Exhibit 10.1

 

Ranger Energy Services, Inc.

 

2017 Long Term Incentive Plan

 

1.                                      Purpose.  The purpose of the Ranger
Energy Services, Inc. 2017 Long Term Incentive Plan (the “Plan”) is to provide a
means through which (a) Ranger Energy Services, Inc., a Delaware corporation
(the “Company”), and its Affiliates may attract, retain and motivate qualified
persons as employees, directors and consultants, thereby enhancing the
profitable growth of the Company and its Affiliates and (b) persons upon whom
the responsibilities of the successful administration and management of the
Company and its Affiliates rest, and whose present and potential contributions
to the Company and its Affiliates 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 Company and its Affiliates.
Accordingly, the Plan provides for the grant of Options, SARs, Restricted Stock,
Restricted Stock Units, Stock Awards, Dividend Equivalents, Other Stock-Based
Awards, Cash Awards, Substitute Awards, Performance Awards, or any combination
of the foregoing, as determined by the Committee in its sole discretion.

 

2.                                      Definitions.  For purposes of the Plan,
the following terms shall be defined as set forth below:

 

(a)                                 “Affiliate” means any corporation,
partnership, limited liability company, limited liability partnership,
association, trust or other organization that, directly or indirectly, controls,
is controlled by, or is under common control with, the Company.  For purposes of
the preceding sentence, “control” (including, with correlative meanings, the
terms “controlled by” and “under common control with”), as used with respect to
any entity or organization, shall mean the possession, directly or indirectly,
of the power (i) to vote more than 50% of the securities having ordinary voting
power for the election of directors of the controlled entity or organization or
(ii) to direct or cause the direction of the management and policies of the
controlled entity or organization, whether through the ownership of voting
securities, by contract, or otherwise.

 

(b)                                 “ASC Topic 718” means the Financial
Accounting Standards Board Accounting Standards Codification Topic 718,
Compensation — Stock Compensation, as amended or any successor accounting
standard.

 

(c)                                  “Award” means any Option, SAR, Restricted
Stock, Restricted Stock Unit, Stock Award, Dividend Equivalent, Other
Stock-Based Award, Cash Award, Substitute Award or Performance Award, together
with any other right or interest, granted under the Plan.

 

(d)                                 “Award Agreement” means any written
instrument (including any employment, severance or change in control agreement)
that sets forth the terms, conditions, restrictions and/or limitations
applicable to an Award, in addition to those set forth under the Plan.

 

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

 

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(f)                                   “Cash Award” means an Award denominated in
cash granted under Section 6(i).

 

(g)                                  “Change in Control” means, except as
otherwise provided in an Award Agreement, the occurrence of any of the following
events after the Effective Date:

 

(i)                                     any Person or any group of Persons
acting together which would constitute a “group” for purposes of
Section 13(d) of the Exchange Act (excluding a corporation or other entity
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company)
is or becomes the “beneficial owner,” as defined in Rule 13d-3 under the
Exchange Act, directly or indirectly, of securities of the Company representing
more than 50% of the combined voting power of the Company’s then outstanding
voting securities; or

 

(ii)                                  there is consummated a merger or
consolidation of the Company with any other corporation or other entity, and,
immediately after the consummation of such merger or consolidation, the voting
securities of the Company immediately prior to such merger or consolidation do
not continue to represent or are not converted into more than 50% of the
combined voting power of the then-outstanding voting securities of the Person
resulting from such merger or consolidation or, if the surviving company is a
Subsidiary, the ultimate parent thereof; or

 

(iii)                               the stockholders of the Company approve a
plan of complete liquidation or dissolution of the Company or there is
consummated an agreement or series of related agreements for the sale or other
disposition, directly or indirectly, by the Company of all or substantially all
of the Company’s assets, other than such sale or other disposition by the
Company of all or substantially all of the Company’s assets to an entity, at
least 50% of the combined voting power of the voting securities of which are
owned by stockholders of the Company in substantially the same proportions as
their ownership of the Company immediately prior to such sale.

 

Notwithstanding the foregoing, except with respect to clause (ii) above, a
“Change of Control” shall not be deemed to have occurred by virtue of the
consummation of any transaction or series of integrated transactions immediately
following which the record holders of the shares of the Company immediately
prior to such transaction or series of transactions continue to have
substantially the same proportionate ownership in, and own substantially all of
the shares of, an entity which owns, either directly or through a subsidiary,
all or substantially all of the assets of the Company immediately following such
transaction or series of transactions.

 

(h)                                 “Change in Control Price” means the amount
determined in the following clause (i), (ii), (iii), (iv) or (v), whichever the
Committee determines 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 or other
event without regard to assets sold in the Change in Control or other event 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 or other

 

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event takes place, or (v) if such Change in Control or other event occurs other
than pursuant to a transaction described in clauses (i), (ii), (iii), or (iv) of
this Section 2(h), the value per share of the Stock that may otherwise be
obtained with respect to such Awards or to which such Awards track, as
determined by the Committee as of the date determined by the Committee to be the
date of cancellation and surrender of such Awards.  In the event that the
consideration offered to stockholders of the Company in any transaction
described in this Section 2(h) or in Section 8(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.

 

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

 

(j)                                    “Committee” means a committee of two or
more directors designated by the Board to administer the Plan; provided,
however, that, unless otherwise determined by the Board, the Committee shall
consist solely of two or more Qualified Members.

 

(k)                                 “Covered Employee” means an Eligible Person
who is (i) a “covered employee” within the meaning of Section 162(m) or
(ii) designated by the Committee, at the time of grant of a Performance Award or
at any subsequent time, as reasonably expected to be a “covered employee” with
respect to the taxable year of the Company in which any applicable Award will be
paid.

 

(l)                                     “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.

 

(m)                             “Effective Date” means August 10, 2017.

 

(n)                                 “Eligible Person” means any individual who,
as of the date of grant of an Award, is an officer or employee of the Company or
of any of its Affiliates, and any other person who provides services to the
Company or any of its Affiliates, including directors of the Company; provided,
however, that, any such individual must be an “employee” of the Company or any
of its parents or subsidiaries within the meaning of General Instruction
A.1(a) to Form S-8 if such individual is granted an Award that may be settled in
Stock.  An employee on leave of absence may be an Eligible Person.

 

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

 

(p)                                 “Fair Market Value” of a share of Stock
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 such 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 on such date, the average between the reported high and low bid
and asked prices of Stock on the most recent date on

 

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which Stock was publicly traded  on or preceding the specified date; or (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 the Nonqualified Deferred
Compensation Rules.  Notwithstanding this definition of Fair Market Value, with
respect to one or more Award types, or for any other purpose for which the
Committee must determine the Fair Market Value under the Plan, the Committee may
elect to choose a different measurement date or methodology for determining Fair
Market Value so long as the determination is consistent with the Nonqualified
Deferred Compensation Rules and all other applicable laws and regulations.

 

(q)                                 “ISO” means an Option intended to be and
designated as an “incentive stock option” within the meaning of Section 422 of
the Code.

 

(r)                                    “Nonqualified Deferred Compensation
Rules” means the limitations or requirements of Section 409A of the Code, as
amended from time to time, including the guidance and regulations promulgated
thereunder and successor provisions, guidance and regulations thereto.

 

(s)                                   “Nonstatutory Option” means an Option that
is not an ISO.

 

(t)                                    “Option” means a right, granted to an
Eligible Person under Section 6(b), to purchase Stock at a specified price
during specified time periods, which may either be an ISO or a Nonstatutory
Option.

 

(u)                                 “Other Stock-Based Award” means an Award
granted to an Eligible Person under Section 6(h).

 

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

 

(w)                               “Performance Award” means an award granted to
an Eligible Person under Section 6(k), the grant, vesting, exercisability and/or
settlement of which (and/or the timing or amount thereof) is subject to the
achievement of one or more performance goals specified by the Committee.

 

(x)                                 “Person” means any individual, corporation,
firm, partnership, joint venture, limited liability company, estate, trust,
business association, organization, governmental entity or other entity.

 

(y)                                 “Qualified Member” means a member of the
Board who is (i) a “non-employee director” within the meaning of
Rule 16b-3(b)(3), (ii) following expiration of the Transition Period (as defined
below), an “outside director” within the meaning of Section 162(m), and
(iii) “independent” under the listing standards or rules of the securities
exchange upon which the Stock is traded, but only to the extent such
independence is required in order to take the action at issue pursuant to such
standards or rules.

 

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

 

(aa)                          “Restricted Stock Unit” means a right, granted to
an Eligible Person under Section 6(e), to receive Stock, cash or a combination
thereof at the end of a specified period (which may or may not be coterminous
with the vesting schedule of the Award).

 

(bb)                          “Rule 16b-3” means Rule 16b-3, promulgated by the
SEC under Section 16 of the Exchange Act.

 

(cc)                            “SAR” means a stock appreciation right granted
to an Eligible Person under Section 6(c).

 

(dd)                          “SEC” means the Securities and Exchange
Commission.

 

(ee)                            “Section 162(m)” means Section 162(m) of the
Code and Treasury Regulation § 1.162-27, as amended from time to time, and any
other guidance and regulations promulgated thereunder and successor provisions,
guidance and regulations thereto.

 

(ff)                              “Section 162(m) Award” means a Performance
Award granted under Section 6(k)(i) to a Covered Employee that is intended to
satisfy the requirements for “performance-based compensation” within the meaning
of Section 162(m).

 

(gg)                            “Securities Act” means the Securities Act of
1933, as amended from time to time, including the guidance, rules and
regulations promulgated thereunder and successor provisions, guidance, rules and
regulations thereto.

 

(hh)                          “Stock” means the Company’s Class A common Stock,
par value $0.01 per share, and such other securities as may be substituted (or
re-substituted) for Stock pursuant to Section 8.

 

(ii)                                  “Stock Award” means unrestricted shares of
Stock granted to an Eligible Person under Section 6(f).

 

(jj)                                “Subsidiary” means, with respect to any
Person, as of any date of determination, any other Person as to which such
Person, owns, directly or indirectly, or otherwise controls more than 50% of the
voting power or other similar interests or the sole general partner interest or
managing member or similar interest of such Person.

 

(kk)                          “Substitute Award” means an Award granted under
Section 6(j).

 

3.                                      Administration.

 

(a)                                 Authority of the Committee.  The Plan shall
be administered by the Committee except to the extent the Board elects to
administer the 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, Rule 16b-3 and other applicable laws, the Committee shall have the
authority, in its sole and absolute discretion, to:

 

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(i) designate Eligible Persons as Participants;

 

(ii) determine the type or types of Awards to be granted to an Eligible Person;

 

(iii) determine the number of shares of Stock or amount of cash to be covered by
Awards;

 

(iv) determine the terms and conditions of any Award, including whether, to what
extent and under what circumstances Awards may be vested, settled, exercised,
cancelled or forfeited (including conditions based on continued employment or
service requirements or the achievement of one or more performance goals);

 

(v) modify, waive or adjust any term or condition of an Award that has been
granted, which may include the acceleration of vesting, waiver of forfeiture
restrictions, modification of the form of settlement of the Award (for example,
from cash to Stock or vice versa), early termination of a performance period, or
modification of any other condition or limitation regarding an Award;

 

(vi) determine the treatment of an Award upon a termination of employment or
other service relationship;

 

(vii) impose a holding period with respect to an Award or the shares of Stock
received in connection with an Award;

 

(viii) interpret and administer the Plan and any Award Agreement;

 

(ix) correct any defect, supply any omission or reconcile any inconsistency in
the Plan, in any Award, or in any Award Agreement; and

 

(x) make any other determination and take any other action that the Committee
deems necessary or desirable for the administration of the Plan.

 

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.  Any action of the Committee shall be final,
conclusive and binding on all persons, including the Company, its Affiliates,
stockholders, Participants, beneficiaries, and permitted transferees under
Section 7(a) or other persons claiming rights from or through a Participant.

 

(b)                                 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 (i) 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 where such action is not taken by the full Board, or (ii) a
Section 162(m) Award, may be taken either (A) by a subcommittee, designated by
the Committee, composed solely of two or more Qualified Members, or (B) 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 the Plan.  For the avoidance of

 

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doubt, the full Board may take any action 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, so long as such Award is not a
Section 162(m) Award.

 

(c)                                  Delegation of Authority.  The Committee may
delegate any or all of its powers and duties under the Plan to a subcommittee of
directors or to any officer of the Company, including the power to perform
administrative functions and grant Awards; provided, however, that such
delegation does not (i) violate state or corporate law, (ii) result in the loss
of an exemption under Rule 16b-3(d)(1) for Awards granted to Participants
subject to Section 16 of the Exchange Act in respect of the Company, or
(iii) cause Section 162(m) Awards to fail to so qualify.  Upon any such
delegation, all references in the Plan to the “Committee,” other than in
Section 8, shall be deemed to include any subcommittee or officer of the Company
to whom such powers have been delegated by the Committee.  Any such delegation
shall not limit the right of such subcommittee members or such an officer to
receive Awards; provided, however, that such subcommittee members and any such
officer may not grant Awards to himself or herself, a member of the Board, or
any executive officer of the Company or an Affiliate, or take any action with
respect to any Award previously granted to himself or herself, a member of the
Board, or any executive officer of the Company or an Affiliate. The Committee
may also appoint agents who are not executive officers of the Company or members
of the Board to assist in administering the Plan, provided, however, that such
individuals may not be delegated the authority to (A) grant or modify any Awards
that will, or may, be settled in Stock or (B) take any action that would cause
Section 162(m) Awards to fail to so qualify, if applicable.

 

(d)                                 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 Affiliates, the Company’s legal counsel,
independent auditors, consultants or any other agents assisting in the
administration of the Plan.  Members of the Committee and any officer or
employee of the Company or any of its Affiliates 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 the 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.

 

(e)                                  Participants in Non-U.S. Jurisdictions.
Notwithstanding any provision of the Plan to the contrary, to comply with
applicable laws in countries other than the United States in which the Company
or any of its Affiliates operates or has employees, directors or other service
providers from time to time, or to ensure that the Company complies with any
applicable requirements of foreign securities exchanges, the Committee, in its
sole discretion, shall have the power and authority to: (i) determine which of
the Company’s Affiliates shall be covered by the Plan; (ii) determine which
Eligible Persons outside the United States are eligible to participate in the
Plan; (iii) modify the terms and conditions of any Award granted to Eligible
Persons outside the United States to comply with applicable foreign laws or
listing requirements of any foreign exchange; (iv) establish sub-plans and
modify exercise procedures and other terms and procedures, to the extent such
actions may be necessary or advisable (any such sub-plans and/or modifications
shall be attached to the Plan as appendices), provided, however, that no such
sub-plans and/or modifications shall increase the share limitations contained in
Section 4(a); and (v) take any action, before or after an Award is granted, that
it deems advisable to comply with any

 

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applicable governmental regulatory exemptions or approval or listing
requirements of any such foreign securities exchange.  For purposes of the Plan,
all references to foreign laws, rules, regulations or taxes shall be references
to the laws, rules, regulations and taxes of any applicable jurisdiction other
than the United States or a political subdivision thereof.

 

4.                                      Stock Subject to Plan.

 

(a)                                 Number of Shares Available for Delivery. 
Subject to adjustment in a manner consistent with Section 8, 1,250,000 shares of
Stock are reserved and available for delivery with respect to Awards, and such
total shall be available for the issuance of shares upon the exercise of ISOs.

 

(b)                                 Application of Limitation to Grants of
Awards.  Subject to Section 4(c), no Award may be granted if the number of
shares of Stock that may be delivered in connection with such Award exceeds the
number of shares of Stock remaining available under the 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 Delivered under
Awards.  If all or any portion of an Award expires or is cancelled, forfeited,
exchanged, settled in cash or otherwise terminated, the shares of Stock subject
to such Award (including (i) shares forfeited with respect to Restricted Stock,
and (ii) the number of shares withheld or surrendered to the Company in payment
of any exercise or purchase price of an Award or taxes relating to Awards) shall
not be considered “delivered shares” under the Plan, shall be available for
delivery with respect to Awards, and shall no longer be considered issuable or
related to outstanding Awards for purposes of Section 4(b), except that if any
such shares could not again be available for Awards granted 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. If an Award may be settled only in cash, such Award need not be
counted against any share limit under this Section 4, but will remain subject to
the limitations in Section 5 to the extent required to preserve the status of
any Award intended to be a Section 162(m) Award.

 

(d)                                 Stock Offered.  The shares of Stock 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; Per Person Award
Limitations.

 

(a)                                 Awards may be granted under the Plan only to
Eligible Persons.

 

(b)                                 Beginning with the calendar year in which
the Transition Period expires and for each calendar year thereafter, a Covered
Employee may not be granted Awards intended to be Section 162(m) Awards (i) to
the extent such Award is based on a number of shares of Stock (including Awards
that may be settled in either cash or shares of Stock) relating to more

 

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than 1,000,000 shares of Stock, subject to adjustment in a manner consistent
with any adjustment made pursuant to Section 8, and (ii) to the extent such
Award is designated to be paid only in cash and is not based on a number of
shares of Stock, having a maximum value determined on the date of grant in
excess of $5,000,000, in each case multiplied by the number of full or partial
fiscal or calendar years, as applicable, in any performance period established
with respect to an Award, if applicable, up to a maximum of five fiscal or
calendar years.  If an Award is cancelled, then the cancelled Award shall
continue to be counted toward the applicable limitation in this paragraph to the
extent required by Section 162(m).

 

(c)                                  In each calendar year during any part of
which the Plan is in effect, a non-employee member of the Board may not be
granted Awards (i) relating to more than 100,000 shares of Stock, subject to
adjustment in a manner consistent with any adjustment made pursuant to
Section 8, or (ii) if greater, Awards having a value (determined, if applicable,
pursuant to ASC Topic 718) on the date of grant in excess of $500,000, in each
case multiplied by the number of full or partial calendar years in any
performance period established with respect to an Award, if applicable;
provided, that, for the calendar year in which a non-employee member of the
Board first commences service on the Board only, the foregoing limitations shall
be doubled; provided, further that, the limits set forth in this
Section 5(c) shall be without regard to grants of Awards, if any, made to a
non-employee member of the Board during any period in which such individual was
an employee of the Company or of any of its Affiliates or was otherwise
providing services to the Company or to any of its Affiliates other than in the
capacity as a director of the Company.

 

6.                                      Specific Terms of Awards.

 

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

 

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

 

(i)                                     Exercise Price.  Each Award Agreement
evidencing an Option shall state the exercise price per share of Stock (the
“Exercise Price”) established by the Committee; provided, however, that except
as provided in Section 6(j) or in Section 8, the Exercise Price of 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 an ISO granted to an individual who owns
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company or its parent or any of its subsidiaries, 110% of the
Fair Market Value per share of the Stock on the date of grant).  Notwithstanding
the foregoing, the Exercise Price of a Nonstatutory Option may be less than 100%
of the Fair Market Value per share of Stock as of the date of grant of the
Option if the Option (1) does not provide for a deferral of compensation by
reason of satisfying the short-term deferral exception set forth in the
Nonqualified Deferred Compensation Rules or (2) provides for

 

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a deferral of compensation and is compliant with the Nonqualified Deferred
Compensation Rules.

 

(ii)                                  Time and Method of Exercise; Other Terms. 
The Committee shall determine the methods by which the Exercise Price may be
paid or deemed to be paid, the form of such payment, including cash or cash
equivalents, Stock (including previously owned shares or through a cashless
exercise, i.e., “net settlement”, a broker-assisted exercise, or other reduction
of the amount of shares otherwise issuable pursuant to the Option), other Awards
or awards granted under other plans of the Company or any Affiliate, other
property, or any other legal consideration the Committee deems appropriate
(including notes or other contractual obligations of Participants to make
payment on a deferred basis), the methods by or forms in which Stock will be
delivered or deemed to be delivered to Participants, including the delivery of
Restricted Stock subject to Section 6(d), and any other terms and conditions of
any Option.  In the case of an exercise whereby the Exercise Price is paid with
Stock, such Stock shall be valued based on the Stock’s Fair Market Value as of
the date of exercise.  No Option may be exercisable for a period of more than
ten years following the date of grant of the Option (or in the case of an ISO
granted to an individual who owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or its parent or
any of its subsidiaries, for a period of more than five years following the date
of grant of the ISO).

 

(iii)                               ISOs.  The terms of any ISO granted under
the Plan shall comply in all respects with the provisions of Section 422 of the
Code.  ISOs may only be granted to Eligible Persons who are employees of the
Company or employees of a parent or any subsidiary corporation of the Company. 
Except as otherwise provided in Section 8, no term of the Plan relating to ISOs
(including any SAR in tandem therewith) shall be interpreted, amended or
altered, nor shall any discretion or authority granted under the Plan be
exercised, so as to disqualify either the 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 the Plan or the approval of the Plan by the
Company’s stockholders. Notwithstanding the foregoing, to the extent that the
aggregate 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) subject
to any other incentive stock options of the Company or a parent or subsidiary
corporation (within the meaning of Sections 424(e) and (f) of the Code) that are
exercisable for the first time by a Participant during any calendar year exceeds
$100,000, or such other amount as may be prescribed under Section 422 of the
Code, such excess shall be treated as Nonstatutory Options in accordance with
the Code.  As used in the previous sentence, Fair Market Value shall be
determined as of the date the ISO is granted.  If a Participant shall make any
disposition of shares of Stock issued pursuant to an ISO under the circumstances
described in Section 421(b) of the Code (relating to disqualifying
dispositions), the Participant shall notify the Company of such disposition
within the time provided to do so in the applicable award agreement.

 

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

 

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(i)                                     Right to Payment.  An SAR is 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)                                  Grant Price. Each Award Agreement
evidencing an SAR shall state the grant price per share of Stock established by
the Committee; provided, however, that except as provided in Section 6(j) or in
Section 8, the grant price per share of Stock subject to an SAR 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
SAR.  Notwithstanding the foregoing, the grant price of an SAR may be less than
100% of the Fair Market Value per share of Stock subject to an SAR as of the
date of grant of the SAR if the SAR (1) does not provide for a deferral of
compensation by reason of satisfying the short-term deferral exception set forth
in the Nonqualified Deferred Compensation Rules or (2) provides for a deferral
of compensation and is compliant with the Nonqualified Deferred Compensation
Rules.

 

(iii)                               Method of Exercise and Settlement; Other
Terms. The Committee shall determine the form of consideration payable upon
settlement, the method by or forms in which Stock (if any) will be delivered or
deemed to be delivered to Participants, and any other terms and conditions of
any SAR.  SARs may be either free-standing or granted in tandem with other
Awards.  No SAR may be exercisable for a period of more than ten years following
the date of grant of the SAR.

 

(iv)                              Rights Related to Options.  An SAR granted in
connection with 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 determined by multiplying (A) 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 (B) the number of shares as to which that
SAR has been exercised.  The Option shall then cease to be exercisable to the
extent surrendered.  SARs granted in connection with an Option shall be subject
to the terms and conditions of the Award Agreement governing the Option, which
shall provide that the SAR is 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 transferrable.

 

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

 

(i)                                     Restrictions.  Restricted Stock shall be
subject to such restrictions on transferability, risk of forfeiture and other
restrictions, if any, as the Committee may impose.  Except as provided in
Section 7(a)(iii) and Section 7(a)(iv), during the restricted period applicable
to the Restricted Stock, the Restricted Stock may not be sold, transferred,
pledged, hedged, hypothecated, margined or otherwise encumbered by the
Participant.

 

(ii)                                  Dividends and Splits.  As a condition to
the grant of an Award of Restricted Stock, the Committee may allow a Participant
to elect, or may require, that any cash dividends paid on a share of Restricted
Stock be automatically reinvested in additional shares of Restricted Stock,
applied to the purchase of additional Awards or deferred without interest to the

 

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date of vesting of the associated Award of Restricted Stock.  Unless otherwise
determined by the Committee and specified in the applicable Award Agreement,
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 to Eligible Persons on the following
terms and conditions:

 

(i)                                     Award and Restrictions.  Restricted
Stock Units shall be subject to such restrictions (which may include a risk of
forfeiture) as the Committee may impose.

 

(ii)                                  Settlement.  Settlement of vested
Restricted Stock Units shall occur upon vesting or upon expiration of the
deferral period specified for such Restricted Stock Units by the Committee (or,
if permitted by the Committee, as elected by the Participant).  Restricted Stock
Units shall be settled by delivery of (A) a number of shares of Stock equal to
the number of Restricted Stock Units for which settlement is due, or (B) cash in
an amount equal to the Fair Market Value of the specified number of shares of
Stock equal to the number of Restricted Stock Units for which settlement is due,
or a combination thereof, as determined by the Committee at the date of grant or
thereafter.

 

(f)                                   Stock Awards.  The Committee is authorized
to grant Stock Awards to Eligible Persons as a bonus, as additional
compensation, or in lieu of cash compensation any such Eligible Person is
otherwise entitled to receive, in such amounts and subject to such other terms
as the Committee in its discretion determines to be appropriate.

 

(g)                                  Dividend Equivalents.  The Committee is
authorized to grant Dividend Equivalents to Eligible Persons, entitling any such
Eligible Person to receive cash, Stock, other Awards, or other property equal in
value to dividends or other distributions paid with respect to a specified
number of shares of Stock.  Dividend Equivalents may be awarded on a
free-standing basis or in connection with another Award (other than an Award of
Restricted Stock or a Stock Award).  The Committee may provide that Dividend
Equivalents shall be paid or distributed when accrued or at a later specified
date and, if distributed at a later date, may be deemed to have been reinvested
in additional Stock, Awards, or other investment vehicles or accrued in a
bookkeeping account without interest, and subject to such restrictions on
transferability and risks of forfeiture, as the Committee may specify.  With
respect to Dividend Equivalents granted in connection with another Award, absent
a contrary provision in the Award Agreement, such Dividend Equivalents shall be
subject to the same restrictions and risk of forfeiture as the Award with
respect to which the dividends accrue and shall not be paid unless and until
such Award has vested and been earned.

 

(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 the Plan,
including convertible or exchangeable debt securities, other rights convertible
or exchangeable into Stock, purchase rights for Stock, Awards with value and
payment contingent upon

 

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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 Affiliates of the Company.  The Committee
shall determine the terms and conditions of such Other Stock-Based Awards. 
Stock delivered pursuant to an Other-Stock Based 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 cash, Stock, other Awards, or other property, as the Committee shall
determine.

 

(i)                                     Cash Awards.  The Committee is
authorized to grant Cash Awards, on a free-standing basis or as an element of, a
supplement to, or in lieu of any other Award under the Plan to Eligible Persons
in such amounts and subject to such other terms as the Committee in its
discretion determines to be appropriate.

 

(j)                                    Substitute Awards; No Repricing.  Awards
may be granted in substitution or exchange for any other Award granted under the
Plan or under another plan of the Company or an Affiliate or any other right of
an Eligible Person to receive payment from the Company or an Affiliate.  Awards
may also be granted under the Plan in substitution for awards held by
individuals who become Eligible Persons as a result of a merger, consolidation
or acquisition of another entity or the assets of another entity by or with the
Company or an Affiliate.  Such Substitute Awards referred to in the immediately
preceding sentence that are Options or SARs may have an exercise price that is
less than the Fair Market Value of a share of Stock on the date of the
substitution if such substitution complies with the Nonqualified Deferred
Compensation Rules and other applicable laws and exchange rules.  Except as
provided in this Section 6(j) or in Section 8, without the approval of the
stockholders of the Company, the terms of outstanding Awards may not be amended
to (i) reduce the Exercise Price or grant price of an outstanding Option or SAR,
(ii) grant a new Option, SAR or other Award in substitution for, or upon the
cancellation of, any previously granted Option or SAR that has the effect of
reducing the Exercise Price or grant price thereof, (iii) exchange any Option or
SAR for Stock, cash or other consideration when the Exercise Price or grant
price per share of Stock under such Option or SAR exceeds the Fair Market Value
of a share of Stock or (iv) take any other action that would be considered a
“repricing” of an Option or SAR under the applicable listing standards of the
national securities exchange on which the Stock is listed (if any).

 

(k)                                 Performance Awards. The Committee is
authorized to designate any of the Awards granted under the foregoing provisions
of this Section 6 as Performance Awards.  The Committee may use such business
criteria and other measures of performance as it may deem appropriate in
establishing any performance goals applicable to a Performance Award, and may
exercise its discretion to reduce or increase the amounts payable under any
Performance Award, except as limited under Section 6(k)(i).  Performance goals
may differ among Performance Awards granted to any one Participant or to
different Participants.  The performance period applicable to any Performance
Award shall be set by the Committee in its discretion but shall not exceed ten
years.

 

(i)                                     Section 162(m) Awards.  If the Committee
determines in its discretion that a Performance Award granted to a Covered
Employee shall be designated as a Section 162(m) Award, the grant, exercise,
vesting and/or settlement of such Performance Award shall be contingent upon
achievement of a pre-established performance goal or goals and

 

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other terms set forth in this Section 6(k)(i); provided, however, that nothing
in this Section 6(k) or elsewhere in the Plan shall be interpreted as preventing
the Committee from granting Performance Awards or other Awards to Covered
Employees that are not intended to constitute Section 162(m) Awards or from
determining that it is no longer necessary or appropriate for a
Section 162(m) Award to qualify as such.

 

(A)                               Performance Goals Generally.  The performance
goals for Section 162(m) Awards shall consist of one or more business criteria
and a targeted level or levels of performance with respect to each of such
criteria as specified by the Committee.  Performance goals shall be objective
and shall otherwise meet the requirements of Section 162(m), including the
requirement that the level or levels of performance targeted by the Committee
must be “substantially uncertain” at the time the Committee actually establishes
the performance goal or goals.

 

(B)                               Business Criteria for Performance Goals.  One
or more of the following business criteria for the Company, on a consolidated
basis, and/or for specified subsidiaries, business or geographical units or
operating areas 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 Section 162(m) Awards: (1) revenues, sales or
other income; (2) cash flow, discretionary cash flow, cash flows from
operations, cash flows from investing activities, and/or cash flows from
financing activities; (3) return on net assets, return on assets, return on
investment, return on capital, return on capital employed or return on equity;
(4) income, operating income or net income; (5) earnings or earnings margin
determined before or after any one or more of depletion, depreciation and
amortization expense; exploration and abandonments; impairment of oil and gas
properties; impairment of inventory and other property and equipment; accretion
of discount on asset retirement obligations; interest expense; net gain or loss
on the disposition of assets; income or loss from discontinued operations, net
of tax; noncash derivative related activity; amortization of stock-based
compensation; income taxes; or other items; (6) equity; net worth; tangible net
worth; book capitalization; debt; debt, net of cash and cash equivalents;
capital budget or other balance sheet goals; (7) debt or equity financings or
improvement of financial ratings; (8) general and administrative expenses;
(9) net asset value; (10) Fair Market Value of the Stock, share price, share
price appreciation, total stockholder return or payments of dividends; (11)
achievement of savings from business improvement projects and achievement of
capital projects deliverables; (12) working capital or working capital changes;
(13) operating profit or net operating profit; (14) internal research or
development programs; (15) geographic business expansion; (16) corporate
development (including licenses, innovation, research or establishment of third
party collaborations); (17) performance against environmental, ethics or
sustainability targets; (18) safety performance and/or incident rate; (19) human
resources management targets, including medical cost reductions, employee
satisfaction or retention, workforce diversity and time to hire;
(20) satisfactory internal or external audits; (21) consummation, implementation
or completion of a Change in Control or other strategic partnerships,
transactions, projects, processes or initiatives or other goals relating to
acquisitions or divestitures (in whole or in part), joint ventures or strategic
alliances; (22) regulatory approvals or other regulatory milestones; (23) legal
compliance or risk reduction; (24) market share; (25) economic value added; or
(26) cost reduction targets. Any of the above goals may be determined pre-tax or
post-tax, on an absolute or relative basis, as compared to the performance of a
published or special index deemed

 

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applicable by the Committee including the Standard & Poor’s 500 Stock Index or a
group of comparable companies, as a ratio with other business criteria, as a
ratio over a period of time or on a per unit of measure (such as per day, or per
barrel, a volume or thermal unit of gas or a barrel-of-oil equivalent), on a
per-share basis (basic or diluted), and on a basis of continuing operations
only. The terms above may, but shall not be required to be, used as applied
under generally accepted accounting principles, as applicable.

 

(C)                               Effect of Certain Events. The Committee may,
at the time the performance goals in respect of a Section 162(m) Award are
established, provide for the manner in which actual performance and performance
goals with regard to the business criteria selected will reflect the impact of
specified events or occurrences during the relevant performance period, which
may mean excluding the impact of one or more events or occurrences, as specified
by the Committee, for such performance period so long such events are
objectively determinable. The adjustments described in this paragraph shall only
be made, in each case, to the extent that such adjustments in respect of a
Section 162(m) Award would not cause the Section 162(m) Award to fail to qualify
as “performance-based compensation” under Section 162(m).

 

(D)                               Timing for Establishing Performance Goals.  No
later than 90 days after the beginning of any performance period applicable to a
Section 162(m) Award, or at such other date as may be required or permitted for
“performance-based compensation” under Section 162(m), the Committee shall
establish (i) the Eligible Persons who will be granted Section 162(m) Awards,
and (ii) the objective formula used to calculate the amount of cash or Stock
payable, if any, under such Section 162(m) Awards, based upon the level of
achievement of a performance goal or goals with respect to one or more of the
business criteria selected by the Committee from the list set forth in
Section 6(k)(i)(B) and, if desired, the effect of any events set forth in
Section 6(k)(i)(C).

 

(E)                                Performance Award Pool.  The Committee may
establish an unfunded pool, with the amount of such pool calculated using an
objective formula based upon the level of achievement of one or more performance
goals with respect to business criteria selected from the list set forth in
Section 6(k)(i)(B) during the given performance period, as specified by the
Committee in accordance with Section 6(k)(i)(D).  The Committee may specify the
amount of the pool as a percentage of any of such business criteria, a
percentage in excess of a threshold amount with respect to such business
criteria, or as another amount which need not bear a direct relationship to such
business criteria but shall be objectively determinable and calculated based
upon the level of achievement of pre-established goals with regard to the
business criteria.  If a pool is established, the Committee shall also establish
the maximum amount payable to each Covered Employee from the pool for each
performance period.

 

(F)                                 Settlement or Payout of Awards; Other
Terms.  Except as otherwise permitted under Section 162(m), after the end of
each performance period and before any Section 162(m) Award is settled or paid,
the Committee shall certify the level of performance achieved with regard to
each business criteria established with respect to each Section 162(m) Award and
shall determine the amount of cash or Stock, if any, payable to each Participant
with respect to each Section 162(m) Award.  The Committee may, in its
discretion,

 

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reduce the amount of a payment or settlement otherwise to be made in connection
with a Section 162(m) Award, but may not exercise discretion to increase any
such amount.

 

(G)                               Written Determinations.  With respect to each
Section 162(m) Award, all determinations by the Committee as to (1) the
establishment of performance goals and performance period with respect to the
selected business criteria, (2) the establishment of the objective formula used
to calculate the amount of cash or Stock payable, if any, based on the level of
achievement of such performance goals, and (3) the certification of the level of
performance achieved during the performance period with regard to each business
criteria selected, shall each be made in writing.

 

(H)                              Options and SARs.  Notwithstanding the
foregoing provisions of this Section 6(k)(i), Options and SARs with an Exercise
Price or grant price not less than the Fair Market Value on the date of grant
awarded to Covered Employees are intended to be Section 162(m) Awards even if
not otherwise contingent upon achievement of one or more pre-established
performance goal or goals with respect to business criteria set forth in
Section 6(k)(i)(B).

 

(ii)                                  Status of Section 162(m) Awards.  The
terms governing Section 162(m) Awards shall be interpreted in a manner
consistent with Section 162(m), in particular the prerequisites for
qualification as “performance-based compensation,” and, if any provision of the
Plan as in effect on the date of adoption of any Award Agreement relating to a
Section 162(m) Award does not comply or is inconsistent with the requirements of
Section 162(m), such provision shall be construed or deemed amended to the
extent necessary to conform to such requirements.  Notwithstanding anything to
the contrary in Section 6(k)(i) or elsewhere in the Plan, the Company intends to
rely on the transition relief set forth in Treasury Regulation § 1.162-27(f),
which may be relied upon until the earliest to occur of (i) the material
modification of the Plan within the meaning of Treasury Regulation §
1.162-27(h)(1)(iii); (ii) the delivery of the total 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, 2020
(the “Transition Period”), and during the Transition Period, Awards granted to
Covered Employees under the Plan shall only be required to comply with the
transition relief described in Treasury Regulation § 1.162-27(f).

 

7.                                      Certain Provisions Applicable to Awards.

 

(a)                                 Limit on Transfer of Awards.

 

(i)                                     Except as provided in Sections
7(a)(iii) and (iv), each Option and SAR shall be exercisable only by the
Participant during the Participant’s lifetime, or by the person to whom the
Participant’s rights shall pass by will or the laws of descent and distribution.
Notwithstanding anything to the contrary in this Section 7(a), an ISO shall not
be transferable other than by will or the laws of descent and distribution.

 

(ii)                                  Except as provided in Sections 7(a)(i),
(iii) and (iv), no Award, other than a Stock Award, and no right under any such
Award, may be assigned, alienated, pledged, attached, sold or otherwise
transferred or encumbered by a Participant and any such

 

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purported assignment, alienation, pledge, attachment, sale, transfer or
encumbrance shall be void and unenforceable against the Company or any
Affiliate.

 

(iii)                               To the extent specifically provided by the
Committee, an Award may be transferred by a Participant without consideration to
immediate family members or related family trusts, limited partnerships or
similar entities or on such terms and conditions as the Committee may from time
to time establish.

 

(iv)                              An Award may be transferred pursuant to a
domestic relations order entered or approved by a court of competent
jurisdiction upon delivery to the Company of a written request for such transfer
and a certified copy of such order.

 

(b)                                 Form and Timing of Payment under Awards;
Deferrals.  Subject to the terms of the Plan and any applicable Award Agreement,
payments to be made by the Company or any of its Affiliates upon the exercise or
settlement of an Award may be made in such forms as the Committee shall
determine in its discretion, including cash, Stock, other Awards or other
property, and may be made in a single payment or transfer, in installments, or
on a deferred basis (which may be required by the Committee or permitted at the
election of the Participant on terms and conditions established by the
Committee); provided, however, that any such deferred or installment payments
will be set forth in the Award Agreement.  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.

 

(c)                                  Evidencing Stock. The Stock or other
securities of the Company delivered pursuant to an Award may be evidenced in any
manner deemed appropriate by the Committee in its sole discretion, including in
the form of a certificate issued in the name of the Participant or by book
entry, electronic or otherwise, and shall be subject to such stop transfer
orders and other restrictions as the Committee may deem advisable under the Plan
or the rules, regulations, and other requirements of the SEC, any stock exchange
upon which such Stock or other securities are then listed, and any applicable
federal, state or other laws, and the Committee may cause a legend or legends to
be inscribed on any such certificates to make appropriate reference to such
restrictions.  Further, if certificates representing Restricted Stock are
registered in the name of the Participant, the Company may retain physical
possession of the certificates and may require that the Participant deliver a
stock power to the Company, endorsed in blank, related to the Restricted Stock.

 

(d)                                 Consideration for Grants. Awards may be
granted for such consideration, including services, as the Committee shall
determine, but shall not be granted for less than the minimum lawful
consideration.

 

(e)                                  Additional Agreements.  Each Eligible
Person to whom an Award is granted under the Plan may be required to agree in
writing, as a condition to the grant of such Award or otherwise, to subject an
Award that is exercised or settled following such Eligible Person’s termination
of employment or service to a general release of claims and/or a noncompetition
or other restricted covenant agreement in favor of the Company and its

 

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Affiliates, with the terms and conditions of such agreement(s) to be determined
in good faith by the Committee.

 

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

 

(a)                                 Existence of Plans and Awards.  The
existence of the Plan and the Awards granted hereunder shall not affect in any
way the right or power of the Company, 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.

 

(b)                                 Additional Issuances.  Except as expressly
provided herein, the issuance by the Company of shares of stock of any class,
including 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 of Stock, if applicable.

 

(c)                                  Subdivision or Consolidation of Shares. 
The terms of an Award and the share limitations under the Plan shall be subject
to adjustment by the Committee 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
delivery with respect to Awards and applicable limitations with respect to
Awards provided in Section 4 and Section 5 (other than cash limits) 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 or grant 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;
provided, however, that in the case of an extraordinary cash dividend that is
not an Adjustment Event, the adjustment to the number of shares of Stock and the
Exercise Price or grant price, as applicable, with respect to an outstanding
Option or SAR may be made in such other manner as the Committee may determine
that is permitted pursuant to applicable tax and other laws, rules and
regulations.

 

(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, then, as appropriate (A) the

 

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maximum number of shares of Stock available for delivery with respect to Awards
and applicable limitations with respect to Awards provided in Section 4 and
Section 5 (other than cash limits) 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 proportionately, and (C) the price (including the Exercise Price or
grant 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.

 

(d)                                 Recapitalization.  In the event of any
change in the capital structure or business of the Company or other corporate
transaction or event that would be considered an “equity restructuring” within
the meaning of ASC Topic 718 and, in each case, that would result in an
additional compensation expense to the Company pursuant to the provisions of ASC
Topic 718, if adjustments to Awards with respect to such event were
discretionary or otherwise not required (each such an event, an “Adjustment
Event”), then the Committee shall equitably adjust (i) the aggregate number or
kind of shares that thereafter may be delivered under the Plan, (ii) the number
or kind of shares or other property (including cash) subject to an Award,
(iii) the terms and conditions of Awards, including the purchase price or
Exercise Price of Awards and performance goals, as applicable, and (iv) the
applicable limitations with respect to Awards provided in Section 4 and
Section 5 (other than cash limits) to equitably reflect such Adjustment Event
(“Equitable Adjustments”).  In the event of any change in the capital structure
or business of the Company or other corporate transaction or event that would
not be considered an Adjustment Event, and is not otherwise addressed in this
Section 8, the Committee shall have complete discretion to make Equitable
Adjustments (if any) in such manner as it deems appropriate with respect to such
other event.

 

(e)                                  Change in Control and Other Events.  Except
to the extent otherwise provided in any applicable Award Agreement, vesting of
any Award shall not occur solely upon the occurrence of a Change in Control and,
in the event of a Change in Control or other changes in the Company or the
outstanding Stock by reason of a recapitalization, reorganization, merger,
consolidation, combination, exchange or other relevant change occurring after
the date of the grant of any Award, the Committee, acting in its sole discretion
without the consent or approval of any holder, may exercise any power enumerated
in Section 3 (including the power to accelerate vesting, waive any forfeiture
conditions or otherwise modify or adjust any other condition or limitation
regarding an Award) and may also effect one or more of the following
alternatives, which may vary among individual holders and which may vary among
Awards held by any individual holder:

 

(i) accelerate the time of exercisability of an Award so that such Award may be
exercised in full or in part for a limited period of time on or before a date
specified by the Committee, after which specified date all unexercised Awards
and all rights of holders thereunder shall terminate;

 

(ii) redeem in whole or in part outstanding Awards by requiring the mandatory
surrender to the Company by selected holders of some or all of the outstanding
Awards held by such holders (irrespective of whether such Awards are then vested
or exercisable) as of a

 

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date, specified by the Committee, in which event the Committee shall thereupon
cancel such Awards and pay to each holder an amount of cash or other
consideration per Award (other than a Dividend Equivalent or Cash Award, which
the Committee may separately require to be surrendered in exchange for cash or
other consideration determined by the Committee in its discretion) equal to the
Change in Control Price, less the Exercise Price with respect to an Option and
less the grant price with respect to a SAR, as applicable to such Awards;
provided, however, that to the extent the Exercise Price of an Option or the
grant price of an SAR exceeds the Change in Control Price, such Award may be
cancelled for no consideration;

 

(iii) cancel Awards that remain subject to a restricted period as of the date of
a Change in Control or other such event without payment of any consideration to
the Participant for such Awards; or

 

(iv) make such adjustments to Awards then outstanding as the Committee deems
appropriate to reflect such Change in Control or other such event (including the
substitution, assumption, or continuation of Awards by the successor company or
a parent or subsidiary thereof);

 

provided, however, that so long as the event is not an Adjustment Event, the
Committee may determine in its sole discretion that no adjustment is necessary
to Awards then outstanding.  If an Adjustment Event occurs, this
Section 8(e) shall only apply to the extent it is not in conflict with
Section 8(d).

 

9.                                      General Provisions.

 

(a)                                 Tax Withholding.  The Company and any of its
Affiliates are authorized to withhold from any Award granted, or any payment
relating to an Award, including from a distribution of Stock, 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, its Affiliates and Participants to satisfy the payment of withholding
taxes and other tax obligations relating to any Award in such amounts as may be
determined by the Committee.  The Committee shall determine, in its sole
discretion, the form of payment acceptable for such tax withholding obligations,
including the delivery of cash or cash equivalents, Stock (including previously
owned shares, net settlement, a broker-assisted sale, or other cashless
withholding or reduction of the amount of shares otherwise issuable or delivered
pursuant to the Award), other property, or any other legal consideration the
Committee deems appropriate.  Any determination made by the Committee to allow a
Participant who is subject to Rule 16b-3 to pay taxes with shares of Stock
through net settlement or previously owned shares shall be approved by either a
committee made up of solely two or more Qualified Members or the full Board.  If
such tax withholding amounts are satisfied through net settlement or previously
owned shares, the maximum number of shares of Stock that may be so withheld or
surrendered shall be the number of shares of Stock that have an aggregate Fair
Market Value on the date of withholding or surrender equal to the aggregate
amount of such tax liabilities determined based on the greatest withholding
rates for federal, state, foreign and/or local tax purposes, including payroll
taxes, that may be utilized without creating adverse accounting treatment for
the Company with respect to such Award, as determined by the Committee.

 

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(b)                                 Limitation on Rights Conferred under Plan. 
Neither the 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
Affiliates, (ii) interfering in any way with the right of the Company or any of
its Affiliates 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 the 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.

 

(c)                                  Governing Law; Submission to Jurisdiction. 
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 Delaware, without
giving effect to any conflict of law provisions thereof, except to the extent
Delaware 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.  With respect to any
claim or dispute related to or arising under the Plan, the Company and each
Participant who accepts an Award hereby consent to the exclusive jurisdiction,
forum and venue of the state and federal courts located in Houston, Texas.

 

(d)                                 Severability and Reformation.  If any
provision of the Plan or any Award is or becomes or is deemed to be invalid,
illegal, or unenforceable in any jurisdiction or as to any person or Award, or
would disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to the
applicable law or, if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the Plan or
the Award, such provision shall be stricken as to such jurisdiction, person or
Award and the remainder of the Plan and any such Award shall remain in full
force and effect. If any of the terms or provisions of the 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 of the
Exchange Act), Section 162(m) (with respect to any Section 162(m) Award) or
Section 422 of the Code (with respect to ISOs), then those conflicting terms or
provisions shall be deemed inoperative to the extent they so conflict with the
requirements of Rule 16b-3 or Section 162(m) (unless the Board or the Committee,
as appropriate, has expressly determined that the Plan or such Award should not
comply with Rule 16b-3 or Section 162(m)) or Section 422 of the Code, in each
case, only to the extent Rule 16b-3 and such sections of the Code are
applicable.  With respect to ISOs, if the Plan does not contain any provision
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 ISO cannot so qualify,
that Option (to that extent) shall be deemed a Nonstatutory Option for all
purposes of the Plan.

 

(e)                                  Unfunded Status of Awards; No Trust or Fund
Created.  The Plan is intended to constitute an “unfunded” plan for certain
incentive awards. Neither the Plan nor any Award shall create or be construed to
create a trust or separate fund of any kind or a fiduciary relationship between
the Company or any Affiliate and a Participant or any other person.  To the

 

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extent that any person acquires a right to receive payments from the Company or
any Affiliate pursuant to an Award, such right shall be no greater than the
right of any general unsecured creditor of the Company or such Affiliate.

 

(f)                                   Nonexclusivity of the Plan.  Neither the
adoption of the 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 constitute “performance-based compensation” under Section 162(m).  Nothing
contained in the Plan shall be construed to prevent the Company or any of its
Affiliates from taking any corporate action which is deemed by the Company or
such Affiliate to be appropriate or in its best interest, whether or not such
action would have an adverse effect on the Plan or any Award made under the
Plan. No employee, beneficiary or other person shall have any claim against the
Company or any of its Affiliates as a result of any such action.

 

(g)                                  Fractional Shares.  No fractional shares of
Stock shall be issued or delivered pursuant to the Plan or any Award, and the
Committee shall determine in its sole discretion whether cash, other securities,
or other property shall be paid or transferred in lieu of any fractional shares
of Stock or whether such fractional shares of Stock or any rights thereto shall
be cancelled, terminated, or otherwise eliminated with or without consideration.

 

(h)                                 Interpretation.  Headings are given to the
Sections and subsections of the Plan solely as a convenience to facilitate
reference.  Such headings shall not be deemed in any way material or relevant to
the construction or interpretation of the Plan or any provision thereof. Words
in the masculine gender shall include the feminine gender, and, where
appropriate, the plural shall include the singular and the singular shall
include the plural. In the event of any conflict between the terms and
conditions of an Award Agreement and the Plan, the provisions of the Plan shall
control. The use herein of the word “including” following any general statement,
term or matter shall not be construed to limit such statement, term or matter to
the specific items or matters set forth immediately following such word or to
similar items or matters, whether or not non-limiting language (such as “without
limitation”, “but not limited to”, or words of similar import) is used with
reference thereto, but rather shall be deemed to refer to all other items or
matters that could reasonably fall within the broadest possible scope of such
general statement, term or matter.  References herein to any agreement,
instrument or other document means such agreement, instrument or other document
as amended, supplemented and modified from time to time to the extent permitted
by the provisions thereof and not prohibited by the Plan.

 

(i)                                     Facility of Payment.  Any amounts
payable hereunder to any individual under legal disability or who, in the
judgment of the Committee, is unable to manage properly his financial affairs,
may be paid to the legal representative of such individual, or may be applied
for the benefit of such individual in any manner that the Committee may select,
and the Company shall be relieved of any further liability for payment of such
amounts.

 

(j)                                    Conditions to Delivery of Stock.  Nothing
herein or in 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

 

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Securities Act, any other applicable statute or regulation, or the rules of any
applicable securities exchange or securities association, as then in effect.  In
addition, each Participant who receives an Award under the Plan shall not sell
or otherwise dispose of Stock that is acquired upon grant, exercise or vesting
of an Award in any manner that would constitute a violation of any applicable
federal or state securities laws, the Plan or the rules, regulations or other
requirements of the SEC or any stock exchange upon which the Stock is then
listed.  At the time of any exercise of an Option or SAR, or at the time of any
grant of any other Award, the Company may, as a condition precedent to the
exercise of such Option or SAR or settlement of any 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, any other applicable state or federal statute
or regulation, or any rule of any applicable securities exchange or securities
association, as then in effect.  Stock or other securities shall not be
delivered pursuant to any Award until payment in full of any amount required to
be paid pursuant to the Plan or the applicable Award Agreement (including any
Exercise Price, grant price, or tax withholding) is received by the Company.

 

(k)                                 Section 409A of the Code.  It is the general
intention, but not the obligation, of the Committee to design Awards to comply
with or to be exempt from the Nonqualified Deferred Compensation Rules, and
Awards will be operated and construed accordingly. Neither this Section 9(k) nor
any other provision of the Plan is or contains a representation to any
Participant regarding the tax consequences of the grant, vesting, exercise,
settlement, or sale of any Award (or the Stock underlying such Award) granted
hereunder, and should not be interpreted as such.  In no event shall the Company
be liable for all or any portion of any taxes, penalties, interest or other
expenses that may be incurred by the Participant on account of non-compliance
with the Nonqualified Deferred Compensation Rules.  Notwithstanding any
provision in the Plan or an Award Agreement to the contrary, in the event that a
“specified employee” (as defined under the Nonqualified Deferred Compensation
Rules) becomes entitled to a payment under an Award that would be subject to
additional taxes and interest under the Nonqualified Deferred Compensation
Rules if the Participant’s receipt of such payment or benefits is not delayed
until the earlier of (i) the date of the Participant’s death, or (ii) the date
that is six months after the Participant’s “separation from service,” as defined
under the Nonqualified Deferred Compensation Rules (such date, the “Section 409A
Payment Date”), then such payment or benefit shall not be provided to the
Participant until the Section 409A Payment Date.  Any amounts subject to the
preceding sentence that would otherwise be payable prior to the Section 409A
Payment Date will be aggregated and paid in a lump sum without interest on the
Section 409A Payment Date.  The applicable provisions of the Nonqualified
Deferred Compensation Rules are hereby incorporated by reference and shall
control over any Plan or Award Agreement provision in conflict therewith.

 

(l)                                     Clawback.  The Plan and all Awards
granted hereunder are subject to any written clawback policies that the Company,
with the approval of the Board or an authorized committee thereof, may adopt
either prior to or following the Effective Date, including any

 

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policy adopted to conform to the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 and rules promulgated thereunder by the SEC and that the
Company determines should apply to Awards.  Any such policy may subject a
Participant’s Awards and amounts paid or realized with respect to Awards to
reduction, cancelation, forfeiture or recoupment if certain specified events or
wrongful conduct occur, including an accounting restatement due to the Company’s
material noncompliance with financial reporting regulations or other events or
wrongful conduct specified in any such clawback policy.

 

(m)                             Status under ERISA.  The 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.

 

(n)                                 Plan Effective Date and Term.  The Plan was
adopted by the Board to be effective on the Effective Date. No Awards may be
granted under the Plan on and after the tenth anniversary of the Effective Date,
which is August 10, 2027. However, any Award granted prior to such termination
(or any earlier termination pursuant to Section 10), and the authority of the
Board or Committee to amend, alter, adjust, suspend, discontinue, or terminate
any such Award or to waive any conditions or rights under such Award in
accordance with the terms of the Plan, shall extend beyond such termination
until the final disposition of such Award.

 

10.                               Amendments to the Plan and Awards.  The
Committee may amend, alter, suspend, discontinue or terminate any Award or Award
Agreement, the Plan or the Committee’s authority to grant Awards without the
consent of stockholders or Participants, except that any amendment or alteration
to the 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 Committee 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 Committee may otherwise, in its discretion, determine to submit other
changes to the Plan to stockholders for approval; provided, that, without the
consent of an affected Participant, no such Committee action may materially and
adversely affect the rights of such Participant under any previously granted and
outstanding Award.  For purposes of clarity, any adjustments made to Awards
pursuant to Section 8 will be deemed not to materially and 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.

 

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