NATIONAL-OILWELL, INC. FORM 10-Q FILED NOVEMBER 12, 2002
 
                                                                   EXHIBIT 10.1
 
                             NATIONAL-OILWELL, INC.
                              AMENDED AND RESTATED
                    STOCK AWARD AND LONG-TERM INCENTIVE PLAN
 
        [REFLECTING THE FIRST, SECOND, AND THIRD AMENDMENTS TO THE PLAN]
 
                                  I.  PURPOSE
 
         The purpose of the National-Oilwell, Inc. (formerly NOW Holdings, Inc.)
Stock Award and Long-Term Incentive Plan (the "Plan") is to provide a means
whereby National-Oilwell, Inc. (formerly NOW Holdings, Inc.) a Delaware
corporation (the "Company"), and its Subsidiaries may attract able persons to
enter the employ of the Company in key positions and to provide a means whereby
those key employees upon whom the responsibilities of the successful
administration and management of the Company rest, and whose present and
potential contributions to the welfare of the Company are of importance, can
acquire and maintain stock ownership, thereby strengthening their concern for
the long-term welfare of the Company and their desire to remain in its employ. A
further purpose of the Plan is to provide such key employees with additional
incentive and reward opportunities designed to enhance the profitable growth of
the Company over the long term. Accordingly, the Plan provides for granting
Incentive Stock Options, options which do not constitute Incentive Stock
Options, Stock Appreciation Rights Restricted Stock Awards, Performance Share
Awards, Stock Value Equivalent Awards, or any combination of the foregoing, as
is best suited to the circumstances of the particular employee as provided
herein
 
                                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 Share Award or Stock
Value Equivalent Award.
 
         (b)      "BOARD" means the Board of Directors of National-Oilwell, Inc.
 
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         (c)      "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.
 
         (d)      "COMMITTEE" means the committee selected by the Board to
administer the Plan in accordance with Paragraph (a) of Article IV of the Plan.
 
         (e)      "COMMON STOCK" means the common stock, par value $0.01 per
share, of National-Oilwell, Inc.
 
         (f)      "COMPANY" means National-Oilwell, Inc.
 
         (g)      "FAIR MARKET VALUE" means the last reported sale price on the
New York Stock Exchange or such other national securities exchange (or the
Nasdaq National Market) which constitutes the principal trading market for the
Common Stock, on the relevant date or, if there were no trades on that date the
latest preceding date upon which a sale was reported.
 
         (h)      "FINAL STOCK AWARD" means an award granted under Article XII
of the Plan.
 
         (i)      "HOLDER" means an employee or consultant of the Company, a
Parent Corporation or a Subsidiary (or his guardian or legal representative)
who has been granted an Award.
 
         (j)      "INCENTIVE STOCK OPTION" means an option within the meaning of
section 422 of the Code to purchase Common Stock.
 
         (k)      "NONQUALIFIED OPTION" means an option to purchase Common Stock
which is not an Incentive Stock Option.
 
         (l)      "OPTION" means an Award granted under Article VII of the Plan
and includes both Incentive Stock Options and Nonqualified Options.
 
         (m)      "OPTION AGREEMENT" means a written agreement between the
Company and an employee with respect to an Option.
 
         (n)      "OPTIONEE" means a consultant or an employee who has been
granted an Option.
 
         (o)      "PARENT CORPORATION" shall have the meaning set forth in
section 424(e) of the Code.
 
         (p)      "PERFORMANCE SHARE AWARD" means an Award granted under
Article X of the Plan.
 
         (q)      "PLAN" means the National-Oilwell, Inc. Stock Award and
Long-Term Incentive Plan, as amended and restated.
 
         (r)      "RESTRICTED STOCK AWARD" means an Award granted under
Article IX of the Plan.
 
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         (s)      "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.
 
         (t)      "STOCK APPRECIATION RIGHT" means an Award granted under
Article VIII of the Plan.
 
         (u)      "STOCK APPRECIATION RIGHTS AGREEMENT" means a written
agreement between the Company and an employee with respect to an Award of
Stock Appreciation Rights.
 
         (v)      "STOCK VALUE EQUIVALENT AWARD" means an Award granted under
Article XI of the Plan.
 
         (w)      "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
or equity interests, directly or indirectly, 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.
 
                  III. EFFECTIVE DATE AND DURATION OF THE PLAN
 
         The Plan shall be effective upon the date of its adoption by the Board,
provided the Plan is approved by the stockholders of the Company within twelve
months thereafter. Notwithstanding any provision of the Plan or in any Option
Agreement or Stock Appreciation Rights Agreement, no Option or Stock
Appreciation Right shall be exercisable prior to such stockholder approval. No
further Awards may be granted under the Plan after ten years from the date the
Plan is adopted by the Board. 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 Share Awards and Stock Value Equivalent Awards have been satisfied.
 
                               IV. ADMINISTRATION
 
         (a)      COMPOSITION OF COMMITTEE. The Plan shall be administered and
interpreted by the Committee. The Committee shall consist of two or more
persons appointed by the Board, all of whom shall be "outside directors" as
defined under section 162(m) of the Code and related Treasury regulations.
 
         (b)      POWERS. The Committee shall have sole authority, in its
discretion, to determine which employees or consultants of the Company and its
Subsidiaries shall receive an Award, the time or times when such Award shall be
made and the duration of any applicable exercise or restriction period,
including the criteria for exercisability and the acceleration of
exercisability, 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 Share Award and Stock Value Equivalent
Award. In making such determinations the Committee may take into
 
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account the nature of the services rendered by the respective employees, 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 agreements 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 quality 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 agreement relating to an Award
in the manner and to the extent it shall deem expedient to carry it into
effect. The determinations of the Committee on the matters referred to in this
Article IV shall be final and binding for all purposes and upon all interested
persons and their heirs, successors and personal representatives.
 
           V. GRANT OF OPTIONS, STOCK APPRECIATION RIGHTS,
              RESTRICTED STOCK AWARDS, PERFORMANCE SHARE
              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 employees or consultants 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 10,282,606 shares. During the term of the Plan, the maximum
aggregate number of shares of Common Stock that shall be subject to Awards under
the Plan to any individual shall not exceed one-half of the aggregate limitation
for the Plan specified in the preceding sentence. Any of such shares which
remain unissued and which are not subject to outstanding 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 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 XIII with respect to shares of Common Stock subject to
Options then outstanding. 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 a Nonqualified
Option.
 
         (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 outstanding and, reacquired by the Company.
 
                                 VI. ELIGIBILITY
 
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         Awards made pursuant to the Plan may be granted only to individuals
who, at the time of grant, are key employees or directors of the Company or any
Parent Corporation or Subsidiary of the Company. Awards may not be granted to
any director of the Company who is not an employee of the Company or to any
member of the Committee provided, however, that effective August 28, 1996,
Awards, other than Incentive Stock Options, may be granted to directors who are
not employees of the Company. Awards, other than Incentive Stock Options, may
also be granted to consultants who are not employees of the Company. 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, a Nonqualified
Option, an Award of Stock Appreciation Rights, a Restricted Stock Award, a
Performance Share Award, a Stock Value Equivalent Award or any combination
thereof. Each Award shall be evidenced by a written instrument duly executed by
or on behalf of the Company.
 
                                  VII. OPTIONS
 
         (a)      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 or payment through a
broker in accordance with procedures permitted by Regulation T of the Federal
Reserve Board. Each Option Agreement shall provide that the Option may not be
exercised earlier than six months from the date of grant and shall specify the
effect of termination of employment on the exercisability of the Option.
 
         (b)      OPTION PERIOD.  The term of each Option shall be as
specified by the Committee at the date of grant provided, however, that the
term of any Incentive Stock Option shall not exceed ten 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)      SPECIAL LIMITATIONS ON INCENTIVE STOCK OPTIONS. To the extent
that the aggregate Fair Market Value (determined at the time the respective
Incentive Stock Option is granted) of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by an individual
during any calendar year under all incentive stock option plans of the Company
and its Parent Corporation and Subsidiaries exceeds $100,000, such excess
Incentive Stock Options shall be treated as Nonqualified Options. The Committee
shall determine, in accordance with applicable provisions of the Code, Treasury
Regulations and other administrative pronouncements, which of an Optionee's
Incentive Stock Option will not constitute Incentive Stock Options because of
such limitation and shall notify the Optionee of such determination as soon as
practicable after such determination. No Incentive Stock Option shall be
granted to an individual if, at the time the Option is granted, such individual
owns stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company or of its Parent Corporation or a Subsidiary,
within the meaning of section 422(b)(6) of the Code, unless (1) at the time
such Option is granted the option price is at least 110% of the Fair Market
Value of the Common Stock subject to the
 
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Option and (ii) such Option by its terms is not exercisable after the
expiration of five years from the date of grant.
 
         (e)      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.
 
         (f)      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, key 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.
 
                        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 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 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 Stock Appreciation Right. Each Stock
Appreciation Rights Agreement shall provide that the Stock Appreciation Rights
may not be exercised earlier than six months from the date of grant and shall
specify the effect of termination of employment on the exercisability of the
Stock Appreciation Rights.
 
         (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.
 
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         (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.
 
                          IX. RESTRICTED STOCK AWARDS
 
         (a)      RESTRICTION 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. Each Restricted
Stock Award may have a different Restriction Period, as determined 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.
 
         (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 (subject to the terms
of any Restricted Stock Agreement), to vote the Common Stock subject thereto
and to enjoy all other stockholder rights (subject to the terms of any
Restricted Stock Agreement), except that unless otherwise specified in the
Restricted Stock Agreement (i) the Holder shall not be entitled to possession
of the stock certificate until the Restriction Period shall have expired, (ii)
at the discretion of the Company, 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 discretion, prescribe additional terms, conditions or restrictions
relating to Restricted Stock Awards, including, but not limited to, rules
pertaining to the termination of employment (by retirement, disability, death
or otherwise) of a Holder prior to expiration of the Restriction Period.
 
         (c)      PAYMENT FOR RESTRICTED STOCK. A Holder shall be required to
make such payment for Common Stock received pursuant to a Restricted Stock
Award as may be required by law or as the Committee may, in its discretion,
determine to charge 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 SHARE AWARDS
 
         (a)      PERFORMANCE PERIOD. The Committee shall establish, with
respect to and at the time of each Performance Share Award, a performance
period over which the performance applicable to the Performance Share Award of
the Holder shall be measured.
 
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         (b)      PERFORMANCE SHARE AWARDS. Each Performance Share Award may
have a maximum value established by the Committee at the time of such Award.
 
         (c)      PERFORMANCE MEASURES. A Performance Share Award may be
awarded to an employee contingent upon future performance of the employee, the
Company or any Subsidiary, division or department thereof by in which he is
employed during the performance period, the Fair Market Value of Common Stock or
the increase thereof during the performance period, combinations thereof, or
such other provisions as the Committee may determine to be appropriate. The
Committee shall establish the performance measures applicable to such
performance prior to the beginning of the performance period but subject to such
later revisions as the Committee shall deem appropriate to reflect significant,
unforeseen events or changes.
 
         (d)      AWARDS CRITERIA. In determining the value of Performance Share
Awards, the Committee may take into account an employee's responsibility level,
performance, potential, other Awards and such other considerations as it deems
appropriate.
 
         (e)      PAYMENT. Following the end of the performance period, the
Holder of a Performance Share Award shall be entitled to receive payment of an
amount, not exceeding the maximum value of the Performance Share 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 Share 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 Common Stock on the payment date. If a 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.
 
         (f)      TERMINATION OF EMPLOYMENT. The Committee shall determine the
effect of termination of employment during the performance period on an
employee's Performance Share 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.
 
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         (c)      AWARDS CRITERIA. In determining the value of Stock Value
Equivalent Awards, the Committee may take into account an employee's
responsibility level, performance, potential, other Awards and such other
considerations as it deems appropriate.
 
         (d)      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.
 
         (e)      TERMINATION OF EMPLOYMENT. The Committee shall determine the
effect of termination of employment during the applicable vesting period on an
employee's Stock Value Equivalent Award.
 
                            XII. FINAL STOCK AWARDS
 
         (a)      NATURE OF FINAL STOCK AWARDS. Final Stock Awards constitute
the issuance as of January 17, 2001 to certain Holders of Restricted Stock
Awards of one or more shares of Common Stock free and clear of any and all
forfeiture restrictions or other encumbrances.
 
         (b)      AUTOMATIC GRANT OF FINAL STOCK AWARDS. As of January 17, 2001,
there shall be granted Final Stock Awards for a number of shares of Common Stock
equal to the difference as of January 17, 2001 between 941,303 shares of Common
Stock and the number of shares of Common Stock issued pursuant to Restricted
Stock Awards granted under the Plan which have not been forfeited to the
Company. Such shares of Common Stock shall be allocated to those individuals who
(i) are employed by the Company or a Parent Corporation or a Subsidiary of the
Company as of January 17, 2001 and (ii) who at any time were Holders of
Restricted Stock Awards. An individual entitled to an allocation of a Final
Stock Award pursuant to the preceding sentence shall receive a Final Stock Award
for a number of shares of Common Stock equal to the total number of shares of
Common Stock as to which Final Stock Awards are then being granted multiplied by
a fraction, the numerator of which is the number of shares of Common Stock
theretofore issued to him pursuant to his Restricted Stock Awards as to which
forfeiture restrictions have lapsed and the denominator of which is the total
number of shares of Common Stock theretofore issued pursuant to Restricted Stock
Awards as to which forfeiture restrictions have lapsed to all individuals
entitled to allocations of Final Stock Awards pursuant to the preceding
sentence.
 
                    XIII. RECAPITALIZATION OR REORGANIZATION
 
         (a)      Except as hereinafter otherwise provided, Options, Stock
Appreciation Rights, Restricted Stock Awards, Performance Share Awards, Stock
Value Equivalent Awards and any agreements evidencing such Awards shall be
subject to adjustment by the Committee at its
 
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discretion as to the number and price of shares of Common Stock or other
consideration subject to such Awards in the event of changes in the
outstanding, Common Stock by reason of dividends payable in stock of the
Company, stock splits, recapitalization, reorganizations, mergers,
consolidations, combinations, exchanges or other relevant changes in
capitalization occurring after the date of the grant of any such Option or
Awards.
 
         (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.
 
         (c)      The shares with respect to which Awards may be granted are
shares of Common Stock as presently constituted, but if, and whenever, prior to
the expiration of an Option theretofore granted, the Company shall effect a
subdivision or consolidation of shares of Common Stock or the payment of a
stock dividend on Common Stock payable in stock of the Company, without receipt
of consideration by the Company, the number of shares of Common Stock with
respect to which such Award may thereafter pertain (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, an Award theretofore granted shall be adjusted to reflect such
recapitalization to the extent appropriate as determined by the Committee.
 
                   XIV. 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:
 
(a) to increase the aggregate number of shares of Common Stock which may be
issued under the Plan, except as provided in Article XIII;
 
(b) to change the class of employees eligible to receive Incentive Stock
Options under the Plan; or
 
(c) to modify materially the requirements as to eligibility for participation
in the Plan if such approval is required by section 162(m) of the Code.
 
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                                   XV. 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 any
right to be granted an Option, a Stock Appreciation Right, a Restricted Stock
Award or a Performance Share Award or Stock Value Equivalent Award, Final Stock
Award or any other rights hereunder except as may be evidenced by an Option
Agreement, Stock Appreciation Rights Agreement Restricted Stock Agreement or
other instrument evidencing an Award duly executed on behalf of the Company, and
then only to the extent 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
with respect 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)      OTHER LAW; 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.
 
         (d)      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 employee,
beneficiary or other person shall have any claim against the Company or any
Subsidiary as a result of any such action.
 
         (e)      RESTRICTIONS ON TRANSFER. An Award shall not be transferable
otherwise than by will or the laws of descent and distribution and shall be
exercisable during the lifetime of the Holder only by such Holder or the
Holder's guardian or legal representative. The Option Agreement, Stock
Appreciation Rights Agreement, Restricted Stock Agreement or other written
instrument evidencing an Award shall specify the effect of the death of the
Holder on the Award.
 
         (f)      SEVERABILITY. If any provision of this Plan or an Award shall
be held illegal or invalid for any reason, said illegality or invalidity shall
not affect the remaining provisions thereof,
 
                                       30
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         instead, each provision of the Plan or an Award shall be fully
severable and shall be construed and enforced as if said illegal or invalid
provision had never been included therein.
 
         (g)      LIMITATION ON ACTIONS. Every right of action by or on behalf
of the Company or by any stockholder against any past, present, or future
member of the Board, the Committee, or any officer or employee of the Company
arising out of or in connection with this Plan shall, regardless of the place
where the action may be brought and regardless of the place of residence of any
such director, Committee member, officer or employee, cease and be barred by
the expiration of three years from the later of: (i) the date of the act or
omission in respect of which such right of action arises or (ii) the first date
upon which there has been made generally available to stockholders an annual
report of the Company and a proxy statement for the annual meeting of
stockholders following the issuance of such annual report, which annual report
and proxy statement alone or together set forth for the related period, the
amount of the allocations. In addition, any and all right of action by any
employee (past, present or future) against the Company or any member of the
Committee arising out of or in connection with this Plan will, regardless of
the place where action may be brought and regardless of the place of residence
of any Committee member, cease and be barred by the expiration of three years
from the date of the act or omission in respect of which such right of action
arises.
 
         (h)      GOVERNING LAW. This Plan shall be governed by, and construed
in accordance with, the internal laws of the State of Texas without regard to
the principles of conflicts of law thereof that would require the application
of the laws of any jurisdiction other than 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.
 
         Executed as of the 15th day of May, 2002 to reflect the Third
Amendment to that Plan document which was theretofore adopted by and executed
on behalf of the Company.