Document:

exv10w7

 

EXHIBIT 10.7

Execution Version

LSI Logic Corporation

(Lease B)

Omnibus Amendment

in respect of

Lease (Lease B)

Lessor Assignment Agreement (Lease B)

Dated as of September 16, 2004

among

Bank of the West,

as Lessor,

LSI Logic Corporation,

as Lessee,

Wells Fargo Bank, National Association, as Series A Assignee

ABN Amro Bank, N.V., as Series A Assignee

and

Wells Fargo Bank Northwest, National Association, as Agent

 

 

LSI Logic Corporation

(Lease B)

Omnibus Amendment (Lease B)

     This Omnibus Amendment (Lease B) (this “Omnibus Amendment”) is dated as of
September 16, 2004 and is among LSI Logic Corporation, a Delaware corporation
(“LSI” or “Lessee”); Bank of the West (“Lessor” or “Seller”); Wells Fargo Bank,
Northwest, as a Series A Assignee; ABN Amro Bank N.V., as a Series A Assignee
(each, an “Assignee”); and Wells Fargo Bank Northwest, National Association,
not in its individual capacity, except as expressly stated in the Lease, but
solely as Agent (“Wells Fargo” or “Agent”).

Recitals

     A. Lessor, Lessee and Agent have heretofore entered into that certain
Lease and Security Agreement (Lease B), dated as of August 6, 2004 (the
“Lease”), under and pursuant to which Lessee agreed to lease from Lessor, and
Lessor agreed to lease to Lessee, certain Items of Equipment. Capitalized
terms used but not otherwise defined in this Omnibus Amendment shall have the
meanings assigned to such terms in the Lease.

     B. Lessor, the financial institutions defined therein as Assignees, the
Agent and the financial institutions identified therein as Securities
Intermediaries have heretofore entered into that certain Lessor Assignment
Agreement (Lease B), dated as of August 6, 2004 (the “Lessor Assignment
Agreement”) under and pursuant to which Seller sold and assigned to the
Assignees, and the Assignees purchased and assumed from Seller, a percentage
interest in Seller’s right, title, interest and obligations with respect to the
Series A Lease Balance and/or the Series B Lease Balance, as applicable, and,
in each case the rights appurtenant thereto.

     C. The parties now desire to amend the Lease and the Lessor Assignment
Agreement in the manner set forth below.

     D. All requirements of law have been fully complied with and all other
acts and things necessary to make this Omnibus Amendment a legal, valid and
binding instrument according to its terms for the purposes herein expressed
have been done or performed.

     Now, therefore, upon the full and complete satisfaction of the conditions
precedent to the effectiveness of this Omnibus Amendment set forth in Section 3
hereof, and in consideration of good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

Agreement

Section 1. Amendment to the Lease.

     Section 1.1. Section 22.5. Section 22.5 of the Lease shall be and is
hereby amended and restated in its entirety to read as follows:

 

 

LSI Logic Corporation

(Lease B)

     “Section 22.5. Amendments; Complete Agreements.
This Lease and the other Operative Documents
exclusively and completely state the rights of Agent,
Lessor and Lessee with respect to the Overall
Transaction and supersede all prior agreements, oral
or written, with respect thereto. Subject to the
following paragraph, no variation, modification,
amendment or waiver of this Lease shall be valid
unless in writing and signed by Agent and Lessee.

     Notwithstanding anything contained herein or in
any other Operative Document, so long as no Lease
Event of Default exists at the time of execution, no
amendment, modification or waiver of this Lease or any
other Operative Document (other than any Control
Agreement or the applicable sections of the Cash
Collateral Agreement or the Lease which relate solely
to such Control Agreement) shall be effective even
after execution by the applicable parties to such
amendment, modification or waiver unless and until
Lessee shall have delivered to Agent an identical
amendment, modification or waiver to Lease A or the
corresponding Operative Documents (other than any
Control Agreement or the applicable sections of the
Cash Collateral Agreement or the Lease which relate
solely to such Control Agreement) (as such terms are
defined in Lease A), as applicable, in each case
executed by the applicable parties.

     Notwithstanding the foregoing, nothing contained
herein shall be construed to require the consent of
Lessee to any amendment, modification or waiver of any
Operative Document unless such consent of Lessee is
expressly required by the terms of such Operative
Document.”

Section 2. Amendments to the Lessor Assignment Agreement.

     Section 2.1. Section 3.1. Section 3.1 of the Lessor Assignment Agreement
shall be and is hereby amended and restated in its entirety to read as follows:

     “Section 3.1. Sole Administration by Agent. (a)
The parties hereto agree that the Agent will
administer the assignments and transactions
contemplated hereby in accordance with the agency
provisions of Article XX of the Lease. Each Assignee
hereby agrees to and shall have the benefit of such
provisions and hereby joins in the appointment of Wells Fargo Bank
Northwest, National Association, as Agent.

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LSI Logic Corporation

(Lease B)

     (b) The parties hereto also agree that the term
“Lessor” as used in Article XX of the Lease (except
for Section 20.3 of the Lease (other than the second
and fifth sentence of such Section 20.3 of the Lease))
shall mean each Assignee and Seller and that the term
“Lessor” as used in Section 20.3 of the Lease (other
than the second and fifth sentence of such Section
20.3 of the Lease), Article XII of the Lease and
certain other relevant sections of the Lease shall
have the meaning as further described in Section
3.1(b)2 below. Accordingly:

     1. Agent hereby agrees to promptly deliver to
each Assignee copies of each notice, report,
certificate, document, amendment request, waiver
request and other information that (A) Agent is
required to deliver to Lessor under the Lease or the
other Operative Documents and (B) that Agent receives
from Lessor pursuant to the Lease or the other
Operative Documents.

     2. (i) (A) Any act, right, remedy, approval or
power by Lessor or Agent at the direction of Lessor,
as applicable, under the Lease or the other Operative
Documents in connection with the exercise of remedies
and/or the enforcement of the Operative Documents or
(B) any amendment, modification or waiver of any
provision of the Lease or the other Operative
Documents at any time that a Lease Event of Default
exists, in either case, which requires the consent of
or direction by Lessor or Agent at the direction of
Lessor, as applicable, shall require the consent of or
direction by Assignees and Lessor collectively,
holding more than 50% of the outstanding Lease Balance
and (ii) (A) with respect to any other act, right,
approval or power by Lessor or Agent at the direction
of Lessor, as applicable, under the Lease or the other
Operative Documents or (B) any amendment, modification
or waiver of any provision of the Lease or the other
Operative Documents (other than any Control Agreement
or the applicable sections of the Cash Collateral
Agreement or the Lease which relate solely to such
Control Agreement, in each case which shall be
governed by clause (VI) of the following proviso) at
any time that a Lease Event of Default does not exist,
in either case, which requires the consent of or
direction by Lessor or Agent at the direction of
Lessor, as applicable, shall require the consent of or
direction by Assignees, Lessor, Assignees (as defined
in Lease A)
and Lessor (as defined in Lease A) collectively
holding more than 50% of the sum of (x) the
outstanding Lease Balance plus (y) the outstanding
Lease Balance (as defined in Lease A); provided that

-3-

 

LSI Logic Corporation

(Lease B)

(I) any act, right, remedy, approval or power by
Lessor or Agent at the direction of Lessor, as
applicable, under the Lease or the other Operative
Documents or any amendment, modification or waiver
thereof purporting to (i) release any Item of
Equipment or other Lessee Collateral (other than any
Cash Collateral, the release of the lien in which
shall be governed by Sections 3 and 7 of the Control
Agreements) from the Liens created by the Operative
Documents (except as expressly provided in the Lease),
(ii) amend, modify or waive (A) clause (i)(A) or
clause (i)(B) of this Section 3.1(b)2 or (B) clause
(I), (II), (III), (IV), (V) or (VI) of this proviso,
(iii) amend, modify or waive Section 18.3(a) of the
Lease or any defined term used in Section 18.3(a) of
the Lease in a manner that makes Section 18.3(a) of
the Lease less restrictive to Lessee, or (iv) amend,
modify or waive Section 5.1 of the Lease, which
requires the consent of or direction by the Lessor or
Agent shall require the consent of or direction by
each Assignee and Lessor, (II) any act, right, remedy,
approval or power by Lessor or Agent at the direction
of Lessor, as applicable, under the Lease or the other
Operative Documents or any amendment, modification or
waiver thereof relating, in each case, to Section 8.3
or 8.6 of the Lease, or waiving any Lease Event of
Default under the Lease after the Sale Option has been
exercised, which requires the consent of or direction
by the Lessor or Agent at the direction of Lessor, as
applicable, shall require the consent of or direction
by Assignees holding more than 50% of the sum of (x)
the outstanding Series A Lease Balance plus (y) the
outstanding Series B Lease Balance and the consent of
or direction by Lessor, (III) any act, right, remedy,
approval or power by Lessor or Agent, at the direction
of Lessor, as applicable, under the Lease or the other
Operative Documents or any amendment, modification or,
waiver thereof (i) relating to the Sale Option
provisions contained in Article XV of the Lease (other
than the right to receive the Sale Recourse Amount or
any modification of Lessee’s obligation with respect
to the Sale Recourse Amount) or Section 11.7 of the
Lease or (ii) purporting to amend the Lease or any
other Operative Document in connection with an
assignment by Lessor of its interests and obligations
under the Operative Documents pursuant to Section
19.1(a)(ii) of the Lease, if such amendment modifies
or adds representations and warranties, covenants,
events of default or other provisions to the Operative
Documents that are more restrictive to Lessee or more
favorable to the Assignees than the provisions of the
Operative Documents as of the Delivery Date, which
requires the consent of or direction by Lessor or by
Agent, at the direction of Lessor, shall,

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LSI Logic Corporation

(Lease B)

in each
case, require the consent of or direction by Lessor
only, (IV) any act, right, remedy, approval or power
by Lessor or Agent, at the direction of Lessor, under
the Lease or any other Operative Document or any
amendment, modification or waiver thereof relating to
the provisions regarding the sale or possession of, or
enforcement of the lien on, the Equipment in
connection with the enforcement of remedies pursuant
to Section 12.2 or Section 12.3 of the Lease which
requires the consent of or direction by Lessor or
Agent, at the direction of Lessor, as applicable,
shall require the consent of or direction by the
Series B Assignees holding more than 50% of the
outstanding Series B Lease Balance, (V) any act,
right, remedy, approval or power by Lessor or Agent,
at the direction of Lessor, as applicable, under the
Lease or the other Operative Documents or any
amendment, modification or, waiver thereof waiving a
Payment Default with respect to a Series or modifying
the definition (including the definition of any
defined term used in any such definition), or the
method of calculation of any payment of Basic Rent
with respect to a Series, Series A Lease Balance,
Series B Lease Balance, Series C Lease Balance or
Lessor’s Interest Related Lease Balance with respect
to a Series (as defined below), Accrual Rent with
respect to a Series or any other amount payable
hereunder with respect to a Series, which requires the
consent of or direction by Lessor or Agent, at the
direction of Lessor, shall require the consent of each
Assignee of such Series and, with respect to interests
in the Series B Lease Balance, the Series C Lease
Balance or the Lessor’s Interest Related Lease
Balance, the consent of Lessor (“Series” shall mean,
as the context may require, the rights and obligations
with respect to (a) the Series A Lease Balance, (b)
the Series B Lease Balance, (c) the Series C Lease
Balance or (d) the Lessor’s Interest Related Lease
Balance), (VI) any act, right, remedy, approval or
power by Lessor or Agent, at the direction of Lessor,
under any Control Agreement or the Cash Collateral
Agreement, or any amendment, modification or waiver of
the Control Agreement or the applicable sections of
the Cash Collateral Agreement or the Lease which
relate solely to such Control Agreement or to the Cash
Collateral which is the subject of such Control
Agreement, in each case which requires the consent of
or direction by Lessor or Agent, at the direction of
Lessor, shall require the consent of or direction
solely by the Assignee or Lessor for whose ultimate
benefit the Securities
Intermediary party to such Control Agreement holds the
Cash Collateral in the Cash Collateral Account which
is the subject of such Control Agreement, and (VII)
any amendment or

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LSI Logic Corporation

(Lease B)

modification purporting to modify (i)
this clause (VII), (ii) clause (ii)(A) or clause
(ii)(B) of this Section 3.1(b)2 or (iii) Section 22.5
of the Lease, shall require the consent of or
direction by each Assignee, Lessor, each Assignee (as
defined in Lease A) and Lessor (as defined in Lease
A).

     3. Except as set forth in the third paragraph of
clause (c) below, Lessor shall have no responsibility,
obligation or liability whatsoever with respect to the
administration of the assignments or the transactions
contemplated hereby (including but not limited to any
item listed in this Section 3.1(b)).

     (c) Without limiting the rights of any
Assignee(s) under Section 3.1(b) to direct the Agent
to exercise any act, right, remedy, approval or power
under the Operative Documents, in the event the Lessor
is permitted by the terms of the Lease to exercise any
remedy or take any remedial action under the Operative
Documents, Lessor may and, in the event the Lessor
and/or Assignees holding the requisite percentage of
the Lease Balance necessary to exercise a remedy under
Section 3.1(b) above instruct Lessor to appoint the
Agent to exercise such remedy, Lessor shall appoint
Agent as its agent for purposes of exercising such
remedy or taking such remedial action (and Agent
hereby agrees to accept such appointment) whereupon
Lessor shall have no liability or responsibility
whatsoever with respect thereto, except as otherwise
expressly set forth in the Operative Documents.

Upon the occurrence of a Lease Event of Default and
provided that the requisite percentage of Lessor
and/or Assignees required to give any approval or
direction to the Agent with respect to the
acceleration of the Lease Balance has not been
obtained, the Agent shall, at the direction of Lessor
or any Assignee, request (the “Acceleration Request”)
that the Lessor (if applicable) and each Assignee
elect whether or not to accelerate the Lease Balance
pursuant to Section 12.2(a)(i) of the Lease; provided
that if (i) the Lease Event of Default (A) is of the
type described in Section 12.1(a) or 12.1(c) of the
Lease, (B) has existed for at least sixty (60) days
and (C) an Acceleration Request has been delivered by
Agent on or after such sixty (60) day period and (ii)
Lessor or an Assignee fails to notify the Agent in
writing of whether or not Lessor or such Assignee has elected to accelerate the
Lease Balance within two weeks following Lessor’s or
such Assignee’s receipt of the Acceleration Request,
then the Lease Balance held by

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LSI Logic Corporation

(Lease B)

Lessor or such
Assignee, as applicable, shall be deemed to be not
outstanding for the purpose of determining whether the
requisite percentage of the Lessor and Assignees have
given any approval or directed the taking of any
action by Agent with respect to acceleration of the
Lease Balance pursuant to Section 12.2(a)(i) of the
Lease.

Lessor shall be indemnified and held harmless by
Assignees pursuant to the provisions of Section 4.5
hereof and shall not be liable for any such action
taken or omitted to be taken by it under or in
connection with this Agreement or the other Operative
Documents except for (i) its own gross negligence,
(ii) its willful misconduct, (iii) its negligence in
the handling of funds or (iv) its breach of any of the
Operative Documents. Additionally, Lessor shall not
be responsible in any manner to the Assignees for any
recital, statement, representation or warranty made by
the Lessee, or any officer thereof, contained in any
Operative Document, or in any certificate, report,
statement or other document referred to or provided
for in, or received by Lessor under or in connection
with any Operative Document, or the validity,
effectiveness, genuineness, enforceability or
sufficiency of any Operative Document, or for any
failure of the Lessee or any other party to any
Operative Document to perform its obligations
thereunder. Lessor shall not be under any obligation
to the Assignees to ascertain or to inquire as to the
observance or performance of any of the agreements
contained in, or conditions of, any Operative
Document, or to inspect the properties, books or
records of the Lessee.

Lessor shall be entitled to rely, and shall be fully
protected in relying, upon any writing, resolution,
notice, consent, certificate, affidavit, letter,
telegram, facsimile, telex or telephone message,
statement or other document or conversation reasonably
believed by it to be genuine and correct and to have
been signed, sent or made by the proper person or
persons, and upon advice and statements of legal
counsel (including counsels to the Lessee),
independent accountants and other experts selected by
Lessor or the Lessee.

     (d) Agent hereby represents and warrants to
Assignees that the representations and warranties of
Agent set forth in Section 17.3 of the Lease are true
and correct in all material respects.

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LSI Logic Corporation

(Lease B)

     (e) In the event that LSI and/or any Affiliate of
LSI (each, an “LSI Assignee”) is or becomes an
Assignee hereunder, no LSI Assignee shall have any
rights whatsoever as an Assignee with respect to any
amendments, modifications, waivers, approvals or
consents, or directions with respect to the taking of
any action, in each case, hereunder or under any other
Operative Document and for the purpose of determining
whether the requisite percentage of Assignees approved
or consented to any amendment, modification, waiver or
consent to be given under any Operative Document, or
have given any other approval or directed the taking
of any action provided herein or therein to be taken
upon the direction of all or a specified percentage of
the Assignees, the principal amount of the Lease
Balance directly or indirectly held by any LSI
Assignee shall be deemed to be not outstanding.

     (f) Each Series A Assignee hereby acknowledges
and agrees that in the event that such Series A
Assignee becomes the subject of any voluntary or
involuntary case or proceeding under any bankruptcy,
insolvency, receivership or similar law now or
hereafter in effect, and as a result thereof the
Series A Cash Collateral held by or benefiting such
Series A Assignee becomes a part of such Series A
Assignee’s bankruptcy estate, then (i) such Series A
Assignee shall be deemed to have set off and applied
such Series A Cash Collateral against any amounts due
with respect to the portion of the Series A Lease
Balance secured by such Series A Cash Collateral and
(ii) the Lessee shall be deemed to have paid in full
any and all Rent due with respect to the Series A
Lease Balance secured by such Series A Cash
Collateral, in each case in an amount not to exceed
such Series A Cash Collateral.”

     Section 2.2. Section 6.2. Section 6.2 of the Lessor Assignment Agreement
shall be and is hereby amended and restated in its entirety to read as follows:

     “Section 6.2. Amendments and Waivers. No
amendment or waiver of any provision of this
Agreement, and no consent with respect to any
departure by any party from the terms hereof, shall be
effective unless the same shall be in writing and
signed by Agent, Lessor and each Assignee affected
thereby (and, with
respect to (i) Section 3.1(b) and (ii) the last
sentence of 4.4(b), the Lessee) and then any such
waiver or consent shall be effective only in the
specific instance and for the specific purpose for
which given.”

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LSI Logic Corporation

(Lease B)

Section 3. Conditions to Effectiveness.

     This Omnibus Amendment shall become effective on September 16, 2004 (the
“Effective Date”) upon the satisfaction of the following conditions precedent:

     (a) This Omnibus Amendment shall have been duly authorized, executed
and delivered by each of the parties hereto;

     (b) After giving effect to this Omnibus Amendment, the Operative
Documents shall be in full force and effect as to all parties and no
Lease Default or Lease Event of Default shall have occurred or be
continuing;

     (c) Lessee shall have paid the reasonable fees and expenses of
Chapman and Cutler LLP and Lessor’s special counsel, in each case in
connection with the negotiation, preparation, approval, execution and
delivery of this Omnibus Amendment; and

     (d) The representations and warranties of the Lessee set forth
herein shall be true and correct.

Section 4. Representations and Warranties.

     Section 4.1. Representations and Warranties. Lessee hereby represents and
warrants to Lessor, Agent and the Assignees that, as of the date hereof:

     (a) No Lease Default or Lease Event of Default has occurred and is
continuing, or will occur as a result of, or after giving effect to, this
Omnibus Amendment;

     (b) After giving effect to this Omnibus Amendment, the
representations and warranties of Lessee contained in Section 17.1 of the
Lease are true and correct on and as of the date hereof, except to the
extent such representations and warranties relate to an earlier date, in
which case such representations and warranties shall have been true and
correct in all material respects on and as of such earlier date. For
purposes of the foregoing representation, the term “Operative Documents”
as used in Section 17.1 of the Lease shall include this Omnibus Amendment
and the other Operative Documents as amended hereby;

     (c) Each of the Operative Documents is in full force and effect; and

     (d) The provisions set forth in Sections 1 and 2 hereof are set
forth, mutatis mutandis, in the Omnibus Amendment (Lease A), dated as of
the date hereof, among LSI, as lessee, Wells Fargo, as agent and the
financial institutions party thereto.

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LSI Logic Corporation

(Lease B)

     Section 4.2. Reaffirmation of Lien and Security Interest of Lessee.
Lessee hereby reaffirms its grant to Lessor of a lien on and security interest
in the Lessee Collateral as set forth in the Lease and the Cash Collateral
Agreement, as applicable, and in the case of the Lease, as amended pursuant
hereto.

Section 5. Miscellaneous.

     Section 5.1. Construction. This Omnibus Amendment shall be construed in
connection with and as part of the Operative Documents, and except as modified
and expressly amended by this Omnibus Amendment, all terms, conditions and
covenants contained in the Operative Documents are hereby ratified and shall be
and remain in full force and effect.

     Section 5.2. Headings and Table of Contents. The headings of the Sections
of this Omnibus Amendment are inserted for purposes of convenience only and
shall not be construed to affect the meaning or construction of any of the
provisions hereof and any reference to numbered Sections, unless otherwise
indicated, are to Sections of this Omnibus Amendment.

     Section 5.3. References. Any and all notices, requests, certificates and
other instruments executed and delivered after the execution and delivery of
this Omnibus Amendment may refer to the Lease, the Lessor Assignment Agreement
and the other Operative Documents without making specific reference to this
Omnibus Amendment but nevertheless all such references shall be deemed to
include this Omnibus Amendment unless the context otherwise requires.

     Section 5.4. Counterparts. This Omnibus Amendment may be executed in any
number of counterparts, each executed counterpart constituting an original but
all together only one amendment.

     Section 5.5. Governing Law. This Omnibus Amendment shall be governed by,
and construed in accordance with, the internal laws of the State of California,
without regard to the conflict of laws principles of such State, except as to
matters relating to the Lessor Assignment Agreement, which shall be governed
by, and construed in accordance with, the internal laws of the State of New
York, without regard to conflict of laws principles of such State.

[Signature Pages Follow]

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LSI Logic Corporation

(Lease B)

     In Witness Whereof, each of the undersigned have caused this Omnibus
Amendment to be duly executed and delivered by their properly and duly
authorized officers as of the day and year first above written.

	 	 	 	 	 	 	 
	 	 	LSI Logic Corporation
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Anita Prasad

	

	 	 	 	Name:
	 	Anita Prasad

	

	 	 	 	Title:
	 	Vice President, Treasury and Tax

	 	 	 	 	 	 	 
	 	 	ABN AMRO Bank N.V., as a Series A Assignee
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Panida Wongchantara

	

	 	 	 	Name:
	 	Panida Wongchantara

	

	 	 	 	Title:
	 	Vice President

	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Bassam Wehbe

	

	 	 	 	Name:
	 	Bassam Wehbe

	

	 	 	 	Title:
	 	Director

	 	 	 	 	 	 	 
	 	 	Wells
Fargo Bank Northwest, National
Association, not in its individual
capacity, but solely as Agent

	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Val T. Orton

	

	 	 	 	Name:
	 	Val T. Orton

	

	 	 	 	Title:
	 	Vice President

	 	 	 	 	 	 	 
	 	 	Bank of the West, as Lessor

	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ David W. Maurer

	

	 	 	 	Name:
	 	David W. Maurer

	

	 	 	 	Title:
	 	Vice President

	 	 	 	 	 	 	 
	 	 	Wells Fargo Bank, National Association, as a Series A Assignee

	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Matt Jurgens

	

	 	 	 	Name:
	 	Matt Jurgens

	

	 	 	 	Title:
	 	Vice Presidentexv4w1

 

EXHIBIT 4.1

ENCORE ACQUISITION COMPANY

2000 INCENTIVE STOCK PLAN

(As Amended and Revised Effective March 18, 2004)

SECTION 1.     Purpose;
Definitions.

     
The purpose of the Plan is to attract, motivate and retain
selected employees of the Company and to provide the Company
with the ability to provide incentives more directly linked to
the profitability of the Company’s businesses and increases
in shareholder value.

     
For purposes of the Plan, the following terms are defined as set
forth below:

     
“Awards” mean grants under this Plan of any form of
Stock Option, Stock Award, Stock Appreciation Right or Cash
Award, whether granted singly, in combination or in tandem,
pursuant to any applicable terms, conditions and limitations as
the Committee may establish in order to fulfill the objectives
of the Plan.

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

     
“Cash Award” means an Award denominated in cash.

     
“Code” means the Internal Revenue Code of 1986, as
amended from time to time, and any successor thereto.

     
“Commission” means the Securities and Exchange
Commission or any successor agency.

     
“Committee” means the Board unless, and until, a
Compensation Committee of the Board, or a subcommittee thereof,
any successor thereto or such other committee or subcommittee,
shall be designated by the Board to administer the Plan.

     
“Common Stock” or “Stock” means the
$0.01 par value Common Stock of the Company.

     
“Company” means Encore Acquisition Company, a
corporation organized under the laws of the State of Delaware,
and its subsidiaries.

     
“Exercise Period” means the 60-day period from and
after a Change in Control.

     
“Exchange Act” means the Securities Exchange Act of
1934, as amended from time to time, and any successor thereto.

     
“Fair Market Value” means, as of any given date,
(i) the closing sale price of the Common Stock for such
date on The New York Stock Exchange, (ii) at the
discretion of the Committee, the price prevailing on the
exchange at the time of exercise or other relevant event (as
determined in accordance with procedures established by the
Committee), (iii) if the closing sale price or the price
prevailing on the exchange cannot be determined, the fair market
value of the Common Stock as determined by the Committee in good
faith, (iv) if applicable, the price per share as
determined in accordance with the terms, conditions, and
limitations set forth in an Award agreement, or (v) if
applicable, the price per share as determined in accordance with
the procedures of a third party administrator retained by the
Company to administer the Plan and as approved by the Committee.
Under no circumstances shall the Fair Market Value be less than
the par value of the Common Stock.

     
“Grant Date” means the date an Award is granted to a
Plan participant pursuant to the Plan. The Grant Date for a
substituted award is the Grant Date of the original award.

     
“Grant Price” means the price at which a Plan
participant may exercise his or her right to receive cash or
Common Stock, as applicable, under the terms of an Award.

     
“Incentive Stock Option” means any Stock Option that
complies with Section 422 of the Code.

     
“Nonqualified Stock Option” means any Stock Option
that is not an Incentive Stock Option.

1

 

     
“Performance Award” means an Award made pursuant to
this Plan that is subject to the attainment of one or more
Performance Goals.

     
“Performance Goal” means one or more standards
established by the Committee to determine in whole or in part
whether a Performance Award shall be earned.

     
“Plan” means this 2000 Incentive Stock Plan, as
amended from time to time.

     
“Qualified Performance Award” means a Performance
Award made to a participant who is an employee that is intended
to qualify as qualified performance-based compensation under
Section 162(m) of the Code, as described in
Section 5(e)(ii) of the Plan.

     
“Restricted Period” means the period during which an
Award may not be sold, assigned, transferred, pledged or
otherwise encumbered.

     
“Restricted Stock” means an Award of shares of Common
Stock that is subject to a Restricted Period.

     
“Restricted Stock Unit” means a Stock Unit that is
subject to a Restricted Period.

     
“Spread Value” means, with respect to a share of
Common Stock subject to an Award, an amount equal to the excess
of the Fair Market Value, on the date such value is determined,
over the Award’s exercise or Grant Price, if any.

     
“Stock Appreciation Right” or “SAR” means a
right to receive a payment, in cash or Common Stock, equal to
the excess of the Fair Market Value or other specified valuation
of a specified number of shares of Common Stock on the date the
right is exercised over a specified Grant Price, in each case,
as determined by the Committee.

     
“Stock Award” means an Award in the form of shares of
Common Stock or Stock Units, including an award of Restricted
Stock or Restricted Stock Units.

     
“Stock Option” means an option granted pursuant to
Section 5(a).

     
“Stock Unit” means a unit representing the right to
receive one share of Common Stock or equivalent value (as
determined by the Committee).

     
In addition, the terms “Business Combination,”
“Change in Control,” “Change in Control
Price,” “Incumbent Board,” “Outstanding
Company Stock,” “Outstanding Company Voting
Securities” and “Person” have the meanings set
forth in Section 6.

     
SECTION 2.     Administration.

     
The Plan shall be administered by the Committee, which shall
have the power to interpret the Plan and to adopt such rules and
guidelines for carrying out the Plan as it may deem appropriate.
The Committee shall have the authority to adopt such
modifications, procedures and subplans as may be necessary or
desirable to comply with the laws, regulations, compensation
practices and tax and accounting principles of the countries in
which the Company, a subsidiary or an affiliate may operate to
assure the viability of the benefits of Awards made to
individuals employed in such countries and to meet the
objectives of the Plan.

     
Subject to the terms of the Plan, the Committee shall have the
authority to determine those employees eligible to receive
Awards and the amount, type and terms of each Award.

     
Following the authorization of a pool of cash or shares of
Common Stock to be available for Awards, the Board or the
Committee may authorize the Chief Executive Officer and/or
another executive officer of the Company, if and to the extent
permitted by applicable law, rule or regulation, or a
subcommittee of members of the Board, to grant individual Awards
from such pool pursuant to such conditions or limitations as the
Board or the Committee may establish. The Board or Committee may
also delegate to the Chief Executive Officer and to other
employees of the Company its administrative duties under this
Plan (excluding its granting authority) pursuant to such
conditions or limitations as the Committee may establish. The
Board or Committee may engage or authorize the engagement of a
third party administrator to carry out administrative functions
under the Plan.

2

 

     
The Committee may, in its discretion, provide for the extension
of the exercisability of an Award, accelerate the vesting or
exercisability of an Award, eliminate or make less restrictive
any restrictions applicable to an Award, waive any restriction
or other provision of this Plan or an Award or otherwise amend
or modify an Award in any manner that is either (i) not
adverse to the Participant to whom such an Award was granted or
(ii) consented to by such Participant. Notwithstanding
anything herein to the contrary, without the approval of the
Company’s stockholders, Stock Options issued under the Plan
will not be repriced, replaced, or regranted through
cancellation or by decreasing the exercise price of a previously
granted Stock Option, except as expressly provided by the
adjustment provisions of Section 4.

     
Any determination made by the Committee or pursuant to delegated
authority in accordance with the provisions of the Plan with
respect to any Award shall be made in the sole discretion of the
Committee or such delegate, and all decisions made by the
Committee or any appropriately designated officer pursuant to
the provisions of the Plan shall be final and binding on all
persons, including the Company and Plan participants.

SECTION 3.     Eligibility.

     
All directors and all full time regular employees of the Company
and its subsidiaries and affiliates are eligible to be granted
Awards under the Plan.

SECTION 4.     Common Stock
Subject to Plan.

     
The total number of shares of Common Stock reserved and
available for distribution pursuant to the Plan shall be
3,000,000 shares. If any Award is exercised, cashed out,
forfeited, or terminates or expires without a payment being made
to the participant in the form of Common Stock, the shares
subject to such Award, if any, shall again be available for
distribution in connection with Awards under the Plan. Any
shares of Common Stock that are used by a participant as full or
partial payment of withholding or other taxes or as payment for
the exercise or conversion price of an Award shall be available
for distribution in connection with Awards under the Plan.

     
Shares of Common Stock delivered under the Plan as an Award or
in settlement of an Award issued or made (a) upon the
assumption, substitution, conversion or replacement of
outstanding awards under a plan or arrangement of an entity
acquired in a merger or other acquisition or (b) as a
post-transaction grant under such a plan or arrangement of an
acquired entity shall not reduce or be counted against the
maximum number of shares of Common Stock available for delivery
under the Plan, to the extent that the exemption for
transactions in connection with mergers and acquisitions from
the shareholder approval requirements of the New York Stock
Exchange for equity compensation plans applies.

     
In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split, split-up,
distribution to holders of Common Stock of securities or
property (including cash dividends that the Board determines are
not in the ordinary course of business but excluding normal cash
dividends), or other change in corporate structure affecting the
Common Stock occurring after adoption of the Plan by the Board,
the Board is authorized to make substitutions or adjustments in
the aggregate number and kind of shares reserved and available
for issuance under the Plan, in the number, kind and Grant Price
or other price of shares subject to outstanding Awards and in
the per person Award limits set forth in Section 5;
provided, however, that any such substitutions or adjustments
shall be, to the extent deemed appropriate by the Board,
consistent with the treatment of shares of Common Stock not
subject to the Plan, and that the number of shares subject to
any Award shall always be a whole number.

SECTION 5.     Awards.

     
The types of Awards that may be granted under the Plan are set
forth below. Awards may be granted singly, in combination, or in
tandem with other Awards. Each Award will be set forth in a
separate agreement with the person receiving the Award and will
indicate the type, terms and conditions of the Award.

     
(a) Stock Options.

		
	 	     
    (i) A Stock Option represents the right to purchase a share
    of Stock at a predetermined Grant Price. Stock Options granted
    under this Plan may be in the form of Incentive Stock Options or

3

 

		
	 	
    Nonqualified Stock Options, as specified in the Award agreement.
    The terms of each Stock Option shall be set forth in the Award
    agreement. Subject to the applicable Award agreement, Stock
    Options may be exercised, in whole or in part, by giving written
    notice of exercise to the Company specifying the number of
    shares to be purchased. Such notice shall be accompanied by
    payment in full of the purchase price by certified or bank check
    or such other instrument as the Company may accept (including a
    copy of instructions to a broker or bank acceptable to the
    Company to deliver promptly to the Company an amount of sale or
    loan proceeds sufficient to pay the purchase price). As
    determined by the Committee, payment in full or in part may also
    be made in the form of Common Stock already owned by the
    optionee valued at the Fair Market Value on the date the Stock
    Option is exercised; provided, however, that to the extent
    required by the Committee such Common Stock shall not have been
    acquired within the preceding six months upon the exercise of a
    Stock Option Award granted under the Plan or any other plan
    maintained at any time by the Company or any subsidiary.
	 
	 	     
    (ii) Incentive Stock Options will be designed to comply
    with the provisions of the Code and will be subject to certain
    restrictions contained in the Code. Among such
    restrictions, Incentive Stock Options must have an exercise
    price not less than the Fair Market Value of a share of Common
    Stock on the Grant Date, must expire within a specified period
    of time following the optionee’s termination of employment,
    and must be exercised within ten years after the Grant Date; but
    may be subsequently modified to disqualify them from treatment
    as Incentive Stock Options. In the case of an Incentive Stock
    Option granted to an individual who owns (or is deemed to own)
    at least 10% of the total combined voting power of all classes
    of stock of the Company, the exercise price must be at least
    110% of the Fair Market Value of a share of Common Stock on the
    Grant Date and the Incentive Stock Option must expire no later
    than the fifth anniversary of the date of its grant. The
    aggregate Fair Market Value (determined at the time the option
    was granted) of the Common Stock with respect to which Incentive
    Stock Options are exercisable for the first time by a
    participant during any calendar year shall not exceed $100,000
    (or such other limit as may be required by the Code).
	 
	 	     
    (iii) Nonqualified Stock Options will provide for the right
    to purchase Common Stock at a specified price which, except with
    respect to Nonqualified Stock Options intended to qualify as
    performance-based compensation under Section 162(m) of the
    Code, may be less than Fair Market Value on the Grant Date (but
    not less than 85% of Fair Market Value) and usually will become
    exercisable (in the discretion of the Committee) in one or more
    installments after the Grant Date. The term of a Nonqualified
    Stock Option will not exceed ten years from the Grant Date.

     
(b) Stock Awards. An Award may be in the form of a Stock
Award. The terms, conditions and limitations applicable to any
Stock Awards granted pursuant to this Plan shall be determined
by the Committee; provided that any Stock Award which is not a
Performance Award shall have a minimum Restricted Period of
three years from the Grant Date, provided further that
(i) the Committee may provide for earlier vesting upon a
termination of employment by reason of death, disability,
layoff, retirement, or change in control, and (ii) such
three-year minimum Restricted Period shall not apply to a Stock
Award that is granted in lieu of salary or bonus. Shares of
Restricted Stock are shares of Common Stock that are awarded to
a participant and that during the Restricted Period may be
forfeitable to the Company upon such conditions as may be set
forth in the applicable Award agreement (including, without
limitation, a specified period of employment or the satisfaction
of pre-established Performance Goals, when granted to executive
officers). Stock Awards granted to executive officers may only
be in the form of Performance Awards. Except as provided in this
subsection (b) and in the applicable Award agreement,
a participant who has received an Award of Restricted Stock
shall have all the rights of a holder of Common Stock, including
the rights to receive dividends or dividend equivalents and to
vote during the Restricted Period. Dividends with respect to
Restricted Stock that are payable in Common Stock shall be paid
in the form of Restricted Stock.

     
(c) Stock Appreciation Rights. An Award may be in the form
of an SAR. On the Grant Date, the Grant Price of an SAR shall be
not less than the Fair Market Value of the Common Stock subject
to such SAR. The exercise period for an SAR shall extend no more
than 10 years after the Grant Date. Subject to the
foregoing provisions, the terms, conditions, and limitations
applicable to any SARs awarded pursuant to this Plan,

4

 

including the Grant Price, the term of any SARs, and the date or
dates upon which they become exercisable, shall be determined by
the Committee.

     
(d) Cash Awards. An Award may be in the form of a Cash
Award. The terms, conditions, and limitations applicable to any
Cash Awards granted pursuant to this Plan shall be determined by
the Committee.

     
(e) Performance Awards. Without limiting the type or number
of Awards that may be made under the other provisions of this
Plan, an Award may be in the form of a Performance Award. The
terms, conditions and limitations applicable to any Performance
Awards granted pursuant to this Plan shall be determined by the
Committee; provided that any Stock Award granted as a
Performance Award shall have a minimum Restricted Period of one
year from the Grant Date, provided further that the Committee
may provide for earlier vesting upon a termination of employment
by reason of death, disability, layoff, retirement, or change in
control. The Committee shall set Performance Goals in its
discretion which, depending on the extent to which they are met,
will determine the value and/or amount of Performance Awards
that will be paid out to the Plan participant and/or the portion
of an Award that may be exercised.

		
	 	     
    (i) Nonqualified Performance Awards. Performance
    Awards that are not intended to qualify as qualified
    performance-based compensation under Section 162(m), or
    that are Stock Options or SARs, of the Code shall be based on
    achievement of such goals and be subject to such terms,
    conditions, and restrictions as the Committee or its delegate
    shall determine.
	 
	 	     
    (ii) Qualified Performance Awards. Performance
    Awards under the Plan that are intended to qualify as qualified
    performance-based compensation under Section 162(m) of the
    Code shall be paid, vested, or otherwise deliverable solely on
    account of the attainment of one or more pre-established,
    objective Performance Goals established by the Committee prior
    to the earlier to occur of (x) 90 days after the
    commencement of the period of service to which the Performance
    Goal relates and (y) the lapse of 25% of the period of service
    (as scheduled in good faith at the time the goal is
    established), and in any event while the outcome is
    substantially uncertain. A Performance Goal is objective if a
    third party having knowledge of the relevant facts could
    determine whether the goal is met. Such a Performance Goal may
    be based on one or more business criteria that apply to the
    Employee, one or more business units or divisions of the Company
    or the applicable sector, or the Company as a whole, and if so
    desired by the Committee, by comparison with a peer group of
    companies. A Performance Goal may include one or more of the
    following: Increased revenue; Net income measures (including but
    not limited to income after capital costs and income before or
    after taxes); Stock price measures (including but not limited to
    growth measures and total shareholder return); Market share;
    Earnings per share (actual or targeted growth); Earnings before
    interest, taxes, depreciation, and amortization
    (“EBITDA”); Cash flow measures (including but not
    limited to net cash flow and net cash flow before financing
    activities); Return measures (including but not limited to
    return on equity, return on average assets, return on capital,
    risk-adjusted return on capital, return on investors’
    capital and return on average equity); Operating measures
    (including operating income, funds from operations, cash from
    operations, after-tax operating income, sales volumes,
    production volumes, and production efficiency); Expense measures
    (including but not limited to finding and development costs,
    overhead cost and general and administrative expense); Margins;
    Shareholder value; Total shareholder return; Reserve levels;
    Reserve additions; Proceeds from dispositions; Reserve
    replacement ratio; Total market value; and Corporate values
    measures (including ethics compliance, environmental, and
    safety).
	 
	 	     
    Unless otherwise stated, such a Performance Goal need not be
    based upon an increase or positive result under a particular
    business criterion and could include, for example, maintaining
    the status quo or limiting economic losses (measured, in each
    case, by reference to specific business criteria). In
    interpreting Plan provisions applicable to Qualified Performance
    Awards, it is the intent of the Plan to conform with the
    standards of Section 162(m) of the Code and Treasury
    Regulation §1.162-27(e)(2)(i), as to grants to those
    participants whose compensation is, or is likely to be, subject
    to Section 162(m) of the Code, and the Committee in
    establishing such goals and interpreting the Plan shall be
    guided by such provisions. Prior to the payment of any
    compensation based on the achievement

5

 

		
	 	
    of Performance Goals for Qualified Performance Awards, the
    Committee must certify in writing that applicable Performance
    Goals and any of the material terms thereof were, in fact,
    satisfied. Subject to the foregoing provisions, the terms,
    conditions, and limitations applicable to any Qualified
    Performance Awards made pursuant to this Plan shall be
    determined by the Committee.

     
(f) Employee Award Limits.

		
	 	     
    (i) No Plan participant who is an employee may be granted,
    during any calendar year, Awards covering or relating to more
    than 150,000 shares of Common Stock.
	 
	 	     
    (ii) No Plan participant who is an employee may be granted
    Awards consisting of cash (including Cash Awards that are
    granted as Performance Awards) in respect of any calendar year
    having a value determined on the Grant Date in excess of
    $1,000,000.

     
(g) Nonemployee Director Award Limits. No Plan participant
who is a nonemployee director may be granted, during any
calendar year, Awards covering or relating to more than
10,000 shares of Common Stock.

     
SECTION 6.     Change in
Control Provisions.

     
(a) Impact of Event. Notwithstanding any other provision of
the Plan to the contrary, in the event of a Change in Control,
unless the Committee otherwise determines prior to such Change
in Control:

		
	 	     
    (i) All Stock Options and SARs outstanding as of the date
    such Change in Control occurs shall become fully vested and
    exercisable.
	 
	 	     
    (ii) The restrictions and other conditions applicable to
    any Stock Award, including vesting requirements, shall lapse,
    and such Awards shall become free of all restrictions and fully
    vested.
	 
	 	     
    (iii) The value of all outstanding Stock Options, SARs and
    Stock Awards shall, unless otherwise determined by the Committee
    at or after grant, be cashed out on the basis of the
    “Change in Control Price,” as defined in
    Section 6(c), as of the date such Change in Control occurs
    or such other date as the Committee may determine prior to the
    Change in Control.

     
(b) Definition of Change in Control. A “Change in
Control” means the happening of any of the following events:

		
	 	     
    (i) The acquisition by any individual, entity or group
    (within the meaning of Section 13(d)(3) or 14(d)(2) of the
    Exchange Act (a “Person”)) of beneficial ownership
    (within the meaning of Rule 13d-3 promulgated under the
    Exchange Act) of 40% or more of either (A) the then
    outstanding shares of Common Stock (the “Outstanding
    Company Common Stock”) or (B) the combined voting power of
    the then outstanding voting securities of the Company entitled
    to vote generally in the election of directors (the
    “Outstanding Company Voting Securities”); provided,
    however, that the following acquisitions shall not constitute a
    Change in Control: (1) any acquisition directly from the
    Company, (2) any acquisition by the Company, (3) any
    acquisition by any employee benefit plan (or related trust)
    sponsored or maintained by the Company or any corporation
    controlled by the Company or (4) any acquisition by any
    corporation pursuant to a transaction described in
    clauses (A), (B) and (C) of paragraph
    (iii) of this Section 6(b) or (5) any acquisition
    by a Person that owns on the date this Plan is adopted by the
    Board of Directors more than 20% of the outstanding capital
    stock of the Company at such date; or
	 
	 	     
    (ii) Individuals who, as of the effective date of the Plan,
    constitute the Board (the “Incumbent Board”) cease for
    any reason to constitute at least a majority of the Board;
    provided, however, that any individual becoming a director
    subsequent to such effective date whose election, or nomination
    for election by the stockholders of the Company, was approved by
    a vote of at least a majority of the directors then comprising
    the Incumbent Board shall be considered as though such
    individual were a member of the Incumbent Board, but excluding,
    for this purpose, any such individual whose initial assumption
    of office occurs as a result of an actual or threatened election
    contest with respect to the election or removal of directors or
    other actual or threatened solicitation of proxies or consents
    by or on behalf of a Person other than the Board; or

6

 

		
	 	     
    (iii) Approval by the stockholders of the Company of a
    reorganization, merger, share exchange or consolidation (a
    “Business Combination”), unless, in each case
    following such Business Combination, (A) all or
    substantially all of the individuals and entities who were the
    beneficial owners, respectively, of the Outstanding Company
    Common Stock and Outstanding Company Voting Securities
    immediately prior to such Business Combination beneficially own,
    directly or indirectly, more than 60% of, respectively, the then
    outstanding shares of common stock and the combined voting power
    of the then outstanding voting securities entitled to vote
    generally in the election of directors, as the case may be, of
    the corporation resulting from such Business Combination
    (including, without limitation, a corporation that as a result
    of such transaction owns the Company through one or more
    subsidiaries) in substantially the same proportions as their
    ownership, immediately prior to such Business Combination of the
    Outstanding Company Common Stock and Outstanding Company Voting
    Securities, as the case may be, (B) no Person (excluding
    any employee benefit plan (or related trust) of the Company or
    such corporation resulting from such Business Combination)
    beneficially owns, directly or indirectly, 40% or more of,
    respectively, the then outstanding shares of common stock of the
    corporation resulting from such Business Combination or the
    combined voting power of the then outstanding voting securities
    of such corporation except to the extent that such Person owned
    40% or more of the Outstanding Company Common Stock or
    Outstanding Company Voting Securities prior to the Business
    Combination and (C) at least a majority of the members of
    the board of directors of the corporation resulting from such
    Business Combination were members of the Incumbent Board at the
    time of the execution of the initial agreement, or of the action
    of the Board, providing for such Business Combination; or
	 
	 	     
    (iv) Approval by the stockholders of the Company of
    (A) a complete liquidation or dissolution of the Company or
    (B) the sale or other disposition of all or substantially
    all of the assets of the Company, other than to a corporation
    with respect to which, following such sale or other disposition,
    (1) more than 60% of, respectively, the then outstanding
    shares of common stock of such corporation and the combined
    voting power of the then outstanding voting securities of such
    corporation entitled to vote generally in the election of
    directors is then beneficially owned, directly or indirectly, by
    all or substantially all of the individuals and entities who
    were the beneficial owners, respectively, of the Outstanding
    Company Common Stock and Outstanding Company Voting Securities
    immediately prior to such sale or other disposition in
    substantially the same proportion as their ownership,
    immediately prior to such sale or other disposition, of the
    Outstanding Company Common Stock and Outstanding Company Voting
    Securities, as the case may be, (2) less than 40% of,
    respectively, the then outstanding shares of common stock of
    such corporation and the combined voting power of the then
    outstanding voting securities of such corporation entitled to
    vote generally in the election of directors is then beneficially
    owned, directly or indirectly, by any Person (excluding any
    employee benefit plan (or related trust) of the Company or such
    corporation), except to the extent that such Person owned 40% or
    more of the Outstanding Company Common Stock or Outstanding
    Company Voting Securities prior to the sale or disposition and
    (3) at least a majority of the members of the board of
    directors of such corporation were members of the Incumbent
    Board at the time of the execution of the initial agreement, or
    of the action of the Board, providing for such sale or other
    disposition of assets of the Company or were elected, appointed
    or nominated by the Board.

     
(c) Change in Control Price. “Change in Control
Price” means the highest closing price per share paid for
the purchase of Common Stock on the New York Stock Exchange
at any time during the preceding 60-day period ending on the
date the Change in Control occurs, except that, in the case of
Incentive Stock Options, such price shall be based only on
transactions reported for the date on which such Incentive Stock
Options are cashed out.

     
(d) Notwithstanding any other provision of this Plan, upon
a Change in Control, unless the Committee shall determine
otherwise at grant, an Award recipient shall have the right, by
giving notice to the Company within the Exercise Period, to
elect to surrender all or part of the Stock Option to the
Company and to receive in cash, within 30 days of such
notice, an amount equal to the amount by which the “Change
in Control Price” on the date of such notice shall exceed
the exercise or Grant Price under such Award, multiplied by the
number of shares of Stock as to which the right granted under
this Section 6 shall have been exercised.

7

 

     
(e) Notwithstanding the foregoing, if any right granted
pursuant to this Section 6 would make a Change in Control
transaction ineligible for pooling of interests accounting under
generally accepted accounting principles that but for this
Section 6 would otherwise be eligible for such accounting
treatment, the Committee shall have the ability to substitute
the cash payable pursuant to this Section 6 with Common
Stock with a Fair Market Value equal to the cash that would
otherwise be payable hereunder.

     
SECTION 7.     Plan Amendment
and Termination

     
The Board may amend or terminate the Plan at any time, provided
that no such amendment shall be made without stockholder
approval if such approval is required by applicable legal
requirements or the requirements of the securities exchange on
which the Company’s stock is listed, or if such amendment
would: (i) decrease the Grant Price of any Stock Option to
less than the minimum price set forth herein on the Grant Date;
or (ii) increase the total number of shares of Common Stock
that may be distributed under the Plan.

     
Except as set forth in any Award agreement, no amendment or
termination of the Plan may materially and adversely affect any
outstanding Award under the Plan without the Award
recipient’s consent.

     
SECTION 8.     Transferability.

     
No Award shall be transferable or assignable, or payable to or
exercisable by, anyone other than the participant to whom it was
granted, except (i) by law, will or the laws of descent and
distribution, (ii) as a result of the disability of a
participant or (iii) that the Committee may permit
transfers of Awards by gift or otherwise to a member of a
participant’s immediate family and/or trusts whose
beneficiaries are members of the participant’s immediate
family, or to such other persons or entities as may be approved
by the Committee. Notwithstanding the foregoing, in no event
shall Incentive Stock Options be transferable or assignable
other than by will or by the laws of descent and distribution,
except as may be expressly allowed by applicable laws or
regulations.

     
SECTION 9.     Award
Agreements.

     
Each Award under the Plan shall be evidenced by a written
agreement that sets forth the terms, conditions, and limitations
for each Award. Such terms may include, but are not limited to,
the term of the Award, vesting and forfeiture provisions, and
the provisions applicable in the event the recipient’s
employment terminates. The Committee may amend an Award
Agreement, provided that no such amendment may materially and
adversely affect an Award without the Award recipient’s
consent.

     
SECTION 10.     Effective Date;
Term.

     
The Plan was initially adopted by the Board on March 8,
2001. This amendment and restatement of the Plan is effective as
of the date of its adoption by the Board on March 18, 2004,
subject to the approval by the holders of a majority of the
shares of common stock then outstanding. The term of the Plan is
ten years from the date the amended and restated Plan is
approved by the holders of a majority of the shares of Common
Stock. Except as otherwise provided by the Board, no Awards
shall be granted after the term of the Plan has expired. Any
Awards granted during the term of the Plan may extend beyond the
term of the Plan.

     
SECTION 11.     General
Provisions.

     
(a) The Committee may require each person acquiring shares
of Common Stock pursuant to an Award to represent to and agree
with the Company in writing that such person is acquiring the
shares without a view to the distribution thereof. The
certificates for such shares may include any legend that the
Committee deems appropriate to reflect any restrictions on
transfer.

     
All certificates for shares of Common Stock delivered under the
Plan shall be subject to such stock transfer orders and other
restrictions as the Committee may deem advisable under the
rules, regulations, and other requirements of the Commission,
any stock exchange upon which the Common Stock is then listed,
and any applicable Federal, state or foreign securities law, and
the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such
restrictions.

8

 

     
(b) It is presently intended that the Plan constitute an
“unfunded” plan for incentive and deferred
compensation. The Committee may authorize the creation of trusts
or other arrangements to meet the obligations created under the
Plan to deliver Common Stock or make payments; provided,
however, that, unless the Committee otherwise determines, the
existence of such trusts or other arrangements is consistent
with the “unfunded” status of the Plan.

     
(c) Nothing contained in this Plan shall prevent the
Company, a subsidiary, or an affiliate from adopting other or
additional compensation arrangements for its employees.

     
(d) The adoption of the Plan shall not confer upon any
employee any right to continued employment nor shall it
interfere in any way with the right of the Company, a
subsidiary, or an affiliate to terminate the employment of any
employee at any time.

     
(e) No later than the date as of which an amount first
becomes includible in the gross income of the participant for
Federal income tax purposes with respect to any Award under the
Plan, the participant shall pay to the Company, or make
arrangements satisfactory to the Company regarding the payment
of, any Federal, state, local, or foreign taxes of any kind
required by law to be withheld with respect to such amount.
Unless otherwise determined by the Committee, withholding
obligations arising from an Award may be settled with Common
Stock, including Common Stock that is part of, or is received
upon exercise or conversion of, the Award that gives rise to the
withholding requirement. The obligations of the Company under
the Plan shall be conditional on such payment or arrangements,
and the Company and its subsidiaries and affiliates shall, to
the extent permitted by law, have the right to deduct any such
taxes from any payment otherwise due to the participant. Common
Stock used to settle withholding obligations shall be valued at
Fair Market Value on the date such withholding obligations are
due. The Committee may establish such procedures as it deems
appropriate, including the making of irrevocable elections, for
the settling of withholding obligations with Common Stock.

     
(f) On receipt of written notice of exercise, the Committee
may elect to cash out all or a portion of the shares of Common
Stock for which a Stock Option is being exercised by paying the
optionee an amount, in cash or Common Stock, equal to the Spread
Value of such shares on the date such notice of exercise is
received.

     
(g) The Plan and all Awards made and actions taken
thereunder shall be governed by and construed in accordance with
the laws of the State of Delaware.

     
(h) If any provision of the Plan is held invalid or
unenforceable, the invalidity or unenforceability shall not
affect the remaining parts of the Plan, and the Plan shall be
enforced and construed as if such provision had not been
included.

9

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