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EXHIBIT 10.1
HARKEN ENERGY CORPORATION
1996 INCENTIVE AND NONSTATUTORY OPTION PLAN
SCOPE AND PURPOSE OF PLAN
Harken Energy Corporation, a Delaware corporation (the "Corporation"),
has adopted this 1996 Incentive and Nonstatutory Option Plan (the "Plan") to
provide for the granting of:
(a) Incentive Options (hereafter defined) to certain Employees
(hereafter defined) and
(b) Nonstatutory Options (hereafter defined) to certain
Employees, members of the Board of Directors and other
persons.
The purpose of the Plan is to provide an incentive for Employees,
members of the Board of Directors, and certain consultants and advisors of the
Corporation or its Subsidiaries (hereafter defined) to remain in the service of
the Corporation or its Subsidiaries, to extend to them the opportunity to
acquire a proprietary interest in the Corporation so that they will apply their
best efforts for the benefit of the Corporation, and to aid the Corporation in
attracting able persons to enter the service of the Corporation and its
Subsidiaries.
SECTION 1. DEFINITIONS
1.1 "Acquiring Person" means any Person other than the
Corporation, any of the Corporation's Subsidiaries, any employee benefit plan
of the Corporation or of a Subsidiary of the Corporation or of a corporation
owned directly or indirectly by the stockholders of the Corporation in
substantially the same proportions as their ownership of stock of the
Corporation, or any trustee or other fiduciary holding securities under an
employee benefit plan of the Corporation or of a Subsidiary of the Corporation
or of a corporation owned directly or indirectly by the stockholders of the
Corporation in substantially the same proportions as their ownership of stock
of the Corporation.
1.2 "Award" means the grant of any form of Option, under the
Plan, to a Holder pursuant to the terms, conditions, and limitations that the
Board of Directors may establish in order to fulfill the objectives of the
Plan.
1.3 "Award Agreement" means the written agreement between the
Corporation and a Holder evidencing the terms, conditions, and limitations of
the Award granted to that Holder.
1.4 "Board of Directors" means the board of directors of the
Corporation.
1.5 "Business Day" means any day other than a Saturday, a Sunday,
or a day on which banking institutions in the State of Texas are authorized or
obligated by law or executive order to close.
1.6 "Change in Control" means the event that is deemed to have
occurred if:
(a) any Acquiring Person is or becomes the "beneficial
owner" (as defined in Rule l3d-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation representing fifty
percent or more of the combined voting power of the then outstanding
Voting Securities of the Corporation; or
(b) members of the Incumbent Board cease for any reason
to constitute at least a majority of the Board of Directors; or
(c) a public announcement is made of a tender or exchange
offer by any Acquiring Person for fifty percent or more of the
outstanding Voting Securities of the Corporation, and the Board of
Directors
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approves or fails to oppose that tender or exchange offer in its
statements in Schedule 14D-9 under the Exchange Act; or
(d) the stockholders of the Corporation approve a merger
or consolidation of the Corporation with any other corporation or
partnership (or, if no such approval is required, the consummation of
such a merger or consolidation of the Corporation), other than a
merger or consolidation that would result in the Voting Securities of
the Corporation outstanding immediately before the consummation
thereof continuing to represent (either by remaining outstanding or by
being converted into Voting Securities of the surviving entity or of a
parent of the surviving entity) a majority of the combined voting
power of the Voting Securities of the surviving entity (or its parent)
outstanding immediately after that merger or consolidation; or
(e) the stockholders of the Corporation approve a plan of
complete liquidation of the Corporation or an agreement for the sale
or disposition by the Corporation of all or substantially all the
Corporation's assets (or, if no such approval is required, the
consummation of such a liquidation, sale, or disposition in one
transaction or series of related transactions) other than a
liquidation, sale or disposition of all or substantially all the
Corporation's assets in one transaction or a series of related
transactions to a corporation owned directly or indirectly by the
stockholders of the Corporation in substantially the same proportions
as their ownership of stock of the Corporation.
1.7 "Code" means the Internal Revenue Code of 1986, as amended.
1.8 "Committee" means the Compensation Committee of the Board of
Directors, or such other committee of the Board of Directors as may be
appointed by the Board of Directors from time to time to administer this Plan.
1.9 "Corporation" means Harken Energy Corporation, a Delaware
corporation.
1.10 "Date of Grant" has the meaning given it in Paragraph 4.3.
1.11 "Disability" has the meaning given it in Paragraph 7.3.
1.12 "Eligible Individuals" means (a) Employees, (b) member of the
Board of Directors and (c) any other Person that the Board of Directors
designates as eligible for an Award (other than for Incentive Options) because
the Person performs bona fide consulting or advisory services for the
Corporation or any of its Subsidiaries (other than services in connection with
the offer or sale of securities in a capital-raising transaction) and the Board
of Directors determines that the Person has a direct and significant effect on
the financial development of the Corporation or any of its Subsidiaries.
1.13 "Employee" means any employee of the Corporation or of any of
its Subsidiaries, including officers and directors of the Corporation who are
also employees of the Corporation or of any of its Subsidiaries. The
definition of "Employee" is qualified in its entirety and is subject to the
definition set forth in the Code and the regulations thereunder.
1.14 "Exchange Act" means the Securities Exchange Act of 1934, or
any successor law, as it may be amended from time to time.
1.15 "Exercise Notice" has the meaning given it in Paragraph 5.5.
1.16 "Exercise Price" has the meaning given it in Paragraph 5.4.
1.17 "Fair Market Value" means, for a particular day:
(a) If shares of Stock of the same class are listed or
admitted to unlisted trading privileges on any national or regional
securities exchange at the date of determining the Fair Market Value,
then the last
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reported sale price, regular way, on the composite tape of that
exchange on the last Business Day before the date in question or, if
no such sale takes place on that Business Day, the average of the
closing bid and asked prices, regular way, in either case as reported
in the principal consolidated transaction reporting system with
respect to securities listed or admitted to unlisted trading
privileges on that securities exchange; or
(b) If shares of Stock of the same class are not listed
or admitted to unlisted trading privileges as provided in Subparagraph
1.17(a) and if sales prices for shares of Stock of the same class in
the over-the- counter market are reported by the National Association
of Securities Dealers, Inc. Automated Quotations, Inc. ("NASDAQ")
National Market System (or such other system then in use) at the date
of determining the Fair Market Value, then the last reported sales
price so reported on the last Business Day before the date in question
or, if no such sale takes place on that Business Day, the average of
the high bid and low asked prices so reported; or
(c) If shares of Stock of the same class are not listed
or admitted to unlisted trading privileges as provided in subparagraph
1.17(a) and sales prices for shares of Stock of the same class are not
reported by the NASDAQ National Market System (or a similar system
then in use) as provided in subparagraph 1.17(b), and if bid and asked
prices for shares of Stock of the same class in the over-the-counter
market are reported by NASDAQ (or, if not so reported, by the National
Quotation Bureau Incorporated) at the date of determining the Fair
Market Value, then the average of the high bid and low asked prices on
the last Business Day before the date in question; or
(d) If shares of Stock of the same class are not listed
or admitted to unlisted trading privileges as provided in subparagraph
1.17(a) and sales prices or bid and asked prices therefor are not
reported by NASDAQ (or the National Quotation Bureau Incorporated) as
provided in subparagraph 1.17(b) or subparagraph 1.17(c) at the date
of determining the Fair Market Value, then the value determined in
good faith by the Board of Directors or the Committee, which
determination shall be conclusive for all purposes; or
1.18 "Holder" means an Eligible Individual to whom an Award has
been granted.
1.19 "Incentive Option" means an incentive stock option as defined
under Section 422 of the Code and regulations thereunder.
1.20 "Incumbent Board" means the individuals who, as of the date
of the adoption of the Plan by the Board of Directors, constitute the Board of
Directors and any other individual who becomes a director of the Corporation
after that date and whose election or appointment by the Board of Directors or
nomination for election by the Corporation's stockholders was approved by a
vote of at least a majority of the directors then comprising the Incumbent
Board.
1.21 "Nonstatutory Option" means a stock option that does not
satisfy the requirements of Section 422 of the Code or that is designated at
the Date of Grant or in the applicable Award Agreement to be an option other
than an Incentive Option.
1.22 "Non-Surviving Event" means an event of Restructure as
described in either subparagraph (b) or (c) of Paragraph 1.31.
1.23 "Option" means either an Incentive Option or a Nonstatutory
Option, or both.
1.24 "Person" means any person or entity of any nature whatsoever,
specifically including (but not limited to) an individual, a firm, a company, a
corporation, a partnership, a trust or other entity. A Person, together with
that Person's affiliates and associates (as those terms are defined in Rule
12b-2 under the Exchange Act for purposes of this definition only), and any
Persons acting as a partnership, limited partnership, joint venture,
association, syndicate or other group (whether or not formally organized), or
otherwise acting jointly or in concert or in a coordinated or
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consciously parallel manner (whether or not pursuant to any express agreement),
for the purpose of acquiring, holding, voting or disposing of securities of the
Corporation with that Person, shall be deemed a single "Person."
1.25 "Plan" means the Corporation's 1996 Incentive and
Nonstatutory Stock Option Plan, as it may be amended from time to time.
1.26 "Restructure" means the occurrence of any one or more of the
following:
(a) The merger or consolidation of the Corporation with
any Person, whether effected as a single transaction or a series of
related transactions, with the Corporation remaining the continuing or
surviving entity of that merger or consolidation and the Stock
remaining outstanding and not changed into or exchanged for stock or
other securities of any other Person or of the Corporation, cash, or
other property;
(b) The merger or consolidation of the Corporation with
any Person, whether effected as a single transaction or a series of
related transactions, with (i) the Corporation not being the
continuing or surviving entity of that merger or consolidation or (ii)
the Corporation remaining the continuing or surviving entity of that
merger or consolidation but all or a part of the outstanding shares of
Stock are changed into or exchanged for stock or other securities of
any other Person or the Corporation, cash, or other property; or
(c) The transfer, directly or indirectly, of all or
substantially all of the assets of the Corporation (whether by sale,
merger, consolidation, liquidation or otherwise) to any Person whether
effected as a single transaction or a series of related transactions.
1.27 "Securities Act" means the Securities Act of 1933, or any
successor law, as it may be amended from time to time.
1.28 "Stock" means the Corporation's authorized common stock, par
value $.01 per share, as described in the Corporation's Certificate of
Incorporation as it shall have been amended, or any other securities that are
substituted for the Stock as provided in Section 6.
1.29 "Subsidiary" means, with respect to any Person, any
corporation or other entity of which a majority of the voting power of the
voting equity securities or equity interest is owned, directly or indirectly,
by that Person.
1.30 "Total Shares" has the meaning given it in Paragraph 6.2.
1.31 "Voting Securities" means any securities that are entitled to
vote generally in the election of directors, in the admission of general
partners, or in the selection of any other similar governing body.
SECTION 2. SHARES OF STOCK SUBJECT TO THE PLAN
2.1 Maximum Amount of Shares. Subject to the provisions of
Paragraph 2.6 and Section 6 of the Plan, the aggregate number of shares of
Stock that may be issued, transferred or exercised pursuant to Awards under the
Plan shall be 670,000.
2.2 Reduction in Available Shares. In computing the total number
of shares available at a particular time for Awards under the Plan, there shall
be counted against the limitations stated in Paragraph 2.1 the number of shares
of Stock subject to issuance upon exercise or settlement of Awards and the
number of shares of Stock that have been issued upon exercise or settlement of
Awards (except as otherwise provided in Paragraph 2.3).
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2.3 Restoration of Unused and Surrendered Shares. If Stock
subject to any Award is not issued or transferred, or ceases to be issuable or
transferable for any reason, including (but not exclusively) because an Award
is forfeited, terminated, expires unexercised, or is exchanged for other
Awards, the shares of Stock that were subject to that Award shall no longer be
charged against the number of available shares provided for in Paragraph 2.2
and shall again be available for issue, transfer, or exercise pursuant to
Awards under the Plan to the extent of such forfeiture, termination,
expiration, or other cessation of its subjection to an Award.
2.4 Description of Shares. The shares to be delivered under the
Plan shall be made available from (a) authorized but unissued shares of Stock,
(b) Stock held in the treasury of the Corporation, or (c) previously issued
shares of Stock reacquired by the Corporation, including shares purchased on
the open market, in each situation as the Board of Directors or the Committee
may determine from time to time at its sole option.
2.5 Registration and Listing of Shares. From time to time, the
Board of Directors and appropriate officers of the Corporation shall and are
authorized to take whatever actions are necessary to file required documents
with governmental authorities, stock exchanges, and other appropriate Persons
to make shares of Stock available for issuance pursuant to Awards.
2.6 Reduction in Outstanding Shares of Stock. Nothing in this
Section 2 shall impair the right of the Corporation to reduce the number of
outstanding shares of Stock pursuant to repurchases, redemptions, or otherwise;
provided, however, that no reduction in the number of outstanding shares of
Stock shall (a) impair the validity of any outstanding Award, whether or not
that Award is fully exercisable or fully vested or (b) impair the status of any
shares of Stock previously issued pursuant to an Award or thereafter issued
pursuant to a then-outstanding Award as duly authorized, validly issued, fully
paid, and nonassessable shares.
SECTION 3. ADMINISTRATION OF THE PLAN
3.1 Powers of the Board of Directors. The Board of Directors
shall have the authority, in its sole and absolute discretion, (a) to determine
the Eligible Individuals to whom, and the time or times at which, Awards shall
be granted; (b) to determine the number of shares of Stock that shall be the
subject of each Award; (c) to determine the terms and provisions of each Award
Agreement (which need not be identical), including provisions defining or
otherwise relating to (i) the term and the period or periods and extent of
exercisability of the Options, (ii) the extent to which the transferability of
shares of Stock issued or transferred pursuant to any Award is restricted,
(iii) the effect of termination of employment on the Award, and (iv) the effect
of approved leaves of absence (consistent with any applicable regulations of
the Internal Revenue Service); (d) to accelerate the time of exercisability of
any Option that has been granted; (e) to make determinations of the Fair Market
Value of the Stock pursuant to the Plan; and (f) to delegate its duties under
the Plan to the Committee or such agents as it may appoint from time to time,
provided that the Board of Directors may not delegate its duties with respect
to making Awards to Eligible Individuals who are subject to Section 16(b) of
the Exchange Act.
3.2 Committee. Subject to the powers reserved unto the Board of
Directors in Section 3.1 hereof, the Committee shall administer the Plan. The
number of persons that shall constitute the Committee shall be determined from
time to time by a majority of all the members of the Board of Directors, and,
unless that majority of the Board of Directors determines otherwise, shall be
no less than two persons.
3.3 Duration, Removal, Etc. The members of the Committee shall
serve at the pleasure of the Board of Directors, which shall have the power, at
any time and from time to time, to remove members from or add members to the
Committee. Removal from the Committee may be with or without cause. Any
individual serving as a member of the Committee shall have the right to resign
from membership in the Committee by at least three day's written notice to the
Board of Directors. The Board of Directors, and not the remaining members of
the Committee, shall have the power and authority to fill vacancies on the
Committee, however caused.
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3.4 Meetings and Actions of Committee. The Board of Directors
shall designate which of the Committee members shall be the chairman of the
Committee. If the Board of Directors fails to designate a Committee chairman,
the members of the Committee shall elect one of the Committee members as
chairman, who shall act as chairman until he ceases to be a member of the
Committee or until the Board of Directors elects a new chairman. The Committee
shall hold its meetings at those times and places as the chairman of the
Committee may determine. At all meetings of the Committee, a quorum for the
transaction of business shall be required, and a quorum shall be deemed present
if at least a majority of the members of the Committee are present. At any
meeting of the Committee, each member shall have one vote. All decisions and
determinations of the Committee shall be made by the majority vote or majority
decision of all of its members present at a meeting at which a quorum is
present; provided, however, that any decision or determination reduced to
writing and signed by all of the members of the Committee shall be as fully
effective as if it had been made at a meeting that was duly called and held.
The Committee may make any rules and regulations for the conduct of its
business that are not inconsistent with the provisions of the Plan, the
Certificate of Incorporation, the by-laws of the Corporation, as the Committee
may deem advisable.
3.5 Committee's Powers. The Committee shall have the authority,
in its sole and absolute discretion, (a) to adopt, amend, and rescind
administrative and interpretive rules and regulations relating to the Plan; (b)
to construe the respective Award Agreements and the Plan; and (c) to make all
other determinations, perform all other acts, and exercise all other powers and
authority necessary or advisable for administering the Plan, including the
delegation of those ministerial acts and responsibilities as the Committee
deems appropriate. The Committee may correct any defect, supply any omission or
reconcile any inconsistency in the Plan, in any Award, or in any Award
Agreement in the manner and to the extent it deems necessary or desirable to
carry the Plan into effect, and the Committee shall be the sole and final judge
of that necessity or desirability. The determinations of the Committee on the
matters referred to in this Paragraph 3.5 shall be final and conclusive.
SECTION 4. ELIGIBILITY AND PARTICIPATION
4.1 Eligible Individuals. Awards may be granted pursuant to the
Plan only to persons who are Eligible Individuals at the time of the grant
thereof.
4.2 Grant of Awards. Subject to the express provisions of the
Plan, the Board of Directors shall determine which Eligible Individuals shall
be granted Awards from time to time. In making grants, the Board of Directors
shall take into consideration the contribution the potential Holder has made or
may make to the success of the Corporation or its Subsidiaries. The Board of
Directors shall also determine the number of shares subject to each of the
Awards and shall authorize and cause the Corporation to grant Awards in
accordance with those determinations.
4.3 Date of Grant. The date on which the Board of Directors
completes all action resolving to offer an Award to an individual, including
the specification of the number of shares of Stock to be subject to the Award,
shall be the date on which the Award covered by an Award Agreement is granted
(the "Date of Grant"), even though certain terms of the Award Agreement may not
be determined at that time and even though the Award Agreement may not be
executed until a later time. In no event shall a Holder gain any rights in
addition to those specified by the Board of Directors in its grant, regardless
of the time that may pass between the grant of the Award and the actual
execution of the Award Agreement by the Corporation and the Holder.
4.4 Award Agreements. Each Award granted under the Plan shall be
evidenced by an Award Agreement that is executed by the Corporation and the
Eligible Individual to whom the Award is granted and incorporating those terms
that the Board of Directors shall deem necessary or desirable. More than one
Award may be granted under the Plan to the same Eligible Individual and be
outstanding concurrently. In the event an Eligible Individual is granted both
one or more Incentive Options and one or more Nonstatutory Options, those
grants shall be evidenced by separate Award Agreements, one for each of the
Incentive Option grants and one for each of the Nonstatutory Option grants.
4.5 Limitation for Incentive Options. Notwithstanding any
provision contained herein to the contrary, (a) a person shall not be eligible
to receive an Incentive Option unless he is an Employee of the Corporation or a
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corporate Subsidiary (but not a partnership Subsidiary), and (b) a person shall
not be eligible to receive an Incentive Option if, immediately before the time
the Option is granted, that person owns (within the meaning of Sections 422 and
425 of the Code) stock possessing more than ten percent of the total combined
voting power or value of all classes of stock of the Corporation or a
Subsidiary. Nevertheless, subparagraph 4.5(b) shall not apply if, at the time
the Incentive Option is granted, the Exercise Price of the Incentive Option is
at least one hundred and ten percent of Fair Market Value and the Incentive
Option is not, by its terms, exercisable after the expiration of five years
from the Date of Grant.
4.6 No Right to Award. The adoption of the Plan shall not be
deemed to give any person a right to be granted an Award.
SECTION 5. TERMS AND CONDITIONS OF OPTIONS
All Options granted under the Plan shall comply with, and the related
Award Agreements shall be deemed to include and be subject to, the terms and
conditions set forth in this Section 5 (to the extent each term and condition
applies to the form of Option) and also to the terms and conditions set forth
in Section 6 and Section 7; provided, however, that the Board of Directors may
authorize an Award Agreement that expressly contains terms and provisions that
differ from the terms and provisions set forth in Paragraphs 6.2, 6.3, and 6.4
and any of the terms and provisions of Section 7 (other than Paragraphs 7.9 and
7.10).
5.1 Number of Shares. Each Award Agreement shall state the total
number of shares of Stock to which it relates.
5.2 Vesting. Unless otherwise provided in an Award Agreement,
all Options awarded under this Plan shall vest and become exercisable over a
four year period, such that on each anniversary of the Date of Grant, 25% of
the number of shares of stock subject to the Option shall vest and become
exercisable until the option is fully vested. Notwithstanding this Section
5.2, the Board of Directors may accelerate the vesting of any Option granted
under this Plan.
5.3 Expiration of Options. Nonstatutory Options and Incentive
Options may be exercised during the term determined by the Board of Directors
and set forth in the Award Agreement; provided that no Incentive Option shall
be exercised after the expiration of a period of ten years commencing on the
Date of Grant of the Incentive Option.
5.4 Exercise Price. Each Award Agreement shall state the
exercise price per share of Stock (the "Exercise Price"). The exercise price
per share of Stock subject to an Incentive Option shall not be less than the
greater of (a) the par value per share of the Stock or (b) 100% of the Fair
Market Value per share of the Stock on the Date of Grant of the Option. The
exercise price per share of Stock subject to a Nonstatutory Option shall not be
less than the par value per share of the Stock.
5.5 Method of Exercise. The Option shall be exercisable only by
written notice of exercise (the "Exercise Notice") delivered to the Corporation
during the term of the Option, which notice shall (a) state the number of
shares of Stock with respect to which the Option is being exercised, (b) be
signed by the Holder of the Option or, if the Holder is dead or Disabled, by
the person authorized to exercise the Option pursuant to Paragraph 7.3, (c) be
accompanied by the Exercise Price for all shares of Stock for which the Option
is exercised, and (d) include such other information, instruments, and
documents as may be required to satisfy any other condition to exercise
contained in the Award Agreement. The Option shall not be deemed to have been
exercised unless all of the requirements of the preceding provisions of this
Paragraph 5.5 have been satisfied.
5.6 Incentive Option Exercises. During the Holder's lifetime,
only the Holder may exercise an Incentive Option.
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5.7 Medium and Time of Payment. The Exercise Price of an Option
shall be payable in full upon the exercise of the Option (a) in cash or by an
equivalent means acceptable to the Committee, (b) on the Committee's prior
consent, with shares of Stock owned by the Holder (including shares received
upon exercise of the Option or restricted shares already held by the Holder)
and having a Fair Market Value at least equal to the aggregate Exercise Price
payable in connection with such exercise, or (c) by any combination of clauses
(a) and (b). If the Committee elects to accept shares of Stock in payment of
all or any portion of the Exercise Price, then (for purposes of payment of the
Exercise Price) those shares of Stock shall be deemed to have a cash value
equal to their aggregate Fair Market Value determined as of the date of the
delivery of the Exercise Notice. If the Committee elects to accept shares of
restricted Stock in payment of all or any portion of the Exercise Price, then
an equal number of shares issued pursuant to the exercise shall be restricted
on the same terms and for the restriction period remaining on the shares used
for payment.
5.8 Payment with Sale Proceeds. In addition, at the request of
the Holder and to the extent permitted by applicable law, the Committee may
(but shall not be required to) approve arrangements with a brokerage firm under
which that brokerage firm, on behalf of the Holder, shall pay to the
Corporation the Exercise Price of the Option being exercised, and the
Corporation shall promptly deliver the exercised shares to the brokerage firm.
To accomplish this transaction, the Holder must deliver to the Corporation an
Exercise Notice containing irrevocable instructions from the Holder to the
Corporation to deliver the stock certificates directly to the broker. Upon
receiving a copy of the Exercise Notice acknowledged by the Corporation, the
broker shall sell that number of shares of Stock or loan the Holder an amount
sufficient to pay the Exercise Price and any withholding obligations due. The
broker shall then deliver to the Corporation that portion of the sale or loan
proceeds necessary to cover the Exercise Price and any withholding obligations
due. The Committee shall not approve any transaction of this nature if the
Committee believes that the transaction would give rise to the Holder's
liability for short-swing profits under Section 16(b) of the Exchange Act.
5.9 Payment of Taxes. The Committee may, in its discretion,
require a Holder to pay to the Corporation (or the Corporation's Subsidiary if
the Holder is an employee of a Subsidiary of the Corporation), at the time of
the exercise of an Option, the amount that the Committee deems necessary to
satisfy the Corporation's or its Subsidiary's current or future obligation to
withhold federal, state or local income or other taxes that the Holder incurs
by exercising an Option. Upon the exercise of an Option requiring tax
withholding, a Holder may (a) direct the Corporation to withhold from the
shares of Stock to be issued to the Holder the number of shares necessary to
satisfy the Corporation's obligation to withhold taxes, that determination to
be based on the shares' Fair Market Value as of the date on which tax
withholding is to be made; (b) deliver to the Corporation sufficient shares of
Stock (based upon the Fair Market Value at date of withholding) to satisfy the
Corporation's tax withholding obligations, based on the shares' Fair Market
Value as of the date of exercise; or (c) deliver sufficient cash to the
Corporation to satisfy its tax withholding obligations. Holders who elect to
use such a stock withholding feature must make the election at the time and in
the manner that the Committee prescribes. The Committee may, at its sole
option, deny any Holder's request to satisfy withholding obligations through
Stock instead of cash. In the event the Committee subsequently determines that
the aggregate Fair Market Value (as determined above) of any shares of Stock
withheld as payment of any tax withholding obligation is insufficient to
discharge that tax withholding obligation, then the Holder shall pay to the
Corporation, immediately upon the Committee's request, the amount of that
deficiency.
5.10 Limitation on Aggregate Value of Shares That May Become First
Exercisable During Any Calendar Year Under an Incentive Option. Except as is
otherwise provided in Paragraph 6.2, with respect to any Incentive Option
granted under this Plan, the aggregate Fair Market Value of shares of Stock
subject to an Incentive Option and the aggregate Fair Market Value of shares of
Stock or stock of any Subsidiary subject to any other incentive stock option
(within the meaning of Section 422 of the Code) of the Corporation or its
Subsidiaries that first become purchasable by a Holder in any calender year may
not (with respect to that Holder) exceed $100,000, or such other amount as may
be prescribed under Section 422 of the Code or applicable regulations or
rulings from time to time. As used in the previous sentence, Fair Market Value
shall be determined as of the date the Incentive Option is granted. Failure to
comply with this provision shall not impair the enforceability or
exercisability of any Option, but shall cause the excess amount of shares to be
reclassified in accordance with the Code.
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5.11 No Fractional Shares. The Corporation shall not in any case
be required to sell, issue, or deliver a fractional share with respect to any
Option. In lieu of the issuance of any fractional share of Stock, the
Corporation shall pay to the Holder an amount in cash equal to the same
fraction (as the fractional Stock) of the Fair Market Value of a share of Stock
determined as of the date of the applicable Exercise Notice.
5.12 Modification, Extension and Renewal of Options. Subject to
the terms and conditions of and within the limitations of the Plan, and any
consent required by the last sentence of this Paragraph 5.12, the Board of
Directors may (a) modify, extend or renew outstanding Options granted under the
Plan, (b) accept the surrender of Options outstanding hereunder (to the extent
not previously exercised) and authorize the granting of new Options in
substitution for outstanding Options (to the extent not previously exercised),
and (c) amend the terms of an Incentive Option at any time to include
provisions that have the effect of changing the Incentive Option to a
Nonstatutory Option. Nevertheless, without the consent of the Holder, the
Board of Directors may not modify any outstanding Options so as to specify a
higher or lower Exercise Price or accept the surrender of outstanding Incentive
Options and authorize the granting of new Options in substitution therefor
specifying a higher or lower Exercise Price. In addition, no modification of an
Option granted hereunder shall, without the consent of the Holder, alter or
impair any rights or obligations under any Option theretofore granted hereunder
to such Holder under the Plan except, with respect to Incentive Options, as may
be necessary to satisfy the requirements of Section 422 of the Code or as
permitted in clause (c) of this Paragraph 5.12.
5.13 Other Agreement Provisions. The Award Agreements authorized
under the Plan shall contain such provisions in addition to those required by
the Plan (including, without limitation, restrictions or the removal of
restrictions upon the exercise of the Option and the retention or transfer of
shares thereby acquired) as the Board of Directors may deem advisable. Each
Award Agreement shall identify the Option evidenced thereby as an Incentive
Option or Nonstatutory Option, as the case may be, and no Award Agreement shall
cover both an Incentive Option and a Nonstatutory Option. Each Award Agreement
relating to an Incentive Option granted hereunder shall contain such
limitations and restrictions upon the exercise of the Incentive Option to which
it relates as shall be necessary for the Incentive Option to which such Award
Agreement relates to constitute an incentive stock option, as defined in
Section 422 of the Code.
SECTION 6. ADJUSTMENT PROVISIONS
6.1 Adjustment of Awards and Authorized Stock. The terms of an
Award and the number of shares of Stock authorized pursuant to Paragraph 2.1
for issuance under the Plan shall be subject to adjustment, from time to time,
in accordance with the following provisions:
(a) If at any time or from time to time, the Corporation
shall subdivide as a whole (by reclassification, by a stock split, by
the issuance of a distribution on Stock payable in Stock or otherwise)
the number of shares of Stock then outstanding into a greater number
of shares of Stock, then (i) the maximum number of shares of Stock
available for the Plan as provided in Paragraph 2.1 shall be increased
proportionately, and the kind of shares or other securities available
for the Plan shall be appropriately adjusted, (ii) the number of
shares of Stock (or other kind of shares or securities) that may be
acquired under any Award shall be increased proportionately, and (iii)
the price (including Exercise Price) for each share of Stock (or other
kind of shares or unit of other securities) subject to then
outstanding Awards shall be reduced proportionately, without changing
the aggregate purchase price or value as to which outstanding Awards
remain exercisable or subject to restrictions.
(b) If at any time or from time to time, the Corporation
shall consolidate as a whole (by reclassification, reverse stock
split, or otherwise) the number of shares of Stock then outstanding
into a lesser number of shares of Stock, (i) the maximum number of
shares of Stock available for the Plan as provided in Paragraph 2.1
shall be decreased proportionately, and the kind of shares or other
securities available for the Plan shall be appropriately adjusted,
(ii) the number of shares of Stock (or other kind of shares or
securities) that may be acquired under any Award shall be decreased
proportionately, and (iii) the price (including
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Exercise Price) for each share of Stock (or other kind of shares or
unit of other securities) subject to then outstanding Awards shall be
increased proportionately, without changing the aggregate purchase
price or value as to which outstanding Awards remain exercisable or
subject to restrictions.
(c) Whenever the number of shares of Stock subject to
outstanding Awards and the price for each share of Stock subject to
outstanding Awards are required to be adjusted as provided in this
Paragraph 6.1, the Committee shall promptly prepare a notice setting
forth, in reasonable detail, the event requiring adjustment, the
amount of the adjustment, the method by which such adjustment was
calculated, and the change in price and the number of shares of Stock,
other securities, cash or property purchasable subject to each Award
after giving effect to the adjustments. The Committee shall promptly
give each Holder such a notice.
(d) Adjustments under subparagraphs 6.1(a) and (b) shall
be made by the Committee, and its determination as to what adjustments
shall be made and the extent thereof shall be final, binding and
conclusive. No fractional interest shall be issued under the Plan on
account of any such adjustments.
6.2 Changes in Control. Each Award Agreement shall provide that,
upon the occurrence of a Change in Control, all outstanding Options shall
immediately become fully vested and exercisable in full, including that portion
of any Option that pursuant to the terms and provisions of the applicable Award
Agreement had not yet become exercisable (the total number of shares of Stock
as to which an Option is exercisable upon the occurrence of a Change in Control
is referred to herein as the "Total Shares"). If a Change in Control involves
a Restructure or occurs in connection with a series of related transactions
involving a Restructure and if such Restructure is in the form of a
Non-Surviving Event and as a part of such Restructure shares of stock, other
securities, cash or property shall be issuable or deliverable in exchange for
Stock, then the Holder of an Award shall be entitled to purchase (in lieu of
the Total Shares that the Holder would otherwise be entitled to purchase) the
number of shares of stock, other securities, cash or property to which that
number of Total Shares would have been entitled in connection with such
Restructure (and at an aggregate exercise price equal to the Exercise Price
that would have been payable if that number of Total Shares had been purchased
on the exercise of the Option immediately before the consummation of the
Restructure). Nothing in this Paragraph 6.2 shall impose on a Holder the
obligation to exercise any Award immediately before or upon the Change of
Control, nor shall the Holder forfeit the right to exercise the Award during
the remainder of the original term of the Award because of a Change in Control
or because the Holder's employment is terminated for any reason following a
Change in Control.
6.3 Restructure and No Change in Control. In the event a
Restructure should occur at any time while there is any outstanding Award
hereunder and that Restructure does not occur in connection with a Change in
Control or in connection with a series of related transactions involving a
Change in Control, then:
(a) no outstanding Option shall immediately become fully
vested and exercisable in full merely because of the occurrence of the
Restructure; and
(b) at the option of the Committee, the Corporation may
(but shall not be required to) take any one or more of the following
actions:
(i) accelerate in whole or in part the time of
the vesting and exercisability of any one or more of the
outstanding Options so as to provide that those Options shall
be exercisable before, upon, or after the consummation of the
Restructure;
(ii) if the Restructure is in the form of a
Non-Surviving Event, cause the surviving entity to assume in
whole or in part any one or more of the outstanding Awards
upon such terms and provisions as the Committee deems
desirable; or
(iii) redeem in whole or in part any one or more
of the outstanding Awards (whether or not then exercisable)
in consideration of a cash payment, as such payment may be
reduced for tax
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withholding obligations as contemplated in Paragraph 5.9 in
an amount equal to the excess of (1) the Fair Market Value,
determined as of a date immediately preceding the
consummation of the Restructure, of the aggregate number of
shares of Stock subject to the Award and as to which the
Award is being redeemed over (2) the Exercise Price for that
number of shares of Stock;
The Corporation shall promptly notify each Holder of any election or action
taken by the Corporation under this Paragraph 6.3. In the event of any
election or action taken by the Corporation pursuant to this Paragraph 6.3 that
requires the amendment or cancellation of any Award Agreement as may be
specified in any notice to the Holder thereof, that Holder shall promptly
deliver that Award Agreement to the Corporation in order for that amendment or
cancellation to be implemented by the Corporation and the Committee. The
failure of the Holder to deliver any such Award Agreement to the Corporation as
provided in the preceding sentence shall not in any manner effect the validity
or enforceability of any action taken by the Corporation and the Committee
under this Paragraph 6.3, including, without limitation, any redemption of an
Award as of the consummation of a Restructure. Any cash payment to be made by
the Corporation pursuant to this Paragraph 6.3 in connection with the
redemption of any outstanding Awards shall be paid to the Holder thereof
currently with the delivery to the Corporation of the Award Agreement
evidencing that Award; provided, however, that any such redemption shall be
effective upon the consummation of the Restructure notwithstanding that the
payment of the redemption price may occur subsequent to the consummation. If
all or any portion of an outstanding Award is to be exercised or accelerated to
upon or after the consummation of a Restructure that is in the form of a
Non-Surviving Event and as a part of that Restructure shares of stock, other
securities, cash or property shall be issuable or deliverable in exchange for
Stock, then the Holder of the Award shall thereafter be entitled to purchase
(in lieu of the number of shares of Stock that the Holder would otherwise be
entitled to purchase) the number of shares of stock, other securities, cash or
property to which such number of shares of Stock would have been entitled in
connection with the Restructure (and, for Options, at an aggregate exercise
price equal to the Exercise Price that would have been payable if that number
of Total Shares had been purchased on the exercise of the Option immediately
before the consummation of the Restructure).
6.4 Notice of Change in Control or Restructure. The Corporation
shall attempt to keep all Holders informed with respect to any Change in
Control or Restructure or of any potential Change in Control or Restructure to
the same extent that the Corporation's stockholders are informed by the
Corporation of any such event or potential event.
SECTION 7. ADDITIONAL PROVISIONS
7.1 Termination of Employment. If a Holder is an Eligible
Individual because Holder is an Employee and if that employment relationship is
terminated for any reason other than that Holder's death or Disability
(hereinafter defined), then any and all Awards held by such Holder in such
Holder's capacity as an Employee as of the date of the termination that are not
yet exercisable shall become null and void as of the date of such termination
and the portion, if any, of such Awards that are exercisable as of the date of
termination shall be exercisable for a period of the lesser of (a) the
remainder of the term of the Award or (b) (i) in the case of an Incentive
Option, 90 days, and (ii) in the case of a Nonstatutory Option, 180 days, after
the date of termination. If a Holder is an eligible Individual because such
Holder is an Employee and if that employment relationship is terminated as a
result of that Holder's death Disability, then any and all Awards held by such
Holder in such Holder's capacity as an Employee as of the date of termination
that are not yet exercisable shall become null and void as of such date, and
all such Awards held by that Holder as of the date of termination that are
exercisable shall be exercisable for a period of the lesser of (a) the
remainder of the term of the Award or (b) twelve (12) months after the date of
termination. Any portion of any such Award not exercised upon the expiration
of the lesser of the periods specified in (a) or (b) of the preceding two
sentences shall be null and void upon the expiration of such period, as
applicable.
7.2 Other Loss of Eligibility. If a Holder is an Eligible
Individual because Holder is serving in a capacity other than as an Employee
and if that capacity is terminated for any reason other than Holder's death or
Disability, then that portion, if any, of any and all Awards held by Holder
that were granted because of that capacity which are not yet exercisable as of
the date of the termination shall become null and void as of the date of the
termination;
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provided, however, that the portion, if any, of any and all Awards held by
Holder that are then exercisable as of the date of the termination shall
survive the termination and shall be exercisable for a period of the lesser of
(a) the remainder of the term of the Award or (b) 180 days following the date
such capacity terminated. If a Holder is an Eligible Individual because the
Holder is serving in a capacity other than as an Employee and if that capacity
is terminated by reason of the Holder's death or Disability, then the portion,
if any, of any and all Awards held by the Holder that are not yet exercisable
as of the date of that termination for death or Disability shall become null
and void as of such date and all such Awards held by that Holder as of the date
of termination that exercisable shall be exercisable for a period of the lesser
of (a) the remainder of the term of the Award or (b) twelve (12) months after
the date of termination. Any portion of an Award not exercised upon the
expiration of the lesser of the periods specified in (a) or (b) of the
preceding two sentences shall be null and void upon the expiration of such
period, as applicable.
7.3 Death or Disability. Upon the death or Disability of a
Holder, any and all Awards held by Holder that are not yet exercisable as of
the date of Holder's death or Disability may be exercisable by, in the case of
Holder's Disability, Holder, his guardian or legal representative or, in the
case of Holder's death, by Holder's legal representatives, heirs, legatees or
distributees, in each case for the periods prescribed in Subsection 7.1 or
Subsection 7.2, as applicable. "Disability" shall have the meaning given it in
the employment agreement of the Holder; provided, however, that if that Holder
has no employment agreement, "Disability" shall mean, as determined by the
Committee in their sole discretion exercised in good faith, a physical or
mental impairment of sufficient severity that, either the Holder is unable to
continue performing the duties he performed before such impairment or the
Holder's condition entitles him to disability benefits under any insurance or
employee benefit plan of the Corporation or its Subsidiaries and that
impairment or condition is cited by the Corporation as the reason for
termination of the Holder's employment.
7.4 Leave of Absence. With respect to an Award, the Committee
may, in its sole discretion, determine that any Holder who is on leave of
absence for any reason will be considered to still be in the employ of the
Corporation, provided that rights to that Award during a leave of absence will
be limited to the extent to which those rights were earned or vested when the
leave of absence began.
7.5 Transferability of Awards. In addition to such other terms
and conditions as may be included in a particular Award Agreement, an Award
requiring exercise shall be exercisable during a Holder's lifetime only by that
Holder or by that Holder's guardian or legal representative. An Award
requiring exercise shall not be transferrable other than by will or the laws of
descent and distribution.
7.6 Forfeiture and Restrictions on Transfer. Each Award
Agreement may contain or otherwise provide for conditions giving rise to the
forfeiture of the Stock acquired pursuant to an Award or otherwise and may also
provide for those restrictions on the transferability of shares of the Stock
acquired pursuant to an Award or otherwise that the Committee in its sole and
absolute discretion may deem proper or advisable. The conditions giving rise
to forfeiture may include, but need not be limited to, the requirement that the
Holder render substantial services to the Corporation or its Subsidiaries for a
specified period of time. The restrictions on transferability may include, but
need not be limited to, options and rights of first refusal in favor of the
Corporation and stockholders of the Corporation other than the Holder of such
shares of Stock who is a party to the particular Award Agreement or a
subsequent holder of the shares of Stock who is bound by that Award Agreement.
7.7 Delivery of Certificates of Stock. Subject to Paragraph 7.8,
the Corporation shall promptly issue and deliver a certificate representing the
number of shares of Stock as to which an Option has been exercised after the
Corporation receives an Exercise Notice and upon receipt by the Corporation of
the Exercise Price and any tax withholding as may be requested. The value of
the shares of Stock transferable because of an Award under the Plan shall not
bear any interest owing to the passage of time, except as may be otherwise
provided in an Award Agreement. If a Holder is entitled to receive
certificates representing Stock received for more than one form of Award under
the Plan, separate Stock certificates shall be issued with respect to Incentive
Options and Nonstatutory Stock Options separately.
7.8 Conditions to Delivery of Stock. Nothing herein or in any
Award granted hereunder or any Award Agreement shall require the Corporation to
issue any shares with respect to any Award if that issuance would, in the
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opinion of counsel for the Corporation, constitute a violation of the
Securities Act or any similar or superseding statute or statutes, any other
applicable statute or regulation, or the rules of any applicable securities
exchange or securities association, as then in effect. At the time of any
exercise of an Option, the Corporation may, as a condition precedent to the
exercise of such Option, require from the Holder of the Award (or in the event
of his death, his legal representatives, heirs, legatees, or distributees) such
written representations, if any, concerning the Holder's intentions with regard
to the retention or disposition of the shares of Stock being acquired pursuant
to the Award and such written covenants and agreements, if any, as to the
manner of disposal of such shares as, in the opinion of counsel to the
Corporation, may be necessary to ensure that any disposition by that Holder (or
in the event of the Holder's death, his legal representatives, heirs, legatees,
or distributees), will not involve a violation of the Securities Act or any
similar or superseding statute or statutes, any other applicable state or
federal statute or regulation, or any rule of any applicable securities
exchange or securities association, as then in effect.
7.9 Securities Act Legend. Certificates for shares of Stock,
when issued, may have the following legend, or statements of other applicable
restrictions, endorsed thereon, and may not be immediately transferable:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD,
PLEDGED, TRANSFERRED, OR OTHERWISE DISPOSED OF UNTIL THE HOLDER HEREOF
PROVIDES EVIDENCE SATISFACTORY TO THE ISSUER (WHICH, IN THE DISCRETION
OF THE ISSUER, MAY INCLUDE AN OPINION OF COUNSEL SATISFACTORY TO THE
ISSUER) THAT SUCH OFFER, SALE, PLEDGE, TRANSFER, OR OTHER DISPOSITION
WILL NOT VIOLATE APPLICABLE FEDERAL OR STATE LAWS.
This legend shall not be required for shares of Stock issued pursuant to an
effective registration statement under the Securities Act.
7.10 Legend for Restrictions on Transfer. Each certificate
representing shares issued to a Holder pursuant to an Award granted under the
Plan shall, if such shares are subject to any transfer restriction, including a
right of first refusal, provided for under this Plan or an Award Agreement,
bear a legend that complies with applicable law with respect to the
restrictions on transferability contained in this Paragraph 7.13, such as:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY IMPOSED BY THAT CERTAIN INSTRUMENT
ENTITLED "HARKEN ENERGY CORPORATION 1996 INCENTIVE AND NONSTATUTORY
STOCK OPTION PLAN" AS ADOPTED BY HARKEN ENERGY CORPORATION (THE
"CORPORATION") ON ____________, 1996, AND AN AGREEMENT THEREUNDER
BETWEEN THE CORPORATION AND [HOLDER] DATED ______________________,
____, AND MAY NOT BE TRANSFERRED, SOLD, OR OTHERWISE DISPOSED OF
EXCEPT AS THEREIN PROVIDED. THE CORPORATION WILL FURNISH A COPY OF
SUCH INSTRUMENT AND AGREEMENT TO THE RECORD HOLDER OF THIS CERTIFICATE
WITHOUT CHARGE ON REQUEST TO THE CORPORATION AT ITS PRINCIPAL PLACE OF
BUSINESS OR REGISTERED OFFICE.
7.11 Rights as a Stockholder. A Holder shall have no right as a
stockholder with respect to any shares covered by his Award until a certificate
representing those shares is issued in his name. No adjustment shall be made
for dividends (ordinary or extraordinary, whether in cash or other property) or
distributions or other rights for which the record date is before the date that
certificate is issued, except as contemplated by Section 6. Nevertheless,
dividends and dividend equivalent rights may be extended to and made part of
any Award denominated in Stock or units of Stock, subject to such terms,
conditions, and restrictions as the Committee may establish. The Committee may
also establish rules and procedures for the crediting of interest on deferred
cash payments and dividend equivalents for deferred payment denominated in
Stock or units of Stock.
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7.12 Furnish Information. Each Holder shall furnish to the
Corporation all information requested by the Corporation to enable it to comply
with any reporting or other requirement imposed upon the Corporation by or
under any applicable statute or regulation.
7.13 Obligation to Exercise. The granting of an Award hereunder
shall impose no obligation upon the Holder to exercise the same or any part
thereof.
7.14 Adjustments to Awards. Subject to the general limitations
set forth in Sections 5 and 6, the Committee may make any adjustment in the
exercise price of, the number of shares subject to or the terms of a
Nonstatutory Option by canceling an outstanding Nonstatutory Option and
regranting a Nonstatutory Option. Such adjustment shall be made by amending,
substituting or regranting an outstanding Nonstatutory Option. Such amendment,
substitution or regrant may result in terms and conditions that differ from the
terms and conditions of the original Nonstatutory Option. The Committee may
not, however, impair the rights of any Holder to previously granted
Nonstatutory Options without that Holder's consent. If such action is effected
by amendment, the effective date of such amendment shall be the date of the
original grant.
7.15 Remedies. The Corporation shall be entitled to recover from
a Holder reasonable attorneys' fees incurred in connection with the enforcement
of the terms and provisions of the Plan and any Award Agreement whether by an
action to enforce specific performance or for damages for its breach or
otherwise.
7.16 Information Confidential. As partial consideration for the
granting of each Award hereunder, the Holder shall agree with the Corporation
that he will keep confidential all information and knowledge that he has
relating to the manner and amount of his participation in the Plan; provided,
however, that such information may be disclosed as required by law and may be
given in confidence to the Holder's spouse, tax and financial advisors, or to a
financial institution to the extent that such information is necessary to
secure a loan.
7.17 Consideration. No Option shall be exercisable with respect
to a Holder unless and until the Holder shall have paid cash or property to, or
performed services for, the Corporation or any of its Subsidiaries that the
Committee believes is equal to or greater in value that the par value of the
Stock subject to such Award.
SECTION 8. DURATION AND AMENDMENT OF PLAN
8.1 Duration. No Awards may be granted hereunder after the date
that is ten (10) years from the date the Plan is adopted by the Board of
Directors.
8.2 Amendment. The Board of Directors may, insofar as permitted
by law, with respect to any shares which, at the time, are not subject to
Awards, suspend or discontinue the Plan or revise or amend it in any respect
whatsoever, and may amend any provision of the Plan or any Award Agreement to
make the Plan or the Award Agreement, or both, comply with Section 16(b) of the
Exchange Act and the exemptions from that Section in the regulations
thereunder. The Board of Directors may also amend, modify, suspend or
terminate the Plan for the purpose of meeting or addressing any changes in
other legal requirements applicable to the Corporation or the Plan or for any
other purpose permitted by law.
SECTION 9. STOCKHOLDER RATIFICATION
9.1 Ratification by Stockholders. The Board of Directors may, in
their sole and absolute discretion, submit this Plan, and any Awards made under
this Plan, to the stockholders of the Corporation for ratification
9.2 Treatment of Options. Notwithstanding any other provision
in this Plan, unless this Plan, and any awards previously made under this Plan,
shall made been submitted to the stockholders for approval within twelve (12)
months from the date this Plan is adopted by the Board of Directors, and within
such time period this Plan, and any awards previously made under this Plan, is
ratified by the vote of the holders of the majority of the total number of
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shares entitled to vote at a annual or special meeting of the stockholders of
the Corporation, all Options issued under this Plan shall be treated as
Nonstatutory Options, regardless of the intention of the Board of Directors or
the Committee at the Date of Grant of such Option.
SECTION 10. GENERAL
10.1 Application of Funds. The proceeds received by the
Corporation from the sale of shares pursuant to Awards may be used for any
general corporate purpose.
10.2 Right of the Corporation and Subsidiaries to Terminate
Employment. Nothing contained in the Plan, or in any Award Agreement, shall
confer upon any Holder the right to continue in the employ of the Corporation
or any Subsidiary, or interfere in any way with the rights of the Corporation
or any Subsidiary to terminate the Holder's employment at any time.
10.3 No Liability for Good Faith Determinations. Neither the
members of the Board of Directors nor any member of the Committee shall be
liable for any act, omission, or determination taken or made in good faith with
respect to the Plan or any Award granted under it, and members of the Board of
Directors and the Committee shall be entitled to indemnification and
reimbursement by the Corporation in respect of any claim, loss, damage, or
expense (including attorneys' fees, the costs of settling any suit, provided
such settlement is approved by independent legal counsel selected by the
Corporation, and amounts paid in satisfaction of a judgment, except a judgment
based on a finding of bad faith) arising therefrom to the full extent permitted
by law and under any directors and officers liability or similar insurance
coverage that may from time to time be in effect. This right to
indemnification shall be in addition to, and not a limitation on, any other
indemnification rights any member of the Board of Directors or the Committee
may have.
10.4 Other Benefits. Participation in the Plan shall not preclude
the Holder from eligibility in any other stock or stock option plan of the
Corporation or any Subsidiary or any old age benefit, insurance, pension,
profit sharing retirement, bonus, or other extra compensation plans that the
Corporation or any Subsidiary has adopted, or may, at any time, adopt for the
benefit of its Employees. Neither the adoption of the Plan by the Board of
Directors nor the submission of the Plan to the stockholders of the Corporation
for approval shall be construed as creating any limitations on the power of the
Board of Directors to adopt such other incentive arrangements as it may deem
desirable, including, without limitation, the granting of stock options and the
awarding of stock and cash otherwise than under the Plan, and such arrangements
may be either generally applicable or applicable only in specific cases.
10.5 Exclusion From Pension and Profit-Sharing Compensation. By
acceptance of an Award (whether in Stock or cash), as applicable, each Holder
shall be deemed to have agreed that the Award is special incentive compensation
that will not be taken into account in any manner as salary, compensation or
bonus in determining the amount of any payment under any pension, retirement or
other employee benefit plan of the Corporation or any Subsidiary. In addition,
each beneficiary of a deceased Holder shall be deemed to have agreed that the
Award will not affect the amount of any life insurance coverage, if any,
provided by the Corporation or a Subsidiary on the life of the Holder that is
payable to the beneficiary under any life insurance plan covering employees of
the Corporation or any Subsidiary.
10.6 Execution of Receipts and Releases. Any payment of cash or
any issuance or transfer of shares of Stock to the Holder, or to his legal
representative, heir, legatee, or distributee, in accordance with the
provisions hereof, shall, to the extent thereof, be in full satisfaction of all
claims of such persons hereunder. The Committee may require any Holder, legal
representative, heir, legatee, or distributee, as a condition precedent to such
payment, to execute a release and receipt therefor in such form as it shall
determine.
10.7 Unfunded Plan. Insofar as it provides for Awards of cash and
Stock, the Plan shall be unfunded. Although bookkeeping accounts may be
established with respect to Holders who are entitled to cash, Stock or rights
thereto under the Plan, any such accounts shall be used merely as a bookkeeping
convenience. The Corporation shall not be required to segregate any assets
that may at any time be represented by cash, Stock or rights thereto, nor shall
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the Plan be construed as providing for such segregation, nor shall the
Corporation nor the Board of Directors nor the Committee be deemed to be a
trustee of any cash, Stock or rights thereto to be granted under the Plan. Any
liability of the Corporation to any Holder with respect to a grant of cash,
Stock or rights thereto under the Plan shall be based solely upon any
contractual obligations that may be created by the Plan and any Award
Agreement; no such obligation of the Corporation shall be deemed to be secured
by any pledge or other encumbrance on any property of the Corporation. Neither
the Corporation nor the Board of Directors nor the Committee shall be required
to give any security or bond for the performance of any obligation that may be
created by the Plan.
10.8 No Guarantee of Interests. Neither the Committee nor the
Corporation guarantees the Stock of the Corporation from loss or depreciation.
10.9 Payment of Expenses. All expenses incident to the
administration, termination, or protection of the Plan, including, but not
limited to, legal and accounting fees, shall be paid by the Corporation or its
Subsidiaries; provided, however, the Corporation or a Subsidiary may recover
any and all damages, fees, expenses, and costs arising out of any actions taken
by the Corporation to enforce its right to purchase Stock under this Plan.
10.10 Corporation Records. Records of the Corporation or its
Subsidiaries regarding the Holder's period of employment, termination of
employment and the reason therefor, leaves of absence, re-employment, and other
matters shall be conclusive for all purposes hereunder, unless determined by
the Committee to be incorrect.
10.11 No Liability of Corporation. The Corporation assumes no
obligation or responsibility to the Holder or his legal representatives, heirs,
legatees, or distributees for any act of, or failure to act on the part of, the
Committee.
10.12 Corporation Action. Any action required of the Corporation
shall be by resolution of its Board of Directors or by a person authorized to
act by resolution of the Board of Directors.
10.13 Severability. If any provision of this Plan is held to be
illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining provisions hereof, but such provision shall be fully
severable and the Plan shall be construed and enforced as if the illegal or
invalid provision had never been included herein.
10.14 Notices. Whenever any notice is required or permitted
hereunder, such notice must be in writing and personally delivered or sent by
mail. Any notice required or permitted to be delivered hereunder shall be
deemed to be delivered on the date on which it is personally delivered, or,
whether actually received or not, on the third Business Day after it is
deposited in the United States mail, certified or registered, postage prepaid,
addressed to the person who is to receive it at the address which such person
has theretofore specified by written notice delivered in accordance herewith.
The Corporation or a Holder may change, at any time and from time to time, by
written notice to the other, the address which it or he had previously
specified for receiving notices. Until changed in accordance herewith, the
Corporation and each Holder shall specify as its and his address for receiving
notices the address set forth in the Award Agreement pertaining to the shares
to which such notice relates.
10.15 Waiver of Notice. Any person entitled to notice hereunder
may waive such notice.
10.16 Successors. The Plan shall be binding upon the Holder, his
legal representatives, heirs, legatees, and distributees, upon the Corporation,
its successors, and assigns, and upon the Committee, and its successors.
10.17 Headings. The titles and headings of Sections and Paragraphs
are included for convenience of reference only and are not to be considered in
construction of the provisions hereof.
10.18 Governing Law. All questions arising with respect to the
provisions of the Plan shall be determined by application of the laws of the
State of Delaware except to the extent Delaware law is preempted by federal
law. Questions arising with respect to the provisions of an Award Agreement
that are matters of contract law shall be governed by the laws of the state
specified in the Award Agreement, except to the extent Delaware corporate law
conflicts with the contract law of such state, in which event Delaware
corporate law shall govern. The obligation of
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the Corporation to sell and deliver Stock hereunder is subject to applicable
laws and to the approval of any governmental authority required in connection
with the authorization, issuance, sale, or delivery of such Stock.
10.19 Word Usage. Words used in the masculine shall apply to the
feminine where applicable, and wherever the context of this Plan dictates, the
plural shall be read as the singular and the singular as the plural.
IN WITNESS WHEREOF, Harken Energy Corporation, acting by and through
its officer hereunto duly authorized, has executed this instrument, as of the
14th day of October, 1996.
Harken Energy Corporation
By: /s/ Richard H. Schroeder
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President
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