Exhibit 10.1
ADMINISTAFF, INC.
2001 INCENTIVE PLAN
(Amended and Restated as of February 24, 2006)
     1. Objectives. This Administaff, Inc. 2001 Incentive Plan (the “Plan”) is
intended as an incentive to retain and attract persons of training, experience
and ability to serve as employees of Administaff, Inc., a Delaware corporation
(the “Company”), and its Subsidiaries and as nonemployee directors of the
Company, to encourage the sense of proprietorship of such persons and to
stimulate the active interest of such persons in the development and financial
success of the Company and its Subsidiaries.
     2. Definitions. As used herein, the terms set forth below shall have the
following respective meanings:
          “Annual Director Award Date” means, for each calendar year beginning
on or after January 1, 2006, in which this Plan is in effect, the date on which
the annual meeting of the stockholders of the Company is held in that year.
          “Award” means an Employee Award or a Director Award.
          “Award Agreement” means an agreement between the Company and a
Participant in such form as is deemed acceptable by the Committee that sets
forth the terms, conditions and limitations applicable to an Award.
          “Board” means the Board of Directors of the Company.
          “Cash Award” means an Award payable in cash.
          “Cause” means:
     (a) the Director whose removal is proposed has been convicted, or when a
Director is granted immunity to testify when another has been convicted, of a
felony by a court of competent jurisdiction and such conviction is no longer
subject to direct appeal;
     (b) such Director has been found by the affirmative vote of a majority of
the entire Board at any regular or special meeting of the Board called for that
purpose or by a court of competent jurisdiction to have been guilty of wilful
misconduct in the performance of his duties to the Company in a matter of
substantial importance to the Company; or

 

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     (c) such Director has been adjudicated by a court of competent jurisdiction
to be mentally incompetent, which mental incompetency directly affects his
ability as a Director of the Company.
          “Change in Control” means:
     (a) the date of the acquisition by any “person” (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act), excluding the Company or any
of its Subsidiaries, of beneficial ownership (within the meaning of Rule 13d-3
under the Exchange Act) of 30% or more of either the then outstanding shares of
common stock of the Company or the then outstanding voting securities entitled
to vote generally in the election of directors; or
     (b) the date the individuals who constitute the Board as of May 3, 2006
(the “Incumbent Board”), cease for any reason to constitute at least a majority
of the members of the Board, provided that any person becoming a director
subsequent to May 3, 2006, whose election, or nomination for election by the
Company’s stockholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (other than any individual whose
nomination for election to Board membership was not endorsed by the Company’s
management prior to, or at the time of, such individual’s initial nomination for
election) shall be, for purposes of this Plan, considered as though such person
were a member of the Incumbent Board; or
     (c) the date of consummation of a merger, consolidation, recapitalization,
reorganization, sale or disposition of all or a substantial portion of the
Company’s assets or the issuance of shares of stock of the Company in connection
with the acquisition of the stock or assets of another entity, provided,
however, that a Change in Control shall not occur under this clause (c) if
consummation of the transaction would result in at least 65% of the total voting
power represented by the voting securities of the Company (or, if not the
Company, the entity that succeeds to all or substantially all of the Company’s
business) outstanding immediately after such transaction being beneficially
owned (within the meaning of Rule 13d-3 promulgated pursuant to the Exchange
Act) by at least 65% of the holders of outstanding voting securities of the
Company immediately prior to the transaction, with the voting power of each such
continuing holder relative to other such continuing holders not substantially
altered in the transaction; or
     (d) the date the Company files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act disclosing in
response to Form 8-K or Schedule 14A (or any successor schedule, form or report
of item therein) that a change in control of the Company has or may have
occurred, or will or may occur in the future, pursuant to any then existing
contract or transaction.
          “Code” means the United States Internal Revenue Code of 1986, as
amended from time to time.

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          “Committee” means the Compensation Committee of the Board or any other
committee as may be designated by the Board.
          “Common Stock” means the common stock, par value $0.01 per share, of
the Company or any security into which such Common Stock may be changed by
reason of any transaction or event of the type described in Section 14.
          “Company” means Administaff, Inc., a Delaware corporation.
          “Director” means a member of the Board, excluding any individual who
is also an employee of the Company or any Subsidiary.
          “Director Award” means a Director Option or a Director Stock Award.
          “Director Option” means a nonqualified stock option granted to a
Director pursuant to Section 8.
          “Director Stock Award” means an award of Common Stock granted to a
Director pursuant to Section 8.
          “Disability” means the inability to perform the duties of the
Director’s position for a period of six (6) consecutive months or for an
aggregate of six (6) months during any twelve (12) month period after the Grant
Date by reason of any medically determinable physical or mental impairment, as
determined by the Committee in the Committee’s sole discretion.
          “Employee” means an individual employed by the Company or any
Subsidiary. For purposes of this Plan, an Employee also includes any individual
who has been offered employment by the Company or any Subsidiary, provided that
(a) any Award granted to such prospective employee shall be canceled if such
individual fails to commence such employment, (b) no payment of value may be
made in connection with such Award until such individual has commenced such
employment and (c) such individual may not be granted an ISO prior to the date
the individual actually commences employment.
          “Employee Award” means any Option, Performance Award, Phantom Stock
Award, Cash Award, Stock Award, Stock Appreciation Right or Other Stock-Based
Award, whether granted singly, in combination or in tandem, to a Participant who
is an Employee pursuant to any applicable terms, conditions and limitations as
the Committee may establish in order to fulfill the objectives of the Plan.
          “Exercise Price” means the price at which the Option Shares may be
purchased under the terms of the Award Agreement.
          “Exchange Act” means the Securities Exchange Act of 1934, as amended
from time to time.

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          “Fair Market Value” of a share of Common Stock means, as of a
particular date, (a) if shares of Common Stock are listed on a national
securities exchange, the closing sales price per share of Common Stock on the
consolidated transaction reporting system for the principal national securities
exchange on which shares of Common Stock are listed on that date or, if there
shall have been no such sale so reported on that date, on the last preceding
date on which such a sale was so reported or, at the discretion of the
Committee, the price prevailing on the exchange at the time of exercise; (b) if
shares of Common Stock are not so listed but are quoted on the Nasdaq Stock
Market, Inc., the closing sales price per share of Common Stock reported by the
Nasdaq Stock Market, Inc. on that date or, if there shall have been no such sale
so reported on that date, on the last preceding date on which such a sale was so
reported or, at the discretion of the Committee, the price prevailing on the
Nasdaq Stock Market, Inc. at the time of exercise; (c) if the Common Stock is
not so listed or quoted, the closing price on that date or, if there are no
quotations available for such date, on the last preceding date on which such
quotations shall be available, as reported by the Nasdaq Stock Market, Inc. or,
if not reported by the Nasdaq Stock Market, Inc., by the National Quotation
Bureau Incorporated; or (d) if none of the above is applicable, then such amount
as may be determined by the Committee or the Board in such a manner as it deems
in good faith to be the fair market value per share of Common Stock.
          “Grant Date” means (a) with respect to an Award other than a Director
Award, the date specified by the Committee in the Award Agreement on which such
Award will become effective and (b) with respect to a Director Award, the
automatic date of grant for such Award as provided in Section 8.
          “ISO” means an incentive stock option within the meaning of Code
Section 422.
          “Option” means a right to purchase a particular number of shares of
Common Stock at a particular Exercise Price, subject to certain terms and
conditions as provided in this Plan and Award Agreement. An Option may be in the
form of an ISO or a nonqualified stock option within the meaning of Code
Section 83.
          “Option Shares” means the shares of Common Stock covered by a
particular Option.
          “Other Stock-Based Award” means any stock-based Award that shall
consist of a right that is not an Option, Performance Award, Phantom Stock
Award, Stock Award or SAR and is (i) denominated or payable in; (ii) valued in
whole or in part by reference to; or (iii) otherwise based on or related to
shares of Common Stock as is deemed by the Committee to be consistent with the
terms of the Plan.
          “Participant” means an Employee or a Director to whom an Award has
been granted under this Plan.
          “Performance Award” means an Employee Award, such as a Performance
Unit, that is subject to the achievement of one or more Performance Objectives
established by the Committee.

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          “Performance Objectives” means the objectives, if any, established by
the Committee that are to be achieved with respect to an Award granted under
this Plan, which may be described in terms of Company-wide objectives, in terms
of objectives that are related to performance of a division, Subsidiary,
department, geographic market or function within the Company or a Subsidiary in
which the Participant receiving the Award is employed, or in individual or other
terms, and which shall relate to the period of time determined by the Committee.
The Performance Objectives intended to qualify under Code Section 162(m) shall
be with respect to one or more of the following: (a) net earnings; (b) operating
income; (c) earnings before interest and taxes; (d) earnings before interest,
taxes, depreciation and amortization expenses; (e) earnings before taxes and
unusual or nonrecurring items; (f) total revenue; (g) return on investment;
(h) return on equity; (i) return on total capital; (j) return on assets;
(k) total stockholder return; (l) return on capital employed in the business;
(m) stock price performance; (n) earnings per share growth; (o) cash flows;
(p) total profit; (q) operating expenses; (r) fee revenue; (s) total revenue
less bonus payroll; (t) the number of paid worksite employees; and (u) gross
mark-up per worksite employee.
          The Committee shall determine, in its sole discretion, at the time of
grant of an Award, which Performance Objectives to use with respect to an Award,
the weighting of such objectives if more than one is used and whether such
objective(s) is (are) to be measured against a Company-established budget or
target, an index or a peer group of companies. A Performance Objective need not
be based on an increase or a positive result and may include, for example,
maintaining the status quo or limiting economic losses.
          “Performance Unit” means a unit equivalent to $100 or such other value
as determined by the Committee.
          “Phantom Stock Award” means the right to receive the value of a
specified number of shares of Common Stock.
          “Plan” means the Administaff, Inc. 2001 Incentive Plan, as amended and
restated, and as amended from time to time.
          “Restricted Stock” means shares of Common Stock that are restricted or
subject to forfeiture provisions.
          “Stock Appreciation Rights” or “SARs” means the right to receive an
amount of Common Stock equal to the appreciation in value of a specified number
of shares of Common Stock over a particular period of time.
          “Stock Award” means an Employee Award denominated in or payable in
shares of Common Stock, which may be Restricted Stock.
          “Subsidiary” means (a) with respect to any Awards other than ISOs,
(i) in the case of a corporation, any corporation of which the Company directly
or indirectly owns shares representing 50% or more of the combined voting power
of the shares of all classes or series of capital stock of such corporation that
have the right to vote generally on matters submitted to a

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vote of the stockholders of such corporation and (ii) in the case of a
partnership or other business entity not organized as a corporation, any such
business entity of which the Company directly or indirectly owns 50% or more of
the voting, capital or profits interests (whether in the form of partnership
interests, membership interests or otherwise) and (b) with respect to Awards of
ISOs, any subsidiary within the meaning of Code Section 424(f).
     3. Plan Administration and Designation of Participants. All Employees of
the Company and its Subsidiaries and all Directors of the Company are eligible
for Awards under this Plan. The Committee shall select the Participants from
time to time by the grant of Employee Awards under this Plan and, subject to the
terms and conditions of this Plan, shall determine all terms and conditions of
the Employee Awards. Except as otherwise set forth herein, the Committee shall
have no discretion with respect to the issuance of a Director Award.
          This Plan shall be administered by the Committee, which shall have
full and exclusive power to interpret this Plan and to adopt such rules,
regulations and guidelines for carrying out this Plan as it may deem necessary
or appropriate.
          The Committee may, in its discretion, provide for the extension of the
exercisability of an Award, accelerate the vesting or exercisability, in whole
or in part, of an Award, eliminate or make less restrictive any restrictions
contained in an Award, waive any restriction or other provision of this Plan or
an Award or otherwise amend or modify an Award in any manner that is either
(a) not adverse to the Participant to whom such Award was granted or
(b) consented to by such Participant. Notwithstanding anything herein to the
contrary, without the prior approval of the Company’s stockholders, Awards
issued under the Plan will not be repriced, replaced or regranted through
cancellation or by decreasing the Exercise Price of a previously granted Award
except as provided by the adjustment provisions of Section 14.
          No member of the Committee shall be liable for anything done or
omitted to be done by him or her, by any member of the Committee or by any
officer of the Company in connection with the performance of any duties under
this Plan, except for his or her own willful misconduct or as expressly provided
by statute.
     4. Delegation of Authority. The Board or Committee may delegate to the
Chairman of the Board the duties of the Committee under this Plan pursuant to
such conditions or limitations as each may establish, except that neither may
delegate to any person the authority to grant Awards to, or take other action
with respect to, Participants who are subject to Section 16 of the Exchange Act.
     5. Award Agreement. Each Award granted hereunder shall be described in an
Award Agreement, which shall be subject to the terms and conditions of this Plan
and shall be accepted in such manner as is deemed acceptable by the Committee by
the Participant and by the appropriate officer for and on behalf of the Company.
     6. Shares of Common Stock Reserved for this Plan. Subject to adjustment as
provided in Section 14 hereof, a total of 2,900,000 shares of Common Stock,
shall be reserved for issuance upon the exercise or payment of Awards granted
pursuant to this Plan. Such shares

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may be shares of original issuance or treasury shares or a combination of the
foregoing. The Committee and the appropriate officers of the Company shall from
time to time take whatever actions are necessary to execute, acknowledge, file
and deliver any documents required to be filed with or delivered to any
governmental authority or any stock exchange or transaction reporting system on
which shares of Common Stock are listed or quoted in order to make shares of
Common Stock available for issuance pursuant to this Plan. Awards that are
forfeited or terminated or expire unexercised in such a manner that all or some
of the shares of Common Stock subject thereto are not issued to a Participant or
are exchanged for Awards that do not involve Common Stock, shall again
immediately become available for the granting of Awards under this Plan. If the
tax withholding obligation resulting from the settlement of any such option or
other Award is satisfied by withholding shares of Common Stock, only the number
of shares of Common Stock issued net of the shares of Common Stock withheld
shall be deemed delivered for purposes of determining usage of shares against
the maximum number of shares of Common Stock available for delivery under the
Plan or any sublimit set forth above. The Committee may from time to time adopt
and observe such rules and procedures concerning the counting of shares against
the Plan maximum or any sublimit as it may deem appropriate, including rules
more restrictive than those set forth above to the extent necessary to satisfy
the requirements of any national stock exchange on which the Common Stock is
listed or any applicable regulatory requirement.
     7. Employee Awards.
     (a) Options. An Employee Award may be in the form of an Option. The
Exercise Price of an Option granted under this Plan shall not be less than 100%
of the Fair Market Value of the Common Stock at the time of the grant.
     (i) Incentive Stock Options. Options granted to Employees hereunder may be
ISOs. An ISO shall consist of a right to purchase a specified number of shares
of Common Stock at a price specified by the Committee in the Award Agreement or
otherwise, which shall not be less than the Fair Market Value of the Common
Stock on the Grant Date. Any ISO granted shall expire not later than ten
(10) years after the Grant Date, with the expiration date to be specified by the
Committee in the Award Agreement. Any ISO granted must, in addition to being
subject to applicable terms, conditions and limitations established by the
Committee, comply with Code Section 422. All other terms, conditions and
limitations applicable to ISOs shall be determined by the Committee.
     (ii) Nonqualified Stock Options. Options granted to Employees may be
nonqualified stock options within the meaning of Code Section 83. A nonqualified
stock option shall consist of a right to purchase a specified number of shares
of Common Stock at a price specified by the Committee in the Award Agreement or
otherwise, which shall not be less than the Fair Market Value of the Common
Stock on the Grant Date. The expiration date of the nonqualified stock option
shall be specified by the Committee in the Award Agreement. All other

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terms, conditions and limitations applicable to nonqualified stock options shall
be determined by the Committee.
     (b) Performance Award. An Employee Award may be in the form of a
Performance Award, such as a Performance Unit. A Performance Award shall be
subject to the achievement of one or more Performance Objectives. All other
terms, conditions and limitations applicable to Performance Awards shall be
determined by the Committee.
     (c) Stock Award (including Restricted Stock). An Employee Award may consist
of Common Stock or may be denominated in units of Common Stock. All terms,
conditions and limitations applicable to any Stock Award pursuant to this Plan
shall be determined by the Committee.
     (d) Phantom Stock Award. An Employee Award may be in the form of Phantom
Stock or other bookkeeping account tied to the value of shares of Common Stock.
All terms, conditions and limitations applicable to any Phantom Stock Award
shall be determined by the Committee.
     (e) Stock Appreciation Right. An Employee Award may be in the form of SARs.
All terms, conditions and limitations applicable to any Employee Awards of SARs
shall be determined by the Committee.
     (f) Cash Award. An Employee Award may be in the form of a Cash Award. All
terms, conditions and limitations applicable to any Cash Award shall be
determined by the Committee.
     (g) Other Stock-Based Awards. An Employee Award may be in the form of any
Other Stock-Based Award. All terms, conditions and limitations applicable to any
Other Stock-Based Award shall be determined by the Committee.
     (h) The following limitations shall apply to any Award made hereunder:
     (i) Notwithstanding anything herein to the contrary, no Participant may be
granted, during any one calendar year period, Options or SARs covering more than
200,000 shares of Common Stock.
     (ii) Notwithstanding anything herein to the contrary, no Participant may
receive, during any one calendar year period, an aggregate payment under Cash
Awards or Performance Awards payable in cash in excess of $2,000,000.
     (iii) Notwithstanding anything herein to the contrary, no Participant may
be issued, during any one calendar year period, more than 200,000 shares of
Common Stock pursuant to Stock Awards (excluding Restricted Stock), Phantom
Stock Awards or Other Stock-Based Awards.

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     (iv) Notwithstanding anything herein to the contrary, no Participant may be
issued, during any one calendar year period, Restricted Stock covering more than
200,000 shares of Common Stock.
     8. Directors Awards. Directors of the Company shall be granted Director
Awards in accordance with this Section 8 and subject to applicable terms and
limitations set forth in this Plan and the applicable Award Agreements.
Notwithstanding anything herein to the contrary, if the number of shares of
Common Stock available for Awards under this Plan is insufficient to make all
automatic grants of Director Awards provided for in this Section 8 on the
applicable Grant Date, then all Directors who are entitled to a Director Award
on such date shall share ratably in the number of shares then available for
Awards under this Plan, all Directors shall have no right to receive a Director
Award with respect to the deficiencies in the number of available shares, and
all future Director Awards under this Section 8 shall terminate.
     (a) Initial Director Award. Each Director who is elected or appointed to
the Board for the first time after February 24, 2006, shall be automatically
granted, on the date of his or her election or appointment to the Board, a
Director Stock Award of a number of shares of Restricted Stock with an aggregate
Fair Market Value, determined as of the date prior to the Grant Date, of
$75,000, rounded up to the next higher whole share amount in the case of a
fractional share amount, which shall become vested as to one-third (1/3) of the
shares on each anniversary of the Grant Date unless such Director gives advance
written notice to the Committee that he or she does not wish to receive such
Director Stock Award. Notwithstanding the foregoing, if the Director terminates
his service as a member of the Board, his or her unvested portion of such
Director Stock Award, if any, shall terminate immediately on such termination
date, unless such termination of service is due to death or Disability, in which
event the unvested portion of such Director Stock Award shall become immediately
100% vested on such termination date.
     (b) Annual Director Award. On the Annual Director Award Date, each Director
who is in office immediately after the annual meeting on such date and who was
not elected or appointed to the Board for the first time on such date shall be
granted a Director Stock Award of a number of shares of Common Stock with an
aggregate Fair Market Value, determined as of the date prior to the Grant Date,
of $50,000. In lieu of such Director Stock Award, each Director may elect prior
to the issuance of such Director Stock Award, in a time and manner determined
acceptable by the Committee, to receive on the Annual Director Award Date, a
Director Option to purchase a number of shares of Common Stock which has an
aggregate value, determined as of the date prior to the Grant Date, of $50,000,
calculated using the valuation methodology most recently utilized by the Company
for purposes of financial statement reporting. The Exercise Price of Director
Options issued under this Plan shall not be less than the Fair Market Value of
the Common Stock at the Grant Date. Awards granted pursuant to this subsection
shall be 100% vested and exercisable and shall be rounded up to the next higher
whole share amount in the case of a fractional share amount. No awards will be
made to an individual

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Director pursuant to this subsection (b) if such Director gives advance written
notice to the Committee that he or she does not wish to receive such award.
     (c) Termination of Director Options. Any Director Option granted to each
Director shall terminate and be of no force and effect with respect to any
shares of Common Stock not previously purchased by the Director upon the first
to occur of:
     (i) the tenth (10th) anniversary of the Grant Date for such Award; or
     (ii) the expiration of (A) three months following the Director’s
termination of service for Cause or (B) three years following the Director’s
termination of service for any other reason.
          Notwithstanding anything herein to the contrary, the normal expiration
date for Director Options shall not be extended.
     (d) Forfeiture of Director Stock Award. Any portion of a Director Stock
Award which has not become vested on or before the date of the Director’s
termination of service shall be forfeited.
     (e) Exercise Price. The Exercise Price of the Common Stock under the
Director Options granted to each Director shall be the Fair Market Value of the
shares of Common Stock subject to such Director Option on the Grant Date for
such Director Option.
     (f) Award Agreement. Each Director Option and Director Stock Award granted
to a Director shall be evidenced by an Award Agreement between the Company and
such Director that sets forth the terms, conditions and limitations described
above, if any, and any additional terms, conditions and limitations applicable
to the Director Option or the Director Stock Award. Such Award Agreements shall
be consistent with the terms and conditions of this Plan.
9. Payment of Awards.
     (a) General. Payment of Awards may be made in the form of cash or, if
permitted, by the Committee by transfer of Common Stock or combinations thereof
and may include such restrictions as the Committee shall determine, including,
in the case of Common Stock, restrictions on transfer and forfeiture provisions.
     (b) Deferral. The Committee may, in its discretion, (i) permit selected
Participants to elect to defer payments of some or all types of Awards in
accordance with procedures established by the Committee or (ii) provide for the
deferral of an Award in an Award Agreement or otherwise.
     (c) Dividends and Interest. Dividends or dividend equivalent rights may be
extended to and made part of any Award denominated in Common Stock or units of

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Common Stock, subject to such terms, conditions and restrictions as the
Committee may establish. The Committee may also establish rules and procedures
for the crediting of interest on deferred cash payments and dividend equivalents
for deferred payment denominated in Common Stock or units of Common Stock.
     (d) Substitution of Awards. At the discretion of the Committee, a
Participant who has been granted an Employee Award may be offered an election to
substitute an Employee Award for another Employee Award or Employee Awards of
the same or different type, subject to the overall limits expressed in this
Plan; provided, however, that except as provided in Section 3, in no event may
the Exercise Price of an outstanding option or SAR be reduced by modification,
substitution or any method without the prior approval of the Company’s
stockholders.
     (e) No Fractional Shares. The Committee shall not be required to issue any
fractional             shares of Common Stock under this Plan. The Committee, in
its sole discretion, may provide for the elimination of fractions for the
settlement of fractions in cash.
     10. Option Exercise. The price at which shares of Common Stock may be
purchased under an Option shall be paid in full at the time of exercise in cash
or, if permitted by the Committee, by means of tendering Common Stock or
surrendering all or part of that or any other Award, including Restricted Stock,
valued at Fair Market Value on the date of exercise, or any combination thereof.
The Committee shall determine acceptable methods for tendering Common Stock or
Awards to exercise a stock option as it deems appropriate. The Committee may
provide for procedures to permit the exercise or purchase of Awards by use of
the proceeds to be received from the sale of Common Stock issuable pursuant to
an Award. Unless otherwise provided in the applicable Award Agreement, in the
event shares of Restricted Stock are tendered as consideration for the exercise
of a stock option, a number of the shares issued upon the exercise of the stock
option, equal to the number of shares of Restricted Stock used as consideration
therefor, shall be subject to the same restrictions as the Restricted Stock so
submitted as well as any additional restrictions that may be imposed by the
Committee.
     11. Termination of Employment or Service. Upon the termination of
employment or service by a Participant, any unexercised, deferred or unpaid
Awards shall be treated as provided in the specific Award Agreement evidencing
the Award or, in the case of Director Awards, as provided in this Plan. Unless
otherwise specifically provided in the Award Agreement, each Award granted
pursuant to this Plan that is an Option shall immediately terminate to the
extent the Option is not vested (or does not become vested as a result of such
termination of employment or service) on the date the Participant terminates
employment or service with the Company or its Subsidiaries.
     12. Acceleration Upon a Change in Control. Notwithstanding anything herein
to the contrary, all conditions and/or restrictions relating to the continued
employment or service of a Participant and/or the achievement of Performance
Objectives with respect to the vesting and

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exercisability or full entitlement to any Award shall immediately lapse upon a
Change in Control.
     13. Assignability. Unless otherwise permitted by the Committee, no Award
granted under this Plan shall be sold, transferred, pledged, assigned or
otherwise alienated or hypothecated by a Participant other than by (a) will or
the laws of descent and distribution or (b) a qualified domestic relations
order. During the lifetime of a Participant, any Award shall be exercisable only
by him, or in the case of a Participant who is mentally incapacitated, the Award
shall be exercisable by his guardian or legal representative. The Committee may
prescribe and include in applicable Award Agreements other restrictions on
transfer. Any attempted assignment or transfer in violation of this Section 13
shall be null and void. Upon the Participant’s death, the personal
representative or other person entitled to succeed to the rights of the
Participant (the “Successor Participant”) may exercise such rights. A Successor
Participant must furnish proof satisfactory to the Company of his or her right
to exercise the Award under the Participant’s will or under the applicable laws
of descent and distribution.
          Subject to approval by the Committee in its sole discretion, other
than with respect to ISOs, all or a portion of the Awards granted to a
Participant under this Plan may be transferable by the Participant, to the
extent and only to the extent specified in such approval, to (a) the spouse,
children or grandchildren (including adopted and stepchildren and grandchildren)
of the Participant (“Immediate Family Members”), (b) a trust or trusts for the
exclusive benefit of such Immediate Family Members and, if applicable, the
Participant or (c) a partnership or partnerships in which such Immediate Family
Members and, if applicable, the Participant are the only partners. Subsequent
transfers of transferred Awards shall be prohibited except by will or the laws
of descent and distribution, unless such transfers are made to the original
Participant or a person to whom the original Participant could have made a
transfer in the manner described herein. No transfer shall be effective unless
and until written notice of such transfer is provided to the Committee, in the
form and manner prescribed by the Committee. Following transfer, any such Awards
shall continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer, and except as otherwise provided herein, the term
“Participant” shall be deemed to refer to the transferee. No transferred Options
shall be exercisable unless arrangements satisfactory to the Company have been
made to satisfy any tax withholding obligations the Company may have with
respect to the Options. The consequences of termination of employment or service
shall continue to be applied with respect to the original Participant, following
which the Awards shall be exercisable by the transferee only to the extent and
for the periods specified in this Plan and the Award Agreement.
     14. Adjustments.
     (a) The existence of outstanding Awards shall not affect in any manner the
right or power of the Company or its stockholders to make or authorize (i) any
or all adjustments, recapitalization, reorganizations or other changes in the
ownership of the Company or its business, (ii) any merger or consolidation of
the Company, (iii) any issue of bonds, debentures or other obligations, (iv) the
dissolution or liquidation of the Company, (v) any sale or transfer of all or
any part of its assets or business or (vi) any

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other Company act or proceeding of any kind, whether or not of a character
similar to that of the acts or proceedings enumerated above.
     (b) In the event of any Common Stock distribution or split,
recapitalization, extraordinary distribution, merger, consolidation, combination
or exchange of shares of Common Stock or similar change or upon the occurrence
of any other event that the Committee, in its sole discretion, deems
appropriate, (i) the number of shares of Common Stock reserved under this Plan
and covered by outstanding Awards, (ii) the Exercise Price in respect of such
Awards, (iii) the appropriate value and price determinations for such Awards,
(iv) the per person limitation on Awards of Options and SARs and (v) the kind of
shares covered thereby (including shares of another issuer) shall be adjusted as
appropriate.
     (c) In the event of a corporate merger, consolidation, acquisition of
property or stock, separation, reorganization or liquidation, the Committee
shall be authorized (i) to issue or assume Awards, regardless of whether in a
transaction to which Section 424(a) of the Code applies, by means of
substitution of new Awards, as appropriate, for previously issued Awards or to
assume previously issued Awards as part of such adjustment, (ii) to make
provision, prior to the transaction, for the acceleration of the vesting and
exercisability of, or lapse of restrictions with respect to, Awards (to the
extent not otherwise provided under Sections 7 or 8) and the termination of
options that remain unexercised at the time of such transaction or (iii) to
provide for the acceleration of the vesting and exercisability of any Awards and
the cancellation thereof (to the extent not otherwise provided under Sections 7
or 8) and to deliver to the Participants cash in an amount that the Board shall
determine in its sole discretion is equal to the fair market value of such
Awards on the date of such event, which in the case of Options or SARs shall be
the excess of the Fair Market Value of Common Stock on such date over the
exercise or strike price of such Award.
     (d) The Committee, in its sole discretion and without the consent of the
Participant, may amend (i) any stock-based Award to reflect a change in
accounting rules required by the Financial Accounting Standards Board and
(ii) any Award that is not intended to meet the requirements of Code
Section 162(m), to reflect a significant event that the Committee, in its sole
discretion, believes to be appropriate to reflect the original intent in the
grant of the Award.
     15. Tax Withholding. The Company shall have the right to deduct applicable
taxes from any Award payment and withhold, at the time of delivery or vesting of
cash or shares of Common Stock under this Plan, an appropriate amount of cash or
number of shares of Common Stock or a combination thereof for payment of taxes
required by law or to take such other action as may be necessary in the opinion
of the Company to satisfy all obligations for withholding of such taxes. The
Committee may also permit withholding to be satisfied by the transfer to the
Company of shares of Common Stock theretofore owned by the holder of the Award
with respect to which withholding is required. If shares of Common Stock are
used to satisfy tax

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withholding, such shares shall be valued as provided in the applicable Award
Agreement or as otherwise determined by the Committee.
     16. Amendments or Termination. The Board may amend, alter or discontinue
this Plan, except that (a) no amendment or alteration that would impair the
rights of any Participant under any Award that he has been granted shall be made
without his consent and (b) no amendment or alteration shall be effective prior
to approval by the Company’s stockholders to the extent such approval is
required by applicable legal requirements or the requirements of the securities
exchange on which the Company’s Common Stock is listed.
     17. Restrictions. No shares of Common Stock or other form of payment shall
be issued with respect to any Award unless the Company shall be satisfied based
on the advice of its counsel that such issuance will be in compliance with
applicable federal and state securities laws and the requirements of any
securities exchange or transaction reporting system upon which the Common Stock
is then listed.
     18. Unfunded Plan. Insofar as it provides for Awards of cash, Common Stock
or rights thereto, this Plan shall be unfunded. Although bookkeeping accounts
may be established with respect to Participants who are entitled to cash, Common
Stock or rights thereto under this Plan, any such accounts shall be used merely
as a bookkeeping convenience. The Company shall not be required to segregate any
assets that may at any time be represented by cash, Common Stock or rights
thereto, nor shall this Plan be construed as providing for such segregation, nor
shall the Company, the Board or the Committee be deemed to be a trustee of any
cash, Common Stock or rights thereto to be granted under this Plan. Any
liability or obligation of the Company to any Participant with respect to a
grant of cash, Common Stock or rights thereto under this Plan shall be based
solely upon any contractual obligations that may be created by this Plan and any
Award Agreement, and no such liability or obligation of the Company shall be
deemed to be secured by any pledge or other encumbrance on any property of the
Company. None of the Company, the Board or the Committee shall be required to
give any security or bond for the performance of any obligation that may be
created by this Plan.
     19. Parachute Payment Limitation. Notwithstanding any contrary provision of
the Plan, the Committee may provide in the Award Agreement or in any other
agreement with the Participant for a limitation on the acceleration of vesting
and exercisability of unmatured Awards to the extent necessary to avoid or
mitigate the impact of the golden parachute excise tax under Section 4999 of the
Code on the Participant or may provide for a supplemental payment to be made to
the Participant as necessary to offset or mitigate the impact of the golden
parachute excise tax on the Participant. In the event the Award Agreement or
other agreement with the Participant does not contain any contrary provision
regarding the method of avoiding or mitigating the impact of the golden
parachute excise tax under Section 4999 of the Code on the Participant, then
notwithstanding any contrary provision of this Plan, the aggregate present value
of all parachute payments payable to or for the benefit of a Participant,
whether payable pursuant to this Plan or otherwise, shall be limited to three
times the Participant’s base amount less one dollar and, to the extent
necessary, the exercisability of an unmatured Award shall be reduced in order
that this limitation not be exceeded. For purposes of this Section 19, the terms
“parachute

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payment,” “base amount” and “present value” shall have the meanings assigned
thereto under Section 280G of the Code. It is the intention of this Section 19
to avoid excise taxes on the Participant under Section 4999 of the Code or the
disallowance of a deduction to the Company pursuant to Section 280G of the Code.
     20. Code Section 409A Compliance. The Board intends that any Awards under
the Plan satisfy the requirements of Section 409A of the Code and related
regulations and Treasury pronouncements (“Section 409A”) to avoid the imposition
of excise taxes thereunder. If any provision of the Plan or an Award Agreement
under the Plan would result in the imposition of an excise tax under Section
409A, that provision will be reformed to avoid imposition of the excise tax and
no action taken to comply with Section 409A shall be deemed to impair the rights
of any Participant under the Plan or an Award Agreement under the Plan.
     21. Indemnification. The Company shall indemnify and hold harmless any
member of the Board or the Committee and other individuals, including Employees
and Directors, performing services on behalf of the Committee, against any
liability, cost or expense arising as a result of any claim asserted by any
person or entity under the laws of any state or of the United States with
respect to any action or failure to act of such individuals taken in connection
with this Plan, except claims or liabilities arising on account of the willful
misconduct or bad faith of such Board member, Committee member or individual.
     22. Right to Employment or Service. The granting of any Award shall not
impose upon the Company any obligation to maintain any Participant as an
Employee or a Director and shall not diminish the power of the Company to
terminate any Participant’s employment or service at any time.
     23. Governing Law. This Plan and all determinations made and actions taken
pursuant hereto, to the extent not otherwise governed by mandatory provisions of
the Code or the securities laws of the United States, shall be governed by and
construed in accordance with the laws of the State of Texas.
     24. Effective Date of Plan. This Plan shall be effective as of February 24,
2006, subject to approval of this Plan by the stockholders of the Company within
one year of the date this Plan is adopted by the Board. If the stockholders of
the Company should fail to so approve this Plan within one year of the adoption
date, this amendment and restatement shall terminate and cease to be of any
further force or effect and all grants of Awards hereunder shall be null and
void.

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