Document:

exv10w14

 

Exhibit 10.14

ANNUAL INCENTIVE PLAN

2007 Plan Year

Guidelines

KIRBY CORPORATION

January 2007

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	Introduction
	 	 	2	 
	 
	 	 	 	 
	The Annual Incentive Plan
	 	 	3	 
	 
	 	 	 	 
	Performance Measurement Period
	 	 	3	 
	 
	 	 	 	 
	Eligibility
	 	 	3	 
	 
	 	 	 	 
	Plan Objectives
	 	 	4	 
	 
	 	 	 	 
	Performance Measures
	 	 	4	 
	 
	 	 	 	 
	Corporate and Business Group Weighting
	 	 	5	 
	 
	 	 	 	 
	Individual Bonus Targets
	 	 	6	 
	 
	 	 	 	 
	Annual Incentive Plan Concept
	 	 	6	 
	 
	 	 	 	 
	Performance Measures and Weighting
	 	 	7	 
	 
	 	 	 	 
	Performance Standards and Award Opportunities
	 	 	7	 
	 
	 	 	 	 
	Example Award Calculation
	 	 	8	 
	 
	 	 	 	 
	Administration
	 	 	9	 

1

 

Introduction

Kirby Corporation established its Annual Incentive Plan to focus employees on identifying
and achieving business strategies that will grow the business and lead to an increase in
shareholder value. The Annual Incentive Plan is also intended to reward superior performance by
employees, for their contributions toward achieving Kirby’s objectives. This program may be
offered, in whole or in part, to wholly owned subsidiaries of the Company, at the Company’s
discretion.

Certain aspects of this Bonus Plan are complex. Although these guidelines establish rules for Plan
operation, those rules may not work in all cases. Therefore, the Compensation Committee of the
Kirby Board of Directors shall have the discretionary authority to interpret, and if determined
appropriate, deviate from the Guide to insure that the awards are consistent with the Plan’s
purposes and the Company’s interests. All decisions by the Compensation Committee shall be final
and binding.

This Plan, or any part thereof, may be amended, modified, or terminated at any time, without prior
notice, by written authorization of the President and Chief Executive Officer of the Company.

This Plan supercedes all prior annual incentive bonus plans or programs maintained by the Company.

The initial Plan became effective January 1, 2003.

2

 

The Annual Incentive Plan

The Annual Incentive Plan is an award for total Company performance, and for the performance
of our four Business Groups; Kirby Inland Marine, Kirby Engine Systems, Dixie Offshore
Transportation and Osprey, Line. Awards are 75% formula-driven and 25% driven by individual
performance, and are based on achieving Company, Business Group and individual performance
objectives.

Performance Measurement Period

Performance is measured on a calendar year basis for the Annual Incentive Plan. The
Performance Period begins on January 1 and ends on December 31.

 Eligibility

	•	 	Generally, shore staff managerial employees in salary grades
15 and above, and Wheelhouse employees classified as Captain,
Relief Captain or Pilot, will be eligible for consideration
to be participants. Selection for participation in the Plan
will be based upon each position’s ability to impact
long-term financial results of the Company. Consequently,
all employees in positions at salary grades 15 and above
might not be included in the Plan, and employees in positions
below salary grade 15 might be included.
	 
	•	 	In order to be eligible to receive an award participants must
be employed on the last day of the Performance Period, and on
the date bonuses are actually paid for the respective
Performance Period, unless their earlier termination is due
to death, normal retirement1 or
disability1.
	 
	•	 	It should also be noted that participation in the Bonus Plan
in one year does not guarantee participation in future years.
Participants in the Plan will be notified annually of their
selection for participation.

 

			
	1	 	Normal retirement or disability as defined
for shore based employees in the Company’s Profit Sharing Plan, and as defined
for wheelhouse employees in the Vessel Pension Plan

3

 

Plan Objectives

The Annual Incentive Plan has five key objectives:

	•	 	Provide an annual incentive plan that drives performance toward
objectives critical to creating shareholder value.
	 
	•	 	Offer competitive cash compensation opportunities to key Kirby
employees.
	 
	•	 	Award outstanding achievement among employees who can directly
affect Kirby’s results.
	 
	•	 	Assist Kirby in attracting and retaining high quality employees.
	 
	•	 	Reflect both quantitative and qualitative performance factors in
actual bonus payouts.

Performance Measures

The performance measures for the Annual Incentive Plan are:

	 	•	 	EBITDA
	 
	 	•	 	Return on Total Capital
	 
	 	•	 	Earnings per share

Annual performance targets will be established for each measure based on Kirby’s projected budget,
and individual bonus payments will be based on a combination of Company performance and individual
performance.

Participants will receive 75% of their award based on Company performance in achieving the three
performance measures, with the remaining 25% based on an assessment of individual performance for
the year.

Each of the performance measures will have equal weight in calculating the bonus payout pool.

4

 

Corporate & Business Group Weighting

The Annual Incentive Plan bonus is calculated at the end of the year based on the performance
of Kirby and the performance of our four Business Groups, Kirby Inland Marine, Kirby Engine
Systems, Dixie Offshore Transportation and Osprey Line, relative to objectives established at the
beginning of the year.

The award for Business Group employees will be primarily tied to Business Group performance, with a
defined portion tied to Company performance.

The award for Corporate employees will be tied entirely to total Kirby performance.

Annual Incentive Plan Calculation

	 	 	 	 	 	 	 	 	 
	 	 	Incentive Bonus Calculation %
	 	 	Kirby (Company)	 	Business Group
	All Corporate Employees
	 	 	100	%	 	 	0	%
	 
	 	 	 	 	 	 	 	 
	Business
Group Employees (Inland,
Engine Systems, Offshore and Osprey)
	 	 	30	%	 	 	70	%
	 
	 	 	 	 	 	 	 	 
	Inland & Engine Systems Presidents
	 	 	50	%	 	 	50	%

5

 

Individual Bonus Targets

Each participant will be assigned a bonus level which is based on competitive market
practices, as well as the employee’s ability to impact long-term Company performance. Market
practices will be determined using data from either general industry, the marine transportation
industry, or the diesel repair industry, depending upon the individual position being considered.
It is the Company’s intent that salary plus target annual bonus be positioned to provide a
competitive market opportunity for target performance.

Annual Incentive Plan Concept

6

 

Performance Measures and Weighting

	 	 	 	 	 	 	 
	 	 	Measure	 	Weight
	n	 	EBITDA (Earnings Before Interst, Taxes,
Depreciation and Ammortization)
	 	 	33-1/3 	%
	 	 	 
	 	 	 	 
	n	 	Return on Total Capital (Earnings before interest and
taxes divided by average beginning and ending shareholders equity
plus long-term debt)
	 	 	33-1/3 	%
	 	 	 
	 	 	 	 
	n	 	Earnings per Share
	 	 	33-1/3 	%
	 	 	 
	 	 	100	%

Performance Standards & Award Opportunities

	 	 	 	 	 	 	 	 	 
	Performance	 	 	 	Relationship to	 	% of Target
	       Level	 	Definition	 	Budget	 	Earned
	Threshold

	 	Minimal acceptable
performance for payout
	 	80% of Budget
	 	 	50	%
	 
	 	 	 	 	 	 	 	 
	Target

	 	Expected performance
at a stretch level
	 	100% of Budget
	 	 	100	%
	 
	 	 	 	 	 	 	 	 
	Maximum

	 	Outstanding performance
	 	120% of Budget
	 	 	200	%

Performance must be at least to Threshold to earn a bonus payment.

7

 

Example Award Calculation

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Performance Standards	 	Example Calculation
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Assumed	 	Percent	 	 	 	 	 	Weighted
	Performance	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Actual	 	of	 	 	 	 	 	Percent
	Objectives	 	Below	 	 	 	 	 	 	 	 	 	 	 	 	 	Results (%	 	Target	 	 	 	 	 	of Target
	Percent of Target	 	Threshold	 	Threshold	 	Target	 	Maximum	 	Budget	 	Award	 	Objective	 	Award
	Award Earned:	 	0%	 	50%	 	100%	 	200%	 	Achieved)	 	Earned	 	Weight	 	Earned
	EBITDA
(% Budget Achieved)
	 	 	< 80	%	 	 	80	%	 	 	100	%	 	 	120	%	 	 	90	%	 	 	75	%	 	 	33-1/3	%	 	 	25	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Return on Total Capital (% Budget
Achieved)
	 	 	< 80	%	 	 	80	%	 	 	100	%	 	 	120	%	 	 	110	%	 	 	150	%	 	 	33-1/3	%	 	 	50	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Earnings per Share (% Budget
Achieved)
	 	 	< 80	%	 	 	80	%	 	 	100	%	 	 	120	%	 	 	100	%	 	 	100	%	 	 	33-1/3	%	 	 	33.3	%
	 
	 	 	 	 	 	 	Total Percent of Target Awards Earned for Bonus Pool:	 	 	108.3	%

 

			
	n	 	As shown in the exhibit, actual performance on each objective
results in a corresponding percent of target award earned.
	 
	n	 	The percents of target award earned for each objective are
then multiplied by the weight for the objective, producing a
weighted percent of target award earned for each objective.
	 
	n	 	The weighted percents of target award earned for all
objectives are summed to produce a total percent of target
awards earned. This factor, when multiplied by the sum of
target bonuses for plan participants, equals the bonus
funding pool.
	 
	n	 	75% of the total pool is paid to participants pro-rata, based on their individual bonus
level and their applicable base salary for the period.
	 
	n	 	The remaining 25% is awarded to participants based on individual performance.

8

 

Administration

Award Payout

A participant’s Final Award is paid out in cash within 90 days following the end of the Company’s
fiscal year, based on audited financials.

Eligibility Limitation

Unless otherwise provided for as a special circumstance (below), selected participants must be
employed by the Company on the last day of the Performance Period, and on the date bonuses are
actually paid for the respective Performance Period, in order to be eligible to receive a bonus
award.

Special Circumstances

Listed below are guidelines addressing termination and other events. The Committee will have the
sole authority to resolve disputes related to Plan administration. Decisions made by the Committee
will be final and binding on all participants.

New Employees. New employees hired after the beginning of a Performance Period who are selected
for participation in the Plan, will receive prorated awards for the then current Performance
Period, subject to the Termination of Employment restrictions.

Termination of Employment. If employment terminates before the end of the full Performance Period,
or before the date bonuses are actually paid for the respective Performance Period, as a result of
death, normal retirement3, or disability3, the participant (or the
participant’s heirs) will be entitled to receive a prorated award at the end of the Performance
Period, based upon base wages earned while employed during the Performance Period.

If employment terminates prior to the last day of the applicable Performance Period, or prior to
the date bonuses are actually paid for the respective Performance Period, for any reason other then
death, normal retirement3, or disability3, the participant will be ineligible
to receive an award.

 

			
	3	 	Normal retirement or disability as defined for shore based employees in the Company’s
Profit Sharing Plan, and as defined for wheelhouse employees in the Vessel Pension Plan.

9

 

Transfer. A participant who is transferred between business units of the Company will be entitled
to receive a weighted award based upon the time spent at each of the units. The weighted award is
calculated by adding (1) the participant’s prorated award for time spent at the first business
unit, to (2) the participant’s prorated award for time spent at the second business
unit4.

Promotions. A participant who is promoted or reassigned during any Performance Period, and whose
bonus target is subsequently increased or decreased, will be eligible to receive a weighted award.
The award is calculated by adding (1) the prorated award for service before the promotion or
reassignment, to (2) the prorated award for service after the promotion or
reassignment4.

Compensation Committee

The Compensation Committee has the responsibility for the overall governance and administration of
the Plan. In fulfilling its duties, the Committee will be responsible for interpreting the Plan
and will rely on these guidelines in making all determinations that are necessary or advisable for
administration of the Plan.

In administering the Plan the Committee will, on an annual basis:

	 	•	 	Approve the designation of Business Groups within the Company
	 
	 	•	 	Approve the Performance Measures and the Threshold, Target and Maximum budget
performance levels
	 
	 	•	 	Approve linkage for participants to Company and Business Group performance
	 
	 	•	 	Approve the Bonus Levels for all participants whose salaries are at or above $100,000

President & CEO

The CEO will have primary responsibility for recommending Plan guidelines to the Committee, and for
carrying out the administrative duties associated with annual award calculations. In addition, the
Compensation Committee may delegate additional administrative duties to the CEO or any Company
officer.

 

			
	4	 	Company and Business Group performance factors are calculated using performance for
the entire Performance Period.

10

 

CFO

The CFO will be responsible for calculating performance under the Plan and recommending adjustments
to the performance objectives. In this capacity, the CFO will:

	 	•	 	Provide annual reports to the Compensation Committee and the CEO on each Business
Group’s performance at the end of the Company’s fiscal year
	 
	 	•	 	Maintain a financial information system that reports results on an estimated
quarterly and annual basis
	 
	 	•	 	Coordinate with the Company’s auditors to properly recognize any accounting expense
associated with awards under the Plan
	 
	 	•	 	Provide the VP of Human Resources with the performance results of each Business
Group as well as overall Company performance
	 
	 	•	 	Calculate new Threshold, Target and Maximum performance objectives as required by
the Plan

VP of Human Resources

The VP of Human Resources will have primary responsibility for the day-to-day administration of the
Plan. In this capacity, the VP of Human Resources will:

	 	•	 	Develop and recommend Target Award Guidelines and eligible participants for each
new Performance Period to the CEO for approval
	 
	 	•	 	Coordinate communications with participants, including materials to facilitate
understanding the Plan’s objectives and goals
	 
	 	•	 	Provide quarterly performance updates to Plan participants
	 
	 	•	 	Calculate participants’ awards, using the performance factors provided by the CFO
	 
	 	•	 	Process paperwork approving individual award payments

Business Group Presidents and Vice Presidents

Business Group Presidents and Vice Presidents will:

	 	•	 	Recommend participants for each Performance Period
	 
	 	•	 	Coordinate with the CFO to determine any significant changes in business conditions
for purposes of reviewing the Threshold, Target and Maximum performance objectives
	 
	 	•	 	Insure that participants are informed of the actual award earned for each
Performance Period

11exv10w15

 

EXHIBIT 10.15

KIRBY CORPORATION

2000 NONEMPLOYEE DIRECTOR STOCK OPTION PLAN

ARTICLE I. GENERAL

     Section 1.1. Purpose. The purpose of this Plan is to advance the interests of Kirby
Corporation, a Nevada corporation (the “Company”), by providing an additional incentive to attract
and retain qualified and competent directors, upon whose efforts and judgment the success of the
Company is largely dependent, through the encouragement of stock ownership in the Company by such
persons.

     Section 1.2. Definitions. As used herein, the following terms shall have the meaning
indicated:

     (a) “Board” means the Board of Directors of the Company.

     (b) “Change in Control” means the occurrence of any of the following events:

     (i) Any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended) becomes the beneficial owner, directly or indirectly, of
voting securities representing thirty percent (30%) or more of the combined voting power of
the Company’s then outstanding voting securities or, if a person is the beneficial owner,
directly or indirectly, of voting securities representing thirty percent (30%) or more of
the combined voting power of the Company’s outstanding voting securities as of the date the
particular Option is granted, such person becomes the beneficial owner, directly or
indirectly, of additional voting securities representing ten percent (10%) or more of the
combined voting power of the Company’s then outstanding voting securities;

     (ii) During any period of twelve (12) months, individuals who at the beginning of such
period constitute the Board cease for any reason to constitute a majority of the Directors
unless the election, or the nomination for election by the Company’s stockholders, of each
new Director was approved by a vote of at least a majority of the Directors then still in
office who were Directors at the beginning of the period;

     (iii) The stockholders of the Company approve (A) any consolidation or merger of the
Company or any Subsidiary that results in the holders of the Company’s voting securities
immediately prior to the consolidation or merger having (directly or indirectly) less than a
majority ownership interest in the outstanding voting securities of the surviving entity
immediately after the consolidation or merger, (B) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all or substantially
all of the assets of the Company or (C) any plan or proposal for the liquidation or
dissolution of the Company;

     (iv) The stockholders of the Company accept a share exchange, with the result that
stockholders of the Company immediately before such share exchange do not own,

 

 

immediately following such share exchange, at least a majority of the voting securities
of the entity resulting from such share exchange in substantially the same proportion as
their ownership of the voting securities outstanding immediately before such share exchange;
or

     (v) Any tender or exchange offer is made to acquire thirty percent (30%) or more of the
voting securities of the Company, other than an offer made by the Company, and shares are
acquired pursuant to that offer.

For purposes of this definition, the term “voting securities” means equity securities, or
securities that are convertible or exchangeable into equity securities, that have the right to vote
generally in the election of Directors.

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

     (d) “Committee” means the Compensation Committee, if any, appointed by the Board.

     (e) “Compensation Plan” means the written plan or program in effect from time to time, as
approved by the Board, which sets forth the compensation to be paid to Eligible Directors.

     (f) “Date of Grant” means the date on which an Option or Restricted Stock is granted to an
Eligible Director.

     (g) “Director” means a member of the Board.

     (h) “Eligible Director” means a Director who is not an employee of the Company or a
Subsidiary.

     (i) “Existing Plan” means the 2000 Nonemployee Director Stock Option Plan, as amended by the
Board on January 27, 2004 and approved by the stockholders of the Company on April 27, 2004.

     (j) “Fair Market Value” of a Share means the closing price on the New York Stock Exchange on
the day of reference. If the Shares are not listed for trading on the New York Stock Exchange, the
Fair Market Value on the date of reference shall be determined by any fair and reasonable means
prescribed by the Committee.

     (k) “Nonincentive Stock Option” means an option that is not an incentive stock option as
defined in Section 422 of the Internal Revenue Code of 1986, as amended.

     (l) “Option” means any option granted under this Plan.

     (m) “Optionee” means a person to whom a stock option is granted under this Plan or any
successor to the rights of such person under this Plan by reason of the death of such person.

     (n) “Payment Date” means the last day of a calendar quarter.

2

 

     (o) “Plan” means this 2000 Nonemployee Director Stock Option Plan for Kirby Corporation, as
amended from time to time.

     (p) “Restricted Stock” means Shares granted under this Plan that are subject to restrictions
described in Article III and the Compensation Plan.

     (q) “Share” means a share of the common stock, par value ten cents ($0.10) per share, of the
Company.

     (r) “Subsidiary” means any corporation (other than the Company) in any unbroken chain of
corporations beginning with the Company if, at the time of the granting of the Option, each of the
corporations other than the last corporation in the unbroken chain owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the other corporations in
such chain.

     Section 1.3. Total Shares. The maximum number of Shares that may be issued under this Plan
shall be SIX HUNDRED THOUSAND (600,000) Shares from Shares held in the Company’s treasury. If any
Option granted under the Plan shall terminate, expire or be cancelled or surrendered as to any
Shares, new Options may thereafter be granted covering such Shares or such Shares may thereafter be
issued as Restricted Stock.

ARTICLE II. STOCK OPTIONS

     Section 2.1. Automatic Grant of Options. Options shall automatically be granted to Eligible
Directors as provided in Sections 2.2, 2.3 and 2.4. All Options shall be Nonincentive Stock
Options. Each Option shall be evidenced by an option agreement containing such terms deemed
necessary or desirable by the Committee that are not inconsistent with the Plan or any applicable
law. Neither the Plan nor any Option shall confer upon any person any right to continue to serve
as a Director.

     Section 2.2. Automatic One-Time Grant. Each Eligible Director shall automatically be granted
an Option for TEN THOUSAND (10,000) Shares on the date of such Eligible Director’s first election
as a Director.

     Section 2.3. Automatic Annual Grants. Immediately after each annual meeting of stockholders
of the Company, each Eligible Director shall automatically be granted an Option for SIX THOUSAND
(6,000) Shares.

     Section 2.4. Election to Receive Options. If the Compensation Plan permits Eligible Directors
to elect to receive an Option in lieu of all or part of Director fees otherwise payable in cash,
each Eligible Director who has properly and timely made such election as provided in the
Compensation Plan shall automatically be granted an Option for a number of Shares equal to (i) the
amount of the fee such Eligible Director elects to receive in the form of an Option divided by (ii)
the Fair Market Value of a Share on the Date of Grant multiplied by (iii) 3, with the result
rounded to the nearest whole Share.

     Section 2.5. Option Price. The option price per Share for any Option shall be the Fair Market
Value on the Date of Grant.

3

 

     Section 2.6. Date of Grant.

     (a) The Date of Grant of an Option granted under Section 2.2 shall be the date of the Eligible
Director’s first election as a Director.

     (b) The Date of Grant of an Option granted under Section 2.3 shall be the date of the annual
meeting of stockholders of the Company to which the grant relates.

     (c) The Date of Grant of an Option granted under Section 2.4 shall be the date of the next
annual meeting of stockholders after the election by the Eligible Director pursuant to the
Compensation Plan to receive the Option in lieu of cash fees, except that, for an Eligible Director
elected between annual stockholder meetings, the Date of Grant shall be the date of his or her
election as a Director.

     Section 2.7. Vesting.

     (a) An Option granted under Section 2.2 shall be exercisable on or after the Date of Grant.

     (b) An Option granted under Section 2.3 shall become exercisable six months after the Date of
Grant.

     (c) An Option granted under Section 2.4 shall become exercisable on the Payment Date(s)
following the Date of Grant as provided in this Section 2.7(c). The number of Shares as to which
an Option granted under Section 2.4 will become exercisable on each Payment Date after the Date of
Grant shall equal the number of Shares subject to the Option divided by the number of Payment Dates
occurring after the Date of Grant and before the first anniversary of the most recent annual
meeting of stockholders of the Company.

     (d) Notwithstanding the other provisions of this Section 2.7, (i) an Option shall only become
exercisable as provided in this Section 2.7 if the Optionee is a Director at the time the Option
would otherwise become exercisable and (ii) upon the occurrence of a Change in Control, all Options
outstanding at the time of the Change in Control shall become immediately exercisable.

     Section 2.8. Term of Options. The portion of an Option that is exercisable shall
automatically and without notice terminate upon the earlier of (a) one (1) year after the Optionee
ceases to be a Director for any reason or (b) ten (10) years after the Date of Grant of the Option.
The portion of an Option that is not exercisable shall automatically and without notice terminate
at the time the Optionee ceases to be a Director for any reason.

     Section 2.9. Exercise of Options. Any Option may be exercised in whole or in part to the
extent exercisable in accordance with Section 2.7. An Option shall be deemed exercised when (i)
the Company has received written notice of such exercise in accordance with the terms of the Option
and (ii) full payment of the aggregate option price of the Shares as to which the Option is
exercised has been made. Unless further limited by the Committee in any Option, the option price
of any Shares purchased shall be paid solely in cash, by certified or cashier’s check, by money
order, by personal check or with Shares owned by the Optionee for at least six months,

4

 

or by a combination of the foregoing. If the option price is paid in whole or in part with
Shares, the value of the Shares surrendered shall be their Fair Market Value on the date received
by the Company.

     Section 2.10. Adjustment of Shares.

     (a) If at any time while the Plan is in effect or unexercised Options are outstanding, there
shall be any increase or decrease in the number of issued and outstanding Shares through the
declaration of a stock dividend or through any recapitalization resulting in a stock split,
combination or exchange of Shares, then and in such event:

     (i) appropriate adjustment shall be made in the maximum number of Shares then subject
to being optioned under the Plan, and the numbers of Options to be granted under Sections
2.2, 2.3 and 2.4, so that the same proportion of the Company’s issued and outstanding Shares
shall continue to be subject to being so optioned, and

     (ii) appropriate adjustment shall be made in the number of Shares and the exercise
price per Share thereof then subject to any outstanding Option, so that the same proportion
of the Company’s issued and outstanding Shares shall remain subject to purchase at the same
aggregate exercise price.

     (b) In the event of a merger, consolidation or other reorganization of the Company in which
the Company is not the surviving entity, the Board or the Committee may provide for any or all of
the following alternatives: (i) for Options to become immediately exercisable, (ii) for exercisable
Options to be cancelled immediately prior to such transaction, (iii) for the assumption by the
surviving entity of the Plan and the Options, with appropriate adjustments in the number and kind
of shares and exercise prices or (iv) for payment in cash or stock in lieu of and in complete
satisfaction of Options.

     (c) Any fractional shares resulting from any adjustment under this Section 2.10 shall be
disregarded and each Option shall cover only the number of full shares resulting from such
adjustment.

     (d) Except as otherwise expressly provided herein, the issuance by the Company of shares of
its capital stock of any class, or securities convertible into shares of capital stock of any
class, either in connection with direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the Company convertible into
such shares or other securities, shall not affect, and no adjustment by reason thereof shall be
made with respect to, the number of or exercise price of Shares then subject to outstanding Options
granted under the Plan.

     (e) Without limiting the generality of the foregoing, the existence of outstanding Options
granted under the Plan shall not affect in any manner the right or power of the Company to make,
authorize or consummate (i) any or all adjustments, recapitalizations, reorganizations or other
changes in the Company’s capital structure or its business; (ii) any merger or consolidation of the
Company; (iii) any issue by the Company of debt securities, or preferred or preference stock that
would rank above the Shares subject to outstanding Options; (iv) the dissolution or

5

 

liquidation of the Company; (v) any sale, transfer or assignment of all or any part of the
assets or business of the Company; or (vi) any other corporate act or proceeding, whether of a
similar character or otherwise.

     Section 2.11. Transferability of Options. Each Option shall provide that such Option shall not
be transferable by the Optionee otherwise than by will or the laws of descent and distribution and
that so long as an Optionee lives, only such Optionee or his guardian or legal representative shall
have the right to exercise such Option.

     Section 2.12. Issuance of Shares. No person shall be, or have any of the rights or privileges
of, a stockholder of the Company with respect to any of the Shares subject to any Option unless and
until certificates representing such Shares (whether in physical or in book entry or other
electronic form) shall have been issued and delivered to such person. As a condition of any
transfer of the certificate for Shares, the Committee may obtain such agreements or undertakings,
if any, as it may deem necessary or advisable to assure compliance with any provision of the Plan,
any agreement or any law or regulation including, but not limited to, the following:

     (a) a representation, warranty or agreement by the Optionee to the Company, at the time any
Option is exercised, that the Optionee is acquiring the Shares for investment and not with a view
to, or for sale in connection with, the distribution of any such Shares; and

     (b) a representation, warranty or agreement to be bound by any legends that are, in the
opinion of the Committee, necessary or appropriate to comply with the provisions of any securities
law deemed by the Committee to be applicable to the issuance of the Shares and are endorsed upon
the Share certificates.

ARTICLE III. RESTRICTED STOCK

     Section 3.1. Automatic Grants of Restricted Stock. Restricted Stock shall automatically be
granted to Eligible Directors as provided in Sections 3.2 and 3.3. Each Restricted Stock grant
shall be evidenced by an agreement containing such terms deemed necessary or desirable by the
Committee that are not inconsistent with the Plan or any applicable law. No grant of Restricted
Stock shall confer upon any person any right to continue to serve as a Director.

     Section 3.2. Automatic Annual Grants. Immediately after each annual meeting of stockholders
of the Company, each Eligible Director shall automatically be granted ONE THOUSAND (1,000) shares
of Restricted Stock.

     Section 3.3. Election to Receive Restricted Stock. If the Compensation Plan permits Eligible
Directors to elect to receive Restricted Stock in lieu of all or part of Director fees otherwise
payable in cash, each Eligible Director who has properly and timely made such election as provided
in the Compensation Plan shall automatically be granted a number of Shares of Restricted Stock
equal to (i) the amount of the fee such Eligible Director elects to receive in the form of
Restricted Stock divided by (ii) the Fair Market Value of a Share on the Date of Grant multiplied
by (iii) 1.2, with the result rounded to the nearest whole Share.

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     Section 3.4. Date of Grant.

     (a) The Date of Grant of Restricted Stock granted under Section 3.2 shall be the date of the
annual meeting of stockholders of the Company to which the grant relates.

     (b) The Date of Grant of Restricted Stock granted under Section 3.3 shall be the date of the
next annual meeting of stockholders after the election by the Eligible Director pursuant to the
Compensation Plan to receive the Restricted Stock in lieu of cash fees, except that, for an
Eligible Director elected between annual stockholder meetings, the Date of Grant shall be the date
of his or her election as a Director.

     Section 3.5. Vesting.

     (a) Restricted Stock granted under Section 3.2 shall vest six months after the Date of Grant.

     (b) Restricted Stock granted under Section 3.3 shall vest on the Payment Date(s) following the
Date of Grant as provided in this Section 3.5(a). The number of Shares of Restricted Stock granted
under Section 3.3 that will vest on each Payment Date after the Date of Grant shall equal the
number of Shares of Restricted Stock granted divided by the number of Payment Dates occurring after
the Date of Grant and before the first anniversary of the most recent annual meeting of
stockholders of the Company.

     (c) Notwithstanding the other provisions of this Section 3.5, (i) Restricted Stock shall only
vest as provided in this Section 3.5 if the holder is a Director at the time the Restricted Stock
would otherwise vest and (ii) upon the occurrence of a Change in Control, all Restricted Stock
issued under the Plan that is outstanding at the time of the Change in Control shall immediately
vest.

     (d) Notwithstanding the vesting conditions set forth in the Plan or the Compensation Plan, the
Committee may in its discretion at any time accelerate the vesting of Restricted Stock or otherwise
waive or amend any conditions of a grant of Restricted Stock under the Plan.

     Section 3.6. Restrictions on Transfer. Stock certificates representing Restricted Stock
granted to an Eligible Director under the Plan (whether in physical or in book entry or other
electronic form) shall be registered in the Director’s name or, at the option of the Committee, not
issued until such time as the Restricted Stock shall become vested or as otherwise determined by
the Committee. If certificates are issued prior to the Shares of Restricted Stock becoming vested,
either in physical or in book entry or other electronic form, such certificates shall either be
held by the Company on behalf of the Director, or delivered to the Director bearing a legend to
restrict transfer of the certificate until the Restricted Stock has vested, as determined by the
Committee. The Director shall have the right to vote and receive dividends on the Restricted Stock
before it has vested. Except as may otherwise be expressly permitted by the Committee, no Share of
Restricted Stock may be sold, transferred, assigned or pledged by the Director until such Share has
vested. In the event that a Director ceases to be a Director before all the Director’s Restricted
Stock has vested, the Shares of Restricted Stock that have not vested shall be forfeited. At the
time Restricted Stock vests (and, if the Director has been issued legended

7

 

certificates for Restricted Stock, upon the return of such certificates to the Company), a
certificate for such vested Shares shall be delivered to the Director free of all restrictions.

     Section 3.7. Issuance of Shares. As a condition of the issuance of any certificate for Shares
of Restricted Stock, the Committee may obtain such agreements or undertakings, if any, as it may
deem necessary or advisable to assure compliance with any provision of the Plan, any agreement or
any law or regulation including, but not limited to, the following:

     (a) a representation, warranty or agreement by the Eligible Director to the Company that the
Eligible Director is acquiring the Shares for investment and not with a view to, or for sale in
connection with, the distribution of any such Shares; and

     (b) a representation, warranty or agreement to be bound by any legends that are, in the
opinion of the Committee, necessary or appropriate to comply with the provisions of any securities
law deemed by the Committee to be applicable to the issuance of the Shares and are endorsed upon
the Share certificates.

     Section 3.8. Section 83(b) Election. If a Director receives Restricted Stock that is subject
to a “substantial risk of forfeiture,” the Director may elect under Section 83(b) of the Code to
include in his or her gross income, for the taxable year in which the Restricted Stock is received,
the Fair Market Value of such Restricted Stock on the Date of Grant. If the Director makes the
Section 83(b) election, the Director shall (a) make such election in a manner that is satisfactory
to the Committee, (b) provide the Company with a copy of such election and (c) agree to promptly
notify the Company if any Internal Revenue Service or state tax agent, on audit or otherwise,
questions the validity or correctness of such election or of the amount of income reportable on
account of such election.

ARTICLE IV. ADDITIONAL PROVISIONS

     Section 4.1. Administration of the Plan. The Plan shall be administered by the Committee.
The Committee shall have the authority to interpret the provisions of the Plan, to adopt such rules
and regulations for carrying out the Plan as it may deem advisable, to decide conclusively all
questions arising with respect to the Plan and to make all other determinations and take all other
actions necessary or desirable for the administration of the Plan. All decisions and acts of the
Committee shall be final and binding upon all affected Optionees and holders of Restricted Stock.
If there is no Committee, the Board shall administer the Plan and in such case all references to
the Committee shall be deemed to be references to the Board.

     Section 4.2. Adjustment of Shares. If at any time while the Plan is in effect, there shall be
any increase or decrease in the number of issued and outstanding Shares through the declaration of
a stock dividend or through any recapitalization resulting in a stock split, combination or
exchange of Shares, the Committee shall make an appropriate adjustment in the number and kind of
Shares then subject to being issued under the Plan, so that the same proportion of the Company’s
issued and outstanding Shares shall continue to be subject to issuance under the Plan upon the
exercise of Options or as Restricted Stock.

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     Section 4.3. Amendment. The Board may amend or modify the Plan in any respect at any time,
subject to stockholder approval if required by applicable law or regulation or by applicable stock
exchange rules.

     Section 4.4. Duration and Termination. The Plan shall be of unlimited duration. The Board
may suspend, discontinue or terminate the Plan at any time. Such action shall not impair any of
the rights of any holder of any Option or Restricted Stock outstanding on the date of the Plan’s
suspension, discontinuance or termination without the holder’s written consent.

     Section 4.5. Effective Date. The Plan amends and restates the Existing Plan in its entirety.
Such amendment and restatement was adopted by the Board on March 3, 2005, to be effective April 26,
2005, with the Existing Plan remaining in effect until that date. The Board further amended the
Plan on January 22, 2007 (with numbers of shares revised to reflect the 2-for-1 stock split on May
31, 2006).

9

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