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EXHIBIT 99.9
OCEAN ENERGY, INC.
2001 LONG-TERM INCENTIVE PLAN
SECTION 1. Purpose of the Plan.
The Ocean Energy, Inc. 2001 Long-Term Incentive Plan (the "Plan") is intended to
promote the interests of Ocean Energy, Inc., a Texas corporation (the
"Company"), by encouraging employees of the Company, its subsidiaries and
affiliated entities and Directors (as defined below) to acquire or increase
their equity interest in the Company and to provide a means whereby employees
may develop a sense of proprietorship and personal involvement in the
development and financial success of the Company, and to encourage them to
remain with and devote their best efforts to the business of the Company thereby
advancing the interests of the Company and its shareholders. The Plan is also
contemplated to enhance the ability of the Company, its subsidiaries and
affiliated entities to attract and retain the services of individuals who are
essential for the growth and profitability of the Company.
SECTION 2. Definitions.
As used in the Plan, the following terms shall have the meanings set forth
below:
"Affiliate" shall mean (i) any entity that, directly or through one or
more intermediaries, is controlled by the Company and (ii) any entity
in which the Company has a significant equity interest, as determined
by the Committee.
"Award" shall mean any Option, Stock Appreciation Right, Restricted
Stock, Performance Award, Phantom Shares, Bonus Shares or Cash Award.
"Award Agreement" shall mean any written agreement, contract, or other
instrument or document evidencing any Award, which may, but need not,
be executed or acknowledged by a Participant.
"Board" shall mean the Board of Directors of the Company.
"Bonus Shares" shall mean an award of Shares granted pursuant to
Section 6(e) of the Plan.
"Cash Award" shall mean an award payable in cash granted pursuant to
Section 6(g) of the Plan.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the rules and regulations thereunder.
"Committee" shall mean the Organization and Compensation Committee of
the Board, which shall be comprised solely of two or more Directors who
are "outside directors" within the meaning of section 162(m) of the
Code and "Non-Employee Directors" within the meaning of Rule 16b-3.
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"Director" shall mean a member of the Board who is not also an
Employee.
"Employee" shall mean any employee of the Company or an Affiliate.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" shall mean, with respect to Shares, the closing
price of a Share quoted on the New York Stock Exchange Composite Tape,
or if the Shares are not listed on the New York Stock Exchange, on the
principal United States securities exchange registered under the
Exchange Act on which such stock is listed, or if the Shares are not
listed on any such stock exchange, the last sale price, or if none is
reported, the highest closing bid quotation on the National Association
of Securities Dealers, Inc., Automated Quotations System or any
successor system then in use on the Date of Grant, or if none are
available on such day, on the next preceding day on which the Shares
were publicly traded. In the event the Shares are not publicly traded
at the time a determination of its fair market value is required to be
made hereunder, the determination of fair market value shall be made in
good faith by the Committee.
"Incentive Stock Option" or "ISO" shall mean an option granted under
Section 6(a) of the Plan that is intended to qualify as an "incentive
stock option" under Section 422 of the Code or any successor provision
thereto.
"Non-Qualified Stock Option" or "NQO" shall mean an option granted
under Sections 6(a) or 6(h) of the Plan that is not intended to be an
Incentive Stock Option.
"Option" shall mean an Incentive Stock Option or a Non-Qualified Stock
Option.
"Participant" shall mean any individual granted an Award under the
Plan.
"Performance Award" shall mean any right granted under Section 6(d) of
the Plan.
"Person" shall mean individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, government or
political subdivision thereof or other entity.
"Phantom Shares" shall mean an Award of the right to receive Shares
issued at the end of a Restricted Period which is granted pursuant to
Section 6(f) of the Plan.
"Restricted Period" shall mean the period established by the Committee
with respect to an Award during which the Award either remains subject
to forfeiture or is not exercisable by the Participant.
"Restricted Stock" shall mean any Share, prior to the lapse of
restrictions thereon, granted under Section 6(c) of the Plan.
"Rule 16b-3" shall mean Rule 16b-3 promulgated by the SEC under the
Exchange Act, or any successor rule or regulation thereto as in effect
from time to time.
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"SEC" shall mean the Securities and Exchange Commission, or any
successor thereto.
"Shares" or "Common Shares" or "Common Stock" shall mean the common
stock of the Company, $0.10 par value, and such other securities or
property as may become the subject of Awards of the Plan.
"Spread" shall mean, in the case of a Stock Appreciation Right, an
amount equal to the excess, if any, of the Fair Market Value of a Share
on the date such right is exercised over the exercise price of such
Stock Appreciation Right.
"Stock Appreciation Right" or "Right" shall mean any right to receive
the Spread of Shares granted under Section 6(b) of the Plan.
"Substitute Award" shall mean Awards granted in assumption of, or in
substitution for, outstanding awards previously granted by (i) a
company acquired by the Company or one or more of its Affiliates, or
(ii) a company with which the Company or one or more of its Affiliates
combines. To the extent reasonably practical, as determined by the
Committee in its sole discretion, Substitute Awards shall contain the
same terms and conditions as the award they replace.
SECTION 3. Administration.
The Plan shall be administered by the Committee. A majority of the Committee
shall constitute a quorum, and the acts of the members of the Committee who are
present at any meeting thereof at which a quorum is present, or acts unanimously
approved by the members of the Committee in writing, shall be the acts of the
Committee. Subject to the terms of the Plan and applicable law, and in addition
to other express powers and authorizations conferred on the Committee by the
Plan, the Committee shall have full power and authority to: (i) designate
Participants; (ii) determine the type or types of Awards to be granted to an
eligible Participant; (iii) determine the number of Shares to be covered by, or
with respect to which payments, rights, or other matters are to be calculated in
connection with, Awards; (iv) determine the terms and conditions of any Award,
including such terms and conditions as shall be requisite in the judgment of the
Committee to cause designated Options to qualify as Incentive Stock Options; (v)
determine whether, to what extent, and under what circumstances Awards may be
settled or exercised in cash, Shares, other securities, other Awards or other
property, or canceled, forfeited, or suspended and the method or methods by
which Awards may be settled, exercised, canceled, forfeited, or suspended; (vi)
determine whether, to what extent, and under what circumstances cash, Shares,
other securities, other Awards, other property, and other amounts payable with
respect to an Award shall be deferred either automatically or at the election of
the holder thereof or of the Committee; (vii) interpret and administer the Plan
and any instrument or agreement relating to, or Award made under, the Plan;
(viii) establish, amend, suspend, or waive such rules and regulations and
appoint such agents as it shall deem appropriate for the proper administration
of the Plan; and (ix) make any other determination and take any other action
that the Committee deems necessary or desirable for the administration of the
Plan. The Committee may correct any defect or supply any omission or reconcile
any inconsistency in the Plan or in any Award Agreement in the manner and to the
extent it shall deem expedient to carry it into effect. Unless otherwise
expressly provided in the Plan, all designations, determinations,
interpretations, and
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other decisions under or with respect to the Plan or any Award shall be within
the sole discretion of the Committee, may be made at any time and shall be
final, conclusive, and binding upon all Persons, including the Company, any
Affiliate, any Participant, any holder or beneficiary of any Award, any
shareholder, any Employee and any Director.
SECTION 4. Shares Available for Awards.
(a) Shares Available. Subject to adjustment as provided in Section 4(c) and
below, the number of Shares with respect to which Awards may be granted under
the Plan shall be 4,000,000. If any Shares covered by an Award granted under the
Plan, or to which such an Award relates, are forfeited, or if an Award otherwise
terminates or is canceled without the delivery of Shares or of other
consideration, then the Shares covered by such Award, or to which such Award
relates, or the number of Shares otherwise counted against the aggregate number
of Shares with respect to which Awards may be granted, to the extent of any such
forfeiture, termination or cancellation, shall again be, or shall become, Shares
with respect to which Awards may be granted.
(b) Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant to
an Award may consist, in whole or in part, of authorized and unissued Shares or
of treasury Shares. Any of such Shares which remain unissued and which are not
subject to outstanding Awards at the termination of the Plan shall cease to be
subject to the Plan but, until termination of the Plan, the Company shall at all
times make available a sufficient number of shares to meet the requirements of
the Plan.
(c) Adjustments. In the event that the Committee determines that any dividend or
other distribution (whether in the form of cash, Shares, other securities, or
other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Shares or other securities of the Company, issuance
of warrants or other rights to purchase Shares or other securities of the
Company, or other similar corporate transaction or event affects the Shares such
that an adjustment is determined by the Committee in its discretion to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number and type of Shares (or other securities or property) with respect
to which Awards may be granted, (ii) the number and type of Shares (or other
securities or property) subject to outstanding Awards, and (iii) the grant or
exercise price with respect to any Award or, if deemed appropriate, make
provision for a cash payment to the holder of an outstanding Award; provided, in
each case, that with respect to Awards of Incentive Stock Options and Awards
intended to qualify as performance based compensation under Section 162(m)(4)(C)
of the Code, no such adjustment shall be authorized to the extent that such
authority would cause the Plan to violate Section 422(b)(1) of the Code or would
cause such Award to fail to so qualify under Section 162(m) of the Code, as the
case may be, or any successor provisions thereto; and provided, further, that
the number of Shares subject to any Award denominated in Shares shall always be
a whole number.
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SECTION 5. Eligibility and Award Limits.
Other than Awards granted to Directors pursuant to Section 6(h) of the Plan, any
Employee shall be eligible to be designated a Participant. However, no Employee
may receive Share-denominated Awards during the term of the Plan that, in the
aggregate, are with respect to more than one-third of all Shares that may be
made subject to Awards under the Plan. The maximum amount of compensation
(including the Fair Market Value of any Shares) that may be paid to any
Participant with respect to any single Performance Award or Cash Award in any
calendar year shall be $1.5 million. With respect to any Award granted in tandem
with, and expressed as a percentage of, a Share-denominated Award that is
intended to qualify as "performance-based compensation," the maximum payment to
any Participant with respect to such Award in any calendar year shall be an
amount (in cash and/or in Shares) equal to the Fair Market Value of the number
of Shares subject to such Award. The limitations set forth in the preceding
sentences shall be applied in a manner which will permit compensation generated
under the Plan to constitute "performance-based" compensation for purposes of
section 162(m) of the Code, including, without limitation, counting against such
maximum number of Shares, to the extent required under Section 162(m) of the
Code and applicable interpretive authority thereunder, any Shares subject to
Options that are canceled or repriced. Further, Restricted Stock, Performance
Awards, Phantom Shares and Bonus Shares paid in Shares may not, in the
aggregate, exceed 50% of all Shares that may be the subject of Awards under the
Plan.
SECTION 6. Awards.
(a) Options. Subject to the provisions of the Plan, the Committee shall have the
authority to determine the Employees to whom Options shall be granted, the
number of Shares to be covered by each Option, the purchase price therefor and
the conditions and limitations applicable to the exercise of the Option,
including the following terms and conditions and such additional terms and
conditions, as the Committee shall determine, that are not inconsistent with the
provisions of the Plan.
(i) Exercise Price. The purchase price per Share purchasable under an
Option shall be determined by the Committee at the time each Option is
granted, but shall not be less than the Fair Market Value of a Share on
such date, unless such Option is a Substitute Award.
(ii) Time and Method of Exercise. The Committee shall determine the
time or times at which an Option may be exercised in whole or in part,
and the method or methods by which, and the form or forms (which may
include, without limitation, cash, already-owned Shares, outstanding
Awards, Shares that would otherwise be acquired upon exercise of the
Option, a "cashless-broker" exercise (through procedures approved by
the Company), other securities or other property, or any combination
thereof, having a Fair Market Value on the exercise date equal to the
relevant exercise price) in which payment of the exercise price with
respect thereto may be made or deemed to have been made.
(iii) Special Limitations on Incentive Stock Options. Incentive Stock
Options may be granted only to employees of the Company and its
subsidiaries, within the meaning of Section 424(f) of the Code. To the
extent that the aggregate Fair Market Value
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(determined at the time the respective Incentive Stock Option is
granted) of Shares with respect to which Incentive Stock Options are
exercisable for the first time by an individual during any calendar
year under all incentive stock option plans of the Company and its
parent and subsidiary corporations exceeds $100,000, such Incentive
Stock Options shall be treated as Options which do not constitute
Incentive Stock Options. The Committee shall determine, in accordance
with applicable provisions of the Code, Treasury regulations and other
administrative pronouncements, which of a Participant's Incentive Stock
Options will not constitute Incentive Stock Options because of such
limitation and shall notify the Participant of such determination as
soon as practicable after such determination. No Incentive Stock Option
shall be granted to an individual if, at the time the Option is
granted, such individual owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company or
of its parent or subsidiary corporation, within the meaning of Section
422(b)(6) of the Code, unless (1) at the time such Option is granted
the option price is at least 110% of the Fair Market Value of the
Shares subject to the Option and (2) such Option by its terms is not
exercisable after the expiration of five years from the date of grant.
(iv) Expiration. Except as provided in Section 6(a)(iii), each Option
shall expire ten (10) years from the date of grant thereof, and, unless
provided otherwise in the Award Agreement, shall be subject to earlier
termination as follows: Options, to the extent exercisable as of the
date a Participant ceases to be an Employee, must be exercised within
three (3) months of such date unless such event results from death,
disability or retirement, in which case all outstanding Options held by
such Participant may be exercised in full by the optionee, the
optionee's legal representative, heir or devisee, as the case may be,
within two (2) years from the date of the Participant's death,
disability or retirement; provided, however, that no such event shall
extend the expiration date of an Option beyond the 10th anniversary of
its date of grant. Options that are not exercisable on termination of
employment shall be automatically canceled on termination of
employment. For purposes hereof, (x) "disability" means the Participant
is receiving benefits under a long-term disability plan of the Company
or, if the Company does not maintain such a plan, a determination by
the Committee, upon the basis of medical evidence satisfactory to it,
that the Participant is totally disabled, whether due to a physical or
mental condition, such that he is expected to be unable to continue his
employment for a continuous period of 12 or more months, and (y)
"retirement" means a termination of employment on or after the
Participant has reached age 65 or, with the consent of the Committee,
on or after reaching age 55.
(b) Stock Appreciation Rights. Subject to the provisions of the Plan, the
Committee shall have the authority to determine the Employees to whom Stock
Appreciation Rights shall be granted, the number of Shares to be covered by each
Stock Appreciation Right Award, the grant price thereof and the conditions and
limitations applicable to the exercise thereof. A Stock Appreciation Right may
be granted in tandem with another Award, in addition to another Award, or
freestanding and unrelated to another Award. A Stock Appreciation Right granted
in tandem with or in addition to another Award may be granted either at the same
time as such other Award or at a later time.
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(i) Grant Price. The grant price of a Stock Appreciation Right shall be
determined by the Committee on the date of grant, but shall not be less
than the Fair Market Value of a Share on such date (or such greater
exercise price as may be required if such Stock Appreciation Right is
granted in connection with an Incentive Stock Option that must have an
exercise price equal to 110% of the Fair Market Value of a Share on the
date of grant pursuant to Section 6(a)(iii)), unless such Stock
Appreciation Right is a Substitute Award.
(ii) Other Terms and Conditions. Subject to the terms of the Plan and
any applicable Award Agreement, the Committee shall determine, at or
after the grant of a Stock Appreciation Right, the term, methods of
exercise, methods of settlement, and any other terms and conditions of
any Stock Appreciation Right. Any such determination by the Committee
may be changed by the Committee from time to time and may govern the
exercise of Stock Appreciation Rights granted or exercised prior to
such determination as well as Stock Appreciation Rights granted or
exercised thereafter. The Committee may impose such conditions or
restrictions on the exercise of any Stock Appreciation Right as it
shall deem appropriate.
(iii) Expiration. Each Stock Appreciation Right shall expire ten (10)
years from the date of grant thereof, or, if granted in tandem with
another Award, upon the expiration of such tandem Award, if earlier,
and, unless provided otherwise in the Award Agreement, shall be subject
to earlier termination as follows: Stock Appreciation Rights, to the
extent exercisable as of the date a Participant ceases to be an
Employee, must be exercised within three (3) months of such date unless
such event results from death, disability or retirement, in which case
all outstanding Stock Appreciation Rights held by such Participant may
be exercised in full by the Participant, the Participant's legal
representative, heir or devisee, as the case may be, within two (2)
years from the date of the Participant's death, disability or
retirement; provided, however, that no such event shall extend the
expiration date of a Stock Appreciation Right beyond the 10th
anniversary of its date of grant. Stock Appreciation Rights that are
not exercisable on termination of employment shall be automatically
canceled on termination of employment. For purposes hereof,
"disability" and "retirement" shall have their respective meanings as
set forth in Section 6(a)(iv).
(c) Restricted Stock. Subject to the provisions of the Plan, the Committee shall
have the authority to determine the Employees to whom Restricted Stock shall be
granted, the number of Shares of Restricted Stock to be granted to each such
Participant, the duration of the Restricted Period during which, and the
conditions, including performance goals, if any, under which, the Restricted
Stock may be forfeited to the Company, and the other terms and conditions of
such Awards.
(i) Dividends. Dividends paid on Restricted Stock may be paid directly
to the Participant, may be subject to risk of forfeiture and/or
transfer restrictions during any period established by the Committee or
sequestered and held in a bookkeeping cash account (with or without
interest) or reinvested on an immediate or deferred basis in additional
shares of Common Stock, which credit or shares may be subject to the
same
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restrictions as the underlying Award or such other restrictions, all as
determined by the Committee in its discretion.
(ii) Registration. Any Restricted Stock may be evidenced in such manner
as the Committee shall deem appropriate, including, without limitation,
book-entry registration or issuance of a stock certificate or
certificates. In the event any stock certificate is issued in respect
of Restricted Stock granted under the Plan, such certificate shall be
registered in the name of the Participant and shall bear an appropriate
legend referring to the terms, conditions, and restrictions applicable
to such Restricted Stock.
(iii) Forfeiture and Restrictions Lapse. Except as otherwise determined
by the Committee or the terms of the Award that granted the Restricted
Stock, upon termination of a Participant's employment (as determined
under criteria established by the Committee) for any reason during the
applicable Restricted Period, all Restricted Stock shall be forfeited
by the Participant and re-acquired by the Company. The Committee may,
when it finds that a waiver would be in the best interests of the
Company and not cause such Award, if it is intended to qualify as
performance-based compensation under Section 162(m) of the Code, to
fail to so qualify under Section 162(m) of the Code, waive in whole or
in part any or all remaining restrictions with respect to such
Participant's Restricted Stock. Unrestricted Shares, evidenced in such
manner as the Committee shall deem appropriate, shall be issued to the
holder of Restricted Stock promptly after the applicable restrictions
have lapsed or otherwise been satisfied.
(iv) Transfer Restrictions. During the Restricted Period, Restricted
Stock will be subject to the limitations on transfer as provided in
Section 6(i)(iii).
(d) Performance Awards. The Committee shall have the authority to determine the
Employees who shall receive a Performance Award, which shall be denominated as a
cash amount at the time of grant and confer on the Participant the right to
receive payment of such Award, in whole or in part, upon the achievement of such
performance goals during such performance periods as the Committee shall
establish with respect to the Award.
(i) Terms and Conditions. Subject to the terms of the Plan and any
applicable Award Agreement, the Committee shall determine the
performance goals to be achieved during any performance period, the
length of any performance period, the amount of any Performance Award
and the amount of any payment or transfer to be made pursuant to any
Performance Award.
(ii) Payment of Performance Awards. Performance Awards may be paid (in
cash and/or in Shares, in the sole discretion of the Committee) in a
lump sum or in installments following the close of the performance
period, in accordance with procedures established by the Committee with
respect to such Award.
(e) Bonus Shares. The Committee shall have the authority, in its discretion, to
grant Bonus Shares to eligible Employees. Each Bonus Share shall constitute a
transfer of an unrestricted Share to the Participant, without other payment
therefor, as additional compensation for the Participant's services to the
Company.
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(f) Phantom Shares. The Committee shall have the authority to grant Awards of
Phantom Shares to eligible Employees upon such terms and conditions as the
Committee may determine.
(i) Terms and Conditions. Each Phantom Share Award shall constitute an
agreement by the Company to issue or transfer a specified number of
Shares or pay an amount of cash equal to the Fair Market Value of a
specified number of Shares, or a combination thereof to the Participant
in the future, subject to the fulfillment during the Restricted Period
of such conditions, including performance goals, if any, as the
Committee may specify at the date of grant. During the Restricted
Period, the Participant shall not have any right to transfer any rights
under the subject Award, shall not have any rights of ownership in the
Phantom Shares and shall not have any right to vote such shares.
(ii) Dividends. Any Phantom Share award may provide that any or all
dividends or other distributions paid on Shares during the Restricted
Period be credited in a cash bookkeeping account (without interest) or
that equivalent additional Phantom Shares be awarded, which account or
shares may be subject to the same restrictions as the underlying Award
or such other restrictions as the Committee may determine.
(g) Cash Awards. The Committee shall have the authority to determine the
Employees to whom Cash Awards shall be granted, the amount, and the terms or
conditions, if any, as additional compensation for the Employee's services to
the Company or its Affiliates. A Cash Award may be granted (simultaneously or
subsequently) separately or in tandem with another Award and may entitle a
Participant to receive a specified amount of cash from the Company upon such
other Award becoming taxable to the Participant, which cash amount may be based
on a formula relating to the anticipated taxable income associated with such
other Award and the payment of the Cash Award.
(h) Granting of Options to Directors. Each individual who is elected or
appointed as a Director for the first time after the date the Plan is approved
by the shareholders of the Company shall receive, as of the date of his election
or appointment, and without the exercise of the discretion of any person or
persons, a Non-Qualified Stock Option (an "Initial Grant") exercisable for
10,000 Shares (subject to adjustment in the same manner as provided in Section 7
hereof with respect to Shares subject to Options then outstanding). As of the
date of the annual meeting of the shareholders of the Company ("Annual Meeting")
in each year after 2001 that the Plan is in effect, each Director who is in
office immediately after such meeting and who is not then entitled to receive an
Initial Grant pursuant to the preceding provisions of this Section 6(h) shall
receive, without the exercise of the discretion of any person or persons, a
Non-Qualified Stock Option exercisable for 6,000 Shares (an "Annual Grant")
(subject to adjustment in the same manner as provided in Section 7 hereof with
respect to shares of Stock subject to Options then outstanding).
(i) Other Terms and Conditions. The following provisions are applicable
to Options granted pursuant to this Section 6(h):
A. Subject to the following provisions, (1) an Initial Grant shall
become exercisable for 50% of the Shares covered thereby on the date of
grant, and for the remaining 50% thereof on the first Annual Meeting
following its date of grant and (2) an Annual Grant
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shall become exercisable for one-third of the Shares covered thereby on
the first Annual Meeting following the date of grant, and thereafter,
for an additional one-third of the Shares covered thereby on each of
the second and third Annual Meetings following the date of grant.
B. The purchase price of a Share covered under an Option granted under
this Section 6(h) shall be the Fair Market Value of a Share on the date
of grant.
C. To the extent that the right to exercise an Option has accrued and
is in effect, the Option may be exercised in full at one time or in
part from time to time by giving written notice, signed by the optionee
exercising the Option, to the Company, stating the number of Shares
with respect to which the Option is being exercised, accompanied by
payment in full for such Shares, which payment may be in cash,
already-owned Shares, a "cashless-broker" exercise (through procedures
approved by the Company), or any combination thereof, having a Fair
Market Value on the exercise date equal to the relevant exercise price
in which payment of the exercise price with respect thereto may be made
or deemed to have been made; provided however, that (i) no Option shall
be exercisable after ten (10) years from the date on which it was
granted, and (ii) there shall be no such exercise at any one time for
fewer than one hundred (100) Shares or for all of the remaining Shares
then purchasable by the optionee exercising the Option, if fewer than
one hundred (100) Shares.
D. Each Option shall expire ten (10) years from the date of grant
thereof, subject to earlier termination as follows: Options, to the
extent exercisable as of the date a Director optionee ceases to serve
as a director of the Company, must be exercised within three (3) months
of such date unless such event results from death, disability or
retirement, as determined by the Committee, in which case all
outstanding Options held by such Director may be exercised in full by
the optionee, the optionee's legal representative, heir or devisee, as
the case may be, within two (2) years from the date of death,
disability or retirement; provided, however, that no such event shall
extend the normal expiration date of such Options. Options not
exercisable on termination as provided above shall be automatically
canceled on termination.
E. Upon exercise of the Option, delivery of a certificate for fully
paid and nonassessable Shares shall be made at the corporate office of
the Company to the optionee exercising the Option either at such time
during ordinary business hours after fifteen (15) days but not more
than thirty (30) days from the date of receipt of the notice by the
Company as shall be designated in such notice, or at such time, place
and manner as may be agreed upon by the Company and the optionee
exercising the Option.
(ii) Number of Available Shares. In the event that the number of Shares
available for grants under the Plan is insufficient to make all grants
provided for in this Section 6(h) hereby made on the applicable date,
then all Directors who are entitled to a grant on such date shall share
ratably in the number of Shares then available for grant under the
Plan, and shall have no right to receive a grant with respect to the
deficiencies in the number of available Shares and the grants under
this Section 6(h) shall terminate.
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(i) General.
(i) Awards May Be Granted Separately or Together. Awards to Employees
may, in the discretion of the Committee, be granted either alone or in
addition to, in tandem with, or in substitution for any other Award
granted under the Plan or any award granted under any other plan of the
Company or any Affiliate. Awards granted in addition to or in tandem
with other Awards or awards granted under any other plan of the Company
or any Affiliate may be granted either at the same time as or at a
different time from the grant of such other Awards or awards.
(ii) Forms of Payment by Company Under Awards. Subject to the terms of
the Plan and of any applicable Award Agreement, payments or transfers
to be made by the Company or an Affiliate upon the grant, exercise or
payment of an Award may be made in such form or forms as the Committee
shall determine, including, without limitation, cash, Shares, other
securities, other Awards or other property, or any combination thereof,
and may be made in a single payment or transfer, in installments, or on
a deferred basis, in each case in accordance with rules and procedures
established by the Committee. Such rules and procedures may include,
without limitation, provisions for the payment or crediting of
reasonable interest on installment or deferred payments.
(iii) Limits on Transfer of Awards.
(A) Except as provided in (C) below, each Award, and each right under
any Award, shall be exercisable only by the Participant during the
Participant's lifetime, or, if permissible under applicable law, by the
Participant's guardian or legal representative or by a transferee
receiving such Award pursuant to a qualified domestic relations order
(a "QDRO") as determined by the Committee.
(B) Except as provided in (C) below, no Award and no right under any
such Award may be assigned, alienated, pledged, attached, sold or
otherwise transferred or encumbered by a Participant otherwise than by
will or by the laws of descent and distribution (or, in the case of
Restricted Stock, to the Company) or, if permissible under applicable
law, pursuant to a QDRO and any such purported assignment, alienation,
pledge, attachment, sale, transfer or encumbrance shall be void and
unenforceable against the Company or any Affiliate.
(C) Notwithstanding anything in the Plan to the contrary, except to the
extent specifically provided otherwise by the Committee in an Award
Agreement, Non-Qualified Stock Options may be transferred by the
optionee to one or more permitted transferees; provided that (i) there
may be no consideration given for such transfer, (ii) the optionee (or
such optionee's estate or representative) shall remain obligated to
satisfy all employment tax and other withholding tax obligations
associated with the exercise of the transferred Options, (iii) the
optionee shall notify the Company in writing that such transfer has
occurred, the identity and address of the permitted transferee and the
relationship of the permitted transferee to the optionee, and (iv) such
transfer shall be effected pursuant to transfer documents approved from
time to time by the Company. Any permitted transferee may not further
assign or transfer the transferred Option
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otherwise than by will or the laws of descent and distribution.
Following any permitted transfer, any such Options shall continue to be
subject to the same terms and conditions as were applicable to the
Option immediately prior to the transfer, provided that the term
"optionee" as used in the Plan shall be deemed to refer also to each
permitted transferee where required by the context. A transferred
Option may only be exercised by a transferee to the same extent such
Option could, at such time, be exercised by the optionee "but for" such
transfer. The term "permitted transferees" shall mean one or more of
the following: (i) any member of the optionee's immediate family; (ii)
a trust established for the exclusive benefit of one or more members of
such immediate family; (iii) a partnership in which such immediate
family members are the only partners; or (iv) any other person approved
from time to time by the Committee. The term "immediate family" is
defined for such purpose as spouses, children, stepchildren and
grandchildren, including relationships arising from adoption.
(iv) Term of Awards. The term of each Award (other than pursuant to
Section 6(h)) shall be for such period as may be determined by the
Committee; provided, that in no event shall the term of any Award
exceed a period of ten (10) years from the date of its grant.
(v) Share Certificates. All certificates for Shares or other securities
of the Company or any Affiliate delivered under the Plan pursuant to
any Award or the exercise thereof shall be subject to such stop
transfer orders and other restrictions as the Committee may deem
advisable under the Plan or the rules, regulations, and other
requirements of the SEC, any stock exchange upon which such Shares or
other securities are then listed, and any applicable Federal or state
laws, and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.
(vi) Consideration for Grants. Awards may be granted for no cash
consideration or for such consideration as the Committee determines
including, without limitation, such minimal cash consideration as may
be required by applicable law.
(vii) Delivery of Shares or other Securities and Payment by Participant
of Consideration. No Shares or other securities shall be delivered
pursuant to any Award until payment in full of any amount required to
be paid pursuant to the Plan or the applicable Award Agreement is
received by the Company, including without limitation, all applicable
withholding taxes. Such payment may be made by such method or methods
and in such form or forms as the Committee shall determine, including,
without limitation, cash, Shares, other securities, other Awards or
other property, withholding of Shares, cashless exercise with
simultaneous sale, or any combination thereof; provided that the
combined value, as determined by the Committee, of all cash and cash
equivalents and the Fair Market Value of any such Shares or other
property so tendered to the Company, as of the date of such tender, is
at least equal to the full amount required to be paid pursuant to the
Plan or the applicable Award Agreement to the Company.
(viii) Performance Goals. Where necessary, the Committee shall
establish performance goals applicable to those Awards the payment of
which is intended by the Committee to qualify as "performance-based
compensation" as described in Section 162(m)(4)(C) of
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the Code. Until changed by the Committee, the performance goals shall
be based upon the attainment of such target levels of Share price, net
income, cash flows, reserve additions or revisions, acquisitions, total
capitalization, total or comparative shareholder return, assets,
exploration successes, production volumes, findings and development
costs, costs reductions and savings, reportable incidents in safety or
environmental matters, return on equity, profit margin or sales, and/or
earnings per share as may be specified by the Committee. The
performance goals may be made subject to adjustment for specified
unusual and nonrecurring events and may be absolute, relative to one or
more other companies, or relative to one or more indices. Which factor
or factors to be used with respect to any grant, and the weight to be
accorded thereto if more than one factor is used, shall be determined
by the Committee at the time of grant.
SECTION 7. Amendment and Termination.
Except to the extent prohibited by applicable law and unless otherwise expressly
provided in an Award Agreement or in the Plan:
(a) Amendments to the Plan. The Board may amend, alter, suspend,
discontinue, or terminate the Plan without the consent of any
shareholder, Participant, other holder or beneficiary of an Award, or
other Person; provided, however, notwithstanding any other provision of
the Plan or any Award Agreement, without the approval of the
shareholders of the Company no such amendment, alteration, suspension,
discontinuation, or termination shall be made that would (i) increase
the total number of Shares available for Awards under the Plan, except
as provided in Section 4(c) of the Plan; (ii) increase the class of
eligible Participants; (iii) amend the eligibility requirements for
Awards under the Plan; or (iv) amend or delete Section 7(b)(ii).
(b) Amendments to Awards. The Committee may waive any conditions or
rights under, amend any terms of, or alter any Award theretofore
granted (other than Initial Grants or Annual Grants under Section
6(h)); provided, however, that (i) no change, other than pursuant to
Section 7(c), in any Award shall reduce the benefit to Participant
without the consent of such Participant and (ii) the Committee may not,
without approval of the shareholders of the Company, amend any
outstanding Award Agreement to lower the exercise price of any Option
(or cancel and replace any outstanding Option with an Option having a
lower exercise price). Notwithstanding the foregoing, with respect to
any Award intended to qualify as performance-based compensation under
Section 162(m) of the Code, no amendment shall be authorized to the
extent such amendment would cause the Award to fail to so qualify.
(c) Adjustment of Awards Upon the Occurrence of Certain Unusual or
Nonrecurring Events. The Committee is hereby authorized to make
adjustments in the terms and conditions of, and the criteria included
in, Awards in recognition of unusual or nonrecurring events (including,
without limitation, the events described in Section 4(c) of the Plan)
affecting the Company, any Affiliate, or the financial statements of
the Company or any Affiliate, or of changes in applicable laws,
regulations, or accounting principles, whenever the Committee
determines that such adjustments are appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended
to
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be made available under the Plan. Notwithstanding the foregoing, with
respect to any Award intended to qualify as performance-based
compensation under Section 162(m) of the Code, no adjustment shall be
authorized to the extent such adjustment would cause the Award to fail
to so qualify.
SECTION 8. Change in Control.
Notwithstanding any other provision of this Plan to the contrary, in the event
of a Change in Control of the Company, all outstanding Awards granted prior to
the date of the Change in Control automatically shall become fully vested on
such Change in Control, all restrictions, if any, with respect to such Awards
shall lapse, and all performance goals, if any, with respect to such Awards
shall be deemed to have been met in full (at the maximum performance level). For
purposes of this Plan, a "Change in Control" shall be deemed to occur:
(i) if any person (as such term is used in sections 13(d) and 14(d)(2)
of the Exchange Act), other than the Company, any parent corporation or
subsidiary corporation of the Company or any employee benefit plan of
the Company or any such entity, is or becomes the "beneficial owner"
(as defined in Rule 13d-3 of the Exchange Act), directly or indirectly,
of securities of the Company representing 25% or more of the combined
voting power of the Company's then outstanding securities,
(ii) upon the first purchase of the Company's common stock pursuant to
a tender or exchange offer (other than a tender or exchange offer made
by the Company),
(iii) on the date of consummation of a merger, consolidation,
recapitalization, reorganization, sale or disposition of all or a
substantial portion of the Company's assets, or the issuance of shares
of stock of the Company in connection with the acquisition of the stock
or assets of another entity; provided, however, that a Change in
Control shall not occur under this clause (iii) if consummation of the
transaction would result in at least two-thirds of the total voting
power represented by the voting securities of the Company (or, if not
the Company, the entity that succeeds to all or substantially all of
the Company's business) outstanding immediately after such transaction
being beneficially owned (within the meaning of Rule 13d-3 promulgated
pursuant to the Exchange Act) by at least two-thirds of the holders of
outstanding voting securities of the Company immediately prior to the
transaction, with the voting power of each such continuing holder
relative to other such continuing holders not substantially altered in
the transaction, or
(iv) if, during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board cease for any reason
to constitute at least a majority thereof, unless the election or
nomination for the election by the Company's shareholders of each new
director was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of the period.
SECTION 9. Parachute Tax Gross-Up.
To the extent that the grant, payment, or acceleration of vesting or payment,
whether in cash or stock, of any Award made to a Participant under the Plan is
subject to an excise tax under
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Section 4999(a) of the Code, or any similar or successor provision (a "Parachute
Tax"), the Company shall pay such Participant an additional amount of cash (the
"Gross-up Amount") such that the "net" after-tax benefit received by the
Participant, after paying all applicable Parachute Taxes with respect to such
Awards (including those on the Gross-up Amount) and any federal or state taxes
on the Gross-up Amount, shall be equal to the net after-tax benefit that such
Participant would have received if such Parachute Tax had not been applicable.
SECTION 10. General Provisions.
(a) No Rights to Awards. No Employee, Participant or other Person shall have any
claim to be granted any Award, and there is no obligation for uniformity of
treatment of Employees, Participants, or holders or beneficiaries of Awards. The
terms and conditions of Awards need not be the same with respect to each
recipient.
(b) Withholding. The Company or any Affiliate is authorized to withhold from any
Award, from any payment due or transfer made under any Award or under the Plan
or from any compensation or other amount owing to a Participant the amount (in
cash, Shares, other securities, Shares that would otherwise be issued pursuant
to such Award, other Awards or other property) of any applicable taxes payable
in respect of an Award, its exercise, the lapse of restrictions thereon, or any
payment or transfer under an Award or under the Plan and to take such other
action as may be necessary in the opinion of the Company to satisfy all
obligations for the payment of such taxes. Any Participant who is subject to
Rule 16b-3 may direct the Company to withhold Shares or may tender Shares to the
Company to satisfy his tax withholding obligations.
(c) No Right to Employment. The grant of an Award shall not be construed as
giving a Participant the right to be retained in the employ of the Company or
any Affiliate. Further, the Company or an Affiliate may at any time dismiss a
Participant from employment, free from any liability or any claim under the
Plan, unless otherwise expressly provided in the Plan or in any Award Agreement.
Nothing contained in the Plan shall confer on any Director any right with
respect to continuation of membership on the Board.
(d) 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 Texas and applicable Federal law.
(e) Severability. If any provision of the Plan or any Award is or becomes or is
deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any
Person or Award, or would disqualify the Plan or any Award under any law deemed
applicable by the Committee, such provision shall be construed or deemed amended
to conform to the applicable laws, or if it cannot be construed or deemed
amended without , in the determination of the Committee, materially altering the
intent of the Plan or the Award, such provision shall be stricken as to such
jurisdiction, Person or Award and the remainder of the Plan and any such Award
shall remain in full force and effect.
(f) Other Laws. The Committee may refuse to issue or transfer any Shares or
other consideration under an Award if, acting in its sole discretion, it
determines that the issuance or
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transfer of such Shares or such other consideration might violate any applicable
law or regulation or entitle the Company to recover the same under Section 16(b)
of the Exchange Act, and any payment tendered to the Company by a Participant,
other holder or beneficiary in connection with the exercise of such Award shall
be promptly refunded to the relevant Participant, holder or beneficiary.
(g) No Trust or Fund Created. Neither the Plan nor the Award shall create or be
construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Affiliate and a Participant or any other
Person. To the extent that any Person acquires a right to receive payments from
the Company or any Affiliate pursuant to an Award, such right shall be no
greater than the right of any general unsecured creditor of the Company or any
Affiliate.
(h) No Fractional Shares. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award, and the Committee shall determine whether
cash, other securities, or other property shall be paid or transferred in lieu
of any fractional Shares or whether such fractional Shares or any rights thereto
shall be canceled, terminated, or otherwise eliminated.
(i) Headings. Headings are given to the Sections and subsections of the Plan
solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.
(j) No Restriction on Corporate Action. Nothing contained in the Plan shall be
construed to prevent the Company or any Affiliate from taking any action that is
deemed by the Company or such Affiliate to be appropriate or in its best
interest, whether or not such action would have an adverse effect on the Plan or
any Award made under the Plan. No Employee, Participant, or other Person shall
have any claim against the Company or any Affiliate as a result of any such
action.
(k) Facsimile Signature. Any Award Agreement or related document may be executed
by facsimile signature. If any officer who shall have signed or whose facsimile
signature shall have been placed upon any such Award Agreement or related
document shall have ceased to be such officer before the related Award is
granted by the Company, such Award may nevertheless be issued by the Company
with the same effect as if such person were such officer at the date of grant.
SECTION 11. Effective Date of the Plan.
The Plan shall be effective as of the date of its approval by the Board,
provided the Plan is subsequently approved by the shareholders of the Company
within 12 months thereafter. Notwithstanding any provision in the Plan or in any
Award Agreement, no Option or Stock Appreciation Right shall be exercisable and
no Award shall vest or become satisfiable prior to such shareholder approval.
SECTION 12. Term of the Plan.
No Award shall be granted under the Plan after the tenth anniversary of the date
the Plan was adopted by the Board or approved by the shareholders, whichever is
earlier. However, unless otherwise expressly provided in the Plan or in an
applicable Award Agreement, any Award
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theretofore granted may, and the authority of the Board or the Committee to
amend, alter, adjust, suspend, discontinue, or terminate any such Award or to
waive any conditions or rights under any such Award shall, extend beyond such
date.
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