BOOTS & COOTS INTERNATIONAL WELL CONTROL, INC.
1997 Executive Compensation Plan
1. PURPOSE OF THE PLAN. This 1997 Executive Compensation Stock Plan is
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intended to promote the interests of Boots & Coots International Well
Control, Inc., a Delaware corporation (the "Company"), by providing the
employees of the Company, who are largely responsible for the management,
growth and protection of the business of the Company, with a proprietary
interest in the Company.
2. DEFINITIONS. As used in the Plan, the following definitions apply to the
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terms indicated below:
(a) "Board of Directors" shall mean the Board of Directors of Boots & Coots International Well Control, Inc., a Delaware corporation.
(b) "Cause" when used in connection with the termination of a
Participant's employment with the Company, shall mean the termination
of the Participant's employment by the Company by reason of (i) the
conviction of the Participant by a court of competent jurisdiction as
to which no further appeal can be taken of a crime involving moral
turpitude; (ii) the proven commission by the Participant of an act of
fraud upon the Company; (iii) the willful and proven misappropriation
of any funds or property of the Company by the Participant; (iv) the
willful, continued and unreasonable failure by the Participant to
perform duties assigned to him and agreed to by him; (v) the knowing
engagement by the Participant in any direct, material conflict of
interest with the Company without compliance with the Company's
conflict of interest policy, if any, then in effect; (vi) the knowing
engagement by the Participant, without the written approval of the
Board of Directors of the Company, in any activity which competes with
the business of the Company or which would result in a material injury
to the Company; or (vii) the knowing engagement in any activity which
would constitute a material violation of the provisions of the
Company's Policies and Procedures Manual, if any, then in effect.
(c) "Cash Bonus" shall mean an award of a bonus payable in cash pursuant
to Section 10 hereof.
(d) "Change in Control" shall mean: (1) a "change in control" of the
Company, as that term is contemplated in the federal securities laws;
or (2) the occurrence of any of the following events
(A) any Person becomes, after the effective date of this Plan, the
"beneficial owner" (as defined in Rule 13d-3 promulgated under
the Exchange Act), directly or indirectly, of securities of the
Company representing 20% or more of the combined voting power of
the Company's then outstanding securities; provided, that the
acquisition of additional voting securities, after the effective
date of this Plan, by any Person who is, as of the effective date
of this Plan, the beneficial owner, directly or indirectly, of
20% or more of the combined voting power of the Company's then
outstanding securities, shall not constitute a "Change in
Control" of the Company for purposes of this Section 2(d).
(B) a majority of individuals who are nominated by the Board of
Directors for election to the Board of Directors on any date,
fail to be elected to the Board of Directors as a direct or
indirect result of any proxy fight or contested election for
positions on the Board of Directors, or
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
(f) "Committee" shall mean the Compensation Committee of the Board of
Directors or such other committee as the Board of Directors shall
appoint from time to time to administer the Plan.
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(g) "Common Stock" shall mean the Company's Common Stock, par value $.01
per share.
(h) "Company" shall mean Boots & Coots International Well Control, Inc., a
Delaware corporation, and each of its Subsidiaries, and its
successors.
(i) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(j) the "Fair Market Value" of a share of Common Stock on any date shall
be (i) the closing sale price on the immediately preceding business
day of a share of Common Stock as reported on the principal securities
exchange on which shares of Common Stock are then listed or admitted
to trading or (ii) if not so reported, the average of the closing bid
and asked prices for a share of Common Stock on the immediately
preceding business day as quoted on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") or (iii) if
not quoted on NASDAQ, the average of the closing bid and asked prices
for a share of Common Stock as quoted by the National Quotation
Bureau's "Pink Sheets" or the National Association of Securities
Dealers' OTC Bulletin Board System. If the price of a share of Common
Stock shall not be so reported, the Fair Market Value of a share of
Common Stock shall be determined by the Committee in its absolute
discretion.
(k) "Incentive Award" shall mean an Option, a share of Restricted Stock, a
share of Phantom Stock, a Stock Bonus or Cash Bonus granted pursuant
to the terms of the Plan.
(l) "Incentive Stock Option" shall mean an Option which is an "incentive
stock option" within the meaning of Section 422 of the Code and which
is identified as an Incentive Stock Option in the agreement by which
it is evidenced.
(m) "Issue Date" shall mean the date established by the Committee on which
certificates representing shares of Restricted Stock shall be issued
by the Company pursuant to the terms of Section 7(d) hereof.
(n) "Non-Qualified Stock Option" shall mean an Option which is not an
Incentive Stock Option and which is identified as a Non-Qualified
Stock Option in the agreement by which it is evidenced.
(o) "Option" shall mean an option to purchase shares of Common Stock of
the Company granted pursuant to Section 6 hereof. Each Option shall be
identified as either an Incentive Stock Option or a Non-Qualified
Stock Option in the agreement by which it is evidenced.
(p) "Participant" shall mean a full-time employee of the Company who is
eligible to participate in the Plan and to whom an Incentive Award is
granted pursuant to the Plan, and, upon his death, his successors,
heirs, executors and administrators, as the 2 case may be, to the
extent permitted hereby.
(q) "Person" shall mean a "person," as such term is used in Sections 13(d)
and 14(d) of the Exchange Act, and the rules and regulations in effect
from time to time thereunder.
(r) a share of "Phantom Stock" shall represent the right to receive in
cash the Fair Market Value of a share of Common Stock of the Company,
which right is granted pursuant to Section 8 hereof and subject to the
terms and conditions contained therein.
(s) "Plan" shall mean the Boots & Coots International Well Control, Inc.
1997 Executive Compensation Plan, as it may be amended from time to
time.
(t) "Qualified Domestic Relations Order" shall mean a qualified domestic
relations order as defined in the Code, in Title I of the Employee
Retirement Income Security Act, or in the rules
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and regulations as may be in effect from time to time thereunder.
(u) a share of "Restricted Stock" shall mean a share of Common Stock which
is granted pursuant to the terms of Section 7 hereof and which is
subject to the restrictions set forth in Section 7(c) hereof for so
long as such restrictions continue to apply to such share.
(v) "Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
(w) "Stock Bonus" shall mean a grant of a bonus payable in shares of
Common Stock pursuant to Section 9 hereof.
(x) "Subsidiary" or "Subsidiaries" shall mean any and all corporations in
which at the pertinent time the Company owns, directly or indirectly,
stock vested with 50% or more of the total combined voting power of
all classes of stock of such corporations within the meaning of
Section 424(f) of the Code.
(y) "Vesting Date" shall mean the date established by the Committee on
which a share of Restricted Stock or Phantom Stock may vest.
3. STOCK SUBJECT TO THE PLAN. Under the Plan, the Committee may grant to
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Participants (i) Options, (ii) shares of Restricted Stock, (iii) shares of
Phantom Stock, (iv) Stock Bonuses and (v) Cash Bonuses. The Committee may
grant Options, shares of Restricted Stock, shares of Phantom Stock and
Stock Bonuses under the Plan with respect to a number of shares of Common
Stock that in the aggregate at any time does not exceed 1,475,000 shares of
Common Stock. The grant of a Cash Bonus shall not reduce the number of
shares of Common Stock with respect to which Options, shares of Restricted
Stock, shares of Phantom Stock or Stock Bonuses may be granted pursuant to
the Plan. If any outstanding Option expires, terminates or is canceled for
any reason, the shares of Common Stock subject to the unexercised portion
of such Option shall again be available for grant under the Plan. If any
shares of Restricted Stock or Phantom Stock, or any shares of Common Stock
granted in a Stock Bonus are forfeited or canceled for any reason, such
shares shall again be available for grant under the Plan. Shares of Common
Stock issued under the Plan may be either newly issued or treasury shares,
at the discretion of the Committee.
4. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
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Compensation Committee of the Board of Directors consisting of two or more
persons, each of whom shall be a "disinterested person" within the meaning
of Rule 16b-3(c)(2)(i) promulgated under Section 16 of the Exchange Act.
The Committee shall from time to time designate the executives of the
Company who shall be granted Incentive Awards and the amount and type of
such Incentive Awards. The Committee shall have full authority to
administer the Plan, including authority to interpret and construe any
provision of the Plan and the terms of any Incentive Award issued under it
and to adopt such rules and regulations for administering the Plan as it
may deem necessary. Decisions of the Committee shall be final and binding
on all parties. The Committee may, in its absolute discretion (i)
accelerate the date on which any Option granted under the Plan becomes
exercisable, (ii) extend the date on which any Option granted under the
Plan ceases to be exercisable, (iii) accelerate the Vesting Date or Issue
Date, or waive any condition imposed pursuant to Section 7(b) hereof, with
respect to any share of Restricted Stock granted under the Plan and (iv)
accelerate the Vesting Date or waive any condition imposed pursuant to
Section 8 hereof, with respect to any share of Phantom Stock granted under
the Plan. In addition, the Committee may, in its absolute discretion, grant
Incentive Awards to Participants on the condition that such Participants
surrender to the Committee for cancellation such other Incentive Awards
(including, without limitation, Incentive Awards with higher exercise
prices) as the Committee specifies. Notwithstanding Section 3 hereof,
Incentive Awards granted on the condition of
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surrender of outstanding Incentive Awards shall not count against the
limits set forth in such Section 3 until such time as such Incentive Awards
are surrendered. Whether an authorized leave of absence, or absence in
military or government service, shall constitute termination of employment
shall be determined by the Committee in its absolute discretion. No member
of the Committee shall be liable for any action, omission, or determination
relating to the Plan, and the Company shall indemnify and hold harmless
each member of the Committee and each other director or employee of the
Company to whom any duty or power relating to the administration or
interpretation of the Plan has been delegated from and against any cost or
expense (including attorneys' fees) or liability (including any sum paid in
settlement of a claim with the approval of the Committee) arising out of
any action, omission or determination relating to the Plan, unless, in
either case, such action, omission or determination was taken or made by
such member, director or employee in bad faith and without reasonable
belief that it was in the best interests of the Company.
5. ELIGIBILITY. The persons who shall be eligible to receive Incentive Awards
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pursuant to the Plan shall be such full-time executive, employees of the
Company as the Committee, in its absolute discretion, shall select from
time to time.
6. OPTIONS. The Committee may grant Options pursuant to the Plan, which
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Options shall be evidenced by agreements in such form as the Committee
shall from time to time approve. Options shall comply with and be subject
to the following terms and conditions:
(a) Identification of Options All Options granted under the Plan shall be
clearly identified in the agreement evidencing such Options as either
Incentive Stock Options or as Non-Qualified Stock Options.
(b) Exercise Price The exercise price of any Non-Qualified Stock Option
granted under the Plan shall be such price as the Committee shall
determine on the date on which such Non-Qualified Stock Option is
granted; provided, that such price may not be less than the minimum
price required by law. Except as provided in Section 6(d) hereof, the
exercise price of any Incentive Stock Option granted under the Plan
shall be not less than 100% of the Fair Market Value of a share of
Common Stock on the date on which such Incentive Stock Option is
granted.
(c) Term and Exercise of Options
(1) Each Option shall be exercisable on such date or dates, during
such period and for such number of shares of Common Stock as
shall be determined by the Committee on the day on which such
Option is granted and set forth in the agreement evidencing the
Option; provided, however, that no Option shall be exercisable
after the expiration of ten years from the date such Option was
granted; and, provided, further, that each Option shall be
subject to earlier termination, expiration or cancellation as
provided in the Plan.
(2) Each Option shall be exercisable in whole or in part with respect
to whole shares of Common Stock. The partial exercise of an
Option shall not cause the expiration, termination or
cancellation of the remaining portion thereof. Upon the partial
exercise of an Option, the agreement evidencing such Option shall
be returned to the Participant exercising such Option together
with the delivery of the certificates described in Section
6(c)(5) hereof.
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(3) An Option shall be exercised by delivering notice to the
Company's principal office, to the attention of its Secretary, no
fewer than five business days in advance of the effective date of
the proposed exercise. Such notice shall be accompanied by the
agreement evidencing the Option, shall specify the number of
shares of Common Stock with respect to which the Option is being
exercised and the effective date of the proposed exercise, and
shall be signed by the Participant. The Participant may withdraw
such notice at any time prior to the close of business on the
business day immediately preceding the effective date of the
proposed exercise, in which case such agreement shall be returned
to the Participant. Payment for shares of Common Stock purchased
upon the exercise of an Option shall be made on the effective
date of such exercise either (i) in cash, by certified check,
bank cashier's check or wire transfer or (ii) subject to the
approval of the Committee, in shares of Common Stock owned by the
Participant and valued at their Fair Market Value on the
effective date of such exercise, or (iii) partly in shares of
Common Stock with the balance in cash, by certified check, bank
cashier's check or wire transfer. Any payment in shares of Common
Stock shall be effected by the delivery of such shares to the
Secretary of the Company, duly endorsed in blank or accompanied
by stock powers duly executed in blank, together with any other
documents and evidences as the Secretary of the Company shall
require from time to time.
(4) Any Option granted under the Plan may be exercised by a
broker-dealer acting on behalf of a Participant if (i) the
broker-dealer has received from the Participant or the Company a
duly endorsed agreement evidencing such Option and instructions
signed by the Participant requesting the Company to deliver the
shares of Common Stock subject to such Option to the
broker-dealer on behalf of the Participant and specifying the
account into which such shares should be deposited, (ii) adequate
provision has been made with respect to the payment of any
withholding taxes due upon such exercise and (iii) the
broker-dealer and the Participant have otherwise complied with
Section 220.3(e)(4) of Regulation T, 12 CFR Part 220.
(5) Certificates for shares of Common Stock purchased upon the
exercise of an Option shall be issued in the name of the
Participant and delivered to the Participant as soon as
practicable following the effective date on which the Option is
exercised; provided, however, that such delivery shall be
effected for all purposes when a stock transfer agent of the
Company shall have deposited such certificates in the United
States mail, addressed to the Participant.
(6) During the lifetime of a Participant each Option granted to him
shall be exercisable only by him. No Option shall be assignable
or transferable otherwise than by will or by the laws of descent
and distribution.
(d) Limitations on Grant of Incentive Stock Options
(1) The aggregate Fair Market Value of shares of Common Stock with
respect to which "incentive stock options" (within the meaning of
Section 422, without regard to Section 422(d) of the Code) are
exercisable for the first time by a Participant during any
calendar year under the Plan (and any other stock option plan of
the Company, or any subsidiary of the Company shall not exceed
$100,000. Such Fair Market Value shall be determined as of the
date on which each such Incentive Stock Option is granted. If
such aggregate Fair Market Value of shares of Common Stock
underlying such Incentive Stock Options
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exceeds $100,000, then Incentive Stock Options granted hereunder
to such Participant shall, to the extent and in the order
required by Regulations promulgated under the Code (or any other
authority having the force of Regulations), automatically be
deemed to be Non-Qualified Stock Options, but all other terms and
provisions of such Incentive Stock Options shall remain
unchanged. In the absence of such Regulations (and authority), or
if such Regulations (or authority) require or permit a
designation of the options which shall cease to constitute
Incentive Stock Options, Incentive Stock Options shall, to the
extent of such excess and in the order in which they were
granted, automatically be deemed to be Non-Qualified Stock
Options, but all other terms and provisions of such Incentive
Stock Options shall remain unchanged.
(2) No Incentive Stock Option may be granted to an individual if, at
the time of the proposed grant, such individual owns, directly or
indirectly (based on the attribution rules in Section 424(d) of
the Code) stock possessing more than ten percent of the total
combined voting power of all classes of stock of the Company or
any of its subsidiaries, unless (i) the exercise price of such
Incentive Stock Option is at least 110% of the Fair Market Value
of a share of Common Stock at the time such Incentive Stock
Option is granted and (ii) such Incentive Stock Option is not
exercisable after the expiration of five years from the date such
Incentive Stock Option is granted
(e) Effect of Termination of Employment
(1) If the employment of a Participant with the Company shall
terminate for any reason other than Cause, "permanent and total
disability (within the meaning of Section 22(e)(3) of the Code)
or the death of the Participant (i) Options granted to such
Participant, to the extent that they were exercisable at the time
of such termination, shall remain exercisable until the
expiration of one month after such termination, on which date
they shall expire, and (ii) Options granted to such Participant,
to the extent that they were not exercisable at the time of such
termination, shall expire at the close of business on the date of
such termination; provided, however, that no Option shall be
exercisable after the expiration of its term.
(2) If the employment of a Participant with the Company shall
terminate as a result of the "permanent and total disability
(within the meaning of Section 22(e)(3) of the Code) of the
Participant, the voluntary retirement of the Participant in
accordance with the Company's retirement policy as then in effect
or the death of the Participant (i) Options granted to such
Participant, to the extent that they were exercisable at the time
of such termination, shall remain exercisable until the
expiration of one year after such termination, on which date they
shall expire, and (ii) Options granted to such Participant, to
the extent that they were not exercisable at the time of such
termination, shall expire at the close of business on the date of
such termination; provided, however, that no Option shall be
exercisable after the expiration of its term.
(3) In the event of the termination of a Participant's employment for
Cause, all outstanding Options granted to such Participant shall
expire at the commencement of business on the date of such
termination.
(f) Acceleration of Exercise Date Upon Change in Control Upon the
occurrence of a Change in Control, each Option granted under the Plan
and outstanding at such time shall become fully and immediately
exercisable and shall remain exercisable until its expiration,
termination or
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cancellation pursuant to the terms of the Plan.
7. RESTRICTED STOCK. The Committee may grant shares of Restricted Stock
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pursuant to the Plan. Each grant of shares of Restricted Stock shall be
evidenced by an agreement in such form as the Committee shall from time to
time approve. Each grant of shares of Restricted Stock shall comply with
and be subject to the following terms and conditions:
(a) Issue Date and Vesting Date At the time of the grant of shares of
Restricted Stock, the Committee shall establish an Issue Date or Issue
Dates and a Vesting Date or Vesting Dates with respect to such shares.
The Committee may divide such shares into classes and assign a
different Issue Date and/or Vesting Date for each class. Except as
provided in Sections 7(c) and 7(f) hereof, upon the occurrence of the
Issue Date with respect to a share of Restricted Stock, a share of
Restricted Stock shall be issued in accordance with the provisions of
Section 7(d) hereof. Provided that all conditions to the vesting of a
share of Restricted Stock imposed pursuant to Section 7(b) hereof are
satisfied, and except as provided in Sections 7(c) and 7(f) hereof,
upon the occurrence of the Vesting Date with respect to a share of
Restricted Stock, such share shall vest and the restrictions of
Section 7(c) hereof shall cease to apply to such share.
(b) Conditions to Vesting At the time of the grant of shares of Restricted
Stock, the Committee may impose such restrictions or conditions, not
inconsistent with the provisions hereof, to the vesting of such shares
as it in its absolute discretion deems appropriate. By way of example
and not by way of limitation, the Committee may require, as a
condition to the vesting of any class or classes of shares of
Restricted Stock, that the Participant or the Company achieve certain
performance criteria, such criteria to be specified by the Committee
at the time of the grant of such shares.
(c) Restrictions on Transfer Prior to Vesting Prior to the vesting of a
share of Restricted Stock, no transfer of a Participant's rights with
respect to such share, whether voluntary or involuntary, by operation
of law or otherwise, shall vest the transferee with any interest or
right in or with respect to such share, but immediately upon any
attempt to transfer such fights, such share, and all of the rights
related thereto, shall be forfeited by the Participant and the
transfer shall be of no force or effect.
(d) Issuance of Certificates
(1) Except as provided in Sections 7(c) or 7(f) hereof, reasonably
promptly after the Issue Date with respect to shares of
Restricted Stock, the Company shall cause to be issued a stock
certificate, registered in the name of the Participant to whom
such shares were granted, evidencing such shares: provided, that
the Company shall not cause to be issued such a stock
certificates unless it has received a stock power duly endorsed
in blank with respect to such shares. Each such stock certificate
shall bear the following legend: The transferability of this
certificate and the shares of stock represented hereby are
subject to the restrictions, terms and conditions (including
forfeiture and restrictions against transfer) contained in the
Boots & Coots International Well Control, Inc., --1997 Executive
Stock Plan and an Agreement entered into between the registered
owner of such shares and the Company. A copy of the Plan and
Agreement is on file in the office of the Secretary of Boot & Coots International Well Control, Inc., 777 Post Oak Boulevard,
8th Floor, Houston, Texas 77056. Such legend shall not be removed
from the certificate evidencing such shares until such shares
vest pursuant to the terms hereof.
(2) Each certificate issued pursuant to Paragraph 7 (d)(1) hereof,
together with the stock
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powers relating to the shares of Restricted Stock evidenced by
such certificate, shall be held by the Company. The Company shall
issue to the Participant a receipt evidencing the certificates
held by it which are registered in the name of the Participant.
(e) Consequences Upon Vesting. Upon the vesting of a share of Restricted
Stock pursuant to the terms hereof, the restrictions of Section 7(c)
hereof shall cease to apply to such share. Reasonably promptly after a
share of Restricted Stock vests pursuant to the terms hereof, the
Company shall cause to be issued and delivered to the Participant to
whom such shares were granted, a certificate evidencing such share,
free of the legend set forth in Paragraph 7 (d)(1) hereof, together
with any other property of the Participant held by Company pursuant to
Section 7(d) hereof, provided, however, that such delivery shall be
effected for all purposes when the Company shall have deposited such
certificate and other property in the United States mail, addressed to
the Participant.
(f) Effect of Termination of Employment.
(1) If the employment of a Participant with the Company shall
terminate for any reason other than Cause prior to the vesting of
shares of Restricted Stock granted to such Participant, a portion
of such shares, to the extent not forfeited or canceled on or
prior to such termination pursuant to any provision hereof, shall
vest on the date of such termination. The portion referred to in
the preceding sentence shall be determined by the Committee at
the time of the grant of such shares of Restricted Stock and may
be based on the achievement of any conditions imposed by the
Committee with respect to such shares pursuant to Section 7(b).
Such portion may equal zero.
(2) In the event of the termination of a Participant's employment for
Cause, all shares of Restricted Stock granted to such Participant
which have not vested as of the date of such termination shall
immediately be forfeited.
(g) Effect of Change in Control. Upon the occurrence of a Change in
Control, all shares of Restricted Stock which have not theretofore
vested (including those with respect to which the Issue Date has not
yet occurred) shall immediately vest.
8. PHANTOM STOCK. The Committee may grant shares of Phantom Stock pursuant to
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the Plan. Each grant of shares of Phantom Stock shall be evidenced by an
agreement in such form as the Committee shall from time to time approve.
Each grant of shares of Phantom Stock shall comply with and be subject to
the following terms and conditions:
(a) Vesting Date. At the time of the grant of shares of Phantom Stock, the
Committee shall establish a Vesting Date or Vesting Dates with respect
to such shares. The Committee may divide such shares into classes and
assign a different Vesting Date for each class. Provided that all
conditions to the vesting of a share of Phantom Stock imposed pursuant
to Section 8(c) hereof are satisfied, and except as provided in
Section 8(d) hereof, upon the occurrence of the Vesting Date with
respect to a share of Phantom Stock, such share shall vest.
(b) Benefit Upon Vesting. Upon the vesting of a share of Phantom Stock, a
Participant shall be entitled to receive in cash, within 90 days of
the date on which such share vests, an amount in cash in a lump sum
equal to the sum of (i) the Fair Market Value of a share of Common
Stock of the Company on the date on which such share of Phantom Stock
vests and (ii) the aggregate amount of cash dividends paid with
respect to a share of Common Stock of the Company during the period
commencing on the date on which the share of Phantom Stock
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was granted and terminating on the date on which such share vests.
(c) Conditions to Vesting. At the time of the grant of shares of Phantom
Stock, the Committee may impose such restrictions or conditions, not
inconsistent with the provisions hereof, to the vesting of such shares
as it, in its absolute discretion deems appropriate. By way of example
and not by way of limitation, the Committee may require, as a
condition to the vesting of any class or classes of shares of Phantom
Stock, that the Participant or the Company achieve certain performance
criteria, such criteria to be specified by the Committee at the time
of the grant of such shares.
(d) Effect of Termination of Employment.
(1) If the employment of a Participant with the Company shall
terminate for any reason other than Cause prior to the vesting of
shares of Phantom Stock granted to such Participant a portion of
such shares, to the extent not forfeited or canceled on or prior
to such termination pursuant to any provision hereof, shall vest
on the date of such termination. The portion referred to in the
preceding sentence shall be determined by the Committee at the
time of the grant of such shares of Phantom Stock and may be
based on the achievement of any conditions imposed by the
Committee with respect to such shares pursuant to Section 8(c).
Such portion may equal zero.
(2) In the event of the termination of a Participant's employment for
Cause, all shares of Phantom Stock granted to such Participant
which have not vested as of the date of such termination shall
immediately be forfeited.
(e) Effect of Change in Control Upon the occurrence of a Change in
Control, all shares of Phantom Stock which have not theretofore vested
shall immediately vest.
9. STOCK BONUSES. The Committee may, in its absolute discretion, grant Stock
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Bonuses in such amounts as it shall determine from time to time. A Stock
Bonus shall be paid at such time and subject to such conditions as the
Committee shall determine at the time of the grant of such Stock Bonus.
Certificates for shares of Common Stock granted as a Stock Bonus shall be
issued in the name of the Participant to whom such grant was made and
delivered to such Participant as soon as practicable after the date on
which such Stock Bonus is required to be paid.
10. CASH BONUSES. The Committee may, in its absolute discretion, grant in
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connection with any grant of Restricted Stock or Stock Bonus or at any time
thereafter, a cash bonus, payable promptly after the date on which the
Participant is required to recognize income for federal income tax purposes
in connection with such Restricted Stock or Stock Bonus, in such amounts as
the Committee shall determine from time to time; provided, however, that in
no event shall the amount of a Cash Bonus exceed the Fair Market Value of
the related shares of Restricted Stock or Stock Bonus on such date. A Cash
Bonus shall be subject to such conditions as the Committee shall determine
at the time of the grant of such Cash Bonus.
11. ADJUSTMENT UPON CHANGES IN COMMON STOCK.
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(a) Outstanding Restricted Stock and Phantom Stock Unless the Committee in
its absolute discretion otherwise determines, if a Participant
receives any securities or other property (including dividends paid in
cash) with respect to a share of Restricted Stock, the Issue Date with
respect to which occurs prior to such event, but which has not vested
as of the date of such event, as a result of any dividend, stock split
recapitalization, merger, consolidation, combination, exchange of
shares or otherwise, such securities or other property will not vest
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until such share of Restricted Stock vests, and shall be held by the
Company pursuant to Paragraph 7 (d) (2) hereof. The Committee may, in
its absolute discretion, adjust any grant of shares of Restricted
Stock, the Issue Date with respect to which has not occurred as of the
date of the occurrence of any of the following events, or any grant of
shares of Phantom Stock, to reflect any dividend, stock split,
recapitalization, merger, consolidation, combination, exchange of
shares or similar corporate change as the Committee may deem
appropriate to prevent the enlargement or dilution of rights of
Participants under the grant.
(b) Outstanding Options, Increase or Decrease in Issued Shares Without
Consideration. Subject to any required action by the shareholders of
the Company, in the event of any increase or decrease in the number of
issued shares of Common Stock resulting from a subdivision or
consolidation of shares of Common Stock or the payment of a stock
dividend (but only on the shares of Common Stock), or any other
increase or decrease in the number of such shares effected without
receipt of consideration by the Company, the Committee shall
proportionally adjust the number of shares and the exercise price per
share of Common Stock subject to each outstanding Option.
(c) Outstanding Options, Certain Mergers Subject to any required action by
the shareholders of the Company, if the Company shall be the surviving
corporation in any merger or consolidation (except a merger of
consolidation as a result of which the holders of shares of Common
Stock receive securities of another corporation), each Option
outstanding on the date of such merger or consolidation shall entitle
the Participant to acquire upon exercise the securities which a holder
of the number of shares of Common Stock subject to such Option would
have received in such merger or consolidation.
(d) Outstanding Options, Certain Other Transactions In the event of a
dissolution or liquidation of the Company, a sale of all or
substantially all of the Company's assets, a merger or consolidation
involving the Company in which the Company is not the surviving
corporation or a merger or consolidation involving the Company in
which the Company is the surviving corporation but the holders of
shares of Common Stock receive securities of another corporation
and/or other property, including cash, the Committee shall, in its
absolute discretion, have the power to:
(1) cancel, effective immediately prior to the occurrence of such
event, each Option outstanding immediately prior to such event
(whether or not then exercisable), and, in full consideration of
such cancellation, pay to the Participant to whom such Option was
granted an amount in cash, for each share of Common Stock subject
to such Option equal to the excess of (A) the value, as
determined by the Committee in its absolute discretion, of the
property (including cash) received by the holder of a share of
Common Stock as a result of such event over (B) the exercise
price of such Option; or
(2) provide for the exchange of each Option outstanding immediately
prior to such event (whether or not then exercisable) for an
option on some or all of the property for which such Option is
exchanged and, incident thereto, make an equitable adjustment as
determined by the Committee in its absolute discretion in the
exercise price of the option, or the number of shares or amount
of property subject to the option or, if appropriate, provide for
a cash payment to the Participant to whom such Option was granted
in partial consideration for the exchange of the Option.
(e) Outstanding Options. Other Changes In the event of any change in the
capitalization of the Company or corporate change other than those
specifically referred to in Sections 11(b), (c) or (d) hereof, the
Committee may, in its absolute discretion, make such adjustments in
the
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number and class of shares subject to Options outstanding on the date
on which such change occurs and in the per share exercise price of
each such Option as the Committee may consider appropriate to prevent
dilution or enlargement of rights.
(f) No Other Rights Except as expressly provided in the Plan, no
Participant shall have any rights by reason of any subdivision or
consolidation of shares of stock of any class, the payment of any
dividend, any increase or decrease in the number of shares of stock of
any class or any dissolution, liquidation, merger or consolidation of
the Company or any other corporation. Except as expressly provided in
the Plan, no issuance by the Company of shares of stock of any class,
or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect
to, the number of shares of Common Stock subject to an Incentive Award
or the exercise price of any Option.
12. RIGHTS AS A SHAREHOLDER. No person shall have any rights as a shareholder
-------------------------
with respect to any shares of Common Stock covered by or relating to any
Incentive Award granted pursuant to this Plan until the date of the
issuance of a stock certificate with respect to such shares. Except as
otherwise expressly provided in Section 11 hereof, no adjustment to any
Incentive Award shall be made for dividends or other rights for which the
record date occurs prior to the date such stock certificate is issued.
13. NO SPECIAL EMPLOYMENT RIGHTS; NO RIGHT TO INCENTIVE AWARD. Nothing
-----------------------------------------------------------------
contained in the Plan or any Incentive Award shall confer upon any
Participant any right with respect to the continuation of his employment by
the Company or interfere in any way with the right of the Company, subject
to the terms of any separate employment agreement to the contrary, at any
time to terminate such employment or to increase or decrease the
compensation of the Participant from the rate in existence at the time of
the grant of an Incentive 12 Award. No person shall have any claim or right
to receive an Incentive Award hereunder. The Committee's granting of an
Incentive Award to a Participant at any time shall neither require the
Committee to grant an Incentive Award to such Participant or any other
Participant or other person at any time nor preclude the Committee from
making subsequent grants to such Participant or any other Participant or
other person.
14. SECURITIES MATTERS.
--------------------
(a) The Company shall be under no obligation to effect the registration
pursuant to the Securities Act of any shares of Common Stock to be
issued hereunder or to effect similar compliance under any state laws.
Notwithstanding anything herein to the contrary, the Company shall not
be obligated to cause to be issued or delivered any certificates
evidencing shares of Common Stock pursuant to the Plan unless and
until the Company is advised by its counsel that the issuance and
delivery of such certificates is in compliance with all applicable
laws, regulations of governmental authority and the requirements of
any securities exchange on which shares of Common Stock are traded.
The Committee may require, as a condition of the issuance and delivery
of certificates evidencing shares of Common Stock pursuant to the
terms hereof, that the recipient of such shares make such covenants,
agreements and representations, and that such certificates bear such
legends, as the Committee, in its sole discretion, deems necessary or
desirable.
(b) The exercise of any Option granted hereunder shall only be effective
at such time as counsel to the Company shall have determined that the
issuance and delivery of shares of Common Stock pursuant to such
exercise is in compliance with all applicable laws, regulations of
governmental authorities and the requirements of any securities
exchange on which shares of
Page 11
Common Stock are traded. The Company may, in its sole discretion,
defer the effectiveness of any exercise of an Option granted hereunder
in order to allow the issuance of shares of Common Stock pursuant
thereto to be made pursuant to registration or an exemption from
registration or other methods for compliance available under federal
or state securities laws. The Company shall inform the Participant in
writing of its decision to defer the effectiveness of the exercise of
an Option granted hereunder. During the period that the effectiveness
of the exercise of an Option has been deferred, the Participant may,
by written notice, withdraw such exercise and obtain the refund of any
amount paid with respect thereto.
15. WITHHOLDING TAXES. Whenever shares of Common Stock are to be issued upon
------------------
the exercise of an Option, the occurrence of the Issue Date or Vesting Date
with respect to a share of Restricted Stock or the payment of a Stock
Bonus, the Company shall have the right to require the Participant to remit
to the Company in cash an amount sufficient to satisfy federal, state and
local withholding tax requirements, if any, attributable to such exercise,
occurrence or payment prior to the delivery of any certificate or
certificates for such shares. In addition, upon the grant of a Cash Bonus
or the making of a payment with respect to a share of Phantom Stock, the
Company shall have the right to withhold from any cash payment required to
be made pursuant thereto an amount sufficient to satisfy the federal, state
and local withholding tax requirements, if any, attributable to such
exercise or grant.
16. AMENDMENT OF THE PLAN. The Board of Directors may at any time suspend or
------------------------
discontinue the Plan or revise or amend it in any respect whatsoever,
provided, however, that without approval of the shareholders no revision or
amendment shall (i) except as provided in Section 11 hereof, increase the
number of shares of Common Stock that may be issued under the Plan, (ii)
materially increase the benefits accruing to individuals holding Incentive
Awards granted pursuant to the Plan or (iii) materially modify the
requirements as to eligibility for participation in the Plan.
17. NO OBLIGATION TO EXERCISE. The grant to a Participant of an Option shall
----------------------------
impose no obligation upon such Participant to exercise such Option.
18. TRANSFERS UPON DEATH. Upon the death of a Participant, outstanding
----------------------
Incentive Awards granted to such Participant may be exercised only by the
executors or administrators of the Participant's estate or by any person or
persons who shall have acquired such right to exercise by will or by the
laws of descent and distribution. No transfer by will or the laws of
descent and distribution of any Incentive Award, or the right to exercise
any Incentive Award, shall be effective to bind the Company unless the
Committee shall have been furnished with (a) written notice thereof and
with a copy of the will and/or such evidence as the Committee may deem
necessary to establish the validity of the transfer and (b) an agreement by
the transferee to comply with all the terms and conditions of the Incentive
Award that are or would have been applicable to the Participant and to be
bound by the acknowledgments made by the Participant in connection with the
grant of the Incentive Award.
19. EXPENSES AND RECEIPTS. The expenses of the Plan shall be paid by the
-----------------------
Company. Any proceeds received by the Company in connection with any
Incentive Award will be used for general corporate purposes.
20. FAILURE TO COMPLY. In addition to the remedies of the Company elsewhere
-------------------
provided for herein, failure by a Participant to comply with any of the
terms and conditions of the Plan or the agreement executed by such
Participant evidencing an Incentive Award, unless such failure is
Page 12
remedied by such Participant within ten days after having been notified of
such failure by the Committee, shall be grounds for the cancellation and
forfeiture of such Incentive Award, in whole or in part as the Committee,
in its absolute discretion, may determine.
21. EFFECTIVE DATE AND TERM OF PLAN. The Plan was adopted by the Board of
------------------------------------
Directors effective May 18, 1998, subject to approval by the shareholders
of the Company in accordance with applicable law, the requirements of
Section 422 of the Code and the requirements of Rule 16b-3 under Section
16(b) of the Exchange Act. No Incentive Award may be granted under the Plan
after November 11, 2007. Incentive Awards may be granted under the Plan at
any time prior to the receipt of such shareholder approval; provided,
however, that each such grant shall be subject to such approval. Without
limitation on the foregoing, no Option may be exercised prior to the
receipt of such approval, no share certificate shall be issued pursuant to
a grant of Restricted Stock or Stock Bonus prior to the receipt of such
approval and no 14 Cash Bonus or payment with respect to a share of Phantom
Stock shall be paid prior to the receipt of such approval. If the Plan is
not approved by the Company's shareholders, then the Plan and all Incentive
Awards then outstanding hereunder shall forthwith automatically terminate
and be of no force and effect.
IN WITNESS WHEREOF, this 1997 Executive Compensation Stock Plan has been
executed in Houston, Texas this 18th day of May, 1998. -
------------------------------- L. H. Ramming,
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