Exhibit 10.1
FORM OF NONSTATUTORY STOCK OPTION AGREEMENT
ENDEAVOUR INTERNATIONAL CORPORATION
2004 INCENTIVE PLAN
1. Grant of Option. Pursuant to the endeavour International Corporation
2004 Incentive Plan (the "Plan") for employees, consultants and outside
directors of Endeavour International Corporation f/k/a Continental Southern
Resources, Inc., a Nevada Corporation (the "Company"), the Company grants to
____________________
(the "Participant"),
an option to purchase shares of Common Stock ("Common Stock") of the Company as
follows:
On the date hereof, the Company grants to the Participant an option
(the "Option" or "Stock Option") to purchase _________
(nonstatutory) full shares (the "Optioned Shares") of Common Stock
at an Option Price equal to $_________ per share. The Date of Grant
of this Stock Option is ________ __, 20__.
The "Option Period" shall commence on the Date of Grant and shall expire on the
date immediately preceding the _______ (____) anniversary of the Date of Grant.
The Stock Option is a Nonstatutory Stock Option.
2. Subject To Plan. The Stock Option and its exercise are subject to
the terms and conditions of the Plan, and the terms of the Plan shall control to
the extent not otherwise inconsistent with the provisions of this Agreement. The
capitalized terms used herein that are defined in the plan shall have the same
meanings assigned to them in the Plan. The Stock Option is subject to any rules
promulgated pursuant to the Plan by the Committee. In addition, if the Plan
previously has not been approved by the Company's stockholders, the Stock Option
is granted subject to such stockholder approval.
3. Vesting: Time Of Exercise. Except as specifically provided in this
Agreement and subject to certain restrictions and conditions set forth in the
Plan, the Stock Option shall be vested and exercisable as follows:
a. With respect to 33.3% of the total Optioned Shares, the Stock
Option shall vest and become exercisable on ________ __, 20__ provided the
Participant is employed by (or, if the Participant is a consultant or an
Outside Director, is providing services to) the Company or a Subsidiary on
that date.
b. With respect to 33.3% of the total Optioned Shares, the Stock
Option shall vest and become exercisable on ________ __, 20__ provided the
Participant is employed by (or, if the Participant is a consultant or an
Outside Director, is providing services to) the Company or a Subsidiary on
that date.
c. With respect to 33.3% of the total Optioned Shares, the Stock
Option shall vest and become exercisable on ________ __, 20__ provided the
Participant is
employed by (or, if the Participant is a consultant or an Outside
Director, is providing services to) the Company or a Subsidiary on that
date.
d. A Participant shall become 100% vested in the total Optioned
Shares hereunder on the day preceding an event which constitutes a Change
in Control as defined in the Plan.
4. Term; Forfeiture. In the event of Participant's termination of
employment with the Company and its affiliates (a "Termination of Employment")
for any reason (including for Cause) other than Participant's death, Disability
or Retirement, the Option outstanding on such date of Termination of Employment,
to the extent vested on such date, may be exercised by Participant (or, in the
event of Participant's subsequent death, by Participant's Heir (as defined
below)) within three months following such Termination of Employment, but not
thereafter. In the event that, as a result of such Termination of Employment,
Participant is eligible to receive severance benefits under any Company plan,
program or severance agreement, the Option outstanding on such date of
Termination of Employment, to the extent vested on such date, may be exercised
by Participant (or, in the event of Participant's subsequent death, by
Participant's Heir (as defined below)) within twelve months following such
Termination of Employment, but not thereafter. However, in no event shall the
Option be exercisable after the fifth (5th) anniversary of the Grant Date. To
the extent the Option is not vested on Participant's date of Termination of
Employment, the Option shall automatically lapse and be canceled unexercised as
of such date.
In the event of Participant's Termination of Employment by reason of
death, Disability or Retirement, as defined by the Committee in its sole
discretion pursuant to the terms of the Plan, the Option shall be fully vested
on such date of termination and may be exercised by Participant or, in the event
of Participant's death, by the person to whom Participant's rights shall pass by
will or the laws of descent and distribution ("Heir"), at any time within the
two-year period beginning on Participant's Termination of Employment, but not
thereafter. However, in no event shall the Option be exercisable after the _____
(___) anniversary of the Grant Date.
5. Who May Exercise. Subject to the terms and conditions set forth in
Sections 3 and 4 above, during the lifetime of the Participant, the Stock Option
may be exercised only by the Participant, or by the Participant's guardian or
personal or legal representative (in the event of his or her Disability or by a
broker dealer subject to Section 2.3 of the Plan).
6. No Fractional Shares. The Stock Option may be exercised only with
respect to full shares, and no fractional share of stock shall be issued.
7. Manner of Exercise. Subject to such administrative regulations as
the Committee may from time to time adopt, the Option may be exercised by the
delivery of written notice to the Committee or designated Company representative
setting forth the number of shares of Common Stock with respect to which the
Option is to be exercised, the date of exercise thereof (the "Exercise Date")
which shall be at least three (3) days after giving such notice unless an
earlier time shall have been mutually agreed upon. On the Exercise Date, the
Participant shall deliver to the Company consideration with a value equal to the
total Option Price of the shares to be purchased, payable to the Company in full
in either: (i) in cash or its equivalent, or (ii) subject
2
to prior approval by the Committee in its discretion, by tendering previously
acquired Shares having an aggregate Fair Market Value at the time of exercise
equal to the total Option Price (provided that the Shares which are tendered
must have been held by the Participant 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 discretion, by withholding Shares which otherwise would be
acquired on exercise having an aggregate Fair Market Value at the time of
exercise equal to the total Option Price, or (iv) subject to prior approval by
the Committee in its discretion, by a combination of (i), (ii), and (iii) above.
Any payment in Shares shall be effected by the surrender of such Shares to the
Company in good form for transfer and shall be valued at their Fair Market Value
on the date when the Stock Option is exercised. Unless otherwise permitted by
the Committee in its discretion, the Participant shall not surrender, or attest
to the ownership of, Shares in payment of the Option Price if such action would
cause the Company to recognize compensation expense (or additional compensation
expense) with respect to the Option for financial reporting purposes.
The Committee, in its discretion, also may allow the Option Price to be
paid with such other consideration as shall constitute lawful consideration for
the issuance of Shares (including, without limitation, effecting a "cashless
exercise" with a broker of the Option), subject to applicable securities law
restrictions and tax withholdings, or by any other means which the Committee
determines to be consistent with the Plan's purpose and applicable law. A
"cashless exercise" of an Option is a procedure by which a broker provides the
funds to the Participant to effect an Option exercise, to the extent consented
to by the Committee in its discretion. At the direction of the Participant, the
broker will either (i) sell all of the Shares received when the Option is
exercised and pay the Participant the proceeds of the sale (minus the Option
Price, withholding taxes and any fees due to the broker) or (ii) sell enough of
the Shares received upon exercise of the Option to cover the Option Price,
withholding taxes and any fees due the broker and deliver to the Participant
(either directly or through the Company) a stock certificate for the remaining
Shares. Dispositions to a broker effecting a cashless exercise are not exempt
under Section 16 of the Exchange Act (if the Company is a Publicly Held
Corporation). In no event will the Committee allow the Option Price to be paid
with a form of consideration, including a loan or a "cashless exercise," if such
form of consideration would violate the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 as determined
by the Committee in its discretion.
As soon as practicable after receipt of a written notification of exercise
and full payment, the Company shall deliver, or cause to be delivered, to or on
behalf of the Participant, in the name of the Participant or other appropriate
recipient, Share certificates for the number of Shares purchased under the
Option. Such delivery shall be effected for all purposes when the Company or a
stock transfer agent of the Company shall have deposited such certificates in
the United States mail, addressed to Participant or other appropriate recipient.
If the Participant fails to pay for any of the Shares specified in such
notice or fails to accept delivery thereof, then the Option, and right to
purchase such Shares may be forfeited by the Company.
8. Nonassignability. The Stock Option is not assignable or transferable
by the Participant except by will or by the laws of descent and distribution or
pursuant to a domestic relations order that would qualify as a qualified
domestic relations order as defined in Section 414(p) of the Code, if such
provision were applicable to the Stock Option.
3
9. Rights as Stockholder. The Participant will have no rights as a
stockholder with respect to any shares covered by the Stock Option until the
issuance of a certificate or certificates to the Participant for the Optioned
Shares. The Optioned Shares shall be subject to the terms and conditions of this
Agreement and Plan regarding such Shares. Except as otherwise provided in
Section 10 hereof, no adjustment shall be made for dividends or other rights for
which the record date is prior to the issuance of such certificate or
certificates.
10. Adjustment of Number of Optioned Shares and Related Matters. The
number of shares of Common Stock covered by the Stock Option, and the Option
Prices thereof, shall be subject to adjustment in accordance with Section 5.5 of
the Plan.
11. Nonstatutory Stock Option. The Stock Option shall not be treated as
an Incentive Stock Option.
12. Community Property. Each spouse individually is bound by, and such
spouse's interest, if any, in any Shares is subject to, the terms of this
Agreement. Nothing in this Agreement shall create a community property interest
where none otherwise exists.
13. Dispute Resolution.
a. Arbitration. All disputes and controversies of every kind and
nature between any parties hereto arising out of or in connection with
this Agreement or the transactions described herein as to the
construction, validity, interpretation or meaning, performance,
non-performance, enforcement, operation or breach, shall be submitted to
arbitration pursuant to the following procedures:
i. After a dispute or controversy arises, any party may, in
a written notice delivered to the other parties to the dispute,
demand such arbitration. Such notice shall designate the name of the
arbitrator (who shall be an impartial person) appointed by such
party demanding arbitration, together with a statement of the matter
in controversy.
ii. Within 30 days after receipt of such demand, the other
parties shall, in a written notice delivered to the first party,
name such parties' arbitrator (who shall be an impartial person). If
such parties fail to name an arbitrator, then the second arbitrator
shall be named by the American Arbitration Association (the "AAA").
The two arbitrators so selected shall name a third arbitrator (who
shall be an impartial person) within 30 days, or in lieu of such
agreement on a third arbitrator by the two arbitrators so appointed,
the third arbitrator shall be appointed by the AAA. If any
arbitrator appointed hereunder shall die, resign, refuse or become
unable to act before an arbitration decision is rendered, then the
vacancy shall be filled by the method set forth in this Section for
the original appointment of such arbitrator.
iii. Each party shall bear its own arbitration costs and
expenses. The arbitration hearing shall be held in Houston, Texas at
a location designated by a majority of the arbitrators. The
Commercial Arbitration Rules of the American Arbitration Association
shall be incorporated by reference at such hearing and the
4
substantive laws of the State of Texas (excluding conflict of laws
provisions) shall apply.
iv. The arbitration hearing shall be concluded within ten
(10) days unless otherwise ordered by the arbitrators and the
written award thereon shall be made within fifteen (15) days after
the close of submission of evidence. An award rendered by a majority
of the arbitrators appointed pursuant to this Agreement shall be
final and binding on all parties to the proceeding, shall resolve
the question of costs of the arbitrators and all related matters,
and judgment on such award may be entered and enforced by either
party in any court of competent jurisdiction.
v. Except as set forth in Section 13.b., the parties
stipulate that the provisions of this Section shall be a complete
defense to any suit, action or proceeding instituted in any federal,
state or local court or before any administrative tribunal with
respect to any controversy or dispute arising out of this Agreement
or the transactions described herein. The arbitration provisions
hereof shall, with respect to such controversy or dispute, survive
the termination or expiration of this Agreement.
No party to an arbitration may disclose the existence or results of any
arbitration hereunder without the prior written consent of the other
parties; nor will any party to an arbitration disclose to any third party
any confidential information disclosed by any other party to an
arbitration in the course of an arbitration hereunder without the prior
written consent of such other party.
b. Emergency Relief. Notwithstanding anything in this Section 13
to the contrary, any party may seek from a court any provisional remedy
that may be necessary to protect any rights or property of such party
pending the establishment of the arbitral tribunal or its determination of
the merits of the controversy or to enforce a party's rights under Section
13.
14. Participant's Representations. Notwithstanding any of the provisions
hereof, the Participant hereby agrees that he will not exercise the Stock Option
granted hereby, and that the Company will not be obligated to issue any shares
to the Participant hereunder, if the exercise thereof or the issuance of such
shares shall constitute a violation by the Participant or the Company of any
provision of any law or regulation of any governmental authority or Company
policies, or the rules of the stock exchange on which the Common Stock is
listed. Any determination in this connection by the Company shall be final,
binding, and conclusive. The obligations of the Company and the rights of the
Participant are subject to all applicable laws, rules, and regulations, rules of
the stock exchange on which the Common Stock is listed and policies of the
Company.
15. Investment Representation. The Participant represents and warrants
to the Company that all Common Stock which may be purchased hereunder will be
acquired by the Participant for investment purposes for his own account and not
with any intent for resale or distribution in violation of federal or state
securities laws.
5
16. Participant's Acknowledgments. The Participant acknowledges receipt
of a copy of the Plan, which is annexed hereto, and represents that he or she is
familiar with the terms and provisions thereof, and hereby accepts this Option
subject to all the terms and provisions thereof. The Participant hereby agrees
to accept as binding, conclusive, and final all decisions or interpretations of
the Committee, the Company or the Board, as appropriate, upon any questions
arising under the Plan or this Agreement.
17. Law Governing. This Agreement shall be governed by, construed, and
enforced in accordance with the laws of the State of Texas (excluding any
conflict of laws rule or principle of Nevada law that might refer the
governance, construction, or interpretation of this agreement to the laws of
another state).
18. No Right to Continue Service or Employment. Nothing herein shall be
construed to confer upon the Participant the right to continue in the employ or
to provide services to the Company, its Affiliates or any Parent or Subsidiary
or their Affiliates, whether as an employee or as a consultant or as an Outside
Director, or interfere with or restrict in any way the right of the Company or
any of the other foregoing entities to discharge the Participant as an employee,
consultant or Outside Director at any time.
19. Legal Construction. In the event that any one or more of the terms,
provisions, or agreements that are contained in this Agreement shall be held by
a Court of competent jurisdiction to be invalid, illegal, or unenforceable in
any respect for any reason, the invalid, illegal, or unenforceable term,
provision, or agreement shall not affect any other term, provision, or agreement
that is contained in this Agreement and this Agreement shall be construed in all
respects as if the invalid, illegal, or unenforceable term, provision, or
agreement had never been contained herein.
20. Covenants and Agreements as Independent Agreements. Each of the
covenants and agreements that is set forth in this Agreement shall be construed
as a covenant and agreement independent of any other provision of this
Agreement. The existence of any claim or cause of action of the Participant
against the Company, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Company of the covenants and
agreements that are set forth in this Agreement.
21. Entire Agreement. This Agreement together with the Plan supersede
any and all other prior understandings and agreements, either oral or in
writing, between the parties with respect to the subject matter hereof and
constitute the sole and only agreements between the parties with respect to the
said subject matter. All prior negotiations and agreements between the parties
with respect to the subject matter hereof are merged into this Agreement. Each
party to this Agreement acknowledges that no representations, inducements,
promises, or agreements, orally or otherwise, have been made by any party or by
anyone acting on behalf of any party, which are not embodied in this Agreement
or the Plan and that any agreement, statement or promise that is not contained
in this Agreement or the Plan shall not be valid or binding or of any force or
effect.
22. Parties Bound. The terms, provisions, and agreements that are
contained in this Agreement shall apply to, be binding upon, and inure to the
benefit of the parties and their
6
respective heirs, executors, administrators, legal representatives, and
permitted successors and assigns, subject to the limitation on assignment
expressly set forth herein. [No person or entity shall be permitted to acquire
any Optioned Shares without first executing and delivering an agreement in the
form satisfactory to the Company making such person or entity subject to the
restrictions on transfer contained herein.]
23. Modification. No change or modification of this Agreement shall be
valid or binding upon the parties unless the change or modification is in
writing and signed by the parties. Notwithstanding the preceding sentence, the
Company may amend the Plan or revoke this Stock Option to the extent permitted
by the Plan.
24. Headings. The headings that are used in this Agreement are used for
reference and convenience purposes only and do not constitute substantive
matters to be considered in construing the terms and provisions of this
Agreement.
25. Gender and Number. Words of any gender used in this Agreement shall
be held and construed to include any other gender, and words in the singular
number shall be held to include the plural, and vice versa, unless the context
requires otherwise.
26. Independent Legal and Tax Advice. Optionee acknowledges that the
Company has advised Optionee to obtain independent legal and tax advice
regarding the grant and exercise of the Option and the disposition of any Shares
acquired thereby.
27. Notice. Any notice required or permitted to be delivered hereunder
shall be deemed to be delivered only when actually received by the Company or by
the Participant, as the case may be, at the addresses set forth below, or at
such other addresses as they have theretofore specified by written notice
delivered in accordance herewith:
a. Notice to the Company shall be addressed and delivered as
follows:
Endeavour International Corporation
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: Secretary
▇▇▇▇▇▇▇▇▇: (▇▇▇) ▇▇▇-▇▇▇▇
b. Notice to the Participant shall be addressed and delivered as
set forth on the signature page.
28. Tax Requirements.
a. Tax Withholding. The Company shall have the power and the
right to deduct or withhold, or require the Participant 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 and this
Option.
7
b. Share Withholding. With respect to tax withholding required
upon the exercise of Stock Options or upon any other taxable event arising
as a result of the Stock Option, Participant may elect, subject to the
approval of the Committee in its 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 statutory total tax which could be imposed on the transaction. All
such elections shall be made in writing, signed by the Participant, and
shall be subject to any restrictions or limitations that the Committee, in
its discretion, deems appropriate. Any fraction of a Share required to
satisfy such obligation shall be disregarded and the amount due shall
instead be paid in cash by the Participant.
[SIGNATURE PAGE FOLLOWS]
8
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized officer, and the Participant, to evidence his consent and
approval of all the terms hereof, has duly executed this Agreement, as of the
date specified in Section 1 hereof.
COMPANY:
ENDEAVOUR INTERNATIONAL
CORPORATION
By: _________________________________
Name:
Title:
PARTICIPANT:
_____________________________________
Name:
Address:_____________________________
_____________________________________
9