Exhibit 10.1
SIXTH AMENDED AND RESTATED
2004 LONG-TERM INCENTIVE PLAN
SECTION 1
GENERAL PROVISIONS RELATING
TO PLAN GOVERNANCE, COVERAGE AND BENEFITS
     1.1 Purpose
     The purpose of the Plan is to foster and promote the long-term financial
success of ION Geophysical Corporation (the “Company”) and its Subsidiaries and
to increase stockholder value by: (a) encouraging the commitment of Directors
and selected key Employees and Consultants, (b) motivating superior performance
of Directors and key Employees and Consultants by means of long-term performance
related incentives, (c) encouraging and providing Directors and selected key
Employees and Consultants with a program for obtaining ownership interests in
the Company that link and align their personal interests to those of the
Company’s stockholders, (d) attracting and retaining Directors and selected key
Employees and Consultants by providing competitive incentive compensation
opportunities, and (e) enabling Directors and selected key Employees and
Consultants to share in the long-term growth and success of the Company. For
administrative purposes, and subject to Section 8.13, this Plan incorporates the
ION Geophysical Corporation Amended and Restated 1996 Non-Employee Director
Stock Option Plan (the “Director Plan”).
     The Plan provides for payment of various forms of incentive compensation.
Except as provided in Section 8.14, it is not intended to be a plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), and, as such, the Plan will be interpreted, construed and
administered consistent with its status as a plan that is not subject to ERISA.
     This sixth amendment and restatement of the Plan will become effective as
of May 27, 2011 (with the Plan having an original effective date of May 3, 2004
(the “Effective Date”)). The Plan will commence on the Effective Date, and will
remain in effect, subject to the right of the Board to amend or terminate the
Plan at any time pursuant to Section 8.6, until all Shares subject to the Plan
have been purchased or acquired according to its provisions. However, in no
event may any Incentive Award be granted under the Plan after ten (10) years
from the Effective Date.
     1.2 Definitions
     The following terms shall have the meanings set forth below:
     (a) Appreciation. The difference between the Fair Market Value of a share
of Common Stock on the date of exercise of a Tandem SAR and the option exercise
price per share of the Nonstatutory Stock Option to which the Tandem SAR
relates.
     (b) Authorized Officer. The Chairman of the Board, the CEO or any other
senior officer of the Company to whom either of them delegate the authority to
execute any Incentive Agreement for and on behalf of the Company. No officer or
director shall be an Authorized Officer with respect to any Incentive Agreement
for himself.
     (c) Board. The Board of Directors of the Company.
     (d) Cause. Except as otherwise provided by the Committee or as otherwise
provided in a Grantee’s employment agreement, when used in connection with the
termination of a Grantee’s Employment or service, shall mean the termination of
the Grantee’s Employment or Grantee’s services as a Director or Consultant by
the Company or any Subsidiary by reason of (i) the conviction of the Grantee by
a court of competent jurisdiction as to which no further appeal can be taken of
a crime involving moral turpitude or a felony; (ii) the proven commission by the
Grantee of a material act of fraud upon the Company or any Subsidiary, or any
customer or supplier thereof; (iii) the willful and proven misappropriation of
any funds or property of the Company or any Subsidiary, or any customer or
supplier thereof; (iv) the willful, continued and unreasonable failure by the
Grantee to perform the material duties assigned to him which is not cured to the
reasonable satisfaction of the Company within 30 days after written notice of
such failure is provided to Grantee by the Board or by a designated officer of
the Company or a Subsidiary; (v) the knowing engagement by the Grantee in any
direct and material conflict of interest with the Company or any Subsidiary
without compliance with the Company’s or Subsidiary’s conflict of interest
policy, if any, then in effect; or (vi) the knowing engagement by the Grantee,
without the written approval of the Board, in any material activity which
competes with the business of the Company or any Subsidiary or which would
result in a material injury to the business, reputation or goodwill of the
Company or any Subsidiary; or (vii) the material breach by a Consultant of such
Grantee’s contract with the Company.

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     (e) CEO. The Chief Executive Officer of the Company.
     (f) Change in Control. Any of the events described in and subject to
Section 7.7.
     (g) Code. The Internal Revenue Code of 1986, as amended, and the
regulations and other authority promulgated thereunder by the appropriate
governmental authority. References herein to any provision of the Code shall
refer to any successor provision thereto.
     (h) Committee. A committee appointed by the Board consisting of at least
two directors, who fulfill the “outside directors” requirements of Section
162(m) of the Code, to administer the Plan. The Committee may be the
Compensation Committee of the Board, or any subcommittee of the Compensation
Committee. The Board shall have the power to fill vacancies on the Committee
arising by resignation, death, removal or otherwise. The Board, in its sole
discretion, may bifurcate the powers and duties of the Committee among one or
more separate committees, or retain all powers and duties of the Committee in a
single Committee. The members of the Committee shall serve at the discretion of
the Board.
     (i) Common Stock. The common stock of the Company, $.01 per value per
share, and any class of common stock into which such common shares may hereafter
be converted, reclassified, re-capitalized, or exchanged.
     (j) Company. ION Geophysical Corporation, a corporation organized under the
laws of the State of Delaware, and any successor-in-interest thereto.
     (k) Consultant. An independent agent, consultant, attorney, an individual
who has agreed to become an Employee within the next six months, or any other
individual who is not a Director or employee of the Company (or any Parent or
Subsidiary) and who, in the opinion of the Committee, is in a position to
contribute to the growth or financial success of the Company (or any Parent or
Subsidiary), (ii), is a natural person and (iii) provides bona fide services to
the Company (or any Parent or Subsidiary), which services are not in connection
with the offer or sale of securities in a capital raising transaction, and do
not directly or indirectly promote or maintain a market for the Company’s
securities.
     (l) Covered Employee. A named executive officer who is one of the group of
covered employees, as defined in Section 162(m) of the Code and Treasury
Regulation § 1.162-27(c) (or its successor), during any such period that the
Company is a Publicly Held Corporation.
     (m) Deferred Stock. Shares of Common Stock to be issued or transferred to a
Grantee under an Other Stock-Based Award granted pursuant to Section 5 at the
end of a specified deferral period, as set forth in the Incentive Agreement
pertaining thereto.
     (n) Director. Any individual who is a member of the Board.
     (o) Director Plan. The Amended and Restated 1996 Non-Employee Director
Stock Option Plan.
     (p) Disability. As determined by the Committee in its discretion exercised
in good faith, a physical or mental condition of the Employee that would entitle
him to disability income payments under the Company’s long term disability
insurance policy or plan for employees, as then effective, if any; or in the
event that the Grantee is not covered, for whatever reason, under the Company’s
long-term disability insurance policy or plan, “Disability” means a permanent
and total disability as defined in Section 22(e)(3) of the Code. A determination
of Disability may be made by a physician selected or approved by the Committee
and, in this respect, the Grantee shall submit to any reasonable examination by
such physician upon request.
     (q) Employee. Any employee of the Company (or any Parent or Subsidiary)
within the meaning of Section 3401(c) of the Code who, in the opinion of the
Committee, is in a position to contribute to the growth, development or
financial success of the Company (or any Parent or Subsidiary), including,
without limitation, officers who are members of the Board.
     (r) Employment. Employment by the Company (or any Parent or Subsidiary), or
by any corporation issuing or assuming an Incentive Award in any transaction
described in Section 424(a) of the Code, or by a parent corporation or a
subsidiary corporation of such corporation issuing or assuming such Incentive
Award, as the parent-subsidiary relationship shall be determined at the time of
the corporate action described in Section 424(a) of the Code. In this regard,
neither the transfer of a Grantee from Employment by the Company to Employment
by any Parent or Subsidiary, nor the transfer of a Grantee from Employment by
any Parent or Subsidiary to Employment by the Company, shall be deemed to be a
termination of Employment of the Grantee. Moreover, the

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Employment of a Grantee shall not be deemed to have been terminated because of
an approved leave of absence from active Employment on account of temporary
illness, authorized vacation or granted for reasons of professional advancement,
education, health, government service or military leave, or during any period
required to be treated as a leave of absence by virtue of any applicable
statute, Company personnel policy or agreement. Whether an authorized leave of
absence shall constitute termination of Employment hereunder shall be determined
by the Committee in its discretion. Unless otherwise provided in the Incentive
Agreement, the term “Employment” for purposes of the Plan is also defined to
include compensatory or advisory services performed by a Consultant for the
Company (or any Parent or Subsidiary).
     (s) Exchange Act. The Securities Exchange Act of 1934, as amended.
     (t) Fair Market Value. While the Company is a Publicly Held Corporation,
the Fair Market Value of one share of Common Stock on the date in question is
deemed to be the closing sales price on the immediately preceding business day
of a share of Common Stock as reported on the New York Stock Exchange or other
principal securities exchange on which Shares are then listed or admitted to
trading, or as quoted on any national interdealer quotation system, if such
shares are not so listed.
     (u) Grantee. Any Employee, Director or Consultant who is granted an
Incentive Award under the Plan.
     (v) Immediate Family. With respect to a Grantee, the Grantee’s child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse,
sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships.
     (w) Incentive Award. A grant of an award under the Plan to a Grantee,
including any Nonstatutory Stock Option, Incentive Stock Option, Stock
Appreciation Right, Performance Share, Restricted Stock, Restricted Stock Unit
or Other Stock-Based Award, as well as any Supplemental Payment.
     (x) Incentive Agreement. The written agreement entered into between the
Company and the Grantee setting forth the terms and conditions pursuant to which
an Incentive Award is granted under the Plan, as such agreement is further
defined in Section 7.1 (a).
     (y) Incentive Stock Option or ISO. A Stock Option granted by the Committee
to an Employee under Section 2 that is designated by the Committee as an
Incentive Stock Option and intended to qualify as an Incentive Stock Option
under Section 422 of the Code.
     (z) Independent SAR. A Stock Appreciation Right described in Section 2.5.
     (aa) Insider. While the Company is a Publicly Held Corporation, an
individual who is, on the relevant date, an officer, director or ten percent
(10%) beneficial owner of any class of the Company’s equity securities that is
registered pursuant to Section 12 of the Exchange Act, all as defined under
Section 16 of the Exchange Act.
     (bb) Non-Employee Director. A Director who is not an Employee.
     (cc) Non-Employee Director Award. Any Nonstatutory Stock Option, SAR,
Performance Shares, Restricted Stock, Restricted Stock Unit or Other Stock-Based
Award granted, whether singly, in combination, or in tandem, to a Grantee who is
a Non-Employee Director pursuant to such applicable terms, conditions, and
limitations as the Board or Committee may establish in accordance with this
Plan.
     (dd) Nonstatutory Stock Option. A Stock Option granted by the Committee to
a Grantee under Section 2 that is not designated by the Committee as an
Incentive Stock Option or to which Section 421 of the Code does not apply.
     (ee) Option Price. The exercise price at which a Share may be purchased by
the Grantee of a Stock Option.
     (ff) Other Stock-Based Award. An award granted by the Committee to a
Grantee under Section 2 that is not a Nonstatutory Stock Option, SAR,
Performance Share, Restricted Stock or Restricted Stock Unit and is valued in
whole or in part by reference to, or is otherwise based upon, Common Stock.
     (gg) Parent. Any corporation (whether now or hereafter existing) that
constitutes a “Parent” of the Company, as defined in Section 424(e) of the Code.

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     (hh) Performance-Based Exception. The performance-based exception from the
tax deductibility limitations of Section 162(m) of the Code, as prescribed in
Section 162(m) of the Code and Treasury Regulation § 1.162-27(e) (or its
successor), which is applicable during such period that the Company is a
Publicly Held Corporation.
     (ii) Performance Period. A period of time determined by the Committee over
which performance is measured for the purpose of determining a Grantee’s right
to and the payment value of any Performance Share or Other Stock-Based Award.
     (jj) Performance Share. An Incentive Award representing a contingent right
to receive Shares of Common Stock at the end of a Performance Period.
     (kk) Period of Restriction. A period when Restricted Stock or Restricted
Stock Units are subject to a substantial risk of forfeiture (based on the
passage of time, the achievement of performance goals, or upon the occurrence of
other events as determined by the Committee, in its discretion), as provided in
Section 4.
     (ll) Plan. 2004 Long-Term Incentive Plan, as set forth herein and as it may
be amended from time to time.
     (mm) Publicly Held Corporation. A corporation issuing any class of common
equity securities required to be registered under Section 12 of the Exchange
Act.
     (nn) Restricted Stock. An Award granted to a Grantee pursuant to Section 4.
     (oo) Restricted Stock Unit. An Award granted to a Grantee pursuant to
Section 4, except no Shares are actually awarded to the Grantee on the date of
grant.
     (pp) Retirement. The voluntary termination of Employment from the Company
or any Parent or Subsidiary constituting retirement for age on any date after
the Employee attains the normal retirement age of 65 years, or such other age as
may be designated by the Committee in the Employee’s Incentive Agreement.
     (qq) intentionally deleted.
     (rr) Share. A share of Common Stock of the Company.
     (ss) Share Pool. The number of Shares authorized for issuance under Section
1.4 as adjusted for awards and payouts under Section 1.5 and as adjusted for
changes in corporate capitalization under Section 7.5.
     (tt) Spread. The difference between the exercise price per Share specified
in any SAR grant and the Fair Market Value of a Share on the date of exercise of
the SAR.
     (uu) Stock Appreciation Right or SAR. A Tandem SAR described in Section 2.4
or an Independent SAR described in Section 2.5.
     (vv) Stock Option or Option. Pursuant to Section 2 or Section 6, (i) an
Incentive Stock Option granted to an Employee, or (ii) a Nonstatutory Stock
Option granted to an Employee, Director or Consultant, whereunder such option
the Grantee has the right to purchase Shares of Common Stock. In accordance with
Section 422 of the Code, only an Employee of the Company, Parent or Subsidiary
may be granted an Incentive Stock Option.
     (ww) Subsidiary. Any corporation (whether now or hereafter existing) which
constitutes a “subsidiary” of the Company, as defined in Section 424(f) of the
Code.
     (xx) Supplemental Payment. Any amount, as described in Sections 2.6, and/or
4.3, that is dedicated to payment of income taxes which are payable by the
Grantee resulting from an Incentive Award.
     (yy) Tandem SAR. A Stock Appreciation Right that is granted in connection
with a related Stock Option pursuant to Section 2.4, the exercise of which shall
require forfeiture of the right to purchase a Share under the related Stock
Option (and when a Share is purchased under the Stock Option, the Tandem SAR
with respect thereto, shall similarly be canceled).

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     1.3 Plan Administration
     (a) Authority of the Committee. Except as may be limited by law and subject
to the provisions herein, the Committee shall have full power to (i) select
Grantees who shall participate in the Plan; (ii) determine the sizes, duration
and types of Incentive Awards; (iii) determine the terms and conditions of
Incentive Awards and Incentive Agreements; (iv) determine whether any Shares
subject to Incentive Awards will be subject to any restrictions on transfer;
(v) construe and interpret the Plan and any Incentive Agreement or other
agreement entered into under the Plan; and (vi) establish, amend, or waive rules
for the Plan’s administration. Further, the Committee shall make all other
determinations which may be necessary or advisable for the administration of the
Plan. Notwithstanding the preceding, without the prior approval of the Company’s
shareholders, any Stock Option previously granted under the Plan shall not be
repriced, replaced, or regranted through cancellation, or by lowering the
exercise price of a previously granted option, except as provided in
Section 7.5.
     (b) Meetings. The Committee shall designate a chairman from among its
members who shall preside at all of its meetings, and shall designate a
secretary, without regard to whether that person is a member of the Committee,
who shall keep the minutes of the proceedings and all records, documents, and
data pertaining to its administration of the Plan. Meetings shall be held at
such times and places as shall be determined by the Committee and the Committee
may hold telephonic meetings.
     (c) Decisions Binding. All determinations and decisions made by the
Committee shall be made in its discretion pursuant to the provisions of the
Plan, and shall be final, conclusive and binding on all persons including the
Company, Employees, Directors, Grantees, and their estates and beneficiaries.
The Committee’s decisions and determinations with respect to any Incentive Award
need not be uniform and may be made selectively among Incentive Awards and
Grantees, whether or not such Incentive Awards are similar or such Grantees are
similarly situated.
     (d) Modification of Outstanding Incentive Awards. Subject to the
stockholder approval requirements of Section 8.6 if applicable, the Committee
may, in its discretion, provide for the extension of the exercisability of an
Incentive Award, accelerate the vesting or exercisability of an Incentive Award,
eliminate or make less restrictive any restrictions contained in an Incentive
Award, waive any restriction or other provisions of an Incentive Award, or
otherwise amend or modify an Incentive Award in any manner that is either
(i) not adverse to the Grantee to whom such Incentive Award was granted or
(ii) consented to by such Grantee; provided, however, no Stock Option issued
under the Plan will be repriced, replaced or regranted through cancellation, or
by lowering the Option Price of a previously granted Stock Option. and the
period during which a Stock Option may be exercised shall not be extended such
that the compensation payable under the Stock Option would be subject to the
excise tax applicable under Section 409A of the Code. With respect to an
Incentive Award that is an incentive stock option (as described in Section 422
of the Code), no adjustment to such option shall be made to the extent
constituting a “modification” within the meaning of Section 424(h)(3) of the
Code unless otherwise agreed to by the Grantee in writing. Except as provided in
this Plan in connection with a Change of Control or a Corporate Event, the
language of this Section 1.3(d) prohibits all forms of repricing, including cash
buyouts and Incentive Award exchanges, without stockholder approval.
     (e) Delegation of Authority. The Committee may delegate to designated
officers or other employees of the Company any of its duties and authority under
the Plan pursuant to such conditions or limitations as the Committee may
establish from time to time; provided, however, the Committee may not delegate
to any person the authority to (i) grant Incentive Awards, or (ii) take any
action which would contravene the requirements of Rule 16b-3 under the Exchange
Act or the Performance-Based Exception under Section 162(m) of the Code.
     (f) Expenses of Committee. The Committee may employ legal counsel,
including, without limitation, independent legal counsel and counsel regularly
employed by the Company, and other agents, as the Committee may deem appropriate
for the administration of the Plan. The Committee may rely upon any opinion or
computation received from any such counsel or agent. All expenses incurred by
the Committee in interpreting and administering the Plan, including, without
limitation, meeting expenses and professional fees, shall be paid by the
Company.
     (g) Indemnification. Each person who is or was a member of the Committee,
or of the Board, shall be indemnified by the Company against and from any
damage, loss, liability, cost and expense that may be imposed upon or reasonably
incurred by him in connection with or resulting from any claim, action, suit, or
proceeding to which he may be a party or in which he may be involved by reason
of any action taken or failure to act under the Plan, except for any such act or
omission constituting willful misconduct or gross negligence. Such person shall
be indemnified by the Company for all amounts paid by him in settlement thereof,
with the Company’s approval, or paid by him in satisfaction of any judgment in
any such action, suit, or proceeding against him, provided he shall give the

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Company an opportunity, at its own expense, to handle and defend the same before
he undertakes to handle and defend it on his own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such persons may be entitled under the Company’s Articles or Certificate
of Incorporation or Bylaws, by contract, as a matter of law, or otherwise, or
any power that the Company may have to indemnify them or hold them harmless.
     (h) Awards in Foreign Countries. The Board shall have the authority to
adopt modifications, procedures, sub-plans, and other similar plan documents as
may be necessary or desirable to comply with provisions of the laws of foreign
countries in which the Company or its subsidiaries may operate to assure the
viability of the benefits of Incentive Awards made to individuals employed or
providing services in such countries and to meet the objectives of the Plan.
     1.4 Shares of Common Stock Available for Incentive Awards
     Subject to this Section 1.4 and subject to adjustment under Section 7.5,
there shall be available for Incentive Awards that are granted wholly or partly
in Common Stock (including rights or Options that may be exercised or settled in
Common Stock) 15,200,000 Shares of Common Stock.
     The number of Shares of Common Stock that are the subject of Incentive
Awards under this Plan, that are forfeited or terminated, expire unexercised,
are settled in cash in lieu of Common Stock or in a manner such that all or some
of the Shares covered by an Incentive Award are not issued to a Grantee or are
exchanged for Incentive Awards that do not involve Common Stock, shall again
immediately become available for Incentive Awards hereunder; provided, however,
the aggregate number of Shares which may be issued upon exercise of ISOs shall
in no event exceed 15,200,000 Shares (subject to adjustment pursuant to
Section 7.5).
     Any Shares of Common Stock reserved for issuance under the Director Plan in
excess of the number of Shares as to which Incentive Awards have been awarded
thereunder shall no longer be available for grant under the Director Plan after
the Effective Date but shall instead be available for grant under the terms and
conditions of this Plan. Any Shares as to which Awards granted or issued under
the Director Plan that may lapse, expire, terminate, or be cancelled, are
settled in cash in lieu of common stock, are tendered (either by actual delivery
or attestation) to pay the Option Price, or satisfy any tax withholding
requirements shall be deemed available for issuance or reissuance under the
preceding paragraph of this Section of the Plan.
     Subject to adjustment under Section 7.5 and the limit set forth above, the
following additional limits are imposed under the Plan:
     (a) The maximum number of Shares that may be covered by Incentive Awards
granted to any one individual pursuant to Section 2 (relating to Options and
SARs) shall be 15,200,000 Shares during any one calendar-year period. To the
extent required by Section 162(m) of the Code, Shares subject to the foregoing
limit with respect to which the related Incentive Award described in Section 2
is forfeited, expires, or is canceled shall not again be available for grant
under this limit.
     (b) For Performance Shares that are intended to qualify for the
Performance-Based Exception, no more than 15,200,000 Shares may be delivered to
any one Grantee for Performance Periods beginning in any one calendar year,
regardless of whether the applicable Performance Period during which the
Performance Shares are earned ends in the same year in which it begins or in a
later calendar year; provided that Performance Shares described in this
paragraph (b) that are intended to qualify for the Performance-Based Exception
shall be subject to the following: (i) If the Performance Shares are denominated
in Shares but are settled in an equivalent amount of cash, the foregoing limit
shall be applied as though the Incentive Award was settled in Shares; and
(ii) If delivery of Shares or cash is deferred until after Performance Shares
have been earned, any adjustment in the amount delivered to reflect actual or
deemed investment experience after the date the shares are earned shall be
disregarded.
     (c) For Supplemental Payments that are intended to qualify for the
Performance-Based Exception, no more than $2,000,000 may be paid to any one
Grantee for Performance Periods beginning in any one calendar year, regardless
of whether the applicable Performance Period during which the Supplemental
Payment is earned ends in the same year in which it begins or in a later
calendar year; provided that Supplemental Payments described in this paragraph
(c) that are intended to qualify for the Performance-Based Exception shall be
subject to the following: (i) If a Supplemental Payment is denominated in cash
but an equivalent amount of Shares is delivered in lieu of delivery of cash, the
foregoing limit shall be applied as though the Supplemental Payment was settled
in cash; and (ii) if delivery of Shares or cash is deferred until after the
Supplemental Payment has been earned, any adjustment in the amount delivered to
reflect actual or deemed investment experience after the date the Supplemental
Payment is earned shall be disregarded.

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     1.5 Share Pool Adjustments for Awards and Payouts
     The following Incentive Awards and payouts shall reduce, on a one Share for
one Share basis, the number of Shares authorized for issuance under the Share
Pool:
     (a) Stock Option;
     (b) SAR (except a Tandem SAR);
     (c) A payout of a Performance Share in Shares;
     (d) Restricted Stock or a payout of Restricted Stock Units in Shares; and
     (e) A payout of an Other Stock-Based Award in Shares.
     The following transactions shall restore, on a one Share for one Share
basis, the number of Shares authorized for issuance under the Share Pool:
     (A) A payout of an SAR or Other Stock-Based Award in the form of cash;
     (B) A cancellation, termination, expiration, forfeiture, or lapse for any
reason (with the exception of the termination of a Tandem SAR upon exercise of
the related Stock Option, or the termination of a related Stock Option upon
exercise of the corresponding Tandem SAR) of any Shares subject to an Incentive
Award; and
     (C) Payment of an Option Price with previously acquired Shares or by
withholding Shares which otherwise would be acquired on exercise (i.e., the
Share Pool shall be increased by the number of Shares turned in or withheld as
payment of the Option Price plus any Shares withheld to pay withholding taxes).
     1.6 Common Stock Available
     The Common Stock available for issuance or transfer under the Plan shall be
made available from Shares now or hereafter (a) held in the treasury of the
Company, (b) are authorized but unissued, or (c) to be purchased or acquired by
the Company. No fractional Shares shall be issued under the Plan; any payment
for fractional Shares shall be made in cash.
     1.7 Participation
     (a) Eligibility. The Committee shall from time to time designate those key
Employees, Directors or Consultants, if any, to be granted Incentive Awards
under the Plan, the type and number of Incentive Awards granted, and any other
terms or conditions relating to the Incentive Awards as it may deem appropriate
to the extent consistent with the provisions of the Plan. A Grantee who has been
granted an Incentive Award may, if otherwise eligible, be granted additional
Incentive Awards at any time.
     (b) Incentive Stock Option Eligibility. No Consultant or Non-Employee
Director shall be eligible for the grant of any Incentive Stock Option. In
addition, no Employee shall be eligible for the grant of any Incentive Stock
Option who owns or would own immediately before the grant of such Incentive
Stock Option, directly or indirectly, stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company,
or any Parent or Subsidiary. This restriction does not apply if, at the time
such Incentive Stock Option is granted, the Incentive Stock Option exercise
price is at least one hundred and ten percent (110%) of the Fair Market Value on
the date of grant and the Incentive Stock Option by its terms is not exercisable
after the expiration of five (5) years from the date of grant. For the purpose
of the immediately preceding sentence, the attribution rules of Section 424(d)
of the Code shall apply for the purpose of determining an Employee’s percentage
ownership in the Company or any Parent or Subsidiary. This paragraph shall be
construed consistent with the requirements of Section 422 of the Code.

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     1.8 Types of Incentive Awards
     The types of Incentive Awards under the Plan are Stock Options, Stock
Appreciation Rights and Supplemental Payments as described in Section 2,
Performance Shares and Supplemental Payments as described in Section 3,
Restricted Stock, Restricted Stock Units and Supplemental Payments as described
in Section 4, and Other Stock-Based Awards and Supplemental Payments as
described in Section 5, and any combination of the foregoing.
SECTION 2
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
     2.1 Grant of Stock Options
     The Committee is authorized to grant (a) Nonstatutory Stock Options to
Employees, Directors or Consultants and (b) Incentive Stock Options to Employees
only, in accordance with the terms and conditions of the Plan, and with such
additional terms and conditions, not inconsistent with the Plan, as the
Committee shall determine in its discretion. Successive grants may be made to
the same Grantee whether or not any Stock Option previously granted to such
person remains unexercised.
     2.2 Stock Option Terms
     (a) Written Agreement. Each grant of a Stock Option shall be evidenced by a
written Incentive Agreement. Among its other provisions, each Incentive
Agreement shall set forth, subject to Section 422 of the Code, the extent to
which the Grantee shall have the right to exercise the Stock Option following
termination of the Grantee’s Employment. Such provisions shall be determined in
the discretion of the Committee, shall be included in the Grantee’s Incentive
Agreement, and need not be uniform among all Stock Options issued pursuant to
the Plan. In addition, Incentive Agreement shall state whether the Stock Option
is intended to meet the requirements of Section 422 of the Code.
     (b) Number of Shares. Each Stock Option shall specify the number of Shares
of Common Stock to which it pertains.
     (c) Exercise Price. The exercise price per Share of Common Stock under each
Stock Option shall be determined by the Committee; provided, however, that in
the case of a Stock Option, such exercise price shall not be less than 100% of
the Fair Market Value per Share on the date the Stock Option is granted (110% in
the case of an Incentive Stock Option for 10% or greater shareholders pursuant
to Section 1.7(b)). Each Stock Option shall specify the method of exercise,
which shall be consistent with the requirements of Section 2.3(a).
     (d) Term. In the Incentive Agreement, the Committee shall fix the term of
each Stock Option, which shall be not more than ten (10) years from the date of
grant (five years for ISO grants to 10% or greater shareholders pursuant to
Section 1.7(b)). In the event no term is fixed, such term shall be ten
(10) years from the date of grant.
     (e) Exercise. The Committee shall determine the time or times at which a
Stock Option may be exercised in whole or in part. Each Stock Option may specify
the required period of continuous Employment and/or the performance objectives
to be achieved before the Stock Option or portion thereof will become
exercisable. Each Stock Option, the exercise of which, or the timing of the
exercise of which, is dependent, in whole or in part, on the achievement of
designated performance objectives, may specify a minimum level of achievement in
respect of the specified performance objectives below which no Stock Options
will be exercisable and a method for determining the number of Stock Options
that will be exercisable if performance is at or above such minimum but short of
full achievement of the performance objectives. All such terms and conditions
shall be set forth in the Incentive Agreement.
     (f) $100,000 Annual Limit on Incentive Stock Options. Notwithstanding any
contrary provision in the Plan, to the extent that the aggregate Fair Market
Value (determined as of the time the Incentive Stock Option is granted) of the
Shares of Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by any Grantee during any single calendar year
(under the Plan and any other stock option plans of the Company and its
Subsidiaries or Parent) exceeds the sum of $100,000, such Incentive Stock Option
shall be treated as a Nonstatutory Stock Option to the extent in excess of the
$100,000 limit, and not an Incentive Stock Option, but all other terms and
provisions of such Stock Option shall remain unchanged. This paragraph shall be
applied by taking Incentive Stock Options into account in the order in which
they were granted and shall be construed in accordance with Section 422(d) of
the Code. In the absence of such regulations or other authority, or if such
regulations or other authority require or permit a designation of the Options
which shall cease to constitute Incentive Stock Options, then such Incentive
Stock Options, only to the extent of such excess, shall automatically be deemed
to be Nonstatutory Stock Options but all other terms and conditions of such
Incentive Stock Options, and the corresponding Incentive Agreement, shall remain
unchanged.

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     2.3 Stock Option Exercises
     (a) Method of Exercise and Payment. Stock Options shall be exercised by the
delivery of a signed written notice of exercise to the Company as of a date set
by the Company in advance of the effective date of the proposed exercise. The
notice shall set forth the number of Shares with respect to which the Option is
to be exercised.
     The Option Price upon exercise of any Stock Option shall be payable to the
Company in full either: (i) in cash or its equivalent, or (ii) by tendering
previously acquired Shares having an aggregate Fair Market Value at the time of
exercise equal to the Option Price, or (iii) by withholding Shares which
otherwise would be acquired on exercise having an aggregate Fair Market Value at
the time of exercise equal to the total Option Price, or (iv) by any combination
of (i), (ii), and (iii) above. Any payment in Shares shall be effected by
surrender of such Shares to the Company in good form for transfer and shall be
valued at their Fair Market Value on the date when the Stock Option is
exercised. The Company shall not withhold shares, and the Grantee shall not
surrender, or attest to the ownership of, Shares in payment of the Option Price
if such action would cause the Company to recognize compensation expense (or
additional compensation expense) with respect to the Stock Option for financial
reporting purposes.
     While the Company is a Publicly Held Corporation, the Committee may also
allow the Option Price to be paid with such other consideration as shall
constitute lawful consideration for the issuance of Shares (including, without
limitation, effecting a “cashless exercise” with a broker or dealer), subject to
applicable securities law restrictions and tax withholdings, or by any other
means which the Committee determines to be consistent with the Plan’s purpose
and applicable law.
     As soon as practicable after receipt of a written notification of exercise
and full payment, the Company shall deliver, or cause to be delivered, to or on
behalf of the Grantee, in the name of the Grantee or other appropriate
recipient, Share certificates for the number of Shares purchased under the Stock
Option. Such delivery shall be effected for all purposes when the Company or a
stock transfer agent of the Company shall have deposited such certificates in
the United States mail, addressed to Grantee or other appropriate recipient.
     Subject to Section 7.2 during the lifetime of a Grantee, each Option
granted to him shall be exercisable only by the Grantee (or his legal guardian
or personal representative in the event of his Disability) or by a broker or
dealer acting on his behalf pursuant to a cashless exercise under the foregoing
provisions of this Section 2.3(a).
     (b) Restrictions on Share Transferability. The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of a Stock Option
as it may deem advisable, including, without limitation, restrictions under
(i) any stockholders’ agreement, buy/sell agreement, right of first refusal,
non-competition, and any other agreement between the Company and any of its
securities holders or employees, (ii) any applicable federal securities laws,
(iii) the requirements of any stock exchange or market upon which such Shares
are then listed and/or quoted, or (iv) any blue sky or state securities law
applicable to such Shares. Any certificate issued to evidence Shares issued upon
the exercise of an Incentive Award may bear such legends and statements as the
Committee shall deem advisable to assure compliance with federal and state laws
and regulations.
     Any Grantee or other person exercising an Incentive Award may be required
by the Committee to give a written representation that the Incentive Award and
the Shares subject to the Incentive Award will be acquired for investment and
not with a view to public distribution; provided, however, that the Committee,
in its sole discretion, may release any person receiving an Incentive Award from
any such representations either prior to or subsequent to the exercise of the
Incentive Award.
     (c) Notification of Disqualifying Disposition of Shares from Incentive
Stock Options. Notwithstanding any other provision of the Plan, a Grantee who
disposes of Shares of Common Stock acquired upon the exercise of an Incentive
Stock Option by a sale or exchange either (i) within two (2) years after the
date of the grant of the Incentive Stock Option under which the Shares were
acquired or (ii) within one (1) year after the transfer of such Shares to him
pursuant to exercise, shall promptly notify the Company of such disposition, the
amount realized and his adjusted basis in such Shares.
     (d) Proceeds of Option Exercise. The proceeds received by the Company from
the sale of Shares pursuant to Stock Options exercised under the Plan shall be
used for general corporate purposes.
     (e) Information Required in Connection with Exercise of Incentive Stock
Option. The Company shall provide the Grantee with a written statement required
by Section 6039 of the Code no later than January 31 of the year following the
calendar year during which the Grantee exercises an Option that is intended to
be an Incentive Stock Option.

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     2.4 Stock Appreciation Rights in Tandem with Nonstatutory Stock Options
     (a) Grant. The Committee may, at the time of grant of a Nonstatutory Stock
Option, or at any time thereafter during the term of the Nonstatutory Stock
Option, grant Stock Appreciation Rights with respect to all or any portion of
the Shares of Common Stock covered by such Nonstatutory Stock Option. A Stock
Appreciation Right in tandem with a Nonstatutory Stock Option is referred to
herein as a “Tandem SAR.”
     (b) General Provisions. The terms and conditions of each Tandem SAR shall
be evidenced by an Incentive Agreement. The Option Price per Share of a Tandem
SAR shall be fixed in the Incentive Agreement and shall not be less than one
hundred percent (100%) of the Fair Market Value of a Share on the grant date of
the Nonstatutory Stock Option to which it relates.
     (c) Exercise. A Tandem SAR may be exercised at any time the Nonstatutory
Stock Option to which it relates is then exercisable, but only to the extent
such Nonstatutory Stock Option is exercisable, and shall otherwise be subject to
the conditions applicable to such Nonstatutory Stock Option. When a Tandem SAR
is exercised, the Nonstatutory Stock Option to which it relates shall terminate
to the extent of the number of Shares with respect to which the Tandem SAR is
exercised. Similarly, when a Nonstatutory Stock Option is exercised, the Tandem
SARs relating to the Shares covered by such Nonstatutory Stock Option exercise
shall terminate.
     (d) Settlement. Upon exercise of a Tandem SAR, the holder shall receive,
for each Share specified in the Tandem SAR grant, an amount equal to the
Appreciation. The Appreciation shall be payable in cash, Common Stock, or a
combination of both, as specified in the Incentive Agreement. The Appreciation
shall be paid within 30 calendar days of the exercise of the Tandem SAR. If the
Appreciation is to be paid in Common Stock or cash only, the resulting shares or
cash shall be determined dividing (1) by (2), where (1) is the number of Shares
as to which the Tandem SAR is exercised multiplied by the Appreciation in such
shares and (2) is the Fair Market Value of a Share on the exercise date. If a
portion of the Appreciation is to be paid in Shares, the Share amount shall be
determined by calculating the amount of cash payable pursuant to the preceding
sentence then by dividing (1) as defined herein, minus the amount of cash
payable, by (2) as defined herein.
     2.5 Stock Appreciation Rights Independent of Nonstatutory Stock Options
     (a) Grant. The Committee may grant Stock Appreciation Rights independent of
Nonstatutory Stock Options (“Independent SARs”).
     (b) General Provisions. The terms and conditions of each Independent SAR
shall be evidenced by an Incentive Agreement. The exercise price per share of
Common Stock shall be not less than one hundred percent (100%) of the Fair
Market Value of a Share of Common Stock on the date of grant of the Independent
SAR. The term of an Independent SAR shall be determined by the Committee.
     (c) Exercise. Independent SARs shall be exercisable at such time and
subject to such terms and conditions as the Committee shall specify in the
Incentive Agreement for the Independent SAR grant.
     (d) Settlement. Upon exercise of an Independent SAR, the holder shall
receive, for each Share specified in the Independent SAR grant, an amount equal
to the Spread. The Spread shall be payable in cash, Common Stock, or a
combination of both, as specified in the Incentive Agreement. The Spread shall
be paid within 30 calendar days of the exercise of the Independent SAR. If the
Spread is to be paid in Common Stock or cash only, the resulting shares or cash
shall be determined by dividing (1) by (2), where (1) is the number of Shares as
to which the Independent SAR is exercised multiplied by the Spread in such
Shares and (2) is the Fair Market Value of a Share on the exercise date. If a
portion of the Spread is to be paid in Shares, the Share amount shall be
determined by calculating the amount of cash payable pursuant to the preceding
sentence then by dividing (1) as defined herein, minus the amount of cash
payable, by (2) as defined herein.
     2.6 Supplemental Payment on Exercise of Nonstatutory Stock Options or Stock
Appreciation Rights
     The Committee, either at the time of grant or as of the time of exercise of
any Nonstatutory Stock Option or Stock Appreciation Right, may provide in the
Incentive Agreement for a Supplemental Payment by the Company to the Grantee
with respect to the exercise of any Nonstatutory Stock Option or Stock
Appreciation Right. The Supplemental Payment shall be in the amount specified by
the Committee, which amount shall not exceed the amount necessary to pay the
federal and state income tax payable with respect to both the exercise of the
Nonstatutory Stock Option and/or Stock Appreciation Right and the receipt of the
Supplemental Payment, assuming the holder is taxed at either the maximum
effective income tax rate applicable thereto or at a lower tax rate as deemed
appropriate by the Committee. The Committee shall have the discretion to grant
Supplemental Payments that are payable solely in cash or Supplemental Payments
that are payable in cash, Common Stock, or a combination of both, as determined
by the Committee at the time of payment.

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SECTION 3
PERFORMANCE SHARES
     3.1 Performance Based Awards
     (a) Grant. The Committee is authorized to grant Performance Shares to
selected Grantees who are Employees or Consultants. Each grant of Performance
Shares shall be evidenced by an Incentive Agreement in such amounts and upon
such terms as shall be determined by the Committee. The Committee may make
grants of Performance Shares in such a manner that more than one Performance
Period is in progress concurrently. For each Performance Period, the Committee
shall establish the number of Performance Shares and their contingent values
which may vary depending on the degree to which performance criteria established
by the Committee are met.
     (b) Performance Criteria.
     (i) The grant of Performance Shares shall be subject to such conditions,
restrictions and contingencies, as determined by the Committee.
     (ii) The Committee may designate a grant of Performance Shares to any
Grantee as intended to qualify for the Performance-Based Exception. To the
extent required by Code section 162(m), any grant of Performance Shares so
designated shall be conditioned on the achievement of one or more performance
goals, subject to the following:
     (A) The performance goals shall be based upon criteria in one or more of
the following categories: performance of the Company as a whole, performance of
a segment of the Company’s business, and individual performance. Performance
criteria for the Company shall relate to the achievement of predetermined
financial objectives for the Company and its Subsidiaries on a consolidated
basis. Performance criteria for a segment of the Company’s business shall relate
to the achievement of financial and operating objectives of the segment for
which the Grantee is accountable.
     (B) Performance criteria shall include pre-tax or after-tax profit levels,
including: earnings per share, earnings before interest and taxes, earnings
before interest, taxes, depreciation and amortization, net operating profits
after tax, and net income; total shareholder return; return on assets, equity,
capital or investment; cash flow and cash flow return on investment; economic
value added and economic profit; growth in earnings per share; levels of
operating expense and maintenance expense; or measures of customer satisfaction
and customer service, as determined from time to time including the relative
improvement therein.
     (C) Individual performance criteria shall relate to a Grantee’s overall
performance, taking into account, among other measures of performance, the
attainment of individual goals and objectives. The performance goals may differ
among Grantees.
     (c) Modification. If the Committee determines, in its discretion exercised
in good faith, that the established performance measures or objectives are no
longer suitable to the Company’s objectives because of a change in the Company’s
business, operations, corporate structure, capital structure, or other
conditions the Committee deems to be appropriate, the Committee may modify the
performance measures and objectives to the extent it considers to be necessary.
However, if any Performance Shares are designated as intended to qualify for the
Performance-Based Exception, no such modification shall be made to the extent
the modification would otherwise cause the Performance Shares to not qualify for
the Performance-Based Exception.
     (d) Payment. The basis for payment of Performance Shares for a given
Performance Period shall be the achievement of those performance objectives
determined by the Committee at the beginning of the Performance Period as
specified in the Grantee’s Incentive Agreement. If minimum performance is not
achieved for a Performance Period, no payment shall be made and all contingent
rights shall cease. If minimum performance is achieved or exceeded, the number
of Performance Shares may be based on the degree to which actual performance
exceeded the pre-established minimum performance standards. The amount of
payment shall be determined by multiplying the number of Performance Shares
granted at the beginning of the Performance Period times the final Performance
Share value. Payments shall be made in cash or Common Stock in the discretion of
the Committee as specified in the Incentive Agreement.
     (e) Special Rule for Covered Employees. No later than the ninetieth (90th)
day following the beginning of a Performance Period (or twenty-five percent
(25%) of the Performance Period) the Committee shall establish performance goals
as described in Section 3.1(b) applicable to Performance Shares awarded to
Covered Employees in such a manner as shall permit payments with respect thereto
to

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qualify for the Performance-Based Exception, if applicable. If a Performance
Share granted to a Covered Employee is intended to comply with the
Performance-Based Exception, the Committee in establishing performance goals
shall comply with Treasury Regulation § 1.162-27(e)(2) (or its successor). As
soon as practicable following the Company’s determination of the Company’s
financial results for any Performance Period, the Committee shall certify in
writing: (i) whether the Company achieved its minimum performance for the
objectives for the Performance Period, (ii) the extent to which the Company
achieved its performance objectives for the Performance Period, (iii) any other
terms that are material to the grant of Performance Shares, and (iv) the
calculation of the payments, if any, to be paid to each Grantee for the
Performance Period.
SECTION 4
RESTRICTED STOCK AND RESTRICTED STOCK UNITS
     4.1 Grant of Restricted Stock or Restricted Stock Units
     Subject to the terms and provisions of the Plan, the Committee, at any time
and from time to time, may grant Restricted Stock and/or Restricted Stock Units
to Grantees in such amounts as the Committee shall determine. Restricted Stock
Units shall be similar to Restricted Stock except that no Shares are actually
awarded to the Grantee on the date of grant.
     4.2 Restricted Stock Award or Restricted Stock Unit Award Terms
     (a) Written Agreement. The terms and conditions of each grant of Restricted
Stock Award and/or Restricted Stock Unit Award shall be evidenced by an
Incentive Agreement that shall specify the Period(s) of Restriction, the number
of shares of Restricted Stock or the number of Restricted Stock Units granted,
and such other provisions as the Committee shall determine.
     (b) Transferability. Except as provided in this Plan or an Incentive
Agreement, Restricted Stock and/or Restricted Stock Units granted herein may not
be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated
until the end of the applicable Period of Restriction established by the
Committee and specified in the Incentive Agreement (and in the case of
Restricted Stock Units until the date of delivery or other payment), or upon
earlier satisfaction of any other conditions, as specified by the Committee, in
its sole discretion, and set forth in the Incentive Agreement or otherwise at
any time by the Committee. All rights with respect to the Restricted Stock
and/or Restricted Stock Units granted to a Grantee under the Plan shall be
available during his lifetime only to such Grantee, except as otherwise provided
in an Incentive Agreement or at any time by the Committee.
     (c) Other Restrictions. The Committee shall impose such other conditions
and/or restrictions on any Restricted Stock or Restricted Stock Units granted
pursuant to the Plan as it may deem advisable including, without limitation, a
requirement that Grantees pay a stipulated purchase price for each Share of
Restricted Stock or each Restricted Stock Unit, restrictions based upon the
achievement of specific performance goals, time-based restrictions on vesting
following the attainment of the performance goals, time-based restrictions,
and/or restrictions under applicable laws or under the requirements of any stock
exchange or market upon which such Shares are listed or traded, or holding
requirements or sale restrictions placed on the Shares by the Company upon
vesting of such Restricted Stock or Restricted Stock Units.
     To the extent deemed appropriate by the Committee, the Company may retain
the certificates representing shares of Restricted Stock in the Company’s
possession until such time as all conditions and/or restrictions applicable to
such shares have been satisfied or lapse.
     Except as otherwise provided in this Section 4, shares of Restricted Stock
covered by each Restricted Stock Award shall become freely transferable by the
Grantee after all conditions and restrictions applicable to such shares have
been satisfied or lapse (including satisfaction of any applicable tax
withholding obligations) at the close of the Period of Restriction (but no later
than 2 1/2 months following the end of the year that contains the close of the
Period of Restriction), or as soon as practicable thereafter. Restricted Stock
Units shall be paid in cash, Shares, or a combination of cash and Shares as the
Committee, in its sole discretion shall determine.
     (d) Certificate Legend. In addition to any legends placed on certificates
pursuant to Section 7.1(c), each certificate representing Restricted Stock
granted pursuant to the Plan may bear a legend such as the following or as
otherwise determined by the Committee in its sole discretion:
     the sale or transfer of shares of stock represented by this certificate,
whether voluntary, involuntary, or by operation of law, is subject to certain
restrictions on transfer as set forth in the SIXTH amended and restated 2004
long-term incentive plan, and in the associated incentive agreement. a copy of
the plan and such incentive agreement may be obtained from Ion Geophysical
Corporation.

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     (e) Voting Rights. Unless otherwise determined by the Committee or as
otherwise set forth in a Grantee’s Incentive Agreement, to the extent permitted
or required by law, as determined by the Committee, Grantees holding shares of
Restricted Stock granted hereunder may be granted the right to exercise full
voting rights with respect to those shares during the Period of Restriction. A
Grantee shall have no voting rights with respect to any Restricted Stock Units
granted hereunder.
     (f) Termination of Employment. Each Incentive Agreement shall set forth the
extent to which the Grantee shall have the right to retain Restricted Stock
and/or Restricted Stock Units following termination of the Grantee’s employment
with or provision of services to the Company, its Affiliates, and/or its
Subsidiaries, as the case may be. Such provisions shall be determined in the
sole discretion of the Committee, shall be included in the Incentive Agreement
entered into with each Grantee, need not be uniform among all Shares of
Restricted Stock or Restricted Stock Units issued pursuant to the Plan, and may
reflect distinctions based on the reasons for termination.
     (g) Section 83(b) Election. The Committee may provide in an Incentive
Agreement that the Award of Restricted Stock is conditioned upon the Grantee
making or refraining from making an election with respect to the Award under
Section 83(b) of the Code. If a Grantee makes an election pursuant to Section
83(b) of the Code concerning a Restricted Stock Award, the Grantee shall be
required to file promptly a copy of such election with the Company.
     4.3 Supplemental Payment on Vesting of Restricted Stock and Restricted
Stock Units
     The Committee, either at the time of grant or at the time of vesting of
Restricted Stock or Restricted Stock Units, may provide for a Supplemental
Payment by the Company to the Grantee in an amount specified by the Committee,
which amount shall not exceed the amount necessary to pay the federal and state
income tax payable with respect to both the vesting of such Restricted Stock or
Restricted Stock Units and receipt of the Supplemental Payment, assuming the
Grantee is taxed at either the maximum effective income tax rate applicable
thereto or at a lower tax rate as seemed appropriate by the Committee. The
Committee shall also have the discretion to grant Supplemental Payments that are
payable in Common Stock.
SECTION 5
OTHER STOCK-BASED AWARDS
     5.1 Grant of Other Stock-Based Awards
     Other Stock-Based Awards may be awarded by the Committee to selected
Grantees that are denominated or payable in, valued in whole or in part by
reference to, or otherwise related to, Shares of Common Stock, as deemed by the
Committee to be consistent with the purposes of the Plan and the goals of the
Company. Other types of Stock-Based Awards include, without limitation, Deferred
Stock, purchase rights, Shares of Common Stock awarded which are not subject to
any restrictions or conditions, convertible or exchangeable debentures, other
rights convertible into Shares, Incentive Awards valued by reference to the
value of securities of or the performance of a specified Subsidiary, division or
department, and settlement in cancellation of rights of any person with a vested
interest in any other plan, fund, program or arrangement that is or was
sponsored, maintained or participated in by the Company or any Parent or
Subsidiary. As is the case with other Incentive Awards, Other Stock-Based Awards
may be awarded either alone or in addition to or in tandem with any other
Incentive Awards.
     5.2 Other Stock-Based Award Terms
     (a) Written Agreement. The terms and conditions of each grant of an Other
Stock-Based Award shall be evidenced by an Incentive Agreement.
     (b) Purchase Price. Except to the extent that an Other Stock-Based Award is
granted in substitution for an outstanding Incentive Award or is delivered upon
exercise of a Stock Option, the amount of consideration required to be received
by the Company shall be either (i) no consideration other than services actually
rendered (in the case of authorized and unissued shares) or to be rendered, or
(ii) in the case of an Other Stock-Based Award in the nature of a purchase
right, consideration (other than services rendered or to be rendered) at least
equal to 50% of the Fair Market Value of the Shares covered by such grant on the
date of grant (or such percentage higher than 50% that is required by any
applicable tax or securities law).
     (c) Performance Criteria and Other Terms. In its discretion, the Committee
may specify such criteria, periods or goals for vesting in Other Stock-Based
Awards and payment thereof to the Grantee as it shall determine; and the extent
to which such criteria, periods or goals have been met shall be determined by
the Committee. All terms and conditions of Other Stock-Based Awards shall be

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determined by the Committee and set forth in the Incentive Agreement. The
Committee may also provide for a Supplemental Payment similar to such payment as
described in Section 4.3.
     (d) Payment. Other Stock-Based Awards may be paid in Shares of Common Stock
or other consideration related to such Shares, in a single payment or in
installments on such dates as determined by the Committee, all as specified in
the Incentive Agreement.
     (e) Dividends. The Grantee of an Other Stock-Based Award may be entitled to
receive, currently or on a deferred basis, dividends or dividend equivalents
with respect to the number of Shares covered by the Other Stock-Based Award, as
determined by the Committee and set forth in the Incentive Agreement. The
Committee may also provide in the Incentive Agreement that such amounts (if any)
shall be deemed to have been reinvested in additional Shares of Common Stock.
SECTION 6
PROVISIONS RELATING TO NON-EMPLOYEE DIRECTOR AWARDS
     6.1 Generally
     All Awards to Non-Employee Directors shall be determined by the Board or
Committee.
     6.2 Vesting Period
     Unless the Committee shall otherwise prescribe or as otherwise specified in
an applicable Incentive Agreement, each Incentive Award granted to a
Non-Employee Director shall vest as follows:
     (a) each Incentive Award granted to a Non-Employee Director under the Plan
during his initial year of service as a Non-Employee Director, if any, shall
vest in 33.33% consecutive annual installments on the first, second and third
anniversary dates of the date of grant of each such Incentive Award;
     (b) each Incentive Award granted to a Non-Employee Director under the Plan
during his second full year of service as a Non-Employee Director, if any, shall
vest in 50% consecutive annual installments on the first and second anniversary
dates of the Date of Grant of each such Incentive Award;
     (c) each Incentive Award granted to a Non-Employee Director under the Plan
during his third full year of service as a Non-Employee Director, if any, shall
fully vest on the first anniversary date of the date of grant of each such
Incentive Award; and
     (d) each Incentive Award granted to a Non-Employee Director following the
completion of his third full year of service as a Non-Employee Director, if any,
shall be fully vested on the date of grant.
SECTION 7
PROVISIONS RELATING TO PLAN PARTICIPATION
     7.1 Plan Conditions
     (a) Incentive Agreement. Each Grantee to whom an Incentive Award is granted
shall be required to enter into an Incentive Agreement with the Company, in such
a form as is provided by the Committee. The Incentive Agreement shall contain
specific terms as determined by the Committee, in its discretion, with respect
to the Grantee’s particular Incentive Award. Such terms need not be uniform
among all Grantees or any similarly-situated Grantees. The Incentive Agreement
may include, without limitation, vesting, forfeiture and other provisions
particular to the particular Grantee’s Incentive Award, as well as, for example,
provisions to the effect that the Grantee (i) shall not disclose any
confidential information acquired during Employment with the Company, (ii) shall
abide by all the terms and conditions of the Plan and such other terms and
conditions as may be imposed by the Committee, (iii) shall not interfere with
the employment or other service of any employee, (iv) shall not compete with the
Company or become involved in a conflict of interest with the interests of the
Company, (v) shall forfeit an Incentive Award as determined by the Committee
(including if terminated for Cause), (vi) shall not be permitted to make an
election under Section 83(b) of the Code when applicable, and (vii) shall be
subject to any other agreement between the Grantee and the Company regarding
Shares that may be acquired under an Incentive Award including, without
limitation, a stockholders’ agreement or other agreement restricting the
transferability of Shares by Grantee. An Incentive Agreement shall include such
terms and conditions as are determined by the Committee, in its discretion, to

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be appropriate with respect to any individual Grantee. The Incentive Agreement
shall be signed by the Grantee to whom the Incentive Award is made and by an
Authorized Officer.
     (b) No Right to Employment. Nothing in the Plan or any instrument executed
pursuant to the Plan shall create any Employment rights or right to serve on the
Board (including without limitation, rights to continued Employment or to
continue to provide services as a Director or Consultant) by any Grantee or
affect the right of the Company to terminate the Employment or services of any
Grantee at any time without regard to the existence of the Plan.
     (c) Securities Requirements. The Company shall be under no obligation to
effect the registration pursuant to the Securities Act of 1933 of any Shares of
Common Stock to be issued hereunder or to effect similar compliance under any
state laws. Notwithstanding anything herein to the contrary, the Company shall
not be obligated to cause to be issued or delivered any certificates evidencing
Shares pursuant to the Plan unless and until the Company is advised by its
counsel that the issuance and delivery of such certificates is in compliance
with all applicable laws, regulations of governmental authorities, and the
requirements of any securities exchange or national quotation system on which
Shares are traded or quoted. The Committee may require, as a condition of the
issuance and delivery of certificates evidencing Shares of Common Stock pursuant
to the terms hereof, that the recipient of such Shares make such covenants,
agreements and representations, and that such certificates bear such legends, as
the Committee, in its discretion, deems necessary or desirable.
     If the Shares issuable on exercise of an Incentive Award are not registered
under the Securities Act of 1933, the Company may imprint on the certificate for
such Shares the following legend or any other legend which counsel for the
Company considers necessary or advisable to comply with the Securities Act of
1933:
     The shares of stock represented by this certificate have not been
registered under the securities act of 1933 or under the securities laws of any
state and may not be sold or transferred except upon such registration or upon
receipt by the corporation of an opinion of counsel satisfactory to the
corporation, in form and substance satisfactory to the corporation, that
registration is not required for such sale or transfer.
     7.2 Transferability
     Incentive Awards granted under the Plan shall not be transferable or
assignable, pledged, or otherwise encumbered other than by will or the laws of
descent and distribution. However, only with respect to Incentive Awards that
are not Incentive Stock Options, the Committee may, in its discretion, authorize
all or a portion of the Nonstatutory Stock Options to be granted on terms which
permit transfer by the Grantee to (i) the members of the Grantee’s Immediate
Family, (ii) a trust or trusts for the exclusive benefit of Immediate Family
members, (iii) a partnership in which Immediate Family members are the only
partners, (iv) any other entity owned solely by Immediate Family members, or
(v) pursuant to a domestic relations order that would qualify under Code Section
414(p); provided that (A) the Incentive Agreement pursuant to which such
Nonstatutory Stock Options are granted must expressly provide for
transferability in a manner consistent with this Section 7.2, (B) the actual
transfer must be approved in advance by the Committee, and (C) subsequent
transfers of transferred Nonstatutory Stock Options shall be prohibited except
in accordance with the first sentence of this section. Following any permitted
transfer, the Nonstatutory Stock Option shall continue to be subject to the same
terms and conditions as were applicable immediately prior to transfer, provided
that the term “Grantee” (subject to the immediately succeeding paragraph) shall
be deemed to refer to the transferee. The events of termination of employment,
as set out in Section 7.6 and in the Incentive Agreement, shall continue to be
applied with respect to the original Grantee, and the Incentive Award shall be
exercisable by the transferee only to the extent, and for the periods, specified
in the Incentive Agreement.
     Except as may otherwise be permitted under the Code, in the event of a
permitted transfer of a Nonstatutory Stock Option hereunder, the original
Grantee shall remain subject to withholding taxes upon exercise. In addition,
the Company and the Committee shall have no obligation to provide any notices to
any Grantee or transferee thereof, including, for example, notice of the
expiration of an Incentive Award following the original Grantee’s termination of
employment.
     The designation by a Grantee of a beneficiary of an Incentive Award shall
not constitute a transfer of the Incentive Award. No transfer by will or by the
laws of descent and distribution shall be effective to bind the Company unless
the Committee has been furnished with a copy of the deceased Grantee’s
enforceable will or such other evidence as the Committee deems necessary to
establish the validity of the transfer. Any attempted transfer in violation of
this Section 7.2 shall be void and ineffective. The Committee in its discretion
shall make all determinations under this Section 7.2.

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     7.3 Rights as a Stockholder
     (a) No Stockholder Rights. Except as otherwise set forth in Section 4, a
Grantee of an Incentive Award (or a permitted transferee of such Grantee) shall
have no rights as a stockholder with respect to any Shares of Common Stock until
the issuance of a stock certificate for such Shares.
     (b) Representation of Ownership. In the case of the exercise of an
Incentive Award by a person or estate acquiring the right to exercise such
Incentive Award by reason of the death or Disability of a Grantee, the Committee
may require reasonable evidence as to the ownership of such Incentive Award or
the authority of such person and may require such consents and releases of
taxing authorities as the Committee may deem advisable.
     7.4 Listing and Registration of Shares of Common Stock
     The exercise of any Incentive Award granted hereunder shall only be
effective at such time as counsel to the Company shall have determined that the
issuance and delivery of Shares of Common Stock pursuant to such exercise is in
compliance with all applicable laws, regulations of governmental authorities and
the requirements of any securities exchange or quotation system on which Shares
of Common Stock are traded or quoted. The Committee may, in its discretion,
elect to suspend the right to exercise any Incentive Award during any
Company-imposed employee “blackout” stock trading period that is necessary or
desirable to comply with requirements of such laws, regulations or requirements.
The Committee may also, in its discretion, elect to extend the period for
exercise of any Incentive Award to reflect any such “blackout” period. The
Committee may, in its discretion, defer the effectiveness of any exercise of an
Incentive Award in order to allow the issuance of Shares of Common Stock to be
made pursuant to registration or an exemption from registration or other methods
for compliance available under federal or state securities laws. The Committee
shall inform the Grantee in writing of its decision to defer the effectiveness
of the exercise of an Incentive Award.
     7.5 Change in Stock and Adjustments
     (a) Changes in Law. Subject to Section 7.7 (which only applies in the event
of a Change of Control), in the event of any change in applicable law which
warrants equitable adjustment because it interferes with the intended operation
of the Plan, then, if the Committee should determine, in its absolute
discretion, that such change equitably requires an adjustment in the number or
kind of shares of stock or other securities or property theretofore subject, or
which may become subject, to issuance or transfer under the Plan or in the terms
and conditions of outstanding Incentive Awards, such adjustment shall be made in
accordance with such determination. Such adjustments may include changes with
respect to (i) the aggregate number of Shares that may be issued under the Plan,
(ii) the number of Shares subject to Incentive Awards, and (iii) the price per
Share for outstanding Incentive Awards. Any adjustment under this paragraph of
an outstanding Incentive Stock Option shall be made only to the extent not
constituting a “modification” within the meaning of Section 424(h)(3) of the
Code unless otherwise agreed to by the Grantee in writing. The Committee shall
give notice to each applicable Grantee of such adjustment, which shall be
effective and binding.
     (b) Exercise of Corporate Powers. The existence of the Plan or outstanding
Incentive Awards hereunder shall not affect in any way the right or power of the
Company or its stockholders to make or authorize any or all adjustments,
re-capitalizations, reorganizations or other changes in the Company’s capital
structure or its business or any merger or consolidation of the Company, or any
issue of bonds, debentures, preferred or prior preference stocks ahead of or
affecting the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding whether of a
similar character or otherwise.
     (c) Recapitalization of the Company. Subject to Section 7.7 (which only
applies in the event of a Change in Control), in the event that the Committee
shall determine that any dividend or other distribution (whether in the form of
cash, Common Stock, other securities, or other property), re-capitalization,
stock split, reverse stock split, rights offering, reorganization, merger,
consolidation, split-up, spin-off, split-off, combination, subdivision,
repurchase, or exchange of Common Stock or other securities of the Company,
issuance of warrants or other rights to purchase Common Stock or other
securities of the Company, or other similar corporate transaction or event
affects the Common Stock such that an adjustment is determined by the Committee
to be appropriate to prevent the dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee shall, in such manner as it deems equitable, adjust any or all of
(i) the number of shares and type of Common Stock (or the securities or
property) which thereafter may be made the subject of Incentive Awards, (ii) the
number of shares and type of Common Stock (or other securities or property)
subject to outstanding Incentive Awards, (iii) the number of shares and type of
Common Stock (or other securities or property) subject to the annual
per-individual limitation under Section 1.4(a) of the Plan, (iv) the Option
Price of each outstanding Incentive Award, and (v) the number of or Option Price
of Shares of Common Stock then subject to outstanding SARs previously granted
and unexercised under the Plan to the end that the same proportion of the
Company’s issued and outstanding shares of Common Stock in each instance shall
remain subject to exercise at the same aggregate Option Price; provided however,
that the

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number of Shares of Common Stock (or other securities or property) subject to
any Incentive Award shall always be a whole number. In lieu of the foregoing, if
deemed appropriate, the Committee may make provision for a cash payment to the
holder of an outstanding Incentive Award. Notwithstanding the foregoing, no such
adjustment or cash payment shall be made or authorized to the extent that such
adjustment or cash payment would cause the Plan or any Stock Option to violate
Section 422 of the Code. Such adjustments shall be made in accordance with the
rules of any securities exchange, stock market, or stock quotation system to
which the Company is subject.
     Upon the occurrence of any such adjustment or cash payment, the Company
shall provide notice to each affected Grantee of its computation of such
adjustment or cash payment, which shall be conclusive and shall be binding upon
each such Grantee.
     (d) Issue of Common Stock by the Company. Except as herein above expressly
provided in this Section 7.5 and subject to Section 7.7 in the event of a Change
in Control, the issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property,
or for labor or services, either upon direct sale or upon the exercise of rights
or warrants to subscribe therefor, or upon any conversion of shares or
obligations of the Company convertible into such shares or other securities,
shall not affect, and no adjustment by reason thereof shall be made with respect
to, the number of, or Fair Market Value of, any Incentive Awards then
outstanding under previously granted Incentive Awards.
     (e) Assumption of Incentive Awards by a Successor. Unless otherwise
determined by the Committee in its discretion pursuant to the next paragraph,
but subject to the accelerated vesting and other provisions of Section 7.7 that
apply in the event of a Change in Control, in the event of a Corporate Event
(defined below), each Grantee shall be entitled to receive, in lieu of the
number of Shares subject to Incentive Awards, such shares of capital stock (or
other securities or property) as may be issuable or payable with respect to or
in exchange for the number of Shares which Grantee would have received had he
exercised the Incentive Award immediately prior to such Corporate Event,
together with any adjustments (including, without limitation, adjustments to the
Option Price and the number of Shares issuable on exercise of outstanding Stock
Options). A “Corporate Event” means any of the following: (i) a dissolution or
liquidation of the Company, (ii) a sale of all or substantially all of the
Company’s assets, or (iii) a merger, consolidation or combination involving the
Company (other than a merger, consolidation or combination (A) in which the
Company is the continuing or surviving corporation and (B) which does not result
in the outstanding Shares being converted into or exchanged for different
securities, cash or other property, or any combination thereof). The Committee
shall take whatever other action it deems appropriate to preserve the rights of
Grantees holding outstanding Incentive Awards.
     Subject to the accelerated vesting and other provisions of Section 7.7 that
apply in the event of a Change in Control, in the event of a Corporate Event,
the Committee in its discretion shall have the right and power to:
     (i) cancel, effective immediately prior to the occurrence of the Corporate
Event, each outstanding Incentive Award (whether or not then exercisable) and,
in full consideration of such cancellation, pay to the Grantee an amount in cash
equal to the excess of (A) the value, as determined by the Committee, of the
property (including cash) received by the holders of Common Stock as a result of
such Corporate Event over (B) the exercise price of such Incentive Award, if
any; or
     (ii) provide for the exchange or substitution of each Incentive Award
outstanding immediately prior to such Corporate Event (whether or not then
exercisable) for another award with respect to the Common Stock or other
property for which such Incentive Award is exchangeable and, incident thereto,
make an equitable adjustment as determined by the Committee, in its discretion,
in the exercise price of the Incentive Award, if any, or in the number of Shares
or amount of property (including cash) subject to the Incentive Award; or
     (iii) provide for the assumption of the Plan and such outstanding Incentive
Awards by the surviving entity or its parent.
     The Committee, in its discretion, shall have the authority to take whatever
action it deems to be necessary or appropriate to effectuate the provisions of
this Subsection (e).
     (f) intentionally deleted.
     7.6 Termination of Employment, Death, Disability and Retirement
     (a) Termination of Relationship. Unless otherwise expressly provided in the
Grantee’s Incentive Agreement, if the Grantee’s Employment or services as a
Director or Consultant is terminated for any reason other than due to his death,
Disability, Retirement, or for Cause, any non-vested portion of any Stock Option
or other applicable Incentive Award at the time of such termination shall

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automatically expire and terminate and no further vesting shall occur after the
termination date. In such event, except as otherwise expressly provided in his
Incentive Agreement, the Grantee shall be entitled to exercise his rights only
with respect to the portion of the Incentive Award that was vested as of his
termination of Employment or service date. In such event, except as otherwise
expressly provided in his Incentive Agreement, the Grantee shall be entitled to
exercise his vested Stock Options for a period that shall end on the earlier of
(i) the expiration date set forth in the Incentive Agreement or (ii) one hundred
eighty (180) days after the date of his termination, except with respect to
Incentive Stock Options, in which case such period shall be three (3) months.
     (b) Termination for Cause. Unless otherwise expressly provided in the
Grantee’s Incentive Agreement, in the event of the termination of a Grantee’s
Employment, or service as a Consultant or Director, for Cause, all vested and
non-vested Stock Options and other Incentive Awards (other than vested
Restricted Stock or vested Restricted Stock Units) granted to such Grantee shall
immediately expire, and shall not be exercisable to any extent, as of
12:01 a.m., Houston, Texas time, on the date of such termination of Employment
or service for cause.
     (c) Retirement. Unless otherwise expressly provided in the Grantee’s
Incentive Agreement, upon the termination of Employment due to the Retirement of
any Employee who is a Grantee:
     (i) all of his Stock Options and Stock Appreciation Rights then outstanding
shall become 100% vested and immediately and fully exercisable until the earlier
of (A) the expiration date set forth in the Incentive Agreement for such
Incentive Award; or (B) the expiration of (1) twelve months after the date of
his termination of Employment due to his Retirement in the case of any Incentive
Award other than an Incentive Stock Option or (2) three months after his
termination date in the case of an Incentive Stock Option;
     (ii) any Period of Restriction with respect to any of his Restricted Stock
or Restricted Stock Units shall be deemed to have expired and all restrictions
imposed on Restricted Stock or Restricted Stock Units shall lapse, and each such
Incentive Award shall thereupon become free of all restrictions and fully
vested; and
     (iii) all of the restrictions and conditions of any of his Other
Stock-Based Awards then outstanding shall be deemed satisfied, and the Period of
Restriction with respect thereto shall be deemed to have expired, and each such
Incentive Award shall thereupon become free of all restrictions and fully
vested.
     (d) Disability or Death. Unless otherwise expressly provided in the
Grantee’s Incentive Agreement, upon the termination of Employment or service as
a Director due to the Disability or death of any Employee or Non-Employee
Director who is a Grantee:
     (i) all of his Stock Options and Stock Appreciation Rights then outstanding
shall become 100% vested and immediately and fully exercisable until the earlier
of (A) the expiration date set forth in the Incentive Agreement for such
Incentive Award; or (B) the expiration of (1) twelve months after the date of
his termination of Employment due to his Disability or death in the case of any
Incentive Award other than an Incentive Stock Option or (2) three months after
his termination date in the case of an Incentive Stock Option;
     (ii) any Period of Restriction with respect to any of his Restricted Stock
or Restricted Stock Unit shall be deemed to have expired and all restrictions
imposed on Restricted Stock or Restricted Stock Units shall lapse, and each such
Incentive Award shall thereupon become free of all restrictions and fully
vested; and
     (iii) all of the restrictions and conditions of any of his Other
Stock-Based Awards then outstanding shall be deemed satisfied, and the Period of
Restriction with respect thereto shall be deemed to have expired, and each such
Incentive Award shall thereupon become free of all restrictions and fully
vested.
     In the case of any vested Incentive Stock Option held by an Employee
following termination of Employment, notwithstanding the definition of
‘Disability’ in Section 1.2, whether the Employee has incurred a ‘Disability’
for purposes of determining the length of the Option exercise period following
termination of Employment under this Subsection (d) shall be determined by
reference to Section 22(e)(3) of the Code to the extent required by
Section 422(c)(6) of the Code. The Committee shall determine whether a
Disability for purposes of this Subsection (d) has occurred.
     (e) Continuation. Subject to the conditions and limitations of the Plan and
applicable law and regulation in the event that a Grantee ceases to be an
Employee or Consultant, as applicable, for whatever reason, the Committee and
Grantee may mutually agree with respect to any outstanding Option or other
Incentive Award then held by the Grantee (i) for an acceleration or other
adjustment in any

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vesting schedule applicable to the Incentive Award, (ii) for a continuation of
the exercise period following termination for a longer period than is otherwise
provided under such Incentive Award, or (iii) to any other change in the terms
and conditions of the Incentive Award. In the event of any such change to an
outstanding Incentive Award, a written amendment to the Grantee’s Incentive
Agreement shall be required.
     7.7 Change in Control
     In the event of a Change in Control (as defined below), the following
actions shall automatically occur as of the day immediately preceding the Change
in Control date unless expressly provided otherwise in the Grantee’s Incentive
Agreement:
     (a) all of the Stock Options and Stock Appreciation Rights then outstanding
shall become 100% vested and immediately and fully exercisable;
     (b) any Period of Restriction with respect to any Restricted Stock or
Restricted Stock Unit shall be deemed to have expired and all restrictions
imposed on Restricted Stock or Restricted Stock Units shall lapse, and thus each
such Incentive Award shall become free of all restrictions and fully vested;
     (c) all of the restrictions and conditions of any Other Stock-Based Awards
then outstanding shall be deemed satisfied, and the Period of Restriction with
respect thereto shall be deemed to have expired, and thus each such Incentive
Award shall become free of all restrictions and fully vested; and
     (d) all of the Performance Shares, Restricted Stock, Restricted Stock Units
and any Other Stock-Based Awards shall become fully vested, deemed earned in
full, and promptly paid within thirty (30) days to the affected Grantees without
regard to payment schedules and notwithstanding that the applicable performance
cycle, retention cycle or other restrictions and conditions have not been
completed or satisfied.
     Notwithstanding any other provision of this Plan, unless otherwise
expressly provided in the Grantee’s Incentive Agreement, the provisions of this
Section 7.7 may not be terminated, amended, or modified to adversely affect any
Incentive Award theretofore granted under the Plan without the prior written
consent of the Grantee with respect to his outstanding Incentive Awards,
subject, however, to the last paragraph of this Section 7.7.
     For all purposes of this Plan, a “Change in Control” of the Company means
the occurrence of any one or more of the following events:
     (a) The acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”)) of beneficial
ownership(within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of forty percent (40%) or more of either (i) the then outstanding shares of
common stock of the Company (the “Outstanding Company Stock”) or (ii) 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 the following acquisitions
shall not constitute a Change in Control: (i) any acquisition directly from the
Company or any Subsidiary, (ii) any acquisition by the Company or any Subsidiary
or by any employee benefit plan (or related trust) sponsored or maintained by
the Company or any Subsidiary, or (iii) any acquisition by any corporation
pursuant to a reorganization, merger, consolidation or similar business
combination involving the Company (a “Merger”), if, following such Merger, the
conditions described in clauses (i) and (ii) of Section 7.7(c) (below) are
satisfied;
     (b) Individuals who, as of the Effective Date, constitute the Board of
Directors of the Company (the “Incumbent Board”) cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the Effective Date whose election,
or nomination for election by the Company’s shareholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of either an actual or threatened
election contest (a solicitation by any person or group of persons for the
purpose of opposing a solicitation of proxies or consents by the Board with
respect to the election or removal of Directors at any annual or special meeting
of stockholders) or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board;
     (c) Consummation of a Merger, unless immediately following such Merger,
(i) substantially all of the holders of the Outstanding Company Voting
Securities immediately prior to Merger beneficially own, directly or indirectly,
more than 50% of the common stock of the corporation resulting from such Merger
(or its parent corporation) in substantially the same proportions as their
ownership of Outstanding Company Voting Securities immediately prior to such
Merger and (ii) at least a majority of the members

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of the board of directors of the corporation resulting from such Merger (or its
parent corporation) were members of the Incumbent Board at the time of the
execution of the initial agreement providing for such Merger; or
     (d) The sale or other disposition of all or substantially all of the assets
of the Company.
     7.8 Exchange of Incentive Awards
     The Committee may, in its discretion, permit any Grantee to surrender
outstanding Incentive Awards in order to exercise or realize his rights under
other Incentive Awards or in exchange for the grant of new Incentive Awards, or
require holders of Incentive Awards to surrender outstanding Incentive Awards
(or comparable rights under other plans or arrangements) as a condition
precedent to the grant of new Incentive Awards.
SECTION 8
GENERAL
     8.1 Effective Date and Grant Period
     The amendment and restatement of this Plan is adopted by the Board
effective as of February 14, 2008. No Incentive Award that is an Incentive Stock
Option shall be granted under the Plan after ten (10) years from the Effective
Date. Unless sooner terminated by action of the Board, this Plan will terminate
at 5:00 p.m. Houston, Texas time, on May 3, 2014. Incentive Awards under this
Plan may not be granted after that date, but any Incentive Award duly granted
before that date will continue to be effective in accordance with its terms and
conditions.
     8.2 Funding and Liability of Company
     No provision of the Plan shall require the Company, for the purpose of
satisfying any obligations under the Plan, to purchase assets or place any
assets in a trust or other entity to which contributions are made, or otherwise
to segregate any assets. In addition, the Company shall not be required to
maintain separate bank accounts, books, records or other evidence of the
existence of a segregated or separately maintained or administered fund for
purposes of the Plan. Although bookkeeping accounts may be established with
respect to Grantees who are entitled to cash, Common Stock or rights thereto
under the Plan, any such accounts shall be used merely as a bookkeeping
convenience. The Company shall not be required to segregate any assets that may
at any time be represented by cash, Common Stock or rights thereto. The Plan
shall not be construed as providing for such segregation, nor shall the Company,
the Board or the Committee be deemed to be a trustee of any cash, Common Stock
or rights thereto. Any liability or obligation of the Company to any Grantee
with respect to an Incentive Award shall be based solely upon any contractual
obligations that may be created by this Plan and any Incentive Agreement, and no
such liability or obligation of the Company shall be deemed to be secured by any
pledge or other encumbrance on any property of the Company. Neither the Company,
the Board nor the Committee shall be required to give any security or bond for
the performance of any obligation that may be created by the Plan.
     8.3 Withholding Taxes
     (a) Tax Withholding. The Company shall have the power and the right to
deduct or withhold, or require a Grantee to remit to the Company, an amount
sufficient to satisfy federal, state, and local taxes, domestic or foreign,
required by law or regulation to be withheld with respect to any taxable event
arising as a result of the Plan or an Incentive Award hereunder.
     (b) Share Withholding. With respect to tax withholding required upon the
exercise of Stock Options or SARs, or upon any other taxable event arising as a
result of any Incentive Awards, Grantees may elect, subject to the approval of
the Committee in its discretion, to satisfy the withholding requirement, in
whole or in part, by having the Company withhold Shares having a Fair Market
Value on the date the tax is to be determined equal to the minimum withholding
tax which could be imposed on the transaction. All such elections shall be made
in writing, signed by the Grantee, and shall be subject to any restrictions or
limitations that the Committee, in its discretion, deems appropriate.
     8.4 No Guarantee of Tax Consequences
     Neither the Company nor the Committee makes any commitment or guarantee
that any federal, state or local tax treatment will apply or be available to any
person participating or eligible to participate hereunder.

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     8.5 Designation of Beneficiary by Grantee
     Each Grantee may, from time to time, name any beneficiary or beneficiaries
(who may be named contingently or successively) to whom any benefit under the
Plan is to be paid in case of his death before he receives any or all of such
benefit. Each such designation shall revoke all prior designations by the same
Grantee, shall be in a form prescribed by the Committee, and will be effective
only when filed by the Grantee in writing with the Committee during the
Grantee’s lifetime. In the absence of any such designation, benefits remaining
unpaid at the Grantee’s death shall be paid to the Grantee’s estate.
     8.6 Amendment and Termination
     The Board shall have the power and authority to terminate or amend the Plan
at any time. No termination, amendment, or modification of the Plan shall
adversely affect in any material way any outstanding Incentive Award previously
granted to a Grantee under the Plan, without the written consent of such Grantee
or other designated holder of such Incentive Award.
     In addition, to the extent that the Committee determines that (a) the
listing or qualification requirements of any national securities exchange or
quotation system on which the Company’s Common Stock is then listed or quoted,
if applicable, or (b) the Code (or regulations promulgated thereunder), require
stockholder approval in order to maintain compliance with such listing or
quotation system requirements or to maintain any favorable tax advantages or
qualifications, then the Plan shall not be amended in such respect without
approval of the Company’s stockholders.
     8.7 Governmental Entities and Securities Exchanges
     The granting of Incentive Awards and the issuance of Shares under the Plan
shall be subject to all applicable laws, rules, and regulations, and to such
approvals by any governmental agencies or national securities exchanges as may
be required. Certificates evidencing shares of Common Stock delivered under this
Plan (to the extent that such shares are so evidenced) may be subject to such
stop transfer orders and other restrictions as the Committee may deem advisable
under the rules and regulations of the Securities and Exchange Commission, any
securities exchange or transaction reporting system upon which the Common Stock
is then listed or to which it is admitted for quotation, and any applicable
federal or state securities law, if applicable. The Committee may cause a legend
or legends to be placed upon such certificates (if any) to make appropriate
reference to such restrictions.
     8.8 Successors to Company
     All obligations of the Company under the Plan with respect to Incentive
Awards granted hereunder shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise, of all or substantially all of
the business and/or assets of the Company.
     8.9 Miscellaneous Provisions
     (a) No Employee or Consultant, or other person shall have any claim or
right to be granted an Incentive Award under the Plan. Neither the Plan, nor any
action taken hereunder, shall be construed as giving any Employee, Director or
Consultant, any right to be retained in the Employment or other service of the
Company or any Parent or Subsidiary.
     (b) By accepting any Incentive Award, each Grantee and each person claiming
by or through him shall be deemed to have indicated his acceptance of the Plan.
     (c) Performance-based awards granted under the Plan to a Grantee who is
subject to the Company’s Compensation Recoupment Policy, as may be amended from
time to time, may be reduced or subject to recoupment pursuant to the terms and
conditions of such policy.
     8.10 Severability
     In the event that any provision of this Plan shall be held illegal, invalid
or unenforceable for any reason, such provision shall be fully severable, but
shall not affect the remaining provisions of the Plan, and the Plan shall be
construed and enforced as if the illegal, invalid, or unenforceable provision
was not included herein.

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     8.11 Gender, Tense and Headings
     Whenever the context so requires, words of the masculine gender used herein
shall include the feminine and neuter, and words used in the singular shall
include the plural. Section headings as used herein are inserted solely for
convenience and reference and constitute no part of the interpretation or
construction of the Plan.
     8.12 Governing Law
     The Plan shall be interpreted, construed and constructed in accordance with
the laws of the State of Texas without regard to its conflicts of law
provisions, except as may be superseded by applicable laws of the United States
or applicable provisions of the Delaware General Corporation Law.
     8.13 Successor to Director Plan
     This Plan shall serve as the successor to the Director Plan. All
outstanding Awards under the Director Plan shall continue to be governed solely
by the terms and conditions of the instrument evidencing such grant or issuance.
Notwithstanding any provision in this Plan to the contrary, no provision of this
Plan is intended to modify, extend or renew any option granted under the
Director Plan. Any provision in this Plan that is contrary to a provision in the
Director Plan that would create a modification, extension or renewal of such
option is hereby incorporated into this Plan. All terms, conditions and
limitations, if any, that are set forth in any previously granted option
agreement shall remain in full force and effect under the terms of the Plan
pursuant to which it was issued.
     8.14 Deferred Compensation
     This Plan and any Incentive Agreement issued under the Plan is intended to
meet the requirements of Section 409A of the Code and shall be administered in a
manner that is intended to meet those requirements and shall be construed and
interpreted in accordance with such intent. To the extent that an Incentive
Award or payment, or the settlement or deferral thereof, is subject to
Section 409A of the Code, except as the Board otherwise determines in writing,
the Incentive Award shall be granted, paid, settled or deferred in a manner that
will meet the requirements of Section 409A of the Code, including regulations or
other guidance issued with respect thereto, such that the grant, payment,
settlement or deferral shall not be subject to the excise tax applicable under
Section 409A of the Code. Any provision of this Plan or any Incentive Agreement
that would cause an Incentive Award or the payment, settlement or deferral
thereof to fail to satisfy Section 409A of the Code shall be amended (in a
manner that as closely as practicable achieves the original intent of this Plan
or the Incentive Agreement, as applicable) to comply with Section 409A of the
Code on a timely basis, which may be made on a retroactive basis, in accordance
with regulations and other guidance issued under Section 409A of the Code. In
the event the Plan allows for a deferral of compensation, the Plan is intended
to qualify for certain exemptions under Title I of ERISA provided for plans that
are unfunded and maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly-compensated employees.

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