Document:

exv10w1

 

Exhibit 10.1

«FirstLast»

(address)

Dear «Fname»:

Effective as of
___ (the “Award Date”), TODCO (the “Company”) hereby grants to you a
nonqualified stock option (“Option”) to purchase
___ shares of Class A common stock of the
Company (“Common Stock”) in accordance with the TODCO 2005 Long Term Incentive Plan (the “Plan”).
Your award is more fully described in the attached Appendix A, Terms and Conditions of Nonqualified
Stock Option Award (which together with this letter is the “Award Letter”).

The price at which you may purchase the shares of Common Stock covered by the Option is $___
per share (“Exercise Price”) which is the Fair Market Value of a Share of Common Stock on the Award
Date. Unless otherwise provided in the attached Appendix A, your Option will expire on
___ (“Expiration Date”), and will become vested and exercisable in installments as
follows, provided that you are and have been continuously employed with the Company on the
“Exercise Date”:

	 	 	 
	Exercise Date	 	“Number of Shares Exercisable”
	                                                            , 200                    

	 	                                                            
	                                                            , 200                    

	 	                                                            
	                                                            , 200                    

	 	                                                            

This award is subject to the terms and conditions set forth in the enclosed Plan, this Award
Letter, the Prospectus for the Plan, and any rules and regulations adopted by the Executive
Compensation Committee of the Company’s Board of Directors.

This Award Letter, the Plan and any other attachments should be retained in your files for future
reference.

Very truly yours,

Jan Rask

President and Chief Executive Officer

Enclosures

 

 

Appendix A

Terms and Conditions of

Employee Nonqualified Stock Option Award

[Date]

The Option granted to you by TODCO (the “Company”) to purchase shares of Class A common stock of
the Company (“Common Stock”) is subject to the terms and conditions set forth in the TODCO 2005
Long Term Incentive Plan (the “Plan”), the enclosed Prospectus for the Plan, any rules and
regulations adopted by the Executive Compensation Committee of the Company’s Board of Directors
(the “Committee”), and this Award Letter. Any terms used and not defined in the Award Letter shall
have the meanings set forth in the Plan. In the event there is an inconsistency between the terms
of the Plan and this Award Letter, the terms of the Plan will control.

1. Exercise Price

You may purchase the shares of Common Stock covered by the Option for the Exercise Price stated in
this Award Letter.

2. Term of Option

Your Option expires on the Expiration Date. However, your Option will terminate prior to the
Expiration Date as provided in Section 6 of this Appendix A upon the occurrence of one of the
events described in that Section. Regardless of the provisions of Section 6, in no event can your
Option be exercised after the Expiration Date

3. Vesting and Exercisability of Option

          (a) Unless it becomes exercisable on an earlier date as provided in Sections 6 or 7
below, your Option will become vested and exercisable in installments with respect to the
Number of Shares Exercisable on the Exercise Dates as set forth in this Award Letter.

          (b) The number of shares covered by each installment will be in addition to the number
of shares which previously became exercisable.

          (c) To the extent your Option has become vested and exercisable, you may exercise the
Option as to all or any part of the shares covered by the Option, at any time on or before
the Option Expiration Date.

4. Exercise of Option

Subject to the limitations set forth in this Award Letter and in the Plan, your Option may be
exercised by written notice provided to the Company as set forth below. Such written notice shall
(a) state the number of shares of Common Stock with respect to which your Option is being exercised
and (b) unless otherwise permitted by the Committee be accompanied by a wire transfer, cashier’s
check, cash or money order payable to TODCO in the full amount of the

 

 

Exercise Price for any shares of Common Stock being acquired and any appropriate withholding taxes
(as provided in Section 8 of this Appendix), or by other consideration in the form and manner
approved by the Committee pursuant to Sections 5 and 8 of this Appendix. If any law or regulation
requires the Company to take any action with respect to the shares specified in such notice, the
time for delivery thereof, which would otherwise be as promptly as possible, shall be postponed for
the period of time necessary to take such action. You shall have no rights of a shareholder with
respect to shares of Common Stock subject to your Option unless and until such time as your Option
has been exercised and ownership of such shares of Common Stock has been transferred to you.

5. Satisfaction of Exercise Price

          (a) Payment of Cash or Common Stock. Your Option may be exercised by payment in cash
(including check, bank draft, money order or wire transfer payable to the Company), in
Common Stock, in a combination of cash and Common Stock or in such other manner as the
Committee in its discretion may provide.

          (b) Payment of Common Stock. The fair market value of any shares of Common Stock
tendered or withheld as all or part of the Exercise Price shall be determined in accordance
with the Plan on the date agreed to by the Company in advance as the date of exercise. The
certificates evidencing previously owned shares of Common Stock tendered must be duly
endorsed or accompanied by appropriate stock powers. Only stock certificates issued solely
in your name may be tendered in exercise of your Option. Fractional shares may not be
tendered in satisfaction of the Exercise Price; any portion of the Exercise Price which is
in excess of the aggregate fair market value of the number of whole shares tendered must be
paid in cash. If a certificate tendered in exercise of the Option evidences more shares
than are required pursuant to the immediately preceding sentence for satisfaction of the
portion of the Exercise Price being paid in Common Stock, an appropriate replacement
certificate will be issued to you for the number of excess shares.

6. Termination of Employment

          (a) General. The following rules apply to your Option in the event of your death,
disability, retirement, or other termination of employment.

	 	(1)	 	Termination of Employment. If your
employment terminates for any reason other than death, disability,
retirement, or for the convenience of the Company (as those terms are used
below), your Option will expire as to all unvested and not yet exercisable shares on such date and no additional portions of your Option will become
exercisable. Your Option will be limited to only the number of shares of
Common Stock which you were entitled to purchase under the Option on the
date of the termination of your employment and will remain exercisable for
the earlier of 60 days or the Expiration Date.

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	 	(2)	 	Retirement. If your employment terminates by
reason of retirement for the convenience of the Company or under a
retirement program of the Company or one of its subsidiaries or otherwise
(as determined by the Committee) your Option will expire as to all
unvested and not yet exercisable shares on such date and no additional
portions of your Option will become exercisable. Your Option will be
limited to only the number of shares of Common Stock which you were
entitled to purchase under the Option on the date of your retirement and
will be exercisable until the Expiration Date.
	 
	 	(3)	 	Death or Disability. If your employment
terminates by reason of disability (as determined by the Committee), your
Option will become fully exercisable, and 100% vested as to all shares
covered by the Option, and your Option will remain exercisable until the
Expiration Date. If your employment terminates by reason of your death,
your Option will become 100% vested and fully exercisable as to all of the shares covered by the Option and remain exercisable until the Expiration
Date.
	 
	 	(4)	 	Convenience of the Company. If your
employment is terminated for the convenience of the Company (as determined
by the Committee), your Option will become 100% vested and shall be fully
exercisable as to all shares covered by the Option and will remain
exercisable until the Expiration Date.
	 
	 	(5)	 	Adjustments by the Committee. The Committee
may, in its sole discretion, exercised before or after your termination of
employment, declare all or any portion of your Option immediately
exercisable and/or make any other modification as permitted under the
Plan.

          (b) Committee Determinations. The Committee shall have absolute discretion to
determine the date and circumstances of termination of your employment and make all
determinations under the Plan pursuant to Section 1.3 of the Plan, and its determination
shall be final, conclusive and binding upon you.

	7.	 	Change in Control
	 
	 	 	Acceleration Upon Change in Control. Notwithstanding the provisions of Sections 3 and 6,
upon the occurrence of a Change in Control (as defined below), your Option will immediately
become 100% vested and fully exercisable as to all shares covered by this Option and the
Option will remain exercisable until the Expiration Date. A Change in Control of the
Company shall be deemed to have occurred as of the first day any one or more of the
following conditions shall have been satisfied:

	 	(a)	 	The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated

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	 	 	 	under the Exchange Act) of shares representing 20% or more of the combined
voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that for purposes of this
Section (7), the following acquisitions shall not constitute a Change in
Control: (i) any acquisition directly from the Company, (ii) any acquisition
by the Company, (iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any corporation or
other entity controlled by the Company, or (iv) any acquisition by any
corporation or other entity pursuant to a transaction which complies with
clauses (i), (ii) and (iii) of Section 7 (c); or
	 
	 	(b)	 	Individuals who, as of the effective date of the Plan (as
defined in the Plan), are members of the Board of Directors of the Company (the
“Incumbent Board”) cease for any reason to constitute at least a majority of
the Board of Directors of the Company; provided, however, that for purposes of
this Section 7 (b), any individual becoming a director subsequent to the date
hereof whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board, shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board of Directors of
the Company; or
	 
	 	(c)	 	Consummation of a reorganization, merger, conversion or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company (a “Business Combination”), in each case, unless,
following such Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50% of the then
outstanding combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of the corporation or
other entity resulting from such Business Combination (including, without
limitation, a corporation or other entity which as a result of such transaction
owns the Company or all or substantially all of the Company’s assets either
directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business Combination
of the Outstanding Company Voting Securities, (ii) no Person (excluding any
corporation or other entity resulting from such Business Combination or any
employee benefit plan (or related trust) of the Company or such corporation or
other entity resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of the combined

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	 	 	 	voting power of the then outstanding voting securities of the corporation or
other entity resulting from such Business Combination except to the extent
that such ownership existed prior to the Business Combination and (iii) at
least a majority of the members of the board of directors of the corporation
or other entity resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or of
the action of the Board of Directors of the Company, providing for such
Business Combination; or
	 
	 	(d)	 	Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company other than in connection with the
transfer of all or substantially all of the assets of the Company to an
affiliate or a Subsidiary of the Company.

8. Tax Consequences and Income Tax Withholding

        (a) You should review the TODCO 2005 Long Term Incentive Plan Prospectus for a general
summary of the federal income tax consequences of your Option based on currently applicable
provisions of the Code and related regulations. The summary does not discuss state and
local tax laws, which may differ from the federal tax law. Neither the Company nor the
Committee guarantees the tax consequences of your award herein. You are advised to consult
your own tax advisor regarding the application of the tax laws to your particular situation.

        (b) The Option is not intended to be an “incentive stock option,” as defined in Section
422 of the Code.

        (c) This Award Letter is subject to your making arrangements satisfactory to the
Company to satisfy any applicable federal, state or local withholding tax liability arising
from the grant or exercise of your Option. You can either make a cash payment to the
Company of the required amount or you can elect to satisfy your withholding obligation by
having the Company retain shares of Common Stock having a value equal to the amount of your
withholding obligation from the shares otherwise deliverable to you upon the exercise of
your Option. You may not elect to have the Company withhold shares of Common Stock having a
value in excess of the minimum statutory withholding tax liability. If you fail to satisfy
your withholding obligation in a time and manner satisfactory to the Company, the Company
shall have the right to withhold the required amount from your salary or other amounts
payable to you prior to transferring any shares of Common Stock to you pursuant to this
Option.

9. Restrictions on Resale

There are no restrictions imposed by the Plan on the resale of shares of Common Stock acquired
under the Plan. However, under the provisions of the Securities Act of 1933 (the “Securities Act”)
and the rules and regulations of the Securities and Exchange Commission (the “SEC”), resales of
shares acquired under the Plan by certain officers and directors of the Company who may be deemed
to be “affiliates” of the Company must be made pursuant to an appropriate

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effective registration statement filed with the SEC, pursuant to the provisions of Rule 144 issued
under the Securities Act, or pursuant to another exemption from registration provided in the
Securities Act. At the present time, the Company does not have a currently effective registration
statement pursuant to which such resales may be made by affiliates. There are no restrictions
imposed by the SEC on the resale of shares acquired under the Plan by persons who are not
affiliates of the Company; provided, however, that all employees, this Award Letter and the Option
and its exercise hereunder are subject to the Company’s policies against insider trading (including
black-out periods during which no sales are permitted), and to other restrictions on resale that
may be imposed by the Company from time to time if it determines said restrictions are necessary or
advisable to comply with applicable law.

10. Effect on Other Benefits

Income recognized by you as a result of this Award Letter or the exercise of the Option or sale of
Common Stock will not be included in the formula for calculating benefits under any of the
Company’s retirement and disability plans or any other benefit plans.

11. Compliance with Laws

This Award Letter and any Common Stock that may be issued hereunder shall be subject to all
applicable federal and state laws and the rules of the exchange on which shares of the Company’s
Common stock are traded.

12. Miscellaneous

          (a) Not an Agreement for Continued Employment or Services. This Award Letter shall
not, and no provision of this Award Letter shall be construed or interpreted to, create any
right to be employed or to provide services to or continue your employment with or provide
services to the Company, the Company’s affiliates, parent, subsidiary or their affiliates.

          (b) Community Property. Each spouse individually is bound by, and such spouse’s
interest, if any, in the grant of this Option or in any shares of Common Stock is subject to
the terms of this Award Letter. Nothing in this Award Letter shall create a community
property interest where none otherwise exists.

If you have any questions regarding your Option or would like to obtain additional information
about the Plan or the Committee, please contact the Company’s General Counsel, TODCO, 2000 W. Sam
Houston Parkway South, Suite 800, Houston, Texas 77042 (telephone (713) 278-6000). Your Award
Letter, the Plan and any other attachments should be retained in your files for future reference.

6exv10w2

 

Exhibit 10.2

«FirstLast»

(address)

Dear «Fname»:

TODCO (the “Company”) hereby awards to you effective as of ___,
 200___ (the “Award
Date”) ___ Deferred Performance Units in accordance with the TODCO 2005 Long Term Incentive
Plan (the “Plan”). Each Deferred Performance Unit represents the opportunity for you to receive
one share of TODCO Class A common stock (“Common Stock”). Your award of Deferred Performance Units
is more fully described in Appendix A, Terms and Conditions of Employee Deferred Performance Unit
Award. This letter and the attached Appendix A shall be referred to and defined herein as the
“Award Letter.”

The exact amount of the shares of Common Stock you may earn will be determined based upon the
Company’s achievement of a performance standard during the Performance Cycle as described in
Appendix A. Your Deferred Performance Unit Award will become Earned Shares on the Determination
Date and will be issued in Common Stock thereafter in accordance with Appendix A.

Your Deferred Performance Units are subject to the terms and conditions set forth in the enclosed
Plan, the Prospectus for the Plan, this Award Letter and any rules and regulations adopted by the
Executive Compensation Committee of the Company’s Board of Directors in accordance with the terms
of the Plan.

This Award Letter, the Plan, and any other attachments should be retained in your files for future
reference.

Congratulations on your award.

Very truly yours,

Jan Rask

Enclosures

 

 

Appendix A

Terms and Conditions of

Employee Deferred Performance Unit Award

[Date]

The Deferred Performance Unit Award by TODCO (the “Company”) to you effective as of the Award Date
provides for the opportunity for you to receive, if certain conditions are met, shares of TODCO
Class A common stock (“Common Stock”) subject to the terms and conditions set forth in the TODCO
2005 Long Term Incentive Plan (the “Plan”), the enclosed Prospectus for the Plan, any rules and
regulations adopted by the Executive Compensation Committee of the Company’s Board of Directors
(the “Committee”), and this Award Letter. Any terms used and not defined in the Award Letter shall
have the meanings set forth in the Plan. In the event there is an inconsistency between the terms
of the Plan and the Award Letter, the terms of the Plan will prevail.

1. Determination of Earned Shares

          (a) Earned Shares. The exact number of shares of Common Stock that will actually be
earned by and awarded to you (the “Earned Shares”) out of the total maximum number of the
Deferred Performance Units awarded to you in this Award Letter will be based upon the level
of achievement by the Company of the performance standard described below over the
three-year period commencing January 1, 200___ (the “Performance Cycle”). The determination
by the Committee with respect to the achievement of such performance standards will be made
in the first quarter of 200___ after all necessary Company and peer information is
available. The specific date on which such determination is formally made and approved by
the Committee is referred to as the “Determination Date.” After the Determination Date, the
Company will notify you of the number of Earned Shares, if any, to be actually awarded to
you. The delivery of the Earned Shares will be made no later than 2
1/2 months after the
Determination Date.

The calculation of Earned Shares shall be based on the Company’s Total Shareholder Return
ranking compared to a defined peer group at the end of the Performance Cycle as determined
by the Committee in its sole discretion. “Total Shareholder Return” is defined for a given
company as the change in share price plus cumulative dividends paid, assuming dividend
reinvestment during the Performance Cycle, over share price at the beginning of the
Performance Cycle of the applicable company. Earned Shares will be calculated by
multiplying the maximum number of Deferred Performance Units granted by the following
percentages for the percentile rank achieved. For Total Shareholder Return performance
between the percentile ranks noted below, linear interpolation will be used to calculate the
exact number of Earned Shares:

 

 

	 	 	 	 	 
	Percentile	 	 	 
	Rank	 	Percentage	 
	100th
	 	 	100	%
	92
	 	 	91.67	 
	84
	 	 	83.33	 
	75
	 	 	75.00	 
	68
	 	 	66.67	 
	62
	 	 	58.33	 
	56
	 	 	50.00	 
	50
	 	 	40.00	 
	44
	 	 	30.00	 
	38
	 	 	20.00	 
	32
	 	 	10.00	 
	25th or lower
	 	ZERO

The Company’s defined “Peer Group” shall consist of TODCO and the following companies: Cal
Dive International, Ensco International, Global Industries, Grant Prideco, Grey Wolf,
Helmerich & Payne, Key Energy Services, Maverick Tube, Newpark Resources, Parker Drilling,
Patterson – UTI Energy, Pride International, Rowan Companies Inc. and Tidewater Inc.

          (b) Committee Determinations. In accordance with the provisions of the Plan, the
Committee shall have the exclusive authority to make all determinations hereunder, including
but not limited to the ranking of TODCO and its Peer Group. Without limiting the foregoing,
the Committee shall have absolute discretion to determine the number of Earned Shares to
which you are entitled, if any, including without limitation such adjustments as may be
necessary in the opinion of the Committee to account for changes since the date of the Award
Letter. Notwithstanding the foregoing, the Committee shall be precluded from increasing the
amount that would otherwise be obtainable upon the achievement of the performance goals
described in Section 1(a) above to the extent prescribed by Section 162(m) of the Internal
revenue Code of 1986 as amended (the “Code”) and the applicable regulations rulings and
notices thereunder. The Committee’s determination shall be final, conclusive and binding
upon you. You will not have any right or claim with respect to any shares other than Earned
Shares to which you become entitled in accordance herewith.

          (c) You will not be required to pay any purchase price for the Earned Shares; however
tax withholding is required pursuant to Section 8.

2. Vesting

          (a) Unless vested on an earlier date as provided in this Appendix A, the Earned Shares
will vest on the Determination Date. The Deferred Performance Units will only become Earned
Shares, if at all, on the Determination Date.

          (b) As described in Section 7 below, in the event of a Change in Control, a portion of
your Deferred Performance Units may become Earned Shares.

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3. Restrictions

Until and unless Earned Shares become vested, you do not own any of the Common Stock potentially
subject to the Deferred Performance Units awarded to you in this Award Letter and you may not
attempt to sell, transfer, assign or pledge the Deferred Performance Units or the Common Stock that
may be awarded hereunder. Your Earned Shares, if any, will be registered in your name as of the
Determination Date. The Deferred Performance Units awarded hereunder shall be accounted for by the
Company on your behalf on a ledger. Promptly after the Determination Date (but no later than
2 1/2
months after the Determination Date), the net shares (total vested Earned Shares minus any Earned
Shares retained to satisfy the tax withholding obligation of the Company, as described in Section 8
if applicable), will be delivered in street name to your brokerage account (or, in the event of
your death, to a brokerage account in the name of your beneficiary in accordance with the Plan) or,
at the Company’s option, a certificate for such shares will be delivered to you.

4. Dividends and Voting

The Deferred Performance Units granted herein do not give you any rights as a stockholder of the
Company including, but not limited to, voting and dividend rights.

5. Termination of Employment

If your employment is terminated prior to the Determination Date due to death, “Disability” (as
defined below), “Retirement” (as defined below) or at the convenience of the Company (as determined
by the Committee), you will be entitled to receive Earned Shares representing a “Pro Rata Share” of
your Deferred Performance Units, if any become payable, on the Determination Date. The calculation
of your Pro- Rata Share is determined by multiplying the number of Earned Shares calculated as of
the Determination Date which would have otherwise been earned had your employment not been
terminated, by a fraction, the numerator of which is the number of calendar days you were employed
during the Performance Cycle after the Award Date and the denominator of which is the total number
of calendar days in the Performance Cycle after the Award Date. Retirement is defined for the
purpose of this section of Appendix A as meeting the “Rule of 70”, which requires a minimum age of
55, combined with years of service to total 70 or more. If you retire after the age of 55, yet
your age and years of service do not lead to a combined 70, you will not be entitled to any Earned
Shares. Retirement also means your retirement at the convenience of the Company as determined by
the Committee. Disability shall mean you are unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment that can be expected to
result in death, or last a continuous period of not less than twelve months or by reason of either
of the foregoing you are receiving income replacement benefits for a period of not less than three
months under an accident and health plan covering employees of the Company. Except as provided
under Section 7, “Change in Control”,” if your employment is terminated for any reason other than
death, Disability, Retirement, or termination for the convenience of the Company, you will not be
entitled to any Earned Shares. The Committee shall have absolute discretion to determine the date
and circumstances of termination of your employment, including without limitation whether as a
result of death, Disability, Retirement, or termination for the convenience of the Company, or any
other reason, and its determination shall be final, conclusive and binding upon you.

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6. Beneficiary

You may designate a beneficiary to receive any Earned Shares that become due to you after your
death, and may change your beneficiary from time to time. Beneficiary designations should be filed
with the Committee of the Plan. If you fail to designate a beneficiary, Earned Shares due to you
under the Plan will be issued to the executor or administrator of your estate in the event of your
death.

7. Change in Control

Acceleration of Vesting. If you are employed by the Company on the date of a Change in
Control of the Company and the Determination Date has not occurred, you will be entitled to
receive Earned Shares representing 50% of your Deferred Performance Units. to be paid no
later than 2 1/2 months after a Change in Control. A Change in Control of the Company shall
be deemed to have occurred as of the first day any one or more of the following conditions
shall have been satisfied:

	 	(a)	 	The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of shares representing 20% or more of the combined voting power
of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however, that for purposes of this subsection (a), the
following acquisitions shall not constitute a Change in Control: (i) any
acquisition directly from the Company, (ii) any acquisition by the Company,
(iii) any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation or other entity controlled by
the Company, or (iv) any acquisition by any corporation or other entity
pursuant to a transaction which complies with clauses (i), (ii) and (iii) of
Section 7(c); or
	 
	 	(b)	 	Individuals who, as of the effective date of the Plan (as
defined in the Plan), are members of the Board of Directors of the Company (the
“Incumbent Board”) cease for any reason to constitute at least a majority of
the Board of Directors of the Company; provided, however, that for purposes of
this Section 7(b), any individual becoming a director subsequent to the date
hereof whose election, or nomination for election by the Company’s
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board, shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board of Directors of
the Company; or

4

 

	 	(c)	 	Consummation of a reorganization, merger, conversion or
consolidation or sale or other disposition of all or substantially all of the
assets of the Company (a “Business Combination”), in each case, unless,
following such Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50% of the then
outstanding combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of the corporation or
other entity resulting from such Business Combination (including, without
limitation, a corporation or other entity which as a result of such transaction
owns the Company or all or substantially all of the Company’s assets either
directly or through one or more subsidiaries) in substantially the same
proportions as their ownership, immediately prior to such Business Combination
of the Outstanding Company Voting Securities, (ii) no Person (excluding any
corporation or other entity resulting from such Business Combination or any
employee benefit plan (or related trust) of the Company or such corporation or
other entity resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of the combined voting power of the then
outstanding voting securities of the corporation or other entity resulting from
such Business Combination except to the extent that such ownership existed
prior to the Business Combination and (iii) at least a majority of the members
of the board of directors of the corporation or other entity resulting from
such Business Combination were members of the Incumbent Board at the time of
the execution of the initial agreement, or of the action of the Board of
Directors of the Company, providing for such Business Combination; or
	 
	 	(d)	 	Approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company other than in connection with the
transfer of all or substantially all of the assets of the Company to an
affiliate or a Subsidiary of the Company.

8. Tax Consequences and Income Tax Withholding

          (a) You should review the Plan Prospectus for a general summary of the U.S. federal
income tax consequences to you from this award of Deferred Performance Units and any Earned
Shares based on currently applicable provisions of the Code and related regulations. The
summary does not discuss state and local tax laws or the laws of any other jurisdiction,
which may differ from U.S. federal tax law. Neither the Company nor the Committee
guarantees the tax consequences of your award herein. You are advised to consult your own
tax advisor regarding the application of the tax laws to your particular situation.

          (b) The award under the Award Letter is subject to your making of arrangements
satisfactory to the Company to satisfy any applicable U.S. federal, state or local
withholding

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tax liability arising from the vesting of the Earned Shares. You can either make
a cash payment to the Company of the required amount or at the discretion of the Committee you
can elect to satisfy your withholding obligation by having the Company retain Common Stock
having a value approximately equal to the amount of your withholding obligation from the
Earned Shares otherwise deliverable to you upon the vesting of such shares. You may not
elect for such withholding to be greater than the minimum statutory withholding tax
liability arising from the vesting of the Earned Shares. If you fail to satisfy your
withholding obligation in a time and manner satisfactory to the Company, no shares will be
issued to you or the Company at its discretion shall have the right to withhold the required
amount from your salary or other amounts payable to you prior to the delivery of the Common
Stock to you.

          (c) In addition, you must make arrangements satisfactory to the Company to satisfy any
applicable withholding tax liability imposed under the laws of any other jurisdiction
arising from the award hereunder. You may not elect to have the Company withhold Earned
Shares having a value in excess of the minimum statutory withholding tax liability. If you
fail to satisfy such withholding obligation in a time and manner satisfactory to the
Company, no shares will be issued to you or the Company shall have the right to withhold the
required amount from your salary or other amounts payable to you prior to the delivery of
the Common Stock to you.

9. Restrictions on Resale

Other than the restrictions referenced in paragraph 3, there are no restrictions imposed by the
Plan on the resale of Earned Shares acquired under the Plan. However, under the provisions of the
Securities Act of 1933 (the “Securities Act”) and the rules and regulations of the Securities and
Exchange Commission (the “SEC”), resales of shares acquired under the Plan by certain officers and
directors of the Company who may be deemed to be “affiliates” of the Company must be made pursuant
to an appropriate effective registration statement filed with the SEC, pursuant to the provisions
of Rule 144 issued under the Securities Act, or pursuant to another exemption from registration
provided in the Securities Act. At the present time, the Company does not have a currently
effective registration statement pursuant to which such resales may be made by affiliates. These
restrictions do not apply to persons who are not affiliates of the Company; provided, however, that
all employees and the award made hereby are subject to the Company’s policies against insider
trading (including black-out periods during which no sales are permitted) and to other restrictions
on resale that may be imposed by the Company from time- to- time if it determines such restrictions
are necessary or advisable to comply with applicable law.

10. Effect on Other Benefits

Income recognized by you as a result of this award of the Deferred Performance Units, vesting , or
payment of Earned Shares or dividends on your Earned Shares will not be included in the formula for
calculating benefits under any of the Company’s retirement and disability plans or any other
benefit plans.

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11. Compliance With Laws

This Award Letter, the Deferred Performance Units and any Earned Shares issued hereunder shall be
subject to all applicable federal and state laws and the rules of the exchange on which shares of
the Company’s Common Stock are traded.

12. Miscellaneous

          (a) Not an Agreement for Continued Employment or Services. This Award Letter will not,
and no provision of this Award Letter will be construed or interpreted to, create any right
to be employed by or to provide services to or continue your employment with or provide
services to the Company, the Company’s affiliates, parent, subsidiary or their affiliates.

          (b) Community Property. Each spouse individually is bound by, and such spouse’s
interest, if any, in this award of Deferred Performance Units or in any shares of Common
Stock that may be awarded hereunder is subject to the terms of this Award Letter. Nothing
in this Award Letter shall create a community property interest where none otherwise exists.

          (c) Amendment for Code Section 409A. This award of Deferred Performance Units is
intended to be exempt from Code Section 409A. If the Committee determines that this award
of Deferred Performance Units is subject to Code Section 409A, the Committee may, in its
sole discretion, amend the terms and conditions of this Award Letter to the extent necessary
to comply with Code Section 409A.

If you have any questions regarding your award of Deferred Performance Units or would like to
obtain additional information about the Plan or the Committee, please contact the Company’s General
Counsel. Your Award Letter, the Plan and all attachments should be retained in your files for
future reference.

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