Exhibit 10.4

 

GlobalSantaFe

2003 Long-Term Incentive Plan

(As Amended and Restated Effective June 7, 2005)

 

SECTION 1 – GENERAL

 

1.1 Purpose. The GlobalSantaFe 2003 Long-Term Incentive Plan (the “Plan”) was
established by GlobalSantaFe Corporation (the “Company”) to (i) attract and
retain persons eligible to participate in the Plan, (ii) motivate Participants
by means of appropriate incentives to achieve long-range goals, (iii) provide
incentive compensation opportunities using the Company’s ordinary shares or cash
that are competitive with those of other similar companies, and (iv) further
identify Participants’ interests with those of the Company’s other shareholders
through compensation that is based on the Company’s ordinary shares, thereby
promoting the long-term financial interest of the Company and the Related
Companies, including growth in value of the Company’s equity and enhancement of
long-term shareholder return. The Plan was originally effective March 4, 2003
and, and, subject to its approval by the shareholders of the Company at the
Company’s 2005 annual meeting of shareholders, the Plan, as amended and restated
herein, shall be effective as of June 7, 2005.

 

1.2 Participation. Subject to the terms and conditions of the Plan, the
Committee shall determine and designate from time to time, from among the
Eligible Individuals, those persons who will be granted one or more Awards under
the Plan and thereby become “Participants” in the Plan. At the discretion of the
Committee, a Participant may be granted any Award permitted under the provisions
of the Plan, and more than one Award may be granted to a Participant. Awards may
be granted as alternatives to or in replacement of (a) awards outstanding under
the Plan or any other plan or arrangement of the Company or a Related Company,
or (b) awards outstanding under a plan or arrangement of a business or entity
all or part of which is acquired by the Company or a Related Company; provided,
however, that except for adjustments described in paragraph (c) of subsection
7.2, the Exercise Price of any Option or SAR shall not be decreased including by
means of issuance of a substitute Option or SAR with a lower Grant Price.

 

1.3 Operation and Administration. The operation and administration of the Plan,
including the Awards made under the Plan, shall be subject to the provisions of
Section 7 (relating to operation and administration).

 

1.4 Construction and Definitions. Where the context admits, words in any gender
shall include any other gender, words in the singular shall include the plural
and the plural shall include the singular. Capitalized terms in the Plan shall
be defined as set forth in the Plan, including the definition provisions of
Section 2.

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SECTION 2 - DEFINED TERMS

 

For purposes of the Plan, the terms listed below shall be defined as follows:

 

(a) Agreement. The term “Agreement” has the meaning ascribed to it in subsection
7.10.

 

(b) Award. The term “Award” means any award or benefit granted to any
Participant under the Plan, including without limitation the grant of Options,
SARs, Stock Awards, Cash Awards or Performance Awards.

 

(c) Board. The term “Board” means the Board of Directors of the Company.

 

(d) Cash Award. The term “Cash Award” has the meaning ascribed to it in
subsection 5.1.

 

(e) Code. The term “Code” means the Internal Revenue Code of 1986, as amended. A
reference to any provision of the Code shall include reference to any successor
provision of the Code.

 

(f) Committee. The term “Committee” has the meaning ascribed to it in subsection
8.1.

 

(g) Company. The term “Company” has the meaning ascribed to it in subsection
1.1.

 

(h) Effective Date. The term “Effective Date” has the meaning ascribed to it in
subsection 7.1.

 

(i) Eligible Individual. The term “Eligible Individual” shall mean any employee
of the Company or a Related Company, any consultant or other person providing
key services to the Company or a Related Company, any person to whom an offer of
employment has been made by the Company or a Related Company and is expected to
become such an employee within the following six months, and any Non-Employee
Director.

 

(j) Exercise Price. The term “Exercise Price” has the meaning ascribed to it in
paragraph (c) of subsection 3.1.

 

(k) Fair Market Value. For purposes of determining the “Fair Market Value” of a
share of Stock, the following rules shall apply:

 

  (i) If the Stock is at the time listed or admitted to trading on any stock
exchange, then the “Fair Market Value” shall be the mean between the lowest and
highest reported sale prices of the Stock on the date in question on the
principal exchange on which the Stock is then listed or admitted to trading;
provided that, in the discretion of the Committee, “Fair Market Value” for
purposes of the exercise of an Option or SAR may be the price prevailing on the
exchange at the time of exercise. If no reported

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sale of Stock takes place on the date in question on the principal exchange,
then the reported closing asked price of the Stock on such date on the principal
exchange shall be determinative of “Fair Market Value.”

 

  (ii) If the Stock is not at the time listed or admitted to trading on a stock
exchange, the “Fair Market Value” shall be the mean between the lowest reported
bid price and highest reported asked price of the Stock on the date in question
in the over-the-counter market, as such prices are reported in a publication of
general circulation selected by the Committee and regularly reporting the market
price of the Stock in such market.

 

  (iii) If the Stock is not listed or admitted to trading on any stock exchange
or traded in the over-the-counter market, the “Fair Market Value” shall be as
determined in good faith by the Committee.

 

(l) Incentive Stock Option. The term “Incentive Stock Option” has the meaning
ascribed to it in paragraph (a) of subsection 3.1.

 

(m) Non-Employee Director. The term “Non-Employee Director” shall mean an
individual serving as a member of the Board who is not an employee of the
Company or a Related Company.

 

(n) Non-Qualified Stock Option. The term “Non-Qualified Stock Option” has the
meaning ascribed to it in paragraph (a) of subsection 3.1.

 

(o) Option. The term “Option” has the meaning ascribed to it in paragraph (a) of
subsection 3. 1.

 

(p) Participant. The term “Participant” has the meaning ascribed to it in
subsection 1.2.

 

(q) Plan. The term “Plan” has the meaning ascribed to it in subsection 1.1.

 

(r) Performance Award. The term “Performance Award” has the meaning ascribed to
it in subsection 6.1.

 

(s) Pricing Date. The term “Pricing Date” has the meaning ascribed to it in
paragraph (c) of subsection 3.1.

 

(t) Qualified Performance Award. The term “Qualified Performance Award” has the
meaning ascribed to it in subsection 6.2.

 

(u) Related Company. The term “Related Company” means any subsidiary of the
Company and any other business venture in which the Company has a significant
interest as determined in the discretion of the Committee.

 

(v) Restatement Date. The term “Restatement Date” has the meaning ascribed to it
in subsection 7.1.

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(w) SAR. The term “SAR” has the meaning ascribed to it in paragraph (b) of
subsection 3.1.

 

(x) Stock. The term “Stock” means the ordinary shares, $.01 par value per share,
of the Company.

 

(y) Stock Award. The term “Stock Award” has the meaning ascribed to it in
subsection 4.1.

 

SECTION 3 - OPTIONS AND SARS

 

3.1 Definitions

 

(a) The grant of an “Option” entitles the Participant to purchase shares of
Stock at an Exercise Price established by the Committee. Options granted under
this Section 3 may be either Incentive Stock Options or Non-Qualified Stock
Options, as determined in the discretion of the Committee. An “Incentive Stock
Option” is an Option that is intended to satisfy the requirements applicable to
an “incentive stock option” as described in section 422(b) of the Code and shall
comply with, among other things, the requirements of subsections 3.2, 3.3 and
7.1 of the Plan. A “Non-Qualified Stock Option” is an Option that is not
intended to be an “incentive stock option” as that term is described in section
422(b) of the Code.

 

(b) A stock appreciation right (an “SAR”) entitles the Participant to receive,
in cash or Stock (as determined in accordance with subsection 3.4), value equal
to all or a portion of the excess of: (i) the Fair Market Value of a specified
number of shares of Stock at the time of exercise; over (ii) an Exercise Price
established by the Committee. An SAR may be granted in tandem with an Option,
subject to the terms and restrictions established by the Committee.

 

(c) Exercise Price. The “Exercise Price” of each Option and SAR granted under
this Section 3 shall be established by the Committee or shall be determined by a
method established by the Committee; provided, however, that the Exercise Price
shall not be less than the Fair Market Value of a share of Stock as of the
Pricing Date. For purposes of the preceding sentence, the “Pricing Date” shall
be the date on which the Option or SAR is granted, except that if an Option or
SAR is granted in tandem with or in substitution for an outstanding Award, the
Pricing Date is the date of grant of such outstanding Award.

 

3.2 Exercise. Each Option and each SAR shall be exercisable in accordance with
such terms and conditions and during such periods as may be established by the
Committee; provided, however, that (a) each Option and each SAR shall be
exercisable only during a fixed period of time ending no later than ten years
from the date such Option or SAR is granted, and (b) to the extent required by
the Code, the aggregate Fair Market Value of the shares of Stock with respect to
which Incentive Stock Options granted to any individual Participant are
exercisable for the first time during any calendar year shall not exceed
$100,000, valued at the date or dates the Options are granted, and any Option
designated as an Incentive Stock Option that is in excess of such limit required
by the Code shall be treated as a Non-Qualified Stock Option.

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3.3 Payment of Option Exercise Price. The payment of the Exercise Price of an
Option granted under this Section 3 shall be subject to the following:

 

(a) Subject to the following provisions of this subsection 3.3, the full
Exercise Price for shares of Stock purchased upon the exercise of any Option
shall be paid at the time of such exercise except that, in the case of an
exercise arrangement approved by the Committee and described in paragraph (c) of
this subsection 3.3, payment may be made as soon as practicable after the
exercise.

 

(b) The Exercise Price shall be payable in cash or by tendering shares of Stock
(by either actual delivery of shares or by attestation, with such shares being
valued at Fair Market Value as of the day of exercise), excluding any shares
deemed unacceptable for any reason by the Committee, or in any combination
thereof, as determined by the Committee.

 

(c) The Committee may permit a Participant to elect to pay the Exercise Price
upon the exercise of an Option by authorizing a third party to sell some or all
of the shares of Stock acquired upon exercise of an Option and remit to the
Company a sufficient portion of the sale proceeds to pay the entire Exercise
Price and any tax withholding resulting from such exercise.

 

3.4 Settlement of Award. Distribution following exercise of an Option or SAR,
and shares of Stock distributed pursuant to such exercise, shall be subject to
such conditions, restrictions and contingencies as the Committee may establish.
Settlement of SARs may be made in shares of Stock valued at their Fair Market
Value at the time of exercise, in cash, or in any combination thereof, as
determined in the discretion of the Committee. The Committee may in its
discretion impose such conditions, restrictions and contingencies with respect
to shares of Stock acquired pursuant to the exercise of an Option or an SAR as
the Committee determines to be desirable.

 

SECTION 4 - OTHER STOCK AWARDS

 

4.1. Definition. A “Stock Award” is a grant of shares of Stock or of a right to
receive shares of Stock, or their cash equivalent or a combination of both, in
the future.

 

4.2 Restrictions on Stock Awards. Each Stock Award shall be subject to such
terms and conditions, restrictions and contingencies, if any, as the Committee
shall determine. Restrictions and contingencies limiting the right to receive
shares of Stock, or their cash equivalent or a combination of both, in the
future pursuant to a Stock Award shall limit such right for a minimum of three
years from the date such Stock Award is granted or be based on the achievement
of single or multiple performance goals over a period ending at least one year
from the date such Stock Award is granted. Such restrictions and/or
contingencies may terminate or be subject to termination before the passage of
the period of time designated and/or the achievement of such performance goals
only in the event of grants made in connection with the initial employment or
service of a Participant, the death, disability, or retirement from or other
non-cause termination of employment or service with the Company or a Related
Company of the

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holder of such Stock Award, or in the event of a change of control, as defined
in the terms of such Stock Award, of the Company or a Related Company. Any
unrestricted grant of shares of Stock pursuant to a Stock Award shall be made
only in lieu of salary or bonus that otherwise would be payable by the Company
or a Related Company.

 

SECTION 5 - CASH AWARDS

 

5.1 Definition. A “Cash Award” is a cash bonus paid solely on account of the
attainment of one or more objective performance goals that have been
pre-established by the Committee.

 

5.2 Restrictions on Cash Awards. Each Cash Award shall be subject to such terms
and conditions, restrictions and contingencies, if any, as the Committee shall
determine. Restrictions and contingencies limiting the right to receive a cash
payment pursuant to a Cash Award shall be based on the achievement of single or
multiple performance goals over a period of time determined by the Committee.
The maximum cash payment to be made to any one individual pursuant to any Cash
Award during any calendar year shall not exceed $3,000,000.

 

SECTION 6 - PERFORMANCE AWARDS

 

6.1 Definition. A “Performance Award” is an Award made pursuant to this Plan to
a Participant that is subject to the attainment of one or more performance
goals.

 

6.2 Restrictions on Performance Awards. Performance Awards not intended to
qualify as qualified performance-based compensation under Section 162(m) of the
Code shall be based on achievement of such goals and be subject to such terms,
conditions and restrictions as the Committee or its delegate shall determine.
Performance Awards granted under the Plan that are intended to qualify as
qualified performance-based compensation under Section 162(m) of the Code
(“Qualified Performance Awards”) shall be paid, vested or otherwise deliverable
solely on account of the attainment of one or more pre-established, objective
performance goals established by the Committee. The performance goals may be
cumulative, annual or end-of-performance period goals, may be relative to a peer
group or based on increases or changes relative to stated values, and may be
based on any one or more of the following measures: (a) earnings before or after
interest, taxes, depreciation and amortization; (b) earnings per share; (c)
stock price performance; (d) net income (before or after taxes); (e) cash flow;
(f) total shareholder return; (g) revenue growth; (h) return on equity or on
assets or on net investment; (i) profit returns and margins and (j) working
capital or cost containment or reduction. Unless otherwise stated, such a
performance goal need not be based upon an increase or positive result under a
particular business criterion and could include, for example, maintaining the
status quo or limiting economic losses (measured, in each case, by reference to
specific business criteria). In interpreting Plan provisions applicable to
Qualified Performance Awards, it is the intent of the Plan to conform with the
standards of Section 162(m) of the Code and Treasury Regulation
§1.162-27(e)(2)(i) as to grants to those Employees whose compensation is, or is
likely to be, subject to Section 162(m) of the Code, and the Committee in
establishing performance goals and interpreting the Plan shall be guided by such

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provisions. Prior to the payment of any compensation pursuant to a Qualified
Performance Award, the Committee must certify in writing that applicable
performance goals and any of the material terms thereof were, in fact,
satisfied. Subject to the foregoing provisions, the terms, conditions and
limitations applicable to any Qualified Performance Awards made pursuant to this
Plan shall be determined by the Committee.

 

SECTION 7 - OPERATION AND ADMINISTRATION

 

7.1 Effective Date and Duration. The Plan was originally effective March 4, 2003
(the “Effective Date”). Subject to its approval by the shareholders of the
Company at the Company’s 2005 Annual General Meeting of Shareholders, the Plan,
as amended and restated, shall be effective as of June 7, 2005 (the “Restatement
Date”). The Plan shall be unlimited in duration and, in the event of Plan
termination, shall remain in effect as long as any Awards under it are
outstanding; provided, however, that, to the extent required by section 422 of
the Code, no Incentive Stock Options may be granted under the Plan on a date
that is more than ten years from the Effective Date.

 

7.2 Shares Subject to Plan.

 

(a)    (i) With respect to an Award granted on or after the Restatement Date and
subject to the following provisions of this subsection 7.2, the maximum number
shares of Stock that may be delivered to Participants and their beneficiaries
under the Plan shall be 4,500,000 shares of Stock. The Committee may from time
to time adopt and observe such procedures concerning the counting of shares
against the Plan maximum as it may deem appropriate.

 

  (ii) With respect to an Award granted on or after the Restatement Date, any
shares of Stock granted under the Plan that are forfeited because of the failure
to meet an Award contingency or condition shall again be available for delivery
pursuant to new Awards granted under the Plan. To the extent any shares of Stock
covered by an Award granted on or after the Restatement Date are not delivered
to a Participant or beneficiary because the Award is forfeited or canceled, or
the shares of Stock are not delivered because the Award is settled in cash, such
shares shall not be deemed to have been delivered for purposes of determining
the maximum number of shares of Stock available for delivery under the Plan.

 

  (iii) With respect to an Award granted on or after the Restatement Date, If
the Exercise Price or other purchase price of any stock option or other award
granted under the Plan is satisfied by tendering shares of Stock to the Company
by either actual delivery or by attestation, or if the tax withholding
obligation resulting from the settlement of any such option or other award is
satisfied by tendering or withholding shares of Stock, only the number of shares
of Stock issued net of the shares of Stock tendered or withheld shall be deemed
delivered for purposes of determining the maximum number of shares of Stock
available for delivery under the Plan.

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  (iv) Shares of Stock delivered under the Plan in settlement, assumption or
substitution of outstanding awards or obligations to grant future awards under
the plans or arrangements of another entity shall not reduce the maximum number
of shares of Stock available for delivery under the Plan, to the extent that
such settlement, assumption or substitution is a result of the Company or a
Related Company acquiring another entity or an interest in another entity.

 

(b) Subject to paragraph (c) of this subsection 7.2, the following additional
maximums are imposed under the Plan.

 

  (i) The entire number of shares of Stock that may be issued pursuant to the
Plan may be issued with respect to Incentive Stock Options, Non-Qualified Stock
Options, SARs, Stock Awards or Performance Awards.

 

  (ii) The maximum number of shares of Stock that may be covered by Awards
granted to any one employee during any one calendar year pursuant to this Plan
shall be 400,000 shares. The maximum number of shares of Stock that may be
covered by Awards granted to any one Non-Employee Director during any one
calendar year pursuant to this Plan shall be 25,000 shares.

 

(c) In the event of a corporate transaction involving the Company (including
without limitation any stock dividend, stock split, extraordinary cash dividend,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
combination or exchange of shares), the Committee may adjust Awards to preserve
the benefits or potential benefits of the Awards. Action by the Committee may
include adjustment of: (i) the number and kind of shares which may be issued or
delivered under the Plan; (ii) the number and kind of shares subject to
outstanding Awards; (iii) the Award limits set forth in paragraph (b) of
subsection 7.2; and (iv) the Exercise Price of outstanding Options and SARs; as
well as any other adjustments that the Committee determines to be equitable.

 

7.3 Limit on Distribution. Distribution of shares of Stock or other amounts
under the Plan shall be subject to the following:

 

(a) Notwithstanding any other provision of the Plan, the Company shall have no
liability to deliver any shares of Stock under the Plan or make any other
distribution of benefits under the Plan unless such delivery or distribution
would comply with all applicable laws (including without limitation the
requirements of the Securities Act of 1933) and the applicable requirements of
any securities exchange or similar entity.

 

(b) To the extent that the Plan provides for the issuance of stock certificates
to reflect the issuance of shares of Stock, the issuance may be effected on a
non-certificated basis to the extent not prohibited by applicable law or the
applicable rules of any stock exchange.

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7.4 Tax Withholding. Whenever the Company proposes or is required to distribute
Stock under the Plan, the Company may require the recipient to remit to the
Company, or the Company or any Related Company may withhold from any payments
due or becoming due to the recipient, an amount sufficient to satisfy any
Federal, state and local tax withholding requirements prior to the delivery of
any certificate for such shares; provided, however, that, in the discretion of
the Committee, the Company may withhold from the shares to be delivered shares
with a Fair Market Value sufficient to satisfy all or a portion of such tax
withholding requirements, or the Company may accept delivery of shares of Stock
with a Fair Market Value sufficient to satisfy all or a portion of such tax
withholding requirement, excluding any shares deemed unacceptable for any reason
by the Committee. Whenever under the Plan payments are to be made to a
Participant or beneficiary in cash, such payments may be net of an amount
sufficient to satisfy any Federal, state and local tax withholding requirements.
At the discretion of the Committee, the terms and conditions of any Award may
provide for a cash payment to a Participant equal to any tax the Participant
must pay in connection with the settlement of the Award and/or the disposition
of Stock received upon settlement of the Award. If no provision is made in an
Award regarding excise taxes on golden parachute payments under Section 280G of
the Code, then payments under the Plan will be capped to avoid imposition of the
excise tax and loss of deduction.

 

7.5 Shares as Payment. Subject to the overall limitation on the number of shares
of Stock that may be delivered under the Plan, the Committee may use available
shares of Stock, valued at their Fair Market Value, as the form of payment for
any compensation, grants or rights earned or due under any other compensation
plans or arrangements of the Company or a Related Company.

 

7.6 Dividends and Dividend Equivalents. An Award may provide the Participant
with the right to receive dividends or dividend equivalent payments with respect
to Stock which may be either paid currently or credited to an account for the
Participant, and may be settled in cash or Stock as determined by the Committee.
Any such settlements, and any such crediting of dividends or dividend
equivalents or reinvestment in shares of Stock, may be subject to such
conditions, restrictions and contingencies as the Committee shall establish,
including the reinvestment of such credited amounts in Stock equivalents.

 

7.7 Payments. Awards may be settled through cash payments, the delivery of
shares of Stock, the granting of replacement Awards (subject to the restrictions
described in subsection 1.2), or a combination thereof as the Committee shall
determine. Any Award settlement, including payment deferrals, may be subject to
such conditions, restrictions and contingencies as the Committee shall
determine. The Committee may permit or require the deferral of any Award
payment, subject to such rules and procedures as it may establish, which may
include provisions for the payment or crediting of interest or dividend
equivalents, including converting such credits into deferred Stock equivalents.

 

7.8 Transferability. Except as otherwise provided by the Committee, Awards under
the Plan are not transferable. The transfer restrictions in this Section 7.8
shall not apply to:

 

(i) transfers to the Company,

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  (ii) the designation of a beneficiary to receive benefits in the event of the
Participant’s death or, if the Participant has died, transfers to or exercise by
the Participant’s beneficiary, or, in the absence of a validly designated
beneficiary, transfers by will or the laws of descent and distribution; provided
that, no transfer by will or by the laws of descent and distribution shall be
effective to bind the Company unless the Committee shall have been furnished
with a copy of the deceased Participant’s will or such other evidence as the
Committee may deem necessary to establish the validity of the transfer,

 

  (iii) transfers pursuant to a domestic relations order,

 

  (iv) permitted transfers or exercises on behalf of the Participant by his or
her legal representative, if the Participant has suffered a disability,

 

  (v) the authorization by the Committee of “cashless exercise” procedures with
third parties who provide financing for the purpose of (or who otherwise
facilitate) the exercise of Awards consistent with applicable laws and the
express authorization of the Committee, or

 

  (vi) if permitted by the Committee in the applicable Agreement, a transfer by
the Participant to (i) the children or grandchildren of the Participant
(“Immediate Family Members”), (ii) a trust or trusts for the exclusive benefit
of such Immediate Family Members, or (iii) a partnership or partnerships in
which such Immediate Family Members have at least ninety-nine percent (99%) of
the equity, profit and loss interests. Subsequent transfers of a transferred
Award shall be prohibited except by will or the laws of descent and
distribution, unless such transfers are made to the original Participant or a
person to whom the original Participant could have made a transfer in the manner
described herein. No transfer shall be effective unless and until written notice
of such transfer is provided to the Committee, in the form and manner prescribed
by the Committee. Following transfer, the Award shall continue to be subject to
the same terms and conditions as were applicable immediately prior to transfer,
and, except as otherwise provided in the applicable Agreement, the term
“Participant” shall be deemed to refer to the transferee. The consequences of
termination of employment or service shall continue to be applied with respect
to the original Participant as specified in the Agreement.

 

7.9 Form and Time of Elections. Unless otherwise specified herein, each election
required or permitted to be made by any Participant or other person entitled to
benefits under the Plan, and any permitted modification or revocation thereof,
shall be made and delivered to the Committee at such times, in such form, and
subject to such restrictions and limitations, not inconsistent with the terms of
the Plan, as the Committee shall require.

 

7.10 Agreement With Company. At the time of an Award to a Participant under the
Plan, the Committee may require a Participant to enter into an agreement with
the Company (the “Agreement”) in a form specified by the Committee, agreeing to
the terms and conditions of the Plan and to such additional terms and conditions
not inconsistent with the Plan as the Committee may prescribe in its sole
discretion.

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7.11 Limitation of Implied Rights.

 

(a) Neither a Participant nor any other person shall by reason of the Plan
acquire any right in or title to any assets, funds or property of the Company or
any Related Company whatsoever, including without limitation any specific funds,
assets, or other property which the Company or any Related Company, in their
sole discretion, may set aside in anticipation of a liability under the Plan. A
Participant shall have only a contractual right to the stock or amounts, if any,
payable under the Plan, unsecured by any assets of the Company or any Related
Company. Nothing contained in the Plan shall constitute a guarantee that the
assets of such companies shall be sufficient to pay any benefits to any person.

 

(b) The Plan does not constitute a contract of employment, and selection as a
Participant and/or the grant of an Award will not give any employee the right to
be retained in the employ of the Company or any Related Company, the right to
receive any future Award under the Plan, or any right or claim to any benefit
under the Plan, unless such right or claim has specifically accrued under the
terms of the Plan. Except as otherwise provided in the Plan, no Award under the
Plan shall confer upon the holder thereof any right as a shareholder of the
Company prior to the date on which the individual fulfills all conditions for
receipt of such right.

 

7.12 Evidence. Evidence required of anyone under the Plan may be by certificate,
affidavit, document or other information which the person acting on it considers
pertinent, reliable, and signed, made or presented by the proper party or
parties.

 

7.13 Action by Company or Related Company. Any action required or permitted to
be taken by the Company or any Related Company shall be by resolution of its
board of directors, or by action of one or more members of the board (including
a committee of the board) who are duty authorized to act for the board, or,
except to the extent prohibited by applicable law or applicable rules of any
stock exchange, by a duly authorized officer of the Company.

 

7.14 Separate Fund. Neither the Company, the Board or the Committee has any
obligation to create a separate fund for the performance of any cash payment
obligation under the Plan, but any or all of them may, at their own discretion,
create trust funds or similar arrangements for such purpose.

 

7.15 Liability for Cash Payments. Each Related Company shall be liable for
payment of cash due under the Plan with respect to any Participant to the extent
that such benefits are attributable to the services rendered for that Related
Company by the Participant. Any disputes relating to liability of a Related
Company for cash payments shall be resolved by the Committee.

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SECTION 8 – COMMITTEE

 

8.1 Administration. The authority to control and manage the operation and
administration of the Plan shall be vested in a committee (the “Committee”) or,
as applicable, the Board, in accordance with this Section 8.

 

8.2 Selection and Composition of Committee. The Committee shall be selected by
the Board and shall consist of two or more members of the Board who are not
employees of the Company or a Related Company.

 

8.3 Powers of Committee. The authority to manage and control the operation and
administration of the Plan with respect to awards to employees or consultants
shall be vested in the Committee, subject to the following:

 

(a) Subject to the provisions of the Plan, the Committee will have the authority
and discretion to select from among the Eligible Individuals those persons who
shall receive Awards, to determine the time or times of receipt, to determine
the types of Awards and the number of shares covered by the Awards, to establish
the terms, conditions, performance criteria, restrictions, and other provisions
of such Awards, and, subject to the same restrictions imposed upon the Board by
Section 9, to amend, cancel or suspend Awards. In making such Award
determinations, the Committee may take into account the nature of services
rendered by the individual, the individual’s present and potential contribution
to the Company’s success, and such other factors as the Committee deems
relevant.

 

(b) Subject to the provisions of the Plan, the Committee will have the authority
and discretion to determine the extent to which Awards under the Plan will be
structured to conform to the requirements applicable to performance-based
compensation as described in Code section 162(m) and to take such action,
establish such procedures, and impose such restrictions at the time such Awards
are granted as the Committee determines to be necessary or appropriate to
conform to such requirements.

 

(c) The Committee will have the authority and discretion to establish terms and
conditions of Awards as the Committee determines to be necessary or appropriate
to conform to applicable requirements or practices of jurisdictions outside of
the United States.

 

(d) The Committee will have the authority and discretion to interpret the Plan,
to establish, amend and rescind any rules and regulations relating to the Plan,
to determine the terms and provisions of any agreements made pursuant to the
Plan, and to make all other determinations that may be necessary or advisable
for the administration of the Plan.

 

(e) Any interpretation of the Plan by the Committee and any decision made by it
under the Plan is conclusive, final and binding.

 

(f) At its discretion, the Committee may terminate or suspend the granting of
Awards under the Plan at any time or from time to time.

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(g) In controlling and managing the operation and administration of the Plan,
the Committee shall act by a majority of its then members, by meeting or by
writing filed without a meeting. The Committee shall maintain and keep adequate
records concerning the Plan and concerning its proceedings and acts in such form
and detail as the Committee may decide.

 

8.4 Powers of the Board. Notwithstanding any Plan provision to the contrary, the
Board shall have the same powers, duties, and authority to administer the Plan
with respect to Awards granted to Non-Employee Directors as the Committee
retains with respect to Awards granted to employees and consultants as described
in subsection 8.3 and other applicable Plan provisions.

 

8.5 Delegation by Committee or Board. Except to the extent prohibited by
applicable law or the applicable rules of a stock exchange, the Committee or the
Board may allocate all or any part of their respective responsibilities and
powers to any one or more of their respective members and may delegate all or
any part of its responsibilities and powers to any person or persons. Any such
allocation or delegation may be revoked by the Committee or the Board, as
applicable, at any time.

 

8.6 Information to be Furnished to Committee. The Company and Related Companies
shall furnish the Committee or the Board, as applicable, with such data and
information as may be required for it to discharge their respective duties. The
records of the Company and Related Companies as to an employee’s or
Participant’s employment or other provision of services, termination of
employment or cessation of the provision of services, leave of absence,
re-employment and compensation shall be conclusive on all persons unless
determined to be incorrect. Participants and other persons entitled to benefits
under the Plan must furnish the Committee such evidence, data or information as
the Committee or the Board, as applicable, considers desirable to carry out the
terms of the Plan.

 

8.7 Duplicated Signatures. At their discretion, the Committee or the Board, as
applicable, may accept a duplicated signature on any document, whether faxed,
photocopied or otherwise duplicated, which will be effective to the same extent
as an original signature unless there is a showing of fraud or other wrongdoing,
the burden of making such showing being on the person asserting such fraud or
wrongdoing.

 

AMENDMENT AND TERMINATION

 

9.1 Generally. The Board may at any time amend, suspend or terminate the Plan,
provided that, subject to subsection 7.2 (relating to certain adjustments to
shares), no amendment or termination may in the absence of written consent to
the change by the affected Participant (or, if the Participant is not then
living, the affected beneficiary), adversely affect the rights of any
Participant or beneficiary under any Award granted under the Plan prior to the
date such amendment is adopted by the Board. Notwithstanding the foregoing, the
Committee may amend the Plan by its own action if any such amendment is
necessary for the Plan to meet applicable legal requirements or if the amendment
does not materially increase the Plan costs nor substantially modify the
eligibility, vesting or benefit provisions of the Plan. To the extent required
by applicable law or the requirements of the principal national exchange on
which the Stock is listed, a Plan amendment shall be subject to shareholder
approval.

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9.2. Section 409A. Notwithstanding anything in this Plan to the contrary, if any
Plan provision or Award under the Plan would result in the imposition of an
additional tax under Code Section 409A and related regulations and United States
Department of the Treasury pronouncements (“Section 409A”), that Plan provision
or Award will be reformed to avoid imposition of the applicable tax and no
action taken to comply with Section 409A shall be deemed to adversely affect the
Participant’s rights under any Award.