Document:

exv10w74

 

EXHIBIT
10.74

FLOWSERVE CORPORATION

AMENDED AND RESTATED

NON-EMPLOYEE DIRECTORS’ STOCK OPTION PLAN

     Section 1                Purpose.

     (a) This Amended and Restated Flowserve Corporation Non-Employee Directors’ Stock
Option Plan (the “Plan”) has been adopted to update the BW/IP Holding, Inc. Non-Employee
Directors’ Stock Option Plan (the “Prior Plan”), in order to permit continuation of
unexercised options that would otherwise expire during a period in which exercise is not
permitted. The changes reflected in this Plan are not intended to negatively impact any
Non-Employee Director (as defined below).

     (b) As amended and restated, the purpose of the Plan, like the Prior Plan, is to secure
for the Company and its stockholders the benefits of the incentive inherent in common stock
ownership by the members of the Board of Directors (the “Board”) of the Company who are not
employees of the Company or any of its subsidiaries.

     Section 2 Administration. The Plan shall be administered by the Board. The Board shall have
all the powers vested in it by the terms of the Plan, such powers to include authority (within the
limitations described herein) to prescribe the form of the agreement embodying awards of stock
options made under the Plan (“Options”). The Board shall, subject to the provisions of the Plan,
have the power to construe the Plan, to determine all questions arising thereunder and to adopt and
amend such rules and regulations for the administration of the Plan as it may deem desirable. Any
decision of the Board in the administration of the Plan, as described herein, shall be final and
conclusive. The Board may act only by a majority of its members in office, except that the members
thereof may authorize anyone or more of their number or the Secretary or any other officer of the
Company to execute and deliver documents on behalf of the Board. No member of the Board shall be
liable for anything done or omitted to be done by such member or by any other member of the Board
in connection with the Plan, except for such member’s own willful misconduct or as expressly
provided by statute.

     Section 3 Amount of Stock. The stock which may be issued and sold under the Plan will be the
Class A Common Stock, par value $.01 per share (the “Common Stock”), of the Company of a total
number not exceeding 125,000 shares, subject to adjustment as provided in Paragraph 7. The stock
to be issued may be either authorized and unissued shares or issued shares acquired by the Company
or its subsidiaries. In the event that Options granted under the Plan shall terminate or expire
without being exercised in whole or in part, new Options may be granted covering the shares not
purchased under such lapsed Options.

     Section 4 Eligibility. Each member of the Board of the Company who is not an employee of the
Company or any of its subsidiaries (a “Non-Employee Director”) shall be eligible to receive an
Option in accordance with Paragraph 5.

     Section 5 Terms and Conditions of Options. Each Option granted under the Plan shall be
evidenced by an agreement in the form as the Board shall prescribe from time to time in accordance
with the Plan and shall comply with the following terms and conditions:

     (a) The Option exercise price shall be the fair market value of the Common Stock shares
subject to such Option on the date the Option is granted, which shall be the closing price
on the New York Stock Exchange (or such successor reporting system as may be selected by the
Board) on the date the value of the Common Stock is to be determined or, if there are no
sales on such date, the next preceding date for which a sale is reported.

     (b) Upon adoption by the Board of Directors and subject to approval of the Plan by the
stockholders at the 1993 Annual Meeting of Stockholders of the Company, the Company grants
to each Non-Employee Director an Option for 5,000 shares of Common Stock. Thereafter, as of
the date of each Annual Meeting of Stockholders of the Company (each, an “Annual Meeting”),
each Non-Employee

 

Director who has been elected or reelected or who is continuing as a member of the
Board as of the adjournment of such Annual Meeting shall automatically receive an Option for
2,000 shares of Common Stock; provided, however, that each Non-Employee Director elected to
the Board of Directors after the adoption of the Plan shall receive (i) at the time such
person first becomes a Non-Employee Director, an Option for 5,000 shares of Common Stock and
(ii) if such person is first elected at an Annual Meeting, such Non-Employee Director shall
on the adjournment of each subsequent Annual Meeting automatically receive an option for
2,000 shares of Common Stock, but if such person is first elected or appointed other than at
an Annual Meeting, then as of the adjournment of the first Annual Meeting following the
election or appointment of such Non-Employee Director, such person shall receive an Option
for that number of shares of Common Stock equal to the product of 2,000 times a fraction,
the numerator of which is the number of meetings of the Board of Directors held while such
person was a Non-Employee Director and the denominator of which is the total number of
meetings of the Board of Directors held between the last preceding Annual Meeting and the
Annual Meeting following which such Option is granted.

     (c) The Option shall not be transferable by the Non-Employee Director otherwise than by
will or the laws of descent and distribution and shall be exercisable during their lifetime
only by them.

     (d) No Option or any part of an Option shall be exercisable:

     (i) before the earlier to occur of (A) the time at which the Non-Employee
Director has served one term-year as a member of the Board since the date the Option
was granted (as used herein, the term “term-year” means that period from one Annual
Meeting to the subsequent Annual Meeting), (B) the Non-Employee Director’s death or
retirement and (C) a Change of Control of the Company (as defined in subparagraph
6(b));

     (ii) after the expiration of ten years from the date the Option was granted;
provided, however, that the otherwise applicable ten year term of an option may be
extended beyond ten years, if:

     (A) the exercise period is extended to a date no later than the later
of:

     (I) the 15th day of the third month following the date at which,
or

     (II) December 31 of the calendar year in which,

the option would otherwise have expired if the option had not been extended,
based on the terms of the option at the original grant date, or

     (B) the option is unexercisable because an exercise of the option would
violate applicable securities laws, provided that the period during which
the option may be exercised is not extended more than 30 days after the
exercise of the option first would no longer violate applicable securities
laws.;

     (iii) unless written notice of the exercise is delivered to the Company
specifying the number of shares to be purchased and payment in full is made for the
shares of Common Stock being acquired thereunder at the time of exercise; such
payment shall be made

     (A) in United States dollars by certified check or bank draft, or

     (B) by tendering to the Company Common Stock shares owned by the person
exercising the Option and having a fair market value equal to the cash
exercise price applicable to such Option, such fair market value to be the
closing price on the New York Stock Exchange (or such successor reporting
system as may be selected by the Board) on the date the value of the Common
Stock is to be determined or, if there are no sales on such date, the next
preceding date for which a sale is reported, or

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     (C) by a combination of United States dollars and Common Stock shares
as aforesaid; and

     (iv) unless the person exercising the Option has been at all times during the
period beginning with the date of grant of the Option and ending on the date of such
exercise, a Non-Employee Director of the Company, except that

     (A) if such person shall cease to be a Non-Employee Director for
reasons other than retirement or death, such person, at any time within one
year after the date he ceases to be a Non-Employee Director (but in no event
after the Option has expired under the provisions of subparagraph 5(d)(ii)),
may exercise any unexercised portion of any Option that was exercisable on
the date such person ceased to be a Non-Employee Director (the “Cessation
Date”). Any portion of any Option that is not exercisable on a Cessation
Date shall expire on such Cessation Date; or

     (B) if such person shall cease to be a Non-Employee Director by reason
of retirement or death, such person or, in the case of death, the executors,
administrators or distributees, as the case may be, may, at any time within
five years after the date such person ceased to be a Non-Employee Director
(but in no event after the Option has expired under the provisions of
subparagraph 5(d)(ii)), exercise any unexercised portion of any Option
outstanding on the Cessation Date; or

     (C) if any person who has ceased to be a Non-Employee Director for
reasons other than death shall die holding an Option that has not been fully
exercised and has not otherwise expired, such person’s executors,
administrators, heirs or distributees, as the case may be, may, at any time
within the greater of (1) one year after the date of death or (2) the
remainder of the period in which such person could have exercised the Option
had the person not died (but in no event under either (1) or (2) after the
Option has expired under the provisions of subparagraph 5(d)(ii)), exercise
the Option with respect to any Common Stock shares as to which the decedent
could have exercised the Option at the time of death.

In the event any Option is exercised by the executors, administrators, legatees or
distributees of the estate of a deceased Non-Employee Director, the Company shall be
under no obligation to issue Common Stock shares thereunder unless and until the
Company is satisfied that the person or persons exercising the Option are the duly
appointed legal representatives of the deceased Non-Employee Director’s estate or
the proper legatees or distributees thereof.

     (e) Subject to subparagraph 5(d)(i) and Paragraph 6, fifty percent (50%) of the total
number of shares of Common Stock covered by the Option shall become exercisable beginning
with the first anniversary date of the grant of the Option, thereafter the remaining fifty
percent (50%) of the total number of shares of Common Stock covered by the Option shall
become exercisable on the second anniversary date of the grant of the Option. In the event
the Non-Employee Director ceases to be a Non-Employee Director by reason of retirement or
death, the total number of Common Stock shares covered by the Option shall, notwithstanding
subparagraph 5(d)(i), become exercisable.

     Section 6 Change of Control.

     (a) Upon the occurrence of a change of control of the Company, as herein defined, each
Option outstanding under this Plan which was granted more than six months and one day before
the change of control, shall immediately vest, and then be canceled in exchange for payment
in cash of an amount equal to the product of (i) the number of shares of Common Stock
subject to such Option and (ii) the amount by which the change of control price exceeds the
exercise price of such Option. Notwithstanding the foregoing, the cancellation and cash out
provisions of this subparagraph shall be rendered without effect with respect to any
Non-Employee Director if in the opinion of counsel to the Company such Non-Employee Director
would incur a liability to the Company under Section 16(b) of the
Securities Exchange Act of 1934 (the “Securities Exchange Act”) were such cash out provisions to apply to
such Non-Employee Director.

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     (b) A Change in Control shall be deemed to have occurred if (i) the ownership of the
voting stock of the Company owned by any “person,” as that term is defined for purposes of
Section 13(d) and 14(d) of the Securities Exchange Act, reaches in the aggregate more than
fifty percent (50%) of all outstanding voting stock of the Company, whether such increase
occurs by way of a merger, consolidation, redemption, direct transfer or sale of stock or
otherwise, (ii) the stockholders of the Company approve a plan of complete liquidation of
the Company, (iii) the stockholders of the Company or International approve an agreement for
the sale or disposition of all or substantially all of the assets of the Company or
International or (iv) the occurrence of a transaction requiring stockholder approval for the
acquisition of the Company by an entity other than the Company or one of its subsidiaries
through purchase of assets, by merger or otherwise.

     (c) Change of control price means the highest price per share of Common Stock paid in
any transaction reported on the New York Stock Exchange (or such successor reporting system
as may be selected by the Board) at any time during the sixty day period immediately
preceding such change of control or, if higher, the highest price per share of Common Stock
paid or offered in connection with such change of control.

     Section 7 Adjustment in the Event of Change in Stock. In the event of changes in the
outstanding Common Stock of the Company by reason of stock dividends, recapitalizations, mergers,
consolidations, split-ups, combinations or exchanges of shares and the like, the aggregate number
and class of Common Stock shares available under the Plan, and the number, class and price of
Common Stock shares subject to outstanding Options shall be appropriately adjusted by the Board,
whose determination shall be conclusive.

     Section 8 Miscellaneous Provisions.

     (a) Except as expressly provided in the Plan, no Non-Employee Director or other person
shall have any claim or right to be granted an Option under the Plan. Neither the Plan nor
any action taken hereunder shall be construed as giving any Non-Employee Director any right
to be retained in the service of the Company.

     (b) A Non-Employee Director’s rights and interest under the Plan may not be assigned or
transferred in whole or in part either directly or by operation of law or otherwise (except
in the event of a Non-Employee Director’s death, by will or by the laws of descent and
distribution), including without limitation execution, levy, garnishment, attachment,
pledge, bankruptcy or in any other manner, and no such right or interest of a Non-Employee
Director in the Plan shall be subject to any obligation or liability of such participant.

     (c) No Common Stock shares shall be issued hereunder unless the General Counsel for the
Company shall be satisfied that such issuance will be in compliance with applicable federal,
state and other securities laws and regulations.

     (d) It shall be a condition to the obligation of the Company to issue Common Stock
shares upon exercise of an Option that the Non-Employee Director (or any beneficiary or
person entitled to act under subparagraph 5(d)(iv)) pay to the Company upon its demand such
amount as may be requested by the Company for the purpose of satisfying any liability to
withhold federal, state, local or foreign income or other taxes. If any amount requested is
not paid, the Company may refuse to issue Common Stock shares.

     (e) The expenses of the Plan shall be borne by the Company.

     (f) The Plan shall be unfunded. The Company shall not be required to establish any
special or separate fund or to make any other segregation of assets to assure the issuance
of Common Stock shares

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upon exercise of any Option under the Plan. The issuance of Common Stock shares upon
exercise of Options shall be subordinate to the claims of the Company’s general creditors.

     (g) By accepting any Option or other benefit under the Plan, each Non-Employee Director
and each person claiming under or through such person shall be conclusively deemed to have
indicated his acceptance and ratification of, and consent to, any action taken under the
Plan by the Company or the Board.

     (h) It is the intent of the Company that the Plan comply in all respects with Rule
16b-3 or any successor rule (“Rule 16b-3”) under the Securities Exchange Act of 1934, as
amended, that any ambiguities or inconsistencies in construction of the Plan be interpreted
to give effect to such intention and that if any provision of the Plan is found not to be in
compliance with Rule 16b-3, such provision shall be deemed null and void to the extent
required to permit the Plan to comply with Rule 16b-3. The Board may adopt rules and
regulations under, and amend, the Plan in furtherance of the intent of the foregoing.

     Section 9 Amendment or Discontinuance. The Plan may be amended at any time and from time to
time by the Board as the Board shall deem advisable, including without limitation amendments
necessary to qualify for any exemption or to comply with applicable law or regulations; provided,
however, that except as provided in paragraph 6, the Board may not, without further approval by the
stockholders of the Company in accordance with paragraph 11 increase the maximum number of shares
of Common Stock as to which Options may be granted under the Plan, increase the number of shares
subject to an Option, reduce the minimum Option exercise price described in subparagraph 5(a),
extend the period during which Options may be granted or exercised under the Plan or change the
class of persons eligible to receive Options under the Plan. No amendment of the Plan shall
materially and adversely affect any right of any Non-Employee Director with respect to any Option
theretofore granted without such Non-Employee Director’s written consent. Notwithstanding the
foregoing, the provisions of the Plan which determine (a) the number of shares of Common Stock
subject to any Option, (b) the exercise price per share of any Option, c) the time at which any
Option shall be granted or (d) the class of persons eligible to receive an option under the Plan
may not be amended more frequently than once every six months.

     Section 10 Termination. This Plan shall terminate upon the earlier of the following dates or
events to occur:

     (a) upon the adoption of a resolution of the Board terminating the Plan; or

     (b) ten years from the date the Plan is initially approved by the shareholders of the
Company in accordance with Paragraph 10.

     Section 11 Effective Date of Plan. The Prior Plan became effective as of the May 18, 1993 and
was approved at the BW/IP Holding, Inc 1993 Annual Meeting of Stockholders. This Plan, as amended
and restated shall become effective upon its approval (either in person or by proxy) by the
affirmative vote of the holders of a majority of the Shares at the Company’s 2005 Annual Meeting of
Shareholders.

5exv10w75

 

EXHIBIT
10.75

FLOWSERVE CORPORATION

AMENDED AND RESTATED

1992 LONG-TERM INCENTIVE PLAN

     Section 1. Purpose of the Plan. This Flowserve Corporation Amended and Restated 1992
Long-Term Incentive Plan (the “Plan”) has been adopted to update the BW/IP International, Inc. 1992
Long-Term Incentive Plan (the “Prior Plan”), in order to permit continuation of unexercised options
that would otherwise expire during a period in which exercise is not permitted. The changes
reflected in this Plan are not intended to negatively impact any Grantee (as defined below).

     Section 2. Definitions.

     (a) “Award” means a grant of Stock Options under Section 6 of this Plan.

     (b) “Board” means the Board of Directors of the Company.

     (c) “Change in Control” shall be deemed to have occurred if (i) the percentage of the
voting stock of Company owned by one or more persons (“person” as that term is defined for
purposes of Sections 13(d) and 14(d) of the Exchange Act), or entities becomes more than 50
percent of the outstanding shares of Common Stock (determined on the basis of all
outstanding stock of Company and not just with regard to a percentage increase of such
persons or entities over their prior interest), whether such increase occurs by way of a
merger, consolidation, redemption, direct transfer or sale of stock or otherwise, (ii) the
stockholders of the Company approve a plan of complete liquidation of the Company, or (iii)
the stockholders of the Company approve an agreement for the sale or disposition of all or
substantially all of the assets of the Company.

     (d) “Committee” means the Compensation and Benefits Committee of the Board, or any such
other committee designated by the Board to administer the Plan.

     (e) “Code” means the Internal Revenue Code of 1986, as amended from time to time.

     (f) “Company” means Flowserve Corporation, a New York corporation and its successors in
interest.

     (g) “Date of Grant” means the date on which the granting of a Stock Option is
authorized by the Committee.

     (h) “Employee” means any person who is a regular full time employee of the Company or a
Subsidiary, including those who are officers or directors of the Company or a Subsidiary.

     (i) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     (j) “Fair Market Value” of Stock means the closing price on the New York Stock Exchange
(or such successor reporting system as may be selected by the Committee) on the date the
value of a Share is to be determined or, if there are no sales on such date, the next
preceding date for which a sale is reported.

     (k) “Grantee” means an Employee who has been selected as a Participant in the Plan, and
has received an Incentive Award.

     (l) “Company” means Flowserve Corporation., or any successor thereto.

     (m) “Incentive Award” means a Stock Option granted under the Plan.

 

 

     (n) “Incentive Stock Option’“ means a Stock Option as defined under section 422 of the
Code and regulations thereunder.

     (o) “Key Employee” means any Employee deemed to have a direct and significant impact on
the performance of the Company, as determined by the Committee in its sole and absolute
discretion.

     (p) “Non-Qualified Stock Option” means an option other than an Incentive Stock Option.

     (q) “Option Agreement” means an agreement entered into in connection with Stock Options
granted under the Plan.

     (r) “Participant” means an Employee determined in the Committee’s sole and absolute
discretion to be eligible to receive Incentive Awards under this Plan.

     (s) “Plan” means the Flowserve Corporation Amended and Restated 1992 Long-Term
Incentive Plan as set forth herein, and as amended from time to time.

     (t) “Prior Plan” means the BW/IP International, Inc. 1992 Long-Term Incentive Plan.

     (u) “Stock” means the Class A Common Stock of Company, $1.25 par value per share.

     (v) “Stock Option” means a Non-Qualified Stock Option or Incentive Stock Option.

     (w) “Subsidiary” means a “subsidiary corporation” as defined in section 424 of the Code
that is subsidiary to the Company.

     (x) “Ten Percent Stockholder” means a Grantee who, at the time an Incentive Stock
Option is granted, owns Stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of Company.

     Section 3. Shares Subject to the Plan.

     (a) Subject to adjustment as provided in Section 7(a) below, the aggregate number of
shares of Stock to be delivered upon exercise of Stock Options granted under the Plan shall
not exceed 1,000,000 shares. The shares of Stock to be delivered upon the exercise of Stock
Options under the Plan shall be made available either from the authorized but unissued
shares or from previously issued and reacquired shares of Stock held as treasury shares,
including shares purchased on the open market.

     (b) If any Stock Option granted under the Plan expires, terminates or is cancelled
without having been exercised in full, the number of shares of Stock as to which the Stock
Option has not been exorcised shall become available for further grants under the Plan.

     Section 4. Administration.

     (a) The Plan shall be administered by non-employee members of the Committee, consisting
of not less than two (2) members of the Board who shall qualify to administer the Plan as
contemplated by Rule 16b-3, as amended, or any successor provision thereto (“Rule 16b-3”),
or other applicable rules under Section 16(b) of the Exchange Act.

     (b) The Committee shall have full and final authority to operate, manage and administer
the Plan on behalf of the Company. This authority includes, but is not limited to, the
following:

     (i) Determining eligibility for awards;

     (ii) Granting of Incentive Awards (conditionally or unconditionally);

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     (iii) Entering into Stock Option exchanges;

     (iv) Directing the Company to make accruals and payments provided for by the
Plan;

     (v) Interpreting the Plan;

     (vi) Prescribing, amending, or rescinding rules and regulations relating to the
Plan; and

     (vii) Determining the vesting schedules for all Awards.

     (c) With respect to Stock Options the Committee shall have full and final authority in
its sole and absolute discretion to: determine whether the same shall be an Incentive Stock
Option or a Non-Qualified Stock Option; determine the number of shares of Stock subject to
each Stock Option; determine the time or times at which Stock Options will be granted;
determine the exercise price of the shares subject to each Stock Option, which price shall
not be less than the prices set forth in Section 6(a)(ii) and Section 6(c)(iii) of the Plan;
and determine the time when each Stock Option shall become exercisable and the duration of
the exercise period, which shall not exceed the maximum periods as set forth in Section
6(a)(ii) and Section 6(c)(v) of the Plan.

     (d) A majority of the Committee shall constitute a quorum, and the acts of a majority
of the members present at any meeting at which a quorum is present, or acts approved in
writing by all the members in the absence of a meeting, shall be the acts of the Committee.
All Committee interpretations, determinations and actions will be final, conclusive and
binding on all parties.

     (e) No member of the Board or the Committee will be liable for any action taken or
determination made in good faith by the Board or the Committee with respect to the Plan or
any Incentive Award granted hereunder.

     Section 5. Eligibility.

     (a) Awards will be granted to Employees, groups of Employees, or classes of Employees
selected or determined by the Committee in its sole and absolute discretion. Generally,
awards will be granted to Key Employees of the Company. In determining the number of
persons to whom awards shall be granted and the number of shares of Stock to be covered by
each award, the Committee shall take into account the duties of the respective persons,
their present and potential contributions to the success of the Company and such other
factors as the Committee shall deem relevant in connection with accomplishing the purposes
of the Plan.

     (b) No Incentive Awards may be made to any person, who, at the time of the grant of the
Incentive Awards, is a member of the Committee responsible for the administration of the
Plan.

     Section 6. Stock Options.

     (a) Incentive Stock Options. Stock Options granted pursuant to this Section 6(a) are
intended to constitute Incentive Stock Options and shall be subject to the following special
terms and conditions, in addition to the general terms and conditions set forth in Section
6(c) hereof.

     (i) The aggregate Fair Market Value (determined as of the date the incentive
Stock Option is granted) of the shares of Stock with respect to which Incentive
Stock Options granted under this Plan (or any other plan of the Company or a
Subsidiary) becoming exercisable for the first time by an optionee during any
calendar year shall not exceed $100,000.

     (ii) In the case of an Incentive Stock Option granted to a Ten Percent
Stockholder, (a) the option price shall not be less than one hundred ten percent
(110%) of the Fair Market Value

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of the shares of Stock on the date of grant of such
Incentive Stock Option, and (h) the exercise period shall not exceed five (5) years
from the date of grant of such Incentive Stock Option.

     (b) Non-Qualified Stock Options. Stock Options granted pursuant to this Section 6(b)
are intended to constitute Non-Qualified Stock Options and shall be subject only to the
general terms and conditions specified in Section 6(c) hereof.

     (c) General Terms and Conditions of Options.

     (i) Each Option Agreement shall state the number of shares of Stock to which
the Stock Option relates.

     (ii) Each Option Agreement shall specifically state whether the Option
constitutes an Incentive Stock Option or a Non-Qualified Stock Option.

     (iii) Each Option Agreement shall state the option price, which, in the case of
an Incentive Stock Option (subject to Section 6(a)(ii) above) or a Non-Qualified
Stock Option shall not be less than one hundred percent (100%) of the Fair Market
Value of the shares of Stock on the date of grant.

     (iv) The option price shall be paid in full, at the time of exercise, in cash
or in shares of Stock having a Fair Market Value equal to such option price or in
combination of cash and such shares.

     (v) Unless the Committee shall otherwise determine, Stock Options shall be
exercisable commencing on the third anniversary of the grant thereof, in one or more
installments and subject to such other conditions as the Committee may determine.
Except as described in the following sentence, however, in no event shall Stock
Options be exercisable until the first anniversary of the grant thereof. The
Committee shall have the authority to accelerate the exercisability of any
outstanding option at such time and under such circumstances as it deems
appropriate. The exercise period shall be determined by the Committee. No Stock
Option may he exercised more than ten years after the date of grant; provided,
however, that the otherwise applicable ten year term of a Stock Option may be
extended beyond ten years, thus causing the Stock Option to generally become a
Nonqualified Option, if:

     (A) the exercise period is extended to a date no later than the later
of:

     (1) the 15th day of the third month following the date at which,
or

     (2) December 31 of the calendar year in which,

the option would otherwise have expired if the option had not been extended,
based on the terms of the option at the original grant date, or

(B) the option is unexercisable because an exercise of the option would
violate applicable securities laws, provided that the period during which
the option may be exercised is not extended more than 30 days after the
exercise of the option first would no longer violate applicable securities
laws.

     (vi) The exercise period shall be subject to earlier termination as provided in
Section 6(c)(vii) through Section 6(c)(ix) hereof. A Stock Option may be exercised
after it has become exercisable by giving written notice of such exercise to the
Committee or its designated agent.

     (vii) Except as provided for in this Section 6(c)(vii) or Section 6(c)(ix)
hereof, a Stock Option may not be exercised unless the

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Grantee is then an Employee,
and unless the Grantee has remained continuously employed since the date of the
grant of the Stock Option. Unless otherwise determined by the Committee at or after
grant, in the event that the employment of a Grantee shall terminate (other than by
reason of death, disability, or retirement at or after age 60), all Stock Options of
such Grantee that are exercisable at the time of termination may, unless earlier
terminated in accordance with their terms, be exercised within ninety (90) days
after the date of such termination,

     (viii) Unless otherwise determined by the Committee at or after grant, if a
Grantee shall die, or if the Grantee’s employment shall terminate by reason of
disability while an Employee, all Stock Options theretofore granted to such Grantee
(to the extent otherwise exercisable) may, unless earlier terminated in accordance
with their terms, be exercised by the Grantee or by the Grantee’s estate or by a
person who acquired the right to exercise any such Stock Options within one (1) year
after the date of termination of such Grantee’s employment.

     (ix) Unless otherwise determined by the Committee at or after grant, if a
Grantee shall retire from the employ of the Company or any Subsidiary thereof at or
after age 60, all Stock Options theretofore granted to such Grantee (to the extent
otherwise exercisable) may, unless earlier terminated in accordance with their
terms, be exercised by the Grantee within three (3) years after the date of
termination of such Grantee’s employment.

     Section 7. Changes in Capital Structure and Other Events.

     (a) If there is any change in the number of shares of Stock through the declaration of
extraordinary dividends, recapitalization, stock splits, or combinations or exchanges of
shares, or in the event of an extraordinary cash dividend or other similar transaction, the
number of shares of Stock available for awards, the number of such shares covered by
outstanding awards and the price per share of Stock Options or the applicable market value
of Performance Units shall be appropriately adjusted by the Committee to reflect any such
changes; provided, however, that any fractional shares resulting from such adjustment shall
be eliminated.

     (b) Upon dissolution or liquidation of Company or upon a reorganization, merger or
consolidation of the Company with one (1) or more corporations as a result of which Company
is not the surviving corporation, or upon the sale of all or substantially all of the assets
of Company, (i) the Stock Options then outstanding under the Plan will become fully vested
and exercisable, and (ii) all or some outstanding Performance Units will be immediately paid
on the basis of an amount determined by the Committee.

     (c) In the event of a Change in Control, (i) all Stock Options shall immediately become
fully vested and exercisable; (ii) the Committee may, in its sole and absolute discretion,
determine to pay cash to any or all Stock Option holders in exchange for the cancellation of
some or all of their outstanding Stock Options; and (iv) subject to the consent of the
Grantee, the Committee may make any other adjustments to outstanding Incentive Awards or
substitute new incentive awards for such outstanding Incentive Awards as it may, in its sole
discretion, determine.

     (d) Adjustments made under this Section 7 will be made by the Committee as constituted
immediately prior to the event occasioning such adjustment, whose determination as to what
adjustments will be made and the extent thereof will be final, binding and conclusive. No
fractional interest will be issued under the Plan on account of any such adjustments.

     Section 8. Agreement by Grantee Regarding Withholding Taxes.

     If the Committee shall so require, as a condition of exercise of a Stock Option, each Grantee
shall agree that no later than the date of exercise or other payment of an award hereunder, the
Grantee will pay to the Company
or make arrangements satisfactory to the Committee regarding payment of any federal, state, or
local taxes of any kind required by law to be withheld upon the exercise or realization of an
Incentive Award, The Committee may

5

 

also provide that a Grantee may elect to have the Corporation
withhold shares of Stock otherwise issuable upon Stock Option exercise in satisfaction of federal,
state and local tax with Company obligations (up to an amount permitted by applicable law or
regulation, including Rule 16b-3) in connection with the exercise or realization of any such
Incentive Award.

     Section 9. Term of the Plan.

     Incentive Awards may be granted pursuant to the Plan from time to time within a period of ten
(10) years from the date the Prior Plan was adopted by the Board, or the date the Prior Plan was
approved by the stockholders of BWIP Holding, Inc., whichever was earlier.

     Section 10. Amendment and Termination of the Plan.

     The Board at any time and from time to time may suspend, terminate, modify, or amend the Plan;
provided, however, that any amendment that would materially increase the aggregate number of shares
of Stock as to which awards may be granted under the Plan or materially increase the benefits
accruing to Grantees under the Plan or materially modify the requirements as to eligibility for
participation in the Plan shall be subject to the approval of the holders of a majority of the
Stock issued and outstanding to the extent required by Rule 16b-3, applicable law or any other
governing rules or regulations, except that any such increase or modification resulting from
adjustments authorized by Section 7 hereof shall not require such approval. Except as otherwise
provided for in Section 6, no suspension, termination, modification, or amendment of the Plan may
adversely affect any Incentive Award previously granted, unless the written consent of the Grantee
is obtained.

     Section 11. General Provisions.

     (a) All Incentive Awards shall be evidenced by an instrument in such form as the
Committee shall prescribe from time to time in accordance with the terms of the Plan (and
with other such terms and conditions not inconsistent with the terms of the Plan as the
Committee, in its sole and absolute discretion, shall establish).

     (b) Nothing in the Plan or in any Incentive Award granted pursuant hereto shall confer
upon an individual any right to continue in the employ of the Company or any Subsidiary or
interfere in any way with the right of the Company or any Subsidiary to terminate such
employment.

     (c) No shares of Stock will be issued or transferred pursuant to an Incentive Award
unless and until all then applicable requirements imposed by federal and state securities
and other laws, rules and regulations and by any regulatory agencies having jurisdiction,
and by any stock exchanges upon which the Stock may be listed, have been fully met. As a
condition precedent to the issuance of shares pursuant to the grant or exercise of an
Incentive Award, the Company may require the Participant to take any reasonable action to
meet such requirements.

     (d) The Plan shall take effect upon its adoption by the Board subject to approval by
the holders of a majority of the shares of Stock which are represented in person or by proxy
and entitled to vote on the subject within twelve months after the date the Plan is adopted
by the Board.

     (e) Awards granted under the Plan shall not be transferable otherwise than by will or
by the laws of descent and distribution, and awards may be exercised or otherwise realized
during the lifetime of the Grantee only by the Grantee or by his guardian or legal
representative.

     (f) The section and subsection headings are contained herein for convenience only and
shall not affect the construction hereof.

6

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