PEDEVCO CORP.
2012 EQUITY INCENTIVE PLAN
(As Amended)
1. Purposes
of the Plan. PEDEVCO Corp., a Texas corporation (the
“Company”)
hereby establishes the PEDEVCO 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;
(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 to 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 PEDEVCO Corp., a Texas 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 eight million (8,000,000) 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;
(iii) to
determine the number of Shares to be covered by each Award granted
hereunder;
(iv) to
approve forms of agreement for use under the Plan;
(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 30th 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 15th 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 15th 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 eight million
(8,000,000) 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 eight million (8,000,000)
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 eight
million (8,000,000) 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 eight million (8,000,000)
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 with 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 a 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 Texas.
Adopted
by the Board of Directors on June 26, 2012.
Amended
by the stockholders of the Company on June 27, 2014, October 7,
2015, December 28, 2016, December 28, 2017, September 27, 2018 and
August 28, 2019.
