Exhibit 10.01

 

CAPSTEAD MORTGAGE CORPORATION

DEFERRED COMPENSATION PLAN

As Amended and Restated

Effective January 1, 2009*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*Per IRS Notice 2010-6, Section XI. (A.)(1)

 

Solely for purposes of applying this notice, if a plan fails to satisfy the
requirements of Section 409A(a) in a manner that is eligible for correction
under this notice, and the plan is corrected in accordance with this notice on
or before December 31, 2010, the plan may be treated as having been corrected on
January 1, 2009, ….

 

 

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CAPSTEAD MORTGAGE CORPORATION

DEFERRED COMPENSATION PLAN

Table of Contents

Page

 

ARTICLE IDEFINITIONS1

ARTICLE IIPARTICIPATION4

ARTICLE IIIDEFERRALS AND CREDITS TO ACCOUNT5

ARTICLE IVIN-SERVICE HARDSHIP WITHDRAWALS7

ARTICLE VPAYMENT OF BENEFIT7

ARTICLE VIFORM OF DISTRIBUTION9

ARTICLE VIIADMINISTRATION OF THE PLAN10

ARTICLE VIIICLAIM REVIEW PROCEDURE11

ARTICLE IXLIMITATION OF RIGHTS12

ARTICLE XLIMITATION OF ASSIGNMENT AND PAYMENTS TO LEGALLY
INCOMPETENT DISTRIBUTEE12

ARTICLE XIAMENDMENT TO OR TERMINATION OF THE PLAN13

ARTICLE XIISTATUS OF PARTICIPANT AS UNSECURED CREDITOR14

ARTICLE XIIIGENERAL AND MISCELLANEOUS15

 

 

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CAPSTEAD MORTGAGE CORPORATION

DEFERRED COMPENSATION PLAN

PREAMBLE

Capstead Mortgage Corporation (the "Company") previously established the
Capstead Mortgage Corporation Deferred Compensation Plan, effective July 1,
1994, as subsequently amended and restated effective January 1, 1998 (the "Prior
Plan"), as a fundamental strategy to encourage and reward the continued service
of certain key executives who are essential to overall corporate
profitability.  The Prior Plan was frozen with respect to the Accounts of all
Vested Recipients, effective January 1, 2005, and the maintenance and
distribution of the Accounts of all Vested Recipients shall be governed by the
terms of the Prior Plan. With respect to the Accounts of all Participants, other
than Vested Recipients, the Prior Plan was amended and restated, effective
January 1, 2005, for compliance with Section 409A of the Internal Revenue Code
and was thereafter referred to as the "Plan".  The Plan is hereby amended and
restated for compliance with subsequent guidance under Section 409A, effective
January 1, 2009.

The Company intends that this Plan will be maintained for the exclusive benefit
of Participants, who shall constitute a select group of executives of the
Company, and that any Participant or Beneficiary of the Plan shall have the
status of an unsecured general creditor with respect to this Plan and the Trust
Fund, if any, established in connection with the Plan.

The terms of the Plan are as follows:

ARTICLE I
DEFINITIONS

1.1"Account" shall mean the record maintained by the Administrator showing the
monetary value of the individual interest of each Participant or Beneficiary,
with respect to amounts deferred and credited pursuant to Article III
hereof.  The term "Account" shall refer only to a bookkeeping entry and shall
not be construed to require the segregation of assets on behalf of any
Participant or Beneficiary.  

1.2"Administrator" shall mean the Compensation Committee or, if applicable, its
delegate.

1.3"Annual Compensation" shall mean the total amounts payable by the Company to
a Participant as remuneration for personal services rendered during each Plan
Year, including bonuses and any other type of incentive compensation, as
reported on the Participant's federal income tax withholding statement or
statements (IRS Form W‑2 or its subsequent equivalent), unreduced by any amounts
not includable in such Participant's gross income pursuant to Sections 125 or
402(g) of the Code and any amounts deferred by such Participant pursuant to
Section 3.1 hereof, but Annual Compensation shall not include (i) amounts, if
any, realized from the exercise of a nonqualified stock option or when
restricted stock (or property) held by a Participant either becomes freely
transferable or is no longer subject to a substantial risk of forfeiture; (ii)
amounts payable to a Participant that do not represent salary, i.e., expense
reimbursements; and (iii) dividends payable with respect to nonvested shares of
restricted stock.

 

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1.4"Beneficiary" shall mean the person or persons designated by each Participant
under the CapSave Plan; provided, however, that a Participant may designate a
different Beneficiary hereunder by delivering to the Administrator a written
beneficiary designation in the form provided by the Administrator and executed
specifically with respect to this Plan.  If a Participant fails to name a
Beneficiary, or if the Beneficiary named by a Participant predeceases him or
dies before distribution of the Participant's Account, then the entire value of
the Participant's Account shall be paid to the Participant's estate.

1.5"Board" shall mean the Board of Directors of the Company.

1.6"CapSave Plan" shall mean the qualified 401(k) and profit sharing plan
maintained by the Company, as amended from time to time, or any successor
qualified plan thereto.

1.7"Code" shall mean the Internal Revenue Code of 1986, as it may be amended
from time to time, and the rules and regulations promulgated thereunder.

1.8"Company" shall mean Capstead Mortgage Corporation, a company formed under
the laws of the State of Maryland, or its successor or successors.

1.9"Compensation Committee" shall mean the Compensation Committee of the Board.

1.10"Disability" shall mean a medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, and with respect to which a
Participant has been receiving income replacement benefits for a period of not
less than 3 months under a long-term disability plan of the Company.

1.11"Distribution Schedule" shall mean the form of payment and the date or
date(s) elected by a Participant, at the time and in the manner described in
Section 2.2 hereof, for the distribution of amounts credited to the
Participant's Account.

1.12"Effective Date" shall mean January 1, 2009.

1.13"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.

1.14"Insolvent" shall mean (a) the Company is unable to pay its debts as they
become due or (ii) the Company is subject to a pending proceeding as a debtor
under the United States Bankruptcy Code.

1.15"Participant" shall mean an individual who has been selected for
participation in the Plan, as set forth in Article II hereof.

1.16"Performance-Based Compensation" shall mean the total amounts payable to the
Participant as remuneration based upon the Participant's performance of services
for the Company over a period of not less than twelve (12) months, the payment
of which or the amount of which is contingent on the satisfaction of established
organizational or individual performance criteria, and that otherwise meets the
definition of "performance-based compensation", as that term is

 

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defined in Section 1.409A-1(e) of the Treasury Regulations. For these purposes,
Performance-Based Compensation shall be based upon criteria established no later
than ninety (90) days following commencement of the applicable performance
period.

1.17"Plan" shall mean the Capstead Mortgage Corporation Deferred Compensation
Plan, as amended and restated herein, effective January 1, 2009, and as further
amended from time to time.

1.18"Plan Year" shall mean the twelve (12) month period commencing on each
January 1 and ending on the following December 31.

1.19"Prior Plan" shall mean the Capstead Mortgage Corporation Deferred
Compensation Plan, as amended and restated effective January 1, 1998.

1.20"Normal Retirement Age" shall mean the date on which the Participant attains
age sixty (60) or completes thirty (30) years of service with the Company.

1.21"Separation from Service" shall mean the date on which the Participant's
employment with the Company is terminated, whether voluntary or involuntary, or
due to the Participant's death.  The determination of whether a Participant's
employment has terminated shall be made in accordance with Code Section 409A and
the regulations prescribed thereunder.

1.22"Specified Employee" shall mean, for any Plan Year in which the Company is
publicly traded on an established securities market or otherwise, a Participant
who is a "key employee" as defined under Code Section 416(i)(1)(A)(i), (ii), or
(iii)(applied in accordance with the Treasury Regulations thereunder and
disregarding subparagraph (5) thereof).  For purposes of this Plan, the
identification of Specified Employees will be made by the Administrator on
December 31st of each Plan Year, based upon the twelve (12) month period ending
on such date.  Each Participant identified by the Company as a "key employee"
under the applicable provisions of Code Section 416(i) shall be a Specified
Employee under this Plan for the twelve (12) month period commencing on the
immediately succeeding April 1.

1.23"Trust Agreement" shall mean the agreement, if any, including any amendments
thereto entered into between the Company and the Trustee for the accumulation of
deferrals and credits made pursuant to Article III of the Plan, and any
investment income, gains or losses thereto.

1.24"Trust Fund" shall mean the cash and other properties held and administered
by the Trustee pursuant to a Trust Agreement.

1.25"Trustee" shall mean the designated trustee acting at any time under a Trust
Agreement.

1.26"Valuation Date" shall mean each day on which the financial markets are open
for trading activity, except to the extent otherwise prescribed by an authorized
deemed investment option designated by the Administrator.

1.27"Vested Interest" shall mean that portion of the Participant's Account in
which he has a nonforfeitable right.  Each Participant shall have a 100% Vested
Interest in the value of the

 

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amounts credited to his Account which are attributable to deferrals made by such
Participant pursuant to the provisions of Section 3.1 hereof and shall have a
Vested Interest equal to a percentage of all amounts credited to his Account
which are attributable to matching contributions and supplemental contributions
credited on his behalf pursuant to the provisions of Sections 3.2 and 3.3
hereof, respectively, such percentage to be determined in accordance with the
vesting schedule provided under the CapSave Plan.  Notwithstanding the
foregoing, each Participant shall have a 100% Vested Interest in the value of
his entire Account upon such Participant's death or Disability, or upon
attainment of Normal Retirement Age.

1.28"Vested Recipient" shall mean any Participant whose employment with the
Company terminated prior to December 31, 2004, who had a 100% Vested Interest in
the value of the amounts credited to his Account on December 31, 2004 and who
commenced distribution of amounts credited to his Account prior to January 1,
2005.

ARTICLE II
PARTICIPATION

2.1Eligibility to Participate.  Participation in the Plan shall be made
available to a select group of individuals, as determined by the Board, who are
providing services to the Company in key positions of management and
responsibility.  The determination as to the eligibility of any individual to
participate in the Plan shall be in the sole and absolute discretion of the
Board, consistent with the policies of the Company in place from time to time,
and the decision of the Board in that regard shall be conclusive and binding for
all purposes hereunder.  The Administrator shall notify each individual selected
by the Board of his eligibility to participate.

2.2Participation Agreements.

(a)Elections Upon Commencement of Participation. Within thirty (30) days of the
date on which an individual is notified by the Administrator of his eligibility
to participate hereunder, such individual shall submit an executed participation
agreement to the Administrator, in such form as the Administrator shall require,
to irrevocably elect to defer a portion of his Annual Compensation pursuant to
Section 3.1 hereunder, provided, however, such election shall not become
effective earlier than the first day of the first full payroll period
immediately following the Administrator's receipt of such deferral election, or
such later payroll period specified by the Participant. A Participant's failure
to elect to defer a portion of his Annual Compensation in accordance with this
paragraph (a) shall be deemed an election by the Participant to defer zero
percent (0%) of his Annual Compensation.  The Participant may, at such time,
also irrevocably elect the Distribution Schedule under which benefits hereunder
will be paid.  A Participant's failure to elect a Distribution Schedule in
accordance with this paragraph (a) shall be deemed an election by the
Participant to receive his benefits hereunder in a single, lump sum payment on
the fifteenth day of the third month of the Plan Year immediately following such
Participant's Separation from Service.

(b)Annual Deferral Election.  Except as otherwise provided in Article IV hereof,
a Participant's election (or deemed election) to defer Annual Compensation shall

 

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remain effective for each subsequent calendar year, unless and until modified or
revoked by the Participant in accordance with this paragraph (b).  A Participant
may modify or revoke an election to defer Annual Compensation with respect to
amounts to be earned in a subsequent calendar year by submitting an executed
participation agreement to the Administrator, in such form as the Administrator
shall require, no later than December 31 of the calendar year immediately
preceding the calendar year in which such Annual Compensation will be earned.

(c)Performance-Based Compensation.  Notwithstanding any provision of paragraphs
(a) and (b) above to the contrary, a Participant may elect to defer or specify a
Distribution Schedule with respect to all or a portion of his Annual
Compensation which constitutes Performance-Based Compensation by submitting an
executed participation agreement to the Administrator, in such form as the
Administrator shall require, no later than six (6) months prior to the end of
the applicable performance period.

(d)Subsequent Elections Regarding Time and Form of Benefit.  A Participant may
elect to delay one or more payment dates under a Distribution Schedule or change
the form of benefit to be received hereunder, provided that (i) such election
shall not be effective for at least twelve (12) months following the date on
which such election is made, (ii) with respect to a payment which the
Participant is entitled to receive following his Separation from Service or
pursuant to a Distribution Schedule, the first payment with respect to which
such election is made is deferred at least five (5) years from the date on which
such payment would otherwise have been made, and (iii) with respect to the
payment of benefits hereunder pursuant to a Distribution Schedule, such election
is made no less than twelve (12) months prior to the date of the first scheduled
payment.

ARTICLE III
DEFERRALS AND CREDITS TO ACCOUNT

3.1Deferral Elections.  For any Plan Year, a Participant may elect, pursuant to
Section 2.2 hereof, to defer a portion of the Annual Compensation otherwise
payable to him.  The amount a Participant may elect to defer under this Plan for
any Plan Year may in no event exceed sixty percent (60%) of such Participant's
Annual Compensation earned during such Plan Year, provided, however, that
notwithstanding the foregoing, such Participant may elect to defer up to one
hundred percent (100%) of that portion of such Participant's Annual Compensation
that constitutes a bonus or other type of incentive compensation (including, but
not limited to, Performance-Based Compensation) earned during such Plan Year,
even though such amounts may be payable during a subsequent Plan Year.  Any
amounts withheld pursuant to this Section 3.1 from the Annual Compensation
otherwise payable to a Participant shall be credited to his Account as of the
date on which such amounts would otherwise have been paid.  

3.2Matching Contributions.  For each Plan Year, the Company shall credit an
amount to the Account of each Participant hereunder who has deferred amounts
under the Plan during such Plan Year, as provided in Section 3.1 above, but only
as such deferrals relate to that portion, if any, of such Participant's Annual
Compensation that exceeds the amount set forth in Section 401(a)(17) of the Code
for such Plan Year ("Excess Compensation").  The amount of such

 

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matching contribution shall equal fifty percent (50%) of the Participant's
Excess Compensation deferred hereunder by the Participant during such Plan Year,
but only taking into account up to six percent (6%) of such Excess
Compensation.  Any amounts credited pursuant to this Section 3.2 shall be
credited to the Participant's Account as soon as practicable following the date
on which the applicable deferral is credited to the Participant's Account
pursuant to Section 3.1 above, but not later than the last day of the second
calendar month following the calendar month to which the applicable deferral
relates.  

3.3Supplemental Matching Contributions. The Company may credit to the Account of
a Participant hereunder who has deferred amounts under the Plan, as provided in
Section 3.1 above, such amount, if any, as is determined by the Board in its
sole and absolute discretion, which amount may, but is not required to be, equal
to a uniform percentage of such Participant's Excess Compensation deferred
hereunder. Any amounts credited pursuant to this Section 3.3 shall be credited
to the Participant's Account as soon as practicable following the date on which
the applicable deferral is credited to the Participant's Account pursuant to
Section 3.1 above, but not later than the last day of the second calendar month
following the calendar month to which the applicable deferral relates.  

3.4Valuation of Accounts.  As of each Valuation Date, the Administrator shall
credit to each Participant's Account the deemed income, gains or losses
attributable thereto, determined pursuant to the provisions of Section 3.5
below, as well as any other credits to or charges against such Account. All
payments from an Account between Valuation Dates shall be charged against the
Account as of the immediately preceding Valuation Date.

3.5Participant-Directed Investments.  Each Participant, upon becoming a
Participant in the Plan, may, in the manner prescribed by the Administrator,
designate the manner in which he wishes his Account to be deemed invested among
the various options designated by the Administrator for this purpose. The
investment designation will continue until changed by the timely submission of a
new investment designation.  In the absence of any such investment designation,
a Participant's Account shall be deemed to be invested in such property as the
Administrator, in its sole and absolute discretion, shall determine.  In no
event may a Participant designate the deemed investment of his Account in stock
or other securities of the Company or any Affiliate.  The Administrator may, but
shall not be obligated to, invest amounts credited to a Participant's Account in
accordance with the investment designations of such Participant; nevertheless,
the Account of such Participant shall be credited with the amount of income,
gains and losses attributable thereto, as if the amounts credited to such
Account had been so invested.  The Administrator shall be authorized at any time
and from time to time to modify, alter, delete or add to the deemed investment
options hereunder.  In the event a modification occurs, the Administrator shall
notify those Participants whom the Administrator, in its sole and absolute
discretion, determines are affected by the change, and shall give such persons
such additional time as is determined necessary by the Administrator to
designate the manner in which amounts thereby affected shall be deemed
invested.  The Administrator shall not be obligated to substitute deemed
investment options with similar investment criteria for existing options, nor
shall it be obligated to continue the types of deemed investment options
presently available to the Participants.  Notwithstanding any of the foregoing
provisions, in no event shall the Administrator or the Company be responsible
for implementing the deemed investment designation of a Participant

 

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unless proper notice of such designation is given to the Administrator in the
manner prescribed by the Administrator.

ARTICLE IV
IN-SERVICE HARDSHIP WITHDRAWALS

4.1Request for Withdrawal.  In the event of an unforeseeable emergency, a
Participant may make a written request to the Administrator for a withdrawal
from his Account.  For purposes of this Section, the term "unforeseeable
emergency" shall mean a severe financial hardship to the Participant resulting
from an illness or accident of the Participant, Participant's spouse or of a
Participant’s dependent (as defined in Section 152 of the Code without regard to
Section 152(b)(1), (b)(2), and (d)(1)(B)), loss of the Participant's property
due to casualty, or other similar extraordinary and unforeseeable circumstances
arising as a result of events beyond the control of the Participant.  Any
determination of the existence of an unforeseeable emergency and the amount to
be withdrawn on account thereof shall be made by the Administrator in its sole
and absolute discretion.  However, notwithstanding the foregoing, a withdrawal
will not be permitted to the extent that the financial hardship is or may be
relieved:  (i) through reimbursement or compensation by insurance or otherwise
or (ii) by liquidation of the Participant's assets, to the extent that
liquidation of such assets would not itself cause severe financial hardship.  In
no event shall the need to send a Participant's child to college or the desire
to purchase a home be deemed to constitute an unforeseeable emergency.  No
person serving as Administrator shall vote or decide upon any matter relating to
the determination of the existence of his own financial hardship or the amount
to be withdrawn by him on account thereof.  A request for a hardship withdrawal
must be made in writing on a form provided by the Administrator, and must be
expressed as a specific dollar amount.  The amount of a hardship withdrawal may
not exceed the amount necessary to meet the severe financial hardship, plus
amounts necessary to pay taxes reasonably anticipated as a result of the
distribution.  All hardship withdrawals shall be paid in a lump sum in cash.

4.2Termination of Deferral Election.  Upon a Participant's receipt of an
in-service withdrawal pursuant to Section 4.1 of this Plan for an unforeseeable
emergency, or to the extent required for a Participant to receive a hardship
withdrawal under the CapSave Plan, such Participant's deferral election shall
thereupon be automatically terminated.  Except to the extent otherwise required
with respect to a hardship withdrawal under the CapSave Plan, a Participant may
elect to resume deferrals under this Plan as of the first day of the first full
payroll period of the immediately succeeding calendar year, or such later
payroll period specified by the Participant, by submitting a new deferral
election to the Administrator no later than the last day of the immediately
preceding calendar year.

ARTICLE V
PAYMENT OF BENEFIT

5.1General.  Distribution of a Participant's Vested Interest shall commence in
accordance with such Participant's Distribution Schedule or, if the Participant
has failed to elect a Distribution Schedule, then within ninety (90) days
following such Participant's Separation from Service, provided, however that a
distribution to which a Specified Employee is entitled shall not

 

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commence prior to the first day of the seventh (7th) month following the date of
such Participant's Separation from Service or, if earlier, the date of the
Participant’s death.  The amount credited to the Participant's Account for
purposes of such distribution shall be determined as of the Valuation Date
coincident with or next preceding the date of distribution, increased by the
amount of Participant deferrals and Company contributions, if any, to be
credited after such Valuation Date.  

5.2Death of Participant.  Notwithstanding any provision of this Plan to the
contrary, in the case of the death of a Participant, distribution of such
Participant's entire Account shall be made to the Beneficiary of such
Participant within ninety (90) days following the date of such Participant’s
death.  The amount credited to the Participant's Account for purposes of such
distribution shall be determined as of the Valuation Date coincident with or
next preceding the date of distribution, increased by the amount of Participant
deferrals and Company contributions, if any, to be credited after such Valuation
Date.  

5.3Effect of Tax Laws.  Notwithstanding any provision of this Plan to the
contrary, if, in any Plan Year, the Plan fails to meet the requirements of Code
Section 409A, benefits may be paid to an affected Participant hereunder before
they would otherwise be payable, provided, however, that the amount paid shall
not exceed the lesser of:  (a) the amount in such Participant's Account or (b)
the amount to be reported pursuant to Code Section 409A on the applicable Form
W-2 (or Form 1099) as taxable income to the Participant.

5.4Delay for Compelling Business Reasons.  Notwithstanding any provision of this
Plan to the contrary, the benefits payable hereunder may, to the extent
expressly provided in this Section 5.4, be paid later than the date on which
they would otherwise be paid to the Participant.

(a)Going Concern.  In the event the Board determines that the making of any
payment on the date specified hereunder would jeopardize the ability of the
Company to continue as a going concern, the Administrator may delay the payment
of benefits under this Plan until the first calendar year in which the Board
notifies the Administrator that the payment of benefits would not have such
effect.

(b)Loss of Deduction.  In the event the Board determines that the Company’s
Federal income tax deduction for benefits hereunder would not be permitted due
to the application of Code Section 162(m), the Administrator may delay the date
on which payment of such benefits would otherwise be made or commence, provided
that the payment is made either (i) in the first taxable year of the Participant
in which the Company reasonably anticipates (or should reasonably anticipate)
that the Federal income tax deduction of such payment would not be barred by
application of Code Section 162(m) or (ii) during the period beginning with the
date of the Participant's Separation from Service and ending on the later of the
last day of the taxable year of the Company in which the Participant's
Separation from Service occurred or, if later the 15th day of the third month
following the Participant's Separation from Service.  In the case of a Specified
Employee, however, the period described in clause (ii) of the immediately
preceding sentence shall instead be measured from the first day of the seventh
(7th) month following such Participant's Separation from Service to the last day
of the taxable year of the Company in which such date occurred or, if later, the
15th day of the third month following such date.

 

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(c)Violation of Securities Laws.  In the event the Board reasonably anticipates
that the payment or commencement of benefits hereunder will violate Federal
securities laws or other applicable law (other than Code Section 409A), the date
on which payment of such benefits would otherwise be made or commence may be
delayed until the earliest date on which the Board reasonably anticipates that
the making or commencement of such payment would not cause such violation.  

5.5Administrative Delay in Payment.  The payment of benefits under this
Article V shall begin at the date specified in accordance with the provisions of
the foregoing paragraphs of this Article V; provided that, in the case of
administrative necessity, the payment of such benefits may be delayed up to the
later of the last day of the calendar year in which payment would otherwise be
made or the 15th day of the third calendar month following the date on which
payment would otherwise be made.  Further, if, as a result of events beyond the
control of the Participant (or following the Participant's death, the
Participant's Beneficiary), it is not administratively practicable for the
Administrator to calculate the amount of benefits due to the Participant as of
the date on which payment would otherwise be made, the payment may be delayed
until the first calendar year in which calculation of the amount is
administratively practicable.

5.6No Participant Election.  Notwithstanding the foregoing provisions of this
Plan, if the period during which payment of benefits hereunder will be made
occurs, or will occur, in two calendar years, the Participant shall not be
permitted to elect the calendar year in which the payment shall be made.

ARTICLE VI
FORM OF DISTRIBUTION

6.1Payment of Benefits.  Except to the extent otherwise provided herein,
distribution of a Participant's Vested Interest shall be made either in a
single, lump sum cash payment, or in the form of periodic cash installments over
a period not to exceed five (5) years, such method of payment to be irrevocably
elected by the Participant at the time and in the manner described under Section
2.2 above; provided, however, that payment will be made in a lump sum in any
event if, at the time distribution is to commence, the value of the benefit in
which such Participant has a vested interest is less than $10,000.  Furthermore,
notwithstanding the commencement of installment payments under this Section 6.1,
the entire value of all remaining amounts to which a Participant is entitled
hereunder shall be distributed to him in a lump sum, in cash, at such time as
the value of such remaining amounts is less than $10,000.  If installment
payments are made, such payments shall be charged pro rata to the individual
investment options in which amounts credited to the Participant's Account are
deemed to be invested, pursuant to the provisions of Section 3.5
hereof.  Furthermore, the Administrator shall continue to credit the unpaid
balance of the Participant's Account with the deemed income and losses
attributable thereto, determined pursuant to the provisions of Section 3.5
hereof, as well as with any other credits to or charges against the unpaid
balance of such Account, during the period for which installment payments are
made.

6.2Payment of Benefits On Account of Death.  Notwithstanding any provision
herein to the contrary, payment of a Participant's benefit (or the remainder
thereof) on account of the Participant's death shall be made in a single, lump
sum payment to the Beneficiary within ninety (90) days following the date of
such Participant's death.

 

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6.3Payments to Specified Employees.  Notwithstanding any other provision of this
Plan or a participation agreement to the contrary, to the extent applicable, a
Participant who is a Specified Employee, the distribution of whose benefit
hereunder is therefore deferred, as described in Section 5.1 hereof, shall, upon
the commencement of such distribution, receive a single, lump sum payment equal
to the aggregate amount of payments that would otherwise have been made during
the first six months following the date of such Participant's Separation from
Service.  

ARTICLE VII
ADMINISTRATION OF THE PLAN

7.1Designation of Administrator.  The Plan shall be administered by the
Administrator.  No person serving as Administrator, or a member of a committee
serving as such, shall receive compensation with respect to his services for the
performance of his duties hereunder.  The Administrator shall serve without bond
or security for the performance of its duties hereunder unless applicable law
makes the furnishing of such bond or security mandatory or unless required by
the Company.  Any Administrator or member of a committee serving as such may
resign by delivering his written resignation to the Board.  

7.2Actions of Administrator.  If a committee shall be serving as Administrator
at any time, the Administrator shall perform any act that the Plan authorizes
expressed by a vote at a meeting or in a writing signed by a majority of such
individuals without a meeting.  Neither the Administrator not any member of a
committee serving as such shall vote or decide upon any matter relating solely
to himself or vote in any case in which his individual right or claim to any
benefit under the Plan is particularly involved.  If, in any matter or case in
which a person is so disqualified to act, the remaining persons serving as
Administrator cannot resolve such matter or case, the Board will resolve such
matter or case, or will appoint a temporary substitute to exercise all the
powers of the disqualified person concerning the matter or case in which he is
disqualified.

7.3Delegation, Expenses and Indemnification.  The Administrator may designate in
writing other persons to carry out its responsibilities under the Plan, and may
remove any person designated to carry out its responsibilities under the Plan by
notice in writing to that person.  The Administrator may employ persons to
render advice with regard to any of its responsibilities.  All usual and
reasonable expenses of the Administrator shall be paid by the Company.  The
Company shall indemnify and hold harmless each Administrator and member of a
committee serving as such from and against any and all claims and expenses
(including, without limitation, attorney's fees and related costs), in
connection with the performance by such person of his duties in that capacity,
other than any of the foregoing arising in connection with the willful neglect
or willful misconduct of the person so acting.

7.4Administrative Duties.  The Administrator may establish rules, not contrary
to the provisions of the Plan, for the administration of the Plan and the
transaction of its business, and shall interpret the Plan and determine all
questions arising in the administration, interpretation and application of the
Plan in its sole and absolute discretion.  All determinations of the
Administrator shall be conclusive and binding on all employees, Participants and
Beneficiaries, subject to the provisions of this Plan and applicable law.

 

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7.5Actions of Company.  Any action to be taken hereunder by the Company shall be
taken by resolution adopted by the Board or an executive committee thereof;
provided, however, that by resolution, the Board or an executive committee
thereof may delegate to any officer of the Company the authority to take any
actions hereunder, other than the power to amend or terminate the Plan.

ARTICLE VIII
CLAIM REVIEW PROCEDURE

8.1Denial of Benefits.  A Participant or Beneficiary (the "Claimant") who
believes he is entitled to benefits hereunder that have not been paid may file a
written claim for benefits with the Administrator.  Within a reasonable period
of time thereafter, but not later than ninety (90) days (unless the
Administrator determines that special circumstances require an extension of
time) following receipt of the written claim, the Administrator will determine
the Claimant's entitlement to the benefits requested.  If the Administrator
determines that an extension of time is required, the Administrator will, prior
to expiration of the initial 90-day period, notify the Claimant, in writing, of
the extension, along with an explanation of the special circumstances requiring
an extension of time and the date by which the Administrator expects to reach
its decision, which shall not be later than one hundred eighty (180) days from
the Administrator's receipt of the claim.  If the claim is denied, the
Administrator will furnish the Claimant a written notice stating:  (a) the
specific reason or reasons for denial of the claim, (b) a specific reference to
pertinent Plan provisions on which the denial is based, (c) a description of any
additional material or information necessary for the Claimant to perfect the
claim and an explanation of why such material or information is necessary, and
(d) an explanation of the Plan's claim review procedure and the time limits
applicable to such procedures, including a statement of the Claimant's right to
bring a civil action under Section 502(a) of ERISA following an adverse
determination on review.  

8.2Appeal of Denial of Benefits.  A Claimant may appeal to the Administrator any
claim that is denied by submitting a written request for review within sixty
(60) days after notice of the claim denial.  The written appeal must (i) request
a review of the claim under the Plan, (ii) set forth all grounds under which the
request for review is based and any facts in support thereof, and (iii) set
forth any issues or comments that the Claimant deems pertinent to the
appeal.  The Claimant may also submit documents, records and other information
relating to the claim for benefits.  In preparing the request for review, the
Claimant will be entitled to receive, upon request and free of charge,
reasonable access to, and copies of, all documents, records and other
information relevant to the claim for benefits.  The Administrator's review will
take into account all comments, documents, records, and other information
submitted by the Claimant and relating to the claim, without regard to whether
such information was submitted or considered in the Administrator's initial
benefit determination.  The Administrator will notify the Claimant in writing of
its decision within sixty (60) days (unless the Administrator determines that
special circumstances require an extension of time) after receipt of the request
for review.  If the Administrator determines that an extension of time is
required, it will, prior to expiration of the initial 60-day period, notify the
Claimant, in writing, of the extension, along with an explanation of the special
circumstances requiring an extension of time and the date by which the
Administrator expects to reach its decision, which shall not be later than one
hundred twenty (120) days from the Administrator's receipt of the Claimant's
request for review.  If the Claimant's appeal is denied, the written
notification of the Administrator will contain specific reasons for the decision
and will

 

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refer to the specific Plan provisions on which the decision is based, and will
contain a statement that the Claimant is entitled to receive, upon request and
free of charge, reasonable access to and copies of all documents, records, and
other information relevant to the claim for benefits and a statement of the
Claimant's right to bring an action under Section 502(a) of ERISA.  The decision
of the Administrator will be final and conclusive as to any claim filed
hereunder.

ARTICLE IX
LIMITATION OF RIGHTS

The establishment of this Plan shall not be construed as giving to any
Participant or Beneficiary, any employee of the Company or any person
whomsoever, any legal, equitable or other rights against the Company, or its
officers, directors, agents or shareholders, or as giving to any Participant or
Beneficiary any equity or other interest in the assets or business of the
Company or shares of Company stock or as giving any employee the right to be
retained in the employment of the Company.  All employees shall be subject to
discharge to the same extent they would have been if this Plan had never been
adopted.  The rights of a Participant hereunder shall be solely those of an
unsecured general creditor of the Company.

ARTICLE X
LIMITATION OF ASSIGNMENT AND PAYMENTS TO
LEGALLY INCOMPETENT DISTRIBUTEE

10.1Non-Alienation.  No benefits payable under the Plan to any person shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, and any attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber, charge or otherwise dispose of the same
shall be void.  No benefit shall in any manner be subject to the debts,
contracts, liabilities, engagements or torts of any person, nor shall it be
subject to attachment or legal process for or against any person, except to the
extent required by law.

10.2Incapacitated Distributee.  In the event any benefit payable under the Plan
is to be paid to or for the benefit of any person who is then a minor or
determined by the Administrator, on the basis of qualified medical advice, to be
incompetent, the Administrator need not require the appointment of a guardian or
custodian, but shall be authorized to cause the same to be paid over to the
person having custody of the minor or incompetent, or to cause the same to be
paid to the minor or incompetent without the intervention of a guardian or
custodian, or to cause the same to be paid to a legal guardian or custodian of
the minor or incompetent, if one has been appointed, or to cause the same to be
used for the benefit of the minor or incompetent.

ARTICLE XI
AMENDMENT TO OR TERMINATION OF THE PLAN

11.1Amendment and Termination.  The Company reserves the right at any time to
amend or terminate the Plan in whole or in part by resolution of the Board.  No
amendment shall have the effect of retroactively changing or depriving
Participants or Beneficiaries of rights already accrued under the Plan.  In the
event that the Company shall change its name, the Plan shall be

 

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deemed to be amended to reflect the name change without further action of the
Company, and the language of the Plan shall be changed accordingly.  

11.2Distribution Upon Termination.  Upon termination of the Plan, benefits
hereunder shall be paid at the time and in the manner as otherwise provided
herein; provided, however, that, notwithstanding the foregoing, the Company, in
its sole and absolute discretion, may accelerate the payment of benefits
hereunder in the event that termination of the Plan occurs in accordance with
one of the following:

(a)Termination and liquidation of the Plan within twelve (12) months of a
corporate dissolution taxed under section 331, or with the approval of a
bankruptcy court pursuant to 11 U.S.C. §503(b)(1)(A), provided that the amounts
deferred under the Plan are included in the Participants' gross income in the
latest of the following years (or, if earlier, the taxable year in which the
amount is actually or constructively received):

(i)The calendar year in which the Plan termination and liquidation occurs;

(ii)The first calendar year in which the amount is no longer subject to a
substantial risk of forfeiture; or

(iii)The first calendar year in which the payment is administratively
practicable.

(b)Termination and liquidation of the Plan pursuant to an irrevocable action
taken by the Board within the thirty (30) days preceding, or the twelve (12)
months following, a "change in control" event (as defined in Treasury
Regulations §1.409A-3(i)(5)), provided that all agreements, methods, programs
and other arrangements sponsored by the Company immediately after the time of
the change in control event with respect to which deferrals of compensation are
treated as having been deferred under a single plan under Treasury Regulations
§1.409A-1(c)(2) are terminated and liquidated with respect to each Participant
that experienced the change in control event, so that under the terms of the
termination and liquidation of the Plan all such Participants are required to
receive all amounts of compensation deferred under the terminated agreements,
methods, programs and arrangements within twelve (12) months of the date the
Board irrevocably takes all necessary actions to terminate and liquidate the
agreements, methods, programs and arrangements.

(c)Termination and liquidation of the Plan upon satisfaction of the following
conditions:

(i)The termination and liquidation of the Plan does not occur proximate to a
downturn in the financial health of the Company;

(ii)The Company terminates and liquidates all agreements, methods, programs and
arrangements sponsored by the Company that would be aggregated with the Plan
under Treasury Regulations §1.409A-1(c) if the same Participant had

 

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deferrals of compensation under all of the agreements, methods, programs and
arrangements that are terminated and liquidated;

(iii)No payments in liquidation of the Plan are made within twelve (12) months
of the date the Board takes all necessary action to irrevocably terminate and
liquidate the Plan other than payments that would be payable under the Plan if
the action to terminate and liquidate the Plan had not occurred;

(iv)All payments are made within twenty-four (24) months of the date the Board
takes all necessary action to irrevocably terminate and liquidate the Plan; and

(v)The Company does not adopt a new plan that would be aggregated within any
terminated and liquidated plan under Treasury Regulations §1.409A-1(c), if the
same Participant participated in both plans, at any time within three (3) years
following the date the Board takes all necessary action to irrevocably terminate
and liquidate the Plan.

(d)Such other events and conditions as may be prescribed by the Commissioner of
Internal Revenue in generally applicable guidance published in the Internal
Revenue Bulletin.

ARTICLE XII
STATUS OF PARTICIPANT AS UNSECURED CREDITOR

All benefits under the Plan shall be the unsecured obligations of the Company
and, except for those assets that may be placed in a Trust Fund established in
connection with this Plan, no assets will be placed in trust or otherwise
segregated from the general assets of the Company for the payment of obligations
hereunder.  If assets are placed in a Trust Fund, the Trust Agreement, to the
extent required by the Code, shall conform in all material respects to the model
trust set forth in Internal Revenue Service Revenue Procedure 92‑64.  To the
extent that any person acquires a right to receive payments hereunder, such
right shall be no greater than the right of any unsecured general creditor of
the Company.

ARTICLE XIII
GENERAL AND MISCELLANEOUS

13.1Prohibited Acceleration.  Notwithstanding any provision herein to the
contrary, except as provided in Sections 5.3 and 11.2 hereof, the time or
schedule of any payment hereunder shall not be accelerated, except to the extent
otherwise permitted under Code Section 409A and the regulations promulgated
thereunder.

13.2Trust Fund.  The Company may establish a Trust Fund for the purpose of
retaining assets set aside by the Company pursuant to the Trust Agreement for
payment of all or a portion of the benefits payable pursuant to Article V of the
Plan.  Any such benefits not paid from a Trust Fund shall be paid from the
Company's general assets.  The Trust Fund, if such shall be established,

 

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shall be subject to the claims of general creditors of the Company in the event
the Company is Insolvent.

13.3Severability.  In the event that any provision of this Plan shall be
declared illegal or invalid for any reason, said illegality or invalidity shall
not affect the remaining provisions of this Plan but shall be fully severable
and this Plan shall be construed and enforced as if said illegal or invalid
provision had never been inserted herein.

13.4Construction.  The section headings and numbers are included only for
convenience of reference and are not to be taken as limiting or extending the
meaning of any of the terms and provisions of this Plan.  Whenever appropriate,
words used in the singular shall include the plural or the plural may be read as
the singular.  When used herein, the masculine gender includes the feminine
gender.

13.5Governing Law.  The validity and effect of this Plan and the rights and
obligations of all persons affected hereby shall be construed and determined in
accordance with the laws of the State of Texas unless superseded by federal law.

13.6No Requirement to Fund.  The Company is not required to set aside any assets
for payment of the benefits provided under this Plan; however, it may do so as
provided in the Trust Agreement, if any.  A Participant shall have no security
interest in any such amounts.  It is the Company's intention that this Plan be
construed as a plan that is unfunded and maintained primarily for the purpose of
providing benefits for a select group of management and highly compensated
employees of the Company.

13.7Taxes.  All amounts payable hereunder shall be reduced by any and all
federal, state and local taxes imposed upon the Participant or his Beneficiary
that are required to be paid or withheld by the Company.

IN WITNESS WHEREOF, Capstead Mortgage Corporation has caused these presents to
be duly executed in its name and behalf by its proper officers thereunto duly
authorized this _____ day of December, 2010.

CAPSTEAD MORTGAGE CORPORATION

By:

Title:

ATTEST:

 

(Title)

Dallas_1\5290890\2

2376-2 12/13/2010

 

12/13/2010 

 

 

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