Document:

EX-10.1

EXHIBIT 10.1

SEPARATION AGREEMENT

AGREEMENT (the “Agreement”), dated as of March 13, 2009 between CRM Holdings, Ltd., a Bermuda
company (together with its subsidiaries from time to time and its successors and assigns, the
“Company”), and Daniel G. Hickey, Jr. (the “Executive”).

W I T N E S S E T H:

WHEREAS Executive and the Company are currently parties to an Employment Agreement;

WHEREAS Executive and the Company have agreed that Executive will resign from the Company as
of the Resignation Date; and

WHEREAS the parties wish to document the terms and conditions pertaining to the resignation;

NOW, THEREFORE, in consideration of the mutual promises and agreements set forth herein, and
other good and valuable consideration, the receipt of which is hereby acknowledged, the Company and
Executive hereby agree as follows:

1. Definitions.

The capitalized terms used herein shall have the following meanings:

“Agreement” shall mean this Separation Agreement, together with Exhibit A.

“Board of Directors” shall mean the board of directors or other governing body of Company, and
from time to time the boards of directors, or other governing bodies, of the Company Subsidiaries.

“Code” shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations
promulgated thereunder.

“Company Subsidiaries” shall mean all the Company’s subsidiary companies and affiliates,
collectively, including but not limited to, Twin Bridges (Bermuda), Ltd., CRM USA Holdings Inc.,
Compensation Risk Managers, LLC, Compensation Risk Managers of California, LLC, EIMAR, LLC,
Compensation Risk Claims Services, LLC, Embarcadero Insurance Holdings, Inc., Majestic Insurance
Company, Great Western Insurance Services, Inc. and Redhorse Insurance Company.

“Company” shall mean CRM Holdings, Ltd., together with its successors and assigns.

“Competition” shall have the meaning ascribed to it in Section 4(d)(ii).
“Confidential Information” shall have the meaning ascribed to it in Section 4(a)(ii).

“Covenant Term” shall have the meaning ascribed to it in Section 4.

“Employment Agreement” shall mean the employment agreement entered into between the Company
and Executive dated November 3, 2005.

“Executive” shall mean Daniel G. Hickey, Jr.

“Proceeding” shall have the meaning ascribed to it in Section 3(d)(iii)(A).

“Release” shall mean the release executed by Executive of even date herewith, in the form of
Exhibit A.

“Releasees” shall have the meaning ascribed to it in the Release.

“Resignation Date” shall be March 13, 2009.

“Restrictive Covenants” shall the meaning ascribed to it in Section 4.

2. Resignation.

(a) Executive hereby resigns from each of the following positions effective as of the
Resignation Date: (i) Chief Executive Officer of the Company; (ii) Chief Executive Officer of each
of the Company Subsidiaries; (iii) member of the Board of Directors of the Company and all Company
Subsidiaries; and (iv) all other positions Executive holds by reason of or in connection with his
employment by the Company.

(b) During the initial 6 months after the Resignation Date, Executive shall provide reasonable
assistance to the Company with regard to transition issues and make himself reasonably available
during regular business hours to confer on Company business matters; provided, however, that (i)
Executive shall not be required to assist or confer if and to the extent such activities interfere
with his then current professional or business activities; and (ii) Executive shall be reimbursed
by the Company on an after-tax basis for all expenses reasonably incurred in any given month in
connection with such activities for the Company; provided, however, that any expenses in an amount
exceeding one-thousand ($1,000) dollars that are incurred, or reasonably estimated to be incurred,
must be pre-approved by the Company.

(c) Executive hereby agrees to execute and deliver any and all further documentation and take
all such other action reasonably requested by the Company to evidence and effect the resignations
contemplated by this Agreement. Executive hereby further agrees that the Employment Agreement is
hereby terminated as of the Resignation Date and from and after the Resignation Date, the
Employment Agreement shall have no further force or effect.

3. Payments.

In consideration for Executive entering into this Agreement and executing the Release, the
Company agrees that the Company shall provide Executive with the following payments and benefits,
all of which are expressly conditioned on Executive’s ongoing compliance with the Restrictive
Covenants:

(a) Cash Severance Payment. The Company shall pay to Executive payments in the
aggregate gross amount of three million three hundred thousand dollars ($3,300,000) in three
payments as follows: (i) a payment in the gross amount of one million five hundred thousand
dollars ($1,500,000) payable six months and one day after the Resignation Date; (ii) a further
payment in the gross amount of one million five hundred thousand dollars ($1,500,000) payable
twelve months after the Termination Date; and (iii) a payment in the gross amount of three hundred
thousand dollars ($300,000) payable thirty months after the Resignation Date.

(b) Welfare Benefits Continuation. To the extent permitted under the terms of such
plans, Executive and his family shall be entitled to continued participation in all medical, health
and life insurance plans at the same benefit level at which Executive and his family were
participating on the Resignation Date until the earlier of (A) the third anniversary of the
Resignation Date, or (B) the date, or dates, Executive receives substantially similar coverage and
benefits under the plans and programs of a subsequent employer (such coverage and benefits to be
determined on a coverage-by-coverage, or benefit-by-benefit, basis). To the extent permitted under
the terms of such plans, such coverage shall be determined as if Executive had continued to be an
active employee of the Company, and the Company shall continue to pay the costs of such coverage
under such plans on the same basis as is applicable to active employees covered thereunder. At the
Company’s option, Executive’s rights under this Section 3(b) may be conditioned upon
Executive’s election of continued coverage in accordance with COBRA either (a) as of the
Resignation Date in the event that Executive may not remain an active participant under the terms
of the Company’s medical and health plans, in which event the Company shall subsidize such coverage
to the same extent it subsidizes coverage for active employees of the Company, or (b) as of
eighteen months after the Resignation Date.

(c) Vesting of Restricted Stock. Any and all restrictions with respect to restricted
stock granted to Executive on January 16, 2008 shall be removed effective as of the Resignation
Date and such stock shall be distributed to Executive in accordance with the terms of such grant.

(d) Other Benefits. Executive shall be entitled to receive such other benefits as
follows:

(i) Executive shall receive any and all benefits accrued under any deferred compensation or
qualified or non-qualified pension plan in which he currently participates (other than any
severance plan) in accordance with, and subject to, the terms thereof; provided that no such
deferred compensation or non-qualified pension benefits shall be paid prior to the first date on
which they would not be subject to the imposition of any excise tax pursuant to Section 409A of the
Code.

(ii) Executive shall be paid any (A) base salary (at the rate of salary in effect immediately
prior to the Resignation Date) to the extent earned but unpaid as of the Resignation Date, (B)
accrued but untaken vacation (not to exceed five weeks of such vacation), and (C) reasonable
business and fringe benefit expenses incurred by him prior to the Resignation Date in accordance
with Company policy in effect on the Resignation Date which have not yet been reimbursed. Such
payments shall be made in accordance with the Company’s standard payroll and expense reimbursement
practices.

(iii) Executive shall be reimbursed by the Company in an amount not to exceed five thousand
($5,000) dollars for attorney’s fees incurred in connection with the negotiation of this Agreement.

(iv) Executive may retain the used office furniture and related furnishings in his office.

(v) Indemnification.

(A) Company Indemnity. The Company agrees that if Executive is at any time made a
party, or is threatened to be made a party, to any third-party action, suit or proceeding, whether
civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that he
was a director, officer or employee of the Company or was serving at the Company’s request as a
director, officer, member, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit plans, whether or not
the basis of such Proceeding is Executive’s alleged action in an official capacity while serving as
a director, officer, member, employee or agent, and including Proceedings arising from or relating
to Executive’s resignation and his execution of this Agreement, Executive shall be indemnified and
held harmless by the Company to the fullest extent legally permitted or authorized by the Company’s
bye-laws or resolutions of the Board of Directors or, if greater, by the laws of the State of New
York, against all cost, expense, liability and loss (including, without limitation, reasonable
attorney’s fees, judgments, fines, interest on same, if any, ERISA excise taxes or penalties and
amounts paid or to be paid in settlement) reasonably incurred or suffered by Executive in
connection therewith. The Company shall advance to Executive all reasonable costs and expenses to
be incurred by him in connection with a Proceeding within 30 days after receipt by the Company of a
written request for such advance. Such request shall include an undertaking by Executive to repay
the amount of such advance if it shall ultimately be determined that he is not entitled to be
indemnified against such costs and expenses. The provisions of this Section 3(d)(v)(A)
shall not be deemed exclusive of any other rights of indemnification to which Executive may be
entitled or which may be granted to him, and it shall be in addition to any rights of
indemnification to which he may be entitled under any policy of insurance.

(B) Liability Insurance. The Company agrees to continue and maintain a directors and
officers’ liability insurance policy covering Executive to the extent and for as long as the
Company provides such coverage for its executive officers.

(e) Except as explicitly provided in this Section 3, Executive shall not be entitled
to receive any compensation, other payments, or benefits of any kind from the Company, any of the
Company Subsidiaries or their respective affiliates.

4. Disclosure; Restrictive Covenants Against Competition and Solicitation.

Executive and Company hereby acknowledge and agree that for a period of three years beginning
on the Resignation Date (“Covenant Term”), or as otherwise specified in this Agreement, Executive
and Company shall continue to be bound by the following restrictive covenants and other provisions
(collectively referred to as the “Restrictive Covenants”):

(a) Confidentiality.

(i) During the Covenant Term and at all times thereafter, Executive shall not disclose to
anyone or make use of any Confidential Information, except when required to do so by legal process,
by any governmental agency having supervisory authority over the business of the Company and the
Company Subsidiaries or by any administrative or legislative body (including a committee thereof)
that requires him to divulge, disclose or make accessible such information. In the event that
Executive is so ordered, he shall give prompt written notice to the Company to allow the Company
the opportunity to object to or otherwise resist such order.

(ii) For purposes of this Agreement, “Confidential Information” shall mean all information
concerning the business of the Company, the Company Subsidiaries and their respective affiliates
relating to any of their products, product development, trade secrets, customers, suppliers,
finances, and business plans and strategies. Excluded from the definition of Confidential
Information is information (1) that is or becomes part of the public domain, other than through the
breach of this Agreement by Executive or (2) regarding the Company’s business or industry properly
acquired by Executive in the course of his career as an executive in the Company’s industry and
independent of Executive’s employment by the Company that is not proprietary information of the
Company or the Company Subsidiaries or their respective affiliates. For this purpose, information
known or available generally within the trade or industry of the Company shall be deemed to be
known or available to the public.

(b) Litigation Cooperation. During the Covenant Term and at all times thereafter,
Executive agrees to cooperate reasonably with the Company, Company Subsidiaries and their
respective affiliates by making himself reasonably available to testify on behalf of the Company,
Company Subsidiaries and their respective affiliates in any action, suit, proceeding, or
investigation, whether civil, criminal, administrative, or otherwise, and to assist the Company,
Company Subsidiaries and their respective affiliates, in any such action, suit, proceeding, or
investigation, by providing information and documents and meeting and consulting with the Board of
Directors or its representatives or counsel, or representatives or counsel to the Company, Company
Subsidiaries and their respective affiliates, as reasonably requested. The Company agrees to
reimburse Executive for all expenses reasonably incurred in connection with his provision of
testimony or assistance; provided, however, that any expenses in an amount exceeding one-thousand
($1,000) dollars that are incurred, or reasonably estimated to be incurred, must be pre-approved by
the Company.

(c) Non-Disparagement. During the Covenant Term, Executive agrees that he will not
make statements or representations, or otherwise communicate, directly or indirectly, in writing,
orally, or otherwise, or take any action which may, directly or indirectly, disparage the Company,
Company Subsidiaries or their respective affiliates or their respective officers, directors,
employees, advisors, businesses or reputations. The Company agrees that it will direct its
directors and executive officers that, during the Covenant Term, they should not make statements or
representations, or otherwise communicate, directly or indirectly, in writing, orally, or
otherwise, or take any action which may directly or indirectly, disparage Executive, his business
or reputation. However, nothing in this Agreement shall preclude either of Executive or the
Company from making truthful statements or disclosures required by applicable law, regulation or
legal process or made in connection with an investigation by any governmental or regulatory
authority, the Company, or any Company Subsidiary.

(d) Non-competition.

(i) During the Covenant Term, Executive shall not engage in Competition with the Company or
any of the Company Subsidiaries or their respective affiliates.

(ii) “Competition” shall mean engaging in any activity relating to the establishment of or
provision of services to or in connection with any self insured workers compensation group plan
operating within the State of California, whether as an employee, consultant, principal, agent,
officer, director, partner, shareholder (except as a less than one percent shareholder of a
publicly traded company) or otherwise.

(e) Non-solicitation.

(i) During the period beginning on the Resignation Date and ending on the second anniversary
thereof, Executive shall not solicit, induce or encourage employees of the Company or any of the
Company Subsidiaries or their respective affiliates to terminate their employment or to violate any
agreement with any of them.

(ii) During the Covenant Term, Executive shall not solicit, induce or encourage any customers,
brokers or agents of the Company, the Company’s Subsidiaries or their respective affiliates, or any
corporation, limited liability company, partnership, limited partnership, sole proprietorship,
joint venture or any other entity in a joint venture relationship (directly or indirectly) with the
Company, the Company’s Subsidiaries or their respective affiliates, to terminate or diminish its
relationship with the Company, the Company’s Subsidiaries or their respective affiliates or to
violate any agreement with any of them.

(iii) During the period beginning on the Resignation Date and ending on the second anniversary
thereof, Executive shall not, either directly or through any employee, agent or representative,
hire or cause to be hired any employee of the Company, the Company’s Subsidiaries or their
respective affiliates, or any person who was employed by the Company, the Company’s Subsidiaries or
their respective affiliates, within 180 days of such hiring; provided, however, that the Company
agrees that this Section 4(e) shall not apply solely to Executive’s hiring of his current
administrative assistant.

5. Right to Withhold or Cancel Payments; No Mitigation.

(a) If, after written notice and provided (to the extent the breach is curable) such breach is
not cured within seven (7) days of the receipt of the written notice, Executive breaches or has
breached any of the Restrictive Covenants, (i) the Company shall immediately be relieved of any
further obligation to make any additional payments to Executive pursuant to Section 3, and
(ii) the Company, any of the Company Subsidiaries or their respective affiliates may seek
injunctive relief and/or damages for such breach. Executive acknowledges that a breach of the
Restrictive Covenants would cause irreparable injury, money damages would not provide an adequate
remedy for the Company, and the Company shall be entitled to injunctive relief or other equitable
relief without posting any bond; provided, however, that the foregoing shall not prevent Executive
from contesting the issuance of any such injunction on the ground that no violation or threatened
violation of the Restrictive Covenants has occurred. The Company’s remedies under this Section
5(a), or as provided by law, shall be cumulative and not exclusive of one another.

(b) No payments or benefits payable to or with respect to Executive pursuant to this Agreement
shall be reduced by any amount Executive may earn or receive from employment with another employer
or from any other source. Executive shall have no duty to mitigate his damages by seeking other
employment.

6. Announcements.

To the extent consistent with its reporting obligations under applicable laws and regulations,
the Company will use reasonable efforts to consult with Executive regarding the wording of all
written internal and external announcements regarding Executive’s resignation from the Company.
The Company further agrees that oral communications made to the Company’s employees by a Company
spokesperson acting in his official capacity and on behalf of the Company shall conform in material
respects with any previously agreed upon internal or external announcement regarding Executive’s
resignation from the Company.

7. Binding Effect; Revocation; Modification.

(a) The Company and Executive hereby understand and agree that:

(i) this Agreement is final and binding and constitutes the complete and exclusive statement
of the terms and conditions relating to Executive’s resignation;

(ii) this Agreement supersedes all prior agreements and understandings, whether oral or
written, between or among Executive and the Releasees relating to Executive’s employment,
Resignation Date, or severance, including but not limited to the Employment Agreement; and

(iii) no representations or commitments were made by the parties to induce this Agreement
other than as expressly set forth herein.

(b) Executive represents that Executive has been advised to consult with counsel, has had the
opportunity and time to consult with legal counsel and other personal or financial advisors of his
own choosing concerning the provisions of this Agreement and the Release and that Executive has
been given twenty-one (21) days within which to execute this Agreement and the Release and seven
(7) days following that execution to revoke the Release. To be effective, any such revocation must
be in writing and actually delivered in accordance with Section 9(g) no later than the
close of business on the 7th day following Executive’s execution of this Agreement and the Release.
If Executive revokes the Release, then this Agreement and the Release shall be null and void. No
obligation upon the Company set forth herein shall be effective, and no payment or other benefit
shall be required to be made or provided to Executive hereunder, any earlier than the 8th day
following Executive’s execution of the Release. This Agreement may not be modified or supplemented
except by a subsequent written agreement signed by both parties.

8. Withholding.

The Company may withhold from any amounts payable under this Agreement such federal, state and
local taxes as may be required to be withheld pursuant to applicable laws or regulations.

9. Miscellaneous.

(a) Assignability; Binding Nature. This Agreement shall be binding upon and inure to
the benefit of the Releasees and to their heirs, administrators, representatives, executors,
successors and assigns. No rights or obligations of the Company under this Agreement may be
assigned or transferred by the Company, except that such rights or obligations may be assigned or
transferred to any purchaser of all or substantially all of the Company’s business or assets or any
successor to the Company (whether direct or indirect, by purchase, merger, consolidation or
otherwise) without prior notice to, or consent of, Executive. The Company will require in a
writing delivered to Executive that any such purchaser, successor or assignee (and any parent
entity of any such purchaser, successor or assignee) expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be required to perform
it if no such purchase, succession or assignment had taken place. No rights or obligations of
Executive under this Agreement may be assigned or transferred by Executive.

(b) Representation. The Company represents and warrants that it is fully authorized
and empowered to enter into this Agreement and that the performance of its obligations under this
Agreement will not violate any agreement between it and any other person, firm or organization.

(c) Entire Agreement. This Agreement contains the entire understanding and agreement
between the Company and Executive concerning the subject matter hereof.

(d) Amendment or Waiver. No provision in this Agreement may be amended unless such
amendment is agreed to in writing and signed by Executive and an authorized officer of the Company.
Except as set forth herein, no delay or omission to exercise any right, power or remedy accruing
to the Company or the Executive shall impair any such right, power or remedy or shall be construed
to be a waiver of or an acquiescence to any breach hereof. No waiver by either the Company or the
Executive of any breach by the other party of any condition or provision contained in this
Agreement to be performed by such other party shall be deemed a waiver of a similar or dissimilar
condition or provision at the same or any prior or subsequent time. Any waiver must be in writing
and signed by Executive or an authorized director or officer of the Company, as the case may be.

(e) Survivorship. The respective rights and obligations of the Company and the
Executive shall survive to the extent necessary to the intended preservation of such rights and
obligations.

(f) Beneficiaries/References. Executive shall be entitled, to the extent permitted
under any applicable law, to select and change a beneficiary or beneficiaries to receive any
compensation or benefit payable hereunder following Executive’s death by giving the Company written
notice thereof. In the event of Executive’s death or a judicial determination of his incompetence,
reference in this Agreement to Executive shall be deemed, where appropriate, to refer to his
beneficiary, estate or other legal representative.

(g) Notices. Any notice given to the Company or the Executive shall be in writing and
shall be deemed to have been given when delivered personally or sent by certified or registered
mail, postage prepaid, return receipt requested, duly addressed to the party concerned at the
address indicated below or to such changed address as such party may subsequently give such notice
of:

	 	 	 
	If to the Company:
	 	CRM Holdings, Ltd.

Attention:  Louis Viglotti, Esq.

FB Perry Building

40 Church Street

P.O. Box HM 2062

Hamilton HM HX

Bermuda

Facsimile No.: 441-295-6689

e-mail:  lviglotti@logic.bm

	 	 	 

	With a copy to:
	 	Louis Viglotti, Esq.

	 	 	 
	General Counsel

	 	

	Compensation Risk Managers, LLC

	2515 South Road

	 	

	Poughkeepsie, New York 12601

	Facsimile No.: 845-473-6154

	e-mail: lviglotti@trustcrm.com

	 

	If to Executive:

	 	Mr. Daniel G. Hickey, Jr.

	 	 	 
	70 Pond Hills Court

	 	

	Pleasant Valley, New York 12569

	With a copy to:

	 	Donald D. Brown, Jr., Esq.

Spiegel Brown Fichera & Coté LLP

272 Mill Street

Poughkeepsie, New York 12601

Facsimile No.: 845-452-4731

e-mail: sbfc@sbfclaw.com

(h) Headings. The headings of the sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or construction of any
provision of this Agreement.

10. Governing Law/Jurisdiction.

This Agreement shall be governed by, construed, interpreted and enforced in accordance with
the laws of New York without reference to principles of conflict of laws. The Company and
Executive hereby consent to the exclusive jurisdiction of any or all of the following courts for
purposes of resolving any dispute under this Agreement: (i) the United States District Court for
the Southern District of New York or (ii) the Supreme Court of the State of New York venued in and
for the County of Dutchess. The Company and Executive further agree that any service of process or
notice requirements in any such proceeding shall be satisfied if the rules of such court relating
thereto have been substantially satisfied. The Company and Executive hereby waive, to the fullest
extent permitted by applicable law, any objection which it or he may now or hereafter have to such
jurisdiction and any defense of inconvenient forum.

11. Drafting.

This Agreement represents the joint efforts of the parties involved and should not be
construed as having been drafted by either party for purposes of resolving ambiguities in the
language contained herein.

12. Counterparts.

This Agreement may be executed by either of the parties hereto in counterparts, each of which
shall be deemed to be an original, but all such counterparts shall together constitute one and the
same instrument.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above
written.

CRM HOLDINGS, LTD.

By: /s/ James J. Scardino

Name: James J. Scardino

Title: Chief Financial Officer

/s/ Daniel G. Hickey, Jr.

Daniel G. Hickey, Jr.

EXHIBIT A

RELEASE

As a material inducement to CRM Holdings, Ltd., a Bermuda company (together with its
subsidiaries from time to time and its successors and assigns, the “Company”), to enter into the
annexed Separation Agreement with Daniel G. Hickey, Jr. (the “Executive”) executed of even date
herewith (the “Agreement”), and for and in consideration of the payments and other benefits
provided therein, Executive hereby irrevocably and unconditionally releases, acquits and forever
discharges the Company, its subsidiaries and affiliates, and their respective directors, officers,
executives, agents, stockholders, members, representatives, subsidiaries, divisions, parent
corporations and affiliates, and all other persons acting by, through or in concert with any of
them and the successors, assigns, heirs and personal representatives of any of the foregoing
(collectively, the “Releasees”), from any and all charges, complaints, claims, demands,
liabilities, obligations, promises, agreements, actions, causes of action, at law, in equity, or
otherwise, costs, damages, expenses (including attorneys’ fees and costs actually incurred), or any
rights of any and every kind or nature, accrued or unaccrued, contingent or otherwise, known or
unknown, which Executive has or claims to have arising out of facts or circumstances which have
occurred or existed prior to, or which are occurring and do exist as of, the date of Executive’s
execution of the Agreement against each or any of the Releasees. This release (“Release”) pertains
to but is in no way limited to all matters relating to or arising out of Executive’s employment and
the cessation of his employment with the Company and all claims for severance benefits or other
payments which are not express obligations of the Company under the Agreement. This Release
further pertains to, but is in no way limited to, rights and claims under the Age Discrimination in
Employment Act of 1967 (“ADEA”), Title VII of the Civil Rights Act, as amended, the Americans With
Disabilities Act, the Family Medical Leave Act, the New York State Human Rights Law, and all other
federal, state, local or municipal fair employment and discrimination laws, and all claims under
common law, whether based in tort or contract, law or equity.

Notwithstanding anything herein to the contrary, this Release does not apply to: (i) claims
that arise after the execution of this Release; (ii) the Executive’s rights under any tax-qualified
pension or claims for accrued vested benefits under any other employee benefit plan, policy or
arrangements maintained by the Company or under COBRA; (iii) worker’s compensation claims and any
other claims that cannot be waived by law; or (iv) Executive’s rights to enforce the Agreement.

IN WITNESS WHEREOF, I have executed this Release this       13       day of March, 2009.

/s/ Daniel G. Hickey, Jr. 

Daniel G. Hickey, Jr., an individualexh10_6.htm

     

     

    
      

      

    

     

    
       

      RESOURCE
CAPITAL CORP.

       

      2007 OMNIBUS EQUITY
COMPENSATION PLAN

       

      1. Purpose

       

      The
purpose of the Plan is to provide (i) employees of the Company or an Affiliate
of the Company, (ii) any individual who provides services to the Company or an
Affiliate of the Company, including portfolio managers and other employees of
Resource Capital Manager, Inc. and Resource America, Inc., and (iii) members of
the Board, with the opportunity to receive grants of Options, SARs, Stock Units,
Performance Shares, Stock Awards, Dividend Equivalents and Other Stock-Based
Awards.  The Company believes that the Plan will encourage the
Participants to contribute materially to the growth of the Company, thereby
benefiting the Company’s stockholders, and will align the economic interests of
the Participants with those of the stockholders.

       

      2. Definitions

       

      Whenever
used in this Plan, the following terms will have the respective meanings set
forth below:

       

      (a) "Administrator" means the
Committee and any delegate of the Committee that is appointed in accordance with
Section 3, except that the Board shall be the Administrator with respect to
Grants to Non-Employee Directors.

       

      (b) “Affiliate” means a person
that directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the Person
specified.

       

      (c) "Board" means the Company’s
Board of Directors as constituted from time to time.

       

      (d) "Change of Control" means the
first to occur of any of the following events:

       

      (i) the
Manager, or a direct or indirect wholly owned subsidiary of Resource America,
ceases to be the investment manager of the Company;

       

      (ii) the sale,
lease or transfer, in one or a series of related transactions, of all or
substantially all of the assets of the Company, taken as a whole, to any Person
other than any one or more Qualified Affiliates;

       

      (iii) the
acquisition by any Person or group (within the meaning of
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any
successor provision), including any group acting for the purpose of acquiring,
holding or disposing of securities (within the meaning of Rule
13d-5(b)(1) under the Exchange Act), in a single transaction or in a
related series of transactions, by way of merger, consolidation or other
business combination or purchase of beneficial ownership (within the meaning of
Rule 13d-3 under the Exchange Act, or any successor provision) of 50% or
more of the total voting power of the voting capital interests of the Company,
other than an acquisition by one or more Qualified Affiliates; or

       

      (iv) After the
date this Plan is approved by the stockholders of the Company, directors are
elected such that a majority of the members of the Board shall have been members
of the Board for less than two years, unless the election or nomination for
election of each new director who was not a director at the beginning of such
two-year period was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of such
period.

       

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

       

      
        
          
          

        

        
          A-1

          
            

          

        

        
          
          

        

      

      (f) "Company" means Resource
Capital Corp., a Maryland corporation.

       

      (g) “Committee” means the
Compensation Committee of the Board or another committee appointed by the Board
to administer the Plan.

       

      (h) “Date of Grant” means the
date a Grant is effective; provided, however, that no retroactive Grants will be
made.

       

      (i) "Dividend Equivalent" means
an amount determined by multiplying the number of shares of Stock, Performance
Shares or Stock Units subject to a Grant by the per-share cash dividend, or the
per-share fair market value (as determined by the Administrator) of any dividend
in consideration other than cash, paid by the Company on its Stock on a dividend
payment date.

       

      (j) “Effective Date” means July
25, 2007, subject to approval by the stockholders of the Company.

       

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

       

      (l) "Fair Market Value" of Stock
is (i) if the Stock is publicly traded, then the Fair Market Value per share
shall be determined as follows: (A) if the principal trading market for the
Stock is a national securities exchange or the Nasdaq National Market, the last
reported sale price thereof on the relevant date or (if there were no trades on
that date) the latest preceding date upon which a sale was reported, or (B) if
the Stock is not principally traded on such exchange or market, the mean between
the last reported “bid” and “asked” prices of Stock on the relevant date, as
reported on Nasdaq or, if not so reported, as reported by the National Daily
Quotation Bureau, Inc. or as reported in a customary financial reporting
service, as applicable and as the Administrator determines, or (ii) if the Stock
is not publicly traded or, if publicly traded, is not subject to reported
transactions or “bid” or “asked” quotations as set forth above, the Fair Market
Value per share shall be as determined by the Administrator.

       

      (m) “Grant” means an Option, SAR,
Stock Unit, Performance Share, Stock Award, Dividend Equivalent or Other
Stock-Based Award granted under the Plan.

       

      (n) “Grant Instrument” means the
written agreement that sets forth the terms and conditions of a Grant, including
all amendments thereto.

       

      (o) “Incentive Stock Option”
means a stock option that is intended to meet the requirements of section 422 of
the Code, as described in Section 7.

       

      (p) “Manager” means Resource
Capital Manager, Inc., a Delaware corporation.

       

      (q) “Non-Employee Director” means
a non-employee director of the Company as defined by Rule 16b-3 under the
Exchange Act.

       

      (r) “Nonqualified Stock Option”
means a stock option that is not intended to meet the requirements of section
422 of the Code, as described in Section 7.

       

      (s) "Option" means an Incentive
Stock Option or Nonqualified Stock Option to purchase shares of Stock at an
Option Price for a specified period of time.

       

      (t) "Option Price" means an
amount per share of Stock purchasable under an Option, as designated by the
Administrator.

       

      (u) “Other Stock-Based Award”
means any Grant based on, measured by or payable in Stock (other than Grants
described in Sections 7, 8, 9, 10, 11 and 12), as described in Section
13.

       

      
        
          
          

        

        
          A-2

          
            

          

        

        
          
          

        

      

      (v) “Parent” means a “parent
corporation,” as defined in section 424(e) of the Code, of the
Company.

       

      (w) "Participant" means an
employee of the Company or an Affiliate of the Company, a member of the Board,
or an individual who provides services to the Company or an Affiliate of the
Company, including a portfolio manager or other employee of the Manager or
Resources America, and is selected by the Administrator to receive a Grant under
the Plan.

       

      (x) “Performance Shares” means an
award of phantom shares, representing one or more shares of Stock, as described
in Section 10.

       

      (y) “Person” means any
individual, corporation, partnership, joint venture, limited liability company,
estate, trust, or unincorporated association, and any fiduciary acting in such
capacity on behalf of any of the foregoing.

       

      (z) "Plan" means this Resource
Capital Corp. 2007 Omnibus Equity Compensation Plan, as in effect from time to
time.

       

      (aa) “Qualified Affiliate” means
(i) any Person that is part of a controlled group or under common control with
the Company or Resource America; (ii) any employee benefit plan (or related
trust) sponsored or maintained by the Company or by any entity controlled by the
Company; or (iii) any Person controlled by any executive officer (as defined by
Rule 16a-1(f) of the Exchange Act) of the Company.  For purposes of
this definition, “controlled by” shall mean possessing, directly or indirectly,
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.

       

      (bb) “Resource America” means
Resource America, Inc., a Delaware corporation.

       

      (cc) "Stock" means the common
stock, par value $0.001, of the Company or such other securities of the Company
as may be substituted for Stock pursuant to Sections 5(d) or 18.

       

      (dd) “SAR” means an award of a
stock appreciation right, as described in Section 8.

       

      (ee) “Stock Award” means an award
of Stock, as described in Section 11.

       

      (ff) “Stock Unit” means an award
of a phantom unit, representing one or more shares of Stock, as described in
Section 9.

       

      (gg) “Subsidiary” means any entity
in which the Company has a greater than 50% ownership interest.  For
purposes of Sections 7(c), (d) and (h), “Subsidiary” shall mean a “subsidiary
corporation,” as defined in section 424(f) of the Code, of the
Company.

       

      (hh) “Successor Participant” means
the personal representative or other person entitled to succeed to the rights of
the Participant in accordance with Section 17.

       

      3. Administration

       

      (a) The Plan
shall be administered by the Administrator. The Administrator shall have the
sole authority to (i) determine the Participants to whom Grants shall be made
under the Plan, (ii) determine the type, size and terms of the Grants to be made
to each Participant, (iii) determine the time when the Grants will be made and
the duration of any applicable exercise or restriction period, including the
criteria for exercisability and the acceleration of exercisability, (iv) amend
the terms of any previously issued Grant, subject to the provisions of Section
20, (v) adopt guidelines separate from the Plan that set forth the specific
terms and conditions for Grants under the Plan, and (vi) deal with any other
matters arising under the Plan.

       

      
        
          
          

        

        
          A-3

          
            

          

        

        
          
          

        

      

      (b) The
Administrator shall have full power and express discretionary authority to
administer and interpret the Plan, to make factual determinations and to adopt
or amend such rules, regulations, agreements and instruments for implementing
the Plan and for the conduct of its business as it deems necessary or advisable,
in its sole discretion.  The Administrator’s interpretations of the
Plan and all determinations made by the Administrator pursuant to the powers
vested in it hereunder shall be conclusive and binding on all persons having any
interest in the Plan or in any awards granted hereunder.  All powers
of the Administrator shall be executed in its sole discretion, in the best
interest of the Company, not as a fiduciary, and in keeping with the objectives
of the Plan and need not be uniform as to similarly situated
individuals.

       

      (c) The
Administrator, in its discretion, may delegate to one or more officers of the
Company all or part of the Administrator’s authority and duties with respect to
grants and awards to individuals who are not subject to the reporting and other
provisions of Section 16 of the Exchange Act.  The Administrator
may revoke or amend the terms of a delegation at any time but such action shall
not invalidate any prior actions of the Administrator’s delegate or delegates
that were consistent with the terms of the Plan and the Administrator’s prior
delegation.

       

      4. Grants

       

      Grants
under the Plan may consist of Options, SARs, Stock Units, Performance Shares,
Stock Awards, Dividend Equivalents and Other Stock-Based Awards.  All
Grants shall be subject to the terms and conditions set forth herein and to such
other terms and conditions consistent with the Plan as the Administrator deems
appropriate and as are specified in writing by the Administrator in separate
guidelines or to the individual in the Grant Instrument or an amendment to the
guidelines or Grant Instrument.  The Administrator shall approve the
form and provisions of each Grant Instrument.  All Grants shall be
made conditional upon the Participant’s acknowledgment, in writing or by
acceptance of the Grant, that all decisions and determinations of the
Administrator shall be final and binding on the Participant, his or her
beneficiaries, and any other person having or claiming an interest under such
Grant.  Grants under a particular Section of the Plan need not be
uniform as among the Participants.

       

      5. Shares of Stock Subject to
the Plan

       

      (a) Shares
Authorized.  The total aggregate number of shares of Stock that
may be issued or transferred under the Plan is 2,000,000 shares, subject to
adjustment as described below.  The shares may be
authorized but unissued shares of Stock or reacquired shares of Stock, including
shares purchased by the Company on the open market for purposes of the
Plan.  Grants paid in cash shall not count against the foregoing share
limits.

       

      (b) Share
Counting.  For administrative purposes, when the Administrator
makes a Grant payable in Stock, the Administrator shall reserve shares of Stock
equal to the maximum number of shares of Stock that may be payable under the
Grant.  If and to the extent Options or SARs granted under the Plan
terminate, expire, or are canceled, forfeited, exchanged or surrendered without
having been exercised or if any Stock Awards, Stock Units, Performance Shares,
Dividend Equivalents or Other Stock-Based Awards are forfeited or terminated, or
otherwise not paid in full, the shares subject to such Grants which have not
been issued shall again be available for purposes of the Plan.  Shares
of Stock surrendered in payment of the Option Price of an Option or withheld for
purposes of satisfying the Employer’s minimum tax withholding obligations with
respect to Grants under the Plan shall again be available for issuance or
transfer under the Plan.  To the extent that any Grants are paid in
cash, and not in shares of Stock, any shares previously reserved for issuance or
transfer pursuant to such Grants shall again be available for issuance or
transfer under the Plan.

       

      
        
          
          

        

        
          A-4

          
            

          

        

        
          
          

        

      

      (c) Individual
Limits.  All Grants under the Plan, other than Dividend
Equivalents, shall be expressed in shares of Stock.  The maximum
aggregate number of shares of Stock with respect to which all Grants, other than
Dividend Equivalents, may be made under the Plan to any individual during any
calendar year shall be 300,000 shares, subject to adjustment as described
below.  A Participant may not accrue Dividend Equivalents during any
calendar year in excess of $100,000. The individual limits
described in this subsection (c) shall apply without regard to whether the
Grants are to be paid in Stock or in cash.  All cash payments (other
than Dividend Equivalents) shall equal the Fair Market Value of the shares of
Stock to which the cash payment relates.

       

      (d) Adjustments.  If
there is any change in the number or kind of shares of Stock outstanding (i) by
reason of a stock dividend, spinoff, recapitalization, stock split, or
combination or exchange of shares, (ii) by reason of a merger, reorganization or
consolidation, (iii) by reason of a reclassification or change in par value, or
(iv) by reason of any other extraordinary or unusual event affecting the
outstanding Stock as a class without the Company’s receipt of consideration, or
if the value of outstanding shares of Stock is substantially reduced as a result
of a spinoff or the Company’s payment of an extraordinary dividend or
distribution, the maximum number of shares of Stock available for issuance under
the Plan, the maximum number of shares of Stock for which any individual may
receive pursuant to Grants in any year, the number of shares covered by
outstanding Grants, the kind of shares to be issued or transferred under the
Plan, and the price per share or the applicable market value of such Grants
shall be appropriately adjusted by the Administrator to reflect any increase or
decrease in the number of, or change in the kind or value of, issued shares of
Stock to preclude, to the extent practicable, the enlargement or dilution of
rights and benefits under such Grants; provided, however, that any fractional
shares resulting from such adjustment shall be eliminated.  Any
adjustments determined by the Administrator shall be final, binding and
conclusive.

       

      6. Eligibility for
Participation

       

      Any employee of the Company or an
Affiliate of the Company, any member of the Board and any individual who
provides services to the Company or an Affiliate of the Company, including a
portfolio manager or other employee of the Manager or Resource America, is
eligible to participate in this Plan if the Administrator, in its sole
discretion, determines that such person has contributed significantly or can be
expected to contribute significantly to the profits or growth of the Company or
an Affiliate of the Company.  Grants will be made only to persons who
are employees, directors, consultants or advisors of the Company for purposes of
Form S-8 registration under the Securities Act of 1933, as
amended.  Options and SARs may be granted only to persons who perform
direct services to the Company on the date of grant, as determined under section
409A of the Code.

       

      7. Options

       

      (a) General
Requirements.  The Administrator may grant Options to a
Participant upon such terms and conditions as the Administrator deems
appropriate under this Section 7.

       

      (b) Number of
Shares.  The Administrator shall determine the number of shares
of Stock that will be subject to each Grant of Options to
Participants.

       

      (c) Type of Option and
Price.

       

      (i) The
Administrator may grant Incentive Stock Options or Nonqualified Stock Options or
any combination of Incentive Stock Options and Nonqualified Stock
Options.  Incentive Stock Options may be granted only to employees of
the Company or its Subsidiaries. No Option that is intended to be an Incentive
Stock Option shall be invalid for failure to qualify as an Incentive Stock
Option.  Nonqualified Stock Options may be granted to any
Participant.

       

      
        
          
          

        

        
          A-5

          
            

          

        

        
          
          

        

      

      (ii) The
Option Price shall be determined by the Administrator and may be equal to or
greater than the Fair Market Value of the shares of Stock subject to the Grant
on the Date of Grant; provided, however, that an Incentive Stock Option may not
be granted to any person who, at the Date of Grant, owns stock possessing more
than 10 percent of the total combined voting power of all classes of stock of
the Company or any Subsidiary, unless the Option Price is not less than 110% of
the Fair Market Value on the Date of Grant.

       

      (d) Option
Term.  The Administrator shall determine the term of each
Option.  The term of an Option shall not exceed ten years from the
Date of Grant.  However, an Incentive Stock Option that is granted to
an Employee who, at the Date of Grant, owns stock possessing more than 10
percent of the total combined voting power of all classes of stock of the
Company, or any Subsidiary, may not have a term that exceeds five years from the
Date of Grant.

       

      (e) Exercisability of
Options.  Options shall become exercisable in accordance with
such terms and conditions as may be determined by the Administrator and
specified in the Grant Instrument.  The Administrator may accelerate
the exercisability of any or all outstanding Options at any time for any
reason.

       

      (f) Termination of Employment or
Service.  Except as provided in the Grant Instrument, an Option
may only be exercised while the Participant is employed by, or providing service
to, the Company, an Affiliate or another entity as designated in the Grant
Instrument.  The Administrator shall specify in the Grant Instrument
under what circumstances and during what time periods a Participant may exercise
an Option after termination of employment or service.

       

      (g) Exercise of
Options.  A Participant may exercise an Option that has become
exercisable, in whole or in part, by delivering a notice of exercise to the
Company or its designated agent.  The Participant shall pay the Option
Price and any withholding taxes for the Option (i) in cash or by certified
check, (ii) with the approval of the Administrator, by delivering shares of
Stock owned by the Participant and having a Fair Market Value on the date of
exercise equal to the Option Price or by attestation (on a form prescribed by
the Administrator) to ownership of shares of Stock having an aggregate Fair
Market Value on the date of exercise equal to the Option Price, (iii) in cash,
on the T+3 settlement date that occurs after the exercise date specified in the
notice of exercise, provided that the Participant exercises the Option through
an irrevocable agreement with a registered broker and the payment is made in
accordance with procedures permitted by Regulation T of the Federal Reserve
Board and such procedures do not violate applicable law, or (iv) by such other
method as the Administrator may approve, to the extent permitted by applicable
law.  Shares of Stock used to exercise an Option shall have been held
by the Participant for the requisite period of time to avoid adverse accounting
consequences to the Company with respect to the Option.  Payment for
the shares pursuant to the Option, and any required withholding taxes, must be
received by the time specified by the Administrator depending on the type of
payment being made.

       

      (h) Limits on Incentive Stock
Options.  Each Incentive Stock Option shall provide that if the
aggregate Fair Market Value on the Date of Grant with respect to which Incentive
Stock Options are exercisable for the first time by a Participant during any
calendar year, under the Plan or any other stock option plan of the Company or a
Parent or Subsidiary, exceeds $100,000, then the Option, as to the excess, shall
be treated as a Nonqualified Stock Option.

       

      8. SARs

       

      (a) General
Requirements.  The Administrator may grant SARs to any
Participant, upon such terms and conditions as the Administrator deems
appropriate under this Section 8.  Each SAR shall represent the right
of the Participant to receive, upon settlement of the SAR, shares of Stock or
cash equal to the amount by which the Fair Market Value of a share of Stock on
the date of exercise of the SAR exceeds the base amount of the SAR as described
below in Section 8(c).

       

      
        
          
          

        

        
          A-6

          
            

          

        

        
          
          

        

      

      (b) Terms of
SARs.  The Administrator shall determine the terms and
conditions of SARs and may grant SARs separately from or in tandem with any
Option (for all or a portion of the applicable Option).  Tandem SARs
may be granted either at the time the Option is granted or any time thereafter
while the Option remains outstanding; provided, however, that in the case of an
Incentive Stock Option, SARs may be granted only at the time of the grant of the
Incentive Stock Option.  The Administrator will determine the number
of SARs to be granted, the base amount, the vesting and other restrictions
applicable to SARs and the period during which SARs will remain
exercisable.

       

      (c) Base
Amount.  The Administrator shall establish the base amount of
the SAR at the time the SAR is granted.  The base amount shall not be
less than the Fair Market Value of the shares of Stock subject to the Grant on
the Date of Grant.

       

      (d) Payment With Respect to
SARs.  The Administrator shall determine whether the
appreciation in an SAR shall be paid in the form of cash, in Stock, or in a
combination of the two, in such proportion as the Administrator deems
appropriate.  For purposes of calculating the number of shares of
Stock to be received, Stock shall be valued at its Fair Market Value on the date
of exercise of the SAR.  If shares of Stock are to be received upon
exercise of an SAR, cash shall be delivered in lieu of any fractional
share.

       

      (e) Requirement of Employment or
Service.  The Administrator shall determine in the Grant
Instrument under what circumstances a Participant may retain SARs after
termination of the Participant’s employment or service, and the circumstances
under which SARs may be forfeited.

       

      9. Stock
Units

       

      (a) General
Requirements.  The Administrator may grant Stock Units to a
Participant, upon such terms and conditions as the Administrator deems
appropriate under this Section 9.  Each Stock Unit shall represent the
right of the Participant to receive a share of Stock or an amount based on the
value of a share of Stock.  All Stock Units shall be credited to
accounts on the Company’s records for purposes of the Plan.

       

      (b) Terms of Stock
Units.  The Administrator may grant Stock Units that are
payable if specified performance goals or other conditions are met, or under
other circumstances.  Stock Units may be paid at the end of a
specified period, or payment may be deferred to a date authorized by the
Administrator.  The Administrator shall determine the number of Stock
Units to be granted and the requirements applicable to such Stock
Units.

       

      (c) Payment With Respect to
Stock Units.  Payment with respect to Stock Units shall be made
in cash, in Stock, or in a combination of the two, as determined by the
Administrator.  The Grant Instrument shall specify the maximum number
of shares that shall be paid under the Stock Units.

       

      (d) Requirement of Employment or
Service.  The Administrator shall determine in the Grant
Instrument under what circumstances a Participant may retain Stock Units after
termination of the Participant’s employment or service, and the circumstances
under which Stock Units may be forfeited.

       

      10. Performance
Shares

       

      (a) General
Requirements.  The Administrator may grant Performance Shares
to a Participant, upon such terms and conditions as the Administrator deems
appropriate under this Section 10.  Each Performance Share shall
represent the right of the Participant to receive a share of Stock or an amount
based on the value of a share of Stock, if specified performance goals are
met.  All Performance Shares shall be credited to accounts on the
Company’s records for purposes of the Plan.

       

      (b) Terms of Performance
Shares.  The Administrator shall establish the performance
goals and other conditions for payment of Performance
Shares.  Performance Shares may be paid at the end of a specified
performance or other period, or payment may be deferred to a date authorized by
the Administrator.  The Administrator shall determine the number of
Performance Shares to be granted and the requirements applicable to such
Performance Shares.

       

      
        
          
          

        

        
          A-7

          
            

          

        

        
          
          

        

      

      (c) Payment With Respect to
Performance Shares.  Payment with respect to Performance Shares
shall be made in cash, in Stock, or in a combination of the two, as determined
by the Administrator.  The Administrator shall establish in the Grant
Instrument a target amount to be paid under a Performance Share based on
achievement of the performance goals.

       

      (d) Requirement of Employment or
Service.  The Administrator shall determine in the Grant
Instrument under what circumstances a Participant may retain Performance Shares
after termination of the Participant’s employment or service, and the
circumstances under which Performance Shares may be forfeited.

       

      11. Stock
Awards

       

      (a) General
Requirements.  The Administrator may issue or transfer shares
of Stock to a Participant under a Stock Award, upon such terms and conditions as
the Administrator deems appropriate under this Section 11.  Shares of
Stock issued or transferred pursuant to Stock Awards may be issued or
transferred for cash consideration or for no cash consideration, and subject to
restrictions or no restrictions, as determined by the
Administrator.  The Administrator may establish conditions under which
restrictions on Stock Awards shall lapse over a period of time or according to
such other criteria as the Administrator deems appropriate, including
restrictions based upon the achievement of specific performance
goals.

       

      (b) Number of
Shares.  The Administrator shall determine the number of shares
of Stock to be issued or transferred pursuant to a Stock Award and any
restrictions applicable to such shares.

       

      (c) Requirement of Employment or
Service.  The Administrator shall determine in the Grant
Instrument under what circumstances a Participant may retain Stock Awards after
termination of the Participant’s employment or service, and the circumstances
under which Stock Awards may be forfeited.

       

      (d) Restrictions on
Transfer.  While Stock Awards are subject to restrictions, a
Participant may not sell, assign, transfer, pledge or otherwise dispose of the
shares of a Stock Award except upon death as described in Section
17.  Each certificate, or electronic book entry equivalent, for a
share of a Stock Award shall contain a legend giving appropriate notice of the
restrictions in the Grant.  The Participant shall be entitled to have
the legend removed when all restrictions on such shares have
lapsed.  The Administrator may retain possession of any stock
certificates for Stock Awards until all restrictions on such shares have
lapsed.

       

      (e) Right to Vote and to Receive
Dividends.  The Administrator shall determine to what extent,
and under what conditions, the Participant shall have the right to vote shares
of Stock Awards and to receive any dividends or other distributions paid on such
shares during the restriction period.  The Administrator may determine
that a Participant’s entitlement to dividends or other distributions with
respect to a Stock Award shall be subject to achievement of performance goals or
other conditions.

       

      12. Dividend
Equivalents

       

      (a) General
Requirements.  When the Administrator makes a Grant under the
Plan, the Administrator may grant Dividend Equivalents in connection with such
Grants, under such terms and conditions as the Administrator deems appropriate
under this Section 12.  Dividend Equivalents may be paid to
Participants currently or may be deferred, as determined by the
Administrator.  All Dividend Equivalents that are not paid currently
shall be credited to accounts on the Company’s records for purposes of the
Plan.  Dividend Equivalents may be accrued as a cash obligation, or
may be converted to Stock Units for the Participant, as determined by the
Administrator.  Unless otherwise specified in the Grant Instrument,
deferred Dividend Equivalents will not accrue interest.  The
Administrator may provide that Dividend Equivalents shall be payable based on
the achievement of specific performance goals.

       

      
        
          
          

        

        
          A-8

          
            

          

        

        
          
          

        

      

      (b) Payment with Respect to
Dividend Equivalents.  Dividend Equivalents may be payable in
cash or shares of Stock or in a combination of the two, as determined by the
Administrator.

       

      13. Other Stock-Based
Awards

       

      The
Administrator may grant other awards that are cash-based or based on, measured
by or payable in Stock to Participants, on such terms and conditions as the
Administrator deems appropriate under this Section 13.  Other
Stock-Based Awards may be granted subject to achievement of performance goals or
other conditions and may be payable in Stock or cash, or in a combination of the
two, as determined by the Administrator in the Grant Instrument.

       

      14. Qualified Performance-Based
Compensation

       

      (a) Designation as Qualified
Performance-Based Compensation.  The Administrator may
determine that Stock Units, Performance Shares, Stock Awards, Dividend
Equivalents or Other Stock-Based Awards granted to an Employee shall be
considered “qualified performance-based compensation” under section 162(m) of
the Code.  The provisions of this Section 14 shall apply to any such
Grants that are to be considered “qualified performance-based compensation”
under section 162(m) of the Code.  To the extent that Grants of Stock
Units, Performance Shares, Stock Awards, Dividend Equivalents or Other
Stock-Based Awards designated as “qualified performance-based compensation”
under section 162(m) of the Code are made, no such Grant may be made as an
alternative to another Grant that is not designated as “qualified performance
based compensation” but instead must be separate and apart from all other Grants
made.

       

      (b) Performance
Goals.  When Stock Units, Performance Shares, Stock Awards,
Dividend Equivalents or Other Stock-Based Awards that are to be considered
“qualified performance-based compensation” are granted, the Administrator shall
establish in writing (i) the objective performance goals that must be met, (ii)
the period during which performance will be measured, (iii) the maximum amounts
that may be paid if the performance goals are met, and (iv) any other conditions
that the Administrator deems appropriate and consistent with the Plan and the
requirements of section 162(m) of the Code for “qualified performance-based
compensation.”  The performance goals shall satisfy the requirements
for “qualified performance-based compensation,” including the requirement that
the achievement of the goals be substantially uncertain at the time they are
established and that the performance goals be established in such a way that a
third party with knowledge of the relevant facts could determine whether and to
what extent the performance goals have been met.  The Administrator
shall not have discretion to increase the amount of compensation that is payable
upon achievement of the designated performance goals, but the Administrator may
reduce the amount of compensation that is payable upon achievement of the
designated performance goals.

       

      (c) Criteria Used for Objective
Performance Goals.  The Administrator shall use objectively
determinable performance goals based on one or more of the following
criteria:  Stock price, earnings per share of Stock, net earnings,
operating earnings, return on assets, stockholder return, return on equity,
growth in assets, unit volume, sales, market share, or strategic business
criteria consisting of one or more objectives based on meeting specific revenue
goals, market penetration goals, geographic business expansion goals, cost
targets or goals relating to acquisitions or divestitures.  The
performance goals may relate to the Participant’s business unit or the
performance of the Company, a Subsidiary, or the Company and its Subsidiaries as
a whole, or any combination of the foregoing.  Performance goals need
not be uniform as among Participants.

       

      (d) Timing of Establishment of
Goals.  The Administrator shall establish the performance goals
in writing either before the beginning of the performance period or during a
period ending no later than the earlier of (i) 90 days after the beginning of
the performance period or (ii) the date on which 25% of the performance period
has been completed, or such other date as may be required or permitted under
applicable regulations under section 162(m) of the Code.

       

      
        
          
          

        

        
          A-9

          
            

          

        

        
          
          

        

      

      (e) Certification of
Results.  The Administrator shall certify and announce the
results for the performance period to all Participants after the Company
announces the Company’s financial results for the performance
period.  The Administrator shall determine the amount, if any, to be
paid pursuant to each Grant based on the achievement of the performance goals
and the terms of each Grant Instrument.

       

      (f) Death, Disability or Other
Circumstances.  The Administrator may provide in the Grant
Instrument that Grants shall be payable, in whole or in part, in the event of
the Participant’s death or disability, a Change of Control or under other
circumstances consistent with the Treasury regulations and rulings under section
162(m) of the Code.

       

      15. Deferrals

       

      The
Administrator may permit or require a Participant to defer receipt of the
payment of cash or the delivery of shares of Stock that would otherwise be due
to the Participant in connection with any Grant. The Administrator shall
establish rules and procedures for such deferrals. Any deferrals under the Plan
shall be intended to comply with the requirements of section 409A of the Code,
and any corresponding regulations and guidance.

       

      16. Withholding of
Taxes

       

      (a) Required
Withholding.  All Grants under the Plan shall be subject to
applicable federal (including FICA), state and local tax withholding
requirements. The Employer may require that the Participant or other person
receiving or exercising Grants pay to the Employer the amount of any federal,
state or local taxes that the Employer is required to withhold with respect to
such Grants, or the Employer may deduct from other wages paid by the Employer
the amount of any withholding taxes due with respect to such
Grants.

       

      (b) Election to Withhold
Shares.  If the Administrator so permits, a Participant may
elect to satisfy the Employer’s tax withholding obligation with respect to
Grants paid in Stock by having shares withheld, at the time such Grants become
taxable, up to an amount that does not exceed the minimum applicable withholding
tax rate for federal (including FICA), state and local tax liabilities. In
addition, with respect to any required tax withholding amount that exceeds the
minimum applicable withholding tax rate, the Administrator may permit a
Participant to satisfy such tax withholding obligation with respect to such
excess amount by providing that the Participant may elect to deliver to the
Company shares of Stock owned by the Participant that have been held by the
Participant for the requisite period of time to avoid adverse accounting
consequences to the Company. The elections described in this subsection
(b) must be in a form and manner prescribed by the Administrator and may be
subject to the prior approval of the Administrator.

       

      17. Transferability of
Grants

       

      (a) In
General.  Except as provided in this Section 17, only the
Participant may exercise rights under a Grant during the Participant’s
lifetime.  A Participant may not transfer those rights except by will
or by the laws of descent and distribution, or, with respect to Grants other
than Incentive Stock Options, if permitted in any specific case by the
Administrator, pursuant to a domestic relations order.  When a
Participant dies, the Successor Participant may exercise such rights in
accordance with the terms of the Plan.  A Successor Participant must
furnish proof satisfactory to the Company of his or her right to receive the
Grant under the Participant’s will or under the applicable laws of descent and
distribution.

       

      (b) Transfer of Nonqualified
Stock Options.  Notwithstanding the foregoing, the
Administrator may provide in a Grant Instrument that a Participant may transfer
Nonqualified Stock Options to family members of the Participant, one or more
trusts in which family members of the Participant have more than 50% of the
beneficial interest, foundations in which family members of the Participant (or
the Participant) control the management of assets, or any other entity in which
family members of the Participant (or the Participant) own more than 50% of the
voting interests, consistent with applicable securities laws, according to such
terms as the Administrator may determine; provided that the Participant receives
no consideration for the transfer of a Nonqualified Stock Option and the
transferred Nonqualified Stock Option shall continue to be subject to the same
terms and conditions as were applicable to the Nonqualified Stock Option
immediately before the transfer.

       

      
        
          
          

        

        
          A-10

          
            

          

        

        
          
          

        

      

      18. Consequences of a Change of
Control

       

      (i) Assumption of
Grants.  Upon a Change of Control where the Company is not the
surviving corporation (or survives only as a subsidiary of another corporation),
unless the Administrator determines otherwise, all outstanding Options and SARs
that are not exercised shall be assumed by, or replaced with comparable options
or rights by, the surviving corporation (or a parent or subsidiary of the
surviving corporation), and other outstanding Grants shall be converted to
similar grants of the surviving corporation (or a parent or subsidiary of the
surviving corporation).

       

      (ii) Other
Alternatives.  Notwithstanding the foregoing, in the event of a
Change of Control, the Administrator may take any of the following actions with
respect to any or all outstanding Grants: the Administrator may (i) determine
that outstanding Options and SARs shall accelerate and become exercisable, in
whole or in part, upon the Change of Control or upon such other event as the
Administrator determines, (ii) determine that the restrictions and conditions on
outstanding Stock Awards shall lapse, in whole or in part, upon the Change of
Control or upon such other event as the Administrator determines, (iii)
determine that Grantees holding Stock Units, Performance Shares, Dividend
Equivalents, and Other Stock-Based Awards shall receive a payment in settlement
of such Stock Units, Performance Shares, Dividend Equivalents, and Other
Stock-Based Awards in an amount determined by the Administrator, (iv) require
that Participants surrender their outstanding Options and SARs in exchange for a
payment by the Company, in cash or Stock, as determined by the Administrator, in
an amount equal to the amount by which the then Fair Market Value of the shares
of Stock subject to the Participant’s unexercised Options and SARs exceeds the
Option Price of the Options or the base amount of SARs, as applicable, or (v)
after giving Participants an opportunity to exercise their outstanding Options
and SARs, terminate any or all unexercised Options and SARs at such time as the
Administrator deems appropriate.  Such surrender, termination or
settlement shall take place as of the date of the Change of Control or such
other date as the Administrator may specify.  The Administrator shall
have no obligation to take any of the foregoing actions, and, in the absence of
any such actions, outstanding Grants shall continue in effect according to their
terms (subject to any assumption pursuant to subsection (a)).

       

      19. Requirements for Issuance of
Shares

       

      No shares
of Stock shall be issued or transferred in connection with any Grant hereunder
unless and until all legal requirements applicable to the issuance of such Stock
have been complied with to the satisfaction of the Administrator.  The
Administrator shall have the right to condition any Grant made to any
Participant hereunder on such Participant’s undertaking in writing to comply
with such restrictions on his or her subsequent disposition of such shares of
Stock as the Administrator shall deem necessary or advisable, and certificates
representing such shares may be legended to reflect any such
restrictions.  Certificates representing shares of Stock issued or
transferred under the Plan will be subject to such stop-transfer orders and
other restrictions as may be required by applicable laws, regulations and
interpretations, including any requirement that a legend be placed
thereon.

       

      20. Amendment and Termination of
the Plan

       

      (a) Amendment.  The
Board may amend or terminate the Plan at any time; provided, however, that the
Board shall not amend the Plan without approval of the stockholders of the
Company if such approval is required in order to comply with the Code or
applicable laws, or to comply with applicable stock exchange
requirements.  No amendment or termination of this Plan shall, without
the consent of the Participant, impair any rights or obligations under any Grant
previously made to the Participant, unless such right has been reserved in the
Plan or the Grant Instrument, or except as provided in Section 21(b)
below.

       

      
        
          
          

        

        
          A-11

          
            

          

        

        
          
          

        

      

      (b) No Repricing Without
Stockholder Approval.  Except in connection with a corporate
transaction involving the Company (including, without limitation, any stock
dividend, stock split, extraordinary cash dividend, recapitalization,
reorganization, merger, consolidation, split-up, spin-off, combination, or
exchange of shares), the terms of outstanding awards may not be amended to
reduce the exercise price of outstanding Options or SARs or cancel outstanding
Options or SARs in exchange for cash, other awards or Options or SARs with an
exercise price that is less than the exercise price of the original Options or
SARs without stockholder approval.

       

      (c) Stockholder Approval for
“Qualified Performance-Based Compensation.”  If Stock Units,
Performance Shares, Stock Awards, Dividend Equivalents or Other Stock-Based
Awards are granted as “qualified performance-based compensation” under Section
14 above, the Plan must be reapproved by the Company’s stockholders no later
than the first stockholders meeting that occurs in the fifth year following the
year in which the stockholders previously approved the provisions of Section 14,
if additional Grants are to be made under Section 14 and if required by section
162(m) of the Code or the regulations thereunder.

       

      (d) Termination of
Plan.  The Plan shall terminate on the day immediately
preceding the tenth anniversary of its Effective Date, unless the Plan is
terminated earlier by the Board or is extended by the Board with the approval of
the stockholders.  The termination of the Plan shall not impair the
power and authority of the Administrator with respect to an outstanding
Grant.

       

      21. Miscellaneous

       

      (a) Grants in Connection with
Corporate Transactions and Otherwise.  Nothing contained in
this Plan shall be construed to (i) limit the right of the Administrator to make
Grants under this Plan in connection with the acquisition, by purchase, lease,
merger, consolidation or otherwise, of the business or assets of any
corporation, firm or association, including Grants to employees thereof who
become Employees, or for other proper corporate purposes, or (ii) limit the
right of the Company to grant stock options or make other awards outside of this
Plan.  Without limiting the foregoing, the Administrator may make a
Grant to an employee of another corporation who becomes an Employee by reason of
a corporate merger, consolidation, acquisition of stock or property,
reorganization or liquidation involving the Company in substitution for a grant
made by such corporation.  The terms and conditions of the substitute
Grants may vary from the terms and conditions required by the Plan and from
those of the substituted stock incentives.  The Administrator shall
prescribe the provisions of the substitute Grants.

       

      (b) Compliance with
Law.  The Plan, the exercise of Options and the obligations of
the Company to issue or transfer shares of Stock under Grants shall be subject
to all applicable laws and to approvals by any governmental or regulatory agency
as may be required. With respect to persons subject to section 16 of the
Exchange Act, it is the intent of the Company that the Plan and all transactions
under the Plan comply with all applicable provisions of Rule 16b-3 or its
successors under the Exchange Act. In addition, it is the intent of the Company
that the Plan and applicable Grants comply with the applicable provisions of
sections 162(m), 409A and 422 of the Code. To the extent that any legal
requirement of section 16 of the Exchange Act or sections 162(m), 409A or 422 of
the Code as set forth in the Plan ceases to be required under section 16 of the
Exchange Act or sections 162(m), 409A or 422 of the Code, that Plan provision
shall cease to apply. The Administrator may revoke any Grant if it is contrary
to law or modify a Grant to bring it into compliance with any valid and
mandatory government regulation. The Administrator may also adopt rules
regarding the withholding of taxes on payments to Participants. The
Administrator may, in its sole discretion, agree to limit its authority under
this Section.

       

      
        
          
          

        

        
          A-12

          
            

          

        

        
          
          

        

      

      (c) Enforceability.  The
Plan shall be binding upon and enforceable against the Company and its
successors and assigns.

       

      (d) Funding of the Plan;
Limitation on Rights.  This Plan shall be
unfunded.  Neither the Company or any other Employer shall be required
to establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Grants under this Plan.  Nothing
contained in the Plan and no action taken pursuant hereto shall create or be
construed to create a fiduciary relationship between the Company or any other
Employer and any Participant or any other person.  No Participant or
any other person shall under any circumstances acquire any property interest in
any specific assets of the Company or any other Employer.  To the
extent that any person acquires a right to receive payment from the Company
hereunder, such right shall be no greater than the right of any unsecured
general creditor of the Company.

       

      (e) Rights of
Participants.  Nothing in this Plan shall entitle any
Participant or other person to any claim or right to receive a Grant under this
Plan.  Neither this Plan nor any action taken hereunder shall be
construed as giving any individual any rights to be retained by or in the
employment or service of the Employer.

       

      (f) No Fractional
Shares.  No fractional shares of Stock shall be issued or
delivered pursuant to the Plan or any Grant.  The Administrator shall
determine whether cash, other awards or other property shall be issued or paid
in lieu of such fractional shares or whether such fractional shares or any
rights thereto shall be forfeited or otherwise eliminated.

       

      (g) Governing
Law.  The validity, construction, interpretation and effect of
the Plan and Grant Instruments issued under the Plan shall be governed and
construed by and determined in accordance with the laws of the State of
Delaware, without giving effect to the conflict of laws provisions
thereof.

       

      A-13

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