Document:

EX-10.1

 

Exhibit 10.1

RealNetworks, Inc.

2005 Stock Incentive Plan

(Amended and Restated Effective as of June 25, 2007)

 

 

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1. PURPOSE OF THE PLAN

Purpose.  The purpose of the RealNetworks, Inc 2005 Stock Incentive Plan (the “Plan”), as
amended and restated, is to assist RealNetworks, Inc., a Washington corporation (the “Company”),
and its subsidiaries in attracting and retaining selected individuals to serve as employees,
directors, consultants and/or advisors of the Company who are expected to contribute to the
Company’s success and to achieve long-term objectives which will inure to the benefit of all
shareholders of the Company through the additional incentives inherent in the Awards hereunder.

 

 

2. DEFINITIONS

2.1.  “Award” shall mean any Option, Stock Appreciation Right, Restricted Stock Award,
Performance Award, Other Share-Based Award or any other right, interest or option relating to
Shares or other property (including cash) granted pursuant to the provisions of the Plan.

 

2.2.  “Award Agreement” shall mean any written agreement, contract or other instrument or
document, including through an electronic medium, evidencing any Award granted by the Committee
hereunder.

 

2.3.  “Board” shall mean the board of directors of the Company.

 

2.4.  “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

 

2.5.  “Committee” shall mean the Compensation Committee of the Board, consisting of no
fewer than two Directors, each of whom is (i) a “Non-Employee Director” within the meaning of
Rule 16b-3 of the Exchange Act, (ii) an “outside director” within the meaning of Section 162(m) of
the Code, and (iii) an “independent director” for purpose of the rules and regulations of the
NASDAQ Stock Market.

 

2.6.  “Covered Employee” shall mean a “covered employee” within the meaning of
Section 162(m) of the Code.

 

2.7.  “Director” shall mean a non-employee member of the Board.

 

2.8.  “Employee” shall mean any employee of the Company or any Subsidiary and any
prospective employee conditioned upon, and effective not earlier than, such person’s becoming an
employee of the Company or any Subsidiary. Solely for purposes of the Plan, an Employee shall also
mean any consultant or advisor who provides services to the Company or any Subsidiary, so long as
such person (i) renders bona fide services that are not in connection with the offer and sale of
the Company’s securities in a capital-raising transaction and (ii) does not directly or indirectly
promote or maintain a market for the Company’s securities.

 

2.9.  “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

 

2.10.  “Fair Market Value” shall mean, with respect to any property other than Shares,
the market value of such property determined by such methods or procedures as shall be established
from time to time by the Committee. The Fair Market Value of Shares as of any date shall be the per
Share closing price of the Shares as reported on the NASDAQ Stock Market on that date (or if there
was no reported price on such date, on the last preceding date on which the price was reported); if
the Company is not then listed on the NASDAQ Stock Market but is listed on the New York Stock
Exchange, the Fair Market Value of the Shares shall be the per Share closing price of the Shares as
reported on the New York Stock Exchange on that date (or if there was no reported price on such
date, on the last preceding date on which the price was reported); or, if the Company is not then
listed on the NASDAQ Stock Market or the New York Stock Exchange, the Fair Market Value of Shares
shall be determined by the Committee in its sole discretion using appropriate criteria.

 

2.11.  “Freestanding Stock Appreciation Right” shall have the meaning set forth in
Section 6.1.

 

2.12.  “Limitations” shall have the meaning set forth in Section 10.5.

 

2.13.  “Option” shall mean any right granted to a Participant under the Plan allowing
such Participant to purchase Shares at such price or prices and during such period or periods as
the Committee shall determine.

 

2.14.  “Other Share-Based Award” shall have the meaning set forth in Section 8.1.

 

2.15.  “Participant” shall mean an Employee or Director who is selected by the Committee
to receive an Award under the Plan.

 

2.16.  “Payee” shall have the meaning set forth in Section 13.1.

 

2.17.  “Performance Award” shall mean any Award of Performance Shares or Performance
Units granted pursuant to Article 9.

 

2.18.  “Performance Period” shall mean that period established by the Committee at the
time any Performance Award is granted or at any time thereafter during which any performance goals
specified by the Committee with respect to such Award are to be measured.

 

2.19.  “Performance Share” shall mean any grant pursuant to Article 9 of a unit valued by
reference to a designated number of Shares, which value may be paid to the Participant by delivery
of such property as the Committee shall determine, including cash, Shares, other property, or any
combination thereof, upon achievement of such performance goals during the Performance Period as
the Committee shall establish at the time of such grant or thereafter.

 

2.20.  “Performance Unit” shall mean any grant pursuant to Section 9 of a unit valued by
reference to a designated amount of property (including cash) other than Shares, which value may be
paid to the Participant by delivery of such property as the Committee shall determine, including
cash, Shares, other property, or any combination thereof, upon achievement of such performance
goals during the Performance Period as the Committee shall establish at the time of such grant or
thereafter.

 

2.21.  “Permitted Assignee” shall have the meaning set forth in Section 12.3.

 

2.22.  “Prior Plans” shall mean, collectively, the Company’s 1996 Stock Option Plan, the
Company’s 2000 Stock Option Plan, the Company’s 2002 Director Stock Option Plan and the Company’s
Director Compensation Stock Plan.

 

2.23.  “Restricted Stock” shall mean any Share issued with the restriction that the
holder may not sell, transfer, pledge or assign such Share and with such other restrictions as the
Committee, in its sole discretion, may impose (including any restriction on the right to vote such
Share and the right to receive any dividends), which restrictions may lapse separately or in
combination at such time or times, in installments or otherwise, as the Committee may deem
appropriate.

 

2.24.  “Restriction Period” shall have the meaning set forth in Section 7.1.

 

2.25.  “Restricted Stock Award” shall have the meaning set forth in Section 7.1.

 

2.26. “Shares” shall mean the shares of common stock of the Company, par value $0.001 per
share.

 

2.27. “Stock Appreciation Right” shall mean the right granted to a Participant pursuant
to Section 6.

 

2.28. “Subsidiary” shall mean any corporation (other than the Company) in an unbroken
chain of corporations beginning with the Company if, at the time of the granting of the Award, each
of the corporations other than the last corporation in the unbroken chain owns stock possessing 50%
or more of the total combined voting power of all classes of stock in one of the other corporations
in the chain.

 

2.29. “Substitute Awards” shall mean Awards granted or Shares issued by the Company in
assumption of, or in substitution or exchange for, awards previously granted, or the right or
obligation to make future awards, by a company acquired by the Company or any Subsidiary or with
which the Company or any Subsidiary combines.

 

2.30. “Tandem Stock Appreciation Right” shall have the meaning set forth in Section 6.1.

 

 

3. SHARES SUBJECT TO THE PLAN

3.1 Number of Shares.  

(a) Subject to adjustment as provided in Section 12.2, a total of 14,685,043 Shares shall be
authorized for grant under the Plan, plus up to 314,957 Shares remaining available for grant under
the Company’s Director Compensation Stock Plan on the effective date of the amendment and
restatement of the Plan, up to an aggregate maximum of 15,000,000 Shares authorized for grant under
the Plan. Any Shares that are subject to Awards of Options, Stock Appreciation Rights or Tandem
Stock Appreciation Rights shall be counted against this limit as one (1) Share for every one
(1) Share granted. Any Shares that are subject to Awards other than Options, Stock Appreciation
Rights or Tandem Stock Appreciation Rights shall be counted against this limit as two and
two-tenths (2.2) Shares for every one (1) Share granted.

 

(b) If any Shares subject to an Award or to an award under the Prior Plans are forfeited
or expire, or any Award or award under the Prior Plans is settled for cash, the Shares subject to
such Award or to such award under the Prior Plans shall, to the extent of such forfeiture,
expiration or cash settlement or non-issuance, again be available for Awards under the Plan,
subject to Section 3.1(d) below. Notwithstanding anything to the contrary contained herein, the
following Shares shall not be added to the Shares authorized for grant under paragraph (a) of this
Section: (i) Shares tendered by the Participant or withheld by the Company in payment of the
purchase price of an Option, (ii) Shares tendered by the Participant or withheld by the Company to
satisfy any tax withholding obligation with respect to an Award, and (iii) Shares subject to a
Stock Appreciation Right that are not issued in connection with the stock settlement of the Stock
Appreciation Right on exercise thereof.

 

(c) Substitute Awards may be issued under the Plan and such Substitute Awards shall not
reduce the Shares authorized for grant under the Plan or authorized for grant to a Participant in
any calendar year. Additionally, in the event that a company acquired by the Company or any
Subsidiary or with which the Company or any Subsidiary combines has shares available under a
pre-existing plan approved by shareholders and not adopted in contemplation of such acquisition or
combination, the shares available for grant pursuant to the terms of such pre-existing plan (as
adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation
ratio or formula used in such acquisition or combination to determine the consideration payable to
the holders of common stock of the entities party to such acquisition or combination) may be used
for Awards under the Plan and shall not reduce the Shares authorized for grant under the Plan;
provided that Awards using such available shares shall not be made after the date awards or grants
could have been made under the terms of the pre-existing plan, absent the acquisition or
combination, and shall only be made to individuals who were not Employees or Directors prior to
such acquisition or combination.

 

(d) Any Shares that again become available for grant pursuant to this Article shall be
added back as one (1) Share if such Shares were subject to Options or Stock Appreciation Rights
granted under the Plan or options or stock appreciation rights granted under the Prior Plans, and
as two and two-tenths (2.2) Shares if such Shares were subject to Awards other than Options or
Stock Appreciation Rights granted under the Plan.

 

3.2.  Character of Shares.  Any Shares issued hereunder may consist, in whole or in part,
of authorized and unissued shares or shares purchased in the open market or otherwise.

 

 

4. ELIGIBILITY AND ADMINISTRATION

4.1.  Eligibility.  Any Employee or Director shall be eligible to be selected as a
Participant.

 

4.2.  Administration.  (a) The Plan shall be administered by the Committee. The Committee
shall have full power and authority, subject to the provisions of the Plan and subject to such
orders or resolutions not inconsistent with the provisions of the Plan as may from time to time be
adopted by the Board, to: (i) select the Employees and Directors to whom Awards may from time to
time be granted hereunder; (ii) determine the type or types of Awards, not inconsistent with the
provisions of the Plan, to be granted to each Participant hereunder; (iii) determine the number of
Shares to be covered by each Award granted hereunder; (iv) determine the terms and conditions, not
inconsistent with the provisions of the Plan, of any Award granted hereunder; (v) determine
whether, to what extent and under what circumstances Awards may be settled in cash, Shares or other
property, subject to Section 8.1; (vi) determine whether, to what extent, and under what
circumstances cash, Shares, other property and other amounts payable with respect to an Award made
under the Plan shall be deferred either automatically or at the election of the Participant;
(vii) determine whether, to what extent and under what circumstances any Award shall be canceled or
suspended; (viii) interpret and administer the Plan and any instrument or agreement entered into
under or in connection with the Plan, including any Award Agreement; (ix) correct any defect,
supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to
the extent that the Committee shall deem desirable to carry it into effect; (x) establish such
rules and regulations and appoint such agents as it shall deem appropriate for the proper
administration of the Plan; and (xi) make any other determination and take any other action that
the Committee deems necessary or desirable for administration of the Plan.

 

(b) Decisions of the Committee shall be final, conclusive and binding on all persons or
entities, including the Company, any Participant, and any Subsidiary. A majority of the members of
the Committee may determine its actions and fix the time and place of its meetings. Notwithstanding
the foregoing or anything else to the contrary in the Plan, any action or determination by the
Committee specifically affecting or relating to an Award to a Director shall require the prior
approval of the Board.

 

(c) To the extent not inconsistent with applicable law, including Section 162(m) of the
Code, or the rules and regulations of the NASDAQ Stock Market, the Committee may delegate to (i) a
committee of one or more directors of the Company any of the authority of the Committee under the
Plan, including the right to grant, cancel or suspend Awards and (ii) to the extent permitted by
law, to one or more executive officers or a committee of executive officers the right to grant
Awards to Employees who are not Directors or executive officers of the Company and the authority to
take action on behalf of the Committee pursuant to the Plan to cancel or suspend Awards to
Employees who are not Directors or executive officers of the Company.

5. OPTIONS

 

 

5.1.  Grant of Options.  Options may be granted hereunder to Participants either alone or
in addition to other Awards granted under the Plan. Any Option shall be subject to the terms and
conditions of this Article and to such additional terms and conditions, not inconsistent with the
provisions of the Plan, as the Committee shall deem desirable.

 

5.2.  Award Agreements.  All Options granted pursuant to this Article shall be evidenced
by a written Award Agreement in such form and containing such terms and conditions as the Committee
shall determine which are not inconsistent with the provisions of the Plan. The terms of Options
need not be the same with respect to each Participant. Granting of an Option pursuant to the Plan
shall impose no obligation on the recipient to exercise such Option. Any individual who is granted
an Option pursuant to this Article may hold more than one Option granted pursuant to the Plan at
the same time.

 

5.3.  Option Price.  Other than in connection with Substitute Awards, the option price
per each Share purchasable under any Option granted pursuant to this Article shall not be less than
100% of the Fair Market Value of such Share on the date of grant of such Option. Other than
pursuant to Section 12.2, the Committee shall not without the approval of the Company’s
shareholders (a) lower the option price per Share of an Option after it is granted, (b) cancel an
Option in exchange for cash or another Award (other than in connection with Substitute Awards), and
(c) take any other action with respect to an Option that would be treated as a repricing under the
rules and regulations of the NASDAQ Stock Market.

 

5.4.  Option Term.  The term of each Option shall be fixed by the Committee in its sole
discretion; provided that no Option shall be exercisable after the expiration of seven (7) years
from the date the Option is granted, except in the event of death or disability.

 

5.5.  Exercise of Options.  Vested Options granted under the Plan shall be exercised by
the Participant or by a Permitted Assignee thereof (or by the Participant’s executors,
administrators, guardian or legal representative, as may be provided in an Award Agreement) as to
all or part of the Shares covered thereby, by the giving of notice of exercise to the Company or
its designated agent, specifying the number of Shares to be purchased, accompanied by payment of
the full purchase price for the Shares being purchased. Unless otherwise provided in an Award
Agreement, full payment of such purchase price shall be made at the time of exercise and shall be
made (a) in cash or cash equivalents (including certified check or bank check or wire transfer of
immediately available funds), (b) by tendering previously acquired Shares (either actually or by
attestation, valued at their then Fair Market Value), (c) with the consent of the Committee, by
delivery of other consideration (including, where permitted by law and the Committee, other Awards)
having a Fair Market Value on the exercise date equal to the total purchase price, (d) with the
consent of the Committee, by withholding Shares otherwise issuable in connection with the exercise
of the Option, (e) through any other method specified in an Award Agreement, or (f) any combination
of any of the foregoing. The notice of exercise, accompanied by such payment, shall be delivered to
the Company at its principal business office or such other office as the Committee may from time to
time direct, and shall be in such form, containing such further provisions consistent with the
provisions of the Plan, as the Committee may from time to time prescribe. In no event may any
Option granted hereunder be exercised for a fraction of a Share. No adjustment shall be made for
cash dividends or other rights for which the record date is prior to the date of such issuance.

 

5.6.  Form of Settlement.  In its sole discretion, the Committee may provide, at the time
of grant, that the Shares to be issued upon an Option’s exercise shall be in the form of Restricted
Stock or other similar securities, or may reserve the right so to provide after the time of grant.

 

5.7.  Incentive Stock Options.  The Committee may grant Options intended to qualify as
“incentive stock options” as defined in Section 422 of the Code, to any employee of the Company or
any Subsidiary, subject to the requirements of Section 422 of the Code. Notwithstanding anything in
Section 3.1 to the contrary and solely for the purposes of determining whether Shares are available
for the grant of “incentive stock options” under the Plan, the maximum aggregate number of Shares
with respect to which “incentive stock options” may be granted under the Plan shall be
3,000,000 Shares. In addition and notwithstanding anything in this Section 5 to the contrary, if an
incentive stock option is granted to a Participant who at the time such grant owns (within the
meaning of Section 422 of the Code) stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or of its parent corporation or of any Subsidiary
(i) the option price per Share under the incentive stock option shall be not less than 110% of the
Fair Market Value of a Share on the date of grant of the incentive stock option and (ii) such
incentive stock option shall expire and no longer be exercisable no later than 5 years from the
date of grant.

 

 

6. STOCK APPRECIATION RIGHTS

6.1.  Grant and Exercise.  The Committee may provide Stock Appreciation Rights (a) in
conjunction with all or part of any Option granted under the Plan or at any subsequent time during
the term of such Option (“Tandem Stock Appreciation Right”), (b) in conjunction with all or part of
any Award (other than an Option) granted under the Plan or at any subsequent time during the term
of such Award, or (c) without regard to any Option or other Award (a “Freestanding Stock
Appreciation Right”), in each case upon such terms and conditions as the Committee may establish in
its sole discretion.

 

6.2.  Terms and Conditions.  Stock Appreciation Rights shall be subject to such terms and
conditions, not inconsistent with the provisions of the Plan, as shall be determined from time to
time by the Committee, including the following:

 

(a) Upon the exercise of a Stock Appreciation Right, the holder shall have the right to
receive the excess of (i) the Fair Market Value of one Share on the date of exercise (or such other
amount less than Fair Market Value) as the Committee shall so determine at any time during a
specified period before the date of exercise) over (ii) the grant price of the right on the date of
grant, or in the case of a Tandem Stock Appreciation Right granted on the date of grant of the
related Option (subject to the requirements of Section 409A of the Code with respect to a Tandem
Stock Appreciation Right granted subsequent to the related Option), as specified by the Committee
in its sole discretion, which, except in the case of Substitute Awards or in connection with an
adjustment provided in Section 12.2, shall not be less than the Fair Market Value of one Share on
such date of grant of the right or the related Option, as the case may be.

 

(b) Upon the exercise of a Stock Appreciation Right, the Committee shall determine in its
sole discretion whether payment shall be made in cash, in whole Shares or other property, or any
combination thereof.

 

(c) Any Tandem Stock Appreciation Right may be granted at the same time as the related
Option is granted or at any time thereafter before exercise or expiration of such Option.

 

(d) Any Tandem Stock Appreciation Right related to an Option may be exercised only when
the related Option would be exercisable and the Fair Market Value of the Shares subject to the
related Option exceeds the option price at which Shares can be acquired pursuant to the Option. In
addition, if a Tandem Stock Appreciation Right exists with respect to less than the full number of
Shares covered by a related Option, then an exercise or termination of such Option shall not reduce
the number of Shares to which the Tandem Stock Appreciation Right applies until the number of
Shares then exercisable under such Option equals the number of Shares to which the Tandem Stock
Appreciation Right applies.

 

(e) Any Option related to a Tandem Stock Appreciation Right shall no longer be
exercisable to the extent the Tandem Stock Appreciation Right has been exercised.

 

(f) The provisions of Stock Appreciation Rights need not be the same with respect to each
recipient.

 

(g) The Committee may impose such other conditions or restrictions on the terms of
exercise and the exercise price of any Stock Appreciation Right, as it shall deem appropriate,
including providing that the exercise price of a Tandem Stock Appreciation Right may be less than
the Fair Market Value on the date of grant if the Tandem Stock Appreciation Right is added to an
Option following the date of the grant of the Option. Notwithstanding the foregoing provisions of
this Section 6.2(g), but subject to Section 12.2, a Freestanding Stock Appreciation Right shall
generally have the same terms and conditions as Options, including (i) an exercise price not less
than Fair Market Value on the date of grant, and (ii) a term not greater than seven years.

 

(h) Without the approval of the Company’s shareholders, other than pursuant to Section 11
or Section 12.2, the Committee shall not (i) reduce the grant price of any Stock Appreciation Right
after the date of grant (ii) cancel any Stock Appreciation Right in exchange for cash or another
Award (other than in connection with Substitute Awards), and (iii) take any other action with
respect to a Stock Appreciation Right that would be treated as a repricing under the rules and
regulations of the NASDAQ Stock Market.

 

(i) The Committee may impose such terms and conditions on Stock Appreciation Rights
granted in conjunction with any Award (other than an Option) as the Committee shall determine in
its sole discretion.

 

7. RESTRICTED STOCK AWARDS

7.1.  Grants.  Awards of Restricted Stock may be issued hereunder to Participants either alone
or in addition to other Awards granted under the Plan (a “Restricted Stock Award”), and such
Restricted Stock Awards shall also be available as a form of payment of Performance Awards and
other earned cash-based incentive compensation. A Restricted Stock Award shall be subject to
restrictions imposed by the Committee covering a period of time specified by the Committee (the
“Restriction Period”). The Committee has absolute discretion to determine whether any consideration
(other than services) is to be received by the Company or any Subsidiary as a condition precedent
to the issuance of Restricted Stock.

 

7.2.  Award Agreements.  The terms of any Restricted Stock Award granted under the Plan
shall be set forth in a written Award Agreement which shall contain provisions determined by the
Committee and not inconsistent with the Plan. The terms of Restricted Stock Awards need not be the
same with respect to each Participant. The Committee may, in its sole discretion and subject to the
limitations imposed under Section 162(m) of the Code and the regulations thereunder in the case of
a Restricted Stock Award intended to comply with the performance-based exception under Code
Section 162(m), waive the forfeiture period and any other conditions set forth in any Award
Agreement subject to such terms and conditions as the Committee shall deem appropriate.

 

7.3.  Rights of Holders of Restricted Stock.  Unless otherwise provided in an Award
Agreement, beginning on the date of grant of the Restricted Stock Award and subject to execution of
the Award Agreement, the Participant shall become a shareholder of the Company with respect to all
Shares subject to the Award Agreement and shall have all of the rights of a shareholder, including
the right to vote such Shares and the right to receive distributions made with respect to such
Shares; provided, however, that any Shares or any other property (other than cash) distributed as a
dividend or otherwise with respect to any Restricted Stock as to which the restrictions have not
yet lapsed shall be subject to the same restrictions as such Restricted Stock.

 

 

8. OTHER SHARE-BASED AWARDS

8.1.  Grants.  Other Awards of Shares and other Awards that are valued in whole or in part by
reference to, or are otherwise based on, Shares or other property (collectively “Other Share-Based
Awards”) may be granted hereunder to Participants, in addition to other Awards granted under the
Plan. Other Share-Based Awards shall also be available as a form of payment of other Awards granted
under the Plan and other earned cash-based compensation (including Directors’ fees).

 

8.2.  Award Agreements.  The terms of Other Share-Based Award granted under the Plan
shall be set forth in a written Award Agreement, or in a sub-plan forming part of the Plan, which
shall contain provisions determined by the Committee and not inconsistent with the Plan. The terms
of such Awards need not be the same with respect to each Participant.

 

8.3.  Payment.  Except as provided in an Award Agreement, Other Share-Based Awards may be
paid in cash, Shares, other property, or any combination thereof, in the sole discretion of the
Committee at the time of payment. Other Share-Based Awards may be paid in a lump sum or in
installments or, in accordance with procedures established by the Committee, on a deferred basis
subject to the requirements of Section 409A of the Code.

 

 

9. PERFORMANCE AWARDS

9.1.  Grants.  Performance Awards in the form of Performance Shares or Performance Units, as
determined by the Committee in its sole discretion, may be granted hereunder to Participants, for
no consideration or for such minimum consideration as may be required by applicable law, either
alone or in addition to other Awards granted under the Plan. The performance goals to be achieved
for each Performance Period shall be conclusively determined by the Committee and may be based upon
the criteria set forth in Section 10.2.

 

9.2.  Award Agreements.  The terms of any Performance Award granted under the Plan shall
be set forth in a written Award Agreement which shall contain provisions determined by the
Committee and not inconsistent with the Plan. The terms of Performance Awards need not be the same
with respect to each Participant.

 

9.3.  Terms and Conditions.  The performance criteria to be achieved during any
Performance Period and the length of the Performance Period shall be determined by the Committee
upon the grant of each Performance Award. The amount of the Award to be distributed shall be
conclusively determined by the Committee.

 

9.4.  Payment.  Except as provided in Article 11 or as may be provided in an Award
Agreement, Performance Awards will be distributed only after the end of the relevant Performance
Period. Performance Awards may be paid in cash, Shares, other property, or any combination thereof,
in the sole discretion of the Committee at the time of payment. Performance Awards may be paid in a
lump sum or in installments following the close of the Performance Period or, in accordance with
procedures established by the Committee, on a deferred basis subject to the requirements of
Section 409A of the Code.

 

 

10. CODE SECTION 162(m) PROVISIONS

10.1.  Covered Employees.  Notwithstanding any other provision of the Plan, if the Committee
determines at the time a Restricted Stock Award, a Performance Award or an Other Share-Based Award
is granted to a Participant who is, or is likely to be, as of the end of the tax year in which the
Company would claim a tax deduction in connection with such Award, a Covered Employee, then the
Committee may provide that this Article 10 is applicable to such Award.

 

10.2.  Performance Criteria.  If the Committee determines that a Restricted Stock Award,
a Performance Award or an Other Share-Based Award is subject to this Article 10, the lapsing of
restrictions thereon and the distribution of cash, Shares or other property pursuant thereto, as
applicable, shall be subject to the achievement of one or more objective performance goals
established by the Committee, which shall be based on the attainment of specified levels of one or
any combination of the following: net revenue; revenue growth; pre-tax income before allocation of
corporate overhead and bonus; earnings per share; net income; division, group or corporate
financial goals; return on shareholders’ equity; total shareholder return; return on assets;
attainment of strategic and operational initiatives; appreciation in and/or maintenance of the
price of the Shares or any other publicly-traded securities of the Company; market share; gross
profits; earnings before taxes, earnings before interest and taxes earnings before interest, taxes,
depreciation and amortization; economic value-added models; comparisons with various stock market
indices; reductions in costs; cash flow, cash flow per share; return on invested capital; cash flow
return on investment; and improvement in or attainment of expense levels on working capital levels
of the Company or any Subsidiary, division, business segment or business unit of the Company for or
within which the Participant is primarily employed. Such performance goals also may be based solely
by reference to the Company’s performance or the performance of a Subsidiary, division, business
segment or business unit of the Company, or based upon the relative performance of other companies
or upon comparisons of any of the indicators of performance relative to other companies. The
Committee may also exclude the impact of an event or occurrence which the Committee determines
should appropriately be excluded, including (a) restructurings, discontinued operations,
extraordinary items, and other unusual or non-recurring charges, (b) an event either not directly
related to the operations of the Company or not within the reasonable control of the Company’s
management, or (c) the cumulative effects of tax or accounting changes in accordance with generally
accepted accounting principles. Such performance goals shall be set by the Committee within the
time period prescribed by, and shall otherwise comply with the requirements of, Section 162(m) of
the Code, and the regulations thereunder.

 

10.3.  Adjustments.  Notwithstanding any provision of the Plan (other than Article 11),
with respect to any Restricted Stock Award, Performance Award or Other Share-Based Award that is
subject to this Section 10, the Committee may adjust downwards, but not upwards, the amount payable
pursuant to such Award, and the Committee may not waive the achievement of the applicable
performance goals, except in the case of the death or disability of the Participant or as otherwise
determined by the Committee in special circumstances.

 

10.4.  Restrictions.  The Committee shall have the power to impose such other
restrictions on Awards subject to this Article as it may deem necessary or appropriate to ensure
that such Awards satisfy all requirements for “performance-based compensation” within the meaning
of Section 162(m) of the Code.

 

10.5.  Limitations on Grants to Individual Participant.  Subject to adjustment as
provided in Section 12.2, no Participant may be granted (i) Options or Stock Appreciation Rights
during any 12-month period with respect to more than 2,000,000 Shares or (ii) Restricted Stock,
Performance Awards and/or Other Share-Based Awards that are denominated in Shares in any 12-month
period with respect to more than 900,000 Shares (the “Limitations”). In addition to the foregoing,
the maximum dollar value payable to any Participant in any 12-month period with respect to
Performance Awards is $3,000,000. If an Award is cancelled, the cancelled Award shall continue to
be counted toward the applicable Limitations.

 

 

11. CHANGE OF CONTROL PROVISIONS

11.1.  Impact of Change of Control.  The terms of any Award may provide in the Award Agreement
evidencing the Award that, upon a “Change of Control” of the Company (as that term may be defined
therein), (a) Options and Stock Appreciation Rights outstanding as of the date of the Change of
Control immediately vest and become fully exercisable, (b) that Options and Stock Appreciation
Rights outstanding as of the date of the Change of Control may be cancelled and terminated without
payment therefor if the Fair Market Value of one Share as of the date of the Change of Control is
less than the per Share Option exercise price or Stock Appreciation Right grant price,
(c) restrictions and deferral limitations on Restricted Stock lapse and the Restricted Stock
becomes free of all restrictions and limitations and becomes fully vested, (d) all Performance
Awards shall be considered to be earned and payable (either in full or pro rata based on the
portion of Performance Period completed as of the date of the Change of Control), and any deferral
or other restriction shall lapse and such Performance Awards shall be immediately settled or
distributed, (e) the restrictions and deferral limitations and other conditions applicable to any
Other Share-Based Awards or any other Awards shall lapse, and such Other Share-Based Awards or such
other Awards shall become free of all restrictions, limitations or conditions and become fully
vested and transferable to the full extent of the original grant, and (f) such other additional
benefits as the Committee deems appropriate shall apply, subject in each case to any terms and
conditions contained in the Award Agreement evidencing such Award. For purposes of the Plan, a
“Change of Control” shall mean an event described in an Award Agreement evidencing the Award or
such other event as determined in the sole discretion of the Board. Notwithstanding any other
provision of the Plan, the Committee, in its discretion, may determine that, upon the occurrence of
a Change of Control of the Company, each Option and Stock Appreciation Right outstanding shall
terminate within a specified number of days after notice to the Participant, and/or that each
Participant shall receive, with respect to each Share subject to such Option or Stock Appreciation
Right, an amount equal to the excess of the Fair Market Value of such Share immediately prior to
the occurrence of such Change of Control over the exercise price per share of such Option and/or
Stock Appreciation Right; such amount to be payable in cash, in one or more kinds of stock or
property (including the stock or property, if any, payable in the transaction) or in a combination
thereof, as the Committee, in its discretion, shall determine.

 

11.2.  Assumption Upon Change of Control.  Notwithstanding the foregoing, if in the event
of a Change of Control the successor company assumes or substitutes for an Option, Stock
Appreciation Right, Share of Restricted Stock or Other Share-Based Award, then each outstanding
Option, Stock Appreciation Right, Share of Restricted Stock or Other Share-Based Award shall not be
accelerated as described in Sections 11.1(a), (c) and (e). For the purposes of this Section 11.2,
an Option, Stock Appreciation Right, Share of Restricted Stock or Other Share-Based Award shall be
considered assumed or substituted for if following the Change of Control the award confers the
right to purchase or receive, for each Share subject to the Option, Stock Appreciation Right,
Restricted Stock Award or Other Share-Based Award immediately prior to the Change of Control, the
consideration (whether stock, cash or other securities or property) received in the transaction
constituting a Change of Control by holders of Shares for each Share held on the effective date of
such transaction (and if holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding shares); provided, however, that if such
consideration received in the transaction constituting a Change of Control is not solely common
stock of the successor company, the Committee may, with the consent of the successor company,
provide that the consideration to be received upon the exercise or vesting of an Option, Stock
Appreciation Right, Restricted Stock Award or Other Share-Based Award, for each Share subject
thereto, will be solely common stock of the successor company substantially equal in fair market
value to the per share consideration received by holders of Shares in the transaction constituting
a Change of Control. The determination of such substantial equality of value of consideration shall
be made by the Committee in its sole discretion and its determination shall be conclusive and
binding. Notwithstanding the foregoing, on such terms and conditions as may be set forth in an
Award Agreement, in the event of a termination of a Participant’s employment in such successor
company within a specified time period following such Change in Control, each Award held by such
Participant at the time of the Change in Control shall be accelerated as described in
Sections 11.1(a), (c) and (e).

 

 

12. GENERALLY APPLICABLE PROVISIONS

12.1.  Amendment and Termination of the Plan.  The Board may, from time to time, alter, amend,
suspend or terminate the Plan as it shall deem advisable, subject to any requirement for
shareholder approval imposed by applicable law, including the rules and regulations of the NASDAQ
Stock Market provided that the Board may not amend the Plan in any manner that would result in
noncompliance with Rule 16b-3 of the Exchange Act; and further provided that the Board may not,
without the approval of the Company’s shareholders, amend the Plan to (a) increase the number of
Shares that may be the subject of Awards under the Plan (except for adjustments pursuant to
Section 12.2), (b) expand the types of awards available under the Plan, (c) materially expand the
class of persons eligible to participate in the Plan, (d) amend any provision of Section 5.3,
(e) increase the maximum permissible term of any Option specified by Section 5.4 or the maximum
permissible term of a Freestanding Stock Appreciation Right specified by Section 6.2(g), or
(f) amend any provision of Section 10.4. The Board may not, without the approval of the Company’s
shareholders, take any other action with respect to an Option or Stock Appreciation Right that
would be treated as a repricing under the rules and regulations of the NASDAQ Stock Market,
including a reduction of the exercise price of an Option or the grant price of a Stock Appreciation
Right or the exchange of an Option or Stock Appreciation Right for cash or another Award. In
addition, no amendments to, or termination of, the Plan shall in any way impair the rights of a
Participant under any Award previously granted without such Participant’s consent.

 

12.2.  Adjustments.  In the event of any merger, reorganization, consolidation,
recapitalization, dividend or distribution (whether in cash, shares or other property, other than a
regular cash dividend), stock split, reverse stock split, spin-off or similar transaction or other
change in corporate structure affecting the Shares or the value thereof, such adjustments and other
substitutions shall be made to the Plan and to Awards as the Committee, in its sole discretion,
deems equitable or appropriate taking into consideration the accounting and tax consequences,
including such adjustments in the aggregate number, class and kind of securities that may be
delivered under the Plan, the Limitations, the maximum number of Shares that may be issued as
incentive stock options and, in the aggregate or to any one Participant, in the number, class, kind
and option or exercise price of securities subject to outstanding Awards granted under the Plan
and, in the aggregate or to any one Participant, in the number, class, kind and option or exercise
price of securities subject to outstanding Awards granted under the Plan (including, if the
Committee deems appropriate, the substitution of similar options to purchase the shares of, or
other awards denominated in the shares of, another company) as the Committee 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.

 

12.3.  Transferability of Awards.  Except as provided below, and except as otherwise
authorized by the Committee in an Award Agreement, no Award and no Shares subject to Awards
described in Article 8 that have not been issued or as to which any applicable restriction,
performance or deferral period has not lapsed, may be sold, assigned, transferred, pledged or
otherwise encumbered, other than by will or the laws of descent and distribution, and such Award
may be exercised during the life of the Participant only by the Participant or the Participant’s
guardian or legal representative.

 

12.4.  Termination of Employment.  The Committee shall determine and set forth in each
Award Agreement whether any Awards granted in such Award Agreement will continue to be exercisable,
and the terms of such exercise, on and after the date that a Participant ceases to be employed by
or to provide services to the Company or any Subsidiary (including as a Director), whether by
reason of death, disability, voluntary or involuntary termination of employment or services, or
otherwise. The date of termination of a Participant’s employment or services will be determined by
the Committee, which determination will be final.

 

 

13. MISCELLANEOUS

13.1.  Tax Withholding.  The Company shall have the right to make all payments or
distributions pursuant to the Plan to a Participant (or a Permitted Assignee thereof) (any such
person, a “Payee”) net of any applicable federal, state and local taxes required to be paid or
withheld as a result of (a) the grant of any Award, (b) the exercise of an Option or Stock
Appreciation Right, (c) the delivery of Shares or cash, (d) the lapse of any restrictions in
connection with any Award or (e) any other event occurring pursuant to the Plan. The Company or any
Subsidiary shall have the right to withhold from wages or other amounts otherwise payable to such
Payee such withholding taxes as may be required by law, or to otherwise require the Payee to pay
such withholding taxes. If the Payee shall fail to make such tax payments as are required, the
Company or its Subsidiaries shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment of any kind otherwise due to such Payee or to take such other action as
may be necessary to satisfy such withholding obligations. The Committee shall be authorized to
establish procedures for election by Participants to satisfy such obligation for the payment of
such taxes by tendering previously acquired Shares (either actually or by attestation, valued at
their then Fair Market Value), or by directing the Company to retain Shares (up to the
Participant’s minimum required tax withholding rate or such other rate that will not trigger a
negative accounting impact) otherwise deliverable in connection with the Award.

 

13.2.  Right of Discharge Reserved; Claims to Awards.  Nothing in the Plan nor the grant
of an Award hereunder shall confer upon any Employee or Director the right to continue in the
employment or service of the Company or any Subsidiary or affect any right that the Company or any
Subsidiary may have to terminate the employment or service of (or to demote or to exclude from
future Awards under the Plan) any such Employee or Director at any time for any reason. Except as
specifically provided by the Committee, the Company shall not be liable for the loss of existing or
potential profit from an Award granted in the event of termination of an employment or other
relationship. No Employee or Participant shall have any claim to be granted any Award under the
Plan, and there is no obligation for uniformity of treatment of Employees or Participants under the
Plan.

 

13.3.  Prospective Recipient.  The prospective recipient of any Award under the Plan
shall not, with respect to such Award, be deemed to have become a Participant, or to have any
rights with respect to such Award, until and unless such recipient shall have executed an agreement
or other instrument evidencing the Award and delivered a copy thereof to the Company, and otherwise
complied with the then applicable terms and conditions of the Plan and the Award Agreement.

 

13.4.  Substitute Awards.  Notwithstanding any other provision of the Plan, the terms of
Substitute Awards may vary from the terms set forth in the Plan to the extent the Committee deems
appropriate to conform, in whole or in part, to the provisions of the awards in substitution for
which they are granted.

 

13.5.  Cancellation of Award.  Notwithstanding anything to the contrary contained herein,
an Award Agreement may provide that the Award shall be canceled if the Participant, without the
consent of the Company, while employed by the Company or any Subsidiary or after termination of
such employment or service, engages in activity that violates any agreement between the Company or
any Subsidiary and Participant, including any agreement not to compete with the Company, as
determined by the Committee in its sole discretion. The Committee may provide in an Award Agreement
that if within the time period specified in the Agreement the Participant establishes a
relationship with a competitor or engages in an activity referred to in the preceding sentence, the
Participant will forfeit any gain realized on the vesting or exercise of the Award and must repay
such gain to the Company.

 

13.6.  Stop Transfer Orders.  All certificates for Shares delivered under the Plan
pursuant to any Award shall be subject to such stop-transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations and other requirements of the Securities
and Exchange Commission, any stock exchange upon which the Shares are then listed, and any
applicable federal or state securities law, and the Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such restrictions.

 

13.7.  Nature of Payments.  All Awards made pursuant to the Plan are in consideration of
services performed or to be performed for the Company or any Subsidiary, division or business unit
of the Company. Any income or gain realized pursuant to Awards under the Plan and any Stock
Appreciation Rights constitute a special incentive payment to the Participant and shall not be
taken into account, to the extent permissible under applicable law, as compensation for purposes of
any of the employee benefit plans of the Company or any Subsidiary except as may be determined by
the Committee or by the Board or board of directors of the applicable Subsidiary.

 

13.8.  Other Plans.  Nothing contained in the Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to shareholder approval if such approval is
required; and such arrangements may be either generally applicable or applicable only in specific
cases.

 

13.9.  Severability.  If any provision of the Plan shall be held unlawful or otherwise
invalid or unenforceable in whole or in part by a court of competent jurisdiction, such provision
shall (a) be deemed limited to the extent that such court of competent jurisdiction deems it
lawful, valid and/or enforceable and as so limited shall remain in full force and effect, and
(b) not affect any other provision of the Plan or part thereof, each of which shall remain in full
force and effect. If the making of any payment or the provision of any other benefit required under
the Plan shall be held unlawful or otherwise invalid or unenforceable by a court of competent
jurisdiction, such unlawfulness, invalidity or unenforceability shall not prevent any other payment
or benefit from being made or provided under the Plan, and if the making of any payment in full or
the provision of any other benefit required under the Plan in full would be unlawful or otherwise
invalid or unenforceable, then such unlawfulness, invalidity or unenforceability shall not prevent
such payment or benefit from being made or provided in part, to the extent that it would not be
unlawful, invalid or unenforceable, and the maximum payment or benefit that would not be unlawful,
invalid or unenforceable shall be made or provided under the Plan.

 

13.10.  Construction.  As used in the Plan, the words “include” and “including,” and
variations thereof, shall not be deemed to be terms of limitation, but rather shall be deemed to be
followed by the words “without limitation.”

 

13.11.  Unfunded Status of the Plan.  The Plan is intended to constitute an “unfunded”
plan for incentive compensation. With respect to any payments not yet made to a Participant by the
Company, nothing contained herein shall give any such Participant any rights that are greater than
those of a general creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under the Plan to deliver
the Shares or payments in lieu of or with respect to Awards hereunder; provided, however, that the
existence of such trusts or other arrangements is consistent with the unfunded status of the Plan.

 

13.12.  Governing Law.  The Plan and all determinations made and actions taken
thereunder, to the extent not otherwise governed by the Code or the laws of the United States,
shall be governed by the laws of the State of Washington, without reference to principles of
conflict of laws, and construed accordingly.

 

13.13.  Effective Date; Termination.  The amendment and restatement of the Plan shall be
effective on the date of the approval of the Plan’s amendment and restatement by the holders of the
shares entitled to vote at a duly constituted meeting of the shareholders of the Company. The
amendment and restatement of the Plan shall be null and void and of no effect if the foregoing
condition is not fulfilled. Awards may be granted under the Plan at any time and from time to time
on or prior to the tenth anniversary of the effective date of the Plan, on which date the Plan will
expire except as to Awards then outstanding under the Plan. Such outstanding Awards shall remain in
effect until they have been exercised or terminated, or have expired.

 

13.14.  Foreign Employees.  Awards may be granted to Participants who are foreign
nationals or employed outside the United States, or both, on such terms and conditions different
from those applicable to Awards to Employees employed in the United States as may, in the judgment
of the Committee, be necessary or desirable in order to recognize differences in local law or tax
policy. The Committee also may impose conditions on the exercise or vesting of Awards in order to
minimize the Company’s obligation with respect to tax equalization for Employees on assignments
outside their home country.

 

13.15.  Compliance with Section 409A of the Code.  This Plan is intended to comply and
shall be administered in a manner that is intended to comply with Section 409A of the Code and
shall be construed and interpreted in accordance with such intent. To the extent that an Award or
the payment, settlement or deferral thereof is subject to Section 409A of the Code, the Award shall
be granted, paid, settled or deferred in a manner that will comply with Section 409A of the Code,
including regulations or other guidance issued with respect thereto, except as otherwise determined
by the Committee. Any provision of this Plan that would cause the grant of an Award or the payment,
settlement or deferral thereof to fail to satisfy Section 409A of the Code shall be amended to
comply with Section 409A of the Code on a timely basis, which may be made on a retroactive basis,
in accordance with regulations and other guidance issued under Section 409A of the Code.

 

13.16.  Captions.  The captions in the Plan are for convenience of reference only, and
are not intended to narrow, limit or affect the substance or interpretation of the provisions
contained herein

 

13.17.  Conditions to Issuance of Shares.  The granting of Awards and the issuance of
Shares under the Plan 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 necessary or
appropriate. Shares (or if applicable, cash or other property) shall not be issued pursuant to an
Award unless, as determined by the Company, the issuance and delivery of the Shares (or if
applicable, cash or other property) complies with all such laws, rules, regulations and approvals.EX-10.1

MMA FINANCIAL, INC.

EMPLOYMENT AGREEMENT

Richard F. Brown

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is dated as of the 25th day of
June 2007 by and between MMA Financial, Inc., a Maryland corporation (“Employer”) and
Richard F. Brown (“Employee”).

WHEREAS, Employer and Employee desire to initiate an employment relationship on the terms set
forth herein effective as of June 1, 2007 (the “Effective Date”).

NOW, THEREFORE, in consideration of the foregoing, the mutual covenants hereinafter set forth,
and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Employer and Employee hereby agree as follows:

1. Employment and Duties. Employer agrees to continue to employ Employee, and
Employee agrees to continue to be employed by Employer, on the terms and conditions provided in
this Agreement. Employee shall have the duties and responsibilities set forth on the attached
Exhibit A and such other duties and responsibilities as are reasonably ancillary thereto as
determined from time to time by Employer. Employee agrees to devote Employee’s best efforts and
full time, attention and skill in performing the duties of his/her position. Provided that such
activity shall not violate any provision of this Agreement (including the noncompetition provisions
of Section 8 below) or materially interfere with his/her performance of Employee’s duties
hereunder, nothing herein shall prohibit Employee (a) from participating in any other business
activities approved in advance by Employer in accordance with any terms and conditions of such
approval, such approval not to be unreasonably withheld or delayed, (b) from engaging in
charitable, civic, fraternal or trade group activities, or (c) from investing in other entities or
business ventures.

2. Compensation. As compensation for performing the services required by this
Agreement, and during the term of this Agreement, Employee shall be compensated as follows:

(a) Base Compensation. From the Effective Date through December 31, 2007, Employer
shall pay to Employee a salary (“Base Compensation”) of $350,000 per annum payable in
accordance with the general policies and procedures of Employer, but in any event no less
frequently than every two weeks, in substantially equal installments, subject to withholding for
applicable federal, state and local taxes. Assuming that notice of termination has not been given
under Section 7, Employee’s Base Compensation shall increase by $50,000 effective on
January 1, 2008. Employer, based on periodic reviews of Employee’s performance, if any, shall
determine additional increases in Base compensation.

(b) Incentive Compensation.

(i) In addition to Employee’s Base Compensation, Employee shall be eligible to receive
additional compensation (“Incentive Compensation”) in the form of an annual cash bonus and
a long-term incentive compensation payment of up to a total of 100% of Employee’s Base Compensation
then in effect. The amount of the annual cash bonus will be based on a formula weighted
approximately 20% Employee’s performance and 80% Employer’s company-wide performance. The amount of
the long-term incentive payment will be based on a formula weighted among achievement of strategic
objectives, absolute total shareholder return (“TSR”) and the Company’s supplemental
performance measure, as approved by the Board of Directors for purposes of assessing management
performance. These formulas may be modified from time to time by Employer, following consultation
with Employee.

(ii) Incentive Compensation may, at the election of Employer, take the form of cash or equity
or equity-based awards in Municipal Mortgage & Equity, LLC, the Employer’s parent company (the
“Company”). To the extent Employee’s Incentive Compensation consists of such equity
awards, such awards may be granted under Employer’s employee share incentive plans as in effect
from time to time, and may be subject to the approval of the Company’s Compensation Committee.
Employee understands and agrees that the equity component of Incentive Compensation may be awarded
on a deferred basis and may vest and be issued over time in multiple installments. Incentive
Compensation for any given calendar year shall be determined no later than 60 days after the last
day of Employer’s calendar year and paid on March 5 of the following calendar year; in the case
of awards with delayed vesting, each installment shall be paid within thirty days of the vesting
date. Incentive Compensation shall be pro-rated for any partial calendar years. Other than as
specifically set forth herein, if this Agreement is terminated for any reason during any fiscal
year for which Employee is eligible for Incentive Compensation, no Incentive Compensation shall be
payable to Employee for that calendar year.

(iii) This Agreement shall not affect Employee’s eligibility for incentive compensation
under that certain consulting agreement with Employee dated November 10, 2006, except that
Employee shall be eligible only for 5/12ths of the amounts set forth therein representing the
period from January 1, 2007, through the Effective Date of this Agreement. Employee’s consulting
agreement shall terminate on the Effective Date of this Agreement; provided, however that such
termination shall have no impact on Employee’s rights to any compensation or benefits accruing
during the period such agreement was in effect.

3. Employee Benefits. During the Term (as defined in Section 6), Employee and
Employee’s eligible dependents shall have the right to participate in any retirement, pension,
insurance, health or other benefit plan or program adopted by Employer (or in which Employer
participates) subject, in the case of a plan or program (other than any severance plan), to all of
the terms and conditions thereof, and to any limitations imposed by law. To the extent that
Employee has similar benefits under a plan or program established by any other entity, Employee
shall nonetheless have the right to the benefits provided by Employer’s plan or program;
provided, however, that where by the terms of any plan or program, or under
applicable law, Employee may only participate in one such plan or program, Employee shall have the
option to limit participation to the plan or program sponsored by Employer, or to such other plan
or program. Employee shall have the right, to the extent permitted under any applicable law, to
participate concurrently in plans or programs sponsored by others (including self-employment plans
or programs) and in plans or programs sponsored by Employer.

4. Vacation, Sickness and Leaves of Absence.

(a) Vacation and Sick Leave. Employee shall be entitled to six (6) weeks paid
vacation during each fiscal year. Employee shall provide Employer with reasonable notice of
anticipated vacation dates. Employee shall be entitled to such sick leave, with pay, as Employer
provides to other employees.

(b) Carry-Forward/Pay Out of Vacation and Sick Leave. Vacation or sick days that are
not taken in a given fiscal year may be carried over to the next fiscal year; provided, however,
that no more than a total of ten vacation days and ten sick days may be carried forward. In the
event of the expiration of the Term or the termination of this Agreement for any reason, Employer
agrees to compensate Employee for all unused vacation and sick days carried forward, plus all
unused vacation and sick days for the year of expiration or termination (assuming proportionate
accrual of such vacation and sick days during such year), such compensation not to exceed, however,
a total of ten vacation days and ten sick days.

(c) Leaves of Absence. Employee may also be granted leaves of absence with or without
pay for such valid and legitimate reasons as Employer, in its sole discretion, may determine.

5. Expenses. Employee shall be entitled to receive, within a reasonable period of
time after Employee has delivered to Employer an itemized statement thereof, and after presentation
of such invoices or similar records as Employer may reasonably require, reimbursement for all
necessary and reasonable expenses incurred by Employee in connection with the performance of the
duties described in Section 1 hereof. To the extent necessary to avoid characterizing any
reimbursement to Employee as deferred compensation under Section 409A of the Internal Revenue Code
of 1986, as amended (the “Code”), such reimbursements shall be submitted no later than
March 1 following the close of the calendar year in which the expense was incurred by Employee and
paid on or before March 15th following the close of such calendar year. Amounts which
are not submitted within the required timeframe shall not be eligible for reimbursement hereunder.

6. Term. The term of this Agreement shall commence on the Effective Date and end on
December 31, 2008 (the “Expiration Date”), unless earlier terminated in accordance with the
provisions of Section 7 (the period that this Agreement is in effect being herein referred
to as the “Term”). Any termination of this Agreement shall be subject to Section 8
below.

7. Termination and Termination Benefits.

(a) Termination by Employer.

(i) With Cause. Employer may terminate this Agreement for Cause (defined below) upon
ten days prior written notice to Employee. In the event that Employer terminates this Agreement
pursuant to this Section 7(a)(i), Employee shall be entitled to receive the Base
Compensation and the benefits to which Employee is entitled under this Agreement through the
Termination Date (defined in Section 7(f) below), payable within 30 days of the Termination
Date. As used in this Agreement, “Cause” shall mean (A) acts or omissions by Employee with
respect to Employer which constitute intentional misconduct or a knowing violation of law; (B)
receipt by Employee of money, property or services from Employer or from another person dealing
with Employer in violation of law or this Agreement, (C) breach by Employee of the provisions of
Section 8 below, (D) breach by Employee of the duty of loyalty to Employer, (E) gross
negligence by Employee in the performance of the duties assigned pursuant to Section 1
hereof, (F) repeated failure by Employee to perform the duties assigned pursuant to
Section 1 hereof, which failure is not cured to the satisfaction of Employer within 30 days
following delivery of written notice from Employer of such failure; provided that such cure
period shall be available to Employee on only two occasions, (G) violation of Employer’s policies
with respect to alcohol or drug use or abuse, or (H) Employee pleaded guilty or no contest to or
is convicted of any criminal offense (other than minor traffic violations).

(ii) Unsatisfactory Performance. Employer may, upon written notice,
terminate this Agreement for unsatisfactory job performance in the event Employee fails to
achieve stated goals or Employee’s performance is materially below Employer’s expectations.
Employer shall not terminate Employee under this Section 7(a)(ii) unless Employer shall
have given Employee written notice of such unsatisfactory performance and Employee shall fail to
cure such performance within ninety (90) days of such notice. In the event of termination under
this Section 7(a)(ii), Employee shall be paid Employee’s Base Compensation and all other
benefits to which Employee is entitled under this Agreement up through the effective date of
termination. Employee shall also receive, as severance pay, twelve (12) months’ Base Compensation.

(iii) Without Cause. Employer may terminate this Agreement without Cause upon 90 days
prior written notice to Employee. In the event that Employer terminates this Agreement pursuant to
this Section 7(a)(iii), Employee shall be entitled to receive (x) Employee’s Base
Compensation and the benefits to which Employee is entitled under this Agreement through the
Termination Date (as defined in Section 7 (f)), plus (y) the Proportionate Share (as
defined in Section 7(f)) of Employee’s Incentive Compensation, plus (z) severance payments
in an aggregate amount equal to twelve (12) months’ Base Compensation; provided, however, that in
the event of a termination without Cause within eighteen (18) months after a Change in Control (as
defined in Section 7(f)), the severance amount shall be equal to (a) $500,000 if the
Termination Date is within twelve (12) months of the Effective Date, and (b) $1,000,000 thereafter,
and further provided, that if this Agreement is permitted to expire following a Change in Control
without renewal or replacement for a term of at least one year, Employee shall be entitled on the
Expiration Date to a severance payment in the amount of $500,000.

(iv) Disability. If a Disability (defined below) prevents the Employee from
performing the duties assigned to Employee under Section 1 hereof, Employer may terminate
this Agreement upon 30 days prior written notice to Employee. In the event that Employer
terminates Employee pursuant this Section 7(a)(iv), Employee shall be entitled to receive
(x) Employee’s Base Compensation and the benefits to which Employee is entitled under this
Agreement through the Termination Date, plus (y) the Proportionate Share (as defined in Section
7(f)) of Employee’s Incentive Compensation, plus (z) severance payments in an aggregate amount
equal to the greater of (A) twelve (12) months’ Base Compensation and (B) the Base Compensation
that Employee would have received from the Termination Date through the Expiration Date. Nothing
in this Section 7(a)(iv) shall be construed to limit Employee’s rights under or vary the
terms of any disability insurance policy provided by Employer in any manner adverse to Employee.
Employee shall be considered to have a “Disability” if Employee is unable to perform the
duties assigned to Employee under Section 1 hereof due to illness, physical or mental
disability or other incapacity for a total of 120 or more business days during any twelve-month
period.

(b) Termination by Employee. Employee may terminate this Agreement for Good Reason
(defined below) upon 30 days prior written notice to Employer. In the event that Employee
terminates this Agreement pursuant to this Section 7(b), Employee shall be entitled to
receive (x) Employee’s Base Compensation and the benefits to which Employee is entitled under this
Agreement through the Termination Date, plus (y) the Proportionate Share (as defined in Section
7(g)) of Employee’s Incentive Compensation, plus (z) severance payments in an aggregate amount of
twelve (12) months’ Base Compensation; provided, however, that in the event of a termination for
Good Reason within eighteen (18) months after a Change in Control, the severance amount shall be
equal to (a) $500,000 if the Termination Date is within twelve (12) months of the Effective Date,
and (b) $1,000,000 thereafter, and further provided, that if this Agreement is permitted to expire
following a Change in Control without renewal or replacement for a term of at least one year,
Employee shall be entitled on the Expiration Date to a severance payment in the amount of $500,000.
As used in this Agreement, “Good Reason” shall mean (i) the reduction by Employer of
Employee’s Base Compensation without Employee’s consent, (ii) the failure by Employer to provide in
any material respect any of the payments, benefits or conditions of employment to which Employee is
entitled under this Agreement; (iii) a material reduction or alteration in Employee’s duties by
Employer, without Employee’s consent; provided that Employee shall be deemed to have
consented to such reduction or alteration in duties if Employee does not object to such reduction
or alteration in writing within 60 days of the implementation of such reduction or alteration or
(iv) a situation where Employer, through a formal assignment of duties or otherwise, requires
Employee to take any act which would be a violation of federal, state or local law or the Company’s
Charter or bylaws.

(c) Death Benefit. Notwithstanding any other provision of this Agreement, this
Agreement shall terminate on the date of Employee’s death. In such event, Employee’s estate or
such other beneficiary as employee shall provide in writing shall be entitled to receive an amount
equal to twenty four (24) months’ Base Compensation (the “Death Benefit”) payable in accordance
with Employer’s usual payroll practices, except that if Employer receives any insurance proceeds
with respect to the Employee’s death, an amount equal to the lesser of such proceeds or any unpaid
Death Benefit shall be paid to Employee’s estate in a lump sum within five (5) business days of
receipt by Employer.

(d) Severance Payments. Severance payments owing to the Employee under this
Section 7 shall be payable in a lump sum severance payment to Employee on the Termination
Date.

(e) Vesting of Deferred Awards. In the event of a termination under Section
7(a)(ii) (Unsatisfactory Performance), 7(a)(iii) (Without Cause), 7(a)(iv)
(Disability), 7(b) (Good Reason), or 7(c) (Death), or in the event this Agreement
shall expire on the Expiration Date, without renewal, within eighteen (18) months of a Change in
Control, Employee shall become fully vested in any and all outstanding deferred share awards,
options, or other equity-based compensation previously awarded to Employee but not yet vested at
the time of such termination. Awards which become vested under this paragraph shall be paid to
Employee within thirty days of the Termination Date.

(f) Certain Definitions

(i) “Proportionate Share” shall mean the dollar amount of Employee’s Incentive
Compensation (determined in accordance with Employer’s usual and customary practices) that would
have been payable for the year in which the Termination Date occurs multiplied by a fraction, the
numerator of which shall be the number of days elapsed, as of the Termination Date, in the year of
termination, and the denominator of which shall be 365. Proportionate Share amounts shall be
payable as and when provided in Section 2(b)(ii).

(ii) “Termination Date” shall mean the effective date of termination of Employee’s
employment as specified in the written notice described in this Section 7.

(iii) “Change in Control” means:

(A) Any “Person,” as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as Amended (the “Act), or Persons acting in concert (other than
the Company, a subsidiary, any trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or any corporation owned, directly or indirectly, by the shareholders
of the Company in substantially the same proportions as their ownership of shares of the Company),
is or becomes the “beneficial owners” (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing fifty percent (50%) or more of the
combined voting power of the Company’s then outstanding voting securities;

(B) during any period of two consecutive years, individuals who at the beginning of such
period constitute the Company’s Board of Directors (the “Board) and any new director (other than a
director designated by a person who has entered into an agreement with the Company to effect a
transaction described in clause (A) or (C) of this Section 7(g)(iii)) whose election by the
Board or nomination for election by the Company’s shareholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors at the beginning
of the period or whose election or nomination for election was previously so approved, cease for
any reason to constitute at least a majority thereof;

(C) the shareholders of the Company approve a merger, consolidation, recapitalization, or
reorganization of the Company, or a reverse share split of any class of voting securities of the
Company, or the consummation of any such transaction if shareholder approval is not obtained, other
than any such transaction which would result in at least fifty percent (50%) of the total voting
power represented by the voting securities of the Company or the surviving entity outstanding
immediately after such transaction being beneficially owned by persons who together beneficially
owned at least fifty percent (50%) of the combined voting power of the voting securities of the
Company outstanding immediately prior to such transaction, with the relative voting power of each
such continuing holder compared to the voting power of each such continuing holder not
substantially altered as a result of the transaction; provided that, for purposes of this paragraph
(C), such continuity of ownership (and preservation of relative voting power) shall be deemed to be
satisfied if the failure to meet such fifty percent (50%) threshold (or to substantially preserve
such relative voting power) is due solely to the acquisition of voting securities by an employee
benefit plan of the Company or such surviving entity or of any subsidiary of the Company or such
surviving entity;

(D) the shareholders of the Company approve a sale of all or substantially all of the assets
of the Company; or

(E) the Company ceases to own directly or indirectly a majority of the voting interests in the
Employer; or there is an assignment of this Agreement in connection with a sale of all or
substantially all of the assets of Employer.

Notwithstanding anything herein to the contrary, it shall not be a Change in Control if
following a transaction or series of related transactions described in Section 7(g)(iii),
twenty-five percent (25%) or more of the Company’s then outstanding voting securities are
beneficially owned by Employees and Persons who were members of the Company’s Section 16 reporting
group immediately prior thereto.

(iv) “Deferred Compensation” means any amount that is deemed to be deferred
compensation under (and subject to) Section 409A of the Code.

(v) “Specified Employee” has the meaning given to such term by Section
409A(a)(2)(B)(i) of the Code.

(vi) “Separation From Service” means a separation from service within the meaning of
Section 409A of the Code.

8. Covenant Not to Compete.

(a) Noncompetition.

(i) Except as provided below, from and after the Effective Date and continuing until
the later of (A) twelve (12) months following Employee’s last day of employment or (B) the
Expiration Date, Employee shall not without the prior written consent of Employer become
employed by, or undertake to work for, directly or indirectly, whether as an advisor,
principal, agent, partner, officer, director, employee, shareholder, associate or consultant
of or to, any person, partnership, corporation or other business entity which is a Major
Competitor of Employer. As used herein, (x) “Major Competitor” shall mean Charter
Mac and its Affiliates, and any other person or entity whose primary business lines include
business lines in which the Company or its subsidiaries are engaged, unless the net worth of
such person or entity (if privately held) or the market capitalization of such company (if
publicly held) is less than $200 Million and (y) “Affiliate” shall mean any person
or entity controlled by or under common control with any other person or entity, whether by
the ownership of, or the right to control the voting of, voting securities, by contract, or
otherwise. Notwithstanding the foregoing, if Employer terminates Employee without Cause
under Section 7(a)(iii) of this Agreement, or Employee resigns for Good Reason under
Section 7b), this Section 8(a)(i) shall not apply.

(ii) From and after the Effective date and continuing until the later of (A)
twenty-four (24) months following Employee’s last day of employment or (B) the Expiration
Date, Employee shall not (w) solicit any employee of Employer to change employment; (x)
solicit any client, customer or investor of Employer or any of its subsidiaries which closed
(in any capacity) a transaction with Employer or any of its subsidiaries during the last
twenty-four (24) months of Employee’s employment; (y) disclose proprietary or confidential
information of Employer or its subsidiaries, including without limitation, tax structures
and solutions, deal structures, pricing, customer or client lists or information, revenues,
expenses, or other similar information; or (z) knowingly or intentionally disparage the
Company, its products, partners, officers, directors, employees, affiliates subsidiaries or
agents in a manner that Employee could reasonably anticipate would have a direct, materially
adverse effect on the Company (in consideration for which the Company covenants and agrees
that it, through a director, officer, or employee, will not intentionally or knowingly take
any action that would cause Employee embarrassment, humiliation, or otherwise directly
contribute to his being held in disrepute by the public, or his past, current, or
prospective clients, customers, employees, employers, or vendors).  The parties intend for
the covenants and agreements of this paragraph to survive the expiration of this Agreement

(b) Reasonable Restrictions. Employee acknowledges that the restrictions of
Section 8(a) above are reasonable, fair and equitable in scope, term and duration, are
necessary to protect the legitimate business interests of Employer, and are a material inducement
to Employer to enter into this Agreement. Employer and Employee both agree that in the event a
court shall determine any portion of the restrictions in Section 8(a) are not reasonable,
the court may change such restrictions, including without limitation the geographical restrictions
and the duration restrictions, to reflect a restriction which the court will enforce as reasonable.

(c) Specific Performance. Employee acknowledges that the obligations undertaken by
him/her pursuant to this Agreement are unique and that if Employee shall fail to abide by any of
the restrictions set forth in Section 8(a), Employer will suffer harm for which there is no
adequate remedy at law. Employee therefore confirms that Employer shall have the right, in the
event of a violation of Section 8(a), to injunctive relief to enforce the terms of this
Section 8 in addition to any other remedies available at law or in equity.

9. Indemnification. Employer hereby agrees to defend, indemnify and hold Employee
harmless, to the maximum extent allowed by law, from any and all liability for acts or omissions of
Employee performed in the course of Employee’s employment (or reasonably believed by Employee to be
within the scope of his/her employment); provided that such acts or omissions do not
constitute (a) criminal conduct, (b) willful misconduct, or (c) a fraud upon, or breach of
Employee’s duty of loyalty to, Employer. Employer shall at all times carry Director and Officer
liability insurance in commercially reasonable amounts but in any event not less than ten million
dollars ($10,000,000).

10. Miscellaneous.

(a) Complete Agreement. This Agreement constitutes the entire agreement among the
parties with respect to the matters set forth herein and supersedes all prior understandings and
agreements between the parties as to such matters. No amendments or modifications shall be binding
unless set forth in writing and signed by both parties.

(b) Successors and Assigns. Neither party may assign its rights or interest under
this Agreement without the prior written consent of the other party, except that Employer’s
interest in this Agreement may be assigned to a successor by operation of law or to a purchaser
purchasing substantially all of Employer’s business, and Employee’s benefits under this Agreement
may be assigned by operation of law to Employee’s heirs, devisees and personal representatives.
This Agreement shall be binding upon and shall inure to the benefit of each of the parties and
their respective permitted successors and assigns.

(c) Severability. Each provision of this Agreement is severable, such that if any
part of this Agreement shall be deemed invalid or unenforceable, the balance of this Agreement
shall be enforced so as to give effect as to the intent of the parties.

(d) Representations. Employer represents and warrants to Employee that it has the
requisite corporate power to enter into this Agreement and perform the terms hereof and that the
execution, delivery and performance of this Agreement have been duly authorized by all appropriate
company action. Employee represents that Employee is not a party to any agreement that would be
violated by this Agreement or by Employee accepting employment with Employer.

(e) Construction. This Agreement shall be governed in all respects by the internal
laws of the State of Maryland (excluding reference to principles of conflicts of law). As used
herein, the singular shall include the plural, the plural shall include the singular, and the use
of any pronoun shall be construed to refer to the masculine, feminine or neuter, all as the context
may require.

(f) Compliance with Section 409A. To the extent that Section 409A of the Code applies
to any election or payment required under this Agreement, such payment or election shall be made in
conformance with the provisions of Section 409A of the Code.

(g) Notices. All notices required or permitted under this Agreement shall be in
writing and shall be deemed given on the date sent if delivered by hand or by facsimile (with
electronic confirmation of delivery), and on the next business day if sent by overnight courier or
by United States mail, postage prepaid, to each party at the following address (or at such other
address as a party may specify by notice under this section):

If to Employer:

MMA Financial, Inc.

621 East Pratt Street

Suite 300

Baltimore, Maryland 21202

Facsimile: (410) 727-5387

Attention: Chief Executive Officer

If to Employee:

Richard F. Brown

[REDACTED]

(g) Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original and all of which together shall constitute one instrument.

1

IN WITNESS WHEREOF, and intending to be legally bound, the parties have executed this
Agreement as of the date and year first above written.

EMPLOYER:

	 	 	MMA FINANCIAL, INC.

By: /s/ Michael L. Falcone

Name: Michael L. Falcone

Title: Chief Executive Officer and President

EMPLOYEE:

/s/ Richard F. Brown

Richard F. Brown

2

Exhibit A

JOB DESCRIPTION

TITLE: Executive Vice President

DUTIES AND RESPONSIBILITIES:

	 	(a)	 	Oversee the Human Resources functions of the company

	 	(b)	 	Facilitate company strategic planning.

	 	(c)	 	Undertake such related duties as the Chief Executive Officer of the Company may from
time to time assign.

3

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