RUTHERFORD--MORAN OIL CORPORATION
1996 KEY EMPLOYEE STOCK PLAN
RUTHERFORD--MORAN OIL CORPORATION
1996 KEY EMPLOYEE STOCK PLAN
TABLE OF CONTENTS
Section
ARTICLE I - PLAN
Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Effective Date of Plan. . . . . . . . . . . . . . . . . . . . . . . . . 1.2
ARTICLE II - DEFINITIONS
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1
Board of Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2
Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3
Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.6
Disinterested Person. . . . . . . . . . . . . . . . . . . . . . . . . . 2.7
Employee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.8
Fair Market Value . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9
Incentive Option. . . . . . . . . . . . . . . . . . . . . . . . . . . .2.10
Nonqualified Option . . . . . . . . . . . . . . . . . . . . . . . . . .2.11
Option. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.12
Option Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . .2.13
Outside Director. . . . . . . . . . . . . . . . . . . . . . . . . . . .2.14
Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.15
Restricted Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . .2.16
Restricted Stock Agreement. . . . . . . . . . . . . . . . . . . . . . .2.17
Restricted Stock Purchase Price . . . . . . . . . . . . . . . . . . . .2.18
Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.19
Stock Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.20
Voting Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.21
10% Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . . . .2.22
ARTICLE III - ELIGIBILITY
ARTICLE IV - GENERAL PROVISIONS RELATING TO OPTIONS AND STOCK AWARDS
Authority to Grant Options and Stock Awards . . . . . . . . . . . . . . 4.1
Dedicated Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2
Non-Transferability . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3
Requirements of Law . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4
Changes in the Company's Capital Structure. . . . . . . . . . . . . . . 4.5
Election Under Section 83(b) of the Code. . . . . . . . . . . . . . . . 4.6
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ARTICLE V - OPTIONS
Type of Option. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1
Option Price. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2
Duration of Options . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3
Amount Exercisable. . . . . . . . . . . . . . . . . . . . . . . . . . . 5.4
Exercise of Options . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5
Exercise on Termination of Employment . . . . . . . . . . . . . . . . . 5.6
Substitution Options. . . . . . . . . . . . . . . . . . . . . . . . . . 5.7
No Rights as Stockholder. . . . . . . . . . . . . . . . . . . . . . . . 5.8
ARTICLE VI - STOCK AWARDS
Stock Awards. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1
Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2
Stock Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3
Rights as Stockholder . . . . . . . . . . . . . . . . . . . . . . . . . 6.4
Lapse of Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . 6.5
Restriction Period. . . . . . . . . . . . . . . . . . . . . . . . . . . 6.6
ARTICLE VII - ADMINISTRATION
ARTICLE VIII - AMENDMENT OR TERMINATION OF PLAN
ARTICLE IX - MISCELLANEOUS
No Establishment of a Trust Fund. . . . . . . . . . . . . . . . . . . . 9.1
No Employment Obligation. . . . . . . . . . . . . . . . . . . . . . . . 9.2
Forfeiture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3
Tax Withholding . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.4
Written Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.5
Indemnification of the Committee and the
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . 9.6
Gender. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.7
Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.8
Other Compensation Plans. . . . . . . . . . . . . . . . . . . . . . . . 9.9
Other Options or Awards . . . . . . . . . . . . . . . . . . . . . . . .9.10
Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9.11
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ARTICLE I
PLAN
1.1 PURPOSE. This Plan is a plan for key employees (including
officers and employee directors) of the Company and its Affiliates and is
intended to advance the best interests of the Company, its Affiliates, and its
stockholders by providing those persons who have substantial responsibility for
the management and growth of the Company and its Affiliates with additional
incentives and an opportunity to obtain or increase their proprietary interest
in the Company, thereby encouraging them to continue in the employ of the
Company or any of its Affiliates.
1.2 EFFECTIVE DATE OF PLAN. The Plan is effective May 24, 1996, if
within one year of that date it shall have been approved by at least a majority
vote of stockholders voting in person or by proxy at a duly held stockholders'
meeting, or if the provisions of the corporate charter, by-laws or applicable
state law prescribes a greater degree of stockholder approval for this action,
the approval by the holders of that percentage, at a duly held meeting of
stockholders. No Incentive Option, Nonqualified Option, or Stock Award shall be
granted pursuant to the Plan after May 23, 2006.
ARTICLE II
DEFINITIONS
The words and phrases defined in this Article shall have the meaning
set out in these definitions throughout this Plan, unless the context in which
any such word or phrase appears reasonably requires a broader, narrower, or
different meaning.
2.1 "AFFILIATE" means any parent corporation and any subsidiary
corporation. The term "parent corporation" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company if, at the
time of the action or transaction, each of the corporations other than the
Company owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in the chain. The term
"subsidiary corporation" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time of the
action or transaction, each of the corporations other than the last corporation
in the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in the
chain.
2.2 "BOARD OF DIRECTORS" means the board of directors of the Company.
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2.3 "CHANGE OF CONTROL" means the occurrence of one or more of the
following events:
(a) Any "person" (other than the Company or a subsidiary thereof
or any employee benefit plan thereof or any entity which is owned 50%
or more by John A. Moran and/or Patrick R. Rutherford), including a
"syndicate" or "group" as those terms are used in Section 13(d) of the
Securities Exchange Act of 1934 (the"Exchange Act"), is or becomes the
"beneficial owner" (as that term is defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing 40% or more of the combined voting power of the Company's
then outstanding Voting Stock;
(b) The Company is merged or consolidated or combined in any
other manner with another corporation or entity and immediately after
giving effect to the merger or consolidation either (i) less than 80%
of the outstanding Voting Stock of the surviving or resulting entity
are then beneficially owned in the aggregate by (x) the stockholders
of the Company immediately prior to such merger or consolidation, or
(y) if a record date has been set to determine the stockholders of the
Company entitled to vote on such merger or consolidation, the
stockholders of the Company as of such record date, or (ii) the Board
of Directors, or similar governing body, of the surviving or resulting
entity does not have as a majority of its members the persons
specified in clause (c)(a) and (b) below;
(c) If at any time the following do not constitute a majority of
the Board of Directors of the Company (or any successor entity
referred to in clause (b) above):
a. persons who are directors of the Company on
July 1, 1996; and
b. persons who, prior to their election as directors of
the Company (or successor entity if applicable) were nominated,
recommended or endorsed by a formal resolution of the Board of
Directors of the Company;
(d) If at any time during a calendar year a majority of the
directors of the Company are not persons who were directors at the
beginning of the calendar year;
(e) the Company transfers (whether by sale, lease, exchange or
otherwise) substantially all of its assets to another corporation
which is a less than 80%-owned, direct or indirect, subsidiary of the
Company; or
(f) the Company shall adopt or undertake any plan of liquidation
or dissolution.
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2.4 "CODE" means the Internal Revenue Code of 1986, as amended.
2.5 "COMMITTEE" means the Compensation Committee of the Board of
Directors or such other committee designated by the Board of Directors. The
Committee shall be comprised solely of at least two members who are both
Disinterested Persons and Outside Directors.
2.6 "COMPANY" means Rutherford--Moran Oil Corporation.
2.7 "DISINTERESTED PERSON" means a "disinterested person" as that
term is defined in Rule 16b-3 under the Securities Exchange Act of 1934.
2.8 "EMPLOYEE" means a person employed by the Company or any
Affiliate to whom an Option or a Stock Award is granted.
2.9 "FAIR MARKET VALUE" of the Stock as of any date means (a) the
average of the high and low sale prices of the Stock on that date on the
principal securities exchange on which the Stock is listed; or (b) if the Stock
is not listed on a securities exchange, the average of the high and low sale
prices of the Stock on that date as reported on the NASDAQ National Market
System; or (c) if the Stock is not listed on the NASDAQ National Market System,
the average of the high and low bid quotations for the Stock on that date as
reported by the National Quotation Bureau Incorporated; or (d) if none of the
foregoing is applicable, an amount at the election of the Committee equal to
(x), the average between the closing bid and ask prices per share of stock on
the last preceding date on which those prices were reported or (y) that amount
as determined by the Committee.
2.10 "INCENTIVE OPTION" means an option granted under this Plan which
is designated as an "Incentive Option" and satisfies the requirements of
Section 422 of the Code.
2.11 "NONQUALIFIED OPTION" means an option granted under this Plan
other than an Incentive Option.
2.12 "OPTION" means both an Incentive Option and a Nonqualified Option
granted under this Plan to purchase shares of Stock.
2.13 "OPTION AGREEMENT" means the written agreement which sets out the
terms of an Option.
2.14 "OUTSIDE DIRECTOR" means a member of the Board of Directors
serving on the Committee who satisfies Section 162(m) of the Code.
2.15 "PLAN" means the Rutherford--Moran Oil Corporation 1996 Key
Employee Stock Plan, as set out in this document and as it may be amended from
time to time.
2.16 "RESTRICTED STOCK" means stock awarded or purchased under a
Restricted Stock Agreement entered into pursuant to this Plan, together with
(i) all
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rights, warranties or similar items attached or accruing thereto or
represented by the certificate representing the stock and (ii) any stock or
securities into which or for which the stock is thereafter converted or
exchanged. The terms and conditions of the Restricted Stock Agreement shall
be determined by the Committee consistent with the terms of the Plan.
2.17 "RESTRICTED STOCK AGREEMENT" means an agreement between the
Company or any Affiliate and the Employee pursuant to which the Employee
receives a Stock Award subject to Article VI.
2.18 "RESTRICTED STOCK PURCHASE PRICE" means the purchase price, if
any, per share of Restricted Stock subject to an Award. The Restricted Stock
Purchase Price shall be determined by the Committee. It may be greater than or
less than the Fair Market Value of the Stock on the date of the Stock Award.
2.19 "STOCK" means the common stock of the Company, $.01 par value or,
in the event that the outstanding shares of common stock are later changed into
or exchanged for a different class of stock or securities of the Company or
another corporation, that other stock or security.
2.20 "STOCK AWARD" means an award of Restricted Stock.
2.21 "VOTING STOCK" means shares of capital stock of the Company the
holders of which are entitled to vote for the election of directors of the
Company, but excluding shares entitled to so vote only upon the occurrence of a
contingency unless that contingency shall have occurred.
2.22 "10% STOCKHOLDER" means an individual who, at the time the Option
is granted, owns stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or of any Affiliate. An individual
shall be considered as owning the stock owned, directly or indirectly, by or for
his brothers and sisters (whether by the whole or half blood), spouse,
ancestors, and lineal descendants; and stock owned, directly or indirectly, by
or for a corporation, partnership, estate, or trust, shall be considered as
being owned proportionately by or for its stockholders, partners, or
beneficiaries.
ARTICLE III
ELIGIBILITY
The individuals who shall be eligible to receive Incentive Options,
Nonqualified Options, and Stock Awards shall be those key employees of the
Company or any of its Affiliates as the Committee shall determine from time to
time. However, no member of the Committee shall be eligible to receive any
Option, or Stock Award or to receive stock, stock options, or stock appreciation
rights under any other plan of the Company or any of its Affiliates, if to do so
would cause the individual not to be a Disinterested Person or Outside Director.
The Board of Directors may designate one or more individuals who shall not be
eligible to receive any Option or Stock Award under this Plan or under other
similar plans of the Company.
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ARTICLE IV
GENERAL PROVISIONS RELATING TO OPTIONS AND STOCK AWARDS
4.1 AUTHORITY TO GRANT OPTIONS AND STOCK AWARDS. The Committee may
grant to those key Employees of the Company or any of its Affiliates as it shall
from time to time determine, Options or Stock Awards under the terms and
conditions of this Plan. Subject only to any applicable limitations set out in
this Plan, the number of shares of Stock to be covered by any Option or Stock
Award to be granted to an Employee shall be as determined by the Committee.
4.2 DEDICATED SHARES. The total number of shares of Stock with
respect to which Options and Stock Awards may be granted under the Plan shall be
500,000 shares. The shares may be treasury shares or authorized but unissued
shares. The maximum number of shares subject to Options which may be issued to
any Employee under the Plan during each year is 75,000 shares. The maximum
number of shares subject to Stock Awards which may be granted to any Employee
under the Plan during each year is 50,000 shares. The number of shares stated
in this Section 4.2 shall be subject to adjustment in accordance with the
provisions of Section 4.5.
In the event that any outstanding Option or Stock Award shall expire
or terminate for any reason or any Option or Stock Award is surrendered, the
shares of Stock allocable to the unexercised portion of that Option or Stock
Award may again be subject to an Option or Stock Award under the Plan.
4.3 NON-TRANSFERABILITY. Options shall not be transferable by the
Employee otherwise than by will or under the laws of descent and distribution,
and shall be exercisable, during the Employee's lifetime, only by him.
Restricted Stock shall be purchased by and/or become vested under a Restricted
Stock Agreement during the Employee's lifetime, only by him. Any attempt to
transfer a Stock Award other than under the terms of the Plan and the Restricted
Stock Agreement shall terminate the Stock Award and all rights of the Employee
to that Restricted Stock.
4.4 REQUIREMENTS OF LAW. The Company shall not be required to sell
or issue any Stock under any Option or Stock Award if issuing that Stock would
constitute or result in a violation by the Employee or the Company of any
provision of any law, statute, or regulation of any governmental authority.
Specifically, in connection with any applicable statute or regulation relating
to the registration of securities, upon exercise of any Option or pursuant to
any Stock Award, the Company shall not be required to issue any Stock unless the
Committee has received evidence satisfactory to it to the effect that the holder
of that Option or Stock Award will not transfer the Stock except in accordance
with applicable law, including receipt of an opinion of counsel satisfactory to
the Company to the effect that any proposed transfer complies with applicable
law. The determination by the Committee on this matter shall be final, binding
and conclusive. The Company may, but shall in no event be obligated to, register
any Stock covered by this Plan pursuant to applicable securities laws of any
country or any political subdivision. In the event the Stock issuable on
exercise of an Option or pursuant to a Stock Award is not registered, the
Company may imprint on
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the certificate evidencing the Stock any legend that counsel for the Company
considers necessary or advisable to comply with applicable law. The Company
shall not be obligated to take any other affirmative action in order to cause
the exercise of an Option or vesting under a Stock Award, or the issuance of
shares under either of them, to comply with any law or regulation of any
governmental authority.
4.5 CHANGES IN THE COMPANY'S CAPITAL STRUCTURE. The existence of
outstanding Options or Stock Awards shall not affect in any way the right or
power of the Company or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Stock or its rights, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.
If the Company shall effect a subdivision or consolidation of shares
or other capital readjustment, the payment of a stock dividend, or other
increase or reduction of the number of shares of the Stock outstanding, without
receiving compensation for it in money, services or property, then (a) the
number, class, and per share price of shares of Stock subject to outstanding
Options under this Plan shall be appropriately adjusted in such a manner as to
entitle an Employee to receive upon exercise of an Option, for the same
aggregate cash consideration, the equivalent total number and class of shares he
would have received had he exercised his Option in full immediately prior to the
event requiring the adjustment; and (b) the number and class of shares of Stock
then reserved to be issued under the Plan shall be adjusted by substituting for
the total number and class of shares of Stock then reserved, that number and
class of shares of Stock that would have been received by the owner of an equal
number of outstanding shares of each class of Stock as the result of the event
requiring the adjustment.
If the Company is merged or consolidated with another corporation and
the Company is not the surviving corporation, or if the Company is liquidated or
sells or otherwise disposes of substantially all its assets while unexercised
Options remain outstanding under this Plan, (a) subject to the provisions of
clause (c) below, after the effective date of the merger, consolidation,
liquidation, sale or other disposition, as the case may be, each holder of an
outstanding Option shall be entitled, upon exercise of the Option, to receive,
in lieu of shares of Stock, the number and class or classes of shares of stock
or other securities or property to which the holder would have been entitled if,
immediately prior to the merger, consolidation, liquidation, sale or other
disposition, the holder had been the holder of record of a number of shares of
Stock equal to the number of shares as to which the Option shall be so
exercised; (b) the Board of Directors may waive any limitations set out in or
imposed under this Plan so that all Options, from and after a date prior to the
effective date of the merger, consolidation, liquidation, sale or other
disposition, as the case may be, specified by the Board of Directors, shall be
exercisable in full; and (c) all outstanding Options may be canceled by the
Board of Directors as of the effective date of any merger, consolidation,
liquidation, sale or other disposition, if (i) notice of cancellation shall be
given to each holder of an Option and (ii) each holder of an Option shall have
the right to exercise
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that Option in full (without regard to any limitations set out in or imposed
under this Plan or the Option Agreement granting that Option) during a period
set by the Board of Directors preceding the effective date of the merger,
consolidation, liquidation, sale or other disposition and, if in the event
all outstanding Options may not be exercised in full under applicable
securities laws without registration of the shares of Stock issuable on
exercise of the Options, the Board of Directors may limit the exercise of the
Options to the number of shares of Stock, if any, as may be issued without
registration. The method of choosing which Options may be exercised, and the
number of shares of Stock for which Options may be exercised, shall be solely
within the discretion of the Board of Directors.
After a merger of one or more corporations into the Company or after a
consolidation of the Company and one or more corporations in which the Company
shall be the surviving corporation, each Employee shall be entitled to have his
Restricted Stock appropriately adjusted based on the manner the Stock was
adjusted under the terms of the agreement of merger or consolidation.
The issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property,
or for labor or services either upon direct sale or upon the exercise of rights
or warrants to subscribe for them, or upon conversion of shares or obligations
of the Company convertible into shares or other securities, shall not affect,
and no adjustment by reason of such issuance shall be made with respect to, the
number, class, or price of shares of Stock then subject to outstanding Options
or Stock Awards.
4.6 ELECTION UNDER SECTION 83(B) OF THE CODE. No Employee shall
exercise the election permitted under Section 83(b) of the Code without written
approval of the Committee. Any Employee doing so shall forfeit all Options
and/or Stock Awards issued to him under this Plan.
ARTICLE V
OPTIONS
5.1 TYPE OF OPTION. The Committee shall specify whether a given
option shall constitute an Incentive Option or a Nonqualified Option.
5.2 OPTION PRICE. The price at which Stock may be purchased under an
Incentive Option shall not be less than the greater of: (a) 100% of the Fair
Market Value of the shares of Stock on the date the Option is granted or (b) the
aggregate par value of the shares of Stock on the date the Option is granted.
The Committee in its discretion may provide that the price at which shares of
Stock may be purchased under an Incentive Option shall be more than 100% of Fair
Market Value. In the case of any 10% Stockholder, the price at which shares of
Stock may be purchased under an Incentive Option shall not be less than 110% of
the Fair Market Value of the Stock on the date the Incentive Option is granted.
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The price at which shares of Stock may be purchased under a
Nonqualified Option shall not be less than the greater of: (a) 100% of the Fair
Market Value of the shares of Stock on the date the Option is granted or (b) the
aggregate par value of the shares of Stock on the date the Option is granted.
The Committee in its discretion may provide that the price at which shares of
Stock may be purchased under a Nonqualified Option shall be more than 100% of
Fair Market Value.
5.3 DURATION OF OPTIONS. No Option shall be exercisable after the
expiration of 10 years from the date the Option is granted. In the case of a
10% Stockholder, no Incentive Option shall be exercisable after the expiration
of five years from the date the Incentive Option is granted.
5.4 AMOUNT EXERCISABLE. Each Option may be exercised from time to
time, in whole or in part, in the manner and subject to the conditions the
Committee, in its sole discretion, may provide in the Option Agreement, as long
as the Option is valid and outstanding, provided that no Option may be
exercisable within six (6) months of the date of grant. Notwithstanding any
other provisions of this Plan, in the event of a Change of Control, each Option
shall become immediately exercisable in full.
INCENTIVE OPTION. To the extent that the aggregate Fair Market
Value (determined as of the time an Incentive Option is granted) of the Stock
with respect to which Incentive Options first become exercisable by the Optionee
during any calendar year (under this Plan and any other incentive stock option
plan(s) of the Company or any Affiliate) exceeds $100,000, the Incentive Options
shall be treated as Nonqualified Options. In making this determination,
Incentive Options shall be taken into account in the order in which they were
granted.
5.5 EXERCISE OF OPTIONS. Each option shall be exercised by the
delivery of written notice to the Committee setting forth the number of shares
of Stock with respect to which the Option is to be exercised, together with:
(a) cash, certified check, bank draft, or postal or express money order payable
to the order of the Company for an amount equal to the option price of the
shares, (b) Stock at its Fair Market Value on the date of exercise, and/or
(c) any other form of payment which is acceptable to the Committee, and
specifying the address to which the certificates for the shares are to be
mailed. As promptly as practicable after receipt of written notification and
payment, the Company shall deliver to the Employee certificates for the number
of shares with respect to which the Option has been exercised, issued in the
Employee's name. If shares of Stock are used in payment, the aggregate Fair
Market Value of the shares of Stock tendered must be equal to or less than the
aggregate exercise price of the shares being purchased upon exercise of the
Option, and any difference must be paid by cash, certified check, bank draft, or
postal or express money order payable to the order of the Company. Delivery of
the shares shall be deemed effected for all purposes when a stock transfer agent
of the Company shall have deposited the certificates in the United States mail,
addressed to the Employee, at the address specified by the Employee.
Whenever an Option is exercised by exchanging shares of Stock owned by
the Employee, the Employee shall deliver to the Company certificates registered
in the name of the Employee representing a number of shares of Stock legally and
beneficially owned by the Employee, free of all liens, claims, and encumbrances
of every kind,
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accompanied by stock powers duly endorsed in blank by the record holder of
the shares represented by the certificates (with signature guaranteed by a
commercial bank or trust company or by a brokerage firm having a membership
on a registered national stock exchange). The delivery of certificates upon
the exercise of Options is subject to the condition that the person
exercising the Option provide the Company with the information the Company
might reasonably request pertaining to exercise, sale or other disposition.
5.6 EXERCISE ON TERMINATION OF EMPLOYMENT. Unless it is expressly
provided otherwise in the Option Agreement, Options shall terminate one day less
than three months after severance of employment of the Employee from the Company
and all Affiliates for any reason, with or without cause, other than death,
retirement under the then established rules of the Company, or severance for
disability. Whether authorized leave of absence or absence on military or
government service shall constitute severance of the employment of the Employee
shall be determined by the Committee at that time.
In determining the employment relationship between the Company and the
Employee, employment by any Affiliate shall be considered employment by the
Company, as shall employment by a corporation issuing or assuming a stock option
in a transaction to which Section 424(a) of the Code applies, or by a parent
corporation or subsidiary corporation of the corporation issuing or assuming a
stock option (and for this purpose, the phrase "corporation issuing or assuming
a stock option" shall be substituted for the word "Company" in the definitions
of parent corporation and subsidiary corporation in Section 2.1, and the
parent-subsidiary relationship shall be determined at the time of the corporate
action described in Section 424(a) of the Code).
DEATH. If, before the expiration of an Option, the Employee, whether
in the employ of the Company or after he has retired or was severed for
disability, dies, the Option shall continue until the earlier of the Option's
expiration date or one year following the date of his death, unless it is
expressly provided otherwise in the Option Agreement. After the death of the
Employee, his executors, administrators or any persons to whom his Option may be
transferred by will or by the laws of descent and distribution shall have the
right, at any time prior to the Option's expiration or termination, whichever is
earlier, to exercise it, to the extent to which he was entitled to exercise it
immediately prior to his death, unless it is expressly provided otherwise in the
Option Agreement.
RETIREMENT. Unless it is expressly provided otherwise in the Option
Agreement, if before the expiration of an Incentive Option, the Employee shall
be retired in good standing from the employ of the Company under the then
established rules of the Company, the Incentive Option shall terminate on the
earlier of the Option's expiration date or one day less than one year after his
retirement, provided, if an Incentive Option is not exercised within specified
time limits prescribed by the Code, it shall become a Nonqualified Option by
operation of law.
Unless it is expressly provided otherwise in the Option Agreement,
if before the expiration of a Nonqualified Option, the Employee shall be
retired in good standing from the employ of the Company under the then
established rules of the
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Company, the Nonqualified Option shall terminate on the earlier of the
Nonqualified Option's expiration date or one day less than one year after his
retirement. The Employee shall have the right prior to the termination of
the Nonqualified Option to exercise the Nonqualified Option, to the extent to
which he was entitled to exercise it immediately prior to his retirement,
unless it is expressly provided otherwise in the Option Agreement.
DISABILITY. If, before the expiration of an Option, the Employee
shall be severed from the employ of the Company for disability, the Option shall
terminate on the earlier of the Option's expiration date or one day less than
one year after the date he was severed because of disability, unless it is
expressly provided otherwise in the Option Agreement. In the event that the
Employee shall be severed from the employ of the Company for disability, the
Employee shall have the right prior to the termination of the Option to exercise
the Option, to the extent to which he was entitled to exercise it immediately
prior to his retirement or severance of employment for disability, unless it is
expressly provided otherwise in the Option Agreement.
5.7 SUBSTITUTION OPTIONS. Options may be granted under this Plan
from time to time in substitution for stock options held by employees of other
corporations who are about to become employees of or affiliated with the Company
or any Affiliate as the result of a merger or consolidation of the employing
corporation with the Company or any Affiliate, or the acquisition by the Company
or any Affiliate of the assets of the employing corporation, or the acquisition
by the Company or any Affiliate of stock of the employing corporation as the
result of which it becomes an Affiliate of the Company. The terms and
conditions of the substitute Options granted may vary from the terms and
conditions set out in this Plan to the extent the Committee, at the time of
grant, may deem appropriate to conform, in whole or in part, to the provisions
of the stock options in substitution for which they are granted.
5.8 NO RIGHTS AS STOCKHOLDER. No Employee shall have any rights as a
stockholder with respect to Stock covered by his Option until the date a stock
certificate is issued for the Stock.
ARTICLE VI
STOCK AWARDS
6.1 STOCK AWARDS. The Committee may issue shares of Stock to an
eligible employee subject to the terms of a Restricted Stock Agreement. The
Restricted Stock may be issued for no payment by the Employee or for a payment
below the Fair Market Value on the date of grant. Restricted Stock shall be
subject to restrictions as to sale, transfer, alienation, pledge or other
encumbrance and generally will be subject to vesting over a period of time
specified in the Restricted Stock Agreement. The Committee shall determine the
period of vesting, the number of shares, the price, if any, of Stock included in
a Stock Award, and the other terms and provisions which are included in a
Restricted Stock Agreement. Notwithstanding any other provisions of this Plan,
in the event of a Change of Control, each Stock Award shall become immediately
vested.
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6.2 RESTRICTIONS. Restricted Stock shall be subject to the following
terms and conditions as determined by the Committee, including without
limitation any or all of the following:
(a) a prohibition against the sale, transfer,
alienation, pledge or other encumbrance of the shares of
Restricted Stock, such prohibition to lapse (i) at such time
or times as the Committee shall determine (whether in annual
or more frequent installments, at the time of the death,
disability or retirement of the holder of such shares, or
otherwise);
(b) a requirement that the holder of shares of
Restricted Stock forfeit, or in the case of shares sold to
an Employee, resell back to the Company at his cost, all or
a part of such shares in the event of termination of the
holder's employment during any period in which the shares
remain subject to restrictions;
(c) a prohibition against employment of the holder of
Restricted Stock by any competitor of the Company or its
Affiliates, or against such holder's dissemination of any
secret or confidential information belonging to the Company
or an Affiliate;
(d) unless stated otherwise in the Restricted Stock
Agreement, (i) if restrictions remain at the time of
severance of employment with the Company and all Affiliates,
other than for reason of disability or death, the Restricted
Stock shall be forfeited; and (ii) if severance of
employment is by reason of disability or death, the
restrictions on the shares shall lapse and the Employee or
his heirs or estate shall be 100% vested in the shares
subject to the Restricted Stock Agreement.
6.3 STOCK CERTIFICATE. Shares of Restricted Stock shall be
registered in the name of the Employee receiving the Stock Award and deposited,
together with a stock power endorsed in blank, with the Company. Each such
certificate shall bear a legend in substantially the following form:
The transferability of this certificate and the shares of
Stock represented by it is restricted by and subject to the
terms and conditions (including conditions of forfeiture)
contained in the Rutherford--Moran Oil Corporation 1996 Key
Employee Stock Plan, and an agreement entered into between
the registered owner and the Company. A copy of the Plan
and agreement is on file in the office of the Secretary of
the Company.
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6.4 RIGHTS AS STOCKHOLDER. Subject to the terms and conditions of
the Plan, each Employee receiving a certificate for Restricted Stock shall have
all the rights of a stockholder with respect to the shares of Stock included in
the Stock Award during any period in which such shares are subject to forfeiture
and restrictions on transfer, including without limitation, the right to vote
such shares. Dividends paid with respect to shares of Restricted Stock in cash
or property other than stock in the Company or rights to acquire stock in the
Company shall be paid to the Employee currently. Dividends paid in stock in the
Company or rights to acquire stock in the Company shall be added to and become a
part of the Restricted Stock.
6.5 LAPSE OF RESTRICTIONS. At the end of the time period during
which any shares of Restricted Stock are subject to forfeiture and restrictions
on sale, transfer, alienation, pledge, or other encumbrance, such shares shall
vest and will be delivered in a certificate, free of all restrictions, to the
Employee or to the Employee's legal representative, beneficiary or heir;
provided the certificate shall bear such legend, if any, as the Committee
determines is reasonably required by applicable law. By accepting a Stock Award
and executing a Restricted Stock Agreement, the Employee agrees to remit when
due any federal and state income and employment taxes required to be withheld.
6.6 RESTRICTION PERIOD. No Stock Award may provide for restrictions
continuing beyond 10 years from the date of the Stock Award.
ARTICLE VII
ADMINISTRATION
The Plan shall be administered by the Committee. All questions of
interpretation and application of the Plan, Options or Stock Awards shall be
subject to the determination of the Committee. A majority of the members of the
Committee shall constitute a quorum. All determinations of the Committee shall
be made by a majority of its members. Any decision or determination reduced to
writing and signed by a majority of the members shall be as effective as if it
had been made by a majority vote at a meeting properly called and held. This
Plan shall be administered in such a manner as to permit the Options granted
under it which are designated to be Incentive Options to qualify as Incentive
Options. In carrying out its authority under this Plan, the Committee shall
have full and final authority and discretion, including but not limited to the
following rights, powers and authorities, to:
(a) determine the Employees to whom and the time or
times at which Options or Stock Awards will be made,
(b) determine the number of shares and the purchase
price of Stock covered in each Option or Stock Award,
subject to the terms of the Plan,
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(c) determine the terms, provisions and conditions of
each Option and Stock Award, which need not be identical,
(d) accelerate the time at which any outstanding
Option may be exercised,
(e) define the effect, if any, on an Option or Stock
Award of the death, disability, retirement, or termination
of employment of the Employee,
(f) prescribe, amend and rescind rules and regulations
relating to administration of the Plan, and
(g) make all other determinations and take all other
actions deemed necessary, appropriate, or advisable for the
proper administration of this Plan.
The actions of the Committee in exercising all of the rights, powers, and
authorities set out in this Article and all other Articles of this Plan, when
performed in good faith and in its sole judgment, shall be final, conclusive and
binding on all parties.
ARTICLE VIII
AMENDMENT OR TERMINATION OF PLAN
The Board of Directors of the Company may amend, terminate or suspend
this Plan at any time, in its sole and absolute discretion; provided, however,
that to the extent required to qualify this Plan under Rule 16b-3 promulgated
under Section 16 of the Securities Exchange Act of 1934, as amended, no
amendment that would (a) materially increase the number of shares of Stock that
may be issued under this Plan, (b) materially modify the requirements as to
eligibility for participation in this Plan, or (c) otherwise materially increase
the benefits accruing to participants under this Plan, shall be made without the
approval of the Company's stockholders; provided further, however, that to the
extent required to maintain the status of any Incentive Option under the Code,
no amendment that would (a) change the aggregate number of shares of Stock which
may be issued under Incentive Options, (b) change the class of employees
eligible to receive Incentive Options, or (c) decrease the Option price for
Incentive Options below the Fair Market Value of the Stock at the time it is
granted, shall be made without the approval of the Company's stockholders.
Subject to the preceding sentence, the Board shall have the power to make any
changes in the Plan and in the regulations and administrative provisions under
it or in any outstanding Incentive Option as in the opinion of counsel for the
Company may be necessary or appropriate from time to time to enable any
Incentive Option granted under this Plan to continue to qualify as an incentive
stock option or such other stock option as may be defined under the Code so as
to receive preferential federal income tax treatment.
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ARTICLE IX
MISCELLANEOUS
9.1 NO ESTABLISHMENT OF A TRUST FUND. No property shall be set aside
nor shall a trust fund of any kind be established to secure the rights of any
Employee under this Plan. All Employees shall at all times rely solely upon the
general credit of the Company for the payment of any benefit which becomes
payable under this Plan.
9.2 NO EMPLOYMENT OBLIGATION. The granting of any Option or Stock
Award shall not constitute an employment contract, express or implied, nor
impose upon the Company or any Affiliate any obligation to employ or continue to
employ any Employee. The right of the Company or any Affiliate to terminate the
employment of any person shall not be diminished or affected by reason of the
fact that an Option or Stock Award has been granted to him.
9.3 FORFEITURE. Notwithstanding any other provisions of this Plan,
if the Committee finds by a majority vote after full consideration of the facts
that the Employee, before or after termination of his employment with the
Company or an Affiliate for any reason (a) committed or engaged in fraud,
embezzlement, theft, commission of a felony, or proven dishonesty in the course
of his employment by the Company or an Affiliate, which conduct damaged the
Company or Affiliate, or disclosed trade secrets of the Company or an Affiliate,
or (b) participated, engaged in or had a material, financial or other interest,
whether as an employee, officer, director, consultant, contractor, stockholder,
owner, or otherwise, in any commercial endeavor which is in direct competition
with the business of the Company or an Affiliate without the written consent of
the Company or Affiliate, the Employee shall forfeit all outstanding Options and
all outstanding Restricted Stock, and including all exercised Options and other
situations pursuant to which the Company has not yet delivered a stock
certificate. Clause (b) shall not be deemed to have been violated solely by
reason of the Employee's ownership of stock or securities of any publicly owned
corporation, if that ownership does not result in effective control of the
corporation.
The decision of the Committee as to the cause of the Employee's
discharge, the damage done to the Company or an Affiliate, and the extent of the
Employee's competitive activity shall be final. No decision of the Committee,
however, shall affect the finality of the discharge of the Employee by the
Company or an Affiliate in any manner.
9.4 TAX WITHHOLDING. The Company or any Affiliate shall be entitled
to deduct from other compensation payable to each Employee any sums required by
federal, state, or local tax law to be withheld with respect to the grant or
exercise of an Option or lapse of restrictions on Restricted Stock. In the
alternative, the Company may require the Employee (or other person exercising
the Option or receiving the Restricted Stock) to pay the sum directly to the
employer corporation. If the Employee (or other person exercising the Option or
receiving the Restricted Stock) is required to pay the sum directly, payment in
cash or by check of such sums for taxes shall be delivered within 10 days after
the date of exercise or lapse of restrictions. The Company
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shall have no obligation upon exercise of any Option or lapse of restrictions
on Restricted Stock until payment has been received, unless withholding (or
offset against a cash payment) as of or prior to the date of exercise or
lapse of restrictions is sufficient to cover all sums due with respect to
that exercise. The Company and its Affiliates shall not be obligated to
advise an Employee of the existence of the tax or the amount which the
employer corporation will be required to withhold.
9.5 WRITTEN AGREEMENT. Each Option and Stock Award shall be embodied
in a written Option Agreement or Restricted Stock Agreement which shall be
subject to the terms and conditions of this Plan and shall be signed by the
Employee and by a member of the Committee on behalf of the Committee and the
Company or an executive officer of the Company other than the Employee on behalf
of the Company. The Option Agreement or Restricted Stock Agreement may contain
any other provisions that the Committee in its discretion shall deem advisable
which are not inconsistent with the terms of this Plan.
9.6 INDEMNIFICATION OF THE COMMITTEE AND THE BOARD OF DIRECTORS.
With respect to administration of this Plan, the Company shall indemnify each
present and future member of the Committee and the Board of Directors against,
and each member of the Committee and the Board of Directors shall be entitled
without further act on his part to indemnity from the Company for, all expenses
(including attorney's fees, the amount of judgments and the amount of approved
settlements made with a view to the curtailment of costs of litigation, other
than amounts paid to the Company itself) reasonably incurred by him in
connection with or arising out of any action, suit, or proceeding in which he
may be involved by reason of his being or having been a member of the Committee
and/or the Board of Directors, whether or not he continues to be a member of the
Committee and/or the Board of Directors at the time of incurring the expenses --
including, without limitation, matters as to which he shall be finally adjudged
in any action, suit or proceeding to have been found to have been negligent in
the performance of his duty as a member of the Committee or the Board of
Directors. However, this indemnity shall not include any expenses incurred by
any member of the Committee and/or the Board of Directors in respect of matters
as to which he shall be finally adjudged in any action, suit or proceeding to
have been guilty of gross negligence or willful misconduct in the performance of
his duty as a member of the Committee and the Board of Directors. In addition,
no right of indemnification under this Plan shall be available to or enforceable
by any member of the Committee and the Board of Directors unless, within 60 days
after institution of any action, suit or proceeding, he shall have offered the
Company, in writing, the opportunity to handle and defend same at its own
expense. This right of indemnification shall inure to the benefit of the heirs,
executors or administrators of each member of the Committee and the Board of
Directors and shall be in addition to all other rights to which a member of the
Committee and the Board of Directors may be entitled as a matter of law,
contract, or otherwise.
9.7 GENDER. If the context requires, words of one gender when used
in this Plan shall include the others and words used in the singular or plural
shall include the other.
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9.8 HEADINGS. Headings of Articles and Sections are included for
convenience of reference only and do not constitute part of the Plan and shall
not be used in construing the terms of the Plan.
9.9 OTHER COMPENSATION PLANS. The adoption of this Plan shall not
affect any other stock option, incentive or other compensation or benefit plans
in effect for the Company or any Affiliate, nor shall the Plan preclude the
Company from establishing any other forms of incentive or other compensation for
employees of the Company or any Affiliate.
9.10 OTHER OPTIONS OR AWARDS. The grant of an Option or Stock Award
shall not confer upon the Employee the right to receive any future or other
Options or Stock Awards under this Plan, whether or not Options or Stock Awards
may be granted to similarly situated Employees, or the right to receive future
Options or Stock Awards upon the same terms or conditions as previously granted.
9.11 GOVERNING LAW. The provisions of this Plan shall be construed,
administered, and governed under the laws of the State of Texas.
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