TOREADOR RESOURCES CORPORATION 2005 LONG-TERM INCENTIVE PLAN NONQUALIFIED STOCK OPTION AGREEMENT
EXHIBIT 10.3
1. Grant of Option. Pursuant to the Toreador Resources Corporation 2005 Long-Term
Incentive Plan (the “Plan”), as adopted by Toreador Resources Corporation, a Delaware corporation
(the “Company”), the Company grants to
Xxxxx X. Xxxxxx
(the “Participant”)
(the “Participant”)
an option (sometimes referred to herein as the (“Stock Option”) to purchase from the Company a
total of 61,930 full shares of Common Stock, $0.15625 par value per share, of the Company (the
“Optioned Shares”) at an “Option Price” equal to $ 7.88 per share (being the Fair Market Value per
share of the Common Stock on this Date of Grant), in the amounts, during the periods and upon the
terms and conditions set forth in this Agreement.
The “Date of Grant” of this Stock Option is May 15, 2008. The “Option Period” shall commence
on the Date of Grant and shall expire on the date immediately preceding the tenth (10th)
anniversary of the Date of Grant. The Stock Option granted under this Agreement is not
intended to be, and shall not be treated as, an incentive stock option under Section 422 of the
Internal Revenue Code of 1986, as amended (the “Code”). This Stock Option is intended to comply
with the provisions governing nonqualified stock options under the final Treasury Regulations
issued on April 17, 2007, in order to exempt this Stock Option from application of Section 409A of
the Code.
2. Subject to Plan. This Stock Option and its exercise are subject in all respects to
the terms and conditions of the Plan, and the terms of the Plan shall control to the extent not
otherwise inconsistent with the provisions of this Agreement. The defined terms used herein that
are defined in the Plan shall have the same meanings defined for and assigned to them in the Plan.
In addition, this Stock Option is subject to any rules promulgated pursuant to the Plan by the
Board or the Committee and communicated to the Participant in writing.
3. Vesting; Time of Exercise. Except as otherwise provided in the Plan or as
specifically provided elsewhere in this Agreement, this Stock Option shall be vested and
exercisable no sooner than as follows:
| Exercise Date | Number of Shares | |
1. One (1) year from the Date of Grant
|
Up to 33.33% of the total Optioned Shares under the Stock Option | |
2. Two (2) years from the Date of Grant
|
Up to an additional 33.33% of the total Optioned Shares under the Stock Option | |
3. Three (3) years from the Date of Grant
|
Up to an additional 33.34% of the total | |
| Optioned Shares under the Stock Option |
provided, however, that in the event of: (i) the Participant’s death; (ii) the
Participant’s Termination of Service by reason of Total and Permanent Disability; or (iii) during
the Employment Term (as defined in the Employment Agreement dated March 12, 2008 by and between the
Company and the Participant, as may be amended (the “Employment Agreement”)), the occurrence of a
Change in Control and, following such Change in Control: (A) the Participant’s Termination of
Service by the Company without Cause; (B) the Participant is demoted from the positions of Chief
Executive Officer and President; or (C) the Participant’s authorities, powers, functions,
responsibilities or duties attached to the Participant’s position with the Company which the
Participant held on March 12, 2008 are materially reduced, all shares of Common Stock under this
Stock Option which have not previously vested and become exercisable shall automatically be
accelerated and become vested and exercisable in full, without regard to the vesting limitations
set forth above.
4. Term; Forfeiture.
| (a) | Except as otherwise provided in this Agreement, to the extent the unexercised portion of this Stock Option relates to Optioned Shares that are not vested on the Participant’s Termination of Service, the Stock Option will terminate on such date. The unexercised portion of this Stock Option that relates to Optioned Shares that are vested will terminate at the first to occur of the following: |
| (i) | 5 p.m. on the date the Option Period terminates; | ||
| (ii) | 5 p.m. on the date which is twelve (12) months following the date of the Participant’s Termination of Service with the Company or an Affiliate by reason of the Participant’s death or Total and Permanent Disability; | ||
| (iii) | Immediately upon the Participant’s Termination for Cause (as defined herein); | ||
| (iv) | 5 p.m. on the date which is three (3) months following the date of the Participant’s Termination of Service for any reason other than as set forth in subparagraphs (a)(ii) or (a)(iii) above of this Section 4. | ||
| (v) | 5 p.m. on the date the Company causes any portion of the Stock Option to be forfeited pursuant to Section 7 hereof. |
| (b) | For purposes of this Sections 3 and 4, “Cause” shall mean (i) the Participant’s commission of a dishonest or fraudulent act in connection with the Participant’s employment, or the misappropriation of Company property; (ii) the Participant’s conviction of, or plea of nolo contendere to, a felony or crime involving dishonesty; (iii) the Participant’s inattention to duties, unsatisfactory performance, or failure to perform the Participant duties hereunder, provided in each case the Company gives the Participant written notice and thirty (30) days to correct the Participant’s |
| performance to the Company’s satisfaction; (iv) a substantial failure to comply with the Company’s policies; (v) a material and willful breach of the Participant’s fiduciary duties in any material respect, provided in each case the Company gives the Participant written notice and thirty (30) days to correct; (vi) the Participant’s failure to comply in any material respect with any legal written directive of the Board; or (vii) any act or omission of the Participant which is of substantial detriment to the Company because of the Participant’s intentional failure to comply with any statute, rule or regulation, except any act or omission believed by the Participant in good faith to have been in or not opposed to the best interest of the Company (without intent of the Participant to gain, directly or indirectly, a profit to which the Participant was not legally entitled). Any determination of whether an the Participant should be terminated for Cause pursuant to this Agreement shall be made in the sole, good faith discretion of the Board, and shall be binding upon all parties affected thereby. |
5. Who May Exercise. Subject to the terms and conditions set forth in Sections 3
and 4 above, this Stock Option may be exercised during the lifetime of the Participant only by
the Participant or by the Participant’s guardian or legal representative. If the Participant’s
Termination of Service is due to death or Total and Permanent Disability prior to the termination
date specified in Section 4(a)(i) hereof, the following persons may exercise this Stock
Option on behalf of the Participant at any time prior to the earlier of the dates specified in
Sections 4(a)(i), (ii) or (v) hereof: (i) if the Participant has a Total and Permanent
Disability, the Participant or the guardian of the Participant; or (ii) if the Participant dies,
the personal representative of the Participant’s estate or the person who acquired the right to
exercise this Stock Option by bequest or inheritance or by reason of the death of the Participant;
provided that this Stock Option shall remain subject to the other terms of this Agreement, the
Plan, and applicable laws, rules and regulations.
6. Restrictions on Exercise. This Stock Option may be exercised in whole or in part,
but only with respect to full shares of Common Stock, and no fractional share of stock shall be
issued. In no event may this Stock Option be exercised or shares of Common Stock be issued
pursuant to this Agreement if any registration under state or federal securities laws required
under the circumstances has not been accomplished.
7. Manner of Exercise. Subject to such administrative regulations as the Committee
may from time to time adopt, the Stock Option may be exercised by the delivery of written notice to
the Committee setting forth the number of shares of Common Stock with respect to which the Stock
Option is to be exercised, the date of exercise thereof (the “Exercise Date”) which shall be at
least three (3) days after giving such notice unless an earlier time shall have been mutually
agreed upon. On the Exercise Date, the Participant shall deliver to the Company consideration with
a value equal to the total Option Price of the shares to be purchased, payable as follows: (a)
cash, check, bank draft, or money order payable to the order of the Company, (b) Common Stock
(including Restricted Stock) owned by the Participant on the Exercise Date, valued at its Fair
Market Value on the Exercise Date, and which the Participant has not acquired from the Company
within six (6) months
prior to the Exercise Date, (c) by delivery (including by FAX) to the Company
or its designated agent
of an executed irrevocable option exercise form together with irrevocable instructions from
the Participant to a broker or dealer, reasonably acceptable to the Company, to sell certain of the
shares of Common Stock purchased upon exercise of the Stock Option or to pledge such shares as
collateral for a loan and promptly deliver to the Company the amount of sale or loan proceeds
necessary to pay such purchase price, and/or (d) in any other form of valid consideration that is
acceptable to the Committee in its sole discretion. In the event that shares of Restricted Stock
are tendered as consideration for the exercise of the Stock Option, a number of shares of Common
Stock issued upon the exercise of the Stock Option equal to the number of shares of Restricted
Stock used as consideration therefor shall be subject to the same restrictions and provisions as
the Restricted Stock so tendered.
Upon payment of all amounts due from the Participant, the Company shall cause certificates for
the Common Stock then being purchased to be delivered as directed by the Participant (or the person
exercising the Participant’s Stock Option in the event of his Total and Permanent Disability or his
death) at its principal business office promptly after the Exercise Date. The obligation of the
Company to deliver shares of Common Stock shall, however, be subject to the condition that, if at
any time the Committee shall determine in its discretion that the listing, registration, or
qualification of the Stock Option or the Common Stock upon any securities exchange or inter-dealer
quotation system or under any state or federal law, or the consent or approval of any governmental
regulatory body, is necessary as a condition of, or in connection with, the Stock Option or the
issuance or purchase of shares of Common Stock thereunder, the Stock Option may not be exercised in
whole or in part unless such listing, registration, qualification, consent, or approval shall have
been effected or obtained free of any conditions not reasonably acceptable to the Committee.
If the Participant fails to pay for any of the Optioned Shares specified in such notice or
fails to accept delivery thereof, that portion of the Participant’s Stock Option and right to
purchase such Optioned Shares may be forfeited by the Company.
8. Non-Assignability. This Stock Option is not assignable or transferable by the
Participant in any form or fashion except by will or by the laws of descent and distribution.
9. Rights as Stockholder. Except for the adjustment in the number of shares of Common
Stock as provided in Section 10 below, the Participant will have no rights as a stockholder
with respect to any Optioned Shares until the issuance of a certificate or certificates to the
Participant for the shares of Common Stock. The Optioned Shares shall be subject to the terms and
conditions of this Agreement. Except as otherwise provided in Section 10 below, no
adjustment shall be made for dividends or other rights for which the record date is prior to the
issuance of such certificate or certificates.
10. Adjustment of Number of Shares and Related Matters. The number of shares of
Common Stock covered by the Stock Option, and the Option Prices thereof, shall be subject to
adjustment in accordance with Articles 11 – 13 of the Plan.
11. Specific Performance. The parties acknowledge that remedies at law will be
inadequate remedies for breach of this Agreement and consequently agree that this Agreement shall
be enforceable by specific performance. The remedy of specific performance shall be cumulative of
all of the right and remedies at law or in equity of the parties under this Agreement.
12. The Participant’s Representation. Notwithstanding any provision to the contrary
herein, the Participant hereby agrees that he will not exercise this Stock Option, and that the
Company will not be obligated to issue any shares of Common Stock to the Participant hereunder, if
the exercise thereof or the issuance of such shares of Common Stock shall constitute a violation by
the Participant or the Company of any provision of any law or regulation of any governmental
authority. Any determination in this connection by the Company shall be final, binding, and
conclusive. The obligations of the Company and the rights of the Participant are subject to all
applicable laws, rules, and regulations.
13. Investment Representation. Unless the shares of Common Stock are issued to the
Participant in a transaction registered under applicable federal and state securities laws, by his
execution hereof, the Participant represents and warrants to the Company that all Common Stock
which may be purchased hereunder will be acquired by the Participant for investment purposes only
for his own account and not with any intent for resale or distribution in violation of federal or
state securities laws. Unless the Common Stock is issued to him in a transaction registered under
the applicable federal and state securities laws, all certificates issued with respect to the
Common Stock shall bear an appropriate restrictive investment legend and shall be held
indefinitely, unless they are subsequently registered under the applicable federal and state
securities laws or the Participant obtains an opinion of counsel, in form and substance
satisfactory to the Company and its counsel, that such registration is not required.
14. The Participant’s Acknowledgments. The Participant acknowledges receipt of a copy
of the Plan, which is annexed hereto, and represents that he or she is familiar with the terms and
provisions thereof, and hereby accepts this Stock Option subject to all the terms and provisions
thereof. The Participant hereby agrees to accept as binding, conclusive, and final all decisions
or interpretations of the Committee or the Board, as appropriate, upon questions arising under the
Plan or this Agreement.
15. Law Governing. This Agreement shall be governed by, construed, and enforced in
accordance with the laws of the State of Texas (excluding any conflict of laws rule or principle of
Texas law that might refer the governance, construction, or interpretation of this Agreement to the
laws of another state).
16. No Right to Continue Employment. Nothing herein shall be construed to confer upon
the Participant the right to continue in the employment of the Company or interfere with or
restrict in any way the right of the Company to discharge the Participant at any time (subject to
any contract rights of the Participant).
17. Legal Construction. In the event that any one or more of the terms, provisions,
or agreements that are contained in this Agreement shall be held by a court of competent
jurisdiction to be invalid, illegal, or unenforceable in any respect for any reason, the invalid,
illegal, or unenforceable term, provision, or agreement shall not affect any other term, provision,
or agreement that is contained in this Agreement and this Agreement shall be construed in all
respects as if the invalid, illegal, or unenforceable term, provision, or agreement had never been
contained herein.
18. Covenants and Agreements as Independent Agreements. Each of the covenants and
agreements that is set forth in this Agreement shall be construed as a covenant and agreement
independent of any other provision of this Agreement. The existence of any claim or cause of
action of the Participant against the Company, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by the Company of the covenants and agreements
that are set forth in this Agreement.
19. Entire Agreement. This Agreement together with the Plan and the Employment
Agreement supersede any and all other prior understandings and agreements, either oral or in
writing, between the parties with respect to the subject matter hereof and constitute the sole and
only agreements between the parties with respect to the said subject matter. All prior
negotiations and agreements between the parties with respect to the subject matter hereof are
merged into this Agreement and the Employment Agreement. Each party to this Agreement acknowledges
that no representations, inducements, promises, or agreements, orally or otherwise, have been made
by any party or by anyone acting on behalf of any party, which are not embodied in this Agreement,
the Plan or the Employment Agreement and that any agreement, statement or promise that is not
contained in this Agreement, the Plan or the Employment Agreement shall not be valid or binding or
of any force or effect.
20. Parties Bound. The terms, provisions, and agreements that are contained in this
Agreement shall apply to, be binding upon, and inure to the benefit of the parties and their
respective heirs, executors, administrators, legal representatives, and permitted successors and
assigns, subject to the limitation on assignment expressly set forth herein.
21. Modification. No change or modification of this Agreement shall be valid or
binding upon the parties unless the change or modification is in writing and signed by the parties.
Notwithstanding the preceding sentence, the Company may amend the Plan or revoke this Stock Option
to the extent permitted by the Plan. Furthermore, the Company may change or modify this Agreement
without the Participant’s consent or signature if the Company determines, in its sole discretion,
that such change or modification is necessary for purposes of compliance with or exemption from the
requirements of Section 409A of the Code or any regulations or other guidance issued thereunder.
22. Headings. The headings that are used in this Agreement are used for reference and
convenience purposes only and do not constitute substantive matters to be considered in construing
the terms and provisions of this Agreement.
23. Gender and Number. Words of any gender used in this Agreement shall be held and
construed to include any other gender, and words in the singular number shall be held to include
the plural, and vice versa, unless the context requires otherwise.
24. Notice. Any notice required or permitted to be delivered hereunder shall be
deemed to be delivered only when actually received by the Company or by the Participant, as the
case may be, at the addresses set forth below, or at such other addresses as they have theretofore
specified by written notice delivered in accordance herewith:
| a. | Notice to the Company shall be addressed and delivered as follows: | ||
| Toreador Resources Corporation 00000 Xxxx Xx., Xxxxx 0000 Xxxxxx, Xxxxx 00000 Attn: Chief Executive Officer Facsimile: 000-000-0000 |
|||
| b. | Notice to the Participant shall be addressed and delivered as set forth on the signature page. |
25. Tax Requirements. The Participant is hereby advised to consult immediately with
his or her own tax advisor regarding the tax consequences of this Agreement, including, without
limitation, potential tax consequences to the Participant under Section 409A of the Code. The
Company or, if applicable, any Subsidiary (for purposes of this Section 25, the term
“Company” shall be deemed to include any applicable Subsidiary), shall have the right to deduct
from all amounts hereunder paid in cash or other form, any Federal, state, local, or other taxes
required by law to be withheld in connection with this Award. The Company may, in its sole
discretion, also require the Participant receiving shares of Common Stock issued under the Plan to
pay the Company the amount of any taxes that the Company is required to withhold in connection with
the Participant’s income arising with respect to this Award. Such payments shall be required to be
made when requested by the Company and may be required to be made prior to the delivery of any
certificate representing shares of Common Stock. Such payment may be made (i) by the delivery of
cash to the Company in an amount that equals or exceeds (to avoid the issuance of fractional shares
under (iii) below) the required tax withholding obligations of the Company; (ii) if the Company, in
its sole discretion, so consents in writing, the actual delivery by the exercising Participant to
the Company of shares of Common Stock which shares so delivered have an aggregate Fair Market Value
that equals or exceeds (to avoid the issuance of fractional shares under (iii) below) the required
tax withholding payment; (iii) if the Company, in its sole discretion, so consents in writing, the
Company’s withholding of a number of shares to be delivered upon the exercise of the Stock Option,
which shares so withheld have an aggregate fair market value that equals (but does not exceed) the
required tax withholding payment; or (iv) any combination of (i), (ii), or (iii). The
Company may,
in its sole
discretion, withhold any such taxes from any other cash remuneration otherwise paid by the
Company to the Participant.
* * * * * * * *
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly
authorized officer, and the Participant, to evidence his consent and approval of all the terms
hereof, has duly executed this Agreement, as of the date specified in Section 1 hereof.
| TOREADOR RESOURCES CORPORATION | ||||||
| By: | /s/ Xxxxxxx X. Xxxxxxx
|
|||||
| Name: | Xxxxxxx X. Xxxxxxx | |||||
| Title: | Senior Vice President, Finance | |||||
| PARTICIPANT | ||||||
| /s/ Xxxxx X. Xxxxxx | ||||||
| Name: | Xxxxx X. Xxxxxx | |||||
| Address: | 00000 Xxxx Xxxx, Xxxxx 0000 | |||||
| Dallas, TX 75240 | ||||||
