Exhibit 10.4


 


INCENTIVE PLAN OF


EDGE PETROLEUM
CORPORATION


 


(AS AMENDED AND
RESTATED EFFECTIVE AS OF AUGUST 2, 2006)


 


1. Plan. This Incentive
Plan of Edge Petroleum Corporation (the “Plan”) was adopted by Edge Petroleum
Corporation to reward certain corporate officers and key employees of Edge
Petroleum Corporation and certain independent consultants by enabling them to
acquire shares of common stock of Edge Petroleum Corporation.


 


2. Objectives. This Plan
is designed to attract and retain key employees of the Company and its
Subsidiaries (as hereinafter defined), to attract and retain qualified
directors of the Company, to attract and retain consultants and other
independent contractors, to encourage the sense of proprietorship of such
employees, directors and independent contractors and to stimulate the active
interest of such persons in the development and financial success of the
Company and its Subsidiaries. These objectives are to be accomplished by making
Awards (as hereinafter defined) under this Plan and thereby providing
Participants (as hereinafter defined) with a proprietary interest in the growth
and performance of the Company and its Subsidiaries.


 


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


 


“Annual Director Award
Date” means, for each year beginning on or after the IPO Closing Date, the
first business day of the month next succeeding the date upon which the annual
meeting of stockholders of the Company is held in such year.


 


“Authorized Officer”
means the Chairman of the Board or the Chief Executive Officer of the Company
(or any other senior officer of the Company to whom either of them shall
delegate the authority to execute any Award Agreement).


 


“Award” means an Employee
Award, a Director Award or an Independent Contractor Award.


 


“Award Agreement” means
any Employee Award Agreement, Director Award Agreement or Independent
Contractor Award Agreement.


 


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


 


“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
Compensation Committee of the Board or such other committee of the Board as is
designated by the Board to administer the Plan.


 


“Common Stock” means the
Common Stock, par value $.01 per share, of the Company.


 


“Company” means Edge
Petroleum Corporation, a Delaware corporation.


 


“Director” means an
individual serving as a member of the Board.


 


“Director Award” means
the grant of a Director Option or a Director Stock Award.


 


“Director Award Agreement”
means a written agreement between the Company and a Participant who is a
Nonemployee Director setting forth the terms, conditions and limitations
applicable to a Director Award.


 


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“Director Stock Award”
means a Stock Award granted to a Non-employee Director pursuant to the
applicable terms, conditions and limitations specified in paragraph 9(b)
hereof.


 


“Disability” means, with
respect to a Non-employee Director, the inability to perform the duties of a
Director for a continuous period of more than three months by reason of any
medically determinable physical or mental impairment.


 


“Dividend Equivalents”
means, with respect to 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 Company or any of its Subsidiaries and an individual who has
agreed to become an Employee of the Company or any of its Subsidiaries and
actually becomes such an Employee within the following six months.


 


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


 


“Employee Award Agreement”
means a written agreement between the Company and a Participant who is an
Employee setting forth the terms, conditions and limitations applicable to an
Employee Award.


 


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


 


“Fair Market Value” of a
share of Common Stock means, as of a particular date, (i) if shares of Common
Stock are listed on a national securities exchange, the mean between the
highest and lowest sales price per share of Common Stock on the consolidated
transaction reporting system for the principal national securities exchange on
which shares of Common Stock are listed on that date, or, if there shall have
been no such sale so reported on that date, on the last preceding date on which
such a sale was so reported, (ii) if shares of Common Stock are not so listed
but are quoted on the Nasdaq National Market, the mean between the highest and
lowest sales price per share of Common Stock reported by the Nasdaq National
Market 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,
(iii) if the 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, or, if not reported
by the Nasdaq Stock Market, by the National Quotation Bureau Incorporated or
(iv) if shares of Common Stock are not publicly traded, the most recent value
determined by an independent appraiser appointed by the Company for such
purpose; provided that, notwithstanding the foregoing, “Fair Market Value” in
the case of any Award made in connection with the IPO, means the price per
share to the public of the Common Stock in the IPO, as set forth in the final
prospectus relating to the IPO.


 


“Incentive Option” means
an Option that is intended to comply with the requirements set forth in
Section 422 of the Code.


 


“Independent Contractor”
means a person providing services to the Company or any of its Subsidiaries
except an Employee or Non-employee Director.


 


“Independent Contractor
Award” means the grant of any Nonqualified Stock Option, SAR, Stock Award, Cash
Award or Performance Award, whether granted singly, in combination or in
tandem, to a Participant who is an Independent Contractor pursuant to such
applicable terms, conditions and limitations as the Committee may establish in
order to fulfill the objectives of the Plan.


 


“Independent Contractor
Award Agreement” means a written agreement between the Company and a
Participant who is an Independent Contractor setting forth the terms,
conditions and limitations applicable to an Independent Contractor Award.


 


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“IPO” means the first
time a registration statement filed under the Securities Act of 1933 and respecting
an underwritten primary offering by the Company of shares of Common Stock is
declared effective under that Act and the shares registered by that
registration statement are issued and sold by the Company (otherwise than
pursuant to the exercise of any over-allotment option).


 


“IPO Closing Date” means
the date on which the Company first receives payment for the shares of Common
Stock it sells in the IPO.


 


“Non-employee Director”
has the meaning set forth in paragraph 4(b) hereof.


 


“Nonqualified Stock
Option” means an Option that is not an Incentive Option.


 


“Option” means a right to
purchase a specified number of shares of Common Stock at a specified price.


 


“Participant” means an
Employee, Director or Independent Contractor to whom an Award has been made
under this Plan.


 


“Performance Award” means
an award made pursuant to this Plan to a Participant who is an Employee or
Independent Contractor who is subject to the attainment of one or more
Performance Goals.


 


“Performance Goal” means
a standard established by the Committee, to determine in whole or in part
whether a Performance Award shall be earned.


 


“Restricted Stock” means
any Common Stock that is restricted or subject to forfeiture provisions.


 


“Restriction Period”
means a period of time beginning as of the date upon which an Award of
Restricted Stock is made pursuant to this Plan and ending as of the date upon
which the Common Stock subject to such Award is no longer restricted or subject
to forfeiture provisions.


 


“Rule 16b-3” means
Rule 16b-3 promulgated under the Exchange Act, or any successor rule.


 


“SAR” means a right to
receive a payment, in cash or 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 strike price,
in each case, as determined by the Committee.


 


“Stock Award” means an
award in the form of shares of Common Stock or units denominated in shares of
Common Stock.


 


“Subsidiary” means (i) in
the case of a corporation, any corporation of which the Company directly or
indirectly owns shares representing more than 50% of the combined voting power
of the shares of all classes or series of capital stock of such corporation
which have the right to vote generally on matters submitted to a vote of the
stockholders of such corporation and (ii) in the case of a partnership or other
business entity not organized as a corporation, any such business entity of
which the Company directly or indirectly owns more than 50% of the voting,
capital or profits interests (whether in the form of partnership interests,
membership interests or otherwise).


 


4. Eligibility.


 


(a) Employees. Key
Employees eligible for Employee Awards under this Plan are those who hold
positions of responsibility and whose performance, in the judgment of the
Committee, can have a significant effect on the success of the Company and its
Subsidiaries, including those individuals who are expected to become Employees
within six months.


 


(b) Directors. Directors
eligible for Director Awards under this Plan are those who are not employees of
the Company or any of its Subsidiaries (“Non-employee Directors”).


 


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(c) Independent
Contractors. Independent Contractors eligible for Independent Contractor Awards
under this Plan are those Independent Contractors providing services to, or who
will provide services to, the Company or any of its Subsidiaries.


 


5. Common Stock Available
for Awards. Subject to the provisions of paragraph 15 hereof, there shall be
available for Awards under this Plan granted wholly or partly in Common Stock
(including rights or options that may be exercised for or settled in Common
Stock) an aggregate of 2,200,000 shares of Common Stock, all of which shall be
available for Incentive Options. 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 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 again
immediately become available for Awards hereunder. The Committee may from time
to time adopt and observe such procedures concerning the counting of shares
against the Plan maximum as it may deem appropriate. The Board and the
appropriate officers of the Company 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, as it
applies to Participants who are Employees or Independent Contractors but not
with respect to Participants who are Non-employee Directors, shall be
administered by the Committee. To the extent required in order for Employee
Awards to be exempt from Section 16 of the Exchange Act by virtue of the
provisions of Rule 16b-3, the Committee shall consist of at least two
members of the Board who meet the requirements of the definition of “non-employee
director” set forth in Rule 16b-3(b)(3)(i) promulgated under the Exchange
Act.


 


(b) Subject to the
provisions hereof, insofar as this Plan relates to the Employee Awards or
Independent Contractor Awards, 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. Insofar as this Plan relates to the Employee
Awards or Independent Contractor Awards, 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 Company and in
keeping with the objectives of this Plan. The Committee may, in its discretion,
provide for the extension of the exercisability of an Employee Award or
Independent Contractor Award, accelerate the vesting or exercisability of an
Employee Award or Independent Contractor Award, eliminate or make less
restrictive any restrictions contained in an Employee Award or Independent
Contractor Award, waive any restriction or other provision of this Plan
(insofar as such provision relates to Employee Awards or to Independent
Contractor Awards) or an Employee Award or Independent Contractor Award or otherwise
amend or modify an Employee Award or Independent Contractor Award in any manner
that is either (i) not adverse to the Participant to whom such Employee Award
or Independent Contractor Award was granted or (ii) consented to by such
Participant; provided, however, that no Option awarded as an Employee Award or
Independent Contractor Award pursuant to this Plan may be repriced, replaced
with Stock Awards or Cash Awards, or regranted through cancellation without the
approval of the shareholders of the Company (except in connection with a change
in the Company’s capitalization or as otherwise provided in Section 15 hereof),
if the effect would be to reduce the exercise price for the shares underlying
such Employee Award or Independent Contractor Award. The Committee may make an
award to an individual who it expects to become an Employee of the Company or
any of its Subsidiaries within the next six months, with such award being
subject to the individuals 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 Employee Award or
Independent Contractor Award in the manner and to the extent the Committee
deems necessary or desirable to further the Plan purposes. Any decision of the
Committee 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 Company to whom the Committee has delegated
authority in accordance with the provisions of paragraph 7 of this Plan
shall be liable for anything done or omitted to be done by him or her, by any
member of the Committee or by any officer of the Company in connection with the



 


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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. The Committee may delegate to the Chief Executive Officer and to
other senior officers of the Company its duties under this Plan pursuant to
such conditions or limitations as the Committee may establish, except that the
Committee may not delegate to any person the authority to grant Awards to, or
take other action with respect to, Participants who are subject to
Section 16 of the Exchange Act.


 


8. Employee and
Independent Contractor Awards.


 


(a) The Committee shall
determine the type or types of Employee Awards to be made under this Plan and
shall designate from time to time the Employees who are to be the recipients of
such Awards. Each Employee Award may be embodied in an Employee Award Agreement,
which shall contain such terms, conditions and limitations as shall be
determined by the Committee in its sole discretion and shall be signed by the
Participant to whom the Employee Award is made and by an Authorized Officer for
and on behalf of the Company. Employee Awards may consist of those listed in
this paragraph 8(a) hereof and may be granted singly, in combination or in
tandem. Employee Awards may also be made in combination or in tandem with, in
replacement of, or as alternatives to, grants or rights under this Plan or any
other employee plan of the Company or any of its Subsidiaries, including the
plan of any acquired entity. An Employee Award may provide for the grant or
issuance of additional, replacement or alternative Employee Awards upon the
occurrence of specified events, including the exercise of the original Employee
Award granted to a Participant. All or part of an Employee Award may be subject
to conditions established by the Committee, which may include, but are not
limited to, continuous service with the Company and its Subsidiaries,
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.


 


(i) Stock Option. An
Employee Award may be in the form of an Option. An Option awarded pursuant to
this Plan may consist of an Incentive Option or a Nonqualified Option. The
price at which shares of Common Stock may be purchased upon the exercise of an
Incentive Option shall be not less than the Fair Market Value of the Common
Stock on the date of grant. The price at which shares of Common Stock may be
purchased upon the exercise of a Nonqualified Option shall be not less than the
Fair Market Value of the Common Stock on the date of grant. Subject to the
foregoing provisions, the terms, conditions and limitations applicable to any
Options awarded pursuant to this Plan, including the term of any Options and
the date or dates upon which they become exercisable, shall be determined by
the Committee.


 


(ii) Stock Appreciation
Right. An Employee Award may be in the form of an SAR. The terms, conditions
and limitations applicable to any SARs awarded pursuant to this Plan, including
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 may be in the form of a Stock Award. The terms, conditions and
limitations applicable to any Stock Awards granted pursuant to this Plan shall
be determined by the Committee.


 


(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 that may be made under
the other provisions of this Plan, an Employee Award may be in the form of a
Performance Award. A Performance Award 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 


 


5

















 


business criteria that
apply to the individual, one or more business units of the Company, or the
Company as a whole, and may include one or more of the following: increased
revenue, net income, stock price, market share, earnings per share, return on
equity, return on assets or decrease in costs. 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 Performance Awards, it is the intent of the Plan to
conform with the standards of Section 162(m) of the Code and Treasury
Regulations 1.16227(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, conditions and limitations applicable to any 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 one-year period, Employee Awards consisting of Options or
SARs that are exercisable for more than 135,000 shares of Common Stock;


 


(ii) no Participant may
be granted, during any one-year period, Stock Awards covering or relating to
more than 135,000 shares of Common Stock (the limitation set forth in this
clause (ii), together with the limitation set forth in clause (i) above, being
hereinafter collectively referred to as the “Stock Based Awards Limitations”);
and


 


(iii) no Participant may
be granted Employee Awards consisting of cash or in any other form permitted
under this Plan (other than Employee Awards consisting of Options or SARs or
otherwise consisting of shares of Common Stock or units denominated in such
shares) in respect of any one-year period having a value determined on the date
of grant in excess of $500,000.


 


(c) The Committee shall
have the sole responsibility and authority to determine the type or types of
Independent Contractor Awards to be made under this Plan and may make any such
Awards as could be made to an Employee, other than Incentive Options; provided
that the limitations described in paragraph 8(b) shall be inapplicable to
Independent Contractor Awards.


 


9. Director Awards. Each Non-employee
Director of the Company shall be granted Director Awards in accordance with
this paragraph 9 and subject to the applicable terms, conditions and
limitations set forth in this Plan and the applicable Director Award Agreement.
Notwithstanding anything to the contrary contained herein, Director Awards
shall not be made in any year in which a sufficient number of shares of Common
Stock are not available to make such Awards under this Plan.


 


(a) Director Options.


 


(i) On the IPO Closing
Date, each Non-employee Director shall be automatically awarded a Director
Option for the number of shares of Common Stock determined in the following
table:


 


	
  Years of Service With the Company or its Predecessors

  	
   

  	
  Number of Shares Subject to Option

  	
   

  
	
  4 years or
  greater

  	
   

  	
  8,000

  	
   

  
	
  3 to 4 years

  	
   

  	
  6,000

  	
   

  
	
  2 to 3 years

  	
   

  	
  4,000

  	
   

  
	
  2 years or less

  	
   

  	
  2,000

  	
   

  



 


(ii) Each Non-employee
Director who was first appointed or elected to the Board of Directors during
the year ended December 31, 2002, shall be granted a Director Option that: (A)
provides for the purchase of 5,000 Shares of Common Stock; (B) expires
(notwithstanding any earlier termination of the status of the holder as a
Non-employee Director) as set forth on Annex A hereto; (C) vests and becomes
exercisable as set forth on Annex A; and (D) has a purchase price of each
share of Common Stock subject to such Director Option as set forth on
Annex A (which in any event is equal to or greater than the Fair Market
Value as of February 20, 2003).


 


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(iii) Effective beginning
February 20, 2003, on the date of his or her first appointment or
election to the Board of Directors, a Non-employee Director may, in the
discretion of the Board of Directors, be granted a Director Option that provides
for the purchase of up to 5,000 shares of Common Stock.


 


(iv) Effective beginning
on and including June 1, 2004, on each Annual Director Award Date,
each Non-employee Director may, in the discretion of the Board, be granted a
Director Option that provides for the purchase of up to 3,000 shares of Common
Stock.


 


(v) Except as provided in
or pursuant to (ii): (A) each Director Option shall have a term of ten years
from the date of grant, notwithstanding any earlier termination of the status
of the holder as a Non-employee Director; (B) the purchase price of each share
of Common Stock subject to a Director Option shall be equal to the Fair Market
Value of the Common Stock on the date of grant; and (C) all Director Options
granted after July 27, 1999 shall vest and become exercisable on the
second anniversary of the date of grant.


 


(vi) All unvested
Director Options shall be forfeited if the Non-employee Director resigns as a
Director without the consent of a majority of the other Directors.


 


(vii) Any Award of
Director Options shall be embodied in a Director Award Agreement, which shall
contain the terms, conditions and limitations set forth above and shall be
signed by the Participant to whom the Director Options are granted and by an
Authorized Officer for and on behalf of the Company.


 


(b) Director Stock
Awards. Effective beginning on and including June 1, 2004, on each
Annual Director Award Date, each Non-employee Director who was serving as such
on the date immediately preceding the most recent annual meeting of
stockholders, may, in the discretion of the Board, be awarded shares of Common
Stock in respect of all or a portion of the annual retainer to be paid to the
Non-employee Director for the preceding twelve months. The Board may provide
that all or a portion of any such shares of Common Stock be Restricted Stock
and specify the restrictions thereon (unless otherwise specified by the Board,
no shares of Common Stock issued as a retainer shall be Restricted Stock).


 


10. Payment of Awards.


 


(a) General. Payment of
Employee Awards or Independent Contractor Awards 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 payment of an
Employee Award or Independent Contractor Award is made in the form of
Restricted Stock, the applicable Award Agreement relating to such shares shall
specify whether they 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.


 


(b) Deferral. With the
approval of the Committee, amounts payable in respect of Employee Awards or
Independent Contractor 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 Employee Awards
or Independent Contractor Awards in accordance with procedures established by
the Committee. Any deferred payment of an Employee Award or Independent
Contractor Award, whether elected by the Participant or specified by the Award
Agreement or by the Committee, may be forfeited if and to the extent that the
Award Agreement so provides.


 


(c) Dividends and
Interest. Rights to dividends or Dividend Equivalents may be extended to and
made part of any Employee Award or Independent Contractor Award consisting of
shares of Common Stock or units denominated in shares of Common Stock, subject
to such terms, conditions and restrictions as the Committee may establish. The
Committee may also establish rules and procedures for the crediting of interest
on deferred cash 


 


7

















 


payments and Dividend
Equivalents for Employee Awards or Independent Contractor Awards consisting of
shares of Common Stock or units denominated in shares of Common Stock.


 


(d) Substitution of
Awards. At the discretion of the Committee, a Participant who is an Employee or
Independent Contractor may be offered an election to substitute an Employee
Award or Independent Contractor Award for another Employee Award or Independent
Contractor Award or Employee Awards or Independent Contractor Awards of the
same or different type.


 


11. Stock Option
Exercise. The price at which shares of Common Stock may be purchased under an
Option shall be paid in full at the time of exercise in cash or, if elected by
the optionee, the optionee may purchase such shares by means of tendering
Common Stock or surrendering another Award, including Restricted Stock or
Director Restricted Stock, valued at Fair Market Value on the date of exercise,
or any combination thereof. The Committee shall determine acceptable methods
for Participants who are Employees or Independent Contractors to tender- Common
Stock or other Employee Awards or Independent Contractor Awards; provided that
any Common Stock that is or was the subject of an Employee Award or Independent
Contractor 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 Employee Award or Independent
Contractor 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 or Director
Restricted Stock used as consideration therefore, shall be subject to the same
restrictions as the Restricted Stock or Director Restricted Stock so submitted
as well as any additional restrictions that may be imposed by the Committee.


 


12. Taxes. The Company
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 required by law or
to take such other action as may be necessary in the opinion of the Company to
satisfy all obligations for withholding of such taxes. The Committee may also
permit withholding to be satisfied by the transfer to the Company of shares of
Common Stock theretofore owned by the holder of the 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. Except to the extent
prohibited by the Section 402 of the Sarbanes-Oxley Act of 2002 or other
applicable law, the Committee may provide for loans, on either a short term or
demand basis, from the Company to a Participant who is an Employee or
Independent Contractor to permit the payment of taxes required by law.


 


13. Amendment,
Modification, Suspension or Termination. 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
Company to the extent such approval is then required pursuant to Rule 16b-3
in order to preserve the applicability of any exemption provided by such rule
to any Award then outstanding (unless the holder of such Award consents) or to
the extent stockholder approval is otherwise required by applicable legal
requirements.


 


14. Assignability. Unless
otherwise determined by the Committee and provided in the Award Agreement, no
Award or any other benefit under this Plan constituting a derivative security
within the meaning of Rule 16a-1(c) under the Exchange Act shall be
assignable or otherwise transferable except by will 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. The Committee may prescribe and include in applicable Award
Agreements other restrictions on transfer. Any attempted assignment of an Award
or any other benefit under this Plan in violation of this paragraph 14 shall be
null and void.


 


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15. Adjustments.


 


(a) The existence of
outstanding Awards shall not affect in any manner the right or power of the
Company or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the capital stock of the
Company or its business or any merger or consolidation of the Company, 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 Common Stock) or the
dissolution or liquidation of the Company, 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,
except with respect to the Existing Options, (i) the number of shares of Common
Stock reserved under this Plan, (ii) the number of shares of Common Stock
covered by outstanding Awards in the form of Common Stock or units denominated
in Common Stock, (iii) the exercise or other price in respect of such Awards,
(iv) the appropriate Fair Market Value and other price determinations for such
Awards, (v) the number of shares of Common Stock covered by Director Options
granted pursuant to paragraph 9(a) hereof and (vi) the Stock Based Awards
Limitations shall each be proportionately adjusted by the Board to reflect such
transaction. In the event of any other recapitalization or capital
reorganization of the Company, any consolidation or merger of the Company with
another corporation or entity, the adoption by the Company of any plan of
exchange affecting the Common Stock or any distribution to holders of Common
Stock of securities or property (other than normal cash dividends or dividends
payable in Common Stock), the Board shall make appropriate adjustments to (i)
the number of shares of Common Stock covered by Awards in the form of Common
Stock or units denominated in Common Stock, (ii) the exercise or other price in
respect of such Awards, (iii) the appropriate Fair Market Value and other price
determinations for such Awards, (iv) the number of shares of Common Stock
covered by Director Options granted pursuant to paragraph 9(a) hereof and (v)
the Stock Based Awards Limitations to give effect to such transaction shall
each be proportionately adjusted by the Board 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
exceeding, 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 to issue or assume Awards by means
of substitution of new Awards, as appropriate, for previously issued Awards or
to assume previously issued Awards as part of such adjustment.


 


(c) In the event of a
corporate merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation, the Board may make such adjustments to
outstanding Awards or other provisions for the disposition of outstanding
Awards as it deems equitable, and shall be authorized, in its discretion, (i)
to provide for the substitution of a new Award or other arrangement (which, if
applicable, may be exercisable for such property or stock as the Board determines)
for an outstanding Award or the assumption of an outstanding Award, regardless
of whether in a transaction to which Section 424(a) of the Code applies,
(ii) to provide, prior to the transaction, for the acceleration of the vesting
and exercisability of, or lapse of restrictions with respect to, the
outstanding Award and, if the transaction is a cash merger, to provide for the
termination of any portion of the Award that remains unexercised at the time of
such transaction or (iii) to provide for the acceleration of the vesting and
exercisability of an outstanding Award and the cancellation thereof in exchange
for such payment as shall be mutually agreeable to the Participant and the
Board.


 


16. Restrictions. No
Common Stock or other form of payment shall be issued with respect to any Award
unless the Company shall be satisfied based on the advice of its counsel that
such issuance will be in compliance with applicable federal and state
securities laws. It is the intent of the Company that grants of Awards under
this Plan comply with Rule 16b-3 with respect to persons subject to
Section 16 of the Exchange Act unless otherwise provided herein or in an
Award Agreement, that any ambiguities or inconsistencies in the construction of
such an Award or this Plan be interpreted to give effect to such intention.
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.


 


9

















 


17. Unfunded Plan.
Insofar as it provides for Awards of cash, Common Stock or rights thereto, this
Plan shall be unfunded. Although bookkeeping accounts may be established with
respect to Participants who are entitled to cash, Common Stock or rights
thereto under this Plan, any such accounts shall be used merely as a
bookkeeping convenience. The Company shall not be required to segregate any
assets that may at any time be represented by cash, Common Stock or rights
thereto, nor shall this Plan be construed as providing for such segregation,
nor shall the Company, the Board or the Committee be deemed to be a trustee of
any cash, Common Stock or rights thereto to be granted under this Plan. Any
liability or obligation of the Company to any Participant with respect to an Award
of cash, Common Stock or rights thereto under this Plan shall be based solely
upon any contractual obligations that may be created by this Plan and any Award
Agreement, and no such liability or obligation of the Company shall be deemed
to be secured by any pledge or other encumbrance on any property of the
Company. Neither the Company 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.


 


18. 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 Delaware.


 


19. Effectiveness. The
Plan as hereby amended and restated shall be effective as of August 2, 2006.


 


10

















 


ANNEX A


 


	
  NAME

  	
   

  	
  EXPIRATION DATE

  	
   

  	
  VESTING/ EXERCISABILITY (1)

  	
   

  	
  PER SHARE PURCHASE PRICE

  	
   

  
	
  Joseph R.
  Musolino

  	
   

  	
  06/03/2012

  	
   

  	
  06/03/2004

  	
   

  	
  $

  	
   

  	
  5.69

  	
   

  
	
  Thurmon Andress

  	
   

  	
  01/23/2013

  	
   

  	
  01/23/2005

  	
   

  	
  $

  	
  3.88

  	
   

  
	
  David F. Work

  	
   

  	
  01/23/2013

  	
   

  	
  01/23/2005

  	
   

  	
  $

  	
  3.88

  	
   

  



 






(1) Options vest and
become exercisable in full on the date set forth opposite the name of the
applicable Non-employee Director.


 


A-1