UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

 

Date of Report (Date of Earliest Event Reported):

 

November 14, 2007

 

EXCO RESOURCES, INC.

(Exact name of registrant as specified in its charter)

 

Texas

 

0-9204

 

74-1492779

(State of incorporation)

 

(Commission File No.)

 

(IRS Employer Identification No.)

 

 

 

 

 

12377 Merit Drive
Suite 1700, LB 82
Dallas, Texas

 

75251

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code:  (214) 368-2084

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 



 

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

On November 14, 2007, the Board of Directors of EXCO Resources, Inc. (“EXCO”) approved amendments to the EXCO Resources Inc. 2005 Long-Term Incentive Plan, as amended, and the Amended and Restated 2007 Director Plan of EXCO Resources, Inc. In addition, the Compensation Committee of the Board of Directors approved amendments to the Second Amended and Restated EXCO Resources, Inc. Severance Plan. Each of the amendments to the plans were technical in nature and do not materially change the benefits to any participant. A summary of each of the plan amendments follows:

 

EXCO Resources, Inc. Amended and Restated 2005 Long-Term Incentive Plan

 

The 2005 Long-Term Incentive Plan (the “Incentive Plan”) was amended to:

 

                  Conform to the requirements of Section 409A (“Section 409A”) of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), and the regulations promulgated thereunder.

 

                  Conform to the requirements of Section 162(m) (“Section 162(m)”) of the Code.

 

                  Eliminate the ability of EXCO to grant reload stock option awards.

 

                  Specify that the Incentive Plan be administered by the Compensation Committee of the Board, which shall be comprised solely of independent directors under rules promulgated by the New York Stock Exchange.

 

                  Permit any function relating to a participant who is subject to Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or a covered employee (as defined in Section 162(m) of the Code) to be performed solely by a subcommittee of the Compensation Committee consisting of two or more members who are “outside directors” under Section 162(m) of the Code and/or “non-employee directors” as defined in Rule 16b-3 promulgated under the Exchange Act, if at any time the Compensation Committee includes members who are not “outside directors” and/or “non-employee directors.”

 

                  Specify that discretionary Awards granted to outside directors shall be administered by the Compensation Committee (or a subcommittee thereof).

 

                  Specify the treatment of forfeited shares, shares canceled on account of termination, expiration or lapse of an award, shares surrendered in payment of the exercise price of an option or shares withheld for payment of applicable employment taxes and/or withholding obligations resulting from the exercise of an option.

 

                  Create a basket of “exempt shares” comprised of no more than 10 percent of the shares of common stock of EXCO (the “Common Stock”) that may be delivered pursuant to awards under the Incentive Plan. The following are designated as exempt shares, and may not, in the aggregate, exceed the 10 percent limit:

 

                  shares of Common Stock underlying all or any portion of a nonqualified stock option or incentive stock option for which the Compensation Committee accelerates the vesting date other than in the event of the participant’s death, total and permanent disability or retirement, or the occurrence of a change in control;

 

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                  shares of Common Stock underlying performance awards with a net benefit to the participant, without regard to certain restrictions, equal to the fair market value of the Common Stock subject to the award (e.g., restricted stock and restricted stock units but not stock appreciation rights or options) that vest earlier than one year after the date of grant;

 

                  shares of Common Stock underlying tenure awards with a net benefit to the participant, without regard to certain restrictions, equal to the fair market value of the Common Stock subject to the award (e.g., restricted stock and restricted stock units but not stock appreciation rights or options) that vest earlier than over the three year period commencing on the date of grant on a pro rata basis; and

 

                  shares of Common Stock underlying awards with a net benefit to the participant, without regard to certain restrictions, equal to the fair market value of the Common Stock subject to the award (e.g., restricted stock and restricted stock units but not stock appreciation rights or options) for which the Compensation Committee accelerates the vesting date or waives the restriction period other than in the event of the participant’s death, total and permanent disability or retirement, or the occurrence of a change in control.

 

                  Specify that no amendment to the Incentive Plan that increases the benefits accrued to participants, increases the maximum number of shares of Common Stock which may be issued under the Incentive Plan, reprices any stock options or modifies the requirements for participation in the Incentive Plan shall be effective unless approved by the shareholders of EXCO in the manner set forth in EXCO’s articles of incorporation and bylaws.

 

No shareholder approval is required to amend the Incentive Plan because the amendments are either technical in nature or curtail rather than expand the rights of participants.

 

Amended and Restated 2007 Director Plan of EXCO Resources, Inc.

 

The 2007 Director Plan was amended to conform to the requirements of Section 409A. The amendments are technical in nature and do not materially change the benefits to participants.

 

Third Amended and Restated EXCO Resources, Inc. Severance Plan

 

The Severance Plan was amended to conform to the requirements of Section 409A. The amendments are technical in nature and do not materially change the benefits to participants.

 

The full text of the amended and restated plans, as well as conforming changes to the form of Nonqualified Stock Option Agreement and form of Incentive Stock Option Agreement, are filed as Exhibits 10.1 through 10.5 to this Current Report and are incorporated herein by reference.

 

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Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

 

The Board of Directors of EXCO amended Article VII of EXCO’s Bylaws (the “Bylaws”), effective as of November 14, 2007, to allow for the issuance of uncertificated shares. By being able to issue uncertificated shares, EXCO is now eligible to participate in the Direct Registration System, which is currently administered by The Depository Trust Company. The Direct Registration System allows investors to have securities registered in their names without the issuance of physical certificates and allows investors to electronically transfer securities to broker-dealers in order to effect transactions without the risks and delays associated with transferring physical certificates.

 

The full text of the Amended and Restated Bylaws is filed as Exhibit 3.1 to this Current Report and is incorporated herein by reference.

 

Item 9.01. Financial Statements and Exhibits.

 

(d)           Exhibits

 

Exhibit No.

 

Description

 

 

 

3.1

 

Amended and Restated Bylaws dated November 14, 2007

 

 

 

10.1

 

EXCO Resources, Inc. Amended and Restated 2005 Long-Term Incentive Plan

 

 

 

10.2

 

Amended and Restated 2007 Director Plan of EXCO Resources, Inc.

 

 

 

10.3

 

Third Amended and Restated EXCO Resources, Inc. Severance Plan

 

 

 

10.4

 

Form of Nonqualified Stock Option Agreement

 

 

 

10.5

 

Form of Incentive Stock Option Agreement

 

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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

EXCO RESOURCES, INC.

 

 

 

 

Dated: November 16, 2007

By:

/s/ William L. Boeing

 

 

Name:

William L. Boeing

 

Title:

Vice President, General Counsel and Secretary

 

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EXHIBIT INDEX

 

Exhibit No.

 

Description

 

 

 

3.1

 

Amended and Restated Bylaws dated November 14, 2007

 

 

 

10.1

 

EXCO Resources, Inc. Amended and Restated 2005 Long-Term Incentive Plan

 

 

 

10.2

 

Amended and Restated 2007 Director Plan of EXCO Resources, Inc.

 

 

 

10.3

 

Third Amended and Restated EXCO Resources, Inc. Severance Plan

 

 

 

10.4

 

Form of Nonqualified Stock Option Agreement

 

 

 

10.5

 

Form of Incentive Stock Option Agreement

 


Exhibit 3.1

 

AMENDED AND RESTATED BYLAWS

OF

EXCO RESOURCES, INC.

 

Dated November 14, 2007

Effective as of November 14, 2007

 

ARTICLE I

OFFICES

 

Section 1.1  Offices : The Corporation may have offices at such places, within or without the State of Texas, as the Board of Directors may from time to time determine, or as the business of the Corporation may require.

 

ARTICLE II

MEETINGS OF SHAREHOLDERS

 

Section 2.1  Time and Place of Meetings : All meetings of the shareholders shall be held at such time and place, within or without the State of Texas, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof.

 

Section 2.2  Annual Meetings : Annual meetings of shareholders shall be held on such date and time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. At the annual meeting, the shareholders entitled to vote thereat shall elect a Board of Directors and transact such other business as may properly be brought before the meeting.

 

Section 2.3  Special Meetings : Special meetings of the shareholders, unless otherwise prescribed by statute, may be called by the Chairman of the Board and shall be called by the Secretary upon the written request, stating the purpose or purposes therefore, of either (i) not less than a majority of the whole Board of Directors of the Corporation or (ii) the holder or holders of shares having not less than 25% of the voting power at a meeting at which the holders of all shares entitled to vote on the action or actions, as set forth in the proposed purpose or purposes of the meeting, were present and voted. Business conducted at any special meeting shall be confined to the purpose or purposes described in the notice thereof.

 

Section 2.4  Notice of Meetings : Written or printed notice stating the place, day and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than 10 calendar days (20 calendar days in the case of a meeting to approve a plan of merger or exchange) nor more than 60 calendar days before the date of the meeting, by personal delivery, by mail or, with consent of the shareholder, by electronic transmission, by or at the direction of the officer or person calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the shareholder at his, her or its address as it appears on the share transfer records of the Corporation, with postage thereon prepaid. If electronically transmitted, such notice shall be deemed given when transmitted to a facsimile number or electronic mail address provided by the shareholder for the purpose of receiving notice.

 

Section 2.5  Record Date : For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive a distribution by the Corporation (other than a distribution involving a purchase or redemption by the Corporation of any of its own shares) or a share dividend or in order to make a determination of shareholders for any other

 



 

purpose, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than 60 calendar days, and, in the case of a meeting of shareholders, not less than 10 calendar days, prior to the date on which the particular action requiring such determination of shareholders is to be taken. If no record date is fixed for the determination of shareholders entitled to notice of or vote at a meeting of shareholders, or shareholders entitled to receive a distribution by the Corporation (other than a distribution involving a purchase or redemption by the Corporation of any of its own shares) or a share dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such distribution or share dividend is adopted, as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this Section 2.5, such determination shall apply to any adjournment thereof.

 

Section 2.6  Shareholder List : The officer or agent having charge of the share transfer records for shares of the Corporation shall make, at least 10 calendar days before each meeting of shareholders, a complete list of the shareholders entitled to vote at such meeting or any adjournment thereof, arranged in alphabetical order, with the address of and the number of shares held by each, which list, for a period of 10 calendar days prior to such meeting, shall be kept on file at the registered office or principal place of business of the Corporation and shall be subject to inspection by any shareholder at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any shareholder during the whole time of the meeting. The original share transfer records shall be prima facie evidence as to who are the shareholders entitled to examine such list or transfer records or to vote at any meeting of shareholders.

 

Section 2.7  Quorum : A quorum shall be present at a meeting of shareholders if the holder or holders of a majority of the combined voting power of the shares entitled to vote at the meeting are present in person, represented by a duly authorized representative in the case of a corporation or other legal entity or represented by proxy, unless otherwise provided in the Articles of Incorporation. Unless otherwise provided in the Articles of Incorporation, once a quorum is present at a duly constituted meeting of shareholders, the shareholders present or represented at the meeting may conduct such business as may be properly brought before the meeting until it is adjourned, and the subsequent withdrawal from the meeting of any shareholder present or represented shall not affect the presence of a quorum at the meeting. Unless otherwise provided in the Articles of Incorporation, the shareholders entitled to vote and present or represented at a meeting of shareholders at which a quorum is not present may adjourn the meeting until such time and to such place as may be determined by a vote of the holders of a majority of the shares represented at that meeting. At such adjourned meeting at which a quorum shall be present or represented, any business may be conducted which might have been conducted at the meeting as originally notified.

 

Section 2.8  Voting : With respect to any matter, other than the election of directors or a matter for which the affirmative vote of the holders of a specified portion of the shares is required by the Articles of Incorporation or applicable law, the affirmative vote of the holders of a majority of the combined voting power of the shares entitled to vote on that matter and represented at a meeting of shareholders at which a quorum is present shall be the act of the shareholders. Unless otherwise provided in the Articles of Incorporation, directors shall be elected by a plurality of the votes cast by the holders of shares entitled to vote in the election of directors at a meeting of shareholders at which a quorum is present.

 

Section 2.9  Method of Voting : Each outstanding share shall be entitled to one vote on each matter submitted to a vote at a meeting of shareholders, unless the Articles of Incorporation provide for more or less than one vote per share or limit or deny voting rights to the holders of the shares of any class or series or as otherwise provided by applicable law. A shareholder may vote in person, by duly authorized representative in the case of a corporation or other legal entity or by proxy executed in writing

 

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by the shareholder or by his, her or its duly authorized attorney-in-fact. No proxy shall be valid after 11 months from the date of its execution unless otherwise provided in the proxy. Each proxy shall be revocable unless the proxy form conspicuously states that the proxy is irrevocable and the proxy is coupled with an interest. Each proxy shall be filed with the Secretary of the Corporation prior to the time of the meeting.

 

Section 2.10  Inspectors of Election : The chairman of each meeting of shareholders shall appoint one or more persons to act as inspectors of election. The inspectors of election shall report to the meeting the number of shares of each class and series of stock, and of all classes, represented either in person or by proxy. The inspectors of elections shall oversee the vote of the shareholders for the election of directors and for any other matters that are put to a vote of shareholders at the meeting; receive a ballot evidencing votes cast by the proxy committee of the Board of Directors; judge the qualifications of shareholders voting; collect, count, and report the results of ballots cast by any shareholders voting in person; and perform such other duties as may be required by the chairman of the meeting or the shareholders.

 

Section 2.11  Procedure :

 

(a) The Chairman of the Board of Directors, or such other officer of the Corporation designated by the Board of Directors, will call meetings of the shareholders to order and will act as presiding officer at the meetings. Unless otherwise determined by the Board of Directors prior to the meeting, the presiding officer of the meeting of the shareholders will also determine the order of business and have the authority in his or her sole discretion to regulate the conduct of any such meeting, including without limitation by imposing restrictions on the persons (other than shareholders of the Corporation or their duly appointed proxies) who may attend such shareholders’ meeting, by ascertaining whether any shareholder or his, her or its proxy may be excluded from any meeting of the shareholders based upon any determination by the presiding officer, in his or her sole discretion, that any such person has unduly disrupted or is likely to disrupt the proceedings, and by determining the circumstances in which any person may make a statement or ask questions at any meeting of the shareholders.

 

(b) At an annual meeting of the shareholders, only such business will be conducted or considered as is properly brought before the meeting. To be properly brought before an annual meeting, business must be (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors in accordance with Section 2.4, (ii) otherwise properly brought before the meeting by the presiding officer or by or at the direction of a majority of the Board of Directors, or (iii) otherwise properly requested to be brought before the meeting by a shareholder in accordance with Section 2.11(c).

 

(c) For business, including nominations of directors, to be properly requested by a shareholder for consideration at an annual meeting, the shareholder must (i) be a shareholder of record of the Corporation at the time of the giving of the notice for such annual meeting provided for in these Bylaws, (ii) be entitled to vote at such meeting, and (iii) have given timely notice in writing to the Secretary. To be timely, a shareholder’s notice (except for a shareholder’s notice recommending a director candidate) must be delivered to or mailed and received at the principal executive offices of the Corporation not less than 90 nor more than 180 calendar days prior to the annual meeting; provided, however, that in the event public announcement of the date of the annual meeting is not made at least 75 calendar days prior to the date of the annual meeting, notice by the shareholder to be timely must be so received not later than the close of business on the 10th calendar day following the day on which public announcement is first made of the date of the annual meeting. A shareholder’s notice recommending a director candidate will be timely if it is received not less than 90 nor more than 180 calendar days before the anniversary of the date on which the Corporation first mailed its proxy materials for the prior year’s annual meeting of shareholders. A shareholder’s notice to the Secretary must set forth as to each matter the shareholder

 

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proposes to bring before the annual meeting (i) a description in reasonable detail of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and address, as they appear on the Corporation’s books, of the shareholder proposing such business and the beneficial owner, if any, on whose behalf the proposal is made, (iii) the class and number of shares of the Corporation that are owned beneficially and of record by the shareholder proposing such business and by the beneficial owner, if any, on whose behalf the proposal is made, (iv) any material interest of such shareholder proposing such business and the beneficial owner, if any, on whose behalf the proposal is made in such business, and (v) if recommending a director candidate, all information relating to such person that is required to be disclosed in solicitations for proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director, if elected. Notwithstanding the foregoing provisions of this Section 2.11(c), a shareholder must also comply with all applicable requirements of the Exchange Act, and the rules and regulations thereunder with respect to the matters set forth in this Section 2.11(c). For purposes of this Section 2.11(c), “Public Announcement” means disclosure in a press release reported by a national news service or in a document filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act or furnished to shareholders. Nothing in this Section 2.11(c) will be deemed to affect any rights of shareholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

 

(d) At a special meeting of shareholders, only such business may be conducted or considered as is properly brought before the meeting. To be properly brought before a special meeting, business must be specified in the notice of the meeting (or any supplement thereto) given in accordance with Section 2.4.

 

(e) The determination of whether any business sought to be brought before any annual or special meeting of the shareholders is properly brought before such meeting in accordance with this Section 2.11 will be made by the presiding officer of such meeting. If the presiding officer determines that any business is not properly brought before such meeting, he or she will so declare to the meeting and any such business will not be conducted or considered.

 

Section 2.12  Action Without Meeting : Unless otherwise restricted by the Articles of Incorporation or these Bylaws, any action required by the Texas Business Corporation Act, as amended, to be taken at any annual or special meeting of shareholders, or any action that may be taken at any annual or special meeting of shareholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holder or holders of shares having not less than the minimum number of votes that would be necessary to take such action at a meeting at which the holders of all shares entitled to vote on the action were present and voted.

 

ARTICLE III

DIRECTORS

 

Section 3.1  Responsibilities : The powers of the Corporation shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be managed under the direction of, its Board of Directors.

 

Section 3.2  Number; Election; Qualification; Term : The number of directors shall be fixed from time to time by the Board of Directors; provided, however, that no decrease in the number of directors shall have the effect of shortening the term of any incumbent director. The directors shall be elected at the annual meeting of the shareholders, as provided in this Section 3.2, except as otherwise

 

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provided in Section 3.3. Each director shall hold office until the next annual meeting of shareholders or until his successor shall have been elected and qualified. Unless removed in accordance with the Articles of Incorporation or Section 3.4, each director elected shall hold office for the term for which he or she is elected and until his or her successor shall have been elected and qualified or until his or her earlier death, retirement, resignation or removal for cause in accordance with the provisions of these Bylaws. Directors need not be residents of the State of Texas or shareholders of the Corporation, but they must have been nominated in accordance with the procedures set forth in these Bylaws in order to be eligible for election as directors.

 

Section 3.3  Vacancies; Increases : Any vacancy occurring in the Board of Directors (by death, retirement, resignation, removal or otherwise) may be filled by election at an annual or special meeting of shareholders called for that purpose, or by the affirmative vote of a majority of the remaining directors then in office, though less than a quorum. Each director elected to fill a vacancy shall be elected for the unexpired term of his or her predecessor in office. Any directorship to be filled by reason of an increase in the number of directors may be filled by election at an annual or special meeting of shareholders called for that purpose or by the Board of Directors for a term of office continuing only until the next election of one or more directors by the shareholders; provided, however, that the Board of Directors may not fill more than two such directorships during the period between any two successive annual meetings of shareholders.

 

Section 3.4  Removal : At any meeting of shareholders called expressly for that purpose, any director may be removed for any reason, with or without cause, by the affirmative vote of the holder or holders of a majority of the combined voting power of the shares entitled to vote thereon.

 

Section 3.5  Place of Meetings : Meetings of the Board of Directors, regular or special, may be held either within or without the State of Texas.

 

Section 3.6  Regular Meetings : Regular meetings of the Board of Directors may be held at such time and at such place as shall from time to time be determined by the Board of Directors. Regular meetings of the Board of Directors may be held without notice.

 

Section 3.7  Special Meetings : Special meetings of the Board of Directors may be called by the Chairman of the Board or by the President of the Corporation and shall be called by the Secretary on the written request of not less than a majority of the directors then in office. Notice specifying the time and place of special meetings shall be given to each director at least one day before the date of the meeting, either personally or by telephone, mail, telegram or, with consent of the director, electronic transmission.

 

Section 3.8  Purpose of Meetings : Neither the purpose of, nor the business to be transacted at, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting.

 

Section 3.9  Quorum; Majority Vote : At all meetings of the Board of Directors, a majority of the number of the directors fixed in the manner provided in these Bylaws shall constitute a quorum for the transaction of business unless a different number is specifically required by the Articles of Incorporation, these Bylaws or applicable law. The act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors, unless the act of a greater number is required by the Articles of Incorporation, these Bylaws or applicable law. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

 

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Section 3.10  Procedure : At meetings of the Board of Directors, business shall be transacted in such order as the Board of Directors may determine from time to time. The Chairman of the Board, if such office has been filled, and, if not or if the Chairman of the Board is absent or otherwise unable to act, a chairman chosen by the Board of Directors from among the directors present, will preside over the meetings of the Board. The Secretary of the Corporation shall act as the secretary of the meetings of the Board of Directors unless the Board of Directors appoints another person to act as secretary of the meeting. The Board of Directors shall keep regular minutes of its proceedings which shall be placed in the minute book of the Corporation.

 

Section 3.11  Presumption of Assent : A director of the Corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action unless his or her dissent shall be entered in the minutes of the meeting or unless he or she shall file a written dissent to such action with the person acting as secretary of the meeting before the adjournment thereof or shall forward any dissent by certified or registered mail to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action.

 

Section 3.12  Compensation : The Board of Directors shall have authority to fix the compensation, including fees and reimbursement of expenses, paid to directors for attendance at regular or special meetings of the Board of Directors, any committee thereof or for any other services to the Corporation; provided, however, that nothing contained in these Bylaws shall be construed to preclude any director from serving the Corporation in any other capacity or receiving compensation therefor.

 

Section 3.13  Committees : The Board of Directors, by resolution adopted by a majority of the full Board of Directors, may designate from among its members one or more committees, each of which shall be comprised of one or more members, and may designate one or more of its members as alternate members of any committee, who may, subject to any limitations imposed by the Board of Directors, replace absent or disqualified members at any meeting of that committee. Any such committee, to the extent provided in such resolution or in the Articles of Incorporation or these Bylaws, shall have and may exercise all of the authority of the Board of Directors, except as otherwise provided by applicable law. The designation of such committee and the delegation thereto of authority shall not operate to relieve the Board of Directors, or any member thereof, of any responsibility imposed by applicable law. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors.

 

Section 3.14  Committee Procedures : Except as may be otherwise provided in a resolution or resolutions adopted by the Board of Directors, a majority of the members of a committee shall constitute a quorum and a majority vote of the members at a meeting at which a quorum is present shall be the act of the committee. A committee shall keep minutes of its proceedings, and shall report its proceedings to the Board of Directors when required or when requested by a director to do so.

 

Section 3.15  Action Without Meeting : Unless otherwise restricted by the Articles of Incorporation or these Bylaws, any action required or permitted to be taken at a meeting of the Board of Directors or any committee may be taken without a meeting if a consent in writing, setting forth the action so taken, is signed by all the members of the Board of Directors or committee, as the case may be. Such consent shall have the same force and effect as a unanimous vote at a meeting.

 

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ARTICLE IV

NOTICES

 

Section 4.1  Method : Whenever by the Articles of Incorporation, these Bylaws, applicable law or  otherwise, notice is required to be given to a director or shareholder, and no provision is made as to how the notice shall be given, it shall not be construed to be personal notice, but any such notice may be given: (a) in writing, (i) by mail, postage prepaid, addressed to the director or shareholder at the last address known by the Corporation for such director or shareholder at the address appearing on the share transfer records of the Corporation, (ii) with consent of the director or shareholder, by electronic transmission or (iii) by telegram, (b) by telephone, or (c) by any other method permitted by law. Any notice required or permitted to be given by mail shall be deemed given at the time when the same is deposited in the United States mail. If electronically transmitted, such notice shall be deemed given when transmitted to a facsimile number or electronic mail address provided by the director or shareholder for the purpose of receiving notice.

 

Section 4.2  Waiver : Whenever by the Articles of Incorporation, these Bylaws or applicable law, any notice is required to be given to a director or shareholder, a waiver thereof in writing, signed by the person or persons entitled to such notice, or in the case of a corporation or other legal entity by its duly authorized representative, whether before or after the time stated therein, shall be equivalent to the giving of such notice. Attendance of a director, committee member or shareholder at a meeting shall constitute a waiver of notice of such meeting, except where such person attends for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business on the basis that the meeting is not lawfully called or convened.

 

ARTICLE V

OFFICERS

 

Section 5.1  Number : The officers of the Corporation shall consist of a President and a Secretary, each of whom shall be elected by the Board of Directors. The Board of Directors may also elect a Chairman of the Board, a Chief Executive Officer, a Chief Financial Officer, a Treasurer, a General Counsel, a Controller and one or more Vice Presidents and such other officers as it deems necessary or appropriate. The Board of Directors may appoint, and may empower the Chief Executive Officer to appoint, such Assistant Secretaries, Assistant Treasurers, Assistant Controllers and other officers and agents as the Board of Directors or the Chief Executive Officer shall deem necessary or appropriate in the conduct of the affairs of the Corporation with such designations, titles, seniority, duties and responsibilities as the Board of Directors or the Chief Executive Officer shall deem advisable. Any two or more offices may be held by the same person.

 

Section 5.2  Term; Vacancies : An officer of the Corporation shall hold office until his or her successor is elected and qualified, until his or her death or until he or she shall resign or shall have been removed in accordance with these Bylaws. Any officer elected by the Board of Directors may be removed at any time by the Board of Directors. Any vacancy occurring in any office of the Corporation shall be filled by the Board of Directors.

 

Section 5.3  Removal : Any officer elected by the Board of Directors may be removed by the Board of Directors whenever in its judgment the best interests of the Corporation will be served thereby. No elected officer shall have any contractual rights against the Corporation for compensation by virtue of such election beyond the date of the election of his or her successor, his or her death, his or her  resignation or his or her removal, whichever event shall first occur, except as otherwise provided in an employment contract or under an employee benefit plan.

 

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Section 5.4  Compensation : The compensation of all officers and agents of the Corporation who are also directors of the Corporation shall be fixed by the Board of Directors or a committee thereof. The compensation of the Chief Executive Officer shall be fixed by the Board of Directors or a committee thereof. The compensation of all other officers and agents of the Corporation shall be fixed by the Board of Directors or a committee thereof, or the Board of Directors may delegate the power to fix the compensation of any such other officers and agents of the Corporation to an officer of the Corporation.

 

Section 5.5  Duties : The officers of the Corporation shall have such authority and shall perform such duties as are customarily incident to their respective offices, or as may be specified from time to time by resolution of the Board of Directors regardless of whether such authority and duties are customarily incident to such office.

 

Section 5.6  Divisional Officers :  The Board of Directors may delegate by resolution to the Chief Executive Officer the power (1) to appoint one or more employees of the Corporation as a divisional president, secretary, treasurer, controller, and one or more divisional vice presidents, assistant secretaries, assistant treasurers and other assistant officers and (2) to fix their duties as such appointees. The divisional officers shall have such authority with respect to the business and affairs of that division as was given to them in their appointment and, in the regular course of business of such division, may sign contracts and other documents in the name of the division where so authorized by the Chief Executive Officer; provided that in no case and under no circumstances shall a divisional officer of one division have authority to bind the Corporation in general or any other division of the Corporation except as necessary in the pursuit of the normal and usual business of the division of which he is an officer. Divisional officers shall hold office until their respective successors shall have been chosen and shall have qualified. Any divisional officer appointed by the Chief Executive Officer may be removed by the Chief Executive Officer whenever, in his judgment, the best interests of the Corporation will be served thereby. Any vacancy occurring in any office of a division by death, resignation, removal or otherwise may be filled by the Chief Executive Officer of the Corporation.

 

ARTICLE VI

INDEMNIFICATION OF DIRECTORS AND OFFICERS

 

Section 6.1  Indemnification : Each person who is or was a director or officer of the Corporation, or while a director or officer of the Corporation is or was serving at the request of the Corporation as a director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another corporation, employee benefit plan, other enterprise or other entity shall be indemnified by the Corporation to the fullest extent that a corporation is required or permitted to grant indemnification to such person under the Texas Business Corporation Act and the Texas Miscellaneous Corporation Laws Act, as the same exist or may hereafter be amended. Reasonable expenses incurred by a director or officer of the Corporation who was, is or is threatened to be made a named defendant or respondent in a proceeding shall be paid or reimbursed by the Corporation, in advance of the final disposition of the proceeding, to the maximum extent permitted under the Texas Business Corporation Act, as the same exists or may hereafter be amended. The right to indemnification under this Article VI shall be a contract right. In the event of the death of any person having a right of indemnification under this Article VI, such right will inure to the benefit of his or her heirs, executors, administrators and personal representatives. The rights under this Article VI will not be exclusive of any other right which any person may have or hereinafter acquire under any bylaw, resolution of shareholders or directors, agreement, applicable law or otherwise.

 

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ARTICLE VII

SHARES OF CAPITAL STOCK

 

Section 7.1  Certificates :  Shares of the capital stock of the Corporation may be certificated or uncertificated, as provided under the Texas Business Corporation Act. Certificates for shares of stock of the Corporation shall be in such form as shall be approved by the Board of Directors. The certificates shall be signed by the Chairman of the Board, the Chief Executive Officer, the President or a Vice President and also by the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer. Any and all signatures on the certificate may be a facsimile and each such certificate may be sealed with the seal of the Corporation or a facsimile thereof. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue. The certificates shall be consecutively numbered and shall be entered in the books of the Corporation as they are issued and shall exhibit the holder’s name and the number of shares. The Corporation shall, after the issuance or transfer of uncertificated shares, send to the registered owner of uncertificated shares a written notice containing the information required to be set forth or stated on certificates pursuant to the Texas Business Corporation Act.

 

Section 7.2  Lost, Stolen or Destroyed Certificates :  The Board of Directors may direct (i) a new certificate or certificates representing shares of stock or (ii) uncertificated shares be issued in place of a certificate or certificates representing shares of stock theretofore issued by the Corporation and alleged to have been lost or destroyed upon the making of an affidavit of that fact by the person claiming the certificate or certificates representing shares of stock that was or were lost or destroyed. When authorizing such issue of a new certificate or certificates or uncertificated shares, the Board of Directors may in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his or her legal representative, to advertise the same in such manner as it shall require and/or to give the Corporation a bond with a surety or sureties satisfactory to the Corporation in such sum as it may direct as indemnity against any claim or expense resulting from a claim that may be made against the Corporation with respect to the certificate or certificates alleged to have been lost or destroyed.

 

Section 7.3  Transfer of Shares :  Shares of stock, whether certificated or uncertificated, shall be transferable only on the books of the Corporation by the holders thereof or by their duly authorized attorneys or legal representatives. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate representing shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, the Corporation or its transfer agent shall issue a new certificate or evidence of the issuance of uncertificated shares to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon the receipt of proper transfer instructions from the registered owner of uncertificated shares, such uncertificated shares shall be cancelled, issuance of new equivalent uncertificated shares or certificated shares shall be made to the shareholder entitled thereto and the transaction shall be recorded upon the Corporation’s books. If the Corporation has a transfer agent or registrar acting on its behalf, the signature of any officer or representative thereof may be in facsimile.

 

Section 7.4  Registered Shareholders :  The Corporation shall be entitled to treat the holder of record of any share or shares of stock, whether such shares are evidenced by a certificate or are uncertificated, as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by applicable law.

 

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Section 7.5  Regulations :  The Board of Directors may appoint a transfer agent and one or more co-transfer agents and registrar and one or more co-registrars and may make or authorize such agent to make all such rules and regulations deemed expedient concerning the issue, transfer and registration of shares of stock.

 

Section 7.6  Legends :  The Board of Directors shall have the power and authority to provide that the certificates representing shares of stock of the Corporation bear such legends as the Board of Directors deems appropriate to assure that the Corporation does not become liable for violations of federal or state securities laws or other applicable law.

 

ARTICLE VIII

GENERAL PROVISIONS

 

Section 8.1  Distributions and Share Dividends : Subject to any provision of the Articles of Incorporation or applicable law, distributions (in the form of cash or property) or share dividends may be declared by the Board of Directors at any regular or special meeting.

 

Section 8.2  Checks : All checks, demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.

 

Section 8.3  Fiscal Year : The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors; provided, however, that if such fiscal year is not fixed by the Board of Directors and the Board of Directors does not defer determination of the fiscal year, the fiscal year shall be the calendar year.

 

Section 8.4  Seal : The Board of Directors may adopt a corporate seal and use the same by causing it or a facsimile thereof to be impressed, affixed, reproduced or otherwise.

 

Section 8.5  Resignation : Any director, committee member or officer may resign by so stating at any meeting of the Board of Directors or by giving written notice to the Board of Directors, the Chairman of the Board, the Chief Executive Officer, the President or the Secretary. Such resignation shall take effect at the time specified therein, or immediately if no time is specified therein. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

 

Section 8.6  Telephone and Similar Meetings: Unless otherwise restricted by the Articles of Incorporation, members of the Board of Directors or members of any committee of the Board of Directors may participate in and hold a meeting of the Board of Directors or committee, as the case may be, by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in such a meeting shall constitute presence in person at the meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the basis that the meeting is not lawfully called or convened.

 

Section 8.7  Amendment of Bylaws : The Board of Directors may amend or repeal these Bylaws, or adopt new bylaws, unless (a) such power shall be reserved exclusively to the shareholders in whole or part by the Articles of Incorporation or by applicable law or, (b) the shareholders in amending repealing or adopting a particular bylaw shall have expressly provided that the Board of Directors may not amend or repeal that bylaw. Unless the Articles of Incorporation or a bylaw adopted by the shareholders shall provide otherwise as to all or some portion of the Corporation’s bylaws, the shareholders may amend, repeal or adopt (but only by the affirmative vote of the holders of not less than two-thirds of the combined

 

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voting power of the shares entitled to vote thereon) the Corporation’s bylaws even though the bylaws may also be amended, repealed or adopted by the Board of Directors.

 

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EXCO RESOURCES, INC.

 

CERTIFICATE OF ADOPTION OF AMENDED AND RESTATED BYLAWS

OF EXCO RESOURCES, INC.

 

The undersigned hereby certifies that he is the duly elected, qualified and acting Secretary of EXCO Resources, Inc. and that the foregoing Amended and Restated Bylaws of EXCO Resources, Inc. were duly adopted by the Corporation’s Board of Directors on November 14, 2007 to be effective as of November 14, 2007.

 

 

/s/ William L. Boeing

 

William L. Boeing

Secretary

 

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Exhibit 10.1

The EXCO Resources, Inc.

 

AMENDED AND RESTATED

2005 LONG-TERM INCENTIVE PLAN

 

The EXCO Resources, Inc. Amended and Restated 2005 Long-Term Incentive Plan (the “ Plan ”) was originally adopted by the Board of Directors and the stockholders of EXCO Holdings II, Inc., a Delaware corporation (“ Holdings II ”), on September 15, 2005. As a result of the merger of Holdings II with and into EXCO Holdings Inc., a Delaware corporation (“ Holdings ”), the Plan was assumed by Holdings, effective as of September 30, 2005, and ratified by Holdings’ Board of Directors, effective as of October 5, 2005, and Holdings’ stockholders, effective as of October 3, 2005. As a result of the merger of Holdings with and into EXCO Resources, Inc., a Texas corporation (the “ Company ”), the Plan was assumed by the Company, effective as of February 14, 2006, in accordance with the terms of that certain Agreement and Plan of Merger, dated February 9, 2006, which agreement, including the merger and the Company’s assumption of the Plan contemplated thereby, were approved, effective as of February 4, 2006, by (i) the Boards of Directors of the Company and Holdings, (ii) the sole shareholder of the Company, and (iii) the stockholders of Holdings. The Plan was amended pursuant to an amendment approved by (i) the Board of Directors of the Company on June 29, 2007 and (ii) the shareholders of the Company on August 30, 2007. The Plan was amended and restated by the Board of Directors of the Company on November 14, 2007. The Awards previously granted under this Plan have been converted into awards in EXCO Resources, Inc. common stock pursuant to the requirements of Treasury Regulation section 1.424-1. The Plan shall be known as the EXCO Resources, Inc. Amended and Restated 2005 Long-Term Incentive Plan from and after November 14, 2007.

 

ARTICLE 1

PURPOSE

 

The purpose of the Plan is to attract and retain the services of key employees, consultants and Outside Directors of the Company and its Subsidiaries and to provide such persons with a proprietary interest in the Company through the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, dividend equivalent rights, and other awards, whether granted singly, or in combination, or in tandem, that will

 

(a)            increase the interest of such persons in the Company’s welfare;

 

(b)            furnish an incentive to such persons to continue their services for the Company; and

 

(c)            provide a means through which the Company may attract able persons as employees, Consultants and Outside Directors.

 

With respect to Reporting Participants, the Plan and all transactions under the Plan are intended to comply with all applicable conditions of Rule 16b-3 promulgated under the Securities Exchange Act of 1934 (the “ 1934 Act ”). To the extent any provision of the Plan or action by the Committee fails to so comply, it shall be deemed null and void ab initio , to the extent permitted by law and deemed advisable by the Committee. No Incentive Stock Options shall be issued to Consultants, independent contractors or Outside Directors of the Company.

 



 

ARTICLE 2

DEFINITIONS

 

For the purpose of the Plan, unless the context requires otherwise, the following terms shall have the meanings indicated:

 

2.1           Award ” means the grant of any Incentive Stock Option, Nonqualified Stock Option, Restricted Stock, SAR, Restricted Stock Units, Performance Award, Dividend Equivalent Right or Other Award, whether granted singly or in combination or in tandem (each individually referred to herein as an “ Incentive ”).

 

2.2           Award Agreement ” means a written agreement between a Participant and the Company which sets out the terms of the grant of an Award.

 

2.3           Award Period ” means the period set forth in the Award Agreement during which one or more Incentives granted under an Award may be exercised.

 

2.4           Board ” means the board of directors of the Company.

 

2.5           Callable means Common Stock issued to a Participant which is subject to the Company’s right to call and repurchase such Common Stock upon Termination of Employment pursuant to the terms of the Award Agreement under which the Participant purchased the Common Stock.

 

2.6           Change in Control ” means any of the following, except as otherwise provided herein:  (i) any consolidation, merger or share exchange of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the Company’s Common Stock would be converted into cash, securities or other property, other than a consolidation, merger or share exchange of the Company in which the holders of the Company’s Common Stock immediately prior to such transaction have the same proportionate ownership of Common Stock of the surviving corporation immediately after such transaction or the merger of the Company into one of its subsidiaries; (ii) any sale, lease, exchange or other transfer (excluding transfer by way of pledge or hypothecation) in one transaction or a series of related transactions, of all or substantially all of the assets of the Company; (iii) the stockholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company; (iv) the cessation of control (by virtue of their not constituting a majority of directors) of the Board by the individuals (the “ Continuing Directors ”) who (x) at February 14, 2006 were directors or (y) become directors after February 14, 2006 and whose election or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the directors then in office who were directors at February 14, 2006 or whose election or nomination for election was previously so approved; (v) the acquisition of beneficial ownership (within the meaning of Rule 13d-3 under the 1934 Act) of an aggregate of 50% or more of the voting power of the Company’s outstanding voting securities by any person or group (as such term is used in Rule 13d-5 under the 1934 Act) who beneficially owned less than 50% of the voting power of the Company’s outstanding voting securities on February 14, 2006; provided , however , that notwithstanding the foregoing, an acquisition shall not constitute a Change in Control hereunder if the acquirer is (x) a trustee or other fiduciary holding securities under an employee benefit plan of the Company and acting in such capacity, (y) a Subsidiary of the Company or a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of voting securities of the Company or (z) any other person whose acquisition of shares of voting securities is approved in advance by a majority of the Continuing Directors, (aa) a purchase(s) of the shares are sold pursuant to effective registration under applicable federal and state securities laws; or (vi) in a Title 11 bankruptcy proceeding, the appointment of a trustee or the conversion of a case involving the Company to a case under Chapter 7.

 

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Notwithstanding the foregoing provisions of this Section 2.6 , in the event an Award issued under the Plan is subject to Section 409A of the Code, then, to the extent necessary to comply with the requirements of Section 409A of the Code, in lieu of the foregoing definition, the definition of “Change in Control” for purposes of such Award shall be the definition provided for under Section 409A of the Code and the regulations or other guidance issued thereunder.

 

2.7           Code ” means the Internal Revenue Code of 1986, as amended.

 

2.8           Committee ” means the Compensation Committee of the Board.

 

2.9           Common Stock ” means the common stock, par value $0.001 per share, which the Company is currently authorized to issue or may in the future be authorized to issue, or any securities into which or for which the common stock of the Company may be converted or exchanged, as the case may be, pursuant to the terms of this Plan.

 

2.10         Company ” means EXCO Resources, Inc., a Texas corporation, and any successor entity.

 

2.11         Consultant ” means any person performing advisor or consulting services to the Company or a Subsidiary, with or without compensation, who is not an Employee, provided that bona fide services must be rendered by such person and such services shall not be rendered in connection with the offer or sale of securities in a capital raising transaction. A Consultant is not eligible to receive Incentive Stock Options.

 

2.12         Corporation ” means any entity that (i) is defined as a corporation under Section 7701 of the Code and (ii) is the Company or is in an unbroken chain of corporations (other than the Company) beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing a majority of the total combined voting power of all classes of stock in one of the other corporations in the chain. For purposes of clause (ii) hereof, an entity shall be treated as a “corporation” if it satisfies the definition of a corporation under Section 7701 of the Code.

 

2.13         Date of Grant ” means the effective date on which an Award is made to a Participant as set forth in the applicable Award Agreement; provided, however, that solely for purposes of Section 16 of the 1934 Act and the rules and regulations promulgated thereunder, the Date of Grant of an Award shall be the date of stockholder approval of the Plan if such date is later than the effective date of such Award as set forth in the Award Agreement.

 

2.14         Dividend Equivalent Right ” means the right of the holder thereof to receive credits as set forth in Section 6.9 hereof based on the cash dividends that would have been paid on the shares of Common Stock specified in the Award if such shares were held by the Participant to whom the Award is made.

 

2.15         Employee ” means common law employee (as defined in accordance with the Regulations and Revenue Rulings then applicable under Section 3401(c) of the Code) of the Company or any Subsidiary of the Company.

 

2.16         Executive Officer ” means an officer of the Company or a Subsidiary subject to Section 16 of the 1934 Act or a “covered employee” as defined in Section 162(m)(3) of the Code.

 

2.17         Exempt Shares ” means shares of Common Stock designated as “Exempt Shares” pursuant to Section 5.1(b) .

 

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2.18         Fair Market Value ” means, as of a particular date, (a) if the shares of Common Stock are listed on a national securities exchange, the closing sales price per share of Common Stock on the consolidated transaction reporting system for the principal securities exchange for the Common Stock on that date, or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported, (b) if the shares of Common Stock are not so listed but are quoted on the Nasdaq National Market System, the closing sales price per share of Common Stock on the Nasdaq National Market System on that date, or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported, (c) if the Common Stock is not so listed or quoted, the mean between the closing bid and asked price on that date, or, if there are no quotations available for such date, on the last preceding date on which such quotations shall be available, as reported by Nasdaq, or, if not reported by Nasdaq, by the National Quotation Bureau, Inc., or (d) if none of the above is applicable, such amount as may be determined by the Committee (acting on the advice of an Independent Third Party, should the Committee elect in its sole discretion to utilize an Independent Third Party for this purpose), in good faith, to be the fair market value per share of Common Stock and in accordance with the requirements, as applicable, of Section 422 of the Code  and Section 409A of the Code and the regulations and other guidance issued thereunder.

 

2.19         Full Value Award ” means any Award with a net benefit to the Participant, without regard to any restrictions such as those described in Section 6.4(b) , equal to the aggregate Fair Market Value of the total shares of Common Stock subject to the Award. Full Value Awards include Restricted Stock and Restricted Stock Units, but do not include Stock Options and SARs.

 

2.20         Incentive ” is defined in Section 2.1 hereof.

 

2.21         Incentive Stock Option ”  or “ ISO ” means an incentive stock option within the meaning of Section 422 of the Code, granted pursuant to this Plan.

 

2.22         Independent Third Party ” means an individual or entity independent of the Company having experience in providing investment banking or similar appraisal or valuation services and with expertise generally in the valuation of securities or other property for purposes of this Plan. The Committee may utilize one or more Independent Third Parties.

 

2.23         Nonqualified Stock Option ” means a nonqualified stock option, granted pursuant to this Plan, which is not an Incentive Stock Option.

 

2.24         Option Price ” means the price which must be paid by a Participant upon exercise of a Stock Option to purchase a share of Common Stock.

 

2.25         Other Award ” means an Award issued pursuant to Section 6.10 hereof.

 

2.26         Outside Director ” means a director of the Company who is not an Employee or Consultant.

 

2.27         Participant ” means an Employee, Consultant or Outside Director of the Company or a Subsidiary to whom an Award is granted under this Plan.

 

2.28         Plan ” means this EXCO Resources, Inc. Amended and Restated 2005 Long-Term Incentive Plan, as amended from time to time.

 

2.29         Performance Award ” means an Award hereunder of cash, shares of Common Stock, units or rights based upon, payable in, or otherwise related to, Common Stock pursuant to Section 6.8 hereof.

 

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2.30         Performance Goal ” means any of the goals set forth in Section 6.11 hereof.

 

2.31         Reporting Participant ” means a Participant who is subject to the reporting requirements of Section 16 of the 1934 Act.

 

2.32         Restricted Stock ” means shares of Common Stock issued or transferred to a Participant pursuant to Section 6.4 of this Plan which are subject to restrictions or limitations set forth in this Plan and in the related Award Agreement.

 

2.33         Restricted Stock Units ” means units awarded to Participants pursuant to Section 6.7 hereof, which are convertible into Common Stock at such time as such units are no longer subject to restrictions as established by the Committee.

 

2.34         Retirement ” means any Termination of Service solely due to retirement upon or after attainment of age sixty-five (65), or permitted early retirement as determined by the Committee.

 

2.35         SAR ” or “ stock appreciation right ” means the right to receive an amount, in cash and/or Common Stock, equal to the excess of the Fair Market Value of a specified number of shares of Common Stock as of the date the SAR is exercised (or, as provided in the Award Agreement, converted) over the SAR Price for such shares.

 

2.36         SAR Price ” means the exercise price or conversion price of each share of Common Stock covered by a SAR, determined on the Date of Grant of the SAR.

 

2.37         Stock Option ” means a Nonqualified Stock Option or an Incentive Stock Option.

 

2.38         Subsidiary ” means (i) any corporation in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing a majority of the total combined voting power of all classes of stock in one of the other corporations in the chain, (ii) any limited partnership, if the Company or any corporation described in item (i) above owns a majority of the general partnership interest and a majority of the limited partnership interests entitled to vote on the removal and replacement of the general partner, and (iii) any partnership or limited liability company, if the partners or members thereof are composed only of the Company, any corporation listed in item (i) above or any limited partnership listed in item (ii) above. “Subsidiaries” means more than one of any such corporations, limited partnerships, partnerships or limited liability companies.

 

2.39         Tenure Award” means an Award hereunder of cash, shares of Common Stock, units or rights based upon, payable in, or otherwise related to, Common Stock that vests over time based upon the Participant’s continued employment with or service to the Company.

 

2.40         Termination of Service ” occurs when a Participant who is (i) an Employee of the Company or any Subsidiary ceases to serve as an Employee of the Company and its Subsidiaries, for any reason; (ii) an Outside Director of the Company or a Subsidiary ceases to serve as a director of the Company and its Subsidiaries for any reason; or (iii) a Consultant of the Company or a Subsidiary ceases to serve as a Consultant of the Company and its Subsidiaries for any reason. Except as may be necessary or desirable to comply with applicable federal or state law, a “Termination of Service” shall not be deemed to have occurred when a Participant who is an Employee becomes an Outside Director or Consultant or vice versa. If, however, a Participant who is an Employee and who has an Incentive Stock Option ceases to be an Employee but does

 

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not suffer a Termination of Service, and if that Participant does not exercise the Incentive Stock Option within the time required under Section 422 of the Code upon ceasing to be an Employee, the Incentive Stock Option shall thereafter become a Nonqualified Stock Option. Notwithstanding the foregoing provisions of this Section 2.40 , in the event an Award issued under the Plan is subject to Section 409A of the Code, then, to the extent necessary to comply with the requirements of Section 409A of the Code, in lieu of the foregoing definition, the definition of “Termination of Service” for purposes of such Award shall be the definition of “separation from service” provided for under Section 409A of the Code and the regulations or other guidance issued thereunder .

 

2.41         Total and Permanent Disability ” means a Participant is qualified for long-term disability benefits under the Company’s or Subsidiary’s disability plan or insurance policy; or, if no such plan or policy is then in existence or if the Participant is not eligible to participate in such plan or policy, that the Participant, because of a physical or mental condition resulting from bodily injury, disease, or mental disorder, is unable to perform his or her duties of employment for a period of six (6) continuous months, as determined in good faith by the Committee, based upon medical reports or other evidence satisfactory to the Committee; provided that , with respect to any Incentive Stock Option, Total and Permanent Disability shall have the meaning given it under the rules governing Incentive Stock Options under the Code. Notwithstanding the foregoing provisions of this Section 2.41 , in the event an Award issued under the Plan is subject to Section 409A of the Code, then, to the extent necessary to comply with the requirements of Section 409A of the Code, in lieu of the foregoing definition, the definition of “Total and Permanent Disability” for purposes of such Award shall be the definition of “disability” provided for under Section 409A of the Code and the regulations or other guidance issued thereunder.

 

ARTICLE 3

ADMINISTRATION

 

3.1           General Administration; Compensation Committee. Subject to the terms of this Article 3 , the Plan shall be administered by the Compensation Committee of the Board (the “ Committee ”). The Committee shall consist of not fewer than two persons.

 

If at any time the Committee shall include members who are not “outside directors” under Section 162(m) of the Code and/or “non-employee directors” as defined in Rule 16b-3 promulgated under the 1934 Act, then to the extent necessary to satisfy the requirements of Section 162(m) of the Code and/or Rule 16b-3 promulgated under the 1934 Act, any function relating to a Reporting Participant or a covered employee (as defined in Section 162(m) of the Code) may be performed solely by a subcommittee of the Committee consisting of two or more members, which shall be solely comprised of Committee members who are “outside directors” under Section 162(m) of the Code and/or “non-employee directors” as defined in Rule 16b-3 promulgated under the 1934 Act.

 

Notwithstanding anything contained herein to the contrary, discretionary Awards granted to Outside Directors shall be administered by the Compensation Committee of the Board (or a subcommittee thereof), which shall be comprised solely of independent directors under rules promulgated by the New York Stock Exchange.

 

3.2           Designation of Participants and Awards.

 

(a)            The Committee shall determine and designate from time to time the eligible persons to whom Awards will be granted and shall set forth in each related Award Agreement, where applicable, the Award Period, the Date of Grant, and such other terms, provisions, limitations, and performance requirements, as are approved by the Committee, but not inconsistent with the Plan. The

 

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Committee shall determine whether an Award shall include one type of Incentive or two or more Incentives granted in combination or two or more Incentives granted in tandem (that is, a joint grant where exercise of one Incentive results in cancellation of all or a portion of the other Incentive). Although the members of the Committee shall be eligible to receive Awards, all decisions with respect to any Award, and the terms and conditions thereof, to be granted under the Plan to any member of the Committee shall be made solely and exclusively by the other members of the Committee, or if such member is the only member of the Committee, by the Board.

 

(b)            Notwithstanding Section 3.2(a) , the Board may, in its discretion and by a resolution adopted by the Board, authorize one or more officers of the Company (an “Authorized Officer”) to (i) designate one or more Employees as eligible persons to whom Awards will be granted under the Plan and (ii) determine the number of shares of Common Stock that will be subject to such Awards; provided, however, that the resolution of the Board granting such authority shall (x) specify the total number of shares of Common Stock that may be made subject to the Awards, (y) set forth the price or prices (or a formula by which such price or prices may be determined) to be paid for the purchase of the Common Stock subject to such Awards, and (z) not authorize an officer to designate himself as a recipient of any Award.

 

3.3           Authority of the Committee. The Committee, in its discretion, shall (i) interpret the Plan, (ii) prescribe, amend, and rescind any rules and regulations necessary or appropriate for the administration of the Plan, (iii)  establish performance goals for an Award and certify the extent of their achievement, and (iv) make such other determinations or certifications and take such other action as it deems necessary or advisable in the administration of the Plan. Any interpretation, determination, or other action made or taken by the Committee shall be final, binding, and conclusive on all interested parties.

 

The Committee may delegate to officers of the Company, pursuant to a written delegation, the authority to perform specified functions under the Plan. Any actions taken by any officers of the Company pursuant to such written delegation of authority shall be deemed to have been taken by the Committee. Notwithstanding the foregoing, to the extent necessary to satisfy the requirements of Section 162(m) of the Code and/or Rule 16b-3 promulgated under the 1934 Act, any function relating to a Reporting Participant or a covered employee (as defined in Section 162(m) of the Code) shall be performed solely by the Committee or  a subcommittee thereof consisting of two or more members of the Committee.

 

With respect to restrictions in the Plan that are based on the requirements of Rule 16b-3 promulgated under the 1934 Act, Section 422 of the Code, Section 162(m) of the Code, the rules of any exchange or inter-dealer quotation system upon which the Company’s securities are listed or quoted, or any other applicable law, rule or restriction (collectively, “ applicable law ”), to the extent that any such restrictions are no longer required by applicable law, the Committee shall have the sole discretion and authority to grant Awards that are not subject to such mandated restrictions and/or to waive any such mandated restrictions with respect to outstanding Awards.

 

3.4           Prohibition on Acceleration of Benefits. Any Award which constitutes deferred compensation under Section 409A of the Code shall not have the time or schedule of any payment thereunder accelerated, except as permitted under the guidance issued under Section 409A of the Code.

 

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ARTICLE 4

ELIGIBILITY

 

Any Employee (including an Employee who is also a director or an officer), Consultant or Outside Director of the Company or any Subsidiary whose judgment, initiative, and efforts contributed or may be expected to contribute to the successful performance of the Company or any Subsidiary is eligible to participate in the Plan; provided that only Employees of a corporation shall be eligible to receive Incentive Stock Options. The Committee, upon its own action, may grant, but shall not be required to grant, an Award to any Employee, Consultant or Outside Director of the Company or any Subsidiary. Awards may be granted by the Committee at any time and from time to time to new Participants, or to some or all of the then existing Participants, and may include or exclude previous Participants, as the Committee shall determine. Except as required by this Plan, Awards granted at different times need not contain similar provisions. The Committee’s determinations under the Plan (including without limitation determinations of which Employees, Consultants or Outside Directors, if any, are to receive Awards, the form, amount and timing of such Awards, the terms and provisions of such Awards and the agreements evidencing same) need not be uniform and may be made by it selectively among Participants who receive, or are eligible to receive, Awards under the Plan.

 

ARTICLE 5

SHARES SUBJECT TO PLAN

 

5.1           Number Available for Awards.

 

(a)            In General. Subject to adjustment as provided in Articles 11 and 12, the maximum number of shares of Common Stock that may be delivered pursuant to Awards granted under the Plan is twenty million (20,000,000) shares, of which  up to twenty million (20,000,000) shares may delivered pursuant to Incentive Stock Options. Shares to be issued may be made available from authorized but unissued Common Stock, Common Stock held by the Company in its treasury, or Common Stock purchased by the Company on the open market or otherwise. During the term of this Plan, the Company will at all times reserve and keep available the number of shares of Common Stock that shall be sufficient to satisfy the requirements of this Plan.

 

(b)            Exempt Shares. No more than ten percent (10%) of the shares of Common Stock that may be delivered pursuant to Awards under Section 5.1(a)  may be shares designated as “Exempt Shares.”

 

5.2           Reuse of Shares . To the extent that any Award under this Plan shall be forfeited, shall expire or be canceled, in whole or in part, then the number of shares of Common Stock covered by the Award or stock option so forfeited, expired or canceled may again be awarded pursuant to the provisions of this Plan. In the event that previously acquired shares of Common Stock are delivered to the Company in full or partial payment of the exercise price for the exercise of a Stock Option granted under this Plan, the number of shares of Common Stock available for future Awards under this Plan shall be reduced only by the net number of shares of Common Stock issued upon the exercise of the Stock Option. Awards that may be satisfied either by the issuance of shares of Common Stock or by cash or other consideration shall be counted against the maximum number of shares of Common Stock that may be issued under this Plan only during the period that the Award is outstanding or to the extent the Award is ultimately satisfied by the issuance of shares of Common Stock. Awards will not reduce the number of shares of Common Stock that may be issued pursuant to this Plan if the settlement of the Award will not require the issuance of shares of Common Stock, as, for example, a SAR that can be satisfied only by the payment of cash. Notwithstanding any provisions of the Plan to the contrary, only shares forfeited back to the Company, shares canceled on account of termination, expiration or lapse of an

 

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Award, shares surrendered in payment of the exercise price of an option or shares withheld for payment of applicable employment taxes and/or withholding obligations resulting from the exercise of an option shall again be available for grant of Incentive Stock Options under the Plan, but shall not increase the maximum  number of shares described in Section 5.1 above as the maximum number of shares of Common Stock that may be delivered pursuant to Incentive Stock Options.

 

ARTICLE 6

GRANT OF AWARDS

 

6.1           In General.

 

(a)            The grant of an Award shall be authorized by the Committee and shall be evidenced by an Award Agreement setting forth the Incentive or Incentives being granted, the total number of shares of Common Stock subject to the Incentive(s), the Option Price (if applicable), the Award Period, the Date of Grant, and such other terms, provisions, limitations, and performance objectives, as are approved by the Committee, but (i) not inconsistent with the Plan and (ii) to the extent an Award issued under the Plan is subject to Section 409A of the Code, in compliance with the applicable requirements of Section 409A of the Code and the regulations or other guidance issued thereunder. The Company shall execute an Award Agreement with a Participant after the Committee approves the issuance of an Award. Any Award granted pursuant to this Plan must be granted within ten (10) years of the date of adoption of this Plan. The Plan shall be submitted to the Company’s stockholders for approval; however, the Committee may grant Awards under the Plan prior to the time of stockholder approval. Any such Award granted prior to such stockholder approval shall be made subject to such stockholder approval. The grant of an Award to a Participant shall not be deemed either to entitle the Participant to, or to disqualify the Participant from, receipt of any other Award under the Plan.

 

(b)            If the Committee establishes a purchase price for an Award, the Participant must accept such Award within a period of thirty (30) days (or such shorter period as the Committee may specify) after the Date of Grant by executing the applicable Award Agreement and paying such purchase price.

 

(c)            Any Award under this Plan that is settled in whole or in part in cash on a deferred basis may provide for interest equivalents to be credited with respect to such cash payment. Interest equivalents may be compounded and shall be paid upon such terms and conditions as may be specified by the Award. If the Award does not specify interest equivalents, then no interest equivalents shall be credited.

 

6.2           Option Price. The Option Price for any share of Common Stock which may be purchased under a Nonqualified Stock Option for any share of Common Stock may be equal to or greater than the Fair Market Value of the share on the Date of Grant. The Option Price shall never be less than the Fair Market Value of the share on the Date of Grant. The Option Price for any share of Common Stock which may be purchased under an Incentive Stock Option must be at least equal to the Fair Market Value of the share on the Date of Grant; if an Incentive Stock Option is granted to an Employee who owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more than ten percent (10%) of the combined voting power of all classes of stock of the Company (or any parent or Subsidiary), the Option Price shall be at least 110% of the Fair Market Value of the Common Stock on the Date of Grant.

 

6.3           Maximum ISO Grants. The Committee may not grant Incentive Stock Options under the Plan to any Employee which would permit the aggregate Fair Market Value (determined on the Date of Grant)

 

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of the Common Stock with respect to which Incentive Stock Options (under this and any other plan of the Company and its Subsidiaries) are exercisable for the first time by such Employee during any calendar year to exceed $100,000. To the extent any Stock Option granted under this Plan which is designated as an Incentive Stock Option exceeds this limit or otherwise fails to qualify as an Incentive Stock Option, such Stock Option (or any such portion thereof) shall be a Nonqualified Stock Option. In such case, the Committee shall designate which stock will be treated as Incentive Stock Option stock by causing the issuance of a separate stock certificate and identifying such stock as Incentive Stock Option stock on the Company’s stock transfer records.

 

6.4           Restricted Stock. If Restricted Stock is granted to or received by a Participant under an Award (including a Stock Option), the Committee shall set forth in the related Award Agreement: (i) the number of shares of Common Stock awarded, (ii) the price, if any, to be paid by the Participant for such Restricted Stock and the method of payment of the price, (iii) the time or times within which such Award may be subject to forfeiture, in whole or in part, or the schedule which determines when the Participant earns a vested interest in the shares of Common Stock (subject to the Restricted Stock Award), (iv) specified Performance Goals of the Company, a Subsidiary, any division thereof or any group of Employees of the Company, or other criteria, which the Committee determines must be met in order to remove any restrictions (including vesting) on such Award, and (v) all other terms, limitations, restrictions, and conditions of the Restricted Stock, which shall be consistent with this Plan and, to the extent Restricted Stock granted under the Plan is subject to Section 409A of the Code, in compliance with the applicable requirements of Section 409A of the Code and the regulations or other guidance issued thereunder. The provisions of Restricted Stock need not be the same with respect to each Participant.

 

(a)            Legend on Shares. Each Participant who is awarded or receives Restricted Stock shall be issued a stock certificate or certificates in respect of such shares of Common Stock. Such certificate(s) shall be registered in the name of the Participant, and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock, substantially as provided in Section 15.9 of the Plan.

 

(b)            Restrictions and Conditions. Shares of Restricted Stock shall be subject to the following restrictions and conditions:

 

(i)             Subject to the other provisions of this Plan and the terms of the particular Award Agreements, during such period as may be determined by the Committee commencing on the Date of Grant or the date of exercise of an Award (the “ Restriction Period ”), the Participant shall not be permitted to sell, transfer, pledge or assign shares of Restricted Stock. Except for these limitations and subject to Section 7.2 below, the Committee may in its sole discretion, remove any or all of the restrictions on such Restricted Stock whenever it may determine that, by reason of changes in applicable laws or other changes in circumstances arising after the date of the Award, such action is appropriate.

 

(ii)            Except as provided in sub-paragraph (i) above or in the applicable Award Agreement, the Participant shall have, with respect to his or her Restricted Stock, all of the rights of a stockholder of the Company, including the right to vote the shares, and the right to receive any dividends thereon. Certificates for shares of Common Stock free of restriction under this Plan shall be delivered to the Participant promptly after, and only after, the Restriction Period shall expire without forfeiture in respect of such shares of Common Stock or after any other restrictions imposed on such shares of Common Stock by the applicable Award Agreement or other agreement have expired. Certificates for the shares of Common Stock forfeited under the provisions of the Plan and the applicable Award Agreement shall be

 

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promptly returned to the Company by the forfeiting Participant. Each Award Agreement shall require that (x) each Participant, by his or her acceptance of Restricted Stock, shall irrevocably grant to the Company a power of attorney to transfer any shares so forfeited to the Company and agrees to execute any documents requested by the Company in connection with such forfeiture and transfer, and (y) such provisions regarding returns and transfers of stock certificates with respect to forfeited shares of Common Stock shall be specifically performable by the Company in a court of equity or law.

 

(iii)           The Restriction Period of Restricted Stock shall commence on the Date of Grant or the date of exercise of an Award, as specified in the Award Agreement, and, subject to Article 12 of the Plan, unless otherwise established by the Committee in the Award Agreement setting forth the terms of the Restricted Stock, shall expire upon satisfaction of the conditions set forth in the Award Agreement; such conditions may provide for vesting based on such Performance Goals, as may be determined by the Committee in its sole discretion.

 

(iv)           Except as otherwise provided in the particular Award Agreement, upon Termination of Service for any reason during the Restriction Period, the nonvested shares of Restricted Stock shall be forfeited by the Participant. In the event a Participant has paid any consideration to the Company for such forfeited Restricted Stock, the Committee shall specify in the Award Agreement that either (i) the Company shall be obligated to, or (ii) the Company may, in its sole discretion, elect to, pay to the Participant, as soon as practicable after the event causing forfeiture, in cash, an amount equal to the lesser of the total consideration paid by the Participant for such forfeited shares or the Fair Market Value of such forfeited shares as of the date of Termination of Service, as the Committee, in its sole discretion shall select. Upon any forfeiture, all rights of a Participant with respect to the forfeited shares of the Restricted Stock shall cease and terminate, without any further obligation on the part of the Company.

 

6.5           SARs. The Committee may grant SARs to any Participant, either as a separate Award or in connection with a Stock Option. SARs shall be subject to such terms and conditions as the Committee shall impose, provided that such terms and conditions are (i)  not inconsistent with the Plan and (ii) to the extent a SAR issued under the Plan is subject to Section 409A of the Code, in compliance with the applicable requirements of Section 409A of the Code and the regulations or other guidance issued thereunder. The grant of the SAR may provide that the holder may be paid for the value of the SAR either in cash or in shares of Common Stock, or a combination thereof. In the event of the exercise of a SAR payable in shares of Common Stock, the holder of the SAR shall receive that number of whole shares of Common Stock having an aggregate Fair Market Value on the date of exercise equal to the value obtained by multiplying (i) the difference between the Fair Market Value of a share of Common Stock on the date of exercise over the  SAR Price as set forth in such SAR (or other value specified in the agreement granting the SAR), by (ii) the number of shares of Common Stock as to which the SAR is exercised, with a cash settlement to be made for any fractional shares of Common Stock. The Committee, in its sole discretion, may place a ceiling on the amount payable upon exercise of a SAR, but any such limitation shall be specified at the time that the SAR is granted.

 

6.6           SAR Price. The SAR Price for any share of Common Stock subject to a SAR may be equal to or greater than the Fair Market Value of the share on the Date of Grant.

 

6.7           Restricted Stock Units. Restricted Stock Units may be awarded or sold to any Participant under such terms and conditions as shall be established by the Committee, provided, however, that such terms and conditions are (i) not inconsistent with the Plan and (ii) to the extent a Restricted Stock Unit issued under the Plan is subject to Section 409A of the Code, in compliance with the applicable requirements of Section 409A of the Code and the regulations or other guidance issued thereunder). Restricted Stock Units shall be

 

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subject to such restrictions as the Committee determines, including, without limitation, (a) a prohibition against sale, assignment, transfer, pledge, hypothecation or other encumbrance for a specified period; or (b) a requirement that the holder forfeit (or in the case of shares of Common Stock or units sold to the Participant, resell to the Company at cost) such shares or units in the event of Termination of Service during the period of restriction.

 

6.8           Performance Awards.

 

(a)            The Committee may grant Performance Awards to one or more Participants. The terms and conditions of such Performance Awards shall be specified at the time of the grant and may include provisions establishing the performance period (subject to Section 6.8(d)), the Performance Goals to be achieved during a performance period, and the maximum or minimum settlement values, provided that such terms and conditions are (i) not inconsistent with the Plan and (ii) to the extent a Performance Award issued under the Plan is subject to Section 409A of the Code, in compliance with the applicable requirements of Section 409A of the Code and the regulations or other guidance issued thereunder. If the Performance Award is to be in shares of Common Stock, the Performance Awards may provide for the issuance of the shares of Common Stock at the time of the grant of the Performance Award or at the time of  the certification by the Committee that the Performance Goals for the performance period have been met; provided, however, if shares of Common Stock are issued at the time of the grant of the Performance Award and if, at the end of the performance period, the Performance Goals are not certified by the Committee to have been fully satisfied, then, notwithstanding any other provisions of this Plan to the contrary, the Common Stock shall be forfeited in accordance with the terms of the grant to the extent the Committee determines that the Performance Goals were not met. The forfeiture of shares of Common Stock issued at the time of the grant of the Performance Award due to failure to achieve the established Performance Goals shall be separate from and in addition to any other restrictions provided for in this Plan that may be applicable to such shares of Common Stock. Each Performance Award granted to one or more Participants shall have its own terms and conditions.

 

If it is determined to be necessary in order to satisfy Section 162(m) of the Code, at the time of the grant of a Performance Award (other than a Stock Option) and to the extent permitted under Section 162(m) of the Code and the regulations issued thereunder, the Committee shall provide for the manner in which the Performance Goals shall be reduced to take into account the negative effect on the achievement of specified levels of the Performance Goals which may result from enumerated corporate transactions, extraordinary events, accounting changes and other similar occurrences which were unanticipated at the time the Performance Goal was initially established. In no event, however, may the Committee increase the amount earned under a Performance Award, unless the reduction in the Performance Goals would reduce or eliminate the amount to be earned under the Performance Award and the Committee determines not to make such reduction or elimination.

 

With respect to a Performance Award that is not intended to satisfy the requirements of Code Section 162(m), if the Committee determines, in its sole discretion, that the established performance measures or objectives are no longer suitable because of a change in the Company’s business, operations, corporate structure, or for other reasons that the Committee deemed satisfactory, the Committee may modify the performance measures or objectives and/or the performance period. However, the Committee may not, in any event, increase the number of shares of Common Stock earned by any Executive officer upon satisfaction of any Performance Goal.

 

(b)            Performance Awards may be valued by reference to the Fair Market Value of a share of Common Stock or according to any formula or method deemed appropriate by the Committee, in its

 

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sole discretion, including, but not limited to, achievement of Performance Goals or other specific financial, production, sales or cost performance objectives that the Committee believes to be relevant to the Company’s business and/or remaining in the employ of the Company for a specified period of time. Performance Awards may be paid in cash, shares of Common Stock, or other consideration, or any combination thereof. If payable in shares of Common Stock, the consideration for the issuance of such shares may be the achievement of the performance objective established at the time of the grant of the Performance Award. Performance Awards may be payable in a single payment or in installments and may be payable at a specified date or dates or upon attaining the performance objective. The extent to which any applicable performance objective has been achieved shall be conclusively determined by the Committee.

 

6.9           Dividend Equivalent Rights . The Committee may grant a Dividend Equivalent Right to any Participant, either as a component of another Award or as a separate Award. The terms and conditions of the Dividend Equivalent Right shall be specified by the grant. Dividend equivalents credited to the holder of a Dividend Equivalent Right may be paid currently or may be deemed to be reinvested in additional shares of Common Stock (which may thereafter accrue additional dividend equivalents). Any such reinvestment shall be at the Fair Market Value at the time thereof. Dividend Equivalent Rights may be settled in cash or shares of Common Stock, or a combination thereof, in a single payment or in installments. A Dividend Equivalent Right granted as a component of another Award may provide that such Dividend Equivalent Right shall be settled upon exercise, settlement, or payment of, or lapse of restrictions on, such other Award, and that such Dividend Equivalent Right granted as a component of another Award may also contain terms and conditions different from such other Award.

 

6.10         Other Awards. The Committee may grant to any Participant other forms of Awards,  based upon, payable in, or otherwise related to, in whole or in part, shares of Common Stock, if the Committee determines that such other form of Award is consistent with the purpose and restrictions of this Plan. The terms and conditions of such other form of Award shall be specified by the grant. Such Other Awards may be granted for no cash consideration, for such minimum consideration as may be required by applicable law, or for such other consideration as may be specified by the grant.

 

6.11         Performance Goals. Awards of Restricted Stock, Restricted Stock Units, Performance Award and Other Awards (whether relating to cash or shares of Common Stock) under the Plan may be made subject to the attainment of Performance Goals relating to one or more business criteria which, where applicable, shall be within the meaning of Section 162(m) of the Code and consist of one or more or any combination of the following criteria: cash flow; cost; revenues;  sales; ratio of debt to debt plus equity; net borrowing, credit quality or debt ratings; profit before tax; economic profit; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; gross margin; earnings per share (whether on a pre-tax, after-tax, operational or other basis); operating earnings; capital expenditures; expenses or expense levels; economic value added; ratio of operating earnings to capital spending or any other operating ratios; free cash flow; net profit; net sales; net asset value per share; the accomplishment of mergers, acquisitions, dispositions, public offerings or similar extraordinary business transactions; sales growth; price of the Company’s Common Stock; return on assets, equity or stockholders’ equity; market share; inventory levels, inventory turn or shrinkage; or total return to stockholders (“ Performance Criteria ”). Any Performance Criteria may be used to measure the performance of the Company as a whole or any business unit of the Company and may be measured relative to a peer group or index. Any Performance Criteria may include or exclude (i) extraordinary, unusual and/or non-recurring items of gain or loss, (ii) gains or losses on the disposition of a business, (iii) changes in tax or accounting regulations or laws, or (iv) the effect of a merger or acquisition, as identified in the Company’s quarterly and annual earnings releases. In all other respects, Performance Criteria shall be calculated in accordance with the Company’s financial statements, under generally accepted accounting principles, or under a methodology established by the Committee prior to the

 

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issuance of an Award which is consistently applied and identified in the audited financial statements, including footnotes, or the Compensation Discussion and Analysis section of the Company’s annual report. However, the Committee may not in any event increase the amount of compensation payable to an individual upon the attainment of a Performance Goal.

 

6.12         Tandem Awards. The Committee may grant two or more Incentives in one Award in the form of a “tandem Award,” so that the right of the Participant to exercise one Incentive shall be canceled if, and to the extent, the other Incentive is exercised. For example, if a Stock Option and a SAR are issued in a tandem Award, and the Participant exercises the SAR with respect to 100 shares of Common Stock, the right of the Participant to exercise the related Stock Option shall be canceled to the extent of 100 shares of Common Stock.

 

6.13         Maximum Individual Grants. No participant may receive during any calendar year of the Company, Awards covering an aggregate of more than two million (2,000,000) shares of Company Stock.

 

ARTICLE 7

AWARD PERIOD; VESTING; TERMINATION OF SERVICE

 

7.1           Award Period. Subject to the other provisions of this Plan, the Committee may, in its discretion, provide that an Incentive may not be exercised in whole or in part for any period or periods of time or beyond any date specified in the Award Agreement. Except as provided in the Award Agreement, an Incentive may be exercised in whole or in part at any time during its term. The Award Period for an Incentive shall be reduced or terminated upon Termination of Service. No Incentive granted under the Plan may be exercised at any time after the end of its Award Period. No portion of any Incentive may be exercised after the expiration of ten (10) years from its Date of Grant. However, if an Employee owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more than ten percent (10%) of the combined voting power of all classes of stock of the Company (or any parent or Subsidiary) and an Incentive Stock Option is granted to such Employee, the term of such Incentive Stock Option (to the extent required by the Code at the time of grant) shall be no more than five (5) years from the Date of Grant.

 

7.2           Vesting.

 

(a)            General. Except as otherwise provided by Section 7.2(b) , the Committee, in its sole discretion, may determine that an Incentive will be immediately vested in whole or in part, or that all or any portion may not be vested until a date, or dates, subsequent to its Date of Grant, or until the occurrence of one or more specified events, subject in any case to the terms of the Plan. If the Committee imposes conditions upon vesting, then, except as otherwise provided by Section 7.2(b) , subsequent to the Date of Grant, the Committee may, in its sole discretion, accelerate the date on which all or any portion of the Incentive may be vested; provided, however, that shares of Common Stock underlying all or any portion of a Nonqualified Stock Option or Incentive Stock Option for which the Committee accelerates the vesting date other than in the event of the Participant’s death, Total and Permanent Disability or Retirement, or the occurrence of a Change in Control shall be Exempt Shares.

 

(b)            Full Value Award Vesting. Except as otherwise provided herein, the Committee must grant all Full Value Awards in accordance with the following provisions:

 

(i)       All Full Value Awards granted by the Committee that constitute Performance Awards must vest no earlier than one (1) year after the Date of Grant.

 

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(ii)      All Full Value Awards granted by the Committee that constitute Tenure Awards must vest no earlier than over the three (3) year period commencing on the Date of Grant on a pro rata basis.

 

(iii)     The Committee may not accelerate the date on which all or any portion of a Full Value Award may be vested or waive the Restriction Period on a Full Value Award except upon the Participant’s death, Total and Permanent Disability or Retirement or the occurrence of a Change in Control.

 

Notwithstanding the foregoing, the Committee may, in its sole discretion, grant Full Value Awards with more favorable vesting provisions than set forth in this Section 7.2(b)  or accelerate the vesting or waive the Restriction Period for Full Value Awards at any time, provided that the shares of Common Stock subject to such Awards shall be Exempt Shares.

 

ARTICLE 8

EXERCISE OF INCENTIVE

 

8.1           In General . A vested Incentive may be exercised during its Award Period, subject to limitations and restrictions set forth in the Award Agreement and in Article 7. A vested Incentive may be exercised at such times and in such amounts as provided in this Plan and the applicable Award Agreement, subject to the terms, conditions and restrictions of the Plan.

 

8.2           Securities Law and Exchange Restrictions. In no event may an Incentive be exercised or shares of Common Stock be issued pursuant to an Award if a necessary listing or quotation of the shares of Common Stock on a stock exchange or inter-dealer quotation system or any registration under state or federal securities laws required under the circumstances has not been accomplished.

 

8.3           Exercise of Stock Option.

 

(a)            In General. If a Stock Option is exercisable prior to the time it is vested, the Common Stock obtained on the exercise of the Stock Option shall be Restricted Stock which is subject to the applicable provisions of the Plan and the Award Agreement. If the Committee imposes conditions upon exercise, then subsequent to the Date of Grant, the Committee may, in its sole discretion, accelerate the date on which all or any portion of the Stock Option may be exercised. No Stock Option may be exercised  for a fractional share of Common Stock. The granting of a Stock Option shall impose no obligation upon the Participant to exercise that Stock Option.

 

(b)            Notice and Payment. Subject to such administrative regulations as the Committee may from time to time adopt, a Stock Option may be exercised by the delivery of written notice to the Company (or such person or persons designated in the Award Agreement) setting forth the number of shares of Common Stock with respect to which the Stock Option is to be exercised and 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 provided in the Award Agreement, which may provide for payment in any one or more of the following ways:  (a) cash or 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

 

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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 a 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.

 

(c)            Issuance of Certificate. Except as otherwise provided in Section 6.4 hereof (with respect to shares of Restricted Stock) or in the applicable Award Agreement, 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 death) at its principal business office promptly after the Exercise Date; provided that if the Participant has exercised an Incentive Stock Option, the Company may at its option retain physical possession of the certificate evidencing the shares acquired upon exercise until the expiration of the holding periods described in Section 422(a)(1) of the Code. 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.

 

(d)            Failure to Pay. Except as may otherwise be provided in an Award Agreement, if the Participant fails to pay for any of the Common Stock specified in such notice or fails to accept delivery thereof, that portion of the Participant’s Stock Option and right to purchase such Common Stock may be forfeited by the Participant, in the Company’s sole discretion.

 

8.4           SARs. Subject to the conditions of this Section 8.4 and such administrative regulations as the Committee may from time to time adopt, a SAR may be exercised by the delivery (including by FAX) of written notice to the Committee setting forth the number of shares of Common Stock with respect to which the SAR is to be exercised and 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. Subject to the terms of the Award Agreement and only if permissible under Section 409A of the Code and the regulations or other guidance issued thereunder (or, if not so permissible, at such time as permitted by Section 409A of the Code and the regulations or other guidance issued thereunder), the Participant shall receive from the Company in exchange therefor in the discretion of the Committee, and subject to the terms of the Award Agreement:

 

(i)             cash in an amount equal to the excess (if any) of the Fair Market Value (as of the date of the exercise, or if provided in the Award Agreement, conversion, of the SAR) per share of Common Stock over the SAR Price per share specified in such SAR, multiplied by the total number of shares of Common Stock of the SAR being surrendered;

 

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(ii)            that number of shares of Common Stock having an aggregate Fair Market Value (as of the date of the exercise, or if provided in the Award Agreement, conversion, of the SAR) equal to the amount of cash otherwise payable to the Participant, with a cash settlement to be made for any fractional share interests; or

 

(iii)           the Company may settle such obligation in part with shares of Common Stock and in part with cash.

 

The distribution of any cash or Common Stock pursuant to the foregoing sentence shall be made at such time as set forth in the Award Agreement.

 

8.5           Disqualifying Disposition of Incentive Stock Option. If shares of Common Stock acquired upon exercise of an Incentive Stock Option are disposed of by a Participant prior to the expiration of either two (2) years from the Date of Grant of such Stock Option or one (1) year from the transfer of shares of Common Stock to the Participant pursuant to the exercise of such Stock Option, or in any other disqualifying disposition within the meaning of Section 422 of the Code, such Participant shall notify the Company in writing of the date and terms of such disposition. A disqualifying disposition by a Participant shall not affect the status of any other Stock Option granted under the Plan as an Incentive Stock Option within the meaning of Section 422 of the Code.

 

ARTICLE 9

AMENDMENT OR DISCONTINUANCE

 

Subject to the limitations set forth in this Article 9, the Board may at any time and from time to time, without the consent of the Participants, alter, amend, revise, suspend, or discontinue the Plan in whole or in part; provided, however, that no amendment for which stockholder approval is required either (i) by any securities exchange or inter-dealer quotation system on which the Common Stock is listed or traded or (ii) in order for the Plan and Incentives awarded under the Plan to continue to comply with Sections 162(m), 421, and 422 of the Code, including any successors to such Sections, or other applicable law, shall be effective unless such amendment shall be approved by the requisite vote of the stockholders. Notwithstanding the foregoing, no amendment to the Plan that increases the benefits accrued to Participants, increases the maximum number of shares of Common Stock which may be issued under the Plan,  reprices any Stock Options or modifies the requirements for participation in the Plan shall be effective unless such amendment shall be approved by the stockholders of the Company entitled to vote thereon in the manner set forth in the Company’s articles of incorporation and bylaws. Any amendments made pursuant to this Article 9 shall, to the extent deemed necessary or advisable by the Committee, be applicable to any outstanding Incentives theretofore granted under the Plan, notwithstanding any contrary provisions contained in any Award Agreement. In the event of any such amendment to the Plan, the holder of any Incentive outstanding under the Plan shall, upon request of the Committee and as a condition to the exercisability thereof, execute a conforming amendment in the form prescribed by the Committee to any Award Agreement relating thereto. Notwithstanding anything contained in this Plan to the contrary, unless required by law, no action contemplated or permitted by this Article 9 shall adversely affect any rights of Participants or obligations of the Company to Participants with respect to any Incentive theretofore granted under the Plan without the consent of the affected Participant.

 

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ARTICLE 10

TERM

 

The Plan shall be effective from the date that this Plan is approved by the Board. Unless sooner terminated by action of the Board, the Plan will terminate on September 15, 2015, but Incentives granted before that date will continue to be effective in accordance with their terms and conditions.

 

ARTICLE 11

CAPITAL ADJUSTMENTS

 

In the event that any dividend or other distribution (whether in the form of cash, Common Stock, other securities, or other property), recapitalization, stock split, reverse stock split, rights offering, reorganization, merger, consolidation, split-up, spin-off, split-off, combination, subdivision, repurchase, or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, or other similar corporate transaction or event affects the fair value of an Award, then the Committee shall adjust any or all of the following so that the fair value of the Award immediately after the transaction or event is equal to the fair value of the Award immediately prior to the transaction or event (i) the number of shares and type of Common Stock (or the securities or property) which thereafter may be made the subject of Awards, (ii) the number of shares and type of Common Stock (or other securities or property) subject to outstanding Awards, (iii) the number of shares and type of Common Stock (or other securities or property) specified as the annual per-participant limitation under Section 5.1 of the Plan, (iv) the Option Price of each outstanding Award, (v) the amount, if any, the Company pays for forfeited shares of Common Stock in accordance with Section 6.4 , and (vi) the number of or SAR Price of shares of Common Stock then subject to outstanding SARs previously granted and unexercised under the Plan to the end that the same proportion of the Company’s issued and outstanding shares of Common Stock in each instance shall remain subject to exercise at the same aggregate SAR Price; provided however, that the number of shares of Common Stock (or other securities or property) subject to any Award shall always be a whole number. Notwithstanding the foregoing, no such adjustment shall be made or authorized to the extent that such adjustment would cause the Plan or any Stock Option to violate Section 422 of the Code or Section 409A of the Code. Such adjustments shall be made in accordance with the rules of any securities exchange, stock market, or stock quotation system to which the Company is subject.

 

Upon the occurrence of any such adjustment, the Company shall provide notice to each affected Participant of its computation of such adjustment which shall be conclusive and shall be binding upon each such Participant.

 

ARTICLE 12

RECAPITALIZATION, MERGER AND CONSOLIDATION

 

12.1         No Effect on Company’s Authority. The existence of this Plan and Incentives granted hereunder shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations, or other changes in the Company’s capital structure and its business, or any Change in Control, or any merger or consolidation of the Company, or any issuance of bonds, debentures, preferred or preference stocks ranking prior to or otherwise affecting the Common Stock or the rights thereof (or any rights, options, or warrants to purchase same), or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.

 

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12.2         Conversion of Incentives Where Company Survives. Subject to any required action by the stockholders, and except as otherwise provided by Section 12.4 hereof or as may be required to comply with Section 409A of the Code and the regulations or other guidance issued thereunder, if the Company shall be the surviving or resulting corporation in any merger, consolidation or share exchange, any Incentive granted hereunder shall pertain to and apply to the securities or rights (including cash, property, or assets) to which a holder of the number of shares of Common Stock subject to the Incentive would have been entitled.

 

12.3         Exchange or Cancellation of Incentives Where Company Does Not Survive. Except as otherwise provided by Section 12.4 hereof or as may be required to comply with Section 409A of the Code and the regulations or other guidance issued thereunder, in the event of any merger, consolidation or share exchange pursuant to which the Company is not the surviving or resulting corporation or where stockholders of the Company prior to such transaction do not control a majority of the voting shares of the surviving corporation, there shall be substituted for each share of Common Stock subject to the unexercised portions of outstanding Incentives, that number of shares of each class of stock or other securities or that amount of cash, property, or assets of the surviving, resulting or consolidated company which were distributed or distributable to the stockholders of the Company in respect to each share of Common Stock held by them, such outstanding Incentives to be thereafter exercisable for such stock, securities, cash, or property in accordance with their terms.

 

12.4         Cancellation of Incentives. Notwithstanding the provisions of Sections 12.2 and 12.3 hereof,  and except as may be required to comply with Section 409A of the Code and the regulations or other guidance issued thereunder, all Incentives granted hereunder may be canceled by the Company, in its sole discretion, as of the effective date of any Change in Control, merger, consolidation or share exchange, or of any proposed sale of all or substantially all of the assets of the Company, or of any dissolution or liquidation of the Company, by either:

 

(a)            giving notice to each holder thereof or his personal representative of its intention to cancel those Incentives for which the issuance of shares of Common Stock involved payment by the Participant for such shares, and permitting the purchase during the thirty (30) day period next preceding such effective date of any or all of the shares of Common Stock subject to such outstanding Incentives, including in the Board’s discretion some or all of the shares as to which such Incentives would not otherwise be vested and exercisable; or

 

(b)            in the case of Incentives that are either (i) settled only in shares of Common Stock, or (ii) at the election of the Participant, settled in shares of Common Stock, paying the holder thereof an amount equal to a reasonable estimate of the difference between the net amount per share payable in such transaction or as a result of such transaction, and the price per share of such Incentive to be paid by the Participant (hereinafter the “ Spread ”), multiplied by the number of shares subject to the Incentive. In cases where the shares constitute, or would after exercise, constitute Restricted Stock, the Company, in its discretion may include some or all of those shares in the calculation of the amount payable hereunder. In estimating the Spread, appropriate adjustments to give effect to the existence of the Incentives shall be made, such as deeming the Incentives to have been exercised, with the Company receiving the exercise price payable thereunder, and treating the shares receivable upon exercise of the Incentives as being outstanding in determining the net amount per share. In cases where the proposed transaction 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 of Common Stock 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 such liquidation could be completed.

 

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(c)            An Award that by its terms would be fully vested or exercisable upon a Change in Control will be considered vested or exercisable for purposes of Section 12.4(a)  hereof.

 

ARTICLE 13

LIQUIDATION OR DISSOLUTION

 

Subject to Section 12.4 hereof, in case the Company shall, at any time while any Incentive under this Plan shall be in force and remain unexpired, (i) sell all or substantially all of its property, or (ii) dissolve, liquidate, or wind up its affairs, then each Participant shall be entitled to receive, in lieu of each share of Common Stock of the Company which such Participant would have been entitled to receive under the Incentive, the same kind and amount of any securities or assets as may be issuable, distributable, or payable upon any such sale, dissolution, liquidation, or winding up with respect to each share of Common Stock of the Company. If the Company shall, at any time prior to the expiration of any Incentive, make any partial distribution of its assets, in the nature of a partial liquidation, whether payable in cash or in kind (but excluding the distribution of a cash dividend payable out of earned surplus and designated as such) and an adjustment is determined by the Committee to be appropriate to prevent the dilution of the benefits or potential benefits intended to be made available under the Plan, then the Committee shall, in such manner as it may deem equitable, make such adjustment in accordance with the provisions of Article 11 hereof.

 

ARTICLE 14

INCENTIVES IN SUBSTITUTION FOR

INCENTIVES GRANTED BY OTHER ENTITIES

 

Incentives may be granted under the Plan from time to time in substitution for similar instruments held by employees, consultants or directors of a corporation, partnership, or limited liability company who become or are about to become Employees, Consultants or Outside Directors of the Company or any Subsidiary as a result of a merger or consolidation of the employing corporation with the Company, the acquisition by the Company of equity of the employing entity, or any other similar transaction pursuant to which the Company becomes the successor employer. The terms and conditions of the substitute Incentives so granted may vary from the terms and conditions set forth in this Plan to such extent as the Committee at the time of grant may deem appropriate to conform, in whole or in part, to the provisions of the Incentives in substitution for which they are granted.

 

ARTICLE 15

MISCELLANEOUS PROVISIONS

 

15.1         Investment Intent. The Company may require that there be presented to and filed with it by any Participant under the Plan, such evidence as it may deem necessary to establish that the Incentives granted or the shares of Common Stock to be purchased or transferred are being acquired for investment and not with a view to their distribution.

 

15.2         No Right to Continued Employment. Neither the Plan nor any Incentive granted under the Plan shall confer upon any Participant any right with respect to continuance of employment by the Company or any Subsidiary.

 

15.3         Indemnification of Board and Committee. No member of the Board or the Committee, nor any officer or Employee of the Company acting on behalf of the Board or the Committee, shall be personally

 

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liable for any action, determination, or interpretation taken or made in good faith with respect to the Plan, and all members of the Board and the Committee, each officer of the Company, and each Employee of the Company acting on behalf of the Board or the Committee shall, to the extent permitted by law, be fully indemnified and protected by the Company in respect of any such action, determination, or interpretation.

 

15.4         Effect of the Plan. Neither the adoption of this Plan nor any action of the Board or the Committee shall be deemed to give any person any right to be granted an Award or any other rights except as may be evidenced by an Award Agreement, or any amendment thereto, duly authorized by the Committee and executed on behalf of the Company, and then only to the extent and upon the terms and conditions expressly set forth therein.

 

15.5         Compliance With Other Laws and Regulations. Notwithstanding anything contained herein to the contrary, the Company shall not be required to sell or issue shares of Common Stock under any Incentive if the issuance thereof would constitute a violation by the Participant or the Company of any provisions of any law or regulation of any governmental authority or any national securities exchange or inter-dealer quotation system or other forum in which shares of Common Stock are quoted or traded (including without limitation Section 16 of the 1934 Act and Section 162(m) of the Code); and, as a condition of any sale or issuance of shares of Common Stock under an Incentive, the Committee may require such agreements or undertakings, if any, as the Committee may deem necessary or advisable to assure compliance with any such law or regulation. The Plan, the grant and exercise of Incentives hereunder, and the obligation of the Company to sell and deliver shares of Common Stock, shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any government or regulatory agency as may be required.

 

15.6         Tax Requirements. The Company or, if applicable, any Subsidiary (for purposes of this Section 15.6 , the term “ Company ” shall be deemed to include any applicable Subsidiary), shall have the right to deduct from all amounts paid in cash or other form in connection with the Plan, any Federal, state, local, or other taxes required by law to be withheld in connection with an Award granted under this Plan. 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 the Award. Such payments shall be required to be made when requested by 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 that the Participant has not acquired from the Company within six (6) months prior to the date of exercise, 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. The Committee may in the Award Agreement impose any additional tax requirements or provisions that the Committee deems necessary or desirable.

 

15.7         Assignability . Incentive Stock Options may not be transferred, assigned, pledged, hypothecated or otherwise conveyed or encumbered other than by will or the laws of descent and distribution and may be exercised during the lifetime of the Participant only by the Participant or the Participant’s legally authorized representative, and each Award Agreement in respect of an Incentive Stock Option shall so provide. The designation by a Participant of a beneficiary will not constitute a transfer of the Stock Option. The

 

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Committee may waive or modify any limitation contained in the preceding sentences of this Section 15.7 that is not required for compliance with Section 422 of the Code.

 

Except as otherwise provided herein, Nonqualified Stock Options  and SARs may not be transferred, assigned, pledged, hypothecated or otherwise conveyed or encumbered other than by will or the laws of descent and distribution. The Committee may, in its discretion, authorize all or a portion of a Nonqualified Stock Option or SAR to be  granted to a Participant on terms which permit transfer by such Participant to (i) the spouse (or former spouse), children or grandchildren of the Participant (“ Immediate Family Members ”), (ii) a trust or trusts for the exclusive benefit of such Immediate Family Members, (iii) a partnership in which the only partners are (1) such Immediate Family Members and/or (2) entities which are controlled by Immediate Family Members, (iv) an entity exempt from federal income tax pursuant to Section 501(c)(3) of the Code or any successor provision, or (v) a split interest trust or pooled income fund described in Section 2522(c)(2) of the Code or any successor provision, provided that (x) there shall be no consideration for any such transfer, (y) the Award Agreement pursuant to which such Nonqualified Stock Option or SAR is granted must be approved by the Committee and must expressly provide for transferability in a manner consistent with this Section, and (z) subsequent transfers of transferred Nonqualified Stock Options or SARs shall be prohibited except those by will or the laws of descent and distribution.

 

Following any transfer, any such Nonqualified Stock Option and SAR shall continue to be subject to the same terms and conditions as were applicable immediately prior to transfer, provided that for purposes of Articles 8, 9, 11, 13 and 15 hereof the term “Participant” shall be deemed to include the transferee. The events of Termination of Service shall continue to be applied with respect to the original Participant, following which the Nonqualified Stock Options and SARs shall be exercisable  by the transferee only to the extent and for the periods specified in the Award Agreement. The Committee and the Company shall have no obligation to inform any transferee of a Nonqualified Stock Option or SAR of any expiration, termination, lapse or acceleration of such Stock Option or SAR. The Company shall have no obligation to register with any federal or state securities commission or agency any Common Stock issuable or issued under a Nonqualified Stock Option or SAR that has been transferred by a Participant under this Section 15.7 .

 

15.8         Use of Proceeds. Proceeds from the sale of shares of Common Stock pursuant to Incentives granted under this Plan shall constitute general funds of the Company.

 

15.9         Legend. Each certificate representing shares of Restricted Stock issued to a Participant shall bear the following legend, or a similar legend deemed by the Company to constitute an appropriate notice of the provisions hereof (any such certificate not having such legend shall be surrendered upon demand by the Company and so endorsed):

 

On the face of the certificate:

 

“Transfer of this stock is restricted in accordance with conditions printed on the reverse of this certificate.”

 

On the reverse:

 

“The shares of stock evidenced by this certificate are subject to and transferable only in accordance with that certain EXCO Resources, Inc. Amended and Restated 2005 Long-Term Incentive Plan, a copy of which is on file at the principal office of the Company in Dallas, Texas. No transfer or pledge of the shares evidenced hereby may be made except in accordance with and subject to the provisions of said

 

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Plan. By acceptance of this certificate, any holder, transferee or pledgee hereof agrees to be bound by all of the provisions of said Plan.”

 

The following legend shall be inserted on a certificate evidencing Common Stock issued under the Plan if the shares were not issued in a transaction registered under the applicable federal and state securities laws:

 

“Shares of stock represented by this certificate have been acquired by the holder for investment and not for resale, transfer or distribution, have been issued pursuant to exemptions from the registration requirements of applicable state and federal securities laws, and may not be offered for sale, sold or transferred other than pursuant to effective registration under such laws, or in transactions otherwise in compliance with such laws, and upon evidence satisfactory to the Company of compliance with such laws, as to which the Company may rely upon an opinion of counsel satisfactory to the Company.”

 

A copy of this Plan shall be kept on file in the office of the Company at 12377 Merit Drive, Suite 1700, Dallas, Texas, United States, or any successor location of the Company’s principal executive offices.

 

***************

 

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IN WITNESS WHEREOF, the Company has caused this instrument to be executed as of November 14, 2007, by its Chairman, Chief Executive Officer and Vice Chairman, President and Secretary pursuant to prior action taken by the Board.

 

 

 

 

EXCO RESOURCES, INC.

 

 

 

 

 

 

 

 

By:

/s/ Douglas H. Miller

 

 

Name: Douglas H. Miller

 

 

Title:   Chairman and Chief Executive Officer

 

 

 

Attest:

 

 

 

 

 

 

 

 

/s/ William L. Boeing

 

 

William L. Boeing

 

 

Vice President, General Counsel and Secretary

 

 

 

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Exhibit 10.2

 

AMENDED AND RESTATED

2007 DIRECTOR PLAN OF

EXCO RESOURCES, INC.

(Adopted November 8, 2006)

(Amended and Restated Effective November 14, 2007)

 

1.             Purpose . The purpose of this Amended and Restated 2008 Director Plan of EXCO Resources, Inc. (the “Director Plan”) is (i) to attract to and retain at EXCO Resources, Inc., a Texas corporation (the “Company”), qualified and competent directors, upon whose efforts and judgment the success of the Company is largely dependent, and (ii) to stimulate the active interest of these persons in the development and financial success of the Company by providing for stock ownership in the Company by such persons.

 

2.              Definitions . Except as otherwise stated, all capitalized terms herein shall have the meanings assigned to such terms in the EXCO Resources, Inc. 2005 Long-Term Incentive Plan, as amended (the “Incentive Plan”). In addition, the following terms shall have the meanings indicated:

 

(a)            “Change in Control” shall mean:

 

(A)                               Any “Person” (as defined in paragraph (E) below), other than (1) the Company or any of its subsidiaries, (2) a trustee or other fiduciary holding stock under an employee benefit plan of the Company or any of its Affiliates, (3) an underwriter temporarily holding stock pursuant to an offering of such stock, or (4) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of stock of the Company, acquires ownership of stock of the Company that, together with stock held by such Person, constitutes more than 50% of the total fair market value or total voting power of the Company’s stock. However, if any Person is considered to own more than 50% of the total fair market value or total voting power of the Company’s stock, the acquisition of additional stock by the same Person is not considered to be a Change of Control;

 

(B)                                 A majority of members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the Board before the date of the appointment or election; provided, however, that any such director shall not be considered to be endorsed by the Board if his or her initial assumption of office occurs as a result of an actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

 

(C)                                 There is consummated a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, except if:

 

(1)                                   the merger or consolidation would result in the voting stock of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting stock of the surviving entity or any parent thereof) more than 70% of the total voting power of the stock of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation; or

 

(2)                                   the merger or consolidation is effected to implement a recapitalization of the

 

1



 

Company (or similar transaction) in which no Person acquires ownership during the 12-month period ending on the date of the most recent acquisition by such Person, of stock of the Company (not including in the stock beneficially owned by such Person any stock acquired directly from the Company or its Affiliates other than in connection with the acquisition by the Company or its Affiliates of a business) representing 30% or more of the total voting power of the Company’s then outstanding stock; or

 

(D)  For purposes of this Section 2(a):

 

(1)                                   “Person” shall have the meaning given in Section 7701(a)(1) of the Internal Revenue Code of 1986, as amended (the “Code”). Person shall include more than one Person acting as a group as defined by the Final Treasury Regulations issued under Section 409A of the Code.

 

(2)                                   “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Securities Exchange Act of 1934, as amended.

 

(b)                                  “Committee” shall have the meaning set forth in Section 8(a) .

 

(c)                                   “Director” shall mean a member of the Company’s Board of Directors.

 

(d)                                  “Director Fees” shall mean all fees payable to Directors (including their annual retainer for Board services and all fees paid for service on Board committees), as set from time to time by the Board, payable in four (4) equal quarterly amounts (each of such four (4) amounts being the “Quarterly Director Fees”) to each Director on the first business day following the end of each fiscal quarter beginning with the fiscal quarter ended December 31, 2006 (collectively, such payment dates being the “Quarterly Payment Dates”), which may be paid in cash or in Shares. For clarification purposes, “Director Fees” shall relate solely to the fees or other compensation that are paid to a Director for his or her services as a Director.

 

(e)                                   “Effective Date” shall have the meaning set forth in Section 4(b) .

 

(f)                                     “Employee Director” shall mean a Director who is an employee of the Company or any of its subsidiaries or affiliates.

 

(g)                                  “Nonemployee Director” shall mean a Director who is not an employee of the Company or any of its subsidiaries or affiliates.

 

(h)                                  “Option” (when capitalized) shall mean any stock option described in Section 5 of this Director Plan.

 

(i)                                      “Payment Election” shall have the meaning set forth in Section 4(a) .

 

(j)                                      “Quarterly Payment Dates” shall have the meaning set forth in Section 2(d) .

 

(k)                                   “Separation from Service” shall mean a termination of services provided by a Director as a director of the Board or of the board of directors of any other member of the controlled group

 

2



 

of corporations (as defined in Section 414(b) of the Code) which includes the Company, (hereinafter for purposes of this Section 2(k) the Company and such other controlled group members being referred to as “ERISA Affiliates”) whether voluntarily or involuntarily, as determined by the Committee in accordance with Treas. Reg. §1.409A-1(h). In determining whether a Director has experienced a Separation from Service as a director of the Board or of a board of directors of an ERISA Affiliate, the following provisions shall apply:

 

(A)                               If a Director is an Employee Director at the time of his Separation from Service as a Director, the services such Director provides as an employee shall not be taken into account in determining whether the Director has a Separation from Service as a Director for purposes of this Plan (provided that this Plan is not, at the time of such determination, aggregated under Treas. Reg. § 1.409A-1(c)(2)(ii) with any plan in which the Director participates in as an employee, in which case he or she shall not be treated as incurring a Separation from Service for purposes of this Plan until he or she has separated from service both as a Director and as an employee).

 

(B)                                 If a Nonemployee Director is also providing additional services to the Company as an independent contractor, he or she shall not be treated as incurring a Separation from Service for purposes of this Plan until he or she has separated from service both as a Director and as an independent contractor.

 

(C)                                 A Director shall be considered to have experienced a Separation from Service when the facts and circumstances indicate that the Director and the Company and each ERISA Affiliate reasonably anticipate that  the Director will perform no further services for the Company or any ERISA Affiliate as a director of the Board (or the board of directors of any ERISA Affiliate), and the Director’s term as a member of the Board has expired.

 

(l)                                      “Share(s)” shall mean a share or shares of the Common Stock.

 

3.              Incentive Plan .

 

(a)            Shares . To the extent a Director elects that his or her Director Fees be paid as Shares in accordance with Section 4 , (i) such Shares shall be issued as Other Awards pursuant to the Incentive Plan and shall be subject to all of the terms and provisions thereof, and (ii) the number of Shares that shall be granted as Other Awards shall be based on fair market value of the Shares determined as of the date on which Director Fees would normally be paid to the Director. With respect to this Shares component of the Director Fees, if there is a conflict between the terms of this Director Plan and the Incentive Plan, the terms of the Incentive Plan shall be given effect and the conflicting provisions hereof shall be disregarded.

 

(b)            Options . Options described in Section 5 of this Director Plan shall be issued as Nonqualified Stock Options pursuant to the Incentive Plan and shall be subject to all of the terms and provisions thereof. With respect to such Options, if there is a conflict between the terms of this Director Plan and the Incentive Plan, the terms of the Incentive Plan shall be given effect and the conflicting provisions hereof shall be disregarded. If any Option granted hereunder shall terminate, expire, or be canceled or surrendered as to any Shares, such Shares shall thereafter be available for Awards under Article V of the Incentive Plan.

 

4.              Director Fees . Each Director may make an election (a “Payment Election”) in accordance with this Section 4 to receive all or a specified portion his or her Director Fees in Shares, and/or to defer his or her

 

3



 

receipt of such Director Fees. A Payment Election shall be made in a manner satisfactory to the Committee. Generally, a Payment Election shall be made by completing and filing the specified election form with the Secretary or his or her designee within the period described in Section 4(a) . All elections made in an election form are irrevocable, provided that any such election made for any year may be revoked by a Director with respect to such year by providing written notice of such revocation to the Fund prior to such year.

 

(a)            Timing of Election . Each Director who is serving on the Board as of                  , 2007 (the “Effective Date”) may make a Payment Election at any time on or prior to the Effective Date or within 15 days after the Effective Date, unless an election made during such period would result in the current taxation of such person pursuant to Section 409A of the Code or any guidance issued thereunder. If a person becomes a Director after the Effective Date, such Director may make a Payment Election (i) no earlier than the date that is 15 days prior to the date on which such person first becomes a Director, and (ii) no later than the close of the day on which such person first becomes a Director, unless an election made during such period would result in the current taxation of such person pursuant to Section 409A of the Code or any guidance issued thereunder. A Director who does not make a Payment Election when first eligible may make a Payment Election before any subsequent calendar year in accordance with administrative procedures established with respect to the Director Plan.

 

(b)            Effect and Duration of Election . A Payment Election shall apply to Director Fees payable after the date such election is made and shall be deemed to be continuing and applicable to all Director Fees payable in subsequent calendar years, unless the Director revokes or modifies such election by filing a new election form before the first day of any subsequent calendar year in accordance with administrative procedures established with respect to the Director Plan, effective for all Director Fees payable on and after the first day of such calendar year.

 

(c)            Timing of Payment . Each Payment Election filed under this Section 4 shall specify the time(s) when a Director shall receive his or her Directors Fees. Pursuant to such Payment Election, the Director may elect to receive his or her Director Fees: (i) on the Quarterly Payment Dates on which such Director Fees are normally paid to a Director; (ii) on or as soon as administratively feasible after the date on which the Director incurs a Separation from Service; (iii) on or as soon as administratively feasible after the date specified by the Director; (iv) upon a Change in Control; or (v) upon the earliest to occur of two or more of the events described in  “(ii),” “(iii),” and/or “(iv)” above. With respect to receiving, or beginning to receive, a distribution in accordance with “(ii),” “(iii),” “(iv),” or “(v)” above, a Director must elect to receive such distribution in the applicable election form and in accordance with Section 4 . If a Director dies before his or her Director Fees have been distributed pursuant to this Director Plan, such Director Fees shall be paid as soon as administratively feasible after the Director’s death, to the Director’s beneficiary in accordance with Section 7 . Notwithstanding the foregoing, if a Director has elected to defer payment or the commencement of payment of his or her Director Fees, as applicable, to a specified date in accordance with clause (iii) or clause (v) above, and the Director wishes to change such date to a later date, the Director may elect to change such date by delivering an additional election form to the Secretary or his or her designee (“ Second Timing Election ”). Such a Second Timing Election must be made at least twelve (12) months prior to the original payment date or payment commencement date, as applicable, and must defer payment or the commencement of payments of Director Fees, as applicable, for an additional period of not less than five (5) years after the applicable original payment date or payment commencement date.

 

(d)            Form of Payment. Each Payment Election filed under this Section 4 shall specify the form(s) in which a Director shall receive his or her Directors Fees. Pursuant to such Payment Election, the Director may elect to receive his or her Director Fees:  (i) in cash; (ii) Shares with a fair market value equal to his or her

 

4



 

Director Fees; or (iii) fifty percent (50%) of his or her Director Fees in cash, and Shares with a fair market value equal to fifty percent (50%) of his or her Quarterly Director Fees. If a Director has elected to defer the payment of his or her Director Fees, a Payment Election filed under this Section 4 shall specify whether the payment of his or her Director Fees is to be settled by delivering cash and/or Shares to the Director in either (i) a lump sum, or (ii) substantially equal annual installments over a period not to exceed five (5) years. Any fractional Shares credited to a Director at the time of a distribution shall be paid in cash at the time of such distribution. Notwithstanding the foregoing, if a Director has elected to defer the payment of his or her Director Fees and he or she wishes to change the manner in which such Director Fees are distributed, the Director may elect to change such manner of distribution by delivering an additional election form to the Secretary or his or her designee (“ Second Option Election ”). Such a Second Option Election must be made at least 12 months prior to the original payment date or payment commencement date, as applicable, and must defer payment or the commencement of payments, as applicable, for an additional period of not less than 5 years after the applicable original payment date or payment commencement date.

 

(e)            Crediting of Dividend Equivalents . With respect to deferred Director Fees that are payable to a Director in Shares, upon the Company’s payment of a cash dividend to its shareholders, the number of whole and fractional Shares otherwise payable to such Director shall be increased by the Fair Market Value equivalent of the cash dividends that otherwise would have been paid on the number of such Shares as of the close of business on the record date for such dividend.

 

5.              Automatic Grant of Options .

 

(a)            An Option to purchase 50,000 Shares shall automatically be granted to each new Director (but not current Directors serving as of the date of adoption of this Director Plan) on a nondiscriminatory basis on the date such Director is initially elected or appointed a Director of the Company.

 

(b)            Options automatically granted to  Directors pursuant to this Section 5 shall be in addition to the Director Fees or any other benefits with respect to the Director’s position with the Company or its Subsidiaries.

 

(c)            An Option shall vest in four (4) equal amounts of 12,500 Shares per year over four (4) years with the first 12,500 shares vesting upon grant. The foregoing notwithstanding, no Shares subject to a Director’s Option shall vest in any fiscal year in which the Director attends less than seventy-five percent (75%) of the Board meetings held for that fiscal year; failure to attend the requisite number of meetings during a given fiscal year shall result in a forfeiture of the 12,500 Shares subject to the Option that were eligible to vest in that year. In the event a Director ceases to serve as such for any reason, the unvested Shares subject to the Option shall be forfeited, and the Option shall only be exercisable for the number of Shares that vested prior to the Director ceasing to serve as a Director. If a Director dies before exercising his or her Option pursuant to this Director Plan, such Option shall be transferred as administratively feasible after the Director’s death, to the Director’s beneficiary in accordance with Section 7 .

 

(d)            Except for the automatic grants of Options under subparagraph (a) of this Section 5 and the issuance of Shares to Directors under Section 4 above, no Options or Shares shall otherwise be granted hereunder, and the Board shall not have any discretion with respect to the grant of Options or issuance of Shares within the meaning of Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the “1934 Act”), or any successor rule.

 

5



 

6.              Unfunded Status .

 

(a)            General . The interest of each Director in any Director Fees deferred under the Plan shall be that of a general creditor of the Company. Deferred Director Fees that are payable in cash and or Shares, shall at all times be maintained by the Company as bookkeeping entries evidencing unfunded and unsecured general obligations of the Company. Except as provided in Section 6(b) , no money or other assets shall be set aside for any Director.

 

(b)            Trust . To the extent determined by the Company’s Board of Directors, the Company may transfer funds necessary to fund all or part of the payments under the Director Plan to a domestic trust; however, the assets held in any such trust shall remain at all times subject to the claims of the general creditors of the Company. No Director or beneficiary shall have any interest in the assets held in any such trust or in the general assets of the Company other than as a general, unsecured creditor. Accordingly, the Company shall not grant a security interest in the assets held by any such trust in favor of any Director, beneficiary or creditor.

 

7.              Designation of Beneficiary . Each Director may designate, on a form provided by the Committee, one or more beneficiaries to receive payment of the Director’s deferred Director Fees and Options, if applicable, in the event of such Director’s death. The Company may rely upon the beneficiary designation list filed with the Committee, provided that such form was executed by the Director or his or her legal representative and filed with the Committee prior to the Director’s death. If a Director has not designated a beneficiary, or if the designated beneficiary is not surviving when a payment is to be made to such person under the Plan, the beneficiary with respect to such payment shall be the Director’s estate.

 

8.              Administration .

 

(a)            General Administration; Establishment of Committee . Subject to the terms of this Section 8 , the Director Plan shall be administered by the Board or such committee of the Board as is designated by the Board to administer this Director Plan (the “Committee”). The Committee shall consist of not fewer than two persons. Any member of the Committee may be removed at any time, with or without cause, by resolution of the Board. Any vacancy occurring in the membership of the Committee may be filled by appointment by the Board. At any time there is no Committee to administer this Director Plan, any references in this Director Plan to the Committee shall be deemed to refer to the Board.

 

Membership on the Committee shall be limited to those members of the Board who are “outside directors” under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) and “non-employee directors” as defined in Rule 16b-3 promulgated under the 1934 Act only in the event the Common Stock should ever be registered under the 1934 Act. The Committee shall select one of its members to act as its Chairman. A majority of the Committee shall constitute a quorum, and the act of a majority of the members of the Committee present at a meeting at which a quorum is present shall be the act of the Committee.

 

(b)            Authority of the Committee . The Committee, in its discretion, shall (i) interpret this Director Plan, (ii) prescribe, amend, and rescind any rules and regulations necessary or appropriate for the administration of this Director Plan, and (iii) make such other determinations or certifications and take such other action as it deems necessary or advisable in the administration of this Director Plan. Any interpretation, determination, or other action made or taken by the Committee shall be final, binding, and conclusive on all interested parties. The Committee’s discretion set forth herein shall not be limited by any provision of this Director Plan, including any provision which by its terms is applicable notwithstanding any other provision of this Director Plan to the contrary.

 

6



 

The Committee may delegate to officers of the Company, pursuant to a written delegation, the authority to perform specified functions under this Director Plan. Any actions taken by any officers of the Company pursuant to such written delegation of authority shall be deemed to have been taken by the Committee.

 

9.                                        Duration, Amendment and Termination .

 

(a)            Duration . This Director Plan shall continue in effect until terminated in accordance with Section 9(b)  or until such time as the Incentive Plan is terminated.

 

(b)            Amendment and Termination . The Director Plan may be terminated or amended in any respect by resolution adopted by two-thirds of the Board. Notwithstanding anything contained in this Director Plan to the contrary, unless required by law, no action contemplated or permitted by this Section 9(b)  shall adversely affect any rights of Directors or obligations of the Company to Directors with respect to any Options, Shares or other compensation theretofore granted under this Director Plan without the consent of the affected Director.

 

(c)            Form of Amendment . The form of any amendment or termination of the Director Plan shall be a written instrument signed by a duly authorized officer or officers of the Company, certifying that the amendment or termination has been approved by at least two-thirds of the Board.

 

10.            Successors . Except as otherwise provided in the Incentive Plan with respect to Options and Shares, the terms and provisions of this Director Plan shall not be binding on any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company.

 

11.            Adjustment Provisions . In the event of a reorganization, recapitalization, stock split, stock dividend, spin-off, combination, corporate exchange, merger, consolidation or other change in the Common Stock or any distribution to shareholders of Common Stock other than cash dividends or any similar transaction that affects the fair value of an award of Options or Shares, then the Committee shall adjust the type and number of Shares awarded to a Director (either as part of an Option or in lieu of cash Director Fees) so that the fair value of such award immediately after the transaction or event is equal to the fair value of the award immediately prior to the transaction or event. Such adjustment shall be made in accordance with the rules of any securities exchange, stock market, or stock quotation system to which the Company is subject. Notwithstanding the foregoing, no such adjustment shall be made or authorized to the extent that such adjustment would cause the Director Plan or any deferred Director Fees thereunder to violate Section 409A of the Code.

 

12.            Miscellaneous Provisions .

 

(a)            No Right to Continued Employment . Neither this Director Plan, the Incentive Plan, nor any Options, Shares or other compensation granted thereunder shall confer upon any Director the right to continue to serve as a Director.

 

(b)            Indemnification of Board and Committee . No member of the Board or the Committee, nor any officer or employee of the Company acting on behalf of the Board or the Committee, shall be personally liable for any action, determination, or interpretation taken or made in good faith with respect to this Director Plan, and all members of the Board and the Committee, each officer of the Company, and each employee of the

 

7



 

Company acting on behalf of the Board or the Committee shall, to the extent permitted by law, be fully indemnified and protected by the Company in respect of any such action, determination, or interpretation.

 

(c)            Effect of the Plan . Neither the adoption of this Director Plan nor any action of the Board or the Committee shall be deemed to give any person any right to be granted Options, Shares or other compensation or any other rights except as may be evidenced by this Director Plan, or any amendment thereto, duly authorized by the Committee and executed on behalf of the Company, and then only to the extent and upon the terms and conditions expressly set forth therein.

 

(d)            Compliance With Other Laws and Regulations . Notwithstanding anything contained herein to the contrary, the Company shall not be required to sell or issue Shares under any Options, Shares or other compensation if the issuance thereof would constitute a violation by the Director or the Company of any provisions of any law or regulation of any governmental authority or any national securities exchange or inter-dealer quotation system or other forum in which Shares are quoted or traded (including without limitation Section 16 of the 1934 Act in the event the Shares should ever be registered under the 1934 Act and Section 162(m) of the Code); and, as a condition of any sale or issuance of Shares hereunder, the Committee may require such agreements or undertakings, if any, as the Committee may deem necessary or advisable to assure compliance with any such law or regulation. The Director Plan, the Options, Shares or other compensation provided hereunder, and the obligation of the Company to sell and deliver Shares, shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any government or regulatory agency as may be required.

 

(e)            Governing Law . The validity, interpretation, construction and performance of this Director Plan shall in all respects be governed by the laws of the State of Texas.

 

(f)             Tax Requirements; Employee Directors . The Company shall have the right to deduct from all amounts paid in cash or other form in connection with this Director Plan, any Federal, state, local, or other taxes required by law to be withheld in connection with the Options, Shares or other compensation provided hereunder. The Company may, in its sole discretion, also require an Employee Director receiving Shares issued hereunder to pay the Company the amount of any taxes that the Company is required to withhold in connection with the Employee Director’s income arising with respect to such Shares. Such payments shall be required to be made when requested by Company and may be required to be made prior to the delivery of any certificate representing Shares. 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 Employee Director to the Company of Shares that the Employee Director has not acquired from the Company within six (6) months prior to the date of payment, 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 an 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 Employee Director.

 

(g)            Section 409A of the Code; Delay of Payments . The terms of this Director Plan have been designed to comply with the requirements of Section 409A of the Code, where applicable, and shall be interpreted and administered in a manner consistent with such intent. Any Options, Shares or other

 

8



 

compensation which constitutes deferred compensation under Section 409A of the Code shall not have the time or schedule of any payment thereunder accelerated, except as permitted under the guidance issued under Section 409A of the Code. Notwithstanding anything to the contrary in this Plan, (i) if upon a Director’s Separation from Service, the Director is a “specified employee” within the meaning of Section 409A of the Code, and the deferral of any amounts otherwise payable under this Director Plan as a result of the Director’s Separation from Service is necessary in order to prevent any accelerated or additional tax to the Director under Section 409A of the Code, then the Company will delay the payment of any such amounts hereunder until the earliest of (x) the date that is six (6) months following the date of the Director’s Separation from Service, (y) the date the Director becomes “disabled” (as defined in Section 409A of the Code); and (z) the date of the Director’s death following such Separation from Service; and (ii) if any other payments of money or other benefits due to the Director hereunder could cause the application of an accelerated or additional tax under Section 409A of the Code, such payments or other benefits shall be delayed if such delay will make such payment or other benefits compliant under Section 409A of the Code. Upon the expiration of the applicable deferral period, any delayed amounts will be paid to the Director in a single lump sum, with interest from the date otherwise payable, at the prime rate as published in The Wall Street Journal on the Director’s Separation from Service.

 

(h)            Assignability . Except as otherwise provided herein and in the Incentive Plan, no Options or rights to receive Shares or other compensation provided hereunder may be transferred, assigned, pledged, hypothecated or otherwise conveyed or encumbered other than by will or the laws of descent and distribution.

 

A copy of this Plan shall be kept on file in the office of the Company at 12377 Merit Drive, Suite 1700, Dallas, Texas, United States, or any successor location of the Company’s principal executive offices.

 

***************

 

9



 

IN WITNESS WHEREOF, the Company has caused this instrument to be executed as of November 14, 2007, by its Chairman and Chief Executive Officer and Secretary pursuant to prior action taken by the Board.

 

 

EXCO RESOURCES, INC.

 

 

 

 

 

By:

/s/ Douglas H. Miller

 

 

Name:  Douglas H. Miller

 

Title:   Chairman and Chief Executive Officer

 

 

Attest:

 

 

 

 

 

/s/ William L. Boeing

 

 

William L. Boeing

 

Vice President, General Counsel and Secretary

 

 

10


Exhibit 10.3

 

THIRD AMENDED AND RESTATED

 

EXCO RESOURCES, INC.

 

SEVERANCE PLAN

 

(EFFECTIVE AS OF NOVEMBER 14, 2007)

 



 

TABLE OF CONTENTS

 

Section

 

Page

 

 

 

ONE PURPOSE OF PLAN

 

1

TWO PRIOR SEVERANCE ARRANGEMENTS

 

1

THREE DEFINITIONS

 

1

FOUR ELIGIBILITY AND SEVERANCE PAY BENEFITS

 

5

4.1

Eligibility

 

5

4.2

Release Form

 

5

4.3

Termination of Eligibility for Severance Pay

 

5

4.4

Severance Pay

 

6

FIVE FUNDING

 

6

SIX CLAIMS PROCEDURE

 

6

6.1

Filing and Initial Determination of Claim

 

6

6.2

Duty of Plan Administrator Upon Denial of Claim

 

7

6.3

Request for Review of Claim Denial

 

7

6.4

Decision on Review of Denial

 

7

SEVEN ADMINISTRATION OF THE PLAN

 

8

7.1

Plan Administrator

 

8

7.2

Responsibilities

 

8

7.3

Allocation and Delegation of Plan Administrator Responsibilities

 

8

7.4

Actions of Fiduciaries

 

8

7.5

General Administrative Powers

 

8

7.6

Appointment of Professional Assistance

 

9

7.7

Discretionary Acts

 

9

7.8

Responsibility of Fiduciaries

 

9

7.9

Indemnity by Employer

 

9

EIGHT ADOPTION OF PLAN BY SUBSIDIARY

 

10

NINE AMENDMENT OF THE PLAN

 

10

TEN TERMINATION OF THE PLAN

 

10

ELEVEN VESTING

 

10

TWELVE STATUS OF EMPLOYMENT RELATIONS

 

11

THIRTEEN RESTRICTIONS ON ASSIGNMENT

 

11

FOURTEEN APPLICABLE LAW

 

11

FIFTEEN INTERPRETATION OF THE PLAN

 

11

 

i



 

THIRD AMENDED AND RESTATED

 

EXCO RESOURCES, INC.

 

SEVERANCE PLAN

 

EXCO RESOURCES, INC. (the “Company”) is amending and restating its severance plan, originally adopted on August 15, 2002, amended and restated as of August 17, 2004, further amended and restated as of November 8, 2006, and further amended and restated as of November 14, 2007 (the “Effective Date”), in accordance with the terms and conditions contained herein. The amended and restated severance plan adopted on November 8, 2006, is replaced in its entirety with this Third Amended and Restated EXCO Resources, Inc. Severance Plan (the “Plan”) and no provision of the November 8, 2006, plan shall survive.

 

SECTION ONE

 

PURPOSE OF PLAN

 

The purpose of the Plan is to provide financial support to Eligible Employees who incur a Termination of Employment due to a Change of Control.

 

SECTION TWO

 

PRIOR SEVERANCE ARRANGEMENTS

 

As of the Effective Date, the Plan replaces any and all severance pay obligations, plans, policies, practices, arrangements or programs, written or unwritten, under which the Eligible Employees may otherwise be eligible for severance benefit payments. Notwithstanding the foregoing provisions of this Section Two, nothing in this Plan shall adversely affect the rights an individual Eligible Employee may have to severance payments under any written agreement executed by and between the Employer and that Eligible Employee (a “Severance Agreement”); provided, however, that in the event any Eligible Employee that is a party to a Severance Agreement suffers a Termination of Employment and is entitled to and is receiving the severance benefits intended to be provided under his or her Severance Agreement, such Eligible Employee shall not be entitled to receive severance benefits pursuant to this Plan.

 

SECTION THREE

 

DEFINITIONS

 

As used in the Plan:

 

3.1            “Base Pay” shall mean the Eligible Employee’s gross annual salary or wages before any deductions, exclusions or any deferrals or contributions under any Company plan or program, but excluding overtime, bonuses, incentive compensation, shift and lead premium payments, employee benefits or any other form of compensation, being received by an Eligible Employee immediately prior to employment termination. The Base Pay for an Eligible Employee paid on an hourly basis shall be the

 



 

individual’s hourly pay rate in effect immediately prior to the sale multiplied by 40 hours per week and multiplied by 52 weeks.

 

3.2            “Cause” shall mean (i) the willful breach or habitual neglect of assigned duties related to the Company, including compliance with Company policies; (ii) conviction (including any plea of nolo contendere) of the Eligible Employee of any felony or crime involving dishonesty or moral turpitude; (iii) any act of personal dishonesty knowingly taken by the Eligible Employee in connection with his responsibilities as an employee and intended to result in personal enrichment of the Eligible Employee or any other person; (iv) bad faith conduct that is materially detrimental to the Company; (v) inability of the Eligible Employee to perform the Employee’s duties due to alcohol or illegal drug use; (vi) the Eligible Employee’s failure to comply with any legal written directive of the Board of Directors of the Company; (vii) any act or omission of the Eligible Employee which is of substantial detriment to the Company because of the Eligible Employee’s intentional failure to comply with any statute, rule or regulation, except any act or omission believed by the Eligible Employee in good faith to have been in or not opposed to the best interest of the Company (without intent of the Eligible Employee to gain, directly or indirectly, a profit to which the Eligible Employee was not legally entitled) and except that Cause shall not mean bad judgment or negligence other than habitual neglect of duty; or (viii) any other act or failure to act or other conduct which is determined by the Plan Administrator, in its sole discretion, to be demonstrably and materially injurious to the Employer, monetarily or otherwise.

 

3.3            “Change of Control” shall mean

 

(i)             the Company is merged or consolidated into or with another entity, and as a result of such merger or consolidation less than a majority of the combined voting power of the then-outstanding securities of such entity immediately after such transaction is held by the holders of Voting Stock of the Company immediately prior to such transaction;

 

(ii)            the Company sells or otherwise transfers all or substantially all of its assets to any person or entity, and less than a majority of the combined voting power of the then-outstanding securities of such person or entity immediately after such sale or transfer is held by the holders of Voting Stock of the Company immediately prior to such sale or transfer; or

 

(iii)           any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this clause (iii) such person shall be deemed to have “beneficial ownership” of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time, directly or indirectly, of more than 50% of the total voting power of the Voting Stock of the Company; or

 

(iv)           individuals who on the Effective Date constituted the Board of Directors of the Company (together with any new directors whose election by such Board of Directors of the Company or whose nomination for election by the shareholders of the Company was approved by a vote of 66-2/3% of the directors of the Company then still in office who were either directors on the Effective Date or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the Company then in office; or

 

(v)            the adoption of a plan relating to the liquidation or dissolution of the Company.

 

2



 

Provided, however, that in the event any subsidiary of the Company is spun off by means of a rights offering to the Company’s shareholders or an underwritten public offering, or any combination thereof, even where less than a majority of the voting equity ownership is retained by the Company, shall not in any event constitute a Change of Control.

 

3.4            “Company” shall mean EXCO Resources, Inc.

 

3.5            “Comparable Offer of Employment” shall mean:

 

(i)             that the proposed compensation and benefits, in the aggregate, to be paid by the Company or any successor to the Company by merger or acquisition of all or substantially all of the Company’s assets, offering employment are commensurate with the compensation and benefits previously paid by the Company, in the aggregate, to such Eligible Employee;

 

(ii)            the Eligible Employee incurs no demotion in his or her position with the Employer from the position the Eligible Employee held immediately prior to the effective date of the Change of Control;

 

(iii)           the Eligible Employee incurs no significant adverse change in the nature or scope of the authorities, powers, functions, responsibilities or duties attached to the position or positions with the Employer which the Eligible Employee held immediately prior to the effective date of the Change of Control, without the prior written consent of the Eligible Employee, which is not remedied within ten (10) calendar days after receipt by the Employer of written notice from the Eligible Employee of such change; and

 

(iv)           the Eligible Employee’s principal place of work has not changed to any location that is more than thirty-five (35) miles from his or her principal place of work immediately prior to the effective date of the Change of Control, without the prior written consent of the Eligible Employee.

 

3.6            “Eligible Employee” shall mean any employee employed by the Company or any subsidiary of the Company as a regular, full-time employee on the effective date of a Change of Control and who incurs a Termination of Employment due to a Change of Control either on the date of the Change of Control or within the six-month period immediately following the effective date of the Change of Control and such Termination of Employment was not for Cause.

 

3.7            “Employer” shall mean the Company and any direct or indirect United States subsidiary of the Company which adopts the Plan, and any successor to either the Company or any direct or indirect United States subsidiary of the Company which adopted this Plan.

 

3.8            “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time. References to any Section of ERISA shall include any successor provision thereto.

 

3.9            “Exchange Act” shall mean the Federal Securities Exchange Act of 1934, as amended from time to time.

 

3.10          “Good Reason” shall mean any of the following events that occur either on the effective date of a Change of Control or within the six-month period immediately following the effective date of a Change of Control:

 

3



 

(i)             the Eligible Employee, without his or her consent, incurs a demotion in his or her position with the Employer from the position the Eligible Employee held immediately prior to the effective date of the Change of Control and such demotion constitutes (x) a material diminution in the Eligible Employee’s authority, duties, or responsibilities; (y) a material diminution in the budget over which the Eligible Employee retains authority; or (z) a material diminution in the authority, duties, or responsibilities of the supervisor to whom the Eligible Employee is required to report;

 

(ii)            the Eligible Employee, without his or her consent, incurs a material reduction in his or her Base Pay from his or her Base Pay immediately prior to the effective date of a Change of Control;

 

(iii)           the Eligible Employee incurs a significant adverse change in the nature or scope of the authorities, powers, functions, responsibilities or duties attached to the position or positions with the Employer which the Eligible Employee held immediately prior to the effective date of the Change of Control, without the prior written consent of the Eligible Employee,. and such change constitutes (x) a material diminution in the Eligible Employee’s authority, duties, or responsibilities; (y)  a material diminution in the budget over which the Eligible Employee retains authority; or (z) a material diminution in the authority, duties, or responsibilities of the supervisor to whom the Eligible Employee is required to report; or

 

(iv)           the Eligible Employee’s principal place of work changed to any location that is more than thirty-five (35) miles from his or her principal place of work immediately prior to the effective date of the Change of Control, without the prior written consent of the Eligible Employee.

 

Notwithstanding anything to the contrary contained herein, a termination of employment for “Good Reason” shall occur only if the Eligible Employee provides written notice to the Company of the occurrence of the event described in this Section 3.10 that constitutes “Good Reason” within 30 days of the event’s initial existence, the Company fails to remedy the event within 30 days of its receipt of such notice and the Eligible Employee terminates his or her employment no later than 30 days following the end of such cure period.

 

3.11          “Internal Revenue Code” shall mean the Internal Revenue Code of 1986, as amended from time to time. References to any Section of the Internal Revenue Code shall include any successor provision thereto.

 

3.12          “Plan” shall mean the Third Amended and Restated EXCO Resources, Inc. Severance Plan as set forth in this document, and as hereafter amended.

 

3.13          “Plan Administrator” shall mean the person, persons or entity administering the Plan in accordance with the provisions of Section Seven hereof. The Plan Administrator shall be the “named fiduciary,” as referred to in Section 402(a) of ERISA, with respect to the management, operation and administration of the Plan.

 

3.14          “Plan Year” shall mean an initial period starting on November 8, 2006 and ending on December 31, 2006, and thereafter the twelve (12)-month period ending on each December 31.

 

4



 

3.15          “Release Form” shall mean a release agreement which is to be signed by the Eligible Employee releasing any and all claims against the Employer and which is in such form as approved by the Company.

 

3.16          “Severance Pay” shall mean an amount equal to an Eligible Employee’s Base Pay.

 

3.17          “Termination of Employment” shall mean a termination of employment from the Employer which results from an affirmative discharge from employment by the Employer, other than discharge for Cause. An Eligible Employee who voluntarily terminates employment for Good Reason shall be deemed to have incurred a Termination of Employment. An Eligible Employee shall not be deemed to have incurred a Termination of Employment by reason of the transfer of the Eligible Employee’s employment between the Company and any subsidiary or among subsidiaries (or among any department or business unit of the Company). The Plan Administrator shall determine, in its sole discretion, whether an Eligible Employee’s termination of employment from the Employer constitutes a “Termination of Employment.”

 

3.18          “Voting Stock” shall mean shares of the Company’s Common Stock, par value $0.001 per share, and any other securities of the Company entitled to vote for the election of directors.

 

3.19          Wherever appropriate, words used in the Plan in the singular may mean the plural, the plural may mean the singular, and the masculine may mean the feminine.

 

SECTION FOUR

 

ELIGIBILITY AND SEVERANCE PAY BENEFITS

 

4.1            Eligibility . Subject to Sections 4.3 and 4.4 of this Plan, any Eligible Employee is eligible for Severance Pay following his or her Termination of Employment if such Termination of Employment occurs either on the effective date of a Change of Control or within the six-month period immediately following the effective date of a Change of Control, provided that such Eligible Employee executes a Release Form pursuant to Section 4.2 of this Plan.

 

4.2            Release Form . An Eligible Employee otherwise eligible for Severance Pay under this Plan shall be paid such Severance Pay only if the Eligible Employee executes and files the appropriate fully completed and executed Release Form (substantially in the form of Exhibit A-1 or Exhibit A-2, as the case may be, attached hereto) with the Plan Administrator, in accordance with the instructions and on or before the date specified on the Release Form or any document accompanying the Release Form, and in the case of an Eligible Employee age 40 or over, does not revoke the Release Form within seven (7) days of executing the Release Form.

 

4.3            Termination of Eligibility for Severance Pay . An Eligible Employee will cease to be eligible to receive Severance Pay, under this Plan upon the earlier of the following:

 

(a)                                   the Eligible Employee’s death, unless it occurs after the date the Release Form is executed;

 

(b)                                  the Eligible Employee’s discharge for Cause or misconduct;

 

5



 

(c)                                   the Eligible Employee’s failure to execute and file the Release Form by the date specified on the Form;

 

(d)                                  the Eligible Employee’s receipt of a Comparable Offer of Employment from any other operation of the Company or any of its affiliate organizations, regardless of whether such Eligible Employee accepts such offer; or

 

(e)                                   the Eligible Employee’s receipt and acceptance of a transfer of employment to any other operation of the Company or any of its affiliate organizations.

 

4.4            Severance Pay. The Severance Pay to which an Eligible Employee is entitled shall be paid to such Employee after the effective date of a Change in Control in cash in a lump sum within ten (10) days following receipt by the Company of an executed Release Form or, where applicable, following the expiration of the revocation period provided for on the Release Form. If an Eligible Employee fails to return an executed Release Form to the Company within thirty (30) days following his or her Termination of Employment, such Eligible Employee’s rights to Severance Pay shall be immediately forfeited and he or she shall not be entitled to any payments pursuant to this Plan.

 

If an Eligible Employee dies following execution of the Release Form, but before receiving all or part of the Severance Pay to which he is entitled, the Plan Administrator shall pay such Eligible Employee’s Severance Pay to the Eligible Employee’s estate.

 

SECTION FIVE

 

FUNDING

 

Funding for this Plan shall come solely from the general assets of the Employer. All payments of Severance Pay shall be paid from the general assets of the Employer. Neither the Employer nor the Plan Administrator shall have any obligation to establish a trust or fund for the payment of benefits under the Plan or to insure any of the benefits under the Plan. None of the officers, members of the Board of Directors, or agents of the Employer or the Plan Administrator guarantees in any manner the payment of benefits hereunder.

 

SECTION SIX

 

CLAIMS PROCEDURE

 

6.1            Filing and Initial Determination of Claim . An Eligible Employee or his/her duly authorized representative may file a claim for a benefit to which the claimant believes that he or she is entitled. Such a claim must be in writing and delivered to the Plan Administrator by postage prepaid certified mail. Within fifteen (15) days after receipt of a claim, the Plan Administrator shall send to the claimant by certified mail, postage prepaid, notice of the granting or denying, in whole or in part, of such claim, unless special circumstances require an extension of time for processing the claim. In no event may the extension exceed fifteen (15) days from the end of the initial period. If such extension is necessary, the claimant will be given a written notice to this effect prior to the expiration of the initial 15-day period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Plan expects to render the benefit determination. The Plan Administrator shall have full discretion to deny or grant a claim in whole or in part. If notice of the denial of a claim is not

 

6



 

furnished in accordance with this Section 6.1, the claim shall be deemed denied and the claimant shall be permitted to exercise his/or right to review pursuant to Section 6.3.

 

6.2            Duty of Plan Administrator Upon Denial of Claim . If a claim for benefits is denied, the Plan Administrator shall provide to the claimant written notice setting forth in a manner calculated to be understood by the claimant: (i) the specific reason or reasons for the denial; (ii) specific reference to pertinent Plan provisions on which the denial is based; (iii) a description of any additional material or information necessary for the claimant to perfect the claim and an explanation of why such material is necessary; and (iv) a description of the Plan’s claims review procedure and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under Section 502(a) of ERISA following a denial of the claim on review.

 

6.3            Request for Review of Claim Denial . If an Eligible Employee receives written notification of the denial in whole or in part of his/her claim pursuant to Section 6.1, or if an employee is not included in Schedule A and is therefore not eligible for benefits under this Plan, within sixty (60) days of the Eligible Employee’s receipt of claim denial or the date the employee becomes aware that he is not eligible for benefits under this Plan, if the claimant disagrees with such action, the claimant or his/her authorized representative shall file a written request with the Plan Administrator that it conduct a full and fair review of the denial of the claim for benefits. In connection with any request for a review of the denial of a claim for benefits, the claimant shall have the opportunity to submit written comments, documents, records, and other information relating to the claim for benefits. The Plan Administrator shall provide the claimant, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claimant’s claim for benefits. A document, record, or other information shall be considered “relevant” to a claim for benefits if that document, record or other information: (i) was relied upon in making the benefit determination; (ii) was submitted, considered, or generated in the course of making the benefit determination, without regard to whether such document, record or other information was relied upon in making the benefit determination; or (iii) demonstrates compliance with the administrative process and safeguards required by ERISA in making the benefit determination. The review of a denial shall take into account all comments, documents, records, and other information submitted by the claimant, without regard to whether such information was submitted or considered in the initial benefit determination.

 

6.4            Decision on Review of Denial . Upon receipt of the request for review, the Plan Administrator shall review the claim and shall deliver to the claimant a written decision on the claim for benefits within sixty (60) days after the receipt of the aforesaid request for review, except that if there are special circumstances (such as the need to hold a hearing, if necessary) that require an extension of time for processing, the aforesaid sixty (60) day period shall be extended to one hundred twenty (120) days and the claimant will be given written notice of the extension prior to the expiration of the initial 60-day period. In no event shall such extension exceed a period of sixty (60) days from the end of the initial 60-day period. The extension notice shall indicate the special circumstances requiring an extension of time and the date by which the Plan expects to render the determination on review.

 

The Plan Administrator’s decision shall be written in a manner calculated to be understood by the claimant. Any notice of a denial on review shall include (i) the specific reason or reasons for the denial on review; (ii) reference to the specific plan provisions on which the denial is based; (iii) a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of all documents, records, and other information relevant to the claimant’s claim for benefits; and (iv) a statement of the claimant’s right to bring an action under Section 502(a) of ERISA. If notice of the decision on the review is not furnished in accordance with this Section 6.4, the claim shall be deemed denied and the Plan Administrator will have no further duty to review such claim.

 

7



 

SECTION SEVEN

 

ADMINISTRATION OF THE PLAN

 

7.1            Plan Administrator . The Plan Administrator hereunder shall be the Compensation Committee as appointed from time to time by the Board of Directors of the Company.

 

7.2            Responsibilities . The Plan Administrator shall be the “administrator” (as defined in Section 3(16)(A) of ERISA) of the Plan, and shall be responsible for all obligations under the Internal Revenue Code and ERISA and all other obligations required or permitted to be performed by the Plan Administrator and not otherwise delegated pursuant to the Plan. The Plan Administrator shall be the designated agent for service of legal process.

 

7.3            Allocation and Delegation of Plan Administrator Responsibilities . The Plan Administrator may appoint such assistants or representatives as it deems necessary for the effective exercise of its duties in administering the Plan and may delegate to such assistants and representatives any powers and duties, both ministerial and discretionary, as it deems expedient or appropriate. The Plan Administrator also may designate any person, firm or corporation to carry out any of the other responsibilities of the Plan Administrator under the Plan. Any such allocation or designation shall be made pursuant to a written instrument executed by the Plan Administrator.

 

7.4            Actions of Fiduciaries . The Plan Administrator may authorize or approve any action by written instrument signed by a person duly authorized to act on behalf of the Plan Administrator. Any written memorandum signed by any such duly authorized person or by any other person duly authorized by the Plan Administrator to act in respect of the subject matter of the memorandum, shall have the same force and effect as a formal resolution adopted by the Plan Administrator.

 

All acts and determinations with respect to the administration of the Plan made by the Plan Administrator and any assistants or representatives appointed by it shall be duly recorded by the Plan Administrator or by the assistant or representative appointed by it to keep such records. All records, together with such other documents as may be necessary for the administration of the Plan, shall be preserved in the custody of the Plan Administrator or the assistants or representatives appointed by it.

 

7.5            General Administrative Powers . Except as otherwise provided herein, the Plan Administrator is authorized to take such actions as may be necessary to carry out the provisions and purposes of the Plan and shall have the authority to control and manage the operation and administration of the Plan. In order to effectuate the purposes of the Plan, the Plan Administrator shall have the discretionary authority and power to construe and interpret the Plan, to supply any omissions therein, to reconcile and correct any errors or inconsistencies, to decide any questions in the administration and application of the Plan, and to make equitable adjustments for any mistakes or errors made in the administration of the Plan. All such actions or determinations made in good faith by the Plan Administrator, and the application of rules and regulations to a particular case or issue by the Plan Administrator shall, subject to the claims procedures set forth in Section Six hereof, not be subject to review by anyone, but shall be final, binding and conclusive on all persons ever interested hereunder. In construing the Plan and in exercising its power under provisions requiring the Plan Administrator’s approval, the Plan Administrator shall attempt to ascertain the purpose of the provisions in question and when such purpose is known or reasonably ascertainable, such purpose shall be given effect to the extent

 

8



 

feasible. In the discharge of this discretionary authority the Plan Administrator shall have all necessary powers and duties, including but not limited to the following:

 

(a)            to require any person to furnish such information as is reasonably necessary or appropriate for administration of the Plan as a condition to receiving benefits under the Plan;

 

(b)            to make such rules and regulations and prescribe the use of such forms as he shall deem necessary for the efficient administration of the Plan;

 

(c)            to establish or cause to be established such procedures, protocols and guidelines as he shall deem necessary to interpret the terms and conditions of the Plan;

 

(d)            to decide on questions concerning Plan eligibility, Years of Employment and employment termination in accordance with the terms of the Plan;

 

(e)            to determine the amount of benefits payable to an Eligible Employee, in accordance with the Plan, and to provide a full and fair review to any Eligible Employee whose claim for benefits has been denied in whole or in part; and

 

(f)             to designate other persons to carry out any duty or power which would otherwise be a fiduciary responsibility of the Plan Administrator, under the terms of the Plan.

 

7.6            Appointment of Professional Assistance . The Plan Administrator may engage accountants, attorneys and such other personnel as it deems necessary or advisable. The functions of any such persons engaged by the Plan Administrator shall be limited to the specific services and duties for which they are engaged, and such persons shall have no other duties, obligations or responsibilities under the Plan. Unless otherwise specifically so delegated, such persons shall exercise no discretionary authority or discretionary control respecting the management of the Plan.

 

7.7            Discretionary Acts . Any discretionary actions of the Plan Administrator with respect to the administration of the Plan shall be made in a manner which does not discriminate in favor of stockholders, officers and highly compensated employees.

 

7.8            Responsibility of Fiduciaries . The Plan Administrator and its assistants and representatives shall be free from all liability for their acts and conduct in the administration of the Plan except for acts of gross negligence, fraud or willful misconduct; provided, however, that the foregoing shall not relieve any of them from any responsibility or liability for any responsibility, obligation or duty that they may have pursuant to ERISA.

 

7.9            Indemnity by Employer . In the event and to the extent not insured against by any insurance company pursuant to provisions of any applicable insurance policy, the Employer shall indemnify and hold harmless the Plan Administrator and its assistants and representatives from any and all claims, demands, suits or proceedings in connection with the Plan that may be brought by the Employer’s employees or their legal representatives, or by any other person, corporation, entity, government or agency thereof, including any amounts paid in settlement, with the approval of the Plan Administrator, and any and all other losses, damages, interest, expenses, including counsel fees approved by the Plan Administrator, and penalties, including any penalties imposed by the Secretary of Labor pursuant to Section 502(l) of ERISA relating to any breaches of fiduciary responsibility under Part 4 of Title I of ERISA, arising from any action or failure to act, except where the same is judicially determined to be due to gross negligence, fraud, or willful misconduct of such individual in connection with the Plan.

 

9



 

The indemnification contained in this Section shall apply regardless of whether the event causing the liability arises in whole or in part from the negligence (other than judicially determined gross negligence) or other fault on the part of the individual, specifically including breaches of fiduciary responsibility under ERISA.

 

SECTION EIGHT

 

ADOPTION OF PLAN BY SUBSIDIARY

 

Any subsidiary of the Company, whether or not presently existing, may, with the approval of the Plan Administrator, adopt this Plan. Any such subsidiary that adopts the Plan is thereafter an Employer with respect to its employees for purposes of the Plan.

 

SECTION NINE

 

AMENDMENT OF THE PLAN

 

The Plan Administrator may amend the Plan at any time and in any manner with respect to all of the Employees. Any amendment to this Plan shall be effectuated by a written instrument signed by the Plan Administrator and shall be incorporated into the Plan document. Any amendment or restatement may be made retroactive if, in the judgment of the Plan Administrator, such retroactivity is necessary or advisable for any reason. Notwithstanding the above, this Plan may not be terminated or amended within six months following a Change in Control.

 

SECTION TEN

 

TERMINATION OF THE PLAN

 

Continuance of the Plan is not assumed as a contractual obligation of the Employer, and the Plan Administrator reserves the right to terminate the Plan at any time. Notwithstanding the above, this Plan may not be terminated or amended within six months following a Change in Control. Such termination may occur without consent being obtained from the Plan Administrator, Eligible Employees or any other interested person. The Plan shall automatically terminate upon dissolution of the Company, unless provision is specifically made by its successors, if any, for the continuation of the Plan. If not sooner terminated, this Plan shall terminate when all liabilities provided for hereunder have been fully discharged.

 

SECTION ELEVEN

 

VESTING

 

No Eligible Employee shall have a vested right to any benefit under this Plan prior to the time a determination is made by the Plan Administrator that the particular Eligible Employee is entitled to receive benefits under the Plan. At any time prior to such determination the Plan may be amended or terminated with respect to any benefits to which such Eligible Employee would otherwise have been entitled.

 

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SECTION TWELVE

 

STATUS OF EMPLOYMENT RELATIONS

 

The adoption and maintenance of the Plan shall not be deemed to constitute a contract between any Employer and its employees or to be consideration for, or an inducement or condition of, the employment of any person. Nothing herein contained shall be deemed (i) to give to any employee the right to be retained in the employ of the Employer; (ii) to affect the right of the Employer to discipline or discharge any employee at any time; (iii) to give the Employer the right to require any employee to remain in its employ; or (iv) to affect any employee’s right to terminate his employment at any time.

 

SECTION THIRTEEN

 

RESTRICTIONS ON ASSIGNMENT

 

The benefits provided hereunder are not subject in any manner to the debts or other obligations of the persons to whom they are payable. The interest of an Eligible Employee may not be sold, transferred, assigned or encumbered in any manner, either voluntarily or involuntarily, and any attempt so to anticipate, alienate, sell, transfer, assign, pledge, encumber, or charge the same shall be null and void.

 

SECTION FOURTEEN

 

APPLICABLE LAW

 

To the extent not preempted by ERISA, the Plan shall be construed, regulated, interpreted and administered under and in accordance with the laws of the State of Texas.

 

SECTION FIFTEEN

 

INTERPRETATION OF THE PLAN

 

It is the intention of the Employers that the Plan shall comply with the Internal Revenue Code, and the regulations thereunder, the requirements of ERISA and the corresponding provisions of any subsequent laws; the provisions of the Plan shall be construed to effectuate such intention.

 

11



 

IN WITNESS WHEREOF, EXCO Resources, Inc. has caused the Plan to be signed by its duly authorized officer on this 14th day of November, 2007.

 

 

EXCO RESOURCES, INC.

 

 

 

 

 

By:

/s/ Douglas H. Miller

 

 

 

Its: Chief Executive Officer

 

12



 

Exhibit A-1

40+

 

RELEASE AGREEMENT

 

IN RETURN FOR THE CONSIDERATION of payment of severance benefits to me from EXCO Resources, Inc. (“EXCO”) in accordance with EXCO Resources, Inc. Severance Plan, I am entering into this Release Agreement. I understand and agree that the severance payment is in addition to the other (non-severance) benefits to which I may be entitled under the normal policies and procedures applicable to employees of EXCO as a result of my termination of employment from EXCO.

 

I,                                                               , on behalf of myself, my heirs, executors, successors and assigns hereby irrevocably and unconditionally RELEASE, WAIVE, AND FOREVER DISCHARGE EXCO and all of its parents, divisions, subsidiaries and affiliates, and their present and former agents, employees, officers, directors, partners, stockholders, successors and assigns (hereinafter collectively “Releasees”) from any and all claims, demands, actions and causes of action, and all liability whatsoever, whether known or unknown, fixed or contingent, which I have or may have against Releasees as a result of my employment by or subsequent termination as an employee of EXCO, or failure to be hired by any Releasee, up to the date of execution of this Release Agreement. This Release Agreement includes but is not limited to claims at law or equity or sounding in contract (express or implied) or tort arising under federal, state or local laws prohibiting age, sex, race, national origin, disability, religion, veteran or any other forms of discrimination (including but not limited to Title VII of the Civil Rights Act of 1964, the Rehabilitation Act of 1973, the Americans with Disabilities Act, as well as applicable state fair employment practices laws), claims arising under the Fair Labor Standards Act, the National Labor Relations Act, the Worker Adjustment and Retraining Notification Act, the Family and Medical Leave Act, the Employee Retirement Income Security Act, or any other legal and equitable claims regarding my employment with EXCO, the continuation of employment or the termination of said employment.

 

I understand and agree that this Release Agreement shall not in any way be construed as an admission by Releasees of any unlawful or wrongful acts whatsoever against me or any other person, and Releasees specifically disclaim any liability to or wrongful acts against me or any other person.

 

I acknowledge that I have been advised in writing by EXCO that I should consult an attorney prior to executing this Release Agreement, and I further acknowledge that I have been given a period of forty-five (45) calendars days after my termination by EXCO within which to review and consider the provisions of this Release Agreement.

 

I acknowledge that I have been given information regarding the ages and job titles of persons affected and unaffected by these terminations of employment.

 

I understand and acknowledge that I have seven (7) calendar days following the execution of this Release Agreement to revoke my acceptance of this Release Agreement and that this Release Agreement shall not become effective and the severance shall not become payable until this revocation period has expired. In order to revoke this Release Agreement, I acknowledge that I am required to deliver written notice clearly stating my intent to revoke to [Insert Name and Address of Contact Person at Company] . I agree that my notice will not be considered effective unless [Mr./Ms. Insert Name] , or a representative designated by EXCO, receives it within the seven calendar days following my execution of this Release Agreement.

 

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I understand it is my choice whether or not to enter into this Release Agreement and that my decision to do so is voluntary and made knowingly.

 

Please read carefully as this document includes a release of claims.

 

As evidenced by my signature below, I hereby certify that I have read the above Release Agreement and agree to its terms.

 

 

Dated this                        day of                                                       , 2006.

 

 

 

 

WITNESS

 

EMPLOYEE SIGNATURE

 

14



 

Exhibit A-2

Under 40

 

RELEASE AGREEMENT

 

IN RETURN FOR THE CONSIDERATION of payment of severance benefits to me from EXCO Resources, Inc. (“EXCO”) in accordance with the EXCO Resources, Inc. Severance Plan, I am entering into this Release Agreement. I understand and agree that the severance payment is in addition to the other (non-severance) benefits to which I may be entitled under the normal policies and procedures applicable to employees of EXCO as a result of my termination of employment from EXCO.

 

I,                                                , on behalf of myself, my heirs, executors, successors and assigns hereby irrevocably and unconditionally RELEASE, WAIVE, AND FOREVER DISCHARGE EXCO and all of its parents, divisions, subsidiaries and affiliates, and their present and former agents, employees, officers, directors, partners, stockholders, successors and assigns (hereinafter collectively “Releasees”) from any and all claims, demands, actions and causes of action, and all liability whatsoever, whether known or unknown, fixed or contingent, which I have or may have against Releasees as a result of my employment by or subsequent termination as an employee of EXCO, or failure to be hired by any Releasee, up to the date of execution of this Release Agreement. This Release Agreement includes but is not limited to claims at law or equity or sounding in contract (express or implied) or tort arising under federal, state or local laws prohibiting age, sex, race, national origin, disability, religion, veteran or any other forms of discrimination (including but not limited to Title VII of the Civil Rights Act of 1964, the Rehabilitation Act of 1973, the Americans with Disabilities Act, as well as applicable state fair employment practices laws), claims arising under the Fair Labor Standards Act, the National Labor Relations Act, the Worker Adjustment and Retraining Notification Act, the Family and Medical Leave Act, the Employee Retirement Income Security Act, or any other legal and equitable claims regarding my employment with EXCO, the continuation of employment or the termination of said employment.

 

I understand and agree that this Release Agreement shall not in any way be construed as an admission by Releasees of any unlawful or wrongful acts whatsoever against me or any other person, and Releasees specifically disclaim any liability to or wrongful acts against me or any other person.

 

I acknowledge that I have been advised in writing by EXCO that I should consult an attorney prior to executing this Release Agreement, and further acknowledge that I have been given a period of ten (10) calendar days after my termination by EXCO within which to review and consider the provisions of this Release Agreement.

 

I understand and acknowledge that once I have executed this Release Agreement, it is immediately binding and may not be revoked or rescinded by either party.

 

I understand it is my choice whether or not to enter into this Release Agreement and that my decision to do so is voluntary and is made knowingly.

 

15



 

Please read carefully as this document includes a release of claims.

 

As evidenced by my signature below, I hereby certify that I have read the above Release Agreement and agree to its terms.

 

 

Dated this                        day of                                                       , 2006.

 

 

 

 

WITNESS

 

EMPLOYEE SIGNATURE

 

16


Exhibit 10.4

 

NONQUALIFIED STOCK OPTION AGREEMENT

 

THE EXCO RESOURCES, INC.

2005 LONG-TERM INCENTIVE PLAN

 

1.              Grant of Option . Pursuant to the EXCO Resources, Inc. 2005 Long-Term Incentive Plan (the “Plan”) for key employees, consultants, and outside directors of EXCO Resources, Inc., a Texas corporation (the “Company”), the Company grants to

 

 

                        

(the “Participant”),

 

an option to purchase shares of Common Stock, par value $.001 per share (“Common Stock”), of the Company as follows:

 

On the date hereof, the Company grants to the Participant an option (the “Option” or “Stock Option”) to purchase                                 (                    ) full shares (the “Optioned Shares”) of Common Stock at an Option Price equal to $        per share (this amount must be equal to or greater than the fair market value of the underlying Common Stock on the date this Option is granted). The Date of Grant of this Stock Option is                        , 20     .

 

The “Option Period” shall commence on the Date of Grant and shall expire on the date immediately preceding the tenth (10 th ) anniversary of the Date of Grant. The Stock Option is a Nonqualified Stock Option. 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 . The Stock Option and its exercise are subject 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 capitalized terms used herein that are defined in the Plan shall have the same meanings assigned to them in the Plan. The 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. In addition, if the Plan previously has not been approved by the Company’s stockholders, the Stock Option is granted subject to such stockholder approval of the Plan.

 

3.              Vesting; Time of Exercise . Except as specifically provided in this Agreement and subject to certain restrictions and conditions set forth in the Plan, the Optioned Shares shall be vested  and exercisable as follows:

 

a.              Twenty-five percent (25%) of the total Optioned Shares shall be fully vested on the Date of Grant, provided the Participant is employed by (or, if the Participant is a Consultant or an Outside Director, is providing services to) the Company or a Subsidiary on that date.

 

b.              Twenty-five percent (25%) of the total Optioned Shares shall be fully vested on the first anniversary of the Date of Grant, provided the Participant is employed by (or, if the Participant is a Consultant or an Outside Director, is providing services to) the Company or a Subsidiary on that date.

 



 

c.              An additional twenty-five percent (25%)  of the total Optioned Shares shall be fully vested on the second anniversary of the Date of Grant, provided the Participant is employed by (or, if the Participant is a Consultant or an Outside Director, is providing services to) the Company or a Subsidiary on that date.

 

d.              An additional twenty-five percent (25%)  of the total Optioned Shares shall be shall be fully vested on the third anniversary of the Date of Grant, provided the Participant is employed by (or, if the Participant is a Consultant or an Outside Director, is providing services to) the Company or a Subsidiary on that date.

 

Notwithstanding the above, the Optioned Shares shall be fully vested automatically upon a Change in Control (as defined in Section 2.6 of the Plan) or upon the death of the Participant or the Total and Permanent Disability (as defined in Section 2.41 of the Plan) of the Participant, provided the Participant is still employed by the Company as of the date of one of such specified events.

 

4.              Term; Forfeiture .

 

a.              Except as otherwise provided in this Agreement, the unexercised portion of the Stock Option that relates to Optioned Shares which are vested will terminate and be forfeited at the first of the following to occur:

 

i.               5 p.m. on the date the Option Period terminates;

 

ii.              5 p.m. on the date which is one hundred eighty (180) days following the date of the Participant’s Termination of Service due to death or Total and Permanent Disability;

 

iii.             5 p.m. on the date which is ninety (90) days from the date of the Participant’s Retirement;

 

iv.             5 p.m. on the date of the Participant’s Termination of Service by the Company for cause (as defined herein);

 

v.              5 p.m. on the date which is thirty (30) days following the date of the Participant’s Termination of Service for any reason not otherwise specified in this Section 4.a. ;

 

vi.             5 p.m. on the date the Company causes any portion of the Option to be forfeited pursuant to Section 7 hereof;

 

vii.            For purposes hereof, “cause” shall mean that the Participant shall have committed (i) an intentional material act of fraud or embezzlement in connection with his duties in the course of his employment with the Company; (ii) intentional wrongful material damage to property of the Company; or (iii) intentional wrongful disclosure of material secret processes or material confidential information of the Company. For the purposes of this Agreement, no act, or failure to act, on the part of the Participant shall be deemed “intentional” unless done, or omitted to be done, by the Participant not in good faith and without reasonable belief that his action or omission was in the best interest of the Company.

 

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5.              Who May Exercise . Subject to the terms and conditions set forth in Sections 3 and 4 above, during the lifetime of the Participant, the Stock Option may be exercised only by the Participant, or by the Participant’s guardian or personal or legal representative. If the Participant’s Termination of Service is due to his death prior to the date specified in Section 4.a.i. hereof, or Participant dies prior to the termination dates specified in Sections 4.a.i., ii., iii., iv., v. or vi. hereof, and the Participant has not exercised the Stock Option as to the maximum number of vested Optioned Shares as set forth in Section 3 hereof as of the date of death, the following persons may exercise the exercisable portion of the Stock Option on behalf of the Participant at any time prior to the earliest of the dates specified in Section 4 hereof:  the personal representative of his estate, or the person who acquired the right to exercise the Stock Option by bequest or inheritance or by reason of the death of the Participant; provided that the Stock Option shall remain subject to the other terms of this Agreement, the Plan, and applicable laws, rules, and regulations.

 

6.              No Fractional Shares . The Stock Option may be exercised only with respect to full shares, and no fractional share of stock shall be issued.

 

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; provided, that the six (6)-month holding requirement shall only apply to a Reporting Participant at any time following an IPO, (c) if the Company has completed an IPO, 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 a 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 Optioned Shares then being purchased to be delivered to the Participant (or the person exercising the Participant’s Stock Option in the event of his death) at its principal business office within ten (10) business days 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 Company shall determine in its discretion that the listing, registration, or qualification of the Stock Option or the Optioned Shares upon any securities exchange 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, then 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.

 

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If the Participant fails to pay for any of the Optioned Shares specified in such notice or fails to accept delivery thereof, then the Stock Option, and right to purchase such Optioned Shares may be forfeited by the Company.

 

8.              Nonassignability . The Stock Option is not assignable or transferable by the Participant except by will or by the laws of descent and distribution.

 

9.              Rights as Stockholder . The Participant will have no rights as a stockholder with respect to any shares covered by the Stock Option until the issuance of a certificate or certificates to the Participant for the Optioned Shares. The Optioned Shares shall be subject to the terms and conditions of this Agreement regarding such Shares. Except as otherwise provided in Section 10 hereof, 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 Optioned 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.            Nonqualified Stock Option . The Stock Option shall not be treated as an Incentive Stock Option.

 

12.            [Reserved]

 

13.            Voting . The Participant, as record holder of some or all of the Optioned Shares following exercise of this Stock Option, has the exclusive right to vote, or consent with respect to, such Optioned Shares until such time as the Optioned Shares are transferred in accordance with this Agreement; provided , however , that this Section shall not create any voting right where the holders of such Optioned Shares otherwise have no such right.

 

14.            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 rights and remedies at law or in equity of the parties under this Agreement.

 

15.            Participant’s Representations . Notwithstanding any of the provisions hereof, the Participant hereby agrees that he will not exercise the Stock Option granted hereby, and that the Company will not be obligated to issue any shares to the Participant hereunder, if the exercise thereof or the issuance of such shares 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.

 

16.            Investment Representation . Unless the Common Stock is 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 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 the Participant 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

 

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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.

 

17.            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 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 any questions arising under the Plan or this Agreement.

 

18.            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).

 

19.            No Right to Continue Service or Employment . Nothing herein shall be construed to confer upon the Participant the right to continue in the employ or to provide services to the Company or any Subsidiary, whether as an employee or as a consultant or as an Outside Director, or interfere with or restrict in any way the right of the Company or any Subsidiary to discharge the Participant as an employee, consultant or Outside Director at any time.

 

20.            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.

 

21.            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.

 

22.            Entire Agreement . This Agreement together with the Plan 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. 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 or the Plan and that any agreement, statement or promise that is not contained in this Agreement or the Plan shall not be valid or binding or of any force or effect.

 

23.            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. No person or entity shall be permitted to acquire any Optioned Shares without first executing and delivering an agreement in the form satisfactory to the Company making such person or entity subject to the restrictions on transfer contained herein.

 

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24.            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.

 

25.            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.

 

26.            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.

 

27.            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:

 

EXCO Resources, Inc.

12377 Merit Dr., Suite 1700

Dallas, Texas  75251

Attn:  Chief Financial Officer

Facsimile:  (214) 368-2087

 

b.              Notice to the Participant shall be addressed and delivered as set forth on the signature page.

 

28.            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 28 , 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 other than (A) Restricted Stock, or (B) Common Stock that the Participant has not acquired from the Company within six (6) months prior to the date of exercise, 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 other than shares that will constitute Restricted Stock, which shares so withheld have an aggregate fair market value that equals (but does not exceed) the

 

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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.

 

* * * * * * * *

 

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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.

 

COMPANY:

 

 

 

EXCO RESOURCES, INC.

 

 

 

 

 

By:

 

 

Name: J. Douglas Ramsey, Ph.D.

 

Title: Vice President and Chief Financial Officer

 

 

 

 

 

PARTICIPANT:

 

 

 

 

 

Signature

 

 

 

Name:

 

 

Address:

 

 

 

 

 

8


Exhibit 10.5

 

INCENTIVE STOCK OPTION AGREEMENT

 

THE EXCO RESOURCES, INC.

2005 LONG-TERM INCENTIVE PLAN

 

1.              Grant of Option . Pursuant to the EXCO Resources, Inc. 2005 Long-Term Incentive Plan (the “Plan”) for key employees of EXCO Resources, Inc., a Texas corporation (the “Company”), the Company grants to

 

                                       

(the “Participant”),

 

who is an employee of the Company, an option to purchase shares of Common Stock, par value $.001 per share (“Common Stock”), of the Company as follows:

 

On the date hereof, the Company grants to the Participant an option (the “Option” or “Stock Option”) to purchase                                (                       ) full shares (the “Optioned Shares”) of Common Stock at an Option Price equal to $              per share (being the Fair Market Value per share of the Common Stock on this Date of Grant or 110% of such Fair Market Value, in the case of a ten percent (10%) or more stockholder as provided in Code Section 422). The Date of Grant of this Stock Option is                           , 20        .

 

The “Option Period” shall commence on the Date of Grant and shall expire on the date immediately preceding the tenth (10 th ) anniversary of the Date of Grant (or the date immediately preceding the fifth (5 th ) anniversary of the Date of Grant, in the case of a ten percent (10%) or more stockholder as provided in Code Section 422). The Stock Option is intended to be an Incentive Stock Option.

 

2.              Subject to Plan . The Stock Option and its exercise are subject 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 capitalized terms used herein that are defined in the Plan shall have the same meanings assigned to them in the Plan. The 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. In addition, if the Plan previously has not been approved by the Company’s stockholders, the Stock Option is granted subject to such stockholder approval.

 

3.              Vesting; Time of Exercise . Except as specifically provided in this Agreement and subject to certain restrictions and conditions set forth in the Plan, the Optioned Shares shall be vested  and exercisable as follows:

 

a.              Twenty-five percent (25%) of the total Optioned Shares shall be fully vested on the Date of Grant, provided the Participant is employed by the Company or a Subsidiary on that date.

 

b.              Twenty-five percent (25%) of the total Optioned Shares shall be fully vested on the first anniversary of the Date of Grant, provided the Participant is employed by the Company or a Subsidiary on that date.

 

c.              An additional twenty-five percent (25%)  of the total Optioned Shares shall be fully vested on the second anniversary of the Date of Grant, provided the Participant is employed by the Company or a Subsidiary on that date.

 



 

d.              An additional twenty-five percent (25%)  of the total Optioned Shares shall be shall be fully vested on the third anniversary of the Date of Grant, provided the Participant is employed by the Company or a Subsidiary on that date.

 

Notwithstanding the above, the Optioned Shares shall be fully vested automatically upon a Change in Control (as defined in Section 2.6 of the Plan) or upon the death of the Participant or the Total and Permanent Disability (as defined in Section 2.41 of the Plan) of the Participant, provided the Participant is still employed by the Company as of the date of one of such specified events.

 

4.              Term; Forfeiture .

 

a.              Except as otherwise provided in this Agreement, the unexercised portion of the Stock Option that relates to Optioned Shares which are vested will terminate and be forfeited at the first of the following to occur:

 

i.               5 p.m. on the date the Option Period terminates;

 

ii.              5 p.m. on the date which is one hundred eighty (180) days following the date of the Participant’s Termination of Service due to death or Total and Permanent Disability;

 

iii.             5 p.m. on the date which is ninety (90) days from the date of the Participant’s Retirement;

 

iv.             5 p.m. on the date of the Participant’s Termination of Service by the Company for cause (as defined herein);

 

v.              5 p.m. on the date which is thirty (30) days following the date of the Participant’s Termination of Service for any reason not otherwise specified in this Section 4.a. ;

 

vi.             5 p.m. on the date the Company causes any portion of the Option to be forfeited pursuant to Section 7 hereof.

 

vii.            For purposes hereof, “cause” shall mean that the Participant shall have committed (i) an intentional material act of fraud or embezzlement in connection with his duties in the course of his employment with the Company; (ii) intentional wrongful material damage to property of the Company; or (iii) intentional wrongful disclosure of material secret processes or material confidential information of the Company. For the purposes of this Agreement, no act, or failure to act, on the part of the Participant shall be deemed “intentional” unless done, or omitted to be done, by the Participant not in good faith and without reasonable belief that his action or omission was in the best interest of the Company.

 

5.              Who May Exercise . Subject to the terms and conditions set forth in Sections 3 and 4 above, during the lifetime of the Participant, the Stock Option may be exercised only by the Participant, or by the Participant’s guardian or personal or legal representative. If the Participant’s Termination of Service is due to his death prior to the date specified in Section 4.a.i. hereof, or Participant dies prior to the termination dates specified in Sections 4.a.i., ii., iii., iv., v. or vi. hereof, and the Participant has not exercised the Stock Option as to the maximum number of vested Optioned Shares as set forth in Section 3 hereof as of the date of death, the

 

2



 

following persons may exercise the exercisable portion of the Stock Option on behalf of the Participant at any time prior to the earliest of the dates specified in Section 4 hereof:  the personal representative of his estate, or the person who acquired the right to exercise the Stock Option by bequest or inheritance or by reason of the death of the Participant; provided that the Stock Option shall remain subject to the other terms of this Agreement, the Plan, and applicable laws, rules, and regulations.

 

6.              No Fractional Shares . The Stock Option may be exercised only with respect to full shares, and no fractional share of stock shall be issued.

 

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, and whether the Optioned Shares to be exercised will be considered as deemed granted under an Incentive Stock Option as provided in Section 11 . 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; provided, that the six (6)-month holding requirement shall only apply to a Reporting Participant at any time following an IPO, (c) if the Company has completed an IPO, 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 a 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 Optioned Shares then being purchased to be delivered to the Participant (or the person exercising the Participant’s Stock Option in the event of his death) at its principal business office within ten (10) business days 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 Company shall determine in its discretion that the listing, registration, or qualification of the Stock Option or the Optioned Shares upon any securities exchange 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, then 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, then the Stock Option, and right to purchase such Optioned Shares may be forfeited by the Company.

 

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8.              Nonassignability . The Stock Option is not assignable or transferable by the Participant except by will or by the laws of descent and distribution .

 

9.              Rights as Stockholder . The Participant will have no rights as a stockholder with respect to any shares covered by the Stock Option until the issuance of a certificate or certificates to the Participant for the Optioned Shares. The Optioned Shares shall be subject to the terms and conditions of this Agreement regarding such Optioned Shares. Except as otherwise provided in Section 10 hereof, 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 Optioned 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.            Incentive Stock Option . Subject to the provisions of the Plan, this Stock Option is an Incentive Stock Option. To the extent the number of Optioned Shares exceeds the limit set forth in Section 6.3 of the Plan, such Optioned Shares shall be deemed granted pursuant to a Nonqualified Stock Option. Unless otherwise indicated by the Participant in the notice of exercise pursuant to Section 7 , upon any exercise of this Stock Option, the number of exercised Optioned Shares that shall be deemed to be exercised pursuant to an Incentive Stock Option shall equal the total number of Optioned Shares so exercised multiplied by a fraction, (i) the numerator of which is the number of unexercised Optioned Shares that could then be exercised pursuant to an Incentive Stock Option and (ii) the denominator of which is the then total number of unexercised Optioned Shares.

 

12.            Disqualifying Disposition . In the event that Common Stock acquired upon exercise of this Stock Option is disposed of by the Participant in a “Disqualifying Disposition,” such Participant shall notify the Company in writing within thirty (30) days after such disposition of the date and terms of such disposition. For purposes hereof, “Disqualifying Disposition” shall mean a disposition of Common Stock that is acquired upon the exercise of this Stock Option (and that is not deemed granted pursuant to a Nonqualified Stock Option under Section 11 ) prior to the expiration of either two years from the Date of Grant of this Stock Option or one year from the transfer of shares to the Participant pursuant to the exercise of this Stock Option.

 

13.            [Reserved]

 

14.            Voting . The Participant, as record holder of some or all of the Optioned Shares following exercise of this Stock Option, has the exclusive right to vote, or consent with respect to, such Optioned Shares until such time as the Optioned Shares are transferred in accordance with this Agreement; provided , however , that this Section shall not create any voting right where the holders of such Optioned Shares otherwise have no such right.

 

15.            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 rights and remedies at law or in equity of the parties under this Agreement.

 

16.            Participant’s Representations . Notwithstanding any of the provisions hereof, the Participant hereby agrees that he will not exercise the Stock Option granted hereby, and that the Company will not be obligated to issue any shares to the Participant hereunder, if the exercise thereof or the issuance of such shares shall constitute a violation by the Participant or the Company of any provision of any law or regulation of any

 

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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.

 

17.            Investment Representation . Unless the Common Stock is 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 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 the Participant 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.

 

18.            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 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 any questions arising under the Plan or this Agreement.

 

19.            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).

 

20.            No Right to Continue Service or Employment . Nothing herein shall be construed to confer upon the Participant the right to continue in the employ or to provide services to the Company or any Subsidiary, whether as an employee or as a consultant or as an Outside Director, or interfere with or restrict in any way the right of the Company or any Subsidiary to discharge the Participant as an employee, consultant or Outside Director at any time.

 

21.            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.

 

22.            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.

 

23.            Entire Agreement . This Agreement together with the Plan 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. Each party to this Agreement acknowledges that no representations, inducements,

 

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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 or the Plan and that any agreement, statement or promise that is not contained in this Agreement or the Plan shall not be valid or binding or of any force or effect.

 

24.            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. No person or entity shall be permitted to acquire any Optioned Shares without first executing and delivering an agreement in the form satisfactory to the Company making such person or entity subject to the restrictions on transfer contained herein.

 

25.            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.

 

26.            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.

 

27.            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.

 

28.            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:

 

EXCO Resources, Inc.

12377 Merit Dr., Suite 1700

Dallas, Texas 75251

Attn:  Chief Financial Officer

Facsimile:  (214) 368-2087

 

b.              Notice to the Participant shall be addressed and delivered as set forth on the signature page.

 

29.            Tax Requirements . The Participant is hereby advised to consult immediately with his or her own tax advisor regarding the tax consequences of this Agreement. The Company or, if applicable, any Subsidiary (for purposes of this Section 29 , 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

 

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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 other than (A) Restricted Stock, or (B) Common Stock that the Participant has not acquired from the Company within six (6) months prior to the date of exercise, 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 other than shares that will constitute Restricted Stock, 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.

 

* * * * * * * *

 

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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.

 

 

COMPANY:

 

 

 

EXCO RESOURCES, INC.

 

 

 

 

 

By:

 

 

Name: J. Douglas Ramsey

 

Title: Vice President and Chief Financial Officer

 

 

 

 

 

PARTICIPANT:

 

 

 

 

 

 

 

Signature

 

 

 

Name:

 

 

Address:

 

 

 

 

 

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