exv10w10






Exhibit 10.10




WEATHERFORD INTERNATIONAL LTD.




2006 OMNIBUS INCENTIVE PLAN




As Amended on December 31, 2008




 









 





	 	 	 	 	 	 	 
	ARTICLE I ESTABLISHMENT, PURPOSE AND DURATION	 	 	 	 
	1.1

	 	Establishment	 	 	1	 
	1.2

	 	Purpose of the Plan	 	 	1	 
	1.3

	 	Duration of Plan	 	 	1	 
	ARTICLE II DEFINITIONS	 	 	 	 
	2.1

	 	Affiliate	 	 	1	 
	2.2

	 	Award	 	 	1	 
	2.3

	 	Award Agreement	 	 	2	 
	2.4

	 	Board	 	 	2	 
	2.5

	 	Cash-Based Award	 	 	2	 
	2.6

	 	Code	 	 	2	 
	2.7

	 	Committee	 	 	2	 
	2.8

	 	Company	 	 	2	 
	2.9

	 	Corporate Change	 	 	2	 
	2.10

	 	Director	 	 	2	 
	2.11

	 	Disability	 	 	2	 
	2.12

	 	Dividend Equivalent	 	 	2	 
	2.13

	 	Employee	 	 	3	 
	2.14

	 	Entity	 	 	3	 
	2.15

	 	Exchange Act	 	 	3	 
	2.16

	 	Fair Market Value	 	 	3	 
	2.17

	 	Fiscal Year	 	 	3	 
	2.18

	 	Holder	 	 	3	 
	2.19

	 	ISO	 	 	3	 
	2.20

	 	Minimum Statutory Tax Withholding Obligation	 	 	3	 
	2.21

	 	NSO	 	 	3	 
	2.22

	 	Option	 	 	3	 
	2.23

	 	Option Price	 	 	3	 
	2.24

	 	Other Share-Based Award	 	 	3	 
	2.25

	 	Parent Corporation	 	 	3	 
	2.26

	 	Performance Goals	 	 	4	 
	2.27

	 	Performance Share Award	 	 	4	 
	2.28

	 	Performance Unit Award	 	 	4	 
	2.29

	 	Period of Restriction	 	 	4	 
	2.30

	 	Plan	 	 	4	 
	2.31

	 	Restricted Shares	 	 	4	 
	2.32

	 	Restricted Share Award	 	 	4	 
	2.33

	 	RSU	 	 	4	 
	2.34

	 	RSU Award	 	 	4	 






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	2.35

	 	SAR
	 	 	4	 
	2.36

	 	Section 409A
	 	 	4	 
	2.37

	 	Share or Shares
	 	 	4	 
	2.38

	 	Subsidiary Corporation
	 	 	4	 
	2.39

	 	Substantial Risk of Forfeiture
	 	 	5	 
	2.40

	 	Ten Percent Shareholder
	 	 	5	 
	2.41

	 	Termination of Employment
	 	 	5	 
	ARTICLE III ELIGIBILITY AND PARTICIPATION	 	 	 	 
	3.1

	 	Eligibility
	 	 	5	 
	3.2

	 	Participation
	 	 	5	 
	ARTICLE IV GENERAL PROVISIONS RELATING TO AWARDS	 	 	 	 
	4.1

	 	Authority to Grant Awards
	 	 	5	 
	4.2

	 	Dedicated Shares; Maximum Awards
	 	 	6	 
	4.3

	 	Non-Transferability
	 	 	6	 
	4.4

	 	Requirements of Law
	 	 	6	 
	4.5

	 	Changes in the Company’s Capital Structure
	 	 	7	 
	4.6

	 	Election Under Section 83(b) of the Code
	 	 	9	 
	4.7

	 	Forfeiture for Cause
	 	 	10	 
	4.8

	 	Forfeiture Events
	 	 	10	 
	4.9

	 	Award Agreements
	 	 	10	 
	4.10

	 	Amendments of Award Agreements
	 	 	10	 
	4.11

	 	Rights as Shareholder
	 	 	11	 
	4.12

	 	Issuance of Shares
	 	 	11	 
	4.13

	 	Restrictions on Shares Received
	 	 	11	 
	4.14

	 	Compliance With Section 409A
	 	 	11	 
	ARTICLE V OPTIONS	 	 	 	 
	5.1

	 	Authority to Grant Options
	 	 	11	 
	5.2

	 	Type of Options Available
	 	 	11	 
	5.3

	 	Option Agreement
	 	 	11	 
	5.4

	 	Option Price
	 	 	11	 
	5.5

	 	Duration of Option
	 	 	12	 
	5.6

	 	Amount Exercisable
	 	 	12	 
	5.7

	 	Exercise of Option
	 	 	12	 
	5.8

	 	Notification of Disqualifying Disposition
	 	 	12	 
	5.9

	 	No Rights as Shareholder
	 	 	12	 
	5.10

	 	$100,000 Limitation on ISOs
	 	 	13	 
	ARTICLE VI SHARE APPRECIATION RIGHTS	 	 	 	 
	6.1

	 	Authority to Grant SAR Awards
	 	 	13	 
	6.2

	 	General Terms
	 	 	13	 
	6.3

	 	SAR Agreement
	 	 	13	 






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	6.4

	 	Term of SAR
	 	 	13	 
	6.5

	 	Exercise of SAR
	 	 	13	 
	6.6

	 	Payment of SAR Amount
	 	 	13	 
	6.7

	 	Termination of Employment
	 	 	14	 
	ARTICLE VII RESTRICTED SHARE AWARDS	 	 	 	 
	7.1

	 	Restricted Share Awards
	 	 	14	 
	7.2

	 	Restricted Share Award Agreement
	 	 	14	 
	7.3

	 	Holder’s Rights as Shareholder
	 	 	14	 
	ARTICLE VIII RESTRICTED SHARE UNIT AWARDS	 	 	 	 
	8.1

	 	Authority to Grant RSU Awards
	 	 	15	 
	8.2

	 	RSU Award
	 	 	15	 
	8.3

	 	RSU Award Agreement
	 	 	15	 
	8.4

	 	Dividend Equivalents
	 	 	15	 
	8.5

	 	Form of Payment Under RSU Award
	 	 	15	 
	8.6

	 	Time of Payment Under RSU Award
	 	 	15	 
	8.7

	 	No Rights as a Shareholder
	 	 	15	 
	ARTICLE IX PERFORMANCE SHARE AWARDS AND PERFORMANCE UNIT AWARDS	 	 	 	 
	9.1

	 	Authority to Grant Performance Share Awards and Performance Unit Awards
	 	 	16	 
	9.2

	 	Performance Goals
	 	 	16	 
	9.3

	 	Time of Establishment of Performance Goals
	 	 	17	 
	9.4

	 	Written Agreement
	 	 	17	 
	9.5

	 	Form of Payment Under Performance Unit Award
	 	 	17	 
	9.6

	 	Time of Payment Under Performance Unit Award
	 	 	17	 
	9.7

	 	Holder’s Rights as Shareholder With Respect to Performance Awards
	 	 	17	 
	9.8

	 	Increases Prohibited
	 	 	17	 
	9.9

	 	Shareholder Approval
	 	 	17	 
	ARTICLE X OTHER SHARE-BASED AWARDS	 	 	 	 
	10.1

	 	Authority to Grant Other Share-Based Awards
	 	 	18	 
	10.2

	 	Value of Other Share-Based Award
	 	 	18	 
	10.3

	 	Payment of Other Share-Based Award
	 	 	18	 
	10.4

	 	Termination of Employment
	 	 	18	 
	ARTICLE XI CASH-BASED AWARDS	 	 	 	 
	11.1

	 	Authority to Grant Cash-Based Awards
	 	 	18	 
	11.2

	 	Value of Cash-Based Award
	 	 	18	 
	11.3

	 	Payment of Cash-Based Award
	 	 	18	 
	11.4

	 	Termination of Employment
	 	 	18	 
	ARTICLE XII SUBSTITUTION AWARDS	 	 	19	 
	ARTICLE XIII ADMINISTRATION	 	 	 	 
	13.1

	 	Awards
	 	 	19	 






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	13.2

	 	Authority of the Committee
	 	 	19	 
	13.3

	 	Decisions Binding
	 	 	20	 
	13.4

	 	No Liability
	 	 	20	 
	ARTICLE XIV AMENDMENT OR TERMINATION OF PLAN	 	 	 	 
	14.1

	 	Amendment, Modification, Suspension, and Termination
	 	 	20	 
	14.2

	 	Awards Previously Granted
	 	 	20	 
	ARTICLE XV MISCELLANEOUS	 	 	 	 
	15.1

	 	Unfunded Plan/No Establishment of a Trust Fund
	 	 	21	 
	15.2

	 	No Employment Obligation
	 	 	21	 
	15.3

	 	Tax Withholding
	 	 	21	 
	15.4

	 	Gender and Number
	 	 	22	 
	15.5

	 	Severability
	 	 	22	 
	15.6

	 	Headings
	 	 	22	 
	15.7

	 	Other Compensation Plans
	 	 	22	 
	15.8

	 	Other Awards
	 	 	22	 
	15.9

	 	Successors
	 	 	22	 
	15.10

	 	Law Limitations/Governmental Approvals
	 	 	22	 
	15.11

	 	Delivery of Title
	 	 	23	 
	15.12

	 	Inability to Obtain Authority
	 	 	23	 
	15.13

	 	Fractional Shares
	 	 	23	 
	15.14

	 	Investment Representations
	 	 	23	 
	15.15

	 	Persons Residing Outside of the United States
	 	 	23	 
	15.16

	 	Arbitration of Disputes
	 	 	23	 
	15.17

	 	Governing Law
	 	 	24	 
	15.18

	 	Compliance with Section 409A
	 	 	24	 






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ARTICLE I




Establishment, Purpose and Duration




     1.1 Establishment. The Company hereby establishes an incentive compensation plan, to be
known as the “Weatherford International Ltd. 2006 Omnibus Incentive Plan,” as set forth in this
document. The Plan permits the grant of Options, SARs, Restricted Shares, RSUs, Performance Share
Awards, Performance Unit Awards, Cash-Based Awards and Other Share-Based Awards. The Plan shall
become effective on the later of (a) the date the Plan is approved by the Board and (b) the date
the Plan is approved by the shareholders of the Company (the
“Effective Date”).



     1.2 Purpose of the Plan. The Plan is intended to advance the best interests of the Company,
its Affiliates and its shareholders by providing those persons who have substantial responsibility
for the management and growth of the Company and its Affiliates with additional performance
incentives and an opportunity to obtain or increase their proprietary interest in the Company,
thereby encouraging them to continue in their employment or affiliation with the Company or its
Affiliates.



     1.3 Duration of Plan. The Plan shall continue indefinitely until it is terminated pursuant
to Section 14.1. No ISOs may be granted under the Plan on or after the tenth anniversary of the
Effective Date. The applicable provisions of the Plan will continue in effect with respect to an
Award granted under the Plan for as long as such Award remains outstanding.



ARTICLE II




Definitions




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



     2.1 “Affiliate” means any Entity that, directly or indirectly, controls, is controlled by, or
is under common control with, the Company. For purposes of the preceding sentence, “control”
(including, with correlative meanings, the terms “controlled by” and “under common control with”),
as used with respect to any Entity, shall mean the possession, directly or indirectly, of the power
(a) to vote more than fifty percent (50%) of the securities having ordinary voting power for the
election of directors (or other governing body) of the controlled Entity, or (ii) to direct or
cause the direction of the management and policies of the controlled Entity, whether through the
ownership of voting securities or by contract or otherwise.



     2.2 “Award” means, individually or collectively, a grant under the Plan of Options, SARs,
Restricted Shares, RSUs, Performance Share Awards, Performance Unit Awards, Other Share-Based
Awards and Cash-Based Awards, in each case subject to the terms and provisions of the Plan, the
consideration for which may be services rendered to the Company and/or its Affiliates.



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



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



     2.5 “Cash-Based Award” means an Award granted pursuant to Article XI.



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



     2.7 “Committee” means a committee of at least two persons, who are members of the
Compensation Committee of the Board and are appointed by the Compensation Committee of the Board,
or, to the extent it chooses to operate as the Committee, the Compensation Committee of the Board.
Each member of the Committee in respect of his or her participation in any decision with respect to
an Award intended to satisfy the requirements of section 162(m) of the Code must satisfy the
requirements of “outside director” status within the meaning of section 162(m) of the Code;
provided, however, that the failure to satisfy such requirement shall not affect the validity of
the action of any committee otherwise duly authorized and acting in the matter. As to Awards,
grants or other transactions that are authorized by the Committee and that are intended to be
exempt under Rule 16b-3 under the Exchange Act, the requirements of Rule 16b-3(d)(1) under the
Exchange Act with respect to committee action must also be satisfied. For all purposes under the
Plan, the Chief Executive Officer of the Company shall be deemed to be the “Committee” with respect
to Awards granted by him pursuant to Section 4.1.



     2.8 “Company” means Weatherford International Ltd., a Bermuda exempted company, or any
successor or continuing Entity (by acquisition, reincorporation, merger, amalgamation,
consolidation or otherwise).



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



     2.10 “Director” means a director of the Company who is not an Employee.



     2.11 “Disability” means as determined by the Committee in its discretion exercised in good
faith, a physical or mental condition of the Holder that would entitle him to payment of disability
income payments under the Company’s long-term disability insurance policy or plan for Employees as
then in effect; or in the event that the Holder is not covered, for whatever reason, under the
Company’s long-term disability insurance policy or plan for Employees or in the event the Company
does not maintain such a long-term disability insurance policy, “Disability” means a permanent and
total disability as defined in section 22(e)(3) of the Code. A determination of Disability may be
made by a physician selected or approved by the Committee and, in this respect, the Holder shall
submit to an examination by such physician upon request by the Committee.



     2.12 “Dividend Equivalent” means a payment equivalent in amount to dividends paid to the
Company’s shareholders.



2









 





     2.13 “Employee” means a person employed by the Company or any Affiliate as a common law
employee.



     2.14 “Entity” means any company, corporation, partnership, association, joint-stock company,
limited liability company, trust, unincorporated organization or any other entity or organization.



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



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



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



     2.18 “Holder” means a person who has been granted an Award or any person who is entitled to
receive Shares or cash under an Award.



     2.19 “ISO” means an Option that is intended to be an “incentive stock option” that satisfies
the requirements of section 422 of the Code.



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



     2.21 “NSO” means an Option that is intended to be a “nonqualified stock option” that does not
satisfy the requirements of section 422 of the Code.



     2.22 “Option” means an option to purchase Shares granted pursuant to Article V.



     2.23 “Option Price” shall have the meaning ascribed to that term in Section 5.4.



     2.24 “Other Share-Based Award” means an equity-based or equity-related Award not otherwise
described by the terms and provisions of the Plan that is granted pursuant to Article X.



     2.25 “Parent Corporation” means any corporation (other than the Company) in an unbroken chain
of corporations ending with the Company if, at the time of the action or transaction, each of the
corporations other than the Company owns stock or shares possessing 50 percent or more



3









 







of the total combined voting power of all classes of stock or shares in one of the other
corporations in the chain.



     2.26 “Performance Goals” means one or more of the criteria described in Section 9.2 on which
the performance goals applicable to an Award are based.



     2.27 “Performance Share Award” means an Award designated as a performance share award granted
to a Holder pursuant to Article IX.



     2.28 “Performance Unit Award” means an Award designated as a performance unit award granted to
a Holder pursuant to Article IX.



     2.29 “Period of Restriction” means the period during which Restricted Shares are subject to a
substantial risk of forfeiture (or absolute right of the Company to repurchase), whether based on
the passage of time, the achievement of performance goals, or upon the occurrence of other events
as determined by the Committee, in its discretion.



     2.30 “Plan” means the Weatherford International Ltd. 2006 Omnibus Incentive Plan, as set forth
in this document as it may be amended from time to time.



     2.31 “Restricted Shares” means restricted Shares issued or granted under the Plan pursuant to
Article VII.



     2.32 “Restricted Share Award” means an authorization by the Committee to issue or transfer
Restricted Shares to a Holder.



     2.33 “RSU” means a restricted share unit credited to a Holder’s ledger account maintained by
the Company pursuant to Article VIII.



     2.34 “RSU Award” means an Award granted pursuant to Article VIII.



     2.35 “SAR” means a share appreciation right granted under the Plan pursuant to Article VI.



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



     2.37 “Share” or “Shares” means a common share or shares, par value U.S.$1.00 per share, of the
Company, or, in the event that the Shares are later changed into or exchanged for a different class
of shares or securities of the Company or another Entity, that other share or security. Shares may
be represented by a certificate or by book or electronic entry.



     2.38 “Subsidiary Corporation” means any company or corporation (other than the Company) in an
unbroken chain of companies or corporations beginning with the Company if, at the time of the
action or transaction, each of the companies or corporations other than the last company or
corporation in an unbroken chain owns stock or shares possessing 50 percent or more of the total



4









 







combined voting power of all classes of stock or shares in one of the other companies or
corporations in the chain.



     2.39 “Substantial Risk of Forfeiture” shall have the meaning ascribed to that term in section
409A of the Code and Department of Treasury guidance issued thereunder.



     2.40 “Ten Percent Shareholder” means an individual who, at the time the Option is granted,
owns more than ten percent of the total combined voting power of all classes of shares or series of
shares of the Company or of any Parent Corporation or Subsidiary Corporation. An individual shall
be considered as owning the shares owned, directly or indirectly, by or for his brothers and
sisters (whether by the whole or half blood), spouse, ancestors and lineal descendants; and shares
owned, directly or indirectly, by or for a company, corporation, partnership, estate or trust,
shall be considered as being owned proportionately by or for its shareholders, partners or
beneficiaries.



     2.41 “Termination of Employment” means, in the case of an Award other than an ISO, the
termination of the Award recipient’s employment relationship with the Company and all Affiliates.
“Termination of Employment” means, in the case of an ISO, the termination of the Optionee’s
employment relationship with all of the Company, any Parent Corporation, any Subsidiary Corporation
and any parent or subsidiary corporation (within the meaning of section 422(a)(2) of the Code) of
any such corporation that issues or assumes an ISO in a transaction to which section 424(a) of the
Code applies.



ARTICLE III




Eligibility and Participation




     3.1 Eligibility. Except as otherwise specified in this Section 3.1, the persons who are
eligible to receive Awards under the Plan are Employees and Directors. Awards other than ISOs,
Performance Share Awards, or Performance Units Awards may also be granted to a person who is
expected to become an Employee within six months. In no event will an ISO be granted to any person
other than a key Employee.



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



ARTICLE IV




General Provisions Relating to Awards




     4.1 Authority to Grant Awards. The Committee may grant Awards to those eligible persons as
the Committee shall from time to time determine, under the terms and conditions of the Plan.
Subject only to any applicable limitations set out in the Plan, the number of Shares or other value
to be covered by any Award to be granted under the Plan shall be as determined by the Committee in
its sole discretion. The Chief Executive Officer of the Company is authorized



5









 




to grant Awards, with respect to no more than 500,000 Shares per Fiscal Year, to eligible
persons who are not officers of the Company subject to the provisions of Section 16 of the Exchange
Act and as inducements to hire prospective Employees who will not be officers of the Company
subject to the provisions of Section 16 of the Exchange Act.




     4.2 Dedicated Shares; Maximum Awards. The aggregate number of Shares with respect to which
Awards may be granted under the Plan is 10 million. The aggregate number of Shares with respect to
which Options may be granted under the Plan is 10 million. The maximum number of Shares with
respect to which Options may be granted to an Employee or Director during a Fiscal Year is one
million. The maximum number of shares with respect to which SARs may be granted to an Employee
during a Fiscal Year is one million. Each of the foregoing numerical limits stated in this Section
4.2 shall be subject to adjustment in accordance with the provisions of Section 4.5. The number of
Shares stated in this Section 4.2 shall also be increased by such number of Shares as become
subject to substitute Awards granted pursuant to Article XII; provided, however, that such increase
shall be conditioned upon the approval of the shareholders of the Company to the extent shareholder
approval is required by law or applicable stock exchange rules. If Shares are not issued or
withheld from payment of an Award to satisfy tax obligations with respect to the Award, such Shares
will count against the aggregate number of Shares with respect to which Awards may be granted under
the Plan. If Shares are tendered in payment of an Option Price of an Option, such Shares will not
be added to the aggregate number of Shares with respect to which Awards may be granted under the
Plan. To the extent that any outstanding Award is forfeited or cancelled for any reason or is
settled in cash in lieu of Shares, the Shares allocable to such portion of the Award may again be
subject to an Award granted under the Plan. When a SAR is settled in Shares, the number of Shares
subject to the SAR under the SAR Award Agreement will be counted against the aggregate number of
Shares with respect to which Awards may be granted under the Plan as one Share for every Share
subject to the SAR, regardless of the number of Shares used to settle the SAR upon exercise.



     4.3 Non-Transferability. Except as specified in the applicable Award Agreements or in
domestic relations court orders, an Award shall not be transferable by the Holder other than by
will or under the laws of descent and distribution, and shall be exercisable, during the Holder’s
lifetime, only by him or her. Any attempted assignment of an Award in violation of this Section 4.3
shall be null and void. In the discretion of the Committee, any attempt to transfer an Award other
than under the terms of the Plan and the applicable Award Agreement may terminate the Award. No ISO
granted under the Plan may be sold, transferred, pledged, assigned or otherwise alienated or
hypothecated, other than by will or by the laws of descent and distribution. Further, all ISOs
granted to an Employee under the Plan shall be exercisable during his or her lifetime only by the
Employee, and after that time, by the Employee’s heirs or estate.



     4.4 Requirements of Law. The Company shall not be required to sell or issue any Shares under
any Award if issuing those Shares would constitute or result in a violation by the Holder or the
Company of any provision of any law, statute or regulation of any governmental authority.
Specifically, in connection with any applicable statute or regulation relating to the registration
of securities, upon exercise of any Option or pursuant to any other Award, the Company shall not be
required to issue any Shares unless the Committee has received evidence satisfactory to it to the
effect that the Holder will not transfer the Shares except in accordance with applicable law,



6









 







including receipt of an opinion of counsel satisfactory to the Company to the effect that any
proposed transfer complies with applicable law. The determination by the Committee on this matter
shall be final, binding and conclusive. The Company may, but shall in no event be obligated to,
register any Shares covered by the Plan pursuant to applicable securities laws of any country or
any political subdivision. In the event the Shares issuable upon exercise of an Option or pursuant
to any other Award are not registered, the Company may imprint on the certificate evidencing the
Shares any legend that counsel for the Company considers necessary or advisable to comply with
applicable law, or, should the Shares be represented by book or electronic entry, rather than a
certificate, the Company may take such steps to restrict transfer of the Shares as counsel for the
Company considers necessary or advisable to comply with applicable law. The Company shall not be
obligated to take any other affirmative action in order to cause or enable the exercise of an
Option or any other Award, or the issuance of Shares pursuant thereto, to comply with any law or
regulation of any governmental authority.



     4.5 Changes in the Company’s Capital Structure.



     (a) The existence of outstanding Awards shall not affect in any way the right or power of the
Company or its shareholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company’s capital structure or its business, any
acquisition, merger, amalgamation or consolidation of the Company, any issue of bonds, debentures
or shares, including preferred or prior preference shares ahead of or affecting the Shares or Share
rights, the winding up, dissolution or liquidation of the Company, any sale or transfer of all or
any part of its assets or business or any other corporate act or proceeding, whether of a similar
character or otherwise.



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



     (c) If while unexercised Options or other Awards remain outstanding under the Plan (1) the
Company shall not be the surviving Entity in any acquisition, merger, amalgamation, consolidation,
reorganization or other similar transaction (or survives only as a subsidiary of an Entity), (2)
the Company sells, leases or exchanges or agrees to sell, lease or exchange all or substantially
all of its assets to any other person or Entity (other than an Entity wholly-owned by the Company),
(3) the Company is to be wound up or dissolved or (4) the Company is a party to any other corporate
transaction (as defined under section 424(a) of the Code and applicable



7









 







Department of Treasury regulations) that is not described in clauses (1), (2) or (3) of this
sentence (each such event is referred to herein as a
“Corporate Change”), then, except as otherwise
provided in an Award Agreement or another agreement between the Holder and the Company, or as a
result of the Committee’s effectuation of one or more of the alternatives described below, there
shall be no acceleration of the time at which any Award then outstanding may be exercised, and no
later than ten days after any approval by the shareholders of the Company of such Corporate Change,
the Committee, acting in its sole and absolute discretion without the consent or approval of any
Holder, subject to applicable law, shall act to effect one or more of the following alternatives,
which may vary among individual Holders and which may vary among Awards held by any individual
Holder (provided that, with respect to a reincorporation, merger or amalgamation in which Holders
of the Company’s common shares will receive one common share of the successor or continuing Entity
for each common share of the Company, none of such alternatives shall apply and, without Committee
action, each Award shall automatically convert into a similar award of the successor or continuing
Entity exercisable for the same number of common shares of the successor as the Award was
exercisable for common Shares of the Company):




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




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




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



8









 






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




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



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




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




     (e) After (i) the acquisition of the Company by an Entity, (ii) the merger of one or more
Entities into the Company or (iii) a consolidation or amalgamation of the Company and one or
more Entities in which the Company shall be the surviving Entity, each Holder shall be entitled
to have his Restricted Shares appropriately adjusted based on the manner in which the Shares
were adjusted under the terms of the agreement of acquisition, merger, amalgamation or
consolidation.




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



     4.6 Election Under Section 83(b) of the Code. No Holder shall exercise the election
permitted under section 83(b) of the Code with respect to any Award without the written approval of
the Chief Financial Officer or General Counsel of the Company. Any Holder who



9









 







makes an election under section 83(b) of the Code with respect to any Award without the
written approval of the Chief Financial Officer or General Counsel of the Company may, in the
discretion of the Committee, forfeit any or all Awards granted to him or her under the Plan
(including by way of an absolute right of the Company to purchase or obligate the transfer of any
issued Shares or rights to subscribe therefore for such consideration, if any, as the Committee may
determine in its sole discretion).



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



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



     4.9 Award Agreements. Each Award shall be embodied in a written agreement that shall be
subject to the terms and conditions of the Plan. The Award Agreement shall be signed by an
executive officer of the Company, other than the Holder, on behalf of the Company, and may be
signed by the Holder to the extent required by the Committee. The Award Agreement may specify the
effect of a change in control on the Award. The Award Agreement may contain any other provisions
that the Committee in its discretion shall deem advisable which are not inconsistent with the terms
and provisions of the Plan.



     4.10 Amendments of Award Agreements. The terms of any outstanding Award under the Plan may
be amended from time to time by the Committee in its discretion in any manner that it deems
appropriate and that is consistent with the terms of the Plan. However, no such amendment shall
adversely affect in a material manner any right of a Holder without his or her written consent.
Except as specified in Section 4.5(b), the Committee may not directly or



10









 







indirectly lower the exercise price of a previously granted Option or the grant price of a
previously granted SAR.



     4.11 Rights as Shareholder. A Holder shall not have any rights as a shareholder with respect
to Shares covered by an Option, a SAR, an RSU, a Performance Share Unit, or an Other Share-Based
Award until the date, if any, such Shares are issued by the Company; and, except as otherwise
provided in Section 4.5, no adjustment for dividends, or otherwise, shall be made if the record
date therefor is prior to the date of issuance of such Shares.



     4.12 Issuance of Shares. Shares, when issued, may be represented by a certificate or by book
or electronic entry.



     4.13 Restrictions on Shares Received. Subject to applicable law, the Committee may impose
such conditions and/or restrictions on any Shares issued pursuant to an Award as it may deem
advisable or desirable. These restrictions may include, but shall not be limited to, a requirement
that the Holder hold the Shares for a specified period of time.



     4.14 Compliance With Section 409A. Awards shall be designed and operated in such a manner
that they are either exempt from the application of, or comply with, the requirements of Section
409A.



ARTICLE V




Options




     5.1 Authority to Grant Options. Subject to the terms and provisions of the Plan, the
Committee, at any time, and from time to time, may grant Options under the Plan to eligible persons
in such number and upon such terms as the Committee shall determine.



     5.2 Type of Options Available. Options granted under the Plan may be NSOs or ISOs.



     5.3 Option Agreement. Each Option grant under the Plan shall be evidenced by an Award
Agreement that shall specify (a) whether the Option is intended to be an ISO or an NSO, (b) the
Option Price, (c) the duration of the Option, (d) the number of Shares to which the Option
pertains, (e) the exercise restrictions applicable to the Option and (f) such other provisions as
the Committee shall determine that are not inconsistent with the terms and provisions of the Plan.
Notwithstanding the designation of an Option as an ISO in the applicable Option Agreement, to the
extent the limitations of Section 5.10 of the Plan are exceeded with respect to the Option, the
portion of the Option in excess of the limitation shall be treated as a NSO.



     5.4 Option Price. The price at which Shares may be purchased under an Option (the “Option
Price”) shall not be less than 100 percent (100%) of the Fair Market Value of the Shares on the
date the Option is granted. However, in the case of a Ten Percent Shareholder, the Option Price for
an ISO shall not be less than 110 percent (110%) of the Fair Market Value of the Shares on the date
the ISO is granted. Subject to the limitations set forth in the preceding



11









 







sentences of this Section 5.4, the Committee shall determine the Option Price for each grant
of an Option under the Plan.



     5.5 Duration of Option. An Option shall not be exercisable after the earlier of (i) the
general term of the Option specified in the applicable Award Agreement (which shall not exceed ten
years) or (ii) the period of time specified in the applicable Award Agreement that follows the
Holder’s Termination of Employment or severance of affiliation relationship with the Company.
Unless the applicable Award Agreement specifies a shorter term, in the case of an ISO granted to a
Ten Percent Shareholder, the Option shall expire on the fifth anniversary of the date the Option is
granted.



     5.6 Amount Exercisable. Each Option may be exercised at the time, in the manner and subject
to the conditions the Committee specifies in the Award Agreement in its sole discretion.



     5.7 Exercise of Option.



     (a) General Method of Exercise. Subject to the terms and provisions of the Plan and the
applicable Award Agreement, Options may be exercised in whole or in part from time to time by the
delivery of written notice in the manner designated by the Committee stating (1) that the Holder
wishes to exercise such Option on the date such notice is so delivered, (2) the number of Shares
with respect to which the Option is to be exercised and (3) the address to which any certificate
representing such Shares should be mailed. Except in the case of exercise by a third party broker
as provided below, in order for the notice to be effective the notice must be accompanied by
payment of the Option Price by any combination of the following: (a) cash, certified check, bank
draft or postal or express money order for an amount equal to the Option Price under the Option,
(b) an election to make a cashless exercise through a registered broker-dealer (if approved in
advance by the Committee or an executive officer of the Company) or (c) any other form of payment
which is acceptable to the Committee.



     (b) Exercise Through Third-Party Broker. The Committee may permit a Holder to elect to pay
the Option Price and any applicable tax withholding resulting from such exercise by authorizing a
third-party broker to sell all or a portion of the Shares acquired upon exercise of the Option and
remit to the Company a sufficient portion of the sale proceeds to pay the Option Price and any
applicable tax withholding resulting from such exercise.



     5.8 Notification of Disqualifying Disposition. If any Optionee shall make any disposition of
Shares issued pursuant to the exercise of an ISO under the circumstances described in section
421(b) of the Code (relating to certain disqualifying dispositions), such Optionee shall notify the
Company of such disposition within ten (10) days thereof.



     5.9 No Rights as Shareholder. An Optionee shall not have any rights as a shareholder with
respect to Shares covered by an Option until the date such Shares are issued by the Company; and,
except as otherwise provided in Section 4.5, no adjustment for dividends, or otherwise, shall be
made if the record date therefor is prior to the date of issuance of such shares.



12









 





     5.10 $100,000 Limitation on ISOs. To the extent that the aggregate Fair Market Value of
Shares with respect to which ISOs first become exercisable by a Holder in any calendar year exceeds
$100,000, taking into account both Shares subject to ISOs under the Plan and Shares subject to ISOs
under all other plans of the Company, such Options shall be treated as NSOs. For this purpose, the
“Fair Market Value” of the Shares subject to Options shall be determined as of the date the Options
were awarded. In reducing the number of Options treated as ISOs to meet the $100,000 limit, the
most recently granted Options shall be reduced first. To the extent a reduction of simultaneously
granted Options is necessary to meet the $100,000 limit, the Committee may, in the manner and to
the extent permitted by law, designate which Shares are to be treated as shares acquired pursuant
to the exercise of an ISO.



ARTICLE VI




Share Appreciation Rights




     6.1 Authority to Grant SAR Awards. Subject to the terms and provisions of the Plan, the
Committee, at any time, and from time to time, may grant SARs under the Plan to eligible persons in
such number and upon such terms as the Committee shall determine. Subject to the terms and
conditions of the Plan, the Committee shall have complete discretion in determining the number of
SARs granted to each Holder and, consistent with the provisions of the Plan, in determining the
terms and conditions pertaining to such SARs.



     6.2 General Terms. Subject to the terms and conditions of the Plan, a SAR granted under the
Plan shall confer on the recipient a right to receive, upon exercise thereof, an amount equal to
the excess of (a) the Fair Market Value of one Share on the date of exercise over (b) the grant
price of the SAR, which shall not be less than one hundred percent (100%) of the Fair Market Value
of one Share on the date of grant of the SAR.



     6.3 SAR Agreement. Each Award of SARs granted under the Plan shall be evidenced by an Award
Agreement that shall specify (a) the grant price of the SAR, (b) the term of the SAR, (c) the
vesting and termination provisions of the SAR and (d) such other provisions as the Committee shall
determine that are not inconsistent with the terms and provisions of the Plan. The Committee may
impose such additional conditions or restrictions on the exercise of any SAR as it may deem
appropriate.



     6.4 Term of SAR. The term of a SAR granted under the Plan shall be determined by the
Committee, in its sole discretion; provided that no SAR shall be exercisable on or after the tenth
anniversary date of its grant.



     6.5 Exercise of SAR. A SAR may be exercised upon whatever terms and conditions the
Committee, in its sole discretion, imposes.



     6.6 Payment of SAR Amount. Upon the exercise of a SAR, a Holder shall be entitled to receive
payment from the Company in an amount determined by multiplying the excess of the Fair Market Value
of a Share on the date of exercise over the grant price of the SAR by the number of Shares with
respect to which the SAR is exercised. At the discretion of the



13









 







Committee, the payment upon SAR exercise may be in cash, in Shares of equivalent value, in
some combination thereof or in any other manner approved by the Committee in its sole discretion.
The Committee’s determination regarding the form of SAR payout shall be set forth in the Award
Agreement pertaining to the grant of the SAR.



     6.7 Termination of Employment. Each Award Agreement shall set forth the extent to which the
Holder of a SAR shall have the right to exercise the SAR following the Holder’s Termination of
Employment. Such provisions shall be determined in the sole discretion of the Committee, may be
included in the Award Agreement entered into with the Holder, need not be uniform among all SARs
issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination.



ARTICLE VII




Restricted Share Awards




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



     7.2 Restricted Share Award Agreement. Each Restricted Share Award shall be evidenced by an
Award Agreement that contains any vesting, transferability restrictions and other provisions as the
Committee may specify.



     7.3 Holder’s Rights as Shareholder. Subject to the terms and conditions of the Plan, each
recipient of a Restricted Share Award shall have all the rights of a shareholder with respect to
any issued Restricted Shares included in the Restricted Share Award during the Period of
Restriction established for the Restricted Share Award. Dividends paid with respect to Restricted
Shares in cash or property other than Shares or rights to acquire Shares or bonus issues shall be
paid to the recipient of the Restricted Share Award currently. Dividends paid in Shares or rights
to acquire Shares shall be added to and become a part of the Restricted Shares. During the Period
of Restriction, certificates representing the Restricted Shares shall be registered in the Holder’s
name and bear a restrictive legend to the effect that ownership of such Restricted Shares, and the
enjoyment of all rights appurtenant thereto, are subject to the restrictions, terms, and conditions
provided in the Plan and the applicable Award Agreement. Such certificates shall be deposited by
the recipient with the Secretary of the Company or such other officer of the Company as may be
designated by the Committee, together with all share transfer forms or other instruments of
assignment, each endorsed in blank, which will permit transfer to or purchase by the Company of



14









 







all or any portion of the Restricted Shares which shall be forfeited in accordance with the
Plan and the applicable Award Agreement.



ARTICLE VIII




Restricted Share Unit Awards




     8.1 Authority to Grant RSU Awards. Subject to the terms and provisions of the Plan, the
Committee, at any time, and from time to time, may grant RSU Awards under the Plan to eligible
persons in such amounts and upon such terms as the Committee shall determine. The amount of, the
vesting and the transferability restrictions applicable to any RSU Award shall be determined by the
Committee in its sole discretion. The Committee shall maintain a bookkeeping ledger account that
reflects the number of RSUs credited under the Plan for the benefit of a Holder.



     8.2 RSU Award. An RSU Award shall be similar in nature to a Restricted Share Award except
that no Shares are actually issued or transferred to the Holder until a later date specified in the
applicable Award Agreement. Each RSU shall have a value equal to the Fair Market Value of a Share.



     8.3 RSU Award Agreement. Each RSU Award shall be evidenced by an Award Agreement that
contains any Substantial Risk of Forfeiture, transferability restrictions, form and time of payment
provisions and other provisions not inconsistent with the Plan as the Committee may specify.



     8.4 Dividend Equivalents. An Award Agreement for an RSU Award may specify that the Holder
shall be entitled to the payment of Dividend Equivalents under the Award.



     8.5 Form of Payment Under RSU Award. Payment under an RSU Award shall be made in either cash
or Shares, or any combination thereof, as specified in the applicable Award Agreement.



     8.6 Time of Payment Under RSU Award. A Holder’s payment under an RSU Award shall be made at
such time as is specified in the applicable Award Agreement. The Award Agreement shall specify that
the payment will be made (1) by a date that is no later than the date that is two and one-half (2
1/2) months after the end of the Fiscal Year in which the RSU Award payment is no longer subject to
a Substantial Risk of Forfeiture or (2) at a time that is permissible under Section 409A.



     8.7 No Rights as Shareholder. Each recipient of a RSU Award shall have no rights of a
shareholder with respect to any Shares underlying such RSUs until such date as the underlying
Shares are issued.



15









 





ARTICLE IX




Performance Share Awards and Performance Unit Awards




     9.1 Authority to Grant Performance Share Awards and Performance Unit Awards. Subject to the
terms and provisions of the Plan, the Committee, at any time, and from time to time, may grant
Performance Share Awards and Performance Unit Awards under the Plan to eligible persons in such
amounts and upon such terms as the Committee shall determine. The amount of, the vesting and the
transferability restrictions applicable to any Performance Share Award or Performance Unit Award
shall be based upon the attainment of such Performance Goals as the Committee may determine. If the
Committee imposes vesting or transferability restrictions on a Holder’s rights with respect to
Performance Share or Performance Unit Awards, the Committee may issue such instructions to the
Company’s share transfer agent in connection therewith as it deems appropriate. The Committee may
also cause any certificate for Shares issued pursuant to a Performance Shares or Performance Unit
Award to be imprinted with any legend which counsel for the Company considers advisable with
respect to the restrictions or, should the Shares be represented by book or electronic entry rather
than a certificate, the Company may take such steps to restrict transfer of the Shares as counsel
for the Company considers necessary or advisable to comply with applicable law.



     9.2 Performance Goals. A Performance Goal must be objective such that a third party having
knowledge of the relevant facts could determine whether the goal is met. Such a Performance Goal
may be based on one or more business criteria that apply to the Holder, one or more business units
of the Company, or the Company as a whole, with reference to one or more of the following: earnings
per share, total shareholder return, cash return on capitalization, increased revenue, revenue
ratios (per employee or per customer), net income, share price, market share, return on equity,
return on assets, return on capital, return on capital compared to cost of capital, return on
capital employed, return on invested capital, shareholder value, net cash flow, operating income,
earnings before interest and taxes, cash flow, cash flow from operations, cost reductions and cost
ratios. Goals may also be based on performance relative to a peer group of companies. Unless
otherwise stated, such a Performance Goal need not be based upon an increase or positive result
under a particular business criterion and could include, for example, maintaining the status quo or
limiting economic losses (measured, in each case, by reference to specific business criteria).
Performance Goals may be determined by including or excluding, in the Committee’s discretion, items
that are determined to be extraordinary, unusual in nature, infrequent in occurrence, related to
the disposal or acquisition of a segment of a business, or related to a change in accounting
principal, in each case, based on Opinion No. 30 of the Accounting Principles Board (APB Opinion
No. 30) or other applicable accounting rules, or consistent with Company accounting policies and
practices in effect on the date the Performance Goal is established. In interpreting Plan
provisions applicable to Performance Goals and Performance Shares or Performance Unit Awards, it is
intended that the Plan will conform with the standards of section 162(m) of the Code and Treasury
Regulations § 1.162-27(e)(2)(i), and the Committee in establishing such goals and interpreting the
Plan shall be guided by such provisions. Prior to the payment of any compensation based on the
achievement of Performance Goals, the Committee must certify in writing that applicable Performance
Goals and any of the material terms thereof were, in fact, satisfied. Subject to the foregoing
provisions, the terms,



16









 







conditions and limitations applicable to any Performance Shares or Performance Unit Awards
made pursuant to the Plan shall be determined by the Committee.



     9.3 Time of Establishment of Performance Goals. A Performance Goal for a particular
Performance Share Award or Performance Unit Award must be established by the Committee prior to the
earlier to occur of (a) 90 days after the commencement of the period of service to which the
Performance Goal relates or (b) the lapse of 25 percent of the period of service, and in any event
while the outcome is substantially uncertain.



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



     9.5 Form of Payment Under Performance Unit Award. Payment under a Performance Unit Award
shall be made in cash and/or Shares as specified in the Holder’s Award Agreement.



     9.6 Time of Payment Under Performance Unit Award. A Holder’s payment under a Performance
Unit Award shall be made at such time as is specified in the applicable Award Agreement. The Award
Agreement shall specify that the payment will be made (1) by a date that is no later than the date
that is two and one-half (2 1/2) months after the end of the calendar year in which the Performance
Unit Award payment is no longer subject to a Substantial Risk of Forfeiture or (2) at a time that
is permissible under Section 409A.



     9.7 Holder’s Rights as Shareholder With Respect to Performance Awards. Each Holder of a
Performance Share Award shall have all the rights of a shareholder with respect to the Shares
issued to the Holder pursuant to the Award during any period in which such issued Shares are
subject to forfeiture and restrictions on transfer, including without limitation, the right to vote
such Shares. Each Holder of a Performance Unit Award shall have no rights of a shareholder with
respect to any Shares underlying such Performance Unit Award until such date as the underlying
Shares are issued.



     9.8 Increases Prohibited. None of the Committee or the Board may increase the amount of
compensation payable under a Performance Shares or Performance Unit Award. If the time at which a
Performance Shares or Performance Unit Award will vest or be paid is accelerated for any reason,
the number of Shares subject to, or the amount payable under, the Performance Shares or Performance
Unit Award shall be reduced pursuant to Department of Treasury Regulation section
1.162-27(e)(2)(iii) to reasonably reflect the time value of money.



     9.9 Shareholder Approval. No issuances of Shares or payments of cash will be made pursuant
to this Article IX unless the shareholder approval requirements of Department of Treasury
Regulation section 1.162-27(e)(4) are satisfied.



17









 





ARTICLE X




Other Share-Based Awards




     10.1 Authority to Grant Other Share-Based Awards. The Committee may grant to eligible
persons other types of equity-based or equity-related Awards not otherwise described by the terms
and provisions of the Plan (including, subject to applicable law, the grant or offer for sale of
unrestricted Shares) in such amounts and subject to such terms and conditions, as the Committee
shall determine. Such Awards may involve the issue or transfer of Shares to Holders, or payment in
cash or otherwise of amounts based on the value of Shares and may include, without limitation,
Awards designed to comply with or take advantage of the applicable local laws of jurisdictions
other than the United States.



     10.2 Value of Other Share-Based Award. Each Other Share-Based Award shall be expressed in
terms of Shares or units based on Shares, as determined by the Committee.



     10.3 Payment of Other Share-Based Award. Payment, if any, with respect to an Other
Share-Based Award shall be made in accordance with the terms of the Award, in cash or Shares or any
combination thereof as the Committee determines.



     10.4 Termination of Employment. The Committee shall determine the extent to which a Holder’s
rights with respect to Other Share-Based Awards shall be affected by the Holder’s Termination of
Employment. Such provisions shall be determined in the sole discretion of the Committee and need
not be uniform among all Other Share-Based Awards issued pursuant to the Plan.



ARTICLE XI




Cash-Based Awards




     11.1 Authority to Grant Cash-Based Awards. Subject to the terms and provisions of the Plan,
the Committee, at any time, and from time to time, may grant Cash-Based Awards under the Plan to
eligible persons in such amounts and upon such terms as the Committee shall determine.



     11.2 Value of Cash-Based Award. Each Cash-Based Award shall specify a payment amount or
payment range as determined by the Committee.



     11.3 Payment of Cash-Based Award. Payment, if any, with respect to a Cash-Based Award shall
be made in accordance with the terms of the Award, in cash.



     11.4 Termination of Employment. The Committee shall determine the extent to which a Holder’s
rights with respect to Cash-Based Awards shall be affected by the Holder’s Termination of
Employment. Such provisions shall be determined in the sole discretion of the Committee and need
not be uniform among all Cash-Based Awards issued pursuant to the Plan.



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ARTICLE XII




Substitution Awards




     Awards may be granted under the Plan from time to time in substitution for share options and
other awards held by employees of other Entities who are about to become Employees, or whose
employer is about to become an Affiliate as the result of a merger, amalgamation or consolidation
of the Company with another Entity, or the acquisition by the Company of substantially all the
assets of another Entity, or the acquisition by the Company of at least fifty percent (50%) of the
issued and outstanding stock, shares or securities of another Entity as the result of which such
other Entity will become an Affiliate of the Company. The terms and conditions of the substitute
Awards so granted may vary from the terms and conditions set forth in the Plan to such extent as
the Committee at the time of grant may deem appropriate to conform, in whole or in part, to the
provisions of the Award in substitution for which they are granted.



ARTICLE XIII




Administration




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



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



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each Award subject to the terms and provisions of the Plan; determine the terms, provisions
and conditions of each Award, which need not be identical and need not match the default terms set
forth in the Plan; accelerate the time at which any outstanding Award will vest; prescribe, amend
and rescind rules and regulations relating to administration of the Plan; and make all other
determinations and take all other actions deemed necessary, appropriate or advisable for the proper
administration of the Plan.



     The Committee may correct any defect or supply any omission or reconcile any inconsistency in
the Plan or in any Award to a Holder in the manner and to the extent the Committee deems necessary
or desirable to further the Plan’s objectives. Further, the Committee shall make all other
determinations that may be necessary or advisable for the administration of the Plan. As permitted
by law and the terms and provisions of the Plan, the Committee may delegate its authority as
identified in this Section 13.2. The Committee may employ attorneys, consultants, accountants,
agents, and other persons, any of whom may be an Employee, and the Committee, the Company, and its
officers and Board shall be entitled to rely upon the advice, opinions, or valuations of any such
persons.



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



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



ARTICLE XIV




Amendment or Termination of Plan




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



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



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ARTICLE XV




Miscellaneous




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



     15.2 No Employment Obligation. The granting of any Award shall not constitute an employment
contract, express or implied, nor impose upon the Company or any Affiliate any obligation to employ
or continue to employ, or utilize the services of, any Holder. The right of the Company or any
Affiliate to terminate the employment of any person shall not be diminished or affected by reason
of the fact that an Award has been granted to him, and nothing in the Plan or an Award Agreement
shall interfere with or limit in any way the right of the Company or its Affiliates to terminate
any Holder’s employment at any time or for any reason not prohibited by law.



     15.3 Tax Withholding. The Company or any Affiliate shall be entitled to deduct from other
compensation payable to each Holder any sums required by federal, state or local tax law to be
withheld with respect to the vesting or exercise of an Award or lapse of restrictions on an Award.
In the alternative, the Company may require the Holder (or other person validly exercising the
Award) to pay such sums for taxes directly to the Company or any Affiliate in cash or by check
within one day after the date of vesting, exercise or lapse of restrictions. In the discretion of
the Committee, and with the consent of the Holder, the Company may reduce the number of Shares
issued to the Holder upon such Holder’s exercise of an Option to satisfy the tax withholding
obligations of the Company or an Affiliate; provided that the Fair Market Value of the Shares not
issued shall not exceed the Company’s or the Affiliate’s Minimum Statutory Tax Withholding
Obligation. The Committee may, in its discretion, permit a Holder to satisfy any Minimum Statutory
Tax Withholding Obligation arising upon the vesting of an Award by issuing to the Holder a reduced
number of Shares in the manner specified herein. If permitted by the Committee and acceptable to
the Holder, at the time of vesting of shares under the Award, the Company shall (a) calculate the
amount of the Company’s or an Affiliate’s Minimum Statutory Tax Withholding Obligation on the
assumption that all such Shares vested under the Award are to be issued, (b) reduce the number of
such Shares actually issued so that the Fair Market Value of the Shares withheld from issuance on
the vesting date approximates the Company’s or an Affiliate’s Minimum Statutory Tax Withholding
Obligation and (c) in lieu of the Shares withheld



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from issuance, remit cash to the United States Treasury and/or other applicable governmental
authorities, on behalf of the Holder, in the amount of the Minimum Statutory Tax Withholding
Obligation. The Company shall withhold from issuance only whole Shares to satisfy its Minimum
Statutory Tax Withholding Obligation. Where the Fair Market Value of the Shares withheld from
issuance does not equal the amount of the Minimum Statutory Tax Withholding Obligation, the Company
shall withhold from issuance Shares with a Fair Market Value slightly less than the amount of the
Minimum Statutory Tax Withholding Obligation and the Holder must satisfy the remaining minimum
withholding obligation in some other manner permitted under this Section 15.3. The Shares withheld
from issuance by the Company shall be authorized but unissued Shares and the Holder’s right, title
and interest in the rights to subscribe for such Shares shall terminate. The Company shall have no
obligation upon vesting or exercise of any Award or lapse of restrictions on an Award until the
Company or an Affiliate has received payment sufficient to cover the Minimum Statutory Tax
Withholding Obligation with respect to that vesting, exercise or lapse of restrictions. Neither the
Company nor any Affiliate shall be obligated to advise a Holder of the existence of the tax or the
amount which it will be required to withhold.



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



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



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



     15.7 Other Compensation Plans. The adoption of the Plan shall not affect any outstanding
options, restricted shares or restricted share units, nor shall the Plan preclude the Company from
establishing any other forms of incentive compensation arrangements for Employees or Directors.



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



     15.9 Successors. All obligations of the Company under the Plan with respect to Awards
granted hereunder shall be binding on any successor to the Company or continuing company, whether
the existence of such successor is the result of a direct or indirect purchase, merger,
amalgamation, consolidation, or otherwise, of all or substantially all of the business and/or
assets of the Company.



     15.10 Law Limitations/Governmental Approvals. The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules, and regulations,



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and to such approvals by any governmental agencies or national securities exchanges as may be
required.



     15.11 Delivery of Title. The Company shall have no obligation to issue or deliver evidence
of title for Shares issued under the Plan prior to obtaining any approvals from governmental
agencies that the Company determines are necessary or advisable; and completion of any registration
or other qualification of the Shares under any applicable national or foreign law or ruling of any
governmental body that the Company determines to be necessary or advisable.



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



     15.13 Fractional Shares. No fractional Shares shall be issued or acquired pursuant to the
Plan or any Award. If the application of any provision of the Plan or any Award Agreement would
yield a fractional Share, such fractional Share shall be rounded down to the next whole Share if it
is less than 0.5 and rounded up to the next whole Share if it is 0.5 or more.



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



     15.15 Persons Residing Outside of the United States. Notwithstanding any provision of the
Plan to the contrary, in order to comply with the laws in other countries in which the Company or
any of its Affiliates operates or has Employees, the Committee, in its sole discretion, shall have
the power and authority to determine which Affiliates shall be covered by the Plan; determine which
persons employed outside the United States are eligible to participate in the Plan; amend or vary
the terms and provisions of the Plan and the terms and conditions of any Award granted to persons
who reside outside the United States; establish subplans and modify exercise procedures and other
terms and procedures to the extent such actions may be necessary or advisable — any subplans and
modifications to Plan terms and procedures established under this Section 15.15 by the Committee
shall be attached to the Plan document as Appendices; and take any action, before or after an Award
is made, that it deems advisable to obtain or comply with any necessary local government regulatory
exemptions or approvals. Notwithstanding the above, the Committee may not take any actions
hereunder, and no Awards shall be granted, that would violate the United States Securities Exchange
Act of 1934, as amended, the Code, any securities law or governing statute or any other applicable
law.



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



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



     15.18 Compliance with Section 409A. The exercisability of an Option shall not be extended to
the extent that such extension would subject the Holder to additional taxes under Section 409A.
This Section 15.18 is effective for Options that become earned and vested on or after January 1,
2005.




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