Document:

Exhibit
10.2

EXECUTIVE
EMPLOYMENT AGREEMENT

EXECUTIVE
EMPLOYMENT AGREEMENT (the “Agreement”), by and between
Real Mex Restaurants, Inc., a Delaware corporation (the “Company”), and
Frederick Wolfe (the “Executive”). 
Capitalized terms used herein but not otherwise defined have the meaning
set forth in Section 1.1 hereof,

 

WHEREAS, the Company
wishes to employ Executive, and Executive wishes to accept such employment,
each upon the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, in
consideration of the mutual undertakings contained herein and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

 

ARTICLE I

Definitions

1.1   Definitions.  As used herein, the following terms shall
have the following meanings.

“Affiliate” shall
mean, as to any Person, any other Person which directly or indirectly controls,
or is under common control with, or is controlled by, such Person.  As used in this definition, “control” (including,
with its correlative meanings, “controlled by” and “under common control with”)
shall mean possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of securities or
partnership or other ownership interests, by contract or otherwise).

 

“Board” means the
board of directors of the Company.

 

“Cause” means (i)
the commission of a felony or a crime by Executive involving moral turpitude or
the commission of any other act or omission by Executive involving dishonesty,
disloyalty or fraud with respect to any member of the Company Group, (ii)
conduct by Executive which brings any member of the Company Group into
substantial public disgrace or disrepute, (iii) failure by Executive to perform
material duties as reasonably directed by the Board and, if susceptible to
remedy or cure, is not cured or remedied and continues for fifteen (15) days
after the Board has given written notice to the Executive

   
 

specifying in reasonable detail the manner in which Executive has
continued to fail to perform his duties, (iv) gross negligence or willful
misconduct by Executive with respect to any member of the Company Group, or (v)
any beach of a material provision of this Agreement by Executive that is not susceptible
to remedy or cure, or if susceptible to remedy or cure, is not cured or
remedied and continues for fifteen (15) days after the Board has given written
notice to Executive specifying the manner in which Executive has breaches this
Agreement.

 

“Company Group”
means, collectively, the Company and its Subsidiaries and any successors
thereto.

 

“Employment Period”
has the meaning set forth in Section 2.1.

 

“Good Reason”
means a material reduction in Executive’s responsibilities and duties in his
capacity as President and Chief Executive Officer of the Company that is not
susceptible to remedy or cure, or if susceptible to remedy or cure, is not
cured or remedied and continues for fifteen (15) days after Executive has given
the Board written notice of such material reduction.

 

“Permanent Disability”
means either (i) Executive is or (ii) in the good faith determination of the
Board, Executive will likely be unable to substantially perform, by reason of
illness, accident, injury, physical or mental incapacity or other disability,
his duties or obligations under his Agreement for a period of ninety (90)
consecutive days or for shorter periods aggregating 120 days during any period
of twelve (12) consecutive months.

 

“Person” means an individual,
a partnership, a corporation, and association, a joint stock company, a limited
liability company, a trust, a joint venture, an unincorporated organization or
a governmental entity or any department, agency or political subdivision
thereof.

 

“Subsidiary”
means, with respect to any Person, any corporation, partnership, association or
other business entity of which (i) if a corporation, a majority of the total
voting power of shares of stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof, or (ii) if a partnership, association or other

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business entity, a
majority of the partnership or other similar ownership interests thereof is at
the time owned or controlled, directly or indirectly, by any Person or one or
more Subsidiaries of that Person or a combination thereof.  For purposes hereof, a Person or Persons
shall be deemed to have a majority ownership interest in a partnership,
association or other business entity if such Person or Persons shall be
allocated a majority of partnership, association or other business entity gains
or losses or shall be or control the managing director or general partner of
such partnership, association or other business entity.

 

ARTICLE II

Employment

 

2.1   Employment.  The Company agrees to employ Executive, and
Executive hereby accepts employment with the Company and such other members of
the Company Group as the Board shall determine, upon the terms and conditions
set forth in this Agreement for the period beginning on August 21, 2006 (the “Commencement
Date”) and ending as provided in Section 2.4 (the “Employment period”).

 

2.2   Position and Duties.

 

(a)           Commencing on the date and continuing
during the Employment Period, Executive shall serve as President and Chief
Executive Officer of each of the Company and such other members of the Company
Group as the Board shall determine and shall have the typical duties,
responsibilities and authority of a Person serving in such capacities in an
organization of similar size and structure as the Company, subject in each
instance to the supervision and direction of the Board or such Person as the
Board may designate, Executive shall report directly to the Board or to such
other Person as the Board may designate.

 

(b)           Executive shall devote his best
efforts and his full business time and attention (except for permitted vacation
periods and reasonable periods of illness or other incapacity) to the business
and affairs of the Company Group and the performance of Executive’s duties as
President and Chief Executive Officer of the Company and such other members of
the Company Group as the Board shall determine. 
The Executive shall perform his duties and responsibilities to the best
of his abilities in a diligent, trustworthy, businesslike and efficient manner.

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(c)           With respect to all regular elections
of directors during the Employment Period, each of the Company and such other
members of the Company Group as the Board shall determine shall nominate, and
use their respective best efforts to elect, Executive to serve as a member of
their respective boards of directors.

 

2.3   Base Salary, Bonus and Benefits.

 

(a)           During the
Employment Period, Executive’s total bas salary shall be $473,000 per annum or
such greater amount as the Board shall determine, from time to time, in its
sole discretion (the “Base Salary”), which salary shall be payable in
regular installments in accordance with the Company’s general payroll practical
and shall be subject to customary withholding. 
The Company will review the Executive’s total base salary annually.

 

(b)           During the Employment Period,
Executive shall be eligible to receive an annual (based on the Company’s fiscal
year) bonus of up to 66-2/3% of his Base Salary (the “Bonus”).  The Bonus shall be based upon the Company’s
annual financial results, as reflected in its audited financial statements, and
shall consist of a cash payment payable within thirty (30) days after the
completion of the Company’s audited annual financial statements.  The Bonus shall be determined as
follows:  Within a mutually agreeable
time period prior to the beginning of each fiscal year of the Company,
Executive shall submit to the Board for its approval the Company’s operational
plan, including a fiscal budget, for the next fiscal year of the Company.  The Board shall establish financial targets
and set conditions each year based on the approved operational plan (a “Bonus
Plan”).  The financial targets and
conditions established for Executive’s Bonus shall be consistent with those
established for other senior executives of the Company.  Executive shall receive the percentage of the
maximum Bonus specified by the applicable Bonus Plan, depending on whether the
Company attains all or a portion of the financial targets established, and
meets all of the conditions set under such Bonus Plan for that year.  Any of the Company’s financial results that
are used to calculate a Bonus shall be taken only from the Company’s audited
financial statements for the applicable year.

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(c)           During the Employment Period,
consistent with past custom and practice, Executive shall be entitled to (i)
participate in all of the Company Group’s employee benefit programs for which
senior executive employees of the Company Group are generally eligible,
including, if offered by the Company to such executives, medical surgical, hospitalization,
dental, worker’s compensation insurance and disability converge, (ii) four (4)
weeks of paid vacation each year (which shall include $5,000 paid to Executive
for an annual comparative shopping trip for research and development purposes
to be taken during such vacation), which if not taken may not be carried
forward to any subsequent year, (iii) the payment by the Company, or such other
member of the Company Group as the Bard shall determine to the Executive of a
car allowance of $1,000 a month, plus reimbursement of all reasonable,
documented expenses related to the operation of an automobile, including
repairs, maintenance, insurance and registration fees, (iv) payment by the Company
of the premiums on a $1 million term life insurance policy on the life of the
Executive, the death benefit of which will be payable to the Estate of the
Executive or his designee (the cost of the premiums thereon not to exceed
$10,000 a year); provided, however, that Executive shall assist the Company in
procuring such insurance by submitting a reasonable medical examination and by
filling out, executing and delivering such applications and other instruments
in writing as may reasonably be required by any insurer to which the Company
may apply, and (v) such other benefits as the Board may from time to time
determine.  The benefits described in
Section 2.3(c)(i)-(v) above are collectively referred to herein as the
Executive’s “Benefits.”

 

2.4   Term; Severance Payments: Release.

 

(a)           The Employment Period shall end five
years from the Commencement Date, subject to earlier termination (i) by reason
of Executive’s death or Permanent Disability, (ii) by resolution of a majority
of the directors of the Board, terminating Executive’s employment hereunder,
with or without Cause, (iii) upon Executive’s voluntary resignation without
Good Reason or (iv) upon Executive’s resignation for Good Reason.

 

(b)           If the Employment Period is
terminated by the Board for Cause or by Executive’s voluntary resignation
without Good Reason, the Executive shall be entitled to his Base Salary and

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Benefits up to the end
termination, but shall not be entitled to any further Base Salary or Benefits
or any then unpaid Bonus for that year, any prior year, or any future year, or
to any severance compensation of any kind, nature or amount.

 

(c)           If Executive’s employment is
terminated as a result of his death or Permanent Disability, the Company shall
pay or cause to be paid to Executive or his Estate, as applicable, (i) unpaid
Base Salary and Benefits up to the date of such termination, (ii) any
previously awarded but unpaid Bonus, and (iii) such prorated Bonus for the
fiscal year in which the termination occurs as the Board shall determine in
good faith on a basis consistent with past custom and practice; and neither
Executive nor his Estate shall be entitled to any further Base Salary, Benefits
or Bonus for that year or any future year, or to any severance compensation of
any kind, nature or amount.

 

(d)           Subject to paragraph 2.4(o), if the
Employment Period is terminated by the Board without Cause or by Executive’s
voluntary resignation for Good Reason, Executive shall be entitled to (i)
unpaid Base Salary and Benefits up to the date of such termination, (ii) any
previously awarded but unpaid Bonus, and (iii) if such termination occurs
within two years following the Commencement Date, for a period of two (2) years
following the date of such termination (the “severance period”), severance
payments equal in the aggregate to his annual Base Salary (payable in
accordance with the terms of Section 2.4(f) below) (it being understood and agreed
that if such termination occurs after two years following the Commencement
Date, the severance period for all purposes of this Agreement shall be one (1)
year following the date of such termination). 
Until the earlier of the end of the severance period and such time as
Executive begins to receive medical benefits other than those contemplated
herein, Executive shall continue to participate at the Company’s cost in the
Company’s medical plan on a level no less favorable than that enjoyed by the
Executive at the time of his termination. 
In the event that the Company shall be precluded under its existing
policy to provide such coverage to Executive, the Company shall, on a monthly
basis, provide to Executive a cash payment equal to the amount paid by the
Company each month for the Executive’s coverage under such plan.  Executive shall not be entitled to

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any further Base Salary, Benefits
or then unpaid Bonus for the year, any prior year, or to any further severance compensation
of any king, nature or amount except as herein provided. 

 

(e)           Executive agrees that Executive shall
be entitled to the payments provided for in Section 2.4(d) if and only if
Executive has not materially breached as of the date of termination of the
Employment Period the provisions of Sections 2.5, 2.6 and 2.7 hereof and does
not breach such Sections at any time during the severance period, and the
Company will be relieved of any obligation to make such payments during any
portion of the severance period in which the Executive is in breach of any such
obligation; provided the Company will resume making such payments to Executive
during the severance period at such time as the Board determines in good faith
that any such breach has ceased or otherwise been cured. 

 

(f)            Any severance payments pursuant, to
Section 2.4(d) shall be made in installments on the payment dates on which Executive’s
Base Salary would have otherwise been paid if the Employment Period had
continued (net of any withholding taxes), and as of the date of the final such
payment none of the Company or any other member of the Company Group shall have
any further obligation to Executive pursuant to this Section 2.4 except as
provided by law.

 

(g)           Executive hereby agrees that no severance
compensation of any kind, nature or amount shall be payable to Executive in
connection with any termination of the Employment Period, except as expressly
set forth in this Section 2.4, and Executive hereby irrevocable waives any
claim for any other severance compensation. 

 

(h)           Executive acknowledges and agrees
that notwithstanding anything to the contrary set forth above, no payments
shall be made to the Executive by the Company follwoing termination of this
Agreement unless, if so requested by the Company, Executive executes and
delivers to the Company a release in form satisfactory to the Company pursuant
to which Executive releases and forever discharges the Company, its then or
former parents, subsidiaries and affiliates, their respective predecessors and
successors, and their respective officers, employees, agents, and directors,
from all claims or actions of any kind arising on or before the date of
termination.  This general release and
waiver

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shall include, but not be
limited to, all claims or actions arising out of, or relating in any way to the
Executive’s employment with the Company, including any claim for compensation,
or any claim of discrimination under any state, federal or local law or
regulation, including under the Age Discrimination in Employment Act of 1967,
as amended, or any claim for wrongful termination, breach of contract, breach
of covenant of good faith and fair dealing, negligence or intentional
infliction of emotional distress, misrepresentation of defamation. If Executive
maintains, or participates in any claim or action, in any court or agency,
based wholly or partially upon a claim or action Executive has released or
waived under this Agreement, Executive agrees to pay all expenses an costs
(including reasonable attorney’s fees) incurred by the Company and those
associated with the Company in defense of such claim or action. This release
shall not be construed as a waiver of any rights executive has under any
pension or other benefit plan maintained by the Company for its employees
generally.

 

2.5           Confidential Information     The Executive acknowledges that he may have
access to certain confidential, non-public and proprietary information (the “Confidential
Information”), concerning the Company and other members of the Company Group
and their respective officers, directors, shareholders, employees, agents and
representatives and agrees that: (i) unless pursuant to prior written consent
by the Board (which shall not be unreasonably withheld), the Executive shall
not disclose any Confidential Information or the provisions of this Agreement
to any third party, unless compelled by court order or subpoena, in which case
Executive shall (A) immediately notify the Company of any such court order or subpoena
in order to enable the Company to contest such order or subpoena, (B) fully
cooperate with any efforts by the Company to limit the extent of such
disclosure and (C) disclose only so much of such confidential information as is
necessary to comply with such court order or subpoena; (ii) the Executive shall
treat as confidential all Confidential Information and shall take reasonable
precautions to prevent unauthorized access to the Confidential Information;
(iii) the Executive shall not use the Confidential Information in any way
detrimental to the Company or any other member of the Company Group and shall
use the Confidential Information for the exclusive purpose of effecting his
duties of employment with the Company; and (iv) the Executive agrees that the
Confidential Information obtained

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during his employment
with the Company shall remain the exclusive property of the Company and any
other member of the Company Group, and the Executive shall promptly return to
the Company all material which incorporates, or is derived from, all such Confidential
Information immediately following the date of termination. It is hereby agreed
that Confidential Information does not include information generally available
and known to the public or obtained from a source not bound by a
confidentiality agreement with any member of the Company Group. 

 

2.6           Inventions and Patents.      The Executive hereby agrees that all
inventions, innovations or improvements in the method of conducting the
business (including improvements, ideas and discoveries, whether patentable or
not) of the Company or any other member of the Company Group whether prior to,
the date hereof or thereafter, in each case conceived or made by him in the
course of his employment with the Company, belong to the Company and such other
member of the Company Group, except for such inventions, innovations and
improvements that have become part of the public domain and are not entitled to
statutory or common law protection.  The
Executive will promptly disclose such inventions, innovation or improvements to
the Board and perform all actions reasonably requested by the Board to
establish and confirm such ownership by the applicable member of the Company
Group.

 

2.7           Noncompete, Nonsolicitation.

 

                (a)           The
Executive acknowledges that in the course of his employment with the Company or
any other member of the Company Group he has become familiar, and he will
become familiar, with the Company Group’s trade secrets and with other
Confidential Information and that his services have been and will be of
special, unique and extraordinary value to the Company Group. Therefore, the
Executive agrees that, (1) during the time he is employed by the Company or any
other member of the Company Group and (ii) during the severance period (the “Noncompete
Period”), the Executive shall not directly or indirectly own, manage,
control, participate in, consult with, render services for, or in any manner
engage in, any business competing directly or indirectly with the business of
the Company Group (as defined below), within any metropolitan area in which any
member of the Company Group engages or has definitive plans to engage in such
business as of the date of termination

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by the Company Group;
provided, that the Executive shall not be precluded from purchasing or holding
publicly-traded securities of any such entity so long as the Executive shall
hold less than 2% of the outstanding units of any such class of securities and
has no active participation in the business of such entity.  At the Company’s option, the Noncompete
Period shall be extended for up to one (1) additional year provided that the
Company extend the severance period for a corresponding period.  As used in this Section 2.7(a) the business
of the Company Group means the ownership, management, operation, or franchising
of restaurants; canteens, cafeterias; kiosks and other food service operations
featuring Mexican food and the manufacture and distribution of Mexican food
products. 

 

(b)           During the Noncompete Period, the
Executive shall not directly or indirectly (i) induce or attempt to induce any
employee of the Company or any other member of the Company Group to leave the
employ of the Company or any other member of the Company Group except for such
employees whose employment has been terminated for at least six months, or (iii)
induce or attempt to induce any customer, supplier, licensee, licensor,
franchisee, franchisor or other business relation of the Company or any other
member of the Company Group to cease doing business with the Company or such
other member of the Company Group.

 

(c)           The Executive agrees that (i) the
covenants set forth in this Section 2.7 are reasonable in geographical and
temporal scope and in all other respects, (ii) the Company would not have
entered into this Agreement but for the covenants of the Executive contained
herein, and (iii) the covenants contained herein have been made in order to
induce the Company to enter into this Agreement.

 

(d)           If, at any time enforcement of this
Section 2.7, a court shall hold that the duration, scope, or area restrictions
stated herein are unreasonable under circumstances shall be substituted for the
stated duration, scope or area and that the court shall be allowed to revise
the restrictions contained herein to cover the maximum period, scope and area
permitted by law. 

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ARTICLE III

Miscellaneous

3.1           Executive’s Representations.
Executive hereby represents and warrants to the Company that (i) the execution,
delivery and performance of this Agreement by the Executive do not and shall
not conflict with, breach; violate or cause a default under any contract,
agreement, instrument, order, judgment or decree to which Executive is a party
or by which he is bound, (ii) the Executive is not a party to or bound by any
employment agreement, consulting or service agreement, noncompete agreement or
confidentiality agreement with any other person or entity, and (iii) upon the
execution and delivery of this Agreement by the Company, this Agreement shall
be the valid and binding obligations; under this Agreement and that he fully
understands the terms and conditions contained herein.

3.2           Survival. Sections 2.4, 2.5,
2.6, and 2.7 and Sections 3.1 through 3.2 shall survive and continue in full
force in accordance with their terms notwithstanding any termination of the
Employment Period.

3.3           Notices. All notices, demands
or other communications to be given or delivered under of by reason of the
provisions of this Agreement will be in writing and will only be deemed to have
been given when delivered personally, send via nationally recognized overnight
courier, or send via facsimile to the recipient. Such notices, demands and
other communications will be sent to the address indicated below:

	
   

  	
  To the Company:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  To the Executive:

  	
   

  
	
   

  	
   

  	
  Mr. Frederick Wolfe

  	
   

  
					

 

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Or such other addresses
or to the attention of such other person as the recipient party shall have
specified by prior written notice to the sending party.

3.4           Severability. Whenever
possible, each provision of this Agreement will be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will be affect any other provision or any other jurisdiction,
but this Agreement will be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision had never
been contained herein.

3.5           Complete Agreement. This
Agreement embodies the complete agreement and understanding among the parties
and supersede and preempt any prior understanding; agreements or
representations by or among the parties, written or oral.

3.6           Counterparts. This Agreement
may be executed in separate counterparts, each of which is deems to be an
original and all of which taken together constitute one and the same agreement.

3.7           Successors and Assigns. Except
as otherwise provided herein, all covenants and agreements contained in this
Agreement shall bind and inure to the benefit of and be enforceable by
Executive, the Company and their respective successors and assigns.
Notwithstanding anything to the contrary contained herein, the Company shall
have the right to assign any and/or all of its rights and obligations under
this Agreement (i) to one  or more other
members of the company Group; provided, however that no such assignment
by the Company shall relieve the Company of its obligations hereunder in the
event that any such obligations are not satisfied by the other members of the
Company Group and (ii) in connection with the sale of the Company, whether by
merger, consolidation, reorganization, sale of all or substantially all of the Company’s
assets, or sale of a majority of the outstanding shares of the Company’s stock
or otherwise.

3.8           No Strict Construction. The
language used in this Agreement will be deemed to be the language chosen hereto
by the parties hereto to express their mutual intent, and no rule of strict
construction shall be applied to this Agreement.

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3.9           Descriptive Headings. The
descriptive headings of this Agreement are inserted for convenience only and do
not constitute a part of this Agreement.

3.10         Governing Law. All questions
concerning the constructive, validity and interpretation of this Agreement and
the exhibits and schedules hereto will be governed by and construed in
accordance with the domestic laws of the State of Delaware, without giving
effect to any choice of law or conflict of law provision or rule (whether of
the State of Delaware or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of Delaware.

3.11         Remedies. Each of the parties to
this Agreement will be entitled to enforce its rights, under this Agreement specifically,
to recover damages caused by any actual or threatened breach or violation of
any provision of this Agreement and to exercise all other rights existing in
its favor. The parties hereto agree and acknowledge that money damages may not
be an adequate remedy for any actual or threatened breach of the provisions of
this Agreement and that, in addition to any other remedies available under
application law, any party may in its sole discretion apply to any court of law
or equity of competent jurisdiction (without posting any bond or deposit) for
specific performance and/or other injunctive relief in order to enforce or
prevent any violations of the provisions of this Agreement.

3.12         Amendment of Waiver. The
provisions of this Agreement may be amended and waived only with the prior
written consent of the Company and Executive.

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IN WITNESS
WHEREOF, the parties hereto have executed this Executive Employment Agreement
as of the dates set forth below.

	
  

  	
  REAL MEX RESTAURANTS, INC.

  
	
   

  	
   

  
	
  Dated:

  	
  11/09/06

  	
   

  	
  By:

  	
  /s/ Steven L. Tanner

  	
   

  
	
   

  	
  Name:

  	
  Steven L. Tanner

  	
   

  
	
   

  	
  Title:

  	
  CFO

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Dated:

  	
  10/24/06

  	
   

  	
  /s/ Frederick Wolfe

  	
   

  
	
   

  	
  Frederick WolfeExhibit
10.22

EXTRA
SPACE STORAGE INC.

2004 NON-EMPLOYEE DIRECTORS’ SHARE PLAN

1.        Purpose. The purpose of this 2004
Non-Employee Directors’ Share Plan (the “Plan”) of Extra Space Storage Inc., a
Maryland corporation (the “Company”), is to advance the interests of the
Company and its shareholders by providing a means to attract and retain highly
qualified persons to serve as non-employee directors of the Company and to
promote ownership by such directors of a greater proprietary interest in the
Company, thereby aligning such directors’ interests more closely with the
interests of shareholders of the Company.

2.        Definitions. In addition to terms
defined elsewhere in the Plan, the following are defined terms under the Plan:

(a) “Code” means
the Internal Revenue Code of 1986, as amended from time to time. References to
any provision of the Code include regulations thereunder and successor
provisions and regulations thereto.

(b) For purposes
of the Plan, a “Change in Control” shall have occurred if:

(i)       any “person,” including a “group” (as
such terms are used in Sections 13(d) and 14(d) of the Exchange Act, but
excluding (A) the Company, (B) any entity controlling, controlled by or
under common control with the Company, (C) any employee benefit plan of the
Company or any entity described in clause (B), (D) with respect to any
particular Participant, the Participant and any “group” (as such term is used in Section 13(d)(3) of the Exchange Act) of
which the Participant is a
member), (E) Kenneth M. Woolley, his affiliates, associates and people acting
in concert with any of the foregoing and (F) Spencer F. Kirk, his affiliates, associates and people acting in concert
with any of the foregoing, is or becomes the “beneficial owner” (as defined
in Rule 13(d)(3) under the Exchange Act), directly or indirectly, of securities
of the Company representing 20% or more of either (1) the combined voting power
of the Company’s then outstanding securities or (2) the then outstanding Shares (in either such case other than as
a result of an acquisition of securities directly from the Company); provided
however, that, in no event shall a Change in Control be deemed to have occurred
upon an initial public offering of the Company’s common stock under the
Securities Act; or

(ii)      any consolidation or merger of the Company
where the shareholders of the Company, immediately prior to the consolidation
or merger, would not, immediately after the consolidation or merger,
beneficially own (as such term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
shares representing in the aggregate 50% or more of the combined voting power
of the securities of the corporation issuing cash or securities in the
consolidation or merger (or of its ultimate parent corporation, if any); or

(iii)     there shall occur (A) any sale, lease, exchange or other transfer (in one
transaction or a series of transactions contemplated or arranged by any party
as a single plan) of all or substantially all of the assets of the Company,
other than a sale or disposition by the Company of all or substantially all of
the Company’s assets to an entity, at least 50% of the combined voting power of
the voting securities of which are owned by “persons” (as defined above) in substantially the same proportion as their

 

ownership of the Company immediately prior to such sale or (B) the approval by shareholders of
the Company of any plan or proposal for the liquidation or dissolution of the
Company; or

(iv)     the members of the Board at the beginning of
any consecutive 24-calendar-month period (the “Incumbent Directors”) cease for
any reason other than due to death to constitute at least a majority of the
members of the Board; provided that any director whose election, or nomination
for election by the Company’s shareholders, was approved by a vote of at least
a majority of the members of the Board then still in office who were members of
the Board at the beginning of such
24-calendar-month period, shall be deemed to be an incumbent Director.

(c) “Exchange Act”
means the Securities Exchange Act of 1934, as amended. References to any
provision of the Exchange Act include the rules promulgated thereunder and
successor provisions and rules thereto.

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

(e) “Option” means
the right, granted to a director under Section 6, to purchase a specified
number of Shares at the specified exercise price for a specified period of time under the Plan. No Option shall
be intended to qualify as an “incentive stock option” under Section 422 of the
Code.

(f) “Participant”
means any person who, as a non-employee director of the Company, has been
granted an Option which remain outstanding under the Plan.

(g) “Rule 16b-3”
means Exchange Act Rule 16b-3 as from time to time in effect and applicable to
the Plan and Participants.

(h) “Share” means
a Common Share of the Company and such other securities as may be substituted
for such Share or such other securities pursuant to Section 7.

3.        Shares
Available Under the Plan.  Subject to
adjustment as provided in Section 7, the total number of Shares reserved and
available for issuance under the Plan may not exceed 800,000. Such Shares may
be authorized but unissued Shares or treasury Shares. For purposes of the Plan,
Shares that may be purchased upon exercise of an Option will not be considered
to be available after such Option has been granted, except for purposes of
issuance in connection with such Option; provided, however, that, if
an Option expires for any reason without having been exercised in full, the
Shares subject to the unexercised portion
of such Option will again be available for issuance under the Plan.

4.        Administration of the Plan. The
Plan will he administered by the Board of Directors of the Company (the “Board”);
provided, however, that any action by the
Board relating to the Plan will be taken only if, in addition to any other
required vote, such action is approved by the affirmative vote of a

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majority of the directors
who are not then eligible to participate in the Plan. The Board shall have
authority to (i) determine the number of Options to be credited to each
Participant; and (ii) determine or impose conditions on such Options under the
Plan as it may deem appropriate. The Participant shall take whatever additional
actions and execute whatever additional documents the Board may in its
reasonable judgment deem necessary or advisable in order to carry out or effect
one or more of the obligations or restrictions imposed on the Participant
pursuant to the express provisions of the Plan.

5.        Eligibility.
Each director of the Company who, on any date on which an Option is to be
granted under Section 6, is not an employee of the Company or any subsidiary of
the Company will be eligible, at such date,
to  be granted an Option under
Section 6. No person other than those specified in this Section 5 will be
eligible to participate in the Plan.

6.        Options.
Each eligible director automatically shall be entitled to receive, and shall be
granted, (i) on the effective date of the initial public offering of Shares or,
for any individual who is first elected or appointed to the Board after the
effective date of the initial public offering of Shares, on the date such
person first is elected or appointed to the Board, an Option to purchase 30,000
Shares, subject to adjustment as provided in Section 7 and (ii) as of the date of each annual meeting of
the Company’s annual meeting of shareholders, an Option to purchase 5,000
Shares, subject to adjustment as provided in Section 7.

(a) Exercise
Price. The exercise price per Share purchasable upon exercise of an Option
will be equal to 100% of the Fair Market Value of a Share on the date of grant
of the Option. The exercise price per Share purchasable upon the exercise of an
Option granted before the initial public offering of the Company will be equal
to 100% of the initial public offering price.

(b) Option
Expiration. A Participant’s Option will expire at the earlier of (i) 10
years after the date of grant or (ii) one year after the date the Participant ceases to serve as a
director of the Company for any reason.

(c) Exercisability.
Unless otherwise provided by the Board, no Option may be exercised unless and
until it has become exercisable in accordance with this Section 6(c). A
Participant’s Option received upon initial election or appointment will become
exercisable in four equal annual installments commencing at the earlier of the
next anniversary of the director’s initial election or appointment and the next
Annual Meeting of Shareholders; provided, however, that a Participant’s Option
(granted pursuant to Section 6) will
become immediately exercisable in full at the time the Participant ceases to
serve as a director due to death or disability or upon a Change in Control; and
provided further, that a Participant’s
Option may be exercised after the Participant ceases to serve as a director for
any reason other than death or disability only to the extent that the Option
was exercisable at the date he or she ceased to be a director or has become
exercisable pursuant to this Section 6(c) within two months after the date he
or she ceased to be a director. Subject to provisions of the applicable award
agreement, in the event the Participant ceases to serve as a director on
account of death or disability, the Participant’s Option (whether or not
otherwise exercisable) may be exercised until the earlier of (i) one year from
the date the Participant ceases to serve as a director, or (ii) the date on
which the term of the Option expires in accordance with Section 6(b).

(d) Method of
Exercise. A Participant may exercise an Option, in whole or in part, at
such time as it is exercisable and prior to its expiration, by giving written
notice of exercise to the Secretary of the Company, specifying the Option to be
exercised and the number of Shares to be purchased, and paying in full the
exercise price in cash (including by check) or by surrender of Shares already
owned by the Participant (except for Shares acquired from the Company by
exercise of an Option

 3
 

 

or other award less than
six months before the date of surrender) having a Fair Market Value at the time
of exercise equal in the exercise price, or by a combination of cash and Shares.

7.        Adjustment Provisions.

(a) Corporate
Transactions and Events. In the event any recapitalization, reorganization,
merger, consolidation, spin-off, combination, repurchase, exchange of Shares or
other securities of the Company, share split or reverse split, extraordinary
dividend (whether in the form of cash, Shares, or other property), liquidation,
dissolution, or other similar corporate transaction or event affects the Shares
such that an adjustment is appropriate in order to prevent dilution or
enlargement of each Participant’s rights
under the Plan (which would not include a transaction in which public
stockholders retain no interest in the surviving company), then an adjustment
shall be made, in a manner that is proportionate to the change to the Shares
and otherwise equitable, in (i) the number and kind of Shares remaining
reserved and available for issuance under Section 3, (ii) the number and kind of Shares to be subject to each
automatic grant of an Option under Section 6, and (iii) the number and kind of
Shares issuable upon exercise of outstanding Options, and/or the exercise price
per Share thereof (provided that no fractional Shares will he issued upon
exercise of any Option). The foregoing notwithstanding, no adjustment may be
made hereunder except as will be necessary to maintain the proportionate
interest of the Participant under the Plan and to preserve, without exceeding,
the value of outstanding Options and potential grants of Options.

(b) Insufficient
Number of Shares. If at any date an insufficient
number of Shares arc available under the Plan for the automatic grant of
Options will first be automatically granted proportionately to each eligible
director, to the extent Shares are then available (provided that no fractional
Shares will be issued with respect to such Options) and otherwise as provided
under Section 6.

8.        Interpretation and Other Rules.
The Board may make such rules
and regulations and establish such procedures for the administration of the Plan as it deems appropriate. Without
limiting the generality of the foregoing, the Board may (i) interpret the Plan
and any agreements under Section 10(a), with such interpretations to be
conclusive and binding on all persons and otherwise accorded the maximum
deference permitted by law, provided, that the Board’s
interpretation shall not be entitled to deference on and after a Change in
Control except to the extent that such interpretations are made exclusively by
members of the Board who are individuals who served as Board members before the
Change in Control; and (ii) take any other actions and make any other
determinations or decisions that it deems necessary or appropriate in
connection with the Plan or the administration or interpretation thereof, in
the event of any dispute or disagreement as to the interpretation of the Plan or of any rule, regulation or
procedure, or as to any question, right or obligation arising from or related
to the Plan, the decision of the Board shall be final and binding upon all
persons. Unless otherwise expressly provided hereunder, the Board, with respect
to any grant of an Option, may exercise its discretion hereunder at the time of
the grant or thereafter.

9.        Changes to the Plan. The Board
may amend, alter, suspend, discontinue, or terminate the Plan or authority to
grant Options under the Plan without the consent of shareholders or
Participants, except that any amendment or alteration will be subject to the
approval of the Company’s shareholders at or before the next annual meeting of
shareholders for which the record date is after the date of such Board action
if such shareholder approval is required by any applicable federal or state law
or regulation or the rules of any stock
exchange or automated quotation system as then in effect, and the Board may
otherwise determine to submit other such amendments or alterations to shareholders
for approval: provided
however, that, without the consent of an affected Participants, no such action may materially impair the
rights of such Participant with respect to any previously granted Option.

 4
 

 

10.      General Provisions.

(a) Agreements.
Options may be evidence by agreements or other documents executed by the
Company and the Participant incorporating the terms and conditions set forth in
the Plan, together with such other terms and conditions not inconsistent with
the Plan, as the Board may from time to time approve.

(b) Compliance
with Laws and Obligations. The Company will not be obligated to  issue
or deliver Shares in connection with any Option in a transaction subject to the
registration requirements of the Securities Act of 1933, as amended, or any
other federal or state securities law, any requirement under any listing
agreement between the Company and any stock exchange or automated quotation
system, or any other law, regulation, or contractual obligation of the Company,
until the Company is  satisfied that
such laws, regulations, and other obligations of the Company have been complied
with in full. Certificates representing Shares issued under the Plan will be
subject to such stop-transfer orders and other restrictions as may be
applicable under such laws, regulations, and other obligations of the Company,
including any requirement that a legend or legends be placed thereon.

(c) Compliance.
The obligation of the Company to provide Shares under the Plan shall be subject
to all applicable laws, rules and regulations, including all applicable federal
and state securities laws, and the obtaining of all such approvals by
governmental agencies as may be deemed necessary or appropriate by the Board.
The Board may make such changes to the Plan as may be necessary  or appropriate to comply with the rules and
regulations or any government authority or to obtain tax benefits applicable to
rights under the Plan. Notwithstanding any other provision of the Plan, the
Company shall not be required to take or permit any action under the Plan or
any agreement under Section 10(a) which, in the good-faith determination of the
Company, would result in a material risk of a violation by the Company of
Section 13(k) of the Exchange Act.

(d) Limitations
on Transferability. Options will not be transferable by a Participant except by will or the
laws of descent and distribution (or to a designated beneficiary in the event
of a Participant’s death), and will be exercisable during the lifetime of the
Participant only by such Participant or his or her guardian or legal
representative; provided.  however, that
Options (and rights relating thereto) may be transferred to one or more trusts
or other beneficiaries during the lifetime of the Participant for purposes of
the Participant’s estate planning or at the Participant’s death, and such
transferees may exercise rights thereunder in accordance with the terms
thereof, but only if and to the extent then permitted under Rule 16b-3 and
consistent with the regulation of the offer and sale of Shares related thereto
on Form S-8, Form S-3, or such other registration form of the Securities and
Exchange Commission as may then be filed and effective with respect to the
Plan. The Company may rely upon the beneficiary designation last filed in
accordance with this Section 10(d). Options may not be pledged, mortgaged,
hypothecated, or otherwise encumbered, and shall not be subject to the claims
of creditors of any Participant.

(e) Notices.
All notices under the Plan shall be in writing, and if to the Company, shall be
delivered to the Board or mailed to its principal office, addressed to the attention
of the Board; and if to the Participant, shall be delivered personally, sent by
facsimile transmission or mailed to the Participant at the address appearing in
the records of the Company. Such addresses may be changed at any time by
written notice to the other party given in accordance with this Section 10(e).

(f) Compliance
with Rule 16b-3. It is the intent of the Company that this Plan complies in
all respects with applicable provisions of Rule 16-3. Accordingly, if any provision of this Plan or any agreement
hereunder does not comply with the requirements of Rule 16b-3 as then applicable to a

 5
 

 

transaction by a
Participant, such provision will be construed or deemed amended to the extent
necessary, to conform to the applicable requirements with respect to such
Participant.

(g) No Right To
Continue as a Director. Nothing
contained in the Plan or any agreement hereunder will confer upon any
Participant any right to continue to serve as a director of the Company.

(h) No
Shareholder Rights Conferred. Except as otherwise provided in Section 6(a),
nothing contained in the Plan or any agreement hereunder will confer upon any
Participant (or any person or entity claiming rights by or through a
Participant) any rights of a shareholder of the Company unless and until such
Option is validly exercised in accordance with Section 6.

(i) Nonexclusivity
of the Plan. Neither the adoption of the Plan by the Board nor any
submission thereof to the shareholders of the Company for approval shall be
construed as creating any limitations on the power of the Board to adopt such
other compensatory arrangements for directors as it may deem desirable.

(j) Limitation
of Liability. Each member of the Board shall be entitled to, in good faith,
rely or act upon any report or other information furnished to him by any officer
or other employee of the Company or any subsidiary, the Company’s independent
certified public accountants, or any executive compensation consultant, legal
counsel, or other professional retained by the Company to assist in the
administration of the Plan. No member of the Board, nor any officer or employee
of the Company acting on behalf of the Board, shall be personally liable for
any action, determination, or interpretation taken or made in good faith with
respect to the Plan, and all members of the Board and any officer or employee
of the Company acting on behalf of the Board or members thereof shall, to the
extent permitted by law, be fully indemnified and protected by the Company with
respect to any such action, determination, or interpretation.

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

(l) Governing
Law. The validity, construction, and effect of the Plan and any agreement hereunder shall be determined in accordance
with the laws (including those governing contracts) of the State of Maryland,
without giving effect to principles of conflicts of laws, and applicable
federal law.

11.      Effective
Date and Plan Termination. The Plan will be effective if, and at
such time as, the Company’s 2004 Long Term Incentive Compensation Plan has
become effective, subject to its approval by the shareholders of the Company.
Unless earlier terminated by action of the Board, the Plan will remain in
effect until such time as no Shares remain available for issuance under the
Plan and the Company and Participants have no further rights or obligations
under the Plan.

As adopted by the Board:   August
10, 2004

 

 6

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