INCENTIVE PLAN OF CARRIZO OIL & GAS, INC. NON-QUALIFIED STOCK OPTION AGREEMENT
Exhibit
10.2
INCENTIVE
PLAN
OF
CARRIZO
OIL & GAS, INC.
THIS
AGREEMENT (“Agreement”) is made as of the day of [month,
year]
(the
“Grant Date”), by and between Carrizo Oil & Gas, Inc., a Texas corporation
(the “Company”), and [employee
name]
(the
“Grantee”).
The
Company has adopted the Incentive Plan of Carrizo Oil & Gas, Inc. (the
“Plan”), a copy of which is appended to this Agreement as Exhibit A and by this
reference made a part hereof, for the benefit of eligible employees, directors
and independent contractors of the Company and its Subsidiaries. Capitalized
terms used and not otherwise defined herein shall have the meaning ascribed
thereto in the Plan.
Pursuant
to the Plan, the Committee, which has generally been assigned responsibility
for
administering the Plan, has determined that it would be in the interest of
the
Company and its stockholders to grant the options provided herein in order
to
provide Grantee with additional remuneration for services rendered, to encourage
Grantee to remain in the employ of the Company or its Subsidiaries and to
increase Grantee’s personal interest in the continued success and progress of
the Company.
The
Company and Grantee therefore agree as follows:
1. GRANT
OF OPTION. Subject
to the terms and conditions herein, the Company grants to the Grantee during
the
period commencing on date and expiring at 5 p.m. Houston, Texas time (“Close of
Business”) on date (the “Option Term”), subject to earlier termination pursuant
to paragraph 6 below, an option to purchase from the Company, at the price
per
share set forth on Schedule 1 hereto (the “Option Price”), the number of shares
of Company Common Stock (“Common Stock”) set forth on said Schedule 1 (the
“Option Shares”). The Option Price and Option Shares are subject to adjustment
pursuant to paragraph 9 below. This option is a “Nonqualified Stock Option” and
is hereinafter referred to as the “Option.”
2. CONDITIONS
OF EXERCISE.
The Option is exercisable only in accordance with the conditions stated in
this
paragraph.
(a) Except
as
otherwise provided in this subparagraph (a), the Option may only be exercised
to
the extent the Option Shares have become available for purchase in accordance
with the following schedule
|
Date
|
Percentage
of Option Shares Available for Purchase
|
|
First
Anniversary of Grant Date
|
33
1/3%
|
|
Second
Anniversary of Grant Date
|
33
1/3%
|
|
Third
Anniversary of Grant Date
|
33
1/3%
|
Notwithstanding
the foregoing, subject to the provisions of any applicable written employment
agreement between the Grantee and the Company or any Subsidiary, no additional
Option Shares shall become available for purchase if Grantee has not remained
in
the continuous employment of the Company and its Subsidiaries through the
applicable date. A change of employment is continuous employment within the
meaning of this paragraph 2 provided that, after giving effect to such change,
the Grantee continues to be an employee of the Company or any
Subsidiary.
(b) To
the
extent the Option becomes exercisable, such Option may be exercised in whole
or
in part (at any time or from time to time, except as otherwise provided herein)
until expiration of the Option Term or earlier termination thereof.
(c) Notwithstanding
the foregoing, upon a Change of Control while the Grantee remains in continuous
employment, the Option may be exercised with respect to one-hundred percent
(100%) of all Option Shares. Notwithstanding
anything in this Agreement to the contrary, the aggregate present value of
all
parachute payments payable to or for the benefit of the Grantee under this
Agreement shall be limited so that when combined with any other parachute
payments made to the Grantee in connection with a change in control of the
Company such amounts will not exceed three times the Grantee’s base amount less
one dollar and, to the extent necessary, the acceleration of exercisability
under this Agreement shall be reduced in order that this limitation not be
exceeded. For purposes of this Section, the terms "parachute payment," "base
amount" and "present value" shall have the meanings assigned thereto under
Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”).
It is the intention of this Section to avoid excise taxes on the Grantee
under
Code Section 4999 or the disallowance of a deduction to the Company
pursuant to Code Section 280G.
3. MANNER
OF EXERCISE. The
Option shall be considered exercised (as to the number of Option Shares
specified in the notice referred to in subparagraph (a) below) on the latest
of
(i) the date of exercise designated in the written notice referred to in
subparagraph (a) below, (ii) if the date so designated is not a business
day,
the first business day following such date or (iii) the earliest business
day by
which the Company has received all of the following:
(a) Written
notice, in such form as the Committee may require, designating, among other
things, the date of exercise and the number of Option Shares to be
purchased;
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(b) If
the
Option is to be exercised, payment of the Option Price for each Option Share
to
be purchased in cash, Common Stock or in such other form (or combination
of
forms) of payment contemplated by Section 11 of the Plan as the Committee
or the
provisions of Section 11 of the Plan may permit; provided, however, that
any
shares of Common Stock delivered in payment of the Option Price that are
or were
the subject of an Employee Award or Independent Contractor Award must be
shares
that the Grantee has owned for a period of at least six months prior to the
date
of exercise; and
(c) Any
other
documentation that the Committee may reasonably require.
4. MANDATORY
WITHHOLDING FOR TAXES.
Grantee acknowledges and agrees that the Company shall deduct from the
cash and/or shares of Common Stock otherwise payable or deliverable upon
exercise of the Option an amount of cash and/or number of shares of Common
Stock
(valued at their Fair Market Value on the date of exercise) that is equal
to the
amount of all federal, state and local taxes required to be withheld by the
Company upon such exercise, as determined by the Committee.
5. DELIVERY
BY THE COMPANY.
As soon as practicable after receipt of all items referred to in paragraph
3,
and subject to the withholding referred to in paragraph 4, the Company shall
deliver to the Grantee certificates issued in Grantee’s name for the number of
Option Shares purchased by exercise of the Option. If delivery is by mail,
delivery of shares of Common Stock shall be deemed effected for all purposes
when a stock transfer agent of the Company shall have deposited the certificates
in the United States mail, addressed to the Grantee, and any cash payment
shall
be deemed effected when a Company check, payable to Grantee and in an amount
equal to the amount of the cash payment, shall have been deposited in the
United
States mail, addressed to the Grantee.
6. TERMINATION
OF EMPLOYMENT.
Unless otherwise determined by the Committee in its sole discretion, the
Option
shall terminate, prior to the expiration of the Option Term, at the time
specified below:
(a) If
Grantee terminates employment with the Company and its Subsidiaries voluntarily
without Good Reason (as defined below), then the Option shall terminate at
the
Close of Business on the first business day following the expiration of the
90
day period which began on the date of termination of Grantee’s employment;
or
(b) If
Grantee’s employment with the Company and its Subsidiaries is terminated by the
Company or a Subsidiary for Cause (as defined below), then the Option shall
terminate immediately upon termination of Grantee’s employment.
In
any
event in which the Option remains exercisable for a period of time following
the
date of termination of Grantee’s employment, the Option may be exercised during
such period of time only to the extent it is or becomes exercisable as provided
in paragraph 2. Notwithstanding any period of time referenced in this paragraph
6 or any other provision of this paragraph that may be construed to the
contrary, the Option shall in any event terminate upon the expiration of
the
Option Term.
3
“Cause”
for purposes of the Agreement shall mean cause as defined in any written
employment agreement between the Grantee and the Company or a Subsidiary
in
effect at the time of the Grantee’s termination of employment or, in the absence
of any such employment agreement, any of the following: (a) conviction of
the
Grantee by a court of competent jurisdiction of any felony or a crime involving
moral turpitude; (b) the Grantee’s knowing failure or refusal to follow
reasonable instructions of the Board or reasonable policies, standards and
regulations of the Company or its Subsidiaries; (c) the Grantee’s continued
failure or refusal to faithfully and diligently perform the usual, customary
duties of his employment with the Company or a Subsidiary; (d) the Grantee
continuously conducting himself in an unprofessional, unethical, immoral
or
fraudulent manner; or (e) the Grantee’s conduct discredits the Company or
a
Subsidiary or is detrimental to the reputation, character and standing of
the
Company or a Subsidiary.
“Good
Reason” for purposes of the Agreement shall mean good reason as defined in any
written employment agreement between the Grantee and the Company or a Subsidiary
in effect at the time of the Grantee’s termination of employment or, in the
absence of any such employment agreement, shall be deemed to have occurred
upon
the happening of any of the following:
(i) any
reduction in Grantee’s annual rate of salary;
(ii) either
(x) a failure of the Company to continue in effect any employee benefit plan
in
which Grantee was participating or (y) the taking of any action by the Company
that would adversely affect Grantee’s participation in, or materially reduce
Grantee’s benefits under, any such employee benefit plan, unless such failure or
such taking of any action adversely affects the senior members of the corporate
management of the Company generally;
(iii) the
assignment to Grantee of duties and responsibilities that are materially more
oppressive or onerous than those attendant to Grantee’s position immediately
after the date hereof;
(iv) the
relocation of the office location as assigned to Grantee by the Company to
a
location more than 20 miles from Grantee’s current location without Grantee’s
consent; or
(v) the
failure of the Company to obtain, prior to the time of any reorganization,
merger, consolidation, disposition of all or substantially all of the assets
of
the Company or similar transaction effective after the date hereof, in which
the
Company is not the surviving person, the unconditional assumption in writing
or
by operation of law of the Company’s obligations to Grantee under this Agreement
by each direct successor to the Company in any such transaction.
7. NONTRANSFERABILITY
OF OPTION.
During Grantee’s lifetime, the Option is not transferable (voluntarily or
involuntarily) other than pursuant to a domestic relations order and, except
as
otherwise required pursuant to a domestic relations order, is exercisable only
by the Grantee or Grantee’s court appointed legal representative. The Grantee
may designate a
4
beneficiary
or beneficiaries to whom the Option shall pass upon Grantee’s death and may
change such designation from time to time by filing a written designation of
beneficiary or beneficiaries with the Committee on the form annexed hereto
as
Exhibit B or such other form as may be prescribed by the Committee, provided
that no such designation shall be effective unless so filed prior to the death
of Grantee. If no such designation is made or if the designated beneficiary
does
not survive the Grantee’s death, the Option shall pass by will or the laws of
descent and distribution. Following Grantee’s death, the Option, if otherwise
exercisable, may be exercised by the person to whom such option passes according
to the foregoing and such person shall be deemed the Grantee for purposes of
any
applicable provisions of this Agreement.
8. NO
STOCKHOLDER RIGHTS.
The Grantee shall not be deemed for any purpose to be, or to have any of the
rights of, a stockholder of the Company with respect to any shares of Common
Stock as to which this Agreement relates until such shares shall have been
issued to Grantee by the Company. Furthermore, the existence of this Agreement
shall not affect in any way the right or power of the Company or its
stockholders to accomplish any corporate act, including, without limitation,
the
acts referred to in Section 15 of the Plan.
9. ADJUSTMENTS.
As provided in Section 15 of the Plan, certain adjustments may be made to
the Option upon the occurrence of events or circumstances described in Section
15 of the Plan.
10. RESTRICTIONS
IMPOSED BY LAW.
Without limiting the generality of Section 16 of the Plan, the Grantee agrees
that Grantee will not exercise the Option and that the Company will not be
obligated to deliver any shares of Common Stock, if counsel to the Company
determines that such exercise, or delivery would violate any applicable law
or
any rule or regulation of any governmental authority or any rule or regulation
of, or agreement of the Company with, any securities exchange or association
upon which the Common Stock is listed or quoted. The Company shall in no
event
be obligated to take any affirmative action in order to cause the exercise
of
the Option or the resulting delivery of shares of Common Stock to comply
with
any such law, rule, regulation or agreement.
11. NOTICE.
Unless the Company notifies the Grantee in writing of a different
procedure, any notice or other communication to the Company with respect
to this
Agreement shall be in writing and shall be (a) delivered personally to the
following address:
Carrizo
Oil & Gas, Inc.
0000
Xxxxxxxxx Xx.,
Xxxxx
0000
Xxxxxxx,
Xxxxx 00000
or
(b)
sent by first class mail, postage prepaid and addressed as follows:
Carrizo
Oil & Gas, Inc.
0000
Xxxxxxxxx Xx.,
Xxxxx
0000
Xxxxxxx,
Xxxxx 00000
Attention:
Payroll/Benefits Manager
5
Any
notice or other communication to the Grantee with respect to this Agreement
shall be in writing and shall be delivered personally, or shall be sent by
first
class mail, postage prepaid, to Grantee’s address as listed in the records of
the Company on the Grant Date, unless the Company has received written
notification from the Grantee of a change of address.
12. AMENDMENT.
Notwithstanding any other provisions hereof, this Agreement may be
supplemented or amended from time to time as approved by the Committee as
contemplated by Section 6 of the Plan. Without limiting the generality of
the
foregoing, without the consent of the Grantee,
(a) this
Agreement may be amended or supplemented (i) to cure any ambiguity or to correct
or supplement any provision herein which may be defective or inconsistent with
any other provision herein, or (ii) to add to the covenants and agreements
of
the Company for the benefit of Grantee or surrender any right or power reserved
to or conferred upon the Company in this Agreement, subject, however, to any
required approval of the Company’s stockholders and, provided, in each case,
that such changes or corrections shall not adversely affect the rights of
Grantee with respect to the Award evidenced hereby without the Grantee’s
consent, or (iii) to make such other changes as the Company, upon advice of
counsel, determines are necessary or advisable because of the adoption or
promulgation of, or change in or of the interpretation of, any law or
governmental rule or regulation, including any applicable federal or state
securities laws; and
(b) subject
to Section 6 of the Plan and any required approval of the Company’s
stockholders, the Award evidenced by this Agreement may be canceled by the
Committee and a new Award made in substitution therefor, provided that the
Award
so substituted shall satisfy all of the requirements of the Plan as of the
date
such new Award is made and no such action shall adversely affect the Option
to
the extent then exercisable without the Grantee’s consent.
13. GRANTEE
EMPLOYMENT.
Nothing contained in this Agreement, and no action of the Company or the
Committee with respect hereto, shall confer or be construed to confer on the
Grantee any right to continue in the employ of Company or any of its
Subsidiaries or interfere in any way with the right Company or any employing
Subsidiary to terminate the Grantee’s employment time, with or without cause;
subject, however, to the provisions of any employment agreement between the
Grantee and the Company or any Subsidiary.
14. GOVERNING
LAW.
This Agreement shall be governed by, and construed in accordance with, the
internal laws of the State of Texas.
15. CONSTRUCTION.
References in this Agreement to “this Agreement” and the words “herein,”
“hereof,” “hereunder” and similar terms include all Exhibits and Schedules
appended hereto, including the Plan. This Agreement is entered into, and the
Award evidenced hereby is granted, pursuant to the Plan and shall be governed
by
and construed in accordance with the Plan and the administrative interpretations
adopted by the Committee thereunder. All decisions of the Committee upon
questions regarding the Plan or this Agreement shall be conclusive. Unless
otherwise expressly stated herein, in the event of any inconsistency between
6
the
terms
of the Plan and this Agreement, the terms of the Plan shall control. The
headings of the paragraphs of this Agreement have been included for convenience
of reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
16. DUPLICATE
ORIGINALS.
The Company and the Grantee may sign any number of copies of this
Agreement. Each signed copy shall be an original, but all of them together
represent the same agreement.
17. RULES
BY COMMITTEE.
The rights of the Grantee and obligations of the Company hereunder shall
be subject to such reasonable rules and regulations as the Committee may
adopt
from time to time hereafter.
18. ENTIRE
AGREEMENT.
Subject to the provisions of any applicable written employment agreement
between the Grantee and the Company or any Subsidiary, Grantee and the Company
hereby declare and represent that no promise or agreement not herein expressed
has been made and that this Agreement contains the entire agreement between
the
parties hereto with respect to the Option and replaces and makes null and
void
any prior agreements, oral or written, between Grantee and the Company regarding
the Option.
19. GRANTEE
ACCEPTANCE.
Grantee shall signify acceptance of the terms and conditions of this
Agreement by signing in the space provided at the end hereof and returning
a
signed copy to the Company.
| ATTEST: | Carrizo Oil & Gas, Inc. | |
| By: | ||
| Secretary Date | Name: X. X. Xxxxxxx Date | |
| Title: President | ||
| ACCEPTED: | ||
| [Grantee] Date | ||
7
Schedule
1 to Non-Qualified Stock Option Agreement dated as of date
INCENTIVE
PLAN
OF
CARRIZO
OIL & GAS, INC.
| Grantee: | [Employee Name] |
| Grant Date: | [Date] |
| Option Price: | [$_____] per share |
| Option Shares: | [______] shares of Common Stock, par value $ 0.01 per share. |
Exhibit
B
to Non-Qualified Stock Option Agreement dated as of [date]
INCENTIVE
PLAN
OF
CARRIZO
OIL & GAS, INC.
DESIGNATION
OF BENEFICIARY
I,
________________________________ (the “Grantee”), hereby declare that upon my
death _______________________________ (the “Beneficiary”) of
______________________________________________________________________________
who is my ____________________________, shall be entitled to the Option and
all
other rights accorded the Grantee by the above-referenced agreement (the
“Agreement”).
It
is
understood that this Designation of Beneficiary is made pursuant to the
Agreement and is subject to the conditions stated herein, including the
Beneficiary’s survival of the Grantee’s death. If any such condition is not
satisfied, such rights shall devolve according to the Grantee’s will or the laws
of descent and distribution.
It
is
further understood that all prior designations of beneficiary under the
Agreement are hereby revoked and that this Designation of Beneficiary may only
be revoked in writing, signed by the Grantee, and filed with the Company prior
to the Grantee’s death.
|
Date
|
Grantee
|
|
