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                                                                    Exhibit 10.4


                              INNKEEPERS USA TRUST

                            1994 SHARE INCENTIVE PLAN















                           AMENDED AND RESTATED AS OF
                                FEBRUARY 3, 1997


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                                TABLE OF CONTENTS


<TABLE>
<CAPTION>

ARTICLE I              DEFINITIONS
<S>                    <C>                                                    <C>
        1.01.          Acquiring Person.....................................  1
        1.02.          Administrator........................................  1
        1.03.          Affiliate............................................  1
        1.04.          Agreement............................................  1
        1.05.          Associate............................................  1
        1.06.          Board................................................  1
        1.07.          Cause................................................  2
        1.08.          Change of Control....................................  2
        1.09.          Code.................................................  3
        1.10.          Committee............................................  3
        1.11.          Company..............................................  3
        1.12.          Continuing Trustee...................................  3
        1.13.          Control Affiliate....................................  3
        1.14.          Control Change Date..................................  3
        1.15.          Corresponding SAR....................................  3
        1.16.          Disability...........................................  3
        1.17.          Dividend Equivalent Right Performance
                          Measures..........................................  4
        1.18.          Dividend Equivalent Right Performance
                          Period............................................  4
        1.19.          Exchange Act.........................................  5
        1.20.          Fair Market Value....................................  5
        1.21.          Incentive Award......................................  5
        1.22.          Initial Value........................................  5
        1.23.          Option...............................................  5
        1.24.          Participant..........................................  5
        1.25.          Performance Award....................................  6
        1.26.          Performance Shares...................................  6
        1.27.          Person...............................................  7
        1.28.          Plan.................................................  7
        1.29.          Related Entity.......................................  7
        1.30.          SAR..................................................  7
        1.31.          Share Award..........................................  8
        1.32.          Shares...............................................  8

ARTICLE II             PURPOSES.............................................  8

ARTICLE III            ADMINISTRATION

ARTICLE IV             ELIGIBILITY.......................................... 10
</TABLE>



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<TABLE>
<CAPTION>

<S>                    <C>                                                   <C>
ARTICLE V              SHARES SUBJECT TO PLAN

        5.01.          Shares Issued........................................ 11
        5.02.          Aggregate Limit...................................... 11
        5.03.          Reallocation of Shares............................... 11

ARTICLE VI             OPTIONS

        6.01.          Award................................................ 12
        6.02.          Option Price......................................... 12
        6.03.          Maximum Option Period................................ 12
        6.04.          Nontransferability................................... 13
        6.05.          Transferable Options................................. 13
        6.06.          Employee Status...................................... 14
        6.07.          Exercise............................................. 14
        6.08.          Payment.............................................. 15
        6.09.          Performance Awards................................... 15
        6.10.          Change of Control.................................... 15
        6.11.          Shareholder Rights................................... 15
        6.12.          Disposition of Shares................................ 15

ARTICLE VII            SARS

        7.01.          Award................................................ 16
        7.02.          Maximum SAR Period................................... 16
        7.03.          Nontransferability................................... 17
        7.04.          Transferable SARs.................................... 17
        7.05.          Exercise............................................. 17
        7.06           Change of Control.................................... 18
        7.07.          Employee Status...................................... 18
        7.08.          Settlement........................................... 18
        7.09.          Shareholder Rights................................... 19

ARTICLE VIII           SHARE AWARDS

        8.01.          Award................................................ 19
        8.02.          Vesting.............................................. 19
        8.03.          Performance Objectives............................... 19
        8.04.          Employee Status...................................... 20
        8.05.          Change of Control.................................... 20
        8.06.          Shareholder Rights................................... 20

ARTICLE IX             PERFORMANCE SHARE AWARDS............................. 21

        9.01.          Award................................................ 21
        9.02.          Earning the Award.................................... 21
</TABLE>


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<TABLE>
<S>                    <C>                                                   <C>

        9.03.          Payment.............................................. 22
        9.04.          Shareholder Rights................................... 22
        9.05.          Nontransferability................................... 22
        9.06.          Transferable Performance Shares...................... 23
        9.07.          Employee Status...................................... 23
        9.08.          Change of Control.................................... 23

ARTICLE X              INCENTIVE AWARDS

        10.01.         Award................................................ 24
        10.02.         Terms and Conditions................................. 24
        10.03.         Nontransferability................................... 25
        10.04.         Transferable Incentive Awards........................ 25
        10.05.         Employee Status...................................... 25
        10.06.         Change of Control.................................... 26
        10.07.         Shareholder Rights................................... 26

ARTICLE XI             INDEMNIFICATION...................................... 26

ARTICLE XII            ADJUSTMENT UPON CHANGE IN SHARES..................... 27

ARTICLE XIII           COMPLIANCE WITH LAW AND
                       APPROVAL OF REGULATORY BODIES........................ 28

ARTICLE XIV            GENERAL PROVISIONS

        14.01.         Effect on Employment and Service..................... 29
        14.02.         Unfunded Plan........................................ 29
        14.03.         Rules of Construction................................ 30

ARTICLE XV             AMENDMENT............................................ 30

ARTICLE XVI            DURATION OF PLAN..................................... 31

ARTICLE XVII           EFFECTIVE DATE OF PLAN............................... 31
</TABLE>



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                              INNKEEPERS USA TRUST
                            1994 SHARE INCENTIVE PLAN


                                    ARTICLE I

                                   DEFINITIONS


1.01. Acquiring Person means that a Person, considered alone or together with
all Control Affiliates and Associates of that Person, is or becomes directly or
indirectly the beneficial owner of securities representing at least thirty
percent (30%) of the Company's then outstanding securities entitled to vote
generally in the election of the Board.

1.02. Administrator means the Committee and any delegate of the Committee that
is appointed in accordance with Article III.

1.03. Affiliate means any "subsidiary" or "parent" corporation (within the
meaning of Section 424 of the Code) of the Company.

1.04. Agreement means a written agreement (including any amendment or supplement
thereto) between the Company and a Participant specifying the terms and
conditions of a Share Award, an award of Performance Shares, an Incentive Award
or an Option or SAR granted to such Participant.

1.05. Associate, with respect to any Person, is defined in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act, as amended as of January
1, 1990. An Associate does not include the Company or a majority-owned
subsidiary of the Company.

1.06. Board means the Board of Trustees of the Company.


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1.07. Cause, with respect to a Participant, means (i) "Cause" as defined in an
Agreement with the Participant; or, if the Agreement does not contain a
definition of "Cause", (ii) "Cause" as defined in the employment agreement, as
in effect from time to time, between the Company and the Participant; or, if the
agreement described in subsection (ii) does not contain a definition of "Cause"
or there is no such agreement, (iii) "Cause" as defined in the employment
agreement, as in effect from time to time, between the Company and the Company's
Chief Executive Officer; or, if the agreement described in subsection (iii) does
not contain a definition of "Cause" or there is no such agreement, (iv)
Participant's being convicted of a felony involving theft, embezzlement or
misappropriation of the Company's property.

1.08. Change of Control means that (i) a Person is or becomes an Acquiring
Person; (ii) a Person enters into an agreement that would result in that
Person's becoming an Acquiring Person; (iii) the Company enters into any
agreement with a Person that involves the transfer of at least fifty percent
(50%) of the Company's total assets on a consolidated basis, as reported in the
Company's consolidated financial statements filed with the Securities and
Exchange Commission; (iv) the Company enters into any agreement to merge or
consolidate the Company or to effect a statutory share exchange with another
Person, regardless of whether the Company is intended to be the surviving or
resulting entity after the merger, consolidation, or statutory share exchange;
or (v) the Continuing Trustees cease for any reason to constitute a majority of
the Board.


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1.09. Code means the Internal Revenue Code of 1986, and any amendments thereto.

1.10. Committee means the Compensation Committee of the Board.

1.11. Company means Innkeepers USA Trust.

1.12. Continuing Trustee means any member of the Board, while a member of the
Board and (i) who was a member of the Board prior to March 1, 1997 or (ii) whose
nomination for or election to the Board was recommended or approved by a
majority of the Continuing Trustees.

1.13. Control Affiliate, with respect to any Person, means an affiliate as
defined in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act, as amended as of January 1, 1990.

1.14. Control Change Date means the date on which a Change of Control occurs. If
a Change of Control occurs on account of a series of transactions, the "Control
Change Date" is the date of the last of such transactions.

1.15. Corresponding SAR means an SAR that is granted in relation to a particular
Option and that can be exercised only upon the surrender to the Company,
unexercised, of that portion of the Option to which the SAR relates.

1.16. Disability, with respect to a Participant, means a complete physical or
mental inability, confirmed by an independent licensed physician, to perform
substantially all of the services required by the Participant's employment
contract or required of an employee with Participant's job description
immediately before

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Participant first became unable to perform those services, that continues for a
period of 240 consecutive days.

1.17. Dividend Equivalent Right Performance Measures shall mean those measures
of the Company's, an Affiliate's or a Participant's performance over the
Dividend Equivalent Right Performance Period established by the Administrator
with respect to a particular Performance Award. If no Dividend Equivalent Right
Performance Measures are specified in an Agreement that provides for a
Performance Award, then Dividend Equivalent Right Performance Measures shall
mean achievement of a fifteen percent (15%) annual compounded increase in the
fair market value of an investment in Shares during the Dividend Equivalent
Right Performance Period, assuming all dividends payable with respect to such
investment are reinvested in Shares.

1.18. Dividend Equivalent Right Performance Period shall mean the period in
which Dividend Equivalent Right Performance Measures are measured that is
established by the Administrator with respect to a particular Performance Award.
If no Dividend Equivalent Right Performance Period is specified in an Agreement
that provides for a Performance Award, then Dividend Equivalent Right
Performance Period shall mean the five year period beginning on the later of the
date of grant of the Option to which the Performance Award relates or the date
of grant of the Performance Award; provided, however, that, in the absence of
contrary provisions in an Agreement, a Dividend Equivalent Right Performance
Period shall end on the earliest of (i) a Control Change Date or (ii) with
respect to a Participant


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to whom a Performance Award has been granted, the date that such Participant's
employment with the Company terminates due to his death or Disability or is
terminated by the Company without Cause.

1.19. Exchange Act means the Securities Exchange Act of 1934, as amended and as
in effect from time to time.

1.20. Fair Market Value means, on any given date, the closing price of a Share
as reported on the New York Stock Exchange composite tape on such date, or if
the Shares were not traded on the New York Stock Exchange on such date, then on
the next preceding day that the Shares were traded on such exchange, all as
reported by such source as the Administrator may select.

1.21. Incentive Award means an award which, subject to such terms and conditions
as may be prescribed by the Administrator, entitles the Participant to receive a
cash payment from the Company or an Affiliate.

1.22. Initial Value means, with respect to an SAR, the Fair Market Value of one
Share on the date of grant.

1.23. Option means a share option that entitles the holder to purchase from the
Company a stated number of Shares at the price set forth in an Agreement. In the
discretion of the Administrator and if provided in an Agreement, an Option may
include a Performance Award.

1.24. Participant means an employee of the Company or an Affiliate, including an
employee who is a member of the Board, who satisfies the requirements of Article
IV and is selected by the Administrator to receive a Share Award, an award



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of Performance Shares, an Option, an SAR, an Incentive Award or a combination
thereof.

1.25. Performance Award means the right, awarded in tandem with a newly granted
or outstanding Option, to receive a cash payment for all dividends that would
have been paid on each Share for which the related Option is exercised, without
interest or compounding, during the period from the date of grant of the Option
(or, if later, that date of grant of the Performance Award) through the date
that the Option is exercised for such Share, had such Share been outstanding
throughout that period. A Performance Award will be earned only if the Dividend
Equivalent Performance Measures have been satisfied for the Dividend Equivalent
Right Performance Period and only if Participant is employed on the day
preceding the last day of the Dividend Equivalent Right Performance Period.

1.26. Performance Shares means an award, in the amount determined by the
Administrator and specified in an Agreement, stated with reference to a
specified number of Shares, that in accordance with the terms of an Agreement
entitles the holder to receive a cash payment or Shares or a combination
thereof. In the discretion of the Administrator, a Performance Share award may
include the right to receive an additional payment for all dividends that would
have been paid on each specified Share, without interest or compounding, from
the date of grant through the date of settlement of the Performance Share award.
A Participant will be entitled to such a payment only if the performance
criteria that must be satisfied for the


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Performance Share award to be earned are met and only to the extent the award is
settled in Shares.

1.27. Person means any human being, firm, corporation, partnership, or other
entity. Person also includes any human being, firm, corporation, partnership, or
other entity as defined in Sections 13(d)(3) and 14(d)(2) of the Exchange Act,
as amended as of January 1, 1990. The term Person does not include the Company
or any Related Entity, and the term Person does not include any employee-benefit
plan maintained by the Company or by any Related Entity, and any person or
entity organized, appointed, or established by the Company or by any subsidiary
for or pursuant to the terms of any such employee-benefit plan, unless the Board
determines that such an employee-benefit plan or such person or entity is a
Person.

1.28. Plan means the Innkeepers USA Trust 1994 Share Incentive Plan.

1.29. Related Entity means any entity that is part of a controlled group of
corporations or is under common control with the Company within the meaning of
Code Section 1563(a), 414(b) or 414(c).

1.30. SAR means a Share appreciation right that in accordance with the terms of
an Agreement entitles the holder to receive, with respect to each Share
encompassed by the exercise of such SAR, the amount determined by the
Administrator and specified in an Agreement. In the absence of such a
determination, the holder shall be entitled to receive, with respect to each
Share encompassed by the exercise of such SAR, the excess of the Fair Market
Value on the date of exercise over the Initial Value. References to "SARs"
include both


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Corresponding SARs and SARs granted independently of Options, unless the context
requires otherwise.

1.31. Share Award means Shares awarded to a Participant under Article VIII.

1.32. Shares means the common shares of the Company.


                                   ARTICLE II

                                    PURPOSES

             The Plan is intended to assist the Company and its Affiliates in
recruiting and retaining individuals with ability and initiative by enabling
such persons to participate in the future success of the Company and its
Affiliates and to associate their interests with those of the Company and its
shareholders. The Plan is intended to permit the grant of both Options
qualifying under Section 422 of the Code ("incentive share options") and Options
not so qualifying, and the grant of SARs, Share Awards, Performance Awards,
Performance Shares and Incentive Awards. No Option that is intended to be an
incentive share option shall be invalid for failure to qualify as an incentive
share option. The proceeds received by the Company from the sale of Shares
pursuant to this Plan shall be used for general corporate purposes.


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                                   ARTICLE III

                                 ADMINISTRATION


             The Plan shall be administered by the Administrator. The
Administrator shall have authority to grant Share Awards, Performance Awards,
Performance Shares, Incentive Awards, Options and SARs upon such terms (not
inconsistent with the provisions of this Plan), as the Administrator may
consider appropriate. Such terms may include conditions (in addition to those
contained in this Plan), on the exercisability of all or any part of an Option
or SAR or on the transferability or forfeitability of a Share Award, a
Performance Award, an award of Performance Shares or an Incentive Award.
Notwithstanding any such conditions, the Administrator may, in its discretion,
(i) accelerate the time at which any Option or SAR may be exercised, or the time
at which a Share Award may become transferable or nonforfeitable or the time at
which an Incentive Award or award of Performance Shares may be settled or (ii)
suspend the forfeiture of any award made under this Plan. In addition, the
Administrator shall have complete authority to interpret all provisions of this
Plan; to prescribe the form of Agreements; to adopt, amend, and rescind rules
and regulations pertaining to the administration of the Plan; and to make all
other determinations necessary or advisable for the administration of this Plan.
The express grant in the Plan of any specific power to the Administrator shall
not be construed as limiting any power or authority of the Administrator. Any
decision made, or action taken, by the Administrator or in


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connection with the administration of this Plan shall be final and conclusive.
Neither the Administrator nor any member of the Committee shall be liable for
any act done in good faith with respect to this Plan or any Agreement, Option,
SAR, Performance Award, Share Award, Incentive Award or award of Performance
Shares. All expenses of administering this Plan shall be borne by the Company.

             The Committee, in its discretion, may delegate to one or more
officers of the Company all or part of the Committee's authority and duties with
respect to grants and awards to individuals who are not subject to the reporting
and other provisions of Section 16 of the Exchange Act. The Committee may revoke
or amend the terms of a delegation at any time but such action shall not
invalidate any prior actions of the Committee's delegate or delegates that were
consistent with the terms of the Plan.

                                   ARTICLE IV

                                   ELIGIBILITY

             Any employee of the Company or an Affiliate (including a
corporation that becomes an Affiliate after the adoption of this Plan), is
eligible to participate in this Plan if the Administrator, in its sole
discretion, determines that such person has contributed significantly or can be
expected to contribute significantly to the profits or growth of the Company or
an Affiliate. Trustees of the Company who are employees of the Company or an
Affiliate may be selected to participate in this Plan.



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                                    ARTICLE V

                             SHARES SUBJECT TO PLAN

5.01. Shares Issued. Upon the award of Shares pursuant to a Share Award or in
settlement of an award of Performance Shares, the Company may issue Shares from
its authorized but unissued Shares. Upon the exercise of any Option or SAR, the
Company may deliver to the Participant (or the Participant's broker if the
Participant so directs), Shares from its authorized but unissued Shares.

5.02. Aggregate Limit. The maximum aggregate number of Shares that may be issued
under this Plan pursuant to the exercise of SARs and Options and the grant of
Share Awards and the settlement of Performance Shares is 2,700,000 Shares. The
maximum aggregate number of Shares that may be issued under this Plan as Share
Awards and in settlement of Performance Shares is 900,000 Shares. The maximum
aggregate number of Shares that may be issued under this Plan and the maximum
number of Shares that may be issued as Share Awards and in settlement of
Performance Shares shall be subject to adjustment as provided in Article XII.

5.03. Reallocation of Shares. If an Option is terminated, in whole or in part,
for any reason other than its exercise or the exercise of a Corresponding SAR
that is settled with Shares, the number of Shares allocated to the Option or
portion thereof may be reallocated to other Options, SARs, Performance Shares
and Share Awards to be granted under this Plan. If an SAR is terminated, in
whole or in part, for any reason other than its exercise that is settled with
Shares or the exercise of a related Option, the number of Shares allocated to
the SAR or portion thereof may


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be reallocated to other Options, SARs, Performance Shares and Share Awards to be
granted under this Plan. If an award of Performance Shares is terminated, in
whole or in part, for any reason other than its settlement with Shares, the
number of Shares allocated to the Performance Shares or portion thereof may be
reallocated to other Options, SARs, Performance Shares and Share Awards to be
granted under this Plan. If a Share Award is forfeited, in whole or in part, for
any reason, the number of Shares allocated to the Share Award or portion thereof
may be reallocated to other Options, SARs, Performance Shares and Share Awards
to be granted under this Plan.

                                   ARTICLE VI

                                     OPTIONS

6.01. Award. In accordance with the provisions of Article IV, the Administrator
will designate each individual to whom an Option is to be granted and will
specify the number of Shares covered by such awards; provided, however, that no
individual may be granted Options in any calendar year covering more than
750,000 Shares.

6.02. Option Price. The price per share for Shares purchased on the exercise of
an Option shall be determined by the Administrator on the date of grant, but
shall not be less than the Fair Market Value on the date the Option is granted.

6.03. Maximum Option Period. The maximum period in which an Option may be
exercised shall be determined by the Administrator on the date of grant, except
that no Option that is an incentive share option shall be exercisable after the
expiration of ten years from the date such Option was granted. The terms of any


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Option that is an incentive share option may provide that it is exercisable for
a period less than such maximum period.

6.04. Nontransferability. Except as provided in Section 6.05, each Option
granted under this Plan shall be nontransferable except by will or by the laws
of descent and distribution. In the event of any transfer of an Option (by the
Participant or his transferee), the Option and any Corresponding SAR that
relates to such Option must be transferred to the same person or persons or
entity or entities. Except as provided in Section 6.05, during the lifetime of
the Participant to whom the Option is granted, the Option may be exercised only
by the Participant. No right or interest of a Participant in any Option shall be
liable for, or subject to, any lien, obligation, or liability of such
Participant.

6.05. Transferable Options. Section 6.04 to the contrary notwithstanding, if the
Agreement provides, an Option that is not an incentive share option may be
transferred by a Participant to the Participant's children, grandchildren,
spouse, one or more trusts for the benefit of such family members or a
partnership in which such family members are the only partners, on such terms
and conditions as may be permitted under Securities Exchange Commission Rule
16b-3 as in effect from time to time. The holder of an Option transferred
pursuant to this Section shall be bound by the same terms and conditions that
governed the Option during the period that it was held by the Participant;
provided, however, that such transferee may not transfer the Option except by
will or the laws of descent and distribution. In the event of any transfer of an
Option (by the Participant or his transferee), the Option and any


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Corresponding SAR that relates to such Option must be transferred to the same
person or persons or entity or entities.

6.06. Employee Status. For purposes of determining the applicability of Section
422 of the Code (relating to incentive share options), or in the event that the
terms of any Option provide that it may be exercised only during employment or
within a specified period of time after termination of employment, the
Administrator may decide to what extent leaves of absence for governmental or
military service, illness, temporary disability, or other reasons shall not be
deemed interruptions of continuous employment.

6.07. Exercise. Subject to the provisions of this Plan and the applicable
Agreement, an Option may be exercised in whole at any time or in part from time
to time at such times and in compliance with such requirements as the
Administrator shall determine; provided, however, that incentive share options
(granted under the Plan and all plans of the Company and its Affiliates) may not
be first exercisable in a calendar year for Shares having a Fair Market Value
(determined as of the date an Option is granted) exceeding $100,000. An Option
granted under this Plan may be exercised with respect to any number of whole
Shares less than the full number for which the Option could be exercised. A
partial exercise of an Option shall not affect the right to exercise the Option
from time to time in accordance with this Plan and the applicable Agreement with
respect to the remaining Shares subject to the Option. The exercise of an Option
shall result in the termination of any Corresponding SAR to the extent of the
number of Shares with respect to which the Option is exercised.


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6.08. Payment. Subject to rules established by the Administrator and unless
otherwise provided in an Agreement, payment of all or part of the Option price
may be made in cash, a cash equivalent acceptable to the Administrator, or with
Shares which have been owned by the Participant for at least six months and
which have not been used for another exercise during the prior six months. If
Shares are used to pay all or part of the Option price, the sum of the cash and
cash equivalent and the Fair Market Value (determined as of the day preceding
the date of exercise) of the Shares surrendered must not be less than the Option
price of the Shares for which the Option is being exercised.

6.09. Performance Awards. If an Option Agreement includes a Performance Award,
the Participant shall be entitled to the payment (if any) that is due thereunder
within 30 days after the later of: (i) with respect to each Share for which the
Option is exercised, the date the Option is exercised for such Shares, and (ii)
the last day of the applicable Dividend Equivalent Right Performance Period.

6.10. Change of Control. Section 6.07 to the contrary notwithstanding, each
outstanding Option shall be fully exercisable (in whole or in part at the
discretion of the holder) on and after a Control Change Date.

6.11. Shareholder Rights. No Participant shall have any rights as a shareholder
with respect to Shares subject to his Option until the date of exercise of such
Option.

6.12. Disposition of Shares. A Participant shall notify the Company of any sale
or other disposition of Shares acquired pursuant to an Option that was an
incentive share option if such sale or disposition occurs (i) within two years
of the grant of an


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Option or (ii) within one year of the issuance of Shares to the Participant.
Such notice shall be in writing and directed to the Secretary of the Company.

                                   ARTICLE VII

                                      SARS

7.01. Award. In accordance with the provisions of Article IV, the Administrator
will designate each individual to whom SARs are to be granted and will specify
the number of Shares covered by such awards; provided, however, that no
individual may be granted SARs in any calendar year covering more than 750,000
Shares. For purposes of the preceding sentence, an Option and Corresponding SAR
shall be treated as a single award. In addition no Participant may be granted
Corresponding SARs (under all incentive share option plans of the Company and
its Affiliates) that are related to incentive share options which are first
exercisable in any calendar year for Shares having an aggregate Fair Market
Value (determined as of the date the related Option is granted) that exceeds
$100,000.

7.02. Maximum SAR Period. The term of each SAR shall be determined by the
Administrator on the date of grant, except that no Corresponding SAR that is
related to an incentive share option shall have a term of more than ten years
from the date such related Option was granted. The terms of any Corresponding
SAR that is related to an incentive share option may provide that it has a term
that is less than such maximum period.


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<PAGE>   21



7.03. Nontransferability. Except as provided in Section 7.04, each SAR granted
under this Plan shall be nontransferable except by will or by the laws of
descent and distribution. In the event of any such transfer, a Corresponding SAR
and the related Option must be transferred to the same person or persons or
entity or entities. During the lifetime of the Participant to whom the SAR is
granted, the SAR may be exercised only by the Participant. No right or interest
of a Participant in any SAR shall be liable for, or subject to, any lien,
obligation, or liability of such Participant.

7.04. Transferable SARs. Section 7.03 to the contrary notwithstanding, if the
Agreement provides, an SAR, other than a Corresponding SAR that is related to an
incentive share option, may be transferred by a Participant to the Participant's
children, grandchildren, spouse, one or more trusts for the benefit of such
family members or a partnership in which such family members are the only
partners, on such terms and conditions as may be permitted under Securities
Exchange Commission Rule 16b-3 as in effect from time to time. The holder of an
SAR transferred pursuant to this Section shall be bound by the same terms and
conditions that governed the SAR during the period that it was held by the
Participant; provided, however, that such transferee may not transfer the SAR
except by will or the laws of descent and distribution. In the event of any
transfer of a Corresponding SAR (by the Participant or his transferee), the
Corresponding SAR and the related Option must be transferred to the same person
or person or entity or entities.

7.05. Exercise. Subject to the provisions of this Plan and the applicable
Agreement, an SAR may be exercised in whole at any time or in part from time to


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<PAGE>   22



time at such times and in compliance with such requirements as the Administrator
shall determine; provided, however, that a Corresponding SAR that is related to
an incentive share option may be exercised only to the extent that the related
Option is exercisable and only when the Fair Market Value exceeds the option
price of the related Option. An SAR granted under this Plan may be exercised
with respect to any number of whole Shares less than the full number for which
the SAR could be exercised. A partial exercise of an SAR shall not affect the
right to exercise the SAR from time to time in accordance with this Plan and the
applicable Agreement with respect to the remaining Shares subject to the SAR.
The exercise of a Corresponding SAR shall result in the termination of the
related Option to the extent of the number of Shares with respect to which the
SAR is exercised.

7.06 Change of Control. Section 7.05 to the contrary notwithstanding, each
outstanding SAR shall be fully exercisable (in whole or in part at the
discretion of the holder) on and after a Control Change Date.

7.07. Employee Status. If the terms of any SAR provide that it may be exercised
only during employment or within a specified period of time after termination of
employment, the Administrator may decide to what extent leaves of absence for
governmental or military service, illness, temporary disability or other reasons
shall not be deemed interruptions of continuous employment.

7.08. Settlement. At the Administrator's discretion, the amount payable as a
result of the exercise of an SAR may be settled in cash, Shares, or a
combination


                                      -18-

<PAGE>   23



of cash and Shares. No fractional Share will be deliverable upon the exercise of
an SAR but a cash payment will be made in lieu thereof.

7.09. Shareholder Rights. No Participant shall, as a result of receiving an SAR
award, have any rights as a shareholder of the Company or any Affiliate until
the date that the SAR is exercised and then only to the extent that the SAR is
settled by the issuance of Shares.

                                  ARTICLE VIII

                                  SHARE AWARDS

8.01. Award. In accordance with the provisions of Article IV, the Administrator
will designate each individual to whom a Share Award is to be made and will
specify the number of Shares covered by such awards; provided, however, that no
Participant may receive Share Awards in any calendar year for more than 150,000
Shares.

8.02. Vesting. The Administrator, on the date of the award, may prescribe that a
Participant's rights in a Share Award shall be forfeitable or otherwise
restricted for a period of time or subject to such conditions as may be set
forth in the Agreement.

8.03. Performance Objectives. In accordance with Section 8.02, the Administrator
may prescribe that Share Awards will become vested or transferable or both based
on objectives stated with respect to the Company's return on equity, total
earnings, earnings per Share, earnings growth, return on capital, return on
assets, Fair Market Value, Share price appreciation, funds from operations
growth,



                                      -19-

<PAGE>   24



or such other measures as may be selected by the Administrator. If the
Administrator, on the date of award, prescribes that a Share Award shall become
nonforfeitable and transferable only upon the attainment of performance
objectives, the Shares subject to such Share Award shall become nonforfeitable
and transferable only to the extent that the Administrator certifies that such
objectives have been achieved.

8.04. Employee Status. In the event that the terms of any Share Award provide
that Shares may become transferable and nonforfeitable thereunder only after
completion of a specified period of employment, the Administrator may decide in
each case to what extent leaves of absence for governmental or military service,
illness, temporary disability, or other reasons shall not be deemed
interruptions of continuous employment.

8.05. Change of Control. Sections 8.02, 8.03 and 8.04 to the contrary
notwithstanding, each outstanding Share Award shall be transferable and
nonforfeitable on and after a Control Change Date.

8.06. Shareholder Rights. Prior to their forfeiture (in accordance with the
applicable Agreement and while the Shares granted pursuant to the Share Award
may be forfeited or are nontransferable), a Participant will have all rights of
a shareholder with respect to a Share Award, including the right to receive
dividends and vote the Shares; provided, however, that during such period (i) a
Participant may not sell, transfer, pledge, exchange, hypothecate, or otherwise
dispose of Shares granted pursuant to a Share Award, (ii) the Company shall
retain custody of the



                                      -20-

<PAGE>   25



certificates evidencing Shares granted pursuant to a Share Award, and (iii) the
Participant will deliver to the Company a Share power, endorsed in blank, with
respect to each Share Award. The limitations set forth in the preceding sentence
shall not apply after the Shares granted under the Share Award are transferable
and are no longer forfeitable.

                                   ARTICLE IX

                            PERFORMANCE SHARE AWARDS

9.01. Award. In accordance with the provisions of Article IV, the Administrator
will designate each individual to whom an award of Performance Shares is to be
made and will specify the number of Shares covered by such awards; provided,
however, that no Participant may receive an award of Performance Shares in any
calendar year for more than 150,000 Shares.

9.02. Earning the Award. The Administrator, on the date of the grant of an
award, shall prescribe that the Performance Shares, or portion thereof, will be
earned, and the Participant will be entitled to receive payment pursuant to the
award of Performance Shares, only upon the satisfaction of performance
objectives and such other criteria as may be prescribed by the Administrator
during a performance measurement period of at least one year. The performance
objectives may be stated with respect to the Company's return on equity, total
earnings, earnings per Share, earnings growth, return on capital, return on
assets, Fair Market Value, Share price appreciation, funds from operations
growth, or such other measures as may be



                                      -21-

<PAGE>   26



selected by the Administrator. No payments will be made with respect to
Performance Shares unless, and then only to the extent that, the Administrator
certifies that such objectives have been achieved.

9.03. Payment. In the discretion of the Administrator, the amount payable when
an award of Performance Shares is earned may be settled in cash, by the issuance
of Shares or a combination thereof. A Participant's rights in any Shares issued
in settlement of a Performance Share award may be forfeited or otherwise
restricted for a period of time or subject to such conditions as the
Administrator may prescribe. A fractional Share shall not be deliverable when an
award of Performance Shares is earned, but a cash payment will be made in lieu
thereof.

9.04. Shareholder Rights. No Participant shall, as a result of receiving an
award of Performance Shares, have any rights as a shareholder until and to the
extent that the award of Performance Shares is earned and settled in Shares. If
the Agreement so provides, a Participant may receive a cash payment equal to the
dividends that are payable with respect to the number of Shares covered by the
award between the date the Performance Shares are awarded and the date Shares
are issued pursuant to the Performance Share award. After an award of
Performance Shares is earned and settled in Shares, a Participant will have all
the rights of a shareholder as described in Section 8.06.

9.05. Nontransferability. Except as provided in Section 9.06, Performance Shares
granted under this Plan shall be nontransferable except by will or by the laws
of descent and distribution. No right or interest of a Participant in any
Performance


                                      -22-

<PAGE>   27



Shares shall be liable for, or subject to, any lien, obligation, or liability of
such Participant.

9.06. Transferable Performance Shares. Section 9.05 to the contrary
notwithstanding, if the Agreement provides, an award of Performance Shares may
be transferred by a Participant to the Participant's children, grandchildren,
spouse, one or more trusts for the benefit of such family members or a
partnership in which such family members are the only partners, on such terms
and conditions as may be permitted under Securities Exchange Commission Rule
16b-3 as in effect from time to time. The holder of Performance Shares
transferred pursuant to this Section shall be bound by the same terms and
conditions that governed the Performance Shares during the period that they were
held by the Participant; provided, however that such transferee may not transfer
Performance Shares except by will or the laws of descent and distribution.

9.07. Employee Status. In the event that the terms of any Performance Share
Award provide that no payment will be made unless the Participant completes a
stated period of employment, the Administrator may decide to what extent leaves
of absence for government or military service, illness, temporary disability, or
other reasons shall not be deemed interruptions of continuous employment.

9.08. Change of Control. Sections 9.02 to the contrary notwithstanding, on and
after a Control Change Date, each outstanding Performance Share award shall be
earned as of a Control Change Date. To the extent the Agreement provides that
the

                                      -23-

<PAGE>   28



Performance Share award will be settled with Shares, such Shares shall be
nonforfeitable and transferable as of the Control Change Date.

                                    ARTICLE X

                                INCENTIVE AWARDS

10.01. Award. The Administrator shall designate Participants to whom Incentive
Awards are made. All Incentive Awards shall be finally determined exclusively by
the Administrator under the procedures established by the Administrator;
provided, however, that no Participant may receive an Incentive Award payment in
any calendar year that exceeds the lesser of (i) $300,000 and (ii) 150% of the
Participant's base salary (prior to any salary reduction or deferral elections)
as of the date of grant of the Incentive Award.

10.02. Terms and Conditions. The Administrator, at the time an Incentive Award
is made, shall specify the terms and conditions which govern the award. Such
terms and conditions shall prescribe that the Incentive Award shall be earned
only upon, and to the extent that, performance objectives are satisfied. The
performance objectives may be stated with respect to the Company's return on
equity, total earnings, earnings per Share, earnings growth, return on capital,
return on assets, Fair Market Value, Share price appreciation, funds from
operations growth, or such other measures as may be selected by the
Administrator. Such terms and conditions also may include other limitations on
the payment of Incentive Awards including, by way of example and not of
limitation, requirements that the Participant complete



                                      -24-

<PAGE>   29



a specified period of employment with the Company or an Affiliate. The
Administrator, at the time an Incentive Award is made, shall also specify when
amounts shall be payable under the Incentive Award and whether amounts shall be
payable in the event of the Participant's death, disability, or retirement.

10.03. Nontransferability. Except as provided in Section 10.04, Incentive Awards
granted under this Plan shall be nontransferable except by will or by the laws
of descent and distribution. 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.

10.04. Transferable Incentive Awards. Section 10.03 to the contrary
notwithstanding, if provided in an Agreement, an Incentive Award may be
transferred by a Participant to the Participant's children, grandchildren,
spouse, one or more trusts for the benefit of such family members or to a
partnership in which such family members are the only partners, on such terms
and conditions as may be permitted by Securities Exchange Commission Rule 16b-3
as in effect from time to time. The holder of an Incentive Award transferred
pursuant to this Section shall be bound by the same terms and conditions that
governed the Incentive Award during the period that it was held by the
Participant; provided, however, that such transferee may not transfer the
Incentive Award except by will or the laws of descent and distribution.

10.05. Employee Status. If the terms of an Incentive Award provide that a
payment will be made thereunder only if the Participant completes a stated
period of employment, the Administrator may decide to what extent leaves of
absence for


                                      -25-

<PAGE>   30



governmental or military service, illness, temporary disability or other reasons
shall not be deemed interruptions of continuous employment.

10.06. Change of Control. Section 10.02 to the contrary notwithstanding, any
Incentive Award shall be earned in its entirety as of a Control Change Date.

10.07. Shareholder Rights. No Participant shall, as a result of receiving an
Incentive Award, have any rights as a shareholder of the Company or any
Affiliate on account of such award.

                                   ARTICLE XI
                                 INDEMNIFICATION

             A Participant shall be entitled to a payment under this Article XI
if (a) any benefit, payment, accelerated exercisability or vesting or other
right under this Plan constitutes a "parachute payment" (as defined in Code
Section 280G(b)(2)(A), but without regard to Code Section 280G(b)(2)(A)(ii)),
with respect to such Participant and (b) the Participant incurs a liability
under Code Section 4999. The amount payable to a Participant described in the
preceding sentence shall be the amount required to indemnify the Participant and
hold him harmless from the application of Code Sections 280G and 4999. To effect
this indemnification, the Company must pay such Participant an amount sufficient
to pay the excise tax imposed on Participant under Code Section 4999 with
respect to benefits, payments, accelerated exercisability and vesting and other
rights under this Plan and any other plan or agreement, and any income,
employment, hospitalization, excise or other taxes


                                      -26-

<PAGE>   31



attributable to the indemnification payment. The benefit payable under this
Article XI shall be paid in a single cash sum not later than twenty days after
the date (or extended filing date) on which the tax return reflecting liability
for the Code Section 4999 excise tax is required to be filed with the Internal
Revenue Service.

                                   ARTICLE XII

                        ADJUSTMENT UPON CHANGE IN SHARES

             The maximum number of Shares as to which Options, SARs, Performance
Shares and Share Awards may be granted under this Plan, the terms of outstanding
Share Awards, Options, Performance Shares, Incentive Awards, and SARs, and the
per individual limitations on the number of Shares or for which Options, SARs,
Performance Shares, and Share Awards may be granted shall be adjusted as the
Committee shall determine to be equitably required in the event that (i) the
Company (a) effects one or more Share dividends, Share split-ups, subdivisions
or consolidations of shares or (b) engages in a transaction to which Section 424
of the Code applies or (ii) there occurs any other event which, in the judgment
of the Committee necessitates such action. Any determination made under this
Article XI by the Committee shall be final and conclusive.

             The issuance by the Company of shares of any class, or securities
convertible into shares of any class, for cash or property, or for labor or
services, either upon direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the Company
convertible


                                      -27-

<PAGE>   32



into such shares or other securities, shall not affect, and no adjustment by
reason thereof shall be made with respect to, the maximum number of shares as to
which Options, SARs, Performance Shares and Share Awards may be granted, the per
individual limitations on the number of Shares for which Options, SARs,
Performance Shares and Share Awards may be granted or the terms of outstanding
Share Awards, Options, Performance Shares, Incentive Awards or SARs.

             The Committee may make Share Awards and may grant Options, SARs,
Performance Shares, and Incentive Awards in substitution for performance shares,
phantom shares, share awards, stock options, stock appreciation rights, or
similar awards held by an individual who becomes an employee of the Company or
an Affiliate in connection with a transaction described in the first paragraph
of this Article XII. Notwithstanding any provision of the Plan (other than the
limitation of Section 5.02), the terms of such substituted Share Awards or
Option, SAR, Performance Shares or Incentive Award grants shall be as the
Committee, in its discretion, determines is appropriate.

                                  ARTICLE XIII

                             COMPLIANCE WITH LAW AND
                          APPROVAL OF REGULATORY BODIES

             No Option or SAR shall be exercisable, no Shares shall be issued,
no certificates for Shares shall be delivered, and no payment shall be made
under this Plan except in compliance with all applicable federal and state laws
and regulations (including, without limitation, withholding tax requirements),
any listing agreement



                                      -28-

<PAGE>   33



to which the Company is a party, and the rules of all domestic stock exchanges
on which the Company's shares may be listed. The Company shall have the right to
rely on an opinion of its counsel as to such compliance. Any share certificate
issued to evidence Shares when a Share Award is granted, a Performance Share is
settled or for which an Option or SAR is exercised may bear such legends and
statements as the Administrator may deem advisable to assure compliance with
federal and state laws and regulations. No Option or SAR shall be exercisable,
no Share Award or Performance Share shall be granted, no Shares shall be issued,
no certificate for Shares shall be delivered, and no payment shall be made under
this Plan until the Company has obtained such consent or approval as the
Administrator may deem advisable from regulatory bodies having jurisdiction over
such matters.

                                   ARTICLE XIV

                               GENERAL PROVISIONS

14.01. Effect on Employment and Service. Neither the adoption of this Plan, its
operation, nor any documents describing or referring to this Plan (or any part
thereof), shall confer upon any individual any right to continue in the employ
or service of the Company or an Affiliate or in any way affect any right and
power of the Company or an Affiliate to terminate the employment or service of
any individual at any time with or without assigning a reason therefor. 14.02.
Unfunded Plan. The Plan, insofar as it provides for grants, shall be unfunded,
and the Company shall not be required to segregate any assets that may


                                      -29-

<PAGE>   34



at any time be represented by grants under this Plan. Any liability of the
Company to any person with respect to any grant under this Plan shall be based
solely upon any contractual obligations that may be created pursuant to this
Plan. No such obligation of the Company shall be deemed to be secured by any
pledge of, or other encumbrance on, any property of the Company.

14.03. Rules of Construction. Headings are given to the articles and sections of
this Plan solely as a convenience to facilitate reference. The reference to any
statute, regulation, or other provision of law shall be construed to refer to
any amendment to or successor of such provision of law.

                                   ARTICLE XV

                                    AMENDMENT

             The Board may amend or terminate this Plan from time to time;
provided, however, that no amendment may become effective until shareholder
approval is obtained if (i) the amendment increases the aggregate number of
Shares that may be issued under the Plan or (ii) the amendment changes the class
of individuals eligible to become Participants. No amendment shall, without a
Participant's consent, adversely affect any rights of such Participant under any
outstanding Share Award, Performance Share Award, Option, SAR, Performance Award
or Incentive Award outstanding at the time such amendment is made.



                                      -30-
<PAGE>   35



                                   ARTICLE XVI

                                DURATION OF PLAN

             No Share Award, Performance Share Award, Option, SAR, Performance
Award or Incentive Award may be granted under this Plan after December 31, 2006.
Share Awards, Performance Share awards, Options, SARs, Performance Awards and
Incentive Awards granted before that date shall remain valid in accordance with
their terms.

                                  ARTICLE XVII

                             EFFECTIVE DATE OF PLAN

             Options, SARs, Performance Awards, Share Awards, Performance Shares
and Incentive Awards may be granted under this Plan upon its adoption by the
Board; provided that, unless this Plan is approved by a majority of the votes
cast by the Company's shareholders, voting either in person or by proxy, at a
duly held shareholders' meeting at which a quorum is present, (i) no Option
granted on or after February 3, 1997 shall be exercisable or effective to the
extent its grant would cause the maximum aggregate number of Shares issuable
hereunder to exceed 800,000, and (ii) no SAR, Share Award, Performance Award,
Performance Shares or Incentive Award granted on or after February 3, 1997 shall
be exercisable or effective.




                                      -31-