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exv10w1

 

EXHIBIT 10.1

PERFICIENT INC.

AMENDED AND RESTATED

1999 STOCK OPTION/STOCK ISSUANCE PLAN

ARTICLE I

GENERAL PROVISIONS

1.1 Purpose of the Plan

     The 1999 Stock Option/Stock Issuance Plan was adopted on May 3, 1999 for the purpose of
promoting the interests of Perficient Inc., a Delaware corporation, by providing eligible persons
with the opportunity to acquire a proprietary interest, or otherwise increase their proprietary
interest, in the Corporation as an incentive for them to remain in the service of the Corporation.
This amendment and restatement makes certain changes to incorporate various amendments made to the
Plan by the Board since the Plan’s adoption, including certain amendments approved by the
shareholders of the Corporation.

     Unless otherwise indicated, capitalized terms shall have the meanings assigned to such terms
in the attached Appendix.

1.2 Structure of the Plan

     (a) The Plan shall be divided into three separate equity programs:

          (i) the Discretionary Option and SAR Grant Program under which eligible persons may, at the
discretion of the Plan Administrator, be granted options to purchase shares of Common Stock and/or
stock appreciation rights (“SARs”);

          (ii) the Stock Issuance Program under which eligible persons may, at the discretion of the
Plan Administrator, be issued shares of Common Stock directly, either through the immediate
purchase of such shares or as a bonus for services rendered to the Corporation (or any Parent or
Subsidiary); and

          (iii) the Automatic Option Grant Program under which eligible Board members and members of the
Board serving on the Compensation Committee or Audit Committee shall automatically receive options
to purchase shares of Common Stock.

     (b) The provisions of Articles One and Five shall apply to all equity programs under the Plan
and shall govern the interests of all persons under the Plan.

1.3 Administration of the Plan

     (a) Prior to the Section 12 Registration Date, the Discretionary Option and SAR Grant and
Stock Issuance Programs shall be administered by the Board. Beginning with the Section 12
Registration Date, the following provisions shall govern the administration of the Plan:

 

 

          (i) The Board shall have the authority to administer the Discretionary Option and SAR Grant,
Stock Issuance and Automatic Option Grant Programs with respect to Section 16 Insiders but may
delegate such authority in whole or in part to the Primary Committee;

          (ii) Administration of the Discretionary Option and SAR Grant and Stock Issuance Programs with
respect to all other persons eligible to participate in those programs may, at the Board’s
discretion, be vested in the Primary Committee or a Secondary Committee, or the Board may retain
the power to administer those programs with respect to all such persons; and

          (iii) To the extent the Automatic Option Grant Program is not self-executing in accordance
with the terms of that program, administration of the Automatic Option Grant Program may at the
Board’s discretion be vested in the Primary Committee or a Secondary Committee, or the Board may
retain the power to administer the program.

     (b) Each Plan Administrator shall, within the scope of its administrative jurisdiction under
the Plan, have full power and authority subject to the provisions of the Plan:

          (i) to establish such rules as it may deem appropriate for proper administration of the Plan,
to make all factual determinations, to construe and interpret the provisions of the Plan and the
awards thereunder and to resolve any and all ambiguities thereunder;

          (ii) to determine, with respect to awards made under the Discretionary Option and SAR Grant
and Stock Issuance Programs, which eligible persons are to receive such awards, the time or times
when such awards are to be made, the number of shares to be covered by each such award, the vesting
schedule (if any) applicable to the award, the status of a granted option as either an Incentive
Option or a Non-Statutory Option and the maximum term for which the award is to remain outstanding;

          (iii) to amend, modify or cancel any outstanding award with the consent of the holder or
accelerate the vesting of such award; and

          (iv) to take such other discretionary actions as permitted pursuant to the terms of the
applicable program.

     Decisions of each Plan Administrator within the scope of its administrative functions
under the Plan shall be final and binding on all parties.

     (c) Members of the Primary Committee or any Secondary Committee shall serve for such
period of time as the Board may determine and may be removed by the Board at any time. The Board
may also at any time terminate the functions of any Secondary Committee and reassume all powers and
authority previously delegated to such committee.

     (d) Service on the Primary Committee or the Secondary Committee shall constitute service as a
Board member, and members of each such committee shall accordingly be entitled to full
indemnification and reimbursement as Board members for their service on such committee. No member
of the Primary Committee or the Secondary Committee shall be liable for any act or

 

 

omission made in good faith with respect to the Plan or any options or stock issuances under
the Plan.

1.4 Eligibility

     (a) The persons eligible to participate in the Discretionary Option and SAR Grant and Stock
Issuance Programs are as follows:

          (i) Employees;

          (ii) non-employee members of the Board or the board of directors of any Parent or Subsidiary;
and

          (iii) consultants and other independent advisors who provide services to the Corporation (or
any Parent or Subsidiary).

     (b) Board members and members of the Audit Committee and/or Compensation Committee shall be
eligible to participate in the Automatic Option Grant Program.

1.5 Stock Subject to the Plan

     (a) The stock issuable in the aggregate under the Plan shall be shares of authorized but
unissued or reacquired Common Stock, including shares repurchased by the Corporation on the open
market. The maximum number of shares of Common Stock reserved for issuance in the aggregate over
the term of the Plan and upon exercise of options granted prior to the adoption of the Plan (the
“Prior Options”) shall not exceed 5,346,085 shares; provided, however, that the number of shares of
Common Stock reserved for issuance under the Plan shall automatically increase on the first trading
day of January each calendar year, beginning in calendar year 2003, by an amount equal to eight
percent (8%) of the total number of shares of Common Stock outstanding on the last trading day in
December of the preceding calendar year but in no event will any such annual increase exceed
1,000,000 shares of Common Stock.

     (b) No one person participating in the Plan may receive options, SARs and direct stock
issuances for more than 600,000 shares of Common Stock in the aggregate in any calendar year.

     However, should the exercise price of an option under the Plan or a Prior Option be paid
with shares of Common Stock or should shares of Common Stock otherwise issuable under the Plan or
upon exercise of a Prior Option be withheld by the Corporation in satisfaction of the withholding
taxes incurred in connection with the exercise of an option or the vesting of a stock issuance
under the Plan, then the number of shares of Common Stock available for issuance under the Plan
shall be reduced by the gross number of shares for which the option is exercised or which vest
under the stock issuance, and not by the net number of shares of Common Stock issued to the holder
of such option or stock issuance. Shares of Common Stock underlying one or more SARs exercised
under the Plan shall not be available for subsequent issuance.

     (c) Shares of Common Stock subject to outstanding options under the Plan and the Prior
Options shall be available for subsequent issuance under the Plan to the extent those options
expire, terminate or are cancelled for any reason prior to exercise in full. Unvested shares issued
under the Plan and subsequently repurchased by the Corporation, at the original

 

 

exercise or issue price paid per share, pursuant to the Corporation’s repurchase rights, if
any, under the Plan shall be added back to the number of shares of Common Stock reserved for
issuance under the Plan and shall accordingly be available for reissuance through one or more
subsequent options or direct stock issuances under the Plan.

     (d) If any change is made to the Common Stock by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation’s receipt of consideration, appropriate
adjustments shall be made to (i) the maximum number and/or class of securities issuable under the
Plan, (ii) the number and/or class of securities for which any one person may be granted options,
SARs and direct stock issuances under this Plan per calendar year, (iii) the number and/or class of
securities for which grants are subsequently to be made under the Automatic Option Grant Program to
new and continuing eligible Board members and (iv) the number and/or class of securities and the
exercise price per share in effect under each outstanding option under the Plan. Such adjustments
to the outstanding options are to be effected in a manner which shall preclude the enlargement or
dilution of rights and benefits under such options. The adjustments determined by the Plan
Administrator shall be final, binding and conclusive. In no event shall any such adjustments be
made in connection with the conversion of one or more outstanding shares of the Corporation’s
preferred stock into shares of Common Stock.

 

 

ARTICLE II

DISCRETIONARY OPTION AND SAR GRANT PROGRAM

2.1 Option Terms

     Each option shall be evidenced by one or more documents in the form approved by the Plan
Administrator; provided, however, that each such document shall comply with the terms specified
below. Each document evidencing an Incentive Option shall, in addition, be subject to the
provisions of the Plan applicable to such options.

     (a) Exercise Price

          (i) The exercise price per share shall be fixed by the Plan Administrator at the time of the
option grant.

          (ii) The exercise price shall become immediately due upon exercise of the option and shall,
subject to the provisions of Section 5.2 of Article V and the documents evidencing the option, be
payable in cash or check made payable to the Corporation. Should the Common Stock be registered
under Section 12 of the 1934 Act at the time the option is exercised, then the exercise price may
also be paid as follows:

          (A) shares of Common Stock held for the requisite period necessary to avoid a charge to
the Corporation’s earnings for financial reporting purposes and valued at Fair Market Value
on the Exercise Date; or

          (B) to the extent the option is exercised for vested shares, through a special sale and
remittance procedure pursuant to which the Optionee shall concurrently provide irrevocable
instructions to (1) a Corporation-approved brokerage firm to effect the immediate sale of
the purchased shares and remit to the Corporation, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate exercise price payable for the
purchased shares plus all applicable Federal, state and local income and employment taxes
required to be withheld by the Corporation by reason of such exercise and (2) the
Corporation to deliver the certificates for the purchased shares directly to such brokerage
firm in order to complete the sale.

     Except to the extent such sale and remittance procedure is utilized, payment of the
exercise price for the purchased shares must be made on the Exercise Date.

     (b) Exercise and Term of Options. Each option shall be exercisable at such time or
times, during such period and for such number of shares as shall be determined by the Plan
Administrator and set forth in the documents evidencing the option. However, no option shall have
a term in excess of ten (10) years measured from the option grant date.

     (c) Cessation of Service

          (i) The following provisions shall govern the exercise of any options outstanding at the time
of the Optionee’s cessation of Service or death:

 

 

          (A) Any option outstanding at the time of the Optionee’s cessation of Service for any
reason shall remain exercisable for such period of time thereafter as shall be determined by
the Plan Administrator and set forth in the documents evidencing the option, but no such
option shall be exercisable after the expiration of the option term;

          (B) Any option exercisable in whole or in part by the Optionee at the time of death may
be subsequently exercised by his or her Beneficiary;

          (C) During the applicable post-Service exercise period, the option may not be exercised
in the aggregate for more than the number of vested shares for which the option is
exercisable on the date of the Optionee’s cessation of Service. Upon the expiration of the
applicable exercise period or (if earlier) upon the expiration of the option term, the
option shall terminate and cease to be outstanding for any vested shares for which the
option has not been exercised. However, the option shall, immediately upon the Optionee’s
cessation of Service, terminate and cease to be outstanding to the extent the option is not
otherwise at that time exercisable for vested shares;

          (D) Should the Optionee’s Service be terminated for Misconduct or should the Optionee
engage in Misconduct while his or her options are outstanding, then all such options shall
terminate immediately and cease to be outstanding.

          (ii) The Plan Administrator shall have complete discretion, exercisable either at the time an
option is granted or at any time while the option remains outstanding:

          (A) to extend the period of time for which the option is to remain exercisable
following the Optionee’s cessation of Service to such period of time as the Plan
Administrator shall deem appropriate, but in no event beyond the expiration of the option
term; and/or

          (B) to permit the option to be exercised, during the applicable post-Service exercise
period, for one or more additional installments in which the Optionee would have vested had
the Optionee continued in Service.

     (d) Stockholder Rights. The holder of an option shall have no stockholder rights with respect
to the shares subject to the option until such person shall have exercised the option, paid the
exercise price and become a holder of record of the purchased shares.

     (e) Repurchase Rights. The Plan Administrator shall have the discretion to grant options which
are exercisable for unvested shares of Common Stock. Should the Optionee cease Service while
holding such unvested shares, the Corporation shall have the right to repurchase, at the exercise
price paid per share, any or all of those unvested shares. The terms upon which such repurchase
right shall be exercisable (including the period and procedure for exercise and the appropriate
vesting schedule for the purchased shares) shall be established by the Plan Administrator and set
forth in the document evidencing such repurchase right.

     (f) Limited Transferability of Options. During the lifetime of the Optionee, Incentive
Options shall be exercisable only by the Optionee and shall not be assignable or transferable other
than by will or by the laws of descent and distribution following the

 

 

Optionee’s death. Non-Statutory Options shall be subject to the same restrictions, except that
a Non-Statutory Option may, to the extent permitted by the Plan Administrator, be assigned in whole
or in part during the Optionee’s lifetime (i) as a gift to one or more members of the Optionee’s
immediate family, to a trust in which Optionee and/or one or more such family members hold more
than fifty percent (50%) of the beneficial interest or to an entity in which more than fifty
percent (50%) of the voting interests are owned by one or more such family members, or (ii)
pursuant to a domestic relations order. The terms applicable to the assigned portion shall be the
same as those in effect for the option immediately prior to such assignment and shall be set forth
in such documents issued to the assignee as the Plan Administrator may deem appropriate.

2.2 Incentive Options

     The terms specified below shall be applicable to all Incentive Options. Except as
modified by the provisions of this Section 2.2, all the provisions of Articles I, II and V shall be
applicable to Incentive Options. Options which are specifically designated as Non-Statutory Options
when issued under the Plan shall not be subject to the terms of this Section 2.2.

     (a) Eligibility. Incentive Options may only be granted to Employees.

     (b) Exercise Price. The exercise price per share shall not be less than one hundred percent
(100%) of the Fair Market Value per share of Common Stock on the option grant date.

     (c) Dollar Limitation. The aggregate Fair Market Value of the shares of Common Stock
(determined as of the respective date or dates of grant) for which one or more options granted to
any Employee under the Plan (or any other option plan of the Corporation or any Parent or
Subsidiary) may for the first time become exercisable as Incentive Options during any one calendar
year shall not exceed the sum of one hundred thousand dollars ($100,000). To the extent the
Employee holds two (2) or more such options which become exercisable for the first time in the same
calendar year, the foregoing limitation on the exercisability of such options as Incentive Options
shall be applied on the basis of the order in which such options are granted.

     (d) 10% Stockholder. If any Employee to whom an Incentive Option is granted is a 10%
Stockholder, then the exercise price per share shall not be less than one hundred ten percent
(110%) of the Fair Market Value per share of Common Stock on the option grant date, and the option
term shall not exceed five (5) years measured from the option grant date.

2.3 Stock Appreciation Rights

     The Plan Administrator may, subject to such conditions as it may determine, grant stock
appreciation rights (“SARs”) to selected persons eligible to participate in the Discretionary
Option and SAR Grant Program. Each SAR shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such document shall comply with
the terms specified below. Except as modified by the provisions of this Section 2.3, all the
provisions of Articles I, II and V shall be applicable to SARs.

     (a) Rights Related to SARs Granted with Option. A SAR granted in connection with an
option shall entitle the Optionee to elect between the exercise of the underlying option for shares
of Common Stock and the surrender of that option in exchange for a distribution from

 

 

the Corporation in an amount equal to the excess of (i) the Option Surrender Value of the
number of fully-vested shares for which the option is surrendered over (ii) the aggregate exercise
price payable for such shares. The distribution may be made in shares of Common Stock valued at
Fair Market Value on the option surrender date, in cash, or partly in shares and partly in cash, as
the Plan Administrator shall in its sole discretion deem appropriate.

     (b) Rights Related to SARs Granted Without Option. A SAR granted independent of an option
shall be exercisable as determined by the Plan Administrator and set forth in the document
evidencing the grant, which shall comply with the following provisions:

          (i) Each grant shall state the time or periods in which the right to exercise the SAR or a
portion thereof shall vest and the number of shares of Common Stock for which the right to exercise
the SAR shall vest at each such time or period.

          (ii) Each grant shall state the date at which the SAR shall expire if not previously
exercised.

          (iii) Each grant shall entitle a Participant, upon exercise thereof, to receive payment of an
amount determined by multiplying:

          (A) the difference obtained by subtracting the Fair Market Value of a share of Common Stock on
the date of grant of the SAR from the Fair Market Value of a share of Common Stock on the date of
exercise of that SAR, by

          (B) the number of shares as to which the SAR has been exercised.

          (c) SAR Terms. The Plan Administrator shall determine at the date of grant or thereafter, the
time or times at which and the circumstances under which an SAR may be exercised in whole or in
part (including based on achievement of performance goals and/or future service requirements), the
method of exercise, method of settlement, form of consideration payable in settlement (including,
but not limited to, cash or Common Stock), method by or forms in which Common Stock will be
delivered or deemed to be delivered to Participants, whether or not an SAR shall be in tandem or in
combination with any other award, and any other terms and conditions of any SAR. SARs may be
either freestanding or in tandem with other awards.

2.4 Change in Control

     (a) Subject to the terms of an employment or similar agreement, the Board may at any time (i)
provide that an option or SAR outstanding at the time of a Change in Control, but not otherwise
fully-vested, shall automatically accelerate so that such option or SAR shall vest and become
exercisable in full immediately prior to the effective date of the Change in Control, and/or (ii)
provide that such option or SAR shall be assumed or otherwise continued in full force and effect by
the successor corporation (or parent thereof) pursuant to the terms of the Change in Control.

     (b) Subject to the terms of an employment or similar agreement, the Plan Administrator may at
any time (i) provide that the Corporation’s repurchase rights shall terminate, and the shares of
Common Stock subject to such terminated repurchase rights shall

 

 

immediately vest in full, or (ii) provide that the Corporation’s repurchase rights be assigned
to the successor corporation (or parent thereof) or otherwise continue in full force and effect
pursuant to the terms of the Change in Control.

     (c) Immediately following the consummation of the Change in Control, all outstanding options
and SARs shall terminate and cease to be outstanding, except to the extent assumed by the successor
corporation (or parent thereof) or otherwise expressly continued in full force and effect pursuant
to the terms of the Change in Control.

     (d) Each option or SAR which is assumed in connection with a Change in Control shall be
appropriately adjusted, immediately after such Change in Control, to apply to the number and class
of securities to which the option or SAR would have applied had the option or SAR been exercised
immediately prior to such Change in Control. Appropriate adjustments to reflect such Change in
Control shall also be made to (i) the exercise price payable per share under each outstanding
option or SAR, provided the aggregate exercise price payable for such securities shall remain the
same, (ii) the maximum number and/or class of securities available for issuance over the remaining
term of the Plan and (iii) the maximum number and/or class of securities for which any one person
may be granted options, SARs and direct stock issuances under the Plan per calendar year.

     (e) The Plan Administrator may at any time provide that one or more options or SARs will
automatically accelerate upon an Involuntary Termination of the Optionee’s or Participant’s Service
within a designated period (not to exceed eighteen (18) months) following the effective date of any
Change in Control in which those options or SARs do not otherwise accelerate. Any options so
accelerated shall remain exercisable for fully-vested shares until the earlier of (i) the
expiration of the option term, and (ii) the expiration of the one (l)-year period measured from the
effective date of the Involuntary Termination. In addition, the Plan Administrator may at any time
provide that one or more of the Corporation’s repurchase rights shall immediately terminate upon
such Involuntary Termination.

     (f) The portion of any Incentive Option accelerated in connection with a Change in Control
shall remain exercisable as an Incentive Option only to the extent the applicable one hundred
thousand dollar ($100,000) limitation is not exceeded. To the extent such dollar limitation is
exceeded, the accelerated portion of such option shall be exercisable as a Non-Statutory Option
under the Federal tax laws.

 

 

ARTICLE III

STOCK ISSUANCE PROGRAM

3.1 Stock Issuance Terms

     Shares of Common Stock may be issued under the Stock Issuance program through direct and
immediate issuances without any intervening options. Shares of Common Stock may also be issued
under the Stock Issuance Program pursuant to share right awards which entitle the recipients to
receive those shares upon the attainment of designated performance goals or Service requirements.
Each such award shall be evidenced by one or more documents which shall comply with the terms
specified below.

     (a) Purchase Price

          (i) The purchase price per share of Common Stock subject to direct issuance shall be fixed by
the Plan Administrator.

          (ii) Subject to the provisions of Section 5.2 of Article V, Shares of Common Stock may be
issued under the Stock Issuance Program for any of the following items of consideration which the
Plan Administrator may deem appropriate in each individual instance:

          (A) cash or check made payable to the Corporation, or

          (B) past services rendered to the Corporation (or any Parent or Subsidiary).

     (b) Vesting/Issuance Provisions

          (i) The Plan Administrator may issue shares of Common Stock which are fully and immediately
vested upon issuance or which are to vest in one or more installments over the Participant’s period
of Service or upon attainment of specified performance objectives. Alternatively, the Plan
Administrator may issue share right awards which shall entitle the recipient to receive a specified
number of vested shares of Common Stock upon the attainment of one or more performance goals or
Service requirements established by the Plan Administrator.

          (ii) Any new, substituted or additional securities or other property (including money paid
other than as a regular cash dividend) which the Participant may have the right to receive with
respect to his or her unvested shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation’s receipt of consideration shall be
issued subject to (A) the same vesting requirements applicable to the Participant’s unvested shares
of Common Stock and (B) such escrow arrangements as the Plan Administrator shall deem appropriate.

          (iii) The Participant shall have full stockholder rights with respect to the issued shares of
Common Stock, whether or not the Participant’s interest in those shares is vested. Accordingly,
the Participant shall have the right to vote such shares and to receive any regular cash dividends
paid on such shares.

 

 

          (iv) Should the Participant cease to remain in Service while holding one or more unvested
shares of Common Stock, or should the performance objectives not be attained with respect to one or
more such unvested shares of Common Stock, then those shares shall be immediately surrendered to
the Corporation for cancellation, and the Participant shall have no further stockholder rights with
respect to those shares. To the extent the surrendered shares were previously issued to the
Participant for consideration paid in cash or cash equivalent (including the Participant’s
purchase-money indebtedness), the Corporation shall repay to the Participant the cash consideration
paid for the surrendered shares and shall cancel the unpaid principal balance of any outstanding
purchase-money note of the Participant attributable to the surrendered shares.

          (v) The Plan Administrator may waive the surrender and cancellation of one or more unvested
shares of Common Stock (or other assets attributable thereto) which would otherwise occur upon the
cessation of the Participant’s Service or the non-attainment of the performance objectives
applicable to those shares. Such waiver shall result in the immediate vesting of the Participant’s
interest in the shares of Common Stock as to which the waiver applies. Such waiver may be effected
at any time, whether before or after the Participant’s cessation of Service or the attainment or
non-attainment of the applicable performance objectives.

          (vi) Outstanding share right awards shall automatically terminate, and no shares of Common
Stock shall actually be issued in satisfaction of those awards, if the performance goals or Service
requirements established for such awards are not attained. The Plan Administrator, however, shall
have the authority to issue shares of Common Stock in satisfaction of one or more outstanding share
right awards as to which the designated performance goals or Service requirements are not attained.

3.2 Change in Control

     (a) Subject to the terms of an employment or similar agreement, the Plan Administrator may at
any time provide that in the event of a Change in Control (i) the Corporation’s outstanding
repurchase rights shall terminate automatically, and all the shares of Common Stock subject to
those terminated rights shall immediately vest in full or (ii) the Corporation’s outstanding
repurchase rights shall be assigned to the successor corporation (or parent thereof) or otherwise
continue in full force and effect pursuant to the terms of the Change in Control.

     (b) The Plan Administrator may at any time provide for the automatic termination of one or
more outstanding repurchase rights and the immediate vesting of the shares of Common Stock subject
to those terminated repurchase rights in the event of the Involuntary Termination of the
Participant’s Service within a designated period (not to exceed eighteen (18) months) following the
effective date of any Change in Control in which those repurchase rights are assigned to the
successor corporation (or parent thereof) or otherwise continue in full force and effect.

3.3 Share Escrow/Legends

 

 

     Unvested shares may, in the Plan Administrator’s discretion, be held in escrow by the
Corporation until the Participant’s interest in such shares vests or may be issued directly to the
Participant with restrictive legends on the certificates evidencing those unvested shares.

 

 

ARTICLE IV

AUTOMATIC OPTION GRANT PROGRAM

4.1 Option Terms

     (a) Grant Dates. Options shall be made on the dates specified below:

          (i) Each individual who is first elected or appointed as a Board member shall automatically be
granted, on the date of such initial election or appointment, a Non-Statutory Option to purchase
15,000 shares of Common Stock which shall vest and become exercisable with respect to the shares of
Common Stock subject to the option in three equal annual installments beginning on the first
anniversary of the date of grant;

          (ii) On the date of each Annual Stockholders Meeting, each individual who is to continue to
serve as a non-employee Board member, whether or not that individual is standing for re-election to
the Board, shall automatically be granted a fully vested Non-Statutory Option to purchase 5,000
shares of Common Stock;

          (iii) Notwithstanding the foregoing, on the date of each Annual Stockholders Meeting, the
chairman of the Audit Committee shall automatically be granted a fully vested Non-Statutory Option
to purchase 5,000 shares of Common Stock; and

          (iv) Notwithstanding the foregoing, on the date of each Annual Stockholders Meeting, each
Board member serving on a committee of the Board shall automatically be granted a fully vested
Non-Statutory Option to purchase 5,000 shares of Common Stock.

     (b) Exercise Price

          (i) The exercise price per share shall be equal to one hundred percent (100%) of the Fair
Market Value per share of Common Stock on the option grant date.

          (ii) The exercise price shall be payable in one or more of the alternative forms authorized
under the Discretionary Option and SAR Grant Program. Except to the extent the sale and remittance
procedure specified thereunder is utilized, payment of the exercise price for the purchased shares
must be made on the Exercise Date.

     (c) Option Term. Each option shall have a term of ten (10) years measured from the option
grant date.

     (d) Exercise of Options. Each option shall be exercisable for the option shares as, if and
when such shares become vested shares.

     (e) Cessation of Board Service. The following provisions shall govern the exercise of any
options outstanding at the time of the Optionee’s cessation of Board Service:

          (i) Any vested option outstanding at the time of the Optionee’s cessation of Board service for
any reason shall remain exercisable for a twelve (12)-month period following

 

 

the date of such cessation of Board service, but in no event shall such option be exercisable
after the expiration of the option term.

          (ii) Any vested option exercisable in whole or in part by the Optionee at the time of death
may be subsequently exercised by his or her Beneficiary.

          (iii) Any unvested options will terminate and be null and void upon the Optionee’s cessation
of Board Service.

          (iv) Upon the expiration of the applicable exercise period or (if earlier) upon the expiration
of the option term, the option shall terminate and cease to be outstanding for any vested shares
for which the option has not been exercised.

4.2 Remaining Terms

     The remaining terms of each option granted under the Automatic Option Grant Program shall
be the same as the terms in effect for Non-Statutory Options granted under the Discretionary Option
and SAR Grant Program.

 

 

ARTICLE V

MISCELLANEOUS

5.1 No Impairment of Authority

     Outstanding awards shall in no way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

5.2 First Refusal Right

     Until the Section 12 Registration Date, the Corporation shall have the right of first
refusal with respect to any proposed disposition by the Optionee or the Participant (or any
successor in interest) of any shares of Common Stock issued under the Plan. Such right of first
refusal shall be exercisable in accordance with the terms established by the Plan Administrator and
set forth in the document evidencing such right.

5.3 Financing

     The Plan Administrator may permit any Optionee or Participant to pay the option exercise
price under the Discretionary Option and SAR Grant Program or the purchase price of shares issued
under the Stock Issuance Program by delivering a full-recourse, interest bearing promissory note
payable in one or more installments. The terms of any such promissory note (including the interest
rate and the terms of repayment) shall be established by the Plan Administrator in its sole
discretion. In no event may the maximum credit available to the Optionee or Participant exceed the
sum of (a) the aggregate option exercise price or purchase price payable for the purchased shares
plus (b) any Federal, state and local income and employment tax liability incurred by the Optionee
or the Participant in connection with the option exercise or share purchase.

5.4 Tax Withholding

     (a) The Corporation’s obligation to deliver shares of Common Stock upon the exercise of
options or the issuance or vesting of such shares under the Plan shall be subject to the
satisfaction of all applicable Federal, state and local income and employment tax withholding
requirements.

     (b) The Plan Administrator may, in its discretion, provide any or all holders of Non-Statutory
Options or unvested shares of Common Stock under the Plan with the right to use shares of Common
Stock in satisfaction of all or part of the Withholding Taxes incurred by such holders in
connection with the exercise of their options or the vesting of their shares. Such right may be
provided to any such holder in either or both of the following formats:

STOCK WITHHOLDING: The election to have the Corporation withhold, from
the shares of Common Stock otherwise issuable upon the exercise of such
Non-Statutory Option or the vesting of such shares, a portion of those
shares with an aggregate Fair Market Value equal to the percentage of
the Withholding Taxes (not to exceed one hundred percent (100%))
designated by the holder.

STOCK DELIVERY: The election to deliver to the Corporation, at the
time the Non-Statutory Option is exercised or the shares vest, one

 

 

or more shares of Common Stock previously acquired by such holder
(other than in connection with the option exercise or share vesting
triggering the Withholding Taxes) with an aggregate Fair Market Value
equal to the percentage of the Taxes (not to exceed one hundred percent
(100%)) designated by the holder.

5.5 Effective Date and Term of the Plan

     (a) The Plan became effective with respect to the Discretionary Option and SAR Grant and Stock
Issuance Programs immediately upon the Plan Effective Date. The Automatic Option Grant Program
shall become effective on the Underwriting Date. Options may be granted under the Discretionary
Option and SAR Grant at any time on or after the Plan Effective Date. However, no options granted
under the Plan may be exercised, and no shares shall be issued under the Plan, until the Plan is
approved by the Corporation’s stockholders. If such stockholder approval is not obtained within
twelve (12) months after the Plan Effective Date, then all options previously granted under this
Plan shall terminate and cease to be outstanding, and no further options shall be granted and no
shares shall be issued under the Plan.

     (b) The Plan shall terminate upon the earliest of (i) May 2, 2009, (ii) the date on which all
shares available for issuance under the Plan shall have been issued as fully-vested shares or (iii)
the termination of all outstanding options in connection with a Change in Control. Upon such plan
termination, all outstanding options and unvested stock issuances shall thereafter continue to have
force and effect in accordance with the provisions of the documents evidencing such grants or
issuances.

5.6 Amendment of the Plan

     (a) The Board shall have complete and exclusive power and authority to amend or modify the
Plan in any or all respects. However, no such amendment or modification shall adversely affect the
rights and obligations with respect to stock options or unvested stock issuances at the time
outstanding under the Plan unless the Optionee or the Participant consents to such amendment or
modification. In addition, certain amendments may require stockholder approval pursuant to
applicable laws or regulations.

     (b) Options to purchase shares of Common Stock may be granted under the Discretionary Option
and SAR Grant Program and shares of Common Stock may be issued under the Stock Issuance Program
that are in each instance in excess of the number of shares then available for issuance under the
Plan, provided any excess shares actually issued under those programs shall be held in escrow until
there is obtained stockholder approval of an amendment sufficiently increasing the number of shares
of Common Stock available for issuance under the Plan. If such stockholder approval is not obtained
within twelve (12) months after the date the first such excess issuances are made, then (i) any
unexercised options granted on the basis of such excess shares shall terminate and cease to be
outstanding, and (ii) the Corporation shall promptly refund to the Optionees and the Participants
the exercise or purchase price paid for any excess shares issued under the Plan and held in escrow,
together with interest (at the applicable Short Term Federal Rate) for the period the shares were
held in escrow, and such shares shall thereupon be automatically cancelled and cease to be
outstanding.

 

 

5.7 Use of Proceeds

     Any cash proceeds received by the Corporation from the sale of shares of Common Stock
under the Plan shall be used for general corporate purposes.

5.8 Regulatory Approvals

     (a) The implementation of the Plan, the granting of any stock option under the Plan and the
issuance of any shares of Common Stock (i) upon the exercise of any granted option or (ii) under
the Stock Issuance Program shall be subject to the Corporation’s procurement of all approvals and
permits required by regulatory authorities having jurisdiction over the Plan, the stock options
granted under it and the shares of Common Stock issued pursuant to it.

     (b) No shares of Common Stock or other assets shall be issued or delivered under the Plan
unless and until there shall have been compliance with all applicable requirements of Federal and
state securities laws, including the filing and effectiveness of the Form S-8 registration
statement for the shares of Common Stock issuable under the Plan, and all applicable listing
requirements of any stock exchange (or the Nasdaq National Market, if applicable) on which Common
Stock is then listed for trading.

5.9 No Employment/Service Rights

     Nothing in the Plan shall confer upon the Optionee or the Participant any right to
continue in Service for any period of specific duration or interfere with or otherwise restrict in
any way the rights of the Corporation (or any Parent or Subsidiary employing or retaining such
person) or of the Optionee or the Participant, which rights are hereby expressly reserved by each,
to terminate such person’s Service at any time for any reason, with or without cause.

 

 

EXHIBIT 10.1

APPENDIX

     The following definitions shall be in effect under the Plan:

     A. Audit Committee shall mean the Audit Committee of the Board.

     B. Automatic Option Grant Program shall mean the automatic option grant program in effect
under the Plan.

     C. Beneficiary shall mean, in the event the Plan Administrator implements a beneficiary
designation procedure, the person designated by an Optionee or Participant, pursuant to such
procedure, to succeed to such person’s rights under any outstanding awards held by him or her at
the time of death. In the absence of such designation or procedure, the Beneficiary shall be the
personal representative of the estate of the Optionee or Participant or the person or persons to
whom the award is transferred by will or the laws of descent and distribution.

     D. Board shall mean the Corporation’s Board of Directors.

     E. Change in Control shall mean a change in ownership or control of the Corporation effected
through any of the following transactions:

          (i) a merger, consolidation or reorganization approved by the Corporation’s stockholders,
unless securities representing more than fifty percent (50%) of the total combined voting power of
the voting securities of the successor corporation are immediately thereafter beneficially owned,
directly or indirectly and in substantially the same proportion, by the persons who beneficially
owned the Corporation’s outstanding voting securities immediately prior to such transaction,

          (ii) any stockholder-approved transfer or other disposition of all or substantially all of the
Corporation’s assets, or

          (iii) the acquisition, directly or indirectly by any person or related group of persons (other
than the Corporation or a person that directly or indirectly controls, is controlled by, or is
under common control with, the Corporation), of beneficial ownership (within the meaning of Rule
13d-3 of the 1934 Act) of securities possessing more than fifty percent (50%) of the total combined
voting power of the Corporation’s outstanding securities pursuant to a tender or exchange offer
made directly to the Corporation’s stockholders which the Board recommend such stockholders to
accept.

     F. Code shall mean the Internal Revenue Code of 1986, as amended.

     G. Common Stock shall mean the Corporation’s common stock.

     H. Corporation shall mean Perficient Inc., a Delaware corporation, and its successors.

     I. Discretionary Option and SAR Grant Program shall mean the Discretionary Option and SAR
Grant program in effect under the Plan.

 

 

     J. Employee shall mean an individual who is in the employ of the Corporation (or any Parent or
Subsidiary), subject to the control and direction of the employer entity as to both the work to be
performed and the manner and method of performance.

     K. Exercise Date shall mean the date on which the Corporation shall have received written
notice of the option exercise.

     L. Fair Market Value per share of Common Stock on any relevant date shall be determined in
accordance with the following provisions:

          (i) If the Common Stock is at the time traded on the Nasdaq National Market, then the Fair
Market Value shall be the closing selling price per share of Common Stock on the date in question,
as such price is reported on the Nasdaq National Market or any successor system. If there is no
closing selling price for the Common Stock on the date in question, then the Fair Market Value
shall be the closing selling price on the last preceding date for which such quotation exists;

          (ii) If the Common Stock is at the time listed on any Stock Exchange, then the Fair Market
Value shall be the closing selling price per share of Common Stock on the date in question on the
Stock Exchange determined by the Plan Administrator to be the primary market for the Common Stock,
as such price is officially quoted in the composite tape of transactions on such exchange. If there
is no closing selling price for the Common Stock on the date in question, then the Fair Market
Value shall be the closing selling price on the last preceding date for which such quotation
exists; and

          (iii) If shares of Common Stock are not traded on the Nasdaq National Market as provided in
subparagraph (i) or listed or admitted to unlisted trading privileges as provided in subparagraph
(ii) as of the date of determining the Fair Market Value, then the value determined in good faith
by the Plan Administrator which determination shall be conclusive for all purposes.

     M. Incentive Option shall mean an option which satisfies the requirements of section 422 of
the Code.

     N. Involuntary Termination shall mean the termination of the Service of any individual which
occurs by reason of:

          (i) such individual’s involuntary dismissal or discharge by the Corporation for reasons other
than Misconduct, or

          (ii) such individual’s voluntary resignation following (A) a change in his or her position
with the Corporation or Parent or Subsidiary employing the individual which materially reduces his
or her duties and responsibilities or the level of management to which he or she reports, (B) a
reduction in his or her level of compensation (including base salary, fringe benefits and target
bonus under any performance based bonus or incentive programs) by more than fifteen percent (15%)
or (C) a relocation of such individual’s place of employment by more than fifty (50) miles,
provided and only if such change, reduction or relocation is effected by the Corporation without
the individual’s consent.

 

 

     O. Misconduct shall mean the commission of any act of fraud, embezzlement or dishonesty by the
Optionee or Participant, any unauthorized use or disclosure by such person of confidential
information or trade secrets of the Corporation (or any Parent or Subsidiary), or any intentional
wrongdoing by such person, whether by omission or commission, which adversely affects the business
or affairs of the Corporation (or any Parent or Subsidiary) in a material manner. This shall not
limit the grounds for the dismissal or discharge of any person in the Service of the Corporation
(or any Parent or Subsidiary).

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

     Q. Non-Statutory Option shall mean an option not intended to satisfy the requirements of
section 422 of the Code.

     R. Option Surrender Value shall mean the Fair Market Value per share of Common Stock on the
date the option is surrendered to the Corporation.

     S. Optionee shall mean any person to whom an option is granted under the Discretionary Option
and SAR Grant or Automatic Option Grant Program.

     T. Parent shall mean any corporation (other than the Corporation) in an unbroken chain of
corporations ending with the Corporation, provided each corporation in the unbroken chain (other
than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one of the other corporations
in such chain.

     U. Participant shall mean any person who is granted an SAR under the Discretionary Option and
SAR Grant Program or issued shares of Common Stock under the Stock Issuance Program.

     V. Permanent Disability or Permanent Disabled shall mean the inability of the Optionee or the
Participant to engage in any substantial gainful activity by reason of any medically determinable
physical or mental impairment expected to result in death or to be of continuous duration of twelve
(12) months or more. However, solely for purposes of the Automatic Option Grant Program, Permanent
Disability or Permanently Disabled shall mean the inability of the Board member to perform his or
her usual duties as a Board member by reason of any medically determinable physical or mental
impairment expected to result in death or to be of continuous duration of twelve (12) months or
more.

     W. Plan shall mean the Corporation’s 1999 Stock Incentive Plan, amended and restated generally
effective as of ___, as set forth in this document.

     X. Plan Administrator shall mean the particular entity, whether the Primary Committee, the
Board or the Secondary Committee, which is authorized to administer the Discretionary Option and
SAR Grant and Stock Issuance Programs with respect to one or more classes of eligible persons, to
the extent such entity is carrying out its administrative functions under those programs with
respect to the persons under its jurisdiction. However, the Primary Committee shall have the
plenary authority to make all factual determinations and to construe

 

 

and interpret any and all ambiguities under the Plan to the extent such authority is not
otherwise expressly delegated to any other Plan Administrator.

     Y. Plan Effective Date shall mean May 3, 1999, the date on which the Plan was adopted by the
Board. This amendment and restatement is effective as of ___except to the extent the
Board has adopted an amendment to the Plan by resolution and/or stockholder approval, if
applicable, in which case such amendment is effective as of the date declared by the Board upon
passage of the applicable resolutions.

     Z. Primary Committee shall mean the committee of two (2) or more non-employee Board members
appointed by the Board to administer the Discretionary Option and SAR Grant Stock Issuance, and
Automatic Option Grant Programs with respect to Section 16 Insiders.

     AA. Secondary Committee shall mean a committee of one (1) or more Board members appointed by
the Board to administer the Discretionary Option and SAR Grant, Stock Issuance, and Automatic
Option Grant Programs with respect to eligible persons other than Section 16 Insiders.

     BB. Section 12 Registration Date shall mean the date on which the Common Stock is first
registered under Section 12 of the 1934 Act.

     CC. Section 16 Insider shall mean an officer or director of the Corporation subject to the
short-swing profit liabilities of Section 16 of the 1934 Act.

     DD. Service shall mean the performance of services for the Corporation (or any Parent or
Subsidiary) by a person in the capacity of an Employee, a member of the board of directors or a
consultant or independent advisor, except to the extent otherwise specifically provided in the
documents evidencing the award.

     EE. Stock Exchange shall mean either the American Stock Exchange or the New York Stock
Exchange.

     FF. Stock Issuance Program shall mean the stock issuance program in effect under the Plan.

     GG. Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the Corporation, provided each corporation (other than the last
corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.

     HH. 10% Stockholder shall mean the owner of stock (as determined under section 424(d) of the
Code) possessing more than ten percent (10%) of the total combined voting power of all classes of
stock of the Corporation (or any Parent or Subsidiary).

     II. Underwriting Agreement shall mean the agreement between the Corporation and the
underwriter or underwriters managing the initial public offering of the Common Stock.

 

 

     JJ. Underwriting Date shall mean the date on which the Underwriting Agreement is executed and
priced in connection with an initial public offering of the Common Stock.

     KK. Withholding Taxes shall mean the Federal, state and local income and employment
withholding tax liabilities to which the holder of Non-Statutory Options or unvested shares of
Common Stock may become subject in connection with the exercise of those options or the vesting of
those shares.exv10w5

 

EXHIBIT 10.5

THIRD EMPLOYMENT AGREEMENT: KEITH A. KLOPFENSTEIN

This Third Employment Agreement (“Agreement”) is made and entered into on or about March 23, 2005
(the “Effective Date”). This Agreement is by and between T-3 Management Services, L.P., a Delaware
limited partnership, and Keith A. Klopfenstein, a resident of Texas (“Employee).

RECITALS

	A.	 	Effective as of May 27, 2004, Employee commenced his employment with Employer pursuant to an
Employment Agreement between Employee and T-3 Energy Services, Inc. (“T-3”) (the “Original
Employment Agreement”).

	B.	 	Effective as of May 26, 2004, Employee continued his employment with Employer pursuant to a
new Employment Agreement.

	C.	 	The parties desire that Employee continue his employment with Employer, but subject to the
terms and conditions hereinafter set forth in this Agreement.

TERMS AND CONDITIONS

	1.	 	[reserved for future use]
	 
	2.	 	Term.
	 
	 	 	The parties agree to extend their employment relationship under the terms and conditions
hereinafter set forth effective as of the Effective Date and continuing through and
including May 31, 2006 (the “Term of Employment”). Notwithstanding the foregoing,
Employee’s employment hereunder may be sooner terminated as hereinafter provided, and if so
terminated, the Term of Employment shall expire as of the effective date of such termination
and all references herein to the “Term of Employment” shall mean the original term as so
shortened, except as otherwise expressly provided herein.
	 
	 	 	In the event that Employee continues to provide services as an employee to T-3, Employer, or
any company owned or controlled by T-3 (collectively, the “Companies”) after the conclusion
of the Term of Employment, this Agreement shall terminate, subject to the survival
provisions set forth in §10.2 below, and Employee shall be an “employee at will” from that
time forth subject to the terms and conditions of employment specified by Employer for all
of its employees at will.

-1-

 

	3.	 	Duties and Reporting Relationship.

	 	(a)	 	Employee agrees to serve Employer in such capacities with Employer or with any
other of the Companies as may be requested by the chief executive officer of Employer
or any other officer of Employer so authorized by the chief executive officer
(collectively, the “President”).
	 
	 	(b)	 	During the Term of Employment, Employee shall devote his full time and
exclusive attention to and shall use his best efforts to advance the business and
welfare of the Companies. During the Term of Employment, Employee will not engage in
any other employment activities for any direct or indirect remuneration without the
prior written consent of President.

	4.	 	Confidential Information and Covenant Not to Compete.

	 	4.1	 	Confidential Information.
	 
	 	 	 	“Confidential Information” as used in this Agreement means all
proprietary or confidential information furnished on or after the
Effective Date regarding the business and affairs of any of the
Companies, whether of a technical, operational, economic, or other
nature, and including any trade secrets (including customer lists,
identities, contacts, pricing information, know-how, formulas,
patterns, inventions, engineering records or data, interpretive or
analytical information or data, drilling logs, operating agreements
and related records, records of research, proposals, manuals,
compilations, programs, devices, methods, techniques, processes,
budgets or other financial information, and any other records or
information that derive independent economic value, actual or
potential, from not being generally known to, and not being readily
ascertained by proper means by persons other than the holders,
licensees, or other authorized holders thereof who can obtain economic
value from its disclosure or use).
	 
	 	 	 	In consideration of Employer’s commitment to provide Employee with
additional confidential information and the other benefits received by
Employee under this Agreement which he otherwise would not have had
but for his entry into this Agreement, Employee hereby agrees that
during the Term of Employment and thereafter he will not, without the
written consent of Employer, disclose to any person, enterprise,
entity or association or otherwise use or exploit for himself or
others any Confidential Information.
	 
	 	 	 	Notwithstanding the foregoing, Employee may utilize Confidential
Information to the extent required by his performance of assigned
duties for Employer or any other of the Companies or which:

	 	(a)	 	was known to Employee or the public prior to disclosure to
Employee in the course of his employment by Employer;

-2-

 

	 	(b)	 	becomes generally known to the public through no fault of
Employee or others owing duties of trust or confidentiality to Employee,
	 
	 	(c)	 	is lawfully obtained by Employee from another source not under
obligation to Employer or any of the Companies regarding disclosure of such
information or technology, or
	 
	 	(d)	 	is developed after the Term of Employment and independently by
Employee or his agents without access to or reliance on any Confidential
Information.

	 	4.2	 	Return of Confidential Information.
	 
	 	 	 	Upon termination of his employment, Employee will deliver to Employer
all tangible displays and repositories of Confidential Information
including without limitation trade secrets and other materials or
records or writings of any other type (including any copies thereof)
made, used or obtained by Employee in connection with his employment
by Employer. Employee agrees that all inventions, improvements in any
of the Companies’ methods of conducting their businesses or
innovations (in each case, including, by way of expansion and not
limitation, policies, procedures, products, improvements, software,
ideas and discoveries, whether or not patentable or copyrightable)
conceived or made by him during any time of his employment by Employer
prior to or subsequent to the execution of this Agreement belong to
Employer or any other of the Companies, as applicable, and to the
extent Employee participated in the creation of any of the foregoing
he did so on a work for hire basis. Upon termination of his
Employment, Employee shall promptly disclose such inventions,
improvements or innovations to the President or his/her designee and
perform all actions reasonably requested by the President or his/her
designee to establish and confirm such ownership by Employer or any
other of the Companies and to protect the intellectual property rights
of Employer and the Companies contained therein or represented
thereby.
	 
	 	4.3	 	Covenant Not to Compete.

	 
	 	 	 	Employee hereby agrees that:

	 	4.3.1.	 	So long as Employee remains employed by Employer and until the later of (i)
the first anniversary of the date of the termination of Employee’s employment,
whether by Employee’s resignation or by Employer’s termination of the
relationship, and (ii) such time as Employee is no longer receiving any
payments from Employer pursuant to this Agreement (and as a condition to
Employee receiving any such payments) (collectively, the “Non-Compete Period”),
Employee shall not within the states of Texas and Louisiana (i) perform any
duties similar in nature to the duties performed by Employee for any of the
Companies for any competitor of any of the Companies, whether as an employee,
officer, principal, member, advisor,

-3-

 

	 	 	 	agent, partner, director, stockholder, owner, or consultation of such
competitor, and (ii) compete against any acquisition or development of any
line of business, property, or project on which the Companies are then
involved or which has been worked on or evaluated by Employee as part of his
services for Employer during the preceding 12 months and which are still
being worked with or evaluated by any of the Companies.
	 
	 	 	 	With respect to the preceding paragraph, Employee shall not be deemed to be
an owner of a competitor of any of the Companies where Employee’s ownership
interest is less than 1% of the outstanding stock or membership units of a
company whose securities are listed on a national exchange or quoted on the
NASDAQ National Market System.
	 
	 	4.3.2.	 	During the Term of Employment and during the Non-Compete Period, and as a
condition to Employee receiving any payments from Employer pursuant to this
Agreement to which Employee otherwise would not have been entitled after
Employee is no longer employed by Employer, Employee shall not:

	 	(a)	 	solicit or employ any person for employment by
Employee or Employee’s employer if such person is (i) employed by any
of the Companies at that time, or (ii) who has left the employment of
any of the Companies for 60 days or less, for any employment position
or investment opportunity where such position or opportunity would
either interfere with or compete against the activities or businesses
of any of the Companies;
	 
	 	(b)	 	otherwise induce any person to discontinue his
or her employment with any of the Companies;
	 
	 	(c)	 	request any present or future customer or
supplier of any of the Companies to curtail or cancel its business with
any such Companies; or
	 
	 	(d)	 	unless otherwise required by law, disclose to
any person, firm or corporation any details of organization or business
affairs of any of the Companies, any names of past or present customers
of the Companies, or any other non-public information concerning the
Companies.

	 	4.3.3	 	Employee understands that the provisions of §4.1, §4.2, and
this §4.3 may limit his ability to earn a livelihood in a business similar to
the business of Employer and the Companies but as an executive officer of
Employer, T-3 and certain other of the Companies, he nevertheless agrees and
hereby acknowledges that:

-4-

 

	 	(a)	 	such provisions do not impose a greater
restraint than is necessary to protect the goodwill or other business
interests of the Companies;
	 
	 	(b)	 	such provisions contain reasonable limitations
as to time and scope of activity to be restrained; and
	 
	 	(c)	 	the consideration provided hereunder, including
without limitation any amounts or benefits contemplated to be provided
to Employee hereunder following Employee’s termination of employment
other than for cause or by Employee’s resignation, is sufficient to
compensate Employee for the restrictions contained in §4.1, §4.2, or
this §4.3 hereof.

	 	 	 	In consideration of the foregoing and in light of Employee’s education,
skills, and abilities, Employee agrees that he will not assert that, and it
should not be considered that, any provisions of §4.1, §4.2, or this §4.3
hereof otherwise are void, voidable, or unenforceable or should be voided or
held unenforceable.

	 	4.4.	 	Executive Nature of Employment.
	 
	 	 	 	Employee acknowledges and agrees that his duties with Employer are of
an executive nature and that he is a member of Employer’s management
group. Employee agrees that the remedy at law for any breach by him
of any of the covenants and agreements set forth in this §4 will be
inadequate and that in the event of any such breach, Employer may, in
addition to the other remedies which may be available to it at law,
obtain injunctive relief prohibiting Employee (together with all
those persons associated with him) from the breach of such covenants
and agreements.
	 
	 	4.5	 	Application to Other First Reserve Affiliates.
	 
	 	 	 	For purposes of this §4 and of §3 hereof, the terms “Companies” shall
not include or be construed as meaning any affiliates of First
Reserve Corporation other than T-3 and any entity owned or controlled
by T-3.
	 
	 	4.6.	 	Consideration.
	 
	 	 	 	Each of the covenants of this §4 are given by Employee as part of the
consideration for this Agreement and as an inducement to Employer to
enter into this Agreement and accept the obligations hereunder.
	 
	 	4.7.	 	Assignment of Intellectual Property Rights.

-5-

 

	 	 	 	Employee agrees that all ideas, concepts, processes, discoveries,
devices, machines, tools, materials, designs, improvements,
inventions, computer software and other things of value (hereinafter
collectively referred to as “intangible rights”), whether patentable
or not, which are conceived, made, invented or suggested either by
him alone or in collaboration with others during the Term of
Employment and relating to the business of Employer, and whether or
not during regular working hours, shall be promptly disclosed in
writing to Employer and shall be the sole and exclusive property of
Employer or any of the Companies, as applicable. Employee hereby
assigns all of his right, title and interest in and to all such
intangible rights and to any other trade secrets developed by
Employee during his employment with Employer to Employer and its
successors or assigns. Employee further agrees to execute, from time
to time upon the request of Employer, such documentation as may be
required by Employer to confirm Employee’s intent to so assign and
transfer such rights and property, including such rights and property
which may not presently exist but which may exist at a later date
during the Term of Employment.

	 
	 	 	 	
In the event that any of said intangible rights shall be deemed by
Employer to be patentable or otherwise registerable under any
Federal, state or foreign law, Employee further agrees that at the
expense of Employer, he will execute all documents and do all things
necessary, advisable or proper to obtain patents therefor or
registration thereof, and to vest in Employer or any of the
Companies, as applicable, full title thereto.

	5.	 	Compensation and Benefits.

	 	5.1.	 	Base Compensation.

During the Term of Employment, Employer shall pay Employee a salary
at the rate of $127, 200 per annum payable in equal installments at
least as frequently as monthly and subject to payroll deductions as
may be necessary or customary in respect of Employer’s salaried
employees in general. Employee’s salary shall be subject to
adjustment under the Employer’s periodic compensation review
procedure which shall take into account factors such as job
responsibilities, performance, and cost of living considerations. In
no event shall such salary be adjusted to less than the initial
amount set forth above.
	 
	 	5.2.	 	Vacations.
	 
	 	 	 	During the Term of Employment, Employee shall be entitled to vacation
of three weeks for the first year employed and the greater of (i)
three weeks for each year thereafter or (ii) the amount of time
provided under the vacation policy applicable to employees of
Employer generally, as amended from time to time.
	 
	 	5.3.	 	Medical Insurance and Other Benefits.

-6-

 

	 	 	 	During the Term of Employment, Employer shall furnish Employee with
such medical, hospital, and life insurance as is furnished to
employees of Employer generally, as amended from time to time.
Employee also shall be entitled to participate in all other benefit
programs which are maintained by Employer and available to its
executive officers generally and under the same terms as available to
Employer’s executive officers generally. Employee acknowledges that
he shall have no vested rights under or in respect of his
participation in any such program except as expressly provided under
the terms thereof.

	6.	 	Expenses.
	 
	 	 	Employer will pay or reimburse Employee for the reasonable travel, entertainment, and other
expenses as he may reasonably incur during the Term of Employment in the performance of his
duties hereunder, but only to the extent that Employee shall furnish Employer with such
evidence that such expenses were incurred as Employer may from time to time reasonably
require or request in accordance with its policies.
	 
	7.	 	Death or Total Disability of Employee.
	 
	 	 	If Employee dies or becomes totally disabled during the Term of Employment, the Term of
Employment shall automatically terminate and Employer’s obligation to compensate Employee
under this Agreement shall in all respects cease, except that Employer shall pay Employee or
Employee’s estate within thirty days of such death or disability (or sooner if required by
law):

	 	(a)	 	an amount equal to the Base Compensation plus the vacation benefits accrued and
unpaid (“Accrued Compensation”) as of the time of death or disability.
	 
	 	(b)	 	Employee also shall be entitled to the other benefits provided for under §5.2
and §5.3 hereof which have accrued and have not been forfeited as of the time of death
or disability when and if provided to be paid pursuant to the terms of any applicable
Employer plans or programs (collectively, the “Accrued Benefits.”)

	 	 	For purposes of this Section, Employee shall reasonably be deemed “totally disabled” as of
the time the President shall find, on the basis of medical evidence satisfactory to the
President, that, as a result of a mental or physical condition, Employee is unable to
perform his normal duties of employment hereunder or is prevented from engaging in the same
level of performance as he engaged in prior to the onset of such condition, giving effect to
any reasonable accommodations which can be made by Employer, and that such disability is
likely to continue for a substantial period of time.
	 
	 	 	Employer’s obligation to make any payments under this Section which otherwise would not be
required by law absent the existence of this Agreement shall be conditioned upon Employee’s
adherence to the requirements of §4.
	 
	8.	 	Termination for Cause.

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	 	 	Employee’s employment may be terminated by Employer for “Good Cause”, as described below.
Upon such termination, Employer’s obligation to compensate Employee under this Agreement
shall in all respects cease, except that Employer shall pay Employee, within thirty days of
such termination (or sooner if required by law), any Accrued Compensation as of the time of
such termination and Employee shall be entitled to any Accrued Benefits as of the time of
such termination when and if provided to be paid by the applicable program or plan. “Good
Cause” includes, but is not limited to any one or more of the following occurrences:

	 	(a)	 	Employee’s breach of any of the covenants contained in this Agreement;
	 
	 	(b)	 	Employee’s conviction or entry of a plea of guilty or nolo contendere for any
crime involving moral turpitude or which is punishable by imprisonment in the
jurisdiction involved;
	 
	 	(c)	 	Employee’s commission of an act of fraud, whether prior or subsequent to the
date hereof, upon any of the Companies or any customer of any of the Companies;
	 
	 	(d)	 	Employee’s willful failure or refusal to perform his duties as required by this
Agreement, provided that, the termination of Employee’s employment pursuant to this
subparagraph (d) shall not constitute valid termination for Good Cause unless Employee
shall first have received written notice from the President stating with specificity
the nature of such failure or refusal in the performance of duties and affording
Employee at least fifteen days to correct the act or omission complained of;
	 
	 	(e)	 	gross negligence, theft of any property of any of the Companies, or the theft
of any property of any customers or suppliers, material violation by Employee of any
duty of loyalty to Employer, or any other material misconduct on the part of Employee;
or
	 
	 	(f)	 	material violation of any employee policy manual promulgated by Employer as in
effect at that time, including, without limitation, the receipt of any kick-back or
side payment from any customer, supplier or vendor.

	 	 	Notwithstanding the foregoing, termination of Employee’s employment by resignation shall be
deemed a termination for Good Cause and shall be effective as of the effective date of such
resignation, but acceptance of such resignation by Employer shall not be deemed a waiver of
any right of Employer or the Companies under this Agreement.

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	9.	 	Change of Control.

	(a)	 	A “Change of Control” shall mean the closing of a transaction or series of transactions in
which either:

	 	(i)	 	more than 50% of the voting power of Employer or T-3, or
	 
	 	(ii)	 	substantially all of the assets of Employer or T-3

	 	 	are transferred to a party that was not a significant stockholder, member, or partner in any
of the Companies prior to such transaction or series of transactions.
	 
	(b)	 	If within 18 months after a Change of Control of Employer or T-3:

	 	(i)	 	Employee has experienced a material diminution in job title or responsibility
or has been transferred by Employer to any place other than the Houston, Texas
metropolitan area (unless such diminution or transfer is the result of events which
would otherwise entitle Employer to terminate Employee for Good Cause), and
	 
	 	(ii)	 	Employee resigned from Employer within 60 days of such event,

	 	 	then Employee’s resignation under such circumstances shall be deemed a termination other
than for Good Cause and have the effect set forth in §10 below, except that Employee’s
severance compensation under §10(a)(iii) shall be one year.
	 
	10.	 	Other Termination.

	 	(a)	 	Employer may terminate Employee’s employment at any time for any reason other
than those referred to above as for Good Cause or for no reason at all, and Employer’s
obligation to compensate Employee under this Agreement shall in all respects cease upon
such termination, except that

	 	(i)	 	Employer shall pay Employee, within 30 days of such termination
(or sooner if required by law), any Accrued Compensation as of the time of such
termination;
	 
	 	(ii)	 	Employee shall be entitled to any Accrued Benefits as of the
time of such termination when and if provided to be paid by the applicable
program or plan;
	 
	 	(iii)	 	Employer shall continue to pay Employee the Base Compensation
under §5.1 for the period equal to the lesser of (i) one year or (ii) the
remaining Term of Employment immediately prior to termination. Payments for
Base Compensation shall continue to be made in the same manner as paid prior to
termination.

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	 	(iv)	 	Employer shall make for Employee’s benefit all premium payments
for health care insurance for which Employee and Employee’s family may be
entitled under the federal Consolidated Omnibus Budget Reconciliation Act of
1986, as amended, so long as Employee receives payments pursuant to clause
(iii) above.

	 	(b)	 	Employee may waive the provisions of §10(a) above and elect to receive
compensation pursuant to the stated termination policy of the Company in effect as of
the earlier of the date Employer gives written notice of termination to Employee or
Employee is terminated pursuant to this §10.
	 
	 	(c)	 	Except as may be required by applicable law, Employee shall not be entitled to
any other compensation or benefits whatsoever if Employee’s employment is terminated
pursuant to this §10.
	 
	 	(d)	 	An involuntary transfer of Employee’s business office location from the Houston
vicinity shall be deemed a termination other than for Good Cause.
	 
	 	(e)	 	Notwithstanding the foregoing, Employer’s obligation to make any payments under
this Section which otherwise would not be required by law absent the existence of this
Agreement shall be conditioned upon Employee’s adherence to the requirements of §4.

	11.	 	Release and Satisfaction.

	 	11.1.	 	Unless precluded by applicable law, with respect to Employee, his heirs,
executors, legal representatives, successors and assigns, each payment by Employer of
the amounts and benefits provided under §7, §8, §9, or §10 hereof shall release,
relinquish and forever discharge each of the Companies and their respective directors,
officers, employees, shareholders, and agents of and from any and all claims, damages,
losses, costs, expenses, liabilities or obligations, whether known or unknown which
relate to facts or events occurring prior to each payment under §7, §8, §9, or §10
(other than any such claims, damages, losses, costs, expenses, liabilities or
obligations arising prior to the termination of Employee’s employment and (i) covered
by any written indemnification arrangement of Employer with respect to Employee, (ii)
arising under any written employee benefit plan or arrangement, whether or not
tax-qualified, covering Employee, or (iii) constituting a statutory right that is not
waivable by a party to this Agreement), which Employee has incurred or suffered or may
incur or suffer as a result of Employee’s employment by Employer or the termination of
such employment.
	 
	 	11.2.	 	Any termination of Employee’s employment and any expiration of the Term of
Employment shall not affect the continuing operation and effect of §4 or this §11, both
of which shall survive and continue in full force and effect with respect to each of
the parties and their respective heirs, executors, personal representatives,

-10-

 

	 	 	 	successors or permitted assigns. Nothing in this §11 shall be deemed to operate or
shall operate as a release, settlement or discharge of any liability of Employee to
Employer or others from any act or omission by Employee enumerated in §8 hereof as a
possible basis for termination of Employee’s employment for Good Cause.

	12.	 	Miscellaneous.

	 	12.1.	 	Insurance for Key Individuals Employed by Employer.
	 
	 	 	 	Employee recognizes and acknowledges that any of the Companies may
(but shall not be obligated to) seek and purchase one or more
policies providing life insurance coverage for key individuals
employed by Employer, including Employee. The proceeds of the
insurance would be payable to the purchaser or its designee.
Employee hereby consents to Employer’s or its Affiliate’s seeking
and purchasing such insurance and will provide such information,
undergo such medical examinations, execute such documents, and
otherwise take any and all actions necessary or desirable in order
for Employer or its affiliates to seek, purchase and maintain in
full force and effect such policy or policies.
	 
	 	12.2.	 	Severability.
	 
	 	 	 	If any of the provisions of this Agreement shall otherwise
contravene or be invalid under the laws of any state or other
jurisdiction where it is applicable but for such contravention or
invalidity, such contravention or invalidity shall not invalidate
all of the provisions of this Agreement, but rather this Agreement
shall be reformed and construed, insofar as the laws of that state
or jurisdiction are concerned, as not containing the provision or
provisions, but only to the extent that they are contravening or are
invalid under the laws of that state or jurisdiction, and the rights
and obligations created hereby shall be reformed and construed and
enforced accordingly.
	 
	 	 	 	Specifically with regard to §4.3, if a court determines that the
restrictions placed upon Employee in that provision are too broad or
otherwise unreasonable under applicable law, including with respect
to time or geographic area, the court is hereby requested and
authorized by the parties to revise such restriction to include the
maximum restrictions allowable under the applicable law.
	 
	 	12.3.	 	Modification and Waiver of Breach.
	 
	 	 	 	Except as may be otherwise provided in §12.2, no waiver or
modification of this Agreement shall be binding unless it is in
writing and signed by the parties. No waiver of a breach hereof
shall be deemed to constitute a waiver of a future breach, whether
of a similar or dissimilar nature.

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	 	12.4.	 	Assignment
	 
	 	 	 	The rights and obligations of Employer under this Agreement may,
without the consent of Employee, be assigned by Employer, in its
sole discretion, to any subsidiary, venture or Affiliate of Employer
or T-3, provided that Employee continues to have executive level
responsibilities and will not be required to relocate.
	 
	 	12.5.	 	Notices.
	 
	 	 	 	Except as otherwise required by law, any notice, consent, request,
instruction, approval and other communication provided for herein
(other than routine correspondence in the ordinary course of
business) shall be in writing and shall be deemed validly given,
made or served

	 	(a)	 	on the date on which it is delivered personally with receipt
acknowledged,
	 
	 	(b)	 	five business days after it shall have been sent by registered
or certified mail (receipt requested and postage prepaid),
	 
	 	(c)	 	one business day after it is sent by overnight courier (charges
prepaid), or
	 
	 	(d)	 	on the same business day when sent before 5:00 p.m.,
recipient’s time, and on the next business day when sent after 5:00 p.m.,
recipient’s time, by telephone facsimile transmission, provided that the sender
receives electronic confirmation that the document has been received by the
recipient.

	 	 	 	Notices to Employer shall be addressed as follows:

T-3 Management Services, L.P.

c/o T-3 Energy Services, Inc.

13111 Northwest Freeway, Suite 500

Houston, Texas 77040

Attention: President

Fax: 713-996-4123

	 	 	 	Notices to Employee shall be addresses as follows:

	 	 	 	To the current residential address or fax number of Employee, as indicated
in the Human Resources Department files kept by Employer or its designee.

	 	 	 	Either party shall also be entitled to from time to time provide any other address
for notices to be received under this Agreement.

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	 	12.6.	 	Counterparts.
	 
	 	 	 	This Agreement may be executed in several counterparts and all such executed
counterparts shall constitute a single agreement, binding on all parties and their
successors and permitted assigns, notwithstanding that not all parties may be
signatories to the original or to the same counterpart. Each counterpart signature
page so executed may be attached to another counterpart of this Agreement and such
counterparts, when so attached, shall constitute a single agreement. Delivery of an
executed counterpart of a signature page of this Agreement by telephonic facsimile
transmission shall be as effective as delivery of a manually executed original
counterpart of this Agreement.
	 
	 	12.7.	 	Construction of Agreement.
	 
	 	 	 	This Agreement shall be construed in accordance with, and governed by, the laws of
the State of Texas without regard to any principles of conflicts of law which would
require the application of the law of another jurisdiction.
	 
	 	12.8.	 	Merger; Complete Agreement.
	 
	 	 	 	This Agreement contains the entire agreement between the parties
with respect to the transactions contemplated by this Agreement and
supersedes all previous oral and written and all contemporaneous
oral negotiations or commitments and other understandings. In
particular, and without limitation of the foregoing, any prior
employment agreement (including the Original Employment Agreement)
between Employee and Employer is hereby terminated and superseded in
its entirety by this Agreement.
	 
	 	12.9.	 	Non-Transferability of Employee’s Interest.
	 
	 	 	 	None of the rights of Employee to receive any form of compensation payable pursuant
to this Agreement shall be assignable or otherwise transferable except through a
testamentary disposition or by the laws of descent and distribution upon the death
of Employee. Any other attempted assignment, transfer, conveyance, or other
disposition of any interest in the rights of Employee to receive any form of
compensation to be made by Employer pursuant to this Agreement shall be void.
	 
	 	12.10.	 	Legal Fees.
	 
	 	 	 	If any legal action, arbitration or other proceeding is brought for
the enforcement of this Agreement, or because of any alleged
dispute, breach, default or misrepresentation in connection with
this Agreement, the successful or prevailing party shall be
entitled to recover such reasonable attorneys’ fees and other costs
it incurred in that action or proceeding, in addition to any other
relief to which it may be entitled.

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	 	12.11.	 	Submission to Jurisdiction.
	 
	 	 	 	Each party irrevocably consents that any legal action or proceeding
against it or any of its property with respect to this agreement or
any other agreement executed in connection herewith may be brought
in any court in Texas, any federal court of the United States of
America located in Texas, or both, and by the execution and
delivery of this Agreement each party accepts with regard to any
such action or proceeding for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the
aforesaid courts.

The parties have executed this Agreement effective as of the date first set forth above with the
intent to be legally bound by this Agreement.

	 	 	 	 	 	 	 	 	 	 	 
	EMPLOYER	 	 	 	EMPLOYEE	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	T-3 Management Services, L.P.	 	 	 	/s/ Keith A. Klopfenstein	 	 
	 

	 	 	 	 	 	 	 	 

	 	 
	 

	 	 	 	 	 	 	 	Keith A. Klopfenstein	 	 
	By:	 	T-3 Management Holdings, Inc.

general partner	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Gus D. Halas	 	 	 	 	 	 
	 

	 	 	 	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Gus D. Halas	 	 	 	 	 	 
	 

	 	Title:
	 	President	 	 	 	 	 	 

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