Document:

Exhibit 10.14

 

 

FIRST AMENDMENT TO EMPLOYMENT AGREEMENT

 

This First Amendment to
Employment Agreement (“First Amendment”) is entered into between CPNO Services,
L.P., a Texas limited partnership (“Employer”), and James J. Gibson, III (“Employee”),
effective as of this 1st day of March, 2005 (the “Effective Date”).  Capitalized terms used in this First
Amendment that are not otherwise defined herein shall have the meanings set
forth in the Employment Agreement.

 

RECITALS

 

WHEREAS, Copano/Operations,
Inc., a Texas corporation (“Copano Operations”) and Employee have entered into
an Employment Agreement effective October 1, 2004 (the “Employment Agreement”);
and

 

WHEREAS, pursuant to Section
10.5 of the Employment Agreement, Copano Operations assigned its rights and
obligations thereunder to Employer effective January 1, 2005;

 

WHEREAS, the parties have
determined that it is in their mutual interest to amend the Employment
Agreement, and take certain other actions, as set forth herein;

 

NOW, THEREFORE, for and in
consideration of the premises and the mutual agreements contained herein and
for other good and valuable consideration, the receipt, adequacy and
sufficiency of which are hereby acknowledged, Employer and Employee hereby
agree as follows:

 

AGREEMENT

 

SECTION
1.         Amendments
to Employment Agreement.  The Employment Agreement is hereby amended as
follows:

 

A.                                   The first sentence of Section 3.1 is amended
in its entirety to read as follows:  “In
consideration for his services hereunder during the term of the Employee’s
employment under this Agreement and the covenants contained in this Agreement,
Employee shall be paid beginning on March 1, 2005, the amount of Eleven
Thousand Two Hundred Fifty Dollars per month ($11,250.00) (“Salary”),
payable in accordance with the usual payroll practices of the Company and
subject to all customary payroll deductions.”

 

B.            Section 3.2 of the Employment
Agreement is hereby amended:

 

1.                           by inserting the words “For periods prior to
January 1, 2005,” at the beginning of the first sentence of the Section; and

 

2.                           by inserting the following sentence at the
end of the Section: “From and after January 1, 2005, Employee shall be eligible
to participate in the Copano Energy, L.L.C. Management Incentive Compensation
Plan dated January 1, 2005 or any substitute incentive compensation plan as may
be in effect from time to time for the benefit of executive officers of Copano
Holdings (the “Management Bonus Plan”); provided, however, that in the event
that at any time there is no Management Bonus Plan in effect, Employee shall be
eligible to earn an annual incentive cash bonus upon the same terms as in
effect prior to January 1, 2005.”

 

C.                                     Section 3.3(b) of the Employment Agreement is
hereby amended in its entirety to read as follows:  “(b) reimbursement for routine automobile
maintenance expenses and gasoline expenses incurred for Company purposes;”.

 

D.                                    Section
4.3 of the Employment Agreement is hereby amended by inserting at the end of
the first sentence the phrase “; provided, however, that, notwithstanding
subsection (d) hereof, for any periods subsequent to December 31, 2004, the
Employee’s right to receive any bonus payment is governed solely by the
provisions of the Management Bonus Plan for so long as the Management Bonus
Plan is in effect”.

 

 

SECTION 2.         Employment Agreement to Remain in Full Force and
Effect.  The Employment Agreement, as
amended hereby, shall remain in full force and effect.

 

SECTION 3.         Further Assurances.  The parties will execute such
additional documents and instruments, and take such further actions, as are
necessary or appropriate to give effect to the terms of this First Amendment.

 

SECTION 4.         Applicable Law.  This First Amendment shall be
governed by and construed in accordance with laws in the state of Texas.

 

SECTION 5.         Execution.  This First Amendment may be
executed in multiple counterparts, each of which shall be deemed in original
but all of which shall be deemed one instrument.

 

IN WITNESS WHEREOF, the
parties have executed this First Amendment as of the day and year first written
above, to be effective for all purposes as of the Effective Date.

 

 

	
   

  	
  /s/ James J. Gibson, III

  
	
   

  	
  James J. Gibson, III

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CPNO SERVICES, L.P.

  
	
   

  	
  By:

  	
  CPNO Services GP, L.L.C.,
  its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ John R. Eckel, Jr.

  
	
   

  	
   

  	
   

  	
   

  	
  John R. Eckel, Jr.,
  Chairman and Chief

  
	
   

  	
   

  	
   

  	
   

  	
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  ACCEPTED AND AGREED:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  COPANO ENERGY, L.L.C.

  	
   

  	
   

  
	
  (F/K/A COPANO ENERGY
  HOLDINGS, L.L.C.)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/John R. Eckel, Jr.

  	
   

  	
   

  	
   

  
	
   

  	
  John R. Eckel, Jr.,
  Chairman and Chief

  	
   

  	
   

  
	
   

  	
  Executive OfficerExhibit
10.2

 

PETROHAWK
ENERGY CORPORATION

AMENDED AND RESTATED

2004 NON-EMPLOYEE DIRECTOR INCENTIVE PLAN

 

I.
Definitions and Purposes

 

(a)                                  Definitions.

 

Whenever
capitalized in this document, the following terms shall be defined as set forth
below:

 

“Board” means the board of directors of the
Company.

 

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

 

“Committee” means the committee of the Board
which shall be two or more directors as the Board shall appoint to administer
the Plan.

 

“Common Stock” means the common stock of the
Company, $.001 par value per share, and any class of common stock into which
such common stock may hereafter be converted, reclassified or recapitalized.

 

“Company” means Petrohawk Energy Corporation

 

“Corporate Change” shall have the meaning
set forth in Section VIII(c) below.

 

“ERISA” means the Employee Retirement Income
Security Act of 1974, as amended.

 

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

 

“Fair Market Value” means for one Share on
the date in question (i) the closing sale price for such Share as quoted
on the Nasdaq National Market or Nasdaq Small Cap Market, as applicable (“NASDAQ”),
or (ii) if not so quoted, the closing sales price as reported on the
consolidated reporting system for the securities exchange(s) on which Shares
are then listed or admitted to trading (as reported in the Wall Street Journal
or other reputable source), or (iii) if not so reported, the average of
the closing bid and asked prices for a Share on the date of grant as quoted by
the National Quotation Bureau’s “Pink Sheets” or the National Association of
Securities Dealers’ OTC Bulletin Board System. If there was no public trade of
Common Stock on the date in question, Fair Market Value shall be determined by
reference to the last preceding date on which such a trade was so reported.

 

 

If the Company
is not a Publicly Held Corporation at the time a determination of the Fair
Market Vale of the Company Stock is required to be made hereunder, the
determination of Fair Market Value for purposes of the Plan shall be made by
the Committee in its discretion exercised in good faith. In this respect, the
Committee may rely on such financial data, valuations, experts, and other
sources, in its discretion, as it deems advisable under the circumstances.

 

“Grantee(s)” means those certain
non-employee directors of the Company to whom the Company shall grant
Restricted Stock or Incentive Stock.

 

“Immediate Family” means with respect to a
Grantee or an Optionee, the Grantee’s or the Optionee’s spouse, children or
grandchildren (including legally adopted, step children and step
grandchildren).

 

“Incentive Stock” means Shares that may be
granted to eligible persons under Section III (c) below.

 

“Incentive Stock Award” means an agreement
between the Company and a Grantee whereby the Grantee receives Shares.

 

“Incentive Stock Agreement” means an
agreement between the Company and a Grantee whereby the Grantee receives shares
of Incentive Stock.

 

“Option Agreement” means an agreement between
the Company and an Optionee whereby the Optionee receives Stock Options.

 

“Optionee(s)” means those certain
non-employee directors of the Company to whom the Company shall grant Stock
Options.

 

“Option Price” shall mean the amount an
Optionee must pay the Company upon exercise of the Stock Option.

 

“Participants” shall mean Grantees and
Optionees.

 

“Plan” means this Petrohawk Energy
Corporation 2004 Non-Employee Director Incentive Plan.

 

“Publicly Held Corporation” means a
corporation issuing any class of common equity securities required to be
registered under Section 12 of the Exchange Act.

 

“Restricted Stock” means Shares subject to
specified restrictions that may be granted to eligible persons under Section III
(b) below.

 

2

 

“Restricted Stock Agreement” means an
agreement between the Company and a Grantee whereby the Grantee receives shares
of Restricted Stock.

 

“Restricted Stock Award” means an award of
Restricted Stock granted to a Grantee.

 

“Restriction Period” means the period of
time during which the Shares granted pursuant to a Restricted Stock Award
remain subject to the restrictions or vesting set forth in the applicable
Restricted Stock Agreement.

 

“Share” or “Shares” means a share or shares of Common Stock.

 

“Stock Option” means a grant by the Company
to an Optionee of the right to purchase Company Stock under terms set forth in
an Option Agreement.

 

(b)                                  Purposes.

 

This Plan is
intended to foster and promote the long-term financial success of the Company
and its subsidiaries and to increase stockholder value by encouraging ownership
in the Company by directors of the Company who are not employees of the
Company, strengthening the ability of the Company to attract and retain the
services of experienced and knowledgeable individuals as non-employee directors
of the Company, and providing non-employee directors with a further incentive
to work for the best interests of the Company and its stockholders.

 

This Plan provides for payment of various forms
of incentive compensation and it is not intended to be a plan that is subject
to ERISA. The Plan shall be interpreted, construed and administered consistent
with its status as a plan that is not subject to ERISA.

 

II.
Administration

 

The Plan shall be administered by the
Committee. The Committee is authorized to interpret the Plan and may from time
to time adopt such rules and regulations, consistent with the provisions of the
Plan, as it may deem advisable to carry out the Plan. All decisions and determinations
made by the Committee in construing the provisions of the Plan shall be final.

 

III. Types of Grants Under the Plan

 

(a)                                  Types of Grants.

 

Pursuant to
this Plan, the Company may grant shares of Restricted Stock, shares of
Incentive Stock, and Stock Options.

 

3

 

(b)                                 Grants of Restricted Stock.

 

Subject to the
terms and conditions of the Plan, the Board is authorized to grant Restricted
Stock to any non-employee directors. A certificate or certificates representing
the number of shares of Restricted Stock granted shall be registered in the
name of the Grantee. Until the expiration of the Restriction Period or the
lapse of restrictions in the manner provided in the Grantee’s Restricted Stock
Agreement, the certificate or certificates shall be held in escrow by the
Company for the account of the Grantee. The Grantee shall have beneficial
ownership of the shares of Restricted Stock, including the right to receive
dividends and the right to vote the shares of Restricted Stock. Upon the lapse
of all restrictions (as set forth in the Grantee’s Restricted Stock Agreement)
on any or all of the Restricted Stock granted to the Grantee, the certificate
or certificates representing the shares of Restricted Stock for which the
restrictions have lapsed shall be delivered to the Grantee.

 

Each Restricted Stock Award shall be
evidenced by a Restricted Stock Agreement which shall contain the Restriction
Period, the number of shares of Restricted Stock and such other terms and
conditions as may be approved by the Board, including other restrictions as the
Board may determine. The Board may impose such conditions or restrictions on
any Restricted Stock as it may deem advisable, in its sole discretion.

 

Unless
modified by the Board, the following grants shall be made; (i) within
sixty (60) days after the approval of this Plan by the Stockholders, a
grant of 7,500 shares of Restricted Stock shall be granted to each person who
is a non-employee director at that time; (ii) thereafter, within sixty
(60) days after a person becomes a non-employee director, a grant of 7,500
shares of Restricted Stock shall be granted to each such person; and
(iii) each year on the anniversary date of the date on which a
non-employee director became a director, an additional 5,000 shares of
Restricted Stock shall be granted to such person as long as he or she is
serving as a non-employee director at that time. Unless modified by the Board,
all Restricted Stock shall be restricted for a period ending six
(6) months from the date of grant with the restriction that the Grantee be
an non-employee director of the Company for the entire six (6) month
period.

 

(c)                                  Grant of Incentive Stock.

 

Subject to the
terms and conditions of the Plan, the Board may grant Incentive Stock to any
non-employee director in such amounts as the Board shall determine from time to
time. Each Incentive Stock Award shall be evidenced by an Incentive Stock
Agreement which shall contain the number of Shares granted and such other terms
and conditions as may be approved by the Committee.

 

(d)                                 Grant of Stock Options.

 

Subject to the terms and conditions of the
Plan, the Board is authorized to grant Stock Options to any non-employee
director.

 

4

 

Each Stock Option shall be evidenced by an
Option Agreement, which shall contain such terms and conditions as may be
approved by the Committee. The Option Price upon exercise of any Stock Option
shall be payable to the Company in full either: (i) in cash or its
equivalent, or (ii) subject to prior approval by the Committee in its
discretion, by tendering previously acquired Shares having an aggregate Fair
Market Value at the time of exercise equal to the total Option Price (provided
that the Shares which are tendered must have been held by the Optionee for at
least six (6) months prior to their tender to satisfy the option price),
or (iii) subject to prior approval by the Committee in its discretion, by
withholding Shares which otherwise would be acquired on exercise having an
aggregate Fair Market Value at the time of exercise equal to the total Option
Price, or (iv) subject to prior approval by the Committee in its
discretion, by a combination of (i), (ii), and (iii) above. Any payment in
Shares shall be effected by the surrender of such Shares to the Company in good
form for transfer and shall be valued at their Fair Market Value on the date
when the Stock Option is exercised. Unless otherwise permitted by the Committee
in its discretion, the Optionee shall not surrender, or attest to the ownership
of, Shares in payment of the Option Price if such action would cause the
Company to recognize compensation (or additional compensation expense) with
respect to the Stock Option for financial reporting purposes expense.

 

The Committee, in its discretion, also may
allow the Option Price to be paid with such other consideration as shall
constitute lawful consideration for the issuance of Shares (including, without
limitation, effecting a “cashless exercise” with a broker of the Stock Option),
subject to applicable securities law restrictions and tax withholdings, or by
any other means which the Committee determines to be consistent with the Plan’s
purpose and applicable law. A “cashless exercise” of a Stock Option is a
procedure by which a broker provides the funds to the Optionee to effect a
Stock Option exercise, to the extent consented to by the Committee in its
discretion. At the direction of the Optionee, the broker will either
(i) sell all of the Shares received when the Stock Option is exercised and
pay the Optionee the proceeds of the sale (minus the Option Price, withholding
taxes and any fees due to the broker) or (ii) sell enough of the Shares
received upon exercise of the Stock Option to cover the Option Price,
withholding taxes and any fees due the broker and deliver to the Optionee
(either directly or through the Company) a stock certificate for the remaining
Shares.

 

In no event will the Committee allow the
Option Price to be paid with a form of consideration, including a loan or a “cashless
exercise,” if such form of consideration would violate the Sarbanes-Oxley Act
of 2002 as determined by the Committee, in its discretion.

 

As soon as
practicable after receipt of a written notification of exercise and full
payment, the Company shall deliver, or cause to be delivered, to or on behalf
of the Optionee, in the name of the Optionee or other appropriate recipient,
Share certificates for the number of Shares purchased under the Stock Option.
Such delivery shall be effected for all purposes when the Company or a stock
transfer agent of the Company shall have deposited such certificates in the
United States mail, addressed to Grantee or other appropriate recipient.

 

5

 

IV.
Eligibility of Participants, Term and Transferability

 

Restricted Stock, Incentive Stock and Stock
Options may be granted only to individuals who are non-employee directors of the
Company at the time the Restricted Stock, Incentive Stock or Stock Option is
granted. Restricted Stock, Incentive Stock and Stock Options may be granted to
the same individual on more than one occasion.

 

Except with
Board approval, Restricted Stock and Stock Options granted under the Plan shall
not be transferable or assignable other than: (a) by will or the laws of
descent and distribution or (b) pursuant to a qualified domestic relations
order (as defined by Section 414(p) of the Code); provided, however, the
Committee may, in its discretion, authorize all or a portion of the Stock
Options to be granted on terms which permit transfer by the Optionee to
(i) the members of the Optionee’s Immediate Family, (ii) a trust or
trusts for the exclusive benefit of such Immediate Family, or (iii) a
partnership in which such members of such Immediate Family are the only
partners, provided that (A) there may be no consideration for any such
transfer, (B) the Stock Option pursuant to which such Stock Options are
granted must be approved by the Committee, and must expressly provide for transferability
in a manner consistent with this Section and (C) subsequent transfers
of transferred Stock Options shall be prohibited except in accordance with
clauses (A) and (B) above of this sentence. Following any permitted
transfer, any Stock Option shall continue to be subject to the same terms and
conditions as were applicable immediately prior to transfer, provided that the
term “Optionee” shall be deemed to refer to the transferee.  The Stock Option shall be exercisable by the
transferee only to the extent, and for the periods, specified in the Option
Agreement.

 

Except as may
otherwise be permitted under the Code, in the event of a permitted transfer of
a Stock Option hereunder, the original Optionee shall remain subject to
withholding taxes upon exercise. In addition, the Company shall have no
obligation to provide any notices to a transferee.

 

No transfer by will, trust or by the laws of
descent and distribution shall be effective to bind the Company unless the
Committee has been furnished with a copy of the deceased Grantee’s enforceable
will, trust or such other evidence as the Committee deems necessary to
establish the validity of the transfer. Any attempted transfer in violation of
this provision shall be void and ineffective. All determinations under this Section shall
be made by the Committee in its discretion.

 

V.
Shares Subject to Plan

 

The aggregate
number of shares of Restricted Stock, shares of Incentive Stock and Shares
which may be issued under Stock Options granted under the Plan shall not exceed
200,000. Such shares may consist of authorized but unissued Shares, treasury
shares of Common Stock, or previously issued Shares reacquired by the Company.
Any of such Shares which remain unissued and which are not subject to
outstanding Stock Options at the termination of the Plan shall cease to be
subject to the Plan, but, until

 

6

 

termination of
the Plan, the Company shall at all times make available a sufficient number of
Shares to meet the requirements of the Plan. Should any Stock Option hereunder
expire or terminate prior to its exercise in full, the Shares theretofore
subject to such Stock Option may again be subject to a Stock Option granted
under the Plan. Upon the forfeiture of any Restricted Stock, the forfeited
shares of Restricted Stock shall thereafter be available for award under the
Plan. The aggregate number of Shares which may be issued under the Plan shall
be subject to adjustment in the same manner as provided in Section VIII
hereof with respect to Shares subject to Stock Options then outstanding.
Exercise of a Stock Option in any manner shall result in a decrease in the
number of Shares which may thereafter be available, both for purposes of the
Plan and for grant to any one individual, by the number of Shares as to which
the Stock Option is exercised.

 

VI.
Option Price

 

The Option
Price of Shares issued under each Stock Option shall be equal to the Fair
Market Value of Shares subject to the Stock Option on the date the Stock Option
is granted.

 

VII.
Term of Plan

 

This Plan
became effective as of June 3, 2004, pursuant to approval by the
stockholders of the Company at the 2004 Annual Meeting of Stockholders, and is
amended and restated herein only as to the name of the Company to reflect the
name change to Petrohawk Energy Corporation. 
Except with respect to Restricted Stock or Stock Options then
outstanding, if not sooner terminated under the provisions of Section IX,
the Plan shall terminate upon and no further Restricted Stock, Incentive Stock
or Stock Options shall be granted after June 2, 2014.

 

VIII.
Recapitalization or Reorganization

 

(a)                                  The
existence of the Plan and the Restricted Stock, Incentive Stock and Stock
Options granted hereunder shall not affect in any way the right or power of the
Board or the stockholders 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, 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.

 

(b)                                 The
shares with respect to which Stock Options may be granted are shares of Stock
as presently constituted, but if, and whenever, prior to the expiration of a
Stock Option theretofore granted, the Company shall effect a subdivision or
consolidation of shares of Stock or the payment of a stock dividend on Stock
without receipt of consideration by the Company, the number of Shares with
respect to which such Stock Option may thereafter be exercised (i) in the
event of an increase in the number of

 

7

 

outstanding
Shares shall be proportionately increased, and the Option Price per Share shall
be proportionately reduced, and (ii) in the event of a reduction in the
number of outstanding Shares shall be proportionately reduced, and the Option
Price per share shall be proportionately increased.

 

(c)                                  If
the Company recapitalizes, reclassifies its capital stock, or otherwise changes
its capital structure (a “recapitalization”), the number and class of shares of
Stock covered by a Stock Option theretofore granted shall be adjusted so that
such Stock Option shall thereafter cover the number and class of shares of
stock and securities to which the Optionee would have been entitled pursuant to
the terms of the recapitalization if, immediately prior to the recapitalization,
the Optionee had been the holder of record of the number of shares of Stock
then covered by such Stock Option.

 

If (i) the Company shall not be 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
substantially all of its assets to any other person or entity (other than a
wholly-owned subsidiary of the Company), (iii) the Company is to be
dissolved and liquidated, (iv) any person or entity, including a “group”
as contemplated by Section 13(d)(3) of the Exchange Act acquires or gains
ownership or control (including, without limitation, power to vote) of 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 shall cease to constitute a majority of the Board (each such
event is referred to herein as a “Corporate
Change”), no later than (a) ten (10) days after the
approval by the stockholders of the Company of such merger, consolidation,
reorganization, sale, lease or exchange of assets or dissolution or such
election of directors or (b) thirty (30) days after a change of
control of the type described in Clause (iv), the Committee, acting in its
sole discretion without the consent or approval of any Optionee, shall act to
effect one or more of the following alternatives, which may vary among
individual Optionees and which may vary among Stock Options held by any
individual Optionee: (1)  accelerate the time at which Stock Options then
outstanding may be exercised so that such Stock Options may be exercised in
full for a limited period of time on or before a specified date (before or
after such Corporate Change) fixed by the Committee, after which specified date
all unexercised Stock Options and all rights of Optionees thereunder shall
terminate, (2) require the mandatory surrender to the Company by selected
Optionees of some or all of the outstanding Stock Options held by such
Optionees (irrespective of whether such Stock Options are then exercisable
under the provisions of the Plan) as of a date, before or after such Corporate
Change, specified by the Committee, in which event the Committee shall
thereupon cancel such Stock Options and the Company shall pay to each Optionee
an amount of cash per share to be determined by the Committee, (3) make
such adjustments to Stock Options then outstanding as the Committee deems
appropriate to reflect such Corporate Change (provided, however, that the
Committee may determine in its sole discretion that no adjustment is necessary
to Stock Options then outstanding) or (4) provide that the number and
class of shares of Stock covered by a Stock Option theretofore granted shall be

 

8

 

adjusted so that such Stock Option shall thereafter cover the number
and class of shares of stock or other securities or property (including,
without limitation, cash) to which the Optionee would have been entitled
pursuant to the terms of the agreement of merger, consolidation or sale of
assets and dissolution if, immediately prior to such merger, consolidation or
sale of assets and dissolution the Optionee had been the holder of record of
the number of shares of Stock then covered by such Stock Option. In addition,
no later than (a) ten (10) days after the approval by the
stockholders of the Company of such merger, consolidation, reorganization,
sale, lease or exchange of assets or dissolution or such election of directors
or (b) thirty (30) days after a change of control of the type
described in Clause (iv), the Committee, acting in its sole discretion
without the consent or approval of any Grantee, shall act to effect one or more
of the following alternatives, which may vary among individual Grantees and
which may vary among Restricted Stock held by any individual Grantee: (1) 
remove any and all restrictions to which the Restricted Stock is subject
including removing the Restriction Period, (2) require the mandatory
surrender to the Company by selected Grantees of some or all of the outstanding
Restricted Stock held by such Grantees as of a date, before or after such
Corporate Change, specified by the Committee and the Company shall pay to each
Optionee an amount of cash per share to be determined by the Committee,
(3) make such adjustments to the Restricted Stock then outstanding as the
Committee deems appropriate to reflect such Corporate Change (provided,
however, that the Committee may determine in its sole discretion that no
adjustment is necessary to the Restricted Stock then outstanding) or
(4) provide that the number and class of shares of Restricted Stock
covered by a Restricted Stock Agreement theretofore granted shall be adjusted
so that such Restricted Stock shall thereafter cover the number and class of
shares of stock or other securities or property (including, without limitation,
cash) to which the Grantee would have been entitled pursuant to the terms of
the agreement of merger, consolidation or sale of assets and dissolution if,
immediately prior to such merger, consolidation or sale of assets and
dissolution the Grantee had been the holder of record of the number of Shares
which was not Restricted Stock.

 

(d)                                 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 or
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 therefor shall be made with respect to, any Restricted
Stock or the number of shares of Stock subject to Stock Options theretofore
granted or the Option Price.

 

IX.
Amendment or Termination of the Plan

 

The Board in
its discretion may terminate the Plan at any time with respect to any shares
for which Stock Options, Incentive Stock Awards or Restricted Stock 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
Restricted Stock Agreement, Incentive Stock Agreement or Stock Option Agreement
theretofore

 

9

 

granted may be
made which would impair the rights of the Participant without the consent of
such Participant; and provided, further, that the Board may not make any
alteration or amendment which would materially increase the benefits accruing
to Participants under the Plan, increase the aggregate number of shares which
may be issued pursuant to the provisions of the Plan, change the class of
individuals eligible to receive Restricted Stock, Incentive Stock or Stock
Options under the Plan or extend the term of the Plan, without the approval of the
stockholders of the Company.

 

X.
Securities Laws

 

The Company
shall not be obligated to issue any Shares pursuant to any Restricted Stock
Agreement, Incentive Stock Agreement or Stock Option granted under the Plan at
any time when the offering of the shares of Restricted Stock, Incentive Stock
or shares covered by such Stock Option 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
offering and sale of such shares.

 

XI.
General

 

(a)                                  Nothing contained in
this Plan, any Restricted Stock Agreement, any Incentive Stock Agreement or any
Stock Option granted pursuant to this Plan shall confer upon any non-employee
director the right to continue as a director of the Company or its parent or
subsidiary or any other corporation affiliated with the Company.

 

(b)                                 No Optionee shall have
any rights as a stockholder of the Company with respect to any Shares subject
to a Stock Option hereunder until such Shares have been issued.

 

(c)                                  Nothing contained in
this Plan, a Restricted Stock Agreement, an Incentive Stock Agreement or in any
Option Agreement issued hereunder shall impose any liability or responsibility
on the Company, the Board, the Committee or any member or any of the foregoing
to pay, or reimburse any Participant for the payment of any tax arising out of,
or on account of the issuance of Restricted Stock, Incentive Stock or a Stock
Option or Stock Options hereunder to any Participant, an Optionee’s exercise of
any Stock Option issued under the Plan or a Participant’s sale, transfer or
other disposition of any Restricted Stock, Incentive Stock or Shares acquired
pursuant to the exercise of any Stock Option issued hereunder. Any person
receiving Restricted Stock, Incentive Stock or a Stock Option hereunder shall
expressly acknowledge and agree that such participation is voluntary and that
the Participant shall be solely responsible for all taxes to which he or she
may or become subject as a consequence of such participation.

 

10

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