Document:

exv10w1

 

Exhibit 10.1

EMPLOYMENT AGREEMENT

     EMPLOYMENT AGREEMENT dated effective as of November 22, 2006 (this “Agreement”), between
National Energy Group, Inc. (the “Company”), having an address at 4925 Greenville Avenue, Suite
1400, Dallas, Texas 75206, and Mr. Bob G. Alexander (the “Employee”), having an address at6017
Morning Dove Lane, Edmond, Oklahoma 73003.

1. Employment

Upon the terms and conditions hereinafter set forth, the Company hereby agrees to employ Employee
and Employee hereby agrees to become employed by the Company. During the Term of Employment (as
hereinafter defined), Employee shall be employed in the position of Chairman, President and Chief
Executive Officer of the Company and his principal office of employment shall be located in
Oklahoma City, Oklahoma, and shall also serve in other positions of affiliates of the Company as
may be designated (the “Designated Affiliates”) from time to time by the board of directors of the
Company (the “Board”), provided that such Designated Affiliates are engaged in the business of
exploration, production or operation of natural gas and oil properties or related businesses
(collectively, the “Oil & Gas Business”). Employee shall perform such duties as are specified from
time to time by the Company, the Board and the Designated Affiliates, consistent with the position
of Chairman, President and Chief Executive Officer. Employee shall serve in such capacities at the
pleasure of the Board. Employee shall report to and be under the supervision of the Board and such
persons as shall be designated from time to time by the Board.

During the Term of Employment, Employee shall devote all of his professional attention, on a full
time basis, to the business and affairs of the Company and the Designated Affiliates, shall use his
best efforts to advance the best interest of the Company and the Designated Affiliates and shall
comply with all of the policies of the Company and the Designated Affiliates applicable to
employees, including, without limitation, such policies with respect to legal compliance, conflicts
of interest, confidentiality and business ethics as are from time to time in effect;
provided that such policies of the Designated Affiliates do not result in any Securities
and Exchange Commission (“SEC”) or other jurisdictional regulatory body compliance violations or
conflicts of interest with the policies of the Company.

During the Term of Employment, the Employee shall not, without the prior written consent of the
Board, directly or indirectly render services to, or otherwise act in a business or professional
capacity on behalf of or for the benefit of, any other Person (as hereinafter defined) as an
employee, advisor, independent contractor, agent, consultant, representative or otherwise, whether
or not compensated (the “Exclusivity Obligation”).

2. Term

The employment period shall commence effective as of November 22, 2006 and shall continue

 

 

through the period (the “Term of Employment”) ending on November 21, 2007 (the “Expiration Date”),
unless earlier terminated as set forth in this Agreement.

3. Compensation

For all services to be performed by Employee under this Agreement, during the Term of Employment,
the Employee shall be compensated in the following manner:

(a) Base Compensation

The Company will pay Employee a salary (the “Base Salary”) at an annual rate of $1,000,000. The
Base Salary shall be payable in accordance with the normal payroll practice of the Company (but no
less frequently than bi-weekly).

(b) Bonus Compensation

Employee shall be eligible to receive bonus compensation as determined in the sole and absolute
discretion of the Board (“Bonus Compensation”).

(c) Taxes

All amounts paid by the Company to Employee under or pursuant to this Agreement, including, without
limitation, the Base Salary and any Bonus Compensation, or any other compensation or benefits,
whether in cash or in kind, shall be subject to normal withholding and deductions imposed by any
one or more local, state or federal governments.

4. Termination

This Agreement shall terminate (subject to Section 10(f) below) and the Term of Employment shall
end, on the first to occur of (each a “Termination Event”):

(a) The Expiration Date;

(b) The death of Employee or the total or partial disability that, in the reasonable judgment of
the Company, renders Employee, with or without reasonable accommodation, unable to perform his
essential job functions for the Company for a period of at least 90 consecutive business days;

(c) The discharge of Employee by the Company with or without Cause (as hereinafter defined);

(d) The resignation of Employee (and without limiting the effect of such resignation, Employee
agrees to provide the Company with not less than 30 days prior written notice of his
resignation); or

 

 

(e) A Change of Control (as hereinafter defined).

The Company may discharge Employee at any time, for any reason or no reason, with or without
Cause, in which event Employee shall be entitled only to such payments as are set forth in
Section 5 below. As used herein, “Cause” is defined as Employee’s: (i) failure to (x) perform
the duties assigned to him or (y) comply with the instructions given to him; (ii) personal
misconduct or insubordination; (iii) impairment due to alcohol or substance abuse; (iv)
conviction of a crime or being charged with a felony; (v) violation of a federal or state
securities law or regulation; (vi) commission of an act of moral turpitude or dishonesty
relating to the performance of his duties hereunder; (vii) failure to comply with any of the
terms of this Agreement; (viii) breach of the Exclusivity Obligation or any of his obligations
set forth in Section 6 or Section 7 below; (ix) any revocation or suspension by any state or
local authority of Employee’s required license(s) to serve in his position(s) with the Company;
or (x) any act or failure to act by Employee which causes any regulatory authority having
jurisdiction over the Company, the Designated Affiliates or any of their affiliates to seek any
redress or remedy against the Employee, the Company, any Designated Affiliate or any of their
affiliates. In the event Employee is discharged for Cause, prior to Employee’s termination,
the Company shall provide Employee with written notice signed by a member of the Board of
Directors stating with specificity the reason(s), incident(s) or event(s) underlying Employee’s
discharge for Cause. For purposes of this Agreement “Change in Control” means the consummation
of any transaction (including, without limitation, any merger or consolidation), the result of
which is that any Person, other than Carl C. Icahn or the Related Parties, becomes the
Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of the Company,
measured by voting power rather than number of shares.

5. Effect of Termination

In the event of termination of Employee’s employment hereunder, all rights of Employee under this
Agreement, including all rights to compensation, shall end and Employee shall only be entitled to
be paid the amounts set forth in this Section 5 below.

	 	(a)	 	In the event that the Term of Employment ends (i) for the reason set forth in
Section 4(a) above (i.e., Expiration Date), or (ii) for the reason set forth in Section
4(d) above (i.e. resignation), or (iii) due to the discharge of Employee by the Company
for Cause, then, in lieu of any other payments of any kind (including, without
limitation, any severance payments), Employee shall be entitled to receive, within
fifteen (15) days following the date on which the Termination Event in question
occurred (the “Clause (a) Termination Date”) any amounts of: (A) Base Salary due and
unpaid to Employee from the Company as of the Clause (a) Termination Date; and (B)
Bonus Compensation earned, vested, due and unpaid to Employee from the Company as of
the Clause (a) Termination Date.
	 
	 	(b)	 	In the event that the Term of Employment ends (i) for the reason set forth in
Section 4(b) above (i.e., death or disability, or (ii) due to the discharge of the
Employee by the

 

 

	 	 	 	Company without Cause (which the Company is free to do at any time in its sole and
absolute discretion), or (iii) for the reason set forth in Section 4(e) above (i.e., a
Change of Control) then, in lieu of any other payments of any kind (including, without
limitation, any severance payments), Employee shall be entitled to receive, within
fifteen (15) days following the date on which the Termination Event in question occurred
(the “Clause (b) Termination Date”):

	 	(i)	 	any amounts of Base Salary and previously earned Bonus
Compensation, vested, due and unpaid to Employee from the Company as of the
Clause (b) Termination Date; and
	 
	 	(ii)	 	a lump-sum payment in the amount equal to the amount of Base
Salary that would have been paid Employee if Employee had remained employed by
the Company through November 21, 2007, payment of which shall, be conditioned
upon execution and delivery of a Settlement and Release Agreement by Employee
in form attached hereto as Exhibit “A”; provided that in the
event that the Term of Employment ends due to the death of Employee (a) the
amounts described in this Section 4(b)(i) and (ii) shall be paid to Employee’s
spouse , Donna Alexander, upon execution and delivery by her and by the
executor of the estate of Employee of such Settlement and Release Agreement..

For the purpose of this Paragraph 5, any cash Bonus Compensation shall be deemed earned and to
become vested and due on November 21, 2007; provided that Employee is employed by the Company on
such date.

6. Non-Disclosure

During the Term of Employment and at all times thereafter, Employee shall hold in a fiduciary
capacity for the benefit of the Company, each Designated Affiliate and each of their affiliates,
respectively, all secret or confidential information, knowledge or data, including, without
limitation, trade secrets, identity of investments, identity of contemplated investments, business
opportunities, valuation models and methodologies, relating to the business of the Company, the
Designated Affiliates or their affiliates, and their respective business as, (i) obtained by
Employee at any time during Employee’s employment by the Company and (ii) not otherwise in the
public domain (“Confidential Information”). Employee also agrees to keep confidential and not
disclose to any unauthorized Person any personal information regarding any controlling Person of
the Company, the Designated Affiliates or any of their affiliates and any member of the immediate
family of any such Person (and all such personal information shall be deemed “Confidential
Information” for the purposes of this Agreement). Employee shall not, without the prior written
consent of the Company: (i) except to the extent compelled pursuant to the order of a court or
other body having jurisdiction over such matter or based upon the advice of counsel that such
disclosure is legally required, communicate or divulge any Confidential Information to anyone other
than the Company and those designated by the Company; or (ii) use any Confidential Information for
any purpose other than the performance of his duties as an employee of the Company. Employee will
use reasonable efforts to assist the Company, at the

 

 

Company’s expense, in obtaining a protective order, other appropriate remedy or other reliable
assurance that confidential treatment will be accorded any Confidential Information disclosed
pursuant to the terms of this Agreement.

In no event shall Employee during or after his employment hereunder, disparage the Company, the
Designated Affiliates, any controlling Person of the Company, the Designated Affiliates, their
respective affiliates and family members or any of their respective officers, directors or
employees.

All processes, technologies, intellectual property and inventions (collectively, “Inventions”)
conceived, developed, invented, made or found by Employee, alone or with others, during the Term of
Employment, whether or not patentable and whether or not on the Company’s time or with the use of
the Company’s facilities or materials, shall be the property of the Company and shall be promptly
and fully disclosed by the Employee to the Company. Employee shall perform all necessary acts
(including, without limitation, executing and delivering any confirmatory assignments, documents,
or instruments requested by the Company) to vest title to any such Inventions in the Company and to
enable to the Company, at its expense, to secure and maintain domestic and/or foreign patents or
any other rights for such Inventions.

Without limiting anything contained above, Employee agrees and acknowledges that all personal and
not otherwise public information about Employer and its Affiliates, including, without limitation,
their respective investments, investors, transactions, historical performance, or otherwise
regarding or concerning their respective officers or directors, shall constitute Confidential
Information for purposes of this Agreement. In no event shall Employee during or after his
employment hereunder, disparage any of the foregoing individual or entities. In furtherance of the
foregoing, the Employee agrees that during the Term and following the termination of his employment
hereunder, the sole and only disclosure he will make about or concerning the Employer or
any of the foregoing individuals or entities is to acknowledge that he is or was employed with
Employer.

7. Non-Compete

(a) During the Term of Employment and, unless Employee’s employment is terminated by the Company
without Cause or as a result of a Change of Control, for a period of one (1) year following the
last day of Employee’s employment by the Company, Employee will not, either directly or indirectly,
as principal, agent, owner, employee, partner, investor, shareholder (other than solely as a holder
of not more than 1% of the issued and outstanding shares of any public corporation), consultant,
advisor or otherwise howsoever own, operate, carry on or engage in the operation of or have any
financial interest in or provide, directly or indirectly, financial assistance to or lend money to
or guarantee the debts or obligations of any Person carrying on or engaged in any Oil & Gas
Business.

For the avoidance of doubt, nothing in this Agreement will prohibit Employee from investing in the
securities of private companies or in other entities in which he does not participate in the
management (either as an employee, officer or director), provided that such investment has been
cleared in accordance with all investment or insider trading policies applicable to Employee.

 

 

(b) Employee covenants and agrees with the Company and its subsidiaries that, during Employee’s
employment by the Company and, , for one (1) year following the last day of Employee’s employment
by the Company, Employee shall not directly, or indirectly, for himself or for any other Person:

	 	(i)	 	solicit, interfere with or endeavor to entice away from the Company, any Designated
Affiliate or any of their subsidiaries or affiliates, any customer, client or any Person in
the habit of dealing with any of the foregoing;
	 
	 	(ii)	 	interfere with, entice away or otherwise attempt to obtain the withdrawal of any
employee of the Company, any Designated Affiliate or any of their subsidiaries or
affiliates; or
	 
	 	(iii)	 	advise any Person not to do business with the Company, any Designated Affiliate or any
of their subsidiaries or affiliates.

Employee represents to and agrees with the Company that the enforcement of the restrictions
contained in Section 6 and Section 7 (the Non-Disclosure and Non-Compete sections respectively)
would not be unduly burdensome to Employee and that such restrictions are reasonably necessary to
protect the legitimate interests of the Company. Employee agrees that the remedy of damages for any
breach by Employee of the provisions of either of these sections may be inadequate and that the
Company shall be entitled to injunctive relief as provided by applicable law. This section
constitutes an independent and separable covenant that shall be enforceable notwithstanding any
right or remedy that the Company may have under any other provision of this Agreement or otherwise.

8. Benefits

During the Term of Employment, Employee shall be entitled to receive certain healthcare and other
similar employee welfare benefits comparable to those received by other employees of the Company at
a similar pay level and/or position with the Company as such may be provided by the Company in its
sole and absolute discretion from time to time.

9. Definitions

For purposes of this Agreement only, the following definitions shall apply:

“Affiliate” shall mean with respect to any Person, any Person controlled by, controlling or under
common control with such Person.

“Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the
Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as
that term is used in Section 13(d)(3) of the Exchange Act), such “person” will be deemed to have
beneficial ownership of all securities that such “person” has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is

 

 

exercisable only after the passage of time. The terms “Beneficially Owns” and “Beneficially Owned”
have a corresponding meaning.

“Control” and “Controlled” means the right, power or ability of one Person, whether or not
exercised, to direct or influence the management, policies or decisions of another person.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor
thereto.

“Person” means any individual, entity or group within the meaning of Section 13(d)(3) or 14(d)(2)
of the Exchange Act, other than employee benefit plans sponsored or maintained by the Company or by
entities controlled by the Company.

“Related Parties” means: (1) Carl C. Icahn, any spouse and any child, stepchild, sibling or
descendant of Carl C. Icahn; (2) any estate of Carl C. Icahn or of any person under clause (1); (3)
any person who receives a beneficial interest in any estate under clause (2) to the extent of such
interest; (4) any executor, personal administrator or trustee who holds such beneficial interest in
the Company for the benefit of, or as fiduciary for, any person under clauses (1), (2), or (3) to
the extent of such interest; (5) any corporation, partnership, limited liability Partnership,
trust, or similar entity, directly or indirectly owned or controlled by Carl C. Icahn or any other
person or persons identified in clauses (1), (2), (3) or (4); and (6) any not-for-profit entity not
subject to taxation pursuant to Section 501(c)(3) of the Internal Revenue Code or any successor
provision to which Carl C. Icahn or any person identified in clauses (1), (2), or (3) above
contributes his beneficial interest in the Company or to which such beneficial interest passes
pursuant to such person’s will.

“Voting Stock” means, with respect to any Person that is (a) a corporation, any class or series of
capital stock of such Person that is ordinarily entitled to vote in the election of directors
thereof at a meeting of stockholders called for such purpose, without the occurrence of any
additional event or contingency, (b) a limited liability company, membership interests entitled to
manage, or to elect or appoint the Persons that will manage the operations or business of the
limited liability company, or (c) a partnership, partnership interests entitled to elect or replace
the general partner thereof.

10. Miscellaneous

	 	(a)	 	This Agreement constitutes the entire agreement between the parties with respect to the
subject matter hereof and supersedes all previous written, and all previous or
contemporaneous oral negotiations, understandings, arrangements, and agreements.
	 
	 	(b)	 	This Agreement and all of the provisions hereof shall inure to the benefit of and be
binding upon the legal representatives, heirs, distributees, successors (whether by merger,
operation of law or otherwise) and assigns of the Company. Employee may not delegate any of
Employee’s duties hereunder, and may not assign any of Employee’s rights hereunder, without
the prior written consent of the Company, which may be withheld in its sole and absolute
discretion.

 

 

	 	(c)	 	This Agreement will be interpreted and the rights of the parties determined in
accordance with the laws of the United States applicable thereto and the internal laws of
the State of New York..
	 
	 	(d)	 	Employee covenants and represents that he is not a party to any contract, commitment or
agreement, nor is he subject to, or bound by, any order, judgment, decree, law, statute,
ordinance, rule, regulation or other restriction of any kind or character, which would
prevent or restrict him from entering into and performing his obligations under this
Agreement.
	 
	 	(e)	 	Employee acknowledges that he has had the assistance of legal counsel in reviewing and
negotiating this Agreement.
	 
	 	(f)	 	This Agreement and all of its provisions, other than the provisions of Section 5,
Section 6, Section 7 and Section 10 hereunder (which shall survive termination), shall
terminate upon Employee ceasing to be an employee of the Company for any reason.

 

 

	 	 	 	 	 
	NATIONAL ENERGY GROUP, INC.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	Name:
	 	 	 	 
	Title:
	 	 	 	 
	 
	 	 	 	 
	EMPLOYEE:	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 	 	 
	 

	 	     Bob G. Alexander,

     an individual	 	 

[Signature page to Employment Agreement between National Energy Group, Inc. and Bob G. Alexander]

 

 

Exhibit “A”

Settlement And Release Agreement

(ADEA Provisions)

     Pursuant to the terms and conditions of that certain Employment Agreement between you and
National Energy Group, Inc. (the “Company”) dated effective November 22, 2006 (the “Agreement”),
this Settlement and Release Agreement shall act to memorialize the rights and obligations of the
Company and you, respectively, with respect to the provisions of Section 6(b) of the Agreement.

     Resignation and Payment: Your employment with the Company terminated on                     , at
which time you have been or will be paid all accrued salary and unused vacation owing to you
through such date, and all of the benefits given to you in connection with your employment and the
Agreement, except with respect to your right to elect continued health coverage under the
Consolidated Omnibus Budget Reconciliation Act (“COBRA”) laws, shall also terminate. The Company
will forward to you the required COBRA forms describing your election rights. This Settlement and
Release Agreement (“Settlement and Release Agreement”) sets out your agreement to release and
forever waive all claims against the Company in exchange for certain payments as described in
Section 5 of the Agreement, less applicable withholding taxes (the “Compensation Payments”). In
order to receive your Compensation Payments, you agree that you must sign and deliver to the
Company the Reaffirmation of Agreement attached as Exhibit “B” to this Settlement and Release
Agreement at least eight (8) days after signing this Settlement and Release Agreement, after which
you will be paid your Compensation Payments.

     Release and Waiver: You agree that the receipt of the Compensation Payments described in this
Settlement and Release Agreement is in full settlement, release and waiver of any and all claims of
whatever type or nature that you have or may have, known or unknown, against the Company and its
affiliates and their respective shareholders, directors, members, officers, affiliates or its
employees, and include, but are not limited to, claims arising from your employment and/or
termination of employment with the Company, including, but not limited to, any claim under federal
or state statutory laws (including specifically the Texas Commission on Human Rights Act, Title VII
of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the National Labor
Relations Act, the Labor Management Relations Act, the Americans with Disabilities Act, the Family
and Medical Leave Act, the Texas Labor Code, and the Fair Labor Standards Act) or any common law
claims arising out of tort or contract; and you hereby acknowledge that you forever waive any and
all claims that you might otherwise have had, known or unknown, against the Company, its related
entities and affiliates, and/or their members, officers, directors, shareholders or employees for
any reason whatsoever.

     Acknowledgment Regarding ADEA Waiver: You also agree that you are relinquishing any rights or
claims arising under the Age Discrimination in Employment Act (the “ADEA”) and acknowledge that you
are receiving monies in addition to what you are entitled in order to release any claims under the
ADEA. Under the ADEA, and the Older Workers Benefit Protection Act of 1990, you are allowed a
period of 21 days to consider this agreement as it

 

 

relates to any age discrimination claim. Under the law you also have an additional seven (7)
days following your signing this agreement to revoke it; and this agreement does not become
effective until seven (7) days after you sign it. You are advised to consult with an attorney or
other advisor of your choice before signing this agreement, and by your signature below you
acknowledge that you have had an opportunity to do so before signing. You acknowledge by your
signature that no other promises are made to you in order to induce you to sign this agreement, and
that this document includes a release of all claims, known or unknown.

	 	 	 	 	 	 	 
	 	 	National Energy Group, Inc.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Bob G. Alexander, an individual	 	 

 

 

EXHIBIT “B”

REAFFIRMATION OF AGREEMENT

     I,                                         , acknowledge that I executed the Settlement and Release Agreement dated
                                         (the “Settlement and Release Agreement”) with National Energy Group, Inc., and
that during the twenty one (21) day period immediately following my execution of the Settlement and
Release Agreement, I had the right to revoke the Settlement and Release Agreement at any time. By
executing the Settlement and Release Agreement, I also understand that I agreed that I would
receive no Compensation Payments under the Settlement and Release Agreement unless and until I
executed this reaffirmation agreement (this “Reaffirmation”). I further understood that following
the above referenced twenty one (21) day period, I would have seven (7) additional days in which
to execute and deliver this Reaffirmation.

     By executing this Reaffirmation, I now affirm and attest that I (a) have not heretofore, or
contemporaneously with the execution of this Reaffirmation, revoked, or attempted to revoke the
Settlement and Release Agreement, either by notice to National Energy Group, Inc. or otherwise, and
(b) am now, by virtue of executing and delivering this Reaffirmation, fully bound by all of the
terms and conditions of the Settlement and Release Agreement.

     EXECUTED this                      day of                                         , 200_

	 	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	Bob G. Alexander, an Individual
	 	 

	 	 	 
	THE STATE OF                     

	 	§
	 

	 	§
	COUNTY OF                     

	 	§

     BEFORE ME, the undersigned, a Notary Public, on this day personally appeared
                                                            , known to me to be the person whose name is subscribed to the
foregoing instrument and acknowledged to me that he executed the same for the purposes and
consideration therein expressed.

     GIVEN
UNDER MY HAND AND SEAL OF OFFICE this ___ day of                     , 200_

	 	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	Notary Public, State ofexv10w1

 

Exhibit 10.1

As Approved by the Board of Directors January 16, 2007

CARBO CERAMICS INC.

INCENTIVE COMPENSATION PLAN

FOR KEY EMPLOYEES

(EFFECTIVE JANUARY 1, 2007)

Section 1. Purpose.

     The purpose of the Incentive Compensation Plan for Key Employees (the “Plan”) is to: (a)
provide competitive levels of compensation to enable CARBO Ceramics Inc. (the “Company”) to attract
and retain high quality personnel to manage the business; and (b) provide a financial incentive for
managers and key employees that can directly influence business results to achieve corporate,
business unit, and individual goals.

Section 2. Administration.

          (a) The Plan shall be administered by the Compensation Committee (the “Committee”) of the
Board of Directors of the Company.

          (b) The Committee may, subject to the provisions of the Plan, establish, adopt or revise rules
and regulations relating to the Plan or take such actions as it deems necessary or advisable for
the proper administration of the Plan. The Committee shall have the authority to interpret the
Plan in its absolute discretion. Each interpretation made or action taken by the Committee
pursuant to the Plan shall be final and conclusive for all purposes and binding upon all
Participants (as defined in Section 3) or former Participants and their successors in interest.

          (c) The Committee may delegate any of its duties as administrator of the Plan to the President
and Chief Executive Officer or such other individual or individuals as it sees fit; provided that
the Committee shall not delegate its duties with respect to Awards (as defined in Section 4) to any
corporate or executive officer. For purposes of the Plan, the term “Committee” shall include any
person or persons to whom the Committee has delegated any of its duties.

          (d) Neither the Committee nor any member of the Committee shall be liable for any act,
omission, interpretation, construction or determination made in good faith in connection with the
Plan, and the members of the Committee shall be entitled to indemnification and reimbursement by
the Company in respect of any claim, loss, damage or expense (including, without limitation,
reasonable attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by law.

Section 3. Eligibility.

     Awards may be granted only to key salaried employees of the Company who are selected for
participation in the Plan by the Committee. The President and Chief Executive Officer of the
Company shall be ineligible to receive any payments pursuant to the Plan. A qualifying employee
selected by the Committee to participate in the Plan shall be a “Participant” in the Plan.

 

 

Section 4. Awards.

     The Committee may grant performance-based awards (“Awards”) to Participants with respect to
the Company’s 2007 fiscal year (“Annual Awards”), or any quarter of the Company’s 2007 fiscal year
(“Quarterly Awards”) (each such fiscal year or quarter thereof, a “Performance Period”), subject to
the terms and conditions of the Plan. All Awards shall be settled in cash. All Awards will be
based on a Participant’s Incentive Payment Target, as detailed in Section 5, and up to three
Incentive Weights, as detailed in Section 6.

Section 5. Incentive Payment Targets.

     At the beginning of a Performance Period, the Committee shall establish incentive payment
targets (“Incentive Payment Targets”) for each eligible “Grade Position”. The Incentive Payment
Target shall be a percentage of the Participant’s base salary. Incentive Payment Targets will be
determined based on a review of: (i) the Company’s compensation philosophy; (ii) comparable
practices at companies with which the Company competes for labor; (iii) the level of responsibility
of each eligible position; and (iv) Company needs and objectives. The Incentive Payment Target
used to determine the actual Award paid shall be adjusted as set forth in Sections 6 and 7 (as
adjusted, the “Adjusted Incentive Payment Target”).

Section 6. Incentive Weights.

     At the beginning of a Performance Period, the Committee shall establish “Incentive Weights”
for each Grade Position. Incentive Weights are used to reflect the relative importance of each
performance category (e.g., individual, corporate or business unit) in the Participant’s total
incentive compensation opportunity. The sum of a Participant’s Incentive Weights will equal 100%.
Incentive Weights will be tiered by Grade Position.

Section 7. Performance Measures.

     Determination of Corporate Performance and Business Unit Performance. The portion of the
Incentive Payment Target attributable to corporate and/or business unit performance earned will be
based on a comparison of actual Net Income Before Tax (“NIBT”) for the Performance Period against
target NIBT performance goals for the Performance Period set forth in the Company’s business plan
for its 2007 fiscal year (“Target NIBT”).

	 	 	 	 	 
	% of Target NIBT	 	% of Incentive Payment Target Earned
	 
	Less than 75%
	 	 	0.0	%
	75%
	 	 	50	%
	80%
	 	 	66.7	%
	90%
	 	 	83.3	%
	100%
	 	 	100	%
	110%
	 	 	125	%
	120%
	 	 	150	%
	130%
	 	 	175	%
	140% or above
	 	 	200	%

2

 

          If the actual percentage of Target NIBT achieved is in between the percentages of Target
NIBT identified in the table above, then the corresponding percentage of Incentive Payment Target
Earned will be calculated based on the straight-line relationship between the two percentages of
Target NIBT identified in the table immediately above and below the actual percentage of Target
NIBT achieved.

          (a) Determination of Individual Performance. The portion of the Incentive Payment Target
attributable to the Participant’s individual performance earned will be determined in accordance
with either (i) or (ii) below as determined by the Committee.

	 	(i)	 	Individual performance will be determined by the Participant’s
annual “Performance Appraisal Rating” in accordance with the following table:

	 	 	 	 	 
	Performance Appraisal Rating	 	% of Incentive Payment Target Earned
	 
	5
	 	 	120	%
	4
	 	 	100	%
	3
	 	 	80	%
	below 3
	 	not eligible

          Any Participant receiving a Performance Appraisal Rating of below 3 will be ineligible to
receive payment for any Award for the Performance Period. The portion of the incentive payment
that is based on individual performance will be paid regardless of the level of NIBT achieved by
the Company.

	 	(ii)	 	Alternatively, individual performance will be based on revenue
generation, NIBT, or other measures approved by the Committee and set forth in
individual performance plans developed by the Participant’s business unit and
approved by the Company in advance of the start of the Performance Period. In
order for the portion of the Incentive Payment Target attributable to the
Participant’s individual performance to be earned, performance must meet or
exceed a minimum acceptable level of performance (“threshold”) of 75% of the
applicable goal or, for growth oriented plans, 75% of the corresponding prior
period(s) actual performance level.

Section 8. Awards.

          (a) Calculation. The Committee shall, promptly after the date on which the necessary
financial and other information for a particular Performance Period becomes available, certify the
extent to which performance measures for each relevant performance category have been achieved.
The Committee will calculate the actual Award payout for each Participant based on his or her
Adjusted Incentive Payment Target (as determined under Sections 6 and 7). (See Appendix A for an
example of an Award payment calculation. Appendix A is being provided for example purposes only.)

3

 

          (b) Payment.

	 	(i)	 	To be eligible to receive payment of an Annual Award, the
Participant must have remained in the continuous employ of the Company through
December 31, 2007. To be eligible to receive payment of a Quarterly Award, the
Participant must have remained in the continuous employ of the Company through
the date on which the Quarterly Award is paid.
	 
	 	(ii)	 	Awards will be paid as soon as administratively practical
following certification by the Committee of the extent to which the applicable
performance measures have been achieved with respect to a particular
Performance Period and the determination of the actual Awards by the Committee
in accordance with Sections 5, 6 and 7 and this Section 8. Notwithstanding the
foregoing, all payments made pursuant to the Plan shall be paid within 21/2
months following December 31, 2007.
	 
	 	(iii)	 	The Committee reserves the right to make year-end adjustments
(“true-up”) to the final Award earned for the applicable Performance Period in
order to ensure that the sum of the Quarterly Awards paid during the Company’s
2007 fiscal year is appropriate based on performance for the entire 2007 fiscal
year.
	 
	 	(iv)	 	In the event that a Participant’s Incentive Weights or
eligibility for Annual Awards or Quarterly Awards changes during the 2007
fiscal year, the Committee reserves the right to make such adjustments, as it
deems appropriate, to ensure that the individual’s total payment under the Plan
for the entire Performance Period appropriately reflects the Participant’s
contributions to corporate and/or business unit performance.

Section 9. General Provisions.

          (a) No Rights to Awards or Continued Employment. No employee of the Company shall have any
claim or right to receive Awards under the Plan. Neither the Plan nor any action taken under the
Plan shall be construed as giving any employee any right to be retained as an employee by the
Company or to receive any incentive compensation awards in a subsequent year. No Awards for fiscal
year 2007 will be subject to mandatory deferral; however, the Company reserves the right at any
time to require mandatory deferral of incentive compensation paid for subsequent performance
periods if the Committee, in its discretion, determines that such deferrals are in the Company’s
best interests.

          (b) No Limits on Other Awards and Plans. Nothing contained in this Plan shall prohibit the
Company from establishing other special awards or incentive compensation plans providing for the
payment of incentive compensation to employees of the Company, including any Participants.

          (c) Withholding Taxes. The Company shall deduct from all payments and distributions under the
Plan any required federal, state or local governments tax withholdings.

4

 

          (d) Unfunded Status of Plan. The Company shall not have any obligation to establish any
separate fund or trust or other segregation of assets to provide for payments under the Plan. To
the extent any person acquires any rights to receive payments hereunder from the Company, such
rights shall be no greater than those of an unsecured creditor.

          (e) Effective Date; Amendment. The Plan is effective as of January 1, 2007. The Committee
may at any time and from time to time alter, amend, modify, suspend or terminate the Plan in whole
or in part if there is a material change in the nature of the business of the Company, in the
ownership or control of the Company, or if the Committee in its judgment determines that
continuation of the Plan would not be in the Company’s best interests as a result of a material
change in circumstances.

          (f) Governing Law. The Plan and the rights of all persons under the Plan shall be construed
and administered in accordance with the laws of the State of Delaware without regard to its
conflict of law principles.

          (g) Interpretation. In addition, any provision of the Plan or Award shall be automatically
modified and limited to the extent that the Committee determines necessary to avoid the imposition
of additional tax on Participants under Section 409A(a)(1)(B) of the Internal Revenue Code of 1986,
as amended.

5

 

Appendix A

Example Award Calculation (Corporate Job):

	 	 	 	 	 
	Incentive Payment Target (as a % of base salary)
	 	 	20	%
	 
	 	 	 	 
	Individual performance portion (Incentive Weight = 50% of total) 

Performance appraisal rating — 5

Incentive payment for individual performance — 120% of Target

(20% x 50% x 120%)
	 	 	12.0	%
	 
	 	 	 	 
	Corporate performance portion (Incentive Weight = 50% of total) 

NIBT as a percent of Target NIBT — 110%

Incentive payment for corporate performance — 125% of Target

(20% x 50% x 125%)
	 	 	12.5	%
	 
	 	 	 
	 
	 	 	 	 
	Adjusted Incentive Payment Target (as a percentage of base salary)
	 	 	24.5	%

6

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