exv10w1






Exhibit 10.1




STEWART INFORMATION SERVICES CORPORATION




AMENDED AND RESTATED

2005 LONG-TERM INCENTIVE PLAN




(Adopted by the Board of Directors

on January 15, 2009)




 









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Section
	ARTICLE I ESTABLISHMENT, PURPOSE AND DURATION
	 	 	 	 
	Establishment
	 	 	1.1	 
	Purpose of the Plan
	 	 	1.2	 
	Duration of Authority to Make Grants Under the Plan
	 	 	1.3	 
	Adoption of Amendment and Restatement of the Plan
	 	 	1.4	 
	ARTICLE II DEFINITIONS
	 	 	 	 
	Affiliate
	 	 	2.1	 
	Associate
	 	 	2.2	 
	Associate Stock Bonuses
	 	 	2.3	 
	Award
	 	 	2.4	 
	Award Agreement
	 	 	2.5	 
	Board
	 	 	2.6	 
	Change in Control
	 	 	2.7	 
	Code
	 	 	2.8	 
	Committee
	 	 	2.9	 
	Company
	 	 	2.10	 
	Corporate Change
	 	 	2.11	 
	Directors’ Shares
	 	 	2.12	 
	Effective Date
	 	 	2.13	 
	Exchange Act
	 	 	2.14	 
	Executive Officer
	 	 	2.15	 
	Executive Option
	 	 	2.16	 
	Executive Share
	 	 	2.17	 
	Fair Market Value
	 	 	2.18	 
	Fiscal Year
	 	 	2.19	 
	Holder
	 	 	2.20	 
	Incentive Stock Option
	 	 	2.21	 
	Key Employee
	 	 	2.22	 
	Key Employee Option
	 	 	2.23	 
	Key Employee Shares
	 	 	2.24	 
	Mature Shares
	 	 	2.25	 
	Minimum Statutory Tax Withholding Obligation
	 	 	2.26	 
	Nonqualified Stock Option
	 	 	2.27	 
	Option
	 	 	2.28	 
	Option Price
	 	 	2.29	 
	Optionee
	 	 	2.30	 
	Option Agreement
	 	 	2.31	 
	Plan
	 	 	2.32	 
	Section 409A
	 	 	2.33	 
	Service Award
	 	 	2.34	 
	STC
	 	 	2.35	 
	STG
	 	 	2.36	 
	Stock
	 	 	2.37	 
	Ten Percent Stockholder
	 	 	2.38	 
	Termination of Employment
	 	 	2.39	 
	ARTICLE III ELIGIBILITY AND PARTICIPATION
	 	 	 	 
	Eligibility
	 	 	3.1	 
	Participation
	 	 	3.2	 
	ARTICLE IV GENERAL PROVISIONS RELATING TO AWARDS
	 	 	 	 
	Authority to Grant Awards
	 	 	4.1	 
	Dedicated Shares; Maximum Awards
	 	 	4.2	 
	Non-Transferability
	 	 	4.3	 
	Requirements of Law
	 	 	4.4	 
	Changes in the Company’s Capital Structure
	 	 	4.5	 
	Election Under Section 83(b) of the Code
	 	 	4.6	 






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	 	 	Section
	 
	Forfeiture for Cause
	 	 	4.7	 
	Forfeiture Events
	 	 	4.8	 
	ARTICLE V GENERAL PROVISIONS RELATING TO OPTIONS
	 	 	 	 
	Type of Options Available
	 	 	5.1	 
	Stock Appreciation Rights
	 	 	5.2	 
	Option Price
	 	 	5.3	 
	Maximum Value of Stock Subject to Options that are Incentive Stock Options
	 	 	5.4	 
	Exercise of Options
	 	 	5.5	 
	Duration of Options
	 	 	5.6	 
	Employment Obligation
	 	 	5.7	 
	Option Agreement
	 	 	5.8	 
	Substitution Options
	 	 	5.9	 
	No Rights as Stockholder
	 	 	5.10	 
	ARTICLE VI KEY EMPLOYEE AWARD PERFORMANCE CRITERIA
	 	 	 	 
	ARTICLE VII DIRECTORS’ SHARES
	 	 	 	 
	Annual Grant to Directors
	 	 	7.1	 
	Amount of Award
	 	 	7.2	 
	ARTICLE VIII EXECUTIVE SHARES
	 	 	 	 
	Executive Share Awards
	 	 	8.1	 
	Executive Share Award Agreement
	 	 	8.2	 
	Holder’s Rights as Stockholder
	 	 	8.3	 
	ARTICLE IX KEY EMPLOYEE SHARES
	 	 	 	 
	Key Employee Share Awards
	 	 	9.1	 
	Key Employee Share Award Agreement
	 	 	9.2	 
	Holder’s Rights as Stockholder
	 	 	9.3	 
	ARTICLE X ASSOCIATES STOCK BONUSES
	 	 	 	 
	Award of Stock Bonuses
	 	 	10.1	 
	Valuation
	 	 	10.2	 
	ARTICLE XI SERVICE AWARDS
	 	 	 	 
	ARTICLE XII SUBSTITUTION AWARDS
	 	 	 	 
	ARTICLE XIII ADMINISTRATION
	 	 	 	 
	Awards
	 	 	13.1	 
	Authority of the Committee
	 	 	13.2	 
	Decisions Binding
	 	 	13.3	 
	No Liability
	 	 	13.4	 
	ARTICLE XIV AMENDMENT OR TERMINATION OF PLAN
	 	 	 	 
	Amendment, Modification, Suspension, and Termination
	 	 	14.1	 
	Awards Previously Granted
	 	 	14.2	 
	ARTICLE XV MISCELLANEOUS
	 	 	 	 
	Unfunded Plan/No Establishment of a Trust Fund
	 	 	15.1	 
	No Employment Obligation
	 	 	15.2	 
	Tax Withholding
	 	 	15.3	 
	Written Agreement
	 	 	15.4	 
	Indemnification of the Committee
	 	 	15.5	 
	Gender and Number
	 	 	15.6	 
	Severability
	 	 	15.7	 
	Headings
	 	 	15.8	 
	Other Compensation Plans
	 	 	15.9	 
	Other Awards
	 	 	15.10	 
	Successors
	 	 	15.11	 
	Law Limitations/Governmental Approvals
	 	 	15.12	 
	Delivery of Title
	 	 	15.13	 
	Inability to Obtain Authority
	 	 	15.14	 
	Investment Representations
	 	 	15.15	 
	Persons Residing Outside of the United States
	 	 	15.16	 
	No Fractional Shares
	 	 	15.17	 
	Arbitration of Disputes
	 	 	15.18	 
	Governing Law
	 	 	15.19	 







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ARTICLE I




ESTABLISHMENT, PURPOSE AND DURATION




     1.1 Establishment. The Company previously established an incentive compensation plan, known
as “Stewart Information Services Corporation 2005 Long-Term Incentive Plan”. The Plan permits the
grant of Executive Options, Executive Shares, Key Employee Options, Key Employee Shares, Directors’
Shares, Associates Stock Bonuses, and Service Awards. The Plan became effective on April 29, 2005
(the “Effective Date”), was amended and restated by the Board on March 12, 2007, and on January 15,
2009, and shall remain in effect as provided in Section 1.3.



     1.2 Purpose of the Plan. The purpose of the Plan is to reward corporate officers and other
Associates of the Company and its Affiliates by enabling them to acquire shares of common stock of
the Company and to receive other compensation based on the increase in value of the common stock of
the Company. The Plan is intended to advance the best interests of the Company, its Affiliates and
its stockholders by providing those persons who have substantial responsibility for the management
and growth of the Company and its Affiliates with additional performance incentives and an
opportunity to obtain or increase their proprietary interest in the Company, thereby encouraging
them to continue in their employment with the Company and its Affiliates.



     1.3 Duration of Authority to Make Grants Under the Plan. No Awards may be granted under the
Plan on or after the tenth anniversary of the Effective Date. The applicable provisions of the Plan
will continue in effect with respect to an Award granted under the Plan for as long as such Award
remains outstanding.



     1.4 Adoption of Amendment and Restatement of the Plan. This amendment and restatement of the
Plan is contingent upon the approval by the Company’s stockholders of the amendment of the Plan to
increase the number of shares authorized under the Plan. The amendment and restatement of the Plan
shall not become effective unless and until such stockholder approval is obtained and no
incremental shares or Awards shall be granted under the Plan prior to the date such stockholder
approval is obtained.



ARTICLE II




DEFINITIONS




     The words and phrases defined in this Article shall have the meaning set out below throughout
the Plan, unless the context in which any such word or phrase appears reasonably requires a
broader, narrower or different meaning.



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



     2.2 “Associate” means (a) a person employed by the Company or any Affiliate as a common law
employee, (b) a person who has agreed to become a common law employee of the Company or any
Affiliate and is expected to become such within six (6) months from the date of a determination
made for purposes of the Plan or (c) a director or advisory director of the Company who is not an
employee of the Company or any Affiliate.



     2.3 “Associate Stock Bonuses” means an Award granted pursuant to Article X of the Plan.



     2.4 “Award” means, individually or collectively, a grant under the Plan of Executive Options,
Share Appreciation Rights, Executive Shares, Key Employee Options, Key Employee Shares, Directors’
Shares, Associates Stock Bonuses and Service Awards, in each case subject to the terms and
provisions of the Plan.



     2.5 “Award Agreement” means an agreement that sets forth the terms and conditions applicable
to an Award granted under the Plan.



     2.6 “Board” means the board of directors of the Company.



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     2.7 Change in Control” means the occurrence of any of the following events: (a) there shall
be consummated (i) any consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of the Stock would be converted
into cash, securities or other property, other than by a merger of the Company where a majority of
the Board of the surviving corporation is, and for a two-year period after the merger continues to
be, persons who were directors of the Company immediately prior to the merger or were elected as
directors, or nominated for election as director, by a vote of at least two-thirds of the directors
then still in office who were directors of the Company immediately prior to the merger, or (ii) any
sale, lease, exchange or transfer (in one transaction or a series of related transactions) of all
or substantially all of the assets of the Company; (b) the shareholders of the Company shall
approve any plan or proposal for the liquidation or dissolution of the Company; or (c) (i) any
“person” (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act), other than the
Company or a subsidiary thereof or any Associate benefit plan sponsored by the Company or a
subsidiary thereof, who shall become the beneficial owner (within the meaning of Rule 13d-3 under
the Exchange Act) of securities of the Company representing 20 percent or more of the combined
voting power of the Company’s then-outstanding securities ordinarily (and apart from rights
accruing in special circumstances) having the right to vote in the election of directors, as a
result of a tender or exchange offer, open market purchases, privately negotiated purchases or
otherwise, and (ii) at any time during a period of two years after such “person” becomes such a
beneficial owner, individuals who immediately prior to the beginning of such period constituted the
Board shall cease for any reason to constitute at least a majority thereof, unless the election or
the nomination by the Board for election by the Company’s shareholders of each new director during
such period was approved by a vote of at least two-thirds of the directors then still in office who
were directors at the beginning of such period.



     2.8 “Code” means the United States Internal Revenue Code of 1986, as amended from time to
time.



     2.9 “Committee” means a committee of at least two persons, who are members of the
Compensation Committee of the Board and are appointed by the Compensation Committee of the Board,
or, to the extent it chooses to operate as the Committee, the Compensation Committee of the Board.
Each member of the Committee in respect of his or her participation in any decision with respect to
an Award intended to satisfy the requirements of Section 162(m) of the Code must satisfy the
requirements of “outside director” status within the meaning of Section 162(m) of the Code;
provided, however, that the failure to satisfy such requirement shall not affect the validity of
the action of any committee otherwise duly authorized and acting in the matter. As to Awards,
grants or other transactions that are authorized by the Committee and that are intended to be
exempt under Rule 16b-3 under the Exchange Act, the requirements of Rule 16b-3(d)(1) under the
Exchange Act with respect to the committee action must also be satisfied.



     2.10 “Company” means Stewart Information Services Corporation, a Delaware corporation, or any
successor (by reincorporation, merger or otherwise).



     2.11 “Corporate Change” shall have the meaning ascribed to that term in Section 4.5(c).



     2.12 “Directors’ Shares” means an Award granted pursuant to Article VII.



     2.13 “Effective Date” shall have the meaning ascribed to that term In Section 1.1.



     2.14 “Exchange Act” means the United States Securities Exchange Act of 1934, as amended from
time to time.



     2.15 “Executive Officer” has the meaning given such term in the rules and regulations of the
Securities and Exchange Commission.



     2.16 “Executive Option” means an Option granted to an Executive Officer pursuant to Article
V.



     2.17 “Executive Share” means an Award granted pursuant to Article VIII.



     2.18 “Fair Market Value” of the Stock as of any particular date means (1) if the Stock is
traded on a stock exchange, the closing sale price of the Stock on that date as reported on the
principal securities exchange on which the Stock is traded, or (2) if the Stock is traded in the
over-the-counter market, the average between the high bid and low asked price on that date as
reported in such over-the-counter market; provided that (a) if the Stock is not so traded, (b) if
no closing price or bid and asked prices for the Stock was so reported on that date or (c) if, in
the discretion of the Committee, another means of determining the Fair Market Value of a share of
Stock at such date shall be necessary or advisable, the Committee may provide for another means for
determining such Fair Market Value.



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     2.19 “Fiscal Year” means the Company’s fiscal year.



     2.20 “Holder” means a person who has been granted an Award or any person who is entitled to
receive shares of Stock under an Award.



     2.21 “Incentive Stock Option” means an Option granted under the Plan that is designated by
the Committee as an “Incentive Option” and satisfies the requirements of Section 422 of the Code.



     2.22 “Key Employee” means a key employee of the Company, or an Associate, determined by the
Committee to have comparable responsibilities. An Executive Officer is not a Key Employee for
purposes of this Plan.



     2.23 “Key Employee Option” means an Option granted to a Key Employee pursuant to Article V.



     2.24 “Key Employee Shares” means an Award granted to a Key Employee pursuant to Article IX.



     2.25 “Mature Shares” means shares of Stock that the Holder has held for at least six months.



     2.26 “Minimum Statutory Tax Withholding Obligation” means the amount the Company or an
Affiliate is required to withhold for federal, state and local taxes based upon the applicable
minimum statutory withholding rates required by the relevant tax authorities.



     2.27 “Nonqualified Stock Option” means an Option granted under the Plan other than an
Incentive Option.



     2.28 “Option” means an option to purchase Stock granted pursuant to Article V. An Option may
be in the form of either an Incentive Stock Option or a Nonqualified Stock Option.



     2.29 “Option Price” shall have the meaning ascribed to that term in Section 5.3.



     2.30 “Optionee” means a person who is granted an Option under the Plan.



     2.31 “Option Agreement” means a written contract setting forth the terms and conditions of an
Option.



     2.32 “Plan” means Stewart Information Services Corporation 2005 Long-Term Incentive Plan, as
set forth in this document and as it may be amended from time to time.



     2.33 “Section 409A” means Section 409A of the Code and Department of Treasury rules and
regulations issued thereunder.



     2.34 “Service Award” means an Award granted pursuant to Article XI.



     2.35 “STC” means Stewart Title Company, a subsidiary of the Company.



     2.36 “STG” means Stewart Title Guaranty Company, a subsidiary of STG.



     2.37 “Stock” means the common stock of the Company, $1.00 par value per share (or such other
par value as may be designated by act of the Company’s stockholders).



     2.38 “Ten Percent Stockholder” means an individual who owns stock possessing more than ten
percent of the combined voting power of all classes of stock of the Company and its Affiliates. For
this purpose, an individual will be considered as owning the stock owned, directly or indirectly,
by or for his or her brothers and sisters (whether by the whole or half blood), spouse, ancestors
and lineal descendants; and stock owned, directly or indirectly, by or for a corporation,
partnership, estate or trust will be considered as being owned proportionately by or for its
shareholders, partners or beneficiaries.



     2.39 “Termination of Employment” means the termination of the Award recipient’s employment
relationship with the Company and all Affiliates.



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ARTICLE III




ELIGIBILITY AND PARTICIPATION




     3.1 Eligibility. The persons who are eligible to receive Awards under the Plan are as
follows:



	 	 	 
	Type of Award	 	Eligible Associates
	Executive Options

	 	Executive Officers of the Company
	 
	 	 
	Executive Shares

	 	Executive Officers of the Company
	 
	 	 
	Key Employee Options

	 	Key Employees of the Company and persons
determined by the Committee to have equivalent
responsibilities.
	 
	 	 
	Key Employee Shares

	 	Key Employees of the Company and persons
determined by the Company to have equivalent
responsibilities.
	 
	 	 
	Directors’ Shares

	 	Directors who are not full-time employees of the
Company upon their election or re-election.
	 
	 	 
	Associates Stock Bonuses

	 	Associates selected by the Committee who are
awarded cash bonuses.
	 
	 	 
	Service Awards

	 	Associates who have completed at least five years
of service with the Company or an Affiliate, as
the Committee shall determine from time to time;
provided, that no Executive Officer or director
of the Company shall be eligible to receive any
Service Award.






     3.2 Participation. Subject to the terms and provisions of the Plan, the Committee may, from
time to time, select the Associates to whom Awards shall be granted and shall determine the nature
and amount of each Award.



ARTICLE IV




GENERAL PROVISIONS RELATING TO AWARDS




     4.1 Authority to Grant Awards. The Committee may grant Awards to those Associates as the
Committee shall from time to time determine, under the terms and conditions of the Plan. Subject
only to any applicable limitations set out in the Plan, the number of shares of Stock or other
value to be covered by any Award to be granted under the Plan shall be as determined by the
Committee in its sole discretion.



     4.2 Dedicated Shares; Maximum Awards. The aggregate number of shares of Stock with respect
to which Awards may be granted under the Plan is 1,710,000. The aggregate number of shares of Stock
with respect to which the following types of Awards may be granted under the Plan is:



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	 	 	Maximum Number of Shares
	 	 	 	 	 	 	Aggregate per Associate
	 	 	 	 	 	 	in any
	Type of Award	 	Aggregate	 	One Fiscal Year
	Executive Options, Share Appreciation Rights and Executive Shares
	 	 	600,000	 	 	 	35,000	 
	Key Employee Options and Key Employee Shares
	 	 	300,000	 	 	 	2,500	 
	Directors’ Shares
	 	 	380,000	 	 	 	—	 
	Associates Stock Bonuses
	 	 	350,000	 	 	 	—	 
	Service Awards
	 	 	80,000	 	 	 	10	 






     Each of the foregoing numerical limits stated in this Section 4.2 shall be subject to
adjustment in accordance with the provisions of Section 4.5. The number of shares of Stock stated
in this Section 4.2 shall also be increased by such number of shares of Stock as become subject to
substitute Awards granted pursuant to Article XII; provided, however, that such increase shall be
conditioned upon the approval of the stockholders of the Company to the extent stockholder approval
is required by law or applicable stock exchange rules. If shares of Stock are withheld from payment
of an Award to satisfy tax obligations with respect to the Award, such shares of Stock will count
against the aggregate number of shares of Stock with respect to which Awards may be granted under
the Plan. To the extent that any outstanding Award is forfeited or cancelled for any reason or is
settled in cash in lieu of shares of Stock, the shares of Stock allocable to such portion of the
Award may again be subject to an Award granted under the Plan.



     4.3 Non-Transferability. Except as specified in the applicable Award Agreements or in
domestic relations court orders, Awards shall not be transferable by the Holder other than by will
or under the laws of descent and distribution, and shall be exercisable during the Holder’s
lifetime only by him or her. In the discretion of the Committee, any attempt to transfer an Award
other than under the terms of the Plan and the applicable Award Agreement may terminate the Award.



     4.4 Requirements of Law. The Company shall not be required to sell or issue any shares of
Stock under any Award if issuing those shares of Stock would constitute or result in a violation by
the Holder or the Company of any provision of any law, statute or regulation of any governmental
authority. Specifically, in connection with any applicable statute or regulation relating to the
registration of securities, upon exercise of any Option or pursuant to any other Award, the Company
shall not be required to issue any shares of Stock unless the Committee has received evidence
satisfactory to it to the effect that the Holder will not transfer the shares of Stock except in
accordance with applicable law, including receipt of an opinion of counsel satisfactory to the
Company to the effect that any proposed transfer complies with applicable law. The determination by
the Committee on this matter shall be final, binding and conclusive. The Company may, but shall in
no event be obligated to, register any shares of Stock covered by the Plan pursuant to applicable
securities laws of any country or any political subdivision. In the event the shares of Stock
issuable on exercise of an Option or pursuant to any other Award are not registered, the Company
may imprint on the certificate evidencing the shares of Stock any legend that counsel for the
Company considers necessary or advisable to comply with applicable law, or, should the shares of
Stock be represented by book or electronic entry rather than a certificate, the Company may take
such steps to restrict transfer of the shares of Stock as counsel for the Company considers
necessary or advisable to comply with applicable law. The Company shall not be obligated to take
any other affirmative action in order to cause or enable the exercise of an Option or any other
Award, or the issuance of shares of Stock pursuant thereto, to comply with any law or regulation of
any governmental authority.



     4.5 Changes in the Company’s Capital Structure.



     (a) The existence of outstanding Awards shall not affect in any way the right or power of the
Company or its stockholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company’s capital structure or its business, any merger or
consolidation of the Company, any issue of bonds, debentures, preferred or prior preference shares
ahead of or affecting the Stock or Stock rights, the dissolution or liquidation of the Company, 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.



     (b) If the Company shall effect a subdivision or consolidation of Stock or other capital
readjustment, the payment of a Stock dividend, or other increase or reduction of the number of
shares of Stock outstanding, without receiving compensation therefore in money, services or
property, then (1) the number, class or series and per share price of Stock subject to outstanding
Options or other Awards under the Plan shall be appropriately adjusted in such a manner as to
entitle a Holder to receive upon exercise of an Option or other Award, for the same aggregate cash
consideration, the equivalent total number and class or series of Stock the Holder would have
received had the Holder exercised his or her Option or other Award in full immediately prior to the
event requiring the adjustment, and (2) the number and class or series of Stock then reserved to be
issued under the Plan shall be adjusted by substituting



8









 







for the total number and class or series of Stock then reserved, that number and class or
series of Stock that would have been received by the owner of an equal number of outstanding shares
of Stock of each class or series of Stock as the result of the event requiring the adjustment.



     (c) If while unexercised Options or other Awards remain outstanding under the Plan (1) the
Company shall not be the surviving entity in any merger, consolidation or other reorganization (or
survives only as a subsidiary of an entity other than an entity that was wholly-owned by the
Company immediately prior to such merger, consolidation or other reorganization), (2) the Company
sells, leases or exchanges or agrees to sell, lease or exchange all or substantially all of its
assets to any other person or entity (other than an entity wholly-owned by the Company), (3) the
Company is to be dissolved or (4) the Company is a party to any other corporate transaction (as
defined under Section 424(a) of the Code and applicable Department of Treasury regulations) that is
not described in clauses (1), (2) or (3) of this sentence (each such event is referred to herein as
a “Corporate Change”), then, except as otherwise provided in an Award Agreement (provided that such
exceptions shall not apply in the case of a reincorporation merger), or as a result of the
Committee’s effectuation of one or more of the alternatives described below, there shall be no
acceleration of the time at which any Award then outstanding may be exercised, and no later than
ten days after the approval by the stockholders of the Company of such Corporate Change, the
Committee, acting in its sole and absolute discretion without the consent or approval of any
Holder, shall act to effect one or more of the following alternatives, which may vary among
individual Holders and which may vary among Awards held by any individual Holder (provided that,
with respect to a reincorporation merger in which Holders of the Company’s ordinary shares will
receive one ordinary share of the successor corporation for each ordinary share of the Company,
none of such alternatives shall apply and, without Committee action, each Award shall automatically
convert into a similar award of the successor corporation exercisable for the same number of
ordinary shares of the successor as the Award was exercisable for ordinary shares of Stock of the
Company):




     (1) accelerate the time at which some or all of the Awards then outstanding may be
exercised so that such Awards may be exercised in full for a limited period of time on or before
a specified date (before or after such Corporate Change) fixed by the Committee, after which
specified date all such Awards that remain unexercised and all rights of Holders thereunder
shall terminate;




     (2) require the mandatory surrender to the Company by all or selected Holders of some or
all of the then outstanding Awards held by such Holders (irrespective of whether such Awards are
then exercisable under the provisions of the Plan or the applicable Award Agreement evidencing
such Award) as of a date, before or after such Corporate Change, specified by the Committee, in
which event the Committee shall thereupon cancel such Award and the Company shall pay to each
such Holder an amount of cash per share equal to the excess, if any, of the per share price
offered to stockholders of the Company in connection with such Corporate Change over the
exercise prices under such Award for such shares;




     (3) with respect to all or selected Holders, have some or all of their then outstanding
Awards (whether vested or unvested) assumed or have a new award of a similar nature substituted
for some or all of their then outstanding Awards under the Plan (whether vested or unvested) by
an entity that is a party to the transaction resulting in such Corporate Change and that is then
employing such Holder or that is affiliated or associated with such Holder in the same or a
substantially similar manner as the Company prior to the Corporate Change, or a parent or
subsidiary of such entity, provided that (A) such assumption or substitution is on a basis where
the excess of the aggregate Fair Market Value of the Stock subject to the Award immediately
after the assumption or substitution over the aggregate exercise price of such Stock is equal to
the excess of the aggregate Fair Market Value of all Stock subject to the Award immediately
before such assumption or substitution over the aggregate exercise price of such Stock, and (B)
the assumed rights under such existing Award or the substituted rights under such new Award, as
the case may be, will have the same terms and conditions as the rights under the existing Award
assumed or substituted for, as the case may be;




     (4) provide that the number and class or series of Stock covered by an Award (whether
vested or unvested) theretofore granted shall be adjusted so that such Award when exercised
shall thereafter cover the number and class or series of Stock or other securities or property
(including, without limitation, cash) to which the Holder would have been entitled pursuant to
the terms of the agreement or plan relating to such Corporate Change if, immediately prior to
such Corporate Change, the Holder had been the holder of record of the number of shares of Stock
then covered by such Award; or




     (5) make such adjustments to Awards then outstanding as the Committee deems appropriate to
reflect such Corporate Change (provided, however, that the Committee may determine in its sole
and absolute discretion that no such adjustment is necessary).



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     In effecting one or more of alternatives in (3), (4) or (5) immediately above, and except as
otherwise may be provided in an Award Agreement, the Committee, in its sole and absolute discretion
and without the consent or approval of any Holder, may accelerate the time at which some or all
Awards then outstanding may be exercised.



     (d) In the event of changes in the outstanding Stock by reason of recapitalizations,
reorganizations, mergers, consolidations, combinations, exchanges or other relevant changes in
capitalization occurring after the date of the grant of any Award and not otherwise provided for by
this Section 4.5, any outstanding Award and any Award Agreements evidencing such Award shall be
subject to adjustment by the Committee in its sole and absolute discretion as to the number and
price of Stock or other consideration subject to such Award. In the event of any such change in the
outstanding Stock, the aggregate number of shares of Stock available under the Plan may be
appropriately adjusted by the Committee, whose determination shall be conclusive.



     (e) The issuance by the Company of stock of any class or series, or securities convertible
into, or exchangeable for, stock of any class or series, for cash or property, or for labor or
services either upon direct sale or upon the exercise of rights or warrants to subscribe for them,
or upon conversion or exchange of stock or obligations of the Company convertible into, or
exchangeable for, stock or other securities, shall not affect, and no adjustment by reason of such
issuance shall be made with respect to, the number, class or series, or price of shares of Stock
then subject to outstanding Options or other Awards.



     4.6 Election Under Section 83(b) of the Code. No Holder shall exercise the election
permitted under Section 83(b) of the Code with respect to any Award without the written approval of
the Chief Financial Officer of the Company. Any Holder who makes an election under Section 83(b) of
the Code with respect to any Award without the written approval of the Chief Financial Officer of
the Company may, in the discretion of the Committee, forfeit any or all Awards granted to him or
her under the Plan.



     4.7 Forfeiture for Cause. Notwithstanding any other provision of the Plan or an Award
Agreement, if the Committee finds by a majority vote that a Holder, before or after his or her
Termination of Employment (a) committed a fraud, embezzlement, theft, felony or an act of
dishonesty in the course of his or her employment by the Company or an Affiliate, which conduct
damaged the Company or an Affiliate or (b) disclosed trade secrets of the Company or an Affiliate,
then as of the date the Committee makes its finding, any Awards awarded to the Holder that have not
been exercised by the Holder (including all Awards that have not yet vested) will be forfeited to
the Company. The findings and decision of the Committee with respect to such matter, including
those regarding the acts of the Holder and the damage done to the Company, will be final for all
purposes. No decision of the Committee, however, will affect the finality of the discharge of the
individual by the Company or an Affiliate.



     4.8 Forfeiture Events. The Committee may specify in an Award Agreement that the Holder’s
rights, payments, and benefits with respect to an Award shall be subject to reduction,
cancellation, forfeiture, or recoupment upon the occurrence of certain specified events, in
addition to any otherwise applicable vesting or performance conditions of an Award. Such events may
include, but shall not be limited to, Termination of Employment for cause, termination of the
Holder’s provision of services to the Company or its Affiliates, violation of material policies of
the Company and its Affiliates, breach of noncompetition, confidentiality, or other restrictive
covenants that may apply to the Holder, or other conduct by the Holder that is detrimental to the
business or reputation of the Company and its Affiliates.



ARTICLE V




GENERAL PROVISIONS RELATING TO OPTIONS




     5.1 Type of Options Available. The Committee may grant the following Options any time during
the term of the Plan to any eligible Associate that it chooses:




     (a) Incentive Stock Options. The Committee may grant to an Associate who is a Key Employee
of the Company, or an Affiliate that is a corporation, an Option, or Options, to buy a stated
number of shares of Stock under the terms and conditions of the Plan, which Option or Options
would be an “incentive stock option” within the meaning of Section 422 of the Code.




     (b) Nonqualified Options. The Committee may grant to any Associate an Option, or Options,
to buy a stated number of shares of Stock under the terms and conditions of the Plan, which
Option or Options would not constitute an “incentive stock option” within the meaning of Section
422 of the Code.



     5.2 Stock Appreciation Rights. Stock Appreciation Rights may be included in each Option
granted under the Plan to allow the holder of an Option (an “Optionee”) to surrender that Option
(or a portion of the part that is then exercisable) and receive in



10









 







exchange, upon a written request from the Optionee describing the special circumstances that
exist that create the need to use such Stock Appreciation Rights and subject to any other
conditions and limitations set by the Committee, an amount equal to the excess of the Fair Market
Value of the Stock covered by the Option (or the portion of it surrendered), determined as of the
date of surrender, over the aggregate Option Price of the Stock. The payment will be made in shares
of Stock valued at Fair Market Value. Stock Appreciation Rights may be exercised only when the Fair
Market Value of the Stock covered by the Option surrendered exceeds the Option Price of the Stock.



     Upon the surrender of an Option, or a portion of it, for Stock Appreciation Rights, the shares
represented by the Option (or that part of it surrendered) shall not be available for reissuance
under the Plan.



     Each of the Stock Appreciation Rights (a) will expire not later than the expiration of the
underlying Option, (b) may be for no more than 100 percent of the difference between the exercise
price of the underlying Option and the Fair Market Value of a share of the Stock at the time the
Stock Appreciation Right is exercised, and (c) may be exercised only when the underlying Option is
eligible to be exercised.



     5.3 Option Price. The price at which shares of Stock may be purchased pursuant to an Option
that is an Incentive Stock Option shall be not less than the Fair Market Value of the shares of
Stock on the date the Option is granted. The Committee in its discretion may provide that the price
at which shares may be purchased shall be more than the minimum price required. If an individual is
a Ten Percent Stockholder, the option price at which shares may be purchased under an Option that
is an Incentive Stock Option shall be not less than 110 percent of the Fair Market Value of the
Stock on the date the Option is granted.



     5.4 Maximum Value of Stock Subject to Options that are Incentive Stock Options. To the
extent that the aggregate Fair Market Value (determined as of the date the Option is granted) of
the Stock with respect to which Incentive Stock Options are exercisable for the first time by the
Optionee in any calendar year (under the Plan and any other incentive stock option plan(s) of the
Company and any parent and subsidiary corporation) exceeds $100,000, the Options shall be treated
as Nonqualified Options. In making this determination, Options shall be taken into account in the
order in which they were granted.



     5.5 Exercise of Options. Each Option shall be exercised by notification to the Company
setting forth the number of shares of Stock with respect to which the Option is to be exercised.
Except in the case of exercise by a third-party broker, as provided below, payment of the exercise
price and any applicable tax withholding amounts must be made at the time of exercise by any
combination of the following: (a) cash, certified check, bank draft or postal or express money
order payable to the order of the Company for an amount equal to the exercise price under the
Option, (b) Mature Shares with a Fair Market Value on the date of exercise equal to the exercise
price under the Option, (c) an election to make a cashless exercise through a registered
broker-dealer (if approved in advance by the Company or by an executive officer of the Company) or
(d) except as specified below, any other form of payment that is acceptable to the Company. As
promptly as practicable after receipt of the Holder’s notification and payment, the Company shall
deliver to the Holder the number of shares with respect to which the Option has been exercised. If
Mature Shares are used for payment by the Holder, the aggregate Fair Market Value of the shares of
Stock tendered must be equal to or less than the aggregate exercise price of the shares being
purchased upon exercise of the Option, and any difference must be paid by cash, certified check,
bank draft or postal or express money order payable to the order of the Company.



     The Company shall not permit a Holder to pay such Holder’s exercise price upon the exercise of
an Option by having the Company reduce the number of shares of Stock that will be delivered to the
Holder pursuant to the exercise of the Option. In addition, the Company shall not permit a Holder
to pay such Holder’s exercise price upon the exercise of an Option by using shares of Stock other
than Mature Shares.



     An Option may not be exercised for a fraction of a share of Stock.



     5.6 Duration of Options. Unless the Option Agreement specifies a shorter general term, an
Option shall expire on the earliest of the date that is (a) the tenth anniversary of the date the
Option is granted (the fifth anniversary of the date the Option is granted in the case of an
Incentive Stock Option granted to a Ten Percent Stockholder), or (b) one day less than three months
after the date of the Holder’s Termination of Employment (other than by reason of the Holder’s
death) or (c) the date that is one year after the date of the Holder’s death. Unless the Holder’s
Option Agreement specifies otherwise, an Option shall not continue to vest after the severance of
the employment relationship between the Company and all Affiliates and the Optionee.



     Whether authorized leave of absence, or absence on military or government service, shall
constitute severance of the employment relationship between the Company and the Optionee shall be
determined by the Committee at the time thereof.



11









 





     In the event of the death of the holder of any Option while in the employ of the Company and
before the date of expiration of such Option, such Option shall continue in effect until the date
of expiration of the Option. After the death of the Optionee, his or her executors, administrators
or any person or person to whom his or her Option may be transferred by will or by the laws of
descent and distribution, shall have the right, any time before the termination of the Option, to
exercise the Option in respect to the number of shares that the Optionee would have been entitled
to exercise if he had exercised the Option on the date of his or her death while in employment.



     Notwithstanding the foregoing provisions of this Article V, in the case of an Option that is a
Nonqualified Option, the Committee may provide for a different option termination date in the
option agreement with respect to such Option. For purposes of Incentive Stock Options issued under
the Plan, an employment relationship between the Company and the Optionee shall be deemed to exist
during any period in which the Optionee is employed by the Company, by any parent or subsidiary
corporation, by a corporation issuing or assuming an option in a transaction to which Section
424(a) of the Code, as amended, applies, or by a parent or subsidiary corporation of such
corporation issuing or assuming an Option. For purposes of Nonqualified Options issued under the
Plan, an employment relationship between the Company and the Optionee will exist under the
circumstances described above for Incentive Stock Options and will also exist if the Optionee is
transferred to an affiliate corporation approved by the Committee.



     5.7 Employment Obligation. The granting of any Option shall not impose upon the Company any
obligation to employ or continue to employ any Optionee. The right of the Company to terminate the
employment of any officer or other employee shall not be diminished or affected because an Option
has been granted to him or her.



     5.8 Option Agreement. Each Option grant under the Plan shall be evidenced by an Option
Agreement that shall specify (a) the Option Price, (b) the duration of the Option, (c) the number
of shares of Stock to which the Option pertains, (d) the exercise restrictions, if any, applicable
to the Option, (e) whether the Option is intended to be an Incentive Option or a Nonqualified
Option, and (f) such other provisions as the Committee shall determine that are not inconsistent
with the terms and provisions of the Plan.



     5.9 Substitution Options. Options may be granted under the Plan from time to time in
substitution for stock options held by employees of other corporations who are about to become
employees of or affiliated with the Company or any Affiliate as the result of a merger or
consolidation of the employing corporation with the Company or any Affiliate, or the acquisition by
the Company or any Affiliate of the assets of the employing corporation, or the acquisition by the
Company or any Affiliate of stock of the employing corporation as the result of which it becomes an
Affiliate of the Company. The terms and conditions of the substitute Options granted may vary from
the terms and conditions set out in the Plan to the extent the Committee, at the time of grant, may
deem appropriate to conform, in whole or in part, to the provisions of the stock options in
substitution for which they are granted.



     5.10 No Rights as Stockholder. No Holder, as such, shall have any rights as a stockholder
with respect to an Option.



ARTICLE VI




KEY EMPLOYEE AWARD PERFORMANCE CRITERIA




     The Committee may grant Key Employee Options or Key Employee Shares to those eligible Key
Employees as it shall from time to time determine, under the terms and conditions of the Plan.
Factors the Committee may consider include, without limitation:




	 	•	 	Rank of consolidated STG/STC pretax profit (after deducting minority interests) (dollars)
in the Key Employee’s territory as reported on the Key Employee’s consolidated profit center
statement;
	 
	 	•	 	Rank of profit percentage in the Key Employee’s territory as reported on the Key
Employee’s STG/STC profit center statement;
	 
	 	•	 	Rank of percentage of policy losses to premiums generated YTD as reported on the Region
Performance Summary Report;
	 
	 	•	 	Market share increase in the Key Employee’s territory over the prior year as reported on
the quarterly American Land Title Association’s statistics on market share. Market share
weight will be increased with market share growth in key states and percentage of state
responsibility of the Key Employee;
	 
	 	•	 	Rank of percentage increase in Cash to Houston remittances as reported on the Region
Performance Summary Report;




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	 	•	 	Region rank of percentage of delinquent premiums YTD as reported in the Region
Performance Summary Report;
	 
	 	•	 	Rank of percentage increase in Files Closed Per Associate (FCPA) as reported on the
Company’s Goals and Measures Report;
	 
	 	•	 	Rank of region’s cumulative percentage return on investment from acquisitions as reported
on the Return on Investments — Acquisitions Report;
	 
	 	•	 	Key Employee incorporation and pursuit of SISCO Initiatives, including Strategies, Goals,
Principles, Values and Standards;
	 
	 	•	 	Completion of annual goals as submitted by the Key Employee during the Company’s Goals
and Budgets process; and
	 
	 	•	 	Other contributions towards overall Company performance or failure to comply with Company
requests. Items considered may include rollout and implementation of technology, adoption of
new products and services or other programs sponsored by the Company, follow-up on audits
and training and benefits participation.





     The Committee shall evaluate the relative importance of these factors, and the Key Employee’s
standing among the recipient group, in its sole and absolute discretion and shall have full power
and authority to determine, according to the above criteria, the number of shares subject to any
option, subject only to any applicable limitations set out in the Plan.



ARTICLE VII




DIRECTORS’ SHARES




     7.1 Annual Grant to Directors. Each person who is not a full-time employee of the Company or
any of its subsidiaries and who shall be elected or re-elected as a director of the Company shall
be awarded shares of Stock annually on the first business day following the Company’s annual
meeting of stockholders at which such person was elected or re-elected to serve, provided that the
Plan is in effect on that day. Each person who is not a full-time employee of the Company or any of
its subsidiaries and who shall be elected or re-elected as an Advisory Director of the Company
shall be awarded shares of Stock annually on the first business day following the Company’s annual
meeting of directors at or subsequent to which such person was elected or re-elected to serve,
provided that the Plan is in effect on that day.



     7.2 Amount of Award. The number of shares of Stock to be awarded pursuant to this Article
VII shall be the amount determined by dividing the amount authorized by the Company’s Board of
Directors by the Fair Market Value of a share of the Company’s common stock on the date of the
award.



ARTICLE VIII




EXECUTIVE SHARES




     8.1 Executive Share Awards. The Committee may make Awards of Executive Shares to those
eligible Executive Officers selected by it. The amount of, the vesting and the transferability
restrictions applicable to any Executive Share Award shall be determined by the Committee in its
sole discretion. If the Committee imposes vesting or transferability restrictions on a Holder’s
rights with respect to Executive Shares, the Committee may issue such instructions to the Company’s
share transfer agent in connection therewith as it deems appropriate. The Committee may also cause
the certificate for shares of Stock issued pursuant to an Executive Share Award to be imprinted
with any legend that the Company considers advisable with respect to the restrictions or, should
the shares of Stock be represented by book or electronic entry rather than a certificate, the
Company may take such steps to restrict transfer of the shares of Stock as counsel for the Company
considers necessary or advisable to comply with applicable law.



     8.2 Executive Share Award Agreement. Each Executive Share Award shall be evidenced by an
Award Agreement that contains any vesting, transferability restrictions and other provisions not
inconsistent with the Plan as the Committee may specify.



     8.3 Holder’s Rights as Stockholder. Subject to the terms and conditions of the Plan, each
recipient of an Executive Share Award shall have all the rights of a stockholder with respect to
the Executive Shares included in the Executive Share Award during any period of restriction
established for the Executive Share Award. Dividends paid with respect to Executive Shares in cash
or property other than shares of Stock or rights to acquire shares of Stock shall be paid to the
recipient of the Executive Share Award currently. Dividends paid in shares of Stock or rights to
acquire shares of Stock shall be added to and become a part of the Executive Shares.



13









 




During the Period of Restriction, certificates representing the Executive Shares shall be
registered in the Holder’s name and bear a restrictive legend to the effect that ownership of such
Executive Shares, and the enjoyment of all rights appurtenant thereto, are subject to the
restrictions, terms, and conditions provided in the Plan and the applicable Award Agreement. Such
certificates shall be deposited by the recipient with the Secretary of the Company or such other
officer of the Company as may be designated by the Committee, together with all stock powers or
other instruments of assignment, each endorsed in blank, that will permit transfer to the Company
of all or any portion of the Executive Shares that shall be forfeited in accordance with the Plan
and the applicable Award Agreement.




ARTICLE IX




KEY EMPLOYEE SHARES




     9.1 Key Employee Share Awards. The Committee may make Awards of Key Employee shares to those
eligible Key Employees selected by it. The number, the vesting and the transferability restrictions
applicable to any Key Employee Share Award shall be determined by the Committee in its sole
discretion. If the Committee imposes vesting or transferability restrictions on a Holder’s rights
with respect to Key Employee Shares, the Committee may issue such instructions to the Company’s
share transfer agent in connection therewith as it deems appropriate. The Committee may also cause
the certificate for shares of Stock issued pursuant to a Key Employee Share Award to be imprinted
with any legend that counsel for the Company considers advisable with respect to the restrictions
or, should the shares of Stock be represented by book or electronic entry rather than a
certificate, the Company may take such steps to restrict transfer of the shares of Stock as counsel
for the Company considers necessary or advisable to comply with applicable law.



     9.2 Key Employee Share Award Agreement. Each Key Employee Share Award shall be evidenced by
an Award Agreement that contains any vesting, transferability restrictions and other provisions not
inconsistent with the Plan as the Committee may specify.



     9.3 Holder’s Rights as Stockholder. Subject to the terms and conditions of the Plan, each
recipient of a Key Employee Share Award shall have all the rights of a stockholder with respect to
the Key Employee Shares included in the Key Employee Share Award during the Period of Restriction
established for the Key Employee Share Award. Dividends paid with respect to Key Employee Shares in
cash or property, other than shares of Stock or rights to acquire shares of Stock, shall be paid to
the recipient of the Key Employee Share Award currently. Dividends paid in shares of Stock or
rights to acquire shares of Stock shall be added to and become a part of the Key Employee Shares.
During the Period of Restriction, certificates representing the Key Employee Shares shall be
registered in the Holder’s name and bear a restrictive legend to the effect that ownership of such
Key Employee Shares, and the enjoyment of all rights appurtenant thereto, are subject to the
restrictions, terms, and conditions provided in the Plan and the applicable Award Agreement. Such
certificates shall be deposited by the recipient with the Secretary of the Company or such other
officer of the Company as may be designated by the Committee, together with all stock powers or
other instruments of assignment, each endorsed in blank, that will permit transfer to the Company
of all or any portion of the Key Employee Shares that shall be forfeited in accordance with the
Plan and the applicable Award Agreement.



ARTICLE X




ASSOCIATES STOCK BONUSES




     10.1 Award of Stock Bonuses. The Company shall, during the first quarter of each Fiscal Year
during the term of the Plan, issue Stock to each Associate selected by the Committee having a value
(as determined below) equal to one-ninth of the total amount of cash bonus earned by such Associate
for the previous Fiscal Year pursuant to the established bonus policy of STG or STC, as the case
may be. Any such Award shall be granted no later than March 15 following the close of the Fiscal
Year with respect to which the applicable bonus was earned. The fact that an Associate is granted
an Award pursuant to this Article X with respect to one Fiscal Year shall not entitle the Associate
to receive such a grant in a subsequent Fiscal Year.



     10.2 Valuation. The shares of Stock to be issued pursuant to the Plan shall be valued as of
their closing price on the day following the Company’s year-end earnings release.



14









 





ARTICLE XI




SERVICE AWARDS




     Service Awards of 10 shares of Stock will be made to each eligible Associate selected by the
Committee upon his or her completion of the Associate’s first five years of service for the Company
or its Affiliates.



ARTICLE XII




SUBSTITUTION AWARDS




     Awards may be granted under the Plan from time to time in substitution for stock options and
other awards held by employees of other entities who are about to become Associates, or whose
employer is about to become an Affiliate as the result of a merger or consolidation of the Company
with another corporation, or the acquisition by the Company of substantially all the assets of
another corporation, or the acquisition by the Company of at least 50 percent (50%) of the issued
and outstanding stock of another corporation as the result of which it becomes a subsidiary of the
Company. The terms and conditions of the substitute Awards so granted may vary from the terms and
conditions set forth in the Plan to such extent as the Board at the time of grant may deem
appropriate to conform, in whole or in part, to the provisions of the Award in substitution for
which they are granted, but with respect to Options that are Incentive Stock Options, no such
variation shall be such as to affect the status of any such substitute Option as an Incentive Stock
Option under Section 422 of the Code.



ARTICLE XIII




ADMINISTRATION




     13.1 Awards. The Plan shall be administered by the Committee or, in the absence of the
Committee, the Plan shall be administered by the Board. The members of the Committee shall serve at
the discretion of the Board. The Committee shall have full and exclusive power and authority to
administer the Plan and to take all actions that the Plan expressly contemplates or are necessary
or appropriate in connection with the administration of the Plan with respect to Awards granted
under the Plan.



     13.2 Authority of the Committee. The Committee shall have full and exclusive power to
interpret and apply the terms and provisions of the Plan and Awards made under the Plan, and to
adopt such rules, regulations and guidelines for implementing the Plan as the Committee may deem
necessary or proper, all of which powers shall be exercised in the best interests of the Company
and in keeping with the objectives of the Plan. A majority of the members of the Committee shall
constitute a quorum for the transaction of business, and the vote of a majority of those members
present at any meeting shall decide any question brought before that meeting. Any decision or
determination reduced to writing and signed by a majority of the members shall be as effective as
if it had been made by a majority vote at a meeting properly called and held. All questions of
interpretation and application of the Plan, or as to awards granted under the Plan, shall be
subject to the determination, which shall be final and binding, of a majority of the whole
Committee. No member of the Committee shall be liable for any act or omission of any other member
of the Committee or for any act or omission on his or her own part, including but not limited to
the exercise of any power or discretion given to him or her under the Plan, except those resulting
from his or her own gross negligence or willful misconduct. In carrying out its authority under the
Plan, the Committee shall have full and final authority and discretion, including but not limited
to the following rights, powers and authorities, to:




     (a) determine the persons to whom and the time or times at which Awards will be made;




     (b) determine the number and exercise price of shares of Stock covered in each Award,
subject to the terms and provisions of the Plan;




     (c) determine the terms, provisions and conditions of each Award, which need not be
identical and need not match the default terms set forth in the Plan;




     (d) accelerate the time at which any outstanding Award will vest;




     (e) prescribe, amend and rescind rules and regulations relating to administration of the
Plan; and



15









 






     (f) make all other determinations and take all other actions deemed necessary, appropriate
or advisable for the proper administration of the Plan.



     The Committee may correct any defect or supply any omission or reconcile any inconsistency in
the Plan or in any Award to a Holder in the manner and to the extent the Committee deems necessary
or desirable to further the Plan’s objectives. Further, the Committee shall make all other
determinations that may be necessary or advisable for the administration of the Plan. As permitted
by law and the terms and provisions of the Plan, the Committee may delegate its authority as
identified in this Section 13.2.



     The actions of the Committee in exercising all of the rights, powers, and authorities set out
in this Article XIII and all other Articles of the Plan, when performed in good faith and in its
sole judgment, shall be final, conclusive and binding on all persons. The Committee may employ
attorneys, consultants, accountants, agents, and other persons, any of whom may be an Associate,
and the Committee, the Company, and its officers and Board shall be entitled to rely upon the
advice, opinions, or valuations of any such persons.



     13.3 Decisions Binding. All determinations and decisions made by the Committee or the Board,
as the case may be, pursuant to the provisions of the Plan and all related orders and resolutions
of the Committee or the Board, as the case may be, shall be final, conclusive and binding on all
persons, including the Company, its stockholders, Associates, Holders and the estates and
beneficiaries of Associates and Holders.



     13.4 No Liability. Under no circumstances shall the Company, the Board or the Committee
incur liability for any indirect, incidental, consequential or special damages (including lost
profits) of any form incurred by any person, whether or not foreseeable and regardless of the form
of the act in which such a claim may be brought, with respect to the Plan or the Company’s, the
Committee’s or the Board’s roles in connection with the Plan.



ARTICLE XIV




AMENDMENT OR TERMINATION OF PLAN




     14.1 Amendment, Modification, Suspension, and Termination. Subject to Section 14.2 the
Committee may, at any time and from time to time, alter, amend, modify, suspend, or terminate the
Plan and any Award Agreement in whole or in part; provided, however, that, without the prior
approval of the Company’s stockholders and except as provided in Section 4.5, the Committee shall
not directly or indirectly lower the Option Price of a previously granted Option, and no amendment
of the Plan shall be made without stockholder approval if stockholder approval is required by
applicable law or stock exchange rules.



     14.2 Awards Previously Granted. Notwithstanding any other provision of the Plan to the
contrary, no termination, amendment, suspension, or modification of the Plan or an Award Agreement
shall adversely affect in any material way any Award previously granted under the Plan, without the
written consent of the Holder holding such Award.



ARTICLE XV




MISCELLANEOUS




     15.1 Unfunded Plan/No Establishment of a Trust Fund. Holders shall have no right, title, or
interest whatsoever in or to any investments that the Company or any of its Affiliates may make to
aid in meeting obligations under the Plan. Nothing contained in the Plan, and no action taken
pursuant to its provisions, shall create or be construed to create a trust of any kind, or a
fiduciary relationship between the Company and any Holder, beneficiary, legal representative, or
any other person. To the extent that any person acquires a right to receive payments from the
Company under the Plan, such right shall be no greater than the right of an unsecured general
creditor of the Company. All payments to be made hereunder shall be paid from the general funds of
the Company and no special or separate fund shall be established and no segregation of assets shall
be made to assure payment of such amounts, except as expressly set forth in the Plan. No property
shall be set aside nor shall a trust fund of any kind be established to secure the rights of any
Holder under the Plan. All Holders shall at all times rely solely upon the general credit of the
Company for the payment of any benefit that becomes payable under the Plan. The Plan is not
intended to be subject to the Employee Retirement Income Security Act of 1974, as amended.



     15.2 No Employment Obligation. The granting of any Award shall not constitute an employment
contract, express or implied, nor impose upon the Company or any Affiliate any obligation to employ
or continue to employ, or utilize the services of, any Holder. The



16









 







right of the Company or any Affiliate to terminate the employment of any person shall not be
diminished or affected by reason of the fact that an Award has been granted to him or her, and
nothing in the Plan or an Award Agreement shall interfere with or limit in any way the right of the
Company or its Affiliates to terminate any Holder’s employment at any time or for any reason not
prohibited by law.



     15.3 Tax Withholding. The Company or any Affiliate shall be entitled to deduct from
compensation payable to each Holder any sums required by federal, state or local tax law to be
withheld with respect to the vesting or exercise of an Award or lapse of restrictions on an Award.
In the alternative, the Company may require the Holder (or other person validly exercising the
Award) to pay such sums for taxes directly to the Company or any Affiliate in cash or by check
within one day after the date of vesting, exercise or lapse of restrictions. In the discretion of
the Committee, and with the consent of the Holder, the Company may reduce the number of shares of
Stock issued to the Holder upon such Holder’s exercise of an Option to satisfy the tax withholding
obligations of the Company or an Affiliate; provided that the Fair Market Value of the shares of
Stock held back shall not exceed the Company’s or the Affiliate’s Minimum Statutory Tax Withholding
Obligation. The Committee may, in its discretion, permit a Holder to satisfy any Minimum Statutory
Tax Withholding Obligation arising upon the grant or vesting (as applicable) of an Award by
delivering to the Holder of the Award a reduced number of shares of Stock in the manner specified
herein. If permitted by the Committee and acceptable to the Holder, at the time of grant or vesting
(as applicable) of an Award, the Company shall (a) calculate the amount of the Company’s or an
Affiliate’s Minimum Statutory Tax Withholding Obligation on the assumption that all such vested
shares are made available for delivery, (b) reduce the number of such shares of Stock made
available for delivery so that the Fair Market Value of the shares of Stock withheld on the vesting
date approximates the Company’s or an Affiliate’s Minimum Statutory Tax Withholding Obligation and
(c) in lieu of the withheld shares of Stock, remit cash to the United States Treasury and other
applicable governmental authorities, on behalf of the Holder, in the amount of the Minimum
Statutory Tax Withholding Obligation. The Company shall withhold only whole shares of Stock to
satisfy its Minimum Statutory Tax Withholding Obligation. Where the Fair Market Value of the
withheld shares of Stock does not equal the amount of the Minimum Statutory Tax Withholding
Obligation, the Company shall withhold shares of Stock with a Fair Market Value slightly less than
the amount of then Minimum Statutory Tax Withholding Obligation and the Holder must satisfy the
remaining minimum withholding obligation in some other manner permitted under this Section 15.3.
The withheld shares of Stock not made available for delivery by the Company shall be retained as
treasury shares or will be cancelled and, in either case, the Holder’s right, title and interest in
such shares of Stock shall terminate. The Company shall have no obligation upon vesting or exercise
of any Award or lapse of restrictions on any Award until the Company or an Affiliate has received
payment sufficient to cover the Minimum Statutory Tax Withholding Obligation with respect to that
vesting, exercise or lapse of restrictions. Neither the Company nor any Affiliate shall be
obligated to advise a Holder of the existence of the tax or the amount that it will be required to
withhold.



     15.4 Written Agreement. Each Award shall be embodied in a written agreement or statement
that shall be subject to the terms and conditions of the Plan. The Award Agreement shall be signed
by a member of the Committee on behalf of the Committee and the Company or by an Executive Officer
of the Company, other than the Holder, on behalf of the Company, and may be signed by the Holder to
the extent required by the Committee. The Award Agreement may specify the effect of a Change in
Control on the Award. The Award Agreement may contain any other provisions that the Committee in
its discretion shall deem advisable that are not inconsistent with the terms and provisions of the
Plan.



     15.5 Indemnification of the Committee. The Company shall indemnify each present and future
member of the Committee against, and each member of the Committee shall be entitled without further
action on his or her part to indemnity from the Company for, all expenses (including attorney’s
fees, the amount of judgments and the amount of approved settlements made with a view to the
curtailment of costs of litigation, other than amounts paid to the Company itself) reasonably
incurred by such member in connection with or arising out of any action, suit or proceeding in
which such member may be involved by reason of such member being or having been a member of the
Committee, whether or not he or she continues to be a member of the Committee at the time of
incurring the expenses, including, without limitation, matters as to which such member shall be
finally adjudged in any action, suit or proceeding to have been negligent in the performance of
such member’s duty as a member of the Committee. However, this indemnity shall not include any
expenses incurred by any member of the Committee in respect of matters as to which such member
shall be finally adjudged in any action, suit or proceeding to have been guilty of gross negligence
or willful misconduct in the performance of his or her duty as a member of the Committee. In
addition, no right of indemnification under the Plan shall be available to or enforceable by any
member of the Committee unless, within 60 days after institution of any action, suit or proceeding,
such member shall have offered the Company, in writing, the opportunity to handle and defend same
at its own expense. This right of indemnification shall inure to the benefit of the heirs,
executors or administrators of each member of the Committee and shall be in addition to all other
rights to which a member of the Committee may be entitled as a matter of law, contract or
otherwise.



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     15.6 Gender and Number. If the context requires, words of one gender when used in the Plan
shall include the other and words used in the singular or plural shall include the other.



     15.7 Severability. In the event any provision of the Plan shall be held illegal or invalid
for any reason, the illegality or invalidity shall not affect the remaining parts of the Plan, and
the Plan shall be construed and enforced as if the illegal or invalid provision had not been
included.



     15.8 Headings. Headings of Articles and Sections are included for convenience of reference
only and do not constitute part of the Plan and shall not be used in construing the terms and
provisions of the Plan.



     15.9 Other Compensation Plans. The adoption of the Plan shall not affect any other option,
incentive or other compensation or benefit plans in effect for the Company or any Affiliate, nor
shall the Plan preclude the Company from establishing any other forms of incentive compensation
arrangements for Associates.



     15.10 Other Awards. The grant of an Award shall not confer upon the Holder the right to
receive any future or other Awards under the Plan, whether or not Awards may be granted to
similarly situated Holders, or the right to receive future Awards upon the same terms or conditions
as previously granted.



     15.11 Successors. All obligations of the Company under the Plan with respect to 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.



     15.12 Law Limitations/Governmental Approvals. The granting of 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.



     15.13 Delivery of Title. The Company shall have no obligation to issue or deliver evidence
of title for shares of Stock issued under the Plan prior to:




     (a) obtaining any approvals from governmental agencies that the Company determines are
necessary or advisable; and




     (b) completion of any registration or other qualification of the Stock under any applicable
national or foreign law or ruling of any governmental body that the Company determines to be
necessary or advisable.



     15.14 Inability to Obtain Authority. The inability of the Company to obtain authority from
any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be
necessary to the lawful issuance and sale of any shares of Stock hereunder, shall relieve the
Company of any liability in respect of the failure to issue or sell such shares of Stock as to
which such requisite authority shall not have been obtained.



     15.15 Investment Representations. The Committee may require any person receiving Stock
pursuant to an Award under the Plan to represent and warrant in writing that the person is
acquiring the Shares for investment and without any present intention to sell or distribute such
Stock.



     15.16 Persons Residing Outside of the United States. Notwithstanding any provision of the
Plan to the contrary, in order to comply with the laws in other countries in which the Company or
any of its Affiliates operates or has Associates, the Committee, in its sole discretion, shall have
the power and authority to:




     (a) determine which Affiliates shall be covered by the Plan;




     (b) determine which persons employed outside the United States are eligible to participate
in the Plan;




     (c) amend or vary the terms and provisions of the Plan and the terms and conditions of any
Award granted to persons who reside outside the United States;



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     (d) establish subplans and modify exercise procedures and other terms and procedures to the
extent such actions may be necessary or advisable — any subplans and modifications to Plan
terms and procedures established under this Section 15.16 by the Committee shall be attached to
the Plan document as Appendices; and




     (e) take any action, before or after an Award is made, that it deems advisable to obtain or
comply with any necessary local government regulatory exemptions or approvals.



     Notwithstanding the above, the Committee may not take any actions hereunder, and no Awards
shall be granted, that would violate the Exchange Act, the Code, any securities law or governing
statute or any other applicable law.



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



     15.18 Arbitration of Disputes. Any controversy arising out of or relating to the Plan or an
Option Agreement shall be resolved by arbitration conducted pursuant to the arbitration rules of
the American Arbitration Association. The arbitration shall be final and binding on the parties.



     15.19 Governing Law. The provisions of the Plan and the rights of all persons claiming
thereunder shall be construed, administered and governed under the laws of the State of Texas.



     15.18 Arbitration of Disputes. Any controversy arising out of or relating to the Plan or an
Option Agreement shall be resolved by arbitration conducted pursuant to the arbitration rules of
the American Arbitration Association. The arbitration shall be final and binding on the parties.



     15.19 Governing Law. The provisions of the Plan and the rights of all persons claiming
thereunder shall be construed, administered and governed under the laws of the State of Texas.




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