Document:

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EXHIBIT 10.16

KIRBY CORPORATION

2005 Stock and Incentive Plan

ARTICLE I

GENERAL

     Section 1.1. Purpose. The purpose of this Plan is to advance the interests of Kirby
Corporation, a Nevada corporation (the “Company”), by providing an additional incentive to attract
and retain qualified and competent employees for the Company and its subsidiaries, upon whose
efforts and judgment the success of the Company is largely dependent, through the award of (i)
Options to purchase shares of Common Stock (which Options may be Incentive Stock Options or
Nonincentive Stock Options); (ii) shares of Restricted Stock; and (iii) Performance Awards.

     Section 1.2. Definitions. As used herein, the following terms shall have the meaning
indicated:

     (a) “Award” means a grant under this Plan in the form of Options, Restricted Stock,
Performance Awards or any combination of the foregoing.

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

     (c) “Change in Control” means the occurrence of any of the following events:

     (i) Any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended) becomes the beneficial owner, directly or indirectly, of
voting securities representing thirty percent (30%) or more of the combined voting power of
the Company’s then outstanding voting securities;

     (ii) The Board ceases to consist of a majority of Continuing Directors, with the term
“Continuing Director” meaning a Director who (A) is a Director on the effective date of the
Plan or (B) is nominated or appointed to serve as a Director by a majority of the then
Continuing Directors;

     (iii) The stockholders of the Company approve (A) any consolidation or merger of the
Company or any Subsidiary that results in the holders of the Company’s voting securities
immediately prior to the consolidation or merger having (directly or indirectly) less than a
majority ownership interest in the outstanding voting securities of the surviving entity
immediately after the consolidation or merger, (B) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all or substantially
all of the assets of the Company or (C) any plan or proposal for the liquidation or
dissolution of the Company;

     (iv) The stockholders of the Company accept a share exchange, with the result that
stockholders of the Company immediately before such share exchange do not own, immediately
following such share exchange, at least a majority of the voting securities of

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the entity resulting from such share exchange in substantially the same proportion as
their ownership of the voting securities outstanding immediately before such share exchange;
or

     (v) Any tender or exchange offer is made to acquire thirty percent (30%) or more of the
voting securities of the Company, other than an offer made by the Company, and shares are
acquired pursuant to that offer.

For purposes of this definition, the term “voting securities” means equity securities, or
securities that are convertible or exchangeable into equity securities, that have the right to vote
generally in the election of Directors.

     (d) “Code” means the Internal Revenue Code of 1986, as amended.

     (e) “Committee” means the Compensation Committee, if any, appointed by the Board.

     (f) “Date of Grant” means the date on which the Committee takes formal action to grant an
Award to an Eligible Person or such later date as may be specified by the Committee when approving
the Award.

     (g) “Director” means a member of the Board.

     (h) “Disability” means mental or physical disability as determined by a medical doctor
satisfactory to the Committee.

     (i) “Eligible Person” means an employee of the Company or a Subsidiary.

     (j) “Fair Market Value” of a Share means the closing price on the New York Stock Exchange on
the day of reference. If the Shares are not listed for trading on the New York Stock Exchange, the
Fair Market Value on the date of reference shall be determined by any fair and reasonable means
prescribed by the Committee.

     (k) “Incentive Stock Option” means an option that is an incentive stock option as defined in
Section 422 of the Code.

     (l) “Nonincentive Stock Option” means an option that is not an Incentive Stock Option.

     (m) “Option” means any option granted under this Plan.

     (n) “Optionee” means a person to whom a stock option is granted under this Plan or any
successor to the rights of such person under this Plan by reason of the death of such person.

     (o) “Participant” means a person to whom an Award is granted under the Plan.

     (p) “Performance Award” means an Award granted pursuant to Article IV.

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     (q) “Performance Objectives” means the objectives established by the Committee pursuant to
Section 4.1(b).

     (r) “Performance Period” means the period over which the performance of a holder of a
Performance Award is measured.

     (s) “Plan” means this Kirby Corporation 2005 Stock and Incentive Plan.

     (t) “Restricted Stock” means Shares granted under this Plan that are subject to restrictions
imposed by the Committee pursuant to Article III.

     (u) “Restricted Stock Award” means an award of Restricted Stock under this Plan.

     (v) “Section 162(m) Participant” means each Participant who is, on the last day of the
applicable fiscal year of the Company, either (i) the chief executive officer of the Company or
(ii) one of the four most highly compensated officers of the Company other than the chief executive
officer.

     (w) “Share” means a share of the common stock, par value ten cents ($0.10) per share, of the
Company.

     (x) “Subsidiary” means any corporation (other than the Company) in any unbroken chain of
corporations beginning with the Company if each of the corporations other than the last corporation
in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in the chain.

     Section 1.3. Total Shares and Limitations.

     (a) The maximum number of Shares that may be issued under the Plan shall be Two Million
(2,000,000) Shares, which may be from Shares held in the Company’s treasury or from authorized and
unissued Shares. If any Award granted under the Plan shall terminate, expire or be cancelled or
surrendered as to any Shares, or the Award is paid in cash in lieu of Shares, the Shares that were
subject to such Award shall not count against the above limit and shall again be available for
grants under the Plan. Shares equal in number to the Shares surrendered in payment of the option
price of an Option and Shares that are withheld in order to satisfy federal, state or local tax
liability, shall not count against the above limit and shall be available for grants under the
Plan.

     (b) The maximum aggregate number of Shares that may be issued under the Plan pursuant to the
exercise of Incentive Stock Options shall be 1,000,000.

     (c) The maximum number of Shares that may be issued to any Participant pursuant to any
Performance Award during the term of the Plan shall be 400,000.

     (d) The maximum amount of cash that may be paid to any Participant pursuant to any Performance
Award during any calendar year shall be $2,000,000.

     Section 1.4. Awards Under the Plan.

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     (a) Only Eligible Persons may receive awards under the Plan. Awards to Eligible Persons may
be in the form of (i) Options; (ii) shares of Restricted Stock; (iii) Performance Awards; or (iv)
any combination of the foregoing. No Award shall confer on any person any right to continue as an
employee of the Company or any Subsidiary.

     (b) Each Award shall be evidenced by an agreement containing any terms deemed necessary or
desirable by the Committee that are not inconsistent with the Plan or applicable law.

ARTICLE II

STOCK OPTIONS

     Section 2.1. Grant of Options. The Committee may from time to time grant Options to Eligible
Persons. Options may be Incentive Stock Options or Nonincentive Stock Options as designated by the
Committee on the Date of Grant. If no such designation is made by the Committee for an Option, the
Option shall be a Nonincentive Stock Option. The aggregate Fair Market Value (determined as of the
Date of Grant) of the Shares with respect to which Incentive Stock Options are exercisable for the
first time by an Optionee during any calendar year under the Plan and all such plans of the Company
and any parent or subsidiary of the Company (as defined in Section 424 of the Code) shall not
exceed $100,000.

     Section 2.2. Exercise Price. The exercise price per Share for any Option shall be determined
by the Committee, but shall not be less than the Fair Market Value on the Date of Grant and shall
not be less than 110% of the Fair Market Value on the Date of Grant for any Incentive Stock Option
if the Optionee is a person who owns directly or indirectly (within the meaning of Section
422(b)(6) of the Code) stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company.

     Section 2.3. Term of Option. The term of an Option shall be determined by the Committee,
provided that, in the case of an Incentive Stock Option, if the grant is to a person who owns
directly or indirectly (within the meaning of Section 422(b)(6) of the Code) stock possessing more
than 10% of the total combined voting power of all classes of stock of the Company, the term of the
Option shall not exceed five years from the Date of Grant. Notwithstanding any other provision of
this Plan, no Option shall be exercised after the expiration of its term.

     Section 2.4. Vesting. Options shall be exercisable at such times and subject to such terms
and conditions as the Committee shall specify in the option agreement. Unless the option agreement
specifies otherwise, the Committee shall have discretion at any time to accelerate such times and
otherwise waive or amend any conditions in respect of all or any portion of any Options.
Notwithstanding the other provisions of this Section 2.4 and unless otherwise provided in the
option agreement, upon the occurrence of a Change in Control, all Options outstanding at the time
of the Change in Control shall become immediately exercisable.

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     Section 2.5. Termination of Options.

     (a) Except as otherwise provided in the option agreement, the portion of an Option that is
exercisable shall automatically and without notice terminate upon the earliest to occur of the
following:

     (i) thirty (30) days after the date on which the Optionee ceases to be an Employee for
any reason other than (x) death, (y) Disability or (z) termination for cause;

     (ii) one (1) year after the date on which the Optionee ceases to be an Employee as a
result of a Disability;

     (iii) either (y) one (1) year after the death of the Optionee or (z) six (6) months
after the death of the Optionee if the Optionee dies during the 30-day period described in
Section 2.5(a)(i) or the one-year period described in Section 2.5(a)(ii);

     (iv) the date on which the Optionee ceases to be an Employee as a result of a
termination for cause; and

     (v) the tenth anniversary of the Date of Grant of the Option.

     (b) The portion of an Option that is not exercisable shall automatically and without notice
terminate on the date on which the Optionee ceases to be an Employee for any reason.

     (c) The Committee shall have discretion at any time to extend the term of any Nonincentive
Stock Option to any date that is not later than the date described in Section 2.5(a)(v).

     Section 2.6. Exercise of Options. An Option may be exercised in whole or in part to the
extent exercisable in accordance with Section 2.4 and the option agreement. An Option shall be
deemed exercised when (i) the Company has received written notice of such exercise in accordance
with the terms of the Option and (ii) full payment of the aggregate exercise price of the Shares as
to which the Option is exercised has been made. Unless further limited by the Committee for any
Option, the exercise price of any Shares purchased shall be paid solely in cash, by certified or
cashier’s check, by money order, by personal check or with Shares owned by the Optionee for at
least six months, or by a combination of the foregoing. If the exercise price is paid in whole or
in part with Shares, the value of the Shares surrendered shall be their Fair Market Value on the
date received by the Company.

     Section 2.7. Corporate Transactions.

     (a) In the event of a merger, consolidation or other reorganization of the Company in which
the Company is not the surviving entity, the Board or the Committee may provide for payment in cash
or in securities of the Company or the surviving entity in lieu of and in complete satisfaction of
Options.

     (b) Except as otherwise expressly provided herein, the issuance by the Company of shares of
its capital stock of any class, or securities convertible into shares of capital stock of any

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class, either in connection with direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the Company convertible into
such shares or other securities, shall not affect, and no adjustment by reason thereof shall be
made with respect to, the number of or exercise price of Shares then subject to outstanding Options
granted under the Plan.

     (c) Without limiting the generality of the foregoing, the existence of outstanding Options
granted under the Plan shall not affect in any manner the right or power of the Company to make,
authorize or consummate (i) any or all adjustments, recapitalizations, reorganizations or other
changes in the Company’s capital structure or its business; (ii) any merger or consolidation of the
Company; (iii) any issue by the Company of debt securities, or preferred or preference stock that
would rank above the Shares subject to outstanding Options; (iv) the dissolution or liquidation of
the Company; (v) any sale, transfer or assignment of all or any part of the assets or business of
the Company; or (vi) any other corporate act or proceeding, whether of a similar character or
otherwise.

     Section 2.8. Issuance of Shares. No person shall be, or have any of the rights or privileges
of, a stockholder of the Company with respect to any of the Shares subject to any Option unless and
until certificates representing such Shares (whether in physical or in book-entry or other
electronic form) shall have been issued and delivered to such person.

ARTICLE III

RESTRICTED STOCK

     Section 3.1. Grant of Restricted Stock Awards. The Committee may from time to time grant
Restricted Stock Awards to Eligible Persons.

     Section 3.2. Terms and Conditions of Restricted Stock Awards. Each Restricted Stock Award
shall specify the number of shares of Restricted Stock awarded, the price, if any, to be paid by
the Participant receiving the Restricted Stock Award, the date or dates on which the Restricted
Stock will vest and any other terms and conditions that the Committee may determine. The vesting
and number of shares of Restricted Stock may be conditioned upon the completion of a specified
period of service with the Company or its Subsidiaries or upon the attainment of any performance
goals established by the Committee, including without limitation goals related to the performance
of the Company or any Subsidiary, division, department or other unit of the Company, the
performance of the Company’s common stock or other securities, the performance of the recipient of
the Restricted Stock Award or any combination of the foregoing.

     Section 3.3. Restrictions on Transfer. Unless otherwise provided in the grant relating to a
Restricted Stock Award, stock certificates representing the Restricted Stock granted to a
Participant (whether in physical or in book-entry or other electronic form) shall be registered in
the Participant’s name or, at the option of the Committee, not issued until such time as the
Restricted Stock shall become vested or as otherwise determined by the Committee. If certificates
are issued prior to the shares of Restricted Stock becoming vested, either in physical or in
book-entry or other electronic form, such certificates shall either be held by the Company on
behalf of the Participant, or delivered to the Participant bearing a legend to restrict transfer of
the certificate until the Restricted Stock has vested, as determined by the Committee. The

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Committee shall determine whether the Participant shall have the right to vote and/or receive
dividends on the Restricted Stock before it has vested. Except as may otherwise be expressly
permitted by the Committee, no share of Restricted Stock may be sold, transferred, assigned or
pledged by the Participant until such share has vested in accordance with the terms of the
Restricted Stock Award. Unless the grant of a Restricted Stock Award specifies otherwise, in the
event that a Participant ceases to be an Employee before all the Participant’s Restricted Stock has
vested, or in the event other conditions to the vesting of Restricted Stock have not been satisfied
prior to any deadline for the satisfaction of such conditions set forth in the award agreement, the
shares of Restricted Stock that have not vested shall be forfeited and any purchase price paid by
the Participant for the forfeited Shares shall be returned to the Participant. At the time
Restricted Stock vests (and, if the Participant has been issued legended certificates for
Restricted Stock, upon the return of such certificates to the Company), a certificate for such
vested shares shall be delivered to the Participant (or the beneficiary designated by the
Participant in the event of death), free of all restrictions.

     Section 3.4. Accelerated Vesting. Notwithstanding the vesting conditions set forth in a
Restricted Stock Award, unless the Restricted Stock Award grant or other agreement with the
Participant specifies otherwise:

     (a) the Committee may in its discretion at any time accelerate the vesting of Restricted Stock
or otherwise waive or amend any conditions of a grant of a Restricted Stock Award, and

     (b) all shares of Restricted Stock shall vest upon a Change in Control of the Company.

     Section 3.5. Section 83(b) Election. If a Participant receives Restricted Stock that is
subject to a “substantial risk of forfeiture,” such Participant may elect under Section 83(b) of
the Code to include in his or her gross income, for the taxable year in which the Restricted Stock
is received, the excess of the Fair Market Value of such Restricted Stock on the Date of Grant
(determined without regard to any restriction other than one which by its terms will never lapse),
over the amount paid for the Restricted Stock. If the Participant makes the Section 83(b)
election, the Participant shall (a) make such election in a manner that is satisfactory to the
Committee, (b) provide the Company with a copy of such election, (c) agree to notify the Company
promptly if any Internal Revenue Service or state tax agent, on audit or otherwise, questions the
validity or correctness of such election or of the amount of income reportable on account of such
election and (d) agree to such federal and state income tax withholding as the Committee may
reasonably require in its sole discretion.

ARTICLE IV

PERFORMANCE AWARDS

     Section 4.1. Terms and Conditions of Performance Awards. The Committee may from time to time
grant Awards that are intended to be “performance-based compensation,” which are payable in stock,
cash or a combination thereof, at the discretion of the Committee.

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     (a) Performance Period. The Committee shall establish a Performance Period for each
Performance Award at the time such Performance Award is granted. A Performance Period may overlap
with Performance Periods relating to other Performance Awards granted hereunder to the same
Participant. The Committee shall not grant Performance Awards to Section 162(m) Participants after
the earliest to occur of (i) the 90th day after the start of the Performance Period,
(ii) the date on which 25% of the Performance Period has elapsed or (iii) the date on which the
satisfaction of the Performance Objectives becomes substantially certain.

     (b) Performance Objectives. The Committee shall establish written performance objectives for
the Participant at the time of the grant of each Performance Award. Each Performance Award shall
be contingent upon the achievement of the Performance Objectives established by the Committee.
Performance Objectives shall be based on earnings, cash flow, economic value added, total
stockholder return, return on equity, return on capital, return on assets, revenues, operating
profit, EBITDA, net profit, earnings per share, stock price, cost reduction goals, debt to capital
ratio, financial return ratios, profit or operating margins, working capital or other comparable
objective tests selected by the Committee, or any combination of the foregoing, for the Company on
a consolidated basis or, if applicable, for one or more Subsidiaries, divisions, departments or
other units of the Company or one or more of its Subsidiaries.

     (c) Amount; Frequency. The Committee shall determine at the time of grant of Performance
Awards the target and maximum values of Performance Awards and the date or dates when Performance
Awards are earned.

     (d) Payment. Following the end of each Performance Period, the holder of each Performance
Award will be entitled to receive payment of an amount, not exceeding the maximum value of the
Performance Award, based on the achievement of the Performance Objectives for such Performance
Period, as determined in writing by the Committee. Unless otherwise provided in the Performance
Award, if the Participant exceeds the specified minimum level of acceptable achievement but does
not attain the Performance Objectives, the Participant shall be deemed to have partly earned the
Performance Award, and shall become entitled to receive a portion of the total award, as determined
by the Committee. Unless otherwise provided in the Performance Award, if a Performance Award is
granted after the start of a Performance Period, the Performance Award shall be reduced to reflect
the portion of the Performance Period during which the Performance Award was in effect.

     (e) Termination of Employment. Unless otherwise provided in the Performance Award, a
Participant who receives a Performance Award and who ceases to be an Employee as a result of death,
Disability or retirement before the end of the applicable Performance Period shall be entitled to
receive, to the extent earned as a result of the full or partial achievement of the Performance
Objectives during the Performance Period, a portion of the Performance Award that is proportional
to the portion of the Performance Period during which the Participant was employed, with payment to
be made following the end of the Performance Period. Unless otherwise provided in the Performance
Award, a Participant who receives a Performance Award who ceases to be an Employee for any reason
other than death, Disability or retirement shall not be entitled to any part of the Performance
Award unless the Committee determines otherwise.

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     (f) Accelerated Vesting. Notwithstanding the vesting conditions set forth in a Performance
Award, unless the Performance Award specifies otherwise (i) the Committee may in its discretion at
any time accelerate the time at which the Performance Award is considered to have been earned or
otherwise waive or amend any conditions (including but not limited to Performance Objectives) in
respect of a Performance Award, and (ii) all Performance Awards shall be considered earned upon a
Change in Control of the Company. In addition, upon a Change in Control of the Company, unless a
Performance Award specifies otherwise, each Participant shall receive the target Performance Award
such Participant could have earned for the proportionate part of the Performance Period prior to
the Change in Control, and shall retain the right to earn any additional portion of his or her
Performance Award if such Participant remains in the Company’s employ through the end of the
Performance Period.

     (g) Stockholder Rights. The holder of a Performance Award shall, as such, have none of the
rights of a stockholder of the Company.

ARTICLE V

ADDITIONAL PROVISIONS

     Section 5.1. Administration of the Plan. The Plan shall be administered by the Committee.
The Committee shall have the authority to interpret the provisions of the Plan, to adopt such rules
and regulations for carrying out the Plan as it may deem advisable, to decide conclusively all
questions arising with respect to the Plan, to establish performance criteria in respect of Awards
under the Plan, to determine whether Plan requirements have been met for any Participant in the
Plan and to make all other determinations and take all other actions necessary or desirable for the
administration of the Plan. All decisions and acts of the Committee shall be final and binding
upon all affected Participants. If there is no Committee, the Board shall administer the Plan and
in such case all references to the Committee shall be deemed to be references to the Board.

     Section 5.2. Adjustments for Changes in Capitalization. In the event of any (a) stock
dividends, stock splits, recapitalizations, combinations, exchanges of shares, mergers,
consolidations, liquidations, split-ups, split-offs, spin-offs or other similar changes in
capitalization, (b) distributions to stockholders, including a rights offering, other than regular
cash dividends, (c) changes in the outstanding stock of the Company by reason of any increase or
decrease in the number of issued Shares resulting from a split-up or consolidation of Shares or any
similar capital adjustment or the payment of any stock dividend, (d) Share repurchase at a price in
excess of the market price of the Shares at the time such repurchase is announced or (e) other
similar increase or decrease in the number of the Shares, the Committee, in its sole discretion,
shall make appropriate adjustment in the number and kind of shares authorized by the Plan
(including the numbers of Shares specified in Section 1.3(b) and (c)), in the number, price or kind
of shares covered by the Awards and in any outstanding Awards under the Plan. In the event of any
adjustment in the number of Shares covered by any Award, any fractional Shares resulting from such
adjustment shall be disregarded and each such Award shall cover only the number of full Shares
resulting from such adjustment.

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     Section 5.3. Amendment.

     (a) The Board may amend or modify the Plan in any respect at any time, subject to stockholder
approval if required by applicable law or regulation or by applicable stock exchange rules. Such
action shall not impair any of the rights of any Participant with respect to any Award outstanding
on the date of the amendment or modification without the Participant’s written consent.

     (b) The Committee shall have the authority to amend any Award to include any provision which,
at the time of such amendment, is authorized under the terms of the Plan; however, no outstanding
Award may be revoked or altered in a manner unfavorable to the Participant without the written
consent of the Participant.

     Section 5.4. Transferability of Awards. An Award shall not be transferable by the Participant
otherwise than by will or the laws of descent and distribution. So long as a Participant lives,
only such Participant or his or her guardian or legal representative shall have the right to
exercise such Award.

     Section 5.5. Beneficiary. A Participant may file with the Company a written designation of
beneficiary, on such form as may be prescribed by the Committee, to receive any Shares, Awards or
payments that become deliverable to the Participant pursuant to the Plan after the Participant’s
death. A Participant may, from time to time, amend or revoke a designation of beneficiary. If no
designated beneficiary survives the Participant, the executor or administrator of the Participant’s
estate shall be deemed to be the Participant’s beneficiary.

     Section 5.6. Non-uniform Determinations. Determinations by the Committee under the Plan
(including, without limitation, determinations of the Eligible Persons to receive Awards, the form,
amount and timing of Awards, the terms and provisions of Awards and the agreements evidencing
Awards and provisions with respect to termination of employment) need not be uniform and may be
made by the Committee selectively among persons who receive, or are eligible to receive, Awards
under the Plan, whether or not such persons are similarly situated.

     Section 5.7. Duration and Termination. The Plan shall be of unlimited duration, provided that
no Incentive Stock Option shall be granted under the Plan on or after the tenth anniversary of the
effective date of the Plan. The Board may suspend, discontinue or terminate the Plan at any time.
Such action shall not impair any of the rights of any holder of any Award outstanding on the date
of the Plan’s suspension, discontinuance or termination without the holder’s written consent.

     Section 5.8. Withholding. Prior to the issuance of any Shares under the Plan, arrangements
satisfactory to the Committee in its sole discretion shall have been made for the Participant’s
payment to the Company of the amount, if any, that the Committee determines to be necessary for the
Company or Subsidiary employing the Participant to withhold in accordance with applicable federal
or state income tax withholding requirements. If the Committee allows Shares to be withheld from
an Award to satisfy such withholding requirements, the amount withheld in Shares shall not exceed
the minimum amount required to be withheld, determined on the date that the amount of tax to be
withheld is to be determined. When payments under the

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Plan are made in cash, such payments shall be net of an amount sufficient to satisfy such
withholding requirements.

     Section 5.9. Agreements and Undertakings. As a condition of any issuance or transfer of a
certificate for Shares, the Committee may obtain such agreements or undertakings, if any, as it may
deem necessary or advisable to assure compliance with any provision of the Plan, any agreement or
any law or regulation including, but not limited to, the following:

     (a) a representation, warranty or agreement by the Participant to the Company that the
Participant is acquiring the Shares for investment and not with a view to, or for sale in
connection with, the distribution of any such Shares; and

     (b) a representation, warranty or agreement to be bound by any legends that are, in the
opinion of the Committee, necessary or appropriate to comply with the provisions of any securities
law deemed by the Committee to be applicable to the issuance of the Shares and are endorsed on the
Share certificates.

     Section 5.10. Uncertificated Shares. In lieu of issuing stock certificates for Shares
acquired pursuant to the Plan, the Company may issue such Shares in book-entry or other electronic
or uncertificated form, unless prohibited by applicable law or regulation or by applicable stock
exchange rules.

     Section 5.11. Governing Law. The Plan shall be governed by the laws of the State of Texas
except to the extent that federal law or Nevada corporate law is controlling.

     Section 5.12. Effective Date. The Plan was adopted by the Board on March 3, 2005 and shall be
effective upon approval by the stockholders of the Company.

ADOPTED BY
THE BOARD: March 3, 2005

APPROVED BY THE STOCKHOLDERS: April 26, 2005

			
	AS AMENDED BY THE BOARD on January 22, 2007 (with numbers of shares revised to reflect the
2-for-1 stock split on May 31, 2006.)

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Exhibit 10.39

 July 29, 2005

Mr. Gary M. Wilson

1200, Post Oak Blvd, # 3007,

Houston, TX 77056

Dear Mr. Wilson,

In conjunction and contemporaneously with the execution of a Change of Control Agreement dated 29
July 2005 this Letter of Agreement serves to update and confirm certain other benefits of your
employment with Hanover Compressor Company (“Company”) and yourself as set out in your Letter of
Employment dated April 9 2004.

	 	1.	 	Schooling and Education Allowance: The Schooling and Educational Allowance
will be $50,000 per year for the period May 15 2004 to May 15 2006 and shall be $25,000
per year for the period May 15 2006 to May 15 2008 subject to an annual review of tuition
rates at the commencement of each school year. This allowance shall be grossed up at a
rate of 32.5% for tax purposes.
	 
	 	2.	 	Travel Allowance: The Travel Allowance will be calculated on the basis of the
cost of an unrestricted and refundable Full Economy Ticket from Houston Texas to London
England for yourself and your family per year. The Travel Allowance may be used for any
travel related expenses such as airfares, car rental, train fares, taxis and other forms
of transportation. This allowance shall be grossed up at a rate of 32.5% for tax purposes.
	 
	 	3.	 	Shipment of Household Goods and Personal Effects: The Company shall reimburse
you for the cost of the shipment of your household goods and personal effects as and when
these are incurred.
	 
	 	4.	 	Closing Costs in U.S.: The Company shall reimburse you for customary Closing
Costs in the U.S. as and when these are incurred.

This Letter of Agreement supersedes and replaces the Letter of Employment dated April 9 2004 with
respect to the subject matters addressed herein.

Sincerely,

/S/ JOHN JACKSON

John Jackson

Chief Executive Officer

Hanover Compressor Company

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