Document:

Exhibit
10.1

 

U.S.
RESTAURANT PROPERTIES, INC.

 

FLEXIBLE
INCENTIVE PLAN

 

SECTION 1.           PURPOSE OF THIS PLAN

 

The purposes of
the U.S. Restaurant Properties, Inc. Flexible Incentive Plan are to (i) promote
the interests of U.S. Restaurant Properties, Inc. (the “Company”) and
its stockholders by enabling the Company and each of its Subsidiaries (as
hereinafter defined) to (A) attract, motivate and retain their respective
employees and non-employee Directors (as hereinafter defined) by offering such
employees and Non-Employee Directors performance based stock incentives and
other equity interests in the Company and other incentive awards and (B)
compensate Consultants (as hereinafter defined) by offering such Consultants
performance based stock incentives and other equity interests in the Company
and other incentive awards that recognize the creation of value for the
stockholders of the Company and (ii) promote the Company’s long-term growth and
success.  To achieve these purposes,
eligible Persons may receive Stock Options, Restricted Stock, Performance
Awards and any other Awards (as such terms are hereinafter defined), or any
combination thereof.

 

SECTION 2.           DEFINITIONS

 

As used in this
Plan, the following terms shall have the meanings set forth below unless the context
otherwise requires:

 

2.1.          “Award” shall mean the grant of a Stock
Option, Restricted Stock, a Performance Award, a Dividend Equivalent or any
other grant of incentive compensation pursuant to this Plan.

 

2.2.          “Book Value” shall mean the excess of the
value of the assets of an entity over the liabilities of such entity
(determined in accordance with United States generally accepted accounting
principles, consistently applied).

 

2.3.          “Board” shall mean the Board of Directors
of the Company, as the same may be constituted from time to time.

 

2.4.          “Cause” shall mean termination of a
Participant’s employment with the Company or a Subsidiary upon the occurrence
of one or more of the following events:

 

(a)           The
Participant’s failure to substantially perform such Participant’s duties with
the Company or any Subsidiary as determined by the Committee or the Board
following receipt by the Participant of written notice of such failure and the
Participant’s failure to remedy such failure within thirty (30) days after
receipt of such notice (other

 

 

than a failure
resulting from the Participant’s incapacity during physical or mental illness);

 

(b)           The
Participant’s willful failure or refusal to perform specific directives of the
Board, which directives are consistent with the scope and nature of the
Participant’s duties and responsibilities, and which are not remedied by the
Participant within thirty (30) days after being notified in writing of such
Participant’s failure by the Board;

 

(c)           The
Participant’s conviction of a felony; or

 

(d)           A breach
of the Participant’s fiduciary duty to the Company or any Subsidiary or willful
violation in the course of performing the Participant’s duties for the Company
or any Subsidiary of any law, rule or regulation (other than traffic violations
or other minor offenses).  No act or
failure to act on the Participant’s part shall be considered willful unless
done or omitted to be done in bad faith and without reasonable belief that the
action or omission was in the best interest of the Company;

 

provided, however,
that for each employee of the Company who has entered into an employment
agreement with the Company, “cause” shall have the meaning provided in such
employment agreement.

 

2.5.          “Change in Control” shall mean, after the
Effective Date, (i) a Corporate Transaction is consummated, other than a
Corporate Transaction that would result in substantially all of the holders of
voting securities of the Company outstanding immediately prior thereto owning
(directly or indirectly and in substantially the same proportions relative to
each other) not less than fifty percent (50%) of the combined voting power of
the voting securities of the issuing/surviving/resulting entity outstanding
immediately after such Corporate Transaction or (ii) an agreement for the sale
or other disposition of all or substantially all of the Company’s assets
(evaluated on a consolidated basis, without regard to whether the sale or
disposition is effected via a sale or disposition of assets of the Company, the
sale or disposition of the securities of one or more Subsidiaries or the sale
or disposition of the assets of one or more Subsidiaries) is consummated.

 

2.6.          “Code” shall mean the Internal Revenue Code
of 1986, as amended from time to time (or any successor to such legislation).

 

2.7.          “Committee” shall mean the Compensation
Committee of the Board as such Compensation Committee may be constituted from
time to time; provided, however, membership on the Committee shall be limited
to Non Employee Directors; and provided further, the Committee will consist of
not less than two (2) Directors.  All
members of the Committee will serve at the pleasure of the Board.

 

2.8.          “Common Stock” shall mean the Common Stock,
par value $0.001 per share, of the Company.

 

2.9.          “Company” shall have the meaning set forth
in Section 1 of this Plan.

 

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2.10.        “Consultant” shall mean any Person who or
which is engaged by the Company or any Subsidiary to render consulting
services.

 

2.11.        “Corporate Transaction” shall mean any
recapitalization (other than a transaction contemplated by Section 13(a) of
this Plan) merger, consolidation or conversion involving the Company or any
exchange of securities involving the Common Stock (other than a transaction
contemplated by Section 13(a) of this Plan), provided that a primary issuance
of shares of Common Stock shall not be deemed to be a “Corporate Transaction.”

 

2.12.        “Designated Beneficiary” shall mean the
beneficiary designated by a Participant, in a manner authorized by the
Committee or the Board, to exercise the rights of such Participant in the event
of such Participant’s death.  In the
absence of an effective designation by a Participant, the Designated
Beneficiary shall be such Participant’s estate.

 

2.13.        “Director” shall mean any member of the
Board.

 

2.14.        “Disability” shall mean permanent and total
inability to engage in any substantial gainful activity, even with reasonable
accommodation, by reason of any medically determinable physical or mental
impairment which has lasted or can reasonably be expected to last without
material interruption for a period of not less than twelve (12) months, as
determined in the sole discretion of the Committee or the Board.

 

2.15.        “Dividend Equivalent” shall mean an award
granted pursuant to Section 8 of this Plan of a right to receive certain
payments with respect to Shares.

 

2.16.        “Effective Date” shall mean December 18,
1997.

 

2.17.        “Exchange Act” shall mean the Securities
Exchange Act of 1934, as amended from time to time (or any successor to such
legislation).

 

2.18.        “Fair Market Value” shall mean with respect
to the Shares, as of any date, the value established by the Board.  Fair market value shall be determined
without regard to any restriction other than a restriction which, by its terms,
will never lapse.

 

2.19.        “Incentive Stock Option” shall mean any
option to purchase Shares awarded pursuant to this Plan which qualifies as an
“Incentive Stock Option” pursuant to Section 422 of the Code.

 

2.20.        “Non Employee Director” shall have the
meaning set forth in Rule 16b 3 (or any successor to such rule) promulgated
under the Exchange Act) who are also “outside directors,” as required pursuant
to Section 162(m) of the Code and such Treasury regulations as may be
promulgated thereunder.

 

2.21.        “Non Qualified Stock Option” shall mean any
option to purchase Shares awarded pursuant to this Plan that does not qualify
as an Incentive Stock Option (including, without limitation, any option to
purchase Shares originally designated as or intended to qualify as an Incentive
Stock Option) but which does not (for whatever reason) qualify as an Incentive
Stock Option.

 

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2.22.        “Non Share Method” shall have the meaning set
forth in Section 6.6(c) of this Plan.

 

2.23.        “Optionee” shall mean any Participant who
has been granted and holds a Stock Option awarded pursuant to this Plan.

 

2.24.        “Participant” shall mean any Person who has
been granted and holds an Award granted pursuant to this Plan.

 

2.25.        “Performance Award” shall mean any Award
granted pursuant to this Plan of Shares, rights based upon, payable in or
otherwise related to Shares (including Restricted Stock) or cash, as the
Committee or Board may determine, at the end of a specified performance period
established by the Committee or Board and may include, without limitation,
Performance Shares or Performance Units.

 

2.26.        “Performance Shares” shall have the meaning
set forth in Section 9.1 of this Plan.

 

2.27.        “Performance Units” shall have the meaning
set forth in Section 9.1 of this Plan.

 

2.28.        “Permitted Modification” shall be deemed to
be any modification of an Award which is made in connection with a Corporate
Transaction and which provides in connection with a Stock Option, that
subsequent to the consummation of the Corporate Transaction (i) the exercise
price of such Stock Option will be proportionately adjusted to reflect the
exchange ratio applicable to the particular Corporate Transaction and/or (ii)
the nature and amount of consideration to be received upon exercise of the
Stock Option will be the same (on a per share basis) as was received by Persons
who were holders of shares of Common Stock immediately prior to the
consummation of the Corporate Transaction.

 

2.29.        “Person” shall mean an individual,
partnership, limited liability company, corporation, joint stock company,
trust, estate, joint venture, association or unincorporated organization or any
other form of business organization.

 

2.30.        “Plan” shall mean this U.S. Restaurant
Properties, Inc. Flexible Incentive Plan as it may be amended from time to
time.

 

2.31.        “Reload Option” shall mean a Stock Option
as defined in Section 6.6(b) of this Plan.

 

2.32.        “Reorganization” shall mean any stock
split, stock dividend, reverse stock split, combination of Shares or any other
similar increase or decrease in the number of Shares issued and outstanding.

 

2.33.        “Restricted Stock” shall mean any Shares
granted pursuant to this Plan that are subject to restrictions or substantial
risk of forfeiture.

 

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2.34.        “Retirement” shall mean termination of
employment of an employee of the Company or any Subsidiary, other than
discharge for Cause, after age 65 or on or before age 65 if pursuant to the
terms of any retirement plan maintained by the Company or any Subsidiary in
which such employee participates.

 

2.35.        “Securities Act” shall mean the Securities
Act of 1933, as amended from time to time (or any successor to such legislation).

 

2.36.        “Share Retention Method” shall have the
meaning set forth in Section 6.6(c) of this Plan.

 

2.37.        “Shares” shall mean shares of the Common
Stock and any shares of capital stock or other securities hereafter issued or
issuable upon, in respect of or in substitution or exchange for shares of
Common Stock.

 

2.38.        “Stock Option”  shall mean any Incentive Stock Option or Non Qualified Stock
Option.

 

2.39.        “Subsidiary” shall mean a subsidiary
corporation of the Company, as defined in Section 424(f) of the Code.

 

2.40.        “Transactional Consideration” shall have
the meaning set forth in Section 13(b) of this Plan.

 

SECTION 3.           ADMINISTRATION OF THIS
PLAN

 

3.1.          Committee/Board.  This Plan shall be administered and interpreted by the Committee
and/or the Board.

 

3.2.          Awards. 
(a)  Subject to the provisions of
this Plan and directions from the Board, the Committee is authorized to:

 

(i)            determine
the Persons to whom Awards are to be granted;

 

(ii)           determine
the types and combinations of Awards to be granted; the number of Shares to be
covered by an Award; the exercise price of an Award; the time or times when an
Award shall be granted and may be exercised; the terms, performance criteria or
other conditions, vesting periods or any restrictions for an Award; any
restrictions on Shares acquired pursuant to the exercise of an Award; and any
other terms and conditions of an Award;

 

(iii)          interpret the provisions of this Plan;

 

(iv)          prescribe,
amend and rescind rules and regulations relating to this Plan;

 

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(v)           determine
whether, to what extent and under what circumstances to provide loans from the
Company to Participants to exercise Awards granted pursuant to this Plan, and
the terms and conditions of such loans;

 

(vi)          rely
upon employees of the Company for such clerical and recordkeeping duties as may
be necessary in connection with the administration of this Plan;

 

(vii)         accelerate or defer (with the consent of the
Participant) the vesting of any rights pursuant to an Award; and

 

(viii)        make all other determinations and take all
other actions necessary or advisable for the administration of this Plan.

 

(b)           Without
limiting the Board’s right to amend this Plan pursuant to Section 13 of the
Plan, the Board may take all actions authorized by Section 3.2(a) of this Plan,
including, without limitation, granting such Awards pursuant to this Plan as
the Board may deem necessary or appropriate.

 

3.3.          Procedures.

 

(a)           Proceedings
by the Board with respect to this Plan will be conducted in accordance with the
articles of incorporation and bylaws of the Company.

 

(b)           A
majority of the Committee members shall constitute a quorum for action by the
Committee.  All determinations of the
Committee shall be made by not less than a majority of its members.

 

(c)           All
questions of interpretation and application of this Plan or pertaining to any
question of fact or Award granted hereunder will be decided by the Committee or
the Board, whose decision will be final, conclusive and binding upon the
Company and each other affected party.

 

SECTION 4.           SHARES SUBJECT TO PLAN

 

4.1.          Limitations.  The maximum number of Shares that may be issued with respect to
Awards granted pursuant to this Plan at any time shall be an amount equal to
4.9% of the Company’s issued and outstanding shares of Common Stock at such
time; provided, however, that the maximum number of Shares issuable pursuant to
Incentive Stock Options granted under the Plan shall be 575,000.  The Shares issued pursuant to this Plan may
be authorized but unissued Shares, or may be issued Shares which have been
reacquired by the Company.

 

4.2.          Changes. 
To the extent that any Award granted pursuant to this Plan shall be
forfeited, shall expire or shall be cancelled, in whole or in part, then the
number of Shares covered by the Award so forfeited, expired or cancelled may
again be awarded pursuant to the provisions of this Plan.  In the event that Shares are delivered to
the Company in full or partial payment of the exercise price for the exercise
of a Stock Option, the number of Shares available for future Awards granted
pursuant to this Plan shall be reduced only by the net number of

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Shares issued upon the
exercise of the Stock Option.  Awards
that may be satisfied either by the issuance of Shares or by cash or other
consideration shall, until the form of consideration to be paid is finally
determined, be counted against the maximum number of Shares that may be issued
pursuant to this Plan.

 

SECTION 5.           ELIGIBILITY

 

Eligibility for
participation in this Plan shall be confined to those individuals who are
employed by the Company or a Subsidiary and such Consultants and non-employee
Directors as may be designated by the Committee or the Board.  In making any determination as to Persons to
whom Awards shall be granted, the type of Award and/or the number of Shares to
be covered by the Award, the Committee or the Board shall consider the position
and responsibilities of the Person, the importance of the Person to the
Company, the duties of the Person, the past, present and potential
contributions of the Person to the growth and success of the Company and such
other factors as the Committee or the Board may deem relevant in connection
with accomplishing the purposes of this Plan.

 

SECTION 6.           STOCK OPTIONS

 

6.1.          Grants. 
The Committee or the Board may grant Stock Options alone or in addition
to other Awards granted pursuant to this Plan to any eligible Person.  Each Person so selected shall be offered a
Stock Option to purchase the number of Shares determined by the Committee or
the Board.  The Committee or the Board
shall specify whether such Stock Option is an Incentive Stock Option or a Non
Qualified Stock Option and any other terms or conditions relating to such
Award; provided, however only employees of the Company or a Subsidiary may be
granted Incentive Stock Options.  To the
extent that any Stock Option designated as an Incentive Stock Option does not
qualify as an Incentive Stock Option (whether because of its provisions, the
failure of the stockholders of the Company to authorize the issuance of
Incentive Stock Options, the time or manner of its exercise or otherwise), such
Stock Option or the portion thereof which does not qualify shall be deemed to
constitute a Non Qualified Stock Option. 
Each Person to be granted a Stock Option shall enter into a written
agreement with the Company, in such form as the Committee or the Board may
prescribe, setting forth the terms and conditions (including, without
limitation, the exercise price and vesting schedule) of the Stock Option.  At any time and from time to time, the
Optionee and the Committee or the Board may agree to modify an option agreement
in such respects as they may deem appropriate, including, without limitation,
the conversion of an Incentive Stock Option into a Non Qualified Stock
Option.  The Committee or the Board may
require that an Optionee meet certain conditions before the Stock Option or a
portion thereof may vest or be exercised, as, for example, that the Optionee
remain in the employ of the Company or a Subsidiary for a stated period or
periods of time.

 

6.2.          Incentive Stock Options Limitations.

 

(a)           In
no event shall any individual be granted Incentive Stock Options to the extent
that the Shares covered by any Incentive Stock Options (and any incentive stock
options granted pursuant to any other plans of the Company or its Subsidiaries)
that may be exercised for the first time by such individual in any calendar
year have an aggregate Fair Market Value in excess of $100,000.  For this purpose, the Fair Market Value of
the

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Shares shall be determined as of the date(s) on which
the Incentive Stock Options are granted. 
It is intended that the limitation on Incentive Stock Options provided
in this Section 6.2(a) be the maximum limitation on Stock Options which may be
considered Incentive Stock Options pursuant to the Code.

 

(b)           The
option exercise price of an Incentive Stock Option shall not be less than one
hundred percent (100%) of the Fair Market Value of the Shares subject to such
Incentive Stock Option on the date of the grant of such Incentive Stock Option.

 

(c)           Notwithstanding
anything herein to the contrary, in no event shall any employee owning more
than ten percent (10%) of the total combined voting power of the Company or any
Subsidiary be granted an Incentive Stock Option unless the option exercise
price of such Incentive Stock Option shall be at least one hundred ten percent
(110%) of the Fair Market Value of the Shares subject to such Incentive Stock
Option on the date of the grant of such Incentive Stock Option.

 

(d)           In
no event shall any individual be granted an Incentive Stock Option after the
expiration of ten (10) years from the date this Plan is adopted or is approved
by the stockholders of the Company (if stockholder approval is required by
Section 422 of the Code).

 

(e)           To
the extent stockholder approval of this Plan is required by Section 422 of the
Code, no individual shall be granted an Incentive Stock Option unless this Plan
is approved by the stockholders of the Company within twelve (12) months before
or after the date this Plan is initially adopted.  In the event this Plan is amended to increase the number of
Shares subject to issuance upon the exercise of Incentive Stock Options or to
change the class of employees eligible to receive Incentive Stock Options, no
individual shall be granted an Incentive Stock Option unless such amendment is
approved by the stockholders of the Company within twelve (12) months before or
after such amendment.

 

(f)            No
Incentive Stock Option shall be granted to any employee owning more than ten
percent (10%) of the total combined voting power of the Company or any
Subsidiary unless the term of such Incentive Stock Option is equal to or less
than five (5) years measured from the date on which such Incentive Stock Option
is granted.

 

6.3.          Option Term.  The term of a Stock Option shall be for such period of time from
the date of its grant as may be determined by the Committee or the Board;
provided, however, that no Incentive Stock Option shall be exercisable later
than ten (10) years from the date of its grant.

 

6.4.          Time of Exercise.  No Stock Option may be exercised unless it
is exercised prior to the expiration of its stated term and, in connection with
options granted to employees of the Company or its Subsidiaries,  at the time of such exercise, the Optionee
is, and has been continuously since the date of grant of such Stock Option,
employed by the Company or a Subsidiary, except that:

 

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(a)           A
Stock Option may, to the extent vested as of the date the Optionee ceases to be
an employee of the Company or a Subsidiary, be exercised during the three month
period immediately following the date the Optionee ceases (for any reason other
than death, Disability or termination for Cause) to be an employee of the
Company or a Subsidiary (or within such other period as may be specified in the
applicable option agreement), provided that, if the Stock Option has been
designated as an Incentive Stock Option and the option agreement provides for a
longer exercise period, the exercise of such Stock Option after such three
month period shall be treated as the exercise of a Non Qualified Stock Option;

 

(b)           If
the Optionee dies while in the employ of the Company or a Subsidiary, or within
three months after the Optionee ceases (for any reason other than termination
for Cause) to be such an employee (or within such other period as may be
specified in the applicable option agreement), a Stock Option may, to the
extent vested as of the date of the Optionee’s death, be exercised by the
Optionee’s Designated Beneficiary during the one year period immediately
following the date of the Optionee’s death (or within such other period as may
be specified in the applicable option agreement); provided that, if the Stock
Option has been designated as an Incentive Stock Option and the option
agreement provides for a longer exercise period, the exercise of such Stock
Option after such one year period shall be treated as the exercise of a Non
Qualified Stock Option;

 

(c)           If
the Optionee ceases to be an employee of the Company or a Subsidiary by reason
of the Optionee’s Disability, a Stock Option, to the extent vested as of the
date the Optionee ceases to be an employee of the Company or a Subsidiary, may
be exercised during the one year period immediately following the date on which
the Disability is determined to exist (or within such other period as may be
specified in the applicable option agreement); provided that, if the Stock
Option has been designated as an Incentive Stock Option and the option
agreement provides for a longer exercise period, the exercise of such Stock
Option after such one year period shall be treated as the exercise of a Non
Qualified Stock Option; and

 

(d)           If
the Optionee’s employment is terminated for Cause, all Stock Options held by
such Optionee shall simultaneously terminate and will no longer be exercisable.

 

Nothing contained
in this Section 6.4 will be deemed to extend the term of a Stock Option or to
revive any Stock Option which has previously lapsed or been cancelled,
terminated or surrendered.  Stock
Options granted under this Plan to Consultants or Non Employee Directors will
contain such terms and conditions with respect to the death or disability of a
Consultant or Non Employee Director or termination of a Consultant’s or non
employee Director’s relationship with the Company as the Committee or the Board
deems necessary or appropriate.  Such
terms and conditions will be set forth in the option agreements evidencing the
grant of such Stock Options.

 

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6.5.          Vesting of Stock Options.

 

(a)           Each
Stock Option granted pursuant to this Plan may only be exercised to the extent
that the Optionee is vested in such Stock Option.  Each Stock Option shall vest separately in accordance with the
option vesting schedule determined by the Committee or the Board, which will be
incorporated in the option agreement entered into between the Company and such
Optionee.  The option vesting schedule
may be accelerated if, in the sole discretion of the Committee or the Board,
the acceleration of the option vesting schedule would be in the best interests
the Company.

 

(b)           In
the event of the dissolution or liquidation of the Company, each Stock Option
granted pursuant to this Plan shall terminate as of a date to be fixed by the
Committee or Board; provided, however, that not less than thirty (30) days’
prior written notice of the date so fixed shall be given to each Optionee.  During such period all Stock Options which
have not previously been terminated, exercised or surrendered will (subject to
the provisions of Sections 6.3 and 6.4 of the Plan) fully vest and become
exercisable, notwithstanding the vesting schedule set forth in the option
agreement evidencing the grant of such Stock Option.  Upon the date fixed by the Committee or the Board, any
unexercised Stock Options shall terminate and be of no further effect.

 

(c)           Upon
the occurrence of a Change in Control, all Stock Options and any associated
Stock Appreciation Rights shall become fully vested and immediately
exercisable.

 

6.6.          Manner of Exercise of Stock Options.

 

(a)           Except
as otherwise provided in this Plan, Stock Options may be exercised as to Shares
only in amounts and at intervals of time specified in the written option
agreement between the Company and the Optionee.  Each exercise of a Stock Option, or any part thereof, shall be
evidenced by a written notice delivered by the Optionee to the Company.  Except as set forth in Section 6.6(c) of
this Plan, the purchase price of the Shares as to which a Stock Option shall be
exercised shall be paid in full at the time of exercise, and may be paid to the
Company either:

 

(i)            in
cash (including check, bank draft or money order); or

 

(ii)           by
other consideration deemed acceptable by the Committee or the Board in its sole
discretion.

 

(b)           If
an Optionee delivers Shares (including Shares of Restricted Stock) already
owned by the Optionee in full or partial payment of the exercise price for any
Stock Option, or if the Optionee elects to have the Company retain that number
of Shares out of the Shares being acquired through the exercise of the Stock
Option having a Fair Market Value equal to the exercise price of the Stock
Option being exercised, the Committee or the Board may, in its sole discretion,
authorize the grant of a new Stock Option (a “Reload Option”) for that
number of Shares equal to the number of already owned Shares surrendered
(including Shares of Restricted Stock) or newly acquired Shares being retained
by the Company in payment of the option exercise price of the

 

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underlying Stock Option being exercised.  The grant of a Reload Option will become
effective upon the exercise of the underlying Stock Option.  The option exercise price of the Reload
Option shall be the Fair Market Value of a Share on the effective date of the
grant of the Reload Option.  Each Reload
Option shall be exercisable no later than the time when the underlying stock
option being exercised could be last exercised. The Committee or the Board may
also specify additional terms, conditions and restrictions for the Reload
Option and the Shares to be acquired upon the exercise thereof.

 

(c)           Either
the (i) purchase price of the Shares as to which a Stock Option shall be
exercised or (ii) amount, as determined by the Committee or the Board, of any
federal, state or local tax required to be withheld by the Company due to the
exercise of a Stock Option may, subject to the authorization of the Committee
or the Board, be satisfied, at the election of the Optionee, either (A) by
payment by the Optionee to the Company of the amount of such withholding
obligation in cash or other consideration acceptable to the Committee or the
Board in its sole discretion (the “Non Share Method”) or (B) through
either the retention by the Company of a number of Shares out of the Shares
being acquired through the exercise of the Stock Option or the delivery of
already owned Shares having a Fair Market Value equal to the amount of the
withholding obligation (the “Share Retention Method”).  If an Optionee elects to use the Share
Retention Method in full or partial satisfaction of any tax liability resulting
from the exercise of a Stock Option, the Committee or the Board may authorize
the grant of a Reload Option for that number of Shares as shall equal the
number of Shares used to satisfy the tax liabilities of the Optionee arising
out of the exercise of such Stock Option. 
Such Reload Option will be granted at the price and on the terms set
forth in Section 6.6(b) of this Plan. 
The cash payment or an amount equal to the Fair Market Value of the
Shares so withheld, as the case may be, shall be remitted by the Company to the
appropriate taxing authorities.

 

(d)           An
Optionee shall not have any of the rights of a stockholder of the Company with
respect to the Shares subject to a Stock Option except to the extent that such
Stock Option is exercised and one or more certificates representing such Shares
shall have been delivered to the Optionee.

 

SECTION 7.           RESTRICTED STOCK

 

7.1.          Grants. 
The Committee or the Board may grant Awards of Restricted Stock to any
Consultant, Non-Employee Director or employee of the Company or a Subsidiary
for such minimum consideration, if any, as may be required by applicable law or
such greater consideration as may be determined by the Committee or the Board,
in its sole discretion.  The terms and
conditions of the Restricted Stock shall be specified by the grant
agreement.  The Committee or the Board,
in its sole discretion, may specify any particular rights which the Participant
to whom a grant of Restricted Stock is made shall have in the Restricted Stock
during the restriction period and the restrictions applicable to the particular
Award, the vesting schedule (which may be based on service, performance or
other factors) and rights to acceleration of vesting (including, without
limitation, whether non vested Shares are forfeited or vested upon termination
of employment).  Further, the Committee
or the Board may grant performance based Awards consisting of Restricted Stock
by conditioning the grant, or vesting or such other factors, such as the
release, expiration or lapse of restrictions upon any such Award (including the

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acceleration of any such
conditions or terms) of such Restricted Stock upon the attainment of specified
performance goals or such other factors as the Committee or the Board may
determine.  The Committee or the Board
shall also determine when the restrictions shall lapse or expire and the
conditions, if any, pursuant to which the Restricted Stock will be forfeited or
sold back to the Company. Each Award of Restricted Stock may have different
restrictions and conditions.  Unless
otherwise set forth in the grant agreement, Restricted Stock may not be sold,
pledged, encumbered or otherwise disposed of by the recipient until the
restrictions specified in the Award expire. 
Awards of Restricted Stock are subject to acceleration of vesting,
termination of restrictions and termination in the same manner as Stock Options
pursuant to Sections 6.4 and 6.5 of this Plan.

 

7.2.          Awards and Certificates.  Any Restricted Stock issued hereunder may be
evidenced in such manner as the Committee or the Board, in its sole discretion,
shall deem appropriate including, without limitation, book entry registration
or issuance of a stock certificate or certificates.  In the event any stock certificate is issued in respect of Shares
of Restricted Stock, such certificate shall bear an appropriate legend with
respect to the restrictions applicable to such Award.  The Company may retain, at its option, the physical custody of
any stock certificate representing any awards of Restricted Stock during the
restriction period or require that the certificates evidencing Restricted Stock
be placed in escrow or trust, along with a stock power endorsed in blank, until
all restrictions are removed or expire.

 

SECTION 8.           DIVIDEND EQUIVALENTS

 

8.1.          Grant of Dividend Equivalents.  The Committee is authorized to grant
Dividend Equivalents to Participants, which will entitle such Participant to
receive, on a current or deferred basis and subject to such conditions as may
be imposed by the Committee, cash payments from the Company in the same amounts
(or such lesser fraction of such amounts as may be specifically set forth in the
Dividend Equivalent agreement evidencing such award) that the holder of record
of such number of Shares would be entitled to receive as cash dividends on such
Shares (unless otherwise limited in such agreement).  Dividend Equivalent agreements will specify the expiration date
of such Dividend Equivalents, the number of Shares to which they relate, and
such other conditions as the Committee may impose.

 

8.2.          Payments. 
The right to a cash payment in respect of a Dividend Equivalent will
apply to all dividends the record date for which occurs at any time during the
period commencing on the date the Dividend Equivalent is granted and ending on
the date such Dividend Equivalent expires or is terminated, whichever occurs
first.

 

8.3.          Related Dividend Equivalents.  If a Dividend Equivalent is granted in
conjunction with the grant of a Stock Option, the applicable Dividend
Equivalent agreement will provide that the grantee is entitled to receive from
the Company cash payments, on a current or deferred basis, in the same amounts
(or such lesser fraction of such amounts as may be specifically set forth in
the Dividend Equivalent agreement) that the holder of record of a number of
Shares equal to the number of Shares covered by such Stock Option would be
entitled to receive as dividends on such Shares unless otherwise limited in the
Dividend Equivalent agreement.  Such
right to a cash payment will apply to, and such Dividend Equivalent will remain
outstanding in respect of, all cash dividends the record date for which occurs
at any time during the period

A- 12

 

commencing on the date
the related Stock Option is granted and ending on the date that such Stock
Option is exercised, expires or terminates, whichever occurs first.

 

SECTION 9.           PERFORMANCE AWARDS

 

9.1.          Grants. 
A Performance Award may consist of either or both, as the Committee or
the Board may determine, of (i) the right to receive Shares or Restricted
Stock, or any combination thereof as the Committee or the Board may determine
(“Performance Shares”), or (ii) the right to receive a fixed dollar
amount payable in Shares, Restricted Stock, cash or any combination thereof, as
the Committee or the Board may determine (“Performance Units”).  The Committee or the Board may grant
Performance Awards to any eligible Consultant, non-employee Director or
employee of the Company or a Subsidiary, for such minimum consideration, if
any, as may be required by applicable law or such greater consideration as may
be determined by the Committee or the Board, in its sole discretion.  The terms and conditions of Performance
Awards shall be specified at the time of the grant and may include provisions
establishing the performance period, the performance criteria to be achieved
during a performance period, the criteria used to determine vesting (including
the acceleration thereof), whether Performance Awards are forfeited or vest
upon termination of employment during a performance period and the maximum or
minimum settlement values.  Each
Performance Award shall have its own terms and conditions, which shall be
determined in the sole discretion of the Committee or the Board.  If the Committee or the Board determines, in
its sole discretion, that the established performance measures or objectives
are no longer suitable because of a change in the Company’s business,
operations, corporate structure or for other reasons that the Committee or the
Board deems satisfactory, the Committee or the Board may modify the performance
measures or objectives and/or the performance period.  Awards of Performance Shares and/or Performance Units are subject
to acceleration of vesting, termination of restrictions and termination in the
same manner as Stock Options pursuant to Sections 6.4 and 6.5 of this Plan.

 

9.2.          Terms and Conditions.  Performance Awards may be valued by
reference to the Fair Market Value of a Share or according to any other formula
or method deemed appropriate by the Committee or the Board, in its sole
discretion, including, but not limited to, achievement of specific financial,
production, sales, cost or earnings performance objectives that the Committee
or the Board believes to be relevant or the Company’s performance or the
performance of the Common Stock measured against the performance of the market,
the Company’s industry segment or its direct competitors.  Performance Awards may also be conditioned
upon the applicable Participant remaining in the employ of the Company or one
of its Subsidiaries for a specified period. 
Performance Awards may be paid in cash, Shares (including Restricted
Stock) or other consideration, or any combination thereof.  Performance Awards may be payable in a
single payment or in installments and may be payable at a specified date or
dates or upon attaining the performance objective or objectives, all at the
sole discretion of the Committee or the Board. 
The extent to which any applicable performance objective has been
achieved shall be conclusively determined by the Committee or the Board in its
sole discretion.

 

A- 13

 

SECTION 10.         STOCK PURCHASE PLAN

 

10.1.        Grant of Stock Purchase Rights.  The term “Stock Purchase Right” means the right to purchase
shares of Common Stock and to pay for all or a portion of the purchase price
for such shares through a loan made by the Company to a Participant (a “Purchase
Loan”) as set forth in this Section 10.

 

10.2.        Terms of Purchase Loans.

 

(a)           Each
Purchase Loan shall be evidenced by a promissory note.  The term of the Purchase Loan shall be a
period not to exceed ten years, as determined by the Committee, and the
proceeds of the Purchase Loan shall be used exclusively by the Participant for
purchase of shares of Common Stock at a purchase price equal to the Fair Market
Value on the date of the Stock Purchase Right.

 

(b)           A
Purchase Loan shall bear interest at whatever rate the Committee shall
determine (not less than the then existing prime rate as announced by the
Company’s lender under the Company’s credit facility but not in excess of the
maximum rate permissible under applicable law), payable in a manner and at such
times as the Committee shall determine. 
Those terms and provisions as the Committee shall determine shall be
incorporated into the promissory note evidencing the Purchase Loan.

 

10.3.        Security for Loans.

 

(a)           Purchase
Loans granted to Participants shall be secured by a pledge of the shares of
Common Stock acquired pursuant to the Stock Purchase Right.  Such pledge shall be evidenced by a pledge
agreement (the “Pledge Agreement”) containing such terms and conditions
as the Committee shall determine.  The
certificates for the shares of Common Stock purchased by a Participant pursuant
to a Stock Purchase Right shall be issued in the Participant’s name, but shall
be held by the Company as security for repayment of the Participant’s Purchase
Loan together with a stock power executed in blank by the Participant (the
execution and delivery of which by the Participant shall be a condition to the
issuance of the Stock Purchase Right). 
The Participant shall be entitled to exercise all rights applicable to
such shares of Common Stock, including, but not limited to, the right to vote
such shares of Common Stock and the right to receive dividends and other
distributions made with respect to such shares of Common Stock.

 

(b)           The
Company shall release and deliver to each Participant certificates for the
shares of Common Stock purchased by the Participant under the Stock Purchase
Right and then held by the Company, provided the Participant has paid or
otherwise satisfied in full the balance of the Purchase Loan and any accrued
but unpaid interest thereon.  In the
event the balance of the Purchase Loan is not repaid, forgiven or otherwise
satisfied within ninety (90) days after (i) the date repayment of the Purchase
Loan is due (whether in accordance with its term, by reason of acceleration or
otherwise), or (ii) such longer time as the Committee, in its discretion, shall
provide for repayment or satisfaction, the Company shall retain those shares of
Common Stock then held by the Company in accordance with the Pledge Agreement.

 

A- 14

 

10.4.        Restrictions on Transfer. 
No Stock Purchase Right or shares of Common Stock purchased through such
Right and pledged to the Company as collateral security for the Participant’s
Purchase Loan and accrued but unpaid interest thereon may be otherwise pledged,
sold, assigned or transferred (other than by will or by the laws of descent and
distribution).

 

SECTION 11.         OTHER AWARDS

 

The Committee or
the Board may grant to any eligible Consultant, non-employee Director or
employee of the Company or a Subsidiary other forms of Awards based upon,
payable in or otherwise related to, in whole or in part, Shares, if the
Committee or the Board, in its sole discretion, determines that such other form
of Award is consistent with the purposes of this Plan.  The terms and conditions of such other form
of Award shall be specified in a written agreement which sets forth the terms
and conditions of such Award, including, but not limited to, the price, if any,
and the vesting schedule, if any, of such Award.  Such Awards may be granted for such minimum consideration, if
any, as may be required by applicable law or for such other greater
consideration as may be determined by the Committee or the Board, in its sole
discretion.

 

SECTION 12.         COMPLIANCE WITH
SECURITIES AND OTHER LAWS

 

As a condition to
the issuance or transfer of any Award or any security issuable in connection
with such Award, the Company may require an opinion of counsel, satisfactory to
the Company, to the effect that (a) such issuance and/or transfer will not be
in violation of the Securities Act or any other applicable securities laws and
(b) such issuance and/or transfer will not be in violation of the rules and
regulations of any securities exchange or automated quotation system on which
the Common Stock is listed or admitted to trading.  Further, the Company may refrain from issuing, delivering or
transferring any Award or any security issuable in connection with such Award
until the Committee or the Board has determined that such issuance, delivery or
transfer will not violate such securities laws or rules and regulations and
that the recipient has tendered to the Company any federal, state or local tax
owed as a result of such issuance, delivery or transfer, when the Company has a
legal liability to satisfy such tax. 
The Company shall not be liable for damages due to delay in the
issuance, delivery or transfer of any Award or any security issuable in
connection with such Award or any agreement, instrument or certificate
evidencing such Award or security for any reason whatsoever, including, but not
limited to, a delay caused by the listing requirements of any securities
exchange or automated quotation system or any registration requirements under
the Securities Act, the Exchange Act, or under any other state or federal law,
rule or regulation.  The Company is
under no obligation to take any action or incur any expense to register or
qualify the issuance, delivery or transfer of any Award or any security
issuable in connection with such Award under applicable securities laws or to
perfect any exemption from such registration or qualification or to list any
security on any securities exchange or automated quotation system.  Furthermore, the Company will have no
liability to any person for refusing to issue, deliver or transfer any Award or
any security issuable in connection with such Award if such refusal is based upon
the foregoing provisions of this Section 12. 
As a condition to any issuance, delivery or transfer of any Award or any
security issuable in connection with such Award, the Company may place legends
on any agreement, instrument or certificate evidencing such Award or security,
issue stop transfer orders with respect thereto and require such agreements or
undertakings as the Company may deem necessary or advisable to assure
compliance with applicable laws or regulations, including, if the

A- 15

 

Company or its counsel
deems it appropriate, representations from the recipient of such Award or
security to the effect that such recipient is acquiring such Award or security
solely for investment and not with a view to distribution and that no
distribution of the Award or the security will be made unless registered
pursuant to applicable federal and state securities laws, or in the opinion of
counsel to the Company, such registration is unnecessary.

 

SECTION 13.         ADJUSTMENTS UPON THE
OCCURRENCE OF A REORGANIZATION OR CORPORATE TRANSACTION

 

13.1.        Reorganization.  In
the event of a Reorganization, the number of Shares subject to this Plan and to
each outstanding Award, and the exercise price of each Award which is based
upon Shares, shall (to the extent deemed appropriate by the Committee or the
Board) be proportionately adjusted (as determined by the Committee or the Board
in its sole discretion) to account for any increase or decrease in the number
of issued and outstanding Shares of the Company resulting from such
Reorganization.

 

13.2.        Corporate Transaction with the Company as Survivor.  If a Corporate Transaction is consummated
and immediately following the consummation of such Corporate Transaction the
Persons who were holders of shares of Common Stock immediately prior to the
consummation of such Corporate Transaction do not receive any securities or
other property (hereinafter collectively referred to as “Transactional
Consideration”) as a result of such Corporate Transaction and substantially
all of such Persons continue to hold the shares of Common Stock held by them
immediately prior to the consummation of such Corporate Transaction (in
substantially the same proportions relative to each other), the Awards will
remain outstanding and will (subject to the provisions of Sections 6.1, 6.5(c),
7.1 and 9.1 of this Plan) continue in full force and effect in accordance with
its terms (without any modification) following the consummation of the
Corporate Transaction.

 

13.3.        Corporate Transaction with Company Being Acquired.   If a Corporate Transaction is consummated
and immediately following the consummation of such Corporate Transaction the
Persons who were holders of shares of Common Stock immediately prior to the consummation
of such Corporate Transaction do receive Transactional Consideration as a
result of such Corporate Transaction or substantially all of such Persons do
not continue to hold the shares of Common Stock held by them immediately prior
to the consummation of such Corporate Transaction (in substantially the same
proportions relative to each other), the terms and conditions of the Awards
will be modified as follows:

 

(i)            If
the documentation pursuant to which a Corporate Transaction will be consummated
provides for the assumption (by the entity issuing Transactional Consideration
to the Persons who were the holders of shares of Common Stock immediately prior
to the consummation of such Corporate Transaction) of the Awards granted
pursuant to this Plan without any modification or amendment (other than
Permitted Modifications and the modifications contemplated by Sections 6.1,
6.5(c), 7.1 and 9.1 of this Plan), such Awards will remain outstanding and will
continue in full force and effect in accordance with its terms following the
consummation of such Corporate

A- 16

 

Transaction (subject to such Permitted Modifications
and the provisions of Sections 6.1, 6.5(c), 7.1 and 9.1 of the Plan).

 

(ii)           If
the documentation pursuant to which a Corporate Transaction will be consummated
does not provide for the assumption by the entity issuing Transactional
Consideration to the Persons who were the holders of shares of Common Stock
immediately prior to the consummation of such Corporate Transaction of the
Awards granted pursuant to this Plan without any modification or amendment
(other than Permitted Modifications), all vesting restrictions (performance
based or otherwise) applicable to Awards which will not be so assumed will
accelerate and the holders of such Awards may (subject to the expiration of the
term of such Awards) exercise/receive the benefits of such Awards without
regard to such vesting restrictions during the ten (10) day period immediately
preceding the consummation of such Corporate Transaction.  For purposes of the immediately preceding
sentence, all performance based goals will be deemed to have been satisfied in
full.  The Company will provide each
Participant holding Awards which will not be so assumed with reasonable notice
of the termination of such vesting restrictions and the impending termination
of such Awards.  Upon the consummation
of such a Corporate Transaction, all unexercised Awards which are not to be so
assumed will automatically terminate and cease to be outstanding.

 

Nothing contained
in this Section 13 will be deemed to extend the term of an Award or to revive
any Award which has previously lapsed or been cancelled, terminated or
surrendered.

 

SECTION 14.         AMENDMENT OR TERMINATION
OF THIS PLAN

 

14.1.        Amendment of This Plan. 
Notwithstanding anything contained in this Plan to the contrary, all
provisions of this Plan (including, without limitation, the maximum number of
Shares that may be issued with respect to Awards to be granted pursuant to this
Plan) may at any time or from time to time be modified or amended by the Board;
provided, however, that no Award at any time outstanding pursuant to this Plan
may be modified, impaired or cancelled adversely to the holder of the Award
without the consent of such holder.

 

14.2.        Termination of This Plan. 
The Board may suspend or terminate this Plan at any time, and such
suspension or termination may be retroactive or prospective.  Termination of this Plan shall not impair or
affect any Award previously granted hereunder and the rights of the holder of
the Award shall remain in effect until the Award has been exercised in its
entirety or has expired or otherwise has been terminated by the terms of such
Award.

 

SECTION 15.         AMENDMENTS AND
ADJUSTMENTS TO AWARDS

 

The Committee or
the Board may amend, modify or terminate any outstanding Award with the
Participant’s consent at any time prior to payment or exercise in any manner
not inconsistent with the terms of this Plan, including, without limitation,
(a) to change the date or dates as of which and/or the terms and conditions
pursuant to which (i) a Stock Option becomes exercisable or (ii) a Performance
Award is deemed earned, (b) to amend the terms of any

A- 17

 

outstanding Award to
provide an exercise price per share which is higher or lower than the then
current exercise price per share of such outstanding Award or (c) to cancel an
Award and grant a new Award in substitution therefor under such different terms
and conditions as the Committee or the Board determines in its sole discretion
to be appropriate including, but not limited to, having an exercise price per
share which may be higher or lower than the exercise price per share of the
cancelled Award.  The Committee or the
Board may also make adjustments in the terms and conditions of, and the
criteria included in agreements evidencing Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events described in
Section 13 of this Plan) affecting the Company, or the financial statements of
the Company or any Subsidiary, or of changes in applicable laws, regulations or
accounting principles, whenever the Committee or the Board determines that such
adjustments are appropriate to prevent reduction or enlargement of the benefits
or potential benefits intended to be made available pursuant to this Plan.  Any provision of this Plan or any agreement
regarding an Award to the contrary notwithstanding, the Committee or the Board
may cause any Award granted to be cancelled in consideration of a cash payment
or alternative Award made to the holder of such cancelled Award equal in value
to the Fair Market Value of such cancelled Award.  The determinations of value pursuant to this Section 15 shall be
made by the Committee or the Board in its sole discretion.

 

SECTION 16.         GENERAL PROVISIONS

 

16.1.        No Limit on Other Compensation Arrangements.  Nothing contained in this Plan shall prevent
the Company from adopting or continuing in effect other compensation
arrangements, and such arrangements may be either generally applicable or
applicable only in specific cases.

 

16.2.        No Right to Employment or Continuation of Relationship.  Nothing in this Plan or in any Award, nor
the grant of any Award, shall confer upon or be construed as giving any
Participant any right to remain in the employ of the Company or a Subsidiary or
to continue as a Consultant or Non-Employee Director.  Further, the Company or a Subsidiary may at any time dismiss a
Participant from employment or terminate the relationship of any Consultant or
non-employee Director with the Company or any Subsidiary, free from any
liability or any claim pursuant to this Plan, unless otherwise expressly
provided in this Plan or in any agreement evidencing an Award made under this
Plan.  No Consultant, Non-Employee
Director or employee of the Company or any Subsidiary shall have any claim to
be granted any Award, and there is no obligation for uniformity of treatment of
any Consultant, Non-Employee Director or employee of the Company or any
Subsidiary or of any Participants.

 

16.3.        GOVERNING LAW.  THE
VALIDITY, CONSTRUCTION AND EFFECT OF THIS PLAN AND ANY RULES AND REGULATIONS
RELATING TO THIS PLAN SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS, WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES
THEREOF.

 

16.4.        Severability.  If any
provision of this Plan or any Award is or becomes or is deemed to be invalid,
illegal or unenforceable in any jurisdiction or as to any individual or Award,
or would disqualify this Plan or any Award under any law deemed applicable by
the Committee or the Board, such provision shall be construed or deemed amended
to conform to

A- 18

 

applicable law, or if it
cannot be construed or deemed amended without, in the sole determination of the
Committee or the Board, materially altering the intent of this Plan or the
Award, such provision shall be stricken as to such jurisdiction, individual or
Award and the remainder of this Plan and any such Award shall remain in full
force and effect.

 

16.5.        No  Fractional Shares.  No fractional Shares shall be issued or
delivered pursuant to this Plan or any Award, and the Committee or the Board
shall determine, in its sole discretion, whether cash, other securities or
other property shall be paid or transferred in lieu of any fractional Shares or
whether such fractional Shares or any rights thereto shall be cancelled,
terminated or otherwise eliminated.

 

16.6.        Headings.  Headings
are given to the Sections and Subsections of this Plan solely as a convenience
to facilitate reference.  Such headings
shall not be deemed in any way material or relevant to the construction or
interpretation of this Plan or any provision thereof.

 

16.7.        Effective Date.  The
provisions of this Plan that relate to the grant of Incentive Stock Options
shall be effective as of the date of the approval of this Plan by the
stockholders of the Company.

 

16.8.        Transferability of Awards. 
Awards shall not be transferable otherwise than by will or the laws of
descent and distribution without the written consent of the Committee or the
Board (which may be granted or withheld at the sole discretion of the Committee
or the Board).  Awards may be exercised,
during the lifetime of the holder, only by the holder.  Any attempted assignment, transfer, pledge,
hypothecation or other disposition of an Award contrary to the provisions
hereof, or the levy of any execution, attachment or similar process upon an
Award shall be null and void and without effect.

 

16.9.        Rights of Participants. 
Except as hereinbefore expressly provided in this Plan, any Person to
whom an Award is granted shall have no rights by reason of any subdivision or
consolidation of stock of any class or the payment of any stock dividend or any
other increase or decrease in the number of shares of stock of any class or by
reason of any dissolution, liquidation, reorganization, merger or consolidation
or spinoff of assets or stock of another corporation, and any issue by the
Company of shares of stock of any class or securities convertible into shares
of stock of any class shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number or exercise price of Shares subject to
an Award.

 

16.10.      No Limitation Upon the Rights of the Company.  The grant of an Award pursuant to this Plan
shall not affect in any way the right or power of the Company to make
adjustments, reclassifications, or changes of its capital or business structure;
to merge, convert or consolidate; to dissolve or liquidate; or sell or transfer
all or any part of its business or assets.

 

16.11.      Date of Grant of an Award. 
Except as noted in this Section 16.11, the granting of an Award shall
take place only upon the execution and delivery by the Company and the
Participant of a written agreement and neither any other action taken by the
Committee or the Board nor anything contained in this Plan or in any resolution
adopted or to be adopted by the Committee, the Board or the stockholders of the
Company shall constitute the granting of an Award pursuant to this Plan.  Solely, for purposes of determining the Fair
Market Value of the

A- 19

 

Shares subject to an
Award, such Award will be deemed to have been granted as of the date specified
by the Committee or the Board notwithstanding any delay which may elapse in
executing and delivering the applicable agreement.

 

A- 20EXHIBIT
10.5

 

FOURTH AMENDMENT

 

THIS FOURTH
AMENDMENT (this “Amendment”) dated as of April 18, 2003 is to the Credit
Agreement (as previously amended, the “Credit Agreement”) dated as of
March 17, 2000 among TETRA TECH, INC. (the “Company”), various financial
institutions and BANK OF AMERICA, N.A., as administrative agent (the “Agent”).  Unless otherwise defined herein, terms
defined in the Credit Agreement are used herein as defined therein.

 

WHEREAS, the
parties hereto desire to amend the Credit Agreement as set forth below;

 

NOW THEREFORE, in
consideration of the premises and for other good and valuable consideration
(the receipt and sufficiency of which are hereby acknowledged), the parties
hereto agree as follows:

 

SECTION 1  AMENDMENTS.  Effective on (and subject to the occurrence
of) the Amendment Effective Date (as defined below), the Credit Agreement shall
be amended as follows:

 

1.1  New Definitions.  Section 1.1 is amended by adding the
following definitions in appropriate alphabetical order:

 

Adjusted EBITDA means, for any Computation Period, the
sum of Adjusted Consolidated Net Income for such period, plus, to the extent
deducted in determining such Adjusted Consolidated Net Income, (w) federal,
state, local and foreign income, value added and similar taxes, (x) Interest
Expense, (y) depreciation and amortization expense and (z) the Goodwill
Adjustment; provided that Adjusted EBITDA shall be calculated on a pro
forma basis (in accordance with Article 11 of Regulation S-X of the SEC)
giving effect to (a) any acquisition made by the Company or any Subsidiary
during such Computation Period so long as, and to the extent that, (i) the
Company delivers to the Administrative Agent (which shall promptly deliver to
each Bank) a summary in reasonable detail of the assumptions underlying, and
the calculations made, in computing Adjusted EBITDA on a pro  forma
basis and (ii) the Required Banks do not object to such assumptions and/or
calculations within 10 Business Days after receipt thereof; and (b) any
divestiture of a Subsidiary, division or other operating unit made during such
Computation Period.  If the Company or
any Subsidiary makes any acquisition of a Person or assets which would result
in a negative adjustment to Adjusted EBITDA for any period, the Company shall,
upon request of the Required Banks, deliver the information required pursuant
to clause (a)(i) of the preceding sentence so that the calculation of
Adjusted EBITDA will give effect to such acquisition.

 

Adjusted Consolidated Net
Income means, for
any period, the net income or loss of the Company and its Subsidiaries for such
period, excluding extraordinary nonrecurring gains or losses.

 

Goodwill Adjustment means an amount equal to the charge
taken by the Company during the second Fiscal Quarter of 2003 in order to
comply with FAS 142, provided that under no circumstance shall such
amount exceed $150,000,000.

 

 

1.2  Amended Definition.  The definition of “Adjusted Leverage Ratio”
is amended in its entirety to read as follows:

 

Adjusted Leverage Ratio means, for any Computation Period, the
ratio of (a) Funded Debt as of the last day of such Computation Period to (b)
Adjusted EBITDA for such Computation Period: provided that for purposes
of computing the Adjusted Leverage Ratio, Adjusted EBITDA shall be further
adjusted by (x) adding back the special charge (but not more than $38,300,000)
taken by the Company in the third Fiscal Quarter of Fiscal Year 2001 in
connection with the bankruptcy of Metricom, Inc., to the extent taken in such
Computation Period; and (y) deducting any recovery received on the obligations
which gave rise to the special charge referred to in clause (x), to the
extent received during such Computation Period.

 

1.3  Section 10.6.1.  Section 10.6.1 is amended by adding the
following text immediately after the reference to “$242,000,000” therein: “less
the Goodwill Adjustment”.

 

1.4  Section 10.6.2.  Section 10.6.2 is amended by inserting the
word “Adjusted” before the word “EBITDA” therein.

 

1.5  Section 10.10  Section 10.10 is amended by replacing all
text immediately following the semi-colon therein with the following:

 

provided that (i) any Subsidiary may declare and
pay dividends to the Company or to any other wholly-owned Subsidiary and (ii)
so long as no Event of Default or Unmatured Event of Default exists or would
result therefrom, the Company may repurchase shares of its capital stock in an
aggregate amount, for all such repurchases during the term of this Agreement,
not to exceed 5% of Net Worth (measured as of the end of the Fiscal Quarter
immediately preceding any such purchase).

 

1.6
Section 10.23  Section 10.23 is
deleted in its entirety.

 

1.7 Events of
Default.  Clause (a) of Section
12.1.5 of the Credit Agreement is amended by deleting the following at the end
thereof (after the reference to “10.21” and before the semi-colon):  “and 10.23”.

 

SECTION 2  REPRESENTATIONS
AND WARRANTIES.  The Company
represents and warrants to the Agent and the Banks that (a) each warranty set
forth in Section 9 of the Credit Agreement is true and correct as if made on
the date hereof, (b) the execution and delivery by the Company of this
Amendment and the performance by the Company of its obligations under the
Credit Agreement as amended hereby (as so amended, the “Amended Credit
Agreement”) (i) are within the corporate powers of the Company, (ii) have
been duly authorized by all necessary corporate action, (iii) have received all
necessary governmental approval and (iv) do not and will not contravene or
conflict with any provision of law or of the charter or by-laws of the Company
or any Subsidiary or of any indenture, loan agreement or other material
contract, or any judgment, order or decree, which is binding upon the Company
or any Subsidiary, and (c) this Amendment and the Amended Credit Agreement are
the legal, valid and binding obligations of the Company, enforceable against
the Company in accordance with their 

 

2

 

terms, except as enforceability may be limited by bankruptcy, insolvency
or other similar laws of general application affecting the enforcement of
creditor’s rights or by general principles of equity.

 

SECTION 3  EFFECTIVENESS.  The amendments set forth in Section 1
shall become effective, as of the day and year first above written, on such
date (the “Amendment Effective Date”) that the Agent shall have received
each of the following:  (a) counterparts
of this Amendment executed by the Company and the Required Banks; (b) a
Confirmation in the form of Exhibit A hereto signed by the Company and
each Subsidiary; (c) for the account of each Bank that has executed and
delivered a counterpart hereof to the Agent (via facsimile or otherwise) by
1:00 p.m. (Chicago time) on April 18, 2003, an amendment fee in an amount equal
to 0.10% of such Bank’s Commitment; and (d) a copy of an acceptable amendment
to the Note Purchase Agreement executed in connection with the Private
Placement Debt to account for the Goodwill Adjustment.

 

SECTION 4  MISCELLANEOUS.

 

4.1  Continuing
Effectiveness, etc.  As herein
amended, the Credit Agreement shall remain in full force and effect and is
hereby ratified and confirmed in all respects.

 

4.2  Counterparts.  This Amendment may be executed in any number
of counterparts and by the different parties on separate counterparts, and each
such counterpart shall be deemed to be an original but all such counterparts
shall together constitute one and the same First Amendment.

 

4.3  Governing
Law.  This Amendment shall be a
contract made under and governed by the laws of the State of Illinois
applicable to contracts made and to be performed entirely within such State.

 

4.4  Successors
and Assigns.  This Amendment shall
be binding upon the Company and the Agent and their respective successors and
assigns, and shall inure to the benefit of the Company and the Agent and the
successors and assigns of the Agent.

 

4.5  Expenses.  The Company agrees to pay the reasonable costs and expenses of
the Agent (including attorneys’ fees) in connection with the preparation,
execution and delivery of this Amendment.

 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]

 

3

 

Delivered
at Chicago, Illinois, as of the day and year first above written.

 

	
   

  	
  TETRA TECH, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/  David W. King

  
	
   

  	
   

  	
  David
  W. King

  
	
   

  	
  Title:

  	
  Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A.,
  as

  
	
   

  	
  Administrative Agent

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ 
  Kristine Thennes

  
	
   

  	
   

  	
  Kristine
  Thennes

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  BANK OF AMERICA, N.A., as Swing Line Bank, Issuing Bank and as a Bank

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ 
  Jennifer L. Gerdes

  
	
   

  	
   

  	
  Jennifer
  L. Gerdes

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  WELLS FARGO BANK, N.A., as Documentation Agent and as a Bank

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ 
  Randall Repp

  
	
   

  	
   

  	
  Randall
  Repp

  
	
   

  	
  Title: 

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  HARRIS TRUST AND SAVINGS BANK, as Syndication Agent and as a Bank

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ 
  Isabella Battista

  
	
   

  	
   

  	
  Isabella
  Battista

  
	
   

  	
  Title: 

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  THE FUJI BANK, LIMITED

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  U.S. BANK, NATIONAL ASSOCIATION (formerly known as Pacific Century
  Bank, N.A.)

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Tom Roche

  
	
   

  	
   

  	
  Tom Roche

  
	
   

  	
  Title: 

  	
  Vice President

  

 

4

 

EXHIBIT A

 

CONFIRMATION

 

Dated as of April 18, 2003

 

Each of the undersigned hereby acknowledges and agrees
to the foregoing Fourth Amendment and the Amended Credit Agreement and hereby
confirms the continuing validity and enforceability of the Guaranty and the
Security Agreement after giving effect thereto.

 

	
   

  	
  SCM CONSULTANTS, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/  David
  W. King

  
	
   

  	
   

  	
  David W. King

  
	
   

  	
  Title: 

  	
  Assistant Treasurer

  
	
   

  	
   

  
	
   

  	
  TETRA TECH EM INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/  David
  W. King

  
	
   

  	
   

  	
  David W. King

  
	
   

  	
  Title: 

  	
  Treasurer

  
	
   

  	
   

  
	
   

  	
  WHALEN & COMPANY, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/  David
  W. King

  
	
   

  	
   

  	
  David W. King

  
	
   

  	
  Title: 

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  TETRA TECH NUS, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/  David
  W. King

  
	
   

  	
   

  	
  David W. King

  
	
   

  	
  Title: 

  	
  Treasurer

  
	
   

  	
   

  
	
   

  	
  MFG, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/  David
  W. King

  
	
   

  	
   

  	
  David W. King

  
	
   

  	
  Title: 

  	
  Treasurer

  
	
   

  	
   

  
	
   

  	
  DEA CONSTRUCTION COMPANY

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/  David
  W. King

  
	
   

  	
   

  	
  David W. King

  
	
   

  	
  Title: 

  	
  Treasurer

  
	
   

  	
   

  
	
   

  	
  UTILITIES & C.C., INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/  David W.
  King

  
	
   

  	
   

  	
  David W. King

  
	
   

  	
  Title: 

  	
  Treasurer

  

 

5

 

	
   

  	
  COSENTINI ASSOCIATES, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/  David
  W. King

  
	
   

  	
   

  	
  David W. King

  
	
   

  	
  Title: 

  	
  Treasurer

  
	
   

  	
   

  
	
   

  	
  EVERGREEN UTILITY CONTRACTORS, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/  David
  W. King

  
	
   

  	
   

  	
  David W. King

  
	
   

  	
  Title: 

  	
  Treasurer

  
	
   

  	
   

  
	
   

  	
  KCM, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/  David
  W. King

  
	
   

  	
   

  	
  David W. King

  
	
   

  	
  Title: 

  	
  Treasurer

  
	
   

  	
   

  
	
   

  	
  GEOTRANS, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ 
  Richard A. Lemmon

  
	
   

  	
   

  	
  Richard A. Lemmon

  
	
   

  	
  Title: 

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  FHC, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/  David
  W. King

  
	
   

  	
   

  	
  David W. King

  
	
   

  	
  Title: 

  	
  Treasurer

  
	
   

  	
   

  
	
   

  	
  RIZZO ASSOCIATES, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/  David
  W. King

  
	
   

  	
   

  	
  David W. King

  
	
   

  	
  Title: 

  	
  Treasurer

  
	
   

  	
   

  
	
   

  	
  TETRA TECH RMC, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/  David
  W. King

  
	
   

  	
   

  	
  David W. King

  
	
   

  	
  Title: 

  	
  Treasurer

  
	
   

  	
   

  
	
   

  	
  WILLIAMS, HATFIELD & STONER, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/  David
  W. King

  
	
   

  	
   

  	
  David W. King

  
	
   

  	
  Title: 

  	
  Treasurer

  

 

6

 

	
   

  	
  EXPERT WIRELESS SOLUTIONS, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/  David
  W. King

  
	
   

  	
   

  	
  David W. King

  
	
   

  	
  Title: 

  	
  Treasurer

  
	
   

  	
   

  
	
   

  	
  DRAKE CONTRACTORS, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/  David
  W. King

  
	
   

  	
   

  	
  David W. King

  
	
   

  	
  Title: 

  	
  Treasurer

  
	
   

  	
   

  
	
   

  	
  VERTEX ENGINEERING SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/  David
  W. King

  
	
   

  	
   

  	
  David W. King

  
	
   

  	
  Title: 

  	
  Treasurer

  
	
   

  	
   

  
	
   

  	
  MAXIM TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
  By: 

  	
  /s/  David
  W. King

  
	
   

  	
   

  	
  David W. King

  
	
   

  	
  Title: 

  	
  Treasurer

  
	
   

  	
   

  
	
   

  	
  SCIENCES INTERNATIONAL, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/  David
  W. King

  
	
   

  	
   

  	
  David W. King

  
	
   

  	
  Title: 

  	
  Treasurer

  
	
   

  	
   

  
	
   

  	
  WESTERN UTILITY CONTRACTORS, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/  David
  W. King

  
	
   

  	
   

  	
  David W. King

  
	
   

  	
  Title: 

  	
  Treasurer

  
	
   

  	
   

  
	
   

  	
  HARTMAN & ASSOCIATES, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/  David
  W. King

  
	
   

  	
   

  	
  David W. King

  
	
   

  	
  Title: 

  	
  Treasurer

  
	
   

  	
   

  
	
   

  	
  THE THOMAS GROUP OF COMPANIES, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/  David
  W. King

  
	
   

  	
   

  	
  David W. King

  
	
   

  	
  Title: 

  	
  Treasurer

  
	
   

  	
   

  
	
   

  	
  TETRA TECH FW, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/  Li-San
  Hwang

  
	
   

  	
   

  	
  Li-San Hwang

  
	
   

  	
  Title: 

  	
  Vice President

  

 

7

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00052-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00052-of-00352.parquet"}]]