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EXHIBIT 4.2

 

PEDEVCO CORP.

2012 EQUITY INCENTIVE PLAN

NOTICE OF RESTRICTED SHARES GRANT

Capitalized but otherwise undefined terms in this Notice of Restricted Shares Grant and the attached Restricted Shares Grant Agreement shall have the same defined meanings as in the PEDEVCO Corp. (formerly Blast Energy Services, Inc.) 2012 Equity Incentive Plan (the “ Plan ”).

Grantee Name: _______________________________________________

Address: _______________________________________________

You have been granted Restricted Shares subject to the terms and conditions of the Plan and the attached Restricted Shares Grant Agreement, as follows:

Date of Grant: _______________________________________________

Vesting Commencement Date:___________________________________

Price Per Share:______________________________________________

Total Number of Shares Granted:_________________________________

Total Value of Shares Granted:___________________________________

Total Purchase Price:_________________$0_______________________

Agreement Date:_____________________________________________

Vesting Schedule: __________________________________________

PEDEVCO CORP.

2012 EQUITY INCENTIVE PLAN

 

RESTRICTED SHARES GRANT AGREEMENT

 

This  RESTRICTED SHARES GRANT AGREEMENT   (“ Agreement ”), dated as of the Agreement Date specified on the Notice of Restricted Shares Grant is made by and between PEDEVCO CORP., a Texas Company (the “ Company ”), and the grantee named in the Notice of Restricted Shares Grant   (the “ Grantee, ” which term as used herein shall be deemed to include any successor to Grantee by will or by the laws of descent and distribution, unless the context shall otherwise require).

 

BACKGROUND

  

Pursuant to the Plan, the Company, acting through the Administrator, approved the issuance to Grantee, effective as of the date set forth above, of an award of the number of Restricted Shares as is set forth in the attached Notice of Restricted Shares Grant (which is expressly incorporated herein and made a part hereof, the “ Notice of Restricted Shares Grant ”) at the purchase price per share of Restricted Shares (the “ Purchase Price ”), if any, set forth in the attached Notice of Restricted Shares Grant, upon the terms and conditions hereinafter set forth.

  

NOW, THEREFORE , in consideration of the mutual premises and undertakings hereinafter set forth, the parties agree as follows:

 

1.  Grant and Purchase of Restricted Shares .  The Company hereby grants to Grantee, and Grantee hereby accepts the number of Restricted Shares set forth in the Notice of Restricted Shares Grant, subject to the payment by Grantee of the total purchase price, if any, set forth in the Notice of Restricted Shares Grant.

 

2.  Stockholder Rights .

 

(a)  Voting Rights .  Until such time as all or any part of the Restricted Shares are forfeited to the Company under this Agreement, if ever, Grantee (or any successor in interest) has the rights of a stockholder, including voting rights, with respect to the Restricted Shares subject, however, to the transfer restrictions or any other restrictions set forth in the Plan.

 

(b)  Dividends and Other Distributions .  During the period of restriction, Participants holding Restricted Shares are entitled to all regular cash dividends or other distributions paid with respect to all Shares while they are so held.  If any such dividends or distributions are paid in Shares, such Shares will be subject to the same restrictions on transferability and forfeitability as the Restricted Shares with respect to which they were paid.

 

3.  Vesting of Restricted Shares .

 

(a) The Restricted Shares are restricted and subject to forfeiture until vested.  The Restricted Shares which have vested and are no longer subject to forfeiture are referred to as “ Vested Shares. ”  All Restricted Shares which have not become Vested Shares are referred to as “ Nonvested Shares. ”

 

(b) Restricted Shares will vest and become nonforfeitable in accordance with the vesting schedule contained in the Notice of Restricted Shares Grant.

(c) Any Nonvested Shares of Grantee will automatically vest and become nonforfeitable if Grantee’s service with the Company ceases owing to the Grantee’s (a) death, (b) Disability, or (c) Retirement, unless the Administrator provides otherwise.

(d) In the event of a Change in Control, the Administrator, in its discretion, may accelerate the time at which all or any portion of Grantee’s Restricted Shares will vest.

 

(e) Terms used in  Section 3  and  Section 4  have the following meanings:

 

(i) “ Cause ” has the meaning ascribed to such term or words of similar import in Grantee’s written employment or service contract with the Company or its subsidiaries and, in the absence of such agreement or definition, means Grantee’s (i) conviction of, or plea of nolo contendere to, a felony or crime involving moral turpitude; (ii) fraud on or misappropriation of any funds or property of the Company or its subsidiaries, or any affiliate, customer or vendor; (iii) personal dishonesty, incompetence, willful misconduct, willful violation of any law, rule or regulation (other than minor traffic violations or similar offenses), or breach of fiduciary duty which involves personal profit; (iv) willful misconduct in connection with Grantee’s duties or willful failure to perform Grantee’s responsibilities in the best interests of the Company or its subsidiaries; (v) illegal use or distribution of drugs; (vi) violation of any material rule, regulation, procedure or policy of the Company or its subsidiaries, the violation of which could have a material detriment to the Company; or (vii) material breach of any provision of any employment, non-disclosure, non-competition, non-solicitation or other similar agreement executed by Grantee for the benefit of the Company or its subsidiaries, all as reasonably determined by the Board of Directors of the Company, which determination will be conclusive.

 

(ii) “ Retirement ” means Grantee’s retirement from Company employ at age 65 as determined in accordance with the policies of the Company or its subsidiaries in good faith by the Board of Directors of the Company, which determination will be final and binding on all parties concerned.

 

(f) Nonvested Shares may not be sold, transferred, assigned, pledged, or otherwise disposed of, directly or indirectly, whether by operation of law or otherwise.  The restrictions set forth in this Section will terminate upon a Change in Control.

 

4.  Forfeiture of Nonvested Shares .  Except as provided herein, if Grantee's service with the Company ceases for any reason other than Grantee’s (a) death, (b) Disability, or (c) Retirement, any Nonvested Shares will be automatically forfeited to the Company, subject to the re-payment by the Company at the lesser of (1) the original purchase price paid by the Participant pursuant to the Award Agreement or (2) the Shares’ Fair Market Value on the date of repurchase; provided, however, that the Administrator may cause any Nonvested Shares immediately to vest and become nonforfeitable if Grantee’s service with the Company is terminated by the Company without Cause.

 

(a)  Legend .  Each certificate representing Restricted Shares granted pursuant to the Notice of Restricted Shares Grant may bear a legend substantially as follows:

 

“ THE SALE OR OTHER TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE, WHETHER VOLUNTARY, INVOLUNTARY OR BY OPERATION OF LAW, IS SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AS SET FORTH IN THE PEDEVCO CORP. 2012 EQUITY INCENTIVE PLAN AND IN A RESTRICTED SHARE GRANT AGREEMENT.  A COPY OF SUCH PLAN AND SUCH AGREEMENT MAY BE OBTAINED FROM PEDEVCO CORP. ”

 

(b)            Escrow of Nonvested Shares .  The Company has the right to retain the certificates representing Nonvested Shares in the Company’s possession until such time as all restrictions applicable to such Shares have been satisfied.

 

(c)            Removal of Restrictions .  The Participant is entitled to have the legend removed from certificates representing Vested Shares.

5.  Recapitalizations, Exchanges, Mergers, Etc.   The provisions of this Agreement apply to the full extent set forth herein with respect to any and all shares of capital stock of the Company or successor of the Company which may be issued in respect of, in exchange for, or in substitution for the Restricted Shares by reason of any stock dividend, split, reverse split, combination, recapitalization, reclassification, merger, consolidation or otherwise which does not terminate this Agreement.  Except as otherwise provided herein, this Agreement is not intended to confer upon any other person except the parties hereto any rights or remedies hereunder.

 

6.  Grantee Representations .

 

Grantee represents to the Company the following:

 

(a)  Restrictions on Transfer .  Grantee acknowledges that the Restricted Shares to be issued to Grantee must be held indefinitely unless subsequently registered and qualified under the Securities Act or unless an exemption from registration and qualification is otherwise available.  In addition, Grantee understands that the certificate representing the Restricted Shares will be imprinted with a legend which prohibits the transfer of such Restricted Shares unless they are sold in a transaction in compliance with the Securities Act or are registered and qualified or such registration and qualification are not required in the opinion of counsel acceptable to the Company.

 

(b)  Relationship to the Company; Experience .  Grantee either has a preexisting business or personal relationship with the Company or any of its officers, directors or controlling persons or, by reason of Grantee’s business or financial experience or the business or financial experience of Grantee’s personal representative(s), if any, who are unaffiliated with and who are not compensated by the Company or any affiliate or selling agent, directly or indirectly, has the capacity to protect Grantee’s own interests in connection with Grantee’s acquisition of the Restricted Shares to be issued to Grantee hereunder.  Grantee and/or Grantee’s personal representative(s) have such knowledge and experience in financial, tax and business matters to enable Grantee and/or them to utilize the information made available to Grantee and/or them in connection with the acquisition of the Restricted Shares to evaluate the merits and risks of the prospective investment and to make an informed investment decision with respect thereto.

 

(c)  Grantee’s Liquidity .  In reaching the decision to invest in the Restricted Shares, Grantee has carefully evaluated Grantee’s financial resources and investment position and the risks associated with this investment, and Grantee acknowledges that Grantee is able to bear the economic risks of the investment.  Grantee (i) has adequate means of providing for Grantee’s current needs and possible personal contingencies, (ii) has no need for liquidity in Grantee’s investment, (iii) is able to bear the substantial economic risks of an investment in the Restricted Shares for an indefinite period and (iv) at the present time, can afford a complete loss of such investment.  Grantee’s commitment to investments which are not readily marketable is not disproportionate to Grantee’s net worth and Grantee’s investment in the Restricted Shares will not cause Grantee’s overall commitment to become excessive.

(d)  Access to Data .  Grantee acknowledges that during the course of this transaction and before deciding to acquire the Restricted Shares, Grantee has been provided with financial and other written information about the Company.  Grantee has been given the opportunity by the Company to obtain any information and ask questions concerning the Company, the Restricted Shares, and Grantee’s investment that Grantee felt necessary; and to the extent Grantee availed himself of that opportunity, Grantee has received satisfactory information and answers concerning the business and financial condition of the Company in response to all inquiries in respect thereof.

 

(e)  Risks .  Grantee acknowledges and understands that (i) an investment in the Company constitutes a high risk, (ii) the Restricted Shares are highly speculative, and (iii) there can be no assurance as to what investment return, if any, there may be.  Grantee is aware that the Company may issue additional securities in the future which could result in the dilution of Grantee’s ownership interest in the Company.

 

(f)  Valid Agreement .  This Agreement when executed and delivered by Grantee will constitute a valid and legally binding obligation of Grantee which is enforceable in accordance with its terms.

(g)  Residence .  The address set forth on the Notice of Restricted Shares Grant is Grantee’s current address and accurately sets forth Grantee’s place of residence.

 

(h)  Tax Consequences .  Grantee has reviewed with Grantee’s own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Agreement.  Grantee is relying solely on such advisors and not on any statements or representations of the Company or any of its agents.  Grantee understands that Grantee (and not the Company) is responsible for Grantee’s own tax liability that may arise as a result of the transactions contemplated by this Agreement.  Grantee understands that Section 83 of the Internal Revenue Code of 1986, as amended (the “ Code ”), taxes as ordinary income the difference between the purchase price for the Restricted Shares and the fair market value of the Restricted Shares as of the date any restrictions on the Restricted Shares lapse.  Grantee understands that Grantee may elect to be taxed at the time the Restricted Shares is purchased rather than when and as the restrictions lapse by filing an election under Section 83(b) of the Code with the Internal Revenue Service within 30 days from the date of purchase.  The form for making this election is attached as  Exhibit A  hereto.

GRANTEE ACKNOWLEDGES THAT IT IS GRANTEE’S SOLE RESPONSIBILITY AND NOT THE COMPANY’S TO FILE TIMELY ANY ELECTION UNDER SECTION 83(b), EVEN IF GRANTEE REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON GRANTEE’S BEHALF.

7.  No Employment Contract Created .  The issuance of the Restricted Shares is not be construed as granting to Grantee any right with respect to continuance of employment or any service with the Company or any of its subsidiaries.  The right of the Company or any of its subsidiaries to terminate at will Grantee's employment or terminate Grantee’s service at any time (whether by dismissal, discharge or otherwise), with or without cause, is specifically reserved, subject to any other written employment or other agreement to which the Company and Grantee may be a party.

 

8.  Tax Withholding .  The Company has the power and the right to deduct or withhold, or require Grantee to remit to the Company, an amount sufficient to satisfy Federal, state and local taxes (including the Grantee’s FICA obligation) required by law to be withheld with respect to the grant and vesting of the Restricted Shares.

 

9.  Interpretation .  The Restricted Shares are being issued pursuant to the terms of the Plan, and are to be interpreted in accordance therewith.  The Administrator will interpret and construe this Agreement and the Plan, and any action, decision, interpretation or determination made in good faith by the Administrator will be final and binding on the Company and Grantee.

 

10.  Notices .   All notices or other communications which are required or permitted hereunder will be in writing and sufficient if (i) personally delivered or sent by telecopy, (ii) sent by nationally-recognized overnight courier or (iii) sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

 

(a)           if to the Grantee, to the address (or telecopy number) set forth on the Notice of Grant; and

(b)           if to the Company, to its principal executive office as specified in any report filed by the Company with the Securities and Exchange Commission or to such address as the Company may have specified to the Grantee in writing, Attention: Corporate Secretary;

or to such other address as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith.  Any such communication will be deemed to have been given (i) when delivered, if personally delivered, or when telecopied, if telecopied, (ii) on the first Business Day (as hereinafter defined) after dispatch, if sent by nationally-recognized overnight courier and (iii) on the fifth Business Day following the date on which the piece of mail containing such communication is posted, if sent by mail.  As used herein, “ Business Day ” means a day that is not a Saturday, Sunday or a day on which banking institutions in the city to which the notice or communication is to be sent are not required to be open.

11.  Specific Performance .  Grantee expressly agrees that the Company will be irreparably damaged if the provisions of this Agreement and the Plan are not specifically enforced.  Upon a breach or threatened breach of the terms, covenants and/or conditions of this Agreement or the Plan by Grantee, the Company will, in addition to all other remedies, be entitled to a temporary or permanent injunction, without showing any actual damage, and/or decree for specific performance, in accordance with the provisions hereof and thereof.  The Administrator has the power to determine what constitutes a breach or threatened breach of this Agreement or the Plan.  Any such determinations will be final and conclusive and binding upon Grantee.

 

12.  No Waiver .   No waiver of any breach or condition of this Agreement will be deemed to be a waiver of any other or subsequent breach or condition, whether of like or different nature.

 

13.  Grantee Undertaking .   Grantee hereby agrees to take whatever additional actions and execute whatever additional documents the Company may in its reasonable judgment deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on Grantee pursuant to the express provisions of this Agreement.

 

14.  Modification of Rights .   The rights of Grantee are subject to modification and termination in certain events as provided in this Agreement and the Plan.

 

15.  Governing Law .   This Agreement is governed by, and construed in accordance with, the laws of the State of Texas, without giving effect to its conflict or choice of law principles that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.

 

16.  Counterparts; Facsimile Execution .   This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original, but all of which together will constitute one and the same instrument.  Facsimile execution and delivery of this Agreement is legal, valid and binding execution and delivery for all purposes.

 

17.  Entire Agreement .   This Agreement (including the Notice of Restricted Shares Grant) and the Plan, constitute the entire agreement between the parties with respect to the subject matter hereof, and supersede all previously written or oral negotiations, commitments, representations and agreements with respect thereto.

 

18.  Severability .   In the event one or more of the provisions of this Agreement should, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability will not affect any other provisions of this Agreement, and this Agreement will be construed as if such invalid, illegal or unenforceable provision had never been contained herein.

 

19.  WAIVER OF JURY TRIAL .   THE GRANTEE HEREBY EXPRESSLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

[Signature Page Follows]

IN WITNESS WHEREOF , the parties hereto have executed this Restricted Share Grant Agreement as of the date first written above.

PEDEVCO CORP.

By:________________________________________

Name:___________________________________

Title:____________________________________

GRANTEE:

__________________________________________

Name:

SPOUSE'S CONSENT TO AGREEMENT

(Required where Grantee resides in a community property state)

I acknowledge that I have read the Agreement and the Plan and that I know and understand the contents of both.  I am aware that my spouse has agreed therein to the imposition of certain forfeiture provisions and restrictions on transferability with respect to the Restricted Shares that are the subject of the Agreement, including with respect to my community interest therein, if any, on the occurrence of certain events described in the Agreement.  I hereby consent to and approve of the provisions of the Agreement, and agree that I will abide by the Agreement and bequeath any interest in the Restricted Shares which represents a community interest of mine to my spouse or to a trust subject to my spouse's control or for my spouse's benefit or the benefit of our children if I predecease my spouse.

Dated:  ____________________________________

____________________________________

Signature

____________________________________

Print Name

Exhibit A

  

ELECTION UNDER SECTION 83(b)

 

OF THE INTERNAL REVENUE CODE OF 1986

The undersigned taxpayer hereby elects, pursuant to Sections 55 and 83(b) of the Internal Revenue Code of 1986, as amended, to include in taxpayer’s gross income or alternative minimum taxable income, as the case may be, for the current taxable year the amount of any compensation taxable to taxpayer in connection with taxpayer’s receipt of the property described below.

1.                        The name, address, taxpayer identification number and taxable year of the undersigned are as follows:

	TAXPAYER:	SPOUSE:
NAME:
ADDRESS:
IDENTIFICATION NO.:
TAXABLE YEAR:

 

2.                        The property with respect to which the election is made is described as follows: ____ shares (the “ Shares ”) of the Common Stock of PEDEVCO Corp. (the “ Company ”).

 

3.	The date on which the property was transferred is:___________________ ,______.

 

4.	The property is subject to the following restrictions:

 

The Shares may not be transferred and are subject to forfeiture under the terms of an agreement between the taxpayer and the Company.  These restrictions lapse upon the satisfaction of certain conditions contained in such agreement.

 

5.                        The fair market value at the time of transfer, determined without regard to any restriction other than a restriction which by its terms will never lapse, of such property is:  $_________________.

 

6.	The amount (if any) paid for such property is:  $_________________.

The undersigned has submitted a copy of this statement to the person for whom the services were performed in connection with the undersigned’s receipt of the above-described property.  The transferee of such property is the person performing the services in connection with the transfer of said property.

The undersigned understands that the foregoing election may not be revoked except with the consent of the Commissioner .

 

Dated: ______________________, _____

Taxpayer

The undersigned spouse of taxpayer joins in this election.

 

Dated: ______________________, _____

Spouse of Taxpayer

 

Page 9 of 9

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EXHIBIT 4.3

 

PEDEVCO CORP.

 

2012 EQUITY INCENTIVE PLAN

 

STOCK OPTION AGREEMENT

 

Unless otherwise defined herein, the terms in the Stock Option Agreement (the “ Option Agreement ”) have the same meanings as defined in the PEDEVCO Corp. (formerly Blast Energy Services, Inc.) 2012 Equity Incentive Plan (the “ Plan ”).

 

I. NOTICE OF STOCK OPTION GRANT

 

Optionee: _______________________________________________

 

Address: _______________________________________________

 

You have been granted an Option to purchase Common Stock of the Company, subject to the terms and conditions of the Plan and this Option Agreement, as follows:

 

Grant Date: _______________________________________________         

 

Vesting Commencement Date: _____________________________________         

 

Exercise Price per Share:  ________________________________________         

 

Total Number of Shares Granted:  __________________________________        

 

Total Exercise Price:  ___________________________________________

 

Type of Option:    _______________________________________________         

 

Expiration Date:    _______________________________________________         

 

Vesting Schedule: ______________________________________________         

 

Termination Period: _______________________________________

 

To the extent vested, this Option will be exercisable for three (3) months after Optionee ceases to be a Service Provider, unless termination is due to Optionee’s death or Disability, in which case this Option will be exercisable for twelve (12) months   after Optionee ceases to be a Service Provider.  In the event of termination due to Optionee’s death, the Company shall use commercially reasonable efforts to notify Optionee’s estate of the exercisability of the Option following Optionee’s death.  Notwithstanding the foregoing sentence, in no event may this Option be exercised after any termination of the Optionee as a Service Provider determined by the Company’s Board to be for Cause or after the Expiration Date as provided above and this Option may be subject to earlier termination as provided in the Plan.

 

“ Cause ” has the meaning ascribed to such term or words of similar import in Optionee’s written employment or service contract with the Company or its Parent or any Subsidiary and, in the absence of such agreement or definition, means Optionee’s (i) conviction of, or plea of nolo contendere to, a felony or any other crime involving moral turpitude; (ii) fraud on or misappropriation of any funds or property of the Company or its subsidiaries, or any affiliate, customer or vendor; (iii) personal dishonesty, incompetence, willful misconduct, willful violation of any law, rule or regulation (other than minor traffic violations or similar offenses), or breach of fiduciary duty which involves personal profit; (iv) willful misconduct in connection with Optionee’s duties or willful failure to perform Optionee’s responsibilities in the best interests of the Company or its subsidiaries; (v) illegal use or distribution of drugs; (vi) violation of any material rule, regulation, procedure or policy of the Company or its subsidiaries, the violation of which could have a material detriment to the Company; or (vii) material breach of any provision of any employment, non-disclosure, non-competition, non-solicitation or other similar agreement executed by Optionee for the benefit of the Company or its subsidiaries, all as reasonably determined by the Company’s Board, which determination will be conclusive.  

II. AGREEMENT

 

1.  Grant of Option .  The Administrator grants to the Optionee named in the Notice of Stock Option Grant in  Part I  of this Option Agreement, an Option to purchase the number of Shares set forth in the Notice of Stock Option Grant, at the exercise price per Share set forth in the Notice of Stock Option Grant (the “ Exercise Price ”), and subject to the terms and conditions of the Plan, which is incorporated herein by reference.  In the event of a conflict between the terms and conditions of the Plan and this Option Agreement, the terms and conditions of the Plan prevail.

 

If designated in the Notice of Stock Option Grant as an Incentive Stock Option, this Option is intended to qualify as an Incentive Stock Option as defined in Code section 422.  Nevertheless, to the extent that it exceeds the $100,000 rule of Code section 422(d), this Option will be treated as a Nonstatutory Stock Option.

 

2.  Exercise of Option .

 

(a)  Right to Exercise .  This Option is exercisable during its term in accordance with the Vesting Schedule set out in the Notice of Stock Option Grant and with the applicable provisions of the Plan and this Option Agreement.

 

(b)  Method of Exercise .  This Option is exercisable by (i) delivery of an exercise notice in the form attached as  Exhibit A  (the “ Exercise Notice ”) or in a manner and pursuant to procedures as the Administrator may determine, which will state the election to exercise the Option, the number of Shares with respect to which the Option is being exercised, and other representations and agreements as may be required by the Company and (ii) paying the Company in full the aggregate Exercise Price as to all Shares being acquired, together with any applicable tax withholding.

 

This Option will be deemed to be exercised upon receipt by the Company of a fully executed Exercise Notice accompanied by the aggregate Exercise Price, together with any applicable tax withholding.

 

No Shares will be issued pursuant to the exercise of an Option unless the issuance and exercise of Shares complies with Applicable Laws.  Assuming compliance, for income tax purposes the Shares will be considered transferred to the Optionee on the date on which the Option is exercised with respect to the Shares.

 

3.  Method of Payment .  The aggregate Exercise Price may be paid by any of the following, or a combination thereof, at the election of the Optionee:

 

 

(b) check;

 

(c) to the extent not prohibited by Section 402 of the Sarbanes-Oxley Act of 2002, a promissory note;

 

(d) other Shares, provided Shares have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option will be exercised;

(e) by asking the Company to withhold Shares from the total Shares to be delivered upon exercise equal to the number of Shares having a value equal to the aggregate Exercise Price of the Shares being acquired;

 

(f) any combination of the foregoing methods of payment; or

 

(g) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws.

 

4.  Restrictions on Exercise .  This Option may not be exercised (a) until such time as the Plan has been approved by the stockholders of the Company, or (b) if the issuance of such Shares upon such exercise or the method of payment of consideration for such shares would constitute a violation of any Applicable Laws.  The Company will be relieved of any liability with respect to any delayed issuance of shares or its failure to issue shares if such delay or failure is necessary to comply with Applicable Laws.

 

5.  Non-Transferability of Option .  This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by Optionee.  The terms of the Plan and this Option Agreement are binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

 

6.  Term of Option .  This Option may be exercised only within the term set out in the Notice of Stock Option Grant, and may be exercised during the term only in accordance with the Plan and the terms of this Option.

 

7.  Tax Obligations .

 

(a)  Withholding Taxes .  Optionee agrees to arrange for the satisfaction of all Federal, state, local and foreign income and employment tax withholding requirements applicable to the Option exercise.  Optionee acknowledges and agrees that the Company may refuse to honor the exercise and refuse to deliver the Shares if withholding amounts are not delivered at the time of exercise.

 

(b)  Notice of Disqualifying Disposition of ISO Shares .  If the Option granted to Optionee is an ISO, and if Optionee sells or otherwise disposes of any of the Shares acquired pursuant to the ISO on or before the later of (i) the date two (2) years after the Grant Date, or (ii) the date one (1) year after the date of exercise, the Optionee must immediately notify the Company of the disposition in writing.  Optionee agrees that Optionee may be subject to income tax withholding by the Company on the compensation income recognized by the Optionee.

 

(c)  Code Section 409A.   Under Code section 409A, an Option that vests after December 31, 2004 that was granted with a per Share exercise price that is determined by the Internal Revenue Service (the “ IRS ”) to be less than the Fair Market Value of a Share on the Grant Date (a “ discount option ”) may be considered deferred compensation.  An Option that is a discount option may result in (i) income recognition by the Optionee prior to the exercise of the Option, (ii) an additional twenty percent (20%) tax, and (iii) potential penalty and interest charges.  Optionee acknowledges that the Company cannot and has not guaranteed that the IRS will agree that the per Share Exercise Price of this Option equals or exceeds Fair Market Value of a Share on the Grant Date in a later examination.  Optionee agrees that if the IRS determines that the Option was granted with a per Share exercise price that was less than the Fair Market Value of a Share on the Grant Date, Optionee will be solely responsible for any and all resulting tax consequences.

8.  No Guarantee of Continued Service .  OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING OPTIONEE) AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER. OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS OPTION AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND WILL NOT INTERFERE IN ANY WAY WITH OPTIONEE’S RIGHT OR THE RIGHT OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING OPTIONEE) TO TERMINATE OPTIONEE’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.

 

9.  Notices .  All notices or other communications which are required or permitted hereunder will be in writing and sufficient if (i) personally delivered or sent by telecopy, (ii) sent by nationally-recognized overnight courier or (iii) sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

 

(a)           if to the Optionee, to the address (or telecopy number) set forth on the Notice of Stock Option Grant; and

(b)           if to the Company, to its principal executive office as specified in any report filed by the Company with the Securities and Exchange Commission or to such address as the Company may have specified to the Grantee in writing, Attention: Corporate Secretary;

 

or to any other address as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith.  Any communication will be deemed to have been given (i) when delivered, if personally delivered, or when telecopied, if telecopied, (ii) on the first Business Day (as hereinafter defined) after dispatch, if sent by nationally-recognized overnight courier and (iii) on the fourth Business Day following the date on which the piece of mail containing the communication is posted, if sent by mail.  As used herein, “ Business Day ” means a day that is not a Saturday, Sunday or a day on which banking institutions in the city to which the notice or communication is to be sent are not required to be open.

 

10.  Specific Performance .  Optionee expressly agrees that the Company will be irreparably damaged if the provisions of this Option Agreement and the Plan are not specifically enforced.  Upon a breach or threatened breach of the terms, covenants and/or conditions of this Option Agreement or the Plan by the Optionee, the Company will, in addition to all other remedies, be entitled to a temporary or permanent injunction, without showing any actual damage, and/or decree for specific performance, in accordance with the provisions hereof and thereof.  The Administrator has the power to determine what constitutes a breach or threatened breach of this Option Agreement or the Plan.  The Administrator’s determinations will be final and conclusive and binding upon the Optionee.

  

11.  No Waiver .  No waiver of any breach or condition of this Option Agreement will be deemed to be a waiver of any other or subsequent breach or condition, whether of like or different nature.

 

12.  Optionee Undertaking .  The Optionee agrees to take whatever additional actions and execute whatever additional documents the Company may in its reasonable judgment deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on the Optionee pursuant to the express provisions of this Option Agreement.

 

13.  Modification of Rights .  The rights of the Optionee are subject to modification and termination in certain events as provided in this Option Agreement and the Plan.

 

14.  Governing Law .  This Agreement is governed by, and construed in accordance with, the laws of the State of Texas, without giving effect to its conflict or choice of law principles that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.

16.  Counterparts; Facsimile Execution .  This Option Agreement may be executed in one or more counterparts, each of which will be deemed to be an original, but all of which together constitute one and the same instrument.  Facsimile execution and delivery of this Option Agreement is legal, valid and binding execution and delivery for all purposes.

 

17.  Entire Agreement .  The Plan, this Option Agreement, and upon execution, the Exercise Notice, constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee.

 

18.  Severability .  In the event one or more of the provisions of this Option Agreement should, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability will not affect any other provisions of this Option Agreement, and this Option Agreement will be construed as if such invalid, illegal or unenforceable provision had never been contained herein.

 

19.  WAIVER OF JURY TRIAL .  THE OPTIONEE EXPRESSLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS OPTION AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

[remainder of page left blank intentionally]

Optionee acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions thereof, and accepts this Option subject to all of the terms and provisions thereof.  Optionee has reviewed the Plan and this Option in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option and fully understands all provisions of the Option.  Optionee agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan or this Option.  Optionee further agrees to notify the Company upon any change in the residence address indicated below.

 

 

OPTIONEE				PEDEVCO CORP.
Signature				By:
Print Name:				Print Name:
Address:				Address:
				Date Received:

 

EXHIBIT A

 

2012 EQUITY INCENTIVE PLAN

 

EXERCISE NOTICE

PEDEVCO Corp.

[Address]

Attention: _______________, _________________

 

1.  Exercise of Option .  Effective as of today, _____________, _____, the undersigned (“ Optionee ”) elects to exercise Optionee’s option to purchase _________ shares of the Common Stock (the “ Shares ”) of PEDEVCO Corp. (the “ Company ”) under and pursuant to the PEDEVCO Corp. 2012 Equity Incentive Plan (the “ Plan ”) and the Stock Option Agreement dated ____________, ____ (the “ Option Agreement ”).

 

2.  Delivery of Payment .  Optionee herewith delivers to the Company the full purchase price of the Shares, as set forth in the Option Agreement, and any and all withholding taxes due in connection with the exercise of the Option.

 

3.  Representations of Optionee .  Optionee acknowledges that Optionee has received, read and understood the Plan and the Option Agreement and agrees to abide by and be bound by their terms and conditions.

 

4.  Rights as Stockholder .  Until the issuance of the Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder exists with respect to the Optioned Stock, notwithstanding the exercise of the Option.  Subject to the requirements of  Section 6  below, the Shares will be issued to the Optionee as soon as practicable after the Option is exercised in accordance with the Option Agreement.  No adjustment will be made for a dividend or other right for which the record date is prior to the date of issuance except as provided in the Plan.

 

5.  Tax Consultation .  Optionee understands that Optionee may suffer adverse tax consequences as a result of Optionee’s purchase or disposition of the Shares.  Optionee represents that Optionee has consulted with any tax consultants Optionee deems advisable in connection with the purchase or disposition of the Shares and that Optionee is not relying on the Company for any tax advice.

 

6.  Refusal to Transfer .  The Company will not (i) transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Exercise Notice, or (ii) be required to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares have been so transferred.

 

7.  Successors and Assigns .  The Company may assign any of its rights under this Exercise Notice to single or multiple assignees, and this Exercise Notice inures to the benefit of the successors and assigns of the Company.  Subject to the restrictions on transfer herein set forth, this Exercise Notice is binding upon Optionee and his or her heirs, executors, administrators, successors and assigns.

 

8.  Interpretation .  Any dispute regarding the interpretation of this Exercise Notice will be submitted by Optionee or by the Company forthwith to the Administrator for review at its next regular meeting.  The resolution of disputes by the Administrator will be final and binding on all parties.

9.  Governing Law; Severability .  This Exercise Notice is be governed by, and construed in accordance with, the laws of the State of Texas, without giving effect to its conflict or choice of law principles that might otherwise refer construction or interpretation of this Exercise to the substantive law of another jurisdiction.  In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Exercise Notice will continue in full force and effect.

 

10.  Notices .  Any notice required or permitted hereunder will be provided in writing and deemed effective if provided in the manner specified in the Option Agreement.

 

11.  Further Instruments .  The parties agree to execute any further instruments and to take any further action as may be reasonably necessary to carry out the purposes and intent of the Option Agreement and this Exercise Notice.

 

12.  Entire Agreement .  The Plan and Option Agreement are incorporated herein by reference.  This Exercise Notice, the Plan, and the Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee.

 

[signature page follows]

Submitted by:				Accepted by:
OPTIONEE				PEDEVCO CORP.
Signature				By:
Print Name:				Print Name:
Address:				Address:
				Date Received:

 

 

Page 9 of 9

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EXHIBIT 4.4

 

PACIFIC ENERGY DEVELOPMENT CORP.

 

2012 EQUITY INCENTIVE PLAN

 

 

1.

Purposes of the Plan .  Pacific Energy Development Corp., a Nevada corporation (the “ Company ”) hereby establishes the PACIFIC ENERGY DEVELOPMENT CORP. 2012 EQUITY INCENTIVE PLAN (the “ Plan ”). The purposes of this Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees, Directors and Consultants, and to promote the long-term growth and profitability of the Company.  The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Units and Performance Shares as the Administrator may determine.

2.            Definitions .  The following definitions will apply to the terms in the Plan:

“ Administrator ” means the Board or any of its Committees as will be administering the Plan, in accordance with Section 4 .

“ Applicable Laws ” means the requirements relating to the administration of equity-based awards under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Awards are, or will be, granted under the Plan.

“ Award ” means, individually or collectively, a grant under the Plan of Options, SARs, Restricted Stock, Restricted Stock Units, Performance Units or Performance Shares.

“ Award Agreement ” means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan.

“ Board ” means the Board of Directors of the Company.

“ Change in Control ” means the occurrence of any of the following events:

(i)           Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company's then outstanding voting securities; provided however, that for purposes of this subsection (i) any acquisition of securities directly from the Company shall not constitute a Change in Control; or

(ii)           The consummation of the sale or disposition by the Company of all or substantially all of the Company's assets;

(iii)           A change in the composition of the Board occurring within a two-year period, as a result of which fewer than a majority of the directors are Incumbent Directors.  “ Incumbent Directors ” means directors who either (A) are Directors as of the effective date of the Plan, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but will not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company); or

(iv)           The consummation of a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity or its parent outstanding immediately after such merger or consolidation.

For avoidance of doubt, a transaction will not constitute a Change in Control if: (i) its sole purpose is the change the state of the Company’s incorporation, or (ii) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.

“ Code ” means the Internal Revenue Code of 1986, as amended.  Any reference in the Plan to a section of the Code will be a reference to any successor or amended section of the Code.

“ Committee ” means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board in accordance with Section 4 hereof.

“ Common Stock ” means the common stock of the Company.

“ Company ” means Pacific Energy Development Corp., a Nevada corporation, or any successor thereto.

“ Consultant ” means any person, including an advisor, engaged by the Company or a Parent or Subsidiary to render services to such entity.

“ Director ” means a member of the Board.

“ Disability ” means a medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, and that either (1) renders a Participant unable to engage in any substantial gainful activity or (2) results in a Participant receiving income replacement benefits for a period of not less than three months under an employee accident and health plan covering the Participant.

“ Employee ” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director's fee by the Company will be sufficient to constitute “employment” by the Company.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

“ Fair Market Value ” means, as of any date, the value of Common Stock determined as follows:

(i)           If the Common Stock is listed on any established stock exchange or a national market system, including without limitation any division or subdivision of the Nasdaq Stock Market, its Fair Market Value will be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

(ii)           If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, including without limitation quotation through the over the counter bulletin board (“OTCQB ® ”) quotation service administered by the Financial Industry Regulatory Authority (“FINRA”), the Fair Market Value of a Share will be the closing price for the Common Stock on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or

(iii)           In the absence of an established market for the Common Stock, the Fair Market Value will be determined in good faith by the Administrator, and to the extent Section 15 applies (a) with respect to ISOs, the Fair Market Value shall be determined in a manner consistent with Code section 422 or (b) with respect to NSOs or SARs, the Fair Market Value shall be determined in a manner consistent with Code section 409A.

“ Fiscal Year ” means the fiscal year of the Company.

“ Grant Date ” means, for all purposes, the date on which the Administrator determines to grant an Award, or such other later date as is determined by the Administrator, provided that the Administrator cannot grant an Award prior to the date the material terms of the Award are established.  Notice of the Administrator’s determination to grant an Award will be provided to each Participant within a reasonable time after the Grant Date.

“ Incentive Stock Option” or “ISO ” means an Option that by its terms qualifies and is otherwise intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

“ Nonstatutory Stock Option” or “NSO ” means an Option that by its terms does not qualify or is not intended to qualify as an ISO.

“ Officer ” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

“ Option ” means a stock option granted pursuant to the Plan.

“ Optioned Shares ” means the Common Stock subject to an Option.

“ Optionee ” means the holder of an outstanding Option.

“ Parent ” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

“ Participant ” means the holder of an outstanding Award.

“ Performance Share ” means an Award denominated in Shares which may vest in whole or in part upon attainment of performance goals or other vesting criteria as the Administrator may determine pursuant to Section 10 .

“ Performance Unit ” means an Award which may vest in whole or in part upon attainment of performance goals or other vesting criteria as the Administrator may determine and which may be settled for cash, Shares or other securities or a combination of the foregoing pursuant to Section 10 .

“ Period of Restriction ” means the period during which Shares of Restricted Stock are subject to forfeiture or restrictions on transfer pursuant to Section 7 .

“ Plan ” means this 2012 Equity Incentive Plan.

“ Restricted Stock ” means Shares awarded to a Participant which are subject to forfeiture and restrictions on transferability in accordance with Section 7 .

“ Restricted Stock Unit ” means the right to receive one Share at the end of a specified period of time, which right is subject to forfeiture in accordance with Section 8 of the Plan.

“ Rule 16b-3 ” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3.

“ Section ” means a paragraph or section of this Plan.

“ Section 16(b) ” means Section 16(b) of the Exchange Act.

“ Service Provider ” means an Employee, Director or Consultant.

“ Share ” means a share of the Common Stock, as adjusted in accordance with Section 13 .

“ Stock Appreciation Right ” or “ SAR ” means the right to receive payment from the Company in an amount no greater than the excess of the Fair Market Value of a Share at the date the SAR is exercised over a specified price fixed by the Administrator in the Award Agreement, which shall not be less than the Fair Market Value of a Share on the Grant Date.  In the case of a SAR which is granted in connection with an Option, the specified price shall be the Option exercise price.

“ Subsidiary ” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.

“ Ten Percent Owner ” means any Service Provider who is, on the grant date of an ISO, the owner of Shares (determined with application of ownership attribution rules of Code Section 424(d)) possessing more than 10% of the total combined voting power of all classes of stock of the Company or any of its Subsidiaries.

3.            Stock Subject to the Plan .

a.

Stock Subject to the Plan .  Subject to the provisions of Section 13 , the maximum aggregate number of Shares that may be issued under the Plan is three million (3,000,000) Shares. The Shares may be authorized but unissued, or reacquired Common Stock.

b.

Lapsed Awards .  If an Award expires or becomes unexercisable without having been exercised in full or, with respect to Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units, is forfeited in whole or in part to the Company, the unpurchased Shares (or for Awards other than Options and SARs, the forfeited or unissued Shares) which were subject to the Award will become available for future grant or sale under the Plan (unless the Plan has terminated). With respect to SARs, only Shares actually issued pursuant to a SAR will cease to be available under the Plan; all remaining Shares subject to the SARs will remain available for future grant or sale under the Plan (unless the Plan has terminated). Shares that have actually been issued under the Plan under any Award will not be returned to the Plan and will not become available for future distribution under the Plan; provided, however, that if Shares issued pursuant to Awards of Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units are forfeited to the Company, such Shares will become available for future grant under the Plan. Shares withheld by the Company to pay the exercise price of an Award or to satisfy tax withholding obligations with respect to an Award will become available for future grant or sale under the Plan. To the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan.

c.

Share Reserve . The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as will be sufficient to satisfy the requirements of the Plan.

4.            Administration of the Plan .

a.

Procedure .  The Plan shall be administered by the Board or a Committee (or Committees) appointed by the Board, which Committee shall be constituted to comply with Applicable Laws.  If and so long as the Common Stock is registered under Section 12(b) or 12(g) of the Exchange Act, the Board shall consider in selecting the Administrator and the membership of any committee acting as Administrator the requirements regarding: (i) “nonemployee directors” within the meaning of Rule 16b-3 under the Exchange Act; (ii) “independent directors” as described in the listing requirements for any stock exchange on which Shares are listed; and (iii) Section 15(b)(i) of the Plan, if the Company pays salaries for which it claims deductions that are subject to the Code section 162(m) limitation on its U.S. tax returns.  The Board may delegate the responsibility for administering the Plan with respect to designated classes of eligible Participants to different committees consisting of two or more members of the Board, subject to such limitations as the Board or the Administrator deems appropriate.  Committee members shall serve for such term as the Board may determine, subject to removal by the Board at any time.

b.

Powers of the Administrator .  Subject to the provisions of the Plan and the approval of any relevant authorities, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator will have the authority, in its discretion:

i.           to determine the Fair Market Value;

ii.           to select the Service Providers to whom Awards may be granted hereunder;

v.           to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder.  Such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may be exercised (which may be based on continued employment, continued service or  performance criteria), any vesting acceleration (whether by reason of a Change of Control or otherwise) or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Administrator, in its sole discretion, will determine;

vi.           to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan, including the right to construe disputed or doubtful Plan and Award provisions;

vii.           to prescribe, amend and rescind rules and regulations relating to the Plan;

viii.           to modify or amend each Award (subject to Section 19(c) ) to the extent any modification or amendment is consistent with the terms of the Plan.  The Administrator shall have the discretion to extend the exercise period of Options generally provided the exercise period is not extended beyond the earlier of the original term of the Option or 10 years from the original grant date, or specifically (1) if the exercise period of an Option is extended (but to no more than 10 years from the original grant date) at a time when the exercise price equals or exceeds the fair market value of the Optioned Shares or (2) an Option cannot be exercised because such exercise would violate Applicable Laws, provided that the exercise period is not extended more than 30 days after the exercise of the Option would no longer violate Applicable Laws.

ix.           to allow Participants to satisfy withholding tax obligations in such manner as prescribed in Section 14 ;

x.           to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator;

xi.           to delay issuance of Shares or suspend Participant’s right to exercise an Award as deemed necessary to comply with Applicable Laws; and

xii.           to make all other determinations deemed necessary or advisable for administering the Plan.

c.

Effect of Administrator's Decision .  The Administrator’s decisions, determinations and interpretations will be final and binding on all Participants and any other holders of Awards.  Any decision or action taken or to be taken by the Administrator, arising out of or in connection with the construction, administration, interpretation and effect of the Plan and of its rules and regulations, shall, to the maximum extent permitted by Applicable Laws, be within its absolute discretion (except as otherwise specifically provided in the Plan) and shall be final, binding and conclusive upon the Company, all Participants and any person claiming under or through any Participant.

5.	Eligibility .  NSOs, Restricted Stock, Restricted Stock Units, SARs, Performance Units and Performance Shares may be granted to Service Providers.  ISOs may be granted as specified in Section 15(a) .

6.            Stock Options .

a.

Grant of Options .  Subject to the terms and conditions of the Plan, the Administrator, at any time and from time to time, may grant Options to Service Providers in such amounts as the Administrator will determine in its sole discretion.  For purposes of the foregoing sentence, Service Providers shall include prospective employees or consultants to whom Options are granted in connection with written offers of employment or engagement of services, respectively, with the Company; provided that no Option granted to a prospective employee or consultant may be exercised prior to the commencement of employment or services with the Company.  The Administrator may grant NSOs, ISOs, or any combination of the two.  ISOs shall be granted in accordance with Section 15(a) of the Plan.

b.

Option Award Agreement .  Each Option shall be evidenced by an Award Agreement that shall specify the type of Option granted, the Option price, the exercise date, the term of the Option, the number of Shares to which the Option pertains, and such other terms and conditions (which need not be identical among Participants) as the Administrator shall determine in its sole discretion.  If the Award Agreement does not specify that the Option is to be treated as an ISO, the Option shall be deemed a NSO.

c.

Exercise Price .  The per Share exercise price for the Shares to be issued pursuant to exercise of an Option will be no less than the Fair Market Value per Share on the Grant Date.

d.

Term of Options .  The term of each Option will be stated in the Award Agreement.  Unless terminated sooner in accordance with the remaining provisions of this Section 6, each Option shall expire either ten (10) years after the Grant Date, or after a shorter term as may be fixed by the Board.

e.

Time and Form of Payment .

i.            Exercise Date .  Each Award Agreement shall specify how and when Shares covered by an Option may be purchased.  The Award Agreement may specify waiting periods, the dates on which Options become exercisable or “vested” and, subject to the termination provisions of this section, exercise periods.  The Administrator may accelerate the exercisability of any Option or portion thereof.

ii.            Exercise of Option .  Any Option granted hereunder will be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement.  An Option may not be exercised for a fraction of a Share.  An Option will be deemed exercised when the Company receives: (1) notice of exercise (in such form as the Administrator shall specify from time to time) from the person entitled to exercise the Option, and (2) full payment for the Shares with respect to which the Option is exercised (together with all applicable withholding taxes).  Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Award Agreement and the Plan (together with all applicable withholding taxes).  Shares issued upon exercise of an Option will be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse.  Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder will exist with respect to the Optioned Shares, notwithstanding the exercise of the Option.  The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised.  No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 13 .

iii.            Payment . The Administrator will determine the acceptable form of consideration for exercising an Option, including the method of payment.  Such consideration may consist entirely of:

(1)           cash;

(2)           check;

(3)           to the extent not prohibited by Section 402 of the Sarbanes-Oxley Act of 2002, a promissory note;

(4)           other Shares, provided Shares have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option will be exercised;

(5)           to the extent not prohibited by Section 402 of the Sarbanes-Oxley Act of 2002, in accordance with any broker-assisted cashless exercise procedures approved by the Company and as in effect from time to time;

(6)           by asking the Company to withhold Shares from the total Shares to be delivered upon exercise equal to the number of Shares having a value equal to the aggregate Exercise Price of the Shares being acquired;

(7)           any combination of the foregoing methods of payment; or

(8)           such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws.

f.

Forfeiture of Options .  All unexercised Options shall be forfeited to the Company in accordance with the terms and conditions set forth in the Award Agreement and again will become available for grant under the Plan.

7.	Restricted Stock .

a.

Grant of Restricted Stock .  Subject to the terms and conditions of the Plan, the Administrator, at any time and from time to time, may grant Shares of Restricted Stock to Service Providers in such amounts as the Administrator will determine in its sole discretion.

b.

Restricted Stock Award Agreement .  Each Award of Restricted Stock will be evidenced by an Award Agreement that will specify the Period of Restriction, the number of Shares granted, and such other terms and conditions (which need not be identical among Participants) as the Administrator will determine in its sole discretion. Unless the Administrator determines otherwise, the Company as escrow agent will hold Shares of Restricted Stock until the restrictions on such Shares have lapsed.

c.

Vesting Conditions and Other Terms .

i.            Vesting Conditions .  The Administrator, in its sole discretion, may impose such conditions on the vesting of Shares of Restricted Stock as it may deem advisable or appropriate, including but not limited to, achievement of Company-wide, business unit, or individual goals (including, but not limited to, continued employment or service), or any other basis determined by the Administrator in its discretion.  The Administrator, in its discretion, may accelerate the time at which any restrictions will lapse or be removed.  The Administrator may, in its discretion, also provide for such complete or partial exceptions to an employment or service restriction as it deems equitable.

ii.            Voting Rights .  During the Period of Restriction, Service Providers holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares, unless the Administrator determines otherwise.

iii.            Dividends and Other Distributions .  During the Period of Restriction, Service Providers holding Shares of Restricted Stock will be entitled to receive all dividends and other distributions paid with respect to such Shares, unless the Administrator determines otherwise. If any such dividends or distributions are paid in Shares, the Shares will be subject to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid.

iv.            Transferability .  Except as provided in this Section, Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction.

d.

Removal of Restrictions .  All restrictions imposed on Shares of Restricted Stock shall lapse and the Period of Restriction shall end upon the satisfaction of the vesting conditions imposed by the Administrator.  Vested Shares of Restricted Stock will be released from escrow as soon as practicable after the last day of the Period of Restriction or at such other time as the Administrator may determine, but in no event later than the 30 th day following the date on which vesting occurred.

e.

Forfeiture of Restricted Stock .  On the date set forth in the Award Agreement, the Shares of Restricted Stock for which restrictions have not lapsed will be forfeited and revert to the Company and again will become available for grant under the Plan.

8.	Restricted Stock Units .

a.

Grant of Restricted Stock Units .  Subject to the terms and conditions of the Plan, the Administrator, at any time and from time to time, may grant Restricted Stock Units to Service Providers in such amounts as the Administrator will determine in its sole discretion.

b.

Restricted Stock Units Award Agreement .  Each Award of Restricted Stock Units will be evidenced by an Award Agreement that will specify the number of Restricted Stock Units granted, vesting criteria, form of payout, and such other terms and conditions (which need not be identical among Participants) as the Administrator will determine in its sole discretion.

c.

Vesting Conditions .  The Administrator shall set vesting criteria in its discretion, which, depending on the extent to which the criteria are met, will determine the number of Restricted Stock Units that will be paid out to the Participant. The Administrator may set vesting criteria based upon the achievement of Company-wide, business unit, or individual goals (including, but not limited to, continued employment or service), or any other basis determined by the Administrator in its discretion.  At any time after the grant of Restricted Stock Units, the Administrator, in its sole discretion, may reduce or waive any vesting criteria that must be met to receive a payout.

d.

Time and Form of Payment .  Upon satisfaction of the applicable vesting conditions, payment of vested Restricted Stock Units shall occur in the manner and at the time provided in the Award Agreement, but in no event later than the 15 th day of the third month following the end of the year in which vesting occurred.  Except as otherwise provided in the Award Agreement, Restricted Stock Units may be paid in cash, Shares, or a combination thereof at the sole discretion of the Administrator.  Restricted Stock Units that are fully paid in cash will not reduce the number of Shares available for issuance under the Plan.

e.

Forfeiture of Restricted Stock Units .  All unvested Restricted Stock Units shall be forfeited to the Company on the date set forth in the Award Agreement and again will become available for grant under the Plan.

9.	Stock Appreciation Rights .

a.

Grant of SARs .  Subject to the terms and conditions of the Plan, the Administrator, at any time and from time to time, may grant SARs to Service Providers in such amounts as the Administrator will determine in its sole discretion.

b.

Award Agreement .  Each SAR grant will be evidenced by an Award Agreement that will specify the exercise price, the number of Shares underlying the SAR grant, the term of the SAR, the conditions of exercise, and such other terms and conditions (which need not be identical among Participants) as the Administrator will determine in its sole discretion.

c.

Exercise Price and Other Terms .  The per Share exercise price for the exercise of an SAR will be no less than the Fair Market Value per Share on the Grant Date.

d.

Time and Form of Payment of SAR Amount .  Upon exercise of a SAR, a Participant will be entitled to receive payment from the Company in an amount no greater than: (i) the difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times (ii) the number of Shares with respect to which the SAR is exercised.  An Award Agreement may provide for a SAR to be paid in cash, Shares of equivalent value, or a combination thereof.

e.

Forfeiture of SARs .  All unexercised SARs shall be forfeited to the Company in accordance with the terms and conditions set forth in the Award Agreement and again will become available for grant under the Plan.

10.	Performance Units and Performance Shares .

a.

Grant of Performance Units and Performance Shares.   Performance Units or Performance Shares may be granted to Service Providers at any time and from time to time, as will be determined by the Administrator, in its sole discretion. The Administrator will have complete discretion in determining the number of Performance Units and Performance Shares granted to each Participant.

b.

Award Agreement .  Each Award of Performance Units and Shares will be evidenced by an Award Agreement that will specify the initial value, the Performance Period, the number of Performance Units or Performance Shares granted, and such other terms and conditions (which need not be identical among Participants) as the Administrator will determine in its sole discretion.

c.

Value of Performance Units and Performance Shares .  Each Performance Unit will have an initial value that is established by the Administrator on or before the Grant Date. Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the Grant Date.

d.

Vesting Conditions and Performance Period .  The Administrator will set performance objectives or other vesting provisions (including, without limitation, continued status as a Service Provider) in its discretion which, depending on the extent to which they are met, will determine the number or value of Performance Units or Performance Shares that will be paid out to the Service Providers. The time period during which the performance objectives or other vesting provisions must be met will be called the “Performance Period.”  The Administrator may set performance objectives based upon the achievement of Company-wide, divisional, or individual goals or any other basis determined by the Administrator in its discretion.

e.

Time and Form of Payment .  After the applicable Performance Period has ended, the holder of Performance Units or Performance Shares will be entitled to receive a payout of the number of vested Performance Units or Performance Shares by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance objectives or other vesting provisions have been achieved.  Vested Performance Units or Performance Shares will be paid as soon as practicable after the expiration of the applicable Performance Period, but in no event later than the 15 th day of the third month following the end of the year the applicable Performance Period expired.   An Award Agreement may provide for the satisfaction of Performance Unit or Performance Share Awards in cash or Shares (which have an aggregate Fair Market Value equal to the value of the vested Performance Units or Performance Shares at the close of the applicable Performance Period) or in a combination thereof.

f.

Forfeiture of Performance Units and Performance Shares .  All unvested Performance Units or Performance Shares will be forfeited to the Company on the date set forth in the Award Agreement, and again will become available for grant under the Plan.

11.

Leaves of Absence/Transfer Between Locations .  Unless the Administrator provides otherwise or as required by Applicable Laws, vesting of Awards will be suspended during any unpaid leave of absence. An Employee will not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, or any Subsidiary.

12.

Transferability of Awards .  Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by the Participant.  If the Administrator makes an Award transferable, such Award will contain such additional terms and conditions as the Administrator deems appropriate.

13.            Adjustments; Dissolution or Liquidation; Merger or Change in Control .

a.

Adjustments .  In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, shall appropriately adjust the number and class of Shares that may be delivered under the Plan and/or the number, class, and price of Shares covered by each outstanding Award.

b.

Dissolution or Liquidation .  In the event of the proposed dissolution or liquidation of the Company, the Administrator will notify each Participant as soon as practicable prior to the effective date of such proposed transaction.  To the extent it has not been previously exercised, an Award will terminate immediately prior to the consummation of such proposed action.

c.

Change in Control . In the event of a merger or Change in Control, any or all outstanding Awards may be assumed by the successor corporation, which assumption shall be binding on all Participants. In the alternative, the successor corporation may substitute equivalent Awards (after taking into account the existing provisions of the Awards). The successor corporation may also issue, in place of outstanding Shares of the Company held by the Participant, substantially similar shares or other property subject to vesting requirements and repurchase restrictions no less favorable to the Participant than those in effect prior to the merger or Change in Control.

In the event that the successor corporation does not assume or substitute for the Award, unless the Administrator provides otherwise, the Participant will fully vest in and have the right to exercise all of his or her outstanding Options and SARs, including Shares as to which such Awards would not otherwise be vested or exercisable, all restrictions on Restricted Stock and Restricted Stock Units will lapse, and, with respect to Performance Shares and Performance Units, all Performance Goals or other vesting criteria will be deemed achieved at target levels and all other terms and conditions met. In addition, if an Option or SAR is not assumed or substituted in the event of a Change in Control, the Administrator will notify the Participant in writing or electronically that the Option or SAR will be exercisable for a period of time determined by the Administrator in its sole discretion, and the Option or SAR will terminate upon the expiration of such period.

For the purposes of this Section 13(c) , an Award will be considered assumed if, following the Change in Control, the Award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the Change in Control, the consideration (whether stock, cash, or other securities or property) or, in the case of a SAR upon the exercise of which the Administrator determines to pay cash or a Performance Share or Performance Unit which the Administrator can determine to pay in cash, the fair market value of the consideration received in the merger or Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the Change in Control is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the  exercise of an Option or SAR or upon the payout of a Restricted Stock Unit, Performance Share or Performance Unit, for each Share subject to such Award (or in the case of Restricted Stock Units and Performance Units, the number of implied shares determined by dividing the value of the Restricted Stock Units and Performance Units, as applicable, by the per share consideration received by holders of Common Stock in the Change in Control), to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the Change in Control.

Notwithstanding anything in this Section 13(c) to the contrary, an Award that vests, is earned or paid-out upon the satisfaction of one or more performance goals will not be considered assumed if the Company or its successor modifies any of such performance goals without the Participant's consent; provided, however, a modification to such performance goals only to reflect the successor corporation's post-Change in  Control corporate structure will not be deemed to invalidate an otherwise valid Award assumption.

14.            Tax Withholding .

a.

Withholding Requirements .  Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof), the Company will have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy federal, state, local, foreign or other taxes required by Applicable Laws to be withheld with respect to such Award (or exercise thereof).

b.

Withholding Arrangements .  The Administrator, in its sole discretion and pursuant to such procedures as it may specify from time to time, may permit a Participant to satisfy such tax withholding obligation, in whole or in part by (without limitation) (i) paying cash, (ii) electing to have the Company withhold otherwise deliverable Shares having a Fair Market Value equal to the amount required to be withheld, or (iii) delivering to the Company already-owned Shares having a Fair Market Value equal to the amount required to be withheld.  The amount of the withholding requirement will be deemed to include any amount which the Administrator agrees may be withheld at the time the election is made.  The Fair Market Value of the Shares to be withheld or delivered will be determined as of the date that the taxes are required to be withheld.

15.	Provisions Applicable In the Event the Company or the Service Provider is Subject to U.S. Taxation .

a.

Grant of Incentive Stock Options .  If the Administrator grants Options to Employees subject to U.S. taxation, the Administrator may grant such Employee an ISO and the following terms shall also apply:

i.            Maximum Amount .  Subject to the provisions of Section 13 , to the extent consistent with Section 422 of the Code, not more than an aggregate of three million (3,000,000)   Shares may be issued as ISOs under the Plan.

ii.            General Rule .  Only Employees shall be eligible for the grant of ISOs.

iii.            Continuous Employment .  The Optionee must remain in the continuous employ of the Company or its Subsidiaries from the date the ISO is granted until not more than three months before the date on which it is exercised.  A leave of absence approved by the Company may exceed ninety (90) days if reemployment upon expiration of such leave is guaranteed by statute or contract.  If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, then three (3) months following the ninety-first (91st) day of such leave any ISO held by the Optionee will cease to be treated as an ISO.

iv.            Award Agreement .

(1)           The Administrator shall designate Options granted as ISOs in the Award Agreement.  Notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which ISOs are exercisable for the first time by the Optionee during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000), Options will not qualify as an ISO.  For purposes of this section, ISOs will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the time the Option with respect to such Shares is granted.

(2)           The Award Agreement shall specify the term of the ISO.  The term shall not exceed ten (10) years from the Grant Date or five (5) years from the Grant Date for Ten Percent Owners.

(3)           The Award Agreement shall specify an exercise price of not less than the Fair Market Value per Share on the Grant Date or one hundred ten percent (110%) of the Fair Market Value per Share on the Grant Date for Ten Percent Owners.

(4)           The Award Agreement shall specify that an ISO is not transferable except by will, beneficiary designation or the laws of descent and distribution.

v.            Form of Payment .  The consideration to be paid for the Shares to be issued upon exercise of an ISO, including the method of payment, shall be determined by the Administrator at the time of grant in accordance with Section 6(e)(iii) .

vi.           “ Disability ,” for purposes of an ISO, means total and permanent disability as defined in Section 22(e)(3) of the Code.

vii.            Notice .  In the event of any disposition of the Shares acquired pursuant to the exercise of an ISO within two years from the Grant Date or one year from the exercise date, the Optionee will notify the Company thereof in writing within thirty (30) days after such disposition.  In addition, the Optionee shall provide the Company with such information as the Company shall reasonably request in connection with determining the amount and character of Optionee’s income, the Company’s deduction, and the Company’s obligation to withhold taxes or other amounts incurred by reason of a disqualifying disposition, including the amount thereof.

b.

Performance-based Compensation .  If the Company pays salaries for which it claims deductions that are subject to the Code section 162(m) limitation on its U.S. tax returns, then the following terms shall be applied in a manner consistent with the requirements of, and only to the extent required for compliance with, the exclusion from the limitation on deductibility of compensation under Code Section 162(m):

i.            Outside Directors .  The Board shall consider in selecting the Administrator and the membership of any committee acting as Administrator the provisions regarding “outside directors” within the meaning of Code Section 162(m).

ii.            Maximum Amount .

(1)           Subject to the provisions of Section 13 , the maximum number of Shares that can be awarded to any individual Participant in the aggregate in any one fiscal year of the Company is three million (3,000,000) Shares;

(2)           For Awards denominated in Shares and satisfied in cash, the maximum Award to any individual Participant in the aggregate in any one fiscal year of the Company is the Fair Market Value of three million (3,000,000) Shares on the Grant Date; and

(3)           The maximum amount payable pursuant to any cash Awards to any individual Participant in the aggregate in any one fiscal year of the Company is the Fair Market Value of three million (3,000,000) Shares on the Grant Date.

iii.            Performance Criteria .  All performance criteria must be objective and be established in writing prior to the beginning of the performance period or at later time as permitted by Code Section 162(m).  Performance criteria may include alternative and multiple performance goals and may be based on one or more business and/or financial criteria.  In establishing the performance goals, the Committee in its discretion may include one or any combination of the following criteria in either absolute or relative terms, for the Company or any Subsidiary:

(1)   Increased revenue;

 

(2)   Net income measures (including but not limited to income after capital costs and income before or after taxes);

 

(3)   Stock price measures (including but not limited to growth measures and total stockholder return);

 

(4)   Market share;

 

(5)   Earnings per Share (actual or targeted growth);

 

(6)   Earnings before interest, taxes, depreciation, and amortization (“EBITDA”);

 

(7)   Cash flow measures (including but not limited to net cash flow and net cash flow before financing activities);

 

(8)   Return measures (including but not limited to return on equity, return on average assets, return on capital, risk-adjusted return on capital, return on investors’ capital and return on average equity);

 

(9)   Operating measures (including operating income, funds from operations, cash from operations, after-tax operating income, sales volumes, production volumes, and production efficiency);

 

(10)   Expense measures (including but not limited to overhead cost and general and administrative expense);

 

(11)   Margins;

 

(12)   Stockholder value;

 

(13)   Total stockholder return;

 

(14)   Proceeds from dispositions;

 

(15)   Production volumes;

 

(16)   Total market value; and

 

(17)   Corporate values measures (including but not limited to ethics compliance, environmental, and safety).

c.

Stock Options and SARs Exempt from Code section 409A .  If the Administrator grants Options or SARs to Employees subject to U.S. taxation the Administrator may not modify or amend the Options or SARs to the extent that the modification or amendment adds a feature allowing for additional deferral within the meaning of Code section 409A.

16.

No Effect on Employment or Service .  Neither the Plan nor any Award will confer upon any Participant any right with respect to continuing the Participant's relationship as a Service Provider with the Company or any Parent or Subsidiary of the Company, nor will they interfere in any way with the Participant's right or the Company's or its Parent’s or Subsidiary’s right to terminate such relationship at any time, with or without cause, to the extent permitted by Applicable Laws.

17.

Effective Date .  The Plan’s effective date is the date on which it is adopted by the Board, so long as it is approved by the Company’s stockholders at any time within twelve (12) months of such adoption.  Upon approval of the Plan by the stockholders of the Company, all Awards issued pursuant to the Plan on or after the Effective Date shall be fully effective as if the stockholders of the Company had approved the Plan on the Effective Date. If the stockholders fail to approve the Plan within one year after the Effective Date, any Awards made hereunder shall be null and void and of no effect.

18.	Term of Plan .  The Plan will terminate 10 years following the earlier of (i) the date it was adopted by the Board or (ii) the date it became effective upon approval by stockholders of the Company, unless sooner terminated by the Board pursuant to Section 19 .

19.            Amendment and Termination of the Plan .

a.

Amendment and Termination .  The Board may at any time amend, alter, suspend or terminate the Plan.

b.

Stockholder Approval .  The Company will obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.

c.

Effect of Amendment or Termination .  No amendment, alteration, suspension or termination of the Plan will impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company.  Termination of the Plan will not affect the Administrator's ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.

20.            Conditions Upon Issuance of Shares .

a.

Legal Compliance .  The Administrator may delay or suspend the issuance and delivery of Shares, suspend the exercise of Options or SARs, or suspend the Plan as necessary to comply Applicable Laws.  Shares will not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel for the Company with respect to such compliance.

b.

Investment Representations .  As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.

21.

Inability to Obtain Authority .  The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority will not have been obtained.

22.

Repricing Prohibited; Exchange And Buyout of Awards .  The repricing of Options or SARs is prohibited without prior stockholder approval.  The Administrator may authorize the Company, with prior stockholder approval and the consent of the respective Participants, to issue new Option or SAR Awards in exchange for the surrender and cancellation of any or all outstanding Awards.  The Administrator may at any time repurchase Options with payment in cash, Shares or other consideration, based on such terms and conditions as the Administrator and the Participant shall agree.

23.

Substitution and Assumption of Awards .  The Administrator may make Awards under the Plan by assumption, substitution or replacement of performance shares, phantom shares, stock awards, stock options, stock appreciation rights or similar awards granted by another entity (including an Parent or Subsidiary), if such assumption, substitution or replacement is in connection with an asset acquisition, stock acquisition, merger, consolidation or similar transaction involving the Company (and/or its Parent or Subsidiary) and such other entity (and/or its affiliate).  The Administrator may also make Awards under the Plan by assumption, substitution or replacement of a similar type of award granted by the Company prior to the adoption and approval of the Plan. Notwithstanding any provision of the Plan (other than the maximum number of shares of Common Stock that may be issued under the Plan), the terms of such assumed, substituted or replaced Awards shall be as the Administrator, in its discretion, determines is appropriate.

24.	Governing Law .  The Plan and all Agreements shall be construed in accordance with and governed by the laws of the State of California.

Adopted by the Board of Directors on February 9, 2012.

 

 

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EXHIBIT 4.6

 

PACIFIC ENERGY DEVELOPMENT CORP.

 

2012 EQUITY INCENTIVE PLAN

 

STOCK OPTION AGREEMENT

 

Unless otherwise defined herein, the terms in the Stock Option Agreement (the “ Option Agreement ”) have the same meanings as defined in the Pacific Energy Development Corp. 2012 Equity Incentive Plan (the “ Plan ”).

 

I.   NOTICE OF STOCK OPTION GRANT

 

Optionee:

 

Address:

 

You have been granted an Option to purchase Common Stock of the Company, subject to the terms and conditions of the Plan and this Option Agreement, as follows:

 

Grant Date:
Vesting Commencement Date:
Exercise Price per Share:
Total Number of Shares Granted:
Total Exercise Price:
Type of Option:
Expiration Date:	Ten (10) years after Grant Date
Vesting Schedule:
Termination Period:

 

To the extent vested, this Option will be exercisable for three (3) months after Optionee ceases to be a Service Provider, unless termination is due to Optionee’s death or Disability, in which case this Option will be exercisable for twelve (12) months   after Optionee ceases to be a Service Provider.  In the event of termination due to Optionee’s death, the Company shall use commercially reasonable efforts to notify Optionee’s estate of the exercisability of the Option following Optionee’s death.  Notwithstanding the foregoing sentence, in no event may this Option be exercised after any termination of the Optionee as a Service Provider determined by the Company’s Board to be for Cause or after the Expiration Date as provided above and this Option may be subject to earlier termination as provided in the Plan.

“ Cause ” has the meaning ascribed to such term or words of similar import in Optionee’s written employment or service contract with the Company or its Parent or any Subsidiary and, in the absence of such agreement or definition, means Optionee’s (i) conviction of, or plea of nolo contendere to, a felony or any other crime involving moral turpitude; (ii) fraud on or misappropriation of any funds or property of the Company or its subsidiaries, or any affiliate, customer or vendor; (iii) personal dishonesty, incompetence, willful misconduct, willful violation of any law, rule or regulation (other than minor traffic violations or similar offenses), or breach of fiduciary duty which involves personal profit; (iv) willful misconduct in connection with Optionee’s duties or willful failure to perform Optionee’s responsibilities in the best interests of the Company or its subsidiaries; (v) illegal use or distribution of drugs; (vi) violation of any material rule, regulation, procedure or policy of the Company or its subsidiaries, the violation of which could have a material detriment to the Company; or (vii) material breach of any provision of any employment, non-disclosure, non-competition, non-solicitation or other similar agreement executed by Optionee for the benefit of the Company or its subsidiaries, all as reasonably determined by the Company’s Board, which determination will be conclusive.  

 

II.   AGREEMENT

 

1.   Grant of Option .  The Administrator grants to the Optionee named in the Notice of Stock Option Grant in Part I of this Option Agreement, an Option to purchase the number of Shares set forth in the Notice of Stock Option Grant, at the exercise price per Share set forth in the Notice of Stock Option Grant (the “ Exercise Price ”), and subject to the terms and conditions of the Plan, which is incorporated herein by reference.  In the event of a conflict between the terms and conditions of the Plan and this Option Agreement, the terms and conditions of the Plan prevail.

 

If designated in the Notice of Stock Option Grant as an Incentive Stock Option, this Option is intended to qualify as an Incentive Stock Option as defined in Code section 422.  Nevertheless, to the extent that it exceeds the $100,000 rule of Code section 422(d), this Option will be treated as a Nonstatutory Stock Option.

 

2.   Exercise of Option .

 

(a)   Right to Exercise .  This Option is exercisable during its term in accordance with the Vesting Schedule set out in the Notice of Stock Option Grant and with the applicable provisions of the Plan and this Option Agreement.

 

(b)   Method of Exercise .  This Option is exercisable by (i) delivery of an exercise notice in the form attached as Exhibit A (the “ Exercise Notice ”) or in a manner and pursuant to procedures as the Administrator may determine, which will state the election to exercise the Option, the number of Shares with respect to which the Option is being exercised, and other representations and agreements as may be required by the Company and (ii) paying the Company in full the aggregate Exercise Price as to all Shares being acquired, together with any applicable tax withholding.

 

This Option will be deemed to be exercised upon receipt by the Company of a fully executed Exercise Notice accompanied by the aggregate Exercise Price, together with any applicable tax withholding.

 

No Shares will be issued pursuant to the exercise of an Option unless the issuance and exercise of Shares complies with Applicable Laws.  Assuming compliance, for income tax purposes the Shares will be considered transferred to the Optionee on the date on which the Option is exercised with respect to the Shares.

 

3.   Method of Payment .  The aggregate Exercise Price may be paid by any of the following, or a combination thereof, at the election of the Optionee:

 

(a)   cash;

 

(b)   check;

 

(c)   to the extent not prohibited by Section 402 of the Sarbanes-Oxley Act of 2002, a promissory note;

 

(d)   other Shares, provided Shares have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option will be exercised;

 

(e)   by asking the Company to withhold Shares from the total Shares to be delivered upon exercise equal to the number of Shares having a value equal to the aggregate Exercise Price of the Shares being acquired;

 

(f)   any combination of the foregoing methods of payment; or

 

(g)   such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws.

 

4.   Restrictions on Exercise .  This Option may not be exercised (a) until such time as the Plan has been approved by the stockholders of the Company, or (b) if the issuance of such Shares upon such exercise or the method of payment of consideration for such shares would constitute a violation of any Applicable Laws.  The Company will be relieved of any liability with respect to any delayed issuance of shares or its failure to issue shares if such delay or failure is necessary to comply with Applicable Laws.

 

5.   Non-Transferability of Option .  This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by Optionee.  The terms of the Plan and this Option Agreement are binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

 

6.   Term of Option .  This Option may be exercised only within the term set out in the Notice of Stock Option Grant, and may be exercised during the term only in accordance with the Plan and the terms of this Option.

 

7.   Tax Obligations .

 

(a)   Withholding Taxes .  Optionee agrees to arrange for the satisfaction of all Federal, state, local and foreign income and employment tax withholding requirements applicable to the Option exercise.  Optionee acknowledges and agrees that the Company may refuse to honor the exercise and refuse to deliver the Shares if withholding amounts are not delivered at the time of exercise.

 

(b)   Notice of Disqualifying Disposition of ISO Shares .  If the Option granted to Optionee is an ISO, and if Optionee sells or otherwise disposes of any of the Shares acquired pursuant to the ISO on or before the later of (i) the date two (2) years after the Grant Date, or (ii) the date one (1) year after the date of exercise, the Optionee must immediately notify the Company of the disposition in writing.  Optionee agrees that Optionee may be subject to income tax withholding by the Company on the compensation income recognized by the Optionee.

 

(c)   Code Section 409A.   Under Code section 409A, an Option that vests after December 31, 2004 that was granted with a per Share exercise price that is determined by the Internal Revenue Service (the “ IRS ”) to be less than the Fair Market Value of a Share on the Grant Date (a “discount option”) may be considered deferred compensation.  An Option that is a discount option may result in (i) income recognition by the Optionee prior to the exercise of the Option, (ii) an additional twenty percent (20%) tax, and (iii) potential penalty and interest charges.  Optionee acknowledges that the Company cannot and has not guaranteed that the IRS will agree that the per Share Exercise Price of this Option equals or exceeds Fair Market Value of a Share on the Grant Date in a later examination.  Optionee agrees that if the IRS determines that the Option was granted with a per Share exercise price that was less than the Fair Market Value of a Share on the Grant Date, Optionee will be solely responsible for any and all resulting tax consequences.

 

8.   No Guarantee of Continued Service .  OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING OPTIONEE) AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER. OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS OPTION AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND WILL NOT INTERFERE IN ANY WAY WITH OPTIONEE’S RIGHT OR THE RIGHT OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING OPTIONEE) TO TERMINATE OPTIONEE’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.

 

9.   Notices .  All notices or other communications which are required or permitted hereunder will be in writing and sufficient if (i) personally delivered or sent by telecopy, (ii) sent by nationally-recognized overnight courier or (iii) sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

 

(a)           if to the Optionee, to the address (or telecopy number) set forth on the Notice of Stock Option Grant; and

(b)           if to the Company, to its principal executive office as specified in any report filed by the Company with the Securities and Exchange Commission or to such address as the Company may have specified to the Grantee in writing, Attention: Corporate Secretary;

or to any other address as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith.  Any communication will be deemed to have been given (i) when delivered, if personally delivered, or when telecopied, if telecopied, (ii) on the first Business Day (as hereinafter defined) after dispatch, if sent by nationally-recognized overnight courier and (iii) on the fourth Business Day following the date on which the piece of mail containing the communication is posted, if sent by mail.  As used herein, “ Business Day ” means a day that is not a Saturday, Sunday or a day on which banking institutions in the city to which the notice or communication is to be sent are not required to be open.

 

10.   Specific Performance .  Optionee expressly agrees that the Company will be irreparably damaged if the provisions of this Option Agreement and the Plan are not specifically enforced.  Upon a breach or threatened breach of the terms, covenants and/or conditions of this Option Agreement or the Plan by the Optionee, the Company will, in addition to all other remedies, be entitled to a temporary or permanent injunction, without showing any actual damage, and/or decree for specific performance, in accordance with the provisions hereof and thereof.  The Administrator has the power to determine what constitutes a breach or threatened breach of this Option Agreement or the Plan.  The Administrator’s determinations will be final and conclusive and binding upon the Optionee.

 

11.   No Waiver .  No waiver of any breach or condition of this Option Agreement will be deemed to be a waiver of any other or subsequent breach or condition, whether of like or different nature.

 

12.   Optionee Undertaking .  The Optionee agrees to take whatever additional actions and execute whatever additional documents the Company may in its reasonable judgment deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on the Optionee pursuant to the express provisions of this Option Agreement.

 

13.   Modification of Rights .  The rights of the Optionee are subject to modification and termination in certain events as provided in this Option Agreement and the Plan.

 

14.   Governing Law .  This Agreement is governed by, and construed in accordance with, the laws of the State of California, without giving effect to its conflict or choice of law principles that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.

 

15.   Counterparts; Facsimile Execution .  This Option Agreement may be executed in one or more counterparts, each of which will be deemed to be an original, but all of which together constitute one and the same instrument.  Facsimile execution and delivery of this Option Agreement is legal, valid and binding execution and delivery for all purposes.

 

16.   Entire Agreement .  The Plan, this Option Agreement, and upon execution, the Exercise Notice, constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee.

 

17.   Severability .  In the event one or more of the provisions of this Option Agreement should, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability will not affect any other provisions of this Option Agreement, and this Option Agreement will be construed as if such invalid, illegal or unenforceable provision had never been contained herein.

 

18.   WAIVER OF JURY TRIAL .  THE OPTIONEE EXPRESSLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS OPTION AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.

 

[ remainder of page left blank intentionally ]

 

Optionee acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions thereof, and accepts this Option subject to all of the terms and provisions thereof.  Optionee has reviewed the Plan and this Option in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option and fully understands all provisions of the Option.  Optionee agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan or this Option.  Optionee further agrees to notify the Company upon any change in the residence address indicated below.

OPTIONEE		PACIFIC ENERGY DEVELOPMENT CORP.
Signature		By
Print Name		Print Name
		Title
Residence Address

 

EXHIBIT A

2012 EQUITY INCENTIVE PLAN

EXERCISE NOTICE

Pacific Energy Development Corp.

[Address]

Attention: _______________, _________________

 

1.   Exercise of Option .  Effective as of today, _____________, _____, the undersigned (“ Optionee ”) elects to exercise Optionee’s option to purchase _________ shares of the Common Stock (the “ Shares ”) of Pacific Energy Development Corp. (the “ Company ”) under and pursuant to the Pacific Energy Development Corp. 2012 Equity Incentive Plan (the “ Plan ”) and the Stock Option Agreement dated ____________, ____ (the “ Option Agreement ”).

 

2.   Delivery of Payment .  Optionee herewith delivers to the Company the full purchase price of the Shares, as set forth in the Option Agreement, and any and all withholding taxes due in connection with the exercise of the Option.

 

3.   Representations of Optionee .  Optionee acknowledges that Optionee has received, read and understood the Plan and the Option Agreement and agrees to abide by and be bound by their terms and conditions.

 

4.   Rights as Stockholder .  Until the issuance of the Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder exists with respect to the Optioned Stock, notwithstanding the exercise of the Option.  Subject to the requirements of Section 6 below, the Shares will be issued to the Optionee as soon as practicable after the Option is exercised in accordance with the Option Agreement.  No adjustment will be made for a dividend or other right for which the record date is prior to the date of issuance except as provided in the Plan.

 

5.   Tax Consultation .  Optionee understands that Optionee may suffer adverse tax consequences as a result of Optionee’s purchase or disposition of the Shares.  Optionee represents that Optionee has consulted with any tax consultants Optionee deems advisable in connection with the purchase or disposition of the Shares and that Optionee is not relying on the Company for any tax advice.

 

6.   Refusal to Transfer .  The Company will not (i) transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Exercise Notice, or (ii) be required to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares have been so transferred.

 

7.   Successors and Assigns .  The Company may assign any of its rights under this Exercise Notice to single or multiple assignees, and this Exercise Notice inures to the benefit of the successors and assigns of the Company.  Subject to the restrictions on transfer herein set forth, this Exercise Notice is binding upon Optionee and his or her heirs, executors, administrators, successors and assigns.

 

8.   Interpretation .  Any dispute regarding the interpretation of this Exercise Notice will be submitted by Optionee or by the Company forthwith to the Administrator for review at its next regular meeting.  The resolution of disputes by the Administrator will be final and binding on all parties.

 

9.   Governing Law; Severability .  This Exercise Notice is be governed by, and construed in accordance with, the laws of the State of California, without giving effect to its conflict or choice of law principles that might otherwise refer construction or interpretation of this Exercise to the substantive law of another jurisdiction.  In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Exercise Notice will continue in full force and effect.

 

10.   Notices .  Any notice required or permitted hereunder will be provided in writing and deemed effective if provided in the manner specified in the Option Agreement.

 

11.   Further Instruments .  The parties agree to execute any further instruments and to take any further action as may be reasonably necessary to carry out the purposes and intent of the Option Agreement and this Exercise Notice.

 

12.   Entire Agreement .  The Plan and Option Agreement are incorporated herein by reference.  This Exercise Notice, the Plan, and the Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee’s interest except by means of a writing signed by the Company and Optionee.

 

[ signature page follows ]

 

 

 

9

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EXHIBIT 4.7

 

RESTRICTED STOCK GRANT AGREEMENT

 

THIS RESTRICTED STOCK GRANT AGREEMENT (the “ Agreement ”) is entered into as of __________________ (the “ Grant Date ”), by and between Pacific Energy Development Corp., a Nevada corporation (the “ Company ”), and ___________________ (“ Grantee ”).

 

1.   Restricted Stock Grant .

 

(a)   Contemporaneously with the execution of this Agreement, the Company will grant and issue to Grantee ______________ shares of Common Stock, par value $0.001 per share, of the Company (the “ Restricted Stock ” ) for $0.00 consideration from Grantee (the “ Purchase Price ” ).  Stock certificates evidencing the Restricted Stock will be retained by the Company for the period during which the Restricted Stock is subject to forfeiture by the Company pursuant to the terms of Section 2 hereof.

 

(b)   All shares of Restricted Stock issued hereunder shall be deemed issued to Grantee as fully paid and nonassessable shares, and Grantee shall have all rights of a stockholder with respect thereto, including the right to vote, receive dividends (including stock dividends), participate in stock splits or other recapitalizations, and exchange such shares in a merger, consolidation or other reorganization.  The term “Restricted Stock,” in addition to the shares purchased pursuant to this Agreement, also refers to all securities received in replacement of the Restricted Stock, as a stock dividend or as a result of any stock split, recapitalization, merger, reorganization, exchange or the like, and all new, substituted or additional securities or other properties to which Grantee is entitled by reason of Grantee’s ownership of the Restricted Stock.

 

2.   Vesting of Restricted Stock .

 

(a)   The Restricted Stock is restricted and subject to forfeiture by the Company until vested (the “ Repurchase Option ”).  The Restricted Stock which has vested and is no longer subject to forfeiture is referred to as “ Vested Shares .”  All Restricted Stock which has not become Vested Shares is referred to as “ Nonvested Shares .”

 

(b)   Restricted Stock will vest and become nonforfeitable in accordance with the following vesting schedule, in each case subject to Grantee’s continued service as an employee, officer, director or consultant with the Company on such date:

 

(i)	50% of the shares on the six (6) month anniversary of the Grant Date;

 

(ii)	20% on the twelve (12) month anniversary of the Grant Date;

 

(iii)

20% on the eighteen (18) month anniversary of the Grant Date; and

 

(iv)	the balance 10% on the twenty-four (24) month anniversary of the Grant Date.

 

(c)    Any Nonvested Shares of Grantee will automatically vest and become nonforfeitable if Grantee’s service as an employee, officer, director or consultant with the Company ceases owing to the Grantee’s death.

 

 

(d)   In the event of a Corporate Transaction, the Company, in its discretion, may accelerate the time at which all or any portion of Grantee’s Restricted Stock will vest.  A “Corporate Transaction” means (i) a liquidation or dissolution of the Company; (ii) a merger or consolidation of the Company with or into another corporation with the shareholders of the Company immediately prior to the merger or consolidation owning less than 50% of the voting securities of the surviving entity (or the parent of the surviving entity if the merger is a triangular merger); or (iii) a sale of all or substantially all of the assets of the Company in a single transaction or a series of related transactions.

 

(e)   Nonvested Shares may not be sold, transferred, assigned, pledged, or otherwise disposed of, directly or indirectly, whether by operation of law or otherwise.

 

3.   Forfeiture of Nonvested Shares .   Except as provided herein, if Grantee's service with the Company ceases for any reason other than Grantee’s death, any Nonvested Shares will be automatically forfeited to the Company; provided, however, that the Company may cause any Nonvested Shares immediately to vest and become nonforfeitable if Grantee’s service with the Company is terminated by the Company without cause, as determined by the Company.

 

4.   Escrow of Unvested Shares .   For purposes of facilitating the enforcement of the provisions of Section 2 above, Grantee agrees, immediately upon receipt of the certificate(s) for the Shares subject to the Repurchase Option, to deliver such certificate(s), together with an Assignment Separate from Certificate in the form attached to this Agreement as Exhibit A executed by Grantee and by Grantee’s spouse (if required for transfer), in blank, to the Secretary of the Company, or the Secretary’s designee, to hold such certificate(s) and Assignment Separate from Certificate in escrow and to take all such actions and to effectuate all such transfers and/or releases as are in accordance with the terms of this Agreement.  Grantee hereby acknowledges that the Secretary of the Company, or the Secretary’s designee, is so appointed as the escrow holder with the foregoing authorities as a material inducement to make this Agreement and that said appointment is coupled with an interest and is accordingly irrevocable.  Grantee agrees that said escrow holder shall not be liable to any party hereof (or to any other party).  The escrow holder may rely upon any letter, notice or other document executed by any signature purported to be genuine and may resign at any time.  Grantee agrees that if the Secretary of the Company, or the Secretary’s designee, resigns as escrow holder for any or no reason, the Board of Directors of the Company shall have the power to appoint a successor to serve as escrow holder pursuant to the terms of this Agreement.

 

5.   No Employment Rights .   Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a parent or subsidiary of the Company, to terminate Grantee’s employment or consulting relationship, for any reason, with or without cause.

 

6.   Section 83(b) Election .   Grantee understands that Section 83(a) of the Internal Revenue Code of 1986, as amended (the “ Code ”), taxes as ordinary income the difference between the amount paid for the Restricted Stock and the fair market value of the Restricted Stock as of the date any restrictions on the Restricted Stock lapse.  In this context, “ restriction ” means the right of the Company to buy back or forfeit the Restricted Stock pursuant to the Repurchase Option set forth in Section 2 of this Agreement.  Grantee understands that Grantee may elect to be taxed at the time the Restricted Stock is acquired, rather than when and as the Repurchase Option expires, by filing an election under Section 83(b) (an “ 83(b) Election ”) of the Code with the Internal Revenue Service within 30 days from the date of acquisition.  Even if the fair market value of the Restricted Stock at the time of the execution of this Agreement equals the amount paid for the Restricted Stock, the election must be made to avoid income under Section 83(a) in the future.  Grantee understands that failure to file such an election in a timely manner may result in adverse tax consequences for Grantee.  Grantee further understands that an additional copy of such election form should be filed with his or her federal income tax return for the calendar year in which the date of this Agreement falls.  Grantee acknowledges that the foregoing is only a summary of the effect of United States federal income taxation with respect to purchase of the Restricted Stock hereunder, and does not purport to be complete.  Grantee further acknowledges that the Company has directed Grantee to seek independent advice regarding the applicable provisions of the Code, the income tax laws of any municipality, state or foreign country in which Grantee may reside, and the tax consequences of Grantee’s death.

 

Grantee agrees that he will execute and deliver to the Company with this executed Agreement a copy of the Acknowledgment and Statement of Decision Regarding Section 83(b) Election (the “ Acknowledgment ”), attached hereto as Exhibit C .  Grantee further agrees that Grantee will execute and submit with the Acknowledgment a copy of the 83(b) Election, attached hereto as Exhibit D , if Grantee has indicated in the Acknowledgment his or her decision to make such an election.

 

GRANTEE ACKNOWLEDGES THAT IT IS GRANTEE’S SOLE RESPONSIBILITY AND NOT THE COMPANY’S TO FILE TIMELY ANY ELECTION UNDER SECTION 83(b), EVEN IF GRANTEE REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON GRANTEE’S BEHALF.

7.   Investment Representations .

 

(a)   This Agreement is made in reliance upon Grantee’s representations to the Company, which by its acceptance hereof Grantee hereby confirms, that the shares of Restricted Stock to be received by Grantee will be acquired for investment for his or her own  account, not as a nominee or agent, and not with a view to the sale or distribution of any part thereof, and that he or she has no present intention of selling, granting participation in, or otherwise distributing the same, but subject nevertheless to any requirement of law that the disposition of his or her property shall at all times be within his or her control.

 

(b)   The Grantee understands that the Restricted Stock is not registered under the Securities Act of 1933, as amended (the “ 1933 Act ”), on the basis that the sale provided for in this Agreement and the issuance of securities hereunder is exempt from registration under the 1933 Act pursuant to Section 4(2) thereof, and that the Company’s reliance on such exemption is predicated on Grantee’s representations set forth herein.  Grantee realizes that the basis for the exemption may not be present if, notwithstanding such representations, the Grantee has in mind merely acquiring shares of the Restricted Stock for a fixed or determinable period in the future, or for a market rise, or for sale if the market does not rise.  Grantee does not have any such intention.

 

(c)   Grantee understands that the Restricted Stock may not be sold, transferred, or otherwise disposed of without registration under the 1933 Act or an exemption therefrom, and that in the absence of an effective registration statement covering the Restricted Stock or an available exemption from registration under the 1933 Act, the Restricted Stock must be held indefinitely.  In particular, Grantee is aware that the Restricted Stock may not be sold pursuant to Rule 144 or Rule 701 promulgated under the 1933 Act unless all of the conditions of the applicable Rules are met.  Among the conditions for use of Rule 144 is the availability of current information to the public about the Company.  Such information is not now available, and the Company has no present plans to make such information available.  The Grantee represents that, in the absence of an effective registration statement covering the Restricted Stock, he or she will sell, transfer, or otherwise dispose of the Restricted Stock only in a manner consistent with his or her representations set forth herein and then only in accordance with the provisions of paragraph 4(d) hereof.

 

 

(d)   Grantee agrees that in no event will he or she make a transfer or disposition of any of the Restricted Stock (other than pursuant to an effective registration statement under the 1933 Act), unless and until (i) Grantee shall have notified the Company of the proposed disposition and shall have furnished the Company with a statement of the circumstances surrounding the disposition, and (ii) if requested by the Company, at the expense of Grantee or his or her transferees, Grantee shall have furnished to the Company either (A) an opinion of counsel, reasonably satisfactory to the Company, to the effect that such transfer may be made without registration under the 1933 Act or (B) a “no action” letter from the Securities and Exchange Commission to the effect that the transfer of such securities without registration will not result in a recommendation by the staff of the Securities and Exchange Commission that action be taken with respect thereto.

 

(e)   Grantee represents and warrants to the Company that he or she is an “accredited investor” within the meaning of Securities and Exchange Commission Rule 501 of Regulation D, as presently in effect.

 

8.   Legends; Stop Transfer .

 

(a)   All certificates for shares of the Restricted Stock shall bear substantially the following legends:

 

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.  THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.  THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

 

THE SALE OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITONS OF A CERTAIN RESTRICTED STOCK GRANT AGREEMENT BETWEEN THE CORPORATION AND THE HOLDER OF STOCK OF THE CORPORATION REPRESENTED BY THIS CERTIFICATE.  A COPY OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE CORPORATION.

(b)   The certificates for shares of the Restricted Stock shall also bear any legends required by applicable state corporate or securities laws.

 

(c)   In addition, the Company shall make a notation regarding the restrictions on transfer of the Restricted Stock in its stockbooks, and shares of the Restricted Stock shall be transferred on the books of the Company only if transferred or sold pursuant to an effective registration statement under the 1933 Act covering such shares or pursuant to and in compliance with the provisions of this Agreement.

 

9.   California Law .   This Agreement is to be construed in accordance with and governed by the internal laws of the State of California as permitted by Section 1646.5 of the California Civil Code (or any similar successor provision) without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of California to the rights and duties of the parties.

 

 

10.   Notice .   Any notice required to be given under the terms of this Agreement shall be addressed to the Company in care of its Secretary at the office of the Company at 4125 Blackhawk Plaza Circle, Suite 201A, Danville, CA 94506, Attn:  General Counsel, and any notice to be given to Grantee shall be addressed to him or her at the address given by such Grantee beneath his or her signature to this Agreement, or such other address as either party to this Agreement may hereafter designate in writing to the other.  Any such notice shall be deemed to have been duly given when enclosed in a properly sealed envelope or wrapper addressed as aforesaid, registered or certified and deposited (postage or registration or certification fee prepaid) in a post office or branch post office regularly maintained by the United States, or when sent via nationally recognized courier service.

 

11.   Successors .   This Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company.  Where the context permits, “Grantee” as used in this Agreement shall include Grantee’s executors, administrators or other legal representatives or the person or persons to whom Grantee’s rights pass by will or the applicable laws of descent and distribution.

 

12.   Spousal Consent .   Grantee shall cause his or her spouse to execute a Consent of Spouse in substantially the form of that attached hereto as Exhibit B concurrently with the execution of this Agreement or, if later, at the time Grantee becomes married.

 

13.   California Securities Law .   THE SALE OF THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA, AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS CODE.  THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.

 

IN WITNESS WHEREOF, the parties hereto have duly executed this Restricted Stock Grant Agreement as of the date first above written.

 

COMPANY :

PACIFIC ENERGY DEVELOPMENT CORP.,

a Nevada corporation

By: _______________________________

 

GRANTEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO SECTION 2 HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS AN EMPLOYEE OR CONSULTANT AT THE WILL OF THE COMPANY.  GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT SHALL CONFER UPON GRANTEE ANY RIGHT WITH RESPECT TO CONTINUATION OF SUCH EMPLOYMENT OR CONSULTING RELATIONSHIP WITH THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH GRANTEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE GRANTEE’S EMPLOYMENT OR CONSULTING RELATIONSHIP AT ANY TIME, WITH OR WITHOUT CAUSE.

 

 

GRANTEE :

By:  ____________________________________

Name:  __________________________________

Title:  ___________________________________

Address:_________________________________

________________________________________

 

EXHIBIT A

 

ASSIGNMENT SEPARATE FROM CERTIFICATE

 

 

FOR VALUE RECEIVED and pursuant to that certain Common Stock Purchase Agreement between the undersigned (“ Grantee ”) and Pacific Energy Development Corp (the “ Company ”) dated _______________ (the “ Agreement ”), Grantee hereby sells, assigns and transfers unto the Company _________________________________ (________) shares of the Common Stock of the Company standing in Grantee’s name on the Company’s books and represented by Certificate No. _____,  and does hereby irrevocably constitute and appoint ______________________ to transfer said stock on the books of the Company with full power of substitution in the premises.  THIS ASSIGNMENT MAY ONLY BE USED AS AUTHORIZED BY THE AGREEMENT AND THE EXHIBITS THERETO.

 

Dated: ______________________

 

Signature:

______________________________

GRANTEE:  ___________________

Instruction:  Please do not fill in any blanks other than the signature line.  The purpose of this assignment is to enable the Company to exercise its repurchase option set forth in the Agreement without requiring additional signatures on the part of Grantee.

 

EXHIBIT B

 

CONSENT OF SPOUSE

 

I, _____________________, spouse of ____________________________, have read and approved the foregoing Agreement.  In consideration of the right of my spouse to purchase shares of Pacific Energy Development Corp as set forth in the Agreement, I hereby appoint my spouse as my attorney-in-fact in respect to the exercise of any rights under the Agreement insofar as I may have any rights under the community property laws of the State of California or similar laws relating to marital property in effect in the state of our residence as of the date of the signing of the foregoing Agreement.

 

Dated:  ______________                                                                  ________________________________

(Signature of Spouse)

EXHIBIT C

ACKNOWLEDGMENT AND STATEMENT OF DECISION

REGARDING SECTION 83(b) ELECTION

The undersigned has entered a stock purchase agreement with Pacific Energy Development Corp, a Nevada corporation (the “ Company ”), pursuant to which the undersigned is purchasing ___________ shares of Common Stock of the Company (the “ Shares ”).  In connection with the purchase of the Shares, the undersigned hereby represents as follows:

 

1.           The undersigned has carefully reviewed the stock purchase agreement pursuant to which the undersigned is purchasing the Shares.

 

2.           The undersigned either [check and complete as applicable]:

 

(a) ____

has consulted, and has been fully advised by, the undersigned’s own tax advisor, __________________________, whose business address is _____________________________, regarding the federal, state and local tax consequences of purchasing the Shares, and particularly regarding the advisability of making elections pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended (the “ Code ”) and pursuant to the corresponding provisions, if any, of applicable state law; or

(b) ____

has knowingly chosen not to consult such a tax advisor.

3.           The undersigned hereby states that the undersigned has decided [check as applicable]:

 

(a) ____

to make an election pursuant to Section 83(b) of the Code, and is submitting to the Company, together with the undersigned’s executed Common Stock Purchase Agreement, an executed form entitled “Election Under Section 83(b) of the Internal Revenue Code of 1986;” or

(b) ____

not to make an election pursuant to Section 83(b) of the Code.

4.           Neither the Company nor any subsidiary or representative of the Company has made any warranty or representation to the undersigned with respect to the tax consequences of the undersigned’s purchase of the Shares or of the making or failure to make an election pursuant to Section 83(b) of the Code or the corresponding provisions, if any, of applicable state law.

 

Date: ___________________                                                         ___________________________

GRANTEE:                                                                 

EXHIBIT D

ELECTION UNDER SECTION 83(b)

OF THE INTERNAL REVENUE CODE OF 1986

The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the Internal Revenue Code, to include in taxpayer’s gross income or alternative minimum taxable income, as applicable, for the current taxable year, the amount of any income that may be taxable to taxpayer in connection with taxpayer’s receipt of the property described below:

 

1.	The name, address, taxpayer identification number and taxable year of the undersigned are as follows:

 

	TAXPAYER:	SPOUSE:
NAME:
ADDRESS:
IDENTIFICATION NO.:
TAXABLE YEAR:

 

2.	The property with respect to which the election is made is described as follows:

 

__________ shares of the Common Stock of Pacific Energy Development Corp, a Nevada corporation (the “Company”).

 

3.	The date on which the property was transferred is:

 

4.	The property is subject to the following restrictions:

 

The Shares may not be transferred and are subject to forfeiture under the terms of an agreement between the taxpayer and the Company.  These restrictions lapse upon the satisfaction of certain conditions contained in such agreement.

5.	The fair market value at the time of transfer, determined without regard to any restriction other than a restriction which by its terms will never lapse, of such property is:  $______

 

6.	The amount (if any) paid for such property:   NONE .

 

The undersigned has submitted a copy of this statement to the person for whom the services were performed in connection with the undersigned’s receipt of the above-described property.  The transferee of such property is the person performing the services in connection with the transfer of said property.

The undersigned understands that the foregoing election may not be revoked except with the consent of the Commissioner .

 

Dated: ______________________, _____                                                                                  

Taxpayer

 

The undersigned spouse of taxpayer joins in this election.

Dated: ______________________, _____                                                                                  

Spouse of Taxpayer

10

 

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EXHIBIT 4.8

 

PACIFIC ENERGY DEVELOPMENT CORP.

 

STOCK OPTION AGREEMENT

 

This Stock Option Agreement (this “ Agreement ”) is entered into as of the _____ day of ______________ , between Pacific Energy Development Corp., a Nevada corporation (the “ Company ”), and _ _____________________ _ (“ Optionee ”).

 

WHEREAS, Optionee is an employee of the Company or of a parent or subsidiary corporation as defined in the applicable provisions (currently Sections 424(e) and (f), respectively) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the “ Code ”) (an “ Affiliate ”), and the Company desires that Optionee remain as such and desires to secure or increase Optionee’s stock ownership of the Company in order to increase Optionee’s incentive and personal interest in the welfare of the Company.

 

NOW, THEREFORE, in consideration of the premises, covenants and agreements hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto have agreed and do hereby agree as follows:

 

1.   Administration of this Agreement .  This Agreement shall be administered by the Board of Directors of the Company (the “ Board ”) or by a committee (the “ Committee ”) to which administration of this Agreement is delegated by the Board (in either case, the “ Administrator ”).  The Board shall appoint and remove members of the Committee in its discretion in accordance with applicable laws.  If necessary in order to comply with Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), or Section 162(m) of the Code, or any successor statute or regulation, the Committee shall, in the Board’s discretion, be comprised solely of “non-employee directors” within the meaning of Rule 16b-3 or “outside directors” within the meaning of Section 162(m) of the Code.  The foregoing notwithstanding, the Administrator may delegate non-discretionary administrative duties to such employees of the Company as it deems proper and the Board, in its absolute discretion, may at any time and from time to time exercise any and all rights and duties of the Administrator under this Agreement.

 

2.   Grant of Options .  The Company hereby grants to Optionee options (the “ Options ”) to purchase up to _ _______________________________ shares of the Common Stock of the Company at a purchase price of $ _________  per share (the “ Exercise Price ”), on the terms and conditions hereinafter set forth.

 

3.   Treatment . The Options are not intended to satisfy the requirements of Section 422 of the Code relating to the issuance of “incentive stock options”.

 

4.   Term of Options .  Except as otherwise provided in Section 6 below, and subject to Optionee continuing to be an employee, officer or director of, or consultant to, the Company, the Options shall vest and become exercisable pursuant to the following vesting schedule, and shall remain exercisable until ten (10) years after the date of this Agreement, at which time the Options shall terminate and not be exercisable thereafter:

 

 

(a)   Options to purchase 50% of the shares shall vest and become exercisable on the six (6) month anniversary of the date hereof.

 

(b)   Options to purchase 20% of the shares shall vest and become exercisable on the twelve (12) month anniversary hereof.

 

(c)   Options to purchase 20% of the shares shall vest and become exercisable on the eighteen (18) month anniversary hereof.

 

(d)   Options to purchase 10% of the shares shall vest and become exercisable on the twenty-four (24) month anniversary hereof.

 

5.   Exercise of Options .  The Options or any portion thereof may be exercised by Optionee paying the purchase price of any shares with respect to which the Options are being exercised by cash, certified check, bank draft or postal or express money order.  Except as otherwise provided by the Administrator before the Option is exercised, (i) all or a portion of the Exercise Price may be paid by Optionee by delivery of shares of Common Stock owned by Optionee and acceptable to the Administrator having an aggregate fair market value (as of the date of exercise) that is equal to the amount of cash that would otherwise be required; and (ii) Optionee may pay the Exercise Price by authorizing a third party to sell shares of stock (or a sufficient portion of the shares) acquired upon exercise of the Option and remit to the Company a sufficient portion of the sale proceeds to pay the entire Exercise Price and any tax withholding resulting from such exercise.  In each case, Optionee’s payment shall be delivered with a written notice of exercise which shall:

 

(a)   State the number of shares being exercised, the name, address and social security number of each person for whom the stock certificate or certificates for such shares of the Common Stock are to be registered;

 

(b)   Contain any representations and agreements as to Optionee’s investment intent with respect to the shares exercised as may be necessary and satisfactory to the Company’s counsel; and

 

(c)   Be signed by the person or persons entitled to exercise the Options and, if the Options are being exercised by any person or persons other than Optionee, be accompanied by proof satisfactory to counsel for the Company of the right of such person or persons to exercise the Options.

 

As a condition to the exercise of the Options, the Company may require the person exercising the Options to make any representation and warranty to the Company that may be required by any applicable law or regulation.  The Company may also condition the exercise of the Option on the Optionee’s entering into a shareholder agreement or lock-up agreement with the Company and/or other shareholders which will restrict the transferability of the shares and contain other customary provisions including rights of repurchase or first refusal on the part of the Company and may include “drag along” rights, provided that these conditions are also generally imposed on other similarly-situated holders of options granted by the Company.

 

 

6.   Termination of Employment or Consulting Relationship or Death .

 

(a)   In the event Optionee’s employment or consulting relationship with the Company shall terminate on account of death, the Options held by Optionee, to the extent exercisable as of the date of death, may be exercised by a person who acquires the right to exercise the Options, provided such exercise occurs within both the remaining effective term of the Options and one year after Optionee’s death.

 

(b)   In the event Optionee’s employment or consulting relationship with the Company shall terminate on account of retirement or disability, the Options held by Optionee, to the extent exercisable as of the date of such retirement or disability, may be exercised by Optionee, provided such exercise occurs within both the remaining effective term of the Options and one year from the date of termination of employment or consulting relationship with the Company.

 

(c)   In the event Optionee’s employment or consulting relationship with the Company shall terminate on account of resignation, discharge not “for cause” (as defined below), or expiration of the term thereof, the Options held by Optionee, to the extent exercisable as of the date of such termination, may be exercised by Optionee provided such exercise occurs within both the remaining effective term of the Options and three months from the date of termination.

 

(d)   In the event Optionee’s employment or consulting relationship with the Company shall terminate on account of discharge for cause, no exercise period shall exist and Optionee shall forfeit the Options as of the date of termination.

 

(e)   To the extent not then exercisable in accordance with this Section, the Options shall terminate on the date Optionee’s employment or consulting relationship with the Company terminates with the Company.

 

(f)   For purposes of this Agreement, “termination” shall be considered to occur when Optionee ceases to be employed as such by, or engaged in a consulting relationship with, the Company or any Affiliate.  Whether an authorized leave of absence or absence on military or government service shall constitute termination shall be determined by the Administrator.  Retirement shall be considered to mean retirement pursuant to any applicable retirement plan of the Company or any of its Affiliates.  For purposes of this Agreement, “cause” has the meaning ascribed to such term or words of similar import in Optionee’s written employment or service contract with the Company or its Parent or any Subsidiary and, in the absence of such agreement or definition, means Optionee’s (i) conviction of, or plea of nolo contendere to, a felony or any other crime involving moral turpitude; (ii) fraud on or misappropriation of any funds or property of the Company or its subsidiaries, or any affiliate, customer or vendor; (iii) personal dishonesty, incompetence, willful misconduct, willful violation of any law, rule or regulation (other than minor traffic violations or similar offenses), or breach of fiduciary duty which involves personal profit; (iv) willful misconduct in connection with Optionee’s duties or willful failure to perform Optionee’s responsibilities in the best interests of the Company or its subsidiaries; (v) illegal use or distribution of drugs; (vi) violation of any material rule, regulation, procedure or policy of the Company or its subsidiaries, the violation of which could have a material detriment to the Company; or (vii) material breach of any provision of any employment, non-disclosure, non-competition, non-solicitation or other similar agreement executed by Optionee for the benefit of the Company or its subsidiaries, all as reasonably determined by the Company’s Board, which determination will be conclusive.  The Options, to the extent exercisable after death of Optionee, may be exercised by Optionee’s personal representatives.

 

 

7.   Transfer of Options .  The Options may not be assigned, pledged or transferred in any manner except upon the death of Optionee by will or by the laws of descent and distribution.  During the lifetime of Optionee, the Options shall be exercisable only by Optionee.

 

8.   Reservation of Shares .  The Company, during the term hereof, will at all times reserve and keep available, and will seek or obtain from any regulatory body having jurisdiction any requisite authority in order to issue and sell such number of shares of its Common Stock as shall be sufficient to satisfy the requirements hereof.  The inability of the Company to obtain from any regulatory body having jurisdiction the authority deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any shares of stock hereunder shall relieve the Company of any liability in respect of the nonissuance or sale of such stock as to which such requisite authority shall not have been obtained.

 

9.   Restriction on Option Exercise .  Notwithstanding any contrary provision hereof, the Options may not be exercised by Optionee unless the shares to be acquired by Optionee have been registered under the Securities Act of 1933 (the “ Act ”), and any other applicable securities laws of any other state, or the Company receives an opinion of counsel (which may be counsel for the Company) reasonably acceptable to the Company stating that the exercise of the Options and the issuance of shares pursuant to the exercise is registered or exempt from such registration requirements.  Optionee shall represent that unless and until the shares have been registered under the Act and applicable state securities laws:  (1) Optionee is acquiring the shares for investment purposes only and without the intent of making any sale or disposition thereof; (2) Optionee has been advised and understands that the shares have not been registered for sale pursuant to federal and state securities laws and are “restricted securities” under such laws; and (3) Optionee acknowledges that the shares will be subject to stop transfer instructions and bear the following legend:

 

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED IN THE ABSENCE OF REGISTRATION OR THE AVAILABILITY OF AN EXEMPTION FROM SUCH REGISTRATION.  NO OFFER, SALE OR TRANSFER MAY TAKE PLACE WITHOUT PRIOR WRITTEN APPROVAL OF THE COMPANY BEING AFFIXED HERETO.  IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT, SUCH APPROVAL SHALL BE GRANTED ONLY IF THE COMPANY HAS RECEIVED AN OPINION OF SHAREHOLDER’S COUNSEL AT SHAREHOLDER’S EXPENSE SATISFACTORY TO THE COMPANY TO THE EFFECT THAT THIS CERTIFICATE MAY BE LAWFULLY TRANSFERRED PURSUANT TO AN EXEMPTION FROM REGISTRATION.

 

10.   Withholding of Taxes .  The Options may not be exercised unless Optionee has paid or has made provision satisfactory to the Company for payment of, federal, state and local income taxes, or any other taxes (other than stock transfer taxes) which the Company may be obligated to collect as a result of the issue or transfer of Common Stock upon such exercise of the Options, unless waived by the Company.  In its sole discretion, and at the request of Optionee, the Company may permit Optionee (other than an Optionee who would be subject to Section 16(b) of the Exchange Act) to satisfy the obligation imposed by this Section, in whole or in part, by instructing the Company to withhold up to that number of shares otherwise issuable to Optionee with a fair market value equal to the amount of tax to be withheld.

 

 

11.   Corporate Transactions and Certain Other Changes .

 

(a)   Changes in Capital Structure .  Subject to subsection (c) below, if the stock of the Company is changed by reason of a stock split, reverse stock split, stock dividend, recapitalization, reclassification or other distribution of the Company’s securities without consideration, appropriate adjustments shall be made by the Administrator, in its sole discretion, in (a) the number and class of shares of stock subject to this Option, and (b) the exercise price of each outstanding Option; provided , however , that the Company shall not be required to issue fractional shares as a result of any such adjustments.

 

(b)   Mergers, etc .  In the event of any capital reorganization, any reclassification of the Common Stock of the Company (other than a recapitalization described in subsection (a) above), or the consolidation or merger of the Company, upon exercise of all or any portion of this Option following such capital reorganization, reclassification, consolidation or merger, Optionee shall receive the securities or property (including cash) that Optionee would have received had the Optionee exercised the Options immediately prior to such capital reorganization, reclassification, consolidation or merger.

 

(c)   Corporate Transactions .

 

In the event of a Corporate Transaction, the Administrator, in its sole discretion, and prior to consummation of the Corporate Transaction, may (i) terminate any outstanding Options effective immediately prior to the consummation of such Corporate Transaction, (ii) permit exercise of any Options prior to their termination, even if such Options would not otherwise have been exercisable, and/or (iii) provide that all or certain of the outstanding Options shall be assumed or an equivalent option substituted by an applicable successor corporation or entity or any Affiliate of the successor corporation or entity.  In addition, in the event the Corporate Transaction involves a merger or consolidation in which the shareholders of the Company receive cash for their shares, the Administrator may provide that the Options may be exercised contingent upon the closing of such merger or consolidation and that, with respect to Options which have an exercise price less than the per share cash merger consideration Optionee would receive upon the closing or such merger or consolidation, Optionee shall not be required to deliver the exercise price but the exercise price shall be offset against the merger consideration.

 

For purposes of this Agreement, a “ Corporate Transaction ” means (i) a liquidation or dissolution of the Company; (ii) a merger or consolidation of the Company with or into another corporation with the shareholders of the Company immediately prior to the merger or consolidation owning less than 50% of the voting securities of the surviving entity (or the parent of the surviving entity if the merger is a triangular merger); or (iii) a sale of all or substantially all of the assets of the Company in a single transaction or a series of related transactions.

 

12.   No Rights as a Stockholder .  Optionee or a permitted transferee of the Options shall have no rights as a stockholder with respect to any shares covered by the Options until the date as of which stock is issued following exercise of such Options.  Except as provided in this Agreement, no adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or any other distributions for which the record date is prior to the date as of which such stock is issued.

 

13.   No Employment Rights .  This Agreement is not an employment agreement or contract and does not grant any employment rights to Optionee.

 

 

14.   Other Provisions .  The Company may, as a condition precedent to the exercise of the Options, require Optionee (including, in the event of Optionee’s death, his legal representatives, legatees or distributees) to enter into such agreements or to make representations as may be required to make lawful the exercise of the Options and the ultimate disposition of the shares acquired by such exercise.

 

15.   Notices .  Any notice which either of the parties hereto is required or permitted to give to the other must be in writing and may be given by personal delivery or by mailing the same by registered or certified mail, return receipt requested, or via nationally recognized courier service, to the party to which or to whom the notice is directed, at the address each party designates in writing.  Any notice mailed to such address shall be effective when deposited in the mail, duly addressed and postage prepaid, notwithstanding failure by the addressee thereof to receive the mailed notice.

 

16.   Governing Law .  All transactions contemplated hereunder and all rights of the parties hereto shall be governed as to validity, construction, enforcement and in all other respects by the laws and decisions of the State of California.

 

17.   Titles .  The titles of the sections of this Agreement are inserted only as a matter of convenience and for reference, and in no way define, limit or describe the scope of this Agreement or the intent of any provisions hereof.

 

18.   Amendment .  This Agreement shall not be modified or amended except by written agreement signed by all of the parties hereto.

 

19.   Severability of Provisions .  Any provision of this Agreement which is invalid, prohibited, or unenforceable in any jurisdiction, shall not invalidate the remainder of the provision or the remaining provisions of the Agreement.

 

20.   Entire Agreement .  This Agreement contains all of the representations, declarations and statements from either party to the other and expresses the entire understanding between the parties with respect to the transactions provided for herein. All prior memoranda, letters, statements and agreements concerning this subject matter, if any, including any references to the grant of options to Optionee in any prior employment agreement or employment offer letter, are merged in and replaced by this Agreement.

 

21.   Pronouns, Number and Gender .  Wherever necessary to implement the intent of the parties hereto, references herein to the singular shall be interpreted as the plural, and vice versa, and the feminine, masculine or neuter gender shall be treated as one of the other genders.

 

22.   Binding Effect .  This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective legal representatives, successors and assigns.

 

23.   Counterparts .  This Agreement may be executed in one or more counterparts, each of which may be deemed an original, but all of which together shall constitute one and the same instrument.

 

24.   Rule 701 .  This Agreement is intended to qualify as a written compensation contract that complies with all conditions of Rule 701 of the Act.

 

 

IN WITNESS WHEREOF, the parties hereto have signed this Agreement the day and year first above written.

 

 

	PACIFIC ENERGY DEVELOPMENT CORP.     By:
	Name: Its:
	OPTIONEE ___________________________________   By:

Type:____________________

Grantee:_________________

No. of Shares:_____________

Grant Date:_______________

 

7

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EXHIBIT 4.9

PACIFIC ENERGY DEVELOPMENT CORP.

 

CONSULTANT STOCK OPTION AGREEMENT

 

This Consultant Stock Option Agreement (this “ Agreement ”) is entered into as of the 7th day of October , 2011, between Pacific Energy Development Corp., a Nevada corporation (the “ Company ”), and _ Michael Peterson _ (“ Optionee ”).

 

WHEREAS, Optionee is a consultant to the Company or by a parent or subsidiary corporation as defined in the applicable provisions (currently Sections 424(e) and (f), respectively) of the Internal Revenue Code of 1986, as amended, and the regulations thereunder (the “ Code ”) (an “ Affiliate ”), and the Company desires that Optionee remain as such and desires to secure or increase Optionee’s stock ownership of the Company in order to increase Optionee’s incentive and personal interest in the welfare of the Company.

 

NOW, THEREFORE, in consideration of the premises, covenants and agreements hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto have agreed and do hereby agree as follows:

 

1.   Administration of this Agreement .  This Agreement shall be administered by the Board of Directors of the Company (the “ Board ”) or by a committee (the “ Committee ”) to which administration of this Agreement is delegated by the Board (in either case, the “ Administrator ”).  The Board shall appoint and remove members of the Committee in its discretion in accordance with applicable laws.  If necessary in order to comply with Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), or Section 162(m) of the Code, or any successor statute or regulation, the Committee shall, in the Board’s discretion, be comprised solely of “non-employee directors” within the meaning of Rule 16b-3 or “outside directors” within the meaning of Section 162(m) of the Code.  The foregoing notwithstanding, the Administrator may delegate non-discretionary administrative duties to such employees of the Company as it deems proper and the Board, in its absolute discretion, may at any time and from time to time exercise any and all rights and duties of the Administrator under this Agreement.

 

2.   Grant of Options .  The Company hereby grants to Optionee options (the “ Options ”) to purchase up to _ THREE HUNDRED THOUSAND _ ( 300,000 ) shares of the Common Stock of the Company at a purchase price of $0.08 per share (the “ Exercise Price ”), on the terms and conditions hereinafter set forth.

 

3.   Treatment . The Options are not intended to satisfy the requirements of Section 422 of the Code relating to the issuance of “incentive stock options”.

 

4.   Term of Options .  Except as otherwise provided in Section 6 below, and subject to Optionee continuing to be an employee, officer or director of, or consultant to, the Company, the Options shall vest and become exercisable pursuant to the following vesting schedule, and shall remain exercisable until ten (10) years after the date of this Agreement, at which time the Options shall terminate and not be exercisable thereafter:

 

 

(a)   Options to purchase 50% of the shares shall vest and become exercisable on $3 Million Funding Date (as defined below);

 

(b)   Options to purchase 25% of the shares shall vest and become exercisable on the date that the raises an aggregate additional $2 million in the Financing ($5 million total) (as defined below) from sources other than MIE, and excluding conversion of convertible notes issued by the Company to GVEST (each, as defined below); and

 

(c)   Options to purchase 25% of the shares shall vest and become exercisable on the dates that is six (6) months following the date set forth in Section 4(b) above.

 

For purposes of this Agreement, the “$3 Million Funding Date” shall be such date that the Company accepts subscription agreements and payment of funds for at least an aggregate of $3 million in its Series A Preferred Stock financing (the “ Financing ”) from sources other than MIE Holdings Corporation, or any affiliates thereof (“ MIE ”), and excluding conversion of convertible notes issued by the Company to Global Venture Investments LLC (“ GVEST ”).

 

5.   Exercise of Options .  The Options or any portion thereof may be exercised by Optionee paying the purchase price of any shares with respect to which the Options are being exercised by cash, certified check, bank draft or postal or express money order.  Except as otherwise provided by the Administrator before the Option is exercised, (i) all or a portion of the Exercise Price may be paid by Optionee by delivery of shares of Common Stock owned by Optionee and acceptable to the Administrator having an aggregate fair market value (as of the date of exercise) that is equal to the amount of cash that would otherwise be required; and (ii) Optionee may pay the Exercise Price by authorizing a third party to sell shares of stock (or a sufficient portion of the shares) acquired upon exercise of the Option and remit to the Company a sufficient portion of the sale proceeds to pay the entire Exercise Price and any tax withholding resulting from such exercise.  In each case, Optionee’s payment shall be delivered with a written notice of exercise which shall:

 

(a)   State the number of shares being exercised, the name, address and social security number of each person for whom the stock certificate or certificates for such shares of the Common Stock are to be registered;

 

(b)   Contain any representations and agreements as to Optionee’s investment intent with respect to the shares exercised as may be necessary and satisfactory to the Company’s counsel; and

 

(c)   Be signed by the person or persons entitled to exercise the Options and, if the Options are being exercised by any person or persons other than Optionee, be accompanied by proof satisfactory to counsel for the Company of the right of such person or persons to exercise the Options.

 

As a condition to the exercise of the Options, the Company may require the person exercising the Options to make any representation and warranty to the Company that may be required by any applicable law or regulation.  The Company may also condition the exercise of the Option on the Optionee’s entering into a shareholder agreement or lock-up agreement with the Company and/or other shareholders which will restrict the transferability of the shares and contain other customary provisions including rights of repurchase or first refusal on the part of the Company and may include “drag along” rights, provided that these conditions are also generally imposed on other similarly-situated holders of options granted by the Company.

 

6.   Termination of Employment or Consulting Relationship or Death .

 

(a)   In the event Optionee’s employment or consulting relationship with the Company shall terminate on account of death, the Options held by Optionee, to the extent exercisable as of the date of death, may be exercised by a person who acquires the right to exercise the Options, provided such exercise occurs within both the remaining effective term of the Options and one year after Optionee’s death.

 

(b)   In the event Optionee’s employment or consulting relationship with the Company shall terminate on account of retirement or disability, the Options held by Optionee, to the extent exercisable as of the date of such retirement or disability, may be exercised by Optionee, provided such exercise occurs within both the remaining effective term of the Options and one year from the date of termination of employment or consulting relationship with the Company.

 

(c)   In the event Optionee’s employment or consulting relationship with the Company shall terminate on account of resignation, discharge not “for cause” (as defined below), or expiration of the term thereof, the Options held by Optionee, to the extent exercisable as of the date of such termination, may be exercised by Optionee provided such exercise occurs within both the remaining effective term of the Options and three months from the date of termination.

 

(d)   In the event Optionee’s employment or consulting relationship with the Company shall terminate on account of discharge for cause, no exercise period shall exist and Optionee shall forfeit the Options as of the date of termination.

 

(e)   To the extent not then exercisable in accordance with this Section, the Options shall terminate on the date Optionee’s employment or consulting relationship with the Company terminates with the Company.

 

(f)   For purposes of this Agreement, “termination” shall be considered to occur when Optionee ceases to be employed as such by, or engaged in a consulting relationship with, the Company or any Affiliate.  Whether an authorized leave of absence or absence on military or government service shall constitute termination shall be determined by the Administrator.  Retirement shall be considered to mean retirement pursuant to any applicable retirement plan of the Company or any of its Affiliates.  Termination “for cause” shall mean termination as a result of or caused by Optionee’s theft or embezzlement from the Company, the violation of a material term or condition of Optionee’s employment or consulting engagement, substantial failure on the part of Optionee to perform his job or consulting duties, the disclosure by Optionee of confidential information of the Company, willful misconduct or dishonesty or conviction of or failure to contest prosecution for a felony or a crime of moral turpitude, excessive absenteeism unrelated to illness, Optionee’s stealing trade secrets or intellectual property owned by the Company, or any other act, activity or conduct of Optionee which in the opinion of the Administrator is materially adverse to the best interests of the Company. The Options, to the extent exercisable after death of Optionee, may be exercised by Optionee’s personal representatives.

 

7.   Transfer of Options .  The Options may not be assigned, pledged or transferred in any manner except upon the death of Optionee by will or by the laws of descent and distribution.  During the lifetime of Optionee, the Options shall be exercisable only by Optionee.

 

8.   Reservation of Shares .  The Company, during the term hereof, will at all times reserve and keep available, and will seek or obtain from any regulatory body having jurisdiction any requisite authority in order to issue and sell such number of shares of its Common Stock as shall be sufficient to satisfy the requirements hereof.  The inability of the Company to obtain from any regulatory body having jurisdiction the authority deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any shares of stock hereunder shall relieve the Company of any liability in respect of the nonissuance or sale of such stock as to which such requisite authority shall not have been obtained.

 

9.   Restriction on Option Exercise .  Notwithstanding any contrary provision hereof, the Options may not be exercised by Optionee unless the shares to be acquired by Optionee have been registered under the Securities Act of 1933 (the “ Act ”), and any other applicable securities laws of any other state, or the Company receives an opinion of counsel (which may be counsel for the Company) reasonably acceptable to the Company stating that the exercise of the Options and the issuance of shares pursuant to the exercise is registered or exempt from such registration requirements.  Optionee shall represent that unless and until the shares have been registered under the Act and applicable state securities laws:  (1) Optionee is acquiring the shares for investment purposes only and without the intent of making any sale or disposition thereof; (2) Optionee has been advised and understands that the shares have not been registered for sale pursuant to federal and state securities laws and are “restricted securities” under such laws; and (3) Optionee acknowledges that the shares will be subject to stop transfer instructions and bear the following legend:

 

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY OTHER STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR TRANSFERRED IN THE ABSENCE OF REGISTRATION OR THE AVAILABILITY OF AN EXEMPTION FROM SUCH REGISTRATION.  NO OFFER, SALE OR TRANSFER MAY TAKE PLACE WITHOUT PRIOR WRITTEN APPROVAL OF THE COMPANY BEING AFFIXED HERETO.  IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT, SUCH APPROVAL SHALL BE GRANTED ONLY IF THE COMPANY HAS RECEIVED AN OPINION OF SHAREHOLDER’S COUNSEL AT SHAREHOLDER’S EXPENSE SATISFACTORY TO THE COMPANY TO THE EFFECT THAT THIS CERTIFICATE MAY BE LAWFULLY TRANSFERRED PURSUANT TO AN EXEMPTION FROM REGISTRATION.

 

 

10.   Withholding of Taxes .  The Options may not be exercised unless Optionee has paid or has made provision satisfactory to the Company for payment of, federal, state and local income taxes, or any other taxes (other than stock transfer taxes) which the Company may be obligated to collect as a result of the issue or transfer of Common Stock upon such exercise of the Options, unless waived by the Company.  In its sole discretion, and at the request of Optionee, the Company may permit Optionee (other than an Optionee who would be subject to Section 16(b) of the Exchange Act) to satisfy the obligation imposed by this Section, in whole or in part, by instructing the Company to withhold up to that number of shares otherwise issuable to Optionee with a fair market value equal to the amount of tax to be withheld.

 

11.   Corporate Transactions and Certain Other Changes .

 

(a)   Changes in Capital Structure .  Subject to subsection (c) below, if the stock of the Company is changed by reason of a stock split, reverse stock split, stock dividend, recapitalization, reclassification or other distribution of the Company’s securities without consideration, appropriate adjustments shall be made by the Administrator, in its sole discretion, in (a) the number and class of shares of stock subject to this Option, and (b) the exercise price of each outstanding Option; provided , however , that the Company shall not be required to issue fractional shares as a result of any such adjustments.

 

(b)   Mergers, etc .  In the event of any capital reorganization, any reclassification of the Common Stock of the Company (other than a recapitalization described in subsection (a) above), or the consolidation or merger of the Company, upon exercise of all or any portion of this Option following such capital reorganization, reclassification, consolidation or merger, Optionee shall receive the securities or property (including cash) that Optionee would have received had the Optionee exercised the Options immediately prior to such capital reorganization, reclassification, consolidation or merger.

 

(c)   Corporate Transactions .

 

In the event of a Corporate Transaction, the Administrator, in its sole discretion, and prior to consummation of the Corporate Transaction, may (i) terminate any outstanding Options effective immediately prior to the consummation of such Corporate Transaction, (ii) permit exercise of any Options prior to their termination, even if such Options would not otherwise have been exercisable, and/or (iii) provide that all or certain of the outstanding Options shall be assumed or an equivalent option substituted by an applicable successor corporation or entity or any Affiliate of the successor corporation or entity.  In addition, in the event the Corporate Transaction involves a merger or consolidation in which the shareholders of the Company receive cash for their shares, the Administrator may provide that the Options may be exercised contingent upon the closing of such merger or consolidation and that, with respect to Options which have an exercise price less than the per share cash merger consideration Optionee would receive upon the closing or such merger or consolidation, Optionee shall not be required to deliver the exercise price but the exercise price shall be offset against the merger consideration.

 

For purposes of this Agreement, a “ Corporate Transaction ” means (i) a liquidation or dissolution of the Company; (ii) a merger or consolidation of the Company with or into another corporation with the shareholders of the Company immediately prior to the merger or consolidation owning less than 50% of the voting securities of the surviving entity (or the parent of the surviving entity if the merger is a triangular merger); or (iii) a sale of all or substantially all of the assets of the Company in a single transaction or a series of related transactions.

 

 

12.   No Rights as a Stockholder .  Optionee or a permitted transferee of the Options shall have no rights as a stockholder with respect to any shares covered by the Options until the date as of which stock is issued following exercise of such Options.  Except as provided in this Agreement, no adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property) or any other distributions for which the record date is prior to the date as of which such stock is issued.

 

13.   No Employment Rights .  This Agreement is not an employment agreement or contract and does not grant any employment rights to Optionee.

 

14.   Other Provisions .  The Company may, as a condition precedent to the exercise of the Options, require Optionee (including, in the event of Optionee’s death, his legal representatives, legatees or distributees) to enter into such agreements or to make representations as may be required to make lawful the exercise of the Options and the ultimate disposition of the shares acquired by such exercise.

 

15.   Notices .  Any notice which either of the parties hereto is required or permitted to give to the other must be in writing and may be given by personal delivery or by mailing the same by registered or certified mail, return receipt requested, or via nationally recognized courier service, to the party to which or to whom the notice is directed, at the address each party designates in writing.  Any notice mailed to such address shall be effective when deposited in the mail, duly addressed and postage prepaid, notwithstanding failure by the addressee thereof to receive the mailed notice.

 

16.   Governing Law .  All transactions contemplated hereunder and all rights of the parties hereto shall be governed as to validity, construction, enforcement and in all other respects by the laws and decisions of the State of California.

 

17.   Titles .  The titles of the sections of this Agreement are inserted only as a matter of convenience and for reference, and in no way define, limit or describe the scope of this Agreement or the intent of any provisions hereof.

 

18.   Amendment .  This Agreement shall not be modified or amended except by written agreement signed by all of the parties hereto.

 

19.   Severability of Provisions .  Any provision of this Agreement which is invalid, prohibited, or unenforceable in any jurisdiction, shall not invalidate the remainder of the provision or the remaining provisions of the Agreement.

 

20.   Entire Agreement .  This Agreement contains all of the representations, declarations and statements from either party to the other and expresses the entire understanding between the parties with respect to the transactions provided for herein. All prior memoranda, letters, statements and agreements concerning this subject matter, if any, including any references to the grant of options to Optionee in any prior employment agreement or employment offer letter, are merged in and replaced by this Agreement.

 

21.   Pronouns, Number and Gender .  Wherever necessary to implement the intent of the parties hereto, references herein to the singular shall be interpreted as the plural, and vice versa, and the feminine, masculine or neuter gender shall be treated as one of the other genders.

 

22.   Binding Effect .  This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective legal representatives, successors and assigns.

 

23.   Counterparts .  This Agreement may be executed in one or more counterparts, each of which may be deemed an original, but all of which together shall constitute one and the same instrument.

 

24.   Rule 701 .  This Agreement is intended to qualify as a written compensation contract that complies with all conditions of Rule 701 of the Act.

 

IN WITNESS WHEREOF, the parties hereto have signed this Agreement the day and year first above written.

 

 

	PACIFIC ENERGY DEVELOPMENT CORP.
	By:	/s/ Clark Moore
		Name:	Clark Moore
		Its:	Executive Vice President &
			General Counsel
	OPTIONEE Michael Peterson
	By:	/s/ Michael Peterson

 

 

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