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EXHIBIT 10.3
INCENTIVE PLAN
OF
CARRIZO OIL & GAS, INC.
(AS AMENDED AND RESTATED EFFECTIVE AS OF FEBRUARY 17, 2000, HOWEVER, THE CHANGES
TO THE DEFINITION OF "INDEPENDENT CONTRACTOR" IN SECTION 3 AND TO THE
NUMBER OF AUTHORIZED SHARES IN SECTION 5 ARE SUBJECT TO
SHAREHOLDER APPROVAL AT THE 2000 ANNUAL
MEETING OF SHAREHOLDERS.)
1. Plan. This Incentive Plan of Carrizo Oil & Gas, Inc. (the "Plan")
was adopted by Carrizo Oil & Gas, Inc. to reward certain corporate officers and
key employees of Carrizo Oil & Gas, Inc. and certain independent consultants by
enabling them to acquire shares of common stock of Carrizo Oil & Gas, Inc.
2. Objectives. This Plan is designed to attract and retain key
employees of the Company and its Subsidiaries (as hereinafter defined), to
attract and retain qualified directors of the Company, to attract and retain
consultants and other independent contractors, to encourage the sense of
proprietorship of such employees, directors and independent contractors and to
stimulate the active interest of such persons in the development and financial
success of the Company and its Subsidiaries. These objectives are to be
accomplished by making Awards (as hereinafter defined) under this Plan and
thereby providing Participants (as hereinafter defined) with a proprietary
interest in the growth and performance of the Company and its Subsidiaries.
3. Definitions. As used herein, the terms set forth below shall have
the following respective meanings:
"Annual Director Award Date" means, for each year beginning on or
after the IPO Closing Date, the first business day of the month next succeeding
the date upon which the annual meeting of stockholders of the Company is held in
such year.
"Authorized Officer" means the Chairman of the Board or the Chief
Executive Officer of the Company (or any other senior officer of the Company to
whom either of them shall delegate the authority to execute any Award
Agreement).
"Award" means an Employee Award, a Director Award or an Independent
Contractor Award.
"Award Agreement" means any Employee Award Agreement, Director Award
Agreement or Independent Contractor Award Agreement.
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"Board" means the Board of Directors of the Company.
"Cash Award" means an award denominated in cash.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Committee" means (i) the Compensation Committee of the Board or
(ii) such other committee of the Board as is designated by the Board to
administer the Plan or (iii) to the extent contemplated hereby, the Board.
"Common Stock" means the Common Stock, par value $.01 per share, of
the Company.
"Company" means Carrizo Oil & Gas, Inc., a Texas corporation.
"Director" means an individual serving as a member of the Board.
"Director Award" means the grant of a Director Option.
"Director Award Agreement" means a written agreement between the
Company and a Participant who is a Nonemployee Director setting forth the terms,
conditions and limitations applicable to a Director Award.
"Disability" means, with respect to a Nonemployee Director, the
inability to perform the duties of a Director for a continuous period of more
than three months by reason of any medically determinable physical or mental
impairment.
"Dividend Equivalents" means, with respect to shares of Restricted
Stock that are to be issued at the end of the Restriction Period, an amount
equal to all dividends and other distributions (or the economic equivalent
thereof) that are payable to stockholders of record during the Restriction
Period on a like number of shares of Common Stock.
"Employee" means an employee of the Company or any of its
Subsidiaries and an individual who has agreed to become an Employee of the
Company or any of its Subsidiaries and is expected to become such an Employee
within the following six months.
"Employee Award" means the grant of any Option, SAR, Stock Award,
Cash Award or Performance Award, whether granted singly, in combination or in
tandem, to a Participant who is an Employee pursuant to such applicable terms,
conditions and limitations as the Committee may establish in order to fulfill
the objectives of the Plan.
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"Employee Award Agreement" means a written agreement between the
Company and a Participant who is an Employee setting forth the terms, conditions
and limitations applicable to an Employee Award.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Fair Market Value" of a share of Common Stock means, as of a
particular date, (i) if shares of Common Stock are listed on a national
securities exchange, the mean between the highest and lowest sales price per
share of Common Stock on the consolidated transaction reporting system for the
principal national securities exchange on which shares of Common Stock are
listed on that date, or, if there shall have been no such sale so reported on
that date, on the last preceding date on which such a sale was so reported, (ii)
if shares of Common Stock are not so listed but are quoted on the Nasdaq
National Market, the mean between the highest and lowest sales price per share
of Common Stock reported by the Nasdaq National Market on that date, or, if
there shall have been no such sale so reported on that date, on the last
preceding date on which such a sale was so reported, (iii) if the Common Stock
is not so listed or quoted, the mean between the closing bid and asked price on
that date, or, if there are no quotations available for such date, on the last
preceding date on which such quotations shall be available, as reported by the
Nasdaq Stock Market, or, if not reported by the Nasdaq Stock Market, by the
National Quotation Bureau Incorporated or (iv) if shares of Common Stock are not
publicly traded, the most recent value determined by an independent appraiser
appointed by the Company for such purpose; provided that, notwithstanding the
foregoing, "Fair Market Value" in the case of any Award made in connection with
the IPO, means the price per share to the public of the Common Stock in the IPO,
as set forth in the final prospectus relating to the IPO.
"Incentive Option" means an Option that is intended to comply with
the requirements set forth in Section 422 of the Code.
"Independent Contractor" means a person providing services to the
Company or any of its Subsidiaries, including an Employee or Nonemployee
Director.
"Independent Contractor Award" means the grant of any Nonqualified
Stock Option, SAR, Stock Award, Cash Award or Performance Award, whether granted
singly, in combination or in tandem, to a Participant who is an Independent
Contractor pursuant to such applicable terms, conditions and limitations as the
Committee may establish in order to fulfill the objectives of the Plan.
"Independent Contractor Award Agreement" means a written agreement
between the Company and a Participant who is an Independent Contractor setting
forth the terms, conditions and limitations applicable to an Independent
Contractor Award.
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"IPO" means the first time a registration statement filed under the
Securities Act of 1933 and respecting an underwritten primary offering by the
Company of shares of Common Stock is declared effective under that Act and the
shares registered by that registration statement are issued and sold by the
Company (otherwise than pursuant to the exercise of any overallotment option).
"IPO Closing Date" means the date on which the Company first
receives payment for the shares of Common Stock it sells in the IPO.
"Nonemployee Director" has the meaning set forth in paragraph 4(b)
hereof.
"Nonqualified Stock Option" means an Option that is not an Incentive
Option.
"Option" means a right to purchase a specified number of shares of
Common Stock at a specified price.
"Participant" means an Employee, Director or Independent Contractor
to whom an Award has been made under this Plan.
"Performance Award" means an award made pursuant to this Plan to a
Participant who is an Employee or Independent Contractor who is subject to the
attainment of one or more Performance Goals.
"Performance Goal" means a standard established by the Committee, to
determine in whole or in part whether a Performance Award shall be earned.
"Restricted Stock" means any Common Stock that is restricted or
subject to forfeiture provisions.
"Restriction Period" means a period of time beginning as of the date
upon which an Award of Restricted Stock is made pursuant to this Plan and ending
as of the date upon which the Common Stock subject to such Award is no longer
restricted or subject to forfeiture provisions.
"Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act, or
any successor rule.
"SAR" means a right to receive a payment, in cash or Common Stock,
equal to the excess of the Fair Market Value or other specified valuation of a
specified number of shares of Common Stock on the date the right is exercised
over a specified strike price, in each case, as determined by the Committee.
"Stock Award" means an award in the form of shares of Common Stock
or units denominated in shares of Common Stock.
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"Subsidiary" means (i) in the case of a corporation, any corporation
of which the Company directly or indirectly owns shares representing more than
50% of the combined voting power of the shares of all classes or series of
capital stock of such corporation which have the right to vote generally on
matters submitted to a vote of the stockholders of such corporation and (ii) in
the case of a partnership or other business entity not organized as a
corporation, any such business entity of which the Company directly or
indirectly owns more than 50% of the voting, capital or profits interests
(whether in the form of partnership interests, membership interests or
otherwise).
4. Eligibility.
(a) Employees. Key Employees eligible for Employee Awards under this
Plan are those who hold positions of responsibility and whose performance,
in the judgment of the Committee, can have a significant effect on the
success of the Company and its Subsidiaries.
(b) Directors. Directors eligible for Director Awards under this
Plan are those who are not employees of the Company or any of its
Subsidiaries ("Nonemployee Directors").
(c) Independent Contractors. Independent Contractors eligible for
Independent Contractor Awards under this Plan are those Independent
Contractors providing services to, or who will provide services to, the
Company or any of its Subsidiaries.
5. Common Stock Available for Awards. Subject to the provisions of
paragraph 15 hereof, there shall be available for Awards under this Plan granted
wholly or partly in Common Stock (including rights or options that may be
exercised for or settled in Common Stock) an aggregate of 1,500,000 shares of
Common Stock, all of which shall be available for Incentive Options. The number
of shares of Common Stock that are the subject of Awards under this Plan, that
are forfeited or terminated, expire unexercised, are settled in cash in lieu of
Common Stock or in a manner such that all or some of the shares covered by an
Award are not issued to a Participant or are exchanged for Awards that do not
involve Common Stock, shall again immediately become available for Awards
hereunder. The Committee may from time to time adopt and observe such procedures
concerning the counting of shares against the Plan maximum as it may deem
appropriate. The Board and the appropriate officers of the Company shall from
time to time take whatever actions are necessary to file any required documents
with governmental authorities, stock exchanges and transaction reporting systems
to ensure that shares of Common Stock are available for issuance pursuant to
Awards.
6. Administration.
(a) This Plan, as it applies to Participants who are Employees or
Independent Contractors but not with respect to Participants who are
Nonemployee Directors, shall be administered by the Committee. To the
extent required in order for Employee Awards to be
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exempt from Section 16 of the Exchange Act by virtue of the provisions of
Rule 16b-3, (i) the Committee shall consist of at least two members of the
Board who meet the requirements of the definition of "non-employee
director" set forth in Rule 16b-3(b)(3)(i) promulgated under the Exchange
Act or (ii) Awards may be granted by, and the Plan may be administered by,
the Board.
(b) Subject to the provisions hereof, insofar as this Plan relates
to the Employee Awards or Independent Contractor Awards, the Committee
shall have full and exclusive power and authority to administer this Plan
and to take all actions that are specifically contemplated hereby or are
necessary or appropriate in connection with the administration hereof.
Insofar as this Plan relates to Employee Awards or Independent Contractor
Awards, the Committee shall also have full and exclusive power to
interpret this Plan and to adopt such rules, regulations and guidelines
for carrying out this Plan as it may deem necessary or proper, all of
which powers shall be exercised in the best interests of the Company and
in keeping with the objectives of this Plan. The Committee may, in its
discretion, provide for the extension of the exercisability of an Employee
Award or Independent Contractor Award, accelerate the vesting or
exercisability of an Employee Award or Independent Contractor Award,
eliminate or make less restrictive any restrictions contained in an
Employee Award or Independent Contractor Award, waive any restriction or
other provision of this Plan (insofar as such provision relates to
Employee Awards or to Independent Contractor Awards) or an Employee Award
or Independent Contractor Award or otherwise amend or modify an Employee
Award or Independent Contractor Award in any manner that is either (i) not
adverse to the Participant to whom such Employee Award or Independent
Contractor Award was granted or (ii) consented to by such Participant. The
Committee may make an award to an individual who it expects to become an
Employee of the Company or any of its Subsidiaries within the next six
months, with such award being subject to the individual's actually
becoming an Employee within such time period, and subject to such other
terms and conditions as may be established by the Committee. The Committee
may correct any defect or supply any omission or reconcile any
inconsistency in this Plan or in any Employee Award or Independent
Contractor Award in the manner and to the extent the Committee deems
necessary or desirable to further the Plan purposes. Any decision of the
Committee in the interpretation and administration of this Plan shall lie
within its sole and absolute discretion and shall be final, conclusive and
binding on all parties concerned.
(c) No member of the Committee or officer of the Company to whom the
Committee has delegated authority in accordance with the provisions of
paragraph 7 of this Plan shall be liable for anything done or omitted to
be done by him or her, by any member of the Committee or by any officer of
the Company in connection with the performance of any duties under this
Plan, except for his or her own willful misconduct or as expressly
provided by statute.
7. Delegation of Authority. The Committee may delegate to the Chief
Executive Officer and to other senior officers of the Company its duties under
this Plan pursuant to such
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conditions or limitations as the Committee may establish, except that the
Committee may not delegate to any person the authority to grant Awards to, or
take other action with respect to, Participants who are subject to Section 16 of
the Exchange Act.
8. Employee and Independent Contractor Awards.
(a) The Committee shall determine the type or types of Employee
Awards to be made under this Plan and shall designate from time to time
the Employees who are to be the recipients of such Awards. Each Employee
Award may be embodied in an Employee Award Agreement, which shall contain
such terms, conditions and limitations as shall be determined by the
Committee in its sole discretion and shall be signed by the Participant to
whom the Employee Award is made and by an Authorized Officer for and on
behalf of the Company. Employee Awards may consist of those listed in this
paragraph 8(a) hereof and may be granted singly, in combination or in
tandem. Employee Awards may also be made in combination or in tandem with,
in replacement of, or as alternatives to, grants or rights under this Plan
or any other employee plan of the Company or any of its Subsidiaries,
including the plan of any acquired entity. An Employee Award may provide
for the grant or issuance of additional, replacement or alternative
Employee Awards upon the occurrence of specified events, including the
exercise of the original Employee Award granted to a Participant. All or
part of an Employee Award may be subject to conditions established by the
Committee, which may include, but are not limited to, continuous service
with the Company and its Subsidiaries, achievement of specific business
objectives, increases in specified indices, attainment of specified growth
rates and other comparable measurements of performance. Upon the
termination of employment by a Participant who is an Employee, any
unexercised, deferred, unvested or unpaid Employee Awards shall be treated
as set forth in the applicable Employee Award Agreement.
(i) Stock Option. An Employee Award may be in the form of an
Option. An Option awarded pursuant to this Plan may consist of an
Incentive Option or a Nonqualified Option. The price at which shares
of Common Stock may be purchased upon the exercise of an Incentive
Option shall be not less than the Fair Market Value of the Common
Stock on the date of grant. The price at which shares of Common
Stock may be purchased upon the exercise of a Nonqualified Option
shall be not less than the Fair Market Value of the Common Stock on
the date of grant. Subject to the foregoing provisions, the terms,
conditions and limitations applicable to any Options awarded
pursuant to this Plan, including the term of any Options and the
date or dates upon which they become exercisable, shall be
determined by the Committee.
(ii) Stock Appreciation Right. An Employee Award may be in the
form of an SAR. The terms, conditions and limitations applicable to
any SARs awarded pursuant to this Plan, including the term of any
SARs and the date or dates upon which they become exercisable, shall
be determined by the Committee.
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(iii) Stock Award. An Employee Award may be in the form of a
Stock Award. The terms, conditions and limitations applicable to any
Stock Awards granted pursuant to this Plan shall be determined by
the Committee.
(iv) Cash Award. An Employee Award may be in the form of a
Cash Award. The terms, conditions and limitations applicable to any
Cash Awards granted pursuant to this Plan shall be determined by the
Committee.
(v) Performance Award. Without limiting the type or number of
Employee Awards that may be made under the other provisions of this
Plan, an Employee Award may be in the form of a Performance Award. A
Performance Award shall be paid, vested or otherwise deliverable
solely on account of the attainment of one or more pre-established,
objective Performance Goals established by the Committee prior to
the earlier to occur of (x) 90 days after the commencement of the
period of service to which the Performance Goal relates and (y) the
lapse of 25% of the period of service (as scheduled in good faith at
the time the goal is established), and in any event while the
outcome is substantially uncertain. A Performance Goal is objective
if a third party having knowledge of the relevant facts could
determine whether the goal is met. Such a Performance Goal may be
based on one or more business criteria that apply to the individual,
one or more business units of the Company, or the Company as a
whole, and may include one or more of the following: increased
revenue, net income, stock price, market share, earnings per share,
return on equity, return on assets or decrease in costs. Unless
otherwise stated, such a Performance Goal need not be based upon an
increase or positive result under a particular business criterion
and could include, for example, maintaining the status quo or
limiting economic losses (measured, in each case, by reference to
specific business criteria). In interpreting Plan provisions
applicable to Performance Goals and Performance Awards, it is the
intent of the Plan to conform with the standards of Section 162(m)
of the Code and Treasury Regulation ss. 1.162-27(e)(2)(i), and the
Committee in establishinG such goals and interpreting the Plan shall
be guided by such provisions. Prior to the payment of any
compensation based on the achievement of Performance Goals, the
Committee must certify in writing that applicable Performance Goals
and any of the material terms thereof were, in fact, satisfied.
Subject to the foregoing provisions, the terms, conditions and
limitations applicable to any Performance Awards made pursuant to
this Plan shall be determined by the Committee.
(b) Notwithstanding anything to the contrary contained in this Plan,
the following limitations shall apply to any Employee Awards made
hereunder:
(i) no Participant may be granted, during any one-year period,
Employee Awards consisting of Options or SARs that are exercisable
for more than 250,000 shares of Common Stock;
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(ii) no Participant may be granted, during any one-year
period, Stock Awards covering or relating to more than 50,000 shares
of Common Stock (the limitation set forth in this clause (ii),
together with the limitation set forth in clause (i) above, being
hereinafter collectively referred to as the "Stock Based Awards
Limitations"); and
(iii) no Participant may be granted Employee Awards consisting
of cash or in any other form permitted under this Plan (other than
Employee Awards consisting of Options or SARs or otherwise
consisting of shares of Common Stock or units denominated in such
shares) in respect of any one-year period having a value determined
on the date of grant in excess of $500,000.
(c) The Committee shall have the sole responsibility and authority
to determine the type or types of Independent Contractor Awards to be made
under this Plan and may make any such Awards as could be made to an
Employee, other than Incentive Options.
9. Director Awards. Each Nonemployee Director of the Company shall
be granted Director Awards in accordance with this paragraph 9 and subject to
the applicable terms, conditions and limitations set forth in this Plan and the
applicable Director Award Agreement. Notwithstanding anything to the contrary
contained herein, Director Awards shall not be made in any year in which a
sufficient number of shares of Common Stock are not available to make such
Awards under this Plan.
(a) Initial Director Options. On the IPO Closing Date, each
Nonemployee Director shall be automatically awarded a Director Option on
10,000 shares of Common Stock.
(b) Other Director Options. Effective upon the IPO Closing Date, on
the date of his or her first appointment or election to the Board of
Directors, a Nonemployee Director shall automatically be granted a
Director Option that provides for the purchase of 10,000 shares of Common
Stock. In addition, on each Annual Director Award Date, each Nonemployee
Director shall automatically be granted a Director Option that provides
for the purchase of 2,500 shares of Common Stock.
(c) Terms. Each Director Option shall have a term of ten years from
the date of grant, notwithstanding any earlier termination of the status
of the holder as a Nonemployee Director. The purchase price of each share
of Common Stock subject to a Director Option shall be equal to the Fair
Market Value of the Common Stock on the date of grant. All Director
Options shall vest and become exercisable in increments of one-third of
the total number of shares of Common Stock that are subject thereto
(rounded up to the nearest whole number) on the first and second
anniversaries of the date of grant and of all remaining shares of Common
Stock that are subject thereto on the third anniversary of the date of
grant. All
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unvested Director Options shall be forfeited if the Nonemployee Director
resigns as a Director without the consent of a majority of the other
Directors.
(d) Agreements. Any Award of Director Options shall be embodied in a
Director Award Agreement, which shall contain the terms, conditions and
limitations set forth above and shall be signed by the Participant to whom
the Director Options are granted and by an Authorized Officer for and on
behalf of the Company.
10. Payment of Awards.
(a) General. Payment of Employee Awards or Independent Contractor
Awards may be made in the form of cash or Common Stock, or a combination
thereof, and may include such restrictions as the Committee shall
determine, including, in the case of Common Stock, restrictions on
transfer and forfeiture provisions. If payment of an Employee Award or
Independent Contractor Award is made in the form of Restricted Stock, the
applicable Award Agreement relating to such shares shall specify whether
they are to be issued at the beginning or end of the Restriction Period.
In the event that shares of Restricted Stock are to be issued at the
beginning of the Restriction Period, the certificates evidencing such
shares (to the extent that such shares are so evidenced) shall contain
appropriate legends and restrictions that describe the terms and
conditions of the restrictions applicable thereto. In the event that
shares of Restricted Stock are to be issued at the end of the Restricted
Period, the right to receive such shares shall be evidenced by book entry
registration or in such other manner as the Committee may determine.
(b) Deferral. With the approval of the Committee, amounts payable in
respect of Employee Awards or Independent Contractor Awards may be
deferred and paid either in the form of installments or as a lump-sum
payment. The Committee may permit selected Participants to elect to defer
payments of some or all types of Employee Awards or Independent Contractor
Awards in accordance with procedures established by the Committee. Any
deferred payment of an Employee Award or Independent Contractor Award,
whether elected by the Participant or specified by the Award Agreement or
by the Committee, may be forfeited if and to the extent that the Award
Agreement so provides.
(c) Dividends and Interest. Rights to dividends or Dividend
Equivalents may be extended to and made part of any Employee Award or
Independent Contractor Award consisting of shares of Common Stock or units
denominated in shares of Common Stock, subject to such terms, conditions
and restrictions as the Committee may establish. The Committee may also
establish rules and procedures for the crediting of interest on deferred
cash payments and Dividend Equivalents for Employee Awards or Independent
Contractor Awards consisting of shares of Common Stock or units
denominated in shares of Common Stock.
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(d) Substitution of Awards. At the discretion of the Committee, a
Participant who is an Employee or Independent Contractor may be offered an
election to substitute an Employee Award or Independent Contractor Award
for another Employee Award or Independent Contractor Award or Employee
Awards or Independent Contractor Awards of the same or different type.
11. Stock Option Exercise. The price at which shares of Common Stock
may be purchased under an Option shall be paid in full at the time of exercise
in cash or, if elected by the optionee, the optionee may purchase such shares by
means of tendering Common Stock or surrendering another Award, including
Restricted Stock or Director Restricted Stock, valued at Fair Market Value on
the date of exercise, or any combination thereof. The Committee shall determine
acceptable methods for Participants who are Employees or Independent Contractors
to tender Common Stock or other Employee Awards or Independent Contractor
Awards; provided that any Common Stock that is or was the subject of an Employee
Award or Independent Contractor Award may be so tendered only if it has been
held by the Participant for six months. The Committee may provide for procedures
to permit the exercise or purchase of such Awards by use of the proceeds to be
received from the sale of Common Stock issuable pursuant to an Employee Award or
Independent Contractor Award. Unless otherwise provided in the applicable Award
Agreement, in the event shares of Restricted Stock are tendered as consideration
for the exercise of an Option, a number of the shares issued upon the exercise
of the Option, equal to the number of shares of Restricted Stock or Director
Restricted Stock used as consideration therefor, shall be subject to the same
restrictions as the Restricted Stock or Director Restricted Stock so submitted
as well as any additional restrictions that may be imposed by the Committee.
12. Taxes. The Company shall have the right to deduct applicable
taxes from any Employee Award payment and withhold, at the time of delivery or
vesting of cash or shares of Common Stock under this Plan, an appropriate amount
of cash or number of shares of Common Stock or a combination thereof for payment
of taxes required by law or to take such other action as may be necessary in the
opinion of the Company to satisfy all obligations for withholding of such taxes.
The Committee may also permit withholding to be satisfied by the transfer to the
Company of shares of Common Stock theretofore owned by the holder of the
Employee Award with respect to which withholding is required. If shares of
Common Stock are used to satisfy tax withholding, such shares shall be valued
based on the Fair Market Value when the tax withholding is required to be made.
The Committee may provide for loans, on either a short term or demand basis,
from the Company to a Participant who is an Employee or Independent Contractor
to permit the payment of taxes required by law.
13. Amendment, Modification, Suspension or Termination. The Board
may amend, modify, suspend or terminate this Plan for the purpose of meeting or
addressing any changes in legal requirements or for any other purpose permitted
by law, except that (i) no amendment or alteration that would adversely affect
the rights of any Participant under any Award previously granted to such
Participant shall be made without the consent of such Participant and (ii) no
amendment or alteration shall be effective prior to its approval by the
stockholders of the Company
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to the extent such approval is then required pursuant to Rule 16b-3 in order to
preserve the applicability of any exemption provided by such rule to any Award
then outstanding (unless the holder of such Award consents) or to the extent
stockholder approval is otherwise required by applicable legal requirements.
14. Assignability. Unless otherwise determined by the Committee and
provided in the Award Agreement, no Award or any other benefit under this Plan
constituting a derivative security within the meaning of Rule 16a-1(c) under the
Exchange Act shall be assignable or otherwise transferable except by will or the
laws of descent and distribution or pursuant to a qualified domestic relations
order as defined by the Code or Title I of the Employee Retirement Income
Security Act, or the rules thereunder. The Committee may prescribe and include
in applicable Award Agreements other restrictions on transfer. Any attempted
assignment of an Award or any other benefit under this Plan in violation of this
paragraph 14 shall be null and void.
15. Adjustments.
(a) The existence of outstanding Awards shall not affect in any
manner the right or power of the Company or its stockholders to make or
authorize any or all adjustments, recapitalizations, reorganizations or
other changes in the capital stock of the Company or its business or any
merger or consolidation of the Company, or any issue of bonds, debentures,
preferred or prior preference stock (whether or not such issue is prior
to, on a parity with or junior to the Common Stock) or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of
its assets or business, or any other corporate act or proceeding of any
kind, whether or not of a character similar to that of the acts or
proceedings enumerated above.
(b) In the event of any subdivision or consolidation of outstanding
shares of Common Stock, declaration of a dividend payable in shares of
Common Stock or other stock split, then, except with respect to the
Existing Options, (i) the number of shares of Common Stock reserved under
this Plan, (ii) the number of shares of Common Stock covered by
outstanding Awards in the form of Common Stock or units denominated in
Common Stock, (iii) the exercise or other price in respect of such Awards,
(iv) the appropriate Fair Market Value and other price determinations for
such Awards, (v) the number of shares of Common Stock covered by Director
Options automatically granted pursuant to paragraph 9 hereof and (vi) the
Stock Based Awards Limitations shall each be proportionately adjusted by
the Board to reflect such transaction. In the event of any other
recapitalization or capital reorganization of the Company, any
consolidation or merger of the Company with another corporation or entity,
the adoption by the Company of any plan of exchange affecting the Common
Stock or any distribution to holders of Common Stock of securities or
property (other than normal cash dividends or dividends payable in Common
Stock), the Board shall make appropriate adjustments to (i) the number of
shares of Common Stock covered by Awards in the form of Common Stock or
units denominated in Common Stock, (ii) the exercise or other price in
respect of such Awards, (iii) the appropriate Fair Market Value and other
price
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determinations for such Awards, (iv) the number of shares of Common Stock
covered by Director Options automatically granted pursuant to paragraph 9
hereof and (v) the Stock Based Awards Limitations to give effect to such
transaction shall each be proportionately adjusted by the Board to reflect
such transaction; provided that such adjustments shall only be such as are
necessary to maintain the proportionate interest of the holders of the
Awards and preserve, without exceeding, the value of such Awards. In the
event of a corporate merger, consolidation, acquisition of property or
stock, separation, reorganization or liquidation, the Board shall be
authorized to issue or assume Awards by means of substitution of new
Awards, as appropriate, for previously issued Awards or to assume
previously issued Awards as part of such adjustment.
(c) In the event of a corporate merger, consolidation, acquisition
of property or stock, separation, reorganization or liquidation, the Board
may make such adjustments to outstanding Awards or other provisions for
the disposition of outstanding Awards as it deems equitable, and shall be
authorized, in its discretion, (i) to provide for the substitution of a
new Award or other arrangement (which, if applicable, may be exercisable
for such property or stock as the Board determines) for an outstanding
Award or the assumption of an outstanding Award, regardless of whether in
a transaction to which Section 424(a) of the Code applies, (ii) to
provide, prior to the transaction, for the acceleration of the vesting and
exercisability of, or lapse of restrictions with respect to, the
outstanding Award and, if the transaction is a cash merger, to provide for
the termination of any portion of the Award that remains unexercised at
the time of such transaction or (iii) to provide for the acceleration of
the vesting and exercisability of an outstanding Award and the
cancellation thereof in exchange for such payment as shall be mutually
agreeable to the Participant and the Board.
16. Restrictions. No Common Stock or other form of payment shall be
issued with respect to any Award unless the Company shall be satisfied based on
the advice of its counsel that such issuance will be in compliance with
applicable federal and state securities laws. It is the intent of the Company
that grants of Awards under this Plan comply with Rule 16b-3 with respect to
persons subject to Section 16 of the Exchange Act unless otherwise provided
herein or in an Award Agreement, that any ambiguities or inconsistencies in the
construction of such an Award or this Plan be interpreted to give effect to such
intention. Certificates evidencing shares of Common Stock delivered under this
Plan (to the extent that such shares are so evidenced) may be subject to such
stop transfer orders and other restrictions as the Committee may deem advisable
under the rules, regulations and other requirements of the Securities and
Exchange Commission, any securities exchange or transaction reporting system
upon which the Common Stock is then listed or to which it is admitted for
quotation and any applicable federal or state securities law. The Committee may
cause a legend or legends to be placed upon such certificates (if any) to make
appropriate reference to such restrictions.
17. Unfunded Plan. Insofar as it provides for Awards of cash, Common
Stock or rights thereto, this Plan shall be unfunded. Although bookkeeping
accounts may be established with respect to Participants who are entitled to
cash, Common Stock or rights thereto under this Plan,
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any such accounts shall be used merely as a bookkeeping convenience. The Company
shall not be required to segregate any assets that may at any time be
represented by cash, Common Stock or rights thereto, nor shall this Plan be
construed as providing for such segregation, nor shall the Company, the Board or
the Committee be deemed to be a trustee of any cash, Common Stock or rights
thereto to be granted under this Plan. Any liability or obligation of the
Company to any Participant with respect to an Award of cash, Common Stock or
rights thereto under this Plan shall be based solely upon any contractual
obligations that may be created by this Plan and any Award Agreement, and no
such liability or obligation of the Company shall be deemed to be secured by any
pledge or other encumbrance on any property of the Company. Neither the Company
nor the Board nor the Committee shall be required to give any security or bond
for the performance of any obligation that may be created by this Plan.
18. Governing Law. This Plan and all determinations made and actions
taken pursuant hereto, to the extent not otherwise governed by mandatory
provisions of the Code or the securities laws of the United States, shall be
governed by and construed in accordance with the laws of the State of Texas.
19. Effectiveness. The Plan as hereby amended and restated shall be
effective as of February 17, 2000, except for the change to the definition of
"Independent Contractor" and to the number of authorized shares in Section 5,
which shall become effective upon shareholder approval at the 2000 Annual
Meeting of Shareholders.
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