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EXHIBIT 10.1
OCEAN ENERGY, INC.
1999 LONG-TERM INCENTIVE PLAN
SECTION 1. Purpose of the Plan.
The Ocean Energy, Inc. 1999 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.
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"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 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.
"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.
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"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.
"SEC" shall mean the Securities and Exchange Commission, or
any successor thereto.
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"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;
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(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 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 3,000,000. 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
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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.
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 33-1/3% 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 Restricted Stock Award,
Phantom Stock Award, or Cash Award granted in tandem with, and expressed as a
percentage of, a Share-denominated Award which 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 20% 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
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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 (determined at the
time the respective Incentive Stock Option is granted) of Shares with
respect to which Incentive Stock Options granted after 1986 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.
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(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.
(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
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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 restrictions as the underlying Award or such other
restrictions, all as determined by the Committee in its discretion.
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(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.
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(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.
(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.
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(h) Granting of Options to Directors. Each individual who serves as a
Director on the date the Plan is approved by the shareholders of the Company
(the "Approval Date") or who is elected or appointed as a Director for the first
time after such date shall receive, as of the Approval Date of the Plan or the
date of his election or appointment, whichever is applicable, 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 1999 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 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
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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.
(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
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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
15
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
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 immediately
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
16
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 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
17
Plan; (ii) increase the class of eligible Participants; or (iii) amend
the eligibility requirements for Awards under the Plan.
(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 no change, other than pursuant to Section 7(c),
in any Award shall reduce the benefit to Participant without the
consent of such Participant. 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.
(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 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
18
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 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.
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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
20
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 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
21
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 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.
Dated: April 26, 1999