exv10w1



 







Exhibit 10.1




ADMINISTAFF, INC.

2001 INCENTIVE PLAN




(Amended and Restated as of February 24, 2006)




     1. Objectives. This Administaff, Inc. 2001 Incentive Plan (the “Plan”) is intended as an incentive
to retain and attract persons of training, experience and ability to serve as employees of
Administaff, Inc., a Delaware corporation (the “Company”), and its Subsidiaries and as nonemployee
directors of the Company, to encourage the sense of proprietorship of such persons and to stimulate
the active interest of such persons in the development and financial success of the Company and its
Subsidiaries.



     2. Definitions. As used herein, the terms set forth below shall have the following respective
meanings:



          “Annual Director Award Date” means, for each calendar year beginning on or after January 1,
2006, in which this Plan is in effect, the date on which the annual meeting of the stockholders of
the Company is held in that year.




          “Award” means an Employee Award or a Director Award.




          “Award Agreement” means an agreement between the Company and a Participant in such form as is
deemed acceptable by the Committee that sets forth the terms, conditions and limitations applicable
to an Award.




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




          “Cash Award” means an Award payable in cash.




          “Cause” means:





     (a) the Director whose removal is proposed has been convicted, or when a Director is
granted immunity to testify when another has been convicted, of a felony by a court of
competent jurisdiction and such conviction is no longer subject to direct appeal;




     (b) such Director has been found by the affirmative vote of a majority of the entire
Board at any regular or special meeting of the Board called for that purpose or by a court
of competent jurisdiction to have been guilty of wilful misconduct in the
performance of his duties to the Company in a matter of substantial importance to the
Company; or



 









 






     (c) such Director has been adjudicated by a court of competent jurisdiction to be
mentally incompetent, which mental incompetency directly affects his ability as a Director
of the Company.



          “Change in Control” means:





     (a) the date of the acquisition by any “person” (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Exchange Act), excluding the Company or any of its Subsidiaries, of
beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of 30% or
more of either the then outstanding shares of common stock of the Company or the then
outstanding voting securities entitled to vote generally in the election of directors; or




     (b) the date the individuals who constitute the Board as of May 3, 2006 (the “Incumbent
Board”), cease for any reason to constitute at least a majority of the members of the Board,
provided that any person becoming a director subsequent to May 3, 2006, whose election, or
nomination for election by the Company’s stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board (other than any individual
whose nomination for election to Board membership was not endorsed by the Company’s
management prior to, or at the time of, such individual’s initial nomination for election)
shall be, for purposes of this Plan, considered as though such person were a member of the
Incumbent Board; or




     (c) the date of consummation of a merger, consolidation, recapitalization,
reorganization, sale or disposition of all or a substantial portion of the Company’s assets
or the issuance of shares of stock of the Company in connection with the acquisition of the
stock or assets of another entity, provided, however, that a Change in Control shall not
occur under this clause (c) if consummation of the transaction would result in at least 65%
of the total voting power represented by the voting securities of the Company (or, if not
the Company, the entity that succeeds to all or substantially all of the Company’s business)
outstanding immediately after such transaction being beneficially owned (within the meaning
of Rule 13d-3 promulgated pursuant to the Exchange Act) by at least 65% of the holders of
outstanding voting securities of the Company immediately prior to the transaction, with the
voting power of each such continuing holder relative to other such continuing holders not
substantially altered in the transaction; or




     (d) the date the Company files a report or proxy statement with the Securities and
Exchange Commission pursuant to the Exchange Act disclosing in response to Form 8-K or
Schedule 14A (or any successor schedule, form or report of item therein) that a change in
control of the Company has or may have occurred, or will or may occur in the future,
pursuant to any then existing contract or transaction.



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




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          “Committee” means the Compensation Committee of the Board or any other committee as may be
designated by the Board.




          “Common Stock” means the common stock, par value $0.01 per share, of the Company or any
security into which such Common Stock may be changed by reason of any transaction or event of the
type described in Section 14.




          “Company” means Administaff, Inc., a Delaware corporation.




          “Director” means a member of the Board, excluding any individual who is also an employee of
the Company or any Subsidiary.




          “Director Award” means a Director Option or a Director Stock Award.




          “Director Option” means a nonqualified stock option granted to a Director pursuant to Section 8.




          “Director Stock Award” means an award of Common Stock granted to a Director pursuant to
Section 8.




          “Disability” means the inability to perform the duties of the Director’s position for a period
of six (6) consecutive months or for an aggregate of six (6) months during any twelve (12) month
period after the Grant Date by reason of any medically determinable physical or mental impairment,
as determined by the Committee in the Committee’s sole discretion.




          “Employee” means an individual employed by the Company or any Subsidiary. For purposes of
this Plan, an Employee also includes any individual who has been offered employment by the Company
or any Subsidiary, provided that (a) any Award granted to such prospective employee shall be
canceled if such individual fails to commence such employment, (b) no payment of value may be made
in connection with such Award until such individual has commenced such employment and (c) such
individual may not be granted an ISO prior to the date the individual actually commences
employment.




          “Employee Award” means any Option, Performance Award, Phantom Stock Award, Cash Award, Stock
Award, Stock Appreciation Right or Other Stock-Based Award, whether granted singly, in combination
or in tandem, to a Participant who is an Employee pursuant to any applicable terms, conditions and
limitations as the Committee may establish in order to fulfill the objectives of the Plan.




          “Exercise Price” means the price at which the Option Shares may be purchased under the terms
of the Award Agreement.




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





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          “Fair Market Value” of a share of Common Stock means, as of a particular date, (a) if shares
of Common Stock are listed on a national securities exchange, the closing sales price per share of
Common Stock on the consolidated transaction reporting system for the principal national securities
exchange on which shares of Common Stock are listed on that date or, if there shall have been no
such sale so reported on that date, on the last preceding date on which such a sale was so reported
or, at the discretion of the Committee, the price prevailing on the exchange at the time of
exercise; (b) if shares of Common Stock are not so listed but are quoted on the Nasdaq Stock
Market, Inc., the closing sales price per share of Common Stock reported by the Nasdaq Stock
Market, Inc. on that date or, if there shall have been no such sale so reported on that date, on
the last preceding date on which such a sale was so reported or, at the discretion of the
Committee, the price prevailing on the Nasdaq Stock Market, Inc. at the time of exercise; (c) if
the Common Stock is not so listed or quoted, the closing price on that date or, if there are no
quotations available for such date, on the last preceding date on which such quotations shall be
available, as reported by the Nasdaq Stock Market, Inc. or, if not reported by the Nasdaq Stock
Market, Inc., by the National Quotation Bureau Incorporated; or (d) if none of the above is
applicable, then such amount as may be determined by the Committee or the Board in such a manner as
it deems in good faith to be the fair market value per share of Common Stock.




          “Grant Date” means (a) with respect to an Award other than a Director Award, the date
specified by the Committee in the Award Agreement on which such Award will become effective and (b)
with respect to a Director Award, the automatic date of grant for such Award as provided in Section
8.




          “ISO” means an incentive stock option within the meaning of Code Section 422.




          “Option” means a right to purchase a particular number of shares of Common Stock at a
particular Exercise Price, subject to certain terms and conditions as provided in this Plan and
Award Agreement. An Option may be in the form of an ISO or a nonqualified stock option within the
meaning of Code Section 83.




          “Option Shares” means the shares of Common Stock covered by a particular Option.




          “Other Stock-Based Award” means any stock-based Award that shall consist of a right that is
not an Option, Performance Award, Phantom Stock Award, Stock Award or SAR and is (i) denominated or
payable in; (ii) valued in whole or in part by reference to; or (iii) otherwise based on or related
to shares of Common Stock as is deemed by the Committee to be consistent with the terms of the
Plan.




          “Participant” means an Employee or a Director to whom an Award has been granted under this
Plan.




          “Performance Award” means an Employee Award, such as a Performance Unit, that is subject to
the achievement of one or more Performance Objectives established by the Committee.





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          “Performance Objectives” means the objectives, if any, established by the Committee that are
to be achieved with respect to an Award granted under this Plan, which may be described in terms of
Company-wide objectives, in terms of objectives that are related to performance of a division,
Subsidiary, department, geographic market or function within the Company or a Subsidiary in which
the Participant receiving the Award is employed, or in individual or other terms, and which shall
relate to the period of time determined by the Committee. The Performance Objectives intended to
qualify under Code Section 162(m) shall be with respect to one or more of the following: (a) net
earnings; (b) operating income; (c) earnings before interest and taxes; (d) earnings before
interest, taxes, depreciation and amortization expenses; (e) earnings before taxes and unusual or
nonrecurring items; (f) total revenue; (g) return on investment; (h) return on equity; (i) return
on total capital; (j) return on assets; (k) total stockholder return; (l) return on capital
employed in the business; (m) stock price performance; (n) earnings per share growth; (o) cash
flows; (p) total profit; (q) operating expenses; (r) fee revenue; (s) total revenue less bonus
payroll; (t) the number of paid worksite employees; and (u) gross mark-up per worksite employee.




          The Committee shall determine, in its sole discretion, at the time of grant of an Award, which
Performance Objectives to use with respect to an Award, the weighting of such objectives if more
than one is used and whether such objective(s) is (are) to be measured against a
Company-established budget or target, an index or a peer group of companies. A Performance
Objective need not be based on an increase or a positive result and may include, for example,
maintaining the status quo or limiting economic losses.




          “Performance Unit” means a unit equivalent to $100 or such other value as determined by the
Committee.




          “Phantom Stock Award” means the right to receive the value of a specified number of shares of
Common Stock.




          “Plan” means the Administaff, Inc. 2001 Incentive Plan, as amended and restated, and as
amended from time to time.




          “Restricted Stock” means shares of Common Stock that are restricted or subject to forfeiture
provisions.




          “Stock Appreciation Rights” or “SARs” means the right to receive an amount of Common Stock
equal to the appreciation in value of a specified number of shares of Common Stock over a
particular period of time.




          “Stock Award” means an Employee Award denominated in or payable in shares of Common Stock,
which may be Restricted Stock.




          “Subsidiary” means (a) with respect to any Awards other than ISOs, (i) in the case of a
corporation, any corporation of which the Company directly or indirectly owns shares representing
50% or more of the combined voting power of the shares of all classes or series of capital stock of
such corporation that have the right to vote generally on matters submitted to a




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vote of the stockholders of such corporation and (ii) in the case of a partnership or other business entity not
organized as a corporation, any such business entity of which the Company directly or indirectly
owns 50% or more of the voting, capital or profits interests (whether in the form of partnership
interests, membership interests or otherwise) and (b) with respect to Awards of ISOs, any
subsidiary within the meaning of Code Section 424(f).




     3. Plan Administration and Designation of Participants. All Employees of the Company and its
Subsidiaries and all Directors of the Company are eligible for Awards under this Plan. The
Committee shall select the Participants from time to time by the grant of Employee Awards under
this Plan and, subject to the terms and conditions of this Plan, shall determine all terms and
conditions of the Employee Awards. Except as otherwise set forth herein, the Committee shall have
no discretion with respect to the issuance of a Director Award.



          This Plan shall be administered by the Committee, which shall have full and exclusive power to
interpret this Plan and to adopt such rules, regulations and guidelines for carrying out this Plan
as it may deem necessary or appropriate.




          The Committee may, in its discretion, provide for the extension of the exercisability of an
Award, accelerate the vesting or exercisability, in whole or in part, of an Award, eliminate or
make less restrictive any restrictions contained in an Award, waive any restriction or other
provision of this Plan or an Award or otherwise amend or modify an Award in any manner that is
either (a) not adverse to the Participant to whom such Award was granted or (b) consented to by
such Participant. Notwithstanding anything herein to the contrary, without the prior approval of
the Company’s stockholders, Awards issued under the Plan will not be repriced, replaced or
regranted through cancellation or by decreasing the Exercise Price of a previously granted Award
except as provided by the adjustment provisions of Section 14.




          No member of the Committee shall be liable for anything done or omitted to be done by him or
her, by any member of the Committee or by any officer of the Company in connection with the
performance of any duties under this Plan, except for his or her own willful misconduct or as
expressly provided by statute.




     4. Delegation of Authority. The Board or Committee may delegate to the Chairman of the Board
the duties of the Committee under this Plan pursuant to such conditions or limitations as each may
establish, except that neither may delegate to any person the authority to grant Awards to, or take
other action with respect to, Participants who are subject to Section 16 of the Exchange Act.



     5. Award Agreement. Each Award granted hereunder shall be described in an Award Agreement, which shall be subject to
the terms and conditions of this Plan and shall be accepted in such manner as is deemed acceptable
by the Committee by the Participant and by the appropriate officer for and on behalf of the
Company.



     6. Shares of Common Stock Reserved for this Plan. Subject to adjustment as provided in Section 14
hereof, a total of 2,900,000 shares of Common Stock, shall be reserved for issuance upon the
exercise or payment of Awards granted pursuant to this Plan. Such shares



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may be shares of original
issuance or treasury shares or a combination of the foregoing. The Committee and the appropriate
officers of the Company shall from time to time take whatever actions are necessary to execute,
acknowledge, file and deliver any documents required to be filed with or delivered to any
governmental authority or any stock exchange or transaction reporting system on which shares of
Common Stock are listed or quoted in order to make shares of Common Stock available for issuance
pursuant to this Plan. Awards that are forfeited or terminated or expire unexercised in such a
manner that all or some of the shares of Common Stock subject thereto are not issued to a
Participant or are exchanged for Awards that do not involve Common Stock, shall again immediately
become available for the granting of Awards under this Plan. If the tax withholding obligation
resulting from the settlement of any such option or other Award is satisfied by withholding shares
of Common Stock, only the number of shares of Common Stock issued net of the shares of Common Stock
withheld shall be deemed delivered for purposes of determining usage of shares against the maximum
number of shares of Common Stock available for delivery under the Plan or any sublimit set forth
above. The Committee may from time to time adopt and observe such rules and procedures concerning
the counting of shares against the Plan maximum or any sublimit as it may deem appropriate,
including rules more restrictive than those set forth above to the extent necessary to satisfy the
requirements of any national stock exchange on which the Common Stock is listed or any applicable
regulatory requirement.



     7. Employee Awards.




     (a) Options. An Employee Award may be in the form of an Option. The Exercise Price of
an Option granted under this Plan shall not be less than 100% of the Fair Market Value of
the Common Stock at the time of the grant.




     (i) Incentive Stock Options. Options granted to Employees hereunder may be
ISOs. An ISO shall consist of a right to purchase a specified number of shares of
Common Stock at a price specified by the Committee in the Award Agreement or
otherwise, which shall not be less than the Fair Market Value of the Common Stock on
the Grant Date. Any ISO granted shall expire not later than ten (10) years after
the Grant Date, with the expiration date to be specified by the Committee in the
Award Agreement. Any ISO granted must, in addition to being subject to applicable
terms, conditions and limitations established by the Committee, comply with Code
Section 422. All other terms, conditions and limitations applicable to ISOs shall
be determined by the Committee.




     (ii) Nonqualified Stock Options. Options granted to Employees may be
nonqualified stock options within the meaning of Code Section 83. A nonqualified
stock option shall consist of a right to purchase a specified number of shares of
Common Stock at a price specified by the Committee in the Award Agreement or
otherwise, which shall not be less than the Fair Market Value of the Common Stock on
the Grant Date. The expiration date of the nonqualified stock option shall be
specified by the Committee in the Award Agreement. All other



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terms, conditions and
limitations applicable to nonqualified stock options shall be determined by the
Committee.




     (b) Performance Award. An Employee Award may be in the form of a Performance Award,
such as a Performance Unit. A Performance Award shall be subject to the achievement of one
or more Performance Objectives. All other terms, conditions and limitations applicable to
Performance Awards shall be determined by the Committee.




     (c) Stock Award (including Restricted Stock). An Employee Award may consist of Common
Stock or may be denominated in units of Common Stock. All terms, conditions and limitations
applicable to any Stock Award pursuant to this Plan shall be determined by the Committee.




     (d) Phantom Stock Award. An Employee Award may be in the form of Phantom Stock or
other bookkeeping account tied to the value of shares of Common Stock. All terms,
conditions and limitations applicable to any Phantom Stock Award shall be determined by the
Committee.




     (e) Stock Appreciation Right. An Employee Award may be in the form of SARs. All
terms, conditions and limitations applicable to any Employee Awards of SARs shall be
determined by the Committee.




     (f) Cash Award. An Employee Award may be in the form of a Cash Award. All terms,
conditions and limitations applicable to any Cash Award shall be determined by the
Committee.




     (g) Other Stock-Based Awards. An Employee Award may be in the form of any Other
Stock-Based Award. All terms, conditions and limitations applicable to any Other
Stock-Based Award shall be determined by the Committee.




     (h) The following limitations shall apply to any Award made hereunder:




     (i) Notwithstanding anything herein to the contrary, no Participant may be
granted, during any one calendar year period, Options or SARs covering more than
200,000 shares of Common Stock.




     (ii) Notwithstanding anything herein to the contrary, no Participant may
receive, during any one calendar year period, an aggregate payment under Cash Awards
or Performance Awards payable in cash in excess of $2,000,000.




     (iii) Notwithstanding anything herein to the contrary, no Participant may be
issued, during any one calendar year period, more than 200,000 shares of Common
Stock pursuant to Stock Awards (excluding Restricted Stock), Phantom Stock Awards or
Other Stock-Based Awards.



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     (iv) Notwithstanding anything herein to the contrary, no Participant may be
issued, during any one calendar year period, Restricted Stock covering more than
200,000 shares of Common Stock.



     8. Directors Awards. Directors of the Company shall be granted Director Awards in accordance
with this Section 8 and subject to applicable terms and limitations set forth in this Plan and the
applicable Award Agreements. Notwithstanding anything herein to the contrary, if the number of
shares of Common Stock available for Awards under this Plan is insufficient to make all automatic
grants of Director Awards provided for in this Section 8 on the applicable Grant Date, then all
Directors who are entitled to a Director Award on such date shall share ratably in the number of
shares then available for Awards under this Plan, all Directors shall have no right to receive a
Director Award with respect to the deficiencies in the number of available shares, and all future
Director Awards under this Section 8 shall terminate.




     (a) Initial Director Award. Each Director who is elected or appointed to the Board for
the first time after February 24, 2006, shall be automatically granted, on the date of his
or her election or appointment to the Board, a Director Stock Award of a number of shares of
Restricted Stock with an aggregate Fair Market Value, determined as of the date prior to the
Grant Date, of $75,000, rounded up to the next higher whole share amount in the case of a
fractional share amount, which shall become vested as to one-third (1/3) of the shares on
each anniversary of the Grant Date unless such Director gives advance written notice to the
Committee that he or she does not wish to receive such Director Stock Award.
Notwithstanding the foregoing, if the Director terminates his service as a member of the
Board, his or her unvested portion of such Director Stock Award, if any, shall terminate
immediately on such termination date, unless such termination of service is due to death or
Disability, in which event the unvested portion of such Director Stock Award shall become
immediately 100% vested on such termination date.




     (b) Annual Director Award. On the Annual Director Award Date, each Director who is in
office immediately after the annual meeting on such date and who was not elected or
appointed to the Board for the first time on such date shall be granted a Director Stock
Award of a number of shares of Common Stock with an aggregate Fair Market Value, determined
as of the date prior to the Grant Date, of $50,000. In lieu of such Director Stock Award,
each Director may elect prior to the issuance of such Director Stock Award, in a time and
manner determined acceptable by the Committee, to receive on the Annual Director Award Date,
a Director Option to purchase a number of shares of Common Stock which has an aggregate
value, determined as of the date prior to the Grant Date, of $50,000, calculated using the
valuation methodology most recently utilized by the Company for purposes of financial
statement reporting. The Exercise Price of Director Options issued under this Plan shall not be less than the Fair Market Value
of the Common Stock at the Grant Date. Awards granted pursuant to this subsection shall be
100% vested and exercisable and shall be rounded up to the next higher whole share amount in
the case of a fractional share amount. No awards will be made to an individual



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Director pursuant to this subsection (b) if such Director gives advance written notice to the
Committee that he or she does not wish to receive such award.




     (c) Termination of Director Options. Any Director Option granted to each Director
shall terminate and be of no force and effect with respect to any shares of Common Stock not
previously purchased by the Director upon the first to occur of:




     (i) the tenth (10th) anniversary of the Grant Date for such Award; or




     (ii) the expiration of (A) three months following
the Director’s termination of service for Cause or (B) three years
following the Director’s termination of service for any other reason.




          Notwithstanding anything herein to the contrary, the normal expiration date for
Director Options shall not be extended.




     (d) Forfeiture of Director Stock Award. Any portion of a Director Stock Award which
has not become vested on or before the date of the Director’s termination of service shall
be forfeited.




     (e) Exercise Price. The Exercise Price of the Common Stock under the Director Options
granted to each Director shall be the Fair Market Value of the shares of Common Stock
subject to such Director Option on the Grant Date for such Director Option.




     (f) Award Agreement. Each Director Option and Director Stock Award granted to a
Director shall be evidenced by an Award Agreement between the Company and such Director that
sets forth the terms, conditions and limitations described above, if any, and any additional
terms, conditions and limitations applicable to the Director Option or the Director Stock
Award. Such Award Agreements shall be consistent with the terms and conditions of this
Plan.




9. Payment of Awards.




     (a) General. Payment of Awards may be made in the form of cash or, if permitted, by
the Committee by transfer of Common Stock or combinations thereof and may include such
restrictions as the Committee shall determine, including, in the case of Common Stock,
restrictions on transfer and forfeiture provisions.




     (b) Deferral. The Committee may, in its discretion, (i) permit selected Participants
to elect to defer payments of some or all types of Awards in accordance with
procedures established by the Committee or (ii) provide for the deferral of an Award in
an Award Agreement or otherwise.




     (c) Dividends and Interest. Dividends or dividend equivalent rights may be extended to
and made part of any Award denominated in Common Stock or units of



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Common Stock, subject to
such terms, conditions and restrictions as the Committee may establish. The Committee may
also establish rules and procedures for the crediting of interest on deferred cash payments
and dividend equivalents for deferred payment denominated in Common Stock or units of Common
Stock.




     (d) Substitution of Awards. At the discretion of the Committee, a Participant who has
been granted an Employee Award may be offered an election to substitute an Employee Award
for another Employee Award or Employee Awards of the same or different type, subject to the
overall limits expressed in this Plan; provided, however, that except as provided in Section
3, in no event may the Exercise Price of an outstanding option or SAR be reduced by
modification, substitution or any method without the prior approval of the Company’s
stockholders.




     (e) No Fractional Shares. The Committee shall not be required to issue any fractional
            shares of Common Stock under this Plan. The Committee, in its sole discretion, may provide
for the elimination of fractions for the settlement of fractions in cash.



     10. Option Exercise. The price at which shares of Common Stock may be purchased under an Option
shall be paid in full at the time of exercise in cash or, if permitted by the Committee, by means
of tendering Common Stock or surrendering all or part of that or any other Award, including
Restricted Stock, valued at Fair Market Value on the date of exercise, or any combination thereof.
The Committee shall determine acceptable methods for tendering Common Stock or Awards to exercise a
stock option as it deems appropriate. The Committee may provide for procedures to permit the
exercise or purchase of Awards by use of the proceeds to be received from the sale of Common Stock
issuable pursuant to an Award. Unless otherwise provided in the applicable Award Agreement, in the
event shares of Restricted Stock are tendered as consideration for the exercise of a stock option,
a number of the shares issued upon the exercise of the stock option, equal to the number of shares
of Restricted Stock used as consideration therefor, shall be subject to the same restrictions as
the Restricted Stock so submitted as well as any additional restrictions that may be imposed by the
Committee.



     11. Termination of Employment or Service. Upon the termination of employment or service by a
Participant, any unexercised, deferred or unpaid Awards shall be treated as provided in the
specific Award Agreement evidencing the Award or, in the case of Director Awards, as provided in
this Plan. Unless otherwise specifically provided in the Award Agreement, each Award granted
pursuant to this Plan that is an Option shall immediately terminate to the extent the Option is not
vested (or does not become vested as
a result of such termination of employment or service) on the date the Participant terminates
employment or service with the Company or its Subsidiaries.



     12. Acceleration Upon a Change in Control. Notwithstanding anything herein to the contrary,
all conditions and/or restrictions relating to the continued employment or service of a Participant
and/or the achievement of Performance Objectives with respect to the vesting and



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exercisability or
full entitlement to any Award shall immediately lapse upon a Change in Control.



     13. Assignability. Unless otherwise permitted by the Committee, no Award granted under this Plan
shall be sold, transferred, pledged, assigned or otherwise alienated or hypothecated by a
Participant other than by (a) will or the laws of descent and distribution or (b) a qualified
domestic relations order. During the lifetime of a Participant, any Award shall be exercisable
only by him, or in the case of a Participant who is mentally incapacitated, the Award shall be
exercisable by his guardian or legal representative. The Committee may prescribe and include in
applicable Award Agreements other restrictions on transfer. Any attempted assignment or transfer
in violation of this Section 13 shall be null and void. Upon the Participant’s death, the personal
representative or other person entitled to succeed to the rights of the Participant (the “Successor
Participant”) may exercise such rights. A Successor Participant must furnish proof satisfactory to
the Company of his or her right to exercise the Award under the Participant’s will or under the
applicable laws of descent and distribution.



          Subject to approval by the Committee in its sole discretion, other than with respect to ISOs,
all or a portion of the Awards granted to a Participant under this Plan may be transferable by the
Participant, to the extent and only to the extent specified in such approval, to (a) the spouse,
children or grandchildren (including adopted and stepchildren and grandchildren) of the Participant
(“Immediate Family Members”), (b) a trust or trusts for the exclusive benefit of such Immediate
Family Members and, if applicable, the Participant or (c) a partnership or partnerships in which
such Immediate Family Members and, if applicable, the Participant are the only partners.
Subsequent transfers of transferred Awards shall be prohibited except by will or the laws of
descent and distribution, unless such transfers are made to the original Participant or a person to
whom the original Participant could have made a transfer in the manner described herein. No
transfer shall be effective unless and until written notice of such transfer is provided to the
Committee, in the form and manner prescribed by the Committee. Following transfer, any such Awards
shall continue to be subject to the same terms and conditions as were applicable immediately prior
to transfer, and except as otherwise provided herein, the term “Participant” shall be deemed to
refer to the transferee. No transferred Options shall be exercisable unless arrangements
satisfactory to the Company have been made to satisfy any tax withholding obligations the Company
may have with respect to the Options. The consequences of termination of employment or service
shall continue to be applied with respect to the original Participant, following which the Awards
shall be exercisable by the transferee only to the extent and for the periods specified in this
Plan and the Award Agreement.




     14. Adjustments.




     (a) The existence of outstanding Awards shall not affect in any manner the right or
power of the Company or its stockholders to make or authorize (i) any or all adjustments,
recapitalization, reorganizations or other changes in the ownership of the Company or its
business, (ii) any merger or consolidation of the Company, (iii) any issue of bonds,
debentures or other obligations, (iv) the dissolution or liquidation of the Company, (v) any
sale or transfer of all or any part of its assets or business or (vi) any



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other Company act
or proceeding of any kind, whether or not of a character similar to that of the acts or
proceedings enumerated above.




     (b) In the event of any Common Stock distribution or split, recapitalization,
extraordinary distribution, merger, consolidation, combination or exchange of shares of
Common Stock or similar change or upon the occurrence of any other event that the Committee,
in its sole discretion, deems appropriate, (i) the number of shares of Common Stock reserved
under this Plan and covered by outstanding Awards, (ii) the Exercise Price in respect of
such Awards, (iii) the appropriate value and price determinations for such Awards, (iv) the
per person limitation on Awards of Options and SARs and (v) the kind of shares covered
thereby (including shares of another issuer) shall be adjusted as appropriate.




     (c) In the event of a corporate merger, consolidation, acquisition of property or
stock, separation, reorganization or liquidation, the Committee shall be authorized (i) to
issue or assume Awards, regardless of whether in a transaction to which Section 424(a) of
the Code applies, by means of substitution of new Awards, as appropriate, for previously
issued Awards or to assume previously issued Awards as part of such adjustment, (ii) to make
provision, prior to the transaction, for the acceleration of the vesting and exercisability
of, or lapse of restrictions with respect to, Awards (to the extent not otherwise provided
under Sections 7 or 8) and the termination of options that remain unexercised at the time of
such transaction or (iii) to provide for the acceleration of the vesting and exercisability
of any Awards and the cancellation thereof (to the extent not otherwise provided under
Sections 7 or 8) and to deliver to the Participants cash in an amount that the Board shall
determine in its sole discretion is equal to the fair market value of such Awards on the
date of such event, which in the case of Options or SARs shall be the excess of the Fair
Market Value of Common Stock on such date over the exercise or strike price of such Award.




     (d) The Committee, in its sole discretion and without the consent of the Participant,
may amend (i) any stock-based Award to reflect a change in accounting rules required by the
Financial Accounting Standards Board and (ii) any Award that is not intended to meet the
requirements of Code Section 162(m), to reflect a significant event that the Committee, in
its sole discretion, believes to be appropriate to reflect the original intent in the grant
of the Award.



     15. Tax Withholding. The Company shall have the right to deduct applicable taxes from any Award payment and withhold,
at the time of delivery or vesting of cash or shares of Common Stock under this Plan, an
appropriate amount of cash or number of shares of Common Stock or a combination thereof for payment
of taxes required by law or to take such other action as may be necessary in the opinion of the
Company to satisfy all obligations for withholding of such taxes. The Committee may also permit
withholding to be satisfied by the transfer to the Company of shares of Common Stock theretofore
owned by the holder of the Award with respect to which withholding is required. If shares of
Common Stock are used to satisfy tax



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withholding, such shares shall be valued as provided in the
applicable Award Agreement or as otherwise determined by the Committee.



     16. Amendments or Termination. The Board may amend, alter or discontinue this Plan, except that
(a) no amendment or alteration that would impair the rights of any Participant under any Award that
he has been granted shall be made without his consent and (b) no amendment or alteration shall be
effective prior to approval by the Company’s stockholders to the extent such approval is required
by applicable legal requirements or the requirements of the securities exchange on which the
Company’s Common Stock is listed.



     17. Restrictions. No shares of Common Stock or other form of payment shall be issued with respect
to any Award unless the Company shall be satisfied based on the advice of its counsel that such
issuance will be in compliance with applicable federal and state securities laws and the
requirements of any securities exchange or transaction reporting system upon which the Common Stock
is then listed.



     18. Unfunded Plan. Insofar as it provides for Awards of cash, Common Stock or rights thereto, this
Plan shall be unfunded. Although bookkeeping accounts may be established with respect to
Participants who are entitled to cash, Common Stock or rights thereto under this Plan, any such
accounts shall be used merely as a bookkeeping convenience. The Company shall not be required to
segregate any assets that may at any time be represented by cash, Common Stock or rights thereto,
nor shall this Plan be construed as providing for such segregation, nor shall the Company, the
Board or the Committee be deemed to be a trustee of any cash, Common Stock or rights thereto to be
granted under this Plan. Any liability or obligation of the Company to any Participant with
respect to a grant of cash, Common Stock or rights thereto under this Plan shall be based solely
upon any contractual obligations that may be created by this Plan and any Award Agreement, and no
such liability or obligation of the Company shall be deemed to be secured by any pledge or other
encumbrance on any property of the Company. None of the Company, the Board or the Committee shall
be required to give any security or bond for the performance of any obligation that may be created
by this Plan.



     19. Parachute Payment Limitation. Notwithstanding any contrary provision of the Plan, the
Committee may provide in the Award Agreement or in any other agreement with the Participant for a
limitation on the acceleration of vesting and exercisability of unmatured Awards to the extent
necessary to avoid or mitigate the impact of the golden parachute excise tax under Section 4999 of
the Code on the Participant or may provide for a supplemental payment to be made to the Participant
as necessary to offset or mitigate the impact of the golden parachute excise tax on the
Participant. In the event the Award Agreement or other agreement with the Participant does not
contain any contrary provision regarding the method of avoiding or mitigating the impact of the
golden parachute excise tax under Section 4999 of the Code on the Participant, then notwithstanding
any contrary provision of this Plan, the aggregate present value of all parachute payments payable
to or for the benefit of a Participant, whether payable pursuant to this Plan or otherwise, shall
be limited to three times the Participant’s base amount less one dollar and, to the extent
necessary, the exercisability of an unmatured Award shall be reduced in order that this limitation
not be exceeded. For purposes of this Section 19, the terms “parachute



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payment,” “base amount” and “present value” shall have the meanings assigned thereto under Section 280G of the Code. It is the
intention of this Section 19 to avoid excise taxes on the Participant under Section 4999 of the
Code or the disallowance of a deduction to the Company pursuant to Section 280G of the Code.



     20. Code Section 409A Compliance. The Board intends that any Awards under the Plan satisfy
the requirements of Section 409A of the Code and related regulations and Treasury pronouncements
(“Section 409A”) to avoid the imposition of excise taxes thereunder. If any provision of the Plan
or an Award Agreement under the Plan would result in the imposition of an excise tax under Section
409A, that provision will be reformed to avoid imposition of the excise tax and no action taken to
comply with Section 409A shall be deemed to impair the rights of any Participant under the Plan or
an Award Agreement under the Plan.



     21. Indemnification. The Company shall indemnify and hold harmless any member of the Board or the
Committee and other individuals, including Employees and Directors, performing services on behalf
of the Committee, against any liability, cost or expense arising as a result of any claim asserted
by any person or entity under the laws of any state or of the United States with respect to any
action or failure to act of such individuals taken in connection with this Plan, except claims or
liabilities arising on account of the willful misconduct or bad faith of such Board member,
Committee member or individual.



     22. Right to Employment or Service. The granting of any Award shall not impose upon the Company
any obligation to maintain any Participant as an Employee or a Director and shall not diminish the
power of the Company to terminate any Participant’s employment or service at any time.



     23. Governing Law. This Plan and all determinations made and actions taken pursuant hereto, to the extent not
otherwise governed by mandatory provisions of the Code or the securities laws of the United States,
shall be governed by and construed in accordance with the laws of the State of Texas.



     24. Effective Date of Plan. This Plan shall be effective as of February 24, 2006, subject to
approval of this Plan by the stockholders of the Company within one year of the date this Plan is
adopted by the Board. If the stockholders of the Company should fail to so approve this Plan
within one year of the adoption date, this amendment and restatement shall terminate and cease to
be of any further force or effect and all grants of Awards hereunder shall be null and void.





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