Document:

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EXHIBIT 10.2

MITCHAM INDUSTRIES, INC.

NONQUALIFIED STOCK OPTION AGREEMENT

(1998 STOCK AWARDS PLAN)

     THIS NONQUALIFIED STOCK OPTION AGREEMENT (“Option Agreement”) is between
Mitcham Industries, Inc., a Texas corporation (the “Company”), and
           (the “Optionee”), which parties agree as follows:

     1. Introduction. The Company has adopted the Mitcham Industries, Inc.
1998 Stock Awards Plan (the “Plan”) to provide employees upon whom the
responsibilities of the successful administration and management of the Company
rest additional incentive and reward opportunities designed to advance the
Company’s profitable growth. The Company, acting through the Committee, has
determined that its interests will be advanced by issuing the Optionee a
Nonqualified Stock Option under the Plan. All capitalized terms in this Option
Agreement not defined in this Option Agreement will have the meanings given to
them in the Plan.

     2. Option Grant. The Company hereby irrevocably grants to the Optionee
the right and option (the “Option”) to purchase from the Company
            shares of the Company’s common stock, $   par value
(“Stock”), at a price of $  per share (the “Exercise Price”), which is
not less than the Fair Market Value of the Stock at the grant date of this
Option.

     3. Option Period and Exercisability. The Optionee may exercise the Option
in whole or in part at any time during a 10-year period (the “Option Period”)
beginning on            (the “Date of Grant”), except that the Option shall
not be exercised (a) at any time before the expiration of six months from the
Date of Grant, or (b) for more than a percentage of the aggregate number of
shares underlying the Option determined by the number of full years of
employment with the Company or its Affiliates from the Date of Grant to the
exercise date, as follows:

	 	 	 
	Number of

Full Years

	 	Percentage of

Shares Purchasable

Notwithstanding anything in this Option Agreement to the contrary, the
Committee, in its sole discretion, may waive the foregoing schedule of vesting
and, upon written notice to the Optionee, accelerate the earliest date or
dates on which the Option is exercisable.

     4. [Performance Criteria. Notwithstanding the vesting schedule in Section
3, the Option may be exercised sooner if the Company attains the following
performance criteria over the following periods of time:

 

 

	 	 	 	 	 
	Performance
Periods

	 	Performance Criteria

	 	Percentage of

Shares Purchasable

However, the Option may not be exercised before the expiration of six months
from the date of Grant.]

     5. Procedure for Exercise. The Optionee may exercise the Option by
delivering written notice to the Secretary of the Company including the number
of shares of Stock with respect to which the Option is being exercised and the
address to which the certificates for such shares are to be mailed. The notice
shall be accompanied by, at the Optionee’s choice, (i) cash, cashier’s check,
bank draft, or postal or express money order payable to the order of the
Company, (ii) certificates representing shares of Stock already owned by the
Optionee, duly endorsed for transfer to the Company, or (iii) any combination
of the preceding, equal in value to the aggregate Exercise Price. The
Committee, in its sole discretion, may allow the Optionee to exercise the
Option under a “cashless exercise” arrangement as described in Section VII(d)
of the Plan. The Optionee may deliver the notice by telecopy, provided that
the Company receives the Exercise Price of such shares via wire transfer on the
same day it receives the telecopy transmission of the notice. The Option shall
be deemed to have been exercised immediately before the close of business on
the date the Company receives (i) written notice of such exercise and (ii)
payment in full of the Exercise Price for the number of shares for which
Options are being exercised, and the Optionee shall be treated for all purposes
as the record holder of such shares of Stock as of such date.

     As promptly as practicable after receipt of such written notice and
payment, the Company shall deliver to the Optionee certificates for the number
of shares with respect to which the Option has been exercised, issued in the
Optionee’s name or such other name as the Optionee directs. Delivery shall be
deemed effected when the Company’s stock transfer agent deposits such
certificates in the United States mail, addressed to the Optionee at the
address specified in the exercise notice.

     6. Termination of Employment. If the Optionee ceases to be employed by
the Company or its Affiliates for any reason other than death or disability,
the Option shall expire upon the date of such termination of employment.
However, the Committee may allow the Optionee to exercise all or a portion of
the Option granted but unexercised for a period of time after the Optionee’s
termination of employment.

     7. Death or Disability. If the Optionee dies or is determined to be
disabled while the Optionee is employed by the Company or its Affiliates, then
the Optionee, the guardian of the Optionee’s estate, the executor or
administrator of the Optionee’s estate or the person or persons to whom the
Optionee’s rights under this Option Agreement pass by will or the laws of
descent and distribution, may exercise the Option (to the extent the Optionee
would have been entitled to do so at the date of death or the determination of
disability) at any time and from time to time, within a one-year period after
such death or determination of disability. However, the Option may not be
exercised after the expiration of the Option Period. The Optionee shall be
deemed to be disabled if, in the opinion of a physician selected by the
Committee, the Optionee

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is incapable of performing for the Company services of the kind he was
performing at the time the disability occurred, due to any medically
determinable physical or mental impairment that can be expected to result in
death or to continue indefinitely. The date of determination of disability for
purposes hereof shall be the date of such physician’s determination.

     8. Transferability. The Optionee may not transfer this Option other than
by will or by the laws of descent and distribution. During the Optionee’s
lifetime, only he or his authorized legal representative may exercise the
Option. Any heir or legatee of the Optionee shall take rights herein granted
subject to the terms and conditions of this Option Agreement. No such transfer
of this Option Agreement to the Optionee’s heirs or legatees shall bind the
Company unless the Company is furnished with written notice of transfer and a
copy of such evidence as the Committee considers necessary to establish the
validity of the transfer and the acceptance by the transferee or transferees of
the terms and conditions of this Option Agreement.

     9. No Rights as Shareholder. The Optionee shall have no rights as a
shareholder with respect to any shares of Stock covered by this Option
Agreement until the Option is exercised by written notice and accompanied by
payment as provided in Section 5 of this Option Agreement.

     10. Extraordinary Corporate Transactions. If, after the execution of this
Option Agreement, the Company is recapitalized, changes its capital structure,
or the number of issued and outstanding shares of Stock changes as a result of
a share dividend or a subdivision or consolidation of shares without the
Company receiving consideration, the Option shall be appropriately adjusted as
provided under the Plan. If there is a Change of Control, the Option shall
immediately vest and be fully exercisable. [SEE ARTICLE XII OF THE PLAN -
COMMITTEE MAY PROVIDE FOR ALTERNATIVE TREATMENT OF OPTIONS.]

     11. Cashing Out Option. On receipt of written notice of exercise, the
Committee may elect to cash out all or part of the portion of the shares of
Stock for which the Option is being exercised by paying the Optionee an amount,
in cash or Stock, equal to (i) the excess of the Fair Market Value of the Stock
over the Exercise Price, multiplied by (ii) the number of shares of Stock for
which the Option is being exercised on the effective date of such cash-out.

     12. Compliance With Securities Laws. When the Optionee acquires any
shares pursuant to the exercise of the Option, the Optionee (or any person
acting under Section 8) will enter into such written representations,
warranties and agreements as the Company reasonably requests in order to comply
with applicable securities laws or with this Option Agreement.

     13. Compliance With Laws. Notwithstanding any of the provisions hereof,
the Optionee agrees that he will not exercise the Option, and that the Company
will not be obligated to issue any shares under this Option Agreement, if the
exercise of the Option or the issuance of such shares of Stock would violate
any provision of any law or regulation of any governmental authority.

     14. Withholding of Tax. To the extent that the exercise of the Option or
the disposition of shares of Stock acquired by exercise of the Option results
in compensation income to the Optionee for federal or state income tax
purposes, the Optionee shall pay to the Company at the time of such exercise or
disposition such amount of money as the Company requires to

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meet its obligations under applicable tax laws or regulations. If the
Optionee fails to do so, the Company is authorized to withhold such tax from
any cash remuneration then or thereafter payable to Optionee, or may otherwise
refuse to issue or transfer any shares otherwise required to be issued or
transferred under this Option Agreement.

     15. No Right to Employment. The Optionee shall be considered to be in the
employment of the Company so long as he or she remains an employee of the
Company or its Affiliates. The Committee shall determine whether and when there
has been a termination of such employment and the cause of such termination,
and its determination shall be final. Nothing contained in this Option
Agreement shall be construed as conferring upon the Optionee the right to
continue in the employ of the Company or its Affiliates, nor shall anything
contained herein be construed to limit the “employment at will” relationship
between the Optionee and the Company or its Affiliates.

     16. Resolution of Disputes. As a condition of the granting of the Option,
the Optionee and the Optionee’s heirs, personal representatives and successors
agree that the Committee shall determine and resolve in its sole discretion and
judgment, any dispute or disagreement that arises under this Option Agreement,
and that any such determination and any resolution of the terms of this Option
Agreement shall be final, binding and conclusive upon the Company, the
Optionee, and the Optionee’s heirs, personal representatives and successors.

     17. Legends on Certificate. The certificates representing the shares of
Stock purchased by the exercise of the Option will be stamped or otherwise
imprinted with legends in such form as the Company or its counsel may require
with respect to any applicable restrictions on sale or transfer and the stock
transfer records of the Company will reflect stop-transfer instructions with
respect to such shares.

     18. Notices. Every notice hereunder must be in writing and shall be given
by registered or certified mail. All notices of the exercise of the Option
shall be directed to Mitcham Industries, Inc., 44000 Highway 75 South, P. O.
Box 1175, Huntsville, Texas 77342. Attention: Secretary. Any notice the
Company gives to the Optionee shall be directed to the Optionee at the address
on file with the Company and shall bind the Optionee and any other person who
acquires rights hereunder. The Company has no obligation to advise the
Optionee of the existence, maturity or termination of any of the Optionee’s
rights hereunder. The Optionee shall be deemed to have familiarized himself
with all matters in this Option Agreement and in the Plan that may affect any
of the Optionee’s rights or privileges hereunder.

     19. Construction and Interpretation. Whenever the term “Optionee” is used
herein under circumstances that apply to any other person or persons to whom
this award may be transferred under Section 8, the word “Optionee” shall be
deemed to include such person or persons.

     20. Notice of Disposition. If the Optionee disposes of any shares of
Stock acquired pursuant to the exercise of the Option before the earlier of (i)
two years from the Date of Grant or (ii) one year from the date the shares of
Stock were acquired, the Optionee shall notify the Company of such disposition
within 10 days of its occurrence and deliver to the Company any amount of
federal or state income tax withholding required by law. If the Optionee fails
to pay

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the withholding tax, the Company is authorized to withhold such tax from
any cash remuneration then or thereafter payable to the Optionee.

     21. Agreement Subject to Plan. This Option Agreement is subject to the
Plan. The terms and provisions of the Plan (including any amendments thereto)
are incorporated in this Option Agreement by reference thereto. If there is a
conflict between any term or provision of this Option Agreement and a term or
provision of the Plan, the terms and provisions of the Plan will govern.

     22. Binding Effect. This Option Agreement shall be binding upon and inure
to the benefit of any successors to the Company and all persons lawfully
claiming under the Optionee as provided herein.

     23. Governing Law. This Option Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.

DATED                    ,                    .

	 	 	 	 
	 	 	MITCHAM INDUSTRIES, INC.
	 
	 	 	 
	

	 	By:	 
	

	 	 	

	

	 	Name:	 
	

	 	 	

	

	 	Title:	 
	

	 	 	

	 
	 	 	 
	 	 	OPTIONEE
	 
	 	 	 
	 	 	

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EXHIBIT 10.3

AMENDED AND RESTATED

1998 STOCK AWARDS PLAN

OF MITCHAM INDUSTRIES, INC.

I. PURPOSE

     The purpose of the MITCHAM INDUSTRIES, INC. AMENDED AND RESTATED
1998 STOCK AWARDS PLAN (the “Plan”) is to provide a means through which
Mitcham Industries, Inc., a Texas corporation (the “Company”), and its
subsidiaries, may attract able persons as Employees, Directors and Consultants
of the Company and to provide a means whereby those employees, directors and
consultants upon whom the responsibilities of the successful administration and
management of the Company rest, and whose present and potential contributions
to the welfare of the Company are of importance, can acquire and maintain stock
ownership, thereby strengthening their concern for the welfare of the Company.
A further purpose of the Plan is to provide employees with additional incentive
and rewards opportunities designed to enhance the profitable growth of the
Company. Therefore, the Plan provides for granting ISOs, options which do not
constitute ISOs, Stock Appreciation Rights, Restricted Stock Awards,
Performance Awards, Phantom Stock Awards, or any combination of the foregoing,
as is best suited to the circumstances of the particular Employee, Director or
Consultant as provided herein.

II. DEFINITIONS

     The following definitions shall be applicable throughout the Plan unless
specifically modified by any paragraph:

     (a) “Affiliates” means any Parent corporation of the Company and any
“subsidiary” of the Company within the meaning of Code Section 424(e) and
(f), respectively.

     (b) “Award” means, individually or collectively, any Option,
Restricted Stock Award, Phantom Stock Award, Performance Award or Stock
Appreciation Right.

     (c) “Award Agreement” means any Option Agreement, Restricted Stock
Agreement, Phantom Stock Award Agreement, Performance Award Agreement or
Stock Appreciation Rights Agreement.

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

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

     (i) the Company is not the surviving entity in any merger,
consolidation or other reorganization (or survives only as a
subsidiary of an entity other than a previously wholly-owned
subsidiary of the Company),

 

 

     (ii) the Company sells, leases or exchanges all or
substantially all of its assets to any other person or entity
(other than a wholly-owned subsidiary of the Company),

     (iii) the Company is dissolved and liquidated,

     (iv) any person or entity, including a “group” as contemplated
by Section 13(d)(3) of the 1934 Act, provides or gains ownership or
control (including, without limitation, power to vote) or more than
50% of the outstanding shares of the Company’s voting stock (based
upon voting power), or

     (v) as a result of or in connection with a contested election
of directors, the persons who were directors of the Company before
such election cease to constitute a majority of the Board.

     (f) “Change of Control Value” means:

     (i) the per share price offered to shareholders of the Company
in any such merger, consolidation, reorganization, sale of assets
or dissolution transaction,

     (ii) the price per share offered to shareholders of the
Company in any tender offer or exchange offer whereby a Change of
Control takes place, or

     if such Change of Control occurs other than pursuant to a tender or
exchange offer, the fair market value per share of the shares into which Awards
are exercisable, as determined by the Committee, whichever is applicable.

     If the consideration offered to shareholders of the Company consists of
anything other than cash, the Committee shall determine the fair cash
equivalent of the portion of the consideration offered which is other than
cash.

     (g) “Code” means the Internal Revenue Code of 1986, as amended.
Reference in the Plan to any section of the Code shall be deemed to
include any amendments or successor provisions to any section and any
regulations under such section.

     (h) “Committee” means the Compensation Committee of the Board, which
shall be (i) constituted so as to permit the Plan to comply with Rule
16b-3 and (ii) constituted solely of “outside directors,” within the
meaning of section 162(m) of the Code and applicable interpretive
authority thereunder.

     (i) “Company” means Mitcham Industries, Inc. and any of its
Affiliates.

     (j) “Consultant” means any person engaged by the Company to render
consulting services and who is compensated for such services.

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     (k) “Continuous Status as an Employee, Director or Consultant”
means, for an Employee, the absence of any interruption or termination of
the employment relationship by the Company or any Subsidiary, for a
Director or Consultant, the absence of any interruption or termination of
service as a Director or Consultant, as the case may be. Continuous
Status as an Employee, Director or Consultant shall not be considered
interrupted in the case of: (i) any leave of absence approved by the
Board, including sick leave, military leave, or any other personal leave;
provided, however, that for purposes of ISOs, such leave is for a period
of not more than 90 days, unless reemployment upon the expiration of such
leave is guaranteed by contract or statute, or unless provided otherwise
under Company policy adopted from time to time; or (ii) in the case of
transfers between locations of the Company or between the Company, its
subsidiaries or its successor.

     (l) “Director” means an individual elected to the Board by the
shareholders of the Company or by the Board under applicable corporate
law who is serving on the Board on the date the Plan is adopted by the
Board or is elected to the Board after that date.

     (m) “Employee” means any person (including an officer or a Director)
in an employment relationship with the Company or any parent or
subsidiary corporation (as defined in Section 424 of the Code).

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

     (o) “Fair Market Value” means, as of any specified date, the mean of
the high and low sales prices of the Stock (i) reported by the any
interdealer quotation system on which the Stock is quoted on that date or
(ii) if the Stock is listed on a national stock exchange, reported on the
stock exchange composite tape on that date; or, in either case, if no
prices are reported on that date, on the last preceding date on which
such prices of the Stock are so reported. If the Stock is traded over
the counter at the time a determination of its fair market value is
required to be made hereunder, its fair market value shall be deemed to
be equal to the average between the reported high and low or closing bid
and asked prices of Stock on the most recent date on which Stock was
publicly traded. If Stock is not publicly traded at the time a
determination of its value is required to be made hereunder, the
determination of its fair market value shall be made by the Committee in
the manner as it deems appropriate.

     (p) “Holder” means an Employee, Director or Consultant to whom an
Award other than an Option has been made under this Plan.

     (q) “Incentive Stock Option” or “ISO” means an incentive stock
option within the meaning of Section 422(b) of the Code.

     (r) “Non-Employee Director” means a Director who either (i) is not a
current Employee of the Company or any Subsidiary; or (ii) is otherwise
considered a “non-employee director” for purposes of Rule 16b-3.

     (s) “Nonqualified Stock Option” means an option granted under
Paragraph VII of the Plan to purchase Stock that is not an Incentive
Stock Option.

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     (t) “Option” means an Award granted under Paragraph VII of the Plan
and includes both Incentive Stock Options to purchase Stock and
Nonqualified Stock Options to purchase Stock.

     (u) “Option Agreement” means a written agreement between the Company
and an Optionee with respect to an Option.

     (v) “Optionee” means a person to whom an Option is granted under
this Plan, or if applicable, such other person who holds an outstanding
Option under this Plan.

     (w) “Performance Award” means an Award granted under Paragraph X of
the Plan.

     (x) “Performance Award Agreement” means a written agreement between
the Company and a Holder with respect to a Performance Award.

     (y) “Phantom Stock Award” means an Award granted under Paragraph XI
of the Plan.

     (z) “Phantom Stock Award Agreement” means a written agreement
between the Company and a Holder with respect to a Phantom Stock Award.

     (aa) “Plan” means the Mitcham Industries, Inc. Amended and Restated
1998 Stock Awards Plan, as may be further amended from time to time.

     (bb) “Restricted Stock Agreement” means a written agreement between
the Company and a Holder with respect to a Restricted Stock Award.

     (cc) “Restricted Stock Award” means an Award granted under Paragraph
IX of the Plan.

     (dd) “Rule 16b-3” means SEC Rule 16b-3 promulgated under the 1934
Act, as such may be amended from time to time, and any successor rule,
regulation or statute fulfilling the same or a similar function.

     (ee) “Spread” means, in the case of a Stock Appreciation Right, an
amount equal to the excess, if any, of the Fair Market Value of a share
of Stock on the date such right is exercised over the exercise price of
such Stock Appreciation Right.

     (ff) “Stock” means the common stock, $0.01 par value, of the
Company.

     (gg) “Stock Appreciation Right” means an Award granted under
Paragraph VIII of the Plan.

     (hh) “Stock Appreciation Rights Agreement” means a written agreement
between the Company and a Holder with respect to an Award of Stock
Appreciation Rights.

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III. EFFECTIVE DATE AND DURATION OF THE PLAN

     The Plan shall be effective upon the date of its adoption by the Board,
provided that the Plan is approved by the shareholders of the Company within 12
months thereafter. No further Awards may be granted under the Plan after the
expiration of 10 years from the date of its adoption by the Board. The Plan
shall remain in effect until all Awards granted under the Plan have been
satisfied or expired.

IV. ADMINISTRATION

     (a) Committee. The Plan shall be administered by the Committee.

     (b) Powers. Subject to the provisions of the Plan, the Committee
shall have sole authority, in its discretion, to determine which
Employees, Directors or Consultants shall receive an Award, the time or
times when such Award shall be made, whether an Incentive Stock Option,
Nonqualified Option or Stock Appreciation Right shall be granted, the
number of shares of Stock which may be issued under each Option, Stock
Appreciation Right or Restricted Stock Award, and the value of each
Performance Award and Phantom Stock Award. In making such
determinations, the Committee may take into account the nature of the
services rendered by the respective Employees, Directors and Consultants
their present and potential contributions to the Company’s success and
such other factors as the Committee in its discretion shall deem
relevant.

     (c) Additional Powers. The Committee shall have such additional
powers as are delegated to it by the other provisions of the Plan.
Subject to the express provisions of the Plan, the Committee is
authorized to construe the Plan and the respective agreements executed
thereunder, to prescribe such rules and regulations relating to the Plan
as it may deem advisable to carry out the Plan, and to determine the
terms, restrictions and provisions of each Award, including such terms,
restrictions and provisions as shall be requisite in the judgment of the
Committee to cause designated Options to qualify as Incentive Stock
Options, and to make all other determinations necessary or advisable for
administering the Plan. The Committee may correct any defect or supply
any omission or reconcile any inconsistency in any agreement relating to
an Award in the manner and to the extent it shall deem expedient to carry
it into effect. The determinations of the Committee on the matters
referred to in this Article IV shall be conclusive.

V. GRANT OF OPTIONS, STOCK APPRECIATION RIGHTS,

RESTRICTED STOCK AWARDS, PERFORMANCE AWARDS AND

PHANTOM STOCK AWARDS; SHARES SUBJECT TO THE PLAN

     (a) Stock Grant and Award Limits. The Committee may from time to
grant Awards to one or more Employees, Directors or Consultants
determined by it to be eligible for participation in the Plan in
accordance with the provisions of Paragraph VI. Subject to Paragraph
XII, the aggregate number of shares of Stock that may be issued under the
Plan shall not exceed 750,000 shares. Shares of Stock shall be deemed to
have been issued under the Plan only to the extent actually issued and
delivered pursuant to an

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Award. To the extent that an Award lapses or the rights of its
Holder terminate or the Award is paid in cash, any shares of Stock
subject to such Award shall again be available for the grant of an Award.
Separate stock certificates shall be issued by the Company for those shares acquired pursuant the exercise of an Incentive Stock Option and
for those shares acquired pursuant to the exercise of a Nonqualified
Stock Option.

     (b) Stock Offered. The stock to be offered pursuant to the grant of
an Award may be authorized but unissued Stock or Stock previously issued
and outstanding and reacquired by the Company.

VI. ELIGIBILITY

     Incentive Stock Options and Stock Appreciation Rights related thereto may
be granted only to Employees. Awards other than Incentive Stock Options may be
granted to Employees, Non-Employee Directors and Consultants. An Award may be
granted on more than one occasion to the same person, and, subject to the
limitations set forth in the Plan, such Award may include an Incentive Stock
Option or a Nonqualified Stock Option, a Stock Appreciation Right, a Restricted
Stock Award, a Performance Award, a Phantom Stock Award or any combination
thereof.

VII. STOCK OPTIONS

     (a) Option Period. The term of each Option shall be as specified by
the Committee at the date of grant.

     (b) Limitations on Exercise of Option. An Option shall be
exercisable in whole or in such installments and at such times as
determined by the Committee.

     (c) Special Limitations on Incentive Stock Options. To the extent
that the aggregate Fair Market Value (determined at the time the
respective Incentive Stock Option is granted) of Stock with respect to
which Incentive Stock Options are exercisable for the first time by an
individual during any calendar year under all incentive stock option
plans of the Company and its parent and subsidiary corporations exceeds
$100,000, such Incentive Stock Options shall be treated as Nonqualified
Stock Options as determined by the Committee. The Committee shall
determine, in accordance with applicable provisions of the Code, Treasury
Regulations and other administrative pronouncements, which of an
Optionee’s Incentive Stock Options will not constitute Incentive Stock
Options because of such limitation and shall notify the Optionee of such
determination as soon as practicable after such determination. No
Incentive Stock Options shall be granted to an individual if, at the time
the Option is granted, such individual owns stock possessing more than
10% of the total combined voting power of all classes of stock of the
Company or of its parent or subsidiary corporation, within the meaning of
Section 422(b)(6) of the Code, unless (i) at the time such Option is
granted the option price is at least 110% of the Fair Market Value of the
Stock subject to the Option and (ii) such Option by its terms is not
exercisable after the expiration of five years from the date of grant.

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     (d) Option Agreement. Each Option shall be evidenced by an Option
Agreement in such form and containing such provisions not inconsistent
with the provisions of the Plan as the Committee from time to time shall
approve, including, without limitation, provisions to qualify an
Incentive Stock Option under Section 422 of the Code. An Option
Agreement may provide for the payment of the option price, in whole or in
part, by the delivery of a number of shares of Stock (plus cash if
necessary) having a Fair Market Value equal to such option price. Each
Option Agreement shall provide that the Option may not be exercised
earlier than six months from the date of grant and shall specify the
effect of termination of employment on the exercisability of the Option.
Moreover, an Option Agreement may provide for a “cashless exercise” of
the Option by establishing procedures whereby the Holder, by a
properly-executed written notice, directs:

     (i) an immediate market sale or margin loan respecting all or
a part of the shares of Stock to which he is entitled upon exercise
pursuant to an extension of credit by the Company to the Holder of
the option price,

     (ii) the delivery of the shares of Stock from the Company
directly to a brokerage firm, and

     (iii) the delivery of the option price from the sale or margin
loan proceeds from the brokerage firm directly to the Company.

Such Option Agreement may also include, without limitation, provisions
relating to:

     (i) vesting of Options, subject to the provisions hereof
accelerating such vesting on a Change of Control,

     (ii) tax matters (including provisions (y) permitting the
delivery of additional shares of Stock or the withholding of shares
of Stock from those acquired upon exercise to satisfy federal or
state income tax withholding requirements and (z) dealing with any
other applicable employee wage withholding requirements), and

     (iii) any other matters not inconsistent with the terms and
provisions of this Plan that the Committee shall in its sole
discretion determine.

The terms and conditions of the respective Option Agreements need not be
identical.

     (e) Option Price and Payment. The price at which a share of Stock
may be purchased upon exercise of an Option shall be determined by the
Committee, but:

     (i) such purchase price shall not be less than the Fair Market
Value of Stock subject to an Incentive Stock Option on the date
immediately preceding the date the Incentive Stock Option is
granted, and

     (ii) such purchase price shall be subject to adjustment as
provided in Paragraph XII.

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     The Option or portion thereof may be exercised by delivery of an
irrevocable notice of exercise to the Company. The purchase price of the
Option or portion thereof shall be paid in full in the manner prescribed by the
Committee.

     (f) Shareholder Rights and Privileges. The Holder shall be entitled
to all the privileges and rights of a shareholder only with respect to
such shares of Stock as have been purchased under the Option and for
which certificates of stock have been registered in the Holder’s name.

     (g) Options and Rights in Substitution for Stock Options Granted by
Other Corporations. Options and Stock Appreciation Rights may be granted
under the Plan from time to time in substitution for stock options held
by individuals employed by corporations who become employees as a result
of a merger or consolidation of the employing corporation with the
Company or any subsidiary, or the acquisition by the Company or a
subsidiary of the assets of the employing corporation, or the acquisition
by the Company or a subsidiary of stock of the employing corporation with
the result that such employing corporation becomes a subsidiary.

     (h) Termination of Employment, Directorship or Consultancy. In the
event of termination of an Optionee’s Continuous Status as an Employee,
Director or Consultant (unless such termination as a Consultant is for
purposes of becoming an Employee), such Optionee may, but only within
ninety (90) days (or such other period of time as is determined by the
Board, but in no event later than the expiration date of the term of such
Option as set forth in the Option Agreement), exercise his Option to the
extent that an Optionee was entitled to exercise it at the date of such
termination. To the extent that an Optionee was not entitled to exercise
the Option at the date of such termination, or if Optionee does not
exercise such Option to the extent so entitled within the time specified
herein, the Option shall terminate.

VIII. STOCK APPRECIATION RIGHTS

     (a) Stock Appreciation Rights. A Stock Appreciation Right is the
right to receive an amount equal to the Spread with respect to a share of
Stock upon the exercise of such Stock Appreciation Right. Stock
Appreciation Rights may be granted in connection with the grant of an
Option, in which case the Option Agreement will provide that exercise of
Stock Appreciation Rights will result in the surrender of the right to
purchase the shares under the Option as to which the Stock Appreciation
Rights were exercised. Alternatively, Stock Appreciation Rights may be
granted independently of Options in which case each Award of Stock
Appreciation Rights shall be evidenced by a Stock Appreciation Rights
Agreement which shall contain such terms and conditions as may be
approved by the Committee. The Spread with respect to a Stock
Appreciation Right may be payable either in cash, shares of Stock with a
Fair Market Value equal to the Spread or in a combination of cash and shares of Stock. With respect to Stock Appreciation Rights that are
subject to Section 16 of the 1934 Act, however, the Committee shall,
except as provided in Paragraph XII(c), retain sole discretion (i) to
determine the form in which payment of the Stock Appreciation Right will
be made (i.e., cash, securities or any combination thereof) or (ii) to
approve an election by a Holder to

8

 

receive cash in full or partial settlement of Stock Appreciation
Rights. Each Stock Appreciation Rights Agreement shall provide that the
Stock Appreciation Rights may not be exercised earlier than six months
from the date of grant and shall specify the effect of termination of
employment on the exercisability of the Stock Appreciation Rights.

     (b) Other Terms and Conditions. At the time of such Award, the
Committee, may in its sole discretion, prescribe additional terms,
conditions or restrictions relating to Stock Appreciation Rights,
including, but not limited to rules pertaining to termination of
employment (by retirement, disability, death or otherwise) of a Holder
prior to the expiration of such Stock Appreciation Rights. Such
additional terms, conditions or restrictions shall be set forth in the
Stock Appreciation Rights Agreement made in conjunction with the Award.
Such Stock Appreciation Rights Agreement may also include, without
limitation, provisions relating to:

     (i) vesting of Awards, subject to the provisions hereof
accelerating vesting on a Change of Control,

     (ii) tax matters (including provisions covering applicable
wage withholding requirements), and

     (iii) any other matters not inconsistent with the terms and
provisions of this Plan, that the Committee shall in its sole
discretion determine.

     The terms and conditions of the respective Stock Appreciation Rights
Agreements need not be identical.

     (c) Exercise Price. The exercise price of each Stock Appreciation
Right shall be determined by the Committee, but such exercise price:

     (i) shall not be less than the Fair Market Value of a share of
Stock on the date the Stock Appreciation Right is granted (or such
greater exercise price as may be required if such Stock
Appreciation Right is granted in connection with an Incentive Stock
Option that must have an exercise price equal to 110% of the Fair
Market Value of the Stock on the date of grant pursuant to
Paragraph VII(c)), and

     (ii) shall be subject to adjustment as provided in Paragraph
XII.

     (d) Exercise Period. The term of each Stock Appreciation Right
shall be as specified by the Committee at the date of grant.

     (e) Limitations on Exercise of Stock Appreciation Right. A Stock
Appreciation Right shall be exercisable in whole or in such installments
and at such times as determined by the Committee.

     (f) Termination of Employment, Directorship or Consultancy. In the
event of termination of a Holder’s Continuous Status as an Employee,
Director or Consultant (unless such termination as a Consultant is for
purposes of becoming an Employee), such Holder may, but only within
ninety (90) days (or such other period of

9

 

time as is determined by the Board, but in no event later than the
expiration date of the term of such Award as set forth in the Stock
Appreciation Rights Agreement), exercise his Stock Appreciation Rights to
the extent that a Holder was entitled to exercise it at the date of such
termination. To the extent that a Holder was not entitled to exercise
the Stock Appreciation Rights at the date of such termination, or if such
Holder does not exercise such Stock Appreciation Rights to the extent so
entitled within the time specified herein, the Stock Appreciation Rights
shall terminate.

IX. RESTRICTED STOCK AWARDS

     (a) Forfeiture Restrictions to be Established by the Committee.
Shares of Stock that are the subject of a Restricted Stock Award shall be
subject to restrictions on disposition by the Holder and an obligation of
the Holder to forfeit and surrender the shares to the Company under
certain circumstances (the “Forfeiture Restrictions”). The Forfeiture
Restrictions shall be determined by the Committee in its sole discretion,
and the Committee may provide that the Forfeiture Restrictions shall
lapse upon:

     (i) the attainment of targets established by the Committee
that are based on (1) the price of a share of Stock, (2) the
Company’s earnings per share, (3) the Company’s revenue, or (4) the
Company’s pre-tax cash flow from operations,

     (ii) the Holder’s continued employment with the Company for a
specified period of time, or

     (iii) a combination of any two or more of the factors listed
in clauses (i) and (ii) of this sentence. Each Restricted Stock
Award may have different Forfeiture Restrictions, in the discretion
of the Committee.

     The Forfeiture Restrictions applicable to a particular Restricted Stock
Award shall not be changed except as permitted by Paragraph IX(b) or Paragraph
XII.

     (b) Other Terms and Conditions. Stock awarded pursuant to a
Restricted Stock Award shall be represented by a stock certificate
registered in the name of the Holder of such Restricted Stock Award. The
Holder shall have the right to receive dividends with respect to Stock
subject to a Restricted Stock Award, to vote Stock subject thereto and to
enjoy all other shareholder rights, except that:

     (i) the Holder shall not be entitled to delivery of the stock
certificate until the Forfeiture Restrictions shall have expired,

     (ii) the Company shall retain custody of the Stock until the
Forfeiture Restrictions shall have expired,

     (iii) the Holder may not sell, transfer, pledge, exchange,
hypothecate or otherwise dispose of the stock until the Forfeiture
Restrictions shall have expired, and

10

 

     (iv) a breach of the terms and conditions established by the
Committee pursuant to the Restricted Stock Agreement, shall cause a
forfeiture of the Restricted Stock Award.

     At the time of such Award, the Committee may, in its sole discretion,
prescribe additional terms, conditions or restrictions relating to Restricted
Stock Awards, including, but not limited to, rules pertaining to the
termination of employment (by retirement, disability, death or otherwise) of a
Holder prior to expiration of the Forfeiture Restrictions. Such additional
terms, conditions or restrictions shall be set forth in a Restricted Stock
Agreement made in conjunction with the Award. Such Restricted Stock Agreement
may also include, without limitation, provisions relating to:

     (i) vesting of Awards, subject to the provisions hereof
accelerating vesting on a Change of Control,

     (ii) tax matters (including provisions (y) covering any
applicable employee wage withholding requirements and (z)
prohibiting an election by the Holder under section 83(b) of the
Code), and

     (iii) any other matters not inconsistent with the terms and
provisions of this Plan that the Committee in its sole discretion
shall determine.

     (c) Payment for Restricted Stock. The Committee shall determine the
amount and form of any payment for Stock received pursuant to a
Restricted Stock Award, provided that in the absence of such a
determination, a Holder shall not be required to make any payment for
Stock received pursuant to a Restricted Stock Award, except to the extent
otherwise required by law.

     (d) Agreements. At the time any Award is made under this Paragraph
IX, the Company and the Holder shall enter into a Restricted Stock
Agreement setting forth each of the matters as the Committee may
determine to be appropriate. The terms and provisions of the respective
Restricted Stock Agreements need not be identical.

     (e) Termination of Employment, Directorship or Consultancy. In the
event of termination of a Holder’s Continuous Status as an Employee,
Director or Consultant (unless such termination as a Consultant is for
purposes of becoming an Employee), the Company may repurchase or
otherwise reacquire any or all of the shares of Restricted Stock held by
that Holder that have not vested as of the date of termination, under the
terms of the Restricted Stock Agreement between the Company and such
Holder.

X. PERFORMANCE AWARDS

     (a) Performance Period. The Committee shall establish, with respect
to and at the time of each Performance Award, a performance period over
which the performance of the Holder shall be measured.

11

 

     (b) Performance Awards. Each Performance Award shall have a maximum
value established by the Committee at the time of such Award.

     (c) Performance Measures. A Performance Award shall be awarded to
an employee contingent upon future performance of the employee, the
Company or any subsidiary, division or department thereof by or in which
is he employed during the performance period. The Committee shall
establish the performance measures applicable to such performance prior
to the beginning of the performance period but subject to such later
revisions as the Committee shall deem appropriate to reflect significant,
unforeseen events or changes.

     (d) Awards Criteria. In determining the value of Performance
Awards, the Committee shall take into account an employee’s
responsibility level, performance, potential, other Awards and such other
considerations as it deems appropriate.

     (e) Payment. Following the end of the performance period, the
Holder of a Performance Award shall be entitled to receive payment of an
amount, not exceeding the maximum value of the Performance Award, based
on the achievement of the performance measures for such performance
period, as determined by the Committee. Payment of a Performance Award
may be made in cash, Stock or a combination thereof, as determined by the
Committee. Payment shall be made in a lump sum or in installments as
prescribed by the Committee. Any payment to be made in Stock shall be
based on the Fair Market Value of the Stock on the payment date. If a
payment of cash is to be made on a deferred basis, the Committee shall
establish whether interest shall be credited, the rate thereof and any
other terms and conditions applicable thereto.

     (f) Termination of Employment, Directorship or Consultancy. In the
event of termination of a Holder’s Continuous Status as an Employee,
Director or Consultant (unless such termination as a Consultant is for
purposes of becoming an Employee), a Performance Award shall terminate,
except as may be determined by the Committee or as may otherwise be
provided in the Performance Award Agreement at the time granted.

     (g) Agreements. At the time any Award is made under this Paragraph
X, the Company and the Holder shall enter into a Performance Award
Agreement setting forth each of the matters contemplated hereby, and, in
addition such matters are set forth in Paragraph IX(b) as the Committee
may determine to be appropriate. The terms and provisions of the
respective agreements need not be identical.

XI. PHANTOM STOCK AWARDS

     (a) Phantom Stock Awards. Phantom Stock Awards are rights to
receive shares of Stock (or cash in an amount equal to the Fair Market
Value thereof), or rights to receive an amount equal to any appreciation
in the Fair Market Value of Stock (or portion thereof) over a specified
period of time, which vest over a period of time or upon the occurrence
of an event (including without limitation a Change of Control) as
established by the Committee, without payment of any amounts by the
Holder thereof (except to the

12

 

extent otherwise required by law) or satisfaction of any performance
criteria or objectives. Each Phantom Stock Award shall have a maximum
value established by the Committee at the time of such Award.

     (b) Award Period. The Committee shall establish, with respect to
and at the time of each Phantom Stock Award, a period over which or the
event upon which the Award shall vest with respect to the Holder.

     (c) Awards Criteria. In determining the value of Phantom Stock
Awards, the Committee shall take into account an employee’s
responsibility level, performance, potential, other Awards and such
other considerations as it deems appropriate.

     (d) Payment. Following the end of the vesting period for a Phantom
Stock Award, the Holder of a Phantom Stock Award shall be entitled to
receive payment of an amount, not exceeding the maximum value of the
Phantom Stock Award, based on the then vested value of the Award.
Payment of a Phantom Stock Award may be made in cash, Stock or a
combination thereof as determined by the Committee. Payment shall be
made in a lump sum or in installments as prescribed by the Committee in
its sole discretion. Any payment to be made in Stock shall be based on
the Fair Market Value of the Stock on the payment date. Cash dividend
equivalents may be paid during or after the vesting period with respect
to a Phantom Stock Award, as determined by the Committee. If a payment
of cash is to be made on a deferred basis, the Committee shall establish
whether interest shall be credited, the rate thereof and any other terms
and conditions applicable thereto.

     (e) Termination of Employment, Directorship or Consultancy. In the
event of termination of a Holder’s Continuous Status as an Employee,
Director or Consultant (unless such termination as a Consultant is for
purposes of becoming an Employee), a Phantom Stock Award shall terminate,
except as may be determined by the Committee or as may otherwise be
provided in the Phantom Stock Award Agreement at the time granted.

     (f) Agreements. At the time any Award is made under this Paragraph
XI, the Company and the Holder shall enter into a Phantom Stock Award
Agreement setting forth each of the matters contemplated hereby and, in
addition such matters as are set forth in Paragraph IX(b) as the
Committee may determine to be appropriate. The terms and provisions of
the respective agreements need not be identical.

XII. RECAPITALIZATION OR REORGANIZATION

     (a) The shares with respect to which Awards may be granted are shares of Stock as presently constituted, but if and whenever, prior to
the expiration of an Award theretofore granted, the Company shall effect
a subdivision or consolidation, the number of shares of Stock with
respect to which such Award may thereafter be exercised or satisfied, as
applicable, (i) in the event of an increase in the number of outstanding shares shall be proportionately increased, and the purchase price per
share shall be proportionately reduced, and (ii) in the event of a
reduction in the number of outstanding

13

 

shares shall be proportionately reduced, and the purchase price per
share shall be proportionately increased.

     (b) If the Company recapitalizes or otherwise changes its capital
structure, thereafter upon any exercise or satisfaction, as applicable,
of an Award theretofore granted the Holder shall be entitled to (or
entitled to purchase, if applicable) under such Award, in lieu of the
number of shares of Stock then covered by such Award, the number and
class of shares of stock and securities to which the Holder would have
been entitled pursuant to the terms of the recapitalization if,
immediately prior to such recapitalization, the Holder had been the
holder of record of the number of shares of Stock then covered by such
Award.

     (c) In the event of a Change of Control, all outstanding Awards
shall immediately vest and become exercisable or satisfiable, as
applicable. The Committee, in its discretion, may determine that upon
the occurrence of a Change of Control, each Award other than an Option
outstanding hereunder shall terminate within a specified number of days
after notice to the Holder, and such Holder shall receive, with respect
to each share of Stock subject to such Award, cash in an amount equal to
the excess, if any, of the Change of Control Value. Further, in the event
of a Change of Control, the Committee, in its discretion may act to
effect one or more of the following alternatives with respect to
outstanding Options, which may vary among individual Holders and which
may vary among Options held by any individual Holder:

     (i) determine a limited period of time on or before a
specified date (before or after such Change of Control) after which
specified date all unexercised Options and all rights of Holders
thereunder shall terminate,

     (ii) require the mandatory surrender to the Company by
selected Holders of some or all of the outstanding Options held by
such Holders (irrespective of whether such Options are then
exercisable under the provisions of the Plan) as of a date, before
or after such Change of Control, specified by the Committee, in
which event the Committee shall thereupon cancel such Options and
the Company shall pay to each Holder an amount of cash per share
equal to the excess, if any, of the Change of Control Value of the shares subject to such Option over the exercise price(s) under such
Options for such shares,

     (iii) make such adjustments to Options then outstanding as the
Committee deems appropriate to reflect such Change of Control
(provided, however, that the Committee may determine in its sole
discretion that no adjustment is necessary to Options then
outstanding), or

     (iv) provide that thereafter upon any exercise of an Option
theretofore granted the Holder shall be entitled to purchase under
such Option, in lieu of the number of shares of Stock then covered
by such Option the number and class of shares of stock or other
securities or property (including, without limitation, cash) to
which the Holder would have been entitled pursuant to the terms of
the agreement of merger, consolidation or sale of assets and
dissolution if,

14

 

immediately prior to such merger, consolidation or sale of
assets and dissolution the Holder has been the holder of record of
the number of shares of Stock then covered by such Option.

     The provisions contained in this paragraph shall be inapplicable to an
Award granted within six (6) months before the occurrence of a Change of
Control if the Holder of such Award is subject to the reporting requirements of
Section 16(a) of the 1934 Act. The provisions contained in this paragraph
shall not terminate any rights of the Holder to further payments pursuant to
any other agreements with the Company after a Change of Control.

     (d) If there are changes in the outstanding Stock by reason of
recapitalization, reorganizations, mergers, consolidations, combinations,
exchanges or other relevant changes in capitalization occurring after the
date of the grant of any Award and not otherwise provided for by this
Paragraph XII, any outstanding Awards and any agreements evidencing such
Awards shall be subject to adjustment by the Committee at its discretion
as to the number and price of shares of Stock or other consideration
subject to such Awards. If there is any change in the outstanding
Stock, the aggregate number of shares available under the Plan may be
appropriately adjusted by the Committee, whose determination shall be
conclusive.

     (e) The existence of the Plan and the Awards granted hereunder shall
not affect in any way the right or power of the Board or the shareholders
of the Company to make or authorize any adjustment, recapitalization,
reorganization or other change in the Company’s capital structure or its
business, any merger or consolidation of the Company, any issue of debt
or equity securities ahead of or affecting Stock or the rights thereof
the dissolution or liquidation of the Company or any sale, lease,
exchange or other disposition of all or any part of its assets or
business or any other corporate act or proceeding.

     (f) Any adjustment provided for in Subparagraphs (a), (b), (c) or
(d) above shall be subject to any required shareholder action.

     (g) Except as hereinbefore expressly provided, the issuance by the
Company of shares of stock of any class or securities convertible into shares of stock of any class, for cash, property, labor or services, upon
direct sale, upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares of obligations of the Company
convertible into such shares or other securities, and in any case whether
or not for fair value, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number of shares of Stock
subject to Awards theretofore granted or the purchase price per share, if
applicable.

XIII. AMENDMENT AND TERMINATION OF THE PLAN

     The Board in its discretion may terminate the Plan at any time with
respect to any shares for which Awards have not theretofore been granted. The
Board shall have the right to alter or amend the Plan or any part thereof from
time to time; provided that no change in any Award previously granted may be
made that would impair the rights of the Holder without the consent

15

 

of the Holder [(unless such change is required in order to cause the
benefits under the Plan to qualify as performance-based compensation within the
meaning of section 162(m) of the Code and applicable interpretive authority
thereunder)], and provided, further, that the Board may not, without approval
of the shareholders, amend the Plan to:

     (a) increase the maximum number of shares which may be issued on
exercise or surrender of an Award, except as provided in Paragraph XII,

     (b) change the Option price,

     (c) extend the maximum period during which Awards may be granted
under the Plan, or

     (d) decrease any authority granted to the Committee hereunder in
contravention of Rule 16b-3.

XIV. MISCELLANEOUS

     (a) No Right to An Award. Neither the adoption of the Plan by the
Company nor any action of the Board or the Committee shall be deemed to
give an employee any right to be granted an Award to purchase Stock, a
right to a Stock Appreciation Right, a Restricted Stock Award, a
Performance Award or a Phantom Stock Award or any of the rights hereunder
except as may be evidenced by an Award or by an Option Agreement, Stock
Appreciation Rights Agreement, Restricted Stock Agreement, Performance
Award Agreement or Phantom Stock Award Agreement on behalf of the
Company, and then only to the extent and on the terms and conditions
expressly set forth therein. 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 funds or assure the payment of any Award.

     (b) No Employment Rights Conferred. Nothing contained in the Plan
shall (i) confer upon any employee any right with respect to continuation
of employment with the Company or any subsidiary or (ii) interfere in any
way with the right of the Company or any subsidiary to terminate his or
her employment at any time.

     (c) Other Laws; Withholding. The Company shall not be obligated to
issue any Stock pursuant to any Award granted under the Plan at any time
when the shares covered by such Award have not been registered under the
Securities Act of 1933 and such other state and federal laws, rules or
regulations as the Company or the Committee deems applicable and, in the
opinion of legal counsel for the Company, there is no exemption from the
registration requirements of such laws, rules or regulations available
for the issuance and sale of such shares. No fractional shares of Stock
shall be delivered, nor shall any cash in lieu of fractional shares be
paid. The Company shall have the right to deduct in connection with all
Awards any taxes required by law to be withheld and to require any
payments required to enable it to satisfy its withholding obligations.

     (d) No Restriction on Corporate Action. Nothing contained in the
Plan shall be construed to prevent the Company or any subsidiary from
taking any corporate

16

 

action which is deemed by the Company or such subsidiary to be
appropriate or in its best interest, whether or not such action would
have an adverse effect on the Plan or any Award made under the Plan. No
employee, beneficiary or other person shall have any claim against the
Company or any subsidiary as a result of any such action.

     (e) Restrictions on Transfer. An Award shall not be transferable
otherwise than by will or the laws of descent and distribution or
pursuant to a “qualified domestic relations order” as defined by the Code
or Title I of the Employee Retirement Income Security Act of 1974, as
amended, or the rules thereunder, and shall be exercisable during the
Holder’s lifetime only by such Holder or the Holder’s guardian or legal
representative.

     (f) Rule 16b-3. It is intended that the Plan and any grant of an
Award made to a person subject to Section 16 of the 1934 Act meet all of
the requirements of Rule 16b-3. If any provision of the Plan or any such
Award would disqualify the Plan or such Award under, or would otherwise
not comply with, Rule 16b-3, such provision or Award shall be construed
or deemed amended to conform to Rule 16b-3.

     (g) Section 162(m). It is intended that the Plan comply fully with
and meet all the requirements of Section 162(m) of the Code so that
Options and Stock Appreciation Rights granted hereunder and, if
determined by the Committee, Restricted Stock Awards, shall constitute
“performance-based” compensation within the meaning of such section. If
any provision of the Plan would disqualify the Plan or would not
otherwise permit the Plan to comply with Section 162(m) as so intended,
such provision shall be construed or deemed amended to conform to the
requirements or provisions of Section 162(m); provided that no such
construction or amendment shall have an adverse effect on the economic
value to a Holder of any Award previously granted hereunder.

     (h) Governing Law. This Plan shall be construed in accordance with
the laws of the State of Texas.

17

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