Document:

Revolving Promissory Note

Exhibit 10.2 
 
REVOLVING PROMISSORY NOTE 
(FLOATING RATE) 
(this “Note”) 
 

	

	 NAME(S) AND ADDRESS(ES) OF BORROWER(S) (“Borrower”)
	  	 	  	 	  	 
	
	 MANNATECH INCORPORATED
 600 SOUTH ROYAL LANE SUITE 200
 COPPELL, TEXAS 75019
	  	 	  	 	  	 
	

	 U.S. $2,000,000.00
	  	 	  	 MARCH 15, 2003 (the “Date”)

	

	 ACCOUNT NUMBER/NOTE NUMBER
	  	 TRANSACTION CODE
	  	 PREPARED BY
	  	 OFFICER

	
	 4008/0080260836
	  	 N
	  	 CVR
	  	 156199

	

 
FOR
VALUE RECEIVED, Borrower (jointly and severally if more than one), promises to pay to the order of JPMorgan Chase Bank (“Bank”) on or before MARCH 15, 2004, at its office at 712 Main Street, Houston, Harris County, Texas 77002, or
at such other location as Bank may designate, in immediately available funds, TWO MILLION AND NO/100 UNITED STATES DOLLARS (U.S. $2,000,000.00) (the “Maximum Amount of Note”) or the aggregate unpaid amount of all advances hereunder,
whichever is less. Borrower will also pay interest on the unpaid principal balance outstanding from time to time at a rate per annum equal to the lesser of (i) the sum of the Prime Rate (as hereinafter defined) from time to time in effect MINUS ONE
percent (1.00%), (the “Stated Rate”) or (ii) the maximum nonusurious rate of interest from time to time permitted by applicable law, (the “Highest Lawful Rate”). If the Stated Rate at any time exceeds the Highest
Lawful Rate, the actual rate of interest to accrue on the unpaid principal amount of this Note will be limited to the Highest Lawful Rate, but any subsequent reductions in the Stated Rate due to reductions in the Prime Rate will not reduce the
interest rate payable upon the unpaid principal amount of this Note below the Highest Lawful Rate until the total amount of interest accrued on this Note equals the amount of interest which would have accrued if the Stated Rate had at all times been
in effect. 
 
“Prime Rate” means
the rate determined from time to time by Bank as its prime rate. The Prime Rate will change automatically from time to time without notice to Borrower or any other person. THE PRIME RATE IS A REFERENCE RATE AND MAY NOT BE BANK’S LOWEST RATE.

 
To the extent that Texas law determines the
Highest Lawful Rate, the Highest Lawful Rate is the weekly rate ceiling as defined in the Texas Finance Code Chapter 303. Bank may from time to time, as to current and future balances, elect and implement any other ceiling under such Code and/or
revise the index, formula or provisions of law used to compute the rate on this open-end account by notice to Borrower, if and to the extent permitted by, and in the manner provided in such Code. 
 
Each advance must be at least N/A UNITED STATES DOLLARS
(U.S.N/A) unless the amount available for borrowing under this Note is less. 
 
Accrued and unpaid interest is due and payable MONTHLY, beginning on APRIL 15, 2003, and continuing on the 15TH day of each MONTH thereafter and at maturity when all unpaid principal and accrued and unpaid interest is finally due and payable. 
 
Interest will be computed on the basis of the actual number of days elapsed and a year comprised
of:    x  365 (or 366 as the case may be) days     ̈  360 days, unless such calculation would result in a usurious interest rate, in which case such interest will be calculated on the basis of a 365 or 366 day year, as the case may be. 
 
All past-due principal and interest on this Note will, at
Bank’s option, bear interest at the Highest Lawful Rate, or if applicable law does not provide for a maximum nonusurious rate of interest, at a rate per annum equal to 18%. 
 
In addition to all principal and accrued interest on this Note, Borrower agrees to pay: (a) all reasonable
costs and expenses incurred by Bank and all owners and holders of this Note in collecting this Note through probate, reorganization, bankruptcy or any other proceeding; and (b) reasonable attorneys’ fees if and when this Note is placed in the
hands of attorneys for collection. 
 
Borrower and
Bank intend to conform strictly to applicable usury laws. Therefore, the total amount of interest (as defined under applicable law) contracted for, charged or collected under this Note will never exceed the Highest Lawful Rate. If Bank contracts
for, charges or receives any excess interest, it will be deemed a mistake. Bank will automatically reform the contract or charge to conform to applicable law, and if excess interest has been received, Bank will either refund the excess to Borrower
or credit the excess on the unpaid principal amount of this Note. All amounts constituting interest will be spread throughout the full term of this Note in determining whether interest exceeds lawful amounts. 
 
The unpaid principal balance of this Note at any time will be
the total amounts advanced by Bank, less the amount of all payments or prepayments of principal. Absent manifest error, the records of Bank will be conclusive as to amounts owed. Subject to the terms and conditions of this Note and the Loan
Documents, Borrower may use all or any part of the credit provided for herein at any time before the maturity of this Note and may borrow, repay and reborrow. There is no limitation on the number of advances made so long as the total unpaid
principal amount at any time outstanding does not exceed the Maximum Amount of Note. 
 
 Borrower may at any time pay the full amount or any part of this Note without the payment of any premium or fee. Any partial prepayment will be in the amount of N/A (US$ N/A), or an integral multiple
thereof. All payments may, at Bank’s sole option, be applied to accrued interest, to principal, or to both. 
  
“Loan Document” means this Note and any document or instrument evidencing, securing, guaranteeing or given in connection
with this Note. “Obligations” means all principal, interest and other amounts which are or become owing under this Note or any other Loan Document. “Obligor” means Borrower and any guarantor, surety, co-signer,
general partner or other person who may now or hereafter be obligated to pay all or any part of the Obligations. Where appropriate the neuter gender includes the feminine and the masculine and the singular number includes the plural number.

 
 Each of the following events or conditions is
an “Event of Default:” (1) any Obligor fails to pay any of the Obligations when due; (2) any warranty, representation or statement now or hereafter contained in or made in connection with any Loan Document was false or misleading in
any respect when made; (3) any Obligor violates any covenant, condition or agreement contained in any Loan Document; (4) any Obligor fails or refuses to submit financial information requested by Bank or to permit Bank to inspect its books and
records on request; (5) any event of default occurs under any other Loan Document; (6) any individual Obligor dies, or any Obligor that is an entity dissolves; (7) a receiver, conservator or similar official is appointed for any Obligor or any
Obligor’s assets; (8) any petition is filed by or against any Obligor under any bankruptcy, insolvency or similar law; (9) any Obligor makes an assignment for the benefit of creditors; (10) a final judgment is entered against any Obligor and
remains unsatisfied for 30 days after entry, or any property of any Obligor is attached, garnished or otherwise made subject to legal process; (11) any material adverse change occurs in the business, assets, affairs or financial condition of any
Obligor, or (12) Borrower is in default of any other obligation to or any other agreement with Bank. 
  
If any Event of Default occurs, then Bank may do any or all of the following: (i) cease making advances hereunder; (ii) declare the
Obligations to be immediately due and payable, without notice of acceleration or of intention to accelerate, presentment and demand or protest or notice of any kind, all of which are hereby expressly waived; (iii) set off, in any order, against the
Obligations any debt owing by Bank to any Obligor, including, but not limited to, any deposit account, which right is hereby granted by each Obligor to Bank; and (iv) exercise any and all other rights under any Loan Document, at law, in equity or
otherwise. 
 
No waiver of any default is waiver of
any other default. Bank’s delay in exercising any right or power under any Loan Document is not a waiver of such right or power. 
 
Each Obligor severally waives notice, demand, presentment for payment, notice of nonpayment, notice of intent to accelerate, notice of
acceleration, protest, notice of protest, and the filing of suit and diligence in collecting this Note and all other demands and notices, and consents and agrees that its liabilities and obligations will not be released or discharged by any or all
of the following, whether with or without notice to it or any other Obligor, and whether before or after the stated maturity hereof: (i) extensions of the time of payment; (ii) renewals; (iii) acceptances of partial payments; (iv) releases or
substitutions of any collateral or any Obligor; or (v) failure, if any, to perfect or maintain perfection of any security interest or lien in any collateral. Each Obligor agrees that acceptance of any partial payment will not constitute a waiver and
that waiver of any default will not constitute waiver of any prior or 
 

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subsequent default. Nothing in this Note is intended to waive or vary the duties of Bank or the rights of any Obligor in violation of Section
9.602 of the Texas Business and Commerce Code. 
 
Borrower represents and agrees that: all advances evidenced by this Note are and will be for business, commercial, investment, agricultural or other similar purpose and not primarily for personal, family, or household use.

 
Borrower represents and warrants that the
following statement is true unless the box preceding that statement is checked and initialed by Borrower and Bank:     ̈                         No advances will be used for the purpose of purchasing or carrying any
margin stock as that term is defined in Regulation U of the Board of Governors of the Federal Reserve System (the “Board”). 
 
Notwithstanding anything contained herein or in any other Loan Document, if this is a consumer credit obligation (as defined or described
in 12 C.F.R. 227, Regulation AA, promulgated by the Board), the security for this credit obligation will not extend to any non-possessory security interest in household goods (as defined in Regulation AA) other than a purchase money security
interest, and no waiver of any notice contained herein or therein will extend to any waiver of notice prohibited by Regulation AA. 
 
Texas Finance Code Chapter 346 shall not apply to this Note or to any advance evidenced by this Note. 
 
This Note is governed by Texas law. If any provision of this
Note is illegal or unenforceable, that illegality or unenforceability will not affect the remaining provisions of this Note. BORROWER(S) AND BANK AGREE THAT THIS NOTE WILL BE PERFORMED IN THE COUNTY IN WHICH BANK’S PRINCIPAL OFFICE IN TEXAS IS
LOCATED, AND THAT SUCH COUNTY IS PROPER VENUE FOR ANY ACTION OR PROCEEDING BROUGHT BY BORROWER(S) OR BANK, WHETHER IN CONTRACT, TORT, OR OTHERWISE. ANY ACTION OR PROCEEDING AGAINST BORROWER(S) MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT IN SUCH
COUNTY TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW. TO THE EXTENT PERMITTED BY APPLICABLE LAW, BORROWER(S) HEREBY IRREVOCABLY (A) SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURTS, AND (B) WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE
AS TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT OR THAT ANY SUCH COURT IS AN INCONVENIENT FORUM. BORROWER(S) AGREES THAT SERVICE OF PROCESS UPON IT MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, AT
ITS ADDRESS SPECIFIED BELOW. BANK MAY SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW AND MAY BRING ANY ACTION OR PROCEEDING AGAINST BORROWER(S) OR WITH RESPECT TO ANY OF ITS PROPERTY IN COURTS IN OTHER PROPER JURISDICTIONS OR VENUES.

 
 For purposes of this Note, any assignee or
subsequent holder of this Note will be considered “Bank,” and each successor to Borrower will be considered “Borrower.” 
  
 Each Borrower and cosigner represents that if it is not a natural person, it is duly organized and validly existing and in good standing
under the laws of the state of its incorporation or organization; has full power to own its properties and to carry on its business as now conducted; is duly qualified to do business and is in good standing in each jurisdiction in which the nature
of the business conducted by it makes such qualification desirable; and has not commenced any dissolution proceedings. Each Borrower and cosigner that is subject to the Texas Revised Partnership Act (“TRPA”) agrees that Bank is not
required to comply with Section 3.05(d) of the TRPA and agrees that Bank may proceed directly against one or more partners or their property without first seeking satisfaction from partnership property. Each Borrower and cosigner represents that if
it conducts business under an assumed business or professional name it has properly filed Assumed Name Certificate(s) in the office(s) required by Chapter 36 of the Texas Business and Commerce Code. Each of the persons signing below as Borrower or
cosigner represents that he/she has full requisite power and authority to execute and deliver this Note to Bank on behalf of the party for whom he/she signs and to bind such party to the terms and conditions of this Note and that this Note is
enforceable against such party. 
  
JURY TRIAL WAIVER. TO
THE EXTENT NOT PROHIBITED BY APPLICABLE LAW, BORROWER AND BANK HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY THAT BORROWER OR BANK MAY HAVE IN ANY ACTION OR PROCEEDING, IN LAW OR IN EQUITY, IN CONNECTION WITH THIS
NOTE OR THE OBLIGATIONS. BORROWER REPRESENTS AND WARRANTS THAT NO REPRESENTATIVE OR AGENT OF BANK HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT BANK WILL NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THIS RIGHT TO JURY TRIAL WAIVER. BORROWER
ACKNOWLEDGES THAT BANK HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE PROVISIONS OF THIS WAIVER. 
 
NO COURSE OF DEALING BETWEEN BORROWER AND BANK, NO COURSE OF PERFORMANCE, NO TRADE PRACTICES, AND NO EXTRINSIC EVIDENCE OF ANY NATURE MAY
BE USED TO CONTRADICT OR MODIFY ANY TERM OF THIS NOTE OR ANY OTHER LOAN DOCUMENT. 
 
THIS NOTE AND THE OTHER WRITTEN LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. 
 
THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES. 
 
IN WITNESS WHEREOF, Borrower has executed
this Note effective as of MARCH 15, 2003. 
 
BORROWER(S):

 
MANNATECH INCORPORATION 
 

	 By:
  
	 	 /s/    STEPHEN D. FENSTERMACHER

	 Name:
	 	 S. Fenstermacher

	 Title:
	 	 CFO

 
(Bank’s signature
is provided as its acknowledgement of the above as the final written agreement between the parties and as its agreement with each Borrower subject to TRPA that Bank is not required to comply with Section 3.05(d) of TRPA and its agreement with the
Jury Trial Waiver.) 
 
BANK: JPMorgan Chase Bank 

	
	 By:
	 	 /s/    LAURA F.
SIMMONS        

	 	 	 	 Title:
	 	 Vice President

	 Typed Name:
	 	 Laura F. Simmons
	 	 	 	 	 	 

 
 

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SECURITY
AGREEMENT—PLEDGE 
(this “Agreement”) 
 
MANNATECH INCORPORATED 
600 SOUTH ROYAL LANE SUITE 200 
COPPELL, TEXAS 75019 
 
(whether one or more, “Debtor”), jointly and severally if more than one, each of whose address pursuant to
Section 3.(d) is set forth below under Debtor’s name if different than the address above, and JPMORGAN CHASE BANK, whose principal office in Texas is located at 712 Main Street, P. O. Box 2558, Houston, Harris County, Texas 77252-2558 (together
with its successors and assigns, “Secured Party”), agree as follows: 
 
SECTION 1. DEFINITIONS. (a) “Acts” means the Securities Act of 1933 and the Securities Exchange Act of 1934, each as amended from time to time and any regulations promulgated pursuant thereto
or any successor statute. (b) “Collateral” means all Pledged Securities, all Securities Accounts and all Proceeds. Notwithstanding the description of “Collateral”, the Security Interest shall exclude any common trust funds
of Secured Party in which Secured Party is prohibited by applicable law from taking a security interest. (c) “Control Agreement” means any control agreement among Debtor, Secured Party and a Securities Intermediary relating to
Collateral. Debtor consents to Secured Party entering into any master control agreement with any of its affiliates acting as Securities Intermediary. (d) “Loan Value” means the value assigned by Secured Party from time to time, in
its sole discretion, to each item of Collateral. (e) “Highest Lawful Rate” means the maximum nonusurious rate of interest permitted to be charged by applicable Federal or state law governing this Agreement (whichever permits the
higher lawful rate) from time to time in effect. To the extent that Texas law determines the Highest Lawful Rate, the Highest Lawful Rate is the “weekly” rate ceiling as defined in the Texas Finance Code Chapter 303. (f)
“Lien” means any mortgage, pledge, charge, encumbrance, security interest, collateral assignment or other lien or restriction of any kind, whether based on common law, constitutional provision, statute or contract. (g)
“Obligations” means all debts, obligations and liabilities of every kind and character of Debtor, whether joint or several, contingent or otherwise, now or hereafter existing in favor of Secured Party, including without limitation,
all liabilities arising under or from any note, open account, overdraft, letter of credit application, endorsement, surety agreement, guaranty, interest rate swap or other derivative product, acceptance, foreign exchange contract or depository
service contract, whether payable to Secured Party or to a third party and subsequently acquired by Secured Party. Debtor and Secured Party specifically contemplate that Obligations include indebtedness hereafter incurred by any Debtor to Secured
Party. (h) “Past Due Rate” means the Highest Lawful Rate or if applicable law does not provide for a maximum nonusurious rate, then 18%. (i) “Pledged Securities” means all securities, financial assets and other
property described on Schedule I and all other securities, financial assets and other property that Debtor now or later delivers or causes to be delivered to Secured Party or to any other person on Secured Party’s behalf intending such
securities, financial assets and other property to be pledged to Secured Party, and any additional securities, financial assets and other property, or financial assets delivered or transferred to Secured Party in replacement of or substitution for
any Pledged Securities, without the need for any additional documentation. Pledged Securities include (1) the intangible interest represented by any security, (2) the physical certificates, if any, and (3) all securities entitlements. If any
Securities Account is listed on Schedule 1, Pledged Securities includes all securities and financial assets in which Debtor has securities entitlements through the Securities Account. Debtor and Secured Party expressly agree that all property
held in the Securities Account are financial assets under the UCC. (j) “Proceeds” means all products and proceeds, in cash or otherwise, of all Collateral, including, but not limited to, all interest, dividends (in cash or
otherwise), rights to receive dividends, subscription rights, voting rights, cash, instruments and other property now or hereafter received, receivable or otherwise distributed in connection with the sale, lease, license, exchange or other
disposition of any Collateral and all other rights, payments or distributions. Proceeds of Pledged Securities include free credit balances and securities entitlements in any securities account in which Pledged Securities are held, to the extent the
free credit balances or securities entitlements would otherwise be Proceeds. The inclusion of Proceeds does not authorize Debtor to sell, dispose of or otherwise use Collateral in any manner not specifically authorized herein. (k) “Proper
Form” means in form and substance satisfactory to Secured Party. (l) “Securities Account” means all securities accounts of Debtor held by a Securities Intermediary and listed on Schedule 1 or hereafter subject to the
terms of this Agreement, including all securities entitlements, free credit balances and other financial assets held in or through the Securities Account. (m) “Securities Laws” means the Acts and any other federal, state, local or
foreign laws or regulations relating to the Collateral. (n) “Securities Intermediary” means any securities intermediary together with each of their successors and assigns or any affiliate of Secured Party acting in such capacity
holding Collateral listed on Schedule 1 or hereafter subject to the terms of this Agreement. (o) “Security Interest” means the Liens created by this Agreement. (p) “UCC” means the Texas Uniform Commercial
Code as amended from time to time if this Agreement is governed by Texas law or the New York Uniform Commercial Code as amended from time to time if this Agreement is governed by New York law. All terms defined in the UCC and used in this Agreement
shall have the same definitions herein as specified therein unless otherwise defined in this Agreement. 
 
SECTION 2. CREATION OF SECURITY INTEREST. To secure the payment and performance of the Obligations, Debtor grants to Secured Party a security interest in, pledges and assigns to Secured
Party all Collateral owned by Debtor or in which Debtor has rights or the power to transfer rights, and all Collateral in which Debtor later acquires ownership, other rights or the power to transfer rights. 
 
SECTION 3. DEBTOR’S REPRESENTATIONS. Debtor represents and
warrants to Secured Party the following: (a) Debtor is the sole and lawful owner of the Collateral, free and clear of all Liens and adverse claims, and has the right and power to assign and transfer the Collateral to Secured Party and to assign,
pledge and grant to Secured Party the Security Interest. No financing statement or similar record covering the Collateral, other than in favor of Secured Party, is on file in any public office. The Security Interest does not violate the rights of
any person. There are no restrictions on transfer, assignment or pledge of the Collateral except as created by this Agreement. Debtor has obtained any consents necessary to execute, deliver and perform Debtor’s obligations under this Agreement
and for Secured Party to enforce the Security Interest. (b) This Agreement constitutes the legal, valid and binding obligation of Debtor, enforceable in accordance with its terms, except as may be limited by bankruptcy, insolvency and other similar
laws affecting creditors’ rights generally. ( c) The Collateral and Debtor’s use thereof comply with all applicable laws, rules and regulations. Debtor has complied and will comply with the Securities Laws in connection with Debtor’s
ownership of Collateral. (d) The address set forth in this Agreement is: (i) Debtor’s principal residence, if Debtor is an individual; (ii) Debtor’s chief executive office, if Debtor is not an individual and has more than one place of
business; or (iii) Debtor’s place of business if Debtor is not an individual and has only one place of business. (e) If Debtor is a registered organization, it is organized under the laws of the state or foreign jurisdiction set forth under
Debtor’s certification below. (f) If Debtor is an individual, Debtor’s correct name is set forth above in this Agreement. If Debtor is a registered organization, Debtor’s name as set forth above in this Agreement is its correct name
as indicated on, the public record of Debtor’s jurisdiction of organization which shows Debtor to have been organized. If Debtor is neither a registered organization nor an individual, the name of Debtor set forth in this Agreement satisfies
the requirements of the UCC for providing the name of Debtor in any financing statement related hereto, including by example only, if a Debtor is a trust, the name of Debtor is the name specified for the trust in Debtor’s organic document and
if Debtor is an organization other than a registered organization, a trust or a decedent’s estate and Debtor has a name, the name of Debtor is the organizational name of Debtor. If Debtor uses any trade or assumed names, Debtor has properly
filed of record in the appropriate filing office all those trade names and has delivered to Bank a list of all of Debtor’s assumed or trade names. (g) Each Securities Account is a valid and legally binding obligation of the Securities
Intermediary, the securities entitlements credited to the Securities Accounts are valid and genuine and Debtor has provided Secured Party with a complete and accurate statement of the financial assets and the money credited to the Securities Account
as of the date of this Agreement. (h) All Pledged Securities are genuine, free from any restriction on transfer unless the restriction is accurately noted on any physical certificate (it being understood that neither the terms of this representation
nor Secured Party’s taking delivery of any legended certificate evidences Secured Party’s agreement that Collateral subject to any restriction is acceptable as security for any Obligations and, if any restriction exists, Debtor has
completed and signed Schedule 2, Transfer Restrictions Schedule). (i) All Pledged Securities are duly and validly authorized and issued, fully paid and nonassessable as of the date of this Agreement and if any of the Collateral is evidenced
by a physical certificate with an earlier issue date, as of that date. No Pledged Securities were issued in violation of the preemptive rights of any person or of any agreement by which Debtor or the issuer is bound. To the best of Debtor’s
knowledge, unless previously disclosed to Secured Party in writing, no issuer of Pledged Securities (other than securities of a class which are publicly traded) has granted any outstanding rights entitling any person to receive newly 
 

3 

issued capital stock of the issuer. (j) No Collateral is held by a bailee except as specified in an attached schedule. (k) Upon the taking of
all actions necessary to perfect the Security Interest, this Agreement will create a valid and perfected first priority Lien in the Collateral securing the Obligations. 
 
SECTION 4. DEBTOR’S AGREEMENTS. (a) Debtor will warrant and defend its title in and to the Collateral and the
Security Interest against any adverse claimant. (b) If any Collateral is subject to any transfer or sale restriction, neither Debtor nor any person with whom Debtor shall be deemed one “person” for purposes of Rule 144 of the Securities
and Exchange Commission (“Rule 144”) and any successor provision, will pledge, sell, donate or otherwise transfer any other securities of the same type, and in the event any transfer occurs (whether or not with Secured Party’s
express consent in its discretion), Debtor will furnish Secured Party with a copy of any Form 144 filed in respect of the transfer. (c) Notwithstanding the Security Interest in Proceeds, Secured Party has not authorized Debtor to, and Debtor agrees
not to sell, transfer, assign or otherwise dispose of any interest in the Collateral, except as authorized in this Agreement or in writing by Secured Party. Debtor will keep the Collateral (including Proceeds) free from unpaid charges, including
taxes and assessments, and from all Liens other than those in favor of Secured Party. Debtor understands that any sale, transfer, pledge, assignment or other disposition or encumbrance of the Collateral contrary to this Agreement would violate the
rights of Secured Party under this Agreement. (d) If requested by Secured Party, Debtor will promptly execute and deliver to Secured Party any documents required (or which Secured Party reasonably believes to be required) under Regulation U of the
Board of Governors of the Federal Reserve System (“Regulation U”). None of the Obligations will be a “purpose credit” under Regulation U unless Debtor discloses that fact in writing to Secured Party on a Regulation U
Purpose Statement before the Obligation is created. (e) Secured Party may require at any time that Debtor (i) deposit all Proceeds in a special bank or securities account over which Secured Party alone has power of withdrawal and control, (ii)
notify other persons holding Collateral of Secured Party’s Security Interest and that payment is to be made directly to Secured Party or to any financial institution or Securities Intermediary designated by Secured Party. After the making of
such a request or the giving of any such notification, Debtor shall hold any Proceeds of Collateral received by Debtor as trustee for Secured Party without commingling them with other funds of Debtor and shall turn them over to Secured Party in the
identical form received, together with any necessary endorsements, assignments or agreements providing Secured Party with control, all in Proper Form. Secured Party shall apply the Proceeds and Collateral received by Secured Party to the
Obligations, such proceeds to be credited after final payment in cash or other immediately available funds of the items giving rise to them, or to be held as Collateral for the Obligations. (f) Debtor will furnish Secured Party all records and other
information Secured Party may reasonably request. (g) Debtor will notify Secured Party promptly of any event or condition that could have a significant effect on the aggregate value of the Collateral or on the Security Interest. (h) Debtor will not
change Debtor’s principal residence, chief executive office or any of its other business locations without providing Secured Party 60 days’ prior written notice. Debtor will not change its legal identity, name, organizational structure or
the jurisdiction in which it is organized without the prior written consent of Secured Party and shall notify Secured Party 60 days’ prior to a request for consent of its intention or desire to so change. (i) Debtor will keep accurate books and
other records regarding the Collateral and will allow Secured Party to inspect the Collateral and make test verifications of the Collateral and make copies (including electronic copies) of Debtor’s books and records during regular business
hours. (j) Debtor has the risk of loss of the Collateral. (k) Debtor will not deposit any Proceeds into a deposit account which is not maintained with Secured Party. (l) If any Collateral is located or maintained with any bailee or person other than
Debtor, Debtor will immediately notify Secured Party and obtain the acknowledgement of the bailee or other person that the Collateral is held for the benefit of Secured Party and Debtor will, and will cause such bailee or other person to enter into
a control agreement in Proper Form with Secured Party. (m) Debtor will take any action requested by Secured Party to establish and maintain control by Secured Party of any Collateral consisting of deposit accounts, letter of credit rights and
investment property. (n) If any Collateral comes into Debtor’s possession, then: (i) Debtor will keep the Collateral separate from other property of Debtor; (ii) Debtor will keep accurate records of all Collateral Debtor receives; and (iii)
Debtor will promptly deliver the Collateral to Secured Party in whatever form received. (o) Debtor will not enter into any agreement purporting to prohibit or restrict the transfer of any Collateral unless the agreement is expressly subordinate to
the rights of Secured Party, any purchaser at foreclosure sale, and any person claiming the Collateral through either of them. (p) Any indication on the books or internal records of a Securities Intermediary (including any Securities Intermediary
which is an affiliate of Secured Party) that Pledged Securities or a Securities Account has been pledged to Secured Party will conclusively establish Secured Party’s perfected Security Interest in and control over the Collateral. (q) Debtor
will not attempt to modify or terminate any Control Agreement or the agreement between Debtor and any Securities Intermediary governing any Securities Account without Secured Party’s written consent. Debtor will cause each Securities
Intermediary to send to Secured Party a complete and accurate copy of every statement, confirmation, notice or other communication concerning the Securities Account that the Securities Intermediary sends to Debtor. Any confirmation or statement of
account that Secured Party may (but need not) issue will conclusively establish delivery of Pledged Securities to Secured Party. (r) Debtor will comply with the Securities Laws with respect to Debtor’s ownership of Collateral. Debtor will not
commit any act which might render any Collateral not readily saleable under the Securities Laws. Debtor will notify Secured Party immediately of any development or occurrence which to Debtor’s knowledge would render any Collateral not readily
saleable under the Securities Laws. 
 
SECTION 5. VOTING RIGHTS
AND DIVIDENDS. Unless an Event of Default occurs, Debtor may exercise all voting and consensual powers and rights pertaining to any Collateral for all purposes not inconsistent with the terms of this Agreement and may receive and retain all
dividends (other than stock or liquidating dividends) on the Collateral. All dividends in stock or property representing stock, and all subscription rights, warrants or other rights or options, all liquidating dividends or distributions, and all
securities or other property received as a result of a merger or consolidation, will be Collateral and must be delivered to Secured Party or as instructed by Secured Party. 
 
SECTION 6. LOAN VALUE OF COLLATERAL. Debtor agrees that at all times the amount of the Obligations may not
exceed the aggregate Loan Value of the Collateral. Debtor will, at Secured Party’s option, either supplement the Collateral or make any payment under the Obligations to the extent necessary to ensure compliance with this provision or Secured
Party may liquidate Collateral without notice to Debtor to the extent necessary to ensure compliance with this provision. 
 
SECTION 7. FURTHER ASSURANCES. Secured Party may file this Agreement, or any financing statements or amendments thereto or other record
wherever Secured Party believes necessary or appropriate to perfect the Security Interest, including but not limited to, any official filing office, or in any other recording or registration system. The financing statement or other record may (a)
indicate the Collateral as being of an equal or lesser scope or with greater detail than set forth in this Agreement and (b) contain any other information required by the UCC or other law regarding the notification of a Lien or other right to direct
disposition, for the sufficiency of the filing office’s or other registrar’s acceptance of any financing statement or amendments thereto or other record including, if Debtor is an organization, the type of organization and any organization
identification number issued to Debtor. Debtor also ratifies its authorization for Secured Party’s filing of any financing statements covering the Collateral in any jurisdiction prior to the date hereof. A photographic or other reproduction of
this Agreement or any financing statement relating to this Agreement will be sufficient as a financing statement. Debtor will take such action as Secured Party may at any time require to create, attach, perfect, protect, assure the first priority of
and to enforce the Security Interest. 
 
SECTION 8. SECURED
PARTY APPOINTED ATTORNEY-IN-FACT. Debtor authorizes and irrevocably appoints Secured Party as Debtor’s attorney-in-fact to take any action and execute or otherwise authenticate any record or other documentation that Secured Party
considers necessary or advisable to accomplish the purposes of this Agreement, including but not limited to, the following actions: (1) to endorse and collect all checks, drafts, other payment orders and instruments representing or included in the
Collateral or representing any payment, dividend or distribution relating to any Collateral or to take any other action to enforce, collect or compromise any of the Collateral; (2) to transfer any Collateral into the name of Secured Party or its
nominee or any broker-dealer which may be an affiliate of Secured Party (including converting physical certificates to book-entry holdings) and to execute any Control Agreement on Debtor’s behalf and as attorney-in-fact for Debtor in order to
perfect Secured Party’s first priority and continuing Security Interest in the Collateral and in order to provide Secured Party with control of the Collateral, and Debtor’s signature on this Agreement or other authentication of this
Agreement shall constitute an irrevocable direction by Debtor to any bank, custodian, broker-dealer, any other Securities Intermediary or commodity intermediary holding any Collateral or any issuer of any letters of credit to comply with the
instructions or entitlement orders, as applicable of Secured Party, without the further consent of Debtor or any other person; (3) to exchange any of the Pledged Securities upon any merger, consolidation or other reorganization; (4) to exercise any
right, privilege or option pertaining to any Collateral, but Secured Party has no obligation to do so; (5) to file any claims, take any actions or institute any proceedings which Secured Party determines to be necessary or appropriate to collect or
preserve the Collateral or to enforce Secured Party’s rights with respect to the Collateral; (6) to execute in the name of or otherwise authenticate on behalf of Debtor any record reasonably believed necessary or appropriate by Secured Party
for compliance with laws, rules or regulations applicable to any Collateral, or in connection with exercising Secured Party’s rights under this Agreement; (7) to file any financing statement relating to this Agreement electronically, and
Secured Party’s transmission of Debtor’s name as part of any filing relating to this Agreement will constitute Debtor’s signature on and 
 

4 

authentication of the financing statement; (8) to do and take any and all actions with respect to the Collateral and to perform any of
Debtor’s obligations under this Agreement; and (9) to execute any documentation reasonably believed necessary by Secured Party for compliance with Rule 144 or any other restrictions, laws, rules or regulations applicable to any Collateral
hereunder that constitutes restricted securities under the Securities Laws. This appointment is irrevocable and coupled with an interest and shall survive the death or disability of Debtor. 
 
SECTION 9. PROTECTION OF COLLATERAL. Except for the safe custody of any
Collateral in its possession and accounting for moneys actually received by it, Secured Party has no duty as to any Collateral. Specifically, Secured Party has no duty to do any of the following, and the failure to do the following things will not
be a failure to exercise ordinary care: (a) to preserve rights against prior parties; (b) to determine the existence of any maturities, calls, conversions, exchanges, offers, tenders or similar matters relating to the Collateral or to inform Debtor
of any such matters; (c) to exercise any right, privilege or option relating to the Collateral unless (i) Debtor makes written demand to Secured Party to do so, (ii) Debtor’s written demand is received by Secured Party in sufficient time to
permit Secured Party to do so in the ordinary course of business, and (iii) if the exercise of such right reasonably might be expected to reduce the value of the Collateral, Debtor provides additional Collateral, acceptable to Secured Party in its
sole discretion; (d) to keep Debtor informed of changes or potential changes affecting the Collateral (including such matters as tender offers, mergers, consolidations and shareholder meetings); or (e) to sell any Collateral. If Debtor requests
Secured Party to sell the Collateral and provides additional Collateral acceptable to Secured Party in its sole discretion, Secured Party may, but is not required to do so. If Debtor requests that Secured Party deliver any Collateral to a broker or
other person, and Secured Party agrees to do so, Debtor will assume all risk of loss of the Collateral. Secured Party has no duty to determine, and no liability for any lack of, the authenticity or authority of any person purporting to be a
messenger, employee or other agent of the broker or other person, or of any document or instructions delivered by any such person. Secured Party’s sole responsibility is to deliver the Collateral to a person purporting to be a messenger,
employee or other agent of the broker or other person, and doing so constitutes ordinary care. 
 
SECTION 10. COSTS AND EXPENSES. To the maximum extent not prohibited by applicable law, Debtor will pay, or reimburse Secured Party for, all costs and expenses of every character incurred from
time to time in connection with this Agreement and the Obligations, including costs and expenses incurred (a) for recording any record in connection with this Agreement, mortgage or recording taxes (b) to satisfy any obligation of Debtor under this
Agreement or to protect or preserve the Collateral, (c) in connection with the evaluation, monitoring or administration of the Obligations or the Collateral (whether or not an Event of Default has occurred) including searches of any lien or
organization records, and (d) in connection with the exercise of Secured Party’s rights and remedies. Costs and expenses include reasonable fees and expenses of outside counsel and other outside professionals and charges imposed or allocated
for the services of attorneys and other professionals employed by Secured Party or its affiliates, as well as bonds posted as surety for lost certificated securities and any costs of reregistration of certificates. Any amount owing under this
Section will be due and payable on demand and will bear interest from the date of expenditure by Secured Party until paid at the Past Due Rate. If any part of the Obligations is governed by the Consumer Restrictions (as defined in Section 15), this
Section is limited to the extent required by the Consumer Restrictions with respect to those Obligations. 
 
SECTION 11. WAIVERS. Debtor waives all suretyship defenses that may lawfully be waived, including but not limited to, notice of acceptance of this Agreement, notice of the incurrence or
acquisition of any Obligations, credit extended, collateral received or delivered or other action taken in reliance on this Agreement, notices and all other demands and notices of any description. With respect to both Obligations and the Collateral,
Debtor assents to any extension or postponement of the time of payment or any other indulgence, to any substitution, exchange or release of or failure to perfect any Lien in any Collateral, to the addition or release of any person primarily or
secondarily liable, to the acceptance of partial payment thereon and the settlement, compromising or adjusting of any thereof, all in such manner and at such time or times as Secured Party may deem advisable. To the extent not prohibited by
applicable law, Debtor further waives (i) diligence and promptness in preserving liability of any person on the Obligations, and in collecting or bringing suit to collect the Obligations; (ii) all rights, if any, of Debtor under Rule 31, Texas Rules
of Civil Procedure, or Chapter 34 of the Texas Business and Commerce Code, or Section 17.001 of the Texas Civil Practice and Remedies Code; (iii) to the extent Debtor is subject to the Texas Revised Partnership Act (“TRPA”),
compliance by Secured Party with Section 3.05(d) of TRPA; (iv) notice of extensions, renewals, modifications, rearrangements and substitutions of the Obligations; (v) failure to pay any of the Obligations as they mature, any other default, adverse
change in any obligor’s or any Debtor’s financial condition, release or substitution of Collateral, subordination of Secured Party’s rights in any Collateral, and every other notice of every kind. Nothing in this Agreement is intended
to waive or vary the duties of Secured Party or the rights of Debtor or any obligor in violation of Section 9.602 of the UCC. 
 
SECTION 12. DEFAULT. Each of the following events or conditions is an “Event of Default:” (a) Debtor fails to pay when due (or
within any contractually agreed grace period) any of the Obligations; (b) any event occurs that results in the automatic acceleration of any Obligations or gives Secured Party the immediate right to declare any of the Obligations due and payable in
full prior to final maturity; (c) any warranty, representation or statement contained in this Agreement or made in connection with this Agreement or any of the Obligations was false or misleading in any respect when made; (d) Debtor violates any
covenant, condition or agreement contained in this Agreement or any other documentation relating to any of the Obligations; (e) any Collateral is lost, stolen, substantially damaged, destroyed, abandoned, levied upon, seized or attached; (f) Debtor
conceals or removes any part of the Collateral with intent to hinder, delay or defraud Secured Party; (g) Secured Party receives at any time a report indicating that the Security Interest is not prior to all other Liens or other interests in the
Collateral reflected in such report; or (h) Debtor fails to comply with or become subject to any administrative or judicial proceeding under any federal, state or local hazardous waste or environmental law, asset forfeiture or similar law which may
result in the forfeiture of property, or other law where non-compliance may have a significant effect on the Collateral or Debtor’s ability to pay the Obligations. After an Event of Default occurs, Secured Party may, without notice to any
person, declare the Obligations to be immediately due and payable. Debtor WAIVES demand, presentment and all notices, including without limitation notice of dishonor and default, notice of intent to accelerate and notice of acceleration.

 
SECTION 13. SECURED PARTY’S RIGHTS AND REMEDIES.
After an Event of Default occurs, Secured Party will have all rights and remedies of a secured party after default under the UCC and other applicable law, including without limitation, the right to take possession of the Collateral, and for that
purpose Secured Party may, so far as Debtor can give authority therefor, enter upon any premises on which any Collateral may be situated and lawfully remove any Collateral. Secured Party may require Debtor to assemble the Collateral and make it
available at a reasonably convenient place Secured Party designates. Secured Party may provide a copy of this Agreement to any Securities Intermediary or other person having possession of, liable on or having any interest in any Collateral. Secured
Party may provide a copy of this Agreement to any person having any interest in any Collateral. Secured Party is not required to take possession of any Collateral prior to any sale, or to have any Collateral present at any sale. In addition to
public or private sale, Secured Party may sell any Collateral on any exchange or through any broker, in one lot or several parcels as Secured Party determines. Secured Party may sell part of the Collateral without waiving its right to proceed
against the remaining Collateral. If any sale is not completed or is defective in the opinion of Secured Party, Secured Party may make a subsequent sale of the same Collateral. Any bill of sale or other record evidencing any foreclosure sale will be
prima facie evidence of the factual matters recorded therein. If a sale of Collateral is conducted in conformity with customary practices of banks disposing of similar property, the sale will be deemed commercially reasonable, but Secured Party will
have no obligation to advertise or to sell Collateral on credit. However, if Secured Party sells any of the Collateral upon credit, Debtor will be credited only with payments actually made by the purchaser, received by Secured Party and applied to
the indebtedness of the purchaser with respect to the sale. In the event the purchaser fails to pay for the Collateral, Secured Party may resell the Collateral and Debtor shall be credited with the proceeds of the sale. In addition, Debtor waives
any and all rights that Debtor may have to a judicial hearing in advance of the enforcement of any of Secured Party’s rights hereunder, including without limitation, its rights following an Event of Default to take immediate possession of the
Collateral and to exercise its rights with respect thereto. By exercising its rights, Secured Party will not become liable for, and Debtor will not be released from, any of Debtor’s duties or obligations under the Collateral. All remedies in
this Agreement are cumulative of any and all other legal, equitable or contractual remedies available to Secured Party and any such remedies may be exercised simultaneously or in any order as determined by Secured Party. Debtor WAIVES any rights to
a marshaling of assets or sale in inverse order of alienation, and any rights to notice except as required by the UCC. Secured Party may by notice to Debtor immediately terminate all of Debtor’s voting rights and dividend rights under Section
5. If the Collateral includes any Securities Account, Secured Party may (i) deliver a notice of exclusive control or otherwise revoke trading and other rights, if any, of Debtor under the Control Agreement; (ii) cause the Securities Account to be
re-registered in Secured Party’s name only or transfer the Securities Account to another broker/dealer in Secured Party’s name only; and (iii) remove any Collateral from the Securities Account and register such collateral in Secured
Party’s name or in the name of its broker/dealer, agent or nominee or any of their nominees. Secured Party may exercise any voting, conversion, 
 

5 

registration, purchase or other rights of a holder of any of the Collateral after an Event of Default occurs and any reasonable expense of
such exercise will be an expense of Debtor preserving the value of Collateral. Debtor agrees that Secured Party’s ability to effect a sale of Collateral may be materially restricted by applicable Securities Laws, or other laws, rules,
regulations or agreements applicable to the Collateral delivered by Debtor. Secured Party may sell Collateral subject to any restriction that Secured Party reasonably believes to be necessary or advisable under applicable Securities Laws or other
laws, rules, regulations or agreements, and the sale (whether public or private) will not be rendered commercially unreasonable by compliance with any such restrictions and/or laws, rules, regulations and other provisions reasonably believed by
Secured Party to be relevant to the sale, whether or not other manner(s) of sale may have been available. Debtor specifically acknowledges and agrees that a commercially reasonable sale of restricted securities typically does not yield net sales
proceeds equal to the sale proceeds expected from sale of the same issue of securities if unrestricted. Secured Party will have no obligation to delay a sale of any of the Collateral in order to permit Debtor to register Collateral under any
Securities Laws, even if Debtor would agree to do so. Debtor represents and warrants that Debtor’s holding period (as defined and provided for in Rule 144) for each item of Collateral represented by a physical certificate is at least as long as
evidenced by the issue date on the certificate. Debtor will indemnify and hold harmless Secured Party and any “controlling persons” of Secured Party (within the meaning of the Acts) from and against any loss, cost or expense (including
counsel fees and disbursements) in connection with the Collateral, or any registration of the Collateral, arising out of or based on any untrue or misleading statement or omission or alleged untrue or misleading statement or omission of a material
fact contained in any registration statement or otherwise. Debtor specifically acknowledges that Secured Party’s exercise of rights and remedies under this Section 13 and otherwise may affect Debtor’s tax liability, and agrees that Secured
Party shall have no duty whatsoever to take into consideration any such tax liability. 
 
SECTION 14. STANDARDS FOR EXERCISING REMEDIES. To the extent that applicable law imposes duties on Secured Party to exercise remedies in a commercially reasonable manner, Debtor acknowledges and agrees that it
is not commercially unreasonable for Secured Party, (a) to fail to incur expenses reasonably deemed significant by Secured Party to prepare any Collateral for disposition, (b) to fail to obtain third party consents for access to Collateral to be
disposed of, or to obtain or if not required by other law, to fail to obtain governmental or third party consents for the collection or disposition of Collateral to be collected or disposed of, (c) to fail to exercise collection remedies against
other persons obligated on Collateral or to remove Liens on or any adverse claims against Collateral, (d) to exercise collection remedies against other persons obligated on Collateral directly or through the use of collection agencies and other
collection specialists, (e) to advertise dispositions of Collateral through publications or media of general circulation, whether or not Collateral is of a specialized nature, (f) to contact other persons, whether or not in the same business as
Debtor, for expressions of interest in acquiring all or any portion of the Collateral, (g) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not Collateral is of a specialized nature, (h) to dispose
of Collateral by utilizing Internet sites that provide for the auction of assets of the types included in Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets, (i) to dispose of assets in
wholesale rather than retail markets, (j) to disclaim disposition warranties, (k) to purchase insurance or credit enhancements to insure Secured Party against risks of loss, collection or disposition of Collateral or to provide Secured Party a
guaranteed return from the collection or disposition of Collateral, (l) to the extent deemed appropriate by Secured Party, to obtain the services of brokers, investment bankers, consultants and other professionals (including Secured Party and its
affiliates) to assist Secured Party in the collection or disposition of any Collateral, (m) to comply with any applicable state or federal law requirement in connection with the disposition or collection of any Collateral; or (n) to not take into
consideration Debtor’s tax liability in connection with the sale of any Collateral. Debtor acknowledges that this Section is intended to provide non-exhaustive indications of what actions or omissions by Secured Party would not be commercially
unreasonable in Secured Party’s exercise of remedies against the Collateral and that other actions or omissions by Secured Party shall not be deemed commercially unreasonable solely by not being included in this Section. Without limitation upon
the foregoing, nothing contained in this Section shall be construed to grant any rights to Debtor or to impose any duties upon Secured Party that would not have been granted or imposed by this Agreement or by applicable law in the absence of this
Section. 
 
SECTION 15. ADDITIONAL AGREEMENTS. (a)
For so long as any Obligations exist, or Secured Party has any commitment to provide financing to any Debtor, or Secured Party makes available a line of credit to any Debtor whether or not extensions of credit under the line are at Secured
Party’s sole discretion, or Secured Party has any obligation to purchase from or guarantee to any affiliate any extension of credit to any Debtor, or Secured Party provides any banking services to any Debtor and until Secured Party executes and
delivers to Debtor an authenticated termination statement, this Agreement will remain in effect. (b) No modification or waiver of the terms of this Agreement will be effective unless in writing and signed by Secured Party. Secured Party may waive
any default without waiving any other prior or subsequent default. Secured Party’s failure to exercise or delay in exercising any right under this Agreement will not operate as a waiver of such right. No single or partial exercise of any right
under this Agreement will preclude any other or further exercise of that right or any other right. (c) Any notice required or permitted under this Agreement will be given in a record by United States mail, by hand delivery or delivery service, by
telegraphic, telex, telecopy or cable communication, or electronic message via the Internet sent to the intended addressee at the address shown in this Agreement, or to such different address as the addressee designates by 10 days’ prior notice
to be the address for this Agreement. Notice by United States mail will be effective when mailed. All other notices will be effective when received. Written confirmation or electronic notification of receipt will be conclusive. (d) If any provision
of this Agreement is unenforceable or invalid, that provision will not affect the enforceability or validity of any other provision. If the application of any provision of this Agreement to any person or circumstance is illegal or unenforceable,
that application will not affect the legality or enforceability of the provision as to any other person or circumstance. (e) If more than one person executes this Agreement as Debtor, their obligations under this Agreement are joint and several, and
the term Collateral includes any property described in Section 1 that is owned by any Debtor individually or jointly with any other Debtor, and the term “Obligations” includes both several and joint obligations of each Debtor. (f) The
section headings in this Agreement are for convenience only and shall not be considered in construing this Agreement. (g) This Agreement may be executed or authenticated in any number of counterparts and by different parties in separate
counterparts, each of which will constitute one and the same agreement. (h) This Agreement benefits Secured Party and its successors and assigns and is binding on Debtor and Debtor’s heirs, legal representatives, successors and assigns and
shall bind all who become bound as a debtor to this Agreement. Secured Party may assign its rights and interests under this Agreement. Debtor shall render performance under this Agreement to any subsequent assignee. Debtor waives and will not assert
against any assignee any claims, defenses or set-off which Debtor could assert against Secured Party except those which cannot legally be waived. (i) If any of the Obligations is subject to Chapters 342 or 346 of the Texas Finance Code or Regulation
AA of the Board of Governors of the Federal Reserve System (collectively, the “Consumer Restrictions”) or is a consumer transaction, (1) nothing in this Agreement waives any rights which cannot be legally waived under the Consumer
Restrictions or the UCC, and (2) Collateral securing Obligations subject to the Consumer Restrictions does not include any assignment of wages or any non-possessory, non-purchase money security interest in household goods. (j) This Agreement is
governed by the laws of the State of x Texas,  ̈ New York. (k) Secured Party is executing this
Agreement for the purpose of acknowledging and agreeing to the following Jury Trial Waiver, the notice given under §26.02 of the Texas Business and Commerce Code and to comply with the waiver requirement of TRPA, and Secured Party’s
failure to execute or authenticate this Agreement will not invalidate this Agreement. 
 
JURY TRIAL WAIVER. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW, DEBTOR AND SECURED PARTY HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHT TO TRIAL BY JURY DEBTOR OR SECURED PARTY MAY HAVE IN ANY
ACTION OR PROCEEDING, IN LAW OR IN EQUITY, IN CONNECTION WITH THIS AGREEMENT OR THE OBLIGATIONS. DEBTOR REPRESENTS AND WARRANTS THAT NO REPRESENTATIVE OR AGENT OF SECURED PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SECURED PARTY WILL NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THIS RIGHT TO JURY TRIAL WAIVER. DEBTOR ACKNOWLEDGES THAT SECURED PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE PROVISIONS OF THIS WAIVER. 
 

6 

 
This written loan agreement
represents the final agreement of the parties and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties. There are no unwritten oral agreements between the parties. 
 
Executed effective as of March 15, 2003. 
 
Debtor certification for all non-individuals: Debtor certifies that it is
organized under the laws of the State of TEXAS if a U.S. Debtor, and if not a U.S. Debtor, the laws of
                        . 
 

	DEBTOR:  
	 	 MANNATECH, INCORPORATED
 

	                           600 SOUTH ROYAL LANE SUITE 200

	                           COPPELL, TEXAS 75019

 
Section 3. (d)
Address (if different from the address set forth
above):                                       
  
 

	
	 	 	 STEPHEN D.
FENSTERMACHER        

	 	 	 CFO

 
 Debtor certification
for all non-individuals: Debtor certifies that it is organized under the laws of the State of ___________ if a US Debtor, and if not a US Debtor, the laws of
                         . 
  
DEBTOR:                                  
               
Section 3.(d) Address (if
different from the address set forth
above):                                     
    
 

	
	

	  

 
SECURED PARTY:
JPMORGAN CHASE BANK 
712 Main Street 
P. O. Box 2558 
Houston, Texas 77252-2558 
 

	
	 By:
	 	 /s/    LAURA F.
SIMMONS        

	 	 	 	 	 	 
	 Name:
	 	 Laura F. Simmons

	 	 	 	 Title:
	 	 Vice President

 

7<PAGE>

                                                                    EXHIBIT 10.1
                      PRENTISS PROPERTIES EXECUTIVE CHOICE

                               SHARE DEFERRAL PLAN

<PAGE>

                                Table of Contents

                                                                         Page
                                                                         ----

EXHIBIT 10.1

ARTICLE I.     DEFINITIONS................................................1

  1.01.   Account(s)......................................................1
  1.02.   Affiliate.......................................................1
  1.03.   Beneficiary.....................................................1
  1.04.   Benefit.........................................................2
  1.05.   Board...........................................................2
  1.06.   Change of Control...............................................2
  1.07.   Code............................................................3
  1.08.   Committee.......................................................3
  1.09.   Common Shares...................................................3
  1.10.   Company.........................................................3
  1.11.   Deferral Election...............................................3
  1.12.   Disability......................................................3
  1.13.   Dividend Election...............................................3
  1.14.   Early Retirement Age............................................3
  1.15.   Effective Date..................................................3
  1.16.   Eligible Person.................................................3
  1.17.   Employer........................................................3
  1.18.   ERISA...........................................................3
  1.19.   Incentive Plan..................................................3
  1.20.   Insolvent; Insolvency...........................................3
  1.21.   KeySOP..........................................................4
  1.22.   KeySOP Deferral Election........................................4
  1.23.   Mature Common Shares............................................4
  1.24.   Normal Retirement Age...........................................4
  1.25.   Open Enrollment Period..........................................4
  1.26.   Option..........................................................4
  1.27.   Option Deferral Election........................................4
  1.28.   Participant.....................................................4
  1.29.   Plan............................................................4
  1.30.   Plan Administrator..............................................4
  1.31.   Plan Year.......................................................4
  1.32.   PPT.............................................................5
  1.33.   Profit Shares...................................................5
  1.34.   Restricted Shares...............................................5
  1.35.   Restricted Share Deferral Election..............................5
  1.36.   Share Account...................................................5
  1.37.   Share Purchase Plan.............................................5
  1.38.   Share Purchase Deferral Election................................5
  1.39.   Termination of Employment.......................................5

                                        i

<PAGE>

                               Table of Contents
                                   (continued)

                                                                         Page
                                                                         ----

  1.40.   Trust; Trust Fund................................................5
  1.41.   Trustee..........................................................5
  1.42.   Unforeseeable Emergency..........................................5
  1.43.   Value; Valuation.................................................6

ARTICLE II.    ELIGIBILITY AND PARTICIPATION...............................6

  2.01.   Determination of Eligibility.....................................6
  2.02.   Notice of Eligibility............................................6
  2.03.   Enrollment in Plan...............................................6
  2.04.   Minimum Deferral.................................................6
  2.05.   Irrevocability of Deferral Elections.............................7
  2.06.   Reemployment.....................................................7
  2.07.   Transfer Among Employers.........................................7
  2.08.   Termination of Participation.....................................7

ARTICLE III.   DEFERRAL ELECTIONS..........................................8

  3.01.   Share Purchase Deferral Elections................................8
  3.02.   Option Deferral Elections........................................9
  3.03.   Restricted Share Deferral Elections.............................10
  3.04.   Dividend Elections..............................................10
  3.05.   KeySOP Deferral Elections.......................................11
  3.06.   Vesting.........................................................11
  3.07.   Effect on Compensation and Other Plans..........................12

ARTICLE IV.    EMPLOYER CONTRIBUTIONS.....................................12

  4.01.   Discretionary Employer Contributions............................12

ARTICLE V.     ACCOUNTING FOR DEFERRED COMMON SHARES......................12

  5.01.   Tracking of Common Shares.......................................12
  5.02.   Use of Third Party Recordkeepers................................13
  5.03.   Unfunded Nature of Benefits.....................................13

ARTICLE VI.    DISTRIBUTION OF BENEFITS...................................13

  6.01.   Time of Distribution............................................13
  6.02.   Distribution of Benefits Following Termination of Employment....13
  6.03.   Withdrawal of Common Shares Prior to Termination of Employment..15
  6.04.   Form of Distribution of Benefits................................15
  6.05.   Transfer of Common Shares Upon Change of Control................17
  6.06.   Designation of Beneficiary......................................17

                                       ii

<PAGE>

                               Table of Contents
                                   (continued)

                                                                         Page
                                                                         ----

  6.07.   Loans...........................................................17
  6.08.   Deductions......................................................18
  6.09.   Benefit Distribution on Disability or Incapacity................18
  6.10.   Deduction Limitation............................................18
  6.11.   Suspension of Transfers During Insolvency.......................18

ARTICLE VII.       ADMINISTRATION.........................................19

  7.01.   Fiduciaries.....................................................19
  7.02.   Powers and Responsibilities of the Company......................19
  7.03.   Powers and Responsibilities of the Committee....................19
  7.04.   Committee Procedures............................................20
  7.05.   Voting of Securities............................................20
  7.06.   Coordination with Other Executive Choice Plans..................20
  7.07.   Decisions of the Committee......................................21
  7.08.   Records and Statements..........................................21
  7.09.   Payment of Expenses.............................................21
  7.10.   Benefit Claims Procedure........................................21
  7.11.   Claims Review Procedure.........................................21
  7.12.   Unclaimed Benefits..............................................22
  7.13.   Indemnification.................................................22

ARTICLE VIII.  AMENDMENT AND ADMINISTRATION...............................22

  8.01.   Amendment.......................................................22
  8.02.   Termination.....................................................22

ARTICLE IX.    MISCELLANEOUS..............................................22

  9.01.   Limitation of Rights; Employment Relationship...................22
  9.02.   Limitation on Assignment........................................23
  9.03.   Accounting Treatment............................................23
  9.04.   Representations.................................................23
  9.05.   Severability....................................................23
  9.06.   Governing Law...................................................23
  9.07.   Binding Effect..................................................23
  9.08.   Gender and Number...............................................23
  9.09.   Mergers, Consolidations, and Transfers..........................23
  9.10.   Notices.........................................................24
  9.11.   Binding Effect..................................................24
  9.12.   Adoption by Affiliates..........................................24

                                       iii

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                               PRENTISS PROPERTIES

                      EXECUTIVE CHOICE SHARE DEFERRAL PLAN

                                    PREAMBLE

        WHEREAS, the Prentiss Properties Trust and its Affiliates offer various
nonqualified deferred compensation and incentive programs to selected executive
and managerial employees in order to attract and retain key management
employees; and

        WHEREAS, the Employers which adopt this Plan believe that it would be in
the best interests of those Employers to adopt a program which provides such
employees with additional options regarding the manner and time of receipt of
benefits under existing programs without affecting the benefits otherwise
payable to such persons.

        NOW, THEREFORE, on behalf of the Employers, Prentiss Properties
Acquisition Partners, L.P. does hereby adopt the Plan as set forth in the
following pages.

                                   ARTICLE I.

                                   DEFINITIONS

        The following terms when used herein shall have the following meaning,
unless a different meaning is clearly required by the context.

        1.01.   Account(s). "Account(s)" means the separate record of each
Participant's interest in the Plan at any time. Each Participant may have a
Share Account and such other Accounts or subaccounts as the Committee deems
appropriate. Unless and until other Accounts are established, the Participant's
Account shall be the same as his Share Account. The maintenance of Accounts is
solely for the purpose of tracking the number of Common Shares transferable to a
Participant at any time and does not require that amounts deferred by any
Participant be segregated from the amounts deferred by other Participants, that
Common Shares deferred hereunder actually be deposited or maintained in a trust
or otherwise segregated from the Employers' general assets.

        1.02.   Affiliate. "Affiliate" means any entity under common control
with the Company, within the meaning of Code section 414(b), (c) or (m) and any
"subsidiary" or "parent" corporation (within the meaning of Section 424 of the
Code) of the Company, including an entity that becomes an Affiliate after the
adoption of this Plan, or any other entity that the Committee determines is
otherwise controlled by, in control of, or under common control with the
Company. Without limiting the foregoing, Prentiss Properties Trust, Prentiss
Properties Limited, Inc., and Prentiss Properties Management, L.P. shall be
considered Affiliates.

        1.03.   Beneficiary. "Beneficiary" means the person(s) or estate
entitled to receive benefits under this Plan after the death of a Participant.

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        1.04.   Benefit. "Benefit" means as of any specific date, the then
current Value of the Participant's Accounts derived from the Participant's
Deferral Elections and the Value of the vested portion of the Participant's
Accounts derived from Employer contributions (if any) made under Article IV.

        1.05.   Board. "Board" means the board of trustees of PPT, as
constituted from time to time.

        1.06.   Change of Control. "Change of Control" means the occurrence of
any one or more of the following events:

                (a)     PPT enters into any agreement with a person or entity
        that involves the transfer of ownership of PPT or of more than fifty
        percent (50%) of PPT's total assets or earnings power on a consolidated
        basis, as reported in PPT's consolidated financial statements filed with
        the Securities and Exchange Commission (including an agreement for the
        acquisition of PPT by merger, consolidation, or statutory share
        exchange--regardless of whether PPT is intended to be the surviving or
        resulting entity after the merger, consolidation, or statutory share
        exchange--or for the sale of substantially all of PPT's assets to the
        person or entity).

                (b)     As a direct or indirect result of, or in connection
        with, a cash tender or exchange offer, a merger or other business
        combination (or any combination of such transactions), the persons who
        were members of the Board before such transactions cease to constitute a
        majority of the Board, or any successor's board, within two years of the
        last such transaction.

                (c)     Any person or entity is or becomes an "Acquiring
        Person." For purposes of the preceding sentence an "Acquiring Person"
        means (i) a person who, considered alone or together with all affiliates
        and associates of that person or entity, becomes directly or indirectly
        the beneficial owner of securities representing at least twenty percent
        (20%) of PPT's outstanding securities entitled to vote generally in the
        election of the Board, or (ii) a person or entity enters into an
        agreement that would result in that person or entity satisfying the
        conditions in subsection (i) or, in the case of a grantee employed by an
        Affiliate when a person or entity becomes an Acquiring Person, that
        would result in that Affiliate's failure to be an Affiliate.

                (d)     During any period of two consecutive calendar years, the
        Continuing Members of the Board cease for any reason to constitute a
        majority of the Board. For purposes of the preceding sentence,
        "Continuing Member" means any member of the Board, while a member of the
        Board and (i) who was a member of the Board prior to the adoption of the
        Plan or (ii) whose subsequent nomination or election to the Board was
        recommended or approved by a majority of the Continuing Members.

                (e)     The foregoing provisions of this Section 1.06 shall not
        apply to any event or condition that would otherwise constitute a Change
        of Control if such event or condition occurs between the Effective Date
        and March 1, 2004. Nor shall the continuation after March 1, 2004 of
        such event or condition occurring between the

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        Effective Date and March 1, 2004 be deemed to constitute a Change of
        Control for purposes of the Plan.

        1.07.   Code. "Code" means the Internal Revenue code of 1986, as
amended, and the regulations adopted thereunder.

        1.08.   Committee. "Committee" means a committee of two or more persons
appointed by the Company to assist in the administration of the Plan.

        1.09.   Common Shares. "Common Shares" means the Common Shares of PPT.

        1.10.   Company. "Company" means Prentiss Properties Acquisition
Partners, L.P., or any successor entity thereto.

        1.11.   Deferral Election. "Deferral Election" means any one or more of
the Deferral Elections available to Participants under Article III.

        1.12.   Disability. "Disability" means a physical or mental condition
which, in the opinion of the Committee based upon appropriate medical advice and
examination and in accordance with rules applied consistently to all Eligible
Employees, totally and presumably permanently prevents the Participant, from
performing the customary duties of his regular job with the Company.

        1.13.   Dividend Election. "Dividend Deferral Election" means an
election by the Participant to receive in cash an amount equal to any dividends
paid with respect to Common Shares held in his Share Account, subject to Article
III.

        1.14.   Early Retirement Age. "Early Retirement Age" means the later of
the date on which a Participant attains age 55 and completes 10 years of service
with the Employers.

        1.15.   Effective Date. "Effective Date" means February 12, 2003.

        1.16.   Eligible Person. "Eligible Person" means any person employed by
an Employer as an executive, managerial or highly compensated employee.

        1.17.   Employer. "Employer" means the Company and any Affiliate which
has adopted this Plan, and any their respective successors.

        1.18.   ERISA. "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended from time to time.

        1.19.   Incentive Plan. "Incentive Plan" means the Prentiss Properties
Trust 1996 Share Incentive Plan, as amended from time to time, and any successor
thereto.

        1.20.   Insolvent; Insolvency. "Insolvent;" "Insolvency" and similar
terms mean that the Employer of a Participant (including any entity that would
be aggregated with it for purposes of determining insolvency under any Federal
or State bankruptcy, receivership, fraudulent transfer

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or similar laws) is (i) unable to pay its debts as they become due, or (ii)
subject to a pending proceeding as a debtor under the United States Bankruptcy
Code.

        1.21.   KeySOP. "KeySOP" means the Prentiss Properties Trust Key
Employees Stock Option Plan, as amended from time to time, and any successor
thereto.

        1.22.   KeySOP Deferral Election. "KeySOP Deferral Election" means an
election by an Eligible Employee who is also a participant in the Prentiss
Properties Trust KeySOP to defer the receipt of any Common Shares that would
otherwise be transferable to him under the KeySOP upon exercise of an option
thereunder and to subject such Common Shares to the terms of the Plan pursuant
to Article III hereof.

        1.23.   Mature Common Shares. "Mature Common Shares" means Common Shares
that have been owned by the Participant for at least six months and meet any
other requirements to be considered "mature" for financial accounting purposes.

        1.24.   Normal Retirement Age. "Normal Retirement Age" means the date on
which a Participant attains age 65.

        1.25.   Open Enrollment Period. "Open Enrollment Period" means the
period established by the Committee prior to the commencement of each Plan Year
during which an Eligible Employee may amend or file a Deferral Election.

        1.26.   Option. "Option" means an option granted to a Participant under
the Incentive Plan to purchase a predetermined number of Common Shares at the
price specified therein.

        1.27.   Option Deferral Election. "Option Deferral Election" means an
election by a Participant under the Plan to (i) defer the exercise of an Option
and the receipt and ownership of any Profit Shares otherwise transferable to the
Participant upon exercise of an Option under the Incentive Plan for a period of
at least six months from the date of the election and (ii) to exercise the
Option subject to the Option Deferral Election only under the Plan; and to pay
the purchase or exercise price of such Option solely by using Mature Common
Shares in an actual or deemed Share-for-Share exercise, subject to the terms of
Article III hereof.

        1.28.   Participant. "Participant" means an Eligible Employee or former
Eligible Employee who is or has made one or more Deferral Elections under the
Plan and who retains the right to benefits under the Plan.

        1.29.   Plan. "Plan" means the Prentiss Properties Executive Choice
Share Deferral Plan (the plan set forth herein), as amended from time to time.

        1.30.   Plan Administrator. "Plan Administrator" means the Company or a
committee appointed by it to the extent that either of them shall act in such
capacity under Article VI.

        1.31.   Plan Year. "Plan Year" means the twelve-month accounting period
ending on December 31 of each calendar year, except that the initial Plan Year
shall be a short year beginning on the Effective Date and ending December 31,
2003.

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        1.32.   PPT. "PPT" means Prentiss Properties Trust, a Real Estate
Investment Trust organized under the laws of the State of Maryland, and any
successor thereto.

        1.33.   Profit Shares. "Profit Shares" means the total number of Common
Shares issuable to a Participant pursuant to the exercise of an Option less the
number of Mature Common Shares used to exercise the Option.

        1.34.   Restricted Shares. "Restricted Shares" means Common Shares
granted to a Participant subject to a substantial risk of forfeiture under the
Incentive Plan prior to the lapse of such risk of forfeiture.

        1.35.   Restricted Share Deferral Election. "Restricted Share Deferral
Election" means an election by a Participant to defer receipt and ownership of
compensation that would otherwise result upon vesting of nonvested Restricted
Shares, subject to the requirements and terms of Article III hereof.

        1.36.   Share Account. "Share Account" means the record established and
maintained for each Participant in accordance with Article III hereof, for
bookkeeping purposes only, to the extent that such Account is deemed to be
invested in Common Shares. The Participant's interest in the Share Account shall
be expressed in the form of whole and fractional Common Shares.

        1.37.   Share Purchase Plan. "Share Purchase Plan" means the Prentiss
Properties Trust Share Purchase Plan, as amended from time to time, and any
successor thereto.

        1.38.   Share Purchase Deferral Election. "Share Purchase Deferral
Election" means an election by a Participant to (i) reduce his salary by a
specified amount for a Plan Year, (ii) subject all or portion of the Common
Shares otherwise issuable or transferable to him under the Share Purchase Plan
to the terms of this Plan; and (iii) defer under this Plan the receipt and
ownership of any Common Shares to which he would otherwise be entitled as a
result of an option granted to him under the Share Purchase Plan, subject to the
requirements and terms of Article III hereof.

        1.39.   Termination of Employment. "Termination of Employment" means a
cessation of substantially all services for an Employer in any capacity,
including employee, trustee, and consultant, as determined by the Committee.

        1.40.   Trust; Trust Fund. "Trust" or "Trust Fund" means trust created
under the Prentiss Properties Executive Choice Deferred Plan Trust Agreement, as
amended from time to time; provided, however, that such Trust shall comply with
the model trust provisions of Rev. Proc. 92-64 and any interpretations or
modifications of such provisions issued by the Internal Revenue Service.

        1.41.   Trustee. The "Trustee" means the person or persons (whether
corporate, individual, or a combination thereof) named in the Trust and any
successor(s) thereto.

        1.42.   Unforeseeable Emergency. "Unforeseeable Emergency" means an
immediate financial need of the Participant resulting from extraordinary and
unforeseeable circumstances arising as a result of events beyond the control of
the Participant as determined by the

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Committee. Without limiting the generality of the foregoing, an emergency shall
be deemed to exist only if the Committee determines that the Participant has
suffered a severe financial hardship resulting form a sudden and unexpected
illness or accident of the Participant or a dependent (as defined in Section
152(a) of the Code) of the Participant, loss of the Participant's property due
to casualty, or other similar circumstances as a result of events beyond the
control of the Participant. An Unforeseeable Emergency will not be deemed to
exist if the hardship is or may be relieved through reimbursement or
compensation by insurance or otherwise, by liquidation of the Participant's
assets, to the extent that such liquidation would not itself cause severe
financial hardship; or by the termination of his Deferral Election under the
Plan.

        1.43.   Value; Valuation. "Value, Valuation" and similar terms mean,
with respect to Common Shares as of any given date, the closing price of a
Common Share on the New York Stock Exchange. If the Common Shares shall cease to
be listed on the New York Stock Exchange but are listed on another established
stock exchange or exchanges, the Value of a Common Share shall be deemed to be
the highest closing price of a Common Share as reported on that stock exchange
or exchanges or, if no sale of Common Shares shall be made on any stock exchange
on that day, then the next preceding day on which there was a sale. If the
Common Shares shall not listed on an established stock exchange but are traded
in the over-the-counter market as reported by the National Association of
Securities Dealers, Inc., the Value of a Common Share shall be the reported
"closing" price of a Share as so reported.

                                   ARTICLE II.

                          ELIGIBILITY AND PARTICIPATION

        2.01.   Determination of Eligibility. Only those Eligible Employees
selected by the Committee may participate in the Plan. The Committee may also
determine that an Employee who was previously eligible may not continue to make
Deferral Elections under the Plan.

        2.02.   Notice of Eligibility. Upon determining that an Eligible
Employee is to be invited to participate in the Plan, the Committee shall
provide such Employee with a copy of the Plan and any amendments thereto. Such
notice may be given at such time and in such manner as the Committee may
determine. No Eligible Employee shall be required to participate in the Plan.

        2.03.   Enrollment in Plan. An Eligible Employee may enroll in the Plan
by filing a Deferral Election with the Committee as provided in Article III.
Upon the filing of a Deferral Election (whether at the time of initial selection
by the Committee or subsequently) and subject to the acceptance of that election
by the Committee, such Eligible Employee shall be deemed to have accepted all of
the terms of the Plan and to have agreed to cooperate fully with the Committee
and the persons and entities engaged to provide services to the Plan. If an
Eligible Person or Participant fails or refuses to provide information requested
or otherwise cooperate fully in the implementation and administration of the
Plan, the Committee may exclude such person from participation in the Plan or
from one or more features of the Plan.

        2.04.   Minimum Deferral. The Committee may establish minimum Deferral
Election requirements from time to time. The Committee may decline to accept any
Deferral Election

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which does not comply with those requirements. Unless and until changed by the
Committee, the minimum Deferral Elections shall be as follows:

                        (i)     KeySOP Deferral Election: 1,000 Common Shares or
                                100% of account in shares, whichever is smaller.

                        (ii)    Share Purchase Deferral Election: one percent
                                (1%) of the Participant's base compensation.

                        (iii)   Option Deferral Election: 1,000 Common Shares.

                        (iv)    Restricted Share Deferral Election: 1,000 Common
                                Shares.

        2.05.   Irrevocability of Deferral Elections. A Deferral Election shall
be irrevocable once filed with the Committee except as otherwise provided in the
Plan. Any attempt by a Participant to assign, pledge anticipate or otherwise
dispose of any Common Shares that may ultimately be transferred to him under the
Plan prior to their actual distribution or transfer shall be null and void and
shall not be recognized by the Company for any purpose.

        2.06.   Reemployment. In the event that Participant ceases to be
eligible to participate in the Plan (whether due to Termination of Employment or
otherwise) and thereafter again becomes an Eligible Employee, the Committee
shall have no obligation to designate such Eligible Employee as to participate
further in the Plan.

        2.07.   Transfer Among Employers. If a Participant is transferred from
one Employer to another, he shall continue to participate in the Plan unless the
Committee determines that the Participant no longer satisfies the requirements
for an Eligible Employee. If a Participant is transferred to an Affiliate which
is not an Employer, such transfer shall terminate such Participant's status as
an Eligible Employee hereunder, but shall not be treated as a Termination of
Employment.

        2.08.   Termination of Participation. Except as provided herein, an
Eligible Employee's participation in the Plan shall end not later than the date
of such employee's Termination of Employment. Upon termination of participation,
the Participant may not make any further Deferral Election, but Deferral
Elections existing on the date of termination shall continue to apply to amounts
or Common Shares that are the subject of those elections. If a Participant is
involuntarily terminated for cause, all existing Deferral Elections shall be
canceled and such Participant's Benefit shall be paid as soon as practical. In
the case of involuntary termination or lay-off otherwise than for cause, the
Committee may, in its complete discretion, allow an employee to revoke an
existing Deferral Election. In addition, the Committee may allow a Participant
who has terminated employment, but who is expected to receive compensation in a
subsequent Plan Year that could be otherwise subject to a Deferral Election, to
make one or more Deferral Elections after his Termination of Employment.

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                                  ARTICLE III.

                               DEFERRAL ELECTIONS

        3.01.   Share Purchase Deferral Elections.

                (a)     A Participant who is also a participant in the Share
        Purchase Plan may make a Share Purchase Deferral Election with respect
        to all or any portion of the Common Shares that the Participant could
        otherwise elect to purchase under the Share Purchase Plan and on the
        same basis as Common Shares could be purchased under the Share Purchase
        Plan. Such a Share Purchase Deferral Election shall specify the dollar
        amount or percentage of salary to be deferred subject to the terms
        hereof; provided, however, that such Share Purchase Deferral Election
        shall be for no more than 90% of the Participant's salary unless
        otherwise permitted by the Committee; provided, however, that the number
        of Common Shares that may be covered by a Share Purchase Deferral
        Election for any Plan Year shall be reduced by the number of Common
        shares that may be purchased under the Share Purchase Plan for that Plan
        Year and which the Participant elects to purchase outside of this Plan.

                (b)     To be effective for any Plan Year beginning on or after
        January 1, 2004, a Share Purchase Deferral Election must be filed with
        the Committee during the Open Enrollment Date preceding such Plan Year.
        However, if the date an Eligible Employee first commences participation
        in the Plan is not the first day of a Plan Year, including an Eligible
        Employee designated as a Participant at the Effective Date of the Plan,
        such an Eligible Employee may make a Share Purchase Deferral Election
        for that Plan Year within 30 days after being designated as a
        Participant. Such initial Share Purchase Deferral Election shall apply
        to semi-annual purchase periods under the Share Purchase Plan beginning
        at least 30 days after the filing of a Share Purchase Deferral Election.

                (c)     The amount specified in the Participant's Share Purchase
        Deferral Election shall be withheld by the Employer from the
        Participant's salary in substantially equal installments over the Plan
        Year (i.e., two semi-annual purchase periods) to which it relates. Such
        withheld amounts shall not be paid or made available to the Participant.
        The Employer shall pay such amounts to the Company which shall retain
        such shares. At such times as the Participant would have been, but for
        the Share Purchase Deferral Election, issued Common Shares under the
        Share Purchase Plan, the Committee shall credit the Participant's Share
        Account with an appropriate number of Common Shares. For such purpose,
        $1.00 in Value of Common Shares shall be credited to the Participant's
        Share Account for each $0.85 withheld from the Participant, as
        determined by the Share Purchase Plan. Thereafter, the investment and
        accounting for such deferred salary shall be determined under Article V.

                (d)     A Share Purchase Deferral Elections shall continue in
        effect from year to year while the Participant continues under the Plan
        unless it is revoked or modified during an Open Enrollment Period or
        unless the Committee suspends, cancels or modifies such election. If the
        amount withheld is insufficient to by a whole number of Common Shares,
        any residual funds shall be carried forward and combined with any
        subsequent

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        amount withheld from the Participant and applied to the purchase of
        Common Shares as provided herein. Upon the termination of a
        Participant's Share Purchase Deferral Election (whether due to
        Termination of Employment or otherwise), any such residual funds shall
        be treated as part of the Participant's Other Investment Account.

                (e)     A Participant's Share Purchase Deferral Election shall
        be invalid to the extent that it would result in the crediting of Common
        Shares to the Participant's Share Account in excess of the number of
        Shares that could have been purchased by the Participant under the Share
        Purchase Plan for any semi-annual purchase period under such plan,
        reduced by the number of Common Shares actually purchased by the
        Participant under the Share Purchase Plan for that period. The Committee
        shall monitor the elections made by the Participant under the Share
        Purchase Plan to assure that no duplication of purchases occurs. To the
        extent that a Participant's combined purchases of Common Shares under
        the Share Purchase Plan and the number of Shares deemed purchased
        hereunder exceeds the maximum number permitted herein, the Value of the
        excess number of Common Shares shall be paid to the Participant in cash
        and the number of Common Shares credited to the Participant's Share
        Account under the Plan shall be reduced accordingly.

        3.02.   Option Deferral Elections.

                (a)     A Participant who has received an Option under the
        Incentive Plan may make an Option Deferral Election with respect to all
        or any portion of the Profit Shares that would otherwise be issued or
        transferred to him pursuant to an Option. Such an Option Deferral
        Election must specify the number of Common Shares to which it relates
        and must be filed with the Committee at least six months prior to the
        vesting of the relevant Option, except that a Participant may make an
        Option Deferral Election not later than February 21, 2003 with respect
        to any Option that could otherwise be exercised at any time thereafter
        without regard to such six month notice requirement. An Option Deferral
        Election, once filed, is irrevocable. For Option Deferral Elections made
        after February 21, 2003, an Option Deferral Election may apply only to
        Options that have not yet vested under the terms of the Incentive Plan.

                (b)     The Option Deferral Election shall clearly identify the
        option to which it applies, including, if required by the Committee, the
        date of grant, exercise date, and number of shares covered by the grant.
        A separate Option Deferral Election must be completed and filed with the
        Committee with respect to each Option, or portion thereof, that is to be
        subject to the Plan. If the Option Deferral Election is applies to only
        a portion of a particular Option, then the Option Deferral Election must
        specify such portion. Any Profit Shares attributable to the exercise of
        the Option shall first be deemed to be the Profit Shares subject to the
        Option Deferral Election. If an Option Deferral Election relates only to
        a portion of an Option, a Participant may make a subsequent Option
        Deferral Election with respect any remaining portion of such Option, but
        may not remove from the Option Deferral Election any portion of an
        Option previously subjected to such an election.

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                (c)     An Option Deferral Election shall remain in effect from
        the date it is filed until the last day of the term of the relevant
        Option and shall prohibit the Participant from exercising the Option
        during the period beginning on the day the Option Deferral Election is
        filed and ending on the date that is six months thereafter. In addition,
        the Option Deferral Election shall require the Participant to agree that
        the exercise price of Option subject thereto may only be paid by the
        transfer to the Company of Mature Common Shares, including any deemed
        transfer or attestation approved by the Committee. Notwithstanding the
        foregoing, any Option Deferral Election shall become null and void with
        respect to the unexercised portion of any Option if the Participant's
        employment is terminated (either voluntarily or involuntarily).

                (d)     Any Profit Shares subject to an Option Deferral Election
        shall not be transferred or issued to the Participant or to the Trust
        but shall be retained by the Company and credited by the Committee to
        the Participant's Share Account. Thereafter, the investment and
        accounting for such Profit Shares shall be determined under Article V.
        Any Common Shares issuable or transferable to the Participant as a
        result of such exercise other than Profit Shares shall be transferred to
        the Participant.

        3.03.   Restricted Share Deferral Elections.

                (a)     A Participant may make a Restricted Share Deferral
        Election with respect to any Restricted Shares granted under the
        Incentive Plan which are subject to a risk of forfeiture. Such an
        election must be filed with the Committee at least six months prior to
        the date the relevant Restricted Shares would otherwise vest or become
        transferable under the Incentive Plan, except that a Participant may
        make a Restricted Share Deferral Election not later than February 21,
        2003 with respect to Restricted Shares that would otherwise vest or
        become transferable at any time thereafter without regard to such six
        month notice requirement. Once filed, a Restricted Share Deferral
        Election is irrevocable.

                (b)     The Restricted Share Deferral Election shall clearly
        identify the grant of Common Shares to which it applies, including, if
        required by the Committee, the date of grant, number of shares granted,
        the number of shares covered by the Restricted Share Deferral Election,
        and the release or vesting date. In addition, if the Participant is in
        possession of certificates evidencing the Restricted Shares for which a
        Restricted Share Deferral Election is made, the Participant shall
        deliver such certificates, duly endorsed in blank, to the Committee
        contemporaneously with the filing of the Restricted Share Deferral
        Election.

                (c)     Any Restricted Shares subject to a Restricted Share
        Deferral Election shall not be released, transferred or issued to the
        Participant or to the Trust, but shall be retained by the Company and,
        at such time as the Restricted Shares would otherwise vest or become
        transferable, credited by the Committee to the Participant's Share
        Account. Thereafter, the investment and accounting for such Restricted
        Shares shall be determined under Article V.

        3.04.   Dividend Elections.

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                (a)     Except as provided herein, any dividends payable with
        respect to Common Shares that are credited to the Participant's Share
        Account shall be transferred to the Trust. A Participant may, however,
        file a Dividend Election with the Committee under which any dividends
        thereafter paid with respect to such Common Shares credited to a
        Participant's Share Account will be paid to the Participant in cash. If
        any such dividend has been inadvertently paid to the Trust, the
        Committee shall require the Trustee to return such dividends to the
        Company. To the extent that the Company has not issued the Common Shares
        reflected in the Participants' Share Accounts, it shall make an
        equivalent payment to the persons who would have received payment of
        such dividends under the Dividend Election. To the extent that any
        payment under this Section is determined to be subject to employment
        taxes, the Company may reduce such payment to the extent of the Company
        and the Participant's portion of such taxes.

                (b)     To be effective for any Plan Year beginning on or after
        January 1, 2004, a Dividend Election must be filed with the Committee
        during the Open Enrollment Date preceding such Plan Year. However, if
        the date an Eligible Employee first commences participation in the Plan
        is not the first day of a Plan Year, including an Eligible Employee
        designated as a Participant at the Effective Date of the Plan, such an
        Eligible Employee may make a Dividend Election for that Plan Year within
        30 days after being designated as a Participant. Such initial Dividend
        Election shall apply to any dividends or dividend equivalent paid at
        least 30 days after the filing of the initial Dividend Election. The
        Committee may refuse to accept any Dividend Election if acceptance of
        the election might result in insufficient funds being available to the
        Trustee to permit it to pay the electing Participant's share of expected
        premiums on insurance purchased under the Prentiss Properties Executive
        Choice Deferred Compensation Plan.

        3.05.   KeySOP Deferral Elections.

                (a)     A Participant who is also a participant in the KeySOP
        may make a KeySOP Deferral Election with respect to all or any portion
        of the balance that would become payable to him under the KeySOP, but
        only to the extent that such benefit is payable in Common Shares. Such a
        KeySOP Deferral Election must specify number of Common Shares to which
        it relates and must be filed with the Committee at least six months
        prior to the vesting date for such shares under the KeySOP.

                (b)     Any Common Shares otherwise distributable to the
        Participant under the KeySOP that is subject to a KeySOP Deferral
        Election, and which is in excess of the amount, if any, paid therefor by
        the Participant, shall not be distributed or made available to the
        Participant but shall be retained by the Company. Such Common Shares
        shall, upon receipt by the Company, be credited to the Participant's
        Share Account under the Plan and shall be considered fully vested at all
        times. Thereafter, the accounting for such amounts shall be determined
        under Article V.

        3.06.   Vesting. Each Participant shall have a fully vested
(non-forfeitable) interest in all amounts covered by his Deferral Elections
under the Plan and the earnings and losses thereon, except as expressly provided
otherwise herein in the event of the Insolvency of his Employer.

                                       11

<PAGE>

        3.07.   Effect on Compensation and Other Plans. Unless otherwise
required by law, the Value of any Common Shares covered by a Deferral Election
shall not be included in the compensation reflected on the Participant's federal
income tax withholding statement (W-2 Form). Such Value shall not be considered
as compensation for purposes of calculating any contribution or benefit which
the deferring Participant may be entitled to under any other plan or program
adopted or maintained by the Employers except to the extent provided therein.
Any type of compensation or benefit that may be the subject of a Deferral
Election hereunder must comply with the terms of the plan or program under which
such compensation or benefit is provided. The adoption and implementation of
this Plan is not intended to amend any other plan or program of the Employers.
Without limiting the generality of the foregoing, nothing in this Plan shall be
interpreted to accelerate or otherwise modify the time at which rights under any
other plan or program of any Employer vest or become exercisable or increase the
number of Common Shares available to a Participant beyond the number of Common
Shares determined under the shareholder-approved plans in which the Participant
participates.

                                   ARTICLE IV.

                             EMPLOYER CONTRIBUTIONS

        4.01.   Discretionary Employer Contributions. The Employer shall not
make any contribution of Common Shares for any of the Participants in the Plan
for any Plan Year or otherwise permit any Participant to receive any number of
Common Shares in excess of the number of Common Shares determined under the
shareholder-approved plans in which the Participant participates.

                                   ARTICLE V.

                      ACCOUNTING FOR DEFERRED COMMON SHARES

        5.01.   Tracking of Common Shares.

                (a)     The Common Shares subject to Deferral Elections shall be
        deemed to be held for investment for the benefit of the Participants.
        The Committee shall maintain a record of all Common Shares held in the
        Participants' Share Accounts. At such time as the Participant becomes
        entitled to distribution under Article VI, the Committee shall inform
        the Company of the number of Common Shares credited to the Participant's
        Share Account for purposes of determining the Benefit to be distributed
        to the Participant. Unless otherwise determined by the Committee
        consistent with Section 9.03, any distribution from the Share Account
        shall be made in kind and not in cash. The Company is not required to
        issue or otherwise set aside any Common Shares for any Participant under
        the Plan, but if it does so, the Common Shares reflected in the Share
        Accounts shall not be transferred to the Trust but shall remain general
        assets of the Company. Any or all of such Common Shares may be
        transferred to or for the benefit of one or more creditors of the
        Company.

                (b)     If any Common Shares reflected in the Participant's
        Share Account are subject to restrictions under applicable law or under
        other agreements between the

                                       12

<PAGE>

        Company and the Participant, those restrictions shall continue to apply
        to such Common Shares unless otherwise determined by the Committee.

                (c)     In the event of a share dividend, split, merger,
        consolidation or other recapitalization of the Company affecting the
        number of outstanding Common Shares, the number of Common Shares
        credited to a Participant's Share Account shall be appropriately
        adjusted on the same basis as specified by the Committee.

                (d)     Notwithstanding any provision to the contrary,
        Participants who are actually or potentially subject to Section 16(b) of
        the Securities Exchange Act of 1934, as amended, shall be subject to any
        procedures adopted by the Committee, including without limitation the
        delay of any distribution from a Participant's Share Account.

        5.02.   Use of Third Party Recordkeepers. The Committee may engage a
third party to assist it in tracking the number of Common Shares credited to the
Participants' Share Accounts, reporting of Values to Participants, and such
other recordkeeping functions as determined by the Committee. To the extent that
a third party recordkeeper is so retained, the Committee shall have no
responsibility for the accuracy of calculations or other actions undertaken by
such third party.

        5.03.   Unfunded Nature of Benefits. It is the intent of the Company
that all benefits provided under the Plan will be considered unfunded for
purposes of the Code and Title I of ERISA. No person entitled to any
distribution under the Plan shall have any claim, right, security, preference or
other interest in any asset of any Company except to the extent that an Employer
has violated the terms of the Plan. Any claims by Participants against any
Employer shall be general, unsecured claims. No Participant shall have any right
or recourse against the assets of any member of the Board, Committee or other
person who acts on behalf of the Company or any Employer with respect to the
Plan, except for breach of a duty imposed on such person by the Plan or
applicable law.

                                   ARTICLE VI.

                            DISTRIBUTION OF BENEFITS

        6.01.   Time of Distribution. Except as otherwise provided below,
distribution of a Participant's Benefit may not be made or commenced prior to
the Participant's Termination of Employment, whether due to Normal Retirement,
Early Retirement, death, Disability or voluntary or involuntary separation. A
temporary leave or layoff shall not be treated as a Termination of Employment
for purposes of this Section so long as the Participant has a right to return to
work under an employment agreement, a policy of the Company, or applicable law.
Distributions to Participants employed or formerly employed by an Employer (and
their Beneficiaries) shall be suspended upon the Insolvency of that Employer
except as provided in Section 6.11.

        6.02.   Distribution of Benefits Following Termination of Employment.

                (a)     Upon commencing participation in the Plan and at each
        subsequent Open Enrollment Period, each Participant may designate the
        date on which Common Shares

                                       13

<PAGE>

        covered by a Deferral Election made during that Open Enrollment Period
        with respect to the succeeding Plan Year will be distributed or
        distribution commenced. The date so selected may be any date at least 24
        months after the first day of the Plan Year to which the Deferral
        Election relates. In addition, the date so selected shall apply to
        Shares the receipt of which is deferred in subsequent years unless and
        until a different date is designated with respect to those years. The
        transfer date so selected may be identified as a specific date, the date
        that is a specific number of months or years following the close of the
        Plan Year to which the election relates, the date the Participant
        Terminates Employment, attains a specified age, or any other formulation
        that the Committee believes will allow it to determine when the transfer
        of Common Shares must be made or commence. Any such election may provide
        alternative transfer dates in the event of Termination of Employment
        before the otherwise applicable date.

                (b)     Only one date may be designated under paragraph (a) for
        the distribution or commencement of distribution of Common Shares
        deferred for such Plan Year. If more than one designated distribution
        date falls within a single year, the Committee may require that all
        distributions for such year be made on a single date within that year
        selected by the Committee (which need not be a date selected by the
        Participant so long as the minimum deferral period of paragraph (a) is
        satisfied). In addition, a Participant may not have more than ten (10)
        designated distribution dates over the life of his participation in the
        Plan. For purposes of the foregoing limitation, a distribution date
        which is postponed under paragraph (c) shall together with the postponed
        date be treated as one distribution date.

                (c)     The date for distribution selected by a Participant may
        be postponed (but not accelerated) by a subsequent written notice to the
        Committee, provided such notice is given at least 12 months prior to the
        date that transfer would otherwise be made or commence and that the
        postponement is for at least an additional 12 months from the original
        distribution date. No postponement shall be permitted if the Participant
        has exceeded (or would exceed) the limitation on the number of transfer
        dates under paragraph (a). If the postponed date requested by a
        Participant would result in two distribution dates in a single year,
        then both distributions shall be made on the later of the postponed
        distribution date or the other date designated for the same year as the
        postponed distribution and treated as a single distribution.

                (d)     In the absence of a contrary designation, the transfer
        of Common Shares deferred hereunder shall commence as soon as practical
        following the Participant's Termination of Employment. However, even if
        there is a contrary designation, transfer of Common Shares will be made
        as soon as practical following Termination of Employment with respect to
        any Participant whose employment is involuntarily terminated for cause
        (as determined by the Committee).

                (e)     The Committee shall have the authority to deny any
        requested postponement to a distribution date if it determines that
        agreeing to such postponement would result in adverse tax consequences
        to other Participants or the Company. The Committee's determination in
        such regard shall be binding and conclusive. Distributions shall be
        deemed to come first from deferred option gains, then from the Share
        Purchase

                                       14

<PAGE>

        Plan and finally from Restricted Stock grants. If there is any question
        concerning a Participant's intended distribution, the Committee may, in
        its discretion, determine the timing and source of the distribution.

        6.03.   Withdrawal of Common Shares Prior to Termination of Employment.

                (a)     A Participant who meets the requirements of paragraph
        (b) or (d) below may withdraw all or a portion of his vested Benefit
        without regard to the limitation on distribution dates under Section
        6.02(a). No withdrawal will be permitted unless the Participant has had
        a Deferral Election in place for 24 consecutive months preceding the
        date of the withdrawal related to that election. No more than one
        withdrawal may be made under this Section during any Plan Year.

                (b)     Subject to paragraph (a), a Participant may withdraw all
        or part of the Common Shares held on his behalf in his Share Account
        prior to Termination of Employment in the event of an Unforeseeable
        Emergency. The Value of the Common Shares distributable under this
        paragraph may not exceed the amount needed to meet the Unforeseeable
        Emergency (including taxes imposed on the distribution), as determined
        by the Committee.

                (c)     If a Participant incurs an Unforeseeable Emergency, but
        the Committee determines that such emergency can be relieved through the
        suspension of Deferral Elections, the Committee shall not authorize a
        withdrawal, but may permit the Participant to suspend his Deferral
        Election or a portion thereof. Following suspension, a Participant may
        resume Deferrals only during a subsequent Open Enrollment Period by
        executing a new Deferral Election.

                (d)     Subject to paragraph (a), a Participant may withdraw all
        or a part of his Benefit derived from his Deferral Elections in a single
        distribution upon 30 days notice to the Committee without regard to
        whether he has suffered an Unforeseeable Emergency. However, in the
        event of such a withdrawal, the Participant shall forfeit an amount
        equal to ten percent (10%) of the Value of the Common Shares withdrawn.
        Such amount shall be released to the Company at the same time as the
        withdrawn shares are transferred to the Participant.

                (e)     A Participant requesting a withdrawal under this Section
        shall specify the years in which the requested Common Shares were
        deferred and would otherwise be distributed or distribution commenced.
        The Committee may, as a condition to approving such request, require
        that a different year's deferral be withdrawn or may designate the year
        to which the withdrawal relates if the Participant does not do so.

        6.04.   Form of Distribution of Benefits.

                (a)     Upon commencing participation in the Plan and at each
        Open Enrollment Date thereafter, each Participant shall designate the
        manner in which Common Shares covered by his Deferral Election made at
        that time shall be distributed at his termination of Employment or at a
        specified date prior to Termination of Employment. For

                                       15

<PAGE>

        distributions made upon Termination of Employment, the following options
        shall be permitted.

                        (i)     A lump sum distribution at Termination of
                Employment, which will be made as soon as practical following
                the termination event;

                        (ii)    A lump sum distribution at a date following the
                Termination of Employment by a specified number of years, but
                not more than fifteen years;

                        (iii)   Annual distributions of Common Shares on a
                declining balance over periods of 5, 10, or 15 years at the
                Participant's option. Such distributions must commence within
                five years following Termination of Employment.

                (b)     If distribution is made prior to Termination of
        Employment, the Participant's Benefit shall be paid in a lump sum or in
        annual installments on a declining balance over a period of 5 years at
        the Participant's option.

                (c)     All distributions due a Participant must be completed
        not more than 15 years after Termination of Employment. In the absence
        of a designation as to the manner of distribution, the default form of
        distribution shall be a lump sum distribution upon Termination of
        Employment.

                (d)     Each such transfer of Common Shares shall be made on or
        as soon as practical following the date selected by the Participant. If
        more than one installment is contemplated, each such distribution shall
        be determined by dividing the number of Common Shares held in the
        Participant's Shares Account immediately prior to the distribution by
        the number of years remaining in the term of distribution. Any
        undistributed portion of the Participant's Benefit shall remain subject
        to all of the terms of the Plan.

                (e)     Any Participant who has elected a manner of distribution
        or has been deemed to have elected a manner of distribution of Common
        Shares may change the manner of distribution by written notice to the
        Committee provided such notice is given at least 12 months prior to the
        date that the distribution of Common Shares would otherwise commence. If
        distribution is to be made upon Termination of Employment, any election
        to change the manner of distribution must be made at least 12 months
        before such termination. In addition, any participant who has elected
        any term of installment transfers may elect a lump sum distribution
        prior to or during the course of such transfers subject to a 10% penalty
        of the Value of the Participant's Benefit determined immediately before
        such distribution is made. If a Participant who has elected installment
        distributions incurs an involuntary Termination of Employment as a
        result of a layoff, property closure or sale, loss of management
        contract or other circumstances beyond the control of the Participant,
        the Committee may, in its discretion, permit a Participant who so
        requests to revoke or modify a prior election and receive all or portion
        of the anticipated installments as single distribution without the
        imposition of a 10% penalty.

                                       16

<PAGE>

                (f)     Notwithstanding elections to the contrary, a Participant
        whose employment ends through voluntary resignation in his initial year
        of Plan participation will receive a lump sum distribution of his
        Benefit as soon as possible following Termination of Employment.

                (g)     A Participant whose employment is terminated for cause
        (as determined by the Committee) shall receive a lump sum distribution
        of his Benefit as soon as practical following the termination event. Any
        contrary election made by the Participant shall be disregarded. A
        Participant whose employment ends through involuntary separation for any
        reason other than cause may receive Benefits in accordance with his
        termination distribution elections.

        6.05.   Transfer of Common Shares Upon Change of Control. In the event
of a Change of Control prior to the Insolvency of an Employer, all Common Shares
held on behalf of the Participants shall become distributable at the date
thereof. Transfer of Common Shares shall be made in a single distribution to
each Participant as soon as practical after the Change of Control occurs. It
shall not be necessary for any Participant or Beneficiary to apply for or
consent to such distribution. The Company shall take all steps necessary to
release such shares and transfer possession thereof to the Participants.

        6.06.   Designation of Beneficiary.

                (a)     If a Participant dies before receiving all of his
        Benefit under the Plan, all prior elections made by the Participant as
        to the time and manner of payment shall be canceled. Such deceased
        Participant's Benefit (or the undistributed portion thereof) shall be
        distributed in a single distribution to the Beneficiary designated by
        the Participant.

                (b)     A Participant may designate one or more Beneficiaries on
        such form as supplied by the Committee. A Participant may by similar
        action designate a change of Beneficiary at any time, which change shall
        be effective only upon receipt by the Committee of said notice. The last
        such designation form filed with the Committee prior to the
        Participant's death shall control.

                (c)     If a Participant designates his spouse as a Beneficiary
        under paragraph (a), such designation shall automatically be revoked on
        the date that the Committee receives written notice that the Participant
        and such designated spouse have divorced, except to the extent otherwise
        provided in a subsequent Beneficiary designation filed by the
        Participant with the Committee.

                (d)     In the absence of a written designation, or in the event
        a Participant dies without a Beneficiary surviving him, the amount which
        would otherwise be payable to his Beneficiary shall be paid to the
        surviving spouse of such Participant or if none, to such Participant's
        estate. A Beneficiary shall have no interest or rights under the Plan
        during the lifetime of the Participant, except as may be provided
        otherwise in the Plan or ERISA.

        6.07.   Loans. Participants shall not be entitled to borrow any portion
of their Accounts, nor may Accounts be given as security for any loan extended
to the Participant.

                                       17

<PAGE>

        6.08.   Deductions. Distributions made hereunder shall be reduced by the
amount of any taxes required by law to be withheld from such distributions and
by the amount of any claims of creditors of the Company payable under the Trust.
The Value of any Common Shares deferred hereunder shall be subject to employment
taxes to the extent required by Section 3121(v) of the Code.

        6.09.   Benefit Distribution on Disability or Incapacity. If a
Participant becomes Disabled prior to receiving his entire Benefit under the
Plan, the Committee may, in its absolute discretion, modify or cancel any
election made by the Participant as to the time or manner of distribution and
determine when and how the Participant's Benefit shall be distributed. If the
Committee determines that a claimant who is to receive Common Shares hereunder
is a minor, mentally or emotionally incompetent, or is for any other reason
incapable of giving a valid receipt or discharge for such transfer, the
Committee may direct the Company to transfer all or part of the Common Shares
otherwise transferable to the claimant to a guardian, custodian, trustee
conservator, relative, institution or other person on behalf of such claimant;
provided, however, the Committee shall not be obligated to make any inquiry as
to the competency of any Participant, Beneficiary or other claimant. Any
transfer of Common Shares made on behalf of a claimant under this Section shall
act as a full and complete discharge and release of the obligation of the Plan
to such claimant.

        6.10.   Deduction Limitation. If the Committee determines that the
Company would be denied a deduction for amounts otherwise payable in any Plan
Year to a Participant as a result of the limitations imposed by section 162(m)
of the Code, the Committee may direct the Trustee to reduce the number of Common
Shares otherwise transferable to such Participant (but not below zero) to the
extent necessary to avoid such loss of deduction. In the event of such
reduction, the Common Shares not so transferred shall continue to be part of the
Participant's Share Account and shall be transferred to the Participant at the
earliest Plan Year or Years in which transfer may be made without loss of the
deduction to the Company under that section.

        6.11.   Suspension of Transfers During Insolvency.

                (a)     Upon the Insolvency of an Employer, all transfers of
        Common Shares that would otherwise be made hereunder to Participants
        employed or formerly employed by such Employer (and their Beneficiaries)
        shall be suspended except to the extent that an event permitting such a
        transfer to one or more Participants or Beneficiaries occurred prior to
        the date of such Insolvency. Transfers may resume or only upon a
        determination that Insolvency has not occurred or has been cured.

                (b)     The Committee shall not have any responsibility for
        determining whether the Insolvency has occurred. If, however, the
        Committee is advised by the Board or otherwise determines that any
        Employer is Insolvent, the Committee shall take all steps necessary to
        effectuate the release and transfer of Common Shares to creditors of the
        Employer as may be requested by the Employer or the Company.

                                       18

<PAGE>

                                  ARTICLE VII.

                                 ADMINISTRATION

        7.01.   Fiduciaries.

                (a)     The "fiduciaries" of the Plan are (1) the Company, when
        acting as the "Plan Administrator," as defined under ERISA); and (2) the
        Committee. Each such fiduciary shall have only those powers, duties,
        responsibilities, and obligations which are specifically allocated to
        them under the Plan.

                (b)     Each fiduciary warrants that any directions given,
        information furnished, or action taken by it shall be in accordance with
        the provisions of the Plan authorizing or providing for such direction,
        information or action. Furthermore, each fiduciary may rely upon any
        such direction, information or action of any other fiduciary as being
        proper under the Plan, and is not required to inquire into the propriety
        of any such direction, information or action. No fiduciary shall be
        deemed to have guaranteed the Value of the Common Shares credited to the
        Share Accounts of Participants.

        7.02.   Powers and Responsibilities of the Company.

                (a)     The Company shall determine the number of, and shall be
        empowered to appoint and remove the members of the Committee from time
        to time as it deems necessary for the proper administration of the Plan.

                (b)     The Company may employ an independent qualified public
        accountant to examine the books, records, and any financial statements
        and schedules of the Plan.

                (c)     The Company shall file or cause to be filed with the
        appropriate government agency (or agencies) any required reports and any
        other pertinent documents.

        7.03.   Powers and Responsibilities of the Committee.

        The Committee shall carry out the daily management of the Plan in
accordance with its terms and shall have the power to determine all questions
arising in connection with the administration, interpretation, and application
of the Plan. Any such determination by the Committee shall be conclusive and
binding upon all persons. The Committee may correct any defect, supply any
information, or reconcile any inconsistency in such manner and to such extent as
shall be deemed necessary or advisable to carry out the purpose of this Plan;
provided, however, that any interpretation or construction shall be made and
applied in a nondiscriminatory manner. The Committee shall have such powers and
duties as may be necessary to discharge its duties hereunder, including, but not
limited to, the power and duty:

                (a)     to construe and interpret the Plan, decide all questions
        of eligibility for distribution of any benefits hereunder;

                (b)     to adopt such rules, such procedures and forms as it
        deems appropriate;

                                       19

<PAGE>

                (c)     To direct an Employer to reduce a Participant's Deferral
        Election if it determines that acceptance of the election as submitted
        could impair the Employer's or the Participant's ability to meet any
        other obligations imposed on either of them by law or agreement.

                (d)     to make a determination as to the right of any person to
        a benefit and to afford any person dissatisfied with such determination
        the right to a hearing thereon;

                (e)     to receive from the Employers and from Participants such
        information as shall be necessary for the proper administration of the
        Plan;

                (f)     to delegate to one or more of the members of the
        Committee the right to act in its behalf in all matters connected with
        the administration of the Plan and to delegate ministerial matters to
        its agents or employees, who need not be members of the Committee;

                (g)     to furnish any Participant or Beneficiary who requests
        in writing statements indicating the Value of such Participant's or
        Beneficiary's Accounts;

                (h)     to maintain all records necessary for verification of
        information required to be filed with any governmental agency;

                (i)     to retain such agents, and employees, including legal
        counsel (which may be counsel for the Company), as it deems appropriate
        for the discharge of its duties hereunder;

                (j)     to adjust the Accounts of Participants at least once per
        quarter of each Plan Year to reflect earnings, gains, losses, and
        increases and decreases in their Accounts based on information supplied
        by the Trustee.

        7.04.   Committee Procedures. The Committee may act at a meeting or in
writing without a meeting. Such committee shall elect one of its members as
chairman, appoint a secretary who need not be a member of the Committee. The
Secretary shall keep a record of all meetings and forward all necessary
communications to the Company or other appropriate persons. The Committee may
adopt such bylaws and regulations as it deems desirable for the conduct of its
affairs. All decisions of the Committee shall be made by the vote of the
majority including actions in writing taken without a meeting. A dissenting
member of the Committee who, within a reasonable time after he has knowledge of
any action or failure to act by the majority, registers his dissent in writing
delivered to the other Committee members and the Company shall not be
responsible for any such action or failure to act.

        7.05.   Voting of Securities. The Participants may direct the manner in
which voting, dissenter's or other shareholder's rights of securities held in
their Share Accounts are to be exercised. The Committee shall adopt such
procedures as necessary to facilitate the exercise of such rights.

        7.06.   Coordination with Other Executive Choice Plans. The Committee is
expected to coordinate the administration of the Plan with the administration of
the Prentiss Properties

                                       20

<PAGE>

Executive Choice Deferred Compensation Plan, the Prentiss Properties Executive
Choice Deferred Compensation Plan for Trustees and the Prentiss Properties
Executive Choice Share Deferral Plan for Trustees. The Committee may provide for
the common administration of the plans and may appoint the same recordkeeper and
other agents who may treat the plans, for administrative purposes and for
communication to Participants, as a single program. The Committee may authorize
the use of forms and disclosures jointly with the Executive Choice Plan. Such
administrative steps are for convenience only and shall not be interpreted to
negate the separate existence and nature of each such plan.

        7.07.   Decisions of the Committee. The decisions of the Committee shall
be conclusive and binding upon the Company, the Trustee and all Employees,
Participants and Beneficiaries. All decisions of the Committee which involve the
exercise of discretion shall be made upon the basis of uniform principles
established in this Plan and by the Committee and in such manner as to avoid any
discrimination among Participants.

        7.08.   Records and Statements. The Committee shall maintain such
records as may be required by law, the Plan, or as it otherwise deems
appropriate for the administration of the Plan. Such records shall reflect the
Value of each Participant's and Beneficiary's Accounts at any time. Records of
the Committee shall be subject to the inspection of the Company and of any
Participant or Beneficiary, but only to the extent that they apply to him.

        7.09.   Payment of Expenses. All expenses incident to the
administration, termination or protection of the Plan, including but not limited
to, legal and accounting fees shall be paid by the Company.

        7.10.   Benefit Claims Procedure. The Committee shall make all
determinations as to the right of any such person to any benefit under the Plan.
Any Participant, Beneficiary, or the authorized representative of either of the
foregoing may file a request for benefits under the Plan. Such request shall be
deemed filed when made in writing addressed or hand-delivered to the Committee
in care of the Company. Such request shall be on such form and pursuant to such
rules as are adopted by the Committee and shall set forth the basis of such
claim. Upon receipt of such claim, the Committee shall conduct such examinations
as may be necessary to determine the validity of the claims and, if appropriate,
shall take such steps as may be necessary to facilitate the distribution to
which the claimant is entitled.

        7.11.   Claims Review Procedure. If any claim for benefits is denied,
the Committee shall notify the claimant in writing. The notice of the denial of
benefits shall state the specific reason for such denial and cite any applicable
provisions of the Plan upon which the denial is based. If the claim can be
corrected, a request for such information shall be made and the reason for
requesting such additional information shall be stated in the notice to the
claimant. The claimant shall be entitled to appeal the decision to the Committee
for a period of sixty (60) days after receipt of the notification of denial. The
claimant shall be advised that the failure to perfect and appeal within such
sixty (60) day period shall make the Committee's initial decision conclusive.
The Committee shall furnish the claimant or his personal representative any Plan
information needed to perfect his appeal.

                                       21

<PAGE>

        7.12.   Unclaimed Benefits. Each Participant and Beneficiary of a
deceased Participant shall file with the Committee from time to time in writing,
his home address and each change of home address. Any communication addressed to
the Participant or the Beneficiary at his last home address filed with the
Committee, or if no such address was filed, then at his last home address as
shown on the Company's records, shall be binding on the Participant or
Beneficiary for all purposes of the Plan. The Committee shall not be obligated
to search for or ascertain the whereabouts of any Participant or Beneficiary. If
the Committee furnishes notice to any Participant or Beneficiary of a deceased
Participant, that he is entitled to a distribution and the Participant or
Beneficiary fails to claim such distribution or make his whereabouts known to
the Committee, such benefit shall be retained by the Plan until the earlier of
(i) the date the Plan is terminated or (ii) the date the Company is liquidated.
Such Participant's benefit shall then be disposed of as follows:

                (a)     If the Participant has not been located by the time of
        distribution of assets, and the whereabouts of the Beneficiary of such
        Participant then is known to the Committee, distribution shall be made
        to such Beneficiary.

                (b)     If the whereabouts of both such Participant and his
        Beneficiary are unknown to the Committee, the Committee may direct the
        distribution of such Participant's benefit to the Company.

        7.13.   Indemnification. The Company shall indemnify each member of the
Committee from and against any and all liabilities, costs, damages or expenses
occasioned by any act or omission except to the extent that the same is
judicially determined to be due to the gross negligence willful misconduct or
fraud of such member. The Company may purchase insurance to the extent deemed
appropriate in connection with such indemnification.

                                  ARTICLE VIII.

                          AMENDMENT AND ADMINISTRATION

        8.01.   Amendment. The Company may amend this Plan, at any time and from
time to time, in whole or in part. An amendment of the Plan may be retroactive
or modify existing elections made by Participants to the extent the Committee
determines that such amendment is necessary to comply with the laws applicable
to the Plan and Trust. The Company shall notify each Participant in writing of
any Plan amendment.

        8.02.   Termination. The Company may terminate or discontinue the Plan
in whole or in part at any time without any liability for such termination or
discontinuance. Upon Plan termination, all Deferral Elections shall cease.

                                   ARTICLE IX.

                                  MISCELLANEOUS

        9.01.   Limitation of Rights; Employment Relationship. Neither the
establishment of this Plan nor any modification thereof, nor the creation of any
fund or account, nor the distribution of any Benefit, shall be construed as
giving a Participant or other person any legal or equitable right

                                       22

<PAGE>

against any Employer except as provided in the Plan. In no event shall the terms
of employment of any employee be modified or in any way be affected by the Plan.

        9.02.   Limitation on Assignment. Benefits under this Plan may not be
assigned or alienated by any Participant. A Participant's or Beneficiary's
interest in benefits under the Plan shall not be subject to debts or liabilities
incurred by the Participant and shall not be subject to attachment, garnishment
or other legal process as a result of any of the Participant's debts or
liabilities.

        9.03.   Accounting Treatment. The Company intends that the maintenance
and administration of the Plan will result in fixed treatment for accounting
purposes and not variable treatment. The Committee is authorized and expected to
adopt such rules and procedures as may be necessary to assure that fixed
accounting treatment is obtained. Without limiting the generality of the
foregoing, any Common Shares held in the Participant's Share Account may not be
diversified, directly or indirectly, or paid otherwise than in the form of
Common Shares, unless the Committee determines that such diversification or
payment can be made consistent with fixed accounting treatment.

        9.04.   Representations. The Company does not represent or guarantee
that any particular federal or state income, payroll, personal property or other
tax advantages will result from participation in this Plan. Participants are
expected to consult with their own professional tax advisors to determine the
tax consequences of participation in the Plan. Furthermore, the Company does not
represent or guarantee successful investment of amounts deferred hereunder, and
shall not be required to repay any loss which may result from such deferral.

        9.05.   Severability. In the event that any provision of this Plan shall
be held illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining provisions of this Plan, but shall be fully severable
and the Plan shall be construed and enforced as if the illegal or invalid
provision had never been inserted herein.

        9.06.   Governing Law. The validity, construction, and effect of this
Plan and its enforcement shall be determined by the laws of the State of Texas,
except to the extent preempted by ERISA.

        9.07.   Binding Effect. The provisions of this Plan shall be binding
upon each Participant and each Beneficiary or other person entitled to any
Benefits hereunder, their heirs, personal representatives, and assigns.

        9.08.   Gender and Number. As used in the Plan, the references to terms
or persons in the masculine gender shall include the feminine and neuter
genders, and vice versa. The singular number shall include the plural and vice
versa.

        9.09.   Mergers, Consolidations, and Transfers. In the event of the
acquisition by or merger of the Company into any other company, the Plan shall
be deemed terminated as of the effective date of such acquisition or merger
unless the successor company expressly agrees to continue the Plan.

                                       23

<PAGE>

        9.10.   Notices. Any notice which shall or may be given under the Plan
shall be in writing and shall be mailed by United States mail, postage prepaid.
If notice is to be given to the Company, such notice shall be addressed to the
Company at its principal place of business or, if notice to a Participant,
addressed to the address shown on the Employer's records. It shall be the
responsibility of each Participant to keep the Committee informed of any change
of address. Any distribution mailed or delivered to the last known address of a
Participant of Beneficiary shall completely discharge the Plan and the Employers
from any further liability to such Participant to the extent of such
distribution. The Committee may establish rules and procedures under which any
notice required or permitted under the Plan may be given in writing by
electronic mail, facsimile or similar means. Any document transmitted in
accordance with the procedures established by the Committee shall not be
invalidated due to the absence of a manual signature.

        9.11.   Binding Effect. The Plan shall be binding upon the Company and
its respective successors or assigns, and upon each Participant, Beneficiary,
and their respective assigns, heirs, executors and administrators.

        9.12.   Adoption by Affiliates.

                (a)     Any Affiliate may, with the approval of the Company,
        adopt this Plan. Thereafter, such adopting affiliate shall be deemed the
        "Employer" with respect to its employees; provided, however, that the
        Company and the Committee shall retain all powers of administration
        under the Plan.

                (b)     The adoption of the Plan by any Affiliate shall be
        evidenced by written resolutions of the governing bodies of the Company
        and the other Affiliate.

        IN WITNESS WHEREOF, the Company has adopted this Executive Choice Share
Deferral Plan as of the 12th day of February, 2003.

                                       PRENTISS PROPERTIES
                                       ACQUISITION PARTNERS, L.P.

                                                /s/ THOMAS F. AUGUST

                                       By:      THOMAS F. AUGUST
                                               ---------------------------------
                                       Title:   CHIEF EXECUTIVE OFFICER
                                               ---------------------------------

                                       24

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