10/13/99
EXHIBIT 10.2
CARBON ENERGY CORPORATION
1999 RESTRICTED STOCK PLAN
SECTION 1: Purpose
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The purpose of the Carbon Energy Corporation 1999 Restricted Stock Plan
(the "Plan") is to further the growth and development of Carbon Energy
Corporation, a Colorado corporation (the "Company"), by affording an opportunity
for stock ownership to selected employees, directors and consultants of the
Company and its Subsidiaries who are responsible for the conduct and management
of its business or who are involved in endeavors significant to its success.
SECTION 2: Definitions
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Unless otherwise indicated, the following words when used herein shall have
the following meanings:
(a) "Affiliate" shall mean, with respect to any person or entity, a
person or entity that directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control
with, such person or entity.
(b) "Board of Directors" shall mean the Board of Directors of the
Company.
(c) "Change in Control" shall be deemed to have occurred:
(1) At such time as a third person, including a "group" as
defined in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended, becomes the beneficial owner of shares of the Company having
50% or more of the total number of votes that may be cast for the
election of Directors of the Company; or
(2) On the date on which the stockholders of the Company
approve: (A) any agreement for a merger or consolidation of the
Company with another entity, provided that there shall be no Change in
Control if the persons and entities who were the stockholders of the
Company immediately before such merger or consolidation continue to
own directly more than two-thirds of the outstanding voting securities
of the corporation resulting from such merger or consolidation in
substantially the same proportion as their ownership of the voting
securities of the Company outstanding immediately before such merger
or consolidation; or (B) any sale, exchange or other disposition of
all or substantially all of the Company's assets; or
(3) On the effective date of any sale, exchange or other
disposition of greater than 50% in fair market value of the Company's
assets, other than in the ordinary course of business, whether in a
single transaction or a series of related transactions; or
(4) At such time that there is a change in more than a majority
of the Company's Board of Directors as a result of a proxy contest,
except this clause (4) will not apply to any Common Stock of a Grantee
who, or an Affiliate of whom, has waged the proxy contest or has
endorsed the change in the Board of Directors.
In determining whether clause (1) of the preceding sentence has been
satisfied, the third person owning shares must be someone other than
Yorktown Energy Partners III, L.P., Yorktown Partners LLC, or entities
controlled by Yorktown Partners LLC. For this purpose, the term
"controlled" means possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a person, whether
(1) through the ownership of more than 50% of the outstanding voting
securities of the person, (2) by contract or (3) by a position such as a
general partner or manager. The Plan Administrator's reasonable
determination as to whether such an event has occurred shall be final and
conclusive.
(d) "Common Stock" shall mean the Company's common stock (no par
value) and any share or shares of the Company's capital stock hereafter
issued or issuable in substitution for such shares.
(e) "Director" shall mean a member of the Board of Directors.
(f) "Plan Administrator" shall mean the body which is responsible for
the administration of the Plan, as determined pursuant to Section 4.1.
(g) "Recipient" shall mean the employee, director, or consultant of
the Company or its Subsidiaries who has been granted Restricted Stock under
this Plan.
(h) "Restricted Stock" shall mean shares of Common Stock granted to
an employee, director, or consultant of the Company or its Subsidiaries,
which are subject to restrictions set forth in a Stock Restriction
Agreement in such form as the Plan Administrator in its sole discretion
shall specify at the time that the shares are granted.
(i) "Stock Restriction Agreement" shall mean the agreement between
the Company and a Recipient pursuant to which Restricted Stock is granted
to the Recipient and which sets forth the restrictions on such Restricted
Stock.
(j) "Subsidiary" shall mean a subsidiary corporation of the Company
as defined in Section 424(f) of the Internal Revenue Code of 1986, as
amended.
SECTION 3: EFFECTIVE DATE
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The effective date of the Plan is October 14, 1999.
SECTION 4: ADMINISTRATION
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4.1 Plan Administrator. The Plan shall be administered by the Board of
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Directors, unless and until such time as the Board of Directors delegates the
administration of the Plan to a
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committee. Any such committee shall be appointed by and shall serve at the
pleasure of the Board of Directors and shall consist of two or more non-employee
Directors and the President of the Company; provided that no member of such
committee shall participate in the deliberations and actions of the committee
with respect to the granting of Restricted Stock to that member. The Board of
Directors may from time to time remove members from or add members to any such
committee, and vacancies on the committee, howsoever caused, shall be filled by
the Board of Directors.
4.2 Meetings and Actions. The Plan Administrator shall hold meetings at
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such times and places as it may determine. A majority of the members of the Plan
Administrator shall constitute a quorum, and the acts of the majority of the
members present at a meeting or a consent in writing signed by all members of
the Plan Administrator shall be the acts of the Plan Administrator and shall be
final, binding and conclusive upon all persons, including the Company, its
Subsidiaries, its stockholders, and all persons having any interest in
Restricted Stock which may be or has been granted pursuant to the Plan.
4.3 Powers of Plan Administrator. The Plan Administrator shall have the
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full and exclusive right to grant and determine terms and conditions of all
Stock Restriction Agreements under the Plan and to prescribe, amend and rescind
rules and regulations for administration of the Plan. In granting Restricted
Stock, the Plan Administrator shall take into consideration the contribution the
Recipient has made or may make to the success of the Company or its Subsidiaries
and such other factors as the Plan Administrator shall determine.
4.4 Interpretation of Plan. The determination of the Plan Administrator as
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to any disputed question arising under the Plan, including questions of
construction and interpretation, shall be final, binding and conclusive upon all
persons, including the Company, its Subsidiaries, its stockholders, and all
persons having any interest in Restricted Stock which may be or has been granted
pursuant to the Plan.
4.5 Indemnification. Each person who is or shall have been a member of the
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Plan Administrator or of the Board of Directors 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 in connection with or resulting
from any claim, action, suit or proceeding to which such person may be a party
or in which such person 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 in
settlement thereof, provided that the Company approved such settlement, or paid
in satisfaction of a judgment in any such action, suit or proceeding, provided
such person shall give the Company an opportunity, at its own expense, to handle
and defend the same before undertaking to handle and defend it on such person's
own behalf. The foregoing right of indemnification shall not be exclusive of,
and is in addition to, any other rights of indemnification to which any person
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 may have to indemnify
them or hold them harmless.
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SECTION 5: STOCK SUBJECT TO THE PLAN
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5.1 Number. The aggregate number of shares of Common Stock which may be
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granted under the Plan shall not exceed three hundred thousand (300,000) shares.
Shares which may be issued as Restricted Stock may consist, in whole or in part,
of authorized but unissued stock or treasury stock of the Company not reserved
for any other purpose.
5.2 Unused Stock. If any Restricted Stock granted under the Plan is
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forfeited, in whole or in part, such shares shall once again be available for
issuance under the Plan.
5.3 Adjustment for Change in Outstanding Shares. If there is any change,
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increase or decrease, in the outstanding shares of Common Stock which is
effected without receipt of additional consideration by the Company, by reason
of a stock dividend, recapitalization, merger, consolidation, stock split,
combination or exchange of stock, or other similar circumstances, then in each
such event, the Plan Administrator shall make an appropriate adjustment in the
aggregate number of shares of Common Stock available under the Plan. The Plan
Administrator's determinations in making adjustments shall be final and
conclusive.
SECTION 6: ELIGIBILITY
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All salaried employees, all directors, and all consultants of the Company
and its Subsidiaries who are responsible for the conduct and management of its
business or who are involved in endeavors significant to its success shall be
eligible to receive grants of Restricted Stock under the Plan.
SECTION 7: GRANT OF RESTRICTED STOCK
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The Plan Administrator may from time to time in its sole discretion
determine which of the eligible employees, directors, or contractors of the
Company should receive grants of Restricted Stock, the number of shares of
Restricted Stock to be granted to each such eligible employee, director, and
contractor, the dates on which such shares of Restricted Stock are to be
granted, and the restrictions applicable to each grant of shares of Restricted
Stock. The restrictions applicable to each grant of shares of Restricted Stock
shall be set forth in a Stock Restriction Agreement in such form as the Plan
Administrator, in its sole discretion, shall determine to be appropriate. The
terms of any Stock Restriction Agreement need not be identical to the terms of
other Stock Restriction Agreements applicable to other grants of Restricted
Stock under the Plan to the same or other Recipients. No shares of Restricted
Stock shall be issued under the Plan until the Recipient of such shares provides
the Company with a signed Stock Restriction Agreement in the form specified by
the Plan Administrator with respect to the grant of Restricted Stock to that
recipient.
SECTION 8: CHANGE IN CONTROL
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Notwithstanding any vesting requirements contained in any Stock Restriction
Agreement, all Restricted Stock issued under the Plan shall become immediately
vested in full upon the occurrence of a Change in Control. However, if the
Change in Control occurs because of the change in the Board of Directors
described in clause (4) of the definition of Change in Control,
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this Section 8 shall not apply to any Restricted Stock of a Recipient who, or an
Affiliate of whom, has waged a proxy contest resulting in the change in more
than a majority of the Board of Directors or has endorsed the change in the
Board of Directors, and the Restricted Stock of that Recipient shall not be
affected by this Section 8. If any employment agreement between a Recipient and
the Company provides that Restricted Stock granted under this Plan will become
vested upon the occurrence of other events (such as, but not limited to, an
event that constitutes a change in control as defined in that employment
agreement but that is not a Change in Control as defined in Section 2(c) of this
Plan), then Restricted Stock granted under this Plan shall become vested upon
the occurrence of such other events in accordance with the terms of such
employment agreement, in addition to becoming vested in accordance with the
terms of this Plan and the Stock Restriction Agreement issued to the Recipient
under this Plan.
SECTION 9: ISSUANCE OF SHARES
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9.1 Compliance with Laws. If the issuance or transfer of shares by the
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Company would for any reason, in the opinion of counsel for the Company, violate
any applicable federal or state laws or regulations, the Company may delay
issuance or transfer of such shares to the Recipient until compliance with such
laws can reasonably be obtained. In no event shall the Company be obligated to
effect or obtain any listing, registration, qualification, consent or approval
under any applicable federal or state laws or regulations or any contract or
agreement to which the Company is a party with respect to the issuance of any
such shares. If, after reasonable efforts, the Company is unable to obtain the
authority which counsel for the Company deems necessary for the lawful issuance
of shares under the Plan, the Company shall be relieved from any liability for
failure to issue shares unless and until such authority is obtained.
9.2 Investment Representation. The Company may require any Recipient to
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provide a written representation providing assurances satisfactory to the
Company (i) as to the Recipient's knowledge and experience in financial and
business matters and/or that the Recipient has engaged a representative
reasonably satisfactory to the Company who is knowledgeable and experienced in
financial and business matters, (ii) that the Recipient is capable of
evaluating, alone or together with the representative, the merits and risks of
owning the Restricted Stock; and (iii) that the Recipient is acquiring the
Restricted Stock for such person's own account and not with any present
intention of selling or otherwise distributing the stock. Certificates
representing Restricted Stock may contain such legends and transfer restrictions
as the Company shall deem reasonably necessary or desirable, including, without
limitation, legends restricting transfer of the Restricted Stock until there has
been compliance with federal and state securities laws.
SECTION 10: AMENDMENTS
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The Board of Directors may at any time and from time to time alter, amend,
suspend or terminate the Plan or any part thereof as it may deem proper, except
that no such action shall diminish or impair the rights under a previous grant
of Restricted Stock. Subject to the terms and conditions of the Plan, the Board
of Directors may modify, extend or renew outstanding Stock Restriction
Agreements granted under the Plan, except that no such action shall diminish or
impair the rights under a Stock Restriction Agreement previously granted without
the consent of the Recipient.
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SECTION 11: TERM OF PLAN
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This Plan shall terminate on September 1, 2009; provided, however, that the
Board of Directors may at any time prior thereto suspend or terminate the Plan.
No such suspension or termination shall diminish or impair the rights under a
grant of Restricted Stock previously made without the consent of the Recipient.
SECTION 12: NO EMPLOYMENT RIGHTS
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Nothing contained in this Plan shall confer upon any person any right with
respect to the continuation of such person's employment by the Company or any
Subsidiary or interfere in any way with the right of the Company or any
Subsidiary, subject to the terms of any separate employment agreement to the
contrary, at any time to terminate such employment or to increase or decrease
the compensation of the person from the rate in existence at the time of the
grant of the Restricted Stock.
SECTION 13: GOVERNING LAW
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This Plan, and all Stock Restriction Agreements granted under this Plan,
shall be construed and shall take effect in accordance with the laws of the
State of Colorado, without regard to the conflicts of laws rules of such State.
Adopted effective the 14th day of October, 1999.
CARBON ENERGY CORPORATION
By:_________________________________________
Title:______________________________________
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