EXHIBIT 10.25

COMPLETE PRODUCTION SERVICES, INC.

2008 INCENTIVE AWARD PLAN

Complete Production Services, Inc., a Delaware corporation (the “Company”), by
resolution of its Board of Directors, hereby adopts the Complete Production
Services, Inc. 2008 Incentive Award Plan, as the same may be amended or restated
from time to time (the “Plan”).

The purpose of the Plan is to promote the success and enhance the value of the
Company by linking the personal interests of the members of the Board,
Employees, and Consultants to those of the Company’s stockholders and by
providing such individuals with an incentive for outstanding performance to
generate superior returns to the Company’s stockholders. The Plan is further
intended to provide flexibility to the Company in its ability to motivate,
attract, and retain the services of members of the Board, Employees, and
Consultants upon whose judgment, interest, and special effort the successful
conduct of the Company’s operation is largely dependent. The Plan succeeds the
Complete Production Services, Inc. Amended and Restated 2001 Stock Incentive
Plan, as amended from time to time.

ARTICLE I.

DEFINITIONS

Wherever the following terms are used in the Plan they shall have the meanings
specified below, unless the context clearly indicates otherwise. The singular
pronoun shall include the plural where the context so indicates.

1.1. “Administrator” shall mean the entity that conducts the general
administration of the Plan as provided in Article XI. With reference to the
duties of the Committee under the Plan which have been delegated to one or more
persons pursuant to Section 11.6, or as to which the Board has assumed, the term
“Administrator” shall refer to such person(s) unless the Committee or the Board
has revoked such delegation or the Board has terminated the assumption of such
duties.

1.2. “Award” shall mean an Option, a Restricted Stock award, a Restricted Stock
Unit award, a Performance Award, a Dividend Equivalents award, a Deferred Stock
award, a Stock Payment award or a Stock Appreciation Right, which may be awarded
or granted under the Plan (collectively, “Awards”).

1.3. “Award Agreement” shall mean any written notice, agreement, terms and
conditions, contract or other instrument or document evidencing an Award,
including through electronic medium, which shall contain such terms and
conditions with respect to an Award as the Administrator shall determine
consistent with the Plan.

1.4. “Award Limit” shall mean 900,000 shares of Common Stock, as adjusted
pursuant to Section 11.3; provided, however, that each share of Common Stock
subject to an Award shall be counted as one share against the Award Limit.
Solely with respect to Performance Awards granted pursuant to Section 8.1(b) and
payable in cash, “Award Limit” shall mean $4,000,000.

1.5. “Board” shall mean the Board of Directors of the Company.

1.6. “Change in Control” shall mean the occurrence of any of the following
events:

(a) a transaction or series of transactions whereby any “person” or related
“group” of “persons” (as such terms are used in Sections 13(d) and 14(d)(2) of
the Exchange Act) directly or indirectly acquires beneficial ownership (within
the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company
possessing more than 20% of the total combined voting power of the Company’s
securities outstanding immediately after such acquisition, other than:

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(i) an acquisition by an employee benefit plan or any trustee holding securities
under any employee benefit plan (or related trust) sponsored or maintained by
the Company or any person controlled by the Company; or

(ii) an acquisition by the Company or any Subsidiary; or

(iii) an acquisition pursuant to the offering of shares of Common Stock by the
Company to the general public through a registration statement filed with the
Securities and Exchange Commission; or

(iv) an acquisition of voting securities pursuant to a transaction described in
clause (c) below that would not be a Change in Control under clause (c).

(b) individuals who, as of the date hereof, constitute the Board (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 the
date hereof whose election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least two thirds of the directors
then comprising the Incumbent Board shall be considered to be members of the
Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office was a result of an actual or threatened election
contest with respect to the election or removal of directors; or

(c) the consummation by the Company (whether directly involving the Company or
indirectly involving the Company through one or more intermediaries or
subsidiaries) of (x) a merger, consolidation, reorganization, or business
combination, including without limitation, a reverse or forward triangular
merger, or (y) the acquisition of assets or stock of another entity, in each
case, other than a transaction, which results in the Company’s stockholders
prior to such transaction owning at least 55% of the outstanding voting
securities of the surviving or resulting corporation or entity.

(d) a tender offer or exchange offer is made and consummated by a person or
group of persons other than the Company for the ownership of 20% or more of the
Company’s voting securities; or

(e) a disposition, transfer, sale or exchange of all or substantially all of the
Company’s assets, or the Company’s stockholders approve a plan of liquidation or
dissolution of the Company.

For purposes of subsection (a) above, the calculation of voting power shall be
made as if the date of the acquisition were a record date for a vote of the
Company’s stockholders, and for purposes of subsection (c) above, the
calculation of voting power shall be made as if the date of the consummation of
the transaction or at the consummation of the last of a series of related
transactions were a record date for a vote of the Company’s stockholders.

1.7. “Code” shall mean the Internal Revenue Code of 1986, as amended from time
to time.

1.8. “Committee” shall mean the Compensation Committee of the Board, or another
committee or subcommittee comprised solely of independent members of the Board,
appointed as provided in Section 10.1.

1.9. “Common Stock” shall mean the common stock of the Company, par value $0.01
per share.

1.10. “Company” shall mean Complete Production Services, Inc., a Delaware
corporation.

1.11. “Consultant” shall mean any consultant or adviser that qualifies as a
consultant under the applicable rules of the Securities and Exchange Commission
for registration of shares on a Form S-8 Registration Statement.

1.12. “Deferred Stock” shall mean a right to receive Common Stock awarded under
Section 8.5.

1.13. “Director” shall mean a member of the Board as constituted from time to
time.

1.14. “Dividend Equivalent” shall mean a right to receive the equivalent value
(in cash or Common Stock) of dividends paid on Common Stock, awarded under
Section 8.3.

 

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1.15. “DRO” shall mean a domestic relations order as defined by the Code or
Title I of the Employee Retirement Income Security Act of 1974, as amended from
time to time, or the rules thereunder.

1.16. “Effective Date” shall mean the date the Plan is approved by the Board,
subject to approval of the Plan by the Company’s stockholders.

1.17. “Eligible Individual” means any person who is an Employee, Consultant or a
Non-Employee Director, as determined by the Administrator.

1.18. “Employee” shall mean any officer or other employee (as determined in
accordance with Section 3401(c) of the Code and the Treasury Regulations
thereunder) of the Company or of any Subsidiary.

1.19. “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended
from time to time

1.20. “Fair Market Value” means, as of any date, the value of a share of Common
Stock determined as follows:

(a) If the Common Stock is listed on any established stock exchange (such as the
New York Stock Exchange, the NASDAQ Global Market and the NASDAQ Global Select
Market) or national market system, its Fair Market Value shall be the closing
sales price for a share of Common Stock as quoted on such exchange or system for
such date or, if there is no closing sales price for a share of Common Stock on
the date in question, the closing sales price for a share of Common Stock on the
last preceding date for which such quotation exists, as reported in The Wall
Street Journal or such other source as the Administrator deems reliable;

(b) If the Common Stock is not listed on an established stock exchange or
national market system , but the Common Stock is regularly quoted by a
recognized securities dealer, its Fair Market Value shall be the mean of the
high bid and low asked prices for such date or, if there are no high bid and low
asked prices for a share of Common Stock on such date, the high bid and low
asked prices for a share of Common Stock on the last preceding date for which
such information exists, as reported in The Wall Street Journal or such other
source as the Administrator deems reliable; or

(c) If the Common Stock is neither listed on an established stock exchange or a
national market system nor regularly quoted by a recognized securities dealer,
its Fair Market Value shall be established by the Administrator in good faith.

1.21. “Holder” shall mean a person who has been granted an Award.

1.22. “Incentive Stock Option” shall mean an option is intended to qualify as an
incentive stock option and conforms to the applicable provisions of Section 422
of the Code.

1.23. “Non-Employee Director” shall mean a member of the Board who is not an
Employee.

1.24. “Non-Qualified Stock Option” shall mean an Option that is not an Incentive
Stock Option.

1.25. “Option” shall mean a right to purchase shares of Common Stock at a
specified exercise price, granted under Article V. An Option shall be either a
Non-Qualified Stock Option or an Incentive Stock Option; provided, however, that
Options granted to Non-Employee Directors and Consultants shall be Non-Qualified
Stock Options.

1.26. “Performance Award” shall mean a cash bonus award, stock bonus award,
performance award or incentive award that is paid in cash, Common Stock or a
combination of both, awarded under Section 8.1.

1.27. “Performance-Based Compensation” means any compensation that is intended
to qualify as “performance-based compensation” as described in
Section 162(m)(4)(C) of the Code.

 

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1.28. “Performance Criteria” means the criteria (and adjustments) that the
Committee selects for an Award for purposes of establishing the Performance Goal
or Performance Goals for a Performance Period, determined as following:

(a) The Performance Criteria that shall be used to establish Performance Goals
are limited to the following: (i) net earnings (either before or after one or
more of the following: (A) interest, (B) taxes, (C) depreciation and
(D) amortization), (ii) gross or net sales or revenue, (iii) net income (either
before or after taxes), (iv) operating earnings or profit, (v) cash flow
(including, but not limited to, operating cash flow and free cash flow),
(vi) return on assets, (vii) return on capital, (viii) return on stockholders’
equity, (ix) return on sales, (x) gross or net profit or operating margin,
(xi) costs, (xii) funds from operations, (xiii) expenses, (xiv) working capital,
(xv) earnings per share, (xvi) price per share of Common Stock,
(xvii) regulatory body approval for commercialization of a product,
(xviii) implementation or completion of critical projects, (xix) various safety
statistics including any of (a) total reportable incident rates (TRIR), (b) loss
time incident rates (LTIR) or (c) workers comp experience modifier and
(xx) market share, any of which may be measured either in absolute terms or as
compared to any incremental increase or decrease or as compared to results of a
peer group.

(b) The Administrator may, in its sole discretion, provide that one or more
objectively determinable adjustments shall be made to one or more of the
Performance Goals. Such adjustments may include one or more of the following:
(i) items related to a change in accounting principle; (ii) items relating to
financing activities; (iii) expenses for restructuring or productivity
initiatives; (iv) other non-operating items; (v) items related to acquisitions;
(vi) items attributable to the business operations of any entity acquired by the
Company during the Performance Period; (vii) items related to the disposal of a
business or segment of a business; (viii) items related to discontinued
operations that do not qualify as a segment of a business under United States
generally accepted accounting principles (“GAAP”); (ix) items attributable to
any stock dividend, stock split, combination or exchange of shares occurring
during the Performance Period; (x) any other items of significant income or
expense which are determined to be appropriate adjustments; (xi) items relating
to unusual or extraordinary corporate transactions, events or developments,
(xii) items related to amortization of acquired intangible assets; (xiii) items
that are outside the scope of the Company’s core, on-going business activities;
or (xiv) items relating to any other unusual or nonrecurring events or changes
in applicable laws, accounting principles or business conditions. For all Awards
intended to qualify as Performance-Based Compensation, such determinations shall
be made within the time prescribed by, and otherwise in compliance with,
Section 162(m) of the Code.

1.29. “Performance Goals” means, for a Performance Period, one or more goals
established in writing by the Administrator for the Performance Period based
upon one or more Performance Criteria. Depending on the Performance Criteria
used to establish such Performance Goals, the Performance Goals may be expressed
in terms of overall Company performance or the performance of a division,
business unit, or an individual. The achievement of each Performance Goal shall
be determined in accordance with GAAP to the extent applicable.

1.30. “Performance Period” means one or more periods of time, which may be of
varying and overlapping durations, as the Administrator may select, over which
the attainment of one or more Performance Goals will be measured for the purpose
of determining a Holder’s right to, and the payment of, a Performance Award.

1.31. “Plan” means this Complete Production Services, Inc. 2008 Incentive Award
Plan, as amended or restated from time to time.

1.32. “Prior Award” means a stock option or restricted stock award granted under
the Prior Plan.

1.33. “Prior Plan” shall mean the Complete Production Services, Inc. Amended and
Restated 2001 Stock Incentive Plan, as amended.

1.34. “Restricted Stock” shall mean Common Stock awarded under Article VII that
is subject to certain restrictions and to risk of forfeiture or repurchase.

 

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1.35. “Restricted Stock Units” shall mean rights to receive Common Stock awarded
under Section 8.5.

1.36. “Rule 16b-3” shall mean Rule 16b-3 promulgated under the Exchange Act, as
such Rule may be amended from time to time.

1.37. “Securities Act” shall mean the Securities Act of 1933, as amended from
time to time.

1.38. “Stock Appreciation Right” shall mean a stock appreciation right granted
under Article IX.

1.39. “Stock Payment” shall mean: (a) a payment in the form of shares of Common
Stock, or (b) an option or other right to purchase shares of Common Stock, as
part of a bonus, deferred compensation or other arrangement awarded under
Section 8.3.

1.40. “Subsidiary” means any entity (other than the Company), whether domestic
or foreign, in an unbroken chain of entities beginning with the Company if each
of the entities other than the last entity in the unbroken chain beneficially
owns, at the time of the determination, securities or interests representing
more than fifty percent (50%) of the total combined voting power of all classes
of securities or interests in one of the other entities in such chain.

1.41. “Substitute Award” shall mean an Option granted under this Plan upon the
assumption of, or in substitution for, outstanding equity awards previously
granted by a company or other entity in connection with a corporate transaction,
such as a merger, combination, consolidation or acquisition of property or
stock; provided, however, that in no event shall the term “Substitute Award” be
construed to refer to an award made in connection with the cancellation and
repricing of an Option.

1.42. “Greater Than 10% Stockholder” shall mean an individual then owning
(within the meaning of Section 424(d) of the Code) more than 10% of the total
combined voting power of all classes of stock of the Company or any subsidiary
corporation (as defined in Section 424(f) of the Code) or parent corporation
thereof (as defined in Section 424(e) of the Code).

1.43. “Termination of Service” shall mean,

(a) As to a Consultant, the time when the engagement of a Holder as a Consultant
to the Company or a Subsidiary is terminated for any reason, with or without
cause, including, without limitation, by resignation, discharge, death or
retirement, but excluding terminations where the Consultant simultaneously
commences or remains in employment or service with the Company or any
Subsidiary.

(b) As to a Non-Employee Director, the time when a Holder who is a Non-Employee
Director ceases to be a Director for any reason, including, without limitation,
a termination by resignation, failure to be elected, death or retirement, but
excluding terminations where the Holder simultaneously commences or remains in
employment or service with the Company or any Subsidiary.

(c) As to an Employee, the time when the employee-employer relationship between
a Holder and the Company or any Subsidiary is terminated for any reason,
including, without limitation, a termination by resignation, discharge, death,
disability or retirement; but excluding terminations where the Holder
simultaneously commences or remains in employment or service with the Company or
any Subsidiary.

The Administrator, in its sole discretion, shall determine the effect of all
matters and questions relating to Terminations of Service, including, without
limitation, the question of whether a Termination of Service resulted from a
discharge for cause and all questions of whether particular leaves of absence
constitute a Termination of Service; provided, however, that, with respect to
Incentive Stock Options, unless the Administrator otherwise provides in the
terms of the Award Agreement or otherwise, a leave of absence, change in status
from an employee to an independent contractor or other change in the
employee-employer relationship shall constitute a Termination of Service only
if, and to the extent that, such leave of absence, change in status or other
change interrupts employment for the purposes of Section 422(a)(2) of the Code
and the then applicable regulations and revenue rulings under said Section. For
purposes of the Plan, a Holder’s employee-employer relationship or consultancy
relations shall be deemed to be terminated in the event that the Subsidiary
employing or contracting with such Holder ceases to remain a Subsidiary
following any merger, sale of stock or other corporate transaction or event
(including, without limitation, a spin-off).

 

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ARTICLE II.

SHARES SUBJECT TO PLAN

2.1. Shares Subject to Plan.

(a) Subject to Section 12.2(a) and Section 2.1(b), the aggregate number of
shares of Common Stock that may be issued or transferred pursuant to Awards
under the Plan initially shall be equal to two million five hundred thousand
(2,500,000) (“Initial Authorized Shares”). In addition, in the event of any
cancellation, termination, expiration or forfeiture of any Prior Award during
the term of the Plan (including any unvested shares of Common Stock that are
forfeited by the holder or repurchased by the Company pursuant to the terms of
the applicable award agreement at a price not greater than the original purchase
price paid by the holder), the number of shares of Common Stock that may be
issued or transferred pursuant to Awards under the Plan shall be automatically
increased by one share for each share subject to such Prior Award that is so
cancelled, terminated, expired, forfeited or repurchased (collectively, the
“Cancelled Prior Award Shares”). In no event, however, shall the aggregate
number of shares available for issuance pursuant to Incentive Stock Options
under the Plan exceed 2,500,000.

(b) To the extent that an Award terminates, expires, lapses, settles in cash, or
is forfeited for any reason, any shares of Common Stock then subject to such
Award shall again be available for the grant of an Award pursuant to the Plan.
If any shares of Restricted Stock are surrendered by the Holder or repurchased
by the Company pursuant to Section 7.4 hereof, such shares may again be granted
or awarded hereunder. To the extent exercised, the full number of shares subject
to an Option or Stock Appreciation Right shall be counted for purposes of
calculating the aggregate number of shares of Common Stock available for
issuance under the Plan and for purposes of calculating the share limitation set
forth in Section 3.7, regardless of the actual number of shares issued or
transferred upon any net exercise of an Option (in which Common Stock is
withheld to satisfy the exercise price or taxes) or upon exercise of any Stock
Appreciation Right for Common Stock or cash. The payment of Dividend Equivalents
in cash in conjunction with any outstanding Awards shall not be counted against
the shares available for issuance under the Plan. To the extent permitted by
applicable law or any exchange rule, shares of Common Stock issued in assumption
of, or in substitution for, any outstanding awards of any entity acquired in any
form of combination by the Company or any Subsidiary shall not be counted
against shares of Common Stock available for grant pursuant to this Plan, but
shall be available under the Plan by virtue of the Company’s assumption of the
plan or arrangement of the acquired company or business. Notwithstanding the
provisions of this Section 2.1(b), no shares of Common Stock may again be
awarded if such action would cause an Incentive Stock Option to fail to qualify
as an incentive stock option under Section 422 of the Code. Notwithstanding the
provisions of this Section 2.1(b), no shares shall become available pursuant to
this Section 2.1 to the extent that such return of shares would constitute a
“material revision” of the Plan subject to stockholder approval under then
applicable rules of the New York Stock Exchange (or any other applicable
exchange or quotation system).

2.2. Stock Distributed. Any Common Stock distributed pursuant to an Award shall
consist, in whole or in part, of authorized and unissued Common Stock, shares of
Common Stock held in treasury or shares of Common Stock purchased on the open
market.

ARTICLE III.

GRANTING OF AWARDS

3.1. Participation. The Administrator shall, from time to time, select from
among all Eligible Individuals, those to whom an Award shall be granted and
shall determine the nature and amount of each Award, which shall not be
inconsistent with the requirements of the Plan. No Eligible Individual shall
have any right to be granted an Award pursuant to the Plan.

3.2. Award Agreement. Each Award shall be evidenced by an Award Agreement. Award
Agreements evidencing Awards intended to qualify as Performance-Based
Compensation shall contain such terms and conditions as may be necessary to meet
the applicable provisions of Section 162(m) of the Code. Award Agreements
evidencing Incentive Stock Options shall contain such terms and conditions as
may be necessary to meet the applicable provisions of Section 422 of the Code.

 

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3.3. Limitations Applicable to Section 16 Persons. Notwithstanding any other
provision of the Plan, the Plan, and any Award granted or awarded to any
individual who is then subject to Section 16 of the Exchange Act, shall be
subject to any additional limitations set forth in any applicable exemptive rule
under Section 16 of the Exchange Act (including Rule 16b-3 of the Exchange Act
and any amendments thereto) that are requirements for the application of such
exemptive rule. To the extent permitted by applicable law, the Plan and Awards
granted or awarded hereunder shall be deemed amended to the extent necessary to
conform to such applicable exemptive rule.

3.4. At-Will Employment. Nothing in the Plan or in any Award Agreement hereunder
shall confer upon any Holder any right to continue in the employ of, or as a
Director or Consultant for, the Company or any Subsidiary, or shall interfere
with or restrict in any way the rights of the Company and any Subsidiary, which
rights are hereby expressly reserved, to discharge any Holder at any time for
any reason whatsoever, with or without cause, except to the extent expressly
provided otherwise in a written agreement between the Holder and the Company or
any Subsidiary.

3.5. Foreign Holders. Notwithstanding any provision of the Plan to the contrary,
in order to comply with the laws in other countries in which the Company and its
Subsidiaries operate or have Employees, Non-Employee Directors or Consultants,
or in order to comply with the requirements of any foreign stock exchange, the
Administrator, in its sole discretion, shall have the power and authority to:
(a) determine which Subsidiaries shall be covered by the Plan; (b) determine
which Eligible Individuals outside the United States are eligible to participate
in the Plan; (c) modify the terms and conditions of any Award granted to
Eligible Individuals outside the United States to comply with applicable foreign
laws or listing requirements of any such foreign stock exchange; (d) establish
subplans and modify exercise procedures and other terms and procedures, to the
extent such actions may be necessary or advisable (any such subplans and/or
modifications shall be attached to the Plan as appendices); provided, however,
that no such subplans and/or modifications shall increase the share limitations
contained in Sections 2.1 and 3.7; and (e) take any action, before or after an
Award is made, that it deems advisable to obtain approval or comply with any
necessary local governmental regulatory exemptions or approvals or listing
requirements of any such foreign stock exchange. Notwithstanding the foregoing,
the Administrator may not take any actions hereunder, and no Awards shall be
granted, that would violate the Code, the Exchange Act, the Securities Act or
any other securities law or governing statute or any other applicable law.

3.6. Stand-Alone and Tandem Awards. Awards granted pursuant to the Plan may, in
the sole discretion of the Administrator, be granted either alone, in addition
to, or in tandem with, any other Award granted pursuant to the Plan. Awards
granted in addition to or in tandem with other Awards may be granted either at
the same time as or at a different time from the grant of such other Awards.

3.7. Award Limits. Notwithstanding any provision in the Plan to the contrary,
and subject to Section 12.2(a), the maximum number of shares of Common Stock
with respect to one or more Awards that may be granted to any Eligible
Individual during any calendar year shall not exceed the applicable Award Limit.
To the extent required by Section 162(m) of the Code, shares subject to Awards
which are canceled shall continue to be counted against the Award Limit. In
addition, the maximum cash payment with respect to one or more Performance
Awards granted pursuant to Section 8.1(b) and payable in cash that may be
granted to any Eligible Individual during any calendar year shall not exceed the
Award Limit.

ARTICLE IV.

PROVISIONS APPLICABLE TO AWARDS INTENDED TO QUALIFY AS

PERFORMANCE-BASED COMPENSATION.

4.1. Purpose. The Committee, in its sole discretion, may determine whether an
Award is to qualify as Performance-Based Compensation. If the Committee, in its
sole discretion, decides to grant such an Award to an Eligible Individual that
is intended to qualify as Performance-Based Compensation, then the provisions of
this Article IV shall control over any contrary provision contained in this
Plan. The Administrator may in its sole discretion grant Awards to Eligible
Individuals that are based on Performance Criteria or Performance Goals but that
do not satisfy the requirements of this Article IV and that are not intended to
qualify as Performance-Based Compensation.

 

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4.2. Applicability. The grant of an Award to an Eligible Individual for a
particular Performance Period shall not require the grant of an Award to such
Individual in any subsequent Performance Period and the grant of an Award to any
one Eligible Individual shall not require the grant of an Award to any other
Eligible Individual in such period or in any other period.

4.3. Types of Awards. Notwithstanding anything in the Plan to the contrary, the
Committee may grant any type of Award to an Eligible Individual intended to
qualify as Performance-Based Compensation, including, without limitation,
Restricted Stock the restrictions with respect to which lapse upon the
attainment of specified Performance Goals and any performance or incentive
Awards described in Article VIII that vest or become exercisable or payable upon
the attainment of one or more specified Performance Goals.

4.4. Procedures with Respect to Performance-Based Awards. To the extent
necessary to comply with the requirements of Section 162(m)(4)(C) of the Code,
with respect to any Award granted under Articles VII or VIII to one or more
Eligible Individuals that is intended to qualify as Performance-Based
Compensation, no later than 90 days following the commencement of any
Performance Period or any designated fiscal period or period of service (or such
earlier time as may be required under Section 162(m) of the Code), the Committee
shall, in writing, (a) designate one or more Eligible Individuals, (b) select
the Performance Criteria applicable to the Performance Period, (c) establish the
Performance Goals, and amounts of such Awards, as applicable, which may be
earned for such Performance Period based on the Performance Criteria, and
(d) specify the relationship between Performance Criteria and the Performance
Goals and the amounts of such Awards, as applicable, to be earned by each Holder
for such Performance Period. Following the completion of each Performance
Period, the Committee shall certify in writing whether and the extent to which
the applicable Performance Goals have been achieved for such Performance Period.
In determining the amount earned under such Awards, the Committee shall have the
right to reduce or eliminate (but not to increase) the amount payable at a given
level of performance to take into account additional factors that the Committee
may deem relevant to the assessment of individual or corporate performance for
the Performance Period.

4.5. Payment of Performance-Based Awards. Unless otherwise provided in the
applicable Award Agreement, as to an Award that is intended to qualify as
Performance-Based Compensation, the Holder must be employed by the Company or a
Subsidiary throughout the Performance Period. Furthermore, a Holder shall be
eligible to receive payment pursuant to such Awards for a Performance Period
only if and to the extent the Performance Goals for such period are achieved.

4.6. Additional Limitations. Notwithstanding any other provision of the Plan,
any Award which is granted to an Eligible Individual and is intended to qualify
as Performance-Based Compensation shall be subject to any additional limitations
set forth in Section 162(m) of the Code or any regulations or rulings issued
thereunder that are requirements for qualification as Performance-Based
Compensation, and the Plan and the Award Agreement shall be deemed amended to
the extent necessary to conform to such requirements.

ARTICLE V.

GRANTING OF OPTIONS

5.1. Granting of Options to Eligible Individuals.

(a) The Administrator shall from time to time, in its sole discretion, and,
subject to applicable limitations of the Plan:

(i) Select from among the Eligible Individuals (including Eligible Individuals
who have previously received Awards under the Plan) such of them as in its
opinion should be granted Options;

(ii) Subject to Section 3.7, determine the number of shares to be subject to
such Options granted to the selected Eligible Individuals;

(iii) Subject to Section 5.2, determine whether such Options are to be Incentive
Stock Options or Non-Qualified Stock Options; and

(iv) Determine the terms and conditions of such Options, which shall not be
inconsistent with the Plan.

 

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(b) Upon the selection of an Eligible Individual to be granted an Option, the
Administrator shall instruct the Secretary of the Company to issue the Option
and may impose such conditions on the grant of the Option as it deems
appropriate.

5.2. Qualification of Incentive Stock Options. No Incentive Stock Option shall
be granted to any person who is not an Employee of the Company or any subsidiary
corporation of the Company (as defined in Section 424(f) of the Code). Any
Incentive Stock Option granted under the Plan may be modified by the
Administrator, with the consent of the Holder, to disqualify such Option from
treatment as an “incentive stock option” under Section 422 of the Code. To the
extent that the aggregate fair market value of stock with respect to which
“incentive stock options” (within the meaning of Section 422 of the Code, but
without regard to Section 422(d) of the Code) are exercisable for the first time
by a Holder during any calendar year under the Plan, and all other plans of the
Company and any subsidiary corporation (as defined in Section 424(f) of the
Code) or parent corporation thereof (as defined in Section 424(e) of the Code),
exceeds $100,000, the Options shall be treated as Non-Qualified Stock Options to
the extent required by Section 422 of the Code. The rule set forth in the
preceding sentence shall be applied by taking Options and other “incentive stock
options” into account in the order in which they were granted and the fair
market value of stock shall be determined as of the time the respective options
were granted.

5.3. Option Exercise Price. The exercise price per share of Common Stock subject
to each Option shall be set by the Administrator, but shall not be less than
100% of the Fair Market Value of a share of Common Stock on the date the Option
is granted (or, as to Incentive Stock Options, on the date the Option is
modified, extended or renewed for purposes of Section 424(h) of the Code). In
addition, in the case of Incentive Stock Options granted to a Greater Than 10%
Stockholder, such price shall not be less than 110% of the Fair Market Value of
a share of Common Stock on the date the Option is granted (or the date the
Option is modified, extended or renewed for purposes of Section 424(h) of the
Code).

5.4. Option Term. The term of each Option shall be set by the Administrator in
its sole discretion; provided, however, that the term shall not be more than ten
(10) years from the date the Option is granted, or five (5) years from the date
an Incentive Stock Option is granted to a Greater Than 10% Stockholder. The
Administrator shall determine the time period, including the time period
following a Termination of Service, during which the Holder has the right to
exercise the vested Options, which time period may not extend beyond the term of
the Option term. Except as limited by the requirements of Section 409A or
Section 422 of the Code and regulations and rulings thereunder, the
Administrator may extend the term of any outstanding Option, and may extend the
time period during which vested Options may be exercised, in connection with any
Termination of Service of the Holder, and may amend any other term or condition
of such Option relating to such a Termination of Service.

5.5. Option Vesting.

(a) The period during which the right to exercise, in whole or in part, an
Option vests in the Holder shall be set by the Administrator and the
Administrator may determine that an Option may not be exercised in whole or in
part for a specified period after it is granted. Such vesting may be based on
service with the Company or any Subsidiary, any of the Performance Criteria, or
any other criteria selected by the Administrator. At any time after grant of an
Option, the Administrator may, in its sole discretion and subject to whatever
terms and conditions it selects, accelerate the period during which an Option
vests.

(b) No portion of an Option which is unexercisable at the Holder’s Termination
of Service shall thereafter become exercisable, except as may be otherwise
provided by the Administrator either in the Award Agreement or by action of the
Administrator following the grant of the Option.

5.6. Substitute Awards. Notwithstanding the foregoing provisions of this
Article V to the contrary, in the case of an Option that is a Substitute Award,
the price per share of the shares subject to such Option may be less than the
Fair Market Value per share on the date of grant, provided, that the excess of:
(a) the aggregate Fair Market Value (as of the date such Substitute Award is
granted) of the shares subject to the Substitute Award, over (b) the aggregate
exercise price thereof does not exceed the excess of: (x) the aggregate fair
market value (as of the time immediately preceding the transaction giving rise
to the Substitute Award, such fair market value to be determined by the
Administrator) of the shares of the predecessor entity that were subject to the
grant assumed or substituted for by the Company, over (y) the aggregate exercise
price of such shares.

 

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5.7. Substitution of Stock Appreciation Rights. The Administrator may provide in
the Award Agreement evidencing the grant of an Option that the Administrator, in
its sole discretion, shall have the right to substitute a Stock Appreciation
Right for such Option at any time prior to or upon exercise of such Option;
provided, that such Stock Appreciation Right shall be exercisable with respect
to the same number of shares of Common Stock for which such substituted Option
would have been exercisable.

ARTICLE VI.

EXERCISE OF OPTIONS

6.1. Partial Exercise. An exercisable Option may be exercised in whole or in
part. However, an Option shall not be exercisable with respect to fractional
shares and the Administrator may require that, by the terms of the Option, a
partial exercise must be with respect to a minimum number of shares.

6.2. Manner of Exercise. All or a portion of an exercisable Option shall be
deemed exercised upon delivery of all of the following to the Secretary of the
Company, or such other person or entity designated by the Administrator, or his,
her or its office, as applicable:

(a) A written notice complying with the applicable rules established by the
Administrator stating that the Option, or a portion thereof, is exercised. The
notice shall be signed by the Holder or other person then entitled to exercise
the Option or such portion of the Option;

(b) Such representations and documents as the Administrator, in its sole
discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act and any other federal, state or
foreign securities laws or regulations. The Administrator may, in its sole
discretion, also take whatever additional actions it deems appropriate to effect
such compliance including, without limitation, placing legends on share
certificates and issuing stop-transfer notices to agents and registrars;

(c) In the event that the Option shall be exercised pursuant to Section 10.3 by
any person or persons other than the Holder, appropriate proof of the right of
such person or persons to exercise the Option; and

(d) Full payment of the exercise price and applicable withholding taxes to the
Secretary of the Company for the shares with respect to which the Option, or
portion thereof, is exercised, in a manner permitted by Section 10.1.

6.3. Notification Regarding Disposition. The Holder shall give the Company
prompt notice of any disposition of shares of Common Stock acquired by exercise
of an Incentive Stock Option within (a) two years from the date of granting
(including the date the Option is modified, extended or renewed for purposes of
Section 424(h) of the Code) such Option to such Holder, or (b) one year after
the transfer of such shares to such Holder.

ARTICLE VII.

AWARD OF RESTRICTED STOCK

7.1. Award of Restricted Stock.

(a) The Administrator shall determine the terms and conditions, including the
restrictions applicable to each award of Restricted Stock, which terms and
conditions shall not be inconsistent with the Plan, and may impose such
conditions on the issuance of such Restricted Stock as it deems appropriate.

(b) The Administrator shall establish the purchase price, if any, and form of
payment for Restricted Stock; provided, however, that such purchase price shall
be no less than the par value of the Common Stock to be purchased, unless
otherwise permitted by applicable state law. In all cases, legal consideration
shall be required for each issuance of Restricted Stock.

 

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7.2. Rights as Stockholders. Subject to Section 7.4, upon issuance of Restricted
Stock, the Holder shall have, unless otherwise provided by the Administrator,
all the rights of a stockholder with respect to said shares, subject to the
restrictions in his or her Award Agreement, including the right to receive all
dividends and other distributions paid or made with respect to the shares;
provided, however, that, in the sole discretion of the Administrator, any
extraordinary distributions with respect to the Common Stock shall be subject to
the restrictions set forth in Section 7.3.

7.3. Restrictions. All shares of Restricted Stock (including any shares received
by Holders thereof with respect to shares of Restricted Stock as a result of
stock dividends, stock splits or any other form of recapitalization) shall, in
the terms of each individual Award Agreement, be subject to such restrictions
and vesting requirements as the Administrator shall provide. Such restrictions
may include, without limitation, restrictions concerning voting rights and
transferability and such restrictions may lapse separately or in combination at
such times and pursuant to such circumstances or based on such criteria as
selected by the Administrator, including, without limitation, criteria based on
the Holder’s duration of employment, directorship or consultancy with the
Company, the Performance Criteria, Company performance, individual performance
or other criteria selected by the Administrator. By action taken after the
Restricted Stock is issued, the Administrator may, on such terms and conditions
as it may determine to be appropriate, accelerate the vesting of such Restricted
Stock by removing any or all of the restrictions imposed by the terms of the
Award Agreement, or continue to vest such Restricted Stock in accordance with
the terms of the Award Agreement following a Termination of Service. Restricted
Stock may not be sold or encumbered until all restrictions are terminated or
expire.

7.4. Repurchase or Forfeiture of Restricted Stock. If no price was paid by the
Holder for the Restricted Stock, upon a Termination of Service the Holder’s
rights in unvested Restricted Stock then subject to restrictions shall lapse,
and such Restricted Stock shall be surrendered to the Company and cancelled
without consideration. If a price was paid by the Holder for the Restricted
Stock, upon a Termination of Service the Company shall have the right to
repurchase from the Holder the unvested Restricted Stock then subject to
restrictions at a cash price per share equal to the price paid by the Holder for
such Restricted Stock. The Administrator in its sole discretion may provide, in
the Award Agreement or by action after the Restricted Stock is issued, that in
the event of certain events, including a Change in Control, the Holder’s death,
retirement or disability or any other specified Termination of Service or any
other event, the Holder’s rights in unvested Restricted Stock shall not lapse,
such Restricted Stock shall either vest immediately upon the occurrence of such
specified event or continue to vest in accordance with the terms of the Award
Agreement and, if applicable, the Company shall not have a right of repurchase.

7.5. Certificates for Restricted Stock. Restricted Stock granted pursuant to the
Plan may be evidenced in such manner as the Administrator shall determine.
Certificates or book entries evidencing shares of Restricted Stock must include
an appropriate legend referring to the terms, conditions, and restrictions
applicable to such Restricted Stock, and the Company may, in its sole
discretion, retain physical possession of any stock certificate until such time
as all applicable restrictions lapse.

7.6. Section 83(b) Election. If a Holder makes an election under Section 83(b)
of the Code, or any successor section thereto, to be taxed with respect to the
Restricted Stock as of the date of transfer of the Restricted Stock rather than
as of the date or dates upon which the Holder would otherwise be taxable under
Section 83(a) of the Code, the Holder shall be required to deliver a copy of
such election to the Company promptly after filing such election with the
Internal Revenue Service.

ARTICLE VIII.

AWARD OF PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS, DEFERRED STOCK,

STOCK PAYMENTS, RESTRICTED STOCK UNITS

8.1. Performance Awards.

(a) The value of Performance Awards may be linked to any one or more of the
Performance Criteria or other specific criteria determined by the Administrator,
in each case on a specified date or dates or over any

 

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period or periods determined by the Administrator. In making such
determinations, the Administrator shall consider (among such other factors as it
deems relevant in light of the specific type of Award) the contributions,
responsibilities and other compensation of the particular Eligible Individual.
Performance Awards may be paid in cash, shares of Common Stock, or both, as
determined by the Administrator.

(b) Without limiting Section 8.1(a), the Administrator may grant to any Employee
Performance Awards intended to qualify as Performance Based Compensation,
payable in cash based upon the attainment of objective Performance Goals which
are established by the Administrator, in each case on a specified date or dates
or over any period or periods determined by the Administrator, and which comply
with Article IV.

8.2. Dividend Equivalents.

(a) Dividend Equivalents may be granted by the Administrator based on dividends
declared on the Common Stock, to be credited as of dividend payment dates during
the period between the date an Award is granted to a Holder and the date such
Award vests, is exercised, is distributed or expires, as determined by the
Administrator. Such Dividend Equivalents shall be converted to cash or
additional shares of Common Stock by such formula and at such time and subject
to such limitations as may be determined by the Administrator.

(b) Notwithstanding the foregoing, no Dividend Equivalents shall be payable with
respect to Options or Stock Appreciation Rights.

8.3. Stock Payments. The number or value of shares of any Stock Payment shall be
determined by the Administrator and may be based upon one or more Performance
Criteria or any other specific criteria, including service to the Company or any
Subsidiary, determined by the Administrator. Stock Payments may, but are not
required to be made in lieu of base salary, bonus, fees or other cash
compensation otherwise payable to such Eligible Individual.

8.4. Deferred Stock. The number of shares of Deferred Stock shall be determined
by the Administrator and may be based on one or more Performance Criteria or
other specific criteria, including service to the Company or any Subsidiary, as
the Administrator determines, in each case on a specified date or dates or over
any period or periods determined by the Administrator. Common Stock underlying a
Deferred Stock award will not be issued until the Deferred Stock award has
vested, pursuant to a vesting schedule or other conditions or criteria set by
the Administrator. Unless otherwise provided by the Administrator, a Holder of
Deferred Stock shall have no rights as a Company stockholder with respect to
such Deferred Stock until such time as the Award has vested and the Common Stock
underlying the Award has been issued to the Holder.

8.5. Restricted Stock Units. The number and terms and conditions of Restricted
Stock Units shall be determined by the Administrator. The Administrator shall
specify the date or dates on which the Restricted Stock Units shall become fully
vested and nonforfeitable, and may specify such conditions to vesting as it
deems appropriate, including conditions based on one or more Performance
Criteria or other specific criteria, including service to the Company or any
Subsidiary, in each case on a specified date or dates or over any period or
periods, as the Administrator determines,. The Administrator shall specify, or
permit the Holder to elect, the conditions and dates upon which the shares of
Common Stock underlying the Restricted Stock Units which shall be issued, which
dates shall not be earlier than the date as of which the Restricted Stock Units
vest and become nonforfeitable and which conditions and dates shall be subject
to compliance with Section 409A of the Code. On the distribution dates, the
Company shall issue to the Holder one unrestricted, fully transferable share of
Common Stock for each vested and nonforfeitable Restricted Stock Unit.

8.6. Term. The term of a Performance Award, Dividend Equivalent award, Deferred
Stock award, Stock Payment award and/or Restricted Stock Unit award shall be set
by the Administrator in its sole discretion.

8.7. Exercise or Purchase Price. The Administrator may establish the exercise or
purchase price of a Performance Award, shares of Deferred Stock, shares
distributed as a Stock Payment award or shares distributed pursuant to a
Restricted Stock Unit award; provided, however, that value of the consideration
shall not be less than the par value of a share of Common Stock, unless
otherwise permitted by applicable state law.

 

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8.8. Exercise upon Termination of Service. A Performance Award, Dividend
Equivalent award, Deferred Stock award, Stock Payment award and/or Restricted
Stock Unit award is exercisable or distributable only while the Holder is an
Employee, Director or Consultant, as applicable. The Administrator, however, in
its sole discretion may provide that the Performance Award, Dividend Equivalent
award, Deferred Stock award, Stock Payment award and/or Restricted Stock Unit
award may be exercised or distributed subsequent to a Termination of Service in
certain events, including a Change in Control, the Holder’s death, retirement or
disability or any other specified Termination of Service.

ARTICLE IX.

AWARD OF STOCK APPRECIATION RIGHTS

9.1. Grant of Stock Appreciation Rights. A Stock Appreciation Right may be
granted: (a) in connection and simultaneously with the grant of an Option, or
(b) independent of an Option. A Stock Appreciation Right shall be subject to
such terms and conditions not inconsistent with the Plan as the Administrator
shall impose.

9.2. Coupled Stock Appreciation Rights.

(a) A Coupled Stock Appreciation Right (“CSAR”) shall be related to a particular
Option and shall be exercisable only when and to the extent the related Option
is exercisable.

(b) A CSAR may be granted to the Holder for no more than the number of shares
subject to the simultaneously granted Option to which it is coupled.

(c) A CSAR shall entitle the Holder (or other person entitled to exercise the
Option pursuant to the Plan) to surrender to the Company unexercised a portion
of the Option to which the CSAR relates (to the extent then exercisable pursuant
to its terms) and to receive from the Company in exchange therefor an amount
determined by multiplying (i) the difference obtained by subtracting the
exercise price per share of the CSAR from (ii) the Fair Market Value of a share
of Common Stock on the date of exercise of the CSAR by the number of shares of
Common Stock with respect to which the CSAR shall have been exercised, subject
to any limitations the Administrator may impose.

9.3. Independent Stock Appreciation Rights.

(a) An Independent Stock Appreciation Right (“ISAR”) shall be unrelated to any
Option and shall have a term set by the Administrator in its sole discretion,
which term shall not be more than ten years following the date of grant of the
ISAR. An ISAR shall be exercisable in such installments as the Administrator may
determine. An ISAR shall cover such number of shares of Common Stock as the
Administrator may determine. The exercise price per share of Common Stock
subject to each ISAR shall be set by the Administrator, but shall not be less
than 100% of the Fair Market Value of a share of Common Stock on the date the
ISAR is granted. An ISAR is exercisable only while the Holder is an Employee,
Non-Employee Director or Consultant; provided, that the Administrator may
determine that the ISAR may be exercised subsequent to Termination of Service or
following a Change in Control, or because of the Holder’s retirement, death or
disability, or termination without cause, or otherwise to the extent not
inconsistent with the terms of any employment agreement or other commitments
made by the Company.

(b) An ISAR shall entitle the Holder (or other person entitled to exercise the
ISAR pursuant to the Plan) to exercise all or a specified portion of the ISAR
(to the extent then exercisable pursuant to its terms) and to receive from the
Company an amount determined by multiplying (i) the difference obtained by
subtracting the exercise price per share of the ISAR from the Fair Market Value
of a share of Common Stock on the date of exercise of the ISAR by (ii) the
number of shares of Common Stock with respect to which the ISAR shall have been
exercised, subject to any limitations the Administrator may impose.

9.4. Payment. Payment of the amounts determined under Section 9.2(c) and 9.3(b)
above shall be in cash, shares of Common Stock (based on its Fair Market Value
as of the date the Stock Appreciation Right is exercised), or a combination of
both, as determined by the Administrator.

 

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ARTICLE X.

ADDITIONAL TERMS OF AWARDS

10.1. Payment. The Administrator shall determine the methods by which payments
with respect to any Awards granted under the Plan shall be made, including,
without limitation: (a) cash or check, (b) shares of Common Stock (including, in
the case of payment of the exercise price of an Award, shares of Common Stock
issuable pursuant to the exercise of the Award) or shares of Common Stock held
for such period of time as may be required by the Administrator in order to
avoid adverse accounting consequences, in each case, having a Fair Market Value
on the date of delivery equal to the aggregate payments required, (c) delivery
of a notice that the Holder has placed a market sell order with a broker with
respect to shares of Common Stock then issuable upon exercise or vesting of an
Award, and that the broker has been directed to pay a sufficient portion of the
net proceeds of the sale to the Company in satisfaction of the aggregate
payments required, provided, that payment of such proceeds is then made to the
Company upon settlement of such sale, or (d) any other form of legal
consideration acceptable to the Administrator. The Administrator shall also
determine the methods by which shares of Common Stock shall be delivered or
deemed to be delivered to Holders. Notwithstanding any other provision of the
Plan to the contrary, no Holder who is a Director or an “executive officer” of
the Company within the meaning of Section 13(k) of the Exchange Act shall be
permitted to make payment with respect to any Awards granted under the Plan, or
continue any extension of credit with respect to such payment with a loan from
the Company or a loan arranged by the Company in violation of Section 13(k) of
the Exchange Act.

10.2. Tax Withholding. The Company or any Subsidiary shall have the authority
and the right to deduct or withhold, or require a Holder to remit to the
Company, an amount sufficient to satisfy federal, state, local and foreign taxes
(including the Holder’s FICA or employment tax obligation) required by law to be
withheld with respect to any taxable event concerning a Holder arising as a
result of this Plan. The Administrator may in its sole discretion and in
satisfaction of the foregoing requirement allow a Holder to elect to have the
Company withhold shares of Common Stock otherwise issuable under an Award (or
allow the surrender of shares of Common Stock). The number of shares of Common
Stock which may be so withheld or surrendered shall be limited to the number of
shares which have a Fair Market Value on the date of withholding or repurchase
equal to the aggregate amount of such liabilities based on the minimum statutory
withholding rates for federal, state, local and foreign income tax and payroll
tax purposes that are applicable to such supplemental taxable income. The
Administrator shall determine the fair market value of the Common Stock,
consistent with applicable provisions of the Code, for tax withholding
obligations due in connection with a broker-assisted cashless option exercise
involving the sale of shares to pay the option exercise price or tax withholding
obligation.

10.3. Transferability of Awards.

(a) Except as otherwise provided in Section 10.3(b):

(i) No Award under the Plan may be sold, pledged, assigned or transferred in any
manner other than by will or the laws of descent and distribution or, subject to
the consent of the Administrator, pursuant to a DRO, unless and until such Award
has been exercised, or the shares underlying such Award have been issued, and
all restrictions applicable to such shares have lapsed;

(ii) No Award or interest or right therein shall be liable for the debts,
contracts or engagements of the Holder or his successors in interest or shall be
subject to disposition by transfer, alienation, anticipation, pledge,
hypothecation, encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law by judgment,
levy, attachment, garnishment or any other legal or equitable proceedings
(including bankruptcy), and any attempted disposition thereof shall be null and
void and of no effect, except to the extent that such disposition is permitted
by the preceding sentence; and

(iii) During the lifetime of the Holder, only the Holder may exercise an Award
(or any portion thereof) granted to him under the Plan, unless it has been
disposed of pursuant to a DRO; after the death of the Holder, any exercisable
portion of an Award may, prior to the time when such portion becomes
unexercisable under the Plan or the applicable Award Agreement, be exercised by
his personal representative or by any person empowered to do so under the
deceased Holder’s will or under the then applicable laws of descent and
distribution.

 

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(b) Notwithstanding Section 10.3(a), the Administrator, in its sole discretion,
may determine to permit a Holder to transfer a Non-Qualified Stock Option to any
one or more Permitted Transferees (as defined below), subject to the following
terms and conditions: (i) a Non-Qualified Stock Option transferred to a
Permitted Transferee shall not be assignable or transferable by the Permitted
Transferee other than by will or the laws of descent and distribution; (ii) any
Non-Qualified Stock Option which is transferred to a Permitted Transferee shall
continue to be subject to all the terms and conditions of the Non-Qualified
Stock Option as applicable to the original Holder (other than the ability to
further transfer the Non-Qualified Stock Option); and (iii) the Holder and the
Permitted Transferee shall execute any and all documents requested by the
Administrator, including, without limitation documents to (A) confirm the status
of the transferee as a Permitted Transferee, (B) satisfy any requirements for an
exemption for the transfer under applicable federal, state and foreign
securities laws and (C) evidence the transfer. For purposes of this
Section 10.3(b), “Permitted Transferee” shall mean, with respect to a Holder,
any “family member” of the Holder, as defined under the instructions to use of
the Form S-8 Registration Statement under the Securities Act, or any other
transferee specifically approved by the Administrator after taking into account
any state, federal, local or foreign tax and securities laws applicable to
transferable Non-Qualified Stock Options.

(c) Notwithstanding Section 10.3(a), a Holder may, in the manner determined by
the Administrator, designate a beneficiary to exercise the rights of the Holder
and to receive any distribution with respect to any Award upon the Holder’s
death. A beneficiary, legal guardian, legal representative, or other person
claiming any rights pursuant to the Plan is subject to all terms and conditions
of the Plan and any Award Agreement applicable to the Holder, except to the
extent the Plan and Award Agreement otherwise provide, and to any additional
restrictions deemed necessary or appropriate by the Administrator. If the Holder
is married and resides in a community property state, a designation of a person
other than the Holder’s spouse as his or her beneficiary with respect to more
than 50% of the Holder’s interest in the Award shall not be effective without
the prior written consent of the Holder’s spouse. If no beneficiary has been
designated or survives the Holder, payment shall be made to the person entitled
thereto pursuant to the Holder’s will or the laws of descent and distribution.
Subject to the foregoing, a beneficiary designation may be changed or revoked by
a Holder at any time provided the change or revocation is filed with the
Administrator prior to the Holder’s death.

10.4. Conditions to Issuance of Shares.

(a) Notwithstanding anything herein to the contrary, the Company shall not be
required to issue or deliver any certificates or make any book entries
evidencing shares of Common Stock pursuant to the exercise of any Award, unless
and until the Board has determined, with advice of counsel, that the issuance of
such shares is in compliance with all applicable laws, regulations of
governmental authorities and, if applicable, the requirements of any exchange on
which the shares of Common Stock are listed or traded, and the shares of Common
Stock are covered by an effective registration statement or applicable exemption
from registration. In addition to the terms and conditions provided herein, the
Board may require that a Holder make such reasonable covenants, agreements, and
representations as the Board, in its sole discretion, deems advisable in order
to comply with any such laws, regulations, or requirements.

(b) All Common Stock certificates delivered pursuant to the Plan and all shares
issued pursuant to book entry procedures are subject to any stop-transfer orders
and other restrictions as the Administrator deems necessary or advisable to
comply with federal, state, or foreign securities or other laws, rules and
regulations and the rules of any securities exchange or automated quotation
system on which the Common Stock is listed, quoted, or traded. The Administrator
may place legends on any Common Stock certificate or book entry to reference
restrictions applicable to the Common Stock.

(c) The Administrator shall have the right to require any Holder to comply with
any timing or other restrictions with respect to the settlement, distribution or
exercise of any Award, including a window-period limitation, as may be imposed
in the sole discretion of the Administrator.

 

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(d) No fractional shares of Common Stock shall be issued and the Administrator
shall determine, in its sole discretion, whether cash shall be given in lieu of
fractional shares or whether such fractional shares shall be eliminated by
rounding down.

10.5. Forfeiture Provisions. Pursuant to its general authority to determine the
terms and conditions applicable to Awards under the Plan, the Administrator
shall have the right to provide, in the terms of Awards made under the Plan, or
to require a Holder to agree by separate written instrument, that: (a)(i) any
proceeds, gains or other economic benefit actually or constructively received by
the Holder upon any receipt or exercise of the Award, or upon the receipt or
resale of any Common Stock underlying the Award, must be paid to the Company,
and (ii) the Award shall terminate and any unexercised portion of the Award
(whether or not vested) shall be forfeited, if (b)(i) a Termination of Service
occurs prior to a specified date, or within a specified time period following
receipt or exercise of the Award, or (ii) the Holder at any time, or during a
specified time period, engages in any activity in competition with the Company,
or which is inimical, contrary or harmful to the interests of the Company, as
further defined by the Administrator or (iii) the Holder incurs a Termination of
Service for “cause” (as such term is defined in the sole discretion of the
Administrator, or as set forth in a written agreement relating to such Award
between the Company and the Holder).

10.6. Prohibition on Repricing. Subject to Section 12.2, the Administrator shall
not, without the approval of the stockholders of the Company, authorize the
amendment of any outstanding Award to reduce its price per share. Furthermore,
no Award shall be canceled and replaced with the grant of an Award having a
lesser price per share without the further approval of stockholders of the
Company. Subject to Section 12.2, the Administrator shall have the authority,
without the approval of the stockholders of the Company, to amend any
outstanding award to increase the price per share or to cancel and replace an
Award with the grant of an Award having a price per share that is greater than
or equal to the price per share of the original Award.

ARTICLE XI.

ADMINISTRATION

11.1. Administrator. The Compensation Committee (or another committee or a
subcommittee of the Board assuming the functions of the Committee under the
Plan) shall administer the Plan (except as otherwise permitted herein) and shall
consist solely of two or more Non-Employee Directors appointed by and holding
office at the pleasure of the Board, each of whom is intended to qualify as both
a “non-employee director” as defined by Rule 16b-3 of the Exchange Act or any
successor rule, an “outside director” for purposes of Section 162(m) of the Code
and an “independent director” under the rules of the New York Stock Exchange (or
other principal securities market on which shares of Common Stock are traded);
provided, that any action taken by the Committee shall be valid and effective,
whether or not members of the Committee at the time of such action are later
determined not to have satisfied the requirements for membership set forth in
this Section 11.l or otherwise provided in any charter of the Committee. Except
as may otherwise be provided in any charter of the Committee, appointment of
Committee members shall be effective upon acceptance of appointment. Committee
members may resign at any time by delivering written notice to the Board.
Vacancies in the Committee may only be filled by the Board. Notwithstanding the
foregoing, (a) the full Board, acting by a majority of its members in office,
shall conduct the general administration of the Plan with respect to Awards
granted to Non-Employee Directors and (b) the Board or Committee may delegate
its authority hereunder to the extent permitted by Section 11.6.

11.2. Duties and Powers of Committee. It shall be the duty of the Committee to
conduct the general administration of the Plan in accordance with its
provisions. The Committee shall have the power to interpret the Plan and the
Award Agreement, and to adopt such rules for the administration, interpretation
and application of the Plan as are not inconsistent therewith, to interpret,
amend or revoke any such rules and to amend any Award Agreement, provided that
the rights or obligations of the holder of the Award that is the subject of any
such Award Agreement are not affected adversely by such amendment, unless the
consent of the Holder is obtained or such amendment is otherwise permitted under
Section 12.10. Any such grant or award under the Plan need not be the same with
respect to each holder. Any such interpretations and rules with respect to
Incentive Stock Options shall be consistent with the provisions of Section 422
of the Code. In

 

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its sole discretion, the Board may at any time and from time to time exercise
any and all rights and duties of the Committee under the Plan except with
respect to matters which under Rule 16b-3 under the Exchange Act or any
successor rule, or Section 162(m) of the Code, or any regulations or rules
issued thereunder, are required to be determined in the sole discretion of the
Committee.

11.3. Action by the Committee. Unless otherwise established by the Board or in
any charter of the Committee, a majority of the Committee shall constitute a
quorum and the acts of a majority of the members present at any meeting at which
a quorum is present, and acts approved in writing by all members of the
Committee in lieu of a meeting, shall be deemed the acts of the Committee. Each
member of the Committee is entitled to, in good faith, rely or act upon any
report or other information furnished to that member by any officer or other
employee of the Company or any Subsidiary, the Company’s independent certified
public accountants, or any executive compensation consultant or other
professional retained by the Company to assist in the administration of the
Plan.

11.4. Authority of Administrator. Subject to any specific designation in the
Plan, the Administrator has the exclusive power, authority and sole discretion
to:

(a) Designate Eligible Individuals to receive Awards;

(b) Determine the type or types of Awards to be granted to each Holder;

(c) Determine the number of Awards to be granted and the number of shares of
Common Stock to which an Award will relate;

(d) Determine the terms and conditions of any Award granted pursuant to the
Plan, including, but not limited to, the exercise price, grant price, or
purchase price, any restrictions or limitations on the Award, any schedule for
vesting, lapse of forfeiture restrictions or restrictions on the exercisability
of an Award, and accelerations or waivers thereof, any provisions related to
non-competition and recapture of gain on an Award, based in each case on such
considerations as the Administrator in its sole discretion determines;

(e) Determine whether, to what extent, and pursuant to what circumstances an
Award may be settled in, or the exercise price of an Award may be paid in cash,
Common Stock, other Awards, or other property, or an Award may be canceled,
forfeited, or surrendered;

(f) Prescribe the form of each Award Agreement, which need not be identical for
each Holder;

(g) Decide all other matters that must be determined in connection with an
Award;

(h) Establish, adopt, or revise any rules and regulations as it may deem
necessary or advisable to administer the Plan;

(i) Interpret the terms of, and any matter arising pursuant to, the Plan or any
Award Agreement; and

(j) Make all other decisions and determinations that may be required pursuant to
the Plan or as the Administrator deems necessary or advisable to administer the
Plan.

11.5. Decisions Binding. The Administrator’s interpretation of the Plan, any
Awards granted pursuant to the Plan, any Award Agreement and all decisions and
determinations by the Administrator with respect to the Plan are final, binding,
and conclusive on all parties.

11.6. Delegation of Authority. To the extent permitted by applicable law, the
Board or Committee may from time to time delegate to a committee of one or more
members of the Board or one or more officers of the Company the authority to
grant or amend Awards; provided, however, that in no event shall an officer be
delegated the authority to grant awards to, or amend awards held by, the
following individuals: (a) individuals who are subject to Section 16 of the
Exchange Act, (b) any Employee who is a “covered employee” within the meaning of
Section 162(m) of the Code, or (c) officers of the Company (or Directors) to
whom authority to grant or amend Awards has been delegated hereunder. Any
delegation hereunder shall be subject to the restrictions and limits that the
Board or Committee specifies at the time of such delegation, and the Board may
at any time rescind the authority so delegated or appoint a new delegatee. At
all times, the delegatee appointed under this Section 11.6 shall serve in such
capacity at the pleasure of the Board and the Committee.

 

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ARTICLE XII.

MISCELLANEOUS PROVISIONS

12.1. Amendment, Suspension or Termination of the Plan. Except as otherwise
provided in this Section 12.1, the Plan may be wholly or partially amended or
otherwise modified, suspended or terminated at any time or from time to time by
the Administrator. However, without approval of the Company’s stockholders given
within twelve (12) months before or after the action by the Administrator, no
action of the Administrator may, except as provided in Section 12.2,
(i) increase the limits imposed in Section 2.1 on the maximum number of shares
which may be issued under the Plan, or (ii) decrease the exercise price of any
outstanding Option or Stock Appreciation Right granted under the Plan. Except as
provided in Section 12.10, no amendment, suspension or termination of the Plan
shall, without the consent of the Holder, impair any rights or obligations under
any Award theretofore granted or awarded, unless the Award itself otherwise
expressly so provides. No Awards may be granted or awarded during any period of
suspension or after termination of the Plan, and in no event may any Award be
granted under the Plan after February 21, 2018.

12.2. Changes in Common Stock or Assets of the Company, Acquisition or
Liquidation of the Company and Other Corporate Events.

(a) In the event of any stock dividend, stock split, combination or exchange of
shares, merger, consolidation or other distribution (other than normal cash
dividends) of Company assets to stockholders, or any other change affecting the
shares of Common Stock or the share price of the Common Stock, the Administrator
shall make equitable adjustments, if any, to reflect such change with respect to
(i) the aggregate number and kind of shares that may be issued under the Plan
(including, but not limited to, adjustments of the limitations in Section 2.1 on
the maximum number and kind of shares which may be issued under the Plan, and
adjustments of the Award Limit); (ii) the number and kind of shares of Common
Stock (or other securities or property) subject to outstanding Awards; (iii) the
terms and conditions of any outstanding Awards (including, without limitation,
any applicable performance targets or criteria with respect thereto); and
(iv) the grant or exercise price per share for any outstanding Awards under the
Plan. Any adjustment affecting an Award intended as Performance-Based
Compensation shall be made consistent with the requirements of Section 162(m) of
the Code or any successor provision.

(b) In the event of any transaction or event described in Section 12.2(a) or any
unusual or nonrecurring transactions or events affecting the Company, any
affiliate of the Company, or the financial statements of the Company or any
affiliate, or of changes in applicable laws, regulations or accounting
principles, the Administrator, in its sole discretion, and on such terms and
conditions as it deems appropriate, either by the terms of the Award or by
action taken prior to the occurrence of such transaction or event and either
automatically or upon the Holder’s request, is hereby authorized to take any one
or more of the following actions whenever the Administrator determines that such
action is appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan or
with respect to any Award under the Plan, to facilitate such transactions or
events or to give effect to such changes in laws, regulations or principles

(i) To provide for either (A) termination of any such Award in exchange for an
amount of cash, if any, equal to the amount that would have been attained upon
the exercise of such Award or realization of the Holder’s rights (and, for the
avoidance of doubt, if as of the date of the occurrence of the transaction or
event described in this Section 12.2 the Administrator determines in good faith
that no amount would have been attained upon the exercise of such Award or
realization of the Holder’s rights, then such Award may be terminated by the
Company without payment) or (B) the replacement of such Award with other rights
or property selected by the Administrator in its sole discretion having an
aggregate value not exceeding the amount that could have been attained upon the
exercise of such Award or realization of the Holder’s rights had such Award been
currently exercisable or payable or fully vested;

 

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(ii) To provide that such Award be assumed by the successor or survivor
corporation, or a parent or subsidiary thereof, or shall be substituted for by
similar options, rights or awards covering the stock of the successor or
survivor corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices;

(iii) To make adjustments in the number and type of shares of Common Stock (or
other securities or property) subject to outstanding Awards, and in the number
and kind of outstanding Restricted Stock or Deferred Stock and/or in the terms
and conditions of (including the grant or exercise price), and the criteria
included in, outstanding options, rights and awards and options, rights and
awards which may be granted in the future;

(iv) To provide that such Award shall be exercisable or payable or fully vested
with respect to all shares covered thereby, notwithstanding anything to the
contrary in the Plan or the applicable Award Notice; and

(v) To provide that the Award cannot vest, be exercised or become payable after
such event.

(c) Notwithstanding any other provision of the Plan, in the event of a Change in
Control, each outstanding Award shall be assumed or an equivalent Award
substituted by the successor corporation or a parent or subsidiary of the
successor corporation. In the event that the successor corporation refuses to
assume or substitute for the Award, the Administrator may cause any or all of
such Awards to become fully exercisable immediately prior to the consummation of
such transaction and all forfeiture restrictions on any or all of such Awards to
lapse. If an Award is exercisable in lieu of assumption or substitution in the
event of a Change in Control, the Administrator shall notify the Holder that the
Award shall be fully exercisable for a period of fifteen (15) days from the date
of such notice, and the Award shall terminate upon the expiration of such
period. For the purposes of this Section 12.2(c), an Award shall be considered
assumed if, following the Change in Control, the Award confers the right to
purchase or receive, for each share of Common Stock subject to the Award
immediately prior to the Change in Control, the consideration (whether stock,
cash, or other securities or property) received in the Change in Control by
holders of Common Stock for each share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding shares);
provided, however, that if such consideration received in the Change in Control
was not solely common stock of the successor corporation or its parent, the
Administrator may, with the consent of the successor corporation, provide for
the consideration to be received upon the exercise of the Award, for each share
of Common Stock subject to an Award, to be solely common stock of the successor
corporation or its parent equal in fair market value to the per share
consideration received by holders of Common Stock in the Change in Control.

(d) The Administrator may, in its sole discretion, include such further
provisions and limitations in any Award, agreement or certificate, as it may
deem equitable and in the best interests of the Company that are not
inconsistent with the provisions of this Plan.

(e) With respect to Awards which are intended to qualify as Performance-Based
Compensation, no adjustment or action described in this Section 12.2 or in any
other provision of the Plan shall be authorized to the extent that such
adjustment or action would cause such Award to fail to so qualify as
Performance-Based Compensation, unless the Administrator determines that the
Award should not so qualify. No adjustment or action described in this
Section 12.2 or in any other provision of the Plan shall be authorized to the
extent that such adjustment or action would cause the Plan to violate
Section 422(b)(1) of the Code. Furthermore, no such adjustment or action shall
be authorized to the extent such adjustment or action would result in
short-swing profits liability under Section 16 or violate the exemptive
conditions of Rule 16b-3 unless the Administrator determines that the Award is
not to comply with such exemptive conditions.

(f) The existence of the Plan, the Award Agreement and the Awards granted
hereunder shall not affect or restrict in any way the right or power of the
Company or the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company’s capital
structure or its business, any merger or consolidation of the Company, any issue
of stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to or
affect the Common Stock or the rights thereof or which are convertible into or
exchangeable for Common Stock, or the dissolution or liquidation of the company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.

 

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(g) No action shall be taken under this Section 12.2 which shall cause an Award
to fail to comply with Section 409A of the Code or the Treasury Regulations
thereunder, to the extent applicable to such Award.

12.3. Approval of Plan by Stockholders. The Plan will be submitted for the
approval of the Company’s stockholders within twelve (12) months after the date
of the Board’s initial adoption of the Plan. Awards may be granted or awarded
prior to such stockholder approval, provided that such Awards shall not be
exercisable, shall not vest and the restrictions thereon shall not lapse and no
shares of Common Stock shall be issued pursuant thereto prior to the time when
the Plan is approved by the stockholders, and provided further that if such
approval has not been obtained at the end of said twelve (12) month period, all
Awards previously granted or awarded under the Plan shall thereupon be canceled
and become null and void.

12.4. No Stockholders Rights. Except as otherwise provided herein, a Holder
shall have none of the rights of a stockholder with respect to shares of Common
Stock covered by any Award until the Holder becomes the record owner of such
shares of Common Stock.

12.5. Paperless Administration. In the event that the Company establishes, for
itself or using the services of a third party, an automated system for the
documentation, granting or exercise of Awards, such as a system using an
internet website or interactive voice response, then the paperless
documentation, granting or exercise of Awards by a Holder may be permitted
through the use of such an automated system.

12.6. Effect of Plan upon Other Compensation Plans. The adoption of the Plan
shall not affect any other compensation or incentive plans in effect for the
Company or any Subsidiary. Nothing in the Plan shall be construed to limit the
right of the Company or any Subsidiary: (a) to establish any other forms of
incentives or compensation for Employees, Directors or Consultants of the
Company or any Subsidiary, or (b) to grant or assume options or other rights or
awards otherwise than under the Plan in connection with any proper corporate
purpose including without limitation, the grant or assumption of options in
connection with the acquisition by purchase, lease, merger, consolidation or
otherwise, of the business, stock or assets of any corporation, partnership,
limited liability company, firm or association.

12.7. Compliance with Laws. The Plan, the granting and vesting of Awards under
the Plan and the issuance and delivery of shares of Common Stock and the payment
of money under the Plan or under Awards granted or awarded hereunder are subject
to compliance with all applicable federal, state, local and foreign laws, rules
and regulations (including but not limited to state, federal and foreign
securities law and margin requirements) and to such approvals by any listing,
regulatory or governmental authority as may, in the opinion of counsel for the
Company, be necessary or advisable in connection therewith. Any securities
delivered under the Plan shall be subject to such restrictions, and the person
acquiring such securities shall, if requested by the Company, provide such
assurances and representations to the Company as the Company may deem necessary
or desirable to assure compliance with all applicable legal requirements. To the
extent permitted by applicable law, the Plan and Awards granted or awarded
hereunder shall be deemed amended to the extent necessary to conform to such
laws, rules and regulations.

12.8. Titles and Headings, References to Sections of the Code. The titles and
headings of the Sections in the Plan are for convenience of reference only and,
in the event of any conflict, the text of the Plan, rather than such titles or
headings, shall control. References to sections of the Code shall include any
amendment or successor thereto.

12.9. Governing Law. The Plan and any agreements hereunder shall be
administered, interpreted and enforced under the internal laws of the State of
Delaware without regard to conflicts of laws thereof.

12.10. Section 409A. To the extent that the Administrator determines that any
Award granted under the Plan is subject to Section 409A of the Code, the Award
Agreement evidencing such Award shall incorporate the terms and conditions
required by Section 409A of the Code. To the extent applicable, the Plan and
Award Agreements shall be interpreted in accordance with Section 409A of the
Code and Department of Treasury

 

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regulations and other interpretive guidance issued thereunder, including without
limitation any such regulations or other guidance that may be issued after the
Effective Date. Notwithstanding any provision of the Plan to the contrary, in
the event that following the Effective Date the Administrator determines that
any Award may be subject to Section 409A of the Code and related Department of
Treasury guidance (including such Department of Treasury guidance as may be
issued after the Effective Date), the Administrator may adopt such amendments to
the Plan and the applicable Award Agreement or adopt other policies and
procedures (including amendments, policies and procedures with retroactive
effect), or take any other actions, that the Administrator determines are
necessary or appropriate to (a) exempt the Award from Section 409A of the Code
and/or preserve the intended tax treatment of the benefits provided with respect
to the Award, or (b) comply with the requirements of Section 409A of the Code
and related Department of Treasury guidance and thereby avoid the application of
any penalty taxes under such Section.

12.11. No Rights to Awards. No Eligible Individual or other person shall have
any claim to be granted any Award pursuant to the Plan, and neither the Company
nor the Administrator is obligated to treat Eligible Individuals, Holders or any
other persons uniformly.

12.12. Unfunded Status of Awards. The Plan is intended to be an “unfunded” plan
for incentive compensation. With respect to any payments not yet made to a
Holder pursuant to an Award, nothing contained in the Plan or any Award
Agreement shall give the Holder any rights that are greater than those of a
general creditor of the Company or any Subsidiary.

12.13. Indemnification. To the extent allowable pursuant to applicable law, each
member of the Committee or of the Board shall be indemnified and held harmless
by the Company from any loss, cost, liability, or expense that may be imposed
upon or reasonably incurred by such member in connection with or resulting from
any claim, action, suit, or proceeding to which he or she may be a party or in
which he or she may be involved by reason of any action or failure to act
pursuant to the Plan and against and from any and all amounts paid by him or her
in satisfaction of judgment in such action, suit, or proceeding against him or
her; provided he or she gives the Company an opportunity, at its own expense, to
handle and defend the same before he or she undertakes to handle and defend it
on his or her own behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such persons may be
entitled pursuant to the Company’s 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.

12.14. Relationship to other Benefits. No payment pursuant to the Plan shall be
taken into account in determining any benefits under any pension, retirement,
savings, profit sharing, group insurance, welfare or other benefit plan of the
Company or any Subsidiary except to the extent otherwise expressly provided in
writing in such other plan or an agreement thereunder.

12.15. Expenses. The expenses of administering the Plan shall be borne by the
Company and its Subsidiaries.

* * * * *

I hereby certify that the foregoing Complete Production Services, Inc. 2008
Incentive Award Plan was duly adopted by the Board of Directors of Complete
Production Services, Inc. on February 21, 2008.

* * * * *

I hereby certify that the foregoing Complete Production Services, Inc. 2008
Incentive Award Plan was approved by the stockholders of Complete Production
Services, Inc. on May 22, 2008

* * * * *

Executed on this day of             , 2008.

James F. Maroney, III,

Corporate Secretary

 

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