Document:

EXHIBIT 10.1

Steven Madden, Ltd. 2006 Stock Incentive Plan, Amended and Restated Effective May 22, 2009 

TABLE
OF CONTENTS

	
  

 	
  

 
	
 ARTICLE I PURPOSE

 	
 1

 
	
 ARTICLE II DEFINITIONS

 	
 1

 
	
 ARTICLE III ADMINISTRATION

 	
 7

 
	
 ARTICLE IV SHARE LIMITATION

 	
 10

 
	
 ARTICLE V ELIGIBILITY – GENERAL
 REQUIREMENTS FOR AWARDS

 	
 14

 
	
 ARTICLE VI STOCK OPTIONS

 	
 14

 
	
 ARTICLE VII STOCK APPRECIATION
 RIGHTS

 	
 17

 
	
 ARTICLE VIII RESTRICTED STOCK

 	
 20

 
	
 ARTICLE IX PERFORMANCE SHARES

 	
 23

 
	
 ARTICLE X OTHER STOCK-BASED
 AWARDS

 	
 25

 
	
 ARTICLE XI PERFORMANCE-BASED CASH
 AWARDS

 	
 27

 
	
 ARTICLE XII TERMINATION

 	
 29

 
	
 ARTICLE XIII CHANGE IN CONTROL
 PROVISIONS

 	
 30

 
	
 ARTICLE XIV TERMINATION OR
 AMENDMENT OF PLAN

 	
 32

 
	
 ARTICLE XV UNFUNDED PLAN

 	
 33

 
	
 ARTICLE XVI GENERAL PROVISIONS

 	
 34

 
	
 ARTICLE XVII EFFECTIVE DATE OF PLAN

 	
 37

 
	
 ARTICLE XVIII TERM OF PLAN

 	
 37

 
	
 ARTICLE XIX NAME OF PLAN

 	
 37

 
	
 EXHIBIT A PERFORMANCE GOALS

 	
 A

 

i

EXHIBIT A

STEVEN MADDEN, LTD.

2006 STOCK INCENTIVE PLAN

 (Amended
and Restated Effective May 22, 2009)

ARTICLE I

PURPOSE

          The
purpose of this Plan is to enhance the profitability and value of the Company
for the benefit of its stockholders by enabling the Company to offer Eligible
Employees, Consultants and Non-Employee Directors cash and stock based
incentives in the Company to attract, retain and reward such individuals and
strengthen the mutuality of interests between such individuals and the
Company’s stockholders.

          This
Plan, in the form set forth herein, is effective as of the Restatement Date (as
defined in Article XVII) and is an amendment and restatement of the Steve
Madden, Ltd. 2006 Stock Incentive Plan, as amended (the “Initial Plan”), which
was initially effective March 10, 2006.

ARTICLE II

DEFINITIONS

          For
purposes of this Plan, the following terms shall have the following meanings:

          2.1          “Acquisition
Event” means a merger or consolidation in which
the Company is not the surviving entity, any transaction that results in the
acquisition of all or substantially all of the Company’s outstanding Common
Stock by a single person or entity or by a group of persons and/or entities
acting in concert, or the sale or transfer of all or substantially all of the
Company’s assets.

          2.2          “Affiliate”
means each of the following: (a) any Subsidiary; (b) any Parent;
(c) any corporation, trade or business (including, without limitation, a
partnership or limited liability company) which is directly or indirectly
controlled 50% or more (whether by ownership of stock, assets or an equivalent
ownership interest or voting interest) by the Company; (d) any corporation,
trade or business (including, without limitation, a partnership or limited
liability company) which directly or indirectly controls 50% or more (whether
by ownership of stock, assets or an equivalent ownership interest or voting
interest) of the Company; and (e) any other entity in which the Company or
any of its Affiliates has a material equity interest and which is designated as
an “Affiliate” by resolution of the Committee; provided that the Common Stock 

subject to any
Award constitutes “service recipient stock” for purposes of Section 409A of the
Code or otherwise does not subject the Award to Section 409A of the Code.

          2.3          “Appreciation
Award” means any Award under this Plan of any
Stock Option, Stock Appreciation Right or Other Stock-Based Award, provided
that such Other Stock-Based Award is based on the appreciation in value of a
share of Common Stock in excess of an amount equal to at least the Fair Market
Value of the Common Stock on the date such Other Stock-Based Award is granted.

          2.4          “Award”
means any award under this Plan of any Stock Option, Stock Appreciation Right,
Restricted Stock, Performance Share, Other Stock-Based Award or
Performance-Based Cash Awards. All Awards shall be granted by, confirmed by,
and subject to the terms of, a written agreement executed by the Company and
the Participant.

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

          2.6          “Cause”
means with respect to a Participant’s Termination of Employment or Termination
of Consultancy from and after the date hereof, the following: (a) in the case
where there is no employment agreement, consulting agreement, change in control
agreement or similar agreement in effect between the Company or an Affiliate
and the Participant at the time of the grant of the Award (or where there is
such an agreement but it does not define “cause” (or words of like import)),
termination due to: (i) a Participant’s conviction of, or plea of guilty or
nolo contendere to, a felony; (ii) perpetration by a Participant of an illegal
act, or fraud which could cause significant economic injury to the Company;
(iii) continuing willful and deliberate failure by the Participant to perform
the Participant’s duties in any material respect, provided that the Participant
is given notice and an opportunity to effectuate a cure as determined by the
Committee; or (iv) a Participant’s willful misconduct with regard to the
Company that could have a material adverse effect on the Company; or (b) in the
case where there is an employment agreement, consulting agreement, change in
control agreement or similar agreement in effect between the Company or an
Affiliate and the Participant at the time of the grant of the Award that
defines “cause” (or words of like import), “cause” as defined under such
agreement; provided, however, that with regard to any agreement under which the
definition of “cause” only applies on occurrence of a change in control, such
definition of “cause” shall not apply until a change in control actually takes
place and then only with regard to a termination thereafter. With respect to a
Participant’s Termination of Directorship, “cause” means an act or failure to
act that constitutes cause for removal of a director under applicable Delaware
law.

          2.7          “Change
in Control” has the meaning set forth in Section
13.2.

          2.8          “Change
in Control Price” has the meaning set forth in
Section 13.1.

          2.9          “Code”
means the Internal Revenue Code of 1986, as amended. Any reference to any
section of the Code shall also be a reference to any successor provision and
any Treasury Regulation promulgated thereunder. 

          2.10         “Committee”
means a committee or subcommittee of the Board appointed from time to time by
the Board, which committee or subcommittee shall consist of two or more
non-employee directors, each of whom shall be (i) a “non-employee director” as
defined in Rule 16b-

2

3; (ii) to the
extent required by Section 162(m) of the Code, an “outside director” as defined
under Section 162(m) of the Code; and (iii) an “independent director” as
defined under NASD Rule 4200(a)(15) or such other applicable stock exchange
rule. To the extent that no Committee exists that has the authority to
administer this Plan, the functions of the Committee shall be exercised by the
Board. If for any reason the appointed Committee does not meet the requirements
of Rule 16b-3 or Section 162(m) of the Code, such noncompliance shall not
affect the validity of Awards, grants, interpretations or other actions of the
Committee.

          2.11         “Common
Stock” means the Common Stock, $0.0001 par value
per share, of the Company.

          2.12         “Company”
means Steven Madden, Ltd., a Delaware corporation, and its successors by
operation of law.

          2.13         “Consultant”
means any natural person who provides bona fide consulting or advisory services
to the Company or its Affiliates pursuant to a written agreement, which are not
in connection with the offer and sale of securities in a capital-raising
transaction.

          2.14         “Disability”
means with respect to a Participant’s Termination, a permanent and total
disability as defined in Section 22(e)(3) of the Code. A Disability shall only
be deemed to occur at the time of the determination by the Committee of the
Disability. Notwithstanding the foregoing, for Awards that are subject to
Section 409A of the Code, Disability shall mean that a Participant is disabled
under Section 409A(a)(2)(C)(i) or (ii) of the Code.

          2.15         “Effective
Date” means the effective date of this Plan as
defined in Article XVII.

          2.16         “Eligible
Employees” means each employee of the Company or
an Affiliate.

          2.17         “Exchange
Act”means
the Securities Exchange Act of 1934, as amended. Any references to any section
of the Exchange Act shall also be a reference to any successor provision.

          2.18         “Fair
Market Value” means, unless otherwise required by any applicable
provision of the Code or any regulations issued thereunder, as of any date and
except as provided below, the closing price reported for the Common Stock on
the applicable date: (a) as reported on the principal national securities
exchange in the United States on which it is then traded or The Nasdaq Stock
Market; or (b) if not traded on any such national securities exchange or The
Nasdaq Stock Market, as quoted on an automated quotation system sponsored by
the National Association of Securities Dealers, Inc. or if the Common Stock
shall not have been reported or quoted on such date, on the first day prior
thereto on which the Common Stock was reported or quoted. If the Common Stock
is not traded, listed or otherwise reported or quoted, then Fair Market Value
means the fair market value of the Common Stock as determined by the Committee
in good faith in whatever manner it considers appropriate taking into account
the requirements of Section 422 of the Code or Section 409A of the Code, as
applicable. For purposes of the grant of any Award, the applicable date shall
be the trading day immediately prior to the date on which the Award is granted.
For purposes of the exercise of any Award, the applicable date shall be the
date a notice of exercise is received by the Committee or, if not a day on
which the applicable market is open, the next day that it is open. 

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          2.19         “Family
Member” means “family member” as defined in
Section A.1.(5) of the general instructions of Form S-8, as may be amended from
time to time.

          2.20         “GAAP”
has the meaning set forth in Section 11.2(c)(ii).

          2.21         “Incentive
Stock Option” means any Stock Option awarded to an
Eligible Employee of the Company, its Subsidiaries and its Parent (if any)
under this Plan intended to be and designated as an “Incentive Stock Option”
within the meaning of Section 422 of the Code.

          2.22         “Non-Employee
Director” means a director of the Company who is
not an active employee of the Company or an Affiliate.

          2.23         “Non-Qualified
Stock Option” means any Stock Option awarded under
this Plan that is not an Incentive Stock Option.

         2.24         “Other
Stock-Based Award” means an Award under Article X
of this Plan that is valued in whole or in part by reference to, or is payable
in or otherwise based on, Common Stock, including, without limitation, a
restricted stock unit or an Award valued by reference to an Affiliate.

          2.25         “Parent”
means any parent corporation of the Company within the meaning of Section
424(e) of the Code.

          2.26         “Participant”
means an Eligible Employee, Non-Employee Director or Consultant to whom an
Award has been granted pursuant to this Plan.

          2.27         “Performance-Based
Cash Award” means a cash Award under Article XI of
this Plan that is payable or otherwise based on the attainment of certain
pre-established performance goals during a Performance Period.

          2.28         “Performance
Period” means the duration of the period during
which receipt of an Award is subject to the satisfaction of performance
criteria, such period as determined by the Committee in its sole discretion.

          2.29         “Performance
Share” means an Award made pursuant to Article IX
of this Plan of the right to receive Common Stock or cash of an equivalent
value at the end of a specified Performance Period.

          2.30         “Person”
means any individual, corporation, partnership, limited liability company,
firm, joint venture, association, joint-stock company, trust, incorporated
organization, governmental or regulatory or other entity.

          2.31         “Plan”
means this Steven Madden, Ltd. 2006 Stock Incentive Plan, as amended from time
to time.

          2.32         “Reference
Stock Option” has the meaning set forth in Section
7.1.

4

          2.33         
“Restricted Stock” means an Award of shares of
Common Stock under this Plan that is subject to restrictions under Article
VIII.

          2.34         “Restriction
Period” has the meaning set forth in Subsection
8.3(a).

          2.35         “Retirement”
means a voluntary Termination of Employment at or after age 65 or such earlier
date after age 50 as may be approved by the Committee, in its sole discretion
at the time of grant or thereafter provided that the exercise of such discretion
does not make the applicable Award subject to Section 409A of the Code, except
that Retirement shall not include any Termination with or without Cause. With
respect to a Participant’s Termination of Directorship, Retirement means the
failure to stand for reelection or the failure to be reelected on or after a
Participant has attained age 65 or, with the consent of the Board, provided
that the exercise of such discretion does not make the applicable Award subject
to Section 409A of the Code, before age 65 but after age 50.

          2.36         “Rule
16b-3” means Rule 16b-3 under Section 16(b) of the
Exchange Act as then in effect or any successor provision.

          2.37         “Section
162(m) of the Code” means the exception for
performance-based compensation under Section 162(m) of the Code and any
applicable Treasury regulations thereunder.

          2.38         “Section
409A of the Code” means the nonqualified deferred
compensation rules under Section 409A of the Code and any applicable Treasury
regulations thereunder.

          2.39         “Securities
Act” means the Securities Act of 1933, as amended
and all rules and regulations promulgated thereunder. Any reference to any
section of the Securities Act shall also be a reference to any successor
provision.

          2.40         “Stock
Appreciation Right” means the right pursuant to an
Award granted under Article VII. A Tandem Stock Appreciation Right shall mean
the right to surrender to the Company all (or a portion) of a Stock Option in exchange
for cash or a number of shares of Common Stock (as determined by the Committee,
in its sole discretion, on the date of grant) equal to the difference between
(a) the Fair Market Value on the date such Stock Option (or such portion
thereof) is surrendered, of the Common Stock covered by such Stock Option (or
such portion thereof), and (b) the aggregate exercise price of such Stock
Option (or such portion thereof). A Non-Tandem Stock Appreciation Right shall
mean the right to receive cash or a number of shares of Common Stock (as
determined by the Committee, in its sole discretion, on the date of grant)
equal to the difference between (i) the Fair Market Value of a share of
Common Stock on the date such right is exercised, and (ii) the aggregate
exercise price of such right, otherwise than on surrender of a Stock Option.

          2.41         “Stock
Option” or “Option” means any option to
purchase shares of Common Stock granted to Eligible Employees, Non-Employee
Directors or Consultants granted pursuant to Article VI.

          2.42         “Subsidiary”
means any subsidiary corporation of the Company within the meaning of Section
424(f) of the Code.

5

          2.43         “Ten
Percent Stockholder” means a person owning stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company, its Subsidiaries or its Parent.

          2.44         “Termination”
means a Termination of Consultancy, Termination of Directorship or Termination
of Employment, as applicable.

          2.45         “Termination
of Consultancy” means: (a) that the Consultant is
no longer acting as a consultant to the Company or an Affiliate; or (b) when an
entity which is retaining a Participant as a Consultant ceases to be an
Affiliate unless the Participant otherwise is, or thereupon becomes, a
Consultant to the Company or another Affiliate at the time the entity ceases to
be an Affiliate. In the event that a Consultant becomes an Eligible Employee or
a Non-Employee Director upon the termination of his or her consultancy, unless
otherwise determined by the Committee, in its sole discretion, no Termination
of Consultancy shall be deemed to occur until such time as such Consultant is
no longer a Consultant, an Eligible Employee or a Non-Employee Director.
Notwithstanding the foregoing, the Committee may, in its sole discretion,
otherwise define Termination of Consultancy in the Award agreement or, if no
rights of a Participant are reduced, may otherwise define Termination of
Consultancy thereafter.

          2.46         “Termination
of Directorship” means that the Non-Employee
Director has ceased to be a director of the Company; except that if a
Non-Employee Director becomes an Eligible Employee or a Consultant upon the
termination of his or her directorship, his or her ceasing to be a director of
the Company shall not be treated as a Termination of Directorship unless and
until the Participant has a Termination of Employment or Termination of
Consultancy, as the case may be.

          2.47         “Termination
of Employment” means: (a) a termination of
employment (for reasons other than a military or personal leave of absence
granted by the Company) of a Participant from the Company and its Affiliates;
or (b) when an entity which is employing a Participant ceases to be an
Affiliate, unless the Participant otherwise is, or thereupon becomes, employed
by the Company or another Affiliate at the time the entity ceases to be an
Affiliate. In the event that an Eligible Employee becomes a Consultant or a Non-Employee
Director upon the termination of his or her employment, unless otherwise
determined by the Committee, in its sole discretion, no Termination of
Employment shall be deemed to occur until such time as such Eligible Employee
is no longer an Eligible Employee, a Consultant or a Non-Employee Director.
Notwithstanding the foregoing, the Committee may, in its sole discretion,
otherwise define Termination of Employment in the Award agreement or, if no
rights of a Participant are reduced, may otherwise define Termination of
Employment thereafter.

          2.48         “Transfer”
means: (a) when used as a noun, any direct or indirect transfer, sale,
assignment, pledge, hypothecation, encumbrance or other disposition (including
the issuance of equity in a Person), whether for value or no value and whether
voluntary or involuntary (including by operation of law), and (b) when used as
a verb, to directly or indirectly transfer, sell, assign, pledge, encumber,
charge, hypothecate or otherwise dispose of (including the issuance of equity
in a Person) whether for value or for no value and whether voluntarily or
involuntarily (including by operation of law). “Transferred” and
“Transferrable” shall have a correlative meaning.

6

ARTICLE III

ADMINISTRATION

          3.1          The
Committee. This Plan shall be administered and
interpreted by the Committee.

          3.2          Grants
of Awards. The Committee shall have full authority
to grant, pursuant to the terms of this Plan, to Eligible Employees,
Consultants and Non-Employee Directors: (i) Stock Options, (ii) Stock
Appreciation Rights, (iii) Restricted Stock, (iv) Performance Shares;
(v) Other Stock-Based Awards, and (vi) Performance-Based Cash Awards. In
particular, the Committee shall have the authority:

	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 to select
 the Eligible Employees, Consultants and Non-Employee Directors to whom Awards
 may from time to time be granted hereunder;

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 to determine
 whether and to what extent Awards, or any combination thereof, are to be
 granted hereunder to one or more Eligible Employees, Consultants or
 Non-Employee Directors;

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 to determine
 the number of shares of Common Stock to be covered by each Award granted
 hereunder;

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 to determine
 the terms and conditions, not inconsistent with the terms of this Plan, of
 any Award granted hereunder (including, but not limited to, the exercise or
 purchase price (if any), any restriction or limitation, any vesting schedule
 or acceleration thereof, or any forfeiture restrictions or waiver thereof,
 regarding any Award and the shares of Common Stock relating thereto, based on
 such factors, if any, as the Committee shall determine, in its sole
 discretion);

 
	
  

 	
  

 	
  

 
	
  

 	
 (e)

 	
 to determine
 whether, to what extent and under what circumstances grants of Options and
 other Awards under this Plan are to operate on a tandem basis and/or in
 conjunction with or apart from other awards made by the Company outside of
 this Plan;

 
	
  

 	
  

 	
  

 
	
  

 	
 (f)

 	
 to determine
 whether and under what circumstances a Stock Option may be settled in cash,
 Common Stock and/or Restricted Stock under Section 6.3(d); 

 
	
  

 	
  

 	
  

 
	
  

 	
 (g)

 	
 to determine
 whether, to what extent and under what circumstances Common Stock and other
 amounts payable with respect to an Award under this Plan shall be deferred
 either automatically or at the election of the Participant in any case, in a
 manner intended to comply with, Section 409A of the Code;

 

7

	
  

 	
  

 	
  

 
	
  

 	
 (h)

 	
 to determine
 whether a Stock Option is an Incentive Stock Option or Non-Qualified Stock
 Option; 

 
	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 to determine
 whether to require a Participant, as a condition of the granting of any
 Award, to not sell or otherwise dispose of shares acquired pursuant to the
 exercise of an Award for a period of time as determined by the Committee, in
 its sole discretion, following the date of the acquisition of such Award; and

 
	
  

 	
  

 	
  

 
	
  

 	
 (j)

 	
 to set the
 performance criteria and the Performance Period with respect to any Award for
 which the grant, vesting or payment of such Award is conditioned upon the
 attainment of specified performance criteria and to certify the attainment of
 any such performance criteria; provided, that with regard to any Award
 that is intended to comply with Section 162(m) of the Code, the applicable
 performance criteria shall be based on one or more of the performance goals
 set forth in Exhibit A hereto (“Performance Goals”).

 

          3.3          Guidelines.
Subject to Article XIV hereof, the Committee shall, in its sole discretion,
have the authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing this Plan and perform all acts, including
the delegation of its responsibilities (to the extent permitted by applicable
law and applicable stock exchange rules), as it shall, from time to time, deem
advisable; to construe and interpret the terms and provisions of this Plan and
any Award issued under this Plan (and any agreements relating thereto); and to
otherwise supervise the administration of this Plan. The Committee may, in its
sole discretion, correct any defect, supply any omission or reconcile any
inconsistency in this Plan or in any agreement relating thereto in the manner
and to the extent it shall deem necessary to effectuate the purpose and intent
of this Plan; provided, that with regard to any provision of this Plan
or any agreement relating thereto that is intended to comply with Section
162(m) of the Code, any such action by the Committee shall be permitted only to
the extent such action would be permitted under Section 162(m) of the Code. The
Committee may, in its sole discretion, adopt special guidelines and provisions
for persons who are residing in or employed in, or subject to, the taxes of,
any domestic or foreign jurisdictions to comply with applicable tax and
securities laws of such domestic or foreign jurisdictions. This Plan is
intended to comply with the applicable requirements of Rule 16b-3 and with
respect to Awards intended to be “performance-based,” the applicable provisions
of Section 162(m) of the Code, and this Plan shall be limited, construed and
interpreted in a manner so as to comply therewith.

          3.4          Decisions
Final. Any decision, interpretation or other
action made or taken in good faith by or at the direction of the Company, the
Board or the Committee (or any of its members) arising out of or in connection
with this Plan shall be within the absolute discretion of all and each of them,
as the case may be, and shall be final, binding and conclusive on the Company
and all employees and Participants and their respective heirs, executors,
administrators, successors and assigns.

          3.5          Procedures.
If the Committee is appointed, the Board shall designate one of the members of
the Committee as chairman and the Committee shall hold meetings, subject to the

8

By-Laws of the
Company, at such times and places as it shall deem advisable, including,
without limitation, by telephone conference or by written consent to the extent
permitted by applicable law. A majority of the Committee members shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. Any decision or determination reduced to writing and
signed by all the Committee members in accordance with the By-Laws of the
Company shall be fully effective as if it had been made by a vote at a meeting duly
called and held. The Committee shall keep minutes of its meetings and shall
make such rules and regulations for the conduct of its business as it shall
deem advisable.

          3.6          Designation
of Consultants/Liability. 

	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 The Committee
 may, in its sole discretion, designate employees of the Company and
 professional advisors to assist the Committee in the administration of this
 Plan and (to the extent permitted by applicable law and applicable exchange
 rules) may grant authority to officers to grant Awards and/or execute
 agreements or other documents on behalf of the Committee.

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 The
 Committee may, in its sole discretion, employ such legal counsel, consultants
 and agents as it may deem desirable for the administration of this Plan and
 may rely upon any opinion received from any such counsel or consultant and
 any computation received from any such consultant or agent. Expenses incurred
 by the Committee or the Board in the engagement of any such counsel,
 consultant or agent shall be paid by the Company. The Committee, its members
 and any person designated pursuant to sub-section (a) above shall not be
 liable for any action or determination made in good faith with respect to
 this Plan. To the maximum extent permitted by applicable law, no officer of
 the Company or member or former member of the Committee or of the Board shall
 be liable for any action or determination made in good faith with respect to
 this Plan or any Award granted under it. 

 

          3.7         Indemnification.
To the maximum extent permitted by applicable law and the Certificate of
Incorporation and By-Laws of the Company and to the extent not covered by
insurance directly insuring such person, each officer or employee of the
Company or any Affiliate and member or former member of the Committee or the
Board shall be indemnified and held harmless by the Company against any cost or
expense (including reasonable fees of counsel reasonably acceptable to the
Committee) or liability (including any sum paid in settlement of a claim with
the approval of the Committee), and advanced amounts necessary to pay the
foregoing at the earliest time and to the fullest extent permitted, arising out
of any act or omission to act in connection with the administration of this
Plan, except to the extent arising out of such officer’s, employee’s, member’s
or former member’s fraud. Such indemnification shall be in addition to any
rights of indemnification the officers, employees, directors or members or
former officers, directors or members may have under applicable law or under
the Certificate of Incorporation or By-Laws of the Company or any Affiliate.
Notwithstanding anything else herein, this indemnification will not apply to
the actions or determinations made by an individual with regard to Awards
granted to him or her under this Plan.

9

ARTICLE IV

SHARE LIMITATION

          4.1         Shares.

	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 General
 Limitations. The aggregate number of shares of
 Common Stock that may be issued or used for reference purposes or with
 respect to which Awards may be granted under this Plan shall not exceed
 4,064,000 shares (subject to any increase or decrease pursuant to Section
 4.2), which may be either authorized and unissued Common Stock or Common
 Stock held in or acquired for the treasury of the Company or both. Any shares
 of Common Stock that are subject to Awards that are not Appreciation Awards
 shall be counted against this limit as 1.78 shares for every share granted.
 If any Appreciation Award granted under this Plan expires, terminates, is
 cancelled or is forfeited for any reason, the number of shares of Common
 Stock underlying any such Award shall again be available for the purpose of
 Awards under this Plan and added back to the aggregate maximum limit. If any
 Awards that are not Appreciation Awards granted under this Plan to a
 Participant expire, terminate, are cancelled or are forfeited for any reason,
 1.78 shares of Common Stock shall again be available for the purposes of
 Awards under this Plan and added back to the aggregate maximum limit. If a
 Tandem Stock Appreciation Right or a Limited Stock Appreciation Right is
 granted in tandem with an Option, such grant shall only apply once against
 the maximum number of shares of Common Stock which may be issued under this
 Plan. The number of shares of Common Stock available for the purpose of
 Awards under this Plan shall be reduced by (i) the total number of Stock
 Options or Stock Appreciation Rights exercised, regardless of whether any of
 the shares of Common Stock underlying such Awards are not actually issued to
 the Participant as the result of a net settlement, (ii) any shares of Common
 Stock used to pay any exercise price or tax withholding obligation with
 respect to any Award and (iii) any shares of Common Stock repurchased by the
 Company on the open market with the proceeds of an Stock Option exercise
 price.

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 Individual
 Participant Limitations.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (i)          The
 maximum number of shares of Common Stock subject to any Award of Stock
 Options, Stock Appreciation Rights or shares of Restricted Stock for which
 the grant of such Award or the lapse of the relevant Restriction Period is
 subject to the attainment of Performance Goals in accordance with Section
 8.3(a)(ii) herein which may be granted under this Plan during any fiscal year
 of the Company to each Eligible Employee or Consultant shall be 600,000
 shares per type of Award (which shall be subject to any further increase or
 decrease pursuant to Section 4.2), provided that the maximum number of shares
 of Common Stock for 

 

10

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 all types of
 Awards does not exceed 750,000 (which shall be subject to any further
 increase or decrease pursuant to Section 4.2) with respect to any fiscal year
 of the Company. If a Tandem Stock Appreciation Right is granted or a Limited Stock
 Appreciation Right is granted in tandem with a Stock Option, it shall apply
 against the Eligible Employee’s or Consultant’s individual share limitations
 for both Stock Appreciation Rights and Stock Options.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (ii)         The
 maximum number of shares of Common Stock subject to any Award of Stock
 Options (other than Incentive Stock Options), Stock Appreciation Rights,
 Performance Shares or Other Stock-Based Awards which may be granted under
 this Plan during any fiscal year of the Company to each Non-Employee Director
 shall be 150,000 shares per type of Award (which shall be subject to any
 further increase or decrease pursuant to Section 4.2), provided that the
 maximum number of shares of Common Stock for all types of Awards does not exceed
 200,000 (which shall be subject to any further increase or decrease pursuant
 to Section 4.2) with respect to any fiscal year of the Company, provided
 further, that, effective on the date of the Company’s 2009 annual
 stockholders’ meeting, in no event shall the aggregate grant of Awards to
 Non-Employee Directors granted on and after such date exceed 10% (when
 combined with the 10% limitation set forth in Sections 8.3(a)(iii), 9.2(f),
 and 10.2(d) of this Plan) of the total number of shares of Common Stock reserved
 for Awards under this Plan. If a Tandem Stock Appreciation Right is granted
 or a Limited Stock Appreciation Right is granted in tandem with a Stock
 Option, it shall apply against the Non-Employee Director’s individual share
 limitations for both Stock Appreciation Rights and Stock Options.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (iii)        There
 are no annual individual Eligible Employee or Consultant share limitations on
 Restricted Stock for which the grant of such Award or the lapse of the
 relevant Restriction Period is not subject to attainment of Performance Goals
 in accordance with Section 8.3(a)(ii) hereof.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (iv)         The
 maximum number of shares of Common Stock subject to any Award of Performance
 Shares which may be granted under this Plan during any fiscal year of the
 Company to each Eligible Employee or Consultant shall be 300,000 (which shall
 be subject to any further increase or decrease pursuant to Section 4.2) with
 respect to any fiscal year of the Company. Each Performance Share shall be referenced
 to one share of Common Stock and shall be charged against the available
 shares under this Plan at the time the unit value measurement is converted to
 a referenced number of shares of Common Stock in accordance with Section 9.1.

 

11

	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (v)         The
 maximum payment under any Performance-Based Cash Award payable with respect
 to any fiscal year of the Company and for which the grant of such Award is
 subject to the attainment of Performance Goals in accordance with Section
 11.2(c) herein which may be granted under this Plan with respect to any
 fiscal year of the Company to each Eligible Employee or Consultant shall be
 $10,000,000.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (vi)         The
 individual Participant limitations set forth in this Section 4.1(b) shall be
 cumulative; that is, to the extent that shares of Common Stock for which
 Awards are permitted to be granted to an Eligible Employee or a Consultant
 during a fiscal year are not covered by an Award to such Eligible Employee or
 Consultant in a fiscal year, the number of shares of Common Stock available
 for Awards to such Eligible Employee or Consultant shall automatically
 increase in the subsequent fiscal years during the term of the Plan until
 used.

 
	
  

 	
  

 	
  

 
	
           4.2          Changes.
 

 
	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 The existence
 of this Plan and the Awards granted hereunder shall not affect in any way the
 right or power of the Board or the stockholders of the Company to make or
 authorize (i) any adjustment, recapitalization, reorganization or other
 change in the Company’s capital structure or its business, (ii) any merger or
 consolidation of the Company or any Affiliate, (iii) any issuance of bonds,
 debentures, preferred or prior preference stock ahead of or affecting the
 Common Stock, (iv) the dissolution or liquidation of the Company or any
 Affiliate, (v) any sale or transfer of all or part of the assets or business
 of the Company or any Affiliate or (vi) any other corporate act or
 proceeding.

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 Subject to
 the provisions of Section 4.2(d), if there shall occur any such change in the
 capital structure of the Company by reason of any stock split, reverse stock
 split, stock dividend, subdivision, combination or reclassification of shares
 that may be issued under the Plan, any recapitalization, any merger, any
 consolidation, any spin off, any reorganization or any partial or complete
 liquidation, or any other corporate transaction or event having an effect
 similar to any of the foregoing (a “Section 4.2 Event”), then (i) the
 aggregate number and/or kind of shares that thereafter may be issued under
 the Plan, (ii) the number and/or kind of shares or other property (including
 cash) to be issued upon exercise of an outstanding Award or under other
 Awards granted under the Plan, (iii) the purchase price thereof, and/or (iv)
 the individual Participant limitations set forth in Section 4.1(b) (other
 than those based on cash limitations) shall be appropriately adjusted. In
 addition, subject to Section 4.2(d), if there shall occur any change in the
 capital structure or the business of the Company that is not a Section 4.2
 Event (an “Other Extraordinary Event”), including by reason of
 any extraordinary dividend (whether cash or stock), any conversion, any
 adjustment, any issuance of 

 

12

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 any class of
 securities convertible or exercisable into, or exercisable for, any class of
 stock, or any sale or transfer of all or substantially all the Company’s
 assets or business, then the Committee, in its sole discretion, may adjust
 any Award and make such other adjustments to the Plan. Any adjustment
 pursuant to this Section 4.2 shall be consistent with the applicable Section
 4.2 Event or the applicable Other Extraordinary Event, as the case may be,
 and in such manner as the Committee may, in its sole discretion, deem
 appropriate and equitable to prevent substantial dilution or enlargement of
 the rights granted to, or available for, Participants under the Plan. Any
 such adjustment determined by the Committee shall be final, binding and
 conclusive on the Company and all Participants and their respective heirs,
 executors, administrators, successors and permitted assigns. Except as
 expressly provided in this Section 4.2 or in the applicable Award agreement,
 a Participant shall have no rights by reason of any Section 4.2 Event or any
 Other Extraordinary Event.

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 Fractional
 shares of Common Stock resulting from any adjustment in Awards pursuant to
 Section 4.2(a) or (b) shall be aggregated until, and eliminated at, the time
 of exercise by rounding-down for fractions less than one-half and rounding-up
 for fractions equal to or greater than one-half. No cash settlements shall be
 made with respect to fractional shares eliminated by rounding. Notice of any
 adjustment shall be given by the Committee to each Participant whose Award
 has been adjusted and such adjustment (whether or not such notice is given)
 shall be effective and binding for all purposes of this Plan.

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 In the event
 of an Acquisition Event, the Committee may, in its sole discretion, terminate
 all outstanding and unexercised Stock Options or Stock Appreciation Rights or
 any Other Stock Based Award that provides for a Participant elected exercise
 effective as of the date of the Acquisition Event, by delivering notice of
 termination to each Participant at least 20 days prior to the date of
 consummation of the Acquisition Event, in which case during the period from
 the date on which such notice of termination is delivered to the consummation
 of the Acquisition Event, each such Participant shall have the right to
 exercise in full all of his or her Stock Options or Stock Appreciation Rights
 that are then outstanding (without regard to any limitations on
 exercisability otherwise contained in the Award agreements), but any such
 exercise shall be contingent on the occurrence of the Acquisition Event, and,
 provided that, if the Acquisition Event does not take place within a
 specified period after giving such notice for any reason whatsoever, the
 notice and exercise pursuant thereto shall be null and void.

 
	
  

 	
  

 	
  

 
	
  

 	
 If an
 Acquisition Event occurs but the Committee does not terminate the outstanding
 Awards pursuant to this Section 4.2(d), then the provisions of Section 4.2(b)
 and Article XIII shall apply.

 

13

          4.3          Minimum
Purchase Price. Notwithstanding any provision of
this Plan to the contrary, if authorized but previously unissued shares of
Common Stock are issued under this Plan, such shares shall not be issued for a
consideration that is less than as permitted under applicable law.

ARTICLE V

ELIGIBILITY – GENERAL REQUIREMENTS FOR AWARDS

          5.1          General
Eligibility. All Eligible Employees, Consultants,
Non-Employee Directors and prospective employees and consultants are eligible
to be granted Awards, subject to the terms and conditions of this Plan. Eligibility
for the grant of Awards and actual participation in this Plan shall be
determined by the Committee in its sole discretion.

          5.2          Incentive
Stock Options. Notwithstanding anything herein to
the contrary, only Eligible Employees of the Company, its Subsidiaries and its
Parent (if any) are eligible to be granted Incentive Stock Options under this
Plan. Eligibility for the grant of an Incentive Stock Option and actual
participation in this Plan shall be determined by the Committee in its sole
discretion.

          5.3          General
Requirement. The vesting and exercise of Awards
granted to a prospective employee or consultant are conditioned upon such
individual actually becoming an Eligible Employee or Consultant.

ARTICLE VI

STOCK OPTIONS

          6.1          Options.
Stock Options may be granted alone or in addition to other Awards granted under
this Plan. Each Stock Option granted under this Plan shall be of one of two
types: (a) an Incentive Stock Option or (b) a Non-Qualified Stock
Option.

          6.2          Grants.
The Committee shall, in its sole discretion, have the authority to grant to any
Eligible Employee (subject to Section 5.2) Incentive Stock Options,
Non-Qualified Stock Options, or both types of Stock Options. The Committee
shall, in its sole discretion, have the authority to grant Non-Qualified Stock
Options to any Consultant or Non-Employee Director. To the extent that any
Stock Option does not qualify as an Incentive Stock Option (whether because of
its provisions or the time or manner of its exercise or otherwise), such Stock
Option or the portion thereof which does not qualify shall constitute a
separate Non-Qualified Stock Option. 

          6.3          Terms
of Options. Options granted under this Plan shall
be subject to the following terms and conditions and shall be in such form and
contain such additional terms and conditions, not inconsistent with the terms
of this Plan, as the Committee, in its sole discretion, shall deem desirable:

	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 Exercise
 Price. The exercise price per share of Common Stock
 subject to a Stock Option shall be determined by the Committee at the time of
 grant, 

 

14

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 provided
 that the per share exercise price of a Stock Option shall not be less than
 100% (or, in the case of an Incentive Stock Option granted to a Ten Percent
 Stockholder, 110%) of the Fair Market Value of the Common Stock at the time
 of grant.

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 Stock Option
 Term. The term of each Stock Option shall be fixed
 by the Committee, provided that no Stock Option shall be exercisable more
 than seven (7) years after the date the Option is granted; and provided
 further that the term of an Incentive Stock Option granted to a Ten Percent
 Stockholder shall not exceed five (5) years.

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 Exercisability.
 Stock Options shall be exercisable at such time or times and subject to such
 terms and conditions or as shall be determined by the Committee at grant. If
 the Committee provides, in its discretion, that any Stock Option is
 exercisable subject to certain limitations (including, without limitation,
 that such Stock Option is exercisable only in installments or within certain
 time periods), the Committee may waive such limitations on the exercisability
 at any time at or after grant in whole or in part (including, without limitation,
 waiver of the installment exercise provisions or acceleration of the time at
 which such Stock Option may be exercised), based on such factors, if any, as
 the Committee shall determine, in its sole discretion. In the event that a
 written employment agreement between the Company and a Participant provides
 for a vesting schedule that is more favorable than the vesting schedule
 provided in the form of Award Agreement, the vesting schedule in such
 employment agreement shall govern, provided that such agreement is in effect
 on the date of grant and applicable to the specific Award.

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 Method of
 Exercise. Subject to whatever installment exercise
 and waiting period provisions apply under subsection (c) above, to the extent
 vested, Stock Options may be exercised in whole or in part at any time during
 the Option term, by giving written notice of exercise to the Company
 specifying the number of shares of Common Stock to be purchased. Such notice
 shall be in a form acceptable to the Company and shall be accompanied by
 payment in full of the purchase price as follows: (i) in cash or by check,
 bank draft or money order payable to the order of the Company; (ii) solely to
 the extent permitted by applicable law, if the Common Stock is traded on a
 national securities exchange, the Nasdaq Stock Market or quoted on a national
 quotation system sponsored by the National Association of Securities Dealers,
 and the Committee authorizes, through a procedure whereby the Participant
 delivers irrevocable instructions to a broker reasonably acceptable to the
 Committee to deliver promptly to the Company an amount equal to the purchase
 price; or (iii) on such other terms and conditions as may be acceptable to
 the Committee (including, without limitation, the relinquishment of Stock
 Options or by payment in full or in part in the form of Common Stock owned by
 the Participant based on the Fair Market Value of the Common Stock on the 

 

15

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 payment date
 as determined by the Committee, in its sole discretion). No shares of Common
 Stock shall be issued until payment therefor, as provided herein, has been
 made or provided for.

 
	
  

 	
  

 	
  

 
	
  

 	
 (e)

 	
 Non-Transferability
 of Options. No Stock Option shall be Transferable by
 the Participant otherwise than by will or by the laws of descent and distribution,
 and all Stock Options shall be exercisable, during the Participant’s
 lifetime, only by the Participant. Notwithstanding the foregoing, the
 Committee may determine, in its sole discretion, at the time of grant or
 thereafter that a Non-Qualified Stock Option that is otherwise not
 Transferable pursuant to this Section is Transferable to a Family Member in
 whole or in part and in such circumstances, and under such conditions, as
 determined by the Committee, in its sole discretion. A Non-Qualified Stock
 Option that is Transferred to a Family Member pursuant to the preceding
 sentence (i) may not be subsequently Transferred otherwise than by will or by
 the laws of descent and distribution and (ii) remains subject to the terms of
 this Plan and the applicable Award agreement. Any shares of Common Stock
 acquired upon the exercise of a Non-Qualified Stock Option by a permissible
 transferee of a Non-Qualified Stock Option or a permissible transferee
 pursuant to a Transfer after the exercise of the Non-Qualified Stock Option
 shall be subject to the terms of this Plan and the applicable Award
 agreement.

 
	
  

 	
  

 	
  

 
	
  

 	
 (f)

 	
 Incentive
 Stock Option Limitations. To the extent that the
 aggregate Fair Market Value (determined as of the time of grant) of the
 Common Stock with respect to which Incentive Stock Options are exercisable
 for the first time by an Eligible Employee during any calendar year under
 this Plan and/or any other stock option plan of the Company, any Subsidiary
 or any Parent exceeds $100,000, such Options shall be treated as
 Non-Qualified Stock Options. Should any provision of this Plan not be
 necessary in order for the Stock Options to qualify as Incentive Stock
 Options, or should any additional provisions be required, the Committee may,
 in its sole discretion, amend this Plan accordingly, without the necessity of
 obtaining the approval of the stockholders of the Company.

 
	
  

 	
  

 	
  

 
	
  

 	
 (g)

 	
 Form,
 Modification, Extension and Renewal of Stock Options.
 Subject to the terms and conditions and within the limitations of this Plan,
 Stock Options shall be evidenced by such form of agreement or grant as is
 approved by the Committee, and the Committee may, in its sole discretion (i)
 modify, extend or renew outstanding Stock Options granted under this Plan
 (provided that the rights of a Participant are not reduced without his or her
 consent and provided further that such action does not subject the Stock
 Options to Section 409A of the Code), and (ii) accept the surrender of
 outstanding Stock Options (up to the extent not theretofore exercised) and
 authorize the granting of new Stock Options in substitution therefor (to the
 extent not theretofore exercised). Notwithstanding the foregoing, an
 outstanding Option may not be modified to reduce the exercise price

 

16

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 thereof nor
 may a new Option at a lower price be substituted for a surrendered Option
 (other than adjustments or substitutions in accordance with Section 4.2),
 unless such action is approved by the stockholders of the Company.

 
	
  

 	
  

 	
  

 
	
  

 	
 (h)

 	
 Early
 Exercise. The Committee may provide that a Stock
 Option include a provision whereby the Participant may elect at any time
 before the Participant’s Termination to exercise the Stock Option as to any
 part or all of the shares of Common Stock subject to the Stock Option prior
 to the full vesting of the Stock Option and such shares shall be subject to
 the provisions of Article VIII and treated as Restricted Stock. Any unvested
 shares of Common Stock so purchased may be subject to a repurchase option in
 favor of the Company or to any other restriction the Committee determines to
 be appropriate.

 
	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 Other Terms
 and Conditions. Stock Options may contain such other
 provisions, which shall not be inconsistent with any of the terms of this
 Plan, as the Committee shall, in its sole discretion, deem appropriate.

 

ARTICLE VII

STOCK APPRECIATION RIGHTS

          7.1          Tandem
Stock Appreciation Rights. Stock Appreciation
Rights may be granted in conjunction with all or part of any Stock Option (a
“Reference Stock Option”) granted under this Plan (“Tandem Stock Appreciation
Rights”). In the case of a Non-Qualified Stock Option, such rights may be
granted either at or after the time of the grant of such Reference Stock
Option. In the case of an Incentive Stock Option, such rights may be granted
only at the time of the grant of such Reference Stock Option.

          7.2          Terms
and Conditions of Tandem Stock Appreciation Rights.
Tandem Stock Appreciation Rights granted hereunder shall be subject to such
terms and conditions, not inconsistent with the provisions of this Plan, as
shall be determined from time to time by the Committee in its sole discretion,
and the following:

	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 Exercise
 Price. The exercise price per share of Common Stock
 subject to a Tandem Stock Appreciation Right shall be determined by the
 Committee at the time of grant, provided that the per share exercise price of
 a Tandem Stock Appreciation Right shall not be less than 100% of the Fair
 Market Value of the Common Stock at the time of grant.

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 Term.
 A Tandem Stock Appreciation Right or applicable portion thereof granted with
 respect to a Reference Stock Option shall terminate and no longer be
 exercisable upon the termination or exercise of the Reference Stock Option,
 except that, unless otherwise determined by the Committee, in its sole
 discretion, at the time of grant, a Tandem Stock Appreciation Right granted
 with respect to less than the full number of shares covered 

 

17

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 by the
 Reference Stock Option shall not be reduced until and then only to the extent
 the exercise or termination of the Reference Stock Option causes the number
 of shares covered by the Tandem Stock Appreciation Right to exceed the number
 of shares remaining available and unexercised under the Reference Stock
 Option.

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 Exercisability.
 Tandem Stock Appreciation Rights shall be exercisable only at such time or
 times and to the extent that the Reference Stock Options to which they relate
 shall be exercisable in accordance with the provisions of Article VI, and
 shall be subject to the provisions of Section 6.3(c).

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 Method of
 Exercise. A Tandem Stock Appreciation Right may be
 exercised by the Participant by surrendering the applicable portion of the
 Reference Stock Option. Upon such exercise and surrender, the Participant
 shall be entitled to receive an amount determined in the manner prescribed in
 this Section 7.2. Stock Options which have been so surrendered, in whole or
 in part, shall no longer be exercisable to the extent the related Tandem
 Stock Appreciation Rights have been exercised.

 
	
  

 	
  

 	
  

 
	
  

 	
 (e)

 	
 Payment.
 Upon the exercise of a Tandem Stock Appreciation Right, a Participant shall
 be entitled to receive up to, but no more than, an amount in cash or
 a number of shares of Common Stock (as determined by the Committee, in its
 sole discretion, on the date of grant) equal in value to the excess of the
 Fair Market Value of one share of Common Stock over the Option exercise price
 per share specified in the Reference Stock Option agreement, multiplied by
 the number of shares in respect of which the Tandem Stock Appreciation Right
 shall have been exercised.

 
	
  

 	
  

 	
  

 
	
  

 	
 (f)

 	
 Deemed
 Exercise of Reference Stock Option. Upon the
 exercise of a Tandem Stock Appreciation Right, the Reference Stock Option or
 part thereof to which such Stock Appreciation Right is related shall be
 deemed to have been exercised for the purpose of the limitation set forth in
 Article IV of the Plan on the number of shares of Common Stock to be issued
 under the Plan.

 
	
  

 	
  

 	
  

 
	
  

 	
 (g)

 	
 Non-Transferability.
 Tandem Stock Appreciation Rights shall be Transferable only when and to the
 extent that the underlying Stock Option would be Transferable under Section
 6.3(e) of the Plan.

 

          7.3          Non-Tandem
Stock Appreciation Rights. Non-Tandem Stock
Appreciation Rights may also be granted without reference to any Stock Options
granted under this Plan.

          7.4          Terms
and Conditions of Non-Tandem Stock Appreciation Rights.
Non-Tandem Stock Appreciation Rights granted hereunder shall be subject to such
terms and conditions, not inconsistent with the provisions of this Plan, as
shall be determined from time to time by the Committee in its sole discretion,
and the following:

18

	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 Exercise
 Price. The exercise price per share of Common Stock
 subject to a Non-Tandem Stock Appreciation Right shall be determined by the
 Committee at the time of grant, provided that the per share exercise price of
 a Non-Tandem Stock Appreciation Right shall not be less than 100% of the Fair
 Market Value of the Common Stock at the time of grant.

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 Term.
 The term of each Non-Tandem Stock Appreciation Right shall be fixed by the
 Committee, but shall not be greater than 7 years after the date the right is
 granted.

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 Exercisability.
 Non-Tandem Stock Appreciation Rights shall be exercisable at such time or
 times and subject to such terms and conditions as shall be determined by the
 Committee at grant. If the Committee provides, in its discretion, that any
 such right is exercisable subject to certain limitations (including, without
 limitation, that it is exercisable only in installments or within certain
 time periods), the Committee may waive such limitations on the exercisability
 at any time at or after grant in whole or in part (including, without
 limitation, waiver of the installment exercise provisions or acceleration of
 the time at which such right may be exercised), based on such factors, if
 any, as the Committee shall determine, in its sole discretion. In the event
 that a written employment agreement between the Company and a Participant
 provides for a vesting schedule that is more favorable than the vesting
 schedule provided in the form of Award Agreement, the vesting schedule in
 such employment agreement shall govern, provided that such agreement is in
 effect on the date of grant and applicable to the specific Award.

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 Method of
 Exercise. Subject to whatever installment exercise
 and waiting period provisions apply under subsection (c) above, Non-Tandem
 Stock Appreciation Rights may be exercised in whole or in part at any time in
 accordance with the applicable Award agreement, by giving written notice of
 exercise to the Company specifying the number of Non-Tandem Stock
 Appreciation Rights to be exercised.

 
	
  

 	
  

 	
  

 
	
  

 	
 (e)

 	
 Payment.
 Upon the exercise of a Non-Tandem Stock Appreciation Right a Participant
 shall be entitled to receive, for each right exercised, up to, but no more
 than, an amount in cash or a number of shares of Common Stock (as determined
 by the Committee, in its sole discretion, on the date of grant) equal in value
 to the excess of the Fair Market Value of one share of Common Stock on the
 date the right is exercised over the Fair Market Value of one share of Common
 Stock on the date the right was awarded to the Participant. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (f)

 	
 Non-Transferability.
 No Non-Tandem Stock Appreciation Rights shall be Transferable by the
 Participant otherwise than by will or by the laws of descent and
 distribution, and all such rights shall be exercisable, during the
 Participant’s lifetime, only by the Participant. 

 

19

          7.5          Limited Stock Appreciation Rights. The Committee may, in its
sole discretion, grant Tandem and Non-Tandem Stock Appreciation Rights either
as a general Stock Appreciation Right or as a Limited Stock Appreciation Right.
Limited Stock Appreciation Rights may be exercised only upon the occurrence of
a Change in Control or such other event as the Committee may, in its sole
discretion, designate at the time of grant or thereafter. Upon the exercise of
Limited Stock Appreciation Rights, except as otherwise provided in an Award
agreement, the Participant shall receive in cash or Common Stock, as determined
by the Committee, an amount equal to the amount (a) set forth in Section
7.2(e) with respect to Tandem Stock Appreciation Rights, or (b) set forth
in Section 7.4(e) with respect to Non-Tandem Stock Appreciation Rights, as
applicable.

ARTICLE VIII

RESTRICTED STOCK

          8.1          Awards
of Restricted Stock. Shares of Restricted Stock
may be issued either alone or in addition to other Awards granted under the
Plan. The Committee shall, in its sole discretion, determine the Eligible
Employees, Consultants and Non-Employee Directors, to whom, and the time or
times at which, grants of Restricted Stock shall be made, the number of shares
to be awarded, the price (if any) to be paid by the Participant (subject to
Section 8.2), the time or times within which such Awards may be subject to
forfeiture, the vesting schedule and rights to acceleration thereof, and all
other terms and conditions of the Awards. The Committee may condition the grant
or vesting of Restricted Stock upon the attainment of specified performance
targets (including, the Performance Goals specified in Exhibit A attached
hereto) or such other factors as the Committee may determine, in its sole
discretion, including to comply with the requirements of Section 162(m) of the
Code. 

          8.2          Awards
and Certificates. Eligible Employees, Consultants
and Non-Employee Directors selected to receive Restricted Stock shall not have
any rights with respect to such Award, unless and until such Participant has
delivered a fully executed copy of the agreement evidencing the Award to the
Company and has otherwise complied with the applicable terms and conditions of
such Award. Further, such Award shall be subject to the following conditions:

	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 Purchase
 Price. The purchase price of Restricted Stock shall
 be fixed by the Committee. Subject to Section 4.3, the purchase price for
 shares of Restricted Stock may be zero to the extent permitted by applicable
 law, and, to the extent not so permitted, such purchase price may not be less
 than par value.

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 Acceptance.
 Awards of Restricted Stock must be accepted within a period of 60 days (or
 such other period as the Committee may specify) after the grant date, by
 executing a Restricted Stock agreement and by paying whatever price (if any)
 the Committee has designated thereunder.

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 Legend.
 Each Participant receiving Restricted Stock shall be issued a stock
 certificate in respect of such shares of Restricted Stock, unless the
 Committee elects to use another system, such as book entries by the 

 

20

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 transfer
 agent, as evidencing ownership of shares of Restricted Stock. Such
 certificate shall be registered in the name of such Participant, and shall,
 in addition to such legends required by applicable securities laws, bear an
 appropriate legend referring to the terms, conditions, and restrictions
 applicable to such Award, substantially in the following form:

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
 “The
 anticipation, alienation, attachment, sale, transfer, assignment, pledge,
 encumbrance or charge of the shares of stock represented hereby are subject
 to the terms and conditions (including forfeiture) of the Steven Madden, Ltd.
 (the “Company”) 2009 Stock Incentive Plan (the “Plan”) and an agreement
 entered into between the registered owner and the Company dated __________.
 Copies of such Plan and agreement are on file at the principal office of the
 Company.”

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 Custody.
 If stock certificates are issued in respect of shares of Restricted Stock,
 the Committee may require that any stock certificates evidencing such shares
 be held in custody by the Company until the restrictions thereon shall have
 lapsed, and that, as a condition of any grant of Restricted Stock, the
 Participant shall have delivered a duly signed stock power, endorsed in
 blank, relating to the Common Stock covered by such Award.

 

          8.3          Restrictions
and Conditions. The shares of Restricted Stock
awarded pursuant to this Plan shall be subject to the following restrictions
and conditions:

	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 Restriction
 Period. (i) The Participant shall not be permitted
 to Transfer shares of Restricted Stock awarded under this Plan during the
 period or periods set by the Committee (the “Restriction Period”) commencing
 on the date of such Award, as set forth in a Restricted Stock Award agreement
 and such agreement shall set forth a vesting schedule and any events which
 would accelerate vesting of the shares of Restricted Stock. Within these limits,
 based on service, attainment of Performance Goals pursuant to Section
 8.3(a)(ii) below and/or such other factors or criteria as the Committee may
 determine in its sole discretion, the Committee may condition the grant or
 provide for the lapse of such restrictions in installments in whole or in
 part, or may accelerate the vesting of all or any part of any Restricted
 Stock Award and/or waive the deferral limitations for all or any part of any
 Restricted Stock Award. Subject to Section 8.3(a)(iii) of this Plan, in the
 event that a written employment agreement between the Company and a
 Participant provides for a vesting schedule that is more favorable than the
 vesting schedule provided in the form of Award Agreement, the vesting
 schedule in such employment agreement shall govern, provided that such
 agreement is in effect on the date of grant and applicable to the specific
 Award.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (ii)          Objective
Performance Goals, Formulae or Standards.
 If the grant of shares of Restricted Stock or the lapse of restrictions is
 based 

 

21

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 on the
 attainment of Performance Goals, the Committee shall establish the
 Performance Goals and the applicable vesting percentage of the Restricted
 Stock Award applicable to each Participant or class of Participants in
 writing prior to the beginning of the applicable Performance Period or at
 such later date as otherwise determined by the Committee and while the
 outcome of the Performance Goals are substantially uncertain. Such
 Performance Goals may incorporate provisions for disregarding (or adjusting
 for) changes in accounting methods, corporate transactions (including,
 without limitation, dispositions and acquisitions) and other similar type
 events or circumstances. With regard to a Restricted Stock Award that is intended
 to comply with Section 162(m) of the Code, to the extent any such provision
 would create impermissible discretion under Section 162(m) of the Code or
 otherwise violate Section 162(m) of the Code, such provision shall be of no
 force or effect. The applicable Performance Goals shall be based on one or
 more of the performance criteria set forth in Exhibit A hereto.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (iii)         Limitations.
 Notwithstanding any other provision of this Plan to the contrary, effective
 on the date of the Company’s 2009 annual stockholders’ meeting, the
 Restriction Period with respect to any Restricted Stock Award granted on or
 after such date shall be no less than (A) one year, if the lapsing of
 restrictions is based (in whole or in part) on the attainment of one or more
 Performance Goals, and (B) three years, if the lapsing of restrictions is
 based solely on the continued performance of services by the Participant
 (with restrictions as to no more than 1/3rd of the shares of
 Common Stock subject thereto lapsing on each of the first three anniversaries
 of the date of grant); provided, that, subject to the terms of this
 Plan, the Committee shall be authorized (at the time of grant or thereafter)
 to provide for the earlier lapsing of restrictions in the event of a Change
 in Control or a Participant’s retirement, death or Disability; and provided
 further, that, subject to the limitations set forth in Section 4.1(b),
 Restricted Stock Awards may be granted on or after the date of the Company’s
 2009 annual stockholders’ meeting without the foregoing limitations with
 respect to up to 10% (when combined with the 10% limitation set forth in
 Sections 4.1(b)(ii), 9.2(f) and 10.2(d) of this Plan) of the total number of
 shares of Common Stock reserved for Awards under this Plan.

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 Rights as a
 Stockholder. Except as provided in this subsection
 (b) and subsection (a) above and as otherwise determined by the Committee,
 the Participant shall have, with respect to the shares of Restricted Stock,
 all of the rights of a holder of shares of Common Stock of the Company
 including, without limitation, the right to receive any dividends, the right
 to vote such shares and, subject to and conditioned upon the full vesting of
 shares of Restricted Stock, the right to tender such shares. The Committee
 may, in its sole discretion, determine at the time of grant that the payment 

 

22

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 of dividends
 shall be deferred until, and conditioned upon, the expiration of the
 applicable Restriction Period.

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 Lapse of
 Restrictions. If and when the Restriction Period
 expires without a prior forfeiture of the Restricted Stock, the certificates
 for such shares shall be delivered to the Participant. All legends shall be
 removed from said certificates at the time of delivery to the Participant,
 except as otherwise required by applicable law or other limitations imposed
 by the Committee.

 

ARTICLE IX

PERFORMANCE SHARES

          9.1          Award
of Performance Shares. Performance Shares may be
awarded either alone or in addition to other Awards granted under this Plan.
The Committee shall, in its sole discretion, determine the Eligible Employees,
Consultants and Non-Employee Directors, to whom, and the time or times at
which, Performance Shares shall be awarded, the number of Performance Shares to
be awarded to any person, the Performance Period during which, and the
conditions under which, receipt of the Shares will be deferred, and the other
terms and conditions of the Award in addition to those set forth in Section
9.2.

          Except
as otherwise provided herein, the Committee shall condition the right to
payment of any Performance Share upon the attainment of specified objective
performance goals (including, the Performance Goals specified in Exhibit A
attached hereto) established pursuant to Section 9.2(c) below and such
other factors as the Committee may determine, in its sole discretion, including
to comply with the requirements of Section 162(m) of the Code.

          9.2          Terms
and Conditions. Performance Shares awarded pursuant
to this Article IX shall be subject to the following terms and conditions:

	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 Earning of
 Performance Share Award. At the expiration of the
 applicable Performance Period, the Committee shall determine the extent to
 which the Performance Goals established pursuant to Section 9.2(c) are
 achieved and the percentage of each Performance Share Award that has been
 earned.

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 Non-Transferability.
 Subject to the applicable provisions of the Award agreement and this Plan,
 Performance Shares may not be Transferred during the Performance Period.

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 Objective
 Performance Goals, Formulae or Standards. The
 Committee shall establish the objective Performance Goals for the earning of
 Performance Shares based on a Performance Period applicable to each
 Participant or class of Participants in writing prior to the beginning of the
 applicable Performance Period or at such later date as permitted under
 Section 162(m) of the Code and while the outcome of the Performance Goals are
 substantially uncertain. Such Performance Goals may 

 

23

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 incorporate,
 if and only to the extent permitted under Section 162(m) of the Code,
 provisions for disregarding (or adjusting for) changes in accounting methods,
 corporate transactions (including, without limitation, dispositions and
 acquisitions) and other similar type events or circumstances. To the extent
 any such provision would create impermissible discretion under Section 162(m)
 of the Code or otherwise violate Section 162(m) of the Code, such provision
 shall be of no force or effect. The applicable Performance Goals shall be
 based on one or more of the performance criteria set forth in Exhibit A
 hereto.

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 Dividends.
 Unless otherwise determined by the Committee at the time of grant, amounts
 equal to any dividends declared during the Performance Period with respect to
 the number of shares of Common Stock covered by a Performance Share will not
 be paid to the Participant.

 
	
  

 	
  

 	
  

 
	
  

 	
 (e)

 	
 Payment.
 Following the Committee’s determination in accordance with subsection (a)
 above, shares of Common Stock or, as determined by the Committee in its sole
 discretion, the cash equivalent of such shares shall be delivered to the
 Eligible Employee, Consultant or Non-Employee Director, or his legal
 representative, in an amount equal to such individual’s earned Performance
 Share. Notwithstanding the foregoing, the Committee may, in its sole
 discretion, award an amount less than the earned Performance Share and/or
 subject the payment of all or part of any Performance Share to additional
 vesting, forfeiture and deferral conditions as it deems appropriate.

 
	
  

 	
  

 	
  

 
	
  

 	
 (f)

 	
 Accelerated
 Vesting. Based on service, performance and/or such
 other factors or criteria, if any, as the Committee may determine, the
 Committee may, in its sole discretion, at or after grant, accelerate the
 vesting of all or any part of any Performance Share Award and/or waive the
 preceding sentence and any other provision of this Plan to the contrary.
 Notwithstanding the preceding sentence or any other provision of this Plan, effective
 on the date of the Company’s 2009 annual stockholders’ meeting, the vesting
 schedule with respect to any Performance Share Award on or after such date
 shall be no less than (A) one year, if the vesting period is based (in whole
 or in part) on the attainment of one or more Performance Goals, and (B) three
 years, if the vesting period is based solely on the continued performance of
 services by the Participant (with restrictions as to no more than 1/3rd
 of the shares of Common Stock subject thereto lapsing on each of the first
 three anniversaries of the date of grant); provided, that, subject to
 the terms of this Plan, the Committee shall be authorized (at the time of
 grant or thereafter) to provide for the acceleration of vesting in the event
 of a Change in Control or a Participant’s retirement, death or Disability;
 and provided further, that, subject to the limitations set
 forth in Section 4.1(b), Performance Share Awards may be granted on or after
 the date of the Company’s 2009 annual stockholders’ meeting without the
 foregoing limitations with respect to up 

 

24

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 to 10% (when
 combined with the 10% limitation set forth in Sections 4.1(b)(ii),
 8.3(a)(iii) and 10.2(d) of this Plan) of the total number of shares of Common
 Stock reserved for Awards under this Plan.

 

ARTICLE X

OTHER STOCK-BASED AWARDS

          10.1        Other
Awards. The
Committee, in its sole discretion, is authorized to grant to Eligible
Employees, Consultants and Non-Employee Directors Other Stock-Based Awards that
are payable in, valued in whole or in part by reference to, or otherwise based
on or related to shares of Common Stock, including, but not limited to, shares
of Common Stock awarded purely as a bonus and not subject to any restrictions
or conditions, shares of Common Stock in payment of the amounts due under an
incentive or performance plan sponsored or maintained by the Company or an
Affiliate, performance units, dividend equivalent units, stock equivalent
units, restricted stock units and deferred stock units. To the extent
permitted by law, the Committee may, in its sole discretion, permit Eligible
Employees and/or Non-Employee Directors to defer all or a portion of their cash
compensation in the form of Other Stock-Based Awards granted under this Plan,
subject to the terms and conditions of any deferred compensation arrangement
established by the Company, which shall be intended to comply with Section 409A
of the Code. Other Stock-Based Awards may be granted either alone or in
addition to or in tandem with other Awards granted under the Plan.

          Subject
to the provisions of this Plan, the Committee shall, in its sole discretion,
have authority to determine the Eligible Employees, Consultants and
Non-Employee Directors, to whom, and the time or times at which, such Awards
shall be made, the number of shares of Common Stock to be awarded pursuant to
such Awards, and all other conditions of the Awards. The Committee may also
provide for the grant of Common Stock under such Awards upon the completion of
a specified Performance Period.

          The
Committee may condition the grant or vesting of Other Stock-Based Awards upon
the attainment of specified Performance Goals set forth on Exhibit A as the
Committee may determine, in its sole discretion; provided that to the extent
that such Other Stock-Based Awards are intended to comply with Section 162(m)
of the Code, the Committee shall establish the objective Performance Goals for
the vesting of such Other Stock-Based Awards based on a performance period
applicable to each Participant or class of Participants in writing prior to the
beginning of the applicable performance period or at such later date as
permitted under Section 162(m) of the Code and while the outcome of the
Performance Goals are substantially uncertain. Such Performance Goals may
incorporate, if and only to the extent permitted under Section 162(m) of the
Code, provisions for disregarding (or adjusting for) changes in accounting
methods, corporate transactions (including, without limitation, dispositions
and acquisitions) and other similar type events or circumstances. To the extent
any such provision would create impermissible discretion under Section 162(m)
of the Code or otherwise violate Section 162(m) of the Code, such provision
shall be of no force or effect. The applicable Performance Goals shall be based
on one or more of the performance criteria set forth in Exhibit A hereto.

25

          10.2        Terms
and Conditions. Other Stock-Based Awards made
pursuant to this Article X shall be subject to the following terms and
conditions:

	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 Non-Transferability.
 Subject to the applicable provisions of the Award agreement and this Plan,
 shares of Common Stock subject to Awards made under this Article X may not be
 Transferred prior to the date on which the shares are issued, or, if later,
 the date on which any applicable restriction, performance or deferral period
 lapses.

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 Dividends.
 Unless otherwise determined by the Committee at the time of Award, subject to
 the provisions of the Award agreement and this Plan, the recipient of an
 Award under this Article X shall not be entitled to receive, currently or on
 a deferred basis, dividends or dividend equivalents with respect to the
 number of shares of Common Stock covered by the Award.

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 Vesting.
 Any Award under this Article X and any Common Stock covered by any such Award
 shall vest or be forfeited to the extent so provided in the Award agreement,
 as determined by the Committee, in its sole discretion, in accordance with
 the terms of this Plan. Subject to Section 10.2(d) of this Plan, in the event
 that a written employment agreement between the Company and a Participant
 provides for a vesting schedule that is more favorable than the vesting
 schedule provided in the form of Award Agreement, the vesting schedule in
 such employment agreement shall govern, provided that such agreement is in
 effect on the date of grant and applicable to the specific Award.

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 Limitation.
 Notwithstanding Section 10.2(c) of this Plan and any other provision of this
 Plan to the contrary, effective on the date of the Company’s 2009 annual
 stockholders’ meeting, the vesting schedule with respect to any Other
 Stock-Based Award on or after such date shall be no less than (A) one year,
 if the vesting period is based (in whole or in part) on the attainment of one
 or more Performance Goals, and (B) three years, if the vesting period is
 based solely on the continued performance of services by the Participant
 (with restrictions as to no more than 1/3rd of the shares of
 Common Stock subject thereto lapsing on each of the first three anniversaries
 of the date of grant); provided, that, subject to the terms of this
 Plan, the Committee shall be authorized (at the time of grant or thereafter)
 to provide for the acceleration of vesting in the event of a Change in
 Control or a Participant’s retirement, death or Disability; and provided
 further, that, subject to the limitations set forth in Section 4.1(b),
 Other Stock-Based Awards may be granted on or after the date of the Company’s
 2009 annual stockholders’ meeting without the foregoing limitations with
 respect to up to 10% (when combined with the 10% limitation set forth in
 Sections 4.1(b)(ii), 8.3(a)(iii) and 9.2(f) of this Plan) of the total number
 of shares of Common Stock reserved for Awards under this Plan.

 

26

	
  

 	
  

 	
  

 
	
  

 	
 (e)

 	
 Price.
 Common Stock issued on a bonus basis under this Article X may be issued for
 no cash consideration; Common Stock purchased pursuant to a purchase right
 awarded under this Article X shall be priced, as determined by the Committee
 in its sole discretion.

 
	
  

 	
  

 	
  

 
	
  

 	
 (f)

 	
 Payment.
 Form of payment for the Other Stock-Based Award shall be specified in the
 Award agreement.

 

ARTICLE XI

PERFORMANCE-BASED CASH AWARDS

          11.1        Performance-Based
Cash Awards. Performance-Based Cash Awards may be
granted either alone or in addition to or in tandem with Stock Options, Stock
Appreciation Rights, or Restricted Stock. Subject to the provisions of this
Plan, the Committee shall, in its sole discretion, have authority to determine
the Eligible Employees, Consultants and Non-Employee Directors to whom, and the
time or times at which, such Awards shall be made, the dollar amount to be
awarded pursuant to such Awards, and all other conditions of the Awards. The Committee
may also provide for the payment of dollar amount under such Awards upon the
completion of a specified Performance Period.

          For
each Participant, the Committee may specify a targeted performance award. The
individual target award may be expressed, at the Committee’s discretion, as a
fixed dollar amount, a percentage of base pay or total pay (excluding payments
made under the Plan), or an amount determined pursuant to an objective formula
or standard. Establishment of an individual target award for a Participant for
a calendar year shall not imply or require that the same level individual
target award (if any such award is established by the Committee for the
relevant Participant) be set for any subsequent calendar year. At the time the
Performance Goals are established, the Committee shall prescribe a formula to
determine the percentages (which may be greater than 100%) of the individual
target award which may be payable based upon the degree of attainment of the
Performance Goals during the calendar year. Notwithstanding anything else
herein, the Committee may, in its sole discretion, elect to pay a Participant
an amount that is less than the Participant’s individual target award (or
attained percentage thereof) regardless of the degree of attainment of the
Performance Goals; provided that no such discretion to reduce an Award earned
based on achievement of the applicable Performance Goals shall be permitted for
the calendar year in which a Change in Control of the Company occurs, or during
such calendar year with regard to the prior calendar year if the Awards for the
prior calendar year have not been made by the time of the Change in Control of
the Company, with regard to individuals who were Participants at the time of
the Change in Control of the Company.

          11.2        Terms
and Conditions. Performance-Based Awards made
pursuant to this Article XI shall be subject to the following terms and
conditions: 

	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 Vesting of
 Performance-Based Cash Award. At the expiration of
 the applicable Performance Period, the Committee shall determine and certify
 in writing the extent to which the Performance Goals established pursuant 

 

27

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 to Section
 11.2(c) are achieved and the percentage of the Participant’s individual
 target award has been vested and earned.

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 Waiver of
 Limitation. In the event of the Participant’s
 Retirement (other than with respect to Performance-Based Cash Awards that are
 intended to comply with Section 162(m) of the Code), Disability or death, or
 in cases of special circumstances (to the extent permitted under Section
 162(m) of the Code with regard to a Performance-Based Cash Award that is
 intended to comply with Section 162(m) of the Code), the Committee may, in
 its sole discretion, waive in whole or in part any or all of the limitations
 imposed hereunder (if any) with respect to any or all of an Award under this
 Article XI.

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 Objective
 Performance Goals, Formulae or Standards. 

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (i)          The
 Committee shall establish the objective Performance Goals and the individual
 target award (if any) applicable to each Participant or class of Participants
 in writing prior to the beginning of the applicable Performance Period or at
 such later date as permitted under Section 162(m) of the Code and while the
 outcome of the Performance Goals are substantially uncertain. Such
 Performance Goals may incorporate, if and only to the extent permitted under
 Section 162(m) of the Code, provisions for disregarding (or adjusting for)
 changes in accounting methods, corporate transactions (including, without
 limitation, dispositions and acquisitions) and other similar type events or
 circumstances. To the extent any Performance-Based Award is intended to
 comply with the provisions of Section 162(m) of the Code, if any provision
 would create impermissible discretion under Section 162(m) of the Code or
 otherwise violate Section 162(m) of the Code, such provision shall be of no
 force or effect. The applicable Performance Goals shall be based on one or
 more of the performance criteria set forth in Exhibit A hereto.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (ii)         The
 measurements used in Performance Goals set under the Plan shall be determined
 in accordance with Generally Accepted Accounting Principles (“GAAP”), except,
 to the extent that any objective Performance Goals are used, if any
 measurements require deviation from GAAP, such deviation shall be at the
 discretion of the Committee at the time the Performance Goals are set or at
 such later time to the extent permitted under Section 162(m) of the Code.

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 Payment.
 Following the Committee’s determination and certification in accordance with
 subsection (a) above, the Performance-Based Cash Award amount shall be
 delivered to the Eligible Employee, Consultant or Non-Employee Director, or
 his legal representative, in accordance with the terms and conditions of the
 Award agreement. If the Award Agreement does not provide when such amount
 will be paid, except as 

 

28

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 provided in
 the next sentence, such amount shall be paid by no later than the later of:
 (i) March 15 of the year following the year in which the applicable
 Performance Period ends; or (ii) two and one-half (21⁄2) months after the
 expiration of the fiscal year of the Company in which the applicable
 Performance Period ends. Notwithstanding the foregoing, the Committee may
 place such conditions on the payment of the payment of all or any portion of
 any Performance-Based Cash Award as the Committee may determine and prior to
 the beginning of a Performance Period the Committee may (x) provide that the
 payment of all or any portion of any Performance-Based Cash Award shall be
 deferred and (y) permit a Participant to elect to defer receipt of all or a
 portion of any Performance-Based Cash Award. Any Performance-Based Cash Award
 deferred by a Participant in accordance with the terms and conditions
 established by the Committee shall not increase (between the date on which
 the Performance-Based Cash Award is credited to any deferred compensation
 program applicable to such Participant and the payment date) by an amount
 that would result in such deferral being deemed as an “increase in the amount
 of compensation” under Code Section 162(m). To the extent applicable, any
 deferral under this Section 11.2(d) shall be made in a manner intended to
 comply with the applicable requirements of Section 409A of the Code.

 

ARTICLE XII

TERMINATION

          12.1        Termination.
The following rules apply with regard to the Termination of a Participant.

	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 Rules Applicable to Stock Option and Stock
 Appreciation Rights. Unless otherwise determined by
 the Committee at grant (or, if no rights of the Participant are reduced,
 thereafter):

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (i)          Termination
 by Reason of Death, Disability or Retirement. If a Participant’s
 Termination is by reason of death, Disability or the Participant’s
 Retirement, all Stock Options or Stock Appreciation Rights that are held by
 such Participant that are vested and exercisable at the time of the
 Participant’s Termination may be exercised by the Participant (or, in the
 case of death, by the legal representative of the Participant’s estate) at
 any time within a one-year period from the date of such Termination, but in
 no event beyond the expiration of the stated term of such Stock Options or Stock
 Appreciation Rights; provided, however, if the Participant dies within such
 exercise period, all unexercised Stock Options or Stock Appreciation Rights
 held by such Participant shall thereafter be exercisable, to the extent to
 which they were exercisable at the time of death, for a period of one year
 from the date of such death, but in no event 

 

29

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 beyond the
 expiration of the stated term of such Stock Options or Stock Appreciation
 Rights.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (ii)         Involuntary
 Termination Without Cause. If a Participant’s Termination is by
 involuntary termination without Cause, all Stock Options or Stock
 Appreciation Rights that are held by such Participant that are vested and
 exercisable at the time of the Participant’s Termination may be exercised by
 the Participant at any time within a period of 90 days from the date of such
 Termination, but in no event beyond the expiration of the stated term of such
 Stock Options or Stock Appreciation Rights.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (iii)        Voluntary
 Termination. If a Participant’s Termination is voluntary (other
 than a voluntary termination described in Section 12.2(a)(iv)(2) below), all
 Stock Options or Stock Appreciation Rights that are held by such Participant
 that are vested and exercisable at the time of the Participant’s Termination
 may be exercised by the Participant at any time within a period of 30 days
 from the date of such Termination, but in no event beyond the expiration of
 the stated terms of such Stock Options or Stock Appreciation Rights.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (iv)         Termination
 for Cause. If a Participant’s Termination: (1) is for Cause or (2)
 is a voluntary Termination (as provided in sub-section (iii) above) after the
 occurrence of an event that would be grounds for a Termination for Cause, all
 Stock Options or Stock Appreciation Rights, whether vested or not vested,
 that are held by such Participant shall thereupon terminate and expire as of
 the date of such Termination.

 
	
  

 	
  

 	
  

 
	
  

 	
  

 	
           (v)         Unvested
 Stock Options and Stock Appreciation Rights. Stock Options or
 Stock Appreciation Rights that are not vested as of the date of a
 Participant’s Termination for any reason shall terminate and expire as of the
 date of such Termination.

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 Rules Applicable to Restricted Stock,
 Performance Shares, Other Stock-Based Awards and Performance-Based Cash
 Awards. Unless otherwise determined by the Committee
 at grant or thereafter, upon a Participant’s Termination for any reason:
 (i) during the relevant Restriction Period, all Restricted Stock still
 subject to restriction shall be forfeited; and (ii) any unvested
 Performance Shares, Other Stock-Based Awards or Performance-Based Cash Awards
 shall be forfeited

 

ARTICLE XIII

CHANGE IN CONTROL PROVISIONS

          13.1        Benefits.
In the event of a Change in Control of the Company, and except as otherwise
provided by the Committee in an Award agreement or in a written employment
agreement between the Company and a Participant, a Participant’s unvested Award
shall not vest 

30

and a
Participant’s Award shall be treated in accordance with one of the following
methods as determined by the Committee in its sole discretion:

	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 Awards,
 whether or not then vested, shall be continued, assumed, have new rights
 substituted therefor or be treated in accordance with Section 4.2(d) hereof,
 as determined by the Committee in its sole discretion, and restrictions to
 which any shares of Restricted Stock or any other Award granted prior to the
 Change in Control are subject shall not lapse upon a Change in Control and
 the Restricted Stock or other Award shall, where appropriate in the sole
 discretion of the Committee, receive the same distribution as other Common
 Stock on such terms as determined by the Committee; provided that, the
 Committee may, in its sole discretion, decide to award additional Restricted
 Stock or other Award in lieu of any cash distribution. Notwithstanding
 anything to the contrary herein, for purposes of Incentive Stock Options, any
 assumed or substituted Stock Option shall comply with the requirements of
 Treasury Regulation § 1.424-1 (and any amendments thereto) and for purposes
 of any Non-Qualified Stock Options and Stock Appreciations Rights, any
 assumed or substituted Non-Qualified Stock Option or Stock Appreciation Right
 shall comply with the requirements of Section 409A of the Code and the
 regulations and guidance issued thereunder.

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 The
 Committee, in its sole discretion, may provide for the purchase of any Awards
 by the Company or an Affiliate for an amount of cash equal to the excess of
 the Change in Control Price (as defined below) of the shares of Common Stock
 covered by such Awards, over the aggregate exercise price of such Awards. For
 purposes of this Section 13.1, “Change in Control Price” shall mean the
 highest price per share of Common Stock paid in any transaction related to a
 Change in Control of the Company.

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 The
 Committee may, in its sole discretion, provide for the cancellation of any
 Awards without payment, if the Change in Control Price is less than the Fair
 Market Value of such Award on the date of grant.

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 Notwithstanding
 anything else herein, the Committee may, in its sole discretion, provide for
 accelerated vesting or lapse of restrictions, of an Award at the time of
 grant or at any time thereafter.

 

          13.2        Change
in Control. Unless otherwise determined by the
Committee in the applicable Award agreement (or other written agreement
approved by the Committee including, without limitation, an employment
agreement), a “Change in Control” shall be deemed to occur following any
transaction if: (a) any “person” as such term is used in Sections 13(d) and
14(d) of the Exchange Act (other than the Company, any trustee or other
fiduciary holding securities under any employee benefit plan of the Company, or
any company owned, directly or indirectly, by the stockholders of the Company
in substantially the same proportions as their ownership of Common Stock of the
Company), becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of 50% or more of the combined voting power of 

31

the then
outstanding securities of the Company (or its successor corporation); provided,
however, that a merger or consolidation effected solely to implement a recapitalization
of the Company shall not constitute a Change in Control of the Company; or (b)
the stockholders of the Company approve a plan of complete liquidation of the
Company; provided, that this subsection (b) shall not constitute a
Change in Control with respect to the amount of any payment pursuant to an
Award under this Plan, or any portion thereof, that is triggered upon a Change
in Control and that is intended to constitute “non-qualified deferred
compensation” pursuant to Section 409A of the Code; or (c) the consummation of
the sale or disposition by the Company of all or substantially all of the
Company’s assets other than (i) the sale or disposition of all or substantially
all of the assets of the Company to a person or persons who beneficially own, directly
or indirectly, at least 50% or more of the combined voting power of the
outstanding voting securities of the Company at the time of the sale or (ii)
pursuant to a spinoff type transaction, directly or indirectly, of such assets
to the stockholders of the Company.

ARTICLE XIV

TERMINATION OR AMENDMENT OF PLAN

          14.1        Termination
or Amendment. Notwithstanding any other provision
of this Plan, the Board or the Committee may at any time, and from time to
time, amend, in whole or in part, any or all of the provisions of this Plan
(including any amendment deemed necessary to ensure that the Company may comply
with any regulatory requirement referred to in Article XVI), or suspend or
terminate it entirely, retroactively or otherwise; provided, however, that,
unless otherwise required by law or specifically provided herein, the rights of
a Participant with respect to Awards granted prior to such amendment,
suspension or termination, may not be impaired without the consent of such
Participant and, provided further, without the approval of the stockholders of
the Company in accordance with the laws of the State of Delaware, to the extent
required by the applicable provisions of Rule 16b-3 or Section 162(m) of the
Code, pursuant to the requirements of NASD Rule 4350(i)(1)(A) or such other
applicable stock exchange rule, or, to the extent applicable to Incentive Stock
Options, Section 422 of the Code, no amendment may be made which would:

	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 increase the
 aggregate number of shares of Common Stock that may be issued under this Plan
 pursuant to Section 4.1 (except by operation of Section 4.2); 

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 increase the
 maximum individual Participant limitations for a fiscal year under Section
 4.1(b) (except by operation of Section 4.2); 

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 change the
 classification of Eligible Employees or Consultants eligible to receive
 Awards under this Plan; 

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 decrease the
 minimum option price of any Stock Option or Stock Appreciation Right; 

 
	
  

 	
  

 	
  

 
	
  

 	
 (e)

 	
 extend the
 maximum option period under Section 6.3; 

 

32

	
  

 	
  

 	
  

 
	
  

 	
 (f)

 	
 alter the
 Performance Goals for the Award of Restricted Stock, Performance Shares or
 Other Stock-Based Awards subject to satisfaction of Performance Goals as set
 forth in Exhibit A;

 
	
  

 	
  

 	
  

 
	
  

 	
 (g)

 	
 other than
 adjustments or substitutions in accordance with Section 4.2, amend the
 terms of outstanding Awards to reduce the exercise price of outstanding Stock
 Options or Stock Appreciation Rights or to cancel outstanding Stock Options
 or Stock Appreciation Rights in exchange for cash, other Awards or Stock
 Options or Stock Appreciation Rights with an exercise price that is less than
 the exercise price of the original Stock Options or Stock Appreciation
 Rights;

 
	
  

 	
  

 	
  

 
	
  

 	
 (h)

 	
 award any
 Stock Option or Stock Appreciation Right in replacement of a canceled Stock
 Option or Stock Appreciation Right with a higher exercise price, except in
 accordance with Section 6.3(g); or

 
	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 require
 stockholder approval in order for this Plan to continue to comply with the
 applicable provisions of Section 162(m) of the Code or, to the extent
 applicable to Incentive Stock Options, Section 422 of the Code. In no event
 may this Plan be amended without the approval of the stockholders of the
 Company in accordance with the applicable laws of the State of Delaware to
 increase the aggregate number of shares of Common Stock that may be issued
 under this Plan, decrease the minimum exercise price of any Stock Option or
 Stock Appreciation Right, or to make any other amendment that would require
 stockholder approval under NASD Rule 4350(i)(1)(A) or other such rules of any
 exchange or system on which the Company’s securities are listed or traded at
 the request of the Company.

 

          The
Committee may amend the terms of any Award theretofore granted, prospectively
or retroactively, but, subject to Article IV above or as otherwise specifically
provided herein, no such amendment or other action by the Committee shall
impair the rights of any holder without the holder’s consent.

ARTICLE XV

UNFUNDED PLAN

          15.1        Unfunded
Status of Plan. This Plan is an “unfunded” plan
for incentive and deferred compensation. With respect to any payments as to
which a Participant has a fixed and vested interest but that are not yet made
to a Participant by the Company, nothing contained herein shall give any such
Participant any rights that are greater than those of a general unsecured
creditor of the Company.

33

ARTICLE XVI

GENERAL PROVISIONS

          16.1        Legend.
The Committee may require each person receiving shares of Common Stock pursuant
to a Stock Option or other Award under the Plan to represent to and agree with
the Company in writing that the Participant is acquiring the shares without a
view to distribution thereof. In addition to any legend required by this Plan,
the certificates for such shares may include any legend that the Committee, in
its sole discretion, deems appropriate to reflect any restrictions on Transfer.

          All
certificates for shares of Common Stock delivered under the Plan shall be
subject to such stop transfer orders and other restrictions as the Committee
may, in its sole discretion, deem advisable under the rules, regulations and
other requirements of the Securities and Exchange Commission, The Nasdaq Stock
Market or any national securities exchange system upon whose system the Common
Stock is then quoted, any applicable Federal or state securities law, and any
applicable corporate law, and the Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such
restrictions.

          16.2        Other
Plans. Nothing contained in this Plan shall
prevent the Board from adopting other or additional compensation arrangements,
subject to stockholder approval if such approval is required; and such arrangements
may be either generally applicable or applicable only in specific cases.

          16.3        No
Right to Employment/Directorship/Consultancy.
Neither this Plan nor the grant of any Option or other Award hereunder shall
give any Participant or other employee, Consultant or Non-Employee Director any
right with respect to continuance of employment, consultancy or directorship by
the Company or any Affiliate, nor shall they be a limitation in any way on the
right of the Company or any Affiliate by which an employee is employed or a
Consultant or Non-Employee Director is retained to terminate his or her
employment, consultancy or directorship at any time.

          16.4        Withholding
of Taxes. The Company shall have the right to
deduct from any payment to be made pursuant to this Plan, or to otherwise
require, prior to the issuance or delivery of any shares of Common Stock or the
payment of any cash hereunder, payment by the Participant of, any Federal,
state or local taxes required by law to be withheld. Upon the vesting of
Restricted Stock (or other Award that is taxable upon vesting), or upon making
an election under Section 83(b) of the Code, a Participant shall pay all
required withholding to the Company. Any statutorily required withholding obligation
with regard to any Participant may be satisfied, subject to the advance consent
of the Committee, by reducing the number of shares of Common Stock otherwise
deliverable or by delivering shares of Common Stock already owned. Any fraction
of a share of Common Stock required to satisfy such tax obligations shall be
disregarded and the amount due shall be paid instead in cash by the
Participant. 

          16.5        No
Assignment of Benefits. No Award or other benefit
payable under this Plan shall, except as otherwise specifically provided by law
or permitted by the Committee, be Transferable in any manner, and any attempt
to Transfer any such benefit shall be void, and any 

34

such benefit shall not in any manner be liable for or
subject to the debts, contracts, liabilities, engagements or torts of any
person who shall be entitled to such benefit, nor shall it be subject to
attachment or legal process for or against such person.

          16.6        Listing
and Other Conditions.

	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 Unless
 otherwise determined by the Committee, as long as the Common Stock is listed
 on a national securities exchange or system sponsored by a national
 securities association, the issue of any shares of Common Stock pursuant to
 an Award shall be conditioned upon such shares being listed on such exchange
 or system. The Company shall have no obligation to issue such shares unless
 and until such shares are so listed, and the right to exercise any Option or
 other Award with respect to such shares shall be suspended until such listing
 has been effected.

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 If at any
 time counsel to the Company shall be of the opinion that any sale or delivery
 of shares of Common Stock pursuant to an Option or other Award is or may in
 the circumstances be unlawful or result in the imposition of excise taxes on
 the Company under the statutes, rules or regulations of any applicable
 jurisdiction, the Company shall have no obligation to make such sale or
 delivery, or to make any application or to effect or to maintain any
 qualification or registration under the Securities Act or otherwise, with
 respect to shares of Common Stock or Awards, and the right to exercise any
 Option or other Award shall be suspended until, in the opinion of said
 counsel, such sale or delivery shall be lawful or will not result in the
 imposition of excise taxes on the Company.

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 Upon
 termination of any period of suspension under this Section 16.6, any Award
 affected by such suspension which shall not then have expired or terminated
 shall be reinstated as to all shares available before such suspension and as
 to shares which would otherwise have become available during the period of
 such suspension, but no such suspension shall extend the term of any Award.

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 A
 Participant shall be required to supply the Company with any certificates,
 representations and information that the Company requests and otherwise
 cooperate with the Company in obtaining any listing, registration,
 qualification, exemption, consent or approval the Company deems necessary or
 appropriate.

 

          16.7        Governing
Law. This Plan and actions taken in connection
herewith shall be governed and construed in accordance with the laws of the
State of Delaware (regardless of the law that might otherwise govern under
applicable Delaware principles of conflict of laws).

          16.8        Construction.
Wherever any words are used in this Plan in the masculine gender they shall be
construed as though they were also used in the feminine gender in all cases
where they would so apply, and wherever any words are used herein in the
singular form they shall be

35

construed  as though they
were also used in the plural form in all cases where they would so apply.

          16.9          Other
Benefits. No Award granted or paid out under this
Plan shall be deemed compensation for purposes of computing benefits under any
retirement plan of the Company or its Affiliates nor affect any benefits under
any other benefit plan now or subsequently in effect under which the
availability or amount of benefits is related to the level of compensation.

          16.10        Costs.
The Company shall bear all expenses associated with administering this Plan,
including expenses of issuing Common Stock pursuant to any Awards hereunder.

          16.11        No
Right to Same Benefits. The provisions of Awards
need not be the same with respect to each Participant, and such Awards to
individual Participants need not be the same in subsequent years.

          16.12        Death/Disability.
The Committee may in its sole discretion require the transferee of a
Participant to supply it with written notice of the Participant’s death or
Disability and to supply it with a copy of the will (in the case of the
Participant’s death) or such other evidence as the Committee deems necessary to
establish the validity of the transfer of an Award. The Committee may, in its
discretion, also require the agreement of the transferee to be bound by all of
the terms and conditions of the Plan.

          16.13        Section
16(b) of the Exchange Act. All elections and
transactions under this Plan by persons subject to Section 16 of the Exchange
Act involving shares of Common Stock are intended to comply with any applicable
exemptive condition under Rule 16b-3. The Committee may, in its sole discretion,
establish and adopt written administrative guidelines, designed to facilitate
compliance with Section 16(b) of the Exchange Act, as it may deem necessary or
proper for the administration and operation of this Plan and the transaction of
business thereunder.

          16.14        Section
409A of the Code. Although the Company does not
guarantee the particular tax treatment of an Award granted under this Plan,
Awards made under this Plan are intended to comply with, or be exempt from, the
applicable requirements of Section 409A of the Code and this Plan and any Award
agreement hereunder shall be limited, construed and interpreted in accordance
with such intent. In no event whatsoever shall the Company or any of its
Affiliates be liable for any additional tax, interest or penalties that may be
imposed on a Participant by Section 409A of the Code or any damages for failing
to comply with Section 409A of the Code.

          16.15        Successor
and Assigns. The Plan shall be binding on all
successors and permitted assigns of a Participant, including, without
limitation, the estate of such Participant and the executor, administrator or
trustee of such estate.

          16.16        Severability
of Provisions. If any provision of the Plan shall
be held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof, and the Plan shall be construed and
enforced as if such provisions had not been included.

36

          16.17        Payments
to Minors, Etc. Any benefit payable to or for the
benefit of a minor, an incompetent person or other person incapable of receipt
thereof shall be deemed paid when paid to such person’s guardian or to the
party providing or reasonably appearing to provide for the care of such person,
and such payment shall fully discharge the Committee, the Board, the Company,
its Affiliates and their employees, agents and representatives with respect
thereto. 

          16.18        Headings
and Captions. The headings and captions herein are
provided for reference and convenience only, shall not be considered part of
the Plan, and shall not be employed in the construction of the Plan.

ARTICLE XVII

EFFECTIVE DATE OF PLAN

          The
Initial Plan was originally adopted by the Board in its resolution adopting the
Initial Plan on March 10, 2006 and was thereafter approved by the stockholders
of the Company in 2006. The Board subsequently approved this amendment and
restatement of the Initial Plan in the form set forth herein (the “Amended and
Restated Plan”) subject to, and to be effective upon, the approval of the
stockholders of the Company in accordance with the requirements of the laws of
the State of Delaware at the Company’s 2009 annual stockholders’ meeting to be
held on May 22, 2009 (the “Restatement Date”). If the Amended and Restated Plan
is not so approved by the stockholders, all provisions of the Initial Plan
shall remain effective.

ARTICLE XVIII

TERM OF PLAN

          No
Award shall be granted pursuant to this Plan on or after the tenth anniversary
of the earlier of the date the Plan is adopted by the Board and the Effective
Date, but Awards granted prior to such tenth anniversary may extend beyond that
date; provided that no Award (other than a Stock Option or Stock Appreciation
Right) that is intended to be “performance-based” under Section 162(m) of
the Code shall be granted on or after the fifth anniversary of the stockholder
approval of the Plan unless the Performance Goals set forth on Exhibit A are
reapproved (or other designated performance goals are approved) by the
stockholders no later than the first stockholder meeting that occurs in the
fifth year following the year in which stockholders approve the Performance
Goals set forth on Exhibit A.

ARTICLE XIX

NAME OF PLAN

          This
Plan shall be known as “The Steven Madden, Ltd. 2006 Stock Incentive Plan.”

37

EXHIBIT A

PERFORMANCE GOALS

	
  

 	
  

 
	
 1.

 	
 Performance
 goals established for purposes of the grant or vesting of Awards of
 Restricted Stock, Other Stock-Based Awards, Performance Shares and/or
 Performance-Based Cash Awards, each intended to be “performance-based” under
 Section 162(m) of the Code, shall be based on the attainment of certain
 target levels of, or a specified increase or decrease (as applicable) in one
 or more of the following performance goals (“Performance Goals”): 

 

	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 earnings per
 share;

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 operating
 income;

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 net income;

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 cash flow;

 
	
  

 	
  

 	
  

 
	
  

 	
 (e)

 	
 gross
 profit;

 
	
  

 	
  

 	
  

 
	
  

 	
 (f)

 	
 gross profit
 return on investment;

 
	
  

 	
  

 	
  

 
	
  

 	
 (g)

 	
 gross margin
 return on investment;

 
	
  

 	
  

 	
  

 
	
  

 	
 (h)

 	
 gross
 margin;

 
	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 working
 capital;

 
	
  

 	
  

 	
  

 
	
  

 	
 (j)

 	
 earnings
 before interest and taxes;

 
	
  

 	
  

 	
  

 
	
  

 	
 (k)

 	
 earnings
 before interest, tax, depreciation and amortization;

 
	
  

 	
  

 	
  

 
	
  

 	
 (l)

 	
 return on
 equity;

 
	
  

 	
  

 	
  

 
	
  

 	
 (m)

 	
 return on
 assets;

 
	
  

 	
  

 	
  

 
	
  

 	
 (n)

 	
 return on
 capital;

 
	
  

 	
  

 	
  

 
	
  

 	
 (o)

 	
 revenue
 growth;

 
	
  

 	
  

 	
  

 
	
  

 	
 (p)

 	
 total
 shareholder return; 

 
	
  

 	
  

 	
  

 
	
  

 	
 (q)

 	
 economic
 value added;

 
	
  

 	
  

 	
  

 
	
  

 	
 (r)

 	
 specified
 objectives with regard to limiting the level of increase in all or a portion
 of the Company’s bank debt or other long-term or short-term public or private
 debt or other similar financial obligations of the 

 

A

	
  

 	
  

 	
  

 
	
  

 	
  

 	
 Company,
 which may be calculated net of cash balances and/or other offsets and
 adjustments as may be established by the Committee in its sole discretion;

 
	
  

 	
  

 	
  

 
	
  

 	
 (s)

 	
 the fair market
 value of the shares of the Company’s Common Stock;

 
	
  

 	
  

 	
  

 
	
  

 	
 (t)

 	
 the growth
 in the value of an investment in the Company’s Common Stock assuming the
 reinvestment of dividends; 

 
	
  

 	
  

 	
  

 
	
  

 	
 (u)

 	
 reduction in
 expenses; 

 
	
  

 	
  

 	
  

 
	
  

 	
 (v)

 	
 customer
 satisfaction;

 
	
  

 	
  

 	
  

 
	
  

 	
 (w)

 	
 customer
 loyalty;

 
	
  

 	
  

 	
  

 
	
  

 	
 (x)

 	
 style
 indexes;

 
	
  

 	
  

 	
  

 
	
  

 	
 (y)

 	
 number of
 new patents;

 
	
  

 	
  

 	
  

 
	
  

 	
 (z)

 	
 employee
 retention;

 
	
  

 	
  

 	
  

 
	
  

 	
 (aa)

 	
 market
 share;

 
	
  

 	
  

 	
  

 
	
  

 	
 (bb)

 	
 market
 segment share;

 
	
  

 	
  

 	
  

 
	
  

 	
 (cc)

 	
 product
 release schedules;

 
	
  

 	
  

 	
  

 
	
  

 	
 (dd)

 	
 new product
 innovation;

 
	
  

 	
  

 	
  

 
	
  

 	
 (ee)

 	
 new product
 introduction;

 
	
  

 	
  

 	
  

 
	
  

 	
 (ff)

 	
 product cost
 reduction through advanced technology;

 
	
  

 	
  

 	
  

 
	
  

 	
 (gg)

 	
 brand
 recognition and/or acceptance; or 

 
	
  

 	
  

 	
  

 
	
  

 	
 (hh)

 	
 ship
 targets.

 

	
  

 	
  

 
	
 2.

 	
 To the
 extent permitted under Section 162(m) of the Code, the Committee may, in its
 sole discretion, also exclude, or adjust to reflect, the impact of an event
 or occurrence which the Committee determines should be appropriately excluded
 or adjusted, including: 

 

	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 restructurings,
 discontinued operations, extraordinary items or events, and other unusual or
 non-recurring charges as described in Accounting Principles Board Opinion No.
 30 and/or management’s discussion and analysis of financial condition and
 results of operations appearing or incorporated by reference in the Company’s
 Form 10-K for the applicable year; 

 

B

	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 an event
 either not directly related to the operations of the Company or not within
 the reasonable control of the Company’s management; or 

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 a change in
 tax law or accounting standards required by generally accepted accounting
 principles. 

 

	
  

 	
  

 
	
 3.

 	
 Performance
 goals may also be based upon individual Participant performance goals, as
 determined by the Committee, in its sole discretion.

 
	
  

 	
  

 
	
 4.

 	
 In addition,
 such Performance Goals may be based upon the attainment of specified levels
 of Company (or subsidiary, division, other operational unit or administrative
 department of the Company) performance under one or more of the measures
 described above relative to the performance of other corporations. To the extent
 permitted under Section 162(m) of the Code, but only to the extent
 permitted under Section 162(m) of the Code (including, without
 limitation, compliance with any requirements for stockholder approval), the
 Committee may: 

 

	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 designate
 additional business criteria on which the performance goals may be based; or 

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 adjust,
 modify or amend the aforementioned business criteria.

 

Cprc_8k-ex1001.htm

    
      EXHIBIT
10.1

    

    EMPLOYMENT
AGREEMENT

     

    THIS EMPLOYMENT AGREEMENT
(“Agreement”)
is entered into on May 22, 2009 (“Effective
Date”) by and between Petro Resources Corporation, a Delaware corporation
(“Company”),
and Gary C. Evans (“Executive”).

     

    R
E C I T A L

     

    Company
is desirous of employing Executive in an executive capacity on the terms and
conditions and for the consideration, hereinafter set forth and Executive is
desirous of being employed by Company on such terms and conditions and for such
consideration.

     

    A
G R E E M E N T

     

    It is
agreed as follows:

     

    ARTICLE
I

     

    DEFINITIONS AND
INTERPRETATIONS

     

    1.1  Definitions.

     

    (a)  “Annual Base Salary” shall
mean Executive’s annual base salary as of the date of his Involuntary
Termination, determined pursuant to Section 4.1. 

     

    (b)  “Board” shall mean the board
of directors of Company.

     

    (c)  “Business Territories” shall
mean all field locations in which the Company has activities directly related to
the exploration or production and sale of oil and gas, including but not limited
to, any location as to which the Company has devoted any significant efforts for
production, analysis, joint venture consideration or interest even if efforts
for the actual exploration or production of oil and gas have not yet
commenced.

     

    (d)  “Cause” shall mean Executive
(i) has engaged in gross negligence, gross incompetence, or willful misconduct
in the performance of his duties at the Company, (ii) has refused, without
proper reason, to perform his duties, (iii) has materially breached any
provision of this Agreement, (iv) has willfully and materially breached a
significant corporate policy or code of conduct established by Company, (v) has
willfully engaged in conduct that is materially injurious to Company or its
subsidiaries (monetarily or otherwise), (vi) has committed an act of fraud,
embezzlement, or breach of a fiduciary duty to Company or an affiliate of
Company (including the unauthorized disclosure of material confidential or
proprietary information of the Company or an affiliate), (vii) has been
convicted of (or pleaded no contest to) a criminal act involving fraud,
dishonesty, or moral turpitude or any felony, or (viii) has been convicted for
any violation of U.S. or foreign securities laws or has entered into a cease and
desist order with the Securities and Exchange Commission alleging violation of
U.S. or foreign securities laws.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (e)  “Change of Control” shall mean
a “Change in Control,” as defined under the Incentive Plan as in effect on the
Effective Date.

     

    (f)  “Change of Control Period”
shall mean, with respect to a Change of Control, the one-year period beginning
on the date upon which such Change of Control occurs.

     

    (g)  “Code” shall mean the Internal
Revenue Code of 1986, as amended.

     

    (h)  “Compensation Committee” shall
mean the Compensation and Nominating Committee of the Board.

     

    (i)  “Disability” shall mean that,
as a result of Executive’s incapacity due to physical or mental illness,
Executive shall have been absent from the full-time performance of his duties
for six consecutive months and shall not have returned to full-time performance
of his duties within 30 days after written notice of termination is given to
Executive by Company (provided, however, that such notice may not be given prior
to 30 days before the expiration of such six-month period).

     

    (j)  “Good Reason” shall mean the
occurrence of any one or more of the following:

     

    (i)  a
diminution in Executive’s Annual Base Salary not in accordance with Section
4.1;

     

    (ii)  a
material diminution in Executive’s authority, duties, or responsibilities from
those applicable to him as of the Effective Date, including a material change in
the reporting structure so that Executive reports to someone other than the
Board;

     

    (iii)  a
material change in the geographic location at which Executive must perform
services, which for purposes of this Agreement includes only Company requiring
Executive to involuntarily relocate to a geographic location other than the
Dallas/Ft. Worth, Texas metroplex area or 10 miles from Houston, Texas;
or

     

    (iv)  a
material breach by Company of any provision of this Agreement (including,
without limitation, the requirements of paragraphs 2.2, 4.2, or 4.3 of this
Agreement).

     

    Notwithstanding
the foregoing provisions of this Section 1.1(j) or any other provision in this
Agreement to the contrary, any assertion by Executive of a termination of
employment for “Good Reason” shall not be effective unless all of the following
conditions are satisfied: (1) any condition described in clauses (i) through
(iv)  of this Section 1.1(j) giving rise to Executive’s termination of
employment must have arisen without Executive’s consent; (2) Executive must
provide written notice to Company of such condition in accordance with Section
9.3 within 30 days of the initial existence of the condition; (3) the condition
specified in such notice must remain uncorrected for a period of 30 days
following receipt of such notice by Company; and (4) the date of Executive’s
termination of employment must occur within one year following the initial
existence of the condition specified in such notice.

     

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    (k)  “Incentive Plan” shall mean
the Petro Resources 2006 Stock Incentive Plan.

     

    (l)  “Involuntary Termination”
shall mean any termination of Executive’s employment with Company
which:

     

    (i)  does
not result from a resignation by Executive (other than a resignation pursuant to
clause (ii) of this Section 1.1(l)); or

     

    (ii)  results
from a resignation by Executive for Good Reason;

     

    provided,
however, the term “Involuntary Termination” shall not include a termination for
Cause or any termination as a result of death or Disability.

     

    (m)  “Payment Date” shall mean the
later of (i) the date that is 30 days after Executive’s termination of
employment with Company or (ii) the date upon which the Release described in
Section 5.6 becomes irrevocable by Executive.

     

    1.2  Interpretations.  In
this Agreement, unless a clear contrary intention appears, (a) the words
“herein,” “hereof,” “hereunder,” and other words of similar import refer to this
Agreement as a whole and not to any particular Article, Section, or other
subdivision, (b) reference to any Article or Section means such Article or
Section hereof, (c) the word “including” (and with correlative meaning,
“include”) means including, without limiting the generality of any description
preceding such term, and (d) where any provision of this Agreement refers to
action to be taken by either party, or which such party is prohibited from
taking, such provision shall be applicable whether such action is taken directly
or indirectly by such party.

     

    ARTICLE
II

     

    EMPLOYMENT AND
DUTIES

     

    2.1  Employment.  Effective
as of the Effective Date and continuing for the period of time set forth in
Section 3.1 of this Agreement, Executive’s employment by Company shall be
subject to the terms and conditions of this Agreement.

     

    2.2  Positions.  From and
after the Effective Date, Company shall employ Executive in the position of
Chairman of the Board of the Company or in such other position or positions as
the parties mutually may agree.  Executive shall accept the additional
title of Chief Executive officer of the Company on or before December 31, 2009
and shall then be employed in that position from and after such
date.

     

     

    
      
        
        

      

      
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    2.3  Duties and
Services.  Executive agrees to serve in the positions referred
to in Section 2.2 and to perform diligently and to the best of his abilities the
duties and services appertaining to such offices, as well as such additional
duties and services appropriate to such offices which the parties mutually may
agree upon from time to time.  Subject to the resignation of Mr. Wayne
P. Hall as Chief Executive Officer of the Company, and there being no other
person holding such title, Executive in his capacity as Chairman of the Board of
the Company shall have all of the authorities, duties and obligations of the
Chief Executive Officer of the Company as provided under Section 6.4 of the
Amended and Restated Bylaws of the Company, as amended. Executive also agrees to
serve, if elected, as an officer or director of any wholly-owned subsidiary or
affiliate of Company so long as such service is commensurate with Executive’s
duties and responsibilities to Company.  Executive’s employment shall
also be subject to the policies maintained and established by Company that are
of general applicability to Company’s executive employees, as such policies may
be amended from time to time.

     

    2.4  Other Interests.  Executive agrees,
during the period of his employment by Company, to devote substantially all of
his business time, energy, and best efforts to the business and affairs of
Company and its affiliates and not to engage, directly or indirectly, in any
other business or businesses, whether or not similar to that of Company, except
as herein permitted or with the consent of the Board.  The foregoing
notwithstanding, the parties recognize and agree that Executive may (i) engage
in passive personal investment and charitable activities and serve on corporate
boards of directors that, in any case, do not conflict with the business and
affairs of Company or interfere with Executive’s performance of his duties
hereunder, which shall be at the sole determination of the Board; (ii) for a
period terminating on December 31, 2009, serve as Chief Executive Officer of
Greenhunter Energy Inc., provided that such service does not interfere with
Executive’s duties and responsibilities under this Agreement, and (iii) while
serving as Chief Executive Officer of Greenhunter Energy Inc., and for a period
that in no event shall extend past December 31, 2009, devote only a majority of
his business time, energy, and best efforts to the business and affairs of
Company and its affiliates.  The Company acknowledges that Executive
has disclosed to the Company Executive’s membership on the board of directors of
Novavax, Inc., Tel Offshore Trust and Global Hunter Securities, Inc. and
Executive’s executive position with and equity interest in Gruy Petroleum
Management Co. LLC.  The Company’s acknowledgement of the foregoing
outside activities shall not  relieve Executive of his obligation to
ensure that such activities do not conflict with the business and affairs of
Company or interfere with Executive’s performance of his duties
hereunder

     

    2.5  Duty of
Loyalty.  Executive acknowledges and agrees that Executive owes
a fiduciary duty of loyalty to act at all times in the best interests of
Company.  In keeping with such duty, Executive shall make full
disclosure to Company of all business opportunities pertaining to Company’s
business and shall not appropriate for Executive’s own benefit, or appropriate
for the benefit of any third party, business opportunities concerning Company’s
business.

     

    2.6  Place of
Employment.  Executive’s place of employment hereunder shall be
at Company’s executive offices in the greater Houston, Texas metropolitan area
and at Executive’s personal office located in the Dallas/Ft. Worth, Texas
metroplex area.

     

     

    
      
        
        

      

      
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    ARTICLE
III

     

    TERM AND TERMINATION OF
EMPLOYMENT

     

    3.1  Term.  Unless sooner
terminated pursuant to other provisions hereof, Company agrees to employ
Executive for the period beginning on the Effective Date and ending on the third
anniversary of the Effective Date.

     

    3.2  Company’s Right to
Terminate.  Notwithstanding the provisions of Section 3.1,
Company shall have the right to terminate Executive’s employment under this
Agreement at any time for any of the following reasons:

     

    (a)  upon
Executive’s death;

     

    (b)  upon
Executive’s Disability;

     

    (c)   for
Cause; or

     

    (d)   at
any time, for any other reason whatsoever, in the sole discretion of the
Board.

     

    3.3  Executive’s Right to
Terminate.  Notwithstanding the provisions of Section 3.1,
Executive shall have the right to terminate his employment under this Agreement
for any of the following reasons:

     

    (a)  for
Good Reason; or

     

    (b)  at
any time for any other reason whatsoever, in the sole discretion of
Executive.

     

    3.4  Notice of
Termination.  If Company desires to terminate Executive’s
employment hereunder at any time prior to expiration of the term of employment
as provided in Section 3.1, it shall do so by giving a 30-day written notice to
Executive that it has elected to terminate Executive’s employment hereunder and
stating the effective date and reason for such termination, provided that no
such action shall alter or amend any other provisions hereof or rights arising
hereunder.  If Executive desires to terminate his employment hereunder
at any time prior to expiration of the term of employment as provided in Section
3.1, he shall do so by giving a 30-day written notice to Company that he has
elected to terminate his employment hereunder and stating the effective date and
reason for such termination, provided that no such action shall alter or amend
any other provisions hereof or rights arising hereunder.

     

    3.5  Deemed
Resignations.  Unless otherwise agreed to in writing by Company
and Executive prior to the termination of Executive’s employment, any
termination of Executive’s employment shall constitute an automatic resignation
of Executive as an officer of Company and each affiliate of Company and an
automatic resignation of Executive from the Board (if applicable) and from the
board of directors or similar governing body of any affiliate of Company and
from the board of directors or similar governing body of any corporation,
limited liability entity, or other entity in which Company or any affiliate
holds an equity interest and with respect to which board or similar governing
body Executive serves as Company’s or such affiliate’s designee or other
representative.

     

     

    
      
        
        

      

      
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    3.6  Meaning of Termination of
Employment.  For all purposes of this Agreement, Executive
shall be considered to have terminated employment with Company when Executive
incurs a “separation from service” with Company within the meaning of Section
409A(a)(2)(A)(i) of the Code and applicable administrative guidance issued
thereunder.

     

    ARTICLE
IV

     

    COMPENSATION AND
BENEFITS

     

    4.1           Base Salary.  During
the period of this Agreement, Executive shall receive a minimum base salary of
$254,000 per annum during the first full year of employment, $274,000 per annum
during the second full year of employment, and $294,000 per annum during the
third full year of employment.  Executive’s base salary shall be
reviewed by the Compensation Committee on an annual basis, and, in the sole
discretion of the Compensation Committee, such base salary may be increased, but
not decreased (except with the prior written consent of Executive), effective as
of any date determined by the Compensation Committee.  Executive’s
base salary shall be paid in equal installments in accordance with Company’s
standard policy regarding payment of compensation to executives but no less
frequently than monthly.

     

    4.2  Stock
Compensation.  Executive shall receive a grant of 2,750,000
shares of common stock of the Company pursuant to the terms and subject to the
conditions of a Restricted Stock Agreement of even date herewith between
Executive and Company.

     

    4.3  Option
Compensation.  Executive shall receive a grant of 2,750,000
non-statutory stock options, at an exercise equal to the volume weighted average
price of the Company’s common stock on the Effective Date, pursuant to the terms
and subject to the conditions of a Stock Option Agreement of even date herewith
between Executive and Company.

     

    4.4  Bonuses and Long-Term
Incentive.

     

    (a)  Annual
Bonus.  Executive shall be eligible for an annual bonus of up
to 100% of Executive’s Base Salary based on performance criteria set by the
Compensation Committee and to otherwise participate in Company’s annual bonus
plan or plans applicable to Executive, all as approved from time to time by the
Compensation Committee in amounts to be determined by the Compensation Committee
based upon criteria established by the Compensation Committee.

     

    (b)  Long-Term Incentive
Plan.  Subject to the sole discretion of the Compensation
Committee, Executive shall also be eligible for participation in the Incentive
Plan or such other long-term incentive arrangement of Company as may from time
to time be made available to other executive officers of Company.  Any
awards made under the Incentive Plan or such other arrangements shall be
governed by Section 5.9 herein.

     

     

    
      
        
        

      

      
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    4.5  Other
Perquisites.  During his employment hereunder, Executive shall
be afforded the following benefits as incidences of his employment:

     

    (a)  Business and Entertainment
Expenses - Subject to Company’s standard policies and procedures with
respect to expense reimbursement as applied to its executive employees
generally, Company shall reimburse Executive for, or pay on behalf of Executive,
reasonable and appropriate expenses incurred by Executive for business-related
purposes, including dues and fees to industry and professional organizations and
costs of entertainment and business development.

     

    (b)  Vacation - During his
employment hereunder, Executive shall be entitled to 4 weeks of paid vacation
each calendar year (or a pro rata portion of such four-week vacation period for
any partial year) and to all holidays provided to executives of Company
generally.

     

    (c)  Other Company Benefits -
Executive and, to the extent applicable, Executive’s spouse, dependents, and
beneficiaries, shall be allowed to participate in all benefits, plans, and
programs, including improvements or modifications of the same, which are now, or
may hereafter be, available to other executive employees of
Company.  Such benefits, plans, and programs shall include, without
limitation, any profit sharing plan, thrift plan, health insurance or health
care plan, life insurance, disability insurance, pension plan, supplemental
retirement plan, vacation and sick leave plan, and the like which may be
maintained by Company. Company shall not, however, by reason of this paragraph
be obligated to institute, maintain, or refrain from changing, amending, or
discontinuing, any such benefit plan or program, so long as such changes are
similarly applicable to executive employees generally.

     

    4.6  Board
Representation.  During the term of this Agreement and provided
that Executive remains an executive officer of the Company, (a) Executive shall
be permitted to serve on the Board, and (b) Executive shall be permitted to
nominate to serve on the Board one person (“Executive
Nominee”) who qualifies as an independent director under Rule 803A(2) of
the NYSE Amex Company Guide and Rule 10A3 under the Securities Exchange Act of
1934, as amended (“Exchange
Act”).  Executive agrees not to name any person as an Executive
Nominee if (i) such person is not reasonably experienced in business or
financial matters, (ii) such person has been convicted of, or has pled nolo
contendere to, a felony, (iii) the election of such person would violate any
law, or (iv) any event of the type required to be disclosed pursuant to Item
401(f) of Regulation S-K of the Exchange Act has occurred with respect to such
person at any time, since such individual reached adulthood, without regard to
the five year “look back” anticipated by Item 401(f).

     

    ARTICLE
V

     

    EFFECT OF TERMINATION ON
COMPENSATION; ADDITIONAL PAYMENTS

     

    5.1  Termination Other Than an Involuntary
Termination.  If Executive’s employment hereunder shall
terminate upon expiration of the term provided in Section 3.1 hereof or if
Executive’s employment hereunder shall terminate for any other reason except
those described in Sections 5.2 and 5.3, then Company shall continue to provide
all compensation and benefits to Executive hereunder until the date of such
termination of employment, and such compensation and benefits shall terminate
contemporaneously with such termination of employment.

     

     

    
      
        
        

      

      
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    5.2  Involuntary Termination Other Than
During a Change of Control Period.  Subject to the provisions
of Sections 5.6 and 5.7 hereof, if Executive’s employment by Company or any
successor thereto shall be subject to an Involuntary Termination which occurs
prior to the date that Change of Control Period begins or after the expiration
of a Change of Control Period, then Company shall, as additional compensation
for services rendered to Company (including its subsidiaries), pay to Executive
the following amounts and take the following actions:

     

    (a)  Pay
Executive a lump sum cash payment in an amount equal to Executive’s Annual Base
Salary on or before the Payment Date.

     

    (b)  During
the portion, if any, of the 12-month period commencing on the date of such
Involuntary Termination that Executive is eligible to elect and elects to
continue coverage for himself and his eligible dependents under Company’s or a
subsidiary’s group health plans, as applicable, under the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, and/or Sections 601 through 608
of the Employee Retirement Income Security Act of 1974, as amended, Company
shall promptly reimburse Executive on a monthly basis for the difference between
the amount Executive pays to effect and continue such coverage and the employee
contribution amount that active senior executive employees of Company pay for
the same or similar coverage under such group health plans; provided, however,
that such reimbursement shall cease to be effective if and to the extent
Executive becomes eligible to receive medical and/or dental coverage from a
subsequent employer (and any such eligibility shall be promptly reported to
Company by Executive).

     

    5.3  Involuntary Termination During a
Change of Control Period.  Subject to the provisions of
Sections 5.6 and 5.7, if Executive’s employment by Company or any successor
thereto shall be subject to an Involuntary Termination during a Change of
Control Period, then Company shall, as additional compensation for services
rendered to Company (including its subsidiaries), pay to Executive the following
amounts and take the following actions:

     

    (a)  Pay Executive a lump sum
cash payment in an amount equal to two times Executive’s
Annual Base Salary on or before the Payment Date.

     

    (b)  During
the portion, if any, of the 12-month period commencing on the date of such
Involuntary Termination that Executive is eligible to elect and elects to
continue coverage for himself and his eligible dependents under Company’s or a
subsidiary’s group health plans, as applicable, under the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, and/or Sections 601 through 608
of the Employee Retirement Income Security Act of 1974, as amended, Company
shall promptly reimburse Executive on a monthly basis for the difference between
the amount Executive pays to effect and continue such coverage and the employee
contribution amount that active senior executive employees of Company pay for
the same or similar coverage under such group health plans; provided, however,
that such reimbursement shall cease to be effective if and to the extent
Executive becomes eligible to receive medical and/or dental coverage from a
subsequent employer (and any such eligibility shall be promptly reported to
Company by Executive).

     

     

    
      
        
        

      

      
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    5.4  Interest on Late
Payments.  If any payment provided for in Section 5.2 or 5.3
hereof is not made when due (applying the deferred payment date provided for in
Section 5.7 as the due date, if applicable) then Company shall pay to Executive
interest on the amount payable from the date that such payment should have been
made under such Section until such payment is made, which interest shall be
calculated at the prime or base rate of interest announced by JPMorgan Chase
Bank (or any successor thereto) at its principal office in New York and shall
change when and as any such change in such prime or base rate shall be announced
by such bank.

     

    5.5  Parachute
Payments.  Notwithstanding anything to the contrary in this
Agreement, in the event that any payment, distribution, or provision of a
benefit by Company to or for the benefit of Executive, whether paid or payable,
distributed or distributable, or provided or to be provided pursuant to the
terms of this Agreement or otherwise (a “Payment”),
would be subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties with respect to such excise tax (such excise tax, together
with any such interest or penalties, are hereinafter collectively referred to as
the “Excise
Tax”), Company shall pay to Executive on or as soon as administratively
practicable following the day on which the Excise Tax is remitted by or on
behalf of Executive (but no later than the end of the taxable year following the
year in which the Excise Tax is remitted) an additional payment (a “Gross-up
Payment”) in an amount such that after payment by Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including any Excise Tax imposed on any Gross-up Payment, Executive retains an
amount of the Gross-up Payment equal to the Excise Tax imposed upon the
Payments.  Company and Executive shall make an initial determination
as to whether a Gross-up Payment is required and the amount of any such Gross-up
Payment.  Executive shall notify Company in writing of any claim by
the Internal Revenue Service which, if successful, would require Company to make
a Gross-up Payment (or a Gross-up Payment in excess of that, if any, initially
determined by Company and Executive) within ten days of the receipt of such
claim.  Company shall notify Executive in writing at least ten days
prior to the due date of any response required with respect to such claim if it
plans to contest the claim.  If Company decides to contest such claim,
Executive shall cooperate fully with Company in such action; provided, however,
Company shall bear and pay directly or indirectly all costs and expenses
(including additional interest and penalties) incurred in connection with such
action and shall indemnify and hold Executive harmless, on an after-tax basis,
for any Excise Tax or income tax, including interest and penalties with respect
thereto, imposed as a result of Company’s action.  If, as a result of
Company’s action with respect to a claim, Executive receives a refund of any
amount paid by Company with respect to such claim, Executive shall promptly pay
such refund to Company.  If Company fails to timely notify Executive
whether it will contest such claim or Company determines not to contest such
claim, then Company shall immediately pay to Executive the portion of such
claim, if any, which it has not previously paid to Executive.

     

    5.6  Release and Full
Settlement.  As a condition to the receipt of any severance
compensation and benefits under this Agreement, Executive must first execute a
release and agreement, in a form reasonably satisfactory to Company, which (a)
shall release and discharge Company and its affiliates, and their officers,
directors, employees, and agents, from any and all claims or causes of action of
any kind or character, including all claims or causes of action arising out of
Executive’s employment with Company or its affiliates or the termination of such
employment, and (b) must be effective and irrevocable within 55 days after the
termination of Executive’s employment.  If Executive is entitled to
and receives the benefits provided hereunder, performance of the obligations of
Company hereunder will constitute full settlement of all claims that Executive
might otherwise assert against Company on account of Executive’s termination of
employment.

     

     

    
      
        
        

      

      
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    5.7  Payments Subject to Section 409A of
the Code.  Notwithstanding the foregoing provisions of this
Article 5, if the payment of any severance compensation or severance benefits
under this Agreement would be subject to additional taxes and interest under
Section 409A of the Code because the timing of such payment is not delayed as
provided in Section 409A(a)(2)(B) of the Code, then any such payments that
Executive (or Executive’s estate) would otherwise be entitled to during the
first six months following the date of Executive’s termination of employment
shall be accumulated and paid on the date that is six months after the date of
Executive’s termination of employment (or if such payment date does not fall on
a business day of Company, the next following business day of Company), or such
earlier date upon which such amount can be paid under Section 409A of the Code
without being subject to such additional taxes and
interest.  Executive hereby agrees to be bound by Company’s
determination of its “specified employees” (as such term is defined in Section
409A of the Code) in accordance with any of the methods permitted under the
regulations issued under Section 409A of the Code.

     

    5.8  Liquidated
Damages.  In light of the difficulties in estimating the
damages for an early termination of Executive’s employment under this Agreement,
Company and Executive hereby agree that the payments, if any, to be received by
Executive pursuant to this Article 5 shall be received by Executive as
liquidated damages.

     

    5.9  Other
Benefits.  This Agreement governs the rights and obligations of
Executive and Company with respect to Executive’s base salary and certain
perquisites of employment.  Except as expressly provided herein,
Executive’s rights and obligations both during the term of his employment and
thereafter with respect to stock options, restricted stock, incentive and
deferred compensation, life insurance policies insuring the life of Executive,
and other benefits under the plans and programs maintained by Company shall be
governed by the separate agreements, plans and other documents and instruments
governing such matters.

     

    ARTICLE
VI

     

    PROTECTION OF CONFIDENTIAL
INFORMATION

     

    6.1  Disclosure to and Property of
Company.

     

    (a)  Confidential Information. All information,
designs, ideas, concepts, improvements, product developments, discoveries, and
inventions, whether patentable or not, that are conceived, made, developed, or
acquired by Executive, individually or in conjunction with others, during the
period of Executive’s employment by Company (whether during business hours or
otherwise and whether on Company’s premises or otherwise) that relate to
Company’s (or any of its affiliates’) business, trade secrets, products, or
services (including, without limitation, all such information relating to
corporate opportunities, product specification, compositions, manufacturing and
distribution methods and processes, research, forms, policies, procedures,
financial and sales data, pricing terms, costs, evaluations, opinions,
interpretations, acquisition prospects, employee lists, property lists, the
identity of customers or their requirements, the identity of key contacts within
the customer’s organizations or within the organization of acquisition
prospects, marketing and merchandising techniques, business plans, negotiation
and documentation strategies, computer software or programs, computer software
and database technologies, prospective names, and marks (collectively, “Confidential
Information”) shall be disclosed to Company and are and shall be the sole
and exclusive property of Company (or its affiliates).

     

     

    
      
        
        

      

      
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    (b)  Work Product. Moreover, all documents,
videotapes, written presentations, brochures, drawings, memoranda, notes,
records, files, correspondence, manuals, models, specifications, computer
programs, E-mail, voice mail, electronic databases, maps, drawings,
architectural renditions, proposals, and all other writings or materials of any
type embodying any of such information, ideas, concepts, improvements,
discoveries, inventions, and other similar forms of expression (including but
not limited to (i) maps, data, and reports that relate to results of
exploration, drilling, drill cores, cuttings, and other samples relating to the
production and operation of Company’s oil and gas properties (whether owned or
prospective) and (ii) title opinions; abstracts of title; land, accounting,
production, or operating expense records; engineering, geological, or
geophysical data; development plans and permits; or any other material or
writing of whatever kind embodying any other information relating to the
production and operation of Company’s oil and gas properties (whether owned or
prospective)) (collectively, “Work
Product”) are and shall be the sole and exclusive property of Company (or
its affiliates).

     

    Upon
Executive’s termination of employment with Company, for any reason, Executive
promptly shall deliver such Confidential Information and Work Product, and all
copies thereof, to Company.

     

    6.2  Disclosure to
Executive.  Company has and will disclose to Executive, or
place Executive in a position to have access to or develop, Confidential
Information and Work Product of Company (or its affiliates); and/or has and will
entrust Executive with business opportunities of Company (or its affiliates);
and/or has and will place Executive in a position to develop business good will
on behalf of Company (or its affiliates).  Executive agrees to
preserve and protect the confidentiality of all Confidential Information or Work
Product of Company (or its affiliates).

     

     

    
      
        
        

      

      
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    6.3  No Unauthorized Use or
Disclosure.  Executive agrees that he will not, at any time
during or after Executive’s employment by Company, make any unauthorized
disclosure of Confidential Information or Work Product of the Company (or its
affiliates), and will not make any use thereof, except in the carrying out of
Executive’s responsibilities during the course of Executive’s employment with
Company.  Executive shall have no obligation hereunder to keep
confidential any Confidential Information if and to the extent disclosure
thereof is specifically required by law; provided, however, that in the event
disclosure is required by applicable law, Executive shall provide Company with
prompt notice of such requirement prior to making any such disclosure, so that
Company may seek an appropriate protective order.  At the request of
Company at any time, Executive agrees to deliver to Company all Confidential
Information that he may possess or control.  Executive agrees that all
Confidential Information of Company (whether now or hereafter existing)
conceived, discovered, or made by him during the period of Executive’s
employment by Company exclusively belongs to Company (and not to Executive), and
Executive will promptly disclose such Confidential Information to Company and
perform all actions reasonably requested by Company to establish and confirm
such exclusive ownership.  Affiliates of Company shall be third party
beneficiaries of Executive’s obligations under this Article 6.  As a
result of Executive’s employment by Company, Executive may also from time to
time have access to, or knowledge of, Confidential Information or Work Product
of third parties, such as customers, suppliers, partners, joint venturers, and
the like, of Company and its affiliates.  Executive also agrees to
preserve and protect the confidentiality of such third party Confidential
Information and Work Product to the same extent, and on the same basis, as
Company’s Confidential Information and Work Product.

     

    6.4  Ownership by
Company.  If, during Executive’s employment by Company,
Executive creates any work of authorship fixed in any tangible medium of
expression that is the subject matter of copyright (such as videotapes, written
presentations, or acquisitions, computer programs, E-mail, voice mail,
electronic databases, drawings, maps, architectural renditions, models, manuals,
brochures, or the like) relating to Company’s business, products, or services,
whether such work is created solely by Executive or jointly with others (whether
during business hours or otherwise and whether on Company’s premises or
otherwise), including any Work Product, Company shall be deemed the author of
such work if the work is prepared by Executive in the scope of Executive’s
employment; or, if the work is not prepared by Executive within the scope of
Executive’s employment but is specially ordered by Company as a contribution to
a collective work, as a part of a motion picture or other audiovisual work, as a
translation, as a supplementary work, as a compilation, or as an instructional
text, then the work shall be considered to be work made for hire and Company
shall be the author of the work.  If such work is neither prepared by
Executive within the scope of Executive’s employment nor a work specially
ordered that is deemed to be a work made for hire, then Executive hereby agrees
to assign, and by these presents does assign, to Company all of Executive’s
worldwide right, title, and interest in and to such work and all rights of
copyright therein.

     

    6.5  Assistance by
Executive.  During the period of Executive’s employment by
Company and thereafter, Executive shall assist Company and its nominee, at any
time, in the protection of Company’s (or its affiliates’) worldwide right,
title, and interest in and to Work Product and the execution of all formal
assignment documents requested by Company or its nominee and the execution of
all lawful oaths and applications for patents and registration of copyright in
the United States and foreign countries.

     

    6.6  Remedies.  Executive
acknowledges that money damages would not be sufficient remedy for any breach of
this Article 6 by Executive, and Company or its affiliates shall be entitled to
enforce the provisions of this Article 6 by terminating payments then owing to
Executive under this Agreement or otherwise and to specific performance and
injunctive relief as remedies for such breach or any threatened
breach.  Such remedies shall not be deemed the exclusive remedies for
a breach of this Article 6 but shall be in addition to all remedies available at
law or in equity, including the recovery of damages from Executive and his
agents.

     

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

     

    ARTICLE
VII

     

    NON-COMPETITION AND
NON-SOLICITATION OBLIGATIONS

     

    7.1  General.  As part of
the consideration for Company’s employment of Executive and the compensation and
benefits that may be paid to Executive hereunder; to protect the trade secrets
and Confidential Information of Company and its affiliates that will in the
future be disclosed or entrusted to Executive, the business good will of Company
and its affiliates that will in the future be developed by Executive, or the
business opportunities that will in the future be disclosed or entrusted to
Executive by Company or its affiliates; and as an additional incentive for
Company to enter into this Agreement, Company and Executive agree to the
provisions of this Article 7.  Executive agrees that during his
employment with Company and for a period of two years following the termination
of Executive’s employment with Company for any reason (the “Non-Compete Period”),
Executive shall not, without the prior written consent of Company:

     

    (a)  directly
or indirectly participate in the ownership, management, operation, or control
of, or be connected as an officer, employee, partner, director, consultant,
contractor, or otherwise with, or have any financial interest in or aid or
assist anyone else in the conduct of, any oil and gas exploration or production
business in any of the Business Territories  of the Company (a “Competitive Operation”);
provided, however, that this provision shall not preclude Executive after the
termination of his employment with Company from (i) owning less than 5% of the
equity securities of any publicly held Competitive Operation so long as
Executive does not serve as an employee, officer, director, or consultant to
such business, (ii) being engaged as an investment banker and/or financial
advisor to oil and gas exploration or production business entities, or
(iii) being employed by a commercial bank or investment management
company;

     

    (b)  call
upon any prospective acquisition candidate on Executive’s own behalf or on
behalf of any Competitive Operation, which candidate is a Competitive Operation
or which candidate was, to Executive’s knowledge after due inquiry, either
called upon by Company or an affiliate or for which Company or an affiliate made
an acquisition analysis, for the purpose of acquiring such entity;
or

     

    (c)  directly
or indirectly, either as principal, agent, independent contractor, consultant,
director, officer, employee, employer, advisor, member, stockholder, partner, or
in any other individual or representative capacity whatsoever, either for his
own benefit or for the benefit of any other person or entity either (i) hire,
contract, or solicit or attempt any of the foregoing with respect to hiring any
then present employee (or person who was an employee at any time during the
six-month period prior to termination of Executive’s employment) of Company or
any affiliate, or (ii) induce or otherwise counsel, advise, or encourage any
employee of Company or any affiliate to leave the employment of Company or any
affiliate.

     

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

     

    7.2  Non-Disparagement. During Executive’s
employment with Company and following any termination of employment with
Company, Executive and Company mutually agree not to disparage, either orally or
in writing, Executive, Company, or any of affiliates’ business, products,
services, or practices, or any of Company’s or its affiliates’ directors,
officers, agents, representatives, stockholders, partners, members, employees,
or affiliates.

     

    7.3  Remedies.  Executive
acknowledges that money damages would not be sufficient remedy for any breach of
this Article 7 by Executive, and Company or its affiliates shall be
entitled to enforce the provisions of this Article 7 by terminating
payments then owing to Executive under this Agreement or otherwise and to
specific performance and injunctive relief as remedies for such breach or any
threatened breach.  Such remedies shall not be deemed the exclusive
remedies for a breach of this Article 7 but shall be in addition to all
remedies available at law or in equity, including the recovery of damages from
Executive and his agents.

     

    7.4  Reformation.  Company
and Executive agree that the foregoing restrictions are reasonable under the
circumstances and that any breach of the covenants contained in this
Article 7 would cause irreparable injury to Company.  If any of
the aforesaid restrictions are found by a court of competent jurisdiction to be
unreasonable, or overly broad as to geographic area or time, or otherwise
unenforceable, the parties intend for the restrictions therein set forth to be
modified by the court making such determination so as to be reasonable and
enforceable and, as so modified, to be fully enforced.  By agreeing to
this contractual modification prospectively at this time, Company and Executive
intend to make this provision enforceable under the law or laws of all
applicable States so that the entire agreement not to compete and this Agreement
as prospectively modified shall remain in full force and effect and shall not be
rendered void or illegal.  Such modification shall not affect the
payments made to Executive under this Agreement.

     

    ARTICLE
VIII

     

    DISPUTE
RESOLUTION

     

    8.1  General.  Executive
and the Company explicitly recognize that no provision of this Article VIII
shall prevent either party from seeking to resolve any dispute relating to
Article VI or Article VII of this Agreement in a court of law.

     

    8.2  Negotiation.  The
parties shall attempt in good faith to resolve any dispute arising out of or
relating to this Agreement promptly by negotiations between Executive and an
executive officer of Company who has authority to settle the
controversy.  Any party may give the other party written notice of any
dispute not resolved in the normal course of business.  Within ten
days after the effective date of such notice, Executive and an executive officer
of Company shall meet at a mutually acceptable time and place within the
Houston, Texas metropolitan area, and thereafter as often as they reasonably
deem necessary, to exchange relevant information and to attempt to resolve the
dispute.  If the matter has not been resolved within 30 days of the
disputing party’s notice, or if the parties fail to meet within ten days, either
party may initiate arbitration of the controversy or claim as provided in
Section 8.3 below.  If a negotiator intends to be accompanied at a
meeting by an attorney, the other negotiator shall be given at least three
business days’ notice of such intention and may also be accompanied by an
attorney.  All negotiations pursuant to this Section 8.2 shall be
treated as compromise and settlement negotiations for the purposes of the
federal and state rules of evidence and procedure.

     

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

     

    8.3  Arbitration.  Company
and Executive agree that after efforts to negotiate any dispute in accordance
with Section 8.2 have failed, then either party may by written notice (the “Notice”)
demand arbitration of the dispute as set out below, and each party hereto
expressly agrees to submit to, and be bound by, such arbitration.

     

    (a)  Each
party will, within ten business days of the Notice, nominate an arbitrator, who
shall be a non-neutral arbitrator. Each nominated arbitrator must be someone
experienced in dispute resolution and of good character without moral turpitude
and not within the employ or direct or indirect influence of the nominating
party.  The two nominated arbitrators will, within ten business days
of nomination, agree upon a third arbitrator, who shall be neutral. If the two
appointed arbitrators cannot agree on a third arbitrator within such period, the
parties may seek such an appointment through any permitted court proceeding or
by the American Arbitration Association (“AAA”).  The
three arbitrators will set the rules and timing of the arbitration, but will
generally follow the rules of the AAA and this Agreement where same are
applicable and shall provide for a reasoned opinion.

     

    (b)  The
arbitration hearing will in no event take place more than 180 days after the
appointment of the third arbitrator.

     

    (c)  The
arbitration will take place in Houston, Texas unless otherwise unanimously
agreed to by the parties.

     

    (d)  The
results of the arbitration and the decision of the arbitrators will be final and
binding on the parties, and each party agrees and acknowledges that these
results shall be enforceable in a court of law.

     

    (e)  All
administrative costs and expenses of the mediation and arbitration shall be
borne equally by the Company and Executive during the pendency of the
proceedings.  Such costs and expenses do not include attorney’s fees,
expert witness fees or other party generated expenses.  Upon the
conclusion of the proceedings, the prevailing party shall be entitled to recover
reasonable and necessary attorneys’ fees, expert witness fees, and costs and
expenses of arbitration.

     

    ARTICLE
IX

     

    MISCELLANEOUS

     

    9.1  Indemnification.  Company
shall continue to indemnify Executive following any termination of this
Agreement to the fullest extent permitted by applicable law consistent with the
Articles of Incorporation and By-Laws of Company in effect as of the date of the
termination with respect to Executive’s sole, joint, or concurrent negligence
and any acts of or omissions he may have committed during the period during
which he was an officer, director, and/or employee of (a) Company, (b) any
subsidiary thereof for which he served as an officer, director, or employee at
the request of Company, or (c) any successor thereto; provided, however, Company
shall have no obligation to indemnify Executive for any claim based on facts or
circumstances that served or could have served as grounds for termination of
Executive’s employment under this Agreement by the Company for
Cause.  Any reimbursement of reasonable attorneys’ fees and
disbursements required under this Section 9.1 shall be made within thirty days
of the date that Executive submits an invoice for payment or
reimbursement.  In the event Company and Executive shall have entered
into a separate indemnity agreement, the terms of such agreement, and not this
Section 9.1, shall govern Company’s obligations to indemnify Executive following
the termination of this Agreement.

     

     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

     

    9.2  Payment Obligations
Absolute.  Except as specifically provided in Sections 6.6 and
7.4, Company’s obligation to pay (or cause one of its subsidiaries to pay)
Executive the amounts and to make the arrangements provided herein shall be
absolute and unconditional and shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim, recoupment, defense,
or other right which Company (including its subsidiaries) may have against
Executive or anyone else.  All amounts payable by Company (including
its subsidiaries hereunder) shall be paid without notice or
demand.  Executive shall not be obligated to seek other employment in
mitigation of the amounts payable or arrangements made under any provision of
this Agreement, and, except as provided in Sections 5.2(b) and 5.3(b) hereof,
the obtaining of any such other employment shall in no event effect any
reduction of Company’s obligations to make (or cause to be made) the payments
and arrangements required to be made under this Agreement.

     

    9.3  Notices.  Any and all notices or other
communications or deliveries required or permitted to be provided hereunder
shall be in writing and shall be deemed given and effective on the earliest of
(a) the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number set forth on the signature pages attached
hereto prior to 3:30 p.m. (Houston time) on  any day except
Saturday, Sunday and any day which shall be a federal legal holiday in the
United States (“Business
Day”), (b) the next Business Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number set
forth on the signature pages attached hereto on a day that is not a Business Day
or later than 3:30 p.m. (Houston time) on any Business Day, (c) the 2nd Business
Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (d) upon actual receipt by the party to whom such
notice is required to be given.  The address for such notices and
communications shall be as set forth on the signature pages attached
hereto.  All notices and demands to Executive or the Company may be
given to them at the following addresses:

     

    
      	
               
      

            	
              If
      to Executive to:

            	
              Gary
      C. Evans

              1046 Texan Trail

              Grapevine, Texas  76051

               

            
	 	If
      to Company:	
              Petro
      Resources Corporation

              777 Post Oak Blvd., Suite 910

              Houston,
  Texas  77056

            

    

     

    Such
parties may designate in writing from time to time such other place or places
that such notices and demands may be given.

     

     

    
      
        
        

      

      
        -16-

        
          

        

      

      
        
        

      

    

     

    9.4  Applicable Law; Submission to
Jurisdiction.

     

    (a)  This
Agreement is entered into under, and shall be governed for all purposes by, the
laws of the State of Texas, without regard to conflict of law principals
thereof.

     

    (b)  With
respect to any claim or dispute related to or arising under this Agreement, the
parties hereto hereby consent to the exclusive jurisdiction, forum, and venue of
the state or federal (to the extent federal jurisdiction exists) courts located
in Harris County in the State of Texas.

     

    9.5  No Waiver.  No
failure by either party hereto at any time to give notice of any breach by the
other party of or to require compliance with, any condition or provision of this
Agreement shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.

     

    9.6  Severability.  Any
provision in this Agreement which is prohibited or unenforceable in any
jurisdiction by reason of applicable law shall, as to such jurisdiction, be
ineffective only to the extent of such prohibition or unenforceability without
invalidating or affecting the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

     

    9.7  Counterparts.  This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original, but all of which together will constitute one and the
same Agreement.

     

    9.8  Withholding of Taxes and Other
Employee Deductions.  Company may withhold from any benefits
and payments made pursuant to this Agreement all federal, state, city, and other
taxes as may be required pursuant to any law or governmental regulation or
ruling and all other customary employee deductions made with respect to
Company’s employees generally.

     

    9.9  Headings.  The
Section headings have been inserted for purposes of convenience and shall not be
used for interpretive purposes.

     

    9.10  Gender and
Plurals.  Wherever the context so requires, the masculine
gender includes the feminine or neuter, and the singular number includes the
plural and conversely.

     

    9.11  Assignment.  This
Agreement shall be binding upon and inure to the benefit of Company and any
successor of Company, by merger or otherwise.  This Agreement shall
also be binding upon and inure to the benefit of Executive and his heirs,
representatives and assigns.  If Executive shall die prior to full
payment of amounts due pursuant to this Agreement, such amounts shall continue
to be payable pursuant to the terms of this Agreement.  Executive
shall not have any right to pledge, hypothecate, anticipate, or assign any
portion of this Agreement or any of the rights hereunder, except by will or the
laws of descent and distribution.

     

    9.12  Term.  This
Agreement has a term co-extensive with the term of employment provided in
Section 3.1.  Termination of this Agreement shall not affect any right
or obligation of any party which is accrued or vested prior to such
termination.  The provisions of Section 3.5 and Articles 6 and 7 shall
survive the termination of this Agreement and shall be binding upon Executive
and his or her legal representatives, successors, and assigns following such
termination.

     

     

    
      
        
        

      

      
        -17-

        
          

        

      

      
        
        

      

    

     

    9.13  Entire
Agreement.  This Agreement constitutes the entire agreement of
the parties with regard to the subject matter hereof and contains all the
covenants, promises, representations, warranties, and agreements between the
parties with respect to such subject matter.  Without limiting the
scope of the preceding sentence, all understandings and agreements preceding the
date of execution of this Agreement and relating to the subject matter hereof
are hereby null and void and of no further force and effect, including, without
limitation, all prior employment and severance agreements, if any, by and
between Company and Executive.  Any modification of this Agreement
will be effective only if it is in writing and signed by the party to be
charged.

     

    9.14  Expenses.  The
Company shall reimburse Executive the non-accountable sum of $2,500 for his
legal fees and expenses.  Each party shall otherwise pay all fees and
expenses incurred by such party incident to the negotiation, preparation and
execution of this Agreement.

     

    IN WITNESS WHEREOF, the
parties hereto have entered into this Agreement as of the date first written
above.

     

    
    

     

    
      	 	
              “Company”

               

              Petro
      Resources Corporation

              a
      Delaware corporation

               

               

            	 
	 	By: 	/s/ Wayne P.
      Hall	 
	 	 	Wayne P.
    Hall	 
	 	 	
              Chief
      Executive Officer

            	 
	 	 	 	 
	 	
              
              

               

               

              “Executive”

               

              Gary
      C. Evans

               

            	 
	 	
              
              

              
                /s/ Gary C.
      Evans

              

            	 
	 	
              Gary
      C. Evans

            	 

    

     

     

     

     -18-

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