Exhibit 10.1
T-3 ENERGY SERVICES
2002 STOCK INCENTIVE PLAN
(As Amended and Restated Effective June 4, 2009)

 

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TABLE OF CONTENTS

                              Page     SECTION 1   GENERAL PROVISIONS RELATING
TO PLAN GOVERNANCE, COVERAGE AND BENEFITS     1  
 
               
1.1
  Background and Purpose     1  
1.2
  Definitions     3  
 
  (a)   Authorized Officer     3  
 
  (b)   Board     3  
 
  (c)   Cause     3  
 
  (d)   CEO     3  
 
  (e)   Change of Control     3  
 
  (f)   Code     3  
 
  (g)   Committee     3  
 
  (h)   Common Stock     4  
 
  (i)   Company     4  
 
  (j)   Consultant     4  
 
  (k)   Covered Employee     4  
 
  (l)   Disability     4  
 
  (m)   Employee     4  
 
  (n)   Employment     5  
 
  (o)   Exchange Act     5  
 
  (p)   Fair Market Value     5  
 
  (q)   Grantee     6  
 
  (r)   Immediate Family     6  
 
  (s)   Incentive Agreement     6  
 
  (t)   Incentive Award     6  
 
  (u)   Incentive Stock Option or ISO     6  
 
  (v)   Insider     6  
 
  (w)   Nonstatutory Stock Option     6  
 
  (x)   Option Price     6  
 
  (y)   Other Stock-Based Award     6  
 
  (z)   Outside Director     6  
 
  (aa)   Parent     6  
 
  (bb)   Performance-Based Award     6  
 
  (cc)   Performance-Based Exception     7  
 
  (dd)   Performance Criteria     7  
 
  (ee)   Performance Period     7  
 
  (ff)   Plan     7  
 
  (gg)   Plan Year     7  
 
  (hh)   Publicly Held Corporation     7  
 
  (ii)   Restricted Stock     7  
 
  (jj)   Restricted Stock Award     7  
 
  (kk)   Restricted Stock Unit     7  
 
  (ll)   Restriction Period     7  

 

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                              Page    
 
  (mm)   Retirement     7  
 
  (nn)   Share     7  
 
  (oo)   Share Pool     7  
 
  (pp)   Spread     8  
 
  (qq)   Stock Appreciation Right or SAR     8  
 
  (rr)   Stock Option or Option     8  
 
  (ss)   Subsidiary     8  
1.3
  Plan Administration     8  
 
  (a)   Authority of the Committee     8  
 
  (b)   Meetings     8  
 
  (c)   Decisions Binding     8  
 
  (d)   Modification of Outstanding Incentive Awards     9  
 
  (e)   Delegation of Authority     9  
 
  (f)   Expenses of Committee     9  
 
  (g)   Surrender of Previous Incentive Awards     9  
 
  (h)   Indemnification     10  
1.4
  Shares of Common Stock Available for Incentive Awards     10  
1.5
  Share Pool Adjustments for Awards and Payouts     11  
1.6
  Common Stock Available     12  
1.7
  Participation     12  
 
  (a)   Eligibility     12  
 
  (b)   Incentive Stock Option Eligibility     12  
1.8
  Types of Incentive Awards     12  
 
                SECTION 2   STOCK OPTIONS AND STOCK APPRECIATION RIGHTS     13  
 
               
2.1
  Grant of Stock Options     13  
2.2
  Stock Option Terms     13  
 
  (a)   Written Agreement     13  
 
  (b)   Number of Shares     13  
 
  (c)   Exercise Price     13  
 
  (d)   Term     13  
 
  (e)   Exercise     13  
 
  (f)   $100,000 Annual Limit on Incentive Stock Options     14  
2.3
  Stock Option Exercises     14  
 
  (a)   Method of Exercise and Payment     14  
 
  (b)   Restrictions on Share Transferability     15  
 
  (c)   Notification of Disqualifying Disposition of Shares from Incentive Stock
Options     15  
 
  (d)   Proceeds of Option Exercise     15  
2.4
  Stock Appreciation Rights     16  
 
  (a)   Grant     16  
 
  (b)   General Provisions     16  
 
  (c)   Exercise     16  
 
  (d)   Settlement     16  
 
                SECTION 3   RESTRICTED STOCK     16  
 
               

 

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                              Page    
3.1
  Award of Restricted Stock     16  
 
  (a)   Grant     16  
 
  (b)   Immediate Transfer Without Immediate Delivery of Restricted Stock     16
 
3.2
  Restrictions     17  
 
  (a)   Forfeiture of Restricted Stock     17  
 
  (b)   Issuance of Certificates     17  
 
  (c)   Removal of Restrictions     18  
3.3
  Delivery of Shares of Common Stock     18  
 
                SECTION 4   OTHER STOCK-BASED AWARDS     18  
 
               
4.1
  Grant of Other Stock-Based Awards     18  
4.2
  Other Stock-Based Award Terms     19  
 
  (a)   Written Agreement     19  
 
  (b)   Purchase Price     19  
 
  (c)   Performance Criteria and Other Terms     19  
 
                SECTION 5   PERFORMANCE-BASED AWARDS AND PERFORMANCE CRITERIA  
  19  
 
                SECTION 6   PROVISIONS RELATING TO PLAN PARTICIPATION     21  
 
               
6.1
  Incentive Agreement     21  
6.2
  No Right to Employment     21  
6.3
  Securities Requirements     22  
6.4
  Transferability     22  
6.5
  Rights as a Shareholder     23  
 
  (a)   No Shareholder Rights     23  
 
  (b)   Representation of Ownership     23  
6.6
  Change in Stock and Adjustments     24  
 
  (a)   Changes in Law or Circumstances     24  
 
  (b)   Exercise of Corporate Powers     24  
 
  (c)   Recapitalization of the Company     24  
 
  (d)   Issue of Common Stock by the Company     24  
 
  (e)   Assumption under the Plan of Outstanding Stock Options     25  
 
  (f)   Assumption of Incentive Awards by a Successor     25  
6.7
  Termination of Employment, Death, Disability and Retirement     26  
 
  (a)   Termination of Employment     26  
 
  (b)   Termination of Employment for Cause     26  
 
  (c)   Retirement     26  
 
  (d)   Disability or Death     27  
 
  (e)   Continuation     27  
6.8
  Change of Control     27  
6.9
  Exchange of Incentive Awards     29  
6.10
  Financing     30  
 
                SECTION 7   GENERAL     30  
 
               
7.1
  Effective Date and Grant Period     30  

 

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                              Page    
7.2
  Funding and Liability of Company     30  
7.3
  Withholding Taxes     31  
 
  (a)   Tax Withholding     31  
 
  (b)   Share Withholding     31  
 
  (c)   Incentive Stock Options     31  
 
  (d)   Loans     31  
7.4
  No Guarantee of Tax Consequences     31  
7.5
  Designation of Beneficiary by Participant     31  
7.6
  Deferrals     32  
7.7
  Amendment and Termination     32  
7.8
  Requirements of Law     32  
 
  (a)   Governmental Entities and Securities Exchanges     32  
 
  (b)   Securities Act Rule 701     33  
7.9
  Rule 16b-3 Securities Law Compliance for Insiders     33  
7.10
  Compliance with Code Section 162(m) for Publicly Held Corporation     33  
7.11
  Notices     34  
 
  (a)   Notice From Insiders to Secretary of Change in Beneficial Ownership    
34  
 
  (b)   Notice to Insiders and Securities and Exchange Commission     34  
7.12
  Pre-Clearance Agreement with Brokers     34  
7.13
  Successors to Company     34  
7.14
  Miscellaneous Provisions     34  
7.15
  Severability     35  
7.16
  Gender, Tense and Headings     35  
7.17
  Governing Law     35  

 

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T-3 ENERGY SERVICES
2002 STOCK INCENTIVE PLAN
SECTION 1
GENERAL PROVISIONS RELATING TO
PLAN GOVERNANCE, COVERAGE AND BENEFITS
1.1 Background and Purpose
     T-3 Energy Services, Inc., a Delaware corporation (“T-3”), entered into an
Agreement and Plan of Merger, dated as of May 7, 2001, and as subsequently
amended, by and among T-3, Industrial Holdings, Inc., a Texas corporation
(“IHI”), and First Reserve Fund VIII, Limited Partnership, a Delaware limited
partnership (the “Merger Agreement”).
     Pursuant to the Merger Agreement, the parties entered into a business
combination effected by a merger of T-3 into IHI, as a result of which the
separate existence of T-3 ceased and IHI was the surviving corporation (the
“Merger”). Immediately after the consummation of the Merger, IHI merged into a
Delaware corporation which was a wholly owned subsidiary of IHI, and the
subsidiary survived and its name was changed to T-3 Energy Services, Inc., a
Delaware corporation (the “Company”). Pursuant to the Merger Agreement, the
outstanding options to purchase T-3 Common Stock (collectively, the “T-3
Options”) were converted into stock options to purchase shares of the Company’s
Common Stock pursuant to an exchange formula set forth in the Merger Agreement.
     T-3 had previously adopted the “T-3 Energy Services, Inc. 2000 Stock Option
Plan” (the “T-3 Plan”). IHI had previously adopted the “Industrial Holdings,
Inc. 1998 Incentive Plan” (the “IHI 1998 Plan”) and the “Industrial Holdings,
Inc. 1994 Amended and Restated Incentive Stock Plan” (the “IHI 1994 Plan”).
     The outstanding T-3 Options at the time of the Merger were assumed under
the IHI 1998 Plan at such time. Coincident with the assumption of the
outstanding T-3 Options under the IHI 1998 Plan, the T-3 Plan was merged into
the IHI 1998 Plan but only to the extent necessary for the purpose of construing
the applicable terms and conditions of the individual stock option agreements
for the outstanding T-3 Options to the extent that specific terms of such
agreements incorporate particular provisions of the T-3 Plan by reference.
     The Company amended and restated the IHI Plan under the form of the plan
document entitled “T-3 Energy Services 2002 Stock Incentive Plan” (the “Plan”),
effective as of January 1, 2002 (the “Original Effective Date”), to reflect the
reorganization of the plan sponsor and to incorporate various other amendments
for the benefit of the Company and the participants in the Plan.
     Effective as of the Original Effective Date, the outstanding stock options
under the IHI 1994 Plan (the “IHI 1994 Options”) were assumed under the Plan.
Coincident with the assumption of the outstanding IHI 1994 Options under the
Plan, the IHI 1994 Plan was merged into the Plan but only to the extent
necessary for the purpose of construing the applicable terms and conditions of
the individual stock option agreements for the outstanding IHI 1994 Options to

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the extent that specific terms of such agreements incorporate particular
provisions of the IHI 1994 Plan by reference.
     As of the Original Effective Date, all outstanding stock options that were
previously granted by T-3 and IHI and assumed and continued under the Plan, as
amended and restated, were made subject to the applicable terms and conditions
of the Plan, as it may further be amended, and the individual stock option
agreements for each such option grant.
     The Company again amended and restated the Plan under the form of the plan
document entitled “T-3 Energy Services 2002 Stock Incentive Plan”, as amended
and restated effective July 30, 2002, primarily to incorporate changes made by
the Sarbanes-Oxley Act of 2002 which was effective July 30, 2002.
     The Company again amended and restated the Plan under the form of the plan
document entitled “T-3 Energy Services 2002 Stock Incentive Plan”, as amended
and restated effective January 1, 2005, primarily to increase the number of
shares of the Company’s Common Stock that are reserved for issuance under the
Plan from 1,000,000 to 2,000,000 shares effective April 10, 2006, and to
incorporate changes required by Section 409A of the Code which was effective
January 1, 2005.
     The Company hereby again amends and restates the Plan under the form of
this plan document entitled “T-3 Energy Services 2002 Stock Incentive Plan”, as
amended and restated effective June 4, 2009 (hereafter the term “Plan” shall
refer to this Plan document), to increase the number of shares of the Company’s
Common Stock that are reserved for issuance under the Plan from 2,000,000 to
2,623,000 shares effective as of June 4, 2009.
     The purpose of the Plan is to foster and promote the long-term financial
success of T-3 Energy Services, Inc. (the “Company”) and to increase stockholder
value by: (a) encouraging the commitment of selected key Employees, Consultants
and Outside Directors, (b) motivating superior performance of key Employees,
Consultants and Outside Directors by means of long-term performance related
incentives, (c) encouraging and providing key Employees, Consultants and Outside
Directors with a program for obtaining ownership interests in the Company which
link and align their personal interests to those of the Company’s stockholders,
(d) attracting and retaining key Employees, Consultants and Outside Directors by
providing competitive compensation opportunities, and (e) enabling key
Employees, Consultants and Outside Directors to share in the long-term growth
and success of the Company.
     The Plan provides for payment of various forms of compensation. It is not
intended to be a plan that is subject to the Employee Retirement Income Security
Act of 1974, as amended (“ERISA”). The Plan will be interpreted, construed and
administered consistent with its status as a plan that is not subject to ERISA.
     The Plan will remain in effect, subject to the right of the Board to amend
or terminate the Plan at any time pursuant to Section 7.7, until all Shares
subject to the Plan have been purchased or acquired according to its provisions.
However, in no event may an Incentive Stock Option be granted under the Plan
after the expiration of ten (10) years from the Original Effective Date to the
extent required by Code Section 422(b)(2).

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1.2 Definitions
     The following terms shall have the meanings set forth below:
     (a) Authorized Officer. The Chairman of the Board, the CEO or any other
senior officer of the Company to whom either of them delegate the authority to
execute any Incentive Agreement for and on behalf of the Company. No officer or
director shall be an Authorized Officer with respect to any Incentive Agreement
for himself.
     (b) Board. The Board of Directors of the Company.
     (c) Cause. When used in connection with the termination of a Grantee’s
Employment, shall mean the termination of the Grantee’s Employment by the
Company or any Subsidiary by reason of (i) the conviction of the Grantee by a
court of competent jurisdiction as to which no further appeal can be taken of a
crime involving moral turpitude or a felony; (ii) the proven commission by the
Grantee of a material act of fraud upon the Company or any Subsidiary, or any
customer or supplier thereof; (iii) the misappropriation of any funds or
property of the Company or any Subsidiary, or any customer or supplier thereof;
(iv) the willful and continued failure by the Grantee to perform the material
duties assigned to him that is not cured to the reasonable satisfaction of the
Company within 30 days after written notice of such failure is provided to
Grantee by the Board or CEO (or by another officer of the Company or a
Subsidiary who has been designated by the Board or CEO for such purpose);
(v) the knowing engagement by the Grantee in any direct and material conflict of
interest with the Company or any Subsidiary without compliance with the
Company’s or Subsidiary’s conflict of interest policy, if any, then in effect;
or (vi) the knowing engagement by the Grantee, without the written approval of
the Board or CEO, in any material activity which competes with the business of
the Company or any Subsidiary or which would result in a material injury to the
business, reputation or goodwill of the Company or any Subsidiary.
     (d) CEO. The Chief Executive Officer of the Company.
     (e) Change of Control. Any of the events described in and subject to
Section 6.8.
     (f) Code. The Internal Revenue Code of 1986, as amended, and the
regulations and other authority promulgated thereunder by the appropriate
governmental authority. References herein to any provision of the Code shall
refer to any successor provision thereto.
     (g) Committee. A committee appointed by the Board to administer the Plan.
While the Company is a Publicly Held Corporation, the Plan shall be administered
by the Committee appointed by the Board consisting of not less than two
directors who fulfill the “nonemployee director” requirements of Rule 16b-3
under the Exchange Act and the “outside director” requirements of Code Section
162(m). In either case, the Committee may be the Compensation Committee of the
Board, or any subcommittee of the Compensation Committee, provided that the
members of the Committee satisfy the requirements of the previous provisions of
this paragraph.
     The Board shall have the power to fill vacancies on the Committee arising
by resignation, death, removal or otherwise. The Board, in its sole discretion,
may bifurcate the powers and

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duties of the Committee among one or more separate committees, or retain all
powers and duties of the Committee in a single Committee. The members of the
Committee shall serve at the discretion of the Board.
     Notwithstanding the preceding paragraphs of this Section 1.2(g), the term
“Committee” as used in the Plan with respect to any Incentive Award for an
Outside Director shall refer to the entire Board. In the case of an Incentive
Award for an Outside Director, the Board shall have all the powers and
responsibilities of the Committee hereunder as to such Incentive Award, and any
actions as to such Incentive Award may be acted upon only by the Board (unless
it otherwise designates in its discretion). When the Board exercises its
authority to act in the capacity as the Committee hereunder with respect to an
Incentive Award for an Outside Director, it shall so designate with respect to
any action that it undertakes in its capacity as the Committee.
     (h) Common Stock. The common stock of the Company, $.001 par value per
share, and any class of common stock into which such common shares may hereafter
be converted, reclassified or recapitalized.
     (i) Company. T-3 Energy Services, Inc., a corporation organized under the
laws of the State of Delaware, and any successor in interest thereto.
     (j) Consultant. An independent agent, consultant, attorney, an individual
who has agreed to become an Employee within the next six months, or any other
individual who is not an Outside Director or employee of the Company (or any
Parent or Subsidiary) and who, in the opinion of the Committee, is in a position
to contribute to the growth or financial success of the Company (or any Parent
or Subsidiary), (ii) is a natural person and (iii) provides bona fide services
to the Company (or any Parent or Subsidiary), which services are not in
connection with the offer or sale of securities in a capital raising
transaction, and do not directly or indirectly promote or maintain a market for
the Company’s securities.
     (k) Covered Employee. To the extent that the Company is a Publicly Held
Corporation, a named executive officer who is, or is determined by the Committee
to likely be, a “covered employee,” as defined in Code Section 162(m) and
Treasury Regulation § 1.162-27(c) (or its successor).
     (l) Disability. As determined by the Committee in its discretion exercised
in good faith, a physical or mental condition of the Grantee that would entitle
him to payment of disability income payments under the Company’s long term
disability insurance policy or plan for employees, as then effective, if any; or
in the event that the Grantee is not covered, for whatever reason, under the
Company’s long-term disability insurance policy or plan, “Disability” means a
permanent and total disability as defined in Code Section 22(e)(3). A
determination of Disability may be made by a physician selected or approved by
the Committee and, in this respect, the Grantee shall submit to any reasonable
examination(s) required in the opinion of such physician.
     (m) Employee. Any employee of the Company (or any Parent or Subsidiary)
within the meaning of Code Section 3401(c) who, in the opinion of the Committee,
is in a position to

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contribute to the growth, development or financial success of the Company (or
any Parent or Subsidiary), including, without limitation, officers who are
members of the Board.
     (n) Employment. Employment means that the individual is employed as an
Employee, or engaged as a Consultant or Outside Director, by the Company (or any
Parent or Subsidiary), or by any corporation issuing or assuming an Incentive
Award in any transaction described in Code Section 424(a), or by a parent
corporation or a subsidiary corporation of such corporation issuing or assuming
such Incentive Award, as the parent-subsidiary relationship shall be determined
at the time of the corporate action described in Code Section 424(a) (as such
relationships are defined in Code Sections 424(e) and (f)). In this regard,
neither the transfer of a Grantee from Employment by the Company to Employment
by any Parent or Subsidiary, nor the transfer of a Grantee from Employment by
any Parent or Subsidiary to Employment by the Company, shall be deemed to be a
termination of Employment of the Grantee. Moreover, the Employment of a Grantee
shall not be deemed to have been terminated because of an approved leave of
absence from active Employment on account of temporary illness, authorized
vacation or granted for reasons of professional advancement, education, or
health, or during any period required to be treated as a leave of absence by
virtue of any applicable statute, Company personnel policy or written agreement.
     The term “Employment” for all purposes of the Plan shall include (i) active
performance of agreed services by a Consultant for the Company (or any Parent or
Subsidiary) and (ii) current membership on the Board by an Outside Director.
     All determinations regarding Employment, and the termination of Employment
hereunder, shall be made by the Committee in its discretion.
     (o) Exchange Act. The Securities Exchange Act of 1934, as amended.
     (p) Fair Market Value. While the Company is a Publicly Held Corporation,
the Fair Market Value of one share of Common Stock on the date in question is
deemed to be (i) the closing sales price on such business day of a share of
Common Stock as reported on the New York Stock Exchange, Nasdaq Stock Market or
other principal securities exchange on which Shares are then listed or admitted
to trading, or (ii) if not quoted on a principal securities exchange, the
average of the closing bid and asked prices for a Share as quoted by the
National Quotation Bureau’s “Pink Sheets” or the National Association of
Securities Dealers’ OTC Bulletin Board System. If there was no public trade of
Common Stock on the date in question, Fair Market Value shall be determined by
reference to the last preceding date on which such a trade was so reported.
     If the Company is not a Publicly Held Corporation at the time a
determination of the Fair Market Value of the Common Stock is required to be
made hereunder, the determination of Fair Market Value for purposes of the Plan
shall be made by the Committee in its sole and absolute discretion. In this
respect, the Committee may rely on such financial data, appraisals, valuations,
experts, and other sources as, in its sole and absolute discretion, it deems
advisable under the circumstances.

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     With respect to Stock Options and SARs, Fair Market Value shall be
determined consistent with the requirements under Code Section 409A in order to
satisfy the exception thereto for stock rights, but only to the extent
inconsistent with the methods for determining Fair Market Value above.
     (q) Grantee. Any Employee, Consultant or Outside Director who is granted an
Incentive Award under the Plan.
     (r) Immediate Family. With respect to a Grantee, the Grantee’s child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse,
sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships.
     (s) Incentive Agreement. The written agreement entered into between the
Company and the Grantee setting forth the terms and conditions pursuant to which
an Incentive Award is granted under the Plan, as such agreement is further
defined in Section 6.1.
     (t) Incentive Award. A grant of an award under the Plan to a Grantee,
including any Nonstatutory Stock Option, Incentive Stock Option (ISO), Stock
Appreciation Right (SAR), Restricted Stock Award, Restricted Stock Unit or Other
Stock-Based Award.
     (u) Incentive Stock Option or ISO. A Stock Option granted by the Committee
to an Employee under Section 2 which is designated by the Committee as an
Incentive Stock Option and intended to qualify as an Incentive Stock Option
under Code Section 422.
     (v) Insider. If the Company is a Publicly Held Corporation, an individual
who is, on the relevant date, an officer, director or ten percent (10%)
beneficial owner of any class of the Company’s equity securities that is
registered pursuant to Section 12 of the Exchange Act, all as defined under
Section 16 of the Exchange Act.
     (w) Nonstatutory Stock Option. A Stock Option granted by the Committee to a
Grantee under Section 2 that is not designated by the Committee as an Incentive
Stock Option.
     (x) Option Price. The exercise price at which a Share may be purchased by
the Grantee of a Stock Option.
     (y) Other Stock-Based Award. An award granted by the Committee to a Grantee
under Section 4.1 that is valued in whole or in part by reference to, or is
otherwise based upon, Common Stock.
     (z) Outside Director. A member of the Board who is not, at the time of
grant of an Incentive Award, an employee of the Company or any Parent or
Subsidiary.
     (aa) Parent. Any corporation (whether now or hereafter existing) which
constitutes a “parent” of the Company, as defined in Code Section 424(e).
     (bb) Performance-Based Award. A grant of an Incentive Award under the Plan
pursuant to Section 5 that is intended to satisfy the Performance-Based
Exception.

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     (cc) Performance-Based Exception. The performance-based exception from the
tax deductibility limitations of Code Section 162(m), as prescribed in Code
Section 162(m) and Treasury Regulation Section 1.162-27(e) (or its successor),
which is applicable during such period that the Company is a Publicly Held
Corporation.
     (dd) Performance Criteria. The business criteria that are specified by the
Committee pursuant to Section 5 for an Incentive Award that is intended to
qualify for the Performance-Based Exception; the satisfaction of such business
criteria during the Performance Period being required for the grant and/or
vesting of the particular Incentive Award to occur, as specified in the
particular Incentive Agreement.
     (ee) Performance Period. A period of time determined by the Committee over
which performance is measured for the purpose of determining a Grantee’s right
to, and the payment value of, any Incentive Award that is intended to qualify
for the Performance-Based Exception.
     (ff) Plan. T-3 Energy Services 2002 Stock Incentive Plan, as amended and
restated effective June 4, 2009, which is set forth herein and as it may be
amended from time to time.
     (gg) Plan Year. The calendar year.
     (hh) Publicly Held Corporation. A corporation issuing any class of common
equity securities required to be registered under Section 12 of the Exchange
Act.
     (ii) Restricted Stock. Common Stock that is issued or transferred to a
Grantee pursuant to Section 3.
     (jj) Restricted Stock Award. An authorization by the Committee to issue or
transfer Restricted Stock to a Grantee pursuant to Section 3.
     (kk) Restricted Stock Unit. A unit granted to a Grantee pursuant to
Section 4.1 which entitles him to receive a Share or cash on the vesting date,
as specified in the Incentive Agreement.
     (ll) Restriction Period. The period of time determined by the Committee and
set forth in the Incentive Agreement during which the transfer of Restricted
Stock by the Grantee is restricted.
     (mm) Retirement. The voluntary termination of Employment from the Company
or any Parent or Subsidiary constituting retirement for age on any date after
the Employee attains the normal retirement age of 65 years, or such other age as
may be designated by the Committee in the Employee’s Incentive Agreement.
     (nn) Share. A share of the Common Stock of the Company.
     (oo) Share Pool. The number of shares authorized for issuance under
Section 1.4, as adjusted for awards and payouts under Section 1.5 and as
adjusted for changes described in Section 6.6.

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     (pp) Spread. The difference between the grant price per Share specified in
any SAR grant and the Fair Market Value of a Share on the date of exercise of
the SAR.
     (qq) Stock Appreciation Right or SAR. A Stock Appreciation Right as
described in Section 2.4.
     (rr) Stock Option or Option. Pursuant to Section 2, (i) an Incentive Stock
Option granted to an Employee, or (ii) a Nonstatutory Stock Option granted to an
Employee, Consultant or Outside Director, whereunder such option the Grantee has
the right to purchase Shares. In accordance with Code Section 422, only an
Employee may be granted an Incentive Stock Option.
     (ss) Subsidiary. Any company (whether a corporation, partnership, joint
venture or other form of entity) in which the Company or a corporation in which
the Company owns a majority of the shares of capital stock, directly or
indirectly, owns a greater than 50% equity interest except that, with respect to
the issuance of Incentive Stock Options, the term “Subsidiary” shall have the
same meaning as the term “subsidiary corporation” as defined in Code Section
424(f) as required by Code Section 422.
1.3 Plan Administration
     (a) Authority of the Committee. Except as may be limited by law and subject
to the provisions herein, the Committee shall have full power to (i) select
Grantees who shall participate in the Plan; (ii) determine the sizes, duration
and types of Incentive Awards; (iii) determine the terms and conditions of
Incentive Awards and Incentive Agreements; (iv) determine whether any Shares
subject to Incentive Awards will be subject to any restrictions on transfer;
(v) construe and interpret the Plan and any Incentive Agreement or other
agreement entered into under the Plan; and (vi) establish, amend, or waive rules
for the Plan’s administration. Further, the Committee shall make all other
determinations which may be necessary or advisable for the administration of the
Plan.
     (b) Meetings. The Committee shall designate a chairman from among its
members who shall preside at its meetings, and shall designate a secretary,
without regard to whether that person is a member of the Committee, who shall
keep the minutes of the proceedings and all records, documents, and data
pertaining to its administration of the Plan. Meetings shall be held at such
times and places as shall be determined by the Committee and the Committee may
hold telephonic meetings. The Committee may take any action otherwise proper
under the Plan by the affirmative vote, taken with or without a meeting, of a
majority of its members. The Committee may authorize any one or more of its
members or any officer of the Company to execute and deliver documents on behalf
of the Committee.
     (c) Decisions Binding. All determinations and decisions of the Committee
shall be made in its discretion pursuant to the provisions of the Plan, and
shall be final, conclusive and binding on all persons including the Company, its
shareholders, Employees, Grantees, and their estates and beneficiaries. The
Committee’s decisions and determinations with respect to any Incentive Award
need not be uniform and may be made selectively among Incentive Awards and

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Grantees, whether or not such Incentive Awards are similar or such Grantees are
similarly situated.
     (d) Modification of Outstanding Incentive Awards. Subject to the
shareholder approval requirements of Section 7.7 if applicable and except as
otherwise provided in Section 6.6(f), the Committee may, in its discretion,
provide for the extension of the exercisability of an Incentive Award,
accelerate the vesting or exercisability of an Incentive Award, eliminate or
make less restrictive any restrictions contained in an Incentive Award, waive
any restriction or other provisions of an Incentive Award, or otherwise amend or
modify an Incentive Award in any manner that (i) is not adverse to the Grantee
to whom such Incentive Award was granted, (ii) is consented to by such Grantee,
and (iii) does not cause the Incentive Award to provide for the deferral of
compensation in a manner that does not comply with Code Section 409A (unless
otherwise determined by the Committee). With respect to an Incentive Award that
is an ISO, no adjustment thereto shall be made to the extent constituting a
“modification” within the meaning of Code Section 424(h)(3) unless otherwise
agreed to by the Grantee in writing. Notwithstanding the above provisions of
this subsection, no amendment or modification of an Incentive Award shall be
made to the extent such modification results in any Stock Option with an
exercise price less than 100% of the Fair Market Value per Share on the date of
grant (110% for Grantees who are 10% or greater shareholders pursuant to
Section 1.7(b)).
     (e) Delegation of Authority. The Committee may delegate to designated
officers or other employees of the Company any of its duties and authority under
the Plan pursuant to such conditions or limitations as the Committee may
establish from time to time; provided, however, the Committee may not delegate
to any person the authority (i) to grant Incentive Awards or (ii) if the Company
is a Publicly Held Corporation, to take any action which would contravene the
requirements of Rule 16b-3 under the Exchange Act, the Performance-Based
Exception under Code Section 162(m), or the Sarbanes-Oxley Act of 2002.
     (f) Expenses of Committee. The Committee may employ legal counsel,
including, without limitation, independent legal counsel and counsel regularly
employed by the Company, and other agents as the Committee may deem appropriate
for the administration of the Plan. The Committee may rely upon any opinion or
computation received from any such counsel or agent. All expenses incurred by
the Committee in interpreting and administering the Plan, including, without
limitation, meeting expenses and professional fees, shall be paid by the
Company.
     (g) Surrender of Previous Incentive Awards. The Committee may, in its
absolute discretion, grant Incentive Awards to Grantees on the condition that
such Grantees surrender to the Committee for cancellation such other Incentive
Awards (including, without limitation, Incentive Awards with higher exercise
prices) as the Committee directs; provided, however, the Committee may not
provide for the repricing or exchange of underwater Stock Options or SARs for
cash consideration or other Incentive Awards unless such repricing or exchange
receives the approval of a majority of the holders of the Shares. Incentive
Awards granted on the condition precedent of surrender of outstanding Incentive
Awards shall not count against the limits set forth in Section 1.4 until such
time as such previous Incentive Awards are surrendered and cancelled. No
surrender of Incentive Awards shall be made under this Section 1.3(g) if such
surrender causes any Incentive Award to provide for the deferral of compensation
in a manner

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that is subject to taxation under Code Section 409A (unless otherwise determined
by the Committee).
     (h) Indemnification. Each person who is or was a member of the Committee
shall be indemnified by the Company against and from any damage, loss,
liability, cost and expense that may be imposed upon or reasonably incurred by
him in connection with or resulting from any claim, action, suit, or proceeding
to which he may be a party or in which he may be involved by reason of any
action taken or failure to act under the Plan, except for any such act or
omission constituting willful misconduct or gross negligence. Each such person
shall be indemnified by the Company for all amounts paid by him in settlement
thereof, with the Company’s approval, or paid by him in satisfaction of any
judgment in any such action, suit, or proceeding against him, provided he shall
give the Company an opportunity, at its own expense, to handle and defend the
same before he undertakes to handle and defend it on his own behalf. The
foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the Company’s
Articles or Certificate of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
1.4 Shares of Common Stock Available for Incentive Awards
     Subject to adjustment under Section 6.6, there shall be available for
Incentive Awards that are granted wholly or partly in Common Stock (including
rights or Stock Options that may be exercised for or settled in Common Stock)
One Million (1,000,000) Shares and, effective as of April 10, 2006, Two Million
(2,000,000) Shares and, effective as of June 4, 2009, Two Million Six Hundred
Twenty Three Thousand (2,623,000) Shares. Except as otherwise provided in
Section 1.5, the number of Shares that are the subject of Incentive Awards under
this Plan, which 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 Incentive Award are not issued to a Grantee or are exchanged for
Incentive Awards that do not involve Common Stock, shall again immediately
become available for Incentive Awards hereunder. The aggregate number of Shares
which may be issued upon exercise of ISOs shall be One Million (1,000,000) of
the Shares reserved pursuant to the first sentence of this paragraph. For
purposes of counting Shares against the ISO maximum number of reserved Shares,
the net number of Shares issued pursuant to the exercise of an ISO shall be
counted. 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.
     During any period that the Company is a Publicly Held Corporation, then
unless and until the Committee determines that a particular Incentive Award
granted to a Covered Employee is not intended to comply with the
Performance-Based Exception, the following rules shall apply to grants of
Incentive Awards to Covered Employees:
     (a) Subject to adjustment as provided in Section 6.6, the maximum aggregate
number of Shares of Common Stock attributable to Incentive Awards paid out in
Shares that may be granted (in the case of Stock Options and SARs) or that may
vest (in the case of Restricted Stock, Restricted Stock Units or Other
Stock-Based Awards), as applicable, in any calendar year

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pursuant to any Incentive Award held by any individual Covered Employee shall be
One Million (1,000,000) Shares.
     (b) The maximum aggregate cash payout (with respect to any Incentive Awards
paid out in cash) in any calendar year which may be made to any Covered Employee
shall be Twenty Million Dollars ($20,000,000).
     (c) With respect to any Stock Option or SAR granted to a Covered Employee
that is canceled or repriced, the number of Shares subject to such Stock Option
or SAR shall continue to count against the maximum number of Shares that may be
the subject of Stock Options or SARs granted to such Covered Employee hereunder
and, in this regard, such maximum number shall be determined in accordance with
Code Section 162(m).
     (d) The limitations of subsections (a), (b) and (c) above shall be
construed and administered so as to comply with the Performance-Based Exception.
1.5 Share Pool Adjustments for Awards and Payouts
     (a) The following Incentive Awards and payouts shall reduce, on a one Share
for one Share basis, the number of Shares authorized for issuance under the
Share Pool:
          (i) Stock Option; and
          (ii) SAR.
     (b) The following Incentive Awards and payouts shall reduce, on a 1.22
Shares for one Share basis, the number of Shares authorized for issuance under
the Share Pool:
          (i) Restricted Stock Award; and
          (ii) A payout of a Restricted Stock Unit or Other Stock-Based Award in
Shares.
     (c) The following transactions shall restore, on a one Share for one Share
basis to the extent the Incentive Award reduced the Shares available under the
Share Pool by one Share at the time of grant, and on a 1.22 Share for one Share
basis to the extent the Incentive Award reduced the Shares available under the
Share Pool by 1.22 Shares at the time of grant, the number of Shares authorized
for issuance under the Share Pool:
          (i) A payout of a Restricted Stock Award, Restricted Stock Unit, SAR,
or Other Stock-Based Award in the form of cash and not Shares (but not the
“cashless” exercise of a Stock Option as provided in Section 2.3(a)); and
          (ii) A cancellation, termination, expiration, forfeiture, or lapse for
any reason of any Shares subject to an Incentive Award.
     Payment of an Option Price or tax withholding for any Incentive Award
settled in Shares by withholding Shares which otherwise would be acquired on
exercise, vesting or settlement

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shall not result in any increase in or restoration to the number of Shares
available in the Share Pool.
1.6 Common Stock Available
     The Common Stock available for issuance or transfer under the Plan shall be
made available from Shares now or hereafter (a) held in the treasury of the
Company, (b) authorized but unissued shares, or (c) Shares to be purchased or
acquired by the Company. No fractional shares shall be issued under the Plan;
payment for fractional shares shall be made in cash.
1.7 Participation
     (a) Eligibility. The Committee shall from time to time designate those
Employees, Consultants and/or Outside Directors, if any, to be granted Incentive
Awards under the Plan, the type of Incentive Awards granted, the number of
Shares, Stock Options, rights or units, as the case may be, which shall be
granted to each such person, and any other terms or conditions relating to the
Incentive Awards as it may deem appropriate to the extent consistent with the
provisions of the Plan. A Grantee who has been granted an Incentive Award may,
if otherwise eligible, be granted additional Incentive Awards at any time.
     No Insider shall be eligible to be granted an Incentive Award that is
subject to Rule 16a-3 under the Exchange Act unless and until such Insider has
granted a limited power of attorney to those officers of the Company who have
been designated by the Committee for purposes of future required filings under
the Exchange Act.
     (b) Incentive Stock Option Eligibility. No Consultant or Outside Director
shall be eligible for the grant of any Incentive Stock Option. In addition, no
Employee shall be eligible for the grant of any Incentive Stock Option who owns
or would own immediately before the grant of such Incentive Stock Option,
directly or indirectly, stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company, or any
Parent or Subsidiary. This restriction does not apply if, at the time such
Incentive Stock Option is granted, the Incentive Stock Option exercise price is
at least one hundred and ten percent (110%) of the Fair Market Value on the date
of grant and the Incentive Stock Option by its terms is not exercisable after
the expiration of five (5) years from the date of grant. For the purpose of the
immediately preceding sentence, the attribution rules of Code Section 424(d)
shall apply for the purpose of determining an Employee’s percentage ownership in
the Company or any Parent or Subsidiary. This paragraph shall be construed
consistent with the requirements of Code Section 422.
1.8 Types of Incentive Awards
     The types of Incentive Awards under the Plan are Stock Options and Stock
Appreciation Rights as described in Section 2, Restricted Stock Awards as
described in Section 3, Restricted Stock Units and Other Stock-Based Awards as
described in Section 4, or any combination of the foregoing.

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SECTION 2
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
2.1 Grant of Stock Options
     The Committee is authorized to grant (a) Nonstatutory Stock Options to
Employees, Consultants and/or Outside Directors and (b) Incentive Stock Options
to Employees only, in accordance with the terms and conditions of the Plan, and
with such additional terms and conditions, not inconsistent with the Plan, as
the Committee shall determine in its discretion. Successive grants may be made
to the same Grantee regardless whether any Stock Option previously granted to
such person remains unexercised.
2.2 Stock Option Terms
     (a) Written Agreement. Each grant of a Stock Option shall be evidenced by a
written Incentive Agreement. Among its other provisions, each Incentive
Agreement shall set forth the extent to which the Grantee shall have the right
to exercise the Stock Option following termination of the Grantee’s Employment.
Such provisions shall be determined in the discretion of the Committee, shall be
included in the Grantee’s Incentive Agreement, and need not be uniform among all
Stock Options issued pursuant to the Plan.
     (b) Number of Shares. Each Stock Option shall specify the number of Shares
of Common Stock to which it pertains.
     (c) Exercise Price. The exercise price per Share of Common Stock under each
Stock Option shall be determined by the Committee; provided, however, that such
exercise price shall not be less than 100% of the Fair Market Value per Share on
the date the Stock Option is granted (or 110% for 10% or greater shareholders
granted Incentive Stock Options as described in Section 1.7(b)). Each Stock
Option shall specify the method of exercise which shall be consistent with the
requirements of Section 2.3(a).
     (d) Term. In the Incentive Agreement, the Committee shall fix the term of
each Stock Option (which shall be not more than ten (10) years from the date of
grant for and not more than five (5) years for ISO grants to 10% or greater
shareholders pursuant to Section 1.7(b)). In the event no term is fixed, such
term shall be ten (10) years from the date of grant.
     (e) Exercise. The Committee shall determine the time or times at which a
Stock Option may be exercised, in whole or in part. Each Stock Option may
specify the required period of continuous Employment and/or the Performance
Criteria to be achieved before the Stock Option or portion thereof will become
exercisable. Each Stock Option, the exercise of which, or the timing of the
exercise of which, is dependent, in whole or in part, on the achievement of
designated Performance Criteria, may specify a minimum level of achievement in
respect of the specified Performance Criteria below which no Stock Options will
be exercisable and a method for determining the number of Stock Options that
will be exercisable if performance is at or above such minimum but short of full
achievement of the Performance Criteria. All such terms and conditions shall be
set forth in the Incentive Agreement.

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     (f) $100,000 Annual Limit on Incentive Stock Options. Notwithstanding any
contrary provision in the Plan, to the extent that the aggregate Fair Market
Value (determined as of the time the Incentive Stock Option is granted) of the
Shares of Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by any Grantee during any single calendar year
(under the Plan and any other stock option plans of the Company and its
Subsidiaries or Parent) exceeds the sum of $100,000, such ISO shall
automatically be deemed to be a Nonstatutory Stock Option, but only to the
extent in excess of the $100,000 limit, and not an ISO. In such event, all other
terms and provisions of such Stock Option grant shall remain unchanged. This
paragraph shall be applied by taking ISOs into account in the order in which
they were granted and shall be construed in accordance with Section 422(d) of
the Code.
2.3 Stock Option Exercises
     (a) Method of Exercise and Payment. Stock Options shall be exercised by the
delivery of a signed written notice of exercise to the Company as of a date set
by the Company in advance of the effective date of the proposed exercise. The
notice shall set forth the number of Shares with respect to which the Option is
to be exercised, accompanied by full payment for the Shares.
     The Option Price upon exercise of any Stock Option shall be payable to the
Company in full either: (i) in cash or its equivalent; or (ii) subject to prior
approval by the Committee in its discretion, by tendering previously acquired
Shares having an aggregate Fair Market Value at the time of exercise equal to
the Option Price, (iii) subject to prior approval by the Committee in its
discretion, by withholding Shares which otherwise would be acquired on exercise
having an aggregate Fair Market Value at the time of exercise equal to the total
Option Price; or (iv) subject to prior approval by the Committee in its
discretion, by a combination of (i), (ii), and (iii) above.
     Any payment in Shares shall be effected by the surrender of such Shares to
the Company in good form for transfer and shall be valued at their Fair Market
Value on the date when the Stock Option is exercised. Unless otherwise permitted
by the Committee in its discretion, the Grantee shall not surrender, or attest
to the ownership of, Shares in payment of the Option Price if such action would
cause the Company to recognize compensation expense (or additional compensation
expense) with respect to the Stock Option for financial accounting reporting
purposes.
     The Committee, in its discretion, also may allow the Option Price to be
paid with such other consideration as shall constitute lawful consideration for
the issuance of Shares (including, without limitation, effecting a “cashless
exercise” with a broker of the Option), subject to applicable securities law
restrictions and tax withholdings, or by any other means which the Committee
determines to be consistent with the Plan’s purpose and applicable law. At the
direction of the Grantee, the broker will either (i) sell all of the Shares
received when the Option is exercised and pay the Grantee the proceeds of the
sale (minus the Option Price, withholding taxes and any fees due to the broker);
or (ii) sell enough of the Shares received upon exercise of the Option to cover
the Option Price, withholding taxes and any fees due the broker and deliver to
the Grantee (either directly or through the Company) a stock certificate for the
remaining Shares. Dispositions to a broker effecting a cashless exercise are not
exempt under Section 16 of

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the Exchange Act if the Company is a Publicly Held Corporation. Moreover, in no
event will the Committee allow the Option Price to be paid with a form of
consideration, including a loan or a “cashless exercise,” if such form of
consideration would violate the Sarbanes-Oxley Act of 2002 as determined by the
Committee.
     As soon as practicable after receipt of a written notification of exercise
and full payment, the Company shall deliver, or cause to be delivered, to or on
behalf of the Grantee, in the name of the Grantee or other appropriate
recipient, evidence of ownership for the number of Shares purchased under the
Stock Option.
     Subject to Section 6.4, during the lifetime of a Grantee, each Option
granted to him shall be exercisable only by the Grantee (or his legal guardian
in the event of his Disability) or by a broker-dealer acting on his behalf
pursuant to a cashless exercise under the foregoing provisions of this
Section 2.3(a).
     (b) Restrictions on Share Transferability. The Committee may impose such
restrictions on any grant of Stock Options or on any Shares acquired pursuant to
the exercise of a Stock Option as it may deem advisable, including, without
limitation, restrictions under (i) any shareholders’ agreement, buy/sell
agreement, right of first refusal, non-competition, and any other agreement
between the Company and any of its securities holders or employees; (ii) any
applicable federal securities laws; (iii) the requirements of any stock exchange
or market upon which such Shares are then listed and/or traded; or (iv) any blue
sky or state securities law applicable to such Shares. Any certificate issued to
evidence Shares issued upon the exercise of an Incentive Award may bear such
legends and statements as the Committee shall deem advisable to assure
compliance with federal and state laws and regulations.
     Any Grantee or other person exercising an Incentive Award shall be
required, if requested by the Committee, to give a written representation that
the Incentive Award and the Shares subject to the Incentive Award will be
acquired for investment and not with a view to public distribution; provided,
however, that the Committee, in its discretion, may release any person receiving
an Incentive Award from any such representations either prior to or subsequent
to the exercise of the Incentive Award.
     (c) Notification of Disqualifying Disposition of Shares from Incentive
Stock Options. Notwithstanding any other provision of the Plan, a Grantee who
disposes of Shares of Common Stock acquired upon the exercise of an Incentive
Stock Option by a sale or exchange either (i) within two (2) years after the
date of the grant of the Incentive Stock Option under which the Shares were
acquired or (ii) within one (1) year after the transfer of such Shares to him
pursuant to exercise, shall promptly notify the Company of such disposition, the
amount realized and his adjusted basis in such Shares.
     (d) Proceeds of Option Exercise. The proceeds received by the Company from
the sale of Shares pursuant to Stock Options exercised under the Plan shall be
used for general corporate purposes.

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2.4 Stock Appreciation Rights
     (a) Grant. The Committee may grant Stock Appreciation Rights that are
intended to satisfy the requirements under Code Section 409A to the effect that
such SARs do not provide for the deferral of compensation that is subject to
taxation under Code Section 409A.
     (b) General Provisions. The terms and conditions of each SAR shall be
evidenced by an Incentive Agreement. The grant price per Share shall never be
less than one hundred percent (100%) of the Fair Market Value of a Share on the
grant date of the SAR. The term of the SAR shall be determined by the Committee
but shall be no longer than 10 years. The Committee cannot include any feature
for the deferral of compensation other than the deferral of recognition of
income until exercise of the SAR.
     (c) Exercise. SARs shall be exercisable subject to such terms and
conditions as the Committee shall specify in the Incentive Agreement for the SAR
grant. No SAR granted to an Insider may be exercised prior to six (6) months
from the date of grant, except in the event of his death or Disability which
occurs prior to the expiration of such six-month period if so permitted under
the Incentive Agreement.
     (d) Settlement. Upon exercise of the SAR, the Grantee shall receive an
amount equal to the Spread. The Spread, less applicable withholdings, shall be
payable only in cash or in Shares, or a combination of both, as specified in the
Incentive Agreement, within 30 calendar days of the exercise date. In addition,
the Incentive Agreement under which such SARs are awarded, or any other
agreements or arrangements, shall not provide that the Company will purchase any
Shares delivered to the Grantee as a result of the exercise or vesting of a SAR.
SECTION 3
RESTRICTED STOCK
3.1 Award of Restricted Stock
     (a) Grant. With respect to a Grantee who is an Employee, Consultant or
Outside Director, Shares of Restricted Stock, which may be designated as a
Performance-Based Award in the discretion of the Committee, may be awarded by
the Committee with such restrictions during the Restriction Period as the
Committee shall designate in its discretion. Any such restrictions may differ
with respect to a particular Grantee. Restricted Stock shall be awarded for no
additional consideration or such additional consideration as the Committee may
determine, which consideration may be less than, equal to or more than the Fair
Market Value of the shares of Restricted Stock on the grant date. The terms and
conditions of each grant of Restricted Stock shall be evidenced by an Incentive
Agreement and, during the Restriction Period, such Shares of Restricted Stock
must remain subject to a “substantial risk of forfeiture” within the meaning
given to such term under Code Section 83. Any Restricted Stock Award may, at the
time of grant, be designated by the Committee as a Performance-Based Award that
is intended to qualify for the Performance-Based Exception.
     (b) Immediate Transfer Without Immediate Delivery of Restricted Stock.
Unless otherwise specified in the Grantee’s Incentive Agreement, each Restricted
Stock Award shall constitute an immediate transfer of the record and beneficial
ownership of the Shares of

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Restricted Stock to the Grantee in consideration of the performance of services
as an Employee, Consultant or Outside Director, as applicable, entitling such
Grantee to all voting and other ownership rights in such Shares.
     As specified in the Incentive Agreement, a Restricted Stock Award may limit
the Grantee’s dividend rights during the Restriction Period in which the shares
of Restricted Stock are subject to a “substantial risk of forfeiture” (within
the meaning given to such term under Code Section 83) and restrictions on
transfer. In the Incentive Agreement, the Committee may apply any restrictions
to the dividends that the Committee deems appropriate. Without limiting the
generality of the preceding sentence, if the grant or vesting of Shares of a
Restricted Stock Award granted to a Covered Employee, is designed to comply with
the requirements of the Performance-Based Exception, the Committee may apply any
restrictions it deems appropriate to the payment of dividends declared with
respect to such Shares of Restricted Stock, such that the dividends and/or the
Shares of Restricted Stock maintain eligibility for the Performance-Based
Exception. In the event that any dividend constitutes a derivative security or
an equity security pursuant to the rules under Section 16 of the Exchange Act,
if applicable, such dividend shall be subject to a vesting period equal to the
remaining vesting period of the Shares of Restricted Stock with respect to which
the dividend is paid.
     Shares awarded pursuant to a grant of Restricted Stock, whether or not
under a Performance-Based Award, may be issued in the name of the Grantee and
held, together with a stock power endorsed in blank, by the Committee or Company
(or their delegates) or in trust or in escrow pursuant to an agreement
satisfactory to the Committee, as determined by the Committee, until such time
as the restrictions on transfer have expired. All such terms and conditions
shall be set forth in the particular Grantee’s Incentive Agreement. The Company
or Committee (or their delegates) shall issue to the Grantee a receipt
evidencing the certificates held by it which are registered in the name of the
Grantee.
3.2 Restrictions
     (a) Forfeiture of Restricted Stock. Restricted Stock awarded to a Grantee
may be subject to the following restrictions until the expiration of the
Restriction Period: (i) a restriction that constitutes a “substantial risk of
forfeiture” (as defined in Code Section 83), and a restriction on
transferability; (ii) unless otherwise specified by the Committee in the
Incentive Agreement, the Restricted Stock that is subject to restrictions which
are not satisfied shall be forfeited and all rights of the Grantee to such
Shares shall terminate; and (iii) any other restrictions that the Committee
determines in advance are appropriate, including, without limitation, rights of
repurchase or first refusal in the Company or provisions subjecting the
Restricted Stock to a continuing substantial risk of forfeiture in the hands of
any transferee. Any such restrictions shall be set forth in the particular
Grantee’s Incentive Agreement.
     (b) Issuance of Certificates. Reasonably promptly after the date of grant
with respect to Shares of Restricted Stock, the Company shall cause to be issued
a stock certificate, registered in the name of the Grantee to whom such Shares
of Restricted Stock were granted, evidencing such Shares; provided, however,
that the Company shall not cause to be issued such a stock certificate unless it
has received a stock power duly endorsed in blank with respect to such

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Shares. Each such stock certificate shall bear the following legend or any other
legend approved by the Company:
     The transferability of this certificate and the shares of stock represented
hereby are subject to the restrictions, terms and conditions (including
forfeiture and restrictions against transfer) contained in the T-3 Energy
Services 2002 Stock Incentive Plan and an Incentive Agreement entered into
between the registered owner of such shares and T-3 Energy Services, Inc. A copy
of the Plan and Incentive Agreement are on file in the main corporate office of
T-3 Energy Services, Inc.
     Such legend shall not be removed from the certificate evidencing such
Shares of Restricted Stock unless and until such Shares vest pursuant to the
terms of the Incentive Agreement.
     (c) Removal of Restrictions. The Committee, in its discretion, shall have
the authority to remove any or all of the restrictions on the Restricted Stock
if it determines that, by reason of a change in applicable law or another change
in circumstance arising after the grant date of the Restricted Stock, such
action is necessary or appropriate.
3.3 Delivery of Shares of Common Stock
     Subject to withholding taxes under Section 7.3 and to the terms of the
Incentive Agreement, a stock certificate evidencing the Shares of Restricted
Stock with respect to which the restrictions in the Incentive Agreement have
been satisfied shall be delivered to the Grantee or other appropriate recipient
free of restrictions.
SECTION 4
OTHER STOCK-BASED AWARDS
4.1 Grant of Other Stock-Based Awards
     Other Stock-Based Awards may be awarded by the Committee to Grantees that
are payable in Shares or in cash, as determined in the discretion of the
Committee to be consistent with the goals of the Company. Other types of
Stock-Based Awards that are payable in Shares include, without limitation,
purchase rights, Shares awarded that are not subject to any restrictions or
conditions, Shares of Common Stock awarded subject to the satisfaction of
specified Performance Criteria, convertible or exchangeable debentures, other
rights convertible into Shares, Incentive Awards valued by reference to the
performance of a specified Subsidiary, division or department of the Company,
and settlement in cancellation of rights of any person with a vested interest in
any other plan, fund, program or arrangement that is or was sponsored,
maintained or participated in by the Company (or any Parent or Subsidiary). As
is the case with other types of Incentive Awards, Other Stock-Based Awards may
be awarded either alone or in addition to or in conjunction with any other
Incentive Awards. Other Stock-Based Awards that are payable in Shares are not
intended to be deferred compensation that is subject to taxation under Code
Section 409A unless otherwise determined by the Committee.
     In addition to Other Stock-Based Awards that are payable in Shares, the
Committee may award to a Grantee Restricted Stock Units that are payable in
Shares or cash, or in a combination

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thereof. Restricted Stock Units are not intended to be deferred compensation
that is subject to Code Section 409A; therefore, during the period beginning on
the date such Incentive Award is granted and ending on the payment date
specified in the Incentive Agreement, the Grantee’s right to payment under the
Incentive Agreement must remain subject to a “substantial risk of forfeiture”
within the meaning of such term under Code Section 409A. In addition, payment to
the Grantee under the Incentive Agreement shall be made within two and one-half
months (2 1/2) months following the end of the calendar year in which the
substantial risk of forfeiture lapses unless an earlier payment date is
specified in the Incentive Agreement.
4.2 Other Stock-Based Award Terms
     (a) Written Agreement. The terms and conditions of each grant of an Other
Stock-Based Award shall be evidenced by an Incentive Agreement.
     (b) Purchase Price. Except to the extent that an Other Stock-Based Award is
granted in substitution for an outstanding Incentive Award or is delivered upon
exercise of a Stock Option, the amount of consideration required to be received
by the Company shall be either (i) no consideration other than services actually
rendered (in the case of authorized and unissued shares) or to be rendered, or
(ii) as otherwise specified in the Incentive Agreement.
     (c) Performance Criteria and Other Terms. The Committee may specify
Performance Criteria for (i) vesting in Other Stock-Based Awards and
(ii) payment thereof to the Grantee, as it may determine in its discretion. The
extent to which any such Performance Criteria have been met shall be determined
and certified by the Committee in accordance with the requirements to qualify
for the Performance-Based Exception under Code Section 162(m). All terms and
conditions of Other Stock-Based Awards shall be determined by the Committee and
set forth in the Incentive Agreement.
SECTION 5
PERFORMANCE-BASED AWARDS AND PERFORMANCE CRITERIA
     As determined by the Committee at the time of grant, Performance-Based
Awards may be granted subject to performance objectives relating to one or more
of the following within the meaning of Code Section 162(m) in order to qualify
for the Performance-Based Exception (the “Performance Criteria”):
     (a) profits (including, but not limited to, profit growth, net operating
profit or economic profit);
     (b) profit-related return ratios;
     (c) return measures (including, but not limited to, return on assets,
capital, equity, investment or sales);
     (d) cash flow (including, but not limited to, operating cash flow, free
cash flow or cash flow return on capital or investments);

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     (e) earnings (including but not limited to, total shareholder return,
earnings per share or earnings before or after taxes);
     (f) net sales growth;
     (g) net earnings or income (before or after taxes, interest, depreciation
and/or amortization);
     (h) gross, operating or net profit margins;
     (i) productivity ratios;
     (j) share price (including, but not limited to, growth measures and total
shareholder return);
     (k) turnover of assets, capital, or inventory;
     (l) expense targets;
     (m) margins;
     (n) measures of health, safety or environment;
     (o) operating efficiency;
     (p) customer service or satisfaction;
     (q) market share;
     (r) credit quality;
     (s) debt ratios (e.g., debt to equity and debt to total capital); and
     (t) working capital targets.
     Performance Criteria may be stated in absolute terms or relative to
comparison companies or indices to be achieved during a Performance Period. The
Committee shall establish one or more Performance Criteria for each Incentive
Award that is intended to qualify for the Performance-Based Exception on its
grant date.
     In establishing the Performance Criteria for each applicable Incentive
Award, the Committee may provide that the effect of specified extraordinary or
unusual events will be included or excluded (including, but not limited to,
items of gain, loss or expense determined to be extraordinary or unusual in
nature or infrequent in occurrence or related to the disposal of a segment of
business or related to a change in accounting principle, all as determined in
accordance with the standards under Opinion No. 30 of the Accounting Principles
Board (APB Opinion 30) or other authoritative financial accounting standards).
The terms of the stated Performance Criteria for each applicable Incentive
Award, whether for a Performance Period of one (1) year or multiple years, must
preclude the Committee’s discretion to increase the amount

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payable to any Grantee that would otherwise be due upon attainment of the
Performance Criteria, but may permit the Committee to reduce the amount
otherwise payable to the Grantee in the Committee’s discretion. The Performance
Criteria specified in any Incentive Agreement need not be applicable to all
Incentive Awards, and may be particular to an individual Grantee’s function or
business unit. The Committee may establish the Performance Criteria of the
Company (or any entity which is affiliated by common ownership with the Company)
as determined and designated by the Committee, in its discretion, in the
Incentive Agreement.
     Performance-Based Awards will be granted in the discretion of the Committee
and will be (a) sufficiently objective so that an independent person or entity
having knowledge of the relevant facts could determine the amount payable to
Grantee, if applicable, and whether the pre-determined goals have been achieved
with respect to the Incentive Award, (b) established at a time when the
performance outcome is substantially uncertain, (c) established in writing no
later than ninety (90) days after the commencement of the Performance Period to
which they apply, and (d) based on operating earnings, performance against
peers, earnings criteria or such other criteria as provided in this Section 5.
SECTION 6
PROVISIONS RELATING TO PLAN PARTICIPATION
6.1 Incentive Agreement
     Each Grantee to whom an Incentive Award is granted shall be required to
enter into an Incentive Agreement with the Company, in such a form as is
provided by the Committee. The Incentive Agreement shall contain specific terms
as determined by the Committee, in its discretion, with respect to the Grantee’s
particular Incentive Award. Such terms need not be uniform among all Grantees or
any similarly situated Grantees. The Incentive Agreement may include, without
limitation, vesting, forfeiture and other provisions particular to the
particular Grantee’s Incentive Award, as well as, for example, provisions to the
effect that the Grantee (a) shall not disclose any confidential information
acquired during Employment with the Company, (b) shall abide by all the terms
and conditions of the Plan and such other terms and conditions as may be imposed
by the Committee, (c) shall not interfere with the employment or other service
of any employee, (d) shall not compete with the Company or become involved in a
conflict of interest with the interests of the Company, (e) shall forfeit an
Incentive Award if terminated for Cause, (f) shall not be permitted to make an
election under Code Section 83(b) when applicable, and (g) shall be subject to
any other agreement between the Grantee and the Company regarding Shares that
may be acquired under an Incentive Award including, without limitation, a
shareholders’ agreement, buy-sell agreement, or other agreement restricting the
transferability of Shares by Grantee. An Incentive Agreement shall include such
terms and conditions as are determined by the Committee, in its discretion, to
be appropriate with respect to any individual Grantee. The Incentive Agreement
shall be signed by the Grantee to whom the Incentive Award is made and by an
Authorized Officer.
6.2 No Right to Employment
     Nothing in the Plan or any instrument executed pursuant to the Plan shall
create any Employment rights (including without limitation, rights to continued
Employment) in any

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Grantee or affect the right of the Company to terminate the Employment of any
Grantee at any time without regard to the existence of the Plan.
6.3 Securities Requirements
     The Company shall be under no obligation to effect the registration
pursuant to the Securities Act of 1933 of any Shares to be issued hereunder or
to effect similar compliance under any state laws. Notwithstanding anything
herein to the contrary, the Company shall not be obligated to cause to be issued
or delivered any certificates evidencing Shares pursuant to the Plan unless and
until the Company is advised by its counsel that the issuance and delivery of
such certificates is in compliance with all applicable laws, regulations of
governmental authorities, and the requirements of any securities exchange on
which Shares are traded. The Committee may require, as a condition of the
issuance and delivery of certificates evidencing Shares pursuant to the terms
hereof, that the recipient of such Shares make such covenants, agreements and
representations, and that such certificates bear such legends, as the Committee,
in its discretion, deems necessary or desirable.
     The Committee may, in its discretion, defer the effectiveness of any
exercise of an Incentive Award in order to allow the issuance of Shares to be
made pursuant to registration or an exemption from registration or other methods
for compliance available under federal or state securities laws. The Committee
shall inform the Grantee in writing of its decision to defer the effectiveness
of the exercise of an Incentive Award. During the period that the effectiveness
of the exercise of an Incentive Award has been deferred, the Grantee may, by
written notice to the Committee, withdraw such exercise and obtain the refund of
any amount paid with respect thereto.
     If the Shares issuable on exercise of an Incentive Award are not registered
under the Securities Act of 1933, the Company may imprint on the certificate for
such Shares the following legend or any other legend which counsel for the
Company considers necessary or advisable to comply with the Securities Act of
1933:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (“ACT”), OR THE SECURITIES LAWS OF ANY
STATE. THE SECURITIES MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO ANY APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH
ACT AND SUCH LAWS OR PURSUANT TO A WRITTEN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
6.4 Transferability
     Incentive Awards granted under the Plan shall not be transferable or
assignable other than: (a) by will or the laws of descent and distribution or
(b) pursuant to a domestic relations order which transfer shall occur pursuant
and subject to procedures established by the Committee; provided, however, only
with respect to Incentive Awards consisting of

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Nonstatutory Stock Options, the Committee may, in its discretion, authorize all
or a portion of the Nonstatutory Stock Options to be granted on terms which
permit transfer by the Grantee to (i) the members of the Grantee’s Immediate
Family, (ii) a trust or trusts for the exclusive benefit of Immediate Family
members, (iii) a partnership in which such Immediate Family members are the only
partners, or (iv) any other entity owned solely by Immediate Family members;
provided that (A) there may be no consideration for any such transfer, (B) the
Incentive Agreement pursuant to which such Nonstatutory Stock Options are
granted must be approved by the Committee, and must expressly provide for
transferability in a manner consistent with this Section 6.4, (C) subsequent
transfers of transferred Nonstatutory Stock Options shall be prohibited except
in accordance with clauses (a) and (b) (above) of this sentence, and (D) there
may be no transfer of any Incentive Award in a listed transaction as described
in IRS Notice 2003-47. Following any permitted transfer, the Nonstatutory Stock
Option shall continue to be subject to the same terms and conditions as were
applicable immediately prior to transfer, provided that the term “Grantee” shall
be deemed to refer to the transferee. The events of termination of employment,
as set out in Section 6.7 and in the Incentive Agreement, shall continue to be
applied with respect to the original Grantee, and the Incentive Award shall be
exercisable by the transferee only to the extent, and for the periods, specified
in the Incentive Agreement.
     Except as may otherwise be permitted under the Code, in the event of a
permitted transfer of a Nonstatutory Stock Option hereunder, the original
Grantee shall remain subject to withholding taxes upon exercise. In addition,
the Company and the Committee shall have no obligation to provide any notices to
any Grantee or transferee thereof, including, for example, notice of the
expiration of an Incentive Award following the original Grantee’s termination of
employment.
     The designation by a Grantee of a beneficiary of an Incentive Award shall
not constitute transfer of the Incentive Award. No transfer by will or by the
laws of descent and distribution shall be effective to bind the Company unless
the Committee has been furnished with a copy of the deceased Grantee’s
enforceable will or such other evidence as the Committee deems necessary to
establish the validity of the transfer. Any attempted transfer in violation of
this Section 6.4 shall be void and ineffective. All determinations under this
Section 6.4 shall be made by the Committee in its discretion.
6.5 Rights as a Shareholder
     (a) No Shareholder Rights. Except as otherwise provided in Section 3.1(b)
for grants of Restricted Stock, a Grantee of an Incentive Award (or a permitted
transferee of such Grantee) shall have no rights as a shareholder with respect
to any Shares of Common Stock until the issuance of a stock certificate or other
record of ownership for such Shares.
     (b) Representation of Ownership. In the case of the exercise of an
Incentive Award by a person or estate acquiring the right to exercise such
Incentive Award by reason of the death or Disability of a Grantee, the Committee
may require reasonable evidence as to the ownership of such Incentive Award or
the authority of such person. The Committee may also require such consents and
releases of taxing authorities as it deems advisable.

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6.6 Change in Stock and Adjustments
     (a) Changes in Law or Circumstances. Subject to Section 6.8 (which only
applies in the event of a Change of Control), in the event of any change in
applicable law or any change in circumstances which results in or would result
in any dilution of the rights granted under the Plan, or which otherwise
warrants an equitable adjustment because it interferes with the intended
operation of the Plan, then, if the Board or Committee should so determine, in
its absolute discretion, that such change equitably requires an adjustment in
the number or kind of shares of stock or other securities or property
theretofore subject, or which may become subject, to issuance or transfer under
the Plan or in the terms and conditions of outstanding Incentive Awards, such
adjustment shall be made in accordance with such determination. Such adjustments
may include changes with respect to (i) the aggregate number of Shares that may
be issued under the Plan, (ii) the number of Shares subject to Incentive Awards,
and (iii) the Option Price or other price per Share for outstanding Incentive
Awards, but shall not result in the grant of any Stock Option with an exercise
price less than 100% of the Fair Market Value per Share on the date of grant.
The Board or Committee shall give notice to each applicable Grantee of such
adjustment which shall be effective and binding.
     (b) Exercise of Corporate Powers. The existence of the Plan or outstanding
Incentive Awards hereunder shall not affect in any way the right or power of the
Company or its shareholders to make or authorize any or all adjustments,
recapitalization, reorganization or other changes in the Company’s capital
structure or its business or any merger or consolidation of the Company, or any
issue of bonds, debentures, preferred or prior preference stocks ahead of or
affecting the Common Stock or the rights thereof, 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 whether of a
similar character or otherwise.
     (c) Recapitalization of the Company. Subject to Section 6.8 (which only
applies in the event of a Change of Control), if while there are Incentive
Awards outstanding, the Company shall effect any subdivision or consolidation of
Shares of Common Stock or other capital readjustment, the payment of a stock
dividend, stock split, combination of Shares, recapitalization or other increase
or reduction in the number of Shares outstanding, without receiving compensation
therefore in money, services or property, then the number of Shares available
under the Plan and the number of Incentive Awards which may thereafter be
exercised shall (i) in the event of an increase in the number of Shares
outstanding, be proportionately increased and the Option Price or grant price
per Share specified in any SAR grant of the Incentive Awards awarded shall be
proportionately reduced; and (ii) in the event of a reduction in the number of
Shares outstanding, be proportionately reduced, and the Option Price or grant
price per Share specified in any SAR grant of the Incentive Awards awarded shall
be proportionately increased. The Board or Committee shall take such action and
whatever other action it deems appropriate, in its discretion, so that the value
of each outstanding Incentive Award to the Grantee shall not be adversely
affected by a corporate event described in this Section 6.6(c).
     (d) Issue of Common Stock by the Company. Except as hereinabove expressly
provided in this Section 6.6 and subject to Section 6.8 in the event of a Change
of Control, the issue by the Company of shares of stock of any class, or
securities convertible into shares of

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stock of any class, for cash or property, or for labor or services, either upon
direct sale or upon the exercise of rights or warrants to subscribe therefor, or
upon any conversion of shares or obligations of the Company convertible into
such shares or other securities, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number of, or Option Price or Fair
Market Value of, any Incentive Awards then outstanding under previously granted
Incentive Awards; provided, however, in such event, outstanding Shares of
Restricted Stock shall be treated the same as outstanding unrestricted Shares of
Common Stock.
     (e) Assumption under the Plan of Outstanding Stock Options. Notwithstanding
any other provision of the Plan, the Board or Committee, in its discretion, may
authorize the assumption and continuation under the Plan of outstanding and
unexercised stock options or other types of stock-based incentive awards that
were granted under a stock option plan (or other type of stock incentive plan or
agreement) that is or was maintained by a corporation or other entity that was
merged into, consolidated with, or whose stock or assets were acquired by, the
Company as the surviving corporation. Any such action shall be upon such terms
and conditions as the Board or Committee, in its discretion, may deem
appropriate, including provisions to preserve the holder’s rights under the
previously granted and unexercised stock option or other stock-based incentive
award; such as, for example, retaining an existing exercise price under an
outstanding stock option. Any such assumption and continuation of any such
previously granted and unexercised incentive award shall be treated as an
outstanding Incentive Award under the Plan and shall thus count against the
number of Shares reserved for issuance pursuant to Section 1.4 in the manner set
forth in Section 1.5. In addition, any Shares issued by the Company through the
assumption or substitution of outstanding grants from an acquired company shall
reduce the Shares available for grants under Section 1.4 in the manner set forth
in Section 1.5.
     (f) Assumption of Incentive Awards by a Successor. Subject to the
accelerated vesting and other provisions of Section 6.8 that apply in the event
of a Change of Control, in the event of a Corporate Event (defined below), each
Grantee shall be entitled to receive, in lieu of the number of Shares subject to
Incentive Awards, such shares of capital stock or other securities or property
as may be issuable or payable with respect to or in exchange for the number of
Shares which Grantee would have received had he exercised the Incentive Award
immediately prior to such Corporate Event, together with any adjustments
(including, without limitation, adjustments to the Option Price and the number
of Shares issuable on exercise of outstanding Stock Options). For this purpose,
Shares of Restricted Stock shall be treated the same as unrestricted outstanding
Shares of Common Stock. A “Corporate Event” means any of the following: (i) a
dissolution or liquidation of the Company, (ii) a sale of all or substantially
all of the Company’s assets, or (iii) a merger, consolidation or combination
involving the Company (other than a merger, consolidation or combination (A) in
which the Company is the continuing or surviving corporation and (B) which does
not result in the outstanding Shares being converted into or exchanged for
different securities, cash or other property, or any combination thereof). The
Board or Committee shall take whatever other action it deems appropriate to
preserve the rights of Grantees holding outstanding Incentive Awards.
     Notwithstanding the previous paragraph of this Section 6.6(f), but subject
to the accelerated vesting and other provisions of Section 6.8 that apply in the
event of a Change of Control, in the event of a Corporate Event (described in
the previous paragraph), the Board or Committee, in its discretion, shall have
the right and power to:

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          (i) cancel, effective immediately prior to the occurrence of the
Corporate Event, each outstanding Incentive Award (whether or not then
exercisable) and, in full consideration of such cancellation, pay to the Grantee
an amount in cash equal to the excess of (A) the value, as determined by the
Board or Committee, of the property (including cash) received by the holders of
Common Stock as a result of such Corporate Event over (B) the exercise price of
such Incentive Award, if any; provided, however, this subsection (i) shall be
inapplicable to an Incentive Award granted within six (6) months before the
occurrence of the Corporate Event if the Grantee is an Insider and such
disposition is not exempt under Rule 16b-3 (or other rules preventing liability
of the Insider under Section 16(b) of the Exchange Act) and, in that event, the
provisions hereof shall be applicable to such Incentive Award after the
expiration of six (6) months from the date of grant; or
          (ii) provide for the exchange or substitution of each Incentive Award
outstanding immediately prior to such Corporate Event (whether or not then
exercisable) for another award with respect to the Common Stock or other
property for which such Incentive Award is exchangeable and, incident thereto,
make an equitable adjustment as determined by the Board or Committee, in its
discretion, in the Option Price or exercise price of the Incentive Award, if
any, or in the number of Shares or amount of property (including cash) subject
to the Incentive Award; or
          (iii) provide for assumption of the Plan and such outstanding
Incentive Awards by the surviving entity or its parent. The Board or Committee,
in its discretion, shall have the authority to take whatever action it deems to
be necessary or appropriate to effectuate the provisions of this Section 6.6(f).
6.7 Termination of Employment, Death, Disability and Retirement
     (a) Termination of Employment. Unless otherwise expressly provided in the
Grantee’s Incentive Agreement or the Plan, if the Grantee’s Employment is
terminated for any reason other than due to his death, Disability, Retirement or
for Cause, any non-vested portion of any Stock Option or other Incentive Award
at the time of such termination shall automatically expire and terminate and no
further vesting shall occur after the termination date. In such event, except as
otherwise expressly provided in his Incentive Agreement, the Grantee shall be
entitled to exercise his rights only with respect to the portion of the
Incentive Award that was vested as of his termination of Employment date for a
period that shall end on the earlier of (i) the expiration date set forth in the
Incentive Agreement or (ii) ninety (90) days after the date of his termination
of Employment.
     (b) Termination of Employment for Cause. Unless otherwise expressly
provided in the Grantee’s Incentive Agreement or the Plan, in the event of the
termination of a Grantee’s Employment for Cause, all vested and non-vested Stock
Options and other Incentive Awards granted to such Grantee shall immediately
expire, and shall not be exercisable to any extent, as of 12:01 a.m. (CST) on
the date of such termination of Employment.
     (c) Retirement. Unless otherwise expressly provided in the Grantee’s
Incentive Agreement or the Plan, upon the termination of Employment due to the
Grantee’s Retirement:

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          (i) any non-vested portion of any outstanding Option or other
Incentive Award shall immediately terminate and no further vesting shall occur;
and
          (ii) any vested Option or other Incentive Award shall expire on the
earlier of (A) the expiration date set forth in the Incentive Agreement for such
Incentive Award; or (B) the expiration of (1) six (6) months after the date of
his termination of Employment due to Retirement in the case of any Incentive
Award other than an Incentive Stock Option or (2) three months after his
termination date in the case of an Incentive Stock Option.
     (d) Disability or Death. Unless otherwise expressly provided in the
Grantee’s Incentive Agreement or the Plan, upon termination of Employment as a
result of the Grantee’s Disability or death:
          (i) any non-vested portion of any outstanding Option or other
Incentive Award shall immediately terminate upon termination of Employment and
no further vesting shall occur; and
          (ii) any vested Incentive Award shall expire on the earlier of either
(A) the expiration date set forth in the Incentive Agreement or (B) the one year
anniversary date of the Grantee’s termination of Employment date.
     In the case of any vested Incentive Stock Option held by an Employee
following termination of Employment, notwithstanding the definition of
“Disability” in Section 1.2, whether the Employee has incurred a “Disability”
for purposes of determining the length of the Option exercise period following
termination of Employment under this Section 6.7(d) shall be determined by
reference to Code Section 22(e)(3) to the extent required by Code
Section 422(c)(6). The Committee shall determine whether a Disability for
purposes of this Section 6.7(d) has occurred.
     (e) Continuation. Subject to the conditions and limitations of the Plan and
applicable law and regulation in the event that a Grantee ceases to be an
Employee, Outside Director or Consultant, as applicable, for whatever reason,
the Committee and Grantee may mutually agree with respect to any outstanding
Option or other Incentive Award then held by the Grantee (i) for an acceleration
or other adjustment in any vesting schedule applicable to the Incentive Award;
(ii) for a continuation of the exercise period following termination for a
longer period than is otherwise provided under such Incentive Award; or (iii) to
any other change in the terms and conditions of the Incentive Award. In the
event of any such change to an outstanding Incentive Award, a written amendment
to the Grantee’s Incentive Agreement shall be required. No amendment to a
Grantee’s Incentive Award shall be made to the extent compensation payable
pursuant thereto as a result of such amendment would be considered deferred
compensation subject to taxation under Code Section 409A, unless otherwise
determined by the Committee.
6.8 Change of Control
     Notwithstanding any contrary provision in the Plan, in the event of a
Change of Control (as defined below), the following actions shall automatically
occur as of the day immediately

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preceding the Change of Control date unless expressly provided otherwise in the
individual Grantee’s Incentive Agreement:
     (a) all of the Stock Options and Stock Appreciation Rights then outstanding
shall become 100% vested and immediately and fully exercisable;
     (b) all of the restrictions and conditions of any Restricted Stock Awards,
Restricted Stock Units and any Other Stock-Based Awards then outstanding shall
be deemed satisfied, and the Restriction Period with respect thereto shall be
deemed to have expired, and thus each such Incentive Award shall become free of
all restrictions and fully vested; and
     (c) all of the Performance-Based Awards shall become fully vested, deemed
earned in full, and promptly paid within thirty (30) days to the affected
Grantees without regard to payment schedules and notwithstanding that the
applicable performance cycle, retention cycle or other restrictions and
conditions have not been completed or satisfied.
     For all purposes of this Plan, a “Change of Control” of the Company means
the occurrence of any one or more of the following events:
     (a) The acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”)) of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of fifty percent (50%) or more of either (i) the then outstanding shares of
common stock of the Company (the “Outstanding Company Stock”) or (ii) the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that the following acquisitions
shall not constitute a Change of Control: (i) any acquisition directly from the
Company or any Subsidiary, (ii) any acquisition by the Company or any Subsidiary
or by any employee benefit plan (or related trust) sponsored or maintained by
the Company or any Subsidiary, or (iii) any acquisition by any corporation
pursuant to a reorganization, merger, consolidation or similar business
combination involving the Company (a “Merger”), if, following such Merger, the
conditions described in Section 6.8(c) (below) are satisfied;
     (b) Individuals who, as of June 4, 2009, constitute the Board of Directors
of the Company (the “Incumbent Board”) cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual becoming a
director subsequent to June 4, 2009 whose election, or nomination for election
by the Company’s shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be considered as though
such individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board;
     (c) Consummation of a Merger, unless immediately following such Merger,
(i) substantially all of the holders of the Outstanding Company Voting
Securities immediately prior to Merger beneficially own, directly or indirectly,
more than 50% of the common stock of the

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corporation resulting from such Merger (or its parent corporation) in
substantially the same proportions as their ownership of Outstanding Company
Voting Securities immediately prior to such Merger and (ii) at least a majority
of the members of the board of directors of the corporation resulting from such
Merger (or its parent corporation) were members of the Incumbent Board at the
time of the execution of the initial agreement providing for such Merger;
     (d) The sale or other disposition of all or substantially all of the assets
of the Company, unless immediately following such sale or other disposition,
(i) substantially all of the holders of the Outstanding Company Voting
Securities immediately prior to the consummation of such sale or other
disposition beneficially own, directly or indirectly, more than 50% of the
common stock of the corporation acquiring such assets in substantially the same
proportions as their ownership of Outstanding Company Voting Securities
immediately prior to the consummation of such sale or disposition, and (ii) at
least a majority of the members of the board of directors of such corporation
(or its parent corporation) were members of the Incumbent Board at the time of
execution of the initial agreement or action of the Board providing for such
sale or other disposition of assets of the Company; or
     (e) The consummation of the liquidation or dissolution of the Company.
     Notwithstanding the occurrence of any of the foregoing events set out in
this Section 6.8 which would otherwise result in a Change of Control, the Board
may determine in its discretion, if it deems it to be in the best interest of
the Company, that an event or events otherwise constituting or reasonably
leading to a Change of Control shall not be deemed a Change of Control
hereunder. Such determination shall be effective only if it is made by the Board
(i) prior to the occurrence of an event that otherwise would be, or reasonably
lead to, a Change of Control, or (ii) after such event only if made by the Board
a majority of which is composed of directors who were members of the Board
immediately prior to the event that otherwise would be, or reasonably lead to, a
Change of Control.
     Notwithstanding the foregoing provisions of this Section 6.8, to the extent
that any payment or acceleration hereunder is subject to Code Section 409A with
respect to an Incentive Award that provides for the deferral of compensation
within the meaning of Code Section 409A, then the term Change of Control shall
have the meaning set forth in Code Section 409A(2)(A)(v) and authoritative
guidance issued thereunder which are incorporated herein by reference, but only
to the extent inconsistent with the foregoing provisions of the Change of
Control definition as determined by the Committee.
6.9 Exchange of Incentive Awards
     The Committee may, in its discretion, permit any Grantee to surrender
outstanding Incentive Awards in order to exercise or realize his rights under
other Incentive Awards or in exchange for the grant of new Incentive Awards, or
require holders of Incentive Awards to surrender outstanding Incentive Awards
(or comparable rights under other plans or arrangements) as a condition
precedent to the grant of new Incentive Awards; provided, however, the Committee
may not provide for the repricing or exchange of underwater Stock Options or
SARs for cash consideration or other Incentive Awards unless such repricing or
exchange receives the approval of a majority of the holders of the Shares. No
exchange of

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Incentive Awards shall be made under this Section 6.9 if such surrender causes
any Incentive Award to provide for the deferral of compensation in a manner that
is subject to taxation under Code Section 409A (unless otherwise determined by
the Committee).
6.10 Financing
     Subject to the requirements of the Sarbanes-Oxley Act of 2002, the Company
may extend and maintain, or arrange for and guarantee, the extension and
maintenance of financing to any Grantee to purchase Shares pursuant to exercise
of an Incentive Award upon such terms as are approved by the Committee in its
discretion.
SECTION 7
GENERAL
7.1 Effective Date and Grant Period
     This Plan, as amended and restated effective June 4, 2009 except as
otherwise provided herein, has been adopted by the Company, subject to the
approval of the shareholders of the Company on or within one year from June 4,
2009, the effective date of the increase in Shares available for Incentive
Awards under Section 1.4. Incentive Awards may be granted under the Plan at any
time prior to receipt of such shareholder approval; provided, however, if the
requisite shareholder approval is not obtained then any Incentive Awards granted
hereunder shall automatically become null and void and of no force or effect.
Notwithstanding the foregoing, any Incentive Award that is intended to satisfy
the Performance-Based Exception shall not be granted until the terms of the Plan
are disclosed to, and approved by, shareholders of the Company in accordance
with the requirements of the Performance-Based Exception.
7.2 Funding and Liability of Company
     No provision of the Plan shall require the Company, for the purpose of
satisfying any obligations under the Plan, to purchase assets or place any
assets in a trust or other entity to which contributions are made, or otherwise
to segregate any assets. In addition, the Company shall not be required to
maintain separate bank accounts, books, records or other evidence of the
existence of a segregated or separately maintained or administered fund for
purposes of the Plan. Although bookkeeping accounts may be established with
respect to Grantees who are entitled to cash, Common Stock or rights thereto
under the Plan, 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. The Plan
shall not 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. Any liability or obligation of the Company to any Grantee
with respect to an Incentive Award shall be based solely upon any contractual
obligations that may be created by this Plan and any Incentive 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,
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 the Plan.

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7.3 Withholding Taxes
     (a) Tax Withholding. The Company shall have the power and the right to
deduct or withhold, or require a Grantee to remit to the Company, an amount
sufficient to satisfy federal, state, and local taxes, domestic or foreign,
required by law or regulation to be withheld with respect to any taxable event
arising as a result of the Plan or an Incentive Award hereunder. Upon the lapse
of restrictions on Restricted Stock, the Committee, in its discretion, may elect
to satisfy the tax withholding requirement, in whole or in part, by having the
Company withhold Shares having a Fair Market Value on the date the tax is to be
determined equal to the minimum withholding taxes which could be imposed on the
transaction as determined by the Committee.
     (b) Share Withholding. With respect to tax withholding required upon the
exercise of Stock Options or SARs, upon the lapse of restrictions on Restricted
Stock, or upon any other taxable event arising as a result of any Incentive
Awards, Grantees may elect, subject to the approval of the Committee in its
discretion, to satisfy the withholding requirement, in whole or in part, by
having the Company withhold Shares having a Fair Market Value on the date the
tax is to be determined equal to the minimum withholding taxes which could be
imposed on the transaction as determined by the Committee. All such elections
shall be made in writing, signed by the Grantee, and shall be subject to any
restrictions or limitations that the Committee, in its discretion, deems
appropriate.
     (c) Incentive Stock Options. With respect to Shares received by a Grantee
pursuant to the exercise of an Incentive Stock Option, if such Grantee disposes
of any such Shares within (i) two years from the date of grant of such Option or
(ii) one year after the transfer of such shares to the Grantee, the Company
shall have the right to withhold from any salary, wages or other compensation
payable by the Company to the Grantee an amount sufficient to satisfy the
minimum withholding taxes which could be imposed with respect to such
disqualifying disposition.
     (d) Loans. To the extent permitted by the Sarbanes-Oxley Act of 2002 or
other applicable law, the Committee may provide for loans, on either a short
term or demand basis, from the Company to a Grantee who is an Employee or
Consultant to permit the payment of taxes required by law.
7.4 No Guarantee of Tax Consequences
     Neither the Company nor the Committee makes any commitment or guarantee
that any federal, state or local tax treatment will apply or be available to any
person participating or eligible to participate hereunder.
7.5 Designation of Beneficiary by Participant
     Each Grantee may, from time to time, name any beneficiary or beneficiaries
(who may be named contingently or successively) to whom any benefit under the
Plan is to be paid in case of his death before he receives any or all of such
benefit. Each such designation shall revoke all prior designations by the same
Grantee, shall be in a form prescribed by the Committee, and will be effective
only when filed by the Grantee in writing with the Company’s Human Resources
Department, with a copy to the Committee, during the Grantee’s lifetime, and
received and

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accepted by the Human Resources Department. In the absence of any such
designation, benefits remaining unpaid at the Grantee’s death shall be paid to
the Grantee’s estate.
7.6 Deferrals
     The Committee shall not permit a Grantee to defer such Grantee’s receipt of
the payment of cash or the delivery of Shares under the terms of his Incentive
Agreement that would otherwise be due and payable by virtue of the lapse or
waiver of restrictions with respect to Restricted Stock or another form of
Incentive Award, or the satisfaction of any requirements or goals with respect
to any Incentive Awards.
7.7 Amendment and Termination
     The Board shall have the power and authority to terminate or amend the Plan
at any time; provided, however, the Board shall not, without the approval of the
shareholders of the Company within the time period required by applicable law:
     (a) except as provided in Section 6.6, increase the maximum number of
Shares which may be issued under the Plan pursuant to Section 1.4;
     (b) amend the requirements as to the class of Employees eligible to
purchase Common Stock under the Plan;
     (c) extend the term of the Plan; or,
     (d) if the Company is a Publicly Held Corporation (i) increase the maximum
limits on Incentive Awards to Covered Employees as set for compliance with the
Performance-Based Exception or (ii) decrease the authority granted to the
Committee under the Plan in contravention of Rule 16b-3 under the Exchange Act.
     No termination, amendment, or modification of the Plan shall adversely
affect in any material way any outstanding Incentive Award previously granted to
a Grantee under the Plan, without the written consent of such Grantee or other
designated holder of such Incentive Award. Nothing in the preceding sentence
shall limit the ability of the Board or Committee to exercise its discretion as
provided in Section 6.6(f).
     In addition, to the extent that the Committee determines that (a) the
listing for qualification requirements of any national securities exchange or
quotation system on which the Company’s Common Stock is then listed or quoted,
if applicable, or (b) the Code (or regulations promulgated thereunder), require
shareholder approval in order to maintain compliance with such listing
requirements or to maintain any favorable tax advantages or qualifications, then
the Plan shall not be amended in such respect without approval of the Company’s
shareholders.
7.8 Requirements of Law
     (a) Governmental Entities and Securities Exchanges. The granting of
Incentive Awards and the issuance of Shares under the Plan shall be subject to
all applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities

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exchanges as may be required. 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 and regulations 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, if applicable.
The Committee may cause a legend or legends to be placed upon such certificates
(if any) to make appropriate reference to such restrictions.
     (b) Securities Act Rule 701. If no class of the Company’s securities is
registered under Section 12 of the Exchange Act, then unless otherwise
determined by the Committee, grants of Incentive Awards to “Rule 701 Grantees”
(as defined below) and issuances of the underlying shares of Common Stock, if
any, on the exercise or conversion of such Incentive Awards are intended to
comply with all applicable conditions of Securities Act Rule 701 (“Rule 701”),
including, without limitation, the restrictions as to the amount of securities
that may be offered and sold in reliance on Rule 701, so as to qualify for an
exemption from the registration requirements of the Securities Act. Any
ambiguities or inconsistencies in the construction of an Incentive Award or the
Plan shall be interpreted to give effect to such intention. In accordance with
Rule 701, each Grantee shall receive a copy of the Plan on or before the date an
Incentive Award is granted to him, as well as the additional disclosure required
by Rule 701 (e) if the aggregate sales price or amount of securities sold during
any consecutive 12-month period exceeds $5,000,000 as determined under
Rule 701(e). If Rule 701 (or any successor provision) is amended to eliminate or
otherwise modify any of the requirements specified in Rule 701, then the
provisions of this Section 7.8(b) shall be interpreted and construed in
accordance with Rule 701 as so amended. For purposes of this Section 7.8(b), as
determined in accordance with Rule 701, “Rule 701 Grantees” shall mean any
Grantee other than a director of the Company, the Company’s chairman, CEO,
president, chief financial officer, controller and any vice president of the
Company, and any other key employee of the Company who generally has access to
financial and other business related information and possesses sufficient
sophistication to understand and evaluate such information.
7.9 Rule 16b-3 Securities Law Compliance for Insiders
     If the Company is a Publicly Held Corporation, transactions under the Plan
with respect to Insiders are intended to comply with all applicable conditions
of Rule 16b-3 under the Exchange Act. Any ambiguities or inconsistencies in the
construction of an Incentive Award or the Plan shall be interpreted to give
effect to such intention, and to the extent any provision of the Plan or action
by the Committee fails to so comply, it shall be deemed null and void to the
extent permitted by law and deemed advisable by the Committee in its discretion.
7.10 Compliance with Code Section 162(m) for Publicly Held Corporation
     If the Company is a Publicly Held Corporation, unless otherwise determined
by the Committee with respect to any particular Incentive Award, it is intended
that the Plan shall comply fully with the applicable requirements so that any
Incentive Awards subject to Section 162(m) that are granted to Covered Employees
shall qualify for the Performance-Based Exception. If any provision of the Plan
or an Incentive Agreement would disqualify the Plan or

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would not otherwise permit the Plan or Incentive Award to comply with the
Performance-Based Exception as so intended, such provision shall be construed or
deemed to be amended to conform to the requirements of the Performance-Based
Exception to the extent permitted by applicable law and deemed advisable by the
Committee; provided, however, no such construction or amendment shall have an
adverse effect on the prior grant of an Incentive Award or the economic value to
a Grantee of any outstanding Incentive Award.
7.11 Notices
     (a) Notice From Insiders to Secretary of Change in Beneficial Ownership.
Within two business days after the date of a change in beneficial ownership of
the Common Stock issued or delivered pursuant to this Plan, an Insider should
report to the Secretary of the Company any such change to the beneficial
ownership of Common Stock that is required to be reported with respect to such
Insider under Rule 16(a)-3 promulgated pursuant to the Exchange Act. Whenever
reasonably feasible, Insiders will provide the Committee with advance
notification of such change in beneficial ownership.
     (b) Notice to Insiders and Securities and Exchange Commission. The Company
shall provide notice to any Insider, as well as to the Securities and Exchange
Commission, of any “blackout period,” as defined in Section 306(a)(4) of the
Sarbanes-Oxley Act of 2002, in any case in which Insider is subject to the
requirements of Section 304 of said Act in connection with such “blackout
period.”
7.12 Pre-Clearance Agreement with Brokers
     Notwithstanding anything in the Plan to the contrary, no shares of Common
Stock issued pursuant to this Plan will be delivered to a broker or dealer that
receives such shares for the account of an Insider unless and until the broker
or dealer enters into a written agreement with the Company whereby such broker
or dealer agrees to report immediately to the Secretary of the Company (or other
designated person) a change in the beneficial ownership of such shares.
7.13 Successors to Company
     Except as otherwise provided in Section 6.6(f), all obligations of the
Company under the Plan with respect to Incentive Awards granted hereunder shall
be binding on any successor to the Company, whether the existence of such
successor is the result of a direct or indirect purchase, merger, consolidation,
or otherwise, of all or substantially all of the business and/or assets of the
Company.
7.14 Miscellaneous Provisions
     (a) No Employee, Consultant, Outside Director, or other person shall have
any claim or right to be granted an Incentive Award under the Plan. Neither the
Plan, nor any action taken hereunder, shall be construed as giving any Employee,
Consultant, or Outside Director any right to be retained in the Employment or
other service of the Company or any Parent or Subsidiary.
     (b) The expenses of the Plan shall be borne by the Company.

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     (c) By accepting any Incentive Award, each Grantee and each person claiming
by or through him shall be deemed to have indicated his acceptance of the Plan.
7.15 Severability
     In the event that any provision of this Plan shall be held illegal, invalid
or unenforceable for any reason, such provision shall be fully severable, but
shall not affect the remaining provisions of the Plan, and the Plan shall be
construed and enforced as if the illegal, invalid, or unenforceable provision
was not included herein.
7.16 Gender, Tense and Headings
     Whenever the context so requires, words of the masculine gender used herein
shall include the feminine and neuter, and words used in the singular shall
include the plural. Section headings as used herein are inserted solely for
convenience and reference and constitute no part of the interpretation or
construction of the Plan.
7.17 Governing Law
     The Plan shall be interpreted, construed and constructed in accordance with
the laws of the State of Delaware without regard to its conflicts of law
provisions, except as may be superseded by applicable laws of the United States.

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     IN WITNESS WHEREOF, the Company has caused this Plan to be duly executed in
its name and on its behalf by its duly authorized officer, effective as of
June 4, 2009.

            T-3 ENERGY SERVICES, INC.
      By:   /s/ James M. Mitchell         Name:   James M. Mitchell       
Title:   Senior Vice President     

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