Exhibit 10.1

 

RUSH ENTERPRISES, INC.
EXECUTIVE TRANSITION PLAN

 

1.                                       PURPOSE.  THE PURPOSE OF THE EXECUTIVE
TRANSITION PLAN (THE “PLAN”) IS TO PROVIDE CERTAIN PROTECTIONS TO COVERED
EXECUTIVES IN THE EVENT THEIR EMPLOYMENT IS INVOLUNTARILY TERMINATED, INCLUDING
IN CONNECTION WITH A CHANGE IN CONTROL OF THE COMPANY. IT IS INTENDED THAT
HAVING THE PROTECTIONS PROVIDED BY THE PLAN WILL ALLEVIATE PERSONAL CONCERNS
THAT PARTICIPANTS MIGHT OTHERWISE HAVE ABOUT UNCERTAINTIES THAT MAY ARISE IN THE
FACE OF CERTAIN BUSINESS EXIGENCIES AND OPPORTUNITIES THE COMPANY MAY HAVE FROM
TIME TO TIME AND, IN TURN, PROVIDE GREATER ASSURANCE TO THE COMPANY AND ITS
SHAREHOLDERS THAT THE COVERED EXECUTIVES WILL BE ABLE TO MAINTAIN THEIR
UNDIVIDED FOCUS ON AND ATTENTION TO THE BUSINESS AND INTERESTS OF THE COMPANY
AND THE ENHANCEMENT OF SHAREHOLDER VALUE.

 

2.                                       CERTAIN DEFINITIONS.

 

(A)                                  “AFFILIATE” MEANS ANY ENTITY AT LEAST 50%
OF THE VOTING, CAPITAL OR PROFIT INTERESTS OF WHICH ARE OWNED DIRECTLY OR
INDIRECTLY BY THE COMPANY.

 

(B)                                 “ANNUAL CASH BONUS” MEANS THE AMOUNT PAYABLE
TO A PARTICIPANT UNDER THE TERMS OF ANY BONUS PROGRAM SPONSORED BY THE COMPANY
IN WHICH THE PARTICIPANT IS ELIGIBLE TO PARTICIPATE.

 

(C)                                  “BASE SALARY” MEANS WITH RESPECT TO A
PARTICIPANT, AN AMOUNT EQUAL TO THE PARTICIPANT’S RATE OF BASIC PAY FOR THE
PERIOD IN QUESTION, EXCLUDING AMOUNTS FOR OVERTIME, BONUSES, OR ALLOWANCES, AS
DETERMINED BY THE COMMITTEE IN ITS SOLE DISCRETION.

 

(D)                                 “BOARD” MEANS THE BOARD OF DIRECTORS OF THE
COMPANY.

 

(E)                                  “CAUSE” MEANS A PARTICIPANT’S
(I) CONVICTION OR PLEA OF GUILTY OR NOLO CONTENDRE TO A FELONY OR OTHER CRIME
INVOLVING MORAL TURPITUDE; (II) COMMISSION OF FRAUD OR A MATERIAL ACT OR
OMISSION INVOLVING DISHONESTY WITH RESPECT TO THE COMPANY, AS REASONABLY
DETERMINED BY THE BOARD; (III) WILLFUL FAILURE OR REFUSAL TO CARRY OUT THE
MATERIAL RESPONSIBILITIES OF HIS OR HER EMPLOYMENT, AS REASONABLY DETERMINED BY
THE BOARD; OR (IV) GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR ENGAGING IN A
PATTERN OF BEHAVIOR WHICH HAS HAD OR IS REASONABLY LIKELY TO HAVE A SIGNIFICANT
ADVERSE EFFECT ON THE COMPANY, AS REASONABLY DETERMINED BY THE BOARD.

 

(F)                                    “CHANGE IN CONTROL” MEANS THE OCCURRENCE
OF ANY OF THE FOLLOWING:

 

(I)                                     ANY “PERSON” (AS SUCH TERM IS USED IN
SECTION 13(D) AND 14(D) OF THE EXCHANGE ACT, OTHER THAN (1) THE COMPANY, (2) ANY
TRUSTEE OR OTHER FIDUCIARY HOLDING SECURITIES UNDER AN EMPLOYEE BENEFIT PLAN OF
THE COMPANY, (3) ANY ENTITY OWNED, DIRECTLY OR INDIRECTLY, BY THE SHAREHOLDERS
OF THE COMPANY IN SUBSTANTIALLY THE SAME PROPORTIONS AS THEIR OWNERSHIP OF STOCK
OF THE COMPANY, (4) W. MARVIN RUSH, W.M. “RUSTY” RUSH AND THEIR IMMEDIATE FAMILY
MEMBERS (I.E., BROTHERS AND SISTERS (WHETHER BY WHOLE OR HALF BLOOD), SPOUSE,
ANCESTORS, AND LINEAL DESCENDANTS); OR (5) ANY PERSON WHO BECOMES A “BENEFICIAL
OWNER” (AS DEFINED BELOW) IN CONNECTION WITH A

 

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TRANSACTION DESCRIBED IN CLAUSE (1) OF SUBPARAGRAPH (III) BELOW) IS OR BECOMES
THE BENEFICIAL OWNER (AS DEFINED IN RULE 13D-3 UNDER THE EXCHANGE ACT), DIRECTLY
OR INDIRECTLY, OF SECURITIES OF THE COMPANY (NOT INCLUDING IN THE SECURITIES
BENEFICIALLY OWNED BY SUCH PERSON ANY SECURITIES ACQUIRED DIRECTLY FROM THE
COMPANY) REPRESENTING 40% OR MORE OF THE COMBINED VOTING POWER OF THE COMPANY’S
THEN OUTSTANDING VOTING SECURITIES;

 

(II)           INCUMBENT DIRECTORS CEASE FOR ANY REASON TO CONSTITUTE A MAJORITY
OF THE DIRECTORS THEN SERVING;

 

(III)          THERE IS CONSUMMATED A MERGER OR CONSOLIDATION OF THE COMPANY OR
ANY DIRECT OR INDIRECT SUBSIDIARY OF THE COMPANY WITH ANY OTHER ENTITY, OTHER
THAN (1) A MERGER OR CONSOLIDATION WHICH RESULTS IN THE DIRECTORS OF THE COMPANY
IMMEDIATELY PRIOR TO SUCH MERGER OR CONSOLIDATION CONTINUING TO CONSTITUTE AT
LEAST A MAJORITY OF THE BOARD OF DIRECTORS OF THE COMPANY, THE SURVIVING ENTITY
OR ANY PARENT THEREOF OR (2) A MERGER OR CONSOLIDATION EFFECTED TO IMPLEMENT A
RECAPITALIZATION OF THE COMPANY (OR SIMILAR TRANSACTION) IN WHICH NO PERSON IS
OR BECOMES THE BENEFICIAL OWNER, DIRECTLY OR INDIRECTLY, OF SECURITIES OF THE
COMPANY (NOT INCLUDING IN THE SECURITIES BENEFICIALLY OWNED BY SUCH PERSON ANY
SECURITIES ACQUIRED DIRECTLY FROM THE COMPANY) REPRESENTING 40% OR MORE OF THE
COMBINED VOTING POWER OF THE COMPANY’S THEN OUTSTANDING VOTING SECURITIES;

 

(IV)                              THE SHAREHOLDERS OF THE COMPANY APPROVE A PLAN
OF COMPLETE LIQUIDATION OR DISSOLUTION OF THE COMPANY OR THERE IS CONSUMMATED AN
AGREEMENT FOR THE SALE OR DISPOSITION BY THE COMPANY OF ALL OR SUBSTANTIALLY ALL
OF THE COMPANY’S ASSETS, OTHER THAN A SALE OR DISPOSITION BY THE COMPANY OF ALL
OR A MAJORITY OF THE COMPANY’S ASSETS, INCOME OR REVENUE TO AN ENTITY, AT LEAST
50% OF THE COMBINED VOTING POWER OF THE VOTING SECURITIES OF WHICH ARE OWNED BY
SHAREHOLDERS OF THE COMPANY IN SUBSTANTIALLY THE SAME PROPORTIONS AS THEIR
OWNERSHIP OF THE COMPANY IMMEDIATELY PRIOR TO SUCH SALE OR DISPOSITION; OR

 

(V)                                 ANY OTHER TRANSACTION OR EVENT OCCURS THAT
IS RESOLVED BY THE COMPANY’S BOARD TO BE A “CHANGE IN CONTROL” FOR PURPOSES OF
THIS AGREEMENT.

 

(G)                                 “CODE” MEANS THE INTERNAL REVENUE CODE OF
1986, AS AMENDED.

 

(H)                                 “COMMITTEE” MEANS THE COMPENSATION COMMITTEE
OF THE BOARD.

 

(I)                                     “COMPANY” MEANS RUSH ENTERPRISES INC., A
TEXAS CORPORATION, ITS AFFILIATES AND ANY SUCCESSOR OR ASSIGNEE THEREOF.

 

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(J)                                     “DISABILITY” MEANS THE INABILITY OF A
PARTICIPANT TO PERFORM THE MATERIAL DUTIES OF HIS OR HER EMPLOYMENT BY REASON OF
A MEDICALLY DETERMINABLE PHYSICAL OR MENTAL IMPAIRMENT THAT CAN BE EXPECTED TO
RESULT IN DEATH OR THAT HAS LASTED OR IS EXPECTED TO LAST FOR A CONTINUOUS
PERIOD OF AT LEAST 12 MONTHS, AS DETERMINED BY A DULY LICENSED PHYSICIAN
SELECTED BY THE COMMITTEE.

 

(K)                                  “GOOD REASON” MEANS (I) PRIOR TO OR
FOLLOWING A CHANGE IN CONTROL, A MATERIAL ADVERSE CHANGE IN A PARTICIPANT’S
STATUS OR POSITION, INCLUDING, WITHOUT LIMITATION, ANY MATERIAL ADVERSE CHANGE
RESULTING FROM A DIMINUTION IN THE PARTICIPANT’S POSITION, DUTIES,
RESPONSIBILITIES OR AUTHORITY OR THE ASSIGNMENT TO THE PARTICIPANT OF DUTIES OR
RESPONSIBILITIES THAT ARE MATERIALLY INCONSISTENT WITH HIS OR HER STATUS OR
POSITION; (II) PRIOR TO OR FOLLOWING A CHANGE IN CONTROL, A REDUCTION IN THE
PARTICIPANT’S ANNUAL BASE SALARY OR A FAILURE TO PAY SAME ABSENT SIMILAR
REDUCTIONS IN THE BASE SALARY OF SIMILARLY SITUATED EMPLOYEES FOR LEGITIMATE
BUSINESS PURPOSES; (III) FOLLOWING A CHANGE IN CONTROL, A REDUCTION IN THE
PARTICIPANT’S TARGET INCENTIVE AWARD OPPORTUNITIES; (IV) FOLLOWING A CHANGE IN
CONTROL, THE RELOCATION OF THE PARTICIPANT’S PRINCIPAL PLACE OF EMPLOYMENT BY
MORE THAN 50 MILES FROM THE CURRENT LOCATION; (V) IN CONNECTION WITH A CHANGE IN
CONTROL, THE SUCCESSOR OR ACQUIRING COMPANY FAILS OR REFUSES TO ASSUME THE
OBLIGATIONS OF THE COMPANY UNDER THIS PLAN; OR (VI) WITH RESPECT TO A LEVEL 1 OR
LEVEL 2 PARTICIPANT, FOLLOWING A CHANGE IN CONTROL A LEVEL 1 OR LEVEL 2
PARTICIPANT DISAGREES WITH THE PHILOSOPHY OR POLICIES OF THE SUCCESSOR OR
ACQUIRING COMPANY.  BEFORE TERMINATING EMPLOYMENT FOR GOOD REASON, A PARTICIPANT
MUST SPECIFY IN WRITING TO THE COMPANY THE NATURE OF THE ACT OR OMISSION THAT
THE PARTICIPANT DEEMS TO CONSTITUTE GOOD REASON AND PROVIDE THE COMPANY 30 DAYS
AFTER RECEIPT OF SUCH NOTICE TO REVIEW AND, IF REQUIRED, CORRECT THE SITUATION
(AND THUS PREVENT THE PARTICIPANT’S TERMINATION FOR GOOD REASON).

 

(L)                                     “INCUMBENT DIRECTOR” MEANS ANY ONE OF
THE FOLLOWING:

 

(I)                                     ANY MEMBER OF THE BOARD ON MARCH 31,
2008; OR

 

(II)                                  ANY INDIVIDUAL APPOINTED OR ELECTED TO THE
BOARD AFTER MARCH 31, 2008, IF AND ONLY IF BOTH:

 

(A)                              SUCH INDIVIDUAL’S INITIAL ASSUMPTION OF OFFICE
IS NOT IN CONNECTION WITH AN ACTUAL OR THREATENED ELECTION CONTEST, INCLUDING
BUT NOT LIMITED TO A CONSENT SOLICITATION RELATING TO THE ELECTION OF DIRECTORS
OF THE COMPANY, AND

 

(B)                                THE APPOINTMENT OR ELECTION BY THE BOARD OR
THE NOMINATION FOR ELECTION BY THE COMPANY’S SHAREHOLDERS OF SUCH INDIVIDUAL WAS
APPROVED OR RECOMMENDED BY A VOTE OF AT LEAST TWO-THIRDS OF THE INCUMBENT
DIRECTORS IN OFFICE AT THE TIME OF SUCH APPROVAL OR RECOMMENDATION.

 

(M)                               “INVOLUNTARY TERMINATION” MEANS THE
TERMINATION OF A PARTICIPANT’S EMPLOYMENT WITH THE COMPANY (I) BY THE COMPANY
FOR ANY REASON OTHER THAN CAUSE, DEATH, OR DISABILITY, OR (II) BY THE
PARTICIPANT FOR GOOD REASON.

 

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(N)                                 “LEVEL 1 PARTICIPANT” MEANS THE EMPLOYEES OF
THE COMPANY SELECTED BY THE COMMITTEE TO PARTICIPATE IN THE PLAN AS A LEVEL 1
PARTICIPANT AS LISTED IN EXHIBIT A, AS EXHIBIT A MAY BE AMENDED FROM TIME TO
TIME BY THE COMMITTEE.

 

(O)                                 “LEVEL 2 PARTICIPANT” MEANS THE EMPLOYEES OF
THE COMPANY SELECTED BY THE COMMITTEE TO PARTICIPATE IN THE PLAN AS A LEVEL 2
PARTICIPANT AS LISTED IN EXHIBIT A, AS EXHIBIT A MAY BE AMENDED FROM TIME TO
TIME BY THE COMMITTEE.

 

(P)                                 “LEVEL 3 PARTICIPANT” MEANS THE EMPLOYEES OF
THE COMPANY SELECTED BY THE COMMITTEE TO PARTICIPATE IN THE PLAN AS A LEVEL 3
PARTICIPANT AS LISTED AS LISTED IN EXHIBIT A, AS EXHIBIT A MAY BE AMENDED FROM
TIME TO TIME BY THE COMMITTEE.

 

(Q)                                 “LEVEL 4 PARTICIPANT” MEANS THE EMPLOYEES OF
THE COMPANY SELECTED BY THE COMMITTEE TO PARTICIPATE IN THE PLAN AS A LEVEL 4
PARTICIPANT AS LISTED IN EXHIBIT A, AS EXHIBIT A MAY BE AMENDED FROM TIME TO
TIME BY THE COMMITTEE.

 

(R)                                    “PARTICIPANT” MEANS ANY EMPLOYEE OF THE
COMPANY SELECTED BY THE COMMITTEE TO PARTICIPATE IN THE PLAN.

 

3.                                       ADMINISTRATION.

 

(A)                                  THE COMMITTEE.  THE PLAN SHALL BE
ADMINISTERED BY THE COMMITTEE. SUBJECT TO THE PROVISIONS OF THE PLAN, THE
COMMITTEE, ACTING IN ITS SOLE AND ABSOLUTE DISCRETION, SHALL HAVE FULL POWER AND
AUTHORITY TO INTERPRET, CONSTRUE AND APPLY THE PROVISIONS OF THE PLAN AND TO
TAKE SUCH ACTIONS AS IT DEEMS NECESSARY OR APPROPRIATE IN ORDER TO CARRY OUT THE
PROVISIONS OF THE PLAN. THE DECISION OF THE COMMITTEE AS TO ANY QUESTION OR
ISSUE ARISING UNDER OR IN CONNECTION WITH THE PLAN OR AN INDIVIDUAL’S
PARTICIPATION IN THE PLAN SHALL BE FINAL AND CONCLUSIVE ON ALL PERSONS. THE
COMMITTEE MAY DELEGATE TO OTHER PERSONS SUCH DUTIES AND FUNCTIONS AS IT DEEMS
APPROPRIATE IN CONNECTION WITH THE ADMINISTRATION OF THE PLAN.

 

(B)                                 INDEMNIFICATION.  THE COMPANY SHALL
INDEMNIFY AND HOLD HARMLESS EACH MEMBER OF THE COMMITTEE AND ANY EMPLOYEE OR
DIRECTOR OF THE COMPANY TO WHOM ANY DUTY OR FUNCTION RELATING TO THE
ADMINISTRATION OF THE PLAN IS DELEGATED FROM AND AGAINST ANY LOSS, COST,
LIABILITY (INCLUDING ANY SUM PAID IN SETTLEMENT OF A CLAIM WITH THE APPROVAL OF
THE BOARD), DAMAGE AND EXPENSE (INCLUDING LEGAL AND OTHER EXPENSES INCIDENT
THERETO) ARISING OUT OF OR INCURRED IN CONNECTION WITH THE PLAN, UNLESS AND
EXCEPT TO THE EXTENT ATTRIBUTABLE TO SUCH PERSON’S FRAUD OR WILLFUL MISCONDUCT.

 

4.                                       PARTICIPATION.

 

(A)                                  THE COMMITTEE SHALL, IN ITS SOLE AND
ABSOLUTE DISCRETION, FROM TIME TO TIME DESIGNATE THE EMPLOYEES OF THE COMPANY
ELIGIBLE TO PARTICIPATE IN THE PLAN AND WHETHER SUCH INDIVIDUAL SHALL BE A LEVEL
1, LEVEL 2, LEVEL 3, OR LEVEL 4 PARTICIPANT.

 

(B)                                 EACH PARTICIPANT SHALL BE PROVIDED, TOGETHER
WITH A COPY OF THE PLAN, A PARTICIPATION CERTIFICATE, IN SUCH FORM AS THE
COMMITTEE MAY FROM TIME TO TIME PRESCRIBE, SPECIFYING THAT THE INDIVIDUAL IS A
PARTICIPANT AND WHETHER THE INDIVIDUAL IS A LEVEL 1, LEVEL 2 LEVEL 3, OR LEVEL 4
PARTICIPANT.

 

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(C)                                  AN EMPLOYEE’S STATUS AS A PARTICIPANT SHALL
TERMINATE AT SUCH TIME AS MAY BE DETERMINED BY THE COMMITTEE, IN ITS SOLE
DISCRETION, PROVIDED THAT SUCH PARTICIPANT SHALL BE GIVEN WRITTEN NOTICE OF SUCH
TERMINATION OF HIS OR HER STATUS AS A PARTICIPANT BY THE COMMITTEE AT LEAST 60
DAYS PRIOR TO THE EFFECTIVE DATE OF SUCH TERMINATION OF PARTICIPATION, AND
PROVIDED FURTHER THAT NO EMPLOYEE WHO IS A PARTICIPANT IMMEDIATELY PRIOR TO A
CHANGE IN CONTROL SHALL HAVE HIS STATUS AS A PARTICIPANT TERMINATED AT ANY TIME
WITHIN THE TWO YEAR PERIOD FOLLOWING SUCH CHANGE IN CONTROL WITHOUT THE
PARTICIPANT’S PRIOR WRITTEN CONSENT.

 

5.                                       INVOLUNTARY TERMINATION OF
PARTICIPANT’S EMPLOYMENT - GENERAL. SUBJECT TO SECTION 10 (IMPOSING ADDITIONAL
CONDITIONS WITH RESPECT TO RECEIPT OF PAYMENTS AND BENEFITS UNDER THE PLAN,
INCLUDING THE ELIMINATION OF DUPLICATE PAYMENTS AND BENEFITS DUE TO OTHER
AGREEMENTS THAT MAY BE APPLICABLE, RESTORATION OF PAYMENTS DUE TO A TERMINATED
PARTICIPANT’S VIOLATION OF RESTRICTIVE COVENANTS AND THE EXECUTION AND DELIVERY
OF A RELEASE) AND EXCEPT AS OTHERWISE PROVIDED IN SECTION 6 (RELATING TO AN
INVOLUNTARY TERMINATION IN CONJUNCTION WITH A CHANGE IN CONTROL), IF A
PARTICIPANT EXPERIENCES AN INVOLUNTARY TERMINATION, THE PARTICIPANT SHALL BE
ENTITLED TO RECEIVE THE PAYMENTS AND BENEFITS SET FORTH IN THE FOLLOWING
SECTIONS 5(A) – (F).

 

(A)                                  A SINGLE LUMP SUM CASH PAYMENT EQUAL TO THE
SUM OF ANY UNPAID BASE SALARY EARNED BY THE TERMINATED PARTICIPANT THROUGH THE
EFFECTIVE DATE OF HIS OR HER INVOLUNTARY TERMINATION, IF ANY.

 

(B)                                 PAYMENT OF ANY BUSINESS EXPENSES THAT WERE
INCURRED PRIOR TO THE EFFECTIVE DATE OF THE PARTICIPANT’S INVOLUNTARY
TERMINATION, BUT WHICH WERE NOT REIMBURSED AND ARE OTHERWISE ELIGIBLE FOR
REIMBURSEMENT AS THE EFFECTIVE DATE OF THE PARTICIPANT’S INVOLUNTARY
TERMINATION, IF ANY.

 

(C)                                  ANY PAYMENTS OR BENEFITS THAT ARE PAYABLE
TO THE TERMINATED PARTICIPANT OR ANY COVERED SPOUSE, DEPENDENT OR BENEFICIARY OF
THE TERMINATED PARTICIPANT, UNDER AND IN ACCORDANCE WITH THE PROVISIONS OF ANY
EMPLOYEE BENEFIT PLAN, PROGRAM OR ARRANGEMENT OF THE COMPANY (OTHER THAN THIS
PLAN).

 

(D)                                 A CASH PAYMENT AS FOLLOWS:

 

(I)                                   IF THE PARTICIPANT IS A LEVEL 1
PARTICIPANT EQUAL TO FOUR (4) TIMES THE PARTICIPANT’S CURRENT BASE SALARY.

 

(II)                                IF THE PARTICIPANT IS A LEVEL 2 PARTICIPANT
OR A LEVEL 3 PARTICIPANT EQUAL TO ONE (1) TIMES THE PARTICIPANT’S CURRENT BASE
SALARY PLUS ONE-HALF (1/2) TIMES THE ANNUAL CASH BONUS, IF ANY, THE PARTICIPANT
RECEIVED FOR THE CALENDAR YEAR PRIOR TO THE CALENDAR YEAR IN WHICH THE
PARTICIPANT IS INVOLUNTARILY TERMINATED.

 

(III)                             IF THE PARTICIPANT IS A LEVEL 4 PARTICIPANT
EQUAL TO ONE-HALF (1/2) TIMES THE PARTICIPANT’S CURRENT BASE SALARY PLUS
ONE-HALF (1/2) TIMES THE ANNUAL CASH BONUS, IF ANY, THE PARTICIPANT RECEIVED FOR
THE CALENDAR YEAR PRIOR TO THE CALENDAR YEAR IN WHICH THE PARTICIPANT IS
INVOLUNTARILY TERMINATED.

 

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Any such cash payment provided for in this Section 5(d) to a Level 1 Participant
shall be paid in a single lump sum in cash as soon as administratively
practicable after the Participant is Involuntarily Terminated, but in all cases,
no later than 2½ months following the fiscal year in which the Level 1
Participant is Involuntarily Terminated.  Any such cash payment provided for in
this Section 5(d) to a Level 2 or Level 3 Participant shall be paid in equal
monthly installments over a one-year period beginning with the first month
following the month in which the Participant was Involuntarily Terminated;
provided, however, to the extent a Level 2 Participant is a “specified employee”
as set forth in Section 409A of the Code, then no more than two times’ the
compensation limit under Section 401(a)(17) of the Code ($460,000 for 2008) may
be paid to such specified employee in the first six months following the month
in which he is Involuntarily Terminated.  Any such cash payment provided for in
this Section 5(d) to a Level 4 Participant shall be paid in equal monthly
installments over a six-month period beginning with the first month following
the month in which the Participant was Involuntarily Terminated.  Payments
provided for under this Sections 5(a), (b) and (c) will be paid in accordance
with normal payroll practices.

 

(E)                                  IF APPLICABLE, THE PARTICIPANT WILL
CONTINUE TO PARTICIPATE AT THE COMPANY’S EXPENSE IN ANY GROUP TERM LIFE
INSURANCE PROGRAM SPONSORED BY THE COMPANY IN WHICH THE PARTICIPANT WAS ELIGIBLE
TO PARTICIPATE IMMEDIATELY PRIOR TO HIS INVOLUNTARY TERMINATION AS IF THE
PARTICIPANT’S EMPLOYMENT HAD CONTINUED AT THE PARTICIPANT’S HIGHEST ANNUAL RATE
OF BASE SALARY IN EFFECT AT ANY TIME DURING THE 12 MONTHS PRECEDING THE
EFFECTIVE DATE OF THE PARTICIPANT’S INVOLUNTARY TERMINATION.  THE PARTICIPANT’S
PARTICIPATION IN THE GROUP TERM LIFE INSURANCE PROGRAM WILL CONTINUE UNTIL THE
EARLIER (I) (A) 48 MONTHS FOLLOWING THE EFFECTIVE DATE OF THE PARTICIPANT’S
INVOLUNTARY TERMINATION IF THE PARTICIPANT IS A LEVEL 1 PARTICIPANT, (B) 12
MONTHS FOLLOWING THE EFFECTIVE DATE OF THE PARTICIPANT’S INVOLUNTARY TERMINATION
IF THE PARTICIPANT IS A LEVEL 2 OR LEVEL 3 PARTICIPANT, OR (C) 6 MONTHS
FOLLOWING THE EFFECTIVE DATE OF THE PARTICIPANT’S INVOLUNTARY TERMINATION IF THE
PARTICIPANT IS A LEVEL 4 PARTICIPANT, (II) THE DATE THAT THE PARTICIPANT IS
ELIGIBLE FOR COVERAGE UNDER A GROUP TERM LIFE INSURANCE PLAN SPONSORED BY THE
PARTICIPANT’S SUCCESSOR EMPLOYER, OR (III) THE PARTICIPANT’S DEATH.

 

(F)                                    IF THE PARTICIPANT AND/OR ANY SPOUSE OR
DEPENDENT PARTICIPATES IN A GROUP HEALTH PLAN SPONSORED BY THE COMPANY (OTHER
THAN PURSUANT TO CONTINUATION COVERAGE UNDER THE CONSOLIDATED OMNIBUS
RECONCILIATION ACT OF 1985 (“COBRA”)) AS OF THE EFFECTIVE DATE OF THE
PARTICIPANT’S INVOLUNTARY TERMINATION, THEN, THE PARTICIPANT AND/OR ANY SPOUSE
AND/OR DEPENDENTS MAY ELECT TO CONTINUE PARTICIPATING IN THE GROUP HEALTH PLAN
SPONSORED BY THE COMPANY AT THE SAME BENEFIT LEVELS AS ARE AVAILABLE FOR
SIMILARLY SITUATED ACTIVE EMPLOYEES AT THE COMPANY’S EXPENSE UNTIL THE EARLIER
OF (I) (A) 48 MONTHS FOLLOWING THE EFFECTIVE DATE OF THE PARTICIPANT’S
INVOLUNTARY TERMINATION IF THE PARTICIPANT IS A LEVEL 1 PARTICIPANT, (B) 12
MONTHS FOLLOWING THE EFFECTIVE DATE OF THE PARTICIPANT’S INVOLUNTARY TERMINATION
IF THE PARTICIPANT IS A LEVEL 2 OR LEVEL 3 PARTICIPANT, OR (C) 6 MONTHS
FOLLOWING THE EFFECTIVE DATE OF THE PARTICIPANT’S INVOLUNTARY TERMINATION IF THE
PARTICIPANT IS A LEVEL 4 PARTICIPANT, OR, IF SUCH COVERAGE IS NOT PERMITTED BY
THE GROUP HEALTH PLAN SPONSORED BY THE COMPANY OR UNDER APPLICABLE LAW, THE
COMPANY WILL PROVIDE COBRA CONTINUATION COVERAGE TO SUCH TERMINATED PARTICIPANT
AND/OR ANY SPOUSE OR DEPENDENTS, AT THE COMPANY’S SOLE EXPENSE, IF AND TO THE
EXTENT ANY OF SUCH PERSONS ELECTS AND IS ENTITLED TO RECEIVE COBRA CONTINUATION
COVERAGE, (II) THE DATE THAT THE PARTICIPANT IS ELIGIBLE FOR COVERAGE UNDER A
GROUP HEALTH PLAN SPONSORED BY THE PARTICIPANT’S SUCCESSOR EMPLOYER, OR
(III) THE PARTICIPANT’S DEATH.  THIS CONTINUATION COVERAGE SHALL BE IN ADDITION
TO AND NOT IN LIEU OF COBRA

 

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TO THE EXTENT CONTINUATION COVERAGE IS PERMITTED BY THE GROUP HEALTH PLAN
SPONSORED BY THE COMPANY AND APPLICABLE LAW.  ANY REIMBURSEMENT TO PARTICIPANTS
UNDER THIS SECTION 5(F) MUST BE MADE NOT LATER THAN THE CALENDAR YEAR FOLLOWING
THE YEAR IN WHICH THE EXPENSE IS INCURRED.  FOLLOWING THE BENEFITS CONTINUATION
PERIOD PROVIDED HEREIN, THE PARTICIPANT, AND/OR ANY SPOUSE AND/OR OTHER
QUALIFIED BENEFICIARY, AS DEFINED UNDER SECTION 4980B OF THE CODE, SHALL BE
ELIGIBLE TO COMMENCE CONTINUED MEDICAL COVERAGE IN ACCORDANCE WITH AND FOR THE
APPLICABLE PERIOD REQUIRED BY COBRA.  IF THE CONTINUATION COVERAGE DESCRIBED
ABOVE ENDS AS A RESULT OF THE PARTICIPANT’S DEATH, THE PARTICIPANT’S SPOUSE
AND/OR DEPENDENTS WHO WOULD OTHERWISE BE CONSIDERED QUALIFIED BENEFICIARIES, AS
DEFINED UNDER SECTION 4980B OF THE CODE, SHALL BE ELIGIBLE TO COMMENCE CONTINUED
MEDICAL COVERAGE IN ACCORDANCE WITH AND FOR THE APPLICABLE PERIOD REQUIRED BY
COBRA.

 

6.                                       INVOLUNTARY TERMINATION OF A
PARTICIPANT’S EMPLOYMENT IN CONJUNCTION WITH A CHANGE IN CONTROL. SUBJECT TO
SECTION 10 (IMPOSING ADDITIONAL CONDITIONS WITH RESPECT TO RECEIPT OF PAYMENTS
AND BENEFITS UNDER THE PLAN, INCLUDING THE ELIMINATION OF DUPLICATE PAYMENTS AND
BENEFITS DUE TO OTHER AGREEMENTS THAT MAY BE APPLICABLE, RESTORATION OF PAYMENTS
DUE TO A TERMINATED PARTICIPANT’S VIOLATION OF RESTRICTIVE COVENANTS AND THE
EXECUTION AND DELIVERY OF A RELEASE), IF A PARTICIPANT EXPERIENCES AN
INVOLUNTARY TERMINATION DURING THE PERIOD BEGINNING SIX MONTHS PRIOR TO THE DATE
OF A CHANGE IN CONTROL OR, IF EARLIER, THE DATE A DEFINITIVE AGREEMENT IS SIGNED
WITH RESPECT TO THE CHANGE IN CONTROL, AND ENDING ON THE SECOND ANNIVERSARY OF
THE CHANGE IN CONTROL, THEN THE PARTICIPANT SHALL BE ENTITLED TO RECEIVE THE
PAYMENTS AND BENEFITS SET FORTH IN THE FOLLOWING SECTIONS 6(A) – (G).

 

(A)                                  A SINGLE LUMP SUM CASH PAYMENT EQUAL TO THE
SUM OF ANY UNPAID BASE SALARY EARNED BY THE TERMINATED PARTICIPANT THROUGH THE
EFFECTIVE DATE OF HIS OR HER INVOLUNTARY TERMINATION, IF ANY.

 

(B)                                 PAYMENT OF ANY BUSINESS EXPENSES THAT WERE
INCURRED PRIOR TO THE EFFECTIVE DATE OF THE PARTICIPANT’S INVOLUNTARY
TERMINATION, BUT WHICH WERE NOT REIMBURSED AND ARE OTHERWISE ELIGIBLE FOR
REIMBURSEMENT AS THE EFFECTIVE DATE OF THE PARTICIPANT’S INVOLUNTARY
TERMINATION, IF ANY.

 

(C)                                  ANY PAYMENTS OR BENEFITS THAT ARE PAYABLE
TO THE TERMINATED PARTICIPANT OR ANY COVERED SPOUSE, DEPENDENT OR BENEFICIARY OF
THE TERMINATED PARTICIPANT, UNDER AND IN ACCORDANCE WITH THE PROVISIONS OF ANY
EMPLOYEE BENEFIT PLAN, PROGRAM OR ARRANGEMENT OF THE COMPANY (OTHER THAN THIS
PLAN).

 

(D)                                 A CASH PAYMENT AS FOLLOWS:

 

(I)                                     IF THE PARTICIPANT IS A LEVEL 1
PARTICIPANT, THE PARTICIPANT SHALL RECEIVE A PAYMENT EQUAL TO FOUR (4) TIMES THE
PARTICIPANT’S CURRENT BASE SALARY.

 

(II)                                  IF THE PARTICIPANT IS A LEVEL 2
PARTICIPANT OR A LEVEL 3 PARTICIPANT, THE PARTICIPANT SHALL RECEIVE A PAYMENT
EQUAL TO TWO (2) TIMES THE PARTICIPANT’S CURRENT BASE SALARY PLUS TWO (2) TIMES
THE HIGHEST ANNUAL CASH BONUS, IF ANY, THE PARTICIPANT RECEIVED IN ANY OF THE

 

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PREVIOUS FIVE (5) CALENDAR YEAR PRIOR TO THE CALENDAR YEAR IN WHICH THE
PARTICIPANT IS INVOLUNTARILY TERMINATED.

 

(III)          IF THE PARTICIPANT IS A LEVEL 4 PARTICIPANT, THE PARTICIPANT
SHALL RECEIVE A PAYMENT A PAYMENT EQUAL TO ONE-HALF (1/2) TIMES THE
PARTICIPANT’S CURRENT BASE SALARY PLUS ONE-HALF (1/2) TIMES THE HIGHEST ANNUAL
CASH BONUS, IF ANY, THE PARTICIPANT RECEIVED IN ANY OF THE PREVIOUS FIVE
(5) CALENDAR YEAR PRIOR TO THE CALENDAR YEAR IN WHICH THE PARTICIPANT IS
INVOLUNTARILY TERMINATED.

 

Any such cash payment provided for in this Section 6(d) shall be paid in a
single lump sum in cash as soon as administratively practicable, but no later
than 2½ months following the year in which the Participant is Involuntarily
Terminated.  Payments provided for under this Sections 6(a), (b) and (c) will be
paid in accordance with normal payroll practices.  If a Participant is entitled
to receive payments and benefits under this Section 6 due to an Involuntary
Termination prior to but in conjunction with a Change in Control and if, with
respect to such Involuntary Termination, the Participant receives payments or
benefits under Section 5, then, in order to avoid duplication, the payments and
benefits to which the Participant is entitled under this Section 6 will be
reduced by the payments and benefits which the Participant has received under
Section 5.

 

(E)                                  IF APPLICABLE, THE PARTICIPANT WILL
CONTINUE TO PARTICIPATE AT THE COMPANY’S EXPENSE IN ANY GROUP TERM LIFE
INSURANCE PROGRAM SPONSORED BY THE COMPANY IN WHICH THE PARTICIPANT WAS ELIGIBLE
TO PARTICIPATE IMMEDIATELY PRIOR TO THE CHANGE IN CONTROL OR THE PARTICIPANT’S
INVOLUNTARY TERMINATION AS IF THE PARTICIPANT’S EMPLOYMENT HAD CONTINUED AT THE
PARTICIPANT’S HIGHEST ANNUAL RATE OF BASE SALARY IN EFFECT AT ANY TIME DURING
THE 12 MONTHS PRECEDING THE EFFECTIVE DATE OF THE CHANGE IN CONTROL OR
PARTICIPANT’S INVOLUNTARY TERMINATION.  THE PARTICIPANT’S PARTICIPATION IN THE
GROUP TERM LIFE INSURANCE PROGRAM WILL CONTINUE UNTIL THE EARLIER (I) (A) 48
MONTHS FOLLOWING THE EFFECTIVE DATE OF THE PARTICIPANT’S INVOLUNTARY TERMINATION
IF THE PARTICIPANT IS A LEVEL 1 PARTICIPANT, (B) 24 MONTHS FOLLOWING THE
EFFECTIVE DATE OF THE PARTICIPANT’S INVOLUNTARY TERMINATION IF THE PARTICIPANT
IS A LEVEL 2 OR LEVEL 3 PARTICIPANT, OR (C) 6 MONTHS FOLLOWING THE EFFECTIVE
DATE OF THE PARTICIPANT’S INVOLUNTARY TERMINATION IF THE PARTICIPANT IS A LEVEL
4 PARTICIPANT, (II) THE DATE THAT THE PARTICIPANT IS ELIGIBLE FOR COVERAGE UNDER
A GROUP TERM LIFE INSURANCE PLAN SPONSORED BY THE PARTICIPANT’S SUCCESSOR
EMPLOYER, OR (III) THE PARTICIPANT’S DEATH.

 

(F)                                    IF THE PARTICIPANT AND/OR ANY SPOUSE OR
DEPENDENT PARTICIPATES IN A GROUP HEALTH PLAN SPONSORED BY THE COMPANY (OTHER
THAN PURSUANT TO CONTINUATION COVERAGE UNDER THE CONSOLIDATED OMNIBUS
RECONCILIATION ACT OF 1985 (“COBRA”)) AS OF THE EFFECTIVE DATE OF THE CHANGE IN
CONTROL OR PARTICIPANT’S INVOLUNTARY TERMINATION, THEN, THE PARTICIPANT AND/OR
ANY SPOUSE AND/OR DEPENDENTS MAY ELECT TO CONTINUE PARTICIPATING IN THE GROUP
HEALTH PLAN SPONSORED BY THE COMPANY AT THE SAME BENEFIT LEVELS AS ARE AVAILABLE
FOR SIMILARLY SITUATED ACTIVE EMPLOYEES AT THE COMPANY’S EXPENSE UNTIL THE
EARLIER OF (I) (A) 48 MONTHS FOLLOWING THE EFFECTIVE DATE OF THE PARTICIPANT’S
INVOLUNTARY TERMINATION IF THE PARTICIPANT IS A LEVEL 1 PARTICIPANT, (B) 24
MONTHS FOLLOWING THE EFFECTIVE DATE OF THE PARTICIPANT’S INVOLUNTARY TERMINATION
IF THE PARTICIPANT IS A LEVEL 2 OR LEVEL 3 PARTICIPANT, OR (C) 6 MONTHS
FOLLOWING THE EFFECTIVE DATE OF THE PARTICIPANT’S INVOLUNTARY TERMINATION IF THE
PARTICIPANT IS A LEVEL 4

 

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PARTICIPANT, OR, IF SUCH COVERAGE IS NOT PERMITTED BY THE GROUP HEALTH PLAN
SPONSORED BY THE COMPANY OR UNDER APPLICABLE LAW, THE COMPANY WILL PROVIDE COBRA
CONTINUATION COVERAGE TO SUCH TERMINATED PARTICIPANT AND/OR ANY SPOUSE AND/OR
DEPENDENT, AT THE COMPANY’S SOLE EXPENSE, IF AND TO THE EXTENT ANY OF SUCH
PERSONS ELECTS AND IS ENTITLED TO RECEIVE COBRA CONTINUATION COVERAGE, (II) THE
DATE THAT THE PARTICIPANT IS ELIGIBLE FOR COVERAGE UNDER A GROUP HEALTH PLAN
SPONSORED BY THE PARTICIPANT’S SUCCESSOR EMPLOYER, OR (III) THE PARTICIPANT’S
DEATH.  THIS CONTINUATION COVERAGE SHALL BE IN ADDITION TO AND NOT IN LIEU OF
COBRA TO THE EXTENT CONTINUATION COVERAGE IS PERMITTED BY THE GROUP HEALTH PLAN
SPONSORED BY THE COMPANY AND APPLICABLE LAW.  ANY REIMBURSEMENT TO PARTICIPANTS
UNDER THIS SECTION 6(F) MUST BE MADE NOT LATER THAN THE CALENDAR YEAR FOLLOWING
THE YEAR IN WHICH THE EXPENSE IS INCURRED.  FOLLOWING THE BENEFITS CONTINUATION
PERIOD PROVIDED HEREIN, THE PARTICIPANT AND/OR ANY SPOUSE AND/OR OTHER QUALIFIED
BENEFICIARY, AS DEFINED UNDER SECTION 4980B OF THE CODE, SHALL BE ELIGIBLE TO
COMMENCE CONTINUED MEDICAL COVERAGE IN ACCORDANCE WITH AND FOR THE APPLICABLE
PERIOD REQUIRED BY COBRA.  IF THE CONTINUATION COVERAGE DESCRIBED ABOVE ENDS AS
A RESULT OF THE PARTICIPANT’S DEATH, THE PARTICIPANT’S SPOUSE AND DEPENDENTS WHO
WOULD OTHERWISE BE CONSIDERED QUALIFIED BENEFICIARIES, AS DEFINED UNDER
SECTION 4980B OF THE CODE, SHALL BE ELIGIBLE TO COMMENCE CONTINUED MEDICAL
COVERAGE IN ACCORDANCE WITH AND FOR THE APPLICABLE PERIOD REQUIRED BY COBRA.

 

(G)                                 IF THE PARTICIPANT PARTICIPATES IN ANY
EQUITY-BASED COMPENSATION PLAN OR PROGRAM SPONSORED BY THE COMPANY, AND IF THE
PARTICIPANT HAS ANY OUTSTANDING AWARDS UNDER SUCH PLAN AS OF THE EFFECTIVE DATE
OF THE PARTICIPANT’S INVOLUNTARY TERMINATION, THEN, TO THE EXTENT ANY SUCH
OUTSTANDING AWARD IS NOT FULLY VESTED AS OF THE EFFECTIVE DATE OF THE
PARTICIPANT’S INVOLUNTARY TERMINATION FOLLOWING A CHANGE IN CONTROL, THE
PARTICIPANT SHALL FULLY VEST IN ALL SUCH AWARDS AS OF THE EFFECTIVE DATE OF SUCH
INVOLUNTARY TERMINATION.

 

7.                                       ATTORNEY’S FEES.  IF, FOLLOWING A
CHANGE IN CONTROL, THE COMPANY FAILS TO COMPLY WITH ANY OF ITS OBLIGATIONS UNDER
THE PLAN OR THE COMPANY TAKES ANY ACTION TO DECLARE THE PLAN VOID OR
UNENFORCEABLE OR INSTITUTES ANY LITIGATION OR OTHER LEGAL ACTION DESIGNED TO
DENY, DIMINISH OR TO RECOVER FROM ANY PARTICIPANT (OR SPOUSE OR BENEFICIARY, AS
THE CASE MAY BE) THE PAYMENTS AND BENEFITS INTENDED TO BE PROVIDED, THEN SUCH
PARTICIPANT (OR BENEFICIARY, AS THE CASE MAY BE) SHALL BE ENTITLED TO RETAIN
COUNSEL OF HIS OR HER CHOICE AT THE EXPENSE OF THE COMPANY TO REPRESENT SUCH
PARTICIPANT (OR BENEFICIARY, AS THE CASE MAY BE) IN CONNECTION WITH THE GOOD
FAITH INITIATION OR DEFENSE OF ANY LITIGATION OR OTHER LEGAL ACTION, WHETHER BY
OR AGAINST THE COMPANY OR ANY DIRECTOR, OFFICER, SHAREHOLDER OR OTHER PERSON
AFFILIATED WITH THE COMPANY OR ANY SUCCESSOR THERETO IN ANY JURISDICTION.

 

8.                                       TERMINATION DUE TO DEATH OR
DISABILITY.  IN THE EVENT THAT A PARTICIPANT EXPERIENCES A SEPARATION FROM
SERVICE AS A RESULT OF THE PARTICIPANT’S DEATH OR DISABILITY, THE PARTICIPANT
SHALL NOT BE ENTITLED TO ANY BENEFITS UNDER THIS PLAN.

 

9.                                       EXCISE TAX PAYMENTS.  IF A PARTICIPANT
IS ENTITLED TO RECEIVE PAYMENTS AND BENEFITS UNDER THE PLAN AND IF, WHEN
COMBINED WITH THE PAYMENTS AND BENEFITS THE PARTICIPANT IS ENTITLED TO RECEIVE
UNDER ANY OTHER PLAN, PROGRAM OR ARRANGEMENT, THE PARTICIPANT WOULD BE SUBJECT
TO EXCISE TAX UNDER SECTION 4999 OF THE CODE, THEN THE COMPANY SHALL MAKE
“GROSS-UP” PAYMENTS TO THE PARTICIPANT IN THE AMOUNT(S), AT THE TIME(S) AND UPON
THE TERMS AND CONDITIONS SET FORTH IN EXHIBIT C ANNEXED TO THE PLAN AND
INCORPORATED HEREIN BY REFERENCE.

 

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10.                                 ADDITIONAL CONDITIONS OF SEVERANCE PAYMENTS.

 

(A)                                  EFFECT OF OTHER AGREEMENTS. 
NOTWITHSTANDING THE PROVISIONS HEREOF, IF A PARTICIPANT IS ENTITLED TO RECEIVE A
PAYMENT OR BENEFIT UNDER THE PLAN AS A RESULT OF AN INVOLUNTARY TERMINATION AND
THE PARTICIPANT IS ALSO ENTITLED TO RECEIVE A PAYMENT OR BENEFIT UNDER SIMILAR
CIRCUMSTANCES FROM THE COMPANY UNDER ANOTHER PLAN OR AGREEMENT, THEN THE COMPANY
MAY REDUCE THE AMOUNT OF THE CORRESPONDING PAYMENT OR ADJUST THE CORRESPONDING
BENEFIT TO WHICH THE PARTICIPANT (OR THE PARTICIPANT’S BENEFICIARY, AS THE CASE
MAY BE) IS ENTITLED UNDER THE PLAN IF AND TO THE EXTENT REASONABLY NECESSARY IN
ORDER TO AVOID AN UNINTENDED DUPLICATION OF ANY SUCH PAYMENT OR BENEFIT.

 

(B)                                 RESTORATION.  ANY SEVERANCE PAYMENTS AND
BENEFITS DUE, MADE OR PROVIDED PURSUANT TO THE PLAN SHALL BE SUBJECT TO
CONTINUING COMPLIANCE WITH THE RESTRICTIVE COVENANTS DESCRIBED IN EXHIBIT B
ANNEXED TO AND MADE A PART OF THE PLAN, AND REPAYMENT PURSUANT TO THIS
SECTION 10(B). AS A CONDITION OF COVERAGE UNDER THE PLAN, EACH PARTICIPANT IS
SUBJECT TO THE RESTRICTIONS DESCRIBED IN EXHIBIT B. IF A PARTICIPANT VIOLATES OR
IS IN BREACH OF ANY RESTRICTIONS SET FORTH IN EXHIBIT B (THE DETERMINATION OF
WHICH SHALL BE MADE BY THE COMMITTEE IN ITS SOLE DISCRETION), THEN THE
PARTICIPANT SHALL (I) NOT BE ENTITLED TO ANY FURTHER SEVERANCE PAYMENTS AND
BENEFITS UNDER THE PLAN, (II) IMMEDIATELY RETURN TO THE COMPANY ANY SEVERANCE
PAYMENTS AND THE VALUE OF ANY SEVERANCE BENEFITS PREVIOUSLY RECEIVED HEREUNDER,
AND (III) HAVE NO FURTHER RIGHTS OR ENTITLEMENTS UNDER THE PLAN.  THIS
SECTION 10(B) SHALL NOT IN ANY MANNER SUPERSEDE OR LIMIT ANY OTHER RIGHT THE
COMPANY MAY HAVE TO ENFORCE OR SEEK LEGAL OR EQUITABLE RELIEF BASED ON THE PLAN
OR EXHIBIT B.

 

(C)                                  RELEASE OF CLAIMS.  NOTWITHSTANDING
ANYTHING HEREIN TO THE CONTRARY, THE COMMITTEE MAY CONDITION SEVERANCE PAYMENTS
OR BENEFITS WHICH, BUT FOR THE PLAN, WOULD NOT OTHERWISE BE PAYABLE, ON THE
EXECUTION AND DELIVERY OF A GENERAL RELEASE IN FAVOR OF THE COMPANY, ITS
AFFILIATES, AND ITS OFFICERS, DIRECTORS AND EMPLOYEES, IN SUCH FORM AS THE
COMMITTEE MAY SPECIFY. ANY PAYMENT OR BENEFIT THAT IS SO CONDITIONED MAY BE
DEFERRED UNTIL THE EXPIRATION OF THE SEVEN DAY REVOCATION PERIOD PRESCRIBED BY
THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, AS AMENDED, OR ANY SIMILAR
REVOCATION PERIOD IN EFFECT ON THE EFFECTIVE DATE OF THE TERMINATION OF THE
PARTICIPANT’S EMPLOYMENT.

 

11.                                 NO DUTY TO MITIGATE/SET OFF.  EXCEPT AS
OTHERWISE PROVIDED IN THE PLAN OR IN AN EMPLOYMENT OR OTHER AGREEMENT, A
PARTICIPANT ENTITLED TO RECEIVE ANY PAYMENT OR BENEFITS HEREUNDER SHALL NOT BE
REQUIRED TO SEEK OTHER EMPLOYMENT OR TO ATTEMPT IN ANY WAY TO REDUCE ANY AMOUNTS
PAYABLE TO HIM OR HER PURSUANT TO THE PLAN AND THE PAYMENTS AND BENEFITS PAYABLE
HEREUNDER SHALL NOT BE REDUCED BY ANY COMPENSATION EARNED BY THE PARTICIPANT AS
A RESULT OF EMPLOYMENT OR CONSULTANCY WITH ANOTHER PERSON.

 

12.                                 AMENDMENT AND TERMINATION.  THE COMMITTEE
MAY AMEND THE PLAN AT ANY TIME AND FROM TIME TO TIME AND THE COMMITTEE MAY
TERMINATE THE PLAN AT ANY TIME AFTER DECEMBER 31, 2008, PROVIDED, HOWEVER, THAT
ANY SUCH ACTION THAT WOULD HAVE AN ADVERSE EFFECT ON THE AMOUNT, TIMING OR VALUE
OF THE PAYMENTS OR BENEFITS A PARTICIPANT IS OR OTHERWISE MAY BECOME ENTITLED TO
RECEIVE UNDER THE PLAN SHALL NOT BE EFFECTIVE WITH RESPECT TO THE PARTICIPANT
(A) IF HIS OR HER EMPLOYMENT TERMINATES BEFORE OR WITHIN SIX MONTHS AFTER THE
DATE SUCH ACTION IS TAKEN, AND/OR (B) PRIOR TO THE SECOND ANNIVERSARY OF A
CHANGE IN CONTROL IF SUCH ACTION IS TAKEN (1) ON THE DAY OF OR

 

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SUBSEQUENT TO THE CHANGE IN CONTROL, (2) PRIOR TO THE CHANGE IN CONTROL, BUT AT
THE REQUEST OF A THIRD PARTY PARTICIPATING DIRECTLY OR INDIRECTLY IN THE CHANGE
IN CONTROL, OR (3) OTHERWISE IN CONNECTION WITH OR IN ANTICIPATION OF THE CHANGE
IN CONTROL.

 

13.                                 SUCCESSORS AND BENEFICIARIES.

 

(A)                                  SUCCESSORS AND ASSIGNS OF COMPANY.  THE
COMPANY SHALL REQUIRE ANY SUCCESSOR OR ASSIGNEE, WHETHER DIRECT OR INDIRECT, BY
PURCHASE, MERGER, CONSOLIDATION OR OTHERWISE, OF ALL OR SUBSTANTIALLY ALL THE
BUSINESS OR ASSETS OF THE COMPANY, EXPRESSLY AND UNCONDITIONALLY TO ASSUME AND
AGREE TO PERFORM OR CAUSE TO BE PERFORMED THE COMPANY’S OBLIGATIONS UNDER THE
PLAN IN THE SAME MANNER AND TO THE SAME EXTENT THAT THE COMPANY WOULD BE
REQUIRED TO PERFORM IF NO SUCH SUCCESSION OR ASSIGNMENT HAD TAKEN PLACE. IN ANY
SUCH EVENT, THE TERM “COMPANY,” AS USED IN THE PLAN SHALL MEAN THE COMPANY, AS
DEFINED ABOVE AND ANY SUCH SUCCESSOR OR ASSIGNEE.

 

(B)                                 BENEFICIARY OF DECEASED PARTICIPANT.  FOR
THE PURPOSES HEREOF, A DECEASED PARTICIPANT’S BENEFICIARY WILL BE THE PERSON OR
PERSONS DESIGNATED AS SUCH IN A WRITTEN PLAN BENEFICIARY DESIGNATION FILED WITH
THE COMMITTEE OR ITS DESIGNEE, WHICH MAY BE REVOKED OR REVISED IN THE SAME
MANNER AT ANY TIME PRIOR TO THE PARTICIPANT’S DEATH. IN THE ABSENCE OF A
PROPERLY FILED WRITTEN PLAN BENEFICIARY DESIGNATION OR IF NO DESIGNATED
BENEFICIARY SURVIVES A PARTICIPANT, THE DECEASED PARTICIPANT’S ESTATE WILL BE
DEEMED TO BE THE PARTICIPANT’S BENEFICIARY HEREUNDER.

 

14.                                 MISCELLANEOUS.

 

(A)                                  COMPLIANCE WITH ERISA.

 

(I)                                   THIS PLAN IS INTENDED TO CONSTITUTE AN
UNFUNDED “EMPLOYEE WELFARE BENEFIT PLAN” MAINTAINED FOR THE PURPOSE OF PROVIDING
SEVERANCE BENEFITS TO A SELECT GROUP OF MANAGEMENT OR HIGHLY COMPENSATED
EMPLOYEES, AND THE PLAN SHALL BE ADMINISTERED IN A MANNER CONSISTENT WITH SUCH
INTENT.  THE PLAN IS INTENDED TO BE EXCEPTED FROM THE DEFINITIONS OF “EMPLOYEE
PENSION BENEFIT PLAN” AND “PENSION PLAN” SET FORTH UNDER SECTION 3(2) OF THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”).

 

(II)                                IF YOU BELIEVE YOU ARE ENTITLED TO PAYMENTS
AND BENEFITS UNDER THE PLAN, THEN CONTACT THE COMMITTEE IN WRITING. IF A CLAIM
FOR BENEFITS UNDER THE PLAN IS DENIED IN FULL OR IN PART, YOU, OR YOUR
AUTHORIZED REPRESENTATIVE, MAY APPEAL THE DECISION TO THE COMMITTEE, OR ITS
DESIGNEE.  TO APPEAL A DECISION, YOU, OR YOUR AUTHORIZED REPRESENTATIVE, MUST
SUBMIT A WRITTEN DOCUMENT THROUGH THE U.S. POSTAL SERVICE OR OTHER COURIER
SERVICE APPEALING THE DENIAL OF THE CLAIM WITHIN 60 DAYS AFTER YOUR TERMINATION
OF EMPLOYMENT OR YOU WILL NO LONGER BE ELIGIBLE TO RECEIVE BENEFITS UNDER THE
PLAN.  YOU, OR YOUR AUTHORIZED REPRESENTATIVE, MAY ALSO INCLUDE INFORMATION OR
OTHER DOCUMENTATION IN SUPPORT OF YOUR CLAIM.  THE COMMITTEE, OR

 

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ITS DESIGNEE, WILL HAVE 90 DAYS FROM THE DATE IT RECEIVES YOUR APPEAL IN WHICH
TO REACH A DECISION REGARDING YOUR CLAIM FOR BENEFITS.  THIS 90 DAY PERIOD MAY
BE EXTENDED TO 180 DAYS, IF REQUIRED.  IF THE COMMITTEE, OR ITS DESIGNEE,
REQUIRES AN EXTENSION OF TIME TO CONSIDER YOUR CLAIM, YOU WILL BE NOTIFIED PRIOR
TO THE END OF THE INITIAL 90 DAY PERIOD OF (1) THE NEED FOR SUCH AN EXTENSION,
AND (2) WHEN THE COMMITTEE, OR ITS DESIGNEE, ANTICIPATES REACHING A DECISION
REGARDING YOUR CLAIM.  ONCE THE COMMITTEE, OR ITS DESIGNEE REACHES A DECISION ON
YOUR CLAIM, IT WILL PROVIDE YOU WITH WRITTEN NOTICE OF THAT DECISION.  THIS
NOTICE WILL INCLUDE THE REASONS FOR THE DENIAL AND THE SPECIFIC PROVISION(S) ON
WHICH THE DENIAL IS BASED, A DESCRIPTION OF ANY ADDITIONAL INFORMATION NEEDED TO
RESUBMIT THE CLAIM, AND AN EXPLANATION OF THE CLAIMS REVIEW PROCEDURE.  IN
CONNECTION WITH YOUR APPEAL, YOU, OR YOUR AUTHORIZED REPRESENTATIVE, CAN REVIEW
ALL PLAN DOCUMENTS AND YOU, OR YOUR AUTHORIZED REPRESENTATIVE, MAY HAVE A
QUALIFIED PERSON REPRESENT YOU, OR YOUR AUTHORIZED REPRESENTATIVE, DURING THE
APPEAL PROCESS.  ANY DOCUMENTS OR RECORDS THAT SUPPORT YOUR POSITION MUST BE
SUBMITTED WITH YOUR APPEAL LETTER.

 

(B)                                 UNFUNDED OBLIGATIONS.  ALL SEVERANCE
PAYMENTS AND BENEFITS UNDER THE PLAN SHALL CONSTITUTE AN UNFUNDED OBLIGATION OF
THE COMPANY.  SEVERANCE PAYMENTS SHALL BE MADE, AS DUE, FROM THE GENERAL FUNDS
OF THE COMPANY.  THE PLAN SHALL CONSTITUTE SOLELY AN UNSECURED PROMISE BY THE
COMPANY TO PROVIDE SUCH BENEFITS TO YOU TO THE EXTENT PROVIDED HEREIN.  FOR
AVOIDANCE OF DOUBT, ANY HEALTH BENEFITS TO WHICH YOU MAY BE ENTITLED UNDER THE
PLAN SHALL BE PROVIDED UNDER OTHER APPLICABLE EMPLOYEE BENEFIT PLANS OF THE
COMPANY.

 

(C)                                  NONASSIGNABILITY.  WITH THE EXCEPTION OF A
PARTICIPANT’S BENEFICIARY DESIGNATION, NO PARTICIPANT OR BENEFICIARY MAY PLEDGE,
TRANSFER OR ASSIGN IN ANY WAY HIS OR HER RIGHT TO RECEIVE PAYMENTS UNDER THE
PLAN, AND ANY ATTEMPTED PLEDGE, TRANSFER OR ASSIGNMENT SHALL BE VOID AND OF NO
FORCE OR EFFECT.

 

(D)                                 NOT A CONTRACT OF EMPLOYMENT.  THE TERMS AND
CONDITIONS OF THE PLAN SHALL NOT BE DEEMED TO CONSTITUTE A CONTRACT OF
EMPLOYMENT BETWEEN ANY PARTICIPANT AND THE COMPANY. NOTHING IN THE PLAN SHALL BE
DEEMED TO GIVE ANY EMPLOYEE THE RIGHT TO BE RETAINED IN THE EMPLOY OR OTHER
SERVICE OF THE COMPANY OR TO INTERFERE WITH THE RIGHT OF THE COMPANY TO
TERMINATE A PARTICIPANT’S EMPLOYMENT AT ANY TIME.

 

(E)                                  GOVERNING LAW.  THE PLAN AND ALL RIGHTS
THEREUNDER SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH ERISA AND, TO THE
EXTENT NOT PREEMPTED BY FEDERAL LAW, WITH THE LAWS OF THE STATE OF TEXAS

 

(F)                                    WITHHOLDING.  THE COMPANY MAY WITHHOLD
FROM ANY AND ALL AMOUNTS PAYABLE UNDER THE PLAN SUCH FEDERAL, STATE AND LOCAL
TAXES AS MAY BE REQUIRED TO BE WITHHELD PURSUANT TO ANY APPLICABLE LAW OR
REGULATION.

 

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(G)                                 OBLIGATION TO THE COMPANY.  IF A PARTICIPANT
(OR BENEFICIARY) BECOMES ENTITLED TO A DISTRIBUTION OF BENEFITS UNDER THE PLAN
AND IF AT SUCH TIME THE PARTICIPANT HAS OUTSTANDING ANY DEBT, OBLIGATION OR
OTHER LIABILITY REPRESENTING AN AMOUNT OWED TO THE COMPANY, THEN THE COMPANY MAY
OFFSET SUCH AMOUNTS OWING IT AGAINST THE AMOUNT OF BENEFITS DISTRIBUTABLE UNDER
THE TERMS OF THE PLAN AND ONLY WHEN SUCH BENEFITS ARE ACTUALLY DISTRIBUTABLE
PURSUANT TO THE TERMS OF THE PLAN.

 

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EXHIBIT B

 

CONFIDENTIALITY AND
POST-EMPLOYMENT RESTRICTIVE COVENANTS

 

This Exhibit B contains the confidentiality and post-employment restrictive
covenants referenced in the Plan to which this Exhibit B is annexed. This
Exhibit B is a part of and will be interpreted in accordance with and otherwise
subject to the provisions of the Plan. The payments and benefits provided to a
participating employee (a “Participant”) under the Plan are expressly
conditioned upon continuing compliance with the covenants set forth herein and
the provisions hereof.

 

1.             ACCESS TO SECRET AND CONFIDENTIAL INFORMATION.  THE COMPANY HAS
FURNISHED AND SHALL FURNISH TO THE PARTICIPANT SECRET AND CONFIDENTIAL
INFORMATION.  “SECRET AND CONFIDENTIAL INFORMATION” INCLUDES, WITHOUT
LIMITATION, THE COMPANY’S TECHNICAL AND BUSINESS INFORMATION, WHETHER PATENTABLE
OR NOT, WHICH IS OF A CONFIDENTIAL, TRADE SECRET OR PROPRIETARY CHARACTER, AND
WHICH IS EITHER DEVELOPED BY THE PARTICIPANT ALONE, WITH OTHERS OR BY OTHERS;
LISTS OF CUSTOMERS; IDENTITY OF CUSTOMERS; IDENTITY OF PROSPECTIVE CUSTOMERS;
CONTRACT TERMS; BIDDING INFORMATION AND STRATEGIES; PRICING METHODS OR
INFORMATION; COMPUTER SOFTWARE; COMPUTER SOFTWARE METHODS AND DOCUMENTATION;
HARDWARE; THE COMPANY’S METHODS OF OPERATION; THE PROCEDURES, FORMS AND
TECHNIQUES USED IN SERVICING ACCOUNTS; AND OTHER INFORMATION OR DOCUMENTS THAT
THE COMPANY REQUIRES TO BE MAINTAINED IN CONFIDENCE FOR THE COMPANY’S CONTINUED
BUSINESS SUCCESS.

 

2.             NON-DISCLOSURE OF SECRET AND CONFIDENTIAL INFORMATION.  IN
CONSIDERATION OF BEING ADMITTED TO THE PLAN AND AS A CONDITION OF RECEIVING AND
RETAINING PAYMENTS OR BENEFITS THEREUNDER, THE PARTICIPANT SHALL NOT DURING THE
PERIOD OF PARTICIPANT’S EMPLOYMENT WITH THE COMPANY OR AT ANY TIME THEREAFTER,
DISCLOSE TO ANYONE, INCLUDING, WITHOUT LIMITATION, ANY PERSON, FIRM,
CORPORATION, OR OTHER ENTITY,  OR PUBLISH, OR USE FOR ANY PURPOSE, ANY SECRET
AND CONFIDENTIAL INFORMATION, EXCEPT AS PROPERLY REQUIRED IN THE ORDINARY COURSE
OF THE COMPANY’S BUSINESS OR AS DIRECTED AND AUTHORIZED BY THE COMPANY.

 

3.             DUTY TO RETURN COMPANY DOCUMENTS AND PROPERTY.  UPON THE
TERMINATION OF PARTICIPANT’S EMPLOYMENT WITH THE COMPANY, FOR ANY REASON
WHATSOEVER, PARTICIPANT SHALL IMMEDIATELY RETURN AND DELIVER TO THE COMPANY ANY
AND ALL PAPERS, BOOKS, RECORDS, DOCUMENTS, MEMORANDA AND MANUALS, E-MAIL,
ELECTRONIC OR MAGNETIC RECORDINGS OR DATA, INCLUDING ALL COPIES THEREOF,
BELONGING TO THE COMPANY OR RELATING TO ITS BUSINESS, IN PARTICIPANT’S
POSSESSION, WHETHER PREPARED BY PARTICIPANT OR OTHERS. IF AT ANY TIME AFTER THE
TERMINATION OF EMPLOYMENT, PARTICIPANT DETERMINES THAT HE OR SHE HAS ANY SECRET
AND CONFIDENTIAL INFORMATION IN HIS OR HER POSSESSION OR CONTROL, PARTICIPANT
SHALL IMMEDIATELY RETURN TO THE COMPANY ALL SUCH SECRET AND CONFIDENTIAL
INFORMATION IN PARTICIPANT’S POSSESSION OR CONTROL, INCLUDING ALL COPIES AND
PORTIONS THEREOF.

 

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4.             DISCLOSURE.  WHILE HE OR SHE IS EMPLOYED WITH THE COMPANY,
PARTICIPANT SHALL PROMPTLY DISCLOSE TO THE COMPANY ALL IDEAS, INVENTIONS,
COMPUTER PROGRAMS, AND DISCOVERIES, WHETHER OR NOT PATENTABLE OR COPYRIGHTABLE,
WHICH PARTICIPANT MAY CONCEIVE OR MAKE, ALONE OR WITH OTHERS, DURING
PARTICIPANT’S EMPLOYMENT, WHETHER OR NOT DURING WORKING HOURS, AND WHICH
DIRECTLY OR INDIRECTLY:

 

(A)           RELATE TO MATTERS WITHIN THE SCOPE, FIELD, DUTIES OR
RESPONSIBILITY OF PARTICIPANT’S EMPLOYMENT WITH THE COMPANY;

 

(B)           ARE BASED ON THE PARTICIPANT’S KNOWLEDGE OF THE ACTUAL OR
ANTICIPATED BUSINESS OR INTEREST OF THE COMPANY; OR

 

(C)           ARE AIDED BY THE USE OF TIME, MATERIALS, FACILITIES OR INFORMATION
OF THE COMPANY.

 

Participant assigns to the Company, without further compensation, all rights,
titles and interest in all such ideas, inventions, computer programs and
discoveries in all countries of the world. Participant recognizes that all
ideas, inventions, computer programs and discoveries of the type described
above, conceived or made by Participant alone or with others within one year
after termination of employment (voluntary or otherwise), are likely to have
been conceived in significant part either while employed by the Company or as a
direct result of knowledge Participant had of proprietary information.
Accordingly, Participant agrees that such ideas, inventions or discoveries shall
be presumed to have been conceived during Participant’s employment with the
Company, unless and until the contrary is clearly established by the
Participant.

 

5.             INVENTIONS.  ANY AND ALL WRITINGS, COMPUTER SOFTWARE, INVENTIONS,
IMPROVEMENTS, PROCESSES, PROCEDURES AND/OR TECHNIQUES THAT PARTICIPANT MAY MAKE,
CONCEIVE, DISCOVER, OR DEVELOP, EITHER SOLELY OR JOINTLY WITH ANY OTHER PERSON
OR PERSONS, AT ANY TIME DURING THE TERM OF HIS OR HER EMPLOYMENT, WHETHER AT THE
REQUEST OR UPON THE SUGGESTION OF THE COMPANY OR OTHERWISE, WHICH RELATE TO OR
ARE USEFUL IN CONNECTION WITH ANY BUSINESS NOW OR HEREAFTER CARRIED ON OR
CONTEMPLATED BY THE COMPANY, INCLUDING DEVELOPMENTS OR EXPANSIONS OF ITS PRESENT
FIELDS OF OPERATIONS, SHALL BE THE SOLE AND EXCLUSIVE PROPERTY OF THE COMPANY.
PARTICIPANT SHALL TAKE ALL ACTIONS NECESSARY SO THAT THE COMPANY CAN PREPARE AND
PRESENT APPLICATIONS FOR COPYRIGHT OR LETTERS PATENT THEREFOR, AND CAN SECURE
SUCH COPYRIGHT OR LETTERS PATENT WHEREVER POSSIBLE, AS WELL AS REISSUE RENEWALS,
AND EXTENSIONS THEREOF, AND CAN OBTAIN THE RECORD TITLE TO SUCH COPYRIGHT OR
PATENTS. PARTICIPANT SHALL NOT BE ENTITLED TO ANY ADDITIONAL OR SPECIAL
COMPENSATION OR REIMBURSEMENT REGARDING ANY SUCH WRITINGS, COMPUTER SOFTWARE,
INVENTIONS, IMPROVEMENTS, PROCESSES, PROCEDURES AND TECHNIQUES. PARTICIPANT
ACKNOWLEDGES THAT THE COMPANY FROM TIME TO TIME MAY HAVE AGREEMENTS WITH OTHER
PERSONS OR ENTITIES WHICH IMPOSE OBLIGATIONS OR RESTRICTIONS ON THE COMPANY
REGARDING INVENTIONS MADE DURING THE COURSE OF WORK THEREUNDER OR REGARDING THE
CONFIDENTIAL NATURE OF SUCH WORK. PARTICIPANT SHALL BE BOUND BY ALL SUCH
OBLIGATIONS AND RESTRICTIONS AND TAKE ALL ACTION NECESSARY TO DISCHARGE THE
OBLIGATIONS OF THE COMPANY.

 

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6.             NON-SOLICITATION AND NON-COMPETITION RESTRICTIONS.  TO PROTECT
SECRET AND CONFIDENTIAL INFORMATION, AND IN THE EVENT OF PARTICIPANT’S
TERMINATION OF EMPLOYMENT FOR ANY REASON WHATSOEVER, WHETHER BY PARTICIPANT OR
THE COMPANY, THE PARTICIPANT WILL BE SUBJECT TO THE FOLLOWING RESTRICTIVE
COVENANTS AS A FURTHER CONDITION OF HIS OR HER PARTICIPATION IN THE PLAN AND
ENTITLEMENT TO RECEIVE AND RETAIN ANY PAYMENTS OR BENEFITS UNDER THE PLAN.

 

(A)           NON-COMPETITION.  FOR SO LONG AS THE PARTICIPANT IS EMPLOYED BY
THE COMPANY AND DURING THE DEEMED SEVERANCE PERIOD APPLICABLE TO SUCH
PARTICIPANT, THE PARTICIPANT SHALL NOT, WITHOUT THE PRIOR WRITTEN CONSENT OF THE
COMPANY:

 

(1)           PERSONALLY ENGAGE IN COMPETITIVE ACTIVITIES (AS DEFINED BELOW); OR

 

(2)           WORK FOR, OWN, MANAGE, OPERATE, CONTROL, OR PARTICIPATE IN THE
OWNERSHIP, MANAGEMENT, OPERATION, OR CONTROL OF, OR PROVIDE CONSULTING OR
ADVISORY SERVICES TO, ANY PERSON, PARTNERSHIP, FIRM, CORPORATION, INSTITUTION OR
OTHER ENTITY ENGAGED IN COMPETITIVE ACTIVITIES, OR ANY COMPANY OR PERSON
AFFILIATED WITH SUCH PERSON OR ENTITY ENGAGED IN COMPETITIVE ACTIVITIES;
PROVIDED THAT THE PARTICIPANT’S PURCHASE OR HOLDING, FOR INVESTMENT PURPOSES, OF
SECURITIES OF A PUBLICLY TRADED COMPANY SHALL NOT CONSTITUTE “OWNERSHIP” OR
“PARTICIPATION IN THE OWNERSHIP” FOR PURPOSES OF THIS PARAGRAPH SO LONG AS SUCH
EQUITY INTEREST IN ANY SUCH COMPANY IS LESS THAN A CONTROLLING INTEREST.

 

(B)           COMPETITIVE ACTIVITIES.  FOR PURPOSES HEREOF, “COMPETITIVE
ACTIVITIES” MEANS ACTIVITIES RELATING TO PRODUCTS OR SERVICES OF THE SAME OR
SIMILAR TYPE AS THE PRODUCTS OR SERVICES (1) WHICH ARE SOLD (OR, PURSUANT TO AN
EXISTING BUSINESS PLAN, WILL BE SOLD) TO PAYING CUSTOMERS OF THE COMPANY, AND
(2) FOR WHICH THE PARTICIPANT HAS RESPONSIBILITY TO PLAN, DEVELOP, MANAGE,
MARKET, OVERSEE OR PERFORM, OR HAD ANY SUCH RESPONSIBILITY WITHIN THE
PARTICIPANT’S MOST RECENT 24 MONTHS OF EMPLOYMENT WITH THE COMPANY. 
NOTWITHSTANDING THE PREVIOUS SENTENCE, AN ACTIVITY SHALL NOT BE TREATED AS A
COMPETITIVE ACTIVITY IF THE GEOGRAPHIC MARKETING AREA OF THE RELEVANT PRODUCTS
OR SERVICES DOES NOT OVERLAP WITH THE GEOGRAPHIC MARKETING AREA FOR THE
APPLICABLE PRODUCTS AND SERVICES OF THE COMPANY.

 

(C)           INTERFERENCE WITH BUSINESS RELATIONS.  FOR SO LONG AS THE
PARTICIPANT IS EMPLOYED BY THE COMPANY AND DURING THE DEEMED SEVERANCE PERIOD
APPLICABLE TO SUCH PARTICIPANT, THE PARTICIPANT SHALL NOT, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMPANY:

 

(1)           RECRUIT, INDUCE OR SOLICIT ANY EMPLOYEE OR OFFICER, DIRECTLY OR
INDIRECTLY, OF THE COMPANY FOR EMPLOYMENT OR FOR RETENTION AS A CONSULTANT OR
SERVICE PROVIDER;

 

(2)           HIRE OR PARTICIPATE (WITH ANOTHER PERSON OR ENTITY) IN THE PROCESS
OF HIRING (OTHER THAN FOR THE COMPANY) ANY PERSON WHO IS THEN AN EMPLOYEE OR
OFFICER OF THE COMPANY, OR PROVIDE NAMES OR OTHER INFORMATION ABOUT ANY
EMPLOYEES OF THE COMPANY OR AN

 

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AFFILIATE TO ANY PERSON OR ENTITY, DIRECTLY OR INDIRECTLY, UNDER CIRCUMSTANCES
THAT COULD LEAD TO THE USE OF ANY SUCH INFORMATION FOR PURPOSES OF RECRUITING,
SOLICITING OR HIRING;

 

(3)           INTERFERE, DIRECTLY OR INDIRECTLY, WITH THE RELATIONSHIP OF THE
COMPANY OR AN AFFILIATE WITH ANY OF ITS EMPLOYEES, AGENTS, OR REPRESENTATIVES;

 

(4)           SOLICIT OR INDUCE, OR IN ANY MANNER ATTEMPT TO SOLICIT OR INDUCE,
DIRECTLY OR INDIRECTLY, ANY CLIENT, CUSTOMER, OR PROSPECT OF THE COMPANY (1) TO
CEASE BEING, OR NOT TO BECOME, A CUSTOMER OF THE COMPANY, OR (2) TO DIVERT ANY
BUSINESS OF SUCH CUSTOMER OR PROSPECT FROM THE COMPANY; OR

 

(5)           OTHERWISE INTERFERE WITH, DISRUPT, OR ATTEMPT TO INTERFERE WITH OR
DISRUPT, THE RELATIONSHIP, CONTRACTUAL OR OTHERWISE, BETWEEN THE COMPANY AND ANY
OF ITS CUSTOMERS, CLIENTS, PROSPECTS, SUPPLIERS, CONSULTANTS, EMPLOYEES, AGENTS,
OR REPRESENTATIVES.

 

(D)           DEEMED SEVERANCE PERIOD.  FOR PURPOSES HEREOF, “DEEMED SEVERANCE
PERIOD” MEANS:

 

(1)           FORTY-EIGHT (48) MONTHS, WITH RESPECT TO ANY PARTICIPANT WHO IS
INITIALLY ENTITLED TO RECEIVE FOUR (4) TIMES THE PARTICIPANT’S CURRENT BASE
SALARY PURSUANT TO SECTION 5(D) OR SECTION 6(D) OF THE PLAN FOLLOWING SUCH
PARTICIPANT’S SEPARATION FROM EMPLOYMENT WITH COMPANY;

 

(2)           TWENTY-FOUR (24) MONTHS, WITH RESPECT TO ANY PARTICIPANT WHO IS
ENTITLED TO RECEIVE TWO (2) TIMES THE PARTICIPANT’S CURRENT BASE SALARY PURSUANT
TO SECTION 6(D) OF THE PLAN FOLLOWING SUCH PARTICIPANT’S SEPARATION FROM
EMPLOYMENT WITH COMPANY;

 

(3)           TWELVE (12) MONTHS, WITH RESPECT TO ANY PARTICIPANT WHO IS
ENTITLED TO RECEIVE ONE (1) TIMES THE PARTICIPANT’S CURRENT BASE SALARY PURSUANT
TO SECTION 5(D) OF THE PLAN FOLLOWING SUCH PARTICIPANT’S SEPARATION FROM
EMPLOYMENT WITH COMPANY; AND

 

(4)           SIX (6) MONTHS, WITH RESPECT TO ANY PARTICIPANT WHO IS ENTITLED TO
RECEIVE ONE-HALF (1/2) TIMES THE PARTICIPANT’S CURRENT BASE SALARY PURSUANT TO
SECTION 5(D) OR SECTION 6(D) OF THE PLAN FOLLOWING SUCH PARTICIPANT’S SEPARATION
FROM EMPLOYMENT WITH COMPANY.

 

7.             REFORMATION.  IF A COURT CONCLUDES THAT ANY TIME PERIOD OR THE
GEOGRAPHIC AREA SPECIFIED IN SECTION 6 ABOVE ARE UNENFORCEABLE, THEN THE TIME
PERIOD WILL BE REDUCED BY THE NUMBER OF MONTHS, OR THE GEOGRAPHIC AREA WILL BE
REDUCED BY THE ELIMINATION OF THE OVERBROAD

 

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PORTION, OR BOTH, SO THAT THE RESTRICTIONS MAY BE ENFORCED IN THE GEOGRAPHIC
AREA AND FOR THE TIME TO THE FULLEST EXTENT PERMITTED BY LAW.

 

8.             TOLLING.  IF PARTICIPANT VIOLATES ANY OF THE RESTRICTIONS
CONTAINED IN SECTION 6, THE RESTRICTIVE PERIOD WILL BE SUSPENDED AND WILL NOT
RUN IN FAVOR OF PARTICIPANT FROM THE TIME OF THE COMMENCEMENT OF ANY VIOLATION
UNTIL THE TIME WHEN THE PARTICIPANT CURES THE VIOLATION TO THE COMPANY’S
SATISFACTION.

 

9.             REMEDIES.  IT IS INTENDED THAT, IN VIEW OF THE NATURE OF THE
COMPANY’S BUSINESS, THE RESTRICTIONS CONTAINED IN THIS EXHIBIT B SHALL BE
CONSIDERED REASONABLE AND NECESSARY TO PROTECT THE COMPANY’S LEGITIMATE BUSINESS
INTERESTS AND THAT ANY VIOLATION OF THESE RESTRICTIONS WOULD RESULT IN
IRREPARABLE INJURY TO THE COMPANY. IN THE EVENT OF A BREACH OR A THREATENED
BREACH BY PARTICIPANT OF ANY RESTRICTIVE COVENANT CONTAINED HEREIN, THE COMPANY
SHALL BE ENTITLED TO A TEMPORARY RESTRAINING ORDER AND INJUNCTIVE RELIEF
RESTRAINING PARTICIPANT FROM THE COMMISSION OF ANY BREACH, AND TO RECOVER THE
COMPANY’S ATTORNEYS’ FEES, COSTS AND EXPENSES RELATED TO THE BREACH OR
THREATENED BREACH. NOTHING CONTAINED HEREIN SHALL BE CONSTRUED AS PROHIBITING
THE COMPANY FROM PURSUING ANY OTHER REMEDIES AVAILABLE TO IT FOR ANY BREACH OR
THREATENED BREACH, INCLUDING, WITHOUT LIMITATION, THE RESTORATION AND OTHER
REMEDIES SPECIFIED IN THE PLAN AND/OR THE RECOVERY OF MONEY DAMAGES, ATTORNEYS’
FEES, AND COSTS. THESE COVENANTS AND RESTRICTIONS SHALL EACH BE CONSTRUED AS
INDEPENDENT OF ANY OTHER PROVISIONS IN THE PLAN, AND THE EXISTENCE OF ANY CLAIM
OR CAUSE OF ACTION BY PARTICIPANT AGAINST THE COMPANY, WHETHER PREDICATED ON THE
PLAN OR OTHERWISE, SHALL NOT CONSTITUTE A DEFENSE TO THE ENFORCEMENT BY THE
COMPANY OF SUCH COVENANTS AND RESTRICTIONS.

 

10.           SEVERABILITY.  SHOULD A COURT DETERMINE THAT ANY SECTION,
PARAGRAPH OR SENTENCE, OR ANY PORTION OF A SECTION, PARAGRAPH OR SENTENCE OF
THIS EXHIBIT B IS INVALID, UNENFORCEABLE, OR VOID, THIS DETERMINATION SHALL NOT
HAVE THE EFFECT OF INVALIDATING OR VALIDATING THE REMAINDER OF THE SECTION,
PARAGRAPH, SENTENCE OR ANY OTHER PROVISION OF THIS EXHIBIT B. FURTHER, IT IS
INTENDED THAT THE COURT SHOULD CONSTRUE THE PLAN AND THIS EXHIBIT B BY LIMITING
AND REDUCING IT ONLY TO THE EXTENT NECESSARY TO BE ENFORCEABLE UNDER THEN
APPLICABLE LAW.

 

11.           FUTURE EMPLOYMENT.  IF A PARTICIPANT SEEKS OR IS OFFERED
EMPLOYMENT BY ANY OTHER COMPANY, FIRM, OR PERSON DURING THE DEEMED SEVERANCE
PERIOD APPLICABLE TO SUCH PARTICIPANT, THE PARTICIPANT SHALL PROVIDE A COPY OF
THIS EXHIBIT B TO THE PROSPECTIVE EMPLOYER BEFORE ACCEPTING EMPLOYMENT WITH THAT
PROSPECTIVE EMPLOYER.

 

12.           APPLICABLE LAW.  THIS EXHIBIT B AND ALL RIGHTS HEREUNDER SHALL BE
GOVERNED AND IN ACCORDANCE WITH ERISA, AND TO THE EXTENT NOT PREEMPTED BY
FEDERAL LAW, WITH THE LAWS OF THE STATE OF TEXAS.

 

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EXHIBIT C

 

EXCISE TAX GROSS UP

 

1.             GROSS-UP PAYMENT.  IF ANY PAYMENT OR BENEFIT RECEIVED OR TO BE
RECEIVED BY A PARTICIPANT FROM THE COMPANY PURSUANT TO THE TERMS OF THE PLAN TO
WHICH THIS EXHIBIT A IS ATTACHED (THE “PLAN”) OR OTHERWISE (THE “PAYMENTS”)
WOULD BE SUBJECT TO THE EXCISE TAX (THE “EXCISE TAX”) IMPOSED BY SECTION 4999 OF
THE INTERNAL REVENUE CODE (THE “CODE”) AS DETERMINED IN ACCORDANCE WITH THIS
EXHIBIT A, THE COMPANY SHALL PAY THE PARTICIPANT, AT THE TIME(S) SPECIFIED
BELOW, AN ADDITIONAL AMOUNT (THE “GROSS-UP PAYMENT”) SUCH THAT THE NET AMOUNT
THE PARTICIPANT RETAINS, AFTER DEDUCTION OF THE EXCISE TAX ON THE PAYMENTS AND
ANY FEDERAL, STATE, AND LOCAL INCOME TAX AND THE EXCISE TAX UPON THE GROSS-UP
PAYMENT, AND ANY INTEREST, PENALTIES, OR ADDITIONS TO TAX PAYABLE BY A
PARTICIPANT WITH RESPECT THERETO, SHALL BE EQUAL TO THE TOTAL PRESENT VALUE
(USING THE APPLICABLE FEDERAL RATE (AS DEFINED IN SECTION 1274(D) OF THE CODE)
IN SUCH CALCULATION) OF THE PAYMENTS AT THE TIME SUCH PAYMENTS ARE TO BE MADE.

 

2.             CALCULATIONS.  FOR PURPOSES OF DETERMINING WHETHER ANY OF THE
PAYMENTS SHALL BE SUBJECT TO THE EXCISE TAX AND THE AMOUNT OF SUCH EXCISE TAX:

 

(A)           THE TOTAL AMOUNT OF THE PAYMENTS SHALL BE TREATED AS “PARACHUTE
PAYMENTS” WITHIN THE MEANING OF SECTION 280G(B)(2) OF THE CODE, AND ALL “EXCESS
PARACHUTE PAYMENTS” WITHIN THE MEANING OF SECTION 280G(B)(1) OF THE CODE SHALL
BE TREATED AS SUBJECT TO THE EXCISE TAX, EXCEPT TO THE EXTENT THAT, IN THE
WRITTEN OPINION OF INDEPENDENT COUNSEL OR AN INDEPENDENT NATIONAL ACCOUNTING OR
OTHER QUALIFIED PROFESSIONAL FIRM SELECTED BY THE COMPANY (“INDEPENDENT
ADVISER”), A PAYMENT (IN WHOLE OR IN PART) DOES NOT CONSTITUTE A “PARACHUTE
PAYMENT” WITHIN THE MEANING OF SECTION 280G(B)(2) OF THE CODE, OR SUCH “EXCESS
PARACHUTE PAYMENTS” (IN WHOLE OR IN PART) ARE NOT SUBJECT TO THE EXCISE TAX;

 

(B)           THE AMOUNT OF THE PAYMENTS THAT SHALL BE SUBJECT TO THE EXCISE TAX
SHALL BE EQUAL TO THE LESSER OF (1) THE TOTAL AMOUNT OF THE PAYMENTS OR (2) THE
AMOUNT OF “EXCESS PARACHUTE PAYMENTS “ WITHIN THE MEANING OF
SECTION 280G(B)(1) OF THE CODE (AFTER APPLYING CLAUSE (A), ABOVE); AND

 

(C)           THE VALUE OF ANY NON-CASH BENEFITS OR ANY DEFERRED PAYMENT OR
BENEFIT SHALL BE DETERMINED BY THE INDEPENDENT ADVISER IN ACCORDANCE WITH THE
PRINCIPLES OF SECTION 280G(D)(3) AND (4) OF THE CODE.

 

3.             TAX RATES.  FOR PURPOSES OF DETERMINING THE AMOUNT OF THE
GROSS-UP PAYMENT, A PARTICIPANT SHALL BE DEEMED TO PAY FEDERAL INCOME TAXES AT
THE HIGHEST MARGINAL RATES OF FEDERAL INCOME TAXATION APPLICABLE TO INDIVIDUALS
IN THE CALENDAR YEAR IN WHICH THE GROSS-UP PAYMENT IS TO BE MADE AND STATE AND
LOCAL INCOME TAXES, IF ANY, AT THE HIGHEST MARGINAL RATES OF TAXATION APPLICABLE
TO INDIVIDUALS AS ARE IN EFFECT IN THE STATE AND LOCALITY OF HIS OR HER
RESIDENCE IN THE CALENDAR YEAR IN WHICH THE GROSS-UP PAYMENT IS TO BE MADE, NET
OF THE MAXIMUM REDUCTION IN FEDERAL INCOME TAXES THAT CAN BE OBTAINED FROM
DEDUCTION OF SUCH STATE AND LOCAL TAXES, TAKING INTO ACCOUNT ANY LIMITATIONS
APPLICABLE TO INDIVIDUALS SUBJECT TO FEDERAL INCOME TAX AT THE HIGHEST MARGINAL
RATES.

 

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4.             TIME OF GROSS-UP PAYMENTS.  THE GROSS-UP PAYMENTS PROVIDED FOR IN
THIS EXHIBIT A SHALL BE MADE UPON THE EARLIER OF (A) THE PAYMENT TO A
PARTICIPANT OF ANY PAYMENT OR (B) THE IMPOSITION UPON A PARTICIPANT, OR ANY
PAYMENT BY HIM OR HER, OF ANY EXCISE TAX.

 

5.             ADJUSTMENTS TO GROSS-UP PAYMENTS.  IF IT IS ESTABLISHED PURSUANT
TO A FINAL DETERMINATION OF A COURT OR AN INTERNAL REVENUE SERVICE PROCEEDING OR
THE WRITTEN OPINION OF THE INDEPENDENT ADVISER THAT THE EXCISE TAX IS LESS THAN
THE AMOUNT PREVIOUSLY TAKEN INTO ACCOUNT HEREUNDER, THE PARTICIPANT SHALL REPAY
THE COMPANY, WITHIN 30 DAYS OF HER RECEIPT OF NOTICE OF SUCH FINAL DETERMINATION
OR OPINION, THE PORTION OF THE GROSS-UP PAYMENT ATTRIBUTABLE TO SUCH REDUCTION
(PLUS THE PORTION OF THE GROSS-UP PAYMENT ATTRIBUTABLE TO THE EXCISE TAX AND
FEDERAL, STATE, AND LOCAL INCOME TAX IMPOSED ON THE GROSS-UP PAYMENT BEING
REPAID BY THE PARTICIPANT IF SUCH REPAYMENT RESULTS IN A REDUCTION IN EXCISE TAX
OR A FEDERAL, STATE, AND LOCAL INCOME TAX DEDUCTION) PLUS ANY INTEREST RECEIVED
BY THE PARTICIPANT ON THE AMOUNT OF SUCH REPAYMENT, PROVIDED THAT IF ANY SUCH
AMOUNT HAS BEEN PAID BY A PARTICIPANT AS AN EXCISE TAX OR OTHER TAX, HE OR SHE
SHALL COOPERATE WITH THE COMPANY IN SEEKING A REFUND OF ANY TAX OVERPAYMENTS,
AND SHALL NOT BE REQUIRED TO MAKE REPAYMENTS TO THE COMPANY UNTIL THE OVERPAID
TAXES AND INTEREST THEREON ARE REFUNDED TO HIM OR HER.

 

6.             ADDITIONAL GROSS-UP PAYMENT.  IF IT IS ESTABLISHED PURSUANT TO A
FINAL DETERMINATION OF A COURT OR AN INTERNAL REVENUE SERVICE PROCEEDING OR THE
WRITTEN OPINION OF THE INDEPENDENT ADVISER THAT THE EXCISE TAX EXCEEDS THE
AMOUNT TAKEN INTO ACCOUNT HEREUNDER (INCLUDING BY REASON OF ANY PAYMENT THE
EXISTENCE OR AMOUNT OF WHICH CANNOT BE DETERMINED AT THE TIME OF THE GROSS-UP
PAYMENT), THE COMPANY SHALL MAKE AN ADDITIONAL GROSS-UP PAYMENT IN RESPECT OF
SUCH EXCESS WITHIN 30 DAYS OF THE COMPANY’S RECEIPT OF NOTICE OF SUCH FINAL
DETERMINATION OR OPINION.

 

7.             CHANGE IN LAW OR INTERPRETATION.  IN THE EVENT OF ANY CHANGE IN
OR FURTHER INTERPRETATION OF SECTION 280G OR 4999 OF THE CODE AND THE
REGULATIONS PROMULGATED THEREUNDER,  A PARTICIPANT SHALL BE ENTITLED, BY WRITTEN
NOTICE TO THE COMPANY, TO REQUEST A WRITTEN OPINION OF THE INDEPENDENT ADVISER
REGARDING THE APPLICATION OF SUCH CHANGE OR FURTHER INTERPRETATION TO ANY OF THE
FOREGOING, AND THE COMPANY SHALL USE ITS BEST EFFORTS TO CAUSE SUCH OPINION TO
BE RENDERED AS PROMPTLY AS PRACTICABLE.

 

8.             FEES AND EXPENSES.  ALL FEES AND EXPENSES OF THE INDEPENDENT
ADVISER INCURRED IN CONNECTION WITH THIS EXHIBIT A SHALL BE BORNE BY THE
COMPANY.

 

9.             SURVIVAL.  THE COMPANY’S OBLIGATION TO MAKE A GROSS-UP PAYMENT
WITH RESPECT TO PAYMENTS MADE OR ACCRUED BEFORE THE TERMINATION OF THE PLAN
SHALL SURVIVE THE TERMINATION OF THE PLAN UNLESS (A) THE AFFECTED PARTICIPANT’S
EMPLOYMENT IS TERMINATED FOR CAUSE, (B) THE PARTICIPANT FAILS TO EXECUTE A
RELEASE IN ACCORDANCE WITH THE REQUIREMENTS OF THE PLAN, OR (C) THE PARTICIPANT
FAILS TO COMPLY WITH THE RESTRICTIVE COVENANTS CONTAINED IN EXHIBIT B OF THE
PLAN, IN WHICH EVENT THE COMPANY’S OBLIGATION UNDER THIS EXHIBIT A SHALL
TERMINATE IMMEDIATELY.

 

10.           DEFINED TERMS.  UNLESS OTHERWISE CLEARLY REQUIRED BY THE CONTEXT,
FOR PURPOSES OF THIS EXHIBIT A, ANY CAPITALIZED TERM THAT IS DEFINED IN THE PLAN
AND IS NOT DEFINED IN THIS EXHIBIT A SHALL HAVE THE MEANING ASCRIBED TO SUCH
TERM IN THE PLAN.

 

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