Document:

exv10w1

 

Exhibit 10.1

AMENDMENT TO

HARVEST NATURAL RESOURCES

2006 LONG TERM INCENTIVE PLAN

          This Amendment to the Harvest Natural Resources 2006 Long Term Incentive Plan (this
“Amendment”) is adopted by Harvest Natural Resources, Inc. (“Harvest”) effective July 19, 2006.

          WHEREAS, Harvest previously established the Harvest Natural Resources 2006 Long Term Incentive
Plan (the “Plan”); and

          WHEREAS, Harvest desires to amend the Plan to restrict the ability of the Committee and the
Board to shorten or eliminate the Restriction Period in a Restricted Stock Agreement except under
certain circumstances;

          NOW, THEREFORE, Section 8.1 of the Plan is hereby amended by adding the following after the
final sentence:

“Notwithstanding any provision in this Plan to the contrary, neither the Committee
nor the Board may shorten or eliminate the Restriction Period in a Restricted Stock
Agreement except on a case-by-case basis (i) involving Employees, Consultants or
Directors whose employment or service has terminated for reasons other than cause;
or (ii) where the number of shares of Restricted Stock subject to the shortened or
eliminated Restriction Period constitutes not more than five percent of the maximum
amount of Stock which may be issued under the Plan in satisfaction of exercised
Options or SARs, or issued as Restricted Stock.”

          Capitalized terms not defined in this Amendment shall have the meaning given to them in the
Plan.

          This Amendment is adopted, and shall be considered, as an amendment to the Plan and shall form
a part thereof, and the provisions of the Plan, as amended by this Amendment, are hereby ratified
and confirmed in all respects.exv10w1

 

Exhibit 10.1

AMENDMENT NO. TWO

TO THE

ATMOS ENERGY CORPORATION

PERFORMANCE-BASED

SUPPLEMENTAL EXECUTIVE BENEFITS PLAN

(EFFECTIVE DATE: AUGUST 12, 1998)

     WHEREAS, ATMOS ENERGY CORPORATION (the “Company”) has adopted the Atmos Energy Corporation
Performance-Based Supplemental Executive Benefits Plan Effective August 12, 1998, as amended (the
“Plan”);

     WHEREAS, pursuant to the provisions of Section 9.1 of the Plan, the Board of Directors of the
Company amended the Plan, effective as of October 1, 2006, to reflect the change in the benefit
formula for retirement benefits under the Plan; and

     WHEREAS, the Company desires to reduce to writing said amendment to the Plan.

     NOW, THEREFORE, Atmos Energy Corporation does hereby amend the Plan, effective as of October
1, 2006, as follows:

     1. Section 2.1(l) is amended by striking said Section and substituting in lieu thereof
the following:

     (l) Reserved.

     2. Section 2.1(t) is amended by striking said Section and substituting in lieu thereof
the following:

     (t) Reserved.

     3. Section 2.1(z) is amended by striking said Section and substituting in lieu thereof
the following:

     (z) Reserved.

     4. Section 5.2 is amended by striking said Section and substituting in lieu thereof
the following:

          Section 5.2. Amount of Supplemental Pension:

(a) Upon Retirement. Except as otherwise provided in the
Participant’s Participation Agreement, the Supplemental Pension payable to
a Participant who Retires, and who has been an Eligible Employee for at
least two years shall, unless reduced as provided in paragraph (c) below,
equal (i) minus (ii) as follows:

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	 	(i)	 	Sixty Percent (60%) of the
Participant’s Compensation, reduced if the Participant has
fewer than ten (10) years of vesting service under the
Pension Plan by one-tenth (1/10th) for each year of his
vesting service less than ten (10);
	 
	 	(ii)	 	The monthly amount of pension
payable to the Participant under the Pension Plan as of the
date that his Supplemental Pension commences, assuming
payment in the normal form applicable to him under the
Pension Plan.

(b) Reduction for Early Commencement of Supplemental Pensions.
If a Participant’s Supplemental Pension commences before the Participant
attains age 62, the amount determined under subparagraph (a)(i) above
shall, unless otherwise provided in a Participation Agreement, be reduced
by 2% per year for the first two (2) years (or fractional years thereof,
based on full months) that the date of commencement precedes age 62, and
by 4% per year for the next five (5) years (or fractional years thereof,
based on full months) that the date of commencement precedes age 60.

(c) Cost of Living and Other Adjustments. A Participant who has
begun to receive his Supplemental Pension shall be entitled to receive any
cost of living or other adjustments to which he is otherwise entitled
pursuant to the Pension Plan, and his Supplemental Pension shall not be
reduced by such adjustments. If a Participant would not be entitled to
receive a cost of living or other adjustment due to statutory or
regulatory limitations on Pension Plan benefits, the Supplemental Pension
shall be increased by the amount of such adjustment for the time the
limitations are in effect.

(d) Upon Involuntary Termination Prior to a Change in Control.
The Supplemental Pension payable to a Participant who suffers an
Involuntary Termination prior to a Change in Control shall be determined
in accordance with paragraph (a) above, but, except as otherwise provided
in the Participant’s Participation Agreement, for purposes of subparagraph
(a)(i), shall be based upon his Compensation and years of vesting service
under the Pension Plan calculated as of the date of his Involuntary
Termination.

     5. Section 5.5(b) is amended by striking said Section and substituting in lieu thereof
the following:

(b) Amount of Supplemental Pension.  The Supplemental
Pension payable to a Participant described in paragraph (a) above

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shall be
calculated in the same manner as set forth in Section 9.1(c) for benefits
payable in the event of a termination of the Plan, but based on his
Compensation as of the date of his employment termination or the date his
participation in the Plan is terminated, whichever is applicable.

     6. Section 9.1 of the Plan is amended by adding the following paragraph (d) at the end
of said Section:

(d) Amendments to Comply with Internal Revenue Code Section 409A.
 Notwithstanding any of the foregoing provisions of this Section 9.1
or any of the terms and conditions of the Participation Agreement to the
contrary, the Board of Directors reserves the right, in its sole
discretion, to amend the Plan and/or any Participation Agreement in any
manner it deems necessary or desirable in order to comply with or
otherwise address issues resulting from Section 409A of the Internal
Revenue Code of 1986, as amended.

     7. The Participation Agreement attached as Exhibit A to the Plan is amended by adding at
the end of Section 5 of said Participation Agreement the following:

Notwithstanding any of the terms and conditions of this Participation
Agreement or Section 9.1 of the Plan to the contrary, the Board of
Directors reserves the right, in its sole discretion, to amend the Plan
and/or this Participation Agreement in any manner it deems necessary or
desirable in order to comply with or otherwise address issues resulting
from Section 409A of the Internal Revenue Code of 1986, as amended.

     6. Exhibit B to the Plan is amended by striking said Exhibit and substituting in lieu
thereof the Exhibit B attached to this Amendment No. Two.

     IN WITNESS WHEREOF, the Company has caused this AMENDMENT NO. TWO TO THE ATMOS ENERGY
CORPORATION PERFORMANCE-BASED
SUPPLEMENTAL EXECUTIVE BENEFITS PLAN (EFFECTIVE DATE: AUGUST 12, 1998), to be executed in its name
and on its behalf this 1st day of March, 2007, effective as of the date provided herein.

	 	 	 	 	 
	 	ATMOS ENERGY CORPORATION

 	 
	 	By:  	/s/  ROBERT W. BEST
 	 
	 	 	Robert W. Best 	 
	 	 	Chairman of the Board, President and
Chief Executive Officer 	 

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EXHIBIT B

ATMOS ENERGY CORPORATION

SUMMARY OF ACTUARIAL ASSUMPTIONS AND METHODS

FOR

DETERMINING ANNUAL PERFORMANCE-BASED SEBP TRUST

FUNDING LIABILITIES

Actuarial Assumptions

	 	 	 	 	 
	Discount Rate
	 	 	8	%
	 
	 	 	 	 
	Mortality
	 	 	 	 
	Prior to Age 62
	 	None
	After Age 62
	 	IRS Code Section 417(e)(3)
 Applicable Mortality Table*
	 
	 	 	 	 
	Salary Scale
	 	 	0	%
	 
	 	 	 	 
	Target Percentage
	 	 	60	%

 

			
	*	 	The table prescribed in Rev. Rul. 2001-62, or such other mortality table which in the future may
be specified from time to time as the applicable mortality table for purposes of Code Section
417(e)(3).

Method for Determining Liabilities

The liability determined is the present value as of the valuation date of the projected age 62
Performance-Based Supplemental Executive Benefits Plan benefit. The projected age 62 benefit is
based on Performance-Based Supplemental Executive Benefits Plan compensation determined as the sum
of (1) and (2) as follows:

	 	(1)	 	The greater of (A) the Participant’s annual base salary at the date of his
termination of employment, or (B) the average of the Participant’s annual base salary
for the highest three (3) calendar years (whether or not consecutive) of the
Participant’s employment with the Employer.
	 
	 	(2)	 	The greater of (A) the Participant’s last Performance Award or (B) the
average of the highest three (3) Performance Awards (whether or not consecutive).

     The qualified plan offset is the projected age 62 qualified plan benefit with no salary scale
or wage base projections.

4exv10w2

 

Exhibit 10.2

ATMOS ENERGY CORPORATION

1998 LONG-TERM INCENTIVE PLAN

(as amended and restated February 9, 2007)

     The Atmos Energy Corporation 1998 Long-Term Incentive Plan (hereinafter called the “Plan”) was
adopted by the Board of Directors of Atmos Energy Corporation, a Texas and Virginia corporation
(hereinafter called the “Company”) on August 12, 1998 to be effective October 1, 1998, and was
approved by the Company’s shareholders on February 10, 1999. An amendment to the Plan was approved
by the Board of Directors on August 8, 2001, which amendment was approved by the Company’s
shareholders on February 13, 2002. The Plan was further amended by the Board of Directors on
November 7, 2006, which amendment was approved by the Company’s shareholders on February 7, 2007.

ARTICLE 1

PURPOSE

     The purpose of the Plan is to attract and retain the services of able persons as employees of
the Company and its Subsidiaries and as Non-employee Directors (as herein defined), to provide such
persons with a proprietary interest in the Company through the granting of incentive stock options,
non-qualified stock options, stock appreciation rights or restricted stock and to motivate
employees and Non-employee Directors using performance-related incentives linked to longer-range
performance goals and the interests of the Company’s shareholders, whether granted singly, or in
combination, or in tandem, that will

     (a) increase the interest of such persons in the Company’s welfare;

     (b) furnish an incentive to such persons to continue their services for the
Company; and

     (c) provide a means through which the Company may attract able persons as
employees and Non-employee Directors.

     With respect to Reporting Participants, the Plan and all transactions under the Plan are
intended to comply with all applicable conditions of Rule 16b-3 promulgated under the Securities
Exchange Act of 1934 (the “1934 Act”). To the extent any provision of the Plan or action by the
Committee fails to so comply, it shall be deemed null and void ab initio, to the extent permitted
by law and deemed advisable by the Committee. Further, any Awards granted under the Plan to a
Non-employee Director shall be solely to compensate said Director for his services to the Company
as a Non-employee Director.

 

 

ARTICLE 2

DEFINITIONS

     For the purpose of the Plan, unless the context requires otherwise, the following terms shall
have the meanings indicated:

     2.1 “Award” means the grant of any Incentive Stock Option, Non-qualified Stock Option, SAR,
Restricted Stock, Restricted Stock Unit, Performance Unit, Performance Share, Bonus Stock or other
Stock Unit Award whether granted singly, in combination or in tandem (each individually referred to
herein as an “Incentive”). “Award” also means any Incentive to which an award under the Management
Incentive Plan is made or converted.

     2.2 “Award Agreement” means a written agreement between a Participant and the Company, which
sets out the terms of the grant of an Award.

     2.3 “Award Period” means the period during which one or more Incentives granted under an Award
may be exercised or earned.

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

     2.5 “Bonus Stock” means an Award granted pursuant to Section 6.8 of the Plan expressed as a
share of Common Stock which may or may not be subject to restrictions.

     2.6 (a) “Change in Control” of the Company shall be deemed to have occurred if:

     (i) Any “Person” (as defined in Section 2.6(b)(i) below), other than
(1) the Company or any of its Subsidiaries, (2) a trustee or other
fiduciary holding securities under an employee benefit plan of the Company
or any of its Affiliates, (3) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (4) a
corporation owned, directly or indirectly, by the shareholders of the
Company in substantially the same proportions as their ownership of stock
of the Company, is or becomes the “beneficial owner” (as defined in
Section 2.6(b)(ii) below), directly or indirectly, of securities of the
Company (not including in the securities beneficially owned by such person
any securities acquired directly from the Company or its Affiliates)
representing 33-1/3% or more of the combined voting power of the Company’s
then outstanding securities, or 33-1/3% or more of the then outstanding
common stock of the Company, excluding any Person who becomes such a
beneficial owner in connection with a transaction described in
subparagraph (iii)(A) below.

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     (ii) During any period of two consecutive years (the “Period”),
individuals who at the beginning of the Period constitute the Board of
Directors of the Company and any “new director” (as defined in Section
2.6(b)(iii) below) cease for any reason to constitute a majority of the
Board of Directors.

     (iii) There is consummated a merger or consolidation of the Company
or any direct or indirect subsidiary of the Company with any other
corporation, except if:

     (A) the merger or consolidation would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or
any parent thereof) at least sixty percent (60%) of the combined
voting power of the voting securities of the Company or such
surviving entity or any parent thereof outstanding immediately
after such merger or consolidation; or

     (B) the merger or consolidation is effected to implement a
recapitalization of the Company (or similar transaction) in which
no Person is or becomes the beneficial owner, directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities
acquired directly from the Company or its Affiliates other than
in connection with the acquisition by the Company or its
Affiliates of a business) representing 60% or more of the
combined voting power of the Company’s then outstanding
securities;

     (iv) The shareholders of the Company approve a plan of complete
liquidation or dissolution of the Company or an agreement for the sale or
disposition by the Company of all or substantially all the Company’s
assets, other than a sale or disposition by the Company of all or
substantially all of the Company’s assets to an entity, at least 60% of
the combined voting power of the voting securities of which are owned by
the stockholders of the Company in substantially the same proportions as
their ownership of the Company immediately prior to such sale.

          (b) Definitions. For purposes of Section 2.6(a) above,

     (i) “Person” shall have the meaning given in Section 3(a)(9) of the
1934 Act as modified and used in Sections 13(d) and 14(d) of the 1934 Act.

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     (ii) “Beneficial owner” shall have the meaning provided in Rule 13d-3
under the 1934 Act.

     (iii) “New director” shall mean an individual whose election by the
Company’s Board of Directors or nomination for election by the Company’s
shareholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning
of the Period or whose election or nomination for election was previously
so approved or recommended. However, “new director” shall not include a
director whose initial assumption of office is in connection with an
actual or threatened election contest, including but not limited to a
consent solicitation relating to the election of directors of the Company.

     (iv) “Affiliate” shall have the meaning set forth in Rule 12b-2
promulgated under Section 12 of the 1934 Act.

     2.7 “Code” means the Internal Revenue Code of 1986, as amended, together with the published
rulings, regulations, and interpretations duly promulgated thereunder.

     2.8 “Committee” means the committee appointed or designated by the Board to administer the
Plan in accordance with Article 3 of this Plan.

     2.9 “Common Stock” means the common stock, with no par value (stated value of $.005 per
share), which the Company is currently authorized to issue or may in the future be authorized to
issue.

     2.10 “Company” means Atmos Energy Corporation, a Texas and Virginia corporation, and any
successor entity.

     2.11 “Covered Participant” means a Participant who is a “covered employee” as defined in
Section 162(m)(3) of the Code, and the regulations promulgated thereunder, or who the Committee
believes will be such a covered employee for a Performance Period, and who the Committee believes
will have remuneration in excess of $1,000,000 for the Performance Period, as provided in Section
162(m) of the Code.

     2.12 “Date of Grant” means the effective date on which an Award is made to a Participant as
set forth in the applicable Award Agreement; provided, however, that solely for purposes of Section
16 of the 1934 Act and the rules and regulations promulgated thereunder, the Date of Grant of an
Award shall
be the date of stockholder approval of the Plan if such date is later than the effective date of
such Award as set forth in the Award Agreement.

     2.13 “Employee” means common law employee (as defined in accordance with the Regulations and
Revenue Rulings then applicable under Section 3401(c) of the Code) of the Company or any Subsidiary
of the Company.

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     2.14 “Fair Market Value” of a share of Common Stock is the mean of the highest and lowest
prices per share on the New York Stock Exchange Consolidated Tape, or such reporting service as the
Board may select, on the appropriate date, or in the absence of reported sales on such day, the
most recent previous day for which sales were reported.

     2.15 “Incentive Stock Option” or “ISO” means an incentive stock option within the meaning of
Section 422 of the Code, granted pursuant to this Plan.

     2.16 “Management Incentive Plan” means the Atmos Energy Corporation Annual Incentive Plan for
Management, as amended from time to time.

     2.17 “Non-employee Director” means a member of the Board who is not an Employee and who
satisfies the requirements of Rule 16b-3(b)(3) promulgated under the 1934 Act or any successor
provision.

     2.18 “Non-qualified Stock Option” or “NQSO” means a non-qualified stock option, granted
pursuant to this Plan.

     2.19 “Option Price” means the price which must be paid by a Participant upon exercise of a
Stock Option to purchase a share of Common Stock.

     2.20 “Participant” shall mean an Employee or Non-employee Director to whom an Award is granted
under this Plan.

     2.21 “Performance Award” means a performance-based Award, which may be in the form of either
Performance Shares or Performance Units.

     2.22 “Performance Criteria” or “Performance Goals” or “Performance Measures” mean the
objectives established by the Committee for a Performance Period, for the purpose of determining
when an Award subject to such objectives is earned.

     2.23 “Performance Period” means the time period designated by the Committee during which
performance goals must be met.

     2.24 “Performance Share” means an Award, designated as a Performance Share, granted to a
Participant pursuant to Section 6.7 hereof, the value of which is determined, in whole or in part,
by the value of Common Stock in a manner deemed appropriate by the Committee and described in the
Agreement.

     2.25 “Performance Unit” means an Award, designated as a Performance Unit, granted to a
Participant pursuant to Section 6.7 hereof, the value of which is determined, in whole or in part,
by the attainment of pre-established goals relating to Company financial or operating performance
as deemed appropriate by the Committee and described in the Award Agreement.

     2.26 “Plan” means The Atmos Energy Corporation 1998 Long-Term Incentive Plan, as amended from
time to time.

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     2.27 “Reporting Participant” means a Participant who is subject to the reporting requirements
of Section 16 of the 1934 Act.

     2.28 “Restricted Stock” means shares of Common Stock issued or transferred to a Participant
pursuant to Section 6.4 of this Plan which are subject to restrictions or limitations set forth in
this Plan and in the related Award Agreement.

     2.29 “Restricted Stock Unit” means a fixed or variable dollar denominated right to acquire
Common Stock, which may or may not be subject to restrictions, contingently awarded under Section
6.4 of the Plan.

     2.30 “Retirement” means any Termination of Service solely due to retirement upon attainment of
age 65, or permitted early retirement as determined by the Committee.

     2.31 “SAR” means the right to receive a payment, in cash and/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 SAR
is exercised over the SAR Price for such shares.

     2.32 “SAR Price” means the Fair Market Value of each share of Common Stock covered by an SAR,
determined on the Date of Grant of the SAR.

     2.33 “Stock Option” means a Non-qualified Stock Option or an Incentive Stock Option.

     2.34 “Stock Unit Award” means awards of Common Stock or other awards pursuant to Section 6.9
hereof that are valued in whole or in part by reference to, or are otherwise based on, shares of
Common Stock or other securities of the Company.

     2.35 “Subsidiary” means (i) any corporation in an unbroken chain of corporations beginning
with the Company, if each of the corporations other than the last corporation in the unbroken chain
owns stock possessing a majority of the total combined voting power of all classes of stock in one
of the other corporations in the chain, (ii) any limited partnership, if the Company or any
corporation described in item (i) above owns a majority of the general partnership interest and a
majority of the limited partnership interests entitled to vote on the removal and replacement of
the general partner, and (iii) any partnership or limited liability company, if the partners or
members thereof are composed only of the Company, any corporation listed in item (i) above or any
limited partnership listed in item (ii) above. “Subsidiaries” means more than one of any such
corporations, limited partnerships, partnerships or limited liability companies.

     2.36 “Termination of Service” occurs when a Participant who is an Employee or Non-employee
Director shall cease to serve as an Employee or Non-employee Director for any reason.

     2.37 “Total and Permanent Disability” means a Participant is qualified for long-term
disability benefits under The Atmos Energy Corporation Group Long-Term Disability Plan as in effect
from time to time; or, if such Plan is not then in

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existence, that the Participant, because of ill
health, physical or mental disability or any other reason beyond his or her control, is unable to
perform his or her duties of employment for a period of six (6) continuous months, as determined in
good faith by the Committee; provided that, with respect to any Incentive Stock
Option, Total and Permanent Disability shall have the meaning given it under the rules governing
Incentive Stock Options under the Code.

ARTICLE 3

ADMINISTRATION

     The Plan shall be administered by the Human Resources Committee of the Board (the “Committee”)
unless otherwise determined by the Board. If said Human Resources Committee does not so serve, the
Committee shall consist of not fewer than two persons; any member of the Committee may be removed
at any time, with or without cause, by resolution of the Board; and any vacancy occurring in the
membership of the Committee may be filled by appointment by the Board.

     All actions to be taken by the Committee under this Plan, insofar as such actions affect
compliance with Section 162(m) of the Code, shall be limited to those members of the Board who are
Non-employee Directors and who are “outside directors” under Section 162(m). The Committee shall
select one of its members to act as its Chairman. A majority of the Committee shall constitute a
quorum, and the act of a majority of the members of the Committee present at a meeting at which a
quorum is present shall be the act of the Committee.

     The Committee shall determine and designate from time to time the eligible persons to whom
Awards will be granted and shall set forth in each related Award Agreement, the Award Period, the
Date of Grant, and such other terms, provisions, limitations, and performance requirements, as are
approved by the Committee, but not inconsistent with the Plan, including, but not limited to, any
rights of the Committee to cancel or rescind any such Award. The Committee shall determine whether
an Award shall include one type of Incentive, two or more Incentives granted in combination, or two
or more Incentives granted in tandem (that is, a joint grant where exercise of one Incentive
results in cancellation of all or a portion of the other Incentive).

     The Committee, in its discretion, shall (i) interpret the Plan, (ii) prescribe, amend, and
rescind any rules and regulations necessary or appropriate for the administration of the Plan, and
(iii) make such other determinations and take such other action as it deems necessary or advisable
in the administration of the Plan. Any interpretation, determination, or other action made or taken
by the Committee shall be final, binding, and conclusive on all interested parties.

     With respect to restrictions in the Plan that are based on the requirements of Rule 16b-3
promulgated under the 1934 Act, Section 422 of the Code, Section 162(m) of the Code, the rules of
any exchange or inter-dealer quotation system upon which the Company’s securities are listed or
quoted, or any other applicable law, rule or restriction (collectively, “applicable law”), to the
extent that any such restrictions are

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no longer required by applicable law, the Committee shall
have the sole discretion and authority to grant Awards that are not subject to such mandated
restrictions and/or to waive any such mandated restrictions with respect to outstanding Awards.

ARTICLE 4

ELIGIBILITY

     Any Employee (including an Employee who is also a director or an officer) and any Non-employee
Director is eligible to participate in the Plan. The Committee, upon its own action, may grant,
but shall not be required to grant, an Award to any Employee or any Non-employee Director. Awards
may be granted by the Committee at any time and from time to time to new Participants, or to then
Participants, or to a greater or lesser number of Participants, and may include or exclude previous
Participants, as the Committee shall determine. Except as required by this Plan, different Awards
need not contain similar provisions. The Committee’s determinations under the Plan (including
without limitation determinations of which Employees or Non-employee Directors, if any, are to
receive Awards, the form, amount and timing of such Awards, the terms and provisions of such Awards
and the agreements evidencing same) need not be uniform and may be made by it selectively among
Employees and Non-employee Directors who receive, or are eligible to receive, Awards under the
Plan.

ARTICLE 5

SHARES SUBJECT TO PLAN

     Subject to adjustment as provided in Articles 14 and 15, the maximum number of shares of
Common Stock that may be delivered pursuant to Awards granted under the Plan is (a) 6,500,000
shares; plus (b) shares of Common
Stock previously subject to Awards which are forfeited, terminated, cancelled or rescinded, settled
in cash in lieu of Common Stock, or exchanged for Awards that do not involve Common Stock, or
expired unexercised.

     Shares to be issued may be made available from authorized but unissued Common Stock, Common
Stock held by the Company in its treasury, or Common Stock purchased by the Company on the open
market or otherwise. During the term of this Plan, the Company will at all times reserve and keep
available the number of shares of Common Stock that shall be sufficient to satisfy the requirements
of this Plan.

ARTICLE 6

GRANT OF AWARDS

     6.1 In General. The grant of an Award shall be authorized by the Committee and shall be
evidenced by an Award Agreement setting forth the

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Incentive or Incentives being granted, the total
number of shares of Common Stock subject to the Incentive(s), the Option Price (if applicable), the
Award Period, the Date of Grant, and such other terms, provisions, limitations, and performance
objectives, as are approved by the Committee, but not inconsistent with the Plan. The Company
shall execute an Award Agreement with a Participant after the Committee approves the issuance of an
Award. Any Award granted pursuant to this Plan must be granted within ten (10) years of the date
of adoption of this Plan. The grant of an Award to a Participant shall not be deemed either to
entitle the Participant to, or to disqualify the Participant from, receipt of any other Award under
the Plan.

     If the Committee establishes a purchase price for an Award, the Participant must accept such
Award within a period of 30 days (or such shorter period as the Committee may specify) after the
Date of Grant by executing the applicable Award Agreement and paying such purchase price.

     6.2 Maximum ISO Grants. The Committee may not grant Incentive Stock Options under the Plan to
any Employee which would permit the aggregate Fair Market Value (determined on the Date of Grant)
of the Common Stock with respect to which Incentive Stock Options (under this and any other plan of
the Company and its Subsidiaries) are exercisable for the first time by such Employee during any
calendar year to exceed $100,000. To the extent any Stock Option granted under this Plan, which is
designated as an Incentive Stock Option exceeds this limit or otherwise fails to qualify as an
Incentive Stock Option, such Stock Option shall be a Non-qualified Stock Option. The Committee may
not grant Incentive Stock Options to Non-employee Directors.

     6.3 Maximum Individual Grants. No Participant may receive during any fiscal year of the
Company Awards of Stock Options and SARs covering an aggregate of more than five hundred thousand
(500,000) shares of Common Stock.

     6.4 Restricted Stock/Restricted Stock Units. If Restricted Stock and/or Restricted Stock
Units are granted to a Participant under an Award, the Committee shall set forth in the related
Award Agreement: (i) the number of shares of Common Stock and/or the number of Restricted Stock
Units awarded, (ii) the price, if any, to be paid by the Participant for such Restricted Stock
and/or Restricted Stock Units, (iii) the time or times within which such Award may be subject to
forfeiture, (iv) specified Performance Goals of the Company, a Subsidiary, any division thereof or
any group of Employees of the Company, or other criteria, which the Committee determines must be
met in order to remove any restrictions (including vesting) on such Award, and (v) all other terms,
limitations, restrictions, and conditions of the Restricted Stock and/or Restricted Stock Units,
which shall be consistent with this Plan. The provisions of Restricted Stock and/or Restricted
Stock Units need not be the same with respect to each Participant.

     (a) Legend on Shares. Each Participant who is awarded Restricted
Stock shall be issued a stock certificate or certificates in respect of such shares of Common Stock. Such certificate(s) shall be registered in the name of
the Participant, and shall bear an appropriate legend referring to the terms,
conditions, and restrictions

9

 

applicable to such Restricted Stock, substantially as
provided in Section 18.12 of the Plan. The Committee may require that the stock
certificates evidencing shares of Restricted Stock be held in custody by the
Company until the restrictions thereon shall have lapsed, and that the Participant
deliver to the Committee a stock power or stock powers, endorsed in blank,
relating to the shares of Restricted Stock.

     (b) Restrictions and Conditions. Shares of Restricted Stock and
Restricted Stock Units shall be subject to the following restrictions and
conditions:

     (i) Subject to the other provisions of this Plan and the terms of the
particular Award Agreements, during such period as may be determined by
the Committee commencing on the Date of Grant (the “Restriction Period”),
the Participant shall not be permitted to sell, transfer, pledge or assign shares of Restricted Stock and/or Restricted Stock Units. Except for
these limitations, the Committee may in its sole discretion, remove any or
all of the restrictions on such Restricted Stock and/or Restricted Stock
Units whenever it may determine that, by reason of changes in applicable
laws or other changes in circumstances arising after the date of the
Award, such action is appropriate.

     (ii) Except as provided in subparagraph (i) above, the Participant
shall have, with respect to his or her Restricted Stock, all of the rights
of a stockholder of the Company, including the right to vote the shares,
and the right to receive any dividends thereon. Certificates for shares
of Common Stock free of restriction under this Plan shall be delivered to
the Participant promptly after, and only after, the Restriction Period
shall expire without forfeiture in respect of such shares of Common Stock.
Certificates for the shares of Common Stock forfeited under the
provisions of the Plan and the applicable Award Agreement shall be
promptly returned to the Company by the forfeiting Participant. Each
Award Agreement shall require that (x) each Participant, by his or her
acceptance of Restricted Stock, shall irrevocably grant to the Company a
power of attorney to transfer any shares so forfeited to the Company and
agrees to execute any documents requested by the Company in connection
with such forfeiture and transfer, and (y) such provisions regarding
returns and transfers of stock certificates with respect to forfeited shares of Common Stock shall be specifically performable by the Company in
a court of equity or law.

     (iii) The Restriction Period of Restricted Stock and/or Restricted
Stock Units shall commence on the Date of Grant and, subject to Article 15
of the Plan, unless otherwise established by the Committee in the Award
Agreement setting

10

 

forth the terms of the Restricted Stock and/or
Restricted Stock Units, shall expire upon satisfaction of the conditions
set forth in the Award Agreement; such conditions may provide for vesting
based on (i) length of continuous service, (ii) achievement of specific
business objectives, (iii) increases in specified indices, (iv) attainment
of specified growth rates, or (v) other comparable Performance
Measurements, as may be determined by the Committee in its sole
discretion.

     (iv) Subject to the provisions of the particular Award Agreement,
upon Termination of Service for any reason during the Restriction Period,
the nonvested shares of Restricted Stock and/or Restricted Stock Units
shall be forfeited by the Participant. In the event a Participant has paid
any consideration to the Company for such forfeited Restricted Stock
and/or Restricted Stock Units, the Company shall, as soon as practicable
after the event causing forfeiture (but in any event within 5 business
days), pay to the Participant, in cash, an amount equal to the total
consideration paid by the Participant for such forfeited shares and/or
units. Upon any forfeiture, all rights of a Participant with respect to
the forfeited shares of the
Restricted Stock shall cease and terminate, without any further obligation
on the part of the Company.

     6.5 SAR. An SAR shall entitle the Participant at his election to surrender to the Company the
SAR, or portion thereof, as the Participant shall choose, and to receive from the Company in
exchange therefor cash in an amount equal to the excess (if any) of the Fair Market Value (as of
the date of the exercise of the SAR) per share over the SAR Price per share specified in such SAR,
multiplied by the total number of shares of the SAR being surrendered. In the discretion of the
Committee, the Company may satisfy its obligation upon exercise of an SAR by the distribution of
that number of shares of Common Stock having an aggregate Fair Market Value (as of the date of the
exercise of the SAR) equal to the amount of cash otherwise payable to the Participant, with a cash
settlement to be made for any fractional share interests, or the Company may settle such obligation
in part with shares of Common Stock and in part with cash.

     6.6 Tandem Awards. The Committee may grant two or more Incentives in one Award in the form of
a “tandem award,” so that the right of the Participant to exercise one Incentive shall be canceled
if, and to the extent, the other Incentive is exercised. For example, if a Stock Option and an SAR
are issued in a tandem Award, and the Participant exercises the SAR with respect to 100 shares of
Common Stock, the right of the Participant to exercise the related Stock Option shall be canceled
to the extent of 100 shares of Common Stock.

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     6.7 Performance Based Awards.

     (a) Grant of Performance Awards. The Committee may issue Performance
Awards in the form of either Performance Units or Performance Shares to
Participants subject to the Performance Goals and Performance Period as it shall
determine. The terms and conditions of each Performance Award will be set forth
in the related Award Agreement. The Committee shall have complete discretion in
determining the number and value of Performance Units or Performance Shares
granted to each Participant. Participants receiving Performance Awards are not
required to pay the Company thereof (except for applicable tax withholding) other
than the rendering of services.

     (b) Value of Performance Awards. The Committee shall set performance
goals in its discretion for each Participant who is granted a Performance Award.
Such Performance Goals may be particular to a Participant, may relate to the
performance of the Subsidiary which employs him or her, may be based on the
division which employs him or her, may be based on the performance of the Company
generally, or a combination of the foregoing. The Performance Goals may be based
on achievement of balance sheet or income statement objectives, or any other
objectives established by the Committee. The Performance Goals
may be absolute in their terms or measured against or in relationship to other
companies comparably, similarly or otherwise situated. The extent to which such
Performance Goals are met will determine the value of the Performance Unit or
Performance Share to the Participant.

     (c) Form of Payment. Payment of the amount to which a Participant
shall be entitled upon the settlement of a Performance Award shall be made in a
lump sum or installments in cash, shares of Common Stock, or a combination thereof
as determined by the Committee.

     6.8 Bonus Stock. The Committee may award shares of Bonus Stock to Participants under the Plan
without cash consideration. The Committee shall determine and indicate in the related Award
Agreement whether such shares of Bonus Stock awarded under the Plan shall be unencumbered of any
restrictions (other than those advisable to comply with law) or shall be subject to restrictions
and limitations similar to those referred to in Section 6.7 hereof. In the event the Committee
assigns any restrictions on the shares of Bonus Stock awarded under the Plan, then such shares
shall be subject to at least the following restrictions:

     (a) No shares of Bonus Stock may be sold, transferred, pledged, assigned or
otherwise alienated or hypothecated if such shares are subject to restrictions
which have not lapsed or have not been vested.

12

 

     (b) If any condition of vesting of the shares of Bonus Stock are not met, all
such shares subject to such vesting shall be delivered to the Company (in a manner
determined by the Committee) within 60 days of the failure to meet such conditions
without any payment from the Company.

     6.9 Other Stock Based Awards.

     (a) Grant of Other Stock Based Awards. The Committee may issue to
Participants, either alone or in addition to other Awards made under the Plan,
Stock Unit Awards which may be in the form of Common Stock or other securities.
The value of each such Award shall be based, in whole or in part, on the value of
the underlying Common Stock or other securities. The Committee, in its sole and
complete discretion, may determine that an Award, either in the form of a Stock
Unit Award under this Section 6.9 or as an Award granted pursuant to the other
provisions of this Article 6, may provide to the Participant (i) dividends or
dividend equivalents (payable on a current or deferred basis) and (ii) cash
payments in lieu of or in addition to an Award. The Committee shall determine the
terms, restrictions, conditions, vesting requirements, and payment rules (all of
which are sometimes hereinafter collectively referred to as “rules”) of the Award
and shall set forth those rules in the related Award Agreement.

     (b) Rules. The Committee, in its sole and complete discretion, may
grant a Stock Unit Award subject to the following rules:

     (i) Common Stock or other securities issued pursuant to Stock Unit
Awards may not be sold, transferred, pledged, assigned or otherwise
alienated or hypothecated by a Participant until the expiration of at
least six months from the Award Date, except that such limitation shall
not apply in the case of death or disability of the Participant. To the
extent Stock Unit Awards are deemed to be derivative securities within the
meaning of Rule 16b-3 under the 1934 Act, a Participant’s rights with
respect to such Awards shall not vest or be exercisable until the
expiration of at least six months from the Award Date. To the extent a
Stock Unit Award granted under the Plan is deemed to be a derivative
security within the meaning of Rule 16b-3 under the 1934 Act, it may not
be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, otherwise than by will or by laws of descent and
distribution. All rights with respect to such Stock Unit Awards granted
to a Participant under the Plan shall be exercisable during his or her
lifetime only by such Participant or his or her guardian or legal
representative.

     (ii) Stock Unit Awards may require the payment of cash consideration
by the Participant in receipt of the Award or

13

 

provide that the Award, and
any Common Stock or other securities issued in conjunction with the Award
be delivered without the payment of cash consideration.

     (iii) The Committee, in its sole and complete discretion, may
establish certain Performance Criteria that may relate in whole or in part
to receipt of the Stock Unit Awards.

     (iv) Stock Unit Awards may be subject to a deferred payment schedule
and/or vesting over a specified employment period.

     (v) The Committee as a result of certain circumstances, may waive or
otherwise remove, in whole or in part, any restriction or condition
imposed on a Stock Unit Award at the time of Award.

ARTICLE 7

OPTION PRICE; SAR PRICE

     The Option Price for any share of Common Stock which may be purchased under a Stock Option and
the SAR Price for any share of Common Stock subject to an SAR shall be at least One Hundred Percent
(100%) of the Fair Market Value of the share on the Date of Grant. If an Incentive Stock Option is
granted to an Employee who owns or is deemed to own (by reason of the attribution rules of Section
424(d) of the Code) more than 10% of the combined voting power of all classes of stock of the
Company (or any parent or Subsidiary), the Option Price shall be at least 110% of the Fair Market
Value of the Common Stock on the Date of Grant.

ARTICLE 8

AWARD PERIOD; VESTING

     8.1 Award Period. Subject to the other provisions of this Plan, the Committee may, in its
discretion, provide that an Incentive may not be exercised in whole or in part for any period or
periods of time or beyond any date specified in the Award Agreement. Except as provided in the
Award Agreement, an Incentive may be exercised in whole or in part at any time during its term.
The Award Period for an Incentive shall be reduced or terminated upon Termination of Service in
accordance with this Article 8 and Article 9. No Incentive granted under the Plan may be exercised
at any time after the end of its Award Period. No portion of any Incentive may be exercised after
the expiration of ten (10) years from its Date of Grant. However, if an Employee owns or is deemed
to own (by reason of the attribution rules of Section 424(d) of the Code) more than 10% of the
combined voting power of all classes of stock of the Company (or any parent or Subsidiary) and an
Incentive Stock Option is granted to such Employee, the term of such Incentive

14

 

Stock Option (to the extent
required by the Code at the time of grant) shall be no more than five (5) years from the Date of
Grant.

     8.2 Vesting. The Committee, in its sole discretion, may determine that an Incentive will be
immediately exercisable, in whole or in part, or that all or any portion may not be exercised until
a date, or dates, subsequent to its Date of Grant, or until the occurrence of one or more specified
events, subject in any case to the terms of the Plan. If the Committee imposes conditions upon
exercise, then subsequent to the Date of Grant, the Committee may, in its sole discretion,
accelerate the date on which all or any portion of the Incentive may be exercised.

ARTICLE 9

TERMINATION OF SERVICE

     In the event of Termination of Service of a Participant, an Incentive may only be exercised as
determined by the Committee and provided in the Award Agreement.

ARTICLE 10

EXERCISE OF INCENTIVE

     10.1 In General. A vested Incentive may be exercised during its Award Period, subject to
limitations and restrictions set forth therein and in Article 9. A vested Incentive may be
exercised at such times and in such amounts as provided in this Plan and the applicable Award
Agreement, subject to the terms, conditions, and restrictions of the Plan.

     In no event may an Incentive be exercised or shares of Common Stock be issued pursuant to an
Award if a necessary listing or quotation of the shares of Common Stock on a stock exchange or
inter-dealer quotation system or any registration under state or federal securities laws required
under the circumstances has not been accomplished. No Incentive may be exercised for a fractional
share of Common Stock. The granting of an Incentive shall impose no obligation upon the
Participant to exercise that Incentive.

     (a) Stock Options. Subject to such administrative regulations as the
Committee may from time to time adopt, a Stock Option may be exercised by the
delivery of written notice to the Committee setting forth the number of shares of
Common Stock with respect to which the Stock Option is to be exercised and the
date of exercise thereof (the “Exercise Date”) which shall
be at least three (3) days after giving such notice unless an earlier time shall
have been mutually agreed upon. On the Exercise Date, the Participant shall
deliver to the Company consideration with a value equal to the total Option Price
of the shares to be purchased, payable as follows: (a) cash, check, bank draft,
or money order payable to the order of the

15

 

Company, (b) Common Stock (including
Restricted Stock) owned by the Participant on the Exercise Date, valued at its
Fair Market Value on the Exercise Date, (c) by delivery (including by FAX) to the
Company or its designated agent of an executed irrevocable option exercise form
together with irrevocable instructions from the Participant to a broker or dealer,
reasonably acceptable to the Company, to sell certain of the shares of Common
Stock purchased upon exercise of the Stock Option or to pledge such shares as
collateral for a loan and promptly deliver to the Company the amount of sale or
loan proceeds necessary to pay such purchase price, and/or (d) in any other form
of valid consideration that is acceptable to the Committee in its sole discretion.
In the event that shares of Restricted Stock are tendered as consideration for
the exercise of a Stock Option, a number of shares of Common Stock issued upon the
exercise of the Stock Option equal to the number of shares of Restricted Stock
used as consideration therefor shall be subject to the same restrictions and
provisions as the Restricted Stock so submitted.

     Upon payment of all amounts due from the Participant, the Company shall cause
certificates for the Common Stock then being purchased to be delivered as directed
by the Participant (or the person exercising the Participant’s Stock Option in the
event of his death) at its principal business office promptly after the Exercise
Date; provided that if the Participant has exercised an Incentive Stock Option,
the Company may at its option retain physical possession of the certificate
evidencing the shares acquired upon exercise until the expiration of the holding
periods described in Section 422(a)(1) of the Code. The obligation of the Company
to deliver shares of Common Stock shall, however, be subject to the condition that
if at any time the Committee shall determine in its discretion that the listing,
registration, or qualification of the Stock Option or the Common Stock upon any
securities exchange or inter-dealer quotation system or under any state or federal
law, or the consent or approval of any governmental regulatory body, is necessary
or desirable as a condition of, or in connection with, the Stock Option or the
issuance or purchase of shares of Common Stock thereunder, the Stock Option may
not be exercised in whole or in part unless such listing, registration,
qualification, consent, or approval shall have been effected or obtained free of
any conditions not acceptable to the Committee.

     If the Participant fails to pay for any of the Common Stock specified in such
notice or fails to accept delivery thereof, the
Participant’s right to purchase such Common Stock may be terminated by the
Company.

     (b) SARs. Subject to the conditions of this Section 10.1(b) and such
administrative regulations as the Committee may from time to time adopt, an SAR
may be exercised by the delivery (including by FAX) of written notice to the
Committee setting forth the number of shares of Common Stock with respect to which
the SAR is to be

16

 

exercised and the date of exercise thereof (the “Exercise Date”)
which shall be at least three (3) days after giving such notice unless an earlier
time shall have been mutually agreed upon. On the Exercise Date, the Participant
shall receive from the Company in exchange therefor cash in an amount equal to the
excess (if any) of the Fair Market Value (as of the date of the exercise of the
SAR) per share of Common Stock over the SAR Price per share specified in such SAR,
multiplied by the total number of shares of Common Stock of the SAR being
surrendered. In the discretion of the Committee, the Company may satisfy its
obligation upon exercise of an SAR by the distribution of that number of shares of
Common Stock having an aggregate Fair Market Value (as of the date of the exercise
of the SAR) equal to the amount of cash otherwise payable to the Participant, with
a cash settlement to be made for any fractional share interests, or the Company
may settle such obligation in part with shares of Common Stock and in part with
cash.

     10.2 Disqualifying Disposition of ISO. If shares of Common Stock acquired upon exercise of an
Incentive Stock Option are disposed of by a Participant prior to the expiration of either two (2)
years from the Date of Grant of such Stock Option or one (1) year from the transfer of shares of
Common Stock to the Participant pursuant to the exercise of such Stock Option, or in any other
disqualifying disposition within the meaning of Section 422 of the Code, such Participant shall
notify the Company in writing of the date and terms of such disposition. A disqualifying
disposition by a Participant shall not affect the status of any other Stock Option granted under
the Plan as an Incentive Stock Option within the meaning of Section 422 of the Code.

ARTICLE 11

SPECIAL PROVISIONS APPLICABLE TO COVERED PARTICIPANTS

     Awards subject to Performance Criteria paid to Covered Participants under this Plan shall be
governed by the conditions of this Section 11 in addition to the requirements of Sections 6.4, 6.7,
6.8 and 6.9 above. Should conditions set forth under this Section 11 conflict with the
requirements of Sections 6.4, 6.7, 6.8 and 6.9, the conditions of this Section 11 shall prevail.

     (a) All Performance Measures, Goals, or Criteria relating to Covered
Participants for a relevant Performance Period shall be established by the
Committee in writing prior to the beginning of the Performance Period, or by such
other later date for the Performance Period as may be permitted under Section
162(m) of the Code. The Performance Goals may be identical for all Participants
or, at the discretion of the Committee, may be different to reflect more
appropriate measures of individual performance.

     (b) The Performance Goals relating to Covered Participants for a Performance
Period shall be established by the Committee in

17

 

writing. Performance Goals may
include alternative and multiple Performance Goals and may be based on one or more
business and/or financial criteria. In establishing the Performance Goals for the
Performance Period, the Committee in its discretion may include one or any
combination of the following criteria in either absolute or relative terms, for
the Company or any Subsidiary:

     (i) Total shareholder return;

     (ii) Return on assets, equity, capital, or investment;

     (iii) Pre-tax or after-tax profit levels, including: earnings per
share; earnings before interest and taxes; earnings before interest,
taxes, depreciation and amortization; net operating profits after tax, and
net income;

     (iv) Cash flow and cash flow return on
investment;

     (v) Economic value added and economic profit;

     (vi) Growth in earnings per share;

     (vii) Levels of operating expense or other expense items as reported
on the income statement, including operating and maintenance expense; or

     (viii) Measures of customer satisfaction and customer service as
surveyed from time to time, including the relative improvement therein.

     (c) The Performance Goals must be objective and must satisfy third party
“objectivity” standards under Section 162(m) of the Code, and the regulations
promulgated thereunder.

     (d) The Committee is authorized to make adjustments in the method of
calculating attainment of Performance Goals in recognition of: (i) extraordinary
or non-recurring items, (ii) changes in tax laws, (iii) changes in generally
accepted accounting principles or changes in accounting principles, (iv) charges
related to restructured or discontinued operations, (v) restatement of prior
period financial results, and (vi) any other unusual, non-recurring gain or loss
that is separately identified and quantified in the Company’s financial
statements. Notwithstanding the foregoing, the Committee may, at its sole
discretion, reduce the performance results upon which Awards are based under the
Plan, to offset any unintended result(s) arising from events not anticipated when
the Performance Goals were established, provided that such adjustment is permitted
by Section 162(m) of the Code.

18

 

     (e) The Performance Goals shall not allow for any discretion by the Committee
as to an increase in any Award, but discretion to lower an Award is permissible.

     (f) The Award and payment of any Award under this Plan to a Covered
Participant with respect to a relevant Performance Period shall be contingent upon
the attainment of the Performance Goals that are applicable to such Covered
Participant. The Committee shall certify in writing prior to payment of any such
Award that such applicable Performance Goals relating to the Award are satisfied.
Approved minutes of the Committee may be used for this purpose.

     (g) The maximum Award that may be paid to any Covered Participant under the
Plan pursuant to Sections 6.4, 6.7, 6.8 and 6.9 for any Performance Period shall
be (i) if in cash, One Million Dollars ($1,000,000.00) and (ii) if in shares of
Common Stock, five hundred thousand (500,000) shares.

     (h) All Awards to Covered Participants under this Plan shall be further
subject to such other conditions, restrictions, and requirements as the Committee
may determine to be necessary to carry out the purpose of this Section 11.

ARTICLE 12

AMENDMENT OR DISCONTINUANCE

     Subject to the limitations set forth in this Article 12, the Board may at any time and from
time to time, without the consent of the Participants, alter, amend, revise, suspend, or
discontinue the Plan in whole or in part; provided, however, that no amendment which requires
stockholder approval in order for the Plan and Incentives awarded under the Plan to continue to
comply with Section 162(m) of the Code, including any successors to such Section, shall be
effective unless such amendment shall be approved by the requisite vote of the stockholders of the
Company entitled to vote thereon. Any such amendment shall, to the extent deemed necessary or
advisable by the Committee, be applicable to any outstanding Incentives theretofore granted under
the Plan, notwithstanding any contrary provisions contained in any Award Agreement. In the event
of any such amendment to the Plan, the holder of any Incentive outstanding under the Plan shall,
upon request of the Committee and as a condition to the exercisability thereof, execute a
conforming amendment in the form prescribed by the Committee to any Award Agreement relating
thereto. Notwithstanding anything contained in this Plan to the contrary, unless required by law,
no action contemplated or permitted by this Article 12 shall adversely affect any rights of
Participants or obligations of the Company to Participants with respect to any Incentive
theretofore granted under the Plan without the consent of the affected Participant.

19

 

ARTICLE 13

EFFECTIVE DATE AND TERM

     The Plan shall be effective as set forth in Section 18.11. Unless sooner terminated by action
of the Board, the Plan will terminate on September 30, 2011, but Incentives granted before that
date will continue to be effective in accordance with their terms and conditions.

ARTICLE 14

CAPITAL ADJUSTMENTS

     If at any time while the Plan is in effect, or Incentives are outstanding, there shall be any
increase or decrease in the number of issued and outstanding shares of Common Stock resulting from
(1) the declaration or payment of a stock dividend, (2) any recapitalization resulting in a stock
split-up, combination, or exchange of shares of Common Stock, or (3) other increase or decrease in
such shares of Common Stock effected without receipt of consideration by the Company, then and in
such event:

     (a) An appropriate adjustment shall be made in the maximum number of shares
of Common Stock then subject to being awarded under the Plan and in the maximum
number of shares of Common Stock that may be awarded to a Participant to the end
that the same proportion of the Company’s issued and outstanding shares of Common
Stock shall continue to be subject to being so awarded.

     (b) Appropriate adjustments shall be made in the number of shares of Common
Stock and the Option Price thereof then subject to purchase pursuant to each such
Stock Option previously granted and unexercised, to the end that the same
proportion of the Company’s issued and outstanding shares of Common Stock in each
such instance shall remain subject to purchase at the same aggregate Option Price.

     (c) Appropriate adjustments shall be made in the number of SARs and the SAR
Price thereof then subject to exercise pursuant to each such SAR previously
granted and unexercised, to the end that the same proportion of the Company’s
issued and outstanding shares of Common Stock in each instance shall remain
subject to exercise at the same aggregate SAR Price.

     (d) Appropriate adjustments shall be made in the number of outstanding shares
of Restricted Stock with respect to which restrictions have not yet lapsed prior
to any such change.

     (e) Appropriate adjustments shall be made with respect to shares of Common
Stock applicable to any other Incentives previously

20

 

awarded under the Plan as the
Committee, in its sole discretion, deems appropriate, consistent with the event.

     Except as otherwise expressly provided herein, the issuance by the Company of shares of its
capital stock of any class, or securities convertible into shares of capital stock of any class,
either in connection with direct sale or 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, shall not affect, and no adjustment by reason thereof shall be made with
respect to (i) the number of or Option Price of shares of Common Stock then subject to outstanding
Stock Options granted under the Plan, (ii) the number of or SAR Price or SARs then subject to
outstanding SARs granted under the Plan, (iii) the number of outstanding shares of Restricted
Stock, or (iv) the number of shares of Common Stock otherwise payable under any other Incentive.

     Upon the occurrence of each event requiring an adjustment with respect to any Incentive, the
Company shall mail to each affected Participant its computation of such adjustment which shall be
conclusive and shall be binding upon each such Participant.

ARTICLE 15

RECAPITALIZATION, MERGER AND

CONSOLIDATION; CHANGE IN CONTROL

     (a) The existence of this Plan and Incentives granted hereunder shall not
affect in any way 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 Company’s capital structure and its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
preference stocks ranking prior to or otherwise affecting the Common Stock or the
rights thereof (or any rights, options, or warrants to purchase same), 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, whether
of a similar character or otherwise.

     (b) Subject to any required action by the stockholders, if the Company shall
be the surviving or resulting corporation in any merger, consolidation or share
exchange, any Incentive granted hereunder shall pertain to and apply to the
securities or rights (including cash, property, or assets) to which a holder of
the number of shares of Common Stock subject to the Incentive would have been
entitled.

     (c) In the event of any merger, consolidation or share exchange pursuant to
which the Company is not the surviving or

21

 

resulting corporation, there shall be
substituted for each share of Common Stock subject to the unexercised portions of
such outstanding Incentives, that number of shares of each class of stock or other
securities or that amount of cash, property, or assets of the surviving, resulting
or consolidated company which
were distributed or distributable to the stockholders of the Company in respect to
each share of Common Stock held by them, such outstanding Incentives to be
thereafter exercisable for such stock, securities, cash, or property in accordance
with their terms. Notwithstanding the foregoing, however, all Stock Options and
SARs may be canceled by the Company immediately prior to the effective date of any
such reorganization, merger, consolidation, share exchange or any dissolution or
liquidation of the Company by giving notice to each holder thereof or his personal
representative of its intention to do so and by permitting the purchase during
the thirty (30) day period next preceding such effective date of all or any
portion of all of the shares of Common Stock subject to such outstanding
Incentives whether or not such Incentives are then vested or exercisable.

     (d) In the event of a Change in Control, notwithstanding any other provision
in this Plan to the contrary all unmatured installments of Incentives outstanding
and not otherwise canceled in accordance with Section 15(c) above, shall thereupon
automatically be accelerated and exercisable in full and all Restriction Periods
applicable to Awards of Restricted Stock and/or Restricted Stock Units shall
automatically expire. The determination of the Committee that any of the
foregoing conditions has been met shall be binding and conclusive on all parties.

ARTICLE 16

LIQUIDATION OR DISSOLUTION

     In case the Company shall, at any time while any Incentive under this Plan shall be in force
and remain unexpired, (i) sell all or substantially all of its property, or (ii) dissolve,
liquidate, or wind up its affairs, then each Participant shall be thereafter entitled to receive,
in lieu of each share of Common Stock of the Company which such Participant would have been
entitled to receive under the Incentive, the same kind and amount of any securities or assets as
may be issuable, distributable, or payable upon any such sale, dissolution, liquidation, or winding
up with respect to each share of Common Stock of the Company. If the Company shall, at any time
prior to the expiration of any Incentive, make any partial distribution of its assets, in the
nature of a partial liquidation, whether payable in cash or in kind (but excluding the distribution
of a cash dividend payable out of earned surplus and designated as such) then in such event the
Option Prices or SAR Prices then in effect with respect to each Stock Option or SAR shall be
reduced, on the payment date of such distribution, in proportion to the percentage reduction in the
tangible book value of the shares of the Company’s Common Stock (determined in accordance with
generally accepted accounting principles) resulting by reason of such distribution.

22

 

ARTICLE 17

INCENTIVES IN SUBSTITUTION FOR

INCENTIVES GRANTED BY OTHER CORPORATIONS

     Incentives may be granted under the Plan from time to time in substitution for similar
instruments held by employees of a corporation who become or are about to become Employees of the
Company or any Subsidiary as a result of a merger or consolidation of the employing corporation
with the Company or the acquisition by the Company of stock of the employing corporation. The
terms and conditions of the substitute Incentives so granted may vary from the terms and conditions
set forth in this Plan to such extent as the Board at the time of grant may deem appropriate to
conform, in whole or in part, to the provisions of the Incentives in substitution for which they
are granted.

ARTICLE 18

MISCELLANEOUS PROVISIONS

     18.1 Investment Intent. The Company may require that there be presented to and filed with it
by any Participant under the Plan, such evidence as it may deem necessary to establish that the
Incentives granted or the shares of Common Stock to be purchased or transferred are being acquired
for investment and not with a view to their distribution.

     18.2 No Right to Continued Employment. Neither the Plan nor any Incentive granted under the
Plan shall confer upon any Participant any right with respect to continuance of employment by the
Company or any Subsidiary.

     18.3 Indemnification of Board and Committee. No member of the Board or the Committee, nor any
officer or employee of the Company acting on behalf of the Board or the Committee, shall be
personally liable for any action, determination, or interpretation taken or made in good faith with
respect to the Plan, and all members of the Board or the Committee and each and any officer or
employee of the Company acting on their behalf shall, to the extent permitted by law, be fully
indemnified and protected by the Company in respect of any such action, determination, or
interpretation.

     18.4 Effect of the Plan. Neither the adoption of this Plan nor any action of the Board or the
Committee
shall be deemed to give any person any right to be granted an Award or any other rights except as
may be evidenced by an Award Agreement, or any amendment thereto, duly authorized by the Committee
and executed on behalf of the Company, and then only to the extent and upon the terms and
conditions expressly set forth therein.

     18.5 Compliance With Other Laws and Regulations. Notwithstanding anything contained herein to
the contrary, the Company shall not be required to sell

23

 

or issue shares of Common Stock under any
Incentive if the issuance thereof would constitute a violation by the Participant or the Company of
any provisions of any law or regulation of any governmental authority or any national securities
exchange or inter-dealer quotation system or other forum in which shares of Common Stock are quoted
or traded (including without limitation Section 16 of the 1934 Act and Section 162(m) of the Code);
and, as a condition of any sale or issuance of shares of Common Stock under an Incentive, the
Committee may require such agreements or undertakings, if any, as the Committee may deem necessary
or advisable to assure compliance with any such law or regulation. The Plan, the grant and
exercise of Incentives hereunder, and the obligation of the Company to sell and deliver shares of
Common Stock, shall be subject to all applicable federal and state laws, rules and regulations and
to such approvals by any government or regulatory agency as may be required.

     18.6 Tax Requirements. The Company shall have the right to deduct from all amounts hereunder
paid in cash or other form, any Federal, state, or local taxes required by law to be withheld with
respect to such payments. The Participant receiving shares of Common Stock issued under the Plan
shall be required to pay the Company the amount of any taxes which the Company is required to
withhold with respect to such shares of Common Stock. Notwithstanding the foregoing, in the event
of an assignment of a Non-qualified Stock Option or SAR pursuant to Section 18.7, the Participant
who assigns the Non-qualified Stock Option or SAR shall remain subject to withholding taxes upon
exercise of the Non-qualified Stock Option or SAR by the transferee to the extent required by the
Code or the rules and regulations promulgated thereunder. Such payments shall be required to be
made prior to the delivery of any certificate representing such shares of Common Stock. Such
payment may be made in cash, by check, or through the delivery of shares of Common Stock owned by
the Participant (which may be effected by the actual delivery of shares of Common Stock by the
Participant or by the Company’s withholding a number of shares to be issued upon the exercise of a
Stock Option, if applicable), which shares have an aggregate Fair Market Value equal to the
required minimum withholding payment, or any combination thereof.

     18.7 Assignability. Incentive Stock Options may not be transferred or assigned other than by
will or the laws of descent and distribution and may be exercised during the lifetime of the
Participant only by the Participant or the Participant’s legally authorized representative, and
each Award Agreement in respect of an Incentive Stock Option shall so provide. The designation by
a Participant of a beneficiary will
not constitute a transfer of the Stock Option. The Committee may waive or modify any limitation
contained in the preceding sentences of this Section 18.7 that is not required for compliance with
Section 422 of the Code. The Committee may, in its discretion, authorize all or a portion of a
Non-qualified Stock Option or SAR to be granted to a Participant to be on terms which permit
transfer by such Participant to (i) the spouse, children or grandchildren of the Participant
(“Immediate Family Members”), (ii) a trust or trusts for the exclusive benefit of such Immediate
Family Members, or (iii) a partnership in which such Immediate Family Members are the only
partners, (iv) an entity exempt from federal income tax pursuant to Section 501(c)(3) of the Code
or any successor provision, or (v) a split interest trust or pooled income fund described in
Section 2522(c)(2) of the Code or any successor provision, provided that (x) there shall be
no

24

 

consideration for any such transfer, (y) the Award Agreement pursuant to which such
Non-qualified Stock Option or SAR is granted must be approved by the Committee and must expressly
provide for transferability in a manner consistent with this Section, and (z) subsequent transfers
of transferred Non-qualified Stock Options or SARs shall be prohibited except those by will or the
laws of descent and distribution or pursuant to a qualified domestic relations order as defined in
the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended. Following
transfer, any such Non-qualified Stock Option and SAR shall continue to be subject to the same
terms and conditions as were applicable immediately prior to transfer, provided that for purposes
of Articles 10, 12, 14, 16 and 18 hereof the term “Participant” shall be deemed to include the
transferee. The events of Termination of Service shall continue to be applied with respect to the
original Participant, following which the Non-qualified Stock Options and SARs shall be exercisable
by the transferee only to the extent and for the periods specified in the Award Agreement. The
Committee and the Company shall have no obligation to inform any transferee of a Non-qualified
Stock Option or SAR of any expiration, termination, lapse or acceleration of such Option. The
Company shall have no obligation to register with any federal or state securities commission or
agency any Common Stock issuable or issued under a Non-qualified Stock Option or SAR that has been
transferred by a Participant under this Section 18.7.

     18.8 Use of Proceeds. Proceeds from the sale of shares of Common Stock pursuant to Incentives
granted under this Plan shall constitute general funds of the Company.

     18.9 Governing Law. The validity, construction and effect of the Plan and any actions taken
or relating to the Plan shall be determined in accordance with the laws of the State of Texas and
applicable Federal law.

     18.10 Successors and Assigns. The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, expressly to assume and agree to perform the Company’s
obligation under this Plan in the same manner and to the same extent that the Company would be
required to perform them if no such succession had taken place. As used herein, the “Company”
shall mean
the Company as hereinbefore defined and any aforesaid successor to its business and/or assets.

     18.11 Effective Date. The Plan became effective as of October 1, 1998. After termination of
the Plan, no future Awards may be made.

     18.12 Legend. Each certificate representing shares of Restricted Stock issued to a
Participant shall bear the following legend, or a similar legend deemed by the Company to
constitute an appropriate notice of the provisions hereof (any such certificate not having such
legend shall be surrendered upon demand by the Company and so endorsed):

25

 

     On the face of the certificate:

“Transfer of this stock is restricted in accordance with
conditions printed on the reverse of this certificate.”

     On the reverse:

“The shares of stock evidenced by this certificate are subject to
and transferrable only in accordance with that certain Atmos
Energy Corporation 1998 Long-Term Incentive Plan, a copy of which
is on file at the principal office of the Company in Dallas,
Texas. No transfer or pledge of the shares evidenced hereby may
be made except in accordance with and subject to the provisions of
said Plan. By acceptance of this certificate, any holder,
transferee or pledgee hereof agrees to be bound by all of the
provisions of said Plan.”

     The following legend shall be inserted on a certificate evidencing Common Stock issued under
the Plan if the shares were not issued in a transaction registered under the applicable federal and
state securities laws:

“Shares of stock represented by this certificate have been
acquired by the holder for investment and not for resale, transfer
or distribution, have been issued pursuant to exemptions from the
registration requirements of applicable state and federal
securities laws, and may not be offered for sale, sold or
transferred other than pursuant to effective registration under
such laws, or in transactions otherwise in compliance with such
laws, and upon evidence satisfactory to the Company of compliance
with such laws, as to which the Company may rely upon an opinion
of counsel satisfactory to the Company.”

     A copy of this Plan shall be kept on file in the principal executive offices of the Company in
Dallas, Texas.

* * * * * * * * * *

     IN WITNESS WHEREOF, the Company has caused this instrument to be executed as of February 9,
2007, by its President pursuant to prior actions taken by the Board and the shareholders of the
Company.

26

 

	 	 	 	 	 
	 	ATMOS ENERGY CORPORATION

 	 
	 	By:  	/s/ ROBERT W. BEST
 	 
	 	 	Robert W. Best 	 
	 	 	Chairman of the Board, President
and Chief Executive Officer 	 
	 

Attest:

	 	 	 
	/s/ DWALA KUHN
	 	 
	 

Dwala Kuhn

	 	 
	Corporate Secretary
	 	 

27

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