Document:

exv10w1

 

EXHIBIT 10.1

 

 

    DAWSON
    GEOPHYSICAL COMPANY

    2006 STOCK AND PERFORMANCE INCENTIVE PLAN

 

    

    1

 

    Table of
    Contents

 

	 	 	 	 	 	 	 	 	 
	

    ARTICLE I Introduction
    

	
 
	
	
    4
    
	

	
	
 
	
	
 
	
 
	
 
	
	
 
	

	
 
	
 
	
	
 
	 
	
    ARTICLE II Objectives
    
	
 
	
	
    4
    
	

	
	
 
	
	
 
	
 
	
 
	
	
 
	

	
 
	
 
	
	
 
	 
	
    ARTICLE III Definitions
    
	
 
	
	
    4
    
	

	
	

    Section 3.1
    

	
	
 
	
    Definitions
	
 
	
	
    4
    
	

	
	
 
	
	
 
	
 
	
 
	
	
 
	

	
 
	
 
	
	
 
	 
	
    ARTICLE IV Eligibility
    
	
 
	
	
    7
    
	

	
	

    Section 4.1
    

	
	
 
	
    Employees
	
 
	
	
    7
    
	

	
	

    Section 4.2
    

	
	
 
	
    Directors
	
 
	
	
    7
    
	

	
	

    Section 4.3
    

	
	
 
	
    Consultants
	
 
	
	
    7
    
	

	
	
 
	
	
 
	
 
	
 
	
	
 
	

	
 
	
 
	
	
 
	 
	
    ARTICLE V Common Stock
    Available for Awards
    
	
 
	
	
    7
    
	

	
	

    Section 5.1
    

	
	
 
	
    Award Limitations
	
 
	
	
    7
    
	

	
	

    Section 5.2
    

	
	
 
	
    Unissued Awards
	
 
	
	
    7
    
	

	
	
 
	
	
 
	
 
	
 
	
	
 
	

	
 
	
 
	
	
 
	 
	
    ARTICLE VI Administration
    
	
 
	
	
    8
    
	

	
	

    Section 6.1
    

	
	
 
	
    Administration by the
    Committee
	
 
	
	
    8
    
	

	
	

    Section 6.2
    

	
	
 
	
    Liability of the
    Committee
	
 
	
	
    9
    
	

	
	

    Section 6.3
    

	
	
 
	
    Authority of the
    Board
	
 
	
	
    9
    
	

	
	

    Section 6.4
    

	
	
 
	
    Delegation of
    Authority
	
 
	
	
    9
    
	

	
	
 
	
	
 
	
 
	
 
	
	
 
	

	
 
	
 
	
	
 
	 
	
    ARTICLE VII  Employee Awards
    and Consultant Awards
    
	
 
	
	
    9
    
	

	
	

    Section 7.1
    

	
	
 
	
    Employee Awards
	
 
	
	
    9
    
	

	
	

    Section 7.2
    

	
	
 
	
    Limitations
	
 
	
	
    11
    
	

	
	

    Section 7.3
    

	
	
 
	
    Consultant Awards
	
 
	
	
    12
    
	

	
	
 
	
	
 
	
 
	
 
	
	
 
	

	
 
	
 
	
	
 
	 
	
    ARTICLE VIII Director Awards
    
	
 
	
	
    12
    
	

	
	

    Section 8.1
    

	
	
 
	
    Grant of Director
    Awards
	
 
	
	
    12
    
	

	
	

    Section 8.2
    

	
	
 
	
    Options
	
 
	
	
    12
    
	

	
	

    Section 8.3
    

	
	
 
	
    Stock Appreciation
    Rights
	
 
	
	
    12
    
	

	
	

    Section 8.4
    

	
	
 
	
    Stock Awards
	
 
	
	
    12
    
	

	
	

    Section 8.5
    

	
	
 
	
    Performance Awards
	
 
	
	
    12
    
	

	
	

    Section 8.6
    

	
	
 
	
    Limitations
	
 
	
	
    12
    
	

	
	
 
	
	
 
	
 
	
 
	
	
 
	

	
 
	
 
	
	
 
	 
	
    ARTICLE IX  Change of Control
    
	
 
	
	
    13
    
	

	
	

    Section 9.1
    

	
	
 
	
    Acceleration of
    Vesting
	
 
	
	
    13
    
	

	
	

    Section 9.2
    

	
	
 
	
    Exercise Period for Options and
    SARs
	
 
	
	
    13
    
	

	
	
 
	
	
 
	
 
	
 
	
	
 
	

	
 
	
 
	
	
 
	 
	
    ARTICLE X
    Non-United
    States Participants
    
	
 
	
	
    13
    
	

	
	
 
	
	
 
	
 
	
 
	
	
 
	

	
 
	
 
	
	
 
	 
	
    ARTICLE XI Payment of Awards
    
	
 
	
	
    13
    
	

	
	

    Section 11.1
    

	
	
 
	
    General
	
 
	
	
    13
    
	

	
	

    Section 11.2
    

	
	
 
	
    Dividends, Earnings and
    Interest
	
 
	
	
    13
    
	

	
	

    Section 11.3
    

	
	
 
	
    Cash-out of Awards
	
 
	
	
    13
    
	

	
	
 
	
	
 
	
 
	
 
	
	
 
	

	
 
	
 
	
	
 
	 
	
    ARTICLE XII Option Exercise
    
	
 
	
	
    14
    
	

	
	

    Section 12.1
    

	
	
 
	
    Exercise in General
	
 
	
	
    14
    
	

	
	

    Section 12.2
    

	
	
 
	
    Exercise through
    Attestation
	
 
	
	
    14
    
	

	
	
 
	
	
 
	
 
	
 
	
	
 
	

    

    2

 

	 	 	 	 	 	 	 	 	 
	
    ARTICLE XIII Taxes
    
	
 
	
	
    14
    
	

	
	
 
	
	
 
	
 
	
 
	
	
 
	

	
 
	
 
	
	
 
	 
	
    ARTICLE XIV Amendment,
    Modification, Suspension, or Termination of the Plan
    
	
 
	
	
    15
    
	

	
	

    Section 14.1
    

	
	
 
	
    In General
	
 
	
	
    15
    
	

	
	

    Section 14.2
    

	
	
 
	
    Exceptions
	
 
	
	
    15
    
	

	
	
 
	
	
 
	
 
	
 
	
	
 
	

	
 
	
 
	
	
 
	 
	
    ARTICLE XV Assignability
    
	
 
	
	
    15
    
	

	
	
 
	
	
 
	
 
	
 
	
	
 
	

	
 
	
 
	
	
 
	 
	
    ARTICLE XVI Adjustments
    
	
 
	
	
    15
    
	

	
	

    Section 16.1
    

	
	
 
	
    Adjustments in
    General
	
 
	
	
    15
    
	

	
	

    Section 16.2
    

	
	
 
	
    Proportionate
    Adjustments
	
 
	
	
    15
    
	

	
	
 
	
	
 
	
 
	
 
	
	
 
	

	
 
	
 
	
	
 
	 
	
    ARTICLE XVII Restrictions
    
	
 
	
	
    16
    
	

	
	
 
	
	
 
	
 
	
 
	
	
 
	

	
 
	
 
	
	
 
	 
	
    ARTICLE XVIII Unfunded Plan
    
	
 
	
	
    16
    
	

	
	
 
	
	
 
	
 
	
 
	
	
 
	

	
 
	
 
	
	
 
	 
	
    ARTICLE XIX Right to
    Employment
    
	
 
	
	
    17
    
	

	
	
 
	
	
 
	
 
	
 
	
	
 
	

	
 
	
 
	
	
 
	 
	
    ARTICLE XX Successors
    
	
 
	
	
    17
    
	

	
	
 
	
	
 
	
 
	
 
	
	
 
	

	
 
	
 
	
	
 
	 
	
    ARTICLE XXI Governing Law
    
	
 
	
	
    17
    
	

	
	
 
	
	
 
	
 
	
 
	
	
 
	

	
 
	
 
	
	
 
	 
	
    ARTICLE XXII Effectiveness
    and Term
    
	
 
	
	
    17
    
	

    

    3

 

    ARTICLE I

    

 

    INTRODUCTION
    

 

    Subject to shareholder approval, effective as of
    November 28, 2006, Dawson Geophysical Company
    (“Company”) established the Dawson Geophysical Company
    2006 Stock and Performance Incentive Plan (the “Plan”)
    in order to reward certain corporate officers and employees,
    certain consultants and nonemployee directors of the Company and
    its Subsidiaries by providing for certain cash benefits and by
    enabling such persons to acquire shares of Common Stock of the
    Company.

 

    ARTICLE II

    

 

    OBJECTIVES
    

 

    The purpose of the Plan is to further the interests of the
    Company, its Subsidiaries and its shareholders by providing
    incentives in the form of Awards to employees, consultants and
    nonemployee directors who can contribute materially to the
    success and profitability of the Company and its Subsidiaries.
    Such Awards will recognize and reward outstanding performance
    and individual contributions and give Participants in the Plan
    an interest in the Company that is parallel to that of the
    shareholders, thus enhancing the proprietary and personal
    interest of such Participants in the Company’s continued
    success and progress. This Plan will also enable the Company and
    its Subsidiaries to attract and retain such employees,
    consultants and nonemployee directors.

 

    ARTICLE III

    

 

    DEFINITIONS
    

 

    Section 3.1  Definitions.  As
    used herein, the terms set forth below shall have the following
    respective meanings:

 

    “Award” means an Employee Award, a Director
    Award or a Consultant Award.

 

    “Award Agreement” means one or more Employee
    Award Agreement, Director Award Agreement or Consultant Award
    Agreement.

 

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

 

    “Cash Award” means an award denominated in cash.

 

    “Change of Control” means one or more events
    reflectd in an Award Agreement, which:

 

    (i) impact the control of:

 

    (A) the Company, or

 

    (B) the Board, or

 

    (ii) reflect a significant change in the ownership of:

 

    (A) the Company or its Subsidiaries, or

 

    (B) the assets of the Company.

 

    Notwithstanding the paragraph above or the definition contained
    in an Award Agreement, in the event an Award is or becomes
    subject to section 409A of the Code, if the payment
    associated with such Award is permitted upon the occurrence of a
    Change of Control, the events that constitute a Change of
    Control shall be limited to the extent necessary to comply with
    the requirements of section 409A of the Code.

 

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

 

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

    

    4

 

    “Common Stock” means Dawson Geophysical Company
    common stock, par value
    $0.331/3 per
    share.

 

    “Company” means Dawson Geophysical Company, a
    Texas corporation.

 

    “Consultant” means means a person other than an
    Employee or a Nonemployee Director providing bona fide services
    to the Company or any of its Subsidiaries as a consultant or
    advisor, as applicable, provided that such person is a natural
    person and that such services are not in connection with the
    offer or sale of securities in a capital-raising transaction and
    do not directly or indirectly promote or maintain a market for
    any securities of the Company.

 

    “Consultant Award” means the grant of any
    Nonqualified Stock Option, SAR, Stock Award, Cash Award or
    Performance Award, whether granted singly, in combination, or in
    tandem, to a Consultant pursuant to such applicable terms,
    conditions and limitations as may be established in order to
    fulfill the objectives of the Plan.

 

    “Consultant Award Agreement” means one or more
    agreements between the Company and a Consultant setting forth
    the terms, conditions and limitations applicable to a Consultant
    Award.

 

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

 

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

 

    “Director Award Agreement” means one or more
    agreements between the Company and a Nonemployee Director
    setting forth the terms, conditions and limitations applicable
    to a Director Award.

 

    “Dividend Equivalents” means, with respect to
    Restricted Stock Units or shares of Restricted Stock that are to
    be issued at the end of the Restriction Period, an amount equal
    to all dividends and other distributions (or the economic
    equivalent thereof) that are payable to stockholders of record
    during the Restriction Period on a like number of shares of
    Common Stock.

 

    “Effective Date” means the date described in
    ARTICLE XXII.

 

    “Employee” means an employee of the Company or
    any of its Subsidiaries and an individual who has agreed to
    become an employee of the Company or any of its Subsidiaries and
    is expected to become such an employee within the following six
    months.

 

    “Employee Award” means the grant of any Option,
    SAR, Stock Award, Cash Award or Performance Award, whether
    granted singly, in combination, or in tandem, to an Employee
    pursuant to such applicable terms, conditions and limitations
    (including treatment as a Performance Award) as may be
    established in order to fulfill the objectives of the Plan.

 

    “Employee Award Agreement” means one or more
    agreements between the Company and an Employee setting forth the
    terms, conditions and limitations applicable to an Employee
    Award.

 

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

 

    “Fair Market Value” of a share of Common Stock
    means, as of a particular date:

 

    (a) if shares of Common Stock are listed on a national
    securities exchange, the mean between the highest and lowest
    sales price per share of the Common Stock on the consolidated
    transaction reporting system for the principal national
    securities exchange on which shares of Common Stock are listed
    on that date, or, if there shall have been no such sale so
    reported on that date, on the last preceding date on which such
    a sale was so reported, or, at the discretion of the Committee,
    the price prevailing on the exchange at the time of exercise or
    other relevant time (as determined under procedures established
    by the Committee),

 

    (b) if shares of Common Stock are not so listed but are
    quoted by The Nasdaq Stock Market, Inc., the mean between the
    highest and lowest sales price per share of Common Stock
    reported on the consolidated transaction reporting system for
    The Nasdaq Stock Market, Inc., or, if there shall have been

    

    5

 

    no such sale so reported on that date, on the last preceding
    date on which such a sale was so reported, or, at the discretion
    of the Committee, the price prevailing as quoted by The Nasdaq
    Stock Market, Inc. at the time of exercise,

 

    (c) if the Common Stock is not so listed or quoted, the
    mean between the closing bid and asked price on that date, or,
    if there are no quotations available for such date, on the last
    preceding date on which such quotations shall be available, as
    reported by The Nasdaq Stock Market, Inc., or, if not reported
    by The Nasdaq Stock Market, Inc., by the National Quotation
    Bureau Incorporated, or

 

    (d) if shares of Common Stock are not publicly traded, the
    most recent value determined by an independent appraiser
    appointed by the Company for such purpose.

 

    “Grant Date” means the date an Award is granted
    to a Participant pursuant to the Plan. The Grant Date for a
    substituted award is the grant date of the original award.

 

    “Grant Price” means the price at which a
    Participant may exercise his or her right to receive cash or
    Common Stock, as applicable, under the terms of an Award.

 

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

 

    “Incumbent Board” means the members who, as of
    the Effective Date, comprise the Board.

 

    “Nonemployee Director” means an individual
    serving as a member of the Board who is not an Employee.

 

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

 

    “Option” means a right to purchase a specified
    number of shares of Common Stock at a specified Grant Price,
    which right may be an Incentive Stock Option or a Nonqualified
    Stock Option.

 

    “Participant” means an Employee, Director or
    Consultant to whom an Award has been granted under this Plan.

 

    “Performance Award” means an award made
    pursuant to this Plan that is subject to the attainment of one
    or more Performance Goals.

 

    “Performance Goal” means one or more
    organizational or individual standards preestablished by the
    Committee to determine in whole or in part whether a Performance
    Award shall be earned. Performance standards shall relate to a
    performance period of at least 12 consecutive months in which
    the Employee, Director or Consultant performs services for the
    Company or any Subsidiary. Performance standards shall be
    considered preestablished if they are established in writing by
    not later than 90 days after the commencement of the period
    of service to which the standards relate, and only if the
    outcome is substantially uncertain at the time the standards are
    established.

 

    “Plan” means the Dawson Geophysical Company
    2006 Stock and Performance Incentive Plan.

 

    “Reload” means the automatic grant of a new
    Option or SAR upon the exercise of an existing Option or SAR.

 

    “Restricted Stock” means any shares of Common
    Stock that are restricted or subject to forfeiture provisions.

 

    “Restricted Stock Unit” means a Stock Unit that
    is restricted or subject to forfeiture provisions.

 

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

 

    “SAR” means a Stock Appreciation Right.

    

    6

 

    “Stock Appreciation Right” means a right to
    receive a payment, in cash or Common Stock, equal to the excess
    of the Fair Market Value of a specified number of shares of
    Common Stock on the date the right is exercised over the Fair
    Market Value of such shares on the Grant Date, in each case, as
    determined by the Committee.

 

    “Stock Award” means an Award in the form of
    shares of Common Stock or Stock Units, including an award of
    Restricted Stock or Restricted Stock Units.

 

    “Stock Based Awards Limitations” means the
    limitations set forth in Section 7.2(b) and
    Section 7.2(a) below.

 

    “Stock Unit” means a unit evidencing the right
    to receive in specified circumstances one share of Common Stock
    or equivalent value (as determined by the Committee).

 

    “Subsidiaries” means more than one Subsidiary.

 

    “Subsidiary” means in the case of a
    corporation, any corporation of which the Company directly or
    indirectly owns shares representing 50% or more of the combined
    voting power of the shares of all classes or series of capital
    stock of such corporation which have the right to vote generally
    on matters submitted to a vote of the stockholders of such
    corporation, in the case of a partnership or other business
    entity not organized as a corporation, any such business entity
    of which the Company directly or indirectly owns 50% or more of
    the voting, capital or profits interests (whether in the form of
    partnership interests, membership interests or otherwise), and
    any other corporation, partnership or other entity that is a
    “subsidiary” of the Company within the meaning of
    Rule 405 promulgated by the Securities and Exchange
    Commission under the Securities Act of 1933, as amended.

 

    ARTICLE IV

    

 

    ELIGIBILITY
    

 

    Section 4.1  Employees.  All
    Employees are eligible for the grant of Employee Awards under
    this Plan in the discretion of the Committee.

 

    Section 4.2  Directors.  Nonemployee
    Directors are eligible for the grant of Director Awards under
    this Plan.

 

    Section 4.3  Consultants.  All
    Consultants are eligible for the grant of Consultant Awards
    under this Plan.

 

    ARTICLE V

    

 

    COMMON STOCK
    AVAILABLE FOR AWARDS
    

 

    Section 5.1  Award
    Limitations.  Subject to the provisions of
    ARTICLE XVI hereof, no Award shall be granted if it shall
    result in the aggregate number of shares of Common Stock issued
    under the Plan plus the number of shares of Common Stock covered
    by or subject to Awards then outstanding under this Plan (after
    giving effect to the grant of the Award in question) to exceed
    750,000.

 

    Section 5.2  Unissued
    Awards

 

    (a) The number of shares of Common Stock that are the
    subject of Awards under this Plan that are forfeited or
    terminated, expire unexercised, are settled in cash in lieu of
    Common Stock or in a manner such that all or some of the shares
    covered by an Award are not issued to a Participant or are
    exchanged for Awards that do not involve Common Stock, shall
    again immediately become available for Awards hereunder. If the
    Grant Price or other purchase price of any Option or other Award
    granted under the Plan is satisfied by tendering shares of
    Common Stock to the Company, or if the tax withholding
    obligation resulting from the settlement of any such Option or
    other Award is satisfied by tendering or withholding shares of
    Common Stock, only the number of shares of Common Stock issued
    net of the shares of Common Stock tendered or

    

    7

 

    withheld shall be deemed delivered for purposes of determining
    usage of shares against the maximum number of shares of Common
    Stock available for delivery under the Plan or any sublimit set
    forth above.

 

    (b) Shares of Common Stock delivered under the Plan as an
    Award or in settlement of an Award issued or made:

 

    (i) upon the assumption, substitution, conversion or
    replacement of outstanding awards under a plan or arrangement of
    an entity acquired in a merger or other acquisition; or

 

    (ii) as a post-transaction grant under such a plan or
    arrangement of an acquired entity

 

    shall, in each case, not reduce or be counted against the
    maximum number of shares of Common Stock available for delivery
    under the Plan, to the extent that the exemption for
    transactions in connection with mergers and acquisitions from
    the shareholder approval requirements of the Nasdaq National
    Market for equity compensation plans applies.

 

    (c) The Committee may from time to time adopt and observe
    such rules and procedures concerning the counting of shares
    against the Plan maximum or any sublimit as it may deem
    appropriate, including rules more restrictive than those set
    forth above to the extent necessary to satisfy the requirements
    of any national stock exchange on which the Common Stock is
    listed or any applicable regulatory requirement. The Board and
    the appropriate officers of the Company are authorized to take
    from time to time whatever actions are necessary, and to file
    any required documents with governmental authorities, stock
    exchanges and transaction reporting systems to ensure that
    shares of Common Stock are available for issuance pursuant to
    Awards.

 

    ARTICLE VI

    

 

    ADMINISTRATION.
    

 

    Section 6.1  Administration
    by the Committee.

 

    (a) This Plan shall be administered by the Committee,
    except as otherwise provided herein. Subject to the provisions
    hereof, the Committee shall have full and exclusive power and
    authority to administer this Plan and to take all actions that
    are specifically contemplated hereby or are necessary or
    appropriate in connection with the administration hereof. The
    Committee shall also have full and exclusive power to interpret
    this Plan and to adopt such rules, regulations and guidelines
    for carrying out this Plan, as it may deem necessary or proper.
    Any decision of the Committee in the interpretation and
    administration of this Plan shall lie within its sole and
    absolute discretion and shall be final, conclusive and binding
    on all parties concerned.

 

    (b) The Committee, in its discretion, may:

 

    (i) provide for the extension of the exercisability of an
    Employee Award or Consultant Award,

 

    (ii) accelerate the vesting or exercisability of an
    Employee Award or Consultant Award,

 

    (iii) eliminate or make less restrictive any restrictions
    applicable to an Employee Award or Consultant Award,

 

    (iv) waive any restriction or other provision of this Plan
    (insofar as such provision relates to Employee Awards or to
    Consultant Awards) or an Employee Award or Consultant Award,

 

    (v) otherwise amend or modify an Employee Award or
    Consultant Award in any manner, or

 

    (vi) correct any defect or supply any omission or reconcile
    any inconsistency in this Plan or in any Award in the manner and
    to the extent the Committee deems necessary or desirable to
    further the Plan purposes.

 

    (c) The Committee may do the preceding actions in any
    manner that is either:

 

    (i) not adverse to the Participant to whom such Employee
    Award or Consultant Award was granted or

    

    8

 

    (ii) consented to by such Participant.

 

    (d) Notwithstanding anything herein to the contrary, the
    Committee shall not be considered to have any discretion to
    amend or modify an Employee Award or Consultant Award in any
    manner than would cause the Award or the Participant who holds
    the Award to be subject to, or violate, the provisions of
    section 409A of the Code with respect to such Award, unless
    otherwise agreed to by the Participant.

 

    Section 6.2  Liability
    of the Committee.  No member of the Committee
    shall be liable for anything done or omitted to be done by him
    or her, by any member of the Committee or by any officer of the
    Company in connection with the performance of any duties under
    this Plan, except for his or her own willful misconduct or as
    expressly provided by statute.

 

    Section 6.3  Authority
    of the Board.  The Board shall have the same
    powers, duties, and authority to administer the Plan with
    respect to Director Awards as the Committee retains with respect
    to Employee Awards and Consultant Awards.

 

    Section 6.4  Delegation
    of Authority.  The Committee may engage or
    authorize the engagement of a third party administrator to carry
    out administrative functions under the Plan.

 

    ARTICLE VII

    

 

    EMPLOYEE
    AWARDS AND CONSULTANT AWARDS
    

 

    Section 7.1  Employee
    Awards.  The Committee shall determine the
    type or types of Employee Awards to be made under this Plan and
    shall designate from time to time the Employees who are to be
    the recipients of such Awards. Each Employee Award may, in the
    discretion of the Committee, be embodied in an Employee Award
    Agreement, which shall contain such terms, conditions and
    limitations as shall be determined by the Committee in its sole
    discretion and, if required by the Committee, shall be signed by
    the Participant to whom the Employee Award is granted and signed
    for and on behalf of the Company. Employee Awards may consist of
    those Awards listed in this ARTICLE VII and may be granted
    singly, in combination or in tandem. Employee Awards may also be
    granted in combination or in tandem with, in replacement of
    (subject to the last sentence of ARTICLE XIV), or as
    alternatives to, grants or rights under this Plan or any other
    employee plan of the Company or any of its Subsidiaries,
    including the plan of any acquired entity. An Employee Award may
    provide for the grant or issuance of additional, replacement or
    alternative Employee Awards upon the occurrence of specified
    events, including the exercise of the original Employee Award
    granted to a Participant. All or part of an Employee Award may
    be subject to conditions established by the Committee, which may
    include, but are not limited to, continuous service with the
    Company and its Subsidiaries, achievement of specific business
    objectives, items referenced in Section 7.1(e)(ii)(B)
    below, and other comparable measurements of performance. Upon
    the termination of employment by a Participant who is an
    Employee, any unexercised, deferred, unvested, or unpaid
    Employee Awards shall be treated as set forth in the applicable
    Employee Award Agreement or as otherwise specified by the
    Committee.

 

    (a) Options.  An Employee Award may
    be in the form of an Option, which may be an Incentive Stock
    Option or a Nonqualified Stock Option. The Grant Price of an
    Option shall be not less than the Fair Market Value of the
    Common Stock subject to such Option on the Grant Date. The term
    of the Option shall extend no more than 10 years after the
    Grant Date. Options may not include provisions that Reload the
    Option upon exercise. Similarly, Options may not be repriced or
    otherwise modified in any way that would constitute a reduction
    in the Grant Price associated with such Options. Subject to the
    foregoing provisions, the terms, conditions and limitations
    applicable to any Options awarded to Employees pursuant to this
    Plan, including the Grant Price, the term of the Options, the
    number of share subject to the Option and the date or dates upon
    which they become exercisable, shall be determined by the
    Committee.

 

    (b) Stock Appreciation Rights.  An
    Employee Award may be in the form of an SAR. On the Grant Date,
    the Grant Price of an SAR shall be not less than the Fair Market
    Value of the Common Stock subject to such SAR. The holder of a
    tandem SAR may elect to exercise either the option or the SAR,
    but not both. The exercise period for an SAR shall extend no
    more than 10 years after the Grant Date. SARs may not
    include

    

    9

 

    provisions that Reload the SAR upon exercise. Similarly, SARs
    may not be repriced or otherwise modified in any way that would
    constitute a reduction in the Grant Price associated with such
    SARs. Subject to the foregoing provisions, the terms, conditions
    and limitations applicable to any SARs awarded to Employees
    pursuant to this Plan, including the Grant Price, the term of
    any SARs, and the date or dates upon which they become
    exercisable, shall be determined by the Committee.

 

    (c) Stock Awards.  An Employee
    Award may be in the form of a Stock Award. The terms, conditions
    and limitations applicable to any Stock Awards granted pursuant
    to this Plan shall be determined by the Committee, subject to
    the limitations set forth below.

 

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

 

    (e) Performance Awards.  Any
    Employee Award may be in the form of a Performance Award. The
    terms, conditions and limitations applicable to any Performance
    Awards granted to Participants pursuant to this Plan shall be
    determined by the Committee, subject to the limitations set
    forth below. Any Stock Award granted as an Employee Award which
    is a Performance Award shall have a minimum Restriction Period
    of twelve months from the Grant Date, provided that the
    Committee may provide for earlier vesting upon a termination of
    employment by reason of death, disability, layoff, retirement or
    change in control. The Committee shall set Performance Goals in
    its discretion which, depending on the extent to which they are
    met, will determine the value
    and/or
    amount of Performance Awards that will be paid out to the
    Participant
    and/or the
    portion of an Award that may be exercised.

 

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

 

    (ii) Qualified Performance Awards

 

    (A) Performance Awards granted to Employees under the Plan
    that are intended to qualify as qualified performance-based
    compensation under Section 162(m) of the Code shall be
    paid, vested, or otherwise deliverable solely on account of the
    attainment of one or more pre-established, objective Performance
    Goals, which are established by the Committee while the outcome
    is substantially uncertain and prior to the earlier to occur of
    the following:

 

    (I) 90 days after the commencement of the period of
    service to which the Performance Goal relates, and

 

    (II) the lapse of 25% of the period of service (as
    scheduled in good faith at the time the goal is established).

 

    (B) A Performance Goal is objective if a third party having
    knowledge of the relevant facts could determine whether the goal
    is met. Such a Performance Goal may be based on one or more
    business criteria that apply to the Employee, one or more
    business units, divisions or sectors of the Company, or the
    Company as a whole, and if so desired by the Committee, by
    comparison with a peer group of companies. A Performance Goal
    may include one or more of the following:

 

    (I) Increased revenue;

 

    (II) Net income measures (including but not limited to
    income after capital costs and income before or after taxes);

 

    (III) Stock price measures (including but not limited to
    growth measures and total shareholder return);

 

    (IV) Market share;

 

    (V) Earnings per share (actual or targeted growth);

    

    10

 

    (VI) Earnings before interest, taxes, depreciation, and
    amortization (“EBITDA”);

 

    (VII) Economic value added (“EVA”);

 

    (VIII) Cash flow measures (including but not limited to net
    cash flow and net cash flow before financing activities);

 

    (IX) Return measures (including but not limited to return
    on equity, return on average assets, return on capital,
    risk-adjusted return on capital, return on investors’
    capital and return on average equity);

 

    (X) Operating measures (including operating income, funds
    from operations, cash from operations, after-tax operating
    income, sales volumes, production volumes, and production
    efficiency);

 

    (XI) Expense measures (including but not limited to finding
    and development costs, overhead cost and general and
    administrative expense);

 

    (XII) Margins;

 

    (XIII) Shareholder value;

 

    (XIV) Total shareholder return;

 

    (XV) Proceeds from dispositions;

 

    (XVI) Production volumes;

 

    (XVII) Total market value; and

 

    (XVIII) Corporate values measures (including ethics
    compliance, environmental, and safety).

 

    (iii) Unless otherwise stated, a Performance Goal need not
    be based upon an increase or positive result under a particular
    business criterion and could include, for example, maintaining
    the status quo or limiting economic losses (measured, in each
    case, by reference to specific business criteria). In
    interpreting Plan provisions applicable to Performance Awards
    that are intended to qualify as qualified performance-based
    compensation under Section 162(m) of the Code, it is the
    intent of the Plan to conform with the standards of
    Section 162(m) of the Code and Treasury Regulation
    §1.162-27(e)(2)(i), as to grants to those Employees whose
    compensation is, or is likely to be, subject to
    Section 162(m) of the Code, and the Committee in
    establishing such goals and interpreting the Plan shall be
    guided by such provisions. Prior to the payment of any
    compensation based on the achievement of Performance Goals for
    such Performance Awards, the Committee must certify in writing
    that applicable Performance Goals and any of the material terms
    thereof were, in fact, satisfied. Subject to the foregoing
    provisions, the terms, conditions and limitations applicable to
    any Performance Awards, which are intended to qualify as
    qualified performance-based compensation under
    Section 162(m) of the Code, shall be determined by the
    Committee.

 

    Section 7.2  Limitations.  Notwithstanding
    anything to the contrary contained in this Plan, the following
    limitations shall apply to any Employee Awards made hereunder:

 

    (a) no Participant may be granted, during any calendar
    year, Employee Awards consisting of Options or SARs (including
    Options or SARs that are granted as Performance Awards) that are
    exercisable for more than 100,000 shares of Common Stock;

 

    (b) no Participant may be granted, during any calendar
    year, Stock Awards (including Stock Awards that are granted as
    Performance Awards) covering or relating to more than
    100,000 shares of Common Stock; and

    

    11

 

    Section 7.3  Consultant
    Awards.  Subject to the limitations described
    in this ARTICLE VII, the Committee shall have the sole
    responsibility and authority to determine the type or types of
    Consultant Awards to be made under this Plan and the terms,
    conditions and limitations applicable to such Awards.

 

    ARTICLE VIII

    

 

    DIRECTOR
    AWARDS
    

 

    Section 8.1  Grant
    of Director Awards.  The Board may grant
    Director Awards to Nonemployee Directors of the Company from
    time to time in accordance with this ARTICLE VIII. Director
    Awards may consist of those Awards listed in this
    ARTICLE VIII and may be granted singly, in combination, or
    in tandem. Each Director Award may, in the discretion of the
    Board, be embodied in a Director Award Agreement, which shall
    contain such terms, conditions and limitations as shall be
    determined by the Board in its sole discretion and, if required
    by the Board, shall be signed by the Participant to whom the
    Director Award is granted and signed for and on behalf of the
    Company.

 

    Section 8.2  Options.  A
    Director Award may be in the form of an Option; provided that
    Options granted as Director Awards shall not be Incentive Stock
    Options. The Grant Price of an Option shall be not less than the
    Fair Market Value of the Common Stock subject to such Option on
    the Grant Date. In no event shall the term of the Option extend
    more than ten (10) years after the Grant Date. Options may
    not include provisions that Reload the Option upon exercise.
    Similarly, Options may not be repriced or otherwise modified in
    any way that would constitute a reduction in the Grant Price
    associated with such Options. Subject to the foregoing
    provisions, the terms, conditions and limitations applicable to
    any Options awarded to Directors pursuant to this
    ARTICLE VIII, including the Grant Price, the term of the
    Options, the number of shares subject to the Option and the date
    or dates upon which they become exercisable, shall be determined
    by the Board.

 

    Section 8.3  Stock
    Appreciation Rights.  A Director Award may be
    in the form of an SAR. On the Grant Date, the Grant Price of an
    SAR shall be not less than the Fair Market Value of the Common
    Stock subject to such SAR. The holder of a tandem SAR may elect
    to exercise either the option or the SAR, but not both. The
    exercise period for an SAR shall extend no more than
    10 years after the Grant Date. SARs may not include
    provisions that Reload the SAR upon exercise. Similarly, SARs
    may not be repriced or otherwise modified in any way that would
    constitute a reduction in the Grant Price associated with such
    SARs. Subject to the foregoing provisions, the terms, conditions
    and limitations applicable to any SARs awarded to Directors
    pursuant to this Plan, including the Grant Price, the term of
    any SARs, and the date or dates upon which they become
    exercisable, shall be determined by the Board.

 

    Section 8.4  Stock
    Awards.  A Director Award may be in the form
    of a Stock Award. Any terms, conditions and limitations
    applicable to any Stock Awards granted to a Nonemployee Director
    pursuant to this Plan, including but not limited to rights to
    Dividend Equivalents, shall be determined by the Board.

 

    Section 8.5  Performance
    Awards.  Without limiting the type or number
    of Director Awards that may be made under the other provisions
    of this Plan, a Director Award may be in the form of a
    Performance Award. Any additional terms, conditions and
    limitations applicable to any Performance Awards granted to a
    Nonemployee Director pursuant to this Plan shall be determined
    by the Board. The Board shall set Performance Goals in its
    discretion which, depending on the extent to which they are met,
    will determine the value
    and/or
    amount of Performance Awards that will be paid out to the
    Nonemployee Director.

 

    Section 8.6  Limitations.  Notwithstanding
    anything to the contrary contained in this Plan the following
    limitations shall apply to any Director Awards made hereunder:

 

    (a) no Participant may be granted, during any fiscal year,
    Director Awards consisting of Options or SARs (including Options
    or SARs that are granted as Performance Awards) that are
    exercisable for more than 100,000 shares of Common
    Stock and

    

    12

 

    (b) no Participant may be granted, during any fiscal year,
    Director Awards consisting of Stock Awards (including Stock
    Awards that are granted as Performance Awards) covering or
    relating to more than 100,000 shares of Common Stock.

 

    ARTICLE IX

    

 

    CHANGE OF
    CONTROL
    

 

    Section 9.1  Acceleration
    of Vesting.  Except as provided in
    ARTICLE XVI, notwithstanding any other provisions of the
    Plan, including ARTICLE VII and ARTICLE VIII hereof,
    unless otherwise expressly provided in the applicable Award
    Agreement, in the event of a Change of Control during a
    Participant’s employment (or service as a Nonemployee
    Director or Consultant) with the Company or one of its
    Subsidiaries, each Award granted under this Plan to the
    Participant shall become immediately vested and fully
    exercisable and any restrictions applicable to the Award shall
    lapse (regardless of the otherwise applicable vesting or
    exercise schedules or performance goals provided for under the
    Award Agreement).

 

    Section 9.2  Exercise
    Period for Options and SARs.  In the event of
    a Change of Control, outstanding Options and SARs shall remain
    exercisable until:

 

    (a) the expiration of the term of the Award or,

 

    (b) if the Participant should die before the expiration of
    the term of the Award, until the earlier of:

 

    (i) the expiration of the term of the Award or

 

    (ii) two (2) years following the date of the
    Participant’s death.

 

    ARTICLE X

    

 

    NON-UNITED
    STATES PARTICIPANTS
    

 

    The Committee may grant Awards to persons outside the United
    States under such terms and conditions as, in the judgment of
    the Committee, may be necessary or advisable to comply with the
    laws of the applicable foreign jurisdictions and, to that end,
    may establish
    sub-plans,
    modified option exercise procedures and other terms and
    procedures. Notwithstanding the above, no actions may be taken
    by the Committee, and no Awards shall be granted, that would
    violate the Exchange Act, the Code, any securities law, any
    governing statute, or any other applicable law.

 

    ARTICLE XI

    

 

    PAYMENT OF
    AWARDS
    

 

    Section 11.1  General.  Payment
    made to a Participant pursuant to an Award may be made in the
    form of cash or Common Stock, or a combination thereof.

 

    Section 11.2  Dividends,
    Earnings and Interest.  Rights to dividends or
    Dividend Equivalents may be extended to and made part of any
    Stock Award, subject to such terms, conditions and restrictions
    as the Committee may establish, including such terms, conditions
    and restrictions as may be necessary to ensure that the Stock
    Awards do not provide for the deferral of compensation within
    the meaning of section 409A of the Code.

 

    Section 11.3  Cash-out
    of Awards.  At the discretion of the
    Committee, an Award that is an Option or SAR may be settled by a
    cash payment equal to the difference between the Fair Market
    Value per share of Common Stock on the date of exercise and the
    Grant Price of the Award, multiplied by the number of shares
    with respect to which the Award is exercised. With respect to
    all Awards other than Options or SARs, at the discretion of the
    Board or the Committee, as applicable, such Awards may be
    settled by a cash payment in an amount that the Board or the
    Committee, as applicable, shall determine in its sole discretion
    is equal to the fair market value of such Awards.

    

    13

 

    ARTICLE XII

    

 

    OPTION
    EXERCISE
    

 

    Section 12.1  Exercise
    in General.  The Grant Price shall be paid in
    full at the time of exercise in cash or, if permitted by the
    Committee and elected by the optionee, the optionee may purchase
    such shares by means of tendering Common Stock or surrendering
    another Award, including Restricted Stock, valued at Fair Market
    Value on the date of exercise, or any combination thereof. The
    Committee shall determine acceptable methods for Participants
    who are Employees or Consultants to tender Common Stock or other
    Employee Awards or Consultant Awards; provided that any Common
    Stock that is or was the subject of an Employee Award or
    Consultant Award may be so tendered only if it has been held by
    the Participant for six months unless otherwise determined by
    the Committee. The Committee may provide for procedures to
    permit the exercise or purchase of such Awards by use of the
    proceeds to be received from the sale of Common Stock issuable
    pursuant to an Award. Unless otherwise provided in the
    applicable Award Agreement, in the event shares of Restricted
    Stock are tendered as consideration for the exercise of an
    Option, a number of the shares issued upon the exercise of the
    Option, equal to the number of shares of Restricted Stock used
    as consideration therefor, shall be subject to the same
    restrictions as the Restricted Stock so submitted as well as any
    additional restrictions that may be imposed by the Committee.
    The Committee may adopt additional rules and procedures
    regarding the exercise of Options from time to time, provided
    that such rules and procedures are not inconsistent with the
    provisions of this ARTICLE XII.

 

    Section 12.2  Exercise
    through Attestation.  An optionee desiring to
    pay the Grant Price of an Option by tendering Common Stock using
    the method of attestation may, subject to any such conditions
    and in compliance with any such procedures as the Committee may
    adopt, do so by attesting to the ownership of Common Stock of
    the requisite value in which case the Company shall issue or
    otherwise deliver to the optionee upon such exercise a number of
    shares of Common Stock subject to the Option equal to the result
    obtained by dividing (a) the excess of the aggregate Fair
    Market Value of the shares of Common Stock subject to the Option
    for which the Option (or portion thereof) is being exercised
    over the Grant Price payable in respect of such exercise by
    (b) the Fair Market Value per share of Common Stock subject
    to the Option, and the optionee may retain the shares of Common
    Stock the ownership of which is attested.

 

    ARTICLE XIII

    

 

    TAXES
    

 

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

    

    14

 

    ARTICLE XIV

    

 

    AMENDMENT,
    MODIFICATION, SUSPENSION, OR TERMINATION OF THE PLAN
    

 

    Section 14.1  In
    General.  The Board may amend, modify,
    suspend, or terminate this Plan for the purpose of meeting or
    addressing any changes in legal requirements or for any other
    purpose permitted by law, except that:

 

    (a) no amendment or alteration that would adversely affect
    the rights of any Participant under any Award previously granted
    to such Participant shall be made without the consent of such
    Participant, and

 

    (b) no amendment or alteration shall be effective prior to
    its approval by the stockholders of the Company to the extent
    such approval is required by applicable legal requirements or
    the applicable requirements of the securities exchange on which
    the Company’s Common Stock is listed.

 

    Section 14.2  Exceptions.  Notwithstanding
    anything herein to the contrary, Options issued under the Plan
    will not be repriced, replaced, or regranted through
    cancellation or by decreasing the exercise price of a previously
    granted Option except as expressly provided by the adjustment
    provisions of ARTICLE XVI.

 

    ARTICLE XV

    

 

    ASSIGNABILITY
    

 

    Unless otherwise determined by the Committee and provided in the
    Award Agreement or the terms of the Award, no Award or any other
    benefit under this Plan shall be assignable or otherwise
    transferable except by will, by beneficiary designation, or by
    the laws of descent and distribution or pursuant to a qualified
    domestic relations order as defined by the Code or Title I
    of the Employee Retirement Income Security Act of 1974, as
    amended, or the rules thereunder. In the event that a
    beneficiary designation conflicts with an assignment by will or
    the laws of descent and distribution, the beneficiary
    designation will prevail. The Committee may prescribe and
    include in applicable Award Agreements or the terms of the Award
    other restrictions on transfer. Any attempted assignment of an
    Award or any other benefit under this Plan in violation of this
    ARTICLE XV shall be null and void.

 

    ARTICLE XVI

    

 

    ADJUSTMENTS
    

 

    Section 16.1  Adjustments
    in General.  The existence of outstanding
    Awards shall not affect in any manner the right or power of the
    Company or its stockholders to make or authorize any or all
    adjustments, recapitalizations, reorganizations, or other
    changes in the capital stock of the Company or its business or
    any merger or consolidation of the Company, or any issue of
    bonds, debentures, preferred or prior preference stock (whether
    or not such issue is prior to, on a parity with or junior to the
    existing Common Stock) or the dissolution or liquidation of the
    Company, or any sale or transfer of all or any part of its
    assets or business, or any other corporate act or proceeding of
    any kind, whether or not of a character similar to that of the
    acts or proceedings enumerated above.

 

    Section 16.2  Proportionate
    Adjustments  (a) In the event of any
    subdivision or consolidation of outstanding shares of Common
    Stock, declaration of a dividend payable in shares of Common
    Stock or other stock split, each of the following shall be
    proportionately adjusted by the Board as appropriate to reflect
    such transaction:

 

    (i) the number of shares of Common Stock reserved under
    this Plan and the number of shares of Common Stock available for
    issuance pursuant to specific types of Awards as described in
    ARTICLE V,

 

    (ii) the number of shares of Common Stock covered by
    outstanding Awards,

 

    (iii) the Grant Price or other price in respect of such
    Awards,

    

    15

 

    (iv) the appropriate Fair Market Value and other price
    determinations for such Awards, and

 

    (v) the Stock Based Awards Limitations.

 

    (b) In the event of any other recapitalization or capital
    reorganization of the Company, any consolidation or merger of
    the Company with another corporation or entity, the adoption by
    the Company of any plan of exchange affecting Common Stock or
    any distribution to holders of Common Stock of securities or
    property (including cash dividends that the Board determines are
    not in the ordinary course of business but excluding normal cash
    dividends or dividends payable in Common Stock), the Board shall
    make appropriate adjustments to:

 

    (i) the number of shares of Common Stock reserved under
    this Plan and the number of shares of Common Stock available for
    issuance pursuant to specific types of Awards as described in
    ARTICLE V,

 

    (ii) the number of shares of Common Stock covered by Awards,

 

    (iii) the Grant Price or other price in respect of such
    Awards,

 

    (iv) the appropriate Fair Market Value and other price
    determinations for such Awards, and

 

    (v) the Stock Based Awards Limitations to reflect such
    transaction; provided that such adjustments shall only be such
    as are necessary to maintain the proportionate interest of the
    holders of the Awards and preserve, without increasing, the
    value of such Awards.

 

    (c) In the event of a corporate merger, consolidation,
    acquisition of assets or stock, separation, reorganization, or
    liquidation, the Board shall be authorized to:

 

    (i) to assume under the Plan previously issued compensatory
    awards, or to substitute Awards for previously issued
    compensatory awards as part of such adjustment; if such event
    constitutes a Change of Control,

 

    (ii) to cancel Awards that are Options or SARs and give the
    Participants who are the holders of such Awards notice and
    opportunity to exercise for 15 days prior to such
    cancellation, or

 

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

 

    ARTICLE XVII

    

 

    RESTRICTIONS
    

 

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

 

    ARTICLE XVIII

    

 

    UNFUNDED PLAN
    

 

    This Plan shall be unfunded. Although bookkeeping accounts may
    be established with respect to Participants under this Plan, any
    such accounts shall be used merely as a bookkeeping convenience,
    including

    

    16

 

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

 

    ARTICLE XIX

    

 

    RIGHT TO
    EMPLOYMENT
    

 

    Nothing in the Plan or an Award Agreement shall interfere with
    or limit in any way the right of the Company or its Subsidiaries
    to terminate any Participant’s employment or other service
    relationship at any time, or confer upon any Participant any
    right to continue in the capacity in which he or she is employed
    or otherwise serves the Company or its Subsidiaries.

 

    ARTICLE XX

    

 

    SUCCESSORS
    

 

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

 

    ARTICLE XXI

    

 

    GOVERNING LAW
    

 

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

 

    ARTICLE XXII

    

 

    EFFECTIVENESS
    AND TERM
    

 

    The Plan will be submitted to the stockholders of the Company
    for approval at the 2007 annual meeting of the stockholders and,
    if approved, shall be effective as of the date first written
    above. No Award shall be made under the Plan ten years or more
    after such date.

    

    17exv4w1

 

Exhibit 4.1

AMENDMENT TO RIGHTS AGREEMENT

     This Amendment No. 1 to Rights Agreement (the “Amendment”) is made as of the 28th day
of January, 2007, by and between Molecular Devices Corporation, a Delaware corporation
(the “Company”), and Computershare Trust Company, N.A. (successor-in-interest to EquiServe
Trust Company, N.A.) (the “Rights Agent”).

     Whereas, the Company is entering into an Agreement and Plan of Merger (as the same
may be amended from time to time, the “Merger Agreement”), among the Company, MDS Inc., , a
Canadian corporation (“Parent”), and Monument Acquisition Corp., a Delaware corporation and an
indirect wholly owned subsidiary of Parent (“Acquisition Sub”), pursuant to which Acquisition Sub
will: (i) make a tender offer to acquire all of the issued and outstanding shares of common stock,
par value $0.001 per share, of the Company (“Company Common Stock”), on the terms and subject to
the conditions set forth in the Merger Agreement (such tender offer, as it may be amended from time
to time, is referred to in this Amendment as the “Offer”); and (ii) after acquiring shares of
Company Common Stock pursuant to the Offer, Acquisition Sub will merge with and into the Company
upon the terms and subject to the conditions set forth in the Merger Agreement;

     Whereas, the Company and the Rights Agent are parties to that certain Rights
Agreement, dated as of October 25, 2001 (the “Rights Agreement”);

     Whereas, the Company desires to amend the Rights Agreement in connection with the
execution and delivery of the Merger Agreement; and

     Whereas, the Board of Directors of the Company has approved this Amendment and
authorized its appropriate officers to execute and deliver the same to the Rights Agent.

     Now, Therefore, in accordance with the procedures for amendment of the Rights
Agreement set forth in Section 27 thereof, and in consideration of the foregoing and the mutual
agreements herein set forth, the parties hereby agree as follows:

     1. Capitalized terms that are not otherwise defined herein shall have the meanings ascribed to
them in the Rights Agreement.

     2. The definition of “Acquiring Person” set forth in Section 1(a) of the Rights Agreement is
amended by adding the following sentence to the end of that section:

     Notwithstanding the foregoing, no Person shall be or become an Acquiring Person
by reason of, and the term Acquiring Person shall not include any Person by reason
of, (i) the approval, execution and delivery of the Agreement and Plan of Merger,
dated as of January 28, 2007, among MDS Inc., a Canadian corporation (“Parent”),
Monument Acquisition Corp., a Delaware corporation and an indirect wholly owned
subsidiary of Parent (“Acquisition Sub”), and the Company (such Agreement and Plan
of Merger, as the same may be amended from time to time, is referred to in this
Agreement as the “Merger Agreement”) or the approval, execution and delivery of any
amendment thereto,

 1.

 

(ii) the acceptance for payment or purchase by Acquisition Sub of Common Shares
pursuant to a tender offer to acquire all of the issued and outstanding Common
Shares to be commenced by Acquisition Sub pursuant to, and on the terms and subject
to the conditions set forth in, the Merger Agreement (such tender offer, as it may
be amended from time to time, is referred to in this Agreement as the “Offer”),
(iii) the merger of Acquisition Sub with and into the Company pursuant to, and on
the terms and subject to the conditions set forth in, the Merger Agreement (such
merger is referred to in this Agreement as the “Merger”), (iv) the consummation of
any other transaction contemplated by the Merger Agreement, or (v) the announcement
of the Merger Agreement, the Merger, the Offer or any other transaction contemplated
by the Merger Agreement.

     3. The definition of “Interested Stockholder” set forth in Section 1(i) of the Rights
Agreement is amended by adding the following sentence to the end of that section:

     Notwithstanding the foregoing, no Person shall be or become an Interested
Stockholder by reason of, and the term Interested Stockholder shall not include any
Person by reason of, (i) the approval, execution and delivery of the Merger
Agreement or any amendment thereto, (ii) the acceptance for payment or purchase by
Acquisition Sub of Common Shares pursuant to the Offer, (iii) the Merger, (iv) the
consummation of any other transaction contemplated by the Merger Agreement, or (v)
the announcement of the Merger Agreement, the Merger, the Offer or any other
transaction contemplated by the Merger Agreement.

     4. The definition of “Shares Acquisition Date” in Section l(n) of the Rights Agreement is
hereby amended by adding the following sentence to the end of that section:

     Notwithstanding anything in this Agreement to the contrary, no Shares
Acquisition Date shall be deemed to have occurred by reason of (i) the approval,
execution and delivery of the Merger Agreement or any amendment thereto, (ii) the
acceptance for payment or purchase by Acquisition Sub of Common Shares pursuant to
the Offer, (iii) the Merger, (iv) the consummation of any other transaction
contemplated by the Merger Agreement, or (v) the announcement of the Merger
Agreement, the Merger, the Offer or any other transaction contemplated by the Merger
Agreement.

     5. Section 3(a) of the Rights Agreement is hereby amended by adding the following sentence to
the end of that section:

     Notwithstanding anything in this Agreement to the contrary, no Distribution
Date shall be deemed to have occurred by reason of (i) the approval, execution and
delivery of the Merger Agreement or any amendment thereto, (ii) the acceptance for
payment or purchase by Acquisition Sub of Common Shares pursuant to the Offer, (iii)
the Merger, (iv) the consummation of any other transaction contemplated by the
Merger Agreement, or (v) the announcement of

 2.

 

the Merger Agreement, the Merger, the Offer or any other transaction
contemplated by the Merger Agreement.

     6. Section 7(a) is amended by deleting the word “or” at the end of Section 7(a)(iii) and by
adding the following clause at the end of Section 7(a):

     , or (iv) the moment in time immediately prior to the Effective Time (as such
term is defined in the Merger Agreement) (the earlier to occur of the events
described in clauses (i) and (iv) of this paragraph (a) shall be referred to herein
as the “Final Expiration Date”).

     7. Section 11(a)(ii) of the Rights Agreement is hereby amended by adding the following
sentence to the end of that section:

     Notwithstanding anything else set forth in this Agreement, no event requiring
an adjustment under this Section 11(a) shall be deemed to have occurred by reason of
(i) the approval, execution and delivery of the Merger Agreement or any amendment
thereto, (ii) the acceptance for payment or purchase by Acquisition Sub of Common
Shares pursuant to the Offer, (iii) the Merger, (iv) the consummation of any other
transaction contemplated by the Merger Agreement, or (v) the announcement of the
Merger Agreement, the Merger, the Offer or any other transaction contemplated by the
Merger Agreement.

     8. Sections 13(a) of the Rights Agreement is hereby amended by adding the following sentence
to the end of that section:

     Notwithstanding anything in this Agreement to the contrary, none of the events
described in clauses (x) through (z) of the first sentence of Section 13(a) shall be
deemed to have occurred as a result of (i) the approval, execution and delivery of
the Merger Agreement or any amendment thereto, (ii) the acceptance for payment or
purchase by Acquisition Sub of Common Shares pursuant to the Offer, (iii) the
Merger, (iv) the consummation of any other transaction contemplated by the Merger
Agreement, or (v) the announcement of the Merger Agreement, the Merger, the Offer or
any other transaction contemplated by the Merger Agreement.

     9. The first phrase of Section 13(c) of the Rights Agreement is hereby amended to read in its
entirety as follows, with the remaining portion of Section 13(c) being unchanged and remaining in
full force and effect:

     The Company shall not consummate any such consolidation, merger (other than any
such transaction contemplated by the Merger Agreement, including the Merger), sale
or transfer unless the Principal Party shall have a sufficient number of authorized
Common Shares that have not been issued or reserved for issuance to permit the
exercise in full of the Rights in accordance with this Section 13 and unless prior
thereto the Company and each Principal Party and each other Person who may become a
Principal Party as a result of such consolidation, merger, sale or transfer shall
have (i) executed and delivered to the

 3.

 

Rights Agent a supplemental agreement providing for the terms set forth in
paragraphs (a) and (b) of this Section 13 and (ii) prepared, filed and had declared
and remain effective a registration statement under the Act on the appropriate form
with respect to the Rights and the securities exercisable upon exercise of the
Rights and further providing that, as soon as practicable after the date of any
consolidation, merger, sale or transfer of assets mentioned in paragraph (a) of this
Section 13, the Principal Party at its own expense will:

     10. Section 13(d)(i) of the Rights Agreement is hereby amended to read in its entirety as
follows:

     (i) consolidate with (other than by any transaction contemplated by the Merger
Agreement, including the Merger),

     11. Section 13(d)(ii) of the Rights Agreement is hereby amended to read in its entirety as
follows:

     (ii) merge with or into (other than by any transaction contemplated by the
Merger Agreement, including the Merger),

     12. Section 30 of the Rights Agreement is hereby amended by adding the following sentence to
the end of that section:

     Nothing in this Agreement shall be construed to give any holder of Rights or
any other Person any legal or equitable rights, remedies or claims under this
Agreement by virtue of (i) the approval, execution and delivery of the Merger
Agreement or any amendment thereto, (ii) the acceptance for payment or purchase by
Acquisition Sub of Common Shares pursuant to the Offer, (iii) the Merger, (iv) the
consummation of any other transaction contemplated by the Merger Agreement, or (v)
the announcement of the Merger Agreement, the Merger, the Offer or any other
transaction contemplated by the Merger Agreement.

     13. The Rights Agreement, as amended by this Amendment, shall remain in full force and effect
in accordance with its terms.

     14. All of the covenants and provisions of this Amendment by or for the benefit of the Company
or the Rights Agent shall bind and inure to the benefit of their respective successors and assigns
hereunder.

     15. Nothing in this Amendment shall be construed to give to any person or corporation other
than the Company, the Parent, the Acquisition Sub, the Rights Agent and the registered holders of
the Right Certificates (and, prior to the Distribution Date, the Common Shares) any legal or
equitable right, remedy or claim under this Amendment; but this Amendment shall be for the sole and
exclusive benefit of the Company, the Parent, the Acquisition Sub, the Rights Agent and the
registered holders of the Right Certificates (and, prior to the Distribution Date, the Common
Shares).

 4.

 

     16. If any term, provision, covenant or restriction of this Amendment is held by a court of
competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Amendment shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.

     17. This Amendment shall be deemed to be a contract made under the laws of the State of
Delaware and for all purposes shall be governed by and construed in accordance with the laws of
such State applicable to contracts to be made and performed entirely within such State.

     18. This Amendment may be executed in any number of counterparts and each of such counterparts
shall for all purposes be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.

     19. The Company hereby certifies to the Rights Agent that this Amendment is in compliance with
Section 27 of the Rights Agreement.

     20. In Section 21. Change of Rights Agent. After first sentence ending with “...by first-class
mail.” add: “In the event the transfer agency relationship in effect between the Company and the
Rights Agent terminates, the Rights Agent will be deemed to resign automatically on the effective
date of such termination; and any required notice will be sent by the Company.”

     21. Insert a new Section – “Force Majeure”. Notwithstanding anything to the contrary
contained herein, Rights Agent shall not be liable for any delays or failures in performance
resulting from acts beyond its reasonable control including, without limitation, acts of God,
terrorist acts, shortage of supply, breakdowns or malfunctions, interruptions or malfunction of
computer facilities, or loss of data due to power failures or mechanical difficulties with
information storage or retrieval systems, labor difficulties, war, or civil unrest.

 5.

 

In Witness Whereof, the parties herein have caused this Amendment to be duly
executed and attested, all as of the date and year first above written.

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Molecular Devices Corporation 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ Timothy A. Harkness	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Name: Timothy A. Harkness	 	 
	 

	 	 	 	 	 	 	 	Title: Chief Financial Officer and
Senior Vice President Finance and
Operations	 	 
	Attest:

	 	/s/ Trent Basarsky	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	Name: Trent Basarsky	 	 	 	 	 	 	 	 
	 

	 	Title: Director, Corporate Development	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Computershare Trust Company, N.A.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ Dennis V. Moccia	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Name: Dennis V. Moccia	 	 
	 

	 	 	 	 	 	 	 	Title: Managing Director	 	 
	Attest:

	 	/s/ Dan Glennon	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 
	 

	 	Name: Dan Glennon	 	 	 	 	 	 	 	 
	 

	 	Title: Relationship Manager	 	 	 	 	 	 	 	 

 6.

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