EXHIBIT 10.20
ENERGY SEARCH, INCORPORATED
1998 STOCK OPTION AND RESTRICTED STOCK PLAN
FOR OUTSIDE ADVISORS AND CONSULTANTS
SECTION 1
ESTABLISHMENT OF PLAN; PURPOSE OF PLAN
1.1 ESTABLISHMENT OF PLAN. Energy Search, Incorporated (the
"Company") hereby establishes the 1998 Stock Option and Restricted Stock
Plan for Outside Advisors and Consultants (the "Plan"). The Plan permits
the grant or award of Options and Restricted Stock.
1.2 PURPOSE OF PLAN. The purpose of the Plan is to provide those
individuals who provide business advertising, marketing, financial,
investment, public relations and other advice and counsel to the Company or
its subsidiaries with the right to receive or purchase the Common Stock of
the Company so as to join the interests of these persons with the interests
of the Company and its shareholders through the increased opportunity for
stock ownership.
SECTION 2
DEFINITIONS
The following words have the following meanings unless a different
meaning is plainly required by the context:
2.1 "Act" means the Securities Exchange Act of 1934, as amended.
2.2 "Board" means the Board of Directors of the Company.
2.3 "Code" means the Internal Revenue Code of 1986, as amended.
2.4 "Committee" means the Executive Management and Compensation
Committee of the Board or such other committee as the Board shall
designate to administer the Plan. The Committee shall consist of
at least two members of the Board all of whom shall be "non-
employee directors" as defined in Rule 16b-3 under the Act. In
addition, at least two of the directors of the Committee shall be
"outside directors" as defined in the regulations issued pursuant
to Section 162(m) of the Code.
2.5 "Common Stock" means the common stock, without par value, of the
Company.
2.6 "Company" means Energy Search, Incorporated, a Tennessee
corporation.
2.7 "Competition" means participation, directly or indirectly, in the
ownership, management, financing or control of any business that
is the same as or similar to the present or future businesses of
the Company or any Subsidiary. Such participation could be by
way of employment, consulting services, directorship or
officership. Ownership of less than five percent (5%) of the
shares of any corporation whose shares are traded publicly on any
national or regional stock exchange or over the counter shall not
be deemed Competition.
2.8 "Incentive Award" means the award or grant of an Option or
Restricted Stock to a Participant under the Plan.
2.9 "Market Value" of any security on any given date means: (a) if
the security is listed for trading on one or more national
securities exchanges (including The NASDAQ SmallCap Market), the
mean of the highest and lowest sales prices on the principal such
exchange on the date in question, or if such security shall not
have been traded on such principal exchange on such date, the
last reported sales price on such principal exchange on the first
day prior thereto on which such security was so traded; or (b) if
the security is not listed for trading on a national securities
exchange (including The NASDAQ SmallCap Market) but is traded in
the over-the-counter market, the mean of highest and lowest bid
prices for such security on the date in question, or if there are
no such bid prices for such security on such date, the mean of
the highest and lowest bid prices on the first day prior thereto
on which such prices existed; or (c) if neither (a) or (b) is
applicable, the value as determined by any means deemed fair and
reasonable by the Committee, which determination shall be final
and binding on all parties.
2.10 "Option" means the right to purchase Common Stock at a stated
price for a specified period of time. For purposes of the Plan,
an Option may not be an incentive stock option within the meaning
of Section 422(b) of the Code.
2.11 "Outside Advisor" means an individual who by reason of his or her
position or past or future dealings or knowledge of the Company
or any subsidiary is in a position to provide business
advertising, marketing, financial, investment, public relations
and other advice and counsel. The Board of Directors shall
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determine the persons deemed to be Outside Advisors or the
standard or method used to determine the persons to be considered
Outside Advisors.
2.12 "Participant" means an Outside Advisor who the Committee
determines is eligible to participate in the Plan and who is
designated to be granted an Incentive Award under the Plan.
2.13 "Restricted Period" means the period of time during which
Restricted Stock awarded under the Plan is subject to
restrictions. The Restricted Period may differ among
Participants and may have different expiration dates with respect
to shares of Common Stock covered by the same Incentive Award.
In no event shall the Restriction Period be for a shorter time
than the applicable holding period under Rule 144, as amended,
promulgated under the Securities Act of 1933.
2.14 "Restricted Stock" means Common Stock awarded to a Participant
under Section 6 of the Plan.
2.15 "Subsidiary" means any corporation of which a majority of the
outstanding voting stock is directly or indirectly owned or
controlled by the Company, or by one or more Subsidiaries.
SECTION 3
ADMINISTRATION
3.1 POWER AND AUTHORITY. The Committee shall administer the Plan,
shall have full power and authority to interpret the provisions of the
Plan, and shall have full power and authority to supervise the
administration of the Plan. All determinations, interpretations and
selections made by the Committee regarding the Plan shall be final and
conclusive. The Committee shall hold its meetings at such times and places
as it deems advisable. Action may be taken by a written instrument signed
by all of the members of the Committee, and any action so taken shall be
fully as effective as if it had been taken at a meeting duly called and
held. The Committee shall make such rules and regulations for the conduct
of its business as it deems advisable. The members of the Committee shall
receive reasonable fees for their services.
3.2 GRANTS OR AWARDS TO PARTICIPANTS. In accordance with and subject
to the provisions of the Plan, the Committee shall have the authority to:
determine whether and when Incentive Awards will be granted, the persons or
entities to be granted Incentive Awards, the amount of Incentive Awards to
be granted to each person and the terms of the Incentive Awards to be
granted; vary and amend vesting schedules, if any; and waive any
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restrictions or conditions applicable to any Incentive Award. Incentive
Awards shall be granted or awarded by the Committee, and Incentive Awards
may be amended by the Committee consistent with the Plan, provided that no
such amendment may become effective without the consent of the Participant,
except to the extent that the amendment operates solely to the benefit of
the Participant.
3.3 INDEMNIFICATION OF COMMITTEE MEMBERS. Each person who is or
shall have been a member of the Committee shall be indemnified and held
harmless by the Company from and against any cost, liability or expense
imposed or incurred in connection with such person's or the Committee's
taking or failing to take any action under the Plan. Each such person
shall be justified in relying upon information furnished in connection with
the Plan's administration by any appropriate person or persons.
SECTION 4
SHARES SUBJECT TO THE PLAN
4.1 NUMBER OF SHARES. Subject to adjustment as provided in
subsection 4.2 of the Plan, a maximum of 25,000 shares of Common Stock
shall be available for Incentive Awards under the Plan. Such shares shall
be authorized and unissued shares.
4.2 ADJUSTMENTS. If the number of shares of Common Stock outstanding
changes by reason of a stock dividend, stock split, recapitalization,
merger, consolidation, combination, exchange of shares or any other change
in the corporate structure or shares of the Company, the aggregate number
and class of shares available for grants or awards under the Plan, together
with the Option prices, shall be appropriately adjusted. No fractional
shares shall be issued pursuant to the Plan, and any fractional shares
resulting from adjustments shall be eliminated from the respective
Incentive Award, with an appropriate cash adjustment for the value of any
Incentive Awards eliminated. If an Incentive Award is canceled,
surrendered, modified, expired or terminated during the term of the Plan
but before the exercise or vesting of the Incentive Award in full, the
shares subject to but not delivered under such Incentive Award shall be
available for other Incentive Awards.
SECTION 5
OPTIONS
5.1 GRANT. A Participant may be granted one or more Options under the
Plan. Options shall be subject to such terms and conditions, consistent
with the other provisions of the Plan, as shall be determined by the
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Committee in its sole discretion. The Committee may vary, among
Participants and among Options granted to the same Participant, any and all
of the terms and conditions of the Options granted under the Plan. The
Committee shall have complete discretion in determining the number of
Options granted to each Participant.
5.2 OPTION AGREEMENTS. Each Option shall be evidenced by an Option
agreement containing such terms and conditions, consistent with the
provisions of the Plan, as the Committee from time to time determines.
Option Agreements may be amended by the Committee consistent with the Plan,
but no such amendment shall be effective as to a Participant without the
Participant's consent unless the amendment operates solely to the benefit
of the Participant.
5.3 OPTION PRICE. The per share Option price shall not be less than
the Market Value on the date of the grant, unless the Committee concludes
that particular circumstances render a lesser Option price beneficial to
the Company. The date of grant of an Option shall be the date the Option
is authorized by the Committee or such future date specified by the
Committee as the date for issuing the Option.
5.4 MEDIUM AND TIME OF PAYMENT. The exercise price for each share
purchased pursuant to an Option granted under the Plan shall be payable in
cash or, if the Committee consents, in shares of Common Stock (including
Common Stock to be received upon a simultaneous exercise). The time and
terms of payment may be amended with the consent of the Participant before
or after exercise of the Option, but such amendment shall not reduce the
Option price. The Committee may from time to time authorize payment of all
or a portion of the Option price in the form of a promissory note or
installments according to such terms as the Committee may approve. The
Board may restrict or suspend the power of the Committee to permit such
loans and may require that adequate security be provided.
5.5 LIMITS ON EXERCISABILITY. Options shall be exercisable for such
periods as may be fixed by the Committee, not to exceed 10 years from the
grant date. At the time of the exercise of an Option, the holder of the
Option, if requested by the Committee, must represent to the Company that
the shares are being acquired for investment and not with a view to the
distribution thereof. The Committee also may vary, among Participants and
among Options granted to the same Participant, any and all of the terms and
conditions of Options granted under the Plan.
5.6 TRANSFERABILITY.
(a) GENERAL. Unless the Committee otherwise consents or
unless the terms of the Option agreement provide otherwise, no
Option granted under the Plan may be sold, transferred, pledged,
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assigned or otherwise alienated or hypothecated, other than by
will or by the laws of descent and distribution if the
Participant is a natural person. In addition, all Options
granted to a Participant during the Participant's lifetime shall
be exercisable during the Participant's lifetime only by such
Participant, the Participant's guardian, or legal representative.
(b) OTHER RESTRICTIONS. The Committee may impose such
restrictions on any shares of Common Stock acquired pursuant to
the exercise of an Option under the Plan as it deems advisable,
including, without limitation, restrictions under applicable
federal or state securities laws.
5.7 RESTRICTIONS ON EXERCISE.
(a) GENERAL. The Committee may impose such restrictions as it
deems appropriate on the Participant's right to exercise any options
granted. Such restrictions shall be specified in the Option Agreement
entered into with the Participant under Section 5.2.
(b) SPECIFIC RESTRICTIONS. Notwithstanding the Committee's
right to impose additional restrictions under Section 5.7(a), the
following restrictions shall also apply:
(i) If the Participant ceases to be an Outside Advisor or
Consultant for any reason other than death or disability, the
Option issued to such Participant shall no longer be exercisable.
If a Participant dies or becomes disabled, the Option shall be
exercisable by the Participant or personal representative for a
period of three months after the date the Participant ceases to
be Outside Advisor or Consultant, but only to the extent that the
Participant was entitled to exercise the option on the date
Participant ceases to be Outside Advisor or Consultant, unless
the Option Agreement provides otherwise or the Committee
otherwise consents;
(ii) If the Committee determines that the Participant has
entered into Competition with the Company or any subsidiary, the
Participant's right to exercise any outstanding Option shall
terminate as of that date of entry into Competition. The
Committee shall have sole discretion in making such
determination.
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SECTION 6
RESTRICTED STOCK
6.1 GRANT. A Participant may be granted Restricted Stock under the
Plan. Restricted Stock shall be subject to such terms and conditions,
consistent with the other provisions of the Plan, as shall be determined by
the Committee in its sole discretion. Restricted Stock shall be awarded on
the condition that the Participant continues to perform certain services or
meets certain requirements as provided by the Committee in the Restricted
Stock Agreement.
6.2 RESTRICTED STOCK AGREEMENTS. Each award of Restricted Stock
shall be evidenced by a Restricted Stock Agreement containing such terms
and conditions, consistent with the provisions of the Plan, as the
Committee from time to time determines. Restricted Stock Agreements may be
amended by the Committee consistent with the Plan, but no such amendment
shall be effective as to a Participant without the Participant's consent
unless the amendment operates solely for the benefit of the Participant.
6.3 TERMINATION OF OUTSIDE ADVISOR STATUS. In addition to any
restrictions that the Committee may impose on the award of Restricted Stock
the following restrictions shall apply:
(a) COMPETITION. If the Committee determines that the
Participant has entered into Competition with the Company or any
subsidiary or ceases to be an Outside Advisor other than by reason of
discontinuance of business, death or disability, then any shares of
Restricted Stock still subject to restrictions on the date of such
determination automatically shall be forfeited and returned to the
Company.
(b) DISCONTINUANCE OF BUSINESS, DEATH OR DISABILITY. Unless the
terms of the Restricted Stock Agreement or grant provide otherwise, in
the event a Participant is no longer an Outside Advisor because of
discontinuance of business, death or disability during the Restricted
Period, the Participant's right to all of the Participant's Restricted
Stock shall vest as of the date of discontinuance of business, death
or disability, and the Participant's Restricted Stock may be
transferred free of any restrictions under the Plan, except any
restrictions as the Company may reasonably specify to ensure
compliance with federal and state securities laws.
6.4 RESTRICTIONS ON TRANSFERABILITY.
(a) GENERAL. Unless the Committee otherwise consents or
unless the terms of the Restricted Stock Agreement provide
otherwise, shares of Restricted Stock shall not be sold,
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exchanged, transferred, pledged or otherwise disposed of by a
Participant during the Restricted Period other than to the
Company pursuant to subsection 6.3 or 6.4(b) or by will or the
laws of descent and distribution.
(b) SURRENDER TO THE COMPANY. If any sale, exchange,
transfer, pledge or other disposition, voluntary or involuntary,
of Restricted Stock that has not vested shall be made or
attempted during the Restricted Period, except as provided above
in subsections 6.3 and 6.4(b), the Participant's right to the
Restricted Stock immediately shall cease and terminate, and the
Participant promptly shall surrender to the Company all such
Restricted Stock in the Participant's possession.
(c) OTHER RESTRICTIONS. The Committee may impose other
restrictions on any shares of Common Stock acquired pursuant to
an award of Restricted Stock as the Committee deems advisable,
including, without limitation, restrictions under applicable
federal or state securities laws.
6.5 RIGHTS AS A SHAREHOLDER. During the Restricted Period, a
Participant shall have all rights of a shareholder with respect to his
Restricted Stock, including (a) the right to vote any shares at
shareholders' meetings; (b) the right to receive, without restriction, all
cash dividends paid with respect to such Restricted Stock; and (c) the
right to participate with respect to such Restricted Stock in any stock
dividend, stock split, recapitalization or other adjustment in the Common
Stock of the Company or any merger, consolidation or other reorganization
involving an increase or decrease or adjustment in the Common Stock of the
Company. Any new, additional or different shares or other security
received by the Participant pursuant to any such stock dividend, stock
split, recapitalization or reorganization shall be subject to the same
terms, conditions and restrictions as those relating to the Restricted
Stock for which such shares were received.
6.6 DEPOSIT OF CERTIFICATES; LEGENDING OF RESTRICTED STOCK.
(a) DEPOSIT OF CERTIFICATES. Any certificates evidencing
shares of Restricted Stock awarded pursuant to the Plan shall be
registered in the name of the relevant Participant and deposited,
together with a stock power endorsed in blank, with the Company.
In the discretion of the Committee, any such certificates may be
deposited in a bank designated by the Committee or delivered to
the Participant. Certificates for shares of Restricted Stock
that have vested shall be delivered to the Participant upon
request within a reasonable period of time. The Participant
shall sign all documents necessary or appropriate to facilitate
such delivery.
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(b) LEGEND. Any certificates evidencing shares of
Restricted Stock awarded pursuant to the Plan shall bear the
following legend:
The shares represented by this certificate were issued
subject to certain restrictions under the Energy
Search, Incorporated 1998 Stock Option and Restricted
Stock Plan for Outside Advisors and Consultants (the
"Plan"). A copy of the Plan is on file in the office
of the Secretary of Energy Search, Incorporated. This
certificate is held subject to the terms and conditions
contained in a restricted stock agreement that includes
a prohibition against the sale or transfer of the stock
represented by this certificate except in compliance
with that agreement, and that provides for forfeiture
upon certain events.
6.7 REPRESENTATIONS AND WARRANTIES. A Participant who is awarded
Restricted Stock shall represent and warrant that the Participant is
acquiring the Restricted Stock for the Participant's own account and
investment and without any intention to resell or redistribute the
Restricted Stock. The Participant shall agree not to resell or
redistribute such Restricted Stock after the Restricted Period except upon
such conditions as the Company reasonably may specify to ensure compliance
with federal and state securities laws.
SECTION 7
GENERAL PROVISIONS
7.1 NO RIGHTS TO AWARDS. No Participant or other person shall have
any claim to be granted any Incentive Award, and there is no obligation of
uniformity of treatment of Participants or holders or beneficiaries of
Incentive Awards. The terms and conditions of Incentive Awards of the same
type and the determination of the Committee to grant a waiver or
modification of any Incentive Award and the terms and conditions thereof
need not be the same with respect to each Participant.
7.2 COMPLIANCE WITH LAWS; LISTING AND REGISTRATION OF SHARES. All
Incentive Awards granted under the Plan (and all issuances of Common Stock
or other securities under the Plan) shall be subject to applicable laws,
rules and regulations, and to the requirement that if at any time the
Committee determines, in its sole discretion, that the listing,
registration or qualification of the shares covered thereby upon any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as
a condition of, or in connection with, the granting of such Incentive Award
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or the issue or purchase of shares thereunder, such Incentive Award may not
be exercised in whole or in part, or the restrictions on such Incentive
Award shall not lapse, unless and until such listing, registration,
qualification, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Committee.
7.3 NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing contained
in the Plan shall prevent the Company or any Subsidiary from adopting or
continuing in effect other or additional compensation arrangements,
including the grant of options and other stock-based awards, and such
arrangements may be either generally applicable or applicable only in
specific cases.
7.4 GOVERNING LAW. The validity, construction and effect of the Plan
and any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Michigan and applicable federal
law.
7.5 SEVERABILITY. In the event any provision of the Plan shall be
held illegal or invalid for any reason, the illegality or invalidity shall
not affect the remaining parts of the Plan, and the Plan shall be construed
and enforced as if the illegal or invalid provision had not been included.
SECTION 8
EFFECTIVE DATE AND DURATION OF THE PLAN
This Plan shall take effect September 1, 1998. Unless earlier
terminated by the Board of Directors, the Plan shall terminate on August
31, 2008. No Incentive Award shall be granted under this Plan after such
date.
SECTION 9
TERMINATION AND AMENDMENT
The Board may terminate the Plan at any time, or may from time to time
amend the Plan as it deems proper and in the best interests of the Company,
provided that without shareholder approval no such amendment may
(a) materially increase either the benefits to Participants under the Plan
or the number of shares that may be issued under the Plan; (b) materially
modify the eligibility requirements; (c) reduce the Option price (except
pursuant to adjustments under subsection 4.2); or (d) impair any
outstanding Incentive Award without the consent of the Participant, except
according to the terms of the Incentive Award. No termination, amendment
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or modification of the Plan shall become effective with respect to any
Incentive Award previously granted under the Plan without the prior written
consent of the Participant holding such Incentive Award unless such
amendment or modification operates solely to the benefit of the
Participant.
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