exh10_28.htm


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    FAR
EAST ENERGY CORPORATION

    2005
STOCK INCENTIVE PLAN

     

    1.           Purpose
of the Plan

     

    The
purpose of the Plan is to (i) aid the Company and its Subsidiaries and
Affiliates in attracting, securing and retaining employees of outstanding
ability, (ii) attract members to the Board, (iii) attract consultants to provide
services to the Company and its Subsidiaries and Affiliates, as needed, and (iv)
motivate such persons to exert their best efforts on behalf of the Company and
its Affiliates by providing incentives through the granting of
Awards.  The Company expects that it will benefit from the added
interest, which such persons will have in the welfare of the Company as a result
of their proprietary interest in the Company's success.

     

    2.           Definitions

     

    The
following capitalized terms used in the Plan have the respective meanings set
forth in this Section:

     

    (a) Act:  The
Securities Exchange Act of 1934, as amended, or any successor
thereto.

     

    (b) Affiliate:  Any
entity (i) 20% or more of the voting equity of which is owned or controlled
directly or indirectly by the Company, or (ii) that had been a business,
division or subsidiary of the Company, the equity of which has been distributed
to the Company's stockholders, even if the Company thereafter owns less than 20%
of the voting equity.

     

    (c) Award:  An
Option, Stock Appreciation Right or Other Stock-Based Award granted pursuant to
the Plan.

     

    (d) Award
Agreement:  Any written agreement, contract, or other
instrument or document evidencing an Award.

     

    (e) Beneficial Owner or
Beneficially
Owned:  As such term is defined in Rule 13d-3 under the Act (or
any successor rule thereto).

     

    (f) Board:  The
Board of Directors of the Company.

     

    (g) Change of
Control:  The occurrence of any of the following
events:

     

    (i)           any
Person becomes the Beneficial Owner, directly or indirectly, of more than forty
percent (40%) of the combined voting power of the then-outstanding voting
securities of the Company entitled to vote generally in the election of
directors (the "Outstanding Company Voting
Securities"); provided, however, that the
following acquisitions shall not constitute a Change of Control:  (A)
any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, or (B)
any acquisition by an entity pursuant to a reorganization, merger or
consolidation, unless such reorganization, merger or consolidation constitutes a
Change of Control under clause (ii) of this Section 2(g);

    


    (ii)           the
consummation of a reorganization, merger or consolidation, unless following such
reorganization, merger or consolidation sixty percent (60%) or more of the
combined voting power of the then-outstanding voting securities of the entity
resulting from such reorganization, merger or consolidation entitled to vote
generally in the election of directors is then Beneficially Owned, directly or
indirectly, by all or substantially all of the individuals and entities who were
the Beneficial Owners, respectively, of the Outstanding Company Voting
Securities immediately prior to such reorganization, merger or
consolidation;

    


    (iii)           the
(i) approval by the stockholders of the Company of a complete liquidation
or dissolution of the Company or (ii) sale or other disposition (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Company and its Subsidiaries, unless the successor entity
existing immediately after such sale or disposition is then Beneficially Owned,
directly or indirectly, by all or substantially all of the individuals and
entities who were the Beneficial Owners, respectively, of the Outstanding
Company Voting Securities immediately prior to such sale or
disposition;

    


    (iv)           during
any period of twenty-four months (not including any period prior to the
Effective Date), individuals who at the beginning of such period constitute the
Board, and any new director (other than (A) a director nominated by a Person who
has entered into an agreement with the Company to effect a transaction described
in Sections 2(g)(i), (ii) or (iii) of the Plan, (B) a director whose initial
assumption of office occurs as a result of either an actual or threatened
election contest subject to Rule 14a-11 of Regulation 14A promulgated under the
Act or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board or (C) a director designated by any
Person who is the Beneficial Owner, directly or indirectly, of securities of the
Company representing 10% or more of the Outstanding Company Voting Securities)
whose election by the Board or nomination for election by the Company's
stockholders was approved in advance by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute at least a majority thereof;
or

     

    (v)           the
Board adopts a resolution to the effect that, for purposes hereof, a Change of
Control has occurred.

    


    Notwithstanding
the foregoing, the definition of Change of Control for any Award under the Plan
that consists of deferred compensation subject to Section 409A of the Code shall
be deemed modified to the extent necessary to comply with Section 409A of the
Code.

     

    (h) Code:  The
Internal Revenue Code of 1986, as amended, or any successor
thereto.

     

    (i) Committee:  The
Compensation Committee of the Board, or any successor thereto or other committee
designated by the Board to assume the obligations of the Committee hereunder, or
if no such committee shall be designated or in office, the Board.

     

    (j) Company: Far East
Energy Corporation, a Nevada corporation.

     

    (k) Covered
Employee:  An employee of the Company or its Subsidiaries who
may be deemed to be a covered employee within the meaning of Section 162(m) of
the Code.

     

    (l) Disability:  Inability
to engage in any substantial gainful activity by reason of a medically
determinable physical or mental impairment which can be expected to result in
death, or can be expected to last for a continuous period of not less than
12 months.  The determination whether a Participant has suffered
a Disability shall be made by the Committee based upon such evidence as it deems
necessary and appropriate.  A Participant shall not be considered
disabled unless he or she furnishes such medical or other evidence of the
existence of the Disability as the Committee, in its sole discretion, may
require.

     

    (m) Effective
Date:  The date on which the Plan takes effect, as defined
pursuant to Section 27 of the Plan.

     

    (n) Fair Market
Value:  On a given date, the arithmetic mean of the high and
low prices of the Shares as reported on such date on the Composite Tape of the
principal national securities exchange on which such Shares are listed or
admitted to trading, or, if no Composite Tape exists for such national
securities exchange on such date, then on the principal national securities
exchange on which such Shares are listed or admitted to trading, or, if the
Shares are not listed or admitted on a national securities exchange, the
arithmetic mean of the per Share closing bid price and per Share closing asked
price on such date as quoted on the National Association of Securities Dealers
Automated Quotation System (or such market in which such prices are regularly
quoted), or, if there is no market on which the Shares are regularly quoted, the
Fair Market Value shall be the value established by the Committee in good
faith.  If no sale of Shares shall have been reported on such
Composite Tape or such national securities exchange on such date or quoted on
the National Association of Securities Dealers Automated Quotation System on
such date, then the immediately preceding date on which sales of the Shares have
been so reported or quoted shall be used.

     

    (o) ISO:  An
Option that is also an incentive stock option granted pursuant to Section 7(d)
of the Plan.

     

    (p) LSAR:  A
limited stock appreciation right granted pursuant to Section 8(d) of the
Plan.

     

    (q) Other Stock-Based
Awards:  Awards granted pursuant to Section 9 of the
Plan.

     

    (r) Option:  A
stock option granted pursuant to Section 7 of the Plan.

     

    (s) Option
Price:  The purchase price per Share of an Option, as
determined pursuant to Section 7(a) of the Plan.

     

    (t) Participant:  An
individual who is selected by the Committee to participate in the Plan pursuant
to Section 5 of the Plan.

     

    (u) Performance-Based
Awards:  Other Stock-Based Awards granted pursuant to Section
9(b) of the Plan.

     

    (v) Person:  As
such term is used for purposes of Section 13(d)(3) or 14(d)(2) of the Act (or
any successor section thereto).

     

    (w) Plan:  The
Far East Energy Corporation 2005 Stock Incentive Plan.

     

    (x) Restricted
Stock:  Restricted stock granted pursuant to Section 9 of the
Plan.

     

    (y) Restricted Stock
Unit:  A restricted stock unit representing a right to acquire
a fixed number of Shares at a future date, granted pursuant to Section 9 of the
Plan.

     

    (z) Securities
Act:   The Securities Act of 1933, as amended, or any
successor thereto.

     

    (aa) Shares:  Shares
of common stock, par value $0.001 per Share, of the Company, as adjusted
pursuant to Section 10 of the Plan.

     

    (bb) Stock Appreciation
Right:  A stock appreciation right granted pursuant to Section
8 of the Plan.

     

    (cc) Subsidiary:  A
subsidiary corporation, as defined in Section 424(f) of the Code (or any
successor section thereto).

     

    (dd) Termination of
Service: A Participant's termination of service with the Company, its
Subsidiaries and Affiliates.  A Termination of Service of an employee
of the Company or any Subsidiary shall not be deemed to have occurred in the
case of sick leave, military leave or any other leave of absence, in each case
approved by the Committee or in the case of transfers between locations of the
Company or its Subsidiaries.  In the case of "specified employees" (as
described in Section 409A of the Code), distributions may not be made before the
date which is six months after the date of termination of service (or, if
earlier, the date of death of the participant).  A specified employee
is a "key employee" as defined in Section 416(i) of the Code without regard to
Paragraph (5), but only if the Company has any stock which is publicly
traded on an established securities market or otherwise.

     

    3.           Shares
Subject to the Plan

     

    The maximum number of Shares with
respect to which Awards may be granted under the Plan shall be 12,500,000
(subject to adjustment in accordance with the provisions of Section 10
hereof), whether pursuant to ISOs or otherwise. Of that number, not more than
2,600,000 Shares (subject to adjustment in accordance with the provisions of
Section 10 hereof) will be available for grants under the Plan of ISOs
pursuant to Section 7(d) hereof, and not more than 3,900,000 Shares (subject to
adjustment in accordance with the provisions of Section 10 hereof) will be
available for grants under the Plan of unrestricted Shares, Restricted Stock,
Restricted Stock Units or any Other Stock-Based Awards pursuant to
Section 9 hereof. The maximum number of Shares with respect to which Awards
of any and all types may be granted during a calendar year to any Participant
shall be limited, in the aggregate, to 1,500,000 (subject to adjustment in
accordance with the provisions of Section 10 hereof). The Shares may
consist, in whole or in part, of authorized and unissued Shares or treasury
Shares, including Shares acquired by purchase in the open market or in private
transactions. If any Awards are forfeited, cancelled, terminated, exchanged or
surrendered or such Award is settled in cash or otherwise terminates without a
distribution of Shares to the Participant, any Shares counted against the number
of Shares reserved and available under the Plan with respect to such Award
shall, to the extent of any such forfeiture, settlement, termination,
cancellation, exchange or surrender, again be available for Awards under the
Plan.

     

    4.           Administration

     

    (a)           The
Plan shall be administered by the Committee, which may delegate its duties and
powers in whole or in part to any subcommittee thereof.  If necessary
to satisfy the requirements of Section 162(m) of the Code and/or
Rule 16b-3 promulgated under the Securities Exchange Act of 1934, the
Committee shall consist solely of at least two individuals who are each
"non-employee directors" within the meaning of Rule 16b-3 under the Act (or any
successor rule thereto), "outside directors" within the meaning of Section
162(m) of the Code (or any successor section thereto) and satisfy all applicable
independence requirements set forth in any applicable stock exchange or market
or quotation system in which the Shares are then traded, listed or quoted. Any
action permitted to be taken by the Committee may be taken by the Board, in its
discretion; provided however that, to the
extent required by any stock exchange or market or quotation system on which the
Shares are traded, listed or quoted, any Award approved by the Board shall also
have been approved by a majority of the Company's independent directors (within
the meaning of such exchange or market or quotation system).  The
Committee may also delegate to a committee consisting of employees of the
Company the authority to authorize transfers, establish terms and conditions
upon which transfers may be made and establish classes of options eligible to
transfer options, as well as to make other determinations with respect to option
transfers.

     

    (b)           The
Committee is authorized to interpret the Plan, to establish, amend and rescind
any rules and regulations relating to the Plan, to make any other determinations
that it deems necessary or desirable for the administration of the Plan, and to
take the following actions, in each case subject to and consistent with the
provisions of the Plan:

     

    (i)           to
select Participants to whom Awards may be granted;

     

    
      	
               
      

            	
              (ii)

            	
              to
      determine the type or types of Awards to be granted to each
      Participant;

            


    

     

    (iii)           to
determine the type and number of Awards to be granted, the number of Shares to
which an Award may relate, the terms and conditions of any Award granted under
the Plan (including, but not limited to, any exercise price, grant price, or
purchase price, and any bases for adjusting such exercise, grant or purchase
price, any restriction or condition, any schedule for lapse of restrictions or
conditions relating to transferability or forfeiture, exercisability, or
settlement of an Award, and waiver or accelerations thereof, and waivers of
performance conditions relating to an Award, based in each case on such
considerations as the Committee shall determine), and all other matters to be
determined in connection with an Award;

     

    (iv)           to
determine whether, to what extent, and under what circumstances an Award may be
settled, or the exercise price of an Award may be paid, in cash, Shares, other
Awards, or other property, or an Award may be cancelled, forfeited, exchanged,
or surrendered;

     

    (v)           to
prescribe the form of each Award Agreement, which need not be identical for each
Participant;

     

    (vi)           to
correct any defect or supply any omission or reconcile any inconsistency in the
Plan and to construe and interpret the Plan and any Award, rules and
regulations, Award Agreement, or other instrument hereunder, in each case, in
the manner and to the extent the Committee deems necessary or desirable;
and

     

    (vii)           to
make all other decisions and determinations as may be required under the terms
of the Plan or as the Committee may deem necessary or advisable for the
administration of the Plan.

     

    (c)           Any
decision of the Committee in the interpretation and administration of the Plan,
as described herein, shall lie within its sole and absolute discretion and shall
be final, conclusive and binding on all parties concerned (including, but not
limited to, Participants and their beneficiaries or
successors).  Determinations made by the Committee under the Plan need
not be uniform and may be made selectively among Participants, whether or not
such Participants are similarly situated.

     

    (d)           The
Committee shall require payment of any amount it may determine to be necessary
to withhold for federal, state, local or other taxes as a result of the grant,
vesting or the exercise of an Award.  With the approval of the
Committee, the Participant may elect to pay a portion or all of such withholding
taxes by (i) delivery of Shares or (ii) having Shares withheld by the Company
from any Shares that would have otherwise been received by the
Participant.  The number of Shares so delivered or withheld shall have
an aggregate Fair Market Value on the date of the exercise of an Award
sufficient to satisfy the applicable withholding taxes.  In addition,
with the approval of the Committee, a Participant may satisfy any additional tax
that the Participant elects to have the Company withhold by delivering to the
Company or its designated representative Shares already owned by the Participant
or, in the case of Shares acquired through an employee benefit plan sponsored by
the Company or its Subsidiaries, Shares held by the Participant for more than
six months.

     

    (e)           If
the chief executive officer of the Company is a member of the Board, the Board
by specific resolution may constitute such chief executive officer as a
committee of one which shall have the authority to grant Awards of up to an
aggregate of 200,000 Shares (subject to adjustment in accordance with the
provisions of Section 10 hereof) in each calendar year to Participants who are
not subject to the rules promulgated under Section 16 of the Act (or any
successor section thereto) or Covered Employees; provided, however, that such
chief executive officer shall notify the Committee of any such grants made
pursuant to this Section 4.

     

    (f)           Notwithstanding
the foregoing, a Repricing (as defined below) is prohibited without prior
stockholder approval. Subject to compliance with the provisions of the
immediately preceding sentence regarding a Repricing, the Committee may, at any
time or from time to time: (a) authorize the Company, with the consent
of the respective Participants, to issue new Awards in exchange for the
surrender and cancellation of any or all outstanding Awards or (b) buy from
a Participant an Award previously granted with payment in cash, Shares
(including Restricted Stock) or other consideration, based on such terms and
conditions as the Committee and the Participant may agree. The exercise of
the authority provided in this Section 4(f) is circumscribed to the
extent necessary to avoid the inadvertent application of the interest and
additional tax provisions of Section 409A of the Code. For purposes of
this Plan, “Repricing” means any of the following or any other action that has
the same purpose and effect: (a) lowering the exercise price of an
outstanding Option granted under this Plan after it is granted or
(b) canceling an outstanding Award granted under this Plan at a time when
its exercise or purchase price exceeds the then Fair Market Value of the stock
underlying such outstanding Award, in exchange for another Award or a cash
payment, unless the cancellation and exchange occurs in connection with a
merger, consolidation, sale of substantially all the Company’s assets,
acquisition, spin-off or other similar corporate transaction.

     

    5.           Eligibility

     

    Employees
of the Company, its Subsidiaries and Affiliates and members of the Board, who
are from time to time responsible for, or contributes to, the management, growth
and protection of the business of the Company and its Affiliates, and
consultants to the Company and its Subsidiaries, are eligible to be granted
Awards under the Plan.  Participants shall be selected from time to
time by the Committee, in its sole discretion, from among those eligible, and
the Committee shall determine, in its sole discretion, the number of Shares to
be covered by the Awards granted to each Participant.  Notwithstanding
any provisions of the Plan to the contrary, an Award may be granted to an
employee or consultant, in connection with his or her hiring or retention prior
to the date the employee or consultant first performs services for the Company
or a Subsidiary; provided, however, that any such Award
shall not become vested prior to the date the employee or consultant first
performs such services.

     

    6.           Limitations

     

    No Award
may be granted under the Plan after the tenth anniversary of the Effective Date,
but Awards theretofore granted may extend beyond that date.

     

    7.           Terms
and Conditions of Options

     

    Options
granted under the Plan shall be, as determined by the Committee, non-qualified,
incentive or other stock options for federal income tax purposes, as evidenced
by the related Award Agreements, and shall be subject to the foregoing and the
following terms and conditions and to such other terms and conditions, not
inconsistent therewith, as the Committee shall determine:

     

    (a)           Option
Price.  The Option Price per Share shall be determined by the
Committee, but shall not be less than 100% of the Fair Market Value of the
Shares on the date an Option is granted.

     

    (b)           Exercisability.  Options
granted under the Plan shall be exercisable at such time and upon such terms and
conditions as may be determined by the Committee, but in no event shall an
Option be exercisable more than ten years after the date it is
granted.

     

    (c)           Exercise of
Options.  Except as otherwise provided in the Plan or in an
Award Agreement, an Option may be exercised for all, or from time to time any
part, of the Shares for which it is then exercisable.  For purposes of
Section 7 of the Plan, the exercise date shall be the date the Company receives
a written notice of exercise in accordance with the terms of the Award Agreement
and full payment for the Shares with respect to which the Option is exercised,
together with (i) any other agreements required by the terms of the Plan and/or
Award Agreement or as required by the Committee, and (ii) payment by the
Participant of all payroll, withholding or income taxes incurred in connection
with such Option exercise (or arrangements for the collection or payment of such
tax satisfactory to the Committee are made).  The purchase price for
the Shares as to which an Option is exercised shall be paid to the Company in
full at the time of exercise at the election of the Participant (A) in cash, (B)
in Shares having a Fair Market Value equal to the aggregate Option Price for the
Shares being purchased and satisfying such other requirements as may be imposed
by the Committee; provided, that, such Shares
have been held by the Participant for no less than six months, (C) partly in
cash and partly in such Shares, (D) through the delivery of irrevocable
instructions to a broker to deliver promptly to the Company an amount equal to
the aggregate Option Price for the Shares being purchased, or (E) through such
other means as shall be prescribed in the Award Agreement.

     

    (d)           ISOs.  The
Committee may grant Options under the Plan that are intended to be
ISOs.  Such ISOs shall comply with the requirements of Section 422 of
the Code (or any successor section thereto).  Unless otherwise
permitted under Section 422 of the Code (or any successor section thereto), no
ISO may be granted to any Participant who at the time of such grant, owns more
than 10% of the total combined voting power of all classes of stock of the
Company or of any Subsidiary, unless (i) the Option Price for such ISO is at
least 110% of the Fair Market Value of a Share on the date the ISO is granted
and (ii) the date on which such ISO terminates is a date not later than the day
preceding the fifth anniversary of the date on which the ISO is
granted.  Any Participant who disposes of Shares acquired upon the
exercise of an ISO either (i) within two years after the date of grant of such
ISO or (ii) within one year after the transfer of such Shares to the
Participant, shall notify the Company of such disposition and of the amount
realized upon such disposition.  Notwithstanding Section 5 of the
Plan, ISOs may be granted solely to employees of the Company and its
Subsidiaries.

     

    (e)           Exercisability Upon
Termination of Service by Death or Disability.  Upon a
Termination of Service by reason of death or Disability, the Option may be
exercised within 180 days (or such other period of time not exceeding one year
as is determined by the Committee at the time of granting the Option) following
the date of death or Termination of Service due to Disability (subject to any
earlier termination of the Option as provided by its terms), by the Participant
in the case of Disability, or in the case of death, by the Participant's estate
or by a person who acquired the right to exercise the Option by bequest or
inheritance, but in any case only to the extent the Participant was entitled to
exercise the Option on the date of his or her Termination of Service by death or
Disability.  To the extent that he or she was not entitled to exercise
such Option at the date of his or her Termination of Service by death or
Disability, or if he or she doe not exercise such Option (which he or she was
entitled to exercise) within the time specified herein, the Option shall
terminate.  Notwithstanding anything to the contrary herein, the
Committee may at any time and from time to time prior to the termination of an
Option, with the consent of the Participant, extend the period of time during
which the Participant may exercise his or her Option following the date of
Termination of Service due to death or Disability; provided, however, that the
maximum period of time during which an Option shall be exercisable following the
date of Termination of Service due to death or Disability shall not exceed the
original term of such Option as set forth in the Award Agreement and that
notwithstanding any extension of time during which an Option may be exercised,
such Option, unless otherwise amended by the Committee, shall only be
exercisable to the extent the Participant was entitled to exercise the Option on
the date of Termination of Service due to death or Disability.  Any
such extension shall be designed to conform to the requirements of
Section 409A of the Code so as to avoid the imposition of the additional
income tax.

     

    (f)           Effect of Other Termination
of Service.  Upon a Termination of Service for any reason
(other than death or Disability), an unexercised Option may thereafter be
exercised during the period ending 90 days after the date of such Termination of
Service, but only to the extent to which such Option was vested and exercisable
at the time of such Termination of Service.  Notwithstanding the
foregoing, the Committee may, in its sole discretion, either by prior written
agreement with the Participant or upon the occurrence of a Termination of
Service, accelerate the vesting of unvested Options held by a Participant if
such Participant's Termination of Service is without "cause" (as such term is
defined by the Committee in its sole discretion) by the Company.

     

    (g)           Nontransferability of Stock
Options.  Except as otherwise provided in this Section 7(g), an
Option shall not be transferable by the Participant otherwise than by will or by
the laws of descent and distribution, and during the lifetime of a Participant
an Option shall be exercisable only by the Participant.  An Option
exercisable after the death of a Participant or a transferee pursuant to the
following sentence may be exercised by the legatees, personal representatives or
distributees of the Participant or such transferee.  The Committee
may, in its discretion, authorize all or a portion of the Options previously
granted or to be granted to a Participant, other than ISOs, to be on terms which
permit irrevocable transfer for no consideration by such Participant to any
child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former
spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law or sister-in-law, including adoptive
relationships, of the Participant, any trust in which these persons have more
than 50% of the beneficial interest, any foundation in which these persons (or
the Participant) control the management of assets, and any other entity in which
these persons (or the Participant) own more than 50% of the voting interests
("Eligible
Transferees"), provided that (i) the Award
Agreement pursuant to which such options are granted must be approved by the
Committee, and must expressly provide for transferability in a manner consistent
with this Section 7(g) and (ii) subsequent transfers of transferred Options
shall be prohibited except those in accordance with the first sentence of this
Section 7(g).  The Committee may, in its discretion, amend the
definition of Eligible Transferees to conform to the coverage rules of Form S-8
under the Securities Act (or any comparable or successor registration statement)
from time to time in effect.  Following transfer, any such Options
shall continue to be subject to the same terms and conditions as were applicable
immediately prior to transfer.  The events of Termination of Service
of Sections 7(e) and 7(f) hereof shall continue to be applied with respect to
the original Participant, following which the options shall be exercisable by
the transferee only to the extent, and for the periods specified, in Sections
7(e) and 7(f).

     

    8.           Terms
and Conditions of Stock Appreciation Rights

     

    (a)           Grants.  The
Committee also may grant a Stock Appreciation Right, independent of an Option,
with respect to Shares that are traded or listed on an established stock
exchange or market or quotation system.

     

    (b)           Terms.  The
exercise price per Share of a Stock Appreciation Right shall be an amount
determined by the Committee but in no event shall such amount be less than the
greater of (i) the Fair Market Value of a Share on the date the Stock
Appreciation Right is granted and (ii) an amount permitted by applicable laws,
rules, by-laws or policies of regulatory authorities or stock exchanges or
market or quotation systems.  Each Stock Appreciation Right granted
independent of an Option shall entitle a Participant to exercise the Stock
Appreciation Right in whole or in part and, upon such exercise, to receive from
the Company an amount equal to (i) the excess of (A) the Fair Market Value on
the exercise date of one Share over (B) the exercise price per Share, times (ii)
the number of Shares covered by the portion of the Stock Appreciation Right so
exercised.  The date a notice of exercise is received by the Company
shall be the exercise date.  Payment shall be made in
Shares.  Stock Appreciation Rights may be exercised from time to time
upon actual receipt by the Company of written notice of exercise stating the
number of Shares with respect to which the Stock Appreciation Right is being
exercised.

     

    (c)           Limitations.  The
Committee may impose, in its discretion, such conditions upon the exercisability
or transferability of Stock Appreciation Rights as it may deem fit.

     

    (d)           Limited Stock Appreciation
Rights.  The Committee may grant LSARs that are exercisable
upon the occurrence of specified contingent events.  Such LSARs may
provide for a different method of determining appreciation, may specify that
payment will be made only in cash as soon as practicable after the occurrence of
the specified contingent event (but not later than March 15 of the year
following the year in which such contingent event occurs) and may provide that
any related Awards are not exercisable while such LSARs are
exercisable.  Unless the context otherwise requires, whenever the term
"Stock Appreciation Right" is used in the Plan, such term shall include
LSARs.

     

    9.           Other
Stock-Based Awards

     

    (a)           Generally.  The
Committee, in its sole discretion, may grant Awards of unrestricted Shares,
Restricted Stock, Restricted Stock Units and other Awards that are valued in
whole or in part by reference to, or are otherwise based on the Fair Market
Value of, Shares (collectively, "Other Stock-Based
Awards").  Such Other Stock-Based Awards shall be in such form,
and dependent on such conditions, as the Committee shall determine, including,
without limitation, the right to receive one or more Shares (or the equivalent
cash value of such Shares) upon the completion of a specified period of service,
the occurrence of an event and/or the attainment of performance
objectives.  Other Stock-Based Awards may be granted alone or in
addition to any other Awards granted under the Plan.  Subject to the
provisions of the Plan, the Committee shall determine (i) to whom and when Other
Stock-Based Awards will be made, (ii) the number of Shares to be awarded under
(or otherwise related to) such Other Stock-Based Awards, (iii) whether such
Other Stock-Based Awards shall be settled in cash, Shares or a combination of
cash and Shares, and (iv) all other terms and conditions of such Awards
(including, without limitation, the vesting provisions thereof).

     

    (b)           Performance-Based
Awards.  Notwithstanding anything to the contrary herein,
certain Other Stock-Based Awards granted under this Section 9 may be granted to
Covered Employees in a manner that will enable the Company to deduct any amount
paid by the Company under Section 162(m) of the Code (or any successor section
thereto) ("Performance-Based
Awards").  A Covered Employee's Performance-Based Award shall
be determined based on the attainment of one or more pre-established, objective
performance goals established in writing by the Committee, for a performance
period established by the Committee, (i) at a time when the outcome for that
performance period is substantially uncertain and (ii) not later than 90 days
after the commencement of the performance period to which the performance goal
relates, but in no event after 25% of the relevant performance period has
elapsed.  The performance goals shall be based upon one or more of the
following criteria: (i) earnings before or after taxes (including earnings
before interest, taxes, depreciation and amortization); (ii) net income; (iii)
operating income; (iv) earnings per Share; (v) book value per Share; (vi) return
on stockholders' equity; (vii) expense management; (viii) return on investment
before or after the cost of capital; (ix) improvements in capital structure; (x)
profitability of an identifiable business unit or product; (xi) maintenance or
improvement of profit margins; (xii) stock price; (xiii) market share; (xiv)
revenues or sales; (xv) costs; (xvi) cash flow; (xvii) working capital; (xviii)
changes in net assets (whether or not multiplied by a constant percentage
intended to represent the cost of capital); and (xix) return on assets. The
foregoing criteria may relate to the Company, one or more of its Affiliates,
Subsidiaries or one or more of its divisions, units, minority investments,
partnerships, joint ventures, product lines or products or any combination of
the foregoing, and may be applied on an absolute basis and/or be relative to one
or more peer group companies or indices, or any combination thereof, all as the
Committee shall determine.  In addition, to the degree consistent with
Section 162(m) of the Code (or any successor section thereto), the performance
goals may be calculated without regard to extraordinary items or accounting
changes.  The maximum amount of a Performance-Based Award to any
Covered Employee with respect to a fiscal year of the Company shall be
$1,000,000.  The Committee shall determine whether, with respect to a
performance period, the applicable performance goals have been met with respect
to a given Covered Employee and, if they have, to so certify and ascertain the
amount of the applicable Performance-Based Award.  No
Performance-Based Awards will be paid for such performance period until such
certification is made by the Committee.  The amount of the
Performance-Based Award actually paid to a given Covered Employee may be less
than the amount determined by the applicable performance goal formula, at the
discretion of the Committee.  The amount of the Performance-Based
Award determined by the Committee for a performance period shall be paid to the
Covered Employee at such time as determined by the Committee in its sole
discretion after the end of such performance period; provided, however, that a
Covered Employee may, if and to the extent permitted by the Committee and
consistent with the provisions of Sections 162(m) and 409A of the Code, elect to
defer payment of a Performance-Based Award.

     

    (c)           Terms and Conditions of
Restricted Stock and Restricted Stock Units.

     

    (i)           Grant.  Each grant
of Restricted Stock and Restricted Stock Units shall be evidenced by an Award
Agreement in form approved by the Committee.  The vesting of a
Restricted Stock Award or Restricted Stock Unit granted under the Plan may be
conditioned upon the completion of a specified period of employment with the
Company or a Subsidiary, upon attainment of specified performance goals, and/or
upon such other criteria as the Committee may determine in its sole
discretion.

     

    (ii)           Receipt of Restricted
Stock.  As soon as practicable after an Award of Restricted
Stock has been made to a Participant, there shall be registered in the name of
such Participant or of a nominee the number of Shares of Restricted Stock so
awarded. Except as provided in the applicable Award Agreement, no Shares of
Restricted Stock may be assigned, transferred or otherwise encumbered or
disposed of by the Participant until such Shares have vested in accordance with
the terms of such Award Agreement.  If and to the extent that the
applicable Award Agreement so provides, a Participant shall have the right to
vote and receive dividends on the Shares of Restricted Stock granted to him or
her under the Plan.  Unless otherwise provided in the applicable Award
Agreement, any Shares received as a dividend on such Restricted Stock or in
connection with a stock split of the Shares of Restricted Stock shall be subject
to the same restrictions as the Restricted Stock.

     

    (iii)           Payments Pursuant to Restricted
Stock Units.  Restricted Stock Units may not be assigned,
transferred or otherwise encumbered or disposed of by the Participant until such
Restricted Stock Units have vested in accordance with the terms of the
applicable Award Agreement.  Upon the vesting of the Restricted Stock
Unit, certificates for Shares shall be delivered to the Participant or his legal
representative on the last business day of the calendar quarter in which such
vesting event occurs or as soon thereafter as practicable (but not later than
March 15 of the calendar year following the year in which vesting occurs), in a
number equal to the Shares covered by the Restricted Stock Unit.

     

    (iv)           Effect of Termination of
Service.  Upon a Termination of Service for any reason, the
Participant shall only be entitled to the Restricted Stock or Restricted Stock
Units vested at the time of such Termination of Service, and the Participant's
unvested Restricted Stock and Restricted Stock Units shall be
forfeited.  Notwithstanding the foregoing, the Committee may, in its
sole discretion, either by prior written agreement with the Participant or upon
the occurrence of a Termination of Service, accelerate the vesting of unvested
Restricted Stock or Restricted Stock Units held by the Participant if such
Participant's Termination of Service is without "cause" (as such term is defined
by the Committee in its sole discretion) by the Company.

     

    10.           Adjustments
Upon Certain Events

     

    Notwithstanding
any other provisions in the Plan to the contrary, the following provisions shall
apply to all Awards granted under the Plan:

     

    (a)           Generally.  Subject
to any required action by the stockholders of the Company, the number and type
of Shares covered by each outstanding Award, and the number and type of Shares
which have been authorized for issuance under the Plan but as to which no Awards
have yet been granted or which have been returned to the Plan upon cancellation,
expiration or forfeiture of an Award, as well as the exercise or purchase price
per Share, as applicable, covered by outstanding Awards, shall be
proportionately adjusted for any increase or decrease in the number of issued
Shares resulting from a stock split, reverse stock split or combination or the
payment of a stock dividend (but only on the Company's common stock) or
reclassification of the Company's common stock or any other increase or decrease
in the number of issued Shares effected without receipt of consideration by the
Company (other than increases pursuant to the issuance of Other Stock-Based
Awards under Section 9 of the Plan); provided, however, that the
conversion of any convertible securities of the Company shall not be deemed to
have been effected without the receipt of consideration. Any such adjustment
shall be determined in good faith by the Committee to be appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan, and the Committee's determination in that
respect shall be final, binding and conclusive. Except as expressly provided
herein, no issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of Shares
subject to the Plan or an Award.

     

    (b)           Change of
Control.  In the event of a Change of Control, if the Committee
makes no provision for the assumption of outstanding Awards by the successor
corporation, then the Award Agreement shall provide whether (i) none, all or a
portion of each Award shall vest, (ii) any Option shall terminate as of a date
fixed by the Committee which is at least 30 days after the notice thereof to the
Participant and shall give each Participant the right to exercise his or her
Option as to all or any part of the Shares, including Shares as to which the
Option would not otherwise be exercisable, or (iii) cause any Award outstanding
as of the effective date of any such event to be cancelled in consideration of a
cash payment or grant of an alternative option or award (whether by the Company
or any entity that is a party to the transaction), or a combination thereof, to
the holder of the cancelled Award, provided that such payment
and/or grant are substantially equivalent in value to the fair market value of
the cancelled Award as determined by the Committee.

     

    11.           "Lockup"
Agreement

     

    The
Committee may in its discretion specify upon granting an Award that upon request
of the Company or the underwriters managing any underwritten offering of the
Company's securities, the Participant shall agree in writing that for a period
of time (not to exceed 180 days) from the effective date of any registration of
securities of the Company, the Participant will not sell, make any short sale
of, loan, grant any option for the purchase of, or otherwise dispose of any
Shares issued pursuant to the exercise of such Award, without the prior written
consent of the Company or such underwriters, as the case may be.

     

    12.           Limitation
of Liability

     

    Each
member of the Committee shall be entitled to, in good faith, rely or act upon
any report or other information furnished to him or her by any officer or other
employee of the Company or any Subsidiary or Affiliate, the Company's
independent certified public accountants, or other professional retained by the
Company to assist in the administration of the Plan.  No member of the
Committee, nor any officer or employee of the Company acting on behalf of the
Committee, shall be personally liable for any action, determination, or
interpretation taken or made in good faith with respect to the Plan, and all
members of the Committee and any officer or employee of the Company acting on
their behalf shall, to the extent permitted by law, be fully indemnified and
protected by the Company with respect to any such action, determination, or
interpretation.

     

    13.           Amendments
or Termination

     

    (a)           The
Board or the Committee may terminate or discontinue the Plan at any
time.  The Board or the Committee may amend, modify or alter the Plan
at any time, but no amendment, modification or alteration shall be made which,
(a) without the approval of the stockholders of the Company, would (except as is
provided in Section 10 of the Plan), increase the total number of Shares
reserved for the purposes of the Plan, change the maximum number of Shares for
which Awards may be granted to any Participant or modify the Plan in any other
way to the extent stockholder approval is required by the rules of any stock
exchange or market or quotation system on which the Shares are traded, listed or
quoted, or (b) without the consent of a Participant, would impair any of the
rights or obligations under any Award theretofore granted to such Participant
under the Plan; provided, however, that the
Board or the Committee may amend or modify the Plan in such manner as it deems
necessary to permit the granting of Awards meeting the requirements of the Code
(including, but not limited to, Sections 162(m) to preserve the deductibility of
Awards and 409A to comply with its requirements so as to ensure any amounts paid
or payable hereunder are not subject to the additional 20% income tax
thereunder) or other applicable laws.  Notwithstanding anything to the
contrary herein, neither the Committee nor the Board may amend, alter or
discontinue the provisions relating to Section 10(b) of the Plan after the
occurrence of a Change of Control.

     

    (b)           
Except as provided in Section 10 of the Plan or expressly provided under the
Plan, any amendment, modification, termination or discontinuance of the Plan
shall not affect Awards previously granted, and such Awards shall remain in full
force and effect as if the Plan had not been amended, modified, terminated or
discontinued, unless mutually agreed otherwise between the Participant and the
Company, which agreement shall be in writing and signed by the Participant and
the Company.

     

    14.           International
Participants

     

    The
Committee may delegate to another committee, as it may appoint, the authority to
take any action consistent with the terms of the Plan, either before or after an
Award has been granted, which such other committee deems necessary or advisable
to comply with any government laws or regulatory requirements of a foreign
country, including but not limited to, modifying or amending the terms and
conditions governing any Awards, or establishing any local country plans as
sub-plans to the Plan. In addition, under all circumstances, the Committee may
make non-substantive administrative changes to the Plan as to conform with or
take advantage of governmental requirements, statutes or
regulations.

     

    15.           No
Right to Continued Employment or Service

     

    Neither
the Plan nor the granting of an Award under the Plan shall impose any obligation
on the Company, a Subsidiary or any Affiliate to continue the employment or
service of a Participant or lessen or affect the Company's, Subsidiary's or
Affiliate's right to terminate the employment or service of such
Participant.

     

    16.           Not
Compensation for Benefit Plans

     

    No Award
payable under the Plan shall be deemed salary or compensation for the purpose of
computing benefits under any benefit plan or other arrangement of the Company
for the benefit of its employees or directors unless the Company shall determine
otherwise.

     

    17.           Unfunded
Status of Awards

     

    The Plan
is intended to constitute an "unfunded" plan for incentive
compensation.  With respect to any payments not yet made to a
Participant pursuant to an Award, nothing contained in the Plan or any Award
shall give any such Participant any rights that are greater than those of a
general creditor of the Company; provided, however, that the Committee may
authorize the creation of trusts or make other arrangements to meet the
Company's obligations under the Plan to deliver cash, Shares, other Awards, or
other property pursuant to any Award, which trusts or other arrangements shall
be consistent with the "unfunded" status of the Plan unless the Committee
otherwise determines with the consent of each affected Participant.

     

    18.           Nonexclusivity
of the Plan

     

    Neither
the adoption of the Plan by the Board nor its submission to the stockholders of
the Company for approval shall be construed as creating any limitations on the
power of the Board to adopt such other incentive arrangements as it may deem
desirable, including, without limitation, the granting of options and other
awards otherwise than under the Plan, and such arrangements may be either
applicable generally or only in specific cases.

     

    19.           Successors
and Assigns

     

    The Plan
shall be binding on all successors and assigns of the Company and a Participant,
including, without limitation, the estate of such Participant and the executor,
administrator or trustee of such estate, or any receiver or trustee in
bankruptcy or representative of the Participant's creditors.

     

    20.           Nontransferability
of Awards

     

    Except as
provided in Section 7(g) of the Plan, an Award shall not be transferable or
assignable by the Participant otherwise than by will or by the laws of descent
and distribution.  During the lifetime of a Participant, an Award
shall be exercisable only by such Participant.  An Award exercisable
after the death of a Participant may be exercised by the legatees, personal
representatives or distributees of the Participant.  Notwithstanding
anything to the contrary herein, the Committee, in its sole discretion, shall
have the authority to waive this Section 20 or any part thereof (except with
respect to ISOs) to the extent that this Section 20 or any part thereof is not
required under the rules promulgated under any law, rule or regulation
applicable to the Company.

     

    21.           No
Rights to Awards, No Stockholder Rights

     

    No
Participant or employee shall have any claim to be granted any Award under the
Plan, and there is no obligation for uniformity of treatment of Participants and
employees.  No Award shall confer on any Participant any rights to
dividends or other rights of a stockholder with respect to Shares subject to an
Award unless and until Shares are duly issued or transferred to the Participant
in accordance with the terms of the Award and, if applicable, the satisfaction
of any other conditions imposed by the Committee pursuant to the
Plan.

     

    22.           No
Fractional Shares

     

    No
fractional Shares shall be issued or delivered pursuant to the Plan or any
Award, including on account of any action under Section 10 of the
Plan.  In the case of Awards to Participants, the Committee shall
determine, in its discretion, whether cash, other Awards, scrip certificates
(which shall be in a form and have such terms and conditions as the Committee in
its discretion shall prescribe) or other property shall be issued or paid in
lieu of such fractional Shares or whether such fractional Shares or any rights
thereto shall be forfeited or otherwise eliminated.

     

    23.           Compliance
with Legal and Trading Requirements

     

    The Plan,
the granting and exercising of Awards thereunder, and the other obligations of
the Company under the Plan and any Award Agreement, shall be subject to all
applicable federal, state and foreign laws, rules and regulations, and to such
approvals by any regulatory or governmental agency as may be
required.  All certificates for Shares delivered under the Plan
pursuant to any Award shall be subject to such stock-transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations
and other requirements of the Securities and Exchange Commission, any stock
exchange or market or quotation system upon which the Shares are then listed,
traded or quoted, and any applicable federal or state securities law, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.  No Award granted
hereunder shall be construed as an offer to sell securities of the Company, and
no such offer shall be outstanding, unless and until the Committee in its sole
discretion has determined that any such offer, if made, would comply with all
applicable requirements of the U.S. federal securities laws and any other laws
to which such offer, if made, would be subject.  The Company, in its
discretion, may postpone the issuance or delivery of Shares under any Award
until completion of such stock exchange or market or quotation system listing or
registration or qualification of such Shares or other required action under any
state, federal or foreign law, rule or regulation as the Company may consider
appropriate, including the Securities Act and the Act, and may require any
Participant to make such representations and furnish such information as it may
consider appropriate in connection with the issuance or delivery of Shares in
compliance with applicable laws, rules and regulations.  No provisions
of the Plan shall be interpreted or construed to obligate the Company to
register any Shares under federal, state or foreign law.

     

    24.           Severability

     

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

     

    25.           Choice
of Law

     

    The Plan
and all Award Agreements shall be governed by and construed in accordance with
the laws of the State of Texas applicable to contracts made and to be performed
in the State of Texas without regard to conflict of laws
principles.

     

    26.           Conflict

     

    To the
extent the provisions of the Plan conflicts with the terms and conditions of any
written agreement between the Company and a Participant, the terms and
conditions of such agreement shall control.

     

    27.           Effectiveness
of the Plan; Term

     

    The Plan
shall be effective upon its approval by the stockholders at the 2005 Annual
Meeting of stockholders of the Company.  The Plan shall continue in
effect for a term of ten (10) years from the Effective Date unless sooner
terminated under Section 13 of the Plan.