Document:

exv10w17

Exhibit 10.17

AMENDMENT

TO

EXECUTIVE EMPLOYMENT AGREEMENT

     WHEREAS, Strata Directional Technology LLC (the “Company”) and David K. Bryan (the
“Executive”) entered into that certain Executive Employment Agreement dated as of July 1, 2007,
(the “Agreement”); and

     WHEREAS, the Company and the Executive desire to amend the Agreement to comply with Internal
Revenue Code (“Code”) Section 409A and regulations issued thereunder;

     NOW, THEREFORE, the Agreement is hereby amended, effective as of the original effective date
of the Agreement, as follows:

1. The second sentence in Section 5(b) of the Agreement is hereby amended and
restated as follows:

     “Such bonus shall be paid annually within 30 days following Allis-Chalmers’
release of its audited financial statements for each year during the term hereof,
but in no event earlier than January 1 of, and no later than December 31 of, the
calendar year following the calendar year with respect to which such bonus is
earned.”

2. A new Section 7(c) is hereby added to the Agreement as follows:

     “(c) Section 409A Limits on Payments to Specified Employees. Notwithstanding
any other provision of the Agreement to the contrary, if Executive is a “specified
employee,” as defined in Section 409A of the Code, except to the extent permitted
under Section 409A of the Code, no benefit or payment that is subject to Section
409A of the Code (after taking into account all applicable exceptions to Section
409A of the Code, including but not limited to the exceptions for short-term
deferrals and for “separation pay only upon an involuntary separation from service”)
shall be made under this Agreement on account of Executive’s “separation from
service,” as defined in Section 409A of the Code, until the later of the date
prescribed for payment in this Agreement and the 1st day of the 7th calendar month
that begins after the date of Executive’s separation from service (or, if earlier,
the date of death of Executive). Any such benefit or payment payable pursuant to
this Agreement within the period described in the immediately preceding sentence
will accrue and will be payable in a lump sum cash payment, without interest, on the
payment date set forth in the immediately preceding sentence.”

3. Except as modified herein, the Agreement is specifically ratified and affirmed.

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     IN WITNESS WHEREOF, the Company and the Executive have executed this Amendment to the
Agreement as of this 31st day of December, 2008, to be effective as herein provided.

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	STRATA DIRECTIONAL TECHONOLOGY LLC:	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Theodore F. Pound III
 

	 	 
	 	 	Printed Name: Theodore F. Pound III	 	 
	 	 	Title: Vice President and Secretary	 	 
	 
	 	 	 	 	 	 
	 	 	EXECUTIVE:	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ David K. Bryan	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	David K. Bryan	 	 

2exv10w27

Exhibit 10.27

AMENDED AND RESTATED

ALLIS-CHALMERS ENERGY INC.

2006 INCENTIVE PLAN

     SECTION 1. Purpose of the Plan.

     This Amended and Restated Allis-Chalmers Energy Inc. 2006 Incentive Plan (the “Plan”) amends
and restates the Allis-Chalmers Energy Inc. 2006 Incentive Plan (the “Prior Plan”) and is intended
to promote the interests of Allis-Chalmers Energy Inc., a Delaware corporation (the “Company”), and
its stockholders by encouraging officers, employees, non-employee directors and consultants of the
Company and its Affiliates to acquire or increase their equity interests in the Company and to
provide a means whereby they may develop a sense of proprietorship and personal involvement in the
development and financial success of the Company, and to encourage them to remain with and devote
their best efforts to the business of the Company thereby advancing the interests of the Company
and its stockholders. The Board of Directors of the Company also contemplates that through the
Plan, the Company and its Affiliates will be better able to attract and retain the services of
individuals who are essential for the growth and profitability of the Company. The Plan provides
for payment of various forms of incentive compensation and accordingly is not intended to be a plan
that is subject to the Employee Retirement Income Security Act of 1974, as amended, and shall be
administered accordingly.

     SECTION 2. Definitions.

     As used in the Plan, the following terms shall have the meanings set forth below:

     “Affiliate” shall mean (i) any “parent corporation” of the Company (as defined in Section
424(e) of the Code), (ii) any “subsidiary corporation” of any such parent corporation (as defined
in Section 424(f) of the Code) of the Company and (iii) any trades or businesses, whether or not
incorporated, which are members of a controlled group or are under common control (as defined in
Sections 414(b) or (c) of the Code) with the Company; provided, that, for the purpose of issuing
Options or Stock Appreciation Rights, “Affiliate” means any corporation or other entity in a chain
of corporations and/or other entities in which the Company has a “controlling interest” within the
meaning of Treas. Reg. § 1.414(c)-2(b)(2)(i), but using the threshold of 50% ownership wherever 80%
appears.

     “Award” shall mean any Option, Restricted Stock, Performance Award, Bonus Shares or Other
Stock-Based Award.

     “Award Agreement” shall mean any written agreement, contract, or other instrument or document
evidencing any Award, which may, but need not, be executed or acknowledged by a Participant.

 

 

     “Board” shall mean the Board of Directors of the Company.

     “Bonus Shares” shall mean an award of Shares granted pursuant to Section 6(d) of the Plan.

     “Change in Control” shall mean, subject to the last paragraph of this definition, the
occurrence of any one (1) of the following events:

	 	(a)	 	any “person” (as defined in Section 3(a)(9) of the Exchange Act, and as
modified in Section 13(d) and 14(d) of the Exchange Act) other than (i) the Company or
any of its subsidiaries; (ii) any employee benefit plan of the Company or any of its
subsidiaries; (iii) or any Affiliate; (iv) a company owned, directly or indirectly, by
stockholders of the Company in substantially the same proportions as their ownership of
the Company; or (v) an underwriter temporarily holding securities pursuant to an
offering of such securities (a “Person”), becomes the “beneficial owner” (as defined in
Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company
representing more than fifty percent (50%) of the shares of voting stock of the Company
then outstanding;
	 
	 	(b)	 	the consummation of any merger, organization, business combination or
consolidation of the Company or one (1) of its subsidiaries with or into any
other company, other than a merger, reorganization, business combination or
consolidation which would result in the holders of the voting securities of the
Company outstanding immediately prior thereto holding securities which represent
immediately after such merger, reorganization, business combination or consolidation
more than fifty percent (50%) of the combined voting power of the voting securities
of the Company or the surviving company or the parent of such surviving company;
	 
	 	(c)	 	the consummation of a sale, lease, transfer, conveyance or other disposition
(including by merger or consolidation) by the Company in one (1) or a series of related
transactions, of all or substantially all of the Company’s assets, other than any such
transaction if the holders of the voting securities of the Company outstanding
immediately prior thereto hold securities immediately thereafter which represent more
than fifty percent (50%) of the combined voting power of the voting securities of the
acquiror, or parent of the acquiror, of such assets;
	 
	 	(d)	 	the stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company; or
	 
	 	(e)	 	individuals who, as of the Effective Date, 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 the Effective Date whose
election by the Board, 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

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	 	 	 	excluding, for this purpose, any such individual whose initial assumption of office
occurs as a result of either (i) an actual or threatened election contest (as such
terms are used in Rule 14A-11 of Regulation 14A promulgated under the Exchange Act)
with respect to the election or removal of directors or an actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the Board
or (ii) a plan or agreement to replace a majority of the members of the Board then
comprising the Incumbent Board.

Except as otherwise expressly provided in an Award, solely with respect to any Award that
constitutes deferred compensation that is subject to Section 409A of the Code and payment of such
Award is contingent upon the occurrence of a Change in Control, the above definition of Change in
Control shall be inoperative with respect to such Award and is hereby replaced by the definition of
such term set forth in Treas. Reg. §1.409A-3(i)(5) or any successor thereto, but using 50% wherever
30% appears in Treas. Reg. §1.409A-3(i)(5)(vi) or any successor thereto and 50% wherever 40%
appears in Treas. Reg. §1.409A-3(i)(5)(vii) or any successor thereto, which regulation, as modified
herein, is hereby incorporated by reference into and shall form part of this Plan solely for the
limited purpose of this sentence, and the Plan, solely as it relates to such Award, and such Award
shall be operated in accordance with such modified definition of Change in Control.

     “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and the
rules and regulations thereunder.

     “Committee” shall mean the compensation committee of the Board which, for any period in which
the Company is subject to the reporting requirements of the Exchange Act, shall consist of not less
than two (2) members of the Board, each of whom shall qualify as a “non-employee director” (as that
term is defined in Rule 16b-3 of the General Rules and Regulations under the Exchange Act)
appointed by and serving at the pleasure of the Board to administer the Plan or, if none, the
Board; provided however, that with respect to any Award granted to a Covered Employee which is
intended to be “performance-based compensation” as described in Section 162(m)(4)(C) of the Code,
the Committee shall consist solely of two (2) or more “outside directors” as described in Section
162(m)(4)(C)(i) of the Code.

     “Company” shall mean the corporation described in Section 1 of the Plan or any successor
thereto that assumes and continues the Plan.

     “Consultant” shall mean any individual, other than a Director or an Employee, who renders
consulting services to the Company or an Affiliate for a fee.

     “Covered Employee” shall mean for fiscal years ending on or after December 15, 2006, any of
the Chief Executive Officer of the Company and each other officer of the Company other than the
Chief Executive Officer who is treated as a “covered employee” for purposes of applying Section
162(m) of the Code to Awards or any individual Consultant, Director or other Employee, or class of
Consultants, Directors or Employees, who the Committee specifies in an Award shall be treated as a
Covered Employee.

     “Director” shall mean a member of the Board who is not an Employee of the Company.

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     “Effective Date” means the date that the Prior Plan was initially (i) adopted by the Board;
and (ii) approved by stockholders of the Company not more than one (1) year prior to or after the
date of such adoption. The provisions of the Prior Plan are applicable to all Awards granted on or
after the Effective Date. The Plan, as adopted by the Board, shall be effective as of December 31,
2008.

     “Employee” shall mean any employee of the Company or an Affiliate.

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

     “Fair Market Value” shall mean, with respect to Shares, the closing sales price of a Share on
the applicable date (or if there is no trading in the Shares on such date, on the next preceding
date on which there was trading) as reported in The Wall Street Journal (or other reporting service
approved by the Committee). In the event the Shares are not publicly traded at the time a
determination of its fair market value is required to be made hereunder, the determination of fair
market value shall be made in good faith by the Committee.

     “Option” shall mean an option granted under Section 6(a) of the Plan. Options granted under
the Plan may constitute “incentive stock options” for purposes of Section 422 of the Code or
nonqualified stock options.

     “Other Stock-Based Award” shall mean an award granted pursuant to Section 6(e) of the Plan
that is not otherwise specifically provided for, the value of which is based in whole or in part
upon the value of a Share.

     “Participant” shall mean any Director, Employee or Consultant granted an Award under the Plan.

     “Performance Award” shall mean any right granted under Section 6(c) of the Plan.

     “Performance Objectives” means the objectives, if any, established by the Committee that are
to be achieved with respect to an Award granted under this Plan, which may be described in terms of
Company-wide objectives, in terms of objectives that are related to performance of a business,
division, subsidiary, department, unit or function within the Company or an Affiliate in which the
Participant receiving the Award is employed or in individual or other terms, and which will relate
to the period of time determined by the Committee. Which objectives to use with respect to an
Award, the weighting of the objectives if more than one (1) is used, and whether the objective is
to be measured against a Company-established budget or target, an index or a peer group of
companies, shall be determined by the Committee in its discretion at the time of grant of the
Award. One or more of the following business criteria for the Company shall be used by the
Committee in establishing Performance Objectives for Performance Awards granted to a Participant:
(i) earnings per share; (ii) increase in price per share, (iii) increase in revenues; (iv) increase
in cash flow; (v) return on net assets; (vi) return on assets; (vii) return on investment;
(viii) return on equity; (ix) economic value added; (x) gross margin; (xi) net income; (xii) pretax
earnings; (xiii) pretax earnings before interest, depreciation, depletion and amortization;
(xiv) pretax operating earnings after interest expense and before incentives, service fees, and
extraordinary or special items; (xv) operating income; (xvi) total stockholder return;

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(xvii) debt reduction; and (xviii) any of the above goals determined on the absolute or relative
basis or as compared to the performance of a published or special index deemed applicable by the
Committee including, but not limited to, the Standard & Poor’s 500 Stock Index or components
thereof or a group of comparable companies. A Performance Objective need not be based on an
increase or a positive result and may include, for example, maintaining the status quo or limiting
economic losses.

     “Person” shall mean an individual or a corporation, limited liability company, partnership,
association, joint-stock company, trust, unincorporated organization, government or political
subdivision thereof or other entity.

     “Plan” means the plan described in Section 1 of the Plan and set forth in this document, as
amended from time to time.

     “Restricted Period” shall mean the period established by the Committee with respect to an
Award during which the Award remains subject to forfeiture and/or is not exercisable by the
Participant.

     “Restricted Stock” shall mean any Share, prior to the lapse of restrictions thereon, granted
under Sections 6(b) of the Plan.

     “Rule 16b-3” shall mean Rule 16b-3 promulgated by the SEC under the Exchange Act, or any
successor rule or regulation thereto as in effect from time to time.

     “SEC” shall mean the Securities and Exchange Commission, or any successor thereto.

     “Shares” or “Common Shares” or “Common Stock” shall mean the common stock of the Company,
$0.01 par value, and such other securities or property as may become the subject of Awards under
the Plan.

     SECTION 3. Administration.

     The Plan shall be administered by the Committee. A majority of the Committee shall
constitute a quorum, and the acts of the members of the Committee who are present at any meeting
thereof at which a quorum is present, or acts unanimously approved by the members of the Committee
in writing, shall be the acts of the Committee. No member of the Committee shall vote or act upon
any matter relating solely to himself. Grants of Awards to members of the Committee must be
ratified by the Board. Subject to the terms of the Plan and applicable law, and in addition to
other express powers and authorizations conferred on the Committee by
the Plan, the Committee shall have full power and authority to: (i) designate Participants;
(ii) determine the type or types of Awards to be granted to a Participant; (iii) determine the
number of Shares to be covered by, or with respect to which payments, rights, or other matters are
to be calculated in connection with, Awards; (iv) determine the terms and conditions of any Award;
(v) determine whether, to what extent, and under what circumstances Awards may be settled or
exercised in cash, Shares, other securities, other Awards or other property, or canceled,
forfeited, or suspended and the method or methods by which Awards may be settled, exercised,
canceled, forfeited, or suspended; (vi) determine whether, to what extent, and under what

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circumstances cash, Shares, other securities, other Awards, other property, and other amounts
payable with respect to an Award shall be deferred either automatically or at the election of the
holder thereof or of the Committee; (vii) interpret and administer the Plan and any instrument or
agreement relating to an Award made under the Plan; (viii) establish, amend, suspend, or waive such
rules and regulations and appoint such agents as it shall deem appropriate for the proper
administration of the Plan; and (ix) make any other determination and take any other action that
the Committee deems necessary or desirable for the administration of the Plan. Unless otherwise
expressly provided in the Plan, all designations, determinations, interpretations, and other
decisions under or with respect to the Plan or any Award shall be within the sole discretion of the
Committee, may be made at any time and shall be final, conclusive, and binding upon all Persons,
including the Company, any Affiliate, any Participant, any holder or beneficiary of any Award, any
stockholder and any Employee, Consultant or Director. No member of the Board or the Committee
shall be liable for any action or determination made in good faith with respect to the Plan or any
Award granted hereunder and the members of the Board and the Committee shall be entitled to
indemnification and reimbursement by the Company and its Affiliates in respect of any claim, loss,
damage or expense (including legal fees) arising therefrom to the full extent permitted by law.

     SECTION 4. Shares Available for Awards.

	 	(a)	 	Shares Available. Subject to adjustment as provided in Section 4(c),
the number of Shares with respect to which Awards may be granted under the Plan shall
be 1,500,000 Shares. In addition, during any calendar year in which Section 162(m) of
the Code shall apply to the Company, the number of Shares reserved for issuance under
the Plan which are subject to Options that may be granted to any one (1) Participant
shall not exceed 200,000 Shares. If any Award is exercised, paid, forfeited,
terminated or canceled without the delivery of Shares, then the Shares covered by such
Award, to the extent of such exercise, payment, forfeiture, termination or
cancellation, shall again be Shares with respect to which Awards may be granted;
provided, however, that Shares not delivered due to withholding or payment of taxes or
payment of exercise price shall not again be Shares with respect to which Awards may be
granted.
	 
	 	(b)	 	Sources of Shares Deliverable Under Awards. Any Shares delivered
pursuant to an Award may consist, in whole or in part, of authorized and unissued
Shares or of treasury Shares. No fractional Shares shall be issued under the Plan;
payment for any fractional Shares shall be made in cash.
	 
	 	(c)	 	Adjustments. In the event that any dividend or other distribution
(whether in the form of cash, Shares, other securities, or other property),
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or
other securities of the Company, issuance of warrants or other rights to purchase
Shares or other securities of the Company, or other similar corporate transaction or
event affects the Shares such that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under the Plan, then the Committee shall,

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	 	 	 	in such manner as it may deem equitable, adjust any or all of (i) the number and
type of Shares (or other securities or property) with respect to which Awards may be
granted; (ii) the number and type of Shares (or other securities or property)
subject to outstanding Awards; and (iii) the grant or exercise price with respect to
any Award or, if deemed appropriate, make provision for a cash payment to the holder
of an outstanding Award.

     SECTION 5. Eligibility.

     Any Employee, Director or Consultant shall be eligible to be designated a Participant and
receive an Award under the Plan.

     SECTION 6. Awards.

	 	(a)	 	Options. Subject to the provisions of the Plan, the Committee shall
have the authority to determine the Participants to whom Options shall be granted, the
number of Shares to be covered by each Option, the purchase price therefor and the
conditions and limitations applicable to the exercise of the Option, including the
following terms and conditions and such additional terms and conditions, as the
Committee shall determine, that are not inconsistent with the provisions of the Plan.

	 	(i)	 	Exercise Price. The purchase price per Share
purchasable under an Option shall be determined by the Committee at the time
the Option is granted, but shall not be less than one hundred percent (100%) of
the Fair Market Value per Share on such grant date if the Option is not an
incentive stock option, and not less than one hundred percent (100%) of the
Fair Market Value per Share on such date if the Option is an incentive stock
option. If any Employee to whom an Option that is an incentive stock option is
granted owns stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or any parent corporation,
within the meaning of Section 424(e) of the Code, or any subsidiary corporation
of the Company, within the meaning of Section 424(f) of the Code, then the
exercise price per share shall not be less than one hundred ten percent (110%)
of the Fair Market Value per Share on the date of grant and the option term
shall not exceed five (5) years measured from the date of grant. For purposes
of the immediately preceding sentence, the attribution rules under Section
424(d) of the Code shall apply for purposes of determining an Employee’s
ownership.
	 
	 	(ii)	 	Time and Method of Exercise. The Committee shall
determine the time or times at which an Option may be exercised in whole or in
part (which may include the achievement of one (1) or more Performance
Objectives), and the method or methods by which, and the form or forms in which
payment of the exercise price with respect thereto may be made. In that
connection, in order to exercise an Option, the person or persons entitled to
exercise it shall deliver to the Company payment in full for (i) the

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	 	 	 	shares being purchased and (ii) unless other arrangements have been made
with the Committee, any required withholding taxes. The payment of the
exercise price for each Option shall either be (i) in cash or by check
payable and acceptable to the Company (ii) with the consent of the
Committee, by tendering to the Company shares of Common Stock owned by the
person for more than six (6) months having an aggregate Fair Market Value as
of the date of exercise that is not greater than the full exercise price for
the shares with respect to which the Option is being exercised and by paying
any remaining amount of the exercise price as provided in (i) above, or
(iii) with the consent of the Committee and compliance with such
instructions as the Committee may specify, by delivering to the Company and
to a broker a properly executed exercise notice and irrevocable instructions
to such broker to deliver to the Company cash or a check payable and
acceptable to the Company to pay the exercise price and any applicable
withholding taxes. Upon receipt of the cash or check from the broker, the
Company will deliver to the broker the shares for which the Option is
exercised. In the event that the person elects to make payment as allowed
under clause (ii) above, the Committee may, upon confirming that the
optionee owns the number of additional shares being tendered, authorize the
issuance of a new certificate for the number of shares being acquired
pursuant to the exercise of the Option less the number of shares being
tendered upon the exercise and return to the person (or not require
surrender of) the certificate for the shares being tendered upon the
exercise. The date of sale of the shares by the broker pursuant to a
cashless exercise under (iii) above shall be the date of exercise of the
Option.
	 
	 	(iii)	 	Option Repricing. With stockholder approval, the
Committee, in its absolute discretion, may grant to holders of outstanding
Options that are not incentive stock options, in exchange for the surrender and
cancellation of such Options that are not incentive stock options, new Options
that are not incentive stock options having exercise prices lower (or higher
with any required consent) than the exercise price provided in the Options so
surrendered and canceled and containing such other terms and conditions as the
Committee may deem appropriate.
	 
	 	(iv)	 	Incentive Stock Options. The terms of any Option
granted under the Plan intended to be an incentive stock option shall comply in
all respects with the provisions of Section 422 of the Code, or any successor
provision, and any regulations promulgated thereunder. Incentive stock options
may be granted only to employees of the Company, while it is a “corporation”
described in Section 7701(a)(3) of the Code and Treas. Reg. Section
1.421-1(i)(l), and its parent corporation and subsidiary corporations, within
the meaning of Section 424 of the Code. To the extent the aggregate Fair
Market Value of the Shares (determined as of the date of grant) of an Option to
the extent exercisable for the first time during any calendar year (under all
plans of the Company and its parent and

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	 	 	 	subsidiary corporations) exceeds $100,000, such Option Shares in excess of
$100,000 shall not be incentive stock options. No Option that is an
incentive stock option shall be issued under the Plan after the date that
occurs one (1) day before the tenth (10th) anniversary of the date the Prior
Plan was adopted by the Board or approved by the stockholders of the
Company, whichever was earlier. No Option that is an incentive stock option
shall be exercisable more than ten (10) years measured from the date of
grant (five (5) years in the case of an Employee described in Section
6(a)(i) hereof) or three (3) months after the Participant ceases to be an
Employee for any reason other than death or disability, or more than one (1)
year after the Participant ceases to be an Employee due to death or
disability.

	 	(b)	 	Restricted Stock. Subject to the provisions of the Plan, the Committee
shall have the authority to determine the Participants to whom Restricted Stock shall
be granted, the number of Shares of Restricted Stock to be granted to each such
Participant, the duration of the Restricted Period during which, and the conditions,
including Performance Objectives, if any, under which if not achieved, the Restricted
Stock may be forfeited to the Company, and the other terms and conditions of such
Awards.

	 	(i)	 	Dividends. Dividends paid on Restricted Stock may be
paid directly to
the Participant or may be subject to risk of forfeiture and/or transfer
restrictions during any period established by the Committee in its
discretion.
	 
	 	(ii)	 	Registration. Any Restricted Stock may be evidenced in
such manner as the Committee shall deem appropriate, including, without
limitation, book-entry registration or issuance of a stock certificate or
certificates. In the event any stock certificate is issued in respect of
Restricted Stock granted under the Plan, such certificate shall be registered
in the name of the Participant and shall bear an appropriate legend referring
to the terms, conditions, and restrictions applicable to such Restricted Stock.
	 
	 	(iii)	 	Forfeiture and Restrictions Lapse. Except as
otherwise determined by the Committee or the terms of the Award that granted
the Restricted Stock, upon termination of a Participant’s employment (as
determined under criteria established by the Committee) for any reason during
the applicable Restricted Period, all Restricted Stock shall be forfeited by
the Participant and reacquired by the Company. Unrestricted Shares, evidenced
in such manner as the Committee shall deem appropriate, shall be issued to the
holder of Restricted Stock promptly after the applicable restrictions have
lapsed or otherwise been satisfied.
	 
	 	(iv)	 	Transfer Restrictions. During the Restricted Period,
Restricted Stock will be subject to the limitations on transfer as provided in
Section 6(f)(iii).

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	 	(c)	 	Performance Awards. The Committee shall have the authority to
determine the Participants who shall receive a Performance Award, which shall confer on
the Participant the right to receive payment of such Award, in whole or in part, upon
the achievement of such Performance Objectives during such performance periods as the
Committee shall establish with respect to the Award.

	 	(i)	 	Terms and Conditions. Subject to the terms of the Plan
and any applicable Award Agreement, the Committee shall determine the
Performance Objectives to be achieved during any performance period, the length
of any performance period, the amount of any Performance Award and the amount
of any payment or transfer to be made pursuant to any Performance Award.
	 
	 	(ii)	 	General. In the case of any Award granted to a Covered
Employee, Performance Objectives shall be designed to be objective and shall
otherwise meet the requirements of Section 162(m) of the Code and regulations
thereunder (including Treasury Regulations sec. 1.162-27 and successor
regulations thereto), including the requirement that the level or levels of
performance targeted by the Committee are such that the achievement of
performance goals is “substantially uncertain” at the time of grant. The
Committee may determine that such Performance Awards shall be granted and/or
settled upon achievement of any one (1) performance goal or that two (2) or
more of the performance goals must be achieved as a condition to the grant
and/or settlement of such Performance Awards. Performance Objectives may
differ among Performance Awards granted to any one (1) Participant or for
Performance Awards granted to different Participants.
	 
	 	(iii)	 	Performance Period; Timing for Establishing Performance
Goals. Achievement of Performance Objectives in respect of Performance
Awards that are granted to a Covered Employee and intended to meet the
requirements of Section 162(m) of the Code shall be measured over a performance
period of not less than six (6) months and not more than ten (10) years, as
specified by the Committee. Performance Objectives in the case of any Award
granted to a Participant shall be established not later than ninety (90) days
after the beginning of any performance period applicable to such Performance
Awards, or at such other date as may
be required or permitted for “performance-based compensation” under Section
162(m) of the Code.
	 
	 	(iv)	 	Settlement of Performance Awards; Other Terms. After
the end of each performance period, the Committee shall determine the amount,
if any, of Performance Awards payable to each Participant based upon
achievement of business criteria over a performance period. Except as may
otherwise be required under Section 409A of the Code, payment described in the
immediately preceding sentence shall be made by the later of (i) the date that
is 21/2 months after the end of the Participant’s first taxable year in

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	 	 	 	which the Performance Award is earned and payable under the Plan and
(ii) the date that is 21/2 months after the end of the Company’s first taxable
year in which the Performance Award is earned and payable under the Plan,
and such payment shall not be subject to any election by the Participant to
defer the payment to a later period. The Committee may not exercise
discretion to increase any such amount payable in respect of a Performance
Award which is intended to comply with Section 162(m) of the Code. The
Committee shall specify the circumstances in which such Performance Awards
shall be paid or forfeited in the event of termination of employment by the
Participant prior to the end of a performance period or settlement of
Performance Awards.
	 
	 	(v)	 	Written Determinations. All determinations by the
Committee as to the establishment of Performance Objectives, the amount of any
Performance Award, and the achievement of Performance Objectives relating to
Performance Awards shall be made in a written agreement or other document
covering the Performance Award. The Committee may not delegate any
responsibility relating to such Performance Awards that are granted to a
Covered Employee and intended to meet the requirements of Section 162(m) of the
Code.
	 
	 	(vi)	 	Status of Performance Awards under Section 162(m) of the
Code. It is the intent of the Company that Performance Awards granted to
persons who are designated by the Committee as likely to be Covered Employees
within the meaning of Section 162(m) of the Code and regulations thereunder
(including Treasury Regulations sec. 1.162-27 and successor regulations
thereto) shall constitute “performance-based compensation” within the meaning
of Section 162(m) of the Code and regulations thereunder. Accordingly, the
terms of this Section shall be interpreted in a manner consistent with Section
162(m) of the Code and regulations thereunder. Notwithstanding the foregoing,
because the Committee cannot determine with certainty whether a given
Participant will be a Covered Employee with respect to a fiscal year that has
not yet been completed, the term Covered Employee as used herein shall mean any
person designated by the Committee, at the time of grant of a Performance
Award, as likely to be a Covered Employee with respect to that fiscal year. If
any provision of the Plan as in effect on the date of adoption or any
agreements relating to Performance Awards that are intended to comply with
Section 162(m) of the Code does not comply or is inconsistent with the
requirements of Section 162(m) of the Code or regulations thereunder, such
provision shall be construed or deemed amended to the extent necessary to
conform to such requirements.

	 	(d)	 	Bonus Shares. The Committee shall have the authority, in its
discretion, to grant Bonus Shares to Participants. Each Bonus Share shall constitute a
transfer of an unrestricted Share to the Participant, without other payment therefor,
as additional compensation for the Participant’s services to the Company.

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	 	(e)	 	Other Stock-Based Awards. The Committee may also grant to Participants
an Other Stock-Based Award, which shall consist of a right which is an Award
denominated or payable in, valued in whole or in part by reference to, or otherwise
based on or related to, Shares as is deemed by the Committee to be consistent with the
purposes of the Plan. Subject to the terms of the Plan, including the Performance
Objectives, if any, applicable to such Award, the Committee shall determine the terms
and conditions of any such Other Stock-Based Award. Notwithstanding any other
provision of the Plan to the contrary, any Other Stock-Based Award shall contain terms
that (i) are designed to avoid application of Section 409A of the Code or (ii) are
designed to avoid adverse tax consequences under Section 409A should that Code section
apply to such Award.
	 
	 	(f)	 	General Provisions Applicable to all Awards.

	 	(i)	 	Awards May Be Granted Separately or Together. Awards
may, in the discretion of the Committee, be granted either alone or in addition
to, in tandem with, or in substitution for any other Award granted under the
Plan or any award granted under any other plan of the Company or any Affiliate.
No Award shall be issued in tandem with another Award if the tandem Awards
would result in adverse tax consequences under Section 409A of the Code.
Awards granted in addition to or in tandem with other Awards or awards granted
under any other plan of the Company or any Affiliate may be granted either at
the same time as or at a different time from the grant of such other Awards or
awards.
	 
	 	(ii)	 	Forms of Payment by Company Under Awards. Subject to
the terms of the Plan and of any applicable Award Agreement, payments or
transfers to be made by the Company or an Affiliate upon the grant, exercise or
payment of an Award may be made in such form or forms as the Committee shall
determine, including, without limitation, cash, Shares, other securities, other
Awards or other property, or any combination thereof, and may be made in a
single payment or transfer, in installments, or on a deferred basis, in each
case in accordance with rules and procedures established by the Committee.
Such rules and procedures may include, without limitation, provisions for the
payment or crediting of reasonable interest on installment or deferred
payments.
	 
	 	(iii)	 	Limits on Transfer of Awards.

	 	A.	 	Except as provided in (C) below, each Award,
and each right under any Award, shall be exercisable only by the
Participant during the Participant’s lifetime, or by the person to whom
the Participant’s rights shall pass by will or the laws of descent and
distribution. Notwithstanding anything in the Plan to the contrary, a
nonqualified stock option shall be transferable pursuant to a domestic
relations order.

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	 	B.	 	Except as provided in (C) below, no Award and
no right under any such Award may be assigned, alienated, pledged,
attached, sold
or otherwise transferred or encumbered by a Participant and any such
purported assignment, alienation, pledge, attachment, sale, transfer
or encumbrance shall be void and unenforceable against the Company or
any Affiliate.
	 
	 	C.	 	Notwithstanding anything in the Plan to the
contrary, to the extent specifically provided by the Committee with
respect to a grant, a nonqualified stock option may be transferred to
immediate family members or related family trusts, or similar entities
on such terms and conditions as the Committee may establish. In
addition, Awards may be transferred by will or the laws of descent and
distribution.

	 	(iv)	 	Term of Awards. The term of each Award shall be for
such period as may be determined by the Committee; provided, that in no event
shall the term of any Award exceed a period of ten (10) years from the date of
its grant (or such shorter term as may be required in respect of an Option that
is an incentive stock option under Section 422 of the Code).
	 
	 	(v)	 	Share Certificates. All certificates for Shares or
other securities of the Company or any Affiliate delivered under the Plan
pursuant to any Award or the exercise thereof shall be subject to such stop
transfer orders and other restrictions as the Committee may deem advisable
under the Plan or the rules, regulations, and other requirements of the SEC,
any stock exchange upon which such Shares or other securities are then listed,
and any applicable federal or state laws, and the Committee may cause a legend
or legends to be put on any such certificates to make appropriate reference to
such restrictions.
	 
	 	(vi)	 	Delivery of Shares or other Securities and Payment by
Participant of Consideration. No Shares or other securities shall be
delivered pursuant to any Award until payment in full of any amount required to
be paid pursuant to the Plan or the applicable Award Agreement (including,
without limitation, any exercise price, tax payment or tax withholding) is
received by the Company. Such payment may be made by such method or methods
and in such form or forms as the Committee shall determine, including, without
limitation, cash, Shares, other securities, other Awards or other property,
withholding of Shares, cashless exercise with simultaneous sale, or any
combination thereof; provided that the combined value, as determined by the
Committee, of all cash and cash equivalents and the Fair Market Value of any
such Shares or other property so tendered to the Company, as of the date of
such tender, is at least equal to the full amount required to be paid pursuant
to the Plan or the applicable Award Agreement to the Company.

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	 	(vii)	 	Code Section 409A. Notwithstanding any other
provision of the Plan to the contrary, any Award granted after December 31,
2004 shall contain terms that (i) are designed to avoid application of Section
409A of the Code to the Award or (ii) are designed to avoid adverse tax
consequences under Section 409A of the Code should that Code Section apply to
the Award.
	 
	 	(viii)	 	Section 409A Limits on Payments to Specified Employees.
Notwith-standing any other provision of the Plan or an Award to the contrary,
if a Participant is a “key employee,” as defined in Section 416(i) of the Code
(without regard to paragraph 5 thereof), except to the extent permitted under
Section 409A of the Code, no benefit or payment that is subject to Section 409A
of the Code (after taking into account all applicable exceptions to Section
409A of the Code, including but not limited to the exceptions for short-term
deferrals and for “separation pay only upon an involuntary separation from
service”) shall be made under this Plan or the affected Award granted
thereunder on account of the Participant’s “separation from service,” as
defined in Section 409A of the Code, with the Company and its Affiliates until
the later of the date prescribed for payment in this Plan or the affected Award
granted thereunder and the first (1st) day of the seventh
(7th) calendar month that begins after the date of the Participant’s
separation from service (or, if earlier, the date of death of the Participant).
Unless otherwise provided in the Award, any amount that is otherwise payable
within the delay period described in the immediately preceding sentence will be
aggregated and paid in a lump sum without interest.

     SECTION 7. Amendment and Termination.

     Except to the extent prohibited by applicable law and unless otherwise expressly provided in
an Award Agreement or in the Plan:

	 	(a)	 	Amendments to the Plan. The Board or the Committee may amend, alter,
suspend, discontinue, or terminate the Plan without the consent of any stockholder,
Participant, other holder or beneficiary of an Award, or other Person; provided,
however, no such amendment may be made without stockholder approval to the extent that
such approval is required by (i) applicable legal requirements or (ii) the requirements
of any securities exchange or market on which the Shares are listed. Notwithstanding
the foregoing, the Board or the Committee may amend the Plan in such manner as it deems
necessary in order to permit Awards to meet the requirements of the Code or other
applicable laws, or to prevent adverse tax consequences.
	 
	 	(b)	 	Amendments to Awards. The Committee may waive any conditions or rights
under, amend any terms of, or alter any Award theretofore granted, provided no change,
other than pursuant to Section 7(c), in any Award shall materially reduce the benefit
to Participant without the consent of such Participant.

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	 	(c)	 	Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring
Events. The Committee is hereby authorized to make adjustments in the terms and
conditions of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events (including, without limitation, the events described in Section
4(c) of the Plan) affecting the Company, any Affiliate, or the financial statements of
the Company or any Affiliate, or of changes in applicable laws, regulations, or
accounting principles, whenever the Committee determines that such adjustments are
appropriate in order to prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under the Plan.

     SECTION 8. Adjustments Upon Changes in Stock/Change in Control.

	 	(a)	 	Adjustments Upon Changes in Stock. If any change is made in the Shares
subject to the Plan, or subject to any Award, without the receipt of consideration by
the Company through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than cash, stock split,
liquidating dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by the
Company), the Plan will be appropriately adjusted in the class(es) and maximum number
of shares subject to the Plan pursuant to Section 4(c) and the outstanding Awards will
be appropriately adjusted in the class(es) and number of shares and exercise price per
share of stock subject to such outstanding
Awards. Such adjustments shall be made by the Board or the Committee, the
determination of which shall be final, binding and conclusive. (The conversion of
any convertible securities of the Company shall not be treated as a “transaction not
involving the receipt of consideration by the Company”.)
	 
	 	(b)	 	Change in Control. Unless otherwise provided in the Award, in the
event of a Change in Control described in clauses (b), (c) or (d) of the definition of
Change in Control under Section 2 of the Plan, (i) if the Company does not survive as
an independent corporation (excluding as a subsidiary), the surviving corporation or an
affiliate of such surviving corporation shall assume the Awards outstanding under the
Plan or substitute similar awards (including an award to acquire the same consideration
paid to the stockholders of the Company in the transaction effecting the Change in
Control) for those outstanding under the Plan, or (ii) if the Company continues as an
independent corporation (excluding as a subsidiary), such Awards shall continue in full
force and effect. In the event of a Change in Control in which the Company does not
survive as an independent corporation (excluding as a subsidiary), if any surviving
corporation and its affiliates refuse to assume or continue the Awards, or to
substitute similar awards for those outstanding under the Plan, then unless otherwise
provided in the Award:

	 	(i)	 	All Options then outstanding shall become immediately vested
and fully exercisable immediately prior to the Change in Control,
notwithstanding any provision therein for exercise in installments;

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	 	(ii)	 	All restrictions and conditions of all Restricted Stock then
outstanding shall be deemed satisfied, and the Restricted Period or other
limitations on payment in full with respect thereto shall be deemed to have
expired immediately prior to the date of the Change in Control; and
	 
	 	(iii)	 	All outstanding Performance Awards and any Other Stock or
Performance-Based Awards shall become fully vested, deemed earned in full
immediately prior to the date of the Change in Control and promptly paid to the
Participants as of the date of the Change of Control, without regard to payment
schedules and notwithstanding that the applicable performance cycle, retention
cycle or other restrictions and conditions shall not have been completed or
satisfied.

     Notwithstanding the foregoing, the preceding provisions shall not apply to any Award to the
extent that such provisions would result in any impermissible acceleration or substitution under
Section 409A of the Code or any other violation of Section 409A of the Code that would result in
adverse tax consequences to the Participant under Section 409A of the Code

	 	(c)	 	Right of Cash-Out. If approved by the Board prior to or within thirty
(30) days after such time as a Change in Control shall be deemed to have occurred, the
Board shall have the right for a forty-five (45) day period immediately following the
date that the Change in Control is deemed to have occurred to require all, but not less
than all, Participants to transfer and deliver to the Company all Awards previously
granted to the Participants in exchange for an amount equal to the “cash value”
(defined below) of the Awards. Such right shall be exercised by written notice to all
Participants. For purposes of this Section, the cash value of an Award shall equal the
sum of (i) all cash to which the Participant would be entitled upon settlement or
exercise of any Award which is not an Option and (ii) in the case of any Award that is
an Option, the excess of the “market value” (defined below) per share over the option
price, if any, multiplied by the number of shares subject to such Award. For purposes
of the preceding sentence, “market value” per share shall mean the higher of (i) the
average of the Fair Market Value per share of Common Stock on each of the five (5)
trading days immediately following the date a Change in Control is deemed to have
occurred or (ii) the highest price, if any, offered in connection with the Change in
Control. The amount payable to each Participant by the Company pursuant to this
Section shall be in cash or by certified check and shall be reduced by any taxes
required to be withheld. Notwithstanding the foregoing, neither the Board, the Company
nor the Committee shall have the right to cash-out any Award, if the existence or
exercise of such right would result in any impermissible acceleration or substitution
under Section 409A of the Code or any other violation of Section 409A of the Code that
would result in adverse tax consequences to the Participant pursuant to Section 409A of
the Code.

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     SECTION 9. General Provisions.

	 	(a)	 	No Rights to Awards. No Director, Employee, Consultant or other Person
shall have any claim to be granted any Award, and there is no obligation for uniformity
of treatment of Employees, Consultants, or holders or beneficiaries of Awards. The
terms and conditions of Awards need not be the same with respect to each recipient.
	 
	 	(b)	 	Withholding. The Company or any Affiliate is authorized to withhold at
the minimum statutory rate from any Award, from any payment due or transfer made under
any Award or under the Plan or from any compensation or other amount owing to a
Participant the amount (in cash, Shares, other securities, Shares that would otherwise
be issued pursuant to such Award, other Awards or other property) of any applicable
taxes payable in respect of an Award, its exercise, the lapse of restrictions thereon,
or any payment or transfer under an Award or under the Plan and to take such other
action as may be necessary in the opinion of the Company to satisfy all obligations for
the payment of such taxes. In addition,
the Committee may provide, in an Award Agreement, that the Participant may direct
the Company to satisfy such Participant’s tax obligation through the “constructive”
tender of already-owned Shares or the withholding of Shares otherwise to be acquired
upon the exercise or payment of such Award.
	 
	 	(c)	 	No Right to Employment. The grant of an Award shall not be construed
as giving a Participant the right to be retained in the employ of the Company or any
Affiliate. Further, the Company or an Affiliate may at any time dismiss a Participant
from employment, free from any liability or any claim under the Plan, unless otherwise
expressly provided in the Plan or in any Award Agreement.
	 
	 	(d)	 	Governing Law. The validity, construction, and effect of the Plan and
any rules and regulations relating to the Plan shall be determined in accordance with
the laws of the State of Delaware and applicable federal law.
	 
	 	(e)	 	Severability. If any provision of the Plan or any Award is or becomes
or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any
Person or Award, or would disqualify the Plan or any Award under any law deemed
applicable by the Committee, such provision shall be construed or deemed amended to
conform to the applicable laws, or if it cannot be construed or deemed amended without,
in the determination of the Committee, materially altering the intent of the Plan or
the Award, such provision shall be stricken as to such jurisdiction, Person or Award
and the remainder of the Plan and any such Award shall remain in full force and effect.
	 
	 	(f)	 	Other Laws. The Committee may refuse to issue or transfer any Shares
or other consideration under an Award if, acting in its sole discretion, it determines
that the issuance of transfer or such Shares or such other consideration might violate
any applicable law or regulation or entitle the Company to recover the same under
Section 16(b) of the Exchange Act, and any payment tendered to the Company by

-17-

 

	 	 	 	a Participant, other holder or beneficiary in connection with the exercise of such
Award shall be promptly refunded to the relevant Participant, holder or beneficiary.

	 	(g)	 	No Trust or Fund Created. Neither the Plan nor the Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any other
Person. To the extent that any Person acquires a right to receive payments from the
Company or any Affiliate pursuant to an Award, such right shall be no greater than the
right of any general unsecured creditor of the Company or any Affiliate.
	 
	 	(h)	 	No Fractional Shares. No fractional Shares shall be issued
or delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash, other securities, or other property shall be paid or transferred in lieu
of any fractional Shares or whether such fractional Shares or any rights thereto shall
be canceled, terminated, or otherwise eliminated.
	 
	 	(i)	 	Securities Laws Compliance. Unless the Shares have been registered
under the Securities Act of 1933 (and, in the case of any Participant who may be deemed
an affiliate of the Company for securities law purposes, such Shares have been
registered under such Act for resale by such Participant), or the Company has
determined that an exemption from registration is available, the Company may require
prior to and as a condition of the exercise or payment of any Award that (i) the
Participant desiring to exercise or receive payment such Award give the Company written
notice thereof and that such notice may not be given by the Participant until
forty-five (45) days thereafter (which time period may be waived by the Committee in
its sole discretion) in order to allow the Company the opportunity to provide to such
Participant any disclosure materials, or to make such filings, as may be required under
federal and state securities laws and (ii) the Participant desiring to exercise or be
paid such Award furnish the Company with a written representation in a form prescribed
by the Committee to the effect that such person is acquiring said Shares solely with a
view to investment for his or her own account and not with a view to the resale or
distribution of all or any part thereof, and that such person will not dispose of any
of such Shares otherwise than in accordance with the provisions of Rule 144 under the
Act unless and until either the Shares are registered under the Act or the Company is
satisfied that an exemption from such registration is available.
	 
	 	(j)	 	Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of the
Plan or any provision thereof.
	 
	 	(k)	 	Code Section 409A. Notwithstanding anything in this Plan to the
contrary, if any Plan provision or Award under the Plan would result in the imposition
of an applicable tax under Code Section 409A and related regulations and Treasury
pronouncements (“Section 409A”), that Plan provision or Award may be

-18-

 

	 	 	 	reformed to avoid imposition of the applicable tax and no action taken to comply
with Section 409A shall be deemed to adversely affect the Participant’s rights to an
Award.

	 	(l)	 	No Guarantee of Tax Consequences. None of the Board, the Company nor
the Committee makes any commitment or guarantee that any federal, state or local tax
treatment will apply or be available to any person participating or eligible to
participate hereunder.

     SECTION 10. Term of the Plan.

     No Award shall be granted under the Plan after the tenth (10th) anniversary of the
date the Prior Plan was adopted by the Board, as the Plan shall expire on that date unless earlier
terminated pursuant to Section 7. However, unless otherwise expressly provided in the Plan or in
an applicable Award Agreement, any Award granted prior to such expiration or termination, and the
authority of the Board or the Committee to amend, alter, adjust, suspend, discontinue, or terminate
any such Award or to waive any conditions or rights under such Award, shall extend beyond such
expiration or termination date.

-19-

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