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Exhibit 10.5

                           CHATEAU PROPERTIES, INC.

                         1997 EQUITY COMPENSATION PLAN

            Chateau Properties, Inc., a Maryland corporation, wishes to attract
key employees, directors and key consultants, to the Company and its
Subsidiaries and induce key employees, directors and key consultants, to remain
with the Company and its Subsidiaries, and to provide them with long-term
incentives for sustained high levels of performance. In furtherance thereof, the
Chateau Properties, Inc. 1997 Equity Compensation Plan is designed to provide
equity-based incentives to key employees, directors and key consultants, of the
Company and its Subsidiaries.

            1. Definitions.

            Whenever used herein, the following terms shall have the meanings
set forth below:

            "Award Agreement" means a written agreement in a form approved by
the Committee to be entered into by the Company and the Optionee of an Option or
the Grantee of Restricted Stock, as applicable, as provided in Section 4, and
also refers, if applicable, to any employment agreement between the Company and
the Participant, the provisions of which relate to Options or Grants.

            "Board" means the Board of Directors of the Company.

            "Cause" means, unless otherwise provided in the Participant's Award
Agreement, (i) engaging in (A) willful or gross misconduct or (B) willful or
gross neglect, (ii) repeatedly failing to adhere to the directions of superiors
or the Board or the written policies and practices of the Company or its
Subsidiaries or its affiliates, (iii) the commission of a felony or a crime of
moral turpitude, or any crime involving the Company or its Subsidiaries, or any
affiliate thereof, (iv) fraud, insubordination, misappropriation or
embezzlement, (v) a material breach of the Participant's employment agreement
(if any) with the Company or its Subsidiaries or its affiliates, or (vi) any
illegal 

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act detrimental to the Company or its Subsidiaries or its affiliates; provided,
however, that if the Participant is a party to an employment agreement with the
Company or any of its Subsidiaries and such agreement provides for termination
for "Cause," "Cause" hereunder shall have the same meaning ascribed to it in the
employment agreement.

            "Change in Control" means the occurrence of one of the following:

                  a. a "person" or "group" (within the meaning of sections 13(d)
                  and 14(d) of the Exchange Act) becomes the "beneficial owner"
                  (within the meaning of Rule 13d-3 under the Exchange Act) of
                  securities of the Company (including options, warrants, rights
                  and convertible and exchangeable securities) representing 50%
                  or more of the combined voting power of the Company's then
                  outstanding securities in any one or more transactions;
                  provided, however, that purchases by employee benefit plans of
                  the Company and by the Company or its affiliates shall be
                  disregarded;

                  b. any sale, lease, exchange or other transfer (in one
                  transaction or a series of related transactions) of all, or
                  substantially all, of the operating assets of the Company;

                  c. the execution and delivery of a definitive agreement by the
                  Company that provides for a merger or consolidation, or a
                  transaction having a similar effect (unless such merger,
                  consolidation or similar transaction is with a subsidiary of
                  the Company or with another company, a majority of whose
                  outstanding capital stock is owned by the same persons or
                  entities who own a majority of the Common Stock at such time),
                  where (A) the Company is not the surviving corporation, (B)
                  the majority of the Common Stock of the Company is no longer
                  held by the stockholders of the Company immediately prior to
                  the transaction, or (C) the Company's Common Stock is
                  converted into cash, securities or other property (other than
                  the common stock of a company into which the Company is
                  merged); provided, however, that, in the event that the
                  contemplated merger, consolidation or similar transaction is
                  not consummated, then any rights that may arise under this
                  Section 5.3(a) by virtue of such Change of Control shall cease
                  to apply;

                  d. at a time when the Common Stock is registered under Section
                  12 of the Exchange Act, a person 


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                  other than the Company makes a tender or exchange offer for
                  50% or more of the Common Stock pursuant to which purchases of
                  any amount of Common Stock are made; or

                  e. a majority of the members of the Board are not persons who
                  (A) had been directors of the Company for at least the
                  preceding 24 consecutive months or (B) when they initially
                  were elected to the Board, (I) were nominated (if they were
                  elected by the stockholders) or elected (if they were elected
                  by the directors) with the affirmative vote of two-thirds of
                  the directors who were Continuing Directors (as defined below)
                  at the time of the nomination or election by the Board and
                  (II) were not elected as a result of an actual or threatened
                  solicitation of proxies or consents by a person other than the
                  Board or an agreement intended to avoid or settle such a proxy
                  solicitation (the directors described in clauses (A) and (B)
                  being "Continuing Directors").

Notwithstanding the foregoing, a "Change of Control" shall not include an
offering of any class of shares of common stock of the Company or any of its
affiliates under the Securities Act of 1933, as amended.

            "Code" means the Internal Revenue Code of 1986, as amended.

            "Committee" means the Executive Compensation Committee of the Board.

            "Common Stock" means the Company's Common Stock, par value $.01 per
share, either currently existing or authorized hereafter.

            "Company" means Chateau Properties, Inc., a Maryland corporation.

            "Disability" means the occurrence of an event which would entitle an
employee of the Company to the payment of disability income under one of the
Company's approved long-term disability income plans or a long-term disability
as determined by the Committee in its absolute discretion pursuant to any other
standard as may be adopted by the Committee; provided, however, that if the
Participant is a party to an employment agreement with the Company or any of its
Subsidiaries and such agreement provides for termination by reason of
"Disability," "Disability" hereunder shall have the same meaning ascribed to it
in the employment agreement.

            "Exchange Act" means the Securities Exchange Act of 


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1934, as amended.

            "Fair Market Value" per Share as of a particular date means (i) if
Shares are then listed on a national stock exchange, the closing sales price per
Share on the exchange for the last preceding date on which there was a sale of
Shares on such exchange, as determined by the Committee; (ii) if Shares are not
then listed on a national stock exchange but are then traded on an
over-the-counter market, the average of the closing bid and asked prices for the
Shares in such over-the-counter market for the last preceding date on which
there was a sale of such Shares in such market, as determined by the Committee;
or (iii) if Shares are not then listed on a national stock exchange or traded on
an over-the-counter market, such value as the Committee in its discretion may in
good faith determine; provided that, where the Shares are so listed or traded,
the Committee may make discretionary determinations where the Shares have not
been traded for 10 trading days.

            "Grantee" means an employee or director of, or key consultant to,
the Company to whom Restricted Stock is granted.

            "Option" means the right to purchase, at a price and for the term
fixed by the Committee in accordance with the Plan, and subject to such other
limitations and restrictions in the Plan and the applicable Award Agreement, a
number of Shares determined by the Committee.

            "Optionee" means an employee or director of, or key consultant to,
the Company to whom an Option is granted, or the Successors of the Optionee, as
the context so requires.

            "Option Price" means the exercise price per Share.

            "Participant" means an Optionee or a Grantee.

            "Plan" means the Company's 1997 Equity Compensation Plan, as set
forth herein and as the same may from time to time be amended.

            "Restricted Stock" means an award of Shares that are subject to
restrictions under Section 7.

            "Retirement" means, unless otherwise provided by the Committee in
the Participant's Award Agreement, the termination (other than for Cause) of
employment (or other termination of service, in the case of key consultants or
directors) of a Participant on or after the Participant's attainment of age 65
or on or after the Participant's attainment of age 55 with five consecutive
years of service with the Company and or its Subsidiaries or its affiliates.

            "Securities Act" means the Securities Act of 1933, as 


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amended.

            "Shares" means shares of Common Stock of the Company.

            "Subsidiary" means any corporation (other than the Company) that is
a "subsidiary corporation" with respect to the Company under Section 424(f) of
the Code or, with respect to grants other than Incentive Stock Options (as
herein defined) Subsidiary means any other entity, a majority of whose equity
interests is owned directly or indirectly by the Company. In the event the
Company becomes a subsidiary of another company, the provisions hereof
applicable to subsidiaries shall, unless otherwise determined by the Committee,
also be applicable to any Company that is a "parent corporation" with respect to
the Company under Section 424(e) of the Code.

            "Successor of the Optionee" means the legal representative of the
estate of a deceased Optionee or the person or persons who shall acquire the
right to exercise an Option by bequest or inheritance or by reason of the death
of the Optionee.

            2. Effective Date and Termination of Plan.

            The effective date of the Plan is that date on which the Plan is
approved by the Board of the Company. The Plan shall not become effective unless
and until it is so approved. The Plan shall terminate on, and no Option or
Restricted Stock shall be granted hereunder on or after, the 10-year anniversary
of the earlier of the approval of the Plan by (i) the Board or (ii) the
shareholders of the Company; provided, however, that the Board may at any time
prior to that date terminate the Plan.

            3. Administration of Plan.

            The Plan shall be administered by the Committee. The Committee shall
consist of at least two individuals each of whom shall be a "nonemployee
director" as defined in Rule 16b-3 as promulgated by the Securities and Exchange
Commission ("Rule 16b-3") under the Exchange Act and shall, at such times as the
Company is subject to Section 162(m) of the Code, qualify as "outside 


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directors" for purposes of Section 162(m) of the Code. The acts of a majority of
the members present at any meeting of the Committee at which a quorum is
present, or acts approved in writing by a majority of the entire Committee,
shall be the acts of the Committee for purposes of the Plan; provided that the
otherwise applicable procedures of the Committee, to the extent inconsistent
with the provisions of this sentence, shall control. If and to the extent
applicable, no member of the Committee may act as to matters under the Plan
specifically relating to such member.

            4. Eligibility for and Grant of Options and Restricted Stock;
Committee Authority.

            Subject to the provisions of the Plan, the Committee shall, in its
discretion as reflected by the terms of the Award Agreements: (i) authorize the
granting of Options or Restricted Stock (or both) to key employees, directors
and key consultants of the Company and its Subsidiaries; (ii) determine and
designate from time to time those key employees, directors and key consultants
of the Company and its Subsidiaries to whom Options and Restricted Stock are to
be granted and the number of Shares to be optioned or granted (as applicable) to
each employee, director and key consultant; (iii) with respect to Options,
determine whether to grant incentive stock options ("Incentive Stock Options")
within the meaning of Section 422(b) of the Code, or non-qualified stock options
("Non-Qualified Stock Options"), or both (to the extent that any Option does not
qualify as an Incentive Stock Option, it shall constitute a separate Non-


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Qualified Stock Option); (iv) determine the number of Shares subject to each
Option or Grant, as applicable; (v) determine the time or times when and the
manner and condition in which each Option shall be exercisable and the duration
of the exercise period, and the restrictions applicable to Restricted Stock; and
(vi) determine or impose other conditions to the grant or exercise of Options
and grant of Restricted Stock under the Plan as it may deem appropriate. In
determining the eligibility of an employee, director and key consultant to
receive an Option or Grant, as well as in determining the number of Shares to be
optioned or granted thereto, the Committee may consider his or her position and
responsibilities, the nature and value to the Company of his or her services and
accomplishments whether directly or through its Subsidiaries, his or her present
and potential contribution to the success of the Company whether directly or
through its Subsidiaries and such other factors as the Committee may deem
relevant. The Award Agreement shall contain such other terms, provisions and
conditions not inconsistent herewith as shall be determined by the Committee.
The Participant shall take whatever additional actions and execute whatever
additional documents the Committee may in its reasonable judgment deem necessary
or advisable in order to carry out or effect one or more of the obligations or
restrictions imposed on the Participant pursuant to the express provisions of
the Plan and the Award Agreement. The Committee shall cause each Option to be
designated as an Incentive Stock Option or a Non-Qualified Stock Option.

            5. Number of Shares Subject to the Plan.


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            Subject to adjustments pursuant to Section 11, (i) no more than an
aggregate of 950,000 Shares may be the subject of Options or Grants, provided
that 250,000 of the Shares available under the Plan shall be reserved for grant
in connection with the Company's annual bonus program referred to in clause (i)
of Section 7B, and shall not be used for any other purpose hereunder.
Notwithstanding the foregoing provisions of this Section 5, Shares as to which
an Option is granted under the Plan that remains unexercised at the expiration,
forfeiture or other termination of such Option and Shares of Restricted Stock
that are forfeited may be the subject of the grant of further Options or Grants
of a type for which the Shares were initially available. Shares of Common Stock
issued hereunder may consist, in whole or in part, of authorized and unissued
shares or treasury shares. The certificates for Shares issued hereunder may
include any legend which the Committee deems appropriate to reflect any
restrictions on transfer hereunder or under the Award Agreement, or as the
Committee may otherwise deem appropriate.

            The aggregate Fair Market Value, determined as of the date an Option
is granted, of the Common Stock for which any optionee may be awarded Incentive
Stock Options which are first exercisable by the optionee during any calendar
year under the Plan (or any other stock option plan required to be taken into
account under Section 422(d) of the Code) shall not exceed $100,000.

            6. Options.

            A. Option Price.


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            The Option Price shall be determined by the Committee on the date
the Option is granted and reflected in the Award Agreement. Any particular Award
Agreement may provide for different exercise prices for specified amounts of
Shares subject to the Option. The Option Price with respect to each Incentive
Stock Option shall not be less than 100% (or 110%, in the case of an individual
described in Section 422(b)(6) of the Code (relating to certain 10% owners)) of
the Fair Market Value of a Share on the day the Option is granted.

            B. Period of Option and Vesting.

            (a) Unless earlier expired, forfeited or otherwise terminated, each
Option shall expire in its entirety upon the tenth anniversary of the date of
grant or shall have such other term as is set forth in the applicable Award
Agreement (except that, in the case of an individual described in Section
422(b)(6) of the Code (relating to certain 10% owners) who is granted an
Incentive Stock Option, the term of such Option shall be no more than five years
from the date of grant). The Option shall also expire, be forfeited and
terminate at such times and in such circumstances as otherwise provided
hereunder or under the Award Agreement.

            (b) Each Option, to the extent that there has been no termination of
the Optionee's employment (or other service, if applicable) and the Option has
not otherwise lapsed, expired, terminated or been forfeited, shall first become
exercisable according to the terms and conditions set forth in the Award
Agreement, as determined by the Committee at the time of grant. 


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Unless otherwise provided in the Award Agreement or herein, no Option (or
portion thereof) shall ever be exercisable if the Optionee's employment or other
service with the Company and its Subsidiaries has terminated before the time at
which such Option would otherwise have become exercisable, and any Option that
would otherwise become exercisable after such termination shall not become
exercisable and shall be forfeited upon such termination. Notwithstanding the
foregoing provisions of this Section 6B(b), Options exercisable pursuant to the
schedule set forth by the Committee at the time of grant may be fully or more
rapidly exercisable or otherwise vested at any time in the discretion of the
Committee. Upon and after the death of an Optionee, such Optionee's Options, if
and to the extent otherwise exercisable hereunder or under the applicable Award
Agreement after the Optionee's death, may be exercised by the Successors of the
Optionee.

            C. Exercisability Upon and After Termination of Optionee.

            (a) The Committee shall provide in the Award Agreement the extent
(if any) to which any Option may be exercised upon the Optionee's termination of
employment (or other service).

            (b) Except as may otherwise be expressly set forth in this Section
6C, and except as may otherwise be expressly provided under the Award Agreement,
no provision of this Section 6C is intended to or shall permit the exercise of
the Option to the extent the Option was not exercisable upon cessation of
employment or other service.


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            D. Exercise of Options.

            (a) Subject to vesting and other restrictions provided for hereunder
or otherwise imposed in accordance herewith, an Option may be exercised, and
payment in full of the aggregate Option Price made, by an Optionee only by
written notice (in the form prescribed by the Committee) to the Company
specifying the number of Shares to be purchased.

            (b) Without limiting the scope of the Committee's discretion
hereunder, the Committee may impose such other restrictions on the exercise of
Incentive Stock Options (whether or not in the nature of the foregoing
restrictions) as it may deem necessary or appropriate.

            E. Payment.

            (a) The aggregate Option Price shall be paid in full upon the
exercise of the Option. Payment must be made by one of the following methods:

                  (i) a certified or bank cashier's check;

                  (ii) the proceeds of a Company loan program or third-party
            sale program or a notice acceptable to the Committee given as
            consideration under such a program, in each case if permitted by the
            Committee in its discretion, if such a program has been established
            and the Optionee is eligible to participate therein;

                  (iii) if approved by the Committee in its discretion, Shares
            of previously owned Common Stock (not subject to restrictions
            hereunder) having an aggregate Fair Market Value on the date of
            exercise equal to the aggregate Option Price;

                  (iv) if approved by the Committee in its discretion, through
            the written election of the Optionee to have Shares withheld by the
            Company from the Shares otherwise to be received, with such withheld
            Shares having an aggregate Fair Market Value on the date of exercise
            equal to the aggregate Option Price;


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            or

                  (v) by any combination of such methods of payment or any other
            method acceptable to the Committee in its discretion.

            (b) The Committee, in its discretion, may also permit the Optionee
to elect to exercise an Option by receiving a combination of Shares and cash,
or, in the discretion of the Committee, either Shares or solely in cash, with an
aggregate Fair Market Value (or, to the extent of payment in cash, in an amount)
equal to the excess of the Fair Market Value of the Shares with respect to which
the Option is being exercised over the aggregate Option Price, as determined as
of the day the Option is exercised.

            (c) Except in the case of Options exercised by certified or bank
cashier's check, the Committee may impose limitations and prohibitions on the
exercise of Options as it deems appropriate, including, without limitation, any
limitation or prohibition designed to avoid accounting consequences which may
result from the use of Common Stock as payment upon exercise of an Option. Any
fractional Shares resulting from an Optionee's election that are accepted by the
Company shall in the discretion of the Committee be paid in cash.

            F. Tax Withholding -- Options.

            The Committee may, in its discretion, require the Optionee to pay to
the Company at the time of exercise of any Option the amount that the Committee
deems necessary to satisfy the Company's obligation to withhold federal, state
or local income or other taxes incurred by reason of the exercise. Upon exercise
of the Option, the Optionee may, if approved by the 


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Committee in its discretion, make a written election to have Shares then issued
withheld by the Company from the Shares otherwise to be received, or to deliver
previously owned Shares (not subject to restrictions hereunder), in order to
satisfy the liability for such withholding taxes. In the event that the Optionee
makes, and the Committee permits, such an election, the number of Shares so
withheld or delivered shall have an aggregate Fair Market Value on the date of
exercise sufficient to satisfy the applicable withholding taxes. Where the
exercise of an Option does not give rise to an obligation by the Company to
withhold federal, state or local income or other taxes on the date of exercise,
but may give rise to such an obligation in the future, the Committee may, in its
discretion, make such arrangements and impose such requirements as it deems
necessary or appropriate. Notwithstanding anything contained in the Plan to the
contrary, the Optionee's satisfaction of any tax-withholding requirements
imposed by the Committee shall be a condition precedent to the Company's
obligation as may otherwise be provided hereunder to provide Shares to the
Optionee, and the failure of the Optionee to satisfy such requirements with
respect to the exercise of an Option shall cause such Option to be forfeited.

            G. Exercise by Successors and Payment in Full.

            An Option may be exercised, and payment in full of the aggregate
Option Price made, by the Successors of the Optionee only by written notice (in
the form prescribed by the Committee) to the Company specifying the number of
Shares to be purchased. Such notice shall state that the aggregate Option Price
will be 


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paid in full, or that the Option will be exercised as otherwise provided
hereunder, in the discretion of the Company or the Committee, if and as
applicable.

            H. Nontransferability of Option.

            Each Option granted under the Plan shall by its terms be
nontransferable by the Optionee except by will or the laws of descent and
distribution of the state wherein the Optionee is domiciled at the time of his
death; provided, however, that the Committee may (but need not) permit other
transfers, where the Committee concludes that such transferability (i) does not
result in accelerated taxation, (ii) does not cause any Option intended to be an
Incentive Stock Option to fail to be described in Section 422(b) of the Code and
(iii) is otherwise appropriate and desirable.

            7. Restricted Stock.

            A. Certificates for Restricted Stock.

            (a) Each Grantee shall be issued a stock certificate in respect of
Shares of Restricted Stock awarded under the Plan. Such certificate shall be
registered in the name of the Grantee, and (without limiting the provisions
relating to the legending of Share certificates contained in Section 5) shall
bear an appropriate legend referring to the terms, conditions, and restrictions
applicable to such award, substantially in the following form:

            The transferability of this certificate and the shares of stock
            represented hereby are subject to the terms and conditions
            (including forfeiture) of the Corporation's Equity Participation
            Plan and an Agreement 


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            entered into between the registered owner and the Corporation.
            Copies of such Plan and Agreement are on file in the offices of the
            Corporation.

            (b) The Committee shall require that the stock certificates
evidencing such Shares be held in custody by the Company until the restrictions
thereon shall have lapsed, and that, as a condition of any Restricted Stock
award, the Grantee shall have delivered a stock power, endorsed in blank,
relating to the stock covered by such award. If and when such restrictions so
lapse, the stock certificates shall be delivered by the Company to the recipient
or his or her designee.

            B. Restrictions and Conditions.

            The Shares of Restricted Stock awarded pursuant to the Plan shall be
subject to the following restrictions and conditions:

                  (i) Subject to the provisions of the Plan and the Award
            Agreements, during a period set by the Committee commencing with the
            date of such award and ending on a date established by the
            Committee, the Grantee shall not be permitted voluntarily or
            involuntarily to sell, transfer, pledge, anticipate, alienate,
            encumber or assign Shares of Restricted Stock awarded under the Plan
            (or have such shares attached or garnished). Unless otherwise
            determined by the Committee, the restriction period with respect to
            Shares issued to Grantees on account of their elections to receive
            all or a portion of their annual bonuses under the Company's annual
            bonus program in Shares of Restricted Stock hereunder shall be for a
            period of three years from the date of grant.

                  (ii) Except as provided in the foregoing clause (i), the
            Grantee shall have, in respect of the Shares of Restricted Stock,
            all of the rights of a stockholder of the Company, including the
            right to vote the Shares, and the right to receive any cash
            dividends. Certificates for shares of Stock (not subject to
            restrictions) shall be delivered to the Grantee promptly after, and
            only after, the period of 


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            forfeiture shall expire without forfeiture in respect of such Shares
            of Restricted Stock.

                  (iii) Subject to the provisions of the Award Agreement and
            clause (iv) below, upon the termination of employment (or other
            service, if applicable) with the Company and its Subsidiaries for
            any reason or by the Grantee during the applicable restriction
            period, all Shares still subject to restriction shall be forfeited
            by the Grantee.

                  (iv) In the event the Grantee's employment with the Company
            and its Subsidiaries terminates on account of death, Retirement or
            Disability of the Grantee during the applicable restriction period,
            restrictions will immediately lapse on all Restricted Stock granted
            under this Section 7.

            C. Tax Withholding -- Restricted Stock.

            The Committee may, in its discretion, require the Grantee to pay to
the Company at the time of vesting of any Restricted Stock (or other income
recognition event, such as election under Section 83(b) of the Code) the amount
that the Committee deems necessary to satisfy the Company's obligation to
withhold federal, state or local income or other taxes incurred by reason of the
vesting (or other such event). Upon vesting (or such other event), the Grantee
may, if approved by the Committee in its discretion, make a written election to
have Shares withheld by the Company from the Shares otherwise to be released
from restriction, or to deliver previously owned Shares (not subject to
restrictions hereunder), in order to satisfy the liability for such withholding
taxes. In the event that the Optionee makes, and the Committee permits, such an
election, the number of Shares so withheld or delivered shall have an aggregate
Fair Market Value on the date of exercise sufficient to satisfy the applicable
withholding taxes. Notwithstanding anything contained in the Plan 


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to the contrary, the Grantee's satisfaction of any tax-withholding requirements
imposed by the Committee shall be a condition precedent to the release of any
restrictions as may otherwise be provided hereunder, and the failure of the
Grantee to satisfy such requirements with respect to the vesting of Restricted
Stock (or another income recognition event) shall cause the applicable
Restricted Stock to be forfeited.

            8. Regulations and Approvals.

            (a) The obligation of the Company to sell Shares with respect to
Options granted under the Plan shall be subject to all applicable laws, rules
and regulations, including all applicable federal and state securities laws, and
the obtaining of all such approvals by governmental agencies as may be deemed
necessary or appropriate by the Committee.

            (b) The Committee may make such changes to the Plan as may be
necessary or appropriate to comply with the rules and regulations of any
government authority or to obtain tax benefits applicable to stock options or
restricted stock.

            (c) Each Option and grant of Restricted Stock is subject to the
requirement that, if at any time the Committee determines, in its discretion,
that the listing, registration or qualification of Shares issuable pursuant to
the Plan is required by any 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 grant of an Option or
the issuance of Shares of Restricted Stock or other Shares, no Options shall be
granted or payment made 


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or Shares issued or grant of Restricted Stock made, in whole or in part, unless
listing, registration, qualification, consent or approval has been effected or
obtained free of any conditions in a manner acceptable to the Committee.

            (d) In the event that the disposition of stock acquired pursuant to
the Plan is not covered by a then current registration statement under the
Securities Act, and is not otherwise exempt from such registration, such Shares
shall be restricted against transfer to the extent required under the Securities
Act, and the Committee may require any individual receiving Shares pursuant to
the Plan, as a condition precedent to receipt of such Shares, to represent to
the Company in writing that the Shares acquired by such individual are acquired
for investment only and not with a view to distribution and that such Shares
will be disposed of only if registered for sale under the Securities Act or if
there is an available exemption for such disposition.

            9. Interpretation and Amendments; Other Rules.

            The Committee may make such rules and regulations and establish such
procedures for the administration of the Plan as it deems appropriate. Without
limiting the generality of the foregoing, the Committee may (i) determine (A)
the conditions under which a Participant will be considered to have retired or
become disabled and (B) whether any Participant has done so; (ii) establish or
assist in the establishment of a program (which need not be administered in a
nondiscriminatory or uniform manner) under which the Company or a third party
may make bona-fide loans 


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on arm's-length terms to any or all Optionees to assist such Optionees with the
satisfaction of any or all of the obligations that such Optionees may have
hereunder or under which third-party sales may be made for such purpose
(including, without limitation, a loan program under which the Company or a
third party would advance the aggregate Option Price to the Optionee and be
repaid with Option stock or the proceeds thereof and a sale program under which
funds to pay for Option stock are delivered by a third party upon the third
party's receipt from the Company of stock certificates); (iii) determine the
extent, if any, to which Options or Shares (whether or not Shares of Restricted
Stock) shall be forfeited (whether or not such forfeiture is expressly
contemplated hereunder); (iv) interpret the Plan and the Award Agreements
hereunder, with such interpretations to be conclusive and binding on all persons
and otherwise accorded the maximum deference permitted by law; and (v) take any
other actions and make any other determinations or decisions that it deems
necessary or appropriate in connection with the Plan or the administration or
interpretation thereof. Unless otherwise expressly provided hereunder, the
Committee, with respect to any Option or Grant, may exercise its discretion
hereunder at the time of the award or thereafter. In the event of any dispute or
disagreement as to the interpretation of the Plan or of any rule, regulation or
procedure, or as to any question, right or obligation arising from or related to
the Plan, the decision of the Committee shall be final and binding upon all
persons. The Board may amend the Plan as it shall deem advisable, except that no
amendment may adversely 


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<PAGE>   20

affect a Participant with respect to Options or Restricted Stock previously
granted unless such amendments are in connection with compliance with applicable
laws; provided that the Board may not make any amendment in the Plan that would,
if such amendment were not approved by the holders of the Common Stock, cause
the Plan to fail to comply with any requirement of applicable law or regulation,
unless and until the approval of the holders of such Common Stock is obtained.
General 162(m) provision -- Without limiting the generality of the foregoing,
the Committee may (subject to such considerations as may arise under Section 16
of the Exchange Act, or under other corporate, securities or tax laws) take any
steps it deems appropriate, that are not inconsistent with the purposes and
intent of the Plan, to take into account the provisions of Section 162(m) of the
Code.

            10. Changes in Capital Structure.

            If (i) the Company or its Subsidiaries shall at any time be involved
in a merger, consolidation, dissolution, liquidation, reorganization, exchange
of shares, sale of all or substantially all of the assets or stock of the
Company or its Subsidiaries or a transaction similar thereto, (ii) any stock
dividend, stock split, reverse stock split, stock combination, reclassification,
recapitalization or other similar change in the capital structure of the Company
or its Subsidiaries, or any distribution to holders of Common Stock other than
cash dividends, shall occur or (iii) any other event shall occur which in the
judgment of the Committee necessitates action by way of adjusting the terms of
the outstanding Options and Restricted Stock, then 


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<PAGE>   21

the Committee may forthwith take any such action as in its judgment shall be
necessary to preserve to the Participants rights substantially proportionate to
the rights existing prior to such event, and to maintain the continuing
availability of Shares under Section 4 (if Shares are otherwise then available)
in a manner consistent with the intent hereof, including, without limitation,
adjustments in (x) the number and kind of shares subject to Options and Grants,
(y) the Option Price, and (z) the number and kind of shares available under
Section 4. To the extent that such action shall include an increase or decrease
in the number of shares subject to outstanding Options and Grants, the number of
shares available under Section 4 above shall be increased or decreased, as the
case may be, proportionately.

            If a Change of Control shall occur, then the Committee may make such
adjustments as it, in its discretion, determines are necessary or appropriate in
light of the Change of Control (including, without limitation, the substitution
of stock other than stock of the Company as the stock optioned or granted (as
applicable) hereunder, and the acceleration of the exercisability of the Option
or vesting of the Restricted Stock), provided that the Committee determines that
such adjustments do not have a substantial adverse economic impact on the
Participant as determined at the time of the adjustments.

            The judgment of the Committee with respect to any matter referred to
in this Section 11 shall be conclusive and binding upon each Participant without
the need for any amendment to the Plan.


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<PAGE>   22

            11. Notices.

            All notices under the Plan shall be in writing, and if to the
Company, shall be delivered to the Board or mailed to its principal office,
addressed to the attention of the Board; and if to the Participant, shall be
delivered personally or mailed to the Participant at the address appearing in
the records of the Company. Such addresses may be changed at any time by written
notice to the other party given in accordance with this Section 12.

            12. Rights as Stockholder.

            Neither the Optionee nor any person entitled to exercise the
Optionee's rights in the event of death shall have any rights of a stockholder
with respect to the Shares subject to an Option, except to the extent that a
certificate for such Shares shall have been issued upon the exercise of the
Option as provided for herein.

            13. Rights to Employment. Nothing in the Plan or in any Option or
Restricted Stock granted pursuant to the Plan shall confer on any individual any
right to continue in the employ or other service of the Company or its
Subsidiaries or interfere in any way with the right of the Company or its
Subsidiaries and its shareholders to terminate the individual's employment or
other service at any time.

            14.   Exculpation and Indemnification.

            To the maximum extent permitted by law, the Company shall indemnify
and hold harmless the members of the Board and the members of the Committee from
and against any and all liabilities, 


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<PAGE>   23

costs and expenses incurred by such persons as a result of any act or omission
to act in connection with the performance of such person's duties,
responsibilities and obligations under the Plan, other than such liabilities,
costs and expenses as may result from the gross negligence, bad faith, willful
misconduct or criminal acts of such persons.

            15. Captions.

            The use of captions in this Plan is for convenience. The captions
are not intended to provide substantive rights.

            16. Governing Law.

            THE PLAN SHALL BE GOVERNED BY THE LAWS OF MARYLAND, WITHOUT
REFERENCE TO PRINCIPLES OF CONFLICT OF LAWS.


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