Exhibit 10.13


 


COBALT INTERNATIONAL ENERGY, INC.


LONG TERM INCENTIVE PLAN


 


SECTION 1.  Purpose.  The purpose of the Cobalt International
Energy, Inc. Long Term Incentive Plan (the “Plan”) is to motivate and reward those employees and other
individuals who are expected to contribute significantly to the success of
Cobalt International Energy, Inc. (the “Company”)
and its Affiliates to perform at the highest level and to further the best
interests of the Company and its shareholders.


 


SECTION 2.  Definitions.  As used in the Plan, the following terms
shall have the meanings set forth below:


 


(a)           “Act” means Securities Exchange Act of 1934.


 


(b)           “Affiliate” means (i) any entity that,
directly or indirectly, is controlled by the Company and (ii) any entity
in which the Company has a significant equity interest, in each case as
determined by the Committee.


 


(c)           “Award” means any Option, SAR, Restricted
Stock, RSU, Performance Award or Other Stock-Based Award granted under the
Plan.


 


(d)           “Award Document” means any agreement,
contract or other instrument or document evidencing any Award granted under the
Plan, which may, but need not, be executed or acknowledged by a Participant.


 


(e)           “Beneficiary” means a person entitled to
receive payments or other benefits or exercise rights that are available under
the Plan in the event of the Participant’s death.  If no such person is named by a Participant,
or if no Beneficiary designated by the Participant is eligible to receive
payments or other benefits or exercise rights that are available under the Plan
at the Participant’s death, such Participant’s Beneficiary shall be such
Participant’s estate.


 


(f)            “Board” means the board of directors of the
Company.


 


(g)           “Cause” means, with respect to any
Participant, “cause” as defined such Participant’s Employment Agreement, if
any, or if not so defined, except as otherwise provided in such Participant’s
Award Document, such Participant’s:


 


(i)        having engaged in
material mismanagement in providing services to the Company or its Affiliates;


 


(ii)       having engaged in
conduct that he or she knew would be materially injurious to the Company or its
Affiliates;


 

















 


(iii)               material breach
of any applicable Employment Agreement or Lock Up Agreement;


 


(iv)                having been convicted of, or
having entered a plea bargain or settlement admitting guilt for, any felony
under the laws of the United States, any state or the District of Columbia
where such felony involves moral turpitude or where, as a result of such
felony, the continued employment of the Participant would have, or could
reasonably be expected to have, a material adverse impact on the reputation of
the Company or any of its Affiliates; or


 


(v)      having been the subject
of any order, judicial or administrative, obtained or issued by the Securities
and Exchange Commission for any securities violation involving fraud including,
for example, any such order consented to by the Participant in which findings
of facts or any legal conclusions establishing liability are neither admitted
nor denied.


 


The
occurrence of any such event that is susceptible to cure or remedy shall not
constitute Cause if such Participant cures or remedies such event within 30
days after the Company provides notice to such Participant.


 


(h)           “Change in Control” means the occurrence of
any one or more of the following events:


 


(i)        any “person” (as
defined in Section 13(d) of the Act),  other than (A) an employee benefit plan or trust
maintained by the Company or (B) any of the Sponsors (as defined in the
Amended and Restated Certificate of Incorporation of the Company as in effect
immediately following the closing of the initial public offering of Shares) or
their respective affiliates, becomes the “beneficial owner” (as defined in
Rule 13d-3 under the Act), directly or indirectly, of securities of the
Company representing more than 50% of the combined voting power of the
Company’s outstanding securities entitled to vote generally in the election of
directors;


 


(ii)       at any time during a
period of 12  consecutive months,
individuals who at the beginning of such period constituted the Board and any
new member of the Board whose election or nomination for election was approved
by a vote of at least  a majority
of the directors then still in office who either were directors at the
beginning of such period or whose election or nomination for election was so
approved, cease for any reason to constitute a majority of members of the
Board; or


 


(iii)      the consummation of
(A) a merger or consolidation of the Company or any of its subsidiaries
with any other corporation or entity, 


 


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other
than a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior to such merger or consolidation
continuing to represent (either by remaining outstanding or being converted
into voting securities of the surviving entity or, if applicable, the ultimate
parent thereof) at least 50% of the combined voting power and total fair market
value of the securities of the Company or such surviving entity or parent
outstanding immediately after such merger or consolidation, or (B) any
sale, lease, exchange or other transfer to any Person (other than an Affiliate
of the Company) of assets of the Company and/or any of its subsidiaries, in one
transaction or a series of related transactions, having an aggregate fair
market value of more than 50% of the fair market value of the Company and its
subsidiaries (the “Company Value”)
immediately prior to such transaction(s), but only to the extent that, in
connection with such transaction(s) or within a reasonable period
thereafter, the Company’s stockholders receive distributions of cash and/or
assets having a fair market value that is greater than 50% of the Company Value
immediately prior to such transaction(s).


 


Notwithstanding the
foregoing, in no event shall a Change in Control be deemed to have occurred
with respect to a Participant if the Participant is part of a “group” within
the meaning of Section 13(d)(3) of the Act that consummates the
Change in Control transaction.  In
addition, for purposes of the definition of Change in Control, a person engaged
in business as an underwriter of securities shall not be deemed to be the
beneficial owner of, or to beneficially own, any securities acquired through
such person’s participation in good faith in a firm commitment underwriting
until the expiration of 40 days after the date of such acquisition.


 


(i)            “Code” means the Internal Revenue Code of
1986, as amended from time to time, and the rules, regulations and guidance
thereunder.  Any reference to a provision
in the Code shall include any successor provision thereto.


 


(j)            “Committee” means the Compensation Committee
of the Board or such other committee as may be designated by the Board.  If the Board does not designate the
Committee, references herein to the “Committee” shall refer to the Board.


 


(k)           “Covered Employee” means an individual who
is (i) either a “covered employee” or expected by the Committee to be a
“covered employee,” in each case within the meaning of
Section 162(m)(3) of the Code or (ii) expected by the Committee
to be the recipient of compensation (other than
Section 162(m) Compensation) in excess of $1,000,000 for the tax year
of the Company with regard to which a deduction in respect of such individual’s
Award would be claimed.


 


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(l)            “Disability” means, with respect to any
Participant, “disability” as defined in such Participant’s Employment
Agreement, if any, or if not so defined, except as otherwise provided in such
Participant’s Award Document:


 


(i)        a permanent and total
disability that entitles the Participant to disability income payments under
any long-term disability plan or policy provided by the Company under which the
Participant is covered, as such plan or policy is then in effect; or


 


(ii)       if such Participant is
not covered under a long-term disability plan or policy provided by the Company
at such time for whatever reason, then the term “Disability” means a “permanent
and total disability” as defined in Section 22(e)(3) of the Code and,
in this case, the existence of any such Disability will be certified by a
physician acceptable to the Company.


 


(m)          “Effective Date” means the date on which the
Plan is adopted by the Board.


 


(n)           “Employment Agreement” means any employment,
severance, consulting or similar agreement between the Company or any of its
Affiliates and a Participant.


 


(o)           “Exchange Act” means the Securities Exchange
Act of 1934, as amended from time to time, and the rules, regulations and
guidance thereunder.  Any reference to a
provision in the Exchange Act shall include any successor provision thereto.


 


(p)           “Fair Market Value” means with respect to
Shares, the closing price of a Share on the date in question (or, if there is
no reported sale on such date, on the last preceding date on which any reported
sale occurred) on the principal stock market or exchange on which the Shares
are quoted or traded, or if Shares are not so quoted or traded, fair market value
as determined by the Committee, and with respect to any property other than
Shares, the fair market value of such property determined by such methods or
procedures as shall be established from time to time by the Committee.


 


(q)           “Good Reason” means, with respect to any
Participant, “good reason” as defined such Participant’s Employment Agreement,
if any, or if not so defined, except as otherwise provided in such
Participant’s Award Document, the occurrence of any one or both of the
following events:


 


(i)        material reduction by
the Company or any of its Affiliates of such Participant’s base salary; or


 


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(ii)       relocation by the
Company or any of its Affiliates of the geographic location of such
Participant’s principal place of employment by more than 75 miles from Houston,
Texas.


 


In each case, if such
Participant desires to terminate his or her employment or engagement with the
Company or such Affiliate for Good Reason, he or she must first give written
notice of the facts and circumstances providing the basis for Good Reason to
the Company or such Affiliate and allow the Company or such Affiliate 60 days
from the date of such notice to remedy, cure or rectify the situation giving
rise to Good Reason, and in the absence of any such remedy, cure or
rectification, such Participant must terminate his or her employment or
engagement for such Good Reason within 120 days after delivery of such written
notice.


 


(r)            “Incentive Stock Option” means an option
representing the right to purchase Shares from the Company, granted pursuant to
Section 6, that meets the requirements of Section 422 of the Code.


 


(s)           “Intrinsic Value” with respect to an Option
or SAR Award means (i) the price or implied price per Share in a Change in
Control or other event over (ii) the exercise or hurdle price of such
Award multiplied by (iii) the number of Shares covered by such Award.


 


(t)            “IPO Awards” has the meaning assigned to it
in Section 3(c).


 


(u)           “Lock Up Agreement” means any agreement between
the Company or any of its Affiliates and a Participant that provides for
restrictions on the transfer of Shares held by such Participant.


 


(v)           “Non-Qualified Stock Option” means an option
representing the right to purchase Shares from the Company, granted pursuant to
Section 6, that is not an Incentive Stock Option.


 


(w)          “Option” means an Incentive Stock Option or
a Non-Qualified Stock Option.


 


(x)            “Other Stock-Based Award” means an Award
granted pursuant to Section 10.


 


(y)           “Participant” means the recipient of an
Award granted under the Plan.


 


(z)            “Performance Award” means an Award granted
pursuant to Section 9.


 


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(aa)         “Performance Period” means the period
established by the Committee at the time any Performance Award is granted or at
any time thereafter during which any performance goals specified by the
Committee with respect to such Award are measured.


 


(bb)         “Reorganization Agreement” means the
Reorganization Agreement dated as of [·], 2009 among Cobalt
International Energy, L.P., the Company, [Cobalt Merger Subsidiary] and the
other parties signatory thereto.


 


(cc)         “Replacement Award” means an Award granted
in assumption of, or in substitution for, an outstanding award previously granted
by a company acquired by the Company or with which the Company combines.


 


(dd)         “Restricted Stock” means any Share granted
pursuant to Section 8.


 


(ee)         “RSU” means a contractual right granted
pursuant to Section 8 that is denominated in Shares.  Each RSU represents a right to receive the
value of one Share (or a percentage of such value) in cash, Shares or a
combination thereof.  Awards of RSUs may
include the right to receive dividend equivalents.


 


(ff)           “SAR” means any right granted pursuant to
Section 7 to receive upon exercise by a Participant or settlement, in
cash, Shares or a combination thereof, the excess of (i) the Fair Market
Value of one Share on the date of exercise or settlement over (ii) the
exercise or hurdle price of the right on the date of grant, or if granted in
connection with an Option, on the date of grant of the Option.


 


(gg)         “Section 162(m) Compensation”
means “qualified performance-based compensation” under
Section 162(m) of the Code.


 


(hh)         “Shares” means shares of the Company’s common
stock.


 


(ii)        “Termination of Service” means, in the case
of a Participant who is an employee of the Company or an Affiliate, cessation
of the employment relationship such that the Participant is no longer an
employee of the Company or Affiliate, or, in the case of a Participant who is
an independent contractor, the date the performance of services for the Company
or an Affiliate has ended; provided, however,
that in the case of an employee, the transfer of employment from the Company to
an Affiliate, from an Affiliate to the Company, from one Affiliate to another
Affiliate or, unless the Committee determines otherwise, the cessation of
employee status but the continuation of the performance of services for the
Company or an Affiliate as a director of the Board or an independent contractor
shall not be deemed a cessation of service that would constitute a Termination
of Service; provided, further,
that a Termination of 


 


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Service
will be deemed to occur for a Participant employed by an Affiliate when an
Affiliate ceases to be an Affiliate unless such Participant’s employment
continues with the Company or another Affiliate.


 


SECTION 3.  Eligibility.


 


(a)           Any employee,
consultant or other advisor of, or any other individual who provides services
to, the Company or any Affiliate, other than any non-employee director of the
Company or any Affiliate, shall be eligible to be selected to receive an Award
under the Plan.


 


(b)           Holders of options
and other types of awards granted by a company acquired by the Company or with
which the Company combines are eligible for grants of Replacement Awards under
the Plan.


 


(c)           Holders of unvested
limited partnership interests in Cobalt International Energy, L.P. as of
immediately prior to the effective time of the merger contemplated by the
Reorganization Agreement shall receive, as soon as practicable following the
closing of the initial public offering of Shares, Awards of Restricted Stock
under the Plan in accordance with the terms set forth in the Reorganization
Agreement (“IPO Awards”).


 


SECTION 4.  Administration.


 


(a)           The Plan shall be
administered by the Committee.  The
Committee shall be appointed by the Board and shall consist of not less than
three directors of the Board.  To the
extent necessary to comply with applicable regulatory regimes, any action by
the Committee shall require the approval of 
Committee members who are (i) independent, within the meaning of
and to the extent required by applicable rulings and interpretations of the
applicable stock market or exchange on which the Shares are quoted or traded;
(ii) a non-employee director within the meaning of Rule 16b-3 under
the Exchange Act; and (iii) an outside director pursuant to Section 162(m) of
the Code.  The Board may designate one or
more directors as alternate members of the Committee who may replace any absent
or disqualified member at any meeting of the Committee.  To the extent permitted by applicable law,
the Committee may delegate to one or more officers of the Company the authority
to grant Awards, except that such delegation shall not be applicable to any
Award for  a person then covered by
Section 16 of the Exchange Act.  The
Committee may issue rules and regulations for administration of the
Plan.  It shall meet at such times and
places as it may determine.


 


(b)           Subject to the terms
of the Plan and applicable law, the Committee (or its delegate) shall have full
power and authority to: 
(i) designate Participants; (ii) determine the type or types
of Awards (including Replacement Awards) to be granted to each Participant
under the Plan; (iii) determine the 


 


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number
of Shares to be covered by (or with respect to which payments, rights or other
matters are to be calculated in connection with) Awards; (iv) determine
the terms and conditions of any Award; (v) determine whether, to what
extent and under what circumstances Awards may be settled or exercised in cash,
Shares, other Awards, other property, net settlement, or any combination
thereof, or canceled, forfeited or suspended, and the method or methods by
which Awards may be settled, exercised, canceled, forfeited or suspended;
(vi) determine whether, to what extent and under what circumstances cash,
Shares, other Awards, other property and other amounts payable with respect to
an Award under the Plan shall be deferred either automatically or at the
election of the holder thereof or of the Committee; (vii) interpret and
administer the Plan and any instrument or agreement relating to, or Award made
under, the Plan; (viii) establish, amend, suspend or waive such
rules and regulations and appoint such agents as it shall deem appropriate
for the proper administration of the Plan; and (ix) make any other determination
and take any other action that the Committee deems necessary or desirable for
the administration of the Plan.


 


(c)           All decisions of the
Committee shall be final, conclusive and binding upon all parties, including
the Company, its shareholders and Participants and any Beneficiaries thereof.


 


SECTION 5.  Shares Available for Awards.


 


(a)           Subject to
adjustment as provided in Section 5(c) and except for Replacement
Awards and IPO Awards, (i) the maximum number of Shares available for
issuance under the Plan shall not exceed [·] Shares and
(ii) no Participant may receive under the Plan in any calendar year
(A) Options and SARs that relate to more than [·]  Shares; (B) Restricted Stock and RSUs
that relate to more than [·] Shares or
(C) Performance Awards and Other Stock-Based Awards that relate to more
than [·] Shares.


 


(b)           Any Shares subject
to an Award (other than a Replacement Award or IPO Award), that expires, is
canceled, forfeited or otherwise terminates without the delivery of such
Shares, including (i) the number of Shares surrendered or withheld in
payment of any grant, purchase, exercise or hurdle price of an Award or taxes
related to an Award and (ii) any Shares subject to an Award to the extent
that Award is settled without the issuance of Shares, shall again be, or shall
become, available for issuance under the Plan.


 


(c)           In the event that
the Committee determines that, as a result of any dividend or other
distribution (whether in the form of cash, Shares or other securities),
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase or exchange of
Shares or other securities of the Company, issuance of warrants or other rights
to purchase Shares or other securities of the Company, issuance of Shares
pursuant to the anti-dilution provisions of securities of the Company, or other
similar 


 


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corporate
transaction or event affecting the Shares, an adjustment is appropriate in order
to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, then the Committee shall adjust
equitably any or all of:


 


(i)    the number and type of
Shares (or other securities) which thereafter may be made the subject of
Awards, including the aggregate and individual limits specified in
Section 5(a);


 


(ii)   the number and type of
Shares (or other securities) subject to outstanding Awards; and


 


(iii)  the grant, purchase,
exercise or hurdle price with respect to any Award or, if deemed appropriate,
make provision for a cash payment to the holder of an outstanding Award;


 


provided,
however, that the number of Shares subject to any Award denominated in Shares
shall always be a whole number.


 


(d)           Any Shares delivered
pursuant to an Award may consist, in whole or in part, of authorized and
unissued Shares or Shares acquired by the Company.


 


SECTION 6.  Options. 
The Committee is authorized to grant Options to Participants with the
following terms and conditions and with such additional terms and conditions,
in either case not inconsistent with the provisions of the Plan, as the
Committee shall determine:


 


(a)           The exercise price
per Share under an Option shall be determined by the Committee; provided, however,
that, except in the case of Replacement Awards, such exercise price shall not
be less than the Fair Market Value of a Share on the date of grant of such
Option.


 


(b)           The term of each
Option shall be fixed by the Committee but shall not exceed 10 years from the
date of grant of such Option.


 


(c)           The Committee shall
determine the time or times at which an Option may be exercised in whole or in
part.


 


(d)           The Committee shall
determine the method or methods by which, and the form or forms, including
cash, Shares, other Awards, other property, net settlement, or any combination
thereof, having a Fair Market Value on the exercise date equal to the relevant
exercise price, in which payment of the exercise price with respect thereto may
be made or deemed to have been made.


 


(e)           The terms of any
Incentive Stock Option granted under the Plan shall comply in all respects with
the provisions of Section 422 of the Code.


 


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SECTION 7. 
Stock Appreciation Rights.  The Committee is authorized to grant SARs
to Participants with the following terms and conditions and with such
additional terms and conditions, in either case not inconsistent with the
provisions of the Plan, as the Committee shall determine.


 


(a)                                  SARs may be granted under the Plan to
Participants either alone (“freestanding”) or in addition to other Awards
granted under the Plan (“tandem”) and may, but need not, relate to a specific
Option granted under Section 6.


 


(b)                                 The exercise or hurdle price per Share
under a SAR shall be determined by the Committee; provided, however,
that, except in the case of Replacement Awards, such exercise or hurdle price
shall not be less than the Fair Market Value of a Share on the date of grant of
such SAR.


 


(c)                                  The term of each SAR shall be fixed by
the Committee but shall not exceed 10 years from the date of grant of such SAR.


 


(d)                                 The Committee shall determine the time or
times at which a SAR may be exercised or settled in whole or in part.


 


SECTION 8.  Restricted Stock and RSUs.  The Committee is authorized to grant Awards of
Restricted Stock and RSUs to Participants with the following terms and
conditions and with such additional terms and conditions, in either case not
inconsistent with the provisions of the Plan, as the Committee shall determine.


 


(a)                                  Shares of Restricted Stock and RSUs shall
be subject to such restrictions as the Committee may impose (including any
limitation on the right to vote a Share of Restricted Stock or the right to
receive any dividend, dividend equivalent or other right), which restrictions
may lapse separately or in combination at such time or times, in such
installments or otherwise, as the Committee may deem appropriate.


 


(b)                                 Any share of Restricted Stock granted
under the Plan may be evidenced in such manner as the Committee may deem
appropriate, including book-entry registration or issuance of a stock
certificate or certificates.  In the
event any stock certificate is issued in respect of shares of Restricted Stock
granted under the Plan, such certificate shall be registered in the name of the
Participant and shall bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such Restricted Stock.


 


(c)                                  If the Committee intends that an Award
granted under this Section 8 shall constitute or give rise to Section 162(m) Compensation,
such Award may be structured in accordance with the requirements of Section 9(a),
including the performance criteria and the Award limitation set forth therein,
and


 


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any such Award shall be considered a Performance Award
for purposes of the Plan.


 


(d)                                 The Committee may provide in an Award
Document that an Award of Restricted Stock is conditioned upon the Participant
making or refraining from making an election with respect to the Award under Section 83(b) of
the Code.  If a Participant makes an
election pursuant to Section 83(b) of the Code with respect to an
Award of Restricted Stock, the Participant shall be required to file promptly a
copy of such election with the Company.


 


SECTION 9.  Performance Awards. 
The Committee is authorized to grant Performance Awards to Participants
with the following terms and conditions and with such additional terms and
conditions, in either case not inconsistent with the provisions of the Plan, as
the Committee shall determine:


 


(a)                                  Performance Awards may be denominated as
a cash amount, number of Shares or a combination thereof and are Awards which
may be earned upon achievement or satisfaction of performance conditions
specified by the Committee.  In addition,
the Committee may specify that any other Award shall constitute a Performance
Award by conditioning the right of a Participant to exercise the Award or have
it settled, and the timing thereof, upon achievement or satisfaction of such
performance conditions as may be specified by the Committee.  The Committee may use such business criteria
and other measures of performance as it may deem appropriate in establishing
any performance conditions.  Subject to
the terms of the Plan, the performance goals to be achieved during any
Performance Period, the length of any Performance Period, the amount of any
Performance Award granted and the amount of any payment or transfer to be made
pursuant to any Performance Award shall be determined by the Committee.


 


(b)                                 Every Performance Award shall, if the
Committee intends that such Award should constitute Section 162(m) Compensation,
include a pre-established formula, such that payment, retention or vesting of
the Award is subject to the achievement during a Performance Period or
Performance Periods, as determined by the Committee, of a level or levels of,
or increases in, in each case as determined by the Committee, one or more of
the following performance measures with respect to the Company:  captured prospects, prospecting licenses
signed, operated prospects matured to drill ready, drilling programs commenced,
drillable prospects, capabilities and critical path items established,
operating budget, third-party capital sourcing, captured net risked resource
potential, acquisition cost efficiency, central lease sale position,
acquisitions of oil and gas interests, increases in proved, probable or
possible reserves, finding and development costs, overhead costs, general and
administration expense, market price of a Share, cash flow, reserve value, net
asset value, earnings, net income, operating income, cash from operations,
revenue, margin, EBITDA (earnings before interest, taxes, depreciation and
amortization), EBITDAX (earnings before


 


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interest, taxes, depreciation, amortization and
exploration expense), net capital employed, return on assets, stockholder
return, reserve replacement, return on equity, return on capital employed,
production, assets, unit volume, sales, market share, or strategic business
criteria consisting of one or more objectives based on meeting specified goals
relating to acquisitions or divestitures, each as determined in accordance with
generally accepted accounting principles, where applicable, as consistently
applied by the Company.  Performance
criteria may be measured on an absolute (e.g., plan or
budget) or relative basis.  Relative
performance may be measured against a group of peer companies, a financial
market index or other acceptable objective and quantifiable indices.  Except in the case of an award intended to
qualify as Section 162(m) Compensation, if the Committee determines
that a change in the business, operations, corporate structure or capital
structure of the Company, or the manner in which the Company conducts its
business, or other events or circumstances render the performance objectives
unsuitable, the Committee may modify the performance objectives or the related
minimum acceptable level of achievement, in whole or in part, as the Committee
deems appropriate and equitable. 
Performance measures may vary from Performance Award to Performance Award,
respectively, and from Participant to Participant, and may be established on a
stand-alone basis, in tandem or in the alternative.  The Committee shall have the power to impose
such other restrictions on Awards subject to this Section 9(b) as it
may deem necessary or appropriate to ensure that such Awards satisfy all
requirements for Section 162(m) Compensation.  Notwithstanding any provision of the Plan to
the contrary, the Committee shall not be authorized to increase the amount
payable under any Award to which this Section 9(b) applies upon
attainment of such pre-established formula.


 


(c)                                  Settlement of Performance Awards;
Other Terms.  Settlement of Performance Awards shall be in
cash, Shares, other Awards, other property, net settlement, or any combination
thereof, in the discretion of the Committee. 
Performance Awards will be settled only after the end of the relevant
Performance Period.  The Committee may,
in its discretion, increase or reduce the amount of a settlement otherwise to
be made in connection with a Performance Award but may not exercise discretion
to increase any amount payable to a Covered Employee in respect of a
Performance Award intended to qualify as Section 162(m) Compensation.  Any settlement that changes the form of
payment from that originally specified shall be implemented in a manner such
that the Performance Award and other related Awards do not, solely for that
reason, fail to qualify as Section 162(m) Compensation.  The Committee shall specify the circumstances
in which, and the extent to which, Performance Awards shall be paid or
forfeited in the event of a Participant’s Termination of Service.


 


SECTION 10. 
Other Stock-Based Awards.  The Committee
is authorized, subject to limitations under applicable law, to grant to
Participants such other Awards that may be denominated or payable in, valued in
whole or in part by


 


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reference to, or
otherwise based on, or related to, Shares or factors that may influence the
value of Shares, including convertible or exchangeable debt securities, other
rights convertible or exchangeable into Shares, purchase rights for Shares,
Awards with value and payment contingent upon performance of the Company or
business units thereof or any other factors designated by the Committee.  The Committee shall determine the terms and
conditions of such Awards.  Shares
delivered pursuant to an Award in the nature of a purchase right granted under
this Section 10 shall be purchased for such consideration, paid for at
such times, by such methods and in such forms, including cash, Shares, other
Awards, other property, or any combination thereof, as the Committee shall
determine.  Cash awards, as an element of
or supplement to any other Award under the Plan, may also be granted pursuant
to this Section 10.


 


SECTION 11. 
Effect of Termination of Service or a Change in Control on Awards.


 


(a)                                  The Committee may provide, by rule or
regulation or in any Award Document, or may determine in any individual case,
the circumstances in which, and the extent to which, an Award may be exercised,
settled, vested, paid or forfeited in the event of a Participant’s Termination
of Service prior to the end of a Performance Period or exercise or settlement
of such Award.


 


(b)                                 The Committee may set forth the treatment
of an Award upon a Change in Control in the applicable Award Document.


 


(c)                                  In the case of an Option or SAR Award,
except as otherwise provided in the applicable Award Document, upon a Change in
Control, a merger or consolidation involving the Company or any other event
with respect to which the Committee deems it appropriate, the Committee may
cause such Award to be canceled in consideration of (i) the full
acceleration of such Award and either (A) a period of at least ten days
prior to such Change in Control to exercise the Award or (B) a payment in
cash or other consideration to the Participant who holds such Award in an
amount equal to the Intrinsic Value of such Award (which may be equal to but
not less than zero), which, if in excess of zero, shall be payable upon the
effective date of such Change in Control, merger, consolidation or other event
or (ii) a substitute award (which immediately upon grant shall have an
Intrinsic Value equal to the Intrinsic Value of such Award).


 


SECTION 12. 
General Provisions Applicable to Awards.


 


(a)                                  Awards shall be granted for no cash
consideration or for such minimal cash consideration as may be required by
applicable law.


 


(b)                                 Awards may, in the discretion of the
Committee, be granted either alone or in addition to or in tandem with any
other Award or any award


 


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granted under any other plan of the Company.  Awards granted in addition to or in tandem
with other Awards, or in addition to or in tandem with awards granted under any
other plan of the Company, may be granted either at the same time as or at a
different time from the grant of such other Awards or awards.


 


(c)                                  Subject to the terms of the Plan,
payments or transfers to be made by the Company upon the grant, exercise or
settlement of an Award may be made in the form of cash, Shares, other Awards,
other property, net settlement, or any combination thereof, as determined by
the Committee in its discretion at the time of grant, and may be made in a
single payment or transfer, in installments or on a deferred basis, in each
case in accordance with rules and procedures established by the
Committee.  Such rules and
procedures may include provisions for the payment or crediting of reasonable
interest on installment or deferred payments or the grant or crediting of
dividend equivalents in respect of installment or deferred payments.


 


(d)                                 Except as may be permitted by the
Committee or as specifically provided in an Award Document, (i) no Award
and no right under any Award shall be assignable, alienable, saleable or
transferable by a Participant otherwise than by will or pursuant to Section 12(e) and
(ii) during a Participant’s lifetime, each Award, and each right under any
Award, shall be exercisable only by the Participant or, if permissible under
applicable law, by the Participant’s guardian or legal representative.  The provisions of this Section 12(d) shall
not apply to any Award that has been fully exercised or settled, as the case
may be, and shall not preclude forfeiture of an Award in accordance with the
terms thereof.


 


(e)                                  A Participant may designate a Beneficiary
or change a previous Beneficiary designation at such times prescribed by the
Committee by using forms and following procedures approved or accepted by the
Committee for that purpose.


 


(f)                                    All certificates for Shares and/or other
securities delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such stop transfer orders and other restrictions as
the Committee may deem advisable under the Plan or the rules, regulations and
other requirements of the Securities and Exchange Commission, any stock market
or exchange upon which such Shares or other securities are then quoted, traded
or listed, and any applicable securities laws, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.


 


(g)                                 The Committee
may impose restrictions on any Award with respect to non-competition,
confidentiality and other restrictive covenants as it deems necessary or
appropriate in its sole discretion.


 


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SECTION 13. 
Amendments and Termination.


 


(a)                                  Except to the extent prohibited by
applicable law and unless otherwise expressly provided in an Award Document or
in the Plan, the Board may amend, alter, suspend, discontinue or terminate the
Plan or any portion thereof at any time; provided,
however, that no
such amendment, alteration, suspension, discontinuation or termination shall be
made without (i) shareholder approval if such approval is required by
applicable law or the rules of the stock market or exchange, if any, on
which the Shares are principally quoted or traded or (ii) the consent of
the affected Participant, if such action would materially adversely affect the
rights of such Participant under any outstanding Award, except to the extent
any such amendment, alteration, suspension, discontinuance or termination is
made to cause the Plan to comply with applicable law, stock market or exchange rules and
regulations or accounting or tax rules and regulations.  Notwithstanding anything to the contrary in
the Plan, the Committee may amend the Plan in such manner as may be necessary
to enable the Plan to achieve its stated purposes in any jurisdiction in a
tax-efficient manner and in compliance with local rules and regulations.


 


(b)                                 The Committee may waive any conditions or
rights under, amend any terms of, or amend, alter, suspend, discontinue or
terminate any Award theretofore granted, prospectively or retroactively,
without the consent of any relevant Participant or holder or Beneficiary of an
Award; provided, however, that no such action shall
materially adversely affect the rights of any affected Participant or holder or
Beneficiary under any Award theretofore granted under the Plan, except to the
extent any such action is made to cause the Plan to comply with applicable law,
stock market or exchange rules and regulations or accounting or tax rules and
regulations; provided further that,
except as provided in Section 5(c), no such action shall directly or
indirectly, through cancellation and regrant or any other method, reduce, or
have the effect of reducing, the exercise price of any Award established at the
time of grant thereof; and provided further,
that the Committee’s authority under this Section 13(b) is limited in
the case of Awards subject to Section 9(b), as provided in Section 9(b).


 


(c)                                  Except as provided in Section 9(b),
the Committee shall be authorized to make adjustments in the terms and
conditions of, and the criteria included in, Awards in recognition of events
(including the events described in Section 5(c)) affecting the Company, or
the financial statements of the Company, or of changes in applicable laws,
regulations or accounting principles, whenever the Committee determines that
such adjustments are appropriate in order to prevent dilution or enlargement of
the benefits or potential benefits intended to be made available under the
Plan.


 


(d)                                 The Committee may correct any defect,
supply any omission or reconcile any inconsistency in the Plan or any Award in
the manner and to the extent it shall deem desirable to carry the Plan into
effect.


 


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SECTION 14. 
Miscellaneous.


 


(a)                                  No employee, Participant or other person
shall have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of employees, Participants or holders or
Beneficiaries of Awards under the Plan. 
The terms and conditions of Awards need not be the same with respect to
each recipient.  Any Award granted under
the Plan shall be a one-time Award that does not constitute a promise of future
grants.  The Company, in its sole
discretion, maintains the right to make available future grants under the Plan.


 


(b)                                 The grant of an Award shall not be
construed as giving a Participant the right to be retained in the employ of, or
to continue to provide services to, the Company or any Affiliate.  Further, the Company or the applicable
Affiliate may at any time dismiss a Participant, free from any liability, or
any claim under the Plan, unless otherwise expressly provided in the Plan or in
any Award Document or in any other agreement binding the parties.  The receipt of any Award under the Plan is
not intended to confer any rights on the receiving Participant except as set
forth in the applicable Award Document.


 


(c)                                  Nothing contained in the Plan shall
prevent the Company from adopting or continuing in effect other or additional
compensation arrangements, and such arrangements may be either generally
applicable or applicable only in specific cases.


 


(d)                                 The Company shall be authorized to
withhold from any Award granted or any payment due or transfer made under any
Award or under the Plan or from any compensation or other amount owing to a
Participant the amount (in cash, Shares, other Awards, other property, net
settlement, or any combination thereof) of applicable withholding taxes due in
respect of an Award, its exercise or settlement or any payment or transfer
under such Award or under the Plan and to take such other action (including
providing for elective payment of such amounts in cash or Shares by the
Participant) as may be necessary in the opinion of the Company to satisfy all
obligations for the payment of such taxes.


 


(e)                                  If any provision of the Plan or any Award
Document is or becomes or is deemed to be invalid, illegal or unenforceable in
any jurisdiction, or as to any person or Award, or would disqualify the Plan or
any Award under any law deemed applicable by the Committee, such provision
shall be construed or deemed amended to conform to applicable laws, or if it
cannot be so construed or deemed amended without, in the determination of the
Committee, materially altering the intent of the Plan or the Award Document,
such provision shall be stricken as to such jurisdiction, person or Award, and
the remainder of the Plan and any such Award Document shall remain in full
force and effect.


 


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(f)                                    Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company and a Participant or any other
person.  To the extent that any person
acquires a right to receive payments from the Company pursuant to an Award,
such right shall be no greater than the right of any unsecured general creditor
of the Company.


 


(g)                                 No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash or other securities shall be paid or transferred in lieu of any
fractional Shares, or whether such fractional Shares or any rights thereto
shall be canceled, terminated or otherwise eliminated.


 


SECTION 15. 
Effective Date of the Plan.  The Plan shall be effective as of the
Effective Date.


 


SECTION 16. 
Term of the Plan.  No Award shall be granted under the Plan
after the earliest to occur of (i) the tenth year anniversary of the
Effective Date, (ii) the maximum number of Shares available for issuance
under the Plan have been issued or (iii) the Board terminates the Plan in
accordance with Section 13(a). 
However, unless otherwise expressly provided in the Plan or in an
applicable Award Document, any Award theretofore granted may extend beyond such
date, and the authority of the Committee to amend, alter, adjust, suspend,
discontinue or terminate any such Award, or to waive any conditions or rights
under any such Award, and the authority of the Board to amend the Plan, shall
extend beyond such date.


 


SECTION 17. 
Section 409A of the Code.  With respect to Awards subject to Section 409A
of the Code, the Plan is intended to comply with the requirements of Section 409A
of the Code, and the provisions of the Plan and any Award Document shall be
interpreted in a manner that satisfies the requirements of Section 409A of
the Code, and the Plan shall be operated accordingly.  If any provision of the Plan or any term or
condition of any Award would otherwise frustrate or conflict with this intent,
the provision, term or condition will be interpreted and deemed amended so as
to avoid this conflict.


 


SECTION 18. 
Governing Law.  The Plan and each Award Document shall be
governed by the laws of the State of Delaware, without application of the
conflicts of law principles thereof.


 


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