Document:

EX-10.1

Exhibit 10.1

PURCHASE AGREEMENT

     THIS PURCHASE AGREEMENT (this “Agreement”) is effective as of the 17th day of
February, 2009, by and between Flagstar Bancorp, Inc. (the “Company”), a corporation
organized under the laws of the State of Michigan, with its principal offices at 5151 Corporate
Drive, Troy, Michigan 48098-2639 and MP Thrift Investments L.P., a Delaware limited partnership
(the “Purchaser”).

     WHEREAS, the Company entered into an Investment Agreement dated as of December 17, 2008 with
the Purchaser (the “Investment Agreement”), pursuant to which the Purchaser purchased from
the Company 250,000 shares of the Company’s Convertible Participating Voting Preferred Stock,
Series B (the “Series B Preferred Stock”), at a purchase price of $1,000 per share, with
each share convertible into common stock, par value $0.01 per share, of the Company (the
“Common Stock”), at the liquidation preference divided by $0.80;

     WHEREAS, all capitalized terms used in this Agreement, but which are not defined herein, shall
have the definition that is ascribed to them under the Investment Agreement;

     WHEREAS, in connection with the issuance of the Series B Preferred Stock, the Company entered
into an Amendment and Waiver Agreement dated as of January 30, 2009 with the Purchaser (the
“Closing Agreement”), pursuant to which, subject to the terms and conditions set forth
therein, the Company agreed to issue and sell, and, the Purchaser agreed to purchase: (i) 50,000
shares of the Company’s preferred stock with terms substantially identical to the Series B
Preferred Stock at a purchase price of $1,000 per share, with each share convertible into Common
Stock, at the liquidation preference divided by $0.80 (the “Conversion Shares”), and (ii)
$50 million of trust preferred securities with a 10% coupon, both as described in the Closing
Agreement.

     IN CONSIDERATION of the mutual covenants contained in this Agreement, the Company and the
Purchaser agree as follows:

     SECTION 1. Agreement to Sell and Purchase the Shares. At the Closing (as defined in
Section 3), the Company will, subject to the terms and conditions of this Agreement, issue and sell
to the Purchaser and the Purchaser will buy from the Company, upon the terms and conditions
hereinafter set forth, 25,000 shares of Series B Preferred Stock (the “Additional Shares”)
at $1,000 per share (the “Purchase Price”).

     SECTION 2. Delivery of the Shares at the Closing.

     2.1 The completion of the purchase and sale of the Additional Shares (the “Closing”)
shall occur on February 17, 2008 at the offices of Sullivan & Cromwell LLP located at 125 Broad
Street, New York, New York 10004 or such other date or location as agreed by the parties, but not
prior to the date that the conditions for Closing set forth below have been satisfied or waived by
the appropriate party (the “Closing Date”).

 

 

     2.2 At the Closing, the Purchaser shall deliver, in immediately available funds, the full
amount of the Purchase Price for the Additional Shares being purchased hereunder to an
account designated by the Company and the Company shall deliver to the Purchaser the
Additional Shares evidenced by one or more share certificates incorporating the terms set forth in
the certificate of designations of the Series B Preferred Stock bearing an appropriate legend
referring to the fact that the Series B Preferred Stock were sold in reliance upon the exemption
from registration under the Securities Act of 1933, as amended (the “Securities Act”),
provided by Section 4(2) thereof and Rule 506 thereunder as more further described in Section 3.5.

     SECTION 3. Representations, Warranties and Covenants of the Purchaser. The Purchaser
represents and warrants to, and covenants with, the Company that:

     3.1 Experience. (i) The Purchaser is knowledgeable, sophisticated and experienced in
financial and business matters, in making, and is qualified to make, decisions with respect to
investments in shares representing an investment decision like that involved in the purchase of the
Additional Shares, including investments in securities issued by the Company and comparable
entities, has the ability to bear the economic risks of an investment in the Additional Shares and
has reviewed carefully the information provided by the Company to the Purchaser in connection with
this Agreement and the purchase of the Additional Shares hereunder, and has requested, received,
reviewed and considered all information it deems relevant in making an informed decision to
purchase the Additional Shares; (ii) the Purchaser is acquiring Additional Shares in the ordinary
course of its business and for its own account for investment only and with no present intention of
distributing any of the Additional Shares or any arrangement or understanding with any other
persons regarding the distribution of such Additional Shares (this representation and warranty not
limiting the Purchaser’s right to sell pursuant to a registration statement or in compliance with
the Securities Act and the rules and regulations promulgated thereunder (the “Rules and
Regulations”)); (iii) the Purchaser will not, directly or indirectly, offer, sell, pledge,
transfer or otherwise dispose of (or solicit any offers to buy, purchase or otherwise acquire or
take a pledge of) any of the Additional Shares, nor will the Purchaser engage in any short sale
that results in a disposition of any of the Additional Shares by the Purchaser, except in
compliance with the Securities Act and the Rules and Regulations and any applicable state
securities laws; (iv) the Purchaser is an “accredited investor” within the meaning of Rule 501(a)
of Regulation D promulgated under the Securities Act.

     3.2 Reliance on Exemptions. The Purchaser understands that the Additional Shares are
being offered and sold to it in reliance upon specific exemptions from the registration
requirements of the Securities Act, the Rules and Regulations and state securities laws and that
the Company is relying upon the truth and accuracy of, and the Purchaser’s compliance with, the
representations, warranties, agreements, acknowledgments and understandings of the Purchaser set
forth herein in order to determine the availability of such exemptions and the eligibility of the
Purchaser to acquire the Additional Shares.

     3.3 Investment Decision. The Purchaser understands that nothing in the Agreement or
any other materials presented to the Purchaser in connection with the purchase and sale of the
Additional Shares, constitutes legal, tax or investment advice. The Purchaser has consulted such
legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or
appropriate in connection with its purchase of the Additional Shares.

2

 

     3.4 Risk of Loss. The Purchaser understands that its investment in the Additional
Shares involves a significant degree of risk, including a risk of total loss of the Purchaser’s
investment, and the Purchaser has full cognizance of and understands all of the risk factors
related to the Purchaser’s purchase of the Securities. The Purchaser understands that the market
price of the Common Stock into which the Additional Shares is convertible has been volatile, and
that no representation is being made as to the future value of the Additional Shares.

     3.5 Legend. The Purchaser understands that, until such time as a registration
statement has been declared effective or the Additional Shares may be sold pursuant to Rule 144
under the Securities Act without any restriction as to the number of securities as of a particular
date that can then be immediately sold, the Additional Shares will bear a restrictive legend in
substantially the following form:

“THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR SECURITIES LAWS OF ANY STATE AND MAY NOT BE
TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT
RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO TRANSFER AND OTHER
RESTRICTIONS SET FORTH IN AN INVESTMENT AGREEMENT, DATED AS OF DECEMBER 17, 2008,
COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF THE ISSUER.”

     3.6 Transfer Restrictions. Consistent with the legend set forth in Section 3.5, the
Additional Shares may only be disposed of in compliance with state and federal securities laws and
the transfer and other restrictions set forth in the Investment Agreement as if they were
“Securities” thereunder.

     SECTION 4. Representations, Warranties and Covenants of the Company. The Company
represents and warrants to, and covenants with, the Purchaser that:

     4.1 Organization and Standing. The Company has been duly incorporated and is an
existing corporation in good standing under the laws of the State of Michigan.

     4.2 Execution and Delivery; Enforceability. The execution, delivery and performance of
this Agreement by the Company and the consummation of the transactions contemplated hereby have
been duly authorized by the Board of Directors. This Agreement has been duly and validly executed
and delivered by the Company and, assuming due authorization, execution and delivery by Purchaser,
is a valid and binding obligation of the Company enforceable against the Company in accordance with
its terms (except as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating
to or affecting creditors’ rights or by general equity principles). No
other corporate proceedings are necessary for the execution and delivery by the Company of
this Agreement, the performance by it of its obligations hereunder or the consummation by it of the
transactions contemplated hereby, subject, in the case of the authorization of the Conversion
Shares, to receipt of the Stockholder Approvals identified in the Certificate of Designations.

3

 

     4.3 Due Authorization. The Additional Shares have been duly authorized and, when
issued and delivered against receipt of consideration therefore as provided in this Agreement, will
be validly issued, fully paid and non-assessable, will not be issued in violation of or subject to
preemptive rights of any other stockholder of the Company and will not result in the violation or
triggering of any price-based antidilution adjustments under any agreement to which the Company is
a party. The voting rights of the holders of the Additional Shares will be enforceable in
accordance with the terms of the Certificate of Designations. The Certificate of Designations has
been filed with the Secretary of State of the state of Michigan and, as of the Closing Date, will
be in full force and effect and enforceable against the Company in accordance with its terms.

     4.4 Governmental Consents. No consent, approval, authorization or other order of any
court, regulatory body, administrative agency or other governmental agency or body is required for
the execution and delivery of this Agreement or the consummation of the transactions contemplated
by this Agreement, except for compliance with the Blue Sky laws and federal securities laws
applicable to the offering of the Shares and such consents, approvals, authorizations or other
orders as have been obtained and are in full force and effect.

     4.5 No Conflicts. Neither the execution and delivery by the Company of this
Agreement, nor the consummation of the transactions contemplated hereby, nor compliance by the
Company with any of the provisions hereof (including, without limitation, the conversion provisions
of the Convertible Preferred Stock), will (A) violate, conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or result in the loss of any
benefit or creation of any right on the part of any third party under, or accelerate the
performance required by, or result in a right of termination or acceleration of, or result in the
creation of any liens, charges, adverse rights or claims, pledges, covenants, title defects,
security interests and other encumbrances of any kind upon any of the material properties or assets
of the Company or any Subsidiary under any of the terms, conditions or provisions of (i) subject in
the case of the authorization and issuance of the Conversion Shares to receipt of the approval by
the Company’s stockholders of the Stockholder Proposals, its Certificate of Incorporation or bylaws
(or similar governing documents) or the certificate of incorporation, charter, bylaws or other
governing instrument of any Subsidiary or (ii) any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which the Company or any Subsidiary
is a party or by which it may be bound, or to which the Company or any Subsidiary or any of the
properties or assets of the Company or any Subsidiary may be subject, or (B) violate any law,
statute, ordinance, rule, regulation, permit, concession, grant, franchise or any judgment, ruling,
order, writ, injunction or decree applicable to the Company or any Subsidiary or any of their
respective properties or assets.

4

 

     SECTION 5. Registration Rights. The Purchaser shall have the right to have the
Additional Shares (including the Conversion Shares) registered for resale under the Securities Act,
and related indemnification rights, as set forth in Section 4.7 of the Investment Agreement,
as if the Additional Shares (including the Conversion Shares) were “Registrable Securities”
thereunder.

     SECTION 6. New York Stock Exchange Listing. The Company shall promptly use its
reasonable best efforts to cause the Conversion Shares to be approved for listing of the New York
Stock Exchange or such other nationally recognized securities exchange on which the Common Stock
may be listed, subject to official notice of issuance.

     SECTION 7. Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be mailed by first-class registered or certified airmail,
e-mail, confirmed facsimile or nationally recognized overnight express courier postage prepaid, and
shall be deemed given when so mailed and shall be delivered as addressed as follows:

	 	(a)	 	if to the Company, to:

	 	 	 	Flagstar Bancorp, Inc.

5151 Corporate Drive,

Troy, Michigan 48098-2639

Attention: Mr. Paul Borja

Facsimile: (248) 312-6833

E-mail: paul.borja@flagstar.com

	 
	 	 	 	with a copy to:

	 
	 	 	 	Kutak Rock LLP

1101 Connecticut Avenue, N.W.

Suite 1000

Washington, DC 20036-4374

Attention: Jeremy Johnson, Esq.

Facsimile: (202) 828-2488

E-mail: jeremy.johnson@KutakRock.com

     or to such other person at such other place as the Company shall designate to the Purchaser in
writing; and

5

 

	 	(b)	 	if to a Purchaser, to:

	 	 	 	MP Thrift Investments L.P.

520 Madison Avenue

New York, New York 10022

Attention: Robert H. Weiss, General Counsel

Facsimile: (212) 651-4014

	 
	 	 	 	with a copy to:

	 
	 	 	 	Sullivan & Cromwell LLP

125 Broad Street

New York, New York 10004

Attention: Mitchell S. Eitel, Esq.

                 George J. Sampas, Esq.

Facsimile: (212) 558-3588

     or at such other address or addresses as may have been furnished to the Company in writing.

     SECTION 8. Changes. This Agreement may not be modified or amended except pursuant to
an instrument in writing signed by the Company and the Purchaser. Any amendment or waiver effected
in accordance with this Section 6 shall be binding upon the Purchaser and the Company.

     SECTION 9. Headings. The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be part of this Agreement.

     SECTION 10. Severability. In case any provision contained in this Agreement should be
invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or impaired thereby.

     SECTION 11. Governing Law; Venue. This Agreement is to be construed in accordance
with and governed by the federal law of the United States of America and the internal laws of the
State of New York without giving effect to any choice of law rule that would cause the application
of the laws of any jurisdiction other than the internal laws of the State of New York to the rights
and duties of the parties, except that the parties hereto intend that the provisions of Sections
5-1401 and 5-1402 of the New York general obligations law shall apply to this Agreement. Each of
the Company and the Purchaser submits to the nonexclusive jurisdiction of the United States
District Court for the Southern District of New York and of any New York State court sitting in New
York City for purposes of all legal proceedings arising out of or relating to this Agreement and
the transactions contemplated hereby. Each of the Company and the Purchaser irrevocably waives, to
the fullest extent permitted by law, any objection that it may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court

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and any claim that any such proceeding brought in such a court has been brought in an
inconvenient forum.

     SECTION 12. Counterparts; Facsimile. This Agreement may be executed in counterparts,
each of which shall constitute an original, but all of which, when taken together, shall constitute
but one instrument, and shall become effective when one or more counterparts have been signed by
each party hereto and delivered to the other parties. Facsimile signatures shall be deemed
original signatures.

     SECTION 13. Entire Agreement. This Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters covered herein and
therein and, except as specifically set forth herein or therein, neither the Company nor the
Purchaser makes any representation, warranty, covenant or undertaking with respect to such matters.
Each party expressly represents and warrants that it is not relying on any oral or written
representations, warranties, covenants or agreements outside of this Agreement.

     SECTION 14. Further Assurances. Each party agrees to cooperate fully with the other
parties and to execute such further instruments, documents and agreements and to give such further
written assurance as may be reasonably requested by any other party to evidence and reflect the
transactions described herein and contemplated hereby and to carry into effect the intents and
purposes of this Agreement.

[Remainder of Page Left Intentionally Blank]

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     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly
authorized representatives as of the day and year first above written.

	 	 	 	 	 
	 	FLAGSTAR BANCORP, INC.

 	 
	 	By:	/s/ Matthew Roslin
 	 
	 	 	Name:  	Matthew Roslin 	 
	 	 	Title:  	EVP 	 
	 
	 
	 
	 	MP THRIFT INVESTMENTS L.P.

 	 
	 	By:  	MP (Thrift) Global Partners III LLC,
 	 
	 	 	its General Partner 	 

	 	 	 
	 	                                           /s/ Robert H. Weiss
 	 
	 	Name: Robert H. Weiss  	 
	 	Title:   General Counsel  	 
	 

8EX-10.1

EXHIBIT 10.1

AAM 2009 Long-Term Incentive Plan

(Effective January 1, 2009)

 

 

Contents

	 	 	 	 	 
	Article 1. Establishment, Purpose, and Duration
	 	 	1	 
	 
	 	 	 	 
	Article 2. Definitions
	 	 	1	 
	 
	 	 	 	 
	Article 3. Administration
	 	 	4	 
	 
	 	 	 	 
	Article 4. Eligibility and Participation
	 	 	4	 
	 
	 	 	 	 
	Article 5. Award Opportunity, Performance Goals, and Performance Period
	 	 	4	 
	 
	 	 	 	 
	Article 6. Employment and Participation
	 	 	5	 
	 
	 	 	 	 
	Article 7. Amendment and Termination
	 	 	6	 
	 
	 	 	 	 
	Article 8. Tax Withholding
	 	 	6	 
	 
	 	 	 	 
	Article 9. Indemnification
	 	 	6	 
	 
	 	 	 	 
	Article 10. Successors
	 	 	6	 
	 
	 	 	 	 
	Article 11. Nature of the Plan
	 	 	6	 
	 
	 	 	 	 
	Article 12. Legal Construction
	 	 	7	 
	 
	 	 	 	 
	Article 13. Section 409A
	 	 	7	 

 

 

AAM 2009 Long-Term Incentive Plan

Article 1. Establishment, Purpose, and Duration

     1.1 Establishment of the Plan. American Axle & Manufacturing Holdings, Inc. (the “Company”), a
Delaware corporation, hereby establishes an incentive compensation plan to be known as the “AAM
2009 Long-Term Incentive Plan” (the “Plan”), as set forth in this document. The Plan permits the
payment of cash awards based upon the achievement of predefined performance goals established by
the Committee.

     The Plan shall become effective as of January 1, 2009 (the “Effective Date”) and shall remain
in effect as provided in Section 1.3 hereof.

     1.2 Purpose of the Plan. The purposes of the Plan are to reward Participants for the overall
success of the Company; to provide Participants with an incentive for excellence in individual
performance; to retain key senior employees; and to provide a competitive and valuable long-term
incentive program for Participants.

     1.3 Duration of the Plan. The Plan shall commence on the Effective Date and shall remain in
effect, subject to the right of the Board to alter, amend, suspend, or terminate the Plan at any
time pursuant to Article 7 hereof.

Article 2. Definitions

     For purposes of the Plan, the capitalized words shall have the meanings set forth below:

	 	(a)	 	“Affiliate” means any Parent or Subsidiary and any person that directly or indirectly
through one or more intermediaries, controls, is controlled by, or is under common control
with, the Company.
	 
	 	(b)	 	“Award” means a grant under the Plan of a cash incentive opportunity to be earned by
and paid to a Participant pursuant to the terms of the Plan and Award Document.
	 
	 	(c)	 	“Award Document” means an agreement, certificate or other type or form of document or
documentation approved by the Committee that sets forth the terms and conditions of an
Award. An Award Document may be written, electronic, or other media, may be limited to a
notation on the books and records of the Company and, unless the Committee requires
otherwise, need not be signed by a representative of the Company or Participant.
	 
	 	(d)	 	“Award Opportunity” or “Award Opportunities” means the Award or Awards that a
Participant can earn based upon the achievement of a pre-established performance goal or
goals during a Performance Period as specified in the Participant’s Award Document and
pursuant to the terms of the Plan.
	 
	 	(e)	 	“Beneficial Owner” or “Beneficial
Ownership” shall have the meaning ascribed to such
terms in Rule 13d-3 of the General Rules and Regulations under the Exchange Act.

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	 	(f)	 	“Board of Directors” or “Board” means the Board of Directors of the Company.
	 
	 	(g)	 	“Change in Control” means any of the following events:

	 	(i)	 	Any Person, excluding the Company and any subsidiary and any employee
benefit plan sponsored or maintained by the Company or any subsidiary (including
any trustee of such plan acting as trustee), directly or indirectly, becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act), of securities
of the Company representing 20% or more of the combined voting power of the
Company’s then outstanding securities; or
	 
	 	(ii)	 	The consummation of any merger or other business combination involving
the Company, a sale of 51% or more of the Company’s assets, liquidation or
dissolution of the Company or a combination of the foregoing transactions (the
“Transactions”) other than a Transaction immediately following which the
shareholders of the Company immediately prior to the Transaction own, in the same
proportion, at least 51% of the voting power, directly or indirectly, of (A) the
surviving corporation in any such merger or other business combination; (B) the
purchaser of or successor to the Company’s assets; (C) both the surviving
corporation and the purchaser in the event of any combination of Transactions; or
(D) the parent company owning 100% of such surviving corporation, purchaser or both
the surviving corporation and the purchaser, as the case may be; or
	 
	 	(iii)	 	Within any 24-month period, the persons who were directors immediately
before the beginning of such period (the “Incumbent Directors”) cease (for any
reason other than death) to constitute at least a majority of the Board or the
board of directors of a successor to the Company. For this purpose, any director
who was not a director at the beginning of such period shall be deemed to be an
Incumbent Director if such director was elected to the Board by, or on the
recommendation of or with the approval of, at least two thirds of the directors who
then qualified as Incumbent Directors, so long as such director was not nominated
by a person who commenced or threatened to commence an election contest or proxy
solicitation by or on behalf of a person (other than the Board) or who has entered
into an agreement to effect a Change in Control or expressed an intention to cause
such a Change in Control.

	 	(h)	 	“Code” means the Internal Revenue Code of 1986, as amended from time to time.
	 
	 	(i)	 	“Committee” means the Compensation Committee of the Board, which shall consist
entirely of “non-employee directors” for purposes of Rule 16b-3 of the Exchange Act and
“outside directors” for purposes of Section 162(m) of the Code; provided, however, that a
failure to meet such requirements shall not invalidate awards granted or decisions made by
the Committee.
	 
	 	(j)	 	“Director” means any individual who is a member of the Board of Directors of the
Company.

2

 

	 	(k)	 	“Disability” shall have the meaning ascribed to such term in the governing long-tern
disability plan pursuant to which the Participant may be entitled to benefits, if any, or
if there shall be no such plan, as determined by the Committee in its absolute discretion.
	 
	 	(l)	 	“Effective Date” shall have the meaning ascribed to such term in Section 1.1 hereof.
	 
	 	(m)	 	“Eligible Individuals” means the individuals described in Article 4 who are eligible
for Awards under the Plan..
	 
	 	(n)	 	“Exchange Act” means the Securities Exchange Act of 1934, as amended from time to
time, or any successor act thereto.
	 
	 	(o)	 	“Participant” means Eligible Individual who has been granted an Award under the Plan.
	 
	 	(p)	 	“Performance Period” means the period established by the Committee and set forth in
the Award Document over which performance goals are measured.
	 
	 	(q)	 	“Person” shall have the meaning ascribed to such term in Section 3(a)(9) of the
Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined
in Section 13(d) thereof.
	 
	 	(r)	 	“Retirement” means, with respect to any Participant, such Participant’s voluntary
resignation at any time after attaining age 65 or as such term is defined in the governing
retirement plan(s) to which the Participant may be entitled to benefits, if any.
	 
	 	(s)	 	“Subsidiary” means

	 	(i)	 	a corporation or other entity with respect to which the Company,
directly or indirectly, has the power, whether through the ownership of voting
securities, by contract or otherwise, to elect at least a majority of the members
of the board of directors or analogous governing body, or
	 
	 	(ii)	 	any other corporation or other entity in which the Company, directly or
indirectly, has an equity or similar interest and that the Committee designates as
a Subsidiary for purposes of the Plan. For purposes of determining eligibility for
the grant of Incentive Stock Options under the Plan, the term “Subsidiary” shall be
defined in the manner required by Section 424(f) of the Code.

	 	(t)	 	“Target Award Opportunity” means the target award opportunity specified in the
Participant’s Award Document, as determined by the Committee.

Article 3. Administration

     3.1 The Committee. The Plan shall be administered by the Committee.

3

 

     3.2 Authority of the Committee. Except as limited by law or by the Certificate of
Incorporation or Bylaws of the Company, and subject to the provisions herein, the Committee shall
have full and absolute discretionary power to select Eligible Individuals who shall participate in
the Plan; determine the terms and conditions of Awards and Award Documents in a manner consistent
with the Plan; construe and interpret the Plan and any agreement or instrument entered into under
the Plan (including, without limitation, any Award Document); establish, amend, or waive rules and
regulations for the Plan’s administration; and, subject to the provisions of Article 7 herein,
amend the terms and conditions of any outstanding Award to the extent such terms and conditions are
within the discretion of the Committee as provided in the Plan and the related Award Document.
Further, the Committee shall make all other determinations which may be necessary or advisable for
the administration of the Plan.

     3.3 Decisions Binding. All interpretations, determinations, and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders and resolutions of the
Committee shall be final, conclusive, and binding on all individuals or entities, including the
Company, Eligible Individuals, Participants, and their estates and beneficiaries.

Article 4. Eligibility and Participation

     4.1 Eligible Individuals. Awards may be granted to officers, executives and other key
employees, as determined by the Compensation Committee, directors and Non-Employee Directors of the
Company or any of its Subsidiaries or joint ventures, partnerships or business organizations in
which the Company or its Subsidiaries have an equity interest. Only employees of the Company or a
Parent or Subsidiary may be granted Awards. The Committee shall have the authority to select the
persons to whom Awards may be granted and to determine the number and terms of Awards to be granted
to each Participant. Under the Plan, references to “employment” or “employed” include the service
of Participants who are Non-Employee Directors, except for purposes of determining eligibility.

     4.2 Actual Participation. The Committee, in its sole discretion, shall determine which
Eligible Individuals shall participate in the Plan during a Performance Period. Such determination
shall be made no later than three months after the start of each applicable Performance Period. The
Committee shall have no obligation to grant any Eligible Individual an Award or to designate an
Eligible Individual as a Participant solely by reason of the Eligible Individual having received a
prior Award or having been previously designated as a Participant. The Committee may grant more
than one Award to a Participant and may designate an Eligible Individual as a Participant for
overlapping periods of time.

Article 5. Award Opportunity, Performance Goals, and Performance Period

     5.1 Setting Award Opportunities. The Committee shall determine the duration of each
Performance Period and set each Participant’s Award Opportunities with respect to a Performance
Period. In addition, the Committee shall establish the performance goal or goals that must be
achieved during a Performance Period for a Participant to earn and be paid his Award. The Committee
shall specify the foregoing in each Participant’s Award Document.

     5.2 Earning Awards. Subject to the terms of the Plan and the Award Document, an Award shall be
earned by and paid to a Participant for a Performance Period based on the
achievement of the performance goal or performance goals for such Performance Period as set
forth in his Award Document.

4

 

     5.3 Award Document. The right to earn and be paid an Award shall be evidenced by an Award
Document that shall specify the Performance Period, the Participant’s Target Award Opportunity for
the Performance Period, the performance measures and related performance goals for earning an
Award, the determination of the Participant’s Award, and such other provisions as the Committee
shall determine. Award Documents may differ among Participants. The right to earn an Award by a
Participant under an Award Document shall not confer upon any other Participant or Eligible
Individual or any future Participant or Eligible Individual a right to the same or similar
benefits.

     5.4 Form and Timing of Payment of Awards. Payment of an Award shall be made solely in cash in
a single lump sum at such time as specified in a Participant’s Award Document and shall be subject
to the approval of the Committee.

     5.5 Effect of Termination of Employment. The effect of a Participant’s termination of
employment during a Performance Period regarding an outstanding Award, if any, shall be specified
in the Participant’s Award Document.

     5.6 Effect of a Change in Control. The effect of a Change in Control during a Performance
Period on a Participant’s outstanding Award, if any, shall be specified in the Award Document.

     5.7 Nontransferability. The Award may not be assigned, alienated, pledged, attached, sold or
otherwise transferred or encumbered by the Participant other than by will or by the laws of descent
and distribution. Except for the designation of the Participant’s beneficiary, the purported
assignment, alienation, pledge, attachment, sale, transfer or encumbrance of the Award shall be
void and unenforceable against the Company or any Affiliate.

Article 6. Employment and Participation

     6.1 Employment. Neither this Plan nor the Award Document shall be construed as giving the
Participant the right to be retained in the employ of, or in any consulting relationship to, the
Company or any Affiliate. Further, the Company or any Affiliate may at any time dismiss the
Participant or discontinue any consulting relationship, free from any liability or any claim under
this Plan or the Award Document, except as expressly provided in this Plan.

     6.2 Participation. No employee shall have the right to be selected to be paid an Award under
this Plan, or, having been so selected, to be paid an award at a future date.

Article 7. Amendment and Termination

     7.1 Amendment and Termination. The Board may, at any time and from time to time, alter, amend,
suspend, or terminate the Plan in whole or in part.

     7.2 Effect of Amendment or Termination. No amendment or termination of the Plan may adversely
affect in any material way any Award previously granted under the Plan without the written consent
of the Participant holding such Award.

5

 

Article 8. Tax Withholding

     The Company shall have the right to deduct or withhold, or require a Participant to remit to
the Company, an amount sufficient to satisfy federal, state, and local taxes, as required by law or
regulation to be withheld with respect to any taxable event arising as a result of this Plan.

Article 9. Indemnification

     Each individual who is or shall have been a member of the Committee, or of the Board, shall be
indemnified by the Company against and from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him in connection with or resulting from any claim, action,
suit, or proceeding to which he may be a party or in which he may be involved by reason of any good
faith action taken or good faith failure to act under the Plan. Such individuals shall be
indemnified by the Company for all amounts paid by him in settlement thereof, with the Company’s
approval, or paid by him in satisfaction of any judgment in any such action, suit, or proceeding
against him; provided he shall give the Company an opportunity, at its own expense, to handle and
defend the same before he undertakes to handle and defend it on his own behalf. The foregoing right
of indemnification shall not be exclusive of any other rights of indemnification to which such
individuals may be entitled under the Company’s Articles of Incorporation or Bylaws, as a matter of
law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

Article 10. Successors

     All obligations of the Company under the Plan shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially of all of the business and/or assets
of the Company.

Article 11. Nature of the Plan

     The Plan constitutes a mere promise by the Company to make benefit payments in the future. A
Participant has the status of a general unsecured creditor of the Company. Nothing contained herein
shall be deemed to create a trust or fund of any kind or create any fiduciary relationship. The
Plan is intended to be an unfunded arrangement for tax purposes and for purposes of Title I of the
Employee Retirement Income Security Act of 1974, as amended.

Article 12. Miscellaneous

     12.1 Gender and Number. Except where otherwise indicated by the context, any masculine term
used herein also shall include the feminine; the plural shall include the singular and the singular
shall include the plural.

     12.2 Severability. In the event any provision of the Plan shall be held illegal or invalid for
any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and the
Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

6

 

     12.3 Requirements of Law. The grant of Awards under the Plan and any Award Document shall be
subject to all applicable laws, rules, and regulations, and to such approvals by any governmental
agencies or national securities exchanges as may be required.

     12.4 Governing Law. To the extent not preempted by federal law, the Plan, and all agreements
hereunder, shall be construed in accordance with and governed by the laws of the state of New York,
without giving effect to the principles of conflicts of law.

Article 13. Section 409A

     Awards granted pursuant to the Plan are intended to satisfy the requirements of Section 409A
of the Code with respect to amounts subject thereto and shall be interpreted and construed in a
manner consistent with that intent. If any provision of this Plan or an Award Document causes the
Award not to satisfy the requirements of Section 409A of the Code, or could otherwise cause the
Participant to recognize income or be subject to the interest and penalties under section 409A of
the Code, then the provision shall have no effect or, to the extent practicable, the Company may
modify the provision to maintain the original intent without violating the requirements of Section
409A of the Code.

7

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