Exhibit 10.81
FX ENERGY, INC.
2004 LONG-TERM INCENTIVE PLAN
FX Energy, Inc., a Nevada corporation (the "Company"), hereby adopts
this "2004 Long-Term Incentive Plan" (the "Plan").
1. Purposes of the Plan. The Board has adopted this Plan with the
intent, and directs that it be administered as necessary, to attract and retain
the best available personnel for positions of substantial responsibility;
provide additional incentive to Employees, Directors and Consultants; and
promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights may also be granted under the Plan.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees
as shall be administering the Plan in accordance with section 4 of the
Plan.
(b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under the corporate laws of the
state in which the Company is incorporated, federal and state
securities laws, the Code, the regulations and policies of any stock
exchange or quotation system on which the Common Stock is listed or
quoted, and the Applicable Laws of any foreign country or jurisdiction
where Options or Stock Purchase Rights are or will be granted under the
Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as
amended.
(e) "Committee" means a committee of Directors appointed by
the Board in accordance with section 4 of the Plan.
(f) "Common Stock" means the common stock of the Company.
(g) "Company" means FX Energy, Inc., a Nevada corporation.
(h) "Consultant" means any person, including an advisor,
engaged by the Company or a Parent or Subsidiary to render services to
such entity, including, at the discretion of the Administrator, an
entity that is not a natural person.
(i) "Director" means a member of the Board.
(j) "Disability" means total and permanent disability as
defined in Section 22(e)(3) of the Code.
(k) "Employee" means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the
Company. A Service Provider shall not cease to be an Employee in the
case of (i) any leave of absence approved by the Company or (ii)
transfers between locations of the Company or between the Company, its
Parent, any Subsidiary, or any successor. For purposes of Incentive
Stock Options, no such leave may exceed 90 days, unless reemployment
upon expiration of such leave is guaranteed by statute or contract. If
reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, then three months following the 91st day
of such leave, any Incentive Stock Option held by the Optionee shall
cease to be treated as an Incentive Stock Option and shall be treated
for tax purposes as a Nonstatutory Stock Option. Neither service as a
Director nor payment of a Director's fee by the Company shall be
sufficient to constitute "employment" by the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(m) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:
(i) if the Common Stock is listed on any established
stock exchange or a national market system, including the
Nasdaq National Market or the Nasdaq SmallCap Market of the
Nasdaq Stock Market, its Fair Market Value shall be the
closing sales price for such stock (or the closing bid, if no
sales were reported) as quoted on such exchange or system on
the day of determination, as reported by Nasdaq, The Wall
Street Journal, or such other source as the Administrator
deems reliable;
(ii) if the Common Stock is regularly quoted in an
inter-dealer quotation medium, but selling prices are not
reported, the Fair Market Value of a Share of Common Stock
shall be the mean between the high bid and low asked prices
for the Common Stock on the day of determination, as reported
by such inter-dealer quotation medium, The Wall Street
Journal, or such other source as the Administrator deems
reliable; or
(iii) in the absence of an established market for the
Common Stock, the Fair Market Value shall be determined in
good faith by the Administrator.
(n) "Incentive Stock Option" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422
of the Code and the regulations promulgated thereunder.
(o) "Inside Director" means a Director who is an Employee.
(p) "Nonstatutory Stock Option" means an Option not intended
to qualify as an Incentive Stock Option.
(q) "Notice of Grant" means a written or electronic notice
evidencing certain terms and conditions of an individual Option or
Stock Purchase Right grant. The Notice of Grant is part of, and subject
to the terms of, the Option Agreement.
(r) "Officer" means a person who is an executive officer of
the Company within the meaning of Section 16 of the Exchange Act and
the rules and regulations promulgated thereunder.
(s) "Option" means a stock option granted pursuant to the
Plan.
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(t) "Option Agreement" means an agreement between the Company
and an Optionee evidencing the terms and conditions of an individual
Option grant. The Option Agreement is subject to the terms and
conditions of the Plan.
(u) "Option Exchange Program" means a program whereby
outstanding Options are surrendered in exchange for Options with a
lower exercise price.
(v) "Optioned Stock" means the Common Stock subject to an
Option or Stock Purchase Right.
(w) "Optionee" means the holder of an outstanding Option or
Stock Purchase Right granted under the Plan.
(x) "Outside Director" means a Director who meets the
definition of both a "Non-Employee Director" (as defined in Rule 16b-3
of the Exchange Act) and "Outside Director" (as defined in Section
162(m) of the Code).
(y) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(z) "Plan" means this 2004 Long-Term Incentive Plan, as the
same may be amended and restated from time to time.
(aa) "Restricted Stock" means Shares of Common Stock acquired
pursuant to a grant of Stock Purchase Rights under section 11 of the
Plan.
(bb) "Restricted Stock Purchase Agreement" means a written
agreement between the Company and the Optionee evidencing the terms and
restrictions applying to stock purchased under a Stock Purchase Right.
The Restricted Stock Purchase Agreement is subject to the terms and
conditions of the Plan and the Notice of Grant.
(cc) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being
exercised with respect to the Plan.
(dd) "Section 16(b)" means Section 16(b) of the Exchange Act.
(ee) "Service Provider" means an Employee, Director or
Consultant.
(ff) "Share" means a share of Common Stock, as adjusted in
accordance with section 15 of the Plan.
(gg) "Stock Purchase Right" means the right to purchase Common
Stock pursuant to section 11 of the Plan, as evidenced by a Notice of
Grant.
(hh) "Subsidiary" means a "subsidiary corporation," whether
now or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of section 15
of the Plan, the maximum aggregate number of Shares on which Options may be
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granted and which may be sold on the exercise of such Options and under
Restricted Stock Purchase Agreements under the Plan is 1,000,000 Shares. The
Shares may be authorized, but unissued, or reacquired Common Stock.
If an Option or Stock Purchase Right expires or becomes unexercisable
without having been exercised in full, or is surrendered pursuant to an Option
Exchange Program, the unpurchased Shares that were subject thereto shall become
available for future grant or sale under the Plan (unless the Plan has
terminated); provided, however, that Shares that have actually been issued under
the Plan, whether upon exercise of an Option or Right, shall not be returned to
the Plan and shall not become available for future distribution under the Plan,
except that if Shares of Restricted Stock are repurchased by the Company at
their original purchase price, such Shares shall become available for future
grant under the Plan.
4. Administration of the Plan.
(a) Procedure.
(i) The Board may designate different Committees to
administer the Plan with respect to different groups of
Service Providers.
(ii) To the extent that the Administrator determines
it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section
162(m) of the Code, the Plan shall be administered by a
Committee of two or more "Outside Directors" within the
meaning of Section 162(m) of the Code.
(iii) To the extent desirable to qualify transactions
hereunder as exempt under Rule 16b-3, the transactions
contemplated hereunder shall be structured to satisfy the
requirements for exemption under Rule 16b-3.
(iv) Other than as provided above, the Plan shall be
administered by the Board or a Committee, which Committee
shall be constituted to satisfy Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of
the Plan, and in the case of a Committee, subject to the specific
duties delegated by the Board to such Committee, the Administrator
shall have the authority, in its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options
and Stock Purchase Rights may be granted hereunder;
(iii) to determine the number of Shares of Common
Stock to be covered by each Option and Stock Purchase Right
granted hereunder;
(iv) to approve forms of agreement for use under the
Plan;
(v) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any Option or
Stock Purchase Right granted hereunder. Such terms and
conditions include the exercise price, the time or times when
Options or Stock Purchase Rights may be exercised (which may
be based on performance criteria), any vesting acceleration or
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waiver of forfeiture restrictions, and any restriction or
limitation regarding any Option or Stock Purchase Right or the
Shares of Common Stock relating thereto, based in each case on
such factors as the Administrator, in its sole discretion,
shall determine;
(vi) to reduce the exercise price of any Option or
Stock Purchase Right to the then-current Fair Market Value if
the Fair Market Value of the Common Stock covered by such
Option or Stock Purchase Right shall have declined since the
date the Option or Stock Purchase Right was granted;
(vii) to institute an Option Exchange Program;
(viii) to construe and interpret the terms of the
Plan and awards granted pursuant to the Plan;
(ix) to establish, amend and rescind rules and
regulations relating to the Plan, including rules and
regulations relating to subplans established for the purpose
of satisfying applicable foreign laws;
(x) to modify or amend each Option or Stock Purchase
Right (subject to section 17(c) of the Plan), including the
discretionary authority to extend the post-termination
exercisability period of Options longer than is otherwise
provided for in the Plan;
(xi) to authorize any person to execute on behalf of
the Company any instrument required to effect the grant of an
Option or Stock Purchase Right previously granted by the
Administrator;
(xii) to correct any defect, supply any omission, or
reconcile any inconsistency in the Plan or in any Option
Agreement, in a manner and to the extent it shall deem
necessary, all of which determinations and interpretations
made by the Administrator shall be conclusive and binding on
all Optionees, any other holders of Options, and on their
legal representatives and beneficiaries;
(xiii) except to the extent prohibited by or
impermissible in order to obtain treatment desired by the
Administrator under Applicable Law or rule, to allocate or
delegate all or any portion of its powers and responsibilities
to any one or more of its members or to any person(s) selected
by it, subject to revocation or modification by the
Administrator of such allocation or delegation; and
(xiv) to make all other determinations deemed
necessary or advisable for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final and
binding on all Optionees and any other holders of Options or Stock
Purchase Rights.
5. Eligibility. Nonstatutory Stock Options and Stock Purchase Rights
may be granted to Service Providers. Incentive Stock Options may be granted only
to Employees.
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6. Limitations.
(a) Designation. Each Option shall be designated in the Option
Agreement as either an Incentive Stock Option or a Nonstatutory Stock
Option. However, notwithstanding such designation, to the extent that
the aggregate Fair Market Value of the Shares with respect to which
Incentive Stock Options are exercisable for the first time by the
Optionee during any calendar year (under all Plans of the Company and
any Parent or Subsidiary) exceeds $100,000, such Options shall be
treated as Nonstatutory Stock Options. For purposes of this section
6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall
be determined as of the time the Option with respect to such Shares is
granted.
(b) No Right of Continuing Service or Employment. Neither the
Plan nor any Option or Stock Purchase Right shall confer upon an
Optionee any right with respect to continuing the Optionee's
relationship as a Service Provider with the Company, nor shall they
interfere in any way with the Optionee's right or the Company's right
to terminate such relationship at any time, with or without cause.
7. Term of Plan. Subject to section 21 of the Plan, the Plan shall
become effective upon its adoption by the Board. It shall continue in effect for
a term of 10 years unless terminated earlier under section 17 of the Plan.
8. Term of Option. The term of each Option shall be stated in the
Option Agreement. In the case of an Incentive Stock Option, the term shall be 10
years from the date of grant or such shorter term as may be provided in the
Option Agreement. Moreover, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Incentive Stock Option is granted, owns stock
representing more than 10% of the total combined voting power of all classes of
stock of the Company or any Parent or Subsidiary, the term of the Incentive
Stock Option shall be five years from the date of grant or such shorter term as
may be provided in the Option Agreement.
9. Option Exercise Price and Consideration.
(a) Exercise Price. The per Share exercise price for the
Shares to be issued pursuant to exercise of an Option shall be
determined by the Administrator and specified in the Option Agreement,
subject to the following:
(i) In the case of an Incentive Stock Option:
(1) granted to an Employee who, at the time
the Incentive Stock Option is granted, owns stock
representing more than 10% of the voting power of all
classes of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no
less than 110% of the Fair Market Value per Share on
the date of grant.
(2) granted to any Employee other than an
Employee described in subsection 9(a)(i)(1)
immediately above, the per Share exercise price shall
be no less than 100% of the Fair Market Value per
Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option, the
per Share exercise price shall be determined by the
Administrator. In the case of a Nonstatutory Stock Option
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intended to qualify as "performance-based compensation" within
the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market
Value per Share on the date of grant.
(iii) Notwithstanding the foregoing, Options may be
granted with a per Share exercise price of less than 100% of
the Fair Market Value per Share on the date of grant pursuant
to a merger or other corporate transaction.
(b) Waiting Period and Exercise Dates. At the time an Option
is granted, the Administrator shall fix the period within which the
Option may be exercised and shall determine any conditions that must be
satisfied before the Option may be exercised.
(c) Form of Consideration. The Administrator shall determine
the acceptable form of consideration for exercising an Option,
including the method of payment. Such consideration may consist
entirely of:
(i) cash;
(ii) check;
(iii) promissory note, except in the case of Options
granted to or held by executive officers or directors;
(iv) other Shares, provided Shares acquired from the
Company have been owned by the Optionee for more than six
months on the date of surrender and have a Fair Market Value
on the date of surrender equal to the aggregate exercise price
of the Shares as to which said Option shall be exercised;
(v) consideration received by the Company under a
cashless exercise program implemented by the Company in
connection with the Plan;
(vi) a reduction in the amount of any Company
liability to the Optionee, including any liability
attributable to the Optionee's participation in any
Company-sponsored deferred compensation program or
arrangement;
(vii) any combination of the foregoing methods of
payment; or
(viii) such other consideration and method of payment
for the issuance of Shares to the extent permitted by
Applicable Laws.
In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant as
set forth in the Option Agreement. Notwithstanding the form of
consideration determined by the Administrator at the time of grant, the
Administrator shall have the authority, in its sole and absolute
discretion, to accept other forms of consideration as the method of
payment.
10. Exercise of Option.
(a) Procedure for Exercise; Rights as a Stockholder. Any
Option granted hereunder shall be exercisable according to the terms of
the Plan and at such times and under such conditions as determined by
the Administrator and set forth in the Option Agreement. Unless the
Administrator provides otherwise, vesting of Options granted hereunder
shall be tolled during any unpaid leave of absence. An Option may not
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be exercised for a fraction of a Share. An Option shall be deemed
exercised when the Company receives: (i) written or electronic notice
of exercise (in accordance with the Option Agreement) from the person
entitled to exercise the Option, and (ii) full payment for the Shares
with respect to which the Option is exercised. Full payment may consist
of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan.
Shares issued upon exercise of an Option shall be issued in the name of
the Optionee or, if requested by the Optionee, in the name of the
Optionee and his or her spouse or in the name of a family trust of
which the Optionee is a trustee. Until the Shares are issued (as
evidenced by the appropriate entry on the books of the Company or of a
duly authorized transfer agent of the Company), no right to vote or
receive dividends or any other rights as a stockholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the
Option. The Company shall issue (or cause to be issued) such Shares
promptly after the Option is exercised; provided that if the Company
shall be advised by counsel that certain requirements under the
federal, state or foreign securities laws must be met before Shares may
be issued under this Plan, the Company shall notify all persons who
have been issued Options, and the Company shall have no liability for
failure to issue Shares under any exercise of Options because of delay
while such requirements are being met or the inability of the Company
to comply with such requirements. No adjustment will be made for a
dividend or other right for which the record date is prior to the date
the Shares are issued, except as provided in section 15 of the Plan.
Exercising an Option in any manner shall decrease the number of Shares
thereafter available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is
exercised.
(b) Termination of Relationship as a Service Provider. If an
Optionee ceases to be a Service Provider, other than upon the
Optionee's death or Disability, the Optionee may exercise his or her
Option within such period of time as is specified in the Option
Agreement to the extent that the Option is vested on the date of
termination (but in no event later than the expiration of the term of
such Option as set forth in the Option Agreement). In the absence of a
specified time in the Option Agreement, the Option shall remain
exercisable for three months following the Optionee's termination. If,
on the date of termination, the Optionee is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the Option
shall revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified by the
Administrator, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.
(c) Disability of Optionee. If an Optionee ceases to be a
Service Provider as a result of the Optionee's Disability, the Optionee
may exercise his or her Option within such period of time as is
specified in the Option Agreement to the extent the Option is vested on
the date of termination (but in no event later than the expiration of
the term of such Option as set forth in the Option Agreement). In the
absence of a specified time in the Option Agreement, the Option shall
remain exercisable for 12 months following the Optionee's termination.
If, on the date of termination, the Optionee is not vested as to his or
her entire Option, the Shares covered by the unvested portion of the
Option shall revert to the Plan. If, after termination, the Optionee
does not exercise his or her Option within the time specified herein,
the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
(d) Death of Optionee. If an Optionee dies while a Service
Provider, the Option may be exercised within such period of time as is
specified in the Option Agreement (but in no event later than the
expiration of the term of such Option as set forth in the Notice of
Grant), by the Optionee's estate or by a person who acquires the right
to exercise the Option by bequest or inheritance, but only to the
extent that the Option is vested on the date of death. In the absence
of a specified time in the Option Agreement, the Option shall remain
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exercisable for 12 months following the Optionee's termination. If, at
the time of death, the Optionee is not vested as to his or her entire
Option, the Shares covered by the unvested portion of the Option shall
immediately revert to the Plan. The Option may be exercised by the
executor or administrator of the Optionee's estate or, if none, by the
person(s) entitled to exercise the Option under the Optionee's will or
the laws of descent or distribution. If the Option is not so exercised
within the time specified herein, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.
11. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards granted
under the Plan and/or cash awards made outside of the Plan. After the
Administrator determines that it will offer Stock Purchase Rights under
the Plan, it shall advise the offeree in writing or electronically, by
means of a Notice of Grant, of the terms, conditions and restrictions
related to the offer, including the number of Shares that the offeree
shall be entitled to purchase, the price to be paid, and the time
within which the offeree must accept such offer. The offer shall be
accepted by execution of a Restricted Stock Purchase Agreement in the
form determined by the Administrator.
(b) Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock Purchase Agreement shall grant the
Company a repurchase option exercisable upon the voluntary or
involuntary termination of the purchaser's service with the Company for
any reason (including death or Disability). The purchase price for
Shares repurchased pursuant to the Restricted Stock Purchase Agreement
shall be the original price paid by the purchaser plus interest at the
rate of 10% per year from the date of the original purchase and may be
paid by cancellation of any indebtedness of the purchaser to the
Company. The repurchase option shall lapse at a rate determined by the
Administrator.
(c) Other Provisions. The Restricted Stock Purchase Agreement
shall contain such other terms, provisions and conditions not
inconsistent with the Plan as may be determined by the Administrator in
its sole discretion.
(d) Rights as a Stockholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
stockholder and shall be a stockholder when his or her purchase is
entered upon the records of the duly authorized transfer agent of the
Company. No adjustment will be made for a dividend or other right for
which the record date is prior to the date the Stock Purchase Right is
exercised, except as provided in section 15 of the Plan.
12. Withholding. If the grant or exercise of an Option or a Stock
Purchase Right pursuant to this Plan, or any other event in connection with any
such grant or exercise, creates an obligation to withhold income and employment
taxes pursuant to the Applicable Laws, such obligation may, at the sole and
absolute discretion of the Administrator at the time of the grant of the Option
or Stock Purchase Right and to the extent permitted by the terms of the Option
or Stock Purchase Right and the then-governing provisions of the Code and the
Exchange Act, be satisfied (a) by the holder of the Option or Stock Purchase
Right delivering to the Company an amount of cash equal to such withholding
obligation; (b) by the Company withholding from any compensation or other amount
owing to the holder of the Option or Stock Purchase Right the amount (in cash,
stock or other property as the Company may determine) of the withholding
obligation; (c) by the Company withholding Shares of stock subject to the Option
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or Stock Purchase Right with a Fair Market Value equal to such obligation; or
(d) by the holder of the Option or Stock Purchase Right either delivering Shares
of stock that have been owned by the holder for more than six months or
canceling Options or other rights to acquire stock from the Company that have
been held for more than six months with a Fair Market Value equal to such
requirements. In all events, delivery of Shares of stock issuable on exercise of
the Option or on grant of the Stock Purchase Right shall be conditioned upon and
subject to the satisfaction or making provision for the satisfaction of the
withholding obligation of the Company resulting from the grant or exercise of
the Option, grant of the Stock Purchase Right, or any other event in accordance
with the foregoing. The Company shall be further authorized to take such other
action as may be necessary, in the opinion of the Company, to satisfy all
obligations for the payment of such taxes.
13. Nontransferability of Options and Stock Purchase Rights.
(a) An Option or Stock Purchase Right may not be sold, pledged,
assigned, hypothecated, transferred or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee, all save and except only (i) an
Optionee's family member who has acquired the Option or Stock Purchase Right
through a gift or a transfer for value pursuant to a domestic relations order in
settlement of marital property rights or a transfer to an entity in which more
that 50% of the voting interests owned by an Optionee's family members or the
Optionee in exchange for an interest in that entity, all as more particularly
provided in the general instructions to Form S-8 or any successor form under the
Securities Act of 1933; or (ii) unless determined otherwise by the
Administrator, in which case such Option or Stock Purchase Right shall contain
such additional terms and conditions as the Administrator deems appropriate.
(b) An Incentive Stock Option may not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner other than by will or by
the laws of descent or distribution and may be exercised, during the lifetime of
the Optionee, only by the Optionee. An Incentive Stock Option can only be
exercised by Optionee. In the event of the death of Optionee while an eligible
employee of the Company or within three months after termination thereof, this
Option can be exercised by the executor or personal representative of the estate
of Optionee or such other person who has acquired this Option as a bequest or by
inheritance from Optionee.
14. Grants to Directors and Officers. To the extent the Company has a
class of securities registered under Section 12 of the Exchange Act, Options or
Stock Purchase Rights granted under the Plan to Directors and Officers (as used
in Rule 16b-3 promulgated under the Exchange Act or any amendment or successor
rule of like tenor) intended to qualify for the exemption from Section 16(b) of
the Exchange Act provided in Rule 16b-3 shall, in addition to being subject to
the other restrictions and limitations set forth in this Plan, be made as
follows:
(a) Requirements for Grant to Officer or Director. A
transaction whereby there is a grant of an Option or Stock Purchase
Right pursuant to this Plan must satisfy one of the following:
(i) The transaction must be approved by the Board or
duly authorized Committee composed solely of two or more
Outside Directors of the Company.
(ii) The transaction must be approved or ratified, in
compliance with Section 14 of the Exchange Act, by either: (1)
the affirmative vote of the holders of a majority of the
securities of the Company present or represented and entitled
to vote at a meeting of the stockholders of the Company held
in accordance with the Applicable Laws of the state of
incorporation of the Company; or (2) if allowed by applicable
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state law, the written consent of the holders of a majority,
or such greater percentage as may be required by Applicable
Laws of the state of incorporation of the Company, of the
securities of the Company entitled to vote. If the transaction
is ratified by the stockholders, such ratification must occur
no later than the date of the next annual meeting of
stockholders.
(iii) The stock acquired must be held by the Officer
or Director for a period of six months subsequent to the date
of the grant; provided that if the transaction involves a
derivative security (as defined in Section 16 of the Exchange
Act), this condition shall be satisfied if at least six months
elapse from the date of acquisition of the derivative security
to the date of disposition of the derivative security (other
than on exercise or conversion) or its underlying equity
security.
(b) Approval Required for Disposition of Securities. Any
transaction involving the disposition by the Company of its securities
in connection with Options or Stock Purchase Rights granted pursuant to
this Plan to an Officer or Director shall:
(i) be approved by the Board or duly authorized
Committee composed solely of two or more Outside Directors; or
(ii) be approved or ratified, in compliance with
Section 14 of the Exchange Act, by either: (1) the affirmative
vote of the holders of a majority of the securities of the
Company present or represented and entitled to vote at a
meeting duly held in accordance with the Applicable Laws of
the state of incorporation of the Company; or (2) if allowed
by applicable state law, the written consent of the holders of
a majority, or such greater percentage as may be required by
Applicable Laws of the state of incorporation of the Company,
of the securities of the Company entitled to vote; provided
that such ratification occurs no later than the date of the
next annual meeting of stockholders;
unless the securities so acquired are held by the Officer or Director
for six months following the date of such acquisition, provided that
this condition shall be satisfied with respect to a derivative security
if at least six months elapse from the date of acquisition of the
derivative security to the date of disposition of the derivative
security (other than upon exercise or conversion) or its underlying
equity security..
All of the foregoing restrictions and limitations are based on the governing
provisions of the Exchange Act and the rules and regulations promulgated
thereunder as of the date of adoption of this Plan. If, at any time, the
governing provisions are amended to permit an Option or Stock Purchase Right to
be granted or exercised pursuant to Rule 16b-3 or any amendment or successor
rule of like tenor without one or more of the foregoing restrictions or
limitations, or the terms of such restrictions or limitations are modified, the
Administrator may award Options or Stock Purchase Rights to Directors and
Officers and may modify outstanding Options or Stock Purchase Rights in
accordance with such changes, all to the extent that such action by the
Administrator does not disqualify the Options or Stock Purchase Rights from
exemption under the provisions of Rule 16b-3 or any amendment or successor rule
of similar tenor.
15. Adjustments upon Changes in Capitalization, Dissolution, Merger or
Asset Sale.
(a) Changes in Capitalization. Subject to any required action
by the stockholders of the Company, the number of Shares of Common
Stock covered by each outstanding Option and Stock Purchase Right, the
number of Shares of Common Stock that have been authorized for issuance
under the Plan but as to which no Options or Stock Purchase Rights have
yet been granted or which have been returned to the Plan upon
cancellation or expiration of an Option or Stock Purchase Right, the
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number of Shares that may be added annually to the Shares reserved
under the Plan by the Board (pursuant to section 3), as well as the
price per Share of Common Stock covered by each such outstanding Option
or Stock Purchase Right, shall be proportionately adjusted for any
increase or decrease in the number of issued Shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other
increase or decrease in the number of issued Shares of Common Stock
effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company
shall not be deemed to have been effected without receipt of
consideration within the meaning of the preceding clause. Such
adjustment shall be made by the Board, whose determination in that
respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of Shares of stock of any
class, or securities convertible into Shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Shares of Common Stock subject to an
Option or Stock Purchase Right.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall
notify each Optionee as soon as practicable prior to the effective date
of such proposed transaction. The Administrator in its discretion may
provide for an Optionee to have the right to exercise his or her Option
until 10 days prior to such transaction as to all of the Optioned Stock
covered thereby, including Shares as to which the Option would not
otherwise be exercisable. In addition, the Administrator may provide
that any Company repurchase option applicable to any Shares purchased
upon exercise of an Option or Stock Purchase Right shall lapse as to
all such Shares, provided the proposed dissolution or liquidation takes
place at the time and in the manner contemplated. To the extent it has
not been previously exercised, an Option or Stock Purchase Right will
terminate immediately prior to the consummation of such proposed
action.
(c) Merger or Asset Sale. In the event of a merger of the
Company with or into another corporation, or the sale of substantially
all of the assets of the Company, each outstanding Option and Stock
Purchase Right shall be assumed or an equivalent Option or right
substituted by the successor corporation or a Parent or Subsidiary of
the successor corporation. With respect to Options granted to an
Outside Director pursuant to section 14 that are assumed or substituted
for, if following such assumption or substitution the Optionee's status
as a Director or a director of the successor corporation, as
applicable, is terminated other than upon a voluntary resignation by
the Optionee, then the Optionee shall fully vest in and have the right
to exercise the Option as to all of the Optioned Stock, including
Shares as to which it would not otherwise be vested or exercisable.
In the event that the successor corporation refuses to assume
or substitute for the Option or Stock Purchase Right, the Optionee
shall fully vest in and have the right to exercise the Option or Stock
Purchase Right as to all of the Optioned Stock, including Shares as to
which it would not otherwise be vested or exercisable. If an Option or
Stock Purchase Right becomes fully vested and exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets,
the Administrator shall notify the Optionee in writing or
electronically that the Option or Stock Purchase Right shall be fully
vested and exercisable for a period of 15 days from the date of such
notice, and the Option or Stock Purchase Right shall terminate upon the
expiration of such period.
For the purposes of this subsection, the Option or Stock
Purchase Right shall be considered assumed if, following the merger or
sale of assets, the Option or right confers the right to purchase or
receive, for each Share of Optioned Stock subject to the Option or
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Stock Purchase Right immediately prior to the merger or sale of assets,
the consideration (whether stock, cash or other securities or property)
received in the merger or sale of assets by holders of Common Stock for
each Share held on the effective date of the transaction (and if
holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the
merger or sale of assets is not solely common stock of the successor
corporation or its Parent, the Administrator may, with the consent of
the successor corporation, provide for the consideration to be received
upon the exercise of the Option or Stock Purchase Right, for each Share
of Optioned Stock subject to the Option or Stock Purchase Right, to be
solely common stock of the successor corporation or its Parent equal in
Fair Market Value to the per Share consideration received by holders of
Common Stock in the merger or sale of assets.
16. Date of Grant. The date of grant of an Option or Stock Purchase
Right shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the determination shall be
provided to each Optionee within a reasonable time after the date of such grant.
17. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time
amend, alter, suspend or terminate the Plan.
(b) Stockholder Approval. The Company shall obtain stockholder
approval of any Plan amendment to the extent necessary and desirable to
comply with Applicable Laws.
(c) Effect of Amendment or Termination. No amendment,
alteration, suspension or termination of the Plan shall impair the
rights of any Optionee, unless mutually agreed otherwise between the
Optionee and the Administrator, which agreement must be in writing and
signed by the Optionee and the Company. Termination of the Plan shall
not affect the Administrator's ability to exercise the powers granted
to it hereunder with respect to Options granted under the Plan prior to
the date of such termination.
18. Conditions upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to
the exercise of an Option or Stock Purchase Right unless the exercise
of such Option or Stock Purchase Right and the issuance and delivery of
such Shares shall comply with Applicable Laws and shall be further
subject to the approval of counsel for the Company with respect to such
compliance.
(b) Investment Representations. As a condition to the exercise
of an Option or Stock Purchase Right, the Company may require the
person exercising such Option or Stock Purchase Right to represent and
warrant at the time of any such exercise that the Shares are being
purchased only for investment and without any present intention to sell
or distribute such Shares if, in the opinion of counsel for the
Company, such a representation is required.
19. Inability To Obtain Authority. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
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20. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
21. Stockholder Approval. The Plan shall be subject to approval by the
stockholders of the Company within 12 months after the date the Plan is adopted.
Such stockholder approval shall be obtained in the manner and to the degree
required under Applicable Laws.
SECRETARY'S CERTIFICATE
The undersigned, the duly constituted and elected secretary of FX
Energy, Inc., hereby certifies that pursuant to resolution duly adopted by the
stockholders on May ___, 2004, in accordance with the requirements of law and
the Company's articles of incorporation and bylaws, the foregoing FX Energy,
Inc. 2004 Long-Term Incentive Plan was approved by the affirmative vote of the
holders of a majority of the Shares of Common Stock.
DATED this 16 day of June, 2004.
/s/ Scott J. Duncan
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Scott J. Duncan, Secretary
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