BOOTS & COOTS INTERNATIONAL WELL CONTROL, INC.
1997 INCENTIVE STOCK PLAN
1. PURPOSE OF THE PLAN
This 1997 Incentive Stock Plan is 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 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).
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(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.
(g) 'Common Stock' shall mean the Company's Common Stock, par value $.01
per share.
(h) 'Company' shall mean IWC Services, Inc., a Texas 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
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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 IWC Services, Inc. 1996 Incentive Stock 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 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 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
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The Plan shall be administered by a 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
employees 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 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 pursuant to the
Plan shall be such full-time employees of the Company as the Committee, in its
absolute discretion, shall select from time to time. Notwithstanding the
generality of the foregoing, no employee of the Company shall be eligible to
receive Incentive Awards pursuant to this Plan if the employee is also entitled
to receive an Incentive Award under the terms of his employment agreement with
the Company, or any specialty Incentive Stock Plan adopted after the date
hereof, unless such employment agreement or specialty plan expressly provides
otherwise.
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6. OPTIONS
The Committee may grant Options pursuant to the Plan, which 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.
(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
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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 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
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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
cancellation pursuant to the terms of the Plan.
7. RESTRICTED STOCK
The Committee may grant shares of Restricted Stock 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
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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 IWC Services, Inc.--1996 Incentive Stock Plan and an
Agreement entered into between the registered owner of such shares and
IWC Services, Inc. A copy of the Plan and Agreement is on file in the
office of the Secretary of IWC Services, Inc., 2800 Post Oak Boulevard,
Suite 6300, 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 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
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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 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
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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 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 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 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.
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11. ADJUSTMENT UPON CHANGES IN COMMON STOCK
(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 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
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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 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
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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 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.
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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 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 November 12, 1997,
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
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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 Incentive Stock Plan has been executed in
Houston, Texas this 12th day of November, 1997.
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L. H. Ramming, Chairman
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