1
EXHIBIT 10.4
AMENDMENT TO THE
SERVICE EXPERTS, INC.
1996 INCENTIVE STOCK PLAN
THIS AMENDMENT to the Service Experts, Inc. 1996 Incentive Stock Plan
(the "Plan") is made by Service Experts, Inc. (the "Company"), to be effective
on October 23, 1998.
RECITALS:
WHEREAS, the Plan was established by the Company by action of its board
of directors on August 16, 1996;
WHEREAS, the Plan was been amended effective April 3, 1997, to modify
certain administrative provisions; and
WHEREAS, the Company desires to further amend the Plan to modify the
effect of a change in control on the awards that are granted under the Plan.
NOW, THEREFORE, the Plan is hereby amended as follows, effective
October 23, 1998:
1. Section 6(g) of the Plan is restated as follows:
(g) Effect of Certain Transactions. The provisions of this
Section 6(g) shall apply to the extent that an Agreement does not
otherwise expressly address the matters contained herein.
(i) If the Company experiences an event which results
in a "Change in Control," as defined in Section 6(g)(ii),
then, whether or not the vesting requirements set forth in any
Agreement have been satisfied, (A) all shares of Restricted
Stock that are outstanding at the time of the Change in
Control shall become fully vested immediately prior to the
Change in Control event, and (B) all Options that are
outstanding at the time of the Change in Control shall become
fully vested and exercisable immediately prior to the Change
in Control event.
(ii) A Change in Control will be deemed to have
occurred for purposes hereof, upon a merger, consolidation,
acquisition of property or stock, separation, reorganization
or liquidation of the Company, as a result of which the
stockholders of the Company receive cash, stock or other
property in exchange for their shares of Stock (but not a
public offering of Stock by the Company), and the Company is
not the surviving entity.
(iii) Upon a Change in Control, all Options that are
held by the Participant immediately after the Change in
Control shall be assumed by the entity which is the survivor
of the transaction, or converted into options to purchase the
common stock of the surviving entity, in a transaction to
which section 424(a) of the Code applies.
2
(iv) Notwithstanding the foregoing, a portion of the
acceleration of vesting described in this Section shall not
occur with respect to an Award to the extent such acceleration
of vesting would cause the Participant or holder of such Award
to realize less income, net of taxes, after deducting the
amount of excise taxes that would be imposed pursuant to
section 4999 of the Code, than if accelerated vesting of that
portion of the Award did not occur. This paragraph shall not
apply to the extent that the Participant is subject to and is
indemnified for such tax liability by the Company or
otherwise.
2. Section 9(e) of the Plan is restated as follows:
(e) In the event of any Change in Control (defined in Section
6(g)(ii)) 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 9(e) shall be limited in the manner described in Section
6(g)(iv).
IN WITNESS WHEREOF, the Company, acting by and through the undersigned
authorized officer, has executed this instrument this the 23rd day of October,
1998, but to be effective on the date first written above.
SERVICE EXPERTS, INC.
By: /s/ Anthony M. Schofield
---------------------------------------
Its: Chief Financial Officer, Secretary and
Treasurer
2