Document:

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                                                                    EXHIBIT 10.7

                                PAIRING AGREEMENT

         THIS PAIRING AGREEMENT (this "Agreement") is made and entered into as
of July 1, 2003, by and among Arbor Realty Trust, Inc., a Maryland corporation
(the "REIT"), Arbor Commercial Mortgage, LLC, a New York limited liability
company ("ACM"), Arbor Realty LPOP, Inc., a Delaware corporation ("LP"), Arbor
Realty GPOP, Inc., a Delaware corporation ("GP"), and Arbor Realty Limited
Partnership, a Delaware limited partnership (the "OP").

         WHEREAS, concurrently with the execution of this Agreement, the REIT
will file Articles Supplementary (the "Articles Supplementary") to its charter
(as supplemented by the Articles Supplementary, the "REIT Charter") with the
State Department of Assessments and Taxation of Maryland whereby the REIT will
reclassify and designate 5,000,000 shares of its Preferred Stock as shares of
Special Voting Preferred Stock, par value $0.01 per share (the "Special Voting
Stock");

         WHEREAS, concurrently with the execution of this Agreement, ACM and the
OP are entering into a Contribution Agreement pursuant to which ACM will
transfer certain assets and related liabilities to the OP and, in exchange
therefor, the OP will issue to ACM (i) 3,146,724 operating partnership units of
the OP (the "Initial OP Units") and (ii) 629,345 warrants (the "ACM Warrants"),
which entitle the holders to purchase additional operating partnership units of
the OP (the "Warrant OP Units" and, together with the Initial OP Units, the
"Paired Common Units");

         WHEREAS, concurrently with the issuance of the Initial OP Units, the
REIT will issue to ACM 3,146,724 shares of Special Voting Stock and, upon the
exercise of each ACM Warrant, the REIT will issue to the holder thereof a number
of shares of Special Voting Stock equal to the number of Warrant OP Units issued
by the OP in connection with the exercise of such ACM Warrant;

         WHEREAS, the REIT Charter provides that the REIT shall not issue or
agree to issue any shares of Special Voting Stock unless effective provision has
been made for the simultaneous issuance by the OP of the same number of
operating partnership units of the OP, and for the pairing of such shares of
Special Voting Stock and operating partnership units;

         WHEREAS, the OP and the REIT wish to enter into this Agreement for the
purpose of further effectuating the pairing of shares of Special Voting Stock
and the

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Paired Common Units (the "Pairing"), including the establishment of the
terms and conditions which will govern the issuance and the transfer of the
shares of Special Voting Stock and the Paired Common Units.

         NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements contained herein, the parties hereto agree as follows:

1.       Transfer of Shares. Commencing on the date hereof and continuing until
         such time as this Agreement shall have been terminated in the manner
         provided herein:

         a.       No share of Special Voting Stock shall be transferable, and no
                  such share shall be transferred on the stock transfer books of
                  the REIT, unless a simultaneous transfer is made by the same
                  transferor to the same transferee of the same number of Paired
                  Common Units.

         b.       No Paired Common Unit shall be transferable, and no Paired
                  Common Unit shall be transferred on the books of the OP,
                  unless a simultaneous transfer is made by the same transferor
                  to the same transferee of the same number of shares of Special
                  Voting Stock.

         c.       Notwithstanding anything to the contrary contained herein,
                  upon any acquisition by the OP, the LP, the GP or the REIT of
                  any Paired Common Units and any shares of Special Voting Stock
                  (whether pursuant to Section 8.6 of the OP Agreement or
                  otherwise), all restrictions on transfer set forth in this
                  Agreement with respect to such Paired Common Units so acquired
                  shall terminate, and any Paired Common Units acquired by the
                  OP, the LP, the GP or the REIT may be transferred without
                  regard to the restrictions set forth in this Agreement. The
                  shares of Special Voting Stock shall be redeemed and cancelled
                  in accordance with the terms of the Articles Supplementary.

         d.       In the event that any shares of Special Voting Stock are
                  transferred to a trust pursuant to the provisions of Section
                  7.2(b) of the REIT Charter, all of the Paired Common Units
                  paired with such shares shall be

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                  automatically transferred to such trust concurrently therewith
                  and shall be subject to all the provisions of Section 7.3 of
                  the REIT Charter to the same extent that the attached shares
                  of Special Voting Stock are so subject.

2.       Issuance of Securities. Commencing on the date hereof and continuing
         until such time as this Agreement shall have been terminated in the
         manner provided herein:

         a.       The REIT shall not issue or agree to issue any shares of
                  Special Voting Stock to any person unless effective provision
                  has been made for the simultaneous issuance or transfer to the
                  same person of the same number of Paired Common Units and for
                  the pairing of such shares of Special Voting Stock and Paired
                  Common Units.

         b.       The OP shall not issue or agree to issue any Paired Common
                  Units to any person unless effective provision has been made
                  for the simultaneous issuance or transfer to the same person
                  of the same number of shares of Special Voting Stock and for
                  the pairing of such Paired Common Units and shares of Special
                  Voting Stock.

         c.       Upon the issuance by the REIT of a share of Special Voting
                  Stock to any person, the REIT shall contribute any cash
                  proceeds or other consideration received from the issuance of
                  such share (the "Per Share REIT Consideration") to the LP,
                  which, in turn, shall contribute such Per Share REIT
                  Consideration to the OP in exchange for one Class A Preferred
                  Unit of the OP (a "Preferred Unit").

3.       Stock Certificates. Commencing on the date hereof and continuing until
         such time as this Agreement shall have been terminated in the manner
         provided herein:

         a.       Each certificate which is issued representing shares of
                  Special Voting Stock shall be printed "back-to-back" with a
                  certificate evidencing the

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                  same number of Paired Common Units and shall bear a
                  conspicuous legend (on the face thereof) referring to the
                  restrictions on transfer set forth in Section 5 of the
                  Articles Supplementary and this Agreement.

         b.       Each certificate which is issued evidencing Paired Common
                  Units shall be printed "back-to-back" with a certificate
                  representing the same number of shares of Special Voting Stock
                  and shall bear a conspicuous legend (on the face thereof)
                  referring to the restrictions on transfer set forth in this
                  Agreement.

4.       Redemption by the OP or Acquisition by the REIT of Paired Common Units.
         Commencing on the date hereof and continuing until such time as this
         Agreement shall have been terminated in the manner provided herein:

         a.       Prior to the redemption of any shares of Special Voting Stock
                  pursuant to Section 8 of the Articles Supplementary (the
                  "Shares"):

                  i.       The OP shall redeem a number of Preferred Units equal
                           to the number of Shares for $.01 in cash per
                           Preferred Unit pursuant to Section 4.11 of the
                           partnership agreement of the OP, which amount shall
                           be paid in its entirety in immediately available
                           funds to the LP (the "LP Payment").

                  ii.      Immediately following the completion of the LP
                           Payment, the LP shall distribute the proceeds of such
                           LP Payment to the REIT in immediately available
                           funds, which amount shall be set aside by the REIT,
                           separate and apart from its other funds, to redeem
                           the Shares pursuant to Section 8 of the Articles
                           Supplementary.

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         b.       All shares of Special Voting Stock redeemed by the REIT
                  pursuant to Section 8 of the Articles Supplementary shall be
                  cancelled automatically and shall become authorized but
                  unissued shares of Special Voting Stock in accordance with the
                  Articles Supplementary, and all certificates representing such
                  shares held by the OP shall be delivered to the REIT for
                  cancellation promptly following the effectiveness of such
                  redemption.

5.       Stock Dividends, Reclassifications, etc. Commencing on the date hereof
         and continuing until such time as this Agreement shall have been
         terminated in the manner provided herein:

         a.       The REIT shall not (i) declare or pay any dividend in respect
                  of the outstanding shares of Special Voting Stock consisting
                  in whole or in part of shares of Special Voting Stock, or (ii)
                  subdivide, combine or otherwise reclassify the outstanding
                  shares of Special Voting Stock.

         b.       The OP shall not (i) declare or pay any dividend in respect of
                  the outstanding Paired Common Units consisting in whole or in
                  part of operating partnership units paired with shares of
                  Special Voting Stock, or (ii) subdivide, combine or otherwise
                  reclassify the outstanding Paired Common Units.

6.       Termination. This Agreement and the Pairing may be terminated by mutual
         consent of the REIT, GP, LP and the OP.

7.       Transfers. No Transfer of shares of Special Voting Stock or the Paired
         Common Units paired thereto may be made to any person, unless in each
         case prior to such Transfer any such transferee agrees in writing to be
         bound by the terms and conditions of this Agreement pursuant to a
         supplementary agreement reasonably satisfactory in form and substance
         to the REIT and the OP. For purposes of this Section 7, the term
         "Transfer" shall mean any direct or indirect sale, assignment,
         mortgage, transfer, pledge, gift, hypothecation or other disposition or
         transfer of, or any act creating a trust (voting or otherwise) with
         respect to shares of Special Voting Stock or the Paired Common

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         Units paired thereto.

8.       No Restrictions on Issuances of Unpaired OP Units. This Agreement shall
         not be deemed to impose any restrictions or limitations on the ability
         of the OP to issue operating partnership units (other than the Paired
         Common Units or Preferred Units) that are not paired to shares of
         Special Voting Stock.

9.       Amendment. This Agreement may be amended by the parties hereto by
         action taken or authorized by the Board of Directors of the REIT, LP
         and GP. This Agreement may not be amended except by an instrument in
         writing signed on behalf of each of the REIT, LP, GP and the OP.

10.      Counterparts. This Agreement may be executed in counterparts, and each
         such counterpart hereof shall be deemed to be an original instrument,
         but all such counterparts together shall constitute but one agreement.

11.      Governing Law. This Agreement shall be governed by, and construed in
         accordance with, the laws of the State of Maryland.

12.      Entire Agreement. This Agreement contains the entire understanding and
         agreement between the parties with respect to its subject matter, and
         any and all conflicting or inconsistent discussions, agreements,
         promises, representations and statements, if any, between the parties
         or their representatives that are not incorporated in this Agreement
         shall be merged into this Agreement.

13.      Headings. The various section headings are inserted for the purposes of
         reference only and shall not affect the meaning or interpretation of
         this Agreement or any provision hereof.

14.      Severability. The provisions of this Agreement shall be severable, and
         any invalidity, unenforceability or illegality of any provision or
         provisions of this Agreement shall not affect any other provision or
         provisions of this Agreement, and each term and provision of this
         Agreement shall be construed to be

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         valid and enforceable to the full extent permitted by law.

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         IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed on its behalf as of the date first written above.

                               ARBOR REALTY TRUST, INC.

                               By: /s/ Frederick C. Herbst
                                   ---------------------------------------------
                                   Name: Frederick C. Herbst
                                   Title: Chief Financial Officer, Treasurer
                                          and Secretary

                               ARBOR REALTY LIMITED PARTNERSHIP

                               By: Arbor Realty GPOP, Inc., its general
                                        partner

                                        By: /s/ Frederick C. Herbst
                                            ------------------------------------
                                            Name: Frederick C. Herbst
                                            Title: Secretary and Treasurer

                               ARBOR COMMERCIAL MORTGAGE, LLC

                               By: /s/ Frederick C. Herbst
                                   ---------------------------------------------
                                   Name: Frederick C. Herbst
                                   Title: Chief Financial Officer

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                               ARBOR REALTY LPOP, INC.

                               By: /s/ Frederick C. Herbst
                                   ---------------------------------------------
                                   Name: Frederick C. Herbst
                                   Title: Secretary and Treasurer

                               ARBOR REALTY GPOP, INC.

                               By: /s/ Frederick C. Herbst
                                   ---------------------------------------------
                                   Name: Frederick C. Herbst
                                   Title: Secretary and Treasurer

                                       9<PAGE>

                                                                    EXHIBIT 10.8

                            ARBOR REALTY TRUST, INC.

                        2003 OMNIBUS STOCK INCENTIVE PLAN

SECTION 1. GENERAL PURPOSE OF PLAN; DEFINITIONS.

                  The name of this plan is the Arbor Realty Trust, Inc. 2003
Omnibus Stock Incentive Plan (the "Plan"). The Plan was adopted by the Board
(defined below) on June 25, 2003 and approved by the stockholders of the Company
(defined below) on July 1, 2003. The purpose of the Plan is to enable the
Company to attract and retain highly qualified personnel who will contribute to
the Company's success and to provide incentives to Participants (defined below)
that are linked directly to stockholder value and will therefore inure to the
benefit of all stockholders of the Company.

                  For purposes of the Plan, the following terms shall be defined
as set forth below:

                  (a)      "Administrator" means the Board, or if and to the
extent the Board does not administer the Plan, the Committee in accordance with
Section 2 below.

                  (b)      "Award" means any award under the Plan.

                  (c)      "Award Agreement" means, with respect to each Award,
the signed written agreement between the Company and the Participant setting
forth the terms and conditions of the Award.

                  (d)      "Board" means the Board of Directors of the Company.

                  (e)      "Code" means the Internal Revenue Code of 1986, as
amended from time to time, or any successor thereto.

                  (f)      "Committee" means any committee the Board may appoint
to administer the Plan. If at any time or to any extent the Board shall not
administer the

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Plan, then the functions of the Board specified in the Plan shall be exercised
by the Committee.

                  (g)      "Common Stock" means the common stock, par value $.01
per share, of the Company.

                  (h)      "Company" means Arbor Realty Trust, Inc., a Maryland
corporation (or any successor corporation).

                  (i)      "Disability" means the inability of a Participant to
perform substantially his or her duties and responsibilities to the Company or
to any Parent or Subsidiary by reason of a physical or mental disability or
infirmity (i) for a continuous period of six months, or (ii) at such earlier
time as the Participant submits medical evidence satisfactory to the
Administrator that the Participant has a physical or mental disability or
infirmity that will likely prevent the Participant from returning to the
performance of the Participant's work duties for six months or longer. The date
of such Disability shall be the last day of such six-month period or the day on
which the Participant submits such satisfactory medical evidence, as the case
may be.

                  (j)      "Eligible Recipient" means an officer, director,
employee, consultant (including employees of the Manager who provide services to
the Company) or advisor of the Company or of any Parent or Subsidiary.

                  (k)      "Fair Market Value" as of a particular date shall
mean the fair market value of a share of Common Stock as determined by the
Administrator in its sole discretion; provided, however, that (i) if the Common
Stock is admitted to trading on a national securities exchange, fair market
value of a share of Common Stock on any date shall be the closing sale price
reported for such share on such exchange on such date or, if no sale was
reported on such date, on the last date preceding such date on which a sale was
reported, (ii) if the Common Stock is admitted to quotation on the National
Association of Securities Dealers Automated Quotation ("Nasdaq") System or other
comparable quotation system and has been designated as a National Market System
("NMS") security, fair market value of a share of Common Stock on any date shall
be the closing sale price reported for such share on such system on such date
or, if no sale was reported on such date, on the last date preceding such date
on which a sale was reported, or (iii) if the Common Stock is admitted to
quotation on the Nasdaq System but has not been designated as an NMS security,
fair market value of a share of Common Stock on any date shall be the average of
the highest bid and lowest asked prices of such share on such system

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on such date or, if no bid and ask prices were reported on such date, on the
last date preceding such date on which both bid and ask prices were reported.

                  (l)      "Manager" means Arbor Commercial Mortgage, LLC, a New
York limited liability company.

                  (m)      "Parent" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company, if each
of the corporations in the chain (other than the Company) owns stock possessing
50% or more of the combined voting power of all classes of stock in one of the
other corporations in the chain.

                  (n)      "Participant" means any Eligible Recipient selected
by the Administrator, pursuant to the Administrator's authority in Section 2
below, to receive awards of Restricted Stock.

                  (o)      "Restricted Stock" means Shares subject to certain
restrictions granted pursuant to Section 6 below.

                  (p)      "Shares" means shares of Common Stock reserved for
issuance under the Plan, as adjusted pursuant to Sections 3 and 4, and any
successor security.

                  (q)      "Subsidiary" means any corporation (other than the
Company) in an unbroken chain of corporations beginning with the Company, if
each of the corporations (other than the last corporation) in the unbroken chain
owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in the chain.

SECTION 2. ADMINISTRATION.

                  The Plan shall be administered by the Board or, at the Board's
sole discretion, by the Committee, which shall be appointed by the Board, and
which shall serve at the pleasure of the Board. Pursuant to the terms of the
Plan, the Administrator shall have the power and authority:

                  (a)      to select those Eligible Recipients who shall be
Participants;

                  (b)      to determine whether and to what extent awards of
Restricted Stock are to be granted hereunder to Participants;

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                  (c)      to determine the number of Shares to be covered by
each Award granted hereunder;

                  (d)      to determine the terms and conditions, not
inconsistent with the terms of the Plan, of each Award granted hereunder; and

                  (e)      to determine the terms and conditions, not
inconsistent with the terms of the Plan, which shall govern all written
instruments evidencing awards of Restricted Stock granted hereunder.

                  The Administrator shall have the authority, in its sole
discretion, to adopt, alter and repeal such administrative rules, guidelines and
practices governing the Plan as it shall from time to time deem advisable; to
interpret the terms and provisions of the Plan and any Award issued under the
Plan (and any Award Agreement relating thereto); and to otherwise supervise the
administration of the Plan.

                  All decisions made by the Administrator pursuant to the
provisions of the Plan shall be final, conclusive and binding on all persons,
including the Company and the Participants.

SECTION 3. SHARES SUBJECT TO PLAN.

                  The total number of shares of Common Stock reserved and
available for issuance under the Plan shall be 185,000 shares. Such shares may
consist, in whole or in part, of authorized and unissued shares or treasury
shares.

                  To the extent that any Shares subject to any award of
Restricted Stock are forfeited, such Shares shall again be available for
issuance in connection with future Awards granted under the Plan.

SECTION 4. CORPORATE TRANSACTIONS.

                  In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend or other change in corporate structure
affecting the Common Stock, an equitable substitution or proportionate
adjustment shall be made in (i) the aggregate number of Shares reserved for
issuance under the Plan, and (ii)

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the kind, number and purchase price of Shares subject to outstanding awards of
Restricted Stock granted under the Plan, in each case as may be determined by
the Administrator, in its sole discretion. Such other substitutions or
adjustments shall be made as may be determined by the Administrator, in its sole
discretion. In connection with any event described in this paragraph, the
Administrator may provide, in its sole discretion, for the cancellation of any
outstanding awards and payment in cash or other property therefor.

SECTION 5. ELIGIBILITY.

                  Eligible Recipients shall be eligible to be granted awards of
Restricted Stock or other awards. The Participants under the Plan shall be
selected from time to time by the Administrator, in its sole discretion, from
among the Eligible Recipients.

SECTION 6. RESTRICTED STOCK.

                  Awards of Restricted Stock may be issued either alone or in
addition to other Awards granted under the Plan. The Administrator shall
determine the Eligible Recipients to whom, and the time or times at which,
awards of Restricted Stock shall be made; the number of Shares to be awarded;
the price, if any, to be paid by the Participant for the acquisition of
Restricted Stock; the Restricted Period (as defined in Section 6(b)) applicable
to awards of Restricted Stock. The Administrator may also condition the grant of
the award of Restricted Stock upon any such criteria as the Administrator may
determine, in its sole discretion. The provisions of the awards of Restricted
Stock need not be the same with respect to each Participant.

                  (a)      Awards and Certificates. The prospective recipient of
awards of Restricted Stock shall not have any rights with respect to any such
Award, unless and until such recipient has executed an Award Agreement
evidencing the Award (a "Restricted Stock Award Agreement") and delivered a
fully executed copy thereof to the Company, within a period of sixty days (or
such other period as the Administrator may specify) after the award date. Except
as otherwise provided below in Section 6(b), each Participant who is granted an
award of Restricted Stock shall be issued a stock certificate in respect of such
shares of Restricted Stock, which certificate shall be registered in the name of
the Participant and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to any such Award.

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                  The Company may require that the stock certificates evidencing
Restricted Stock granted hereunder be held in the custody of the Company until
the restrictions thereon shall have lapsed, and that, as a condition of any
award of Restricted Stock, the Participant shall have delivered a stock power,
endorsed in blank, relating to the Shares covered by such Award.

                  (b)      Restrictions and Conditions. The awards of Restricted
Stock granted pursuant to this Section 6 shall be subject to the following
restrictions and conditions:

                           (i)      Subject to the provisions of the Plan and
         the Restricted Stock Award Agreement governing any such Award, during
         such period as may be set by the Administrator commencing on the date
         of grant (the "Restricted Period"), the Participant shall not be
         permitted to sell, transfer, pledge or assign shares of Restricted
         Stock awarded under the Plan; provided, however, that the Administrator
         may, in its sole discretion, provide for the lapse of such restrictions
         in installments and may accelerate or waive such restrictions in whole
         or in part based on such factors and such circumstances as the
         Administrator may determine, in its sole discretion.

                           (ii)     Except as provided in Section 6(b)(i), the
         Participant shall generally have the rights of a stockholder of the
         Company with respect to Restricted Stock during the Restricted Period.
         Certificates for unrestricted Shares shall be delivered to the
         Participant promptly after, and only after, the Restricted Period shall
         expire without forfeiture in respect of such awards of Restricted Stock
         except as the Administrator, in its sole discretion, shall otherwise
         determine.

                           (iii)    The rights of Participants granted awards of
         Restricted Stock upon termination of employment or service as a
         director, consultant or advisor to the Company or to any Parent or
         Subsidiary terminates for any reason during the Restricted Period shall
         be set forth in the Restricted Stock Award Agreement governing such
         Awards.

SECTION 7. AMENDMENT AND TERMINATION.

                                       6
<PAGE>

                  The Board may amend, alter or discontinue the Plan, but no
amendment, alteration, or discontinuation shall be made that would impair the
rights of a Participant under any Award theretofore granted without such
Participant's consent. To the extent necessary and desirable, the Board shall
obtain approval of the stockholders (as described below), for any amendment that
would:

                  (a)      except as provided in Sections 3 or 4 of the Plan,
increase the total number of Shares reserved for issuance under the Plan; or

                  (b)      change the class of officers, directors, employees,
consultants and advisors eligible to participate in the Plan.

                  The Administrator may amend the terms of any Award theretofore
granted, prospectively or retroactively, but, subject to Section 4 of Plan, no
such amendment shall impair the rights of any Participant without his or her
consent.

SECTION 8. UNFUNDED STATUS OF PLAN.

                  The Plan is intended to constitute an "unfunded" plan for
incentive compensation. With respect to any payments not yet made to a
Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general creditor of the
Company.

SECTION 9. GENERAL PROVISIONS.

                  (a)      Shares shall not be issued pursuant to any Award
granted hereunder unless such Award and the issuance and delivery of such Shares
pursuant thereto shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, and the requirements of any stock exchange
upon which the Common Stock may then be listed, and shall be further subject to
the approval of counsel for the Company with respect to such compliance.

                  (b)      The Administrator may require each person acquiring
Shares to represent to and agree with the Company in writing that such person is
acquiring the Shares without a view to distribution thereof. The certificates
for such Shares may

                                       7
<PAGE>

include any legend which the Administrator deems appropriate to reflect any
restrictions on transfer.

                  All certificates for Shares delivered under the Plan shall be
subject to such stock-transfer orders and other restrictions as the
Administrator may deem advisable under the rules, regulations, and other
requirements of the Securities and Exchange Commission, any stock exchange upon
which the Common Stock is then listed, and any applicable Federal or state
securities law, and the Administrator may cause a legend or legends to be placed
on any such certificates to make appropriate reference to such restrictions.

                  (c)      Nothing contained in the Plan shall prevent the Board
from adopting other or additional compensation arrangements, subject to
stockholder approval, if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases. The adoption
of the Plan shall not confer upon any Eligible Recipient any right to continued
employment or service with the Company or any Parent or Subsidiary, as the case
may be, nor shall it interfere in any way with the right of the Company or any
Parent or Subsidiary to terminate the employment or service of any of its
Eligible Recipients at any time.

                  (d)      Each Participant shall, no later than the date as of
which the value of an Award first becomes includible in the gross income of the
Participant for Federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Administrator regarding payment of, any
Federal, state, or local taxes of any kind required by law to be withheld with
respect to such Award. The obligations of the Company under the Plan shall be
conditional on the Participant's making of such payments or arrangements, and
the Company shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment of any kind otherwise due to the Participant.

                  (e)      No member of the Board or the Administrator, nor any
officer or employee of the Company acting on behalf of the Board or the
Administrator, shall be personally liable for any action, determination, or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Board or the Administrator and each and any officer or employee
of the Company acting on their behalf shall, to the extent permitted by law, be
fully indemnified and protected by the Company in respect of any such action,
determination or interpretation.

SECTION 10. STOCKHOLDER APPROVAL; EFFECTIVE DATE OF PLAN.

                                       8
<PAGE>

                  (a)      The grant of any Award hereunder shall be contingent
upon stockholder approval of the Plan being obtained within 12 months before or
after the date the Board adopts the Plan.

                  (b)      Subject to the approval of the Plan by the
stockholders of the Company within twelve (12) months before or after the date
the Plan is adopted by the Board, the Plan shall be effective as of June 25,
2003 (the "Effective Date").

SECTION 11. TERM OF PLAN.

                  No Award shall be granted pursuant to the Plan on or after the
tenth anniversary of the Effective Date, but Awards theretofore granted may
extend beyond that date.

SECTION 12. GOVERNING LAW.

                  This Plan and all questions relating to its validity,
interpretation, performance and enforcement shall be governed by and construed,
interpreted and enforced in accordance with the laws of the State of New York,
notwithstanding any New York or other conflict-of-law provisions to the
contrary.

                                       9

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