Document:

Exhibit 10.6

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made
this 27th day
of October, 2010, by Walker & Dunlop, Inc., a Maryland
corporation (the “Company”) with its principal place of business at 7501
Wisconsin Avenue, Suite 1200, Bethesda, MD 20814, and Richard M. Lucas,
residing at  the address on file with the
Company (the “Executive”).

 

WHEREAS, the parties desire to enter into this
Agreement to reflect the Executive’s executive capacities in the Company’s
business and to provide for the Company’s employment of the Executive; and

 

WHEREAS, the parties wish to set forth the terms
and conditions of that employment;

 

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

 

1.                                      Term of Employment

 

The Company hereby employs the Executive, and the
Executive hereby accepts employment with the Company, upon the terms and
conditions set forth in this Agreement. 
Unless terminated earlier pursuant to Section 5, the Executive’s
employment pursuant to this Agreement shall be for the three (3) year
period commencing on the date of effectiveness of the Company’s registration
statement on Form S-1 (the “Commencement Date”) and ending on the third
anniversary of the Commencement Date (the “Initial Term”).  The Initial Term shall be extended for an
additional twelve (12) months on the third and each subsequent anniversary of
the Commencement Date unless the Company or the Executive provides written
notice to the contrary at least sixty (60) days before the applicable
anniversary of the Commencement Date. 
The Initial Term, together with any such extensions, shall be referred
to herein as the “Employment Period.” In the event that the Board of Directors
of the Company (the “Board of Directors”) determines that active efforts to
complete the closing of the initial public offering have been abandoned, this
Agreement shall become null and void.

 

2.                                      Title; Duties

 

The Executive shall be employed as Executive Vice
President and General Counsel of the Company. 
The Executive shall report to Chief Executive Officer, who shall have
the authority to direct, control and supervise the activities of the
Executive.  The Executive shall perform
such services consistent with his position as may be assigned to him from time
to time by the Chief Executive Officer and are consistent with the bylaws of
the Company as it may be amended from time to time, including, but not limited
to, managing the affairs of the Company.

 

3.                                      Extent of Services

 

(a)                                  General.  The Executive agrees not to engage in any
business activities during the Employment Period except those which are for the
sole benefit of the Company and its subsidiaries, and to devote his entire
business time, attention, skill and

 

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effort
to the performance of his duties under this Agreement.  Notwithstanding the foregoing, the Executive
may, without impairing or otherwise adversely affecting the Executive’s
performance of his duties to the Company, (i) engage in personal
investments and charitable, professional and civic activities, and (ii) with
the prior approval of the Board of Directors, serve on the boards of directors
of corporations other than the Company, provided, however, that no such
approval shall be necessary for the Executive’s continued service on any board
of directors on which he was serving on the date of this Agreement, all of
which have been previously disclosed to the Board of Directors in writing and
provided further, that in no event shall the Executive be permitted to serve on
the board of directors of any other entity that competes with the Company in
the multifamily finance business.  The
Executive shall perform his duties to the best of his ability, shall adhere to
the Company’s published policies and procedures, and shall use his best efforts
to promote the Company’s interests, reputation, business and welfare.

 

(b)                                 Corporate Opportunities.  The Executive agrees that he will not take
personal advantage of any business opportunities which arise during his
employment with the Company and which may be of benefit to the Company.  All material facts regarding such
opportunities must be promptly reported by the Executive to the Board of
Directors for consideration by the Company.

 

4.                                      Compensation and Benefits

 

(a)                                  Salary.  The Company shall pay the Executive a gross
base annual salary (“Base Salary”) of $250,000.00.  The Base Salary shall be payable in arrears
in approximately equal semi-monthly installments (except that the first and
last such semi-monthly installments may be prorated if necessary) on the
Company’s regularly scheduled payroll dates, minus such deductions as may be
required by law or reasonably requested by the Executive.  The Company’s Compensation Committee (the “Compensation
Committee”) shall review his Base Salary annually in conjunction with its
regular review of employee salaries and may increase (but not decrease) his
Base Salary as in effect from time to time as the Compensation Committee shall
deem appropriate.

 

(b)                                 Annual Bonus. Executive shall be
entitled to earn bonuses with respect to each fiscal year (or partial fiscal
year), based upon Executive’s and the Company’s achievement of performance
objectives set by the Company within the first three (3) months of each
fiscal year of the Employment Period, with a target bonus of 100% of Executive’s
Base Salary for such fiscal year (or partial fiscal year).  Any such bonus earned by the Executive shall
be paid annually by March 15 of the year following the end of the year for
which the bonus was earned.

 

(c)                                  Options and Restricted Stock Grants.  The Executive will be eligible for grants of
options to purchase the Company’s common stock and grants of restricted shares
of the Company’s common stock subject to certain time vesting requirements and
other conditions set forth in the applicable award agreement.

 

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(d)                                 Other Benefits.  The Executive shall be entitled to paid time
off and holiday pay in accordance with the Company’s policies in effect from
time to time and shall be eligible to participate in such life, health, and
disability insurance, pension, deferred compensation and incentive plans,
options and awards, performance bonuses and other benefits as the Company
extends, as a matter of policy, to its executive employees.

 

(e)                                  Reimbursement of Business Expenses.  The Company shall reimburse the Executive for
all reasonable travel, entertainment and other expenses incurred or paid by the
Executive in connection with, or related to, the performance of his duties,
responsibilities or services under this Agreement, upon presentation by the
Executive of documentation, expense statements, vouchers, and/or such other
supporting information as the Company may reasonably request.

 

(f)                                Timing of Reimbursements.  Any reimbursement under this Agreement that
is taxable to the Executive shall be made in no event later than sixty (60)
days following the calendar year in which the Executive incurred the expense.

 

5.                                      Termination

 

(a)                                  Termination by the Company for Cause.  The Company may terminate the Executive’s
employment under this Agreement at any time for Cause, upon written notice by
the Company to the Executive.  For
purposes of this Agreement, “Cause” for termination shall mean any of the
following: (i) the conviction of the Executive of, or the entry of a plea
of guilty or nolo contendere by the Executive to, any felony; (ii) fraud,
misappropriation or embezzlement by the Executive; (iii) the Executive’s
willful failure or gross negligence in the performance of his assigned duties
for the Company, which failure or negligence continues for more than fifteen
(15) calendar days following the Executive’s receipt of written notice of such
willful failure or gross negligence; (iv) the Executive’s breach of any of
his fiduciary duties to the Company; (v) a material violation of a
material Company policy which, if such violation is curable, such failure is
not cured within fifteen (15) calendar days following the Executive’s receipt
of written notice of such failure, with such detail as  sufficient to apprise Executive of the nature
and extent of such failure; or (vi) the material breach by the Executive
of any material term of this Agreement, which, if such breach is curable, such
breach is not cured within fifteen (15) calendar days following the Executive’s
receipt of written notice of such breach, with such detail as sufficient to
apprise Executive of the nature and extent of such breach.

 

(b)                                 Termination by the Company Without Cause or by the Executive Without
Good Reason.  Either party may terminate this Agreement at
any time without Cause (in the case of the Company) or without Good Reason (in
the case of the Executive), upon giving the other party sixty (60) days’
written notice.  At the Company’s sole
discretion, it may substitute sixty (60) days’ Base Salary (or any lesser
portion for any shortened period provided) in lieu of notice.  Any Base Salary paid to the

 

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Executive
in lieu of notice shall not be offset against any entitlement the Executive may
have to the Severance Payment pursuant to Section 6(c).  For purposes of this Agreement, in the event
the Company elects not to extend the Employment Period in accordance with Section 1
hereof, Executive’s employment shall terminate on the last day of the
Employment Period and such election shall be deemed a termination by the
Company without Cause.

 

(c)                                  Termination by Executive for Good Reason.  The Executive may terminate his employment
under this Agreement at any time for Good Reason, upon written notice by the
Executive to the Company.  For purposes
of this Agreement, Good Reason for termination shall mean, without the
Executive’s consent: (i) the assignment to the Executive of substantial
duties or responsibilities inconsistent with the Executive’s position at the
Company, or any other action by the Company which results in a substantial
diminution of the Executive’s duties or responsibilities other than any such
reduction which is remedied by the Company within thirty (30) days of receipt
of written notice thereof from the Executive; (ii) a requirement that the
Executive work principally from a location that is twenty (20) miles further
from the Executive’s residence than the Company’s address first written above; (iii) a
ten (10) percent or greater reduction in the Executive’s aggregate Base
Salary and other compensation (including the target bonus amount and retirement
plan, welfare plans and fringe benefits) taken as a whole, excluding any
reductions caused by the failure to achieve performance targets; or (iv) any
material breach by the Company of this Agreement.  Good Reason shall not exist pursuant to any
subsection of this Section 5(c) unless (A) the Executive shall
have delivered notice to the Board within ninety (90) days of the occurrence of
such event constituting Good Reason, and (B) the Board fails to remedy the
circumstances giving rise to the Executive’s notice within thirty (30) days of
receipt of notice.  The Executive must
terminate his employment under this Section 5(c) at a time agreed
reasonably with the Company, but in any event within one hundred fifty (150)
days  from the occurrence of an event
constituting Good Reason.  For purposes
of Good Reason, the Company shall be defined to include any successor to the
Company which has assumed the obligations of the Company through merger,
acquisition, stock purchase, asset purchase or otherwise.

 

(d)                                 Executive’s Death or Disability.  The Executive’s employment shall terminate
immediately upon his death or, upon written notice as set forth below, his
Disability.  As used in this Agreement, “Disability”
shall mean such physical or mental impairment as would render the Executive
unable to perform each of the essential duties of the Executive’s position by
reason of a medically determinable physical or mental impairment which is
potentially permanent in character or which can be expected to last for a
continuous period of not less than twelve (12) months.  If the Employment Period is terminated by
reason of the Executive’s Disability, either party shall give thirty (30) days’
advance written notice to that effect to the other.

 

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(e)                                  Executive’s Retirement.  The Executive’s employment shall terminate
upon his Retirement.  As used in this
Agreement, “Retirement” shall mean the point in which the Executive has reached
the age of sixty five (65) and has decided to exit the workforce
completely.  If the Employment Period is
terminated by reason of the Executive’s Retirement, the Executive shall give
one hundred eighty (180) days’ advance notice to the effect to the Company.

 

6.                                      Effect of Termination

 

(a)                                  General.  Regardless of the reason for any termination
of this Agreement and subject to this Section 6, the Executive (or the
Executive’s estate if the Employment Period ends on account of the Executive’s
death) shall be entitled to (i) payment of any unpaid portion of his Base
Salary through the effective date of termination; (ii) reimbursement for
any outstanding reasonable business expense he has incurred in performing his
duties hereunder in accordance with Company policy; (iii) continued
insurance benefits to the extent required by law; (iv) payment of any
vested but unpaid rights as required independent of this Agreement by the terms
of any bonus or other incentive pay or equity plan, or any other employee
benefit plan or program of the Company; and (v) except in the case of
Termination by the Company for Cause, any bonus or incentive compensation
amount that had been accrued through the effective date of termination but not
paid.  Upon termination of this Agreement
for any reason, the Executive shall resign from all boards and committees of
the Company, its affiliates and its subsidiaries.

 

(b)                                 Termination by the Company for Cause or by Executive Without Good Reason.  If the Company terminates the
Executive’s employment for Cause or the Executive terminates his employment
without Good Reason, the Executive shall have no rights or claims against the
Company except to receive the payments and benefits described in Section 6(a).

 

(c)                                  Termination by the Company Without Cause or by the Executive with Good
Reason.  If
the Company terminates the Executive’s employment without Cause pursuant to Section 5(b),
or the Executive terminates employment with Good Reason pursuant to Section 5(c),
the Executive shall be entitled to receive, in addition to the items referenced
in Section 6(a) (other than any bonus or incentive compensation as to
which a pro rata amount shall be paid only to the extent performance goals for
the calendar year of termination are achieved), the following:

 

(i)                                     continued payment of his Base Salary, at the
rate in effect on his last day of employment (but in no event in an annual
amount less than as set forth in Section 4(a)), for a period of twelve
(12) months.  Such amount shall be paid
in approximately equal installments on the Company’s regularly

 

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scheduled payroll dates, subject to all legally
required payroll deductions and withholdings for sums owed by the Executive to
the Company;

 

(ii)                                  continued payment by the Company for the
Executive’s life and health insurance coverage for twelve (12) months to the
same extent that the Company paid for such coverage immediately prior to the
termination of the Executive’s employment and subject to the eligibility requirements
and other terms and conditions of such insurance coverage;

 

(iii)                               payments equal to two (2) times the
average annual bonus earned by the Executive over the two (2) preceding
calendar years (or if the Executive has not been employed for two (2) prior
calendar years, payments equal to two (2) times the Executive’s target
bonus for the year of termination).  For
example: if the Executive’s annual bonus over the preceding two (2) years
was $300,000 and $0, the average would be $150,000 and the payments would equal
$300,000.  An amount equal to the average
annual bonus (or target bonus, as applicable), and the pro rata bonus for the
year of termination, if any, payable under Section 6(a) shall be paid
to the Executive within sixty (60) days following the end of the fiscal year in
which such termination occurs and an amount equal to the average annual bonus,
if any (or target bonus, as applicable) shall be paid to the Executive within
ten (10) days after the end of the Restricted Period; and

 

(iv)                              vesting as of the last day of his employment
in any unvested portion of any option and restricted stock previously granted
to the Executive by the Company.

 

None
of the benefits described in this Section 6(c) (the “Severance
Payment”) will be payable unless the Executive has signed a general release
(attached hereto as Exhibit A) within forty five (45) days of date
of termination, which has (and not until it has) become irrevocable,
satisfactory to the Company in the reasonable exercise of its discretion,
releasing the Company, its affiliates, and their Directors, officers and
employees, from any and all claims or potential claims arising from or related
to the Executive’s employment or termination of employment.

 

(d)                                 Termination In the Event of Death, Disability or Retirement.

 

In the event of a termination of employment due to
death, disability or Retirement, the Executive shall be entitled to receive the
items referenced in Section 6(a) (except, in the case of a
termination due to Retirement, any bonus or incentive compensation, as to which
a pro rata amount shall be paid only to the extent performance goals for the
calendar year of termination are achieved and which amount, if any, shall be
paid to the Executive within sixty (60) days following the end of the fiscal
year in which such termination occurs).

 

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(i)                                     If the Executive’s employment terminates
because of his death, any unvested portion of any option and restricted stock
previously granted to the Executive by the Company shall become fully vested as
of the date of his death.  In addition,
the Executive’s estate shall be entitled to receive a pro-rata share of any
performance bonus to which he otherwise would have been entitled for the fiscal
year in which his death occurs.

 

(ii)                                  In the event the Executive’s employment
terminates due to his Disability, he shall be entitled to receive his Base
Salary through the effective date of termination.  In addition, as of the effective date of the
termination notice specified in Section 5(d), the Executive shall vest in
any unvested portion of any option and restricted stock previously granted to
the Executive by the Company and the Executive shall be entitled to receive a
pro-rata share of any performance bonus to which he otherwise would have been
entitled for the fiscal year in which his disability occurs.

 

(iii)                               In the event the Executive’s employment
terminates due to his Retirement, any unvested portion of any option and
restricted stock previously granted to the Executive by the Company shall
become fully vested as of the date of his termination.

 

7.                                      Confidentiality

 

(a)                                  Definition of Proprietary Information.  The Executive acknowledges that he may be
furnished or may otherwise receive or have access to confidential information
which relates to the Company’s past, present or future business activities,
strategies, services or products, research and development; financial analysis
and data; improvements, inventions, processes, techniques, designs or other
technical data; profit margins and other financial information; fee
arrangements; compilations for marketing or development; confidential personnel
and payroll information; or other information regarding administrative,
management, or financial activities of the Company, or of a third party which
provided proprietary information to the Company on a confidential basis.  All such information, including in any
electronic form, and including any materials or documents containing such information,
shall be considered by the Company and the Executive as proprietary and
confidential (the “Proprietary Information”).

 

(b)                                 Exclusions.  Notwithstanding the foregoing, Proprietary
Information shall not include information in the public domain not as a result
of a breach of any duty by the Executive or any other person.

 

(c)                                  Obligations.  Both during and after the Employment Period,
the Executive agrees to preserve and protect the confidentiality of the
Proprietary Information and all physical forms thereof, whether disclosed to
him before this Agreement is signed or afterward.  In addition, the Executive shall not (i) disclose
or disseminate the

 

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Proprietary
Information to any third party, including employees of the Company (or its
affiliates) without a legitimate business need to know during the Employment
Period; (ii) remove the Proprietary Information from the Company’s
premises without a valid business purpose; or (iii) use the Proprietary
Information for his own benefit or for the benefit of any third party.

 

(d)                                 Return of Proprietary Information.  The Executive acknowledges and agrees that
all the Proprietary Information used or generated during the course of working
for the Company is the property of the Company. 
The Executive agrees to deliver to the Company all documents and other
tangibles containing the Proprietary Information at any time upon request by
the Board of Directors during his employment and immediately upon termination
of his employment.

 

8.                                      Noncompetition

 

(a)                                  Restriction on Competition.  For the period of the Executive’s employment
with the Company and for twelve (12) months following the expiration or
termination of the Executive’s employment by the Company (the “Restricted
Period”), the Executive agrees not to engage, directly or indirectly, as a
manager, employee, consultant, partner, principal, agent, representative, or in
any other individual or representative capacity in any material business that
the Company conducts as of the date of the Executive’s termination of
employment, including but not limited to the multifamily finance business,
where material is defined as fifteen (15) percent of the gross revenues of the
Company based on the most recent quarterly earnings.  Executive further agrees that for the period
of the Executive’s employment with the Company and for the Restricted Period,
the Executive will not engage, directly or indirectly, as an owner, director,
trustee, member, stockholder, or in any other corporate capacity in any
material business that the Company conducts as of the date of the Executive’s
termination of employment. 
Notwithstanding the foregoing, the Executive shall not be deemed to have
violated this Section 8(a) solely (i) by reason of his passive
ownership of 1% or less of the outstanding stock of any publicly traded
corporation or other entity, (ii) by providing legal, accounting or audit
services as an employee or partner of a professional services organization or (iii) by
providing services to any investment banking or other institution that do not
relate to any material business that the Company conducts as of the date of the
Executive’s termination of employment.

 

(b)                                 Non-Solicitation of Clients.  During the Restricted Period, the Executive
agrees not to solicit, directly or indirectly, on his own behalf or on behalf
of any other person(s), any client of the Company to whom the Company had
provided services at any time during the Executive’s employment with the
Company in any line of business that the Company conducts as of the date of the
Executive’s termination of employment or that the Company is actively
soliciting, for the purpose of marketing or providing any service competitive
with any service then offered by the Company.

 

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(c)                                  Non-Solicitation of Employees.  During the Restricted Period, the Executive
agrees that he will not, directly or indirectly, hire or attempt to hire or
cause any business, other than an affiliate of the Company, to hire any person
who is then or was at any time during the preceding six (6) months an
employee of the Company and who is at the time of such hire or attempted hire,
or was at the date of such employee’s separation from the Company a vice
president, senior vice president or executive vice president or other senior
executive employee of the Company.

 

(d)                                 Acknowledgement.  The Executive acknowledges that he will
acquire much Proprietary Information concerning the past, present and future
business of the Company as the result of his employment, as well as access to
the relationships between the Company and its clients and employees.  The Executive further acknowledges that the
business of the Company is very competitive and that competition by him in that
business during his employment, or after his employment terminates, would
severely injure the Company.  The
Executive understands and agrees that the restrictions contained in this Section 8
are reasonable and are required for the Company’s legitimate protection, and do
not unduly limit his ability to earn a livelihood.

 

(e)                                  Rights and Remedies upon Breach.  The Executive acknowledges and agrees that
any breach by him of any of the provisions of Sections 7 and 8 (the “Restrictive
Covenants”) would result in irreparable injury and damage for which money damages
would not provide an adequate remedy. 
Therefore, if the Executive breaches, or threatens to commit a breach
of, any of the provisions of the Restrictive Covenants, the Company and its
affiliates, including the Company, shall have the following rights and
remedies, each of which rights and remedies shall be independent of the other
and severally enforceable, and all of which rights and remedies shall be in
addition to, and not in lieu of, any other rights and remedies available to the
Company and its affiliates, including the Company, under law or in equity
(including, without limitation, the recovery of damages):

 

(i)                                     The right and remedy to have the Restrictive
Covenants specifically enforced (without posting bond and without the need to
prove damages) by any court of competent jurisdiction, including, without
limitation, the right to an entry against the Executive of restraining orders
and injunctions (preliminary, mandatory, temporary and permanent) against
violations, threatened or actual, and whether or not then continuing, of such
covenants; and

 

(ii)                                  The right and remedy to require the Executive
to account for and pay over to the Company and its affiliates all compensation,
profits, monies, accruals, increments or other benefits (collectively, “Benefits”)
derived or received by him as the result of any transactions constituting a
breach of the Restrictive Covenants, and the Executive shall account for and
pay over such Benefits to the Company and, if applicable, its affected
affiliates.

 

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(f)                                    Without limiting Section 13(j), if any court or other
decision-maker of competent jurisdiction determines that any of the Restrictive
Covenants, or any part thereof, is unenforceable because of the duration or
geographical scope of such provision, then, after such determination has become
final and unappealable, the duration or scope of such provision, as the case
may be, shall be reduced so that such provision becomes enforceable and, in its
reduced form, such provision shall then be enforceable and shall be enforced.

 

9.                                      Executive Representation

 

The Executive represents and warrants to the
Company that he is not now under any obligation of a contractual or other
nature to any person, business or other entity which is inconsistent or in
conflict with this Agreement or which would prevent him from performing his
obligations under this Agreement.

 

10.                               Mediation and Arbitration

 

(a)                                  Except as provided in Section 10(b) and 10(c), any disputes
between the Company and the Executive in any way concerning the Executive’s
employment, the termination of his employment, this Agreement or its
enforcement shall be subject to mediation. 
If the Company and the Executive
cannot agree upon a mediator, each shall select one name from a list of
mediators maintained by any bona fide dispute resolution provider or other
private mediator; the two selected shall then choose a third person who will
serve as the sole mediator. The first mediation session shall occur within
forty five (45) calendar days following the notice of a dispute.  If within sixty (60) days of the first
mediation session the claim is not resolved, either party may request that the
dispute be settled exclusively by arbitration in the state of Maryland
by a single arbitrator, selected in the same manner as the mediator, in
accordance with the National Rules for the Resolution of Employment
Disputes of the American Arbitration Association in effect at the time of
submission to arbitration.  Judgment may
be entered on the arbitrators’ award in any court having jurisdiction.  For purposes of entering any judgment upon an
award rendered by the arbitrators, any or all of the following courts have
jurisdiction:  (i) the United States
District Court for the Fourth Circuit, (ii) any of the courts of the State
of Maryland, or (iii) any other court having jurisdiction.  Any service of process or notice requirements
in any such proceeding shall be satisfied if the rules of such court
relating thereto have been substantially satisfied.  The Company and the Executive waive to the
fullest extent permitted by applicable law, any objection which it may now or
hereafter have to such jurisdiction and any defense of inconvenient forum.  A judgment upon an award rendered by the
arbitrators may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. 
Each party shall bear its or his costs and expenses arising in
connection with any arbitration proceeding.

 

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(b)                                 Notwithstanding the foregoing, the Company, in its sole discretion, may
bring an action in any court of competent jurisdiction to seek injunctive
relief and such other relief as the Company shall elect to enforce the
Restrictive Covenants.  If the courts of
any one or more of such jurisdictions hold the Restrictive Covenants wholly
unenforceable by reason of breadth of scope or otherwise it is the intention of
the Company and the Executive that such determination not bar or in any way
affect the Company’s right, or the right of any of its affiliates, to the
relief provided in Section 8(e) above in the courts of any other
jurisdiction within the geographical scope of such Restrictive Covenants, as to
breaches of such Restrictive Covenants in such other respective jurisdictions,
such Restrictive Covenants as they relate to each jurisdiction being, for this
purpose, severable, diverse and independent covenants, subject, where
appropriate, to the doctrine of res judicata. 
The parties hereby agree to waive any right to a trial by jury for any
and all disputes hereunder (whether or not relating to the Restrictive
Covenants).

 

(c)                                  Notwithstanding the foregoing, the Company or the Executive may bring an
action in any court of competent jurisdiction to resolve any dispute under or
seek the enforcement of Section 6.

 

11.                               Section 409A.

 

To the extent the Executive would be subject to the
additional twenty (20) percent tax imposed on certain deferred compensation
arrangements pursuant to Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”), as a result of any provision of this Agreement,
such provision shall be deemed amended to the minimum extent necessary to avoid
application of such tax and preserve to the maximum extent possible the
original intent and economic benefit to the Executive and the Company, and the
parties shall promptly execute any amendment reasonably necessary to implement
this Section 11.

 

(a)                              For purposes of Section 409A, the Executive’s right to receive
installment payments pursuant to this Agreement including, without limitation,
each severance payment and health insurance payment shall be treated as a right
to receive a series of separate and distinct payments.

 

(b)                                 The Executive will be deemed to have a date of termination for purposes
of determining the timing of any payments or benefits hereunder that are
classified as deferred compensation only upon a “separation from service”
within the meaning of Section 409A

 

(c)                                  Notwithstanding any other provision of this Agreement to the contrary,
if at the time of the Executive’s separation from service, (i) the
Executive is a specified employee (within the meaning of Section 409A and
using the identification methodology selected by the Company from time to
time), and (ii) the Company makes a good faith determination that an
amount payable on account of such separation from service to the Executive
constitutes deferred compensation (within the meaning of Section 409A) the
payment of which is required to be 

 

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delayed pursuant to the six (6) month delay rule set
forth in Section 409A in order to avoid taxes or penalties under Section 409A
(the “Delay Period”), then the Company will not pay such amount on the
otherwise scheduled payment date but will instead pay it in a lump sum on the
first business day after such six (6) month period (or upon the Executive’s
death, if earlier), together with interest for the period of delay, compounded
annually, equal to the prime rate (as published in the Wall Street Journal) in
effect as of the dates the payments should otherwise have been provided.   To the extent that any benefits to be
provided during the Delay Period are considered deferred compensation under Section 409A
provided on account of a “separation from service,” and such benefits are not
otherwise exempt from Section 409A, the Executive shall pay the cost of
such benefit during the Delay Period, and the Company shall reimburse the
Executive, to the extent that such costs would otherwise have been paid by the
Company or to the extent that such benefits would otherwise have been provided
by the Company at no cost to the Executive, the Company’s share of the cost of
such benefits upon expiration of the Delay Period, and any remaining benefits
shall be reimbursed or provided by the Company in accordance with the
procedures specified herein.

 

(d)                                 (A) Any amount that the Executive is entitled to be reimbursed
under this Agreement will be reimbursed to the Executive as promptly as
practical and in any event not later than the last day of the calendar year
after the calendar year in which the expenses are incurred, (B) any right
to reimbursement or in kind benefits will not be subject to liquidation or
exchange for another benefit, and (C) the amount of the expenses eligible
for reimbursement during any taxable year will not affect the amount of
expenses eligible for reimbursement in any other taxable year.

 

(e)                                  Whenever a payment under this Agreement specifies a payment period with
reference to a number of days (e.g., “payment shall be made within thirty (30)
days following the date of termination”), the actual date of payment within the
specified period shall be within the sole discretion of the Company.

 

12.                               Clawback Policies

 

The Executive is subject to any recoupment or
clawback policies that the Company may implement or maintain at any time
regarding incentive-based compensation, which is granted or awarded to
Executive on or after the date of this Agreement.  Such policies may include the right to
recover incentive-based compensation (including stock options awarded as
compensation) awarded or received during the three-year period preceding the
date on which the Company is required to prepare an accounting restatement due
to material noncompliance with any financial reporting requirement under
federal securities laws.  The Executive
agrees to amend any awards and agreements entered into on or after the date of
this Agreement as the Company may request to reasonably implement to policies.

 

12

 

13.                               Miscellaneous

 

(a)                                 Notices.  All notices required or permitted under this
Agreement shall be in writing and shall be deemed effective (i) upon
personal delivery, (ii) upon deposit with the United States Postal
Service, by registered or certified mail, postage prepaid, or (iii) in the
case of facsimile transmission or delivery by nationally recognized overnight
delivery service, when received, addressed as follows:

 

(b)                                 If to the Company or the Company, to:

 

Walker & Dunlop, Inc.

7501 Wisconsin Avenue

Suite 1200

Bethesda, MD 20814

Attention: William M.
Walker

Fax: (301) 634-2149

 

(i)                                     If to the Executive, to:

 

Richard M. Lucas

Address on file with the Company

 

or to such other address or addresses as either party
shall designate to the other in writing from time to time by like notice.

 

(c)                                  Pronouns.  Whenever the context may require, any
pronouns used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular forms of nouns and pronouns shall
include the plural, and vice versa.

 

(d)                                 Entire Agreement.  This Agreement constitutes the entire
agreement between the parties and supersedes all prior agreements and
understandings, whether written or oral, relating to the subject matter of this
Agreement.

 

(e)                                  Amendment.  This Agreement may be amended or modified
only by a written instrument executed by both the Company and the Executive,
which amendment or modification is consented to by the Company.

 

(f)                                   Governing Law.  This Agreement shall be construed,
interpreted and enforced in accordance with the laws of the State of Maryland,
without regard to its conflicts of laws principles.

 

(g)                                  Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of both parties and their respective successors and
assigns, including any entity with which or into which the Company or the
Company may be merged or which may succeed to its assets or business or any
entity to which the Company or the Company may assign its rights and
obligations under this Agreement; 

 

13

 

provided,
however, that the obligations of the Executive are personal and shall not be
assigned or delegated by him.

 

(h)                                 Waiver.  No delays or omission by the Company, the
Company or the Executive in exercising any right under this Agreement shall
operate as a waiver of that or any other right. 
A waiver or consent by the Company shall not be effective unless consented
to by the Company.  A waiver or consent
given by the Company or the Executive on any one occasion shall be effective
only in that instance and shall not be construed as a bar or waiver of any
right on any other occasion.

 

(i)                                     Captions.  The captions appearing in this Agreement are
for convenience of reference only and in no way define, limit or affect the
scope or substance of any section of this Agreement.

 

(j)                                    Severability.  In case any provision of this Agreement shall
be held by a court or arbitrator with jurisdiction over the parties to this
Agreement to be invalid, illegal or otherwise unenforceable, such provision
shall be restated to reflect as nearly as possible the original intentions of
the parties in accordance with applicable law, and the validity, legality and
enforceability of the remaining provisions shall in no way be affected or
impaired thereby.

 

(k)                                 Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

 

14

 

IN WITNESS WHEREOF, the
parties have executed this Agreement as of the day and year first above
written.

 

	
   

  	
  WALKER & DUNLOP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  William M. Walker

  
	
   

  	
  Name:

  	
  William M. Walker

  
	
   

  	
  Title:

  	
  Chairman, President and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  RICHARD M. LUCAS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Richard M. Lucas

  

 

 

Exhibit A

 

WAIVER AND RELEASE AGREEMENT

 

THIS WAIVER AND RELEASE AGREEMENT (this “Release”) is entered into as of [                        ] (the
“Effective Date”), by Richard M.
Lucas (“Executive”) in
consideration of severance pay (the “Severance
Payment”) provided to Executive by Walker & Dunlop, Inc.,
a Maryland corporation (the “Company”),
pursuant to the Employment Agreement by and between the Company and Executive
(the “Employment Agreement”).

 

1.             Waiver and Release.  Subject
to the last sentence of the first paragraph of this Section 1, Executive,
on his own behalf and on behalf of his heirs, executors, administrators,
attorneys and assigns, hereby unconditionally and irrevocably releases, waives
and forever discharges the Company and each of its affiliates, parents,
successors, predecessors, and the subsidiaries, directors, Directors, owners,
members, shareholders, officers, agents, and employees of the Company and its
affiliates, parents, successors, predecessors, and subsidiaries (collectively,
all of the foregoing are referred to as the “Employer”),
from any and all causes of action, claims and damages, including attorneys’
fees, whether known or unknown, foreseen or unforeseen, presently asserted or
otherwise arising through the date of his signing of this Release, concerning
his employment or separation from employment. 
Subject to the last sentence of the first paragraph of this Section 1,
this Release includes, but is not limited to, any payments, benefits or damages
arising under any federal law (including, but not limited to, Title VII of the
Civil Rights Act of 1964, the Age Discrimination in Employment Act, the
Employee Retirement Income Security Act of 1974, the Americans with
Disabilities Act, Executive Order 11246, the Family and Medical Leave Act, and
the Worker Adjustment and Retraining Notification Act, each as amended, and all other employment discrimination laws
whatsoever as may be created or amended from time to time); any claim
arising under any state or local laws, ordinances or regulations (including,
but not limited to, any state or local laws, ordinances or regulations
requiring that advance notice be given of certain workforce reductions); and
any claim arising under any common law principle or public policy, including,
but not limited to, all suits in tort or contract, such as wrongful
termination, defamation, emotional distress, invasion of privacy or loss of
consortium.  Notwithstanding any other
provision of this Release to the contrary, this Release does not encompass, and
Executive does not release, waive or discharge, the obligations of the Company (a) to
make the payments and provide the other benefits contemplated by the Employment
Agreement, or (b) under any restricted stock agreement, option agreement
or other agreement pertaining to Executive’s equity ownership, or (c) under
any indemnification or similar agreement with Executive or indemnification
under the Articles of Incorporation, Bylaws or other governing instruments of
the Company .

 

Executive understands that by signing this
Release, he is not waiving any claims or administrative charges which cannot be
waived by law.  He is waiving, however,
any right to monetary recovery or individual relief should any federal, state
or local agency (including the Equal Employment Opportunity Commission) pursue
any claim on his behalf

 

 

arising out of or related to his employment with
and/or separation from employment with the Company.

 

Executive further agrees without any
reservation whatsoever, never to sue the Employer or become a party to a
lawsuit on the basis of any and all claims of any type lawfully and validly
released in this Release.

 

2.             Acknowledgments.  Executive is signing this Release
knowingly and voluntarily.  He
acknowledges that:

 

(a)                                 He is hereby advised in writing to consult an attorney before signing
this Release;

 

(b)                                 He has relied solely on his own judgment and/or that of his attorney
regarding the consideration for and the terms of this Release and is signing
this Release knowingly and voluntarily of his own free will;

 

(c)                                  He is not entitled to the Severance Payment unless he agrees to and
honors the terms of this Release;

 

(d)                                 He has been given at least twenty-one
(21) calendar days to consider this Release, or he expressly waives his
right to have at least twenty-one (21)  days to consider this Release;

 

(e)                                  He may revoke this Release within seven (7) calendar days after
signing it by submitting a written notice of revocation to the Employer.  He further understands that this Release is
not effective or enforceable until after the seven (7) day period of
revocation has expired without revocation, and that if he revokes this Release
within the seven (7) day revocation period, he will not receive the
Severance Payment;

 

(f)                                   He has read and understands the Release and further understands that,
subject to the limitations contained herein, it includes a general release of
any and all known and unknown, foreseen or unforeseen claims presently asserted
or otherwise arising through the date of his signing of this Release that he
may have against the Employer; and

 

(g)                                  No statements made or conduct by the Employer has in any way coerced or
unduly influenced him to execute this Release.

 

3.             No Admission of Liability.  This Release does not constitute an
admission of liability or wrongdoing on the part of the Employer, the Employer
does not admit 

 

 

there has been any wrongdoing whatsoever against
the Executive, and the Employer expressly denies that any wrongdoing has
occurred.

 

4.             Entire Agreement.  There are no other agreements of any
nature between the Employer and Executive with respect to the matters discussed
in this Release, except as expressly stated herein, and in signing this
Release, Executive is not relying on any agreements or representations, except
those expressly contained in this Release.

 

5.             Execution. 
It is not necessary that the Employer sign this Release following
Executive’s full and complete execution of it for it to become fully effective
and enforceable.

 

6.             Severability.  If any provision of this Release is
found, held or deemed by a court of competent jurisdiction to be void, unlawful
or unenforceable under any applicable statute or controlling law, the remainder
of this Release shall continue in full force and effect.

 

7.             Governing Law.  This Release shall be governed by the
laws of the State of Maryland, excluding the choice of law rules thereof.

 

8.             Headings. 
Section and subsection headings contained in this Release are
inserted for the convenience of reference only. 
Section and subsection headings shall not be deemed to be a part of
this Release for any purpose, and they shall not in any way define or affect
the meaning, construction or scope of any of the provisions hereof.

 

IN
WITNESS WHEREOF, the undersigned has duly executed this Agreement as of the day
and year first herein above written.

 

	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Richard M. LucasExhibit 10.18

 

 

WALKER & DUNLOP, INC.

 

2010 EQUITY INCENTIVE PLAN

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  1.

  	
  PURPOSE

  	
  1

  
	
  2.

  	
  DEFINITIONS

  	
  1

  
	
  3.

  	
  ADMINISTRATION OF THE PLAN

  	
  7

  
	
   

  	
  3.1.

  	
  Board

  	
  7

  
	
   

  	
  3.2.

  	
  Committee

  	
  7

  
	
   

  	
  3.3.

  	
  Terms of Awards

  	
  8

  
	
   

  	
  3.4.

  	
  No Repricing

  	
  10

  
	
   

  	
  3.5.

  	
  Deferral Arrangement

  	
  10

  
	
   

  	
  3.6.

  	
  No Liability

  	
  10

  
	
   

  	
  3.7.

  	
  Stock Issuance/Book-Entry

  	
  10

  
	
  4.

  	
  STOCK SUBJECT TO THE PLAN

  	
  10

  
	
   

  	
  4.1.

  	
  Number of Shares of Stock
  Available for Awards

  	
  10

  
	
   

  	
  4.2.

  	
  Adjustments in Authorized Shares
  of Stock

  	
  10

  
	
   

  	
  4.3.

  	
  Share Usage

  	
  11

  
	
  5.

  	
  EFFECTIVE DATE, DURATION AND AMENDMENTS

  	
  11

  
	
   

  	
  5.1.

  	
  Effective Date

  	
  11

  
	
   

  	
  5.2.

  	
  Term

  	
  11

  
	
   

  	
  5.3.

  	
  Amendment and Termination of the Plan

  	
  12

  
	
  6.

  	
  AWARD ELIGIBILITY AND LIMITATIONS

  	
  12

  
	
   

  	
  6.1.

  	
  Service Providers and Other Persons

  	
  12

  
	
   

  	
  6.2.

  	
  Limitation on Shares of Stock Subject to Awards and Cash
  Awards

  	
  12

  
	
   

  	
  6.3.

  	
  Stand-Alone, Additional, Tandem and Substitute Awards

  	
  13

  
	
  7.

  	
  AWARD AGREEMENT

  	
  13

  
	
  8.

  	
  TERMS AND CONDITIONS OF OPTIONS

  	
  13

  
	
   

  	
  8.1.

  	
  Option Price

  	
  13

  
	
   

  	
  8.2.

  	
  Vesting

  	
  14

  
	
   

  	
  8.3.

  	
  Term

  	
  14

  
	
   

  	
  8.4.

  	
  Termination of Service

  	
  14

  
	
   

  	
  8.5.

  	
  Limitations on Exercise of Option

  	
  14

  
	
   

  	
  8.6.

  	
  Method of Exercise

  	
  14

  
	
   

  	
  8.7.

  	
  Rights of Holders of Options

  	
  15

  
	
   

  	
  8.8.

  	
  Delivery of Stock Certificates

  	
  15

  
	
   

  	
  8.9.

  	
  Transferability of Options

  	
  15

  
	
   

  	
  8.10.

  	
  Family Transfers

  	
  15

  
	
   

  	
  8.11.

  	
  Limitations on Incentive Stock Options

  	
  16

  
	
   

  	
  8.12.

  	
  Notice of Disqualifying Disposition

  	
  16

  
	
  9.

  	
  TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS

  	
  16

  
	
   

  	
  9.1.

  	
  Right to Payment and Grant Price

  	
  16

  
	
   

  	
  9.2.

  	
  Other Terms

  	
  16

  

 

i

 

	
   

  	
  9.3.

  	
  Term

  	
  17

  
	
   

  	
  9.4.

  	
  Transferability of SARS

  	
  17

  
	
   

  	
  9.5.

  	
  Family Transfers

  	
  17

  
	
  10.

  	
  TERMS AND CONDITIONS OF RESTRICTED STOCK AND STOCK UNITS

  	
  17

  
	
   

  	
  10.1.

  	
  Grant of Restricted Stock or Stock Units

  	
  17

  
	
   

  	
  10.2.

  	
  Restrictions

  	
  17

  
	
   

  	
  10.3.

  	
  Restricted Stock Certificates

  	
  18

  
	
   

  	
  10.4.

  	
  Rights of Holders of Restricted Stock

  	
  18

  
	
   

  	
  10.5.

  	
  Rights of Holders of Stock Units

  	
  18

  
	
   

  	
   

  	
  10.5.1.

  	
  Voting and Dividend Rights

  	
  18

  
	
   

  	
   

  	
  10.5.2.

  	
  Creditor’s Rights

  	
  19

  
	
   

  	
  10.6.

  	
  Termination of Service

  	
  19

  
	
   

  	
  10.7.

  	
  Purchase of Restricted Stock and Shares of Stock Subject to
  Stock Units

  	
  19

  
	
   

  	
  10.8.

  	
  Delivery of Shares of Stock

  	
  19

  
	
  11.

  	
  TERMS AND CONDITIONS OF UNRESTRICTED STOCK AWARDS AND OTHER
  EQUITY-BASED AWARDS

  	
  19

  
	
  12.

  	
  FORM OF PAYMENT FOR OPTIONS AND RESTRICTED STOCK

  	
  20

  
	
   

  	
  12.1.

  	
  General Rule

  	
  20

  
	
   

  	
  12.2.

  	
  Surrender of Shares of Stock

  	
  20

  
	
   

  	
  12.3.

  	
  Cashless Exercise

  	
  20

  
	
   

  	
  12.4.

  	
  Other Forms of Payment

  	
  20

  
	
  13.

  	
  TERMS AND CONDITIONS OF DIVIDEND EQUIVALENT RIGHTS

  	
  21

  
	
   

  	
  13.1.

  	
  Dividend Equivalent Rights

  	
  21

  
	
   

  	
  13.2.

  	
  Termination of Service

  	
  21

  
	
  14.

  	
  TERMS AND CONDITIONS OF PERFORMANCE AWARDS AND ANNUAL
  INCENTIVE AWARDS

  	
  21

  
	
   

  	
  14.1.

  	
  Grant of Performance Awards and Annual Incentive Awards

  	
  21

  
	
   

  	
  14.2.

  	
  Value of Performance Awards and Annual Incentive Awards

  	
  21

  
	
   

  	
  14.3.

  	
  Earning of Performance Awards and Annual Incentive Awards

  	
  22

  
	
   

  	
  14.4.

  	
  Form and Timing of Payment of Performance Awards and Annual
  Incentive Awards

  	
  22

  
	
   

  	
  14.5.

  	
  Performance Conditions

  	
  22

  
	
   

  	
  14.6.

  	
  Performance Awards or Annual Incentive Awards Granted to
  Designated Covered Employees

  	
  22

  
	
   

  	
   

  	
  14.6.1.

  	
  Performance Goals Generally

  	
  23

  
	
   

  	
   

  	
  14.6.2.

  	
  Timing For Establishing Performance Goals

  	
  23

  
	
   

  	
   

  	
  14.6.3.

  	
  Settlement of Awards; Other Terms

  	
  23

  
	
   

  	
   

  	
  14.6.4.

  	
  Performance Measures

  	
  23

  
	
   

  	
   

  	
  14.6.5.

  	
  Evaluation of Performance

  	
  25

  
	
   

  	
   

  	
  14.6.6.

  	
  Adjustment of Performance-Based Compensation

  	
  25

  
	
   

  	
   

  	
  14.6.7.

  	
  Board Discretion

  	
  25

  
						

 

ii

 

	
   

  	
  14.7.

  	
  Status of Awards Under Code Section 162(m)

  	
  25

  
	
  15.

  	
  PARACHUTE LIMITATIONS

  	
  26

  
	
  16.

  	
  REQUIREMENTS OF LAW

  	
  26

  
	
   

  	
  16.1.

  	
  General

  	
  26

  
	
   

  	
  16.2.

  	
  Rule 16b-3

  	
  27

  
	
  17.

  	
  EFFECT OF CHANGES IN CAPITALIZATION

  	
  28

  
	
   

  	
  17.1.

  	
  Changes in Stock

  	
  28

  
	
   

  	
  17.2.

  	
  Reorganization in Which the Company Is the Surviving Entity
  Which Does not Constitute a Change in Control

  	
  28

  
	
   

  	
  17.3.

  	
  Change in Control in which Awards are not Assumed

  	
  29

  
	
   

  	
  17.4.

  	
  Change in Control in which Awards
  are Assumed

  	
  30

  
	
   

  	
  17.5.

  	
  Adjustments

  	
  30

  
	
   

  	
  17.6.

  	
  No Limitations on Company

  	
  30

  
	
  18.

  	
  GENERAL PROVISIONS

  	
  30

  
	
   

  	
  18.1.

  	
  Disclaimer of Rights

  	
  30

  
	
   

  	
  18.2.

  	
  Nonexclusivity of the Plan

  	
  31

  
	
   

  	
  18.3.

  	
  Withholding Taxes

  	
  31

  
	
   

  	
  18.4.

  	
  Captions

  	
  32

  
	
   

  	
  18.5.

  	
  Other Provisions

  	
  32

  
	
   

  	
  18.6.

  	
  Number and Gender

  	
  32

  
	
   

  	
  18.7.

  	
  Severability

  	
  32

  
	
   

  	
  18.8.

  	
  Governing Law

  	
  32

  
	
   

  	
  18.9.

  	
  Section 409A of the Code

  	
  32

  

 

iii

 

WALKER & DUNLOP, INC.

 

2010 EQUITY INCENTIVE PLAN

 

Walker & Dunlop, Inc., a Maryland corporation (the “Company”),
sets forth herein the terms of its 2010 Equity Incentive Plan (the “Plan”), as
follows:

 

1.                                      PURPOSE

 

This Plan is intended to (a) provide incentive to eligible persons
to stimulate their efforts towards the success of the Company and to operate
and manage its business in a manner that will provide for the long term growth
and profitability of the Company; and (b) provide a means of obtaining, rewarding
and retaining key personnel.  To this
end, the Plan provides for the grant of stock options, stock appreciation
rights, restricted stock, unrestricted stock, stock units (including deferred
stock units), dividend equivalent rights, other equity-based awards and cash
bonus awards.  Any of these awards may,
but need not, be made as performance incentives to reward attainment of annual
or long-term performance goals in accordance with the terms hereof.  Stock options granted under the Plan may be
non-qualified stock options or incentive stock options, as provided herein.

 

2.                                      DEFINITIONS

 

For purposes of interpreting the Plan and related documents (including
Award Agreements), the following definitions shall apply:

 

2.1           “Affiliate” means, with
respect to the Company, any company or other trade or business that controls,
is controlled by or is under common control with the Company within the meaning
of Rule 405 of Regulation C under the Securities Act, including, without
limitation, any Subsidiary.  For purposes
of granting Options or Stock Appreciation Rights, an entity may not be
considered an Affiliate of the Company unless the Company holds a “controlling
interest” in such entity, where the term “controlling interest” has the same
meaning as provided in Treasury Regulation Section 1.414(c)-2(b)(2)(i),
provided that the language “at least 50 percent” is used instead of “at least
80 percent” and, provided further, that where granting of Options or Stock
Appreciation Rights is based upon a legitimate business criteria, the language “at
least 20 percent” is used instead of “at least 80 percent” each place it
appears in Treasury Regulation Section 1.414(c)-2(b)(2)(i).

 

2.2           “Annual
Incentive Award” means an Award, denominated in cash, made subject
to attainment of performance goals (as described in Section 14)
over a Performance Period of up to one (1) year (the Company’s fiscal
year, unless otherwise specified by the Board).

 

2.3           “Applicable
Laws” means the legal requirements relating to the Plan and the Awards under
applicable provisions of the corporate, securities, tax and other laws, rules, 

 

 

regulations and government orders, and the rules of any applicable
stock exchange or national market system, of any jurisdiction applicable to
Awards granted to residents therein.

 

2.4           “Award” means a grant
of an Option, Stock Appreciation Right, Restricted Stock, Unrestricted Stock,
Stock Units, Dividend Equivalent Right, Performance Award, Annual Incentive
Award, or Other Equity-Based Award  under the
Plan.

 

2.5           “Award
Agreement” means the agreement between the Company and a
Grantee that evidences and sets out the terms and conditions of an Award.

 

2.6           “Benefit
Arrangement” shall have the meaning set forth in Section 15.

 

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

 

2.8           “Cause”
means, as determined by the Board and unless otherwise provided in an
applicable agreement with the Company or an Affiliate, (i) gross
negligence or willful misconduct in connection with the performance of duties;
(ii) conviction of a criminal offense (other than minor traffic offenses);
(iii) a material violation of a Company policy; or (iv) a material
breach of any term of any employment, consulting or other services,
confidentiality, intellectual property or non-competition agreements, if any,
between the Service Provider and the Company or an Affiliate.

 

2.9           “Change in Control” means:

 

(1)           The acquisition by any
individual, entity or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) (a “Person”) of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of more than fifty percent
(50%) of either (i) the then outstanding shares of common stock, par value
$0.01 per share, of the Company (the “Outstanding Company Stock”) or
(ii) the combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that for purposes
of this subsection (1), the following acquisitions shall not constitute a
Change in Control: (i) any acquisition by the Company; (ii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation or trust controlled by the
Company; and (iii) any acquisition by any entity pursuant to a transaction
which complies with clauses (i), (ii) and (iii) of subsection
(3) of this Section 2.9; or

 

(2)           Individuals who, as of the
date hereof, constitute the Board (the “Incumbent Board”) cease for any reason
to constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company’s stockholders, was
approved by a vote of at least a majority of the directors then comprising the
Incumbent Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or threatened 

 

2

 

election
contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person
other than the Board; or

 

(3)           Consummation of a
reorganization, merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a “Business Combination”), in
each case unless, following such Business Combination, (i) all or
substantially all of the individuals and entities who were the beneficial
owners of the Outstanding Company Stock and Outstanding Company Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than fifty percent (50%) of, respectively, the
then outstanding common shares and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the entity resulting from such Business
Combination (including, without limitation, a corporation that as a result of
such transaction owns the Company or all or substantially all of the Company’s
assets either directly or through one or more subsidiaries) in substantially
the same proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Stock and Outstanding Company Voting
Securities, as the case may be, and (ii) no Person (excluding any
corporation or trust resulting from such Business Combination or any employee
benefit plan (or related trust) of the Company or such corporation or trust
resulting from such Business Combination) beneficially owns, directly or
indirectly, fifty percent (50%) or more of the then outstanding shares of the
corporation or trust resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such corporation or
trust except to the extent that such ownership existed prior to the Business
Combination and (iii) at least a majority of the members of the board of
directors of the corporation or trust resulting from such Business Combination
were members of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or

 

(4)           Approval by the stockholders
of the Company of a complete liquidation or dissolution of the Company and
consummation of such transaction.

 

2.10         “Code” means the
Internal Revenue Code of 1986, as now in effect or as hereafter amended.

 

2.11         “Committee” means a
committee of, and designated from time to time by resolution of, the Board,
which shall be constituted as provided in Section 3.2 (or,
if no Committee has been designated, the Board itself).

 

2.12         “Company” means Walker &
Dunlop, Inc., a Maryland corporation.

 

2.13         “Covered
Employee” means a Grantee who is a covered employee within
the meaning of Code Section 162(m)(3).

 

2.14         “Disability” means the
Grantee is unable to perform each of the essential duties of such Grantee’s
position by reason of a medically determinable physical or mental impairment
which is potentially permanent in character or which can be expected to last
for a continuous 

 

3

 

period of not less than 12 months; provided, however,
that, with respect to rules regarding expiration of an Incentive Stock
Option following termination of the Grantee’s Service, Disability shall mean
the Grantee is unable to engage in any substantial gainful activity by reason
of a medically determinable physical or mental impairment which can be expected
to result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months.

 

2.15         “Dividend
Equivalent Right” means a right, granted to a Grantee under Section 13, to receive cash, Stock, other Awards or
other property equal in value to dividends paid with respect to a specified
number of shares of Stock, or other periodic payments.

 

2.16         “Effective
Date” means, as determined by the Board on September 27, 2010, the date the
Company’s Registration Statement on Form S-1 becomes effective.

 

2.17         “Exchange
Act” means the Securities Exchange Act of 1934, as now in effect or as
hereafter amended.

 

2.18         “Fair
Market Value” means the value of a share of Stock, determined as
follows:  if on the Grant Date the shares
of Stock are listed on an established national or regional stock exchange, or
are publicly traded on an established securities market, the Fair Market Value
of a share of Stock shall be the closing price of the Stock on such exchange or
in such market (if there is more than one such exchange or market the Board
shall determine the appropriate exchange or market) on (i) the date of
grant (if the grant is made before trading commences on the exchange or
securities market or while such exchange or securities market is open for
trading) or (ii) the next trading day after the date of grant (if the
grant is made after the exchange or securities market closes on a trading day
or if the grant is made on a day that is not a trading day on such exchange or
securities market).  If there is no such
reported closing price on the applicable date as specified in the immediately
preceding sentence, the Fair Market Value shall be the mean between the highest
bid and lowest asked prices or between the high and low sale prices on the
applicable date as specified in the immediately preceding sentence.  If on the Grant Date the Stock is not listed
on such an exchange or traded on such a market, Fair Market Value shall be the
value of the Stock as determined by the Board by the reasonable application of
a reasonable valuation method, in a manner consistent with Code Section 409A.  In case of an Award for which the grant date
is the IPO Effective Date, the Fair Market Value shall equal the offering price
of a share of Stock in the IPO.  For
purposes of determining taxable income and the amount of the related tax
withholding obligation under Section 18.3,
notwithstanding this Section 2.18
or Section 18.3, for any shares of
Stock that are sold on the same day that such shares are first legally saleable
pursuant to the terms of the applicable award agreement, Fair Market Value
shall be determined based upon the sale price of such shares so long as the
grantee has provided the Company with advance written notice of such sale.

 

2.19         “Family
Member” means a person who is a spouse, former spouse, child, stepchild,
grandchild, parent, stepparent, grandparent, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother, sister, brother-in-law, or
sister-in-law, including adoptive relationships, of the Grantee, any person
sharing the Grantee’s household (other than a tenant or 

 

4

 

employee), a trust in which any one or more of these persons have more
than fifty percent (50%) of the beneficial interest, a foundation in which any
one or more of these persons (or the Grantee) control the management of assets,
and any other entity in which one or more of these persons (or the Grantee) own
more than fifty percent (50%) of the voting interests.

 

2.20         “Grant
Date” means, as determined by the Board, the latest to occur of (i) the
date as of which the Company completes the corporate action constituting the
Award, (ii) the date on which the recipient of an Award first becomes
eligible to receive an Award under Section 6,
or (iii) such other date as may be specified by the Board.

 

2.21         “Grantee” means a person
who receives or holds an Award under the Plan.

 

2.22         “Incentive
Stock Option” means an “incentive stock option” within the
meaning of Code Section 422, or the corresponding provision of any
subsequently enacted tax statute, as amended from time to time.

 

2.23         “Initial
Public Offering” or “IPO” means the
initial firm commitment underwritten registered public offering by the Company
of the Stock.

 

2.24         “IPO
Effective Date” means the date the Stock becomes available for sale
in an IPO.

 

2.25         “Non-qualified
Stock Option” means an Option that is not an Incentive Stock
Option.

 

2.26         “Option” means an
option to purchase one or more shares of Stock pursuant to the Plan.

 

2.27         “Option
Price” means the exercise price for each share of Stock subject to an Option.

 

2.28         “Other
Agreement” shall have the meaning set forth in Section 15.

 

2.29         “Outside
Director” means a member of the Board who is not an officer
or employee of the Company.

 

2.30         “Other Equity-Based Award” means a right or other interest
that may be denominated or payable in, valued in whole or in part by reference
to, or otherwise based on, or related to, Stock, other than an Option, Stock
Appreciation Right, Restricted Stock, Unrestricted Stock, Stock Units, Dividend
Equivalent Right, Performance Award or Annual Incentive Award.

 

2.31         “Performance
Award” means an Award made subject to the attainment of performance goals (as
described in Section 14) over a
Performance Period of up to ten (10) years.

 

5

 

2.32         “Performance-Based Compensation” means
compensation under an Award that is intended to satisfy the requirements of
Code Section 162(m) for certain performance-based compensation paid
to Covered Employees.  Notwithstanding
the foregoing, nothing in this Plan shall be construed to mean that an Award
which does not satisfy the requirements for performance-based compensation
under Code Section 162(m) does not constitute performance-based
compensation for other purposes, including Code Section 409A.

 

2.33         “Performance Measures”
means measures as described in Section 14
on which the performance goals are based and which are approved by the Company’s
stockholders pursuant to this Plan in order to qualify Awards as
Performance-Based Compensation.

 

2.34         “Performance Period” means the
period of time during which the performance goals must be met in order to
determine the degree of payout and/or vesting with respect to an Award.

 

2.35         “Plan” means this
Walker & Dunlop, Inc. 2010 Equity Incentive Plan, as amended from
time to time.

 

2.36         “Purchase
Price” means the purchase price for each share of Stock pursuant to a grant
of Restricted Stock, Stock Units or Unrestricted Stock.

 

2.37         “Reporting
Person” means a person who is required to file reports under Section 16(a) of
the Exchange Act.

 

2.38         “Restricted
Stock” means shares of Stock, awarded to a Grantee pursuant to Section 10.

 

2.39         “SAR
Exercise Price” means the per share exercise price of a SAR granted
to a Grantee under Section 9.

 

2.40         “Securities
Act” means the Securities Act of 1933, as now in effect or as hereafter
amended.

 

2.41         “Service” means service
as a Service Provider to the Company or any Affiliate.  Unless otherwise stated in the applicable
Award Agreement, a Grantee’s change in position or duties shall not result in
interrupted or terminated Service, so long as such Grantee continues to be a
Service Provider to the Company or any Affiliate.  Subject to the preceding sentence, whether a
termination of Service shall have occurred for purposes of the Plan shall be
determined by the Board, which determination shall be final, binding and
conclusive.

 

2.42         “Service
Provider” means an employee, officer, director, or a
consultant or adviser (who is a natural person) currently providing services to
the Company or any of its Affiliates.

 

2.43         “Stock” means the
common stock, par value $0.01 per share, of the Company.

 

6

 

2.44         “Stock
Appreciation Right” or “SAR” means a
right granted to a Grantee under Section 9.

 

2.45         “Stock
Unit” means a bookkeeping entry representing the equivalent of one share of
Stock awarded to a Grantee pursuant to Section 10.

 

2.46         “Subsidiary” means any “subsidiary
corporation” of the Company within the meaning of Code Section 424(f).

 

2.47         “Substitute
Award” means an Award granted upon assumption of, or in substitution for,
outstanding awards previously granted by a company or other entity acquired by
the Company or an Affiliate or with which the Company or an Affiliate combines.

 

2.48         “Ten Percent
Stockholder” means an individual who owns more than ten percent
(10%) of the total combined voting power of all classes of outstanding voting
securities of the Company, its parent or any of its Subsidiaries.  In determining stock ownership, the attribution
rules of Code Section 424(d) shall be applied.

 

2.49         “Unrestricted Stock” shall
have the meaning set forth in Section 11.

 

3.                                      ADMINISTRATION
OF THE PLAN

 

3.1.                            Board.

 

The Board shall have such powers and authorities related to the
administration of the Plan as are consistent with the Company’s certificate of
incorporation and by-laws and Applicable Laws. 
The Board shall have full power and authority to take all actions and to
make all determinations required or provided for under the Plan, any Award or
any Award Agreement, and shall have full power and authority to take all such
other actions and make all such other determinations not inconsistent with the
specific terms and provisions of the Plan that the Board deems to be necessary
or appropriate to the administration of the Plan, any Award or any Award
Agreement.  All such actions and
determinations shall be by the affirmative vote of a majority of the members of
the Board present at a meeting or by unanimous consent of the Board executed in
writing in accordance with the Company’s certificate of incorporation and
by-laws and Applicable Laws.  The
interpretation and construction by the Board of any provision of the Plan, any
Award or any Award Agreement shall be final, binding and conclusive.

 

3.2.                            Committee.

 

The Board from time to time may delegate to the Committee such powers
and authorities related to the administration and implementation of the Plan,
as set forth in Section 3.1 above and other
applicable provisions, as the Board shall determine, consistent with the
Company’s certificate of incorporation and by-laws and Applicable Laws.

 

(i)        Except as
provided in Subsection (ii) and except as the Board may otherwise
determine, the Committee, if any, appointed by the Board to administer the Plan
shall 

 

7

 

consist of two or more Outside Directors of the Company who: (a) qualify
as “outside directors” within the meaning of Section 162(m) of the
Code and who (b) meet such other requirements as may be established from
time to time by the Securities and Exchange Commission for plans intended to
qualify for exemption under Rule 16b-3 (or its successor) under the
Exchange Act and who (c) comply with the independence requirements of the
stock exchange on which the Common Stock is listed.

 

(ii)       The Board may also appoint
one or more separate committees of the Board, each composed of one or more
directors of the Company who need not be Outside Directors, who may administer
the Plan with respect to employees or other Service Providers who are not
executive officers (as defined under Rule 3b-7 or the Exchange Act) or
directors of the Company, may grant Awards under the Plan to such employees or
other Service Providers, and may determine all terms of such Awards, subject to
the requirements of Code Section 162(m), Rule 16b-3 and the rules of
the New York Stock Exchange.

 

In the event that the Plan, any Award or any Award Agreement entered
into hereunder provides for any action to be taken by or determination to be made
by the Board, such action may be taken or such determination may be made by a
Committee if the power and authority to do so has been delegated to such
Committee by the Board as provided for in this Section.  Unless otherwise expressly determined by the
Board, any such action or determination by the Committee shall be final,
binding and conclusive.

 

3.3.                            Terms
of Awards.

 

Subject to the other terms and conditions of the Plan, the Board shall
have full and final authority to:

 

(i)            designate
Grantees;

 

(ii)           determine the
type or types of Awards to be made to a Grantee;

 

(iii)          determine the
number of shares of Stock to be subject to an Award;

 

(iv)          establish the
terms and conditions of each Award (including, but not limited to, the exercise
price of any Option, the nature and duration of any restriction or condition
(or provision for lapse thereof) relating to the vesting, exercise, transfer,
or forfeiture of an Award or the shares of Stock subject thereto, the treatment
of an Award in the event of a Change in Control, and any terms or conditions
that may be necessary to qualify Options as Incentive Stock Options);

 

(v)           prescribe the
form of each Award Agreement evidencing an Award; and

 

(vi)          amend, modify,
or supplement the terms of any outstanding Award.  Such authority specifically includes the
authority, in order to effectuate the purposes of the Plan but without amending
the Plan, to make or modify Awards to eligible individuals who are foreign
nationals or are individuals who are employed outside the United States to
recognize differences in local law, 

 

8

 

tax policy, or custom. 
Notwithstanding the foregoing, no amendment, modification or supplement
of any Award shall, without the consent of the Grantee, impair the Grantee’s
rights under such Award.

 

The Board shall have the right, in its discretion, to make Awards in
substitution or exchange for any other award under another plan of the Company,
any Affiliate, or any business entity to be acquired by the Company or an
Affiliate.  The Committee may retain the
right in an Award Agreement to cause a forfeiture of the gain realized by a
Grantee on account of actions taken by the Grantee in violation or breach of or
in conflict with any employment agreement, non-competition agreement, any
agreement prohibiting solicitation of employees or clients of the Company or
any Affiliate  thereof or any confidentiality
obligation with respect to the Company or any Affiliate  thereof,
to the extent specified in such Award Agreement applicable to the Grantee.  Furthermore, the Company may annul an Award
if the Grantee is an employee of the Company or an Affiliate thereof and is
terminated for Cause as defined in the applicable Award Agreement or the Plan
or any other agreement with the Grantee, as applicable.

 

Any Award granted pursuant to this Plan is subject to mandatory
repayment by the Grantee to the Company to the extent the Grantee is or in the
future becomes subject to any Company “clawback” or recoupment policy that
requires the repayment by the Grantee to the Company of compensation paid by
the Company to the Grantee in the event that the Grantee fails to comply with,
or violates, the terms or requirements of such policy.

 

Furthermore, if the Company is required to prepare an accounting
restatement due to the material noncompliance of the Company, as a result of
misconduct, with any financial reporting requirement under the securities laws,
the individuals subject to automatic forfeiture under Section 304 of the
Sarbanes-Oxley Act of 2002 and any Grantee who knowingly engaged in the
misconduct, was grossly negligent in engaging in the misconduct, knowingly
failed to prevent the misconduct or was grossly negligent in failing to prevent
the misconduct, shall reimburse the Company the amount of any payment in
settlement of an Award earned or accrued during the 12-month period following
the first public issuance or filing with the United States Securities and
Exchange Commission (whichever first occurred) of the financial document that
contained such material noncompliance.

 

Notwithstanding any other provision of this Plan or any provision of
any Award Agreement, if the Company is required to prepare an accounting
restatement, then Grantees shall forfeit any cash or Stock received in
connection with an Award (or an amount equal to the fair market value of such
Stock on the date of delivery if the Grantee no longer holds the shares of
Stock) if pursuant to the terms of the Award Agreement for such Award, the
amount of the Award earned or the vesting in the Award was explicitly based on
the achievement of pre-established performance goals set forth in the Award
Agreement (including earnings, gains, or other criteria) that are later
determined, as a result of the accounting restatement, not to have been
achieved.

 

9

 

3.4.                            No Repricing.

 

Notwithstanding
anything in this Plan to the contrary, the Board shall not have the authority,
without stockholder approval, (A) to accept the surrender of outstanding
Options when the Fair Market Value of a share of Stock is less than the
exercise price and grant new Options or other Awards in substitution for them, (B) to
reduce the exercise price of any outstanding Option, or (C) to take any
other action that would be treated as a repricing under the rules of the
stock exchange on which the Stock is listed; provided, that appropriate
adjustments shall be made to outstanding Options pursuant to Section 17.

 

3.5.                            Deferral
Arrangement.

 

The
Board may permit or require the deferral of any award payment into a deferred
compensation arrangement, subject to such rules and procedures as it may
establish, which may include provisions for the payment or crediting of
interest or dividend equivalents, including converting such credits into
deferred Stock equivalents and restricting deferrals to comply with hardship
distribution rules affecting 401(k) plans.  Any such deferrals shall be made in a manner
that complies with Code Section 409A.

 

3.6.                            No
Liability.

 

No
member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Award or Award
Agreement.

 

3.7.                            Stock
Issuance/Book-Entry.

 

Notwithstanding
any provision of this Plan to the contrary, the issuance of the shares of Stock
under the Plan may be evidenced in such a manner as the Board, in its
discretion, deems appropriate, including, without limitation, book-entry
registration or issuance of one or more share certificates.

 

4.                                      STOCK
SUBJECT TO THE PLAN

 

4.1.                            Number of Shares of Stock Available for Awards.

 

Subject
to adjustment as provided in Section 17,
the number of shares of Stock available for issuance under the Plan shall be
2,140,000.  Subject to adjustment as
provided in Section 17, the number of
shares of Stock available for issuance as Incentive Stock Options shall be
2,140,000.  Shares of Stock to be issued
under the Plan shall be authorized but unissued shares; or, to the extent
permitted by Applicable Laws, issued shares that have been reacquired by the
Company.

 

4.2.                            Adjustments in Authorized Shares of Stock.

 

The
Board shall have the right to substitute or assume Awards in connection with
mergers, reorganizations, separations, or other transactions to which Code Section 424(a) applies.  The number of shares of Stock reserved
pursuant to Section 4 shall be increased
by the corresponding 

 

10

 

number
of awards assumed and, in the case of a substitution, by the net increase in
the number of shares of Stock subject to awards before and after the
substitution.  Available shares under a
stockholder approved plan of an acquired company (as appropriately adjusted to
reflect the transaction) may be used for Awards under the Plan and do not
reduce the number of shares of Stock available under the Plan, subject to
applicable stock exchange requirements.

 

4.3.                            Share Usage.

 

Shares
of Stock covered by an Award shall be counted as used as of the Grant
Date.  Any shares of Stock that are
subject to Awards shall be counted against the limit set forth in Section 4.1 as one (1) share of Stock for every
one (1) share of Stock subject to an Award.  With respect to SARs, the number of shares of
Stock subject to an award of SARs will be counted against the aggregate number
of shares of Stock available for issuance under the Plan regardless of the
number of shares of Stock actually issued to settle the SAR upon exercise.  If any shares of Stock covered by an Award
granted under the Plan are not purchased or are forfeited or expire, or if an
Award otherwise terminates without delivery of any shares of Stock subject
thereto or is settled in cash in lieu of shares of Stock, then the number of
shares of Stock counted against the aggregate number of shares of Stock
available under the Plan with respect to such Award shall, to the extent of any
such forfeiture, termination or expiration, again be available for making
Awards under the Plan in the same amount as such shares of Stock were counted
against the limit set forth in Section 4.1.  The number of shares of Stock available for
issuance under the Plan shall not be increased by (i) any shares of Stock
tendered or withheld or Award surrendered in connection with the purchase of
shares of Stock upon exercise of an Option as described in Section 12.2,
(ii) any shares of Stock deducted or delivered from an Award payment in
connection with the Company’s tax withholding obligations as described in Section 18.3 or (iii) any shares of Stock
purchased by the Company with proceeds from option exercises.

 

5.                                      EFFECTIVE
DATE, DURATION AND AMENDMENTS

 

5.1.                            Effective
Date.

 

The
Plan shall be effective as of the Effective Date, subject to approval of the
Plan by the Company’s stockholders within one (1) year of the Effective
Date.  Upon approval of the Plan by the
stockholders of the Company as set forth above, all Awards made under the Plan
on or after the Effective Date shall be fully effective as if the stockholders
of the Company had approved the Plan on the Effective Date.  If the stockholders fail to approve the Plan
within one (1) year of the Effective Date, any Awards made hereunder shall
be null and void and of no effect.

 

5.2.                            Term.

 

The
Plan shall terminate automatically ten (10) years after the Effective Date
and may be terminated on any earlier date as provided in Section 5.3.

 

11

 

5.3.                            Amendment
and Termination of the Plan.

 

The
Board may, at any time and from time to time, amend, suspend, or terminate the
Plan as to any shares of Stock as to which Awards have not been made.  An amendment shall be contingent on approval
of the Company’s stockholders to the extent stated by the Board, required by
Applicable Laws or required by applicable stock exchange listing
requirements.  No amendment will be made
to the no-repricing provisions of Section 3.4
or the option pricing provisions of Section 8.1 without
the approval of the Company’s stockholders. 
No amendment, suspension, or termination of the Plan shall, without the
consent of the Grantee, impair rights or obligations under any Award
theretofore awarded under the Plan.

 

6.                                      AWARD
ELIGIBILITY AND LIMITATIONS

 

6.1.                            Service
Providers and Other Persons.

 

Subject
to this Section 6, Awards may be made
under the Plan to: (i) any Service Provider, as the Board shall determine
and designate from time to time and (ii) any other individual whose
participation in the Plan is determined to be in the best interests of the
Company by the Board.

 

6.2.                            Limitation
on Shares of Stock Subject to Awards and Cash Awards.

 

During
any time when the Company has a class of equity securities registered under Section 12
of the Exchange Act and the transition period under Treasury Regulation Section 1.162-27(f)(2) has
lapsed or does not apply:

 

(i) the
maximum number of shares of Stock subject to Options or SARs that can be
granted under the Plan to any person eligible for an Award under Section 6 is 
535,000 in a calendar year; provided, however, that the
maximum number of shares of Stock subject to Options or SARs that can be
granted under the Plan to any employee eligible for an Award under Section 6 in the year that the person is first employed
by the Company or an Affiliate is 1,070,000;

 

(ii) the
maximum number of shares of Stock that can be granted under the Plan, other
than pursuant to an Option or SARs, to any person eligible for an Award under Section 6 is 267,500 in a calendar year; provided,
however, that the maximum number of shares of Stock subject to Awards,
other than Options, or SARs that can be granted under the Plan to any employee
eligible for an Award under Section 6
in the year that the person is first employed by the Company or an Affiliate is
535,000; and

 

(iii) the
maximum amount that may be paid as an Annual Incentive Award in a calendar year
to any person eligible for an Award shall be two million dollars ($2,000,000)
and the maximum amount that may be paid as a cash-settled Performance Award in
respect of a performance period by any person eligible for an Award shall be
five million dollars ($5,000,000); provided, however, the maximum
amount that may be paid as an Annual Incentive Award in a calendar year to any
employee eligible for an Award under Section 6
in the year that the person is first employed by the Company or an Affiliate,
is five million dollars ($5,000,000) 

 

12

 

and
the maximum amount that may be paid as a cash-settled Performance Award in
respect of a Performance Period by any employee eligible for an Award for a
Performance Period commencing with or immediately following the year that the
person is first employed by the Company or an Affiliate shall be seven and
one-half million dollars ($7,500,000).

 

The
preceding limitations in this Section 6.2
are subject to adjustment as provided in Section 17.

 

6.3.                            Stand-Alone,
Additional, Tandem and Substitute Awards.

 

Subject
to Section 3.4, Awards granted under
the Plan may, in the discretion of the Board, be granted either alone or in
addition to, in tandem with, or in substitution or exchange for, any other
Award or any award granted under another plan of the Company, any Affiliate, or
any business entity to be acquired by the Company or an Affiliate, or any other
right of a Grantee to receive payment from the Company or any Affiliate.  Such additional, tandem, and substitute or
exchange Awards may be granted at any time. 
If an Award is granted in substitution or exchange for another Award,
the Board shall require the surrender of such other Award in consideration for
the grant of the new Award.  In addition,
Awards may be granted in lieu of cash compensation, including in lieu of cash
amounts payable under other plans of the Company or any Affiliate.  Notwithstanding Section 8.1
and Section 9.1 but subject to Section 3.4, the Option Price of an Option or the grant
price of an SAR that is a Substitute Award may be less than 100% of the Fair
Market Value of a Share on the original date of grant; provided, that, the
Option Price or grant price is determined in accordance with the principles of
Code Section 424 and the regulations thereunder for any Incentive Share
Option and consistent with Code Section 409A for any other Option or SAR.

 

7.                                      AWARD
AGREEMENT

 

Each
Award granted pursuant to the Plan shall be evidenced by an Award Agreement, in
such form or forms as the Board shall from time to time determine.  Award Agreements granted from time to time or
at the same time need not contain similar provisions but shall be consistent
with the terms of the Plan.  Each Award
Agreement evidencing an Award of Options shall specify whether such Options are
intended to be Non-qualified Stock Options or Incentive Stock Options, and in
the absence of such specification such options shall be deemed Non-qualified
Stock Options.

 

8.                                      TERMS
AND CONDITIONS OF OPTIONS

 

8.1.                            Option
Price.

 

The
Option Price of each Option shall be fixed by the Board and stated in the Award
Agreement evidencing such Option.  Except
in the case of Substitute Awards,  the Option
Price of each Option shall be at least the Fair Market Value of a share of
Stock on the Grant Date; provided, however, that in the event
that a Grantee is a Ten Percent Stockholder, the Option Price of an 

 

13

 

Option
granted to such Grantee that is intended to be an Incentive Stock Option shall
be not less than one hundred ten percent (110%) of the Fair Market Value of a
share of Stock on the Grant Date.  In no
case shall the Option Price of any Option be less than the par value of a share
of Stock.

 

8.2.                            Vesting.

 

Subject
to Sections 8.3 and 17.3, each Option
granted under the Plan shall become exercisable at such times and under such
conditions as shall be determined by the Board and stated in the Award
Agreement. For purposes of this Section 8.2,
fractional numbers of shares of Stock subject to an Option shall be rounded
down to the next nearest whole number.

 

8.3.                            Term.

 

Each
Option granted under the Plan shall terminate, and all rights to purchase
shares of Stock thereunder shall cease, upon the expiration of ten (10) years
from the date such Option is granted, or under such circumstances and on such
date prior thereto as is set forth in the Plan or as may be fixed by the Board
and stated in the Award Agreement relating to such Option; provided, however,
that in the event that the Grantee is a Ten Percent Stockholder, an Option
granted to such Grantee that is intended to be an Incentive Stock Option shall
not be exercisable after the expiration of five (5) years from its Grant
Date.

 

8.4.                            Termination
of Service.

 

Each
Award Agreement shall set forth the extent to which the Grantee shall have the
right to exercise the Option following termination of the Grantee’s
Service.  Such provisions shall be
determined in the sole discretion of the Board, need not be uniform among all
Options issued pursuant to the Plan, and may reflect distinctions based on the
reasons for termination of Service.

 

8.5.                            Limitations on Exercise of Option.

 

Notwithstanding
any other provision of the Plan, in no event may any Option be exercised, in
whole or in part, prior to the date the Plan is approved by the stockholders of
the Company as provided herein or after the occurrence of an event referred to
in Section 17 which results in
termination of the Option.

 

8.6.                            Method
of Exercise.

 

Subject
to the terms of Section 12 and Section 18.3, an Option that is exercisable may be exercised
by the Grantee’s delivery to the Company of notice of exercise on any business
day, at the Company’s principal office, on the form specified by the Company
and in accordance with any additional procedures specified by the Board.  Such notice shall specify the number of
shares of Stock with respect to which the Option is being exercised and shall
be accompanied by payment in full of the Option Price of the shares of Stock
for which the Option is being exercised plus the amount (if any) of federal and/or
other taxes which the Company may, in its judgment, be required to withhold
with respect to an Award.

 

14

 

8.7.                            Rights
of Holders of Options.

 

Unless
otherwise stated in the applicable Award Agreement, an individual or entity
holding or exercising an Option shall have none of the rights of a stockholder
(for example, the right to receive cash or dividend payments or distributions
attributable to the subject shares of Stock or to direct the voting of the subject
shares of Stock) until the shares of Stock covered thereby are fully paid and
issued to him.  Except as provided in Section 17, no adjustment shall be made for dividends,
distributions or other rights for which the record date is prior to the date of
such issuance.

 

8.8.                            Delivery
of Stock Certificates.

 

Promptly
after the exercise of an Option by a Grantee and the payment in full of the
Option Price, such Grantee shall be entitled to the issuance of a stock
certificate or certificates evidencing his or her ownership of the shares of
Stock subject to the Option.

 

8.9.                            Transferability
of Options.

 

Except
as provided in Section 8.10, during the
lifetime of a Grantee, only the Grantee (or, in the event of legal incapacity
or incompetency, the Grantee’s guardian or legal representative) may exercise
an Option.  Except as provided in Section 8.10, no Option shall be assignable or
transferable by the Grantee to whom it is granted, other than by will or the
laws of descent and distribution.

 

8.10.                     Family
Transfers.

 

If
authorized in the applicable Award Agreement and by the Board, in its sole
discretion, a Grantee may transfer, not for value, all or part of an Option
which is not an Incentive Stock Option to any Family Member.  For the purpose of this Section 8.10,
a “not for value” transfer is a transfer which is (i) a gift, (ii) a
transfer under a domestic relations order in settlement of marital property
rights; or (iii) unless Applicable Law does not permit such transfers, a
transfer to an entity in which more than fifty percent (50%) of the voting
interests are owned by Family Members (or the Grantee) in exchange for an
interest in that entity.  Following a
transfer under this Section 8.10,
any such Option shall continue to be subject to the same terms and conditions
as were applicable immediately prior to transfer, and shares of Stock acquired
pursuant to the Option shall be subject to the same restrictions on transfer of
shares as would have applied to the Grantee. 
Subsequent transfers of transferred Options are prohibited except to
Family Members of the original Grantee in accordance with this Section 8.10 or by will or the laws of descent and
distribution.  The events of termination
of Service of Section 8.4 shall continue to
be applied with respect to the original Grantee, following which the Option
shall be exercisable by the transferee only to the extent, and for the periods
specified, in Section 8.4.

 

15

 

8.11.                     Limitations
on Incentive Stock Options.

 

An
Option shall constitute an Incentive Stock Option only (i) if the Grantee
of such Option is an employee of the Company or any Subsidiary of the Company; (ii) to
the extent specifically provided in the related Award Agreement; and (iii) to
the extent that the aggregate Fair Market Value (determined at the time the
Option is granted) of the shares of Stock with respect to which all Incentive
Stock Options held by such Grantee become exercisable for the first time during
any calendar year (under the Plan and all other plans of the Grantee’s employer
and its Affiliates) does not exceed $100,000. 
Except to the extent provided in the regulations under Code Section 422,
this limitation shall be applied by taking Options into account in the order in
which they were granted.

 

8.12.                     Notice
of Disqualifying Disposition.

 

If
any Grantee shall make any disposition of shares of Stock issued pursuant to
the exercise of an Incentive Stock Option under the circumstances described in
Code Section 421(b) (relating to certain disqualifying dispositions),
such Grantee shall notify the Company of such disposition within ten (10) days
thereof.

 

9.                                      TERMS
AND CONDITIONS OF STOCK APPRECIATION RIGHTS

 

9.1.                            Right
to Payment and Grant Price.

 

A
SAR shall confer on the Grantee to whom it is granted a right to receive, upon
exercise thereof, the excess of (A) the Fair Market Value of one share of
Stock on the date of exercise over (B) the SAR Exercise Price as
determined by the Board.  The Award
Agreement for a SAR shall specify the SAR Exercise Price, which shall be at
least the Fair Market Value of a share of Stock on the Grant Date.  SARs
may be granted in conjunction with all or part of an Option granted under the
Plan or at any subsequent time during the term of such Option, in conjunction
with all or part of any other Award or without regard to any Option or other
Award; provided that a SAR that is granted subsequent to the Grant Date of a
related Option must have a SAR Exercise Price that is no less than the Fair
Market Value of one share of Stock on the SAR Grant Date.

 

9.2.                            Other
Terms.

 

The
Board shall determine on the Grant Date or thereafter, the time or times at
which and the circumstances under which a SAR may be exercised in whole or in
part (including based on achievement of performance goals and/or future service
requirements), the time or times at which SARs shall cease to be or become
exercisable following termination of Service or upon other conditions, the
method of exercise, method of settlement, form of consideration payable in
settlement, method by or forms in which shares of Stock will be delivered or
deemed to be delivered to Grantees, whether or not a SAR shall be in tandem or
in combination with any other Award, and any other terms and conditions of any
SAR.

 

16

 

 

9.3.                            Term.

 

Each
SAR granted under the Plan shall terminate, and all rights thereunder shall
cease, upon the expiration of ten (10) years from the date such SAR is
granted, or under such circumstances and on such date prior thereto as is set
forth in the Plan or as may be fixed by the Board and stated in the Award
Agreement relating to such SAR.

 

9.4.                            Transferability
of SARS.

 

Except
as provided in Section 9.5, during the
lifetime of a Grantee, only the Grantee (or, in the event of legal incapacity
or incompetency, the Grantee’s guardian or legal representative) may exercise a
SAR.  Except as provided in Section 9.5, no SAR shall be assignable or transferable
by the Grantee to whom it is granted, other than by will or the laws of descent
and distribution.

 

9.5.                            Family
Transfers.

 

If
authorized in the applicable Award Agreement and by the Board, in its sole
discretion, a Grantee may transfer, not for value, all or part of a SAR to any
Family Member.  For the purpose of this Section 9.5, a “not for value” transfer is a transfer
which is (i) a gift, (ii) a transfer under a domestic relations order
in settlement of marital property rights; or (iii) unless Applicable Law
does not permit such transfers, a transfer to an entity in which more than
fifty percent (50%) of the voting interests are owned by Family Members (or the
Grantee) in exchange for an interest in that entity.  Following a transfer under this Section 9.5, any such SAR shall continue to be subject
to the same terms and conditions as were applicable immediately prior to
transfer, and shares of Stock acquired pursuant to a SAR shall be subject to
the same restrictions on transfer or shares as would have applied to the
Grantee.  Subsequent transfers of
transferred SARs are prohibited except to Family Members of the original
Grantee in accordance with this Section 9.5
or by will or the laws of descent and distribution.

 

10.                               TERMS
AND CONDITIONS OF RESTRICTED STOCK AND STOCK UNITS

 

10.1.                     Grant
of Restricted Stock or Stock Units.

 

Awards
of Restricted Stock or Stock Units may be made for no consideration (other than
par value of the shares of Stock which is deemed paid by past or future
Services to the Company or an Affiliate).

 

10.2.                     Restrictions.

 

At
the time a grant of Restricted Stock or Stock Units is made, the Board may, in
its sole discretion, establish a period of time (a “restricted period”)
applicable to such Restricted Stock or Stock Units.  Each Award of Restricted Stock or Stock Units
may be subject to a different restricted period.  The Board may in its sole discretion, at the
time a grant of Restricted Stock or Stock Units is made, prescribe restrictions
in addition to or other than the expiration of the restricted period, including
the satisfaction of corporate or individual performance objectives, 

 

17

 

which
may be applicable to all or any portion of the Restricted Stock or Stock Units
as described in Section 14.  Neither Restricted Stock nor Stock Units may
be sold, transferred, assigned, pledged or otherwise encumbered or disposed of
during the restricted period or prior to the satisfaction of any other
restrictions prescribed by the Board with respect to such Restricted Stock or
Stock Units.

 

10.3.                     Restricted
Stock Certificates.

 

Subject
to Section 3.7, the Company shall
issue, in the name of each Grantee to whom Restricted Stock have been granted,
stock certificates representing the total number of Restricted Stock granted to
the Grantee, as soon as reasonably practicable after the Grant Date.  The Board may provide in an Award Agreement
that either (i) the Secretary of the Company shall hold such certificates
for the Grantee’s benefit until such time as the shares of Restricted Stock are
forfeited to the Company or the restrictions lapse and the Grantee shall
deliver a stock power to the Company with respect to each certificate, or (ii) such
certificates shall be delivered to the Grantee, provided, however,
that such certificates shall bear a legend or legends that comply with the
applicable securities laws and regulations and makes appropriate reference to
the restrictions imposed under the Plan and the Award Agreement.  Pursuant to Section 3.7,
to the extent Restricted Stock is represented by a book entry, such book entry
will contain an appropriate legend or restriction similar to the foregoing.

 

10.4.                     Rights
of Holders of Restricted Stock.

 

Unless
the Board otherwise provides in an Award Agreement, holders of Restricted Stock
shall have the right to vote such shares of Stock and the right to receive any
dividends declared or paid with respect to such shares of Stock.  The Board may provide that any dividends paid
on Restricted Stock must be reinvested in shares of Stock, which may or may not
be subject to the same vesting conditions and restrictions applicable to such
Restricted Stock.  All distributions, if
any, received by a Grantee with respect to Restricted Stock as a result of any
stock split, stock dividend, combination of stock, or other similar transaction
shall be subject to the restrictions applicable to the original Grant.

 

10.5.                     Rights
of Holders of Stock Units.

 

10.5.1.           Voting
and Dividend Rights.

 

Holders
of Stock Units shall have no rights as stockholders of the Company.  The Board may provide in an Award Agreement
evidencing a grant of Stock Units that the holder of such Stock Units shall be
entitled to receive, upon the Company’s payment of a cash dividend on its
outstanding shares of Stock, a cash payment for each Stock Unit held equal to
the per-stock dividend paid on the shares of Stock.  Such Award Agreement may also provide that
such cash payment will be deemed reinvested in additional Stock Units at a
price per unit equal to the Fair Market Value of a share of Stock on the date
that such dividend is paid.

 

18

 

10.5.2.           Creditor’s
Rights.

 

A
holder of Stock Units shall have no rights other than those of a general
creditor of the Company.  Stock Units
represent an unfunded and unsecured obligation of the Company, subject to the
terms and conditions of the applicable Award Agreement.

 

10.6.                     Termination
of Service.

 

Unless
the Board otherwise provides in an Award Agreement or in writing after the
Award Agreement is issued, upon the termination of a Grantee’s Service, any
Restricted Stock or Stock Units held by such Grantee that have not vested, or
with respect to which all applicable restrictions and conditions have not
lapsed, shall immediately be deemed forfeited. 
Upon forfeiture of Restricted Stock or Stock Units, the Grantee shall
have no further rights with respect to such Award, including but not limited to
any right to vote Restricted Stock or any right to receive dividends with
respect to Restricted Stock or Stock Units.

 

10.7.                     Purchase
of Restricted Stock and Shares of Stock Subject to Stock Units.

 

The
Grantee shall be required, to the extent required by Applicable Laws, to
purchase the Restricted Stock or shares of Stock subject to vested Stock Units
from the Company at a Purchase Price equal to the greater of (i) the
aggregate par value of the shares of Stock represented by such Restricted Stock
or Stock Units or (ii) the Purchase Price, if any, specified in the Award
Agreement relating to such Restricted Stock or Stock Units.  The Purchase Price shall be payable in a form
described in Section 12 or, in the
discretion of the Board, in consideration for past or future Services rendered
to the Company or an Affiliate.

 

10.8.                     Delivery
of Shares of Stock.

 

Upon
the expiration or termination of any restricted period and the satisfaction of
any other conditions prescribed by the Board, the restrictions applicable to
Restricted Stock or Stock Units settled in shares of Stock shall lapse, and,
unless otherwise provided in the Award Agreement, a stock certificate for such
shares of Stock shall be delivered, free of all such restrictions, to the
Grantee or the Grantee’s beneficiary or estate, as the case may be.  Neither the Grantee, nor the Grantee’s
beneficiary or estate, shall have any further rights with regard to a Stock
Unit once the share of Stock represented by the Stock Unit has been delivered.

 

11.                               TERMS
AND CONDITIONS OF UNRESTRICTED STOCK AWARDS AND OTHER EQUITY-BASED AWARDS

 

The
Board may, in its sole discretion, grant (or sell at par value or such other
higher purchase price determined by the Board) an Unrestricted Stock Award to
any Grantee pursuant to which such Grantee may receive shares of Stock free of
any restrictions (“Unrestricted Stock”) under the Plan.  Unrestricted Stock Awards may be granted or
sold as described in the preceding sentence in respect of past or future
services and other valid consideration, or in lieu of, or in addition to, any
cash compensation due to such Grantee.

 

19

 

The
Board may, in its sole discretion, grant Awards to Participants in the form of
Other Equity-Based Awards, as deemed by the Board to be consistent with the
purposes of the Plan.  Awards granted
pursuant to this paragraph may be granted with vesting, value and/or payment
contingent upon the attainment of one or more performance goals.  The Board shall determine the terms and
conditions of such Awards at the date of grant or thereafter.  Unless the Board
otherwise provides in an Award Agreement or in writing after the Award
Agreement is issued, upon the termination of a Grantee’s Service, any Other
Equity-Based Awards held by such Grantee that have not vested, or with respect
to which all applicable restrictions and conditions have not lapsed, shall
immediately be deemed forfeited.  Upon forfeiture
of Other Equity-Based Awards, the Grantee shall have no further rights with
respect to such Award.

 

12.                               FORM OF
PAYMENT FOR OPTIONS AND RESTRICTED STOCK

 

12.1.                     General
Rule.

 

Payment
of the Option Price for the shares of Stock purchased pursuant to the exercise
of an Option or the Purchase Price for Restricted Stock shall be made in cash
or in cash equivalents acceptable to the Company.

 

12.2.                     Surrender
of Shares of Stock.

 

To
the extent the Award Agreement so provides, payment of the Option Price for
shares of Stock purchased pursuant to the exercise of an Option or the Purchase
Price for Restricted Stock may be made all or in part through the tender or
attestation to the Company of shares of Stock, which shall be valued, for
purposes of determining the extent to which the Option Price or Purchase Price
has been paid thereby, at their Fair Market Value on the date of exercise or
surrender.

 

12.3.                     Cashless
Exercise.

 

With
respect to an Option only (and not with respect to Restricted Stock), to the extent
permitted by law and to the extent the Award Agreement so provides, payment of
the Option Price for shares of Stock purchased pursuant to the exercise of an
Option may be made all or in part by delivery (on a form acceptable to the
Board) of an irrevocable direction to a licensed securities broker acceptable
to the Company to sell shares of Stock and to deliver all or part of the sales
proceeds to the Company in payment of the Option Price and any withholding
taxes described in Section 18.3,  or, with the consent of the Company, by issuing the number
of shares of Stock equal in value to the difference between the Option Price
and the Fair Market Value of the shares of Stock subject to the portion of the
Option being exercised.

 

12.4.                     Other
Forms of Payment.

 

To
the extent the Award Agreement so provides and/or unless otherwise specified in
an Award Agreement, payment of the Option Price for shares of Stock purchased
pursuant to exercise of an Option or the Purchase Price for Restricted Stock
may be made in any other form that is 

 

20

 

consistent
with Applicable Laws, regulations and rules, including, without limitation,
Service to the Company or an Affiliate or net exercise.

 

13.                               TERMS
AND CONDITIONS OF DIVIDEND EQUIVALENT RIGHTS

 

13.1.                     Dividend
Equivalent Rights.

 

A
Dividend Equivalent Right is an Award entitling the recipient to receive
credits based on cash distributions that would have been paid on the shares of
Stock specified in the Dividend Equivalent Right (or other award to which it
relates) if such shares of Stock had been issued to and held by the
recipient.  A Dividend Equivalent Right
may be granted hereunder to any Grantee. 
The terms and conditions of Dividend Equivalent Rights shall be specified
in the grant.  Dividend equivalents
credited to the holder of a Dividend Equivalent Right may be paid currently or
may be deemed to be reinvested in additional shares of Stock, which may
thereafter accrue additional equivalents. 
Any such reinvestment shall be at Fair Market Value on the date of
reinvestment.  Dividend Equivalent Rights
may be settled in cash or shares of Stock or a combination thereof, in a single
installment or installments, all determined in the sole discretion of the
Board.  A Dividend Equivalent Right
granted as a component of another Award may provide that such Dividend
Equivalent Right shall be settled upon exercise, settlement, or payment of, or
lapse of restrictions on, such other award, and that such Dividend Equivalent
Right shall expire or be forfeited or annulled under the same conditions as
such other award.  A Dividend Equivalent
Right granted as a component of another Award may also contain terms and
conditions different from such other Award; provided, however, that Dividend
Equivalent rights credited pursuant to a Dividend Equivalent Right granted as a
component of another Award which vests or is earned based upon achievement of
performance goals shall not vest or be paid unless the performance goals for
such underlying Award are achieved.

 

13.2.                     Termination
of Service.

 

Unless
the Board otherwise provides in an Award Agreement or in writing after the
Award Agreement is issued, a Grantee’s rights in all Dividend Equivalent Rights
or interest equivalents shall automatically terminate upon the Grantee’s
termination of Service for any reason.

 

14.                               TERMS
AND CONDITIONS OF PERFORMANCE AWARDS AND ANNUAL INCENTIVE AWARDS

 

14.1.                     Grant
of Performance Awards and Annual Incentive Awards.

 

Subject
to the terms and provisions of this Plan, the Board, at any time and from time
to time, may grant Performance Awards and/or Annual Incentive Awards to a Plan
participant in such amounts and upon such terms as the Committee shall
determine.

 

14.2.                     Value
of Performance Awards and Annual Incentive Awards.

 

Each
Performance Award and Annual Incentive Award shall have an initial value that
is established by the Board at the time of grant.  The Board shall set performance goals in its 

 

21

 

discretion
which, depending on the extent to which they are met, will determine the value
and/or number of Performance Awards that will be paid out to the Plan
participant.

 

14.3.                     Earning
of Performance Awards and Annual Incentive Awards.

 

Subject
to the terms of this Plan, after the applicable Performance Period has ended,
the holder of Performance Awards or Annual Incentive Awards shall be entitled
to receive payout on the value and number of the Performance Awards or Annual
Incentive Awards earned by the Plan participant over the Performance Period, to
be determined as a function of the extent to which the corresponding
performance goals have been achieved.

 

14.4.                     Form and
Timing of Payment of Performance Awards and Annual Incentive Awards.

 

Payment
of earned Performance Awards and Annual Incentive Awards shall be as determined
by the Board and as evidenced in the Award Agreement.  Subject to the terms of this Plan, the Board,
in its sole discretion, may pay earned Performance Awards in the form of cash
or in shares of Stock (or in a combination thereof) equal to the value of the
earned Performance Awards at the close of the applicable Performance Period, or
as soon as practicable after the end of the Performance Period; provided that,
unless specifically provided in the Award Agreement pertaining to the grant of
the Award, such payment shall occur no later than the 15th day of the third
month following the end of the calendar year in which the Performance Period
ends.  Any shares of Stock may be granted
subject to any restrictions deemed appropriate by the Committee.  The determination of the Committee with
respect to the form of payout of such Awards shall be set forth in the Award
Agreement pertaining to the grant of the Award.

 

14.5.                     Performance
Conditions.

 

The
right of a Grantee to exercise or receive a grant or settlement of any Award,
and the timing thereof, may be subject to such performance conditions as may be
specified by the Board.  The Board may
use such business criteria and other measures of performance as it may deem
appropriate in establishing any performance conditions.  If and to the extent required under Code Section 162(m),
any power or authority relating to an Award intended to qualify under Code Section 162(m),
shall be exercised by the Committee and not the Board.

 

14.6.                     Performance
Awards or Annual Incentive Awards Granted to Designated Covered Employees.

 

If
and to the extent that the Board determines that a Performance or Annual
Incentive Award to be granted to a Grantee who is designated by the Committee
as likely to be a Covered Employee should qualify as “performance-based
compensation” for purposes of Code Section 162(m), the grant, exercise
and/or settlement of such Award shall be contingent upon achievement of
pre-established performance goals and other terms set forth in this Section 14.6.

 

22

 

14.6.1.           Performance
Goals Generally.

 

The
performance goals for Performance or Annual Incentive Awards shall consist of
one or more business criteria and a targeted level or levels of performance
with respect to each of such criteria, as specified by the Committee consistent
with this Section 14.6.  Performance goals shall be objective and
shall otherwise meet the requirements of Code Section 162(m) and regulations
thereunder including the requirement that the level or levels of performance
targeted by the Committee result in the achievement of performance goals being “substantially
uncertain.”  The Committee may determine
that such Awards shall be granted, exercised and/or settled upon achievement of
any one performance goal or that two (2) or more of the performance goals
must be achieved as a condition to grant, exercise and/or settlement of such
Awards.  Performance goals may differ for
Awards granted to any one Grantee or to different Grantees.

 

14.6.2.           Timing
For Establishing Performance Goals.

 

Performance
goals shall be established not later than the earlier of (i) 90 days after
the beginning of any performance period applicable to such Awards and (ii) the
day on which twenty-five percent (25%) of any performance period applicable to
such Awards has expired, or at such other date as may be required or permitted
for “performance-based compensation” under Code Section 162(m).

 

14.6.3.           Settlement
of Awards; Other Terms.

 

Settlement
of such Awards shall be in cash, shares of Stock, other Awards or other
property, in the discretion of the Committee. 
The Committee may, in its discretion, reduce the amount of a settlement
otherwise to be made in connection with such Awards.  The Committee shall specify the circumstances
in which such Performance or Annual Incentive Awards shall be paid or forfeited
in the event of termination of Service by the Grantee prior to the end of a
performance period or settlement of Awards.

 

14.6.4.           Performance
Measures.

 

The
performance goals upon which the payment or vesting of a Performance or Annual
Incentive Award to a Covered Employee that is intended to qualify as
Performance-Based Compensation shall be limited to the following Performance
Measures, with or without adjustment:

 

(a)  net earnings or net
income;

 

(b)  operating earnings;

 

(c)  pretax earnings;

 

(d)  earnings per share
of stock;

 

23

 

 

(e)  stock price,
including growth measures and total stockholder return;

 

(f)  earnings before
interest and taxes;

 

(g)  earnings before
interest, taxes, depreciation and/or amortization;

 

(h)  sales or revenue
growth, whether in general, by type of product or service, or by type of
customer;

 

(i)  gross or operating
margins;

 

(j)  return measures,
including return on assets, capital, investment, equity, sales or revenue;

 

(k)  cash flow, including
operating cash flow, free cash flow, cash flow return on equity and cash flow
return on investment;

 

(l)  productivity ratios;

 

(m)  expense targets;

 

(n)  market share;

 

(o)  financial ratios as
provided in credit agreements of the Company and its subsidiaries;

 

(p)  working capital
targets;

 

(q)  completion of
acquisitions of business or companies;

 

(r)  completion of
divestitures and asset sales;

 

(s)  revenues under
management;

 

(t)  funds from
operations; and

 

(u)  any combination of
any of the foregoing business criteria.

 

Any Performance Measure(s) may be used to measure the performance
of the Company, Subsidiary, and/or Affiliate as a whole or any business unit of
the Company, Subsidiary, and/or Affiliate or any combination thereof, as the
Committee may deem appropriate, or any of the above Performance Measures as
compared to the performance of a group of comparator companies, or published or
special index that the Committee, in its sole discretion, deems appropriate, or
the Company may select Performance Measure (e) above as compared to
various stock market indices.  The
Committee also has the authority to provide for accelerated vesting of 

 

24

 

any Award based on the achievement of performance goals pursuant to the
Performance Measures specified in this Section 14.

 

14.6.5.           Evaluation
of Performance.

 

The Committee may provide in any such Award that any evaluation of
performance may include or exclude any of the following events that occur
during a Performance Period: (a) asset write-downs; (b) litigation or
claim judgments or settlements; (c) the effect of changes in tax laws,
accounting principles, or other laws or provisions affecting reported results;
(d) any reorganization and restructuring programs; (e) extraordinary
nonrecurring items as described in Accounting Principles Board Opinion
No. 30 and/or in “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” appearing in the Company’s annual report
to stockholders for the applicable year; (f) acquisitions or divestitures;
and (g) foreign exchange gains and losses. 
To the extent such inclusions or exclusions affect Awards to Covered
Employees that are intended to qualify as Performance-Based Compensation, they
shall be prescribed in a form that meets the requirements of Code
Section 162(m) for deductibility.

 

14.6.6.           Adjustment
of Performance-Based Compensation.

 

Awards that are intended to qualify as Performance-Based Compensation
may not be adjusted upward.  The
Committee shall retain the discretion to adjust such Awards downward, either on
a formula or discretionary basis, or any combination as the Committee
determines.

 

14.6.7.           Board
Discretion.

 

In the event that applicable tax and/or securities laws change to
permit Board discretion to alter the governing Performance Measures without
obtaining stockholder approval of such changes, the Board shall have sole
discretion to make such changes without obtaining stockholder approval provided
the exercise of such discretion does not violate Code Sections 162(m) or 409A.  In addition, in the event that the Board
determines that it is advisable to grant Awards that shall not qualify as
Performance-Based Compensation, the Board may make such grants without
satisfying the requirements of Code Section 162(m) and base vesting
on Performance Measures other than those set forth in Section 14.6.4.

 

14.7.                     Status
of Awards Under Code Section 162(m).

 

It is the intent of the Company that Awards under Section 14.6
granted to persons who are designated by the Committee as likely to be Covered
Employees within the meaning of Code Section 162(m) and regulations
thereunder shall, if so designated by the Committee, constitute “qualified
performance-based compensation” within the meaning of Code Section 162(m) and
regulations thereunder.  Accordingly, the
terms of Section 14.6, including the
definitions of Covered Employee and other terms used therein, shall be
interpreted in a manner consistent with Code Section 162(m) and
regulations thereunder.  The foregoing
notwithstanding, because the Committee cannot determine with certainty whether
a given Grantee will be a Covered Employee with respect to a fiscal year that
has not yet been completed, the term Covered 

 

25

 

Employee as used herein shall mean only a person designated by the
Committee, at the time of grant of an Award, as likely to be a Covered Employee
with respect to that fiscal year.  If any
provision of the Plan or any agreement relating to such Awards does not comply
or is inconsistent with the requirements of Code Section 162(m) or
regulations thereunder, such provision shall be construed or deemed amended to
the extent necessary to conform to such requirements.

 

15.                               PARACHUTE
LIMITATIONS

 

If the Grantee is a “disqualified individual,” as defined in Code
Section 280G(c), then, notwithstanding any other provision of this Plan or
of any other agreement, contract, or understanding heretofore or hereafter
entered into by a Grantee with an Applicable Entity, except an agreement,
contract, or understanding that expressly addresses Code Section 280G or
Code Section 4999 (an “Other Agreement”), and notwithstanding any formal
or informal plan or other arrangement for the direct or indirect provision of
compensation to the Grantee (including groups or classes of Grantees or
beneficiaries of which the Grantee is a member), whether or not such
compensation is deferred, is in cash, or is in the form of a benefit to or for
the Grantee (a “Benefit Arrangement”), any right to exercise, vesting, payment
or benefit to the Grantee under this Plan shall be reduced or eliminated:

 

(i)                                     to the extent
that such right to exercise, vesting, payment, or benefit, taking into account
all other rights, payments, or benefits to or for the Grantee under this Plan,
all Other Agreements, and all Benefit Arrangements, would cause any exercise,
vesting, payment or benefit to the Grantee under this Plan to be considered a “parachute
payment” within the meaning of Code Section 280G(b)(2) as then in
effect (a “Parachute Payment”) and

 

(ii)                                  if, as a result
of receiving such Parachute Payment, the aggregate after-tax amounts received
by the Grantee from the Company under this Plan, all Other Agreements, and all
Benefit Arrangements would be less than the maximum after-tax amount that could
be received by the Grantee without causing any such payment or benefit to be
considered a Parachute Payment.

 

The Company shall accomplish such reduction by first reducing or
eliminating any cash payments (with the payments to be made furthest in the future
being reduced first), then by reducing or eliminating any accelerated vesting
of Options or SARs, then by reducing or eliminating any accelerated vesting of
Restricted Stock or Stock Units, then by reducing or eliminating any other
remaining Parachute Payments.

 

16.                               REQUIREMENTS
OF LAW

 

16.1.                     General.

 

The Company shall not be required to sell or issue any shares of Stock
under any Award if the sale or issuance of such shares of Stock would
constitute a violation by the Grantee, any other 

 

26

 

individual or entity exercising an Option, or the Company or an
Affiliate of any provision of any law or regulation of any governmental
authority, including without limitation any federal or state securities laws or
regulations.  If at any time the Company
shall determine, in its discretion, that the listing, registration or
qualification of any shares of Stock subject to an Award upon any securities
exchange or under any governmental regulatory body is necessary or desirable as
a condition of, or in connection with, the issuance or purchase of shares of
Stock hereunder, no shares of Stock may be issued or sold to the Grantee or any
other individual or entity exercising an Option pursuant to such Award unless
such listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Company, and
any delay caused thereby shall in no way affect the date of termination of the
Award.  Without limiting the generality
of the foregoing, in connection with the Securities Act, upon the exercise of
any Option or any SAR that may be settled in shares of Stock or the delivery of
any shares of Stock underlying an Award, unless a registration statement under
such Act is in effect with respect to the shares of Stock covered by such
Award, the Company shall not be required to sell or issue such shares of Stock
unless the Board has received evidence satisfactory to it that the Grantee or
any other individual or entity exercising an Option may acquire such shares of
Stock pursuant to an exemption from registration under the Securities Act.  Any determination in this connection by the
Board shall be final, binding, and conclusive. 
The Company may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the Securities Act.  The Company shall not be obligated to take
any affirmative action in order to cause the exercise of an Option or a SAR or
the issuance of shares of Stock pursuant to the Plan to comply with any law or
regulation of any governmental authority. 
As to any jurisdiction that expressly imposes the requirement that an
Option (or SAR that may be settled in shares of Stock) shall not be exercisable
until the shares of Stock covered by such Option (or SAR) are registered or are
exempt from registration, the exercise of such Option (or SAR) under
circumstances in which the laws of such jurisdiction apply shall be deemed
conditioned upon the effectiveness of such registration or the availability of
such an exemption.

 

16.2.                     Rule 16b-3.

 

During any time when the Company has a class of equity security
registered under Section 12 of the Exchange Act, it is the intent of the
Company that Awards pursuant to the Plan and the exercise of Options and SARs
granted hereunder that would otherwise be subject to Section 16(b) of
the Exchange Act will qualify for the exemption provided by Rule 16b-3
under the Exchange Act.  To the extent
that any provision of the Plan or action by the Board does not comply with the
requirements of Rule 16b-3, it shall be deemed inoperative with respect to
such Awards to the extent permitted by law and deemed advisable by the Board,
and shall not affect the validity of the Plan. 
In the event that Rule 16b-3 is revised or replaced, the Board may
exercise its discretion to modify this Plan in any respect necessary to satisfy
the requirements of, or to take advantage of any features of, the revised
exemption or its replacement.

 

27

 

17.                               EFFECT
OF CHANGES IN CAPITALIZATION

 

17.1.                     Changes
in Stock.

 

If the number of outstanding shares of Stock is increased or decreased
or the shares of Stock are changed into or exchanged for a different number or
kind of stock or other securities of the Company on account of any
recapitalization, reclassification, stock split, reverse split, combination of
stock, exchange of stock, stock dividend or other distribution payable in
capital stock, or other increase or decrease in such stock effected without
receipt of consideration by the Company occurring after the Effective Date, the
number and kinds of shares of stock for which grants of Options and other
Awards may be made under the Plan, including, without limitation, the limits
set forth in Section 6.2, shall be
adjusted proportionately and accordingly by the Company.  In addition, the number and kind of shares
for which Awards are outstanding shall be adjusted proportionately and
accordingly so that the proportionate interest of the Grantee immediately
following such event shall, to the extent practicable, be the same as
immediately before such event.  Any such
adjustment in outstanding Options or SARs shall not change the aggregate Option
Price or SAR Exercise Price payable with respect to shares that are subject to
the unexercised portion of an outstanding Option or SAR, as applicable, but
shall include a corresponding proportionate adjustment in the Option Price or
SAR Exercise Price per share.  The conversion
of any convertible securities of the Company shall not be treated as an
increase in shares effected without receipt of consideration.  Notwithstanding the foregoing, in the event
of any distribution to the Company’s stockholders of securities of any other
entity or other assets (including an extraordinary dividend but excluding a
non-extraordinary dividend of the Company) without receipt of consideration by
the Company, the Company shall, in such manner as the Company deems
appropriate, adjust (i) the number and kind of shares subject to
outstanding Awards and/or (ii) the exercise price of outstanding Options
and Stock Appreciation Rights to reflect such distribution.

 

17.2.                     Reorganization
in Which the Company Is the Surviving Entity Which Does not Constitute a Change
in Control.

 

Subject to Section 17.3,
if the Company shall be the surviving entity in any reorganization, merger, or
consolidation of the Company with one or more other entities which does not
constitute a Change in Control, any Option or SAR theretofore granted pursuant
to the Plan shall pertain to and apply to the securities to which a holder of
the number of shares of Stock subject to such Option or SAR would have been
entitled immediately following such reorganization, merger, or consolidation,
with a corresponding proportionate adjustment of the Option Price or SAR
Exercise Price per share so that the aggregate Option Price or SAR Exercise
Price thereafter shall be the same as the aggregate Option Price or SAR
Exercise Price of the shares of Stock remaining subject to the Option or SAR
immediately prior to such reorganization, merger, or consolidation.  Subject to any contrary language in an Award
Agreement evidencing an Award, any restrictions applicable to such Award shall
apply as well to any replacement shares received by the Grantee as a result of
the reorganization, merger or consolidation. 
In the event of a transaction described in this Section 17.2,
Stock Units shall be adjusted so as to apply to the securities that a holder of
the number of shares of Stock subject to the Stock Units would have been
entitled to receive immediately following such transaction.

 

28

 

17.3.                     Change
in Control in which Awards are not Assumed.

 

Upon the occurrence of a Change in Control in which outstanding
Options, SARs, Stock Units, Dividend Equivalent Rights, Restricted Stock, or
other Equity-Based Awards are not being assumed or continued:

 

(i) in each case with the exception of any Performance Award, all
outstanding Restricted Stock shall be deemed to have vested, all Stock Units
shall be deemed to have vested and the shares of Stock subject thereto shall be
delivered, and all Dividend Equivalent Rights shall be deemed to have vested
and the shares of Stock subject thereto shall be delivered, immediately prior
to the occurrence of such Change in Control, and

 

(ii) either of the following two actions shall be taken:

 

(A) fifteen (15)
days prior to the scheduled consummation of a Change in Control, all Options
and SARs outstanding hereunder shall become immediately exercisable and shall
remain exercisable for a period of fifteen (15) days, or

 

(B) the Board may elect, in its sole discretion, to cancel any
outstanding Awards of Options, Restricted Stock, Stock Units, and/or SARs and
pay or deliver, or cause to be paid or delivered, to the holder thereof an
amount in cash or securities having a value (as determined by the Board acting
in good faith), in the case of Restricted Stock or Stock Units, equal to the
formula or fixed price per share paid to holders of shares of Stock and, in the
case of Options or SARs, equal to the product of the number of shares of Stock
subject to the Option or SAR (the “Award Stock”) multiplied by the amount, if
any, by which (I) the formula or fixed price per share paid to holders of
shares of Stock pursuant to such transaction exceeds (II) the Option Price
or SAR Exercise Price applicable to such Award Stock.

 

(iii) for Performance Awards denominated in Stock or Stock Units,
if less than half of the Performance Period has lapsed, the Awards shall be
converted into Restricted Stock or Stock Units assuming target performance has
been achieved (or Unrestricted Stock if no further restrictions apply).  If more than half the Performance Period has
lapsed, the Awards shall be converted into Restricted Stock or Stock Units
based on actual performance to date (or Unrestricted Stock if no further
restrictions apply).  If actual
performance is not determinable, then Performance Awards shall be converted
into Restricted Stock or Stock Units assuming target performance has been
achieved, based on the discretion of the Committee (or Unrestricted Stock if no
further restrictions apply).

 

(iv) Other-Equity Based Awards shall be governed by the terms of
the applicable Award Agreement.

 

With respect to the Company’s establishment of an exercise window, (i) any
exercise of an Option or SAR during such fifteen (15)-day period shall be
conditioned upon the consummation of the event and shall be effective only
immediately before the consummation of the event, and (ii) upon
consummation of any Change in Control, the Plan and all outstanding but
unexercised 

 

29

 

Options and SARs shall terminate. 
The Board shall send notice of an event that will result in such a
termination to all individuals and entities who hold Options and SARs not later
than the time at which the Company gives notice thereof to its stockholders.

 

17.4.                     Change in Control in which Awards are Assumed.

 

The Plan, Options, SARs, Stock Units and Restricted Stock theretofore
granted shall continue in the manner and under the terms so provided in the
event of any Change in Control to the extent that provision is made in writing
in connection with such Change in Control for the assumption or continuation of
the Options, SARs, Stock Units and Restricted Stock theretofore granted, or for
the substitution for such Options, SARs, Stock Units and Restricted Stock for
new common stock options and stock appreciation rights and new common stock units
and restricted stock relating to the stock of a successor entity, or a parent
or subsidiary thereof, with appropriate adjustments as to the number of shares
(disregarding any consideration that is not common stock) and option and stock
appreciation rights exercise prices.

 

17.5.                     Adjustments

 

Adjustments under this Section 17
related to shares of Stock or securities of the Company shall be made by the
Board, whose determination in that respect shall be final, binding and
conclusive.  No fractional shares or
other securities shall be issued pursuant to any such adjustment, and any
fractions resulting from any such adjustment shall be eliminated in each case
by rounding downward to the nearest whole share.  The Board shall determine the effect of a
Change in Control upon Awards other than Options, SARs, Stock Units and
Restricted Stock, and such effect shall be set forth in the appropriate Award
Agreement.  The Board may provide in the
Award Agreements at the time of grant, or any time thereafter with the consent
of the Grantee, for different provisions to apply to an Award in place of those
described in Sections 17.1, 17.2,  17.3 and 17.4.  This Section 17 does
not limit the Company’s ability to provide for alternative treatment of Awards
outstanding under the Plan in the event of change in control events that are
not Changes in Control.

 

17.6.                     No
Limitations on Company.

 

The making of Awards pursuant to the Plan shall not affect or limit in
any way the right or power of the Company to make adjustments, reclassifications,
reorganizations, or changes of its capital or business structure or to merge,
consolidate, dissolve, or liquidate, or to sell or transfer all or any part of
its business or assets.

 

18.                               GENERAL
PROVISIONS

 

18.1.                     Disclaimer
of Rights.

 

No provision in the Plan or in any Award or Award Agreement shall be
construed to confer upon any individual or entity the right to remain in the
employ or Service of the Company or an Affiliate, or to interfere in any way
with any contractual or other right or authority of the Company 

 

30

 

or an Affiliate either to increase or decrease the compensation or
other payments to any individual or entity at any time, or to terminate any
employment or other relationship between any individual or entity and the
Company or an Affiliate.  In addition,
notwithstanding anything contained in the Plan to the contrary, unless
otherwise stated in the applicable Award Agreement, no Award granted under the
Plan shall be affected by any change of duties or position of the Grantee, so
long as such Grantee continues to provide Service.  The obligation of the Company to pay any
benefits pursuant to this Plan shall be interpreted as a contractual obligation
to pay only those amounts described herein, in the manner and under the
conditions prescribed herein.  The Plan
and Awards shall in no way be interpreted to require the Company to transfer
any amounts to a third party trustee or otherwise hold any amounts in trust or
escrow for payment to any Grantee or beneficiary under the terms of the Plan.

 

18.2.                     Nonexclusivity
of the Plan.

 

Neither the adoption of the Plan nor the submission of the Plan to the
stockholders of the Company for approval shall be construed as creating any
limitations upon the right and authority of the Board to adopt such other
incentive compensation arrangements (which arrangements may be applicable
either generally to a class or classes of individuals or specifically to a
particular individual or particular individuals) as the Board in its discretion
determines desirable, including, without limitation, the granting of stock
options otherwise than under the Plan.

 

18.3.                     Withholding
Taxes.

 

The Company or an Affiliate, as the case may be, shall have the right
to deduct from payments of any kind otherwise due to a Grantee any federal,
state, or local taxes of any kind required by law to be withheld with respect
to the vesting of or other lapse of restrictions applicable to an Award or upon
the issuance of any shares of Stock upon the exercise of an Option or pursuant
to an Award.  At the time of such
vesting, lapse, or exercise, the Grantee shall pay in cash to the Company or an
Affiliate, as the case may be, any amount that the Company or an Affiliate may
reasonably determine to be necessary to satisfy such withholding obligation; provided,
however, that if there is a same day sale, the Grantee shall pay such
withholding obligation on the day that the same day sale is completed.  Subject to the prior approval of the Company
or an Affiliate, which may be withheld by the Company or an Affiliate, as the
case may be, in its sole discretion, the Grantee may elect to satisfy such
obligations, in whole or in part, (i) by causing the Company or an
Affiliate to withhold shares of Stock otherwise issuable to the Grantee or
(ii) by delivering to the Company or an Affiliate shares of Stock already
owned by the Grantee.  The shares of
Stock so delivered or withheld shall have an aggregate Fair Market Value equal
to such withholding obligations.  The
Fair Market Value of the shares of Stock used to satisfy such withholding
obligation shall be determined by the Company or an Affiliate as of the date
that the amount of tax to be withheld is to be determined.  A Grantee who has made an election pursuant
to this Section 18.3 may satisfy his or
her withholding obligation only with shares of Stock that are not subject to
any repurchase, forfeiture, unfulfilled vesting, or other similar
requirements.  The maximum number of
shares of Stock that may be withheld from any Award to satisfy any federal,
state or local tax withholding requirements upon the exercise, vesting, lapse
of restrictions applicable to such Award or payment of shares of Stock pursuant
to 

 

31

 

such Award, as applicable, cannot exceed such number of shares of Stock
having a Fair Market Value equal to the minimum statutory amount required by
the Company or an Affiliate to be withheld and paid to any such federal, state
or local taxing authority with respect to such exercise, vesting, lapse of
restrictions or payment of shares of Stock. 
For purposes of determining taxable income and the amount of the related
tax withholding obligation under this Section 18.3,
notwithstanding Section 2.18 or this Section 18.3, for any Shares that are sold on the same
day that such Shares are first legally saleable pursuant to the terms of the
applicable award agreement, Fair Market Value shall be determined based upon
the sale price for such Shares so long as the Grantee has provided the Company
with advance written notice of such sale.

 

18.4.                     Captions.

 

The use of captions in this Plan or any Award Agreement is for the
convenience of reference only and shall not affect the meaning of any provision
of the Plan or such Award Agreement.

 

18.5.                     Other
Provisions.

 

Each Award granted under the Plan may contain such other terms and
conditions not inconsistent with the Plan as may be determined by the Board, in
its sole discretion.

 

18.6.                     Number
and Gender.

 

With respect to words used in this Plan, the singular form shall
include the plural form, the masculine gender shall include the feminine gender, etc.,
as the context requires.

 

18.7.                     Severability.

 

If any provision of the Plan or any Award Agreement shall be determined
to be illegal or unenforceable by any court of law in any jurisdiction, the
remaining provisions hereof and thereof shall be severable and enforceable in
accordance with their terms, and all provisions shall remain enforceable in any
other jurisdiction.

 

18.8.                     Governing
Law

 

The validity and construction of this Plan and the instruments
evidencing the Awards hereunder shall be governed by the laws of the State of
Maryland, other than any conflicts or choice of law rule or principle that
might otherwise refer construction or interpretation of this Plan and the
instruments evidencing the Awards granted hereunder to the substantive laws of
any other jurisdiction.

 

18.9.                     Section 409A
of the Code.

 

The Company intends to comply with Section 409A, or an exemption
to Section 409A, with regard to Awards hereunder that constitute
nonqualified deferred compensation within the meaning of Section 409A.  To the extent that the Company determines
that a Grantee would be 

 

32

 

subject to the additional twenty percent (20%) tax imposed on certain
nonqualified deferred compensation plans pursuant to Section 409A as a
result of any provision of any Award granted under this Plan, such provision
shall be deemed amended to the minimum extent necessary to avoid application of
such additional tax.  The nature of any
such amendment shall be determined by the Board.

 

*    *    *

 

To record adoption of the Plan by the Board as of September 27,
2010, and approval of the Plan by the stockholders on November 29, 2010,
the Company has caused its authorized officer to execute the Plan.

 

 

	
   

  	
  WALKER &
  DUNLOP, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Deborah A. Wilson

  
	
   

  	
  Title:

  	
  Senior
  Vice President, Chief Financial Officer, Secretary and Treasurer

  

 

33

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