EX-10.1



 





Exhibit 10.1




HORSEHEAD HOLDING CORP.

2006 LONG-TERM EQUITY INCENTIVE PLAN




1. Purpose.



          This plan shall be known as the Horsehead Holding Corp. 2006 Long-Term Equity Incentive Plan
(the “Plan”). The purpose of the Plan shall be to promote the long-term growth and profitability
of Horsehead Holding Corp. (the “Company”) and its Subsidiaries by (i) providing certain
directors, officers and employees of, and certain other individuals who perform services for, the
Company and its Subsidiaries with incentives to maximize stockholder value and otherwise contribute
to the success of the Company and (ii) enabling the Company to attract, retain and reward the best
available persons for positions of responsibility. Grants of incentive or non-qualified stock
options, stock appreciation rights (“SARs”), restricted stock, restricted stock units, deferred
stock units, performance awards, or any combination of the foregoing may be made under the Plan.



2. Definitions




          (a) “Board of Directors” and “Board” mean the board of directors of the Company.



          (b) “Cause” means the occurrence of one or more of the following events:



               (i) Conviction of a felony or any crime or offense lesser than a felony involving the property
of the Company or a Subsidiary; or



               (ii) Conduct that has caused demonstrable and serious injury to the Company or a Subsidiary,
monetary or otherwise; or



               (iii) Willful refusal to perform or substantial disregard of duties properly assigned, as
determined by the Company or a Subsidiary, as the case may be; or



               (iv) Breach of duty of loyalty to the Company or a Subsidiary or any act of fraud or
dishonesty with respect to the Company or a Subsidiary.



          (c) “Change in Control” means the occurrence of one of the following events:



               (i) if any “person” or “group” as those terms are used in Sections 13(d) and 14(d) of the
Exchange Act or any successors thereto, other than an Exempt Person, is or becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act or any successor thereto), directly or
indirectly, of securities of the Company representing 50% or more of the combined voting power of
the Company’s then outstanding securities; or



               (ii) during any period of two consecutive years, individuals who at the beginning of such
period constitute the Board and any new directors whose election by the Board or nomination for
election by the Company’s stockholders was approved by at least two-thirds of the directors then
still in office who either were directors at the beginning of the period



 









 







or whose election was
previously so approved, cease for any reason to constitute a majority thereof; or



               (iii) consummation of a merger or consolidation of the Company with any other corporation,
other than a merger or consolidation (A) which would result in all or a portion of the voting
securities of the Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the surviving entity) more
than 50% of the combined voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation or (B) by which the corporate
existence of the Company is not affected and following which the Company’s chief executive officer
and directors retain their positions with the Company (and constitute at least a majority of the
Board); or



               (iv) consummation of a plan of complete liquidation of the Company or a sale or disposition by
the Company of all or substantially all the Company’s assets, other than a sale to an Exempt
Person.



          (d) “Code” means the Internal Revenue Code of 1986, as amended.



          (e) “Committee” means the Compensation Committee of the Board, if any, which shall consist
solely of two or more members of the Board, and each member of the Committee shall be (i) a
“non-employee director” within the meaning of Rule 16b-3 under the Exchange Act, unless
administration of the Plan by “non-employee directors” is not then required in order for exemptions
under Rule 16b-3 to apply to transactions under the Plan, (ii) an “outside director” within the
meaning of Section 162(m) of the Code, unless administration of the Plan by “outside directors” is
not then required in order to qualify for tax deductibility under Section 162(m) of the Code, and
(iii) independent, as defined by the rules of the Nasdaq Stock Market or any national securities
exchange on which any securities of the Company are listed for trading, and if not listed for
trading, by the rules of the Nasdaq Stock Market.



          (f) “Common Stock” means the Common Stock, par value $0.01 per share, of the Company, and any
other shares into which such stock may be changed by reason of a recapitalization, reorganization,
merger, consolidation or any other change in the corporate structure or capital stock of the
Company.



          (g) “Competition” is deemed to occur if a person whose employment with the Company or its
Subsidiaries has terminated obtains a position as a full-time or part-time employee of, as a member
of the board of directors of, or as a consultant or advisor with or to, or acquires an ownership
interest in excess of 5% of, a corporation, partnership, firm or other entity that engages in any
of the businesses of the Company or any Subsidiary with which the person was involved in a
management role at any time during his or her last five years of employment with or other service
for the Company or any Subsidiaries.



          (h) “Disability” means a disability that would entitle an eligible participant to payment of
monthly disability payments under any Company disability plan or as otherwise determined by the
Committee.



2









 





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



          (j) “Exempt Person” means any employee benefit plan of the Company or any Subsidiary or a
trustee or other administrator or fiduciary holding securities under an employee benefit plan of
the Company or any Subsidiary.



          (k) “Family Member” has the meaning given to such term in General Instructions A.1(a)(5) to
Form S-8 under the Securities Act of 1933, as amended, and any successor thereto.



          (l) “Fair Market Value” of a share of Common Stock of the Company means, as of the date in
question, the officially-quoted closing selling price of the stock (or if no selling price is
quoted, the bid price) on the principal securities exchange on which the Common Stock is then
listed for trading (including for this purpose the Nasdaq Global Select Market) (the “Market”) for
the applicable trading day or, if the Common Stock is not then listed or quoted in the Market, the
Fair Market Value shall be the fair value of the Common Stock determined in good faith by the
Board; provided, however, that when shares received upon exercise of an option are immediately sold
in the open market, the net sale price received may be used to determine the Fair Market Value of
any shares used to pay the exercise price or applicable withholding taxes and to compute the
withholding taxes.



          (m) “Incentive Stock Option” means an option conforming to the requirements of Section 422 of
the Code and any successor thereto.



          (n) “Non-Employee Director” has the meaning given to such term in Rule 16b-3 under the
Exchange Act and any successor thereto.



          (o) “Non-qualified Stock Option” means any stock option other than an Incentive Stock Option.



          (p) “Other Company Securities” mean securities of the Company other than Common Stock, which
may include, without limitation, unbundled stock units or components thereof, debentures, preferred
stock, warrants and securities convertible into or exchangeable for Common Stock or other property.



          (q) “Retirement” means retirement as defined under any Company pension plan or retirement
program or termination of one’s employment on retirement with the approval of the Committee.



          (r) “Subsidiary” means a corporation or other entity of which outstanding shares or ownership
interests representing 50% or more of the combined voting power of such
corporation or other entity entitled to elect the management thereof, or such lesser
percentage as may be approved by the Committee, are owned directly or indirectly by the Company.



3









 





3. Administration.




          The Plan shall be administered by the Committee, if any; provided that the Board may, in its
discretion, at any time and from time to time, resolve to administer the Plan, in which case the
term “Committee” shall be deemed to mean the Board for all purposes herein. Subject to the
provisions of the Plan, the Committee shall be authorized to (i) select persons to participate in
the Plan, (ii) determine the form and substance of grants made under the Plan to each participant,
and the conditions and restrictions, if any, subject to which such grants will be made, (iii)
certify that the conditions and restrictions applicable to any grant have been met, (iv) modify the
terms of grants made under the Plan, (v) interpret the Plan and grants made thereunder, (vi) make
any adjustments necessary or desirable in connection with grants made under the Plan to eligible
participants located outside the United States and (vii) adopt, amend, or rescind such rules and
regulations, and make such other determinations, for carrying out the Plan as it may deem
appropriate. Decisions of the Committee on all matters relating to the Plan shall be in the
Committee’s sole discretion and shall be conclusive and binding on all parties. The validity,
construction, and effect of the Plan and any rules and regulations relating to the Plan shall be
determined in accordance with applicable federal and state laws and rules and regulations
promulgated pursuant thereto and the rules and regulations of the principal securities exchange on
which the Common Stock is then listed for trading. No member of the Committee and no officer of
the Company shall be liable for any action taken or omitted to be taken by such member, by any
other member of the Committee or by any officer of the Company in connection with the performance
of duties under the Plan, except for such person’s own willful misconduct or as expressly provided
by statute.



          The expenses of the Plan shall be borne by the Company. The Plan shall not be required to
establish any special or separate fund or make any other segregation of assets to assume the
payment of any award under the Plan, and rights to the payment of such awards shall be no greater
than the rights of the Company’s general creditors.



4. Shares Available for the Plan.




          Subject to adjustments as provided in Section 16 hereof, an aggregate of one million one
hundred thousand one two hundred seventy-nine (1,101,279) shares of Common Stock may be issued
pursuant to the Plan (collectively, the “Shares”). Notwithstanding the foregoing, the maximum
aggregate number of Shares that may be issued pursuant to Incentive Stock Options under the Plan
shall not exceed one million one hundred thousand one two hundred seventy-nine (1,101,279) (subject
to adjustments as provided in Section 16 hereof).



          Such Shares may be in whole or in part authorized and unissued or held by the Company as
treasury shares. If any grant under the Plan expires or terminates unexercised, becomes
unexercisable or is forfeited as to any Shares, or is tendered or withheld as to any shares in
payment of the exercise price of the grant or the taxes payable with respect to the exercise, then
such unpurchased, forfeited, tendered or withheld Shares shall thereafter be available for further
grants under the Plan.



          Without limiting the generality of the foregoing provisions of this Section 4 or the
generality of the provisions of Sections 3, 6 or 18 or any other section of this Plan, the



4









 







Committee may, at any time or from time to time, and on such terms and conditions (that are
consistent with and not in contravention of the other provisions of this Plan) as the Committee
may, in its sole discretion, determine, enter into agreements (or take other actions with respect
to the options) for new options containing terms (including exercise prices) more (or less)
favorable than the outstanding options.



5. Participation.




          Participation in the Plan shall be limited to those directors (including Non-Employee
Directors), officers (including non-employee officers) and employees of, and other individuals
performing services for, the Company and its Subsidiaries selected by the Committee (including
participants located outside the United States). Nothing in the Plan or in any grant thereunder
shall confer any right on a participant to continue in the service or employ as a director or
officer of or in the performance of services for the Company or a Subsidiary or shall interfere in
any way with the right of the Company or a Subsidiary to terminate the employment or performance of
services or to reduce the compensation or responsibilities of a participant at any time. By
accepting any award under the Plan, each participant and each person claiming under or through him
or her shall be conclusively deemed to have indicated his or her acceptance and ratification of,
and consent to, any action taken under the Plan by the Company, the Board or the Committee.



          Incentive Stock Options or Non-qualified Stock Options, SARs, restricted stock awards,
restricted stock unit or deferred stock unit awards, performance awards, or any combination
thereof, may be granted to such persons and for such number of Shares as the Committee shall
determine (such individuals to whom grants are made being sometimes herein called “optionees” or
“grantees,” as the case may be). Determinations made by the Committee under the Plan need not be
uniform and may be made selectively among eligible individuals under the Plan, whether or not such
individuals are similarly situated. A grant of any type made hereunder in any one year to an
eligible participant shall neither guarantee nor preclude a further grant of that or any other type
to such participant in that year or subsequent years.



6. Incentive and Non-qualified Options.




          The Committee may from time to time grant to eligible participants Incentive Stock Options,
Non-qualified Stock Options, or any combination thereof; provided that the Committee may grant
Incentive Stock Options only to eligible employees of the Company or its subsidiaries (as defined
for this purpose in Section 422(a)(2) of the Code or any successor thereto). In any one calendar
year, the Committee shall not grant to any one participant options to purchase a number of shares
of Common Stock in excess of eight hundred thousand (800,000) (as adjusted pursuant to Section 16
hereof). The options granted shall take such form as the Committee shall determine, subject to the
following terms and conditions.



          It is the Company’s intent that Non-qualified Stock Options granted under the Plan not be
classified as Incentive Stock Options, that Non-qualified Stock Options not give rise to plan
failure income inclusion under Section 409A(a)(1) of the Code, that Incentive Stock Options be
consistent with and contain or be deemed to contain all provisions required under Section 422 of
the Code and any successor thereto, and that any ambiguities in construction be



5









 







interpreted in
order to effectuate such intent. If an Incentive Stock Option granted under the Plan does not
qualify as such for any reason, then to the extent of such non-qualification, the stock option
represented thereby shall be regarded as a Non-qualified Stock Option duly granted under the Plan,
provided that such stock option otherwise meets the Plan’s requirements for Non-qualified Stock
Options.



          (a) Price. The price per Share deliverable upon the exercise of each option (“exercise
price”) may not be less than 100% of the Fair Market Value of a share of Common Stock as of the
date of grant of the option, and in the case of the grant of any Incentive Stock Option to an
employee who, at the time of the grant, owns more than 10% of the total combined voting power of
all classes of stock of the Company or any of its Subsidiaries, the exercise price may not be less
than 110% of the Fair Market Value of a share of Common Stock as of the date of grant of the
option, in each case unless otherwise permitted by Section 422 of the Code or any successor
thereto.



          (b) Payment. Options may be exercised, in whole or in part, upon payment of the exercise
price of the Shares to be acquired. Unless otherwise determined by the Committee, payment shall be
made (i) in cash (including check, bank draft, money order or wire transfer of immediately
available funds), (ii) by delivery of outstanding shares of Common Stock with a Fair Market Value
on the date of exercise equal to the aggregate exercise price payable with respect to the options’
exercise, (iii) by simultaneous sale through a broker reasonably acceptable to the Committee of
Shares acquired on exercise, as permitted under Regulation T of the Federal Reserve Board or (iv)
by any combination of the foregoing.



          In the event a grantee elects to pay the exercise price payable with respect to an option
pursuant to clause (ii) above, (A) only a whole number of share(s) of Common Stock (and not
fractional shares of Common Stock) may be tendered in payment, (B) such grantee must
present evidence acceptable to the Company that he or she has owned any such shares of Common
Stock tendered in payment of the exercise price (and that such tendered shares of Common Stock have
not been subject to any substantial risk of forfeiture) for at least six months prior to the date
of exercise, and (C) Common Stock must be delivered to the Company. Delivery for this purpose may,
at the election of the grantee, be made either by (1) physical delivery of the certificate(s) for
all such shares of Common Stock tendered in payment of the price, accompanied by duly executed
instruments of transfer in a form acceptable to the Company, or (2) direction to the grantee’s
broker to transfer, by book entry, such shares of Common Stock from a brokerage account of the
grantee to a brokerage account specified by the Company. When payment of the exercise price is
made by delivery of Common Stock, the difference, if any, between the aggregate exercise price
payable with respect to the option being exercised and the Fair Market Value of the shares of
Common Stock tendered in payment (plus any applicable taxes) shall be paid in cash. No grantee may
tender shares of Common Stock having a Fair Market Value exceeding the aggregate exercise price
payable with respect to the option being exercised (plus any applicable taxes).



          (c) Terms of Options. The term during which each option may be exercised shall be
determined by the Committee, but if required by the Code and except as otherwise provided herein,
no option shall be exercisable in whole or in part more than ten years from the



6









 







date it is granted,
and no Incentive Stock Option granted to an employee who at the time of the grant owns more than
10% of the total combined voting power of all classes of stock of the Company or any of its
Subsidiaries shall be exercisable more than five years from the date it is granted. All rights to
purchase Shares pursuant to an option shall, unless sooner terminated, expire at the date
designated by the Committee. The Committee shall determine the date on which each option shall
become exercisable and may provide that an option shall become exercisable in installments. The
Shares constituting each installment may be purchased in whole or in part at any time after such
installment becomes exercisable, subject to such minimum exercise requirements as may be designated
by the Committee. Prior to the exercise of an option and delivery of the Shares represented
thereby, the optionee shall have no rights as a stockholder with respect to any Shares covered by
such outstanding option (including any dividend or voting rights).



          (d) Limitations on Grants. If required by the Code, the aggregate Fair Market Value
(determined as of the grant date) of Shares for which an Incentive Stock Option is exercisable for
the first time by any individual during any calendar year under all equity incentive plans of the
Company and its Subsidiaries (as defined in Section 422 of the Code or any successor thereto) may
not exceed $100,000.



          (e) Termination.



               (i) Death or Disability



               (i) . If a participant ceases to be a director, officer or employee of, or to perform other
services for, the Company or any Subsidiary due to death or Disability, all of the participant’s
options and SARs shall become fully vested and exercisable and shall remain so for a period of 180
days from the date of such death or Disability, but in no event after the expiration date of the
options and SARs; provided that the participant does not engage in Competition during such 180-day
period unless he or she received written consent to do so from the Board or the Committee; provided
further that the Board or Committee may extend such exercise period (and related non-competition
period) in its discretion, but in no event may such extended exercise period extend beyond the
expiration date of the options. Notwithstanding the foregoing, if the Disability giving rise to
the termination of employment is not within the meaning of Section 22(e)(3) of the Code or any
successor thereto, Incentive Stock Options not exercised by such participant within 90 days after
the date of termination of employment will cease to qualify as Incentive Stock Options and will be
treated as Non-qualified Stock Options under the Plan if required to be so treated under the Code.



               (ii) Retirement. If a participant ceases to be a director, officer or employee of, or to
perform other services for, the Company or any Subsidiary upon the occurrence of his or her
Retirement, (A) all of the participant’s options and SARs that were exercisable on the date of
Retirement shall remain exercisable for, and shall otherwise terminate at the end of, a period of
90 days after the date of Retirement, but in no event after the expiration date of the options or SARs; provided that the participant does not engage in Competition during such 90 day period unless
he or she receives written consent to do so from the Board or the Committee; provided further that
the Board or Committee may extend such exercise period (and related non-competition period) in its
discretion, but in no event may such extended exercise period extend beyond the expiration date of
the options, and (B) all of the participant’s options



7









 







and SARs that were not exercisable on the
date of Retirement shall be forfeited immediately upon such Retirement; provided, however, that
such options and SARs may become fully vested and exercisable in whole or in part in the discretion
of the Committee. Notwithstanding the foregoing, Incentive Stock Options not exercised by such
participant within 90 days after Retirement will cease to qualify as Incentive Stock Options and
will be treated as Non-qualified Stock Options under the Plan if required to be so treated under
the Code.



               (iii) Discharge for Cause. If a participant ceases to be a director, officer or employee
of, or to perform other services for, the Company or a Subsidiary due to Cause, all of the
participant’s options and SARs shall expire and be forfeited immediately upon such cessation,
whether or not then exercisable.



               (iv) Other Termination. Unless otherwise determined by the Committee, if a participant
ceases to be a director, officer or employee of, or to otherwise perform services for, the Company
or a
Subsidiary for any reason other than death, Disability, Retirement or Cause, (A) all of the
participant’s options and SARs that were exercisable on the date of such cessation shall remain
exercisable for, and shall otherwise terminate at the end of, a period of 30 days after the date of
such cessation, but in no event after the expiration date of the options or SARs; provided that the
participant does not engage in Competition during such 30-day period unless he or she receives
written consent to do so from the Board or the Committee; provided further that the Board or
Committee may extend such exercise period (and related non-competition period) in its discretion,
but in no event may such extended exercise period extend beyond the expiration date of the options,
and (B) all of the participant’s options and SARs that were not exercisable on the date of such
cessation shall be forfeited immediately upon such cessation. Notwithstanding the foregoing,
Incentive Stock Options not exercised within 90 days after termination will cease to qualify as an
Incentive Stock Option and will be treated as a Non-qualified Stock Option under the Plan if
required to be so treated under the Code.



               (v) Change in Control. If there is a Change in Control of the Company and a participant
is terminated other than for Cause from being a director, officer or employee of, or from
performing other services for, the Company or a Subsidiary within one year after such Change in
Control, all of the participant’s options and SARs shall become fully vested and exercisable upon
such termination and shall remain so for up to one year after the date of termination, but in no
event after the expiration date of the options or SARs. In addition, the Committee shall have the
authority to grant options and SARs that become fully vested and exercisable automatically upon a
Change in Control, whether or not the grantee is subsequently terminated. Notwithstanding the
foregoing, Incentive Stock Options not exercised within 90 days after a participant’s termination
will cease to qualify as an Incentive Stock Option and will be treated as a Non-qualified Stock
Option under the Plan if required to be so treated under the Code.



          (f) Forfeiture. If a participant exercises any of his or her options and SARs and, within
one year thereafter, either (i) is terminated from the Company or a Subsidiary for any of the
reasons specified in the definition of “Cause” set forth in Section 2(b), or (ii) engages in
Competition without having received written consent to do so from the Board or the Committee, then
the participant may, in the discretion of the Committee, be required to pay the Company the



8









 







gain
represented by the difference between the aggregate selling price of the Shares acquired upon the
exercise of options or SARs (or, if the Shares were not then sold, their aggregate Fair Market
Value on the date of exercise) and the aggregate exercise price of the options or SARs exercised
(the “Option Gain”), without regard to any subsequent increase or decrease in the Fair Market Value
of the Common Stock. In addition, the Company may, in its discretion, deduct from any payment of
any kind (including salary or bonus) otherwise due to any such participant an amount equal to the
Option Gain.



          (g) Grant of Reload Options The Committee may provide (either at the time of grant or exercise of an option), in its
discretion, for the grant to a grantee who exercises all or any portion of an option (“Exercised
Options”) and who pays all or part of such exercise price with shares of Common Stock, of an
additional option (a “Reload Option”) for a number of shares of Common Stock equal to the sum (the
“Reload Number”) of the number of shares of Common Stock tendered for the Exercised Options plus,
if so provided by the Committee, the number of shares of Common Stock, if any, tendered by the
grantee in connection with the exercise of the Exercised Options to satisfy any federal, state or
local tax withholding requirements. The terms of each Reload Option, including the date of its
expiration and the terms and conditions of its exercisability and transferability, shall be the
same as the terms of the Exercised Option to which it relates, except that (i) the grant date for
each Reload Option shall be the date of exercise of the Exercised Option to which it relates and
(ii) the exercise price for each Reload Option shall be the Fair Market Value of the Common Stock
on the grant date of the Reload Option.


7. Stock Appreciation Rights. The Committee shall have the authority to grant SARs under
this Plan. SARs shall be subject to such terms and conditions as the Committee may specify;
provided that (1) the exercise price of an SAR may never be less than the Fair Market Value of the
Shares subject to the SAR on the date the SAR is granted, (2) the Shares are traded on an
established securities market, and (3) no SAR may include any feature for the deferral of
compensation other than the deferral of recognition of income until the exercise of the SAR.




     Prior to the exercise of the SAR, the participant shall have no rights as a stockholder with
respect to Shares covered by such outstanding SAR (including any dividend or voting rights).



     Upon the exercise of an SAR, the participant shall be entitled to a distribution in an amount
equal to (A) the difference between the Fair Market Value of a share of Common Stock on the date of
exercise and the exercise price of the SAR multiplied by (B) the number of Shares as to which the
SAR is exercised.



     All SARs will be exercised automatically on the last day prior to the expiration date of the
SAR so long as the Fair Market Value of a share of Common Stock on that date exceeds the exercise
price of the SAR.



8. Restricted Stock.




          The Committee may at any time and from time to time grant Shares of restricted stock under the
Plan to such participants and in such amounts as it determines. Each grant of Shares of restricted
stock shall specify the applicable restrictions on such Shares, the duration of



9









 







such restrictions
(which shall be at least six months except as otherwise determined by the Committee or provided in
the third paragraph of this Section 8), and the time or times at which such restrictions shall
lapse with respect to all or a specified number of Shares that are part of the grant.



          The participant will be required to pay the Company the aggregate par value of any Shares of
restricted stock (or such larger amount as the Board may determine to constitute capital under
Section 154 of the Delaware General Corporation Law, as amended, or any successor thereto) within
ten days of the date of grant, unless such Shares of restricted stock are treasury shares. Unless
otherwise determined by the Committee, certificates representing Shares of restricted stock granted
under the Plan will be held in escrow by the Company on the participant’s behalf during any period
of restriction thereon and will bear an appropriate legend specifying the applicable restrictions
thereon, and the participant will be required to execute a blank stock power therefor. Except as
otherwise provided by the Committee, during such period of restriction the participant shall have
all of the rights of a holder of Common Stock, including but not limited to the rights to receive
dividends (so long as such dividends are paid by March 15 of the year following the year in which
the participant’s right to receive the dividend vests) and to vote, and any stock or other
securities received as a distribution with respect to such participant’s restricted stock shall be
subject to the same restrictions as then in effect for the restricted stock.



          Except as otherwise provided by the Committee, if a participant ceases to be a director,
officer or employee of, or to otherwise perform services for, the Company and its Subsidiaries due
to death, Disability or Retirement during any period of restriction, all restrictions on Shares of
restricted stock granted to such participant shall lapse. At such time as a participant ceases to
be a director, officer or employee of, or otherwise performing services for, the Company or its
Subsidiaries for any other reason, all Shares of restricted stock granted to such participant on
which the restrictions have not lapsed shall be immediately forfeited to the Company.



          If there is a Change in Control of the Company and a participant is terminated other than for
Cause from being a director, officer or employee of, or from performing other services for, the
Company or a subsidiary within one year after such Change in Control, all restrictions on Shares of
restricted stock granted to such participant shall lapse. In addition, the Committee shall have
the authority to grant shares of restricted stock with respect to which all restrictions shall
lapse automatically upon a Change in Control, whether or not the grantee is subsequently
terminated.



9. Restricted Stock Units; Deferred Stock Units.




          The Committee may at any time and from time to time grant restricted stock units under the
Plan to such participants and in such amounts as it determines. Each grant of restricted stock
units shall specify the applicable restrictions on such units, the duration of such restrictions
(which shall be at least six months except as otherwise determined by the Committee or provided in
the third paragraph of this Section 9), and the time or times at which such restrictions shall
lapse with respect to all or a specified number of units that are part of the grant.



10









 





          Each restricted stock unit shall be equivalent in value to one share of Common Stock and shall
entitle the participant to receive from the Company at the end of the vesting period (the “Vesting
Period”) applicable to such unit one Share, unless the participant elects in a timely
fashion to defer the receipt of such Shares, as provided below. Restricted stock units may be
granted without payment of cash or consideration to the Company; provided that participants shall
be required to pay to the Company the aggregate par value of the Shares received from the Company
within ten days of the issuance of such Shares unless such Shares are treasury shares.



          Except as otherwise provided by the Committee, during the Vesting Period the participant shall
not have any rights as a shareholder of the Company; provided that the participant shall have the
right to receive accumulated dividends (so long as such dividends are paid by March 15 of the year
following the year in which the participant’s right to receive the dividend vests) or distributions
with respect to the corresponding number of shares of Common Stock underlying each restricted stock
unit at the end of the Vesting Period, unless such restricted stock units are converted into
deferred stock units, in which case such accumulated dividends or distributions shall be paid by
the Company to the participant at such time as the deferred stock units are converted into Shares.



          Except as otherwise provided by the Committee, if a participant ceases to be a director,
officer or employee of, or to otherwise perform services for, the Company or any Subsidiary due to
death, Disability or Retirement during any Vesting Period, all restrictions on restricted stock
units granted to such participant shall lapse and the participant shall then be entitled to receive
payment in Shares with respect to the applicable restricted stock units. At such time as a
participant ceases to be a director, officer or employee of, or otherwise performing services for,
the Company or any Subsidiary for any other reason, all restricted stock units granted to such
participant on which the restrictions have not lapsed shall be immediately forfeited to the
Company.



          If there is a Change in Control of the Company and a participant is terminated other than for
Cause from being a director, officer or employee of, or from performing other services for, the
Company or any Subsidiary within one year after such Change in Control, all restrictions on
restricted stock units granted to such participant shall lapse. In addition, the Committee shall
have the authority to grant restricted stock units with respect to which all restrictions shall
lapse automatically upon a Change in Control, whether or not the grantee is subsequently
terminated.



          A participant may elect by written notice to the Company, which notice must be made before the
later of (i) the close of the tax year preceding the year in which the restricted stock units are
granted or (ii) 30 days of first becoming eligible to participate in the Plan (or, if earlier, the
last day of the tax year in which the participant first becomes eligible to participate in the
plan) and on or prior to the date the restricted stock units are granted, to defer the receipt of
all or a portion of the Shares due with respect to the vesting of such restricted stock units;
provided that the Committee may impose such additional restrictions with respect to the time at
which a participant may elect to defer receipt of Shares subject to the deferral election, and any
other terms with respect to a grant of restricted stock units to the extent the Committee deems
necessary to enable the participant to defer recognition of income with respect to such units until



11









 







the Shares underlying such units are issued or distributed to the participant. Upon such deferral,
the restricted stock units so deferred shall be converted into deferred stock units. Except as
provided
below, delivery of Shares with respect to deferred stock units shall be made at the end of the
deferral period set forth in the participant’s deferral election notice (the “Deferral Period”).
Deferral Periods shall be no less than one year after the vesting date of the applicable restricted
stock units.



          Except as otherwise provided by the Committee, during such Deferral Period the participant
shall not have any rights as a shareholder of the Company; provided that, the participant shall
have the right to receive accumulated dividends or distributions with respect to the corresponding
number of shares of Common Stock underlying each deferred stock unit at the end of the Deferral
Period when such deferred stock units are converted into Shares.



          Except as otherwise provided by the Committee, if a participant ceases to be a director,
officer or employee of, or to otherwise perform services for, the Company or any Subsidiary upon
his or her death prior to the end of the Deferral Period, the participant shall receive payment in
Shares in respect of such participant’s deferred stock units which would have matured or been
earned at the end of such Deferral Period as if the applicable Deferral Period had ended as of the
date of such participant’s death.



          Except as otherwise provided by the Committee, if a participant ceases to be a director,
officer or employee of, or to otherwise perform services for, the Company or any Subsidiary upon
becoming disabled (as defined under Section 409A(a)(2)(C) of the Code) or Retirement or for any
other reason except termination for Cause prior to the end of the Deferral Period, the participant
shall receive payment in Shares in respect of such participant’s deferred stock units at the end of
the applicable Deferral Period or on such accelerated basis as the Committee may determine, to the
extent permitted by regulations issued under Section 409A(a)(3) of the Code.



          Except as otherwise provided by the Committee, if a participant ceases to be a director,
officer or employee of, or to otherwise perform services for, the Company or any Subsidiary due to
termination for Cause such participant shall immediately forfeit any deferred stock units which
would have matured or been earned at the end of the applicable Deferral Period.



          Except as otherwise provided by the Committee, in the event of a Change in Control that also
constitutes a “change in the ownership or effective control of” the Company, or a change in the
ownership of a substantial portion of the Company’s assets (in each case as determined under
regulations issued pursuant to Section 409A(a)(2)(A)(v) of the Code), a participant shall receive
payment in Shares in respect of such participant’s deferred stock units which would have matured or
been earned at the end of the applicable Deferral Period as if such Deferral Period had ended
immediately prior to the Change in Control; provided, however, that if an event that constitutes a
Change in Control hereunder does not constitute a “change in control” under Section 409A of the
Code (or the regulations promulgated thereunder), no payments with respect to the deferred stock
units shall be made under this paragraph to the extent such payments would constitute an
impermissible acceleration under Section 409A of the Code.



12









 





10. Performance Awards.




          Performance awards may be granted to participants at any time and from time to time as
determined by the Committee. The Committee shall have complete discretion in determining the size
and composition of performance awards granted to a participant. The period over which performance
is to be measured (a “performance cycle”) shall commence on the date specified by the Committee and
shall end on the last day of a fiscal year specified by the Committee. A performance award shall
be paid no later than the 15th day of the third month following the completion of a
performance cycle. Performance awards may include (i) specific dollar-value target awards, (ii)
performance units, the value of each such unit being determined by the Committee at the time of
issuance, and/or (iii) performance Shares, the value of each such Share being equal to the Fair
Market Value of a share of Common Stock.



          The value of each performance award may be fixed or it may be permitted to fluctuate based on
a performance factor (e.g., return on equity) selected by the Committee.



          The Committee shall establish performance goals and objectives for each performance cycle on
the basis of such criteria and objectives as the Committee may select from time to time, including,
without limitation, the performance of the participant, the Company, one or more of its
Subsidiaries or divisions or any combination of the foregoing. During any performance cycle, the
Committee shall have the authority to adjust the performance goals and objectives for such cycle
for such reasons as it deems equitable.



          The Committee shall determine the portion of each performance award that is earned by a
participant on the basis of the Company’s performance over the performance cycle in relation to the
performance goals for such cycle. The earned portion of a performance award may be paid out in
Shares, cash, Other Company Securities, or any combination thereof, as the Committee may determine.



          A participant must be a director, officer or employee of, or otherwise perform services for,
the Company or its Subsidiaries at the end of the performance cycle in order to be entitled to
payment of a performance award issued in respect of such cycle; provided, however, that except as
otherwise determined by the Committee, if a participant ceases to be a director, officer or
employee of, or to otherwise perform services for, the Company and its Subsidiaries upon his or her
death, Retirement, or Disability prior to the end of the performance cycle, the participant shall
earn a proportionate portion of the performance award based upon the elapsed portion of the
performance cycle and the Company’s performance over that portion of such cycle.



          In the event of a Change in Control, a participant shall earn no less than the portion of the
performance award that the participant would have earned if the applicable performance cycle(s) had
terminated as of the date of the Change in Control.



11. Withholding Taxes.




          (a)Participant Election. Unless otherwise determined by the Committee, a participant may elect
to deliver shares of Common Stock (or have the Company withhold shares



13









 







acquired upon exercise of an
option or SAR or deliverable upon grant or vesting of restricted stock, as the case may be) to
satisfy, in whole or in part, the amount the Company is required to withhold for taxes in
connection with the exercise of an option or SAR or the delivery of restricted stock upon grant or
vesting, as the case may be. Such election must be made on or before the date the amount of tax to
be withheld is determined. Once made, the election shall be irrevocable. The fair market value of
the shares to be withheld or delivered will be the Fair Market Value as of the date the amount of
tax to be withheld is determined. In the event a participant elects to deliver or have the Company
withhold shares of Common Stock pursuant to this Section 11(a), such delivery or withholding must
be made subject to the conditions and pursuant to the procedures set forth in Section 6(b) with
respect to the delivery or withholding of Common Stock in payment of the exercise price of options.



          (b) Company Requirement. The Company may require, as a condition to any grant or exercise under
the Plan or to the delivery of certificates for Shares issued hereunder, that the grantee make
provision for the payment to the Company, either pursuant to Section 11(a) or this Section 11(b),
of federal, state or local taxes of any kind required by law to be withheld with respect to any
grant or delivery of Shares. The Company, to the extent permitted or required by law, shall have
the right to deduct from any payment of any kind (including salary or bonus) otherwise due to a
grantee, an amount equal to any federal, state or local taxes of any kind required by law to be
withheld with respect to any grant or delivery of Shares under the Plan.



12. Written Agreement; Vesting.




          Unless the Committee determines otherwise, each participant to whom a grant is made under the
Plan shall enter into a written agreement with the Company that shall contain such provisions,
including without limitation vesting requirements, consistent with the provisions of the Plan, as
may be approved by the Committee. Unless the Committee determines otherwise and except as
otherwise provided in Sections 6, 7, 8, 9 and 10 in connection with a Change in Control or certain
occurrences of termination, no grant under this Plan may be exercised, and no restrictions relating
thereto may lapse, within six months of the date such grant is made.



13. Transferability.




          Unless the Committee determines otherwise, no award granted under the Plan shall be
transferable by a participant other than by will or the laws of descent and distribution or to a
participant’s Family Member by gift or a qualified domestic relations order as defined by the Code.
Unless the Committee determines otherwise, an option or SAR may be exercised only by the optionee
or grantee thereof; by his or her Family Member if such person has acquired the option or SAR by
gift or qualified domestic relations order; by the executor or administrator of the estate of any
of the foregoing or any person to whom the option or SAR is transferred by will or the laws of
descent and distribution; or by the guardian or legal representative of any of the foregoing;
provided that Incentive Stock Options may be exercised by any Family Member, guardian or legal
representative only if permitted by the Code and any regulations thereunder. All provisions of
this Plan shall in any event continue to apply to any award granted under the Plan and transferred
as permitted by this Section 13, and any transferee of any such award shall



14









 







be bound by all
provisions of this Plan as and to the same extent as the applicable original grantee.



14. Listing, Registration and Qualification.




          If the Committee determines that the listing, registration or qualification upon any
securities exchange or under any law of Shares subject to any option, SAR, performance award,
restricted stock unit, deferred stock unit or restricted stock grant is necessary or desirable as a
condition of, or in connection with, the granting of same or the issue or purchase of Shares
thereunder, no such option or SAR may be exercised in whole or in part, no such performance award
may be paid out, and no Shares may be issued, unless such listing, registration or qualification is
effected free of any conditions not acceptable to the Committee.



15. Transfer of Employee.




          The transfer of an employee from the Company to a Subsidiary, from a Subsidiary to the
Company, or from one Subsidiary to another shall not be considered a termination of employment; nor
shall it be considered a termination of employment if an employee is placed on military or sick
leave or such other leave of absence which is considered by the Committee as continuing intact the
employment relationship.



16. Adjustments.




          In the event of a reorganization, recapitalization, stock split, stock dividend, combination
of Shares, merger, consolidation, distribution of assets, or any other change in the corporate
structure or shares of the Company, the Committee shall make such adjustment as it deems
appropriate in the number and kind of Shares or other property available for issuance under the
Plan (including, without limitation, the total number of Shares available for issuance under the
Plan pursuant to Section 4), in the number and kind of options, SARs, Shares, restricted stock
units, deferred stock units or other property covered by grants previously made under the Plan, and
in the exercise price of outstanding options or SARS; provided, however, that the Committee
shall not be required to make any adjustment that would (i) require the inclusion of any
compensation deferred pursuant to provisions of the Plan (or an award thereunder) in a
participant’s gross income pursuant to Section 409A of the Code and the regulations issued
thereunder from time to time and/or (ii) cause any award made pursuant to the Plan to be treated as
providing for the deferral of compensation pursuant to such Code section and regulations. Any such
adjustment shall be final, conclusive and binding for all purposes of the Plan. In the event of
any merger, consolidation or other reorganization in which the Company is not the surviving or
continuing corporation or in which a Change in Control is to occur, all of the Company’s
obligations regarding awards that were granted hereunder and that are outstanding on the date of
such event shall, on such terms as may be approved by the Committee prior to such event, be (a)
canceled in exchange for cash or other property (but, with respect to vested deferred stock units,
only if such merger, consolidation, other reorganization, or Change in Control constitutes a
“change in ownership or control” of the Company or a “change in the ownership of a substantial
portion” of the Company’s assets, as determined pursuant to regulations issued under Section
409A(a)(2)(A)(v) of the Code) or (b) assumed by the surviving or continuing corporation.



15









 





          Without limitation of the foregoing, in connection with any transaction of the type specified
by clause (iii) of the definition of a Change in Control in Section 2(c) that also constitutes a
“change in ownership or control” of the Company or a “change in the ownership of a substantial
portion” of the Company’s assets, as determined pursuant to regulations issued under Section
409A(a)(2)(A)(v) of the Code, the Committee may, in its discretion, (i) cancel any or all
outstanding options under the Plan in consideration for payment to the holders thereof of an amount
equal to the portion of the consideration that would have been payable to such holders pursuant to
such transaction if their options had been fully exercised immediately prior to such transaction,
less the aggregate exercise price that would have been payable therefor, or (ii) if the amount that
would have been payable to the option holders pursuant to such transaction if their options had
been fully exercised immediately prior thereto would be equal to or less than the aggregate
exercise price that would have been payable therefor, cancel any or all such options for no
consideration or payment of any kind. Payment of any amount payable pursuant to the preceding
sentence may be made in cash or, in the event that the consideration to be received in such
transaction includes securities or other property, in cash and/or securities or other property in
the Committee’s discretion.



17. Amendment and Termination of the Plan.




          The Board of Directors or the Committee, without approval of the stockholders, may amend or
terminate the Plan, except that no amendment shall become effective without prior approval of the
stockholders of the Company if stockholder approval would be required by applicable law or
regulations or by any listing requirement of the principal stock exchange on which the Common Stock
is then listed.



          Notwithstanding any other provisions of the Plan, and in addition to the powers of amendment
set forth in this Section 17 and Section 18 hereof or otherwise, the provisions hereof
and the provisions of any award made hereunder may be amended unilaterally by the Committee
from time to time to the extent necessary (and only to the extent necessary) to prevent the
implementation, application or existence (as the case may be) of any such provision from (i)
requiring the inclusion of any compensation deferred pursuant to the provisions of the Plan (or an
award thereunder) in a participant’s gross income pursuant to Section 409A of the Code, and the
regulations issued thereunder from time to time and/or (ii) inadvertently causing any award
hereunder to be treated as providing for the deferral of compensation pursuant to such Code section
and regulations.



18. Amendment or Substitution of Awards under the Plan. 




     The terms of any outstanding award under the Plan may be amended from time to time by the
Committee in its discretion in any manner that it deems appropriate, including, but not limited to,
acceleration of the date of exercise of any award and/or payments thereunder or of the date of
lapse of restrictions on Shares (but only to the extent permitted by regulations issued under
Section 409A(a)(3) of the Code); provided that, except as otherwise provided in Section 16, no such
amendment shall adversely affect in a material manner any right of a participant under the award
without his or her written consent, and provided further that the Committee shall not reduce the
exercise price of any options or SARs awarded under the Plan without approval of the stockholders
of the Company. The Committee may, in its discretion, permit holders of awards under the Plan to
surrender outstanding awards in order to exercise or realize rights under other awards, or in
exchange for the grant of new awards, or require holders of



16









 







awards to surrender outstanding awards
as a condition precedent to the grant of new awards under the Plan, but only if such surrender,
exercise, realization, exchange, or grant (a) would not constitute a distribution of deferred
compensation for purposes of Section 409A(a)(3) of the Code or (b) constitutes a distribution of
deferred compensation that is permitted under regulations issued pursuant to Section 409A(a)(3) of
the Code.



19. Commencement Date; Termination Date.




          The plan shall commence on the date of and immediately prior to execution and delivery by the
Company of that certain Purchase/Placement Agreement (the “Purchase/Placement Agreement”) by and
between the Company and Friedman, Billings, Ramsey & Co., Inc. (“FBR”) pursuant to which the
Company will sell shares of its common stock to FBR and certain other purchasers. If required by
the Code, the Plan will also be subject to reapproval by the shareholders of the Company prior to
the time required under the Code.



          Unless previously terminated upon the adoption of a resolution of the Board terminating the
Plan, the Plan shall terminate at the close of business on the ten year anniversary of the date of
the Purchase/Placement Agreement. No termination of the Plan shall materially and adversely affect
any of the rights or obligations of any person, without his or her written consent, under any grant
of options or other incentives theretofore granted under the Plan.


20. Severability. Whenever possible, each provision of the Plan shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision of the Plan is held
to be prohibited by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder of the Plan.



21. Governing Law. The Plan shall be governed by the corporate laws of the State of Delaware,
without giving effect to any choice of law provisions that might otherwise refer construction or
interpretation of the Plan to the substantive law of another jurisdiction.





17