EXHIBIT 4.1
HIGH PLAINS GAS, INC.
2011 EMPLOYEES' AND CONSULTANTS STOCK OPTION PLAN
1. Purpose of the 2011 Stock Option Plan.
The purpose of the Plan is to enable the Company to attract, retain and
motivate its employees and qualified consultants by providing for or increasing
the proprietary interests of such employees in the Company through increased
stock ownership.
The Plan provides for options which either (i) qualify as incentive stock
options ("Incentive Options") within the meaning of that term in Section 422 of
the Internal Revenue Code of 1986, as amended, or (ii) do not so qualify under
Section 422 of the Code ("Nonstatutory Options") (collectively "Options"). Any
Option granted under this Plan will be clearly identified at the time of grant
as to whether it is intended to be either an Incentive Option or a Nonstatutory
Option.
2. Definitions.
The following terms, when appearing in the text of this Plan in capitalized
form, will have the meanings set out below:
(a) "Board" means the Board of Directors of the Company.
(b "Code" means the Internal Revenue Code of 1986, as heretofore or
hereafter amended.
(c) "Committee" means the committee appointed by the Board pursuant to
Section 3 below.
(d) "Company" means High Plains Gas, Inc. or any parent or "subsidiary
corporation," as that term is defined by Section 424(f) of the Code, thereof,
unless the context requires it to be limited to High Plains Gas, Inc
(e) "Consultants" means the class of persons consisting of individuals
engaged by the Company by contract or otherwise to provide services to the
Company as the Committee shall so determine.
(f) "Disabled Grantee" means a Grantee who is disabled within the
meaning of Section 422(c)(6) of the Code.
(g) "Employees" means the class of employees consisting of individuals
regularly employed by the Company on a full-time salaried basis who are
identified as key employees, or such other employees as the Committee shall so
determine.
(h) "Executive Officer" means those individuals who, on the last day of
the taxable year at issue: (i) served as the Company's chief executive officer
or was acting in a similar capacity, regardless of compensation level; and (ii)
the four most highly compensated executive officers (other than the chief
executive officer) all as determined pursuant to Treasury Regulation
1.162-27(c)(2).
(i) "Fair Market Value" means, with respect to the common stock of the
Company, the price at which the stock would change hands between an informed,
able and willing buyer and seller, neither of which is under a compulsion to
enter into the transaction. Fair Market Value will be determined in good faith
by the Committee in accordance with a valuation method which is consistent with
the guidelines set forth in Treasury Regulation 1.421-7 (e) (2) or any
applicable regulations issued pursuant to Section 422(a) of the
Code. Fair Market Value will be determined without regard to any restriction
other than a restriction which, by its terms, will never lapse.
(j) "Grantee" means an eligible Employee or Consultant under this Plan
who has been granted an Option.
(k) "Incentive Option" means an Option that qualifies for the benefit
described in Section 421 of the Code, by virtue of compliance with the
provisions of Section 422 of the Code.
(l) "Nonstatutory Option" means an Option that is not an Incentive
Option.
(m) "Option" means either an Incentive Option or a Nonstatutory Option
granted under this Plan.
(n) "Option Agreement" means the agreement entered into between the
Company and an individual Grantee and specifying the terms and conditions of the
Option granted to the Grantee, which terms and conditions will recite or
incorporate by reference: (i) the provisions of this Plan which are not subject
to variation; and (ii) the variable terms and conditions of each Option granted
hereunder which will apply to that Grantee.
(o) "Optionee" means a Grantee, and, under the appropriate
circumstances, his guardian, representative, heir, distributee, legatee
or successor in interest, including any transferee.
(p) "Plan" means this 2011 Employees' and Consultants' Stock Option
Plan, as the same may from time to time be amended.
(q) "Stock" means the Company's common stock.
3. Administration of the Plan.
(a) Committee Membership. The Plan shall be administered by a
committee appointed by the Board, to be known as the Compensation Committee (the
"Committee"). The Committee shall be not less than two members and to the
extent possible shall be comprised solely of Non-employee Directors, as defined
by Rule 16b-3(b)(3)(i) of the Securities Exchange Act of 1934 ("1934 Act"), or
any successor definition adopted by the Securities and Exchange Commission, and
who shall each also qualify as an Outside Director for purposes of Section
162(m) of the Code. Any vacancy occurring on the Committee may be filled by
appointment by the Board. The Board at its discretion may from time to time
appoint members to the Committee in substitution of members previously
appointed, may remove members of the Committee and may fill vacancies, however
caused, in the Committee. Given the current makeup of the Board of Directors,
the Committee shall initially consist of Mark Hettinger and Joe Hettinger.
(b) Committee Procedures. The Committee shall select one of its
members as chairman and shall hold meetings at such times and places as it may
determine. A quorum of the Committee shall consist of a majority of its
members, and the Committee may act by vote of a majority of its members present
at a meeting at which there is a quorum, or without a meeting by written consent
signed by all members of the Committee. If any powers of the Committee
hereunder are limited or denied by the Board or under applicable law, the same
powers may be exercised by the Board.
(c) Committee Powers and Responsibilities. The Committee will
interpret the Plan, prescribe, amend and rescind any rules or regulations
necessary or appropriate for the administration of the Plan, and make such other
determinations and take such other actions it deems necessary or advisable,
except as otherwise expressly reserved for the Board. Subject to the
limitations imposed by the Board or under applicable law and the terms of the
Plan, the Committee may periodically determine which Employees and/or
Consultants should receive Options under the Plan, whether the options shall be
Incentive Options or Nonstatutory Options, the number of shares covered by such
Options, the per share purchase price for such shares, and the terms thereof,
including but not limited to transferability of such Options, and shall have
full power to grant such Options. In making its determinations, the Committee
shall consider, among other relevant factors, the importance of the duties of
the Grantee to the Company, his or her experience with the Company, and his or
her future value to the Company. All decisions, interpretations and other
actions of the Committee shall be final and binding on all Grantees, Optionees
and all persons deriving their rights from a Grantee or Optionee. No member of
the Board or the Committee shall be liable for any action taken or failed to be
taken in good faith or for any determination made pursuant to the Plan.
4. Stock Subject to Plan.
This Plan authorizes the Committee to grant Options to Employees up to the
aggregate amount of 12,000,000 shares of Stock, subject to eligibility and any
limitations specified herein. Adjustment in the shares subject to the Plan
shall be made as provided in Section 9. Any shares covered by an Option which,
for any reason, expires, terminates or is canceled may be reoptioned under the
Plan.
5. Eligibility
(a) General Rule. All Employees and Consultants defined in Section 2(e)
and 2(g) shall be eligible.
(b) Ten Percent Stockholders. An Employee or Consultant who owns more
than ten percent (10%) of the total combined voting power of all classes of
outstanding Stock shall not be eligible for designation as a Grantee of an
Incentive Option unless (i) the exercise price for each share of Stock subject
to such Incentive Option is at least one hundred ten percent (110%) of the Fair
Market Value of a share of Stock on the date of grant, and (ii) such Incentive
Option, by its terms, is not exercisable after the expiration of five (5) years
from the date of grant.
(c) Attribution Rules. For purposes of Subsection (b) above, in
determining stock ownership, an Employee or Consultant shall be deemed to own
the Stock owned, directly or indirectly, by or for his brothers, sisters
(whether by whole or half blood), spouse, ancestors and lineal descendants.
Stock owned, directly or indirectly, by or for a corporation, partnership,
estate or trust shall be deemed to be owned proportionately by or for its
stockholders, partners or beneficiaries.
(d) Outstanding Stock. For purposes of Subsection (b) above,
"Outstanding Stock" shall include all Stock actually issued and outstanding
immediately after the grant. "Outstanding Stock" shall not include shares
authorized for issuance under outstanding options held by the Employee or by any
other person.
(e) Individual Limits of Executive Officers. Subject to the provisions
of Section 9 hereof, the number of option shares granted in a fiscal year to any
Executive Officer shall not exceed 1,000,000 shares for the first fiscal year
during which such person becomes an Executive Officer and shall not exceed
2,000,000 shares for any subsequent fiscal year during which such person serves
as an Executive Officer.
(f) Incentive Option Limitation. The aggregate Fair Market Value of
the stock for which Incentive Options granted to any one eligible Employee or
Consultant under this Plan and under all incentive stock option plans of the
Company, its parent(s) and subsidiaries, may by their terms first become
exercisable during any calendar year shall not exceed $100,000, determining Fair
Market Value of the stock subject to any Option as of the time that Option is
granted. If the date on which one or more Incentive Options could be first
exercised would be accelerated pursuant to any other provision of the Plan or
any Stock Option Agreement referred to in Section 6(a), or an amendment thereto,
and the acceleration of such exercise date would result in a violation of the
restriction set forth in the preceding sentence, then notwithstanding any
such other provision the exercise date of such Incentive Options shall be
accelerated only to the extent, if any, that is permitted under Section 422 of
the Code and the exercise date of the Incentive Options with the lowest option
prices shall be accelerated first. Any exercise date which cannot be
accelerated without violating the $100,000 restriction of this section shall
nevertheless be accelerated, and the portion of the Option becoming exercisable
thereby shall be treated as a Nonstatutory Option.
6. Terms and Conditions of All Options Under the Plan.
(a) Option Agreement. All Options granted under the Plan shall be
evidenced by a written Option Agreement and shall be subject to all applicable
terms and conditions of the Plan and may be subject to any other terms and
conditions which are not inconsistent with the Plan and which the Committee
deems appropriate for inclusion in an Option Agreement.
(b) Number of Shares. Each Option Agreement shall specify the number
of shares of the Stock each such Employee or Consultant will be entitled to
purchase pursuant to the Option and shall provide for the adjustment of such
number in accordance with Section 9. Each Option Agreement shall state the
minimum number of shares which must be exercised at any time, if any.
(c) Nature of Option. Each Option Agreement shall specify the intended
nature of the Option as an Incentive Option, a Nonstatutory Option or partly of
each type.
(d) Exercise Price. Each Option Agreement shall specify the exercise
price. The exercise price of either the Incentive Option or the Nonstatutory
Option shall not be less than one hundred percent (100%) of the Fair Market
Value of a share of Stock on the date of grant. Subject to the foregoing, the
exercise price under any Option shall be determined by the Committee in its sole
discretion. The exercise price shall be payable in the form described in
Section 7.
(e) Term of Option. The Option Agreement shall specify the term of the
Option. The term of any Option granted under this Plan is subject to
expiration, termination, and cancellation as set forth within this Plan.
(f) Exercisability. Each Option Agreement shall specify the date when
all or any installment of the Option is to become exercisable. Such Option
shall not be exercisable after the expiration of such term which shall be fixed
by the Committee, but in any event not later than ten years from the date such
Option is granted. Subject to the provisions of the Plan, the Committee may
grant Options which are vested, or which become vested upon the happening of an
event or events as specified by the Committee.
(g) Withholding Taxes. Upon exercise of any Nonstatutory Option (or
any Incentive Option which is treated as a Nonstatutory Option because it fails
to meet the requirements set forth in the Code for Incentive Options), the
Optionee must tender full payment to the Company for any federal income tax
withholding required under the Code in connection with such exercise
("Withholding Tax"). If the Optionee fails to tender to the Company the
Withholding Tax, the Committee, at its discretion, shall withhold from the
Optionee any and all shares subject to such Option, and accordingly, subject to
Withholding Tax until such time as either of the following events has occurred:
(i) the Employee tenders to the Company payment in cash to pay the
Withholding Tax; or
(ii) the Company withholds from the Employee's wages an amount
sufficient to pay the Withholding Tax.
(h) Termination and Acceleration of Option.
For Incentive Options:
(i) If the employment of a Grantee who is not a Disabled Grantee
is terminated without cause, or such Grantee voluntarily quits or retires under
any retirement plan of the Company, any then outstanding and exercisable stock
option held by such a Grantee shall be exercisable, in accordance with the
provisions of the Option Agreement, by such Grantee at any time prior to the
expiration date of such Option or within three months after the date of
termination of employment or service, whichever is the shorter period.
(ii) If the employment of a Grantee who is a Disabled Grantee is
terminated without cause, any then outstanding and exercisable Option held by
such a Grantee shall be exercisable, in accordance with the provisions of the
Option Agreement, by such a Grantee at any time prior to the expiration date of
such Option or within one year after the date of such termination of employment
or service, whichever is the shorter period.
For all Options issued hereunder:
(i) If the Company terminates the employment of a Grantee for
cause, all outstanding stock options held by the Grantee at the time of such
termination shall automatically terminate unless the Committee notifies the
Grantee that his or her options will not terminate. A termination "for cause"
shall be defined under each written Option Agreement. The Company assumes no
responsibility and is under no obligation to notify a Permitted Transferee (as
hereafter defined in section 13) of early termination of an Option on account of
a Grantee's termination of employment.
(ii) Whether termination of employment or other service is a
termination "for cause" or whether a Grantee is a Disabled Grantee shall be
determined in each case, in its discretion, by the Committee and any such
determination by the Committee shall be final and binding.
(iii) Following the death of a Grantee during employment, any
outstanding and exercisable Options held by such Grantee at the time of death
shall be exercisable, in accordance with the provisions of the Option Agreement,
by the person or persons entitled to do so under the Will of the Grantee, or, if
the Grantee shall fail to make testamentary disposition of the stock option or
shall die intestate, by the legal representative of the Grantee at any time
prior to the expiration date of such Option or within one year after the date of
death, whichever is the shorter period.
(iv) The Committee may grant Options, or amend Options previously
granted, to provide that such Options continue to be exercisable up to ten years
after the date of grant irrespective of the termination of the Grantee's
employment with the Company, and which vest upon grant or become vested upon the
happening of an event or events specified by the Committee, although the
exercise of such vested Options in the case of Incentive Options more than three
months after termination of employment may convert such Options to Nonstatutory
Options with respect to the income tax consequences of such exercise.
7. Payment for Shares
(a) Cash. Payment in full for shares purchased under an Option shall
be made in cash (including check, bank draft or money order) at the time that
the Option is exercised.
(b) Stock. In lieu of cash an Optionee may, with the consent of the
Committee, make payment for Stock purchased under an Option, in whole or in
part, by tendering to the Company in good form for transfer, shares of Stock
valued at Fair Market Value on the date the Option is exercised. Such shares
will have been owned by the Optionee or the Optionee's representative for the
time specified by the Committee but in no case shall the Optionee or his
representative have held a beneficial interest in such tendered shares for a
period less than six months prior to the exercise of the Option.
(c) Cashless exercise. the Optionee may elect to receive an amount of
Common Stock (the "Settlement Stock") equal to "X" where:
X = [(N x D) - (N x P)] / D
N = the gross number of shares of Common Stock that would have been issuable if
the Optionee had not elected Cashless Exercise
D = Daily Market Price on the third (3rd) Business Day before, and excluding,
the date of the Notice
P = Warrant Price with respect to such notice
8. Use of Proceeds from Stock.
Cash proceeds from the sale of Stock pursuant to Options granted under the
Plan shall constitute general funds of the Company.
9. Adjustments.
Changes or adjustments in the Option price, number of shares subject to an
Option or other specifics as the Committee should decide will be considered or
made pursuant to the following rules:
(a) Upon Changes in Stock. If the outstanding Stock is increased or
decreased, or is changed into or exchanged for a different number or kinds of
shares or securities, as a result of one or more reorganizations,
recapitalization, stock splits, reverse stock splits, split-up, combination of
shares, exchange of shares, change in corporate structure, or otherwise,
appropriate adjustments will be made in the exercise price and/ or the number
and/or kind of shares or securities for which Options may thereafter be granted
under this Plan and for which Options then outstanding under this Plan may
thereafter be exercised. The Committee will make such adjustments as it may
deem fair, just and equitable to prevent substantial dilution or enlargement of
the rights granted to or available for Optionees. No adjustment provided for in
this Section 9 will require the Company to issue or sell a fraction of a share
or other security. Nothing in this Section will be construed to require the
Company to make any specific or formula adjustment.
(b) Prohibited Adjustment. If any such adjustment provided for in this
Section 9 requires the approval of stockholders in order to enable the Company
to grant or amend Options, then no such adjustment will be made without the
required stockholder approval. Notwithstanding the foregoing, if the effect of
any such adjustment would be to cause an Incentive Option to fail to continue to
qualify under Section 422 of the Code or to cause a modification, extension or
renewal of such stock option within the meaning described in Section 424 of the
Code, the Committee may elect that such adjustment not be made but rather shall
use reasonable efforts to effect such other adjustment of each then outstanding
Option as the Committee, in its sole discretion, shall deem equitable and which
will not result in any disqualification, modification, extension or renewal
(within the meaning of Section 424 of the Code) of such Incentive Option.
(c) Further Limitations. Nothing in this Section will entitle the
Optionee to adjustment of his Option in the following circumstances:
(i) The issuance or sale of additional shares of the Stock,
through public offering or otherwise;
(ii) The issuance or authorization of an additional class of
capital stock of the Company;
(iii) The conversion of convertible preferred stock or debt of the
Company into Stock; and
(iv) The payment of dividends except as provided in Section 9 (a).
The grant of an Option shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes of
its capital or business structure, to merge or consolidate or to dissolve,
liquidate, sell or transfer all or any part of its business or assets.
10. Legal Requirements:
(a) Compliance with All Laws. The Company will not be required to
issue or deliver any certificates for shares of Stock prior to (a) the listing
of any such Stock to be acquired pursuant to the exercise of any Option on any
stock exchange on which the Stock may then be listed, and (b) the compliance
with any registration requirements or qualification of such shares under any
federal securities laws, including without limitation the Securities Act of
1933, as amended ("1933 Act"), the rules and regulations promulgated thereunder,
or state securities laws and regulations, the regulations of any stock exchange
or interdealer quotation system on which the Company's securities may then be
listed, or obtaining any ruling or waiver from any government body which the
Company may, in its sole discretion, determine to be necessary or advisable, or
which, in the opinion of counsel to the Company, is otherwise required.
(b) Compliance with Specific Code Provisions. It is the intent of the
Company that the Plan and its administration conform strictly to the
requirements of Section 422 of the Code with respect to Incentive Options.
Therefore, notwithstanding any other provision of this Plan, nothing herein will
contravene any requirement set forth in Section 422 of the Code with respect to
Incentive Options and if inconsistent provisions are otherwise found herein,
they will be deemed void and unenforceable or automatically amended to conform,
as the case may be.
(c) Plan Subject to Nevada Law. All questions arising with respect to
the provisions of the Plan will be determined by application of the Code and the
laws of the state of Nevada except to the extent that Nevada laws are preempted
by any federal law.
11. Rights as a Stockholder.
An Optionee shall have no rights as a stockholder with respect to any Stock
covered by his Option until the date of issuance of the stock certificate to him
or her after receipt of the consideration in full set forth in the Option
Agreement. Except as provided in Section 9 hereof, no adjustments will be made
for dividends, whether ordinary or extraordinary, whether in cash, securities,
or other property, or for distributions for which the record date is prior to
the date on which the Option is exercised.
12. Restrictions on Shares.
Prior to the issuance or delivery of any shares of the Stock under the
Plan, the person exercising the Option may be required to:
(a) represent and warrant that the shares of the Stock to be acquired
upon exercise of the Option are being acquired for investment for the account of
such person and not with a view to resale or other distribution thereof;
(b) represent and warrant that such person will not, directly or
indirectly, sell, transfer, assign, pledge, hypothecate or otherwise dispose of
any such shares unless the sale, transfer, assignment, pledge, hypothecation or
other disposition of the shares is pursuant to the provisions of this Plan and
effective registrations under the 1933 Act and any applicable state or foreign
securities laws or pursuant to appropriate exemptions from any such
registrations; and
(c) execute such further documents as may reasonably be required by the
Committee upon exercise of the Option or any part thereof, including but not
limited to any stock restriction agreement that the Committee may choose to
require.
Nothing in this Plan shall assure any Optionee that shares issuable under
this Option are registered on a Form S-8 under the 1933 Act or on any other
Form. The certificate or certificates representing the shares of the Stock to be
issued or delivered upon exercise of an Option may bear a legend evidencing the
foregoing and other legends required by any applicable securities laws.
Furthermore, nothing herein or any Option granted hereunder will require the
Company to issue any Stock upon exercise of any Option if the issuance would, in
the opinion of counsel for the Company, constitute a violation of the 1933 Act,
applicable state securities laws, or any other applicable rule or regulation
then in effect. The Company shall have no liability for failure to issue shares
upon any exercise of Options because of a delay pending the meeting of any such
requirements.
13. Transferability.
The Committee shall retain the authority and discretion to permit a
Nonstatutory Option, but in no case an Incentive Option, to be transferable as
long as such transfers are made only to one or more of the following: family
members, limited to children of Grantee, spouse of Grantee, or grandchildren of
Grantee, or trusts for the benefit of Grantee and/or such family members
("Permitted Transferee"), provided that such transfer is a bona fide gift and
accordingly, the Grantee receives no consideration for the transfer, and that
the Options transferred continue to be subject to the same terms and conditions
that were applicable to the Options immediately prior to the transfer. Options
are also subject to transfer by will or the laws of descent and distribution.
Options granted pursuant to this Plan shall not be otherwise transferred,
assigned, pledged, hypothecated or disposed of in any way, whether by operation
of law or otherwise. A Permitted Transferee may not subsequently transfer an
Option. The designation of a beneficiary shall not constitute a transfer.
14. No Right to Continued Employment.
This Plan and any Option granted under this Plan will not confer upon any
Optionee any right with respect to continued employment or engagement by the
Company nor shall they alter, modify, limit or interfere with any right or
privilege of the Company under any employment agreement heretofore or hereafter
executed with any Optionee, including the right to terminate any Optionee's
employment or engagement at any time for or without cause, to change his or her
level of compensation or to change his or her responsibilities or position.
15. Corporate Reorganizations.
Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company as a result of which the
outstanding securities of the class then subject to Options hereunder are
changed into or exchanged for cash or property or securities not of the
Company's issue, or upon a sale of substantially all the property of the Company
to, or the acquisition of stock representing more than eighty percent (80%) of
the voting power of the stock of the Company then outstanding by another
corporation or person, the Plan will terminate and all Options will lapse. The
result described above will not occur if provision is made in writing in
connection with such transaction for the continuance of the Plan and/or for the
assumption of Options earlier granted, or the substitution for such Options of
options covering the stock of a successor employer corporation, or a parent or a
subsidiary thereof, with appropriate adjustments as to the number and kind of
shares and prices, in which event the Plan and Options theretofore granted will
continue in the manner and under the terms so provided. If the Plan and
unexercised Options shall terminate pursuant to the foregoing, all persons
holding any unexercised portions of Options then outstanding shall have the
right, at such time prior to the consummation of the transaction causing the
termination as the Company shall designate, to exercise the unexercised portions
of their options, including the portions thereof which would but for this
Section 15 not yet be exercisable.
16. Modification, Extension and Renewal.
(a) Options. Subject to the conditions of and within the limitations
prescribed in the Plan herein, the Committee may modify, extend, cancel or renew
outstanding Options. Notwithstanding the foregoing, no modification will,
without the prior written consent of the Optionee, alter, impair or waive any
rights or obligations associated with any Option earlier granted under the Plan.
(b) Plan. The Board may at any time and from time to time interpret,
amend or discontinue the Plan, subject to the limitation, however, that, except
as provided in Section 9 (relating to adjustments upon changes in stock), no
amendment shall be made, except upon stockholder approval, which will:
(i) Increase the number of shares reserved for Options under the
Plan; or
(ii) Reduce the Option price below 100% of Fair Market Value at
the time an Option is granted; or
(iii) Change the requirements for eligibility for participation
under the Plan.
17. Plan Date and Duration.
The Plan shall take effect on the date it is adopted by the Board. Options
may not be granted under this Plan after December 31, 2015.