<PAGE> 1
As filed with the Securities and Exchange Commission on April 28, 1998
Registration No. 333-
==========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-------------------------
SOUTHERN MINERAL CORPORATION
(Exact name of Registrant as Specified in Its Charter)
NEVADA 36-2068676
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
500 DALLAS STREET 77002
SUITE 2800 (Zip Code)
HOUSTON, TEXAS
(Address of Principal Executive Offices)
SOUTHERN MINERAL CORPORATION
1997 STOCK OPTION PLAN
(Full Title of the Plan)
STEVEN H. MIKEL
500 DALLAS STREET, SUITE 2800
HOUSTON, TEXAS 77002
(Name and address of Agent For Service)
(713) 658-9444
(Telephone Number, Including Area
Code, of Agent for Service)
Copy to:
DAVID S. PETERMAN
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P
711 LOUISIANA STREET
PENNZOIL PLACE - SOUTH TOWER, SUITE 1900
HOUSTON, TEXAS 77002
-------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=================================================================================================================================
AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SECURITIES REGISTERED OFFERING PRICE PER AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED (1)(2) SHARE (3) PRICE (3) FEE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Common Stock, par value $0.01 per
share 700,000 $3.9375 $2,756,250 $813
=================================================================================================================================
</TABLE>
(1) Pursuant to Rule 416, this Registration Statement also includes an
indeterminate number of additional shares that may become issuable
pursuant to the antidilution adjustment provisions of the Plan.
(2) Issuable upon exercise of options available for grant under the Plan.
(3) Pursuant to Rule 457(c) and (h), and solely for the purpose of
calculating the applicable registration fee, the proposed maximum
offering price per share for the remaining Common Stock to be
registered hereunder, has been estimated at $3.9375, which amount
represents the average of the high and low sales prices of the Common
Stock of the Registrant on April 22, 1998, as quoted on The Nasdaq
National Market.
================================================================================
<PAGE> 2
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The documents constituting Part I of this Registration Statement (the
"Registration Statement") will be sent or given to directors, officers,
consultants, advisors and employees of Southern Mineral Corporation (the
"Company") as specified by Rule 428(b)(1) promulgated under the Securities Act
of 1933, as amended (the "Securities Act").
<PAGE> 3
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed by the Company with the Securities and
Exchange Commission (the "Commission") are incorporated by reference in this
Registration Statement:
(1) The Company's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1997.
(2) All reports filed by the Company pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), since December 31, 1997.
(3) The description of the Company's Common Stock, par value $0.01
per share (the "Common Stock"), contained in Item 1 of the
Registration Statement on Form S-4 dated December 11, 1997, as
amended (Registration No. 333-42045).
In addition, all documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing
of a post-effective amendment to this Registration Statement which indicates
that all securities offered hereby have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be a part hereof from the date
of 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 of this Registration Statement to the extent that a
statement contained herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Certain legal matters with respect to the securities offered hereby
will be passed upon by Akin, Gump, Strauss, Hauer & Feld, L.L.P.,
Houston, Texas. Mr. L. Todd Gremillion, a partner
<PAGE> 4
of Akin, Gump, Strauss, Hauer & Feld, L.L.P., beneficially owns 83,000 shares
of Common Stock of the Company.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article Ninth of the Registrant's amended and restated articles of
incorporation permits, and Article VII of the Registrant's Bylaws contains
indemnification provisions which make mandatory the indemnification permitted
by Section 78.751 of the General Corporation Law of Nevada ("NGCL").
Accordingly, the Registrant generally must indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that such person is or was a director,
officer, employee or agent of the Registrant or is or was serving at the
request of the Registrant as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding. However, with respect to an action or suit
brought to obtain a judgment in the Registrant's favor, whether by the
Registrant itself or derivatively by a stockholder, (i) such indemnification is
limited to expenses, including amounts paid in settlement and attorneys' fees
actually and reasonably incurred by him in connection with the defense or
settlement of the action or suit, and (ii) such indemnification may not be made
for any claim, issue or matter as to which such a person has been adjudged by a
court of competent jurisdiction, after exhaustion of all appeals therefrom, to
be liable to the Registrant or for amounts paid in settlement to the
Registrant, unless and only to the extent that the court in which the action or
suit was brought or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case, the person is
fairly and reasonably entitled to indemnity for such expenses as the court
deems proper. In all cases, the person seeking indemnification must have acted
in good faith and in a manner such person reasonably believed to be in, or not
opposed to, the Registrant's best interests. In the case of criminal actions
or proceedings, the person must also have had no reasonable cause to believe
such person's conduct was unlawful. The determination as to whether a person
seeking indemnification has met the required standard of conduct must be made
by the Registrant's stockholders, by a majority vote of a quorum of its
disinterested directors, or by independent legal counsel in a written opinion
if such a quorum does not exist or if the disinterested directors so direct.
To the extent that a director, officer, employee or agent of the Registrant has
been successful on the merits or otherwise in defending any action, suit or
proceeding for which indemnification is permissible under the NGCL, or in
defending any claim, issue or matter therein, the Registrant must, under both
the NGCL and its bylaws, indemnify such person against expenses, including
attorneys' fees, actually and reasonably incurred by such person in connection
with the defense. As permitted by the NGCL, the Registrant's bylaws require it
to advance expenses which its officers and directors incur in defending any
civil or criminal action, suit or proceeding upon receipt of an undertaking by
such person or on such person's behalf to repay such amounts if it is
ultimately determined by a court of competent jurisdiction that such person is
not entitled to be indemnified by the Registrant. The NGCL and the
Registrant's Bylaws provide that the indemnification and advancement of
expenses authorized therein are not exclusive. Accordingly, the Registrant
could provide for other indemnification of its directors
II-2
<PAGE> 5
and officers acting in either or both of their official capacities or other
capacities while holding office. However, excepting advancement of expenses
and court-ordered indemnification explicitly provided for by the NGCL, the NGCL
and the Registrant's bylaws prohibit the Registrant from indemnifying any
director or officer if a final adjudication establishes that such person's acts
or omissions involved intentional misconduct, fraud or a knowing violation of
the law and was material to the cause of action. Consistent with Section
78.752 of the NGCL, the Registrant's bylaws empower it to procure and maintain
insurance on behalf of any person who is or was a director, officer, employee
or agent of the Registrant, or at the Registrant's request, of another entity,
against any liability asserted against such person and incurred by such person
in such capacity, or arising out of such person's status as such, regardless of
whether the Registrant could indemnify such person against such liability. The
Registrant has purchased insurance on behalf of its directors and officers
against certain liabilities that may be asserted against, or incurred by, such
persons in their capacities as directors or officers of the Registrant, or that
may arise out of their status as directors or officers of the Registrant,
including liabilities under federal and state securities laws. As permitted by
Section 78.037 of the NGCL, the Registrant's current amended and restated
articles of incorporation eliminate the liability of its directors and officers
to the Registrant and its stockholders for damages for breach of fiduciary
duty, except for acts or omissions which involve intentional misconduct, fraud
or a knowing violation of law, or for the payment of distributions in violation
of Section 78.300 of the NGCL. To the extent that this provision limits the
remedies of the Registrant and its stockholders to equitable remedies, it might
reduce the likelihood of derivative litigation and discourage the Registrant's
management or stockholders from initiating litigation against its directors or
officers for breach of their fiduciary duties. Additionally, equitable
remedies may not be effective in many situations. If a stockholder's only
remedy is to enjoin the completion of an action, such remedy would be
ineffective if the stockholder does not become aware of a transaction or event
until after it has been completed. In such a situation, it is possible that
the Registrant and its stockholders would have no effective remedy against
directors or officers. The Registrant has purchased insurance on behalf of its
directors and officers against certain liabilities that may be asserted
against, or incurred by, such persons in their capacities as directors or
officers of the Registrant, or that may arise out of their status as directors
or officers of the Registrant, including liabilities under the federal and
state securities laws.
The above discussion of the NGCL and the Registrant's current amended
and restated articles of incorporation and Bylaws is not intended to be
exhaustive and is qualified in its entirety by the NGCL and such articles of
incorporation and Bylaws.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
II-3
<PAGE> 6
ITEM 8. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBITS
-------------- -----------------------
<S> <C>
3.1 Amended and Restated Articles of Incorporation of the Registrant, (incorporated by
reference to Exhibit 3.1 to Form 8-K dated January 28, 1998).
3.2 Amended and Restated Bylaws of the Registrant, as amended (incorporated by reference
to Exhibit (a)(3)(b) of Item 14, Part IV on Form 10-K for the fiscal year ended
December 31, 1989 (Commission File No. 0-8043)).
4.1 Indenture relating to the Registrant's 6 7/8% Subordinated Debentures due 2007, dated
October 7, 1997, between the Registrant and American Stock Transfer & Trust Company
(incorporated by reference to Exhibit 4.5 to Form S-2 (Commission File No. 333-
35843)).
4.2 Form of Subordinated Debentures (included in Exhibit 4.1).
*4.3 Southern Mineral 1997 Stock Option Plan.
*5.1 Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
*23.1 Consent of KPMG Peat Marwick LLP, independent auditors.
*23.2 Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P. (included in Exhibit 5.1).
*23.3 Consent of Netherland, Sewell & Associates, Inc.
*23.4 Consent of McDaniel & Associates Consultants Ltd.
*23.5 Consent of Grant Thornton LLP
*23.6 Consent of Ryder Scott Company, Petroleum Engineers
*24.1 Powers of Attorney (included in signature pages to this Registration Statement).
</TABLE>
* filed herewith.
ITEM 9. UNDERTAKINGS.
(a) The Registrant hereby undertakes:
(1) to file, during any period in which offers or sales
are being made, 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
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a
II-4
<PAGE> 7
fundamental change in the information set forth in the
Registration Statement. 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
and of the estimated maximum offering range may be reflected
in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement; and
(iii) include any material information with respect
to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
(2) for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof; and
(3) file a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of
the offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable; provided, however, paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act.
II-5
<PAGE> 8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Company 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 this 28th day of
April 1998.
SOUTHERN MINERAL CORPORATION
By: /s/ STEVEN H. MIKEL April 28, 1998
----------------------------
Steven H. Mikel
President and Chief Executive Officer
POWER OF ATTORNEY AND SIGNATURES
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and as of
the dates indicated. Each person whose signature to this Registration
Statement appears below hereby constitutes and appoints Steven H. Mikel and
James H. Price, and each of them, as his true and lawful attorney-in-fact and
agent, with full power of substitution, to sign on his or her behalf
individually and in the capacity stated below and to perform any acts necessary
to be done in order to file all amendments and post- effective amendments to
this Registration Statement, and any and all instruments or documents filed as
part of or in connection with this Registration Statement or the amendments
thereto and each of the undersigned does hereby ratify and confirm all that
said attorney-in-fact and agent, or his substitutes, shall do or cause to be
done by virtue hereof.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ STEVEN H. MIKEL Director and President April 28, 1998
--------------------------- and Chief Executive Officer
Steven H. Mikel (principal executive officer)
/s/ JAMES H. PRICE Vice President - Finance April 28, 1998
-------------------------- (principal financial and
James H. Price accounting officer)
</TABLE>
<PAGE> 9
<TABLE>
<S> <C> <C>
/s/ HOWELL H. HOWARD Chairman of the Board April 28, 1998
--------------------------- and Director
Howell H. Howard
/s/ B. TRAVIS BASHAM Director April 28, 1998
---------------------------
B. Travis Basham
/s/ THOMAS R. FULLER Director April 28, 1998
---------------------------
Thomas R. Fuller
/s/ ROBERT R. HILLERY Director April 28, 1998
---------------------------
Robert R. Hillery
/s/ E. RALPH HINES, JR. Director April 28, 1998
---------------------------
E. Ralph Hines, Jr.
/s/ JAMES E. NIELSON Director April 28, 1998
---------------------------
James E. Nielson
/s/ DONALD H. WEISE, JR. Director April 28, 1998
---------------------------
Donald H. Weise, Jr.
/s/ SPENCER L. YOUNGBLOOD Director April 28, 1998
---------------------------
Spencer L. Youngblood
</TABLE>
<PAGE> 10
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBITS
-------------- -----------------------
<S> <C>
3.1 Amended and Restated Articles of Incorporation of the Registrant, (incorporated by
reference to Exhibit 3.1 to Form 8-K dated January 28, 1998).
3.2 Amended and Restated Bylaws of the Registrant, as amended (incorporated by reference
to Exhibit (a)(3)(b) of Item 14, Part IV on Form 10-K for the fiscal year ended
December 31, 1989 (Commission File No. 0-8043)).
4.1 Indenture relating to the Registrant's 6 7/8% Subordinated Debentures due 2007, dated
October 7, 1997, between the Registrant and American Stock Transfer & Trust Company
(incorporated by reference to Exhibit 4.5 to Form S-2 (Commission File No. 333-
35843)).
4.2 Form of Subordinated Debentures (included in Exhibit 4.1).
*4.3 Southern Mineral 1997 Stock Option Plan.
*5.1 Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
*23.1 Consent of KPMG Peat Marwick LLP, independent auditors.
*23.2 Consent of Akin, Gump, Strauss, Hauer & Feld, L.L.P. (included in Exhibit 5.1).
*23.3 Consent of Netherland, Sewell & Associates, Inc.
*23.4 Consent of McDaniel & Associates Consultants Ltd.
*23.5 Consent of Grant Thornton LLP
*23.6 Consent of Ryder Scott Company, Petroleum Engineers
*24.1 Powers of Attorney (included in signature pages to this Registration Statement).
</TABLE>
* filed herewith.
<PAGE> 1
APPENDIX 4.3
SOUTHERN MINERAL CORPORATION
1997 STOCK OPTION PLAN
AS EFFECTIVE NOVEMBER 14, 1997
SECTION 1.
GENERAL PROVISIONS RELATING TO
PLAN GOVERNANCE, COVERAGE AND BENEFITS
1.1 PURPOSE
The purpose of the Southern Mineral Corporation 1997 Stock Option Plan
(the "PLAN") is to foster and promote the long-term financial success of
Southern Mineral Corporation (the "COMPANY") and to increase stockholder value
by: (a) encouraging the commitment of selected key Employees and Consultants
(b) motivating superior performance of key Employees and Consultants by means
of long-term performance related incentives, (c) encouraging and providing key
Employees and Consultants with a program for obtaining ownership interests in
the Company which link and align their personal interests to those of the
Company's stockholders, (d) attracting and retaining key Employees and
Consultants by providing competitive incentive compensation opportunities, and
(e) enabling key Employees and Consultants to share in the long-term growth and
success of the Company.
The Plan provides for Option Awards of Nonstatutory Stock Options and
Incentive Stock Options and, therefore, is not intended to be a plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended
(ERISA). The Plan shall be interpreted, construed and administered consistent
with its status as a plan that is not subject to ERISA.
Subject to approval by the Company's stockholders, pursuant to Section
4.1, the Plan shall become effective as of November 14, 1997 (the "EFFECTIVE
DATE"). The Plan shall commence on the Effective Date, and shall remain in
effect, subject to the right of the Board to amend or terminate the Plan at any
time pursuant to Section 4.5, until all Shares subject to the Plan have been
purchased or acquired according to its provisions. However, in no event may an
Option Award be granted under the Plan after the expiration of ten (10) years
from the Effective Date. Any Option Award granted prior to obtaining
stockholder approval of the Plan shall be subject to the subsequent receipt of
stockholder approval of the Plan.
1.2 DEFINITIONS
The following terms shall have the meanings set forth below:
(a) AUTHORIZED OFFICER. The Chairman of the Board or the
Chief Executive Officer of the Company or any other senior officer of
the Company to whom either of them delegate the authority to execute
any Option Agreement for and on behalf of the Company provided that
such Option Agreement has been approved or ratified by the Committee.
No officer shall be an Authorized Officer with respect to any Option
<PAGE> 2
Agreement for himself, nor act in any matter hereunder relating
directly to himself.
(b) BOARD. The Board of Directors of the Company.
(c) CAUSE. When used in connection with the termination of a
Grantee's Employment for purposes of the Plan, shall mean the
termination of the Grantee's Employment by the Company by reason of
(i) failure to perform the Grantee's duties diligently and with
reasonable care, which failure(s) the Board determines remains uncured
thirty (30) days after the Board has caused written notice of such
failure(s) to be delivered to the Grantee; (ii) use of drugs or
alcohol that impairs the Grantee's job performance; (iii) commission
of an act of fraud or misappropriation against the Company or a
Subsidiary, Parent or other affiliated entity; (iv) conviction of, or
plea of no contest to, any felony, or to a misdemeanor involving moral
turpitude; (v) the knowing engagement by the Grantee in any direct,
material conflict of interest with the Company (or Parent or
Subsidiary) without compliance with the Company's conflict of interest
policy, if any, then in effect; (vi) the knowing engagement by the
Grantee, without the written approval of the Board, in any activity
which competes with the business of the Company (or Parent or
Subsidiary) or which would result in a material injury to the Company;
or (vii) the knowing engagement in any activity which would constitute
a material violation of the provisions of the Company's insider
trading policy or business ethics policy, if any, then in effect.
(d) CHANGE IN CONTROL. Any of the events described in and
subject to Section 3.7.
(e) CODE. The Internal Revenue Code of 1986, as amended, and
regulations and other authority promulgated thereunder by the
appropriate governmental authority. References herein to any provision
of the Code shall refer to any successor provision thereto.
(f) COMMITTEE. Any Committee appointed by the Board
consisting of not less than two directors who fulfill the
"non-employee director" requirements of Rule 16b-3 under the Exchange
Act and the "outside director" requirements of Section 162(m) of the
Code. Without limitation, the Committee may be the Compensation
Committee of the Board, or any subcommittee of the Compensation
Committee, provided that the members of the Committee satisfy the
requirements of the previous sentence. The Board shall have the power
to fill vacancies on the Committee arising by resignation, death,
removal or otherwise. The Board, in its sole discretion, may bifurcate
the powers and duties of the Committee among one or more separate
committees, or retain all powers and duties of the Committee in a
single Committee. The members of the Committee shall serve at the
discretion of the Board.
(g) COMMON STOCK. The common stock of the Company, $.01 par
value per share, and any class of common stock into which such common
shares may hereafter be converted, reclassified or recapitalized.
<PAGE> 3
(h) COMPANY. Southern Mineral Corporation, a corporation
organized under the laws of the State of Nevada, and any successor in
interest thereto.
(i) CONSULTANT. An independent agent, consultant, attorney or
other individual who is not an Employee of the Company (or any Parent
or Subsidiary) and who, in the opinion of the Committee, is in a
position to contribute materially to the growth or financial success
of the Company (or any Parent or Subsidiary).
(j) COVERED EMPLOYEE. A named executive officer who is one of
the group of "covered employees" as defined in Section 162(m) of the
Code and Treasury Regulation ss. 1.162-27(c) or its successor.
(k) DISABILITY. As determined by the Committee in its
discretion exercised in good faith, a physical or mental condition of
the Employee that would entitle him to payment of disability income
payments under the Company's long term disability insurance policy or
plan for employees, as then effective, if any; or in the event that
the Grantee is not covered, for whatever reason, under the Company's
long-term disability insurance policy or plan, "Disability" means a
permanent and total disability as defined in Section 22(e)(3) of the
Code. A determination of Disability may be made by a physician
selected or approved by the Committee and, in this respect, the
Grantee shall submit to an examination by such physician upon request.
(l) EFFECTIVE DATE. November 14, 1997, the effective date of
the Plan.
(m) EMPLOYEE. Any employee of the Company (or any Parent or
Subsidiary) within the meaning of Section 3401(c) of the Code and who,
in the opinion of the Committee, is one of a select group of executive
officers, other officers, or other key personnel of the Company (or
any Parent or Subsidiary), who is in a position to contribute
materially to the growth and development and to the financial success
of the Company (or any Parent or Subsidiary), including, without
limitation, officers who are members of the Board.
(n) EMPLOYMENT. Employment by the Company (or any Parent or
Subsidiary), or by any corporation issuing or assuming an Option Award
in any transaction described in Section 424(a) of the Code, or by a
parent corporation or a subsidiary corporation of such corporation
issuing or assuming such Option Award, as the parent-subsidiary
relationship is determined at the time of the corporate action
described in Section 424(a) of the Code. In this regard, neither the
transfer of a Grantee from Employment by the Company to Employment by
any Parent or Subsidiary, nor the transfer of a Grantee from
Employment by any Parent or Subsidiary to Employment by the Company,
shall be deemed to be a termination of Employment of the Grantee.
Moreover, the Employment of a Grantee shall not be deemed to have been
terminated because of an approved leave of absence from active
Employment on account of illness, vacation or for reasons of
professional advancement, education, health, or government service, or
during military leave for any period (if the Grantee returns to active
Employment within 90 days after the termination of military leave), or
<PAGE> 4
during any period required to be treated as a leave of absence by
virtue of any valid law or agreement. Whether an authorized leave of
absence shall constitute termination of Employment shall be determined
by the Committee in its absolute discretion.
Unless otherwise provided in the Option Agreement, the term
"Employment" for purposes of the Plan will also include compensatory
services performed by a Consultant for the Company (or any Parent or
Subsidiary).
(o) EXCHANGE ACT. The Securities Exchange Act of 1934, as
amended.
(p) FAIR MARKET VALUE. The fair market value of one Share of
Common Stock, which shall be (i) the closing sales price on the
immediately preceding business day of a Share as reported on the
principal national securities exchange on which Shares are then listed
or admitted to trading, or (ii) if not so reported, the last reported
sales price for a Share on such date as quoted on The Nasdaq National
Market ("NASDAQ"), or (iii) if not quoted on NASDAQ, the average of
the closing bid and asked prices for a Share as quoted by the National
Quotation Bureau's "Pink Sheets" or the National Association of
Securities Dealers' OTC Bulletin Board System. If there was no public
trade of Common Stock on the date in question, Fair Market Value shall
be determined by reference to the last preceding date on which such a
trade was so reported.
If the Common Stock is not traded in accordance with clauses
(i), (ii) or (iii) of the preceding paragraph at the time a
determination of its Fair Market Value is required to be made
hereunder, the determination of Fair Market Value for purposes of the
Plan shall be made by the Committee in its absolute discretion
exercised in good faith. In this respect, the Committee may rely on
such financial data, valuations or experts as it deems advisable under
the circumstances.
In the event that a Grantee uses a cashless exercise method
or a Share withholding method to exercise a Stock Option, as provided
in Section 2.3, Fair Market Value shall be based on the sale prices of
the Shares sold to pay the Option Price.
(q) GRANTEE. Any Employee or Consultant who is granted an
Option Award under the Plan.
(r) INCENTIVE STOCK OPTION. A Stock Option granted by the
Committee to an Employee which is designated by the Committee as an
Incentive Stock Option and intended to qualify as an Incentive Stock
Option under Section 422 of the Code.
(s) INSIDER. An individual who is, on the relevant date, an
officer, director or ten percent (10%) beneficial owner of any class
of the Company's equity securities that is registered pursuant to
Section 12 of the Exchange Act, all as defined under Section 16 of the
Exchange Act.
(t) NONSTATUTORY STOCK OPTION. A Stock Option granted by the
Committee
<PAGE> 5
to a Grantee which is not designated by the Committee as an Incentive
Stock Option.
(u) OPTION AGREEMENT. The written agreement entered into
between the Company and the Grantee setting forth the terms and
conditions pursuant to which an Option Award is granted under the
Plan, as such agreement is further defined in Section 3.1(a).
(v) OPTION AWARD. A Nonstatutory Stock Option or Incentive
Stock Option, as well as any Supplemental Payment, awarded under the
Plan to a Grantee.
(w) OPTION PRICE. The price at which a Share may be purchased
by the Grantee upon exercise of a Stock Option.
(x) PARENT. Any corporation (whether now or hereafter
existing) which constitutes a "parent" of the Company, as defined in
Section 424(e) of the Code.
(y) PERFORMANCE-BASED EXCEPTION. The performance-based
exception from the tax deductibility limitations of Code Section
162(m), as prescribed in Code Section 162(m) and Treasury Regulation
ss. 1.162-27(e) (or its successor).
(z) PLAN. Southern Mineral Corporation 1997 Stock Option
Plan, as set forth herein and as it may be amended from time to time.
(aa) RETIREMENT. The voluntary termination of Employment from
the Company and any Parent or Subsidiary constituting retirement for
age on any date after the Employee attains the normal retirement age
of 65 years, or such other age as may be designated by the Committee
in the Employee's Option Agreement.
(bb) SHARE. A share of the Common Stock of the Company.
(cc) SHARE POOL means the number of shares authorized for
issuance under Section 1.4, as adjusted for granted Options under
Section 1.5 and as adjusted for changes in corporate capitalization
under Section 3.5.
(dd) STOCK OPTION OR OPTION. Pursuant to Section 2, (i) an
Incentive Stock Option or Nonstatutory Stock Option granted to an
Employee, or (ii) a Nonstatutory Stock Option granted to a Consultant,
whereunder the Grantee has the right to purchase Shares of Common
Stock. In accordance with Section 422 of the Code, no Consultant shall
be granted an Incentive Stock Option.
(ee) SUBSIDIARY. Any corporation (whether now or hereafter
existing) which constitutes a "subsidiary" of the Company, as defined
in Section 424(f) of the Code.
(ff) SUPPLEMENTAL PAYMENT. Any amount, as described in
Section 2.4, dedicated to payment of income taxes that are payable by
the Grantee on exercise of a Nonstatutory Stock Option.
<PAGE> 6
1.3 PLAN ADMINISTRATION
(a) AUTHORITY OF THE COMMITTEE. Except as may be limited by
law or by the Certification of Incorporation or Bylaws of the Company,
and subject to the provisions herein, the Committee shall have full
power to (i) select Grantees who shall participate in the Plan; (ii)
determine the sizes, duration and types of Option Awards; (iii)
determine the terms and conditions of Option Awards and Option
Agreements; (iv) determine whether any shares which are subject to
Options will be subject to any restrictions on transfer after exercise
of the Options; (v) construe and interpret the Plan and any Option
Agreement or other agreement entered into under the Plan; and (vi)
establish, amend, or waive rules for the Plan's administration.
Further, the Committee shall make all other determinations which may
be necessary or advisable for the administration of the Plan.
(b) MEETINGS. The Committee shall designate a chairman from
among its members who shall preside at all of its meetings, and shall
designate a secretary, without regard to whether that person is a
member of the Committee, who shall keep the minutes of the proceedings
and all records, documents, and data pertaining to its administration
of the Plan. Meetings shall be held at such times and places as shall
be determined by the Committee and the Committee may hold telephonic
meetings. The Committee may take any action otherwise proper under the
Plan by the affirmative vote, taken with or without a meeting, of a
majority of its members. The Committee may authorize any one or more
of their members or any officer of the Company to execute and deliver
documents on behalf of the Committee.
(c) DECISIONS BINDING. All determinations and decisions made
by the Committee shall be made in its discretion pursuant to the
provisions of the Plan, and shall be final, conclusive and binding on
all persons including the Company, its stockholders, Employees,
Grantees, and their estates and beneficiaries. The Committee's
decisions and determinations under the Plan and with respect to any
Option Award need not be uniform and may be made selectively among
Option Awards, Employees or Consultants, whether or not such Option
Awards are similar or such Employees or Consultants are similarly
situated.
(d) MODIFICATION OF OUTSTANDING OPTION AWARDS. Subject to the
stockholder approval requirements of Section 4.5 if applicable, the
Committee may, in its discretion, provide for the extension of the
exerciseability of an Option Award, accelerate the vesting or
exerciseability of an Option Award, eliminate or make less restrictive
any restrictions contained in an Option Award, waive any restriction
or other provisions of an Option Award, or otherwise amend or modify
an Option Award in any manner that is either (i) not adverse to the
Grantee to whom such Option Award was granted or (ii) consented to by
such Grantee. The Committee may grant an Option Award to an individual
who it expects to become an Employee within the next six months, with
such Option Award being subject to such individual actually becoming
an Employee within such time period, and subject to such other terms
and conditions as
<PAGE> 7
may be established by the Committee in its discretion.
(e) DELEGATION OF AUTHORITY. The Committee may delegate to
the Authorized Officers, or any of them, any of its assigned duties
under this Plan pursuant to such conditions or limitations as the
Committee may establish from time to time, except that the Committee
may not delegate to any person the authority to (i) grant Option
Awards or (ii) to take any action which would contravene the
requirements of Rule 16b-3 under the Exchange Act or the
Performance-Based Exception under Section 162(m) of the Code.
(f) EXPENSES OF COMMITTEE. The Committee may employee legal
counsel, including, without limitation, independent legal counsel and
counsel regularly employed by the Company, consultants and agents as
the Committee may deem appropriate for the administration of the Plan,
and may rely upon any opinion received from any such counsel or
consultant and any computations received from any such consultant or
agent. All expenses incurred by the Committee in interpreting and
administering the Plan, including, without limitation, meeting fees
and expenses and professional fees, shall be paid by the Company.
(g) SURRENDER OF PREVIOUS OPTION AWARDS. The Committee may,
in its absolute discretion, grant Option Awards to Grantees on the
condition that such Grantees surrender to the Committee for
cancellation such other Option Awards (including, without limitation,
Option Awards with higher exercise prices) as the Committee directs.
Option Awards granted on the condition precedent of surrender of
outstanding Option Awards shall not count against the limits set forth
in Section 1.4 until such time as such previous Option Awards are
surrendered and cancelled.
(h) INDEMNIFICATION. Each person who is or was a member of
the Committee, or of the Board, shall be indemnified by the Company
against and from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by him in connection with or
resulting from any claim, action, suit, or proceeding to which he may
be a party or in which he may be involved by reason of any action
taken or failure to act under the Plan, except for any such act or
omission constituting willful misconduct or gross negligence. Such
person shall be indemnified by the Company for all amounts paid by him
in settlement thereof, with the Company's approval, or paid by him in
satisfaction of any judgment in any such action, suit, or proceeding
against him, provided he shall give the Company an opportunity, at its
own expense, to handle and defend the same before he undertakes to
handle and defend it on his own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of
indemnification to which such persons may be entitled under the
Company's Articles of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or
hold them harmless.
1.4 SHARES OF COMMON STOCK SUBJECT TO THE PLAN
Subject to the provisions of Sections 1.5 and 3.5, the number of
Shares of Common
<PAGE> 8
Stock which may be issued pursuant to the exercise of Options under this Plan
shall be Seven Hundred Thousand (700,000) Shares as of the Effective Date.
Except for an adjustment in accordance with Section 3.5, the number of Shares
which may be issued for Incentive Stock Options granted hereunder shall not
exceed 700,000 Shares.
Unless the Committee designates that a particular Option Award granted
to a Covered Employee is not intended to comply with the Performance-Based
Exception, subject to adjustment as provided in Section 3.5, the maximum
aggregate number of Options for Shares that may be granted by the Committee to
any Covered Employee shall be Five Hundred Thousand (500,000) in any calendar
year. With respect to any Stock Option granted to a Covered Employee that is
canceled or repriced, the number of Shares subject to such Option shall
continue to count against the maximum number of Shares that may be the subject
of Stock Options granted to such Covered Employee hereunder and, in this
regard, such maximum number shall be determined in accordance with regulations
promulgated under Section 162(m) of the Code.
1.5 SHARE POOL ADJUSTMENTS FOR AWARDS AND PAYOUTS.
Options granted under the Plan shall reduce, on a one Share for one
Share basis, the number of Shares authorized for issuance under the Share Pool.
A cancellation, termination, expiration, forfeiture, or lapse for any
reason of any Option, and payment of an Option Price with previously acquired
Shares or by withholding Shares which otherwise would be acquired on exercise
(i.e., the number of Shares turned in or withheld as payment of the Option
Price), shall restore, on a one Share for one Share basis, the number of Shares
authorized for issuance under the Plan.
1.6 SOURCES OF COMMON STOCK AVAILABLE FOR ISSUANCE.
The Common Stock available for issuance upon the exercise of Options
under the Plan shall be made available from Shares now or hereafter (a) held in
the treasury of the Company, (b) authorized but unissued shares, or (c) Shares
to be purchased or acquired by the Company. No fractional Shares shall be
issued under the Plan; payment for fractional Shares shall be made in cash.
1.7 ELIGIBILITY FOR PARTICIPATION
(a) ELIGIBILITY. The Committee shall from time to time
designate those Employees and/or Consultants, if any, to be granted
Option Awards under the Plan, the number and type of Stock Options
granted, and any other terms or conditions relating to the Option
Awards as it may deem appropriate to the extent consistent with the
provisions of the Plan. A Grantee who has been granted an Option Award
may, if otherwise eligible, be granted additional Option Awards at any
time. The grant of any Option hereunder in any one year to a Grantee
shall neither guarantee nor preclude a further grant of an Option to
such Grantee in that year or in any subsequent year.
<PAGE> 9
(b) INCENTIVE STOCK OPTION ELIGIBILITY. No Consultant shall
be eligible for the grant of any Incentive Stock Option. In addition,
no Employee shall be eligible for the grant of any Incentive Stock
Option who owns, or would own immediately before the grant of such
Incentive Stock Option, directly or indirectly, stock possessing more
than ten percent (10%) of the total combined voting power of all
classes of stock of the Company, or any Parent or Subsidiary. This
restriction does not apply if, at the time such Incentive Stock Option
is granted, the Incentive Stock Option exercise price is at least one
hundred and ten percent (110%) of the Fair Market Value on the date of
grant and the Incentive Stock Option by its terms is not exercisable
after the expiration of five (5) years from the date of grant. For the
purpose of the immediately preceding sentence, the attribution rules
of Section 424(d) of the Code shall apply for the purpose of
determining an Employee's percentage ownership in the Company or any
Parent or Subsidiary. This paragraph shall be construed consistent
with the requirements of Section 422 of the Code.
1.8 TYPES OF OPTION AWARDS
The types of Option Awards available under the Plan are Nonstatutory
Stock Options, Incentive Stock Options and Supplemental Payments as described
in Section 2.
SECTION 2.
STOCK OPTIONS
2.1 GRANT OF STOCK OPTIONS
The Committee is authorized to grant (a) Nonstatutory Stock Options to
Employees and Consultants and (b) Incentive Stock Options to Employees only, in
accordance with the terms and conditions of the Plan and with such additional
terms and conditions, not inconsistent with the Plan, as the Committee shall
determine in its discretion. Successive grants may be made to the same Grantee
whether or not any Stock Option previously granted to such person remains
unexercised.
2.2 STOCK OPTION TERMS
(a) WRITTEN AGREEMENT. Each grant of an Stock Option shall be
evidenced by a written Option Agreement. Among its other provisions,
each Option Agreement shall set forth the extent to which the Grantee
shall have the right to exercise the Stock Option following
termination of the Grantee's Employment. Such provisions shall be
determined in the discretion of the Committee, shall be included in
the Grantee's Option Agreement, need not be uniform among all Stock
Options issued pursuant to the Plan, and may reflect distinctions
based on the reasons for termination of Employment.
(b) NUMBER OF SHARES. Each Stock Option shall specify the
number of Shares of Common Stock to which it pertains.
<PAGE> 10
(c) EXERCISE PRICE. The exercise price per Share of Common
Stock under each Stock Option shall be determined by the Committee and
specified in the Option Agreement; provided, however, (i) in the case
of an Incentive Stock Option, such exercise price shall not be less
than one hundred percent (100%) of the Fair Market Value per Share on
the date the Incentive Stock Option is granted and (ii) in the case of
a Nonstatutory Stock Option, shall not be less than fifty percent
(50%) of the Fair Market Value on the date the Nonstatutory Stock
Option is granted; provided, however, if the Nonstatutory Stock Option
is intended to qualify for the Performance-Based Exception, the
exercise price shall not be less than one hundred percent (100%) of
the Fair Market Value on the date the Nonstatutory Stock Option is
granted. Each Option Agreement may also specify the method of exercise
which shall not be inconsistent with the requirements of Section
2.3(a).
(d) TERM. In the Option Agreement, the Committee shall fix
the term of each Stock Option which shall be not more than ten (10)
years from the date of grant. In the event no term is fixed, such term
shall be ten (10) years from the date of grant.
(e) EXERCISE. In the Option Agreement, the Committee shall
specify the time or times at which a Stock Option may be exercised in
whole or in part. An Option Agreement may require a period of
continuous Employment and/or performance objectives to be achieved
before the Stock Option or any portion thereof will become vested and
exercisable. Each Stock Option, the exercise or timing of which is
dependent, in whole or in part, on the achievement of designated
performance objectives, may specify a minimum level of achievement in
respect of the specified performance objectives below which no Stock
Options will be exercisable, and a method for determining the number
of Stock Options that will be exercisable if performance is at or
above such minimum but short of full achievement of the performance
objectives. Options may be exercisable in installments (which may be
cumulative or noncumulative or subject to acceleration) during the
term of the Option. All such terms and conditions of the Option, as
determined by the Committee in its discretion, shall be set forth in
the Option Agreement.
(f) $100,000 LIMIT ON INCENTIVE STOCK OPTIONS.
Notwithstanding any contrary provision in the Plan, to the extent that
the aggregate Fair Market Value (determined as of the time the
Incentive Stock Options are granted) of the Shares of Common Stock
with respect to which Incentive Stock Options are exercisable for the
first time by any Grantee during any single calendar year (under the
Plan and any other stock option plans of the Company and its
Subsidiaries or Parent) exceeds the sum of $100,000, such Incentive
Stock Options shall be treated as a Nonstatutory Stock Option to the
extent in excess of the $100,000 limit, and not an Incentive Stock
Option, but all other terms and provisions of such Stock Option shall
remain unchanged. This paragraph shall be applied by taking Incentive
Stock Options into account in the order in which they are granted and
shall be construed in accordance with Section 422(d) of the Code. In
the absence of such regulations or other authority, or if such
regulations or other authority require or permit a designation of the
Options which shall cease to
<PAGE> 11
constitute Incentive Stock Options, Incentive Stock Options shall, to
the extent of such excess and in the order in which they were granted,
automatically be deemed to be Nonstatutory Stock Options, but all
other terms and provisions of such Incentive Stock Options, and in
corresponding Option Awards, shall remain unchanged.
2.3 STOCK OPTION EXERCISES
(a) METHOD OF EXERCISE AND PAYMENT. Stock Options shall be
exercised by the delivery of a signed written notice of exercise to
the Company as of the date specified by the Company in advance of the
proposed exercise date. The notice shall set forth the number of
Shares with respect to which the Option is to be exercised,
accompanied by full payment for the Shares.
The Option Price upon exercise of any Stock Option shall be
payable to the Company in full either: (i) in cash or its equivalent,
or (ii) by tendering previously acquired whole Shares, free and clear
of all liens and encumbrances valued at their Fair Market Value
(provided that the Shares which are tendered must have been held by
the Grantee for at least six (6) months prior to their tender to
satisfy the Option Price), or (iii) subject to prior approval by the
Committee in its absolute discretion, by (A) tendering previously
acquired whole shares, free and clear of all liens and encumbrances or
(B) withholding Shares which otherwise would be acquired on exercise,
or (iv) subject to prior approval by the Committee in its absolute
discretion, by a combination of (i), (ii), and (iii) above. Any
payment in Shares shall be effected by the delivery of such Shares to
the Secretary of the Company, duly endorsed in blank or accompanied by
stock powers duly executed in blank, together with any other documents
and evidences as the Secretary of the Company shall require from time
to time.
In the absolute discretion of the Committee, any Option
granted under the Plan may be exercised by a broker-dealer acting on
behalf of a Participant if (i) the broker-dealer has received from the
Grantee or the Company a duly endorsed agreement evidencing such
Option and instructions signed by the Grantee requesting the Company
to deliver the shares of Common Stock subject to such Option to the
broker-dealer on behalf of the Grantee and specifying the account into
which such shares should be deposited, (ii) adequate provision has
been made with respect to the payment of any withholding taxes due on
such exercise, and (iii) the broker-dealer and the Grantee have
otherwise complied with Section 220.3(e)(4) of Federal Reserve Board
Regulation T, 12 CFR Part 220 (or its successor).
The Committee, in its absolute discretion (but subject to
applicable securities law, financial accounting implications and tax
withholdings) may also allow exercise by any other means which the
Committee determines to be consistent with the Plan's purpose and
applicable law.
As soon as practicable after receipt of a written
notification of exercise and full payment, the Company shall deliver
to or on behalf of the Grantee, in the name of the
<PAGE> 12
Grantee (or other appropriate recipient in the event of Grantee's
death), stock certificates for the number of Shares purchased pursuant
to exercise of the Stock Option. Such delivery shall be deemed
effected for all purposes when a stock transfer agent of the Company
shall have deposited such certificates in the United States mail,
addressed to Grantee or other appropriate recipient.
(b) RESTRICTIONS ON OPTION TRANSFERABILITY. During the
lifetime of a Grantee, each Option granted to him shall be exercisable
only by the Grantee or his legal guardian in the event of his
Disability (or by a broker-dealer pursuant to a cashless exercise
under Section 2.3(a) if permitted by the Committee). No Option shall
be assignable or transferable by Grantee otherwise than by will or by
the laws of descent and distribution.
(c) RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may
impose such restrictions on any Shares acquired pursuant to the
exercise of a Stock Option as it may deem advisable in its discretion,
including, without limitation, restrictions under either (i) any
buy/sell agreement or right of first refusal, (ii) applicable federal
securities laws, (iii) the requirements of any stock exchange or
market upon which such Shares are then traded or listed, or (iv) any
blue sky or state securities law applicable to such Shares. Any
certificate issued to evidence Shares issued upon the exercise of an
Option may bear such legends and statements as the Committee shall
deem advisable to assure compliance with federal and state laws and
regulations.
Any Grantee or other person exercising an Option may be
required by the Committee to give a written representation that the
Option and the Shares subject to the Option will be acquired for
investment and not with a view to public distribution; provided,
however, that the Committee, in its sole discretion, may release any
person receiving an Option from any such representations either prior
to or subsequent to the exercise of the Option.
(d) NOTIFICATION OF DISQUALIFYING DISPOSITION OF SHARES FROM
INCENTIVE STOCK OPTIONS. Notwithstanding any other provision of the
Plan, a Grantee who disposes of Shares of Common Stock acquired upon
the exercise of an Incentive Stock Option by a sale or exchange either
(i) within two (2) years after the date of the grant of the Incentive
Stock Option under which the Shares were acquired or (ii) within one
(1) year after the transfer of such Shares to him pursuant to
exercise, shall promptly notify the Company of such disposition, the
amount realized and his adjusted basis in such Shares.
(e) PROCEEDS OF OPTION EXERCISE. The proceeds received by the
Company from the sale of Shares pursuant to Stock Options exercised
under the Plan shall be used for general corporate purposes.
2.4 SUPPLEMENTAL PAYMENT ON EXERCISE OF NONSTATUTORY STOCK OPTIONS
The Committee may provide in the Option Agreement for a supplemental
payment (the
<PAGE> 13
"SUPPLEMENTAL Payment") by the Company to the Grantee with respect to the
exercise of any Nonstatutory Stock Option. The Supplemental Payment shall be in
the amount specified by the Committee, which amount shall not exceed the amount
necessary to pay the federal and state income tax payable with respect to both
the exercise of the Nonstatutory Stock Option and the receipt of the
Supplemental Payment, assuming the holder is taxed either at the maximum
effective income tax rate applicable thereto or at a lower effective tax rate
as deemed appropriate by the Committee. The Committee shall have the discretion
to grant Supplemental Payments that are payable solely in cash or Supplemental
Payments that are payable in cash, Common Stock, or a combination of both, as
determined by the Committee.
SECTION 3.
PROVISIONS RELATING TO PLAN PARTICIPATION
3.1 PLAN CONDITIONS
(a) OPTION AGREEMENT. Each Grantee to whom an Option Award is
granted shall be required to enter into an Option Agreement with the
Company, in such a form as is provided by the Committee. The Option
Agreement shall contain specific terms as determined by the Committee,
in its discretion, with respect to the Grantee's particular Option
Award. Such terms need not be uniform among all Grantees or any
similarly-situated Grantees. The Option Agreement may include, without
limitation, vesting, forfeiture and other provisions particular to the
particular Grantee's Option Award, as well as, for example, provisions
to the effect that the Grantee (i) shall not disclose any confidential
information acquired during Employment with the Company, (ii) shall
abide by all the terms and conditions of the Plan and such other terms
and conditions as may be imposed by the Committee, (iii) shall not
interfere with the employment or other service of any employee, (iv)
shall not compete with the Company or become involved in a conflict of
interest with the interests of the Company, (v) shall forfeit an
Option Award if terminated for Cause, and (vi) shall be subject to any
other agreement between the Grantee and the Company regarding Shares
that may be acquired under an Option Award including, without
limitation, an agreement restricting the transferability of Shares by
Grantee. An Option Agreement shall include such terms and conditions
as are determined by the Committee, in its discretion, to be
appropriate with respect to any individual Grantee. The Option
Agreement shall be signed by the Grantee to whom the Option Award is
made and by an Authorized Officer.
(b) NO RIGHT TO EMPLOYMENT. Nothing in the Plan or any
instrument executed pursuant to the Plan shall create any Employment
rights (including without limitation, rights to continued Employment)
in any Grantee or affect the right of the Company to terminate the
Employment of any Grantee at any time without regard to the existence
of the Plan.
(c) SECURITIES REQUIREMENTS. The Company shall be under no
obligation to effect the registration pursuant to the Securities Act
of 1933 of any Shares of Common
<PAGE> 14
Stock to be issued hereunder or to effect similar compliance under any
state laws. Notwithstanding anything herein to the contrary, the
Company shall not be obligated to cause to be issued or delivered any
certificates evidencing Shares pursuant to the Plan unless and until
the Company is advised by its counsel that the issuance and delivery
of such certificates is in compliance with all applicable laws,
regulations of governmental authorities, and the requirements of any
securities exchange on which Shares are traded. The Committee may
require, as a condition of the issuance and delivery of certificates
evidencing Shares of Common Stock pursuant to the terms hereof, that
the recipient of such Shares make such covenants, agreements and
representations, and that such certificates bear such legends, as the
Committee, in its discretion, deems necessary or desirable.
If the Shares issuable on exercise of an Option Award are not
registered under the Securities Act of 1933, the Company may imprint on
the certificate for such Shares the following legend or any other
legend which counsel for Company considers necessary or advisable to
comply with the Securities Act of 1933:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR
TRANSFERRED EXCEPT UPON SUCH REGISTRATION OR UPON RECEIPT BY
THE CORPORATION OF AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION, IN FORM AND SUBSTANCE SATISFACTORY TO THE
CORPORATION, THAT REGISTRATION IS NOT REQUIRED FOR SUCH SALE
OR TRANSFER.
3.2 NON-TRANSFERABLE OPTIONS.
No Option Award and no right under the Plan, contingent or otherwise,
will be (i) assignable, saleable, or otherwise transferable by a Grantee except
by will or by the laws of descent and distribution, or (ii) subject to any
encumbrance, pledge, lien, assignment or charge of any nature.
No transfer by will or by the laws of descent and distribution shall
be effective to bind the Company unless the Committee has been furnished with a
copy of the deceased Grantee's enforceable will or such other evidence as the
Committee deems necessary to establish the validity of the transfer. Any
attempted transfer in violation of this Section 3.2 shall be void and
ineffective.
3.3 RIGHTS AS A STOCKHOLDER
(a) NO STOCKHOLDER RIGHTS. A Grantee of an Option Award (or a
permitted transferee of such Grantee) shall have no rights as a
stockholder with respect to any Shares of Common Stock until the
issuance of a stock certificate for such Shares.
(b) REPRESENTATION OF OWNERSHIP. In the case of the exercise
of an Option
<PAGE> 15
Award by a person or estate acquiring the right to exercise such
Option Award by reason of the death or Disability of a Grantee, the
Committee may require reasonable evidence as to the ownership of such
Option Award or the authority of such person and may require such
consents and releases of taxing authorities as the Committee may deem
advisable.
3.4 LISTING AND REGISTRATION OF SHARES OF COMMON STOCK
The exercise of any Option Award granted hereunder shall only be
effective at such time as counsel to the Company shall have determined that the
issuance and delivery of Shares of Common Stock pursuant to such exercise is in
compliance with all applicable laws, regulations of governmental authorities
and the requirements of any securities exchange on which Shares of Common Stock
are traded. The Committee may, in its discretion, defer the effectiveness of
any exercise of an Option Award in order to allow the issuance of Shares of
Common Stock to be made pursuant to registration or an exemption from
registration or other methods for compliance available under federal or state
securities laws. The Committee shall inform the Grantee in writing of its
decision to defer the effectiveness of the exercise of an Option Award. During
the period that the effectiveness of the exercise of an Option Award has been
deferred, the Grantee may, by written notice to the Committee, withdraw such
exercise and obtain the refund of any amount paid with respect thereto.
3.5 CHANGE IN STOCK AND ADJUSTMENTS
(a) CHANGES IN LAW OR CIRCUMSTANCES. Subject to Section 3.7
(which only applies in the event of a Change in Control), in the event
of any change in applicable laws or any change in circumstances which
results in or would result in any dilution of the rights granted under
the Plan, or which otherwise warrants equitable adjustment because it
interferes with the intended operation of the Plan, then, if the
Committee should determine, in its absolute discretion, that such
change equitably requires an adjustment in the number or kind of
shares of stock or other securities or property theretofore subject,
or which may become subject, to issuance or transfer under the Plan or
in the terms and conditions of outstanding Option Awards, such
adjustment shall be made in accordance with such determination. Such
adjustments may include changes with respect to (i) the aggregate
number of Shares that may be issued under the Plan, (ii) the number of
Shares subject to Option Awards, and (iii) the price per Share for
outstanding Option Awards. Any adjustment under this paragraph of an
outstanding Incentive Stock Option shall be made only to the extent
not constituting a "modification" within the meaning of Section
424(h)(3) of the Code unless otherwise agreed to by the Grantee in
writing. The Committee shall give notice to each applicable Grantee of
such adjustment which shall be effective and binding.
(b) EXERCISE OF CORPORATE POWERS. The existence of the Plan
or outstanding Option Awards hereunder shall not affect in any way the
right or power of the Company or its stockholders to make or authorize
any or all adjustments, recapitalization, reorganization 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,
<PAGE> 16
debentures, preferred or prior preference stocks 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.
(c) RECAPITALIZATION OF THE COMPANY. Subject to Section 3.7,
if while there are Option Awards outstanding, the Company shall effect
any subdivision or consolidation of Shares of Common Stock or other
capital readjustment, the payment of a stock dividend, stock split,
combination of Shares, recapitalization or other increase or reduction
in the number of Shares outstanding, without receiving compensation
therefor in money, services or property, then the number of Shares
available under the Plan and the number of Option Awards which may
thereafter be exercised shall (i) in the event of an increase in the
number of Shares outstanding, be proportionately increased and the
Fair Market Value of the Option Awards awarded shall be
proportionately reduced; and (ii) in the event of a reduction in the
number of Shares outstanding, be proportionately reduced, and the Fair
Market Value of the Option Awards awarded shall be proportionately
increased. The Committee shall take such action and whatever other
action it deems appropriate, in its discretion, so that the value of
each outstanding Option Award to the Grantee shall not be adversely
affected by a corporate event described in this subsection (c).
(d) REORGANIZATION OF THE COMPANY. Subject to Section 3.7, if
the Company is reorganized, merged or consolidated, or is a party to a
plan of exchange with another corporation, pursuant to which
reorganization, merger, consolidation or exchange, stockholders of the
Company receive any Shares of Common Stock or other securities or
property, or if the Company should distribute securities of another
corporation to its stockholders, each Grantee shall be entitled to
receive, in lieu of the number of unexercised Option Awards previously
awarded, the number of Stock Options, with a corresponding adjustment
to the Fair Market Value of said Option Awards, to which he would have
been entitled if, immediately prior to such corporate action, such
Grantee had been the holder of record of a number of Shares equal to
the number of the outstanding Option Awards payable in Shares that
were previously awarded to him. In this regard, the Committee shall
take whatever other action it deems appropriate to preserve the rights
of Grantees holding outstanding Option Awards.
(e) ISSUE OF COMMON STOCK BY THE COMPANY. Except as
hereinabove expressly provided in this Section 3.5 and subject to
Section 3.7, the issue by the Company of shares of stock of any class,
or securities convertible into shares of stock of any class, for cash
or property, or for labor or services, either upon direct sale or upon
the exercise of rights or warrants to subscribe therefor, or upon any
conversion of shares or obligations of the Company convertible into
such shares or other securities, shall not affect, and no adjustment
by reason thereof shall be made with respect to, the number of, or
Fair Market Value of, any Option Awards then outstanding under
previously granted Option Awards.
<PAGE> 17
(f) ACQUISITION OF THE COMPANY. Subject to Section 3.7, in
the case of any sale of assets, merger, consolidation or combination
of the Company with or into another corporation other than a
transaction in which the Company is the continuing or surviving
corporation and which does not result in the outstanding Shares being
converted into or exchanged for different securities, cash or other
property, or any combination thereof (an "Acquisition"), in the
absolute discretion of the Committee, any Grantee who holds an
outstanding Option Award shall have the right (subject to any
limitation applicable to the Option Award) thereafter and during the
term of the Option Award, to receive upon exercise thereof the
Acquisition Consideration (as defined below) receivable upon the
Acquisition by a holder of the number of Shares which would have been
obtained upon exercise of the Option Award immediately prior to the
Acquisition. The term "Acquisition Consideration" shall mean the kind
and amount of shares of the surviving or new corporation, cash,
securities, evidence of indebtedness, other property or any
combination thereof receivable in respect of one Share upon
consummation of an Acquisition. The Committee, in its discretion,
shall have the authority to take whatever action it deems appropriate
to effectuate the provisions of this subsection (f).
(g) ASSUMPTION OF OUTSTANDING OPTION AWARDS UNDER THE PLAN.
Notwithstanding any other provision of the Plan, the Committee, in its
absolute discretion, may authorize the assumption and continuation
under the Plan of outstanding and unexercised stock options that were
granted under a stock option plan (or other type of stock option plan
or agreement) that is or was maintained by a corporation or other
entity that was merged into, consolidated with, or whose stock or
assets were acquired by, the Company as the surviving corporation. Any
such action shall be upon such terms and conditions as the Committee,
in its discretion, may deem appropriate, including provisions to
preserve the holder's rights under the previously granted and
unexercised stock option, such as, for example, retaining an existing
exercise price under an outstanding stock option. Any such assumption
and continuation of any such previously granted and unexercised stock
option shall be treated as an outstanding Option Award under the Plan
and shall thus count against the number of Shares reserved for
issuance pursuant to Section 1.4. With respect to an incentive stock
option (as described in Section 422 of the Code) subject to this
subsection (g), no adjustment to such incentive stock option shall be
made to the extent constituting a "modification" within the meaning of
Section 424(h)(3) of the Code unless otherwise agreed to by the
optionee in writing.
(h) ASSUMPTION OF OPTION AWARDS BY A SUCCESSOR. In the event
of a dissolution or liquidation of the Company, a sale of all or
substantially all of the Company's assets, a merger or consolidation
involving the Company in which the Company is not the surviving
corporation, or a merger or consolidation involving the Company in
which the Company is the surviving corporation but the holders of
Shares of Common Stock receive securities of another corporation
and/or other property, including cash, the Committee shall, in its
absolute discretion, have the right and power to:
<PAGE> 18
(i) cancel, effective immediately prior to the
occurrence of such corporate event, each outstanding Option
Award (whether or not then exercisable), and, in full
consideration of such cancellation, pay to the Grantee to
whom such Option Award was granted an amount in cash equal to
the excess of (A) the value, as determined by the Committee,
in its absolute discretion, of the property (including cash)
received by the holder of a Share of Common Stock as a result
of such event over (B) the exercise price of such Option
Award, if any; or
(ii) provide for the exchange of each Option Award
outstanding immediately prior to such corporate event
(whether or not then exercisable) for an option on some or
all of the property for which such Option Award is exchanged
and, incident thereto, make an equitable adjustment as
determined by the Committee in its absolute discretion, in
the exercise price of the Option Award, or the number of
shares or amount of property (including cash) subject to the
Option Award or, if appropriate, provide for a cash payment
to the Grantee to whom such Option Award was granted in
consideration for the exchange of his Option Award.
The Committee, in its discretion, shall have the authority to take
whatever action it deems appropriate to effectuate the provisions of
this subsection (h).
3.6 TERMINATION OF EMPLOYMENT, DEATH, DISABILITY AND RETIREMENT
(a) TERMINATION OF EMPLOYMENT. Unless otherwise expressly
provided in the Grantee's Option Agreement, if the Grantee's
Employment is terminated for any reason other than due to his death,
Disability, Retirement or for Cause, any non-vested portion of any
Stock Option at the time of such termination shall automatically
expire and terminate and no further vesting shall occur. In such
event, except as otherwise expressly provided in his Option Agreement,
the Grantee shall be entitled to exercise his rights only with respect
to the portion of the Option Award that was vested as of the
termination date for a period that shall end on the earlier of (i) the
expiration date set forth in the Option Agreement with respect to the
vested portion of such Option Award or (ii) the date that occurs
ninety (90) calendar days after his termination date.
(b) TERMINATION OF EMPLOYMENT FOR CAUSE. Unless otherwise
expressly provided in the Grantee's Option Agreement, in the event of
the termination of a Grantee's Employment for Cause, all vested and
non-vested Stock Options granted to such Grantee shall immediately
expire, and shall not be exercisable, as of the commencement of
business on the date of such termination.
(c) RETIREMENT. Unless otherwise expressly provided in the
Grantee's Option Agreement, upon the Retirement of any Employee who is
a Grantee:
(i) any non-vested portion of any outstanding Option
shall
<PAGE> 19
immediately terminate and no further vesting shall occur; and
(ii) any vested Option shall expire on the earlier
of (A) the expiration date set forth in the Option Agreement for such
Option; or (B) the expiration of (1) six months after the date of
Retirement in the case of any Nonstatutory Stock Option or (2) three
months after the date of Retirement in the case of an Incentive Stock
Option.
(d) DISABILITY OR DEATH. Unless otherwise expressly
provided in the Grantee's Option Agreement, upon termination
of Employment as a result of the Grantee's Disability or
death:
(i) any nonvested portion of any
outstanding Option shall immediately terminate upon
termination of Employment, as applicable, and no further
vesting shall occur; and
(ii) any vested Option Award shall expire
upon the earlier of either (A) the expiration date set forth
in the Option Agreement or (B) the first anniversary of the
Grantee's termination of Employment, as applicable, as a
result of his Disability or death.
In the case of any vested Incentive Stock Option held by an
Employee following termination of Employment, notwithstanding the
definition of "Disability" in Section 1.2, whether the Employee has
incurred a "Disability" for purposes of determining the length of the
Option exercise period following termination of Employment under this
paragraph (d) shall be determined by reference to Section 22(e)(3) of
the Code to the extent required by Section 422(c)(6) of the Code. The
Committee shall determine whether a Disability for purposes of this
subsection (d) has occurred.
(e) CONTINUATION. Subject to the conditions and
limitations of the Plan and applicable law and regulation in
the event that a Grantee ceases to be an Employee or
Consultant, as applicable, for whatever reason, the Committee
and Grantee may mutually agree with respect to any
outstanding Option Award then held by the Grantee (i) for an
acceleration or other adjustment in any vesting schedule
applicable to the Option, (ii) for a continuation of the
exercise period following termination for a longer period
than is otherwise provided under such Option Award, or (iii)
to any other change in the terms and conditions of the
Option. In the event of any such change to an outstanding
Option, a written amendment to the Grantee's Option Agreement
shall be required.
3.7 CHANGE IN CONTROL
Notwithstanding any contrary provision in the Plan, in the event of a
Change in Control (as defined below), all of the Stock Options then outstanding
shall become 100% vested and immediately and fully exercisable, as of the day
immediately preceding the Change in Control date unless expressly provided
otherwise in the Grantee's Option Agreement.
<PAGE> 20
Notwithstanding any other provision of this Plan, unless expressly
provided otherwise in the Grantee's Option Agreement, the provisions of this
Section 3.7 may not be terminated, amended, or modified to adversely affect any
Option Award theretofore granted under the Plan without the prior written
consent of the Grantee with respect to his outstanding Option Awards subject,
however, to the last paragraph of this Section 3.7.
For all purposes of this Plan, a "CHANGE IN CONTROL" of the Company
shall mean:
(a) The acquisition by an individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a
"PERSON") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of fifty percent (50%) or more of
the total voting power of all the Company's then outstanding
securities entitled to vote generally in the election of directors to
the Board.
(b) During the period of two consecutive calendar years,
individuals who at the beginning of such period constitute the Board,
and any new director(s) whose election by the Board or nomination for
election by the Company's shareholders was approved by a vote of at
least two-thirds of the directors then still in office, who either
were directors at the beginning of the two-year period or whose
election or nomination for election was previously so approved, cease
for any reason to constitute a majority of the Board; or
(c) The Company becomes a party to a merger, plan of
reorganization, consolidation or share exchange in which either (i)
the Company will not be the surviving corporation or (ii) the Company
will be the surviving corporation and any outstanding Shares of the
Company's common stock will be converted into shares of any other
company (other than a reincorporation or the establishment of a
holding company involving no change of ownership of the Company) or
other securities, cash or other property (excluding payments made
solely for fractional shares); or
(d) The shareholders of the Company approve a merger, plan of
reorganization, consolidation or share exchange with any other
corporation, and immediately following such merger, plan of
reorganization, consolidation or share exchange, the holders of the
voting securities of the Company outstanding immediately prior thereto
hold securities representing fifty percent (50%) or less of the
combined voting power of the voting securities of the Company or such
surviving entity outstanding immediately after such merger, plan of
reorganization, consolidation or share exchange; provided, however,
that notwithstanding the foregoing, no Change in Control shall be
deemed to have occurred if one-half (1/2) or more of the members of
the Board of the Company or such surviving entity immediately after
such merger, plan of reorganization, consolidation or share exchange
is comprised of persons who served as directors of the Company
immediately prior to such merger, plan of reorganization,
consolidation or share exchange or who are otherwise designees of the
Company; or
(e) Upon approval by the Company's stockholders of a complete
liquidation
<PAGE> 21
and dissolution of the Company or the sale or other disposition of all
or substantially all of the assets of the Company other than to a
Parent or Subsidiary; or
(f) Any other event that a majority of the Board, in its sole
discretion, shall determine constitutes a Change in Control.
Notwithstanding the occurrence of any of the foregoing events of this
Section 3.7 which would otherwise result in a Change in Control, the Board may
determine in its discretion, if it deems it to be in the best interest of the
Company, that an event or events otherwise constituting a Change in Control
shall not be considered a Change in Control. Such determination shall be
effective only if it is made by the Board prior to the occurrence of an event
that otherwise would be or probably would lead to a Change in Control; or after
such event if made by the Board a majority of which is composed of directors
who were members of the Board immediately prior to the event that otherwise
would be or probably would lead to a Change in Control.
3.8 EXCHANGE OF OPTION AWARDS
The Committee may, in its discretion, permit any Grantee to surrender
outstanding Option Awards in order to exercise or realize his rights under
other Option Awards or in exchange for the grant of new Option Awards, or
require holders of Option Awards to surrender outstanding Option Awards (or
comparable rights under other plans or arrangements) as a condition precedent
to the grant of new Option Awards.
3.9 FINANCING
The Company may extend and maintain, or arrange for and guarantee, the
extension and maintenance of financing to any Grantee to purchase Shares
pursuant to exercise of an Option Award upon such terms as are approved by the
Committee in its discretion.
SECTION 4.
GENERAL
4.1 EFFECTIVE DATE AND GRANT PERIOD
This Plan is adopted by the Board effective as of November 14, 1997
(the "EFFECTIVE DATE"), subject to the approval of the stockholders of the
Company by December 31, 1998. Options may be granted under the Plan at any time
prior to receipt of such stockholder approval; provided, however, if the
requisite stockholder approval is not obtained, then any Option Awards granted
under the Plan shall automatically become null and void and not exercisable.
Unless sooner terminated by the Board, no Option Award shall be granted under
the Plan after ten (10) years from the Effective Date.
4.2 FUNDING AND LIABILITY OF COMPANY
<PAGE> 22
No provision of the Plan shall require the Company, for the purpose of
satisfying any obligations under the Plan, to purchase assets or place any
assets in a trust or other entity to which contributions are made, or otherwise
to segregate any assets. In addition, the Company shall not be required to
maintain separate bank accounts, books, records or other evidence of the
existence of a segregated or separately maintained or administered fund for
purposes of the Plan. Although bookkeeping accounts may be established with
respect to Grantees who are entitled to cash, Common Stock or rights thereto
under the Plan, any such accounts shall be used merely as a bookkeeping
convenience. The Company shall not be required to segregate any assets that may
at any time be represented by cash, Common Stock or rights thereto. The Plan
shall not be construed as providing for such segregation, nor shall the
Company, the Board or the Committee be deemed to be a trustee of any cash,
Common Stock or rights thereto. Any liability or obligation of the Company to
any Grantee with respect to an Option Award shall be based solely upon any
contractual obligations that may be created by this Plan and any Option
Agreement, and no such liability or obligation of the Company shall be deemed
to be secured by any pledge or other encumbrance on any property of the
Company. Neither the Company, the Board nor the Committee shall be required to
give any security or bond for the performance of any obligation that may be
created by the Plan.
4.3 WITHHOLDING TAXES
(a) TAX WITHHOLDING. The Company shall have the power and the
right to deduct or withhold, or require a Grantee to remit to the
Company, an amount sufficient to satisfy federal, state, and local
taxes, domestic or foreign, required by law or regulation to be
withheld with respect to any taxable event arising as a result of the
Plan or an Option Award hereunder.
(b) SHARE WITHHOLDING. With respect to tax withholding
required upon the exercise of Stock Options, Grantees may elect,
subject to the approval of the Committee in its absolute discretion,
to satisfy the withholding requirement, in whole or in part, by having
the Company withhold Shares having a Fair Market Value on the date the
tax is to be determined equal to the minimum statutory total tax which
could be imposed on the transaction. All such elections shall be made
in writing, signed by the Grantee, and shall be subject to any
restrictions or limitations that the Committee, in its discretion,
deems appropriate.
(c) INCENTIVE STOCK OPTIONS. With respect to Shares received
by a Grantee pursuant to the exercise of an Incentive Stock Option, if
such Grantee disposes of any such Shares within (i) two years from the
date of grant of such Option or (ii) one year after the transfer of
such shares to the Grantee, the Company shall have the right to
withhold from any salary, wages or other compensation payable by the
Company to the Grantee an amount sufficient to satisfy federal, state
and local tax withholding requirements attributable to such
disqualifying disposition.
(d) LOANS. The Committee may provide for loans, on either a
short term or demand basis, from the Company to a Grantee who is an
Employee or Consultant to
<PAGE> 23
permit the payment of taxes required by law.
4.4 NO GUARANTEE OF TAX CONSEQUENCES
Neither the Company nor the Committee makes any commitment or
guarantee that any federal, state or local tax treatment will apply or be
available to any person participating or eligible to participate hereunder.
4.5 AMENDMENT AND TERMINATION
The Board shall have complete power and authority to terminate or
amend the Plan at any time; provided, however, that the Board shall not,
without the approval of the stockholders of the Company within the time period
required by applicable law, (a) except as provided in Section 3.5, increase the
maximum number of Shares which may be issued under the Plan pursuant to Section
1.4, (b) amend the requirements as to the class of Employees eligible to
receive Common Stock under the Plan, (c) increase the maximum limits on Option
Awards to Covered Employees as set for compliance with the Performance-Based
Exception, (d) extend the term of the Plan, or (e) decrease the authority
granted to the Committee under the Plan in contravention of Rule 16b-3 under
the Exchange Act.
No termination, amendment, or modification of the Plan shall adversely
affect in any material way any outstanding Option Award previously granted to a
Grantee under the Plan, without the written consent of such Grantee or other
designated holder of such Option Award.
In addition, to the extent that the Committee determines that (a) the
listing for qualification requirements of any national securities exchange or
quotation system on which the Company's Common Stock is then listed or quoted,
or (b) the Code (or regulations promulgated thereunder), require stockholder
approval in order to maintain compliance with such listing requirements or to
maintain any favorable tax advantages or qualifications, then the Plan shall
not be amended in such respect without approval of the Company's stockholders.
4.6 REQUIREMENTS OF LAW
The granting of Option Awards and the issuance of Shares under the
Plan shall be subject to all applicable laws, rules, and regulations, and to
such approvals by any governmental agencies or national securities exchanges as
may be required. Certificates evidencing shares of Common Stock delivered under
this Plan (to the extent that such shares are so evidenced) may be subject to
such stop transfer orders and other restrictions as the Committee may deem
advisable under the rules and regulations of the Securities and Exchange
Commission, any securities exchange or transaction reporting system upon which
the Common Stock is then listed or to which it is admitted for quotation, and
any applicable federal or state securities law. The Committee may cause a
legend or legends to be placed upon such certificates (if any) to make
appropriate reference to such restrictions.
<PAGE> 24
4.7 RULE 16B-3 SECURITIES LAW COMPLIANCE
With respect to Insiders, transactions under the Plan are intended to
comply with all applicable conditions of Rule 16b-3 under the Exchange Act. Any
ambiguities or inconsistencies in the construction of an Option Award or the
Plan shall be interpreted to give effect to such intention. However, to the
extent any provision of the Plan or action by the Committee fails to so comply,
it shall be deemed null and void to the extent permitted by law and deemed
advisable by the Committee in its discretion.
4.8 COMPLIANCE WITH CODE SECTION 162(M)
Unless otherwise determined by the Committee with respect to any
particular Option Award, it is extended that the Plan comply fully with and
meet all the requirements of Section 162(m) of the Code so that any applicable
types of Option Awards that are granted to Covered Employees shall qualify for
the Performance-Based Exception. If any provision of the Plan or an Option
Agreement would disqualify the Plan or would not otherwise permit the Plan or
Option Award to comply with the Performance-Based Exception as so intended,
such provision shall be construed or deemed amended to conform to the
requirements of the Performance-Based Exception to the extent permitted by
applicable law and deemed advisable by the Committee; provided that no such
construction or amendment shall have an adverse effect on the prior grant of an
Option Award or the economic value to a Grantee of any outstanding Option
Award.
4.9 SUCCESSORS
All obligations of the Company under the Plan with respect to Option
Awards granted hereunder shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise, of all or substantially all of
the business and/or assets of the Company.
4.10 MISCELLANEOUS PROVISIONS
(a) No Employee or Consultant or other person shall have any
claim or right to be granted an Option Award under the Plan. Neither
the Plan, nor any action taken hereunder, shall be construed as giving
any Employee or Consultant any right to be retained in the Employment
or other service of the Company or any Parent or Subsidiary.
(b) No Shares of Common Stock shall be issued hereunder
unless counsel for the Company is then reasonably satisfied that such
issuance will be in compliance with federal and state securities laws,
if applicable.
(c) The expenses of the Plan shall be borne by the Company.
(d) By accepting any Option Award, each Grantee and each
person claiming by or through him shall be deemed to have indicated
his acceptance of the Plan.
4.11 SEVERABILITY
<PAGE> 25
In the event that any provision of this Plan shall be held illegal,
invalid or unenforceable for any reason, such provision shall be fully
severable, but shall not affect the remaining provisions of the Plan, and the
Plan shall be construed and enforced as if the illegal, invalid, or
unenforceable provision was not included herein.
4.12 GENDER, TENSE AND HEADINGS
Whenever the context so requires, words of the masculine gender used
herein shall include the feminine and neuter, and words used in the singular
shall include the plural. Section headings as used herein are inserted solely
for convenience and reference and constitute no part of the interpretation or
construction of the Plan.
4.13 GOVERNING LAW
The Plan shall be interpreted, construed and constructed in accordance
with the laws of the State of Texas, without regard to its conflicts of law
provisions, except as superseded by applicable the laws of the United States.
IN WITNESS WHEREOF, Southern Mineral Corporation has caused this Plan
to be duly executed in its name and on its behalf by its duly authorized
officer, to be effective as of November 17, 1997.
ATTEST: SOUTHERN MINERAL CORPORATION
By:/S/ James H. Price By:/S/ Steven H. Mikel
--------------------------- -----------------------------------------
Name: James H. Price Name: Steven H. Mikel
----------------------- -------------------------------------
Title: Vice President-Finance Title: President and Chief Executive Officer
----------------------- -------------------------------------
<PAGE> 1
EXHIBIT 5.1
April 27, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Southern Mineral Corporation
Registration Statement on Form S-8
Ladies and Gentlemen:
We have acted as counsel to Southern Mineral Corporation, a Nevada
corporation (the "Company"), in the preparation of a Registration Statement on
Form S-8 (the "Registration Statement") relating to the Company's 1997 Stock
Option Plan (the "Plan") filed by the Company with the Securities and Exchange
Commission covering 700,000 shares of common stock, $.01 par value per share
(the "Shares"), of the Company issuable pursuant to the Plan.
In so acting, we have examined and relied upon such records, documents, and
other instruments as in our judgment are necessary or appropriate in order to
express the opinion hereinafter set forth and have assumed the genuineness of
all signatures, 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.
Based upon such examination and review and upon representations made to us
by the officers and directors of the Company, we are of the opinion that the
Shares have been duly and validly authorized and, assuming that the Shares are
issued for an amount at least equal to their par value, will, upon issuance
pursuant to the terms and conditions of the Plan, be validly issued, fully
paid, and nonassessable.
The opinion expressed herein is limited to the corporate laws of the State
of Nevada and we express no opinion as to the effect on the matters covered by
any other jurisdiction. This firm consents to the filing of this opinion as an
exhibit to the Registration Statement and to the reference to the firm in any
documents incorporated by reference in the Registration Statement.
Very truly yours,
/s/ AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Southern Mineral Corporation:
We consent to incorporation by reference in the Registration Statement on Form
S-8 of Southern Mineral Corporation of our report dated March 13, 1998 relating
to the consolidated balance sheet of Southern Mineral Corporation and
subsidiaries as of December 31, 1997 and 1996 and the related consolidated
statements of operations, stockholders' equity and cash flows for the each of
the years in the two year period ended December 31, 1997, which report appears
in the December 31, 1997 annual report on Form 10-KSB of Southern Mineral
Corporation.
KPMG Peat Marwick LLP
/s/ KPMG Peat Marwick LLP
Houston, Texas
April 27, 1998
<PAGE> 1
EXHIBIT 23.3
NETHERLAND, SEWELL & ASSOCIATES, INC.
April 24, 1998
Southern Mineral Corporation
500 Dallas, Suite 3350
Houston, Texas 77002-4708
Gentlemen:
In accordance with your request, we have enclosed a copy of our Consent of
Netherland, Sewell, & Associates, Inc. for the Form S-8 Registration Statement
to be filed by Southern Mineral Corporation.
Our Consent is based on our review of the draft delivered to us on April
24, 1998, and is conditioned upon there being no further changes made that
relate to us in the Form S-8. In the event any changes are made in the final
Form S-8 relating to our firm or our report, we would like to review such
changes and provide a new Consent letter.
Please send us a copy of the final Form S-8 for our office, and let us
know if we may be of further assistance.
Very truly yours,
/s/ Danny D. Simmons
DDS:SLS
Enclosures
<PAGE> 2
NETHERLAND, SEWELL & ASSOCIATES, INC.
CONSENT OF NETHERLAND, SEWELL & ASSOCIATES, INC.
We consent to the incorporation by reference into Form S-8 Registration of
Southern Mineral Corporation, a Nevada corporation (the "Company"), of the
references to this firm and its reports listed below for the Company's
estimated domestic proved reserves contained in its Annual Report on Form
10-KSB for the year ended December 31, 1997.
1. Report of domestic proved reserves as of January 1, 1996 dated
March 1, 1996.
2. Audit of domestic proved reserves estimates as of January 1, 1997
dated February 25, 1997.
3. Report of domestic proved reserves estimates as of January 1, 1998
dated February 16, 1998.
NETHERLAND, SEWELL & ASSOCIATES, INC.
By: /s/ DANNY D. SIMMONS
----------------------------------
Danny D. Simmons
Senior Vice President
Houston, Texas
April 24, 1998
<PAGE> 1
EXHIBIT 23.4
MCDANIEL & ASSOCIATES
CONSULTANTS LTD.
---------------------------------
OIL AND GAS RESERVOIR EVALUATIONS
Reference: Southern Mineral Corporation
Registration Statement Form S-8
We consent to the reference to our report entitled "Spruce Hills Production
Company Inc., Evaluation of Oil and Gas Reserves, based on Escalating Price
Assumptions, as of April 1, 1997", dated June 13, 1997, in the Registration
Statement on Form S-8 of Southern Mineral Corporation and any amendments
thereto and to all references to this firm in the Prospectus, which is part of
the Registration Statement.
McDANIEL & ASSOCIATES CONSULTANTS LTD.
/s/ B. H. EMSLIE
- ----------------------------
B. H. Emslie, P. Eng.
Vice President
Calgary, Alberta
Dated: April 24, 1998
Suite 220, Bow Valley Square Ill, 255 - 5th Avenue S.W.,
Calgary, Alberta, Canada T2P 3G6
Phone (403) 262-5506 Fax (403) 233-2744 E-Mail: [email protected] Web Site:
http://www.mcdan.com
<PAGE> 1
Exhibit 23.5
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated February 21, 1996, accompanying the
consolidated financial statements of Southern Mineral Corporation and
Subsidiaries appearing in its Annual Report on Form 10-KSB for the year ended
December 31, 1997, which is incorporated by reference in this Registration
Statement. We consent to the incorporation by reference in this Registration
Statement of the aforementioned report.
GRANT THORNTON LLP
Houston, Texas
April 27, 1998
<PAGE> 1
RYDER SCOTT COMPANY PETROLEUM ENGINEERS
EXHIBIT 23.6
CONSENT OF RYDER SCOTT COMPANY PETROLEUM ENGINEERS
We hereby consent to the incorporation by reference into the Form S-8
Registration Statement of Southern Mineral corporation a Nevada Corporation
(the "Company"), of the references of this firm and to our report on the
Company's estimated Ecuadorian proved reserves as of December 31, 1997,
contained in its Annual Report on Form 10-KSB for the year ended December 31,
1997.
/s/ RYDER SCOTT COMPANY
PETROLEUM ENGINEERS
RYDER SCOTT COMPANY
PETROLEUM ENGINEERS
Houston, Texas
April 27, 1998
