Document:

EX-10.1.C

 

Exhibit 10.1(c)

SUB-ADVISORY AGREEMENT

     This SUB-ADVISORY AGREEMENT is made as of March 15, 2005 (this “Agreement”) by and among
Crystal River Capital, Inc., a Maryland corporation (the “Company”), Hyperion Crystal River Capital
Advisors, LLC, a Delaware limited liability company (the “Manager”), and Ranieri & Co., Inc., a
Delaware corporation (the “Sub-Advisor”).

WITNESSETH:

     WHEREAS, pursuant to the terms of a Management Agreement, dated as of the date hereof (the
“Management Agreement”), between the Company and the Manager, the Company has retained the Manager
for the purpose of providing day-to-day management and administrative services to the Company;

     WHEREAS, the Manager desires to retain the Sub-Advisor for the purpose of providing certain
investment advisory services to the Manager in connection with the Manager’s service as the manager
of the Company; and

     WHEREAS, the Sub-Advisor is willing to render such services on the terms and conditions
hereinafter set forth.

AGREEMENT

     NOW, THEREFORE, in consideration of the mutual agreements herein set forth, the parties hereto
agree as follows:

     1. Definitions.

          (a) “Affiliate” shall mean, with respect to any Person, any Person Controlling, Controlled by,
or under common Control with, such Person.

          (b) “Agreement” has the meaning assigned in the first paragraph.

          (c) “Board of Directors” means the Board of Directors of the Company.

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

          (e) “Company” has the meaning assigned in the first paragraph; provided that all
references herein to the Company shall, except as otherwise expressly provided herein, be deemed to
include any Subsidiaries of Crystal River Capital, Inc.

          (f) “Control” shall mean, the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of another Person without the consent or approval
of any other Person.

 

 

          (g) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.

          (h) “Governing Instruments” means, with respect to any Person, the articles of incorporation
and bylaws in the case of a corporation, the certificate of limited partnership (if applicable) and
partnership agreement in the case of a general or limited partnership or the articles of formation
and operating agreement in the case of a limited liability company.

          (i) “Hyperion Capital” means Hyperion Capital Management, Inc.

          (j) “Investment Company Act” means the Investment Company Act of 1940, as amended.

          (k) “Manager” has the meaning assigned in the first paragraph.

          (l) “Person” means any individual, corporation, partnership, joint venture, limited liability
company, estate, trust, unincorporated association, any federal, state, county or municipal
government or any bureau, department or agency thereof and any fiduciary acting in such capacity on
behalf of any of the foregoing.

          (m) “REIT” means a corporation or trust which qualifies as a real estate investment trust in
accordance with Sections 856 through 860 of the Code and the Treasury Regulation promulgated
thereunder.

          (n) “RMBS” means residential mortgage-backed securities.

          (o) “Sub-Advisor” has the meaning assigned in the first paragraph.

          (p) “Subsidiary” means any subsidiary of the Company, any partnership, the general partner of
which is the Company or any subsidiary of the Company and any limited liability company, the
managing member of which is the Company or any subsidiary of the Company.

          (q) “Treasury Regulations” means the Procedures and Administration Regulations promulgated by
the U.S. Department of Treasury under the Code, as amended.

     2. Retention and Duties of Sub-Advisor.

          (a) The Manager hereby retains the Sub-Advisor as an advisor to consult with the Manager, as
may reasonably be requested by the Manager, regarding macroeconomic trends, market trends in RMBS
and the Company’s overall portfolio investment and financing strategy, and the Sub-Advisor hereby
agrees to provide such services in accordance with the provisions of this Agreement.

          (b) The Sub-Advisor shall cooperate with the Manager in all matters pertaining to its
performance of the consulting services hereunder as reasonably requested by the Manager.

2

 

          (c) The Sub-Advisor shall have exclusive control over the means and manner by which the
consulting services provided pursuant to this Agreement are performed.

          (d) The Sub-Advisor shall not be required to expend money in connection with the provision of
its services hereunder. Subject to Section 7, the Company shall pay all expenses, and reimburse
the Sub-Advisor for the Sub-Advisor’s expenses incurred on the Company’s behalf, in connection with
the services rendered by the Sub-Advisor hereunder.

          (e) In performing its duties under this Section 2, the Sub-Advisor shall be entitled to rely
on qualified experts and professionals (including, without limitation, accountants, legal counsel
and other professional service providers) hired by the Sub-Advisor at the Company’s sole cost and
expense.

     3. Dedication; Other Activities.

          (a) The Sub-Advisor shall cause its officers and employees to devote such of their time to the
provision of services to the Manager as the Sub-Advisor deems reasonably necessary and appropriate
for the proper performance of all of the Sub-Advisor’s duties hereunder. The Manager shall have
the benefit of the Sub-Advisor’s reasonable judgment and effort in rendering services.

          (b) Nothing herein shall prevent the Sub-Advisor or any of its Affiliates or any of the
directors, officers, shareholders, partners, members and employees of any of the foregoing from
engaging in other businesses or from rendering services of any kind to any other Person, including
investment in, or advisory services to others investing in, any type of real estate, real
estate-related investment or non-real estate related investment, including investments which meet
the principal investment objectives of the Company.

     4. Confidentiality. The Sub-Advisor shall keep confidential any nonpublic information of the
Company or the Manager obtained in connection with the services rendered under this Agreement and
shall not disclose any such information (or use the same except in furtherance of its duties under
this Agreement), except: (a) to the Manager and Hyperion Capital; (b) with the prior written
consent of the Manager; (c) to legal counsel, accountants and other professional advisors; (d) to
governmental officials having jurisdiction over the Company, Hyperion Capital, the Manager or the
Sub-Advisor; (e) in connection with any governmental or regulatory filings of the Company, Hyperion
Capital, the Manager or the Sub-Advisor or disclosure or presentations to Company investors or (f)
as required by law or legal process to which the Sub-Advisor or any Person to whom disclosure is
permitted hereunder is a party. The foregoing shall not apply to information which has previously
become available through the actions of a Person other than the Sub-Advisor not resulting from
Sub-Advisor’s violation of this Section 4. The provisions of this Section 4 shall survive the
expiration or earlier termination of this Agreement for a period of one year.

     5. Other Obligations.

          The Sub-Advisor shall promptly obtain and thereafter maintain “errors and omissions” insurance
coverage and such other insurance coverage which is customarily carried by investment advisors
performing functions similar to those of the Sub-Advisor under this

3

 

Agreement, in a minimum amount equal to the lesser of (i) the aggregate amount of compensation
received by the Sub-Advisor from the Manager pursuant to Section 6 hereof and (ii) $250,000.

     6. Compensation. The Manager shall pay the Sub-Advisor an annual investment advisory fee of
$100,000. The annual investment advisory fee shall be paid in cash monthly in arrears.

     7. Expenses. Each of the Company, the Manager and the Sub-Advisor shall bear all of its
respective operating expenses, except those specifically required to be borne by the Manager or the
Company under the Management Agreement.

     The Sub-Advisor is not entitled to be reimbursed for wages, salaries and benefits of its
officers and employees. Subject to any required approval of the Board of Directors and/or the
Manager, the Sub-Advisor may retain third parties including accountants, legal counsel, real estate
underwriters, brokers, among others, on the Company’s behalf, and be reimbursed for such services.
The provisions of this Section 7 shall survive the expiration or earlier termination of this
Agreement to the extent such expenses have previously been incurred or are incurred in connection
with such expiration or termination.

     8. Expense Reports and Reimbursements. The Sub-Advisor shall prepare a statement
documenting the expenses incurred by the Sub-Advisor in connection with the performance of its
duties hereunder during each fiscal year, and deliver the same to the Company and the Manager
within 45 days following the end of the applicable fiscal quarter. Such expenses shall be
reimbursed by the Company within 45 days following delivery of the expense statement by the
Sub-Advisor; provided, however, that such reimbursements may be offset by the
Sub-Advisor against amounts due to the Company from the Sub-Advisor. The provisions of this
Section 8 shall survive the expiration or earlier termination of this Agreement.

     9. Limits of Manager Responsibility; Indemnification.

          (a) Pursuant to this Agreement, the Sub-Advisor will not assume any responsibility other than
to render the services called for hereunder and will not be responsible for any action of the
Company, the Board of Directors or the Manager in following or declining to follow its advice or
recommendations. The Sub-Advisor, its directors, officers, managers and employees will not be
liable to the Company, any Subsidiary, the Manager, any of their directors, officers, stockholders,
managers, owners or partners for acts or omissions performed or not performed in accordance with
and pursuant to this Agreement, except by reason of acts or omissions constituting bad faith,
willful misconduct, gross negligence or reckless disregard of the Sub-Advisor’s duties under this
Agreement (subject to Section 9(g) hereof).

          (b) The Company hereby agrees to indemnify, defend and hold harmless the Sub-Advisor, the
Manager and their respective Affiliates, officers, directors, members, managers, employees, agents,
successors and assigns from and against all liabilities, judgments, costs, charges, losses,
expenses and claims, including reasonable attorneys’ fees, charges and expenses and expert witness
fees, of any nature, kind or description, arising out of (i) the enforcement by the Sub-Advisor of
any of its rights under this Section 9 against the

4

 

Company and (ii) claims by third parties based on acts or omissions of the Sub-Advisor
performed or not performed in accordance with and pursuant to this Agreement, except (A) to the
extent caused by or resulting from acts or omissions constituting bad faith, willful misconduct,
gross negligence or reckless disregard of the Sub-Advisor’s duties under this Agreement, as
determined pursuant to a final, non-appealable order of a court of competent jurisdiction or (B)
claims by the Sub-Advisor’s employees relating to the terms and conditions of their employment with
the Sub-Advisor.

          (c) The Sub-Advisor hereby agrees to indemnify the Company, the Manager and their respective
officers, members, managers, employees, agents, successors and assigns with respect to all
liabilities, judgments, costs, charges, losses, expenses and claims, including reasonable
attorney’s fees, charges and expenses and expert witness fees, of any nature, kind or description,
arising out of (i) the enforcement by the Company and/or the Manager of any of their respective
rights under this Section 9 against the Sub-Advisor, (ii) claims by third parties based on acts or
omissions of the Sub-Advisor performed or not performed in accordance with and pursuant to this
Agreement constituting bad faith, willful misconduct, gross negligence or reckless disregard of the
Sub-Advisor’s duties under this Agreement, as determined pursuant to a final, non-appealable order
of a court of competent jurisdiction or (iii) claims by the Sub-Advisor’s employees relating to the
terms and conditions of their employment with the Sub-Advisor.

          (d) The Person seeking indemnity (“Indemnitee”) will promptly notify the party against whom
indemnity is claimed (“Indemnitor”) of any claim for which it seeks indemnification; provided,
however, that the failure to so notify the Indemnitor will not relieve Indemnitor from any
liability which it may have hereunder, except to the extent such failure actually prejudices
Indemnitor. The Indemnitor shall have the right to assume the defense and settlement of such
claim; provided that, Indemnitor notifies Indemnitee of its election to assume such defense
and settlement within thirty (30) days after the Indemnitee gives the Indemnitor notice of the
claim. In such case the Indemnitee will not settle or compromise such claim, and the Indemnitor
will not be liable for any such settlement made without its prior written consent. If Indemnitor
is entitled to, and does, assume such defense by delivering the aforementioned notice to
Indemnitee, Indemnitee will (i) have the right to approve Indemnitor’s counsel (which approval will
not be unreasonably withheld or delayed), (ii) be obligated to cooperate in furnishing evidence and
testimony and in any other manner in which Indemnitor may reasonably request and (iii) be entitled
to participate in (but not control) the defense of any such action, with its own counsel and at its
own expense.

          (e) Reasonable expenses (including attorney’s fees) incurred by an Indemnitee in defense or
settlement of a claim that may be subject to a right of indemnification hereunder may be advanced
by the Company to such Indemnitee as such expenses are incurred prior to the final disposition of
such claim; provided that, Indemnitee undertakes to repay such amounts if its shall be
determined ultimately by a court of competent jurisdiction that Indemnitee was not entitled to be
indemnified hereunder.

          (f) The Sub-Advisor shall remain entitled to exculpation from the Company and the Manager and
indemnification from the Company pursuant to this Section 9 (subject to the limitations set forth
herein) with respect to any matter arising prior to the

5

 

termination of this Agreement and shall have no liability to the Company, the Manager or their
respective Affiliates, officers, directors, members, shareholders, managers, partners, employees,
agents, successors and assigns in respect of any matter arising after such termination unless such
matter arose out of events or circumstances that occurred prior to such termination.

          (g) The liability of the Sub-Advisor to the Company, any Subsidiary, the Manager and their
respective directors, officers, stockholders, partners, members, managers, employees, agents,
successors and assigns with respect to acts or omissions of the Sub-Advisor performed or not
performed in accordance with and pursuant to this Agreement constituting bad faith, willful
misconduct, gross negligence or reckless disregard of the Sub-Advisor’s duties under this
Agreement, whether such liability arises pursuant to Section 9(c) hereof or otherwise, shall not
exceed the lesser of (A) the aggregate amount of compensation received by the Sub-Advisor from the
Manager pursuant to Section 6 hereof and (B) $250,000.

     10. No Joint Venture. Nothing in this Agreement shall be construed to make the Company, the
Manager and the Sub-Advisor partners or joint venturers or impose any liability as such on either
of them.

     11. Term; Termination.

          (a) This Agreement shall become effective on the date first set forth above. This Agreement
may be terminated by the Sub-Advisor at any time without penalty upon giving the Manager 60 days’
prior written notice (which notice may be waived by the Manager), and may be terminated by the
Manager at any time without penalty upon giving the Sub-Advisor 60 days’ prior written notice
(which notice may be waived by the Sub-Advisor). This Agreement shall terminate automatically
immediately upon termination of the Management Agreement.

          (b) If this Agreement is terminated pursuant to this Section 11, such termination shall be
without any further liability or obligation of either party to the other, except as otherwise
expressly provided herein.

     12. Action Upon Termination or Expiration of Origination Period. From and after the
effective date of termination of this Agreement pursuant to Section 11, the Sub-Advisor shall not
be entitled to compensation for further services under this Agreement but shall be paid all
compensation accruing to the date of termination, reimbursement for all expenses incurred by the
Sub-Advisor to which the Sub-Advisor is entitled to be reimbursed under this Agreement in
connection with the performance of its duties hereunder and a termination fee, if applicable. Upon
such termination or expiration, the Sub-Advisor shall reasonably promptly deliver to the Manager
all property and documents of the Company provided to or obtained by the Sub-Advisor pursuant to or
in connection with this Agreement (including all copies and extracts thereof in whatever form, then
in the Sub-Advisor’s possession or under its control), except to the extent that the Sub-Advisor is
required to retain any such property or documents in accordance with the Sub-Advisor’s document
retention policy or applicable law.

     13. Assignment. None of the parties hereto may assign its duties under this Agreement.

6

 

     14. Notices. Unless expressly provided otherwise in this Agreement, all notices, requests,
demands and other communications required or permitted under this Agreement shall be in writing and
shall be deemed to have been duly given, made and received when delivered against receipt or upon
actual receipt of (a) personal delivery, (b) delivery by a reputable overnight courier, (c)
delivery by facsimile transmission against answerback, or (d) delivery by registered or certified
mail, postage prepaid, return receipt requested, addressed as set forth below:

	 	 	 
	If to the Company:

	 	Crystal River Capital, Inc.
	 

	 	One Liberty Plaza, 165 Broadway
	 

	 	36th Floor
	 

	 	New York, New York 10006
	 

	 	Attn: General Counsel
	 

	 	Facsimile: (212) 549-8310
	 
	 	 
	If to the Manager:

	 	Hyperion Crystal River Capital Advisors, LLC
	 

	 	One Liberty Plaza, 165 Broadway
	 

	 	36th Floor
	 

	 	New York, New York 10006
	 

	 	Attn: General Counsel
	 

	 	Facsimile: (212) 549-8310
	 
	 	 
	If to the Sub-Advisor:

	 	Ranieri & Co., Inc.
	 

	 	50 Charles Lindbergh Boulevard, Suite 500
	 

	 	New York, New York 10006
	 

	 	Attn: Robert A. Perro
	 

	 	Facsimile: (516) 745-6787

     Any party may change the address to which communications or copies are to be sent by giving
notice of such change of address in conformity with the provisions of this Section 14 for the
giving of notice.

     15. Binding Nature of Agreement; Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs, personal
representatives, successors and permitted assigns as provided in this Agreement. The provisions of
Section 9 of this Agreement shall inure to the benefit of the Persons provided to be exculpated
and/or indemnified thereunder (each, a “Covered Person”). Each Covered Person is an intended
beneficiary of Section 9 hereof and shall have to the right to enforce the provisions thereof.

     16. Entire Agreement; Amendments. This Agreement contains the entire agreement and
understanding among the parties hereto with respect to the subject matter hereof and supersedes all
prior and contemporaneous agreements, understandings, inducements and conditions, express or
implied, oral or written, of any nature whatsoever with respect to the subject matter of this
Agreement. The express terms of this Agreement control and supersede any course of performance
and/or usage of the trade inconsistent with any of the terms of this

7

 

Agreement. This Agreement may not be modified or amended other than by an agreement in
writing signed by the parties hereto.

     17. Governing Law. This Agreement and all questions relating to its validity,
interpretation, performance and enforcement shall be governed by and construed, interpreted and
enforced in accordance with the laws of the State of New York.

     18. Indulgences, Not Waivers. Neither the failure nor any delay on the part of a party to
exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude
any other or further exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any occurrence be
construed as a waiver of such right, remedy, power or privilege with respect to any other
occurrence. No waiver shall be effective unless it is in writing and is signed by the party
asserted to have granted such waiver.

     19. Titles Not to Affect Interpretation. The titles of sections, paragraphs and
subparagraphs contained in this Agreement are for convenience only, and they neither form a part of
this Agreement nor are they to be used in the construction or interpretation of this Agreement.

     20. Execution in Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original as against any party whose signature
appears thereon, and all of which shall together constitute one and the same instrument. This
Agreement shall become binding when one or more counterparts of this Agreement, individually or
taken together, shall bear the signatures of all of the parties reflected hereon as the
signatories.

     21. Provisions Separable. The provisions of this Agreement are independent of and separable
from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue
of the fact that for any reason any other or others of them may be invalid or unenforceable in
whole or in part.

     22. Principles of Construction. Words used herein regardless of the number and gender
specifically used, shall be deemed and construed to include any other number, singular or plural,
and any other gender, masculine, feminine or neuter, as the context requires. All references to
recitals, sections, paragraphs and schedules are to the recitals, sections, paragraphs and
schedules in or to this Agreement unless otherwise specified.

[SIGNATURE PAGE FOLLOWS]

8

 

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

	 	 	 	 	 	 	 
	 	 	THE COMPANY:	 	 
	 
	 	 	 	 	 	 
	 	 	CRYSTAL RIVER CAPITAL, INC.	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ John J. Feeney, Jr.	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: John J. Feeney, Jr.	 	 
	 

	 	 	 	Title:  Secretary	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	THE MANAGER:	 	 
	 
	 	 	 	 	 	 
	 	 	HYPERION CRYSTAL RIVER CAPITAL	 	 
	 	 	ADVISORS, LLC	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ John J. Feeney, Jr.	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: John J. Feeney, Jr.	 	 
	 

	 	 	 	Title:  Secretary	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	THE SUB-ADVISOR:	 	 
	 
	 	 	 	 	 	 
	 	 	RANIERI & CO., INC.	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Robert A. Perro	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Robert A. Perro	 	 
	 

	 	 	 	Title:  Vice President	 	 

[Signature Page to Ranieri & Co., Inc. Sub-Advisory Agreement]EX-10.3.A

 

	 	 	 	 
	 
 
	 	 
	 

	 	Exhibit 10.3(a)	 

CRYSTAL RIVER CAPITAL, INC.

2005 LONG-TERM INCENTIVE PLAN

	 	 	 
	 
 
	 	 
	 

	 	As approved by the Board of
	 

	 	Directors on February 23, 2005
	 

	 	and by the stockholders on
	 

	 	February 23, 2005
	 

	 	
As amended through the

2006 First
Plan Amendment

 

 

CRYSTAL RIVER CAPITAL INC.

2005 LONG-TERM INCENTIVE PLAN

1. Establishment, Purpose, and Types of Awards

     On February 23, 2005, Crystal River Capital, Inc., a Maryland corporation (the “Company”)
established an incentive compensation plan known as the “Crystal River Capital, Inc. 2005 Long-Term
Incentive Plan” (hereinafter referred to as the “Plan”), to provide incentives to its manager,
officers, employees, directors, and advisors, and consultants who provide services to the Company
and its Affiliates and to motivate them toward the Company’s long term success, growth and
profitability and to attract, retain and reward key personnel.

     The Plan permits the granting of the following types of awards (“Awards”), according to the
Sections of the Plan listed here:

	 	 	 
	Section 6

	 	Options
	Section 7

	 	Stock Appreciation Rights
	Section 8

	 	Restricted and Unrestricted Stock Awards; Restricted Stock Units
	Section 9

	 	Deferred Stock Units
	Section 10

	 	Performance Awards

     The Plan is not intended to affect and shall not affect any stock options, equity-based
compensation, or other benefits that the Company or its Affiliates may have provided, or may
separately provide in the future pursuant to any agreement, plan, or program that is independent of
this Plan.

2. Defined Terms

     Terms in the Plan that begin with an initial capital letter have the defined meaning set forth
in Appendix A, unless defined elsewhere in this Plan or the context of their use clearly indicates
a different meaning.

3. Shares Subject to the Plan

     Subject to the provisions of Section 13 of the Plan, the maximum number of Shares that the
Company may issue pursuant to the Plan shall be determined in accordance with the following
paragraph.

     With respect to the calendar year ending December 31, 2005, the maximum number of Shares that
may be made the subject of Awards granted under the Plan shall be equal to (i) ten percent (10%) of
the number of shares of Common Stock that are outstanding immediately following the completion of
the offering of Common Stock pursuant to that certain purchase/placement agreement, dated as of
March 9, 2005, by and among the Company and Deutsche Securities Inc. and Wachovia Capital Markets,
LLC, as representatives of the several

 

 

initial purchasers listed in such agreement (the “Closing Date”). Thereafter, for any given
subsequent calendar year, the maximum number of shares of Common Stock that may be made the subject
of Awards granted under the Plan shall increase by an amount equal to ten percent (10%) of the
difference, if any (but not less than zero) between the number of shares of Common Stock that were
outstanding as of the last day of the immediately preceding calendar year and the number of shares
of Common Stock that were outstanding as of the last day of the calendar year preceding such year.
For purposes of making the foregoing calculation, the last day of the calendar year preceding the
calendar year ending December 31, 2005, shall be the Closing Date. Notwithstanding the foregoing,
in no event shall the number of Shares issued pursuant to the Plan exceed 10,000,000.

     For all Awards, these Shares may be authorized but unissued Shares, or Shares that the Company
has reacquired or otherwise holds in treasury.

     Shares that are subject to an Award that for any reason expires, is forfeited, is cancelled,
or becomes unexercisable, and Shares that are for any other reason not paid or delivered under the
Plan shall again, except to the extent prohibited by Applicable Law, be available for subsequent
Awards under the Plan. In addition, the Committee may make future Awards with respect to Shares
that the Company retains from otherwise delivering pursuant to an Award either (i) as payment of
the exercise price of an Award, or (ii) in order to satisfy the withholding or employment taxes due
upon the grant, exercise, vesting, or distribution of an Award. Notwithstanding the foregoing, but
subject to adjustments pursuant to Section 13 below, the number of Shares that are available for
ISO Awards shall be determined, to the extent required under applicable tax laws, by reducing the
number of Shares that can be issued pursuant to the Plan designated above by the number of Shares
granted pursuant to ISO Awards (whether or not Shares are issued pursuant to such Awards); provided
that any Shares that are either purchased under the Plan and forfeited back to the Plan, or
surrendered in payment of the Exercise Price for an Award shall be available for issuance pursuant
to ISO Awards. Notwithstanding the foregoing and unless an Award Agreement provides otherwise, Shares
subject to Awards of Options or Restricted Stock that are
(i) authorized by the Board and granted to the Manager pursuant to the Plan and in connection with
the Company's March 2005 Offering whereby the Board granted the Manager 84,000 shares of the Company's
Restricted Stock and Options to purchase 126,000 Shares; (ii) transferred and reallocated by the Manager
to Eligible Persons in the form of Awards in accordance with the
March 15, 2005 Management Agreement
between the Manager and the Company, as amended and restated from
time to time; and (iii) forfeited for
any reason, shall again be available for transfer and reallocation by the Manager.

4. Administration

     (a) General. The Committee shall administer the Plan in accordance with its terms, provided
that the Board may act in lieu of the Committee on any matter. The Committee shall hold meetings
at such times and places as it may determine and make such rules and regulations for the conduct of
its business as it deems advisable. In the absence of a duly appointed Committee or if the Board
otherwise chooses to act in lieu of a Committee, the Board shall function as the Committee for all
purposes of the Plan.

     (b) Committee Composition. The Board shall appoint the members of the Committee. If and to
the extent permitted by Applicable Law, the Committee may authorize one or more Reporting Persons
(or other officers) to make Awards to Eligible Persons who are not Reporting Persons (or other
officers whom the Committee has specifically authorized to make Awards). The Board may at any time
appoint additional members to the Committee, remove and replace members of the Committee with or
without Cause, and fill vacancies on the Committee however caused.

- 2 -

 

     (c) Powers of the Committee. Subject to the provisions of the Plan, the Committee shall have
the authority, in its sole discretion:

     (i) to determine Eligible Persons to whom Awards shall be granted from time to time and
the number of Shares, units, or SARs to be covered by each Award;

     (ii) to determine, from time to time, the Fair Market Value of Shares;

     (iii) to determine, and to set forth in Award Agreements, the terms and conditions of
all Awards, including any applicable exercise or purchase price, the installments and
conditions under which an Award shall become vested (which may be based on performance),
terminated, expired, cancelled, renewed, or replaced, and the circumstances for vesting
acceleration or waiver of forfeiture restrictions, and other restrictions and limitations;

     (iv) to approve the forms of Award Agreements and all other documents, notices and
certificates in connection therewith which need not be identical either as to type of Award
or among Participants;

     (v) to construe and interpret the terms of the Plan and any Award Agreement, to
determine the meaning of their terms, and to prescribe, amend, and rescind rules and
procedures relating to the Plan and its administration; and

     (vi) in order to fulfill the purposes of the Plan and without amending the Plan,
modify, cancel, or waive the Company’s rights with respect to any Awards, to adjust or to
modify Award Agreements for changes in Applicable Law, and to recognize differences in
foreign law, tax policies, or customs; and

     (vii) to make all other interpretations and to take all other actions that the
Committee may consider necessary or advisable to administer the Plan or to effectuate its
purposes.

     Subject to Applicable Law and the restrictions set forth in the Plan, the Committee may
delegate administrative functions to individuals who are Reporting Persons, officers, or Employees
of the Company or its Affiliates.

     (d) Deference to Committee Determinations. The Committee shall have the discretion to
interpret or construe ambiguous, unclear, or implied (but omitted) terms in any fashion it deems to
be appropriate in its sole discretion, and to make any findings of fact needed in the
administration of the Plan or Award Agreements. The Committee’s prior exercise of its
discretionary authority shall not obligate it to exercise its authority in a like fashion
thereafter. The Committee’s interpretation and construction of any provision of the Plan, or of
any Award or Award Agreement, shall be final, binding, and conclusive. The validity of any such
interpretation, construction, decision or finding of fact shall not be given de novo review if
challenged in court, by arbitration, or in any other forum, and shall be upheld unless clearly
arbitrary or capricious.

- 3 -

 

     (e) No Liability; Indemnification. Neither the Board nor any Committee member, nor any Person
acting at the direction of the Board or the Committee, shall be liable for any act, omission,
interpretation, construction or determination made in good faith with respect to the Plan, any
Award or any Award Agreement. The Company and its Affiliates shall pay or reimburse any member of
the Committee, as well as any Director, Officer, Employee, or Consultant who takes action in
connection with the Plan, for all expenses incurred with respect to the Plan, and to the full
extent allowable under Applicable Law shall indemnify each and every one of them for any claims,
liabilities, and costs (including reasonable attorney’s fees) arising out of their good faith
performance of duties under the Plan. The Company and its Affiliates may obtain liability
insurance for this purpose.

5. Eligibility

     (a) General Rule. The Committee may grant ISOs only to Employees (including officers who are
Employees) of the Company or an Affiliate that is a “parent corporation” or “subsidiary
corporation” within the meaning of Section 424 of the Code, and may grant all other Awards to any
Eligible Person. A Participant who has been granted an Award may be granted an additional Award or
Awards if the Committee shall so determine, if such Person is otherwise an Eligible Person and if
otherwise in accordance with the terms of the Plan.

     (b) Grant of Awards. Subject to the express provisions of the Plan, the Committee shall
determine from the class of Eligible Persons those individuals to whom Awards under the Plan may be
granted, the number of Shares subject to each Award, the price (if any) to be paid for the Shares
or the Award and, in the case of Performance Awards, in addition to the matters addressed in
Section 10 below, the specific objectives, goals and performance criteria that further define the
Performance Award. Each Award shall be evidenced by an Award Agreement signed by the Company and,
if required by the Committee, by the Participant. The Award Agreement shall set forth the material
terms and conditions of the Award established by the Committee.

     (c) Limits on Awards. No Participant other than the Manager may receive Options and SARs that
relate to more than 100,000 Shares per calendar year. The Manager may not receive Options or SARs
that relate to more than 1,000,000 Shares per calendar year. The Committee will adjust these
limitations pursuant to Section 13 below.

     (d) Replacement Awards. The Committee may, in its sole discretion and upon such terms as it
deems appropriate, require as a condition of the grant of an Award to a Participant that the
Participant surrender for cancellation some or all of the Awards or other awards that have
previously been granted to the Participant under this Plan or otherwise. An Award that is
conditioned upon such surrender may or may not be the same type of Award, may cover the same (or a
lesser or greater) number of Shares as such surrendered Award, may have other terms that are
determined without regard to the terms or conditions of such surrendered Award, and may contain any
other terms that the Committee deems appropriate. In the case of Options, these other terms may
not involve an Exercise Price that is lower than the Exercise Price of the surrendered Option
unless either the new grant will not create any material financial expense for the Company or the
Company’s stockholders approve the grant itself or the program under which it is made pursuant to
the Plan.

- 4 -

 

6. Option Awards

     (a) Types; Documentation. The Committee may in its discretion grant ISOs to any Employee and
Non-ISOs to any Eligible Person, and shall evidence any such grants in an Award Agreement that is
delivered to the Participant. Each Option shall be designated in the Award Agreement as an ISO or
a Non-ISO. At the sole discretion of the Committee, any Option may be exercisable, in whole or in
part, immediately upon the grant thereof, or only after the occurrence of a specified event, or
only in installments, which installments may vary. Options granted under the Plan may contain such
terms and provisions not inconsistent with the Plan that the Committee shall deem advisable in its
sole and absolute discretion.

     (b) ISO $100,000 Limitation. To the extent that the aggregate Fair Market Value of Shares
with respect to which Options designated as ISOs first become exercisable by a Participant in any
calendar year (under this Plan and any other plan of the Company or any Affiliate) exceeds
$100,000, such excess Options shall be treated as Non-ISOs. For purposes of determining whether
the $100,000 limit is exceeded, the Fair Market Value of the Shares subject to an ISO shall be
determined as of the Grant Date. In reducing the number of Options treated as ISOs to meet the
$100,000 limit, the most recently granted Options shall be reduced first. In the event that
Section 422 of the Code is amended to alter the limitation set forth therein, the limitation of
this Section 6(b) shall be automatically adjusted accordingly.

     (c) Term of Options. Each Award Agreement shall specify a term at the end of which the Option
automatically expires, subject to earlier termination provisions contained in Section 6(h) hereof
(to the extent an Award Agreement does not contain contrary provisions); provided, that, the term
of any Option may not exceed ten years from the Grant Date. In the case of an ISO granted to an
Employee who is a Ten Percent Holder on the Grant Date, the term of the ISO shall not exceed five
years from the Grant Date.

     (d) Exercise Price. The exercise price of an Option shall be determined by the Committee in
its discretion and shall be set forth in the Award Agreement, subject to the following special
rules:

     (i) ISOs. If an ISO is granted to an Employee who on the Grant Date is a Ten
Percent Holder, the per Share exercise price shall not be less than 110% of the Fair Market
Value per Share on such Grant Date. If an ISO is granted to any other Employee, the per
Share exercise price shall not be less than 100% of the Fair Market Value per Share on the
Grant Date.

     (ii) Non-ISOs. The per Share exercise price for the Shares to be issued
pursuant to the exercise of a Non-ISO shall not be less than 75% of the Fair Market Value
per Share on the Grant Date.

     (iii) Named Executive Officers. The per Share exercise price shall not be less
than 100% of the Fair Market Value per Share on the Grant Date of an Option if (A) on such
Grant Date, the Participant is subject to the limitations set forth in Section 162(m) of the
Code, and (B) the grant is intended to qualify as performance-based compensation under
Section 162(m) of the Code.

- 5 -

 

     (iv) Repricing. The Committee may at any time unilaterally reduce the exercise
price for any Option, but only if (I) the reduction will not cause material financial
expense for the Company or the Company’s stockholders approve the reduction or the program
under which it is made, and (II) the Committee promptly provides a written notice to any
Participant affected by the reduction.

     (v) Adjustment for Section 409A of the Code. In the event an Option is granted
with an Exercise Price that is below the Fair Market Value per Share on the date of grant,
and subject to Section 11(e) below, the Option shall be subject to any terms and conditions
that the Administrator may in its discretion determine to be necessary to avoid the income
tax penalties set forth under Section 409A of the Code.

     (e) Exercise of Option. The times, circumstances and conditions under which an Option shall
be exercisable shall be determined by the Committee in its sole discretion and set forth in the
Award Agreement. The Committee shall have the discretion to determine whether and to what extent
the vesting of Options shall be tolled during any unpaid leave of absence; provided, however, that
in the absence of such determination, vesting of Options shall be tolled during any such leave
approved by the Company.

     (f) Minimum Exercise Requirements. An Option may not be exercised for a fraction of a Share.
The Committee may require in an Award Agreement that an Option be exercised as to a minimum number
of Shares, provided that such requirement shall not prevent a Participant from purchasing the full
number of Shares as to which the Option is then exercisable.

     (g) Methods of Exercise. Prior to its expiration pursuant to the terms of the applicable
Award Agreement, and subject to the times, circumstances, and conditions for exercisability
contained in the applicable Award Agreement and Applicable Law, each Option may be exercised, in
whole or in part (provided that the Company shall not be required to issue fractional shares), by
delivery of written notice of exercise to the secretary of the Company accompanied by the payment
of the full exercise price of the Shares being purchased. Unless otherwise provided in the
applicable Award Agreement and subject to compliance with Applicable Law at the time of such
payment, the acceptable methods of payment on the exercise date of any Option shall include the
following:

     (i) cash or check payable to the Company (in U.S. dollars);

     (ii) other Shares that (A) are owned by the Participant who is purchasing Shares
pursuant to an Option, (B) have a Fair Market Value on the date of surrender equal to the
aggregate exercise price of the Shares as to which the Option is being exercised, (C) were
not acquired by such Participant pursuant to the exercise of an Option, unless such Shares
have been owned by such Participant for at least six months or such other longer period as
the Committee may determine, (D) are all, at the time of such surrender, free and clear of
any and all claims, pledges, liens and encumbrances, or any restrictions which would in any
manner restrict the transfer of such shares to or by the Company (other than such
restrictions as may have existed prior to an issuance of such Shares by the Company to such
Participant), and (E) are duly endorsed for transfer to the Company;

- 6 -

 

     (iii) a cashless exercise program that the Committee may approve, from time to time in
its discretion, pursuant to which a Participant may concurrently provide irrevocable
instructions (A) to such Participant’s broker or dealer to effect the immediate sale of the
purchased Shares and remit to the Company, out of the sale proceeds available on the
settlement date, sufficient funds to cover the exercise price of the Option plus all
applicable taxes required to be withheld by the Company by reason of such exercise and (B)
to the Company to deliver the certificates for the purchased Shares directly to such broker
or dealer in order to complete the sale;

     (iv) the Participant’s surrender of Restricted Stock, Restricted Stock Units, Stock
Appreciation Rights, or Deferred Stock Units; provided that to the extent payment is made by
means of the surrender of any Award which is unvested or subject to restrictions, the Shares
issued pursuant to such surrender shall be subject to the same vesting terms and other
restrictions that applied to the surrendered Award; or

     (v) any combination of the foregoing methods of payment.

          The Committee shall have the discretion to exclude from an Award Agreement any methods of
payment set forth above. The Company shall not be required to deliver Shares pursuant to the
exercise of an Option until payment of the full exercise price therefore is received by the
Company.

     (h) Termination of Continuous Service. The Committee may establish and set forth in the
applicable Award Agreement the terms and conditions on which an Option shall remain exercisable, if
at all, following termination of a Participant’s Continuous Service. The Committee may waive or
modify these provisions at any time. To the extent that a Participant is not entitled to exercise
an Option at the date of his or her termination of Continuous Service, or if the Participant (or
other Person entitled to exercise the Option) does not exercise the Option to the extent so
entitled within the time specified in the Award Agreement or below (as applicable), the Option
shall terminate and the Shares underlying the unexercised portion of the Option shall revert to the
Plan and become available for future Awards. In no event may any Option be exercised after the
expiration of the Option term as set forth in the Award Agreement.

     The following provisions shall apply to the extent an Award Agreement does not specify the
terms and conditions upon which an Option shall terminate when there is a termination of a
Participant’s Continuous Service:

     (i) Termination other than Upon Disability or Death or for Cause. In the event
of termination of a Participant’s Continuous Service (other than as a result of
Participant’s death, disability, retirement or termination for Cause), the Participant shall
have the right to exercise an Option at any time within 90 days following such termination
to the extent the Participant was entitled to exercise such Option at the date of such
termination.

     (ii) Disability. In the event of termination of a Participant’s Continuous
Service as a result of becoming Disabled, the Participant shall have the right to exercise

- 7 -

 

an Option at any time within one year following such termination to the extent the
Participant was entitled to exercise such Option at the date of such termination.

     (iii) Retirement. In the event of termination of a Participant’s Continuous
Service as a result of Participant’s retirement, the Participant shall have the right to
exercise the Option at any time within six months following such termination to the extent
the Participant was entitled to exercise such Option at the date of such termination.

     (iv) Death. In the event of the death of a Participant during the period of
Continuous Service since the Grant Date of an Option, or within 90 days following
termination of the Participant’s Continuous Service, the Option may be exercised, at any
time within one year following the date of the Participant’s death, by the Participant’s
estate or by a Person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent the right to exercise the Option had vested at the date
of death or, if earlier, the date the Participant’s Continuous Service terminated.

     (v) Cause. If the Committee determines that a Participant’s Continuous Service
terminated due to Cause, the Participant shall immediately forfeit the right to exercise any
Option, and it shall be considered immediately null and void.

     (i) Reverse Vesting. The Plan Administrator in its discretion may allow a Participant to
exercise unvested Options, in which case the Shares then issued shall be Restricted Stock Units
having analogous vesting restrictions to the unvested Options.

     (j) Buyout Provisions. The Committee may at any time offer to buy out an Option, in exchange
for a payment in cash or Shares, based on such terms and conditions as the Committee shall
establish and communicate to the Participant at the time that such offer is made. In addition, if
the Fair Market Value for Shares subject to an Option is more than 33% below their exercise price
for more than 30 consecutive business days, the Committee may unilaterally terminate and cancel the
Option either (i) by paying the Participant, in cash or Shares, an amount not less than the
Black-Scholes value of the vested portion of the Option, or (ii) by irrevocably committing to grant
a new Option, on a designated date more than six months after such termination and cancellation of
such Option (but only if the Participant’s Continuous Service has not terminated prior to such
designated date), on substantially the same terms as the cancelled Option, provided that the per
Share exercise price for the new Option shall equal the per Share Fair Market Value of a Share on
the date the new grant occurs.

7. Share Appreciate Rights (SARs)

     (a) Grants. The Committee may in its discretion grant Share Appreciation Rights to any
Eligible Person, in any of the following forms:

     (i) SARs related to Options. The Committee may grant SARs either concurrently
with the grant of an Option or with respect to an outstanding Option, in which case the SAR
shall extend to all or a portion of the Shares covered by the related Option. An SAR shall
entitle the Participant who holds the related Option, upon exercise of the SAR and surrender
of the related Option, or portion thereof, to the extent the SAR and related Option each
were previously unexercised, to receive payment of an amount

- 8 -

 

determined pursuant to Section 7(e) below. Any SAR granted in connection with an ISO
will contain such terms as may be required to comply with the provisions of Section 422 of
the Code and the regulations promulgated thereunder.

     (ii) SARs Independent of Options. The Committee may grant SARs which are
independent of any Option subject to such conditions as the Committee may in its discretion
determine, which conditions will be set forth in the applicable Award Agreement.

     (iii) Limited SARs. The Committee may grant SARs exercisable only upon or in
respect of a Change in Control or any other specified event, and such limited SARs may
relate to or operate in tandem or combination with or substitution for Options or other
SARs, or on a stand-alone basis, and may be payable in cash or Shares based on the spread
between the exercise price of the SAR, and (A) a price based upon or equal to the Fair
Market Value of the Shares during a specified period, at a specified time within a specified
period before, after or including the date of such event, or (B) a price related to
consideration payable to Company’s stockholders generally in connection with the event.

     (b) Exercise Price. The per Share exercise price of an SAR shall be determined in the sole
discretion of the Committee, shall be set forth in the applicable Award Agreement, and shall be no
less than 75% of the Fair Market Value (as of the Grant Date) of one Share. The exercise price of
an SAR related to an Option shall be the same as the exercise price of the related Option. The
exercise price of an SAR shall be subject to the special rules on pricing contained in paragraphs
(iii) and (iv) of Section 6(d) hereof.

     (c) Exercise of SARs. Unless the Award Agreement otherwise provides, an SAR related to an
Option will be exercisable at such time or times, and to the extent, that the related Option will
be exercisable. An SAR may not have a term exceeding ten years from its Grant Date. An SAR
granted independently of any other Award will be exercisable pursuant to the terms of the Award
Agreement. Whether an SAR is related to an Option or is granted independently, the SAR may only be
exercised when the Fair Market Value of the Shares underlying the SAR exceeds the exercise price of
the SAR.

     (d) Effect on Available Shares. To the extent that an SAR is exercised, only the actual
number of delivered Shares (if any) will be charged against the maximum number of Shares that may
be delivered pursuant to Awards under this Plan. The number of Shares subject to the SAR and the
related Option of the Participant will, however, be reduced by the number of underlying Shares as
to which the exercise relates, unless the Award Agreement otherwise provides.

     (e) Payment. Upon exercise of an SAR related to an Option and the attendant surrender of an
exercisable portion of any related Award, the Participant will be entitled to receive payment of an
amount determined by multiplying —

     (i) the excess of the Fair Market Value of a Share on the date of exercise of the SAR
over the exercise price per Share of the SAR, by

     (ii) the number of Shares with respect to which the SAR has been exercised.

- 9 -

 

     Notwithstanding the foregoing, an SAR granted independently of an Option may limit the amount
payable to the Participant to a percentage, specified in the Award Agreement but not exceeding
one-hundred percent (100%), of the amount determined pursuant to the preceding sentence.

     (f) Form and Terms of Payment. Subject to Applicable Law, the Committee may, in its sole
discretion, settle the amount determined under Section 7(e) above solely in cash, solely in Shares
(valued at their Fair Market Value on the date of exercise of the SAR), or partly in cash and
partly in Shares. In any event, cash shall be paid in lieu of fractional Shares. Absent a
contrary determination by the Committee, all SARs shall be settled in cash as soon as practicable
after exercise. Notwithstanding the foregoing, the Committee may, in an Award Agreement, (i)
determine the maximum amount of cash or Shares or combination thereof that may be delivered upon
exercise of an SAR, and (ii) impose payment or other restrictions, including restrictions intended
to conform the SARs with any applicable provisions of Section 409A of the Code.

     (g) Termination of Employment or Consulting Relationship. The Committee shall establish and
set forth in the applicable Award Agreement the terms and conditions on which an SAR shall remain
exercisable, if at all, following termination of a Participant’s Continuous Service. The
provisions of Section 6(h) above shall apply to the extent an Award Agreement does not specify the
terms and conditions upon which an SAR shall terminate when there is a termination of a
Participant’s Continuous Service.

     (h) Repricing and Buy-out. The Committee has the same discretion to reprice and to buy-out
SARs as it has to take such actions with respect to Options.

8. Restricted and Unrestricted Stock Awards; Restricted Stock Units

     (a) Grants. The Committee may in its discretion grant and issue restricted Shares
(“Restricted Stock”) to any Eligible Person and shall evidence such grant in an Award Agreement
that is delivered to the Participant which sets forth the number of Shares subject to the
Restricted Stock Award, the purchase price for such Shares (if any) and the terms upon which such
Shares may become vested. In addition, the Company may in its discretion grant the right to
receive Shares after certain vesting requirements are met (“Restricted Stock Units”) to any
Eligible Person and shall evidence such grant in an Award Agreement that is delivered to the
Participant which sets forth the number of Shares (or formula, that may be based on future
performance or conditions, for determining the number of Shares) that the Participant shall be
entitled to receive upon vesting and the terms upon which the Shares subject to Restricted Stock
Units may become vested. Unless otherwise provided in the Award Agreement, the holder of Restricted
Stock shall receive any cash and stock dividends declared and paid on the Restricted Stock. Unless
otherwise provided in the Award Agreement, the holder of Restricted Stock Units shall receive (i)
in the case of any cash dividends declared and paid on the Shares, a cash amount equal to that
amount that would otherwise be payable as cash dividends so declared and paid if the Shares subject
to the then outstanding Restricted Stock Units were outstanding and (ii) in the case of any stock
dividends declared and paid on the Shares, a grant of additional Restricted Stock Units (which
shall be subject to the same outstanding vesting terms) for the number of Shares equal to any stock
dividends so declared and paid that would otherwise be payable if the Shares subject to the then
outstanding Restricted Stock Units were outstanding, subject to the

- 10 -

 

availability of Shares reserved for issuance under the Plan at the time of such dividend. The
Committee may condition any Award of Restricted Stock or Restricted Stock Units to a Participant on
receiving from the Participant such further assurances and documents as the Committee may require
to enforce the restrictions. In addition, the Committee may grant Awards hereunder in the form of
unrestricted Shares (“Unrestricted Stock”), which shall vest in full upon the date of grant or such
other date as the Committee may determine or which the Committee may issue pursuant to any program
under which one or more Eligible Persons (selected by the Committee in its discretion) elect to
receive Unrestricted Stock in lieu of cash bonuses that would otherwise be paid.

     (b) Vesting. The Committee shall set forth in an Award Agreement granting Restricted Stock or
Restricted Stock Units, the terms and conditions under which the Participant’s interest in the
Shares subject to Restricted Stock Awards or Restricted Stock Units will become vested. Except as
set forth in the applicable Award Agreement or as the Committee otherwise determines, upon
termination of a Participant’s Continuous Service for any other reason, the Participant shall
forfeit his or her unvested Restricted Stock and Restricted Stock Units; provided that if a
Participant purchases the Restricted Stock and forfeits them for any reason, the Company shall
return the purchase price to the Participant only if and to the extent set forth in an Award
Agreement.

     (c) Issuance of Restricted Shares Prior to Vesting. The Company shall issue stock
certificates that evidence Restricted Stock pending the lapse of applicable restrictions, and that
bear a legend making appropriate reference to such restrictions. Except as set forth in the
applicable Award Agreement or the Committee otherwise determines, the Company or a third party that
the Company designates shall hold such Restricted Stock and any dividends not currently paid to the
Participant pursuant to the applicable Award Agreement.

     (d) Issuance of Shares upon Vesting. As soon as practicable after vesting of a Participant’s
Shares subject to a Restricted Stock Award (or Shares subject to Restricted Stock Units) and the
Participant’s satisfaction of applicable tax withholding requirements, the Company shall release to
the Participant, free from the vesting restrictions, one Share for each vested Share subject to the
Restricted Stock Award (or issue one Share free of the vesting restriction for each vested
Restricted Stock Unit), unless an Award Agreement provides otherwise. No fractional shares shall
be distributed, and cash shall be paid in lieu thereof.

     (e) Dividends payable on Vesting. Unless an Award Agreement provides that no payment of
dividends be made, if an Award Agreement does not provide for an earlier payment of dividends,
whenever Shares are issued to a Participant or duly-authorized transferee under Section 8(d) above
pursuant to the vesting of Shares subject to a Restricted Stock Award or the Shares subject to
Restricted Stock Units, such Participant or duly-authorized transferee shall also be entitled to
receive, with respect to each Share issued, an amount equal to any cash dividends (plus simple
interest at a rate of five percent per annum, or such other reasonable rate as the Committee may
determine) and a number of Shares equal to any stock dividends, which were declared and paid to the
holders of Shares between the Grant Date and the date such Share is issued to the extent not
currently paid to the Participant pursuant to the applicable Award Agreement.

- 11 -

 

     (f) Section 83(b) Elections. If a Participant who has received Restricted Stock Units
provides the Committee with written notice of his or her intention to make an election under
Section 83(b) of the Code with respect to the Shares subject to such Restricted Stock Units (the
“Section 83(b) Election”), the Committee may in its discretion convert the Participant’s Restricted
Stock Units into Restricted Stock, on a one-for-one basis, in full satisfaction of the
Participant’s Restricted Stock Unit Award.

     (g) Deferral Elections. Subject to Section 11(e) below, at any time within the calendar year
in which a Participant who is Director, Officer, Consultant or a member of a “select group of
management or highly compensated employees” (within the meaning of ERISA) receives an Award of
either Restricted Stock or Restricted Stock Units, the Committee may permit the Participant to
irrevocably elect, on a form provided by and acceptable to the Committee, to defer the receipt of
all or a percentage of the Shares that would otherwise be transferred to the Participant upon the
vesting of such Award. If the Participant makes this election, the Shares subject to the election,
and any associated unpaid dividends and interest thereon, shall be credited as Deferred Stock Units
(as defined below) to an Account (as defined below) established pursuant to Section 9 hereof on the
date such Shares would otherwise have been released or issued to the Participant pursuant to
Section 8(d) above. Notwithstanding the foregoing, Shares with respect to which a Participant
makes a Section 83(b) Election shall not be eligible for deferral pursuant to Section 9 below.

9. Deferred Stock Units

     (a) Elections to Defer. Subject to Section 11(e) below, the Committee may permit any Eligible
Person who is a Director, Officer, Consultant or member of a “select group of management or highly
compensated employees” (within the meaning of the ERISA) to irrevocably elect, on a form provided
by and acceptable to the Committee (the “Election Form”), to forego the receipt of cash or other
compensation (including Shares subject to Restricted Stock Awards for which a Section 83(b)
Election has not been made, Shares subject to Restricted Stock Units and the dividends or the cash
amount equal to the amount of dividends that would otherwise be paid in respect of Shares subject
to Restricted Stock Awards or Restricted Stock Units), and in lieu thereof to have the Company
credit to an internal Plan account (the “Account”) a number of deferred share units (“Deferred
Stock Units”) having a Fair Market Value equal to the Shares and other compensation deferred.
These credits will be made at the end of each calendar month during which compensation is deferred.
Each Election Form shall take effect five business days after its delivery to the Company, unless
during such five business day period the Company sends the Participant a written notice explaining
why the Election Form is invalid. Notwithstanding the foregoing sentence, Election Forms shall be
ineffective with respect to any compensation that a Participant earns before the date on which the
Company receives the Election Form.

     (b) Vesting. Each Participant shall be 100% vested at all times in any Shares subject to
Deferred Stock Units.

     (c) Crediting of Dividends. Unless otherwise provided in the Award Agreement, whenever cash
dividends are declared and paid on the Shares, the Account shall be credited with additional
Deferred Stock Units calculated by dividing (i) the amount obtained by multiplying

- 12 -

 

the number of Shares subject to the then outstanding Deferred Stock Units by the per share
dividend amount by (ii) the Fair Market Value of the Shares on the date of payment of the
dividends. Whenever stock dividends are declared and paid on the Shares, the Account shall be
credited with additional Deferred Stock Units for the number of Shares equal to any stock dividends
declared and paid on the Shares that would otherwise be payable if the Shares subject to the then
outstanding Deferred Stock Units were outstanding.

     (d) Issuances of Shares. The Company shall provide a Participant with one Share for each
Deferred Stock Unit in five substantially equal annual installments that are issued before the last
day of each of the five calendar years that end after the date on which the Participant’s
Continuous Service terminates, unless the Participant has properly elected at the time the
Participant makes a deferral election pursuant to Section 9(a) above a different method of
distribution, on a form approved by the Committee that permits the Participant to select any
combination of a lump sum and annual installments that are completed within ten years following
termination of the Participant’s Continuous Service. Fractional shares shall not be issued, and
instead shall be paid out in cash.

     (e) Hardship Withdrawals. In the event a Participant suffers an unforeseeable hardship within
the contemplation of this Section 9(e) , the Participant may apply to the Company for an immediate
distribution of all or a portion of the Participant’s Deferred Share Units. The hardship must
result from a sudden and unexpected illness or accident of the Participant, the Participant’s
spouse, or a dependent of the Participant (within the meaning of Section 152(a) of the Code),
casualty loss of property, or other similar extraordinary and unforeseeable circumstances arising
as a result of events beyond the control of the Participant. Examples of purposes which are not
considered hardships include post-secondary school expenses or the desire to purchase a residence.
In no event will a distribution be made to the extent the hardship could be relieved through
reimbursement or compensation by insurance or otherwise, or by liquidation of the Participant’s
nonessential assets to the extent such liquidation would not itself cause a severe financial
hardship. The amount of any distribution hereunder shall be limited to the amount necessary to
relieve the Participant’s financial hardship plus amounts necessary to pay taxes reasonably
anticipated as a result of the distribution. The Committee shall determine whether a Participant
has a qualifying hardship and the amount which qualifies for distribution, if any. The Committee
may require evidence of the purpose and amount of the need, and may establish such application or
other procedures as it deems appropriate.

     (f) Unsecured Rights to Deferred Compensation. A Participant’s right to Deferred Stock Units
shall at all times constitute an unsecured promise of the Company to pay benefits as they come due.
The right of the Participant or the Participant’s duly-authorized transferee to receive benefits
hereunder shall be solely an unsecured claim against the general assets of the Company. Neither
the Participant nor the Participant’s duly-authorized transferee shall have any claim against or
rights in any specific assets, shares, or other funds of the Company.

10. Performance Awards

     (a) Performance Units. The Committee may in its discretion grant Performance Units to any
Eligible Person and shall evidence such grant in an Award Agreement that is

- 13 -

 

delivered to the Participant which sets forth the terms and conditions of the Award. A
Performance Unit is an Award which is based on the achievement of specific goals with respect to
the Company or any Affiliate or individual performance of the Participant, or a combination
thereof, over a specified period of time. Subject to subsection (d) hereof, the maximum
Performance Unit compensation that may be paid to any one Participant other than the Manager with
respect to any one Performance Period (hereinafter defined) shall be 100,000 Shares, $500,000 in
cash, or both. The maximum Performance Unit compensation that may paid to the Manager with respect
to any one Performance Period shall be 1,000,000 Shares, $500,000 in cash, or both.

     (b) Performance Compensation Awards. The Committee may, at the time of grant of a Performance
Unit, designate such Award as a “Performance Compensation Award” in order that such Award
constitutes “qualified performance-based compensation” under Code Section 162(m), in which event
the Committee shall have the power to grant such Performance Compensation Award upon terms and
conditions that qualify it as “qualified performance-based compensation” within the meaning of Code
Section 162(m). With respect to each such Performance Compensation Award, the Committee shall
establish, in writing within the time required under Code Section 162(m), a “Performance Period,”
“Performance Measure(s)”, and “Performance Formula(e)” (each such term being hereinafter defined).
Once established for a Performance Period, the Performance Measure(s) and Performance Formula(e)
shall not be amended or otherwise modified to the extent such amendment or modification would cause
the compensation payable pursuant to the Award to fail to constitute qualified performance-based
compensation under Code Section 162(m).

     A Participant shall be eligible to receive payment in respect of a Performance Compensation
Award only to the extent that the Performance Measure(s) for such Award are achieved and the
Performance Formula(e) as applied against such Performance Measure(s) determines that all or some
portion of such Participant’s Award has been earned for the Performance Period. As soon as
practicable after the close of each Performance Period, the Committee shall review and certify in
writing whether, and to what extent, the Performance Measure(s) for the Performance Period have
been achieved and, if so, determine and certify in writing the amount of the Performance
Compensation Award to be paid to the Participant and, in so doing, may use negative discretion to
decrease, but not increase, the amount of the Award otherwise payable to the Participant based upon
such performance. Subject to subsection (d) hereof, the maximum Performance Compensation Award for
any one Participant other than the Manager for any one Performance Period shall be 100,000 Shares,
$500,000 in cash, or both. The maximum Performance Compensation Award that may paid to the Manager
with respect to any one Performance Period shall be 1,000,000 Shares, $500,000 in cash, or both.

     (c) Definitions.

     (i) “Performance Formula” means, for a Performance Period, one or more objective
formulas or standards established by the Committee for purposes of determining whether or
the extent to which an Award has been earned based on the level of performance attained or
to be attained with respect to one or more Performance Measure(s). Performance Formulae may
vary from Performance Period to Performance

- 14 -

 

Period and from Participant to Participant and may be established on a stand-alone
basis, in tandem or in the alternative.

     (ii) “Performance Measure” means one or more of the following selected by the Committee
to measure Company, Affiliate, and/or business unit performance for a Performance Period,
whether in absolute or relative terms, including, without limitation: terms relative to a
peer group or index; basic, diluted, or adjusted earnings per share; sales or revenue;
earnings before interest, taxes, and other adjustments (in total or on a per share basis);
basic or adjusted net income; basic or adjusted funds from operations or cash flow; returns
on equity, assets, capital, revenue or similar measure; level and growth of dividends; the
price or increase in price of Shares; total stockholder return; total assets; growth in
assets or new originations of assets; equity market capitalization; assets under management;
and mergers, acquisitions, sales of assets of Affiliates or business units. Each such
measure shall be to the extent applicable, determined in accordance with generally accepted
accounting principles as consistently applied by the Company (or such other standard applied
by the Committee) and, if so determined by the Committee, and in the case of a Performance
Compensation Award, to the extent permitted under Code Section 162(m), adjusted to omit the
effects of extraordinary items, gain or loss on the disposal of a business segment, unusual
or infrequently occurring events and transactions and cumulative effects of changes in
accounting principles. Performance Measures may vary from Performance Period to Performance
Period and from Participant to Participant, and may be established on a stand-alone basis,
in tandem or in the alternative.

     (iii) “Performance Period” means one or more periods of time (of not less than one
fiscal year of the Company), as the Committee may designate, over which the attainment of
one or more Performance Measure(s) will be measured for the purpose of determining a
Participant’s rights in respect of an Award.

     (d) Subject to Section 11(e) below, with respect to the maximum limits set forth in Section
10(a) and 10(b) above, the Committee shall have the discretion to provide in any Award Agreement
that any amounts earned pursuant to a Performance Award (and/or in excess of the limits set forth
in Sections 10(a) and 10(b) above) during a Performance Period will either be credited as Deferred
Stock Units (in accordance with the terms of Section 9 above), or as deferred cash compensation
under a separate plan of the Company or an Affiliate (provided in the latter case that such
deferred compensation either bears a reasonable rate of interest or has a value based on one or
more predetermined actual investments). Any amounts in excess of the limits set forth under
Sections 10(a) and 10(b) above for which payment to the Participant is deferred pursuant to the
preceding sentence shall be paid to the Participant in a future year or years but not earlier than,
and only to the extent that, the Participant is either not receiving compensation in excess of
these limits for a Performance Period, or is not subject to the restrictions set forth under
Section 162(b) of the Code.

11. Taxes

     (a) General. As a condition to the issuance or distribution of Shares pursuant to the Plan,
the Participant (or in the case of the Participant’s death, the Person who succeeds to the
Participant’s rights) shall make such arrangements as the Company may require for the

- 15 -

 

satisfaction of any applicable federal, state, local or foreign withholding tax obligations
that may arise in connection with the Award and the issuance of Shares. The Company shall not be
required to issue any Shares until such obligations are satisfied. If the Committee allows the
withholding or surrender of Shares to satisfy a Participant’s tax withholding obligations, the
Committee shall not allow Shares to be withheld in an amount that exceeds the minimum statutory
withholding rates for federal and state tax purposes, including payroll taxes.

     (b) Default Rule for Employees. In the absence of any other arrangement, an Employee shall be
deemed to have directed the Company to withhold or collect from his or her cash compensation an
amount sufficient to satisfy such tax obligations from the next payroll payment otherwise payable
after the date of the exercise of an Award.

     (c) Special Rules. In the case of a Participant other than an Employee (or in the case of an
Employee where the next payroll payment is not sufficient to satisfy such tax obligations, with
respect to any remaining tax obligations), in the absence of any other arrangement and to the
extent permitted under the Applicable Law, the Participant shall be deemed to have elected to have
the Company withhold from the Shares or cash to be issued pursuant to an Award that number of
Shares (or equivalent cash amount) having a Fair Market Value determined as of the applicable Tax
Date (as defined below) equal to the amount required to be withheld. For purposes of this Section
11, the Fair Market Value of the Shares to be withheld shall be determined on the date that the
amount of tax to be withheld is to be determined under the Applicable Law (the “Tax Date”).

     (d) Surrender of Shares. If permitted by the Committee, in its discretion, a Participant may
satisfy the minimum applicable tax withholding and employment tax obligations associated with an
Award by surrendering Shares to the Company (including Shares that would otherwise be issued
pursuant to the Award) that have a Fair Market Value determined as of the applicable Tax Date equal
to the amount required to be withheld. In the case of Shares previously acquired from the Company
that are surrendered under this Section 11, such Shares must have been owned by the Participant for
more than six months on the date of surrender (or such longer period of time the Company may in its
discretion require).

     (e) Income Taxes and Deferred Compensation. Participants are solely responsible and liable
for the satisfaction of all taxes and penalties that may arise in connection with Awards (including
any taxes arising under Section 409A of the Code), and the Company shall not have any obligation to
indemnify or otherwise hold any Participant harmless from any or all of such taxes. The
Administrator shall have the discretion to organize any deferral program, to require deferral
election forms, and to grant or to unilaterally modify any Award in a manner that (i) conforms with
the requirements of Section 409A of the Code with respect to compensation that is deferred and that
vests after December 31, 2005, (ii) that voids any Participant election to the extent it would
violate Section 409A of the Code, and (iii) for any distribution election that would violate
Section 409A of the Code, to make distributions pursuant to the Award at the earliest to occur of a
distribution event that is allowable under Section 409A of the Code or any distribution event that
is both allowable under Section 409A of the Code and is elected by the Participant, subject to any
valid second election to defer, provided that the Administrator permits second elections to defer
in accordance with Section 409A(a)(4)(C). The Administrator shall

- 16 -

 

have the sole discretion to interpret the requirements of the Code, including Section 409A,
for purposes of the Plan and all Awards.

12. Non-Transferability of Awards

     (a) General. Except as set forth in this Section 12, or as otherwise approved by the
Committee for Directors, Officers or a “select group of management or highly compensated employees”
(within the meaning of ERISA), Awards may not be sold, pledged, assigned, hypothecated, transferred
or disposed of in any manner other than by will or by the laws of descent or distribution. The
designation of a beneficiary by a Participant will not constitute a transfer. An Award may be
exercised, during the lifetime of the Participant issued an Award, only by such Participant, the
duly-authorized legal representative of a disabled Participant, or a transferee permitted by this
Section 12.

     (b) Limited Transferability Rights. Notwithstanding anything else in this Section 12 and
subject to Section 22 below, (i) the Committee may in its discretion provide in an Award Agreement
that the Award may be transferred by instrument to an inter vivos or testamentary trust (or other
entity) in which the Award is to be passed to beneficiaries upon the death of the trustor
(settlor), or by gift to charitable institutions, the Participant’s Immediate Family, on such terms
and conditions as the Committee deems appropriate or (ii) any Award to the Manager may be
transferred by the Manager to a Consultant. Any transferee of a Participant’s Awards or rights
therein shall succeed to and be subject to all of the terms of the Plan and the Award Agreement
(and any amendments thereto) governing the Award or rights therein so transferred.

13. Adjustments Upon Changes in Capitalization, Merger or Certain Other Transactions

     (a) Changes in Capitalization. The Committee shall equitably adjust the number of Shares
covered by each outstanding Award, and the number of Shares that have been authorized for issuance
under the Plan but as to which no Awards have yet been granted or that have been returned to the
Plan upon cancellation, forfeiture, or expiration of an Award, as well as the price per Share
covered by each such outstanding Award, to reflect any increase or decrease in the number of issued
Shares resulting from a stock-split, reverse stock-split, stock dividend, combination,
recapitalization or reclassification of the Shares, or any other increase or decrease in the number
of issued Shares effected without receipt of consideration by the Company. In the event of any
such transaction or event, the Committee may provide in substitution for any or all outstanding
Options under the Plan such alternative consideration (including securities of any surviving
entity) as it may in good faith determine to be equitable under the circumstances and may require
in connection therewith the surrender of all Options so replaced. In any case, such substitution
of securities shall not require the consent of any Person who is granted options pursuant to the
Plan. Except as expressly provided herein, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be required to be made with respect to, the number or price of Shares
subject to any Award.

     (b) Dissolution or Liquidation. In the event of the dissolution or liquidation of the Company
other than as part of a Change in Control, each Award will terminate immediately

- 17 -

 

prior to the consummation of such action, subject to the discretion of the Committee to
exercise any discretion authorized in the case of a Change in Control.

     (c) Change in Control. In the event of a Change in Control (or beforehand through an Award
Agreement or modification of an Award Agreement), the Committee may in its sole and absolute
discretion and authority, without obtaining the approval or consent of the Company’s stockholders
or any Participant (subject to the specific commitments made in any Award Agreement) with respect
to his or her outstanding Awards, take one or more of the following actions:

     (i) arrange for or otherwise provide that each outstanding Award shall be assumed or a
substantially similar award shall be substituted by a successor corporation or a parent or
subsidiary of such successor corporation (the “Successor Corporation”);

     (ii) accelerate the vesting of Awards for any period that the Committee may authorize
at the end of which the Committee may provide for termination of any unexercised Options or
SARs, so that Awards shall vest (and, to the extent applicable, become exercisable) as to
the Shares that otherwise would have been unvested and provide that repurchase rights of the
Company, if any, with respect to Shares issued upon exercise of an Award shall lapse as to
the Shares subject to such repurchase right; or

     (iii) arrange or otherwise provide for the payment of cash or other consideration to
Participants in exchange for the satisfaction and cancellation of outstanding Awards.

     Notwithstanding the above, in the event a Participant holding an Award assumed or substituted
by the Successor Corporation in a Change in Control is Involuntarily Terminated by the Successor
Corporation in connection with, or within 12 months following consummation of, the Change in
Control, then any assumed or substituted Award held by the terminated Participant at the time of
termination shall accelerate and become fully vested (and exercisable in full in the case of
Options and SARs), and any repurchase right applicable to any Shares shall lapse in full. The
acceleration of vesting and lapse of repurchase rights provided for in the previous sentence shall
occur immediately prior to the effective date of the Participant’s termination.

     (d) Certain Distributions. In the event of any distribution to the Company’s stockholders of
securities of any other entity or other assets (other than dividends payable in cash or stock of
the Company) without receipt of consideration by the Company, the Committee may, in its discretion,
appropriately adjust the price per Share covered by each outstanding Award to reflect the effect of
such distribution.

14. Time of Granting Awards.

     The date of grant (“Grant Date”) of an Award shall be the date on which the Committee makes
the determination granting such Award or such other date as is determined by the Committee,
provided that in the case of an ISO, the Grant Date shall be the later of the date on which the
Committee makes the determination granting such ISO or the date of commencement of the
Participant’s employment relationship with the Company.

- 18 -

 

15. Modification of Awards and Substitution of Options.

     (a) Modification, Extension, and Renewal of Awards. Within the limitations of the Plan and
any Award Agreement and subject to Section 11(e) above, the Committee may modify an Award (i) to
accelerate the rate at which an Option or SAR may be exercised (including without limitation
permitting an Option or SAR to be exercised in full without regard to the installment or vesting
provisions of the applicable Award Agreement or whether the Option or SAR is at the time
exercisable, to the extent it has not previously been exercised), (ii) to accelerate the vesting of
any Award, (iii) to extend or renew outstanding Awards, or (iv) to accept the cancellation of
outstanding Awards to the extent not previously exercised either for the granting of new Awards or
for other consideration in substitution or replacement thereof.

     (b) Substitution of Options. Notwithstanding any inconsistent provisions or limits under the
Plan, in the event the Company or an Affiliate acquires (whether by purchase, merger or otherwise)
all or substantially all of outstanding capital stock or assets of another corporation or in the
event of any reorganization or other transaction qualifying under Section 424 of the Code, the
Committee may, in accordance with the provisions of that Section, substitute Options for options
under the plan of the acquired company provided (i) the excess of the aggregate fair market value
of the shares subject to an option immediately after the substitution over the aggregate option
price of such shares is not more than the similar excess immediately before such substitution and
(ii) the new Option does not give Persons additional benefits, including any extension of the
exercise period.

16. Term of Plan.

     The Plan shall continue in effect for a term of ten (10) years from its effective date as
determined under Section 20 below, unless the Plan is sooner terminated under Section 17 below.

17. Amendment and Termination of the Plan.

     (a) Authority to Amend or Terminate. Subject to Applicable Laws, the Board may from time to
time amend, alter, suspend, discontinue, or terminate the Plan.

     (b) Effect of Amendment or Termination. No amendment, suspension, or termination of the Plan
shall materially and adversely affect Awards already granted unless either it relates to an
adjustment pursuant to Section 13 above, or it is otherwise mutually agreed between the Participant
and the Committee, which agreement must be in writing and signed by the Participant and the
Company. Notwithstanding the foregoing, the Committee may amend the Plan to eliminate provisions
which are no longer necessary as a result of changes in tax or securities laws or regulations, or
in the interpretation thereof.

18. Conditions Upon Issuance of Shares.

     Notwithstanding any other provision of the Plan or any agreement entered into by the Company
pursuant to the Plan, the Company shall not be obligated, and shall have no liability for failure,
to issue or deliver any Shares under the Plan unless such issuance or delivery would

- 19 -

 

comply with Applicable Law, with such compliance determined by the Company in consultation with its
legal counsel.

19. Reservation of Shares.

     The Company, during the term of this Plan, will at all times reserve and keep available such
number of Shares as shall be sufficient to satisfy the requirements of the Plan.

20. Effective Date.

     This Plan shall become effective on the date of its approval by the Board; provided that this
Plan shall be submitted to the Company’s stockholders for approval, and if not approved by the
stockholders within one year from the date of approval by the Board, this Plan and any Awards shall
be null, void, and of no force and effect. Awards granted under this Plan before approval of this
Plan by the stockholders shall be granted subject to such approval and no Shares shall be
distributed before such approval.

21. Controlling Law.

     All disputes relating to or arising from the Plan shall be governed by the internal
substantive laws (and not the laws of conflicts of laws) of the State of New York, to the extent
not preempted by United States federal law. If any provision of this Plan is held by a court of
competent jurisdiction to be invalid and unenforceable, the remaining provisions shall continue to
be fully effective.

22. Laws And Regulations.

     (a) U.S. Securities Laws. This Plan, the grant and transferability of Awards, and the
exercise of Options and SARs under this Plan, and the obligation of the Company to sell or deliver
any of its securities (including, without limitation, Options, Restricted Stock, Restricted Stock
Units, Unrestricted Stock, Deferred Stock Units, and Shares) under this Plan shall be subject to
all Applicable Law. In the event that the Shares are not registered under the Securities Act of
1933, as amended (the “Act”), or any applicable state securities laws prior to the delivery of such
Shares, the Company may require, as a condition to the issuance thereof, that the Persons to whom
Shares are to be issued represent and warrant in writing to the Company that such Shares are being
acquired by him or her for investment for his or her own account and not with a view to, for resale
in connection with, or with an intent of participating directly or indirectly in, any distribution
of such Shares within the meaning of the Act, and a legend to that effect may be placed on the
certificates representing the Shares.

     (b) Other Jurisdictions. To facilitate the making of any grant of an Award under this Plan,
the Committee may provide for such special terms for Awards to Participants who are foreign
nationals or who are employed by the Company or any Affiliate outside of the United States of
America as the Committee may consider necessary or appropriate to accommodate differences in local
law, tax policy or custom. The Company may adopt rules and procedures relating to the operation
and administration of this Plan to accommodate the specific requirements of local laws and
procedures of particular countries. Without limiting the

- 20 -

 

foregoing, the Company is specifically authorized to adopt rules and procedures regarding the
conversion of local currency, taxes, withholding procedures and handling of stock certificates
which vary with the customs and requirements of particular countries. The Company may adopt
sub-plans applicable to particular locations and countries.

23. Stockholder Rights. Except as otherwise provided in an Award Agreement, a Participant
who receives Shares pursuant to the Plan shall be reflected as the owner of record of the Shares on
the Company’s books and records, subject to meeting any requirements that the Company imposes in
the Award Agreement (which may include delivering to the Company a stock power, endorsed in blank,
with respect to the Shares subject to the Award) and subject to any forfeiture provisions in the
Plan and the Award Agreement. As the owner of record of the Shares subject to an Award, a
Participant shall be entitled to all rights of a stockholder of the Company, including the right to
vote the Shares and the right to payment of any cash dividends or other distributions (including
those paid in stock) declared or paid following the date of the Award (as set forth in the Award
Agreement), and to the extent paid in stock, such stock shall be subject to the same restrictions
on Shares contained in the Award Agreement, subject in each case to the treatment of the Award upon
termination of employment before the particular record date for determining stockholders of record
entitled to payment of the dividend or distribution. No adjustment will be made for a dividend or
other right that is determined based on a record date prior to the date the stock certificate for
Shares subject to an Award is issued, except as otherwise specifically provided for in this Plan.

24. No Employment Rights. The Plan shall not confer upon any Participant any right to
continue an employment, service or consulting relationship with the Company, nor shall it affect in
any way a Participant’s right or the Company’s right to terminate the Participant’s employment,
service, or consulting relationship at any time, with or without Cause.

- 21 -

 

CRYSTAL RIVER CAPITAL, INC.

2005 LONG-TERM INCENTIVE PLAN

 

Appendix A: Definitions

 

As used in the Plan, the following definitions shall apply:

     “Affiliate” means, with respect to any Person (as defined below), any other Person
that directly or indirectly controls or is controlled by or under common control with such Person.
For the purposes of this definition, “control,” when used with respect to any Person, means the
possession, direct or indirect, of the power to direct or cause the direction of the management and
policies of such Person or the power to elect directors, whether through the ownership of voting
securities, by contract or otherwise; and the terms “affiliated,” “controlling” and “controlled”
have meanings correlative to the foregoing.

     “Applicable Law” means the legal requirements relating to the administration of
options and share-based plans under applicable U.S. federal and state laws, the Code, any
applicable stock exchange or automated quotation system rules or regulations, and the applicable
laws of any other country or jurisdiction where Awards are granted, as such laws, rules,
regulations and requirements shall be in place from time to time.

     “Award” means any award made pursuant to the Plan, including awards made in the form
of an Option, an SAR, Restricted Stock, Unrestricted Stock, a Restricted Stock Unit, a Deferred
Stock Unit and a Performance Award, or any combination thereof, whether alternative or cumulative,
authorized by and granted under this Plan.

     “Award Agreement” means any written document setting forth the terms of an Award that
has been authorized by the Committee. The Committee shall determine the form or forms of documents
to be used, and may change them from time to time for any reason.

     “Board” means the Board of Directors of the Company.

     “Cause” for termination of a Participant’s Continuous Service will exist for
Participants other than the Manager if the Participant is terminated from employment or other
service with the Company or an Affiliate for any of the following reasons: (i) the Participant’s
conviction of a felony committed in connection with his or her employment or service with the
Company, (ii) the Participant’s willful and failure to substantially perform his or her duties and
responsibilities to the Company or deliberate violation of a material Company policy; (iii) the
Participant’s commission of any material act or acts of fraud, embezzlement, dishonesty, or other
willful misconduct; (iv) the Participant’s material unauthorized use or disclosure of any
proprietary information or trade secrets of the Company or any other party to whom the Participant
owes an obligation of nondisclosure as a result of his or her relationship with the Company; or (v)

 

 

Participant’s willful and material breach of any of his or her obligations under any written
agreement or covenant with the Company.

     In the case of the Manager, Cause shall mean events giving rise to a termination for cause
under the Company’s management agreement with the Manager.

     The Committee shall in its discretion determine whether or not a Participant is being
terminated for Cause. The Committee’s determination shall, unless arbitrary and capricious, be
final and binding on the Participant, the Company, and all other affected Persons. The foregoing
definition does not in any way limit the Company’s ability to terminate a Participant’s employment
or consulting relationship at any time, and the term “Company” will be interpreted herein to
include any Affiliate or successor thereto, if appropriate.

     “Change in Control” means any of the following:

     (a) Approval by the stockholders of the Company of the dissolution or liquidation of the
Company;

     (b) Approval by the stockholders of the Company of an agreement to merge or consolidate, or
otherwise reorganize, with or into one or more entities that are not Affiliates, as a result of
which less than 50% of the outstanding voting securities of the surviving or resulting entity
immediately after such transaction are, or will be, owned, directly or indirectly, by stockholders
of the Company immediately before such transaction (assuming for purposes of such determination
that there is no change in the record ownership of the Company’s securities from the record date
for such approval until such transaction and that such record owners hold no securities of the
other parties to such reorganization), but including in such determination any securities of the
other parties to such transaction held by Affiliates of the Company);

     (c) Approval by the stockholders of the Company of the sale of substantially all of the
Company’s business and/or assets to a Person or entity that is not an Affiliate of the Company;

     (d) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act but
excluding any Person described in and satisfying the conditions of Rule 13d-1(b)(1) thereunder),
other than a Person that is a stockholder of the Company on the Effective Date or a trustee or a
fiduciary holding securities under an employee benefit plan of the Company or any of its
subsidiaries or an entity owned directly or indirectly by the stockholders of the Company in
substantially the same proportion as their ownership of the stock of the Company, becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing more than 33% of the combined voting power of the Company’s
then outstanding securities entitled to then vote generally in the election of directors of the
Company other than as a result of the acquisition of securities directly from the Company; or

     (e) During any period not longer than two consecutive years, individuals who at the beginning
of such period constituted the Board cease to constitute at least a majority thereof,

A- 2 -

 

unless the election, or the nomination for election by the Company’s stockholders, of each new
Board member was approved by a vote of at least three-fourths of the Board members then still in
office who were Board members at the beginning of such period (including for these purposes, new
members whose election or nomination was so approved).

     “Code” means the U.S. Internal Revenue Code of 1986, as amended.

     “Committee” means one or more committees or subcommittees of the Board appointed by
the Board to administer the Plan in accordance with Section 4 above. With respect to any decision
involving an Award intended to satisfy the requirements of Section 162(m) of the Code, the
Committee shall consist solely of two or more Directors of the Company who are “outside directors”
within the meaning of Section 162(m) of the Code. With respect to any decision involving an Award
intended to satisfy the requirements of Rule 16b-3 (and not otherwise able to satisfy such
requirements), the Committee shall consist solely of two or more Directors of the Company who are
“non-employee directors” within the meaning of Rule 16b-3.

     “Company” means Crystal River Capital, Inc., a Maryland corporation.

     “Consultant” means any natural or non-natural Person, including an advisor or
consultant, who is engaged by the Company, any Affiliate of the Company, the Manager or any
Affiliate of the Manager to render services to the Company and is compensated for such services.

     “Continuous Service” means the absence of any interruption or termination of service
as an Employee, Director, Officer or Consultant. Continuous Service shall not be considered
interrupted in the case of: (i) sick leave; (ii) military leave; (iii) any other leave of absence
approved by the Committee, provided that such leave is for a period of not more than 90 days,
unless reemployment upon the expiration of such leave is guaranteed by contract or statute, or
unless provided otherwise pursuant to Company policy adopted from time to time; (iv) changes in
status from Director to advisory director or emeritus status; or (iv) in the case of transfers
between locations of the Company or between the Company, its Affiliates or their respective
successors. Changes in status between service as an Employee, Director, Officer and a Consultant
will not constitute an interruption of Continuous Service.

     “Deferred Stock Units” mean Awards pursuant to Section 9 of the Plan.

     “Director” means a member of the Board, or a member of the board of directors of an
Affiliate.

     “Disabled” means a Participant who

     (a) is unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, or

     (b) is, by reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period of not less than 12
months, received income replacement benefits for a period of not less than 3 months under an
accident or health plan covering employees of the Company.

A- 3 -

 

     “Eligible Person” means the Manager or Consultant, Officer, Director or Employee and
includes non-Employees to whom an offer of employment has been extended.

     “Employee” means any natural person whom the Company or any Affiliate of the Company
classifies as an employee (including an officer) for employment tax purposes. The payment by the
Company of a director’s fee to a Director shall not be sufficient to constitute “employment” of
such Director by the Company.

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

     “Fair Market Value” means, as of any date (the “Determination Date”) means: (i) the
closing price of a Share on the New York Stock Exchange or the American Stock Exchange
(collectively, the “Exchange”), on the Determination Date, or, if shares were not traded on the
Determination Date, then on the nearest preceding trading day during which a sale occurred; or (ii)
if such stock is not traded on the Exchange but is quoted on NASDAQ or a successor quotation
system, (A) the last sales price (if the stock is then listed as a National Market Issue under The
Nasdaq National Market System) or (B) the mean between the closing representative bid and asked
prices (in all other cases) for the stock on the Determination Date as reported by NASDAQ or such
successor quotation system; or (iii) if such stock is not traded on the Exchange or quoted on
NASDAQ but is otherwise traded in the over-the-counter, the mean between the representative bid and
asked prices on the Determination Date; or (iv) if subsections (i)-(iii) do not apply, the fair
market value established in good faith by the Board.

     “Grant Date” has the meaning set forth in Section 14 of the Plan.

     “Immediate Family” means any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, domestic partner, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include
adoptive relationships.

     “Incentive Stock Option or ISO” hereinafter means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code, as designated in the
applicable Award Agreement.

     “Involuntary Termination” means termination of a Participant’s Continuous Service
under the following circumstances occurring on or after a Change in Control: (i) termination
without Cause by the Company or an Affiliate or successor thereto, as appropriate; or (ii)
voluntary termination by the Participant within 60 days following (A) a material reduction in the
Participant’s job responsibilities, provided that neither a mere change in title alone nor
reassignment to a substantially similar position shall constitute a material reduction in job
responsibilities; (B) an involuntary relocation of the Participant’s work site to a facility or
location more than 50 miles from the Participant’s principal work site at the time of the Change in
Control; or (C) a material reduction in Participant’s total compensation other than as part of an
reduction by the same percentage amount in the compensation of all other similarly-situated
Employees, Directors or Consultants.

     “Manager” means Hyperion Crystal River Capital Advisors, LLC or any successor
appointed to serve as the Company’s manager.

A- 4 -

 

     “Non-ISO” means an Option not intended to qualify as an ISO, as designated in the
applicable Award Agreement.

     “Option” means any stock option granted pursuant to Section 6 of the Plan.

     “Participant” means any holder of one or more Awards, or the Shares issuable or issued
upon exercise of such Awards, under the Plan.

     “Performance Awards” mean Performance Units and Performance Compensation Awards
granted pursuant to Section 10.

     “Performance Compensation Awards” mean Awards granted pursuant to Section 10(b) of the
Plan.

     “Performance Unit” means Awards granted pursuant to Section 10(a) of the Plan which
may be paid in cash, in Shares, or such combination of cash and Shares as the Committee in its sole
discretion shall determine.

     “Person” means any natural person, association, trust, business trust, cooperative,
corporation, general partnership, joint venture, joint-stock company, limited partnership, limited
liability company, real estate investment trust, regulatory body, governmental agency or
instrumentality, unincorporated organization or organizational entity.

     “Plan” means this Crystal River Capital, Inc. 2005 Long-term Incentive Plan.

     “Reporting Person” means an officer, Director, or greater than ten percent stockholder
of the Company within the meaning of Rule 16a-2 under the Exchange Act, who is required to file
reports pursuant to Rule 16a-3 under the Exchange Act.

     “Restricted Stock” means Awards designated as such pursuant to Section 8 of the Plan.

     “Restricted Stock Units” mean Awards designated as such pursuant to Section 8 of the
Plan.

     “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act, as amended from time
to time, or any successor provision.

     “SAR” or “Stock Appreciation Right” means Awards granted pursuant to Section 7 of the
Plan.

     “Share” means a share of common stock, par value $0.001 per share, of the Company, as
adjusted or substituted in accordance with Section 13 of the Plan.

     “Ten Percent Holder” means a Person who owns stock representing more than ten percent
(10%) of the combined voting power of all classes of stock of the Company or any Affiliate.

     “Unrestricted Stock” means Awards designated as such pursuant to Section 8 of the
Plan.

A- 5 -

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00106-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00106-of-00352.parquet"}]]