Document:

Exhibit 10.1

 

EXECUTION COPY

 

This EMPLOYMENT AGREEMENT (this “Agreement”) is made
and entered into as of September 7, 2006, between Asbury Automotive
Group, Inc., a Delaware corporation (the “Company”), and Charles Oglesby,
an individual resident of the State of Georgia (the “Executive”).

WHEREAS the Company wishes to employ Executive, and
Executive wishes to accept such employment, on the following terms and
conditions, effective as of September 7, 2006.

NOW, THEREFORE, in consideration of the mutual covenants
contained herein and intending to be legally bound hereby, the parties hereby
agree as follows:

SECTION 1.   Employment.  The Company hereby employs Executive, and
Executive accepts employment by the Company, on the terms and conditions
contained in this Agreement.

SECTION 2.   Term. 
The employment of Executive pursuant hereto shall commence on the date
hereof (the “Commencement Date”) and shall remain in effect until
December 31, 2009, unless terminated pursuant to Section 14.  The period of time between the Commencement
Date and the termination of this Agreement pursuant to its terms is herein
referred to as the “Term”.

SECTION 3.   Duties and Extent of Service.  (a) During the Term, Executive shall serve as
Senior Vice President and Chief Operating Officer of the Company and Chief
Executive Officer of the South Region and, in addition, in such other executive
capacity or capacities for the Company, as may be commensurate with Executive’s
seniority and experience and as determined by the Board of Directors.  During the Term, the Company shall use its
reasonable best efforts to ensure that Executive is elected and re-elected as a
director of the Company, and Executive agrees to serve in such capacity without
additional compensation.

(b)  Executive shall report directly and
exclusively to the Company’s Chief Executive Officer, and, other than the
Company’s Chief Executive Officer, no other executive officer shall be
appointed with authority over the business operations of the Company superior
to that of Executive.

(c)  The Executive shall perform such services and
duties for the Company as are customarily performed by an executive in
Executive’s position at a business such as the Company’s business and as the
Board of Directors may assign or delegate to him from time to time.  Executive shall devote his full business
knowledge, skill, time and reasonable best efforts exclusively to the
performance of his duties for the Company and the promotion of its interests; provided,
however, that Executive shall be entitled to (i) engage in civic and
charitable activities, (ii) manage passive personal investments, and (iii) with
the consent of the Board of Directors (which shall not be unreasonably
withheld), serve on the board of 

 

 

directors of corporations not in competition with the
Company; provided  further that none of the foregoing activities
shall, individually or in the aggregate, interfere with Executive’s ability to
devote the requisite time and effort to the performance of his duties and
responsibilities under this Agreement. 
Executive’s principal office shall be in the Company’s Atlanta, Georgia
headquarters, provided that Executive acknowledges that Executive’s duties
hereunder shall be performed, from time to time, at the Company’s New York, New
York headquarters or at such other place or places as the interests, needs,
businesses or opportunities of the Company shall require, including with
respect to duties as Chief Executive Officer of the South Region.

SECTION 4.   Base Salary.  During the Term, Executive shall be paid a
base salary (the “Base Salary”) at a rate of $700,000 per annum, payable in
arrears in equal monthly installments. 
The Board of Directors shall review Executive’s Base Salary on
May 1, 2007, and annually thereafter at the same time as the salaries of
other members of the corporate office are reviewed and may increase (but not
decrease) his then current Base Salary in its sole discretion.

SECTION 5.   Incentive Compensation.  Incentive compensation for the year 2006, if
any, will be based upon the provisions of the bonus plan governing Executive’s
incentive compensation immediately prior to the Commencement Date.  In addition, Executive will be eligible for a
bonus of $150,000 for his performance from the Commencement Date through December 31,
2006, at the discretion of the Compensation Committee (the “Compensation
Committee”) of the Board of Directors. 
Commencing in calendar year 2007, and during the remainder of the Term,
Executive shall be entitled to earn an annual bonus pursuant to the Company’s
Key Executive Incentive Compensation Plan (or an applicable successor plan), on
a calendar year basis, of 90% of his then current Base Salary (“Target Bonus”),
which shall be payable if the Company achieves specified objectives (the “Targets”)
established by the Compensation Committee no later than the 90th day of each
such year, provided that, with respect to the calendar year 2007, the
sum of Executive’s annual Base Salary and annual bonus for such year shall not
be less than $1,250,000.  The
Compensation Committee shall certify whether the relevant Targets have been
achieved and, based on such certification, shall thereafter determine the
actual bonus earned by Executive with respect to the year described in the
preceding sentence no later than 30 days after delivery to the Board of
Directors of audited financial statements for the Company for the relevant
calendar year.  Such Targets shall be
substantially similar to those Targets established for purposes of computing
annual bonuses for other senior officers of the Company.

SECTION 6.   Fringe Benefits.   During the Term, Executive shall be entitled
to participate, to the extent eligible, in such medical, dental, disability,
life insurance, deferred compensation and other benefit plans as the Company
shall maintain for the benefit of Corporate office senior executives generally,
on the terms and subject to the conditions set forth in such plans.

SECTION 7.   Expenses; Vacation; Automobile. Upon
the receipt from Executive of expense vouchers and other documentation
reasonably requested by the Company, the Company shall reimburse Executive
promptly in accordance with the

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Company’s policies and procedures for all reasonable
expenses incurred by Executive in connection with Executive’s duties and
responsibilities hereunder.  During the
Term,  Executive shall be entitled to the
use of two demonstrator automobiles. 
Executive shall be entitled to four weeks paid vacation per year.

SECTION 8.   Noncompete and Nonsolicitation.  (a) 
During the Term and for one year thereafter, Executive shall not
directly or indirectly (other than as an employee of or consultant to the
Company):

(i) accept
employment with, or render services to, any Competing Business (defined below)
or solicit business on behalf of any Competing Business from any customers or
clients of the Company or its affiliates.

(ii) solicit,
recruit or hire any employee of the Company (or any person who was an employee
of the Company during the 12 month period preceding Executive’s date of termination)
or encourage any such employee to terminate employment with the Company.

(b) For purposes of this Agreement, “Competing
Business” means any corporation, partnership, sole proprietorship or other
entity that engages in activities or businesses within the United States that
are substantially in competition with the Company or any of its controlled
affiliates.

(c) Notwithstanding anything to the contrary
contained in this Agreement, the Company hereby agrees that the foregoing
covenant shall not be deemed breached as a result of the passive ownership by
Executive of:  (i) less than an aggregate
of 5% of any class of stock of a Competing Business; provided, however,
that such stock is listed on a national securities exchange or is quoted on the
National Market System of NASDAQ; or (ii) less than an aggregate of 10% in
value of any instrument of indebtedness of a Competing Business.

(d) If a judicial determination is made that any
of the provisions of this Section 8 constitutes an unreasonable or
otherwise unenforceable restriction against Executive, the provisions of this
Section 8 shall be rendered void only to the extent that such judicial
determination finds such provisions to be unreasonable or otherwise
unenforceable.  Moreover, notwithstanding
the fact that any provision of this Section 8 is determined not to be
specifically enforceable, the Company shall nevertheless be entitled to recover
monetary damages as a result of Executive’s breach of such provision.

(e) Executive agrees that the provisions of this
Section 8 are reasonable and properly required for the adequate protection of
the business and the goodwill of the Company.

SECTION 9.   Nondisclosure.  (a) 
The parties hereto agree that during the course of his employment by the
Company, Executive will have access to, and will gain knowledge with respect
to, the Company’s Confidential Information (defined below).  The parties acknowledge that unauthorized
disclosure or misuse of such Confidential Information would cause irreparable
damage to the Company.  Accordingly,
Executive agrees to the nondisclosure covenants in this Section 9.  Executive represents that his experience and 

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capabilities are such that the provisions of Section 8
and this Section 9 will not prevent him from earning his livelihood.  Executive agrees that he shall not (except as
may be required by law), without the prior written consent of the Company
during his employment with the Company under this Agreement, and any extension
or renewal hereof, and thereafter for so long as it remains Confidential
Information, use or disclose, or knowingly permit any unauthorized person to
use, disclose or gain access to, any Confidential Information; provided,
however, that Executive may disclose Confidential Information to a
person to whom disclosure is reasonably necessary or appropriate in connection
with the performance by Executive of his duties under this Agreement.  Upon termination of this Agreement for any
reason, Executive shall return to the Company the original and all copies of
all documents and correspondence in his possession relating to the business of
the Company or any affiliate, including but not limited to all Confidential
Information, and shall not be entitled to any lien or right of retention in
respect thereof.

(b) For purposes of this Agreement, “Confidential
Information” shall mean all business information (whether or not in written
form) which relates to the Company, any of its 
affiliates or their respective businesses or products or services and
which is not known to the public generally, including but not limited to
technical information or reports; trade secrets; unwritten knowledge and “know-how”;
operating instructions; training manuals; customer lists; customer buying
records and habits; product sales records and documents, and product
development, marketing and sales strategies; market surveys; marketing plans;
profitability analyses; product cost; long-range plans; information relating to
pricing, competitive strategies and new product development; information relating
to any forms of compensation and other personnel-related information;
contracts; and supplier lists. 
Notwithstanding anything herein to the contrary, “Confidential
Information” shall not include any information that (i) at the time of
Executive is made aware of such information, is generally available to the
public, (ii) after Executive becomes aware of such information, becomes
generally available to the public through no act or omission of Executive or
(iii) is made available to Executive by a person (other than the Company, its
affiliates or their respective directors or officers) who did not breach any
confidentiality obligations to the Company or its affiliates in disclosing such
information to Executive.

SECTION 10.   Severance.  (a) Subject to Section 11, if a
Termination (as defined below) of Executive’s employment occurs at any time
during the Term, the Company will pay Executive an aggregate cash amount equal
to 200% of the sum of (i) Executive’s annual base salary and (ii) the Target
Bonus in effect as of the date of Termination as “Severance Pay”.  This payment (subject to required
withholding) will be made by Asbury to Executive on the regular payroll dates
of Asbury starting with the date of Termination.

(b) Subject to Section 11, Severance Pay
will also include a portion of the Target Bonus for the calendar year of
Termination in an amount equal to such Target Bonus multiplied by the
percentage of such year that has lapsed through the date of Termination.

(c) Subject to Section 11, Executive shall
also be entitled for 24 months following the date of Termination to continue to
participate at the same level of coverage and Executive contribution in any
health, dental, disability and life insurance plans, as may be amended from
time to time, in which Executive was participating immediately prior to the 

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date of Termination. 
Such participation will terminate 30 days after Executive has obtained
other employment under which Executive is covered by equal benefits.  The Executive agrees to notify Asbury
promptly upon obtaining such other employment. 
At the option of the Executive, COBRA coverage will be available, as
provided by law and/or Company policy, at the termination of extended benefits
as provided above.

SECTION 11.   Change in Control.  (a) In the event that a Termination (as
defined below) occurs at any time within two years after a Change of Control,
as defined herein, or Executive chooses to terminate his employment within the
first 90 days following a Change of Control a (“CoC Termination”), then, in
lieu of Section 10, this Section 11 shall apply.

(b) In the event of a CoC Termination, the
Executive shall be paid the following as “Severance Pay” on the regular payroll
dates of Asbury starting with the date of Termination:

(i) Three (3) years of Executive’s Base Salary as of
the date of the CoC Termination; plus

(ii) Three (3) times Executive’s Target Bonus.

(c) In addition, in the event of a CoC
Termination, the Executive shall be eligible to participate at the same level
of coverage and Executive contribution to any health, dental, disability and
life insurance plans, as may be amended from time to time, in which Executive
was participating immediately prior to Termination.  Eligibility for such participation shall
terminate once Executive has obtained other employment or has reached the age
of sixty-five (65) whichever occurs first. 
The Executive agrees to promptly notify Asbury upon obtaining such other
employment.  The value of these extended
benefits shall be taxable income to Executive.

(d) For purposes of this Agreement, “Change of Control”
shall having the meaning ascribed to such term in Asbury Automotive Group, Inc.
2002 Equity Incentive Plan (the “2002 Equity Plan”), as such plan may be
amended from time to time.

(e) In the event of a Change of Control, stock options
theretofore granted to the Executive under the 2002 Equity Plan (i) shall, to
the extent then outstanding and unexercisable or unvested immediately prior to
the Change of Control, automatically be deemed exercisable and/or vested, as
the case may be, and (ii) to the extent such stock options remain
outstanding at or following such Change of Control (including by means of
assumption or substitution), such stock options shall remain exercisable for no
less than a two-year period commencing on the date of the Change of Control
subject to earlier expiration of the stock options pursuant to the terms of the
2002 Equity Plan or the applicable stock option award agreement; provided,
however, that any such stock options shall not expire prior to the end of such
two-year period solely as a result of the Executive’s termination of
employment.  The accelerated vesting and
exercisability and extended two-year exercise period provisions described in
the preceding sentence shall apply with respect to stock options held by the
Executive granted under any successor stock option plan of the 

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Company, if any, to the extent a change of control or
similar occurrence occurs under such successor stock option plan (or, if such
successor plan does not contain a “change of control” or similar provision, to
the extent a Change of Control occurs after the grant of the applicable stock
option).  The provisions of this
paragraph shall be deemed incorporated by reference into the Executive’s stock
option award agreements accordingly. In the event of a Change of Control, all
Performance Unit awards granted to the executive under the 2002 Equity plan
shall be treated as specified in the Performance Unit award agreement.

SECTION 12.   Definition of Termination Triggering
Severance.  For purposes of
Sections 10 and 11, “Termination” means (a) termination of Executive’s
employment by the Company for any reason, except death, “disability” (as
defined below), retirement, voluntary resignation (other than a resignation
described in clause (b) of this sentence) or “cause”, (b) termination by
the Executive because of (i) the involuntary reduction of Executive’s Base
Salary, (ii) the involuntary relocation of Executive’s current principal
place of business in Atlanta, Georgia to a location more than 50 miles
away or (iii) the involuntary and material diminution of Executive’s
duties or job title or (c) the failure by the Company, within 60 days
prior to the expiration of this Agreement, to renew this Agreement for an
additional three (3) year term, in each case except in the case of a
termination for “cause,” death, “disability”, retirement or voluntary
resignation (other than a resignation described in clause (b) of this
sentence).  Notwithstanding the foregoing,
the termination of Executive’s employment because of Executive’s “disability”
shall constitute a “Termination” for purposes of Section 10,       but shall not constitute a “Termination”
for purposes of Section 11.  The
definition of “disability” is a physical or mental disability or infirmity that
prevents the performance by Executive of his duties lasting (or likely to last,
based on competent medical evidence presented to the Company) for a continuous
period of six months or longer.  The
definition of “cause” is: 
(a) Executive’s gross negligence or serious misconduct (including
without limitation any criminal, fraudulent or dishonest conduct) that is
injurious to the Company or any of its affiliates; (b) Executive’s being
convicted of, or entering a plea of nolo contendere to, any crime that
constitutes a felony or involves moral turpitude; (c) Executive’s breach
of Sections 8 or 9; or (d) Executive’s willful and continued failure
to perform substantially the Executive’s duties with the Company that is not corrected
within thirty days after delivery of written notice to Executive by the
Company, provided that Executive shall not be entitled to the
opportunity to correct more than one such failure.

SECTION 13.   Parachute Payment Limitation.  (a) Notwithstanding anything in this
Agreement to the contrary, if any severance pay or benefits payable under this
agreement (without the application of this Section 13), either alone or
together with other payments, awards, benefits or distributions (or any
acceleration of any payment, award, benefit or distribution) pursuant to any
agreement, plan or arrangement with the Company or any of its affiliates (the “Total
Payments”), would constitute a “parachute payment” (as defined in Section 280G
of the U.S. Internal Revenue Code of 1986, as amended, and regulations
thereunder (the “Code”)), then the following shall occur:

(i)  Company’s independent auditors (the “Auditor”)
shall compute the net present value to Executive of all the Total Payments
after reduction for the excise taxes imposed by Code Section 4999 and for any
normal income taxes that would be imposed on Executive if such Total Payments
constituted Executive’s sole taxable income; and

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(ii)  The Auditor shall next compute the maximum
Total Payments that can be provided without any such Total Payments being
characterized as “Excess Parachute Payments” (as defined in Code Section 280G)
and reduce the result by the amount of any normal income taxes that would be
imposed on Executive if such reduced Total Payments constituted Executive’s
sole taxable income.

(b) If the result derived
in clause (i) above is greater than the result derived in clause (ii) above by
more than 10% of the result derived in clause (ii) above, then Asbury shall pay
Executive the full amount of the Total Payments without reduction.  If the result derived from clause (i) above
is not greater than the result derived in clause (ii) above by more than 10% of
the result derived in clause (ii) above, then the Company shall pay Executive
the maximum Total Payments possible without any such Total Payments being
characterized as Excess Parachute Payments. 
The determination of how such Total Payments will be reduced shall be
made by Executive in good faith after consultation with the Company.

SECTION 14.   Termination; Survival.  This Agreement may be terminated (a) by the
Company (i) upon the death or disability (as defined in Section 12) of the
Executive, (ii) for cause (as defined in Section 12) or (iii) for any
other reason upon 30 days notice to the Executive or (b) by the Executive for
any reason upon 30 days written notice to the Company.  Notwithstanding the foregoing, if Executive’s
employment terminates in a manner giving rise to a payment or benefit under
Section 10 or 11, such Sections shall survive the termination of this
Agreement.

SECTION 15.   Validity.  The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which shall remain in
full force and effect.

SECTION 16.   Resolution of Disputes.  Any disputes arising under or in connection
with this Agreement shall be resolved by third party mediation of the dispute
and, if such dispute is not resolved within 30 days, by binding arbitration, to
be held in Atlanta, Georgia, in accordance with the rules and procedures of the
American Arbitration Association. 
Judgment upon the award rendered by the arbitrator(s) may be entered in
any court having jurisdiction thereof. 
Each party shall bear his or its own costs of the mediation, arbitration
or litigation.

SECTION 17.   Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

SECTION 18.   Withholding.  All payments hereunder shall be subject to
any required withholding of Federal, state and local taxes pursuant to any
applicable law or regulation.

SECTION 19.   Section Headings.  The section headings in this Agreement are
for convenience of reference only, and they form no part of this Agreement and
shall not affect its interpretation.

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SECTION 20.   Miscellaneous.  (a) This Agreement shall inure to the benefit
of and shall be binding upon Executive and his executor, administrator, heirs,
personal representative and permitted assigns, and the Company and its
successors and permitted assigns. 
Neither this Agreement nor any rights or obligations hereunder may be
assigned by one party without the consent of the others, except that this
Agreement shall be binding upon and inure to the benefit of any successor or
successors of the Company whether by merger, consolidation, sale of assets or
otherwise and reference herein to the Company shall be deemed to include any
such successor or successors.

(b) Executive represents
and warrants that (i) he is not subject to any agreement, understanding or
limitation that could hinder or impair Executive’s ability to perform his
duties hereunder and (ii) Executive’s entry into, and performance of his
obligations under, this Agreement will not interfere or otherwise violate any
other agreement to which Executive is a party or is bound.

(c) This Agreement shall
be deemed to be made in, and in all respects shall be interpreted, construed
and governed by and in accordance with, the laws of the State of New York,
without regard to the conflicts of law principles of such State.  No provision of this Agreement or any related
document shall be construed against or interpreted to the disadvantage of any
party hereto by any court or other governmental or judicial authority by reason
of such party having or being deemed to have structured or drafted such
provision.

(d) This Agreement
constitutes the entire agreement between the Company and Executive with respect
to Executive’s employment by the Company and supersedes all prior agreements,
if any, whether written or oral, between them, relating to Executive’s
employment by the Company, including, without limitation, the agreement between
the Company and Executive dated August 16, 2004.  Notwithstanding the foregoing, this Agreement
does not supersede (except to the extent expressly provided herein) any of the
terms or conditions of any stock option grants, the Performance Share Unit
Award Agreement between Executive and Company or any other similar agreements
governing incentive compensation or stock grants that were entered into prior
to the date hereof.  This Agreement may
not be changed, waived, discharged or terminated orally, but only by an
instrument in writing, signed by the party against which enforcement of such
change, waiver, discharge or termination is sought.

(e) All notices and other
communications required or permitted hereunder shall be in writing and shall be
deemed given when (a) delivered personally, (b) sent by certified or registered
mail, postage prepaid, return receipt requested or delivered by overnight
courier (provided that a written acknowledgment of receipt is obtained by the
overnight courier) to the party concerned at the address indicated below or to
such changed address as such party may subsequently give such notice of:

	
  If to the Company

  	
   

  	
  Asbury Automotive Group Inc. 

  attn. General Counsel

  622 3rd Avenue

  37th Floor

  
	
   

  	
   

  	
   

  

 

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  New York, New York 10017

  
	
   

  	
   

  	
   

  
	
  If to Executive

  	
   

  	
  Charles Oglesby

  2938 Major Ridge Trail

  Duluth, Ga.30097

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Eugene W. Luciani

  Andersen, Tate & Carr, P.C.

  1505 Lakes Parkway, Suite 100

  Lawrenceville, Georgia 30043

  

 

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IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed as of the day and year first above written.

	
   

  	
  ASBURY AUTOMOTIVE GROUP,
  INC.,

  
	
   

  	
   

  	
   

  
	
   

  	
  By 

  	
  /s/  Michael
  Durham

  
	
   

  	
   

  	
  Name: Michael Durham

  
	
   

  	
   

  	
  Title: Non-Executive Chairman

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/  Charles
  Oglesby

  
	
   

  	
   

  	
  Charles Oglesby

  

 

 10EXHIBIT 4.1

WHITTIER ENERGY
CORPORATION

LONG-TERM
INCENTIVE PLAN

(as amended July
14, 2005)

ARTICLE I.
ESTABLISHMENT AND PURPOSE

1.1    Establishment.    Whittier
Energy Corporation, a Nevada corporation, hereby establishes the Whittier
Energy Corporation Long-Term Incentive Plan as set forth in this document.

1.2    Purpose.    The
purposes of the Plan are to attract able persons to enter the employ of the
Company, to encourage Employees to remain in the employ of the Company and to
provide motivation to Employees to put forth maximum efforts toward the
continued growth, profitability and success of the Company, by providing
incentives to such persons through the ownership and/or performance of the
Common Stock of Whittier. A further purpose of the Plan is to provide a means
through which the Company may attract able persons to become directors of and
Consultants with respect to the Company and to provide such individuals with
incentive and reward opportunities. Toward these objectives, Awards may be
granted under the Plan to Employees, Outside Directors and Consultants on the
terms and subject to the conditions set forth in the Plan.

1.3    Effectiveness.    The
Plan shall become effective as of July 14, 2005, the date of its adoption by
the Board, provided it is duly approved by the holders of at least a majority
of the shares of Common Stock present or represented and entitled to vote at a
meeting of the stockholders of Whittier duly held in accordance with applicable
law within twelve months after the date of adoption of the Plan by the Board.
If the Plan is not so approved, the Plan shall terminate and any Award granted
hereunder shall be null and void.

ARTICLE II.
DEFINITIONS

2.1    Affiliate.    ”Affiliate”
means a parent corporation or subsidiary corporation (within the meanings of
Section 424(e) and (f) of the Code) of Whittier, and with respect to
an Award that is not an Incentive Stock Option, any other incorporated or
unincorporated trade or business or organization which along with Whittier is
under common control (within the meaning of the regulations from time to time
promulgated by the Secretary of the Treasury pursuant to Section 414(c) of
the Code).

2.2    Award.    ”Award”
means any Option, Phantom Option, Restricted Stock, SAR, or Other Incentive
Award granted under the Plan, whether singly, in combination or in tandem, to a
Participant. Each Award shall be evidenced by an Award Agreement.

2.3    Award
Agreement.    ”Award Agreement” means a
written agreement between Whittier and a Participant that sets forth the terms,
conditions, restrictions and/or limitations applicable to an Award.

2.4    Board.    ”Board”
means the Board of Directors of Whittier.

2.5    Cause.    ”Cause”
means the termination of a Participant’s employment or service by reason of
fraud, dishonesty, any unauthorized use or disclosure by the Participant of any
confidential information or trade secrets of Whittier, or the performance of
other acts detrimental to Whittier or an Affiliate, as determined by the
Committee in its absolute discretion.

2.6    Code.    ”Code”
means the Internal Revenue Code of 1986, as amended from time to time,
including regulations thereunder and successor provisions and regulations
thereto.

2.7    Committee.    ”Committee”
means (i) with respect to the application of this Plan to Employees and
Consultants, the Compensation Committee of the Board, or such other Committee
of the Board as may be designated by the Board to administer the Plan, which
committee shall consist of two or more non-employee directors, each of whom is
a “non-employee director” under Rule 16b-3 and an “outside director” under
Section 162(m) of the Code, and (ii) with respect to the application
of this Plan to an Outside Director, the Board. To the extent that no Committee
exists that has the authority to administer the Plan, the functions of the
Committee shall be exercised by the Board. If for any reason the appointed
Committee does not meet the requirements of Rule 16b-3 or
Section 162(m) of the Code, such a noncompliance with such requirements
shall not affect the validity of Awards, grants, interpretations or other
actions of the Committee.

 

2.8    Common
Stock.    ”Common Stock” means the Common
Stock, par value $0.001 per share, of Whittier, or any stock or other
securities of Whittier hereafter issued or issuable in substitution or exchange
for the Common Stock.

2.9    Company.    ”Company”
means Whittier and its Affiliates.

2.10    Consultant.    ”Consultant”
means any individual who performs services for and is treated by Whittier or an
Affiliate as an independent contractor for employment tax purposes, but does
not include an Outside Director.

2.11    Effective
Date.    ”Effective Date” means the date
an Award is determined to be effective by the Board upon the grant of such Award.

2.12    Employee.    ”Employee”
means an employee of Whittier or an Affiliate. The term “Employee” does not
include an Outside Director, a Consultant or any other individual performing
services for Whittier or an Affiliate who is treated for tax purposes as an
independent contractor at the time of performance of the services.

2.13    Exchange
Act.    ”Exchange Act” means the
Securities Exchange Act of 1934, as amended.

2.14    Fair
Market Value.    ”Fair Market Value”
means with respect to shares of Common Stock (i) if such shares are traded
on a securities exchange or through the NASDAQ Stock Market, the average of the
closing prices of such shares on such exchange or system on the applicable
date, (ii) if such shares are actively traded over-the-counter, the
average of the closing bid and closing asked prices for such shares on the
applicable date, or (iii) if there is no active public market for such
shares, the fair market value of such shares as determined in good faith by the
Board.

2.15    Incentive
Stock Option.    ”Incentive Stock Option”
means an Option that is intended to meet the requirements of
Section 422(b) of the Code.

2.16    Nonqualified
Stock Option.    ”Nonqualified Stock
Option” means an Option that is not an Incentive Stock Option.

2.17    Option.    ”Option”
means an option to purchase shares of Common Stock granted to a Participant
pursuant to Article VII. An Option may be either an Incentive Stock Option
or a Nonqualified Stock Option as determined by the Committee.

2.18    Other
Incentive Award.    ”Other Incentive
Award” means an Award granted to a Participant pursuant to Article XI.

2.19    Outside
Director.    ”Outside Director” means a “non-employee
director” of the Company within the meaning of Rule 16b-3.

2.20    Participant.    ”Participant”
means any Employee, Outside Director or Consultant to whom an Award has been
granted under the Plan.

2.21    Phantom
Option.    ”Phantom Option” means a
fictional option granted to a Participant pursuant to Article VIII.

2.22    Plan.    ”Plan”
means this Whittier Energy Corporation Long-Term Incentive Plan.

2.23    Restricted
Stock.    ”Restricted Stock” means an
Award of shares of Common Stock granted to a Participant pursuant to, and with
such restrictions as are imposed under, Article IX. Restricted Stock shall
constitute issued and outstanding shares of Common Stock for all corporate
purposes.

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

2.25    SARs.    ”SARs”
means an Award of stock appreciation rights granted to a Participant pursuant
to Article X.

2.26    Whittier.    ”Whittier”
means Whittier Energy Corporation, a Nevada corporation, and any successor
thereto.

ARTICLE III. PLAN
ADMINISTRATION

3.1    Plan
Administrator.    The Plan shall be
administered by the Committee. The Committee may delegate some or all of its
power to the Chief Executive Officer or such other officer of the Company as
the Committee deems appropriate; provided, that (i) the Committee may not
delegate its power with regard to the grant of an Award to any individual who
is a “covered employee” within the 

 2
 

 

meaning of Section 162(m) of the Code or who, in
the Committee’s judgment, is likely to be a covered employee at any time during
the period an Award to such individual would be outstanding, and (ii) the
Committee may not delegate its power with regard to the selection for
participation in the Plan of an officer or other individual subject to
Section 16 of the Exchange Act or decisions concerning the timing, pricing
or amount of an Award to such an officer or other individual.

3.2    Authority
of Administrator.    The Committee shall
have total and exclusive responsibility to control, operate, manage and
administer the Plan in accordance with its terms. The Committee shall have all
the authority that may be necessary or helpful to enable it to discharge its
responsibilities with respect to the Plan. Without limiting the generality of the
preceding sentence, the Committee shall have the exclusive right to:
(i) interpret the Plan and the Award Agreements executed hereunder;
(ii) determine eligibility for participation in the Plan;
(iii) decide all questions concerning eligibility for, and the amount of,
Awards payable under the Plan; (iv) construe any ambiguous provision of
the Plan or any Award Agreement; (v) prescribe the form of the Award
Agreements embodying Awards granted under the Plan; (vi) correct any
defect, supply any omission or reconcile any inconsistency in the Plan or any
Award Agreement; (vii) issue administrative guidelines as an aid to
administering the Plan and make changes in such guidelines as the Committee
from time to time deems proper; (viii) make regulations for carrying out
the Plan and make changes in such regulations as the Committee from time to
time deems proper; (ix) determine whether Awards should be granted singly,
in combination or in tandem; (x) to the extent permitted under the Plan,
grant waivers of Plan terms, conditions, restrictions and limitations;
(xi) accelerate the exercise, vesting or payment of an Award when such
action or actions would be in the best interests of the Company;
(xii) grant Awards in replacement of Awards previously granted under the
Plan or any other employee benefit plan of the Company; and (xiii) take
any and all other actions the Committee deems necessary or advisable for the
proper operation or administration of the Plan.

3.3    Discretionary
Authority.    The Committee shall have
full discretionary authority in all matters related to the discharge of its
responsibilities and the exercise of its authority under the Plan, including,
without limitation, its construction of the terms of the Plan and its
determination of eligibility for participation and Awards under the Plan. The
decisions of the Committee and its actions with respect to the Plan shall be
final, conclusive and binding on all persons having or claiming to have any
right or interest in or under the Plan, including Participants and their
respective estates, beneficiaries and legal representatives.

3.4    Liability;
Indemnification.    No member of the
Committee nor any person to whom authority has been delegated, shall be
personally liable for any action, interpretation or determination made in good
faith with respect to the Plan or Awards granted hereunder, and each member of
the Committee (or delegatee of the Committee) shall be fully indemnified and
protected by Whittier with respect to any liability he or she may incur with
respect to any such action, interpretation or determination, to the extent
permitted by applicable law.

ARTICLE IV.
ELIGIBILITY

All Employees, Outside Directors and Consultants are
eligible to participate in the Plan. The Committee shall recommend, from time
to time, Participants from those Employees, Outside Directors and Consultants,
who, in the opinion of the Committee, can further the Plan purposes. Once a
Participant is recommended for an Award by the Committee, the Committee shall
determine the type and size of Award to be granted to the Participant and shall
establish in the related Award Agreement the terms, conditions, restrictions
and/or limitations applicable to the Award, in addition to those set forth in
the Plan and the administrative rules and regulations, if any, established by
the Committee.

ARTICLE V. FORM OF
AWARDS

Awards may, at the Committee’s sole discretion, be
granted under the Plan in the form of Options pursuant to Article VII,
Phantom Options pursuant to Article VIII, Restricted Stock pursuant to
Article IX, SARs pursuant to Article X, and Other Incentive Awards
pursuant to Article XI, or a combination thereof. All Awards shall be
subject to the terms, conditions, restrictions and limitations of the Plan. The
Committee may, in its absolute discretion, subject any Award to such other
terms, conditions, restrictions and/or limitations (including, but not limited
to, the time and conditions of exercise, vesting or payment of an Award and
restrictions on transferability of any shares of Common Stock issued or
delivered pursuant to an Award), provided they are not inconsistent with the
terms of the Plan. Awards under a particular Article of the Plan need not be
uniform, and Awards under more than one Article of the Plan may be combined
into a single Award Agreement. Any combination of Awards may be granted at one
time and on more than one occasion to the same Participant.

 3
 

 

ARTICLE VI. SHARES
SUBJECT TO THE PLAN

6.1    Available
Shares.    The maximum number of shares
of Common Stock that shall be available for grant of Awards under the Plan
shall not exceed a total of 1,876,000, subject to adjustment as provided in
Sections 6.2 and 6.3. Shares of Common Stock issued pursuant to the Plan may be
shares of original issuance or treasury shares or a combination of the
foregoing, as the Committee, in its absolute discretion, shall from time to
time determine.

6.2    Adjustments
for Recapitalizations and Reorganizations.

(a)   The shares with respect to which
Awards may be granted under the Plan are shares of Common Stock as presently
constituted, but if, and whenever, prior to the expiration or satisfaction of
an Award theretofore granted, Whittier shall effect a subdivision or
consolidation of shares of Common Stock or the payment of a stock dividend on
Common Stock in the form of Whittier Common Stock without receipt of
consideration by Whittier, the number of shares of Common Stock with respect to
which such Award may thereafter be exercised or satisfied, as applicable,
(i) in the event of an increase in the number of outstanding shares, shall
be proportionately increased, and the exercise price per share shall be
proportionately reduced, and (ii) in the event of a reduction in the
number of outstanding shares, shall be proportionately reduced, and the
exercise price per share shall be proportionately increased.

(b)   If Whittier recapitalizes or
otherwise changes its capital structure, thereafter upon any exercise or
satisfaction, as applicable, of an Award theretofore granted the Participant shall
be entitled to (or entitled to purchase, if applicable) under such Award, in
lieu of the number of shares of Common Stock then covered by such Award, the
number and class of shares of stock or other securities to which the
Participant would have been entitled pursuant to the terms of the
recapitalization if, immediately prior to such recapitalization, the
Participant had been the holder of record of the number of shares of Common
Stock then covered by such Award.

(c)   In the event of changes in the outstanding
Common Stock by reason of a reorganization, merger, consolidation, combination,
separation (including a spin-off or other distribution of stock or property),
exchange, or other relevant change in capitalization occurring after the date
of grant of any Award and not otherwise provided for by this Section 6.2,
any outstanding Awards and any Award Agreements evidencing such Awards shall be
subject to adjustment by the Committee in its absolute discretion as to the
number, price and kind of shares or other consideration subject to, and other
terms of, such Awards to reflect such changes in the outstanding Common Stock.

(d)   In the event of any changes in
the outstanding Common Stock provided for in this Section 6.2, the
aggregate number of shares available for grant of Awards under the Plan may be
equitably adjusted by the Committee, whose determination shall be conclusive.
Any adjustment provided for in this Section 6.2 shall be subject to any
required stockholder action.

6.3    Adjustments
for Awards.    The Committee shall have
full discretion to determine the manner in which shares of Common Stock
available for grant of Awards under the Plan are counted. Without limiting the
discretion of the Committee under this Section 6.3, unless otherwise determined
by the Committee, the following rules shall apply for the purpose of
determining the number of shares of Common Stock available for grant of Awards
under the Plan:

(a)    Options
and Restricted Stock.    The grant of Options
and Restricted Stock shall reduce the number of shares available for grant of
Awards under the Plan by the number of shares subject to such Award.

(b)    SARs
and Phantom Options.    The grant of SARS and
Phantom Options shall not affect the number of shares available for grant of
Awards under the Plan, but such number of shares shall be reduced by any shares
issued in payment or settlement of SARS and Phantom Options.

(c)    Other
Incentive Awards.    The grant of an Other
Incentive Award in the form of Common Stock or that may be paid or settled only
in Common Stock shall reduce the number of shares available for grant of Awards
under the Plan by the number of shares subject to such Award. The grant of an
Other Incentive Award that may be paid or settled only for cash shall not affect
the number of shares available for grant of Awards under the Plan. The grant of
an Other Incentive Award that may be paid or settled in either Common Stock or
cash shall reduce the number of shares available for grant of Awards under the
Plan by the number of shares subject to such Award.

(d)    Termination.    If
any Award referred to in paragraphs (a) and (c) above (other than an
Other Incentive Award that may be paid or settled only for cash) is canceled or
forfeited, or terminates, expires or lapses, for any reason (other than the 

 4
 

 

termination of a Related
Option (as defined in Section 10.1) upon exercise of its corresponding
SARs), the shares then subject to such Award shall again be available for grant
of Awards under the Plan.

(e)    Payment
of Exercise Price and Withholding Taxes.    If
previously acquired shares of Common Stock are used to pay the exercise price
of an Award, or shares of Common Stock that would be acquired upon exercise of
an Award are withheld to pay the exercise price of such Award, the number of
shares available for grant of Awards under the Plan shall not be increased by
the number of shares delivered or withheld as payment of such exercise price.
If previously acquired shares of Common Stock are used to pay withholding taxes
payable upon exercise, vesting or payment of an Award, or shares of Common
Stock that would be acquired upon exercise, vesting or payment of an Award are
withheld to pay withholding taxes payable upon exercise, vesting or payment of
such Award, the number of shares available for grant of Awards under the Plan
shall not be increased by the number of shares delivered or withheld as payment
of such withholding taxes.

(f)    Fractional
Shares.    If any adjustment would result in a
fractional security being (i) available under the Plan, such fractional
security shall be disregarded, or (ii) subject to an Award, Whittier shall
pay the holder of such Award, in connection with the first vesting, exercise or
settlement of such Award in whole or in part occurring after such adjustment,
an amount in cash determined by multiplying (1) the fraction of such
security (rounded to the nearest hundredth) by (2) the excess, if any, of
the Fair Market Value on the vesting, exercise or settlement date over the exercise
price, if any, of such Award.

ARTICLE VII.
OPTIONS

7.1    General.    Awards
may be granted to Employees, Outside Directors and Consultants in the form of
Options. Options granted under the Plan may be Incentive Stock Options or
Nonqualified Stock Options, or a combination of both; provided, however, that
Incentive Stock Options may be granted only to Employees. Option grants under
the Plan to Outside Directors and Consultants may only be in the form of
Nonqualified Stock Options.

7.2    Terms and
Conditions of Options.    An Option shall
be exercisable in whole or in such installments and at such times as may be
determined by the Committee. The price at which a share of Common Stock may be
purchased upon exercise of an Option shall be determined by the Committee, but
such exercise price shall not be less than 100% of the Fair Market Value per
share of Common Stock on the Effective Date of such Option’s grant. Except as
otherwise provided in Section 7.3, the term of each Option shall be as
specified by the Committee; provided, however, that, no Option shall be
exercisable later than ten years from the Effective Date of such Option’s
grant. Options may be granted with respect to Restricted Stock or shares of
Common Stock that are not Restricted Stock, as determined by the Committee in
its absolute discretion.

7.3    Restrictions
Relating to Incentive Stock Options.    Options
granted in the form of Incentive Stock Options shall, in addition to being
subject to the terms and conditions of Section 7.2, comply with Section 422(b)
of the Code. Accordingly, no Incentive Stock Options shall be granted later
than ten years from the date of adoption of the Plan by the Board. In addition,
no Incentive Stock Option shall be exercisable after the expiration of ten
years from the Effective Date of such Option’s grant. To the extent that the
aggregate Fair Market Value (determined at the time the respective Incentive
Stock Option is granted) of Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by an individual during any calendar
year under all incentive stock option plans of Whittier and its Affiliates
exceeds $100,000, such excess Incentive Stock Options shall be treated as
Nonqualified Stock Options. The Committee shall determine, in accordance with
the applicable provisions of the Code, which of a Participant’s Incentive Stock
Options will be treated as Nonqualified Stock Options because of such
limitation and shall notify the Participant of such determination as soon as
practicable after such determination. No Incentive Stock Option shall be
granted to an Employee under the Plan if, at the time such Option is granted,
such Employee owns stock possessing more than 10% of the total combined voting
power of all classes of stock of Whittier or an Affiliate, within the meaning
of Section 422(b)(6) of the Code, unless (i) on the Effective Date of
grant of such Option, the exercise price of such Option is at least 110% of the
Fair Market Value of the Common Stock subject to the Option and (ii) such
Option by its terms is not exercisable after the expiration of five years from
the Effective Date of such Option’s grant.

7.4    Additional
Terms and Conditions.    The Committee
may subject any Award of an Option to such other terms, conditions, restrictions
and/or limitations as it determines are necessary or appropriate, provided they
are not inconsistent with the Plan.

7.5    Exercise
of Options.    Subject to the terms and
conditions of the Plan, Options shall be exercised by the delivery of a written
notice of exercise to Whittier, setting forth the number of shares of Common
Stock with respect to which the Option is to be exercised, accompanied by full
payment for such shares.

Upon exercise of an Option, the exercise price of the
Option shall be payable to Whittier in full either: (i) in cash or an
equivalent acceptable to the Committee, or (ii) in the absolute discretion
of the Committee and in accordance with any applicable administrative 

 5
 

 

guidelines established by the Committee, by tendering
previously acquired nonforfeitable, unrestricted shares of Common Stock that
have been held by the Participant for at least six months and that have an
aggregate Fair Market Value at the time of exercise equal to the total exercise
price, or (iii) in a combination of the forms of payment specified in
clauses (i) and (ii) above.

Unless otherwise prohibited by applicable law, payment
of the exercise price of an Option may also be made, in the absolute discretion
of the Committee, (i) by delivery to Whittier or its designated agent as
an executed irrevocable option exercise form together with irrevocable
instructions to a broker-dealer to sell or margin a sufficient portion of the
shares with respect to which the Option is exercised and deliver the sale or
margin loan proceeds directly to Whittier to pay the exercise price and any
required withholding taxes, or (ii) by such other cashless or
broker-assisted exercise methods as may be approved by the Committee.

In addition, any grant of a Nonqualified Stock Option
under the Plan may provide that payment of the exercise price of the
Nonqualified Stock Option may also be made in whole or in part in the form of
shares of Restricted Stock or other shares of Common Stock that are subject to
a risk of forfeiture or restrictions on transfer, provided that such shares
have been held by the Participant for at least six months. Unless otherwise
determined by the Committee at the time of grant of such Nonqualified Stock
Option, whenever the exercise price of such Nonqualified Stock Option is paid
in whole or in part by means of the form of consideration specified in the
immediately preceding sentence, the shares of Common Stock received by the
Participant upon the exercise of such Option shall be subject to the same risk
of forfeiture and restrictions on transfer as those that applied to the
consideration surrendered by the Participant. However, the risk of forfeiture
and restrictions on transfer shall apply only to the same number of shares of
Common Stock received by the Participant upon exercise as applied to the
forfeitable or restricted Common Stock surrendered by the Participant in
payment of the exercise price.

As soon as reasonably practicable after receipt of
written notification of exercise of an Option and full payment of the exercise
price and any required withholding taxes, Whittier shall deliver to the
Participant, in the Participant’s name, a stock certificate or certificates in
an appropriate amount based upon the number of shares of Common Stock purchased
under the Option.

7.6    Termination
of Employment or Service.    Each Award
Agreement embodying the Award of an Option shall set forth the extent to which
the Participant shall have the right to exercise the Option following
termination of the Participant’s employment or service with the Company. Such
provisions shall be determined by the Committee in its absolute discretion,
need not be uniform among all Options granted under the Plan and may reflect
distinctions based on the reasons for termination of employment or service. In
the event a Participant’s Award Agreement embodying the award of an Option does
not set forth such termination provisions, the following termination provisions
shall apply with respect to such Award:

(a)    Retirement.    If
the employment or service of a Participant shall terminate by reason of
retirement on or after attaining age sixty-five (65), each outstanding Award
held by such Participant may be exercised, the Option held by the Participant
will continue to vest for one year following the date of such retirement, and,
to the extent vested, shall be exercisable until the expiration of the term of
such Option.

(b)    Death
or Disability.    If the employment or service
of a Participant shall terminate by reason of death or permanent and total
disability (within the meaning of Section 22(e)(3) of the Code), each
outstanding Option held by the Participant may be exercised, to the extent then
vested, until the earlier of (i) the expiration of one year from the date
of such termination of employment or service, or (ii) the expiration of
the term of such Option.

(c)    Other
Termination.    If the employment or service of
a Participant shall terminate for any reason other than a reason set forth in
paragraph (a) or (b) above or paragraph (d) below, whether on a
voluntary or involuntary basis, each outstanding Option held by the Participant
may be exercised, to the extent then vested, until the earlier of (i) the
expiration of three months from the date of such termination of employment or service,
or (ii) the expiration of the term of such Option.

(d)    Termination
for Cause.    Notwithstanding paragraphs (a),
(b) and (c) above, if the employment or service of a Participant is
terminated for Cause, all outstanding Options held by the Participant shall
immediately be forfeited to the Company and no additional exercise period shall
be allowed, regardless of the vested status of the Options.

7.7    Maximum
Option Grants.    Any provision of this
Plan to the contrary notwithstanding, the maximum number of shares of Common
Stock for which Options and SARs may be granted under the Plan to any one
Participant during a calendar year is 350,000.

ARTICLE VIII.
PHANTOM OPTIONS

8.1    General.    Awards
may be granted to Employees, Outside Directors and Consultants in the form of
Phantom Options. Phantom Options shall be awarded in such numbers and at such
times as the Committee shall determine. All Phantom Options shall be 

 6
 

 

evidenced by an Award Agreement as described in
Section 8.2 below and any payment or settlement made upon exercise of a
Phantom Option shall be made to the Participant in accordance with the terms
and conditions set forth in the Award Agreement.

8.2    Award of
Phantom Options.    Each Award Agreement
embodying a Phantom Option granted pursuant to the Plan shall specify the
Strike Price for each fictional share of Common Stock subject to the Phantom
Option, the number of fictional shares subject to the Phantom Option being
awarded, the manner and timing of the vesting of the Phantom Option and of
payments or transfer of shares to the Participant under such Award and such
other terms and conditions not inconsistent with the provisions of the Plan as
may be approved by the Committee in its absolute discretion. The Strike Price
of a Phantom Option shall be determined by the Committee, but such Strike Price
shall not be less than 100% of the Fair Market Value per share of Common Stock
on the Effective Date of the Phantom Option’s grant. The term of each Phantom
Option shall be as specified by the Committee; provided, however, that unless
otherwise designated by the Committee, no Phantom Option shall be exercisable
later than ten years after the Effective Date of the Phantom Option’s grant.
Except as otherwise provided in an applicable Award Agreement, Participants
holding Phantom Options shall not be entitled to any dividends, rights upon
liquidation or other rights of a holder of shares of Common Stock.

8.3    Exercise.    Subject
to the terms and conditions of the Plan, Phantom Options shall be exercised by
the delivery of a written notice of exercise to Whittier, setting forth the
number of fictional shares with respect to which the Phantom Option is to be
exercised. Subject to the terms and conditions of this Plan and the applicable
Award Agreement, upon exercise each fictional share subject to a Phantom Option
entitles the Participant holding such Phantom Option to receive the amount, if
any, by which the Fair Market Value as of the date of exercise exceeds the
Strike Price, payable in one or a combination of the following forms, as
determined by the Committee in its absolute discretion: (i) a cash
payment, (ii) a whole number of shares of Common Stock (with cash payable
in lieu of fractional shares), or (iii) by execution of a promissory note
by Whittier as maker, to the Participant, as payee. Any promissory note
described in (iii) shall be payable in sixty (or fewer) equal monthly
installments, the first of such installments payable two months after the date
of exercise, and the remaining installments payable monthly thereafter and
shall bear simple interest per annum at a rate equal to the prime rate of
interest as quoted in the Wall Street Journal on the exercise date (or the
immediately preceding business day) under the caption “Prime Rate” in the section entitled “Money Rates.” The promissory note shall
provide that the maker shall have the privilege of prepaying all or any part
thereof at any time with interest to date of prepayment.

8.4    Termination
of Employment or Service.    Each Award
Agreement embodying the Award of a Phantom Option shall set forth the extent to
which the Participant shall have the right to exercise the Phantom Option
following termination of the Participant’s employment or service with the
Company. Such provisions shall be determined by the Committee in its absolute
discretion, need not be uniform among all Phantom Options granted under the
Plan and may reflect distinctions based on the reasons for termination of
employment or service. In the event a Participant’s Award Agreement embodying
the award of a Phantom Option does not set forth such termination provisions,
the following termination provisions shall apply with respect to such Award:

(a)    Retirement.    If
the employment or service of a Participant shall terminate by reason of
retirement on or after attaining age sixty-five (65), each outstanding Phantom
Option held by the Participant will continue to vest for one year following the
date of such retirement, and, to the extent vested, shall be exercisable until the
expiration of the term of such Phantom Option.

(b)    Death or
Disability.    If the employment or
service of a Participant shall terminate by reason of death or permanent and
total disability (within the meaning of Section 22(e)(3) of the Code),
each outstanding Phantom Option held by the Participant may be exercised, to
the extent then vested, until the earlier of (i) the expiration of one
year from the date of such termination of employment or service, or
(ii) the expiration of the term of such Option.

(c)    Other
Termination.    If the employment or
service of a Participant shall terminate for any reason other than a reason set
forth in paragraph (a) or (b) above or paragraph (d) below,
whether on a voluntary or involuntary basis, each outstanding Phantom Option
held by the Participant may be exercised, to the extent then vested, until the
expiration of the term of such Phantom Option.

(d)    Termination for Cause.    Notwithstanding
paragraphs (a), (b) and (c) above, if the employment or service of a Participant
is terminated for Cause, all outstanding Phantom Options held by the
Participant shall immediately be forfeited to the Company and no additional
exercise period shall be allowed, regardless of the vested status of the
Phantom Options.

 7
 

 

ARTICLE IX.
RESTRICTED STOCK

9.1    General.    Awards
may be granted to Employees, Outside Directors and Consultants in the form of
Restricted Stock. Restricted Stock shall be awarded in such numbers and at such
times as the Committee shall determine.

9.2    Restriction
Period.    At the time an Award of
Restricted Stock is granted, the Committee shall establish a period of time
(the “Restriction Period”) applicable to such Restricted Stock. Each Award of
Restricted Stock may have a different Restriction Period, in the discretion of
the Committee. The Restriction Period applicable to a particular Award of
Restricted Stock shall not be changed except as permitted by Section 6.2
or Section 9.3.

9.3    Other
Terms and Conditions.    Restricted Stock
awarded to a Participant under the Plan shall be represented by a stock
certificate registered in the name of the Participant or, at the option of
Whittier, in the name of a nominee of Whittier. Subject to the terms and
conditions of the Award Agreement, a Participant to whom Restricted Stock has
been awarded shall have the right to receive dividends thereon during the
Restriction Period, to vote the Restricted Stock and to enjoy all other
stockholder rights with respect thereto, except that (i) the Participant
shall not be entitled to possession of the stock certificate representing the
Restricted Stock until the Restriction Period shall have expired,
(ii) Whittier shall retain custody of the Restricted Stock during the
Restriction Period, (iii) the Participant may not sell, transfer, pledge,
exchange, hypothecate or otherwise dispose of the Restricted Stock during the
Restriction Period, and (iv) a breach of the terms and conditions
established by the Committee pursuant to the Award of the Restricted Stock
shall cause a forfeiture of the Restricted Stock. At the time of an Award of
Restricted Stock, the Committee may, in its absolute discretion, prescribe
additional terms, conditions, restrictions and/or limitations applicable to the
Restricted Stock, including, but not limited to, rules pertaining to the
termination of employment or service (by reason of death, permanent and total
disability, or otherwise) of a Participant prior to expiration of the
Restriction Period.

9.4    Payment
for Restricted Stock.    A Participant
shall not be required to make any payment for Restricted Stock awarded to the
Participant, except to the extent otherwise required by the Committee or by
applicable law.

9.5    Miscellaneous.    Nothing
in this Article shall prohibit the exchange of shares of Restricted Stock
issued under the Plan pursuant to a plan of reorganization for stock or
securities of Whittier or another corporation that is a party to the
reorganization, but the stock or securities so received for shares of
Restricted Stock shall, except as provided in Section 6.2 or
Section 13.2, become subject to the restrictions applicable to the Award
of such Restricted Stock. Any shares of stock received as a result of a stock
split or stock dividend with respect to shares of Restricted Stock shall also
become subject to the restrictions applicable to the Award of such Restricted
Stock.

ARTICLE X. SARs

10.1    General.    The
Committee may from time to time grant SARs in conjunction with all or any
portion of any Option (the “Related Option”) either (i) at the time of the
initial Option grant (not including any subsequent modification that may be
treated as a new grant of an Incentive Stock Option for purposes of
Section 424(h) of the Code) or (ii) with respect to Nonqualified
Stock Options, at any time after the initial Option grant while the
Nonqualified Stock Option is still outstanding. SARs shall not be granted other
than in conjunction with an Option granted hereunder.

10.2    Terms and
Conditions.    SARs granted hereunder
shall comply with the following conditions and also with the terms of the Award
Agreement governing the Related Option:

(a)   The SAR shall expire no later
than the expiration of the Related Option.

(b)   Upon the exercise of an SAR, the
Participant shall be entitled to receive from Whittier or the appropriate
Affiliate an amount in cash equal to the excess of the aggregate Fair Market
Value of the shares of Common Stock with respect to which the SAR is then being
exercised (determined as of the date of such exercise) over the aggregate
purchase price of such shares as provided in the Related Option.

(c)   SARs shall be exercisable
(i) only at such time or times and only to the extent that the Related
Option shall be exercisable, (ii) only when the Fair Market Value of the
shares subject to the Related Option exceeds the purchase price of the shares
as provided in the Related Option, and (iii) only upon surrender of the
Related Option or any portion thereof with respect to the shares for which the
SARs are then being exercised.

(d)   Upon the exercise of an SAR, the
Related Option shall be deemed to have been terminated to the extent of the
number of shares of Common Stock with respect to which such SARs are exercised.
Upon the exercise or termination of the 

 8
 

 

Related Option, the SARs
with respect to such Related Option shall be deemed to have been terminated to
the extent of the number of shares of Common Stock with respect to which the
Related Option was so exercised or terminated.

10.3    Exercise
of SARs.    Each exercise of SARs, or a
portion thereof, shall be evidenced by a notice in writing to Whittier.

ARTICLE XI. OTHER
INCENTIVE AWARDS

Subject to the terms and provisions of the Plan, Other
Incentive Awards may be granted to Employees, Outside Directors and Consultants
in such amounts, upon such terms and at any time and from time to time as shall
be determined by the Committee in its absolute discretion. Other Incentive
Awards may be granted based upon, payable in or otherwise related to, in whole
or in part, shares of Common Stock if the Committee, in its absolute
discretion, determines that such Other Incentive Awards are consistent with the
purposes of the Plan. Each grant of an Other Incentive Award shall be evidenced
by an Award Agreement that shall specify the amount of the Other Incentive
Award and the terms, conditions, restrictions and/or limitations applicable to
such Award. Payment of Other Incentive Awards shall be made at such times and
in such form, which may be cash, shares of Common Stock or other property (or a
combination thereof), as established by the Committee, subject to the terms of
the Plan.

ARTICLE XII.
CORPORATE TRANSACTIONS

12.1    Definition
of Corporate Transaction.    A “Corporate
Transaction” shall mean any of the following transactions with respect to which
Whittier is a party:

(a)   a merger or consolidation in
which (i) Whittier is not the surviving entity or (ii) Whittier
survives only as a subsidiary of an entity other than a previously wholly-owned
subsidiary of Whittier;

(b)   a tender offer or share exchange
resulting in the transfer of ownership of more than fifty percent (50%) of the
total outstanding voting power of Whittier immediately after such transaction;
or

(c)   the sale, lease, transfer or
other disposition of all or substantially all of the assets of Whittier (other
than to a wholly-owned subsidiary of Whittier).

12.2    Effect on
Outstanding Awards.    Upon (i) the
approval by the stockholders of Whittier of a Corporate Transaction of the type
described in Section 12.1(a) or (c), or (ii) the public announcement
of a Corporate Transaction of the type described in Section 12.1(b), the
Committee, acting in its absolute discretion and without the consent or
approval of any Participant, may act to effect one or more of the following alternatives,
which may vary among individual Participants and which may vary among Awards
held by any individual Participant:

(a)   accelerate the vesting of and the
time at which Awards then outstanding may be exercised so that such Awards may
be exercised in full (irrespective of whether such Awards are fully exercisable
prior to the date of such Corporate Transaction) for a limited period of time
on or before a specified date fixed by the Committee (which date may be before
or after the date of such Corporate Transaction), after which specified date
all unexercised Awards and all rights of Participants thereunder shall
terminate;

(b)   require the mandatory surrender
to Whittier by selected Participants of some or all of the outstanding Awards
held by such Participants (irrespective of whether such Awards are fully
exercisable prior to the date of such Corporate Transaction) as of a date
specified by the Committee (which date may be before or after the date of such
Corporate Transaction), in which event the Committee shall thereupon cancel
such Awards and Whittier shall pay to each Participant an amount of cash per
share equal to the excess, if any, of the following amount, whichever is
applicable:

(i)  the per share price offered to
stockholders of Whittier in the merger or consolidation described in
Section 12.1(a), less the applicable exercise price, if any, payable by
the Participant pursuant to such Award;

(ii)  the price per share offered to
stockholders of Whittier in any tender offer or share exchange described in
Section 12.1(b), less the applicable exercise price, if any, payable by
the Participant pursuant to such Award;

(iii)  if such Corporate Transaction occurs
pursuant to a type of transaction described in Section 12.1(c), the Fair
Market Value per share of Common Stock subject to such Award, as determined by
the Committee as of the date determined by the Committee to be the date of such
transaction, less the applicable exercise price, if any, payable by the
Participant pursuant to such Award.

 9
 

 

In the event that the consideration offered to
stockholders of Whittier in any Corporate Transaction consists of anything
other than cash, the Committee may determine in its absolute discretion the
fair cash equivalent of the portion of the consideration offered which is other
than cash.

(c)   make such adjustments to Awards
then outstanding so that such Awards thereafter cover the number and class of
shares of stock or other securities or property (including, without limitation,
cash) to which the Participant would have been entitled pursuant to the terms
of the Corporate Transaction had the Participant been the holder of record of
the number of shares of Common Stock covered by such Award; or

(d)   in the event of a Corporate
Transaction in which the holders of Whittier’s Common Stock receive shares of
stock in the acquiring entity (“Acquiror Stock”), convert Awards into Awards to
acquire (or with respect to) shares of Acquiror Stock (“Substitute Awards”).
Each Substitute Award shall be exercisable on substantially the same terms and
conditions contained in the applicable Award, and shall cover such number of
shares of Acquiror Stock and have such exercise price and other terms as the
Committee, in its absolute discretion, shall deem appropriate in order to approximate
with the Substitute Award an economic equivalent to the applicable Award.

In the event of Corporate Transaction, the Committee
may, but shall not be required to, take any such action set forth in Sections
12.2(a) through (d) above or shall be permitted to allow any or all
outstanding Awards to remain so outstanding in accordance with the terms and
conditions of the related Award Agreement.

ARTICLE XIII.
AMENDMENT AND TERMINATION

13.1    Plan
Amendment and Termination.    The Board
may at any time suspend, terminate, amend or modify the Plan, in whole or in
part; provided, however, that no amendment or modification of the Plan shall
become effective without the approval of such amendment or modification by the
stockholders of Whittier (i) if such amendment or modification increases
the maximum number of shares subject to the Plan (except as provided in
Section 6.2) or changes the designation or class of persons eligible to
receive Awards under the Plan, or (ii) if counsel for Whittier determines
that such approval is otherwise required by or necessary to comply with
applicable law. The Plan shall terminate upon the earlier of (i) the
termination of the Plan by the Board, or (ii) the expiration of ten years
from the date the Plan is adopted by the Board. Upon termination of the Plan,
the terms and provisions of the Plan shall, notwithstanding such termination,
continue to apply to Awards granted prior to such termination. No suspension,
termination, amendment or modification of the Plan shall adversely affect in
any material way any Award previously granted under the Plan, without the
consent of the Participant holding such Award.

13.2    Award
Amendment and Cancellation.    The Board
may amend the terms of any outstanding Award granted pursuant to this Plan, but
any amendment that would adversely affect the Participant’s (or a permitted
transferee’s) rights under an outstanding Award shall not be made without the
written consent of the Participant (or the permitted transferee). The Board
may, with a Participant’s (or a permitted transferee’s) written consent, cancel
any outstanding Award or accept any outstanding Award in exchange for a new
Award.

ARTICLE XIV.
MISCELLANEOUS

14.1    Award
Agreements.    After the Committee grants
an Award under the Plan to a Participant, Whittier and the Participant shall
enter into an Award Agreement setting forth the terms, conditions, restrictions
and/or limitations applicable to the Award and such other matters as the
Committee may determine to be appropriate. The terms and provisions of the
respective Award Agreements need not be identical. All Award Agreements shall
be subject to the provisions of the Plan, and in the event of any conflict
between an Award Agreement and the Plan, the terms of the Plan shall govern.

14.2    Listing Conditions.

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

(b)   If at any time counsel to
Whittier or its Affiliates shall be of the opinion that any sale or delivery of
shares of Common Stock pursuant to an Award is or may in the circumstances be
unlawful or result in the imposition of excise taxes on Whittier or its
Affiliates under the statutes, rules or regulations of any applicable
jurisdiction, Whittier or its Affiliates shall have no obligation to make such
sale or delivery, or to make any application or to effect or to maintain any
qualification or registration under the Securities Act of 1933, as amended, or
otherwise, with respect to shares of Common Stock or Awards, and the right to
exercise any Option or other Award shall 

 10
 

 

be suspended until, in
the opinion of said counsel, such sale or delivery shall be lawful or will not
result in the imposition of excise taxes on Whittier or its Affiliates.

(c)   Upon termination of any period of
suspension under this Section 14.2, any Award affected by such suspension
which shall not then have expired or terminated shall be reinstated as to all
shares available before such suspension and as to shares which would otherwise
have become available during the period of such suspension, but no such
suspension shall extend the term of any Award.

14.3    Additional
Conditions.    Notwithstanding anything
in the Plan to the contrary: (i) Whittier may, if it shall determine it
necessary or desirable for any reason, at the time of grant of any Award or the
issuance of any shares of Common Stock pursuant to any Award, require the
recipient of the Award or such shares of Common Stock, as a condition to the
receipt thereof, to deliver to Whittier a written representation of present
intention to acquire the Award or such shares of Common Stock for his or her
own account for investment and not for distribution; (ii) the certificate
for shares of Common Stock issued to a Participant may include any legend which
the Committee deems appropriate to reflect any restrictions on transfer, and
(iii) all certificates for shares of Common Stock delivered under the Plan
shall be subject to such stop transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations and other
requirements of the SEC, any stock exchange upon which the Common Stock is then
quoted, any applicable federal or state securities law, and any applicable
corporate law, and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.

14.4    Nonassignability.    No
Award granted under the Plan may be sold, transferred, pledged, exchanged,
hypothecated or otherwise disposed of, other than by will or pursuant to the
applicable laws of descent and distribution. Further, no such Award shall be
subject to execution, attachment or similar process. Any attempted sale,
transfer, pledge, exchange, hypothecation or other disposition of an Award not
specifically permitted by the Plan or the Award Agreement shall be null and
void and without effect. All Awards granted to a Participant under the Plan
shall be exercisable during his or her lifetime only by such Participant or, in
the event of the Participant’s legal incapacity, by his or her guardian or
legal representative.

14.5    Withholding
Taxes.    The Company shall be entitled
to deduct from any payment made under the Plan, regardless of the form of such
payment, the amount of all applicable income and employment taxes required by
law to be withheld with respect to such payment, may require the Participant to
pay to the Company such withholding taxes prior to and as a condition of the
making of any payment or the issuance or delivery of any shares of Common Stock
under the Plan, and shall be entitled to deduct from any other compensation
payable to the Participant any withholding obligations with respect to Awards
under the Plan. In accordance with any applicable administrative guidelines it
establishes, the Committee may allow a Participant to pay the amount of taxes
required by law to be withheld from or with respect to an Award by
(i) withholding shares of Common Stock from any payment of Common Stock
due as a result of such Award, or (ii) permitting the Participant to
deliver to the Company previously acquired shares of Common Stock, in each case
having a Fair Market Value equal to the amount of such required withholding
taxes. No payment shall be made and no shares of Common Stock shall be issued
pursuant to any Award unless and until the applicable tax withholding
obligations have been satisfied.

14.6    No
Fractional Shares.    No fractional
shares of Common Stock shall be issued or delivered pursuant to the Plan or any
Award granted hereunder, and except as otherwise provided herein, no payment or
other adjustment shall be made in respect of any such fractional share.

14.7    Notices.    All
notices required or permitted to be given or made under the Plan or any Award
Agreement shall be in writing and shall be deemed to have been duly given or
made if (i) delivered personally, (ii) transmitted by first class
registered or certified United States mail, postage prepaid, return receipt
requested, (iii) sent by prepaid overnight courier service, or
(iv) sent by telecopy or facsimile transmission, answer back requested, to
the person who is to receive it at the address that such person has theretofore
specified by written notice delivered in accordance herewith. Such notices
shall be effective (i) if delivered personally or sent by courier service,
upon actual receipt by the intended recipient, (ii) if mailed, upon the
earlier of five days after deposit in the mail or the date of delivery as shown
by the return receipt therefor, or (iii) if sent by telecopy or facsimile
transmission, when the answer back is received. Whittier or a Participant may
change, at any time and from time to time, by written notice to the other, the
address that it or such Participant had theretofore specified for receiving
notices. Until such address is changed in accordance herewith, notices
hereunder or under an Award Agreement shall be delivered or sent (i) to a
Participant at his or her address as set forth in the records of the Company or
(ii) to Whittier at the principal executive offices of Whittier clearly
marked “Attention: LTIP Administrator.”

14.8    Binding
Effect.    The obligations of Whittier
under the Plan shall be binding upon any successor corporation or organization
resulting from the merger, consolidation or other reorganization of Whittier,
or upon any successor corporation or organization succeeding to all or substantially
all of the assets and business of Whittier. The terms and conditions of the
Plan shall be binding upon each Participant and his or her heirs, legatees,
distributees and legal representatives.

 11
 

 

14.9    Severability.    If
any provision of the Plan or any Award Agreement is held to be illegal or
invalid for any reason, the illegality or invalidity shall not affect the
remaining provisions of the Plan or such agreement, as the case may be, but
such provision shall be fully severable and the Plan or such agreement, as the
case may be, shall be construed and enforced as if the illegal or invalid
provision had never been included herein or therein.

14.10    No
Restriction of Corporate Action.    Nothing
contained in the Plan shall be construed to prevent Whittier or any Affiliate
from taking any corporate action (including any corporate action to suspend,
terminate, amend or modify the Plan) that is deemed by Whittier or such
Affiliate to be appropriate or in its best interest, whether or not such action
would have an adverse effect on the Plan or any Awards made or to be made under
the Plan. No Participant or other person shall have any claim against Whittier
or any Affiliate as a result of such action.

14.11    Governing
Law.    The Plan shall be governed by and
construed in accordance with the internal laws (and not the principles relating
to conflicts of laws) of the State of Texas except as superseded by applicable
federal law.

14.12    No
Right, Title or Interest in Company Assets.    No
Participant shall have any rights as a stockholder of Whittier as a result of
participation in the Plan until the date of issuance of a stock certificate in
his or her name and, in the case of Restricted Stock, unless and until such
rights are granted to the Participant pursuant to the Plan. To the extent any
person acquires a right to receive payments from the Company under the Plan,
such rights shall be no greater than the rights of an unsecured general
creditor of the Company, and such person shall not have any rights in or
against any specific assets of the Company. All of the Awards granted under the
Plan shall be unfunded.

14.13    Risk of
Participation.    Nothing contained in
the Plan shall be construed either as a guarantee by Whittier or its
Affiliates, or their respective stockholders, directors, officers or employees,
of the value of any assets of the Plan or as an agreement by Whittier or its
Affiliates, or their respective stockholders, directors, officers or employees,
to indemnify anyone for any losses, damages, costs or expenses resulting from
participation in the Plan.

14.14    No
Guarantee of Tax Consequences.    No
person connected with the Plan in any capacity, including, but not limited to,
Whittier and the Affiliates and their respective directors, officers, agents
and employees, makes any representation, commitment or guarantee that any tax
treatment, including, but not limited to, federal, state and local income,
estate and gift tax treatment, will be applicable with respect to any Awards or
payments thereunder made to or for the benefit of a Participant under the Plan
or that such tax treatment will apply to or be available to a Participant on
account of participation in the Plan.

14.15    Continued
Employment or Service.    Nothing
contained in the Plan or in any Award Agreement shall confer upon any
Participant the right to continue in the employ or service of the Company, or
interfere in any way with the rights of the Company to terminate a Participant’s
employment or service at any time, with or without cause.

14.16    Miscellaneous.    Headings
are given to the articles and sections of the Plan solely as a convenience to
facilitate reference. Such headings shall not be deemed in any way material or
relevant to the construction of the Plan or any provisions hereof. The use of
the masculine gender shall also include within its meaning the feminine.
Wherever the context of the Plan dictates, the use of the singular shall also
include within its meaning the plural, and vice versa.

 12

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