2003 Outside Advisors Stock Incentive Plan - Luminent Mortgage Capital Inc.
LUMINENT MORTGAGE CAPITAL, INC.
2003 OUTSIDE ADVISORS STOCK INCENTIVE PLAN
1. PURPOSE OF PLAN
The purpose of the Luminent Mortgage Capital, Inc. 2003 Outside Advisors
Stock Incentive Plan (this "Plan") is to provide an additional means to
compensate the Corporation's Management Company and to provide an
additional incentive for the Management Company and certain of its
directors, employees and other eligible persons to enhance the value of
the Common Stock and to help further align their interests with those of
the Corporation's stockholders. As used herein, "Corporation" means
Luminent Mortgage Capital, Inc., a Maryland corporation. As used herein,
"Management Company" means Seneca Capital Management, LLC, or any
affiliate of Seneca Capital Management, LLC, who shall succeed as the
manager of the Corporation under that certain Management Agreement,
dated on or about June 11, 2003, by and between the Corporation and
Seneca Capital Management, LLC.
2. ELIGIBILITY
2.1 Eligible Persons. The Administrator (as such term is defined in
Section 3.1) may grant awards under this Plan only to those
persons that the Administrator determines to be Eligible
Persons. An "Eligible Person" is the Management Company, any
affiliate or subsidiary of the Management Company, and any
person who is either: (a) an officer (whether or not a director)
or employee of the Management Company or one of its affiliates
or subsidiaries; or (b) a director of the Management Company or
one of its affiliates or subsidiaries. An Eligible Person who
has been granted an award (a "participant") may, if otherwise
eligible, be granted additional awards if the Administrator
shall so determine.
2.2 Ownership Limit. Notwithstanding anything else contained herein
or in any award hereunder to the contrary, no Person may receive
Common Stock upon the grant, exercise or payment of an award to
the extent that it will cause such Person to Beneficially Own or
Constructively Own Capital Stock in excess of the Ownership
Limit. If a Person would be entitled to receive or acquire
shares of Common Stock but for the limitation of the preceding
sentence, the Corporation shall have the right to deliver to the
Person, in lieu of Common Stock, a check or cash in the amount
equal to the value of the Common Stock otherwise deliverable,
subject to any applicable tax withholding or other authorized
deductions. For purposes of this limitation, the terms "Person,"
"Beneficially Own," "Constructively Own," "Capital Stock," and
"Ownership Limit" are used as defined in the Corporation's
Articles of Incorporation.
3. PLAN ADMINISTRATION
3.1 The Administrator. This Plan shall be administered by and all
awards under this Plan shall be authorized by the Administrator.
The "Administrator" means the Board of Directors of the
Corporation (the "Board") or one or more committees
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appointed by the Board or another committee (within its
delegated authority) to administer all or certain aspects of
this Plan. Any such committee shall be comprised solely of one
or more directors or such number of directors as may be required
under applicable law. A committee may delegate some or all of
its authority to another committee so constituted. The Board may
delegate different levels of authority to different committees
with administrative and grant authority under this Plan. Unless
otherwise provided in the Bylaws of the Corporation or the
applicable charter of any Administrator: (a) a majority of the
members of the acting Administrator shall constitute a quorum,
and (b) the vote of a majority of the members present assuming
the presence of a quorum or the unanimous written consent of the
members of the Administrator shall constitute action by the
acting Administrator.
3.2 Powers of the Administrator. Subject to the express provisions
of this Plan and compliance with Section 2-203 of the Maryland
General Corporation Law, the Administrator is authorized and
empowered to do all things necessary or desirable in connection
with the authorization of awards and the administration of this
Plan (in the case of a committee, within the authority delegated
to that committee), including, without limitation, the authority
to:
(a) determine eligibility and, from among those persons
determined to be eligible, the particular Eligible
Persons who will receive an award under this Plan;
(b) grant awards to Eligible Persons, determine the price at
which securities will be offered or awarded and the
number of securities to be offered or awarded to any of
such persons, determine the other specific terms and
conditions of such awards consistent with the express
limits of this Plan, establish the installments (if any)
in which such awards shall become exercisable or shall
vest (which may include, without limitation, performance
and/or time-based schedules), or determine that no
delayed exercisability or vesting is required, establish
any applicable performance targets, and establish the
events of termination or reversion of such awards;
(c) approve the forms of award agreements (which need not be
identical either as to type of award or among
participants);
(d) construe and interpret this Plan and any agreements
defining the rights and obligations of the Corporation
and participants under this Plan, further define the
terms used in this Plan, and prescribe, amend and
rescind rules and regulations relating to the
administration of this Plan or the awards granted under
this Plan;
(e) cancel, modify, or waive the Corporation's rights with
respect to, or modify, discontinue, suspend, or
terminate any or all outstanding awards, subject to any
required consent under Section 8.6.5;
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(f) accelerate or extend the vesting or exercisability or
extend the term of any or all such outstanding awards
(in the case of options or stock appreciation rights,
within the maximum ten-year term of such awards) in such
circumstances as the Administrator may deem appropriate
(including, without limitation, in connection with a
termination of employment or services or other events of
a personal nature) subject to any required consent under
Section 8.6.5;
(g) adjust the number of shares of Common Stock subject to
any award, adjust the price of any or all outstanding
awards, reprice any or all outstanding awards (by
amendment, exchange or other means) or otherwise change
previously imposed terms and conditions, in such
circumstances as the Administrator may deem appropriate,
in each case subject to Sections 4 and 8.6;
(h) determine the date of grant of an award, which may be a
designated date after but not before the date of the
Administrator's action (unless otherwise designated by
the Administrator, the date of grant of an award shall
be the date upon which the Administrator took the action
granting an award);
(i) determine whether, and the extent to which, adjustments
are required pursuant to Section 7 hereof and authorize
the termination, conversion, substitution or succession
of awards upon the occurrence of an event of the type
described in Section 7;
(j) acquire or settle (subject to Sections 7 and 8.6) rights
under awards in cash, stock of equivalent value, or
other consideration; and
(k) determine the fair market value of the Common Stock or
awards under this Plan from time to time and/or the
manner in which such value will be determined.
3.3 Binding Determinations. Any action taken by, or inaction of, the
Corporation or any of its subsidiaries, or the Administrator
relating or pursuant to this Plan and within its authority
hereunder or under applicable law shall be within the absolute
discretion of that entity or body and shall be conclusive and
binding upon all persons. Neither the Board nor any Board
committee, nor any member thereof or person acting at the
direction thereof, shall be liable for any act, omission,
interpretation, construction or determination made in good faith
in connection with this Plan (or any award made under this
Plan), and all such persons shall be entitled to indemnification
and reimbursement by the Corporation in respect of any claim,
loss, damage or expense (including, without limitation,
attorneys' fees) arising or resulting therefrom to the fullest
extent permitted by law and/or under any directors and officers
liability insurance coverage that may be in effect from time to
time.
3.4 Reliance on Experts. In making any determination or in taking or
not taking any action under this Plan, the Board or a committee,
as the case may be, may obtain
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and may rely upon the advice of experts, including employees and
professional advisors to the Corporation. No director, officer
or agent of the Corporation shall be liable for any such action
or determination taken or made or omitted in good faith.
3.5 Delegation. The Administrator may delegate ministerial,
non-discretionary functions to individuals who are officers or
employees of the Corporation or to third parties.
4. SHARES OF COMMON STOCK SUBJECT TO THE PLAN; SHARE LIMITS
4.1 Shares Available. Subject to the provisions of Section 7.1, the
capital stock that may be delivered under this Plan shall be
shares of the Corporation's authorized but unissued Common Stock
and any shares of its Common Stock held as treasury shares. For
purposes of this Plan, "Common Stock" shall mean the common
stock of the Corporation and such other securities or property
as may become the subject of awards under this Plan, or may
become subject to such awards, pursuant to an adjustment made
under Section 7.1.
4.2 Share Limits. The maximum number of shares of Common Stock that
may be delivered pursuant to awards granted to Eligible Persons
under this Plan (the "Share Limit") is equal to (a) 1,000,000
shares, minus (b) the number of any shares of Common Stock
issued under (and not reacquired pursuant to) the Corporation's
2003 Stock Incentive Plan. The foregoing numerical limit is
subject to adjustment as contemplated by Section 4.3, Section
7.1, and Section 8.10.
4.3 Awards Settled in Cash, Reissue of Awards and Shares. To the
extent that an award is settled in cash or a form other than
shares of Common Stock, the shares that would have been
delivered had there been no such cash or other settlement shall
not be counted against the shares available for issuance under
this Plan. In the event that shares are delivered in respect of
a dividend equivalent, stock appreciation right, or other award,
only the actual number of shares delivered with respect to the
award shall be counted against the share limits of this Plan.
Shares that are subject to or underlie awards which expire or
for any reason are cancelled or terminated, are forfeited, fail
to vest, or for any other reason are not paid or delivered under
this Plan shall again be available for subsequent awards under
this Plan. Shares that are exchanged by a participant or
withheld by the Corporation as full or partial payment in
connection with any award under this Plan, as well as any shares
exchanged by a participant or withheld by the Corporation to
satisfy the tax withholding obligations related to any award
under this Plan, shall be available for subsequent awards under
this Plan.
4.4 Reservation of Shares; No Fractional Shares; Minimum Issue. The
Corporation shall at all times reserve a number of shares of
Common Stock sufficient to cover the Corporation's obligations
and contingent obligations to deliver shares with respect to
awards then outstanding under this Plan (exclusive of any
dividend equivalent obligations to the extent the Corporation
has the right to settle such rights in cash). No fractional
shares shall be delivered under this
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Plan. The Administrator may pay cash in lieu of any fractional
shares in settlements of awards under this Plan. No fewer than
one hundred (100) shares may be purchased on exercise of any
award (or, in the case of stock appreciation or purchase rights,
no fewer than one hundred (100) rights may be exercised at any
one time) unless the total number purchased or exercised is the
total number at the time available for purchase or exercise
under the award.
5. AWARDS
5.1 Type and Form of Awards. The Administrator shall determine the
type or types of award(s) to be made to each selected Eligible
Person. Awards may be granted singly, in combination or in
tandem. Awards also may be made in combination or in tandem
with, in replacement of, as alternatives to, or as the payment
form for grants or rights under any other employee or
compensation plan of the Corporation. The types of awards that
may be granted under this Plan are:
5.1.1 Stock Options. A stock option is the grant of a right to
purchase a specified number of shares of Common Stock during a
specified period as determined by the Administrator. The maximum
term of each option shall be ten (10) years. The per share
exercise price for each option shall be determined by the
Administrator and set forth in the applicable award agreement.
When an option is exercised, the exercise price for the shares
to be purchased shall be paid in full in cash or such other
method permitted by the Administrator consistent with Section
5.4.
5.1.2 Stock Appreciation Rights. A stock appreciation right or
"SAR" is a right to receive a payment, in cash and/or Common
Stock, equal to the excess of the fair market value of a
specified number of shares of Common Stock on the date the SAR
is exercised over a per share amount (the "base price")
determined by the Administrator and set forth in the applicable
award agreement. The maximum term of an SAR shall be ten (10)
years. The Administrator may grant limited SARs which are
exercisable only upon a change in control or other specified
event and may be payable based on the spread between the base
price of the SAR and the fair market value of a share of Common
Stock during a specified period or at a specified time within a
specified period before, after or including the date of such
event.
5.1.3 Other Awards. The other types of awards that may be
granted under this Plan include: (a) stock bonuses, restricted
stock, performance stock, stock units, phantom stock, dividend
equivalents, or similar rights to purchase or acquire shares,
whether at a fixed or variable price or ratio related to the
Common Stock, upon the passage of time, the occurrence of one or
more events, or the satisfaction of performance criteria or
other conditions, or any combination thereof; or (b) any similar
securities with a value derived from the value of or related to
the Common Stock and/or returns thereon.
5.2 Award Agreements. Each award shall be evidenced by a written
award agreement in the form approved by the Administrator and
executed on behalf of the Corporation and, if required by the
Administrator, executed by the recipient of
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the award. The Administrator may authorize any officer of the
Corporation (other than the particular award recipient) to
execute any or all award agreements on behalf of the
Corporation. The award agreement shall set forth the material
terms and conditions of the award as established by the
Administrator consistent with the express limitations of this
Plan.
5.3 Deferrals and Settlements. Payment of awards may be in the form
of cash, Common Stock, other awards or combinations thereof as
the Administrator shall determine, and with such restrictions as
it may impose. The Administrator may also require or permit
participants to elect to defer the issuance of shares or the
settlement of awards in cash under such rules and procedures as
it may establish under this Plan. The Administrator may also
provide that deferred settlements include the payment or
crediting of interest or other earnings on the deferral amounts,
or the payment or crediting of dividend equivalents where the
deferred amounts are denominated in shares.
5.4 Consideration for Common Stock or Awards. The purchase price for
any award granted under this Plan or the Common Stock to be
delivered pursuant to an award, as applicable, may be paid by
means of any lawful consideration as determined by the
Administrator, including, without limitation, one or a
combination of the following methods:
. services rendered by the recipient of such award;
. cash, check payable to the order of the Corporation, or
electronic funds transfer;
. notice and third party payment in such manner as may be
authorized by the Administrator;
. the delivery of previously owned shares of Common Stock;
. by a reduction in the number of shares otherwise
deliverable pursuant to the award;
. by delivery of one or more promissory notes from the
Eligible Person, provided that any such note shall be
subject to terms and conditions established by the
Administrator and the requirements of applicable law; or
. subject to such procedures as the Administrator may
adopt, pursuant to a "cashless exercise" with a third
party who provides financing for the purposes of (or who
otherwise facilitates) the purchase or exercise of
awards.
In no event shall any shares newly-issued by the Corporation be
issued for less than the minimum lawful consideration for such
shares or for consideration other than consideration permitted
by applicable state law. In the event that the Administrator
allows a participant to exercise an award by delivering shares
of Common Stock previously owned by such participant and unless
otherwise expressly provided by the Administrator, any shares
delivered which were
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initially acquired by the participant from the Corporation (upon
exercise of a stock option or otherwise) must have been owned by
the participant at least six months as of the date of delivery.
Shares of Common Stock used to satisfy the exercise price of an
option shall be valued at their fair market value on the date of
exercise. The Corporation will not be obligated to deliver any
shares unless and until it receives full payment of the exercise
or purchase price therefor and any related withholding
obligations under Section 8.5 and any other conditions to
exercise or purchase have been satisfied. Unless otherwise
expressly provided in the applicable award agreement, the
Administrator may at any time eliminate or limit a participant's
ability to pay the purchase or exercise price of any award or
shares by any method other than cash payment to the Corporation.
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5.5 Definition of Fair Market Value. For purposes of this Plan,
"fair market value" shall mean, unless otherwise determined or
provided by the Administrator in the circumstances: (a) the
closing price of a share of Common Stock as reported on the
composite tape of the principal national securities exchange on
which the Common Stock is listed or admitted to trade (the
"Exchange") for the date in question or, if no sales of Common
Stock were made on the Exchange on that date (or if the market
has not closed at the applicable time), the closing price of a
share of Common Stock as reported on the composite tape of the
Exchange for the next preceding day on which sales of Common
Stock were made on the Exchange; or (b) if the stock is not
listed or admitted to trade on a national securities exchange,
then the last trading price for a share of Common Stock for the
date in question (or as of the most recent trading date if there
were no sales of Common Stock on the date in question or if the
market has not closed at the applicable time) as furnished by
the National Association of Securities Dealers, Inc. ("NASD").
The Administrator may, however, provide with respect to one or
more awards that the fair market value shall equal the last
closing or trading price of a share of Common Stock as reported
on the composite tape of the Exchange or by the NASD available
on the date in question or the average of the high and low
prices, or the average of the bid and asked prices, of a share
of Common Stock as reported on the composite tape of the
Exchange or by the NASD (or by a similar organization if the
NASD is no longer reporting such information) for the date in
question or the most recent trading day. If the Common Stock is
not listed or admitted to trade on a national securities
exchange and if prices for the Common Stock are not furnished by
the NASD, or if the Common Stock is not actively traded as of
the applicable date, the fair market value of the Common Stock
shall be the value as reasonably determined by the Administrator
for purposes of the award in the circumstances. The
Administrator also may adopt a different methodology for
determining fair market value with respect to one or more awards
if a different methodology is necessary or advisable to secure
any intended favorable tax, legal or other treatment for the
particular award(s) (for example, and without limitation, the
Administrator may provide that fair market value for purposes of
one or more awards will be based on an average of closing prices
(or the average of high and low daily trading prices) for a
specified period preceding the relevant date).
5.6 TRANSFER RESTRICTIONS.
5.6.1 Limitations on Exercise and Transfer. Unless otherwise
expressly provided in (or pursuant to) this Section 5.6, by
applicable law and by the award agreement, as the same may be
amended, (a) all awards are non-transferable and shall not be
subject in any manner to sale, transfer, anticipation,
alienation, assignment, pledge, encumbrance or charge; (b)
awards shall be exercised only by the participant; and (c)
amounts payable or shares issuable pursuant to any award shall
be delivered only to (or for the account of) the participant.
5.6.2 Further Exceptions to Limits on Transfer. The exercise and
transfer restrictions in Section 5.6.1 shall not apply to:
(a) transfers to the Corporation,
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(b) the designation of a beneficiary to receive benefits in
the event of the participant's death or, if the
participant has died, transfers to or exercise by the
participant's beneficiary, or, in the absence of a
validly designated beneficiary, transfers by will or the
laws of descent and distribution,
(c) transfers by gift to "immediate family" as that term is
defined in Rule 16a-1(e) promulgated under the
Securities Exchange Act of 1934, as amended,
(d) if the participant has suffered a disability, permitted
transfers or exercises on behalf of the participant by
his or her legal representative, or
(e) the authorization by the Administrator of "cashless
exercise" procedures with third parties who provide
financing for the purpose of (or who otherwise
facilitate) the exercise of awards consistent with
applicable laws and the express authorization of the
Administrator.
Notwithstanding the foregoing or anything in Section 5.6.1,
restricted stock awards shall be subject to any and all
additional transfer restrictions under the Code to the extent
necessary to maintain the intended tax consequences of such
awards. Notwithstanding clause (c) above but subject to
compliance with all applicable laws, any contemplated transfer
by gift to "immediate family" as referenced in clause (c) above
is subject to the condition precedent that the transfer be
approved by the Administrator in order for it to be effective.
5.7 Tandem Awards. The Administrator may grant an award to the
Management Company and a corresponding "tandem" award to another
Eligible Person and provide with respect to such awards that the
Management Company's award shall not be payable or exercisable
unless and until the related tandem award terminates and/or that
an exercise or payment of either of such award shall result in a
corresponding reduction in the number of shares subject to or
other potential benefits in respect of the other award. Any such
awards shall be subject to such other terms and conditions as
the Administrator shall prescribe in the circumstances.
6. EFFECT OF TERMINATION OF EMPLOYMENT OR SERVICE ON AWARDS
6.1 General. The Administrator shall establish the effect of a
termination of employment or service on the rights and benefits
under each award under this Plan and in so doing may make
distinctions based upon, inter alia, the cause of termination
and type of award.
6.2 Events Not Deemed Terminations of Employment. Unless the
Administrator otherwise provides, the employment relationship
shall not be considered terminated in the case of (a) sick
leave, (b) military leave, or (c) any other leave of absence
authorized by the Management Company or the Administrator;
provided that unless reemployment upon the expiration of such
leave is guaranteed by contract or law, such leave is for a
period of not more than ninety (90) days. In the case of any
employee of the Management Company on an approved leave of
absence, continued vesting of the award while on leave from the
employ of the Management Company may be suspended until the
employee returns to service,
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unless the Administrator otherwise provides or applicable law
otherwise requires. In no event shall an award be exercised
after the expiration of the term set forth in the award
agreement.
6.3 Effect of Change of Subsidiary Status. For purposes of this Plan
and any award, if an entity ceases to be a subsidiary of or
other entity controlled by the Management Company a termination
of employment or service shall be deemed to have occurred with
respect to each Eligible Person in respect of such entity who
does not continue as an Eligible Person in respect of another
entity within the Management Company after giving effect to the
entity's change in status.
7. ADJUSTMENTS; ACCELERATION
7.1 Adjustments. Upon or in contemplation of: any reclassification,
recapitalization, stock split (including a stock split in the
form of a stock dividend) or reverse stock split ("stock
split"); any merger, combination, consolidation, or other
reorganization; any spin-off, split-up, or similar extraordinary
dividend distribution in respect of the Common Stock (whether in
the form of securities or property); any exchange of Common
Stock or other securities of the Corporation, or any similar,
unusual or extraordinary corporate transaction in respect of the
Common Stock; or a sale of all or substantially all the business
or assets of the Corporation as an entirety; then the
Administrator shall, in such manner, to such extent (if any) and
at such time as it deems appropriate and equitable in the
circumstances:
(a) proportionately adjust any or all of (1) the number and
type of shares of Common Stock (or other securities)
that thereafter may be made the subject of awards
(including the specific share limits, maximums and
numbers of shares set forth elsewhere in this Plan), (2)
the number, amount and type of shares of Common Stock
(or other securities or property) subject to any or all
outstanding awards, (3) the grant, purchase, or exercise
price (which term includes the base price of any SAR or
similar right) of any or all outstanding awards, (4) the
securities, cash or other property deliverable upon
exercise or payment of any outstanding awards, or (5)
(subject to Section 7.7) the performance standards
applicable to any outstanding awards, or
(b) make provision for a cash payment or for the assumption,
substitution or exchange of any or all outstanding
share-based awards or the cash, securities or property
deliverable to the holder of any or all outstanding
share-based awards, based upon the distribution or
consideration payable to holders of the Common Stock
upon or in respect of such event.
The Administrator may adopt such valuation methodologies for
outstanding awards as it deems reasonable in the event of a cash
or property settlement and, in the case of options, SARs or
similar rights, but without limitation on other methodologies,
may base such settlement solely upon the excess if any of the
per share amount payable upon or in respect of such event over
the exercise or base price of the award.
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In any of such events, the Administrator may take such action
prior to such event to the extent that the Administrator deems
the action necessary to permit the participant to realize the
benefits intended to be conveyed with respect to the underlying
shares in the same manner as is or will be available to
stockholders generally. In the case of any stock split or
reverse stock split, if no action is taken by the Administrator,
the proportionate adjustments contemplated by clause (a) above
shall nevertheless be made.
7.2 Automatic Acceleration of Awards. Upon a dissolution of the
Corporation or other event described in Section 7.1 that the
Corporation does not survive (or does not survive as a public
company in respect of its Common Stock), then each then
outstanding option and SAR shall become fully vested, all shares
of restricted stock then outstanding shall fully vest free of
restrictions, and each other award granted under this Plan that
is then outstanding shall become payable to the holder of such
award; provided that such acceleration provision shall not
apply, unless otherwise expressly provided by the Administrator,
with respect to any award to the extent that the Administrator
has made a provision for the substitution, assumption, exchange
or other continuation or settlement of the award, or the award
would otherwise continue in accordance with its terms, in the
circumstances.
7.3 Possible Acceleration of Awards. Without limiting Section 7.2,
in the event of a Change in Control Event (as defined below),
the Administrator may, in its discretion, provide that any
outstanding option or SAR shall become fully vested, that any
share of restricted stock then outstanding shall fully vest free
of restrictions, and that any other award granted under this
Plan that is then outstanding shall be payable to the holder of
such award. The Administrator may take such action with respect
to all awards then outstanding or only with respect to certain
specific awards identified by the Administrator in the
circumstances. For purposes of this Plan, "Change in Control
Event" means any of the following:
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(a) The acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934, as amended (a
"Person")) of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Securities Exchange
Act of 1934, as amended) of 20% or more of either (1)
the then-outstanding shares of common stock of the
Corporation (the "Outstanding Company Common Stock") or
(2) the combined voting power of the then-outstanding
voting securities of the Corporation entitled to vote
generally in the election of directors (the "Outstanding
Company Voting Securities"); provided, however, that,
for purposes of this definition, the following
acquisitions shall not constitute a Change in Control
Event; (A) any acquisition directly from the
Corporation, (B) any acquisition by the Corporation, (C)
any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Corporation or any
affiliate of the Corporation or a successor, or (D) any
acquisition by any entity pursuant to a transaction that
complies with Sections (c)(1), (2) and (3) below;
(b) Individuals who, as of the Effective Date, constitute
the Board (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board;
provided, however, that any individual becoming a
director subsequent to the Effective Date whose
election, or nomination for election by the
Corporation's stockholders, was approved by a vote of at
least two-thirds of the directors then comprising the
Incumbent Board (including for these purposes, the new
members whose election or nomination was so approved,
without counting the member and his predecessor twice)
shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened
election contest with respect to the election or removal
of directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other
than the Board;
(c) Consummation of a reorganization, merger, statutory
share exchange or consolidation or similar corporate
transaction involving the Corporation or any of its
Subsidiaries, a sale or other disposition of all or
substantially all of the assets of the Corporation, or
the acquisition of assets or stock of another entity by
the Corporation or any of its Subsidiaries (each, a
"Business Combination"), in each case unless, following
such Business Combination, (1) all or substantially all
of the individuals and entities that were the beneficial
owners of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities immediately prior
to such Business Combination beneficially own, directly
or indirectly, more than 50% of the then-outstanding
shares of common stock and the combined voting power of
the then-outstanding voting securities entitled to vote
generally in the election of directors, as the case may
be, of the entity resulting from such Business
Combination (including, without limitation, an entity
that, as a result of such transaction, owns the
Corporation or all or substantially all of the
Corporation's assets directly or through one or more
subsidiaries (a "Parent")) in substantially the same
proportions as
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their ownership immediately prior to such Business
Combination of the Outstanding Company Common Stock and
the Outstanding Company Voting Securities, as the case
may be, (2) no Person (excluding any entity resulting
from such Business Combination or a Parent or any
employee benefit plan (or related trust) of the
Corporation or such entity resulting from such Business
Combination or Parent) beneficially owns, directly or
indirectly, 20% or more of, respectively, the
then-outstanding shares of common stock of the entity
resulting from such Business Combination or the combined
voting power of the then-outstanding voting securities
of such entity, except to the extent that the ownership
in excess of 20% existed prior to the Business
Combination, and (3) at least a majority of the members
of the board of directors or trustees of the entity
resulting from such Business Combination or a Parent
were members of the Incumbent Board at the time of the
execution of the initial agreement or of the action of
the Board providing for such Business Combination; or
(d) Approval by the stockholders of the Corporation of a
complete liquidation or dissolution of the Corporation
other than in the context of a transaction that does not
constitute a Change in Control Event under clause (c)
above.
7.4 Early Termination of Awards. Any award that has been accelerated
as required or contemplated by Section 7.2 or 7.3 (or would have
been so accelerated but for Section 7.5, 7.6 or 7.7) shall
terminate upon the related event referred to in Section 7.2 or
7.3, as applicable, subject to any provision that has been
expressly made by the Administrator, through a plan of
reorganization or otherwise, for the survival, substitution,
assumption, exchange or other continuation or settlement of such
award and provided that, in the case of options and SARs that
will not survive, be substituted for, assumed, exchanged, or
otherwise continued or settled in the transaction, the holder of
such award shall be given reasonable advance notice of the
impending termination and a reasonable opportunity to exercise
his or her outstanding options and SARs in accordance with their
terms before the termination of such awards (except that in no
case shall more than ten days' notice of accelerated vesting and
the impending termination be required and any acceleration may
be made contingent upon the actual occurrence of the event).
7.5 Other Acceleration Rules. Any acceleration of awards pursuant to
this Section 7 shall comply with applicable legal requirements
and, if necessary to accomplish the purposes of the acceleration
or if the circumstances require, may be deemed by the
Administrator to occur a limited period of time not greater than
thirty (30) days before the event. Without limiting the
generality of the foregoing, the Administrator may deem an
acceleration to occur immediately prior to the applicable event
and/or reinstate the original terms of an award if an event
giving rise to an acceleration does not occur. The Administrator
may override the provisions of Section 7.2, 7.3, 7.4 and/or 7.6
by express provision in the award agreement and may accord any
Eligible Person a right to refuse any acceleration, whether
pursuant to the award agreement or otherwise, in such
circumstances as the Administrator may approve.
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7.6 Possible Rescission of Acceleration. If the vesting of an award
has been accelerated expressly in anticipation of an event or
upon stockholder approval of an event and the Administrator
later determines that the event will not occur, the
Administrator may rescind the effect of the acceleration as to
any then outstanding and unexercised or otherwise unvested
awards.
7.7 Golden Parachute Limitation. Notwithstanding anything else
contained in this Section 7 to the contrary, in no event shall
an award be accelerated under this Plan to an extent or in a
manner which would not be fully deductible by the Corporation
for federal income tax purposes because of Section 280G of the
Code, nor shall any payment hereunder be accelerated to the
extent any portion of such accelerated payment would not be
deductible by the Corporation because of Section 280G of the
Code. If a participant would be entitled to benefits or payments
hereunder and under any other plan or program that would
constitute "parachute payments" as defined in Section 280G of
the Code, then the participant may by written notice to the
Corporation designate the order in which such parachute payments
will be reduced or modified so that the Corporation is not
denied federal income tax deductions for any "parachute
payments" because of Section 280G of the Code. Notwithstanding
the foregoing, an employment or other agreement with the
participant may expressly provide for benefits in excess of
amounts determined by applying the foregoing Section 280G
limitations.
8. OTHER PROVISIONS
8.1 Compliance with Laws. This Plan, the granting and vesting of
awards under this Plan, the offer, issuance and delivery of
shares of Common Stock, the acceptance of promissory notes
and/or the payment of money under this Plan or under awards are
subject to compliance with all applicable federal and state
laws, rules and regulations (including but not limited to state
and federal securities law, federal margin requirements) and to
such approvals by any listing, regulatory or governmental
authority as may, in the opinion of counsel for the Corporation,
be necessary or advisable in connection therewith. The person
acquiring any securities under this Plan will, if requested by
the Corporation, provide such assurances and representations to
the Corporation as the Administrator may deem necessary or
desirable to assure compliance with all applicable legal and
accounting requirements.
8.2 Employment Status. No person shall have any claim or rights to
be granted an award (or additional awards, as the case may be)
under this Plan, subject to any express contractual rights (set
forth in a document other than this Plan) to the contrary.
8.3 No Employment/Service Contract. Nothing contained in this Plan
(or in any other documents under this Plan or in any award)
shall confer upon any Eligible Person or other participant any
right to continue in the employ or other service of the
Corporation or the Management Company or the affiliates of
either of them, constitute any contract or agreement of
employment or other service or affect an employee's status as an
employee at will, nor shall interfere in any way with the right
of the Corporation, the Management Company, or their respective
affiliates
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to change a person's compensation or other benefits, or to
terminate his or her employment or other service, with or
without cause. Nothing in this Section 8.3, however, is intended
to adversely affect any express independent right of such person
under a separate employment or service contract other than an
award agreement.
8.4 Plan Not Funded. Awards payable under this Plan shall be payable
in shares or from the general assets of the Corporation, and no
special or separate reserve, fund or deposit shall be made to
assure payment of such awards. No participant, beneficiary or
other person shall have any right, title or interest in any fund
or in any specific asset (including shares of Common Stock,
except as expressly otherwise provided) of the Corporation by
reason of any award hereunder. Neither the provisions of this
Plan (or of any related documents), nor the creation or adoption
of this Plan, nor any action taken pursuant to the provisions of
this Plan shall create, or be construed to create, a trust of
any kind or a fiduciary relationship between the Corporation and
any participant, beneficiary or other person. To the extent that
a participant, beneficiary or other person acquires a right to
receive payment pursuant to any award hereunder, such right
shall be no greater than the right of any unsecured general
creditor of the Corporation.
8.5 Tax Withholding. Upon any exercise, vesting, or payment of any
award, the Corporation shall have the right at its option to:
(a) require the participant (or the participant's personal
representative or beneficiary, as the case may be) to
pay or provide for payment of at least the minimum
amount of any taxes which the Corporation or its
affiliates may be required to withhold with respect to
such award event or payment; or
(b) deduct from any amount otherwise payable in cash to the
participant (or the participant's personal
representative or beneficiary, as the case may be) the
minimum amount of any taxes which the Corporation or its
affiliates may be required to withhold with respect to
such cash payment.
In any case where a tax is required to be withheld in connection
with the delivery of shares of Common Stock under this Plan, the
Administrator may in its sole discretion (subject to Section
8.1) grant (either at the time of the award or thereafter) to
the participant the right to elect, pursuant to such rules and
subject to such conditions as the Administrator may establish,
to have the Corporation reduce the number of shares to be
delivered by (or otherwise reacquire) the appropriate number of
shares, valued in a consistent manner at their fair market value
or at the sales price in accordance with authorized procedures
for cashless exercises, necessary to satisfy the minimum
applicable withholding obligation on exercise, vesting or
payment. In no event shall the shares withheld exceed the
minimum whole number of shares required for tax withholding
under applicable law. The Corporation may, with the
Administrator's approval, accept one or more promissory notes
from any Eligible Person in connection with taxes required to be
withheld upon the exercise, vesting or payment of any award
under
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this Plan; provided that any such note shall be subject to terms
and conditions established by the Administrator and the
requirements of applicable law.
8.6 Effective Date, Termination and Suspension, Amendments.
8.6.1 Effective Date. This Plan is effective as of June 4, 2003,
the date of its approval by the Board (the "Effective Date").
This Plan shall be submitted for and subject to stockholder
approval no later than twelve months after the Effective Date.
Unless earlier terminated by the Board, this Plan shall
terminate at the close of business on the day before the tenth
anniversary of the Effective Date. After the termination of this
Plan either upon such stated expiration date or its earlier
termination by the Board, no additional awards may be granted
under this Plan, but previously granted awards (and the
authority of the Administrator with respect thereto, including
the authority to amend such awards) shall remain outstanding in
accordance with their applicable terms and conditions and the
terms and conditions of this Plan.
8.6.2 Board Authorization. The Board may, at any time, terminate
or, from time to time, amend, modify or suspend this Plan, in
whole or in part. No awards may be granted during any period
that the Board suspends this Plan.
8.6.3 Stockholder Approval. To the extent then required by
applicable law or any applicable listing agency or required
under Sections 422 or 424 of the Code to preserve the intended
tax consequences of this Plan, or deemed necessary or advisable
by the Board, any amendment to this Plan shall be subject to
stockholder approval.
8.6.4 Amendments to Awards. Without limiting any other express
authority of the Administrator under (but subject to) the
express limits of this Plan, the Administrator by agreement or
resolution may waive conditions of or limitations on awards to
participants that the Administrator in the prior exercise of its
discretion has imposed, without the consent of a participant,
and (subject to the requirements of Sections 3.2 and 8.6.5) may
make other changes to the terms and conditions of awards. Any
amendment or other action that would constitute a repricing of
an award is subject to the limitations set forth in Section
3.2(g).
8.6.5 Limitations on Amendments to Plan and Awards. No
amendment, suspension or termination of this Plan or change of
or affecting any outstanding award shall, without written
consent of the participant, affect in any manner materially
adverse to the participant any rights or benefits of the
participant or obligations of the Corporation under any award
granted under this Plan prior to the effective date of such
change. Changes, settlements and other actions contemplated by
Section 7 shall not be deemed to constitute changes or
amendments for purposes of this Section 8.6.
8.7 Privileges of Stock Ownership. Except as otherwise expressly
authorized by the Administrator or this Plan, a participant
shall not be entitled to any privilege of stock ownership as to
any shares of Common Stock not actually delivered to and held of
record by the participant. No adjustment will be made for
dividends or
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other rights as a stockholder for which a record date is prior
to such date of delivery.
8.8 Governing Law; Severability.
8.8.1 Choice of Law. This Plan, the awards, all documents
evidencing awards and all other related documents shall be
governed by, and construed in accordance with the laws of the
State of Maryland.
8.8.2 Severability. If a court of competent jurisdiction holds
any provision invalid and unenforceable, the remaining
provisions of this Plan shall continue in effect.
8.9 Captions. Captions and headings are given to the sections and
subsections of this Plan solely as a convenience to facilitate
reference. Such headings shall not be deemed in any way material
or relevant to the construction or interpretation of this Plan
or any provision thereof.
8.10 Non-Exclusivity of Plan. Nothing in this Plan shall limit or be
deemed to limit the authority of the Board or the Administrator
to grant awards or authorize any other compensation, with or
without reference to the Common Stock, under any other plan or
authority.
8.11 No Corporate Action Restriction. The existence of this Plan, the
award agreements and the awards granted hereunder shall not
limit, affect or restrict in any way the right or power of the
Board or the stockholders of the Corporation to make or
authorize: (a) any adjustment, recapitalization, reorganization
or other change in the capital structure or business of the
Corporation or any subsidiary, (b) any merger, amalgamation,
consolidation or change in the ownership of the Corporation or
any subsidiary, (c) any issue of bonds, debentures, capital,
preferred or prior preference stock ahead of or affecting the
capital stock (or the rights thereof) of the Corporation or any
subsidiary, (d) any dissolution or liquidation of the
Corporation or any subsidiary, (e) any sale or transfer of all
or any part of the assets or business of the Corporation or any
subsidiary, or (f) any other corporate act or proceeding by the
Corporation or any subsidiary. No participant, beneficiary or
any other person shall have any claim under any award or award
agreement against any member of the Board or the Administrator,
or the Corporation or any employees, officers or agents of the
Corporation or any subsidiary, as a result of any such action.
8.12 Other Corporation Benefit and Compensation Programs. Payments
and other benefits received by a participant under an award made
pursuant to this Plan shall not be deemed a part of a
participant's compensation for purposes of the determination of
benefits under any other employee welfare or benefit plans or
arrangements, if any, provided by the Corporation, except where
the Administrator expressly otherwise provides or authorizes in
writing. Awards under this Plan may be made in addition to, in
combination with, as alternatives to or in payment of grants,
awards or commitments under any other plans or arrangements of
the Corporation.
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