Document:

Exhibit 10.1

 

	

    	
HUMAN RESOURCES ONLY
    	
SECTION:
    	
2
    
	
HRS-HRM-PP-01
    	
SUBSECTION:
    	
1.1
    
	
 
    	
 
    	
 
    
	
 
    	
CAREER DEVELOPMENT

EMPLOYMENT

Executive Severance Benefit
    	
 
    	
 
    

 

1                                         POLICY

 

The Company will provide executives who are terminated for the convenience of the Company with the severance benefits as defined herein. Whether a termination is for the convenience of the Company will be determined by the Executive Compensation Committee in its sole discretion.

 

2                                         PURPOSE

 

The purpose of this policy is to define the executive severance policy of the Company.

 

3                                         DEFINITIONS

 

The following terms as used in this policy shall have the following meaning:

 

“Affiliate” shall mean with respect to the Company, any corporation, partnership, trust, association, limited liability company, joint venture, joint-stock company or any other entity or organization, that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the Company.

 

“Cause” shall mean the executive’s (1) willful and continued failure to substantially perform his or her duties with the Company (other than any such failure resulting from incapacity due to physical or mental illness), (2) willful engagement in conduct which is materially and demonstrably injurious to the Company or its Subsidiaries, monetarily or otherwise, or (3) indictment of a felony or a misdemeanor involving moral turpitude.  For purposes of clauses (1) and (2) of this definition, no act, or failure to act, on the executive’s part shall be deemed “willful” unless done, or omitted to be done, by the executive not in good faith and without reasonable belief that such act, or failure to act, was in the best interest of the Company.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended.

 

“Committee” shall mean the Executive Compensation Committee of Transocean Ltd.

 

“Company” shall mean Transocean Ltd.

 

“Confidential Information” shall mean information:  (i) disclosed to or known by executive as a consequence of or through executive’s employment with the Company or its Affiliates; (ii) not generally known outside the Company or its Affiliates; and (iii) which relates to any aspect of the Company or its Affiliates or their business, finances, operation plans, budgets, research, or strategic development.  “Confidential Information” includes, but is not limited to, the Company’s or its Affiliates’ trade secrets, proprietary information, financial documents, long range plans, customer information, employee compensation, marketing strategy, data bases, pricing and costing data, patent information, computer software developed by the Company or any of its Affiliates, investments made by the Company or any of its Affiliates, and any information provided to the Company or any of its Affiliates by a third party under restrictions against disclosure or use by the Company or any of its Affiliates or others.

 

“Convenience of the Company” shall mean (i) an involuntary separation from service that is not for Cause and that is determined by the Executive Compensation Committee to be for the convenience of the Company, and (ii) a voluntary separation from service for Good Reason.

 

“Good Reason” means (1) a diminution of the executive’s duties or responsibilities, or a demotion of the executive’s position, to such an extent or in such a manner as to relegate the executive to a

 

 

position not substantially similar to that which he or she held prior to such reduction or change or (2) a material reduction in the executive’s base salary or annual incentive plan opportunities, other than in connection with such reductions that are applicable to the Company’ s executives as a group.  The Executive Compensation Committee of the Company shall have the sole discretion to determine whether the executive’s termination is for Good Reason, provided that the executive shall not be considered to have terminated for Good Reason unless the executive notifies the Company in writing within 30 days of the date the event giving rise to Good Reason occurs, the Company does not cure such condition within 30 days of such notice and the executive terminates employment no later than 90 days after the date the event giving rise to Good Reason occurred.

 

“Severance Benefits” shall mean the benefits described in Sections 6.2 and 6.3 of this policy.

 

“Termination Date” shall mean the date on which executive separates from service with the Company and/or its Affiliates in accordance with U.S. Treasury Regulation 1.409A-1(h)(1)(ii).

 

“Revocation Period” shall mean seven (7) days following executive’s execution of the Waiver, Release and Separation Agreement during which period executive may revoke executive’s execution of such agreement.

 

4                                         ELIGIBILITY

 

This policy shall apply to all executives.  An executive for purposes of this policy is defined as an employee of the Company or an Affiliate who holds a job title of vice president of the Company or higher, including without limitation a vice president, senior vice president, executive vice president, chief operating officer, president, chief executive officer and executive chairman. No benefit shall be payable under this policy to employees who enter into separate written severance agreements with the Company or an Affiliate and who are entitled to receive severance payments thereunder as a result of their termination of employment. Without limiting the generality of the foregoing, an officer position held by an individual in any subsidiary of Transocean Ltd. shall not be considered in the determination of whether such individual is an executive for purposes of this policy.

 

5                                         PARTICIPATION

 

As a condition precedent to receiving the Severance Benefits, each executive will be required to execute and return to the Company a binding Waiver, Release and Separation Agreement substantially in the form attached hereto as Appendix A with such changes as may be approved by the Committee no later than the fiftieth (50th) day following the executive’s Termination Date.  If an executive fails to timely execute and return the Waiver, Release and Separation Agreement in accordance with the previous sentence, or revokes such Waiver, Release and Separation Agreement within the Revocation Period, executive shall forfeit all Severance Benefits.

 

 

6                                         SEVERANCE BENEFITS

 

An executive who has a separation from service for the Convenience of the Company shall be provided the following payments, benefits and other services as hereinafter defined.

 

6.1                               Base Salary

 

The Company will pay base salary for the period ending on the Termination Date.

 

6.2                               Bonus

 

The Company will pay the executive a lump sum amount 60 days after the Termination Date equal to a pro-rata share of executive’s target bonus opportunity pursuant to the Performance Award and Cash Bonus Plan as calculated from the first day of the performance period through the Termination Date, to the extent not otherwise payable.

 

6.3                               Severance

 

The Company will pay the executive a lump sum cash severance payment 60 days after the Termination Date equal to one year’s base salary calculated using the annual salary rate in effect for executive immediately prior to the Termination Date.

 

6.4                               Long Term Incentives

 

Terminations made under the provisions of this policy shall, for purposes of any long term incentive awards held by the executive, be deemed for the “Convenience of the Company”, as defined within the individual long term incentive plan award letters.

 

6.5                               Outplacement

 

The executive will be eligible to receive outplacement services the duration and costs for which shall be determined by the then prevailing Human Resources’ practice concerning use of outplacement services, and in no event should exceed a cost to the Company of  5% of the base annual salary of the executive immediately prior to the Termination Date.  In no event shall such outplacement benefits end later than the last day of the second calendar year that begins after the Termination Date.

 

6.6                               Other Benefits

 

Any other termination benefits will be managed consistent with current severance practices for non-executive employees.

 

 

7                                         NON-DISPARAGEMENT, NON-SOLICITATION AND CONFIDENTIALITY

 

An executive must agree to the following restrictive covenants under the Waiver, Release and Separation Agreement as a condition to the receipt of the Severance Benefits:

 

7.1                               Non-Disparagement

 

Executive shall agree that, in acting alone or in concert with others, he will not (i) publicly criticize or disparage the Company or its Affiliates or any of their officers, employees, directors or agents, or privately criticize or disparage the Company or its Affiliates or any of their officers, employees, directors or agents in a manner intended or reasonably calculated to result in public embarrassment to, or injury to the reputation of, the Company or its Affiliates; (ii) directly or indirectly, acting alone or acting in concert with others, institute or prosecute, or assist any person in any manner in instituting or prosecuting, any legal proceedings of any nature against the Company or its Affiliates; (iii) commit damage to the property of the Company or its Affiliates or otherwise engage in any misconduct which is injurious to the business or reputation of the Company or its Affiliates; or (iv) take any other action, or assist any person in taking any other action, that is adverse to the interests of the Company or its Affiliates or inconsistent with fostering the goodwill of the Company or its Affiliates; provided, however, that nothing in this paragraph shall apply to or restrict in any way the communication of information by the executive to any state or federal law enforcement agency or require notice to the Company or its Affiliates thereof, and the executive will not be in breach of the covenant contained in (ii) above solely by reason of executive’s testimony which is compelled by process of law.

 

7.2                               Non-Solicitation of Customers

 

Executive shall agree that, during the one year  period beginning on executive’s Termination Date, executive will not directly or indirectly, on executive’s own behalf or on behalf of others, solicit or accept any business producing or providing products or services which the Company or any of its Affiliates produces or provides from any person that was a customer or client or prospective customer or client of the Company or its Affiliates during the period during which executive was employed with the Company or its Affiliates.

 

7.3                               Non-Solicitation of Employees

 

Executive shall agree that during the one year  period beginning on executive’s Termination Date, executive will not either directly or indirectly, on executive’s own behalf or on behalf of others, hire, solicit, induce, recruit or encourage any of the employees of the Company or its Affiliates to leave their employment, or attempt to solicit, induce, recruit, or hire employees of the Company or its Affiliates.

 

7.4                               Confidential Information

 

Executive shall agree that executive will not, except as the Company or its Affiliates may otherwise consent or direct in writing, reveal, sell, use, lecture upon, publish or otherwise disclose to any third party any Confidential Information or proprietary information of the Company or any of its Affiliates, or authorize anyone else to do these things at any time whether during or subsequent to executive’s employment with the Company or its Affiliates. This Section 7.4 shall continue in full force and effect after termination of executive’s employment.  Executive shall continue to be obligated under this Section 7.4 not to use or to disclose Confidential Information of the Company or any of its Affiliates so long as it shall not be publicly available.  Executive’s obligations under this Section 7.4 with respect to any specific Confidential Information and proprietary information shall cease when that specific

 

 

portion of the Confidential Information and proprietary information becomes publicly known, in its entirety and without combining portions of such information obtained separately.  It is understood that such Confidential Information and proprietary information include matters that executive conceives or develops, as well as matters executive learns from other employees of the Company or any of its Affiliates.

 

8                                         SECTION 409A

 

This policy is intended to comply with the provision of Section 409A of the Code and applicable Treasury authorities (“Section 409”) and all provisions of this policy shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A. In the event an executive is a “specified employee” of a publicly traded corporation for purposes of Section 409A, any severance payments pursuant to any arrangement with the Company, to the extent the Company determines such amounts are not short-term deferrals, involuntary separation pay or otherwise exempt from the application of Section 409A, shall be delayed until the earlier of (i) the date six months and two days following the executive’s Termination Date, (ii) the date of executive’s death or (iii) such earlier date as complies with the requirements of Section 409A.

 

9                                         RESPONSIBILITY; ADMINISTRATION

 

Except as otherwise stated herein, this policy will be administered by the Vice President of Human Resources, who shall have full and final authority, subject to the express provisions of the policy, with respect to determination of eligibility including, but not limited to, the authority to construe and interpret the provisions of the policy.  This policy is subject to review, change or cancellation at any time at the sole discretion of the Committee.

 

10                                  EFFECTIVE DATE

 

The original effective date of this policy was February 09, 2005. This policy was amended and restated on February 17, 2012.

 

 

Appendix A

 

WAIVER, RELEASE AND SEPARATION AGREEMENT

 

In exchange for the payment and the other promises made by                                        (“Transocean”) in this  Waiver, Release and Separation Agreement (“Agreement”), I,                     , on behalf of myself, my heirs, relations, successors, executors, administrators, assigns, agents, representatives, attorneys, and anyone acting on my behalf, promise and agree as follows:

 

I irrevocably and unconditionally release, acquit, and forever discharge Transocean and its predecessors, successors, parent and affiliated companies (collectively, the “Transocean Group”), and its and their past and present officers, directors, attorneys, insurers, agents, servants, suppliers, representatives, employees, affiliates, subsidiaries, parent companies, partners, predecessors and successors in interest, assigns and benefit plans (except with respect to vested benefits under such plans), and any other persons or firms for whom Transocean could be legally responsible (collectively, “Released Parties”), from any and all claims, liabilities or causes of action, whether known or now unknown to me, arising from or related in any way to my employment and termination of my employment with Transocean and/or any of the Released Parties and occurring through the date I sign and return this Agreement.

 

I acknowledge that this Agreement is my knowing and voluntary waiver of all rights or claims arising before I accept and return this Agreement, as indicated below.  I understand and agree that my waiver includes, but is not limited to, all waivable charges, complaints, claims, liabilities, actions, suits, rights, demands, costs, losses, damages or debts of any nature [, including, but not limited to, claims arising under Title VII of the Civil Rights Act of 1964, as amended; the Civil Rights Act of 1991; the Texas Commission on Human Rights Acts; the Americans with Disabilities Act; the Age Discrimination in Employment Act, as amended; the Older Workers Benefit Protection Act; the Family and Medical Leave Act of 1993; the Texas Workers’ Compensation Act; the Texas Labor Code; the Employee Retirement Income Security Act of 1974, as amended; all state and federal statutes and regulations; and the common law,] whether based in law or equity, in tort or contract.  I further acknowledge and agree that my waiver of rights or claims is in exchange for valuable payments and other promises in addition to anything of value to which I already am entitled.

 

I acknowledge and agree that Transocean has no obligation to reemploy, rehire or recall me, and promise that I shall not apply for re-employment with the Transocean Group.

 

For this Waiver, Release and Separation Agreement, Transocean agrees to pay me the amounts described in Section 6.2 and 6.3 of the Executive Severance Benefit Policy, less applicable taxes and withholdings (the “Amount”).  This Agreement becomes effective after I sign and return the signed Agreement per the instructions below.

 

I acknowledge and understand that I am not entitled to the Amount except in exchange for this Agreement.  Therefore, I will not be paid the Amount unless I execute, date and return this Agreement to Transocean and do not revoke this Agreement within the next seven days after execution.

 

 

I acknowledge, understand and confirm my continuing obligations under the restrictive covenants set forth in Section 7 of the Executive Severance Benefit Policy and restated below which provisions shall survive the termination of my employment with the Transocean Group:

 

I agree (acting alone or in concert with others) that from and after my Termination Date (as defined in the Executive Severance Benefit Policy) I will not (i) publicly criticize or disparage the Transocean Group or any of their officers, employees, directors or agents, or privately criticize or disparage the Transocean Group or any of their officers, employees, directors or agents in a manner intended or reasonably calculated to result in public embarrassment to, or injury to the reputation of, the Transocean Group in any community in which the Transocean Group are engaged in business; (ii) directly or indirectly, acting alone or acting in concert with others, institute or prosecute, or assist any person in any manner in instituting or prosecuting, any legal proceedings of any nature against the Transocean Group;  (iii) commit damage to the property of the Transocean Group or otherwise engage in any misconduct which is injurious to the business or reputation of the Transocean Group; or (iv) take any other action, or assist any person in taking any other action, that is adverse to the interests of the Transocean Group or inconsistent with fostering the goodwill of the Transocean Group; provided, however, that nothing in this Agreement shall apply to or restrict in any way the communication of information by me to any state or federal law enforcement agency or require notice to the Transocean Group thereof, and I will not be in breach of the covenant contained in (ii) above solely by reason of my testimony which is compelled by process of law.

 

I agree that during the one year  period beginning on my Termination Date, I will not directly or indirectly, on my own behalf or on behalf of others, solicit or accept any business producing or providing products or services which the Transocean Group produces or provides from any person that was a customer or client or prospective customer or client of the Transocean Group during the period during which I was employed with the Transocean Group.

 

I agree that during the one year  period beginning on my Termination Date, I will not either directly or indirectly, on my own behalf or on behalf of others, hire, solicit, induce, recruit or encourage any of the employees of the Transocean Group to leave their employment, or attempt to solicit, induce, recruit, or hire employees of the Transocean Group.

 

I agree that I will not, except as Transocean may otherwise consent or direct in writing, reveal, sell, use, lecture upon, publish or otherwise disclose to any third party any Confidential Information of the Transocean Group, or authorize anyone else to do these things at any time whether during or subsequent to my employment with the Transocean Group.  I shall continue to be obligated under this paragraph not to use or to disclose Confidential Information of the Transocean Group so long as it shall not be publicly available.  My obligations under this paragraph with respect to any specific Confidential Information shall cease when that specific portion of the Confidential Information becomes publicly known, in its entirety and without combining portions of such information obtained separately.  It is understood that such Confidential Information includes matters that I conceive or develop, as well as matters I learn from other employees of Company.  “Confidential Information” shall mean information:  (i) disclosed to or known by me as a consequence of or through my employment with the Transocean Group; (ii) not generally known outside the Transocean Group; and (iii) which relates to any aspect of the Transocean Group or their business, finances, operation plans, budgets, research, or strategic development.  “Confidential Information” includes, but is not limited to, the Transocean Group’s trade secrets, proprietary information, financial documents, long range plans, customer information, employee compensation, marketing strategy, data bases, pricing and costing data, patent information, computer software developed by any member of the Transocean Group, investments made by the Transocean Group, and any information provided to the Transocean Group by a third party under restrictions against disclosure or use by the Transocean Group or others.

 

 

If I breach any of the restrictive covenants contained in this Waiver, Release and Separation Agreement (the “Restrictive Covenants”), Transocean shall have the following rights and remedies, each of which rights and remedies shall be independent of the others and severally enforceable, and each of which is in addition to, and not in lieu of, any other rights and remedies available to Transocean under law or in equity:

 

a.                                       Specific Performance.  The right and remedy to have the Restrictive Covenants specifically enforced by any court of competent jurisdiction, it being agreed that any breach of the Restrictive Covenants would cause irreparable injury to any member of the Transocean Group and that money damages would not provide an adequate remedy to any member of the Transocean Group.

b.                                      Accounting.  The right and remedy to require me to account for and pay over to Transocean all compensation, profits, monies, accruals, increments or other benefits derived or received by me as the result of any action constituting a breach of any of the Restrictive Covenants.

c.                                       Company Obligations; Repayment.  Transocean shall have the right to (i) cease making severance payments to me in the event of a breach of any of the Restrictive Covenants and (ii) require that I repay to Transocean all severance benefits received by me pursuant to the Executive Severance Benefit Policy, in either case on or following the date of breach of any of the Restrictive Covenants.

d.                                      Forfeiture of Certain Awards.  I agree that as of the date of any such breach, I shall forfeit any unpaid Contingent Deferred Units and/or any other unpaid performance-based compensation.

 

I warrant, acknowledge and agree that:

 

a.                                       My acceptance of this Agreement is completely voluntary;

b.                                      I have had the opportunity to consider this Agreement for [twenty-one (21)]  [forty-five (45)] days, though I understand I may accept sooner than [21]  [45] days if I choose;

c.                                       I am hereby being advised in writing by Transocean to consult with an attorney regarding the terms of this Agreement before accepting;

d.                                      if I accept this Agreement, I have 7 days following the execution of this Agreement to revoke my acceptance;

e.                                       this Agreement shall not become effective or enforceable until the 7-day revocation period has expired;

f.                                         I am receiving under this Agreement consideration of value in addition to anything to which I already am entitled;

g.                                      I do not waive any claims or rights that may arise after the date I sign and return this Agreement.

 

I acknowledge and agree that I have carefully read this Agreement and I represent, warrant and promise as follows:

 

a.                                       I understand this Agreement is my release and waiver of all claims, known and unknown, past or present;

b.                                      I have entered into this Agreement in exchange for Transocean’s promises in this Agreement, including to pay the Amount;

c.                                       I am fully competent to execute this Agreement, which I understand is a binding contract;

d.                                      I accept this Agreement of my own free will, after having a reasonable period of time to review, study and deliberate regarding its meaning and effect, and without reliance on any representation of any kind or character not specifically included in writing this Agreement;

e.                                       I execute this Agreement fully knowing its effect and voluntarily;

f.                                         I understand that Transocean is relying upon the truthfulness of the statements I make in this Agreement, and I understand that Transocean would not enter into this Agreement with me or

 

 

pay me the Amount if I did not make each of the representations and promises contained in this Agreement.

 

[Attached as Exhibit A is a list of the job titles and ages of all individuals in the same organizational unit (corporate headquarters) and same or similar job (officer) who are part of the                        reduction in force.  Attached as Exhibit B is a list of the ages of all individuals in the same organizational unit (corporate headquarters) and same or similar job (officer) who are being retained.]

 

This Agreement shall be interpreted and construed in accordance with and shall be governed by the laws of [                            ], notwithstanding any conflicts of law principles which may refer to the laws of any other jurisdiction.

 

To accept this Agreement, I understand that I must sign the Acceptance of Agreement (below).  The fully executed Waiver, Release and Separation Agreement should be delivered by hand to                        marked to the attention of                      or mailed to the following address:

 

[address]

 

This Agreement will not be effective and no payment will be made unless the above procedure is strictly followed.  I understand that if I have any questions concerning the procedure, I may call                      at                             .

 

ACCEPTANCE OF AGREEMENT BY EMPLOYEE

 

After having the opportunity to consider this Waiver, Release and Separation Agreement, I knowingly and voluntarily choose to accept this Waiver, Release and Separation Agreement and agree to be bound by it.

 

Accepted this          day of                                           .

 

 

	
 
    	
Employee’s   SignatureUnassociated Document

Exhibit 10.04

 

FRIEDMAN, BILLINGS, RAMSEY GROUP, INC.

NON-EMPLOYEE DIRECTOR STOCK COMPENSATION PLAN

(as amended and restated effective March 31, 2003)

 

1.  Purpose.  The purposes of the Plan are to assist the Company in (1) promoting a greater identity of interests between the Company’s non-employee directors and its shareholders, and (2) attracting and retaining directors by affording them an opportunity to share in the future successes of the Company.

 

2.  Definitions

 

(a)  “Additional Retainer” shall mean any additional annual retainer fees payable to a Non-Employee Director for service in certain positions on the Board, as set forth on Exhibit A hereto.

 

(b)  “Award” shall mean an award of Restricted Stock Units as contemplated by Section 7.

 

(c)  “Award Date” shall mean either (i) the date set forth in Section 7 for purposes of Restricted Stock Units awarded to a Non-Employee Director thereunder, or (ii) the date on which a Restricted Stock Unit is issued pursuant to Section 8 in lieu of Fees that would otherwise be payable to the Non-Employee Director.

 

(d)  “Beneficiary” shall mean a Beneficiary or Beneficiaries designated by the Non-Employee Director under Section 12.

 

(e)  “Board” shall mean the Board of Directors of the Company.

 

(f)  “Change in Control” shall mean the happening of any of the following events:

 

(i)         The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (a “Person”), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either (i) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (ii) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following acquisitions shall not constitute a Change in Control:  (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this definition, or (v) any acquisition by Emanuel Friedman, Eric Billings or W. Russell Ramsey (the “Founders”) or any entity that is controlled by one or more of the Founders (the “Founder Affiliates”);

  

  

  

 

(ii)         Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

 

(iii)         Approval by the shareholders of the Company of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets or stock of another corporation (a “Business Combination”), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination will beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination or the Founders or Founder Affiliates) will beneficially own, directly or indirectly, 50% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination will have been members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

 

(iv)         Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company.

 

(g)  “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations thereunder.

  

2

  

 

(h)  “Committee” shall mean the Compensation Committee or any other Committee of the Board designated by the Board to administer the Plan that shall consist of at least two members appointed from time to time by the Board.  Each Committee member must qualify as a “non-employee director” as defined in Reg. §240.16b-3(b)(3) (or any successor rule) of the Exchange Act.

 

(i)  “Common Stock” shall mean the Class A common stock, $.01 par value, of the Company.

 

(j)  “Company” shall mean Friedman, Billings, Ramsey Group, Inc., a Virginia corporation.

 

(k)  “Deferral Period” shall mean a period of time beginning on the Award Date and ending on the earlier of (1) the date that is one year after the Non-Employee Director’s retirement or (2) the date that is one year after the Non-Employee Director ceases to be a member of the Board.

 

(l)  “Fair Market Value” shall mean, as of any given date, the closing price of the Common Stock reported in the Wall Street Journal for the day prior to such date, or if the Common Stock was not traded on the New York Stock Exchange on such day, then for the last preceding day on which the Common Stock was traded.  If there is no regular public trading market for the Common Stock, Fair Market Value shall be determined by such other source as the Committee may select.

 

(m)  “Fees” shall mean the annual cash retainer fee, the cash portion of the Additional Retainer, and meeting fees for a Non-Employee Director in connection with his or her service on the Board for any Plan Year.

 

(n)  “Involuntary Termination” shall mean a Director’s termination of Board membership other than his voluntary termination, his failure to stand for reelection, or a termination for cause (as determined under Section 16).

 

(o)  “Non-Employee Director” shall mean each member of the Board who is not an employee of the Company.

 

(p)  “Plan” shall mean the Friedman, Billings, Ramsey Group, Inc. Non-Employee Director Stock Compensation Plan.

 

(q)  “Plan Year” shall mean the fiscal year of the Company.

 

(r)  “Restricted Stock Unit” or “RSU” shall mean a bookkeeping entry representing the right to receive a share of Common Stock (or a cash payment equal to the Fair Market Value of a share of Common Stock) at some future date.

 

3.  Eligibility.  Each Non-Employee Director shall be eligible to participate in the Plan.  Any Non-Employee Director who becomes an employee of the Company shall not be entitled to additional Awards under the Plan, but shall retain all Awards granted pursuant to the terms of the Plan prior to the date that the Non-Employee Director becomes an employee of the Company.

  

3

  

 

4.  Shares Subject to the Plan.  The maximum number of shares of Common Stock that shall be reserved and available for use under the Plan shall be 200,000, subject to adjustment pursuant to Section 17.  The shares issued under the Plan may be authorized and unissued shares or may be treasury shares or both.

 

5.  Duration of Plan.  Unless earlier terminated pursuant to Section 14, this Plan shall automatically terminate on, and no awards or elections may be made after, December 31, 2010, other than the exercise of outstanding stock options previously granted under the Plan and the payment of Restricted Stock Units awarded or purchased for Fees earned prior to such date.

 

6.  Administration.  The Plan shall be administered by the Board or any committee thereof so designated by the Board (the “Committee”), which shall have full authority to construe and interpret the Plan, to establish, amend and rescind rules and regulations relating to the Plan, and to take all such actions and make all such determinations in connection with the Plan as it may deem necessary or desirable.

 

7.  Awards of Restricted Stock Units

 

(a)  Annual Award.  Effective March 31, 2003, the Company shall automatically award to each Non-Employee Director for each Plan Year a number of Restricted Stock Units that is equal to $50,000, as calculated below.  The Award Date for this award of Restricted Stock Units shall be the first business day following the Company’s Annual Meeting of Shareholders for such Plan Year.

 

(b)  Additional Retainer Award.  Fifty percent (50%) of the Additional Retainer, if any, paid to a Non-Employee Director on the Award Date described in subsection (a), above, shall be paid in a number of Restricted Stock Units that is equal to the dollar amount representing fifty percent (50%) of such Additional Retainer.

 

(c)  Calculating Restricted Stock Units.  A Non-Employee Director shall be credited with a whole number of Restricted Stock Units determined by dividing (i) the dollar amounts under Sections 7(a) and (b) by (ii) the Fair Market Value of a share of Common Stock on the applicable Award Date.  No fractional Restricted Stock Units will be credited, and the amount equivalent in value to the fractional Restricted Stock Unit will be paid to the Non-Employee Director in cash.

 

(d)  Vesting.  A Non-Employee Director shall be fully vested in each Restricted Stock Unit awarded pursuant to Section 7(a) or (b) as of the business day preceding the Company’s Annual Meeting of Shareholders for the Plan Year following the Plan Year in which the award is made (the “Vesting Date”), provided that the Non-Employee Director has remained a member of the Board for the entire period from the Award Date to the Vesting Date.  A vested Restricted Stock Unit will not be subject to the forfeiture provisions described in Sections 9(c) and (d).

 

(e)  Pro Rata Awards.  In the event that the number of shares of Common Stock available for future Awards under the Plan is insufficient to make all automatic Awards required to be made on such date, then all Non-Employee Directors entitled to an Award on such date shall share ratably in the number available to be awarded under the Plan.

  

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8.  Purchases of Restricted Stock Units

 

(a)  Electing Restricted Stock Units.  Each Non-Employee Director shall be entitled to elect to receive all or any portion of his Fees that would otherwise be payable in cash as an award of Restricted Stock Units.  To receive Restricted Stock Units, a Non-Employee Director shall complete an election form.  The election form shall provide that the Non-Employee Director elects to receive Restricted Stock Units in lieu of a specified portion of his Fees.  Such portion may be expressed as a specified percentage (in whole percentages) of the actual Fees.  The Company must receive election forms prior to the first day of the Plan Year for which such Fees will be paid.

 

(b)  Calculation of Restricted Stock Units.  The Company shall issue Restricted Stock Units on each Award Date to each Non-Employee Director who has made an election.  Each Non-Employee Director shall be credited with a whole number of Restricted Stock Units determined by dividing (i) the amount of the Fees elected under Section 8(a) by (ii) the Fair Market Value of a share of Common Stock on the Award Date.  No fractional Restricted Stock Units will be credited and the amount equivalent in value to the fractional Restricted Stock Unit will be paid to the Non-Employee Director in cash.

 

(c)  Vesting.  A Non-Employee Director shall immediately be fully vested in each Restricted Stock Unit that he elects to purchase pursuant to this Section 8.

 

9.  Terms of Restricted Stock Units

 

(a)  In the event that a Non-Employee Director dies or becomes disabled (as determined by the Committee) before he is fully vested in his Restricted Stock Units awarded pursuant to Section 7, but while still a member of the Board, the Non-Employee Director shall become fully vested in all his Restricted Stock Units at that time.  In the event the Non-Employee Director ceases to be a member of the Board following a Change in Control before he is fully vested in his Restricted Stock Units awarded pursuant to Section 7, the Non-Employee Director shall become fully vested in all Restricted Stock Units at that time.

 

(b)  With respect to each vested Restricted Stock Unit, whether awarded pursuant to Section 7 or purchased pursuant to Section 8, the Company shall issue to the Non-Employee Director one share of Common Stock as soon as practicable after the end of the Deferral Period.

 

(c)  If a Non-Employee Director ceases to be a member of the Board for reasons other than death, disability, or Involuntarily Termination, the Non-Employee Director’s nonvested Restricted Stock Units shall be canceled, and he shall receive as soon as practicable after his ceasing to be a member of the Board a cash payment equal to the number of those Restricted Stock Units multiplied by the aggregate Fair Market Value of those Restricted Stock Units on the date of the Non-Employee Director’s ceasing to be a member of the Board.

  

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(d)  Subject to Section 9(a), if a Non-Employee Director’s membership on the Board terminates as a result of an Involuntary Termination, the Non-Employee Director’s nonvested Restricted Stock Units shall be cancelled and he shall receive payment as soon as practicable following his Involuntary Termination as described below:

 

(i)           The number of nonvested Restricted Stock Units awarded on each Award Date shall be multiplied by a fraction, the numerator of which is the number of full months since the Award Date and the denominator of which is 12; and the Non-Employee Director shall receive the resulting number of such Restricted Stock Units in shares of Common Stock.

 

(ii)           With respect to the Non-Employee Director’s remaining nonvested Restricted Stock Units, the Non-Employee Director shall receive cash in an amount equal to the number of those Restricted Stock Units multiplied by the Fair Market Value of those Restricted Stock Units on the date of the Non-Employee Director’s termination of Board membership.

 

(e)  The Committee shall have complete discretion to determine the reasons for a Non-Employee Director’s termination of membership on the Board, including whether the same results from Involuntary Termination or disability, and the Committee’s determination shall be final and binding on all parties and not subject to review or challenge by any Non-Employee Director or other person.

 

(f)  A holder of Restricted Stock Units shall not be entitled to voting rights on any shares of Common Stock to which the Restricted Stock Units relate.  The fair market value of a Restricted Stock Unit on any date shall be deemed to be the Fair Market Value of a share of Common Stock on that date.

 

(g)  During the Deferral Period, a Non-Employee Director shall be entitled to receive in cash a dividend credit equal to the cash dividend payable on the number of shares of Common Stock that the Non-Employee Director will be entitled to receive based on the number of Restricted Stock Units held by the Non-Employee Director, regardless of whether the Restricted Stock Units have fully vested.

 

10.  Deferrals of Fees.

 

(a)  In addition to a Non-Employee Directors right to purchase Restricted Stock Units pursuant to Section 8, a Non-Employee Director may elect to defer the payment of some or all of his Fees that would otherwise be payable in cash by completing a deferral election.  A deferral election shall pertain to all Fees payable in cash during a Plan Year.  A deferral election must be in writing and be delivered to the Committee prior to the start of the Plan Year to which it pertains.  A deferral election shall be irrevocable with respect to the Plan Year to which it pertains.  A deferral election must specify the applicable amount or percentage of Fees that the Non-Employee Director wishes to defer.  A deferral election may be made for a single Plan Year or may be made applicable to all future Plan Years until revoked.  Any revocation shall be effective as of the first day of the next Plan Year after the revocation is made.

  

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(b)  The Board shall establish one or more permissible deemed investments for the Fees deferred pursuant to this Section 10, which may include Company Common Stock.  A Non-Employee Director may select from the permissible deemed investments under such procedures as are established by the Board.  With respect to all amounts for which a deferral election is made, the Company shall credit an equal deemed amount to the Non-Employee Director’s fee deferral account when the Fees otherwise would have been payable to the Non-Employee Director.  Deemed earnings and losses shall be credited to the fee deferral account established for the Non-Employee Director based on the selected deemed investments.  The Board shall establish the method or methods for crediting earnings and losses to fee deferral accounts, in its discretion.

 

(c)  For purposes of the Plan, a fee deferral account means a bookkeeping record on the books of the Company established for each Non-Employee Director who makes a fee deferral.  A fee deferral account shall be established only for purposes of measuring the Company’s obligation to the Non-Employee Director and not to segregate assets or to identify assets that may be used to satisfy the obligation.

 

(d)  A deferral election shall provide for payment of the Non-Employee Director’s fee deferral account at a future date or dates elected by the Non-Employee Director.  Payments of the fee deferral account must commence no later than the first Plan Year after the Non-Employee Director ceases to be a member of the Board.  Payments of the fee deferral account shall be made over a period of up to 10 years and shall be made no more frequently than annually.  In absence of an effective election, the fee deferral account will be paid in a lump sum in the first Plan Year after the Non-Employee Director ceases to be a member of the Board.  In addition, the Non-Employee Director may elect to receive payment of the fee deferral account in a single lump sum payment upon the occurrence of a Change in Control in lieu of any other form that would otherwise be payable pursuant to a prior election.  The single lump sum payment shall be paid in cash as soon as practicable after the Change in Control occurs.  Except for an election made at the time of the Non-Employee Director’s first deferral election which shall be immediately effective, any election by the Non-Employee Director as to the date or form of payment shall be effective six months after it is made.

 

(e)  To the extent of undistributed amounts in a Non-Employee Director’s fee deferral account at the Non-Employee Director’s death, the Non-Employee Director’s beneficiary shall continue to receive payments in the form elected by the Non-Employee Director unless the beneficiary elects to take a lump sum payment.  The election of a lump sum payment made within 30 days of the Non-Employee Director’s death shall be immediately effective.  In addition, a beneficiary may elect to receive the balance of any unpaid benefit in a single lump sum payment upon the occurrence of a Change in Control in lieu of the benefit that would otherwise be payable.  The single lump sum payment shall be paid in cash as soon as practicable after the Change in Control occurs.

  

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11.  Discretionary Stock Option Grants.  Grants of stock options on Common Stock may be made to Non-Employee Directors.  The Board shall have the complete discretion to determine the terms and conditions and the number of shares to be allocated as part of each stock option for each Non-Employee Director.  The grant of stock options shall not obligate the Company to make further grants to the Non-Employee Director at any time thereafter.

 

12.  Designation of Beneficiary.  A Non-Employee Director may designate one or more Beneficiaries to receive any payments or shares of Common Stock payable in the event of his death.  A designation of Beneficiary shall apply to a specified percentage of a Non-Employee Director’s entire interest in the Plan.  Such designation, or any change therein, must be in writing and shall be effective upon receipt by the Company.  If there is no effective designation of Beneficiary, or if no Beneficiary survives the Non-Employee Director, the Non-Employee Director’s estate shall be deemed to be the Beneficiary.

 

13.  Transferability.  No Restricted Stock Unit shall be transferable by a Non-Employee Director other than by will or by the laws of descent and distribution, or, in the Committee’s discretion, pursuant to a written beneficiary designation.

 

14.  Amendment and Termination.  The Board may amend, alter, or discontinue the Plan, but no amendment, alteration or discontinuation shall be made which would impair the rights of a Non-Employee Director under any Award theretofore granted without such person’s consent.  In addition, no such amendment shall be made without the approval of the Company’s shareholders to the extent such approval is required by law or agreement.  The Committee may amend the terms of any Award theretofore granted, prospectively or retroactively, but no such amendment shall impair the rights of any holder without the holder’s consent.  Subject to the above provisions, the Board shall have authority to amend the Plan to take into account changes in law and tax and accounting rules as well as other developments, and to grant Awards which qualify for beneficial treatment under such rules without stockholder approval.

 

15.  Effect of Change in Control.  Notwithstanding any other provision of the Plan to the contrary, in the event of a Change in Control, any Restricted Stock Units not then vested as of the date such Change in Control is determined to have occurred shall become fully exercisable and vested.

 

16.  Effect of Termination for Cause.  If a Non-Employee Director incurs a termination of membership on the Board for cause, such Non-Employee Director’s unvested Restricted Stock Units shall be automatically canceled immediately, and he shall receive a cash payment as described in Section 9.  Unless otherwise determined by the Board, for purposes of the Plan “cause” shall mean (i) the conviction of the Non-Employee Director for commission of a felony under Federal law or the law in the state in which such action occurred, or (ii) dishonesty in the course of fulfilling the Non-Employee Director’s duties as a director.

  

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17.  Adjustments Upon Changes in Capitalization.  In the event of any change in corporate capitalization, such as a stock split or a corporate transaction, such as any merger, consolidation, separation, including a spin-off, or other distribution of stock or property of the Company, any reorganization (whether or not such reorganization comes within the definition of such term in Section 368 of the Code) or any partial or complete liquidation of the Company, the Committee or Board may make such substitution or adjustments in the aggregate number and class of shares reserved for issuance under the Plan, the number and kind of shares subject to Restricted Stock Units, the number and kind of shares subject to other outstanding Awards granted under the Plan, and/or such other equitable substitution or adjustments as it may determine to be appropriate in its sole discretion; provided, however, that the number of shares subject to any Award shall always be a whole number.

 

18.  Effectiveness of Plan.  The Plan originally became effective on December 23, 1997.  This amended and restated Plan is effective as of March 31, 2003.  The terms of any stock option, restricted stock unit, or other award granted prior to the effectiveness of this amended and restated Plan shall be governed by the provisions of the Plan that were in effect at the time such grant was made.

 

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