursuant to any Award may be adjusted by the appropriate number such
that the percentage of Shares outstanding of the Company on a fully diluted basis attributable to
the Award immediately prior to such conversion will be equal to the percentage of Shares
outstanding of the Company on a fully diluted basis attributable to the Award immediately following
such conversion.



     13. Amendment of the Plan and Awards.



          13.1 Amendment of Plan. The Board at any time, and from time to time, may amend or
terminate the Plan. However, except as provided in Section 12.1 relating to adjustments upon
changes in Shares, no amendment shall be effective unless approved by the Shareholders of the
Company to the extent Shareholder approval is necessary to satisfy any applicable law or any Nasdaq
or securities exchange listing requirements. At the time of such amendment, the Board shall
determine, upon advice from counsel, whether such amendment will be contingent on Shareholder
approval.



          13.2 Shareholder Approval. The Board may, in its sole discretion, submit any other
amendment to the Plan for Shareholder approval, including, but not limited to, amendments to the
Plan intended to satisfy the requirements of Section 162(m) of the Code and the regulations
thereunder regarding the exclusion of performance-based compensation from the limit on corporate
deductibility of compensation paid to certain executive officers.



          13.3 Contemplated Amendments. It is expressly contemplated that the Board may amend
the Plan in any respect the Board deems necessary or advisable to provide eligible Employees with
the maximum benefits provided or to be provided under the provisions of the Code and the
regulations promulgated thereunder relating to 409A Awards and/or to bring the Plan and/or Awards
granted under it into compliance therewith.



          13.4 No Impairment of Rights. Rights under any Award granted before amendment of the
Plan shall not be impaired by any amendment of the Plan if (a) the Company requests the consent of
the Participant and (b) the Participant consents in writing. However, a cancellation of an Award
where the Participant receives a payment equal in value to the Fair Market Value of the vested
Award or, in the case of vested Options, the difference between the Fair Market Value and the
exercise price, shall not be an impairment of the Participant’s rights that requires consent of the
Participant.



          13.5 Amendment of Awards. The Administrator at any time, and from time to time, may
amend the terms of any one or more Awards; provided, however, that the Administrator may not effect
any amendment which would otherwise constitute an impairment of the rights under any Award unless
(a) the Company requests the consent of the Participant and (b) the Participant consents in
writing. For the avoidance of doubt, the cancellation of an Award where the Participant receives a
payment equal in value to the Fair Market Value of the vested Award or, in the case of vested
Options, the difference between the Fair Market Value of the Shares underlying the Option and the
aggregate exercise price, shall not be an impairment of the Participant’s rights that requires
consent of the Participant.



     14. General Provisions.



          14.1 Other Compensation Arrangements. Nothing contained in this Plan shall prevent
the Board from adopting other or additional compensation arrangements, subject to Shareholder
approval if such approval is required; and such arrangements may be either generally applicable or
applicable only in specific cases.



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          14.2 Recapitalizations. Each Option Agreement and Award Agreement shall contain
provisions required to reflect the provisions of Section 12.1.



          14.3 Delivery. Upon exercise of an Award granted under this Plan, the Company shall
issue Shares or pay any amounts due within a reasonable period of time thereafter. Subject to any
statutory obligations the Company may otherwise have, for purposes of this Plan, thirty days shall
be considered a reasonable period of time.



          14.4 Other Provisions. The Option Agreements and Award Agreements authorized under
the Plan may contain such other provisions not inconsistent with this Plan, including, without
limitation, restrictions upon the exercise of the Awards, as the Administrator may deem advisable.



     15. Market Stand-Off.



          Each Option Agreement and Award Agreement shall provide that, in connection with any
underwritten public offering by the Company of its equity securities pursuant to an effective
registration statement filed under the Securities Act of 1933, as amended, the Participant shall
agree not to sell, make any short sale of, loan, hypothecate, pledge, grant any option for the
repurchase of, transfer the economic consequences of ownership or otherwise dispose or transfer for
value or otherwise agree to engage in any of the foregoing transactions with respect to any Share
without the prior written consent of the Company or its underwriters, for such period of time from
and after the effective date of such registration statement as may be requested by the Company or
such underwriters (the “Market Stand-Off”). In order to enforce the Market Stand-Off, the Company
may impose stop-transfer instructions with respect to the Shares acquired under this Plan until the
end of the applicable stand-off period. If there is any change in the number of outstanding Shares
by reason of a Share split, reverse Share split, Share dividend, recapitalization, combination,
reclassification, dissolution or liquidation of the Company, any corporate separation or division
(including, but not limited to, a split-up, a split-off or a spin-off), a merger or consolidation;
a reverse merger or similar transaction, then any new, substituted or additional securities which
are by reason of such transaction distributed with respect to any Shares subject to the Market
Stand-Off, or into which such Shares thereby become convertible, shall immediately be subject to
the Market Stand-Off.



     16. Effective Date of Plan.



          The Plan shall become effective as of the Effective Date, but no Award shall be exercised (or,
in the case of a Share bonus, shall be granted) unless and until the Plan has been approved by the
Shareholders of the Company, which approval shall be within 12 months before or after the date the
Plan is adopted by the Board.



     17. Termination or Suspension of the Plan.



          The Plan shall terminate automatically on May 11, 2015, but no later than the day before the
10th anniversary of the Effective Date. No Award shall be granted pursuant to the Plan after such
date, but Awards theretofore granted may extend beyond that date. The Board may suspend or
terminate the Plan at any earlier date pursuant to Section 13.1 hereof. No Awards may be granted
under the Plan while the Plan is suspended or after it is terminated.



     18. Choice of Law.



          The law of the State of Maryland shall govern all questions concerning the construction,
validity and interpretation of this Plan, without regard to such state’s conflict of law rules.



     19. Execution.



     To record the adoption of the Plan by the Board, the Company has caused its authorized officer
to execute the Plan as of the date specified below.



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[SIGNATURE PAGE FOLLOWS]








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     IN WITNESS WHEREOF, upon authorization of the Board of Trustees, the undersigned has caused
the Prentiss Properties Trust 2005 Share Incentive Plan to be executed effective as of the 11th day
of May, 2005.



	 	 	 	 	 
	 	PRENTISS PROPERTIES TRUST

 	 
	 	By:  	/s/ Thomas F. August
 	 
	 	Name: 	Thomas F. August 	 
	 	Title:  	President and CEO 	 
	 




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