Document:

Exhibit
10.1

 

Execution Version

 

CONTRIBUTION AGREEMENT

 

This Contribution Agreement
(this “Agreement”) is made as of May 24,
2010, by and among Eagle Rock Energy GP, L.P., a Delaware limited partnership (“Eagle Rock GP”) and Eagle Rock
Holdings, L.P., a Texas limited liability partnership (“ERH”
and, together with Eagle Rock GP, the “Contributors”),
and Eagle Rock Energy Partners, L.P., a Delaware limited partnership (the “Partnership”).  Capitalized terms used and not defined in
this Agreement shall have the meanings ascribed to them in the SPGTA (herein
defined).

 

WHEREAS, in accordance with
that certain Amended and Restated Securities Purchase and Global Transaction
Agreement dated as of January 12, 2010 (the “SPGTA”)
by and among the Contributors, the Partnership, Natural Gas Partners VII, L.P.,
a Delaware limited partnership, Natural Gas Partners VIII, L.P., a Delaware
limited partnership, Montierra Minerals & Production, L.P., a Texas
limited partnership, Montierra Management LLC, a Texas limited liability
company, and Eagle Rock Energy G&P, LLC, a Delaware limited liability
company, Contributors desire to contribute the assets described herein to the
Partnership.

 

NOW, THEREFORE, for and in
consideration of the premises and the mutual covenants and agreements contained
herein and other good and valuable consideration (the receipt and sufficiency
of which are hereby confirmed and acknowledged), the parties hereto hereby
stipulate and agree as follows:

 

1.                                      Contribution. Contributors
hereby irrevocably contribute, assign and transfer to the Partnership and the
Partnership hereby irrevocably takes and accepts such contribution, assignment
and transfer, on the terms herein provided, all of the following:

 

·                            20,691,495 subordinated
units representing limited partner interests in the Partnership; and

 

·                            all of the Incentive
Distribution Rights (as defined in the Partnership’s First Amended and Restated
Agreement of Limited Partnership).

 

2.                                      Entire
Agreement. The rights and obligations created by this
Agreement are separate and independent from any rights and obligations created
by any other agreements between, including or relating to the parties hereto
(or any of their affiliates), including the SPGTA. Accordingly, none of the
representations, warranties, covenants or indemnities included in the SPGTA or
any other agreements between, including or relating to any party hereto (or any
of their affiliates) shall be merged into this Agreement or otherwise restrict
or limit the effect of this Agreement, but each shall survive as provided in
each such agreement.

 

3.                                      Miscellaneous. All
amendments, supplements and modifications to this Agreement shall be in writing
and signed by each of the parties hereto. This Agreement may be executed in
multiple counterparts, each of which, when executed, shall be deemed an
original, and all of which shall constitute but one and the same instrument.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED AND 

 

1

 

ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE WITHOUT
REGARD TO CONFLICT OF LAW PRINCIPLES.

 

[The remainder of this page is intentionally
left blank.]

 

2

 

IN WITNESS WHEREOF, the
undersigned have executed this Agreement as of the date first above written.

 

	
   

  	
  EAGLE
  ROCK ENERGY GP, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By
  its general partner,

  
	
   

  	
  Eagle
  Rock Energy G&P, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Joseph A. Mills

  
	
   

  	
   

  	
  Joseph
  A. Mills,

  
	
   

  	
   

  	
  Chairman
  and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  EAGLE
  ROCK HOLDINGS, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By
  its general partner,

  
	
   

  	
  Eagle
  Rock GP, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  William J. Quinn

  
	
   

  	
   

  	
  William
  J. Quinn,

  
	
   

  	
   

  	
  Authorized
  Member

  
	
   

  	
   

  	
   

  
	
   

  	
  EAGLE
  ROCK ENERGY PARTNERS, L.P.

  
	
   

  	
   

  
	
   

  	
  By
  its general partner,

  
	
   

  	
  Eagle
  Rock Energy GP, L.P.

  
	
   

  	
   

  
	
   

  	
  By
  its general partner,

  
	
   

  	
  Eagle
  Rock Energy G&P, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Joseph A. Mills

  
	
   

  	
   

  	
  Joseph
  A. Mills,

  
	
   

  	
   

  	
  Chairman and Chief Executive Officer

  

 

Signature Page to
Contribution AgreementExhibit 10.1

 

LEVEL 3 COMMUNICATIONS, INC. STOCK PLAN

 

ARTICLE I.

NAME AND PURPOSE

 

1.1.  Name.  The name of the Plan is the “Level 3
Communications, Inc. Stock Plan.” This Plan is a continuation, amendment
and restatement of the Level 3 Communications, Inc. 1995 Stock Plan
(Amended and Restated as of April 1, 1998), which was last amended on December 14,
2007.

 

1.2.  Purpose.  The purpose of the Plan is to assist the
Company in attracting, retaining, motivating, and rewarding certain key
employees, officers, directors, and consultants of the Company and its
Affiliates, and promoting the creation of long-term value for stockholders of
the Company by closely aligning the interests of these individuals with those
of the Company’s stockholders. The Plan authorizes the award of Stock-based
incentives to Employees who then become Participants to encourage such persons
to expend their maximum efforts in the creation of stockholder value.

 

ARTICLE II.

DEFINITIONS

 

2.1.          “Affiliate” means, with
respect to any entity, any other entity that, directly or indirectly through
one or more intermediaries, controls, is controlled by, or is under common
control with, such entity.

 

2.2.          “Agreement” means any
written (including electronic) agreement, document or instrument that evidences
a grant of an Award to a Participant and the terms, conditions and provisions
of, and restrictions upon, the Award.

 

2.3.          “Award” means any grant
pursuant to the Plan of Incentive Stock Options, Nonqualified Stock Options,
Restricted Shares, Restricted Stock Units, bargain Shares, bonuses of Shares,
Performance Awards, performance shares, Outperform Stock Options, Stock
Appreciation Rights or other stock benefit or stock-based benefit granted to a
Participant under this Plan.

 

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

 

2.5.          “Certificate” means the
certificate of incorporation of the Company, as amended from time to time.

 

2.6.          “Change in Control” means
the occurrence of any of the following events:

 

2.6.1        a change in ownership or
control of the Company effected through a transaction or series of related
transactions (other than an offering of Stock to the general public through a
registration statement filed with the Securities and Exchange Commission)
whereby any “person” (as defined in Section 3(a)(9) of the Exchange
Act) or any two or more persons deemed to be one “person” (as used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act), other than
the Company or any of its Affiliates, or an employee benefit plan maintained by
the Company or any of its Affiliates, directly or indirectly acquire “beneficial
ownership” (within the meaning of Rule 13d-3 under the Exchange Act) of
securities of the Company possessing more than fifty percent (50%) of the total
combined voting power of the Company’s securities outstanding immediately after
such acquisition; or

 

2.6.2        the date upon which
individuals who, as of the Effective Date, constitute the Board (the “Incumbent
Board”), cease for any reason to constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to the Effective Date 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 constituting
the Incumbent Board shall be considered as though such individual were a member
of the Incumbent Board since the Effective Date, 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 other than the Board; or

 

2.6.3        the sale or disposition, in
one or a series of related transactions, of all or substantially all of the
assets of the Company to any “person” (as defined in Section 3(a)(9) of
the Exchange Act) or to any two or more persons deemed to be one “person” (as
used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) other
than the Company’s Affiliates.

 

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The Committee may, by a written determination
prior to the consummation of an event or transaction, determine that such event
or transaction does not constitute a Change in Control, provided that the
Committee reasonably concludes that such event or transaction (i) is not
likely to result in a significant change to the identities of the persons
functioning as senior management of the Company, either immediately in the
foreseeable future (it being understood that the Committee need not conclude
that no changes in senior management are likely to occur), and (ii) is not
likely to result in control of the Board (or a significant portion of the Board’s
functions) being transferred to a single Person other than an Affiliate of the
Company or any employee benefit plan (or related trust) sponsored or maintained
by the Company or an Affiliate of the Company, either immediately or in the
foreseeable future.

 

2.10.        “Code” means the Internal
Revenue Code of 1986, as amended, and the regulations promulgated under the
Code.

 

2.11.        “Committee” means the Board
or a committee or committees of the Board appointed by the Board to administer
this Plan.

 

2.12.        “Company” means Level 3
Communications, Inc., a Delaware corporation.

 

2.13.        “Effective Date” means May 20,
2010.

 

2.14.        “Employee” means (i) each
employee of the Company or of any of its Affiliates, including each such person
who may also be a director of the Company and/or its Affiliates; (ii) each
non-employee director of the Company and/or its Affiliates and who is
designated as eligible by the Committee; and (iii) each other person who
provides substantial services to the Company and/or its Affiliates and who is
designated as eligible by the Committee. An employee on an approved leave of
absence may be considered as still in the employ of the Company or its
Affiliates for purposes of eligibility for participation in the Plan.

 

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

 

2.16.        “Fair Market Value,” means,
as of any date when the Stock is listed on one or more national securities
exchanges, the closing price reported on the principal national securities
exchange on which such Stock is listed and traded on the date of determination.
If the Stock is not listed on an exchange, or representative quotes are not
otherwise available, the Fair Market Value shall mean the amount determined by
the Board in good faith, and in a manner consistent with Section 409A of
the Code, to be the fair market value per Share.

 

2.17.        “Fiscal Year” means the
taxable year of the Company for federal income tax purposes, including the
taxable year in which the Plan is adopted.

 

2.18.        “Incentive Stock Option”
means any Option that is intended, at the time it is granted, to be an
incentive stock option within the meaning of Section 422 of the Code.

 

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

 

2.20.        “Option” means any option to
purchase Shares that is granted pursuant to Section 6.1.

 

2.21.        “Outperform Stock Option”
means a Stock-based Award, which requires that the Stock outperform an index as
determined by the Committee, from time to time, and set forth in an Outperform
Stock Option Award Agreement entered into between the Company and a
Participant. Outperform Stock Option also includes any Stock-based Award that
is referred to as an OSO.

 

2.22         “Outperform Stock Option
Award Agreement” means an Agreement between the Company and a Participant
evidencing the terms and conditions of an Outperform Stock Option grant.

 

2.23.        “Participant” means any
Employee who is granted an Award pursuant to this Plan.

 

2.24         “Performance Award” means an
Award granted to a Participant under Article VIII hereof, which is subject
to the achievement of Performance Objectives during a Performance Period. A
Performance Award shall be designated as a “Performance Share” or a “Performance
Unit” at the time of grant.

 

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2.25         “Performance Award Agreement”
means an Agreement between the Company and a Participant evidencing the terms
and conditions of a Performance Award grant.

 

2.26         “Performance Objectives”
means the performance objectives established pursuant to this Plan for
Participants who have received Performance Awards.

 

2.27         “Performance Period” means
the period designated for the achievement of Performance Objectives.

 

2.28.        “Plan” means the
Level 3 Communications, Inc. Stock Plan, as it may be amended from
time to time.

 

2.29.        “Representative” means a
member of the Committee acting on behalf of the Committee, or an Employee
appointed by the Committee to exercise some or all of the authority of the
Committee.

 

2.30.        “Restricted Shares” means
any Shares that are granted pursuant to Section 7.1 subject to
restrictions on transfer, to forfeiture under certain circumstances and to such
other restrictions as the Committee deems appropriate (including restrictions
on the exercise of voting rights or the right to receive dividends, or a
requirement to reinvest dividends).

 

2.31.        Restricted Stock Unit” means
a notional unit representing the right to receive one Share (or the cash value
of one Share, if so determined by the Committee) on a specified settlement
date.

 

2.32.        “Rule 16b-3” means Rule 16b-3
promulgated under the Exchange Act, as it may be amended from time to time, or
any successor rule in effect from time to time.

 

2.33         “Section 409A” means Section 409A
of the Code.

 

2.34.        “Share” means a share of
Stock.

 

2.35.        “Stock” means the common
stock of the Company, par value $0.01 per share.

 

2.36.        “Stock Appreciation Right”
means an Award pursuant to which a Participant shall be paid the increase in
value of one or more Shares from the date of grant of such Award until the date
of exercise of such Award, in cash or Shares, and subject to such terms and
conditions as the Committee deems appropriate and as may be reflected in an
Agreement (including the number of Shares subject to such Stock Appreciation
Right, the date or dates on which the Stock Appreciation Right becomes
exercisable or exercised, either wholly or in part, and the expiration date of
the Stock Appreciation Right).

 

2.37.        “Term” means the term of
this Plan, as set forth in Section 12.2.

 

ARTICLE III.

ELIGIBILITY AND PARTICIPATION

 

3.1.  Eligibility.  Every Employee is eligible to become a
Participant. A person who is not an Employee is not eligible to become a
Participant.

 

3.2.  Participation.  The Committee will select Employees to
participate in the Plan from time to time, in its sole discretion. An Employee
cannot become a Participant unless such person is selected by the Committee to
participate in the Plan. In selecting such persons to participate in the Plan,
the Committee may consider the past, present and expected future performance of
the individual, the effort of the individual, the length of service of the
individual, the level of responsibility of the individual and such other
factors as the Committee deems appropriate.

 

ARTICLE IV.

AWARDS

 

4.1.  Types of
Awards.  The Committee will
determine the Awards to be granted to each Participant. The Committee may grant
Awards in any one or any combination of (a) Incentive Stock Options; (b) Nonqualified
Stock Options; (c) Restricted Shares or Restricted Stock Units; (d) Outperform
Stock Options; (e) bargain purchases of Shares; (f) bonuses of
Shares; (g) Performance Shares and Performance Units or other grants of
Shares based on performance or the satisfaction of other conditions; (h) Stock
Appreciation Rights; or (i) any other form of stock benefit or stock-related
benefit.

 

3

 

4.2.  Terms and
Conditions of Awards.  The
Committee will determine all terms, conditions and provisions of, and
restrictions upon, any grant of Awards. Without limiting the Committee’s
authority, the Committee may: (a) make the grant of Awards conditional
upon an election by a Participant to defer payment of a portion of his salary; (b) give
a Participant a combination of Awards or a choice between two Awards; (c) grant
Awards in the alternative so that acceptance of or exercise of one Award
cancels the right of a Participant to another; (d) grant Awards subject to
any condition that the Committee deems appropriate; (e) provide that
grants of Awards in Shares or Share equivalents will include dividend or
dividend equivalent payments or dividend credit rights; and (f) provide
any vesting schedule for Awards as the Committee deems appropriate. The
Committee may waive any term, condition, provision or restriction, in its sole
discretion.

 

4.3.  Agreements.  Each grant of an Award to a Participant will
be evidenced by an Agreement executed (including by electronic acknowledgement)
by the Participant and a Representative (on behalf of the Company and the
Committee). Subject to the terms and conditions of this Plan, the Committee, in
its sole and absolute discretion, will determine the form and content of all
Agreements. Agreements with respect to a specific type of Award need not be
identical.

 

4.4.  Modification
or Termination of Awards.  The
Committee, in its sole discretion, may modify, cancel or terminate any Award at
any time if a Participant is not in compliance with this Plan, the related
Agreement or any rules adopted by the Committee.

 

4.5.  Optional
Deferral.  The Committee may
defer the right to receive any Award, or the proceeds of the exercise of any
Award for such period and upon such terms as the Committee determines;
provided, that any such deferral subject to Section 409A shall comply with
Section 409A. Any such deferral may, at the discretion of the Committee,
involve crediting of interest on deferrals denominated in cash and crediting of
dividend equivalents on deferrals denominated in Shares.

 

4.6.  Code Section 162(m).  The Committee, in its sole discretion, may
require that one or more Agreements provide that, in the event that Section 162(m) of
the Code or any similar provision would operate to disallow a deduction by the
Company for all or part of any Award, a Participant’s receipt of the portion of
such Award that would not be deductible by the Company will be deferred until
the next succeeding year or years in which such portion may be paid without causing
the Participant’s remuneration for such year to exceed the limit set forth in Section 162(m) of
the Code; provided, that any such deferral subject to Section 409A shall
comply with Section 409A. Any such deferred amounts denominated in cash
shall have earnings credited thereon at a market rate of interest, as
reasonably determined by the Committee, and any such deferred amounts
denominated in Shares shall have dividend equivalents credited thereon, and
earnings subsequently credited on such dividend equivalents at a market rate of
interest, as reasonably determined by the Committee.

 

4.7.  Code Section 280G.  The Committee, in its sole discretion, may
(but need not) provide in any Agreement for the payment of additional amounts
in respect of the Award in order to make a Participant whole for some or all of
the excise taxes imposed on a Participant pursuant to Section 4999 of the
Code in the event that the grant, exercise, vesting or payment of such Award is
deemed to be an “excess parachute payment” for purposes of Section 280G of
the Code. The terms and conditions of such additional payments shall be as
determined by the Committee and reflected in the Agreement. To the extent that
any Agreement provides for a tax gross-up payment to pay for or reimburse any
Participant for any taxes owed by such Participant, the amount of such tax
gross-up payment required to be paid shall be paid by the Company to such
participant no later than the end of the Participant’s taxable year following
the Participant’s taxable year in which such tax owed by such Participant that
is subject to the tax gross-up payment is remitted to the applicable taxing
authority.

 

4.8  Compliance
with Code Section 409A. 
All Awards are intended to be either exempt from or compliant with Section 409A,
and any ambiguity with respect to whether any such Award is so exempt or
compliant shall be construed in a manner consistent with such exemption or
compliance.

 

ARTICLE V.

SHARES SUBJECT TO PLAN

 

5.1.  Aggregate
Limitation.  The Committee may
not grant Awards under this Plan with respect to more than 250,000,000 Shares
during the Term.

 

5.2.  Individual
Limitations.  The Committee
may not grant Options or Stock Appreciation Rights under this Plan to any
Participant during any calendar year with respect to more than 3,000,000
Shares.

 

5.3.  Unused Shares
and Share Counting Rules.  The
Committee may adopt reasonable counting procedures to ensure appropriate
counting, avoid double counting (as, for example, in the case of tandem or
substitute awards) and make adjustments if the number of shares of Stock
actually delivered differs from the number of Shares previously counted in
connection with an Award. If any Award expires or terminates, or if any Award
is surrendered, canceled or forfeited without having been fully exercised, the
Committee may again grant Awards with respect to the unused Shares allocable to
the 

 

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expired, terminated,
surrendered, canceled or forfeited Award. Shares withheld in payment of the
exercise price or taxes relating to an Award and shares equal to the number
surrendered in payment of any exercise price or taxes relating to an Award
shall be deemed to constitute shares not delivered to the Participant and shall
be deemed to again be available for Awards under the Plan; provided, however,
that such shares shall not become available for issuance hereunder if either (i) the
applicable shares are withheld or surrendered following the termination of the
Plan, or (ii) at the time the applicable shares are withheld or
surrendered, it would constitute a material revision of the Plan subject to
stockholder approval under any then-applicable rules of the national
securities exchange on which the Stock is listed.

 

ARTICLE VI.

OPTIONS

 

6.1.  Grant.  The Committee may grant Options to any
Employee. The Committee will determine the terms, conditions and provisions of,
and the restrictions on, any Options, including the number of shares subject to
such Options, the date or dates on which the Options become exercisable, either
wholly or in part, and the expiration date of the Options; provided, however, that no Option granted
hereunder shall be exercisable after the expiration of ten (10) years from
the date it was granted. A Participant to whom an Option is granted will not be
deemed the holder of any Shares subject to the Option until the Shares are
fully paid, and issued and delivered to him following exercise of the Option.

 

6.2.  Incentive
Stock Options.  Incentive
Stock Options must include such terms and conditions as determined by the
Committee to be reasonably necessary to cause the Options to qualify as
incentive stock options under Section 422 of the Code.

 

6.3.  Exchange.  Subject to Section 12.3 below, the
Committee may grant Options to a Participant holding unexercised outstanding
Options, or unexercised outstanding Options granted under another stock plan of
the Company, on the condition that the Participant exchanges and surrenders for
cancellation some or all of those unexercised outstanding Options.

 

6.4.  Substitution.  The Committee may grant Options from time to
time in substitution for similar rights held by employees of other entities who
become Employees as a result of a merger or consolidation of the other entity
with the Company or an Affiliate, the acquisition by the Company or an
Affiliate of the assets of the other entity, or the acquisition by the Company
or an Affiliate of an equity interest in another entity.

 

6.5.  Exercise
Price.  The Committee may not
grant Options pursuant to this Plan with a per-share exercise price that is
less than the Fair Market Value of one Share, as of the date of the grant. In
addition, with respect to each Outperform Stock Option, under no circumstances
will the Adjusted Price (as defined in the applicable Outperform Stock Option
Award Agreement or similar agreement) of such Outperform Stock Option ever be
less than the Initial Price (as defined in the applicable Outperform Stock
Option Award Agreement or similar agreement), which can be no less than the
Fair Market Value of one Share, as of the date of grant.

 

6.6.  Vesting.  Options granted pursuant to this Plan will
vest and become exercisable as determined by the Committee in its sole
discretion and as reflected in an Agreement.

 

ARTICLE VII.

RESTRICTED SHARES

 

7.1.  Grant.  The Committee may grant Restricted Shares to
any Employee. The Committee may make grants of Restricted Shares at such cost,
or at no cost, as determined by the Committee in its sole discretion.

 

7.2.  Beneficial
Ownership.  Except as set
forth in an Agreement relating to Restricted Shares, each Participant who is
awarded Restricted Shares will have the entire beneficial ownership of, and all
rights and privileges of a stockholder with respect to, the Restricted Shares
awarded to him. Notwithstanding the above, Restricted Shares may not be sold,
transferred, pledged or otherwise encumbered during the restricted period set
by the Committee.

 

ARTICLE VIII.

PERFORMANCE AWARDS

 

8.1  General.  The Committee may from time to time authorize
grants of Performance Awards to any Employee upon such terms and conditions as
the Committee may determine in accordance with provisions of this Section 8.
The terms and conditions of each Performance Award grant shall be evidenced by
a Performance Award Agreement, which agreements need not be identical.

 

5

 

8.2  Value of
Performance Units and Performance Shares.  Each Performance Unit shall have an initial
value that is established by the Committee at the time of grant. Each
Performance Share shall have an initial value equal to the Fair Market Value of
the Stock on the date of grant. In addition to any other non-performance terms
included in the Performance Award Agreement, the Committee shall set the
applicable Performance Objectives in its discretion which, depending on the
extent to which they are met, will determine the value and/or number of
Performance Units or Performance Shares, as the case may be, that will be paid
out to the Participant.

 

8.3  Earning of
Performance Units and Performance Shares.  Upon the expiration of the applicable
Performance Period, the holder of Performance Units or Performance Shares, as
the case may be, shall be entitled to receive payout on the value and number of
the applicable Performance Units or Performance Shares earned by the
Participant over the Performance Period, to be determined as a function of the
extent to which the corresponding Performance Objectives have been achieved and
any other non-performance terms met.

 

8.4  Form and
Timing of Payment of Performance Units and Performance Shares.  Payment of earned Performance Units and
Performance Shares shall be as determined by the Committee and as evidenced in
the Performance Award Agreement. Subject to the terms of the Plan, the
Committee, in its sole discretion, may pay earned Performance Units and
Performance Shares in the form of cash, Stock, or other Awards (or in a
combination thereof) equal to the value of the earned Performance Units or
Performance Shares, as the case may be, at the close of the applicable
Performance Period, or as soon as practicable after the end of the Performance
Period. Any Stock may be granted subject to any restrictions deemed appropriate
by the Committee. The determination of the Committee with respect to the form
of payout of such Awards shall be set forth in the Performance Award Agreement
pertaining to the grant of the Performance Award.

 

8.5          Performance
Objectives.

 

8.5.1        Each Performance Award shall
specify the Performance Objectives that must be achieved before such Award
shall become vested and payable. The Committee also may specify a minimum
acceptable level of achievement below which no payment will be made and may set
forth a formula for determining the amount of any payment to be made if
performance is at or above such minimum acceptable level but falls short of the
maximum achievement of the specified Performance Objectives.

 

8.5.2        Performance Objectives may
be described in terms of Company-wide objectives or objectives that are related
to the performance of an individual Participant or the division, department, or
function within the Company or the Affiliate of the Company. Performance
Objectives may be measured on an absolute or relative basis. Relative
performance may be measured by comparison to a group of peer companies or to a
financial market index. Performance Objectives shall be limited to specified
levels of or increases in one or more of the following: return on equity;
diluted earnings per share; net earnings; total earnings; earnings growth;
return on capital; working capital turnover; return on assets; earnings before
interest and taxes; earnings before interest, taxes, depreciation, and
amortization; sales; sales growth; gross margin; return on investment; increase
in the fair market value per share; share price (including but not limited to,
growth measures and total stockholder return); operating profit; cash flow
(including, but not limited to, operating cash flow and free cash flow); cash
flow return on investment (which equals net cash flow divided by total
capital); inventory turns; financial return ratios; total return to
stockholders; market share; earnings measures/ratios; economic value added;
balance sheet measurements including (but not limited to receivable turnover);
internal rate of return; and expense targets.

 

8.5.3        The Committee shall adjust
Performance Objectives and the related minimum acceptable level of achievement
if, in the sole judgment of the Committee, events or transactions have occurred
after the applicable date of grant of a Performance Award that are unrelated to
the performance of the Company and/or Participant and result in a distortion of
the Performance Objectives or the related minimum acceptable level of
achievement. Potential transactions or events giving rise to adjustment include
but are not limited to (i) restructurings, discontinued operations,
extraordinary items or events, and other unusual or non-recurring charges; (ii) an
event either not directly related to the operations of the Company or not
within the reasonable control of the Company’s management; and (iii) a
change in tax law or accounting standards required by generally accepted
accounting principles.

 

ARTICLE IX

OTHER AWARDS

 

9.1.  Grants.  The Committee is authorized, subject to
limitations under applicable law, to grant to Employees such other Awards that
may be denominated or payable in, valued in whole or in part by reference to,
or otherwise based on, or 

 

6

 

related to, Stock, as deemed
by the Committee to be consistent with the purposes of the Plan, including,
without limitation, Restricted Stock Units and Stock Appreciation Rights. The
Committee may also grant Stock as a bonus, or may grant other awards in lieu of
obligations of the Company or an Affiliate to pay cash or deliver other
property under this Plan or under other plans or compensatory arrangements,
subject to such terms as shall be determined by the Committee. The terms and
conditions applicable to such Awards shall be determined by the Committee and
evidenced by Award agreements, which agreements need not be identical; provided, however, that no Stock
Appreciation Right granted hereunder shall be exercisable after the expiration
of ten (10) years from the date it was granted. In the event that any
Award granted pursuant to this Section 9.1 that is a “stock right” within
the meaning of Section 409A is assigned an exercise price by the
Committee, in no event may the per-share exercise price of such Award be less
than the Fair Market Value of one Share, as of the date the Award is granted.

 

ARTICLE X

CHANGES IN CAPITAL STRUCTURE AND CHANGE IN CONTROL

 

10.1  Changes in
Capital Structure.  Awards
granted under the Plan and any agreements evidencing such Awards, the maximum
number of Shares subject to all Awards and the maximum number of shares with
respect to which any one person may be granted Options, Outperform Stock
Options or Stock Appreciation Rights or other stock or stock related awards
during the Term shall be adjusted or substituted, as determined by the
Committee in its sole discretion, as to the number, price or kind of a Share or
other consideration subject to such Awards or as otherwise determined by the
Committee to be equitable:

 

(i)            in the event of changes in
the outstanding Shares or in the capital structure of the Company by reason of
stock dividends, stock splits, reverse stock splits, recapitalizations,
reorganizations, mergers, consolidations, combinations, exchanges, or other
relevant changes in capitalization occurring after the date of grant of any
such Award, or

 

(ii)           in the event of any change
in applicable laws or any change in circumstances which results in or would
result in any substantial dilution or enlargement of the rights granted to, or
available for, Participants in the Plan, or which otherwise warrants equitable
adjustment because it interferes with the intended operation of the Plan.

 

In addition, in the event of any such
adjustments or substitution, the aggregate number of Shares available under the
Plan shall be appropriately adjusted by the Committee, whose determination
shall be conclusive.

 

10.1.1 
Adjustments—Code Related Items.  Unless otherwise determined by the Committee,
any adjustment in Incentive Stock Options under this Section 10.1 shall be
made only to the extent not constituting a “modification” within the meaning of
Section 424(h)(3) of the Code, and any adjustments under this Section 10.1
shall be made in a manner which does not adversely affect the exemption
provided pursuant to Rule 16b-3 under the Exchange Act. Unless otherwise
determined by the Committee, no adjustment or modification under this Section 10.1
may be made which would subject any Award recipient to the tax required to be
imposed pursuant to Section 409A(a)(1)(B) of the Code. Further, with
respect to Awards intended to qualify as “performance-based compensation” under
Section 162(m) of the Code, such adjustments or substitutions shall
be made only to the extent that the Committee determines that such adjustments
or substitutions may be made without a loss of deductibility for Awards under Section 162(m) of
the Code, unless the Committee specifically determines otherwise.

 

The Company shall give each
Participant notice of an adjustment hereunder and, upon notice, such adjustment
shall be conclusive and binding for all purposes.

 

10.1.2      Notwithstanding the above,
in the event of any of the following that does not constitute a Change in
Control:

 

A.            The Company is merged or
consolidated with another corporation or entity and, in connection therewith,
consideration is received by stockholders of the Company in a form other than
stock or other equity interests of the surviving entity;

 

B.            All or substantially all of
the assets of the Company are acquired by another Person;

 

C.            The reorganization or
liquidation of the Company; or

 

D.            The Company shall enter into
a written agreement to undergo an event described in clauses A, B or C
above,

 

7

 

then the Committee may, in
its discretion and upon at least 10 days advance notice to the affected
persons, cancel any outstanding Awards and pay to the holders thereof, in cash
or stock, or any combination thereof, the value of such Awards based upon the
price per Share received or to be received by other stockholders of the Company
in the event; provided, however, that unless otherwise determined by the
Committee, no such action to cancel and pay out any outstanding Award may be
made to an award subject to Section 409A that is in violation of Treasury
Regulation Section 1.409A-3(j).

 

10.1.3  Variations.  The terms of this Section 10.1, other
than the prohibitions relating to Section 409A, may be varied by the
Committee in any particular Agreement.

 

10.2  Effect of
Change in Control.  Except to
the extent reflected in a particular Agreement:

 

10.2.1      The Committee, in its sole
discretion, may (but need not) provide in any Agreement that, in the event of a
Change in Control, notwithstanding any vesting schedule otherwise effective
with respect to the Award, (i) in the case of Options or Stock
Appreciation Rights, the Award shall become immediately exercisable with
respect to 100 percent of the Shares subject thereto, (ii) in the
case of Restricted Shares, any restrictions shall expire immediately with
respect to 100 percent of such Restricted Shares and (iii) in the
case of any other Award, any other vesting or restricted period to which such
Award is subject shall expire as to 100 percent of such Award.

 

10.2.2      In addition, in the event of
a Change in Control, the Committee may in its discretion and upon at least
10 days’ advance notice to the affected persons, cancel any outstanding
Awards and pay to the holders thereof, in cash or stock, or any combination
thereof, the value of such Awards based upon the price per share received or to
be received by other shareholders of the Company in the event; provided,
however, that unless otherwise determined by the Committee, no such action to
cancel and pay out any outstanding Award may be made to an award subject to Section 409A
that is in violation of Treasury Regulation Section 1.409A-3(j).

 

10.3  Binding Upon
Successors.  The obligations
of the Company under this Plan shall be binding upon any successor corporation
or organization resulting from the merger, consolidation or other
reorganization of the Company, or upon any successor corporation or
organization succeeding to substantially all of the assets and business of the
Company. Subject to the actions which the Committee may take with respect to
Awards in accordance with Sections 10.1 and 10.2, the Company agrees that
it will make appropriate provisions for the preservation of Participants’
rights under the Plan in any agreement or plan which it may enter into or adopt
to effect any such merger, consolidation, reorganization or transfer of assets.

 

ARTICLE XI.

ADMINISTRATION

 

11.1. 
Administration.  The
Committee will administer this Plan. The Board may appoint a separate committee
or committees to administer portions of the Plan applicable to persons subject
to Rule 16b-3, Section 162(m) of the Code or other similar
provisions of law. The Committee may act either through majority vote of the
Committee at a meeting for which a quorum is present, or through the written
consent of a majority of the members of the Committee in lieu of a meeting. The
Committee will maintain such books, accounts and records relating to the Plan
and to Committee proceedings as it considers appropriate. The Committee may
designate Employees to assist the Committee in the administration of the Plan
and to act as Representatives of the Committee, and in that capacity to
exercise any or all of the authority of the Committee under this Plan, and may
grant authority to those Employees to execute any and all agreements
contemplated by this Plan and any other documents reasonably required to
implement this Plan. The Committee may employ agents, attorneys, accountants or
other third parties for such purposes as the Committee considers appropriate.

 

11.2.  Discretion
and Authority.  Subject to the
express limitations set forth in this Plan, the Committee, in its sole and
absolute discretion, may take any and all actions necessary, advisable or
appropriate to implement the Plan and may make any and all determinations deemed
appropriate for the administration of the Plan, including actions and
determinations with respect to (a) the Participants in the Plan, (b) adequacy
of consideration received by the Company in exchange for Awards granted under
the Plan, (c) the types and amounts of Awards to be granted to
Participants or to any particular Participant, (d) the terms, conditions
and provisions of, and restrictions on, all Awards, (e) amounts payable,
if any, by a Participant in connection with the grant, award or receipt of any
Award, (f) restrictions on transfer of any Award by a Participant, and (g) the
circumstances under which any Award may expire, terminate or be surrendered,
canceled or forfeited.

 

11.3.  Payment.  Upon the exercise of an Option or in the case
of any other Award that requires a payment by a Participant to the Company, the
amount due the Company may be paid (a) in cash; (b) by the surrender
of all or part of an 

 

8

 

Award (including the Award
being exercised); (c) by the tender to the Company of Shares acquired by
the Participant on the open market or owned by the Participant for at least six
months and registered in his or her name having a Fair Market Value equal to
the amount due to the Company; (d) by delivering to the Committee a copy
of irrevocable instructions to a stockbroker to deliver promptly to the Company
an amount of sale or loan proceeds sufficient to pay the exercise price, in the
case of an Option; (e) in other property, rights and credits deemed
acceptable by the Committee, including the Participant’s promissory note; or (f) by
any combination of the payment methods specified in (a) through (e).
Notwithstanding the foregoing, any method of payment other than in cash may be
used only with the consent of the Committee or if and to the extent so provided
in the related Agreement. The proceeds of the sales of Shares purchased
pursuant to an Option and any payment to the Company for other Awards will be
added to the general funds of the Company or to the reacquired Shares held by
the Company, as the case may be, and used for the corporate purposes of the
Company as the Board determines.

 

11.4.  Rules.  The Committee may make, amend and rescind
such rules and regulations and establish, modify or repeal such procedures
as it deems appropriate for the administration of the Plan. The Committee may
make special rules or regulations that apply only to persons covered by Rule 16b-3,
Section 162(m) of the Code or other provisions of law.

 

11.5.  Interpretation.  In the event of a disagreement as to the
interpretation of the Plan, any rule, regulation or procedure under the Plan,
or as to any right or obligation arising from or related to the Plan (including
but not limited to under an Agreement), the interpretation of the Committee
will be final and binding.

 

11.6.  Legal
Requirements.  The Committee
will cause the Plan, and any grants or awards of Awards, to comply with all
applicable laws.

 

ARTICLE XII.

AMENDMENT AND TERMINATION

 

12.1.  Amendment.  The Committee may amend the Plan from time to
time as it deems appropriate, subject to any applicable law or rule(s) promulgated
by the principal national securities exchange on which the Stock is listed and
traded at the time of such amendment. The Committee, however, may not amend any
provision of Article V, Section 6.2 or this Article XII without
the approval of the Board. Unless otherwise determined by the Committee, no
amendment to this Plan may deprive a Participant of any Award or rights with
respect to an Award or cause the imposition of a tax on such Participant
pursuant to Section 409A(a)(1)(B) of the Code without the Participant’s
consent.

 

12.2.  Term.  The Plan will terminate on the tenth
anniversary of the Effective Date (May 20, 2020). The Board, however, may
terminate the Plan at any time. Neither amendment nor termination of the Plan
will deprive Participants of their rights with respect to outstanding Awards.
This Plan was originally effective as of September 25, 1995, and has been
amended and restated by the Board effective as of October 22, 1997,
further amended and restated effective as of November 10, 1997, further
amended and restated effective as of April 1, 1998, and further amended on
July 24, 2002, May 18, 2004, May 15, 2006 and December 14,
2007.

 

12.3.  No Repricing
of Awards without Stockholder Approval.  Notwithstanding any provision of the Plan,
repricing of Awards shall not be permitted without stockholder approval. For
this purpose, a “repricing” means any of the following (or any other action
that has the same effect as any of the following): (i) changing the terms
of an Award to lower its exercise price (other than on account of capital
adjustments resulting from share splits, etc., as described in Article X
and other than on account of adjustments associated with the initial exercise
price of an Award of Outperform Stock Options); (ii) any other action that
is treated as “repricing” under generally accepted accounting principles; and (iii) repurchasing
for cash or canceling an Award in exchange for another Award at a time when its
exercise price is greater than the Fair Market Value of the underlying Stock,
unless the cancellation and exchange occurs in connection with an event set
forth in Article X.

 

ARTICLE XIII.

MISCELLANEOUS

 

13.1.  Continuation
of Employment.  Neither this
Plan nor any Award granted under this Plan confers upon any Employee any right
to continue in the service of the Company or any Affiliate or limits the right
of the Company to terminate an Employee’s service at will at any time.

 

13.2.  Discretionary
Acceleration of Vesting.  The
Committee may accelerate the vesting, exercisability or payment of any Award at
any time and for any reason as it determines in its sole discretion (including
but not limited to retirement of a Participant); provided, that unless otherwise determined by the Committee,
no such acceleration of the payment of any Award subject to Section 409A
shall be made in violation of Treasury Regulation 1.409A-3(j).

 

9

 

13.3.  Unfunded
Plan.  This Plan is intended
to constitute an “unfunded” plan for incentive and deferred compensation. With
respect to any payments or deliveries of Shares not yet made to a Participant
by the Company, nothing contained in this Plan will give any Participant rights
that are greater than those of a general creditor of the Company. The Committee
may authorize the creation of trusts or other arrangements to meet the
obligations to deliver Shares or payments under the Plan.

 

13.4.  Designation
of Beneficiary.  A Participant
may file with the Committee a written designation of a beneficiary or
beneficiaries (subject to such limitations as to the classes and numbers of
beneficiaries and contingent beneficiaries as the Committee may from time to
time prescribe) to exercise, in the event of the death of the Participant, an
Option, Outperform Stock Option or Stock Appreciation Right, Restricted Shares,
Restricted Stock Units, Performance Awards or to receive, in such event, any
Awards. The Committee reserves the right to review and approve beneficiary
designations. A Participant may from time to time revoke or change any such
designation of beneficiary and any designation of beneficiary under the Plan
will be controlling over any other disposition, testimony or otherwise;
provided, however, that if the Committee will be in doubt as to the right of
any such beneficiary to exercise any Option, Outperform Stock Option or Stock
Appreciation Right, Restricted Shares, Restricted Stock Units, Performance
Awards, or to receive any Award, the Committee may determine to recognize only
the legal representative of the recipient.

 

13.5. 
Nontransferability. 
Unless otherwise determined by the Committee or specified in an
Agreement, (a) no Award granted under this Plan may be transferred or
assigned by the Participant to whom it is granted other than by beneficiary
designation, will, or pursuant to the laws of descent and distribution, and (b) an
Award granted under this Plan may be exercised, during the Participant’s
lifetime, only by the Participant or by the Participant’s guardian or legal
representative.

 

13.6.  Rule 16b-3.  With respect to Participants subject to Section 16
of the Exchange Act, transactions under this Plan are intended to comply with
all applicable provisions of Rule 16b-3 or its successors under the
Exchange Act, and the provisions of the Plan shall be construed accordingly.

 

13.7.  No Effect on
Other Awards.  The receipt of
Awards under the Plan shall have no effect on any benefits to which a
Participant may be entitled from his or her employer, under another plan or
otherwise, or preclude a Participant from receiving any such benefits.

 

13.8.  Withholding.  If the Company is required to withhold any
taxes in connection with an Award, and a Participant is obligated to pay to the
Company any or all of the amount required to be withheld, the Committee may
permit the Participant to satisfy the withholding obligation, in whole or in
part, either (a) by having the Company withhold from any Shares to be
issued upon the receipt of an Award with a Fair Market Value sufficient to
satisfy the withholding amount due, or (b) by delivering to the Company
sufficient Shares to satisfy the withholding amount due. In the absence of such
Committee permission, the withholding obligation shall be satisfied by the
payment of cash or its equivalent by the Participant to the Company. The
Company shall have no obligation to deliver to a Participant Shares or other
consideration in respect of an Award until arrangements satisfactory to the
Committee have been made to satisfy any required withholding obligation of the
Company.

 

13.9.  Liability.  No member of the Committee shall be
personally liable by reason of any contract or other instrument executed by
such member or on his behalf in his capacity as a member of the Committee or
for any mistake of judgment made in good faith or upon the advice of counsel,
and the Company shall indemnify and hold harmless each member of the Committee
and each other employee, officer, or director of the Company to whom any duty
or power relating to the administration or interpretation of the Plan may be
allocated or delegated, against all costs and expenses (including counsel fees)
and liabilities (including sums paid in settlement of a claim) arising out of
any act or omission to act in connection with the Plan unless arising out of
such person’s own fraud or willful misconduct; provided,
however, that approval of the Board shall be required for the
payment of any amount in settlement of a claim against any such person. The
foregoing right of indemnification shall not be exclusive of any other rights
of indemnification to which such persons may be entitled under the Company’s
certificate or articles of incorporation or by-laws, each as may be amended
from time to time, as a matter of law, or otherwise, or any power that the
Company may have to indemnify them or hold them harmless.

 

13.11.  Governing
Law.  The law of the state of
Delaware will govern issues related to the validity and issuance of Shares. All
other terms, conditions and provisions of, and restrictions upon, this Plan,
and Awards granted hereunder, will be construed and administered in accordance
with the law of the state in which the Company’s principal executive offices
are located.

 

10

 

13.12.  Conflict.  Unless specifically stated otherwise in an
Agreement, if a term, condition or provision of, or restriction upon, the Plan
conflicts with the term, condition or provision of, or restriction upon, any
Agreement, the term of the Plan will control.

 

13.13  Reliance on
Reports.  Each member of the
Committee and each member of the Board shall be fully justified in relying,
acting or failing to act, and shall not be liable for having so relied, acted,
or failed to act in good faith, upon any report made by the independent public
accountant of the Company and its Affiliates and upon any other information
furnished in connection with the Plan by any person or persons other than such
member.

 

May 20, 2010

 

11

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