CHATEAU COMMUNITIES INC
EXHIBIT 10.10
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<TYPE>EX-10.10
<SEQUENCE>3
<FILENAME>dex1010.txt
<DESCRIPTION>EXHIBIT 10.10
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                                                                   EXHIBIT 10.10

                            CHATEAU COMMUNITIES, INC.

                          2002 EQUITY COMPENSATION PLAN

                                TABLE OF CONTENTS

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1.    Definitions...............................................................................    1

2.    Effective Date and Termination of Plan....................................................    3

3.    Administration of Plan....................................................................    4

4.    Eligibility for and Grant of Options and Restricted Stock; Committee Authority............    4

5.    Number of Shares Subject to the Plan......................................................    4

6.    Options...................................................................................    5

7.    Restricted Stock..........................................................................    7

8.    Regulations and Approvals.................................................................    9

9.    Interpretation and Amendments; Other Rules................................................    9

10.   Changes in Capital Structure..............................................................   10

11.   Notices...................................................................................   10

12.   Rights as Stockholder.....................................................................   11

13.   Rights to Employment......................................................................   11

14.   Exculpation and Indemnification...........................................................   11

15.   Captions..................................................................................   11

16.   Governing Law.............................................................................   11
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                            CHATEAU COMMUNITIES, INC.

                          2002 EQUITY COMPENSATION PLAN

          Chateau Communities, Inc., a Maryland corporation, wishes to attract
key employees, directors and key consultants, to the Company and its
Subsidiaries and induce key employees, directors and key consultants, to remain
with the Company and its Subsidiaries, and to provide them with long-term
incentives for sustained high levels of performance. In furtherance thereof, the
Chateau Communities, Inc. 2002 Equity Compensation Plan is designed to provide
equity-based incentives to key employees, directors and key consultants, of the
Company and its Subsidiaries.

          1.   Definitions.

          Whenever used herein, the following terms shall have the meanings set
forth below:

          "Award" means the award of either or both of an Option or Restricted
Stock under the Plan as the context requires.

          "Award Agreement" means a written agreement in a form approved by the
Committee to be entered into by the Company and a Participant, and also refers,
if applicable, to any employment agreement between the Company and the
Participant, the provisions of which relate to Options or Grants.

          "Board" means the Board of Directors of the Company.

          "Cause" means, unless otherwise provided in the Participant's Award
Agreement, (i) engaging in (A) willful or gross misconduct or (B) willful or
gross neglect, (ii) repeatedly failing to adhere to the directions of superiors
or the Board or the written policies and practices of the Company or its
Subsidiaries or its affiliates, (iii) the commission of a felony or a crime of
moral turpitude, or any crime involving the Company or its Subsidiaries, or any
affiliate thereof, (iv) fraud, insubordination, misappropriation or
embezzlement, (v) a material breach of the Participant's employment agreement
(if any) with the Company or its Subsidiaries or its affiliates, or (vi) any
illegal act detrimental to the Company or its Subsidiaries or its affiliates;
provided, however, that if the Participant is a party to an employment agreement
with the Company or any of its Subsidiaries and such agreement provides for
termination for "Cause," "Cause" hereunder shall have the same meaning ascribed
to it in the employment agreement.

          "Change in Control" means the occurrence of one of the following:

               (a) a "person" or "group" (within the meaning of sections 13(d)
               and 14(d) of the Exchange Act) becomes the "beneficial owner"
               (within the meaning of Rule 13d-3 under the Exchange Act) of
               securities of the Company (including options, warrants, rights
               and convertible and exchangeable securities) representing 50% or
               more of the combined voting power of the Company's then
               outstanding securities in any one or more transactions; provided,
               however, that purchases by employee benefit plans of the Company
               and by the Company or its affiliates shall be disregarded;

               (b) any sale, lease, exchange or other transfer (in one
               transaction or a series of related transactions) of all, or
               substantially all, of the operating assets of the Company;

               (c) the execution and delivery of a definitive agreement by the
               Company that provides for a merger or consolidation, or a
               transaction having a similar

<PAGE>

               effect (unless such merger, consolidation or similar transaction
               is with a subsidiary of the Company or with another company, a
               majority of whose outstanding capital stock is owned by the same
               persons or entities who own a majority of the Common Stock at
               such time), where (A) the Company is not the surviving
               corporation, (B) the majority of the Common Stock of the Company
               is no longer held by the stockholders of the Company immediately
               prior to the transaction, or (C) the Company's Common Stock is
               converted into cash, securities or other property (other than the
               common stock of a company into which the Company is merged);

               (d) at a time when the Common Stock is registered under Section
               12 of the Exchange Act, a person other than the Company makes a
               tender or exchange offer for 50% or more of the Common Stock
               pursuant to which purchases of any amount of Common Stock are
               made; or

               (e) a majority of the members of the Board are not persons who
               (A) had been directors of the Company for at least the preceding
               24 consecutive months or (B) when they initially were elected to
               the Board, (I) were nominated (if they were elected by the
               stockholders) or elected (if they were elected by the directors)
               with the affirmative vote of two-thirds of the directors who were
               Continuing Directors (as defined below) at the time of the
               nomination or election by the Board and (II) were not elected as
               a result of an actual or threatened solicitation of proxies or
               consents by a person other than the Board or an agreement
               intended to avoid or settle such a proxy solicitation (the
               directors described in clauses (A) and (B) being "Continuing
               Directors").

Notwithstanding the foregoing, a "Change of Control" shall not include an
offering of any class of shares of common stock of the Company or any of its
affiliates under the Securities Act of 1933, as amended.

          "Code" means the Internal Revenue Code of 1986, as amended.

          "Committee" means the Executive Compensation Committee of the Board.

          "Common Stock" means the Company's Common Stock, par value $.01 per
share, either currently existing or authorized hereafter.

          "Company" means Chateau Communities, Inc., a Maryland corporation.

          "Disability" means the occurrence of an event which would entitle an
employee of the Company to the payment of disability income under one of the
Company's approved long-term disability income plans or a long-term disability
as determined by the Committee in its absolute discretion pursuant to any other
standard as may be adopted by the Committee; provided, however, that if the
Participant is a party to an employment agreement with the Company or any of its
Subsidiaries and such agreement provides for termination by reason of
"Disability," "Disability" hereunder shall have the same meaning ascribed to it
in the employment agreement.

          "Exchange Act" means the Securities Exchange Act of 1934, as amended.

          "Fair Market Value" per Share as of a particular date means (i) if
Shares are then listed on a national stock exchange, the closing sales price per
Share on the exchange for the last preceding date on which there was a sale of
Shares on such exchange, as determined by the Committee; (ii) if Shares are not
then listed on a national stock exchange but are then traded on an
over-the-counter market, the average of the closing bid and asked prices for the
Shares in such over-the-counter market for the last

                                        2

<PAGE>

preceding date on which there was a sale of such Shares in such market, as
determined by the Committee; or (iii) if Shares are not then listed on a
national stock exchange or traded on an over-the-counter market, such value as
the Committee in its discretion may in good faith determine; provided that,
where the Shares are so listed or traded, the Committee may make discretionary
determinations where the Shares have not been traded for 10 trading days.

          "Grantee" means an employee or director of, or key consultant to, the
Company to whom Restricted Stock is granted.

          "Option" means the right to purchase, at a price and for the term
fixed by the Committee in accordance with the Plan, and subject to such other
limitations and restrictions in the Plan and the applicable Award Agreement, a
number of Shares determined by the Committee.

          "Optionee" means an employee or director of, or key consultant to, the
Company to whom an Option is granted, or the Successors of the Optionee, as so
requires.

          "Option Price" means the exercise price per Share.

          "Participant" means an Optionee or Grantee.

          "Plan" means the Company's 2002 Equity Compensation Plan, as set forth
herein and as the same may from time to time be amended.

          "Restricted Stock" means an award of Shares that are subject to
restrictions under Section 7.

          "Retirement" means, unless otherwise provided by the Committee in the
Participant's Award Agreement, the termination (other than for Cause) of
employment (or other termination of service, in the case of key consultants or
directors) of a Participant on or after the Participant's attainment of age 65
or on or after the Participant's attainment of age 55 with five consecutive
years of service with the Company and or its Subsidiaries or its affiliates.

          "Securities Act" means the Securities Act of 1933, as amended.

          "Shares" means shares of Common Stock of the Company.

          "Subsidiary" means any corporation (other than the Company) that is a
"subsidiary corporation" with respect to the Company under Section 424(f) of the
Code or, with respect to grants other than Incentive Stock Options (as herein
defined) Subsidiary means any other entity, a majority of whose equity interests
is owned directly or indirectly by the Company. In the event the Company becomes
a subsidiary of another company, the provisions hereof applicable to
subsidiaries shall, unless otherwise determined by the Committee, also be
applicable to any Company that is a "parent corporation" with respect to the
Company under Section 424(e) of the Code.

          "Successor of the Optionee" means the legal representative of the
estate of a deceased Optionee or the person or persons who shall acquire the
right to exercise an Option by bequest or inheritance or by reason of the death
of the Optionee.

          2.   Effective Date and Termination of Plan.

          The effective date of the Plan is that date on which the Plan is
approved by the Board of the Company. The Plan shall not become effective unless
and until it is so approved. The Plan shall terminate on, and no Option or
Restricted Stock shall be granted hereunder on or after, the 10-year

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anniversary of the earlier of the approval of the Plan by (i) the Board or (ii)
the shareholders of the Company; provided, however, that the Board may at any
time prior to that date terminate the Plan.

          3.   Administration of Plan.

          The Plan shall be administered by the Committee. The Committee shall
consist of at least two individuals each of whom shall be a "nonemployee
director" as defined in Rule 16b-3 as promulgated by the Securities and Exchange
Commission ("Rule 16b- 3") under the Exchange Act and shall, at such times as
the Company is subject to Section 162(m) of the Code, qualify as "outside
directors" for purposes of Section 162(m) of the Code. The acts of a majority of
the members present at any meeting of the Committee at which a quorum is
present, or acts approved in writing by a majority of the entire Committee,
shall be the acts of the Committee for purposes of the Plan; provided that the
otherwise applicable procedures of the Committee, to the extent inconsistent
with the provisions of this sentence, shall control. If and to the extent
applicable, no member of the Committee may act as to matters under the Plan
specifically relating to such member.

          4.   Eligibility for and Grant of Options and Restricted Stock;
               Committee Authority.

          Subject to the provisions of the Plan, the Committee shall, in its
discretion as reflected by the terms of the Award Agreements: (i) authorize the
granting of Options or Restricted Stock (or both) to key employees, directors
and key consultants of the Company and its Subsidiaries; (ii) determine and
designate from time to time those key employees, directors and key consultants
of the Company and its Subsidiaries to whom Options and Restricted Stock are to
be granted and the number of Shares to be optioned or granted (as applicable) to
each employee, director and key consultant; (iii) with respect to Options,
determine whether to grant incentive stock options ("Incentive Stock Options")
within the meaning of Section 422(b) of the Code, or non-qualified stock options
("Non-Qualified Stock Options"), or both (to the extent that any Option does not
qualify as an Incentive Stock Option, it shall constitute a separate
Non-Qualified Stock Option); provided that Incentive Stock Options shall only be
granted to employees of the Company; (iv) determine the number of Shares subject
to each Award; (v) determine the time or times when and the manner and condition
in which each Option shall be exercisable and the duration of the exercise
period, and the restrictions applicable to Restricted Stock; and (vi) determine
or impose other conditions to any Award under the Plan as it may deem
appropriate. In determining the eligibility of an employee, director and key
consultant to receive an Award, as well as in determining the number of Shares
to be subject to any such Award, the Committee may consider his or her position
and responsibilities, the nature and value to the Company of his or her services
and accomplishments whether directly or through its Subsidiaries, his or her
present and potential contribution to the success of the Company whether
directly or through its Subsidiaries and such other factors as the Committee may
deem relevant. The Award Agreement shall contain such other terms, provisions
and conditions not inconsistent herewith as shall be determined by the
Committee. The Participant shall take whatever additional actions and execute
whatever additional documents the Committee may in its reasonable judgment deem
necessary or advisable in order to carry out or effect one or more of the
obligations or restrictions imposed on the Participant pursuant to the express
provisions of the Plan and the Award Agreement. The Committee shall cause each
Option to be designated as an Incentive Stock Option or a Non-Qualified Stock
Option.

          5.   Number of Shares Subject to the Plan.

          Subject to adjustments pursuant to Section 10, (i) no more than an
aggregate of 1,400,000 Shares may be the subject of Awards. Notwithstanding the
foregoing provisions of this Section 5, Shares as to which an Option is granted
under the Plan that remain unexercised at the expiration, forfeiture or other
termination of such Option and Shares of Restricted Stock that are forfeited may
be the subject of further Awards of a type for which the Shares were initially
available. Shares issued hereunder may

                                        4

<PAGE>

consist, in whole or in part, of authorized and unissued shares or treasury
shares. The certificates for Shares issued hereunder may include any legend
which the Committee deems appropriate to reflect any restrictions on transfer
hereunder or under the Award Agreement, or as the Committee may otherwise deem
appropriate.

          The aggregate Fair Market Value, determined as of the date an Option
is granted, of the Common Stock for which any Optionee may be awarded Incentive
Stock Options which are first exercisable by the Optionee during any calendar
year under the Plan (or any other stock option plan required to be taken into
account under Section 422(d) of the Code) shall not exceed $100,000.

          6.   Options.

          A.   Option Price.

          The Option Price shall be determined by the Committee on the date the
Option is granted and reflected in the Award Agreement. Any particular Award
Agreement may provide for different exercise prices for specified amounts of
Shares subject to the Option. The Option Price with respect to each Incentive
Stock Option shall not be less than 100% (or 110%, in the case of an individual
described in Section 422(b)(6) of the Code (relating to certain 10% owners)) of
the Fair Market Value of a Share on the day the Option is granted.

          B.   Period of Option and Vesting.

          (a) Unless earlier expired, forfeited or otherwise terminated, each
Option shall expire in its entirety upon the 10th anniversary of the date of
grant or shall have such other term as is set forth in the applicable Award
Agreement (except that, in the case of an individual described in Section
422(b)(6) of the Code (relating to certain 10% owners) who is granted an
Incentive Stock Option, the term of such Option shall be no more than five years
from the date of grant). The Option shall also expire, be forfeited and
terminate at such times and in such circumstances as otherwise provided
hereunder or under the Award Agreement.

          (b) Each Option, to the extent that there has been no termination of
the Optionee's employment (or other service, if applicable) and the Option has
not otherwise lapsed, expired, terminated or been forfeited, shall first become
exercisable according to the terms and conditions set forth in the Award
Agreement, as determined by the Committee at the time of grant. Unless otherwise
provided in the Award Agreement or herein, no Option (or portion thereof) shall
ever be exercisable if the Optionee's employment or other service with the
Company and its Subsidiaries has terminated before the time at which such Option
would otherwise have become exercisable, and any Option that would otherwise
become exercisable after such termination shall not become exercisable and shall
be forfeited upon such termination. Notwithstanding the foregoing provisions of
this Section 6B(b), Options exercisable pursuant to the schedule set forth by
the Committee at the time of grant may be fully or more rapidly exercisable or
otherwise vested at any time in the discretion of the Committee. Upon and after
the death of an Optionee, such Optionee's Options, if and to the extent
otherwise exercisable hereunder or under the applicable Award Agreement after
the Optionee's death, may be exercised by the Successors of the Optionee.

          C.   Exercisability Upon and After Termination of Optionee.

          (a) The Committee shall provide in the Award Agreement the extent (if
any) to which any Option may be exercised upon the Optionee's termination of
employment (or other service).

          (b) Except as may otherwise be expressly set forth in this Section 6C,
and except as may otherwise be expressly provided under the Award Agreement, no
provision of this Section 6C is

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<PAGE>

intended to or shall permit the exercise of the Option to the extent the Option
was not exercisable upon cessation of employment or other service.

          D.   Exercise of Options.

          (a) Subject to vesting and other restrictions provided for hereunder
or otherwise imposed in accordance herewith, an Option may be exercised, and
payment in full of the aggregate Option Price made, by an Optionee only by
written notice (in the form prescribed by the Committee) to the Company
specifying the number of Shares to be purchased.

          (b) Without limiting the scope of the Committee's discretion
hereunder, the Committee may impose such other restrictions on the exercise of
Incentive Stock Options (whether or not in the nature of the foregoing
restrictions) as it may deem necessary or appropriate.

          (c) If Shares acquired upon exercise of an Incentive Stock Option are
disposed of in a disqualifying disposition within the meaning of Section 422 of
the Code by an Optionee prior to the expiration of either two years from the
date of grant of such Option or one year from the transfer of Shares to the
Optionee pursuant to the exercise of such Option, or in any other disqualifying
disposition within the meaning of Section 422 of the Code, such Optionee shall
notify the Company in writing as soon as practicable thereafter of the date and
terms of such disposition and, if the Company (or any affiliate thereof)
thereupon has a tax-withholding obligation, shall pay to the Company (or such
affiliate) an amount equal to any withholding tax the Company (or affiliate) is
required to pay as a result of the disqualifying disposition.

          E.   Payment.

          (a) The aggregate Option Price shall be paid in full upon the exercise
of the Option. Payment must be made by one of the following methods:

               (i) a certified or bank cashier's check;

               (ii) the proceeds of a Company loan program or third-party sale
               program or a notice acceptable to the Committee given as
               consideration under such a program, in each case if permitted by
               the Committee in its discretion, if such a program has been
               established and the Optionee is eligible to participate therein;

               (iii) if approved by the Committee in its discretion, Shares of
               previously owned Common Stock (not subject to restrictions
               hereunder) having an aggregate Fair Market Value on the date of
               exercise equal to the aggregate Option Price, which Common Stock
               was owned by the Participant at least six months prior to such
               delivery;

               (iv) if approved by the Committee in its discretion, through the
               written election of the Optionee to have Shares withheld by the
               Company from the Shares otherwise to be received, with such
               withheld Shares having an aggregate Fair Market Value on the date
               of exercise equal to the aggregate Option Price; or

               (v) by any combination of such methods of payment or any other
               method acceptable to the Committee in its discretion.

          (b) The Committee, in its discretion, may also permit the Optionee to
elect to exercise an Option by receiving a combination of Shares and cash, or,
in the discretion of the Committee, either Shares or solely in cash, with an
aggregate Fair Market Value (or, to the extent of payment in cash,

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<PAGE>

in an amount) equal to the excess of the Fair Market Value of the Shares with
respect to which the Option is being exercised over the aggregate Option Price,
as determined as of the day the Option is exercised.

          (c) Except in the case of Options exercised by certified or bank
cashier's check, the Committee may impose limitations and prohibitions on the
exercise of Options as it deems appropriate, including, without limitation, any
limitation or prohibition designed to avoid accounting consequences which may
result from the use of Common Stock as payment upon exercise of an Option. Any
fractional Shares resulting from an Optionee's election that are accepted by the
Company shall in the discretion of the Committee be paid in cash.

          F.   Tax Withholding -- Options.

          The Committee may, in its discretion, require the Optionee to pay to
the Company at the time of exercise of any Option the amount that the Committee
deems necessary to satisfy the Company's obligation to withhold federal, state
or local income or other taxes incurred by reason of the exercise. Upon exercise
of the Option, the Optionee may, if approved by the Committee in its discretion,
make a written election to have Shares then issued withheld by the Company from
the Shares otherwise to be received, or to deliver previously owned Shares (not
subject to restrictions hereunder), in order to satisfy the liability for such
withholding taxes. In the event that the Optionee makes, and the Committee
permits, such an election, the number of Shares so withheld or delivered shall
have an aggregate Fair Market Value on the date of exercise sufficient to
satisfy the applicable withholding taxes. Where the exercise of an Option does
not give rise to an obligation by the Company to withhold federal, state or
local income or other taxes on the date of exercise, but may give rise to such
an obligation in the future, the Committee may, in its discretion, make such
arrangements and impose such requirements as it deems necessary or appropriate.
Notwithstanding anything contained in the Plan or any Award Agreement to the
contrary, the Optionee's satisfaction of any tax-withholding requirements
imposed by the Committee shall be a condition precedent to the Company's
obligation as may otherwise be provided hereunder to provide Shares to the
Optionee, and the failure of the Optionee to satisfy such requirements with
respect to the exercise of an Option shall cause such Option to be forfeited.

          G.   Exercise by Successors and Payment in Full.

          An Option may be exercised, and payment in full of the aggregate
Option Price made, by the Successors of the Optionee only by written notice (in
the form prescribed by the Committee) to the Company specifying the number of
Shares to be purchased. Such notice shall state that the aggregate Option Price
will be paid in full, or that the Option will be exercised as otherwise provided
hereunder, in the discretion of the Company or the Committee, if and as
applicable.

          H.   Nontransferability of Option.

          Each Option granted under the Plan shall by its terms be
nontransferable by the Optionee except by will or the laws of descent and
distribution of the state wherein the Optionee is domiciled at the time of his
death; provided, however, that the Committee may (but need not) permit other
transfers, where the Committee concludes that such transferability (i) does not
result in accelerated taxation, (ii) does not cause any Option intended to be an
Incentive Stock Option to fail to be described in Section 422(b) of the Code and
(iii) is otherwise appropriate and desirable.

          7.   Restricted Stock.

          A.   Certificates for Restricted Stock.

          (a) Each Grantee shall be issued a stock certificate in respect of
Shares of Restricted Stock awarded under the Plan. Such certificate shall be
registered in the name of the Grantee, and

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<PAGE>

(without limiting the provisions relating to the legending of Share certificates
contained in Section 5) shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Award, substantially in the
following form:

          The transferability of this certificate and the shares of stock
          represented hereby are subject to the terms and conditions (including
          forfeiture) of the Company's 2002 Equity Compensation Plan and an
          Agreement entered into between the registered owner and the Company.
          Copies of such Plan and Agreement are on file in the offices of the
          Company.

          (b)  The Committee shall require that the stock certificates
evidencing such Shares be held in custody by the Company until the restrictions
thereon shall have lapsed, and that, as a condition of any Restricted Stock
Award, the Grantee shall have delivered a stock power, endorsed in blank,
relating to the stock covered by such Award. If and when such restrictions so
lapse, the stock certificates shall be delivered by the Company to the recipient
or his or her designee.

          B.   Restrictions and Conditions.

          The Shares of Restricted Stock awarded pursuant to the Plan shall be
subject to the following restrictions and conditions:

               (i) Subject to the provisions of the Plan and the Award
               Agreements, during a period set by the Committee commencing with
               the date of such Award and ending on a date established by the
               Committee, the Grantee shall not be permitted voluntarily or
               involuntarily to sell, transfer, pledge, anticipate, alienate,
               encumber or assign Shares of Restricted Stock awarded under the
               Plan (or have such Shares attached or garnished). Unless
               otherwise determined by the Committee, the restriction period
               with respect to Shares issued to Grantees on account of their
               elections with the consent of the Committee to receive all or a
               portion of their annual bonuses under the Company's discretionary
               annual bonus program in Shares of Restricted Stock hereunder
               shall be for a period of three years from the date of the Award.

               (ii) Except as provided in the foregoing clause (i), the Grantee
               shall have, in respect of the Shares of Restricted Stock, all of
               the rights of a stockholder of the Company, including the right
               to vote the Shares, and the right to receive any cash dividends.
               Certificates for Shares not subject to restrictions shall be
               delivered to the Grantee promptly after, and only after, the
               period of forfeiture shall expire without forfeiture in respect
               of such Shares of Restricted Stock.

               (iii) Subject to the provisions of the Award Agreement and clause
               (iv) below, upon the termination of employment (or other service,
               if applicable) with the Company and its Subsidiaries for any
               reason or by the Grantee during the applicable restriction
               period, all Shares still subject to restriction shall be
               forfeited by the Grantee.

               (iv) In the event the Grantee's employment with the Company and
               its Subsidiaries terminates on account of death, Retirement or
               Disability of the Grantee during the applicable restriction
               period, if and to the extent provided in the Award Agreement, all
               restrictions shall immediately lapse on all Restricted Stock
               granted pursuant to such Award Agreement.

          C.   Tax Withholding -- Restricted Stock.

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<PAGE>

          The Committee may, in its discretion, require the Grantee to pay to
the Company at the time of vesting of any Restricted Stock (or other income
recognition event, such as election under Section 83(b) of the Code) the amount
that the Committee deems necessary to satisfy the Company's obligation to
withhold federal, state or local income or other taxes incurred by reason of the
vesting (or other such event). Upon vesting (or such other event), the Grantee
may, if approved by the Committee in its discretion, make a written election to
have Shares withheld by the Company from the Shares otherwise to be released
from restriction, or to deliver previously owned Shares (not subject to
restrictions hereunder), in order to satisfy the liability for such withholding
taxes. In the event that the Optionee makes, and the Committee permits, such an
election, the number of Shares so withheld or delivered shall have an aggregate
Fair Market Value on the date of exercise sufficient to satisfy the applicable
withholding taxes. Notwithstanding anything contained in the Plan to the
contrary, the Grantee's satisfaction of any tax-withholding requirements imposed
by the Committee shall be a condition precedent to the release of any
restrictions as may otherwise be provided hereunder, and the failure of the
Grantee to satisfy such requirements with respect to the vesting of Restricted
Stock (or another income recognition event) shall cause the applicable
Restricted Stock to be forfeited.

          8.   Regulations and Approvals.

          (a) The obligation of the Company to sell Shares with respect to
Options granted under the Plan shall be subject to all applicable laws, rules
and regulations, including all applicable federal and state securities laws, and
the obtaining of all such approvals by governmental agencies as may be deemed
necessary or appropriate by the Committee.

          (b) The Committee may make such changes to the Plan as may be
necessary or appropriate to comply with the rules and regulations of any
government authority or to obtain tax benefits applicable to stock options or
restricted stock.

          (c) Each Award is subject to the requirement that, if at any time the
Committee determines, in its discretion, that the listing, registration or
qualification of Shares issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the Award, no Options shall be granted or
payment made or Shares issued or grant of Restricted Stock made, in whole or in
part, unless listing, registration, qualification, consent or approval has been
effected or obtained free of any conditions in a manner acceptable to the
Committee.

          (d) In the event that the disposition of stock acquired pursuant to
the Plan is not covered by a then current registration statement under the
Securities Act, and is not otherwise exempt from such registration, such Shares
shall be restricted against transfer to the extent required under the Securities
Act, and the Committee may require any individual receiving Shares pursuant to
the Plan, as a condition precedent to receipt of such Shares, to represent to
the Company in writing that the Shares acquired by such individual are acquired
for investment only and not with a view to distribution and that such Shares
will be disposed of only if registered for sale under the Securities Act or if
there is an available exemption for such disposition.

          9.   Interpretation and Amendments; Other Rules.

          The Committee may make such rules and regulations and establish such
procedures for the administration of the Plan as it deems appropriate. Without
limiting the generality of the foregoing, the Committee may (i) determine (A)
the conditions under which a Participant will be considered to have retired or
become disabled and (B) whether any Participant has done so; (ii) establish or
assist in the establishment of a program (which need not be administered in a
nondiscriminatory or uniform manner) under which the Company or a third party
may make bona-fide loans on arm's-length terms to any or all

                                        9

<PAGE>

Optionees to assist such Optionees with the satisfaction of any or all of the
obligations that such Optionees may have hereunder or under which third-party
sales may be made for such purpose (including, without limitation, a loan
program under which the Company or a third party would advance the aggregate
Option Price to the Optionee and be repaid with Option stock or the proceeds
thereof and a sale program under which funds to pay for Option stock are
delivered by a third party upon the third party's receipt from the Company of
stock certificates); (iii) determine the extent, if any, to which Options or
Shares (whether or not Shares of Restricted Stock) shall be forfeited (whether
or not such forfeiture is expressly contemplated hereunder); (iv) interpret the
Plan and the Award Agreements hereunder, with such interpretations to be
conclusive and binding on all persons and otherwise accorded the maximum
deference permitted by law; and (v) take any other actions and make any other
determinations or decisions that it deems necessary or appropriate in connection
with the Plan or the administration or interpretation thereof. The Committee
may, in its discretion, establish a program under which, in each case in which
dividends (or, in the discretion of the Committee, certain dividends) are
payable with respect to an outstanding Share, an equivalent amount with respect
to each Share subject to an outstanding Option shall be (i) paid currently to
the applicable Optionee, (ii) deferred for eventual payment to the Optionee
(with or without interest or other deemed earnings), (iii) credited as a
reduction to the exercise price of the Option or (iv) any combination of the
foregoing. Unless otherwise expressly provided hereunder, the Committee may,
with respect to any Award, exercise its discretion hereunder at the time of the
Award or thereafter. In the event of any dispute or disagreement as to the
interpretation of the Plan or of any rule, regulation or procedure, or as to any
question, right or obligation arising from or related to the Plan, the decision
of the Committee shall be final and binding upon all persons. The Board may
amend the Plan as it shall deem advisable, except that no amendment may
adversely affect a Participant with respect to Options or Restricted Stock
previously granted unless such amendments are in connection with compliance with
applicable laws; provided that the Board may not make any amendment in the Plan
that would, if such amendment were not approved by the holders of the Common
Stock, cause the Plan to fail to comply with any requirement of applicable law
or regulation, unless and until the approval of the holders of such Common Stock
is obtained. Without limiting the generality of the foregoing, the Committee may
(subject to such considerations as may arise under Section 16 of the Exchange
Act, or under other corporate, securities or tax laws) take any steps it deems
appropriate, that are not inconsistent with the purposes and intent of the Plan,
to take into account the provisions of Section 162(m) of the Code.

          10.  Changes in Capital Structure.

          If (i) the Company or its Subsidiaries shall at any time be involved
in a merger, consolidation, dissolution, liquidation, reorganization, exchange
of shares, sale of all or substantially all of the assets or stock of the
Company or its Subsidiaries or a transaction similar thereto, (ii) any stock
dividend, stock split, reverse stock split, stock combination, reclassification,
recapitalization or other similar change in the capital structure of the Company
or its Subsidiaries, or any distribution to holders of Common Stock other than
cash dividends, shall occur or (iii) any other event shall occur which in the
judgment of the Committee necessitates action by way of adjusting the terms of
the outstanding Options and Restricted Stock, then the Committee may forthwith
take any such action as in its judgment shall be necessary to preserve to the
Participants rights substantially proportionate to the rights existing prior to
such event, and to maintain the continuing availability of Shares under Section
5 (if Shares are otherwise then available) in a manner consistent with the
intent hereof, including, without limitation, adjustments in (x) the number and
kind of shares subject to Options and Grants, (y) the Option Price, and (z) the
number and kind of shares available under Section 5. To the extent that such
action shall include an increase or decrease in the number of shares subject to
outstanding Options and Grants, the number of shares available under Section 5
above shall be increased or decreased, as the case may be, proportionately.

                                       10

<PAGE>

          If a Change in Control shall occur, then the Committee may make such
adjustments as it, in its discretion, determines are necessary or appropriate in
light of the Change in Control (including, without limitation, the substitution
of stock other than stock of the Company as the stock optioned or granted (as
applicable) hereunder, and the acceleration of the exercisability of the Option
or vesting of the Restricted Stock), provided that the Committee determines that
such adjustments do not have a substantial adverse economic impact on the
Participant as determined at the time of the adjustments.

          The judgment of the Committee with respect to any matter referred to
in this Section 10 shall be conclusive and binding upon each Participant without
the need for any amendment to the Plan.

          11.  Notices.

          All notices under the Plan shall be in writing, and if to the Company,
shall be delivered to the Board or mailed to its principal office, addressed to
the attention of the Board; and if to the Participant, shall be delivered
personally or mailed to the Participant at the address appearing in the records
of the Company. Such addresses may be changed at any time by written notice to
the other party given in accordance with this Section 11.

          12.  Rights as Stockholder.

          Neither the Optionee nor any person entitled to exercise the
Optionee's rights in the event of death shall have any rights of a stockholder
with respect to the Shares subject to an Option, except to the extent that a
certificate for such Shares shall have been issued upon the exercise of the
Option as provided for herein.

          13.  Rights to Employment.

          Nothing in the Plan or in any Option or Restricted Stock granted
pursuant to the Plan shall confer on any individual any right to continue in the
employ or other service of the Company or its Subsidiaries or interfere in any
way with the right of the Company or its Subsidiaries and its shareholders to
terminate the individual's employment or other service at any time.

          14.  Exculpation and Indemnification.

          To the maximum extent permitted by law, the Company shall indemnify
and hold harmless the members of the Board and the members of the Committee from
and against any and all liabilities, costs and expenses incurred by such persons
as a result of any act or omission to act in connection with the performance of
such person's duties, responsibilities and obligations under the Plan, other
than such liabilities, costs and expenses as may result from the gross
negligence, bad faith, willful misconduct or criminal acts of such persons.

          15.  Captions.

          The use of captions in this Plan is for convenience. The captions are
not intended to provide substantive rights.

          16.  Governing Law.

          THE PLAN SHALL BE GOVERNED BY THE LAWS OF MARYLAND, WITHOUT REFERENCE
TO PRINCIPLES OF CONFLICT OF LAWS.

                                       11

</TEXT>
</DOCUMENT>
