EXHIBIT 10.2
As Amended on March 25, 1999
ST. XXXX XXXX & EXPLORATION COMPANY
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STOCK OPTION PLAN
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ARTICLE I
ESTABLISHMENT AND PURPOSE
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1.1 Establishment. St. Xxxx Xxxx & Exploration Company, a Delaware
corporation (the "Company"), hereby establishes a stock option plan for key
employees, consultants and members of the Board of Directors of the Company or
of a subsidiary of the Company, providing material services to the Company,
which shall be known as the ST. XXXX XXXX & EXPLORATION COMPANY STOCK OPTION
PLAN (the "Plan"). The Company shall enter into Option agreements with Optionees
pursuant to the Plan.
1.2 Purpose. The purpose of the Plan is to enhance shareholder value by
attracting, retaining and motivating key employees, consultants and members of
the Board of Directors of the Company and of a subsidiary of the Company by
providing them with a means to acquire a proprietary interest in the Company's
success.
ARTICLE II
ELIGIBILITY AND PARTICIPATION
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All current and former employees, consultants and members of the Board
of Directors of the Company (the "Board"), and of any subsidiary of the Company,
are eligible to participate in the Plan and receive Options under the Plan.
Optionees under the Plan shall be selected by the Board, in its sole discretion,
from among those current and former employees, consultants and members of the
Board of the Company, and of any subsidiary of the Company, who, in the opinion
of the Board, are or were in a position to contribute materially to the
Company's continued growth and development and to its long-term success.
ARTICLE III
ADMINISTRATION
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Administration. The Board shall be responsible for administering
the Plan.
(a) The Board is authorized to interpret the Plan; to
prescribe, amend, and rescind rules and regulations relating to the
Plan; to provide for conditions and assurances deemed necessary or
advisable to protect the interests of the Company with respect to the
Plan; and to make all other determinations necessary or advisable for
the administration of the Plan. Determinations, interpretations, or
other actions made or taken by the Board with respect to the Plan and
Options granted under the Plan shall be final and binding and
conclusive for all purposes and upon all persons.
(b) At the discretion of the Board the Plan may be
administered by a Committee of two or more non-employee Directors
appointed by the Board (the "Committee"). The members of the Committee
may be Directors who are eligible to receive Options under the Plan,
but Options may be granted to such persons only by action of the full
Board and not by action of the Committee. The Committee shall have full
power and authority, subject to the limitations of the Plan and any
limitations imposed by the Board, to construe, interpret and administer
the Plan and to make determinations which shall be final, conclusive
and binding upon all persons, including any persons having any
interests in any Options which may be granted under the Plan, and, by
resolution or resolutions to provide for the creation and issuance of
any Option, to fix the terms upon which and the time or times at or
within which, and the price or prices at which any shares may be
purchased from the Company upon the exercise of an Option. Such terms,
time or times and price or prices shall, in every case, be set forth or
incorporated by reference in the instrument or instruments evidencing
an Option, and shall be consistent with the provisions of the Plan.
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(c) Where a Committee has been created by the Board pursuant
to this Article III, references in the Plan to actions to be taken by
the Board shall be deemed to refer to the Committee as well, except
where limited by the Plan or by the Board.
(d) No member of the Board or the Committee shall be liable
for any action or determination made in good faith with respect to the
Plan or any Option granted under it.
ARTICLE IV
STOCK SUBJECT TO THE PLAN
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4.1 Number. The total number of shares of common stock of the Company
(the "Stock") hereby made available and reserved for issuance under the Plan
upon exercise of Options shall be 1,650,000 shares. Notwithstanding anything to
the contrary contained in the foregoing, to the extent that options are issued
under any Incentive Stock Option Plan adopted by the Company, the shares of
common stock reserved for issuance pursuant to Options granted under this Plan
shall be reduced. The aggregate number of shares of Stock available under the
Plan shall be subject to adjustment as provided in Section 4.3.
4.2 Unused Stock. If an Option shall expire or terminate for any reason
without having been exercised in full, or if an "immaculate cashless exercise"
(as described in Section 5.4) results in the issuance of a reduced number of
shares in satisfaction of an option grant, the unpurchased shares of Stock
subject thereto shall (unless the Plan shall have terminated) become available
for other Options under the Plan.
4.3 Adjustment in Capitalization. In the event of any change in the
outstanding shares of Stock of the Company by reason of a stock dividend or
split, recapitalization, reclassification, or other similar capital change, the
aggregate number of shares of Stock set forth in Section 4.1 shall be
appropriately adjusted by the Board, whose determination shall be conclusive. In
any such case, the number and kind of shares of Stock that are subject to any
Option and the Option price per share shall be proportionately and appropriately
adjusted without any change in the aggregate Option price to be paid therefor
upon exercise of the Option.
ARTICLE V
TERMS OF STOCK OPTIONS
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5.1 Grant of Options. Subject to Section 4.1, Options may be granted to
current and former employees, consultants and members of the Board of the
Company and of any subsidiary of the Company at any time and from time to time
as determined by the Board. The Board shall have complete discretion in
determining the terms and conditions and number of Options granted to each
Optionee. In making such determinations, the Board may take into account the
nature of services rendered by such current and former employees, consultants
and members of the Board, their present and potential contributions to the
Company and such other factors as the Board in its discretion shall deem
relevant.
5.2 Option Agreement; Terms and Conditions to Apply Unless Otherwise
Specified. As determined by the Board on the date of grant, each Option shall be
evidenced by an option agreement (the "Option Agreement") that specifies: the
Option price; the duration of the Option; the number of shares of Stock to which
the Option applies; such vesting or exercisability restrictions which the Board
may impose; and any other terms or conditions which the Board may impose. All
such terms and conditions shall be determined by the Board at the time of grant
of the Option.
(a) If not otherwise specified by the Board, the following
terms and conditions shall apply to Options granted under the Plan:
(i) Term. The duration of the Option shall be for
ten years from the date of grant.
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(ii) Exercise of Option. Unless an Option is
terminated as provided hereunder, an Optionee may exercise an
Option pursuant to a vesting and exercisability schedule as
determined by the Board, which vesting and exercisability
schedule shall provide that (A) an Option held by an Optionee
who retires from employment with the Company after having both
reached the age of sixty and completed twelve years of service
with the Company shall continue to vest in accordance with the
vesting schedule set forth in the applicable Option Agreement
notwithstanding the termination of the Optionee's employment
with the Company, provided that prior to the exercise of the
Option such Optionee does not after such retirement become
employed on a full-time basis by a competitor of the Company
prior to reaching age sixty-five, and (B) an Option held by a
non-employee Director of the Company who retires from the
Board after completing at least five years of service to the
Company shall become fully vested. An Option may however not
be exercised prior to five years following the date of its
grant.
(iii) Termination. Each Option granted pursuant to
the Plan shall expire upon the earliest to occur of:
(A) The date set forth in such Option, not
to exceed ten years from the date of grant;
(B) The completion of the merger or sale of
substantially all of the Stock or assets of the
Company with or to another company in a transaction
in which the Company is not the survivor, except for
the merger of the Company into a wholly-owned
subsidiary (and the Company shall not be considered
the surviving corporation for purposes hereof if the
Company is the survivor of a reverse triangular
merger), provided that the Company shall have given
the Optionee at least thirty days' prior written
notice of its intent to enter into such merger or
sale; or
(C) The termination of the employment of an
Optionee for cause by the Company.
(iv) Acceleration. An Option shall become fully
vested and exercisable irrespective of its other provisions
(A) immediately prior to the completion of the merger or sale
of substantially all of the stock or assets of the Company in
a transaction in which the Company is not the survivor, except
for the merger of the Company into a wholly-owned subsidiary
(and the Company shall not be considered the surviving
corporation for purposes hereof if the Company is the survivor
of a reverse triangular merger); (B) upon termination of the
Optionee's employment with the Company or a subsidiary thereof
because of death, disability or normal retirement upon
reaching the age of sixty-five; or (C) in the event that the
Optionee is a non-employee member of the Company's Board of
Directors, upon retirement from the Company's Board of
Directors after reaching the age of seventy.
(v) Transferability. In addition to the Optionee,
the Option may be exercised, to the extent exercisable by the
Optionee, by the person or persons to whom the Optionee's
rights under the Option pass by will or the laws of descent
and distribution, by the spouse or the descendants of the
Optionee or by trusts for such persons, to whom or which the
Optionee may have transferred the Option, or by legal
representative of any of the foregoing. Any such transfer
shall be made only in compliance with the Securities Act of
1933, as amended, and the requirements therefor as set forth
by the Company.
(b) The Board shall be free to specify terms and conditions
other than and in addition to those set forth above, in its
discretion.
(c) All Option Agreements shall incorporate the provisions of
the Plan by reference.
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5.3 Option Price. No Option granted pursuant to the Plan shall have
an Option price that is less than the fair market value of Stock on the date the
Option is granted, as determined by the Board. The Option exercise price shall
be subject to adjustment as provided in Section 4.3 above.
5.4 Payment. Payment for all shares of Stock shall be made at the time
that an Option, or any part thereof, is exercised, and no shares shall be issued
until full payment therefor has been made. Payment shall be made (i) in cash, or
(ii) if acceptable to the Board, in Stock, by the surrender of Option rights
hereunder valued at the difference between the Option exercise price plus income
taxes to be withheld, if any, and the fair market value of the common stock
(referred to as "immaculate cashless exercise"), or in some other form.
ARTICLE VI
WRITTEN NOTICE, ISSUANCE OF STOCK
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CERTIFICATES, SHAREHOLDER PRIVILEGES
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6.1 Written Notice. An Optionee wishing to exercise an Option shall
give written notice to the Company, in the form and manner prescribed by the
Board. Full payment for the shares of Stock acquired pursuant to the Option must
accompany the written notice.
6.2 Issuance of Stock Certificates. As soon as practicable after the
receipt of written notice and payment, the Company shall deliver to the Optionee
a certificate or certificates for the requisite number of shares of Stock.
6.3 Privileges of a Shareholder. An Optionee or any other person
entitled to exercise an Option under the Option Agreement shall not have
shareholder privileges with respect to any Stock covered by the Option until the
date of issuance of a stock certificate for such Stock.
ARTICLE VII
RIGHTS OF OPTIONEES
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Nothing in the Plan shall interfere with or limit in any way the right
of the Company or a subsidiary corporation to terminate any employee's or
consultant's employment at any time, nor confer upon any employee or consultant
any right to continue in the employ of the Company or a subsidiary corporation.
ARTICLE VIII
AMENDMENT, MODIFICATION, AND
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TERMINATION OF THE PLAN
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The Board may at any time terminate and from time to time may amend or
modify the Plan. Any amendment or modification of the Plan by the Board may be
accomplished without approval of the shareholders of the Company, except in the
event that shareholder approval of such amendment or modification is required by
any law or regulation governing the Company.
No amendment, modification, or termination of the Plan shall in any
manner adversely affect any outstanding Option under the Plan without the
consent of the Optionee holding the Option.
ARTICLE IX
ACQUISITION, MERGER OR LIQUIDATION
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9.1 Acquisition.
(a) In the event that an acquisition occurs with respect to
the Company, the Company shall have the option, but not the obligation,
to cancel Options outstanding as of the effective date of such
acquisition, whether or not such Options are then exercisable, in
return for payment to the Optionees of an amount equal to a reasonable
estimate of an amount (hereinafter the "Spread"), determined by the
Board, equal to the difference between the net amount per share payable
in the acquisition or as a result of the acquisition, less the exercise
price of the Option. In estimating the Spread, appropriate adjustments
to give effect to the existence of the Options shall be made, such as
deeming the Options to have been exercised, with the Company receiving
the exercise price payable thereunder, and treating the Stock
receivable upon exercise of the Options as being outstanding in
determining the net amount per share.
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(b) For purposes of this section, an "acquisition" shall mean
any transaction in which substantially all of the Company's assets are
acquired or in which a controlling amount of the Company's outstanding
shares are acquired, in each case by a single person or entity or an
affiliated group of persons and entities. For purposes of this section,
a controlling amount shall mean more than fifty percent of the issued
and outstanding shares of Stock of the Company. The Company shall have
the above option to cancel Options regardless of how the acquisition is
effectuated, whether by direct purchase, through a merger or similar
corporate transaction, or otherwise. In cases where the acquisition
consists of the acquisition of assets of the Company, the net amount
per share shall be calculated on the basis of the net amount receivable
with respect to shares upon a distribution and liquidation by the
Company after giving effect to expenses and charges, including but not
limited to taxes, payable by the Company before the liquidation can be
completed.
(c) Where the Company does not exercise its option under this
Section 9.1 the remaining provisions of this Article IX shall apply, to
the extent applicable.
9.2 Merger or Consolidation. If the Company shall be the surviving
corporation in any merger or consolidation, any Option granted hereunder shall
pertain to and apply to the securities to which a holder of the number of shares
of Stock subject to the Option would have been entitled in such merger or
consolidation, provided that the Company shall not be considered the surviving
corporation for purposes hereof if the Company is the survivor of a reverse
triangular merger.
9.3 Other Transactions. A dissolution or a liquidation of the Company
or a merger and consolidation in which the Company is not the surviving
corporation (the Company shall not be considered the surviving corporation for
purposes hereof if the Company is the survivor of a reverse triangular merger)
shall cause every Option outstanding hereunder to terminate as of the effective
date of such dissolution, liquidation, merger or consolidation. However, the
Optionee either (i) shall be offered a firm commitment whereby the resulting or
surviving corporation in a merger or consolidation will tender to the Optionee
an option (the "Substitute Option") to purchase its shares on terms and
conditions both as to number of shares and otherwise, which will substantially
preserve to the Optionee the rights and benefits of the Option outstanding
hereunder granted by the Company, or (ii) shall have the right immediately prior
to such dissolution, liquidation, merger, or consolidation to exercise any
unexercised Options whether or not then vested, subject to the other provisions
of the Plan. The Board shall have absolute and uncontrolled discretion to
determine whether the Optionee has been offered a firm commitment and whether
the tendered Substitute Option will substantially preserve to the Optionee the
rights and benefits of the Option outstanding hereunder.
ARTICLE X
SECURITIES REGISTRATION
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10.1 Securities Registration. In the event that the Company shall deem
it necessary or desirable to register under the Securities Act of 1933, as
amended, or any other applicable statute, any Options or any Stock with respect
to which an Option may be or shall have been granted or exercised, or to qualify
any such Options or Stock under the Securities Act of 1933, as amended, or any
other statute, then the Optionee shall cooperate with the Company and take such
action as is necessary to permit registration or qualification of such Options
or Stock.
10.2 Representations. Unless the Company has determined that the
following representation is unnecessary, each person exercising an Option under
the Plan may be required by the Company, as a condition to the issuance of the
shares of Stock pursuant to exercise of the Option, to make a representation in
writing (i) that he is acquiring such shares for his own account for investment
and not with a view to, or for sale in connection with, the distribution of any
part thereof within the meaning of the Securities Act of 1933, and (ii) that
before any transfer in connection with the resale of such shares, he will obtain
the written opinion of counsel for the Company, or other counsel acceptable to
the Company, that such shares may be transferred without registration thereof.
The Company may also require that the certificates representing such shares
contain legends reflecting the foregoing. To the extent permitted by law,
including the Securities Act of 1933, nothing herein shall restrict the right of
a person exercising an Option to sell the shares received in an open market
transaction.
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ARTICLE XI
TAX WITHHOLDING
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Whenever shares of Stock are to be issued in satisfaction of Options
exercised under the Plan, the Company shall have the power to require the
recipient of the Stock to remit to the Company an amount sufficient to satisfy
federal, state, and local withholding tax requirements, if any.
ARTICLE XII
INDEMNIFICATION
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To the extent permitted by law, each person who is or shall have been a
member of the Board or the Committee shall be indemnified and held harmless by
the Company against and from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him in connection with or resulting from
any claim, action, suit, or proceeding to which he may be a party or in which he
may be involved by reason of any action taken or failure to act under the Plan
and against and from any and all amounts paid by him in settlement thereof, with
the Company's approval, or paid by him in satisfaction of judgment in any such
action, suit, or proceeding against him, provided he shall give the Company an
opportunity, at its own expense, to handle and defend the same before he
undertakes to handle and defend it on his own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such persons may be entitled under the Company's certificate of
incorporation or bylaws, as a matter of law, or otherwise, or any power that the
Company or a Subsidiary Corporation may have to indemnify them or hold them
harmless.
ARTICLE XIII
REQUIREMENTS OF LAW
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13.1 Requirements of Law. The granting of Options and the issuance of
shares of Stock upon the exercise of an Option shall be subject to all
applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.
13.2 Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of Colorado.
ARTICLE XIV
EFFECTIVE DATE OF PLAN
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The Plan shall be effective on November 21, 1996.
ARTICLE XV
NO OBLIGATION TO EXERCISE OPTION
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The granting of an Option shall impose no obligation upon the holder
thereof to exercise such Option.
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THIS STOCK OPTION PLAN was adopted by the Board of Directors of St.
Xxxx Xxxx & Exploration Company on November 21, 1996, to be effective upon
adoption, and was amended by the Board of Directors on January 31, 1997 and on
March 25, 1999 to increase the number of shares available for issuance under
Article IV to 1,650,000.
ST. XXXX XXXX & EXPLORATION COMPANY
By: /s/ XXXXXXX X. XXXXXX
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Xxxxxxx X. Xxxxxx
Title: Vice President-Finance, Secretary and Treasurer
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