EXHIBIT 10.3

AMENDED AND RESTATED
1998 STOCK AWARDS PLAN
OF MITCHAM INDUSTRIES, INC.

I. PURPOSE

     The purpose of the MITCHAM INDUSTRIES, INC. AMENDED AND RESTATED 1998 STOCK
AWARDS PLAN (the “Plan”) is to provide a means through which Mitcham Industries,
Inc., a Texas corporation (the “Company”), and its subsidiaries, may attract
able persons as Employees, Directors and Consultants of the Company and to
provide a means whereby those employees, directors and consultants upon whom the
responsibilities of the successful administration and management of the Company
rest, and whose present and potential contributions to the welfare of the
Company are of importance, can acquire and maintain stock ownership, thereby
strengthening their concern for the welfare of the Company. A further purpose of
the Plan is to provide employees with additional incentive and rewards
opportunities designed to enhance the profitable growth of the Company.
Therefore, the Plan provides for granting ISOs, options which do not constitute
ISOs, Stock Appreciation Rights, Restricted Stock Awards, Performance Awards,
Phantom Stock Awards, or any combination of the foregoing, as is best suited to
the circumstances of the particular Employee, Director or Consultant as provided
herein.

II. DEFINITIONS

     The following definitions shall be applicable throughout the Plan unless
specifically modified by any paragraph:

     (a) “Affiliates” means any Parent corporation of the Company and any
“subsidiary” of the Company within the meaning of Code Section 424(e) and (f),
respectively.

     (b) “Award” means, individually or collectively, any Option, Restricted
Stock Award, Phantom Stock Award, Performance Award or Stock Appreciation Right.

     (c) “Award Agreement” means any Option Agreement, Restricted Stock
Agreement, Phantom Stock Award Agreement, Performance Award Agreement or Stock
Appreciation Rights Agreement.

     (d) “Board” means the Board of Directors of the Company.

     (e) “Change of Control” means the occurrence of any of the following
events:

     (i) the Company is not the surviving entity in any merger, consolidation or
other reorganization (or survives only as a subsidiary of an entity other than a
previously wholly-owned subsidiary of the Company),

 

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     (ii) the Company sells, leases or exchanges all or substantially all of its
assets to any other person or entity (other than a wholly-owned subsidiary of
the Company),

     (iii) the Company is dissolved and liquidated,

     (iv) any person or entity, including a “group” as contemplated by
Section 13(d)(3) of the 1934 Act, provides or gains ownership or control
(including, without limitation, power to vote) or more than 50% of the
outstanding shares of the Company’s voting stock (based upon voting power), or

     (v) as a result of or in connection with a contested election of directors,
the persons who were directors of the Company before such election cease to
constitute a majority of the Board.

     (f) “Change of Control Value” means:

     (i) the per share price offered to shareholders of the Company in any such
merger, consolidation, reorganization, sale of assets or dissolution
transaction,

     (ii) the price per share offered to shareholders of the Company in any
tender offer or exchange offer whereby a Change of Control takes place, or

     if such Change of Control occurs other than pursuant to a tender or
exchange offer, the fair market value per share of the shares into which Awards
are exercisable, as determined by the Committee, whichever is applicable.

     If the consideration offered to shareholders of the Company consists of
anything other than cash, the Committee shall determine the fair cash equivalent
of the portion of the consideration offered which is other than cash.

     (g) “Code” means the Internal Revenue Code of 1986, as amended. Reference
in the Plan to any section of the Code shall be deemed to include any amendments
or successor provisions to any section and any regulations under such section.

     (h) “Committee” means the Compensation Committee of the Board, which shall
be (i) constituted so as to permit the Plan to comply with Rule 16b-3 and
(ii) constituted solely of “outside directors,” within the meaning of section
162(m) of the Code and applicable interpretive authority thereunder.

     (i) “Company” means Mitcham Industries, Inc. and any of its Affiliates.

     (j) “Consultant” means any person engaged by the Company to render
consulting services and who is compensated for such services.

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     (k) “Continuous Status as an Employee, Director or Consultant” means, for
an Employee, the absence of any interruption or termination of the employment
relationship by the Company or any Subsidiary, for a Director or Consultant, the
absence of any interruption or termination of service as a Director or
Consultant, as the case may be. Continuous Status as an Employee, Director or
Consultant shall not be considered interrupted in the case of: (i) any leave of
absence approved by the Board, including sick leave, military leave, or any
other personal leave; provided, however, that for purposes of ISOs, such leave
is for a period of not more than 90 days, unless reemployment upon the
expiration of such leave is guaranteed by contract or statute, or unless
provided otherwise under Company policy adopted from time to time; or (ii) in
the case of transfers between locations of the Company or between the Company,
its subsidiaries or its successor.

     (l) “Director” means an individual elected to the Board by the shareholders
of the Company or by the Board under applicable corporate law who is serving on
the Board on the date the Plan is adopted by the Board or is elected to the
Board after that date.

     (m) “Employee” means any person (including an officer or a Director) in an
employment relationship with the Company or any parent or subsidiary corporation
(as defined in Section 424 of the Code).

     (n) “1934 Act” means the Securities Exchange Act of 1934, as amended.

     (o) “Fair Market Value” means, as of any specified date, the mean of the
high and low sales prices of the Stock (i) reported by the any interdealer
quotation system on which the Stock is quoted on that date or (ii) if the Stock
is listed on a national stock exchange, reported on the stock exchange composite
tape on that date; or, in either case, if no prices are reported on that date,
on the last preceding date on which such prices of the Stock are so reported. If
the Stock is traded over the counter at the time a determination of its fair
market value is required to be made hereunder, its fair market value shall be
deemed to be equal to the average between the reported high and low or closing
bid and asked prices of Stock on the most recent date on which Stock was
publicly traded. If Stock is not publicly traded at the time a determination of
its value is required to be made hereunder, the determination of its fair market
value shall be made by the Committee in the manner as it deems appropriate.

     (p) “Holder” means an Employee, Director or Consultant to whom an Award
other than an Option has been made under this Plan.

     (q) “Incentive Stock Option” or “ISO” means an incentive stock option
within the meaning of Section 422(b) of the Code.

     (r) “Non-Employee Director” means a Director who either (i) is not a
current Employee of the Company or any Subsidiary; or (ii) is otherwise
considered a “non-employee director” for purposes of Rule 16b-3.

     (s) “Nonqualified Stock Option” means an option granted under Paragraph VII
of the Plan to purchase Stock that is not an Incentive Stock Option.

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     (t) “Option” means an Award granted under Paragraph VII of the Plan and
includes both Incentive Stock Options to purchase Stock and Nonqualified Stock
Options to purchase Stock.

     (u) “Option Agreement” means a written agreement between the Company and an
Optionee with respect to an Option.

     (v) “Optionee” means a person to whom an Option is granted under this Plan,
or if applicable, such other person who holds an outstanding Option under this
Plan.

     (w) “Performance Award” means an Award granted under Paragraph X of the
Plan.

     (x) “Performance Award Agreement” means a written agreement between the
Company and a Holder with respect to a Performance Award.

     (y) “Phantom Stock Award” means an Award granted under Paragraph XI of the
Plan.

     (z) “Phantom Stock Award Agreement” means a written agreement between the
Company and a Holder with respect to a Phantom Stock Award.

     (aa) “Plan” means the Mitcham Industries, Inc. Amended and Restated 1998
Stock Awards Plan, as may be further amended from time to time.

     (bb) “Restricted Stock Agreement” means a written agreement between the
Company and a Holder with respect to a Restricted Stock Award.

     (cc) “Restricted Stock Award” means an Award granted under Paragraph IX of
the Plan.

     (dd) “Rule 16b-3” means SEC Rule 16b-3 promulgated under the 1934 Act, as
such may be amended from time to time, and any successor rule, regulation or
statute fulfilling the same or a similar function.

     (ee) “Spread” means, in the case of a Stock Appreciation Right, an amount
equal to the excess, if any, of the Fair Market Value of a share of Stock on the
date such right is exercised over the exercise price of such Stock Appreciation
Right.

     (ff) “Stock” means the common stock, $0.01 par value, of the Company.

     (gg) “Stock Appreciation Right” means an Award granted under Paragraph VIII
of the Plan.

     (hh) “Stock Appreciation Rights Agreement” means a written agreement
between the Company and a Holder with respect to an Award of Stock Appreciation
Rights.

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III. EFFECTIVE DATE AND DURATION OF THE PLAN

     The Plan shall be effective upon the date of its adoption by the Board,
provided that the Plan is approved by the shareholders of the Company within 12
months thereafter. No further Awards may be granted under the Plan after the
expiration of 10 years from the date of its adoption by the Board. The Plan
shall remain in effect until all Awards granted under the Plan have been
satisfied or expired.

IV. ADMINISTRATION

     (a) Committee. The Plan shall be administered by the Committee.

     (b) Powers. Subject to the provisions of the Plan, the Committee shall have
sole authority, in its discretion, to determine which Employees, Directors or
Consultants shall receive an Award, the time or times when such Award shall be
made, whether an Incentive Stock Option, Nonqualified Option or Stock
Appreciation Right shall be granted, the number of shares of Stock which may be
issued under each Option, Stock Appreciation Right or Restricted Stock Award,
and the value of each Performance Award and Phantom Stock Award. In making such
determinations, the Committee may take into account the nature of the services
rendered by the respective Employees, Directors and Consultants their present
and potential contributions to the Company’s success and such other factors as
the Committee in its discretion shall deem relevant.

     (c) Additional Powers. The Committee shall have such additional powers as
are delegated to it by the other provisions of the Plan. Subject to the express
provisions of the Plan, the Committee is authorized to construe the Plan and the
respective agreements executed thereunder, to prescribe such rules and
regulations relating to the Plan as it may deem advisable to carry out the Plan,
and to determine the terms, restrictions and provisions of each Award, including
such terms, restrictions and provisions as shall be requisite in the judgment of
the Committee to cause designated Options to qualify as Incentive Stock Options,
and to make all other determinations necessary or advisable for administering
the Plan. The Committee may correct any defect or supply any omission or
reconcile any inconsistency in any agreement relating to an Award in the manner
and to the extent it shall deem expedient to carry it into effect. The
determinations of the Committee on the matters referred to in this Article IV
shall be conclusive.

V. GRANT OF OPTIONS, STOCK APPRECIATION RIGHTS,
RESTRICTED STOCK AWARDS, PERFORMANCE AWARDS AND
PHANTOM STOCK AWARDS; SHARES SUBJECT TO THE PLAN

     (a) Stock Grant and Award Limits. The Committee may from time to grant
Awards to one or more Employees, Directors or Consultants determined by it to be
eligible for participation in the Plan in accordance with the provisions of
Paragraph VI. Subject to Paragraph XII, the aggregate number of shares of Stock
that may be issued under the Plan shall not exceed 750,000 shares. Shares of
Stock shall be deemed to have been issued under the Plan only to the extent
actually issued and delivered pursuant to an

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Award. To the extent that an Award lapses or the rights of its Holder terminate
or the Award is paid in cash, any shares of Stock subject to such Award shall
again be available for the grant of an Award. Separate stock certificates shall
be issued by the Company for those shares acquired pursuant the exercise of an
Incentive Stock Option and for those shares acquired pursuant to the exercise of
a Nonqualified Stock Option.

     (b) Stock Offered. The stock to be offered pursuant to the grant of an
Award may be authorized but unissued Stock or Stock previously issued and
outstanding and reacquired by the Company.

VI. ELIGIBILITY

     Incentive Stock Options and Stock Appreciation Rights related thereto may
be granted only to Employees. Awards other than Incentive Stock Options may be
granted to Employees, Non-Employee Directors and Consultants. An Award may be
granted on more than one occasion to the same person, and, subject to the
limitations set forth in the Plan, such Award may include an Incentive Stock
Option or a Nonqualified Stock Option, a Stock Appreciation Right, a Restricted
Stock Award, a Performance Award, a Phantom Stock Award or any combination
thereof.

VII. STOCK OPTIONS

     (a) Option Period. The term of each Option shall be as specified by the
Committee at the date of grant.

     (b) Limitations on Exercise of Option. An Option shall be exercisable in
whole or in such installments and at such times as determined by the Committee.

     (c) Special Limitations on Incentive Stock Options. To the extent that the
aggregate Fair Market Value (determined at the time the respective Incentive
Stock Option is granted) of Stock with respect to which Incentive Stock Options
are exercisable for the first time by an individual during any calendar year
under all incentive stock option plans of the Company and its parent and
subsidiary corporations exceeds $100,000, such Incentive Stock Options shall be
treated as Nonqualified Stock Options as determined by the Committee. The
Committee shall determine, in accordance with applicable provisions of the Code,
Treasury Regulations and other administrative pronouncements, which of an
Optionee’s Incentive Stock Options will not constitute Incentive Stock Options
because of such limitation and shall notify the Optionee of such determination
as soon as practicable after such determination. No Incentive Stock Options
shall be granted to an individual if, at the time the Option is granted, such
individual owns stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or of its parent or subsidiary
corporation, within the meaning of Section 422(b)(6) of the Code, unless (i) at
the time such Option is granted the option price is at least 110% of the Fair
Market Value of the Stock subject to the Option and (ii) such Option by its
terms is not exercisable after the expiration of five years from the date of
grant.

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     (d) Option Agreement. Each Option shall be evidenced by an Option Agreement
in such form and containing such provisions not inconsistent with the provisions
of the Plan as the Committee from time to time shall approve, including, without
limitation, provisions to qualify an Incentive Stock Option under Section 422 of
the Code. An Option Agreement may provide for the payment of the option price,
in whole or in part, by the delivery of a number of shares of Stock (plus cash
if necessary) having a Fair Market Value equal to such option price. Each Option
Agreement shall provide that the Option may not be exercised earlier than six
months from the date of grant and shall specify the effect of termination of
employment on the exercisability of the Option. Moreover, an Option Agreement
may provide for a “cashless exercise” of the Option by establishing procedures
whereby the Holder, by a properly-executed written notice, directs:

     (i) an immediate market sale or margin loan respecting all or a part of the
shares of Stock to which he is entitled upon exercise pursuant to an extension
of credit by the Company to the Holder of the option price,

     (ii) the delivery of the shares of Stock from the Company directly to a
brokerage firm, and

     (iii) the delivery of the option price from the sale or margin loan
proceeds from the brokerage firm directly to the Company.

Such Option Agreement may also include, without limitation, provisions relating
to:

     (i) vesting of Options, subject to the provisions hereof accelerating such
vesting on a Change of Control,

     (ii) tax matters (including provisions (y) permitting the delivery of
additional shares of Stock or the withholding of shares of Stock from those
acquired upon exercise to satisfy federal or state income tax withholding
requirements and (z) dealing with any other applicable employee wage withholding
requirements), and

     (iii) any other matters not inconsistent with the terms and provisions of
this Plan that the Committee shall in its sole discretion determine.

The terms and conditions of the respective Option Agreements need not be
identical.

     (e) Option Price and Payment. The price at which a share of Stock may be
purchased upon exercise of an Option shall be determined by the Committee, but:

     (i) such purchase price shall not be less than the Fair Market Value of
Stock subject to an Incentive Stock Option on the date immediately preceding the
date the Incentive Stock Option is granted, and

     (ii) such purchase price shall be subject to adjustment as provided in
Paragraph XII.

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     The Option or portion thereof may be exercised by delivery of an
irrevocable notice of exercise to the Company. The purchase price of the Option
or portion thereof shall be paid in full in the manner prescribed by the
Committee.

     (f) Shareholder Rights and Privileges. The Holder shall be entitled to all
the privileges and rights of a shareholder only with respect to such shares of
Stock as have been purchased under the Option and for which certificates of
stock have been registered in the Holder’s name.

     (g) Options and Rights in Substitution for Stock Options Granted by Other
Corporations. Options and Stock Appreciation Rights may be granted under the
Plan from time to time in substitution for stock options held by individuals
employed by corporations who become employees as a result of a merger or
consolidation of the employing corporation with the Company or any subsidiary,
or the acquisition by the Company or a subsidiary of the assets of the employing
corporation, or the acquisition by the Company or a subsidiary of stock of the
employing corporation with the result that such employing corporation becomes a
subsidiary.

     (h) Termination of Employment, Directorship or Consultancy. In the event of
termination of an Optionee’s Continuous Status as an Employee, Director or
Consultant (unless such termination as a Consultant is for purposes of becoming
an Employee), such Optionee may, but only within ninety (90) days (or such other
period of time as is determined by the Board, but in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise his Option to the extent that an Optionee was entitled to
exercise it at the date of such termination. To the extent that an Optionee was
not entitled to exercise the Option at the date of such termination, or if
Optionee does not exercise such Option to the extent so entitled within the time
specified herein, the Option shall terminate.

VIII. STOCK APPRECIATION RIGHTS

     (a) Stock Appreciation Rights. A Stock Appreciation Right is the right to
receive an amount equal to the Spread with respect to a share of Stock upon the
exercise of such Stock Appreciation Right. Stock Appreciation Rights may be
granted in connection with the grant of an Option, in which case the Option
Agreement will provide that exercise of Stock Appreciation Rights will result in
the surrender of the right to purchase the shares under the Option as to which
the Stock Appreciation Rights were exercised. Alternatively, Stock Appreciation
Rights may be granted independently of Options in which case each Award of Stock
Appreciation Rights shall be evidenced by a Stock Appreciation Rights Agreement
which shall contain such terms and conditions as may be approved by the
Committee. The Spread with respect to a Stock Appreciation Right may be payable
either in cash, shares of Stock with a Fair Market Value equal to the Spread or
in a combination of cash and shares of Stock. With respect to Stock Appreciation
Rights that are subject to Section 16 of the 1934 Act, however, the Committee
shall, except as provided in Paragraph XII(c), retain sole discretion (i) to
determine the form in which payment of the Stock Appreciation Right will be made
(i.e., cash, securities or any combination thereof) or (ii) to approve an
election by a Holder to

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receive cash in full or partial settlement of Stock Appreciation Rights. Each
Stock Appreciation Rights Agreement shall provide that the Stock Appreciation
Rights may not be exercised earlier than six months from the date of grant and
shall specify the effect of termination of employment on the exercisability of
the Stock Appreciation Rights.

     (b) Other Terms and Conditions. At the time of such Award, the Committee,
may in its sole discretion, prescribe additional terms, conditions or
restrictions relating to Stock Appreciation Rights, including, but not limited
to rules pertaining to termination of employment (by retirement, disability,
death or otherwise) of a Holder prior to the expiration of such Stock
Appreciation Rights. Such additional terms, conditions or restrictions shall be
set forth in the Stock Appreciation Rights Agreement made in conjunction with
the Award. Such Stock Appreciation Rights Agreement may also include, without
limitation, provisions relating to:

     (i) vesting of Awards, subject to the provisions hereof accelerating
vesting on a Change of Control,

     (ii) tax matters (including provisions covering applicable wage withholding
requirements), and

     (iii) any other matters not inconsistent with the terms and provisions of
this Plan, that the Committee shall in its sole discretion determine.

     The terms and conditions of the respective Stock Appreciation Rights
Agreements need not be identical.

     (c) Exercise Price. The exercise price of each Stock Appreciation Right
shall be determined by the Committee, but such exercise price:

     (i) shall not be less than the Fair Market Value of a share of Stock on the
date the Stock Appreciation Right is granted (or such greater exercise price as
may be required if such Stock Appreciation Right is granted in connection with
an Incentive Stock Option that must have an exercise price equal to 110% of the
Fair Market Value of the Stock on the date of grant pursuant to
Paragraph VII(c)), and

     (ii) shall be subject to adjustment as provided in Paragraph XII.

     (d) Exercise Period. The term of each Stock Appreciation Right shall be as
specified by the Committee at the date of grant.

     (e) Limitations on Exercise of Stock Appreciation Right. A Stock
Appreciation Right shall be exercisable in whole or in such installments and at
such times as determined by the Committee.

     (f) Termination of Employment, Directorship or Consultancy. In the event of
termination of a Holder’s Continuous Status as an Employee, Director or
Consultant (unless such termination as a Consultant is for purposes of becoming
an Employee), such Holder may, but only within ninety (90) days (or such other
period of

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time as is determined by the Board, but in no event later than the expiration
date of the term of such Award as set forth in the Stock Appreciation Rights
Agreement), exercise his Stock Appreciation Rights to the extent that a Holder
was entitled to exercise it at the date of such termination. To the extent that
a Holder was not entitled to exercise the Stock Appreciation Rights at the date
of such termination, or if such Holder does not exercise such Stock Appreciation
Rights to the extent so entitled within the time specified herein, the Stock
Appreciation Rights shall terminate.

IX. RESTRICTED STOCK AWARDS

     (a) Forfeiture Restrictions to be Established by the Committee. Shares of
Stock that are the subject of a Restricted Stock Award shall be subject to
restrictions on disposition by the Holder and an obligation of the Holder to
forfeit and surrender the shares to the Company under certain circumstances (the
“Forfeiture Restrictions”). The Forfeiture Restrictions shall be determined by
the Committee in its sole discretion, and the Committee may provide that the
Forfeiture Restrictions shall lapse upon:

     (i) the attainment of targets established by the Committee that are based
on (1) the price of a share of Stock, (2) the Company’s earnings per share,
(3) the Company’s revenue, or (4) the Company’s pre-tax cash flow from
operations,

     (ii) the Holder’s continued employment with the Company for a specified
period of time, or

     (iii) a combination of any two or more of the factors listed in clauses
(i) and (ii) of this sentence. Each Restricted Stock Award may have different
Forfeiture Restrictions, in the discretion of the Committee.

     The Forfeiture Restrictions applicable to a particular Restricted Stock
Award shall not be changed except as permitted by Paragraph IX(b) or Paragraph
XII.

     (b) Other Terms and Conditions. Stock awarded pursuant to a Restricted
Stock Award shall be represented by a stock certificate registered in the name
of the Holder of such Restricted Stock Award. The Holder shall have the right to
receive dividends with respect to Stock subject to a Restricted Stock Award, to
vote Stock subject thereto and to enjoy all other shareholder rights, except
that:

     (i) the Holder shall not be entitled to delivery of the stock certificate
until the Forfeiture Restrictions shall have expired,

     (ii) the Company shall retain custody of the Stock until the Forfeiture
Restrictions shall have expired,

     (iii) the Holder may not sell, transfer, pledge, exchange, hypothecate or
otherwise dispose of the stock until the Forfeiture Restrictions shall have
expired, and

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     (iv) a breach of the terms and conditions established by the Committee
pursuant to the Restricted Stock Agreement, shall cause a forfeiture of the
Restricted Stock Award.

     At the time of such Award, the Committee may, in its sole discretion,
prescribe additional terms, conditions or restrictions relating to Restricted
Stock Awards, including, but not limited to, rules pertaining to the termination
of employment (by retirement, disability, death or otherwise) of a Holder prior
to expiration of the Forfeiture Restrictions. Such additional terms, conditions
or restrictions shall be set forth in a Restricted Stock Agreement made in
conjunction with the Award. Such Restricted Stock Agreement may also include,
without limitation, provisions relating to:

     (i) vesting of Awards, subject to the provisions hereof accelerating
vesting on a Change of Control,

     (ii) tax matters (including provisions (y) covering any applicable employee
wage withholding requirements and (z) prohibiting an election by the Holder
under section 83(b) of the Code), and

     (iii) any other matters not inconsistent with the terms and provisions of
this Plan that the Committee in its sole discretion shall determine.

     (c) Payment for Restricted Stock. The Committee shall determine the amount
and form of any payment for Stock received pursuant to a Restricted Stock Award,
provided that in the absence of such a determination, a Holder shall not be
required to make any payment for Stock received pursuant to a Restricted Stock
Award, except to the extent otherwise required by law.

     (d) Agreements. At the time any Award is made under this Paragraph IX, the
Company and the Holder shall enter into a Restricted Stock Agreement setting
forth each of the matters as the Committee may determine to be appropriate. The
terms and provisions of the respective Restricted Stock Agreements need not be
identical.

     (e) Termination of Employment, Directorship or Consultancy. In the event of
termination of a Holder’s Continuous Status as an Employee, Director or
Consultant (unless such termination as a Consultant is for purposes of becoming
an Employee), the Company may repurchase or otherwise reacquire any or all of
the shares of Restricted Stock held by that Holder that have not vested as of
the date of termination, under the terms of the Restricted Stock Agreement
between the Company and such Holder.

X. PERFORMANCE AWARDS

     (a) Performance Period. The Committee shall establish, with respect to and
at the time of each Performance Award, a performance period over which the
performance of the Holder shall be measured.

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     (b) Performance Awards. Each Performance Award shall have a maximum value
established by the Committee at the time of such Award.

     (c) Performance Measures. A Performance Award shall be awarded to an
employee contingent upon future performance of the employee, the Company or any
subsidiary, division or department thereof by or in which is he employed during
the performance period. The Committee shall establish the performance measures
applicable to such performance prior to the beginning of the performance period
but subject to such later revisions as the Committee shall deem appropriate to
reflect significant, unforeseen events or changes.

     (d) Awards Criteria. In determining the value of Performance Awards, the
Committee shall take into account an employee’s responsibility level,
performance, potential, other Awards and such other considerations as it deems
appropriate.

     (e) Payment. Following the end of the performance period, the Holder of a
Performance Award shall be entitled to receive payment of an amount, not
exceeding the maximum value of the Performance Award, based on the achievement
of the performance measures for such performance period, as determined by the
Committee. Payment of a Performance Award may be made in cash, Stock or a
combination thereof, as determined by the Committee. Payment shall be made in a
lump sum or in installments as prescribed by the Committee. Any payment to be
made in Stock shall be based on the Fair Market Value of the Stock on the
payment date. If a payment of cash is to be made on a deferred basis, the
Committee shall establish whether interest shall be credited, the rate thereof
and any other terms and conditions applicable thereto.

     (f) Termination of Employment, Directorship or Consultancy. In the event of
termination of a Holder’s Continuous Status as an Employee, Director or
Consultant (unless such termination as a Consultant is for purposes of becoming
an Employee), a Performance Award shall terminate, except as may be determined
by the Committee or as may otherwise be provided in the Performance Award
Agreement at the time granted.

     (g) Agreements. At the time any Award is made under this Paragraph X, the
Company and the Holder shall enter into a Performance Award Agreement setting
forth each of the matters contemplated hereby, and, in addition such matters are
set forth in Paragraph IX(b) as the Committee may determine to be appropriate.
The terms and provisions of the respective agreements need not be identical.

XI. PHANTOM STOCK AWARDS

     (a) Phantom Stock Awards. Phantom Stock Awards are rights to receive shares
of Stock (or cash in an amount equal to the Fair Market Value thereof), or
rights to receive an amount equal to any appreciation in the Fair Market Value
of Stock (or portion thereof) over a specified period of time, which vest over a
period of time or upon the occurrence of an event (including without limitation
a Change of Control) as established by the Committee, without payment of any
amounts by the Holder thereof (except to the

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extent otherwise required by law) or satisfaction of any performance criteria or
objectives. Each Phantom Stock Award shall have a maximum value established by
the Committee at the time of such Award.

     (b) Award Period. The Committee shall establish, with respect to and at the
time of each Phantom Stock Award, a period over which or the event upon which
the Award shall vest with respect to the Holder.

     (c) Awards Criteria. In determining the value of Phantom Stock Awards, the
Committee shall take into account an employee’s responsibility level,
performance, potential, other Awards and such other considerations as it deems
appropriate.

     (d) Payment. Following the end of the vesting period for a Phantom Stock
Award, the Holder of a Phantom Stock Award shall be entitled to receive payment
of an amount, not exceeding the maximum value of the Phantom Stock Award, based
on the then vested value of the Award. Payment of a Phantom Stock Award may be
made in cash, Stock or a combination thereof as determined by the Committee.
Payment shall be made in a lump sum or in installments as prescribed by the
Committee in its sole discretion. Any payment to be made in Stock shall be based
on the Fair Market Value of the Stock on the payment date. Cash dividend
equivalents may be paid during or after the vesting period with respect to a
Phantom Stock Award, as determined by the Committee. If a payment of cash is to
be made on a deferred basis, the Committee shall establish whether interest
shall be credited, the rate thereof and any other terms and conditions
applicable thereto.

     (e) Termination of Employment, Directorship or Consultancy. In the event of
termination of a Holder’s Continuous Status as an Employee, Director or
Consultant (unless such termination as a Consultant is for purposes of becoming
an Employee), a Phantom Stock Award shall terminate, except as may be determined
by the Committee or as may otherwise be provided in the Phantom Stock Award
Agreement at the time granted.

     (f) Agreements. At the time any Award is made under this Paragraph XI, the
Company and the Holder shall enter into a Phantom Stock Award Agreement setting
forth each of the matters contemplated hereby and, in addition such matters as
are set forth in Paragraph IX(b) as the Committee may determine to be
appropriate. The terms and provisions of the respective agreements need not be
identical.

XII. RECAPITALIZATION OR REORGANIZATION

     (a) The shares with respect to which Awards may be granted are shares of
Stock as presently constituted, but if and whenever, prior to the expiration of
an Award theretofore granted, the Company shall effect a subdivision or
consolidation, the number of shares of Stock with respect to which such Award
may thereafter be exercised or satisfied, as applicable, (i) in the event of an
increase in the number of outstanding shares shall be proportionately increased,
and the purchase price per share shall be proportionately reduced, and (ii) in
the event of a reduction in the number of outstanding

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shares shall be proportionately reduced, and the purchase price per share shall
be proportionately increased.

     (b) If the Company recapitalizes or otherwise changes its capital
structure, thereafter upon any exercise or satisfaction, as applicable, of an
Award theretofore granted the Holder shall be entitled to (or entitled to
purchase, if applicable) under such Award, in lieu of the number of shares of
Stock then covered by such Award, the number and class of shares of stock and
securities to which the Holder would have been entitled pursuant to the terms of
the recapitalization if, immediately prior to such recapitalization, the Holder
had been the holder of record of the number of shares of Stock then covered by
such Award.

     (c) In the event of a Change of Control, all outstanding Awards shall
immediately vest and become exercisable or satisfiable, as applicable. The
Committee, in its discretion, may determine that upon the occurrence of a Change
of Control, each Award other than an Option outstanding hereunder shall
terminate within a specified number of days after notice to the Holder, and such
Holder shall receive, with respect to each share of Stock subject to such Award,
cash in an amount equal to the excess, if any, of the Change of Control Value.
Further, in the event of a Change of Control, the Committee, in its discretion
may act to effect one or more of the following alternatives with respect to
outstanding Options, which may vary among individual Holders and which may vary
among Options held by any individual Holder:

     (i) determine a limited period of time on or before a specified date
(before or after such Change of Control) after which specified date all
unexercised Options and all rights of Holders thereunder shall terminate,

     (ii) require the mandatory surrender to the Company by selected Holders of
some or all of the outstanding Options held by such Holders (irrespective of
whether such Options are then exercisable under the provisions of the Plan) as
of a date, before or after such Change of Control, specified by the Committee,
in which event the Committee shall thereupon cancel such Options and the Company
shall pay to each Holder an amount of cash per share equal to the excess, if
any, of the Change of Control Value of the shares subject to such Option over
the exercise price(s) under such Options for such shares,

     (iii) make such adjustments to Options then outstanding as the Committee
deems appropriate to reflect such Change of Control (provided, however, that the
Committee may determine in its sole discretion that no adjustment is necessary
to Options then outstanding), or

     (iv) provide that thereafter upon any exercise of an Option theretofore
granted the Holder shall be entitled to purchase under such Option, in lieu of
the number of shares of Stock then covered by such Option the number and class
of shares of stock or other securities or property (including, without
limitation, cash) to which the Holder would have been entitled pursuant to the
terms of the agreement of merger, consolidation or sale of assets and
dissolution if,

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immediately prior to such merger, consolidation or sale of assets and
dissolution the Holder has been the holder of record of the number of shares of
Stock then covered by such Option.

     The provisions contained in this paragraph shall be inapplicable to an
Award granted within six (6) months before the occurrence of a Change of Control
if the Holder of such Award is subject to the reporting requirements of Section
16(a) of the 1934 Act. The provisions contained in this paragraph shall not
terminate any rights of the Holder to further payments pursuant to any other
agreements with the Company after a Change of Control.

     (d) If there are changes in the outstanding Stock by reason of
recapitalization, reorganizations, mergers, consolidations, combinations,
exchanges or other relevant changes in capitalization occurring after the date
of the grant of any Award and not otherwise provided for by this Paragraph XII,
any outstanding Awards and any agreements evidencing such Awards shall be
subject to adjustment by the Committee at its discretion as to the number and
price of shares of Stock or other consideration subject to such Awards. If there
is any change in the outstanding Stock, the aggregate number of shares available
under the Plan may be appropriately adjusted by the Committee, whose
determination shall be conclusive.

     (e) The existence of the Plan and the Awards granted hereunder shall not
affect in any way the right or power of the Board or the shareholders of the
Company to make or authorize any adjustment, recapitalization, reorganization or
other change in the Company’s capital structure or its business, any merger or
consolidation of the Company, any issue of debt or equity securities ahead of or
affecting Stock or the rights thereof the dissolution or liquidation of the
Company or any sale, lease, exchange or other disposition of all or any part of
its assets or business or any other corporate act or proceeding.

     (f) Any adjustment provided for in Subparagraphs (a), (b), (c) or (d) above
shall be subject to any required shareholder action.

     (g) Except as hereinbefore expressly provided, the issuance by the Company
of shares of stock of any class or securities convertible into shares of stock
of any class, for cash, property, labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares of obligations of the Company convertible into such shares or other
securities, and in any case whether or not for fair value, shall not affect, and
no adjustment by reason thereof shall be made with respect to, the number of
shares of Stock subject to Awards theretofore granted or the purchase price per
share, if applicable.

XIII. AMENDMENT AND TERMINATION OF THE PLAN

     The Board in its discretion may terminate the Plan at any time with respect
to any shares for which Awards have not theretofore been granted. The Board
shall have the right to alter or amend the Plan or any part thereof from time to
time; provided that no change in any Award previously granted may be made that
would impair the rights of the Holder without the consent

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of the Holder [(unless such change is required in order to cause the benefits
under the Plan to qualify as performance-based compensation within the meaning
of section 162(m) of the Code and applicable interpretive authority
thereunder)], and provided, further, that the Board may not, without approval of
the shareholders, amend the Plan to:

     (a) increase the maximum number of shares which may be issued on exercise
or surrender of an Award, except as provided in Paragraph XII,

     (b) change the Option price,

     (c) extend the maximum period during which Awards may be granted under the
Plan, or

     (d) decrease any authority granted to the Committee hereunder in
contravention of Rule 16b-3.

XIV. MISCELLANEOUS

     (a) No Right to An Award. Neither the adoption of the Plan by the Company
nor any action of the Board or the Committee shall be deemed to give an employee
any right to be granted an Award to purchase Stock, a right to a Stock
Appreciation Right, a Restricted Stock Award, a Performance Award or a Phantom
Stock Award or any of the rights hereunder except as may be evidenced by an
Award or by an Option Agreement, Stock Appreciation Rights Agreement, Restricted
Stock Agreement, Performance Award Agreement or Phantom Stock Award Agreement on
behalf of the Company, and then only to the extent and on the terms and
conditions expressly set forth therein. The Plan shall be unfunded. The Company
shall not be required to establish any special or separate fund or to make any
other segregation of funds or assure the payment of any Award.

     (b) No Employment Rights Conferred. Nothing contained in the Plan shall
(i) confer upon any employee any right with respect to continuation of
employment with the Company or any subsidiary or (ii) interfere in any way with
the right of the Company or any subsidiary to terminate his or her employment at
any time.

     (c) Other Laws; Withholding. The Company shall not be obligated to issue
any Stock pursuant to any Award granted under the Plan at any time when the
shares covered by such Award have not been registered under the Securities Act
of 1933 and such other state and federal laws, rules or regulations as the
Company or the Committee deems applicable and, in the opinion of legal counsel
for the Company, there is no exemption from the registration requirements of
such laws, rules or regulations available for the issuance and sale of such
shares. No fractional shares of Stock shall be delivered, nor shall any cash in
lieu of fractional shares be paid. The Company shall have the right to deduct in
connection with all Awards any taxes required by law to be withheld and to
require any payments required to enable it to satisfy its withholding
obligations.

     (d) No Restriction on Corporate Action. Nothing contained in the Plan shall
be construed to prevent the Company or any subsidiary from taking any corporate

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action which is deemed by the Company or such subsidiary to be appropriate or in
its best interest, whether or not such action would have an adverse effect on
the Plan or any Award made under the Plan. No employee, beneficiary or other
person shall have any claim against the Company or any subsidiary as a result of
any such action.

     (e) Restrictions on Transfer. An Award shall not be transferable otherwise
than by will or the laws of descent and distribution or pursuant to a “qualified
domestic relations order” as defined by the Code or Title I of the Employee
Retirement Income Security Act of 1974, as amended, or the rules thereunder, and
shall be exercisable during the Holder’s lifetime only by such Holder or the
Holder’s guardian or legal representative.

     (f) Rule 16b-3. It is intended that the Plan and any grant of an Award made
to a person subject to Section 16 of the 1934 Act meet all of the requirements
of Rule 16b-3. If any provision of the Plan or any such Award would disqualify
the Plan or such Award under, or would otherwise not comply with, Rule 16b-3,
such provision or Award shall be construed or deemed amended to conform to
Rule 16b-3.

     (g) Section 162(m). It is intended that the Plan comply fully with and meet
all the requirements of Section 162(m) of the Code so that Options and Stock
Appreciation Rights granted hereunder and, if determined by the Committee,
Restricted Stock Awards, shall constitute “performance-based” compensation
within the meaning of such section. If any provision of the Plan would
disqualify the Plan or would not otherwise permit the Plan to comply with
Section 162(m) as so intended, such provision shall be construed or deemed
amended to conform to the requirements or provisions of Section 162(m); provided
that no such construction or amendment shall have an adverse effect on the
economic value to a Holder of any Award previously granted hereunder.

     (h) Governing Law. This Plan shall be construed in accordance with the laws
of the State of Texas.

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