Document:

exv10w11

 

Exhibit 10.11

ORION MARINE GROUP, INC.

LONG TERM INCENTIVE PLAN

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	1. Purpose
	 	 	1	 
	 
	 	 	 	 
	2. Definitions
	 	 	1	 
	 
	 	 	 	 
	3. Administration
	 	 	5	 
	(a) Authority of the Committee
	 	 	5	 
	(b) Manner of Exercise of Committee Authority
	 	 	6	 
	(c) Limitation of Liability
	 	 	6	 
	 
	 	 	 	 
	4. Stock Subject to Plan
	 	 	7	 
	(a) Overall Number of Shares Available for Delivery
	 	 	7	 
	(b) Application of Limitation to Grants of Awards
	 	 	7	 
	(c) Availability of Shares Not Issued under Awards
	 	 	7	 
	(d) Stock Offered
	 	 	7	 
	 
	 	 	 	 
	5. Eligibility; Per Person Award Limitations
	 	 	7	 
	 
	 	 	 	 
	6. Specific Terms of Awards.
	 	 	8	 
	(a) General
	 	 	8	 
	(b) Options
	 	 	8	 
	(c) Stock Appreciation Rights
	 	 	9	 
	(d) Restricted Stock
	 	 	10	 
	(e) Restricted Stock Units
	 	 	11	 
	(f) Bonus Stock and Awards in Lieu of Obligations
	 	 	11	 
	(g) Dividend Equivalents
	 	 	12	 
	(h) Other Stock-Based Awards
	 	 	12	 
	 
	 	 	 	 
	7. Certain Provisions Applicable to Awards
	 	 	12	 
	(a) Termination of Employment
	 	 	12	 
	(b) Stand-Alone, Additional, Tandem, and Substitute Awards
	 	 	12	 
	(c) Term of Awards
	 	 	13	 
	(d) Form and Timing of Payment under Awards; Deferrals
	 	 	13	 
	(e) Exemptions from Section 16(b) Liability
	 	 	13	 
	(f) Non-Competition Agreement
	 	 	13	 
	 
	 	 	 	 
	8. Performance and Annual Incentive Awards
	 	 	13	 
	(a) Performance Conditions
	 	 	13	 
	(b) Performance Awards Granted to Designated Covered Employees
	 	 	14	 
	(c) Annual Incentive Awards Granted to Designated Covered Employees
	 	 	15	 
	(d) Written Determinations
	 	 	16	 
	(e) Status of Subsection 8(b) and Subsection 8(c) Awards under Section 162(m) of the Code
	 	 	16	 
	 
	 	 	 	 
	9. Subdivision or Consolidation; Recapitalization; Change in Control; Reorganization
	 	 	17	 
	(a) Existence of Plans and Awards
	 	 	17	 

 

 

	 	 	 	 	 
	(b) Subdivision or Consolidation of Shares
	 	 	17	 
	(c) Corporate Recapitalization.
	 	 	18	 
	(d) Additional Issuances
	 	 	18	 
	(e) Change in Control
	 	 	19	 
	(f) Change in Control Price
	 	 	19	 
	 	 	 	 	 
	10. General Provisions
	 	 	20	 
	(a) Transferability.
	 	 	20	 
	(b) Taxes
	 	 	21	 
	(c) Changes to this Plan and Awards
	 	 	21	 
	(d) Limitation on Rights Conferred under Plan
	 	 	21	 
	(e) Unfunded Status of Awards
	 	 	22	 
	(f) Nonexclusivity of this Plan
	 	 	22	 
	(g) Fractional Shares
	 	 	22	 
	(h) Severability
	 	 	22	 
	(i) Governing Law
	 	 	22	 
	(j) Conditions to Delivery of Stock
	 	 	23	 
	(k) Plan Effective Date
	 	 	23	 

 

 

ORION MARINE GROUP, INC.

Long Term Incentive Plan

     1. Purpose. The purpose of the Orion Marine Group, Inc. Long Term Incentive Plan (the “Plan”)
is to provide a means through which Orion Marine Group, Inc., a Delaware corporation (the
“Company”), and its Subsidiaries may attract and retain able persons as employees, directors and
consultants of the Company, and its Subsidiaries, and to provide a means whereby those persons upon
whom the responsibilities of the successful administration and management of the Company, and its
Subsidiaries, rest, and whose present and potential contributions to the welfare of the Company,
and its Subsidiaries, are of importance, can acquire and maintain stock ownership, or awards the
value of which is tied to the performance of the Company, thereby strengthening their concern for
the welfare of the Company, and its Subsidiaries, and their desire to remain employed. A further
purpose of this Plan is to provide such employees, directors and consultants with additional
incentive and reward opportunities designed to enhance the profitable growth of the Company.
Accordingly, this Plan primarily provides for the granting of Incentive Stock Options, options
which do not constitute Incentive Stock Options, Restricted Stock Awards, Restricted Stock Units,
Stock Appreciation Rights or any combination of the foregoing, as is best suited to the
circumstances of the particular individual as provided herein.

     2. Definitions. For purposes of this Plan, the following terms shall be defined as set forth
below, in addition to such terms defined in Section 1 hereof:

          (a) “Annual Incentive Award” means a conditional right granted to a Participant under
Subsection 8(c) hereof to receive a cash payment, Stock or other Award, unless otherwise determined
by the Committee, after the end of a specified year.

          (b) “Award” means any Option, SAR, Restricted Stock Award, Restricted Stock Unit, Bonus Stock,
Dividend Equivalent, Other Stock-Based Award, Performance Award or Annual Incentive Award, together
with any other right or interest granted to a Participant under this Plan.

          (c) “Beneficiary” means one or more persons, trusts or other entities which have been
designated by a Participant, in his or her most recent written beneficiary designation filed with
the Committee, to receive the benefits specified under this Plan upon such Participant’s death or
to which Awards or other rights are transferred if and to the extent permitted under Subsection
10(a) hereof. If, upon a Participant’s death, there is no designated Beneficiary or surviving
designated Beneficiary, then the term Beneficiary means the persons, trusts or other entities
entitled by will or the laws of descent and distribution to receive such benefits.

          (d) “Board” means the Company’s Board of Directors.

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          (e) “Business Day” means any day other than a Saturday, a Sunday, or a day on which banking
institutions in the state of Texas are authorized or obligated by law or executive order to close.

          (f) “Change in Control” means the occurrence of any of the following events:

               (i) A “change in the ownership of the Company” which shall occur on the date that any one
person, or more than one person acting as a group, acquires ownership of stock in the Company that,
together with stock held by such person or group, constitutes more than 50% of the total fair
market value or total voting power of the stock of the Company; however, if any one person or more
than one person acting as a group, is considered to own more than 50% of the total fair market
value or total voting power of the stock of the Company, the acquisition of additional stock by the
same person or persons will not be considered a “change in the ownership of the Company” (or to
cause a “change in the effective control of the Company” within the meaning of Subsection 2(f)(ii)
below) and an increase of the effective percentage of stock owned by any one person, or persons
acting as a group, as a result of a transaction in which the Company acquires its stock in exchange
for property will be treated as an acquisition of stock for purposes of this paragraph; provided,
further, however, that for purposes of this Subsection 2(f)(i), the following acquisitions shall
not constitute a Change in Control: (A) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any entity controlled by the Company, or (B) any
acquisition by investors (immediately prior to such acquisition) in the Company for financing
purposes, as determined by the Committee in its sole discretion. This Subsection 2(f)(i) applies
only when there is a transfer of the stock of the Company (or issuance of stock) and stock in the
Company remains outstanding after the transaction.

               (ii) A “change in the effective control of the Company” which shall occur on the date that
either (A) any one person, or more than one person acting as a group, acquires (or has acquired
during the twelve month period ending on the date of the most recent acquisition by such person or
persons) ownership of stock of the Company possessing 35% or more of the total voting power of the
stock of the Company, except for (1) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any entity controlled by the Company, or (2) any
acquisition by investors (immediately prior to such acquisition) in the Company for financing
purposes, as determined by the Committee in its sole discretion; or (B) a majority of the members
of the Board are replaced during any twelve-month period by directors whose appointment or election
is not endorsed by a majority of the members of the Board prior to the date of the appointment or
election. For purposes of a “change in the effective control of the Company,” if any one person,
or more than one person acting as a group, is considered to effectively control the Company within
the meaning of this Subsection 2(f)(ii), the acquisition of additional control of the Company by
the same person or persons is not considered a “change in the effective control of the Company,” or
to cause a “change in the ownership of the Company” within the meaning of Subsection 2(f)(i) above.

               (iii) A “change in the ownership of a substantial portion of the Company’s assets” which shall
occur on the date that any one person, or more than one person acting as a group, acquires (or has
acquired during the twelve month period ending on the date of the most recent acquisition by such
person or persons) assets of the Company that have a total

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gross fair market value equal to or more than 40% of the total gross fair market value of all
the assets of the Company immediately prior to such acquisition or acquisitions. For this purpose,
gross fair market value means the value of the assets of the Company, or the value of the assets
being disposed of, determined without regard to any liabilities associated with such assets. Any
transfer of assets to an entity that is controlled by the shareholders of the Company immediately
after the transfer, as provided in guidance issued pursuant to the Nonqualified Deferred
Compensation Rules, shall not constitute a Change in Control.

          For purposes of this Subsection 2(f), the provisions of section 318(a) of the Code regarding
the constructive ownership of stock will apply to determine stock ownership; provided, that, stock
underlying unvested options (including options exercisable for stock that is not substantially
vested) will not be treated as owned by the individual who holds the option. In addition, for
purposes of this Subsection 2(f) and except as otherwise provided in an Award agreement, “Company”
includes (x) the Company, (y) the entity for whom a Participant performs the services for which an
Award is granted, and (z) an entity that is a stockholder owning more than 50% of the total fair
market value and total voting power (a “Majority Shareholder”) of the Company or the entity
identified in (y) above, or any entity in a chain of entities in which each entity is a Majority
Shareholder of another entity in the chain, ending in the Company or the entity identified in (y)
above.

          (g) “Code” means the Internal Revenue Code of 1986, as amended from time to time, including
regulations thereunder and successor provisions and regulations thereto.

          (h) “Committee” means a committee of two or more directors designated by the Board to
administer this Plan; provided, however, that, unless otherwise determined by the
Board, the Committee shall consist solely of two or more directors, each of whom shall be (i) a
“nonemployee director” within the meaning of Rule 16b-3, and (ii) an “outside director” as defined
under section 162(m) of the Code unless administration of this Plan by “outside directors” is not
then required in order to qualify for tax deductibility under section 162(m) of the Code.

          (i) “Covered Employee” means an Eligible Person who is a Covered Employee as specified in
Subsection 8(e) of this Plan.

          (j) “Dividend Equivalent” means a right, granted to a Participant under Subsection 6(g), to
receive cash, Stock, other Awards or other property equal in value to dividends paid with respect
to a specified number of shares of Stock, or other periodic payments.

          (k) “Effective Date” means the day the stockholders of the Company approve the Plan.

          (l) “Eligible Person” means all officers and employees of the Company or of any Subsidiary,
and other persons who provide services to the Company or any of its Subsidiaries, including
directors of the Company. An employee on leave of absence may be considered as still in the employ
of the Company or a Subsidiary for purposes of eligibility for participation in this Plan.

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          (m) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time,
including rules thereunder and successor provisions and rules thereto.

          (n) “Fair Market Value” means, as of any specified date, (i) the mean of the high and low
sales prices of the Common Stock either (A) if the Stock is traded on the National Market System of
the NASDAQ, as reported on the National Market System of NASDAQ on that date (or if no sales occur
on that date, on the last preceding date on which such sales of the Stock are so reported), or (B)
if the Stock is listed on a national securities exchange, as reported on the stock exchange
composite tape on that date (or if no sales occur on that date, on the last preceding date on which
such sales of the Stock are so reported); (ii) if the Stock is not traded on the National Market
System of the NASDAQ or a national securities exchange but is traded over the counter at the time a
determination of its fair market value is required to be made under the Plan, the average between
the reported high and low or closing bid and asked prices of Stock on the most recent date on which
Stock was publicly traded; (iii) in the event Stock is not publicly traded at the time a
determination of its value is required to be made under the Plan, the amount determined by the
Committee in its discretion in such manner as it deems appropriate; or (iv) on the date of an
initial public offering of Stock, the offering price under such initial public offering.

          (o) “Incentive Stock Option” or “ISO” means any Option intended to be and designated as an
incentive stock option within the meaning of section 422 of the Code or any successor provision
thereto.

          (p) “Nonqualified Deferred Compensation Rules” means the limitations or requirements of
section 409A of the Code and the regulations promulgated thereunder.

          (q) “Option” means a right, granted to a Participant under Subsection 6(b) hereof, to purchase
Stock or other Awards at a specified price during specified time periods.

          (r) “Other Stock-Based Awards” means Awards granted to a Participant under Subsection 6(h)
hereof.

          (s) “Participant” means a person who has been granted an Award under this Plan which remains
outstanding, including a person who is no longer an Eligible Person.

          (t) “Performance Unit” means a right, granted to a Participant under Section 8 hereof, to
receive Awards based upon performance criteria specified by the Committee.

          (u) “Person” means any person or entity of any nature whatsoever, specifically including an
individual, a firm, a company, a corporation, a partnership, a limited liability company, a trust
or other entity; a Person, together with that Person’s Affiliates and Associates (as those terms
are defined in Rule 12b-2 under the Exchange Act), and any Persons acting as a partnership, limited
partnership, joint venture, association, syndicate or other group (whether or not formally
organized), or otherwise acting jointly or in concert or in a coordinated or consciously parallel
manner (whether or not pursuant to any express agreement), for the purpose of acquiring, holding,
voting or disposing of securities of the Company with such Person, shall be deemed a single
“Person.”

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          (v) “Qualifying Public Offering” shall mean a firm commitment underwritten public offering of
Stock for cash where the shares of Stock registered under the Securities Act are listed on a
national securities exchange or the NASDAQ National Market System.

          (w) “Qualified Member” means a member of the Committee who is a “nonemployee Director” within
the meaning of Rule 16b-3(b)(3) and an “outside director” within the meaning of Treasury Regulation
1.162-27 under section 162(m) of the Code.

          (x) “Restricted Stock” means Stock granted to a Participant under Subsection 6(d) hereof, that
is subject to certain restrictions and to a risk of forfeiture.

          (y) “Restricted Stock Unit” means a right, granted to a Participant under Subsection 6(e)
hereof, to receive Stock, cash or a combination thereof at the end of a specified deferral period.

          (z) “Rule 16b-3” means Rule 16b-3, promulgated by the Securities and Exchange Commission under
section 16 of the Exchange Act, as from time to time in effect and applicable to this Plan and
Participants.

          (aa) “Securities Act” means the Securities Act of 1933 and the rules and regulations
promulgated thereunder, or any successor law, as it may be amended from time to time.

          (bb) “Stock” means the Company’s Common Stock, par value $.0001 per share, and such other
securities as may be substituted (or resubstituted) for Stock pursuant to Section 9.

          (cc) “Stock Appreciation Rights” or “SAR” means a right granted to a Participant under
Subsection 6(c) hereof.

          (dd) “Subsidiary” means with respect to the Company, any corporation or other entity of which
a majority of the voting power of the voting equity securities or equity interest is owned,
directly or indirectly, by the Company.

     3. Administration.

          (a) Authority of the Committee. This Plan shall be administered by the Committee
except to the extent the Board elects to administer this Plan, in which case references herein to
the “Committee” shall be deemed to include references to the “Board.” Subject to the express
provisions of the Plan and Rule 16b-3, the Committee shall have the authority, in its sole and
absolute discretion, to (i) adopt, amend, and rescind administrative and interpretive rules and
regulations relating to the Plan; (ii) determine the Eligible Persons to whom, and the time or
times at which, Awards shall be granted; (iii) determine the amount of cash and the number of
shares of Stock, Stock Appreciation Rights, Restricted Stock Units or Restricted Stock Awards, or
any combination thereof, that shall be the subject of each Award; (iv) determine the terms and
provisions of each Award agreement (which need not be identical), including provisions defining or
otherwise relating to (A) the term and the period or periods and extent of exercisability of the
Options, (B) the extent to which the transferability of shares of Stock issued or transferred

5

 

pursuant to any Award is restricted, (C) except as otherwise provided herein, the effect of
termination of employment, or the service relationship with the Company, of a Participant on the
Award, and (D) the effect of approved leaves of absence (consistent with any applicable regulations
of the Internal Revenue Service); (v) accelerate the time of exercisability of any Award that has
been granted; (vi) construe the respective Award agreements and the Plan; (vii) make determinations
of the Fair Market Value of the Stock pursuant to the Plan; (viii) delegate its duties under the
Plan to such agents as it may appoint from time to time, provided that the Committee may not
delegate its duties with respect to making Awards to, or otherwise with respect to Awards granted
to, Eligible Persons who are subject to section 16(b) of the Exchange Act or section 162(m) of the
Code; and (ix) make all other determinations, perform all other acts, and exercise all other powers
and authority necessary or advisable for administering the Plan, including the delegation of those
ministerial acts and responsibilities as the Committee deems appropriate. Subject to Rule 16b-3
and section 162(m) of the Code, the Committee may correct any defect, supply any omission, or
reconcile any inconsistency in the Plan, in any Award, or in any Award agreement in the manner and
to the extent it deems necessary or desirable to carry the Plan into effect, and the Committee
shall be the sole and final judge of that necessity or desirability. The determinations of the
Committee on the matters referred to in this Subsection 3(a) shall be final and conclusive.

          (b) Manner of Exercise of Committee Authority. At any time that a member of the
Committee is not a Qualified Member, any action of the Committee relating to an Award granted or to
be granted to a Participant who is then subject to section 16 of the Exchange Act in respect of the
Company, or relating to an Award intended by the Committee to qualify as “performance-based
compensation” within the meaning of section 162(m) of the Code and regulations thereunder, may be
taken either (i) by a subcommittee, designated by the Committee, composed solely of two or more
Qualified Members, or (ii) by the Committee but with each such member who is not a Qualified Member
abstaining or recusing himself or herself from such action; provided, however,
that, upon such abstention or recusal, the Committee remains composed solely of two or more
Qualified Members. Such action, authorized by such a subcommittee or by the Committee upon the
abstention or recusal of such non-Qualified Member(s), shall be the action of the Committee for
purposes of this Plan. Any action of the Committee shall be final, conclusive and binding on all
persons, including the Company, its Subsidiaries, stockholders, Participants, Beneficiaries, and
transferees under Subsection 10(a) hereof or other persons claiming rights from or through a
Participant. The express grant of any specific power to the Committee, and the taking of any
action by the Committee, shall not be construed as limiting any power or authority of the
Committee. The Committee may delegate to officers or managers of the Company or any Subsidiary, or
committees thereof, the authority, subject to such terms as the Committee shall determine, to
perform such functions, including administrative functions, as the Committee may determine, to the
extent that such delegation will not result in the loss of an exemption under Rule 16b-3(d)(1) for
Awards granted to Participants subject to section 16 of the Exchange Act in respect of the Company
and will not cause Awards intended to qualify as “performance-based compensation” under section
162(m) of the Code to fail to so qualify.

          (c) Limitation of Liability. The Committee and each member thereof shall be entitled
to, in good faith, rely or act upon any report or other information furnished to him or her by any
officer or employee of the Company or a Subsidiary, the Company’s legal counsel,

6

 

independent auditors, consultants or any other agents assisting in the administration of this
Plan. Members of the Committee and any officer or employee of the Company or a Subsidiary acting
at the direction or on behalf of the Committee shall not be personally liable for any action or
determination taken or made in good faith with respect to this Plan, and shall, to the fullest
extent permitted by law, be indemnified and held harmless by the Company with respect to any such
action or determination.

     4. Stock Subject to Plan.

          (a) Overall Number of Shares Available for Delivery. Subject to adjustment in a
manner consistent with any adjustment made pursuant to Section 9, the total number of shares of
Stock reserved and available for issuance in connection with Awards under this Plan shall not
exceed 4,500,000 shares, and the maximum number of shares that may be issued under both this Plan
and the Company’s 2005 Stock Incentive Plan shall be limited to 6,565,000.

          (b) Application of Limitation to Grants of Awards. No Award may be granted if the
number of shares of Stock to be delivered in connection with such Award exceeds the number of
shares of Stock remaining available under this Plan minus the number of shares of Stock issuable in
settlement of or relating to then-outstanding Awards. The Committee may adopt reasonable counting
procedures to ensure appropriate counting, avoid double counting (as, for example, in the case of
tandem or substitute awards) and make adjustments if the number of shares of Stock actually
delivered differs from the number of shares previously counted in connection with an Award.

          (c) Availability of Shares Not Issued under Awards. Shares of Stock subject to an
Award under this Plan that expire or are canceled, forfeited, settled in cash or otherwise
terminated without an issuance of shares to the Participant, including (i) the number of shares
withheld in payment of any exercise or purchase price of an Award or taxes relating to Awards, and
(ii) the number of shares surrendered in payment of any exercise or purchase price of an Award or
taxes relating to any Award, will again be available for Awards under this Plan, except that if any
such shares could not again be available for Awards to a particular Participant under any
applicable law or regulation, such shares shall be available exclusively for Awards to Participants
who are not subject to such limitation.

          (d) Stock Offered. The shares to be delivered under the Plan shall be made available
from (i) authorized but unissued shares of Stock, (ii) Stock held in the treasury of the Company,
or (iii) previously issued shares of Stock reacquired by the Company, including shares purchased on
the open market.

     5. Eligibility; Per Person Award Limitations. Awards may be granted under this Plan only to
Persons who are Eligible Persons at the time of grant thereof or in connection with the severance
or retirement of Eligible Individuals. In each calendar year, during any part of which this Plan
is in effect, a Covered Employee may not be granted (a) Awards (other than Awards designated to be
paid only in cash or the settlement of which is not based on a number of shares of Stock) relating
to more than 2,000,000 shares of Stock, subject to adjustment in a manner consistent with any
adjustment made pursuant to Section 9 and (b) Awards designated to

7

 

be paid only in cash, or the settlement of which is not based on a number of shares of Stock,
having a value determined on the date of grant in excess of $5,000,000.00.

     6. Specific Terms of Awards.

          (a) General. Awards may be granted on the terms and conditions set forth in this
Section 6. In addition, the Committee may impose on any Award or the exercise thereof, at the date
of grant or thereafter (subject to Subsection 10(c)), such additional terms and conditions, not
inconsistent with the provisions of this Plan, as the Committee shall determine, including terms
requiring forfeiture of Awards in the event of termination of employment by the Participant, or
termination of the Participant’s service relationship with the Company, and terms permitting a
Participant to make elections relating to his or her Award. The Committee shall retain full power
and discretion to accelerate, waive or modify, at any time, any term or condition of an Award that
is not mandatory under this Plan; provided, however, that the Committee shall not
have any discretion to accelerate, waive or modify any term or condition of an Award that is
intended to qualify as “performance-based compensation” for purposes of section 162(m) of the Code
if such discretion would cause the Award to not so qualify.

          (b) Options. The Committee is authorized to grant Options to Participants on the
following terms and conditions:

               (i) Exercise Price. Each Option agreement shall state the exercise price per share of
Stock (the “Exercise Price”); provided, however, that the Exercise Price per share
of Stock subject to an ISO shall not be less than the greater of (A) the par value per share of the
Stock or (B) 100% of the Fair Market Value per share of the Stock as of the date of grant of the
Option (or in the case of an individual who owns stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the Company or its parent or any subsidiary, 110%
of the Fair Market Value per share of the Stock on the date of grant.

               (ii) Time and Method of Exercise. The Committee shall determine the time or times at
which or the circumstances under which an Option may be exercised in whole or in part (including
based on achievement of performance goals and/or future service requirements), the methods by which
such exercise price may be paid or deemed to be paid, the form of such payment, including without
limitation cash, Stock, other Awards or awards granted under other plans of the Company or any
Subsidiary, or other property (including notes or other contractual obligations of Participants to
make payment on a deferred basis), and the methods by or forms in which Stock will be delivered or
deemed to be delivered to Participants, including, but not limited to, the delivery of Restricted
Stock subject to Subsection 6(d). In the case of an exercise whereby the Exercise Price is paid
with Stock, such Stock shall be valued as of the date of exercise.

               (iii) ISOs. The terms of any ISO granted under this Plan shall comply in all respects
with the provisions of section 422 of the Code. Anything in this Plan to the contrary
notwithstanding, no term of this Plan relating to ISOs (including any SAR in tandem therewith)
shall be interpreted, amended or altered, nor shall any discretion or authority granted under this
Plan be exercised, so as to disqualify either this Plan or any ISO under section 422 of the Code,
unless the Participant has first requested the change that will result in such

8

 

disqualification. ISOs shall not be granted more than ten years after the earlier of the
adoption of this Plan or the approval of this Plan by the Company’s stockholders. Notwithstanding
the foregoing, the Fair Market Value of shares of Stock subject to an ISO and the aggregate Fair
Market Value of shares of stock of any parent or Subsidiary corporation (within the meaning of
sections 424(e) and (f) of the Code) subject to any other ISO (within the meaning of section 422 of
the Code)) of the Company or a parent or Subsidiary corporation (within the meaning of sections
424(e) and (f) of the Code) that first becomes purchasable by a Participant in any calendar year
may not (with respect to that Participant) exceed $100,000, or such other amount as may be
prescribed under section 422 of the Code or applicable regulations or rulings from time to time.
As used in the previous sentence, Fair Market Value shall be determined as of the date the ISOs are
granted. Failure to comply with this provision shall not impair the enforceability or
exercisability of any Option, but shall cause the excess amount of shares to be reclassified in
accordance with the Code.

          (c) Stock Appreciation Rights. The Committee is authorized to grant SARs to
Participants on the following terms and conditions:

               (i) Right to Payment. An SAR shall confer on the Participant to whom it is granted a
right to receive, upon exercise thereof, the excess of (A) the Fair Market Value of one share of
Stock on the date of exercise over (B) the grant price of the SAR as determined by the Committee.

               (ii) Rights Related to Options. An SAR granted in connection with an Option shall
entitle a Participant, upon exercise, to surrender that Option or any portion thereof, to the
extent unexercised, and to receive payment of an amount computed pursuant to Subsection
6(c)(ii)(B). That Option shall then cease to be exercisable to the extent surrendered. SARs
granted in connection with an Option shall be subject to the terms of the Award agreement governing
the Option, which shall comply with the following provisions in addition to those applicable to
Options:

                    (A) An SAR granted in connection with an Option shall be exercisable only at such time or
times and only to the extent that the related Option is exercisable.

                    (B) Upon the exercise of an SAR related to an Option, a Participant shall be entitled to
receive payment from the Company of an amount determined by multiplying:

                         (1) the difference obtained by subtracting the exercise price of a share of Stock specified in
the related Option from the Fair Market Value of a share of Stock on the date of exercise of the
SAR, by

                         (2) the number of shares as to which that SAR has been exercised.

               (iii) Right Without Option. An SAR granted independent of an Option shall be
exercisable as determined by the Committee and set forth in the Award agreement governing the SAR,
which Award agreement shall comply with the following provisions:

9

 

                    (A) Each Award agreement shall state the total number of shares of Stock to which the SAR
relates.

                    (B) Each Award agreement shall state the time or periods in which the right to exercise the
SAR or a portion thereof shall vest and the number of shares of Stock for which the right to
exercise the SAR shall vest at each such time or period.

                    (C) Each Award agreement shall state the date at which the SARs shall expire if not previously
exercised.

                    (D) Each SAR shall entitle a participant, upon exercise thereof, to receive payment of an
amount determined by multiplying:

                         (1) the difference obtained by subtracting the Fair Market Value of a share of Stock on the
date of grant of the SAR from the Fair Market Value of a share of Stock on the date of exercise of
that SAR, by

                         (2) the number of shares as to which the SAR has been exercised.

               (iv) Terms. Except as otherwise provided herein, the Committee shall determine at the
date of grant or thereafter, the time or times at which and the circumstances under which an SAR
may be exercised in whole or in part (including based on achievement of performance goals and/or
future service requirements), the method of exercise, method of settlement, form of consideration
payable in settlement, method by or forms in which Stock will be delivered or deemed to be
delivered to Participants, whether or not an SAR shall be in tandem or in combination with any
other Award, and any other terms and conditions of any SAR. SARs may be either freestanding or in
tandem with other Awards.

          (d) Restricted Stock. The Committee is authorized to grant Restricted Stock to
Participants on the following terms and conditions:

               (i) Grant and Restrictions. Restricted Stock shall be subject to such restrictions on
transferability, risk of forfeiture and other restrictions, if any, as the Committee may impose,
which restrictions may lapse separately or in combination at such times, under such circumstances
(including based on achievement of performance goals and/or future service requirements), in such
installments or otherwise, as the Committee may determine at the date of grant or thereafter.
During the restricted period applicable to the Restricted Stock, the Restricted Stock may not be
sold, transferred, pledged, hypothecated, margined or otherwise encumbered by the Participant.

               (ii) Certificates for Stock. Restricted Stock granted under this Plan may be
evidenced in such manner as the Committee shall determine. If certificates representing Restricted
Stock are registered in the name of the Participant, the Committee may require that such
certificates bear an appropriate legend referring to the terms, conditions and restrictions
applicable to such Restricted Stock, that the Company retain physical possession of the
certificates, and that the Participant deliver a stock power to the Company, endorsed in blank,
relating to the Restricted Stock.

10

 

               (iii) Dividends and Splits. As a condition to the grant of an Award of Restricted
Stock, the Committee may require or permit a Participant to elect that any cash dividends paid on a
share of Restricted Stock be automatically reinvested in additional shares of Restricted Stock or
applied to the purchase of additional Awards under this Plan. Unless otherwise determined by the
Committee, Stock distributed in connection with a Stock split or Stock dividend, and other property
distributed as a dividend, shall be subject to restrictions and a risk of forfeiture to the same
extent as the Restricted Stock with respect to which such Stock or other property has been
distributed.

          (e) Restricted Stock Units. The Committee is authorized to grant Restricted Stock
Units to Participants, which are rights to receive Stock or cash, as determined by the Committee,
at the end of a specified deferral period, subject to the following terms and conditions:

               (i) Award and Restrictions. Settlement of an Award of Restricted Stock Units shall
occur upon expiration of the deferral period specified for such Restricted Stock Unit by the
Committee (or, if permitted by the Committee, as elected by the Participant). In addition,
Restricted Stock Units shall be subject to such restrictions (which may include a risk of
forfeiture) as the Committee may impose, if any, which restrictions may lapse at the expiration of
the deferral period or at earlier specified times (including based on achievement of performance
goals and/or future service requirements), separately or in combination, in installments or
otherwise, as the Committee may determine. Restricted Stock Units shall be satisfied by the
delivery of cash or Stock in the amount equal to the Fair Market Value of the specified number of
shares of Stock covered by the Restricted Stock Units, or a combination thereof, as determined by
the Committee at the date of grant or thereafter.

               (ii) Dividend Equivalents. Unless otherwise determined by the Committee at date of
grant, Dividend Equivalents on the specified number of shares of Stock covered by an Award of
Restricted Stock Units shall be either (A) paid with respect to such Restricted Stock Units on the
dividend payment date in cash or in shares of unrestricted Stock having a Fair Market Value equal
to the amount of such dividends, or (B) deferred with respect to such Restricted Stock Units and
the amount or value thereof automatically deemed reinvested in additional Restricted Stock Units,
other Awards or other investment vehicles, as the Committee shall determine or permit the
Participant to elect.

          (f) Bonus Stock and Awards in Lieu of Obligations. The Committee is authorized to
grant Stock as a bonus, or to grant Stock or other Awards in lieu of obligations to pay cash or
deliver other property under this Plan or under other plans or compensatory arrangements, provided
that, in the case of Participants subject to section 16 of the Exchange Act, the amount of such
grants remains within the discretion of the Committee to the extent necessary to ensure that
acquisitions of Stock or other Awards are exempt from liability under section 16(b) of the Exchange
Act. Stock or Awards granted hereunder shall be subject to such other terms as shall be determined
by the Committee. In the case of any grant of Stock to an officer of the Company or a Subsidiary
in lieu of salary or other cash compensation, the number of shares granted in place of such
compensation shall be reasonable, as determined by the Committee.

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          (g) Dividend Equivalents. The Committee is authorized to grant Dividend Equivalents
to a Participant, entitling the Participant to receive cash, Stock, other Awards, or other property
equal in value to dividends paid with respect to a specified number of shares of Stock, or other
periodic payments. Dividend Equivalents may be awarded on a free-standing basis or in connection
with another Award. The Committee may provide that Dividend Equivalents shall be paid or
distributed when accrued or shall be deemed to have been reinvested in additional Stock, Awards, or
other investment vehicles, and subject to such restrictions on transferability and risks of
forfeiture, as the Committee may specify.

          (h) Other Stock-Based Awards. The Committee is authorized, subject to limitations
under applicable law, to grant to Participants such other Awards that may be denominated or payable
in, valued in whole or in part by reference to, or otherwise based on, or related to, Stock, as
deemed by the Committee to be consistent with the purposes of this Plan, including without
limitation convertible or exchangeable debt securities, other rights convertible or exchangeable
into Stock, purchase rights for Stock, Awards with value and payment contingent upon performance of
the Company or any other factors designated by the Committee, and Awards valued by reference to the
book value of Stock or the value of securities of or the performance of specified Subsidiaries.
The Committee shall determine the terms and conditions of such Awards. Stock delivered pursuant to
an Award in the nature of a purchase right granted under this Subsection 6(h) shall be purchased
for such consideration, paid for at such times, by such methods, and in such forms, including,
without limitation, cash, Stock, other Awards, or other property, as the Committee shall determine.
Cash awards, as an element of or supplement to any other Award under this Plan, may also be
granted pursuant to this Subsection 6(h).

     7. Certain Provisions Applicable to Awards.

          (a) Termination of Employment. Except as provided herein, the treatment of an Award
upon a termination of employment or any other service relationship by and between a Participant and
the Company or any Subsidiary shall be specified in the agreement controlling such Award.

          (b) Stand-Alone, Additional, Tandem, and Substitute Awards. Awards granted under this
Plan may, in the discretion of the Committee, be granted either alone or in addition to, in tandem
with, or in substitution or exchange for, any other Award or any award granted under another plan
of the Company, any Subsidiary, or any business entity to be acquired by the Company or a
Subsidiary, or any other right of a Participant to receive payment from the Company or any
Subsidiary. Such additional, tandem and substitute or exchange Awards may be granted at any time.
If an Award is granted in substitution or exchange for another Award, the Committee shall require
the surrender of such other Award in consideration for the grant of the new Award. In addition,
Awards may be granted in lieu of cash compensation, including in lieu of cash amounts payable under
other plans of the Company or any Subsidiary, in which the value of Stock subject to the Award is
equivalent in value to the cash compensation, or in which the exercise price, grant price or
purchase price of the Award in the nature of a right that may be exercised is equal to the Fair
Market Value of the underlying Stock minus the value of the cash compensation surrendered.

12

 

          (c) Term of Awards. Except as specified herein, the term of each Award shall be for
such period as may be determined by the Committee; provided, however, that in no
event shall the term of any Option or SAR exceed a period of ten years (or such shorter term as may
be required in respect of an ISO under section 422 of the Code).

          (d) Form and Timing of Payment under Awards; Deferrals. Subject to the terms of this
Plan and any applicable Award agreement, payments to be made by the Company or a Subsidiary upon
the exercise of an Option or other Award or settlement of an Award may be made in such forms as the
Committee shall determine, including without limitation cash, Stock, other Awards or other
property, and may be made in a single payment or transfer, in installments, or on a deferred basis.
Except as otherwise provided herein, the settlement of any Award may be accelerated, and cash paid
in lieu of Stock in connection with such settlement, in the discretion of the Committee or upon
occurrence of one or more specified events (in addition to a Change in Control). Installment or
deferred payments may be required by the Committee (subject to Subsection 10(c) of this Plan,
including the consent provisions thereof in the case of any deferral of an outstanding Award not
provided for in the original Award agreement) or permitted at the election of the Participant on
terms and conditions established by the Committee. Payments may include, without limitation,
provisions for the payment or crediting of reasonable interest on installment or deferred payments
or the grant or crediting of Dividend Equivalents or other amounts in respect of installment or
deferred payments denominated in Stock. Any deferral shall only be allowed as is provided in a
separate deferred compensation plan adopted by the Company. This Plan shall not constitute an
“employee benefit plan” for purposes of section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended.

          (e) Exemptions from Section 16(b) Liability. It is the intent of the Company that the
grant of any Awards to or other transaction by a Participant who is subject to section 16 of the
Exchange Act shall be exempt from such section pursuant to an applicable exemption (except for
transactions acknowledged in writing to be non-exempt by such Participant). Accordingly, if any
provision of this Plan or any Award agreement does not comply with the requirements of Rule 16b-3
as then applicable to any such transaction, such provision shall be construed or deemed amended to
the extent necessary to conform to the applicable requirements of Rule 16b-3 so that such
Participant shall avoid liability under section 16(b) of the Exchange Act.

          (f) Non-Competition Agreement. Each Participant to whom an Award is granted under
this Plan may be required to agree in writing as a condition to the granting of such Award not to
engage in conduct in competition with the Company or any of its Subsidiaries for a period after the
termination of such Participant’s employment with the Company and its Subsidiaries as determined by
the Committee.

     8. Performance and Annual Incentive Awards.

          (a) Performance Conditions. The right of a Participant to exercise or receive a grant
or settlement of any Award, and the timing thereof, may be subject to such performance conditions
as may be specified by the Committee. The Committee may use such business criteria and other
measures of performance as it may deem appropriate in establishing any performance conditions, and
may exercise its discretion to reduce or increase the amounts

13

 

payable under any Award subject to performance conditions, except as limited under Subsections
8(b) and 8(c) hereof in the case of a Performance Award or Annual Incentive Award intended to
qualify under section 162(m) of the Code.

          (b) Performance Awards Granted to Designated Covered Employees. If the Committee
determines that a Performance Award to be granted to an Eligible Person who is designated by the
Committee as likely to be a Covered Employee should qualify as “performance-based compensation” for
purposes of section 162(m) of the Code, the grant, exercise and/or settlement of such Performance
Award may be contingent upon achievement of preestablished performance goals and other terms set
forth in this Subsection 8(b).

               (i) Performance Goals Generally. The performance goals for such Performance Awards
shall consist of one or more business criteria or individual performance criteria and a targeted
level or levels of performance with respect to each of such criteria, as specified by the Committee
consistent with this Subsection 8(b). Performance goals shall be objective and shall otherwise
meet the requirements of section 162(m) of the Code and regulations thereunder (including Treasury
Regulation §1.162-27 and successor regulations thereto), including the requirement that the level
or levels of performance targeted by the Committee result in the achievement of performance goals
being “substantially uncertain.” The Committee may determine that such Performance Awards shall be
granted, exercised, and/or settled upon achievement of any one performance goal or that two or more
of the performance goals must be achieved as a condition to grant, exercise and/or settlement of
such Performance Awards. Performance goals may differ for Performance Awards granted to any one
Participant or to different Participants.

               (ii) Business and Individual Performance Criteria

                    (A) Business Criteria. One or more of the following business criteria for the
Company, on a consolidated basis, and/or for specified Subsidiaries or business or geographical
units of the Company (except with respect to the total stockholder return criteria), shall be used
by the Committee in establishing performance goals for such Performance Awards: (1) earnings per
share; (2) revenues, (3) increase in revenues; (4) increase in cash flow; (5) increase in cash flow
return; (6) return on net assets; (7) return on assets; (8) return on investment; (9) return on
capital; (10) return on equity; (11) economic value added; (12) operating margin; (13) contribution
margin; (14) net income before taxes; (15) net income after taxes; (16) pretax earnings; (17)
pretax earnings before interest, depreciation and amortization; (18) pretax operating earnings
after interest expense and before incentives, service fees, and extraordinary or special items;
(19) total stockholder return; (20) debt reduction; (21) market share; (22) change in the Fair
Market Value of the Stock; and (23) any of the above goals determined on an absolute or relative
basis or as compared to the performance of a published or special index deemed applicable by the
Committee including, but not limited to, the Standard & Poor’s 500 Stock Index or a group of
comparable companies. One or more of the foregoing business criteria shall also be exclusively
used in establishing performance goals for Annual Incentive Awards granted to a Covered Employee
under Subsection 8(c) hereof.

                    (B) Individual Performance Criteria. The grant, exercise and/or settlement of
Performance Awards may also be contingent upon individual performance goals

14

 

established by the Committee. If required for compliance with section 162(m) of the Code,
such criteria shall be approved by the stockholders of the Company.

               (iii) Performance Period; Timing for Establishing Performance Goals. Achievement of
performance goals in respect of such Performance Awards shall be measured over a performance period
of up to ten years, as specified by the Committee. Performance goals shall be established not
later than 90 days after the beginning of any performance period applicable to such Performance
Awards, or at such other date as may be required or permitted for “performance-based compensation”
under section 162(m) of the Code.

               (iv) Performance Award Pool. The Committee may establish a Performance Award pool,
which shall be an unfunded pool, for purposes of measuring performance of the Company in connection
with Performance Awards. The amount of such Performance Award pool shall be based upon the
achievement of a performance goal or goals based on one or more of the criteria set forth in
Subsection 8(b)(ii) hereof during the given performance period, as specified by the Committee in
accordance with Subsection 8(b)(iii) hereof. The Committee may specify the amount of the
Performance Award pool as a percentage of any of such criteria, a percentage thereof in excess of a
threshold amount, or as another amount which need not bear a strictly mathematical relationship to
such criteria.

               (v) Settlement of Performance Awards; Other Terms. After the end of each performance
period, the Committee shall determine the amount, if any, of (A) the Performance Award pool, and
the maximum amount of the potential Performance Award payable to each Participant in the
Performance Award pool, or (B) the amount of the potential Performance Award otherwise payable to
each Participant. Settlement of such Performance Awards shall be in cash, Stock, other Awards or
other property, in the discretion of the Committee. The Committee may, in its discretion, reduce
the amount of a settlement otherwise to be made in connection with such Performance Awards, but may
not exercise discretion to increase any such amount payable to a Covered Employee in respect of a
Performance Award subject to this Subsection 8(b). The Committee shall specify the circumstances
in which such Performance Awards shall be paid or forfeited in the event of termination of
employment by the Participant prior to the end of a performance period or settlement of Performance
Awards.

          (c) Annual Incentive Awards Granted to Designated Covered Employees. If the Committee
determines that an Annual Incentive Award to be granted to an Eligible Person who is designated by
the Committee as likely to be a Covered Employee should qualify as “performance-based compensation”
for purposes of section 162(m) of the Code, the grant, exercise and/or settlement of such Annual
Incentive Award shall be contingent upon achievement of preestablished performance goals and other
terms set forth in this Subsection 8(c).

               (i) Potential Annual Incentive Awards. Not later than the end of the 90th day of each
applicable year, or at such other date as may be required or permitted in the case of Awards
intended to be “performance-based compensation” under section 162(m) of the Code, the Committee
shall determine the Eligible Persons who will potentially receive Annual Incentive Awards, and the
amounts potentially payable thereunder, for that fiscal year, either out of an Annual Incentive
Award pool established by such date under Subsection 8(c)(i) hereof or

15

 

as individual Annual Incentive Awards. The amount potentially payable, with respect to Annual
Incentive Awards, shall be based upon the achievement of a performance goal or goals based on one
or more of the business criteria set forth in Subsection 8(b)(ii) hereof in the given performance
year, as specified by the Committee.

               (ii) Annual Incentive Award Pool. The Committee may establish an Annual Incentive
Award pool, which shall be an unfunded pool, for purposes of measuring performance of the Company
in connection with Annual Incentive Awards. The amount of such Annual Incentive Award pool shall
be based upon the achievement of a performance goal or goals based on one or more of the business
criteria set forth in Subsection 8(b)(ii) hereof during the given performance period, as specified
by the Committee in accordance with Subsection 8(b)(iii) hereof. The Committee may specify the
amount of the Annual Incentive Award pool as a percentage of any of such business criteria, a
percentage thereof in excess of a threshold amount, or as another amount which need not bear a
strictly mathematical relationship to such business criteria.

               (iii) Payout of Annual Incentive Awards. After the end of each applicable year, the
Committee shall determine the amount, if any, of (A) the Annual Incentive Award pool, and the
maximum amount of the potential Annual Incentive Award payable to each Participant in the Annual
Incentive Award pool, or (A) the amount of the potential Annual Incentive Award otherwise payable
to each Participant. The Committee may, in its discretion, determine that the amount payable to
any Participant as a final Annual Incentive Award shall be reduced from the amount of his or her
potential Annual Incentive Award, including a determination to make no final Award whatsoever, but
may not exercise discretion to increase any such amount in the case of an Annual Incentive Award
intended to qualify under section 162(m) of the Code. The Committee shall specify the
circumstances in which an Annual Incentive Award shall be paid or forfeited in the event of
termination of employment by the Participant prior to the end of the applicable year or settlement
of such Annual Incentive Award.

          (d) Written Determinations. All determinations by the Committee as to the
establishment of performance goals, the amount of any Performance Award pool or potential
individual Performance Awards, the achievement of performance goals relating to Performance Awards
under Subsection 8(b), the amount of any Annual Incentive Award pool or potential individual Annual
Incentive Awards, the achievement of performance goals relating to Annual Incentive Awards under
Subsection 8(c) shall be made in writing in the case of any Award intended to qualify under section
162(m) of the Code. The Committee may not delegate any responsibility relating to such Performance
Awards or Annual Incentive Awards.

          (e) Status of Subsection 8(b) and Subsection 8(c) Awards under Section 162(m) of the
Code. It is the intent of the Company that Performance Awards and Annual Incentive Awards
under Subsections 8(b) and 8(c) hereof granted to persons who are designated by the Committee as
likely to be Covered Employees within the meaning of section 162(m) of the Code and regulations
thereunder (including Treasury Regulation §1.162-27 and successor regulations thereto) shall, if so
designated by the Committee, constitute “performance-based compensation” within the meaning of
section 162(m) of the Code and regulations thereunder. Accordingly, the terms of Subsections 8(b),
(c), (d) and (e), including the definitions of Covered Employee and other terms used therein, shall
be interpreted in a manner consistent with section

16

 

162(m) of the Code and regulations thereunder. The foregoing notwithstanding, because the
Committee cannot determine with certainty whether a given Participant will be a Covered Employee
with respect to a fiscal year that has not yet been completed, the term Covered Employee as used
herein shall mean only a person designated by the Committee, at the time of grant of Performance
Awards or an Annual Incentive Award, who is likely to be a Covered Employee with respect to that
fiscal year. If any provision of this Plan as in effect on the date of adoption or any agreements
relating to Performance Awards or Annual Incentive Awards that are designated as intended to comply
with section 162(m) of the Code does not comply or is inconsistent with the requirements of section
162(m) of the Code or regulations thereunder, such provision shall be construed or deemed amended
to the extent necessary to conform to such requirements.

     9. Subdivision or Consolidation; Recapitalization; Change in Control; Reorganization.

          (a) Existence of Plans and Awards. The existence of this Plan and the Awards granted
hereunder shall not affect in any way the right or power of the Board or the stockholders of the
Company to make or authorize any adjustment, recapitalization, reorganization or other change in
the Company’s capital structure or its business, any merger or consolidation of the Company, any
issue of debt or equity securities ahead of or affecting Stock or the rights thereof, the
dissolution or liquidation of the Company or any sale, lease, exchange or other disposition of all
or any part of its assets or business or any other corporate act or proceeding.

          (b) Subdivision or Consolidation of Shares. The terms of an Award and the number of
shares of Stock authorized pursuant to Section 4 for issuance under the Plan shall be subject to
adjustment from time to time, in accordance with the following provisions:

               (i) If at any time, or from time to time, the Company shall subdivide as a whole (by a Stock
split, by the issuance of a distribution on Stock payable in Stock, or otherwise) the number of
shares of Stock then outstanding into a greater number of shares of Stock, then (A) the maximum
number of shares of Stock available in connection with the Plan or Awards as provided in Sections 4
and 5 shall be increased proportionately, and the kind of shares or other securities available for
the Plan shall be appropriately adjusted, (B) the number of shares of Stock (or other kind of
shares or securities) that may be acquired under any Award shall be increased proportionately, and
(C) the price (including the exercise price) for each share of Stock (or other kind of shares or
securities) subject to then outstanding Awards shall be reduced proportionately, without changing
the aggregate purchase price or value as to which outstanding Awards remain exercisable or subject
to restrictions.

               (ii) If at any time, or from time to time, the Company shall consolidate as a whole (by
reverse Stock split, or otherwise) the number of shares of Stock then outstanding into a lesser
number of shares of Stock, (A) the maximum number of shares of Stock available in connection with
the Plan or Awards as provided in Sections 4 and 5 shall be decreased proportionately, and the kind
of shares or other securities available for the Plan shall be appropriately adjusted, (B) the
number of shares of Stock (or other kind of shares or securities) that may be acquired under any
Award shall be decreased proportionately, and (C) the price

17

 

(including the exercise price) for each share of Stock (or other kind of shares or securities)
subject to then outstanding Awards shall be increased proportionately, without changing the
aggregate purchase price or value as to which outstanding Awards remain exercisable or subject to
restrictions.

               (iii) Whenever the number of shares of Stock subject to outstanding Awards and the price for
each share of Stock subject to outstanding Awards are required to be adjusted as provided in this
Subsection 9(b), the Committee shall promptly prepare, and deliver to each Participant, a notice
setting forth, in reasonable detail, the event requiring adjustment, the amount of the adjustment,
the method by which such adjustment was calculated, and the change in price and the number of
shares of Stock, other securities, cash, or property purchasable subject to each Award after giving
effect to the adjustments.

               (iv) Adjustments under Subsections 9(b)(i) and (ii) shall be made by the Committee, and its
determination as to what adjustments shall be made and the extent thereof shall be final, binding,
and conclusive. No fractional interest shall be issued under the Plan on account of any such
adjustments.

          (c) Corporate Recapitalization.

               (i) If the Company recapitalizes, reclassifies its capital stock, or otherwise changes its
capital structure (a “recapitalization”), the number and class of shares of Stock covered by an
Option or an SAR theretofore granted shall be adjusted so that such Option or SAR shall thereafter
cover the number and class of shares of stock and securities to which the holder would have been
entitled pursuant to the terms of the recapitalization if, immediately prior to the
recapitalization, the holder had been the holder of record of the number of shares of Stock then
covered by such Option or SAR and the share limitations provided in Sections 4 and 5 shall be
adjusted in a manner consistent with the recapitalization.

               (ii) In the event of changes in the outstanding Stock by reason of recapitalization,
reorganizations, mergers, consolidations, combinations, 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 9, any outstanding Awards and any agreements evidencing such Awards shall be subject
to adjustment by the Committee at its discretion as to the number and price of shares of Stock or
other consideration subject to such Awards. In the event of any such change in the outstanding
Stock, the share limitations provided in Sections 4 and 5 may be appropriately adjusted by the
Committee, whose determination shall be conclusive.

          (d) Additional Issuances. Except as hereinbefore expressly provided, the issuance by
the Company of shares of stock of any class or securities convertible into shares of stock of any
class, for cash, property, labor or services, upon direct sale, upon the exercise of rights or
warrants to subscribe therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, and in any case whether or not for fair value,
shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of
shares of Stock subject to Awards theretofore granted or the purchase price per share, if
applicable.

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          (e) Change in Control. Upon a Change in Control the Committee, acting in its sole
discretion without the consent or approval of any holder, shall affect one or more of the following
alternatives, which may vary among individual holders and which may vary among Options or SARs
(collectively “Grants”) held by any individual holder: (i) accelerate the time at which Grants then
outstanding may be exercised so that such Grants may be exercised in full for a limited period of
time on or before a specified date (before or after such Change in Control) fixed by the Committee,
after which specified date all unexercised Grants and all rights of holders thereunder shall
terminate, (ii) require the mandatory surrender to the Company by selected holders of some or all
of the outstanding Grants held by such holders (irrespective of whether such Grants are then
exercisable under the provisions of this Plan) as of a date, before or after such Change in
Control, specified by the Committee, in which event the Committee shall thereupon cancel such
Grants and pay to each holder an amount of cash per share equal to the excess, if any, of the
amount calculated in Subsection 9(f) (the “Change in Control Price”) of the shares subject to such
Grants over the exercise price(s) under such Grants for such shares, or (iii) make such adjustments
to Grants then outstanding as the Committee deems appropriate to reflect such Change in Control;
provided, however, that the Committee may determine in its sole discretion that no
adjustment is necessary to Grants then outstanding; provided, further,
however, that the right to make such adjustments shall include, but not be limited to, the
modification of Grants such that the holder of the Grant shall be entitled to purchase or receive
(in lieu of the total shares or other consideration that the holder would otherwise be entitled to
purchase or receive under the Grant (the “Total Consideration”)), the number of shares of stock,
other securities, cash or property to which the Total Consideration would have been entitled to in
connection with the Change in Control (A) (in the case of Options), at an aggregate exercise price
equal to the exercise price that would have been payable if the total shares had been purchased
upon the exercise of the Grant immediately before the consummation of the Change in Control and (B)
(in the case of SARs) if the SARs had been exercised immediately before the consummation of the
Change in Control.

          (f) Change in Control Price. The “Change in Control Price” shall equal the amount
determined in clause (i), (ii), (iii), (iv) or (v), whichever is applicable, as follows: (i) the
per share price offered to holders of Stock in any merger or consolidation, (ii) the per share
value of the Stock immediately before the Change in Control without regard to assets sold in the
Change in Control and assuming the Company has received the consideration paid for the assets in
the case of a sale of the assets, (iii) the amount distributed per share of Stock in a dissolution
transaction, (iv) the price per share offered to holders of Stock in any tender offer or exchange
offer whereby a Change in Control takes place, or (v) if such Change in Control occurs other than
pursuant to a transaction described in clauses (i), (ii), (iii), or (iv) of this Subsection 9(f),
the Fair Market Value per share of the shares that may otherwise be obtained with respect to such
Grants or to which such Grants track, as determined by the Committee as of the date determined by
the Committee to be the date of cancellation and surrender of such Grants. In the event that the
consideration offered to stockholders of the Company in any transaction described in this
Subsection 9(f) or Subsection 9(e) consists of anything other than cash, the Committee shall
determine the fair cash equivalent of the portion of the consideration offered which is other than
cash.

19

 

     10. General Provisions.

          (a) Transferability.

               (i) Permitted Transferees. The Committee may, in its discretion, permit a Participant
to transfer all or any portion of an Option, or authorize all or a portion of an Option to be
granted to an Eligible Person to be on terms which permit transfer by such Participant; provided
that, in either case the transferee or transferees must be any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive
relationships, in each case with respect to the Participant, any person sharing the Participant’s
household (other than a tenant or employee of the Company), a trust in which these persons have
more than fifty percent of the beneficial interest, a foundation in which these persons (or the
Participant) control the management of assets, or any other entity in which these persons (or the
Participant) own more than fifty percent of the voting interests (collectively, “Permitted
Transferees”); provided further that, (X) there may be no consideration for any such transfer and
(Y) subsequent transfers of Options transferred as provided above shall be prohibited except
subsequent transfers back to the original holder of the Option and transfers to other Permitted
Transferees of the original holder. Agreements evidencing Options with respect to which such
transferability is authorized at the time of grant must be approved by the Committee, and must
expressly provide for transferability in a manner consistent with this Subsection 10(a)(i).

               (ii) Qualified Domestic Relations Orders. An Option, Stock Appreciation Right,
Restricted Stock Unit Award, Restricted Stock Award or other Award may be transferred, to a
Permitted Transferee, pursuant to a domestic relations order entered or approved by a court of
competent jurisdiction upon delivery to the Company of written notice of such transfer and a
certified copy of such order.

               (iii) Other Transfers. Except as expressly permitted by Subsections 10(a)(i) and
10(a)(ii), Awards shall not be transferable other than by will or the laws of descent and
distribution. Notwithstanding anything to the contrary in this Section 10, an Incentive Stock
Option shall not be transferable other than by will or the laws of descent and distribution.

               (iv) Effect of Transfer. Following the transfer of any Award as contemplated by
Subsections 10(a)(i), 10(a)(ii) and 10(a)(iii), (A) such Award shall continue to be subject to the
same terms and conditions as were applicable immediately prior to transfer, provided that the term
“Participant” shall be deemed to refer to the Permitted Transferee, the recipient under a qualified
domestic relations order, or the estate or heirs of a deceased Participant, as applicable, to the
extent appropriate to enable the Participant to exercise the transferred Award in accordance with
the terms of this Plan and applicable law and (B) the provisions of the Award relating to
exercisability shall continue to be applied with respect to the original Participant and, following
the occurrence of any applicable events described therein the Awards shall be exercisable by the
Permitted Transferee, the recipient under a qualified domestic relations order, or the estate or
heirs of a deceased Participant, as applicable, only to the extent and for the periods that would
have been applicable in the absence of the transfer.

20

 

               (v) Procedures and Restrictions. Any Participant desiring to transfer an Award as
permitted under Subsections 10(a)(i), 10(a)(ii) or 10(a)(iii) shall make application therefor in
the manner and time specified by the Committee and shall comply with such other requirements as the
Committee may require to assure compliance with all applicable securities laws. The Committee
shall not give permission for such a transfer if (A) it would give rise to short swing liability
under section 16(b) of the Exchange Act or (B) it may not be made in compliance with all applicable
federal, state and foreign securities laws.

               (vi) Registration. To the extent the issuance to any Permitted Transferee of any
shares of Stock issuable pursuant to Awards transferred as permitted in this Subsection 10(a) is
not registered pursuant to the effective registration statement of the Company generally covering
the shares to be issued pursuant to this Plan to initial holders of Awards, the Company shall not
have any obligation to register the issuance of any such shares of Stock to any such transferee.

          (b) Taxes. The Company and any Subsidiary is authorized to withhold from any Award
granted, or any payment relating to an Award under this Plan, including from a distribution of
Stock, amounts of withholding and other taxes due or potentially payable in connection with any
transaction involving an Award, and to take such other action as the Committee may deem advisable
to enable the Company and Participants to satisfy obligations for the payment of withholding taxes
and other tax obligations relating to any Award. This authority shall include authority to
withhold or receive Stock or other property and to make cash payments in respect thereof in
satisfaction of a Participant’s tax obligations, either on a mandatory or elective basis in the
discretion of the Committee.

          (c) Changes to this Plan and Awards. The Board may amend, alter, suspend, discontinue
or terminate this Plan or the Committee’s authority to grant Awards under this Plan without the
consent of stockholders or Participants, except that any amendment or alteration to this Plan,
including any increase in any share limitation, shall be subject to the approval of the Company’s
stockholders not later than the annual meeting next following such Board action if such stockholder
approval is required by any federal or state law or regulation or the rules of any stock exchange
or automated quotation system on which the Stock may then be listed or quoted, and the Board may
otherwise, in its discretion, determine to submit other such changes to this Plan to stockholders
for approval; provided, however, that, without the consent of an affected
Participant, no such Board action may materially and adversely affect the rights of such
Participant under any previously granted and outstanding Award. The Committee may waive any
conditions or rights under, or amend, alter, suspend, discontinue or terminate any Award
theretofore granted and any Award agreement relating thereto, except as otherwise provided in this
Plan; provided, however, that, without the consent of an affected Participant, no
such Committee action may materially and adversely affect the rights of such Participant under such
Award.

          (d) Limitation on Rights Conferred under Plan. Neither this Plan nor any action taken
hereunder shall be construed as (i) giving any Eligible Person or Participant the right to continue
as an Eligible Person or Participant or in the employ or service of the Company or a Subsidiary,
(ii) interfering in any way with the right of the Company or a Subsidiary to terminate any Eligible
Person’s or Participant’s employment or service relationship at any time,

21

 

(iii) giving an Eligible Person or Participant any claim to be granted any Award under this
Plan or to be treated uniformly with other Participants or employees or other service providers, or
(iv) conferring on a Participant any of the rights of a stockholder of the Company unless and until
the Participant is duly issued or transferred shares of Stock in accordance with the terms of an
Award.

          (e) Unfunded Status of Awards. This Plan is intended to constitute an “unfunded” plan
for certain incentive awards.

          (f) Nonexclusivity of this Plan. Neither the adoption of this Plan by the Board nor
its submission to the stockholders of the Company for approval shall be construed as creating any
limitations on the power of the Board or a committee thereof to adopt such other incentive
arrangements as it may deem desirable, including incentive arrangements and awards which do not
qualify under section 162(m) of the Code. Nothing contained in this Plan shall be construed to
prevent the Company or any Subsidiary from taking any corporate action which is deemed by the
Company or such Subsidiary to be appropriate or in its best interest, whether or not such action
would have an adverse effect on this Plan or any Award made under this Plan. No employee,
beneficiary or other person shall have any claim against the Company or any Subsidiary as a result
of any such action.

          (g) Fractional Shares. No fractional shares of Stock shall be issued or delivered
pursuant to this Plan or any Award. The Committee shall determine whether cash, other Awards or
other property shall be issued or paid in lieu of such fractional shares or whether such fractional
shares or any rights thereto shall be forfeited or otherwise eliminated.

          (h) Severability. If any provision of this Plan is held to be illegal or invalid for
any reason, the illegality or invalidity shall not affect the remaining provisions hereof, but such
provision shall be fully severable and the Plan shall be construed and enforced as if the illegal
or invalid provision had never been included herein. If any of the terms or provisions of this
Plan or any Award agreement conflict with the requirements of Rule 16b-3 (as those terms or
provisions are applied to Eligible Persons who are subject to section 16(b) of the Exchange Act) or
section 422 of the Code (with respect to Incentive Stock Options), then those conflicting terms or
provisions shall be deemed inoperative to the extent they so conflict with the requirements of Rule
16b-3 (unless the Board or the Committee, as appropriate, has expressly determined that the Plan or
such Award should not comply with Rule 16b-3) or section 422 of the Code. With respect to
Incentive Stock Options, if this Plan does not contain any provision required to be included herein
under section 422 of the Code, that provision shall be deemed to be incorporated herein with the
same force and effect as if that provision had been set out at length herein; provided, further,
that, to the extent any Option that is intended to qualify as an Incentive Stock Option cannot so
qualify, that Option (to that extent) shall be deemed an Option not subject to section 422 of the
Code for all purposes of the Plan.

          (i) Governing Law. All questions arising with respect to the provisions of the Plan
and Awards shall be determined by application of the laws of the State of Delaware, without giving
effect to any conflict of law provisions thereof, except to the extent Delaware law is preempted by
federal law. The obligation of the Company to sell and deliver Stock hereunder

22

 

is subject to applicable federal and state laws and to the approval of any governmental
authority required in connection with the authorization, issuance, sale, or delivery of such Stock.

          (j) Conditions to Delivery of Stock. Nothing herein or in any Award granted hereunder
or any Award agreement shall require the Company to issue any shares with respect to any Award if
that issuance would, in the opinion of counsel for the Company, constitute a violation of the
Securities Act or any similar or superseding statute or statutes, any other applicable statute or
regulation, or the rules of any applicable securities exchange or securities association, as then
in effect. At the time of any exercise of an Option or Stock Appreciation Right, or at the time of
any grant of a Restricted Stock Award, Restricted Stock Unit, or other Award the Company may, as a
condition precedent to the exercise of such Option or Stock Appreciation Right or settlement of any
Restricted Stock Award, Restricted Stock Unit or other Award, require from the Participant (or in
the event of his or her death, his or her legal representatives, heirs, legatees, or distributees)
such written representations, if any, concerning the holder’s intentions with regard to the
retention or disposition of the shares of Stock being acquired pursuant to the Award and such
written covenants and agreements, if any, as to the manner of disposal of such shares as, in the
opinion of counsel to the Company, may be necessary to ensure that any disposition by that holder
(or in the event of the holder’s death, his or her legal representatives, heirs, legatees, or
distributees) will not involve a violation of the Securities Act or any similar or superseding
statute or statutes, any other applicable state or federal statute or regulation, or any rule of
any applicable securities exchange or securities association, as then in effect.

          (k) Plan Effective Date. This Plan has been adopted by the Board and will become
effective upon approval of the stockholders of the Company.

23

 

     Executed this 22nd day of March, 2007.

	 	 	 	 	 	 	 
	 	 	ORION MARINE GROUP, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 /s/ Mark R. Stauffer	 	 
	 

	 	Name:
	 	
 

Mark R. Stauffer
	 	 
	 

	 	Title:
	 	
 

CFO	 	 
	 

	 	 	 	 

	 	 

24exv10w12

 

ORION MARINE GROUP, INC.

LONG TERM INCENTIVE PLAN

STOCK OPTION AGREEMENT

     This Agreement is made and entered into as of the Date of Grant set forth in the Notice of
Grant of Stock Option (“Notice of Grant”) by and between Orion Marine Group, Inc., a Delaware
corporation (the “Company”), and you:

     WHEREAS, the Company, in order to induce you to enter into and continue in dedicated service
to the Company and to materially contribute to the success of the Company, agrees to grant you an
option to acquire an interest in the Company through the purchase of shares of Stock of the
Company;

     WHEREAS, the Company adopted the Orion Marine Group, Inc. Long Term Incentive Plan as it may
be amended from time to time (the “Plan”) under which the Company is authorized to grant Stock
Options to certain employees and service providers of the Company;

     WHEREAS, a copy of the Plan has been furnished to you and shall be deemed a part of this stock
option agreement (the “Agreement”) as if fully set forth herein and terms capitalized but not
defined herein shall have the meaning set forth in the Plan; and

     WHEREAS, you desire to accept the Option created pursuant to the Agreement.

     NOW, THEREFORE, in consideration of the mutual covenants set forth herein and for other
valuable consideration hereinafter set forth, the parties agree as follows:

     1. The Grant. Subject to the conditions set forth below, the Company hereby grants to
you, effective as of the Date of Grant set forth in the Notice of Grant, as a matter of separate
inducement and not in lieu of any salary or other compensation for your services for the Company,
the right and option to purchase (the “Option”), in accordance with the terms and conditions set
forth herein and in the Plan, an aggregate of the number of shares of Stock set forth in the Notice
of Grant (the “Option Shares”), at the Exercise Price set forth in the Notice of Grant.

     2. Exercise.

          (a) Option Shares shall be deemed “Nonvested Shares” unless and until they have become “Vested
Shares.” The Option shall in all events terminate at the close of business on the tenth (10)
anniversary of the date of this Agreement (the “Expiration Date”). Subject to other terms and
conditions set forth herein, the Option may be exercised in cumulative installments in accordance
with the vesting schedule set forth in the Notice of Grant, provided that you remain in the employ
of or a service provider to the Company or its Subsidiaries until the applicable dates set forth
therein.

          (b) Subject to the relevant provisions and limitations contained herein and in the Plan, you
may exercise the Option to purchase all or a portion of the applicable number of Vested Shares at
any time prior to the termination of the Option pursuant to this Option

1

 

Agreement. No less than 100 Vested Shares may be purchased at any one time unless the number
purchased is the total number of Vested Shares at that time purchasable under the Option. In no
event shall you be entitled to exercise the Option for any Nonvested Shares or for a fraction of a
Vested Share.

          (c) Any exercise by you of the Option shall be in writing addressed to the Secretary of the
Company at its principal place of business. Exercise of the Option shall be made by delivery to
the Company by you (or other person entitled to exercise the Option as provided hereunder) of (i)
an executed “Notice of Stock Option Exercise,” and (ii) payment of the aggregate purchase price for
shares purchased pursuant to the exercise.

          (d) Payment of the Exercise Price may be made, at your election, with the approval of the
Company, (i) in cash, by certified or official bank check or by wire transfer of immediately
available funds, (ii) by delivery to the Company of a number of shares of Stock having a Fair
Market Value as of the date of exercise equal to the Exercise Price, (iii) by the delivery of a
note, or (iv) by net issue exercise, pursuant to which the Company will issue to you a number of
shares of Stock as to which the Option is exercised, less a number of shares with a Fair Market
Value as of the date of exercise equal to the Exercise Price.

          (e) If you are on leave of absence for any reason, the Company may, in its sole discretion,
determine that you will be considered to still be in the employ of or providing services for the
Company, provided that rights to the Option will be limited to the extent to which those rights
were earned or vested when the leave or absence began.

          (f) The terms and provisions of the employment agreement, if any, between you and the Company
or any Subsidiary (the “Employment Agreement”) that relate to or affect the Option are incorporated
herein by reference. Notwithstanding the foregoing provisions of this Section 2 or Section 3, in
the event of any conflict or inconsistency between the terms and conditions of this Section 2 or
Section 3 and the terms and conditions of the Employment Agreement, the terms and conditions of the
Employment Agreement shall be controlling.

     3. Effect of Termination of Service on Exercisability. Except as provided in Sections
6 and 7 or an Employment Agreement, this Option may be exercised only while you continue to perform
services for the Company or any Subsidiary and will terminate and cease to be exercisable upon
termination of your service, except as follows:

          (a) Termination on Account of Disability. If your service with the Company or any
Subsidiary terminates by reason of disability (within the meaning of section 22(e)(3) of the Code),
this Option may be exercised by you (or your estate or the person who acquires this Option by will
or the laws of descent and distribution or otherwise by reason of your death) at any time during
the period ending on the earlier to occur of (i) the date that is one year following such
termination, or (ii) the Expiration Date, but only to the extent this Option was exercisable for
Vested Shares as of the date your service so terminates.

          (b) Termination on Account of Death. If you cease to perform services for the Company
or any Subsidiary due to your death, your estate, or the person who acquires this Option by will or
the laws of descent and distribution or otherwise by reason of your death, may

2

 

exercise this Option at any time during the period ending on the earlier to occur of (i) the
date that is one year following your death, or (ii) the Expiration Date, but only to the extent
this Option was exercisable for Vested Shares as of the date of your death.

          (c) Termination not for Cause. If your service with the Company or any Subsidiary
terminates for any reason other than as described in Sections 3(a) or (b), unless such service is
terminated for Cause (as defined below), this Option may be exercised by you at any time during the
period ending on the earlier to occur of (i) the date that is three months following your
termination, or (ii) the Expiration Date, or by your estate (or the person who acquires this Option
by will or the laws of descent and distribution or otherwise by reason of your death) during a
period of one year following your death if you die during such three-month period, but in each such
case only to the extent this Option was exercisable for Vested Shares as of the date of your
termination. “Cause” means “cause” as defined in your Employment Agreement, or in the absence of
such an agreement or such a definition, “Cause” will mean a determination by the Committee that you
(A) have engaged in personal dishonesty, willful violation of any law, rule, or regulation (other
than minor traffic violations or similar offenses), or breach of fiduciary duty involving personal
profit, (B) have failed to satisfactorily perform your duties and responsibilities for the Company
or any Affiliate, (C) have been convicted of, or plead nolo contendere to, any felony or a crime
involving moral turpitude, (D) have engaged in negligence or willful misconduct in the performance
of your duties, including but not limited to willfully refusing without proper legal reason to
perform your duties and responsibilities, (E) have materially breached any corporate policy or code
of conduct established by the Company or any Subsidiary as such policies or codes may be adopted
from time to time, (F) have violated the terms of any confidentiality, nondisclosure, intellectual
property, nonsolicitation, noncompetition, proprietary information or inventions agreement, or any
other agreement between you and the Company or any Subsidiary related to your service with the
Company or any Subsidiary, or (G) have engaged in conduct that is likely to have a deleterious
affect on the Company or any Subsidiary or their legitimate business interests, including but not
limited to their goodwill and public image.

     4. Transferability. The Option, and any rights or interests therein will be
transferable by you only to the extent approved by the Committee in conformance with Section 10(a)
of the Plan.

     5. Compliance with Securities Law. Notwithstanding any provision of this Agreement to
the contrary, the grant of the Option and the issuance of Stock will be subject to compliance with
all applicable requirements of federal, state, and foreign securities laws and with the
requirements of any stock exchange or market system upon which the Stock may then be listed. The
Option may not be exercised if the issuance of shares of Stock upon exercise would constitute a
violation of any applicable federal, state, or foreign securities laws or other law or regulations
or the requirements of any stock exchange or market system upon which the Stock may then be listed.
In addition, the Option may not be exercised unless (a) a registration statement under the
Securities Act of 1933, as amended (the “Act”), is at the time of exercise of the Option in effect
with respect to the shares issuable upon exercise of the Option or (b) in the opinion of legal
counsel to the Company, the shares issuable upon exercise of the Option may be issued in accordance
with the terms of an applicable exemption from the registration requirements of the Act. YOU ARE
CAUTIONED THAT THE OPTION MAY NOT BE

3

 

EXERCISED UNLESS THE FOREGOING CONDITIONS ARE SATISFIED. ACCORDINGLY, YOU MAY NOT BE ABLE TO
EXERCISE THE OPTION WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED. The inability of the Company to
obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s
legal counsel to be necessary to the lawful issuance and sale of any shares subject to the Option
will relieve the Company of any liability in respect of the failure to issue or sell such shares as
to which such requisite authority has not been obtained. As a condition to the exercise of the
Option, the Company may require you to satisfy any qualifications that may be necessary or
appropriate to evidence compliance with any applicable law or regulation and to make any
representation or warranty with respect to such compliance as may be requested by the Company.

     6. Extension if Exercise Prevented by Law. Notwithstanding Section 3, if the exercise
of the Option within the applicable time periods set forth in Section 3 is prevented by the
provisions of Section 5, the Option will remain exercisable until 30 days after the date you are
notified by the Company that the Option is exercisable, but in any event no later than the
Expiration Date. The Company makes no representation as to the tax consequences of any such
delayed exercise. You should consult with your own tax advisor as to the tax consequences of any
such delayed exercise.

     7. Extension if You are Subject to Section 16(b). Notwithstanding Section 3, if a
sale within the applicable time periods set forth in Section 3 of shares acquired upon the exercise
of the Option would subject you to suit under Section 16(b) of the Securities Exchange Act of 1934,
as amended, the Option will remain exercisable until the earliest to occur of (a) the 10th day
following the date on which a sale of such shares by you would no longer be subject to such suit,
(b) the 190th day after your termination of service with the Company and any Subsidiary, or (c) the
Expiration Date. The Company makes no representation as to the tax consequences of any such
delayed exercise. You should consult with your own tax advisor as to the tax consequences of any
such delayed exercise.

     8. Withholding Taxes. The Committee may, in its discretion, require you to pay to the
Company at the time of the exercise of an Option or thereafter, the amount that the Committee deems
necessary to satisfy the Company’s current or future obligation to withhold federal, state or local
income or other taxes that you incur by exercising an Option. In connection with such an event
requiring tax withholding, you may (a) direct the Company to withhold from the shares of Stock to
be issued to you the number of shares necessary to satisfy the Company’s obligation to withhold
taxes, that determination to be based on the shares’ Fair Market Value as of the date of exercise;
(b) deliver to the Company sufficient shares of Stock (based upon the Fair Market Value as of the
date of such delivery) to satisfy the Company’s tax withholding obligation; or (c) deliver
sufficient cash to the Company to satisfy its tax withholding obligations. If you elect to use a
Stock withholding feature you must make the election at the time and in the manner that the
Committee prescribes. The Committee may, at its sole option, deny your request to satisfy
withholding obligations through shares of Stock instead of cash. In the event the Committee
subsequently determines that the aggregate Fair Market Value (as determined above) of any shares of
Stock withheld or delivered as payment of any tax withholding obligation is insufficient to
discharge that tax withholding obligation, then you shall

4

 

pay to the Company, immediately upon the Committee’s request, the amount of that deficiency in
the form of payment requested by the Committee.

     9. Status of Stock. With respect to the status of the Stock, at the time of execution
of this Agreement you understand and agree to all of the following:

          (a) You understand that at the time of the execution of this Agreement the shares of Stock to
be issued upon exercise of this Option have not been registered under the Act or any state
securities law and that the Company does not currently intend to effect any such registration. In
the event exemption from registration under the Act is available upon an exercise of this Option,
you (or such other person permitted to exercise this Option if applicable), if requested by the
Company to do so, will execute and deliver to the Company in writing an agreement containing such
provisions as the Company may require to ensure compliance with applicable securities laws.

          (b) You agree that the shares of Stock that you may acquire by exercising this Option will be
acquired for investment without a view to distribution, within the meaning of the Act, and will not
be sold, transferred, assigned, pledged, or hypothecated in the absence of an effective
registration statement for the shares under the Act and applicable state securities laws or an
applicable exemption from the registration requirements of the Act and any applicable state
securities laws. You also agree that the shares of Stock that you may acquire by exercising this
Option will not be sold or otherwise disposed of in any manner that would constitute a violation of
any applicable securities laws, whether federal or state.

          (c) You agree that (i) the Company may refuse to register the transfer of the shares of Stock
purchased under this Option on the stock transfer records of the Company if such proposed transfer
would in the opinion of counsel satisfactory to the Company constitute a violation of any
applicable securities law and (ii) the Company may give related instructions to its transfer agent,
if any, to stop registration of the transfer of the shares of Stock purchased under this Option.

     10. Adjustments. The terms of the Option shall be subject to adjustment from time to
time, in accordance with the following provisions:

          (a) If at any time, or from time to time, the Company shall subdivide as a whole (by
reclassification, by a Stock split, by the issuance of a distribution on Stock payable in Stock or
otherwise) the number of shares of Stock then outstanding into a greater number of shares of Stock,
then (i) the number of shares of Stock (or other kind of securities) that may be acquired under the
Option shall be increased proportionately and (ii) the Exercise Price for each share of Stock (or
other kind of shares or securities) subject to the then outstanding Option shall be reduced
proportionately, without changing the aggregate purchase price or value as to which the outstanding
Option remains exercisable or subject to restrictions.

          (b) If at any time, or from time to time, the Company shall consolidate as a whole (by
reclassification, reverse Stock split or otherwise) the number of shares of Stock then outstanding
into a lesser number of shares of Stock, (i) the number of shares of Stock (or other kind of shares
or securities) that may be acquired under the Option shall be decreased

5

 

proportionately and (ii) the Exercise Price for each share of Stock (or other kind of shares
or securities) subject to the then outstanding Option shall be increased proportionately, without
changing the aggregate purchase price or value as to which the outstanding Option remains
exercisable or subject to restrictions.

          (c) Whenever the number of shares of Stock subject to the Option and the price for each share
of Stock subject to the Option are required to be adjusted as provided in this Section 6, the
Committee shall promptly prepare a notice setting forth, in reasonable detail, the event requiring
adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and
the change in price and the number of shares of Stock, other securities, cash, or property
purchasable by you pursuant to the exercise of the Option or subject to the Option after giving
effect to the adjustments. The Committee shall promptly give you such a notice.

          (d) Adjustments under this Section 10 shall be made by the Committee, and its determination as
to what adjustments shall be made and the extent thereof shall be final, binding, and conclusive.
No fractional interest shall be issued under the Plan on account of any such adjustments.

     11. Lock-Up Period. You hereby agrees that, if so requested by the Company or any
representative of the underwriters (the “Managing Underwriter”) in connection with any registration
of the offering of any securities of the Company under the Act, you will not sell or otherwise
transfer any Option Shares or other securities of the Company during the 180-day period (or such
other period as may be requested in writing by the Managing Underwriter and agreed to in writing by
the Company) (the “Market Standoff Period”) following the effective date of a registration
statement of the Company filed under the Act. Such restriction will apply only to the first
registration statement of the Company to become effective under the Act that includes securities to
be sold on behalf of the Company to the public in an underwritten public offering under the Act.
The Company may impose stop-transfer instructions with respect to securities subject to the
foregoing restrictions until the end of such Market Standoff Period.

     12. Stockholder Agreement. The Committee may, in its sole discretion, condition the
delivery of Stock pursuant to the exercise of this Option upon your entering into a stockholder
agreement in such form as approved from time to time by the Board.

     13. Legends. The Company may at any time place legends, referencing any restrictions
imposed on the shares pursuant to Sections 9 and 11 of this Agreement, and any applicable federal,
state or foreign securities law restrictions, on all certificates representing shares of Stock
subject to the provisions of this Agreement.

     14. Notice of Sales Upon Disqualifying Disposition of ISO. If the Option is
designated as an Incentive Stock Option in the Notice of Grant, you must comply with the provisions
of this Section. You must promptly notify the Chief Financial Officer of the Company if you
dispose of any of the shares acquired pursuant to the Option within one year after the date you
exercise all or part of the Option or within two years after the Date of Grant. Until such time as
you dispose of such shares in a manner consistent with the provisions of this Agreement, unless
otherwise expressly authorized by the Company, you must hold all shares acquired pursuant to the
Option in your name (and not in the name of any nominee) for the one-

6

 

year period immediately after the exercise of the Option and the two-year period immediately
after the Date of Grant. At any time during the one-year or two-year periods set forth above, the
Company may place a legend on any certificate representing shares acquired pursuant to the Option
requesting the transfer agent for the Company’s stock to notify the Company of any such transfers.
Your obligation to notify the Company of any such transfer will continue notwithstanding that a
legend has been placed on the certificate pursuant to the preceding sentence.

     15. Right to Terminate Services. Nothing contained in this Agreement shall confer
upon you the right to continue in the employ of or performing services for the Company or any
Subsidiary, or interfere in any way with the rights of the Company or any Subsidiary to terminate
your employment or service relationship at any time.

     16. Furnish Information. You agree to furnish to the Company all information
requested by the Company to enable it to comply with any reporting or other requirement imposed
upon the Company by or under any applicable statute or regulation.

     17. Remedies. The Company shall be entitled to recover from you reasonable attorneys’
fees incurred in connection with the enforcement of the terms and provisions of this Agreement
whether by an action to enforce specific performance or for damages for its breach or otherwise.

     18. No Liability for Good Faith Determinations. The Company and the members of the
Committee and the Board shall not be liable for any act, omission or determination taken or made in
good faith with respect to this Agreement or the Option granted hereunder.

     19. Execution of Receipts and Releases. Any payment of cash or any issuance or
transfer of shares of Stock or other property to you, or to your legal representative, heir,
legatee or distributee, in accordance with the provisions hereof, shall, to the extent thereof, be
in full satisfaction of all claims of such persons hereunder. The Company may require you or your
legal representative, heir, legatee or distributee, as a condition precedent to such payment or
issuance, to execute a release and receipt therefore in such form as it shall determine.

     20. No Guarantee of Interests. The Board and the Company do not guarantee the Stock
of the Company from loss or depreciation.

     21. Company Records. Records of the Company regarding your service and other matters
shall be conclusive for all purposes hereunder, unless determined by the Company to be incorrect.

     22. Notice. All notices required or permitted under this Agreement must be in writing
and personally delivered or sent by mail and shall be deemed to be delivered on the date on which
it is actually received by the person to whom it is properly addressed or if earlier the date sent
via certified mail.

     23. Waiver of Notice. Any person entitled to notice hereunder may, by written form,
waive such notice.

7

 

     24. Information Confidential. As partial consideration for the granting of this
Option, you agree that you will keep confidential all information and knowledge that you have
relating to the manner and amount of your participation in the Plan; provided, however, that such
information may be disclosed as required by law and may be given in confidence to your spouse, tax
and financial advisors. In the event any breach of this promise comes to the attention of the
Company, it shall take into consideration that breach in determining whether to recommend the grant
of any future similar award to you, as a factor weighing against the advisability of granting any
such future award to you.

     25. Successors. This Agreement shall be binding upon you, your legal representatives,
heirs, legatees and distributees, and upon the Company, its successors and assigns.

     26. Severability. If any provision of this Agreement is held to be illegal or invalid
for any reason, the illegality or invalidity shall not affect the remaining provisions hereof, but
such provision shall be fully severable and this Agreement shall be construed and enforced as if
the illegal or invalid provision had never been included herein.

     27. Company Action. Any action required of the Company shall be by resolution of the
Board or by a person authorized to act by resolution of the Board.

     28. Headings. The titles and headings of paragraphs are included for convenience of
reference only and are not to be considered in construction of the provisions hereof.

     29. Governing Law. All questions arising with respect to the provisions of this
Agreement shall be determined by application of the laws of Delaware, without giving any effect to
any conflict of law provisions thereof, except to the extent Delaware law is preempted by federal
law. The obligation of the Company to sell and deliver Stock hereunder is subject to applicable
laws and to the approval of any governmental authority required in connection with the
authorization, issuance, sale, or delivery of such Stock.

     30. Word Usage. Words used in the masculine shall apply to the feminine where
applicable, and wherever the context of this Agreement dictates, the plural shall be read as the
singular and the singular as the plural.

     31. No Assignment. You may not assign this Agreement or any of your rights under this
Agreement without the Company’s prior written consent, and any purported or attempted assignment
without such prior written consent shall be void.

     32. Acknowledgements Regarding Section 409A and Section 422 of the Code. You
understand that if the purchase price of the Stock under this Option is less than the Fair Market
Value of such Stock on the date of grant of this Option, then you may incur adverse tax
consequences under section 409A and Section 422 of the Code. You acknowledge and agree that (a)
you are not relying upon any determination by the Company, its affiliates, or any of their
respective employees, directors, officers, attorneys or agents (collectively, the “Company
Parties”) of the Fair Market Value of the Stock on the Date of Grant, (b) you are not relying upon
any written or oral statement or representation of the Company Parties regarding the tax effects
associated with your execution of this Agreement and your receipt, holding and exercise of this

8

 

Option, and (c) in deciding to enter into this Agreement, you are relying on your own judgment
and the judgment of the professionals of your choice with whom you have consulted. You hereby
release, acquit and forever discharge the Company Parties from all actions, causes of actions,
suits, debts, obligations, liabilities, claims, damages, losses, costs and expenses of any nature
whatsoever, known or unknown, on account of, arising out of, or in any way related to the tax
effects associated with your execution of this Agreement and your receipt, holding and exercise of
this Option.

     33. Miscellaneous.

          (a) This Agreement is subject to all the terms, conditions, limitations and restrictions
contained in the Plan. In the event of any conflict or inconsistency between the terms hereof and
the terms of the Plan, the terms of the Plan shall be controlling.

          (b) The Option may be amended by the Board or by the Committee at any time (i) if the Board or
the Committee determines, in its sole discretion, that amendment is necessary or advisable in light
of any addition to or change in any federal or state, tax or securities law or other law or
regulation, which change occurs after the Date of Grant and by its terms applies to the Option; or
(ii) other than in the circumstances described in clause (i) or provided in the Plan, with your
consent.

          (c) If this Option is intended to be a incentive stock option designed pursuant to section 422
of the Code, then in the event the Option Shares (and all other options designed pursuant to
section 422 of the Code granted to you by the Company or any parent of the Company or Subsidiary)
that first become exercisable in any calendar year have an aggregate fair market value (determined
for each Option Share as of the Date of Grant) that exceeds $100,000, the Option Shares in excess
of $100,000 shall be treated as subject to a Nonstatutory Stock Option.

[Remainder of page intentionally left blank]

9

 

Please indicate your acceptance of all the terms and conditions of the Award and the Plan by
signing and returning a copy of this Agreement.

	 	 	 	 	 
	 	 	ORION MARINE GROUP, INC.,
	 	 	a Delaware Corporation
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 

	 	 	 
	ACCEPTED:
	 	 
	 
	 	 
	 

Signature of optionee

	 	 
	 
	 	 
	 

Name of optionee (Please Print)

	 	 

Date:                     , ____

10

 

                                                            

                                                            

                                                            

                                                            

                    , 20___

                                                            

                                                            

                                                            

NOTICE OF GRANT OF STOCK OPTION

     Pursuant to the terms and conditions of the Orion Marine Group, Inc. Long Term Incentive Plan,
attached as Appendix A (the “Plan”), and the associated Stock Option Agreement, attached as
Appendix B (the “Option Agreement”), you are hereby granted an option (this “Option”) to
purchase shares of Stock under the conditions set forth below, in the Option Agreement, and in the
Plan. Capitalized terms used but not defined herein shall have the meanings set forth in the Plan.

	 	 	 
	Type of Option:

	 	Check one (and only one) of the following:
	 
	 	 
	 

	 	o    Incentive Stock Option (This Option is
intended to be an Incentive Stock Option (as defined in
the Plan).)

	 
	 	 
	 

	 	o    Nonstatutory Stock Option (This Option
is not intended to be an Incentive Stock Option (as
defined in the Plan).)

	 
	 	 
	Optionee:

	 	                    
	 
	 	 
	Date of Grant:

	 	                    , 20___ (“Date of Grant”)
	 
	 	 
	Number of Shares:

	 	                    
	 
	 	 
	Option Price:

	 	$                    per share
	 
	 	 
	 

	 	Note: In the case of an Incentive Stock Option, the
Option Price must be at least 100% (or, in the case of a
10% shareholder of the Company, 110%) of the Fair Market
Value (as defined in the Plan) of a share of Stock on
the Date of Grant.
	 
	 	 
	Expiration Date:

	 	                    , 20___
	 
	 	 
	 

	 	Note: In the case of an Incentive Stock Option, this
date cannot be more than ten years (or in the case of a
10% shareholder of the Company, more than five years)
from the Date of Grant.

 

 

                    

Page 2

                    , 20___

	 	 	 
	Vesting Schedule:

	 	Subject to the other terms and conditions set forth
herein, the Option Agreement and in the Plan, this
Option may be exercised in cumulative installments as
follows, provided that you remain in the employ of or a
service provider to the Company or its Subsidiaries
until the following applicable dates: (a) this Option
will become exercisable with respect to
1/3 of the Option Shares on the
one year anniversary of the Date of Grant, and (b) this
Option will become exercisable with respect to
1/36 of the Options Shares on each
monthly anniversary of the Date of Grant thereafter such
that this Option will be exercisable with respect to
100% of the Option Shares as of the three year
anniversary of the Date of Grant.
	 
	 	 
	 

	 	[NOTE: ADDITIONAL VESTING EVENTS MAY BE ADDED.]

     By your signature and the signature of the Company’s representative below, you and the Company
hereby acknowledge your receipt of this Option granted on the Grant Date indicated above, which has
been issued to you under the terms and conditions of the Plan and the Option Agreement. You
further acknowledge receipt of the copy of the Plan and Option Agreement and agree to all of the
terms and conditions of the Plan and the Option Agreement, which are incorporated in this Option by
reference.

Note: To accept the grant of this Option, you must execute this form and return an executed copy
to                      (the “Designated Recipient”) by                     . Failure to return the executed
copy to the Designated Recipient by such date will render this Option invalid.

	 	 	 	 	 
	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title:

	 	 

	 	 
	 

	 	 

	 	 

Accepted by:

[GRANTEE]

	 	 	 	 	 
	By:
	 	 	 	 
	Date:

	 	 

	 	 
	 

	 	 

	 	 

[DESIGNATED RECIPIENT]

	 	 	 	 	 
	By:
	 
	 	 
	Date Received:

	 
	 	 
	 

	 	 

	 	 

			
	Attachments:	 	Appendix A – Orion Marine Group, Inc. Long Term Incentive Plan

Appendix B – Stock Option Agreement

 

 

Appendix A

Orion Marine Group, Inc. Long Term Incentive Plan

 

 

Appendix B

Stock Option Agreement

 

 

Orion Marine Group, Inc. Long Term Incentive Plan

Notice Of Stock Option Exercise

	 	 	 	 	 	 	 
	Optionee Information:	 	 	 	 
	 
	 	 	 	 	 	 
	Name:

	 	 	 	Social Security Number:
	 	     -     -     
	 

	 	 

	 	 	 	 
	 
	 	 	 	 	 	 
	Address:

	 	 	 	Employee Number:
	 	                                        
	 

	 	 

	 	 	 	 
	 

	 	 

	 	 	 	 
	Option Information:	 	 	 	 
	 
	 	 	 	 	 	 
	Date of Grant:                     , ____, 20 ___	 	Type of Option:	 	o Nonstatutory (NSO) or
	 

	 	 	 	 	 	o Incentive (ISO)
	Exercise Price per share: $                                                            	 	 
	 
	 	 	 	 	 	 
	Total number of shares of common stock
(“Stock”) of                      (the “Company”)
covered by option:	 	                                         shares
	 
	 	 	 	 	 	 
	Exercise Information:	 	 	 	 
	 
	 	 	 	 	 	 
	Number of shares of Stock of the Company for which option is being exercised now:                     
(These shares are referred to below as the “Purchased Shares.”)
	 
	 	 	 	 	 	 
	Total Exercise Price for the Purchased Shares:	 	 $                    	 	 
	 
	 	 	 	 	 	 
	Form of payment enclosed [check all that apply]:	 	 
	 
	 	 	 	 	 	 
	o	 	Check for $                    ,
made

payable to “                    ”	 	 o  Certificate(s) for                      shares of
Stock of the Company
      that I have
owned for at least six months.
(These shares will be

      valued as of
the date this notice is received by
the Company.)
	 
	 	 	 	 	 	 
	Names in which the Purchased Shares should be registered [you must check one]:
	 
	 	 	 	 	 	 
	o

	 	In my name only	 	 	 	 
	 
	 	 	 	 	 	 
	o	 	In the names of my spouse and
myself as community property	 	My spouse’s name (if applicable):

                                                            
	 
	 	 	 	 	 	 
	o

	 	In the names of my spouse and
myself as joint tenants with
the right of survivorship	 	 	 	 
	 
	 	 	 	 	 	 
	The certificate for the Purchased Shares
should be sent to the following address:	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	By:
	 	 	 	 	 	 
	Name:

	 	 

	 	 	 	 
	Date:

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