Exhibit 10.1

[To Be Placed on Oasis Petroleum Inc. Letterhead]

 

                                        , 20                                   

NOTICE OF GRANT OF PERFORMANCE SHARE UNITS

Pursuant to the terms and conditions of the Oasis Petroleum Inc. 2010 Long Term
Incentive Plan, attached as Appendix B (the “Plan”), and the associated
Performance Share Unit Agreement, attached as Appendix C or which has previously
been provided to you (the “Agreement”), you are hereby granted an award of the
number of Performance Share Units set forth below, whereby each Performance
Share Unit that becomes earned, as determined by the Committee in its sole and
absolute discretion, represents the right to receive one share of common stock
of the Company, par value $0.001 per share (“Stock”), plus rights to certain
Dividend Equivalents described in Section 3 of the Agreement, under the terms
and conditions set forth below, in the Agreement, and in the Plan (the
“Performance Share Units”). Capitalized terms used but not defined herein shall
have the meanings set forth in the Plan or the Agreement.

 

Grantee:   

 

Date of Grant:    July 30, 2012 (“Date of Grant”) Number of Performance Share
Units:                            (the “Initial Performance Units”). The number
of shares of Stock that may be deliverable in respect of this Award may range
from 0% to 200% of the number of Initial Performance Units. Performance Cycle:
   The Performance Cycle applicable to the Performance Share Units begins on
August 1, 2012 and ends on July 31, 2015; provided, that, if less than 200% of
the Initial Performance Units become Earned Performance Units as of the end of
the Performance Cycle, the last day of the Performance Cycle will be extended to
July 31, 2016 (the “Extended Performance Cycle”). Vesting Requirements:    Your
right to receive Stock in respect of Performance Share Units is generally
contingent, in whole or in part, upon (a) except as otherwise provided below,
your continuous active service with the Company through the end of the
Performance Cycle (and the Extended Performance Cycle, if applicable) (the
“Continuous Service Requirement”), and (b) the level of achievement of the TSR
Vesting Objective as outlined below and in Appendix A.

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The “TSR Vesting Objective” means the Company’s relative ranking in respect of
the Performance Cycle (and the Extended Performance Cycle, if applicable) with
regard to Total Shareholder Return (as defined in Appendix A attached hereto) as
compared to Total Shareholder Return of the Peer Companies (as defined in
Appendix A), and the level of achievement of the TSR Vesting Objective shall be
determined in accordance with Appendix A. After the end of the Performance Cycle
(and the Extended Performance Cycle, if applicable), the Committee will
determine the Company’s Total Shareholder Return as compared to Total
Shareholder Return of the Peer Companies and will certify the level of
achievement with respect to the TSR Vesting Objective and what percentage of the
Initial Performance Units have been earned in accordance with the table set
forth in Appendix A (such number of Performance Share Units that become earned
shall hereinafter be called the “Earned Performance Units”), subject to your
satisfaction of the Continuous Service Requirement.

 

Notwithstanding anything to the contrary herein, in the Agreement, in the Plan
or in any other arrangement between you and the Company (including any
employment agreement or the Amended and Restated Executive Change in Control and
Severance Benefit Plan, if you participate in such plan):

 

(a) if a Change in Control occurs prior to the end of the Performance Cycle (and
the Extended Performance Cycle, if applicable) (the date of such occurrence, the
“Change in Control Date”) and you have remained in continuous service with the
Company through the Change in Control Date, then, upon the occurrence of such
Change in Control, you shall be deemed to have earned a number of Performance
Share Units equal to the number of Earned Performance Units you would have
earned in accordance with Appendix A, but assuming that (i) the Performance
Cycle ended on the Change in Control Date, and (ii) the determination of
whether, and to what extent, the TSR Vesting Objective is achieved shall be
based on actual performance against the stated criteria through the Change in
Control Date. For purposes of this Award, “Change in Control” shall have the
meaning given such term in the Plan; provided, that, in the event of any
Business Combination following which both Thomas B. Nusz and Taylor L. Reid
remain as Chief Executive Officer and Chief Operating Officer, respectively, and
as members of the board of directors or similar governing body, of the entity
resulting from such Business Combination (not including any subsidiary thereof),
the Board of the pre-Business Combination Company may determine, in its sole
discretion, that no Change in Control has occurred for purposes of this Award.

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(b) if your employment or service relationship with the Company or any of its
Subsidiaries is terminated
due to your death or Disability prior to the end of the Performance Cycle (or
the Extended Performance Cycle,
if applicable), then you shall be deemed to have earned a number of Performance
Share Units equal to 200%
of the Initial Performance Units. For purposes of this Award, “Disability” shall
have the meaning given such
term in any employment agreement between you and the Company; provided, however,
that if there is no
existing employment agreement between you and the Company, the term “Disability”
shall mean your
inability to perform the essential functions of your position with or without
reasonable accommodation, if
required by law, due to physical or mental impairment. The existence of any such
Disability shall be certified,
at the Company’s discretion, by either the Company’s disability carrier or a
physician acceptable to both you
and the Company. If the parties are not able to agree on the choice of
physician, each party shall select a
physician who, in turn, shall select a third physician to render such
certification. In no event will your
employment be terminated as a result of Disability, unless otherwise agreed to
by you and the Company, until
at least 180 consecutive days of leave have elapsed and the Company has provided
you with written notice of
termination.

 

(c) if your employment or service relationship with the Company or any of its
Subsidiaries is terminated
prior to the end of the Performance Cycle (or the Extended Performance Cycle, if
applicable) by the Company
or a Subsidiary without “Cause” or by you for “Good Reason” (in each case, as
such terms are defined in any
employment agreement between you and the Company or in the Amended and Restated
Executive Change in
Control and Severance Benefit Plan, if you participate in such plan), then you
shall be deemed to have earned,
as of the end of the Performance Cycle (and the Extended Performance Cycle, if
applicable), the number of
Earned Performance Units that you would have earned in accordance with Appendix
A had you remained
employed through the end of the Performance Cycle (and the Extended Performance
Cycle, if applicable).

 

Any of your Performance Share Units that are eligible to be earned but that do
not become Earned
Performance Units as of the end of the Extended Performance Cycle shall
terminate and be cancelled upon the
expiration of such Extended Performance Cycle.

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Date of Settlement:               

Payment in respect of Earned Performance Units shall be made no later than
March 15 of the calendar year following the calendar year in which the last day
of the Performance Cycle occurs, except that (a) in the event that the Extended
Performance Cycle becomes applicable, Performance Share Units earned as of the
last day of the Performance Cycle shall be paid as provided above and any
additional Performance Share Units earned as of the last day of the Extended
Performance Cycle shall be paid no later than March 15 of the calendar year
following the calendar year in which the last day of the Extended Performance
Cycle occurs; (b) in the event of your death or Disability, payments in respect
of Earned Performance Units shall be made no later than the 30th day following
your death or termination for Disability (which, in the event your death or
Disability occurs during the final 12 month period of the Extended Performance
Cycle (if applicable), such payment shall only be made with respect to any
additional Earned Performance Units that become due as a result of your death or
Disability); and (c) in the event of a Change in Control, payments in respect of
Earned Performance Units shall be made no later than five (5) business days
after the Change in Control Date (which, in the event the Change in Control Date
occurs during the final 12 month period of the Extended Performance Cycle (if
applicable), such payment shall only be made with respect to any additional
Earned Performance Units that become due as a result of the Change in Control)
(in each case, the “Date of Settlement”).

 

All payments with respect to Earned Performance Units shall be made in freely
transferable shares of Stock.

 

Upon full settlement of the Performance Share Units hereunder and pursuant to
Section 3 of the Agreement, no additional payments will be made pursuant to this
Award and the Award shall terminate.

By your signature and the signature of the Company’s representative below, you
and the Company hereby acknowledge receipt of the Performance Share Units issued
on the Date of Grant indicated above, which have been granted under the terms
and conditions contained herein and in the Plan and the Agreement.
Alternatively, you acknowledge your agreement to be bound to the terms of this
Notice, the Agreement and the Plan in connection with your acceptance of the
Performance Share Units issued hereby through procedures, including electronic
procedures, provided by or on behalf of the Company.

You acknowledge and agree that (a) you are not relying upon any written or oral
statement or representation of the Company, its affiliates, or any of their
respective employees, directors, officers, attorneys or agents (collectively,
the “Company Parties”) regarding the tax effects associated with your execution
of this Notice of Grant of Performance Share Units and your receipt and holding
of and the vesting of the Performance Share Units, and (b) in deciding to enter
into this Agreement, you are relying on your own judgment and the judgment of
the professionals of your choice with whom you have consulted. You hereby
release, acquit and

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forever discharge the Company Parties from all actions, causes of actions,
suits, debts, obligations, liabilities, claims, damages, losses, costs and
expenses of any nature whatsoever, known or unknown, on account of, arising out
of, or in any way related to the tax effects associated with your execution of
the Agreement and your receipt and holding of and the vesting of the Performance
Share Units.

You further acknowledge receipt of a copy of the Plan and the Agreement and
agree to all of the terms and conditions of the Plan and the Agreement, which
are incorporated herein by reference.

Note: To accept the Performance Share Units, execute this form and return an
executed copy to                         (the “Designated Recipient”) by
                        , 20        . Failure to return the executed copy to the
Designated Recipient by such date will render this issuance invalid.

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OASIS PETROLEUM INC.,

a Delaware corporation

 

By:    

Name:

   

Title:

    Accepted by:       [insert name of Grantee]

Date:

          [insert name of Designated Recipient]

 

Date Received:    

 

Attachments: Appendix A – Total Shareholder Return Vesting Objective

Appendix B – Oasis Petroleum Inc. 2010 Long Term Incentive Plan

Appendix C – Performance Share Unit Agreement

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Appendix A

Total Shareholder Return Vesting Objective

The TSR Vesting Objective for the Performance Share Units is outlined in this
Appendix A below. The “TSR Vesting Objective” means the Company’s relative
ranking in respect of the Performance Cycle (or the Extended Performance Cycle,
if applicable) with regard to Total Shareholder Return as compared to the Total
Shareholder Return of the Peer Companies. The Committee shall have the sole
discretion for determining the level of achievement with respect to the TSR
Vesting Objective and the number of Earned Performance Units and any such
determinations shall be conclusive.

 

  1. Defined Terms.

(a) “Total Shareholder Return” means, as to the Company and each of the Peer
Companies, the annualized rate of return shareholders receive through stock
price changes and the assumed reinvestment of dividends paid over the
Performance Cycle (or the Extended Performance Cycle, if applicable). Dividends
per share paid other than in the form of cash shall have a value equal to the
amount of such dividends reported by the issuer to its shareholders for purposes
of Federal income taxation. For purposes of determining the Total Shareholder
Return for the Company and each of the Peer Companies, the change in the price
of the Company’s Stock and of the common stock of each Peer Company, as the case
may be, shall be based upon the volume weighted average of the stock prices of
the Company and each such Peer Company on each trading day in the 30-day period
preceding each of the start (the “Initial Value”) and the end (the “Closing
Value”) of the Performance Cycle (and the Extended Performance Cycle, if
applicable). The Initial Value of the Stock to be used to determine Total
Shareholder Return over the Performance Cycle (and the Extended Performance
Cycle, if applicable) is [$            ].

(b) “Peer Company” means a company that (A) has a class of common equity
securities listed to trade under Section 12(g) of the Exchange Act, during each
day of the Performance Cycle (and the Extended Performance Cycle, if
applicable), and (B) is listed below.

 

Berry Petroleum Company    Forest Oil Corporation Bill Barrett Corp.    Gulfport
Energy Corp. Cabot Oil and Gas Corporation    Kodiak Oil & Gas Corp. Carrizo Oil
and Gas, Inc.    Quicksilver Resources Inc. Comstock Resources Inc.    Resolute
Energy Corp. Concho Resources Inc.    Rosetta Resources Inc. Continental
Resources, Inc.    Swift Energy Company EXCO Resources, Inc.    Whiting
Petroleum Corporation

In addition, the Standard & Poor’s Oil & Gas Exploration & Production Select
Industry Index, weighted as a single company, shall also be included as a Peer
Company.

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If, prior to the end of the Performance Cycle (or the Extended Performance
Cycle, if applicable), a company listed above ceases to have a class of common
equity securities listed to trade under Section 12(g) of the Exchange Act, then
such company shall cease to qualify as a Peer Company and shall not be
considered for purposes of the Total Shareholder Return calculation described in
Section 2 below.

 

  2. Calculation of Ranking; Earned Performance Units.

(a) After the end of the Performance Cycle, the Committee will calculate the
Company’s Total Shareholder Return as compared to Total Shareholder Return of
the Peer Companies in accordance with the following formula:

1 – (the Company’s Total Shareholder Return ranking/

Total Number of Peer Companies at the end of the Performance Cycle (including
the Company))

= the Company’s “TSR Percentage”

Once the Company’s TSR Percentage has been determined, the Committee will then
certify the level of achievement with respect to the TSR Vesting Objective and
determine the number of Earned Performance Units, which will be calculated based
on which quartile the Company’s TSR Percentage falls in accordance with the
table below:

 

Quartile Ranking

(Percentile Range)

   Percentage of  Initial
Performance Units Earned  

75th percentile or above

     200 % 

50th to 74.99th percentile

     125 % 

25th to 49.99th percentile

     75 % 

Less than 25th percentile

     0 % 

(b) If less than 200% of the Initial Performance Units become Earned Performance
Units as of the end of the Performance Cycle, then the Extended Performance
Cycle shall become applicable and additional Performance Share Units may be
earned. For purposes of determining the Total Shareholder Return of the Company
and each Peer Company for the Extended Performance Cycle, the Closing Value
shall be the volume weighted average of the stock prices of the Company and each
such Peer Company on each trading day in the 30-day period preceding the last
day of the Extended Performance Cycle. After the end of the Extended Performance
Cycle, the Committee will determine the Company’s Total Shareholder Return as
compared to Total Shareholder Return of the Peer Companies for the entirety of
the Extended Performance Cycle and will certify the level of achievement with
respect to the TSR Vesting Objective and the number of Earned Performance Units
in accordance with the table above. To the extent the number of Earned
Performance Units for the Extended Performance Cycle exceeds the number of
Earned Performance Units for the Performance Cycle, the additional Earned
Performance Units will be paid at the time specified in the Notice of Grant.

(c) Notwithstanding the foregoing, no Performance Share Units will become Earned
Performance Units unless you also satisfy the Continuous Service Requirement in
accordance with the terms of the Agreement and the Notice of Grant.

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Appendix B

Oasis Petroleum Inc. 2010 Long Term Incentive Plan

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OASIS PETROLEUM INC.

2010 LONG TERM INCENTIVE PLAN

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TABLE OF CONTENTS

 

               Page  

1.

  

Purpose

     1   

2.

  

Definitions

     1   

3.

  

Administration

     5       (a)   

Authority of the Committee

     5       (b)   

Manner of Exercise of Committee Authority

     6       (c)   

Limitation of Liability

     6   

4.

  

Stock Subject to Plan

     7       (a)   

Overall Number of Shares Available for Delivery

     7       (b)   

Application of Limitation to Grants of Awards

     7       (c)   

Availability of Shares Not Issued under Awards

     7       (d)   

Stock Offered

     7   

5.

  

Eligibility

     7   

6.

  

Specific Terms of Awards

     7       (a)   

General

     7       (b)   

Options

     8       (c)   

Stock Appreciation Rights

     9       (d)   

Restricted Stock

     10       (e)   

Restricted Stock Units

     11       (f)   

Bonus Stock and Awards in Lieu of Obligations

     11       (g)   

Dividend Equivalents

     12       (h)   

Other Stock-Based Awards

     12   

7.

  

Certain Provisions Applicable to Awards

     12       (a)   

Termination of Employment

     12       (b)   

Stand-Alone, Additional, Tandem, and Substitute Awards

     12       (c)   

Term of Awards

     13       (d)   

Form and Timing of Payment under Awards

     13       (e)   

Exemptions from Section 16(b) Liability

     13       (f)   

Non-Competition Agreement

     13   

8.

  

Performance Awards

     14       (a)   

Performance Conditions

     14       (b)   

Performance Awards Granted to Designated Covered Employees

     14       (c)   

Written Determinations

     16       (d)   

Status of Section 8(b) Performance Awards under Section 162(m) of the Code

     16   

9.

  

Subdivision or Consolidation; Recapitalization; Change in Control;
Reorganization

     17       (a)   

Existence of Plans and Awards

     17   

 

i

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   (b)   

Subdivision or Consolidation of Shares

     17       (c)   

Corporate Recapitalization

     18       (d)   

Additional Issuances

     18       (e)   

Change in Control

     18       (f)   

Change in Control Price

     19       (g)   

Impact of Corporate Events on Awards Generally

     19   

10.

  

General Provisions

     20       (a)   

Transferability

     20       (b)   

Taxes

     21       (c)   

Changes to this Plan and Awards

     21       (d)   

Limitation on Rights Conferred under Plan

     22       (e)   

Unfunded Status of Awards

     22       (f)   

Nonexclusivity of this Plan

     22       (g)   

Fractional Shares

     22       (h)   

Severability

     22       (i)   

Governing Law

     23       (j)   

Conditions to Delivery of Stock

     23       (k)   

Section 409A of the Code

     23       (l)   

Plan Effective Date and Term

     23   

 

ii

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OASIS PETROLEUM INC.

2010 Long Term Incentive Plan

1. Purpose. The purpose of the Oasis Petroleum Inc. 2010 Long Term Incentive
Plan (the “Plan”) is to provide a means through which Oasis Petroleum Inc., a
Delaware corporation (the “Company”), and its Subsidiaries may attract and
retain able persons as employees, directors and consultants and provide a means
whereby those persons, upon whom the responsibilities of the successful
administration and management rest and whose present and potential contributions
to the welfare of the Company and its Subsidiaries are of importance, can
acquire and maintain stock ownership or awards, the value of which is tied to
the performance of the Company, thereby strengthening their concern for the
welfare of the Company and its Subsidiaries and their desire to remain employed.
A further purpose of this Plan is to provide such employees, directors and
consultants with additional incentive and reward opportunities designed to
enhance the profitable growth of the Company. Accordingly, this Plan primarily
provides for the granting of Incentive Stock Options, Nonqualified Stock
Options, Stock Appreciation Rights, Restricted Stock Awards, Restricted Stock
Units, Bonus Stock, Dividend Equivalents, and Other Stock-Based Awards, any of
which may be further designated as Performance Awards.

2. Definitions. For purposes of this Plan, the following terms shall be defined
as set forth below, in addition to such terms defined in Section 1 hereof:

(a) “Award” means any Option, SAR (including Limited SAR), Restricted Stock
Award, Restricted Stock Unit, Bonus Stock, Dividend Equivalent or Other
Stock-Based Award, including any of the foregoing that is designated as a
Performance Award, together with any other right or interest granted to a
Participant under this Plan.

(b) “Beneficiary” means one or more persons, trusts or other entities which have
been designated by a Participant, in his or her most recent written beneficiary
designation filed with the Committee, to receive the benefits specified under
this Plan upon such Participant’s death or to which Awards or other rights are
transferred if and to the extent permitted under Section 10(a) hereof. If, upon
a Participant’s death, there is no designated Beneficiary or surviving
designated Beneficiary, then the term Beneficiary means the persons, trusts or
other entities entitled by will or the laws of descent and distribution to
receive such benefits.

(c) “Board” means the Company’s Board of Directors.

(d) “Bonus Stock” means Stock granted as a bonus pursuant to Section 6(f).

(e) “Business Day” means any day other than a Saturday, a Sunday, or a day on
which banking institutions in the state of Texas are authorized or obligated by
law or executive order to close.

 

1

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

(i) The consummation of an agreement to acquire or a tender offer for beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act
by any Person, of 50% or more of either (x) the then outstanding shares of Stock
(the “Outstanding Stock”) or (y) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting Securities”); provided,
however, that for purposes of this paragraph (i), the following acquisitions
shall not constitute a Change in Control: (A) any acquisition directly from the
Company, (B) any acquisition by the Company, (C) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
entity controlled by the Company or (D) any acquisition by any entity pursuant
to a transaction that complies with clauses (A), (B) and (C) of paragraph
(iii) below;

(ii) Individuals who constitute the Incumbent Board cease for any reason to
constitute at least a majority of the Board;

(iii) Consummation of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the Company or an
acquisition of assets of another entity (a “Business Combination”), in each
case, unless, following such Business Combination, (A) the Outstanding Stock and
Outstanding Company Voting Securities immediately prior to such Business
Combination represent or are converted into or exchanged for securities which
represent or are convertible into more than 50% of, respectively, the then
outstanding shares of common stock or common equity interests and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors or other governing body, as the case may
be, of the entity resulting from such Business Combination (including, without
limitation, an entity which as a result of such transaction owns the Company, or
all or substantially all of the Company’s assets either directly or through one
or more subsidiaries), (B) no Person (excluding any employee benefit plan (or
related trust) of the Company or the entity resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock or common equity
interests of the entity resulting from such Business Combination or the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors or other governing body of such entity
except to the extent that such ownership results solely from ownership of the
Company that existed prior to the Business Combination, and (C) at least a
majority of the members of the board of directors or similar governing body of
the entity resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination; or

(iv) Approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company.

For purposes of an Award that provides for a deferral of compensation under the
Nonqualified Deferred Compensation Rules, to the extent the impact of a Change
in Control on such Award would subject a Participant to additional taxes under
the Nonqualified Deferred Compensation Rules, a Change in Control for purposes
of such Award will mean both a Change in Control and a “change in the ownership
or effective control of a corporation, or a change in the ownership of a
substantial portion of the assets of a corporation” within the meaning of the
Nonqualified Deferred Compensation Rules.

 

2

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(g) “Code” means the Internal Revenue Code of 1986, as amended from time to
time, including regulations thereunder and successor provisions and regulations
thereto.

(h) “Committee” means a committee of two or more directors designated by the
Board to administer this Plan; provided, however, that, unless otherwise
determined by the Board, the Committee shall consist solely of two or more
directors, each of whom shall be a Qualified Member (except to the extent
administration of this Plan by “outside directors” is not then required in order
to qualify for tax deductibility under section 162(m) of the Code).

(i) “Covered Employee” means an Eligible Person who is a Covered Employee as
specified in Section 8(d) of this Plan.

(j) “Dividend Equivalent” means a right, granted to an Eligible Person under
Section 6(g), to receive cash, Stock, other Awards or other property equal in
value to dividends paid with respect to a specified number of shares of Stock,
or other periodic payments.

(k) “Effective Date” means as of the closing of the initial public offering.

(l) “Eligible Person” means all officers and employees of the Company or of any
of its Subsidiaries, and other persons who provide services to the Company or
any of its Subsidiaries, including directors of the Company. An employee on
leave of absence may be considered as still in the employ of the Company or any
of its Subsidiaries for purposes of eligibility for participation in this Plan.

(m) “Exchange Act” means the Securities Exchange Act of 1934, as amended from
time to time, including rules thereunder and successor provisions and rules
thereto.

(n) “Fair Market Value” means, as of any specified date, (i) if the Stock is
listed on a national securities exchange, the closing sales price of the Stock,
as reported on the stock exchange composite tape on that date (or if no sales
occur on that date, on the last preceding date on which such sales of the Stock
are so reported); (ii) if the Stock is not traded on a national securities
exchange but is traded over the counter at the time a determination of its fair
market value is required to be made under the Plan, the average between the
reported high and low bid and asked prices of Stock on the most recent date on
which Stock was publicly traded; (iii) in the event Stock is not publicly traded
at the time a determination of its value is required to be made under the Plan,
the amount determined by the Committee in its discretion in such manner as it
deems appropriate, taking into account all factors the Committee deems
appropriate including, without limitation, the Nonqualified Deferred
Compensation Rules; or (iv) on the date of a Qualifying Public Offering of
Stock, the offering price under such Qualifying Public Offering.

(o) “Incentive Stock Option” or “ISO” means any Option intended to be and
designated as an incentive stock option within the meaning of section 422 of the
Code or any successor provision thereto.

 

3

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(p) “Incumbent Board” means the portion of the Board constituted of the
individuals who are members of the Board as of the Effective Date, and any
individual who becomes a director of the Company after the Effective Date and
whose election or appointment by the Board or nomination for election by the
Company’s stockholders was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board, but excluding, for this purpose,
any such individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Incumbent Board.

(q) “Nonqualified Deferred Compensation Rules” means the limitations or
requirements of section 409A of the Code and the guidance and regulations
promulgated thereunder.

(r) “Nonqualified Stock Option” means any Option that is not intended to be and
that is not designated as an Incentive Stock Option.

(s) “Option” means a right, granted to an Eligible Person under Section 6(b)
hereof, to purchase Stock or other Awards at a specified price during specified
time periods.

(t) “Other Stock-Based Awards” means Awards granted to an Eligible Person under
Section 6(h) hereof.

(u) “Participant” means a person who has been granted an Award under this Plan
which remains outstanding, including a person who is no longer an Eligible
Person.

(v) “Performance Award” means a right, granted to an Eligible Person under
Section 8 hereof, to receive Awards based upon performance criteria specified by
the Committee.

(w) “Performance Share Unit” means a Restricted Stock Unit that has been
designated hereunder as a Performance Award.

(x) “Person” means any person or entity of any nature whatsoever, specifically
including an individual, a firm, a company, a corporation, a partnership, a
limited liability company, a trust or other entity; a Person, together with that
Person’s Affiliates and Associates (as those terms are defined in Rule 12b-2
under the Exchange Act, provided that “registrant” as used in Rule 12b-2 shall
mean the Company), and any Persons acting as a partnership, limited partnership,
joint venture, association, syndicate or other group (whether or not formally
organized), or otherwise acting jointly or in concert or in a coordinated or
consciously parallel manner (whether or not pursuant to any express agreement),
for the purpose of acquiring, holding, voting or disposing of securities of the
Company with such Person, shall be deemed a single “Person.”

(y) “Qualifying Public Offering” means a firm commitment underwritten public
offering of Stock for cash where the shares of Stock registered under the
Securities Act are listed on a national securities exchange.

 

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(z) “Qualified Member” means a member of the Committee who is a “nonemployee
director” within the meaning of Rule 16b-3(b)(3) and an “outside director”
within the meaning of Treasury Regulation §1.162-27 under section 162(m) of the
Code.

(aa) “Restricted Stock” means Stock granted to an Eligible Person under
Section 6(d) hereof, that is subject to certain restrictions and to a risk of
forfeiture.

(bb) “Restricted Stock Unit” means a right, granted to an Eligible Person under
Section 6(e) hereof, to receive Stock, cash or a combination thereof at the end
of a specified vesting or deferral period.

(cc) “Rule 16b-3” means Rule 16b-3, promulgated by the Securities and Exchange
Commission under section 16 of the Exchange Act, as from time to time in effect
and applicable to this Plan and Participants.

(dd) “Securities Act” means the Securities Act of 1933 and the rules and
regulations promulgated thereunder, or any successor law, as it may be amended
from time to time.

(ee) “Stock” means the Company’s Common Stock, par value $0.001 per share, and
such other securities as may be substituted (or resubstituted) for Stock
pursuant to Section 9.

(ff) “Stock Appreciation Rights” or “SAR” means a right granted to an Eligible
Person under Section 6(c) hereof.

(gg) “Subsidiary” means, with respect to the Company, any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by the Company.

3. Administration.

(a) Authority of the Committee. This Plan shall be administered by the Committee
except to the extent the Board elects to administer this Plan, in which case
references herein to the “Committee” shall be deemed to include references to
the “Board.” Subject to the express provisions of the Plan and Rule 16b-3, the
Committee shall have the authority, in its sole and absolute discretion, to
(i) adopt, amend, and rescind administrative and interpretive rules and
regulations relating to the Plan; (ii) determine the Eligible Persons to whom,
and the time or times at which, Awards shall be granted; (iii) determine the
amount of cash and/or the number of Options, Stock Appreciation Rights,
Restricted Stock Awards, Restricted Stock Units, Bonus Stock, Dividend
Equivalents, or Other Stock-Based Awards, including any of the foregoing that
are designated as Performance Awards, as applicable, or any combination thereof,
that shall be the subject of each Award; (iv) determine the terms and provisions
of each Award agreement (which need not be identical), including provisions
defining or otherwise relating to (A) the term and the period or periods and
extent of exercisability of the Options, (B) the extent to which the
transferability of shares of Stock issued or transferred pursuant to any Award
is restricted, (C) except as otherwise provided herein, the effect of
termination of employment, or termination of the service relationship with the
Company, of a Participant on the Award, and (D) the effect of

 

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approved leaves of absence (consistent with any applicable regulations of the
Internal Revenue Service); (v) accelerate the time of exercisability of any
Award that has been granted; (vi) construe the respective Award agreements and
the Plan; (vii) make determinations of the Fair Market Value of the Stock
pursuant to the Plan; (viii) delegate its duties under the Plan to such agents
as it may appoint from time to time, provided that the Committee may not
delegate its duties where such delegation would violate state corporate law, or
with respect to making Awards to, or otherwise with respect to Awards granted
to, Eligible Persons who are subject to section 16(b) of the Exchange Act or who
are Covered Employees receiving Awards that are intended to constitute
“performance-based compensation” within the meaning of section 162(m) of the
Code; (ix) subject to Section 10(c), terminate, modify or amend the Plan; and
(x) make all other determinations, perform all other acts, and exercise all
other powers and authority necessary or advisable for administering the Plan,
including the delegation of those ministerial acts and responsibilities as the
Committee deems appropriate. Subject to Rule 16b-3 and section 162(m) of the
Code, the Committee may correct any defect, supply any omission, or reconcile
any inconsistency in the Plan, in any Award, or in any Award agreement in the
manner and to the extent it deems necessary or desirable to carry the Plan into
effect, and the Committee shall be the sole and final judge of that necessity or
desirability. The determinations of the Committee on the matters referred to in
this Section 3(a) shall be final and conclusive.

(b) Manner of Exercise of Committee Authority. At any time that a member of the
Committee is not a Qualified Member, any action of the Committee relating to an
Award granted or to be granted to an Eligible Person who is then subject to
section 16 of the Exchange Act in respect of the Company, or relating to an
Award intended by the Committee to qualify as “performance-based compensation”
within the meaning of section 162(m) of the Code and regulations thereunder, may
be taken either (i) by a subcommittee, designated by the Committee, composed
solely of two or more Qualified Members, or (ii) by the Committee but with each
such member who is not a Qualified Member abstaining or recusing himself or
herself from such action; provided, however, that, upon such abstention or
recusal, the Committee remains composed solely of two or more Qualified Members.
Such action, authorized by such a subcommittee or by the Committee upon the
abstention or recusal of such non-Qualified Member(s), shall be the action of
the Committee for purposes of this Plan. Any action of the Committee shall be
final, conclusive and binding on all Persons, including the Company, its
Subsidiaries, stockholders, Participants, Beneficiaries, and transferees under
Section 10(a) hereof or other persons claiming rights from or through a
Participant. The express grant of any specific power to the Committee, and the
taking of any action by the Committee, shall not be construed as limiting any
power or authority of the Committee. The Committee may delegate to officers or
managers of the Company or any of its Subsidiaries, or committees thereof, the
authority, subject to such terms as the Committee shall determine, to perform
such functions, including administrative functions, as the Committee may
determine, to the extent that such delegation will not result in the loss of an
exemption under Rule 16b-3 for Awards granted to Participants subject to section
16 of the Exchange Act in respect of the Company and will not cause Awards
intended to qualify as “performance-based compensation” under section 162(m) of
the Code to fail to so qualify. The Committee may appoint agents to assist it in
administering the Plan.

(c) Limitation of Liability. The Committee and each member thereof shall be
entitled to, in good faith, rely or act upon any report or other information
furnished to him or her by any officer or employee of the Company or any of its
Subsidiaries, the Company’s legal

 

6

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counsel, independent auditors, consultants or any other agents assisting in the
administration of this Plan. Members of the Committee and any officer or
employee of the Company or any of its Subsidiaries acting at the direction or on
behalf of the Committee shall not be personally liable for any action or
determination taken or made in good faith with respect to this Plan, and shall,
to the fullest extent permitted by law, be indemnified and held harmless by the
Company with respect to any such action or determination.

4. Stock Subject to Plan.

(a) Overall Number of Shares Available for Delivery. Subject to adjustment in a
manner consistent with any adjustment made pursuant to Section 9, the total
number of shares of Stock reserved and available for issuance in connection with
Awards under this Plan shall not exceed 7,200,000 shares.

(b) Application of Limitation to Grants of Awards. No Award may be granted if
the number of shares of Stock to be delivered in connection with such Award
exceeds the number of shares of Stock remaining available under this Plan minus
the number of shares of Stock issuable in settlement of or relating to
then-outstanding Awards. The Committee may adopt reasonable counting procedures
to ensure appropriate counting, avoid double counting (as, for example, in the
case of tandem or substitute awards) and make adjustments if the number of
shares of Stock actually delivered differs from the number of shares previously
counted in connection with an Award.

(c) Availability of Shares Not Issued under Awards. Shares of Stock subject to
an Award under this Plan that expire or are canceled, forfeited, settled in cash
or otherwise terminated without an issuance of shares to the Participant,
including (i) shares forfeited with respect to Restricted Stock, (ii) the number
of shares withheld in payment of any exercise or purchase price of an Award or
taxes relating to Awards, and (iii) the number of shares surrendered in payment
of any exercise or purchase price of an Award or taxes relating to any Award,
will again be available for Awards under this Plan, except that if any such
shares could not again be available for Awards to a particular Participant under
any applicable law or regulation, such shares shall be available exclusively for
Awards to Participants who are not subject to such limitation.

(d) Stock Offered. The shares to be delivered under the Plan shall be made
available from (i) authorized but unissued shares of Stock, (ii) Stock held in
the treasury of the Company, or (iii) previously issued shares of Stock
reacquired by the Company, including shares purchased on the open market.

5. Eligibility. Awards may be granted under this Plan only to Persons who are
Eligible Persons at the time of grant thereof.

6. Specific Terms of Awards.

(a) General. Awards may be granted on the terms and conditions set forth in this
Section 6. In addition, the Committee may impose on any Award or the exercise
thereof, at the date of grant or thereafter (subject to Section 10(c)), such
additional terms and conditions, not inconsistent with the provisions of this
Plan, as the Committee shall determine, including

 

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terms requiring forfeiture of Awards in the event of termination of employment
by the Participant, or termination of the Participant’s service relationship
with the Company, and terms permitting a Participant to make elections relating
to his or her Award. The Committee shall retain full power and discretion to
accelerate, waive or modify, at any time, any term or condition of an Award that
is not mandatory under this Plan; provided, however, that the Committee shall
not have any discretion to accelerate, waive or modify any term or condition of
an Award that is intended to qualify as “performance-based compensation” for
purposes of section 162(m) of the Code if such discretion would cause the Award
to not so qualify or to accelerate the terms of payment of any Award that
provides for deferral of compensation under the Nonqualified Deferred
Compensation Rules if such acceleration would subject a Participant to
additional taxes under the Nonqualified Deferred Compensation Rules.

(b) Options. The Committee is authorized to grant Options, which may be
designated as either Incentive Stock Options or Nonqualified Stock Options, to
Eligible Persons on the following terms and conditions:

(i) Exercise Price. Each Option agreement shall state the exercise price per
share of Stock (the “Exercise Price”); provided, however, that the Exercise
Price per share of Stock subject to an Option shall not be less than the greater
of (A) the par value per share of the Stock or (B) 100% of the Fair Market Value
per share of the Stock as of the date of grant of the Option (or in the case of
the grant of an ISO to an individual who owns stock possessing more than 10
percent of the total combined voting power of all classes of stock of the
Company or its parent or any subsidiary, 110% of the Fair Market Value per share
of the Stock on the date of grant).

(ii) Time and Method of Exercise. The Committee shall determine the time or
times at which or the circumstances under which an Option may be exercised in
whole or in part (including based on achievement of performance goals and/or
future service requirements), the methods by which such Exercise Price may be
paid or deemed to be paid, the form of such payment, including without
limitation cash, Stock, other Awards or awards granted under other plans of the
Company or any Subsidiary, or other property (including notes or other
contractual obligations of Participants to make payment on a deferred basis),
and the methods by or forms in which Stock will be delivered or deemed to be
delivered to Participants, including, but not limited to, the delivery of
Restricted Stock subject to Section 6(d). In the case of an exercise whereby the
Exercise Price is paid with Stock, such Stock shall be valued as of the date of
exercise.

(iii) ISOs. The terms of any ISO granted under this Plan shall comply in all
respects with the provisions of section 422 of the Code. Except as otherwise
provided in Section 9, no term of this Plan relating to ISOs (including any SAR
in tandem therewith) shall be interpreted, amended or altered, nor shall any
discretion or authority granted under this Plan be exercised, so as to
disqualify either this Plan or any ISO under section 422 of the Code, unless the
Participant has first requested the change that will result in such
disqualification. ISOs shall not be granted more than ten years after the
earlier of the adoption of this Plan or the approval of this Plan by the
Company’s stockholders. Notwithstanding the foregoing, the Fair Market Value of
shares of Stock subject to an ISO and the aggregate Fair Market Value of shares
of stock of any parent or subsidiary corporation (within the meaning of sections
424(e) and (f) of the Code)

 

8

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subject to any other ISO (within the meaning of section 422 of the Code) of the
Company or a parent or subsidiary corporation (within the meaning of sections
424(e) and (f) of the Code) that first becomes purchasable by a Participant in
any calendar year may not (with respect to that Participant) exceed $100,000, or
such other amount as may be prescribed under section 422 of the Code or
applicable regulations or rulings from time to time. As used in the previous
sentence, Fair Market Value shall be determined as of the date the ISOs are
granted. Failure to comply with this provision shall not impair the
enforceability or exercisability of any Option, but shall cause the excess
amount of shares to be reclassified in accordance with the Code.

(c) Stock Appreciation Rights. The Committee is authorized to grant SARs to
Eligible Persons on the following terms and conditions:

(i) Right to Payment. An SAR shall confer on the Participant to whom it is
granted a right to receive, upon exercise thereof, the excess of (A) the Fair
Market Value of one share of Stock on the date of exercise over (B) the grant
price of the SAR as determined by the Committee.

(ii) Rights Related to Options. An SAR granted pursuant to an Option shall
entitle a Participant, upon exercise, to surrender that Option or any portion
thereof, to the extent unexercised, and to receive payment of an amount computed
pursuant to Section 6(c)(ii)(B). That Option shall then cease to be exercisable
to the extent surrendered. SARs granted in connection with an Option shall be
subject to the terms of the Award agreement governing the Option, which shall
comply with the following provisions in addition to those applicable to Options:

(A) An SAR granted in connection with an Option shall be exercisable only at
such time or times and only to the extent that the related Option is exercisable
and shall not be transferable except to the extent that the related Option is
transferable.

(B) Upon the exercise of an SAR related to an Option, a Participant shall be
entitled to receive payment from the Company of an amount determined by
multiplying:

(1) the difference obtained by subtracting the Exercise Price with respect to a
share of Stock specified in the related Option from the Fair Market Value of a
share of Stock on the date of exercise of the SAR, by

(2) the number of shares as to which that SAR has been exercised.

(iii) Right Without Option. An SAR granted independent of an Option shall be
exercisable as determined by the Committee and set forth in the Award agreement
governing the SAR, which Award agreement shall comply with the following
provisions:

(A) Each Award agreement shall state the total number of shares of Stock to
which the SAR relates.

 

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(B) Each Award agreement shall state the time or periods in which the right to
exercise the SAR or a portion thereof shall vest and the number of shares of
Stock for which the right to exercise the SAR shall vest at each such time or
period.

(C) Each Award agreement shall state the date at which the SARs shall expire if
not previously exercised.

(D) Each SAR shall entitle a Participant, upon exercise thereof, to receive
payment of an amount determined by multiplying:

(1) the difference obtained by subtracting the Fair Market Value of a share of
Stock on the date of grant of the SAR from the Fair Market Value of a share of
Stock on the date of exercise of that SAR, by

(2) the number of shares as to which the SAR has been exercised.

(iv) Terms. Except as otherwise provided herein, the Committee shall determine
at the date of grant or thereafter, the time or times at which and the
circumstances under which an SAR may be exercised in whole or in part (including
based on achievement of performance goals and/or future service requirements),
the method of exercise, method of settlement, form of consideration payable in
settlement, method by or forms in which Stock will be delivered or deemed to be
delivered to Participants, whether or not an SAR shall be in tandem or in
combination with any other Award, and any other terms and conditions of any SAR.
SARs may be either freestanding or in tandem with other Awards.

(d) Restricted Stock. The Committee is authorized to grant Restricted Stock to
Eligible Persons on the following terms and conditions:

(i) Grant and Restrictions. Restricted Stock shall be subject to such
restrictions on transferability, risk of forfeiture and other restrictions, if
any, as the Committee may impose, which restrictions may lapse separately or in
combination at such times, under such circumstances (including based on
achievement of performance goals and/or future service requirements), in such
installments or otherwise, as the Committee may determine at the date of grant
or thereafter. During the restricted period applicable to the Restricted Stock,
the Restricted Stock may not be sold, transferred, pledged, hypothecated,
margined or otherwise encumbered by the Participant.

(ii) Certificates for Stock. Restricted Stock granted under this Plan may be
evidenced in such manner as the Committee shall determine. If certificates
representing Restricted Stock are registered in the name of the Participant, the
Committee may require that such certificates bear an appropriate legend
referring to the terms, conditions and restrictions applicable to such
Restricted Stock, that the Company retain physical possession of the
certificates, and that the Participant deliver a stock power to the Company,
endorsed in blank, relating to the Restricted Stock.

(iii) Dividends and Splits. As a condition to the grant of an Award of
Restricted Stock, the Committee may require or permit a Participant to elect
that any cash

 

10

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dividends paid on a share of Restricted Stock be automatically reinvested in
additional shares of Restricted Stock, applied to the purchase of additional
Awards under this Plan or deferred without interest to the date of vesting of
the associated Award of Restricted Stock; provided, that, to the extent
applicable, any such election shall comply with the Nonqualified Deferred
Compensation Rules. Unless otherwise determined by the Committee, Stock
distributed in connection with a Stock split or Stock dividend, and other
property (other than cash) distributed as a dividend, shall be subject to
restrictions and a risk of forfeiture to the same extent as the Restricted Stock
with respect to which such Stock or other property has been distributed.

(e) Restricted Stock Units. The Committee is authorized to grant Restricted
Stock Units (including Performance Share Units), which are rights to receive
Stock or cash (or a combination thereof) at the end of a specified deferral
period (which may or may not be coterminous with the vesting schedule of the
Award), to Eligible Persons, subject to the following terms and conditions:

(i) Award and Restrictions. Settlement of an Award of Restricted Stock Units
shall occur upon expiration of the deferral period specified for such Restricted
Stock Unit by the Committee (or, if permitted by the Committee, as elected by
the Participant). In addition, Restricted Stock Units shall be subject to such
restrictions (which may include a risk of forfeiture) as the Committee may
impose, if any, which restrictions may lapse at the expiration of the deferral
period or at earlier specified times (including based on achievement of
performance goals and/or future service requirements), separately or in
combination, in installments or otherwise, as the Committee may determine.
Restricted Stock Units shall be satisfied by the delivery of cash or Stock in
the amount equal to the Fair Market Value of the specified number of shares of
Stock covered by the Restricted Stock Units, or a combination thereof, as
determined by the Committee at the date of grant or thereafter.

(ii) Dividend Equivalents. Unless otherwise determined by the Committee at date
of grant, Dividend Equivalents on the specified number of shares of Stock
covered by an Award of Restricted Stock Units shall be either (A) paid with
respect to such Restricted Stock Units on the dividend payment date in cash or
in shares of unrestricted Stock having a Fair Market Value equal to the amount
of such dividends, or (B) deferred with respect to such Restricted Stock Units
and the amount or value thereof automatically deemed reinvested in additional
Restricted Stock Units, other Awards or other investment vehicles, as the
Committee shall determine or permit the Participant to elect.

(f) Bonus Stock and Awards in Lieu of Obligations. The Committee is authorized
to grant Bonus Stock, or to grant Stock or other Awards in lieu of obligations
to pay cash or deliver other property under this Plan or under other plans or
compensatory arrangements; provided, that, in the case of Participants subject
to section 16 of the Exchange Act, the amount of such grants remains within the
discretion of the Committee to the extent necessary to ensure that acquisitions
of Stock or other Awards are exempt from liability under section 16(b) of the
Exchange Act. Stock or Awards granted hereunder shall be subject to such other
terms as shall be determined by the Committee. In the case of any grant of Stock
to an officer of the Company or any of its Subsidiaries in lieu of salary or
other cash compensation, the number of shares granted in place of such
compensation shall be reasonable, as determined by the Committee.

 

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(g) Dividend Equivalents. The Committee is authorized to grant Dividend
Equivalents to an Eligible Person, entitling a Participant to receive cash,
Stock, other Awards, or other property equal in value to dividends paid with
respect to a specified number of shares of Stock, or other periodic payments.
Dividend Equivalents may be awarded on a free-standing basis or in connection
with another Award. The Committee may provide that Dividend Equivalents shall be
paid or distributed when accrued or shall be deemed to have been reinvested in
additional Stock, Awards, or other investment vehicles, and subject to such
restrictions on transferability and risks of forfeiture, as the Committee may
specify.

(h) Other Stock-Based Awards. The Committee is authorized, subject to
limitations under applicable law, to grant to Eligible Persons such other Awards
that may be denominated or payable in, valued in whole or in part by reference
to, or otherwise based on, or related to, Stock, as deemed by the Committee to
be consistent with the purposes of this Plan, including without limitation
convertible or exchangeable debt securities, other rights convertible or
exchangeable into Stock, purchase rights for Stock, Awards with value and
payment contingent upon performance of the Company or any other factors
designated by the Committee, and Awards valued by reference to the book value of
Stock or the value of securities of, or the performance of, specified
Subsidiaries of the Company. The Committee shall determine the terms and
conditions of such Other Stock-Based Awards. Stock delivered pursuant to an
Award in the nature of a purchase right granted under this Section 6(h) shall be
purchased for such consideration, paid for at such times, by such methods, and
in such forms, including, without limitation, cash, Stock, other Awards, or
other property, as the Committee shall determine. Cash awards, as an element of
or supplement to any other Award under this Plan, may also be granted pursuant
to this Section 6(h).

7. Certain Provisions Applicable to Awards.

(a) Termination of Employment. Except as provided herein, the treatment of an
Award upon a termination of employment or any other service relationship by and
between a Participant and the Company or any Subsidiary shall be specified in
the agreement controlling such Award.

(b) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards granted under
this Plan may, in the discretion of the Committee, be granted either alone or in
addition to, in tandem with, or in substitution or exchange for, any other Award
or any award granted under another plan of the Company, or any of its
Subsidiaries, or of any business entity to be acquired by the Company or any of
its Subsidiaries, or any other right of an Eligible Person to receive payment
from the Company or any of its Subsidiaries. Such additional, tandem and
substitute or exchange Awards may be granted at any time. If an Award is granted
in substitution or exchange for another Award, the Committee shall require the
surrender of such other Award in consideration for the grant of the new Award.
Notwithstanding the foregoing, but subject to Section 9 of the Plan, without the
approval of stockholders, the terms of outstanding Awards may not be amended to
reduce the Exercise Price of outstanding Options or SARs or to cancel
outstanding Options and SARs in exchange for cash, other Awards, or Options or
SARs with an Exercise Price that is less than the Exercise Price of the original
Options or SARs. Awards under this Plan may be granted in lieu of cash
compensation, including in lieu of cash amounts payable under other plans of the
Company or any of its

 

12

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Subsidiaries, in which the value of Stock subject to the Award is equivalent in
value to the cash compensation. Awards granted pursuant to the preceding
sentence shall be designed, awarded and settled in a manner that does not result
in additional taxes under the Nonqualified Deferred Compensation Rules.

(c) Term of Awards. Except as specified herein, the term of each Award shall be
for such period as may be determined by the Committee; provided, that in no
event shall the term of any Option or SAR exceed a period of ten years (or such
shorter term as may be required in respect of an ISO under section 422 of the
Code).

(d) Form and Timing of Payment under Awards. Subject to the terms of this Plan
and any applicable Award agreement, payments to be made by the Company or any of
its Subsidiaries upon the exercise of an Option or other Award or settlement of
an Award may be made in such forms as the Committee shall determine, including
without limitation cash, Stock, other Awards or other property, and may be made
in a single payment or transfer, in installments, or on a deferred basis;
provided, however, that any such deferred payment will be set forth in the
agreement evidencing such Award and/or otherwise made in a manner that will not
result in additional taxes under the Nonqualified Deferred Compensation Rules.
Except as otherwise provided herein, the settlement of any Award may be
accelerated, and cash paid in lieu of Stock in connection with such settlement,
in the discretion of the Committee or upon occurrence of one or more specified
events (in addition to a Change in Control). Installment or deferred payments
may be required by the Committee (subject to Section 10(c) of this Plan,
including the consent provisions thereof in the case of any deferral of an
outstanding Award not provided for in the original Award agreement) or permitted
at the election of the Participant on terms and conditions established by the
Committee and in compliance with the Nonqualified Deferred Compensation Rules.
Payments may include, without limitation, provisions for the payment or
crediting of reasonable interest on installment or deferred payments or the
grant or crediting of Dividend Equivalents or other amounts in respect of
installment or deferred payments denominated in Stock. Any deferral shall only
be allowed as is provided in a separate deferred compensation plan adopted by
the Company and shall be made pursuant to the Nonqualified Deferred Compensation
Rules. This Plan shall not constitute an “employee benefit plan” for purposes of
section 3(3) of the Employee Retirement Income Security Act of 1974, as amended.

(e) Exemptions from Section 16(b) Liability. It is the intent of the Company
that the grant of any Awards to or other transaction by a Participant who is
subject to section 16 of the Exchange Act shall be exempt from such section
pursuant to an applicable exemption (except for transactions acknowledged in
writing to be non-exempt by such Participant). Accordingly, if any provision of
this Plan or any Award agreement does not comply with the requirements of Rule
16b-3 as then applicable to any such transaction, such provision shall be
construed or deemed amended to the extent necessary to conform to the applicable
requirements of Rule 16b-3 so that such Participant shall avoid liability under
section 16(b) of the Exchange Act.

(f) Non-Competition Agreement. Each Participant to whom an Award is granted
under this Plan may be required to agree in writing as a condition to the
granting of such Award not to engage in conduct in competition with the Company
or any of its Subsidiaries for a period after the termination of such
Participant’s employment with the Company and its Subsidiaries as determined by
the Committee.

 

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8. Performance Awards.

(a) Performance Conditions. The right of an Eligible Person to receive a grant,
and the right of a Participant to exercise or receive settlement of any Award,
and the timing thereof, may be subject to such performance conditions as may be
specified by the Committee. The Committee may use such business criteria and
other measures of performance as it may deem appropriate in establishing any
performance conditions, and may exercise its discretion to reduce or increase
the amounts payable under any Award subject to performance conditions, except as
limited under Section 8(b) hereof in the case of a Performance Award intended to
qualify under section 162(m) of the Code.

(b) Performance Awards Granted to Designated Covered Employees. If the Committee
determines that a Performance Award to be granted to an Eligible Person who is
designated by the Committee as likely to be a Covered Employee should qualify as
“performance-based compensation” for purposes of section 162(m) of the Code, the
grant, exercise and/or settlement of such Performance Award may be contingent
upon achievement of preestablished performance goals and other terms set forth
in this Section 8(b).

(i) Performance Goals Generally. The performance goals for such Performance
Awards shall consist of one or more business criteria or individual performance
criteria and a targeted level or levels of performance with respect to each of
such criteria, as specified by the Committee consistent with this Section 8(b).
Performance goals shall be objective and shall otherwise meet the requirements
of section 162(m) of the Code and regulations thereunder (including Treasury
Regulation §1.162-27 and successor regulations thereto), including the
requirement that the level or levels of performance targeted by the Committee
result in the achievement of performance goals being “substantially uncertain”
at the time the Committee actually establishes the performance goal or goals.
The Committee may determine that such Performance Awards shall be granted,
exercised, and/or settled upon achievement of any one performance goal or that
two or more of the performance goals must be achieved as a condition to grant,
exercise, and/or settle such Performance Awards. Performance goals may differ
for Performance Awards granted to any one Participant or to different
Participants. In establishing or adjusting a performance goal, the Committee may
exclude the impact of any of the following events or occurrences which the
Committee determines should appropriately be excluded: (a) any amounts accrued
by the Company or its Subsidiaries pursuant to management bonus plans or cash
profit sharing plans and related employer payroll taxes for the fiscal year;
(b) any discretionary or matching contributions made to a savings and deferred
profit-sharing plan or deferred compensation plan for the fiscal year; (c) asset
write-downs; (d) litigation, claims, judgments or settlements; (e) the effect of
changes in tax law or other such laws or regulations affecting reported results;
(f) accruals for reorganization and restructuring programs; (g) any
extraordinary, unusual or nonrecurring items as described in the Accounting
Standards Codification Topic 225, as the same may be amended or superseded from
time to time; (h) any change in accounting principle as defined in the
Accounting Standards Codification Topic 250, as the same may be amended or
superseded from time to time; (i) any loss from a discontinued operation as
described in the Accounting Standards Codification Topic 360, as the

 

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same may be amended or superseded from time to time; (j) goodwill impairment
charges; (k) operating results for any business acquired during the applicable
performance period; (l) third party expenses associated with any acquisition by
the Company or any Subsidiary; and (m) any other extraordinary events or
occurrences identified by the Committee.

(ii) Business and Individual Performance Criteria.

(A) Business Criteria. One or more of the following business criteria for the
Company, on a consolidated basis, and/or for specified Subsidiaries or business
or geographical units of the Company (except with respect to the total
stockholder return and earnings per share criteria), shall be used by the
Committee in establishing performance goals for such Performance Awards:
(1) earnings per share; (2) increase in revenues; (3) increase in cash flow;
(4) increase in cash flow from operations; (5) increase in cash flow return;
(6) return on net assets; (7) return on assets; (8) return on investment;
(9) return on capital; (10) return on equity; (11) economic value added;
(12) operating margin; (13) contribution margin; (14) net income; (15) net
income per share; (16) pretax earnings; (17) pretax earnings before interest,
depreciation and amortization; (18) pretax operating earnings after interest
expense and before incentives, service fees, and extraordinary or special items;
(19) total stockholder return; (20) debt reduction; (21) market share;
(22) change in the Fair Market Value of the Stock; (23) operating income;
(24) reserve growth; (25) reserve replacement; (26) production growth;
(27) finding/ development costs; (28) lease operating expense; and (29) any of
the above goals determined on an absolute or relative basis or as compared to
the performance of a published or special index deemed applicable by the
Committee including, but not limited to, the Standard & Poor’s 500 Stock Index
or a group of comparable companies.

(B) Individual Performance Criteria. The grant, exercise and/or settlement of
Performance Awards may also be contingent upon individual performance goals
established by the Committee, including individual business objectives and
criteria specific to an individual’s position and responsibility with the
Company or its Subsidiaries. If required for compliance with section 162(m) of
the Code, such criteria shall be approved by the stockholders of the Company.

(iii) Performance Period; Timing for Establishing Performance Goals. Achievement
of performance goals in respect of such Performance Awards shall be measured
over a performance period of up to ten years, as specified by the Committee.
Performance goals shall be established not later than 90 days after the
beginning of any performance period applicable to such Performance Awards, or at
such other date as may be required or permitted for “performance-based
compensation” under section 162(m) of the Code.

(iv) Performance Award Pool. The Committee may establish a Performance Award
pool, which shall be an unfunded pool, for purposes of measuring performance of
the Company in connection with Performance Awards. The amount of such
Performance Award pool shall be based upon the achievement of a performance goal
or goals based on one or more of the criteria set forth in Section 8(b)(ii)
hereof during the given performance period, as specified by the Committee in
accordance with Section 8(b)(iii) hereof. The Committee may, in its discretion,
adjust the amount of such Performance Award pool to reflect the events or
occurrences set forth in Section 8(b)(i). The Committee may specify the

 

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amount of the Performance Award pool as a percentage of any such criteria, a
percentage thereof in excess of a threshold amount, or as another amount which
need not bear a strictly mathematical relationship to such criteria.

(v) Settlement of Performance Awards; Other Terms. After the end of each
performance period, the Committee shall determine (A) the amount, if any, of the
Performance Award pool, and the maximum amount of the potential Performance
Award payable to each Participant who is designated to participate in the
Performance Award pool, or (B) the amount of the potential Performance Award
otherwise payable to each Participant. Settlement of such Performance Awards
shall be in cash, Stock, other Awards or other property, in the discretion of
the Committee. The Committee may, in its discretion, reduce the amount of a
settlement otherwise to be made in connection with such Performance Awards,
and/or adjust the amount of a settlement otherwise to be made in connection with
such Performance Awards to reflect the events or occurrences set forth in
Section 8(b)(i), but may not exercise discretion to increase any such amount
payable to a Covered Employee in respect of a Performance Award subject to this
Section 8(b). The Committee shall specify the circumstances in which such
Performance Awards shall be paid or forfeited in the event of termination of
employment by the Participant prior to the end of a performance period or
settlement of Performance Awards.

(c) Written Determinations. All determinations by the Committee as to the
establishment of performance goals, the amount of any Performance Award pool or
potential individual Performance Awards, and the achievement of performance
goals relating to and final settlement of Performance Awards under Section 8(b)
shall be made in writing in the case of any Award intended to qualify under
section 162(m) of the Code. The Committee may not delegate any responsibility
relating to such Performance Awards.

(d) Status of Section 8(b) Performance Awards under Section 162(m) of the Code.
It is the intent of the Company that Performance Awards under Section 8(b)
hereof granted to Persons who are designated by the Committee as likely to be
Covered Employees within the meaning of section 162(m) of the Code and the
regulations thereunder (including Treasury Regulation §1.162-27 and successor
regulations thereto) shall, if so designated by the Committee, constitute
“performance-based compensation” within the meaning of section 162(m) of the
Code and regulations thereunder. Accordingly, the terms of Sections 8(b), (c),
and (d), including the definitions of Covered Employee and other terms used
therein, shall be interpreted in a manner consistent with section 162(m) of the
Code and regulations thereunder. The foregoing notwithstanding, because the
Committee cannot determine with certainty whether a given Eligible Person will
be a Covered Employee with respect to a fiscal year that has not yet been
completed, the term “Covered Employee” as used herein shall mean only a Person
designated by the Committee, at the time of grant of a Performance Award, who is
likely to be a Covered Employee with respect to that fiscal year. If any
provision of this Plan as in effect on the date of adoption of any agreements
relating to Performance Awards that are designated as intended to comply with
section 162(m) of the Code does not comply or is inconsistent with the
requirements of section 162(m) of the Code or regulations thereunder, such
provision shall be construed or deemed amended to the extent necessary to
conform to such requirements. Notwithstanding anything to the contrary in this
Section 8(d) or elsewhere in this Plan, the Company intends to rely on the
transition relief described in Treasury Regulation §1.162-27(f), and hence the
deduction limitation imposed by section 162(m) of the Code shall not be

 

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applicable to the Company until the earliest to occur of (i) the material
modification of the Plan within the meaning of Treasury Regulation §
1.162-27(b)(1)(iii); (ii) the issuance of the number of shares of Stock set
forth in Section 4(a); or (iii) the first meeting of stockholders of the Company
at which directors are to be elected that occurs after December 31, 2013 (the
“Transition Period”), and during the Transition Period, Performance Awards to
Covered Employees shall only be required to comply with the transition relief
described in this Section 8(d).

9. Subdivision or Consolidation; Recapitalization; Change in Control;
Reorganization.

(a) Existence of Plans and Awards . The existence of this Plan and the Awards
granted hereunder shall not affect in any way the right or power of the Board or
the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company’s capital
structure or its business, any merger or consolidation of the Company, any issue
of 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. In no event will any action taken by the Committee
pursuant to this Section 9 result in the creation of deferred compensation
within the meaning of the Nonqualified Deferred Compensation Rules.

(b) Subdivision or Consolidation of Shares. The terms of an Award and the number
of shares of Stock authorized pursuant to Section 4 for issuance under the Plan
shall be subject to adjustment from time to time, in accordance with the
following provisions:

(i) If at any time, or from time to time, the Company shall subdivide as a whole
(by reclassification, by a Stock split, by the issuance of a distribution on
Stock payable in Stock, or otherwise) the number of shares of Stock then
outstanding into a greater number of shares of Stock or in the event the Company
distributes an extraordinary cash dividend, then, as appropriate, (A) the
maximum number of shares of Stock available for the Plan or in connection with
Awards as provided in Section 4 shall be increased proportionately, and the kind
of shares or other securities available for the Plan shall be appropriately
adjusted, (B) the number of shares of Stock (or other kind of shares or
securities) that may be acquired under any then outstanding Award shall be
increased proportionately, and (C) the price (including the exercise price) for
each share of Stock (or other kind of shares or securities) subject to then
outstanding Awards shall be reduced proportionately, without changing the
aggregate purchase price or value as to which outstanding Awards remain
exercisable or subject to restrictions.

(ii) If at any time, or from time to time, the Company shall consolidate as a
whole (by reclassification, by reverse Stock split, or otherwise) the number of
shares of Stock then outstanding into a lesser number of shares of Stock,
(A) the maximum number of shares of Stock for the Plan or available in
connection with Awards as provided in Section 4 shall be decreased
proportionately, and the kind of shares or other securities available for the
Plan shall be appropriately adjusted, (B) the number of shares of Stock (or
other kind of shares or securities) that may be acquired under any then
outstanding Award shall be decreased

 

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proportionately, and (C) the price (including the exercise price) for each share
of Stock (or other kind of shares or securities) subject to then outstanding
Awards shall be increased proportionately, without changing the aggregate
purchase price or value as to which outstanding Awards remain exercisable or
subject to restrictions.

(iii) Whenever the number of shares of Stock subject to outstanding Awards and
the price for each share of Stock subject to outstanding Awards are required to
be adjusted as provided in this Section 9(b), the Committee shall promptly
prepare a notice setting forth, in reasonable detail, the event requiring
adjustment, the amount of the adjustment, the method by which such adjustment
was calculated, and the change in price and the number of shares of Stock, other
securities, cash, or property purchasable subject to each Award after giving
effect to the adjustments. The Committee shall promptly provide each affected
Participant with such notice.

(iv) Adjustments under Sections 9(b)(i) and (ii) shall be made by the Committee,
and its determination as to what adjustments shall be made and the extent
thereof shall be final, binding, and conclusive. No fractional interest shall be
issued under the Plan on account of any such adjustments.

(c) Corporate Recapitalization. If the Company recapitalizes, reclassifies its
capital stock, or otherwise changes its capital structure (a “recapitalization”)
without the occurrence of a Change in Control, the number and class of shares of
Stock covered by an Option or an SAR theretofore granted shall be adjusted so
that such Option or SAR shall thereafter cover 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 the recapitalization,
the holder had been the holder of record of the number of shares of Stock then
covered by such Option or SAR and the share limitations provided in Section 4
shall be adjusted in a manner consistent with the recapitalization.

(d) Additional Issuances. 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 or 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.

(e) Change in Control. Upon a Change in Control, the Committee, acting in its
sole discretion without the consent or approval of any holder, shall affect one
or more of the following alternatives, which may vary among individual holders
and which may vary among Options or SARs (collectively “Grants”) held by any
individual holder: (i) accelerate the time at which Grants then outstanding may
be exercised so that such Grants may be exercised in full for a limited period
of time on or before a specified date (before or after such Change in Control)
fixed by the Committee, after which specified date all unexercised Grants 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
Grants held by such holders (irrespective of

 

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whether such Grants are then exercisable under the provisions of this Plan) as
of a date, before or after such Change in Control, specified by the Committee,
in which event the Committee shall thereupon cancel such Grants and pay to each
holder an amount of cash per share equal to the excess, if any, of the amount
calculated in Section 9(f) (the “Change in Control Price”) of the shares subject
to such Grants over the Exercise Price(s) under such Grants for such shares
(except to the extent the Exercise Price under any such Grant is equal to or
exceeds the Change in Control Price, in which case no amount shall be payable
with respect to such Grant), or (iii) make such adjustments to Grants then
outstanding as the Committee deems appropriate to reflect such Change in
Control; provided, however, that the Committee may determine in its sole
discretion that no adjustment is necessary to Grants then outstanding; provided,
further, however, that the right to make such adjustments shall include, but not
require or be limited to, the modification of Grants such that the holder of the
Grant shall be entitled to purchase or receive (in lieu of the total number of
shares of Stock as to which an Option or SAR is exercisable (the “Total Shares”)
or other consideration that the holder would otherwise be entitled to purchase
or receive under the Grant (the “Total Consideration”)), the number of shares of
stock, other securities, cash or property to which the Total Shares or Total
Consideration would have been entitled to in connection with the Change in
Control (A) (in the case of Options), at an aggregate exercise price equal to
the Exercise Price that would have been payable if the Total Shares had been
purchased upon the exercise of the Grant immediately before the occurrence of
the Change in Control, and (B) in the case of SARs, if the SARs had been
exercised immediately before the occurrence of the Change in Control.

(f) Change in Control Price. The “Change in Control Price” shall equal the
amount determined in the following clause (i), (ii), (iii), (iv) or (v),
whichever is applicable, as follows: (i) the price per share offered to holders
of Stock in any merger or consolidation, (ii) the per share Fair Market Value of
the Stock immediately before the Change in Control without regard to assets sold
in the Change in Control and assuming the Company has received the consideration
paid for the assets in the case of a sale of the assets, (iii) the amount
distributed per share of Stock in a dissolution transaction, (iv) the price per
share offered to holders of Stock in any tender offer or exchange offer whereby
a Change in Control takes place, or (v) if such Change in Control occurs other
than pursuant to a transaction described in clauses (i), (ii), (iii), or (iv) of
this Section 9(f), the Fair Market Value per share of the Stock that may
otherwise be obtained with respect to such Grants or to which such Grants track,
as determined by the Committee as of the date determined by the Committee to be
the date of cancellation and surrender of such Grants. In the event that the
consideration offered to stockholders of the Company in any transaction
described in this Section 9(f) or in Section 9(e) 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 and such determination
shall be binding on all affected Participants to the extent applicable to Awards
held by such Participants.

(g) Impact of Corporate Events on Awards Generally. In the event of changes in
the outstanding Stock by reason of a recapitalization, reorganization, merger,
consolidation, combination, exchange or other relevant change in capitalization
occurring after the date of the grant of any Award and not otherwise provided
for by this Section 9, any outstanding Awards and any Award agreements
evidencing such Awards shall be subject to adjustment by the Committee at its
discretion, which adjustment may, in the Committee’s discretion, be described in
the Award agreement and may include, but not be limited to, adjustments as to
the number and

 

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price of shares of Stock or other consideration subject to such Awards,
accelerated vesting (in full or in part) of such Awards, conversion of such
Awards into awards denominated in the securities or other interests of any
successor Person, or the cash settlement of such Awards in exchange for the
cancellation thereof. In the event of any such change in the outstanding Stock,
the aggregate number of shares of Stock available under this Plan may be
appropriately adjusted by the Committee, whose determination shall be
conclusive.

10. General Provisions.

(a) Transferability.

(i) Permitted Transferees. The Committee may, in its discretion, permit a
Participant to transfer all or any portion of an Option or SAR, or authorize all
or a portion of an Option or SAR to be granted to an Eligible Person to be on
terms which permit transfer by such Participant; provided that, in either case,
the transferee or transferees must be a child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, in each case with respect to
the Participant, an individual sharing the Participant’s household (other than a
tenant or employee of the Company), a trust in which any of the foregoing
individuals have more than fifty percent of the beneficial interest, a
foundation in which any of the foregoing individuals (or the Participant)
control the management of assets, or any other entity in which any of the
foregoing individuals (or the Participant) own more than fifty percent of the
voting interests (collectively, “Permitted Transferees”); provided further that,
(A) there may be no consideration for any such transfer and (B) subsequent
transfers of Options or SARs transferred as provided above shall be prohibited
except subsequent transfers back to the original holder of the Option or SAR and
transfers to other Permitted Transferees of the original holder. Agreements
evidencing Options or SARs with respect to which such transferability is
authorized at the time of grant must be approved by the Committee, and must
expressly provide for transferability in a manner consistent with this
Section 10(a)(i).

(ii) Qualified Domestic Relations Orders. An Option, Stock Appreciation Right,
Restricted Stock Unit Award, Restricted Stock Award or other Award may be
transferred, to a Permitted Transferee, pursuant to a domestic relations order
entered or approved by a court of competent jurisdiction upon delivery to the
Company of written notice of such transfer and a certified copy of such order.

(iii) Other Transfers. Except as expressly permitted by Sections 10(a)(i) and
10(a)(ii), Awards shall not be transferable other than by will or the laws of
descent and distribution. Notwithstanding anything to the contrary in this
Section 10, an Incentive Stock Option shall not be transferable other than by
will or the laws of descent and distribution.

(iv) Effect of Transfer. Following the transfer of any Award as contemplated by
Sections 10(a)(i), 10(a)(ii) and 10(a)(iii), (A) such Award shall continue to be
subject to the same terms and conditions as were applicable immediately prior to
transfer, provided that the term “Participant” shall be deemed to refer to the
Permitted Transferee, the recipient under a qualified domestic relations order,
or the estate or heirs of a deceased

 

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Participant or other transferee, as applicable, to the extent appropriate to
enable the Participant to exercise the transferred Award in accordance with the
terms of this Plan and applicable law and (B) the provisions of the Award
relating to exercisability shall continue to be applied with respect to the
original Participant and, following the occurrence of any applicable events
described therein the Awards shall be exercisable by the Permitted Transferee,
the recipient under a qualified domestic relations order, or the estate or heirs
of a deceased Participant, as applicable, only to the extent and for the periods
that would have been applicable in the absence of the transfer.

(v) Procedures and Restrictions. Any Participant desiring to transfer an Award
as permitted under Sections 10(a)(i), 10(a)(ii) or 10(a)(iii) shall make
application therefor in the manner and time specified by the Committee and shall
comply with such other requirements as the Committee may require to assure
compliance with all applicable securities laws. The Committee shall not give
permission for such a transfer if (A) it would give rise to short swing
liability under section 16(b) of the Exchange Act or (B) it may not be made in
compliance with all applicable federal, state and foreign securities laws.

(vi) Registration. To the extent the issuance to any Permitted Transferee of any
shares of Stock issuable pursuant to Awards transferred as permitted in this
Section 10(a) is not registered pursuant to the effective registration statement
of the Company generally covering the shares to be issued pursuant to this Plan
to initial holders of Awards, the Company shall not have any obligation to
register the issuance of any such shares of Stock to any such transferee.

(b) Taxes. The Company and any of its Subsidiaries are authorized to withhold
from any Award granted, or any payment relating to an Award under this Plan,
including from a distribution of Stock, amounts of withholding and other taxes
due or potentially payable in connection with any transaction involving an
Award, and to take such other action as the Committee may deem advisable to
enable the Company and Participants to satisfy obligations for the payment of
withholding taxes and other tax obligations relating to any Award. This
authority shall include authority to withhold or receive Stock or other property
and to make cash payments in respect thereof in satisfaction of a Participant’s
tax obligations, either on a mandatory or elective basis in the discretion of
the Committee.

(c) Changes to this Plan and Awards. The Board may amend, alter, suspend,
discontinue or terminate this Plan or the Committee’s authority to grant Awards
under this Plan without the consent of stockholders or Participants, except that
any amendment or alteration to this Plan, including any increase in any share
limitation, shall be subject to the approval of the Company’s stockholders not
later than the annual meeting next following such Board action if such
stockholder approval is required by any federal or state law or regulation or
the rules of any stock exchange or automated quotation system on which the Stock
may then be listed or quoted, and the Board may otherwise, in its discretion,
determine to submit other such changes to this Plan to stockholders for
approval; provided, that, without the consent of an affected Participant, no
such Board action may materially and adversely affect the rights of such
Participant under any previously granted and outstanding Award. The Committee
may waive any conditions or rights under, or amend, alter, suspend, discontinue
or terminate any Award theretofore granted and any Award agreement relating
thereto, except as otherwise provided in this Plan; provided,

 

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however, that, without the consent of an affected Participant, no such Committee
action may materially and adversely affect the rights of such Participant under
such Award. For purposes of clarity, any adjustments made to Awards pursuant to
Section 9 will be deemed not to materially or adversely affect the rights of any
Participant under any previously granted and outstanding Award and therefore may
be made without the consent of affected Participants.

(d) Limitation on Rights Conferred under Plan. Neither this Plan nor any action
taken hereunder shall be construed as (i) giving any Eligible Person or
Participant the right to continue as an Eligible Person or Participant or in the
employ or service of the Company or any of its Subsidiaries, (ii) interfering in
any way with the right of the Company or any of its Subsidiaries to terminate
any Eligible Person’s or Participant’s employment or service relationship at any
time, (iii) giving an Eligible Person or Participant any claim to be granted any
Award under this Plan or to be treated uniformly with other Participants and/or
employees and/or other service providers, or (iv) conferring on a Participant
any of the rights of a stockholder of the Company unless and until the
Participant is duly issued or transferred shares of Stock in accordance with the
terms of an Award.

(e) Unfunded Status of Awards. To the extent applicable, Awards under this Plan
are unfunded and unsecured.

(f) Nonexclusivity of this Plan. Neither the adoption of this Plan by the Board
nor its submission to the stockholders of the Company for approval shall be
construed as creating any limitations on the power of the Board or a committee
thereof to adopt such other incentive arrangements as it may deem desirable,
including incentive arrangements and awards which do not qualify under section
162(m) of the Code. Nothing contained in this Plan shall be construed to prevent
the Company or any of its Subsidiaries from taking any corporate 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 this Plan
or any Award made under this Plan. No employee, beneficiary or other person
shall have any claim against the Company or any of its Subsidiaries as a result
of any such action.

(g) Fractional Shares. No fractional shares of Stock shall be issued or
delivered pursuant to this Plan or any Award. The Committee shall determine
whether cash, other Awards or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.

(h) Severability. If any provision of this Plan is held to be illegal or invalid
for any reason, the illegality or invalidity shall not affect the remaining
provisions hereof, but such provision shall be fully severable and the Plan
shall be construed and enforced as if the illegal or invalid provision had never
been included herein. If any of the terms or provisions of this Plan or any
Award agreement conflict with the requirements of Rule 16b-3 (as those terms or
provisions are applied to Eligible Persons who are subject to section 16(b) of
the Exchange Act) or section 422 of the Code (with respect to Incentive Stock
Options), then those conflicting terms or provisions shall be deemed inoperative
to the extent they so conflict with the requirements of Rule 16b-3 (unless the
Board or Committee, as appropriate, has expressly determined that the Plan or
such Award should not comply with Rule 16b-3) or section 422 of the Code. With
respect to Incentive Stock Options, if this Plan does not contain any provision

 

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required to be included herein under section 422 of the Code, that provision
shall be deemed to be incorporated herein with the same force and effect as if
that provision had been set out at length herein; provided, further, that, to
the extent any Option that is intended to qualify as an Incentive Stock Option
cannot so qualify, that Option (to that extent) shall be deemed an Option not
subject to section 422 of the Code for all purposes of the Plan.

(i) Governing Law. All questions arising with respect to the provisions of the
Plan and Awards shall be determined by application of the laws of the State of
Texas, without giving effect to any conflict of law provisions thereof, except
to the extent Texas state law is preempted by federal law. The obligation of the
Company to sell and deliver Stock hereunder is subject to applicable federal and
state laws and to the approval of any governmental authority required in
connection with the authorization, issuance, sale, or delivery of such Stock.

(j) Conditions to Delivery of Stock. Nothing herein or in any Award granted
hereunder or any Award agreement shall require the Company to issue any shares
with respect to any Award if that issuance would, in the opinion of counsel for
the Company, constitute a violation of the Securities Act or any similar or
superseding statute or statutes, any other applicable statute or regulation, or
the rules of any applicable securities exchange or securities association, as
then in effect. At the time of any exercise of an Option or Stock Appreciation
Right, or at the time of any grant of a Restricted Stock Award, Restricted Stock
Unit, or other Award the Company may, as a condition precedent to the exercise
of such Option or Stock Appreciation Right or settlement of any Restricted Stock
Award, Restricted Stock Unit or other Award, require from the Participant (or in
the event of his or her death, his or her legal representatives, heirs,
legatees, or distributees) such written representations, if any, concerning the
holder’s intentions with regard to the retention or disposition of the shares of
Stock being acquired pursuant to the Award and such written covenants and
agreements, if any, as to the manner of disposal of such shares as, in the
opinion of counsel to the Company, may be necessary to ensure that any
disposition by that holder (or in the event of the holder’s death, his or her
legal representatives, heirs, legatees, or distributees) will not involve a
violation of the Securities Act or any similar or superseding statute or
statutes, any other applicable state or federal statute or regulation, or any
rule of any applicable securities exchange or securities association, as then in
effect. No Option or Stock Appreciation Right shall be exercisable and no
settlement of any Restricted Stock Award or Restricted Stock Unit shall occur
with respect to a Participant unless and until the holder thereof shall have
paid cash or property to, or performed services for, the Company or any of its
Subsidiaries that the Committee believes is equal to or greater in value than
the par value of the Stock subject to such Award.

(k) Section 409A of the Code. In the event that any Award granted pursuant to
this Plan provides for a deferral of compensation within the meaning of the
Nonqualified Deferred Compensation Rules, such Award will be designed to comply
with the Nonqualified Deferred Compensation Rules.

(l) Plan Effective Date and Term. This Plan was adopted by the Board on May 17,
2010, and approved by the stockholders of the Company on May 17, 2010, to be
effective as of the Effective Date. No Awards may be granted under this Plan on
and after ten years after the Effective Date.

 

23

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Appendix C

Performance Share Unit Agreement