Document:

exv10w1

 

Exhibit 10.1

FORM OF

CONTINUING LETTER OF CREDIT AGREEMENT

     This CONTINUING LETTER OF CREDIT AGREEMENT (this “Agreement”) dated as of May 21, 2007, among
THE HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED (“Bank”) and                                         
(“Applicant”).

For the purpose of inducing Bank to issue one or more irrevocable commercial and/or standby letters
of credit (each individually, a “Credit”, and collectively, the “Credits”) from any office of Bank
in or outside the United States in Bank’s sole discretion from time to time, for Applicant’s
account substantially as shown in Applicant’s application (or in an application by any subsidiary
of Applicant designated by Applicant from time to time to make a Credit application or request)
made on a standard Bank form or other form of letter of credit application satisfactory to Bank,
Applicant hereby agrees as follows:

1.      Payment Obligation.

(a) Applicant unconditionally agrees to reimburse Bank at such office, place or account of Bank as
specified by Bank, on or before an agreed value date (or, if there is no agreed value date, then on
demand), each amount paid by Bank with respect to any draft or demand for payment under, or
purporting to be under, any Credit issued at the request or for the account of Applicant (i)
against a presentation that appears to comply with the terms and conditions of the Credit, or (ii)
with Applicant’s waiver of noncompliance or authorization to pay.

(b) As to any draft or demand for payment which is payable in United States Dollars, Applicant
shall reimburse Bank in United States Dollars. As to any draft or demand for payment which is
payable in a currency (“Alternate Currency”) other than United States Dollars, Applicant shall
reimburse Bank, as Bank in its sole discretion may elect, either (i) in such Alternate Currency or
(ii) in United States Dollars, in which case the amount to be paid by Applicant to Bank shall be
the equivalent amount (as determined by Bank at its rate of exchange) in United States Dollars of
the amount payable in the Alternate Currency under such draft or demand for payment, on the day
such draft was paid or demand honored for the purchase by Bank of such Alternate Currency.
Applicant shall comply with any and all governmental exchange regulations now or hereafter
applicable to any foreign exchange provided to Bank pursuant to this paragraph 1(b) and will
indemnify and hold Bank harmless from any failure to so comply. Applicant shall assume all risks
(political, economic or otherwise) of disruptions or interruptions in currency exchange with
respect to any demand payable in an Alternate Currency, and if there is no then prevailing exchange
rate, then Bank may obtain the Alternate Currency from any commercially reasonable source, in which
case Applicant shall pay Bank’s cost therefor, inclusive of all reasonable expenses, in United
States currency.

All payments to be made to Bank under any Credit or this Agreement shall be payable in immediately
available funds, without withholding, deduction or set-off and free and clear of taxes (other than
income and franchise taxes imposed on Bank).

 

 

2.       Fees and Costs.

     Except as otherwise provided in paragraph 4(i) of this Agreement, Applicant agrees to pay to
Bank in connection with each Credit issued at the request or for the account of Applicant fees,
charges and expenses (whether incurred by Bank or its correspondents in connection with the Credits
or this Agreement), and any applicable interest thereon, in such amounts and at such times as are
mutually agreed by Bank and Applicant from time to time.

3.       Penalty Interest.

     If for any reason Bank makes payment under a Credit and is not reimbursed in full by Applicant
on the agreed value date (or on demand if there is no agreed value date) in the manner prescribed
by Bank, then Applicant agrees to pay Bank interest at a rate per annum equal to two percent (2%)
plus the Prime Rate (as defined below), from the agreed value date (or from the date Bank makes
such reimbursement demand) to the date Applicant reimburses Bank for the amount of such payment.
All computations of interest shall be made by Bank on the basis of a year of 360 days for the
actual number of days elapsed. “Prime Rate” means the rate of interest announced publicly, from
time to time, by HSBC Bank USA at its office in New York, New York as its prime rate and is a base
rate for calculating interest on certain loans. Without notice to Applicant, the Prime Rate will
change automatically from time to time as and in the amount by which HSBC Bank USA’s prime rate
shall fluctuate and any change in the interest rate resulting from a change in the prime rate shall
be effective on the date of such change in the prime rate.

4.       Other Matters Pertaining to Credits.

(a) Bank shall not be responsible to Applicant for, and Bank’s rights and remedies against
Applicant shall not be impaired by, a payment by Bank against a presentation that (i) does not
appear to comply with the terms and conditions of a Credit, or (ii) does appear to comply with the
terms and conditions of a Credit but such terms and conditions are not strictly in compliance with
Applicant’s application or request for such Credit, except, in either event, to the extent and in
the amount of any direct damages suffered or incurred by Applicant in connection with the
underlying transaction as a result of such noncompliance. Except as may be expressly provided in
this Agreement, Bank shall not be liable to Applicant in contract, tort, or otherwise for any
special, indirect, consequential, or punitive damages.

(b) Applicant agrees that in the event of any increase in the amount of any Credit, any extension
of the time for presentment of drafts, or any other modification of the terms of any Credit, this
Agreement shall be binding upon Applicant with regard to any such Credit so increased or otherwise
modified, to drafts covered thereby and to any action taken by Bank or any of Bank’s correspondents
in accordance with such extension, increase or other modification provided Applicant has consented
in writing to any such increase, extension or other modification.

(c) Applicant agrees to notify Bank of any objection Applicant may have to Bank’s issuance or
amendment of a Credit, Bank’s acceptance or rejection of a presentation under a Credit, or any
other action or inaction taken or proposed to be taken by Bank under or in connection with this
Agreement or any Credit. Applicant’s notice of objection must be given to Bank by expeditious
means within

 

 

three (3) banking days after Applicant receives notice of the action or inaction taken or proposed
to be taken by Bank. For example, within three (3) banking days after receiving a copy of a Credit
or the originals or copies of documents presented under a Credit, Applicant must examine them,
notify Bank of any defect in such Credit as issued or of any discrepancy in any presentation to
which Applicant objects, and specify each such defect or discrepancy, even if Bank has indicated
its satisfaction with the issuance or presentation or its awareness of the defect or discrepancy.

(d) Absent fraud or manifest error on the part of Bank, Applicant’s failure to give timely and
specific notice of objection shall automatically waive Applicant’s objection, authorize Bank’s
action or inaction, and absolutely preclude Applicant from raising the objection as a defense or
claim against Bank.

(e) Applicant’s acceptance or retention of any documents presented under or in connection with a
Credit (including originals or copies of documents sent directly to Applicant) or of any property
for which payment is supported by a Credit shall ratify Bank’s honor of the documents and
absolutely preclude Applicant from raising a defense or claim with respect to Bank’s honor of the
relevant presentation.

(f) Applicant must take action to avoid and reduce the amount of damages to be claimed against
Bank. For example, in case of a claim for wrongful honor of the like, Applicant must enforce its
rights arising out of the underlying transaction, except to the extent that enforcement is
impractical because of the insolvency of the beneficiary or other person against whom Applicant
might otherwise recover. In case of a claim for wrongful dishonor or the like, Applicant must
specifically and timely authorize Bank to effect a cure and must give written assurances to the
beneficiary that such cure is being arranged.

(g) If Bank honors a presentation under or in connection with a Credit for which Applicant claims
it is not obligated to reimburse or indemnify Bank, then Applicant shall nonetheless pay to Bank
the amount Bank paid, without prejudice to Applicant’s claims against Bank to recover any Bank fees
and costs paid by Applicant with respect to the honored presentation, plus any direct damages that
Applicant is unable to avoid or reduce.

(h) Applicant’s aggregate remedies against Bank for honoring a presentation or retaining honored
documents in breach of Bank’s obligations to Applicant (whether arising under this Agreement,
applicable letter of credit practice or law, or any other agreement or law) are limited to the
aggregate amounts paid by Applicant to Bank with respect to the honored presentation.

(i) In any dispute or litigation between Applicant and Bank, Applicant must pay Bank’s reasonable
and documented attorney’s fees, expert witness fees, and other expenses of litigation, arbitration
or dispute resolution, unless Applicant prevails in obtaining an award of damages claimed against
Bank. (Applicant does not prevail if it obtains a contested injunction against honor of a Credit
or to the extent its damage claim against Bank is denied, reduced, or offset by a damage remedy in
favor of Bank.)

(j) Applicant agrees to indemnify Bank (and Bank’s directors, officers, employees, attorneys, and
agents), on demand, against claims and liabilities (and related costs, including reasonable
attorney’s

 

 

fees, and other dispute resolution expenses) that arise out of or in connection with this Agreement
or any Credit to the extent that (i) Bank prevails in the matter; or (ii) Applicant is responsible
for the matter under this Agreement or applicable law; or (iii) Bank is not responsible to
Applicant for the matter under this Agreement or applicable law. This indemnity covers claims and
liabilities, whether they arise or are settled formally or informally, in which (i) a beneficiary
seeks to enforce a Credit or any pre-advice of its issuance or amendment; (ii) a beneficiary
requested to issue its own undertaking seeks to be reimbursed, indemnified, or compensated; (iii)
an advising bank or a confirmer or other nominated bank seeks to be reimbursed, indemnified, or
compensated; (iv) a third party seeks to enforce the rights of an applicant, beneficiary, nominated
bank, assignee of letter of credit proceeds, or holder of a document; or (v) a government agency
seeks to investigate or regulate specifically this Agreement, a Credit, or any document or property
received under this Agreement or a Credit.

Applicant agrees to account to Bank, without demand, for any benefit Applicant or any of its
subsidiaries or affiliates at any time receives because Bank pays or gives value in connection with
a Credit but is for any reason whatsoever not reimbursed or indemnified, such as benefit from a
payment by Bank that satisfies (wholly or partially) the underlying obligation, when due, or that
avoids the accrual of interest or penalties otherwise accruing on the underlying obligation.

5.       Representations and Warranties.

     Applicant represents and warrants that (i) it is authorized to enter into this Agreement; (ii)
it has obtained all necessary authorizations, approvals, notices and filings required for it to
enter in this Agreement, and that such authorizations, approvals, notices and filings remain in
full force and effect; (iii) this Agreement constitutes a legal, valid and binding obligation of
Applicant, enforceable against it in accordance with its terms, except to the extent that such
enforceability may be limited by any applicable bankruptcy, insolvency, reorganization, moratorium
or other similar law relating to creditors’ rights generally and to general principles of equity;
(iv) the execution, delivery and performance by Applicant of this Agreement does not and will not
contravene its charter, by-laws or other applicable organization documents or any law or
contractual restriction binding on or affecting it, the contravention of which would have a
material adverse effect on the financial condition of Applicant; (v) the transactions covered by
the Credits are not/will not be prohibited under, or in violation of, any United States laws and
governmental regulations applicable thereto (including, without limitation, regulations of the
Office of Foreign Asset Control of the US Department of Treasury); and (vi) no information now or
hereafter furnished by Applicant to Bank in connection with this Agreement or any Credit is or
shall be, when taken as a whole, materially false or misleading when furnished.

6.       Events of Defaults and Remedies.

(a) Any of the following events or conditions shall constitute an event of default hereunder: (i)
Applicant defaults in respect of any payment due Bank under this Agreement or in the performance of
any obligation, agreement, term or condition of this Agreement or any other agreement with Bank;
(ii) Applicant becomes insolvent, makes any assignment for the benefit of creditors, files or
suffers the filing of any petition or action for relief under the provisions of the Bankruptcy Code
or other similar laws for the relief of, or relating to, debtors, (iii) the voluntary or
involuntary appointment of a receiver, trustee, custodian or similar official to take possession of
a material portion of Applicant’s

 

 

property and which is not dismissed or discharged within 60 days; (iv) any representation made (or
deemed made pursuant to the terms of this Agreement or any other agreement between Applicant and
Bank) in any financial statement or in any other statement or document presented to Bank by, or on
Applicant’s behalf is, in any material respect, false or misleading when made or deemed made; or
(v) the reorganization, merger or consolidation of Applicant, or the making of any agreement
therefor, without the prior written consent of Bank, provided, that if Applicant is the surviving
corporation in any such reorganization, merger or consolidation, the consent of Bank shall not be
required.

(b) Upon the occurrence and during the continuance of any event of default, Bank may pursue any
remedy available at law or in equity to secure, collect, enforce, or satisfy the obligations of
Applicant under this Agreement, whether present or future, absolute or contingent, or due or to
become due (the “Obligations”), whether against Applicant or other person, whether under this
Agreement or any separate security agreement, guaranty, or other agreement or undertaking
supporting this Agreement, and whether under the law applicable to letter of credit agreements or
to unjust enrichment, subrogation, setoff, possessory liens, warranties on presentation, or
otherwise. Bank may pursue its rights and remedies separately, successively, or concurrently.

(c) An amount equal to the full undrawn amount of all issued and unexpired Credits shall become
immediately due and payable in immediately available funds by Applicant to Bank, as cash collateral
for such Credits and the Obligations, at the option of Bank, upon and during the continuance of (i)
any event of default; (ii) any material adverse change in the business or financial condition of
Applicant; (iii) any material change or threatened change in the direct or indirect ownership or
control of Applicant or that segment of Applicant’s business in the underlying transaction; or (iv)
any Applicant injunction action, beneficiary wrongful dishonor action, or other event that
threatens to extend or increase Bank’s contingent liability beyond the time, amount or other limit
provided in the Credit or this Agreement. Upon expiry of all such Credits, and after application
of any amounts paid to Bank pursuant to the preceding sentence to the Obligations: (i) Applicant
shall remain liable for any deficiency remaining; and (ii) provided the Obligations have been
irrevocably satisfied in full and this Agreement terminated, Bank shall refund any surplus
remaining. Interest on such cash collateral shall accrue to Applicant at the then prevailing
federal funds rate for each day until paid to Applicant. For purposes of this paragraph 6(c),
Applicant hereby expressly waives presentment, demand, protest or further notice of any kind.

7.       Miscellaneous.

(a) To the fullest extent permitted by law and/or whenever Bank has the right to declare that cash
collateral be delivered to Bank (whether or not is has been so declared by Bank), Bank may set off
and apply all deposits (general or special, time or demand, provisional or final) and other credits
as to which Bank is debtor and Applicant is creditor against all of the Obligations, without notice
and without regard to the place or currency of payment or to the contingent, absolute, or matured
status of such credits or of the Obligations. To the extent that Bank honors a presentation for
which it remains unpaid, Bank may assert its rights of subrogation under applicable law, whether
Bank’s honor satisfies all or only part of the underlying obligation. Applicant must, on
reasonable notice, cooperate with Bank in its assertion of Applicant’s rights against the
beneficiary, the beneficiary’s right against Applicant, and any other rights that Bank may have by
subrogation or assignment.

 

 

(b) No course of dealing between Applicant and Bank and no delay or omission by either party in
exercising any right or remedy hereunder shall operate as a waiver thereof or of any other right or
remedy, and no single or partial exercise thereof shall preclude any other or further exercise
thereof or the exercise of any other right or remedy. Either party may remedy any default
hereunder in any reasonable manner without waiving the default remedied and without waiving any
other prior or subsequent default. Each party’s rights and remedies hereunder are cumulative.

(c) The terms “Bank” and “Applicant” as used herein shall include the successors and assigns of
those parties; provided that neither party may, without the prior written consent of the other
party, assign or grant participations in any of its rights or obligations hereunder.
Notwithstanding the foregoing, Bank may assign or grant participations in this Agreement and in the
payment obligations under the Credits (i) to one or more subsidiaries or HSBC Group affiliates
without the prior written consent of Applicant; and/or (ii) to one or more third party (non-HSBC
Group affiliated) financial institutions with the prior written consent of Applicant. Bank may
disclose credit and other information regarding Applicant and this Agreement to any permitted
(actual or prospective) assignees or participants; provided, however, that Bank shall exercise
reasonable efforts to ensure that any prospective assignees or participants receiving confidential
information regarding Applicant from Bank shall keep such information confidential and shall
prevent further disclosure of such information consistent with Bank’s existing policies concerning
the protection of confidential information.

(d) Except as expressly provided in any written agreement or document which may be hereafter
executed and delivered by Bank, Bank shall have no obligations to issue any Credit or to extend the
expiration date of any Credit; the issuance and extension of any Credit in each case being in
Bank’s sole and absolute discretion.

(e) No amendment of any provision of this Agreement, no waiver of any right or remedy of Bank
arising under this Agreement, and no inconsistent course of dealing or performance between Bank and
Applicant shall be enforceable against Bank, unless Bank expressly agrees in a signed writing, and
then only in the specific instance and for the specific purpose for which given. (Bank’s issuance
of a Credit amendment shall constitute Bank’s signed writing expressly consenting to such
amendment).

(f) Captions of the paragraphs of this Agreement are solely for the convenience of Bank and
Applicant, and are not an aid in the interpretation of this Agreement.

(g) This Agreement, together with all related documents and facility letter executed substantially
contemporaneously with this Agreement, from Bank to Applicant, together constitute a written credit
agreement and the final agreement among the parties relating to the subject matter thereof, and may
not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements. There are
no unwritten oral agreements among the parties.

(h) If, in any Credit or in any application or request for a Credit, any designated subsidiary of
Applicant is identified as the “applicant”, account party”, or “customer” at whose request and on
whose instruction and for whose account the Credit is issued, then such subsidiary’s request or
application for, and utilization of, the Credit shall be deemed to be a request or application for,
and

 

 

utilization of, the Credit under this Agreement by Applicant, and Applicant shall assume all risk
and liability for such subsidiary’s utilization, acts and omissions in connection with such Credit,
application and/or request. If more than one party executes this Agreement as Applicant, then the
term “Applicant” shall include each as well as all of them, and their obligations hereunder shall
be joint and several.

(i) This Agreement, and Bank’s liability to Applicant for action or omission under or in connection
with this Agreement or a Credit, shall be governed by the law, including particularly the Uniform
Commercial Code (the “UCC”) Article 5, of the State of New York in effect at the time of issuance
of the Credit. The provisions, definitions, interpretations, and practices of the Uniform Customs
and Practice for Documentary Credits published by the International Chamber of Commerce (the “UCP”)
in effect at the time of issuance of each Credit are incorporated by reference as an aid to the
interpretation of this Agreement. To the extent permitted by applicable law, this Agreement shall
prevail in case of conflict with the UCP or the UCC, and the UCP shall prevail in case of conflict
between the UCP and UCC. If a standby Credit is issued (or pre-advised) subject to a comprehensive
statement or rules of standby letter of credit practice (e.g., International Standby Practices 1997
Edition), then such statement or rules shall be substituted for the UCP. This Agreement shall be
construed to assure Bank’s compliance with banking regulation on the scope, safety and soundness,
and other provisions on independent undertakings (e.g., 12 C.F.R. Section 7.1016, as published in
61 FR4849). All obligations of Applicant and rights of Bank expressed in this Agreement shall be
in addition to and not in limitation of those provided by applicable law, including, without
limitation, the law relative to estoppel, mistake, unjust enrichment, subrogation and mitigation of
loss or damage.

(j) Any notice or demand to be given hereunder shall be duly given if delivered by hand or courier
or mailed to Applicant or Bank at the address, fax or telex number shown on the signature page of
this Agreement (or at such other address, fax or telex number as such party may notify the other in
accordance with these notice provisions), and shall not be effective until actually received by
such party, unless the intended recipient fails to maintain or fails to notify of any relevant
change of its name, address or number.

(k) Any action to enforce a right or obligation under or arising out of this Agreement must be
commenced within one year of the expiration of the Credit or one year after the cause of action
accrues, whichever is later. A cause of action accrues when the breach occurs, regardless of the
aggrieved party’s lack of knowledge of the breach. For purposes of this provision, a cause of
action against Applicant to indemnify Bank continues to accrue until the validity and amount of any
indemnifiable liability is finally determined against Bank.

(l) Any dispute, controversy or claim arising out of or in relation to this Agreement, any Credit
or any application or request to issue a Credit, or the breach, dishonor, termination or invalidity
thereof, shall be finally settled by arbitration administered by the International Center for
Letter of Credit Arbitration, Inc., Gaithersburg, MD 20879, under its Rules of Arbitration (1996).

(m) This Agreement shall survive expiration or other discharge of any Credit.

(n) This Agreement confers no right or benefit upon any person other than the parties to this

 

 

Agreement and their respective permitted successors and assigns. Without limiting the foregoing,
nothing in this Agreement shall affect Bank’s obligations or the beneficiary’s rights under a
Credit or any pre-advice of its issuance, except to the extent repeated in such Credit or
pre-advice.

(o) Bank is authorised to act and rely on any application for or application for amendments to
Letters of Credit (together “Applications”, and each of them an “Application”) from each Applicant
received through Bank’s electronic banking software. Bank has no obligation to verify the accuracy
of the applications and data contained therein. Each Applicant will indemnify Bank against all
losses, liabilities, actions, proceedings, claims, demands, damages, costs and expenses which may
be incurred or suffered by Bank as a result of, arising from or in connection with any of the
Applications and/ or the accepting or relying by Bank of any of the Applications.

 

 

     IN WITNESS WHEREOF, the parties hereto each have caused this Agreement to be duly executed by
a duly authorized officer as of the date first above written.

	 	 	 	 	 
	 	 	THE HONGKONG AND SHANGHAI BANKING

CORPORATION LIMITED
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	Address for Notices:

The Hongkong and Shanghai Banking Corporation Limited

1 Queens Road Central

Hong Kong
	 
	 	 	 	 
	 	 	Attention:       HKH Corporate Banking, 11/ F

                       International Division
	 
	 	 	 	 
	 	 	Telex: 73205 HSBC HX
	 
	 	 	 	 
	 	 	[                                                            ]
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	Address for Notices:exv10w1

 

Exhibit 10.1

EAGLE MATERIALS INC.

SALARIED INCENTIVE COMPENSATION PROGRAM

FOR FISCAL YEAR 2008

1.     Purpose

     The purpose of the Eagle Materials Inc. Salaried Incentive Compensation Program for Fiscal
Year 2008 (the “Plan”) is to establish an incentive bonus program which: (i) focuses on the
performance of Eagle Materials Inc. (the “Company”) as well as individual performance; and (ii)
aligns the interest of participants with those of the Company’s shareholders. The Plan is adopted
by the Compensation Committee of the Board of Directors (the “Committee”) under the structure of
the Company’s Incentive Plan (the “Incentive Plan”) and is subject to all the terms and conditions of such
 Incentive Plan, including, without limitation, the limits set forth
in Section 8 of the Incentive Plan. The
Plan shall be in effect for the fiscal year ending March 31, 2008.

2.     Eligibility

     The Company’s Chief Executive Officer (the “CEO”) and his direct reports are eligible to
participate in the Plan. The CEO may also include in the Plan additional exempt salaried employees
at the corporate level of the Company.

     Participants must be an exempt salaried manager or professional. No hourly or non-exempt
employee may participate. Participants in the Plan may not participate in any other Company
incentive plan providing for monetary awards, except for the Eagle Materials Long Term Compensation
Program and the Eagle Materials Special Situation Program.

3.     Bonus Pool

     To ensure reasonableness and affordability, available funds for bonus payments under the Plan
are to be determined as a percentage of EBIT of the Company. The actual percentage may vary from
year to year as recommend by the CEO and approved by the Committee. For Fiscal Year 2008, 1.2% of
the Company’s earnings before interest and taxes (“EBIT”) will fund the corporate bonus pool.

     Participants must be employed on March 31, 2008 to be eligible for any bonus award. Awards
may be adjusted for partial year participation for participants who enter the program after April
1, 2007.

4.     Allocation of Corporate Pool

     At the beginning of the fiscal year goals and objectives shall be established for each
participant. The actual bonus award paid at the end of the fiscal year shall be based on the
individual participant’s performance relative to the previously established goals and objectives.
Except with respect to the CEO, each participant’s allocated percentage of the corporate pool,

1

 

his/her goals and objectives and his/her individual performance relative to the goals and
objectives (and bonus award) shall be recommended by the CEO and approved and certified by the
Committee. The CEO’s allocated percentage of the corporate pool, his/her goals and objectives and
his/her individual performance (and bonus award) shall be approved and certified by the Committee.
For each participant, the maximum annual bonus award opportunity is represented by the percentage
of the corporate pool assigned to such participant.

5.     Goals and Objectives

     The goals and objectives to be used for participants in the Plan may be comprised of objective
and subjective criteria and should generally have a broader scope than the goals and objectives for
subsidiary companies. However, at the same time the goals must also contain specific criteria
regarding execution that links subsidiary company performance to corporate performance. By way of
example and not limitation, these goals and objectives could focus on operational criteria, the
interaction between corporate and subsidiaries as a way of gauging the successful execution of
business plans, strategic execution criteria, criteria relating to shareholder alignment and
investor relations, interaction and communication with the board, performance relative to the
responsibilities associated with being publicly traded company, organizational development and
leadership skills.

6.     Plan Administration

     The Plan shall be administered by the Committee, which shall have full and exclusive power to
interpret this Plan and to adopt such rules, regulations and guidelines for carrying out this Plan
as it may deem necessary or appropriate in its sole discretion. All decisions of the Committee
shall be binding and conclusive on the participants. The Committee shall determine all terms and
conditions of the bonus awards.

     No member of the Committee shall be liable for anything done or omitted to be done by him or
by any member of the Committee in connection with the performance of any duties under this Plan,
except for his own willful misconduct or as expressly provided by statute.

7.     No Employment Guaranteed

     No provision of this Plan hereunder shall confer any right upon any executive officer to
continued employment.

8.     Governing Law

     This Plan and all determinations made and actions taken pursuant hereto, shall be governed by
and construed in accordance with the laws of the State of Texas, without reference to any conflicts
of law principles thereof that would require the application of the laws of another jurisdiction.

2

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