exv10w3



 





EXHIBIT 10.3



THIS DOCUMENT IS A COMPOSITE REFLECTING THE EAGLE MATERIALS INC.
INCENTIVE PLAN AS AMENDED THROUGH JUNE 14, 2004



EAGLE MATERIALS INC.



INCENTIVE PLAN



     
1. Plan. The Eagle Materials Inc. Incentive Plan (the “Plan”) is a
combined amendment and restatement of the Centex Construction
Products, Inc. Amended and Restated Stock Option Plan and the
Centex Construction Products, Inc. 2000 Stock Option Plan (the
“Existing Plans”) which were adopted by the
Corporation to reward certain key Employees of the Corporation
and its Affiliates and Nonemployee Directors of the Corporation
by enabling them to acquire shares of Common Stock of the
Corporation.



     
2. Objectives. The purpose of this Plan is to further
the interests of the Corporation and its shareholders by
providing incentives in the form of Awards to key Employees and
Nonemployee Directors who can contribute materially to the
success and profitability of the Corporation and its Affiliates.
Such Awards will recognize and reward outstanding performances
and individual contributions and give Participants in the Plan
an interest in the Corporation parallel to that of the
shareholders, thus enhancing the proprietary and personal
interest of such Participants in the Corporation’s
continued success and progress. This Plan will also enable the
Corporation and its Affiliates to attract and retain such
Employees and Nonemployee Directors.



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




		
	 	     
    “Affiliate” means a Subsidiary or Joint
    Venture.
    
	 
	 	     
    “Authorized Officer” means the Chief
    Executive Officer of the Corporation (or any other senior
    officer of the Corporation to whom he or she shall delegate the
    authority to execute any Award Agreement, where applicable).
    
	 
	 	     
    “Award” means an Employee Award or a
    Director Award.
    
	 
	 	     
    “Award Agreement” means a written
    agreement setting forth the terms, conditions and limitations
    applicable to an Award, to the extent the Committee determines
    such agreement is necessary.
    
	 
	 	     
    “Board” means the Board of Directors of
    the Corporation.
    
	 
	 	     
    “Cash Award” means an award denominated
    in cash.
    
	 
	 	     
    “Code” means the Internal Revenue Code
    of 1986, as amended from time to time.
    
	 
	 	     
    “Committee” means the independent
    Compensation and Stock Option Committee of the Board or such
    other independent committee as is designated by the Board to
    administer the Plan.
    
	 
	 	     
    “Common Stock” means the common stock, par value
    $.01 per share, of Eagle Materials Inc.
    
	 
	 	     
    “Corporation” means Eagle Materials
Inc., a Delaware corporation, formerly known as Centex Construction
Products, Inc., or any successor thereto.
    
	 
	 	     
    “Director” means an individual who is a
    member of the Board.
    
	 
	 	     
    “Director Award” means any Nonqualified
    Options or Stock Award granted, whether singly, in combination
    or in tandem, to a Participant who is a Nonemployee Director
    pursuant to such applicable terms, conditions and limitations as
    the Committee may establish in order to fulfill the objectives
    of the Plan.
    
	 
	 	     
    “Disability” means a disability that
    renders the Participant unable to engage in any occupation in
    accordance with the terms of the Long Term Disability Plan of
    Eagle Materials Inc.
    




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    “Dividend Equivalents” means, with
    respect to Stock Units or shares of Restricted Stock that are to
    be issued at the end of the Restriction Period, an amount equal
    to all dividends and other distributions (or the economic
    equivalent thereof) that are payable to stockholders of record
    during the Restriction Period on a like number of shares of
    Common Stock.
    
	 
	 	     
    “Employee” means an employee of the
    Corporation or any of its Affiliates and an individual who has
    agreed to become an Employee of the Corporation or any of its
    Affiliates and actually becomes such an Employee within the
    following six months.
    
	 
	 	     
    “Employee Award” means any Option, SAR,
    Stock Award, Cash Award, or Performance Award granted, whether
    singly, in combination or in tandem, to a Participant who is an
    Employee pursuant to such applicable terms, conditions and
    limitations (including treatment as a Performance Award) as the
    Committee may establish in order to fulfill the objectives of
    the Plan.
    
	 
	 	     
    “Employee Director” means an individual
    serving as a member of the Board who is an Employee of the
    Corporation or any of its Affiliates.
    
	 
	 	     
    “Equity Award” means any Option, SAR,
    Stock Award, or Performance Award (other than a Performance
    Award denominated in cash) granted to a Participant under the
    Plan.
    
	 
	 	     
    “Exchange Act” means the Securities
    Exchange Act of 1934, as amended.
    
	 
	 	     
    “Fair Market Value” of a share of
    Common Stock means, as of a particular date, (i) (A) if
    Common Stock is listed on a national securities exchange, the
    mean between the highest and lowest sales price per share of
    such Common Stock on the consolidated transaction reporting
    system for the principal national securities exchange on which
    shares of Common Stock are listed on that date, or, if there
    shall have been no such sale so reported on that date, on the
    last preceding date on which such a sale was so reported, or, at
    the discretion of the Committee, the price prevailing on the
    exchange at the time of exercise, (B) the mean between the
    highest and lowest sales price per share of such Common Stock
    reported on the consolidated transaction reporting system for
    The Nasdaq Stock Market, Inc. or, if there shall have been no
    such sale so reported on that date, on the last preceding date
    on which such a sale was reported, (C) if Common Stock is
    not so listed or quoted, the mean between the closing bid and
    asked price on that date, or, if there are no quotations
    available for such date, on the last preceding date on which
    such quotations shall be available, as reported by The Nasdaq
    Stock Market, Inc., or, if not reported by The Nasdaq Stock
    Market, Inc., by the National Quotation Bureau Incorporated or
    (D) if Common Stock is not publicly traded, the most recent
    value determined by an independent appraiser appointed by the
    Corporation for such purpose, or (ii) if applicable, the
    price per share as determined in accordance with the procedures
    of a third party administrator retained by the Corporation to
    administer the Plan.
    
	 
	 	     
    “Grant Date” means the date an Award is
    granted to a Participant pursuant to the Plan. The Grant Date
    for a substituted award is the Grant Date of the original award.
    
	 
	 	     
    “Grant Price” means the price at which
    a Participant may exercise his or her right to receive cash or
    Common Stock, as applicable, under the terms of an Award.
    
	 
	 	     
    “Incentive Stock Option” means an
    Option that is intended to comply with the requirements set
    forth in Section 422 of the Code.
    
	 
	 	     
    “Joint Venture” means any joint venture
    or partnership in which the Corporation has at least 50%
    ownership, voting, capital or profit interests (in whatever
    form) and which is a subsidiary of the Corporation within the
    meaning of the Securities Act of 1933, as amended.
    
	 
	 	     
    “Nonemployee Director” means an
    individual serving as a member of the Board who is not an
    Employee of the Corporation or any of its Affiliates.
    
	 
	 	     
    “Nonqualified Stock Option” means an
    Option that is not an Incentive Stock Option.
    




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    “Option” means a right to purchase a
    specified number of shares of Common Stock at a specified Grant
    Price, which may be an Incentive Stock Option or a Nonqualified
    Stock Option.
    
	 
	 	     
    “Participant” means an Employee or
    Nonemployee Director to whom an Award has been granted under
    this Plan.
    
	 
	 	     
    “Performance Award” means an Award made
    pursuant to this Plan that is subject to the attainment in the
    future of one or more Performance Goals.
    
	 
	 	     
    “Performance Goal” means a standard
    established by the Committee, to determine in whole or in part
    whether a Qualified Performance Award shall be earned.
    
	 
	 	     
    “Qualified Performance Award” means a
    Performance Award made to a Participant who is an Employee that
    is intended to qualify as qualified performance-based
    compensation under Section 162(m) of the Code, as described
    in Section 8(a)(v)(B) of the Plan.
    
	 
	 	     
    “Restricted Stock” means Common Stock
    that is restricted or subject to forfeiture provisions.
    
	 
	 	     
    “Restriction Period” means a period of
    time beginning as of the Grant Date of an Award of Restricted
    Stock and ending as of the date upon which the Common Stock
    subject to such Award is no longer restricted or subject to
    forfeiture provisions.
    
	 
	 	     
    “Retirement” means termination from
    employment at age 62 or later with at least 10 years
    of service.
    
	 
	 	     
    “Stock Appreciation Right” or
    “SAR” means a right to receive a payment, in cash,
    Common Stock or a combination of cash and Common Stock, equal to
    the excess of the Fair Market Value or other specified valuation
    of a specified number of shares of Common Stock on the date the
    right is exercised over a specified Grant Price, in each case,
    as determined by the Committee.
    
	 
	 	     
    “Stock Award” means an Award in the
    form of shares of Common Stock or Stock Units, including an
    award of Restricted Stock.
    
	 
	 	     
    “Stock Unit” means a unit equal to one
    share of Common Stock (as determined by the Committee) granted
    to either an Employee or a Nonemployee Director.
    
	 
	 	     
    “Subsidiary” means any corporation,
    partnership, limited liability company or other business venture
    or entity of which the Corporation directly or indirectly owns
    50% or more of the ownership interest in such entity, as
    determined by the Committee in its sole and absolute discretion
    (such determination by the Committee to be conclusively
    established by the grant of an Award by the Committee to an
    officer or employee of such an entity).
    




     
4. Eligibility.



     
(a) Employees. Employees eligible for
the grant of Employee Awards under this Plan are those Employee
Directors and Employees who hold positions of responsibility and
whose performance, in the judgment of the Committee, can have a
significant effect on the success of the Corporation and its
Affiliates.



     
(b) Directors. Members of the Board
eligible for the grant of Director Awards under this Plan are
those who are Nonemployee Directors.




     
5. Common Stock Available for Awards.
Subject to the provisions of paragraph 16 hereof, there shall be
available for Awards under this Plan granted or payable wholly
or partly in Common Stock (including rights or Options that may
be exercised for or settled in Common Stock) an aggregate of
1,685,954 shares (which includes shares of Common Stock
subject to awards outstanding under the Existing Plans), less
those shares issued after the date of Board approval of the Plan
and before shareholder approval of the Plan pursuant to
outstanding grants. All of the shares authorized for issuance
may be issued pursuant to Incentive Options, Nonqualified Stock
Options or any combination thereof. All




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shares are available for issuance pursuant to
Stock Awards (including Stock Awards that are granted as
Performance Awards).




     
The number of shares of Common Stock that are the
subject of Awards under this Plan that are forfeited or
terminated, expire unexercised, are settled in cash in lieu of
Common Stock or otherwise in a manner such that all or some of
the shares covered by an Award are not issued to a Participant
or are exchanged for Awards that do not involve Common Stock,
shall not be counted against the aggregate plan maximum or any
sublimit set forth above and shall again immediately become
available for Awards hereunder. If the Grant Price or other
purchase price of any Option or other Award granted under the
Plan is satisfied by tendering shares of Common Stock to the
Corporation, or if the tax withholding obligation resulting from
the settlement of any such Option or other Award is satisfied by
tendering or withholding shares of Common Stock, only the number
of shares of Common Stock issued net of the shares of Common
Stock tendered or withheld shall be deemed delivered for
purposes of determining usage of shares against the maximum
number of shares of Common Stock available for delivery under
the Plan or any sublimit set forth above. Shares of Common Stock
delivered under the Plan in settlement, assumption or
substitution of outstanding awards or obligations to grant
future awards under the plans or arrangements of another entity
shall not reduce the maximum number of shares of Common Stock
available for delivery under the Plan, to the extent that such
settlement, assumption or substitution is a result of the
Corporation’s or a Affiliate’s acquiring another
entity or an interest in another entity. The Committee may from
time to time adopt and observe such rules and procedures
concerning the counting of shares against the Plan maximum or
any sublimit as it may deem appropriate, including rules more
restrictive than those set forth above to the extent necessary
to satisfy the requirements of any national stock exchange on
which the Common Stock is listed or any applicable regulatory
requirement. The Board and the appropriate officers of the
Corporation shall from time to time take whatever actions are
necessary to file any required documents with governmental
authorities, stock exchanges and transaction reporting systems
to ensure that shares of Common Stock are available for issuance
pursuant to Awards.



     
6. Administration.



     
(a) This Plan shall be administered by the
Committee except as otherwise provided herein.



     
(b) Subject to the provisions hereof, the
Committee shall have full and exclusive power and authority to
administer this Plan and to take all actions that are
specifically contemplated hereby or are necessary or appropriate
in connection with the administration hereof. The Committee
shall also have full and exclusive power to interpret this Plan
and to adopt such rules, regulations and guidelines for carrying
out this Plan as it may deem necessary or proper, all of which
powers shall be exercised in the best interests of the
Corporation and in keeping with the objectives of this Plan. The
Committee may, in its discretion, provide for the extension of
the exercisability of an Award, accelerate the vesting or
exercisability of an Award, eliminate or make less restrictive
any restrictions applicable to an Award, waive any restriction
or other provision of this Plan (insofar as such provision
relates to Awards) or an Award or otherwise amend or modify an
Award in any manner that is either (i) not adverse to the
Participant to whom such Award was granted or
(ii) consented to by such Participant. Notwithstanding
anything herein to the contrary, without the prior approval of
the Corporation’s stockholders, Options issued under the
Plan will not be repriced, replaced or regranted through
cancellation or by decreasing the exercise price of a previously
granted Option. The Committee may make an Award to an individual
who it expects to become an Employee of the Corporation or any
of its Affiliates within the next six months, with such award
being subject to the individual’s actually becoming an
Employee within such time period, and subject to such other
terms and conditions as may be established by the Committee. The
Committee may correct any defect or supply any omission or
reconcile any inconsistency in this Plan or in any Award in the
manner and to the extent the Committee deems necessary or
desirable to further the Plan purposes. Any decision of the
Committee, with respect to Awards, in the interpretation and
administration of this Plan shall lie within its sole and
absolute discretion and shall be final, conclusive and binding
on all parties concerned.



     
(c) No member of the Committee or officer of
the Corporation to whom the Committee has delegated authority in
accordance with the provisions of paragraph 7 of this Plan shall
be liable for



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anything done or omitted to be done by him or
her, by any member of the Committee or by any officer of the
Corporation in connection with the performance of any duties
under this Plan, except for his or her own willful misconduct or
as expressly provided by statute.




     
7. Delegation of Authority. Following
the authorization of a pool of cash or shares of Common Stock to
be available for Awards, the Committee may authorize the Chief
Executive Officer of the Corporation or a committee consisting
solely of members of the Board to grant individual Employee
Awards from such pool pursuant to such conditions or limitations
as the Committee may establish. The Committee may also delegate
to the Chief Executive Officer and to other executive officers
of the Corporation its administrative duties under this Plan
(excluding its granting authority) pursuant to such conditions
or limitations as the Committee may establish. The Committee may
engage or authorize the engagement of a third party
administrator to carry out administrative functions under the
Plan.



     
8. Awards.



     
(a) The Committee shall determine the type
or types of Awards to be made under this Plan and shall
designate from time to time the Participants who are to be the
recipients of such Awards. Each Award may, in the discretion of
the Committee, be embodied in an Award Agreement, which shall
contain such terms, conditions and limitations as shall be
determined by the Committee in its sole discretion and, if
required by the Committee, shall be signed by the Participant to
whom the Award is granted and by an Authorized Officer for and
on behalf of the Corporation. Awards may consist of those listed
in this paragraph 8(a) and may be granted singly, in combination
or in tandem. Awards may also be granted in combination or in
tandem with, in replacement of, or as alternatives to, grants or
rights under this Plan or any other plan of the Corporation or
any of its Affiliates, including the plan of any acquired
entity. An Award may provide for the grant or issuance of
additional, replacement or alternative Awards upon the
occurrence of specified events. All or part of an Award may be
subject to conditions established by the Committee, which may
include, but are not limited to, continuous service with the
Corporation and its Affiliates, achievement of specific business
objectives, increases in specified indices, attainment of
specified growth rates and other comparable measurements of
performance. Upon the termination of employment by a Participant
who is an Employee, any unexercised, deferred, unvested or
unpaid Employee Awards shall be treated as set forth in the
applicable Employee Award Agreement or as otherwise specified by
the Committee.



     
(i) Option. An Employee Award or
Director Award may be in the form of an Option; provided that
Options granted as Director Awards are not Incentive Stock
Options. The Grant Price of an Option shall be not less than the
Fair Market Value of the Common Stock subject to such Option on
the Grant Date. Notwithstanding anything contrary contained in
this Plan, in no event shall the term of the Option extend more
than ten (10) years after the Grant Date. Options may not
include provisions that “reload” the option upon
exercise. Subject to the foregoing provisions, the terms,
conditions and limitations applicable to any Options awarded to
Participants pursuant to this Plan, including the Grant Price,
the term of the Options, the number of shares subject to the
Option and the date or dates upon which they become exercisable,
shall be determined by the Committee.



     
(ii) Stock Appreciation Rights. An
Employee Award may be in the form of an SAR. On the Grant Date,
the Grant Price of an SAR shall be not less than the Fair Market
Value of the Common Stock subject to such SAR. The holder of a
tandem SAR may elect to exercise either the option or the SAR,
but not both. The exercise period for an SAR shall extend no
more than 10 years after the Grant Date. Subject to the
foregoing provisions, the terms, conditions and limitations
applicable to any SARs awarded pursuant to this Plan, including
the Grant Price, the term of any SARs and the date or dates upon
which they become exercisable, shall be determined by the
Committee.



     
(iii) Stock Award. An Employee Award
or Director Award may be in the form of a Stock Award. The
terms, conditions and limitations applicable to any Stock Awards
granted to Participants pursuant to this Plan shall be
determined by the Committee; provided that any Stock Award
granted as an Employee Award which is not a Performance Award
shall have a minimum Restriction Period of three years from the
Grant Date, provided that (i) the Committee may provide for
earlier vesting upon a termination of



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employment by reason of death, Disability or
Retirement, (ii) such three-year minimum Restriction Period
shall not apply to a Stock Award that is granted in lieu of
salary or bonus, and (iii) vesting of a Stock Award may
occur incrementally over the three-year minimum Restricted
Period.




     
(iv) Cash Award. An Employee Award
may be in the form of a Cash Award. The terms, conditions and
limitations applicable to any Cash Awards granted pursuant to
this Plan shall be determined by the Committee.



     
(v) Performance Award. Without
limiting the type or number of Employee Awards or Director
Awards that may be made under the other provisions of this Plan,
an Employee Award or Director Award may be in the form of a
Performance Award. The terms, conditions and limitations
applicable to any Performance Awards granted to Participants
pursuant to this Plan shall be determined by the Committee;
provided that any Stock Award granted as an Employee Award which
is a Performance Award shall have a minimum Restriction Period
of one year from the Grant Date, provided that the Committee may
provide for earlier vesting upon a termination of employment by
reason of death, Disability or Retirement. The Committee shall
set Performance Goals in its discretion which, depending on the
extent to which they are met, will determine the value and/or
amount of Performance Awards that will be paid out to the
Participant.



     
(A) Nonqualified Performance Awards.
Performance Awards granted to Employees or Directors that are
not intended to qualify as qualified performance-based
compensation under Section 162(m) of the Code shall be
based on achievement of such goals and be subject to such terms,
conditions and restrictions as the Committee or its delegate
shall determine.



     
(B) Qualified Performance Awards.
Performance Awards granted to Employees under the Plan that are
intended to qualify as qualified performance-based compensation
under Section 162(m) of the Code shall be paid, vested or
otherwise deliverable solely on account of the attainment of one
or more pre-established, objective Performance Goals established
by the Committee prior to the earlier to occur of
(x) 90 days after the commencement of the period of
service to which the Performance Goal relates and (y) the
lapse of 25% of the period of service (as scheduled in good
faith at the time the goal is established), and in any event
while the outcome is substantially uncertain. A Performance Goal
is objective if 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 Employee, one or more business units or
divisions of the Corporation or the applicable sector, or the
Corporation as a whole, and if so desired by the Committee, by
comparison with a peer group of companies. A Performance Goal
may include one or more of the following: Stock price measures
(including but not limited to growth measures and total
shareholder return); Earnings per share (actual or targeted
growth); Earnings before interest, taxes, depreciation, and
amortization (“EBITDA”); Economic value added
(“EVA”); Net income measures (including but not
limited to income after capital costs and income before or after
taxes); Operating income; Cash flow measures; Return measures
(including but not limited to return on average assets,
risk-adjusted return on capital, and return on average equity);
Operating measures (including sales volumes, production volumes
and production efficiency); Expense measures (including but not
limited to overhead cost and general and administrative
expense); Margins; and corporate values measures (including
ethics compliance, environmental, and safety).



     
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). In interpreting Plan provisions applicable to
Performance Goals and Qualified Performance Awards, it is the
intent of the Plan to conform with the standards of
Section 162(m) of the Code and Treasury Regulation
§1.162-27(e)(2)(i), as to grants to those Employees whose
compensation is, or is likely to be, subject to
Section 162(m) of the Code, 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,
conditions



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and limitations applicable to any Qualified
Performance Awards made pursuant to this Plan shall be
determined by the Committee.




     
(b) Notwithstanding anything to the contrary
contained in this Plan, the following limitations shall apply to
any Employee Awards made hereunder:




		
	 	     
    (i) no Participant may be granted, during
    any fiscal year, Employee Awards consisting of Options or SARs
    (including Options or SARs that are granted as Performance
    Awards) that are exercisable for more than 200,000 shares
    of Common Stock;
    
	 
	 	     
    (ii) no Participant may be granted, during
    any fiscal year, Employee Awards consisting of Stock Awards
    (including Stock Awards that are granted as Performance Awards)
    covering or relating to more than 100,000 shares of Common
    Stock (the limitation set forth in this clause (ii),
    together with the limitation set forth in clause (i) above
    and (c)(i) and (ii) below, being hereinafter collectively
    referred to as the “Stock Based Awards Limitations”);
    and
    
	 
	 	     
    (iii) no Participant may be granted Employee
    Awards under this Plan consisting of cash (including Awards that
    are granted as Performance Awards) in respect of any fiscal year
    having a value determined on the Grant Date in excess of
    $3,000,000.
    




     
(c) Notwithstanding anything to the contrary
contained in this Plan the following limitations shall apply to
any Director Awards made hereunder:




		
	 	     
    (i) no Participant may be granted, during
    any fiscal year, Director Awards consisting of Options that are
    exercisable for more than 25,000 shares of Common
    Stock and
    
	 
	 	     
    (ii) no Participant may be granted, during
    any fiscal year, Director Awards consisting of Stock Awards
    covering or relating to more than 15,000 shares of Common
    Stock.
    




     
(d) Prior to the effective date of this
amendment and restatement, certain awards on shares of Common
Stock (the “Existing Awards”) have been granted under
the Existing Plans as in effect from time to time. As of the
effective date of this Plan, each Existing Award shall continue
to be outstanding and the shares of Common Stock that are the
subject of such Existing Awards shall be subject to adjustment
in accordance with Section 16 and to the other provisions
of the Plan.



     
9. Change in Control Under Existing
Plans. Unless otherwise expressly provided in the applicable
award agreement, the change in control provisions under the
Existing Plans shall govern the awards previously granted
thereunder.



     
10. Non-United States Participants.
The Committee may grant awards to persons outside the United
States under such terms and conditions as may, in the judgment
of the Committee, be necessary or advisable to comply with the
laws of the applicable foreign jurisdictions and, to that end,
may establish sub-plans, modified option exercise procedures and
other terms and procedures. Notwithstanding the above, the
Committee may not take any actions hereunder, and no Awards
shall be granted, that would violate the Exchange Act, the Code,
any securities law, any governing statute, or any other
applicable law.



     
11. Payment of Awards.



     
(a) General. Payment made to a
Participant pursuant to an Award may be made in the form of cash
or Common Stock, or a combination thereof, and may include such
restrictions as the Committee shall determine, including, in the
case of Common Stock, restrictions on transfer and forfeiture
provisions. If such payment is made in the form of Restricted
Stock, the Committee shall specify whether the underlying shares
are to be issued at the beginning or end of the Restriction
Period. In the event that shares of Restricted Stock are to be
issued at the beginning of the Restriction Period, the
certificates evidencing such shares (to the extent that such
shares are so evidenced) shall contain appropriate legends and
restrictions that describe the terms and conditions of the
restrictions applicable thereto. In the event that shares of
Restricted Stock are to be issued at the end of the Restricted
Period, the right to receive such shares shall be evidenced by
book entry registration or in such other manner as the Committee
may determine.



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(b) Deferral. With the approval of
the Committee, amounts payable in respect of Awards may be
deferred and paid either in the form of installments or as a
lump-sum payment. The Committee may permit selected Participants
to elect to defer payments of some or all types of Awards or any
other compensation otherwise payable by the Corporation in
accordance with procedures established by the Committee and may
provide that such deferred compensation may be payable in shares
of Common Stock. Any deferred payment pursuant to an Award,
whether elected by the Participant or specified by the Award
Agreement or the terms of the Award or by the Committee, maybe
forfeited if and to the extent that the Award Agreement or the
terms of the Award so provide.



     
(c) Dividends, Earnings and Interest.
Rights to dividends or Dividend Equivalents may be extended to
and made part of any Stock Award, subject to such terms,
conditions and restrictions as the Committee may establish. The
Committee may also establish rules and procedures for the
crediting of interest or other earnings on deferred cash
payments and Dividend Equivalents for Stock Awards.



     
(d) Substitution of Awards. Subject
to paragraphs 14 and 16, at the discretion of the Committee, a
Participant who is an Employee may be offered an election to
substitute an Employee Award for another Employee Award or
Employee Awards of the same or different type.



     
12. Option Exercise. The Grant Price
shall be paid in full at the time of exercise in cash or, if
permitted by the Committee and elected by the optionee, the
optionee may purchase such shares by means of tendering Common
Stock or surrendering another Award, including Restricted Stock,
valued at Fair Market Value on the date of exercise, or any
combination thereof. The Committee shall determine acceptable
methods for Participants to tender Common Stock or other Awards
provided that any Common Stock that is or was the subject of an
Award may be so tendered only if it has been held by the
Participant for six months. The Committee may provide for
procedures to permit the exercise or purchase of such Awards by
use of the proceeds to be received from the sale of Common Stock
issuable pursuant to an Award. Unless otherwise provided in the
applicable Award Agreement, in the event shares of Restricted
Stock are tendered as consideration for the exercise of an
Option, a number of the shares issued upon the exercise of the
Option, equal to the number of shares of Restricted Stock used
as consideration therefor, shall be subject to the same
restrictions as the Restricted Stock so submitted as well as any
additional restrictions that may be imposed by the Committee.
The Committee may adopt additional rules and procedures
regarding the exercise of Options from time to time, provided
that such rules and procedures are not inconsistent with the
provisions of this paragraph.



     
An optionee desiring to pay the Grant Price of an
Option by tendering Common Stock using the method of attestation
may, subject to any such conditions and in compliance with any
such procedures as the Committee may adopt, do so by attesting
to the ownership of Common Stock of the requisite value in which
case the Corporation shall issue or otherwise deliver to the
optionee upon such exercise a number of shares of Common Stock
subject to the Option equal to the result obtained by dividing
(a) the excess of the aggregate Fair Market Value of the
shares of Common Stock subject to the Option for which the
Option (or portion thereof) is being exercised over the Grant
Price payable in respect of such exercise by (b) the Fair
Market Value per share of Common Stock subject to the Option,
and the optionee may retain the shares of Common Stock the
ownership of which is attested.



     
13. Taxes. The Corporation or its
designated third party administrator shall have the right to
deduct applicable taxes from any Employee Award payment and
withhold, at the time of delivery or vesting of cash or shares
of Common Stock under this Plan, an appropriate amount of cash
or number of shares of Common Stock or a combination thereof for
payment of taxes or other amounts required by law or to take
such other action as may be necessary in the opinion of the
Corporation to satisfy all obligations for withholding of such
taxes. The Committee may also permit withholding to be satisfied
by the transfer to the Corporation of shares of Common Stock
theretofore owned by the holder of the Employee Award with
respect to which withholding is required. If shares of Common
Stock are used to satisfy tax withholding, such shares shall be
valued based on the Fair Market Value when the tax withholding
is required to be made. The Committee may provide for loans, to
the extent not otherwise prohibited by law, on either a



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short term or demand basis, from the Corporation
to a Participant who is an Employee to permit the payment of
taxes required by law.




     
14. Amendment, Modification, Suspension
or Termination of the Plan. The Board may amend, modify,
suspend or terminate this Plan for the purpose of meeting or
addressing any changes in legal requirements or for any other
purpose permitted by law, except that (i) no amendment or
alteration that would adversely affect the rights of any
Participant under any Award previously granted to such
Participant shall be made without the consent of such
Participant and (ii) no amendment or alteration shall be
effective prior to its approval by the stockholders of the
Corporation to the extent such approval is required by
applicable legal requirements or the requirements of the
securities exchange on which the Corporation’s stock is
listed.



     
15. Assignability. Unless otherwise
determined by the Committee and provided in the Award Agreement
or the terms of the Award, no Award or any other benefit under
this Plan shall be assignable or otherwise transferable except
by will, by beneficiary designation or the laws of descent and
distribution or pursuant to a qualified domestic relations order
as defined by the Code or Title I of the Employee
Retirement Income Security Act, or the rules thereunder. In the
event that a beneficiary designation conflicts with an
assignment by will, the beneficiary designation will prevail.
The Committee may prescribe and include in applicable Award
Agreements or the terms of the Award other restrictions on
transfer. Any attempted assignment of an Award or any other
benefit under this Plan in violation of this paragraph 15 shall
be null and void.



     
16. Adjustments.



     
(a) The existence of outstanding Awards
shall not affect in any manner the right or power of the
Corporation or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations or other changes
in the capital stock of the Corporation or its business or any
merger or consolidation of the Corporation, or any issue of
bonds, debentures, preferred or prior preference stock (whether
or not such issue is prior to, on a parity with or junior to the
existing Common Stock) or the dissolution or liquidation of the
Corporation, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding of
any kind, whether or not of a character similar to that of the
acts or proceedings enumerated above.




     
(b) In the event of any subdivision or
consolidation of outstanding shares of Common Stock, declaration
of a dividend payable in shares of Common Stock or other stock
split, then (i) the number of shares of Common Stock
reserved under this Plan and available for issuance pursuant to
specific types of Awards as described in paragraph 5,
(ii) the number of shares of Common Stock covered by
outstanding Awards, (iii) the Grant Price or other price in
respect of such Awards, (iv) the appropriate Fair Market
Value and other price determinations for such Awards, and
(v) the Stock Based Awards Limitations shall each be
proportionately adjusted by the Board as appropriate to reflect
such transaction. In the event of any other recapitalization or
capital reorganization of the Corporation, any consolidation or
merger of the Corporation with another corporation or entity,
the adoption by the Corporation of any plan of exchange
affecting Common Stock or any distribution to holders of Common
Stock of securities or property (including cash dividends that
the Committee determines are not in the ordinary course of
business but excluding normal cash dividends or dividends
payable in Common Stock), the Board shall make appropriate
adjustments to (x) the number of shares of Common Stock
reserved under this Plan and (y)(i) the number of shares of
Common Stock covered by Awards, (ii) the Grant Price or
other price in respect of such Awards, (iii) the
appropriate Fair Market Value and other price determinations for
such Awards, and (iv) the Stock Based Awards Limitations to
reflect such transaction; provided that such adjustments shall
only be such as are necessary to maintain the proportionate
interest of the holders of the Awards and preserve, without
increasing, the value of such Awards. In the event of a
corporate merger, consolidation, acquisition of property or
stock, separation, reorganization or liquidation, the Board
shall be authorized (x) to assume under the Plan previously
issued compensatory awards, or to substitute new Awards for
previously issued compensatory awards, including Awards, as part
of such adjustment; (y) to cancel Awards that are Options
or SARs and give the Participants who are the holders of such
Awards




9







 




notice and opportunity to exercise for
30 days prior to such cancellation; or (z) to cancel
any such Awards and to deliver to the Participants cash in an
amount that the Committee shall determine in its sole discretion
is equal to the fair market value of such Awards on the date of
such event, which in the case of Options or SARs shall be the
excess of the Fair Market Value of Common Stock on such date
over the exercise or strike price of such Award.




     
17. Restrictions. No Common Stock or
other form of payment shall be issued with respect to any Award
unless the Corporation shall be satisfied based on the advice of
its counsel that such issuance will be in compliance with
applicable federal and state securities laws. Certificates
evidencing shares of Common Stock delivered under this Plan (to
the extent that such shares are so evidenced) may be subject to
such stop 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 securities exchange or transaction reporting system upon
which the Common Stock is then listed or to which it is admitted
for quotation and any applicable federal or state securities
law. The Committee may cause a legend or legends to be placed
upon such certificates (if any) to make appropriate reference to
such restrictions.



     
18. Unfunded Plan. This Plan shall be
unfunded. Although bookkeeping accounts may be established with
respect to Participants under this Plan, any such accounts shall
be used merely as a bookkeeping convenience, including
bookkeeping accounts established by a third party administrator
retained by the Corporation to administer the Plan. The
Corporation shall not be required to segregate any assets for
purposes of this Plan or Awards hereunder, nor shall the
Corporation, the Board or the Committee be deemed to be a
trustee of any benefit to be granted under this Plan. Any
liability or obligation of the Corporation to any Participant
with respect to an Award under this Plan shall be based solely
upon any contractual obligations that may be created by this
Plan and any Award Agreement or the terms of the Award, and no
such liability or obligation of the Corporation shall be deemed
to be secured by any pledge or other encumbrance on any property
of the Corporation. Neither the Corporation nor the Board nor
the Committee shall be required to give any security or bond for
the performance of any obligation that may be created by this
Plan.



     
19. Right to Employment. Nothing in
the Plan or an Award Agreement shall interfere with or limit in
any way the right of the Corporation to terminate any
Participant’s employment or other service relationship at
any time, nor confer upon any Participant any right to continue
in the capacity in which he or she is employed or otherwise
serves the Corporation.



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



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



     
22. Effectiveness and Term. The
Existing Plans shall be amended and restated in their entirety
as set forth herein effective as of the date of approval of the
Plan by the stockholders of the Corporation. No Award shall be
made ten years after the date of such stockholder approval.



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