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Exhibit 10.21
NORTH COAST ENERGY, INC.
1999 EMPLOYEE STOCK OPTION PLAN
North Coast Energy, Inc. (the "Company") hereby adopts a stock option plan for
eligible employees of the Company and its subsidiary corporations pursuant to
the following terms and provisions.
1. PURPOSE OF THE PLAN. The purpose of this plan (the "Plan") is to provide
additional incentive to such key employees of the Company and its subsidiary
corporations as may be designated for participation herein by encouraging them
to acquire a new or an additional share ownership in the Company, thus
increasing their proprietary interest in the Company's business and providing
them with an increased personal interest in the Company's continued success and
progress and to attract and retain individuals with experience and/or ability
for the Company. These objectives will be promoted through the grant of options
to acquire shares of the Company's common stock pursuant to the terms of the
Plan. It is intended that eligible employees may be granted, simultaneously or
from time to time, "incentive stock options" under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), or other stock options, but no
provision of the Plan is intended or shall be construed to grant employees
alternative rights in incentive stock options and other stock options so as to
prevent options granted as incentive stock options under the Plan from
qualifying as such options within the meaning of Section 422 of the Code. In
this Plan, the terms "employees of the Company", employment by the Company", and
"in the employ of the Company", shall be deemed to include employees of,
employment by, and in the employ of, a "subsidiary corporation" or "parent
corporation" of the Company, as those terms are defined in Section 424 of the
Code.
2. EFFECTIVE DATE OF THE PLAN. The Plan shall become effective as of October 18,
1999, the date of adoption by the Board of Directors of the Company, subject to
approval by holders of shares representing a majority of the outstanding voting
stock of the Company present at a meeting of stockholders called for that
purpose.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the Stock
Option and Compensation Committee of the Board of Directors of the Company (the
"Committee") as appointed from time to time by the Board of Directors from among
its members, none of whom shall be eligible to be granted stock options under
the Plan and each of whom shall be (a) a "disinterested person" within the
meaning of Rule l6b-3(c)(2)(i) under the Securities Exchange Act of 1934, as
amended (the "34 Act") and (b) an "outside director" within the meaning of
Section 162(m)(4) of the Code.
Subject to the terms and conditions of the Plan, the Committee shall be
authorized:
(a) To select the key employees to whom options may be granted;
(b) To determine the number of shares of Common Stock to be covered by any
option;
(c) To determine the time or times when options will be granted;
(d) To determine the time or times when each option may be exercised;
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(e) To determine at the time of grant of an option under the Plan whether
and to what extent such option is an incentive stock option entitled
to the benefits of Section 422 of Code;
(f) To determine whether stock appreciation rights shall be made part of
any option grant to any key employee employed by the Company and to
approve such stock appreciation rights made part of any option grant
to any key employee employed by any subsidiary corporation of the
Company pursuant to Section 8 hereof,
(g) To prescribe the form of the option agreements to be granted under the
Plan; and
(h) To establish such other provisions of the option agreements not
contrary to the terms and conditions of the Plan or, where the option
is an incentive stock option, of Section 422 of the Code as the
Committee may deem necessary or desirable.
4. EMPLOYEES ELIGIBLE FOR OPTIONS. Options may be granted from time to time in
the discretion of the Committee only to such key employees of the Company or of
a subsidiary corporation of the Company as may be designated by the Committee
whose initiative and efforts contribute or may be expected to contribute to the
Company's continued growth and future success, including key employees who may
also be members of the Board of Directors or officers, subject to the
restrictions herein contained. Members of the Committee shall not be eligible to
participate in this Plan, or to receive options under it, while serving on the
Committee. The Committee may grant more than one option, with or without stock
appreciation rights, to the same employee. No option shall be granted to any
employee during any period of time when he is on leave of absence.
5. SHARES SUBJECT TO THE PLAN. The shares to be issued upon the exercise of
options granted under the Plan shall be shares of common stock, par value $.01
per share of the Company ("Common Stock"). Either treasury or authorized and
unissued shares of Common Stock, or both, in such amount or amounts, within the
maximum limits of the Plan, as the Board of Directors shall from time to time
determine, may be so issued. All shares of Common Stock which are the subject of
any lapsed, expired or terminated options may be made available for reoffering
under the Plan to any eligible employee. In the event a stock appreciation right
is granted in conjunction with an option pursuant to Section 8 and such stock
appreciation right is thereafter exercised in whole or in part, then such option
or the portion thereof to which the duly exercised stock appreciation right
relates shall be deemed to have been exercised. The shares of Common Stock which
otherwise would have been issued upon exercise of such option may be made
available for reoffering under the Plan to any eligible employee.
Subject to the provisions of the next succeeding paragraph of this Section 5,
the aggregate number of shares of Common Stock for which options may be granted
under the Plan shall be four hundred thousand (400,000) shares of Common Stock.
In the event that subsequent to the date of adoption of the Plan by the Board of
Directors the authorized number of shares of Common Stock should, as a result of
a stock split, stock dividend, combination or exchange of shares, exchange for
other securities, reclassification, reorganization, redesignation, merger,
consolidation, recapitalization or other such change, be increased or decreased
or changed into or exchanged for a different number or kind of shares of stock
or other securities of the Company or of another corporation, then (i) there
shall automatically be substituted for each share of Common Stock subject to an
unexercised option (in whole or in part) granted under the Plan and each share
of Common Stock available for additional grants of options under the Plan the
number and kind of shares of stock or
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other securities into which each outstanding share of Common Stock shall be
changed or for which each such share of Common Stock shall be exchanged, (ii)
the option price per share of Common Stock or unit of securities shall be
increased or decreased proportionately so that the aggregate purchase price for
the securities subject to the option shall remain the same as immediately prior
to such event, and (iii) the Board shall make such other adjustments to the
securities subject to options and the provisions of the Plan and option
agreements as may be appropriate and equitable. Any such adjustment may provide
for the elimination of fractional shares.
6. OPTION PROVISIONS.
(a) Option price. The option price per share of Common Stock which is the
subject of an incentive stock option under the Plan shall be determined by the
Committee at the time of grant but shall not be less than one hundred percent
(100%) of the fair market value of the Company's shares of Common Stock on the
date such an option is granted; provided, however, that if the employee to whom
an option is granted is at the time of the grant of the option an owner as
defined in Section 425(d) of the Code of more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or any
subsidiary corporation (a "Substantial Shareholder") the option price per share
of Common Stock shall be determined by the Committee from time to time but shall
never be less than one hundred ten percent (110%) of the fair market value of
the Company's shares of Common Stock on the date such an option is granted. The
option price per share of Common Stock under each option granted pursuant to the
Plan which is not an incentive stock option shall be determined by the Committee
at the time of grant but shall not be less than fifty percent (50%) of the fair
market value of the Company's shares of Common Stock on the date such option is
granted. Such fair market value shall be determined in accordance with
procedures to be established by the Committee. The day on which the Committee
approves the granting of an option shall be considered the date on which such
option is granted.
(b) Period of option. The Committee shall determine when each option is to
expire but no option shall be exercisable for a period of more than ten (10)
years from the date upon which the option is granted; provided, however, no
incentive stock option granted to an employee who is a Substantial Shareholder
at the time of the grant of such option shall be exercisable after the
expiration of five (5) years from the date of the grant of the option.
(c) Limitation on exercise and transfer of options. No option granted hereunder
shall be transferable except (i) by the Last Will and Testament of the employee
to whom it is granted or, if the employee dies intestate, by the applicable laws
of descent and distribution, or (ii) subject to the prior approval of the
Committee, for transfers to "family members" (as defined below) or charitable
institutions (subject to such limitations as the Committee in its discretion may
impose, if necessary, to comply with applicable securities laws), in each case
subject to the condition that the Committee be satisfied that such transfer is
being made by the participant for estate planning, tax planning or donative
purposes and no consideration (other than nominal consideration or interests in
a family partnership, family corporation or other family-related entity) is
received by the participant therefor. Except as provided above, during the
lifetime of a participant, awards hereunder are exercisable only by, and payable
only to, the participant.
(d) For purposes hereof, a "family member" shall mean any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any person
sharing the participant's household (other than a tenant or employee) a trust in
which these persons have more than fifty percent of the beneficial interest, a
foundation in which these persons (or the
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participant) control the management of assets, and any other entity in which
these persons (or the participant) own more than fifty percent of the voting
interests. No option granted hereunder may be pledged or hypothecated, nor shall
any such option be subject to execution, attachment or similar process.
(e) Employment required before exercise of option. The Committee may, in its
absolute discretion, require that prior to the exercise of all or any part of
any option granted hereunder, the optionee shall have remained in the employ of
the Company or any subsidiary corporation for a specified period after the date
of such option, but always subject to the right of the Company or any such
subsidiary corporation to terminate his employment during such period, or the
Committee may determine to make any option granted hereunder immediately
exercisable. Each option shall be subject to such additional restrictions as to
the time and method of exercise as shall be prescribed by the Committee. Upon
completion of the required period or periods of employment, if any, the option
or the appropriate portion thereof may be exercised in whole or in part from
time to time during the option period, but this right of exercise shall be
limited to whole shares. Options shall be exercised by the optionee giving
written notice to the Company of intention to exercise the same accompanied by
full payment of the purchase price in cash or, with the consent of the
Committee, in whole or in part through the delivery of shares of Common Stock
having a fair market value on the date the option is exercised equal to that
portion of the purchase price for which payment in cash is not made. '
(f) Termination of employment. If the optionee ceases to be an employee of the
Company or one of its subsidiary corporations, his option shall, unless extended
by the Committee on or before his date of termination of employment, terminate
on the effective date of termination of his employment and neither he nor any
other person shall have any right after such date to exercise all or any part of
his option. If, however, the cessation of employment is because of such
optionee's death, then the option may be exercised within twelve (12) months
after the optionee's death by the optionee's estate or the person designated in
the optionee's Last Will and Testament or to whom transferred by the applicable
laws of descent and distribution. Notwithstanding the foregoing, in no event
shall any option be exercisable after the expiration of the option period and
not to any greater extent than the optionee would have been entitled to exercise
the option at the time of his death.
(g) In the event an employee of the Company or one of its subsidiaries is
granted a leave of absence by the Company or such subsidiary to enter military
service or because of sickness, his employment with the Company or such
subsidiary shall not be considered as terminated and he shall be deemed an
employee of the Company or such subsidiary during such leave of absence or any
extension thereof granted by the Company or such subsidiary.
(h) Limitations on grant of incentive stock options. The aggregate fair market
value, determined as of the date an incentive stock option is granted, of the
shares of Common Stock for which any employee may be granted incentive stock
options which are exercisable for the first time in any calendar year shall not
exceed One Hundred Thousand Dollars ($100,000).
7. AMENDMENTS TO PLAN. The Committee is authorized to interpret the Plan and
from time to time adopt any rules and regulations for carrying out the Plan that
it may deem advisable. Subject to the approval of the Board of Directors of the
Company, the Committee may at any time amend, modify, suspend or terminate the
Plan. In no event, however, without the approval of shareholders, shall any
action of the Committee or the Board of Directors result in:
(a) Amending, modifying or altering the eligibility requirements provided
in Section 4 hereof;
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(b) Increasing or decreasing, except as provided in Section 5 hereof, the
maximum number of shares as to which options may be granted;
(c) Decreasing the minimum option price per share at which options may be
granted under the Plan as provided in Section 6(a) hereof;
(d) Extending either the maximum period during which an option is
exercisable as provided in Section 6(b) hereof or the date on which
the Plan shall terminate as provided in Section II hereof;
(e) Changing the requirements relating to the Committee; or
(f) Making any other change which would cause any options granted under
the Plan as incentive stock options not to qualify as such options
within the meaning of Section 422 of the Code;
except to conform the Plan and the option agreements to changes in the Code or
governing law.
8. STOCK APPRECIATION RIGHTS. A key employee may be awarded, either at the time
of grant or subsequently, the right to elect alternative payment in lieu of
exercising all or a portion of the options granted to him. Stock appreciation
rights must be specifically granted upon such terms and conditions as specified
by the Committee, if the Company is the employer of the key employee, or by the
Board of Directors of a subsidiary corporation subject to the Committee's
approval, if such subsidiary corporation is the employer of the key employee. No
optionee shall be entitled to such rights solely as a result of the grant of an
option to him. Such right if granted, may be exercised by said option holder
either with respect to all or a portion of the option to which it applies. Stock
appreciation rights are exercisable only during the periods beginning on the
third business day following the release of a summary statement of the Company's
quarterly or annual sales and earnings and ending on the twelfth business day
following said date. The stock appreciation right shall provide that an option
holder shall have the right to receive an amount equal to one hundred percent
(100%) of the excess, if any, of the fair market value of the shares of Common
Stock covered by the option, determined as of the date of exercise of the stock
appreciation right by the Committee in the same manner as such value is
determined for purposes of the granting of options, over the option price. Such
amount shall be payable by either the Company or the subsidiary corporation,
whichever such corporation is the employer of the key employee, in one or more
of the following manners, as shall be determined by the Committee, if the
Company is the employer of the key employee, or by the Board of Directors of the
subsidiary corporation subject to the Committee's approval, if such subsidiary
corporation is the employer of the key employee:
(a) cash;
(b) fully-paid shares of Common Stock having a fair market value equal to
such amount; or
(c) a combination of cash and shares of Common Stock.
In no event may any person exercise any stock appreciation rights granted
hereunder unless (i) such person is then permitted to exercise the option or the
portion thereof with respect to which such stock appreciation rights relate, and
(ii) the fair market value of the shares of Common Stock covered by the
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option, determined as provided above, exceeds the option price of such shares of
Common Stock. Upon the exercise of any stock appreciation rights, the option, or
that portion thereof to which such stock appreciation rights relate, shall be
cancelled and such person shall surrender such option for cancellation and
reissuance, if appropriate. Stock appreciation rights granted hereunder shall be
made a part of the option agreements in such form as the Committee shall approve
from time to time and which shall not be inconsistent with this Plan. The
granting of an option or stock appreciation right shall impose no obligation
upon the optionee to exercise such option or right. The Company's or a
subsidiary corporation's obligation to satisfy stock appreciation rights shall
not be funded or secured in any manner.
9. INVESTMENT REPRESENTATION, APPROVALS AND LISTING. The Committee may, if it
deems appropriate, condition its grant of any option hereunder upon receipt of
the following investment representation from the optionee:
"I further agree that any shares of Common Stock of North Coast
Energy, Inc. which I may acquire by virtue of this option shall be
acquired for investment purposes only and not with a view to
distribution or resale; provided, however, that this restriction shall
become inoperative in the event the said shares of Common Stock
subject to this option shall be registered under the Securities Act of
1933, as amended, or in the event there is presented to North Coast
Energy, Inc. an opinion of counsel satisfactory to North Coast Energy,
Inc. to the effect that the offer or sale of the shares of Common
Stock subject to this option may lawfully be made without registration
of the said shares of stock under the Securities Act of 1933, as
amended."
The Company shall not be required to issue any certificate or certificates for
shares of Common Stock upon the exercise of an option or a stock appreciation
right granted under the Plan prior to (i) the obtaining of any approval from any
governmental agency which the Company shall, in its sole discretion, determine
to be necessary or advisable, (ii) the admission of such shares to listing on
any national securities exchange on which the shares of Common Stock may be
listed, (iii) the completion of any registration or other qualification of the
shares of Common Stock under any state or federal law or ruling or regulations
of any governmental body which the Company shall, in its sole discretion,
determine to be necessary or advisable or the determination by the Company, in
its sole discretion, that any registration or other qualification of the shares
of Common Stock is not necessary or advisable and (iv) the obtaining of an
investment representation from the optionee in the form stated above or in such
other form as the Company, in its sole discretion, shall determine to be
adequate.
10. GENERAL PROVISIONS. The form and substance of option agreements and grants
of stock appreciation rights, whether granted at the same or different times,
need not be identical.
Nothing in the Plan or in any option agreement shall confer upon any employee
any right to continue in the employ of the Company or any of its subsidiary
corporations, to be entitled to any remuneration or benefits not set forth in
the Plan or such option, or to interfere with or limit the right of the Company
or any subsidiary corporation to terminate his employment at any time, with or
without cause. No employee of the Company or other person shall have any right
to be granted an award under the Plan except in the discretion of the Committee.
Nothing contained in the Plan or in any option agreement shall be construed as
entitling any optionee to any rights of a shareholder as a result of the grant
of an option until such time as shares of Common
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Stock are actually issued to such optionee pursuant to the exercise of an option
or stock appreciation rights.
The Plan may be assumed by the successors and assigns of the Company.
The liability of the Company under the Plan and any distribution of Common Stock
made hereunder is limited to the obligations set forth herein with respect to
such distribution and no. term or provision of the Plan shall be construed to
impose any liability on the Company in favor of any person with respect to any
loss, cost or expense which the person may incur in connection with or arising
out of any transaction in connection with the Plan, including, but not limited
to, any liability to any federal, state, or local tax authority and/or any
securities regulatory authority.
The cash proceeds received by the Company from the issuance of shares of Common
Stock pursuant to the Plan will be used for general corporate purposes or in
such other manner as the Board of Directors deems appropriate.
The expense of administering the Plan shall be borne by the Company.
The captions and section numbers appearing in the Plan are inserted only as a
matter of convenience. They do not define, limit, construe or describe the scope
or intent of the provisions of the Plan.
11. TERMINATION OF THE PLAN. The Plan shall terminate on the tenth (10th)
anniversary of the adoption hereof by the Board of Directors, and thereafter no
options shall be granted hereunder. All options outstanding at the time of
termination of the Plan shall continue in full force and effect according to
their terms and the terms and conditions of the Plan. The Board may at any time
terminate or from time to time amend the Plan in whole or in part, but no such
action shall adversely affect any rights or obligations with respect to any
awards theretofore made under the Plan.
12. TAXES. Appropriate provisions shall be made for all taxes required to be
withheld and/or paid in connection with the options or the exercise thereof and
the transfer of Common Stock pursuant thereto, under the applicable laws or
other regulations of any governmental authority, whether federal, state, or
local and whether domestic or foreign. In its discretion, the Company may permit
the optionee to satisfy such withholding requirements by (a) the Company
withholding from issuance to the optionee such number of Common Stock otherwise
issuable upon exercise of the option as the Company and the optionee may agree,
provided, however, that the optionee must have had on file with the Company, for
at least six (6) months prior thereto, an effective standing election to satisfy
said optionee's tax withholding obligations in such a fashion, which election
form by its terms shall not be revocable or amendable for at least six (6)
months, or (b) with the consent of the Board, in whole or in part, in Common
Stock having a fair market value on the date the option is exercised equal to
that portion of the withholding obligation for which payment in cash is not
made.
13. CHANGES IN GOVERNING RULES AND RELATIONS. All references herein to the
Internal Revenue Code of 1986, as amended, or sections thereof, or to rules and
regulations of the Department of Treasury or of the Securities and Exchange
Commission, shall mean and include the Code sections thereof and such rules and
regulations as are now in effect or as they may be subsequently amended,
modified, substituted or superseded.