Document:

ex10-21

 

Exhibit 10.21

THE 2002 STOCK OPTION AND INCENTIVE PLAN

OF

AMB PROPERTY CORPORATION

AND AMB PROPERTY, L.P.

     AMB Property Corporation, a Maryland corporation (the “Company”), and AMB
Property, L.P., a Delaware limited partnership (the “Partnership”), have
adopted The 2002 Stock Option and Incentive Plan of AMB Property Corporation
and AMB Property, L.P. (the “Plan”), effective as of February 26, 2002, for the
benefit of their eligible Employees, Consultants and Directors and those of
their Subsidiaries. The Plan consists of two plans, one for the benefit of
Employees, Consultants and Independent Directors of the Company and its
subsidiaries and one for the benefit of the Employees and Consultants of the
Partnership and its subsidiaries.

     The purposes of this Plan are as follows:

     (1)  To provide an additional incentive for Employees, Consultants and
Independent Directors of the Company and any Company Subsidiary and Employees
and Consultants of the Partnership and any Partnership Subsidiary to further
the growth, development and financial success of the Company by personally
benefiting through the ownership of Company stock and/or rights which recognize
such growth, development and financial success.

     (2)  To enable the Company and the Partnership, and their respective
Subsidiaries, to obtain and retain the services of Independent Directors,
Employees and Consultants considered essential to the long range success of the
Company by offering them an opportunity to own stock in the Company and/or
rights which will reflect the growth, development and financial success of the
Company.

ARTICLE I.

 

DEFINITIONS

     1.1. General. Wherever the following terms are used in this Plan they
shall have the meanings specified below, unless the context clearly indicates
otherwise.

     1.2. Award Limit. “Award Limit” shall mean one million (1,000,000) shares
of Common Stock, as adjusted pursuant to Section 10.3.

     1.3. Board. “Board” shall mean the Board of Directors of the Company.

     1.4. Cause. “Cause,” unless otherwise defined in an Employee’s employment
agreement, or a Consultant’s consulting agreement, with the Company, the
Partnership or one of their respective Subsidiaries, shall mean (i) gross
negligence or willful misconduct, (ii) an uncured breach of any of the
employee’s material duties under their employment agreement, (iii) fraud or
other conduct against the material best interests of the Company, the
Partnership or one of their respective Subsidiaries, or (iv) a conviction of a
felony if such conviction has a material adverse effect on the Company and/or
the Partnership or one of their respective Subsidiaries.

     1.5. Code. “Code” shall mean the Internal Revenue Code of 1986, as
amended.

     1.6. Committee. “Committee” shall mean the Compensation Committee of the
Board, or another committee or subcommittee of the Board, appointed as provided
in Section 9.1; provided, however, that, in the case of a person who is an
“officer or director of the issuer” within the meaning of Rule 16-3(a) under
the Exchange Act, the grant of any award under this Plan to such person shall
be made by the Compensation Committee of the Board.

 

 

     1.7. Common Stock. “Common Stock” shall mean the common stock of the
Company, par value $.01 per share, and any equity security of the Company
issued or authorized to be issued in the future, but excluding any preferred
stock and any warrants, options or other rights to purchase Common Stock. Debt
securities of the Company convertible into Common Stock shall be deemed equity
securities of the Company.

     1.8. Company. “Company” shall mean AMB Property Corporation, a Maryland
corporation.

     1.9. Company Employee. “Company Employee” shall mean any officer or other
employee (as defined in accordance with Section 3401(c) of the Code) of the
Company or of any Company Subsidiary.

     1.10. Consultant. “Consultant” shall mean any consultant or adviser if:

	     	
	 	     (a) the consultant or adviser renders bona fide services to the
Company, the Partnership or any of their respective Subsidiaries;

	     	
	 	     (b) the services rendered by the consultant or adviser are not in
connection with the offer or sale of securities in a capital-raising
transaction and do not directly or indirectly promote or maintain a
market for the securities of the Company, the Partnership or any of their
respective Subsidiaries; and

	     	
	 	     (c) the consultant or adviser is a natural person who has contracted
directly with the Company, the Partnership or any of their respective
Subsidiaries, as applicable, to render such services.

     1.11. Corporate Transaction. “Corporate Transaction” shall mean any of
the following stockholder-approved transactions to which the Company is a
party:

	     	
	 	     (a) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of which
is to change the State in which the Company is incorporated, form a
holding company or effect a similar reorganization as to form whereupon
this Plan and all Options are assumed by the successor entity;

	     	
	 	     (b) the sale, transfer, exchange or other disposition of all or
substantially all of the assets of the Company, in complete liquidation
or dissolution of the Company in a transaction not covered by the
exceptions to clause (a), above; or

	     	
	 	     (c) any reverse merger in which the Company is the surviving entity
but in which securities possessing more than fifty percent (50%) of the
total combined voting power of the Company’s outstanding securities are
transferred or issued to a person or persons different from those who
held such securities immediately prior to such merger.

     1.12. Deferred Stock. “Deferred Stock” shall mean Common Stock awarded
under Article VII of this Plan.

     1.13. Director. “Director” shall mean a member of the Board.

     1.14. Dividend Equivalent. “Dividend Equivalent” shall mean a right to
receive the equivalent value (in cash or Common Stock) of dividends or regular
cash distributions paid on Common Stock, awarded under Article VII of this
Plan.

     1.15. Employee. “Employee” shall mean any Company Employee or any
Partnership Employee.

     1.16. Exchange Act. “Exchange Act” shall mean the Securities
Exchange Act of 1934, as amended.

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     1.17. Fair Market Value. “Fair Market Value” of a share of Common Stock
as of a given date shall be (i) the closing price of a share of Common Stock on
the principal exchange on which shares of Common Stock are then trading, if any
(or as reported on any composite index which includes such principal exchange),
on the date of grant, or if shares were not traded on the date of grant, then
on the next succeeding date on which a trade occurred, or (ii) if Common Stock
is not traded on an exchange but is quoted on Nasdaq or a successor quotation
system, the mean between the closing representative bid and asked prices for
the Common Stock on the date of grant as reported by Nasdaq or such successor
quotation system; or (iii) if Common Stock is not publicly traded on an
exchange and not quoted on Nasdaq or a successor quotation system, the Fair
Market Value of a share of Common Stock as established by the Committee (or the
Board, in the case of awards granted to Independent Directors) acting in good
faith.

     1.18. Family Member. “Family Member” shall mean any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any person
sharing the Optionee’s, Grantee’s or Restricted Stockholder’s household (other
than a tenant or an employee), a trust in which these persons have more than
fifty percent (50%) of the beneficial interest, a foundation in which these
persons (or the Optionee, Grantee or Restricted Stockholder) control the
management of assets, and any other entity in which these persons (or the
Optionee, Grantee or Restricted Stockholder) own more than fifty percent (50%)
of the voting interests.

     1.19. Grantee. “Grantee” shall mean an Employee, Consultant or Director
granted a Performance Award, Dividend Equivalent, Stock Payment or Stock
Appreciation Right, or an award of Deferred Stock, under this Plan.

     1.20. Incentive Stock Option. “Incentive Stock Option” shall mean an
option which conforms to the applicable provisions of Section 422 of the Code
and which is designated as an Incentive Stock Option by the Committee.

     1.21. Independent Director. “Independent Director” shall mean a member of
the Board who is not an employee, officer or affiliate of the Company, the
Partnership or any of their respective Subsidiaries, or a relative of any
principal executive officer of the Company, the Partnership or any of their
respective Subsidiaries, and who is not an individual member of an organization
acting as an advisor, Consultant or legal counsel receiving compensation on a
continuing basis from the Company, the Partnership or any of their respective
Subsidiaries in addition to director’s fees.

     1.22. Non-Qualified Stock Option. “Non-Qualified Stock Option” shall mean
an Option which is not designated as an Incentive Stock Option by the
Committee.

     1.23. Option. “Option” shall mean a stock option granted under Article
III of this Plan. An Option granted under this Plan shall, as determined by
the Committee, be either a Non-Qualified Stock Option or an Incentive Stock
Option; provided, however, that Options granted to anyone other than Company
Employees shall be Non-Qualified Stock Options.

     1.24. Optionee. “Optionee” shall mean an Employee, Consultant or Director
granted an Option under this Plan.

     1.25. Partnership. “Partnership” shall mean AMB Property, L.P., a
Delaware limited partnership.

     1.26. Partnership Agreement. “Partnership Agreement” shall mean the Fifth
Amended and Restated Agreement of Limited Partnership of the Partnership, as
amended by Amendment No. 1 thereto, as the same may be amended, modified or
restated from time to time.

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     1.27. Partnership Employee. “Partnership Employee” shall mean any
employee (as defined in accordance with Section 3401(c) of the Code) of the
Partnership or any entity which is then a Partnership Subsidiary.

     1.28. Partnership Purchase Price. “Partnership Purchase Price” shall have
the meaning set forth in Section 5.4

     1.29. Partnership Purchased Shares. “Partnership Purchased Shares” shall
have the meaning set forth in Section 5.4.

     1.30. Partnership Subsidiary. “Partnership Subsidiary” shall mean (i) a
corporation, association or other business entity of which 50% or more of the
total combined voting power of all classes of capital stock is owned, directly
or indirectly, by the Partnership or by one or more Partnership Subsidiaries or
by the Partnership and one or more Partnership Subsidiaries, (ii) any
partnership or limited liability company of which 50% or more of the capital
and profits interests is owned, directly or indirectly, by the Partnership or
by one or more Partnership Subsidiaries or by the Partnership and one or more
Partnership Subsidiaries, and (iii) any other entity not described in clauses
(i) or (ii) above of which 50% or more of the ownership and the power, pursuant
to a written contract or agreement, to direct the policies and management or
the financial and the other affairs thereof, are owned or controlled by the
Partnership or by one or more other Partnership Subsidiaries or by the
Partnership and one or more Partnership Subsidiaries.

     1.31. Performance Award. “Performance Award” shall mean a cash bonus,
stock bonus or other performance or incentive award that is paid in cash,
Common Stock or a combination of both, awarded under Article VII of this Plan.

     1.32. Plan. “Plan” shall mean The 2002 Stock Option and Incentive Plan of
AMB Property Corporation and AMB Property, L.P.

     1.33. QDRO. “QDRO” shall mean a qualified domestic relations order as
defined by the Code or Title I of the Employee Retirement Income Security Act
of 1974, as amended, or the rules thereunder.

     1.34. Restricted Stock. “Restricted Stock” shall mean Common Stock
awarded under Article VI of this Plan.

     1.35. Restricted Stockholder. “Restricted Stockholder” shall mean an
Employee, Director or Consultant granted an award of Restricted Stock under
Article VI of this Plan.

     1.36. Rule 16b-3. “Rule 16b-3” shall mean that certain Rule 16b-3 under
the Exchange Act, as such Rule may be amended from time to time.

     1.37. Section 162(m) Participant. “Section 162(m) Participant” shall mean
any key Employee designated by the Committee as a key Employee whose
compensation for the fiscal year in which the key Employee is so designated or
a future fiscal year may be subject to the limit on deductible compensation
imposed by Section 162(m) of the Code.

     1.38. Stock Appreciation Right. “Stock Appreciation Right” shall mean a
stock appreciation right granted under Article VIII of this Plan.

     1.39. Stock Payment. “Stock Payment” shall mean (i) a payment in the form
of shares of Common Stock, or (ii) an option or other right to purchase shares
of Common Stock, as part of a deferred compensation arrangement, made in lieu
of all or any portion of the compensation, including without limitation,
salary, bonuses and commissions, that would otherwise become payable to an
Employee, Independent Director or Consultant in cash, awarded under Article VII
of this Plan.

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     1.40. Subsidiary. “Subsidiary” shall mean any Company Subsidiary or any
Partnership Subsidiary.

     1.41. Termination of Consultancy. “Termination of Consultancy” shall mean
the time when the engagement of an Optionee, Grantee or Restricted Stockholder
as a Consultant to the Company, a Company Subsidiary, the Partnership or a
Partnership Subsidiary is terminated for any reason, with or without Cause,
including, but not by way of limitation, by resignation, discharge, disability
death or retirement; but excluding terminations where there is a simultaneous
commencement of employment with the Company, a Company Subsidiary, the
Partnership or a Partnership Subsidiary. The Committee, in its sole and
absolute discretion, shall determine the effect of all matters and questions
relating to Termination of Consultancy, including, but not by way of
limitation, the question of whether a Termination of Consultancy resulted from
a discharge for Cause, and all questions of whether a particular leave of
absence constitutes a Termination of Consultancy. Notwithstanding any other
provision of this Plan, the Company, a Company Subsidiary, the Partnership or a
Partnership Subsidiary has an absolute and unrestricted right to terminate a
Consultant’s service at any time for any reason whatsoever, with or without
Cause, except to the extent expressly provided otherwise in writing.

     1.42. Termination of Directorship. “Termination of Directorship” shall
mean the time when an Optionee, Grantee or Restricted Stockholder who is an
Independent Director ceases to be a Director for any reason, including, but not
by way of limitation, a termination by resignation, failure to be re-elected,
disability, death or retirement; but excluding, at the discretion of the
Committee, terminations (i) where there is a simultaneous employment of an
Independent Director by the Company, a Company Subsidiary, the Partnership or a
Partnership Subsidiary or (ii) which are followed by the simultaneous
establishment of a directorship with a Company Subsidiary or a Partnership
Subsidiary. The Board, in its sole and absolute discretion, shall determine
the effect of all matters and questions relating to Termination of Directorship
with respect to Independent Directors in accordance with the Company’s bylaws.

     1.43. Termination of Employment. “Termination of Employment” shall mean
the time when the employee-employer relationship between an Optionee, Grantee
or Restricted Stockholder and the Company, a Company Subsidiary, the
Partnership or a Partnership Subsidiary, is terminated for any reason, with or
without Cause, including, but not by way of limitation, a termination by
resignation, discharge, death, disability or retirement; but excluding (i)
terminations where there is a simultaneous reemployment or continuing
employment of an Optionee, Grantee or Restricted Stockholder by the Company, a
Company Subsidiary, the Partnership or a Partnership Subsidiary, (ii) at the
discretion of the Committee, terminations which result in a temporary severance
of the employee-employer relationship, or (iii) at the discretion of the
Committee, terminations which are followed by the simultaneous establishment of
a consulting relationship between the Company, a Company Subsidiary, the
Partnership or a Partnership Subsidiary and the former employee. The
Committee, in its sole and absolute discretion, shall determine the effect of
all matters and questions relating to Termination of Employment, including, but
not by way of limitation, the question of whether a Termination of Employment
resulted from a discharge for Cause, and all questions of whether a particular
leave of absence constitutes a Termination of Employment; provided, however,
that, with respect to Incentive Stock Options, unless otherwise determined by
the Committee in its sole and absolute discretion, a leave of absence, change
in status from an employee to an independent contractor or other change in the
employee-employer relationship shall constitute a Termination of Employment if,
and to the extent that, such leave of absence, change in status or other change
interrupts employment for the purposes of Section 422(a)(2) of the Code and the
then applicable regulations and revenue rulings under said Section.
Notwithstanding any other provision of this Plan, the Company, a Company
Subsidiary, the Partnership or a Partnership Subsidiary has an absolute and
unrestricted right to terminate an Employee’s employment at any time for any
reason whatsoever, with or without Cause, except to the extent expressly
provided otherwise in writing.

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ARTICLE II.

 

SHARES SUBJECT TO PLAN

     2.1. Shares Subject to Plan.

     (a)  The shares of stock subject to Options, awards of Restricted Stock,
Performance Awards, Dividend Equivalents, awards of Deferred Stock, Stock
Payments or Stock Appreciation Rights shall be shares of Common Stock. The
aggregate number of such shares which may be issued upon exercise of such
Options or rights or upon any such awards under the Plan shall not exceed ten
million (10,000,000). The shares of Common Stock issuable upon exercise of such
Options or rights or upon any such awards may be previously authorized but
unissued shares.

     (b)  The maximum number of shares which may be subject to Options, awards
of Restricted Stock, Performance Awards, Dividend Equivalents, awards of
Deferred Stock, Stock Payments or Stock Appreciation Rights granted under the
Plan to any individual in any calendar year shall not exceed the Award Limit.

     2.2. Add-back of Options and Other Rights. If any Option, or other right
to acquire shares of Common Stock under any other award under this Plan,
expires or is canceled without having been fully exercised, or is exercised in
whole or in part for cash as permitted by this Plan, the number of shares
subject to such Option or other right but as to which such Option or other
right was not exercised prior to its expiration, cancellation or exercise may
again be optioned, granted or awarded hereunder, subject to the limitations of
Section 2.1. Furthermore, any shares subject to Options or other awards which
are adjusted pursuant to Section 10.3 and become exercisable with respect to
shares of stock of another corporation shall be considered canceled and may
again be optioned, granted or awarded hereunder, subject to the limitations of
Section 2.1. Shares of Common Stock which are delivered by the Optionee or
Grantee or withheld by the Company upon the exercise of any Option or other
award under this Plan, in payment of the exercise price thereof, may again be
optioned, granted or awarded hereunder, subject to the limitations of Section
2.1. If any share of Restricted Stock is forfeited by the Grantee or
repurchased by the Company pursuant to Section 6.6 hereof, such share may again
be optioned, granted or awarded hereunder, subject to the limitations of
Section 2.1. Notwithstanding the provisions of this Section 2.2, no shares of
Common Stock may again be optioned, granted or awarded if such action would
cause an Incentive Stock Option to fail to qualify as an incentive stock option
under Section 422 of the Code.

ARTICLE III.

 

GRANTING OF OPTIONS

     3.1. Eligibility. Any Employee, Consultant or Independent Director
selected by the Committee pursuant to Section 3.4(a)(i) shall be eligible to be
granted an Option. Independent Directors of the Company shall also be eligible
to be granted Options at the times and in the manner set forth in Section
3.4(d).

     3.2. Disqualification for Stock Ownership. No person may be granted an
Incentive Stock Option under this Plan if such person, at the time the
Incentive Stock Option is granted, owns stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or any then existing Subsidiary or parent corporation (within the meaning of
Section 422 of the Code) unless such Incentive Stock Option conforms to the
applicable provisions of Section 422 of the Code.

     3.3. Qualification of Incentive Stock Options. No Incentive Stock Option
shall be granted to any person who is not a Company Employee, or to any
Employee of a Subsidiary which does not constitute a “subsidiary corporation”
within Section 424(f) of the Code.

     3.4. Granting of Options.

     (a)  The Committee (or the Board, in the case of Options granted to
Independent Directors) shall from time to time, in its sole and absolute
discretion, and subject to applicable limitations of this Plan:

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	 	     (i) Select from among the Employees, Consultants and Independent
Directors (including Employees, Consultants and Independent Directors who
have previously received Options or other awards under this Plan) such of
them as in its opinion should be granted Options;
	 
	 	     (ii) Subject to the Award Limit, determine the number of shares to
be subject to such Options granted to Employees, Consultants or
Independent Directors;
	 
	 	     (iii) Subject to Section 3.3, determine whether such Options are to
be Incentive Stock Options or Non-Qualified Stock Options and whether
such Options are to qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code; and
	 
	 	     (iv) Determine the terms and conditions of such Options, consistent
with this Plan; provided, however, that the terms and conditions of
Options intended to qualify as performance-based compensation as
described in Section 162(m)(4)(C) of the Code shall include, but not be
limited to, such terms and conditions as may be necessary to meet the
applicable provisions of Section 162(m) of the Code.

     (b)  Upon the selection of an Employee, Consultant or Independent Director
to be granted an Option, the Committee (or the Board, in the case of Options
granted to Independent Directors) shall instruct the Secretary of the Company
to issue the Option and may impose such conditions on the grant of the Option
as it deems appropriate.

     (c)  Any Incentive Stock Option granted under this Plan may be modified by
the Committee, with the consent of the Optionee, to disqualify such Option from
treatment as an “incentive stock option” under Section 422 of the Code.

     (d)  During the term of the Plan, a person who is initially elected to the
Board and who is an Independent Director at the time of such initial election
automatically shall be granted an Option to purchase twenty thousand (20,000)
shares of Common Stock (subject to adjustment as provided in Section 10.3) on
the date of such initial election. Members of the Board who are employees of
the Company who subsequently retire from the Company and remain on the Board
will not receive an initial Option grant pursuant to the first sentence of this
Section 3.4(d). All the foregoing Option grants authorized by this Section
3.4(d) are subject to stockholder approval of the Plan.

ARTICLE IV.

 

TERMS OF OPTIONS

     4.1. Option Agreement. Each Option shall be evidenced by a written
agreement (each, a “Stock Option Agreement”), which shall be executed by the
Optionee and an authorized officer of the Company and which shall contain such
terms and conditions as the Committee (or the Board, in the case of Options
granted to Independent Directors) shall determine, consistent with this Plan.
Stock Option Agreements evidencing Options intended to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of the Code
shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 162(m) of the Code. Stock Option Agreements
evidencing Incentive Stock Options shall contain such terms and conditions as
may be necessary to meet the applicable provisions of Section 422 of the Code.

     4.2. Option Price. The price per share of the shares subject to each
Option shall be set by the Committee; provided, however, that (i) in the case
of Incentive Stock Options such price shall not be less than 100% of the Fair
Market Value of a share of Common Stock on the date the Option is granted (or
the date the Option is modified, extended or renewed for purposes of Section
424(h) of the Code); (ii) in the case of Incentive Stock Options granted to an
individual then owning (within the meaning of Section 424(d) of the Code) more
than 10% of the total combined voting power of all classes of stock of the
Company or any Subsidiary or parent corporation thereof (within the meaning of
Section 422 of the Code), such price shall not be less than 110% of the Fair
Market Value of a share of Common Stock on the date the Option is granted (or
the date the Option is modified, extended or renewed for purposes of Section
424(h) of the Code); (iii) in the case of Options granted to Independent
Directors,

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 such price shall equal 100% of the Fair Market Value of a share of Common
Stock on the date the Option is granted; and (iv) in the case of all other
Options granted, such price shall be not less than 100% of the Fair Market
Value of a share of Common Stock on the date the Option is granted.
Notwithstanding any other provision of this Plan to the contrary, the Committee
shall not have the authority to amend the terms of any outstanding Option to
reduce its exercise price.

     4.3. Option Term. The term of an Option shall be set by the Committee (or
the Board, in the case of Options granted to Independent Directors) in its sole
and absolute discretion; provided, however, that, (i) no Option shall be
granted with a term of more than ten (10) years from the date the Option is
granted, (ii) in the case of Options granted to Independent Directors, unless
the Board otherwise provides in the terms of the Option or otherwise, the term
shall be ten (10) years from the date the Option is granted, and (iii) in the
case of Incentive Stock Options, the term shall not be more than five (5) years
from the date the Incentive Stock Option is granted, if the Incentive Stock
Option is granted to an individual then owning (within the meaning of Section
424(d) of the Code) more than 10% of the total combined voting power of all
classes of stock of the Company or any Subsidiary or parent corporation thereof
(within the meaning of Section 422 of the Code). Except as limited by
requirements of Section 422 of the Code and regulations and rulings thereunder
applicable to Incentive Stock Options, the Committee may extend the term of any
outstanding Option in connection with any Termination of Employment,
Termination of Consultancy or Termination of Directorship of the Optionee, or
amend any other term or condition of such Option relating to such a
termination.

     4.4. Option Vesting.

     (a)  The period during which the right to exercise an Option in whole or in
part vests in the Optionee shall be set by the Committee (or the Board, in the
case of Options granted to Independent Directors) and the Committee (or the
Board, in the case of Options granted to Independent Directors) may determine
that an Option may not be exercised in whole or in part for a specified period
after it is granted; provided, however, that, unless the Committee (or the
Board, in the case of Options granted to Independent Directors) otherwise
provides in the terms of the Option or otherwise, no Option shall be
exercisable by any Optionee who is then subject to Section 16 of the Exchange
Act within the period ending six months and one day after the date the Option
is granted; and provided, further, that, unless the Board otherwise provides in
the terms of the Options or otherwise, Options granted to Independent Directors
pursuant to Section 3.4(d) shall become fully exercisable on the first
anniversary of the date of Option grant, except as provided in Section 10.3(b).
At any time after grant of an Option, the Committee may, in its sole and
absolute discretion and subject to whatever terms and conditions it selects,
accelerate the period during which an Option vests.

     (b)  No portion of an Option which is unexercisable at Termination of
Employment, Termination of Directorship or Termination of Consultancy, as
applicable, shall thereafter become exercisable, except as may be otherwise
provided by the Committee.

     (c)  To the extent that the aggregate Fair Market Value of stock with
respect to which “incentive stock options” (within the meaning of Section 422
of the Code, but without regard to Section 422(d) of the Code) are exercisable
for the first time by an Optionee during any calendar year (under the Plan and
all other incentive stock option plans of the Company and any parent or
subsidiary corporation (within the meaning of Section 422 of the Code) of the
Company) exceeds $100,000, such Options shall be treated as Non-Qualified
Options to the extent required by Section 422 of the Code. The rule set forth
in the preceding sentence shall be applied by taking Options into account in
the order in which they were granted. For purposes of this Section 4.4(c), the
Fair Market Value of stock shall be determined as of the time the Option with
respect to such stock is granted.

     4.6. Consideration. In consideration of the granting of an Option, the
Optionee shall agree, in the written Stock Option Agreement, to remain in the
employ of (or to consult for or to serve as an Independent Director of, as
applicable) the Company, a Company Subsidiary, the Partnership or a Partnership
Subsidiary for a period of at least one year (or such shorter period as may be
fixed in the Stock Option Agreement or by action of the Committee following
grant of the Option) after the Option is granted, or, in the case of an
Independent Director, for the remainder of such Independent Director’s elected
term. Nothing in this Plan or in any Stock Option Agreement hereunder shall
(i) confer upon any Optionee any right to (a) continue in the employ of (or to
consult for or to serve as an Independent Director of, as applicable) the
Company, a Company Subsidiary, the Partnership or a Partnership

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 Subsidiary, or (b) receive any severance pay from the Company, a Company
Subsidiary, the Partnership or a Partnership Subsidiary, or (ii) interfere with
or restrict in any way the rights of the Company, a Company Subsidiary, the
Partnership or a Partnership Subsidiary, which are hereby expressly reserved,
to discharge the Employee or Consultant at any time for any reason whatsoever,
with or without Cause, or any Independent Director pursuant to the Company’s
bylaws.

ARTICLE V.

 

EXERCISE OF OPTIONS

     5.1. Partial Exercise. An exercisable Option may be exercised in whole or
in part. However, an Option shall not be exercisable with respect to
fractional shares and the Committee may require that, by the terms of the
Option, a partial exercise be with respect to a minimum number of shares.

     5.2. Manner of Exercise. All or a portion of an exercisable Option shall
be deemed exercised upon delivery of all of the following to the Secretary of
the Company (or such other officer as identified in the applicable Stock Option
Agreement):

     (a)  A written notice complying with the applicable rules established by
the Committee stating that the Option, or a portion thereof, is exercised. The
notice shall be signed by the Optionee or other person then entitled to
exercise the Option or such portion of the Option;

     (b)  Such representations and documents as the Committee, in its sole and
absolute discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act of 1933, as amended, and any other
federal or state securities laws or regulations. The Committee may, in its
sole and absolute discretion, also take whatever additional actions it deems
appropriate to effect such compliance, including, without limitation, placing
legends on share certificates and issuing stop-transfer notices to agents and
registrars;

     (c)  In the event that the Option shall be exercised pursuant to Section
10.1 by any person or persons other than the Optionee, appropriate proof of the
right of such person or persons to exercise the Option; and

     (d)  Full cash payment to the Secretary of the Company for the shares with
respect to which the Option, or portion thereof, is exercised. However, the
Committee may, in its sole and absolute discretion, (i) allow a delay in
payment up to thirty (30) days from the date the Option, or portion thereof, is
exercised; (ii) allow payment, in whole or in part, through the delivery of
shares of Common Stock owned by the Optionee, duly endorsed for transfer to the
Company with a Fair Market Value on the date of delivery equal to the aggregate
exercise price of the Option or exercised portion thereof; (iii) allow payment,
in whole or in part, through the surrender of shares of Common Stock then
issuable upon exercise of the Option having a Fair Market Value on the date of
Option exercise equal to the aggregate exercise price of the Option or
exercised portion thereof; (iv) allow payment, in whole or in part, through the
delivery of a full recourse promissory note bearing interest (at no less than a
market rate of interest) and payable upon such terms as may be prescribed by
the Committee; or (v) allow payment through any combination of the
consideration provided in the foregoing subparagraphs (ii), (iii) and (iv). In
the case of a promissory note, the Committee may also prescribe the form of
such note and the security to be given for such note. The Option may not be
exercised, however, by delivery of a promissory note or by a loan from the
Company, the Partnership or any Subsidiary when or where such loan or other
extension of credit is prohibited by law.

     5.3. Transfer of Shares to a Company Employee, Consultant or Independent
Director. As soon as practicable after receipt by the Company, pursuant to
Section 5.2(d), of payment for the shares with respect to which an Option
(which in the case of a Company Employee, Consultant or Independent Director
was issued to and is held by such Optionee in such capacity), or portion
thereof, is exercised by an Optionee who is a Company Employee, Independent
Director or a Consultant to the Company, with respect to each such exercise,
the Company shall transfer to the Optionee the number of shares equal to

     (a)  The amount of the payment made by the Optionee to the Company pursuant
to Section 5.2(d), divided by

9

 

     (b)  The price per share of the shares subject to the Option as determined
pursuant to Section 4.2.

     5.4. Transfer of Shares to a Partnership Employee or Consultant. As soon
as practicable after receipt by the Company, pursuant to Section 5.2(d), of
payment for the shares with respect to which an Option (which was issued to and
is held by a Partnership Employee or Consultant in such capacity, or portion
thereof, is exercised by an Optionee who is a Partnership Employee or a
Consultant to the Partnership, with respect to each such exercise:

     (a)  the Company shall transfer to the Optionee the number of shares equal
to (A) the amount of the payment made by the Optionee to the Company pursuant
to Section 5.2(d) divided by (B) the Fair Market Value of a share of Common
Stock at the time of exercise (the “Partnership Optionee Purchased Shares”);

     (b)  the Company shall sell to the Partnership the number of shares (the
“Partnership Purchased Shares”) equal to the excess of (i) the amount obtained
by dividing (A) the amount of the payment made by the Optionee to the Company
pursuant to Section 5.2(d) by (B) the price per share of the shares subject to
the Option as determined pursuant to Section 4.2., over (ii) the Partnership
Optionee Purchased Shares. The price to be paid by the Partnership to the
Company for the Partnership Purchased Shares (the “Partnership Purchase Price”)
shall be an amount equal to the product of (x) the number of Partnership
Purchased Shares multiplied by (y) the Fair Market Value of a share of Common
Stock at the time of the exercise; and

     (c)  as soon as practicable after receipt of the Partnership Purchased
Shares by the Partnership, the Partnership shall transfer such shares to the
Optionee at no additional cost, as additional compensation.

     5.5. Transfer of Payment to the Partnership. As soon as practicable after
receipt by the Company of the amounts described in Section 5.2(d) and 5.4(b),
the Company shall contribute to the Partnership an amount of cash equal to such
payments and the Partnership shall issue an additional interest in the
Partnership on the terms set forth in the Partnership Agreement.

     5.6. Conditions to Issuance of Stock Certificates. The Company or the
Partnership shall not be required to issue or deliver any certificate or
certificates for shares of stock purchased upon the exercise of any Option or
portion thereof prior to fulfillment of all of the following conditions:

     (a)  The admission of such shares to listing on all stock exchanges on
which such class of stock is then listed;

     (b)  The completion of any registration or other qualification of such
shares under any state or federal law, or under the rulings or regulations of
the Securities and Exchange Commission or any other governmental regulatory
body which the Committee shall, in its sole and absolute discretion, deem
necessary or advisable;

     (c)  The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee shall, in its sole and absolute
discretion, determine to be necessary or advisable;

     (d)  The lapse of such reasonable period of time following the exercise of
the Option as the Committee may establish from time to time for reasons of
administrative convenience; and

     (e)  The receipt by the Company or the Partnership of full payment for such
shares, including payment of any applicable withholding tax.

     5.7. Rights as Stockholders. The holders of Options shall not be, nor
have any of the rights or privileges of, stockholders of the Company in respect
of any shares purchasable upon the exercise of any part of an Option unless and
until certificates representing such shares have been issued by the Company to
such holders.

10

 

     5.8. Ownership and Transfer Restrictions. The Committee, in its sole and
absolute discretion, may impose such restrictions on the ownership and
transferability of the shares purchasable upon the exercise of an Option as it
deems appropriate. Any such restriction shall be set forth in the respective
Stock Option Agreement and may be referred to on the certificates evidencing
such shares. The Committee may require the Employee to give the Company prompt
notice of any disposition of shares of Common Stock acquired by exercise of an
Incentive Stock Option within (i) two years from the date of granting
(including the date the Option is modified, extended or renewed for purposes of
Section 424(h) of the Code) such Option to such Employee or (ii) one year after
the transfer of such shares to such Employee. The Committee may direct that
the certificates evidencing shares acquired by exercise of an Option refer to
such requirement to give prompt notice of disposition.

     5.9. Limitations on Exercise of Options Granted to an Optionee. The
Committee, in its sole and absolute discretion, may impose such limitations and
restrictions on the exercise of Options as it deems appropriate. Any such
limitation shall be set forth in the respective Stock Option Agreement.
Notwithstanding the foregoing, an Option is not exercisable if in the sole and
absolute discretion of the Committee the exercise of such Option would likely
result in any of the following:

     (a)  the Optionee’s or any other person’s ownership of capital stock being
in violation of the Stock Ownership Limit (as defined in the Company’s Articles
of Incorporation); or

     (b)  income to the Company that could impair the Company’s status as a
real estate investment trust, within the meaning of Sections 856 through 860 of
the Code.

ARTICLE VI.

 

AWARD OF RESTRICTED STOCK

     6.1. Eligibility. Subject to the Award Limit, Restricted Stock may be
awarded to any Employee, Independent Director or Consultant whom the Committee
(or the Board, in the case of Restricted Stock awarded to Independent
Directors) determines should receive such an award.

     6.2. Award of Restricted Stock.

     (a)  The Committee (or the Board, in the case of Restricted Stock awarded
to Independent Directors) may from time to time, in its sole and absolute
discretion:

	     	
	 	     (i) Select from among the Employees, Independent Directors or
Consultants (including Employees, Independent Directors or Consultants
who have previously received other awards under this Plan) such of them
as in its opinion should be awarded Restricted Stock; and

	     	
	 	     (ii) Determine the purchase price, if any, and other terms and
conditions (including, without limitation, in the case of awards to
Employees or Consultants of the Partnership or any Partnership
Subsidiary, the mechanism for the transfer of the Restricted Stock and
payment therefor and, in the case of the repurchase of shares of
Restricted Stock subject to restrictions in effect at the time of the
Termination of Employment, Termination of Directorship or Termination of
Consultancy of such Employee, Independent Director or Consultant, as the
case may be) applicable to such Restricted Stock, consistent with this
Plan; provided, however, that all restrictions, including the right of
repurchase, on any Restricted Stock granted to Independent Directors
shall lapse on the first anniversary of the date of Restricted Stock
grant, except as provided in Section 10.3(b).

     (b) Except as provided in Section 6.2(a)(ii), the Committee (or the Board,
in the case of Restricted Stock awarded to Independent Directors) shall
establish the purchase price, if any, and form of payment for Restricted Stock;
provided, however, that such purchase price shall be no less than the par value
of the Common Stock to be purchased, unless otherwise permitted by applicable
state law. In all cases, legal consideration shall be required for each
issuance of Restricted Stock.

11

 

     (c)  Upon the selection of an Employee, Independent Director or Consultant
to be awarded Restricted Stock, the Committee (or the Board, in the case of
Restricted Stock awarded to Independent Directors) shall instruct the Secretary
of the Company to issue such Restricted Stock and may impose such conditions on
the issuance of such Restricted Stock as it deems appropriate.

     6.3. Restricted Stock Agreement. Restricted Stock shall be issued only
pursuant to a written agreement (each, a “Restricted Stock Agreement”), which
shall be executed by the Employee, Independent Director or Consultant and an
authorized officer of the Company and which shall contain such terms and
conditions as the Committee (or the Board, in the case of Restricted Stock
awarded to Independent Directors) shall determine, consistent with this Plan.

     6.4. Consideration. As consideration for the issuance of Restricted
Stock, in addition to payment of any purchase price, the Restricted Stockholder
shall agree, in the written Restricted Stock Agreement, to remain in the employ
of (or to consult for or to serve as an Independent Director of, as applicable)
the Company, a Company Subsidiary, the Partnership or a Partnership Subsidiary
for a period of at least one year (or such shorter period as may be fixed in
the Restricted Stock Agreement or by action of the Committee following grant of
the Restricted Stock) after the Restricted Stock is issued, or, in the case of
an Independent Director, for the remainder of such Independent Director’s
elected term. Nothing in this Plan or in any Restricted Stock Agreement
hereunder shall (i) confer on any Restricted Stockholder any right to (a)
continue in the employ of (or to consult for or to serve as an Independent
Director of, as applicable) the Company, a Company Subsidiary, the Partnership
or a Partnership Subsidiary, or (b) receive any severance pay from the Company,
a Company Subsidiary, the Partnership or a Partnership Subsidiary, or (ii)
interfere with or restrict in any way the rights of the Company, a Company
Subsidiary, the Partnership or a Partnership Subsidiary, which are hereby
expressly reserved, to discharge the Employee or Consultant at any time for any
reason whatsoever, with or without Cause, or any Independent Director pursuant
to the Company’s bylaws.

     6.5. Rights as Stockholders. Subject to Section 6.6, upon delivery of the
shares of Restricted Stock to the escrow holder pursuant to Section 6.8, the
Restricted Stockholder shall have, unless otherwise provided by the Committee,
all the rights of a stockholder with respect to said shares, subject to the
restrictions in his Restricted Stock Agreement, including the right to receive
all dividends and other distributions paid or made with respect to the shares;
provided, however, that in the sole and absolute discretion of the Committee,
any extraordinary distributions with respect to the Common Stock shall be
subject to the restrictions set forth in Section 6.6.

     6.6. Restriction. All shares of Restricted Stock issued under this Plan
(including any shares received by holders thereof with respect to shares of
Restricted Stock as a result of stock dividends, stock splits or any other form
of recapitalization) shall, in the terms of each individual Restricted Stock
Agreement, be subject to such restrictions as the Committee (or the Board, in
the case of Restricted Stock awarded to Independent Directors) shall provide,
which restrictions may include, without limitation, restrictions concerning
voting rights and transferability and restrictions based on duration of
employment or service, corporate performance and individual performance;
provided, however, that, unless the Committee otherwise provides in the terms
of the Restricted Stock Agreement or otherwise, no share of Restricted Stock
granted to a person subject to Section 16 of the Exchange Act shall be sold,
assigned or otherwise transferred until at least six months and one day have
elapsed from the date on which the Restricted Stock was issued; and provided,
further, that, except with respect to shares of Restricted Stock granted
pursuant to Section 6.10, by action taken after the Restricted Stock is issued,
the Committee may, on such terms and conditions as it may determine to be
appropriate, remove any or all of the restrictions imposed by the terms of the
Restricted Stock Agreement. Restricted Stock may not be sold or encumbered
until all restrictions are terminated or expire. If no cash consideration was
paid by the Restricted Stockholder upon issuance, a Restricted Stockholder’s
rights in unvested Restricted Stock shall lapse upon a Termination of
Employment, Termination of Directorship or Termination of Consultancy;
provided, however, that the Committee in its sole and absolute discretion may
provide that such rights shall not lapse in the event of a Termination of
Employment, Termination of Directorship or Termination of Consultancy without
Cause, following a change in control of the Company, or because of the
Grantee’s retirement, death or disability, or otherwise.

     6.7. Repurchase of Restricted Stock. The Committee shall provide in the
terms of each individual Restricted Stock Agreement that the Company shall have
the right to repurchase from the Restricted Stockholder the Restricted Stock
then subject to restrictions under the Restricted Stock Agreement immediately

12

 

 upon a Termination of Employment, Termination of Directorship or
Termination of Consultancy, at a cash price per share equal to the price paid
by the Restricted Stockholder for such Restricted Stock; provided, however,
that the Committee may, in its sole and absolute discretion, provide that no
such right of repurchase shall exist in the event of a Termination of
Employment, Termination of Directorship or Termination of Consultancy without
Cause, following a change in control of the Company, or because of the
Grantee’s retirement, death or disability, or otherwise.

     6.8. Escrow. The Secretary of the Company or such other escrow holder as
the Committee may appoint shall retain physical custody of each certificate
representing Restricted Stock until all of the restrictions imposed under the
Restricted Stock Agreement with respect to the shares evidenced by such
certificate expire or shall have been removed.

     6.9. Legend. In order to enforce the restrictions imposed upon shares of
Restricted Stock hereunder, the Committee shall cause a legend or legends to be
placed on certificates representing all shares of Restricted Stock that are
still subject to restrictions under Restricted Stock Agreements, which legend
or legends shall make appropriate reference to the conditions imposed thereby.

     6.10. Provisions Applicable to Section 162(m) Participants.

     (a)  Notwithstanding anything in the Plan to the contrary, the Committee
may grant Restricted Stock to a Section 162(m) Participant the restrictions
with respect to which lapse upon the attainment of performance goals for the
Company which are related to one or more of the following business criteria:
(i) pre-tax income, (ii) operating income, (iii) cash flow, (iv) earnings per
share, (v) return on equity, (vi) return on invested capital or assets, (vii)
cost reductions or savings, (viii) funds from operations, (ix) appreciation in
the fair market value of Common Stock and (x) earnings before any one or more
of the following items: interest, taxes, depreciation or amortization.

     (b)  To the extent necessary to comply with the performance-based
compensation requirements of Section 162(m)(4)(C) of the Code, with respect to
Restricted Stock which may be granted to one or more Section 162(m)
Participants, no later than ninety (90) days following the commencement of any
fiscal year in question or any other designated fiscal period or period of
service (or such other time as may be required or permitted by Section 162(m)
of the Code), the Committee shall, in writing, (i) designate one or more
Section 162(m) Participants, (ii) select the performance goal or goals
applicable to the fiscal year or other designated fiscal period or period of
service, (iii) establish the various targets and amounts of Restricted Stock
which may be earned for such fiscal year or other designated fiscal period or
period of service and (iv) specify the relationship between performance goals
and targets and the amounts of Restricted Stock to be earned by each Section
162(m) Participant for such fiscal year or other designated fiscal period or
period of service. Following the completion of each fiscal year or other
designated fiscal period or period of service, the Committee shall certify in
writing whether the applicable performance targets have been achieved for such
fiscal year or other designated fiscal period or period of service. In
determining the amount earned by a Section 162(m) Participant, the Committee
shall have the right to reduce (but not to increase) the amount payable at a
given level of performance to take into account additional factors that the
Committee may deem relevant to the assessment of individual or corporate
performance for the fiscal year or other designated fiscal period or period of
service.

ARTICLE VII.

 

PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS,

DEFERRED STOCK, STOCK PAYMENTS

     7.1. Eligibility. Subject to the Award Limit, one or more Performance
Awards, Dividend Equivalents, awards of Deferred Stock, and/or Stock Payments
may be granted to any Employee, Consultant or Independent Director whom the
Committee (or the Board, in the case of such awards to Independent Directors)
determines should receive such an award.

     7.2. Performance Awards. Any Employee, Consultant or Independent Director
selected by the Committee (or the Board, in the case of Performance Awards
granted to Independent Directors) may be granted

13

 

 one or more Performance Awards. The value of such Performance Awards may
be linked to the market value, book value, net profits or other measure of the
value of Common Stock or other specific performance criteria determined
appropriate by the Committee (or the Board, in the case of Performance Awards
granted to Independent Directors), in each case on a specified date or dates or
over any period or periods determined by the Committee (or the Board, in the
case of Performance Awards granted to Independent Directors), or may be based
upon the appreciation in the market value, book value, net profits or other
measure of the value of a specified number of shares of Common Stock over a
fixed period or periods determined by the Committee (or the Board, in the case
of Performance Awards granted to Independent Directors). In making such
determinations, the Committee (or the Board, in the case of Performance Awards
granted to Independent Directors) shall consider (among such other factors as
it deems relevant in light of the specific type of award) the contributions,
responsibilities and other compensation of the Employee, Independent Director
or Consultant.

     7.3. Dividend Equivalents. Any Employee, Consultant or Independent
Director selected by the Committee (or the Board, in the case of Dividend
Equivalents granted to Independent Directors) may be granted Dividend
Equivalents based on the dividends declared on Common Stock, to be credited as
of dividend payment dates, during the period between the date an Option, Stock
Appreciation Right, Deferred Stock or Performance Award is granted, and the
date such Option, Stock Appreciation Right, Deferred Stock or Performance Award
is exercised, vests or expires, as determined by the Committee (or the Board,
in the case of Dividend Equivalents granted to Independent Directors). Such
Dividend Equivalents shall be converted to cash or additional shares of Common
Stock by such formula and at such time and subject to such limitations as may
be determined by the Committee (or the Board, in the case of Dividend
Equivalents granted to Independent Directors). With respect to Dividend
Equivalents granted with respect to Options intended to be qualified
performance-based compensation for purposes of Section 162(m) of the Code, such
Dividend Equivalents shall be payable regardless of whether such Option is
exercised.

     7.4. Stock Payments. Any Employee, Consultant or Independent Director
selected by the Committee (or the Board, in the case of Stock Payments to
Independent Directors) may receive Stock Payments in the manner determined
from time to time by the Committee (or the Board, in the case of Stock Payments
to Independent Directors). The number of shares shall be determined by the
Committee (or the Board, in the case of Stock Payments to Independent
Directors) and may be based upon the Fair Market Value, book value, net profits
or other measure of the value of Common Stock or other specific performance
criteria determined appropriate by the Committee (or the Board, in the case of
Stock Payments to Independent Directors), determined on the date such Stock
Payment is made or on any date thereafter.

     7.5. Deferred Stock. Any Employee, Consultant or Independent Director
selected by the Committee (or the Board, in the case of Deferred Stock granted
to Independent Directors) may be granted an award of Deferred Stock in the
manner determined from time to time by the Committee (or the Board, in the case
of Deferred Stock granted to Independent Directors). The number of shares of
Deferred Stock shall be determined by the Committee (or the Board, in the case
of Deferred Stock granted to Independent Directors) and may be linked to the
market value, book value, net profits or other measure of the value of Common
Stock or other specific performance criteria determined to be appropriate by
the Committee (or the Board, in the case of Deferred Stock granted to
Independent Directors), in each case on a specified date or dates or over any
period or periods determined by the Committee (or the Board, in the case of
Deferred Stock granted to Independent Directors). Common Stock underlying a
Deferred Stock award will not be issued until the Deferred Stock award has
vested, pursuant to a vesting schedule or performance criteria set by the
Committee (or the Board, in the case of Deferred Stock granted to Independent
Directors). Unless otherwise provided by the Committee, a Grantee of Deferred
Stock shall have no rights as a Company stockholder with respect to such
Deferred Stock until such time as the award has vested and the Common Stock
underlying the award has been issued.

     7.6. Performance Award Agreement, Dividend Equivalent Agreement, Deferred
Stock Agreement, Stock Payment Agreement. Each Performance Award, Dividend
Equivalent, award of Deferred Stock or Stock Payment shall be evidenced by a
written agreement, which shall be executed by the Grantee and an authorized
Officer of the Company and which shall contain such terms and conditions
(including, without limitation, in the case of awards to Employees or
Consultants of the Partnership or any Partnership Subsidiary, the mechanism for
the transfer or rights under such awards) as the Committee (or the Board, in
the case of such awards to Independent Directors) shall determine, consistent
with this Plan.

14

 

     7.7. Term. The term of a Performance Award, Dividend Equivalent, award of
Deferred Stock and/or Stock Payment shall be set by the Committee (or the
Board, in the case of such awards to Independent Directors) in its sole and
absolute discretion.

     7.8. Exercise or Purchase Price. The Committee (or the Board, in the case
of such awards to Independent Directors) may establish the exercise or purchase
price of a Performance Award, shares of Deferred Stock, or shares received as a
Stock Payment; provided, however, that such price shall not be less than the
par value for a share of Common Stock, unless otherwise permitted by applicable
state law.

     7.9. Exercise Upon Termination of Employment. A Performance Award,
Dividend Equivalent, award of Deferred Stock or Stock Payment is exercisable or
payable only while the Grantee is an Employee, Independent Director or
Consultant; provided, however, that the Committee in its sole and absolute
discretion may provide that the Performance Award, Dividend Equivalent, award
of Deferred Stock or Stock Payment may be exercised or paid subsequent to a
Termination of Employment, Termination of Directorship or Termination of
Consultancy without Cause, following a change in control of the Company, or
because of the Grantee’s retirement, death or disability, or otherwise.

     7.10. Payment on Exercise. Payment of the amount determined under Section
7.1 or 7.2 above shall be in cash, in Common Stock or a combination of both, as
determined by the Committee. To the extent any payment under this Article VII
is effected in Common Stock, it shall be made subject to satisfaction of all
provisions of Section 5.3.

     7.11. Consideration. In consideration of the granting of a Performance
Award, Dividend Equivalent, award of Deferred Stock or Stock Payment, the
Grantee shall agree, in a written agreement, to remain in the employ of (or to
consult for or to serve as an Independent Director of, as applicable) the
Company, a Company Subsidiary, the Partnership or a Partnership Subsidiary for
a period of at least one year (or such shorter period as may be fixed in such
agreement or by action of the Committee after such Performance Award, Dividend
Equivalent, award of Deferred Stock and/or Stock Payment is granted, or, in the
case of an Independent Director, for the remainder of such Independent
Director’s elected term. Nothing in this Plan or in any agreement hereunder
shall (i) confer on any Grantee any right to (a) continue in the employ of (or
to consult for or to serve as an Independent Director of, as applicable) the
Company, a Company Subsidiary, the Partnership or a Partnership Subsidiary, or
(b) receive any severance pay from the Company, a Company Subsidiary, the
Partnership or a Partnership Subsidiary, or (ii) interfere with or restrict in
any way the rights of the Company, a Company Subsidiary, the Partnership or a
Partnership Subsidiary, which are hereby expressly reserved, to discharge the
Employee or Consultant at any time for any reason whatsoever, with or without
Cause, or any Independent Director pursuant to the Company’s bylaws.

     7.12. Provisions Applicable to Section 162(m) Participants.

     (a)  Notwithstanding anything in the Plan to the contrary, the Committee
may grant any performance or incentive awards described in Article VII to a
Section 162(m) Participant that vest or become exercisable or payable upon the
attainment of performance goals for the Company which are related to one or
more of the following business criteria: (i) pre-tax income, (ii) operating
income, (iii) cash flow, (iv) earnings per share, (v) return on equity, (vi)
return on invested capital or assets, (vii) cost reductions or savings, (viii)
funds from operations, (ix) appreciation in the fair market value of Common
Stock and (x) earnings before any one or more of the following items: interest,
taxes, depreciation or amortization.

     (b)  To the extent necessary to comply with the performance-based
compensation requirements of Section 162(m)(4)(C) of the Code, with respect to
performance or incentive awards described in Article VII which may be granted
to one or more Section 162(m) Participants, no later than ninety (90) days
following the commencement of any fiscal year in question or any other
designated fiscal period or period of service (or such other time as may be
required or permitted by Section 162(m) of the Code), the Committee shall, in
writing, (i) designate one or more Section 162(m) Participants, (ii) select the
performance goal or goals applicable to the fiscal year or other designated
fiscal period or period of service, (iii) establish the various targets and
bonus amounts which may be earned for such fiscal year or other designated
fiscal period or period of service and (iv) specify the relationship between
performance goals and targets and the amounts to be earned by each Section
162(m) Participant for such fiscal year or other designated fiscal period or
period of service. Following the completion of

15

 

 each fiscal year or other designated fiscal period or period of service,
the Committee shall certify in writing whether the applicable performance
targets have been achieved for such fiscal year or other designated fiscal
period or period of service. In determining the amount earned by a Section
162(m) Participant, the Committee shall have the right to reduce (but not to
increase) the amount payable at a given level of performance to take into
account additional factors that the Committee may deem relevant to the
assessment of individual or corporate performance for the fiscal year or other
designated fiscal period or period of service.

ARTICLE VIII.

 

STOCK APPRECIATION RIGHTS

     8.1. Grant of Stock Appreciation Rights. A Stock Appreciation Right may
be granted to any Employee, Independent Director or Consultant selected by the
Committee (or the Board, in the case of Stock Appreciation Rights granted to
Independent Directors). A Stock Appreciation Right may be granted (i) in
connection and simultaneously with the grant of an Option, (ii) with respect to
a previously granted Option, or (iii) independent of an Option. A Stock
Appreciation Right shall be subject to such terms and conditions (including,
without limitation, the mechanism for the transfer of rights under such awards)
not inconsistent with this Plan as the Committee (or the Board, in the case of
Stock Appreciation Rights granted to Independent Directors) shall impose and
shall be evidenced by a written Stock Appreciation Right Agreement, which shall
be executed by the Grantee and an authorized officer of the Company. The
Committee, in its sole and absolute discretion, may determine whether a Stock
Appreciation Right is to qualify as performance-based compensation as described
in Section 162(m)(4)(C) of the Code and Stock Appreciation Right Agreements
evidencing Stock Appreciation Rights intended to so qualify shall contain such
terms and conditions as may be necessary to meet the applicable provisions of
Section 162(m) of the Code.

     8.2. Coupled Stock Appreciation Rights.

     (a)  A Coupled Stock Appreciation Right (“CSAR”) shall be related to a
particular Option and shall be exercisable only when and to the extent the
related Option is exercisable.

     (b)  A CSAR may be granted to the Grantee for no more than the number of
shares subject to the simultaneously or previously granted Option to which it
is coupled.

     (c)  A CSAR shall entitle the Grantee (or other person entitled to exercise
the Option pursuant to this Plan) to surrender to the Company unexercised a
portion of the Option to which the CSAR relates (to the extent then exercisable
pursuant to its terms) and to receive from the Company in exchange therefor an
amount determined by multiplying the difference obtained by subtracting the
Option exercise price from the Fair Market Value of a share of Common Stock on
the date of exercise of the CSAR by the number of shares of Common Stock with
respect to which the CSAR shall have been exercised, subject to any limitations
the Committee (or the Board, in the case of Stock Appreciation Rights granted
to Independent Directors) may impose.

     8.3. Independent Stock Appreciation Rights.

     (a)  An Independent Stock Appreciation Right (“ISAR”) shall be unrelated to
any Option and shall have a term set by the Committee (or the Board, in the
case of Stock Appreciation Rights granted to Independent Directors). An ISAR
shall be exercisable in such installments as the Committee (or the Board, in
the case of Stock Appreciation Rights granted to Independent Directors) may
determine. An ISAR shall cover such number of shares of Common Stock as the
Committee (or the Board, in the case of Stock Appreciation Rights granted to
Independent Directors) may determine; provided, however, that unless the
Committee otherwise provides in the terms of the ISAR or otherwise, no ISAR
granted to a person subject to Section 16 of the Exchange Act shall be
exercisable until at least six months have elapsed from (but excluding) the
date on which the Option was granted. The exercise price per share of Common
Stock subject to each ISAR shall be set by the Committee (or the Board, in the
case of Stock Appreciation Rights granted to Independent Directors). An ISAR
is exercisable only while the Grantee is an Employee, Director or Consultant;
provided that the Committee may determine that the ISAR may be exercised
subsequent to a Termination of Employment, Termination of Directorship or
Termination of Consultancy

16

 

 without Cause, following a change in control of the Company, or because of
the Grantee’s retirement, death or disability, or otherwise.

     (b)  An ISAR shall entitle the Grantee (or other person entitled to
exercise the ISAR pursuant to this Plan) to exercise all or a specified portion
of the ISAR (to the extent then exercisable pursuant to its terms) and to
receive from the Company an amount determined by multiplying the difference
obtained by subtracting the exercise price per share of the ISAR from the Fair
Market Value of a share of Common Stock on the date of exercise of the ISAR by
the number of shares of Common Stock with respect to which the ISAR shall have
been exercised, subject to any limitations the Committee may impose.

     8.4. Payment and Limitations on Exercise.

     (a)  Payment of the amount determined under Section 8.2(c) and 8.3(b) above
shall be in cash, in Common Stock (based on its Fair Market Value as of the
date the Stock Appreciation Right is exercised) or a combination of both, as
determined by the Committee. To the extent such payment is effected in Common
Stock it shall be made subject to satisfaction of all provisions of Section 5.3
above pertaining to Options.

     (b)  Grantees of Stock Appreciation Rights may be required to comply with
any timing or other restrictions with respect to the settlement or exercise of
a Stock Appreciation Right, including a window-period limitation, as may be
imposed in the discretion of the Committee.

     8.5. Consideration. In consideration of the granting of a Stock
Appreciation Right, the Grantee shall agree, in the written Stock Appreciation
Right Agreement, to remain in the employ of (or to consult for or to serve as
an Independent Director of, as applicable) the Company, a Company Subsidiary,
the Partnership or a Partnership Subsidiary for a period of at least one year
(or such shorter period as may be fixed in the Stock Appreciation Right
Agreement or by action of the Committee after the Stock Appreciation Right is
granted) following grant of the Stock Appreciation Right, or, in the case of an
Independent Director, for the remainder of such Independent Director’s elected
term. Nothing in this Plan or in any Stock Appreciation Right Agreement
hereunder shall (i) confer upon any Employee, Independent Director or
Consultant any right to (a) continue in the employ of (or to consult for or to
serve as an Independent Director of, as applicable) the Company, a Company
Subsidiary, the Partnership or a Partnership Subsidiary, or (b) receive any
severance pay from the Company, a Company Subsidiary, the Partnership or a
Partnership Subsidiary, or (ii) interfere with or restrict in any way the
rights of the Company, a Company Subsidiary, the Partnership or a Partnership
Subsidiary, which are hereby expressly reserved, to discharge the Employee or
Consultant at any time for any reason whatsoever, with or without Cause, or any
Independent Director pursuant to the Company’s bylaws.

ARTICLE IX.

 

ADMINISTRATION

     9.1. Compensation Committee. The Compensation Committee (or another
committee or a subcommittee of the Board assuming the functions of the
Committee under this Plan) shall consist solely of two or more Independent
Directors appointed by and holding office at the pleasure of the Board, each of
whom is both a “non-employee director” as defined by Rule 16b-3 and an “outside
director” for purposes of Section 162(m) of the Code. Appointment of Committee
members shall be effective upon acceptance of appointment. Committee members
may resign at any time by delivering written notice to the Board. Vacancies in
the Committee may be filled by the Board.

     9.2. Duties and Powers of Committee. It shall be the duty of the
Committee to conduct the general administration of this Plan in accordance with
its provisions. The Committee shall have the power to interpret this Plan and
the agreements pursuant to which Options, awards of Restricted Stock or
Deferred Stock, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments are granted or awarded, and to adopt such rules
for the administration, interpretation, and application of this Plan as are
consistent therewith and to interpret, amend or revoke any such rules;
provided, however, that only the full Board, acting by a majority of its
members in office, shall have the power to grant awards under this Plan to
Independent Directors. Any such grant or award under this Plan need not be the
same with respect to each Optionee, Grantee or Restricted

17

 

 Stockholder. Any such interpretations and rules with respect to Incentive
Stock Options shall be consistent with the provisions of Section 422 of the
Code. In its sole and absolute discretion, the Board may at any time and from
time to time exercise any and all rights and duties of the Committee under this
Plan except with respect to matters which under Rule 16b-3 or Section 162(m) of
the Code, or any regulations or rules issued thereunder, are required to be
determined in the sole discretion of the Committee.

     9.3. Majority Rule; Unanimous Written Consent. The Committee shall act by
a majority of its members in attendance at a meeting at which a quorum is
present or by a memorandum or other written instrument signed by all members of
the Committee.

     9.4. Compensation; Professional Assistance; Good Faith Actions. Members
of the Committee shall receive such compensation, if any, for their services as
members as may be determined by the Board. All expenses and liabilities which
members of the Committee incur in connection with the administration of this
Plan shall be borne by the Company. The Committee may, with the approval of
the Board, employ attorneys, Consultants, accountants, appraisers, brokers, or
other persons. The Committee, the Company and the Company’s officers and
Directors shall be entitled to rely upon the advice, opinions or valuations of
any such persons. All actions taken and all interpretations and determinations
made by the Committee or the Board in good faith shall be final and binding
upon all Optionees, Grantees, Restricted Stockholders, the Company and all
other interested persons. No members of the Committee or Board shall be
personally liable for any action, determination or interpretation made in good
faith with respect to this Plan, Options, awards of Restricted Stock or
Deferred Stock, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments, and all members of the Committee and the Board
shall be fully protected by the Company in respect of any such action,
determination or interpretation.

     9.5. Delegation of Authority to Grant Awards. The Committee may, but need
not, delegate from time to time to a committee consisting of one or more
members of the Committee or of one or more officers of the Company some or all
of the Committee’s authority to grant awards under this Plan to eligible
recipients; provided, however, that each such recipient must be an individual
other than an “officer,” “director” or “beneficial owner of more than ten per
centum of any class of any equity security” within the meaning of each such
term as it is used under Section 16(b) of the Exchange Act. Any delegation
hereunder shall be subject to the restrictions and limits that the Committee
specifies at the time of such delegation of authority and may be rescinded at
any time by the Committee. At all times, any committee appointed under this
Section 9.5 shall serve in such capacity at the pleasure of the Committee.

ARTICLE X.

 

MISCELLANEOUS PROVISIONS

     10.1. Not Transferable. Options, Restricted Stock awards, Deferred Stock
awards, Performance Awards, Stock Appreciation Rights, Dividend Equivalents or
Stock Payments under this Plan may not be sold, pledged, assigned, or
transferred in any manner other than by will or the laws of descent and
distribution, or pursuant to a QDRO, unless and until such rights or awards
have been exercised, or the shares underlying such rights or awards have been
issued, and all restrictions applicable to such shares have lapsed; provided,
however, that Non-Qualified Stock Options, Restricted Stock awards, Deferred
Stock awards, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents and Stock Payments may be transferred with the consent of the
Committee or by gift to a Family Member, in which case the transferee shall
receive and hold the Option or other award so transferred subject to the
provisions of this Plan and the agreement governing such Option or other award;
provided, further, that a transfer of a Non-Qualified Stock Option, Restricted
Stock award, Deferred Stock award, Performance Award, Stock Appreciation Right,
Dividend Equivalent or Stock Payment or interest or right therein to an entity
in which more than fifty percent (50%) of the voting interests are owned by
Family Members (or the Optionee, Grantee or Restricted Stockholder) in exchange
for an interest in that entity shall be considered a gift of such Option or
other award. No Option, Restricted Stock award, Deferred Stock award,
Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
Payment or interest or right therein shall be liable for the debts, contracts
or engagements of the Optionee, Grantee or Restricted Stockholder or his
successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means

18

 

 whether such disposition be voluntary or involuntary or by operation of
law by judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect, except to the extent that such disposition
is permitted by the preceding sentence.

     During the lifetime of the Optionee or Grantee, only he may exercise an
Option or other right or award (or any portion thereof) granted to him under
the Plan, unless it has been transferred with the consent of the Committee or
pursuant to a QDRO or by gift to a Family Member, in which case the transferee
may exercise such Option or other award. Unless previously transferred as
permitted by this Section 10.1, after the death of the Optionee or Grantee, any
exercisable portion of an Option or other right or award may, prior to the time
when such portion becomes unexercisable under the Plan or the applicable Stock
Option Agreement or other agreement, be exercised by his personal
representative or by any person empowered to do so under the deceased
Optionee’s or Grantee’s will or under the then applicable laws of descent and
distribution.

     10.2. Amendment, Suspension or Termination of this Plan. Except as
otherwise provided in this Section 10.2, this Plan may be wholly or partially
amended or otherwise modified, suspended or terminated at any time or from time
to time by the Board or the Committee. However, without approval of the
Company’s stockholders given within twelve months before or after the action by
the Board or the Committee, no action of the Board or the Committee may, except
as provided in Section 10.3, increase the limits imposed in Section 2.1 on the
maximum number of shares which may be issued under this Plan or increase the
Award Limit, and no action of the Board or the Committee may be taken that
would otherwise require stockholder approval as a matter of applicable law,
regulation or rule. No amendment, suspension or termination of this Plan
shall, without the consent of the holder of Options, Restricted Stock awards,
Deferred Stock awards, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments, alter or impair any rights or obligations under
any Options, Restricted Stock awards, Deferred Stock awards, Performance
Awards, Stock Appreciation Rights, Dividend Equivalents or Stock Payments
theretofore granted or awarded, unless the award itself otherwise expressly so
provides. No Options, Restricted Stock, Deferred Stock, Performance Awards,
Stock Appreciation Rights, Dividend Equivalents or Stock Payments may be
granted or awarded during any period of suspension or after termination of this
Plan, and in no event may any Incentive Stock Option be granted under this Plan
after the first to occur of the following events:

     (a)  The expiration of ten years from the date the Plan is adopted by the
Board; or

     (b)  The expiration of ten years from the date the Plan is approved by the
Company’s stockholders under Section 10.4.

     10.3. Changes in Common Stock or Assets of the Company, Acquisition or
Liquidation of the Company and Other Corporate Events.

     (a)  Subject to Section 10.3(d), in the event that the Committee determines
that any dividend or other distribution (whether in the form of cash, Common
Stock, other securities, or other property), recapitalization,
reclassification, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, liquidation,
dissolution, or sale, transfer, exchange or other disposition of all or
substantially all of the assets of the Company (including, but not limited to,
a Corporate Transaction), or exchange of Common Stock or other securities of
the Company, issuance of warrants or other rights to purchase Common Stock or
other securities of the Company, or other similar corporate transaction or
event, in the Committee’s sole and absolute discretion, affects the Common
Stock such that an adjustment is determined by the Committee to be appropriate
in order to prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under the Plan or with respect to an
Option, Restricted Stock award, Performance Award, Stock Appreciation Right,
Dividend Equivalent, Deferred Stock award or Stock Payment, then the Committee
shall, in such manner as it may deem equitable, adjust any or all of

	     	
	 	     (i) the number and kind of shares of Common Stock (or other
securities or property) with respect to which Options, Performance
Awards, Stock Appreciation Rights, Dividend Equivalents or Stock Payments
may be granted under the Plan, or which may be granted as Restricted
Stock or Deferred Stock

19

 

	     	
	 	(including, but not limited to, adjustments of the limitations in
Section 2.1 on the maximum number and kind of shares which may be issued
and adjustments of the Award Limit);

	     	
	 	     (ii) the number and kind of shares of Common Stock (or other
securities or property) subject to outstanding Options, Performance
Awards, Stock Appreciation Rights, Dividend Equivalents, or Stock
Payments, and in the number and kind of shares of outstanding Restricted
Stock or Deferred Stock; and

	     	
	 	     (iii) the grant or exercise price with respect to any Option,
Performance Award, Stock Appreciation Right, Dividend Equivalent or Stock
Payment.

     (b)  Subject to Section 10.3(e), in the event of any Corporate Transaction
or other transaction or event described in Section 10.3(a) which results in
shares of Common Stock being exchanged for or converted into cash, securities
(including securities of another corporation) or other property, the Committee
will have the right to terminate this Plan as of the date of the event or
transaction, in which case all Options, rights and other awards granted under
this Plan shall become the right to receive such cash, securities or other
property, net of any applicable exercise price.

     (c)  Subject to Section 10.3(e), in the event of any Corporate Transaction
or other transaction or event described in Section 10.3(a) or any unusual or
nonrecurring transactions or events affecting the Company, any affiliate of the
Company, or the financial statements of the Company or any affiliate, or of
changes in applicable laws, regulations, or accounting principles, the
Committee in its sole and absolute discretion is hereby authorized to take any
one or more of the following actions whenever the Committee determines that
such action is appropriate or desirable:

	     	
	 	     (i) In its sole and absolute discretion, and on such terms and
conditions as it deems appropriate, the Committee may provide, either by
the terms of the agreement or by action taken prior to the occurrence of
such transaction or event and either automatically or upon the optionee’s
request, for either the purchase of any such Option, Performance Award,
Stock Appreciation Right, Dividend Equivalent, or Stock Payment, or any
Restricted Stock or Deferred Stock for an amount of cash equal to the
amount that could have been attained upon the exercise of such option,
right or award or realization of the holder’s rights had such option,
right or award been currently exercisable or payable or fully vested or
the replacement of such option, right or award with other rights or
property selected by the Committee in its sole and absolute discretion;

	     	
	 	     (ii) In its sole and absolute discretion, the Committee may
provide, either by the terms of such Option, Performance Award, Stock
Appreciation Right, Dividend Equivalent, or Stock Payment, or Restricted
Stock or Deferred Stock or by action taken prior to the occurrence of
such transaction or event that it cannot vest, be exercised or become
payable after such event;

	     	
	 	     (iii) In its sole and absolute discretion, and on such terms and
conditions as it deems appropriate, the Committee may provide, either by
the terms of such Option, Performance Award, Stock Appreciation Right,
Dividend Equivalent, or Stock Payment, or Restricted Stock or Deferred
Stock or by action taken prior to the occurrence of such transaction or
event, that for a specified period of time prior to such transaction or
event, such option, right or award shall be exercisable as to all shares
covered thereby, notwithstanding anything to the contrary in (i) Section
4.4 or (ii) the provisions of such Option, Performance Award, Stock
Appreciation Right, Dividend Equivalent, or Stock Payment, or Restricted
Stock or Deferred Stock;

	     	
	 	     (iv) In its sole and absolute discretion, and on such terms and
conditions as it deems appropriate, the Committee may provide, either by
the terms of such Option, Performance Award, Stock Appreciation Right,
Dividend Equivalent, or Stock Payment, or Restricted Stock or Deferred
Stock or by action taken prior to the occurrence of such transaction or
event, that upon such event, such option, right or award be assumed by
the successor or survivor corporation, or a parent or subsidiary thereof,
or shall be substituted for by similar options, rights or awards covering
the stock of the successor or survivor

20

 

	     	
	 	corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices;

	     	
	 	     (v) In its sole and absolute discretion, and on such terms and
conditions as it deems appropriate, the Committee may make adjustments in
the number and type of shares of Common Stock (or other securities or
property) subject to outstanding Options, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents, or Stock Payments, and in the
number and kind of outstanding Restricted Stock or Deferred Stock and/or
in the terms and conditions of, and the criteria included in, outstanding
options, rights and awards and options, rights and awards which may be
granted in the future; and

	     	
	 	     (vi) In its sole and absolute discretion, and on such terms and
conditions as it deems appropriate, the Committee may provide either by
the terms of a Restricted Stock award or Deferred Stock award or by
action taken prior to the occurrence of such event that, for a specified
period of time prior to such event, the restrictions imposed under a
Restricted Stock Agreement or a Deferred Stock Agreement upon some or all
shares of Restricted Stock or Deferred Stock may be terminated, and, in
the case of Restricted Stock, some or all shares of such Restricted Stock
may cease to be subject to repurchase under Section 6.6 or forfeiture
under Section 6.5 after such event.

     (d)  Subject to Section 10.3(e) and 10.8, the Committee may, in its sole
and absolute discretion, include such further provisions and limitations in any
Option, Performance Award, Stock Appreciation Right, Dividend Equivalent, or
Stock Payment, or Restricted Stock or Deferred Stock agreement or certificate,
as it may deem equitable and in the best interests of the Company.

     (e)  With respect to Options, Stock Appreciation Rights and performance or
incentive awards described in Article VII which are granted to Section 162(m)
Participants and are intended to qualify as performance-based compensation
under Section 162(m)(4)(C), no adjustment or action described in this Section
10.3 or in any other provision of the Plan shall be authorized to the extent
that such adjustment or action would cause the Plan to violate Section
422(b)(1) of the Code or would cause such option or stock appreciation right to
fail to so qualify under Section 162(m)(4)(C), as the case may be, or any
successor provisions thereto. Furthermore, no such adjustment or action shall
be authorized to the extent such adjustment or action would result in
short-swing profits liability under Section 16 or violate the exemptive
conditions of Rule 16b-3 unless the Committee determines that the option or
other award is not to comply with such exemptive conditions. The number of
shares of Common Stock subject to any option, right or award shall always be
rounded to the next whole number.

     10.4. Approval of Plan by Stockholders. This Plan will be submitted for
the approval of the Company’s stockholders within twelve months after the date
of the Board’s initial adoption of this Plan. Options, Performance Awards,
Stock Appreciation Rights, Dividend Equivalents or Stock Payments may be
granted and Restricted Stock or Deferred Stock may be awarded prior to such
stockholder approval, provided that such Options, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments shall not be
exercisable and such Restricted Stock or Deferred Stock shall not vest prior to
the time when this Plan is approved by the stockholders, and provided further
that if such approval has not been obtained at the end of said twelve-month
period, all Options, Performance Awards, Stock Appreciation Rights, Dividend
Equivalents or Stock Payments previously granted and all Restricted Stock or
Deferred Stock previously awarded under this Plan shall thereupon be canceled
and become null and void.

     10.5. Tax Withholding. The Company shall be entitled to require payment
in cash or deduction from other compensation payable to each Optionee, Grantee
or Restricted Stockholder of any sums required by federal, state or local tax
law to be withheld with respect to the issuance, vesting, exercise or payment
of any Option, Restricted Stock, Deferred Stock, Performance Award, Stock
Appreciation Right, Dividend Equivalent or Stock Payment. The Committee may in
its sole and absolute discretion and in satisfaction of the foregoing
requirement allow such Optionee, Grantee or Restricted Stockholder to elect to
have the Company withhold shares of Common Stock otherwise issuable or becoming
vested under such Option or other award (or allow the return of shares of
Common Stock) having a Fair Market Value equal to the statutory minimum sums
required to be withheld.

     10.6. Loans. The Committee may, in its discretion, extend one or more
loans to Employees in connection with the exercise or receipt of an Option,
Performance Award, Stock Appreciation Right, Dividend

21

 

 Equivalent or Stock Payment granted under this Plan, or the issuance of
Restricted Stock or Deferred Stock awarded under this Plan. The terms and
conditions of any such loan shall be set by the Committee; provided, however,
that any such loan that bears interest shall bear at least a market rate of
interest.

     10.7. Forfeiture Provisions. Pursuant to its general authority to
determine the terms and conditions applicable to awards under the Plan, the
Committee shall have the right (to the extent consistent with the applicable
exemptive conditions of Rule 16b-3) to provide, in the terms of Options or
other awards made under the Plan, or to require the recipient to agree by
separate written instrument, that (i) any proceeds, gains or other economic
benefit actually or constructively received by the recipient upon any receipt
or exercise of the award, or upon the receipt or resale of any Common Stock
underlying such award, must be paid to the Company, and (ii) the award shall
terminate and any unexercised portion of such award (whether or not vested)
shall be forfeited, if (a) a Termination of Employment, Termination of
Consultancy or Termination of Directorship occurs prior to a specified date, or
within a specified time period following receipt or exercise of the award, or
(b) the recipient at any time, or during a specified time period, engages in
any activity in competition with the Company, or which is inimical, contrary or
harmful to the interests of the Company, as further defined by the Committee
(or the Board, as applicable).

     10.8. Limitations Applicable to Section 16 Persons and Performance-Based
Compensation. Notwithstanding any other provision of this Plan, this Plan, and
any Option, Performance Award, Stock Appreciation Right, Dividend Equivalent or
Stock Payment granted, or Restricted Stock or Deferred Stock awarded, to any
individual who is then subject to Section 16 of the Exchange Act, shall be
subject to any additional limitations set forth in any applicable exemptive
rule under Section 16 of the Exchange Act (including any amendment to Rule
16b-3 of the Exchange Act) that are requirements for the application of such
exemptive rule. To the extent permitted by applicable law, the Plan, Options,
Performance Awards, Stock Appreciation Rights, Dividend Equivalents, Stock
Payments, Restricted Stock and Deferred Stock granted or awarded hereunder
shall be deemed amended to the extent necessary to conform to such applicable
exemptive rule. Furthermore, notwithstanding any other provision of this Plan,
any Option, Stock Appreciation Right or performance or incentive award
described in Article VII which is granted to a Section 162(m) Participant and
is intended to qualify as performance-based compensation as described in
Section 162(m)(4)(C) of the Code shall be subject to any additional limitations
set forth in Section 162(m) of the Code (including any amendment to Section
162(m) of the Code) or any regulations or rulings issued thereunder that are
requirements for qualification as performance-based compensation as described
in Section 162(m)(4)(C) of the Code, and this Plan shall be deemed amended to
the extent necessary to conform to such requirements.

     10.9. Effect of Plan Upon Options and Compensation Plans. The adoption of
this Plan shall not affect any other compensation or incentive plans in effect
for the Company or any Subsidiary. Nothing in this Plan shall be construed to
limit the right of the Company (i) to establish any other forms of incentives
or compensation for Employees, Directors or Consultants of the Company, the
Partnership or any Subsidiary or (ii) to grant or assume options or other
rights or awards otherwise than under this Plan in connection with any proper
corporate purpose including but not by way of limitation, the grant or
assumption of options in connection with the acquisition by purchase, lease,
merger, consolidation or otherwise, of the business, stock or assets of any
corporation, partnership, limited liability company, firm or association.

     10.10. Section 83(b) Election Prohibited. No Grantee, Optionee or
Restricted Stockholder may make an election under Section 83(b) of the Code
with respect to any award or grant under this Plan.

     10.11. Compliance with Laws. This Plan, the granting and vesting of
Options, Restricted Stock awards, Deferred Stock awards, Performance Awards,
Stock Appreciation Rights, Dividend Equivalents or Stock Payments under this
Plan and the issuance and delivery of shares of Common Stock and the payment of
money under this Plan or under Options, Performance Awards, Stock Appreciation
Rights, Dividend Equivalents or Stock Payments granted or Restricted Stock or
Deferred Stock awarded hereunder are subject to compliance with all applicable
federal and state laws, rules and regulations (including but not limited to
state and federal securities law and federal margin requirements) and to such
approvals by any listing, regulatory or governmental authority as may, in the
opinion of counsel for the Company, be necessary or advisable in connection
therewith. Any securities delivered under this Plan shall be subject to such
restrictions, and the person acquiring such securities shall, if requested by
the Company, provide such assurances and representations to the Company as the
Company may deem

22

 

 necessary or desirable to assure compliance with all applicable legal
requirements. To the extent permitted by applicable law, the Plan, Options,
Restricted Stock awards, Deferred Stock awards, Performance Awards, Stock
Appreciation Rights, Dividend Equivalents or Stock Payments granted or awarded
hereunder shall be deemed amended to the extent necessary to conform to such
laws, rules and regulations.

     10.12. Titles. Titles are provided herein for convenience only and are
not to serve as a basis for interpretation or construction of this Plan.

     10.13. Governing Law. This Plan and any agreements hereunder shall be
administered, interpreted and enforced under the internal laws of the State of
California without regard to conflicts of laws thereof.

     10.14. Conflicts with Company’s Articles of Incorporation.
Notwithstanding any other provision of this Plan, no Optionee, Grantee or
Restricted Stockholder shall acquire or have any right to acquire any Common
Stock, and shall not have other rights under this Plan, which are prohibited
under the Company’s Articles of Incorporation.

23<PAGE>
                                                                   Exhibit 10.21
                             SECOND LEASE AMENDMENT

This Second Lease Amendment is made as of the 14th day of June, 2001, between
STANLEY D. MCDONALD, MARY LEE SCHEIDT, HERBERT A. WEST AND MCDONALD, LTD., a
Washington Limited Partnership ("Landlord") and OCULAR SCIENCES, INC., a
California corporation ("Tenant").

                                    RECITALS

1.     WHEREAS, Landlord and Tenant are the parties to a Lease dated May 18,
       1995, commencing November 1, 1995, by which Landlord let to Tenant the
       Premises comprised of the entire building located at 475 Eccles Avenue,
       South San Francisco, California outlined in Paragraph 1 of the Lease.

2.     WHEREAS, the Tenant agreed to modify the Lease on the terms and
       conditions set forth in the First Lease Amendment dated January 25, 1999,
       as so amended (the "Lease").

3.     WHEREAS, the Lease by its terms expires on December 31, 2002 and the
       Tenant agrees to extend the term of the Lease on the terms and conditions
       set forth hereinafter.

                                    AGREEMENT

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants and agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Landlord and Tenant agree as follows:

1.       The term of the Lease will be extended for a period of approximately
         fifty-four and one-half (54.5) months, commencing June 15, 2001 and
         expiring on December 31, 2005.

2.       For the extension period, the monthly Base Rent contained in the Lease
         is hereby amended and the following Base Rent schedule is substituted
         therefor:

         June 15, 2001 through December 31, 2001            $78,283.00 per month
         January 1, 2002 through December 31, 2002          $80,552.00 per month
         January 1, 2003 through December 31, 2003         $125,934.00 per month
         January 1, 2004 through December 31, 2004         $129,330.00 per month
         January 1, 2005 through December 31, 2005         $136,145.00 per month

3.       The total square footage of the Premises will be adjusted from 152,145
         rentable square feet to 113,454 rentable square feet. The adjustment
         comes from the Tenant's surrender of the second floor of the building
         as indicated by the attached floor plan, Exhibit A.

4.       Tenant's Proportionate Share of the Project shall be changed from 100%
         to 74.57%.

5.       Landlord will not be responsible for any improvements to the Premises.
         Tenant shall be responsible for all costs, up to $25,000, associated
         with the demising the Premises

<PAGE>

         including, but not limited to, construction of a demising wall and
         electrical separation of the original premises into two distinct
         spaces.

6.       Tenant shall have the right to 130 parking spaces with 27 of those
         spaces as reserved parking spaces. The unreserved spaces will be on a
         non-exclusive first come, first serve basis. The reserved parking
         allotment shall be defined and detailed in Exhibit B.

7.       Tenant shall have the option to further extend the Lease for one period
         of an additional two (2) years ("Extension Term") on the terms and
         conditions of the Lease except as provided below:

         (a)      Tenant shall provide Landlord with 300 days prior written
                  notice of its exercise of such option to extend the Lease,
                  which notice shall be irrevocable.

         (b)      Tenant shall not be in material default of Lease at the time
                  of the notice or at the time of commencement of Extension
                  Term.

         (c)      The square footage during the Extension Term shall be
                  increased to 152,145 square feet comprising the entire
                  Building.

         (d)      The Base Rent for the first year of the Extension Term shall
                  be $196,267 per month. The Base Rent for the second year of
                  the Extension Term shall be $203,874 per month.

         (e)      There shall be no further rights to extend the Lease.

         (f)      Tenant shall accept the Premises in its "as is" condition.
                  Landlord shall not be obligated to pay for any improvements.

         (g)      Tenant's Proportionate Share of the Project shall increase to
                  100%.

         (h)      If Tenant fails to exercise the option strictly in accordance
                  with these terms, the option shall be deemed waived.

8.       This Amendment sets forth the entire agreement between the parties with
         respect to the matters set forth herein. There have been no additional
         oral or written representations or agreements. Under no circumstances
         shall Tenant be entitled to any Rent abatement, improvement allowance,
         leasehold improvements, or other work to the Premises, or any similar
         economic incentives that may have been provided to the Tenant in
         connection with entering into the Amendment, unless specifically set
         forth in this Amendment.

9.       Except as herein modified or amended, the provisions, conditions and
         terms of the Lease shall remain unchanged as amended and hereby remain
         in full force and effect.

10.      In case of any inconsistency between the provisions of the Lease and
         this Amendment, the provisions of this Amendment shall govern and
         control. Under no circumstances shall this Amendment be deemed to grant
         Tenant any further right to extend the Lease.

                                        2
<PAGE>

11.      Tenant hereby agrees to indemnify and hold Landlord harmless from all
         claims of any real estate brokers who may have represented Tenant in
         connection with this Amendment.

IN WITNESS WHEREOF, Landlord and Tenant have duly executed this Amendment as of
the day and year first written above.

LANDLORD:                                          TENANT:

STANLEY D. MCDONALD, MARY                          OCULAR SCIENCES, INC., a
LEE SCHEIDT, HERBERT A. WEST                       California corporation
AND MCDONALD, LTD., a
Washington limited partnership

Stanley D. McDonald

Name: /s/ S.D. McDonald                            Name: /s/ Linda Hoffman
      ------------------------------                     -----------------------

Title:                                             Title: VP Operations
       -----------------------------                      ----------------------

Mary Lee Scheidt

Name: /s/ Mary Lee Scheidt
     -------------------------------

Title: Trustee
      ------------------------------

Herbert A. West

Name: /s/ Herbert A. West
     -------------------------------

Title:
      ------------------------------

MCDONALD, LTD.

Name: /s/ S.D. McDonald
     -------------------------------

Title:
      ------------------------------

                                        3

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