SEAGULL ENERGY CORPORATION
1998 OMNIBUS STOCK PLAN
I. PURPOSE
The purpose of the SEAGULL ENERGY CORPORATION 1998 OMNIBUS STOCK PLAN (the
"Plan") is to provide a means through which SEAGULL ENERGY CORPORATION, a Texas
corporation (the "Company"), and its subsidiaries may attract able persons to
enter the employ of the Company and to provide a means whereby those key
employees upon whom the responsibilities of the successful administration and
management of the Company rest, and whose present and potential contributions to
the welfare of the Company are of importance, can acquire and maintain stock
ownership, thereby strengthening their concern for the welfare of the Company
and their desire to remain in its employ. A further purpose of the Plan is to
provide such key employees with additional incentive and reward opportunities
designed to enhance the profitable growth of the Company. Accordingly, the Plan
provides for granting Incentive Stock Options (subject to the provisions of
Paragraph VII(c)), options which do not constitute Incentive Stock Options,
Stock Appreciation Rights, Restricted Stock Awards, Long-Term Incentive Awards,
or any combination of the foregoing, as is best suited to the circumstances of
the particular employee as provided herein.
II. DEFINITIONS
The following definitions shall be applicable throughout the Plan unless
specifically modified by any paragraph:
(a) "Award" means, individually or collectively, any Option, Restricted Stock
Award, Long-Term Incentive Award or Stock Appreciation Right.
(b) "Award Agreement" means any Option Agreement, Restricted Stock Agreement,
Long-Term Incentive Award Agreement or Stock Appreciation Rights Agreement.
(c) "Board" means the Board of Directors of the Company.
(d) "Change of Control" means the occurrence of any of the following events: (i)
the Company shall not be the surviving entity in any merger, consolidation or
other reorganization (or survives only as a subsidiary of an entity other than a
previously wholly-owned subsidiary of the Company), (ii) the Company sells,
leases or exchanges all or substantially all of its assets to any other person
or entity (other than a wholly-owned subsidiary of the Company), (iii) the
Company is to be dissolved and liquidated, (iv) any person or entity, including
a "group" as contemplated by Section 13(d)(3) of the 1934 Act, acquires or gains
ownership or control (including, without limitation, power to vote) of more than
40% of the outstanding shares of the Company's voting stock (based upon voting
power), or (v) as a result of or in connection with a contested election of
directors, the persons who were directors of the Company before such election
shall cease to constitute a majority of the Board.
(e) "Change of Control Value" shall mean (i) the per share price offered to
shareholders of the Company in any merger, consolidation, reorganization, sale
of assets or dissolution transaction, (ii) the price per share offered to
shareholders of the Company in any tender offer or exchange offer whereby a
Change of Control takes place, or (iii) if the Change of Control occurs other
than pursuant to a tender or exchange offer, the Fair Market Value per share of
the shares into which Awards are exercisable, as determined by the Committee. In
the event that the consideration offered to shareholders of the Company in a
Change of Control consists of anything other than cash, the Committee shall
determine the fair cash equivalent of the portion of the consideration offered
which is other than cash.
(f) "Code" means the Internal Revenue Code of 1986, as amended. Reference in
the Plan to any section of the Code shall be deemed to include any amendments or
successor provisions to any section and any regulations under such section.
(g) "Committee" means the Compensation Committee of the Board which shall be
(i) constituted so as to permit the Plan to comply with Rule 16b-3 and
(ii) comprised solely of two or more "outside directors," within the meaning of
section 162(m) of the Code and applicable interpretive authority thereunder.
(h) "Company" means Seagull Energy Corporation.
(i) "Director" means an individual elected to the Board by the shareholders of
the Company or by the Board under applicable corporate law who is serving on the
Board on the date the Plan is adopted by the Board or is elected to the Board
after such date.
(j) An "employee" means any person (including an officer or a Director) in an
employment relationship with the Company or any parent or subsidiary corporation
(as defined in section 424 of the Code).
(k) "1934 Act" means the Securities Exchange Act of 1934, as amended.
(l) "Fair Market Value" means, as of any specified date, the reported closing
price of the Stock on the New York Stock Exchange Composite Tape on that date,
or if no closing price is reported on that date, on the last preceding date on
which such closing price of the Stock is so reported. In the event Stock is not
publicly traded at the time a determination of its value is required to be made
hereunder, the determination of its fair market value shall be made by the
Committee in such manner as it deems appropriate.
(m) "Holder" means an employee who has been granted an Award.
(n) "Incentive Stock Option" means an incentive stock option within the meaning
of section 422 of the Code.
(o) "Long-Term Incentive Award" means an Award granted under Paragraph X of the
Plan.
(p) "Long-Term Incentive Award Agreement" means a written agreement between the
Company and a Holder with respect to a Long-Term Incentive Award.
(q) "Option" means an Award granted under Paragraph VII of the Plan and includes
both Incentive Stock Options to purchase Stock and Options which do not
constitute Incentive Stock Options to purchase Stock.
(r) "Option Agreement" means a written agreement between the Company and a
Holder with respect to an Option.
(s) "Plan" means the Seagull Energy Corporation 1998 Omnibus Stock Plan, as
amended from time to time.
(t) "Restricted Stock Agreement" means a written agreement between the Company
and a Holder with respect to a Restricted Stock Award.
(u) "Restricted Stock Award" means an Award granted under Paragraph IX of the
Plan.
(v) "Rule 16b-3" means SEC Rule 16b-3 promulgated under the 1934 Act, as such
may be amended from time to time, and any successor rule, regulation or statute
fulfilling the same or a similar function.
(w) "Spread" means, in the case of a Stock Appreciation Right, an amount equal
to the excess, if any, of the Fair Market Value of a share of Stock on the date
such right is exercised over the exercise price of such Stock Appreciation
Right.
(x) "Stock" means the common stock, par value $0.10 per share, of the Company.
(y) "Stock Appreciation Right" means an Award granted under Paragraph VIII of
the Plan.
(z) "Stock Appreciation Rights Agreement" means a written agreement between the
Company and a Holder with respect to an Award of Stock Appreciation Rights.
III. EFFECTIVE DATE AND DURATION OF THE PLAN
The Plan shall be effective upon the date of its adoption by the Board, provided
the Plan is approved by the shareholders of the Company within twelve months
thereafter. Notwithstanding any provision in the Plan or in any Award Agreement,
no Option or Stock Appreciation Right granted on or after the effective date of
the Plan shall be exercisable and no Restricted Stock Award or Long-Term
Incentive Award shall be made prior to such shareholder approval. No further
Awards may be granted under the Plan after the expiration of ten years from the
date of its adoption by the Board. The Plan shall remain in effect until all
Awards granted under the Plan have been satisfied or expired.
IV. ADMINISTRATION
(a) Committee. The Plan shall be administered by the Committee.
(b) Powers. Subject to the provisions of the Plan, the Committee shall have
sole authority, in its discretion, to determine which employees shall receive an
Award, the time or times when such Award shall be made, the type of Award, the
number of shares of Stock which may be issued under each Option, Stock
Appreciation Right or Restricted Stock Award, and number of shares subject to or
the value of each Long-Term Incentive Award. In making such determinations the
Committee may take into account the nature of the services rendered by the
respective employees, their present and potential contribution to the Company's
success and such other factors as the Committee in its discretion shall deem
relevant.
(c) Additional Powers. The Committee shall have such additional powers as are
delegated to it by the other provisions of the Plan. Subject to the express
provisions of the Plan, the Committee is authorized to construe the Plan and the
respective Award Agreements executed thereunder, to prescribe such rules and
regulations relating to the Plan as it may deem advisable to carry out the Plan,
and to determine the terms, restrictions and provisions of each Award, including
such terms, restrictions and provisions as shall be requisite in the judgment of
the Committee to cause designated Options to qualify as Incentive Stock Options,
and to make all other determinations necessary or advisable for administering
the Plan. The Committee may correct any defect or supply any omission or
reconcile any inconsistency in any Award Agreement in the manner and to the
extent it shall deem expedient to carry it into effect. The determinations of
the Committee on the matters referred to in this Paragraph IV shall be
conclusive.
V. GRANT OF AWARDS;
SHARES SUBJECT TO THE PLAN
(a) Stock Grant and Award Limits. The Committee may from time to time grant
Awards to one or more employees determined by it to be eligible for
participation in the Plan in accordance with the provisions of Paragraph VI.
Subject to adjustment in the same manner as provided in Paragraph XI with
respect to shares of Stock subject to Awards then outstanding, the aggregate
number of shares of Stock that may be issued under the Plan shall not exceed
2,500,000 shares. Shares shall be deemed to have been issued under the Plan only
(i) to the extent actually issued and delivered pursuant to an Award, or (ii) to
the extent an Award is settled in cash. To the extent that an Award lapses or
the rights of its Holder terminate, any shares of Stock subject to such Award
shall again be available for the grant of an Award. Notwithstanding any
provision in the Plan to the contrary, the maximum number of shares of Stock
that may be subject to Awards granted to any one employee during any calendar
year may not exceed 250,000 shares of Stock (subject to adjustment in the same
manner as provided in Paragraph XI with respect to shares of Stock subject to
Awards then outstanding). The limitation set forth in the preceding sentence
shall be applied in a manner which will permit compensation generated under the
Plan to constitute "performance-based" compensation for purposes of section
162(m) of the Code, including, without limitation, counting against such maximum
number of shares, to the extent required under section 162(m) of the Code and
applicable interpretive authority thereunder, any shares subject to Awards that
are canceled or repriced. Further, notwithstanding any provision of the Plan to
the contrary, the aggregate number of shares of Stock that may be granted as
either Restricted Stock Awards under Paragraph IX or Long-Term Incentive Awards
under Paragraph X during the term of the Plan is 300,000 shares of Stock
(subject to adjustment in the same manner as provided in Paragraph XI with
respect to shares of Stock subject to Awards then outstanding).
(b) Stock Offered. The stock to be offered pursuant to the grant of an Award
may, at the discretion of the Committee, be authorized but unissued Stock or
Stock previously issued and outstanding and reacquired by the Company.
VI. ELIGIBILITY
Awards may be granted only to persons who, at the time of grant, are employees.
Awards may not be granted to any Director who is not an employee. An Award may
be granted on more than one occasion to the same person, and, subject to the
limitations set forth in the Plan, such Award may include an Incentive Stock
Option or an Option which is not an Incentive Stock Option, a Stock Appreciation
Right, a Restricted Stock Award, a Long-Term Incentive Award or any combination
thereof.
VII. STOCK OPTIONS
(a) Option Period. The term of each Option shall be as specified by the
Committee at the date of grant.
(b) Limitations on Exercise of Option. An Option shall be exercisable in
whole or in such installments and at such times as determined by the Committee.
(c) Special Limitations on Incentive Stock Options. To the extent that the
aggregate Fair Market Value (determined at the time the respective Incentive
Stock Option is granted) of Stock with respect to which Incentive Stock Options
granted after 1986 are exercisable for the first time by an individual during
any calendar year under all incentive stock option plans of the Company and its
parent and subsidiary corporations exceeds $100,000, such Incentive Stock
Options shall be treated as Options which do not constitute Incentive Stock
Options. The Committee shall determine, in accordance with applicable provisions
of the Code, Treasury Regulations and other administrative pronouncements, which
of a Holder's Incentive Stock Options will not constitute Incentive Stock
Options because of such limitation and shall notify the Holder of such
determination as soon as practicable after such determination. No Incentive
Stock Option shall be granted to an individual if, at the time the Option is
granted, such individual owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or of its parent or
subsidiary corporation, within the meaning of section 422(b)(6) of the Code,
unless (i) at the time such Option is granted the option price is at least 110%
of the Fair Market Value of the Stock subject to the Option and (ii) such Option
by its terms is not exercisable after the expiration of five years from the date
of grant. An Incentive Stock Option shall not be transferable otherwise than by
will or the laws of descent and distribution, and shall be exercisable during
the Holder's lifetime only by such Holder or the Holder's guardian or legal
representative. Notwithstanding any provision in the Plan or in any Option
Agreement, (1) no Incentive Stock Option shall be granted after the expiration
of 12 months from the date of the adoption of the Plan by the Board unless the
Plan has been approved by the stockholders of the Company within such 12-month
period in a manner that satisfies the requirements of section 422 of the Code
and (2) any Option granted prior to the expiration of such 12-month period that
was intended to constitute an Incentive Stock Option shall constitute an Option
that is not an Incentive Stock Option if the Plan has not been approved by the
stockholders of the Company within such 12-month period in a manner that
satisfies the requirements of section 422 of the Code.
(d) Option Agreement. Each Option shall be evidenced by an Option Agreement in
such form and containing such provisions not inconsistent with the provisions of
the Plan as the Committee from time to time shall approve, including, without
limitation, provisions to qualify an Incentive Stock Option under section 422 of
the Code. An Option Agreement may provide for the payment of the option price,
in whole or in part, (i) in cash or (ii) by the delivery of a number of shares
of Stock (plus cash if necessary) having a Fair Market Value equal to such
option price. Each Option Agreement shall specify the effect of termination of
employment on the exercisability of the Option. Moreover, an Option Agreement
may provide for a "cashless exercise" of the Option pursuant to procedures
established by the Committee (as the same may be amended from time to time).Such
Option Agreement may also include, without limitation, provisions relating to
(1) subject to the provisions hereof accelerating such vesting on a Change of
Control, vesting of Options, (2) tax matters (including provisions (A)
permitting the delivery of additional shares of Stock or the withholding of
shares of Stock from those acquired upon exercise to satisfy federal or state
income tax withholding requirements and (B) dealing with any other applicable
employee wage withholding requirements), and (3) any other matters not
inconsistent with the terms and provisions of this Plan that the Committee shall
in its sole discretion determine. The terms and conditions of the respective
Option Agreements need not be identical.
(e) Option Price and Payment. The price at which a share of Stock may be
purchased upon exercise of an Option shall be determined by the Committee, but,
subject to adjustment as provided in Paragraph XI, such purchase price shall not
be less than the Fair Market Value of a share of Stock on the date such Option
is granted. The Option or portion thereof may be exercised by delivery of an
irrevocable notice of exercise to the Company in a manner specified by the
Committee. The purchase price of the Option or portion thereof shall be paid in
full in the manner prescribed by the Committee. Separate stock certificates
shall be issued by the Company for those shares acquired pursuant to the
exercise of an Incentive Stock Option and for those shares acquired pursuant to
the exercise of any Option which does not constitute an Incentive Stock Option.
(f) Shareholder Rights and Privileges. The Holder shall be entitled to all
the privileges and rights of a shareholder only with respect to such shares of
Stock as have been purchased under the Option and for which certificates of
stock have been registered in the Holder's name.
(g) Options and Rights in Substitution for Stock Options Granted by Other
Corporations. Options and Stock Appreciation Rights may be granted under the
Plan from time to time in substitution for stock options held by individuals
employed by corporations who become employees as a result of a merger or
consolidation of the employing corporation with the Company or any subsidiary,
or the acquisition by the Company or a subsidiary of the assets of the employing
corporation, or the acquisition by the Company or a subsidiary of stock of the
employing corporation with the result that such employing corporation becomes a
subsidiary.
VIII. STOCK APPRECIATION RIGHTS
(a) Stock Appreciation Rights. A Stock Appreciation Right is the right to
receive an amount equal to the Spread with respect to a share of Stock upon the
exercise of such Stock Appreciation Right. Stock Appreciation Rights may be
granted in connection with the grant of an Option, in which case the Option
Agreement will provide that exercise of Stock Appreciation Rights will result in
the surrender of the right to purchase the shares under the Option as to which
the Stock Appreciation Rights were exercised. Alternatively, Stock Appreciation
Rights may be granted independently of Options in which case each Award of Stock
Appreciation Rights shall be evidenced by a Stock Appreciation Rights Agreement
which shall contain such terms and conditions as may be approved by the
Committee. The terms and conditions of the respective Stock Appreciation Rights
Agreements need not be identical. The Spread with respect to a Stock
Appreciation Right may be payable either in cash, shares of Stock with a Fair
Market Value equal to the Spread or in a combination of cash and shares of
Stock. With respect to Stock Appreciation Rights that are subject to Section 16
of the 1934 Act, however, the Committee shall, except as provided in Paragraph
XI hereof, retain final authority (i) to determine whether a Holder shall be
permitted to receive cash in full or partial settlement of Stock Appreciation
Rights or (ii) to approve an election by a Holder to receive cash in full or
partial settlement of Stock Appreciation Rights. Each Stock Appreciation Rights
Agreement shall specify the effect of termination of employment on the
exercisability of the Stock Appreciation Rights.
(b) Exercise Price. The exercise price of each Stock Appreciation Right shall be
determined by the Committee, but such exercise price (i) shall not be less than
the Fair Market Value of a share of Stock on the date the Stock Appreciation
Right is granted (or such greater exercise price as may be required if such
Stock Appreciation Right is granted in connection with an Incentive Stock Option
that must have an exercise price equal to 110% of the Fair Market Value of the
Stock on the date of grant pursuant to Paragraph VII(c)), and (ii) shall be
subject to adjustment as provided in Paragraph XI.
(c) Exercise Period. The term of each Stock Appreciation Right shall be as
specified by the Committee at the date of grant.
(d) Limitations on Exercise of Stock Appreciation Right. A Stock Appreciation
Right shall be exercisable in whole or in such installments and at such times as
determined by the Committee. In the case of any Stock Appreciation Right that is
granted in connection with an Incentive Stock Option, such right shall be
exercisable only when the Fair Market Value of the Common Stock exceeds the
price specified therefor in the Option or the portion thereof to be surrendered.
IX. RESTRICTED STOCK AWARDS
(a) Forfeiture Restrictions To Be Established by the Committee. Shares of Stock
that are the subject of a Restricted Stock Award shall be subject to
restrictions on disposition by the Holder and an obligation of the Holder to
forfeit and surrender the shares to the Company under certain circumstances (the
"Forfeiture Restrictions"). The Forfeiture Restrictions shall be determined by
the Committee in its sole discretion, and the Committee may provide that the
Forfeiture Restrictions shall lapse upon (i) the attainment of one or more
performance targets established by the Committee that are based on (1) the price
of a share of Stock, (2) the Company's earnings per share, (3) the Company's
revenue, (4) the revenue of a business unit of the Company designated by the
Committee, (5) the return on stockholders' equity achieved by the Company, (6)
the Company's pre-tax cash flow from operations, (7) finding costs, (8) reserve
additions, (9) acquisitional growth, or (10) cost containment, (ii) the Holder's
continued employment with the Company for a specified period of time, (iii) the
occurrence of any event or the satisfaction of any other condition specified by
the Committee in its sole discretion, or (iv) any a combination of the
foregoing. Each Restricted Stock Award may have different Forfeiture
Restrictions, in the discretion of the Committee. The Forfeiture Restrictions
applicable to a particular Restricted Stock Award shall not be changed except as
permitted by Paragraph IX(b) or Paragraph XI.
(b) Other Terms and Conditions. Stock awarded pursuant to a Restricted Stock
Award shall be represented by a stock certificate registered in the name of the
Holder of such Restricted Stock Award. The Holder shall have the right to
receive dividends with respect to Stock subject to a Restricted Stock Award, to
vote Stock subject thereto and to enjoy all other shareholder rights, except
that (i) the Holder shall not be entitled to delivery of the stock certificate
until the Forfeiture Restrictions have expired, (ii) the Company shall retain
custody of the Stock until the Forfeiture Restrictions have expired, (iii) the
Holder may not sell, transfer, pledge, exchange, hypothecate or otherwise
dispose of the Stock until the Forfeiture Restrictions have expired, and (iv) a
breach of the terms and conditions established by the Committee pursuant to the
Restricted Stock Agreement shall cause a forfeiture of the Restricted Stock
Award. At the time of such Award, the Committee may, in its sole discretion,
prescribe additional terms, conditions or restrictions relating to Restricted
Stock Awards, including, but not limited to, rules pertaining to the termination
of employment (by retirement, disability, death or otherwise) of a Holder prior
to expiration of the Forfeiture Restrictions. Such additional terms, conditions
or restrictions shall be set forth in a Restricted Stock Agreement made in
conjunction with the Award. Such Restricted Stock Agreement may also include,
without limitation, provisions relating to (1) subject to the provisions hereof
accelerating vesting on a Change of Control, vesting of Awards, (2) tax matters
(including provisions (A) covering any applicable employee wage withholding
requirements and (B) prohibiting an election by the Holder under section 83(b)
of the Code), and (3) any other matters not inconsistent with the terms and
provisions of this Plan that the Committee shall in its sole discretion
determine. The terms and conditions of the respective Restricted Stock
Agreements need not be identical.
(c) Payment for Restricted Stock. The Committee shall determine the amount and
form of any payment for Stock received pursuant to a Restricted Stock Award,
provided that in the absence of such a determination, a Holder shall not be
required to make any payment for Stock received pursuant to a Restricted Stock
Award, except to the extent otherwise required by law.
(d) Agreements. At the time any Award is made under this Paragraph IX, the
Company and the Holder shall enter into a Restricted Stock Agreement setting
forth each of the matters contemplated hereby and such other matters as the
Committee may determine to be appropriate. The terms and provisions of the
respective Restricted Stock Agreements need not be identical.
X. LONG-TERM INCENTIVE AWARDS
(a) Long-Term Incentive Awards. The Committee shall establish the maximum
number of shares of Stock subject to each Long-Term Incentive Award at the time
of such Award.
(b) Performance Period. The Committee shall establish, with respect to and
at the time of each Long-Term Incentive Award, a performance period over which
the performance targets shall be measured.
(c) Performance Targets. A Long-Term Incentive Award shall be awarded to a
Holder contingent upon future performance of the Company or any subsidiary,
division or department thereof by or in which such Holder is employed during the
performance period. The Committee shall establish the performance targets
applicable to such performance either (i) prior to the beginning of the
performance period or (ii) within 90 days after the beginning of the performance
period if the outcome of the performance targets is substantially uncertain at
the time such targets are established, but not later than the date 25% of the
performance period has elapsed. The performance targets may be absolute,
relative to one or more other companies, or relative to one or more indices. The
performance targets established by the Committee may be based upon (1) the price
of a share of Stock, (2) the Company's earnings per share, (3) the Company's
revenue, (4) the revenue of a business unit of the Company designated by the
Committee, (5) the return on stockholders' equity achieved by the Company, (6)
the Company's pre-tax cash flow from operations, (7) finding costs, (8) reserve
additions, (9) acquisitional growth, or (10) cost containment, or a combination
of any of the foregoing.
(d) Awards Criteria. In determining the number of shares of Stock subject to
Long-Term Incentive Awards, the Committee shall take into account a Holder's
responsibility level, performance, potential, other Awards and such other
considerations as it deems appropriate. The Committee, in its sole discretion,
may provide for a reduction in the value of a Holder's Long-Term Incentive Award
during the performance period.
(e) Payment. Following the end of the performance period, the Holder of a
Long-Term Incentive Award shall be entitled to receive payment of an amount, not
exceeding the maximum value of the Long-Term Incentive Award, based on the
achievement of the performance targets for such performance period, as
determined by the Committee. Payment of a Long-Term Incentive Award may be made
in cash, Stock or a combination thereof, as determined by the Committee. Payment
shall be made in a lump sum or in installments as prescribed by the Committee.
Any payment to be made in cash shall be based on the Fair Market Value of the
Stock on the payment date. If a payment of cash is to be made on a deferred
basis, the Committee shall establish whether interest shall be credited, the
rate thereof and any other terms and conditions applicable thereto.
(f) Termination of Employment. A Long-Term Incentive Award shall terminate
if the Holder does not remain continuously in the employ of the Company at all
times during the applicable performance period, except as may be determined by
the Committee.
(g) Agreements. At the time any Award is made under this Paragraph X, the
Company and the Holder shall enter into a Long-Term Incentive Award Agreement
setting forth each of the matters contemplated hereby, and, in addition such
matters as are set forth in Paragraph IX(b) as the Committee may determine to be
appropriate. The terms and provisions of the respective agreements need not be
identical.
XI. RECAPITALIZATION OR REORGANIZATION
(a) The shares with respect to which Awards may be granted are shares of Stock
as presently constituted, but if, and whenever, prior to the expiration of an
Award theretofore granted, the Company shall effect a subdivision or
consolidation of shares of Stock or the payment of a stock dividend on Stock
without receipt of consideration by the Company, the number of shares of Stock
with respect to which such Award may thereafter be exercised or satisfied, as
applicable, (i) in the event of an increase in the number of outstanding shares
shall be proportionately increased, and the purchase price per share shall be
proportionately reduced, and (ii) in the event of a reduction in the number of
outstanding shares shall be proportionately reduced, and the purchase price per
share shall be proportionately increased. Any fractional share resulting from
such adjustment shall be rounded up to the next whole share.
(b) If the Company recapitalizes, reclassifies its capital stock, or otherwise
changes its capital structure (a "recapitalization"), thereafter upon any
exercise or satisfaction, as applicable, of an Award theretofore granted the
Holder shall be entitled to (or entitled to purchase, if applicable) under such
Award, in lieu of the number of shares of Stock then covered by such Award, the
number and class of shares of stock and securities to which the Holder would
have been entitled pursuant to the terms of the recapitalization if, immediately
prior to such recapitalization, the Holder had been the holder of record of the
number of shares of Stock then covered by such Award.
(c) In the event of a Change of Control, and except as provided in any Award
Agreement, outstanding Awards shall immediately vest and become exercisable or
satisfiable, as applicable. The Committee, in its discretion, may determine that
upon the occurrence of a Change of Control, each Award outstanding hereunder
shall terminate within a specified number of days after notice to the Holder,
and such Holder shall receive, with respect to each share of Stock subject to
such Award, cash in an amount equal to the excess, if any, of the Change of
Control Value over the exercise price, if applicable, under such Award for such
share. The provisions contained in this paragraph shall not terminate any rights
of the Holder to further payments pursuant to any other agreement with the
Company following a Change of Control.
(d) In the event of changes in the outstanding Stock by reason of
recapitalization, reorganizations, mergers, consolidations, combinations,
exchanges or other relevant changes in capitalization occurring after the date
of the grant of any Award and not otherwise provided for by this Paragraph XII,
any outstanding Awards and any Award Agreements shall be subject to adjustment
by the Committee at its discretion as to the number and price of shares of Stock
or other consideration subject to such Awards. In the event of any such change
in the outstanding Stock, the aggregate number of shares available under the
Plan may be appropriately adjusted by the Committee, whose determination shall
be conclusive.
(e) The existence of the Plan and the Awards granted hereunder shall not affect
in any way the right or power of the Board or the shareholders of the Company to
make or authorize any adjustment, recapitalization, reorganization or other
change in the Company's capital structure or its business, any merger or
consolidation of the Company, any issue of debt or equity securities ahead of or
affecting Stock or the rights thereof, the dissolution or liquidation of the
Company or any sale, lease, exchange or other disposition of all or any part of
its assets or business or any other corporate act of proceeding.
(f) Any adjustment provided for in Subparagraphs (a), (b), (c) or (d) above
shall be subject to any required shareholder action.
(g) Except as hereinbefore expressly provided, the issuance by the Company of
shares of stock of any class or securities convertible into shares of stock of
any class, for cash, property, labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares of obligations of the Company convertible into such shares or other
securities, and in any case whether or not for fair value, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number of
shares of Stock subject to Awards theretofore granted or the purchase price per
share, if applicable.
XII. AMENDMENT AND TERMINATION OF THE PLAN
The Board in its discretion may terminate the Plan at any time with respect to
any shares for which Awards have not theretofore been granted. The Board shall
have the right to alter or amend the Plan or any part thereof from time to time;
provided that no change in any Award theretofore granted may be made which would
impair the rights of the Holder without the consent of the Holder and provided,
further, that the Board may not, without approval of the shareholders, amend the
Plan (a) to increase the maximum aggregate number of shares of Stock that may be
issued under the Plan or (b) to change the class of employees eligible to
receive Awards under the Plan.
XIII. MISCELLANEOUS
(a) No Right To An Award. Neither the adoption of the Plan by the Company nor
any action of the Board or the Committee shall be deemed to give an employee any
right to be granted an Award or any of the rights hereunder except as may be
evidenced by an Award or by an Option Agreement, Stock Appreciation Rights
Agreement, Restricted Stock Agreement or Long-Term Incentive Award Agreement
duly executed on behalf of the Company, and then only to the extent and on the
terms and conditions expressly set forth therein. The Plan shall be unfunded.
The Company shall not be required to establish any special or separate fund or
to make any other segregation of funds or assets to assure the payment of any
Award.
(b) No Employment Rights Conferred. Nothing contained in the Plan shall (i)
confer upon any employee any right with respect to continuation of employment
with the Company or any subsidiary or (ii) interfere in any way with the right
of the Company or any subsidiary to terminate his or her employment at any time.
(c) Other Laws; Withholding. The Company shall not be obligated to issue any
Stock pursuant to any Award granted under the Plan at any time when the shares
covered by such Award have not been registered under the Securities Act of 1933
and such other state and federal laws, rules or regulations as the Company or
the Committee deems applicable and, in the opinion of legal counsel for the
Company, there is no exemption from the registration requirements of such laws,
rules or regulations available for the issuance and sale of such shares. No
fractional shares of Stock shall be delivered, nor shall any cash in lieu of
fractional shares be paid. The Company shall have the right to deduct in
connection with all Awards any taxes required by law to be withheld and to
require any payments required to enable it to satisfy its withholding
obligations.
(d) No Restriction on Corporate Action. Nothing contained in the Plan shall be
construed to prevent the Company or any subsidiary from taking any corporate
action which is deemed by the Company or such subsidiary to be appropriate or in
its best interest, whether or not such action would have an adverse effect on
the Plan or any Award made under the Plan. No employee, beneficiary or other
person shall have any claim against the Company or any subsidiary as a result of
any such action.
(e) Restrictions on Transfer. An Award (other than an Incentive Stock Option,
which shall be subject to the transfer restrictions set forth in Paragraph VII
(c)) shall not be transferable otherwise than (i) by will or the laws of descent
and distribution, (ii) pursuant to a "qualified domestic relations order" as
defined by the Code or Title I of the Employee Retirement Income Security Act of
1974, as amended, or the rules thereunder, or (iii) with the consent of the
Committee.
(f) Rule 16b-3. It is intended that the Plan and any grant of an Award made to a
person subject to Section 16 of the 1934 Act meet all of the requirements of
Rule 16b-3 so that any transaction under the Plan involving a grant, award, or
other acquisition from the Company or disposition to the Company is exempt from
Section 16(b) of the 1934 Act. If any provision of the Plan or any such Award
would result in any such transaction not being exempt from Section 16(b) of the
1934 Act, such provision or Award shall be construed or deemed amended so that
such transaction will be exempt from Section 16(b) of the 1934 Act.
(g) Section 162(m). It is intended that the Plan comply fully with and meet all
the requirements of Section 162(m) of the Code so that Options, Stock
Appreciation Rights, Long-Term Incentive Awards hereunder and, if determined by
the Committee, Restricted Stock Awards, shall constitute "performance-based"
compensation within the meaning of such section. If any provision of the Plan
would disqualify the Plan or would not otherwise permit the Plan to comply with
Section 162(m) as so intended, such provision shall be construed or deemed
amended to conform to the requirements or provisions of Section 162(m); provided
that no such construction or amendment shall have an adverse effect on the
economic value to a Holder of any Award previously granted hereunder.
(h) Facsimile Signature. Any Award Agreement or related document may be executed
by facsimile signature. If any officer who shall have signed or whose facsimile
signature shall have been placed upon any such Award Agreement or related
document shall have ceased to be such officer before the related Award is
granted by the Company, such Award may nevertheless be issued by the Company
with the same effect as if such person were such officer at the date of grant.
(i) Governing Law. This Plan shall be construed in accordance with the laws of
the State of Texas.