<PAGE> 1
As filed with the Securities and Exchange Commission on December 7, 1999
Registration No. 333 -
===============================================================================
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
BARGO ENERGY COMPANY
(Exact name of registrant as
specified in its charter)
TEXAS 87-0239185
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
700 LOUISIANA, SUITE 3700, HOUSTON, TEXAS 77002
(Address of Principal Executive Offices) (Zip Code)
BARGO ENERGY COMPANY
1999 STOCK INCENTIVE PLAN
(Full title of the plan)
TIM J. GOFF
700 LOUISIANA, SUITE 3700, HOUSTON, TEXAS 77002
(Name and address of agent for service)
(713) 236-9792
(Telephone number, including area code, of agent for service)
--------------------
Copy to:
Haynes and Boone, LLP
1000 Louisiana, Suite 4300
Houston, Texas 77002
Attn: George G. Young III
(713) 547-2081
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
======================================================================================================================
TITLE OF AMOUNT PROPOSED MAXI- PROPOSED MAXI- AMOUNT OF
SECURITIES TO BE TO BE MUM OFFERING PRICE MUM AGGREGATE REGISTRATION
REGISTERED REGISTERED PER SHARE OFFERING PRICE FEE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$0.01 per share (1) 26,333,747 $.4063(2) $10,699,401(2) $2,825
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) In addition, pursuant To Rule 416(c) under the Securities Act of 1933,
This Registration Statement also covers an indeterminate amount of interests to
be offered or sold pursuant to the Bargo Energy Company 1999 Stock Incentive
Plan described herein.
(2) Estimated solely for purposes of calculating the registration fee.
Pursuant to Rule 457(c) and 457(h), the offering price and registration fee is
computed on the basis of the average of the bid and asked price on the OTC
Electronic Bulletin Board on December 3, 1999.
<PAGE> 2
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
ITEM 1. PLAN INFORMATION.*
ITEM 2. REGISTRANT INFORMATION AND EMPLOYEE PLAN ANNUAL INFORMATION.*
*Information specified in Part I of Form S-8 (Items 1 and 2) will be
sent or given to our employees, officers and directors participating in the
Bargo Energy Company 1999 Stock Incentive Plan as specified by Rule 428(b)(1)
under the Securities Act of 1933, as amended (the "Securities Act").
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed by us with the Securities and Exchange
Commission pursuant to Section 13 of the Securities Exchange Act of 1934, as
amended, are incorporated herein by reference:
o Annual Report on Form 10-K for the fiscal year ended December
31, 1998.
o Quarterly Reports on Form 10-Q for the periods ended March 31,
1999, June 30, 1999 and September 30, 1999.
o Current Reports on Form 8-K filed with the Securities and
Exchange Commission on February 26, 1999, April 29, 1999, May 4,
1999, May 21, 1999, May 27, 1999, August 24, 1999, October 12,
1999, October 14, 1999 and November 19, 1999.
o The description of our common stock contained in our
Registration Statement on Form 10, filed with the Securities and
Exchange Commission on January 31, 1978, including any future
amendment or report filed for the purpose of updating such
description.
All documents subsequently filed by the Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"), prior to the filing of a post-effective amendment which
indicates that all securities offered under the plan have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of the
filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein or in any
other subsequently filed document which also is or is deemed to be incorporated
by reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part hereof.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
1
<PAGE> 3
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 2.02-1 of the Texas Business Corporation Act provides that any
director or officer of a Texas corporation may be indemnified against
judgments, penalties (including excise and similar taxes), fines, settlements
and reasonable expenses actually incurred by him in connection with or in
defending any action, suit or proceeding in which he was, is, or is threatened
to be made a named defendant or respondent by reason of his position as
director or officer, provided that he conducted himself in good faith and
reasonably believed that, in the case of conduct in his official capacity as a
director or officer of the corporation, such conduct was in the corporation's
best interests; and, in all other cases, that such conduct was at least not
opposed to the corporation's best interests. In the case of any criminal
proceeding, a director or officer may be indemnified only if he had no
reasonable cause to believe his conduct was unlawful. If a director or officer
is found liable to the corporation, or is found liable on the basis that he
received an improper personal benefit, indemnification is limited to the
reimbursement of reasonable expenses actually incurred. No indemnification is
available if the officer or director is found liable for willful or intentional
misconduct in the performance of his duty to the corporation. If a director or
officer is wholly successful, on the merits or otherwise, in connection with
such a proceeding, such indemnification is mandatory.
Our certificate of incorporation and bylaws allows us to indemnify
each of our directors and our officers to the fullest extent permitted by
applicable law.
We have purchased directors and officers liability insurance which
insures, among other things,
o our officers and directors from any claim arising out of an
alleged wrongful act by such
o persons while acting as directors and officers; and us to the
extent that we have indemnified the directors and officers for
such loss.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT INCORPORATED HEREIN FILED
NUMBER DESCRIPTION BY REFERENCE TO HEREWITH
- ------------- ----------------------------------------- ------------------------------------- ---------------
<S> <C> <C> <C>
4.1 Articles of Incorporation Incorporated by reference from the
of Bargo Energy Company Company's current report on
Form 8-K filed with the Securities
and Exchange Commission on
April 29, 1999 (File No. 000-86-0)
4.2 Bylaws of Bargo Energy Company Incorporated by reference from the
Company's current report on
Form 8-K filed with the Securities
and Exchange Commission on
April 29, 1999 (File No. 000-86-0)
4.3 Specimen Stock Certificate X
</TABLE>
2
<PAGE> 4
<TABLE>
<CAPTION>
EXHIBIT INCORPORATED HEREIN FILED
NUMBER DESCRIPTION BY REFERENCE TO HEREWITH
- ------------- ----------------------------------------- ------------------------------------- ---------------
<S> <C> <C> <C>
5.1 Opinion of Haynes and Boone, LLP X
15 Letter re unaudited interim financial
information*
23.1 Consent of PricewaterhouseCoopers, X
LLP
23.2 Consent of Haynes and Boone, LLP Included as
part of
Exhibit 5.1
23.3 Consent of T.J. Smith & Co., Inc. X
23.4 Consent of Hein + Associates LLP X
24 Power of Attorney Signature
Page to this
Registration
Statement
99 1999 Stock Incentive Plan X
</TABLE>
- ------------------
* Not applicable
ITEM 9. UNDERTAKINGS.
(a) We hereby undertake that we will:
(1) File, during any period in which we offer or sell securities,
a post-effective amendment to this Registration Statement to:
(i) Include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental
change in the information in the Registration
Statement; and, notwithstanding the foregoing, any
increase or decrease in volume of securities offered
(if the total dollar value of securities offered would
not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of a
prospectus filed with the Securities and Exchange
Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration
Statement;
(iii) Include any additional or changed material information
on the plan of distribution;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii)
do not apply if the information required in a post-effective amendment
is incorporated by reference from periodic reports filed with the
Securities sand Exchange Commission by us under the Exchange Act.
3
<PAGE> 5
(2) For determining liability under the Securities Act, treat
each such post-effective amendment as a new registration
statement of the securities offered, and the offering of the
securities at that time to be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the
offering.
(e) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers and
controlling persons pursuant to the provisions referred to in
Item 6, or otherwise, we have been advised that in the opinion of
the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by us of expenses incurred or paid by a director, officer or
controlling person of ours in the successful defense of any
action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being
registered, we will, unless in the opinion of our counsel the
matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by us is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
4
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on form S-8 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, State of Texas,
on December 3, 1999.
BARGO ENERGY COMPANY
(Registrant)
By: /s/ Tim J. Goff
-----------------------------------
Tim J. Goff, Chairman of the Board
and Chief Executive Officer
(principal executive officer)
5
<PAGE> 7
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENT, that each person whose signature
appears below constitutes and appoints Tim J. Goff and Jonathan M. Clarkson,
and each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, and any other regulatory
authority, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, thereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following persons
in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ Tim J. Goff Chairman of the Board December 3, 1999
- ----------------------------------- and Chief Executive Officer
Tim J. Goff (principal executive officer)
/s/ Jonathan M. Clarkson President and Chief Operating Officer December 3, 1999
- ----------------------------------- (principal financial officer)
Jonathan M. Clarkson
/s/ Kimberly G. Seekely Vice President and Treasurer December 3, 1999
- ----------------------------------- (principal accounting officer)
Kimberly G. Seekely
/s/ Thomas D. Barrow Director December 3, 1999
- -----------------------------------
Thomas D. Barrow
/s/ D. Martin Phillips Director December 3, 1999
- -----------------------------------
D. Martin Phillips
/s/ Gary R. Petersen Director December 3, 1999
- -----------------------------------
Gary R. Petersen
/s/ Daniel M. Weingeist Director December 3, 1999
- -----------------------------------
Daniel M. Weingeist
Director December 3, 1999
- -----------------------------------
J. Travis Hain
/s/ Brian D. Young Director December 3, 1999
- -----------------------------------
Brian D. Young
</TABLE>
6
<PAGE> 8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Bargo
Energy Company has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Houston,
State of Texas on December 3, 1999.
BARGO ENERGY COMPANY 1999 STOCK
INCENTIVE PLAN
By: Bargo Energy Company Plan Administrator
By: /s/ Tim J. Goff
-----------------------------------
Tim J. Goff, Chairman of the Board
and Chief Executive Officer
(principal executive officer)
7
<PAGE> 9
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT INCORPORATED HEREIN FILED
NUMBER DESCRIPTION BY REFERENCE TO HEREWITH
- ------------- ----------------------------------------- ------------------------------------- ---------------
<S> <C> <C> <C>
4.1 Articles of Incorporation Incorporated by reference from the
of Bargo Energy Company Company's current report on
Form 8-K filed with the Securities
and Exchange Commission on
April 29, 1999 (File No. 000-86-0)
4.2 Bylaws of Bargo Energy Company Incorporated by reference from the
Company's current report on
Form 8-K filed with the Securities
and Exchange Commission on
April 29, 1999 (File No. 000-86-0)
4.3 Specimen Stock Certificate X
5.1 Opinion of Haynes and Boone, LLP X
15 Letter re unaudited interim financial
information*
23.1 Consent of PricewaterhouseCoopers, X
LLP
23.2 Consent of Haynes and Boone, LLP Included as
part of
Exhibit 5.1
23.3 Consent of T.J. Smith & Co., Inc. X
23.4 Consent of Hein + Associates LLP X
24 Power of Attorney Signature
Page to this
Registration
Statement
99 1999 Stock Incentive Plan X
</TABLE>
- ------------------
* Not applicable
8
<PAGE> 1
EXHIBIT 4.3
[SPECIMEN]
INCORPORATED UNDER THE LAWS OF THE STATE OF TEXAS
CUSIP NO. 067587 10 5
NUMBER SHARES
BARGO ENERGY COMPANY
120,000,000 AUTHORIZED SHARES $0.01 PAR VALUE NON-ASSESSABLE
THIS CERTIFIES THAT
is the record holder of
Shares of Bargo Energy Company Common Stock
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney upon surrender of this Certificate properly
endorsed. This Certificate is not valid until countersigned by the Transfer
Agent and registered by the Registrar.
Witness the facsimile seal of the Corporation and the facsimile signatures
of its duly authorized officers.
Dated:
COUNTERSIGNED AND REGISTERED
FIDELITY TRANSFER COMPANY (SALT LAKE CITY, UTAH)
By
TRANSFER AGENT AND REGISTRAR - AUTHORIZED SIGNATURE
[SEAL]
/s/ MARY ELIZABETH VANDERHIDER /s/ TIM J. GOFF
SECRETARY PRESIDENT
<PAGE> 2
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT-________ Custodian _________
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act _________________________
in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
For Value Received, __________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
[ ]
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
________________________________________________________________________________
________________________________________________________________________________
_________________________________________________________________________ Shares
of the capital stock represented by the within certificate, and do hereby
irrevocably constitute and appoint
_______________________________________________________________________ Attorney
to transfer the said stock on the books of the within named Corporation with
full power of substitution in the premises.
Dated ________________________
__________________________________________________________________________
NOTICE: SIGNATURE MUST CORRESPOND TO THE NAME AS WRITTEN UPON THE FACE OF
THIS CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A
BANK, BROKER OR ANY OTHER ELIGIBLE GUARANTOR INSTITUTION THAT IS
AUTHORIZED TO DO SO UNDER THE SECURITIES TRANSFER AGENTS MEDALLION
PROGRAM (STAMP) UNDER RULES PROMULGATED BY THE U.S. SECURITIES AND
EXCHANGE COMMISSION.
<PAGE> 1
EXHIBIT 5.1
[HAYNES AND BOONE, L.L.P. LETTERHEAD]
December 6, 1999
Bargo Energy Company
700 Louisiana, Suite 3700
Houston, Texas 77002
Gentlemen:
We have acted as counsel to Bargo Energy Company, a Texas corporation (the
"Company"), in connection with the preparation of the Registration Statement on
Form S-8 (the "Registration Statement") filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, relating to the
registration of 26,333,747 shares of Common Stock, par value $0.01 per share
(the "Common Stock"), of the Company that may be issued pursuant to the terms of
the Company's 1999 Stock Incentive Plan (the "Plan").
In connection therewith, we have examined (i) the Certificate of Incorporation
and the Bylaws of the Company, each as amended; (ii) minutes and records of the
corporate proceedings of the Company with respect to the adoption of the Plan;
(iii) certificates of certain officers and directors of the Company; (iv) the
Plan; and (v) such other documents as we have deemed necessary for the
expression of the opinions contained herein.
In making the foregoing examination, we have assumed the genuineness of all
signatures and the authenticity of all documents submitted to us as originals,
and the conformity to original documents of all documents submitted to us as
certified or photostatic copies. Furthermore, we have assumed that prices paid
for shares of Common Stock will equal or exceed the par value per share of the
Common Stock. As to questions of fact material to this opinion, where such facts
have not been independently established, and as to the content and form of the
Certificate of Incorporation (as amended), Bylaws (as amended), minutes,
records, resolutions and other documents or writings of the Company, we have
relied, to the extent we deem reasonably appropriate, upon representations or
certificates of officers or directors of the Company and upon documents, records
and instruments furnished to us by the Company, without independent check or
verification of their accuracy.
Based upon the foregoing, and having due regard for such legal considerations as
we deem relevant, we are of the opinion that the 26,333,747 shares of Common
Stock covered by the Registration Statement, which may be issued from time to
time pursuant to the purchase of shares of Common Stock in accordance with the
terms of the Plan, have been duly authorized for issuance by the Company, and,
when so issued in accordance with the terms and conditions of the Plan, will be
validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion with the Securities and Exchange
Commission as an exhibit to the Registration Statement.
Very truly yours,
/s/ HAYNES AND BOONE, LLP
HAYNES AND BOONE, LLP
<PAGE> 1
EXHIBIT 23.1
CONSENT OF PRICEWATERHOUSECOOPERS LLP
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated April 14, 1999 relating to the
financial statements of Bargo Energy Company (formerly Future Petroleum
Corporation) which appears in Bargo Energy Company's Annual Report on
Form 10-KSB for the year ended December 31, 1998.
/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Houston, TX
December 2, 1999
<PAGE> 2
CONSENT OF PRICEWATERHOUSECOOPERS LLP
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated November 15, 1999 relating to the
Statement of Revenues and Direct Operating Expenses of the East Texas
Properties, which appears in the Current Report on Form 8-K/A dated
November 19, 1999 of Bargo Energy Company.
/s/ PricewaterhouseCoopers LLP
- -------------------------------
PricewaterhouseCoopers LLP
Houston, Texas
December 2, 1999
<PAGE> 1
EXHIBIT 23.3
[T.J. SMITH & COMPANY, INC. LETTERHEAD]
CONSENT OF T.J. SMITH & COMPANY, INC.
We hereby consent to the incorporation by reference in Bargo Energy
Company's Registration Statement on Form S-8 of our reserve reports relating to
the oil and gas reserves of Bargo Energy Company prepared as of December 31,
1998, as of December 31, 1997 and as of December 31, 1996, and to the reference
T.J. Smith & Company, Inc. as experts in the field of petroleum engineering in
the Prospectus forming a part of the Registration Statement on Form S-8.
T.J. Smith & Company, Inc.
By /s/ T.J. SMITH, P.E.
-----------------------
T.J. Smith, P.E.
Houston, Texas
November 18, 1999
<PAGE> 1
EXHIBIT 23.4
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in the Form S-8 Registration
Statement and Prospectus of Bargo Energy Company (the Company) of (1) our report
dated March 20, 1998 included in the Company's annual report on Form 10-K which
accompanies the consolidated financial statements of Future Petroleum
Corporation for the years ended December 31, 1997 and 1996, (2) our report dated
March 12, 1999 included in the Company's Form 8-K/A dated May 4, 1999 which
accompanies the financial statements of Bargo Energy Resources as of November
30, 1998, and (3) our report dated April 30, 1999 included in the Company's Form
8-K/A dated May 27, 1999 which accompanies the historical summaries of revenues
and direct operating expenses of the Cody Properties for the eleven months ended
November 30, 1998 and the year ended December 31, 1997, and to the use of our
name and the statements with respect to us, as appearing under the heading
"Experts" in the Prospectus.
/s/ HEIN + ASSOCIATES LLP
HEIN + ASSOCIATES LLP
Certified Public Accountants
December 6, 1999
Dallas, Texas
<PAGE> 1
EXHIBIT 99
BARGO ENERGY COMPANY
1999 STOCK INCENTIVE PLAN
MAY 12, 1999
A-1
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I. GENERAL...............................................................................................1
SECTION 1.1. PURPOSE....................................................................................1
SECTION 1.2. ADMINISTRATION.............................................................................1
SECTION 1.3. ELIGIBILITY FOR PARTICIPATION..............................................................2
SECTION 1.4. TYPES OF AWARDS UNDER PLAN.................................................................2
SECTION 1.5. AGGREGATE LIMITATION ON AWARDS.............................................................2
SECTION 1.6. EFFECTIVE DATE AND TERM OF PLAN............................................................3
ARTICLE II. STOCK OPTIONS........................................................................................3
SECTION 2.1. AWARD OF STOCK OPTIONS.....................................................................3
SECTION 2.2. STOCK OPTION AGREEMENTS....................................................................3
SECTION 2.3. STOCK OPTION PRICE.........................................................................3
SECTION 2.4. TERM AND EXERCISE..........................................................................3
SECTION 2.5. MANNER OF PAYMENT..........................................................................4
SECTION 2.6. ISSUANCE OF CERTIFICATES...................................................................4
SECTION 2.7. DEATH, RETIREMENT AND TERMINATION OF EMPLOYMENT OF OPTIONEE................................4
ARTICLE III. INCENTIVE STOCK OPTIONS.............................................................................5
SECTION 3.1. AWARD OF INCENTIVE STOCK OPTIONS...........................................................5
SECTION 3.2. INCENTIVE STOCK OPTION AGREEMENTS..........................................................5
SECTION 3.3. INCENTIVE STOCK OPTION PRICE...............................................................5
SECTION 3.4. TERM AND EXERCISE..........................................................................5
SECTION 3.5. MAXIMUM AMOUNT OF INCENTIVE STOCK OPTION GRANT.............................................5
SECTION 3.6. DEATH OF OPTIONEE..........................................................................5
SECTION 3.7. RETIREMENT OR DISABILITY...................................................................6
SECTION 3.8. TERMINATION FOR OTHER REASONS..............................................................6
SECTION 3.9. TERMINATION FOR CAUSE......................................................................6
SECTION 3.10. APPLICABILITY OF STOCK OPTIONS SECTIONS...................................................6
SECTION 3.11. CODE REQUIREMENTS.........................................................................6
ARTICLE IV. PERFORMANCE SHARE AWARDS.............................................................................6
SECTION 4.1. AWARDS GRANTED BY PLAN ADMINISTRATOR.......................................................6
SECTION 4.2. AMOUNT OF AWARD............................................................................6
SECTION 4.3. COMMUNICATION OF AWARD.....................................................................6
SECTION 4.4. AMOUNT OF AWARD PAYABLE....................................................................7
SECTION 4.5. ADJUSTMENTS................................................................................7
SECTION 4.6. PAYMENTS OF AWARDS.........................................................................7
SECTION 4.7. TERMINATION OF EMPLOYMENT..................................................................7
SECTION 4.8. TRANSFER RESTRICTION.......................................................................7
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
ARTICLE V. MISCELLANEOUS.........................................................................................8
SECTION 5.1. GENERAL RESTRICTION........................................................................8
SECTION 5.2. NON-ASSIGNABILITY..........................................................................8
SECTION 5.3. WITHHOLDING TAXES..........................................................................8
SECTION 5.4. RIGHT TO TERMINATE EMPLOYMENT..............................................................8
SECTION 5.5. NON-UNIFORM DETERMINATIONS.................................................................8
SECTION 5.6. RIGHTS AS A STOCKHOLDER....................................................................8
SECTION 5.7. DEFINITIONS................................................................................8
SECTION 5.8. LEAVES OF ABSENCE..........................................................................9
SECTION 5.9. NEWLY ELIGIBLE EMPLOYEES...................................................................9
SECTION 5.10. ADJUSTMENTS...............................................................................9
SECTION 5.11. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE................................................9
SECTION 5.12. AMENDMENT OF THE PLAN....................................................................11
SECTION 5.13. ADJUSTMENTS FOR POOLING OF INTERESTS ACCOUNTING..........................................11
</TABLE>
ii
<PAGE> 4
BARGO ENERGY COMPANY
1999 STOCK INCENTIVE PLAN
ARTICLE I. GENERAL
SECTION 1.1. PURPOSE. The purposes of this Stock Incentive Plan (the
"Plan") are to: (1) associate the interests of the management of BARGO ENERGY
COMPANY, a Texas corporation, and its Subsidiaries and affiliates (collectively
referred to as the "Company") closely with the stockholders to generate an
increased incentive to contribute to the Company's future success and
prosperity, thus enhancing the value of the Company for the benefit of its
stockholders; (2) provide management with a proprietary ownership interest in
the Company commensurate with Company performance, as reflected in increased
stockholder value; (3) maintain competitive compensation levels thereby
attracting and retaining highly competent and talented directors, employees and
consultants; and (4) provide an incentive to management for continuous
employment with the Company. Certain capitalized terms are defined in Section
5.7.
SECTION 1.2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors
of the Company or any duly constituted committee of the Board of
Directors consisting of at least two members of the Board of Directors
all of whom shall be Non-Employee Directors unless otherwise designated
by the Board of Directors. Such administrating party shall be referred
to herein as the "Plan Administrator." The Plan Administrator shall
have the authority to appoint a committee consisting of two or more
employees of the Company to make recommendations to the Plan
Administrator with respect to the selection of participants in the Plan
to receive Awards and the form and terms of such Awards. Such committee
and the members thereof shall serve subject to the discretion of the
Plan Administrator and the recommendations of such committee shall not
be binding on the Plan Administrator. In addition, the Chief Executive
Officer of the Company will make recommendations to the Plan
Administrator with respect to the selection of participants to receive
Awards and the form and terms of such Awards relating to shares of
Common Stock (as defined) underlying Awards that were previously
awarded but expired unexercised.
(b) The Plan Administrator shall have the authority, in its
sole discretion and from time to time to:
(i) designate the officers and key employees and
consultants of the Company and its Subsidiaries eligible to
participate in the Plan;
(ii) grant Awards provided in the Plan in such form
and amount as the Plan Administrator shall determine;
(iii) impose such limitations, restrictions and
conditions, not inconsistent with this Plan, upon any such
Award as the Plan Administrator shall deem appropriate; and
(iv) interpret the Plan and any agreement,
instrument or other document executed in connection with the
Plan, adopt, amend and rescind rules and regulations relating
to the Plan, and make all other determinations and take all
other action necessary or advisable for the implementation and
administration of the Plan.
<PAGE> 5
(c) Decisions and determinations of the Plan Administrator on
all matters relating to the Plan shall be in its sole discretion and
shall be final, conclusive and binding upon all persons, including the
Company, any participant, any stockholder of the Company, any employee
and any consultant. No member of any committee acting as Plan
Administrator shall be liable for any action taken or decision made
relating to the Plan or any Award thereunder.
SECTION 1.3. ELIGIBILITY FOR PARTICIPATION. Participants in the Plan
shall be selected by the Plan Administrator from the directors, executive
officers and other key employees and consultants of the Company and executive
officers and key employees and consultants of any Subsidiary who have the
capability of making a substantial contribution to the success of the Company.
In making this selection and in determining the form and amount of awards, the
Plan Administrator shall consider any factors deemed relevant, including the
individual's functions, responsibilities, value of services to the Company and
past and potential contributions to the Company's profitability and growth. For
the purposes of this Plan, the term "Subsidiary" means any corporation or other
entity of which at least 50% of the voting securities are owned by the Company
directly or through one or more other corporations, each of which is also a
Subsidiary. With respect to non-corporate entities, Subsidiary shall mean an
entity managed or controlled by the Company or any Subsidiary and with respect
to which the Company or any Subsidiary is allocated more than half of the
profits and losses thereof.
SECTION 1.4. TYPES OF AWARDS UNDER PLAN. Awards under the Plan may be
in the form of any or more of the following:
(i) Stock Options, as described in Article II;
(ii) Incentive Stock Options, as described in Article III;
and/or
(iii) Performance Shares, as described in Article IV.
Awards under the Plan shall be evidenced by an Award Agreement between the
Company and the recipient of the Award, in form and substance satisfactory to
the Plan Administrator, and not inconsistent with this Plan. Award Agreements
may provide such vesting schedules for Stock Options, Incentive Stock Options
and Performance Shares, and such other terms, conditions and provisions as are
not inconsistent with the terms of this Plan. Subject to the express provisions
of the Plan, and within the limitations of the Plan, the Plan Administrator may
modify, extend or renew outstanding Award Agreements, or accept the surrender of
outstanding Awards and authorize the granting of new Awards in substitution
therefor. However, except as provided in this Plan, no modification of an Award
shall impair the rights of the holder thereof without his consent.
SECTION 1.5. AGGREGATE LIMITATION ON AWARDS.
(a) Shares of stock which may be issued under the Plan shall
be authorized and unissued or treasury shares of Common Stock, par
value $.01 per share, of the Company ("Common Stock"). The maximum
number of shares of Common Stock which may be issued pursuant to Awards
issued under the Plan shall be 26,333,747 which may be increased by the
Board of Directors pursuant to Section 5.12.
(b) For purposes of calculating the maximum number of shares
of Common Stock which may be issued under the Plan at any time:
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<PAGE> 6
(i) all the shares issued (including the shares, if
any, withheld for tax withholding requirements) under the Plan
shall be counted when issued upon exercise of a Stock Option
or Incentive Stock Option; and
(ii) only the net shares issued as Performance
Shares shall be counted (shares reacquired by the Company
because of failure to achieve a performance target or failure
to become fully vested for any other reason shall again be
available for issuance under the Plan).
(c) Shares tendered by a participant as payment for shares
issued upon exercise of a Stock Option or Incentive Stock Option shall
be available for issuance under the Plan. Any shares of Common Stock
subject to a Stock Option or Incentive Stock Option which for any
reason is terminated unexercised or expires shall again be available
for issuance under the Plan.
SECTION 1.6. EFFECTIVE DATE AND TERM OF PLAN.
(a) The Plan shall become effective on the date adopted by the
Board of Directors. In order for Awards of Incentive Stock Options to
be made, the holders of a majority of the shares of Common Stock must
approve the Plan at a meeting or by written consent within one year of
the date the Plan is adopted by the Board of Directors.
(b) The Plan and all Awards made under the Plan shall remain
in effect until such Awards have been satisfied or terminated in
accordance with the Plan and the terms of such Awards.
ARTICLE II. STOCK OPTIONS
SECTION 2.1. AWARD OF STOCK OPTIONS. The Plan Administrator may from
time to time, and subject to the provisions of the Plan and such other terms and
conditions as the Plan Administrator may prescribe, grant to any participant in
the Plan one or more options to purchase for cash or shares the number of shares
of Common Stock ("Stock Options") allotted by the Plan Administrator. The date a
Stock Option is granted shall mean the date selected by the Plan Administrator
as of which the Plan Administrator allots a specific number of shares to a
participant pursuant to the Plan.
SECTION 2.2. STOCK OPTION AGREEMENTS. The grant of a Stock Option shall
be evidenced by a written Award Agreement, executed by the Company and the
holder of a Stock Option (the "Optionee"), stating the number of shares of
Common Stock subject to the Stock Option evidenced thereby, and in such form as
the Plan Administrator may from time to time determine.
SECTION 2.3. STOCK OPTION PRICE. The Option Price per share of Common
Stock deliverable upon the exercise of a Stock Option shall be 100% of the Fair
Market Value of a share of Common Stock on the date the Stock Option is granted
unless otherwise determined by the Plan Administrator.
SECTION 2.4. TERM AND EXERCISE. A Stock Option shall not be exercisable
prior to six months from the date of its grant, unless a shorter period is
provided by the Plan Administrator or by another Section of this Plan, and may
be subject to such vesting scheduling and term ("Option Term") as the Plan
Administrator may provide in an Award Agreement. No Stock Option shall be
exercisable after the expiration of its Option Term.
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<PAGE> 7
SECTION 2.5. MANNER OF PAYMENT. Each Award Agreement providing for
Stock Options shall set forth the procedure governing the exercise of the Stock
Option granted thereunder, and shall provide that, upon such exercise in respect
of any shares of Common Stock subject thereto, the Optionee shall pay to the
Company, in full, the Option Price for such shares with cash or, if duly
authorized by the Plan Administrator, Common Stock. The Plan Administrator may
permit an Optionee to elect to pay the Option Price upon the exercise of a Stock
Option through a cashless exercise procedure approved by the Plan Administrator
by irrevocably authorizing a broker to sell shares of Common Stock (or a
sufficient portion of the shares) acquired upon exercise of the Stock Option and
remit to the Company a sufficient portion of the sale proceeds to pay the entire
Option Price and any tax withholding resulting from such exercise.
SECTION 2.6. ISSUANCE OF CERTIFICATES. As soon as practicable after
receipt of payment, the Company shall deliver to the Optionee a certificate or
certificates for such shares of Common Stock unless (i) such certificate or
certificates have been previously delivered to a broker pursuant to a cashless
exercise through a broker or (ii) the Award Agreement for such Stock Options
allows the Plan Administrator or the Optionee to defer delivery of such
certificates. The Optionee shall become a stockholder of the Company with
respect to Common Stock represented by share certificates so issued and as such
shall be fully entitled to receive dividends, to vote and to exercise all other
rights of a stockholder unless the Plan Administrator, in its discretion,
imposes conditions, restrictions or contingencies with respect to such shares in
the applicable Award Agreement.
SECTION 2.7. DEATH, RETIREMENT AND TERMINATION OF EMPLOYMENT OF
OPTIONEE. Unless otherwise provided in an Award Agreement or otherwise agreed to
by the Plan Administrator:
(a) Upon the death of the Optionee, any rights to the extent
exercisable on the date of death may be exercised by the Optionee's
estate, or by a person who acquires the right to exercise such Stock
Option by bequest or inheritance or by reason of the death of the
Optionee, provided that such exercise occurs within both (i) the
remaining Option Term of the Stock Option and (ii) one year after the
Optionee's death. The provisions of this Section shall apply
notwithstanding the fact that the Optionee's employment may have
terminated prior to death, but only to the extent of any rights
exercisable on the date of death.
(b) Upon termination of the Optionee's employment by reason of
retirement or permanent disability (as each is determined by the Plan
Administrator), the Optionee may exercise any vested Stock Options,
provided such option exercise occurs within both (i) the remaining
Option Term of the Stock Option and (ii) one year (in the case of
permanent disability) or three months (in the case of retirement).
(c) Upon termination of the Optionee's employment by reason
other than death, disability, retirement or cause (as each is
determined by the Plan Administrator), the Optionee may exercise any
vested Stock Options, provided such option exercise occurs within both
(i) the remaining Option Term of the Stock Option and (ii) 120 days of
the date of termination.
(d) Except as provided in Subsections (a), (b) and (c) of this
Section 2.7, all Stock Options shall terminate immediately upon the
termination of the Optionee's employment.
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<PAGE> 8
ARTICLE III. INCENTIVE STOCK OPTIONS
SECTION 3.1. AWARD OF INCENTIVE STOCK OPTIONS. The Plan Administrator
may, from time to time and subject to the provisions of the Plan and such other
terms and conditions as the Plan Administrator may prescribe, grant to any
officer or key employee who is a participant in the Plan one or more "incentive
stock options" (intended to qualify as such under the provisions of Section 422
of the Internal Revenue Code of 1986, as amended ("Incentive Stock Options")) to
purchase for cash or shares the number of shares of Common Stock allotted by the
Plan Administrator. No Incentive Stock Options shall be made under the Plan
after the tenth anniversary of the effective date of the Plan. The date an
Incentive Stock Option is granted shall mean the date selected by the Plan
Administrator as of which the Plan Administrator allots a specific number of
shares to a participant pursuant to the Plan. Notwithstanding the foregoing,
Incentive Stock Options shall not be granted to any owner of 10% or more of the
total combined voting power of the Company and its subsidiaries.
SECTION 3.2. INCENTIVE STOCK OPTION AGREEMENTS. The grant of an
Incentive Stock Option shall be evidenced by a written Award Agreement, executed
by the Company and the holder of an Incentive Stock Option (the "Optionee"),
stating the number of shares of Common Stock subject to the Incentive Stock
Option evidenced thereby, and in such form as the Plan Administrator may from
time to time determine.
SECTION 3.3. INCENTIVE STOCK OPTION PRICE. The Option Price per share
of Common Stock deliverable upon the exercise of an Incentive Stock Option shall
be 100% of the Fair Market Value of a share of Common Stock on the date the
Incentive Stock Option is granted.
SECTION 3.4. TERM AND EXERCISE. Each Incentive Stock Option shall not
be exercisable prior to six months from the date of its grant and, unless a
shorter period is provided by the Plan Administrator or another Section of this
Plan, may be exercised during a period of ten years from the date of grant
thereof (the "Option Term") and may be subject to such vesting scheduling as the
Plan Administrator may provide in an Award Agreement. No Incentive Stock Option
shall be exercisable after the expiration of its Option Term.
SECTION 3.5. MAXIMUM AMOUNT OF INCENTIVE STOCK OPTION GRANT. The
aggregate Fair Market Value (determined on the date the Incentive Stock Option
is granted) of Common Stock with respect to which Incentive Stock Options first
become exercisable by an Optionee during in any calendar year (under all plans
of the Optionee's employer corporations and their parent and subsidiary
corporations) shall not exceed $100,000.
SECTION 3.6. DEATH OF OPTIONEE. Unless otherwise provided in an Award
Agreement or otherwise agreed to by the Plan Administrator:
(a) Upon the death of the Optionee, any Incentive Stock Option
exercisable on the date of death may be exercised by the Optionee's
estate or by a person who acquires the right to exercise such Incentive
Stock Option by bequest or inheritance or by reason of the death of the
Optionee, provided that such exercise occurs within both the remaining
Option Term of the Incentive Stock Option and one year after the
Optionee's death.
(b) The provisions of this Section shall apply notwithstanding
the fact that the Optionee's employment may have terminated prior to
death, but only to the extent of any Incentive Stock Options
exercisable on the date of death.
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<PAGE> 9
SECTION 3.7. RETIREMENT OR DISABILITY. Unless otherwise provided in an
Award Agreement or otherwise agreed to by the Plan Administrator, upon the
termination of the Optionee's employment by reason of permanent disability or
retirement (as each is determined by the Plan Administrator), the Optionee may
exercise any vested Incentive Stock Options, provided such option exercise
occurs within both (i) the remaining Option Term of the Incentive Stock Option
and (ii) six months (in the case of permanent disability) or three months (in
the case of retirement). Notwithstanding the terms of an Award Agreement, the
tax treatment available pursuant to Section 422 of the Internal Revenue Code of
1986 (the "Code") upon the exercise of an Incentive Stock Option shall not be
available to an Optionee who exercises any Incentive Stock Options more than (i)
one year after the date of termination of employment due to permanent disability
or (ii) three months after the date of termination of employment due to
retirement.
SECTION 3.8. TERMINATION FOR OTHER REASONS. Unless otherwise provided
in an Award Agreement or otherwise agreed to by the Plan Administrator, except
as provided in Sections 3.6 and 3.7, upon termination of the Optionee's
employment by reason other than cause (as determined by the Plan Administrator),
the Optionee may exercise any vested Incentive Stock Options, provided such
option exercise occurs within both (i) the remaining Option Term of the
Incentive Stock Option and (ii) 30 days of the date of termination.
SECTION 3.9. TERMINATION FOR CAUSE. Unless otherwise provided in an
Award Agreement or otherwise agreed to by the Plan Administrator, except as
provided in Sections 3.6, 3.7 and 3.8, all Incentive Stock Options shall
terminate immediately upon the termination of the Optionee's employment.
SECTION 3.10. APPLICABILITY OF STOCK OPTIONS SECTIONS. Sections 2.5,
Manner of Payment; and 2.6, Issuance of Certificates, applicable to Stock
Options, shall apply equally to Incentive Stock Options. Said Sections are
incorporated by reference in this Article III as though fully set forth herein.
SECTION 3.11. CODE REQUIREMENTS. The terms of any Incentive Stock
Option granted under the Plan shall comply in all respects with the provisions
of Code Section 422. Anything in the Plan to the contrary notwithstanding, no
term of the Plan relating to Incentive Stock Options shall be interpreted,
amended or altered, nor shall any discretion or authority granted under the Plan
be exercised, so as to disqualify either the Plan or any Incentive Stock Option
under Code Section 422, unless the participant has first requested the change
that will result in such disqualification.
ARTICLE IV. PERFORMANCE SHARE AWARDS
SECTION 4.1. AWARDS GRANTED BY PLAN ADMINISTRATOR. Coincident with or
following designation for participation in the Plan, a participant may be
granted Performance Shares. Certificates representing Performance Shares shall
be issued to the participant effective as of the date of the Award. Holders of
Performance Shares shall have all of the voting, dividend and other rights of
stockholders of the Company, subject to the terms of any Award Agreement.
SECTION 4.2. AMOUNT OF AWARD. The Plan Administrator shall establish a
maximum amount of a participant's Award, which amount shall be denominated in
shares of Common Stock.
SECTION 4.3. COMMUNICATION OF AWARD. Written notice of the maximum
amount of a participant's Award and the Performance Cycle determined by the Plan
Administrator, if any, shall be given to a participant as soon as practicable
after approval of the Award by the Plan Administrator. The grant of Performance
Shares shall be evidenced by a written Award Agreement, executed by the Company
and the
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<PAGE> 10
recipient of Performance Shares, in such form as the Plan Administrator may from
time to time determine, providing for the terms of such grant.
SECTION 4.4. AMOUNT OF AWARD PAYABLE. Performance Shares may be granted
based upon past performance or future performance. In addition to any other
restrictions the Plan Administrator may place on Performance Shares, the Plan
Administrator may, in its discretion, provide that Performance Shares shall vest
upon the satisfaction of performance targets to be achieved during an applicable
"Performance Cycle." Failure to satisfy the performance targets may result, in
the Plan Administrator's discretion as set forth in an Award Agreement, in the
forfeiture of the Performance Shares by the participant and the return of such
shares to the Company, or have any other consequence as determined by the Plan
Administrator. Performance targets established by the Plan Administrator may
relate to corporate, group, unit or individual performance and may be
established in terms of market price of common stock, cash flow or cash flow per
share, reserve value or reserve value per share, net asset value or net asset
value per share, earnings, or such other measures or standards determined by the
Plan Administrator. Multiple performance targets may be used and the components
of multiple performance targets may be given the same or different weight in
determining the amount of an Award earned, and may relate to absolute
performance or relative performance measured against other groups, units,
individuals or entities. The Plan Administrator may also establish that none, a
portion or all of a participant's Award will vest (subject to Section 4.6) for
performance which falls below the performance target applicable to such Award.
Certificates representing Performance Shares shall bear a legend restricting
their transfer and requiring the forfeiture of the shares to the Company if any
performance targets or other conditions to vesting are not met. The Plan
Administrator may also require a participant to deliver certificates
representing unvested Performance Shares to the Company in escrow until the
Performance Shares vest.
SECTION 4.5. ADJUSTMENTS. At any time prior to vesting of a Performance
Share, the Plan Administrator may adjust previously established performance
targets or other terms and conditions to reflect events such as changes in laws,
regulations, or accounting practice, or mergers, acquisitions, divestitures or
any other event determined by the Plan Administrator.
SECTION 4.6. PAYMENTS OF AWARDS. Following the conclusion of each
Performance Cycle, the Plan Administrator shall determine the extent to which
performance targets have been attained, and the satisfaction of any other terms
and conditions with respect to vesting an Award relating to such Performance
Cycle. Subject to the provisions of Section 5.3, to the extent the Plan
Administrator determines Performance Shares have vested, the Company shall issue
to the participant certificates representing vested shares free of any legend
regarding performance targets or forfeiture in exchange for such participant's
legended certificates.
SECTION 4.7. TERMINATION OF EMPLOYMENT. Unless the Award Agreement
provides for vesting upon death, disability, retirement or other termination of
employment, upon any such termination of employment of a participant prior to
vesting of Performance Shares, all outstanding and unvested Awards of
Performance Shares to such participant shall be cancelled, shall not vest and
shall be returned to the Company.
SECTION 4.8. TRANSFER RESTRICTION. Unless otherwise provided in an
Award Agreement or otherwise agreed to by the Plan Administrator, any Award
Agreement providing for the issuance of Performance Shares to any person who, at
the time of grant, is subject to the restrictions of Section 16(b) of the
Securities Exchange Act of 1934, as amended, shall provide that such Common
Stock cannot be resold for a period of six months following the grant of such
Performance Shares.
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<PAGE> 11
ARTICLE V. MISCELLANEOUS
SECTION 5.1. GENERAL RESTRICTION. Each Award under the Plan shall be
subject to the requirement that, if at any time the Plan Administrator shall
determine that (i) the listing, registration or qualification of the shares of
Common Stock subject or related thereto upon any securities exchange or under
any state or Federal law, or (ii) the consent or approval of any government
regulatory body, or (iii) an agreement by the grantee of an Award with respect
to the disposition of shares of Common Stock, is necessary or desirable as a
condition of, or in connection with, the granting of such Award or the issue or
purchase of shares of Common Stock thereunder, such Award may not be consummated
in whole or in part unless such listing, registration, qualification, consent,
approval or agreement shall have been effected or obtained free of any
conditions not acceptable to the Plan Administrator.
SECTION 5.2. NON-ASSIGNABILITY. No Award under the Plan shall be
assignable or transferable by the recipient thereof, except by will or by the
laws of descent and distribution. During the life of the recipient, such Award
shall be exercisable only by such person or by such person's guardian or legal
representative.
SECTION 5.3. WITHHOLDING TAXES. Whenever the Company proposes or is
required to issue or transfer shares of Common Stock under the Plan, the Company
shall have the right to require the grantee to remit to the Company an amount
sufficient to satisfy any Federal, state and/or local withholding tax
requirements prior to the delivery of any certificate or certificates for such
shares. Alternatively, the Company may issue, transfer or vest only such number
of shares of the Company net of the number of shares sufficient to satisfy the
withholding tax requirements. For withholding tax purposes, the shares of Common
Stock shall be valued on the date the withholding obligation is incurred. Unless
the Plan Administrator provides otherwise in the applicable Award Agreement,
Participants may elect to satisfy tax withholding obligations through the
surrender of shares of Common Stock which the Participant already owns or
through the surrender of shares of Common Stock to which the participant is
otherwise entitled under the Plan.
SECTION 5.4. RIGHT TO TERMINATE EMPLOYMENT. Nothing in the Plan or in
any agreement entered into pursuant to the Plan shall confer upon any
participant the right to continue in the employment of the Company or affect any
right which the Company may have to terminate the employment of such
participant.
SECTION 5.5. NON-UNIFORM DETERMINATIONS. The Plan Administrator's
determinations under the Plan (including without limitation determinations of
the persons to receive Awards, the form, amount and timing of such Awards, the
terms and provisions of such Awards and the agreements evidencing the same) need
not be uniform and may be made by it selectively among persons who receive, or
are eligible to receive, Awards under the Plan, whether or not such persons are
similarly situated.
SECTION 5.6. RIGHTS AS A STOCKHOLDER. The recipient of any Award under
the Plan shall have no rights as a stockholder with respect thereto unless and
until certificates for shares of Common Stock are issued to him.
SECTION 5.7. DEFINITIONS. In this Plan the following definitions shall
apply:
(a) "Award" shall mean a grant of Stock Options, Incentive
Stock Options or Performance Shares under the Plan.
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<PAGE> 12
(b) "Fair Market Value" as of any date and in respect of any
share of Common Stock means the average of the closing bid and offer
price on such date or on the next business day, if such date is not a
business day, of a share of Common Stock on the OTC Bulletin Board or
other public securities market on which the Common Stock trades. If the
Plan Administrator determines that the average of the closing bid and
offer price on the OTC Bulletin Board or other public securities market
on which the Common Stock trades does not properly reflect the Fair
market Value of a share of Common Stock, the Fair Market Value of
shares of Common Stock shall be as determined by the Plan Administrator
in such manner as it may deem appropriate. In no event shall the Fair
Market Value of any share of Common Stock be less than its par value.
(c) "Option" means a Stock Option or Incentive Stock Option.
(d) "Option Price" means the purchase price per share of
Common Stock deliverable upon the exercise of a Stock Option or
Incentive Stock Option.
(e) "Performance Cycle" means the period of time, if any, as
specified by the Plan Administrator over which Performance Shares are
to be vested.
SECTION 5.8. LEAVES OF ABSENCE. The Plan Administrator shall be
entitled to make such rules, regulations and determinations as it deems
appropriate under the Plan in respect of any leave of absence taken by the
recipient of any Award. Without limiting the generality of the foregoing, the
Plan Administrator shall be entitled to determine (i) whether or not any such
leave of absence shall constitute a termination of employment within the meaning
of the Plan and (ii) the impact, if any, of any such leave of absence on Awards
under the Plan theretofore made to any recipient who takes such leave of
absence.
SECTION 5.9. NEWLY ELIGIBLE EMPLOYEES. The Plan Administrator shall be
entitled to make such rules, regulations, determinations and Awards as it deems
appropriate in respect of any employee who becomes eligible to participate in
the Plan or any portion thereof after the commencement of an Award or incentive
period.
SECTION 5.10. ADJUSTMENTS. In the event of any change in the
outstanding Common Stock by reason of a stock dividend or distribution,
recapitalization, merger, consolidation, split-up, combination, exchange of
shares or the like, the Plan Administrator may appropriately adjust the number
of shares of Common Stock which may be issued under the Plan, the number of
shares of Common Stock subject to Options or Performance Shares theretofore
granted under the Plan, and any and all other matters deemed appropriate by the
Plan Administrator.
SECTION 5.11. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE.
(a) The existence of outstanding Options or Performance Shares
shall not affect in any way the right or power of the Company or its
stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's
capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior
preference stock ahead of or affecting the Common Stock or the rights
thereof, or the dissolution or liquidation of the Company, or any sale
or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or
otherwise.
(b) If, while there are outstanding Options, the Company shall
effect a subdivision or consolidation of shares or other increase or
reduction in the number of shares of the Common Stock
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outstanding without receiving compensation therefor in money, services
or property, then, subject to the provisions, if any, in the Award
Agreement (a) in the event of an increase in the number of such shares
outstanding, the number of shares of Common Stock then subject to
Options hereunder shall be proportionately increased; and (b) in the
event of a decrease in the number of such shares outstanding the number
of shares then available for Option hereunder shall be proportionately
decreased.
(c) After a merger of one or more corporations into the
Company, or after a consolidation of the Company and one or more
corporations in which the Company shall be the surviving corporation,
(i) each holder of an outstanding Option shall, at no additional cost,
be entitled upon exercise of such Option to receive (subject to any
required action by stockholders) in lieu of the number of shares as to
which such Option shall then be so exercisable, the number and class of
shares of stock, other securities or consideration to which such holder
would have been entitled to receive pursuant to the terms of the
agreement of merger or consolidation if, immediately prior to such
merger or consolidation, such holder had been the holder of record of a
number of shares of the Company equal to the number of shares as to
which such Option had been exercisable and (ii) unless otherwise
provided by the Plan Administrator, the number of shares of Common
Stock, other securities or consideration to be received with respect to
unvested Performance Shares shall continue to be subject to the Award
Agreement, including any vesting provisions thereof.
(d) If the Company is about to be merged into or consolidated
with another corporation or other entity under circumstances where the
Company is not the surviving corporation, or if the Company is about to
sell or otherwise dispose of substantially all of its assets to another
corporation or other entity while unvested Performance Shares or
unexercised Options remain outstanding, then the Plan Administrator may
direct that any of the following shall occur:
(i) If the successor entity is willing to assume
the obligation to deliver shares of stock or other securities
after the effective date of the merger, consolidation or sale
of assets, as the case may be, each holder of an outstanding
Option shall be entitled to receive, upon the exercise of such
Option and payment of the option price, in lieu of shares of
Common Stock, such shares of stock or other securities as the
holder of such Option would have been entitled to receive had
such Option been exercised immediately prior to the
consummation of such merger, consolidation or sale, and the
terms of such Option shall apply as nearly as practicable to
the shares of stock or other securities purchasable upon
exercise of the Option following such merger, consolidation or
sale of assets;
(ii) The Plan Administrator may waive any
limitations set forth in or imposed pursuant to this Plan or
any Award Agreement with respect to such Option or Performance
Share such that (A) such Option shall become exercisable prior
to the record or effective date of such merger, consolidation
or sale of assets or (B) the vesting of such Performance Share
shall occur upon such merger, consolidation or sale of assets;
and/or
(iii) The Plan Administrator may cancel all
outstanding Options as of the effective date of any such
merger, consolidation or sale of assets provided that prior
notice of such cancellation shall be given to each holder of
an Option at least 30 days prior to the effective date of such
merger, consolidation or sale of assets, and each holder of an
Option shall have the right to exercise such Option in full
during a period of not less than 30 days prior to the
effective date of such merger, consolidation or sale of
assets.
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(e) Except as herein provided, the issuance by the Company of
Common Stock or any other shares of capital stock or securities
convertible into shares of capital stock, for cash, property, labor
done or other consideration, shall not affect, and no adjustment by
reason thereof shall be made with respect to, the number or price of
shares of Common Stock then subject to outstanding Options.
SECTION 5.12. AMENDMENT OF THE PLAN. The Board of Directors may,
without further approval by the stockholders and without receiving further
consideration from the participants, amend this Plan or condition or modify
Awards under this Plan, including increases to the number of shares which may be
covered by Awards under this Plan.
Notwithstanding the foregoing, however, in accordance with the Second
Amended and Restated Shareholders' Agreement ("Agreement") dated May 14, 1999,
by and among the Company, B. Carl Price, Don Wm. Reynolds, Energy Capital
Investment Company PLC, EnCap Equity 1994 Limited Partnership, Bargo Energy
Resources, Ltd., TJG Investments, Inc., Bargo Energy Company, Tim J. Goff,
Thomas Barrow, James E. Sowell, Bargo Operating Company, Inc., EnCap Energy
Capital Fund III-B, L.P., BOCP Energy Partners, L.P., EnCap Energy Capital Fund
III, L.P., Kayne Anderson Energy Fund, L.P., BancAmerica Capital Investors SBIC
I, L.P., Eos Partners, L.P., Eos Partners SBIC, L.P., Eos Partners SBIC II,
L.P., and SGC Partners II LLC (capitalized terms in this paragraph are as
defined in the Agreement), for so long as Eos and SGCP (jointly), Kayne, BACI
and Encap are entitled to appoint directors to the Company's Board of Directors,
at least one of such directors must approve any increase in the number of shares
which may be issued pursuant to Awards granted under the Plan as set forth in
Section 1.5 hereof.
SECTION 5.13 ADJUSTMENTS FOR POOLING OF INTERESTS ACCOUNTING. If the
Company enters into a transaction which is intended to be accounted for using
the pooling of interests method of accounting, but it is determined by the Board
that any outstanding Option or any aspect thereof could reasonably be expected
to preclude such treatment, then the Board may modify (to the minimum extent
required) or revoke (if necessary) the Option or any of the provisions thereof
to the extent that the Board determines that such modification or revocation is
necessary to enable the transaction to be subject to pooling of interests
accounting.
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