**Exhibit10.9**

 

INCENTIVE PLAN OF

EDGE PETROLEUMCORPORATION

 

(AS AMENDED AND RESTATEDEFFECTIVE AS OF JUNE 1, 2004)

 

1. Plan. This Incentive Plan of Edge PetroleumCorporation (the “Plan”) was adopted by Edge Petroleum Corporation to rewardcertain corporate officers and key employees of Edge Petroleum Corporation andcertain independent consultants by enabling them to acquire shares of commonstock of Edge Petroleum Corporation.

 

2. Objectives. This Plan is designed to attract andretain key employees of the Company and its Subsidiaries (as hereinafterdefined), to attract and retain qualified directors of the Company, to attractand retain consultants and other independent contractors, to encourage thesense of proprietorship of such employees, directors and independentcontractors and to stimulate the active interest of such persons in thedevelopment and financial success of the Company and its Subsidiaries. Theseobjectives are to be accomplished by making Awards (as hereinafter defined)under this Plan and thereby providing Participants (as hereinafter defined)with a proprietary interest in the growth and performance of the Company andits Subsidiaries.

 

3. Definitions. As used herein, the terms set forthbelow shall have the following respective meanings:

 

“Annual Director Award Date” means, for each yearbeginning on or after the IPO Closing Date, the first business day of the monthnext succeeding the date upon which the annual meeting of stockholders of theCompany is held in such year.

 

“Authorized Officer” means the Chairman of the Boardor the Chief Executive Officer of the Company (or any other senior officer ofthe Company to whom either of them shall delegate the authority to execute anyAward Agreement).

 

“Award” means an Employee Award, a Director Award oran Independent Contractor Award.

 

“Award Agreement” means any Employee Award Agreement,Director Award Agreement or Independent Contractor Award Agreement.

 

“Board” means the Board of Directors of the Company.

 

“Cash Award” means an award denominated in cash.

 

“Code” means the Internal Revenue Code of 1986, asamended from time to time.

 

“Committee” means the Compensation Committee of theBoard or such other committee of the Board as is designated by the Board toadminister the Plan.

 

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“Common Stock” means the Common Stock, par value $.01per share, of the Company.

 

“Company” means Edge Petroleum Corporation, a Delawarecorporation.

 

“Director” means an individual serving as a member ofthe Board.

 

“Director Award” means the grant of a Director Optionor a Director Stock Award.

 

“Director Award Agreement” means a written agreementbetween the Company and a Participant who is a Nonemployee Director settingforth the terms, conditions and limitations applicable to a Director Award.

 

“Director Stock Award” means a Stock Award granted toa Non-employee Director pursuant to the applicable terms, conditions andlimitations specified in paragraph 9(b) hereof.

 

“Disability” means, with respect to a Non-employeeDirector, the inability to perform the duties of a Director for a continuousperiod of more than three months by reason of any medically determinablephysical or mental impairment.

 

“Dividend Equivalents” means, with respect to sharesof Restricted Stock that are to be issued at the end of the Restriction Period,an amount equal to all dividends and other distributions (or the economicequivalent thereof) that are payable to stockholders of record during theRestriction Period on a like number of shares of Common Stock.

 

“Employee” means an employee of the Company or any ofits Subsidiaries and an individual who has agreed to become an Employee of theCompany or any of its Subsidiaries and actually becomes such an Employee withinthe following six months.

 

“Employee Award” means the grant of any Option, SAR,Stock Award, Cash Award or Performance Award, whether granted singly, incombination or in tandem, to a Participant who is an Employee pursuant to suchapplicable terms, conditions and limitations as the Committee may establish inorder to fulfill the objectives of the Plan.

 

“Employee Award Agreement” means a written agreementbetween the Company and a Participant who is an Employee setting forth theterms, conditions and limitations applicable to an Employee Award.

 

“Exchange Act” means the Securities Exchange Act of1934, as amended from time to time.

 

“Fair Market Value” of a share of Common Stock means,as of a particular date, (i) if shares of Common Stock are listed on a nationalsecurities exchange, the mean between the highest and lowest sales price pershare of Common Stock on the consolidated transaction reporting system for theprincipal national securities exchange on which shares of Common Stock arelisted on that date, or, if there shall have been no such sale so reported onthat date, on

 

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the last preceding date on which such a sale was so reported, (ii) ifshares of Common Stock are not so listed but are quoted on the Nasdaq NationalMarket, the mean between the highest and lowest sales price per share of CommonStock reported by the Nasdaq National Market on that date, or, if there shallhave been no such sale so reported on that date, on the last preceding date onwhich such a sale was so reported, (iii) if the Common Stock is not so listedor quoted, the mean between the closing bid and asked price on that date, or,if there are no quotations available for such date, on the last preceding dateon which such quotations shall be available, as reported by the Nasdaq StockMarket, or, if not reported by the Nasdaq Stock Market, by the NationalQuotation Bureau Incorporated or (iv) if shares of Common Stock are notpublicly traded, the most recent value determined by an independent appraiserappointed by the Company for such purpose; provided that, notwithstanding theforegoing, “Fair Market Value” in the case of any Award made in connection withthe IPO, means the price per share to the public of the Common Stock in theIPO, as set forth in the final prospectus relating to the IPO.

 

“Incentive Option” means an Option that is intended tocomply with the requirements set forth in Section 422 of the Code.

 

“Independent Contractor” means a person providingservices to the Company or any of its Subsidiaries except an Employee orNon-employee Director.

 

“Independent Contractor Award” means the grant of anyNonqualified Stock Option, SAR, Stock Award, Cash Award or Performance Award,whether granted singly, in combination or in tandem, to a Participant who is anIndependent Contractor pursuant to such applicable terms, conditions andlimitations as the Committee may establish in order to fulfill the objectivesof the Plan.

 

“Independent Contractor Award Agreement” means awritten agreement between the Company and a Participant who is an IndependentContractor setting forth the terms, conditions and limitations applicable to anIndependent Contractor Award.

 

“IPO” means the first time a registration statementfiled under the Securities Act of 1933 and respecting an underwritten primaryoffering by the Company of shares of Common Stock is declared effective underthat Act and the shares registered by that registration statement are issuedand sold by the Company (otherwise than pursuant to the exercise of anyover-allotment option).

 

“IPO Closing Date” means the date on which the Companyfirst receives payment for the shares of Common Stock it sells in the IPO.

 

“Non-employee Director” has the meaning set forth inparagraph 4(b) hereof.

 

“Nonqualified Stock Option” means an Option that isnot an Incentive Option.

 

“Option” means a right to purchase a specified numberof shares of Common Stock at a specified price.

 

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“Participant” means an Employee, Director orIndependent Contractor to whom an Award has been made under this Plan.

 

“Performance Award” means an award made pursuant tothis Plan to a Participant who is an Employee or Independent Contractor who issubject to the attainment of one or more Performance Goals.

 

“Performance Goal” means a standard established by theCommittee, to determine in whole or in part whether a Performance Award shallbe earned.

 

“Restricted Stock” means any Common Stock that isrestricted or subject to forfeiture provisions.

 

“Restriction Period” means a period of time beginningas of the date upon which an Award of Restricted Stock is made pursuant to thisPlan and ending as of the date upon which the Common Stock subject to suchAward is no longer restricted or subject to forfeiture provisions.

 

“Rule 16b-3” means Rule 16b-3 promulgatedunder the Exchange Act, or any successor rule.

 

“SAR” means a right to receive a payment, in cash orCommon Stock, equal to the excess of the Fair Market Value or other specifiedvaluation of a specified number of shares of Common Stock on the date the rightis exercised over a specified strike price, in each case, as determined by theCommittee.

 

“Stock Award” means an award in the form of shares ofCommon Stock or units denominated in shares of Common Stock.

 

“Subsidiary” means (i) in the case of a corporation,any corporation of which the Company directly or indirectly owns sharesrepresenting more than 50% of the combined voting power of the shares of allclasses or series of capital stock of such corporation which have the right tovote generally on matters submitted to a vote of the stockholders of suchcorporation and (ii) in the case of a partnership or other business entity notorganized as a corporation, any such business entity of which the Companydirectly or indirectly owns more than 50% of the voting, capital or profitsinterests (whether in the form of partnership interests, membership interestsor otherwise).

 

4. Eligibility.

 

(a) Employees. Key Employees eligible for Employee Awardsunder this Plan are those who hold positions of responsibility and whoseperformance, in the judgment of the Committee, can have a significant effect onthe success of the Company and its Subsidiaries, including those individualswho are expected to become Employees within six months.

 

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(b) Directors. Directors eligible for Director Awardsunder this Plan are those who are not employees of the Company or any of itsSubsidiaries (“Non-employee Directors”).

 

(c) Independent Contractors. Independent Contractorseligible for Independent Contractor Awards under this Plan are thoseIndependent Contractors providing services to, or who will provide services to,the Company or any of its Subsidiaries.

 

5. Common Stock Available for Awards. Subject to theprovisions of paragraph 15 hereof, there shall be available for Awards underthis Plan granted wholly or partly in Common Stock (including rights or optionsthat may be exercised for or settled in Common Stock) an aggregate of 1,700,000shares of Common Stock, all of which shall be available for Incentive Options.The number of shares of Common Stock that are the subject of Awards under thisPlan, that are forfeited or terminated, expire unexercised, are settled in cashin lieu of Common Stock or in a manner such that all or some of the sharescovered by an Award are not issued to a Participant or are exchanged for Awardsthat do not involve Common Stock, shall again immediately become available forAwards hereunder. The Committee may from time to time adopt and observe suchprocedures concerning the counting of shares against the Plan maximum as it maydeem appropriate. The Board and the appropriate officers of the Company shallfrom time to time take whatever actions are necessary to file any requireddocuments with governmental authorities, stock exchanges and transactionreporting systems to ensure that shares of Common Stock are available forissuance pursuant to Awards.

 

6. Administration.

 

(a) This Plan, as it applies to Participants who areEmployees or Independent Contractors but not with respect to Participants whoare Non-employee Directors, shall be administered by the Committee. To theextent required in order for Employee Awards to be exempt from Section 16of the Exchange Act by virtue of the provisions of Rule 16b-3, theCommittee shall consist of at least two members of the Board who meet therequirements of the definition of “non-employee director” set forth inRule 16b-3(b)(3)(i) promulgated under the Exchange Act.

 

(b) Subject to the provisions hereof, insofar as thisPlan relates to the Employee Awards or Independent Contractor Awards, theCommittee shall have full and exclusive power and authority to administer thisPlan and to take all actions that are specifically contemplated hereby or arenecessary or appropriate in connection with the administration hereof. Insofaras this Plan relates to Employee Awards or Independent Contractor Awards, theCommittee shall also have full and exclusive power to interpret this Plan andto adopt such rules, regulations and guidelines for carrying out this Plan asit may deem necessary or proper, all of which powers shall be exercised in thebest interests of the Company and in keeping with the objectives of this Plan.The Committee may, in its discretion, provide for the extension of theexercisability of an Employee Award or Independent Contractor Award, acceleratethe vesting or exercisability of an Employee Award or Independent ContractorAward, eliminate or make less restrictive any restrictions contained in anEmployee Award or Independent Contractor Award, waive any restriction or otherprovision of this Plan (insofar as such provision relates to Employee Awards orto Independent Contractor Awards) or an Employee Award or IndependentContractor Award or otherwise amend or modify an Employee Award or IndependentContractor Award in any

 

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manner that is either (i) not adverse to the Participant to whom suchEmployee Award or Independent Contractor Award was granted or (ii) consented toby such Participant. The Committee may make an award to an individual who itexpects to become an Employee of the Company or any of its Subsidiaries withinthe next six months, with such award being subject to the individuals actuallybecoming an Employee within such time period, and subject to such other termsand conditions as may be established by the Committee. The Committee maycorrect any defect or supply any omission or reconcile any inconsistency inthis Plan or in any Employee Award or Independent Contractor Award in themanner and to the extent the Committee deems necessary or desirable to furtherthe Plan purposes. Any decision of the Committee in the interpretation and administrationof this Plan shall lie within its sole and absolute discretion and shall befinal, conclusive and binding on all parties concerned.

 

(c) No member of the Committee or officer of theCompany to whom the Committee has delegated authority in accordance with theprovisions of paragraph 7 of this Plan shall be liable for anything doneor omitted to be done by him or her, by any member of the Committee or by anyofficer of the Company in connection with the performance of any duties underthis Plan, except for his or her own willful misconduct or as expresslyprovided by statute.

 

7. Delegation of Authority. The Committee may delegateto the Chief Executive Officer and to other senior officers of the Company itsduties under this Plan pursuant to such conditions or limitations as theCommittee may establish, except that the Committee may not delegate to anyperson the authority to grant Awards to, or take other action with respect to,Participants who are subject to Section 16 of the Exchange Act.

 

8. Employee and Independent Contractor Awards.

 

(a) The Committee shall determine the type or types ofEmployee Awards to be made under this Plan and shall designate from time totime the Employees who are to be the recipients of such Awards. Each Employee Awardmay be embodied in an Employee Award Agreement, which shall contain such terms,conditions and limitations as shall be determined by the Committee in its solediscretion and shall be signed by the Participant to whom the Employee Award ismade and by an Authorized Officer for and on behalf of the Company. EmployeeAwards may consist of those listed in this paragraph 8(a) hereof and maybe granted singly, in combination or in tandem. Employee Awards may also bemade in combination or in tandem with, in replacement of, or as alternativesto, grants or rights under this Plan or any other employee plan of the Companyor any of its Subsidiaries, including the plan of any acquired entity. AnEmployee Award may provide for the grant or issuance of additional, replacementor alternative Employee Awards upon the occurrence of specified events,including the exercise of the original Employee Award granted to a Participant.All or part of an Employee Award may be subject to conditions established bythe Committee, which may include, but are not limited to, continuous servicewith the Company and its Subsidiaries, achievement of specific businessobjectives, increases in specified indices, attainment of specified growthrates and other comparable measurements of performance. Upon the termination ofemployment by a Participant who is an Employee, any unexercised, deferred,unvested or unpaid Employee Awards shall be treated as set forth in theapplicable Employee Award Agreement.

 

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(i) Stock Option. An Employee Award may be in the formof an Option. An Option awarded pursuant to this Plan may consist of anIncentive Option or a Nonqualified Option. The price at which shares of CommonStock may be purchased upon the exercise of an Incentive Option shall be notless than the Fair Market Value of the Common Stock on the date of grant. Theprice at which shares of Common Stock may be purchased upon the exercise of aNonqualified Option shall be not less than the Fair Market Value of the CommonStock on the date of grant. Subject to the foregoing provisions, the terms,conditions and limitations applicable to any Options awarded pursuant to thisPlan, including the term of any Options and the date or dates upon which they becomeexercisable, shall be determined by the Committee.

 

(ii) Stock Appreciation Right. An Employee Award maybe in the form of an SAR. The terms, conditions and limitations applicable toany SARs awarded pursuant to this Plan, including the term of any SARs and thedate or dates upon which they become exercisable, shall be determined by theCommittee.

 

(iii) Stock Award. An Employee Award may be in theform of a Stock Award. The terms, conditions and limitations applicable to anyStock Awards granted pursuant to this Plan shall be determined by theCommittee.

 

(iv) Cash Award. An Employee Award may be in the formof a Cash Award. The terms, conditions and limitations applicable to any CashAwards granted pursuant to this Plan shall be determined by the Committee.

 

(v) Performance Award. Without limiting the type ornumber of Employee Awards that may be made under the other provisions of thisPlan, an Employee Award may be in the form of a Performance Award. APerformance Award shall be paid, vested or otherwise deliverable solely onaccount of the attainment of one or more pre-established, objective PerformanceGoals established by the Committee prior to the earlier to occur of (x) 90 daysafter the commencement of the period of service to which the Performance Goalrelates and (y) the lapse of 25% of the period of service (as scheduled in goodfaith at the time the goal is established), and in any event while the outcomeis substantially uncertain. A Performance Goal is objective if a third partyhaving knowledge of the relevant facts could determine whether the goal is met.Such a Performance Goal may be based on one or more business criteria thatapply to the individual, one or more business units of the Company, or theCompany as a whole, and may include one or more of the following: increasedrevenue, net income, stock price, market share, earnings per share, return onequity, return on assets or decrease in costs. Unless otherwise stated, such aPerformance Goal need not be based upon an increase or positive result under aparticular business criterion and could include, for example, maintaining thestatus quo or limiting economic losses (measured, in each case, by reference tospecific business criteria). In interpreting Plan provisions applicable to PerformanceGoals and Performance Awards, it is the intent of the Plan to conform with thestandards of Section 162(m) of the Code and TreasuryRegulations 1.16227(e)(2)(i), and the Committee in establishing such goalsand interpreting the Plan shall be guided by such provisions. Prior to thepayment of any compensation based on the achievement of Performance Goals, theCommittee must certify in writing that applicable Performance Goals and any ofthe material terms thereof were, in fact, satisfied. Subject to the

 

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foregoing provisions, the terms, conditions and limitations applicableto any Performance Awards made pursuant to this Plan shall be determined by theCommittee.

 

(b) Notwithstanding anything to the contrary containedin this Plan, the following limitations shall apply to any Employee Awards madehereunder:

 

(i) no Participant may be granted, during any one-yearperiod, Employee Awards consisting of Options or SARs that are exercisable formore than 135,000 shares of Common Stock;

 

(ii) no Participant may be granted, during anyone-year period, Stock Awards covering or relating to more than 135,000 sharesof Common Stock (the limitation set forth in this clause (ii), together withthe limitation set forth in clause (i) above, being hereinafter collectivelyreferred to as the “Stock Based Awards Limitations”); and

 

(iii) no Participant may be granted Employee Awardsconsisting of cash or in any other form permitted under this Plan (other thanEmployee Awards consisting of Options or SARs or otherwise consisting of sharesof Common Stock or units denominated in such shares) in respect of any one-yearperiod having a value determined on the date of grant in excess of $500,000.

 

(c) The Committee shall have the sole responsibilityand authority to determine the type or types of Independent Contractor Awardsto be made under this Plan and may make any such Awards as could be made to anEmployee, other than Incentive Options; provided that the limitations describedin paragraph 8(b) shall be inapplicable to Independent Contractor Awards.

 

9. Director Awards. Each Non-employee Director of theCompany shall be granted Director Awards in accordance with thisparagraph 9 and subject to the applicable terms, conditions andlimitations set forth in this Plan and the applicable Director Award Agreement.Notwithstanding anything to the contrary contained herein, Director Awardsshall not be made in any year in which a sufficient number of shares of CommonStock are not available to make such Awards under this Plan.

 

(a) Director Options.

 

(i) On the IPO Closing Date, each Non-employeeDirector shall be automatically awarded a Director Option for the number ofshares of Common Stock determined in the following table:

 
| **Years of Service With the Company or its Predecessors** |   | **Number of  Shares  Subject to Option** |   |
|-----------------------------------------------------------|--------|------------------------------------------|--------|
| 4 years or  greater                                       |   | 8,000                                    |   |
| 3 to 4 years                                              |   | 6,000                                    |   |
| 2 to 3 years                                              |   | 4,000                                    |   |
| 2 years or less                                           |   | 2,000                                    |   |

 

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(ii) Each Non-employee Director who was firstappointed or elected to the Board of Directors during the year endedDecember 31, 2002, shall be granted a Director Option that: (A) providesfor the purchase of 5,000 Shares of Common Stock; (B) expires (notwithstandingany earlier termination of the status of the holder as a Non-employee Director)as set forth on Annex A hereto; (C) vests and becomes exercisable as set forthon Annex A; and (D) has a purchase price of each share of Common Stocksubject to such Director Option as set forth on Annex A (which in anyevent is equal to or greater than the Fair Market Value as ofFebruary 20, 2003).

 

(iii) Effective beginning February 20, 2003,on the date of his or her first appointment or election to the Board ofDirectors, a Non-employee Director may, in the discretion of the Board ofDirectors, be granted a Director Option that provides for the purchase of up to5,000 shares of Common Stock.

 

(iv) Effective beginning on and includingJune 1, 2004, on each Annual Director Award Date, each Non-employeeDirector may, in the discretion of the Board, be granted a Director Option thatprovides for the purchase of up to 3,000 shares of Common Stock.

 

(v) Except as provided in or pursuant to (ii): (A)each Director Option shall have a term of ten years from the date of grant,notwithstanding any earlier termination of the status of the holder as aNon-employee Director; (B) the purchase price of each share of Common Stocksubject to a Director Option shall be equal to the Fair Market Value of theCommon Stock on the date of grant; and (C) all Director Options granted afterJuly 27, 1999 shall vest and become exercisable on the secondanniversary of the date of grant.

 

(vi) All unvested Director Options shall be forfeitedif the Non-employee Director resigns as a Director without the consent of amajority of the other Directors.

 

(vii) Any Award of Director Options shall be embodiedin a Director Award Agreement, which shall contain the terms, conditions andlimitations set forth above and shall be signed by the Participant to whom theDirector Options are granted and by an Authorized Officer for and on behalf ofthe Company.

 

(b) Director Stock Awards. Effective beginning on andincluding June 1, 2004, on each Annual Director Award Date, eachNon-employee Director who was serving as such on the date immediately precedingthe most recent annual meeting of stockholders, may, in the discretion of theBoard, be awarded shares of Common Stock in respect of all or a portion of theannual retainer to be paid to the Non-employee Director for the precedingtwelve months.  The Board may providethat all or a portion of any such shares of Common Stock be Restricted Stockand specify the restrictions thereon (unless otherwise specified by the Board,no shares of Common Stock issued as a retainer shall be Restricted Stock).

 

10. Payment of Awards.

 

(a) General. Payment of Employee Awards or IndependentContractor Awards may be made in the form of cash or Common Stock, or acombination thereof, and may include such restrictions as the Committee shalldetermine, including, in the case of Common Stock,

 

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restrictions on transfer and forfeiture provisions. If payment of anEmployee Award or Independent Contractor Award is made in the form ofRestricted Stock, the applicable Award Agreement relating to such shares shallspecify whether they are to be issued at the beginning or end of theRestriction Period. In the event that shares of Restricted Stock are to be issuedat the beginning of the Restriction Period, the certificates evidencing suchshares (to the extent that such shares are so evidenced) shall containappropriate legends and restrictions that describe the terms and conditions ofthe restrictions applicable thereto. In the event that shares of RestrictedStock are to be issued at the end of the Restricted Period, the right toreceive such shares shall be evidenced by book entry registration or in suchother manner as the Committee may determine.

 

(b) Deferral. With the approval of the Committee,amounts payable in respect of Employee Awards or Independent Contractor Awardsmay be deferred and paid either in the form of installments or as a lump sumpayment. The Committee may permit selected Participants to elect to deferpayments of some or all types of Employee Awards or Independent ContractorAwards in accordance with procedures established by the Committee. Any deferredpayment of an Employee Award or Independent Contractor Award, whether electedby the Participant or specified by the Award Agreement or by the Committee, maybe forfeited if and to the extent that the Award Agreement so provides.

 

(c) Dividends and Interest. Rights to dividends orDividend Equivalents may be extended to and made part of any Employee Award orIndependent Contractor Award consisting of shares of Common Stock or unitsdenominated in shares of Common Stock, subject to such terms, conditions andrestrictions as the Committee may establish. The Committee may also establishrules and procedures for the crediting of interest on deferred cash paymentsand Dividend Equivalents for Employee Awards or Independent Contractor Awardsconsisting of shares of Common Stock or units denominated in shares of CommonStock.

 

(d) Substitution of Awards. At the discretion of theCommittee, a Participant who is an Employee or Independent Contractor may beoffered an election to substitute an Employee Award or Independent ContractorAward for another Employee Award or Independent Contractor Award or EmployeeAwards or Independent Contractor Awards of the same or different type.

 

11. Stock Option Exercise. The price at which sharesof Common Stock may be purchased under an Option shall be paid in full at thetime of exercise in cash or, if elected by the optionee, the optionee maypurchase such shares by means of tendering Common Stock or surrendering anotherAward, including Restricted Stock or Director Restricted Stock, valued at FairMarket Value on the date of exercise, or any combination thereof. The Committeeshall determine acceptable methods for Participants who are Employees orIndependent Contractors to tender- Common Stock or other Employee Awards orIndependent Contractor Awards; provided that any Common Stock that is or wasthe subject of an Employee Award or Independent Contractor Award may be sotendered only if it has been held by the Participant for six months. TheCommittee may provide for procedures to permit the exercise or purchase of suchAwards by use of the proceeds to be received from the sale of Common Stockissuable pursuant to an Employee Award or Independent Contractor Award. Unlessotherwise provided in the applicable Award Agreement, in the event shares ofRestricted Stock are tendered as consideration for the

 

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exercise of an Option, a number of the shares issued upon the exerciseof the Option, equal to the number of shares of Restricted Stock or DirectorRestricted Stock used as consideration therefore, shall be subject to the samerestrictions as the Restricted Stock or Director Restricted Stock so submittedas well as any additional restrictions that may be imposed by the Committee.

 

12. Taxes. The Company shall have the right to deductapplicable taxes from any Employee Award payment and withhold, at the time ofdelivery or vesting of cash or shares of Common Stock under this Plan, anappropriate amount of cash or number of shares of Common Stock or a combinationthereof for payment of taxes required by law or to take such other action asmay be necessary in the opinion of the Company to satisfy all obligations forwithholding of such taxes. The Committee may also permit withholding to besatisfied by the transfer to the Company of shares of Common Stock theretoforeowned by the holder of the Employee Award with respect to which withholding isrequired. If shares of Common Stock are used to satisfy tax withholding, suchshares shall be valued based on the Fair Market Value when the tax withholdingis required to be made. The Committee may provide for loans, on either a shortterm or demand basis, from the Company to a Participant who is an Employee orIndependent Contractor to permit the payment of taxes required by law.

 

13. Amendment, Modification, Suspension orTermination. The Board may amend, modify, suspend or terminate this Plan forthe purpose of meeting or addressing any changes in legal requirements or forany other purpose permitted by law, except that (i) no amendment or alterationthat would adversely affect the rights of any Participant under any Awardpreviously granted to such Participant shall be made without the consent ofsuch Participant and (ii) no amendment or alteration shall be effective priorto its approval by the stockholders of the Company to the extent such approvalis then required pursuant to Rule 16b-3 in order to preserve theapplicability of any exemption provided by such rule to any Award thenoutstanding (unless the holder of such Award consents) or to the extentstockholder approval is otherwise required by applicable legal requirements.

 

14. Assignability. Unless otherwise determined by theCommittee and provided in the Award Agreement, no Award or any other benefitunder this Plan constituting a derivative security within the meaning ofRule 16a-1(c) under the Exchange Act shall be assignable or otherwisetransferable except by will or the laws of descent and distribution or pursuantto a qualified domestic relations order as defined by the Code or Title I ofthe Employee Retirement Income Security Act, or the rules thereunder. TheCommittee may prescribe and include in applicable Award Agreements otherrestrictions on transfer. Any attempted assignment of an Award or any otherbenefit under this Plan in violation of this paragraph 14 shall be null andvoid.

 

15. Adjustments.

 

(a) The existence of outstanding Awards shall notaffect in any manner the right or power of the Company or its stockholders tomake or authorize any or all adjustments, recapitalizations, reorganizations orother changes in the capital stock of the Company or its business or any mergeror consolidation of the Company, or any issue of bonds, debentures, preferredor prior preference stock (whether or not such issue is prior to, on a paritywith or junior to the Common

 

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Stock) or the dissolution or liquidation of the Company, or any sale ortransfer of all or any part of its assets or business, or any other corporateact or proceeding of any kind, whether or not of a character similar to that ofthe acts or proceedings enumerated above.

 

(b) In the event of any subdivision or consolidationof outstanding shares of Common Stock, declaration of a dividend payable inshares of Common Stock or other stock split, then, except with respect to theExisting Options, (i) the number of shares of Common Stock reserved under thisPlan, (ii) the number of shares of Common Stock covered by outstanding Awardsin the form of Common Stock or units denominated in Common Stock, (iii) theexercise or other price in respect of such Awards, (iv) the appropriate FairMarket Value and other price determinations for such Awards, (v) the number ofshares of Common Stock covered by Director Options granted pursuant toparagraph 9(a) hereof and (vi) the Stock Based Awards Limitations shall each beproportionately adjusted by the Board to reflect such transaction. In the eventof any other recapitalization or capital reorganization of the Company, anyconsolidation or merger of the Company with another corporation or entity, theadoption by the Company of any plan of exchange affecting the Common Stock orany distribution to holders of Common Stock of securities or property (otherthan normal cash dividends or dividends payable in Common Stock), the Board shallmake appropriate adjustments to (i) the number of shares of Common Stockcovered by Awards in the form of Common Stock or units denominated in CommonStock, (ii) the exercise or other price in respect of such Awards, (iii) theappropriate Fair Market Value and other price determinations for such Awards,(iv) the number of shares of Common Stock covered by Director Options grantedpursuant to paragraph 9(a) hereof and (v) the Stock Based Awards Limitations togive effect to such transaction shall each be proportionately adjusted by theBoard to reflect such transaction; provided that such adjustments shall only besuch as are necessary to maintain the proportionate interest of the holders ofthe Awards and preserve, without exceeding, the value of such Awards. In theevent of a corporate merger, consolidation, acquisition of property or stock,separation, reorganization or liquidation, the Board shall be authorized toissue or assume Awards by means of substitution of new Awards, as appropriate,for previously issued Awards or to assume previously issued Awards as part ofsuch adjustment.

 

(c) In the event of a corporate merger, consolidation,acquisition of property or stock, separation, reorganization or liquidation,the Board may make such adjustments to outstanding Awards or other provisionsfor the disposition of outstanding Awards as it deems equitable, and shall beauthorized, in its discretion, (i) to provide for the substitution of a newAward or other arrangement (which, if applicable, may be exercisable for suchproperty or stock as the Board determines) for an outstanding Award or theassumption of an outstanding Award, regardless of whether in a transaction towhich Section 424(a) of the Code applies, (ii) to provide, prior to thetransaction, for the acceleration of the vesting and exercisability of, orlapse of restrictions with respect to, the outstanding Award and, if thetransaction is a cash merger, to provide for the termination of any portion ofthe Award that remains unexercised at the time of such transaction or (iii) toprovide for the acceleration of the vesting and exercisability of anoutstanding Award and the cancellation thereof in exchange for such payment asshall be mutually agreeable to the Participant and the Board.

 

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16. Restrictions. No Common Stock or other form ofpayment shall be issued with respect to any Award unless the Company shall besatisfied based on the advice of its counsel that such issuance will be incompliance with applicable federal and state securities laws. It is the intentof the Company that grants of Awards under this Plan comply withRule 16b-3 with respect to persons subject to Section 16 of theExchange Act unless otherwise provided herein or in an Award Agreement, thatany ambiguities or inconsistencies in the construction of such an Award or thisPlan be interpreted to give effect to such intention. Certificates evidencingshares of Common Stock delivered under this Plan (to the extent that such sharesare so evidenced) may be subject to such stop transfer orders and otherrestrictions as the Committee may deem advisable under the rules, regulationsand other requirements of the Securities and Exchange Commission, anysecurities exchange or transaction reporting system upon which the Common Stockis then listed or to which it is admitted for quotation and any applicablefederal or state securities law. The Committee may cause a legend or legends tobe placed upon such certificates (if any) to make appropriate reference to suchrestrictions.

 

17. Unfunded Plan. Insofar as it provides for Awardsof cash, Common Stock or rights thereto, this Plan shall be unfunded. Althoughbookkeeping accounts may be established with respect to Participants who areentitled to cash, Common Stock or rights thereto under this Plan, any suchaccounts shall be used merely as a bookkeeping convenience. The Company shallnot be required to segregate any assets that may at any time be represented bycash, Common Stock or rights thereto, nor shall this Plan be construed asproviding for such segregation, nor shall the Company, the Board or theCommittee be deemed to be a trustee of any cash, Common Stock or rights theretoto be granted under this Plan. Any liability or obligation of the Company toany Participant with respect to an Award of cash, Common Stock or rightsthereto under this Plan shall be based solely upon any contractual obligationsthat may be created by this Plan and any Award Agreement, and no such liabilityor obligation of the Company shall be deemed to be secured by any pledge orother encumbrance on any property of the Company. Neither the Company nor theBoard nor the Committee shall be required to give any security or bond for theperformance of any obligation that may be created by this Plan.

 

18. Governing Law. This Plan and all determinationsmade and actions taken pursuant hereto, to the extent not otherwise governed bymandatory provisions of the Code or the securities laws of the United States,shall be governed by and construed in accordance with the laws of the State ofDelaware.

 

19. Effectiveness. The Plan as hereby amended andrestated shall be effective as of June 1, 2004.

 

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ANNEX A

 
| **NAME**            |   | **EXPIRATION DATE** |   | **VESTING/ EXERCISABILITY (1)** |   | **PER SHARE PURCHASE PRICE** |   |
|---------------------|--------|---------------------|--------|---------------------------------|--------|------------------------------|--------|
| Joseph  R. Musolino |   | 06/03/2012          |   | 06/03/2004                      |   | $                            | 5.69   |   |
| Thurmon Andress     |   | 01/23/2013          |   | 01/23/2005                      |   | $                            | 3.88   |   |
| David F. Work       |   | 01/23/2013          |   | 01/23/2005                      |   | $                            | 3.88   |   |

 

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(1) Options vest and become exercisable in full on the date set forthopposite the name of the applicable Non-employee Director.

 

A-1

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