Unassociated Document


    Exhibit
10.3

     

    
    

     

    
      	 


    

     

     

    LIGHTSTONE
VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC.

     

    FORM
OF 2005 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

     

    Effective
as of [                    ],
2005

     

    
       

      
        	 
	 


      

       

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    TABLE
OF CONTENTS

     

    Page

    
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      
	
              1.

            	
                

            	
              Purpose
      of the Plan.

            	
                

            	
              1

            
	 
      	 
      	 
      
	
              2.

            	
                

            	
              Definitions.

            	
                

            	
              1

            
	 
      	 
      	 
      
	
              3.

            	
                

            	
              Effective
      Date/Expiration of Plan.

            	
                

            	
              3

            
	 
      	 
      	 
      
	
              4.

            	
                

            	
              Administration.

            	
                

            	
              3

            
	 
      	 
      	 
      
	
              5.

            	
                

            	
              Shares;
      Adjustment Upon Certain Events.

            	
                

            	
              4

            
	 
      	 
      	 
      
	
              6.

            	
                

            	
              Awards
      and Terms of Options.

            	
                

            	
              6

            
	 
      	 
      	 
      
	
              7.

            	
                

            	
              Effect
      of Termination of Service.

            	
                

            	
              9

            
	 
      	 
      	 
      
	
              8.

            	
                

            	
              Nontransferability
      of Options.

            	
                

            	
              10

            
	 
      	 
      	 
      
	
              9.

            	
                

            	
              Rights
      as a Stockholder.

            	
                

            	
              10

            
	 
      	 
      	 
      
	
              10.

            	
                

            	
              Determinations.

            	
                

            	
              10

            
	 
      	 
      	 
      
	
              11.

            	
                

            	
              Termination,
      Amendment and Modification.

            	
                

            	
              10

            
	 
      	 
      	 
      
	
              12.

            	
                

            	
              Non-Exclusivity.

            	
                

            	
              11

            
	 
      	 
      	 
      
	
              13.

            	
                

            	
              Use
      of Proceeds.

            	
                

            	
              11

            
	 
      	 
      	 
      
	
              14.

            	
                

            	
              General
      Provisions.

            	
                

            	
              11

            
	 
      	 
      	 
      
	
              15.

            	
                

            	
              Issuance
      of Stock Certificates; Legends and Payment of Expenses.

            	
                

            	
              12

            
	 
      	 
      	 
      
	
              16.

            	
                

            	
              Listing
      of Shares and Related Matters.

            	
                

            	
              13

            
	 
      	 
      	 
      
	
              17.

            	
                

            	
              Governing
      Law.

            	
                

            	
              13

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    LIGHTSTONE
VALUE PLUS REAL ESTATE INVESTMENT TRUST, INC.

     

    FORM
OF 2005 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN

     

    Effective
as of [                    ],
2005

     

    1.
Purpose of the Plan.

     

    The
purpose of this Lightstone Value Plus Real Estate Investment Trust, Inc. 2005
Non-Employee Director Stock Option Plan is to enhance the Company’s
profitability and value for the benefit of stockholders to enable the Company to
attract, retain and motivate Non-Employee Directors and who are important to the
success of the Company and to create and strengthen a mutuality of interest
between the Non-Employee Directors and the stockholders of the Company by
granting such directors options to purchase Common Stock of the
Company.

     

    2.
Definitions.

     

    (a) “Acquisition
Event” means a merger or consolidation in which the Company is not the
surviving entity, or any transaction that results in the acquisition of all or
substantially all of the Company’s outstanding Common Stock by a single person
or entity or by a group of persons and/or entities in concert, or the sale or
transfer of all or substantially all of the Company’s assets.

     

    (b) “Act”
means the Securities Exchange Act of 1934, as amended and the rules and
regulations promulgated thereunder.

     

    (c) Annual Date of
Grant” has the meaning set forth in Section 6(a).

     

    (d) “Board”
means the Board of Directors of the Company.

     

    (e) “Cause”
has the meaning set forth in Section 7(b).

     

    (f) “Change of
Control” has the meaning set for in Section 6(d).

     

    (g) “Code”
means the Internal Revenue Code of 1986, as amended.

     

    (h) “Committee”
means the Board of a duly appointed committee of the Board to which the Board
has delegated its powers and functions hereunder.

     

    (i) “Common
Stock” means the voting common stock of the Company, par value $.01, any
common stock into which the common stock may be converted and any common stock
resulting from any reclassification of the common stock.

     

    (j) “Company”
means Lightstone Value Plus Real Estate Investment Trust, Inc., a Maryland
corporation.

     

    (k) “Company Voting
Securities” has the meaning set forth in Section 6(d)(i).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (l) “Corporate
Transaction” has the meaning set forth in Section 6(d)(i).

     

    (m) “Disability”
means a permanent and total disability, as determined by the Committee in its
sole discretion, provided that in no event shall any disability that is not
permanent and total disability within the meaning of Section 22(e)(3) of the
Code be treated as a Disability. A Disability shall be deemed to occur at the
time of the determination by the Committee of the Disability.

     

    (n) “Effective
Date” has the meaning set forth in Section 3.

     

    (o) “Fair Market
Value” means, for purposes of this Plan, unless otherwise required by any
applicable provision of the Code or any regulations issued thereunder, as of any
date and except as provided below, the last sales price reported for the Common
Stock on the applicable date: (i) as reported on the principal national
securities exchange in the United States on which it is then traded or The
Nasdaq Stock Market; or (ii) if not traded on any such national securities
exchange or The Nasdaq Stock Market, as quoted on an automated quotation system
sponsored by the National Association of Securities Dealers, Inc. or if the
Common Stock shall not have been reported or quoted on such date, on the first
day prior thereto on which the Common Stock was reported or quoted; provided,
that the Committee may modify the definition of Fair Market Value to reflect any
changes in the trading practices of any exchange on which the Common Stock is
listed or traded. If the Common Stock is not readily tradable on a national
securities exchange, The Nasdaq Stock Market or any automated quotation system
sponsored by the National Association of Securities Dealers, Inc., its Fair
Market Value shall be set in good faith by the Committee. For purposes of the
grant of any Option, the applicable date shall be the date on which the Stock
Option is granted.

     

    (p) “Incumbent
Board” has the meaning set forth in Section 6(d)(ii).

     

    (q) “Non-Employee
Directors” means, except for purposes of the definition of Committee,
directors of the Company who are not employees of the Company or its
subsidiaries.

     

    (r) “Option”
means the right to purchase the number of Shares granted in the Option agreement
at a prescribed purchase price on the terms specified in the Plan and the Option
agreement. No Option awarded under this Plan is intended to be an “incentive
stock option” within the meaning of Section 422 of the Code.

     

    (s) “Participant”
means a Non-Employee Director who is granted an Option under the Plan, which
Option has not expired or been cancelled.

     

    (t) “Person”
means an individual, entity or group within the meaning of Section l3d-3 or
14d-1 of the Act.

     

    (u) “Plan”
means the Lightstone Value Plus Real Estate Investment Trust, Inc. 2005
Non-Employee Director Stock Option Plan, as amended from time to
time.

     

    (v) “Purchase
Price” means the purchase price per Share.

     

    (w) “Securities
Act” means the Securities Act of 1933, as amended.

     

    
      
        
        

      

      
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    (x) “Share”
means a share of Common Stock.

     

    (y) “Termination of
Service” means termination of the relationship with the Company so that
an individual is no longer a director of the Company.

     

    3.
Effective Date/Expiration of Plan.

     

    The Plan
became effective [                    ]
2005 (the “Effective Date”). No Option shall be granted under the Plan on or
after the tenth anniversary of the Effective Date, but Options previously
granted may extend beyond that date.

     

    4.
Administration.

     

    (a) Duties of the Committee. The
Plan shall be administered by the Committee. The Committee shall have full
authority to interpret the Plan and to decide any questions and settle all
controversies and disputes that may arise in connection with the Plan; to
establish, amend, and rescind rules for carrying out the Plan, to administer the
Plan, subject to its provisions; to prescribe the form or forms of instruments
evidencing Options and any other instruments required under the Plan (which need
not be uniform) and to change such forms from time to time; and to make all
other determinations and to take all such steps in connection with the Plan and
the Options as the Committee, in its sole discretion, deems necessary or
desirable; provided, that all
such determinations shall be in accordance with the express provisions, if any,
contained in the Plan or Option agreement. The Committee shall not be bound to
any standards of uniformity or similarity of action, interpretation or conduct
in the discharge of its duties hereunder, regardless of the apparent similarity
of the matters coming before it. The determination, action or conclusion of the
Committee in connection with the foregoing shall be final, conclusive and
binding on all parties.

     

    (b) Advisors. The Committee may
designate the Secretary of the Company, other employees of the Company or
competent professional advisors to assist the Committee in the administration of
the Plan, and may grant authority to such persons (other than professional
advisors) to grant an Option or to execute Option agreements or other documents
on behalf of the Committee, provided that no Participant may grant an Option or
execute any Option agreement granting Options to such Participant. The Committee
may employ such legal counsel, consultants and agents as it may deem desirable
for the administration of the Plan, and may rely upon any opinion received from
any such counsel or consultant and any computation received from any such
consultant or agent. Expenses incurred by the Committee in the engagement of
such counsel, consultant or agent shall be paid by the Company.

     

    (c) Indemnification. To the
maximum extent permitted by law, no officer, member or former officer or member
of the Committee or the Board shall be liable for any action or determination
made in good faith with respect to the Plan or any Option granted under it. To
the maximum extent permitted by applicable law or the Certificate of
Incorporation or By-Laws of the Company and to the extent not covered by
insurance, each officer, member or former officer or member
of the Committee or of the Board shall be indemnified and held harmless by the
Company against any cost or expense (including reasonable fees of counsel
reasonably acceptable to the Company) or liability (including any sum paid in
settlement of a claim with the approval of the Company), and advanced amounts
necessary to pay the foregoing at the earliest time and to the fullest extent
permitted, arising out of any act or omission to act in connection with the
Plan, except to the extent arising out of such officer’s, member’s or former
officer’s or member’s own fraud or bad faith. Such indemnification shall be in
addition to any rights of indemnification the officers, members or former
officers or members may have as directors under applicable law or under the
Certificate of Incorporation or By-Laws of the Company or
otherwise.

     

    
      
        
        

      

      
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    (d) Meetings of the Committee.
The Committee shall select one of its members as a Chairman and shall adopt such
rules and regulations, as it shall deem appropriate, concerning the holding of
its meetings and the transaction of its business. Any member of the Committee
may be removed at any time either with or without cause by resolution adopted by
the Board, and any vacancy on the Committee may at any time be filled by
resolution adopted by the Board. All determinations by the Committee shall be
made by the affirmative vote of a majority of its members. Any such
determination may be made at a meeting duly called and held at which a majority
of the members of the Committee were in attendance in person or through
telephonic communication. Any determination set forth in writing and signed by
all of the members of the Committee shall be as fully effective as if it had
been made by a vote of such members at a meeting duly called and
held.

     

    5.
Shares; Adjustment Upon Certain Events.

     

    (a) Shares to be Delivered; Fractional
Shares. Shares to be issued under the Plan shall be made available, at
the discretion of the Board, either from authorized but unissued Shares or from
issued Shares reacquired by the Company and held in treasury. No fractional
Shares will be issued or transferred upon the exercise of any Option. In lieu
thereof, the Company shall pay a cash adjustment equal to the same fraction of
the Fair Market Value of one Share on the date of exercise.

     

    (b) Number of Shares. Subject to
adjustment as provided in this Section 5, the maximum aggregate number of Shares
authorized for issuance under the Plan shall be 75,000 Shares. If an Option is
for any reason canceled, or expires or terminates unexercised, the Shares
covered by such Option shall again be available for the grant of Options, within
the limits provided by the preceding sentence. In addition, if Common Stock has
been exchanged by a Participant as full or partial payment to the Company of the
Purchase Price or if the number of shares of Common Stock otherwise deliverable
has been reduced for full or partial payment to the Company of the Purchase
Price, the number of shares of Common Stock exchanged or reduced shall again be
available under the Plan.

     

    (c) Adjustments; Recapitalization,
etc. The existence of the Plan and the Options granted hereunder shall
not affect in any way the right or power of the Board or the stockholders of the
Company to make or authorize any adjustment, recapitalization, reorganization or
other change in the Company’s capital structure or its business, any merger or
consolidation of the Company, any issue of bonds, debentures, preferred or prior
preference stocks ahead of or affecting
Common Stock, the dissolution or liquidation of the Company or any sale or
transfer of all or part of its assets or business or any other corporate act or
proceeding. If and whenever the Company takes any such action, however, the
following provisions, to the extent applicable, shall govern:

     

    
      
        
        

      

      
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    (i) If
and whenever the Company shall effect a stock split, stock dividend,
subdivision, recapitalization or combination of Shares or other changes in the
Company’s Common Stock, (x) the Purchase Price (as defined herein) per Share and
the number and class of Shares and/or other securities with respect to which
outstanding Options thereafter may be exercised, and (y) the total number and
class of Shares and/or other securities that may be issued under this Plan,
shall be proportionately adjusted by the Committee. The Committee may also make
such other adjustments as it deems necessary to take into consideration any
other event (including, without limitation, accounting changes) if the Committee
determines that such adjustment is appropriate to avoid distortion in the
operation of the Plan.

     

    (ii)
Subject to Section 5(c)(iii), if the Company merges or consolidates with one or
more corporations, then from and after the effective date of such merger or
consolidation, upon exercise of an Option theretofore granted, the Participant
shall be entitled to purchase under such Option, in lieu of the number of Shares
as to which such Option shall then be exercisable but on the same terms and
conditions of exercise set forth in such Option, the number and class of Shares
and/or other securities or property (including cash) to which the Participant
would have been entitled pursuant to the terms of the agreement of merger or
consolidation if, immediately prior to such merger or consolidation, the
Participant had been the holder of record of the total number of Shares
receivable upon exercise of such Option (whether or not then exercisable). In
connection with any event described in this paragraph, the Committee may
provide, in its sole discretion, for the cancellation of any outstanding Options
and payment in cash or other property in exchange therefor.

     

    (iii) In
the event of an Acquisition Event, the Committee may, in its discretion, and
without any liability to any Participant, terminate all outstanding Options as
of the consummation of the Acquisition Event by delivering notice of termination
to each Participant at least 20 days prior to the date of consummation of the
Acquisition Event; provided that, during the period from the date on which such
notice of termination is delivered to the consummation of the Acquisition Event,
each Participant shall have the right to exercise in full all of the Options
that are then outstanding (without regard to limitations on exercise otherwise
contained in the Options) but any such exercise shall be contingent upon and
subject to the occurrence of the Acquisition Event, provided that if the
Acquisition Event does not take place within a specified period after giving
such notice for any reason whatsoever, the notice and exercise pursuant thereto
shall be null and void. If the Acquisition Event does take place after giving
such notice, any Option not exercised prior to the date of the consummation of
such Acquisition Event shall be forfeited simultaneous with the consummation of
the Acquisition Event. If an Acquisition Event occurs and the Committee does not
terminate the outstanding Options pursuant to the foregoing provisions, then the
provisions of Section 5(c)(ii) shall apply.

     

    
      
        
          
          

        

        
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    (iv) If,
as a result of any adjustment made pursuant to the preceding paragraphs of this
Section 5, any Participant shall become entitled upon exercise of an Option to
receive any securities other than Common Stock, then the number and class of
securities so receivable thereafter shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Common Stock set forth in this Section 5, as
determined by the Committee in its discretion.

     

    (v)
Except as hereinbefore expressly provided, the issuance by the Company of shares
of stock of any class, or securities convertible into shares of stock of any
class, for cash, property, labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or other securities, and in any case whether or not for fair value, shall
not affect, and no adjustment by reason thereof shall be made with respect to
the number and class of Shares and/or other securities or property subject to
Options theretofore granted of the Purchase Price per Share.

     

    6.
Awards and Terms of Options.

     

    (a) Grant. Without further action
by the Board or the stockholders (except as provided in Section 11) of the
Company, each year, as of the date of the annual meeting of the stockholders of
the Company (each such date, an “Annual Date of Grant”), each Participant shall
be automatically granted an Option to purchase 3,000 Shares (subject to any
increase or decrease pursuant to Section 5(c)), subject to the terms of the
Plan, provided that no such Option shall be granted if on the date of grant the
Company has liquidated, dissolved or merged or consolidated with another entity
in such a manner that it is not the surviving entity (unless the Plan has been
assumed by such surviving entity with regard to future grants).

     

    (b) Purchase Price. The Purchase
Price deliverable upon the exercise of an Option shall equal 100% of the Fair
Market Value on the last business day preceding the Annual Date of Grant.
Notwithstanding the foregoing, the Purchase Price for all Options granted under
the Plan will be $10 per Share until the termination of the Company’s initial
public offering.

     

    (c) Exercisability. Except as
otherwise provided herein, any Option granted to a Participant shall vest and
become exercisable on the second anniversary of the date of grant, subject to
the Participant’s continued service as a Non-Employee Director through such
date. No Option shall be exercisable after the expiration of ten (10) years from
the date of grant.

     

    (d) Acceleration of Exercisability on
Change of Control. All Options granted and not previously exercisable
shall become exercisable immediately upon a Change of Control (as defined
herein). For this purpose, a “Change of Control” shall be deemed to have
occurred upon:

     

    (i) an
acquisition by any Person of beneficial ownership (within the meaning of Rule
l3d-3 promulgated under the Act) of 33% or more of either (A) the then
outstanding Shares or (B) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of
directors (the “Company Voting
Securities”); excluding, however, the following: (w) any acquisition
directly
from the Company, other than an acquisition by virtue of the exercise of a
conversion privilege unless the security being so converted was itself acquired
directly from the Company, (x) any acquisition by the Company, (y) any
acquisition by an employee benefit plan (or related trust) sponsored or
maintained by the Company or (z) any acquisition by any corporation pursuant to
a reorganization, merger, consolidation or similar corporate transaction (in
each case, a “Corporate
Transaction”), if, pursuant to such Corporate Transaction, the conditions
described in clauses (A), (B) and (C) of paragraph (iii) of this Section are
satisfied; or

     

    (ii) a
change in the composition of the Board such that the individuals who, as of the
Effective Date hereof, constitute the Board (the Board as of the date hereof
shall be hereinafter referred to as the “Incumbent
Board”) cease for any reason to constitute at least a majority of the
Board; provided that for purposes of this subsection any individual who becomes
a member of the Board subsequent to the date hereof whose election, or
nomination for election by the Company’s stockholders, was approved by a vote of
at least a majority of those individuals who are members of the Board and who
are also members of the Incumbent Board (or deemed to be such pursuant to this
proviso) shall be considered as though such individual were a member of the
Incumbent Board; but, provided further, that any such individual whose initial
assumption of office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Act) or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board shall not be so
considered as a member of the Incumbent Board; or

     

    (iii) the
approval by the stockholders of the Company of a Corporate Transaction or, if
consummation of such Corporate Transaction is subject, at the time of such
approval by stockholders, to the consent of any government or governmental
agency, the obtaining of such consent (either explicitly or implicitly by
consummation); excluding, however, such a Corporate Transaction pursuant to
which (A) all or substantially all of the individuals and entities who are the
beneficial owners, respectively, of the outstanding Shares and Company Voting
Securities immediately prior to such Corporate Transaction will beneficially
own, directly or indirectly, more than 60% of, respectively, the outstanding
shares of common stock of the corporation resulting from such Corporate
Transaction and the combined voting power of the outstanding voting securities
of such corporation entitled to vote generally in the election of directors, in
substantially the same proportions as their ownership, immediately prior to such
Corporate Transaction, of the outstanding Shares and Company Voting Securities,
as the case may be, (B) no Person (other than the Company, any employee benefit
plan (or related trust) of the Company or the corporation resulting from such
Corporate Transaction and any Person beneficially owning, immediately prior to
such Corporate Transaction, directly or indirectly, 33% or more of the
outstanding Shares or Company Voting Securities, as the case may be) will
beneficially own, directly or indirectly, 33% or more of, respectively, the
outstanding shares of common stock of the corporation resulting from such
Corporate Transaction or the combined voting power of the then outstanding
securities of such corporation entitled to vote generally in the election of
directors and (C) individuals who were members of the Incumbent Board will
constitute at least a majority of the members of the board of directors of the
corporation resulting
from such Corporate Transaction; notwithstanding the foregoing, no Change of
Control will occur if two-thirds (2/3) of the
Incumbent Board approves the Corporate Transaction; or

     

    
      
        
        

      

      
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    (iv) the
approval of the stockholders of the Company of (A) a complete liquidation or
dissolution of the Company or (B) the sale or other disposition of all or
substantially all of the assets of the Company; excluding; however, such a sale
or other disposition to a corporation with respect to which, following such sale
or other disposition, (x) more than 60% of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting power of the
then outstanding voting securities of such corporation entitled to vote
generally in the election of directors will be then beneficially owned, directly
or indirectly, by all or substantially all of the individuals and entities who
were the beneficial owners respectively, of the outstanding Shares and Company
Voting Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior to such
sale or other disposition, of the outstanding Shares and Company Voting
Securities, as the case may be, (y) no Person (other than the Company and any
employee benefit plan (or related trust) of the Company or such corporation and
any Person beneficially owning, immediately prior to such sale or other
disposition, directly or indirectly, 33% or more of the outstanding Shares or
Company Voting Securities, as the case may be) will beneficially own, directly
or indirectly, 33% or more of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors and (z) individuals who were members of the Incumbent
Board will constitute at least a majority of the members of the board of
directors of such corporation.

     

    (e) Exercise of
Options.

     

    (i) A
Participant may elect to exercise an Option by giving written notice to the
Committee of such election and of the number of Shares such Participant has
elected to purchase pursuant to the Option, accompanied by payment in full of
the aggregate Purchase Price for the number of Shares for which the Option is
being exercised.

     

    (ii)
Shares purchased pursuant to the exercise of an Option shall be paid for at the
time of exercise as follows:

     

    (A) in
cash or by check, bank draft or money order payable to the order of the
Company;

     

    (B) if so
permitted by the Committee: (x) through the delivery of unencumbered Shares
(including Shares being acquired pursuant to the Option then being exercised),
provided such Shares (or such Option) have been owned by the Participant for
such period as may be required by applicable accounting standards to avoid a
charge to earnings or (y) through a combination of Shares and cash as provided
above, provided, that, if the Shares delivered upon exercise of the Option is an
original issue of authorized Shares, at least so much of the Purchase Price as
represents the par value of such Shares shall be paid in cash or by a
combination of cash and Shares;

     

    
      
        
        

      

      
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    (C) if
the Common Stock is traded on a national securities exchange, the Nasdaq Stock
Market, Inc. or quoted on a national quotation system sponsored by the National
Association of Securities Dealers, through the delivery of irrevocable
instructions to a broker to deliver promptly to the Company an amount equal to
the aggregate Purchase Price; or

     

    (D) on
such other terms and conditions as may be acceptable to the Committee and in
accordance with applicable law. As soon as practicable after receipt of payment,
the Company shall deliver to the Participant a certificate or certificates for
the Shares then purchased.

     

    (iii)
REIT Status.
Notwithstanding anything herein to the contrary, no Option granted under this
Plan may be exercised if such exercise would jeopardize the Company’s status as
a “real estate investment trust” as defined under the Code.

     

    7.
Effect of Termination of Service.

     

    (a) Death, Disability, or Retirement.
Except as otherwise provided in the Participant’s Option agreement or in
this Plan, upon a Termination of Service, all outstanding Options then
exercisable and not exercised by the Participant prior to such Termination of
Service shall remain exercisable by the Participant to the extent not
theretofore exercised for the following time periods (subject to Section
6(c)):

     

    (i) in
the event of the Participant’s death, such Options shall remain exercisable (by
the Participant’s estate or by the person given authority to exercise such
Options by the Participant’s will or by operation of law) for a period of one
(1) year from the date of the Participant’s death; and

     

    (ii) in
the event the Participant retires at or after age 65 (or, with the consent of
the Committee, before age 65), or, if the Participant’s services terminate due
to Disability, such Options shall remain exercisable for one (1) year from the
date of the Participant’s Termination of Service.

     

    (b) Cause. Upon the Termination
of Service of a Participant for Cause (as defined herein) or if it is discovered
after a Termination of Service that such Participant had engaged in conduct that
would have justified a Termination of Service for Cause, all outstanding Options
(whether vested or unvested) shall immediately be canceled, provided that upon
any such termination the Committee may, in its discretion, require the
Participant to promptly pay to the Company (and the Company shall have the right
to recover) any gain the Participant realized as a result of the exercise of any
Option that occurred within one (1) year prior to such Termination of Service or
the discovery of conduct that would have justified a Termination of Service for
Cause. Termination of Service shall be deemed to be for “Cause” for purposes of
this Section 7(b) if the Participant shall have committed fraud or any felony in
connection with the Participant’s duties as a director of the Company or willful
misconduct or any act of disloyalty, dishonesty, fraud or breach of trust,
confidentiality or fiduciary duties as to the Company or the commission
of any other act which causes or may reasonably be expected to cause economic or
reputational injury to the Company or any other act or failure to act that
constitutes “cause” for removal of a director under applicable Maryland
law.

     

    
      
        
        

      

      
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    (c) Other Termination. In the
event of a Termination of Service for any reason other than as provided in
Sections 7(a) and 7(b), all outstanding Options then exercisable and not
exercised by the Participant prior to such Termination of Service shall remain
exercisable (to the extent exercisable by such Participant immediately before
such termination) for a period of three (3) months after such termination, but
not beyond the original stated term of the Option.

     

    8.
Nontransferability of Options.

     

    No Option
shall be transferable by the Participant otherwise than by will or under
applicable laws of descent and distribution, and during the lifetime of the
holder may be exercised only by the holder or his or her guardian or legal
representative. In addition, no Option shall be assigned, negotiated, pledged or
hypothecated in any way (whether by operation of law or otherwise), and no
Option shall be subject to execution, attachment or similar process. Upon any
attempt to transfer, assign, negotiate, pledge or hypothecate any Option, or in
the event of any levy upon any Option by reason of any execution, attachment or
similar process contrary to the provisions hereof, such Option shall immediately
be cancelled. Notwithstanding the foregoing, the Committee may determine at the
time of grant or thereafter, that an Option that is otherwise non transferable
is transferable in whole or in part and in such circumstances, and under such
conditions, as specified by the Committee.

     

    9.
Rights as a Stockholder.

     

    A holder
of an Option shall have no rights as a stockholder with respect to any Shares
covered by such holder’s Option until such holder shall have become the holder
of record of such Shares, and no adjustments shall be made for dividends in cash
or other property or distributions or other rights in respect to any such
Shares, except as otherwise specifically provided for in this Plan.

     

    10.
Determinations.

     

    Each
determination, interpretation or other action made or taken pursuant to the
provisions of this Plan by the Committee shall be final, conclusive and binding
for all purposes and upon all persons, including, without limitation, the
holders of any Options and Non-Employee Directors and their respective heirs,
executors, administrators, personal representatives and other successors in
interest.

     

    11.
Termination, Amendment and Modification.

     

    Notwithstanding
any other provision of this Plan, the Board or the Committee may at any time,
and from time to time, amend, in whole or in part, any or all of the provisions
of this Plan, or suspend or terminate it entirely, retroactively or otherwise;
provided, however, that, unless otherwise required by law or specifically
provided herein, the rights of a Participant with respect to Options granted
prior to such amendment, suspension or termination, may not be impaired without
the consent of such Participant; provided further, that no amendment may be
made, without
stockholder approval if stockholder approval is required under applicable
law.

     

    
      
        
        

      

      
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    The
Committee may amend the terms of any Option theretofore granted, prospectively
or retroactively, but, subject to Section 5 above or as otherwise specifically
provided herein, no such amendment or other action by the Committee shall impair
the rights of any holder without the holder’s consent.

     

    12.
Non-Exclusivity.

     

    Neither
the adoption of the Plan by the Board shall be construed as creating any
limitations on the power of the Board to adopt such other incentive arrangements
as it may deem desirable, including, without limitation, the granting or
issuance of Options, Shares and/or other incentives otherwise than under the
Plan, and such arrangements may be either generally applicable or limited in
application.

     

    13.
Use of Proceeds.

     

    The
proceeds of the sale of Shares subject to Options under the Plan are to be added
to the general funds of the Company and used for its general corporate purposes
as the Board shall determine.

     

    14.
General Provisions.

     

    (a) Right to Terminate Services.
Neither the adoption of the Plan nor the grant of Options shall impose any
obligations on the Company to retain any Participant as a director nor shall it
impose any obligation on the part of any Participant to remain a
director.

     

    (b) Purchase for Investment. If
the Board determines that the law so requires, the holder of an Option granted
hereunder shall, upon any exercise or conversion thereof, execute and deliver to
the Company a written statement, in form satisfactory to the Company,
representing and warranting that such Participant is purchasing or accepting the
Shares then acquired for such Participant’s own account and not with a view to
the resale or distribution thereof, that any subsequent offer for sale or sale
of any such Shares shall be made either pursuant to (i) a registration statement
on in appropriate form under the Securities Act, which registration statement
shall have become effective and shall be current with respect to the Shares
being offered and sold, or (ii) a specific exemption from the registration
requirements of the Securities Act, and that in claiming such exemption the
holder will, prior to any offer for sale or sale of such Shares, obtain a
favorable written opinion, satisfactory in form and substance to the Company,
from counsel approved by the Company as to the availability of such
exception.

     

    (c) Trusts, etc. Nothing
contained in the Plan and no action taken pursuant to the Plan (including,
without limitation, the grant of any Option thereunder) shall create or be
construed to create a trust of any kind, or a fiduciary relationship, between
the Company and any Participant or the executor, administrator or other personal
representative or designated beneficiary of such Participant, or any other
persons. Any reserves that may be established by

    the
Company in connection with the Plan shall continue to be part of the general
funds of the Company, and no individual or entity other than the Company shall
have any interest in such funds until paid to a Participant. If and to the
extent that any Participant or such Participant’s executor, administrator, or
other personal representative, as the case may be, acquires a right to receive
any payment from the Company pursuant to the Plan, such right shall be no
greater than the right of an unsecured general creditor of the
Company.

     

    
      
        
        

      

      
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    (d) Notices. Each Participant
shall be responsible for furnishing the Committee with the current and proper
address for the mailing to such Participant of notices and the delivery to such
Participant of agreements, Shares and payments. Any notices required or
permitted to be given shall be deemed given if directed to the person to whom
addressed at such address and mailed by regular United States mail, first class
and prepaid. If any item mailed to such address is returned as undeliverable to
the addressee, mailing will be suspended until the Participant furnishes the
proper address.

     

    (e) Severability of Provisions.
If any provisions of the Plan shall be held invalid or unenforceable, such
invalidity or unenforceability shall not affect any other provisions of the
Plan, and the Plan shall be construed and enforced as if such provisions had not
been included.

     

    (f) Payment to Minors, Etc. Any
benefit payable to or for the benefit of a minor, an incompetent person or other
person incapable of receipting therefor shall be deemed paid when paid to such
person’s guardian or to the party providing or reasonably appearing to provide
for the care of such person, and such payment shall fully discharge the
Committee, the Company and their employees, agents and representatives with
respect thereto.

     

    (g) Readings and Captions. The
headings and captions herein are provided for reference and convenience only.
They shall not be considered part of the Plan and shall not be employed in the
construction of the Plan.

     

    (h) Other Benefits. No award
under this Plan shall be deemed compensation for purposes of computing benefits
under any retirement plan of the Company or its subsidiaries nor affect any
benefits under any other benefit plan now or subsequently in effect under which
the availability or amount of benefits is related to the level of
compensation.

     

    (i) 409A. To the extent
applicable, the Plan is intended to comply with the applicable requirements of
Section 409A of the Code and shall be limited, construed and interpreted in a
manner so as to comply therewith. Notwithstanding anything herein to the
contrary, any provision in the plan that is inconsistent with Section 409A of
the Code shall be deemed to be amended to comply with Section 409A and to the
extent such provision cannot be amended to comply therewith, such provision
shall be null and void.

     

    15.
Issuance of Stock Certificates; Legends and Payment of Expenses.

     

    (a) Stock Certificates. Upon any
exercise of an Option and payment of the exercise price as provided in such
Option, a certificate or certificates for the Shares as to which such Option has
been exercised shall be issued by the Company in the name of the person or
persons exercising such Option and shall be delivered to or upon the order of
such person or persons.

     

    (b) Legends. Certificates for
Shares issued upon exercise of an Option shall bear such legend or legends as
the Committee, in its discretion, determines to be necessary or appropriate to
prevent a violation of, or to perfect an exemption from, the registration
requirements of the Securities Act or to implement the provisions of any
agreements between the Company and the Participant with respect to such
Shares.

     

    
      
        
        

      

      
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    (c) Payment of Expenses. The
Company shall pay all issue or transfer taxes with respect to the issuance or
transfer of Shares, as well as all fees and expenses necessarily incurred by the
Company in connection with such issuance or transfer and with the administration
of the Plan.

     

    (d) Section 16(b) of the Act. All
elections and transactions under the Plan by persons subject to Section 16 of
the Act involving Shares are intended to comply with any applicable condition
under Rule 16b-3, provided, however, noncompliance with the requirements of Rule
16b-3 shall not affect the validity of an Option granted under this Plan. To the
extent any provision of the Plan or action by the Committee fails to so comply,
it shall be deemed null and void. The Committee may establish and adopt written
administrative guidelines, designed to facilitate compliance with Section 16(b)
of the Act, as it may deem necessary or proper for the administration and
operation of the Plan and the transaction of business thereunder.

     

    16.
Listing of Shares and Related Matters.

     

    If at any
time the Board shall determine in its sole discretion that the listing,
registration or qualification of the Shares covered by the, Plan upon any
national securities exchange or under any state or federal law, or the consent
or approval of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the award or sale of Shares under the Plan,
no Shares will be delivered unless and until such listing, registration,
qualification, consent or approval shall have been effected or obtained, or
otherwise provided for, free of any conditions not acceptable to the
Board.

     

    17.
Governing Law.

     

    This Plan
shall be governed and construed in accordance with the laws of the State of
Maryland (regardless of the law that might otherwise govern under applicable
principles of conflict of laws).

     

     

    
      
        
        

      

      
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