1993 Stock and Incentive Plan - Halliburton Co.
HALLIBURTON COMPANY
1993 STOCK AND INCENTIVE PLAN
As Amended and Restated February 12, 2003
I. PURPOSE
The purpose of the Halliburton Company 1993 Stock and Incentive Plan (the
"Plan") is to provide a means whereby Halliburton Company, a Delaware
corporation (the "Company"), and its Subsidiaries may attract, motivate and
retain highly competent employees and to provide a means whereby selected
employees can acquire and maintain stock ownership and receive cash awards,
thereby strengthening their concern for the long-term welfare of the Company.
The Plan is also intended to provide employees with additional incentive and
reward opportunities designed to enhance the profitable growth of the Company
over the long term. A further purpose of the Plan is to allow awards under the
Plan to Non-employee Directors in order to enhance the Company's ability to
attract and retain highly qualified Directors. Accordingly, the Plan provides
for granting Incentive Stock Options, Options which do not constitute Incentive
Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Performance
Awards, Stock Value Equivalent Awards, or any combination of the foregoing, as
is best suited to the circumstances of the particular employee or Non-employee
Director as provided herein. The Plan was established February 18, 1993, has
been amended from time to time thereafter, and effective as of February 12,
2003, is amended and restated to remove the expiration date of the Plan, to
rename the Plan and to make certain other changes.
II. DEFINITIONS
The following definitions shall be applicable throughout the Plan unless
specifically modified by any paragraph:
(a) "Award" means, individually or collectively, any Option, Stock
Appreciation Right, Restricted Stock Award, Performance Award
or Stock Value Equivalent Award.
(b) "Award Document" means the relevant award agreement or other
document containing the terms and conditions of an Award.
(c) "Beneficial Owners" shall have the meaning set forth in Rule
13d-3 promulgated under the Exchange Act.
(d) "Board" means the Board of Directors of Halliburton Company.
(e) "Change of Control Value" means, for the purposes of Paragraph
(f) of Article XII, the amount determined in Clause (i), (ii)
or (iii), whichever is applicable, as follows: (i) the per
share price offered to stockholders of the Company in any
merger, consolidation, sale of assets or dissolution
transaction, (ii) the per share price offered to stockholders
of the Company in any tender offer or exchange offer whereby a
Corporate Change takes place or (iii) if a Corporate Change
occurs other than as described in Clause (i) or Clause (ii),
the fair market value per share determined by the Committee as
of the date determined by the Committee to be the date of
cancellation and surrender of an Option or Stock Appreciation
Right. If the consideration offered to stockholders of the
Company in any transaction described in this Paragraph (e)
consists of anything other than cash, the Committee shall
determine the fair cash equivalent of the portion of the
consideration offered which is other than cash.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
Reference in the Plan to any section of the Code shall be
deemed to include any amendments or successor provisions to
such section and any regulations under such section.
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(g) "Committee" means the committee selected by the Board to
administer the Plan in accordance with Paragraph (a) of
Article IV of the Plan.
(h) "Common Stock" means the Common Stock, par value $2.50 per
share, of the Company.
(i) "Company" means Halliburton Company, a Delaware corporation.
(j) "Corporate Change" shall conclusively be deemed to have
occurred on a Corporate Change Effective Date if an event set
forth in any one of the following paragraphs shall have
occurred:
(i) any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the
Company (not including in the securities
beneficially owned by such Person any securities
acquired directly from the Company or its
affiliates) representing 20% or more of the
combined voting power of the Company's then
outstanding securities; or
(ii) the following individuals cease for any reason to
constitute a majority of the number of directors
then serving: individuals who, on the date hereof,
constitute the Board and any new Director (other
than a Director whose initial assumption of office
is in connection with an actual or threatened
election contest relating to the election of
Directors of the Company) whose appointment or
election by the Board or nomination for election
by the Company's stockholders was approved or
recommended by a vote of at least two-thirds (2/3)
of the Directors then still in office who either
were Directors on the date hereof or whose
appointment, election or nomination for election
was previously so approved or recommended; or
(iii) there is consummated a merger or consolidation of
the Company or any direct or indirect Subsidiary
of the Company with any other corporation, other
than (A) a merger or consolidation which would
result in the voting securities of the Company
outstanding immediately prior to such merger or
consolidation continuing to represent (either by
remaining outstanding or by being converted into
voting securities of the surviving entity or any
parent thereof), in combination with the ownership
of any trustee or other fiduciary holding
securities under an employee benefit plan of the
Company or any Subsidiary of the Company, at least
50% of the combined voting power of the securities
of the Company or such surviving entity or any
parent thereof outstanding immediately after such
merger or consolidation, or (B) a merger or
consolidation effected to implement a
recapitalization of the Company (or similar
transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of
securities of the Company (not including in the
securities Beneficially Owned by such Person any
securities acquired directly from the Company or
any of its affiliates other than in connection
with the acquisition by the Company or any of its
affiliates of a business) representing 20% or more
of the combined voting power of the Company's then
outstanding securities; or
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(iv) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company
or there is consummated an agreement for the sale,
disposition, lease or exchange by the Company of
all or substantially all of the Company's assets,
other than a sale, disposition, lease or exchange
by the Company of all or substantially all of the
Company's assets to an entity, at least 50% of the
combined voting power of the voting securities of
which are owned by stockholders of the Company in
substantially the same proportions as their
ownership of the Company immediately prior to such
sale.
Notwithstanding the foregoing, a "Corporate Change" shall not be deemed to have
occurred by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the record holders of the
Common Stock of the Company immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity which owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions.
(k) "Corporate Change Effective Date" shall mean:
(i) the first date that the direct or indirect
ownership of 20% or more combined voting power of
the Company's outstanding securities results in a
Corporate Change as described in clause (i) of
such definition above; or
(ii) the date of the election of Directors that results
in a Corporate Change as described in clause (ii)
of such definition; or
(iii) the date of the merger or consideration that
results in a Corporate Change as described in
clause (iii) of such definition; or
(iv) the date of stockholder approval that results in a
Corporate Change as described in clause (iv) of
such definition.
(l) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(m) "Fair Market Value" means, as of any specified date, the
closing price of the Common Stock on the New York Stock
Exchange (or, if the Common Stock is not then listed on such
exchange, such other national securities exchange on
which the Common Stock is then listed) on that date, or if no
prices are reported on that date, on the last preceding date
on which such prices of the Common Stock are so reported or,
in the sole discretion of the Committee for purposes of
determining the Fair Market Value of the Common Stock at the
time of exercise of an Option or a Stock Appreciation Right,
such Fair Market Value shall be the prevailing price of the
Common Stock as of the time of exercise. If the Common Stock
is not then listed or quoted on any national securities
exchange but is traded over the counter at the time a
determination of its Fair Market Value is required to be made
hereunder, its Fair Market Value shall be deemed to be equal
to the average between the reported high and low sales prices
of Common Stock on the most recent date on which Common Stock
was publicly traded. If the Common Stock is not publicly
traded at the time a determination of its value is required to
be made hereunder, the determination of its Fair Market Value
shall be made by the Committee in such manner as it deems
appropriate.
(n) "Holder" means an employee or Non-employee Director of the
Company who has been granted an Award.
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(o) "Immediate Family" means, with respect to a particular Holder,
the Holder's spouse, parent, brother, sister, children and
grandchildren (including adopted and step children and
grandchildren).
(p) "Incentive Stock Option" means an Option within the meaning of
Section 422 of the Code.
(q) "Minimum Criteria" shall have the meaning given such term in
Paragraph (a) of Article IX.
(r) "Non-employee Director" means a member of the Board who is not
an employee or former employee of the Company or its
Subsidiaries.
(s) "Option" means an Award granted under Article VII of the Plan
and includes both Incentive Stock Options to purchase Common
Stock and Options which do not constitute Incentive Stock
Options to purchase Common Stock.
(t) "Option Agreement" means a written agreement between the
Company and a Holder with respect to an Option.
(u) "Optionee" means a Holder who has been granted an Option.
(v) "Parent Corporation" shall have the meaning set forth in
Section 424(e) of the Code.
(w) "Performance Award" means an Award granted under Article X of
the Plan.
(x) "Person" shall have the meaning given in Section 3(a)(9) of
the Exchange Act, as modified and used in Sections 13(d) and
14(d) thereof, except that such term shall not include (i) the
Company or any of its Subsidiaries, (ii) a trustee or other
fiduciary holding securities under an employee benefit plan of
the Company or any of its affiliates, (iii) an underwriter
temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or
indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock
of the Company.
(y) "Plan" means the Halliburton Company 1993 Stock and Incentive
Plan.
(z) "Restricted Stock Award" means an Award granted under Article
IX of the Plan.
(aa) "Restricted Stock Award Agreement" means a written agreement
between the Company and a Holder with respect to a Restricted
Stock Award.
(bb) "Restriction Period" shall have the meaning given such term in
Paragraph (a) of Article IX.
(cc) "Spread" means, in the case of a Stock Appreciation Right, an
amount equal to the excess, if any, of the Fair Market Value
of a share of Common Stock on the date such right is exercised
over the exercise price of such Stock Appreciation Right.
(dd) "Stock Appreciation Right" means an Award granted under
Article VIII of the Plan.
(ee) "Stock Appreciation Rights Agreement" means a written
agreement between the Company and a Holder with respect to an
Award of Stock Appreciation Rights.
(ff) "Stock Value Equivalent Award" means an Award granted under
Article XI of the Plan.
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(gg) "Subsidiary" means a company (whether a corporation,
partnership, joint venture or other form of entity) in which
the Company or a corporation in which the Company owns a
majority of the shares of capital stock, directly or
indirectly, owns a greater than 20% equity interest, except
that with respect to the issuance of Incentive Stock Options
the term "Subsidiary" shall have the same meaning as the term
"subsidiary corporation" as defined in Section 424(f) of the
Code.
(hh) "Successor Holder" shall have the meaning given such term in
Paragraph (f) of Article XIV.
III. EFFECTIVE DATE AND DURATION OF THE PLAN
The Plan as amended and restated herein shall be effective February 12, 2003,
the date of its adoption by the Board, provided the Plan is approved by the
stockholders of the Company within twelve (12) months thereafter and on or prior
to the date of the first annual meeting of stockholders of the Company held
thereafter. Notwithstanding any provision of the Plan or in any Option Agreement
or Stock Appreciation Rights Agreement, no Option or Stock Appreciation Right
granted on or after February 12, 2003, shall be exercisable prior to such
stockholder approval. Subject to the provisions of Article XIII, the Plan shall
remain in effect until all Options and Stock Appreciation Rights granted under
the Plan have been exercised or expired by reason of lapse of time, all
restrictions imposed upon Restricted Stock Awards have lapsed and all
Performance Awards and Stock Value Equivalent Awards have been satisfied.
IV. ADMINISTRATION
(a) Composition of Committee. The Plan shall be administered by a Committee
of Directors of the Company which shall be appointed by the Board.
(b) Powers. The Committee shall have authority, in its discretion, to
determine which eligible individuals shall receive an Award, the time
or times when such Award shall be made, whether an Incentive Stock
Option, nonqualified Option or Stock Appreciation Right shall be
granted, the number of shares of Common Stock which may be issued under
each Option, Stock Appreciation Right and Restricted Stock Award, and
the value of each Performance Award and Stock Value Equivalent Award.
The Committee shall have the authority, in its discretion, to establish
the terms and conditions applicable to any Award, subject to any
specific limitations or provisions of the Plan. In making such
determinations the Committee may take into account the nature of the
services rendered by the respective individuals, their responsibility
level, their present and potential contribution to the Company's
success and such other factors as the Committee in its discretion shall
deem relevant.
(c) Additional Powers. The Committee shall have such additional powers as
are delegated to it by the other provisions of the Plan. Subject to the
express provisions of the Plan, the Committee is authorized to construe
the Plan and the respective Award Documents executed thereunder, to
prescribe such rules and regulations relating to the Plan as it may
deem advisable to carry out the Plan, and to determine the terms,
restrictions and provisions of each Award, including such terms,
restrictions and provisions as shall be requisite in the judgment
of the Committee to cause designated Options to qualify as Incentive
Stock Options, and to make all other determinations necessary or
advisable for administering the Plan. The Committee may correct any
defect or supply any omission or reconcile any inconsistency in any
Award Document relating to an Award in the manner and to the extent the
Committee shall deem expedient to carry the Award into effect. The
determinations of the Committee on the matters referred to in this
Article IV shall be conclusive.
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(d) Delegation of Authority. The Committee may delegate some or all of its
power to the Chief Executive Officer of the Company as the Committee
deems appropriate; provided, however, that (i) the Committee may not
delegate its power with regard to the grant of an Award to any person
who is a "covered employee" within the meaning of Section 162(m) of the
Code or who, in the Committee's judgment, is likely to be a covered
employee at any time during the period an Award to such employee would
be outstanding; (ii) the Committee may not delegate its power with
regard to the selection for participation in the Plan of an officer or
other person subject to Section 16 of the Exchange Act or decisions
concerning the timing, pricing or amount of an Award to such an officer
or other person and (iii) any delegation of the power to grant Awards
shall be permitted by applicable law.
V. GRANT OF OPTIONS, STOCK APPRECIATION RIGHTS, RESTRICTED STOCK
AWARDS, PERFORMANCE AWARDS AND STOCK VALUE EQUIVALENT
AWARDS; SHARES SUBJECT TO THE PLAN
(a) Award Limits. The Committee may from time to time grant Awards to one
or more individuals determined by it to be eligible for participation
in the Plan in accordance with the provisions of Article VI. The
aggregate number of shares of Common Stock that may be issued under the
Plan shall not exceed 49,000,000 shares, of which no more than
16,000,000 may be issued in the form of Restricted Stock Awards or
pursuant to Performance Awards. Notwithstanding anything contained
herein to the contrary, the number of Option shares or Stock
Appreciation Rights, singly or in combination, together with shares or
share equivalents under Performance Awards granted to any Holder in any
one calendar year, shall not in the aggregate exceed 500,000. The cash
value determined as of the date of grant of any Performance Award not
denominated in Common Stock granted to any Holder for any one calendar
year shall not exceed $5,000,000. Any shares which remain unissued and
which are not subject to outstanding Options or Awards at the
termination of the Plan shall cease to be subject to the Plan, but,
until termination of the Plan, the Company shall at all times reserve a
sufficient number of shares to meet the requirements of the Plan.
Shares shall be deemed to have been issued under the Plan only to the
extent actually issued and delivered pursuant to an Award. To the
extent that an Award lapses or the rights of its Holder terminate or
the Award is paid in cash, any shares of Common Stock subject to such
Award shall again be available for the grant of an Award. The
aggregate number of shares which may be issued under the Plan shall be
subject to adjustment in the same manner as provided in Article XII
with respect to shares of Common Stock subject to Options then
outstanding. The 500,000-share limit on Stock Options and Stock
Appreciation Rights Awards to a Holder in any calendar year shall be
subject to adjustment in the same manner as provided in Article XII.
Separate stock certificates shall be issued by the Company for those
shares acquired pursuant to the exercise of an Incentive Stock Option
and for those shares acquired pursuant to the exercise of any Option
which does not constitute an Incentive Stock Option. The Committee may
from time to time adopt and observe such procedures concerning the
counting of shares against the Plan maximum as it may deem appropriate.
(b) Stock Offered. The stock to be offered pursuant to the grant of an
Award may be authorized but unissued Common Stock or Common Stock
previously issued and reacquired by the Company.
VI. ELIGIBILITY
Awards made pursuant to the Plan may be granted to individuals who, at the time
of grant, are employees of the Company or any Parent Corporation or Subsidiary
of the Company or are Non-employee Directors. An Award may also be granted to a
person who has agreed to become an employee of the Company or any Parent
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Corporation or Subsidiary of the Company within the subsequent three (3)
months. An Award made pursuant to the Plan may be granted on more than one
occasion to the same person, and such Award may include an Incentive Stock
Option, an Option which is not an Incentive Stock Option, an Award of Stock
Appreciation Rights, a Restricted Stock Award, a Performance Award, a Stock
Value Equivalent Award or any combination thereof. Each Award shall be evidenced
in such manner and form as may be prescribed by the Committee.
VII. STOCK OPTIONS
(a) Stock Option Agreement. Each Option shall be evidenced by an Option
Agreement between the Company and the Optionee which shall contain such
terms and conditions as may be approved by the Committee. The terms and
conditions of the respective Option Agreements need not be identical.
Specifically, an Option Agreement may provide for the payment of the
option price, in whole or in part, by the delivery of a number of
shares of Common Stock (plus cash if necessary) having a Fair Market
Value equal to such option price.
(b) Option Period. The term of each Option shall be as specified by the
Committee at the date of grant; provided that, in no case, shall the
term of an Option exceed ten (10) years.
(c) Limitations on Exercise of Option. An Option shall be exercisable in
whole or in such installments and at such times as determined by the
Committee.
(d) Option Price. The purchase price of Common Stock issued under each
Option shall be determined by the Committee, but such purchase price
shall not be less than the Fair Market Value of Common Stock subject to
the Option on the date the Option is granted.
(e) Options and Rights in Substitution for Stock Options Granted by Other
Corporations. Options and Stock Appreciation Rights may be granted
under the Plan from time to time in substitution for stock options held
by employees of corporations who become, or who became prior to the
effective date of the Plan, employees of the Company or of any
Subsidiary as a result of a merger or consolidation of the employing
corporation with the Company or such Subsidiary, or the acquisition by
the Company or a Subsidiary of all or a portion of the assets of the
employing corporation, or the acquisition by the Company or a
Subsidiary of stock of the employing corporation with the result that
such employing corporation becomes a Subsidiary.
(f) Repricing Prohibited. Except for adjustments pursuant to Article XII,
the purchase price of Common Stock for any outstanding Option granted
under the Plan may not be decreased after the date of grant nor may an
outstanding Option granted under the Plan be surrendered to the Company
as consideration for the grant of a new Option with a lower purchase
price. Any other action that is deemed to be a repricing under any
applicable rule of the New York Stock Exchange shall be prohibited.
VIII. STOCK APPRECIATION RIGHTS
(a) Stock Appreciation Rights. A Stock Appreciation Right is the right to
receive an amount equal to the Spread with respect to a share of Common
Stock upon the exercise of such Stock Appreciation Right. Stock
Appreciation Rights may be granted in connection with the grant of an
Option, in which case the Option Agreement will provide that exercise
of Stock Appreciation Rights will result in the surrender of the right
to purchase the shares under the Option as to which the Stock
Appreciation Rights were exercised. Alternatively, Stock Appreciation
Rights may be granted independently of Options in which case each Award
of Stock Appreciation Rights shall be evidenced by a Stock Appreciation
Rights Agreement between the Company and the Holder which shall contain
such terms and conditions as may be approved by the Committee. The
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terms and conditions of the respective Stock Appreciation Rights
Agreements need not be identical. The Spread with respect to a Stock
Appreciation Right may be payable either in cash, shares of Common
Stock with a Fair Market Value equal to the Spread or in a combination
of cash and shares of Common Stock. Upon the exercise of any Stock
Appreciation Rights granted hereunder, the number of shares reserved
for issuance under the Plan shall be reduced only to the extent that
shares of Common Stock are actually issued in connection with the
exercise of such Right.
(b) Exercise Price. The exercise price of each Stock Appreciation Right
shall be determined by the Committee, but such exercise price shall not
be less than the Fair Market Value of a share of Common Stock on the
date the Stock Appreciation Right is granted.
(c) Exercise Period. The term of each Stock Appreciation Right shall be as
specified by the Committee at the date of grant; provided that, in no
case, shall the term of a Stock Appreciation Right exceed ten (10)
years.
(d) Limitations on Exercise of Stock Appreciation Right. A Stock
Appreciation Right shall be exercisable in whole or in such
installments and at such times as determined by the Committee.
(e) Repricing Prohibited. Except for adjustments pursuant to Article XII,
the exercise price of a Stock Appreciation Right may not be decreased
after the date of grant nor may an outstanding Stock Appreciation Right
granted under the Plan be surrendered to the Company as consideration
for the grant of a new Stock Appreciation Right with a lower exercise
price. Any other action that is deemed to be a repricing under any
applicable rule of the New York Stock Exchange shall be prohibited.
IX. RESTRICTED STOCK AWARDS
(a) Restricted Period To Be Established by the Committee. At the time a
Restricted Stock Award is made, the Committee shall establish a period
of time (the "Restriction Period") applicable to such Award; provided,
however, that, except as set forth below and as permitted by Paragraph
(b) of this Article IX, such Restriction Period shall not be less than
three (3) years from the date of grant (the "Minimum Criteria"). An
award which provides for the lapse of restrictions on shares applicable
to such Award in equal annual installments over a period of at least
three (3) years from the date of grant shall be deemed to meet the
Minimum Criteria. The foregoing notwithstanding, with respect to
Restricted Stock Awards of up to an aggregate 550,000 shares (subject
to adjustment as set forth in Article XII), the Minimum Criteria shall
not apply and the Committee may establish such lesser Restriction
Periods applicable to such Awards as it shall determine in its
discretion. Subject to the foregoing, each Restricted Stock Award may
have a different Restriction Period, in the discretion of the
Committee. The Restriction Period applicable to a particular Restricted
Stock Award shall not be changed except as permitted by Paragraph (b)
of this Article or by Article XII.
(b) Other Terms and Conditions. Common Stock awarded pursuant to a
Restricted Stock Award shall be represented by a stock certificate
registered in the name of the Holder of such Restricted Stock Award or,
at the option of the Company, in the name of a nominee of the Company.
The Holder shall have the right to receive dividends during the
Restriction Period, to vote the Common Stock subject thereto and to
enjoy all other stockholder rights, except that (i) the Holder shall
not be entitled to possession of the stock certificate until the
Restriction Period shall have expired, (ii) the Company shall retain
custody of the stock during the Restriction Period, (iii) the Holder
may not sell, transfer, pledge, exchange, hypothecate or otherwise
dispose of the stock during the Restriction Period, and (iv) a breach
of the terms and conditions established by the Committee pursuant to
the Restricted Stock Award shall cause a forfeiture of the Restricted
Stock Award. At the time of such Award, the Committee may, in its sole
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discretion, prescribe additional terms, conditions or restrictions
relating to Restricted Stock Awards, including, but not limited
to, rules pertaining to the termination of a Holder's service (by
retirement, disability, death or otherwise) prior to expiration of the
Restriction Period as shall be set forth in a Restricted Stock Award
Agreement.
(c) Payment for Restricted Stock. A Holder shall not be required to make
any payment for Common Stock received pursuant to a Restricted Stock
Award, except to the extent otherwise required by law and except that
the Committee may, in its discretion, charge the Holder an amount in
cash not in excess of the par value of the shares of Common Stock
issued under the Plan to the Holder.
(d) Miscellaneous. Nothing in this Article shall prohibit the exchange of
shares issued under the Plan (whether or not then subject to a
Restricted Stock Award) pursuant to a plan of reorganization for stock
or securities in the Company or another corporation a party to the
reorganization, but the stock or securities so received for shares then
subject to the restrictions of a Restricted Stock Award shall become
subject to the restrictions of such Restricted Stock Award. Any shares
of stock received as a result of a stock split or stock dividend with
respect to shares then subject to a Restricted Stock Award shall also
become subject to the restrictions of the Restricted Stock Award.
X. PERFORMANCE AWARDS
(a) Performance Period. The Committee shall establish, with respect to and
at the time of each Performance Award, a performance period over which
the performance applicable to the Performance Award of the Holder shall
be measured.
(b) Performance Awards. Each Performance Award may have a maximum value
established by the Committee at the time of such Award.
(c) Performance Measures. A Performance Award granted under the Plan that
is intended to qualify as qualified performance-based compensation
under Section 162(m) of the Code shall be awarded contingent upon the
achievement of one or more performance measures. The performance
criteria for Performance Awards shall consist of objective tests based
on the following: earnings, cash flow, cash value added performance,
stockholder return and/or value, revenues, operating profits (including
EBITDA), net profits, earnings per share, stock price, cost reduction
goals, debt to capital ratio, financial return ratios, profit return
and margins, market share, working capital and customer satisfaction.
The Committee may select one criterion or multiple criteria for
measuring performance. Performance criteria may be measured on
corporate, subsidiary or business unit performance, or on a combination
thereof. Further, the performance criteria may be based on comparative
performance with other companies or other external measure of the
selected performance criteria. A Performance Award that is not intended
to qualify as qualified performance-based compensation under Section
162(m) of the Code shall be based on achievement of such goals and be
subject to such terms, conditions and restrictions as the Committee or
its delegate shall determine.
(d) Payment. Following the end of the performance period, the Holder of a
Performance Award shall be entitled to receive payment of an amount,
not exceeding the maximum value of the Performance Award, if any, based
on the achievement of the performance measures for such performance
period, as determined by the Committee in its sole discretion. Payment
of a Performance Award (i) may be made in cash, Common Stock or a
combination thereof, as determined by the Committee in its sole
discretion, (ii) shall be made in a lump sum or in installments as
prescribed by the Committee in its sole discretion, and (iii) to the
extent applicable, shall be based on the Fair Market Value of the
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Common Stock on the payment date. If a payment of cash or issuance of
Common Stock is to be made on a deferred basis, the Committee shall
establish whether interest or dividend equivalents shall be credited
on the deferred amounts and any other terms and conditions applicable
thereto.
(e) Termination of Service. The Committee shall determine the effect of
termination of service during the performance period on a Holder's
Performance Award.
XI. STOCK VALUE EQUIVALENT AWARDS
(a) Stock Value Equivalent Awards. Stock Value Equivalent Awards are rights
to receive an amount equal to the Fair Market Value of shares of Common
Stock or rights to receive an amount equal to any appreciation or
increase in the Fair Market Value of Common Stock over a specified
period of time, which vest over a period of time as established by the
Committee, without payment of any amounts by the Holder thereof (except
to the extent otherwise required by law) or satisfaction of any
performance criteria or objectives. Each Stock Value Equivalent Award
may have a maximum value established by the Committee at the time of
such Award.
(b) Award Period. The Committee shall establish, with respect to and at the
time of each Stock Value Equivalent Award, a period over which the
Award shall vest with respect to the Holder.
(c) Payment. Following the end of the determined period for a Stock Value
Equivalent Award, the Holder of a Stock Value Equivalent Award shall be
entitled to receive payment of an amount, not exceeding the maximum
value of the Stock Value Equivalent Award, if any, based on the then
vested value of the Award. Payment of a Stock Value Equivalent Award
(i) shall be made in cash, (ii) shall be made in a lump sum or in
installments as prescribed by the Committee in its sole discretion,
and (iii) shall be based on the Fair Market Value of the Common Stock
on the payment date. Cash dividend equivalents may be paid during, or
may be accumulated and paid at the end of, the determined period with
respect to a Stock Value Equivalent Award, as determined by the
Committee. If payment of cash is to be made on a deferred basis, the
Committee shall establish whether interest shall be credited, the rate
thereof and any other terms and conditions applicable thereto.
(d) Termination of Service. The Committee shall determine the effect of
termination of service during the applicable vesting period on a
Holder's Stock Value Equivalent Award.
XII. RECAPITALIZATION OR REORGANIZATION
(a) Except as hereinafter otherwise provided, in the event of any
recapitalization, reorganization, merger, consolidation, combination,
exchange, stock dividend, stock split, extraordinary dividend or
divestiture (including a spin-off) or any other change in the corporate
structure or shares of Common Stock occurring after the date of the
grant of an Award, the Committee shall, in its discretion, make such
adjustment as to the number and price of shares of Common Stock or
other consideration subject to such Awards as the Committee shall deem
appropriate in order to prevent dilution or enlargement of rights of
the Holders.
(b) The existence of the Plan and the Awards granted hereunder shall not
affect in any way the right or power of the Board or the stockholders
of the Company to make or authorize any adjustment, recapitalization,
reorganization or other change in the Company's capital structure or
its business, any merger or consolidation of the Company, any issue of
debt or equity securities having any priority or preference with
respect to or affecting Common Stock or the rights thereof, the
dissolution or liquidation of the Company or any sale, lease, exchange
or other disposition of all or any part of its assets or business or
any other corporate act or proceeding.
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(c) The shares with respect to which Options or Stock Appreciation Rights
may be granted are shares of Common Stock as presently constituted, but
if, and whenever, prior to the expiration of an Option or Stock
Appreciation Rights, the Company shall effect a subdivision or
consolidation of shares of Common Stock or the payment of a stock
dividend on Common Stock without receipt of consideration by the
Company, the number of shares of Common Stock with respect to which
such Option or Stock Appreciation Rights may thereafter be exercised
(i) in the event of an increase in the number of outstanding shares
shall be proportionately increased, and the purchase price per share
shall be proportionately reduced, and (ii) in the event of a reduction
in the number of outstanding shares shall be proportionately reduced,
and the purchase price per share shall be proportionately increased.
(d) If the Company recapitalizes or otherwise changes its capital
structure, thereafter upon any exercise of an Option or Stock
Appreciation Rights theretofore granted, the Holder shall be entitled
to purchase or receive, as applicable, under such Option or Stock
Appreciation Rights, in lieu of the number of shares of Common Stock as
to which such Option or Stock Appreciation Rights shall then be
exercisable, the number and class of shares of stock and securities and
the cash and other property to which the Holder would have been
entitled pursuant to the terms of the recapitalization if, immediately
prior to such recapitalization, the Holder had been the holder of
record of the number of shares of Common Stock then covered by such
Option or Stock Appreciation Rights.
(e) In the event of a Corporate Change, unless an Award Document otherwise
provides, as of the Corporate Change Effective Date (i) any outstanding
Options and Stock Appreciation Rights shall become immediately vested
and fully exercisable, (ii) any restrictions on Restricted Stock Awards
shall immediately lapse, (iii) all performance measures upon which an
outstanding Performance Award is contingent shall be deemed achieved
and the Holder shall receive a payment equal to the maximum amount of
the Award he or she would have been entitled to receive, prorated to
the Corporate Change Effective Date, and (iv) any outstanding cash
Awards including, but not limited to, Stock Value Equivalent Awards
shall immediately vest and be paid based on the vested value of the
Award.
(f) In the relevant Award Document, the Committee may provide that, no
later than two (2) business days prior to any Corporate Change
referenced in Clause (ii), (iii) or (iv) of the definition thereof or
ten (10) business days after any Corporate Change referenced in Clause
(i) of the definition thereof, the Committee may, in its sole
discretion, (i) require the mandatory surrender to the Company by
selected Optionees of some or all of the outstanding Options held by
such Optionees (irrespective of whether such Options are then
exercisable under the provisions of the Plan) as of a date (before or
after a Corporate Change) specified by the Committee, in which event
the Committee shall thereupon cancel such Options and pay to each
Optionee an amount of cash per share equal to the excess, if any, of
the Change of Control Value of the shares subject to such Option over
the exercise price(s) under such Options for such shares, (ii) require
the mandatory surrender to the Company by selected Holders of Stock
Appreciation Rights of some or all of the outstanding Stock
Appreciation Rights held by such Holders (irrespective of whether such
Stock Appreciation Rights are then exercisable under the provisions of
the Plan) as of a date (before or after a Corporate Change) specified
by the Committee, in which event the Committee shall thereupon cancel
such Stock Appreciation Rights and pay to each Holder an amount of cash
equal to the Spread with respect to such Stock Appreciation Rights with
the Fair Market Value of the Common Stock at such time to be deemed to
be the Change of Control Value, or (iii) require the mandatory
surrender to the Company by selected Holders of Restricted Stock Awards
or Performance Awards of some or all of the outstanding Awards held by
such Holder (irrespective of whether such Awards are vested under the
provisions of the Plan) as of a date (before or after a Corporate
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Change) specified by the Committee, in which event the Committee
shall thereupon cancel such Awards and pay to each Holder an amount of
cash equal to the Change of Control Value of the shares, if the Award
is denominated in Common Stock, or an amount of cash equal to the Fair
Market Value of the Common Stock at such time, if the Award is not
denominated in Common Stock.
(g) Except as hereinbefore expressly provided, the issuance by the Company
of shares of stock of any class or securities convertible into shares
of stock of any class, for cash, property, labor or services, upon
direct sale, upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, and in any case
whether or not for fair value, shall not affect, and no adjustment by
reason thereof shall be made with respect to, the number of shares of
Common Stock subject to Options or Stock Appreciation Rights
theretofore granted, the purchase price per share of Common Stock
subject to Options or the calculation of the Spread with respect to
Stock Appreciation Rights.
XIII. AMENDMENT OR TERMINATION OF THE PLAN
The Board in its discretion may terminate the Plan or alter or amend the Plan or
any part thereof from time to time; provided that no change in any Award
theretofore granted may be made which would impair the rights of the Holder
without the consent of the Holder, and provided, further, that the Board may
not, without approval of the stockholders, amend the Plan to effect a "material
revision" of the Plan, where a "material revision" includes, but is not limited
to, a revision that: (a) materially increases the benefits accruing to a Holder
under the Plan, (b) materially increases the aggregate number of securities that
may be issued under the Plan, (c) materially modifies the requirements as to
eligibility for participation in the Plan, (d) changes the types of awards
available under the Plan or, (e) amends or deletes the provisions that prevent
the Committee from amending the terms and conditions of an outstanding Option or
Stock Appreciation Rights to alter the exercise price.
XIV. OTHER
(a) No Right To An Award. Neither the adoption of the Plan nor any action
of the Board or of the Committee shall be deemed to give an employee or
a non-employee Director any right to be granted an Option, a Stock
Appreciation Right, a right to a Restricted Stock Award or a right to a
Performance Award or Stock Value Equivalent Award or any other rights
hereunder except as may be evidenced by an Award or by an Option or
Stock Appreciation Agreement duly executed on behalf of the Company,
and then only to the extent of and on the terms and conditions
expressly set forth therein. The Plan shall be unfunded. The Company
shall not be required to establish any special or separate fund or to
make any other segregation of funds or assets to assure the payment of
any Award.
(b) No Employment Rights Conferred. Nothing contained in the Plan or in
any Award made hereunder shall:
(i) confer upon any employee any right to continuation
of employment with the Company or any Subsidiary;
or
(ii) interfere in any way with the right of the Company
or any Subsidiary to terminate his or her
employment at any time.
(c) No Rights to Serve as a Director Conferred. Nothing contained in the
Plan or in any Award made hereunder shall confer upon any Director any
right to continue their position as a Director of the Company.
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(d) Other Laws; Withholding. The Company shall not be obligated to issue
any Common Stock pursuant to any Award granted under the Plan at any
time when the offering of the shares covered by such Award has not been
registered under the Securities Act of 1933 and such other state and
federal laws, rules or regulations as the Company or the Committee
deems applicable and, in the opinion of legal counsel for the Company,
there is no exemption from the registration requirements of such laws,
rules or regulations available for the issuance and sale of such
shares. No fractional shares of Common Stock shall be delivered, nor
shall any cash in lieu of fractional shares be paid. The Company shall
have the right to deduct in connection with all Awards any taxes
required by law to be withheld and to require any payments necessary to
enable it to satisfy its withholding obligations. The Committee may
permit the Holder of an Award to elect to surrender, or authorize the
Company to withhold, shares of Common Stock (valued at their Fair
Market Value on the date of surrender or withholding of such shares) in
satisfaction of the Company's withholding obligation, subject to such
restrictions as the Committee deems appropriate.
(e) No Restriction on Corporate Action. Nothing contained in the Plan shall
be construed to prevent the Company or any Subsidiary from taking any
corporate action which is deemed by the Company or such Subsidiary to
be appropriate or in its best interest, whether or not such action
would have an adverse effect on the Plan or any Award made under the
Plan. No Holder, beneficiary or other person shall have any claim
against the Company or any Subsidiary as a result of any such action.
(f) Restrictions on Transfer. Except as otherwise provided herein, an Award
shall not be sold, transferred, pledged, assigned or otherwise
alienated or hypothecated by a Holder other than by will or the laws of
descent and distribution or pursuant to a "qualified domestic relations
order" as defined by the Code or Title I of the Employee Retirement
Income Security Act of 1974, as amended, and shall be exercisable
during the lifetime of the Holder only by such Holder, the Holder's
guardian or legal representative, a transferee under a qualified
domestic relations order or a transferee as described below. The
Committee may prescribe and include in the respective Award Documents
hereunder other restrictions on transfer. Any attempted assignment or
transfer in violation of this section shall be null and void. Upon a
Holder's death, the Holder's personal representative or other person
entitled to succeed to the rights of the Holder (the "Successor
Holder") may exercise such rights as are provided under the applicable
Award Document. A Successor Holder must furnish proof satisfactory to
the Company of his or her rights to exercise the Award under the
Holder's will or under the applicable laws of descent and distribution.
Notwithstanding the foregoing, the Committee shall have the authority,
in its discretion, to grant (or to sanction by way of amendment to an
existing grant) Awards (other than Incentive Stock Options) which may
be transferred by the Holder for no consideration to or for the benefit
of the Holder's Immediate Family, to a trust solely for the benefit of
the Holder and his Immediate Family, or to a partnership or limited
liability company in which the Holder and members of his Immediate
Family have at least 99% of the equity, profit and loss interest, in
which case the Award Document shall so state. A transfer of an Award
pursuant to this Paragraph (f) shall be subject to such rules and
procedures as the Committee may establish. In the event an Award is
transferred as contemplated in this Paragraph (f), such Award may not
be subsequently transferred by the transferee except by will or the
laws of descent and distribution, and such Award shall continue to be
governed by and subject to the terms and limitations of the Plan and
the relevant written instrument for the Award and the transferee shall
be entitled to the same rights as the Holder under Articles XII and
XIII hereof as if no transfer had taken place. No transfer shall be
effective unless and until written notice of such transfer is provided
to the Committee, in the form and manner prescribed by the Committee.
The consequences of termination of employment shall continue to be
applied with respect to the original Holder, following which the Awards
shall be exercised by the transferee only to the extent and for the
periods specified in the Plan and the related Award Document.
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The Option Agreement, Stock Appreciation Rights Agreement, Restricted
Stock Agreement or other Award Document shall specify the effect of the
death of the Holder on the Award.
(g) Governing Law. This Plan shall be construed in accordance with the laws
of the State of Texas, except to the extent that it implicates matters
which are the subject of the General Corporation Law of the State of
Delaware which matters shall be governed by the latter law.
(h) Foreign Awardees. Without amending the Plan, the Committee may grant
Awards to eligible persons who are foreign nationals on such terms and
conditions different from those specified in the Plan as may, in the
judgment of the Committee, be necessary or desirable to foster and
promote achievement of the purposes of the Plan and, in furtherance of
such purposes, the Committee may make such modifications, amendments,
procedures, subplans and the like as may be necessary or advisable to
comply with the provisions of laws and regulations in other countries
or jurisdictions in which the Company or its Subsidiaries operate.
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