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Exhibit 99.3
SECOND AMENDMENT TO SERVICE EXPERTS, INC.
1996 INCENTIVE STOCK PLAN
WHEREAS, on August 16, 1996, Service Experts, Inc. (the "Company")
adopted the 1996 Incentive Stock Plan (the "Plan");
WHEREAS, the Plan has been amended effective April 3, 1997, and such
amendment was approved by the stockholders of the Company; and
WHEREAS, the Company desires to further amend the Plan to (1) limit
the acceleration of exercisability of awards under the Plan that occurs upon a
change in control so that no person will be subject to "golden parachute" taxes
under Sections 280G and 4999 of the Internal Revenue Code as a result of such
acceleration, and (2) consistent with modifications to Rule 16b-3 promulgated
under the Securities Exchange Act of 1934, provide for the administration of the
Plan by a committee of two or more directors who are not employees of the
Company.
NOW, THEREFORE, the Plan is hereby amended as follows, effective April
3, 1997:
1. Section 3 of the Plan is deleted in its entirety and restated as
follows:
3. Administration of the Plan. This Plan shall be administered
by the "Committee" that is appointed by the Board of Directors and
consists of not less than two individuals who are members of the Board
of Directors and are not employees of the Company or an "affiliate" of
the Company (as defined in Section 424(f) of the Code), or such other
composition that satisfies Section 162(m)(4)(C) of the Code and Rule
16b-3 promulgated by the Securities and Exchange Commission ("Rule
16b-3"). Subject to the provisions of the Plan, the Committee shall
have full and conclusive authority to interpret the Plan; to
prescribe, amend and rescind rules and regulations relating to the
Plan; to determine the terms and provisions of the respective Stock
Incentive agreements (which need not be identical); to determine the
restrictions on transferability of Stock acquired upon exercise of
Options (which restrictions need not be identical); and to make all
other determinations necessary or advisable for the proper
administration of the Plan.
2. Section 6(g) of the Plan is deleted in its entirety and restated as
follows:
(g) Limited Right of Exercise. Upon the occurrence of any of
the following events (each a "Change in Control"), an Option may be
exercised during the Option term as to the lesser of (a) the full
number of shares covered by the Option and (b) the maximum number of
shares covered by the Option to extent that any acceleration of the
right to exercise upon the Change in Control would not cause the
grantee or holder of such Option to be liable for the payment of taxes
pursuant to Section 4999 of the Code:
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(1) a tender offer or exchange offer has been made for shares of
Stock, provided that the corporation, person, or other entity making
such offer purchases or otherwise acquires shares of Stock
representing 50% or more of the outstanding shares of Stock pursuant
to such offer; (2) the shareholders of the Corporation have approved a
definitive agreement (the "Agreement") to merge or consolidate with or
into another corporation pursuant to which the Corporation will not
survive or will survive only as a subsidiary of another corporation,
or to sell or otherwise dispose of all or substantially all of its
assets; or (3) any person or group, as such terms are defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), becomes the holder of 50% or more of the
outstanding shares of Stock. If a Change in Control has occurred, the
Option shall be fully exercisable: (x) in the event of (1) above,
during the term of the tender or exchange offer; (y) in the event of
(2) above, within a 30-day period commencing on the date of approval
by the shareholders of the Agreement; or (z) in the event of (3)
above, within a 30-day period commencing on the date upon which the
Corporation is provided a copy of Schedule 13D (filed pursuant to
Section 13(d) of the Exchange Act and the rules and regulations
promulgated thereunder) indicating that any person or group has become
the holder of 50% or more of the outstanding shares of Stock or, if
the Corporation is not subject to Section 13(d) of the Exchange Act,
within a 30-day period commencing on the date upon which the
Corporation receives written notice that any person or group has
become the holder of 50% or more of the outstanding shares of Stock.
Notwithstanding the foregoing, no person subject to Section 16(a) of
the Exchange Act with respect to the Stock may sell or otherwise
dispose of Stock acquired pursuant to an Option granted within six
months of the date of sale or other disposition.
3. Section 9(e) of the Plan is deleted in its entirety and restated as
follows:
(e) In the event of any Change in Control in which shares of
Stock are purchased for cash in a tender offer or are to be converted
into cash in a merger, then, unless the Committee otherwise
determines, each Option (other than an Option granted within the last
six months held by a person subject to Section 16(b) of the Exchange
Act) shall be converted into a fully exercisable right to receive an
amount in cash per share subject to such Option equal to (A) in the
case of a tender offer or merger, the excess, if any, of the price
paid in such tender offer or merger over the exercise price of such
Option and (B) in the case of conversion, the excess, if any, of the
highest market price of the Stock on the date of conversion over the
exercise price of such Option; provided, however, that any
acceleration of the right to exercise an Option that occurs under this
Section 6(e) shall be limited to the maximum number of shares covered
by the Option for which the right of acceleration upon the Change in
Control will not cause the grantee or holder of such Option to be
liable for the payment of taxes pursuant to Section 4999 of the Code.
IN WITNESS WHEREOF, the undersigned officer has executed this
Amendment pursuant to authority granted by the board of directors of the
Company on this 3rd day of April, 1997.
SERVICE EXPERTS, INC.
By: /s/ Alan R. Sielbeck
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Title: President
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