EXHIBIT 10.48
ST. MARY LAND & EXPLORATION COMPANY
INCENTIVE STOCK OPTION PLAN
ARTICLE I
ESTABLISHMENT AND PURPOSE
1.1 Establishment. St. Mary Land & Exploration Company, a Delaware
corporation (the "Company"), hereby establishes a stock option plan for key
employees providing material services to the Company or a subsidiary of the
Company as described herein, which shall be known as the "ST. MARY LAND &
EXPLORATION COMPANY INCENTIVE STOCK OPTION PLAN" (the "Plan"). It is intended
that the options issued to employees pursuant to the Plan constitute incentive
stock options within the meaning of Section 422 of the Internal Revenue Code.
The Company shall enter into stock option agreements with recipients of options
pursuant to the Plan.
1.2 Purpose. The purpose of the Plan is to enhance shareholder value by
attracting, retaining and motivating key employees of the Company and of a
subsidiary of the Company by providing them with a means to acquire a
proprietary interest in the Company's success.
ARTICLE II
DEFINITIONS
2.1 Definitions. Whenever used herein, the following terms shall have the
respective meanings set forth below, unless the context clearly requires
otherwise, and when such meaning is intended, the term shall be capitalized.
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Committee" shall mean the Committee provided for by Article IV
hereof, which may be created at the discretion of the Board.
(d) "Company" means St. Mary Land & Exploration Company, a Delaware
corporation.
(e) "Date of Exercise" means the date the Company receives notice, by
an Optionee, of the exercise of an Option pursuant to Section 8.1 of the
Plan. Such notice shall indicate the number of shares of Stock the Optionee
intends to acquire pursuant to exercise of the Option.
-1B-
(f) "Employee" means any person, including an officer or director of
the Company or a Subsidiary Corporation, who is employed by the Company or
a Subsidiary Corporation.
(g) "Fair Market Value" means the fair market value of Stock upon
which an option is granted under the Plan, determined as follows:
(i) If the Stock is listed on a national securities exchange or
admitted to unlisted trading privileges on such exchange, the Fair
Market Value shall be the last reported sale price of the Stock on the
composite tape of such exchange on the date of issuance of this
option, or if such day is not a normal trading day, the last trading
day prior to the date of issuance of this option, and if no such sale
is made on such day, the Fair Market Value shall be the average
closing bid and asked prices for such day on the composite tape of
such exchange; or
(ii) If the Stock is not so listed or admitted to unlisted
trading privileges, the Fair Market Value shall be the mean of the
last reported bid and asked prices reported by the National
Association of Securities Dealers Quotation System (or, if not so
quoted on NASDAQ, by the National Quotation Bureau, Inc.) on the last
trading day prior to the date of issuance of the option.
(h) "Incentive Stock Option" means an Option granted under the Plan
which is intended to qualify as an "incentive stock option" within the
meaning of Section 422 of the Code.
(i) "Option" means the right, granted under the Plan, to purchase
Stock of the Company at the option price for a specified period of time.
(j) "Optionee" means an Employee holding an Option under the Plan.
(k) "Parent Corporation" shall have the meaning set forth in
Section 424(e) of the Code with the Company being treated as the employer
corporation for purposes of this definition.
(l) "Subsidiary Corporation" shall have the meaning set forth in
Section 424(f) of the Code with the Company being treated as the employer
corporation for purposes of this definition.
(m) "Significant Shareholder" means an individual who, within the
meaning of Section 422(b)(6) of the Code, owns stock possessing more than
ten percent of the total combined voting power of all classes of stock of
the Company or of any Parent Corporation or Subsidiary Corporation of the
Company. In determining whether an individual is a Significant Shareholder,
an individual shall be treated as owning stock owned by certain relatives
of the individual and certain stock owned by corporations in which the
individual is a shareholder, partnerships in which the individual is a
partner, and estates or trusts of which the individual is a beneficiary,
all as provided in Section 424(d) of the Code.
-2B-
(n) "Stock" means the $.01 par value common stock of the Company.
2.2 Gender and Number. Except when otherwise indicated by the context, any
masculine terminology when used in the Plan also shall include the feminine
gender, and the definition of any term herein in the singular also shall include
the plural.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
All Employees are eligible to participate in the Plan and receive Incentive
Stock Options under the Plan. Optionees in the Plan shall be selected by the
Board, in its sole discretion, from among those Employees who, in the opinion of
the Board, are in a position to contribute materially to the Company's continued
growth and development and to its long-term financial success.
ARTICLE IV
ADMINISTRATION
The Board shall be responsible for administering the Plan.
(a) The Board is authorized to interpret the Plan; to prescribe,
amend, and rescind rules and regulations relating to the Plan; to provide
for conditions and assurances deemed necessary or advisable to protect the
interests of the Company; and to make all other determinations necessary or
advisable for the administration of the Plan. Determinations,
interpretations, or other actions made or taken by the Board with respect
to the Plan and Options granted under the Plan shall be final and binding
and conclusive for all purposes and upon all persons.
(b) At the discretion of the Board the Plan may be administered by a
Committee of two or more non-employee Directors appointed by the Board (the
"Committee"). The Committee shall have full power and authority, subject to
the limitations of the Plan and any limitations imposed by the Board, to
construe, interpret and administer the Plan and to make determinations
which shall be final, conclusive and binding upon all persons, including
any persons having any interests in any Options which may be granted under
the Plan, and, by resolution or resolutions to provide for the creation and
issuance of any Option, to fix the terms upon which, the time or times at
or within which, and the price or prices at which any shares of Stock may
be purchased from the Company upon the exercise of an Option. Such terms,
time or times and price or prices shall, in every case, be set forth or
incorporated by reference in the instrument or instruments evidencing an
Option, and shall be consistent with the provisions of the Plan.
-3B-
(c) Where a Committee has been created by the Board pursuant to this
Article IV, references in the Plan to actions to be taken by the Board
shall be deemed to refer to the Committee as well, except where limited by
the Plan or by the Board.
(d) No member of the Board or the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any
Option granted under it.
ARTICLE V
STOCK SUBJECT TO THE PLAN
5.1 Number. The total number of shares of Stock hereby made available and
reserved for issuance under the Plan upon exercise of Options shall be 700,000
shares. Notwithstanding anything to the contrary contained in the foregoing, to
the extent that options are issued under any other current Stock Option Plan
adopted by the Company, the shares of Stock reserved for issuance pursuant to
Options granted under the Plan shall be reduced. The aggregate number of shares
of Stock available under the Plan shall be subject to adjustment as provided in
Section 5.3.
5.2 Unused Stock. If an Option shall expire or terminate for any reason
without having been exercised in full, the unpurchased shares of Stock subject
thereto shall (unless the Plan shall have terminated) become available for other
Options under the Plan.
5.3 Adjustment in Capitalization. In the event of any change in the
outstanding shares of Stock by reason of a stock dividend or split,
recapitalization, reclassification, or other similar capital change, the
aggregate number of shares of Stock set forth in Section 5.1 shall be
appropriately adjusted by the Board, whose determination shall be conclusive. In
any such case, the number and kind of shares of Stock that are subject to any
Option and the Option price per share shall be proportionately and appropriately
adjusted without any change in the aggregate Option price to be paid therefor
upon exercise of the Option.
ARTICLE VI
DURATION OF THE PLAN
Subject to approval of shareholders, the Plan shall be in effect for ten
years from the date of its adoption by the Board. Any Options outstanding at the
end of such period shall remain in effect in accordance with their terms. The
Plan shall terminate before the end of such period if all Stock subject to it
has been purchased pursuant to the exercise of Options granted under the Plan.
ARTICLE VII
TERMS OF STOCK OPTIONS
7.1 Grant of Options. Subject to Section 5.1, Options may be granted to
Employees at any time and from time to time as determined by the Board. The
Board shall have complete discretion in determining the terms and conditions and
number of Options granted to each Optionee. In making such determinations, the
Board may take into account the nature of services rendered by such Employees,
their present and potential contributions to the Company and its Subsidiary
Corporations, and such other factors as the Board in its discretion shall deem
relevant.
-4B-
(a) The total Fair Market Value (determined at the date of grant) of
shares of Stock with respect to which incentive stock options granted are
exercisable for the first time by the Optionee during any calendar year
under all plans of the Company under which incentive stock options may be
granted (and all such plans of any Parent Corporations and any Subsidiary
Corporations of the Company) shall not exceed $100,000. Hereinafter, this
requirement is sometimes referred to as the "$100,000 Limitation".
(b) The Board is expressly given the authority to issue amended or
replacement Options with respect to shares of Stock subject to an Option
previously granted hereunder. An amended Option amends the terms of an
Option previously granted and thereby supersedes the previous Option. A
replacement Option is similar to a new Option granted hereunder except that
it provides that it shall be forfeited to the extent that a previously
granted Option is exercised, or except that its issuance is conditioned
upon the termination of a previously granted Option.
7.2 No Tandem Options. Where an Option granted under the Plan is intended
to be an Incentive Stock Option, the Option shall not contain terms pursuant to
which the exercise of the Option would affect the Optionee's right to exercise
another Option, or vice versa, such that the Option intended to be an Incentive
Stock Option would be deemed a tandem stock option within the meaning of the
regulations under Section 422 of the Code.
7.3 Option Agreement; Terms and Conditions to Apply Unless Otherwise
Specified. As determined by the Board on the date of grant, each Option shall be
evidenced by an Option agreement (the "Option Agreement") that includes the
non-transferability provisions required by Section 10.2 hereof and that
specifies: the Option price; the duration of the Option; the number of shares of
Stock to which the Option applies; such vesting or exercisability restrictions
which the Board may impose; a provision implementing the $100,000 Limitation;
and any other terms or conditions which the Board may impose. All such terms and
conditions shall be determined by the Board at the time of grant of the Option.
(a) If not otherwise specified by the Board, the following terms and
conditions shall apply to Options granted under the Plan:
(i) Term. The duration of the Option shall be for ten years from
the date of grant.
(ii) Exercise of Option. Unless an Option is terminated as
provided hereunder, an Optionee may exercise an Option pursuant to a
vesting schedule as determined by the Board.
-5B-
(iii) Termination. Each Option granted pursuant to the Plan shall
expire upon the earliest to occur of:
(A) The date set forth in such Option, not to exceed ten
years from the date of grant (five years in the case of a
Significant Shareholder);
(B) The completion of the merger or sale of substantially
all of the Stock or assets of the Company with or to another
company in a transaction in which the Company is not the
survivor, except for the merger of the Company into a
wholly-owned subsidiary and, provided that the Company shall have
given the Optionee at least thirty days' prior written notice of
its intent to enter into such merger or sale (and the Company
shall not be considered the surviving corporation for purposes
hereof if the Company is the survivor of a reverse triangular
merger);
(C) Ninety days following the termination of the employment
of an Optionee, except for termination for cause by the Company
or termination because of the Optionee's death or disability (in
which event of termination of employment due to the Optionee's
death or disibility, the Option shall expire one year following
the termination of employment of an Optionee); or
(D) Immediately upon the termination of the employment of an
Optionee for cause by the Company.
(iv) Nontransferability. All Options granted under the Plan shall
be nontransferable by the Optionee, other than by will or the laws of
descent and distribution, and shall be exercisable during the
Optionee's lifetime only by the Optionee.
(b) The Board shall be free to specify terms and conditions other than
and in addition to those set forth above, in its discretion.
(c) All Option Agreements shall incorporate the provisions of the Plan
by reference.
7.4 Option Price. No Option granted pursuant to the Plan shall have an
Option price that is less than the Fair Market Value of Stock on the date the
Option is granted. Incentive Stock Options granted to Significant Shareholders
shall have an Option price of not less than 110% of the Fair Market Value of
Stock on the date of grant. The Option exercise price shall be subject to
adjustment as provided in Section 5.3 above.
7.5 Payment. Payment for all shares of Stock shall be made at the time that
an Option, or any part thereof, is exercised, and no shares shall be issued
until full payment therefor has been made. Payment shall be made (i) in cash, or
(ii) if acceptable to the Board, in Stock or in some other form; provided,
however, in the case of an Incentive Stock Option, that such other form of
payment does not prevent the Option from qualifying for treatment as an
"incentive stock option" within the meaning of the Code.
-6B-
ARTICLE VIII
WRITTEN NOTICE, ISSUANCE OF STOCK
CERTIFICATES, SHAREHOLDER PRIVILEGES
8.1 Written Notice. An Optionee wishing to exercise an Option shall give
written notice to the Company, in the form and manner prescribed by the Board.
Full payment for the shares of Stock to be acquired pursuant to the exercise of
the Option must accompany the written notice.
8.2 Issuance of Stock Certificates. As soon as practicable after the
receipt of written notice and payment, the Company shall deliver to the Optionee
a certificate or certificates for the requisite number of shares of Stock.
8.3 Privileges of a Shareholder. An Optionee or any other person entitled
to exercise an Option under the Option Agreement shall not have shareholder
privileges with respect to any Stock covered by the Option until the date of
issuance of a stock certificate for such Stock.
ARTICLE IX
TERMINATION OF EMPLOYMENT OR SERVICES
9.1 Death or Disability. Subject to any prior partial exercise of the
Option, if an Optionee's employment terminates by reason of Optionee's death or
permanent and total disability, the Option may be exercised up to one hundred
percent of the shares originally subject to the Option at any time prior to the
expiration date of the Option or within 12 months after the date of such death
or disability, whichever period is the shorter, by the person or persons
entitled to do so under the Optionee's will or, if the Optionee shall fail to
make a testamentary disposition of an Option or shall die intestate, the
Optionee's legal representative or representatives.
9.2 Termination other than for Cause or Due to Death. In the event of an
Optionee's termination of employment other than by reason of death or permanent
and total disability, the Optionee may exercise such portion of his Option as
was vested and exercisable by him at the date of such termination (the
"Termination Date") at any time within ninety days of the Termination Date. In
any event, the Option cannot be exercised after the expiration of the term of
the Option. Options not exercised within the applicable period specified above
shall terminate.
(a) In the case of an Employee, a change of duties or position within the
Company or an assignment of employment in a Subsidiary Corporation or Parent
Corporation of the Company, if any, or from such a Corporation to the Company,
shall not be considered a termination of employment for purposes of the Plan.
-7B-
(b) The Option Agreements may contain such provisions as the Board shall
approve with reference to the effect of approved leaves of absence upon
termination of employment.
9.3 Termination for Cause. In the event of an Optionee's termination of
employment, which termination is by the Company or a Subsidiary Corporation for
cause, any Option or Options held by him under the Plan, to the extent not
exercised before such termination, shall terminate upon notice of termination
for cause.
ARTICLE X
RIGHTS OF OPTIONEES
10.1 Service. Nothing in the Plan shall interfere with or limit in any way
the right of the Company or a Subsidiary Corporation to terminate any Employee's
employment at any time, nor confer upon any Employee any right to continue in
the employ of the Company or a Subsidiary Corporation.
10.2 Non-transferability. All Options granted under the Plan shall be
nontransferable by the Optionee, other than by will or the laws of descent and
distribution, and shall be exercisable during the Optionee's lifetime only by
the Optionee.
ARTICLE XI
OPTIONEE-EMPLOYEE'S TRANSFER
OR LEAVE OF ABSENCE
For purposes of the Plan:
(a) A transfer of an Optionee who is an Employee from the Company to a
Subsidiary Corporation or Parent Corporation, or from one such Corporation
to another, or
(b) A leave of absence for such an Optionee (i) which is duly
authorized in writing by the Company or a Subsidiary Corporation, and
(ii) if the Optionee holds an Incentive Stock Option, which qualifies under
the applicable regulations under the Code which apply in the case of
incentive stock options,
shall not be deemed a termination of employment. However, under no circumstances
may an Optionee exercise an Option during any leave of absence, unless
authorized by the Board.
ARTICLE XII
AMENDMENT, MODIFICATION, AND
TERMINATION OF THE PLAN
(a) The Board may at any time terminate and from time to time may
amend or modify the Plan, provided, however, that no such action of the
Board, without approval of the shareholders, may:
(i) increase the total amount of Stock which may be purchased
through Options granted under the Plan, except as provided in
Article V;
(ii) change the class of Employees eligible to receive Options;
(b) No amendment, modification, or termination of the Plan shall in
any manner adversely affect any outstanding Option under the Plan without
the consent of the Optionee holding the Option.
-8B-
ARTICLE XIII
ACQUISITION, MERGER OR LIQUIDATION
13.1 Acquisition.
(a) In the event that an acquisition occurs with respect to the
Company, the Company shall have the option, but not the obligation, to
cancel Options outstanding as of the effective date of such acquisition,
whether or not such Options are then exercisable, in return for payment to
the Optionees of an amount equal to a reasonable estimate of an amount
(hereinafter the "Spread"), determined by the Board, equal to the
difference between the net amount per share payable in the acquisition or
as a result of the acquisition, less the exercise price of the Option. In
estimating the Spread, appropriate adjustments to give effect to the
existence of the Options shall be made, such as deeming the Options to have
been exercised, with the Company receiving the exercise price payable
thereunder, and treating the shares receivable upon exercise of the Options
as being outstanding in determining the net amount per share.
(b) For purposes of this section, an "acquisition" shall mean any
transaction in which substantially all of the Company's assets are acquired
or in which a controlling amount of the Company's outstanding shares are
acquired, in each case by a single person or entity or an affiliated group
of persons and entities. For purposes of this section, a controlling amount
shall mean more than 50% of the issued and outstanding shares of Stock of
the Company. The Company shall have the above option to cancel Options
regardless of how the acquisition is effectuated, whether by direct
purchase, through a merger or similar corporate transaction, or otherwise.
In cases where the acquisition consists of the acquisition of assets of the
Company, the net amount per share shall be calculated on the basis of the
net amount receivable with respect to shares upon a distribution and
liquidation by the Company after giving effect to expenses and charges,
including but not limited to taxes, payable by the Company before the
liquidation can be completed.
(c) Where the Company does not exercise its option under this
Section 13.1 the remaining provisions of this Article XIII shall apply, to
the extent applicable.
-9B-
13.2 Merger or Consolidation. If the Company shall be the surviving
corporation in any merger or consolidation, any Option granted hereunder shall
pertain to and apply to the securities to which a holder of the number of shares
of Stock subject to the Option would have been entitled in such merger or
consolidation, provided that the Company shall not be considered the surviving
corporation for purposes hereof if the Company is the survivor of a reverse
triangular merger.
13.3 Other Transactions. A dissolution or a liquidation of the Company or a
merger and consolidation in which the Company is not the surviving corporation
(the Company shall not be considered the surviving corporation for purposes
hereof if the Company is the survivor of a reverse triangular merger) shall
cause every Option outstanding hereunder to terminate as of the effective date
of such dissolution, liquidation, merger or consolidation. However, the Optionee
either (i) shall be offered a firm commitment whereby the resulting or surviving
corporation in a merger or consolidation will tender to the Optionee an option
(the "Substitute Option") to purchase its shares on terms and conditions both as
to number of shares and otherwise, which will substantially preserve to the
Optionee the rights and benefits of the Option outstanding hereunder granted by
the Company, or (ii) shall have the right immediately prior to such dissolution,
liquidation, merger, or consolidation to exercise any unexercised Options
whether or not then vested, subject to the provisions of the Plan. The Board
shall have absolute and uncontrolled discretion to determine whether the
Optionee has been offered a firm commitment and whether the tendered Substitute
Option will substantially preserve to the Optionee the rights and benefits of
the Option outstanding hereunder. In any event, any Substitute Option for an
Incentive Stock Option shall comply with the requirements of Code
Section 424(a).
ARTICLE XIV
SECURITIES REGISTRATION
14.1 Securities Registration. In the event that the Company shall deem it
necessary or desirable to register under the Securities Act of 1933, as amended,
or any other applicable statute, any Options or any Stock with respect to which
an Option may be or shall have been granted or exercised, or to qualify any such
Options or Stock under the Securities Act of 1933, as amended, or any other
statute, then the Optionee shall cooperate with the Company and take such action
as is necessary to permit registration or qualification of such Options or
Stock.
14.2 Representations. Unless the Company has determined that the following
representation is unnecessary, each person exercising an Option under the Plan
may be required by the Company, as a condition to the issuance of the shares
pursuant to exercise of the Option, to make a representation in writing (i) that
he is acquiring such shares for his own account for investment and not with a
view to, or for sale in connection with, the distribution of any part thereof
within the meaning of the Securities Act of 1933, (ii) that before any transfer
in connection with the resale of such shares, he will obtain the written opinion
of counsel for the Company, or other counsel acceptable to the Company, that
such shares may be transferred without registration thereof. The Company may
also require that the certificates representing such shares contain legends
reflecting the foregoing. To the extent permitted by law, including the
Securities Act of 1933, nothing herein shall restrict the right of a person
exercising an Option to sell the shares received in an open market transaction.
-10B-
ARTICLE XV
TAX WITHHOLDING
Whenever shares of Stock are to be issued in satisfaction of Options
exercised under the Plan, the Company shall have the power to require the
recipient of the Stock to remit to the Company an amount sufficient to satisfy
federal, state, and local withholding tax requirements, if any.
ARTICLE XVI
INDEMNIFICATION
To the extent permitted by law, each person who is or shall have been a
member of the Board or the Committee shall be indemnified and held harmless by
the Company against and from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him in connection with or resulting from
any claim, action, suit, or proceeding to which he may be a party or in which he
may be involved by reason of any action taken or failure to act under the Plan
and against and from any and all amounts paid by him in settlement thereof, with
the Company's approval, or paid by him in satisfaction of judgment in any such
action, suit, or proceeding against him, provided he shall give the Company an
opportunity, at its own expense, to handle and defend the same before he
undertakes to handle and defend it on his own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such persons may be entitled under the Company's certificate of
incorporation or bylaws, as a matter of law, or otherwise, or any power that the
Company or any Subsidiary Corporation may have to indemnify them or hold them
harmless.
ARTICLE XVII
REQUIREMENTS OF LAW
17.1 Requirements of Law. The granting of Options and the issuance of
shares of Stock upon the exercise of an Option shall be subject to all
applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.
17.2 Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Colorado.
ARTICLE XVIII
EFFECTIVE DATE OF PLAN
The Plan shall be effective on March 27, 1997.
ARTICLE XIX
COMPLIANCE WITH CODE
Incentive Stock Options granted hereunder are intended to qualify as
"incentive stock options" under Code Section 422. If any provision of the Plan
is susceptible to more than one interpretation, such interpretation shall be
given thereto as is consistent with Incentive Stock Options granted under the
Plan being treated as incentive stock options under the Code.
-11B-
ARTICLE XX
NO OBLIGATION TO EXERCISE OPTION
The granting of an Option shall impose no obligation upon the holder
thereof to exercise such Option.
ARTICLE XXI
SHAREHOLDER APPROVAL
The Plan shall be submitted for approval and ratification by a vote of the
holders of a majority of the shares of Stock of the Company no later than 12
months after the date the Plan is adopted; provided, however, that failure to
timely obtain such shareholder approval shall result in all Options granted
hereunder being deemed to be Non-qualified Options and shall not affect the
validity of any Option issued under the Plan.
THIS INCENTIVE STOCK OPTION PLAN was adopted by the Board of Directors of
St. Mary Land & Exploration Company on March 27, 1997, to be effective upon
adoption.
ST. MARY LAND & EXPLORATION COMPANY
By: /s/ John P. Congdon
----------------------------------
Title: Vice President and General Counsel
----------------------------------
-12B-