Exhibit 10.4
ABRAXAS PETROLEUM CORPORATION
1994 LONG TERM INCENTIVE PLAN
(as amended through June 5, 2001)
Abraxas Petroleum Corporation (the "Company") hereby establishes the Plan
for key employees of, and consultants to, the Company and its Affiliates as
follows:
I. Purpose
The purpose of the Plan is to aid the Company and its Affiliates in
employing and retaining qualified and competent personnel and to encourage
significant contributions by such personnel to the success of the Company and
its Affiliates. It is believed that this purpose will be furthered through the
granting to key employees and consultants of Awards, as authorized under the
Plan, so that such employees and consultants will be encouraged and enabled to
acquire a substantial personal interest in the continued success of the Company
and its Affiliates.
This Plan shall be effective January 1, 1994, subject to approval by the
Company's stockholders at the 1994 Annual Meeting of Stockholders to be held May
19, 1994, and shall terminate on December 31, 2003, except with respect to any
Award then outstanding.
2. Definitions
"Administrative Guidelines" means the interpretative guidelines approved by
the Committee providing the foundation for administration of the Plan.
"Affiliate" means any subsidiary corporation (as defined in Section 424 of
the Code) of the Company.
"Award" means an Award described in Section 4 of this Plan.
"Award Agreement" means an agreement entered into between the Company and a
Participant, setting forth the terms and conditions applicable to the Award
granted to the Participant.
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986 and the regulations
thereunder, as amended from time to time.
"Committee" means the Compensation Committee of the Board, the requisite
number of members of which shall qualify as "disinterested persons" within the
meaning of Rule 16b-3 under the Exchange Act or any successor provision.
"Common Stock" means the common stock of the Company, par value $.01 per
share, and shall include both treasury shares and authorized but unissued shares
and shall also include any security of the Company issued in substitution, in
exchange for, or in lieu of the Common Stock.
"Exchange Act" means the Securities Exchange Act of 1934 and the
regulations thereunder, as amended from time to time.
"Fair Market Value" means the average of the high and low sale prices of a
share of Common Stock, or other security for which Fair Market Value is being
determined, as quoted on the NASDAQ Stock Market (or such other reporting system
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as shall be selected by the Committee) on the relevant date, or if no sale of
Common Stock or such other security is reported for such date, the first
preceding day for which there is a reported sale. The Committee shall determine
the Fair Market Value of any security that is not publicly traded, using such
criteria as it shall determine, in its sole discretion, to be appropriate for
the purposes of such valuation.
"Participant" means an individual who has been granted an Award pursuant to
this Plan.
"Plan" means this Abraxas Petroleum Corporation 1994 Long Term Incentive
Plan, as set forth herein and as it may be amended from time to time.
"Plan Year" means the calendar year.
3. Eligibility
Key employees (including officers and employee directors) of, and
consultants to, the Company and its Affiliates shall be eligible to participate
in this Plan. An Award may not be granted to a member of the Board who is not
also an employee of the Company or an Affiliate.
4. Awards
An Award is the right to receive compensation, payable in cash, Common
Stock or other securities of the Company or an Affiliate, or any combination
thereof, determined in accordance with the Administrative Guidelines. All Awards
made pursuant to this Plan are in consideration of services performed or to be
performed for the Company or its Affiliates. The Committee may establish minimum
performance targets with respect to each Award. Performance targets may be based
on financial criteria, such as the Fair Market Value of Common Stock or other
objective measures of financial performance of the Company, or may be based on
the performance of a division, subsidiary or Affiliate of the Company, or the
performance of an individual Participant. Notwithstanding anything in this Plan
to the contrary, any Awards of stock options or similar rights, stock
appreciation rights, performance units, or performance shares shall contain the
restrictions on assignability in Section 6(a) of this Plan to the extent
required under Rule 16b-3 of the Exchange Act. The following types of Awards may
be granted under this Plan, singly or in combination or in tandem with other
Awards, as the Committee may determine:
(a) Non-Qualified Stock Options. A non-qualified stock option is a right to
purchase, during such period of time as the Committee may determine, a
specified number of shares of Common Stock or other security, which does
not qualify as an incentive stock option under Section 422 of the Code, at
a fixed option price equal to no less than 100 percent of the Fair Market
Value of the Common Stock or other security on the date the Award is
granted. A non-qualified stock option shall be designated as such in the
Award Agreement and on the Company's books and records.
The option price may be payable in the following form(s) as determined in
accordance with the Administrative Guidelines:
(i) in U.S. dollars by personal check, bank draft or money order payable
to the order of the Company, wire transfer, or direct account debit;
(ii)through the delivery or assignment of the ownership of shares of Common
Stock or other securities of the Company with a Fair Market Value
equal to all or a portion of the option price for the total number of
options being exercised; or
(iii)by a combination of the methods described in clauses (i) and (ii)
above.
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(b) Incentive Stock Options. An incentive stock option is a right to
purchase, during such period of time as the Committee may determine, a
specified number of shares of Common Stock, that shall comply with the
requirements of Section 422 of the Code or any successor section, at a
fixed option price equal to no less than 100 percent of the Fair Market
Value of the Common Stock on the date the Award is granted; provided,
however, if the optionee owns stock possessing more than ten (10%) of
the total combined voting power of all classes of stock of the Company
or any of its Affiliates, the option price shall not be less than
one-hundred ten percent (110%) of the Fair Market Value of the Common
Stock on the date the Award is granted. The aggregate Fair Market Value
(determined at the time of grant of the Award) of the shares with
respect to which incentive stock options are exercisable for the first
time by an optionee during a calendar year shall not exceed $100,000
(or such other limit as may be required by the Code) based on the Fair
Market Value of the stock on the date that the incentive stock option
is granted. An incentive stock option shall not be exercisable after
the expiration of ten (10) years from the date such Award is granted;
provided, however, if the optionee owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of
stock of the Company or any of its Affiliates, any incentive stock
option granted to such optionee shall not be exercisable after the
expiration of five (5) years from the date such Award is granted. The
Committee may provide that the option price under an incentive stock
option may be paid by one or more of the methods described in Sections
4(a)(i), (ii) and (iii) above.
(c) Stock Appreciation Rights. A stock appreciation right is a right to
receive, without payment, an amount not in excess of (i) the Fair
Market Value on the exercise date of the number of shares of Common
Stock for which the stock appreciation right is exercised less (ii) the
exercise price of such stock appreciation right, which price shall
equal the Fair Market Value of such shares on the date the stock
appreciation right was granted (or, in the case of an option with a
tandem stock appreciation right, the option price that the optionee
would otherwise have been required to pay for such shares). The right
to receive such amount shall be conditioned upon the surrender of the
stock appreciation right (or of both the option and the stock
appreciation right in the case of a tandem stock appreciation right, or
a portion of either). Stock appreciation rights shall be payable in
Common Stock, cash or a combination thereof.
(d) Restricted Stock. Restricted Stock is Common Stock or other
security of the Company or an Affiliate that is subject to restrictions
on transfer and such other restrictions on the incidents of ownerships
as the Committee may determine. Restricted Stock Awards may be made
without cash payment by, or other out of pocket consideration from, the
Participant, either on the date of grant or the date the restriction(s)
lapse or are removed. Restricted Stock Awards shall be designated as
such in the Award Agreement and on the Company's books and records.
(e) Performance Units. A performance unit is a promise by the Company
to make a payment to the Participant, which may be contingent upon the
achievement of one or more performance targets specified by the
Committee. A performance unit is a right to receive an amount that may
be determined by reference to Common Stock, other securities of the
Company or an Affiliate, or by reference to dollar amounts. Performance
units shall be subject to such conditions with respect to vesting,
timing, and amount of payments as the Committee shall determine.
Performance units shall be payable in cash. Performance unit Awards may
be made without cash payment by, or other out of pocket consideration
from, the Participant, either on the date of grant or the date of
payment.
(f) Performance Shares. A performance share is a promise by the Company
to make a payment to the Participant, which may be contingent upon the
achievement of one or more performance targets specified by the
Committee. A performance share is a right to receive an amount that may
be determined by reference to Common Stock, other securities of the
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Company or an Affiliate, or by reference to dollar amounts. Performance
shares shall be subject to such conditions with respect to vesting,
timing, and amount of payments as the Committee shall determine.
Performance shares shall be payable in Common Stock or other securities
of the Company or any Affiliate. Performance share Awards may be made
without cash payment by, or other out of pocket consideration from, the
Participant, either on the date of grant or the date of payment.
Performance Share Awards shall be designated as such in the Award
Agreement and on the Company's books and records.
(g) Dividend Equivalents. A dividend equivalent is the right to receive
an amount equal to the dividends paid on a specified number of shares
of Common Stock. A dividend equivalent shall be payable in cash.
(h) Other Awards. The Committee may, from time to time, grant such
other Awards as the Committee may determine, provided that no such
Award shall be inconsistent with the terms of this Plan.
5. Number of Shares
Not more than 5,000,000 shares of Common Stock may be issued with respect
to all Awards granted under this Plan, subject to the adjustment provisions set
forth in Section 10 hereof. Upon the expiration or termination of an Award, for
any reason, the shares shall again be available for grant under the Plan. No
Awards under this Plan shall be granted after December 31, 2003, pursuant to
Section 1 hereof. Awards that are granted or paid in some manner other than by
the issuance of Common Stock shall not be counted in determining the number of
shares issued under this Plan.
6. Award Agreements
Each Award under this Plan shall be evidenced by an Award Agreement setting
forth the terms and conditions, as determined by Administrative Guidelines,
applicable to the Award. Award Agreements may include:
(a) Non-Assignability. A provision that no Award shall be
assignable or transferable except by will or by the laws of descent and
distribution and that during the lifetime of a Participant, the Award
shall be exercised only by such Participant or by his guardian or legal
representative. Incentive Stock Option Awards shall include a
non-assignability provision as provided in this Section 6(a).
(b) Termination of Employment. Provisions governing the
disposition of an Award in the event of the retirement, disability,
death, or other termination of a Participant's employment or
relationship to the Company or an Affiliate.
(c) Rights as a Stockholder. A provision concerning what
rights, if any, a Participant shall have as a stockholder with respect
to any shares of Common Stock covered by an Award until the date the
Participant or his nominee becomes the holder of record. Except as
provided in Section 10 hereof, no adjustment shall be made for
dividends or other rights for which the record date is prior to such
date, unless the Award Agreement specifically requires such adjustment.
(d) Withholding. A provision requiring the withholding of all
taxes as required by law. In the case of payments of Awards in shares
of Common Stock or other securities, withholding shall be as required
by law and in the Administrative Guidelines.
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(e) Miscellaneous. Such other terms and conditions including,
without limitation, the criteria for determining vesting of Awards, the
amount or value of Awards, termination of Awards for cause, the
exercise of Awards pursuant to a brokerage or similar arrangement or
adjustments for nonrecurring or extraordinary items, as are necessary
and appropriate to effect the purposes of the Plan.
7. Change in Control
Award Agreements may include, as set forth in the Administrative
Guidelines, that any or all of the following actions may occur as a result of,
or in anticipation of, any Change in Control to assure fair and equitable
treatment of Participants:
(a) acceleration of time periods for purposes of vesting in,
or realizing gain from, any outstanding Award made pursuant to this
Plan;
(b) purchase of any outstanding Award made pursuant to this
Plan from the holder of its equivalent cash value, as determined by the
Committee, as of the effective date of the Change in Control; and
(c) adjustments or modifications to outstanding Awards as the
Committee deems appropriate to maintain and protect the rights and
interests of Participants.
For purposes of this Section, a "Change in Control" shall mean the
occurrence of any of the following events:
(i) a third person, including a "group" as determined in
accordance with Section 13(d)(3) of the Exchange Act, becomes the
beneficial owner (as determined pursuant to Section 13(d)(3) of the
Exchange Act) of Common Stock having thirty percent (30%) or more of
the total number of votes that may be cast for the election of members
of the Board;
(ii) all or substantially all of the assets and business of
the Company are sold, transferred or assigned to, or otherwise acquired
by, any other entity or entities; or
(iii) as a result of, or in connection with, any cash tender
or exchange offer, merger or other business combination, sale of assets
or contested election, or any combination of the foregoing transactions
(each a "Transaction"), the persons who are members of the Board before
the Transaction shall cease to constitute a majority of the Board of
the Company or any successor to the Company after the Transaction.
Notwithstanding the foregoing, in no event shall the distribution by
the Company to its stockholders of stock in a subsidiary be deemed a Change in
Control.
8. Amendment and Termination
Although the Committee may at any time amend, suspend, or discontinue
the Plan or alter or amend any or all Award Agreements under the Plan to the
extent permitted by law, no amendment, suspension, or termination of the Plan
shall, without the consent of the Participant, adversely alter or change any of
the rights or obligations under any Awards or other rights previously granted
the Participant under the Plan. However, no such action by the Committee may,
without approval of the Board and the Company's stockholders if such approval is
required by law, Rule 16b-3 of the Exchange Act or any successor provisions, or
the rules of any stock exchange on which the Common Stock or any other security
of the Company or its Affiliates are listed, alter the provisions of the Plan so
as to:
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(a) increase the maximum number of shares of Common Stock (or
other securities) that may be subject to Awards granted under the Plan;
(b) change the class of individuals eligible to receive Awards
under the Plan;
(c) permit any member of the Committee to be eligible to
receive or hold an Award under the Plan;
(d) materially increase the benefits accruing to Participants
under the Plan; or
(e) effect any other amendment to the Plan, or to an existing
Award under the Plan, that would require the approval of the Company's
stockholders in accordance with Rule 16b-3 under the Exchange Act or
any successor provision or under the rules of any stock exchange on
which the Common Stock or any other securities of the Company or its
Affiliates are listed or quoted.
9. Administration
(a) The Plan and all Awards granted pursuant thereto shall be
administered by the Committee. The Committee shall periodically make
determinations with respect to eligible individuals who shall participate in the
Plan and receive Awards pursuant thereto. All questions of interpretation and
administration with respect to the Plan and Award Agreements shall be determined
by the Committee in its absolute discretion and its determination shall be final
and conclusive upon all parties in interest.
(b) The Committee may authorize persons other than its members to carry
out its policies and directives, including the authority to grant Awards,
subject to the limitations and guidelines set by the Committee, except that: (i)
the authority to grant or administer Awards with respect to persons who are
subject to Section 16 of the Exchange Act, shall not be delegated by the
Committee; and (ii) any such delegation shall satisfy any other applicable
requirements of Rule 16b-3 of the Exchange Act, or any successor provision. Any
person to whom such authority is granted shall continue to be eligible to
receive Awards under the Plan, provided that such Awards are granted directly by
the Committee without delegation.
10. Adjustment Provisions
If the outstanding shares of Common Stock shall be changed into or
exchanged for a different number or kind of shares of stock or other securities
or property of the Company or of another corporation (whether by reason of
merger, consolidation, recapitalization, reclassification, split up, combination
of shares or otherwise), or if the number of such shares of Common Stock shall
be increased by a stock dividend or stock split, there shall be substituted for
or added to each share of Common Stock theretofore reserved for the purposes of
the Plan, whether or not such shares are at the time subject to outstanding
Awards, the number and kind of shares of stock or other securities or property
into which each outstanding share of Common Stock shall be so changed or for
which it shall be so exchanged, or to which each such share shall be entitled,
as the case may be. Outstanding Awards shall also be considered to be
appropriately amended as to price and other terms as may be necessary or
appropriate to reflect the foregoing events. If there shall be any other change
in the number or kind of the outstanding shares of Common Stock, or of any stock
or other securities or property into which such Common Stock shall have been
changed, or for which it shall have been exchanged, and if the Board shall in
its sole discretion determine that such change equitably requires an adjustment
in the number or kind or price of the shares then reserved for the purposes of
the Plan, or in any Award theretofore granted or which may be granted under the
Plan, then such adjustment shall be made by the Board and shall be effective and
binding for all purposes of the Plan. In making any such substitution or
adjustment pursuant to this Section 10, fractional shares may be ignored.
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The Board shall have the power, in the event of any merger or
consolidation of the Company with or into any other corporation, or the merger
or consolidation of any other corporation with or into the Company, to amend all
outstanding Awards to permit the exercise thereof in whole or in part at
anytime, or from time to time, prior to the effective date of any such merger or
consolidation (but not more than ten (10) years after the date of grant of any
incentive stock option) and to terminate each such Award as of such effective
date.
11. Unfunded Plan
The adoption of the Plan and any setting aside of amounts by the
Company with which to discharge its obligations hereunder shall not be deemed to
create a trust. The benefits provided under this Plan shall be a general,
unsecured obligation of the Company payable solely from the general assets of
the Company, and neither a Participant nor the Participant's beneficiaries or
estate shall have any interest in any assets of the Company by virtue of this
Plan. Nothing in this Section 11 shall be construed to prevent the Company from
implementing or setting aside funds in a grantor trust subject to the claims of
the Company's creditors. Legal and equitable title to any funds set aside, other
than any grantor trust subject to the claims of the Company's creditors, shall
remain in the Company and any funds so set aside shall remain subject to the
general creditors of the Company, present and future. Any liability of the
Company to any Participant with respect to an Award shall be based solely upon
contractual obligations created by this Plan, the Administrative Guidelines, and
the Award Agreements.
12. Right of Discharge Reserved
Nothing in this Plan or in any Award shall confer upon any employee or
other individual the right to continue in the employment or service of the
Company or any Affiliate or affect any right that the Company or any Affiliate
may have to terminate the employment or service of any such employee or other
individual at any time for any reason.
13. Governing Law
This Plan shall be governed by, construed and enforced in accordance
with the laws of the State of Texas applicable to transactions that take place
entirely within the State of Texas, and, where applicable, the laws of the
United States.
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