EXHIBIT 7
NONSTATUTORY STOCK OPTION AGREEMENT
CONTINENTAL SOUTHERN RESOURCES, INC.
2004 INCENTIVE PLAN
1. Grant of Option. Pursuant to the Continental Southern
Resources, Inc. 2004 Incentive Plan (the "Plan") for employees, consultants and
outside directors of 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 250,000 (nonstatutory)
full shares (the "Optioned Shares") of Common Stock at an Option Price
equal to $2.00 per share. The Date of Grant of this Stock Option is
February 26, 2004.
The "Option Period" shall commence on the Date of Xxxxx and shall expire on the
date immediately preceding the fifth (5th) anniversary of the Date of Xxxxx. 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 January 1, 2005
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 January 1, 2006
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 January 1, 2007
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 fifth
(5th) 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
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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 Xxxxxxxx-Xxxxx 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.
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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
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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.
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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
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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:
Continental Southern Resources, Inc.
0000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Secretary
Xxxxxxxxx: (000) 000-0000
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.
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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]
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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:
CONTINENTAL SOUTHERN RESOURCES,
INC.
By: _________________________________________
Name: _______________________________________
Title: ______________________________________
PARTICIPANT:
*
---------------------------------------------
* A form of this Agreement was executed by
each of Xxxxxxx X. Xxxxxxxx and Xxxx X.
Xxxxx
Address: ____________________________________
_____________________________________________
_____________________________________________
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