Document:

netreit_10-ex1001.htm

    EXHIBIT
10.1

     

    NetREIT

    

    1999
FLEXIBLE INCENTIVE PLAN

    

    TABLE
OF CONTENTS

     

    
    

    
      Page      

    

    
      	

              
                
 
      SECTION
      1.  PURPOSE OF THIS PLAN

              

              
                 
      SECTION
      2.  DEFINITIONS

              

              
                
 
      SECTION
      3.  ADMINISTRATION OF THIS PLAN

              

              
                
 
      SECTION
      4.  SHARES SUBJECT TO PLAN

              

              
                
 
      SECTION
      5.  ELIGIBILITY

              

              
                
 
      SECTION
      6.  STOCK OPTIONS

              

              
                
 
      SECTION
      7.  RESTRICTED STOCK

              

              
                
 
      SECTION
      8.  STOCK APPRECIATION RIGHTS

              

              
                 

                 
      SECTION
      9.  PHANTOM STOCK AWARDS

              

              
                 
      SECTION
      10.  DIVIDEND EQUIVALENTS

              

              
                
 
      SECTION
      11.  PERFORMANCE AWARDS

              

              
                
 
      SECTION
      12.  STOCK PURCHASE PLAN

              

              
                
 
      SECTION
      13.  OTHER AWARDS

              

              
                
 
      SECTION
      14.  COMPLIANCE WITH SECURITIES AND OTHER
      LAWS

              

              
                
 
      SECTION
      15.  ADJUSTMENTS UPON THE OCCURRENCE OF A REORGANIZATION OR
      CORPORATE TRANSACTION

              

              
                
 
      SECTION
      16.  AMENDMENT OR TERMINATION OF THIS
PLAN

              

              
                
 
      SECTION
      17.  AMENDMENTS AND ADJUSTMENTS TO AWARDS

              

              
                
 
      SECTION
      18.  GENERAL PROVISIONS

              

            	
              
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    SECTION
1.                              PURPOSE
OF THIS PLAN

    

    

    The purposes of the NetREIT 1999
Flexible Incentive Plan are to (i) promote the interests of NetREIT (the
"Company") and its stockholders by enabling the Company and each of its
Subsidiaries (as hereinafter defined) to (A) attract, motivate and retain their
respective employees and Non-Employee Directors (as hereinafter defined) by
offering such employees and Non-Employee Directors performance-based stock
incentives and other equity interests in the Company and other incentive awards
and (B) compensate Consultants (as hereinafter defined) by offering such
Consultants performance-based stock incentives and other equity interests in the
Company and other incentive awards that recognize the creation of value for the
stockholders of the Company and (ii) promote the Company's long-term growth and
success. To achieve these purposes, eligible Persons may receive Stock Options,
Restricted Stock, Performance Awards and any other Awards (as such terms are
hereinafter defined), or any combination thereof.

    

    SECTION
2.                                DEFINITIONS

    

    As used in this Plan, the following
terms shall have the meanings set forth below unless the context otherwise
requires:

    

    2.1         "Award" shall mean the grant of
a Stock Option, Restricted Stock, a Performance Award, a Dividend Equivalent, an
SAR, a Phantom Stock Award or any other grant of incentive compensation pursuant
to this Plan.

    

    2.2         "Book Value" shall mean the
excess of the value of the assets of an entity over the liabilities of such
entity (determined in accordance with United States generally accepted
accounting principles, consistently applied).

    

    2.3         "Board" shall mean the Board of
Directors of the Company, as the same may be constituted from time to
time.

    

    2.4         "Cause" shall mean termination
of a Participant's employment with the Company or a Subsidiary upon the
occurrence of one or more of the following events:

    

    (a)         The
Participant's failure to substantially perform such Participant's duties with
the Company or any Subsidiary as determined by the Committee or the Board
following receipt by the Participant of written notice of such failure and the
Participant's failure to remedy such failure within thirty (30) days after
receipt of such notice (other than a failure resulting from the Participant's
incapacity during physical or mental illness);

    

    (b)         The
Participant's willful failure or refusal to perform specific directives of the
Board, which directives are consistent with the scope and nature of the
Participant's duties and responsibilities, and which are not remedied by the
Participant within thirty (30) days after being notified in writing of such
Participant's failure by the Board;

    
      
         

      

      
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    (c)         The
Participant's conviction of a felony; or

    

    (d)         A
breach of the Participant's fiduciary duty to the Company or any Subsidiary or
willful violation in the course of performing the Participant's duties for the
Company or any Subsidiary of any law, rule or regulation (other than traffic
violations or other minor offenses). No act or failure to act on the
Participant's part shall be considered willful unless done or omitted to be done
in bad faith and without reasonable belief that the action or omission was in
the best interest of the Company; provided, however, that for each employee of
the Company who has entered into an employment agreement with the Company,
"Cause" shall have the meaning provided in such employment
agreement.

    

    2.5         "Change in Control" shall mean,
after the Effective Date, (i) a Corporate Transaction is consummated, other than
a Corporate Transaction that would result in substantially all of the holders of
voting securities of the Company outstanding immediately prior thereto owning
(directly or indirectly and in substantially the same proportions relative to
each other) not less than fifty percent (50%) of the combined voting power of
the voting securities of the issuing/surviving/resulting entity outstanding
immediately after such Corporate Transaction or (ii) an agreement for the sale
or other disposition of all or substantially all of the Company's assets
(evaluated on a consolidated basis, without regard to whether the sale or
disposition is effected via a sale or disposition of assets of the Company, the
sale or disposition of the securities of one or more Subsidiaries or the sale or
disposition of the assets of one or more Subsidiaries) is
consummated.

    

    2.6         "Code" shall mean the Internal
Revenue Code of 1986, as amended from time to time (or any successor to such
legislation).

    

    2.7         "Committee" shall mean the
Board.

    

    2.8         "Common Stock" shall mean the
Common Stock, no par value, of the Company.

    

    2.9         "Company" shall have the
meaning set forth in Section 1 of this Plan.

    

    2.10       "Consultant" shall mean any
Person who or which is engaged by the Company or any Subsidiary to render
consulting services.

    

    2.11       "Corporate Transaction" shall
mean any recapitalization (other than a transaction contemplated by Section 15.1 of this
Plan) merger, consolidation or conversion involving the Company or any exchange
of securities involving the Common Stock (other than a transaction contemplated
by Section 15.1
of this Plan), provided that a primary issuance of shares of Common Stock shall
not be deemed to be a "Corporate Transaction."

    

    2.12       "Designated Beneficiary" shall
mean the beneficiary designated by a Participant, in a manner authorized by the
Committee or the Board, to exercise the rights of such Participant in the event
of such Participant's death. In the absence of an effective designation by a
Participant, the Designated Beneficiary shall be such Participant's
estate.

    

    2.13       "Director" shall mean any
member of the Board.

    
      
         

      

      
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    2.14                
"Disability" shall mean
permanent and total inability to engage in any substantial gainful activity,
even with reasonable accommodation, by reason of any medically determinable
physical or mental impairment which has lasted or can reasonably be expected to
last without material interruption for a period of not less than twelve (12)
months, as determined in the sole discretion of the Committee or the
Board.

    

    2.15                 "Dividend Equivalent" shall
mean an award granted pursuant to Section 10 of this Plan of a right to receive
certain payments with respect to Shares.

    

    2.16                 "Effective Date" shall mean
December 1, 1999.

    

    2.17                 "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended from time to time (or any successor
to such legislation).

    

    2.18                 "Fair Market Value" shall mean
with respect to the Shares, as of any date, the value established by the Board.
Fair market value shall be determined without regard to any restriction other
than a restriction which, by its terms, will never lapse.

    

    2.19                 "Incentive Stock Option" shall
mean any option to purchase Shares awarded pursuant to this Plan which qualifies
as an "Incentive Stock Option" pursuant to Section 422 of the Code.

    

    2.20                 "Non-Employee Director" shall
have the meaning set forth in Rule 16b-3 (or any successor to such rule)
promulgated under the Exchange Act) who is also an "outside director," as
required pursuant to Section 162(m) of the Code and such Treasury regulations as
may be promulgated thereunder.

    

    2.21                 "Non-Qualified Stock Option"
shall mean any option to purchase Shares awarded pursuant to this Plan that does
not qualify as an Incentive Stock Option, including, without limitation, any
option to purchase Shares originally designated as or intended to qualify as an
Incentive Stock Option but which does not (for whatever reason) qualify as an
Incentive Stock Option.

    

    2.22                 "Non-Share Method" shall have
the meaning set forth in Section 6.6(c) of
this Plan.

    

    2.23                 "Optionee" shall mean any
Participant who has been granted and holds a Stock Option awarded pursuant to
this Plan.

    

    2.24                 "Participant" shall mean any
Person who has been granted and holds an Award granted pursuant to this
Plan.

    

    2.25                 "Performance Award" shall mean
any Award granted pursuant to this Plan of Shares, rights based upon, payable in
or otherwise related to Shares (including Restricted Stock) or cash, as the
Committee or Board may determine, at the end of a specified performance period
established by the Committee or Board and may include, without limitation,
Performance Shares or Performance Units.

    

    2.26                 "Performance Shares" shall have
the meaning set forth in Section 11.1 of this
Plan.

    

    2.27                 "Performance Units" shall have
the meaning set forth in Section 11.1 of this
Plan.

    
      
         

      

      
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    2.28                 "Permitted Modification" shall
be deemed to be any modification of an Award which is made in connection with a
Corporate Transaction and which provides, in connection with a Stock Option,
that subsequent to the consummation of the Corporate Transaction (i) the
exercise price of such Stock Option will be proportionately adjusted to reflect
the exchange ratio applicable to the particular Corporate Transaction and/or
(ii) the nature and amount of consideration to be received upon exercise of the
Stock Option will be the same (on a per share basis) as was received by Persons
who were holders of shares of Common Stock immediately prior to the consummation
of the Corporate Transaction.

    

    2.29                 "Person" shall mean an
individual, partnership, limited liability company, corporation, joint stock
company, trust, estate, joint venture, association or unincorporated
organization or any other form of business organization.

    

    2.30                 "Phantom Stock Award" means a
right awarded to a participant that, in accordance with the terms of the
granting agreement, entitles the holder to receive Shares or cash in an amount
equal to the Fair Market Value thereof, as determined by the Committee, without
payment of any amounts by the holder.

    

    2.31                 "Plan" shall mean this NetREIT
1999 Flexible Incentive Plan as it may be amended from time to
time.

    

    2.32                 "Purchase Loan" shall have the
meaning set forth in Section 12.1 of this
Plan.

    

    2.33                 "Reload Option" shall mean a
Stock Option as defined in Section 6.6(b) of
this Plan.

    

    2.34                 "Reorganization" shall mean any
stock split, stock dividend, reverse stock split, combination of Shares or any
other similar increase or decrease in the number of Shares issued and
outstanding.

    

    2.35                 "Restricted Stock" shall mean
any Shares granted pursuant to this Plan that are subject to restrictions or
substantial risk of forfeiture.

    

    2.36                 "Retirement" shall mean
termination of employment of an employee of the Company or any Subsidiary, other
than discharge for Cause, after age 65 or on or before age 65 if pursuant to the
terms of any retirement plan maintained by the Company or any Subsidiary in
which such employee participates.

    

    2.37                 "Securities Act" shall mean the
Securities Act of 1933, as amended from time to time (or any successor to such
legislation).

    

    2.38                 "Share Retention Method" shall
have the meaning set forth in Section 6.6(c) of
this Plan.

    

    2.39                 "Shares" shall mean shares of
the Common Stock and any shares of capital stock or other securities hereafter
issued or issuable upon, in respect of or in substitution or exchange for shares
of Common Stock.

    

    2.40                 "SAR" shall mean a stock
appreciation right granted pursuant to an agreement that entitles the holder to
receive, with respect to each Share encompassed by the exercise of such SAR, an
amount determined by the Committee. In the absence of such determination, the
holder shall be entitled to receive, with respect to such Share encompassed by
the exercise of such SAR, the excess of its Fair Market Value on the date of
exercise over the value on the date of the grant.

    
      
         

      

      
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    2.41                 "Stock Option" shall mean any
Incentive Stock Option or Non-Qualified Stock Option.

    

    2.42                 "Subsidiary" shall mean a
subsidiary corporation of the Company, as defined in Section 424(f) of the
Code.

    

    2.43                 "Transactional Consideration"
shall have the meaning set forth in Section 15.2 of this
Plan.

    

    SECTION
3.                                ADMINISTRATION
OF THIS PLAN

    

    3.1         Committee/Board. This Plan
shall be administered and interpreted by the Committee and/or the
Board.

    

    3.2         Awards.

    

    (a)         Subject
to the provisions of this Plan, the Committee is authorized to:

    

    (i)         determine
the Persons to whom Awards are to be granted;

    

    
      	
               
      

            	
              (ii)

            	
              determine
      the types and combinations of Awards to be granted; the number of Shares
      to be covered by an Award; the exercise price of an Award; the time or
      times when an Award shall be granted and may be exercised; the terms,
      performance criteria or other conditions, vesting periods or any
      restrictions for an Award; any restrictions on Shares acquired pursuant to
      the exercise of an Award; and any other terms and conditions of an
      Award;

            

    

    

    (iii)       interpret
the provisions of this Plan;

    

    (iv)      prescribe,
amend and rescind rules and regulations relating to this Plan;

    

    
      	
               
      

            	
              (v)

            	
              determine
      whether, to what extent and under what circumstances to provide loans from
      the Company to Participants to exercise Awards granted pursuant to this
      Plan, and the terms and conditions of such
  loans;

            

    

    

    
      	
               
      

            	
              (vi)

            	
              rely
      upon employees of the Company for such clerical and record keeping duties
      as may be necessary in connection with the administration of this
      Plan;

            

    

    

    
      	
               
      

            	
              (vii)

            	
              accelerate
      or defer (with the consent of the Participant) the vesting of any rights
      pursuant to an Award; and

            

    

    

    
      	
               
      

            	
              (viii)

            	
              make
      all other determinations and take all other actions necessary or advisable
      for the administration of this
Plan.

            

    

    
      
         

      

      
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    (b)         Without
limiting the Board's right to amend this Plan pursuant to Section 17 of this
Plan, the Board may take all actions authorized by Section 3.2(a) of
this Plan, including, without limitation, granting such Awards pursuant to this
Plan as the Board may deem necessary or appropriate.

    

    3.3         Procedures.

    

    (a)         Proceedings
by the Board with respect to this Plan will be conducted in accordance with the
articles of incorporation and bylaws of the Company.

    

    (b)         A
majority of the Committee members shall constitute a quorum for action by the
Committee. All determinations of the Committee shall be made by not less than a
majority of its members.

    

    (c)         All
questions of interpretation and application of this Plan or pertaining to any
question of fact or Award granted hereunder will be decided by the Committee,
whose decision will be final, conclusive and binding upon the Company and each
other affected party.

    

    SECTION
4.                                SHARES
SUBJECT TO PLAN

    

    4.1         Limitations. The maximum
number of Shares that may be issued with respect to Awards granted pursuant to
this Plan at any time shall be an amount equal to ten percent (10.0%) of the
Company's issued and outstanding shares of Common Stock at such time. The Shares
issued pursuant to this Plan may be authorized but unissued Shares, or may be
issued Shares which have been reacquired by the Company.

    

    4.2         Changes. To the extent that
any Award granted pursuant to this Plan shall be forfeited, shall expire or
shall be canceled, in whole or in part, then the number of Shares covered by the
Award so forfeited, expired or canceled may again be awarded pursuant to the
provisions of this Plan. In the event that Shares are delivered to the Company
in full or partial payment of the exercise price for the exercise of a Stock
Option, the number of Shares available for future Awards granted pursuant to
this Plan shall be reduced only by the net number of Shares issued upon the
exercise of the Stock Option. Awards that may be satisfied either by the
issuance of Shares or by cash or other consideration shall, until the form of
consideration to be paid is finally determined, be counted against the maximum
number of Shares that may be issued pursuant to this Plan.

    

    SECTION
5.                                ELIGIBILITY

    

    Eligibility for participation in this
Plan shall be confined to those individuals who are employed by the Company or a
Subsidiary and such Consultants and Non-Employee Directors as may be designated
by the Committee. In making any determination as to Persons to whom Awards shall
be granted, the type of Award and/or the number of Shares to be covered by the
Award, the Committee shall consider the position and responsibilities of the
Person, the importance of the Person, the duties of the Person, the past,
present and potential contributions of the Person to the growth and success of
the Company and such other factors as the Committee may deem relevant in
connection with accomplishing the purposes of this Plan.

    
      
         

      

      
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    SECTION
6.                                STOCK
OPTIONS

    

    6.1         Grants. The Committee or the
Board may grant Stock Options alone or in addition to other Awards granted
pursuant to this Plan to any eligible Person. Each Person so selected shall be
offered a Stock Option to purchase the number of Shares determined by the
Committee. The Committee shall specify whether such Stock Option is an Incentive
Stock Option or a Non-Qualified Stock Option and any other terms or conditions
relating to such Award; provided, however only employees of the Company or a
Subsidiary may be granted Incentive Stock Options. To the extent that any Stock
Option designated as an Incentive Stock Option does not qualify as an Incentive
Stock Option (whether because of its provisions, the failure of the stockholders
of the Company to authorize the issuance of Incentive Stock Options, the time or
manner of its exercise or otherwise), such Stock Option or the portion thereof
which does not qualify shall be deemed to constitute a Non-Qualified Stock
Option. Each Person to be granted a Stock Option shall enter into a written
agreement with the Company, in such form as the Committee may prescribe, setting
forth the terms and conditions (including, without limitation, the exercise
price and vesting schedule) of the Stock Option. At any time and from time to
time, the Optionee and the Committee may agree to modify an option agreement in
such respects as they may deem appropriate, including, without limitation, the
conversion of an Incentive Stock Option into a Non-Qualified Stock Option. The
Committee may require that an Optionee meet certain conditions before the Stock
Option or a portion thereof may vest or be exercised, as, for example, that the
Optionee remain in the employ of the Company or a Subsidiary for a stated period
or periods of time.

    

    6.2         Incentive Stock Options
Limitations.

    

    (a)         In
no event shall any individual be granted Incentive Stock Options to the extent
that the Shares covered by any Incentive Stock Options (and any incentive stock
options granted pursuant to any other plans of the Company or its Subsidiaries)
that may be exercised for the first time by such individual in any calendar year
have an aggregate Fair Market Value in excess of $100,000. For this purpose, the
Fair Market Value of the Shares shall be determined as of the date(s) on which
the Incentive Stock Options are granted. It is intended that the limitation on
Incentive Stock Options provided in this Section 6.2(a) be the
maximum limitation on Stock Options which may be considered Incentive Stock
Options pursuant to the Code.

    

    (b)         The
option exercise price of an Incentive Stock Option shall not be less than one
hundred percent (100%) of the Fair Market Value of the Shares subject to such
Incentive Stock Option on the date of the grant of such Incentive Stock
Option.

    

    (c)         Notwithstanding
anything herein to the contrary, in no event shall any employee owning more than
ten percent (10%) of the total combined voting power of the Company or any
Subsidiary be granted an Incentive Stock Option unless the option exercise price
of such Incentive Stock Option shall be at least one hundred ten percent (110%)
of the Fair Market Value of the Shares subject to such Incentive Stock Option on
the date of the grant of such Incentive Stock Option.

    

    (d)         In
no event shall any individual be granted an Incentive Stock Option after the
expiration of ten (10) years from the date this Plan is adopted or is approved
by the stockholders of the Company (if stockholder approval is required by
Section 422 of the Code).

    
      
         

      

      
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    (e)         To
the extent stockholder approval of this Plan is required by Section 422 of the
Code, no individual shall be granted an Incentive Stock Option unless this Plan
is approved by the stockholders of the Company within twelve (12) months before
or after the date this Plan is initially adopted. In the event this Plan is
amended to increase the number of Shares subject to issuance upon the exercise
of Incentive Stock Options or to change the class of employees eligible to
receive Incentive Stock Options, no individual shall be granted an Incentive
Stock Option unless such amendment is approved by the stockholders of the
Company within twelve (12) months before or after such amendment.

    

    (f)         No
Incentive Stock Option shall be granted to any employee owning more than ten
percent (10%) of the total combined voting power of the Company or any
Subsidiary unless the term of such Incentive Stock Option is equal to or less
than five (5) years measured from the date on which such Incentive Stock Option
is granted.

    

    6.3         Option Term. The term of a
Stock Option shall be for such period of time from the date of its grant as may
be determined by the Committee or the Board; provided, however, that no
Incentive Stock Option shall be exercisable later than ten (10) years from the
date of its grant.

    

    6.4         Time of Exercise. No Stock
Option may be exercised unless it is exercised prior to the expiration of its
stated term and, in connection with options granted to employees of the Company
or its Subsidiaries, at the time of such exercise, the Optionee is, and has been
continuously since the date of grant of such Stock Option, employed by the
Company or a Subsidiary, except that:

    

    (a)         A
Stock Option may, to the extent vested as of the date the Optionee ceases to be
an employee of the Company or a Subsidiary, be exercised during the three month
period immediately following the date the Optionee ceases (for any reason other
than death, Disability or termination for Cause) to be an employee of the
Company or a Subsidiary (or within such other period as may be specified in the
applicable option agreement), provided that, if the Stock Option has been
designated as an Incentive Stock Option and the option agreement provides for a
longer exercise period, the exercise of such Stock Option after such three-month
period shall be treated as the exercise of a Non-Qualified Stock
Option;

    

    (b)         If
the Optionee dies while in the employ of the Company or a Subsidiary, or within
three months after the Optionee ceases (for any reason other than termination
for Cause) to be such an employee (or within such other period as may be
specified in the applicable option agreement), a Stock Option may, to the extent
vested as of the date of the Optionee's death, be exercised by the Optionee's
Designated Beneficiary during the one year period immediately following the date
of the Optionee's death (or within such other period as may be specified in the
applicable option agreement); provided that, if the Stock Option has been
designated as an Incentive Stock Option and the option agreement provides for a
longer exercise period, the exercise of such Stock Option after such one-year
period shall be treated as the exercise of a Non-Qualified Stock
Option;

    

    (c)         If
the Optionee ceases to be an employee of the Company or a Subsidiary by reason
of the Optionee's Disability, a Stock Option, to the extent vested as of the
date the Optionee ceases to be an employee of the Company or a Subsidiary, may
be exercised during the one year period immediately following the date on which
the Disability is determined to exist (or within such other period as may be
specified in the applicable option agreement); provided that, if the Stock
Option has been designated as an Incentive Stock Option and the option agreement
provides for a longer exercise period, the exercise of such Stock Option after
such one-year period shall be treated as the exercise of a Non-Qualified Stock
Option; and

    
      
         

      

      
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    (d)         If
the Optionee's employment is terminated for Cause, all Stock Options held by
such Optionee shall simultaneously terminate and will no longer be exercisable.
Nothing contained in this Section 6.4 will be
deemed to extend the term of a Stock Option or to revive any Stock Option which
has previously lapsed or been canceled, terminated or surrendered. Stock Options
granted under this Plan to Consultants or Non-Employee Directors will contain
such terms and conditions with respect to the death or disability of a
Consultant or Non-Employee Director or termination of a Consultant's or
Non-Employee Director's relationship with the Company as the Committee or the
Board deems necessary or appropriate. Such terms and conditions will be set
forth in the option agreements evidencing the grant of such Stock
Options.

    

    6.5         Vesting of Stock
Options.

    

    (a)         Each
Stock Option granted pursuant to this Plan may only be exercised to the extent
that the Optionee is vested in such Stock Option. Each Stock Option shall vest
separately in accordance with the option vesting schedule determined by the
Committee, which will be incorporated in the option agreement entered into
between the Company and such Optionee. The option vesting schedule may be
accelerated if, in the sole discretion of the Committee, the acceleration of the
option vesting schedule would be in the best interests the Company.

    

    (b)         In
the event of the dissolution or liquidation of the Company, each Stock Option
granted pursuant to this Plan shall terminate as of a date to be fixed by the
Committee; provided, however, that not less than thirty (30) days' prior written
notice of the date so fixed shall be given to each Optionee. During such period
all Stock Options which have not previously been terminated, exercised or
surrendered will (subject to the provisions of Section 6.3 and Section 6.4 of this
Plan) fully vest and become exercisable, notwithstanding the vesting schedule
set forth in the option agreement evidencing the grant of such Stock Option.
Upon the date fixed by the Committee, any unexercised Stock Options shall
terminate and be of no further effect.

    

    (c)         Upon
the occurrence of a Change in Control, all Stock Options and any associated
Stock Appreciation Rights shall become fully vested and immediately
exercisable.

    

    6.6         Manner of Exercise of Stock
Options.

    

    (a)         Except
as otherwise provided in this Plan, Stock Options may be exercised as to Shares
only in amounts and at intervals of time specified in the written option
agreement between the Company and the Optionee. Each exercise of a Stock Option,
or any part thereof, shall be evidenced by a written notice delivered by the
Optionee to the Company. Except as set forth in Section 6.6(c) of
this Plan, the purchase price of the Shares as to which a Stock Option shall be
exercised shall be paid in full at the time of exercise, and may be paid to the
Company either:

    

    (i)         in
cash (including check, bank draft or money order); or

    

    
      	
               
      

            	
              (ii)

            	
              by
      other consideration deemed acceptable by the Committee in its sole
      discretion.

            

    

    
      
         

      

      
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    (b)         If
an Optionee delivers Shares (including Shares of Restricted Stock) already owned
by the Optionee in full or partial payment of the exercise price for any Stock
Option, or if the Optionee elects to have the Company retain that number of
Shares out of the Shares being acquired through the exercise of the Stock Option
having a Fair Market Value equal to the exercise price of the Stock Option being
exercised, the Committee may, in its sole discretion, authorize the grant of a
new Stock Option (a "Reload Option") for that number of Shares equal to the
number of already owned Shares surrendered (including Shares of Restricted
Stock) or newly acquired Shares being retained by the Company in payment of the
option exercise price of the underlying Stock Option being exercised. The grant
of a Reload Option will become effective upon the exercise of the underlying
Stock Option. The option exercise price of the Reload Option shall be the Fair
Market Value of a Share on the effective date of the grant of the Reload Option.
Each Reload Option shall be exercisable no later than the time when the
underlying stock option being exercised could be last exercised. The Committee
may also specify additional terms, conditions and restrictions for the Reload
Option and the Shares to be acquired upon the exercise thereof.

    

    (c)         Either
the (i) purchase price of the Shares as to which a Stock Option shall be
exercised or (ii) amount, as determined by the Committee, of any federal, state
or local tax required to be withheld by the Company due to the exercise of a
Stock Option may, subject to the authorization of the Committee, be satisfied,
at the election of the Optionee, either (A) by payment by the Optionee to the
Company of the amount of such withholding obligation in cash or other
consideration acceptable to the Committee in its sole discretion (the "Non-Share
Method") or (B) through either a cashless exercise whereby the Company, in
essence, retains a number of Shares out of the Shares being acquired through the
exercise of the Stock Option having a Fair Market Value equal to the purchase
price or payment of the purchase price through the delivery of already owned
Shares having a Fair Market Value equal to the amount of the purchase price (the
"Share Retention Method"). If an Optionee elects to use the Share Retention
Method in full or partial satisfaction of any tax liability resulting from the
exercise of a Stock Option, the Committee may authorize the grant of a Reload
Option for that number of Shares as shall equal the number of Shares used to
satisfy the tax liabilities of the Optionee arising out of the exercise of such
Stock Option. Such Reload Option will be granted at the price and on the terms
set forth in Section
6.6(b) of this Plan. The cash payment or an amount equal to the Fair
Market Value of the Shares so withheld, as the case may be, shall be remitted by
the Company to the appropriate taxing authorities.

    

    (d)         An
Optionee shall not have any of the rights of a stockholder of the Company with
respect to the Shares subject to a Stock Option except to the extent that such
Stock Option is exercised and one or more certificates representing such Shares
shall have been delivered to the Optionee.

    

    SECTION
7.                                RESTRICTED
STOCK

    

    7.1         Grants. The Committee may
grant Awards of Restricted Stock to any Consultant, Non-Employee Director or
employee of the Company or a Subsidiary for such minimum consideration, if any,
as may be required by applicable law or such greater consideration as may be
determined by the Committee, in its sole discretion. The terms and conditions of
the Restricted Stock shall be specified by the grant agreement. The Committee,
in its sole discretion, may specify any particular rights which the Participant
to whom a grant of Restricted Stock is made shall have in the Restricted Stock
during the restriction period and the restrictions applicable to the particular
Award, the vesting schedule (which may be based on service, performance or other
factors) and rights to acceleration of vesting (including, without limitation,
whether non-vested Shares are forfeited or vested upon termination of
employment).

    
      
         

      

      
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    Further,
the Committee may grant performance-based Awards consisting of Restricted Stock
by conditioning the grant, or vesting or such other factors, such as the
release, expiration or lapse of restrictions upon any such Award (including the
acceleration of any such conditions or terms) of such Restricted Stock upon the
attainment of specified performance goals or such other factors as the Committee
may determine. The Committee shall also determine when the restrictions shall
lapse or expire and the conditions, if any, pursuant to which the Restricted
Stock will be forfeited or sold back to the Company. Each Award of Restricted
Stock may have different restrictions and conditions. Unless otherwise set forth
in the grant agreement, Restricted Stock may not be sold, pledged, encumbered or
otherwise disposed of by the recipient until the restrictions specified in the
Award expire. Awards of Restricted Stock are subject to acceleration of vesting,
termination of restrictions and termination in the same manner as Stock Options
pursuant to Section
6.4 and Section
6.5 of this Plan.

    

    7.2         Awards and Certificates. Any
Restricted Stock issued hereunder may be evidenced in such manner as the
Committee, in its sole discretion, shall deem appropriate including, without
limitation, book-entry registration or issuance of a stock certificate or
certificates. In the event any stock certificate is issued in respect of Shares
of Restricted Stock, such certificate shall bear an appropriate legend with
respect to the restrictions applicable to such Award. The Company may retain, at
its option, the physical custody of any stock certificate representing any
awards of Restricted Stock during the restriction period or require that the
certificates evidencing Restricted Stock be placed in escrow or trust, along
with a stock power endorsed in blank, until all restrictions are removed or
expire.

    

    SECTION
8.                                STOCK
APPRECIATION RIGHTS

    

    8.1         Grants. The Committee may
grant SARS to any employee, Non-Employee Director, consultant or advisor of the
Company in its sole discretion.

    

    8.2         Maximum SAR Period. The
maximum period in which an SAR may be exercised shall be determined by the
Committee on the date of grant, except that no corresponding SAR that is related
to an Incentive Stock Option shall be exercisable after the expiration of ten
years from the date such related stock Option was granted. In the case of a
corresponding SAR that is related to an Incentive Stock Option granted to a
Participant who is or is deemed to be a ten percent (10%) stockholder, such
corresponding SAR shall not be exercisable after the expiration of five years
from the date such related Stock Option was granted. The terms of any
corresponding SAR that is related to an Incentive Stock Option may provide that
it is exercisable for a period less than such maximum period.

    

    8.3         Exercise. Subject to the
provisions of this Plan and the applicable granting agreement, an SAR may be
exercised in whole at any time or in part from time to time at such times and in
compliance with such requirements as the Committee shall determine; provided
however, that a corresponding SAR that is related to an Incentive Stock Option
may be exercised only to the extent that the related Stock Option is exercisable
and only when the Fair Market Value exceeds the option price of the related
Stock Option. An SAR granted under this Plan may be exercised with respect to
any number of whole shares less than the full number for which the SAR could be
exercised. A partial exercise of an SAR shall not affect the right to exercise
the SAR from time to time in accordance with this Plan and the applicable
granting agreement with respect to the remaining Shares subject to the SAR. The
exercise of a corresponding SAR shall result in the termination of the related
Stock Option to the extent of the number of Shares with respect to which the SAR
is exercised.

    
      
         

      

      
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    8.4         Settlement. At the discretion
of the Committee, the amount payable as a result of the exercise of an SAR may
be settled in cash, Common Stock, or a combination of cash and Common Stock. No
fractional shares will be deliverable upon the exercise of an SAR but a cash
payment will be made in lieu thereof.

    

    SECTION
9.                                PHANTOM
STOCK AWARDS

    

    9.1         Grants. The Committee shall
designate each individual to whom Phantom Stock Awards are to be granted and
shall specify the number of Shares included in such awards.

    

    9.2         Vesting. The Committee, on the
date of the Award, may prescribe that a Participant's rights in the Phantom
Stock Award shall be forfeitable or otherwise restricted for a period of time or
subject to such conditions as may be set forth in the granting
agreement.

    

    9.3         Performance Objectives. The
Committee may prescribe that Phantom Stock Awards will become nonforfeitable
based on objectives such as, but not limited to, the Company's, a Subsidiary's
or an operating unit's return on equity, earnings per share, total earnings,
earnings growth, return on capital, return on assets, or Fair Market
Value.

    

    9.4         Settlement. A Phantom Stock
Award shall be settled, to the extent that it is nonforfeitable, at the time set
forth in the applicable granting agreement. At the discretion of the Committee,
the Phantom Stock Award may be settled in cash, Common Stock, or a combination
of cash and Common Stock. Any payment to be made in cash shall be made in a lump
sum or in installments as prescribed by the Committee in its discretion. Any
payment to be made in Common Stock shall be based on the Fair Market Value of
the Common Stock on the payment date. Cash Dividend Equivalents may be paid
during or after the vesting period with respect to a Phantom Stock Award, as
determined by the Committee. If a payment of cash is to be made on a deferred
basis, the Committee shall establish whether interest shall be credited, the
rate thereof and any other terms and conditions applicable thereto.

    

    SECTION
10.                                DIVIDEND
EQUIVALENTS

    

    10.1                 Grant of Dividend Equivalents.
The Committee is authorized to grant Dividend Equivalents to Participants, which
will entitle such Participant to receive, on a current or deferred basis and
subject to such conditions as may be imposed by the Committee, cash payments
from the Company in the same amounts (or such lesser fraction of such amounts as
may be specifically set forth in the Dividend Equivalent agreement evidencing
such award) that the holder of record of such number of Shares would be entitled
to receive as cash dividends on such Shares (unless otherwise limited in such
agreement). Dividend Equivalent agreements will specify the expiration date of
such Dividend Equivalents, the number of Shares to which they relate, and such
other conditions as the Committee may impose.

    

    10.2                 Payments. The right to a cash
payment in respect of a Dividend Equivalent will apply to all dividends the
record date for which occurs at any time during the period commencing on the
date the Dividend Equivalent is granted and ending on the date such Dividend
Equivalent expires or is terminated, whichever occurs first.

    
      
         

      

      
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    10.3                 Related Dividend Equivalents.
If a Dividend Equivalent is granted in conjunction with the grant of a Stock
Option, the applicable Dividend Equivalent agreement will provide that the
grantee is entitled to receive from the Company cash payments, on a current or
deferred basis, in the same amounts (or such lesser fraction of such amounts as
may be specifically set forth in the Dividend Equivalent agreement) that the
holder of record of a number of Shares equal to the number of Shares covered by
such Stock Option would be entitled to receive as dividends on such Shares
unless otherwise limited in the Dividend Equivalent agreement. Such right to a
cash payment will apply to, and such Dividend Equivalent will remain outstanding
in respect of, all cash dividends the record date for which occurs at any time
during the period commencing on the date the related Stock Option is granted and
ending on the date that such Stock Option is exercised, expires or terminates,
whichever occurs first.

    

    SECTION
11.                                PERFORMANCE
AWARDS

    

    11.1                 Grants. A Performance Award
may consist of either or both, as the Committee may determine, of (a) the right
to receive Shares or Restricted Stock, or any combination thereof as the
Committee may determine ("Performance Shares"), or (b) the right to receive a
fixed dollar amount payable in Shares, Restricted Stock, cash or any combination
thereof, as the may determine ("Performance Units"). The Committee may grant
Performance Awards to any eligible Consultant, Non-Employee Director or employee
of the Company or a Subsidiary, for such minimum consideration, if any, as may
be required by applicable law or such greater consideration as may be determined
by the Committee, in its sole discretion. The terms and conditions of
Performance Awards shall be specified at the time of the grant and may include
provisions establishing the performance period, the performance criteria to be
achieved during a performance period, the criteria used to determine vesting
(including the acceleration thereof), whether Performance Awards are forfeited
or vest upon termination of employment during a performance period and the
maximum or minimum settlement values. Each Performance Award shall have its own
terms and conditions, which shall be determined in the sole discretion of the
Committee. If the Committee determines, in its sole discretion, that the
established performance measures or objectives are no longer suitable because of
a change in the Company's business, operations, corporate structure or for other
reasons that the Committee deems satisfactory, the Committee may modify the
performance measures or objectives and/or the performance period. Awards of
Performance Shares and/or Performance Units are subject to acceleration of
vesting, termination of restrictions and termination in the same manner as Stock
Options pursuant to Section 6.4 and Section 6.5 of this
Plan.

    

    11.2                 Terms and Conditions.
Performance Awards may be valued by reference to the Fair Market Value of a
Share or according to any other formula or method deemed appropriate by the
Committee, in its sole discretion, including, but not limited to, achievement of
specific financial, production, sales, cost or earnings performance objectives
that the Committee believes to be relevant or the Company's performance or the
performance of the Common Stock measured against the performance of the market,
the Company's industry segment or its direct competitors. Performance Awards may
also be conditioned upon the applicable Participant remaining in the employ of
the Company or one of its Subsidiaries for a specified period. Performance
Awards may be paid in cash, Shares (including Restricted Stock) or other
consideration, or any combination thereof. Performance Awards may be payable in
a single payment or in installments and may be payable at a specified date or
dates or upon attaining the performance objective or objectives, all at the sole
discretion of the Committee. The extent to which any applicable performance
objective has been achieved shall be conclusively determined by the Committee in
its sole discretion.

    
      
         

      

      
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    SECTION
12.                                STOCK
PURCHASE PLAN

    

    12.1                 Grant of Stock Purchase
Rights. The term "Stock Purchase Right" means the right to purchase
shares of Common Stock and to pay for all or a portion of the purchase price for
such shares through a loan made by the Company to a Participant (a "Purchase
Loan") as set forth in this Section 12.

    

    12.2                 Terms of Purchase
Loans

    

    (a)         Each
Purchase Loan shall be evidenced by a promissory note. The term of the Purchase
Loan shall be a period not to exceed ten years, as determined by the Committee,
and the proceeds of the Purchase Loan shall be used exclusively by the
Participant for purchase of shares of Common Stock at a purchase price equal to
the Fair Market Value on the date of the Stock Purchase Right.

    

    (b)         A
Purchase Loan shall bear interest at whatever rate the Committee shall determine
(not less than the then existing prime rate as announced by the Company's lender
under the Company's credit facility but not in excess of the maximum rate
permissible under applicable law), payable in a manner and at such times as the
Committee shall determine. Those terms and provisions as the Committee shall
determine shall be incorporated into the promissory note evidencing the Purchase
Loan.

    

    12.3                 Security for
Loans.

    

    (a)         Purchase
Loans granted to Participants shall be secured by a pledge of the shares of
Common Stock acquired pursuant to the Stock Purchase Right. Such pledge shall be
evidenced by a pledge agreement (the "Pledge Agreement") containing such terms
and conditions as the Committee shall determine. The certificates for the shares
of Common Stock purchased by a Participant pursuant to a Stock Purchase Right
shall be issued in the Participant's name, but shall be held by the Company as
security for repayment of the Participant's Purchase Loan together with a stock
power executed in blank by the Participant (the execution and delivery of which
by the Participant shall be a condition to the issuance of the Stock Purchase
Right). The Participant shall be entitled to exercise all rights applicable to
such shares of Common Stock, including, but not limited to, the right to vote
such shares of Common Stock and the right to receive dividends and other
distributions made with respect to such shares of Common Stock.

    

    (b)         The
Company shall release and deliver to each Participant certificates for the
shares of Common Stock purchased by the Participant under the Stock Purchase
Right and then held by the Company, provided the Participant has paid or
otherwise satisfied in full the balance of the Purchase Loan and any accrued but
unpaid interest thereon. In the event the balance of the Purchase Loan is not
repaid, forgiven or otherwise satisfied within ninety (90) days after (i) the
date repayment of the Purchase Loan is due (whether in accordance with its term,
by reason of acceleration or otherwise), or (ii) such longer time as the
Committee, in its discretion, shall provide for repayment or satisfaction, the
Company shall retain those shares of Common Stock then held by the Company in
accordance with the Pledge Agreement.

    

    12.4                 Restrictions on Transfer. No
Stock Purchase Right or shares of Common Stock purchased through a Stock
Purchase Right and pledged to the Company as collateral security for the
Participant's Purchase Loan and accrued but unpaid interest thereon may be
otherwise pledged, sold, assigned or transferred (other than by will or by the
laws of descent and distribution).

    
      
         

      

      
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    SECTION
13.                                OTHER
AWARDS

    

    The Committee may grant to any eligible
Consultant, Non-Employee Director or employee of the Company or a Subsidiary
other forms of Awards based upon, payable in or otherwise related to, in whole
or in part, Shares, if the Committee, in its sole discretion, determines that
such other form of Award is consistent with the purposes of this Plan. The terms
and conditions of such other form of Award shall be specified in a written
agreement which sets forth the terms and conditions of such Award, including,
but not limited to, the price, if any, and the vesting schedule, if any, of such
Award. Such Awards may be granted for such minimum consideration, if any, as may
be required by applicable law or for such other greater consideration as may be
determined by the Committee, in its sole discretion.

    

    SECTION
14.                                COMPLIANCE
WITH SECURITIES AND OTHER LAWS

    

    As a condition to the issuance or
transfer of any Award or any security issuable in connection with such Award,
the Company may require an opinion of counsel, satisfactory to the Company, to
the effect that (a) such issuance and/or transfer will not be in violation of
the Securities Act or any other applicable securities laws and (b) such issuance
and/or transfer will not be in violation of the rules and regulations of any
securities exchange or automated quotation system on which the Common Stock is
listed or admitted to trading. Further, the Company may refrain from issuing,
delivering or transferring any Award or any security issuable in connection with
such Award until the Committee has determined that such issuance, delivery or
transfer will not violate such securities laws or rules and regulations and that
the recipient has tendered to the Company any federal, state or local tax owed
as a result of such issuance, delivery or transfer, when the Company has a legal
liability to satisfy such tax. The Company shall not be liable for damages due
to delay in the issuance, delivery or transfer of any Award or any security
issuable in connection with such Award or any agreement, instrument or
certificate evidencing such Award or security for any reason whatsoever,
including, but not limited to, a delay caused by the listing requirements of any
securities exchange or automated quotation system or any registration
requirements under the Securities Act, the Exchange Act, or under any other
state or federal law, rule or regulation. The Company is under no obligation to
take any action or incur any expense to register or qualify the issuance,
delivery or transfer of any Award or any security issuable in connection with
such Award under applicable securities laws or to perfect any exemption from
such registration or qualification or to list any security on any securities
exchange or automated quotation system. Furthermore, the Company will have no
liability to any person for refusing to issue, deliver or transfer any Award or
any security issuable in connection with such Award if such refusal is based
upon the foregoing provisions of this Section 14. As a condition to any
issuance, delivery or transfer of any Award or any security issuable in
connection with such Award, the Company may place legends on any agreement,
instrument or certificate evidencing such Award or security, issue stop transfer
orders with respect thereto and require such agreements or undertakings as the
Company may deem necessary or advisable to assure compliance with applicable
laws or regulations, including, if the Company or its counsel deems it
appropriate, representations from the recipient of such Award or security to the
effect that such recipient is acquiring such Award or security solely for
investment and not with a view to distribution and that no distribution of the
Award or the security will be made unless registered pursuant to applicable
federal and state securities laws, or in the opinion of counsel to the Company,
such registration is unnecessary.

    
      
         

      

      
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    SECTION
15.                                ADJUSTMENTS
UPON THE OCCURRENCE OF A REORGANIZATION OR CORPORATE TRANSACTION

     

    15.1                 Reorganization. In the event
of a Reorganization, the number of Shares subject to this Plan and to each
outstanding Award, and the exercise price of each Award which is based upon
Shares, shall (to the extent deemed appropriate by the Committee) be
proportionately adjusted (as determined by the Committee in its sole discretion)
to account for any increase or decrease in the number of issued and outstanding
Shares of the Company resulting from such Reorganization.

    

    15.2                 Corporate Transaction with the
Company as Survivor. If a Corporate Transaction is consummated and
immediately following the consummation of such Corporate Transaction the Persons
who were holders of shares of Common Stock immediately prior to the consummation
of such Corporate Transaction do not receive any securities or other property
(hereinafter collectively referred to as "Transactional Consideration") as a
result of such Corporate Transaction and substantially all of such Persons
continue to hold the shares of Common Stock held by them immediately prior to
the consummation of such Corporate Transaction (in substantially the same
proportions relative to each other), the Awards will remain outstanding and will
(subject to the provisions of Section 6.1, Section 6.5(c), Section 7.1 and Section 9.1 of this
Plan) continue in full force and effect in accordance with its terms (without
any modification) following the consummation of the Corporate
Transaction.

    

    15.3                 Corporate Transaction with Company
Being Acquired. If a Corporate Transaction is consummated and immediately
following the consummation of such Corporate Transaction the Persons who were
holders of shares of Common Stock immediately prior to the consummation of such
Corporate Transaction do receive Transactional Consideration as a result of such
Corporate Transaction or substantially all of such Persons do not continue to
hold the shares of Common Stock held by them immediately prior to the
consummation of such Corporate Transaction (in substantially the same
proportions relative to each other), the terms and conditions of the Awards will
be modified as follows:

    

    (a)         If
the documentation pursuant to which a Corporate Transaction will be consummated
provides for the assumption (by the entity issuing Transactional Consideration
to the Persons who were the holders of shares of Common Stock immediately prior
to the consummation of such Corporate Transaction) of the Awards granted
pursuant to this Plan without any modification or amendment (other than
Permitted Modifications and the modifications contemplated by Section 6.1, Section 6.5(c), Section 7.1 and Section 11.1 of this
Plan), such Awards will remain outstanding and will continue in full force and
effect in accordance with its terms following the consummation of such Corporate
Transaction (subject to such Permitted Modifications and the provisions of Section 6.1, Section 6.5(c), Section 7.1 and Section 11.1 of this
Plan).

    
      
         

      

      
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    (b)         If
the documentation pursuant to which a Corporate Transaction will be consummated
does not provide for the assumption (by the entity issuing Transactional
Consideration to the Persons who were the holders of shares of Common Stock
immediately prior to the consummation of such Corporate Transaction) of the
Awards granted pursuant to this Plan without any modification or amendment
(other than Permitted Modifications), all vesting restrictions (performance
based or otherwise) applicable to Awards which will not be so assumed will
accelerate and the holders of such Awards may (subject to the expiration of the
term of such Awards) exercise/receive the benefits of such Awards without regard
to such vesting restrictions during the ten (10) day period immediately
preceding the consummation of such Corporate Transaction. For purposes of the
immediately preceding sentence, all performance based goals will be deemed to
have been satisfied in full. The Company will provide each Participant holding
Awards which will not be so assumed with reasonable notice of the termination of
such vesting restrictions and the impending termination of such Awards. Upon the
consummation of such a Corporate Transaction, all unexercised Awards which are
not to be so assumed will automatically terminate and cease to be outstanding.
Nothing contained in this Section 15 will be deemed to extend the term of an
Award or to revive any Award which has previously lapsed or been canceled,
terminated or surrendered.

    

    SECTION
16.                                AMENDMENT
OR TERMINATION OF THIS PLAN

    

    16.1                 Amendment of This Plan.
Notwithstanding anything contained in this Plan to the contrary, all provisions
of this Plan (including, without limitation, the maximum number of Shares that
may be issued with respect to Awards to be granted pursuant to this Plan) may at
any time or from time to time be modified or amended by the Board; provided,
however, that no Award at any time outstanding pursuant to this Plan may be
modified, impaired or canceled adversely to the holder of the Award without the
consent of such holder.

    

    16.2                 Termination of This Plan. The
Board may suspend or terminate this Plan at any time, and such suspension or
termination may be retroactive or prospective. Termination of this Plan shall
not impair or affect any Award previously granted hereunder and the rights of
the holder of the Award shall remain in effect until the Award has been
exercised in its entirety or has expired or otherwise has been terminated by the
terms of such Award.

    

    SECTION
17.                                AMENDMENTS
AND ADJUSTMENTS TO AWARDS

    

    The Board may amend, modify or
terminate any outstanding Award with the Participant's consent at any time prior
to payment or exercise in any manner not inconsistent with the terms of this
Plan, including, without limitation, (a) to change the date or dates as of which
and/or the terms and conditions pursuant to which (i) a Stock Option becomes
exercisable or (ii) a Performance Award is deemed earned, (b) to amend the terms
of any outstanding Award to provide an exercise price per share which is higher
or lower than the then current exercise price per share of such outstanding
Award or (c) to cancel an Award and grant a new Award in substitution therefor
under such different terms and conditions as the Board determines in its sole
discretion to be appropriate, including, but not limited to, having an exercise
price per share which may be higher or lower than the exercise price per share
of the canceled Award. The Board may also make adjustments in the terms and
conditions of, and the criteria included in agreements evidencing Awards in
recognition of unusual or nonrecurring events (including, without limitation,
the events described in Section 15 of this
Plan) affecting the Company, or the financial statements of the Company or any
Subsidiary, or of changes in applicable laws, regulations or accounting
principles, whenever the Board determines that such adjustments are appropriate
to prevent reduction or enlargement of the benefits or potential benefits
intended to be made available pursuant to this Plan. Any provision of this Plan
or any agreement regarding an Award to the contrary notwithstanding, the Board
may cause any Award granted to be canceled in consideration of a cash payment or
alternative Award made to the holder of such canceled Award equal in value to
the Fair Market Value of such canceled Award. The determinations of value
pursuant to this Section 17 shall be
made by the Board in its sole discretion.

    
      
         

      

      
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    SECTION
18.                                GENERAL
PROVISIONS

    

    18.1                 No Limit on Other Compensation
Arrangements. Nothing contained in this Plan shall prevent the Company
from adopting or continuing in effect other compensation arrangements, and such
arrangements may be either generally applicable or applicable only in specific
cases.

    

    18.2                 No Right to Employment or
Continuation of Relationship. Nothing in this Plan or in any Award, nor
the grant of any Award, shall confer upon or be construed as giving any
Participant any right to remain in the employ of the Company or a Subsidiary or
to continue as a Consultant or Non-Employee Director. Further, the Company or a
Subsidiary may at any time dismiss a Participant from employment or terminate
the relationship of any Consultant or Non-Employee Director with the Company or
any Subsidiary, free from any liability or any claim pursuant to this Plan,
unless otherwise expressly provided in this Plan or in any agreement evidencing
an Award made under this Plan. No Consultant, Non-Employee Director or employee
of the Company or any Subsidiary shall have any claim to be granted any Award,
and there is no obligation for uniformity of treatment of any Consultant,
Non-Employee Director or employee of the Company or any Subsidiary or of any
Participants.

    

    18.3                 GOVERNING LAW. THE VALIDITY,
CONSTRUCTION AND EFFECT OF THIS PLAN AND ANY RULES AND REGULATIONS RELATING TO
THIS PLAN SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
MISSISSIPPI, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES
THEREOF.

    

    18.4                 Severability. If any provision
of this Plan or any Award is or becomes or is deemed to be invalid, illegal or
unenforceable in any jurisdiction or as to any individual or Award, or would
disqualify this Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable law, or if it cannot be construed or deemed amended without, in the
sole determination of the Committee, materially altering the intent of this Plan
or the Award, such provision shall be stricken as to such jurisdiction,
individual or Award and the remainder of this Plan and any such Award shall
remain in full force and effect.

    

    18.5                 No Fractional Shares. No
fractional Shares shall be issued or delivered pursuant to this Plan or any
Award, and the Committee shall determine, in its sole discretion, whether cash,
other securities or other property shall be paid or transferred in lieu of any
fractional Shares or whether such fractional Shares or any rights thereto shall
be canceled, terminated or otherwise eliminated.

    

    18.6                 Headings. Headings are given
to the Sections and Subsections of this Plan solely as a convenience to
facilitate reference. Such headings shall not be deemed in any way material or
relevant to the construction or interpretation of this Plan or any provision
thereof.

    

    18.7                 Effective Date. The provisions
of this Plan that relate to the grant of Incentive Stock Options shall be
effective as of the date of the approval of this Plan by the stockholders of the
Company.

    

    18.8                 Transferability of Awards.
Awards shall not be transferable otherwise than by will or the laws of descent
and distribution without the written consent of the Committee (which may be
granted or withheld at the sole discretion of the Committee). Awards may be
exercised, during the lifetime of the holder, only by the holder. Any attempted
assignment, transfer, pledge, hypothecation or other disposition of an Award
contrary to the provisions hereof, or the levy of any execution, attachment or
similar process upon an Award shall be null and void and without effect. Phantom
Stock Awards may be transferred to a Participant's children, grandchildren,
spouse, one or more trusts for the benefit of family members or a partnership in
which such family members are the only partners; provided; however, that the
participant may not receive any consideration for the transfer.

    
      
         

      

      
        Page 19
of 20

        
          

        

      

      
         

      

    

    18.9                 Rights of Participants. Except
as expressly provided in this Plan, any Person to whom an Award is granted shall
have no rights by reason of any subdivision or consolidation of stock of any
class or the payment of any stock dividend or any other increase or decrease in
the number of shares of stock of any class or by reason of any dissolution,
liquidation, reorganization, merger or consolidation or spinoff of assets or
stock of another corporation, and any issue by the Company of shares of stock of
any class or securities convertible into shares of stock of any class shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number or exercise price of Shares subject to an Award.

    

    18.10   No Limitation Upon
the Rights of the Company. The grant of an Award pursuant to this Plan
shall not affect in any way the right or power of the Company to make
adjustments, reclassifications, or changes of its capital or business structure;
to merge, convert or consolidate; to dissolve or liquidate; or sell or transfer
all or any part of its business or assets.

    

    18.11   Date of Grant of an
Award. Except as noted in this Section 18.11, the
granting of an Award shall take place only upon the execution and delivery by
the Company and the Participant of a written agreement and neither any other
action taken by the Committee nor anything contained in this Plan or in any
resolution adopted or to be adopted by the Committee, the Board or the
stockholders of the Company shall constitute the granting of an Award pursuant
to this Plan. Solely, for purposes of determining the Fair Market Value of the
Shares subject to an Award, such Award will be deemed to have been granted as of
the date specified by the Committee notwithstanding any delay which may elapse
in executing and delivering the applicable agreement.

    

    18.12   Tax Withholding. Whenever the
Company proposes or is required to distribute Common stock under the Plan, the
Company may require the recipient to remit to the Company an amount sufficient
to satisfy any federal, state and local tax withholding requirements prior to
the delivery of any certificate for such shares or, in the discretion of the
Committee, the Company may withhold from the Common Stock to be delivered shares
sufficient to satisfy all or a portion of such tax withholding requirements.
Whenever under the Plan payments are to be made in cash, such payments may be
net of an amount sufficient to satisfy any federal, state and local tax
withholding requirements.

    

    End
of Plan

     

     

    Page 20 of 20Unassociated Document

    EXHIBIT
10.2

     

    

    NetREIT

    DIVIDEND
REINVESTMENT PLAN

    

    NetREIT, a California corporation (the
“Company”), has adopted this Dividend Reinvestment Plan (the “DRP”) effective
June 1, 1999, as amended and restated effective January 1, 2000, and as
amended effective March 8, 2006. Unless otherwise expressly stated, the meanings
of the capitalized terms used in this Plan shall have the meaning set forth in
Section 10.

    

    1.           Eligible Participants. The
record owner of Shares of the Company’s common stock may elect to participate in
the DRP (a “Participant”).

    

    2.           Application of Dividends. The
Company will apply all distributions paid with respect to the Shares held by
each Participant (the “Dividends”), including Dividends paid with respect to any
full or fractional Shares acquired under the DRP, to the purchase of the Shares
for said Participants directly from the Company, or as permitted under state
securities laws in the secondary market.

    

    3.           Procedure for Participation.
Any Stockholder may elect to become a Participant by completing and executing
the Participation Agreement or other appropriate authorization form as may be
available from the Company. Participation in the DRP will begin with the next
Dividend payable after receipt of a Participant’s subscription or authorization.
Shares will be purchased under the DRP on the record date for the Dividend used
to purchase the Shares. Dividends for Shares acquired under the DRP are
currently paid quarterly and are calculated with a daily record and Dividend
declaration date.

    

    4.           Purchase of Shares.
Participants shall acquire Shares from the Company at a fixed price of nine
dollars and fifty cents ($9.50) per Share. Participants in the DRP may also
purchase fractional Shares so that 100% of the Dividends will be used to acquire
Shares. However, a Participant will not be able to acquire Shares under the DRP
to the extent such purchase would cause it to exceed any ownership limit imposed
by the Company. The Company may pay commissions to broker-dealers in connection
with the purchase of the Shares. However, neither the Company nor its Affiliates
will receive a fee for selling Shares under the DRP.

    

    If a secondary market develops for the
Shares, the Shares may be bought and sold on the secondary market at prices
lower or higher than the $9.50 per Share price. In such event, the Company shall
endeavor to acquire Shares on behalf of Participants at the lowest price then
available. However, the Company does not guarantee or warrant that the
Participant will be acquiring Shares at the lowest possible price.

    

    If the Company’s Shares are listed on a
national stock exchange or included for quotation on a national market system,
Shares purchased by the Company for the DRP will be purchased on such exchange
or market, at the prevailing market price. Also, in the event of such listing or
inclusion, the reservation of any Shares from the Offering for issuance under
the DRP which have not been issued as of the date of such listing or inclusion,
will be canceled, and such Shares will continue to have the status of authorized
but unissued Shares. Those unissued Shares will not be issued unless they are
first registered with the Securities and Exchange Commission (the “Commission”)
under the Act and under appropriate state securities laws or are otherwise
issued in compliance with such laws.

    

    It is understood that reinvestment of
Dividends does not relieve a Participant of any income tax liability which may
be payable on the Dividends.

    
      
         

      

      
        -1-

        
          

        

      

      
         

      

    

    5.           The Company’s Obligation to Purchase
Shares.  In the event the Company shall at any time determine, in
its sole discretion, that for any reason Shares may not be issued to any
Participant under the DRP, the Company shall have no obligation to do so. The
amount of any Dividend that would otherwise be used to purchase Shares under
this Plan shall be paid in cash to the Participant.

    

    6.           Share Certificates. Upon the
written request of any Participant, the Company will issue certificates
evidencing ownership of Shares purchased through the DRP during the prior fiscal
year. The ownership of the Shares will be in book-entry form prior to the
issuance of such certificates.

    

    7.   Maintenance of
Records. Within 90 days after the end of the Company’s fiscal year, the
Company will maintain true and correct information regarding each Participant’s
investment, including the purchase date(s), purchase price and number of Shares
owned, as well as the dates of distribution and amounts of Dividends received
during the prior fiscal year.

    

    8.      Termination
by Participant. A Participant may terminate participation in the DRP at
any time, without penalty, by delivering to the Company a written notice. Prior
to listing of the Shares on a national stock exchange or inclusion of the Shares
for quotation on a national market system, any transfer of Shares by a
Participant to a non-Participant will terminate participation in the DRP with
respect to the transferred Shares. If a Participant terminates DRP
participation, the Company will provide the terminating Participant with a
certificate evidencing the whole shares in his or her account and a check for
the cash value of any fractional share in such account. Upon termination of DRP
participation, Dividends will be distributed to the Stockholder in
cash.

    

    9.    Amendment
or Termination of DRP by the Company. The Directors of the Company may by
majority vote (including a majority of the Independent Directors) amend or
terminate the DRP for any reason upon 30 days’ written notice to the
Participants.

    

    10.      Liability
of the Company. The Company shall not be liable for any act done in good
faith, or for any good faith omission to act, including, without limitation, any
claims or liability: (a) arising out of failure to terminate a Participant’s
account upon such Participant’s death prior to receipt of notice in writing of
such death; and (b) with respect to the time and the prices at which Shares are
purchased or sold for a Participant’s account. To the extent that
indemnification may apply to liabilities arising under the Act or the securities
laws of a state, the Company has been advised that, in the opinion of the
Commission and certain state securities commissioners, such indemnification is
contrary to public policy and, therefore, unenforceable.

    

    11.     Certain
Definitions.

    

    “Act” means the Securities Act of
1933.

    

    “Affiliate” means, as to any person,
any other person who (i) owns beneficially, directly or indirectly, 10% or more
of the outstanding capital stock, shares or equity interests of such person; or
(ii) is an officer, retired officer, director, trustee or general partner of
such person; or (iii) controls, is controlled by or is under common control
with, such person; or (iv) if such other person is an officer, director,
trustee, or general partner of another entity, then the entity for which that
person acts in any capacity.

    

    “Articles of Incorporation” means the
Company’s Articles of Incorporation, as amended.

    

    “Bylaws” means the Company's Bylaws, as
amended.

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    “Independent Director(s)” means the
director(s) of the Company who are not affiliated, directly or indirectly, with
an officer or Shareholder owning more than ten percent (10%) of the Company’s
outstanding Common Stock, whether by ownership of, ownership interest in,
employment by, any business or professional relationship with such person, and
who perform no other services for the Company at the time his or her
independence is being determined. A director will, however, not be considered
“independent” if he or she is serving as a director for more than three real
estate investment trusts organized by or affiliated with an officer or 10% or
greater Shareholder of the Company, or any director who is not an Independent
Director. “Independent Director(s)” shall also mean a person who performs no
other material services for the Company except as a director. An indirect
relationship shall include circumstances in which a member of the immediate
family of a director has one of the foregoing relationships with an officer or
10% or greater Shareholder of the Company.

    

    “IRA” means Individual Retirement
Account, as defined in Section 408 of the Code.

    

    “Majority Vote” means the affirmative
vote of at least a majority of the Shares then outstanding represented and
voting at a duly held meeting at which a quorum is present or by written consent
of the Shareholders.

    

    “Person(s)” means individuals,
corporations, limited partnerships, general partnerships, joint stock companies
or associations, joint venturers, associations, companies, trusts, banks, trust
companies, land trusts, business trusts and any other entities, government
agencies and political subdivisions thereof.

    

    “Service” means the Internal Revenue
Service.

    

    “Share(s)” means the Shares of the
Company’s no par value common stock offered pursuant to the Registration
Statement.

    

    “Shareholder(s)” means, as of any
particular date, all holders of record of outstanding Shares on such
date.

    ________________

    End of
Plan

     

     

    -3-

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