Document:

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                                                                    EXHIBIT 4.1

                                 SKB REIT, INC.

                     UP TO 33,000,000 SHARES OF COMMON STOCK

                            DEALER MANAGER AGREEMENT

                              ______________, 2004

SKB Securities, Inc.
1211 SW Fifth Avenue
Suite 2250
Portland, Oregon  97204

Ladies and Gentlemen:

      SKB REIT, Inc., a Maryland corporation (the "Company"), is registering for
public sale a maximum of 33,000,000 shares (the "Shares") of its common stock,
$0.001 par value per share (the "Offering"), to be issued and sold for an
aggregate purchase price of $328,500,000 (30,000,000 shares to be offered to the
public at a purchase price of $10.00 per share and 3,000,000 shares to be
offered pursuant to the Company's dividend reinvestment plan at a purchase price
of $9.50 per share). The minimum purchase by any one person shall be 100 Shares
except as otherwise indicated in the Prospectus or in any letter or memorandum
from the Company to SKB Real Estate Securities, Inc. (the "Dealer Manager"). It
is anticipated that the Dealer Manager will enter into Selected Dealer
Agreements in the form attached to this Dealer Manager Agreement as Exhibit "A"
with other broker-dealers participating in the Offering (each dealer being
referred to herein as a "Dealer" and said dealers being collectively referred to
herein as the "Dealers"). The Company shall have the right to approve any
material modifications or addendums to the form of the Selected Dealer
Agreement. Terms not defined herein shall have the same meaning as in the
Prospectus. In connection therewith, the Company hereby agrees with the Dealer
Manager, as follows:

1. Representations and Warranties of the Company

      The Company represents and warrants to the Dealer Manager and each Dealer
with whom the Dealer Manager enters into a Selected Dealer Agreement that:

      1.1 A registration statement with respect to the Company has been prepared
by the Company in accordance with applicable requirements of the Securities Act
of 1933, as amended (the "Securities Act"), and the applicable rules and
regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "SEC") promulgated thereunder, covering the Shares. Said
registration statement, which includes a preliminary prospectus, was initially
filed with the SEC on ___________ , 2004. Copies of such registration statement
and each amendment thereto have been or will be delivered to the Dealer Manager.
(The registration statement and prospectus contained therein, as finally amended
and revised at the effective date

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of the registration statement, are respectively hereinafter referred to as the
"Registration Statement" and the "Prospectus," except that if the Prospectus
filed by the Company pursuant to Rule 424(b) under the Securities Act shall
differ from the Prospectus, the term "Prospectus" shall also include the
Prospectus filed pursuant to Rule 424(b).)

      1.2 The Company has been duly and validly organized and formed as a
corporation under the laws of the State of Maryland, with the power and
authority to conduct its business as described in the Prospectus.

      1.3 The Registration Statement and Prospectus comply with the Securities
Act and the Rules and Regulations, and the Prospectus and any and all authorized
sales materials prepared by the Company for use with potential investors in
connection with the Offering, when used in conjunction with the Prospectus, do
not contain any untrue statements of material facts or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not misleading; provided, however, that the foregoing
provisions of this Section 1.3 will not extend to such statements contained in
or omitted from the Registration Statement or Prospectus or authorized sales
materials as are primarily within the knowledge of the Dealer Manager or any of
the Dealers and are based upon information either (1) furnished by a Dealer in
writing to the Dealer Manager or the Company, or (2) furnished by the Dealer
Manager in writing to the Company specifically for inclusion therein.

      1.4 No consent, approval, authorization or other order of any governmental
authority is required in connection with the execution or delivery by the
Company of this Dealer Manager Agreement or the issuance and sale by the Company
of the Shares, except such as may be required under the Securities Act, rules of
the National Association of Securities Dealers, Inc. ("NASD") or applicable
state securities laws.

      1.5 There are no actions, suits or proceedings pending or, to the
knowledge of the Company, threatened against the Company at law or in equity or
before or by any federal or state commission, regulatory body or administrative
agency or other governmental body, domestic or foreign, which will have a
material adverse effect on the business or property of the Company.

      1.6 The execution and delivery of this Dealer Manager Agreement, the
consummation of the transactions herein contemplated and compliance with the
terms of this Dealer Manager Agreement by the Company will not conflict with or
constitute a default under any charter, by-law, indenture, mortgage, deed of
trust, lease, rule, regulation, writ, injunction or decree of any government,
governmental instrumentality or court, domestic or foreign, having jurisdiction
over the Company, except to the extent that the enforceability of the indemnity
and/or contribution provisions contained in Section 4 of this Dealer Manager
Agreement may be limited under applicable securities laws.

      1.7 The Company has full legal right, power and authority to enter into
this Dealer Manager Agreement and to perform the transactions contemplated
hereby, except to the extent that the enforceability of the indemnity and/or
contribution provisions contained in Section 4 of this Dealer Manager Agreement
may be limited under applicable securities laws.

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      1.8 The Shares, when subscribed for, paid for and issued, will be duly and
validly issued, fully paid and non-assessable and will conform to the
description thereof contained in the Prospectus; no holder thereof will be
subject to personal liability for the obligations of the Company solely by
reason of being such a holder; such Shares are not subject to the preemptive
rights of any shareholder of the Company; and all corporate action required to
be taken for the authorization, issuance and sale of such Shares shall have been
validly and sufficiently taken.

      1.9 The Company is not in violation of its Articles of Incorporation or
its Bylaws.

      1.10 The financial statements of the Company filed as part of the
Registration Statement and those included in the Prospectus present fairly in
all material respects the financial position of the Company as of the date
indicated and the results of its operations for the periods indicated; said
financial statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis.

2. Covenants of the Company

      The Company covenants and agrees with the Dealer Manager that:

      2.1 It will prepare and file with the SEC and each appropriate state
securities commission, at no expense to the Dealer Manager, the Registration
Statement, including all amendments and exhibits thereto. In addition, it will
furnish the Dealer Manager, at no expense to the Dealer Manager, with such
number of printed copies of the Registration Statement, including all amendments
and exhibits thereto, as the Dealer Manager may reasonably request. It will
similarly furnish to the Dealer Manager and others designated by the Dealer
Manager as many copies as the Dealer Manager may reasonably request in
connection with the offering of the Shares of: (a) the Prospectus in preliminary
and final form and every form of supplemental or amended prospectus; and (b)
this Dealer Manager Agreement.

      2.2 It will prepare and file with the appropriate regulatory authorities,
at no expense to the Dealer Manager, the printed sales literature or other
materials authorized by the Company to be used in offering and selling the
Shares to members of the public ("Authorized Sales Materials"). In addition, it
will furnish the Dealer Manager, at no expense to the Dealer Manager, with such
number of printed copies of Authorized Sales Materials as the Dealer Manager may
reasonably request.

      2.3 It will furnish such proper information and execute and file such
documents as may be necessary for the Company to qualify the Shares for offer
and sale under the securities laws of such jurisdictions as the Dealer Manager
may reasonably designate and will file and make in each year such statements and
reports as may be required. The Company will furnish to the Dealer Manager a
copy of such papers filed by the Company in connection with any such
qualification.

      2.4 It will use its best efforts to cause the Registration Statement to
become effective with the SEC and each state securities commission which it
deems appropriate in its sole discretion. If at any time the SEC or any state
securities commission shall issue any stop order suspending the effectiveness of
the Registration Statement, and to the extent the Company

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determines that such action is in the best interest of its shareholders, it will
use its best efforts to obtain the lifting of such order at the earliest
possible time.

      2.5 If at any time when a Prospectus is required to be delivered under the
Securities Act any event occurs as a result of which, in the opinion of either
the Company or the Dealer Manager, the Prospectus or any other prospectus then
in effect would include an untrue statement of a material fact or, in view of
the circumstances under which they were made, omit to state any material fact
necessary to make the statements therein not misleading, the Company will
promptly notify the Dealer Manager thereof (unless the information shall have
been received from the Dealer Manager), will effect the preparation of an
amended or supplemental prospectus which will correct such statement or
omission, and deliver to the Dealer Manager as many copies of such amended or
supplemented prospectus as the Dealer Manager may reasonably request.

      2.6 It intends to use the net proceeds received from the sale of the
Shares as set forth in the Prospectus.

      2.7 It will furnish the Dealer Manager, at no expense to the Dealer
Manager, with a copy of each report or general communication sent to the holders
of Shares.

      2.8 It will be duly qualified to do business as a foreign corporation in
each jurisdiction in which it will own or lease property of a nature, or
transact business of a type, that will make such qualification necessary.

3. Appointment and Compensation of the Dealer Manager

      3.1 The Company hereby appoints the Dealer Manager as its agent and
principal distributor for the purpose of selling for cash up to a maximum of
33,000,000 Shares through the Dealers, all of whom shall be members of the NASD.
The Dealer Manager may also sell Shares for cash directly to its own clients and
customers at the public offering price and subject to the terms and conditions
stated in the Prospectus. The Dealer Manager hereby accepts such agency and
distributorship and agrees to use its best efforts to sell the Shares on said
terms and conditions. The Dealer Manager represents to the Company that it is a
member of the NASD and that it and its employees and representatives have all
required licenses and registrations to act under this Dealer Manager Agreement.

      The Dealer Manager agrees to be bound by the terms of the Escrow Agreement
executed as of _______________, 2004, between Deutsche Bank AG, as escrow agent,
and the Company.

      Promptly after the effective date of the Registration Statement, the
Dealer Manager and the Dealers shall commence the offering of the Shares for
cash to the public in jurisdictions in which the Shares are registered or
qualified for sale or in which such offering is otherwise permitted. The Dealer
Manager and the Dealers will suspend or terminate offering of the Shares upon
request of the Company at any time and will resume offering the Shares upon
subsequent request of the Company.

      3.2 Except as otherwise provided in the "Plan of Distribution" section of
the Prospectus, as compensation for the services rendered by the Dealer Manager,
the Company agrees that it will pay to the Dealer Manager selling commissions in
the amount of up to 6.75% of

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the gross proceeds of the Shares sold, 3.5% with respect to shares sold pursuant
to the Dividend Reinvestment Plan, plus a dealer manager fee in the amount of up
to 2.5% of the gross proceeds of the Shares sold to the public. No dealer
manager fee shall be paid with respect to Shares sold pursuant to the Company's
dividend reinvestment plan. Notwithstanding the foregoing, no commissions,
payments or amount whatsoever will be paid to the Dealer Manager under this
Section 3.3 unless or until 250,000 Shares have been sold by the Dealer Manager
and its Dealers (the "Minimum Offering"). Until the Minimum Offering is
obtained, proceeds from the sale of Shares will be held in escrow and, if the
Minimum Offering is not obtained, will be returned to the investors in
accordance with the terms of the Prospectus. The Company will not be liable or
responsible to any Dealer for direct payment of commissions to any Dealer. The
payment of commissions to Dealers is the sole and exclusive responsibility of
the Dealer Manager. Notwithstanding the above, at the discretion of the Company,
the Company may act as agent of the Dealer Manager by making direct payment of
commissions to Dealers on behalf of the Dealer Manager without incurring any
liability therefor. In addition, the Company may reimburse the Dealer Manager
for certain employee compensation and other expenses relating to the Offering as
described in the Prospectus.

4. Covenants of the Dealer Manager. The Dealer Manager covenants and agrees with
the Company on its behalf and on behalf of the Dealers as follows:

      4.1 The Dealer Manager represents and warrants to the Company and each
person that signs the Registration Statement that the information under the
caption "Plan of Distribution" in the Prospectus and all other information
furnished to the Company by the Dealer Manager in writing expressly for use in
the Registration Statement, any preliminary prospectus, the Prospectus, or any
amendment or supplement thereto, does not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.

      4.2 In offering the Shares for sale, the Dealer Manager and each Dealer
shall not give or provide any information or make any representation other than
those contained in the Prospectus, the sales literature or any other document
provided for such purpose by the Company.

      4.3 The Dealer Manager and each Dealer shall solicit purchases of the
Shares only in the jurisdictions in which it is legally qualified to so act and
in which it has been advised by the Company that such solicitations can be made.

      4.4 The Dealer Manager will offer Shares, and in its agreements with
Dealers will require that the Dealers offer Shares, only to persons who meet the
suitability standards set forth in the Prospectus or in any suitability letter
or memorandum sent to it by the Company and will only make offers to persons in
the states in which it is advised in writing that the Shares are qualified for
sale or that such qualification is not required. The Dealer Manager will require
that all Dealers comply with the provisions of all applicable rules and
regulations relating to suitability of investors, including without limitation,
the provisions of Article III.C. of the Statement of Policy Regarding Real
Estate Investment Trusts of the North American Securities Administrators
Association, Inc. (the "NASAA REIT Guidelines").

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      4.5 The Dealer Manager and each Dealer represents and warrants to the
Company that it will not represent or imply that the escrow agent, as identified
in the Prospectus, has investigated the desirability or advisability of
investment in the Company, or has approved, endorsed or passed upon the merits
of the Shares or the Company, nor will they use the name of said escrow agent in
any manner whatsoever in connection with the offer or sale of the Shares other
than by acknowledgment that it has agreed to serve as escrow agent.

5. Indemnification

      5.1 The Company will indemnify and hold harmless the Dealers and the
Dealer Manager, their officers and directors and each person, if any, who
controls such Dealer or Dealer Manager ("Dealer Indemnified Parties") within the
meaning of Section 15 of the Securities Act or Section 20 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") from and against any
losses, claims, damages or liabilities, joint or several, to which such Dealers
or Dealer Manager, their officers and directors, or such controlling person may
become subject, under the Securities Act or the Exchange Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (a) any untrue statement or alleged
untrue statement of a material fact contained (i) in any Registration Statement
(including the Prospectus as a part thereof) or any post-effective amendment
thereto or in the Prospectus, any preliminary prospectus, if used prior to the
effective date of the Registration Statement, or any amendment or supplement to
the Prospectus, or (ii) in any Authorized Sales Material, or (iii) in any blue
sky application or other document executed by the Company or on its behalf
specifically for the purpose of qualifying any or all of the Shares for sale
under the securities laws of any jurisdiction or based upon written information
furnished by the Company under the securities laws thereof (any such
application, document or information being hereinafter called a "Blue Sky
Application"), or (b) the omission or alleged omission from (i) the Registration
Statement (including the Prospectus as a part thereof) or any post-effective
amendment thereof, (ii) the Prospectus or any amendment or supplement to the
Prospectus or (iii) any Authorized Sales Material or from any Blue Sky
Application of a material fact required to be stated therein or necessary to
make the statements therein not misleading. The Company will reimburse each
Dealer Indemnified Party, as appropriate, for any reasonable legal or other
expenses reasonably incurred by such Dealer Indemnified Party, in connection
with investigating or defending such loss, claim, damage, liability or action.
Notwithstanding the foregoing, the Company will not be liable in any such case
(1) to the extent that any such loss, claim, damage or liability arises out of,
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information furnished (x) to the Company by the Dealer Manager or (y) to the
Company or the Dealer Manager by or on behalf of any Dealer specifically for use
in the preparation of the Registration Statement or any such post-effective
amendment thereof, any such Authorized Sales Materials, any such Blue Sky
Application or any such preliminary prospectus or the Prospectus or any such
amendment thereof or supplement thereto; (2) if it is determined that such
Dealer or the Dealer Manager was at fault in connection with the loss, claim,
damage, liability or action; or (3) to the Dealer Manager or any Dealer (or any
person who controls such Dealer Manager or Dealer) if such loss, claim, damage
or liability arises out of, or is based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in the Prospectus but
eliminated or remedied in any amendment or supplement thereto, if the person
asserting such loss, claim, damage or liability purchased the Shares which are
the subject thereof from the Dealer Manager

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or such Dealer but a copy of the Prospectus as so amended or supplemented was
not sent or given to such person at or prior to the time the subscription of
such person was accepted by the Company; but only if a copy of the Prospectus
(as so amended or supplemented) had been supplied by the Company to the Dealer
Manager or such Dealer prior to such acceptance.

      Notwithstanding the foregoing, as required by Section II.G. of the NASAA
REIT Guidelines, the indemnification and agreement to hold harmless provided in
this Section 4.1 is further limited to the extent that no such indemnification
by the Company of a Dealer shall be permitted under this Agreement for, or
arising out of, an alleged violation of federal or state securities laws, unless
one or more of the following conditions are met: (1) there has been a successful
adjudication on the merits of each count involving alleged securities law
violations; (2) such claims have been dismissed with prejudice on the merits by
a court of competent jurisdiction; or (3) a court of competent jurisdiction
approves a settlement of the claims against the indemnitee and finds that
indemnification of the settlement and the related costs should be made, and the
court considering the request for indemnification has been advised of the
position of the SEC and of the published position of any state securities
regulatory authority in which the securities were offered or sold as to
indemnification for violations of securities laws.

      5.2 The Dealer Manager will indemnify and hold harmless the Company its
officers and directors (including any persons named in any of the Registration
Statements with his consent, as about to become a director), each person who has
signed any of the Registration Statements and each person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, from and against any losses, claims, damages or liabilities
to which any of the aforesaid parties may become subject, under the Securities
Act or the Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (a)
any untrue statement of a material fact contained (i) in the Registration
Statement (including the Prospectus as a part thereof) or any post-effective
amendment thereof, or (ii) in any Authorized Sales Materials, or (iii) in any
Blue Sky Application, or (b) the omission to state in the Registration Statement
(including the Prospectus as a part thereof) or any post-effective amendment
thereof or in the Prospectus or in any amendment or supplement to the Prospectus
or in any Authorized Sales Materials or in any Blue Sky Application a material
fact required to be stated therein or necessary to make the statements therein
not misleading, in each case described in clauses (a) and (b) to the extent, but
only to the extent, that such untrue statement or omission was made in reliance
upon and in conformity with written information furnished to the Company by or
on behalf of the Dealer Manager specifically for use with reference to the
Dealer Manager in the preparation of the Registration Statement or any such
post-effective amendments thereof or any Authorized Sales Materials or any such
Blue Sky Application or any such preliminary prospectus or the Prospectus or any
such amendment thereof or supplement thereto, or (c) any use of sales literature
not authorized or approved by the Company or any use of "broker-dealer use only"
materials with members of the public or unauthorized verbal representations
concerning the Shares by the Dealer Manager, or (d) any untrue statement made by
the Dealer Manager or its representatives or agents or omission to state a fact
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading in connection with the offer and sale
of the Shares, or (e) any material violation of this Agreement, or (f) any
failure to comply with applicable laws governing money laundry abatement and
anti-terrorist financing efforts, including applicable NASD Rules, SEC Rules and
the USA PATRIOT Act of

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2001, or (g) any other failure to comply with applicable NASD or SEC Rules. The
Dealer Manager will reimburse the aforesaid parties, in connection with
investigation or defending such loss, claim, damage, liability or action. This
indemnity agreement will be in addition to any liability which the Dealer
Manager may otherwise have.

      5.3 Each Dealer severally will indemnify and hold harmless the Company,
the Dealer Manager and each of their officers and directors (including any
persons named in the Registration Statement with his consent, as about to become
a director), each person who has signed the Registration Statement and each
person, if any, who controls the Company and the Dealer Manager within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
from and against any losses, claims, damages or liabilities to which the
Company, the Dealer Manager, any such director or officer, or controlling person
may become subject, under the Securities Act or the Exchange Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (a) any untrue statement or alleged
untrue statement of a material fact contained (i) in the Registration Statement
(including the Prospectus as a part thereof) or any post-effective amendment
thereof, or (ii) in any Authorized Sales Materials, or (iii) in any Blue Sky
Application, or (b) the omission or alleged omission to state in the
Registration Statement (including the Prospectus as a part thereof) or any
post-effective amendment thereof or in the Prospectus or in any amendment or
supplement to the Prospectus or in any Authorized Sales Materials or in any Blue
Sky Application a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case described in clauses
(a) and (b) to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with written information furnished to the Company or the
Dealer Manager by or on behalf of such Dealer specifically for use with
reference to such Dealer in the preparation of the Registration Statement or any
such post-effective amendments thereof or any such Authorized Sales Materials or
any such Blue Sky Application or any such preliminary prospectus or the
Prospectus or any such amendment thereof or supplement thereto, or (c) any use
of sales literature not authorized or approved by the Company or use of
"broker-dealer use only" materials with members of the public or unauthorized
verbal representations concerning the Shares by such Dealer or Dealer's
representatives or agents, or (d) any untrue statement made by such Dealer or
its representatives or agents or omission to state a fact necessary in order to
make the statements made, in light of the circumstances under which they were
made, not misleading in connection with the offer and sale of the Shares, or (e)
any failure to comply with Section VII or Section X or any other material
violation of the Selected Dealer Agreement, or (f) any failure to comply with
applicable laws governing money laundry abatement and anti-terrorist financing
efforts, including applicable NASD Rules, SEC Rules and the USA PATRIOT Act of
2001, or (g) any other failure to comply with applicable NASD or SEC Rules. Each
such Dealer will reimburse the Company and the Dealer Manager and any such
directors or officers, or controlling person, in connection with investigating
or defending any such loss, claim, damage, liability or action. This indemnity
agreement will be in addition to any liability which such Dealer may otherwise
have.

      5.4 Promptly after receipt by an indemnified party under this Section 4 of
notice of the commencement of any action (but in no event in excess of 30 days
after receipt of actual notice), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under this Section
4, notify in writing the indemnifying party of the

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commencement thereof and the omission so to notify the indemnifying party will
relieve it from any liability under this Section 4 as to the particular item for
which indemnification is then being sought, but not from any other liability
which it may have to any indemnified party. In case any such action is brought
against any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled, to the extent it
may wish, jointly with any other indemnifying party similarly notified, to
participate in the defense thereof, with separate counsel. Such participation
shall not relieve such indemnifying party of the obligation to reimburse the
indemnified party for reasonable legal and other expenses (subject to Section
4.5) incurred by such indemnified party in defending itself, except for such
expenses incurred after the indemnifying party has deposited funds sufficient to
effect the settlement, with prejudice, of the claim in respect of which
indemnity is sought. Any such indemnifying party shall not be liable to any such
indemnified party on account of any settlement of any claim or action effected
without the consent of such indemnifying party.

      5.5 The indemnifying party shall pay all reasonable legal fees and
expenses of the indemnified party in the defense of such claims or actions;
provided, however, that the indemnifying party shall not be obliged to pay legal
expenses and fees to more than one law firm in connection with the defense of
similar claims arising out of the same alleged acts or omissions giving rise to
such claims notwithstanding that such actions or claims are alleged or brought
by one or more parties against more than one indemnified party. If such claims
or actions are alleged or brought against more than one indemnified party, then
the indemnifying party shall only be obliged to reimburse the expenses and fees
of the one law firm that has been selected by a majority of the indemnified
parties against which such action is finally brought; and in the event a
majority of such indemnified parties is unable to agree on which law firm for
which expenses or fees will be reimbursable by the indemnifying party, then
payment shall be made to the first law firm of record representing an
indemnified party against the action or claim. Such law firm shall be paid only
to the extent of services performed by such law firm and no reimbursement shall
be payable to such law firm on account of legal services performed by another
law firm.

      5.6 The indemnity agreements contained in this Section 4 shall remain
operative and in full force and effect regardless of (a) any investigation made
by or on behalf of any Dealer, or any person controlling any Dealer or by or on
behalf of the Company, the Dealer Manager or any officer or director thereof, or
by or on behalf of the Company or the Dealer Manager, (b) delivery of any Shares
and payment therefor, and (c) any termination of this Dealer Manager Agreement
or any Selected Dealer Agreement. A successor of any Dealer or of any of the
parties to this Dealer Manager Agreement, as the case may be, shall be entitled
to the benefits of the indemnity agreements contained in this Section 4.

6. Survival of Provisions

      The respective agreements, representations and warranties of the Company
and the Dealer Manager set forth in this Dealer Manager Agreement shall remain
operative and in full force and effect regardless of (a) any termination of this
Dealer Manager Agreement, (b) any investigation made by or on behalf of the
Dealer Manager or any Dealer or any person controlling the Dealer Manager or any
Dealer or by or on behalf of the Company or any person controlling the Company,
and (c) the acceptance of any payment for the Shares.

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7. Applicable Law

      This Dealer Manager Agreement was executed and delivered in, and its
validity, interpretation and construction shall be governed by, the laws of the
State of New York; provided however, that causes of action for violations of
federal or state securities laws shall not be governed by this Section.

8. Counterparts

      This Dealer Manager Agreement may be executed in any number of
counterparts. Each counterpart, when executed and delivered, shall be an
original contract, but all counterparts, when taken together, shall constitute
one and the same agreement.

9. Successors and Amendment

      9.1 This Dealer Manager Agreement shall inure to the benefit of and be
binding upon the Dealer Manager and the Company and their respective successors,
and to the benefit of the Dealers to the extent set forth in Sections 1 and 5
hereof. Nothing in this Dealer Manager Agreement is intended or shall be
construed to give to any other person any right, remedy or claim, except as
otherwise specifically provided herein.

      9.2 This Dealer Manager Agreement may be amended by the written agreement
of the Dealer Manager and the Company.

10. Term

      This Dealer Manager Agreement may be terminated by either party (1)
immediately upon notice to the other party in the event that the other party
shall have materially failed to comply with any of the material provisions of
this Dealer Manager Agreement on its part to be performed during the term of
this Agreement or if any of the representations, warranties, covenants or
agreements of such party contained herein shall not have been materially
complied with or satisfied within the times specified herein or (2) by either
party on 60 days' written notice.

      In any case, this Dealer Manager Agreement shall expire at the close of
business on the effective date that the Offering is terminated. The provisions
of Section 4 hereof shall survive such termination. In addition, the Dealer
Manager, upon the expiration or termination of this Dealer Manager Agreement,
shall (1) promptly deposit any and all funds in its possession which were
received from investors for the sale of Shares into the appropriate escrow
account or, if the minimum number of Shares have been sold and accepted by the
Company, into such other account as the Company may designate; and (2) promptly
deliver to the Company all records and documents in its possession which relate
to the Offering which are not designated as dealer copies. The Dealer Manager,
at its sole expense, may make and retain copies of all such records and
documents, but shall keep all such information confidential. The Dealer Manager
shall use its best efforts to cooperate with the Company to accomplish any
orderly transfer of management of the Offering to a party designated by the
Company. Upon expiration or termination of this Dealer Manager Agreement, the
Company shall pay to the Dealer Manager all commissions to

                                       10
<PAGE>

which the Dealer Manager is or becomes entitled under Section 3 at such time as
such commissions become payable.

11. Confirmation

      The Company hereby agrees to prepare and send confirmations to all
purchasers of Shares whose subscriptions for the purchase of Shares are accepted
by the Company.

12. Suitability of Investors

      The Dealer Manager will offer Shares, and in its agreements with Dealers
will require that the Dealers offer Shares, only to persons who meet the
suitability standards set forth in the Prospectus or in any suitability letter
or memorandum sent to it by the Company and will only make offers to persons in
the states in which it is advised in writing that the Shares are qualified for
sale or that such qualification is not required. The Dealer Manager will require
that all Dealers comply with the provisions of all applicable rules and
regulations relating to suitability of investors, including without limitation,
the provisions of Article III.C. of the NASAA REIT Guidelines.

13. Submission of Orders

      13.1 Those persons who purchase Shares will be instructed by the Dealer
Manager or the Dealer to make their checks payable to an escrow agent for the
Company, whenever appropriate, or to the Company after the Minimum Offering has
been achieved. The Dealer Manager and any Dealer receiving a check not
conforming to the foregoing instructions shall return such check directly to
such subscriber not later than the end of the next business day following its
receipt. Checks received by the Dealer Manager or Dealer which conform to the
foregoing instructions shall be transmitted for deposit pursuant to one of the
methods described in this Section 12. Transmittal of received investor funds
will be made in accordance with the following procedures.

      13.2 Where, pursuant to a Dealer's internal supervisory procedures,
internal supervisory review is conducted at the same location at which
subscription documents and checks are received from subscribers, checks will be
transmitted by the end of the next business day following receipt by the Dealer
to the Company for deposit with an escrow agent, where appropriate, or for
deposit directly with the Company after the Minimum Offering has been achieved.

      13.3 Where, pursuant to a Dealer's internal supervisory procedures, final
internal supervisory review is conducted at a different location, checks will be
transmitted by the end of the next business day following receipt by the Dealer
to the office of the Dealer conducting such final internal supervisory review
(the "Final Review Office"). The Final Review Office will in turn transmit by
the end of the next business day following receipt at a different location by
the Final Review Office such checks to the Company for deposit with an escrow
agent, where appropriate, or for deposit directly with the Company after the
Minimum Offering has been achieved.

                                       11
<PAGE>

      If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter and your acceptance shall constitute a binding agreement between us
as of the date first above written.

                                             Very truly yours,

                                             SKB REIT, INC.

                                             By:________________________________
                                                Name:
                                                Title:

Accepted and agreed as of the
date first above written.

SKB REAL ESTATE SECURITIES, INC.

By:____________________________________
   Name:
   Title:

                                       12
<PAGE>

                                   EXHIBIT "A"

                                 SKB REIT, INC.

                     UP TO 33,000,000 SHARES OF COMMON STOCK

                            SELECTED DEALER AGREEMENT

Ladies and Gentlemen:

      SKB Securities, Inc., as the dealer manager ("Dealer Manager") for SKB
REIT, Inc. (the "Company"), a Maryland corporation, invites you (the "Dealer")
to participate in the distribution of shares of common stock ("Shares") of the
Company subject to the following terms:

1. Dealer Manager Agreement

      The Dealer Manager and the Company have entered into that certain Dealer
Manager Agreement dated _____________, 2004, in the form attached hereto as
Exhibit "A." By your acceptance of this Selected Dealer Agreement, you will
become one of the Dealers referred to in such Dealer Manager Agreement between
the Company and the Dealer Manager and will be entitled and subject to the
indemnification provisions contained in such Dealer Manager Agreement, including
specifically the provisions of Section 5.3 of such Dealer Manager Agreement
wherein each Dealer, upon execution of this Selected Dealer Agreement, severally
agrees to indemnify and hold harmless the Company, the Dealer Manager and each
officer and director thereof, and each person, if any, who controls the Company
and the Dealer Manager within the meaning of the Securities Act of 1933, as
amended (the "Securities Act") or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), for the matters set forth in said Section 4.3.
Except as otherwise specifically stated herein, all terms used in this Selected
Dealer Agreement have the meanings provided in the Dealer Manager Agreement. The
Shares are offered solely through broker-dealers who are members of the National
Association of Securities Dealers, Inc. (the "NASD").

      Dealer hereby agrees to use its best efforts to sell the Shares for cash
on the terms and conditions stated in the Prospectus. Nothing in this Selected
Dealer Agreement shall be deemed or construed to make Dealer an employee, agent,
representative or partner of the Dealer Manager or of the Company, and Dealer is
not authorized to act for the Dealer Manager or the Company or to make any
representations except as set forth in the Prospectus and such other printed
information furnished to Dealer by the Dealer Manager or the Company to
supplement the Prospectus ("Supplemental Information").

2. Submission of Orders

      Those persons who purchase Shares will be instructed by the Dealer to make
their checks payable to "Deutsche Bank AG, as Escrow Agent for SKB REIT, Inc."
where appropriate, or directly to SKB REIT, Inc. after the Minimum Offering has
been achieved. Dealer hereby agrees to be bound by the terms of the Escrow
Agreement executed as of ______________, 2004, between Deutsche Bank AG, as
escrow agent, and the Company. Any Dealer receiving a check not conforming to
the foregoing instructions shall return such check directly to such subscriber
not later than the

                                      A-1
<PAGE>

end of the next business day following its receipt. Checks received by the
Dealer which conform to the foregoing instructions shall be transmitted for
deposit pursuant to one of the methods in this Article II. Transmittal of
received investor funds will be made in accordance with the following
procedures:

      Where, pursuant to the Dealer's internal supervisory procedures, internal
      supervisory review is conducted at the same location at which subscription
      documents and checks are received from subscribers, checks will be
      transmitted by the end of the next business day following receipt by the
      Dealer to the Company for deposit with an escrow agent, where appropriate,
      or for deposit directly with the Company after the Minimum Offering has
      been achieved.

      Where, pursuant to the Dealer's internal supervisory procedures, final and
      internal supervisory review is conducted at a different location, checks
      will be transmitted by the end of the next business day following receipt
      by the Dealer to the office of the Dealer conducting such final internal
      supervisory review (the "Final Review Office"). The Final Review Office
      will in turn transmit by the end of the next business day following
      receipt at a different location by the Final Review Office such checks to
      the Company for deposit with an escrow agent, where appropriate, or for
      deposit directly with the Company after the Minimum Offering has been
      achieved.

3. Pricing

      Except as may be otherwise provided for in the "Plan of Distribution"
section of the Prospectus, Shares shall be offered to the public at the offering
price of $10.00 per Share and Shares shall be offered pursuant to the Company's
dividend reinvestment plan at $9.50 per Share. Except as otherwise indicated in
the Prospectus or in any letter or memorandum sent to the Dealer by the Company
or Dealer Manager, a minimum initial purchase of 100 Shares is required. Except
as otherwise indicated in the Prospectus, additional investments may be made in
minimal increments of at least TEN (10) Shares. The Shares are nonassessable.

4. Dealers' Commissions

      Except for volume discounts described in the "Plan of Distribution"
section of the Prospectus, which volume discounts shall be the responsibility of
the Dealer to provide to investors who qualify, and except as otherwise provided
in the "Plan of Distribution" section of the Prospectus, the Dealer's selling
commission applicable to the Shares sold by Dealer which it is authorized to
sell hereunder is 6.75% of the gross proceeds of Shares sold by it and accepted
and confirmed by the Company, which commission will be payable by the Dealer
Manager. For these purposes, shares shall be deemed to be "sold" if and only if
a transaction has closed with a subscriber for Shares pursuant to all applicable
offering and subscription documents, the Company has accepted the subscription
agreement of such subscriber, and such Shares have been fully paid for. The
Dealer affirms that the Dealer Manager's liability for commissions payable is
limited solely to the proceeds of commissions receivable from the Company, and
the Dealer hereby waives any and all rights to receive payment of commissions
due until such time as the Dealer Manager is in receipt of the commission from
the Company. In addition, as set forth in

                                      A-2
<PAGE>

the Prospectus, the Dealer Manager may, in its sole discretion, reallow a
portion of its dealer manager fee to Dealers participating in the offering of
Shares as marketing fees, reimbursement of costs and expenses of attending
educational conferences or to defray other distribution-related expenses.

      The parties hereby agree that the foregoing commission is not in excess of
the usual and customary distributors' or sellers' commission received in the
sale of securities similar to the Shares, that Dealer's interest in the offering
is limited to such commission from the Dealer Manager and Dealer's indemnity
referred to in Section 4 of the Dealer Manager Agreement, and that the Company
is not liable or responsible for the direct payment of such commission to the
Dealer.

5. Payment

      Payments of selling commissions will be made by the Dealer Manager (or by
the Company as provided in the Dealer Manager Agreement) to Dealer within 30
days of the receipt by the Dealer Manager of the gross commission payments from
the Company.

6. Right to Reject Orders or Cancel Sales

      All orders, whether initial or additional, are subject to acceptance by
and shall only become effective upon confirmation by the Company, which reserves
the right to reject any order. Orders not accompanied by a Subscription
Agreement Signature Page and the required check in payment for the Shares may be
rejected. Issuance of the Shares will be made only after actual receipt of
payment therefor. If any check is not paid upon presentment, or if the Company
is not in actual receipt of clearinghouse funds or cash, certified or cashier's
check or the equivalent in payment for the Shares within 15 days of sale, the
Company reserves the right to cancel the sale without notice. In the event an
order is rejected, canceled or rescinded for any reason, the Dealer agrees to
return to the Dealer Manager any commission theretofore paid with respect to
such order and, failing to do so, the Dealer Manager shall have the right to
offset amounts owed against future commissions due and otherwise payable to said
Dealer.

7. Prospectus and Supplemental Information

      Dealer is not authorized or permitted to give, and will not give, any
information or make any representation (written or oral) concerning the Shares,
except as set forth in the Prospectus and any Authorized Sales Materials. The
Dealer Manager will supply Dealer with reasonable quantities of the Prospectus,
any supplements thereto and any amended Prospectus, as well as any Authorized
Sales Materials, for delivery to investors, and Dealer will deliver a copy of
the Prospectus and all supplements thereto and any amended Prospectus to each
investor to whom an offer is made prior to or simultaneously with the first
solicitation of an offer to sell the Shares to an investor. The Dealer agrees
that it will not send or give any Supplemental Information or Authorized Sales
Materials to an investor unless it has previously sent or given a Prospectus and
all supplements thereto and any amended Prospectus to that investor or has
simultaneously sent or given a Prospectus and all supplements thereto with such
Supplemental Information or Authorized Sales Materials, as the case may be.
Dealer agrees that it will not show or give to any investor or prospective
investor or reproduce any material or writing which is supplied to it by

                                      A-3
<PAGE>

the Dealer Manager and marked "broker-dealer use only" or otherwise bearing a
legend denoting that it is not to be used in connection with the sale of Shares
to members of the public. Dealer agrees that it will not use in connection with
the offer or sale of Shares any material or writing supplied to it by the
Company or the Dealer Manager bearing a legend which states that such material
may not be used in connection with the offer or sale of the Shares or any other
securities. Dealer further agrees that it will not use in connection with the
offer or sale of Shares any materials or writings which have not been previously
authorized or approved by the Dealer Manager. Each Dealer agrees to furnish a
copy of any revised preliminary Prospectus to each person to whom it has
furnished a copy of any previous preliminary Prospectus, and further agrees that
it will itself mail or otherwise deliver all preliminary and final Prospectuses
required for compliance with the provisions of Rule 15c2-8 under the Exchange
Act. Regardless of the termination of this Selected Dealer Agreement, Dealer
will deliver a Prospectus in transactions in the Shares for a period of 90 days
from the effective date of the Registration Statement or such longer period as
may be required by the Exchange Act. On becoming a Dealer, and in offering and
selling Shares, Dealer agrees to comply with all the applicable requirements
under the Securities Act and the Exchange Act.

8. License and Association Membership

      Dealer's acceptance of this Selected Dealer Agreement constitutes a
representation to the Company and the Dealer Manager that Dealer is a properly
registered or licensed broker-dealer, duly authorized to sell Shares under
Federal and state securities laws and regulations and in all states where it
offers or sells Shares, and that it is a member in good standing of the NASD.
This Selected Dealer Agreement shall automatically terminate if the Dealer
ceases to be a member in good standing of such association, or in the case of a
foreign dealer, so to conform. Dealer agrees to notify the Dealer Manager
immediately if Dealer ceases to be a member in good standing, or in the case of
a foreign dealer, so to conform. The Dealer Manager and Dealer each hereby agree
to abide by applicable NASD Rules, specifically including, but not limited to,
Rules 2340, 2420, 2730, 2740 and 2750.

9. Anti-Money Laundering Compliance Programs

      Dealer's acceptance of this Selected Dealer Agreement constitutes a
representation to the Company and the Dealer Manager that Dealer has established
and implemented an anti-money laundering compliance program ("AML Program") in
accordance with applicable law, including applicable NASD Rules, SEC Rules and
the USA PATRIOT Act, specifically including, but not limited to, Section 352 of
the Money Laundering Abatement Act (collectively, the "AML Rules"), reasonably
expected to detect and cause the reporting of suspicious transactions in
connection with the sale of Shares of the Company. Upon request by the Dealer
Manager at any time, Dealer hereby agrees to (i) furnish a copy of its AML
Program to the Dealer Manager for review, and (ii) furnish a copy of the
findings and any remedial actions taken in connection with Dealer's most recent
independent testing of its AML Program. Dealer hereby represents that it is
currently in compliance with all AML Rules, specifically including, but not
limited to, the Customer Identification Program requirements under Section 326
of the USA PATRIOT Act. Dealer hereby agrees to provide an annual certification
to Dealer Manager that, as of the date of such certification (i) its AML Program
is consistent with the AML Rules, (ii) it has continued to implement its AML
Program, and (iii) it is currently in compliance with all AML Rules,

                                      A-4
<PAGE>

specifically including, but not limited to, the Customer Identification Program
requirements under Section 326 of the USA PATRIOT Act.

10. Limitation of Offer; Suitability

      Solicitation and other activities by the Dealer hereunder shall be
undertaken only in accordance with the Dealer Manager Agreement, this Agreement,
the Securities Act, the Exchange Act, the applicable rules and regulations of
the SEC, any applicable blue sky requirements, and the Rules of the National
Association of Securities Dealers, Inc. (the "NASD"), specifically including,
but not in any way limited to, NASD Rules 2440, 2710, 2730, 2740, 2750 and 2810.
Dealer will offer Shares only to persons who meet the suitability standards set
forth in the Prospectus or in any suitability letter or memorandum sent to it by
the Company or the Dealer Manager and will only make offers to persons in the
states in which it is advised in writing that the Shares are qualified for sale
or that such qualification is not required.

      In offering Shares, Dealer will comply with the provisions of all
applicable NASD Conduct Rules, as well as all other applicable rules and
regulations relating to suitability of investors, including without limitation,
the provisions of Article III.C. of the Statement of Policy Regarding Real
Estate Investment Trusts of the North American Securities Administrators
Association, Inc.

      The Dealer Manager will inform Dealer as to the jurisdictions in which it
has been advised by the Company that the offer and sale of the Shares has been
qualified or is exempt under the respective securities or "blue sky" laws of
such jurisdictions; but neither Dealer Manager nor the Company have assumed and
will not assume any obligation or responsibility as to Dealer's qualification or
your right to act as a broker and/or dealer with respect to the Shares in any
jurisdiction. Dealer agrees that it will not make any offers except in states in
which Dealer Manager may advise Dealer that the Shares have been qualified or
are exempt.

      Dealer further represents, warrants and covenants that no Dealer, or
person associated with Dealer, shall offer or sell Shares in any jurisdiction
except to investors who satisfy the investor suitability standards and minimum
investment requirements under the most restrictive of the following: (1)
applicable provisions of the Prospectus; (2) applicable laws of the jurisdiction
of which such investor is a resident; or (3) applicable NASD Conduct Rules.
Dealer agrees to ensure that, in recommending the purchase, sale or exchange of
Shares to an investor, each Dealer, or person associated with Dealer, shall have
reasonable grounds to believe, on the basis of information obtained from the
investor (and thereafter maintained in the manner and for the period provided in
such Rules) concerning his age, investment objectives, other investments,
financial situation and needs, and any other information known to Dealer, or
person associated with Dealer, that (A) the investor is or will be in a
financial position appropriate to enable him to realize to a significant extent
the benefits described in the Prospectus, including the tax benefits to the
extent they are a significant aspect of the Company, (B) the investor has a fair
market net worth sufficient to sustain the risks inherent in an investment in
Shares in the amount proposed, including loss, and lack of liquidity of such
investment, and (C) an investment in Shares is otherwise suitable for such
investor. Dealer further represents, warrants and covenants that Dealer, or a
person associated with Dealer, will make every reasonable effort to determine
the suitability and appropriateness of an investment in Shares of each proposed
investor by

                                      A-5
<PAGE>

reviewing documents and records disclosing the basis upon which the
determination as to suitability was reached as to each purchaser of Shares
pursuant to a subscription solicited by Dealer, whether such documents and
records relate to accounts which have been closed, accounts which are currently
maintained, or accounts hereafter established. Dealer agrees to retain such
documents and records in Dealer's records for a period of six years from the
date of the applicable sale of Shares and to make such documents and records
available to (i) the Dealer Manager and the Company upon request, and (ii) to
representatives of the SEC, NASD and applicable state securities administrators
upon your firm's receipt of an appropriate document subpoena or other
appropriate request for documents from any such agency. Dealer shall not
purchase any Shares for a discretionary account without obtaining the prior
written approval of Dealer's customer and his or her signature on a Subscription
Agreement.

      It is understood and agreed that under no circumstances will you, as a
Soliciting Dealer, engage in any activities hereunder in any jurisdiction in
which you may not lawfully so engage or in any activities in any jurisdiction
with respect to the Shares in which you may lawfully so engage unless you have
complied with the provisions hereof.

11. Due Diligence; Adequate Disclosure

      Prior to offering the Shares for sale, Dealer shall have conducted an
inquiry such that Dealer has reasonable grounds to believe, based on information
made available to Dealer by the Company or the Dealer Manager through the
Prospectus or other materials, that all material facts are adequately and
accurately disclosed and provide a basis for evaluating a purchase of Shares. In
determining the adequacy of disclosed facts pursuant to the foregoing, each
Dealer may obtain, upon request, information on material facts relating at a
minimum to the following: (1) items of compensation; (2) physical properties;
(3) tax aspects; (4) financial stability and experience of the Company and its
advisor; (5) conflicts and risk factors; and (6) appraisals and other pertinent
reports.

      Notwithstanding the foregoing, each Dealer may rely upon the results of an
inquiry conducted by an independent third party retained for that purpose or
another Dealer, provided that: (1) such Dealer has reasonable grounds to believe
that such inquiry was conducted with due care by said independent third party or
such other Dealer; (2) the results of the inquiry were provided to Dealer with
the consent of the other Dealer conducting or directing the inquiry; and (3) no
Dealer that participated in the inquiry is an affiliate of the Company.

      Prior to the sale of the Shares, each Dealer shall inform each prospective
purchaser of Shares of pertinent facts relating to the Shares including
specifically the lack of liquidity and lack of marketability of the Shares
during the term of the investment.

12. Compliance with Record Keeping Requirements

      Dealer agrees to comply with the record keeping requirements of the
Exchange Act, including but not limited to, Rules 17a-3 and 17a-4 promulgated
under the Exchange Act. Dealer further agrees to keep such records with respect
to each customer who purchases Shares, his suitability and the amount of Shares
sold and to retain such records for such period of time as may be required by
the SEC, any state securities commission, the NASD or the Company.

                                      A-6
<PAGE>

13. Customer Complaints

      Each party hereby agrees to provide to the other party copies of any
written or otherwise documented customer complaints received by such party
relating in any way to the Offering (including, but not limited to, the manner
in which the Shares are offered by the Dealer Manager or the Dealer), the Shares
or the Company.

14. Termination; Amendment

      Dealer will immediately suspend or terminate its offer and sale of Shares
upon the request of the Company or the Dealer Manager at any time and will
resume its offer and sale of Shares hereunder upon subsequent request of the
Company or the Dealer Manager. Any party may terminate this Selected Dealer
Agreement by written notice. Such termination shall be effective 48 hours after
the mailing of such notice. This Selected Dealer Agreement and the exhibits
hereto are the entire agreement of the parties and supersedes all prior
agreements, if any, between the parties hereto.

      This Selected Dealer Agreement may be amended at any time by the Dealer
Manager by written notice to the Dealer, and any such amendment shall be deemed
accepted by Dealer upon placing an order for sale of Shares after he has
received such notice.

15. Privacy Laws

      The Dealer Manager and Dealer each hereby agree as follows:

      A. Each party agrees to abide by and comply with (i) the privacy standards
and requirements of the Gramm-Leach-Bliley Act of 1999 ("GLB Act"), (ii) the
privacy standards and requirements of any other applicable Federal or state law,
and (iii) its own internal privacy policies and procedures, each as may be
amended from time to time.

      B. Dealer agrees to provide privacy policy notices required under the GLB
Act resulting from purchases of Shares made by its customers pursuant to this
Selected Dealer Agreement.

      C. Each party agrees to refrain from the use or disclosure of nonpublic
personal information (as defined under the GLB Act) of all customers who have
opted out of such disclosures except as necessary to service the customers or as
otherwise necessary or required by applicable law; and

      D. Each party shall be responsible for determining which customers have
opted out of the disclosure of nonpublic personal information by periodically
reviewing and, if necessary, retrieving a list of such customers (the "List") to
identify customers that have exercised their opt-out rights. In the event either
party uses or discloses nonpublic personal information of any customer for
purposes other than servicing the customer, or as otherwise required by
applicable law, that party will consult the List to determine whether the
affected customer has exercised his or her opt-out rights. Each party
understands that each is prohibited from using or disclosing any nonpublic
personal information of any customer that is identified on the List as having
opted out of such disclosures.

                                      A-7
<PAGE>

16. Dealer Manager Agreement

      Dealer hereby authorizes and ratifies the execution and delivery of the
Dealer Manager Agreement by Dealer Manager for itself and on behalf of Dealer
and authorizes Dealer Manager to agree to any variation of its terms or
provisions and to execute and deliver any amendment, modification or supplement
thereto. Dealer hereby agrees to be bound by all provisions of the Dealer
Manager Agreement relating to Dealers. Dealer also authorizes Dealer Manager to
exercise, in its discretion, all the authority or discretion now or hereafter
vested in Dealer Manager by the provisions of the Dealer Manager Agreement and
to take all such actions as it may believe desirable in order to carry out the
provisions of the Dealer Manager Agreement and of this Agreement.

17. Notice

      All notices will be in writing and will be duly given to the Dealer
Manager when mailed to the attention of ________________, SKB Real Estate
Securities, Inc., 1211 SW Fifth Avenue, Suite 2250, Portland, Oregon 97204 and
to Dealer when mailed to the address specified by Dealer herein.

18. Attorney's Fees and Applicable Law

      In any action to enforce the provisions of this Selected Dealer Agreement
or to secure damages for its breach, the prevailing party shall recover its
costs and reasonable attorney's fees. This Selected Dealer Agreement shall be
construed under the laws of the State of New York and shall take effect when
signed by Dealer and countersigned by the Dealer Manager.

                                             THE DEALER MANAGER:

                                             SKB Real Estate Securities, Inc.

                                             By:______________________________
                                                Name:
                                                Title:

      We have read the foregoing Selected Dealer Agreement and we hereby accept
and agree to the terms and conditions therein set forth. We hereby represent
that the list below of jurisdictions in which we are registered or licensed as a
broker or dealer and are fully authorized to sell securities is true and
correct, and we agree to advise you of any change in such list during the term
of this Selected Dealer Agreement.

1.    Identity of Dealer:

      Name:_____________________________________________________________________

      Type of entity:___________________________________________________________
      to be completed by Dealer) (corporation, partnership or proprietorship)

                                      A-8
<PAGE>

      Organized in the State of: ______________________________ to be completed
      by Dealer) _____________________________(State)

      Licensed as broker-dealer in the following States:________________________

      __________________________________________________________________________

      (to be completed by Dealer)

      Tax I.D. #:_______________________________________________________________

2.    Person to receive notice pursuant to Section XV.

      Name:_____________________________________________________________________

      Company:__________________________________________________________________

      Address:__________________________________________________________________

      City, State and Zip Code:_________________________________________________

      Telephone No.:(_____) ____________________________________________________

      Telefax No.:(____) _______________________________________________________

AGREED TO AND ACCEPTED BY THE DEALER:

___________________________________
(Dealer's Firm Name)

By:________________________________
   Signature

Title:_____________________________

Date: _____________________________

                                      A-9exv4w1

 

EXHIBIT 4.1

TAQUA, INC.

2002 STOCK INCENTIVE PLAN

	1.	 	DEFINITIONS.

     Unless otherwise specified or unless the context otherwise requires, the
terms set forth on Exhibit A — Definitions, shall have the meanings used
therein.

	2.	 	PURPOSES OF THE PLAN.

     The Plan is intended to encourage ownership of Shares by Key Employees and
by directors of and consultants to the Company, its Affiliates and Strategic
Partners in order to attract such people, to induce them to work for the
benefit of the Company and its Affiliates and to provide incentive for them to
promote the success of the Company and its Affiliates. The Plan provides for
the granting of ISOs, Non-Qualified Options and Stock Grants.

	3.	 	SHARES SUBJECT TO THE PLAN.

     (a) The initial maximum number of Shares which shall be reserved and
available for Stock Rights pursuant to this Plan shall be 9,189,319, subject to
adjustment in accordance with Paragraph 16 hereof. Shares issued under the
Plan may be authorized but unissued shares of Common Stock or shares of Common
Stock held in treasury.

     (b) To the extent that any Option shall lapse, terminate, expire or
otherwise be cancelled without the issuance of Shares, or if the Company shall
reacquire any Shares issued pursuant to a Stock Grant, the Shares shall be
available for the granting of other Stock Rights under the Plan.

     (c) Shares issuable under the Plan may be subject to such restrictions on
transfer, repurchase rights or other restrictions as shall be determined by the
Administrator.

	4.	 	ADMINISTRATION OF THE PLAN.

     (a) At the discretion of the Company’s Board of Directors, the
Administrator of the Plan shall be either (i) by the full Board of Directors of
the Company or (ii) by a committee (the “Committee”) consisting of two or more
members of the Company’s Board of Directors. In the event the full Board of
Directors is the Administrator of the Plan, references herein to the Committee
shall be deemed to mean the full Board of Directors. The Board of Directors
may from time to time appoint a member or members of the Committee in
substitution for or in addition to the member or members then in office and may
fill vacancies on the Committee however caused. The Committee may choose one
of its members as Chairman and shall hold meetings at such times and places as
it shall deem advisable. A majority of the members of the Committee shall
constitute a quorum and any action may be taken by a majority of those present
and voting at any meeting.

1

 

     (b) Any action may also be taken without the necessity of a meeting by a
written instrument signed by a majority of the Committee. The decision of the
Committee as to all questions of interpretation and application of the Plan
shall be final, binding and conclusive on
all persons. The Committee shall have the authority to adopt, amend and
rescind such rules and regulations as, in its opinion, may be advisable in the
administration of the Plan. The Committee may correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any Option Agreement
or Stock Grant Agreement in the manner and to the extent it shall deem
expedient to carry the Plan into effect and shall be the sole and final judge
of such expediency. No Committee member shall be liable for any action or
determination made in good faith.

     (c) Subject to the terms of the Plan, the Administrator is authorized to:

	i.	 	Interpret the provisions of the Plan or of any Option or
Stock Grant and to make all rules and determinations which it deems
necessary or advisable for the administration of the Plan;
	 
	ii.	 	Determine which persons shall be considered eligible
Participants in the Plan and which of such eligible persons shall be
granted Stock Rights;
	 
	iii.	 	Determine the number of Shares for which Stock Rights shall
be granted; and
	 
	iv.	 	Specify the terms and conditions upon which Stock Rights may
be granted, including, but not limited to, the time or times when
Stock Rights may be granted, shall become exercisable and the
duration of the exercise period, and the price of Shares subject to
each Stock Right.

Notwithstanding the foregoing, all such interpretations, rules, determinations,
terms and conditions shall be made and prescribed in the context of preserving
the tax status under Section 422 of the Code of those Options which are
designated as ISOs. Subject to the foregoing, the interpretation and
construction by the Administrator of any provisions of the Plan or of any Stock
Right shall be final, unless otherwise determined by the Board of Directors, if
the Administrator is the Committee.

	5.	 	ELIGIBILITY FOR PARTICIPATION.

     The Administrator will, in its sole discretion, name the Participants in
the Plan, provided, however, that each Participant must be a Key Employee,
director or consultant of the Company, an Affiliate, or of a Strategic Partner
at the time a Stock Right is granted. Notwithstanding the foregoing, the
Administrator may authorize the grant of a Stock Right to a person not then an
employee, director or consultant of the Company or of an Affiliate; provided,
however, that the actual grant of such Stock Right shall be conditioned upon
such person becoming eligible to become a Participant at or prior to the time
of the delivery of the Agreement evidencing such Stock Right. ISOs may be
granted only to Key Employees. Non-Qualified Options and Stock Grants may be
granted to any Key Employee, director or consultant of the Company, an
Affiliate or Strategic Partner or any other eligible Participant. The granting
of any Stock Right to any

2

 

individual shall neither entitle that individual to, nor disqualify him or
her from, participation in any other grant of Stock Rights.

     In determining the eligibility of an individual to be granted an Option or
Stock Grant, as well as in determining the number of Shares to be optioned or
granted to any individual, the Administrator shall take into account the
position and responsibilities of the individual being considered, the nature
and value to the Company or an Affiliate of his or her service and
accomplishments, his or her present and potential contribution to the success
of the Company or an Affiliate, and such other factors as the Committee may
deem relevant.

     No Option designated as an IS0 shall be granted to any Key Employee of the
Company or an Affiliate if such Key Employee owns, immediately prior to the
grant of an Option, stock representing more than 10% of the combined voting
power of all classes of stock of the Company or an Affiliate, unless the
purchase price for the stock under such Option shall be at least 110% of its
Fair Market Value at the time such Option is granted and the Option, by its
terms, shall not be exercisable more than five years from the date it is
granted. In determining the stock ownership under this paragraph, the
provisions of Section 424(d) of the Code shall be
controlling.

     Subject to the provisions hereof relating to adjustments upon changes in
the shares of Common Stock, no employee shall be eligible to be granted Options
covering more than 50,000 shares of Common Stock during any calendar year,
except that this restriction shall not apply at any time prior to the date on
which the Company lists any shares of its securities on any securities
exchange. The restriction contained in this paragraph shall also not apply
until the earliest of: (1) the first material modification of the Plan
(including any increase in the number of shares of Common Stock reserved for
issuance hereunder); (2) the issuance of all of the shares of Common Stock
reserved for issuance under the Plan; (3) the expiration of the Plan; (4) the
first meeting of stockholders at which Directors are to be elected that occurs
after the close of the third (3rd) calendar year following the calendar year in
which occurred the first registration of an equity security by the Company
under Section 12 of the Securities Act of 1934, as amended; or (5) such other
date required by Section 162(m) of the Code.

	6.	 	TERMS AND CONDITIONS OF OPTIONS.

     Each Option shall be set forth in writing in an Option Agreement, duly
executed on behalf of the Company and by the Participant to whom such Option is
granted. The
Administrator may provide that Options be granted subject to such terms
and conditions, consistent with the terms and conditions specifically required
under this Plan, as the Administrator may deem appropriate including, without
limitation, subsequent approval by the shareholders of the Company of this Plan
or any amendments thereto.

	A.	 	Non-Qualified Options: Each Option intended to be a
Non-Qualified Option shall be subject to the terms and conditions
which the Administrator determines to be appropriate and in the best
interest of the Company, subject to the following minimum standards
for any such Non-Qualified Option:

3

 

	a.	 	Option Price: Each Option Agreement shall state
the option price (per Share) of the Shares covered by each
Option, which option price shall be determined by the
Administrator but shall not be less than the par value
per share of Common Stock.
	 
	b.	 	Each Option Agreement shall state the number of
Shares to which it pertains;
	 
	c.	 	Each Option Agreement shall state the date or
dates on which it first is exercisable and the date after
which it may no longer be exercised, and may provide that the
Option rights accrue or become exercisable in installments
over a period of months or years, or upon the occurrence of
certain conditions or the attainment of stated goals or
events; and
	 
	d.	 	Exercise of any Option may be conditioned upon
the Participant’s execution of certain agreements in form
satisfactory to the Administrator providing for certain
protections for the Company and its shareholders including,
without limitation, requirements that:

	i.	 	The Participant’s or the
Participant’s Survivors’ right to sell or transfer the
Shares may be restricted; and
	 
	ii.	 	The Participant or the Participant’s
Survivors may be required to execute letters of
investment intent and must also acknowledge that the
Shares will bear legends noting any applicable
restrictions.

	B.	 	ISOs: Each Option intended to be an IS0 shall be issued only
to a Key Employee of the Company (and not any other person including
a Key Employee of a Strategic Partner) and shall be subject to the
following terms and conditions and to such additional restrictions or
changes as the Administrator determines are appropriate but that are
not in conflict with Section 422 of the Code:

	a.	 	Minimum standards: The IS0 shall meet the
minimum standards required of Non-Qualified Options, as
described in Paragraph 6(A) above, except clause (a)
thereunder.
	 
	b.	 	Option Price: Immediately before the Option is
granted, if the Participant owns, directly or by reason of the
applicable attribution rules in Section 424(d) of the Code:

	i.	 	Ten percent (10%) or less of the
total combined voting power of all classes of stock of
the Company or an Affiliate, the Option price per share
of the Shares covered by each Option shall not be less
than one hundred percent (100%) of the Fair Market Value
per share of the Shares on the date of the grant of the
Option as

4

 

	 	 	 determined by Administrator in accordance with Section
422 of the Code.
	 
	ii.	 	More than ten percent (10%) of the
total combined voting power of all classes of stock of
the Company or an Affiliate, the Option price per share
of the Shares covered by each Option shall not be less
than one hundred ten percent (110%) of the said Fair
Market Value on the date of grant.

	c.	 	Term of Option: For Participants who own:

	i.	 	Ten percent (10%) or less of the
total combined voting power of all classes of stock of
the Company or an Affiliate, each Option shall terminate
not more than ten (10) years from the date of the grant
or at such earlier time as the Option Agreement may
provide.
	 
	ii.	 	More than ten percent (10%) of the
total combined voting power of all classes of stock of
the Company or an Affiliate, each Option shall terminate
not more than five (5) years from the date of the grant
or at such earlier time as the Option Agreement may
provide.

	d.	 	Limitation on Yearly Exercise: The Option
Agreements shall restrict the amount of Options which may be
exercisable in any calendar year (under this or any other IS0
plan of the Company or an Affiliate) so that the aggregate
Fair Market Value (determined at the time each IS0 is granted)
of the stock with respect to which ISOs are exercisable for
the first time by the Participant in any calendar year does
not exceed one hundred thousand dollars ($100,000), provided
that this subparagraph (d) shall have no force or effect if
its inclusion in the Plan is not necessary for Options issued
as ISOs to qualify as ISOs pursuant to Section 422(d) of the
Code.

	7.	 	TERMS AND CONDITIONS OF STOCK GRANTS.

     Each offer of a Stock Grant to a Participant shall state the date prior to
which the Stock Grant must be accepted by the Participant, and the principal
terms of each Stock Grant shall be set forth in a Stock Grant Agreement, duly
executed by the Company and the Participant. The Stock Grant Agreement shall
be in a form approved by the Administrator and shall contain terms and
conditions which the Administrator determines to be appropriate and in the best
interest of the Company, subject to the following minimum standards:

	(a)	 	Each Stock Grant Agreement shall state the purchase price
(per share), if any, of the Shares covered by each Stock Grant,
which purchase price shall be determined by the Administrator but
shall not be less than the par value on the date of the grant of the
Stock Grant;

5

 

	(b)	 	Each Stock Grant Agreement shall state the number of Shares
to which the Stock Grant pertains; and
	 
	(c)	 	Each Stock Grant Agreement shall include the terms of any
right of the Company to reacquire the Shares subject to the Stock
Grant, including the time and events upon which such rights shall
accrue and the purchase price therefor, if any.

	8.	 	EXERCISE OF OPTIONS AND ISSUE OF SHARES.

     To the extent that the right to purchase Shares under an Option has
accrued and is in effect, an Option (or any part or installment thereof) shall
be exercised by giving written notice to the Company at its principal executive
office, together with payment of the full purchase price in accordance with
this Paragraph for the Shares as to which the Option is being exercised, and
upon compliance with any other condition(s) set forth in the Option Agreement.
Such written notice shall be signed by the person exercising the Option, shall
state the number of Shares with respect to which the Option is being exercised
and shall contain any representation required by the Plan or the Option
Agreement.

     Each Option granted under the Plan shall, subject to the other provisions
of this Plan, be exercisable at such time or times and during such period as
shall be set forth in the Option Agreement.

     To the extent that an Option to purchase shares is not exercised by a
Participant when it becomes initially exercisable, it shall not expire but
shall be carried forward and shall be exercisable, on a cumulative basis, until
the expiration of the exercise period. No partial exercise may be made for
less than one hundred (100) full shares of Common Stock.

     Payment of the purchase price for the Shares as to which such Option is
being exercised shall be made (a) in United States dollars in cash or by check,
or (b) at the discretion of the Administrator, and so long as there is no
adverse tax or accounting impact to the Company, through delivery of shares of
Common Stock owned by the Participant for at least six (6) months and having a
Fair Market Value equal as of the date of the exercise to the cash exercise
price of the Option, or (c) at the discretion of the Administrator, by delivery
of the grantee’s personal recourse note bearing interest at such rate as the
Administrator deems to be prudent and in accordance with applicable tax and
accounting practice, or (d) at the discretion of the Administrator, by any
combination of the above. Notwithstanding the foregoing, the Administrator
shall accept only such payment on exercise of an IS0 as is permitted by Section
422 of the Code.

     When an Option is exercised, the Company shall then reasonably promptly
deliver the Shares as to which such Option was exercised to the Participant (or
to the Participant’s

     Survivors, as the case may be). In determining what constitutes
“reasonably promptly,” it is expressly understood that the issuance and
delivery of the Shares may be delayed by the Company in order to comply with
any law or regulation (including, without limitation, state securities or “blue
sky” laws) which requires or makes it desirable for the Company to take any

6

 

action with respect to the Shares prior to their issuance. The Shares
shall, upon delivery, be evidenced by an appropriate certificate or
certificates for fully paid, non-assessable Shares.

     The Administrator shall have the right to accelerate the date of exercise
of any installment of any Option; provided that the Administrator shall not
accelerate the exercise date of any installment of any Option granted as an IS0
(and not previously converted into a Non-Qualified Option pursuant to Paragraph
26) if such acceleration would violate any vesting limitation contained in
Section 422(d) of the Code.

     The Administrator may, in its discretion, amend any term or condition of
an outstanding Option provided (i) such amendment is permitted by the Plan,
(ii) any such amendment shall be made only with the consent of the Participant
to whom the Option was granted, or in the event of the death of the
Participant, the Participant’s Survivors, if the amendment is adverse to the
Participant, and (iii) any such amendment of any IS0 shall be made only after
the Administrator, after consulting the counsel for the Company, determines
whether such amendment would constitute a “modification” of any Option which is
an IS0 (as that term is defined in Section 424(h) of the Code) or would cause
any adverse tax consequences for the holder of such ISO.

	9.	 	ACCEPTANCE OF STOCK GRANT AND ISSUE OF SHARES.

     A Stock Grant (or any part or installment thereof) shall be accepted by
executing the Stock Grant Agreement and delivering it to the Company at its
principal office, together with payment of the full purchase price, if any, in
accordance with this Paragraph for the Shares as to which such Stock Grant is
being accepted, and upon compliance with any other conditions set forth in the
Stock Grant Agreement. Payment of the purchase price for the Shares as to
which such Stock Grant is being accepted shall be made (a) in United States
dollars in cash or by check, or (b) at the discretion of the Administrator and
only so long as there is no adverse tax or accounting impact to the Company,
through delivery of shares of Common Stock owned by the Participant for at
least six (6) months and having a fair market value equal as of the date of
acceptance of the Stock Grant to the purchase price of the Stock Grant
determined in good faith by the Administrator, or (c) at the discretion of the
Administrator, by delivery of the grantee’s personal recourse note bearing
interest at such rate as the Administrator deems to be prudent and in
accordance with applicable tax and accounting practices, or (d) at the
discretion of the Administrator, by any combination of (a), (b) and (c) above.

     The Company shall then reasonably promptly (as determined in paragraph 8
above) deliver the Shares as to which such Stock Grant was accepted to the
Participant (or to the Participant’s Survivors, as the case may be), subject to
any escrow provision set forth in the Stock Grant Agreement.

     The Administrator may, in its discretion, amend any term or condition of
an outstanding Stock Grant or Stock Grant Agreement provided (i) such amendment
is permitted by the Plan, and (ii) any such amendment shall be made only with
the consent of the Participant to whom the Stock Grant was made, if the
amendment is adverse to the Participant.

7

 

	10.	 	RIGHTS AS A SHAREHOLDER.

     No Participant to whom a Stock Right has been granted shall have rights as
a shareholder with respect to any Shares covered by such Stock Right, except
after: (a) due exercise of the Option or acceptance of the Stock Grant in compliance with the terms of
the Stock Right and tender of the full purchase price, if any, for the Shares
being purchased pursuant to such exercise or acceptance; and (b) registration
of the Shares in the Company’s share register in the name of
the Participant.

	11.	 	ASSIGNABILITY AND TRANSFERABILITY OF STOCK RIGHTS.

     By its terms, a Stock Right granted to a Participant shall not be
assignable or transferable by the Participant other than (i) by will or by the
laws of descent and distribution, except that an optionee may transfer Stock
Rights that are not ISOs granted under the Plan to the Participant’s spouse or
children or to a trust or partnership for the benefit of the Participant or
Participant’s spouse or children, or (ii) as otherwise determined by the
Administrator and set forth in the applicable Option Agreement or Stock Grant
Agreement. The designation of a beneficiary of a Stock Right by a Participant
shall not be deemed a transfer prohibited by this Paragraph. Except as
provided above, a Stock Right shall only be exercisable or may only be
accepted, during the Participant’s lifetime, by such Participant (or by his or
her legal representative) and shall not be assigned, pledged or hypothecated in
any way (whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Any Stock Right granted under the
Plan shall be null and void and without effect upon the bankruptcy of the
Participant to whom the Stock Right is granted, or upon any attempted transfer,
assignment, pledge, hypothecation or other disposition except as herein
provided, including without limitation any disposition, attachment, divorce,
trustee process or similar process, whether legal or equitable upon such Stock
Right.

	12.	 	EFFECT ON OPTIONS OF TERMINATION OF SERVICE.

     A. Termination Other Than “For Cause”, Death or Disability. Except as
otherwise provided in the pertinent Option Agreement, in the event of a
termination of service (whether as an employee, director or consultant) with
the Company or an Affiliate before the Participant has exercised an Option, the
following rules apply:

	a.	 	A Participant who ceases to be an employee, director or
consultant of the Company or of an Affiliate (for any reason other
than termination “for cause”, Disability, or death for which events
there are special rules in Subparagraphs B, C and D, respectively),
may exercise any Option granted to him or her to the extent that the
Option is exercisable on the date of such termination of service,
but only within such term as the Administrator has designated in the
pertinent Option Agreement.
	 
	b.	 	Except as provided in elsewhere in this Paragraph, in no
event may an Option Agreement provide, if an Option is intended to
be an ISO, that the time for

8

 

	 	 	exercise be later than three (3) months after the Participant’s
termination of employment.
	 
	c.	 	The provisions of this Paragraph, and not the provisions of
subparagraph C or D, shall apply to a Participant who subsequently
becomes Disabled or dies after the termination of employment,
director status or consultancy, provided, however, in the case of a
Participant’s Disability or death within three (3) months after the
termination of employment, director status or consultancy, the
Participant or the Participant’s Survivors may exercise the Option
within one (1) year after the date of the Participant’s termination
of employment, but in no event after the date of expiration of the
term of the Option.
	 
	d.	 	Notwithstanding anything herein to the contrary, if
subsequent to a Participant’s termination of employment, termination
of director status or termination of consultancy, but prior to the
exercise of an Option, the Board of Directors determines that,
either prior or subsequent to the Participant’s termination, the
Participant engaged in conduct which would constitute “cause”, then
such Participant shall forthwith cease to have any right to exercise
any Option.
	 
	e.	 	A Participant to whom an Option has been granted under the
Plan who is absent from work with the Company or with an Affiliate
because of temporary disability (any disability other than a
Disability), or who is on leave of absence for any purpose, shall
not, during the period of any such absence, be deemed, by virtue of
such absence alone, to have terminated such Participant’s
employment, director status or consultancy with the Company or with
an Affiliate, except as the Administrator may otherwise expressly
provide.
	 
	f.	 	Except as required by law or as set forth in the pertinent
Option Agreement, Options granted under the Plan shall not be
affected by any change of a Participant’s status within or among the
Company and any Affiliates, so long as the Participant continues to
be an employee, director or consultant of the
Company or any Affiliate.

     B. Termination For Cause. Except as otherwise provided in the pertinent
Option Agreement, the following rules apply if the Participant’s service
(whether as an employee, director or consultant) with the Company or an
Affiliate is terminated “for cause” prior to the time that all his or her
outstanding Options have been exercised:

	a.	 	All outstanding and unexercised Options as of the time the
Participant is notified his or her service is terminated “for cause”
will immediately be forfeited.
	 
	b.	 	For purposes of this Plan, “cause” shall include (and is not
limited to) dishonesty with respect to the Company or any Affiliate,
breach of fiduciary duty, insubordination, substantial malfeasance
or non-feasance of duty, unauthorized disclosure of confidential
information, material failure or refusal to comply with

9

 

	 	 	 Company’s published policies generally applicable to all employees,
and conduct materially harmful to the business of the Company or
any Affiliate. The determination of the Administrator as to the
existence of “cause” will be conclusive on the Participant and the
Company.
	 
	c.	 	“Cause” is not limited to events which have occurred prior to
a Participant’s termination of service, nor is it necessary that the
Administrator’s finding of “cause” occur prior to termination. If
the Administrator determines, subsequent to a Participant’s
termination of service but prior to the exercise of an Option, that
either prior or subsequent to the Participant’s termination the
Participant engaged in conduct which would constitute “cause”, then
the right to exercise any Option is forfeited.
	 
	d.	 	Any definition in an agreement between the Participant and
the Company or an Affiliate, which contains a conflicting definition
of “cause” for termination and which is in effect at the time of
such termination, shall supersede the definition in this Plan with
respect to such Participant.

     C. Termination for Disability. Except as otherwise provided in the
pertinent Option Agreement, a Participant who ceases to be an employee,
director or consultant of the Company or of an Affiliate by reason of
Disability may exercise any Option granted to such Participant:

	a.	 	To the extent exercisable but not exercised on the date of
Disability; and
	 
	b.	 	In the event rights to exercise the Option accrue
periodically, to the extent of a pro rata portion of any additional
rights as would have accrued had the Participant not become Disabled
prior to the end of the accrual period which next ends following the
date of Disability. The proration shall be based upon the number of
days of such accrual period prior to the date of Disability.

     A Disabled Participant may exercise such rights only within the period
ending one (1) year after the date of the Participant’s termination of
employment, directorship or consultancy, as the case may be, notwithstanding
that the Participant might have been able to exercise the Option as to some or
all of the Shares on a later date if the Participant had not become Disabled
and had continued to be an employee, director or consultant or, if earlier,
within the originally prescribed term of the Option.

     D. Termination Due to Death. Except as otherwise provided in the
pertinent Option Agreement, in the event of the death of a Participant while
the Participant is an employee, director or consultant of the Company or of an
Affiliate, such Option may be exercised by the Participant’s Survivors:

	a.	 	To the extent exercisable but not exercised on the date of
death; and

10

 

	b.	 	In the event rights to exercise the Option accrue periodically, to
the extent of a pro rata portion of any additional rights which
would have accrued had the Participant not died prior to the end of
the accrual period which next ends following the date of death.
The proration shall be based upon the number of days of such
accrual period prior to the Participant’s death.

     If the Participant’s Survivors wish to exercise the Option, they must take
all necessary steps to exercise the Option within one (1) year after the date
of death of such Participant, notwithstanding that the decedent might have been
able to exercise the Option as to some or all
of the Shares on a later date if he or she had not died and had continued
to be an employee, director or consultant or, if earlier, within the originally
prescribed term of the Option.

	13.	 	EFFECT OF TERMINATION OF SERVICE ON STOCK GRANTS.

     A. General. In the event of a termination of service (whether as an
employee, director or consultant) with the Company or an Affiliate for any reason
before the Participant has accepted the offer of, and complied with all
purchase or acquisition requirements under, a Stock Grant in accordance with
its terms, such offer of a Stock Grant shall terminate.

     For purposes of this Paragraph 13, a Participant to whom a Stock Grant has
been offered under the Plan who is absent from work with the Company or with an
Affiliate because of temporary disability (any disability other than a
“Disability”), or who is on leave of absence for any purpose, shall not, during
the period of any such absence, be deemed, by virtue of such absence alone, to
have terminated such Participant’s employment, director status or consultancy
with the Company or with an Affiliate, except as the Administrator may
otherwise expressly provide.

     In addition, for purposes of this Paragraph 13, any change of employment
or other service within or among the Company and any Affiliates shall not be
treated as a termination of employment, director status or consultancy so long
as the Participant continues to be an employee, director or consultant of the
Company or any Affiliate.

     Except as otherwise provided in the pertinent Stock Grant Agreement, in
the event of a termination of service (whether as an employee, director or
consultant), other than termination “for cause,” Disability, or death for which
events there are special rules in subparagraphs B, C, and D, the Company shall
have the right to repurchase all unvested Shares at the original purchase
price.

     B. Termination For Cause. Except as otherwise provided in the pertinent
Stock
Grant Agreement, upon a termination of employment for cause, all Shares
subject to any Stock Grant shall be immediately subject to repurchase by the
Company at the purchase price, if any, thereof. For all purposes of this Plan,
including this paragraph 13, “cause” shall have the meanings used in and shall
be determined as provided in paragraph 12.

11

 

     C.
Termination Due to Disability. Except as otherwise provided in the
pertinent Stock Grant Agreement, if a Participant ceases to be an employee,
director or consultant of the Company or of an Affiliate by reason of
Disability, the Company shall have the right to purchase all unvested
Shares at the original purchase price, to the extent such rights of repurchase
are to lapse periodically after the date of Disability, such rights of
repurchase shall lapse on a pro rata portion of the Shares subject to such
Stock Grant as would have lapsed had the Participant not become Disabled prior
to the end of the vesting period which next ends following the date of
Disability. The proration shall be based upon the number of days of such
vesting period prior to the date of Disability.

     D. Termination Due to Death. Except as otherwise provided in the
pertinent Stock Grant Agreement in the event of the death of a Participant
while the Participant is an employee, director or consultant of the Company or
of an Affiliate, the Company shall have the right to repurchase unvested Shares
at the original purchase price. To the extent such rights of
repurchase are to lapse periodically after the date of death, such rights
of repurchase shall lapse on a pro rata portion of the Shares subject to such
Stock Grant as would have lapsed had the Participant not died prior to the end
of the vesting period following the date of death. The proration shall be
based upon the number of days of such vesting period prior to the Participant’s
death.

	14.	 	PURCHASE FOR INVESTMENT.

     Unless the offering and sale of the Shares to be issued upon the
particular exercise or acceptance of a Stock Right shall have been effectively
registered under the Securities Act of 1933, as now in force or hereafter
amended (the “1933 Act”), the Company shall be under no obligation to issue the
Shares covered by such exercise unless and until the following conditions have
been fulfilled:

	a.	 	The person(s) who exercise(s) or accept(s) such Stock Right
shall warrant to the Company, prior to the receipt of such Shares,
that such person(s) are acquiring such Shares for their own
respective accounts, for investment, and not with a view to, or for
sale in connection with, the distribution of any such Shares, in
which event the person(s) acquiring such Shares shall be bound by
the provisions of the following legend which shall be endorsed upon
the certificate(s) evidencing their Shares issued pursuant to such
exercise or such grant:

	 	 	“The shares represented by this certificate have been taken
for investment and they may not be sold or otherwise
transferred by any person, including a pledgee, unless (1)
either (a) a Registration Statement with respect to such
            shares shall be effective under the Securities Act of 1933,
as amended, or (b) the Company shall have received an opinion
of counsel satisfactory to it that an exemption from
registration under such Act is then available, and (2) there
shall have been compliance with all applicable
state securities laws.”

12

 

	b.	 	At the discretion of the Administrator, the Company shall have
received an opinion of its counsel that the Shares may be issued
upon such particular exercise or acceptance in compliance with the
1933 Act without registration thereunder.

	15.	 	DISSOLUTION OR LIQUIDATION OF THE COMPANY.

     Upon the dissolution or liquidation of the Company, all Options granted
under this Plan which as of such date shall not have been exercised and all
Stock Grants which have not been accepted will terminate and become null and
void; provided, however, that if the rights of a Participant or a Participant’s
Survivors have not otherwise terminated and expired, the
Participant or the Participant’s Survivors will have the right immediately
prior to such
dissolution or liquidation to exercise or accept any Stock Right to the
extent that the Stock Right is exercisable or subject to acceptance as of the
date immediately prior to such dissolution or liquidation.

	16.	 	ADJUSTMENTS.

     Upon the occurrence of any of the following events, a Participant’s rights
with respect to any Stock Right granted to him or her hereunder shall be
adjusted as hereinafter provided, unless otherwise specifically provided in the
pertinent Option Agreement or Stock Grant Agreement:

     A. Stock Dividends and Stock Splits. If (i) the shares of Common Stock
shall be subdivided or combined into a greater or smaller number of shares or
if the Company shall issue any shares of Common Stock as a stock dividend on
its outstanding Common Stock, or
(ii) additional shares or new or different shares or other securities of
the Company or other non- cash assets are distributed with respect to such
shares of Common Stock, the number of shares of Common Stock deliverable upon
the exercise or acceptance of such Stock Right shall be appropriately increased
or decreased proportionately, and appropriate adjustments shall be made in the
purchase price per share to reflect such events.

     B. Consolidations or Mergers. If the Company is to be consolidated with
or acquired by another entity in a merger, consolidation, private sale or sale
of all or substantially all of the Company’s assets or otherwise (an
“Acquisition”), the Administrator or the board of directors of any entity
assuming the obligations of the Company hereunder (the “Successor Board”),
shall, as to outstanding Options, either (i) make appropriate provision for the
continuation of such
Options by substituting on an equitable basis for the Shares then subject
to such Options either the consideration payable with respect to the
outstanding shares of Common Stock in connection with the Acquisition or
securities of any successor or acquiring entity; or (ii) upon written notice to
the Participants, provide that all Options must be exercised (to the extent
then exercisable after taking into account any applicable acceleration of
vesting) at the end of which period the Options shall terminate; or (iii)
terminate all Options in exchange for a cash payment equal to the excess of the
Fair Market Value of the Shares subject to such Options (to the extent then
exercisable after taking into account any applicable application of vesting)
over the exercise price thereof.

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     With respect to outstanding Stock Grants, the Administrator or the
Successor Board, shall either (i) make appropriate provisions for the
continuation of such Stock Grants by substituting
on an equitable basis for the Shares then subject to such Stock Grants
either the consideration payable with respect to the outstanding Shares of
Common Stock in connection with the Acquisition or securities of any successor
or acquiring entity; or (ii) upon written notice to the Participants, provide
that all Stock Grants must be accepted (to the extent then subject to
acceptance) within a specified number of days of the date of such notice, at
the end of which period the offer of the Stock Grants shall terminate; or (iii)
terminate all Stock Grants in exchange for a cash payment equal to the excess
of the Fair Market Value of the Shares subject to such Stock Grants over the
purchase price thereof, if any. In addition, in the event of an Acquisition,
the Administrator may waive any or all Company repurchase rights with respect
to outstanding Stock Grants.

     C. Recapitalization or Reorganization. In the event of a recapitalization
or reorganization of the Company (other than a transaction described in
Subparagraph B above) pursuant to which securities of the Company or of another
corporation are issued with respect to the outstanding shares of Common Stock,
a Participant upon exercising or accepting a Stock Right shall be entitled to
receive, for the purchase price, if any, paid upon such exercise or acceptance,
the securities which would have been received if such Stock Right had been
exercised or accepted prior to such recapitalization or reorganization.

     D. Modification of ISOs. Notwithstanding the foregoing, any adjustments
made pursuant to Subparagraph A, B or C with respect to ISOs shall be made only
after the Administrator, after consulting with counsel for the Company,
determines whether such adjustments would constitute a “modification” of such
ISOs (as that term is defined in Section 424(h) of the Code) or would cause any
adverse tax consequences for the holders of such ISOs. If the Administrator
determines that such adjustments made with respect to ISOs would constitute a
modification of such ISOs, it may refrain from making such adjustments, unless
the holder of an IS0 specifically requests in writing that such adjustment be
made and such writing indicates that the holder has full knowledge of the
consequences of such “modification” on his or her income tax treatment with
respect to the ISO.

	17.	 	ISSUANCES OF SECURITIES.

     Except as expressly provided herein, no issuance by the Company of shares
of stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Stock Rights. Except as
expressly provided herein, no adjustments shall be made for dividends paid in
cash or in property (including without limitation, securities) of the Company
prior to any issuance of Shares pursuant to a Stock Right.

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	18.	 	FRACTIONAL SHARES.

     No fractional shares shall be issued under the Plan and the person
exercising a Stock
Right shall receive from the Company cash in lieu of such fractional
shares equal to the Fair Market Value thereof.

	19.	 	CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOs.

     The Administrator, at the written request of any Participant, may in its
discretion take such actions as may be necessary to convert such Participant’s
ISOs (or any portions thereof) that have not been exercised on the date of
conversion into Non-Qualified Options at any time prior to the expiration of
such ISOs, regardless of whether the Participant is an employee of the Company
or an Affiliate at the time of such conversion. Such actions may include, but
not be limited to, extending the exercise period or reducing the exercise price
of the appropriate installments of such Options. At the time of such
conversion, the Administrator (with the consent of the Participant) may impose
such conditions on the exercise of the resulting Non- Qualified Options as the
Administrator in its discretion may determine, provided that such conditions
shall not be inconsistent with this Plan. Nothing in the Plan shall be deemed
to give any Participant the right to have such Participant’s ISOs converted
into Non-Qualified Options, and no such conversion shall occur until and unless
the Administrator takes appropriate action. The Administrator, with the
consent of the Participant, may also terminate any portion of any IS0 that has
not been exercised at the time of such conversion.

	20.	 	WITHHOLDING.

     In the event that any federal, state, or local income taxes, employment
taxes, Federal Insurance Contributions Act (“F.I.C.A.”) withholdings or other
amounts are required by applicable law or governmental regulation to be
withheld from the Participant’s salary, wages or other remuneration in
connection with the exercise or acceptance of a Stock Right or in connection
with a Disqualifying Disposition (as defined in Paragraph 21) or upon the
lapsing of any right of repurchase, the Company may withhold from the
Participant’s compensation, if any, or may require that the Participant advance
in cash to the Company, or to any Affiliate of the Company which employs or
employed the Participant, the amount of such withholdings unless a different
withholding arrangement, including the use of shares of the Company’s Common
Stock or a promissory note, is authorized by the Administrator (and permitted
by law). For purposes hereof, the fair market value of the shares withheld for
purposes of payroll withholding shall be determined in the manner provided in
Paragraph 1 above, as of the most recent practicable date prior to the date of
exercise and shall not exceed the minimum amount required by law to be
withheld. If the fair market value of the shares withheld is less than the
amount of payroll withholdings required, the Participant may be required to
advance the difference in cash to the Company or the Affiliate employer. The
Administrator in its discretion may condition the exercise of an Option for
less than the then Fair Market Value on the Participant’s payment of such
additional withholding.

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	21.	 	NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.

     Each Key Employee who receives an IS0 must agree to notify the Company in
writing immediately after the Key Employee makes a Disqualifying Disposition of
any shares acquired pursuant to the exercise of an ISO. A Disqualifying
Disposition is any disposition (including any sale)of such shares before the
later of (a) two years after the date the Key Employee was granted the ISO, or
(b) one year after the date the Key Employee acquired Shares by exercising the
ISO. If the Key Employee has died before such stock is sold, these holding
period requirements do not apply and no Disqualifying Disposition can occur
thereafter.

	22.	 	TERMINATION OF THE PLAN.

     The Plan will terminate on, the date which is ten (10) years from the
earlier of the date of its adoption and the date of its approval by the
shareholders of the Company. The Plan may be terminated at an earlier date by
vote of the shareholders of the Company; provided, however, that any such
earlier termination shall not affect any Option Agreements or Stock Grant
Agreements executed prior to the effective date of such termination.

	23.	 	AMENDMENT OF THE PLAN AND AGREEMENTS.

     The Plan may be amended by the shareholders of the Company. The Plan may
also be amended by the Administrator, including, without limitation, to the
extent necessary to qualify any or all outstanding Stock Rights granted under
the Plan or Stock Rights to be granted under the Plan for favorable federal
income tax treatment (including deferral of taxation upon exercise) as may be
afforded incentive stock options under Section 422 of the Code, and to the
extent necessary to qualify the shares issuable upon exercise or acceptance of
any outstanding Stock Rights granted, or Stock Rights to be granted, under the
Plan for listing on any national securities exchange or quotation in any
national automated quotation system of securities dealers. Any amendment
approved by the Administrator which the Administrator determines is of a scope
that requires shareholder approval shall be subject to obtaining such
shareholder approval. Any modification or amendment of the Plan shall not,
without the consent of a Participant, adversely affect his or her rights under
a Stock Right previously granted to him or her. With the consent of the
Participant affected, the Administrator may amend outstanding Option Agreements
and Stock Grant Agreements in a manner which may be adverse to the Participant
but which is not inconsistent with the Plan. In the discretion of the
Administrator, outstanding Option Agreements and Stock Grant Agreements may be
amended by the Administrator in a manner which is not adverse to the
Participant.

	24.	 	EMPLOYMENT OR OTHER RELATIONSHIP.

     Nothing in this Plan or any Option Agreement or Stock Grant Agreement
shall be deemed to prevent the Company or an Affiliate from terminating the
employment, consultancy or director status of a Participant, nor to prevent a
Participant from terminating his or her own employment, consultancy or director
status or to give any Participant a right to be retained in employment or other
service by the Company or any Affiliate for any period of time.

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	25.	 	RESTRICTION ON ISSUE OF SHARES.

     (a) Notwithstanding the provisions of Paragraph 8, the Company may delay
the issuance of Shares covered by the exercise of an option and the delivery of
a certificate for such Shares until the delivery or distribution of any shares
issued under this Plan complies with all applicable laws (including without
limitation, the Securities Act of 1933, as amended), and with the applicable
rules of any stock exchange upon which the shares of the Company are listed or
traded.

     (b) It is intended that all exercises of options shall be effective, and
the Company shall use its best efforts to bring about compliance with all
applicable legal and regulatory requirements within a reasonable time, except
that the Company shall be under no obligation to qualify Shares or to cause a
registration statement or a post-effective amendment to any registration
statement to be prepared for the purpose of covering the issue of Shares in
respect of which any option may be exercised, except as otherwise agreed to by
the Company in writing.

	26.	 	RESERVATION OF STOCK.

     The Company shall at all times during the term of the Plan reserve and
keep available such number of Shares as will be sufficient to satisfy the
requirements of the Plan and shall pay all fees and expenses necessarily
incurred by the Company in connection therewith.

	27.	 	NOTICES.

     Any communication or notice required or permitted to be given under the
Plan shall be in writing, and mailed by registered or certified mail or
delivered by hand, if to the Company, to its principal place of business,
attention: Chief Financial Officer, and, if to a Participant, to the address as
appearing on the records of the Company.

	28.	 	GOVERNING LAW.

     This Plan shall be construed and enforced in accordance with the law of
The Commonwealth of Massachusetts.

	29.	 	APPROVAL OF STOCKHOLDERS.

     The Plan shall be subject to approval by the vote of stockholders holding
at least a majority of the voting stock of the Company present, or represented,
and entitled to vote at a duly held stockholders’ meeting, or by written
consent of the stockholders as provided for under applicable state law, within
twelve (12) months after the adoption of the Plan by the Board of Directors and
shall take effect as of the date of adoption by the Board of Directors upon
such approval. The Committee may grant options under the Plan prior to such
approval, but any such option shall become effective as of the date of grant
only upon such approval and, accordingly, no such option may be exercisable
prior to such approval.

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	 	 	Adopted by Board of
Directors: _______________
	 
	 	 	Adopted by Stockholders: ___________________

18

 

EXHIBIT A

DEFINITIONS

“Administrator” means the Board of Directors, unless it has delegated power to
act on its behalf to the Committee, in which case the Administrator means the
Committee.

“Affiliate” means a corporation which, for purposes of Section 424 of the Code,
is a parent or subsidiary of the Company, direct or indirect.

“Board of Directors” means the Board of Directors of the Company.

“Code” means the United States Internal Revenue Code of 1986, as amended, and
all rules and regulations promulgated thereunder by the regulatory agencies
with authority thereunder.

“Committee” means the committee of the Board of Directors to which the Board of
Directors has delegated power to act under or pursuant to the provisions of the
Plan.

“Common Stock” means shares of the Company’s common stock, $.001 par value per
share.

“Company” means Taqua, Inc., a Delaware corporation.

“Disability” or “Disabled” means permanent and total disability as defined in
Section 22(e)(3) of the Code. The Administrator shall make the determination
both of whether Disability has occurred and the date of its occurrence (unless
a procedure for such determination is set forth in another agreement between
the Company and such Participant, in which case such procedure shall be used
for such determination). If requested, the Participant shall be examined by a
physician selected or approved by the Administrator, the cost of which
examination shall be paid for by the Company.

“Fair Market Value” of a Share of Common Stock means:

     (1) If the Common Stock is listed on a national securities exchange or
traded in the over-the-counter market and sales prices are regularly reported
for the Common Stock, the closing or last price of the Common Stock on the
Composite Tape or other comparable reporting system for the trading day
immediately preceding the applicable date;

     (2) If the Common Stock is not traded on a national securities exchange
but is traded on the over-the-counter market, if sales prices are not regularly
reported for the Common Stock for the trading day referred to in clause (l),
and if bid and asked prices for the Common Stock are regularly reported, the
mean between the bid and the asked price for the Common Stock at the close of
trading in the over-the-counter market for the trading day on which Common
Stock was traded immediately preceding the applicable date; and

19

 

     (3) If the Common Stock is neither listed on a national securities
exchange nor traded in the over-the-counter market, such value as the
Administrator, in good faith, shall determine.

’’ISO” means an option meant to qualify as an incentive stock option under
Section 422 of the Code.

“Key Employee” means an employee of the Company, an Affiliate or a Strategic
Partner (including, without limitation, an employee who is also serving as an
officer or director of the Company or of an Affiliate), designated by the
Administrator to be eligible to be granted one or more Stock Rights under the
Plan.

“Non-Qualified Option” means an option which is not intended to qualify as an
ISO.

“Option” means an IS0 or Non-Qualified Option granted under the Plan.

“Option Agreement” means an agreement between the Company and a Participant
delivered pursuant to the Plan, in such form as the Administrator shall
approve.

“Participant” means a Key Employee, director or consultant of the Company or
its Affiliates to whom one or more Stock Rights are granted under the Plan and
who are eligible to participate in this Plan under Paragraph 2. As used
herein, “Participant” shall include “Participant’s Survivors” where the context
requires.

’’Plan” means this Taqua, Inc. 2002 Stock Incentive Plan.

“Shares” means shares of the Common Stock as to which Stock Rights have been or
may be granted under the Plan or any shares of capital stock into which the
Shares are changed or for which they are exchanged within the provisions of the
Plan.

“Stock Grant” means a grant by the Company of Shares under the Plan also means
the grant by the Company of a right to purchase Shares under a restricted stock
purchase arrangement on terms that the Administrator deems appropriate.

“Stock Grant Agreement” means an agreement between the Company and a
Participant delivered pursuant to the Plan, in such form as the Administrator
shall approve.

“Stock Right” means a right to Shares of the Company granted pursuant to the
Plan under a ISO, a Non-Qualified Option or a Stock Grant.

’’Strategic Partners” means any contractor, joint venture partner or other
entity having a relationship with the Company, which relationship the
Administrator, at its discretion, determines will promote the success of the
Company.

20

 

“Survivors” means a deceased Participant’s legal representatives and/or any
person or persons who acquired the Participant’s rights to a Stock Right by
will or by the laws of descent and distribution.

21

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