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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[X] Definitive Additional Materials
[ ] Soliciting material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
Nuevo Energy Company
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) filing Information Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
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pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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[Nuevo Letterhead]
Supplement to Our Proxy Statement
dated April 14, 1999
May 11, 1999
Dear Nuevo stockholder:
In connection with our 1999 annual meeting of stockholders, we have made several
changes to our 1999 Stock Incentive Plan. These changes are in response to
guidelines which institutional investors use to determine whether to vote shares
they own to approve a stock incentive plan. While these guidelines are either
consistent with our past practices in granting awards under our other stock
incentive plans or reflect the intent of our compensation committee in making
future awards, certain institutional investors prefer that these guidelines be
specifically incorporated in the plans, and that any variance from the
guidelines be submitted to stockholders for approval.
1999 STOCK INCENTIVE PLAN
We have made the following amendments to our 1999 Stock Incentive Plan:
GENERAL
The 1999 Stock Incentive Plan authorizes the issuance of up to one million
shares of stock to directors of Nuevo and executive officers, other key
employees and consultants of Nuevo and its subsidiaries. Although no change to
the group of persons who are eligible to participate in the plan has been
made; in order to clarify those individuals who may participate, the
eligibility requirements have been amended. The amendments provide for awards
to directors of Nuevo and executive officers, employees and individuals who act
as consultants of Nuevo or any of its subsidiaries who have the capability of
making a substantial contribution to our success.
EXERCISE PRICE OF OPTIONS MUST BE EQUAL TO OR GREATER THAN MARKET PRICE
Prior to the amendments, the 1999 Stock Incentive Plan provided that the
exercise price of stock options granted under the plan would be the market
price on the date of grant, unless our compensation committee approved a
different exercise price. This would allow our compensation committee to grant
options at less than the market price on the date of grant. In the past, all of
the stock options granted under our plans were granted at the market price on
the date of grant. We have amended the 1999 Stock Incentive Plan to formalize
this practice and specifically provide that we will not issue stock options
with an exercise price less than the market value on the date of grant.
OPTIONS ISSUED UNDER THE PLAN MAY NOT BE RE-PRICED
We have amended the 1999 Stock Incentive Plan to provide that we may not reduce
the exercise price of options granted under the plan or exchange outstanding
options for options with a lower exercise price. Our existing plans do not
prohibit the reduction of the exercise price of options or exchange of
outstanding options for new options with a lower exercise price. As described
in the proxy statement, during 1998, the compensation committee authorized the
reduction in the exercise price of options owned by persons who are not
executive officers or directors of the company. The exercise price of options
owned by executive officers and directors was not changed.
PROHIBITION ON DIVIDEND EQUIVALENTS FOR STOCK OPTIONS
Prior to the amendments, the 1999 Stock Incentive Plan allowed the compensation
committee to issue stock options which would entitle the holder to receive an
amount equal to any dividends which would have been paid on the common stock
issuable upon exercise of a stock option. The company has never granted options
with these dividend equivalents. The 1999 Stock Incentive Plan has been amended
to formalize past practice and specifically provide that such dividend
equivalents cannot be issued under the plan.
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AMENDMENT OF THE PLAN
Prior to its amendment, the 1999 Stock Incentive Plan allowed the compensation
committee to amend the plan without stockholder approval. Under certain
circumstances, the rules of the New York Stock Exchange would require
stockholder approval of amendments to the plan. However, we have amended the
1999 Stock Incentive Plan to provide that any of the following amendments
require stockholder approval to become effective:
o Any material increase in the number of shares subject to the plan;
o any amendment to the terms of outstanding Award Agreements which
benefit the plan participant if such improvement relates to a
material number of shares under the plan; and
o any extension of the class of persons entitled to receive awards
under the 1999 Stock Incentive Plan covering a material number of
shares subject to the plan.
Amendments affecting a number of shares in any of the foregoing categories
equal to or less than 10% of the shares subject to the plan will not be deemed
material unless such amendment provides for a decrease in the exercise price of
an option (which may not be approved for any options). In addition, the
compensation committee may approve changes to outstanding award agreements
which benefit the holder of awards in connection with the termination of the
employment of a holder of such awards.
We have also amended the plan to provide that we will not waive the enforcement
of any provision of an outstanding award grant, although this will not prohibit
the amendment of a grant as contemplated above.
MINIMUM VESTING PERIOD FOR PERFORMANCE SHARES
Prior to its amendment, the 1999 Stock Incentive Plan had no requirement for
minimum vesting for awards which involve the issuance of stock to employees
(generally referred to as "performance share" awards). We have amended the plan
to provide that any performance share awards or similar awards would have a
minimum one year vesting period. Generally, if employment terminates (or, in
the case of director grants, a director resigns) prior to vesting, the shares
would be forfeit. Vesting generally has exceptions for death and disability,
which exceptions usually permit early vesting.
In addition, we have amended the 1999 Stock Incentive Plan to provide that all
performance share awards will be made only if the compensation committee
determines that the award is made in place of cash or other compensation to
which the employee or director would have been entitled.
We do not expect performance shares to be a material component of executive
officer compensation. However, as described in the proxy statement, in order to
facilitate stock ownership by directors, we will permit our directors to elect
to acquire common stock at a 33% discount to market price rather than cash
director fees. Such common stock would be subject to a three year vesting,
which vesting period could be extended at the election of the director.
You may review a copy of the plan, as amended, at the Securities and Exchange
Commission's web site www.sec.gov, or may request a copy of the plan from us by
contacting Barbara Forbes, Director of Investor Relations, Nuevo Energy Company
1331 Lamar, Suite 1650, Houston, Texas 77010 or by calling (713) 756-1781.
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EXHIBIT INDEX
Exhibit A 1999 Stock Incentive Plan
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NUEVO ENERGY COMPANY
1999 STOCK INCENTIVE PLAN
March 30, 1999
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TABLE OF CONTENTS
<TABLE>
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ARTICLE I. GENERAL...............................................................................................1
SECTION 1.1. PURPOSE..........................................................................................1
SECTION 1.2. ADMINISTRATION...................................................................................1
SECTION 1.3. ELIGIBILITY FOR PARTICIPATION....................................................................1
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................................................................................3
SECTION 2.6. ISSUANCE OF CERTIFICATES.........................................................................4
SECTION 2.7. DEATH, RETIREMENT AND TERMINATION OF EMPLOYMENT OF OPTIONEE......................................4
SECTION 2.8. EFFECT OF EXERCISE...............................................................................4
SECTION 2.9. NO REDUCTION IN OPTION PRICE.....................................................................4
ARTICLE III. INCENTIVE STOCK OPTIONS.............................................................................4
SECTION 3.1. AWARD OF INCENTIVE STOCK OPTIONS.................................................................4
SECTION 3.2. INCENTIVE STOCK OPTION...........................................................................4
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.........................................................................5
SECTION 3.8. TERMINATION FOR OTHER REASONS....................................................................5
SECTION 3.9. TERMINATION FOR CAUSE............................................................................5
SECTION 3.10. APPLICABILITY OF STOCK OPTIONS SECTIONS..........................................................5
SECTION 3.11. CODE REQUIREMENTS................................................................................6
SECTION 3.12. NO REDUCTION IN OPTION PRICE.....................................................................6
ARTICLE IV. STOCK APPRECIATION RIGHTS............................................................................6
SECTION 4.1. AWARD OF STOCK APPRECIATION RIGHTS...............................................................6
SECTION 4.2. SAR AGREEMENTS...................................................................................6
SECTION 4.3. SAR EXERCISE PRICE...............................................................................6
SECTION 4.4. TERM AND EXERCISE................................................................................6
SECTION 4.5. EXERCISE OF SAR..................................................................................6
ARTICLE V. BONUS STOCK AWARDS....................................................................................7
SECTION 5.1. AWARD OF BONUS STOCK.............................................................................7
SECTION 5.2. STOCK BONUS AGREEMENTS...........................................................................7
SECTION 5.3. TRANSFER RESTRICTION.............................................................................7
ARTICLE VI. RESTRICTED STOCK.....................................................................................7
SECTION 6.1. AWARD OF RESTRICTED STOCK........................................................................7
SECTION 6.2. RESTRICTED STOCK AGREEMENTS......................................................................7
SECTION 6.3. STOCKHOLDER RIGHTS...............................................................................7
SECTION 6.4. CERTIFICATES.....................................................................................7
SECTION 6.5. PERFORMANCE-BASED AWARDS.........................................................................7
SECTION 6.6. TERMINATION OF EMPLOYMENT........................................................................8
ARTICLE VII. RESTRICTED STOCK UNITS..............................................................................8
SECTION 7.1. AWARD OF RESTRICTED STOCK UNITS..................................................................8
SECTION 7.2. RESTRICTED STOCK UNIT AGREEMENTS.................................................................8
SECTION 7.3. STOCKHOLDER RIGHTS...............................................................................8
SECTION 7.4. CERTIFICATES.....................................................................................8
SECTION 7.5. PERFORMANCE-BASED AWARDS.........................................................................8
SECTION 7.6. TERMINATION OF EMPLOYMENT........................................................................8
ARTICLE VIII. PERFORMANCE SHARE AWARDS...........................................................................9
SECTION 8.1. AWARDS GRANTED BY PLAN ADMINISTRATOR.............................................................9
SECTION 8.2. AMOUNT OF AWARD..................................................................................9
SECTION 8.3. COMMUNICATION OF AWARD...........................................................................9
SECTION 8.4. AMOUNT OF AWARD PAYABLE..........................................................................9
SECTION 8.5. ADJUSTMENTS......................................................................................9
SECTION 8.6. PAYMENTS OF AWARDS...............................................................................9
SECTION 8.7. TERMINATION OF EMPLOYMENT........................................................................9
SECTION 8.8. TRANSFER RESTRICTION.............................................................................9
</TABLE>
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<TABLE>
<S> <C>
ARTICLE IX. PERFORMANCE UNITS...................................................................................10
SECTION 9.1. AWARDS GRANTED BY PLAN ADMINISTRATOR............................................................10
SECTION 9.2. AMOUNT OF AWARD.................................................................................10
SECTION 9.3. COMMUNICATION OF AWARD..........................................................................10
SECTION 9.4. AMOUNT OF AWARD PAYABLE.........................................................................10
SECTION 9.5. ADJUSTMENTS.....................................................................................10
SECTION 9.6. PAYMENTS OF AWARDS..............................................................................10
SECTION 9.7. TERMINATION OF EMPLOYMENT.......................................................................10
ARTICLE X. MISCELLANEOUS........................................................................................11
SECTION 10.1. GENERAL RESTRICTION...........................................................................11
SECTION 10.2. NON-ASSIGNABILITY..............................................................................11
SECTION 10.3. WITHHOLDING TAXES..............................................................................11
SECTION 10.4. RIGHT TO TERMINATE EMPLOYMENT..................................................................11
SECTION 10.5. NON-UNIFORM DETERMINATIONS.....................................................................11
SECTION 10.6. RIGHTS AS A STOCKHOLDER........................................................................11
SECTION 10.7. DEFINITIONS....................................................................................11
SECTION 10.8. LEAVES OF ABSENCE..............................................................................13
SECTION 10.9. NEWLY ELIGIBLE EMPLOYEES.......................................................................13
SECTION 10.10. ADJUSTMENTS...................................................................................13
SECTION 10.11. CHANGES IN THE COMPANY'S CAPITAL STRUCTURE....................................................13
SECTION 10.12. AMENDMENT OF THE PLAN.........................................................................14
SECTION 10.13. NO LOSS OF RIGHTS OF GRANTEE OF AN AWARD......................................................14
SECTION 10.14. DIVIDENDS AND DIVIDEND EQUIVALENTS............................................................14
SECTION 10.15. FORM AND TIME OF ELECTIONS....................................................................14
SECTION 10.16. PERFORMANCE BASED COMPENSATION................................................................15
SECTION 10.17. DEFERRAL......................................................................................15
SECTION 10.18. VESTING AND AWARD CRITERIA OF PERFORMANCE SHARES..............................................15
SECTION 10.19. NO WAIVER.....................................................................................15
</TABLE>
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NUEVO 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 Nuevo Energy
Company 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 10.7.
Section 1.2. Administration.
(a) The Plan shall be administered by a duly constituted committee of
the Board of Directors consisting of at least two members of the Board of
Directors, all of whom shall be both a Non-Employee Director and an Outside
Director unless otherwise designated by the Board of Directors. Such
administrating committee shall be referred to herein as the "Plan
Administrator." The Plan Administrator may delegate to one or more executive
officers of the Company the power to make Awards to individuals eligible to
participate in the Plan pursuant to Section 1.3 who are not subject to Section
16(a) or 16(b) of the Exchange Act, provided the Plan Administrator shall fix
the maximum amount of such Awards for the group and the maximum for any one
Participant.
(b) The Plan Administrator shall have the authority, in its sole
discretion and from time to time to:
(i) designate the directors, officers, 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.
(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 director, 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 employees and individuals who act as consultants of the
Company and executive officers and employees and individuals who act as
consultants of any Subsidiary of the Company 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.
Section 1.4. Types of Awards Under Plan. Awards under the Plan may be
in the form of one or more of the following:
(i) Stock Options, as described in Article II;
(ii) Incentive Stock Options, as described in Article III;
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(iii) Stock Appreciation Rights, as described in Article IV;
(iv) Bonus Stock, as described in Article V;
(v) Restricted Stock, as described in Article VI;
(vi) Restricted Stock Units, as described in Article VII;
(vii) Performance Shares, as described in Article VIII; and/or
(viii) Performance Units, as described in Article IX.
Awards under the Plan shall be evidenced by an agreement between the Company and
the recipient of the Award ("Award Agreement"), 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, Bonus Stock, Stock Appreciation Rights, Restricted Stock,
Restricted Stock Units, Performance Shares and Performance Units, 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 Sections 10.1(i), 10.1(ii), 10.1(iii) and 10.11(d)(iii) of this Plan, no
modification of an Award shall impair the rights of the holder thereof without
his or her 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 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 1,000,000 shares, which
may be increased by the Board of Directors pursuant to Section 10.12.
(b) For purposes of calculating the maximum number of shares of Common
Stock which may be issued under the Plan at any time:
(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 shares issued (including the shares, if any,
withheld for tax withholding requirements) as a result of an exercise
of a Stock Appreciation Right shall be counted;
(iii) only the net shares issued (including the shares, if
any, withheld for tax withholding requirements) shall be counted when
shares of Common Stock are used as full or partial payment for shares
issued upon exercise of a Stock Option or Incentive Stock Option; and
(iv) only the net shares issued (including the shares, if any,
withheld for tax withholding requirements) as Bonus Stock, Restricted
Stock, Restricted Stock Units, Performance Shares or Performance Units
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) 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, but shares subject to a Stock
Option or Incentive Stock Option which are not issued as a result of the
exercise of a tandem Stock Appreciation Right shall not 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, subject to approval by the holders of the Company's Common Stock as
required by the rules of the NYSE.
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(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 person eligible
to participate 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 the Plan Administrator determines a higher price.
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. Unless otherwise provided
by the Plan Administrator, the Option Term shall be 10 years.
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 subject to the following:
(a) Subject to the following provisions of this Section 2.5,
upon the exercise in respect of any shares of Common Stock subject to
the Stock Option, the Optionee shall pay to the Company, in full, the
Option Price for such shares (except that, in the case of an exercise
arrangement approved by the Plan Administrator and described in Section
2.5(c)), payment may be made as soon as practicable after the exercise.
(b) The Option Price shall be payable in cash or, if
authorized by the Plan Administrator, by tendering shares of Common
Stock in a manner acceptable to the Plan Administrator and valued at
Fair Market Value as of the day of exercise of the Stock Option, or in
any combination thereof approved by the Plan Administrator.
(c) 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 Section
2.5(c) 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
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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 Stock
Options 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 Stock Options, provided
such option exercise occurs within both (i) the remaining Option Term
of the Stock Option and (ii) six months (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, retirement, disability or cause (as each is
determined by the Plan Administrator), the Optionee may exercise any
Stock Options, provided such option exercise occurs within both (i) the
remaining Option Term of the Stock Option and (ii) 30 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.
Section 2.8. Effect of Exercise. The exercise of any Stock Option shall
cancel that number of tandem SARs, if any, which is equal to the number of
shares of Common Stock purchased pursuant to said Stock Option unless otherwise
agreed by the Plan Administrator in an Award Agreement or otherwise.
Section 2.9. No Reduction in Option Price. The Option Price of Stock
Options issued under the Plan shall not be reduced following the Award of such
Stock Options. The Plan Administrator shall not authorize the Award of Stock
Options for outstanding Stock Options or outstanding Incentive Stock Options
which have a lower Option Price.
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 eligible to participate in the Plan one or more
"incentive stock options" (intended to qualify as such under the provisions of
Section 422 of the Code ("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 granted 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. 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 any calendar year (under all plans of
the Optionee's employer corporations and their parent and subsidiary
corporations) shall not exceed $100,000.
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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 (i) the
remaining Option Term of the Incentive Stock Option and (ii) 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.
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 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 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 death, retirement, disability or cause (as each
is determined by the Plan Administrator), the Optionee may exercise any
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; 2.6, Issuance of Certificates; and 2.8, Effect of Exercise,
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. If Code Section 422 is amended to
change any requirements to qualify for treatment as Incentive Stock Options the
Board of Directors may amend the Plan to conform to any such change.
Section 3.12. No Reduction in Option Price. The Option Price of
Incentive Stock Options issued under the Plan shall not be reduced following the
Award of such Incentive Stock Options. The Plan Administrator shall not
authorize the Award of Incentive Stock Options for outstanding Stock Options or
outstanding Incentive Stock Options which have a lower Option Price.
ARTICLE IV. STOCK APPRECIATION RIGHTS
Section 4.1. Award of Stock Appreciation Rights. 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
person eligible to participate in the Plan one or more stock appreciation rights
("SAR") entitling the Participant, upon exercise, to receive, in cash or shares
of Common Stock, value equal to (or otherwise based on) the excess of: (i) the
Fair Market Value of a specified number of shares of Common Stock at the time of
exercise over (ii) an Exercise Price established by the Plan Administrator, or,
if granted in tandem with an Option, the Option Price with respect to shares
under the tandem Option. The date an SAR is granted shall mean the date selected
by the Plan Administrator as of which the Plan Administrator specifies the
number of shares upon which the SAR will be based.
Section 4.2. SAR Agreements. The grant of an SAR shall be evidenced by
a written Award Agreement, executed by the Company and the holder of the SAR
("SAR Holder") stating the number of
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shares of Common Stock upon which the SAR is based, and in such form as the Plan
Administrator may from time to time determine. SARs may be granted in tandem
with all or any portion of a previously or contemporaneously granted Option.
Section 4.3. SAR Exercise Price. The exercise price per share of Common
Stock ("Exercise Price") used to determine the value to be received upon the
exercise of an SAR shall be 100% of the Fair Market Value of a share of Common
Stock on the date the SAR is granted unless otherwise determined by the Plan
Administrator.
Section 4.4. Term and Exercise. An SAR that is not in tandem with an
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
("SAR Term") as the Plan Administrator may provide in an Award Agreement. No SAR
shall be exercisable after the expiration of its SAR Term. An SAR granted in
tandem with an Option is exercisable at the time the tandem Option is
exercisable, unless the Plan Administrator provides for a longer period. A
tandem SAR shall be subject to the same Option Term as the tandem Option to
which it relates, unless the Plan Administrator specifies a different SAR Term
in the applicable Award Agreement. The exercise of an SAR granted in tandem with
an Option will result in the cancellation of an equal number of corresponding
Options related to the tandem SAR. The Plan Administrator may, in its
discretion, prescribe additional conditions to the exercise of any SAR.
Section 4.5. Exercise of SAR. Each Award Agreement providing for SARs
shall set forth procedures governing the exercise of the SAR granted thereunder.
Settlement of SARs may be made in shares of Common Stock (valued at their Fair
Market Value at the time of exercise), in cash or in a combination thereof, as
determined in the discretion of the Plan Administrator. As soon as practicable
after the exercise of an SAR for shares of Common Stock, the Company shall
deliver to the SAR Holder a certificate or certificates for such shares of
Common Stock unless the Award Agreement for such SARs allows the Plan
Administrator or the SAR Holder to defer delivery of such shares of Common
Stock. The SAR Holder 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.
ARTICLE V. BONUS STOCK AWARDS
Section 5.1. Award of Bonus Stock. The Plan Administrator may from time
to time, and subject to the provisions of this Plan and such other terms and
conditions as the Plan Administrator may prescribe, grant to any person eligible
to participate in the Plan shares of Common Stock ("Bonus Stock").
Section 5.2. Bonus Stock Agreements. The grant of a Bonus Stock shall
be evidenced by a written Award Agreement, executed by the Company and the
recipient of Bonus Stock, in such form as the Plan Administrator may from time
to time determine, providing for the terms of such grant, including any vesting
schedule, restrictions on the transfer of such Common Stock or other matters.
Section 5.3. Transfer Restriction. Any Award Agreement providing for
the issuance of Bonus Stock to any person who, at the time of grant, is a person
described in Section 16(a) under the Exchange Act shall provide that such Common
Stock cannot be resold for a period of six months following the grant of such
Bonus Stock.
ARTICLE VI. RESTRICTED STOCK
Section 6.1. Award of Restricted Stock. The Plan Administrator may
grant shares of restricted stock, the vesting of which is subject to certain
conditions established by the Plan Administrator with some or all of those
conditions relating to events (such as performance or continued employment)
occurring after the date of grant ("Restricted Stock"). The date Restricted
Stock is granted shall mean the date selected by the Plan Administrator as of
which the Plan Administrator allots a specified number of shares to a
Participant pursuant to the Plan.
Section 6.2. Restricted Stock Agreements. The grant of Restricted Stock
shall be evidenced by a written Award Agreement, executed by the Company and the
holder of the Restricted Stock stating the number of shares of Common Stock that
are subject to the Restricted Stock Award and the conditions to vesting, and in
such form as the Plan Administrator may from time to time determine.
Section 6.3. Stockholder Rights. Unless otherwise provided by the Plan
Administrator, Restricted Stock may not be sold, assigned, transferred, pledged
or otherwise encumbered during the
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<PAGE> 10
Restricted Period. Except for such restrictions and any other restrictions
imposed by the Plan Administrator, holders of Restricted Stock shall have all of
the rights of a stockholder, including, but not limited to, the right to vote
such shares and the right to receive all dividends paid on such shares.
Section 6.4. Certificates. Unless otherwise provided by the Plan
Administrator, each certificate issued in respect of shares of Restricted Stock
granted under the Plan shall be registered in the name of the holder of such
Restricted Stock and shall be deposited with the Company with a stock power
endorsed in blank. Upon the vesting of Restricted Stock, such Restricted Stock
shall be transferred free of all restrictions to the Participant.
Section 6.5. Performance-Based Awards. The Plan Administrator may award
performance-based Restricted Stock that becomes vested (or for which vesting is
accelerated) upon the achievement of Performance Targets established pursuant to
the requirements of Section 8.4 by the Plan Administrator. The Plan
Administrator may specify the number of shares that will vest upon the
achievement of different levels of performance. Except as otherwise provided by
the Plan Administrator, achievement of maximum target levels during the
Performance Cycle shall result in the Participant's receipt of the full
performance-based Restricted Stock Award. For achievement of the minimum target,
but less than the maximum target, the Plan Administrator may establish a portion
of the Award that the Participant is entitled to receive. Any performance-based
Restricted Stock that is not earned by the end of a Performance Cycle shall be
forfeited unless the Plan Administrator provides otherwise in the applicable
Award Agreement.
Section 6.6. Termination of Employment. Unless the applicable 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 Restricted Stock, all outstanding and unvested
Awards of Restricted Stock to such Participant shall be canceled, shall not vest
and shall be returned to the Company.
ARTICLE VII. RESTRICTED STOCK UNITS
Section 7.1. Award of Restricted Stock Units. The Plan Administrator
may grant rights to receive stock in the future, the vesting of which is subject
to certain conditions established by the Plan Administrator with some or all of
those conditions relating to events (such as performance or continued
employment) occurring after the date of grant ("Restricted Stock Units"). The
date a Restricted Stock Unit is granted shall mean the date selected by the Plan
Administrator as of which the Plan Administrator allots a specified number of
shares to a Participant pursuant to the Plan.
Section 7.2. Restricted Stock Unit Agreements. The grant of Restricted
Stock Units shall be evidenced by a written Award Agreement, executed by the
Company and the holder of the Restricted Stock Unit stating the number of shares
of Common Stock that are subject to the Restricted Stock Unit Award and the
conditions to vesting, and in such form as the Plan Administrator may from time
to time determine.
Section 7.3. Stockholder Rights. Except as otherwise provided in this
Section 7.3, prior to the vesting and settlement of Restricted Stock Units in
shares of Common Stock, holders of Restricted Stock Units shall not have any of
the rights of a stockholder. Unless the Plan Administrator provides otherwise,
holders of Restricted Stock Units shall have the right, subject to any
restrictions or vesting requirements imposed by the Plan Administrator, to
receive a payment from the Company in lieu of a dividend in an amount equal to
such dividends and at such times as dividends would otherwise be paid.
Section 7.4. Certificates. As soon as practicable after the vesting of
Restricted Stock Units, the Company shall deliver to the Participant a
certificate or certificates for such shares of Common Stock unless the Award
Agreement for such Restricted Stock Units allows the Plan Administrator or the
Participant to defer delivery of such shares of Common Stock. The Participant
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 7.5. Performance-Based Awards. The Plan Administrator may award
performance-based Restricted Stock Units that becomes vested (or for which
vesting is accelerated) upon the achievement of Performance Targets established
pursuant to the requirements of Section 8.4 by the Plan Administrator. The Plan
Administrator may specify the number of shares that will vest upon the
achievement of different levels of performance. Except as otherwise provided by
the Plan Administrator, achievement of maximum target levels during the
Performance Cycle shall result in the Participant's receipt of the full
performance-based Restricted Stock Unit Award. For achievement of the minimum
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<PAGE> 11
target, but less than the maximum target, the Plan Administrator may establish a
portion of the Award that the Participant is entitled to receive. Any
performance-based Restricted Stock Unit that is not earned by the end of a
Performance Cycle shall be forfeited unless the Plan Administrator provides
otherwise in the applicable Award Agreement.
Section 7.6. Termination of Employment. Unless the applicable 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 Restricted Stock, all outstanding and unvested
Awards of Restricted Stock to such Participant shall be canceled, shall not vest
and shall be returned to the Company.
ARTICLE VIII. PERFORMANCE SHARE AWARDS
Section 8.1. Awards Granted by Plan Administrator. Coincident with or
following designation for participation in the Plan, a person eligible to
participate in the Plan 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 8.2. 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 8.3. 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 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 8.4. 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. 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 8.6) 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 8.5. 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 8.6. 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 the vesting of an Award relating to such
Performance Cycle. Subject to the provisions of Section 8.3, 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 8.7. 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 canceled, shall not vest and
shall be returned to the Company.
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<PAGE> 12
Section 8.8. Transfer Restriction. Unless otherwise agreed to by the
Plan Administrator in an Award Agreement, 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 Exchange Act, shall provide
that such Common Stock cannot be resold for a period of six months following the
grant of such Performance Shares.
ARTICLE IX. PERFORMANCE UNITS
Section 9.1. Awards Granted by Plan Administrator. Coincident with or
following designation for participation in the Plan, a person eligible to
participate in the Plan may be granted the right to receive value for
performance units, denominated in dollars or shares of Common Stock at the end
of a Performance Cycle ("Performance Units"). The date a Performance Unit is
granted shall mean the date selected by the Plan Administrator as of which the
Plan Administrator allots a specified dollar amount or number of shares to a
Participant pursuant to the Plan.
Section 9.2. Amount of Award. The Plan Administrator shall establish a
maximum amount of a Participant's Award, which amount shall be denominated in
dollars or shares of Common Stock. Performance Units shall be paid in shares of
Common Stock unless the Plan Administrator provides in the Award Agreement for
payment in cash or a combination of shares of Common Stock and cash. Performance
Units denominated in dollars shall be paid the number of shares of Common Stock
determined by dividing the dollar denominated value of a Performance Unit by the
Fair Market Value of a share of Common Stock on the effective date of the grant.
If a cash payment is made for a Performance Unit denominated in shares of Common
Stock, the cash payment per share shall be equal to the Fair Market Value of a
share of Common Stock on the date of vesting.
Section 9.3. 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
Units shall be evidenced by a written Award Agreement, executed by the Company
and the recipient of Performance Units, in such form as the Plan Administrator
may from time to time determine, providing for the terms of such grant.
Section 9.4. Amount of Award Payable. Performance Units may be granted
based upon past performance or future performance. In addition to any other
restrictions the Plan Administrator may place on Performance Units, the Plan
Administrator may, in its discretion, provide that Performance Units 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 Units by the Participant, or have any other
consequence as 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 9.6) for performance which falls below the Performance
Target applicable to such Award.
Section 9.5. Adjustments. At any time prior to vesting of a Performance
Unit, 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 9.6. 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 the vesting of an Award relating to such
Performance Cycle. Subject to the provisions of Section 9.3, to the extent the
Plan Administrator determines Performance Units have vested, the Company shall
issue to the Participant certificates representing vested shares, cash payment,
or a combination of both as provided in the applicable Award Agreement unless
the Award Agreement for such Performance Units allows the Plan Administrator or
the Participant to defer delivery of such Common Stock or cash payment.
Section 9.7. 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 Unit, all outstanding and unvested Awards of Performance
Shares to such Participant shall be canceled and shall not vest.
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ARTICLE X. MISCELLANEOUS
Section 10.1. 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 which is the subject of such Award is necessary under the rules and
regulations of any securities exchange or under any state or federal law, (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 10.2. 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 10.3. 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 10.4. 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 10.5. 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 10.6. Rights as a Stockholder. Unless otherwise provided in the
Plan, 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 10.7. Definitions. In this Plan the following definitions shall
apply:
(a) "Affiliate" means any person or entity which directly, or
indirectly through one or more intermediaries, controls, is controlled
by, or is under common control with Nuevo Energy Company.
(b) "Award" shall mean a grant of Stock Options, Incentive
Stock Options, Bonus Stock, SARs, Restricted Stock, Restricted Stock
Units, Performance Shares or Performance Units under the Plan.
(c) "Code" means the Internal Revenue Code of 1986, as
amended. A reference to any provision of the Code shall include any
successor provision of the Code.
(d) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(e) "Fair Market Value" as of any date and in respect of any
share of Common Stock means the closing price on such date or on the
next business day, if such date is not a business day, of a share of
Common Stock reflected in the consolidated trading tables of The Wall
Street Journal (presently the NYSE - Composite Transactions) or any
other publication selected by the Plan Administrator, provided that, if
shares of
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<PAGE> 14
Common Stock shall not have been traded on the New York Stock Exchange
for more than 10 days immediately preceding such date or if deemed
appropriate by the Plan Administrator for any other reason, the Fair
Market Value of shares of Common Stock shall be as determined by the
Plan Administrator in such other 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.
(f) "Non-Employee Director" shall mean a director who (i) is
not an officer of the Company or a parent or Subsidiary of the Company,
or otherwise employed by the Company or parent or Subsidiary of the
Company; (ii) does not receive compensation, either directly or
indirectly, from the Company or a parent or Subsidiary of the Company,
for services rendered as a consultant or in any capacity other than as
a director, except for an amount not exceeding $60,000; (iii) does not
possess an interest in any transaction for which disclosure would be
required under Item 404(a) of Regulation S-K of the Securities Act of
1933, as amended ("Securities Act"); or (iv) is not engaged in a
business relationship for which disclosure would be required pursuant
to Item 404(b) of Regulation S-K of the Securities Act.
(g) "Option" means a Stock Option or Incentive Stock Option.
(h) "Option Price" means the purchase price per share of
Common Stock deliverable upon the exercise of a Stock Option or
Incentive Stock Option.
(i) "Outside Director" means a director of the Company who is
an "outside director" within the meaning of Section 162(m) of the Code
and the regulations promulgated thereunder.
(j) "Participant" means a director, executive officer, other
key employee or consultant of the company or any Subsidiary who holds
an outstanding Award granted under the Plan
(k) "Performance Cycle" means the period of time, if any, as
specified by the Plan Administrator over which Performance Shares are
to be vested.
(l) "Performance Target" means those targets established by
the Plan Administrator that relate to corporate, group, unit or
individual performance and are 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 or net asset value per share,
earnings, or, to the extent that the Award is not intended to qualify
as performance-based compensation (as that term is used for purposes of
Section 162(m) of the Code), such other measures or standards
determined by the Plan Administrator.
(m) "Restricted Period" means the period of time for which
Restricted Stock is subject to forfeiture pursuant to the Plan.
(n) "Subsidiary" means any corporation or other entity of
which at least 50% of the voting securities entitled to vote generally
in an election of directors are owned by the Company directly or
through one or more other corporations or other entities, 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 10.8. 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 10.9. 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.
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Section 10.10. 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, Bonus Stock, SARs, Restricted Stock,
Restricted Stock Units, Performance Shares or Performance Units theretofore
granted under the Plan, and any and all other matters deemed appropriate by the
Plan Administrator.
Section 10.11. Changes in the Company's Capital Structure.
(a) The existence of outstanding Options, Bonus Stock, SARs, Restricted
Stock, Restricted Stock Units, Performance Shares or Performance Units 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 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 Bonus Stock, SARs, Restricted Stock, Restricted Stock Units,
Performance Shares and Performance Units shall continue to be subject to the
Award Agreement, including vesting provisions hereof.
(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 Bonus Stock, SARs, Restricted Stock, Restricted Stock
Units, Performance Shares or Performance Units 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 and any tandem SAR associated with 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 and any tandem SAR, Bonus Stock, SAR, Restricted
Stock, Restricted Stock Unit, Performance Share or Performance Unit
such that (A) such Option and tandem SAR shall become exercisable prior
to the record or effective date of such merger, consolidation or sale
of assets or (B) the vesting of such Bonus Stock, SAR, Restricted
Stock, Restricted Stock
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<PAGE> 16
Unit, Performance Share or Performance Unit shall occur upon such
merger, consolidation or sale of assets; and/or
(iii) The Plan Administrator may cancel all outstanding
Options and tandem SARs 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 or any tandem SARs in full during a period of not
less than 30 days prior to the effective date of such merger,
consolidation or sale of assets.
(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 10.12. Amendment of the Plan.
(a) Subject to Section 3.11, Section 10.13 and subsection (b) of this
Section 10.12, 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.
(b) The following amendments shall require the approval of holders of
a majority of the shares of Common Stock present and voting at a meeting of
stockholders properly called at which a quorum is present:
(i) Any increase in the number of shares of Common Stock
which may be issued under the Plan as set forth in Section 1.5(a) in
excess of 100,000 shares;
(ii) Any amendment, supplement or other change to an
outstanding Award Agreement which provides a material increase in
benefits to the Participant unless such amendment, supplement or change
is made in connection with the termination of employment of a
Participant or the aggregate number of shares subject to the Awards
which are so amended over the life of the Plan does not exceed 100,000
shares; provided, however, without stockholder approval as contemplated
by this Section, no amendment shall be made to Section 2.9 and 3.12
providing for a decrease in the Option price of any outstanding Stock
Option;
(iii) Any amendment, supplement or change which extends the
class of persons entitled to receive Awards under the Plan, other than
the extension of Awards covering up to an aggregate of 100,000 shares
over the life of the plan;
(iv) Any amendment, supplement or other change to Section
10.14 or 10.18; and
(v) Any amendment to this Section.
Section 10.13. No Loss of Rights of Grantee of an Award. Nothing in
this Plan shall give the Plan Administrator or any other person the right, power
or authority to change, amend, alter or repeal the terms of any Award granted
under this Plan, except as otherwise expressly set forth in the grant of such
Award, without the prior written consent of the grantee of such Award.
Section 10.14. Dividends and Dividend Equivalents. An Award Agreement
for any Award other than an Option or SAR Award may provide the Participant with
the right to receive dividend payments or dividend equivalent payments with
respect to Common Stock subject to the Award Agreement (both before and after
the Common Stock subject to the Award Agreement is earned, vested, or acquired),
which payments may be either made currently or credited to an account for the
Participant, and may be settled in cash or Common Stock as determined by the
Plan Administrator. Any such settlements, and any such crediting of dividends or
dividend equivalents or reinvestment in shares of Common Stock, may be subject
to such conditions, restrictions and contingencies as the Plan Administrator
shall establish, including the reinvestment of such credited amounts in Common
Stock equivalents. An Award Agreement shall not provide such rights with
respect to Option or SAR Awards.
Section 10.15. Form and Time of Elections. Unless otherwise specified
herein, each election required or permitted to be made by any Participant or
other person entitled to benefits under the Plan, and any permitted
modification, or revocation thereof, shall be in writing filed with the Plan
Administrator at such times, in such form, and subject to such restrictions and
limitations, not inconsistent with the terms of the Plan, as the Plan
Administrator shall require.
Section 10.16. Performance Based Compensation. The Plan Administrator
shall designate all Awards intended to qualify as performance based compensation
under Section 162(m) of the Code and shall not be entitled to exercise any
discretion otherwise authorized under this Plan with respect to Awards
designated as performance based compensation if the ability to exercise such
discretion or the exercise of such discretion itself would cause the
compensation attributable to such Awards to fail to qualify as performance based
compensation.
Section 10.17. Deferral. The Plan Administrator may provide in any
Award Agreement that the Plan Administrator or the Participant may, upon the
vesting of any Award under this Plan, defer the receipt of any shares of Common
Stock or cash to be paid to the Participants as a result of the vesting of an
Award under this Plan.
Section 10.18. Vesting and Award Criteria of Performance Shares.
Notwithstanding the provisions of Articles V, VI, VII and VIII, the Plan
Administrator shall not make any Award under such Articles which vests in less
than one year. Any Award under such Articles shall also be made by the Plan
Administrator following a determination that such Award was in lieu of other
compensation which would have been paid to such employee.
Section 10.19. No Waiver. The Plan Administrator shall not waive any
provision of an Award which provides for vesting, performance criteria or other
material conditions to receipt or exercise of the Award, except for amendments
which are specifically permitted by Section 10.12(b).
The foregoing is a true and correct copy of the Nuevo Energy Company
1999 Stock Incentive Plan as approved by the Board of Directors on March 30,
1999 and the stockholders the annual meeting on May 12, 1999.
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