Exhibit 10.1


 


CRYSTAL RIVER CAPITAL INC.


 


2005 LONG-TERM INCENTIVE PLAN


 


(As amended and restated on January 1, 2008)


 


1.             Establishment, Purpose, and Types of Awards


 


By
resolution of its Board dated, December 31, 2007, Crystal River Capital, Inc.,
a Maryland corporation
(the “Company”), hereby amends and restates,
effective as of January 1, 2008, the Crystal River Capital, Inc. 2005 Long-Term Incentive
Plan (the “Plan”), which the Company initially adopted by resolution of its
Board on February 23, 2005.  The Plan
was adopted to
provide incentives to its manager, officers, employees, directors, and
advisors, and consultants who provide services to the Company and its
Affiliates and to motivate them toward the Company’s long term success, growth
and profitability and to attract, retain and reward key personnel.  This Plan is intended to
conform to Section 409A of the Code, and the Company shall have complete
discretion to interpret and construe the Plan and any associated documents in
any manner that establishes an exemption from or otherwise conforms to the
requirements of Section 409A.


 


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

  	
   

  	
  Stock Appreciation
  Rights

  
	
  Section 8

  	
   

  	
  Restricted and
  Unrestricted Stock Awards; Restricted Stock Units

  
	
  Section 9

  	
   

  	
  Deferred Stock 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.


 


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 pursuant to the Plan
shall be determined in accordance with the following paragraph.


 


With respect to the calendar year ending December 31,
2005, the maximum number of Shares that may be made the subject of Awards
granted under the Plan shall be equal to (i) ten percent (10%) of the
number of shares of Common Stock that are outstanding immediately following the
completion of the offering of Common Stock pursuant to that certain
purchase/placement agreement, dated as of March 9, 2005, by and among the
Company and Deutsche Securities Inc. and Wachovia Capital Markets, LLC, as
representatives of the several initial purchasers listed in such agreement (the
“Closing Date”).  Thereafter, for any
given subsequent calendar year, the maximum number of shares of Common Stock
that may be made the subject of Awards granted under the Plan shall increase by
an amount equal to ten percent (10%) of the difference, if any (but not less
than zero) between the number of shares of Common Stock that were outstanding
as of the last day of the immediately preceding calendar year and the number of
shares of Common Stock that were outstanding as of the last day of the calendar
year preceding such year.  For purposes
of making the foregoing calculation, the last day of the calendar year
preceding the calendar year ending December 31, 2005, shall be the Closing
Date.  Notwithstanding the foregoing, in
no event shall the number of Shares issued pursuant to the Plan exceed 10,000,000.


 


For all Awards, these Shares may be authorized but
unissued Shares, or Shares that the Company has reacquired or otherwise holds
in treasury.


 


Shares that are subject to an Award 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 the Plan shall
again, except to the extent prohibited by Applicable Law, be available for
subsequent Awards under the Plan.  In
addition, the Committee may 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 the 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 that can be issued pursuant to the Plan designated above by
the number of Shares granted pursuant to ISO Awards (whether or not Shares are
issued pursuant to such Awards); provided that any Shares that are
either purchased under the Plan and forfeited back to the Plan, or surrendered
in payment of the Exercise Price for an Award shall be available
for issuance pursuant to ISO Awards.


 


Notwithstanding the foregoing and unless an Award
Agreement provides otherwise, Shares subject to Awards of Options or Restricted
Stock that are (i) authorized by the Board and granted to the Manager
pursuant to the Plan and in connection with the Company’s March 2005
Offering whereby the Board granted the Manager 84,000 shares of the Company’s
Restricted Stock and Options to purchase 126,000 Shares; (ii) transferred
and reallocated by the Manager to Eligible Persons in the form of Awards in
accordance with the March 15, 2005 Management Agreement between the
Manager and the Company, as amended and restated from time to time; and (iii) forfeited
for any reason, shall again be available for transfer and reallocation by the
Manager.


 


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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 make such rules and
regulations for the conduct of its business as it deems advisable.  In the absence of a duly appointed Committee
or if the Board otherwise chooses to act in lieu of a 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 SARs 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, renewed, 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


 


(vi)          in order to fulfill
the purposes of the Plan and without amending the Plan, 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.


 


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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 arbitrary or capricious.


 


(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 and its Affiliates shall pay or reimburse any member of the Committee,
as well as any Director, Officer, Employee, or Consultant who takes action in
connection with 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 under
the Plan.  The Company and its Affiliates
may obtain liability insurance for this purpose.


 


5.             Eligibility


 


(a)           General Rule.  The Committee may grant ISOs only to
Employees (including officers who are Employees) of the Company or an 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.


 


(b)           Grant
of Awards.  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.  Each Award shall be evidenced by an Award
Agreement signed by the Company and, if required by the Committee, by the Participant.  The Award Agreement shall set forth the
material terms and conditions of the Award established by the Committee.


 


(c)           Limits on Awards.  No Participant
other than the Manager may receive Options and SARs that relate to more than
100,000 Shares per calendar year.  The
Manager may not


 


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receive Options or SARs
that relate to more than 1,000,000 Shares per calendar year.  The Committee will adjust these limitations
pursuant to Section 13 below.


 


(d)           Replacement
Awards. 
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 or other 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 either the new grant
will not create any material financial expense for the Company or the Company’s
stockholders approve the grant itself or the program under which it is made
pursuant to the Plan.


 


6.             Option Awards


 


(a)           Types; Documentation. 
The Committee may in its discretion grant ISOs to any Employee and
Non-ISOs to any Eligible Person, and shall evidence any such grants in an Award
Agreement that is delivered to the Participant. 
Each Option shall be designated in the Award Agreement as an ISO or a
Non-ISO.  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.


 


(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 (to the extent
an Award Agreement does not contain contrary provisions); 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 discretion and shall be set forth in the
Award Agreement, subject to the following special rules:


 


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(i)            ISOs.  If an ISO is granted to an Employee who on
the Grant Date is a Ten Percent Holder, the per Share exercise price shall not
be less than 110% of the Fair Market Value per Share on such Grant Date.  If an ISO is granted to any other Employee,
the per Share exercise price shall not be less than 100% of the Fair Market
Value per Share on the Grant Date.


 


(ii)           Non-ISOs.  The per Share exercise price for the Shares
to be issued pursuant to the exercise of a Non-ISO shall not be less than 100%
of the Fair Market Value per Share on the Grant Date.


 


(iii)          Named Executive
Officers.  The per Share exercise
price shall not be less than 100% of the Fair Market Value per Share on the
Grant Date of an Option if (A) on such Grant Date, the Participant is
subject to the limitations set forth in Section 162(m) of the Code,
and (B) the grant is intended to qualify as performance-based compensation
under Section 162(m) of the Code.


 


(iv)          Repricing.  The Committee may at any time unilaterally
reduce the exercise price for any Option, but only if (I) the reduction
will not cause material financial expense for the Company or the Company’s
stockholders approve the reduction or the program under which it is made, and (II) the
Committee promptly provides a written notice to any Participant affected by the
reduction.


 


(v)           Adjustment for Section 409A
of the Code.  In the event an Option
is granted with an Exercise Price that is below the Fair Market Value per Share
on the date of grant, and subject to Section 11(e) below, the Option
shall be subject to any terms and conditions that the Administrator may in its
discretion determine to be necessary to avoid the income tax penalties set
forth under Section 409A of the Code.


 


(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 exercisability contained in the applicable Award Agreement and
Applicable Law, 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
payment of the full exercise price of the Shares being purchased.  Unless otherwise provided in the applicable
Award Agreement and subject to compliance with


 


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Applicable Law at the
time of such payment, the acceptable methods of payment on the exercise date of
any Option shall include the following:


 


(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 longer 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 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 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 Stock, Restricted Stock Units, Stock Appreciation Rights, or
Deferred Stock 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
Committee shall have the discretion to exclude from an Award Agreement any
methods of payment set forth above.  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


 


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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 becoming 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.


 


(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.


 


(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.


 


(i)            Reverse
Vesting.  The Plan
Administrator in its discretion may allow a Participant to exercise unvested
Options, in which case the Shares then issued shall be Restricted Stock Units
having analogous vesting restrictions to the unvested Options.


 


(j)            Buyout Provisions.  The Committee may at any time offer to buy
out an Option, in exchange for a payment in cash or Shares, based on such terms
and conditions as the Committee shall establish and communicate to the
Participant at the time that such offer is made.  In addition, if the Fair Market Value for
Shares subject to an Option is more than 33% below their exercise price for
more than 30 consecutive business days, the Committee may unilaterally
terminate and cancel the Option either (i) by paying the Participant, in
cash or Shares, an amount not less than the Black-Scholes value of the vested
portion of the Option, or (ii) by irrevocably committing to grant a new
Option, on a designated date more than six months after such


 


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termination and
cancellation of such Option (but only if the Participant’s Continuous Service
has not terminated prior to such designated date), on substantially the same
terms as the cancelled Option, provided that the per Share exercise price for
the new Option shall equal the per Share Fair Market Value of a Share on the
date the new grant occurs.


 


7.             Share Appreciate 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.


 


(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, which conditions will be 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 stockholders 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 (as of the Grant Date) 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.  The exercise price of an SAR shall be subject
to the special rules on pricing contained in paragraphs (iii) and (iv) of
Section 6(d) hereof.


 


(c)           Exercise of SARs.  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.  An SAR may not have a term exceeding ten
years from its Grant Date.  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


 


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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.   To the extent
that an SAR is exercised, only the actual number of delivered Shares (if any)
will be charged against the maximum number of Shares that may be delivered
pursuant to Awards under this Plan. The number of Shares subject to the SAR and
the related Option of the Participant will, however, be reduced by the number
of underlying Shares as to which the exercise relates, unless the Award
Agreement otherwise provides.


 


(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.


 


Notwithstanding the foregoing, an SAR granted independently
of an Option 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.


 


(f)            Form and Terms of
Payment.  Subject to
Applicable Law, the Committee may, in its sole discretion, settle the amount
determined under Section 7(e) above 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.  In
any event, cash shall be paid in lieu of fractional Shares.  Absent a contrary determination by the
Committee, all SARs shall be settled in cash as soon as practicable after
exercise.  Notwithstanding the foregoing,
the Committee may, in an Award Agreement, (i) determine the maximum amount
of cash or Shares or combination thereof that may be delivered upon exercise of
an SAR, and (ii) impose payment or other restrictions, including
restrictions intended to conform the SARs with any applicable provisions of Section 409A
of the Code.


 


(g)           Termination of Employment
or Consulting Relationship. 
The Committee shall establish and set forth in the applicable Award
Agreement the terms and conditions on 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.


 


(h)           Repricing
and Buy-out.  The Committee has the same discretion to
reprice and to buy-out SARs as it has to take such actions with respect to
Options.


 


8.             Restricted and Unrestricted Stock Awards; Restricted
Stock Units


 


(a)           Grants.  The Committee may in its discretion grant and
issue restricted Shares (“Restricted Stock”) to any Eligible Person and shall
evidence such grant in an Award


 


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Agreement that is
delivered to the Participant which sets forth the number of Shares subject to
the Restricted Stock Award, the purchase price for such Shares (if any) and the
terms upon which such Shares may become vested. 
In addition, the Company may in its discretion grant the right to
receive Shares after certain vesting requirements are met (“Restricted Stock
Units”) to any Eligible Person 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 Restricted Stock Units may become
vested. Unless otherwise provided in the Award Agreement, the holder of
Restricted Stock shall receive any cash and stock dividends declared and paid
on the Restricted Stock.  Unless
otherwise provided in the Award Agreement, the holder of Restricted Stock Units
shall receive (i) in the case of any cash dividends declared and paid on
the Shares, a cash amount equal to that amount that would otherwise be payable
as cash dividends so declared and paid if the Shares subject to the then
outstanding Restricted Stock Units were outstanding and (ii) in the case
of any stock dividends declared and paid on the Shares, a grant of additional
Restricted Stock Units (which shall be subject to the same outstanding vesting
terms) for the number of Shares equal to any stock dividends so declared and
paid that would otherwise be payable if the Shares subject to the then
outstanding Restricted Stock Units were outstanding, subject to the
availability of Shares reserved for issuance under the Plan at the time of such
dividend.  The Committee may condition
any Award of Restricted Stock or Restricted Stock 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 Stock”), which shall vest
in full upon the date of grant 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 discretion)
elect to receive Unrestricted Stock in lieu of cash bonuses that would
otherwise be paid.


 


(b)           Vesting.  The Committee shall set forth in an Award
Agreement granting Restricted Stock or Restricted Stock Units, the terms and
conditions under which the Participant’s interest in the Shares subject to
Restricted Stock Awards or Restricted Stock Units will become vested.  Except as set forth in the applicable Award
Agreement or as the Committee otherwise determines, upon termination of a
Participant’s Continuous Service for any other reason, the Participant shall
forfeit his or her unvested Restricted Stock and Restricted Stock Units;
provided that if a Participant purchases the Restricted Stock 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 Stock 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 Agreement or the Committee otherwise
determines, the Company or a third party that the Company designates shall hold
such Restricted Stock and any dividends not currently paid to the Participant
pursuant to the applicable Award Agreement.


 


(d)           Issuance
of Shares upon Vesting.  As
soon as practicable after vesting of a Participant’s Shares subject to a
Restricted Stock Award (or Shares subject to Restricted Stock


 


11

















 


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 Share subject to the Restricted Stock Award (or issue
one Share free of the vesting restriction for each vested Restricted Stock
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 an Award Agreement provides
that no payment of dividends be made, if
an Award Agreement does not provide for an earlier payment of dividends, whenever
Shares are issued to a Participant or duly-authorized transferee under Section 8(d) above
pursuant to the vesting of Shares subject to a Restricted Stock Award or the
Shares subject to Restricted Stock Units, such Participant or duly-authorized
transferee shall also be entitled to receive, with respect to each Share
issued, an amount equal to any cash dividends (plus simple interest at a rate
of five percent per annum, or such other reasonable rate as the Committee may
determine) and a number of Shares equal to any stock dividends, which were
declared and paid to the holders of Shares between the Grant Date and the date
such Share is issued to the extent not currently paid to the Participant
pursuant to the applicable Award Agreement.


 


(f)            Section 83(b) Elections.  If a Participant
who has received Restricted Stock Units provides the Committee with written
notice of his or her intention to make an election under Section 83(b) of
the Code with respect to the Shares subject to such Restricted Stock Units (the
“Section 83(b) Election”), the Committee may in its discretion
convert the Participant’s Restricted Stock Units into Restricted Stock, on a
one-for-one basis, in full satisfaction of the Participant’s Restricted Stock
Unit Award.


 


(g)           Deferral Elections.  Subject to Section 11(e) below, at
any time within the calendar year in which a Participant who is Director,
Officer, Consultant or a member of a “select group of management or highly
compensated employees” (within the meaning of ERISA) receives an Award of
either Restricted Stock or Restricted Stock Units that has a vesting condition
tied to the Participant’s Continued Service, 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 provided the
election is made at least 12 months in advance of the earliest date that the
Restricted Shares or Restricted Share Units may vest.  If the Participant makes this election, the
Shares subject to the election, and any associated unpaid dividends and
interest thereon, shall be credited as Deferred Stock Units (as defined below)
to an Account (as defined below) 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.  Notwithstanding the foregoing, Shares with
respect to which a Participant makes a Section 83(b) Election shall
not be eligible for deferral pursuant to Section 9 below.


 


9.             Deferred Stock Units


 


(a)           Elections to Defer. 
Subject to Section 11(e) below, the Committee may permit any
Eligible Person who is a Director, Officer, Consultant or member of a “select
group of management or highly compensated employees” (within the meaning of the
ERISA) to irrevocably elect, on a form provided by and acceptable to the
Committee (the “Election Form”),


 


12

















 


to forego the receipt of cash or other compensation
(including Shares subject to Restricted Stock Awards for which a Section 83(b) Election
has not been made, Shares subject to Restricted Stock Units and the dividends
or the cash amount equal to the amount of dividends that would otherwise be
paid in respect of Shares subject to Restricted Stock Awards or Restricted
Stock Units), 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”) having a Fair Market Value equal to the Shares and other compensation
deferred.  These credits will be made at
the end of each calendar month (or other period determined by the Committee)
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) Election
Forms must be submitted to the Committee no later than December 31st of
the calendar year preceding the calendar year in which the Eligible Person
first performs the services that are attributable to the compensation being
deferred.  Notwithstanding the foregoing,
any Eligible Person who first becomes eligible to defer compensation under the
Plan and is not eligible to defer or otherwise accrue an amount of deferred compensation
under any other plan or arrangement that (i) is maintained by the Company
or any other Affiliate that would be considered a single employer with the
Company pursuant to Code Sections 414(b) or 414(c) and (ii) constitutes
a single plan under Treasury Regulation §1.409A-1(c)(2)(A), may submit his or
her Election Form to the Committee no later than 30 days after the date
the Eligible Person first becomes eligible to defer compensation under the
Plan; however, the Election Form may relate only to compensation that is
to be paid for services performed after the date the Election Form is
submitted to the Committee.  The
Committee may reject any Election Form that it determines in its sole
discretion does not satisfy the requirements of this paragraph.


 


(b)           Vesting.  Each
Participant shall be 100% vested at all times in any Shares subject to Deferred
Stock Units.


 


(c)           Crediting of Dividends.  Unless otherwise provided in the Award
Agreement, whenever cash dividends are declared and paid on the Shares, the
Account shall be credited with additional Deferred Stock Units calculated by
dividing (i) the amount obtained by multiplying the number of Shares
subject to the then outstanding Deferred Stock Units by the per share dividend
amount by (ii) the Fair Market Value of the Shares on the date of payment
of the dividends.  Whenever stock
dividends are declared and paid on the Shares, the Account shall be credited
with additional Deferred Stock Units for the number of Shares equal to any
stock dividends declared and paid on the Shares that  would otherwise be payable if the Shares
subject to the then outstanding Deferred Stock Units were outstanding.


 


(d)           Issuances of Shares. 
The Company shall provide a Participant with one Share for each Deferred
Stock 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 incurs a


 


13

















 


“separation form service” within the meaning of
Treasury Regulations §1.409A-1(h) (“Separation from Service”), 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 triggered by and completed within ten years
following the Participant’s Separation from Service, and


 


(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.


 


(e)           Emergency Withdrawals.  In the event a Participant suffers an
unforeseeable hardship within the contemplation of this Section 9(e) 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 of the Participant (within the meaning of Section 152(a) of
the Code), casualty loss of the Participant’s property, or other similar
extraordinary and 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, in its sole and absolute discretion, 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
Stock 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
Units. 
The Committee may in its discretion grant Performance Units to any
Eligible Person and shall evidence such grant in an Award Agreement that is


 


14

















 


delivered to the
Participant which sets forth the terms and conditions of the Award.  A Performance Unit is an Award which is based
on the achievement of specific goals with respect to the Company or any
Affiliate or individual performance of the Participant, or a combination thereof,
over a specified period of time.  Subject
to subsection (d) hereof, the maximum Performance Unit compensation that
may be paid to any one Participant other than the Manager with respect to any
one Performance Period (hereinafter defined) shall be 100,000 Shares, $500,000
in cash, or both.  The maximum
Performance Unit compensation that may paid to the Manager with respect to any
one Performance Period shall be 1,000,000 Shares, $500,000 in cash, or both.


 


(b)           Performance
Compensation Awards.  The Committee may, at the time of grant of a
Performance Unit, designate such Award as a “Performance Compensation Award” 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
are 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.  Subject to
subsection (d) hereof, the maximum Performance Compensation Award for any
one Participant other than the Manager for any one Performance Period shall be
100,000 Shares, $500,000 in cash, or both. 
The maximum Performance Compensation Award that may paid to the Manager
with respect to any one Performance Period shall be 1,000,000 Shares, $500,000
in cash, or both.


 


(c)           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).  Performance Formulae may
vary from Performance Period to Performance


 


15

















 


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 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); basic or adjusted net income; basic or adjusted funds from
operations or cash flow; returns on equity, assets, capital, revenue or similar
measure; level and growth of dividends; the price or increase in price of
Shares; total stockholder return; total assets; growth in assets or new
originations of assets; equity market capitalization; assets under management;
and mergers, acquisitions, sales of assets of Affiliates or business
units.  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 fiscal 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.


 


(d)           Subject to Section 11(e) below,
with respect to the maximum limits set forth in Section 10(a) and 10(b) above,
the Committee shall have the discretion to provide in any Award Agreement that
any amounts earned pursuant to a Performance Award (and/or in excess of the
limits set forth in Sections 10(a) and 10(b) above) during a
Performance Period will either be credited as Deferred Stock Units (in
accordance with the terms of Section 9 above), or as deferred cash
compensation under a separate plan of the Company or an Affiliate (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 in excess of
the limits set forth under Sections 10(a) and 10(b) above 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 but 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.


 


11.           Taxes


 


(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


 


16














 


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.  If the Committee allows 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, an Employee shall be deemed to have directed the Company to
withhold or collect from his or her cash compensation an amount sufficient to
satisfy such tax obligations from the next payroll payment otherwise payable
after the date of the exercise of an Award.


 


(c)                                  Special Rules. In the case of a Participant other than
an Employee (or in the case of an Employee where the next payroll payment is
not sufficient to satisfy such tax obligations, with respect to any remaining
tax obligations), in the absence of any other arrangement and to the extent
permitted under the Applicable Law, the 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 (or equivalent cash amount) having a
Fair Market Value determined as of the applicable Tax Date (as defined below)
equal to the amount required to be withheld. 
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”).


 


(d)                                 Surrender of Shares. If permitted by the Committee, in its
discretion, a Participant may satisfy the minimum applicable tax withholding
and employment tax obligations associated with an Award by surrendering Shares
to the Company (including Shares that would otherwise be issued pursuant to the
Award) that have a Fair Market Value determined as of the applicable Tax Date
equal to the amount required to be withheld. 
In the case of Shares previously acquired from the Company that are
surrendered under this Section 11, such Shares must have been owned by the
Participant for more than six months on the date of surrender (or such longer
period of time the Company may in its discretion require).


 


(e)                                  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 Administrator 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 Administrator permits second elections to
defer in accordance with Section 409A(a)(4)(C).  The Administrator shall 


 


17

















 


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 for Directors, Officers or a “select group of management or
highly compensated employees” (within the meaning of ERISA), 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 Participant issued
an Award, only by such Participant, the duly-authorized legal representative of
a disabled Participant, or a transferee permitted by this Section 12.


 


(b)                                 Limited Transferability Rights. 
Notwithstanding
anything else in this Section 12 and subject to Section 22 below, (i) the
Committee may in its discretion provide in an Award Agreement that the Award
may be transferred by instrument to an inter vivos or testamentary trust (or
other entity) in which the Award is to be passed to beneficiaries upon the
death of the trustor (settlor), or by gift to charitable institutions, the
Participant’s Immediate Family, on such terms and conditions as the Committee
deems appropriate or (ii) any Award to the Manager may be transferred by
the Manager to a Consultant.  Any
transferee of a Participant’s Awards or rights therein shall succeed to and be
subject to all of the terms of the Plan and the Award Agreement (and any
amendments thereto) governing the Award or rights therein so transferred.


 


13.                                 Adjustments Upon Changes
in Capitalization, Merger or Certain Other Transactions


 


(a)                                  Changes in Capitalization. 
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 Options 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 Options so replaced.  In any case, such substitution of securities
shall not require the consent of any Person who is granted options pursuant to
the Plan.  Except as expressly provided
herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall 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 in Control, each Award will terminate immediately 


 


18

















 


prior to the consummation
of such action, subject to the discretion 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 (or beforehand through an Award
Agreement or modification of an Award Agreement), the Committee may in its sole
and absolute discretion and authority, without obtaining the approval or
consent of the Company’s stockholders or any Participant (subject to the
specific commitments made in any Award Agreement) 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”);


 


(ii)                                  accelerate the vesting of Awards for any
period that the Committee may authorize at the end of which the Committee may
provide for termination of any unexercised Options or SARs, 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, if any, with respect to Shares issued upon exercise of an Award
shall lapse as to the Shares subject to such repurchase right; or


 


(iii)                               arrange or otherwise provide for the
payment of cash or other consideration to Participants in exchange for the
satisfaction and cancellation of outstanding Awards.


 


Notwithstanding the above, 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  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.  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.


 


(d)                                 Certain Distributions. 
In the event of any distribution to the Company’s stockholders 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.


 


19

















 


15.                                 Modification of Awards
and Substitution of Options.


 


(a)                                  Modification, Extension, and
Renewal of Awards.  Within the limitations of the Plan and any
Award Agreement and subject to Section 11(e) above, the Committee may
modify an Award (i) 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), (ii) to
accelerate the vesting of any Award, (iii) to extend or renew outstanding
Awards, or (iv) to accept the cancellation of outstanding Awards to the
extent not previously exercised either for the granting of new Awards or for
other consideration in substitution or replacement thereof.


 


(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
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 above or modification pursuant to Section 15(a),
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.


 


(c)                                  Special
Code Section 409A. 
Notwithstanding the foregoing provisions of this Section 17, with
respect to any Award that constitutes a “nonqualified deferred compensation
plan” within the meaning of Code Section 409A, termination of this Plan
shall not result in an acceleration or 


 


20

















 


deferral
of income taxation except to the extent permissible within Code Section 409A’s
rules and regulations relating to plan terminations.


 


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 of its approval by the Board; provided that this Plan
shall be submitted to the Company’s stockholders for approval, and if not
approved by the stockholders within one year from the date of approval by the
Board, this Plan and any Awards shall be null, void, and of no force and
effect.  Awards granted under this Plan
before approval of this Plan by the stockholders shall be granted subject to
such approval and no Shares shall be distributed before such approval.


 


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 and transferability 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 Stock, Restricted Stock Units, Unrestricted Stock, Deferred Stock
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.


 


21

















 


(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 applicable to particular locations and
countries.


 


23.                                 Stockholder Rights. 
Except as otherwise provided in an Award Agreement, a Participant who
receives Shares pursuant to the Plan shall be reflected
as the owner of record of the Shares on the Company’s books and records,
subject to meeting any requirements that the Company imposes in the Award
Agreement (which may include delivering to the Company a stock power, endorsed
in blank, with respect to the Shares subject to the Award) and subject to any
forfeiture provisions in the Plan and the Award Agreement.  As the owner of record of the Shares subject
to an Award, a Participant shall be entitled to all rights of a stockholder of
the Company, including the right to vote the Shares and the right to payment of
any cash dividends or other distributions (including those paid in stock)
declared or paid following the date of the Award (as set forth in the Award
Agreement), and to the extent paid in stock, such stock shall be subject to the
same restrictions on Shares contained in the Award Agreement, subject in each case to the treatment of the
Award upon termination of employment before the particular record date for
determining stockholders of record entitled to payment of the dividend or
distribution.  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 for Shares subject to an Award 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.


 


22

















 


CRYSTAL
RIVER CAPITAL, INC. 


2005
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, 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, Restricted Stock, Unrestricted
Stock, a Restricted Stock Unit, a Deferred Stock 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 exist for Participants other than the Manager 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 and 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) 


 

















 


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


 


In the case of the Manager, Cause shall mean events
giving rise to a termination for cause under the Company’s management agreement
with the Manager.


 


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:


 


(a)                                  Approval by the stockholders of the
Company of the dissolution or liquidation of the Company;


 


(b)                                 Approval by the stockholders 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 stockholders 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);


 


(c)                                  Approval by the stockholders 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;


 


(d)                                 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 stockholder 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 stockholders 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


 


(e)                                  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,


 


A-2

















 


unless
the election, or the nomination for election by the Company’s stockholders, 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 (including for these purposes, new members whose election or
nomination was so approved).


 


“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 solely 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
involving an Award intended to satisfy the requirements of Rule 16b-3 (and
not otherwise able to satisfy such requirements), the Committee shall consist
solely of two or more Directors of the Company who are “non-employee directors”
within the meaning of Rule 16b-3.


 


“Company” means Crystal River Capital, Inc., a Maryland corporation.


 


“Consultant” means any natural or non-natural Person, including an
advisor or consultant, who is engaged by the Company, any Affiliate of the
Company, the Manager or any Affiliate of the Manager to render services to the
Company and is compensated for such services.


 


“Continuous Service” means the absence of any interruption or
termination of service as an Employee, Director, Officer 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, Officer and a Consultant will
not constitute an interruption of Continuous Service.


 


“Deferred Stock 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 Participant who


 


(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


 


(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.


 


A-3

















 


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


 


“Employee” means any natural person whom the Company or any
Affiliate of the Company classifies as an employee (including an officer) for
employment tax purposes.  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 Board.


 


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


 


“Incentive Stock 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.


 


“Manager”
means Hyperion Crystal River Capital Advisors, LLC or any successor appointed
to serve as the Company’s manager.


 


A-4

















 


“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.


 


“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 Crystal River Capital, Inc. 2005
Long-term Incentive Plan.


 


“Reporting Person” means an officer, Director, or greater
than ten percent stockholder 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 Stock” means Awards designated as such pursuant
to Section 8 of the Plan.


 


“Restricted Stock Units” mean Awards designated as such 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 “Stock Appreciation Right”
means Awards
granted pursuant to Section 7 of the Plan.


 


“Separation from Service”
has the meaning set forth in Section 9 of the Plan.


 


“Share” means a share of common stock, par value $0.001 per
share, of the Company, as adjusted or substituted 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.


 


A-5

















 


“Unrestricted
Stock” means Awards designated as such pursuant to Section 8 of the Plan.


 


A-6

















 


CRYSTAL RIVER CAPITAL, INC.


 


2005 LONG-TERM INCENTIVE PLAN


 


 


	
   

  	
  As approved by the Board of

  
	
   

  	
  Directors on December 31, 2007

  
	
   

  	
  and by the stockholders on

  
	
   

  	
  February 23, 2005