Exhibit 10.1

 

CAPITAL TRUST, INC.

2007 LONG-TERM INCENTIVE PLAN

 

 

 

 

 

As approved by the Board of

Directors on April 26,

2007 and by the shareholders on June 7, 2007

 

 

 

 

CAPITAL TRUST, INC.

2007 LONG-TERM INCENTIVE PLAN

____________________________

 

Plan Document

__________________________________

 

1.

Establishment, Purpose, and Types of Awards

Capital Trust, Inc. (the “Company”) hereby establishes this incentive
compensation plan to be known as the “Capital Trust 2007 Long-Term Incentive
Plan” (hereinafter referred to as the “Plan”), in order to provide equity-based
and cash-based incentives and awards to select employees, directors,
consultants, and advisors of the Company and its Affiliates. The Plan will serve
as the sole source for future awards to Eligible Persons. The Plan permits the
granting of the following types of awards (“Awards”), according to the Sections
of the Plan listed here:

 

Section 6

Options

 

Section 7

Share Appreciation Rights

 

Section 8

Restricted Shares, Restricted Share Units, and Unrestricted Shares

 

Section 9

Deferred Share Units

 

Section 10

Performance Awards

The Plan is not intended to affect and shall not affect any stock options,
equity-based compensation, or other benefits that the Company or its Affiliates
may have provided, or may separately provide in the future pursuant to any
agreement, plan, or program that is independent of this Plan. Effective and
contingent on the Plan’s receipt of shareholder approval in accordance with
Section 20, no future awards will occur under the Company’s Second Amended and
Restated 1997 Long-Term Incentive Plan, the Company’s Amended and Restated 1997
Non-Employee Director Stock Plan or the Company’s 2004 Amended and Restated 2004
Long-Term Incentive Plan (the “2004 LTIP”).

2.

Defined Terms

Terms in the Plan that begin with an initial capital letter have the defined
meaning set forth in Appendix A, unless defined elsewhere in this Plan or the
context of their use clearly indicates a different meaning.

 

3.

Shares Subject to the Plan

Subject to the provisions of Section 13 of the Plan, the maximum number of
Shares that the Company may issue for all Awards under this Plan is 700,000
Shares. For all Awards, the Shares issued pursuant to the Plan may be authorized
but unissued Shares, Shares that the Company has reacquired or otherwise holds
in treasury, or Shares held in a trust.

Shares that are subject to an Award (or to any award under the 2004 LTIP) that
for any reason expires, is forfeited, is cancelled, or becomes unexercisable,
and Shares that are for any other reason not paid or delivered under this Plan
or the 2004 LTIP shall again, except to the extent

 

 

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prohibited by Applicable Law, be available for subsequent Awards under the Plan.
The Committee may not make future Awards with respect to Shares that the Company
retains from otherwise delivering pursuant to an Award either (i) as payment of
the exercise price of an Award, or (ii) in order to satisfy the withholding or
employment taxes due upon grant, exercise, vesting or distribution of an Award.
Notwithstanding the foregoing, but subject to adjustments pursuant to Section 13
below, the number of Shares that are available for ISO Awards shall be
determined, to the extent required under applicable tax laws, by reducing the
number of Shares designated in the preceding paragraph by the number of Shares
granted pursuant to Awards (whether or not Shares are issued pursuant to such
Awards), provided that any Shares that are either issued or purchased under the
Plan and forfeited back to the Plan, or surrendered in payment of the Exercise
Price or minimum statutory employment taxes for an Award shall be available for
issuance pursuant to future ISO Awards.

4.

Administration

(a)           General. The Committee shall administer the Plan in accordance
with its terms, provided that the Board may act in lieu of the Committee on any
matter. The Committee shall hold meetings at such times and places as it may
determine and shall make such rules and regulations for the conduct of its
business as it deems advisable. In the absence of a duly appointed Committee,
the Board shall function as the Committee for all purposes of the Plan.

(b)          Committee Composition. The Board shall appoint the members of the
Committee. If and to the extent permitted by Applicable Law, the Committee may
authorize one or more Reporting Persons (or other officers) to make Awards to
Eligible Persons who are not Reporting Persons (or other officers whom the
Committee has specifically authorized to make Awards). The Board may at any time
appoint additional members to the Committee, remove and replace members of the
Committee with or without Cause, and fill vacancies on the Committee however
caused.

(c)           Powers of the Committee. Subject to the provisions of the Plan,
the Committee shall have the authority, in its sole discretion:

(i)            to determine Eligible Persons to whom Awards shall be granted
from time to time and the number of Shares, units, or dollars to be covered by
each Award;

(ii)           to determine, from time to time, the Fair Market Value of Shares;

(iii)          to determine, and to set forth in Award Agreements, the terms and
conditions of all Awards, including any applicable exercise or purchase price,
the installments and conditions under which an Award shall become vested (which
may be based on performance), terminated, expired, cancelled, or replaced, and
the circumstances for vesting acceleration or waiver of forfeiture restrictions,
and other restrictions and limitations;

(iv)          to approve the forms of Award Agreements and all other documents,
notices and certificates in connection therewith which need not be identical
either as to type of Award or among Participants;

(v)           to construe and interpret the terms of the Plan and any Award
Agreement, to determine the meaning of their terms, and to prescribe, amend, and
rescind rules and procedures relating to the Plan and its administration; and

 

 

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(vi)        in order to fulfill the purposes of the Plan and without amending
the Plan, to modify, cancel, or waive the Company’s rights with respect to any
Awards, to adjust or to modify Award Agreements for changes in Applicable Law,
and to recognize differences in foreign law, tax policies, or customs; and

(vii)        to make all other interpretations and to take all other actions
that the Committee may consider necessary or advisable to administer the Plan or
to effectuate its purposes.

Subject to Applicable Law and the restrictions set forth in the Plan, the
Committee may delegate administrative functions to individuals who are Reporting
Persons, officers, or Employees of the Company or its Affiliates.

(d)           Deference to Committee Determinations. The Committee shall have
the discretion to interpret or construe ambiguous, unclear, or implied (but
omitted) terms in any fashion it deems to be appropriate in its sole discretion,
and to make any findings of fact needed in the administration of the Plan or
Award Agreements. The Committee’s prior exercise of its discretionary authority
shall not obligate it to exercise its authority in a like fashion thereafter.
The Committee’s interpretation and construction of any provision of the Plan, or
of any Award or Award Agreement, shall be final, binding, and conclusive. The
validity of any such interpretation, construction, decision or finding of fact
shall not be given de novo review if challenged in court, by arbitration, or in
any other forum, and shall be upheld unless clearly made in bad faith or
materially affected by fraud.

(e)           No Liability; Indemnification. Neither the Board nor any Committee
member, nor any Person acting at the direction of the Board or the Committee,
shall be liable for any act, omission, interpretation, construction or
determination made in good faith with respect to the Plan, any Award or any
Award Agreement. The Company shall pay or reimburse any member of the Committee,
as well as any Person who takes authorized action on behalf of the Company with
respect to the Plan, for all expenses incurred with respect to the Plan, and to
the full extent allowable under Applicable Law shall indemnify each and every
one of them for any claims, liabilities, and costs (including reasonable
attorney’s fees) arising out of their good faith performance of duties on behalf
of the Company with respect to the Plan. The Company may, but shall not be
required to, obtain liability insurance for this purpose.

5.

Eligibility

(a)           General Rule. Subject to the express provisions of the Plan, the
Committee shall determine from the class of Eligible Persons those individuals
to whom Awards under the Plan may be granted, the number of Shares subject to
each Award, the price (if any) to be paid for the Shares or the Award and, in
the case of Performance Awards, in addition to the matters addressed in Section
10 below, the specific objectives, goals and performance criteria that further
define the Performance Award. The Committee may grant ISOs only to Employees
(including officers who are Employees) of the Company or any Affiliate that is a
“parent corporation” or “subsidiary corporation” within the meaning of Section
424 of the Code, and may grant all other Awards to any Eligible Person. A
Participant who has been granted an Award may be granted an additional Award or
Awards if the Committee shall so determine, if such person is otherwise an
Eligible Person and if otherwise in accordance with the terms of the Plan.

 

 

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(b)         Documentation of Awards. Each Award (other than an Award of
Unrestricted Shares) shall be evidenced by an Award Agreement signed by the
Company and, if required by the Committee, by the Participant; provided that the
election form described in Section 9(a) shall serve as the sole Award Agreement
for Deferred Share Units (unless the Committee determines otherwise with respect
to any Participant). The Award Agreement shall set forth the material terms and
conditions of the Award established by the Committee, and each Award shall be
subject to the terms and conditions set forth in Sections 23, 24, and 25 unless
otherwise specifically provided in an Award Agreement.

(c)           Limits on Awards. During the term of the Plan, no Participant may
receive Options and SARs that relate to more than 500,000 shares per calendar
year as adjusted pursuant to Section 13 below.

(d)           Replacement Awards. Subject to Applicable Laws (including any
associated Shareholder approval requirements), the Committee may, in its sole
discretion and upon such terms as it deems appropriate, require as a condition
of the grant of an Award to a Participant that the Participant surrender for
cancellation some or all of the Awards that have previously been granted to the
Participant under this Plan or otherwise. An Award that is conditioned upon such
surrender may or may not be the same type of Award, may cover the same (or a
lesser or greater) number of Shares as such surrendered Award, may have other
terms that are determined without regard to the terms or conditions of such
surrendered Award, and may contain any other terms that the Committee deems
appropriate. In the case of Options, these other terms may not involve an
Exercise Price that is lower than the exercise price of the surrendered Option
unless the Company’s shareholders approve the grant itself or the program under
which the grant is made pursuant to the Plan.

6.

Option Awards

(a)           Types; Documentation. Subject to Section 5(a), the Committee may
in its discretion grant Options pursuant to Award Agreements that are delivered
to Participants. Each Option shall be designated in the Award Agreement as an
ISO or a Non-ISO, and the same Award Agreement may grant both types of Options.
At the sole discretion of the Committee, any Option may be exercisable, in whole
or in part, immediately upon the grant thereof, or only after the occurrence of
a specified event, or only in installments, which installments may vary. Options
granted under the Plan may contain such terms and provisions not inconsistent
with the Plan that the Committee shall deem advisable in its sole and absolute
discretion.

(b)          ISO $100,000 Limitation. To the extent that the aggregate Fair
Market Value of Shares with respect to which Options designated as ISOs first
become exercisable by a Participant in any calendar year (under this Plan and
any other plan of the Company or any Affiliate) exceeds $100,000, such excess
Options shall be treated as Non-ISOs. For purposes of determining whether the
$100,000 limit is exceeded, the Fair Market Value of the Shares subject to an
ISO shall be determined as of the Grant Date. In reducing the number of Options
treated as ISOs to meet the $100,000 limit, the most recently granted Options
shall be reduced first. In the event that Section 422 of the Code is amended to
alter the limitation set forth therein, the limitation of this Section 6(b)
shall be automatically adjusted accordingly.

 

 

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(c)          Term of Options. Each Award Agreement shall specify a term at the
end of which the Option automatically expires, subject to earlier termination
provisions contained in Section 6(h) hereof; provided, that, the term of any
Option may not exceed ten years from the Grant Date. In the case of an ISO
granted to an Employee who is a Ten Percent Holder on the Grant Date, the term
of the ISO shall not exceed five years from the Grant Date.

(d)           Exercise Price. The exercise price of an Option shall be
determined by the Committee in its sole discretion and shall be set forth in the
Award Agreement, provided that –

 

(i)

if an ISO is granted to an Employee who is a Ten Percent Holder on the Grant
Date, the per Share exercise price shall not be less than 110% of the Fair
Market Value per Share on the Grant Date, and

 

(ii)

for all other Options, such per Share exercise price shall not be less than 100%
of the Fair Market Value per Share on the Grant Date.

(e)           Exercise of Option. The times, circumstances and conditions under
which an Option shall be exercisable shall be determined by the Committee in its
sole discretion and set forth in the Award Agreement. The Committee shall have
the discretion to determine whether and to what extent the vesting of Options
shall be tolled during any unpaid leave of absence; provided, however, that in
the absence of such determination, vesting of Options shall be tolled during any
such leave approved by the Company.

(f)           Minimum Exercise Requirements. An Option may not be exercised for
a fraction of a Share. The Committee may require in an Award Agreement that an
Option be exercised as to a minimum number of Shares, provided that such
requirement shall not prevent a Participant from purchasing the full number of
Shares as to which the Option is then exercisable.

(g)           Methods of Exercise. Prior to its expiration pursuant to the terms
of the applicable Award Agreement, and subject to the times, circumstances and
conditions for exercise contained in the applicable Award Agreement, each Option
may be exercised, in whole or in part (provided that the Company shall not be
required to issue fractional shares), by delivery of written notice of exercise
to the secretary of the Company accompanied by the full exercise price of the
Shares being purchased. In the case of an ISO, the Committee shall determine the
acceptable methods of payment on the Grant Date and it shall be included in the
applicable Award Agreement. The methods of payment that the Committee may in its
discretion accept or commit to accept in an Award Agreement include:

 

(i)

cash or check payable to the Company (in U.S. dollars);

(ii)           other Shares that (A) are owned by the Participant who is
purchasing Shares pursuant to an Option, (B) have a Fair Market Value on the
date of surrender equal to the aggregate exercise price of the Shares as to
which the Option is being exercised, (C) were not acquired by such Participant
pursuant to the exercise of an Option, unless such Shares have been owned by
such Participant for at least six months or such other period as the Committee
may determine, (D) are all, at the time of such surrender, free and clear of any
and all claims, pledges, liens and encumbrances, or any restrictions which would
in any manner restrict the transfer of such shares to or by the Company (other
than such

 

 

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restrictions as may have existed prior to an issuance of such Shares by the
Company to such Participant), and (E) are duly endorsed for transfer to the
Company;

(iii)          a cashless exercise program that the Committee may approve, from
time to time in its discretion, pursuant to which a Participant may concurrently
either surrender Shares subject to the Option being exercised, or provide
irrevocable instructions (A) to such Participant’s broker or dealer to effect
the immediate sale of the purchased Shares and remit to the Company, out of the
sale proceeds available on the settlement date, sufficient funds to cover the
exercise price of the Option plus all applicable taxes required to be withheld
by the Company by reason of such exercise, and (B) to the Company to deliver the
certificates for the purchased Shares directly to such broker or dealer in order
to complete the sale;

(iv)          the Participant’s surrender of Restricted Shares, Restricted Share
Units, Share Appreciation Rights, or Deferred Share Units; provided that to the
extent payment is made by means of the surrender of any Award which is unvested
or subject to restrictions, the Shares issued pursuant to such surrender shall
be subject to the same vesting terms and other restrictions that applied to the
surrendered Award; or

 

(v)

any combination of the foregoing methods of payment.

The Company shall not be required to deliver Shares pursuant to the exercise of
an Option until payment of the full exercise price therefore is received by the
Company.

(h)          Termination of Continuous Service. The Committee may establish and
set forth in the applicable Award Agreement the terms and conditions on which an
Option shall remain exercisable, if at all, following termination of a
Participant’s Continuous Service. The Committee may waive or modify these
provisions at any time. To the extent that a Participant is not entitled to
exercise an Option at the date of his or her termination of Continuous Service,
or if the Participant (or other Person entitled to exercise the Option) does not
exercise the Option to the extent so entitled within the time specified in the
Award Agreement or below (as applicable), the Option shall terminate and the
Shares underlying the unexercised portion of the Option shall revert to the Plan
and become available for future Awards. In no event may any Option be exercised
after the expiration of the Option term as set forth in the Award Agreement.

The following provisions shall apply to the extent an Award Agreement does not
specify the terms and conditions upon which an Option shall terminate when there
is a termination of a Participant’s Continuous Service:

(i)            Termination other than Upon Disability or Death or for Cause. In
the event of termination of a Participant’s Continuous Service (other than as a
result of Participant’s death, disability, retirement or termination for Cause),
the Participant shall have the right to exercise an Option at any time within 90
days following such termination to the extent the Participant was entitled to
exercise such Option at the date of such termination.

(ii)           Disability. In the event of termination of a Participant’s
Continuous Service as a result of his or her being Disabled, the Participant
shall have the right to exercise an Option at any time within one year following
such termination to the extent the Participant was entitled to exercise such
Option at the date of such termination.

 

 

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(iii)        Retirement. In the event of termination of a Participant’s
Continuous Service as a result of Participant’s retirement, the Participant
shall have the right to exercise the Option at any time within six months
following such termination to the extent the Participant was entitled to
exercise such Option at the date of such termination (provided that an ISO
exercised more than three months after termination of the Participant’s
Continuous Service shall to that extent be treated as a Non-ISO).

(iv)         Death. In the event of the death of a Participant during the period
of Continuous Service since the Grant Date of an Option, or within 90 days
following termination of the Participant’s Continuous Service, the Option may be
exercised, at any time within one year following the date of the Participant’s
death, by the Participant’s estate or by a Person who acquired the right to
exercise the Option by bequest or inheritance, but only to the extent the right
to exercise the Option had vested at the date of death or, if earlier, the date
the Participant’s Continuous Service terminated.

(v)           Cause. If the Committee determines that a Participant’s Continuous
Service terminated due to Cause, the Participant shall immediately forfeit the
right to exercise any Option, and it shall be considered immediately null and
void.

If there is a blackout period under the Company’s insider trading policy or
Applicable Law that prohibits the buying or selling of Shares during any part of
the ten (10) day period before the termination of any Option based on the
termination of a Participant’s Continuous Service other than for Cause (as
described above), the period for exercising the Options shall be extended until
ten (10) days beyond when such blackout period ends. Notwithstanding any
provision hereof or within an Award Agreement, no Option shall ever be
exercisable after the expiration date of its original term as set forth in the
Award Agreement.

(i)            Reverse Vesting. The Committee in its sole discretion may allow a
Participant to exercise unvested Non-ISOs, in which case the Shares then issued
shall be Restricted Shares having analogous vesting restrictions to the unvested
Non-ISOs.

7.

Share Appreciation Rights (SARs)

(a)           Grants. The Committee may in its discretion grant Share
Appreciation Rights to any Eligible Person in any of the following forms:

(i)            SARs related to Options. The Committee may grant SARs either
concurrently with the grant of an Option or with respect to an outstanding
Option, in which case the SAR shall extend to all or a portion of the Shares
covered by the related Option. An SAR shall entitle the Participant who holds
the related Option, upon exercise of the SAR and surrender of the related
Option, or portion thereof, to the extent the SAR and related Option each were
previously unexercised, to receive payment of an amount determined pursuant to
Section 7(e) below. Any SAR granted in connection with an ISO will contain such
terms as may be required to comply with the provisions of Section 422 of the
Code and the regulations promulgated thereunder.

 

 

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(ii)          SARs Independent of Options. The Committee may grant SARs which
are independent of any Option subject to such conditions as the Committee may in
its discretion determine and set forth in the applicable Award Agreement.

(iii)          Limited SARs. The Committee may grant SARs exercisable only upon
or in respect of a Change in Control or any other specified event, and such
limited SARs may relate to or operate in tandem or combination with or
substitution for Options or other SARs, or on a stand-alone basis, and may be
payable in cash or Shares based on the spread between the exercise price of the
SAR, and (A) a price based upon or equal to the Fair Market Value of the Shares
during a specified period, at a specified time within a specified period before,
after or including the date of such event, or (B) a price related to
consideration payable to Company’s shareholders generally in connection with the
event.

(b)          Exercise Price. The per Share exercise price of an SAR shall be
determined in the sole discretion of the Committee, shall be set forth in the
applicable Award Agreement, and shall be no less than 100% of the Fair Market
Value of one Share. The exercise price of an SAR related to an Option shall be
the same as the exercise price of the related Option.

(c)           Exercise of SARs. An SAR may not have a term exceeding ten years
from its Grant Date. Unless the Award Agreement otherwise provides, an SAR
related to an Option will be exercisable at such time or times, and to the
extent, that the related Option will be exercisable; provided that the Award
Agreement shall not, without the approval of the stockholders of the Company,
provide for a vesting period for the exercise of the SAR that is more favorable
to the Participant than the exercise period for the related Option. An SAR
granted independently of any other Award will be exercisable pursuant to the
terms of the Award Agreement. Whether an SAR is related to an Option or is
granted independently, the SAR may only be exercised when the Fair Market Value
of the Shares underlying the SAR exceeds the exercise price of the SAR.

(d)           Effect on Available Shares. Notwithstanding Section 3 above, all
SARs that may be settled in Shares shall be counted in full against the number
of Shares available for Awards under the Plan, regardless of the number of
Shares actually issued upon settlement of the SARs.

(e)           Payment. Upon exercise of an SAR related to an Option and the
attendant surrender of an exercisable portion of any related Award, the
Participant will be entitled to receive payment of an amount determined by
multiplying –

(i)            the excess of the Fair Market Value of a Share on the date of
exercise of the SAR over the exercise price per Share of the SAR, by

 

(ii)

the number of Shares with respect to which the SAR has been exercised.

(iii)          Notwithstanding the foregoing, an SAR granted independently of an
Option (i) may limit the amount payable to the Participant to a percentage,
specified in the Award Agreement but not exceeding one-hundred percent (100%),
of the amount determined pursuant to the preceding sentence, and (ii) shall be
subject to any payment or other restrictions that the Committee may at any time
impose in its discretion, including restrictions intended to conform the SARs
with Section 409A of the Code.

 

 

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(f)          Form and Terms of Payment. Unless otherwise provided in an Award
Agreement, all SARs shall be settled in Shares as soon as practicable after
exercise. Subject to Applicable Law, the Committee may, in its sole discretion,
provide in an Award Agreement that the amount determined under Section 7(e)
above shall be settled solely in cash, solely in Shares (valued at their Fair
Market Value on the date of exercise of the SAR), or partly in cash and partly
in Shares, with cash paid in lieu of fractional shares.

(g)           Termination of Employment or Consulting Relationship. The
Committee shall establish and set forth in the applicable Award Agreement the
terms and conditions under which an SAR shall remain exercisable, if at all,
following termination of a Participant’s Continuous Service. The provisions of
Section 6(h) above shall apply to the extent an Award Agreement does not specify
the terms and conditions upon which an SAR shall terminate when there is a
termination of a Participant’s Continuous Service.

8.

Restricted Shares, Restricted Share Units, and Unrestricted Shares

(a)           Grants. The Committee may in its sole discretion grant restricted
shares (“Restricted Shares”) to any Eligible Person and shall evidence such
grant in an Award Agreement that is delivered to the Participant and that sets
forth the number of Restricted Shares, the purchase price for such Restricted
Shares (if any), and the terms upon which the Restricted Shares may become
vested. In addition, the Company may in its discretion grant to any Eligible
Person the right to receive Shares after certain vesting requirements are met
(“Restricted Share Units”), and shall evidence such grant in an Award Agreement
that is delivered to the Participant which sets forth the number of Shares (or
formula, that may be based on future performance or conditions, for determining
the number of Shares) that the Participant shall be entitled to receive upon
vesting and the terms upon which the Shares subject to a Restricted Share Unit
may become vested. The Committee may condition any Award of Restricted Shares or
Restricted Share Units to a Participant on receiving from the Participant such
further assurances and documents as the Committee may require to enforce the
restrictions. In addition, the Committee may grant Awards hereunder in the form
of unrestricted shares (“Unrestricted Shares”), which shall vest in full upon
the Grant Date or such other date as the Committee may determine or which the
Committee may issue pursuant to any program under which one or more Eligible
Persons (selected by the Committee in its sole discretion) elect to pay for such
Shares or to receive Unrestricted Shares in lieu of cash bonuses that would
otherwise be paid.

(b)          Vesting and Forfeiture. The Committee shall set forth in an Award
Agreement granting Restricted Shares or Restricted Share Units, the terms and
conditions under which the Participant’s interest in the Restricted Shares or
the Shares subject to Restricted Share Units will become vested and
non-forfeitable. Except as set forth in the applicable Award Agreement or the
Committee otherwise determines, upon termination of a Participant’s Continuous
Service for any other reason, the Participant shall forfeit his or her
Restricted Shares and Restricted Share Units; provided that if a Participant
purchases the Restricted Shares and forfeits them for any reason, the Company
shall return the purchase price to the Participant only if and to the extent set
forth in an Award Agreement.

(c)           Issuance of Restricted Shares Prior to Vesting. The Company shall
issue stock certificates that evidence Restricted Shares pending the lapse of
applicable restrictions, and that bear a legend making appropriate reference to
such restrictions. Except as set forth in the applicable Award

 

 

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Agreement or as the Committee otherwise determines, the Company or a third party
that the Company designates shall hold such Restricted Shares and any dividends
not currently paid to the Participant pursuant to the applicable Award Agreement
that accrues with respect to Restricted Shares pursuant to Section 8(e) below.

(d)          Issuance of Shares upon Vesting. As soon as practicable after
vesting of a Participant’s Restricted Shares (or of the right to receive Shares
underlying Restricted Share Units) and the Participant’s satisfaction of
applicable tax withholding requirements, the Company shall release to the
Participant, free from the vesting restrictions, one Share for each vested
Restricted Share (or issue one Share free of the vesting restriction for each
vested Restricted Share Unit), unless an Award Agreement provides otherwise. No
fractional shares shall be distributed, and cash shall be paid in lieu thereof.

(e)           Dividends Payable on Vesting. Unless otherwise provided in the
Award Agreement, the holder of Restricted Shares shall receive any cash and
stock dividends declared and paid on the Restricted Shares, provided that,
dividends paid in stock shall be subject to the vesting restrictions in the
Award Agreement. Unless otherwise provided in the Award Agreement, the holder of
Restricted Share Units shall be credited under the Award Agreement with a number
of additional Restricted Share Units, in the case of cash dividends, equal to
the product of (x) the number of Shares subject to the Restricted Share Units
and (y) the amount of dividends declared and paid, divided by the Fair Market
Value and, in the case of stock dividends, equal to the number of Shares (or
other stock) that would otherwise be payable as stock dividends so declared and
paid if the Shares subject to the then outstanding Restricted Share Units were
outstanding, provided that, any additional Restricted Share Units so credited
shall be subject to the vesting restrictions in the Award Agreement. Whenever
Shares are released to a Participant or duly-authorized transferee pursuant to
Section 8(d) above as a result of the vesting of Restricted Shares or the Shares
underlying Restricted Share Units are issued to a Participant pursuant to
Section 8(d) above, such Participant or duly authorized transferee shall also be
entitled to receive (unless otherwise provided in the Award Agreement) with
respect to each Share released or issued, in the case of Restricted Shares, the
number of Shares or other stock declared and paid as stock dividends and, in the
case of Restricted Share Units, the number of Shares subject to additional
Restricted Share Units credited with respect thereto.

(f)           Section 83(b) Elections. A Participant may make an election under
Section 83(b) of the Code (the “Section 83(b) Election”) with respect to
Restricted Shares. If a Participant who has received Restricted Share Units
provides the Committee with written notice within thirty (30) days of the Grant
Date of his or her intention to make a Section 83(b) Election with respect to
the Shares subject to such Restricted Share Units, the Committee may in its
discretion convert the Participant’s Restricted Share Units into Restricted
Shares, on a one-for-one basis, in full satisfaction of the Participant’s
Restricted Share Unit Award. The Participant may then make a Section 83(b)
Election with respect to those Restricted Shares. Shares with respect to which a
Participant makes a Section 83(b) Election shall not be eligible for deferral
pursuant to Section 9 below.

(g)           Deferral Elections. At any time within the thirty-day period (or
other shorter or longer period that the Committee selects in its sole
discretion) in which a Participant who is a member of a select group of
management or highly compensated employees (within the meaning of the Code)
receives an initial Award of either Restricted Shares or Restricted Share Units
(or before the calendar year in which such a Participant receives a subsequent
Award, subject to adjustments by the

 

 

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Committee in accordance with Code Section 409A), the Committee may permit the
Participant to irrevocably elect, on a form provided by and acceptable to the
Committee, to defer the receipt of all or a percentage of the Shares that would
otherwise be transferred to the Participant upon the vesting of such Award. If
the Participant makes this election, the Shares subject to the election, and any
associated dividends and interest, shall be credited to an account established
pursuant to Section 9 hereof on the date such Shares would otherwise have been
released or issued to the Participant pursuant to Section 8(d) above, and no
vesting shall occur (other than for death or Disability if provided pursuant to
the Award Agreement) within the 12-month period following the date of the
Participant’s election.

9.

Deferred Share Units

(a)           Elections to Defer. The Committee may permit any Eligible Person
who is a Director, Consultant or member of a select group of management or
highly compensated employees (within the meaning of the Code) to irrevocably
elect, on a form provided by and acceptable to the Committee (the “Election
Form”), to forego the receipt of cash or other compensation (including the
Shares deliverable pursuant to any Award other than Restricted Shares for which
a Section 83(b) Election has been made), and in lieu thereof to have the Company
credit to an internal Plan account (the “Account”) a number of deferred share
units (“Deferred Share Units”) equal to the amount of cash or other compensation
(or the Fair Market Value in the case of Shares) deferred divided by the average
price per Share price during the preceding quarter in the case of a deferral of
a Director’s quarterly cash retainer and or the average per Share price during
the preceding 90 days in the case of a deferral of other cash or compensation.
These credits to the Account will be made at the end of each calendar month
during which compensation is deferred. Each Election Form shall take effect on
the first day of the next calendar year (or on the first day of the next
calendar month in the case of an initial election by a Participant who first
receives an Award, subject to adjustments by the Committee in accordance with
Code Section 409A) after its delivery to the Company, subject to Section 8(g)
regarding deferral of Restricted Shares and Restricted Share Units and to
Section 10(e) regarding deferral of Performance Awards, unless the Company sends
the Participant a written notice explaining why the Election Form is invalid
within five business days after the Company receives it. Notwithstanding the
foregoing sentence: (i) Election Forms shall be ineffective with respect to any
compensation that a Participant earns before the date on which the Company
receives the Election Form, and (ii) the Committee may unilaterally make Awards
in the form of Deferred Share Units, regardless of whether or not the
Participant foregoes other compensation.

(b)          Vesting. Unless an Award Agreement expressly provides otherwise,
each Participant shall be 100% vested at all times in any Shares subject to
Deferred Share Units.

(c)           Issuances of Shares. The Company shall provide a Participant with
one Share for each Deferred Share Unit in five substantially equal annual
installments that are issued before the last day of each of the five calendar
years that end after the date on which the Participant’s Continuous Service
terminates, unless –

(i)            the Participant has properly elected a different form of
distribution, on a form approved by the Committee, that permits the Participant
to select any combination of a lump sum and annual installments that are
completed within ten years following termination of the Participant’s Continuous
Service, and

 

 

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(ii)          the Company received the Participant’s distribution election form
at the time the Participant elects to defer the receipt of cash or other
compensation pursuant to Section 9(a), provided that such election may be
changed through any subsequent election that (i) is delivered to the Company at
least one year before the date on which distributions are otherwise scheduled to
commence pursuant to the Participant’s election, and (ii) defers the
commencement of distributions by at least five years from the originally
scheduled commencement date.

Fractional shares shall not be issued, and instead shall be paid out in cash.

(d)           Crediting of Dividends. Unless otherwise provided in the Award
Agreement, in the case of cash or stock dividends declared and paid on the
Shares, the holder of Deferred Share Units shall receive a credit to its Account
of additional Deferred Share Units equal to, in the case of cash dividends, the
product of (x) the number of Shares subject to the Deferred Share Units and
(x) the amount of cash dividends declared and paid, divided by the Fair Market
Value. Unless otherwise provided in an Award Agreement, whenever Shares are
credited to a Participant pursuant to Section 9(c) above, such Participant shall
also be entitled to receive, one Share for each additional Deferred Share Unit
so credited.

(e)           Emergency Withdrawals. In the event a Participant suffers an
unforeseeable emergency within the contemplation of this Section and Section
409A of the Code, the Participant may apply to the Company for an immediate
distribution of all or a portion of the Participant’s Deferred Share Units. The
unforeseeable emergency must result from a sudden and unexpected illness or
accident of the Participant, the Participant’s spouse, or a dependent (within
the meaning of Section 152(a) of the Code) of the Participant, casualty loss of
the Participant’s property, or other similar extraordinary and unforeseeable
conditions beyond the control of the Participant. Examples of purposes which are
not considered unforeseeable emergencies include post-secondary school expenses
or the desire to purchase a residence. In no event will a distribution be made
to the extent the unforeseeable emergency could be relieved through
reimbursement or compensation by insurance or otherwise, or by liquidation of
the Participant’s nonessential assets to the extent such liquidation would not
itself cause a severe financial hardship. The amount of any distribution
hereunder shall be limited to the amount necessary to relieve the Participant’s
unforeseeable emergency plus amounts necessary to pay taxes reasonably
anticipated as a result of the distribution. The Committee shall determine
whether a Participant has a qualifying unforeseeable emergency and the amount
which qualifies for distribution, if any. The Committee may require evidence of
the purpose and amount of the need, and may establish such application or other
procedures as it deems appropriate.

(f)           Unsecured Rights to Deferred Compensation. A Participant’s right
to Deferred Share Units shall at all times constitute an unsecured promise of
the Company to pay benefits as they come due. The right of the Participant or
the Participant’s duly-authorized transferee to receive benefits hereunder shall
be solely an unsecured claim against the general assets of the Company. Neither
the Participant nor the Participant’s duly-authorized transferee shall have any
claim against or rights in any specific assets, shares, or other funds of the
Company.

10.

Performance Awards

(a)           Performance Shares and Units. Subject to the limitations set forth
in paragraph (c) hereof, the Committee may in its discretion grant
performance-based Awards payable in Shares

 

 

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(“Performance Shares”) or in cash (“Performance Units”) to any Eligible Person
and shall evidence such grant in an Award Agreement that is delivered to the
Participant which sets forth the terms and conditions of the Award.

(b)          Performance Compensation Awards. Subject to the limitations set
forth in paragraph (c) hereof, the Committee may, at the time of grant of
Performance Shares or a Performance Unit, designate such Award as a “Performance
Compensation Award” (payable in cash or Shares) in order that such Award
constitutes “qualified performance-based compensation” under Code Section
162(m), in which event the Committee shall have the power to grant such
Performance Compensation Award upon terms and conditions that qualify it as
“qualified performance-based compensation” within the meaning of Code Section
162(m). With respect to each such Performance Compensation Award, the Committee
shall establish, in writing within the time required under Code Section 162(m),
a “Performance Period,” “Performance Measure(s)”, and “Performance Formula(e)”
(each such term being hereinafter defined). Once established for a Performance
Period, the Performance Measure(s) and Performance Formula(e) shall not be
amended or otherwise modified to the extent such amendment or modification would
cause the compensation payable pursuant to the Award to fail to constitute
qualified performance-based compensation under Code Section 162(m).

A Participant shall be eligible to receive payment in respect of a Performance
Compensation Award only to the extent that the Performance Measure(s) for such
Award is achieved and the Performance Formula(e) as applied against such
Performance Measure(s) determines that all or some portion of such Participant’s
Award has been earned for the Performance Period. As soon as practicable after
the close of each Performance Period, the Committee shall review and certify in
writing whether, and to what extent, the Performance Measure(s) for the
Performance Period have been achieved and, if so, determine and certify in
writing the amount of the Performance Compensation Award to be paid to the
Participant and, in so doing, may use negative discretion to decrease, but not
increase, the amount of the Award otherwise payable to the Participant based
upon such performance.

(c)           Limitations on Awards. The maximum Performance Unit Award and the
maximum Performance Share Award that any one Participant may receive for any one
calendar year shall not together exceed $5,000,000 in cash and 250,000 Shares,
respectively. The Committee shall have the discretion to provide in any Award
Agreement that any amounts earned in excess of these limitations will either be
credited as Deferred Share Units, or as deferred cash compensation under a
separate plan of the Company (provided in the latter case that such deferred
compensation either bears a reasonable rate of interest or has a value based on
one or more predetermined actual investments). Any amounts for which payment to
the Participant is deferred pursuant to the preceding sentence shall be paid to
the Participant in a future year or years not earlier than, and only to the
extent that, the Participant is either not receiving compensation in excess of
these limits for a Performance Period, or is not subject to the restrictions set
forth under Section 162(b) of the Code.

 

(d)

Definitions.

(i)            “Performance Formula” means, for a Performance Period, one or
more objective formulas or standards established by the Committee for purposes
of determining whether or the extent to which an Award has been earned based on
the level of performance attained or to be attained with respect to one or more
Performance Measure(s).

 

 

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Performance Formulae may vary from Performance Period to Performance Period and
from Participant to Participant and may be established on a stand-alone basis,
in tandem or in the alternative.

(ii)           “Performance Measure” means one or more of the following selected
by the Committee to measure Company, Affiliate, and/or subsidiary, division or
business unit performance for a Performance Period, whether in absolute or
relative terms including, without limitation: terms relative to a peer group or
index; basic, diluted, or adjusted earnings per share; sales or revenue;
earnings before interest, taxes, and other adjustments (in total or on a per
share basis); cash available for distribution; basic or adjusted net income;
returns on equity, assets, capital, revenue or similar measure; level and growth
of dividends; the price or increase in price of Shares; total shareholder
return; distributions received on the account of so called carried interests or
incentive management fees from any other private equity fund or managed account
managed by the Company; total assets; growth in assets, new originations of
assets, or financing of assets; equity market capitalization; assets under
management; reduction or other quantifiable goal with respect to general and/or
specific expenses; third-party equity capital under management or raised; and
mergers, acquisitions, increase in enterprise value of Affiliates, subsidiaries,
divisions or business units or sales of assets of Affiliates, subsidiaries,
divisions or business units or sales of assets. Each such measure shall be, to
the extent applicable, determined in accordance with generally accepted
accounting principles as consistently applied by the Company (or such other
standard applied by the Committee) and, if so determined by the Committee, and
in the case of a Performance Compensation Award, to the extent permitted under
Code Section 162(m), adjusted to omit the effects of extraordinary items, gain
or loss on the disposal of a business segment, unusual or infrequently occurring
events and transactions and cumulative effects of changes in accounting
principles. Performance Measures may vary from Performance Period to Performance
Period and from Participant to Participant, and may be established on a
stand-alone basis, in tandem or in the alternative.

(iii)          “Performance Period” means one or more periods of time (of not
less than one calendar year of the Company), as the Committee may designate,
over which the attainment of one or more Performance Measure(s) will be measured
for the purpose of determining a Participant’s rights in respect of an Award.

(e)           Deferral Elections. At any time prior to the date that is at least
six months before the close of a Performance Period (or shorter or longer period
that the Committee selects) with respect to a Performance Compensation Award of
either Performance Units or Performance Shares, the Committee may permit a
Participant who is a member of a “select group of management or highly
compensated employees” (within the meaning of ERISA) to irrevocably elect, on a
form provided by and acceptable to the Committee, to defer the receipt of all or
a percentage of the cash or Shares that would otherwise be transferred to the
Participant upon the vesting of such Award. If the Participant makes this
election, the cash or Shares subject to the election, and any associated
interest and dividends, shall be credited to an account established pursuant to
Section 9 hereof on the date such cash or Shares would otherwise have been
released or issued to the Participant pursuant to Section 10(a) or Section 10(b)
above.

11.

Taxes

 

 

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(a)          General. As a condition to the issuance or distribution of Shares
pursuant to the Plan, the Participant (or in the case of the Participant’s
death, the Person who succeeds to the Participant’s rights) shall make such
arrangements as the Company may require for the satisfaction of any applicable
federal, state, local or foreign withholding tax obligations that may arise in
connection with the Award and the issuance of Shares. The Company shall not be
required to issue any Shares until such obligations are satisfied, and may
unilaterally withhold Shares for this purpose. If the Committee allows or
effectuates the withholding or surrender of Shares to satisfy a Participant’s
tax withholding obligations, the Committee shall not allow Shares to be withheld
in an amount that exceeds the minimum statutory withholding rates for federal
and state tax purposes, including payroll taxes.

(b)          Default Rule for Employees. In the absence of any other arrangement
authorized by the Committee or set forth in the Award Agreement, and to the
extent permitted under Applicable Law, each Participant shall be deemed to have
elected to have the Company withhold from the Shares or cash to be issued
pursuant to an Award that number of Shares having a Fair Market Value determined
as of the applicable Tax Date (as defined below) or cash equal to the minimum
applicable tax withholding and employment tax obligations associated with an
Award. If such withholding of Shares is not permitted for any reason, the
Company shall satisfy any required withholding through withholding from cash
compensation otherwise payable to the Participant. For purposes of this Section
11, the Fair Market Value of the Shares to be withheld shall be determined on
the date that the amount of tax to be withheld is to be determined under the
Applicable Law (the “Tax Date”).

(c)           Income Taxes and Deferred Compensation. Participants are solely
responsible and liable for the satisfaction of all taxes and penalties that may
arise in connection with Awards (including any taxes arising under Section 409A
of the Code), and the Company shall not have any obligation to indemnify or
otherwise hold any Participant harmless from any or all of such taxes. The
Committee shall have the discretion to organize any deferral program, to require
deferral election forms, and to grant or to unilaterally modify any Award in a
manner that (i) conforms with the requirements of Section 409A of the Code with
respect to compensation that is deferred and that vests after December 31, 2004,
(ii) that voids any Participant election to the extent it would violate Section
409A of the Code, and (iii) for any distribution election that would violate
Section 409A of the Code, to make distributions pursuant to the Award at the
earliest to occur of a distribution event that is allowable under Section 409A
of the Code or any distribution event that is both allowable under Section 409A
of the Code and is elected by the Participant, subject to any valid second
election to defer, provided that the Committee permits second elections to defer
in accordance with Section 409A(a)(4)(C). The Committee shall have the sole
discretion to interpret the requirements of the Code, including Section 409A,
for purposes of the Plan and all Awards.

12.

Non-Transferability of Awards

(a)           General. Except as set forth in this Section 12, or as otherwise
approved by the Committee, Awards may not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner other than by will or by
the laws of descent or distribution. The designation of a beneficiary by a
Participant will not constitute a transfer. An Award may be exercised, during
the lifetime of the holder of an Award, only by such holder, the duly-authorized
legal representative of a Participant who is Disabled, or a transferee permitted
by this Section 12.

 

 

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(b)         Limited Transferability Rights. Notwithstanding anything else in
this Section 12, the Committee may in its discretion provide in an Award
Agreement that an Award in the form of a Non-ISO, Share-settled SAR, Restricted
Shares, or Performance Shares may be transferred, on such terms and conditions
as the Committee deems appropriate, either (i) by instrument to the
Participant’s “Immediate Family” (as defined below), (ii) by instrument to an
inter vivos or testamentary trust (or other entity) in which the Award is to be
passed to the Participant’s designated beneficiaries, or (iii) by gift to
charitable institutions. Any transferee of the Participant’s rights shall
succeed and be subject to all of the terms of the applicable Award Agreement and
the Plan. “Immediate Family” means any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, domestic partner, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, and shall include adoptive relationships.

13.

Adjustments Upon Changes in Capitalization, Merger or Certain Other Transactions

(a)           Changes in Capitalization. In the event of a corporate transaction
such as a merger, consolidation, separation, spin-off or any reorganization, the
Committee shall make equitable adjustments to prevent dilution or enlargement of
rights. Also, the Committee shall equitably adjust the number of Shares covered
by each outstanding Award, and the number of Shares that have been authorized
for issuance under the Plan but as to which no Awards have yet been granted or
that have been returned to the Plan upon cancellation, forfeiture, or expiration
of an Award, as well as the price per Share covered by each such outstanding
Award, to reflect any increase or decrease in the number of issued Shares
resulting from a stock-split, reverse stock-split, stock dividend, combination,
recapitalization or reclassification of the Shares, or any other increase or
decrease in the number of issued Shares effected without receipt of
consideration by the Company. In the event of any such transaction or event, the
Committee may provide in substitution for any or all outstanding Awards under
the Plan such alternative consideration (including securities of any surviving
entity) as it may in good faith determine to be equitable under the
circumstances and may require in connection therewith the surrender of all
Awards so replaced. In any case, such substitution of securities shall not
require the consent of any Person who is granted Awards pursuant to the Plan.
Except as expressly provided herein, or in an Award Agreement, if the Company
issues for consideration shares of stock of any class or securities convertible
into shares of stock of any class, the issuance shall not affect, and no
adjustment by reason thereof shall be required to be made with respect to the
number or price of Shares subject to any Award.

(b)          Dissolution or Liquidation. In the event of the dissolution or
liquidation of the Company other than as part of a Change of Control, each Award
will terminate immediately prior to the consummation of such action, subject to
the ability of the Committee to exercise any discretion authorized in the case
of a Change in Control.

(c)           Change in Control. In the event of a Change in Control, the
Committee may in its sole and absolute discretion and authority, without
obtaining the approval or consent of the Company’s shareholders or any
Participant with respect to his or her outstanding Awards, take one or more of
the following actions:

(i)            arrange for or otherwise provide that each outstanding Award
shall be assumed or a substantially similar award shall be substituted by a
successor corporation or a parent or subsidiary of such successor corporation
(the “Successor Corporation”);

 

 

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(ii)          accelerate the vesting of Awards so that Awards shall vest (and,
to the extent applicable, become exercisable) as to the Shares that otherwise
would have been unvested and provide that repurchase rights of the Company with
respect to Shares issued upon exercise of an Award shall lapse as to the Shares
subject to such repurchase right;

(iii)          accelerate the vesting of Awards pursuant to paragraph (ii) and
arrange or otherwise provide for the payment of cash or other consideration to
Participants in exchange for the satisfaction and cancellation of outstanding
Awards; or

(iv)         make such other modifications, adjustments or amendments to
outstanding Awards or this Plan as the Committee deems necessary or appropriate,
subject however to the terms of Section 15(a) below.

To the extent that an Award is not exercised or settled prior to consummation of
a transaction in which the Award is not being assumed or substituted, such Award
shall terminate upon such consummation, but only if the Committee has exercised
its discretion to select and implement paragraph 13(c)(iii) hereof.

Notwithstanding the above, unless otherwise provided in an Award Agreement, in
the event a Participant holding an Award assumed or substituted by the Successor
Corporation in a Change in Control is Involuntarily Terminated by the Successor
Corporation in connection with, or within 12 months (or other period either set
forth in an Award Agreement, or as increased thereafter by the Committee to a
period longer than 12 months) following consummation of, the Change in Control,
then any assumed or substituted Award held by the terminated Participant at the
time of termination shall accelerate and become fully vested (and exercisable in
full in the case of Options and SARs), and any repurchase right applicable to
any Shares shall lapse in full, unless an Award Agreement provides for a more
restrictive acceleration or vesting schedule or more restrictive limitations on
the lapse of repurchase rights or otherwise places additional restrictions,
limitations and conditions on an Award. The acceleration of vesting and lapse of
repurchase rights provided for in the previous sentence shall occur immediately
prior to the effective date of the Participant’s termination, unless an Award
Agreement provides otherwise.

(d)           Certain Distributions. In the event of any distribution to the
Company’s shareholders of securities of any other entity or other assets (other
than dividends payable in cash or stock of the Company) without receipt of
consideration by the Company, the Committee may, in its discretion,
appropriately adjust the price per Share covered by each outstanding Award to
reflect the effect of such distribution.

14.

Time of Granting Awards.

The date of grant (“Grant Date”) of an Award shall be the date on which the
Committee makes the determination granting such Award or such other date as is
determined by the Committee, provided that in the case of an ISO, the Grant Date
shall be the later of the date on which the Committee makes the determination
granting such ISO or the date of commencement of the Participant’s employment
relationship with the Company.

 

 

 

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15.

Modification of Awards and Substitution of Options.

(a)           Modification, Extension, and Renewal of Awards. Within the
limitations of the Plan, the Committee may modify an Award to accelerate the
rate at which an Option or SAR may be exercised (including without limitation
permitting an Option or SAR to be exercised in full without regard to the
installment or vesting provisions of the applicable Award Agreement or whether
the Option or SAR is at the time exercisable, to the extent it has not
previously been exercised), to accelerate the vesting of any Award, to extend or
renew outstanding Awards or to accept the cancellation of outstanding Awards to
the extent not previously exercised. However, the Committee may not cancel an
outstanding Option whose exercise price is greater than Fair Market Value at the
time of cancellation for the purpose of reissuing the Option to the Participant
at a lower exercise price or granting a replacement award of a different type.
Notwithstanding the foregoing provision, no modification of an outstanding Award
shall materially and adversely affect such Participant’s rights thereunder (with
such an affect being presumed to arise from a modification that would trigger a
violation of Section 409A of the Code), unless either (i) the Participant
provides written consent, or (ii) before a Change in Control, the Committee
determines in good faith that the modification is not materially adverse to the
Participant. Furthermore, except in connection with a corporate transaction
involving the Company (including, without limitation, any stock dividend, stock
split, extraordinary cash dividend, recapitalization, reorganization, merger,
consolidation, split-up, spin-off, combination, or exchange of shares), the
terms of outstanding awards may not be amended without shareholder approval to
reduce the exercise price of outstanding Options or SARs in exchange for cash,
other awards or Options or SARs with an exercise price that is less than the
exercise price of the original Options or SARs.

(b)          Substitution of Options. Notwithstanding any inconsistent
provisions or limits under the Plan, in the event the Company or an Affiliate
acquires (whether by purchase, merger or otherwise) all or substantially all of
the outstanding capital stock or assets of another corporation or in the event
of any reorganization or other transaction qualifying under Section 424 of the
Code, the Committee may, in accordance with the provisions of that Section,
substitute Options for options under the plan of the acquired company provided
(i) the excess of the aggregate fair market value of the shares subject to an
option immediately after the substitution over the aggregate option price of
such shares is not more than the similar excess immediately before such
substitution and (ii) the new option does not give Persons additional benefits,
including any extension of the exercise period.

16.

Term of Plan.

The Plan shall continue in effect for a term of ten (10) years from its
effective date as determined under Section 20 below, unless the Plan is sooner
terminated under Section 17 below.

17.

Amendment and Termination of the Plan.

(a)           Authority to Amend or Terminate. Subject to Applicable Laws, the
Board may from time to time amend, alter, suspend, discontinue, or terminate the
Plan.

(b)          Effect of Amendment or Termination. No amendment, suspension, or
termination of the Plan shall materially and adversely affect Awards already
granted (with such an affect being presumed to arise from a modification that
would trigger a violation of Section 409A of the Code) unless either it relates
to an adjustment pursuant to Section 13 or modification pursuant to Section

 

 

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15(a) above, or it is otherwise mutually agreed between the Participant and the
Committee, which agreement must be in writing and signed by the Participant and
the Company. Notwithstanding the foregoing, the Committee may amend the Plan to
eliminate provisions which are no longer necessary as a result of changes in tax
or securities laws or regulations, or in the interpretation thereof.

18.

Conditions Upon Issuance of Shares.

Notwithstanding any other provision of the Plan or any agreement entered into by
the Company pursuant to the Plan, the Company shall not be obligated, and shall
have no liability for failure, to issue or deliver any Shares under the Plan
unless such issuance or delivery would comply with Applicable Law, with such
compliance determined by the Company in consultation with its legal counsel.

19.

Reservation of Shares.

The Company, during the term of this Plan, will at all times reserve and keep
available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.

20.

Effective Date.

This Plan shall become effective on the date which it has received approval by a
vote of a majority of the votes cast at a duly held meeting of the Company’s
shareholders (or by such other shareholder vote that the Committee determines to
be sufficient for the issuance of Shares or stock options according to the
Company’s governing documents and applicable state law).

21.

Controlling Law.

All disputes relating to or arising from the Plan shall be governed by the
internal substantive laws (and not the laws of conflicts of laws) of the State
of New York, to the extent not preempted by United States federal law. If any
provision of this Plan is held by a court of competent jurisdiction to be
invalid and unenforceable, the remaining provisions shall continue to be fully
effective.

22.

Laws And Regulations.

(a)           U.S. Securities Laws. This Plan, the grant of Awards, and the
exercise of Options and SARs under this Plan, and the obligation of the Company
to sell or deliver any of its securities (including, without limitation,
Options, Restricted Shares, Restricted Share Units, Unrestricted Shares,
Deferred Share Units, and Shares) under this Plan shall be subject to all
Applicable Law. In the event that the Shares are not registered under the
Securities Act of 1933, as amended (the “Act”), or any applicable state
securities laws prior to the delivery of such Shares, the Company may require,
as a condition to the issuance thereof, that the persons to whom Shares are to
be issued represent and warrant in writing to the Company that such Shares are
being acquired by him or her for investment for his or her own account and not
with a view to, for resale in connection with, or with an intent of
participating directly or indirectly in, any distribution of such Shares within
the meaning of the Act, and a legend to that effect may be placed on the
certificates representing the Shares.

 

 

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(b)         Other Jurisdictions. To facilitate the making of any grant of an
Award under this Plan, the Committee may provide for such special terms for
Awards to Participants who are foreign nationals or who are employed by the
Company or any Affiliate outside of the United States of America as the
Committee may consider necessary or appropriate to accommodate differences in
local law, tax policy or custom. The Company may adopt rules and procedures
relating to the operation and administration of this Plan to accommodate the
specific requirements of local laws and procedures of particular countries.
Without limiting the foregoing, the Company is specifically authorized to adopt
rules and procedures regarding the conversion of local currency, taxes,
withholding procedures and handling of stock certificates which vary with the
customs and requirements of particular countries. The Company may adopt
sub-plans and establish escrow accounts and trusts as may be appropriate or
applicable to particular locations and countries.

23.          No Shareholder Rights. Neither a Participant nor any transferee of
a Participant shall have any rights as a shareholder of the Company with respect
to any Shares underlying any Award until the date of issuance of a share
certificate to a Participant or a transferee of a Participant for such Shares in
accordance with the Company’s governing instruments and Applicable Law. Prior to
the issuance of Shares pursuant to an Award, a Participant shall not have the
right to vote or to receive dividends or any other rights as a shareholder with
respect to the Shares underlying the Award, notwithstanding its exercise in the
case of Options and SARs. No adjustment will be made for a dividend or other
right that is determined based on a record date prior to the date the stock
certificate is issued, except as otherwise specifically provided for in this
Plan.

24.          No Employment Rights. The Plan shall not confer upon any
Participant any right to continue an employment, service or consulting
relationship with the Company, nor shall it affect in any way a Participant’s
right or the Company’s right to terminate the Participant’s employment, service,
or consulting relationship at any time, with or without Cause.

25.

Termination, Rescission and Recapture of Awards.

(a)           Each Award under the Plan is intended to align the Participant’s
long-term interest with those of the Company. If the Participant engages in
certain activities discussed below, either during employment or after employment
with the Company terminates for any reason, the Participant is acting contrary
to the long-term interests of the Company. Accordingly, but only to the extent
expressly provided in an Award Agreement, the Company may terminate any
outstanding, unexercised, unexpired, unpaid, or deferred Awards (“Termination”),
rescind any exercise, payment or delivery pursuant to the Award (“Rescission”),
or recapture any Common Stock (whether restricted or unrestricted) or proceeds
from the Participant’s sale of Shares issued pursuant to the Award
(“Recapture”), if the Participant does not comply with the conditions of
subsections (b) or (c) hereof (collectively, the “Conditions”).

(b)          A Participant shall not, without the Company’s prior written
authorization, disclose to anyone outside the Company, or use in other than the
Company’s business, any proprietary or confidential information or material, as
those or other similar terms are used in any applicable patent, confidentiality,
inventions, secrecy, or other agreement between the Participant and the Company
with regard to any such proprietary or confidential information or material.

(c)           Pursuant to any agreement between the Participant and the Company
with regard to intellectual property (including but not limited to patents,
trademarks, copyrights, trade secrets,

 

 

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inventions, developments, improvements, proprietary information, confidential
business and personnel information), a Participant shall promptly disclose and
assign to the Company or its designee all right, title, and interest in such
intellectual property, and shall take all reasonable steps necessary to enable
the Company to secure all right, title and interest in such intellectual
property in the United States and in any foreign country.

(d)          Upon exercise, payment, or delivery of cash or Common Stock
pursuant to an Award, the Participant shall certify on a form acceptable to the
Company that he or she is in compliance with the terms and conditions of the
Plan and, if a severance of Continuous Service has occurred for any reason,
shall state the name and address of the Participant’s then-current employer or
any entity for which the Participant performs business services and the
Participant’s title, and shall identify any organization or business in which
the Participant owns a greater-than-five-percent equity interest.

(e)           If the Company determines, in its sole and absolute discretion,
that (i) a Participant has violated any of the Conditions or (ii) during his or
her Continuous Service, or within one (1) years after its termination for any
reason, a Participant (a) has solicited any non-administrative employee of the
Company to terminate employment with the Company; or (b) has engaged in
activities which are materially prejudicial to or in conflict with the interests
of the Company, including any breaches of fiduciary duty or the duty of loyalty,
then the Company may, in its sole and absolute discretion, impose a Termination,
Rescission, and/or Recapture with respect to any or all of the Participant’s
relevant Awards, Shares, and the proceeds thereof.

(f)           Within ten days after receiving notice from the Company of any
such activity described in Section 25(e) above, the Participant shall deliver to
the Company the Shares acquired pursuant to the Award, or, if Participant has
sold the Shares, the gain realized, or payment received as a result of the
rescinded exercise, payment, or delivery; provided, that if the Participant
returns Shares that the Participant purchased pursuant to the exercise of an
Option (or the gains realized from the sale of such Common Stock), the Company
shall promptly refund the exercise price, without earnings, that the Participant
paid for the Shares. Any payment by the Participant to the Company pursuant to
this Section 21 shall be made either in cash or by returning to the Company the
number of Shares that the Participant received in connection with the rescinded
exercise, payment, or delivery. It shall not be a basis for Termination,
Rescission or Recapture if after termination of a Participant’s Continuous
Service, the Participant purchases, as an investment or otherwise, stock or
other securities of such an organization or business, so long as (i) such stock
or other securities are listed upon a recognized securities exchange or traded
over-the-counter, and (ii) such investment does not represent more than a five
percent (5%) equity interest in the organization or business.

(g)           Notwithstanding the foregoing provisions of this Section, the
Company has sole and absolute discretion not to require Termination, Rescission
and/or Recapture, and its determination not to require Termination, Rescission
and/or Recapture with respect to any particular act by a particular Participant
or Award shall not in any way reduce or eliminate the Company’s authority to
require Termination, Rescission and/or Recapture with respect to any other act
or Participant or Award. Nothing in this Section shall be construed to impose
obligations on the Participant to refrain from engaging in lawful competition
with the Company after the termination of employment that does not violate
subsections (b) or (c) of this Section, other than any obligations that are part
of any separate agreement between the Company and the Participant or that arise
under applicable law.

 

 

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(h)         All administrative and discretionary authority given to the Company
under this Section shall be exercised by the most senior human resources
executive of the Company or such other person or committee (including without
limitation the Committee) as the Committee may designate from time to time.

(i)            Notwithstanding any provision of this Section, if any provision
of this Section is determined to be unenforceable or invalid under any
applicable law, such provision will be applied to the maximum extent permitted
by applicable law, and shall automatically be deemed amended in a manner
consistent with its objectives to the extent necessary to conform to any
limitations required under applicable law. Furthermore, if any provision of this
Section is illegal under any applicable law, such provision shall be null and
void to the extent necessary to comply with applicable law.

Notwithstanding the foregoing, but subject to any contrary terms set forth in
any Award Agreement, this Section shall not be applicable: (i) to any
Participant who is not, on the Award Date, an Employee of the Company or its
Affiliates; and (ii) to any Participant from and after his or her termination of
Continuous Service after a Change in Control.

26.          Reimbursement of Company for Awards. Unless specifically provided
or otherwise addressed in an Award Agreement, and to the extent permitted by
Applicable Law, the Committee may in its sole and absolute discretion, without
obtaining the approval or consent of the Company’s shareholders or any
Participant with respect to his or her outstanding Awards, require that the
Participant reimburse the Company for all or any portion of any Awards
(“Reimbursement”), or the Committee may require the Termination or Rescission
of, or the Recapture of, any Award, if—

(a)           the granting, vesting, or payment of such Award was predicated
upon the achievement of certain financial results that were subsequently the
subject of a material financial restatement;

(b)           in the Committee’s view the Participant engaged in fraud or
misconduct that caused or partially caused the need for a material financial
restatement by the Company or any Affiliate; and

(c)            a lower granting, vesting, or payment of such Award would have
occurred based upon the restated financial results.

In each instance, the Committee will, to the extent practicable and allowable
under applicable laws, require Reimbursement, Termination, or Rescission of,
and/or Recapture relating to, any such Award granted to a Participant, including
reimbursement for any gains realized on the exercise of Options or SARs
attributable to such Awards, plus a reasonable rate of interest, effecting the
cancellation of Restricted Shares, Restricted Share Units, Unrestricted Shares,
Deferred Share Units, Performance Awards, and outstanding Options and SARs;
provided that the Company will not seek Reimbursement, Termination or Rescission
of, or Recapture relating to, any such Awards that were paid or vested more than
three years prior to the date the applicable restatement is disclosed.
Notwithstanding the foregoing, this provision shall not apply to any Awards or
other rights granted pursuant to the 2004 Incentive Plan.

 

 

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CAPITAL TRUST, INC.

2007 LONG TERM INCENTIVE PLAN

 

_______________________

 

Appendix A: Definitions

______________________

As used in the Plan, the following definitions shall apply:

“Affiliate” means, with respect to any Person (as defined below), any other
Person that directly or indirectly controls or is controlled by or under common
control with such Person. For the purposes of this definition, “control,” when
used with respect to any Person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of
such Person or the power to elect directors, whether through the ownership of
voting securities, by contract or otherwise; and the terms “affiliated,”
“controlling” and “controlled” have meanings correlative to the foregoing.

“Applicable Law” means the legal requirements relating to the administration of
options and share-based plans under applicable U.S. federal and state laws, the
Code, any applicable stock exchange or automated quotation system rules or
regulations (to the extent the Committee determines in its discretion that
compliance with such rules or regulations is necessary) and the applicable laws
of any other country or jurisdiction where Awards are granted, as such laws,
rules, regulations and requirements shall be in place from time to time.

“Award” means any award made pursuant to the Plan, including awards made in the
form of an Option, an SAR, a Restricted Share, a Restricted Share Unit, an
Unrestricted Share, a Deferred Share Unit, and a Performance Award, or any
combination thereof, whether alternative or cumulative, authorized by and
granted under this Plan.

“Award Agreement” means any written document setting forth the terms of an Award
that has been authorized by the Committee. The Committee shall determine the
form or forms of documents to be used, and may change them from time to time for
any reason.

“Board” means the Board of Directors of the Company.

“Cause” for termination of a Participant’s Continuous Service will have the
meaning set forth in any unexpired employment agreement between the Company and
the Participant. In the absence of such an agreement, “Cause” will exist if the
Participant is terminated from employment or other service with the Company or
an Affiliate for any of the following reasons: (i) the Participant’s conviction
of a felony committed in connection with his or her employment or service with
the Company, (ii) the Participant’s willful failure to substantially perform his
or her duties and responsibilities to the Company or deliberate violation of a
material Company policy; (iii) the Participant’s commission of any material act
or acts of fraud, embezzlement, dishonesty, or other willful misconduct; (iv)
the Participant’s material unauthorized use or disclosure of any proprietary
information or trade secrets of the Company or any other party to whom the
Participant owes an obligation of nondisclosure as a result of his or her
relationship with the Company; or (v)

 

 

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Participant’s willful and material breach of any of his or her obligations under
any written agreement or covenant with the Company.

The Committee shall in its discretion determine whether or not a Participant is
being terminated for Cause. The Committee’s determination shall, unless
arbitrary and capricious, be final and binding on the Participant, the Company,
and all other affected persons. The foregoing definition does not in any way
limit the Company’s ability to terminate a Participant’s employment or
consulting relationship at any time, and the term “Company” will be interpreted
herein to include any Affiliate or successor thereto, if appropriate.

“Change in Control” means any of the following:

(i)            Approval by the shareholders of the Company of the dissolution or
liquidation of the Company;

(ii)           Approval by the shareholders of the Company of an agreement to
merge or consolidate, or otherwise reorganize, with or into one or more entities
that are not Affiliates, as a result of which less than 50% of the outstanding
voting securities of the surviving or resulting entity immediately after such
transaction are, or will be, owned, directly or indirectly, by shareholders of
the Company immediately before such transaction (assuming for purposes of such
determination that there is no change in the record ownership of the Company's
securities from the record date for such approval until such transaction and
that such record owners hold no securities of the other parties to such
reorganization), but including in such determination any securities of the other
parties to such transaction held by Affiliates of the Company);

(iii)          Approval by the shareholders of the Company of the sale of
substantially all of the Company's business and/or assets to a Person or entity
that is not an Affiliate of the Company;

(iv)          Any “person” (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act but excluding any Person described in and satisfying the
conditions of Rule 13d-1(b)(1) thereunder), other than a Person that is a
shareholder of the Company on the Effective Date or a trustee or a fiduciary
holding securities under an employee benefit plan of the Company or any of its
subsidiaries or an entity owned directly or indirectly by the shareholders of
the Company in substantially the same proportion as their ownership of the stock
of the Company, becomes the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
more than 33% of the combined voting power of the Company's then outstanding
securities entitled to then vote generally in the election of directors of the
Company other than as a result of the acquisition of securities directly from
the Company; or

(v)           During any period not longer than two consecutive years,
individuals who at the beginning of such period constituted the Board cease to
constitute at least a majority thereof, unless the election, or the nomination
for election by the Company's shareholders, of each new Board member was
approved by a vote of at least three-fourths of the Board members then still in
office who were Board members at the beginning of such period

 

 

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(including for these purposes, new members whose election or nomination was so
approved).

Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have
occurred by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the record holders of the
common stock of the Company immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity which owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions.

“Code” means the U.S. Internal Revenue Code of 1986, as amended.

“Committee” means one or more committees or subcommittees of the Board appointed
by the Board to administer the Plan in accordance with Section 4 above. With
respect to any decision involving an Award intended to satisfy the requirements
of Section 162(m) of the Code, the Committee shall consist of two or more
Directors of the Company who are “outside directors” within the meaning of
Section 162(m) of the Code. With respect to any decision relating to a Reporting
Person, the Committee shall consist of two or more Directors who are
disinterested within the meaning of Rule 16b-3.

“Company” means Capital Trust, Inc., a Maryland corporation, or any
subsidiaries; provided, however, that in the event the Company reincorporates to
another jurisdiction, all references to the term “Company” shall refer to the
Company in such new jurisdiction.

“Consultant” means any person, including an advisor, who is engaged by the
Company or any Affiliate to render services and is compensated for such
services.

“Continuous Service” means the absence of any interruption or termination of
service as an Employee, Director, or Consultant. Continuous Service shall not be
considered interrupted in the case of: (i) sick leave; (ii) military leave;
(iii) any other leave of absence approved by the Committee, provided that such
leave is for a period of not more than 90 days, unless reemployment upon the
expiration of such leave is guaranteed by contract or statute, or unless
provided otherwise pursuant to Company policy adopted from time to time; (iv)
changes in status from Director to advisory director or emeritus status; or (iv)
in the case of transfers between locations of the Company or between the
Company, its Affiliates or their respective successors. Changes in status
between service as an Employee, Director, and a Consultant will not constitute
an interruption of Continuous Service.

“Deferred Share Units” mean Awards pursuant to Section 9 of the Plan.

“Director” means a member of the Board, or a member of the board of directors of
an Affiliate.

“Disabled” means a condition under which a Participant --

(a)           is unable to engage in any substantial gainful activity by reason
of any 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, or

 

 

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(b)         is, by reason of any 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, received income replacement
benefits for a period of not less than 3 months under an accident or health plan
covering employees of the Company.

“Eligible Person” means any Consultant, Director or Employee and includes
non-Employees to whom an offer of employment has been or is being extended.

“Employee” means any person whom the Company or any Affiliate classifies as an
employee (including an officer) for employment tax purposes, whether or not that
classification is correct. The payment by the Company of a director’s fee to a
Director shall not be sufficient to constitute “employment” of such Director by
the Company.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Fair Market Value” means, as of any date (the “Determination Date”) means: (i)
the closing price of a Share on the New York Stock Exchange or the American
Stock Exchange (collectively, the “Exchange”), on the Determination Date, or, if
shares were not traded on the Determination Date, then on the nearest preceding
trading day during which a sale occurred; or (ii) if such stock is not traded on
the Exchange but is quoted on NASDAQ or a successor quotation system, (A) the
last sales price (if the stock is then listed as a National Market Issue under
The Nasdaq National Market System) or (B) the mean between the closing
representative bid and asked prices (in all other cases) for the stock on the
Determination Date as reported by NASDAQ or such successor quotation system; or
(iii) if such stock is not traded on the Exchange or quoted on NASDAQ but is
otherwise traded in the over-the-counter, the mean between the representative
bid and asked prices on the Determination Date; or (iv) if subsections (i)-(iii)
do not apply, the fair market value established in good faith by the Committee.

“Grant Date” has the meaning set forth in Section 14 of the Plan.

“Incentive Share Option or ISO” hereinafter means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code, as
designated in the applicable Award Agreement.

“Involuntary Termination” means termination of a Participant’s Continuous
Service under the following circumstances occurring on or after a Change in
Control: (i) termination without Cause by the Company or an Affiliate or
successor thereto, as appropriate; or (ii) voluntary termination by the
Participant within 60 days following (A) a material reduction in the
Participant’s job responsibilities, provided that neither a mere change in title
alone nor reassignment to a substantially similar position shall constitute a
material reduction in job responsibilities; (B) an involuntary relocation of the
Participant’s work site to a facility or location more than 50 miles from the
Participant’s principal work site at the time of the Change in Control; or (C) a
material reduction in Participant’s total compensation other than as part of an
reduction by the same percentage amount in the compensation of all other
similarly-situated Employees, Directors or Consultants.

“Non-ISO” means an Option not intended to qualify as an ISO, as designated in
the applicable Award Agreement.

“Option” means any stock option granted pursuant to Section 6 of the Plan.

 

 

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“Participant” means any holder of one or more Awards, or the Shares issuable or
issued upon exercise of such Awards, under the Plan.

“Performance Awards” mean Performance Units and Performance Compensation Awards
granted pursuant to Section 10.

“Performance Compensation Awards” mean Awards granted pursuant to Section 10(b)
of the Plan.

“Performance Unit” means Awards granted pursuant to Section 10(a) of the Plan
which may be paid in cash, in Shares, or such combination of cash and Shares as
the Committee in its sole discretion shall determine.

“Person” means any natural person, association, trust, business trust,
cooperative, corporation, general partnership, joint venture, joint-stock
company, limited partnership, limited liability company, real estate investment
trust, regulatory body, governmental agency or instrumentality, unincorporated
organization or organizational entity.

“Plan” means this Capital Trust 2007 Long Term Incentive Plan.

“Reporting Person” means an officer, Director, or greater than ten percent
shareholder of the Company within the meaning of Rule 16a-2 under the Exchange
Act, who is required to file reports pursuant to Rule 16a-3 under the Exchange
Act.

“Restricted Shares” mean Shares subject to restrictions imposed pursuant to
Section 8 of the Plan.

“Restricted Share Units” mean Awards pursuant to Section 8 of the Plan.

“Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act, as amended
from time to time, or any successor provision.

“SAR” or “Share Appreciation Right” means Awards granted pursuant to Section 7
of the Plan.

“Share” means a share of class A common stock of the Company, as adjusted in
accordance with Section 13 of the Plan.

“Ten Percent Holder” means a person who owns stock representing more than ten
percent (10%) of the combined voting power of all classes of stock of the
Company or any Affiliate.

“Unrestricted Shares” mean Shares awarded pursuant to Section 8 of the Plan.

 

 

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