Document:

Exhibit 10.6

 

BARE ESCENTUALS, INC.

2006 Equity Incentive Award Plan

 

ARTICLE 1

PURPOSE

The purpose of the Bare Escentuals, Inc. 2006 Equity
Incentive Award Plan (the “Plan”) is to promote the success and enhance
the value of Bare Escentuals, Inc., a Delaware corporation (the “Company”),
by linking the personal interests of the Employees, Consultants and members of
the Board to those of the Company’s stockholders and by providing such
individuals with an incentive to promote the success and enhance the value of
the Company.  The Plan is further
intended to provide flexibility to the Company in its ability to motivate,
attract, and retain the services of members of the Board, Employees, and
Consultants upon whose judgment, interest, and special effort the successful
conduct of the Company’s operation is largely dependent.

ARTICLE 2

DEFINITIONS
AND CONSTRUCTION

 

Wherever the following terms are used in the Plan they
shall have the meanings specified below, unless the context clearly indicates
otherwise.  The singular pronoun shall
include the plural where the context so indicates.

 

2.1           “Award” means an Option, a Stock
Appreciation Right award, a Restricted Stock award, a Performance Award, a
Dividend Equivalents award, a Stock Payment award, a Deferred Stock award, a
Restricted Stock Unit award, an Other Stock-Based Award or a Performance Award granted
to a Participant pursuant to the Plan.

2.2           “Award Agreement” means any
written agreement, contract, or other instrument or document evidencing an
Award, including through an electronic medium.

2.3           “Board” means the Board of
Directors of the Company.

2.4           “Change in Control” means and
includes each of the following:

(a)           A transaction or series of transactions
(other than an offering of Stock to the general public through a registration
statement filed with the Securities and Exchange Commission) whereby any “person”
or related “group” of “persons” (as such terms are used in Sections 13(d) and
14(d)(2) of the Exchange Act) (other than the Company, any of its subsidiaries,
an employee benefit plan maintained by the Company or any of its subsidiaries
or a “person” that, prior to such transaction, directly or indirectly controls,
is controlled by, or is under common control with, the Company) directly or
indirectly acquires beneficial ownership (within the meaning of Rule 13d-3
under the Exchange Act) of securities of the Company possessing more than 50%
of the total combined voting power of the Company’s securities outstanding
immediately after such acquisition; or

 

(b)           During any period of two consecutive
years, individuals who, at the beginning of such period, constitute the Board
together with any new director(s) (other than a director designated by a person
who shall have entered into an agreement with the Company to effect a
transaction described in Section 2.4(a) or Section 2.4(c)) whose election by
the Board or nomination for election by the Company’s stockholders was approved
by a vote of at least two-thirds of the directors then still in office who
either were directors at the beginning of the two-year period or whose election
or nomination for election was previously so approved, cease for any reason to
constitute a majority thereof; or

(c)           The consummation by the Company (whether
directly involving the Company or indirectly involving the Company through one
or more intermediaries) of (x) a merger, consolidation, reorganization, or
business combination or (y) a sale or other disposition of all or
substantially all of the Company’s assets in any single transaction or series
of related transactions or (z) the acquisition of assets or stock of
another entity, in each case other than a transaction:

(1)           Which results in the Company’s voting
securities outstanding immediately before the transaction continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the Company or the person that, as a result of the transaction,
controls, directly or indirectly, the Company or owns, directly or indirectly,
all or substantially all of the Company’s assets or otherwise succeeds to the
business of the Company (the Company or such person, the “Successor Entity”))
directly or indirectly, at least a majority of the combined voting power of the
Successor Entity’s outstanding voting securities immediately after the
transaction, and

(2)           After which no person or group
beneficially owns voting securities representing 50% or more of the combined
voting power of the Successor Entity; provided,
however, that no person or group shall be treated for purposes of
this Section 2.4(c)(2) as beneficially owning 50% or more of combined voting
power of the Successor Entity solely as a result of the voting power held in
the Company prior to the consummation of the transaction; or

(d)           The Company’s stockholders approve a
liquidation or dissolution of the Company.

The Committee shall have full and final authority,
which shall be exercised in its discretion, to determine conclusively whether a
Change in Control of the Company has occurred pursuant to the above definition,
and the date of the occurrence of such Change in Control and any incidental
matters relating thereto.

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

2.6           “Committee” means the committee of
the Board described in Article 12.

2.7           “Consultant” means any consultant
or adviser if:

(a)           the consultant or adviser is a natural
person;

 

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(b)           the consultant or adviser renders bona
fide services to the Company or any Subsidiary; and

(c)           the services rendered by the consultant
or adviser are not in connection with the offer or sale of securities in a
capital-raising transaction and do not directly or indirectly promote or
maintain a market for the Company’s securities.

2.8           “Covered Employee” means an
Employee who is, or could be, a “covered employee” within the meaning of
Section 162(m) of the Code.

2.9           “Deferred Stock” means a right to
receive a specified number of shares of Stock during specified time periods
pursuant to Article 8.

2.10         “Dividend Equivalents” means a
right granted to a Participant pursuant to Article 8 to receive the equivalent
value (in cash or Stock) of dividends paid on Stock.

2.11         “Effective Date” shall have the
meaning set forth in Section 13.1.

2.12         “Eligible Individual” means any
person who is an Employee, a Consultant, or a Non-Employee Director, as
determined by the Committee.

2.13         “Employee” means any officer or
other employee (as defined in accordance with Section 3401(c) of the Code) of
the Company or any Subsidiary.

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

2.15         “Fair Market Value” means, as of
any date:

(a)           If the Stock is listed on any established
stock exchange or national market system, including without limitation any
market system of The Nasdaq Stock Market, its Fair Market Value shall be the
closing sales price for a share of Stock as quoted on such exchange or system
for the date of determination or, if there is no closing sales price for the
Stock on the date in question, the closing sales price for a share of Stock on
the last preceding date for which such quotation exists, as reported in The Wall Street Journal or such other source as the Committee
deems reliable;

(b)           If the Stock is regularly quoted by a
recognized securities dealer but closing sales prices are not reported, its
Fair Market Value shall be the mean of the high bid and low asked prices on the
date of determination or, if there are no high bid and low asked prices on the
date of determination, the high bid and low asked prices on the last preceding
date for which such information exists, as reported in The Wall
Street Journal or such other source as the Committee deems reliable;
or

(c)           If the Stock is neither listed on an
established stock exchange or a national market system nor regularly quoted by
a recognized securities dealer, the Fair Market Value thereof shall be
established by the Committee in good faith.

 

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2.16         “Incentive Stock Option” means an
Option that is intended to meet the requirements of Section 422 of the Code or
any successor provision thereto.

2.17         “Non-Employee Director” means a
member of the Board who is not an Employee of the Company.

2.18         “Non-Qualified Stock Option” means an Option
that is not intended to be an Incentive Stock Option.

2.19         “Option” means a right granted to a Participant
pursuant to Article 5 of the Plan to purchase a specified number of shares of
Stock at a specified price during specified time periods.  An Option may be either an Incentive Stock
Option or a Non-Qualified Stock Option.

2.20         “Other Stock-Based Award” means an Award
granted or denominated in Stock or units of Stock pursuant to Section 8.7 of
the Plan.

2.21         “Participant” means any Eligible Individual
who, as a member of the Board, Consultant or Employee, has been granted an
Award pursuant to the Plan.

2.22         “Performance Award” has the
meaning set forth in Section 8.8.

2.23         “Performance-Based Award” means an Award
granted to selected Covered Employees pursuant to Article 6 or Article 8, but
which is subject to the terms and conditions set forth in Article 9.  All Performance-Based Awards are intended to
qualify as Qualified Performance-Based Compensation.

2.24         “Performance Criteria” means the criteria that
the Committee selects for purposes of establishing the Performance Goal or
Performance Goals for a Participant for a Performance Period.  The Performance Criteria that will be used to
establish Performance Goals are limited to the following:  net earnings (either before or after
interest, taxes, depreciation and amortization), economic value-added (as
determined by the Committee), sales or revenue, net income (either before or
after taxes), operating earnings, cash flow (including, but not limited to,
operating cash flow and free cash flow), cash flow return on capital, return on
net assets, return on stockholders’ equity, return on assets, return on
capital, stockholder returns, return on sales, gross or net profit margin,
productivity, expense, margins, operating efficiency, customer satisfaction,
working capital, earnings per share, price per share of Stock, and market
share, any of which may be measured either in absolute terms or as compared to
any incremental increase or as compared to results of a peer group.  The Committee shall, within the time
prescribed by Section 162(m) of the Code, define in an objective fashion the
manner of calculating the Performance Criteria it selects to use for such
Performance Period for such Participant.

2.25         “Performance Goals” means, for a
Performance Period, the goals established in writing by the Committee for the
Performance Period based upon the Performance Criteria.  Depending on the Performance Criteria used to
establish such Performance Goals, the Performance Goals may be expressed in
terms of overall Company performance or the performance of a division, business
unit, or an individual.  The Committee,
in its discretion, may, within the time prescribed by Section 162(m) of the
Code, adjust or modify the calculation of Performance Goals for such
Performance Period in order to prevent the dilution or enlargement 

 

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of the rights of
Participants (a) in the event of, or in anticipation of, any unusual or
extraordinary corporate item, transaction, event, or development, or (b) in
recognition of, or in anticipation of, any other unusual or nonrecurring events
affecting the Company, or the financial statements of the Company, or in
response to, or in anticipation of, changes in applicable laws, regulations,
accounting principles, or business conditions.

2.26         “Performance Period” means the one
or more periods of time, which may be of varying and overlapping durations, as
the Committee may select, over which the attainment of one or more Performance
Goals will be measured for the purpose of determining a Participant’s right to,
and the payment of, a Performance-Based Award.

2.27         “Performance Share” means a right
granted to a Participant pursuant to Article 8, to receive Stock, the payment
of which is contingent upon achieving certain Performance Goals or other
performance-based targets established by the Committee.

2.28         “Performance Stock Unit” means a
right granted to a Participant pursuant to Article 8, to receive Stock, the payment
of which is contingent upon achieving certain Performance Goals or other
performance-based targets established by the Committee.

2.29         “Plan” means this Bare Escentuals,
Inc. 2006 Equity Incentive Award Plan, as it may be amended from time to time.

2.30         “Prior Award” means a stock
option, restricted stock award or other stock-based award granted under the
Prior Plan.

2.31         “Prior Plan” means the Company’s
2004 Equity Incentive Award Plan, as it may be amended from time to time.

2.32         “Public Trading Date” means the
first date upon which Stock is listed (or approved for listing) upon notice of
issuance on any securities exchange or designated (or approved for designation)
upon notice of issuance as a national market security on an interdealer quotation
system.

2.33         “Qualified Performance-Based
Compensation” means any compensation that is intended to qualify as “qualified
performance-based compensation” as described in Section 162(m)(4)(C) of
the Code.

2.34         “Restricted Stock” means Stock
awarded to a Participant pursuant to Article 6 that is subject to certain
restrictions and may be subject to risk of forfeiture.

2.35         “Restricted Stock Unit” means an
Award granted pursuant to Section 8.6.

2.36         “Securities Act” shall mean the
Securities Act of 1933, as amended.

2.37         “Stock” means the common stock of
the Company, par value $0.001 per share, and such other securities of the
Company that may be substituted for Stock pursuant to Article 11.

 

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2.38         “Stock Appreciation Right” or “SAR”
means a right granted pursuant to Article 7 to receive a payment equal to the
excess of the Fair Market Value of a specified number of shares of Stock on the
date the SAR is exercised over the Fair Market Value on the date the SAR was
granted as set forth in the applicable Award Agreement.

2.39         “Stock Payment” means (a) a
payment in the form of shares of Stock, or (b) an option or other right to
purchase shares of Stock, as part of any bonus, deferred compensation or other
arrangement, made in lieu of all or any portion of the Participant’s
compensation, granted pursuant to Article 8.

2.40         “Subsidiary” means any “subsidiary
corporation” as defined in Section 424(f) of the Code and any applicable
regulations promulgated thereunder or any other entity of which a majority of
the outstanding voting stock or voting power is beneficially owned directly or
indirectly by the Company.

ARTICLE 3

SHARES
SUBJECT TO THE PLAN

3.1           Number of
Shares.

(a)           Subject to Article 11 and Section 3.1(b),
the maximum aggregate number of shares of Stock which may be issued or
transferred pursuant to Awards under the Plan shall be Four Million Five
Hundred Thousand (4,500,000), which shall include any shares of Stock which as
of immediately prior to the Effective Date are available for future awards under
the Prior Plan (collectively, the “Initial Authorized Shares”).  In addition, in the event of any
cancellation, termination, expiration or forfeiture of any Prior Award during
the term of the Plan (including any shares of Stock that are forfeited by the
holder or repurchased by the Company pursuant to the terms of the applicable
award agreement at a price not greater than the original purchase price paid by
the holder), the number of shares of Stock that may be issued or transferred
pursuant to Awards under the Plan shall automatically be increased by one share
for each share subject to such Prior Award that is so cancelled, terminated,
expired, forfeited or repurchased (collectively, the “Cancelled Prior Award
Shares”).

(b)           To the extent that an Award terminates,
expires, lapses or is forfeited for any reason, any shares of Stock then
subject to such Award shall again be available for the grant of an Award
pursuant to the Plan.  Additionally, any
shares of Stock tendered or withheld to satisfy the grant or exercise price or
tax withholding obligation pursuant to any Award shall again be available for
the grant of an Award pursuant to the Plan.  The payment of Dividend Equivalents in cash in
conjunction with any outstanding Awards shall not be counted against the shares
available for issuance under the Plan. 
To the extent permitted by applicable law or any exchange rule, shares
of Stock issued in assumption of, or in substitution for, any outstanding
awards of any entity acquired in any form of combination by the Company or any
Subsidiary shall not be counted against shares of Stock available for grant
pursuant to this Plan.  Notwithstanding
the provisions of this Section 3.1(b), no shares of Stock may again be
optioned, granted or awarded if such action would cause an Incentive Stock
Option to fail to qualify as an incentive stock option under Section 422 of the
Code.

 

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3.2           Stock Distributed. 
Any Stock distributed pursuant to an Award may consist, in whole or in
part, of authorized and unissued Stock, treasury Stock or Stock purchased on
the open market.

3.3           Award Limits. 
Notwithstanding any provision in the Plan to the contrary, and subject
to Article 11, the maximum number of shares of Stock with respect to one or
more Awards that may be granted to any one Participant during any calendar year
shall be One Million shares (1,000,000). 
The limitations set forth in the preceding sentence shall not apply
prior to the Public Trading Date and, following the Public Trading Date, the
foregoing limitation shall not apply until the earliest of: (a) the first
material modification of the Plan (including any increase in the number of
shares reserved for issuance under the Plan in accordance with Section 3.1);
(b) the issuance of all of the shares of Stock reserved for issuance under the
Plan; (c) the expiration of the Plan; (d) the first meeting of stockholders at
which members of the Board are to be elected that occurs after the close of the
third calendar year following the calendar year in which occurred the first
registration of an equity security of the Company under Section 12 of the
Exchange Act; or (e) such other date required by Section 162(m) of the
Code and the rules and regulations promulgated thereunder.

ARTICLE 4

ELIGIBILITY
AND PARTICIPATION

 

4.1           Eligibility.  Each Eligible Individual shall be eligible to
be granted one or more Awards pursuant to the Plan.

4.2           Participation. 
Subject to the provisions of the Plan, the Committee may, from time to
time, select from among all Eligible Individuals, those to whom Awards shall be
granted and shall determine the nature and amount of each Award.  No Eligible Individual shall have any right
to be granted an Award pursuant to this Plan.

4.3           Foreign Participants. 
In order to assure the viability of Awards granted to Participants
employed in foreign countries, the Committee may provide for such special terms
as it may consider necessary or appropriate to accommodate differences in local
law, tax policy, or custom.  Moreover,
the Committee may approve such supplements to, or amendments, restatements, or
alternative versions of, the Plan as it may consider necessary or appropriate
for such purposes without thereby affecting the terms of the Plan as in effect
for any other purpose; provided,
however, that no such supplements, amendments, restatements, or
alternative versions shall increase the share limitations contained in Sections
3.1 and 3.3 of the Plan.

ARTICLE 5

STOCK
OPTIONS

 

5.1           General. 
The Committee is authorized to grant Options to Participants on the
following terms and conditions:

(a)           Exercise Price.  The exercise
price per share of Stock subject to an Option shall be determined by the Committee
and set forth in the Award Agreement; provided, that, 

 

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subject to Section 5.2(d), the exercise price for any Option shall not
be less than 100% of the Fair Market Value of a share of Stock on the date of
grant.

(b)           Time and Conditions of Exercise. 
The Committee shall determine the time or times at which an Option may
be exercised in whole or in part; provided, that the term of any Option granted
under the Plan shall not exceed ten years. 
The Committee shall also determine the performance or other conditions,
if any, that must be satisfied before all or part of an Option may be
exercised.

(c)           Payment.  The Committee
shall determine the methods by which the exercise price of an Option may be
paid, the form of payment, including, without limitation: (i) cash, (ii) shares
of Stock held for such period of time as may be required by the Committee in
order to avoid adverse accounting consequences and having a Fair Market Value
on the date of delivery equal to the aggregate exercise price of the Option or
exercised portion thereof, or (iii) other property acceptable to the Committee
(including through the delivery of a notice that the Participant has placed a
market sell order with a broker with respect to shares of Stock then issuable
upon exercise of the Option, and that the broker has been directed to pay a
sufficient portion of the net proceeds of the sale to the Company in
satisfaction of the Option exercise price; provided
that payment of such proceeds is then made to the Company upon settlement of
such sale), and the methods by which shares of Stock shall be delivered or
deemed to be delivered to Participants. 
Notwithstanding any other provision of the Plan to the contrary, no
Participant who is a member of the Board or an “executive officer” of the
Company within the meaning of Section 13(k) of the Exchange Act shall be
permitted to pay the exercise price of an Option in any method which would
violate Section 13(k) of the Exchange Act.

(d)           Evidence of Grant.  All Options
shall be evidenced by an Award Agreement between the Company and the
Participant.  The Award Agreement shall
include such additional provisions as may be specified by the Committee.

5.2           Incentive Stock
Options.  The terms of any Incentive Stock Options granted
pursuant to the Plan must comply with the conditions and limitations contained in
this Section 5.2.

(a)           Eligibility. 
Incentive Stock Options may be granted only to employees of the Company
or any “subsidiary corporation” thereof (within the meaning of Section 424(f)
of the Code and the applicable regulations promulgated thereunder).

(b)           Exercise Price.  The exercise
price per share of Stock shall be set by the Committee; provided, that, subject to Section 5.2(d), the exercise price for any
Incentive Stock Option shall not be less than 100% of the Fair Market Value on
the date of grant.

(c)           Dollar Limitation. 
The aggregate Fair Market Value (determined as of the time the Option is
granted) of all shares of Stock with respect to which “incentive stock options”
within the meaning of Section 422 of the Code are first exercisable by a
Participant in any calendar year may not exceed $100,000 or such other
limitation as imposed by Section 422(d) of the Code, or any successor
provision.

(d)           Ten Percent Owners.  An Incentive
Stock Option shall be granted to any 

 

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individual who, at the date of grant, owns stock possessing more than
ten percent of the total combined voting power of all classes of Stock of the
Company only if such Option is granted at a price that is not less than 110% of
Fair Market Value on the date of grant and the Option is exercisable for no
more than five years from the date of grant.

(e)           Notice of Disposition.  In the event
that a Participant acquires shares of Stock by exercise of an Incentive Stock
Option, such Participant shall give the Company prompt notice of any
disposition of such shares of Stock within (i) two years from the date of grant
of such Incentive Stock Option or (ii) one year after the transfer of such
shares of Stock to the Participant.

(f)            Right to Exercise.  During a
Participant’s lifetime, an Incentive Stock Option may be exercised only by the
Participant.

(g)           Failure to Meet Requirements. 
Any Option (or portion thereof) purported to be an Incentive Stock
Option, which, for any reason, fails to meet the requirements of Section 422 of
the Code shall be considered a Non-Qualified Stock Option.

5.3           Substitution of Stock Appreciation Rights. 
The Committee may provide in the Award Agreement evidencing the grant of
an Option that the Committee, in its sole discretion, shall have to right to
substitute a Stock Appreciation Right for such Option at any time prior to or
upon exercise of such Option, subject to the provisions of Section 7.1 hereof;
provided that such Stock Appreciation Right shall be exercisable with respect
to the same number of shares of Stock for which such substituted Option would
have been exercisable.

5.4           Paperless
Exercise.  In the event that the
Company establishes, for itself or using the services of a third party, an
automated system for the exercise of Options, such as a system using an
internet website or interactive voice response, then the paperless exercise of
options by a Participant may be permitted through the use of such an automated
system.

5.5           Granting of
Options to Non-Employee Directors. 
The Board may from time to time, in its sole discretion, and subject to
the limitations of the Plan:

(a)           Select from among the Non-Employee
Directors (including Non-Employee Directors who have previously been granted
Options under the Plan) such of them as in its opinion should be granted
Options;

(b)           Subject to Section 3.3, determine the
number of shares of Stock that may be purchased upon exercise of the Options
granted to such selected Non-Employee Directors; and

(c)           Subject to the provisions of this Article
5, determine the terms and conditions of such Options, consistent with the Plan.

Options granted to Non-Employee Directors shall be
Non-Qualified Stock Options.

 

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ARTICLE 6

RESTRICTED
STOCK AWARDS

 

6.1           Grant of
Restricted Stock.  The Committee is authorized to make awards of
Restricted Stock to any Eligible Individual selected by the Committee in such
amounts and subject to such terms and conditions as determined by the Committee.  All awards of Restricted Stock shall be
evidenced by an Award Agreement.

6.2           Issuance and
Restrictions.  Restricted Stock shall be subject to such
restrictions on transferability and other restrictions as the Committee may
impose (including, without limitation, limitations on the right to vote
Restricted Stock or the right to receive dividends on the Restricted
Stock).  These restrictions may lapse
separately or in combination at such times, pursuant to such circumstances, in
such installments, or otherwise, as the Committee determines at the time of the
grant of the Award or thereafter.

6.3           Forfeiture. 
Except as otherwise determined by the Committee at the time of the grant
of the Award or thereafter, upon termination of employment or service during
the applicable restriction period, Restricted Stock that is at that time
subject to restrictions shall be forfeited; provided,
however, that the Committee may (a) provide in any Award Agreement
that restrictions or forfeiture conditions relating to Restricted Stock will be
waived in whole or in part in the event of terminations resulting from
specified causes, and (b) in other cases waive in whole or in part restrictions
or forfeiture conditions relating to Restricted Stock.

6.4           Certificates
for Restricted Stock.  Restricted Stock granted pursuant to the Plan
may be evidenced in such manner as the Committee shall determine.  If certificates representing shares of
Restricted Stock are registered in the name of the Participant, certificates
must bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such Restricted Stock, and the Company may, at its
discretion, retain physical possession of the certificate until such time as
all applicable restrictions lapse.

ARTICLE 7

STOCK APPRECIATION RIGHTS

7.1           Grant of Stock Appreciation
Rights.

(a)           A Stock Appreciation Right may be granted to any
Eligible Individual selected by the Committee. 
A Stock Appreciation Right shall be subject to such terms and conditions
not inconsistent with the Plan as the Committee shall impose and shall be
evidenced by an Award Agreement.

(b)           A Stock Appreciation Right shall entitle
the Participant (or other person entitled to exercise the Stock Appreciation
Right pursuant to the Plan) to exercise all or a specified portion of the Stock
Appreciation Right (to the extent then exercisable pursuant to its terms) and
to receive from the Company an amount equal to the product of (i) the excess of
(A) the Fair Market Value of a share of Stock on the date the Stock
Appreciation Right is exercised over (B) the Fair Market Value of a share of
Stock on the date the Stock Appreciation Right was 

 

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granted and (ii)
the number of shares of Stock with respect to which the Stock Appreciation
Right is exercised, subject to any limitations the Committee may impose.

7.2           Payment and Limitations on Exercise.

(a)           Payment of the amounts determined under Sections 7.1(b)
above shall be in cash, in Stock (based on its Fair Market Value as of the date
the Stock Appreciation Right is exercised) or a combination of both, as
determined by the Committee.

(b)           To the extent payment for a Stock Appreciation Right
is to be made in cash, the Award Agreement shall, to the extent necessary to
comply with the requirements to Section 409A of the Code, specify the date of
payment which may be different than the date of exercise of the Stock
Appreciation Right.  If the date of
payment for a Stock Appreciation Right is later than the date of exercise, the
Award Agreement may specify that the Participant be entitled to earnings on
such amount until paid.

(c)           To the extent any payment under Section 7.1(b) is
effected in Stock, it shall be made subject to satisfaction of all provisions
of Article 5 above pertaining to Options.

ARTICLE 8

OTHER
TYPES OF AWARDS

 

8.1           Performance Share Awards. 
Any Eligible Individual selected by the Committee may be granted one or
more Performance Share awards which shall be denominated in a number of shares
of Stock and which may be linked to any one or more of the Performance Criteria
or other specific performance criteria determined appropriate by the Committee,
in each case on a specified date or dates or over any period or periods
determined by the Committee.  In making
such determinations, the Committee shall consider (among such other factors as
it deems relevant in light of the specific type of award) the contributions,
responsibilities and other compensation of the particular Participant.

8.2           Performance Stock Units.  Any Eligible Individual selected
by the Committee may be granted one or more Performance Stock Unit awards which
shall be denominated in units of value including dollar value of shares of
Stock and which may be linked to any one or more of the Performance Criteria or
other specific performance criteria determined appropriate by the Committee, in
each case on a specified date or dates or over any period or periods determined
by the Committee.  In making such
determinations, the Committee shall consider (among such other factors as it
deems relevant in light of the specific type of award) the contributions,
responsibilities and other compensation of the particular Participant.

8.3           Dividend Equivalents.

(a)           Any Eligible Individual selected by the Committee may
be granted Dividend Equivalents based on the dividends declared on the shares
of Stock that are subject to any Award, to be credited as of dividend payment
dates, during the period between the date the Award is granted and the date the
Award is exercised, vests or expires, as determined by the Committee.  Such Dividend Equivalents shall be converted
to cash or additional shares of Stock 

 

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based on formulas calculated with reference to the number of shares
covered by the stock options, SARs or other Awards held by the Participant, and
at such time and subject to such limitations as may be determined by the Committee.

(b)           Dividend Equivalents granted with respect to Options
or SARs that are intended to be exempt from the requirements of Code Section
409A or that are intended to satisfy the requirements for Qualified
Performance-Based Compensation shall be payable, with respect to pre-exercise
periods, regardless of whether such Option or SAR is subsequently exercised,
unless otherwise permitted under Code Section 409A or Code Section 162(m).

8.4           Stock Payments.  Any Eligible Individual
selected by the Committee may receive Stock Payments in the manner determined
from time to time by the Committee; provided, that unless otherwise determined
by the Committee, such Stock Payments shall be made in lieu of base salary,
bonus, or other cash compensation otherwise payable to such Participant.  The number of shares shall be determined by
the Committee and may be based upon the Performance Criteria or other specific
performance criteria determined appropriate by the Committee, determined on the
date such Stock Payment is made or on any date thereafter.

8.5           Deferred Stock.  Any Eligible Individual
selected by the Committee may be granted an award of Deferred Stock in the
manner determined from time to time by the Committee.  The number of shares of Deferred Stock shall
be determined by the Committee and may be linked to the Performance Criteria or
other specific performance criteria determined to be appropriate by the Committee,
in each case on a specified date or dates or over any period or periods
determined by the Committee.  Stock
underlying a Deferred Stock award will not be issued until the Deferred Stock
award has vested, pursuant to a vesting schedule or performance criteria set by
the Committee.  Unless otherwise provided
by the Committee, a Participant awarded Deferred Stock shall have no rights as
a Company stockholder with respect to such Deferred Stock until such time as
the Deferred Stock Award has vested and the Stock underlying the Deferred Stock
Award has been issued.

8.6           Restricted Stock Units.  The Committee
is authorized to make Awards of Restricted Stock Units to any Participant
selected by the Committee in such amounts and subject to such terms and
conditions as determined by the Committee. 
At the time of grant, the Committee shall specify the date or dates on
which the Restricted Stock Units shall become fully vested and nonforfeitable,
and may specify such conditions to vesting as it deems appropriate.  At the time of grant, the Committee shall
specify the maturity date applicable to each grant of Restricted Stock Units
which shall be no earlier than the vesting date or dates of the Award and,
subject to compliance with the requirements of Section 409A of the Code, may be
determined at the election of the grantee. 
On the maturity date, the Company shall, subject to Section 10.5(b),  transfer to the Participant one unrestricted,
fully transferable share of Stock for each Restricted Stock Unit scheduled to
be paid out on such date and not previously forfeited. The Committee shall
specify the purchase price, if any, to be paid by the grantee to the Company
for such shares of Stock.

8.7           Other Stock-Based Awards.  Any Eligible Individual selected by the Committee
may be granted one or more Awards that provide Participants with shares of
Stock or the right to purchase shares of Stock or that have a value derived
from the value of, or an exercise or 

 

12

 

conversion
privilege at a price related to, or that are otherwise payable in shares of
Stock and which may be linked to any one or more of the Performance Criteria or
other specific performance criteria determined appropriate by the Committee, in
each case on a specified date or dates or over any period or periods determined
by the Committee.  In making such
determinations, the Committee shall consider (among such other factors as it
deems relevant in light of the specific type of Award) the contributions,
responsibilities and other compensation of the particular Participant.

8.8           Performance
Awards.  Any Eligible Individual
selected by the Committee may be granted one or more Awards in the form of a
cash bonus (a “Performance Award”) payable with respect to any period of
employment and based upon any one or more of the Performance Criteria or other
specific performance criteria determined appropriate by the Committee, and
subject to any terms and conditions that the Committee may determine, in its
sole discretion.  The payment of bonuses
pursuant to this Section 8.8 shall be made on any date or dates determined by
the Committee and subject to any terms and conditions determined by the
Committee, in its sole discretion.

8.9           Term.  Except as otherwise provided herein, the term
of any Award of Performance Shares, Performance Stock Units, Dividend
Equivalents, Stock Payments, Deferred Stock, Restricted Stock Units or Other
Stock-Based Awards intended to constitute Qualified Performance-Based
Compensation shall be set by the Committee in its discretion.

8.10         Exercise
or Purchase Price.  The Committee may
establish the exercise or purchase price, if any, of any Award of Performance
Shares, Performance Stock Units, Deferred Stock, Stock Payments, Restricted
Stock Units or Other Stock-Based Award; provided,
however, that such price shall not be less than the par value of a
share of Stock on the date of grant, unless otherwise permitted by applicable
state law.

8.11         Exercise upon Termination of Employment or
Service.  An Award of
Performance Shares, Performance Stock Units, Dividend Equivalents, Deferred
Stock, Stock Payments, Restricted Stock Units and Other Stock-Based Award shall
only be exercisable or payable while the Participant is an Employee, Consultant
or a member of the Board, as applicable; provided,
however, that the Committee in its sole and absolute discretion may
provide that an Award of Performance Shares, Performance Stock Units, Dividend
Equivalents, Stock Payments, Deferred Stock, Restricted Stock Units or Other
Stock-Based Award may be exercised or paid subsequent to a termination of
employment or service, as applicable, or following a Change in Control, or because of the Participant’s retirement,
death or disability, or otherwise; provided,
however, that any such provision with respect to Performance Shares
or Performance Stock Units shall be subject to the requirements of Section
162(m) of the Code that apply to Qualified Performance-Based Compensation.

8.12         Form
of Payment.  Payments with respect to
any Awards granted under this Article 8 shall be made in cash, in Stock or a
combination of both, as determined by the Committee.

 

13

 

8.13         Award
Agreement.  All Awards under this
Article 8 shall be subject to such additional terms and conditions as
determined by the Committee, and shall be evidenced by an Award Agreement.

ARTICLE 9

PERFORMANCE-BASED
AWARDS

 

9.1           Purpose. 
The purpose of this Article 9 is to provide the Committee the ability to
qualify Awards other than Options and SARs and that are granted pursuant to
Article 6 or Article 8 as Qualified Performance-Based Compensation.  If the Committee in its discretion, decides to
grant a Performance-Based Award to a Covered Employee, the provisions of this
Article 9 shall control over any contrary provision contained in Articles 6 or
8; provided, however, that the
Committee may in its discretion grant Awards to Covered Employees that are
based on Performance Criteria or Performance Goals but that do not satisfy the
requirements of this Article 9.

9.2           Applicability. 
This Article 9 shall apply only to those Covered Employees selected by
the Committee to receive Performance-Based Awards.  The designation of a Covered Employee as a
Participant for a Performance Period shall not in any manner entitle the
Participant to receive an Award for the period. 
Moreover, designation of a Covered Employee as a Participant for a
particular Performance Period shall not require designation of such Covered
Employee as a Participant in any subsequent Performance Period and designation
of one Covered Employee as a Participant shall not require designation of any
other Covered Employees as a Participant in such period or in any other period.

9.3           Procedures with
Respect to Performance-Based Awards.  To the extent
necessary to comply with the Qualified Performance-Based Compensation
requirements of Section 162(m)(4)(C) of the Code, with respect to any Award
granted under Article 6 or Article 8 which may be granted to one or more
Covered Employees, no later than ninety (90) days following the commencement of
any fiscal year in question or any other designated fiscal period or period of
service (or such other time as may be required or permitted by Section 162(m)
of the Code), the Committee shall, in writing, (a) designate one or more
Covered Employees, (b) select the Performance Criteria applicable to the Performance
Period, (c) establish the Performance Goals, and amounts of such Awards, as
applicable, which may be earned for such Performance Period, and (d) specify
the relationship between Performance Criteria and the Performance Goals and the
amounts of such Awards, as applicable, to be earned by each Covered Employee
for such Performance Period.  Following
the completion of each Performance Period, the Committee shall certify in
writing whether the applicable Performance Goals have been achieved for such
Performance Period.  In determining the
amount earned by a Covered Employee, the Committee shall have the right to
reduce or eliminate (but not to increase) the amount payable at a given level
of performance to take into account additional factors that the Committee may
deem relevant to the assessment of individual or corporate performance for the
Performance Period.

9.4           Payment of
Performance-Based Awards.  Unless otherwise provided in
the applicable Award Agreement, a Participant must be employed by the Company
or a Subsidiary on the day a Performance-Based Award for such Performance
Period is paid to the Participant.  

 

14

 

Furthermore, a Participant shall be eligible to receive payment
pursuant to a Performance-Based Award for a Performance Period only if the
Performance Goals for such period are achieved.  In determining the amount earned under a
Performance-Based Award, the Committee may reduce or eliminate the amount of
the Performance-Based Award earned for the Performance Period, if in its sole
and absolute discretion, such reduction or elimination is appropriate.

9.5           Additional Limitations. 
Notwithstanding any other provision of the Plan, any Award which is
granted to a Covered Employee and is intended to constitute Qualified
Performance-Based Compensation shall be subject to any additional limitations
set forth in Section 162(m) of the Code (including any amendment to Section
162(m) of the Code) or any regulations or rulings issued thereunder that are requirements
for qualification as qualified performance-based compensation as described in
Section 162(m)(4)(C) of the Code, and the Plan shall be deemed amended to the
extent necessary to conform to such requirements.

ARTICLE 10

PROVISIONS
APPLICABLE TO AWARDS

 

10.1         Stand-Alone and
Tandem Awards.  Awards granted pursuant to the Plan may, in
the discretion of the Committee, be granted either alone, in addition to, or in
tandem with, any other Award granted pursuant to the Plan.  Awards granted in addition to or in tandem
with other Awards must be granted at the same time as the grant of such other
Awards.

10.2         Award Agreement. 
Awards under the Plan shall be evidenced by Award Agreements that set
forth the terms, conditions and limitations for each Award which may include
the term of an Award, the provisions applicable in the event the Participant’s
employment or service terminates, and the Company’s authority to unilaterally
or bilaterally amend, modify, suspend, cancel or rescind an Award.

10.3         Limits on Transfer. 
No right or interest of a Participant in any Award may be pledged,
encumbered, or hypothecated to or in favor of any party other than the Company
or a Subsidiary, or shall be subject to any lien, obligation, or liability of
such Participant to any other party other than the Company or a
Subsidiary.  Except as otherwise provided
by the Committee, no Award shall be assigned, transferred, or otherwise
disposed of by a Participant other than by will or the laws of descent and
distribution.  The Committee by express
provision in the Award or an amendment thereto may permit an Award (other than
an Incentive Stock Option) to be transferred to, exercised by and paid to
certain persons or entities related to the Participant, including but not
limited to members of the Participant’s family, charitable institutions, or
trusts or other entities whose beneficiaries or beneficial owners are members
of the Participant’s family and/or charitable institutions, or to such other
persons or entities as may be expressly approved by the Committee, pursuant to
such conditions and procedures as the Committee may establish.  Any permitted transfer shall be subject to
the condition that the Committee receive evidence satisfactory to it that the
transfer is being made for estate and/or tax planning purposes (or to a “blind
trust” in connection with the Participant’s termination of employment or
service with the Company or a Subsidiary to assume a position with a
governmental, charitable, educational or similar non-profit institution) and on
a basis consistent with the Company’s lawful issue of securities.

 

15

 

10.4         Beneficiaries. 
Notwithstanding Section 10.3, a Participant may, in the manner
determined by the Committee, designate a beneficiary to exercise the rights of
the Participant and to receive any distribution with respect to any Award upon
the Participant’s death.  A beneficiary,
legal guardian, legal representative, or other person claiming any rights
pursuant to the Plan is subject to all terms and conditions of the Plan and any
Award Agreement applicable to the Participant, except to the extent the Plan
and Award Agreement otherwise provide, and to any additional restrictions
deemed necessary or appropriate by the Committee.  If the Participant is married and resides in
a community property state, a designation of a person other than the
Participant’s spouse as his or her beneficiary with respect to more than 50% of
the Participant’s interest in the Award shall not be effective without the
prior written consent of the Participant’s spouse.  If no beneficiary has been designated or
survives the Participant, payment shall be made to the person entitled thereto
pursuant to the Participant’s will or the laws of descent and distribution.  Subject to the foregoing, a beneficiary
designation may be changed or revoked by a Participant at any time provided the
change or revocation is filed with the Committee.

10.5         Stock
Certificates; Book Entry Procedures.

(a)           Notwithstanding anything herein to the contrary, the
Company shall not be required to issue or deliver any certificates evidencing
shares of Stock pursuant to the exercise of any Award, unless and until the
Board has determined, with advice of counsel, that the issuance and delivery of
such certificates is in compliance with all applicable laws, regulations of
governmental authorities and, if applicable, the requirements of any exchange
on which the shares of Stock are listed or traded.  All Stock certificates delivered pursuant to
the Plan are subject to any stop-transfer orders and other restrictions as the
Committee deems necessary or advisable to comply with federal, state, or
foreign jurisdiction, securities or other laws, rules and regulations and the
rules of any national securities exchange or automated quotation system on
which the Stock is listed, quoted, or traded. 
The Committee may place legends on any Stock certificate to reference
restrictions applicable to the Stock.  In
addition to the terms and conditions provided herein, the Board may require
that a Participant make such reasonable covenants, agreements, and
representations as the Board, in its discretion, deems advisable in order to
comply with any such laws, regulations, or requirements.  The Committee shall have the right to require
any Participant to comply with any
timing or other restrictions with respect to the settlement or exercise of any
Award, including a window-period limitation, as may be imposed in the
discretion of the Committee.

(b)           Notwithstanding any other provision of
the Plan, unless otherwise determined by the Committee or required by any
applicable law, rule or regulation, the Company shall not deliver to any
Participant certificates evidencing shares of Stock issued in connection with
any Award and instead such shares of Stock shall be recorded in the books of
the Company (or, as applicable, its transfer agent or stock plan
administrator).

 

16

ARTICLE 11

CHANGES
IN CAPITAL STRUCTURE

 

11.1         Adjustments.

(a)           In the event of any stock dividend, stock split,
combination or exchange of shares, merger, consolidation, spin-off,
recapitalization, distribution of Company assets to stockholders (other than
normal cash dividends), or any other corporate event affecting the number of
outstanding shares of Stock or the share price of the Stock, the Committee shall
make such proportionate adjustments as are appropriate to reflect such changes
with respect to (i) the aggregate number and type of shares that may be issued
under the Plan (including, but not limited to, adjustments of the limitations
in Sections 3.1 and 3.3); (ii) the terms and conditions of any outstanding
Awards (including, without limitation, any applicable performance targets or
criteria with respect thereto); and (iii) the grant or exercise price per share
for any outstanding Awards under the Plan. 
Any adjustment affecting an Award intended as Qualified
Performance-Based Compensation shall be made consistent with the requirements
of Section 162(m) of the Code.

(b)           In the event of any transaction or event
described in Section 11.1(a) or any unusual or nonrecurring transactions or
events affecting the Company, any affiliate of the Company, or the financial
statements of the Company or any affiliate, or of changes in applicable laws,
regulations or accounting principles, and whenever the Committee determines
that action is appropriate in order to prevent the dilution or enlargement of
the benefits or potential benefits intended to be made available under the Plan
or with respect to any Award under the Plan, to facilitate such transactions or
events or to give effect to such changes in laws, regulations or principles,
the Committee, in its sole discretion and on such terms and conditions as it
deems appropriate, either by amendment of the terms of any outstanding Awards
or by action taken prior to the occurrence of such transaction or event and
either automatically or upon the Participant’s request, is hereby authorized to
take any one or more of the following actions:

(i)            To provide for either (A) termination of any such
Award in exchange for an amount of cash and/or other property, if any, equal to
the amount that would have been attained upon the exercise of such Award or
realization of the Participant’s rights (and, for the avoidance of doubt, if as
of the date of the occurrence of the transaction or event described in this
Section 11.1(b) the Committee determines in good faith that no amount would
have been attained upon the exercise of such Award or realization of the
Participant’s rights, then such Award may be terminated by the Company without
payment) or (B) the replacement of such Award with other rights or property
selected by the Committee in its sole discretion;

(ii)           To provide that such Award be assumed by the successor
or survivor corporation, or a parent or subsidiary thereof, or shall be
substituted for by similar options, rights or awards covering the stock of the
successor or survivor corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of shares and prices;

 

17

 

(iii)          To make adjustments in the number and type of shares
of Stock (or other securities or property) subject to outstanding Awards, and
in the number and kind of outstanding Restricted Stock or Deferred Stock and/or
in the terms and conditions of (including the grant or exercise price), and the
criteria included in, outstanding options, rights and awards and options,
rights and awards which may be granted in the future;

(iv)          To provide that such Award shall be exercisable or
payable or fully vested with respect to all shares covered thereby,
notwithstanding anything to the contrary in the Plan or the applicable Award
Agreement; and

(v)           To provide that the Award cannot vest, be exercised or
become payable after such event.

11.2         No Other Rights. 
Except as expressly provided in the Plan, no Participant shall have any
rights by reason of any subdivision or consolidation of shares of stock of any
class, the payment of any dividend, any increase or decrease in the number of
shares of stock of any class or any dissolution, liquidation, merger, or
consolidation of the Company or any other corporation.  Except as expressly provided in the Plan or
pursuant to action of the Committee under the Plan, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number of shares of Stock subject to an Award or the grant
or exercise price of any Award.

ARTICLE 12

ADMINISTRATION

 

12.1         Committee.  Subject
to Section 12.5 and any specific designation in the Plan, the Plan shall be
administered by the Committee.  The
Committee shall consist solely of two or more members of the Board, each of
whom is intended to qualify as an “outside director,” within the meaning of
Section 162(m) of the Code, a “non-employee director,” within the meaning of Rule
16b-3(b)(3) under the Exchange Act, and an “independent director” under the
rules of The NASDAQ Stock Market (or other principal securities market or
exchange on which shares of Stock are traded). 
Notwithstanding the foregoing: (a) the full Board, acting by a majority
of its members in office, shall conduct the general administration of the Plan
with respect to all Awards granted to Non-Employee Directors and for purposes
of such Awards the term “Committee” as used in this Plan shall be deemed to
refer to the Board and (b) the Committee may delegate its authority hereunder
to the extent permitted by Section 12.5. 
Appointment of Committee members shall be effective upon acceptance of
appointment.  The Board may abolish the
Committee at any time and revest in the Board the administration of the Plan.  Committee members may resign at any time by
delivering written notice to the Board. 
Vacancies in the Committee may only be filled by the Board.

12.2         Action by the
Committee.  A majority of the Committee shall constitute
a quorum.  The acts of a majority of the
members present at any meeting at which a quorum is present, and acts approved
in writing by a majority of the Committee in lieu of a meeting, shall be deemed
the acts of the Committee.  Each member
of the Committee is entitled to, in good 

 

18

 

faith, rely or act upon any report or other information furnished to
that member by any officer or other employee of the Company or any Subsidiary,
the Company’s independent certified public accountants, or any executive
compensation consultant or other professional retained by the Company to assist
in the administration of the Plan.

12.3         Authority of
Committee.  Subject to any specific designation in the Plan,
the Committee has the exclusive power, authority and discretion to:

(a)           Designate Participants to receive Awards;

(b)           Determine the type or types of Awards to
be granted to each Participant;

(c)           Determine the number of Awards to be
granted and the number of shares of Stock to which an Award will relate;

(d)           Determine the terms and conditions of any
Award granted pursuant to the Plan, including, but not limited to, the exercise
price, grant price, or purchase price, any reload provision, any restrictions
or limitations on the Award, any schedule for lapse of forfeiture restrictions
or restrictions on the exercisability of an Award, and accelerations or waivers
thereof, any provisions related to non-competition and recapture of gain on an
Award, based in each case on such considerations as the Committee in its sole
discretion determines; provided, however,
that the Committee shall not have the authority to accelerate the vesting or
waive the forfeiture of any Performance-Based Awards;

(e)           Determine whether, to what extent, and
pursuant to what circumstances an Award may be settled in, or the exercise
price of an Award may be paid in, cash, Stock, other Awards, or other property,
or an Award may be canceled, forfeited, or surrendered;

(f)            Prescribe the form of each Award
Agreement, which need not be identical for each Participant;

(g)           Decide all other matters that must be
determined in connection with an Award;

(h)           Establish, adopt, or revise any rules and
regulations as it may deem necessary or advisable to administer the Plan;

(i)            Interpret the terms of, and any matter
arising pursuant to, the Plan or any Award Agreement; and

(j)            Make all other decisions and
determinations that may be required pursuant to the Plan or as the Committee
deems necessary or advisable to administer the Plan.

12.4         Decisions Binding. 
The Committee’s interpretation of the Plan, any Awards granted pursuant
to the Plan, any Award Agreement and all decisions and determinations by the
Committee with respect to the Plan are final, binding, and conclusive on all
parties.

 

19

 

12.5         Delegation of Authority.  To the extent
permitted by applicable law, the Committee may from time to time delegate to a
committee of one or more members of the Board or one or more officers of the
Company the authority to grant or amend Awards to Participants other than (a)
senior executives of the Company who are subject to Section 16 of the Exchange
Act, (b) Covered Employees, or (c) officers of the Company (or members of the
Board) to whom authority to grant or amend Awards has been delegated
hereunder.  Any delegation hereunder
shall be subject to the restrictions and limits that the Committee specifies at
the time of such delegation, and the Committee may at any time rescind the
authority so delegated or appoint a new delegatee.  At all times, the delegatee appointed under
this Section 12.5 shall serve in such capacity at the pleasure of the
Committee.

ARTICLE 13

EFFECTIVE
AND EXPIRATION DATE

 

13.1         Effective Date.  Subject
to the approval of the Company’s stockholders, the Plan shall become effective
as of the date immediately preceding the Public Trading Date (the “Effective
Date”).  The Plan will be deemed to
be approved by the stockholders if it receives the affirmative vote of the
holders of a majority of the shares of stock of the Company present or
represented and entitled to vote at a meeting duly held in accordance with the
applicable provisions of the Company’s Bylaws.

13.2         Expiration Date. 
The Plan will expire on, and no Incentive Stock Option or other Award
may be granted pursuant to the Plan after, the earlier of the tenth anniversary
of (i) the Effective Date or (ii) the date this Plan is initially approved by
the Board.  Any Awards that are
outstanding upon the expiration of the Plan shall remain in force according to
the terms of the Plan and the applicable Award Agreement.

ARTICLE 14

AMENDMENT, MODIFICATION, AND
TERMINATION

14.1         Amendment,
Modification, and Termination.  With the
approval of the Board, at any time and from time to time, the Committee may
terminate, amend or modify the Plan; provided,
however, that (a) to the extent necessary and desirable to comply
with any applicable law, regulation, or stock exchange rule, the Company shall
obtain stockholder approval of any Plan amendment in such a manner and to such
a degree as required, and (b) stockholder approval is required for any
amendment to the Plan that (i) increases the number of shares available under
the Plan (other than any adjustment as provided by Article 11), (ii) permits
the Committee to grant Options with an exercise price that is below Fair Market
Value on the date of grant, or (iii) permits the Committee to extend the
exercise period for an Option beyond ten years from the date of grant.  Notwithstanding any provision in this Plan to
the contrary, absent approval of the stockholders of the Company, no Option may
be amended to reduce the per share exercise price of the shares subject to such
Option below the per share exercise price as of the date the Option is granted
and, except as permitted by Article 11, no Option may be granted in exchange
for, or in connection with, the cancellation or surrender of an Option having a
higher per share exercise price.

 

20

 

14.2         Awards
Previously Granted.  Except as otherwise provided in Section 15.13
below, no termination, amendment, or modification of the Plan shall adversely
affect in any material way any Award previously granted pursuant to the Plan
without the prior written consent of the Participant.

ARTICLE 15

GENERAL
PROVISIONS

 

15.1         No Rights to
Awards.  No Eligible Individual or other person shall
have any claim to be granted any Award pursuant to the Plan, and neither the
Company nor the Committee is obligated to treat Eligible Individuals,
Participants or any other persons uniformly.

15.2         No Stockholders Rights. 
Except as otherwise provided herein, a Participant shall have none of
the rights of a stockholder with respect to shares of Stock covered by any
Award until the Participant becomes the record owner of such shares of Stock.

15.3         Withholding. 
The Company or any Subsidiary shall have the authority and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy federal, state, local and foreign taxes (including the
Participant’s employment tax obligations) required by law to be withheld with
respect to any taxable event concerning a Participant arising as a result of
this Plan.  The Committee may in its discretion
and in satisfaction of the foregoing requirement allow a Participant to elect
to have the Company withhold shares of Stock otherwise issuable under an Award
(or allow the return of shares of Stock) having a Fair Market Value equal to
the sums required to be withheld. 
Notwithstanding any other provision of the Plan, the number of shares of
Stock which may be withheld with respect to the issuance, vesting, exercise or
payment of any Award (or which may be repurchased from the Participant of such
Award within six months (or such other period as may be determined by the
Committee) after such shares of Stock were acquired by the Participant from the
Company) in order to satisfy the Participant’s federal, state, local and
foreign income and payroll tax liabilities with respect to the issuance,
vesting, exercise or payment of the Award shall be limited to the number of
shares which have a Fair Market Value on the date of withholding or repurchase
equal to the aggregate amount of such liabilities based on the minimum
statutory withholding rates for federal, state, local and foreign income tax
and payroll tax purposes that are applicable to such supplemental taxable
income.

15.4         No Right to
Employment or Services.  Nothing in the Plan or any
Award Agreement shall interfere with or limit in any way the right of the
Company or any Subsidiary to terminate any Participant’s employment or services
at any time, nor confer upon any Participant any right to continue in the
employ or service of the Company or any Subsidiary.

15.5         Unfunded Status
of Awards.  The Plan is intended to be an “unfunded” plan
for incentive compensation.  With respect
to any payments not yet made to a Participant pursuant to an Award, nothing
contained in the Plan or any Award Agreement shall give the Participant any
rights that are greater than those of a general creditor of the Company or any
Subsidiary.

15.6         Indemnification. 
To the extent allowable pursuant to applicable law, each 

 

21

 

member of the Committee or of the Board shall be indemnified and held
harmless by the Company from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by such member in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action or
failure to act pursuant to the Plan and against and from any and all amounts
paid by him or her in satisfaction of judgment in such action, suit, or
proceeding against him or her; provided
he or she gives the Company an opportunity, at its own expense, to handle and
defend the same before he or she undertakes to handle and defend it on his or
her own behalf.  The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification
to which such persons may be entitled pursuant to the Company’s Certificate of
Incorporation or Bylaws, as a matter of law, or otherwise, or any power that
the Company may have to indemnify them or hold them harmless.

15.7         Relationship to other Benefits. 
No payment pursuant to the Plan shall be taken into account in
determining any benefits pursuant to any pension, retirement, savings, profit
sharing, group insurance, welfare or other benefit plan of the Company or any
Subsidiary except to the extent otherwise expressly provided in writing in such
other plan or an agreement thereunder.

15.8         Expenses. 
The expenses of administering the Plan shall be borne by the Company and
its Subsidiaries.

15.9         Titles and
Headings.  The titles and headings of the Sections in
the Plan are for convenience of reference only and, in the event of any
conflict, the text of the Plan, rather than such titles or headings, shall
control.

15.10       Fractional
Shares.  No fractional shares of Stock shall be issued
and the Committee shall determine, in its discretion, whether cash shall be
given in lieu of fractional shares or whether such fractional shares shall be
eliminated by rounding up or down as appropriate.

15.11       Limitations Applicable to Section 16 Persons. 
Notwithstanding any other provision of the Plan, the Plan, and any Award
granted or awarded to any Participant who is then subject to Section 16 of the
Exchange Act, shall be subject to any additional limitations set forth in any
applicable exemptive rule under Section 16 of the Exchange Act (including any
amendment to Rule 16b-3 under the Exchange Act) that are requirements for the
application of such exemptive rule.  To
the extent permitted by applicable law, the Plan and Awards granted or awarded
hereunder shall be deemed amended to the extent necessary to conform to such
applicable exemptive rule.

15.12       Government and
Other Regulations.  The obligation of the Company to make payment
of awards in Stock or otherwise shall be subject to all applicable laws, rules,
and regulations, and to such approvals by government agencies as may be
required.  The Company shall be under no
obligation to register pursuant to the Securities Act, any of the shares of
Stock paid pursuant to the Plan.  If the
shares paid pursuant to the Plan may in certain circumstances be exempt from
registration pursuant to the Securities Act, the Company may restrict the
transfer of 

 

22

 

such shares in
such manner as it deems advisable to ensure the availability of any such
exemption.

15.13       Section 409A.  To the extent
that the Committee determines that any Award granted under the Plan is subject
to Section 409A of the Code, the Award Agreement evidencing such Award shall
incorporate the terms and conditions required by Section 409A of the Code.  To the extent applicable, the Plan and Award
Agreements shall be interpreted in accordance with Section 409A of the Code and
Department of Treasury regulations and other interpretive guidance issued
thereunder, including without limitation any such regulations or other guidance
that may be issued after the Effective Date. 
Notwithstanding anything to the contrary in Section 14.2 or any other
provision of the Plan, in the event that following the Effective Date the
Committee determines that any Award may be subject to Section 409A of the Code
and related Department of Treasury guidance (including such Department of
Treasury guidance as may be issued after the Effective Date), the Committee may
adopt such amendments to the Plan and the applicable Award Agreement or adopt
other policies and procedures (including amendments, policies and procedures
with retroactive effect), or take any other actions, that the Committee
determines are necessary or appropriate to (a) exempt the Award from Section
409A of the Code and/or preserve the intended tax treatment of the benefits
provided with respect to the Award, or (b) comply with the requirements of
Section 409A of the Code and related Department of Treasury guidance.

15.14       Governing Law. 
The Plan and all Award Agreements shall be construed in accordance with
and governed by the laws of the State of Delaware.

 

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Exhibit 10.1  

 
 

SEPARATION AND RELEASE AGREEMENT    
    

        This SEPARATION AND RELEASE AGREEMENT (the "Agreement"), executed as of this 15th day of June, 2006, is entered into by and between Petrie
Parkman & Co. (the "Company") and James E. Parkman, Jr. ("Parkman"). 

W I T N E S S E T H  

        WHEREAS, Parkman is employed by the Company; 

        WHEREAS,
Parkman is not party to an employment agreement with the Company; 

        WHEREAS,
the Company and Parkman wish to provide that Parkman's employment by the Company cease effective as of the close of business on June 15, 2006 (the "Separation Date"); and 

        WHEREAS,
Parkman and the Company desire to settle fully and finally any and all matters between them, including without limitation any issues that have arisen out of Parkman's employment
with the Company and the termination thereof. 

        NOW,
THEREFORE, in consideration of the mutual agreements and understandings set forth herein and other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, intending to be legally bound, the parties hereto hereby agree as follows: 

        Section 1.    Termination of Service; Payment and Other Additional Terms.    

        (a)    Termination of Service.    Effective as of the close of business on the Separation Date, (i) Parkman's
employment by the Company and any and all of its subsidiaries and affiliates shall terminate, and (ii) Parkman shall cease to serve as an officer or director of any subsidiary of the Company;  provided
however, that the foregoing provisions shall not apply to any positions held by Parkman in any of the entities (other than the Company)
comprising, or providing advice or services to, the Company's Energy Special Situations Fund I, L.P. (the "Fund") (together with Energy Special Situations Fund Management, LLC, ESS Participation Fund,
L.P. and its general partners, Houston Energy Advisors, LLC, and any of the Fund's current or future portfolio companies, all of which are collectively referred to herein as the "ESSF"), and so long
as Parkman elects to serve in such capacities, all employment, advisory and other arrangements between Parkman and any such entities (other than the Company) shall remain in full force and effect. Not
later than June 30, 2006, Parkman shall remove all of his belongings from the offices of the Company. 

        (b)    Certain Payments and Benefits.    In consideration for Parkman's agreement to be bound by the terms of this
Agreement and subject to the terms of this Agreement, Parkman shall be entitled to receive from the Company the payments and benefits set forth in paragraphs (i) through (iv) of this
Section 1(b): 

          (i)  Not
later than December 31, 2006, the Company shall pay to Parkman an amount in cash equal to the greater of (A) nine million five hundred thousand
dollars ($9,500,000), but in any event not in excess of thirteen percent (13.0%) of the Company's revenues for the 2006 Payment Period (as hereinafter defined), with such revenues adjusted downward by
any payments made or reasonable reserves set aside during the 2006 Payment Period in respect of the Siebert Matter (as hereinafter defined) or (B) two-thirds (2/3) of
the cash compensation payable to Thomas A. Petrie ("TAP") by the Company for services during the 2006 Payment Period (as hereinafter defined); 

         (ii)  For
the period beginning on the Separation Date and continuing until the earlier of December 31, 2007 or the date comparable coverage is made available to
Parkman by a successor employer, the Company shall provide coverage of Parkman under the Company's health, dental and life insurance plans at the levels and cost generally 

 

applicable
to senior executive officers of the Company from time to time during such period; provided, however, that any such coverage shall be applied against any continuation coverage required under
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended; 

        (iii)  The
Company shall provide Parkman, from the period beginning on the Separation Date and ending on April 30, 2007, with (A) exclusive use of the Company's
apartment in the Rice Loft Building
in Houston, Texas and (B) a parking space on Floor C of the JPMorgan Chase Tower Garage in Houston, Texas; provided, however, that Parkman's right to use of the Rice Loft Building apartment
shall be subject to a short form of letter agreement that provides for rent of zero dollars ($0); and 

        (iv)  Parkman
in his discretion may remain in his current position in regard to, and maintain his current level of involvement with, the ESSF in appropriate coordination with
Jon Linker and subject to ESSF's organizational and other operating documents (without regard to any provision in such documents that would limit the scope of this paragraph (iv)). 

For
purposes of Section 1(b)(i), the 2006 Payment Period shall mean the period ending on the earlier of (x) December 31, 2006 or (y) the consummation of an initial public
offering of the Company's common stock (an "IPO") or the consummation of any merger, sale of shares, tender offer, exchange offer or other business combination transaction involving the Company that
results in the holders of the outstanding shares of Company common stock immediately prior to the consummation thereof constituting less than fifty percent (50%) of the total number of shares of
Company common stock (or capital stock of the surviving or resulting entity therefrom or the parent thereof, as applicable) immediately following consummation thereof (a "Change in Control").
Notwithstanding the foregoing provisions of this Section 1(b), the Company shall be under no obligation to provide the payments and benefits described in the foregoing provisions of this
Section 1(b) or otherwise honor its obligations under this Agreement if Parkman shall have revoked the Company Release (as hereinafter defined) pursuant to Section 2(a)(iv).
Parkman acknowledges that he previously has been paid all compensation that may be due to him for services rendered on or prior to the Separation Date. 

        (c)    Key Man Insurance.    Parkman and the Company acknowledge that the Company currently pays premiums on
key-man life insurance policies insuring the life of each of Parkman (the "JEP Policy") and TAP (the "TAP Policy") and that, pursuant to such policies, Parkman is the owner and beneficiary
of the TAP Policy and TAP is the owner and beneficiary of the JEP Policy. Parkman and the Company agree that Parkman may change the beneficiary under the JEP Policy in his discretion, that TAP may
change the beneficiary under the TAP Policy in his discretion, and that the Company shall continue to pay any premiums due under the JEP Policy on or before December 31, 2006, in accordance
with the historical practice of the Company but that, after that date, the Company shall have no further obligations under the JEP Policy. JEP and TAP will further take such actions as are reasonably
necessary to transfer and vest (i) in TAP ownership of the TAP Policy and (ii) in JEP ownership of the JEP Policy. The Company covenants with JEP that it has received all agreements and
assurances on the part of TAP to assure that the foregoing arrangements will be effected by TAP and the Company. 

        (d)    Dividend Policy.    If the Company has not consummated an IPO or there has not occurred a Change in Control on
or before December 10, 2007, the Board of Directors of the Company (the "Board") shall undertake to implement a reasonable and prudent dividend policy, any such policy to remain in effect,
subject to periodic review by the Board, until the consummation of an IPO or Change in Control. 

2

 

        Section 2.    Mutual Release.    

        (a)    Release by Parkman.    

          (i)  Except
as provided below in Section 2(a)(ii), Parkman knowingly and voluntarily RELEASES, INDEMNIFIES, AND FOREVER DISCHARGES the Company and the Company's past
and present subsidiaries and affiliates, together with all of their respective past and present directors, managers, officers, partners, employees and attorneys, and each of their predecessors,
successors and assigns, and any of the foregoing in their capacity as a shareholder or agent of the Company or its subsidiaries or affiliates (collectively, "Releasees") from any and all claims,
charges, complaints, promises, agreements, controversies, liens, demands, causes of action, obligations, attorneys' fees, damages and liabilities of any nature whatsoever,  known or unknown, suspected or unsuspected, which Parkman or his executors, administrators, successors
in interest or assigns now own or hold, or have at any time heretofore owned or held, or may at any time own or hold by reason of any matter or thing arising from any cause whatsoever prior to the
date of execution of this Agreement, and without limiting the generality of the foregoing, from all claims, demands, and causes of action based upon, relating to, or arising out of Parkman's
employment relationship or other relationship with the Company (including without limitation, as a stockholder of the Company) and/or any of the Releasees and the termination of that relationship, and
whether or not previously asserted before any state or federal court or before any state or federal agency or governmental entity (the "Company Release"), even if such act or omission is found to have
been an INTENTIONAL ACT OR OMISSION, OR A NEGLIGENT ACT OR OMISSION, WHETHER SIMPLE, GROSS, SOLE, OR CONCURRENT, by Releasees. Parkman represents and covenants that Parkman has not filed, initiated or
caused to be filed or initiated, any claim, charge, suit, complaint, grievance, action or cause of action against the Company or any of the Releasees, and agrees not to sue or to join any other person
in bringing suit against any of the Releasees, arising out of or relating in any way to Parkman's employment or other relationship with the Company or any of the Releasees, or the termination thereof.
This release specifically extends, without limitation, to claims arising under any statute or regulation, including the Age Discrimination in Employment Act of 1967, Title VII of the Civil
Rights Act of 1964, the Civil Rights Act of 1991, the Americans with Disabilities Act of 1990, the Employee Retirement Income Security Act of 1974, and the Family Medical Leave Act of 1993, each as
amended, or any other federal, state or local statute, regulation, ordinance or common law in any country, territory, or jurisdiction, or under any policy, agreement, understanding or promise, whether
written or oral, formal or informal, between any of the Releasees and Parkman. 

         (ii)  Nothing
herein shall be deemed to release any of Parkman's rights under this Agreement. 

        (iii)  Parkman
represents that the Company has advised him to consult with an attorney of his choosing prior to signing this Agreement. Parkman further represents that he
understands and agrees that he has the right to have this Agreement and, specifically, the Company Release, reviewed by an attorney of Parkman's choice and that he has in fact reviewed this Agreement
and, specifically, the Company Release, with an attorney of his choice. Parkman further represents that he understands and agrees that the Company is under no obligation to offer him this Agreement,
and that Parkman is under no obligation to consent to the Company Release, that he has entered into this Agreement freely and voluntarily, and that this Agreement and the Company Release are fair,
adequate and reasonable. Parkman is not relying upon any representations or statements made by any of the Releasees regarding this Agreement or its preparation, except to the 

3

 

extent
such representations are expressly incorporated herein. Parkman is not relying upon a legal duty, if one exists, on the part of any of the Releasees to disclose any information in connection
with the execution of this Agreement or its preparation, it being expressly understood that Parkman and the Releasees shall never assert any failure to disclose information on the part of any other
person as a ground for challenging this Agreement; provided, however, that, so long as Parkman remains a holder of the Company's common stock, the Company shall remain under all disclosure obligations
to stockholders required under applicable law. 

        (iv)  Parkman
shall have 21 days to consider this Agreement and once he has signed this Agreement, Parkman shall have seven additional days from the date of
execution to revoke his consent to the Company Release set forth above. Any such revocation shall be made by delivering written notification to the Board, in care of the Chairman of the Board, no
later than 5:00 p.m. on the seventh (7th) day after Parkman signs this Agreement. In the event that Parkman revokes his Company Release, all the terms of the other
sections and subsections of this Agreement shall be null and void and shall not become effective. If no such revocation occurs, the Company Release and this Agreement shall become
effective as of the eighth day after the date Parkman signs this Agreement. 

         (v)  Parkman
agrees that neither this Agreement nor the furnishing of consideration for the Release shall be deemed or construed at any time for any purpose as an admission
by Employer of any liability, wrongdoing, or unlawful conduct of any kind. 

        (b)    Release by the Company.    Except as provided below in the final sentence of this subsection (b), as a
material inducement to enter into this Agreement, the Company, on its behalf and that of its subsidiaries and affiliates and their officers and directors, agents, employees, successors and assigns
(solely in their capacity as officers or directors of the Company or its subsidiaries or affiliates) hereby knowingly and voluntarily releases and forever discharges Parkman and his agents, employees,
successors, heirs, beneficiaries or assigns (collectively, the "Parkman Released Parties") from any and all claims, charges, complaints, promises, agreements, controversies, liens, demands, causes of
action, obligations, damages and liabilities of any nature whatsoever, known or unknown, suspected or unsuspected, that it (or its successors in
interest or assigns) now own or hold, or have at any time heretofore owned or held, or may at any time own or hold by reason of any matter or thing arising from any cause whatsoever prior to the date
of execution of this Agreement, and without limiting the generality of the foregoing, from all claims, demands, and causes of action based upon, relating to, or arising out of Parkman's employment
relationship or other relationship with the Company (including without limitation, as an officer, director or stockholder of the Company), its subsidiaries or affiliates and/or any of the Releasees
and the termination of those relationships, and whether or not previously asserted before any state or federal court or before any state or federal agency or governmental entity (the "Parkman
Release"), even if such act or omission is found to have been an INTENTIONAL ACT OR OMISSION, OR A NEGLIGENT ACT OR OMISSION, WHETHER SIMPLE, GROSS, SOLE, OR CONCURRENT, by any Parkman Released Party.
The Company represents and covenants that it has not filed, initiated or caused to be filed or initiated, any claim, charge, suit, complaint, grievance, action or cause of action against Parkman or
any of the Parkman Released Parties, and agrees not to sue or to join any other person in bringing suit against any of the Parkman Released Parties, arising out of or relating in any way to Parkman's
employment or other relationship with the Company or any of the Releasees, or the termination thereof. The Company agrees that neither this Agreement nor the furnishing of consideration for the
Parkman Release shall be deemed or construed at any time for any purpose as an admission by Parkman of any liability, wrongdoing or unlawful conduct of any 

4

 

kind.
Nothing herein shall be deemed to release any of the Company's rights under this Agreement, including without limitation the Company's rights under Section 5 with regard to actions taking
place after the Separation Date. 

        Section 3.    Mutual Non-Disparagement.    The Company agrees that it will not make or publish any
statement which is, or may reasonably be considered to be, disparaging of Parkman, and Parkman agrees that he will not make or publish any statement which is, or may reasonably be considered to be,
disparaging of the Company or its subsidiaries or affiliates, or directors, officers or employees of the businesses of the Company or its subsidiaries or affiliates; provided, however, that Parkman
and the Company and its agents may respond truthfully and factually to any inquiries as to why Parkman's employment with the Company terminated. 

        Section 4.    Publicity; Regulatory Filing.    The Company shall have the right to issue a press release in a
form reasonably satisfactory to Parkman in regard to Parkman's separation from employment with the Company. The Company will give Parkman reasonable opportunity to comment on its proposed filing with
the NASD of a report on form U5 regarding Parkman's termination of employment. 

        Section 5.    Confidentiality; Intellectual Property and Other Property.    Parkman and the Company agree that
due to the nature of Parkman's association with the Company, Parkman has acquired valuable trade secrets and other confidential and proprietary information relating to the businesses of the Company or
its subsidiaries or affiliates. Parkman acknowledges that such information is of extreme importance to the businesses of the Company and its subsidiaries and affiliates and will continue to be so
after the date of this Agreement, and that disclosure of such trade secrets and other confidential and proprietary information to others or the unauthorized use of such information by Parkman or
others would cause irreparable harm to the Company. Accordingly, the Company and Parkman agree as follows: 

        (a)   Parkman
acknowledges that the Proprietary and Confidential Information (as hereinafter defined) constitutes the property of the Company or its subsidiaries or
affiliates. Parkman acknowledges that the direct and indirect disclosure of any such Proprietary and Confidential Information would cause irreparable harm to the Company. Therefore, except to the
extent otherwise expressly provided in Section 5(b) or 5(c), Parkman will not at any time disclose, disseminate, or use for his own benefit or purposes or the benefit or purposes of any
other person, entity or enterprise, other than the Company or its subsidiaries or affiliates, any Proprietary and Confidential Information; provided, however, that the foregoing shall not apply to
information which has become public other than as a result of Parkman's breach of this covenant. Except to the extent otherwise expressly provided in Section 5(b) or 5(c), Parkman
represents that he has returned to the Company all memoranda, books, papers, plans, information, letters and other data (in whatever tangible form, whether paper, electronic or otherwise), and all
copies thereof or therefrom, in any way relating to the business of the Company or its subsidiaries or affiliates in his possession or control. Parkman further represents that he does not have actual
knowledge (with no requirement of further inquiry) of any such material not in his possession or control that is not also in the possession and control of the Company (exclusive of any such material
in the possession of any officer or shareholder of the Company) where he also has actual knowledge (with no requirement of further inquiry) that (i) there is an intent to deprive the Company of
the possession and control of such information and (ii) the Company is not in possession and control of such information, and Parkman agrees that he will promptly notify the Company if he
acquires such actual knowledge during the Restricted Period. Except to the extent otherwise expressly provided in Section 5(b) or 5(c), all such material is and shall remain the property
of the Company, or in the case of information that the Company or its subsidiaries or affiliates receives from a third party which they are obligated to treat as confidential, the property of such
third party. The foregoing obligation of confidentiality shall not apply to disclosures required by applicable law, provided, however, in the event that Parkman receives a request or is required to 

5

 

disclose
any Proprietary and Confidential Information required by applicable law, Parkman agrees to (i) promptly notify the Company of the existence, terms and circumstances surrounding such a
request or requirement, and (ii) if disclosure of such information is required, disclose any such information which Parkman is advised by legal counsel is legally required to be disclosed and
exercise his reasonable efforts to obtain an order or other reliable assurance that confidential treatment will be accorded to such information. 

        (b)    Certain Intellectual Property Matters.    

          (i)  All
Company Intellectual Property (as hereinafter defined) shall be owned solely by and belong exclusively (subject to the license rights granted herein) to the
Company, and Parkman shall (A) leave in the Company's possession, either in paper form or stored electronically on the portable hard drive referred to below, all documents that form part of the
Company's Intellectual Property, (B) promptly execute and deliver to the Company, without additional compensation, such instruments as the Company may reasonably require from time to time to
evidence its ownership of any such Company Intellectual Property (the "Intellectual Property Documents"), and (C) not challenge or otherwise call into doubt the Company's ownership of such
Company Intellectual Property. If the Company is unable because of Parkman's mental or physical incapacity or for any other reason to secure Parkman's signature for any Intellectual Property Document,
then Parkman hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as his agent and attorney in fact, to act for and on his behalf and in his stead to
execute and file any Intellectual Property Document and to do all other lawfully permitted acts to evidence or perfect the Company's ownership and rights of and to any Company Intellectual Property
with the same legal force and effect as if executed by Parkman; provided, however, that the Company shall have first furnished Parkman's guardian,
conservator, executor, administrator or other personal representative or successor with written notice of its proposed execution and filing of such Intellectual Property Documents, including copies of
same. Parkman acknowledges and agrees that he has no right to use or possess Company Intellectual Property except as provided in this Agreement. Parkman further acknowledges and agrees that the
Company Intellectual Property includes the name "Petrie Parkman & Co." and all reasonable variations thereof (the "Company Names"), and Parkman agrees not to challenge the Company's rights to
or use of (and Parkman agrees not to use) the Company Names. Notwithstanding the foregoing, Parkman retains, and the Company agrees not to challenge, Parkman's right to use his own name (together with
any variations thereof and, if Parkman so elects, in combination with any other names not including "Petrie") in any new business operated by Parkman. 

         (ii)  On
or prior to the date hereof, Parkman shall deliver to the Company all copies of any Company Intellectual Property in physical or electronic form in Parkman's
possession or controlled by Parkman (whether or not taken or obtained prior to the date hereof) in as good and functional a condition as it has generally been in his possession. From and after
January 1, 2007, during all such times as Parkman is not in material breach of his obligations under this Agreement, the Company hereby grants Parkman a perpetual, non-transferable,
non-sublicensable (except as described in the following sentence), fully paid-up, royalty-free, worldwide license to use the Company Intellectual Property set forth
on Exhibit A hereto, including Proprietary and Confidential Information to the extent described on  Exhibit A (the "Licensed Intellectual
Property") in the conduct of Parkman's business or the business of any entity controlled by Parkman and in
which Parkman owns more than 50% of the voting securities. The foregoing license in respect of the Licensed Intellectual Property is granted in favor of Parkman and may be sublicensed 

6

 

by
him only to a business controlled by Parkman and in which Parkman owns more than 50% of the voting securities; provided, that, so long as Parkman retains such control and ownership for a period of
at least five (5) years, any such sub-license shall remain effective in perpetuity (regardless of Parkman's then-current ownership or control of such business) (any such
sub-licensee referred to herein as a "Permitted Sub-licensee"). The Company will execute any license agreements or other documents, and take all such other action, as Parkman
may reasonably request to confirm such rights of use of the Licensed Intellectual Property. Parkman acknowledges and agrees that the Licensed Intellectual Property only includes Company Intellectual
Property created prior to (and in existence on) the date of this Agreement. The Company acknowledges and agrees that any modifications, improvements, derivations or extensions of any Licensed
Intellectual Property created by Parkman or any sublicensee shall be the property of Parkman or such sublicensee, as applicable, and the Company shall have no interest therein (other than its interest
in the underlying Licensed Intellectual Property, which interest does not include or cover any such modifications, improvements, derivations or extensions). The Company shall provide Parkman with a
single physical copy of all Licensed Intellectual Property (to the extent not already in Parkman's possession) and, for Licensed Intellectual Property that exists solely in electronic form, the
Company shall extract a copy of such Licensed Intellectual Property from the Company's computer systems (to the extent not already in Parkman's possession) in such manner as Parkman and the Company
may reasonably agree for the purpose of preventing corruption, damage or diminution of the Company's computer systems or files, and deliver such copy to Parkman; provided, that Parkman may retain the
desktop and laptop computers he uses for business purposes, as long as he delivers to the Company a portable disk drive that holds an electronic copy of all information relating to the business of the
Company or its affiliates stored on such computers (including without limitation Company Intellectual Property). Parkman confirms to the Company that he has taken reasonable precautions in downloading
information from his office desktop, home desktop and laptop computers in order to assure that the portable disk drive he has delivered to the Company concurrently herewith holds an electronic copy of
all information relating to the business of the Company or its affiliates stored on such computers. The Company confirms to Parkman that it will review such portable disk drive to determine whether
the electronic information held on such disk drive appears to be in a form accessible to the Company. Parkman further agrees that, during the Restricted Period, upon reasonable notice from the Company
that any electronic information held on such disk drive has been corrupted or is otherwise not accessible or usable, he will take reasonable steps to duplicate such information in a usable form.
Parkman further agrees that he will in no event retain original copies of any Company engagement letters, invoices or related billing materials. 

        (c)    Non-Competition/Non-Interference.    

        (i)    Non-Competition In General.    In partial consideration of the amount payable pursuant to
Section 1(b), during the Restricted Period (as hereinafter defined), Parkman agrees that Parkman shall not, anywhere in the Business Area (as hereinafter defined), own any interest in, control,
be employed by or hold himself out as being associated with, or render advisory, consulting or other services comprising the Business (as hereinafter defined) to, any person or entity, or subsidiary,
subdivision, division or joint venture of such entity, or enter into any employment arrangement with or render any Business services to or for, any Competitor (as hereinafter defined), or otherwise be
a Competitor. However, notwithstanding the foregoing sentence, Parkman shall be permitted to (i) continue to serve in his present position with the ESSF pursuant to
Section 1(b)(iv) (provided that he shall not undertake any activity in violation of the 

7

 

governing
documents of that fund), (ii) assist the Company with respect to the Company's current engagement by affiliates of Halliburton Company, even if the engagement continues after the
Separation Date, (iii) create, market and manage a brokerage or money management business, and apply for and maintain any regulatory filings or registrations in connection therewith, and
(iv) invest as a principal in energy-related assets or transactions, alone or in conjunction with other investors, and perform due diligence relating to such investments. 

        (ii)    Nonsolicitation.    During the Restricted Period, Parkman shall not: 

        (A)  directly
or indirectly solicit, divert, take away or attempt to solicit, divert or take away any current or former customer or client of Company or any of its
subsidiaries or affiliates; 

        (B)  directly
or indirectly solicit, induce, encourage or attempt to solicit, induce or encourage any current or former customer or client of Company or any of its
subsidiaries or affiliates to cease doing business in whole or in part with Company or any of its subsidiaries or affiliates, or to do business with any other person or entity (besides the Company and
its subsidiaries or affiliates); or 

        (C)  directly
or indirectly otherwise interfere with the Company's relationships with any customer, client, or other person or entity. 

        (iii)    Severability of Covenants.    Parkman acknowledges and agrees that each of the provisions of this
subsection (c) ("Restrictive Covenants") are reasonable and valid in geographical and temporal scope and in all other respects. If any court determines that any of the Restrictive
Covenants, or any part thereof, are invalid or unenforceable, the remainder of the Restrictive Covenants shall not thereby be affected and shall be given full effect without regard to the invalid
portions. 

        (iv)    Blue-Penciling.    It is expressly understood and agreed that although Parkman and the Company
consider the restrictions contained in this subsection (c) to be reasonable, if a judicial determination is made by a court of competent jurisdiction that the time or territory or any
other restriction contained in this Agreement is an unenforceable restriction against Parkman, the provisions of this Agreement shall not be rendered void but shall be deemed amended to apply as to
such maximum time and territory and to such maximum extent as such court may judicially determine or indicate to be enforceable. Alternatively, if any court of competent jurisdiction finds that any
restriction contained in this Agreement is unenforceable, and such restriction cannot be amended so as to make it enforceable, such finding shall not affect the enforceability of any of the other
restrictions contained herein. 

        (v)    Inapplicability after Restricted Period.    The parties hereby expressly confirm and agree that the Restrictive
Covenants terminate, and shall have no further force and effect, from and after January 1, 2007; and from and after such date, subject only to Parkman's compliance with the other terms of this
Agreement, including without limitation the provisions of Section 5(a) regarding Proprietary and Confidential Information and Section 5(b) regarding Company Intellectual
Property, Parkman shall be subject to no restrictions in competing with the Company or soliciting the Company's clients, customers or employees. Without in any way limiting the generality of the
foregoing, the parties expressly confirm and agree that after the end of the Restricted Period, Parkman may work in any investment banking or advisory capacity, or in any other capacity, and may
solicit business from and work for past and current Company clients; provided that nothing in this clause (v) limits the Company's right to pursue after the Restricted Period 

8

 

its
rights in respect of any violation of this Section 5(c) that occurred on or prior to December 31, 2006. 

        (vi)    Available Relief.    Parkman acknowledges that as a former high-level executive of the Company,
who provided services of a special and unique character that were of a peculiar value to the Company, the loss of which may not be reasonably or adequately compensated for by damages in an action at
law: (A) the provisions of this Section 5 are reasonable and necessary to protect the legitimate interests of the Company and/or any of its related entities, and (B) any violation
of this Section 5 will cause irreparable harm to the Company and/or any of its related entities, the exact amount of which will be difficult to ascertain, and that the remedies at law for any
such violation would not be reasonable or adequate compensation to the Company and/or any of its related entities for such a violation. Accordingly, Parkman agrees that if he violates the provisions
of this Section 5, in addition to any other remedy which may be available at law or in equity, the Company and/or any of its related entities shall be entitled to specific performance and
injunctive relief without the necessity of proving actual damages. Nothing herein contained shall be construed as prohibiting the Company from pursuing any other remedies available to the Company for
such breach or threatened breach, including, without limitation, the recovery of damages from Parkman or, in the event the Company pursues any remedy for the recovery of damages, as prohibiting
Parkman from contesting any and all amounts of damages alleged by the Company (i.e., Parkman is not by virtue of this agreement or any recitation of irreparable harm contained herein stipulating the
existence of damages or the amount thereof, or any other cognovit-type remedy). 

        (d)    Certain Definitions.    As used in this Section 5, the following terms shall have the following
meanings: 

          (i)  "Business"
means the investment banking advisory business (A) involving energy-related clients and/or (B) conducted in connection with energy-related
transactions. 

         (ii)  "Business
Area" means North America. 

        (iii)  "Company
Intellectual Property" means, subject to clause (vii) below, any and all of the following and all statutory and/or common law rights throughout the
world in, arising out of, or associated with any of the following, in each case created, developed, co-developed, obtained or conceived of by the Company (including without limitation any
such rights created, developed, co-developed, obtained or conceived by Parkman while employed by the Company): (A) all patents and applications therefor, including docketed patent
disclosures awaiting filing, reissues, divisions, renewals, extensions, provisional, continuations and continuations-in-part thereof; (B) all inventions (whether
patentable or not), inventions disclosures and improvements, trade secrets, confidential business information (including ideas, research and development, know-how, compositions, designs,
specifications, pricing and cost information and business and market plans and proposals), proprietary information, manufacturing, engineering and technical drawings and specifications, processes,
designs, analytic and other models, client lists, and technology; (C) all works of authorship, "moral rights," copyrights (including derivative works thereof), mask works, copyright and mask
work registrations and applications therefor; (D) all trade names, trade dress, logos, product names, collective marks, collective membership marks, trademarks, internet domain names,
certification marks and service marks, trademark and service mark registrations and applications together with the goodwill of the business symbolized by the names and the marks; (E) all data
and related documents, software (in source code or object code form), databases, passwords, 

9

 

encryption
technology, firmware, development tools, files, records and data, and all media on which any of the foregoing is recorded; (F) any similar, corresponding or equivalent rights to any
of the foregoing; (G) all documentation related to any of the foregoing; and (H) all goodwill associated with any of the foregoing (in any case, including without limitation client
lists, data bases, marketing plans and business plans, presentations and analytic and other models). 

        (iv)  "Competitor"
means any entity or person that directly or indirectly competes with Company in the Business (or any portion thereof) at any time during the Restricted
Period and/or whose business is or includes the Business (or any portion thereof). 

         (v)  "Proprietary
and Confidential Information" means, subject to clause (vii) below, all non-public information, knowledge and data (including any trade
secrets or similar
proprietary information) obtained by Parkman during the course of his employment with the Company or its subsidiaries or affiliates, including, but not limited to, lists of the Company's customers,
lists of the representatives of customers with whom the Company has dealt, pricing information in written or electronic form, information concerning the creation, acquisition or disposition of
products and services, transaction and other databases, the Company's proprietary computer software, source codes and algorithms, licensing information, personnel information, or other confidential
information of the Company relating to customers, development programs, costs, marketing, trading, investment, sales activities, promotion, credit and financial data, manufacturing or other
proprietary processes, financing methods, plans or the business and affairs the Company or its subsidiaries or affiliates. The parties further agree, for avoidance of doubt in determining what the
term "Proprietary and Confidential Information" includes, that such term shall include only information and matters that are proprietary, in the sense that they derive independent economic value from
not being generally known or not being readily ascertainable by proper means by other persons. 

        (vi)  "Restricted
Period" means the period commencing as of the Separation Date and ending on December 31, 2006. 

       (vii)  The
Company and Parkman each acknowledge and agree that, during the lengthy time that Parkman has been employed by the Company, he has derived a level of skill,
general and specialized knowledge, business reputation and prestige, all of which he may continue to use in any way from and after the end of the Restricted Period, and none of which constitutes
"Company Intellectual Property" or "Proprietary and Confidential Information." Furthermore, tangible materials such as client lists, and facts which have no particular importance or relevance to
Parkman except with reference to the Company (e.g., financial information regarding the Company), will be presumed to constitute "Company Intellectual
Property" or "Proprietary and Confidential Information" or both; and other information within Parkman's knowledge and experience resulting from his business and other activities to date, and not
maintained in written or electronic form, shall be presumed not to constitute "Company Intellectual Property" or "Proprietary and Confidential Information." 

        (e)    Covenants Regarding Remedies.    The Company and Parkman each acknowledge and agree that in many instances it
may be difficult or impossible to determine with precision whether a particular matter constitutes "Company Intellectual Property" or "Proprietary and Confidential Information," and if it does
constitute Company Intellectual Property, whether it also constitutes a part of the "Licensed Intellectual Property." In order to provide for Parkman's orderly and amicable separation from the
Company, and in consideration of the Company Release and all other covenants and agreements set forth herein, the Company 

10

 

hereby
covenants and agrees, on behalf of itself and its successors and assigns, that it will not sue, initiate arbitration proceedings or otherwise take any legal action against Parkman or any
Permitted Sub-licensee to enforce any rights it may have in respect of any Company Intellectual Property or Proprietary and Confidential Information, other than such items of Proprietary
and Confidential Information and Company Intellectual Property set forth on Exhibit B hereto. The parties confirm that this covenant not to sue
does not extend to, and shall not prohibit the Company from taking legal action to enforce, Parkman's obligations to deliver items of tangible personal property as provided in this Agreement;  provided however, unless such items of personal property comprise a type of Proprietary and Confidential Information or Company Intellectual Property
described on Exhibit B hereto, the Company's sole remedy in respect of such matters will be to compel delivery of such items of tangible personal
property. Notwithstanding anything to the contrary contained in this Agreement, in the event that any item is listed on (or subsumed within an item listed on) both  Exhibit A and Exhibit B, the listing on  Exhibit B shall control and the operative provisions hereof relating to Exhibit B shall
control and shall supersede the listing of such item on Exhibit A for purposes of determining remedies available to the Company. 

        Section 6.    Knowledge of Claims.    Each party represents and warrants to the other that, to the knowledge of
such party, there is no reasonable basis for any third party to assert any claim against the Releasees acting in their Company capacity or the Parkman Released Parties (the "Released Persons") under
any federal, state or local law, including a breach of any applicable duty under common law. Each party further represents and warrants to the other that, to the knowledge of such party, there are no
claims, actions, suits, investigations or proceedings threatened against the Released Persons under any federal, state or local law, including a breach of any applicable duty under common law. Parkman
further represents and warrants that, to his knowledge, there is no reasonable basis for the Company or its subsidiaries or affiliates to assert any claim against Parkman for violation of any federal,
state, or local law, or breach of any applicable duty under common law. Notwithstanding the foregoing provisions of this Section 6, Parkman and the Company acknowledge that there is pending
against the Company certain claims by Siebert Brandford Shank & Co., L.L.C. (the "Siebert Matter"). 

        Section 7.    Cooperation.    Parkman agrees that he will fully and truthfully provide evidence and testimony,
if requested by the Company, in any litigation in which the Company or its subsidiaries or affiliates may become involved. Such cooperation shall include Parkman making himself available, upon the
request of the Company, for depositions, court appearances and interviews by Company's counsel. The Company shall reimburse Parkman for his time at a reasonable hourly rate and for all reasonable and
documented out-of-pocket expenses incurred by him in connection with such cooperation. To the maximum extent permitted by law, Parkman agrees that he will notify the Board, in
care of the Chairman of the Board, if he is contacted by any government agency or any other
person contemplating or maintaining any claim or legal action against the Company or its subsidiaries or affiliates or by any agent or attorney of such person. 

        Section 8.    Notice.    For purposes of this Agreement, notices and all other communications provided for in
this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid as follows: 

If
to the Company: 

Petrie
Parkman & Co.

475 17th Street

Suite 1100

Denver, CO 80202

Attention: Chairman of the Board of Directors 

11

 

If
to Parkman: 

James
E. Parkman, Jr.

c/o Roy Bertolatus

Andrews Kurth LLP

600 Travis Street, Suite 4200

Houston, Texas 77002 

or
such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 

        Section 9.    Enforcement.    Any dispute or controversy arising under or in connection with this Agreement
shall be settled exclusively by arbitration by a sole arbitrator (the "Arbitrator"). A party that requests arbitration shall designate a proposed Arbitrator. Each of the Company and Parkman and each
proposed Arbitrator shall disclose to the other parties any business, familial or other relationship or affiliation that may exist between a disputing party and such proposed Arbitrator; and any
disputing party may disapprove of such proposed Arbitrator on the basis of such relationship or affiliation. If the Company or Parkman objects to such proposed Arbitrator, it or he may, on or before
the tenth (10th) day following delivery of the request for arbitration naming the proposed Arbitrator, notify the other in writing of such objection and the Company and Parkman shall
attempt to agree upon a mutually acceptable Arbitrator. If they are unable to do so within twenty (20) days following delivery of the notice described in the immediately preceding sentence,
either the Company or Parkman may petition the American Arbitration Association to designate the Arbitrator and direct that the American Arbitration Association designate an Arbitrator from a panel of
employment law arbitration specialists within thirty (30) days. If the Arbitrator so chosen shall die, resign or otherwise fail or becomes unable to serve as Arbitrator, a replacement
Arbitrator shall be chosen in accordance with the foregoing provisions of this Section 9. The Arbitrator shall permit discovery to the extent it believes, in its discretion, that discovery is
necessary. At the hearing, the Company and Parkman shall present such evidence and witnesses as they may choose, with or without counsel. Adherence to formal rules of evidence and testimony shall not
be required but the Arbitrator shall consider any evidence and testimony that it determines to be relevant and in accordance with procedures that it determines to be appropriate. The Arbitrator shall
expeditiously (and, if possible, within sixty (60) days after the Arbitrator's selection) hear and decide all matters relating to the dispute. Any arbitration hearing shall be held in New York,
New York. The arbitration shall be conducted in accordance with the then-current Employment Arbitration Rules of the American Arbitration Association (excluding rules governing the
payment of arbitration, administrative or other fees or expenses to the Arbitrator or such Association), to the extent that such Rules do not conflict with the terms of this Agreement. The
decision of the Arbitrator shall be rendered in writing, shall be binding upon the parties and may be enforced in any court of competent jurisdiction. The responsibility for paying the costs and
expenses of the arbitration, including compensation to the Arbitrator and any experts retained by the Arbitrator, shall be allocated between the Company and Parkman in a manner determined by the
Arbitrator to be fair and reasonable under the circumstances. Each of the parties to the arbitration shall be responsible for its own fees and expenses in connection with the arbitration.
Notwithstanding the foregoing, either party shall have the right, without prejudice to any other rights or remedies it might have under the law, which are reserved, to obtain injunctive relief in a
court of competent jurisdiction to restrain any breach or threatened breach of this Agreement or otherwise to specifically enforce any provision of this Agreement, including without limitation
Sections 3 and 5; provided, however, that such right to injunctive relief does not preclude either party from seeking monetary damages for a breach of this Agreement by the other party;
provided, further, that in the event of a breach by Parkman of any representation, warranty, covenant or agreement contained in this Agreement, the Company shall be entitled to suspend any payments
and benefits set forth in Section 1(b) not yet paid or provided to Parkman and instead timely make all payments otherwise to be made to or for the benefit of Parkman 

12

 

into
an appropriate escrow account as directed by the arbitrator or court presiding over the Company's claim of breach. 

        Section 10.    Miscellaneous.    

        (a)    Governing Law.    This Agreement shall be governed by and construed in accordance with the laws of the State of
Delaware without regard to its conflicts of law principles. 

        (b)    Headings.    The section and paragraph headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this Agreement. 

        (c)    Counterparts.    This Agreement may be executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same instrument. 

        (d)    Modification; Waiver or Discharge.    This Agreement is entered into between the Company and Parkman for the
benefit of each of the Company (including its subsidiaries and affiliates) and Parkman. No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or
discharge is agreed to in writing signed by Parkman and the Company. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. 

        (e)    Entire Agreement.    This Agreement constitutes the entire agreement, and supersedes any and all prior
agreements, and understandings, both written and oral, between the parties hereto with respect to the subject matter hereof except as otherwise provided herein and except as set forth in the
Shareholders Agreement by and between Parkman and the Company dated as of the date hereof. 

        (f)    Severability.    If any term or other provision of this Agreement is invalid, illegal or incapable of being
enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect. 

        (g)    Successors.    This Agreement shall be binding upon and shall inure to the benefit of each of the parties
hereto, and their respective heirs, legatees, executors, administrators, legal representatives, successors and assigns. The provisions of Section 2(a) and Section 2(b) are
intended to be for the benefit of, and shall be enforceable by, each Releasee and Parkman Released Party and his, her or its, heirs and representatives. 

        (h)    Withholding.    All payments made by the Company to Parkman pursuant to Section 1(b) shall be
reduced by all federal, state, city or other taxes that are required to be withheld pursuant to any law or governmental regulation. 

        (i)    No Assignments.    Parkman represents and warrants that he has not assigned, pledged, encumbered, or otherwise
in any manner whatsoever sold or transferred, either by instrument in writing or otherwise, any right, claim, cause of action, title, interest, lien, or security interest released herein or relating
in any way to the claims that were or could have been asserted by Parkman against the Releasees. 

        (j)    Reinstatement.    Parkman waives any right to reinstatement of employment or future employment with the Company
or any of its subsidiaries or affiliates and agrees not to knowingly apply for future employment with the Company or any of its subsidiaries or affiliates. 

(SIGNATURE
PAGE FOLLOWS) 

13

 

        IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written. 

	 	 	 	PETRIE PARKMAN & CO.
	

 	

 	
 	

By:	

/s/  THOMAS A. PETRIE      

	 	 	 	 	Name:	Thomas A. Petrie
	 	 	 	 	Title:	Chairman and CEO
	STATE OF COLORADO	 	§	 	 
	 	 	 	§	 	 
	COUNTY OF DENVER	 	§	 	 

        BEFORE
ME, the undersigned authority, on this day personally appeared Thomas A. Petrie, the Chairman and CEO of Petrie Parkman & Co., Inc., who being by me first duly
sworn, stated on his oath that he has read the above and foregoing Separation and Release Agreement, that he is fully competent and authorized to execute the same on behalf of Petrie Parkman &
Co., Inc., that he understands the same, and that he executed the Separation and Release Agreement for the purposes and consideration therein expressed. 

        SUBSCRIBED
AND SWORN to before me on this 1st day of June, 2006. 

	

 	

 	
 	

/s/  JANEEN M. HOGAN      
 Notary Public
	

 	

 	
 	

/s/  JAMES E. PARKMAN, JR.      
 JAMES E. PARKMAN, JR.
	

STATE OF	

Wyoming
	
 	

§	

 	

 
	 	 	 	§	 	 
	COUNTY OF	Fremont
	 	§	 	 

        BEFORE
ME, the undersigned authority, on this day personally appeared James E. Parkman, Jr., who being by me first duly sworn, stated on his oath that he has read the above and foregoing
Separation and Release Agreement, that he is fully competent to execute the same, that he understands the same, and that he executed the Separation and Release Agreement for the purposes and
consideration therein expressed. 

        SUBSCRIBED
AND SWORN to before me on this 19th day of June, 2006. 

	

 	

 	
 	

/s/  RHONDA HOWER      
 Notary Public

14

   EXHIBIT A  

LIST OF LICENSED INTELLECTUAL PROPERTY  

	1.
	All
software, information, documents and data stored in Parkman's office desktop, home desktop and laptop computers, copies of which are also stored on the portable disk drive
delivered to the Company pursuant to Section 5(b)(ii).

	2.
	All
files, materials and information relating to Parkman's past and continuing service in connection with ESSF and the Company's services to Halliburton Company.

	3.
	Pikes
Peak Discussion materials, August 31, 2005.

	4.
	Common
Stock Comparison, June 9, 2006.

	5.
	Generic
New Business Presentation dated 2001.

	6.
	USX
New Business Presentation dated April 14, 2005.

	7.
	Sentient
Jet Reconciliation Log dated May 2006. 

15

   EXHIBIT B  

Proprietary and Confidential Information and Company Intellectual Property  

As
used on this Exhibit B, references to the "Company" mean Petrie Parkman & Co., Inc. and each of its subsidiaries. 

A.    Subject
to Section C of this Exhibit B, the following item in this Section A shall be deemed to be Licensed Intellectual Property under the Separation and Release
Agreement and shall be subject to the provisions of the Separation and Release Agreement relating thereto (e.g, for avoidance of doubt, the parties
agree that such Licensed Intellectual Property may be used by Parkman and the Permitted Sub-licensees, but only in accordance with the provisions of Section 5(b)(ii) relating
to the Licensed Intellectual Property): 

        1.     The
Company's software, and other files or programs in digital or other electronic form, containing the Company's analytic and other evaluation models. 

B.    Subject
to Section C of this Exhibit B, the following items in this Section B shall be deemed to be Proprietary and Confidential Information and/or Company
Intellectual Property, as the case may be, under the Separation and Release Agreement and shall be subject to the provisions of the Separation and Release Agreement relating thereto: 

        1.     The
Company's software, and other files or programs in digital or other form, containing the Company's transaction database and other databases containing
non-public information. 

        2.     Subject
to items B.15 and C.4 below, all corporate and financial books and records of the Company, including all minutes and other documents relating to meetings of the
board of directors and the shareholders of the Company. 

        3.     All
records and data relating to any past or present employees of the Company, including, without limitation, any information relating to the compensation of such
employees. 

        4.     All
engagement letters with past or present clients of the Company. 

        5.     The
financial statements of the Company, all accounting work papers and other reports concerning the business of the Company, including financial performance reports, and
all tax returns and tax records and other information and documentation relating to the Company's tax planning and tax preparation to the extent it relates specifically to the Company
(i.e., information relating specifically to the Company's use of any tax planning device or strategy shall constitute Proprietary and Confidential
Information, but the tax planning device or strategy itself shall not constitute either Proprietary and Confidential Information or Company Intellectual Property). 

        6.     All
information and documentation relating to the Company's accounting practices. 

        7.     All
information and documentation relating to the Company itself (as opposed, for example, to its clients, past clients, prospective clients, etc.) shared between the
Company and its past or present attorneys, accountants or other advisors. 

        8.     All
information and documentation relating to any past or currently pending litigation matters, or any threatened litigation matters known to Parkman, or other similar
disputes involving the Company, or any of its officers, directors or employees. 

        9.     All
information and documentation between the Company and any federal, state and local governmental bodies, including, without limitation, any information or
documentation relating to any past or present investigations or proceedings by any such governmental bodies. 

        10.   All
agreements to which the Company is a party. 

16

 

        11.   All
information and documentation relating to any strategic plans of the Company to effect any reorganization, business combination, restructuring, joint venture or
other strategic transaction involving the Company, including, without limitation, an initial public offering. 

        12.   All
information and documentation relating to fees charged by the Company to current or former clients, including all invoices and billing systems. 

        13.   All
rights in and to the Company Names and logos. 

        14.   All
information contained on the Company's internet web site not generally accessible without having a subscription therefor. 

        15.   All
confidential information made available to Parkman in his capacity as a director of the Company; provided, that Parkman may, to the extent appropriate in connection
with his duties as a director, retain copies of any such information to document his compliance with the discharge of his duty of care and other duties to the Company while serving as a director. 

C.    For
purposes of clarifying the matters set forth on this Exhibit B, the parties further agree as follows: 

        1.     The
Proprietary and Confidential Information and/or the Company Intellectual Property, as the case may be, do not include (x) information and data available to the
public (as, for example, materials included in any proxy statement or other filing with the Securities and Exchange Commission or other regulatory body, and published information that is publicly
available) or (y) information provided by the Company to third parties without any indication of proprietary or confidential status (as, for example, power point or similar presentations to
business groups or prospective clients); provided, that any such information described in clause (y) that (i) was prepared by the Company, (ii) is currently marked with the
Company Name or logo and (iii) is used without material change or modification shall be properly and clearly identified as being prepared by the Company in the event it is used by Parkman. 

        2.     Parkman
acknowledges and confirms that he is in possession of non-public information regarding current and former clients of the Company and certain potential
clients known to him (the "Client Information"). Parkman confirms that he will continue to observe all obligations of confidentiality owing to the applicable client, former client or potential client
with regard to the Client Information. 

        3.     As
to many of the items of information and data referred to in sub-parts A and B of this Exhibit B, Parkman has extensive knowledge of the matters
related to such information. Accordingly, subject to the Restrictive Covenants set forth in Section 5(c) of the Separation Agreement and Release regarding Parkman's activities during the
Restricted Period and provided that there shall be no violation of his obligations with respect to Client Information as described in Section C.2 of this Exhibit B: 

        (a)   Parkman
may prepare and utilize "deal sheets" setting forth his business experience, including his experience acquired during his period of employment by the Company; 

        (b)   Parkman
has knowledge of the terms of energy-related transactions, investment banking advisory services and valuations related to such transactions and customary
compensation for providing such services; and, subject to Section C.2 of this Exhibit B to the extent applicable, such knowledge may be used by him without restriction after the
Restricted Period; and 

        (c)   Parkman
may continue, and benefit from, his relationships with clients, former clients or potential clients of the Company and his relationships, while not necessarily
exclusive to Parkman, are not proprietary to the Company. 

17

 

        4.     All
information received by Parkman in his capacity as a shareholder of the Company (including K-1 reports and supporting schedules and other information
provided to shareholders) may be retained by Parkman and used for any proper purpose relating to his status as a shareholder of the Company. 

        5.     All
materials to which Parkman is entitled under applicable law (including applicable securities laws and HIPPA) may be retained or obtained in the future from the
Company by Parkman and used for any lawful purpose. 

        6.     The
Company recognizes that, pursuant to Section 5(c)(v) of this Separation Agreement, Parkman may compete with the Company after the expiration of the
Restricted Period subject to the otherwise applicable provisions of this Separation Agreement and that Parkman has personal knowledge on which he may rely in conducting any future business enterprise.
The Company covenants with Parkman that it will apply its rights in respect of the Proprietary and Confidential Information and the Company Intellectual Property in good faith and that it does not
intend to assert such rights as a pretext to hinder or impede Parkman's efforts to compete against the Company after the expiration of the Restricted Period as permitted in accordance with
Section 5(c)(v) and the other applicable provisions of this Separation Agreement. 

18

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SEPARATION AND RELEASE AGREEMENT

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