1
EXHIBIT 4.5
SABA PETROLEUM COMPANY
1997 STOCK OPTION PLAN FOR
NON-EMPLOYEE DIRECTORS
2
SABA PETROLEUM COMPANY
1997 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
TABLE OF CONTENTS
-----------------
PAGE
----
1. Purposes ......................................................................... 1
2. Definitions ...................................................................... 1
3. Shares Available under the Plan .................................................. 2
4. Automatic Grants of Nonqualified Options to Nonemployee Directors................. 3
5. Adjustments ...................................................................... 4
6. Fractional Shares ................................................................ 4
7. Administration of the Plan ....................................................... 5
8. Amendments and Other Matters ..................................................... 5
9. No Additional Rights ............................................................. 5
10. Securities Law Matters ........................................................... 6
11. Change in Control ................................................................ 6
12. Termination of the Plan .......................................................... 7
3
SABA PETROLEUM COMPANY
1997 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
1. Purposes. The purposes of this Plan are to encourage
outside Directors of Saba Petroleum Company ("Corporation") to own shares of the
Corporation's stock and thereby to align their interests more closely with the
interests of the other stockholders of the Corporation, to encourage the highest
level of Director performance by providing the Directors with a direct interest
in the Corporation's attainment of its financial goals, and to provide financial
incentives that will help attract and retain the most qualified Directors.
2. Definitions. As used in this Plan:
"BOARD" means the Board of Directors of the Corporation.
"CHANGE IN CONTROL" has the meaning set forth in Section 11.
"CODE" means the Internal Revenue Code of 1986, as amended from
time to time.
"COMMITTEE" means the Committee described in Section 7 of this
Plan.
"COMMON SHARES" means (i) shares of the Common Stock, no par
value, of the Corporation and (ii) any security into which Common Shares may be
converted by reason of any transaction or event of the type referred to in
Section 5 of this Plan.
"DATE OF GRANT" means the date on which a grant of Nonqualified
Options shall become effective as provided in Section 4(a).
"DIRECTOR" means a member of the Board who is not an employee of
the Corporation. For purposes of this Plan, an employee is an individual whose
wages are subject to the withholding of federal income tax under Section 3401
and 3402 of the Code. A Director who becomes an employee (within the meaning of
this Section) shall not forfeit any Option Right granted hereunder solely by
reason of assuming employee status.
"DISABILITY" means the inability to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or can
be expected to last for a continuous period of not less than 12 months. A
Director shall not be considered to be subject to a Disability until he
furnishes a certification from a practicing physician in good standing to the
effect that such Director meets the criteria described in this Section.
"EFFECTIVE DATE" means _____________________,1997.
1
4
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"MARKET VALUE" as of a given date means (a) the closing sale
price of the Common Shares on the American Stock Exchange (the "AMEX"), or (b)
if the price of the Common Shares is not reported on the AMEX, the closing sale
price of the Common Shares on the principal securities exchange on which such
Common Shares are then trading on such date, or (c) if the Common Shares are not
listed on a securities exchange, the closing sale price of the Common Shares as
reported on the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") on such date. If there are no Common Share transactions on
such date, the Market Value per Common Share shall be determined as of the
immediately preceding date on which there were Common Share transactions.
"NONQUALIFIED OPTION" means an option to purchase shares of
Common Stock that is not intended to qualify as an incentive stock option under
Section 422 of the Code.
"OPTIONEE" means the Director so designated in an agreement
evidencing an outstanding Option Right.
"OPTION PRICE" means the purchase price payable upon the exercise
of an Option Right.
"OPTION RIGHT" means the right to purchase Common Shares from the
Corporation upon the exercise of a Nonqualified Option granted pursuant to this
Plan. Option Rights shall be evidenced by written agreements containing terms
and conditions not inconsistent with this Plan.
"PLAN" means the Saba Petroleum Company 1997 Stock Option Plan
for Non-Employee Directors, as the same may be amended from time to time.
"RULE 16B-3" means Rule 16b-3, as promulgated and amended from
time to time by the Securities and Exchange Commission under the Exchange Act.
"TERMINATION OF SERVICE" means the time at which the Optionee
ceases to serve as a member of the Board for any reason, with or without cause,
which includes termination by resignation, removal, death or retirement.
"VOTING STOCK" has the meaning set forth in Section 1(a).
3. SHARES AVAILABLE UNDER THE PLAN. (a) Subject to Sections
3(b) and 5 of this Plan, the number of Common Shares issued or transferred, plus
the number of Common Shares covered by outstanding awards granted under this
Plan, shall not in the aggregate exceed 250,000 Common Shares, which may be
Common Shares of original issuance or Common Shares held in treasury or a
combination thereof.
(b) For the purposes of this Section 3, any Common Shares
subject to an Option
2
5
Right that has been cancelled or terminated shall again be available for the
grant of Option Rights under this Plan.
4. AUTOMATIC GRANTS OF NONQUALIFIED OPTIONS TO NONEMPLOYEE
DIRECTORS.
(a) The following Nonqualified Options shall be granted under
this Plan:
(i) As of the Effective Date of this Plan, an option
to purchase 3,000 Common Shares is granted to each person who on
such date is an incumbent Director of the Corporation, and a
Nonqualified Option to purchase 3,000 Common Shares shall be
automatically granted to each such person on the first day of
each year thereafter for so long as he continues to serve as a
Non-Employee Director.
(ii) With respect to each person who first becomes a
Director of the Corporation after the Effective Date of this
Plan, an option to purchase 3,000 Common Shares shall be
automatically granted as of the date such person first becomes a
Director, and a Nonqualified Option to purchase 3,000 Common
Shares shall be automatically granted to each such person on the
first day of each year thereafter for so long as he or she
continues to serve as a Non-Employee Director and provided that
he or she has served as a Non-Employee Director for at least six
months prior thereto.
(b) The Option Price per share of each Nonqualified Option shall
be the Market Value per Common Share as of the Date of Grant.
(c) (i) Subject to subsection (ii) of this Section 4(c) and
Section 12 of this Plan, each Nonqualified Options, until terminated as provided
in Section 4(d), shall become exercisable to the extent of 20% of the Common
Shares subject thereto on the first anniversary of Date of Grant and to the
extent of an additional 20% of the Common Shares subject thereto after each of
the first four anniversaries of such date, for so long as the Optionee continues
to serve as a member of the Board of Directors. To the extent exercisable, each
Nonqualified Option shall be exercisable in whole or in part from time to time.
(ii) If an Optionee ceases to be a Director by reason of
death or Disability, all Nonqualified Options held by such
Optionee that would have otherwise become exercisable had such
Director continuously served as a Director through the date of
the Corporation's annual meeting of stockholders immediately
following such death or Disability shall, notwithstanding
subsection (i) of this Section 4(c), become immediately
exercisable in full.
(d) Each Nonqualified Option shall terminate on the earliest
of the following dates:
3
6
(i) Three (3) months following the effective date of
the Optionee's Termination of Service, if such Termination of
Service results other than from Optionee's death or Disability;
(ii) One (1) year following the effective date of the
optionee's Termination of service, if such Termination of Service
results from Optionee's death or Disability; or
(iii) Ten (10) years from the Date of Grant.
(e) The Option Price shall be payable (a) in cash or by check
acceptable to the Corporation, (b) by transfer to the Corporation of Common
Shares which have been owned by the Optionee for more than six months prior to
the date of exercise and which have a Market Value on the date of exercise equal
to the Option Price, or (c) by a combination of such methods of payment. The
requirement of payment in cash shall be deemed satisfied if the Optionee shall
have made arrangements satisfactory to the Corporation with a broker who is a
member of the National Association of Securities Dealers, Inc. to sell on the
exercise date a sufficient number of the shares being purchased so that the net
proceeds of the sale transaction will at least equal the option exercise price
and pursuant to which the broker undertakes to deliver the full option exercise
price to the Corporation not later than the date on which the sale transaction
will settle in the ordinary course of business.
(f) Nonqualified Options granted pursuant to this Section 4
shall be options that are not intended to qualify under any particular provision
of the Code.
5. ADJUSTMENTS. The Committee shall make or provide for such
adjustments in the number of Common Shares covered by awards made hereunder, the
Option Prices per Common Share applicable to any such awards, and the kind of
shares (including shares of another issuer) covered thereby, as the Committee
shall in good faith determine to be equitably required in order to prevent
dilution or expansion of the rights of Optionees that otherwise would result
from (a) any stock dividend, stock split, combination of shares,
recapitalization or other change in the capital structure of the Corporation, or
(b) any merger, consolidation, spin-off, spin-out, split-off, split-up,
reorganization, partial or complete liquidation or other distribution of assets,
issuance of warrants or other rights to purchase securities or any other
corporate transaction or event having an effect similar to any of the foregoing.
The Committee shall also make or provide for such adjustments in the maximum
number of Common Shares specified in Section 3(a) of this Plan as the Committee
may in good faith determine to be appropriate in order to reflect any
transaction or event described in this Section 5.
6. FRACTIONAL SHARES. The Corporation shall not be required
to issue any fractional Common Shares pursuant to this Plan. Whenever under the
terms of this Plan a fractional Common Share would otherwise be required to be
issued, an amount in lieu thereof shall be paid in cash based upon the Market
Value of such fractional Common Share.
4
7
7. ADMINISTRATION OF THE PLAN. (a) This Plan shall be
administered by a committee of the Board, which shall be composed of not less
than two members of the Board ("Committee"). Notwithstanding the foregoing,
grants of Option Rights under this Plan shall be automatic as described in
Section 4, and the Committee shall have no authority, discretion or power to
determine the terms of the Option Rights to be granted pursuant to the Plan, the
number of Common Shares to be issued thereunder or the time at which such Option
Rights are to be granted, or establish the duration and nature of Option Rights,
except in the sense of administering the Plan subject to the provisions of the
Plan.
(b) Subject to subsection (a) of this Section 7, the
interpretation and construction by the Committee of any provision of this Plan
or any agreement, notification or document evidencing the grant of Option
Rights, and any determination by the Committee pursuant to any provision of this
Plan or any such agreement, notification or document, shall be final and
conclusive. No member of the Committee shall be liable for any such action taken
or determination made in good faith.
8. AMENDMENTS AND OTHER MATTERS. (a) This Plan may be terminated,
and from time to time amended, by the Board; provided, however, that except as
expressly authorized by this Plan, no such amendment shall (i) increase the
number of Common Shares specified in Section 3(a) hereof, materially modify the
requirements as to eligibility for participation in this Plan, or otherwise
cause this Plan or any grant, award or election made pursuant to this Plan to
cease to satisfy any applicable condition of Rule 16b-3, without further
approval of the stockholders of the Corporation, or (ii) cause any Optionee to
fail to qualify as a "disinterested person" within the meaning of Rule 16b-3;
provided, further, that Plan provisions relating to the amount and price of
securities to be awarded and the timing of awards under the Plan shall not be
amended more than once every six months, other than to comport with changes in
the Code, the Employment Retirement Income Security Act, or the rules
promulgated thereunder. No amendment or termination of the Plan shall adversely
affect any outstanding award theretofore granted under the Plan without the
consent of the Director holding such award.
(b) Any grant, award or election that may be made pursuant to an
amendment to this Plan shall be null and void if it is subsequently determined
that (i) stockholder approval of such amendment was required in order for this
Plan to continue to satisfy the applicable conditions of Rule 16b-3, or (ii)
such grant, award, election or amendment disqualified any optionee as a
"disinterested person" within the meaning of Rule 16b-3.
9. NO ADDITIONAL RIGHTS. Nothing contained in this Plan or in any
award granted under this Plan shall interfere with or limit in any way the right
of the stockholders of the Corporation to remove any Director from the Board
pursuant to state law or the Bylaws or Articles of Incorporation of the
Corporation, nor confer upon any Director any right to continue in the service
of the Corporation.
10. SECURITIES LAW MATTERS. (a) The Corporation may require any
Optionee, as a condition of receiving option Rights, to give written assurances
in substance and form
5
8
satisfactory to the Corporation and its counsel to the effect that such person
is acquiring the Common Shares subject to the Option Rights for his own account
for investment and not with any present intention of selling or otherwise
distributing the same, and to such other effects as the Corporation deems
necessary or appropriate in order to comply with federal and applicable state
securities laws.
(b) Each award of Option Rights shall be subject to the
requirement that, if at any time counsel to the Corporation shall determine that
the listing, registration or qualification of the Common Shares subject to such
Option Rights upon any securities exchange or under any state or federal law, or
the consent or approval of any governmental or regulatory body, is necessary as
a condition of, or in connection with, the issuance of shares thereunder, such
award of Option Rights may not be accepted or exercised in whole or in part
unless such listing, registration, qualification, consent or approval shall have
been effected or obtained on conditions acceptable to such counsel. Nothing
herein shall be deemed to require the Corporation to apply for or to obtain such
listing, registration or qualification.
(c) To the extent necessary for an Option Right, its exercise or
the sale of Common Shares acquired thereunder to be exempt from Section 16(b) of
the Exchange Act, such Option Right shall be held six months from the Date of
Grant, or at least six months shall elapse from the Date of Grant to the date of
disposition of the Common Shares acquired upon exercise of such Option Right.
11. CHANGE IN CONTROL. Upon a Change in Control (as hereinafter
defined), all Nonqualified Options held by an Optionee that would become
exercisable with respect to such Optionee's service as a Director through the
date of the Corporation's annual meeting of stockholders immediately following
such Change in Control shall, notwithstanding Section 4(c) of this Plan, become
immediately exercisable in full. If any event or series of events constituting a
change in control shall be abandoned, the effect thereof shall be null and of no
further force and effect and the provisions of section 4(c) shall be reinstated
but without prejudice to any exercise of any Option Right that may have occurred
prior to such nullification. For purposes of this Plan, "Change in Control"
means the occurrence of any of the following events:
(a) The execution by the Corporation of an agreement for the
merger, consolidation or reorganization into or with another corporation or
other legal person; provided, however, that no such merger, consolidation or
reorganization shall constitute a Change in Control if as a result of such
merger, consolidation or reorganization not less than a majority of the combined
voting power of the then-outstanding securities of such corporation or person
immediately after such transaction are held in the aggregate by the holders of
securities entitled to vote generally in the election of directors of the
Corporation ("Voting Stock") immediately prior to such transaction;
(b) The execution by the Corporation of an agreement for the sale
or other transfer of all or substantially all of its assets to another
corporation or other legal person; provided, however, that no such sale or other
transfer shall constitute a Change in Control if as a
6
9
result of such sale or transfer not less than a majority of the combined voting
power of the then-outstanding securities of such corporation or person
immediately after such sale or transfer is held in the aggregate by the holders
of Voting Stock of the Corporation immediately prior to such sale or transfer.
(c) There is a report filed on Schedule 13D or Schedule 14D-1 (or
any successor schedule, form or report), each as promulgated pursuant to the
Exchange Act disclosing that any person (as the term "person" is used in Section
13(d)(3) or Section 14(d)(2) of the Exchange Act) (other than any person (or any
of their affiliates) that owns beneficially or of record more than ten percent
of the Common Shares on the Effective Date) has or intends to become the
beneficial owner (as the term "beneficial owner" is defined under Rule 13d-3 or
any successor rule or regulation promulgated under the Exchange Act) of
securities representing a majority or more of the combined voting power of the
then-outstanding Voting Stock, including, without limitation, pursuant to a
tender offer or exchange offer;
(d) If, during any period of two consecutive years, individuals
who at the beginning of any such period constitute the directors of the
Corporation cease for any reason to constitute at least a majority thereof;
provided, however, that for purposes of this subsection (d) each director who is
first elected, or first nominated for election by the Corporation's
stockholders, by a vote of at least two-thirds of the directors of the
Corporation (or a committee thereof) then still in office who were directors of
the Corporation at the beginning of any such period shall be deemed to have been
a director of the Corporation at the beginning of such period; or
(e) except pursuant to a transaction described in the proviso to
subsection (a) of this Section 11, the Corporation adopts a plan for the
liquidation or dissolution of the Corporation.
Notwithstanding the foregoing, to the extent necessary for an
Option Right, its exercise or the sale of Common Shares acquired thereunder to
be exempt from Section 16(b) of the Exchange Act (i) except in the case of death
or Disability, an Optionee shall not be entitled to exercise any Option Rights
granted within six months prior to the occurrence of a Change in Control until
the expiration of the six-month period following the Date of Grant of such
Option Rights, or (ii) at least six months shall elapse from the Date of Grant
of such Option Rights to the date of disposition of the Common Shares acquired
upon exercise of such Option Rights.
12. TERMINATION OF THE PLAN. No further awards shall be granted
under this Plan after the passage of ten years from the date on which this Plan
is first approved by the stockholders of the Corporation.
7