Document:

exv10w1

 

	 	 	 	 	 

Exhibit 10.1

AMENDMENT TO SECURED CONVERTIBLE

PROMISSORY NOTES

     THIS AMENDMENT TO SECURED CONVERTIBLE PROMISSORY NOTES (the “Agreement”) is effective as of
July 1, 2007, by and among Sutura, Inc., a Delaware corporation (the “Company”), Pandora Select
Partners L.P., a British Virgin Islands limited partnership (“Pandora”), Whitebox Hedged High Yield
Partners L.P., a British Virgin Islands limited partnership (“WHHY”), Whitebox Convertible
Arbitrage Partners L.P., a British Virgin Islands limited partnership (“WCAP”), Whitebox
Intermarket Partners L.P., a British Virgin Islands limited partnership (“WIP”) and Gary S. Kohler
(“Kohler”) and Scot W. Malloy (“Malloy”), each residents of the State of Minnesota. Each of
Pandora, WHHY, WCAP, WIP, Kohler and Malloy may be referred to herein as a “Whitebox Party” or
collectively as the “Whitebox Parties”.

     WHEREAS, the Company, Pandora, WHHY, WCAP, WIP, Kohler and Malloy are parties to a Purchase
Agreement dated September 17, 2004 (the “Original Purchase Agreement”), pursuant to which the
Investors each purchased a convertible promissory note (each, an “Original Note” and together, the
“Original Notes”) and a warrant to purchase shares of the Company’s Common Stock (each, an
“Original Warrant” and together, the “Original Warrants”) from the Company in consideration of a
collective $6,550,000 loan.

     WHEREAS, the Company, Pandora, WHHY and WIP are parties to a second Purchase Agreement dated
March 24, 2005 (the “Second Purchase Agreement”), pursuant to which Pandora, WHHY and WIP each
purchased an additional convertible promissory note (each, a “March 2005 Note” and together, the
“March 2005 Notes”) and an additional warrant to purchase the Company’s Common Stock (each, a
“March 2005 Warrant” and together, the “March 2005 Warrants”) in consideration of a collective
$3,000,000 new loan.

     WHEREAS, the Company, Pandora, WHHY, WCAP, WIP, Kohler and Malloy are parties to an Amendment
to Secured Convertible Promissory Notes and Warrants dated September 7, 2005 (the “First
Amendment”), pursuant to which the parties agreed to amend certain provisions of the Original
Notes, Original Warrants, March 2005 Notes and March 2005 Warrants.

     WHEREAS, the Company, Pandora, WHHY, WCAP and WIP are parties to a third Purchase Agreement
dated September 7, 2005 (the “Third Purchase Agreement”), pursuant to which Pandora, WHHY, WCAP and
WIP each purchased an additional convertible promissory note (each, a “September 2005 Note” and
together, the “September 2005 Notes”) and an additional warrant to purchase the Company’s Common
Stock (each, a “September 2005 Warrant” and together, the “September 2005 Warrants”) in
consideration of a collective $7,000,000 new loan.

     WHEREAS, the Company, Pandora, WHHY, WCAP, WIP, Kohler and Malloy are parties to a Second
Amendment to Secured Convertible Promissory Notes and Warrants dated March 30, 2006 (the “Second
Amendment”), pursuant to which the parties agreed to amend certain provisions of the Original
Notes, March 2005 Notes, September 2005 Notes, March 2005 Warrants and September 2005 Warrants.

 

 

     WHEREAS, the Company, Pandora, WHHY, WCAP, WIP, Kohler and Malloy are parties to an undated
Letter Agreement (the “Letter Agreement”), entered into by the parties in August, 2006, pursuant to
which the parties agreed to amend certain provisions of the Original Notes, March 2005 Notes,
September 2005 Notes, Original Warrants, March 2005 Warrants and September 2005 Warrants.

     WHEREAS, Sutura, Pandora, WHHY, WCAP, WIP, Kohler and Malloy entered into a Purchase Agreement
dated August 25, 2006 (the “Fourth Purchase Agreement”), pursuant to which Pandora, WHHY, WCAP,
WIP, Kohler and Malloy each converted their respective notes issued in June and July of 2006,
converted certain amounts of interest due under prior notes and purchased shares of Sutura’s common
stock, par value $0.001 per share.

     WHEREAS, the Company, Pandora, WHHY, WCAP, WIP, Kohler and Malloy are parties to a fifth
Purchase Agreement dated December 13, 2006 (the “Fifth Purchase Agreement”), pursuant to which
Pandora, WHHY, WCAP and WIP each purchased additional convertible promissory notes in December,
2006 and March, 2007 (each, a “2006/2007 Note” and together, the “2006/2007 Notes”) in
consideration of a collective $3,000,000 new loan.

     WHEREAS, certain payments of principal and interest due under the Original Notes, March 2005
Notes and September 2005 Notes become due and/or are required to commence on July 1, 2007.

     WHEREAS, in connection with proposed additional funding by Pandora, WHHY, WCAP and WIP in the
principal amount of $1,150,000, the parties desire to amend certain provisions of the Original
Notes, the March 2005 Notes the September 2005 Notes and the 2006/2007 Notes (each sometimes
referred to herein as a “Note” and collectively, as the “Notes”).

     NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, and
for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, hereby agree as follows:

 

 

          1. Amendment to Original Notes. Each of the Original Notes is amended as follows:

	(a)	 	Section 2(b) is amended and restated to read in its entirety as follows:

“(b) On July 1, 2009, the remaining outstanding principal balance of this
Note will be due and payable in a single lump sum together with all
then-accrued, but unpaid interest.”

	(b)	 	Section 2(c) to each of the Original Notes is hereby deleted in its entirety.
	 
	(c)	 	Section 3(b) is amended and restated to read in its entirety as follows:

“(b) The Conversion Rate shall initially be equal to $0.08 per share.”

          2. Amendment to March 2005 Notes. Each of the March 2005 Notes is amended as follows:

	(a)	 	Section 2(b) is amended and restated to read in its entirety as follows:

“(b) On July 1, 2009, the remaining outstanding principal balance of this Note
will be due and payable in a single lump sum together with all then-accrued,
but unpaid interest.”

	(b)	 	Section 2(c) to each of the March 2005 Notes is hereby deleted in its entirety.
	 
	(c)	 	Section 3(b) is amended and restated to read in its entirety as follows:

“(b) The Conversion Rate shall initially be equal to $0.08 per share.”

 

 

          3. Amendment to September 2005 Notes. Each of the September 2005 Notes is amended as
follows:

	(a)	 	Section 2(b) to each of the September 2005 Notes is hereby deleted in its entirety.
	 
	(b)	 	Section 2(c) is amended and restated to read in its entirety as follows:

“(b) On July 1, 2009 ( the “Maturity Date”), the remaining outstanding principal
balance of this Note will be due and payable in a single lump sum together with
all then-accrued, but unpaid interest.”Section 2(c)

	(c)	 	Section 2(d) to each of the September 2005 Notes is hereby deleted in its entirety.
	 
	(d)	 	Section 4(b) is amended and restated to read in its entirety as follows:

“(b) The Conversion Rate shall initially be equal to $0.08 per share.”

          4. Amendment to 2006/2007 Notes. Each of the 2006/2007 Notes is amended as follows:

	(a)	 	Section 2(a)(i) is hereby deleted in its entirety.
	 
	(b)	 	Section 2(a)(ii) is hereby deleted in its entirety.

          5. Interest Payments on Original Notes, March 2005 Notes, September 2005 Notes and
2006/2007 Notes. The parties agree that the Company may pay any interest payments due to any
Whitebox Party pursuant to any Note by issuing to such Whitebox Party a promissory note dated as of
the interest due date. The principal amount of such promissory note shall be the amount of the
then due interest payment and the remaining terms and provisions of such promissory note shall be
the same terms and provisions as are then in effect for the respective Note.

          6. Consent Fee. In connection with this Amendment, and as a condition hereof, the
principal balance outstanding under each Original Note, March 2005 Note and September 2005 Note
shall be increased by three percent (3%) effective as of the date hereof.

          7. Entire Agreement. This Agreement constitutes the entire agreement and understanding
of the parties concerning the amendment of the Notes and expressly supersedes all prior agreements
and commitments of the parties, whether oral or written. Unless amended by this Agreement, all
other terms and conditions of the Notes remain in full force and effect.

 

 

          8. Amendment. No modification, amendment or waiver of any provision of this Agreement
shall be binding unless in a subsequent writing signed by all parties, in the case of an amendment
or modification, or by the party to be charged thereby, in the case of a waiver. Any waiver shall
be limited to the circumstances or event specifically referred to in the waiver instrument and
shall not be deemed a waiver of any other term of this Agreement or of the same circumstances or
event upon any recurrence of such circumstance or event.

          9. Counterparts. This Agreement may be executed by facsimile and in counterparts and
by different parties on different counterparts, with the same effect as if the signatures were on
the same instrument.

          10. Further Assurances. Each party agrees to execute and deliver such additional
documents and perform such additional acts as may be reasonably necessary or appropriate to
effectuate, carry out, and consummate the terms and conditions of this Agreement and the
transactions contemplated thereby.

[Signature page follows.]

 

 

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered
as of the date first written above.

	 	 	 	 	 	 	 
	 	 	SUTURA, INC.
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 	 	 	 	 
	 	 	 	 	David Teckman,
	 	 	 	 	President and Chief Executive Officer
	 
	 	 	 	 	 	 
	 	 	PANDORA SELECT PARTNERS L.P.
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Its	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	WHITEBOX HEDGED HIGH YIELD
PARTNERS L.P.
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Its	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	WHITEBOX CONVERTIBLE ARBITRAGE PARTNERS L.P.
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Its	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	WHITEBOX INTERMARKET PARTNERS L.P.
	 
	 	 	 	 	 	 
	 

	 	By	 	 	 	 
	 	 	 	 	 
	 

	 	 	 	Name	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Its	 	 
	 

	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 
	 	 	 
	 	 	Gary S. Kohler
	 
	 
	 	 	 	 	 	 
	 	 	 
	 	 	Scot W. Malloyexv10w02

 

Exhibit 10.02

VALERO ENERGY CORPORATION

RESTRICTED STOCK PLAN

for

NON-EMPLOYEE DIRECTORS

Adopted April 23, 1997,

as amended and restated through July 11, 2007

 

 

RESTRICTED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS

TABLE OF CONTENTS

	 	 	 	 	 	 	 
	 	 	 	 	 	Page	 
	1.
	 	Purpose and Effective Date of Plan	 	 	2	 
	2.
	 	Certain Definitions	 	 	2	 
	3.
	 	Shares Subject to the Plan	 	 	3	 
	4.
	 	Eligibility	 	 	3	 
	5.
	 	Automatic Grants to Non-Employee Directors	 	 	3	 
	6.
	 	Administration of the Plan	 	 	4	 
	7.
	 	Restrictions Applicable to Restricted Shares	 	 	5	 
	8.
	 	Forfeiture, Completion of Restriction Period	 	 	7	 
	9.
	 	Adjustment in Event of Changes in Common Stock	 	 	8	 
	10.
	 	Non-Alienation of Benefits	 	 	8	 
	11.
	 	Appointment of Attorney-in-Fact	 	 	8	 
	12.
	 	Withholding Taxes	 	 	8	 
	13.
	 	Amendment and Termination of Plan	 	 	9	 
	14.
	 	[reserved]	 	 	9	 
	15.
	 	Government and Other Regulations	 	 	9	 
	16.
	 	No Right to Nomination	 	 	9	 
	17.
	 	Non-Exclusivity of Plan	 	 	10	 
	18.
	 	Governing Law	 	 	10	 
	19.
	 	Miscellaneous Provisions	 	 	10	 

 

 

VALERO ENERGY CORPORATION

Restricted Stock Plan for Non-Employee Directors

	1.	 	Purpose and Effective Date of Plan. The purpose of this Plan is to supplement the
compensation paid to Non-Employee Directors, to increase their proprietary interest in the
Company, to attract and retain persons of outstanding caliber to serve as directors of the
Company and to enhance their identification with the interests of the Company’s stockholders
through ownership of Common Stock. The Effective Date of this Plan is July 31, 1997. Shares
awarded under the Plan shall be in addition to, and shall not replace, any cash or other
compensation arrangement available to Non-Employee Directors.
	 
	2.	 	Certain Definitions.

	 	(a)	 	“Annual Meeting” shall mean the annual meeting of stockholders for election of
directors of the Company. In the event of any adjournment of any such meeting, the
date on which the inspectors appointed for such meeting declare directors to have been
elected shall be deemed the meeting date for purposes of the Plan.
	 
	 	(b)	 	“Board” shall mean the board of directors of the Company.
	 
	 	(c)	 	“Common Stock” shall mean the common stock, $0.01 par value, of the Company.
	 
	 	(d)	 	“Company” shall mean Valero Energy Corporation, a Delaware corporation.
	 
	 	(e)	 	“Compensation Committee” shall mean the Compensation Committee of the Board.
	 
	 	(e-1) 	 	“Effective Date” shall mean July 31, 1997.
	 
	 	(f)	 	“Employee Director” shall mean a member of the Board who is an employee of the
Company or any subsidiary of the Company.
	 
	 	(g)	 	“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
	 
	 	(h)	 	“Fair Market Value” shall mean the average of the high and low sales prices of
the Common Stock on a Grant Date (or if Common Stock was not traded on such day, the
first day following the Grant Date on which Common Stock was traded) as reported on the
New York Stock Exchange.
	 
	 	(i)	 	“Grant Date” shall mean the date on which Restricted Shares are awarded to a
Non-Employee Director pursuant to Paragraph 5.
	 
	 	(j)	 	“Mandatory Retirement Policy” shall mean the retirement policy set forth in
Article I, Section 6, of the Corporate Governance Guidelines of the Company, or any
successor policy.
	 
	 	(k)	 	“Non-Employee Director” shall mean a member of the Board who is not an employee
of the Company or any subsidiary of the Company.
	 
	 	(l)	 	“Participant” shall have the meaning given in Paragraph 5(c).
	 
	 	(m)	 	“Plan” shall mean this Restricted Stock Plan for Non-Employee Directors.
	 
	 	(n)	 	“Restriction Period” shall mean the period of time, as specified in Paragraph
7(c), applicable to Restricted Shares granted under the Plan.
	 
	 	(o)	 	“Restricted Shares” shall mean shares of Common Stock granted to a Non-Employee
Director pursuant to Paragraph 5.
	 
	 	(p)	 	“Restricted Shares Agreement” shall mean the agreement described in Paragraph
5(c).

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	 	(q)	 	“Retained Distributions” shall mean distributions that are retained by the
Company pursuant to Paragraph 7(e)(ii).
	 
	 	(r)	 	“Share” means a share of Common Stock.
	 
	 	(s)	 	“Subsidiary of the Company” shall mean any corporation, partnership or other
entity in which the Company owns, directly or indirectly, a controlling interest.

	3.	 	Shares Subject to the Plan.

	 	(a)	 	Subject to the provisions of Paragraph 9 below, the maximum aggregate number of shares of Common Stock that may be granted under the Plan shall be 100,000 Shares
(pre-split), provided, however, that any Restricted Shares granted under the Plan that
are forfeited pursuant to the terms of the Plan or otherwise surrendered shall again
become available for grant under the Plan. Shares withheld by the Company, or
delivered to the Company, to pay taxes pursuant to Paragraph 12 shall not be available
for additional grants under the Plan.
	 
	 	(b)	 	The Restricted Shares may be, in whole or in part, authorized but unissued
shares of Common Stock or shares of Common Stock previously issued and outstanding and
reacquired by the Company.
	 
	 	(c)	 	The Company shall not be required to issue fractional Shares, and in lieu
thereof any fractional Shares shall be rounded to the next higher number of whole
Shares.

	4.	 	Eligibility. The only persons eligible to participate in the Plan shall be Non-Employee
Directors. An Employee Director who retires from employment with the Company or any
Subsidiary of the Company shall be (without further action by the Committee) eligible to
participate in the Plan and shall be entitled to receive a grant of Restricted Shares
immediately upon the commencement of his or her service as a Non-Employee Director.
	 
	5.	 	Automatic Grants to Non-Employee Directors.

	 	(a)	 	On the date of each Annual Meeting, each Non-Employee Director who is elected
as a Non-Employee Director at the Annual Meeting or whose term of office otherwise
continues following the date of the Annual Meeting shall thereupon receive an automatic
grant of Restricted Shares valued at $160,000 in the aggregate based upon the Fair
Market Value of a Share on such Grant Date.
	 
	 	(b)	 	Each person who is first elected or appointed as a Non-Employee Director on a
date other than the date of an Annual Meeting shall automatically receive, on the date
so elected or appointed, a pro-rata grant of Restricted Shares (as compared to the
annual grant of Restricted Shares described in Paragraph 5(a) above) valued (based upon
the Fair Market Value of a Share on the Grant Date) at an amount equal to $160,000
multiplied by a number equal to the quotient of the whole number of months (rounding
upward for fractional months) until the next Annual Meeting divided by 12.
	 
	 	(c)	 	The officers of the Company shall promptly cause the Company to enter into an
agreement with each Non-Employee Director who is granted Restricted Shares pursuant to
this Paragraph 5 (“Restricted Share Agreement”), and shall cause the Company to issue
such Restricted Shares, all without further action by the Company, the Board, the
Compensation Committee or the Special Committee. Each Non-Employee Director receiving
an automatic grant of Restricted Shares pursuant to this Paragraph 5 is referred to
herein as a “Participant.” The execution and delivery of a Restricted Shares Agreement shall be a condition precedent to the
issuance of Restricted Shares to a Participant.

-3-

 

	6.	 	Administration of the Plan.

	 	(a)	 	Except as otherwise set forth herein, the Plan shall be administered by the
Compensation Committee, as appointed and constituted from time to time by the Board so
long as the Compensation Committee is composed solely of two or more “Non-Employee
Directors” (as defined in Rule 16b-3 under the Exchange Act). In the event the
Compensation Committee shall fail to meet the foregoing criteria, then additional or
different persons shall be appointed by the Board for purposes of administering this
Plan so that the committee administering this Plan shall be composed solely of two or
more Non-Employee Directors (as defined in Rule 16b-3).
	 
	 	(b)	 	In connection with its administration of this Plan, the Compensation Committee
is empowered to:

	 	(i)	 	Make rules and regulations for the administration of the Plan
that are not inconsistent with the terms and provisions of this Plan;
	 
	 	(ii)	 	Construe all terms, provisions, conditions and limitations of
the Plan in good faith, and adopt amendments to the Plan;
	 
	 	(iii)	 	Make equitable adjustments for any mistakes or errors in the
administration of this Plan or deemed to be necessary as the result of any
unusual situation or any ambiguity in the Plan;
	 
	 	(iv)	 	Select, employ and compensate, from time to time, consultants,
accountants, attorneys and other agents and employees as the Compensation
Committee may deem necessary or advisable for the proper and efficient
administration of this Plan.

	 	(c)	 	The foregoing list of express powers granted to the Compensation Committee upon
the adoption of this Plan is not necessarily intended to be either complete or
exclusive, and the Compensation Committee shall, in addition to the specific powers
granted by this Plan, have such powers not inconsistent with the Plan or Rule 16b-3,
whether or not expressly authorized herein, which it may deem necessary, desirable,
advisable, proper, convenient or appropriate for the supervision and administration of
this Plan. Except as otherwise specifically provided herein, the decisions and
judgment of the Compensation Committee on any question or claim arising hereunder shall
be final, binding and conclusive upon the Participants and all persons claiming by,
through or under a Participant.
	 
	 	(d)	 	Notwithstanding the foregoing, the Compensation Committee shall have no
authority to exercise discretion with respect to the selection of any Non-Employee
Director as a Participant in the Plan, the determination of the number of Restricted
Shares that are allocated to any such Non-Employee Director or the terms or conditions
of any such allocation, and shall have no authority to amend any provision of the Plan
relating to eligibility for participation in the Plan, the amount or timing of grants
under the Plan or the imposition or removal of restrictions on the vesting of
Restricted Shares.
	 
	 	(e)	 	Distributions of Shares may, as the Compensation Committee shall in its sole
discretion determine, be made from authorized but unissued Shares or from treasury or
reacquired Shares.

-4-

 

	7.	 	Restrictions Applicable to Restricted Shares.

	 	(a)	 	All Restricted Shares granted pursuant to Paragraph 5 of the Plan shall be
subject to the risk of forfeiture during the applicable Restriction Period. The
Restriction Period for each grant of Restricted Shares shall commence on the Grant
Date.
	 
	 	(b)	 	The Restriction Period for Restricted Shares granted to a Non-Employee Director
shall end and the Restricted Shares and any related Retained Distributions shall become
nonforfeitable on the earlier of any of the following events:

	 	(i)	 	The date a Non-Employee Director ceases to be a Director of the
Company by reason of the Mandatory Retirement Policy;
	 
	 	(ii)	 	The date a Non-Employee Director completes his or her tenure as
a Director of the Company as provided in the bylaws of the Company and declines
to stand for reelection;
	 
	 	(iii)	 	The date a Non-Employee Director, having been nominated for
and having agreed to stand for reelection, is not reelected by the stockholders
of the Company to serve as a member of the Board;
	 
	 	(iv)	 	The date of the death of a Non-Employee Director;
	 
	 	(v)	 	The date a Non-Employee Director certifies in writing to the
Company that he or she is resigning as a member of the Board due to medical or
health reasons which render such Non-Employee Director unable to continue to
serve as a member of the Board;
	 
	 	(vi)	 	Subject to the provisions of and definitions contained in
Paragraph 7(f), the occurrence of a Change of Control of the Company; or
	 
	 	(vii)	 	The date specified in Paragraph 7(c).

	 	(c)	 	Except as otherwise provided herein, the Restriction Period shall
terminate as follows, and the Restricted Shares (and any Retained
Distributions) shall vest and accrue (i.e., become non-forfeitable) to the
Non-Employee Director as follows:

	 	(i)	 	with respect to (A) any grant of Restricted Shares
under Paragraph 5(b), and (B) any first-time grant of Restricted Shares
under Paragraph 5(a) to a Non-Employee Director, the Restriction Period
for one-third of such Restricted Shares shall terminate on the date of
the first Annual Meeting following the Grant Date, the Restriction
Period for another one-third of such Restricted Shares shall terminate
on the date of the second Annual Meeting following the Grant Date, and
the Restriction Period for the final one-third of such Restricted
Shares shall terminate on the date of the third Annual Meeting
following the Grant Date;
	 
	 	(ii)	 	with respect to any second-time grant of Restricted
Shares under Paragraph 5(a) to such Non-Employee Director, the
Restriction Period for one-third of such Restricted Shares shall
terminate on the date of the first Annual Meeting following the Grant
Date, and the Restriction Period for the remaining two-thirds of such
Restricted Shares shall terminate on the date of the second Annual
Meeting following the Grant Date;

-5-

 

	 	(iii)	 	with respect to any third-time grant of Restricted
Shares under Paragraph 5(a) to such Non-Employee Director, and for all
grants thereafter, the Restriction Period for such Restricted Shares
shall terminate on the date of the first Annual Meeting following the
Grant Date.

	 	(d)	 	Restricted Shares and the shares of Common Stock issuable in connection with
the vesting of the Restricted Shares will be issued in uncertificated form, pursuant to
the Direct Registration System (“DRS”) or similar system for recording the issuance and
transfer of uncertificated shares of Common Stock that is administered by the Company’s
stock transfer agent.
	 
	 	(e)	 	Restricted Shares shall constitute issued and outstanding shares of Common
Stock for all corporate purposes. The Non-Employee Director will have the right to
vote such Restricted Shares, to receive and retain all regular cash dividends paid on
such Restricted Shares and to exercise all other rights, powers and privileges of a
holder of Common Stock with respect to such Restricted Shares, with the exception that:

	 	(i)	 	the Non-Employee Director will not be entitled to delivery of a
stock certificate or a designation of “unrestricted” status in the DRS until
the Restriction Period applicable to such Restricted Shares shall have expired
and all other vesting requirements with respect thereto shall have been
fulfilled;
	 
	 	(ii)	 	other than cash dividends and rights to purchase stock which
might be distributed to shareholders of the Company, the Company will retain
custody of all distributions (“Retained Distributions”) made or declared with
respect to Restricted Shares (and such Retained Distributions will be subject
to the same restrictions, terms and conditions as are applicable to the
Restricted Shares with respect to which they were made, paid or declared) until
such time, if ever, as the Restriction Period applicable to the Restricted
Shares with respect to which such Retained Distributions shall have been made,
paid or declared shall have expired, and such Retained Distributions shall not
bear interest or be segregated in separate accounts;
	 
	 	(iii)	 	upon the breach of any restrictions, terms or conditions
provided in the Plan with respect to any Restricted Shares or Retained
Distributions, such Restricted Shares and any related Retained Distributions
shall thereupon be automatically forfeited.

	 	(f)	 	A “Change of Control” as used herein, shall be deemed to occur when:

	 	(i)	 	the stockholders of the Company approve any agreement or
transaction pursuant to which:

	 	(A)	 	the Company will merge or consolidate with any
other person (other than a wholly owned subsidiary of the Company) and
will not be the surviving entity (or in which the Company survives only
as the subsidiary of another entity);
	 
	 	(B)	 	the Company will sell all or substantially all
of its assets to any other person (other than a wholly owned subsidiary
of the Company); or
	 
	 	(C)	 	the Company will be liquidated or dissolved; or

	 	(ii)	 	any “person” or “group” (as these terms are used in Section
13(d) and 14(d) of the Exchange Act) other than the Company, any subsidiary of
the Company, any employee benefit plan of the Company or its subsidiaries, or
any entity holding Common Stock for or pursuant to the terms of such employee
benefit plans, is or becomes an “Acquiring Person” as defined in the Rights
Agreement dated June 18, 1997 (“Rights Agreement”) between the Company and
Computershare Investor 

-6-

 

	 	 	 	Services, L.L.C., as Rights Agent (successor Rights
Agent to Harris Trust and Savings Bank), as amended
(or any successor Rights Agreement) (or, if no Rights Agreement is then in
effect, such person or group acquires or holds such number of shares as,
under the terms and conditions of the most recent such Rights Agreement to
be in force and effect, would have caused such person or group to be an
“Acquiring Person” thereunder); or

	 	(iii)	 	any “person” or “group” shall commence a tender offer or
exchange offer for 15% or more of the shares of Common Stock then outstanding,
or for any number or amount of shares which, if the tender or exchange offer
were to be fully subscribed and all shares for which the tender or exchange
offer is made were to be purchased or exchanged pursuant to the offer, would
result in the acquiring person or group directly or indirectly beneficially
owning 50% or more of the shares of Common Stock then outstanding; or
	 
	 	(iv)	 	individuals who, as of any date, constitute the Board (the
“Incumbent Board”) thereafter cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director whose election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a person or group other than the Board; or
	 
	 	(v)	 	the occurrence of the Distribution Date (as defined in the
Rights Agreement); or
	 
	 	(vi)	 	any other event determined by the Board or the Committee to
constitute a “Change of Control” hereunder.

	8.	 	Forfeiture, Completion of Restriction Period.

	 	(a)	 	If a Non-Employee Director ceases to be a member of the Board for any reason
other than as set forth in Paragraph 7(b), then all Restricted Shares and all Retained
Distributions with respect thereto issued to such Non-Employee Director and to which
the Restriction Period still applies shall be forfeited to the Company and the
Non-Employee Director shall not have any rights (including dividend and voting rights)
with respect to such forfeited Restricted Shares and Retained Distributions.
	 
	 	(b)	 	Upon expiration of the Restriction Period with respect to a Non-Employee
Director’s Restricted Shares, and the satisfaction of any other applicable
restrictions, terms and conditions, such Restricted Shares and any Retained
Distributions with respect to such Restricted Shares shall become nonforfeitable. The
Company shall promptly thereafter direct the Company’s stock transfer agent to
redesignate such shares in the Non-Employee Director’s DRS account as “issued and
unrestricted” Shares.
	 
	 	(c)	 	Notwithstanding any other provision of this Plan, if the Committee finds by a
majority vote, that the Participant, before or after termination of his or her capacity
as a Non-Employee Director of the Company, committed fraud, embezzlement, theft,
commission of felony, or proven dishonesty in the course of his or her relationship to
the Company and/or a Subsidiary of the Company which conduct damaged the Company and/or
a Subsidiary of the Company, or disclosed trade secrets of the Company or a Subsidiary
of the Company, then all Restricted Shares and all Retained Distributions with respect
thereto issued to such Participant to which the Restriction Period still applies shall
be forfeited to the Company and 

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	 	 	 	the Participant will have no further rights with
respect thereto. The decision of the Committee will be final.

	9.	 	Adjustment in Event of Changes in Common Stock. In the event of a recapitalization, stock
split, stock dividend, combination or exchange of shares, merger, consolidation, liquidation
or other similar event, the aggregate number and class of Restricted Shares and other
securities or property available for grant under the Plan shall be automatically adjusted so
that the total number of Restricted Shares or other securities or property issuable under the
Plan immediately following such event shall be the number of shares of Common Stock and other
securities or property which, had all remaining shares of Common Stock available under the
Plan been granted to a single holder immediately prior to such event, would be held or
received by such holder immediately following such event.
	 
	10.	 	Non-Alienation of Benefits. No Shares, Retained Distributions, or other rights or benefits
under the Plan or any Restricted Shares Agreement shall be subject, prior to the end of any
applicable Restriction Period or other restrictive period, to anticipation, alienation, sale,
assignment, hypothecation, pledge, exchange, transfer, encumbrance or charge (other than by
will or the laws of descent and distribution), and any such attempt to anticipate, alienate,
sell, assign, hypothecate, pledge, exchange, transfer, encumber or charge the same shall be
void. No Shares, Retained Distributions, or other rights or benefits under the Plan shall in
any manner be liable for or subject to the debts, contracts, liabilities or torts of the
person entitled to such right or benefit. If any Non-Employee Director or other person
claiming by, through or under a Non-Employee Director hereunder should attempt to anticipate,
alienate, sell, assign, hypothecate, pledge, exchange, transfer, encumber or charge any
Shares, Retained Distributions, or any right or benefit hereunder, prior to the end of any
applicable Restriction Period or other restrictive period, then such Restricted Shares and
related Retained Distributions shall be automatically forfeited and such rights or benefits
shall cease and terminate.
	 
	11.	 	Appointment of Attorney-in-Fact. Upon the grant of any Restricted Sharesthe Non-Employee
Director shall be deemed to have appointed the Company, acting through its Corporate
Secretary, the attorney-in-fact of the Non-Employee Director, with full power of substitution,
for the purpose of carrying out the provisions of this Plan and taking any action and
executing any instruments which such attorney-in-fact may deem necessary or advisable to
accomplish the purposes hereof, which appointment as attorney-in-fact shall be irrevocable and
coupled with an interest. The Company as attorney-in-fact for the Non-Employee Director may,
in the name and stead of the Non-Employee Director, make and execute all conveyances,
assignments and transfers of the Restricted Shares and Retained Distributions deposited with
the Company or its stock transfer agent pursuant to the Plan. The Non-Employee Director
shall, if so requested by the Company, execute and deliver to the Company all such instruments
as may, in the judgement of the Company, be advisable for such purpose.
	 
	12.	 	Withholding Taxes.

	 	(a)	 	At the time any Restricted Shares become nonforfeitable under the Plan (or, if
at the time of receipt the Participant shall not be subject to taxation with respect to
such Shares, at such later date as such Participant becomes subject to taxation with
respect to such Shares; whichever such date is applicable being referred to herein as
the “tax date”), the Participant shall make a cash payment to the Company equal to the
amount required by applicable provisions of law to be withheld by the Company in
connection with federal income tax, FICA and all other federal, state and local taxes
in respect of such Shares (or such greater amount as the Participant shall elect to
have withheld in respect of such taxes; whichever such amount is applicable being
referred to herein as the “tax amount”), provided that subject to the prior approval of
the Committee, the Participant may elect that all or any portion of the 

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	 	 	 	tax amount be
collected by withholding from the number of Shares otherwise to be delivered to the
Participant that number of Shares having a Fair Market Value on the tax date equal to all or any portion of
the amount otherwise to be collected subject to any limitations prescribed by
applicable law, in all cases, only that number of whole Shares the Fair Market Value
of which does not exceed the tax amount shall be withheld or delivered and the
Participant shall make a cash payment to the Company equal to any excess amount to
be withheld or collected. In lieu of the foregoing withholding procedure, a
Participant, subject to the prior approval of the Committee, may satisfy the tax
withholding or collection requirement by delivering to the Company on the tax date
certificates for other Shares already owned by the Participant, endorsed in blank
with appropriate signature guarantee, having a Fair Market Value on the tax date
equal to the tax amount. All taxes payable with respect to income of a Participant
resulting from the grant or issuance of any Shares hereunder shall be the sole
responsibility of the Participant, not of the Company, whether or not the Company
shall have withheld or collected from the Participant any sums required to be so
withheld or collected in respect of such income, and whether or not any sums so
withheld or collected shall be sufficient to provide for any such taxes. The
determination of any tax resulting from the award or vesting of Shares or from cash
or other distributions with respect to Shares or Retained Distributions shall be the
sole responsibility of the Participant.

	 	(b)	 	To the extent permitted under the Internal Revenue Code of 1986, as amended, a
Non-Employee Director granted Restricted Shares may elect (which, apart from any other
notice required by law, shall require that the Non-Employee Director notify the Company
of such election at the time it is made) within 30 days after the Grant Date to include
in gross income for federal income tax purposes an amount equal to the Fair Market
Value of such Shares at the Grant Date.

	13.	 	Amendment and Termination of Plan. Subject to the provisions of Paragraph 6(d), the
Compensation Committee may at any time terminate, modify or amend the Plan as it shall deem
advisable. Notwithstanding the foregoing, shareholder approval shall be obtained for any
action with respect to the Plan to the extent required by applicable state or federal rules,
regulations or laws. No termination or amendment of the Plan shall adversely affect the
rights of any Non-Employee Director under any grant previously made.
	 
	14.	 	[reserved]
	 
	15.	 	Government and Other Regulations. Notwithstanding any other provisions of the Plan, the
obligations of the Company with respect to Restricted Shares or Retained Distributions shall
be subject to all applicable laws, rules and regulations, and such approvals by any
governmental agencies as may be required or deemed appropriate by the Company. The Company
reserves the right to delay or restrict, in whole or in part, the issuance or delivery of
Common Stock pursuant to any grants of Restricted Shares or Retained Distributions under the
Plan until such time as any legal requirements or regulations shall have been met relating to
the issuance of such Restricted Shares or Retained Distributions.
	 
	16.	 	No Right to Nomination. Nothing in the Plan or in any grant shall confer upon any Director
the right be nominated for reelection to the Board.

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	17.	 	Non-Exclusivity of Plan. Neither the adoption of the Plan by the Compensation Committee nor
any submission of the Plan to the stockholders of the Company for approval shall be construed
as creating any limitations on the power of the Compensation Committee or the Board to adopt
such other incentive arrangements as it may deem desirable, including, without limitation, the
awarding of Common Stock otherwise than under the Plan, and such arrangements as may be either
generally acceptable or applicable in specific cases.
	 
	18.	 	Governing Law. The Plan shall be governed by, and construed in accordance with, the laws of
the State of Texas.
	 
	19.	 	Miscellaneous Provisions.

	 	(a)	 	Except as to automatic grants to Non-Employee Directors pursuant to Paragraph 5
hereof, no employee or other person shall have any claim or right to be granted Shares
under this Plan.
	 
	 	(b)	 	The expenses of the Plan shall be born by the Company.
	 
	 	(c)	 	By accepting any grant under the Plan, each Non-Employee Director and each
personal representative or beneficiary and each other person claiming by, through or
under such Non-Employee Director shall be conclusively deemed to have indicated his or
her acceptance and ratification of, and consent to, any action taken under the Plan by
the Company, the Board or the Compensation Committee.
	 
	 	(d)	 	[reserved].
	 
	 	(e)	 	Each grant of Restricted Shares to any person serving at the Grant Date as a
Non-Employee Director shall be in consideration of past services of the Participant.
Each grant of Restricted Shares to a person who was not serving as a Non-Employee
Director prior to the Grant Date shall be in consideration of such person’s agreement
to stand for election as or be considered for appointment as a Non-Employee Director
and to serve as such if so elected or appointed. Each such grant shall be deemed to
constitute a conclusive finding by the Board that such services or agreement, as
applicable, have a value equal to or in excess of the value of such Restricted Shares,
and constitute payment in full therefor. All authorized and unissued shares issued as
Restricted Shares in accordance with the Plan shall be fully paid and nonassessable
shares and free from preemptive rights. No Restricted Shares shall be issued for
consideration having a value less than the par value of the Common Stock.

-10-

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