GREEN HUNTER ENERGY,
INC.
2008 LONG-TERM INCENTIVE
COMPENSATION PLAN
This
document constitutes part of a prospectus covering securities that
have been registered under the Securities Act of
1933.
GREEN HUNTER ENERGY,
INC.
2008 LONG-TERM INCENTIVE
COMPENSATION PLAN
Green Hunter
Energy, Inc. (the “Company”) has established this Green
Hunter Energy, Inc. 2008 Long Term Incentive Plan, effective April,
2008. The primary purpose of the Plan is to promote the interests
of the Company and its shareholders through the (i) attraction
and retention of executive officers, key employees, directors and
consultants essential to the success of the Company; (ii)
motivation of Participants using performance-related incentives
linked to long-range performance goals and the interests of Company
shareholders; and (iii) enabling of such Persons to share in
the long-term growth and success of the Company. The Plan permits
the grant of Incentive Stock Options, Nonstatutory Stock Options,
Stock Appreciation Rights, Restricted Stock, Restricted Stock
Units, Performance Shares, Performance Units, Bonus Stock, and any
other Stock Unit Awards or stock-based forms of awards as the
Committee, in its sole and complete discretion, may determine to be
appropriate in carrying out the intent and purposes of this
Plan.
When used in this
Plan, the following terms shall have the meanings set forth
below:
2.1
“Affiliate” shall have the meaning ascribed to such
term in Rule 12b-2 under the Exchange Act.
2.2
“Agreement” means a written agreement between the
Company and a Participant implementing an Award, and setting forth
the particular terms, conditions and restrictions of each Award.
Each Award Agreement shall be subject to the provisions of this
Plan (which shall be deemed to be incorporated in each Agreement)
and shall contain such provisions as the Committee, in its sole
discretion, may authorize. With respect to the grant of an Option,
the Agreement may be referred to herein as an “Option
Agreement,” and with respect to any other Award hereunder,
the Agreement may be referred to herein as an “Award
Agreement.”
2.3
“Award” or “Grant” means a grant under the
Plan of Nonstatutory Stock Options, Incentive Stock Options, Stock
Appreciation Rights, Restricted Stock, Restricted Stock Units,
Performance Units, Performance Shares, Bonus Stock, or other Stock
Unit Awards.
2.4 “Award
Date” or “Grant Date” means the date on which an
Award is made by the Committee under the Plan.
2.5
“Board” or “Board of Directors” means the
Board of Directors of the Company.
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2.6 “Bonus
Stock” means an Award granted pursuant to Section 10 of
the Plan.
2.7
“Cashless Exercise” means the exercise of an Option by
the Participant through the use of a brokerage firm to make payment
to the Company of the Exercise Price either from the proceeds of a
loan to the Participant from the brokerage firm or from the
proceeds of the sale of Stock issued pursuant to the exercise of
the Option, and upon receipt of such payment, the Company delivers
the exercised Shares to the brokerage firm.
2.8 “Change
in Control” shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs shall
have been satisfied:
(a) Any Person,
corporation or other entity or group, including any
“group” as defined in Section 13(d)(3) of the
Exchange Act, becomes the beneficial owner (as defined in Rule
13d-3 under the Exchange Act) of Shares of the Company having 20%
or more of the total number of votes that may be cast for the
election of directors of the Company; or
(b) As the result
of, or in connection with, any tender or exchange offer, merger or
other business combination, sale of assets, sale of securities,
contested election, or any combination of the foregoing (a
“Transaction”), the persons who were directors of the
Company immediately before the Transaction shall cease to
constitute a majority of the Board of Directors of the Company or
any successor to the Company or its assets; or
(c) If at any
time: (i) the Company shall consolidate or merge with any
other Person and the Company shall not be the continuing or
surviving corporation; (ii) any Person shall consolidate or
merge with the Company, and the Company shall be the continuing or
surviving corporation and in connection therewith, all or part of
the outstanding Stock shall be converted into, or exchanged for,
stock or other securities of any other Person or cash or any other
property; (iii) the Company shall be a party to a statutory
share exchange with any other Person after which the Company is a
Subsidiary of any other Person; or (iv) the Company shall sell
or otherwise transfer 50% or more of the assets or earning power of
the Company and its Subsidiaries (taken as a whole) to any Person
or Persons.
(d)
Notwithstanding the foregoing, in the case of a Restricted Stock
Units, Performance Shares, Performance Units or other Awards
hereunder that constitute deferred compensation under section 409A
of the Code, a change of control shall be deemed to have occurred
unless, in addition to facts and circumstances that satisfy one or
more of the foregoing requirements also constitute a change of
control under Reg. § 1.409A-3(g)(5). It is understood that for
such purposes a change of control will require a change in
ownership of more than 50 percent of the total fair market
value or total voting power of the Stock, the acquisition during a
12-month period ending on the date of the most recent acquisition
of Stock possessing 35 percent or more of the total voting
power of the stock of the Company, the replacement of a majority of
the members of the Board during any 12-month period by directors
whose appointment or election is not
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endorsed by a
majority of the members of the Board prior to the date of the
appointment or election, or the acquisition during a 12-month
period ending on the date of the most recent acquisition by such
person or persons) of assets from the Company that have a total
gross fair market value equal to or more than 40 percent of
the total gross fair market value of all of the assets of the
Company, determined without regard to any liabilities associated
with those assets.
2.9
“Code” means the Internal Revenue Code of 1986 and the
rules and regulations promulgated thereunder, or any successor law,
as amended from time to time.
2.10
“Committee” means the Compensation Committee of
directors appointed by the Board (which may consist of a
subcommittee of directors), which shall consist of not less than
two members who shall be (i) “non-employee directors”
within the meaning of Rule 16b-3 and (ii) unless
otherwise determined by the Board, “outside directors”
within the meaning of Treasury Regulation Section
1.162-27(e)(3) under Section 162(m) of the Code.
2.11 “Common
Stock” or “Stock” means the Common Stock of the
Company, or such other security or right or instrument into which
such Common Stock may be changed or converted in the
future.
2.12
“Company” means Green Hunter Energy, Inc., including
all of its Subsidiaries, or any successor thereto.
2.13
“Covered Participant” means a Participant who is a
“covered employee” as defined in Code
Section 162(m)(3) and the regulations promulgated thereunder,
and generally understood to mean the chief executive officer of the
Company (or a person acting in such capacity) and the four most
highly compensated officers of the Company (other than the chief
executive officer) on the last day of the Company’s fiscal
year, as determined pursuant to the executive compensation
disclosure rules under the Exchange Act.
2.14
“Designated Beneficiary” means the beneficiary
designated by the Participant, pursuant to procedures established
by the Committee, to receive amounts due to the Participant in the
event of the Participant’s death. If the Participant does not
make an effective designation, then the Designated Beneficiary will
be deemed to be the Participant’s surviving spouse or , if
none, the Participant’s estate.
2.15
“Disability” means (i) inability to engage in any
substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to
result in death or can be expected to last for a continuous period
of not less than 12 months, or (ii) the receipt of income
replacement benefits for a period of not less than 3 months
under and accident and health plan covering employees of the
Company by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than
12 months. All decisions by the
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Committee
relating to a Participant’s Disability (including a decision
that a Participant is not disabled) shall be final and
binding on all parties.
2.16
“Employee” means an individual who is employed by the
Company or a Subsidiary in an employer-employee relationship as
determined under Section 3401(c) of the Code and the regulations
thereunder. Unless otherwise required by the Code, the status of an
employee shall not be terminated by the grant of an authorized
leave of absence or by service in the military forces of the United
States for a period of three (3) months or, if longer, during
such time as his re-employment rights are protected by statute or
contract, provided, in either instance, that such employee returns
to active service with the Company at the expiration of such
authorized leave or military service
2.17
“Exchange Act” means the Securities Exchange Act of
1934 and the rules and regulations promulgated thereunder, or any
successor law as amended from time to time.
2.18
“Executive Officer” means any employee considered by
the Company to be an Executive Officer.
2.19
“Exercise Price” or “Option Price” means
the amount that a Grantee must pay to exercise an Award made to him
or her with respect to a Share of Stock under the Plan.
2.20 “Fair
Market Value” means, on any given date, the closing price of
Stock as reported on the New York Stock Exchange composite tape on
such day or, if no Shares were traded on the New York Stock
Exchange on such day, then on the next preceding day that Stock was
traded on such exchange, all as reported by The Wall Street
Journal or such other source as the Committee may
select.
2.21
“Grantee,” “Optionee,” or
“Awardee” means a Person to whom an Award is made under
the Plan.
2.22
“Incentive Stock Option” or “ISO” means an
option to purchase Stock, granted under Section 6 herein,
which is designated as an incentive stock option and is intended to
meet the requirements of Code Section 422.
2.23 “Key
Employee” means an Employee who is an officer or other key
employee of the Company or its Subsidiaries as designated or
determined by the Committee.
2.24
“Nonstatutory Stock Option” or “NSO” means
an option to purchase Stock, granted under Article 6 herein,
which is not intended to qualify as, or constitute an Incentive
Stock Option.
2.25
“Option” means an Incentive Stock Option or a
Nonstatutory Stock Option.
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2.26 “Other
Stock Unit Award” means awards of Stock or other Awards that
are valued in whole or in part by reference to, or are otherwise
based on, the value of the Company’s Common Stock.
2.27
“Participant” means a Person who has been granted an
Award under the Plan.
2.28
“Performance Award” means a performance-based Award
made under Section 9 herein, which may be in the form of
either Performance Shares or Performance Units.
2.29
“Performance Criteria” means the objectives established
under Section 12 by the Committee for a Performance Period,
for the purpose of determining when an Award subject to such
objectives has been earned.
2.30
“Performance Period” means the time period designated
by the Committee during which performance goals must be met in
order for a Participant to obtain a performance-based
Award.
2.31
“Performance Share” means an Award, designated as a
Performance Share, granted to a Participant pursuant to
Section 9 herein, the value of which is determined, in whole
or in part, by the value of Company Stock in a manner deemed
appropriate by the Committee and described in the applicable
Agreement.
2.32
“Performance Unit” means an Award, designated as a
Performance Unit, granted to a Participant pursuant to
Section 9 herein, the value of which is determined, in whole
or in part, by the attainment of pre-established Performance
Criteria as deemed appropriate by the Committee and described in
the Agreement.
2.33 “Period
of Restriction” means the period during which the transfer of
Shares of Restricted Stock is restricted, pursuant to
Section 8 herein.
2.34
“Person” shall have the meaning ascribed to such term
in Section 3(a)(9) of the Exchange Act and used in Sections
13(d) and 14(d) thereof, including a “group” as defined
in Section 13(d).
2.35
“Plan” means the Green Hunter Energy, Inc. 2008
Long-Term Incentive Compensation Plan as herein established and as
hereafter amended from time to time.
2.36
“Restricted Stock” means an Award of Stock granted to a
Participant pursuant to Section 8 herein.
2.37
“Restricted Stock Unit” means a fixed or variable
dollar denominated right to acquire Stock or the value thereof,
which may or may not be subject to restrictions, contingently
awarded under Section 8 of the Plan.
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2.38
“Rule 16b-3” means Rule 16b-3 under Section
16(b) of the Exchange Act or any successor rule as amended from
time to time.
2.39
“Section 162(m)” means Section 162(m) of the Code,
or any successor section under the Code, as amended from time to
time and as interpreted by final or proposed regulations
promulgated thereunder from time to time.
2.40
“Securities Act” means the Securities Act of 1933 and
the rules and regulations promulgated thereunder, or any successor
law, as amended from time to time.
2.41
“Stock” or “Shares” means the Common Stock
of the Company.
2.42 “Stock
Appreciation Right” means the right of a Grantee, without
payment to the Company (except for applicable withholding taxes),
to receive the excess of the Fair Market Value per share of the
Common Stock on the date on which a Stock Appreciation Right is
exercised over the Exercise Price per share as provided in the
Award Agreement.
2.43 “Stock
Unit Award” means an award of Common Stock or units granted
under Section 11.
2.44
“Subsidiary” means a corporation in which the Company
owns, either directly or through one or more of its Subsidiaries,
at least 50% of the total combined voting power of all classes of
stock.
Section 3. Administration
3.1 The
Committee . The Plan shall be administered and interpreted by
the Committee which shall have full authority, discretion and power
necessary or desirable for such administration and interpretation.
The express grant in this Plan of any specific power to the
Committee shall not be construed as limiting any power or authority
of the Committee. In its sole and complete discretion the Committee
may adopt, alter, suspend and repeal any such administrative rules,
regulations, guidelines, and practices governing the operation of
the Plan as it shall from time to time deem advisable. In addition
to any other powers and, subject to the provisions of the Plan, the
Committee shall have the following specific powers: (i) to
determine the terms and conditions upon which Awards may be made
and exercised; (ii) to determine the Participants to which
Awards shall be made; (iii) to determine all terms and
provisions of each Award Agreement, which need not be identical for
types of Awards nor for the same type of Award to different
Participants; (iv) to construe and interpret all terms,
conditions and provisions of the Plan and all Agreements;
(v) to establish, amend, or waive rules or regulations for the
Plan’s administration; (vi) to accelerate the
exercisability of any Award (subject to any restrictions in the
Plan), the length of a Performance Period or the termination of any
Period of Restriction; and (vii) to make all other
determinations and take all other actions necessary or advisable
for the administration or interpretation of the Plan. The Committee
may seek the assistance or advice of any persons it deems necessary
to the proper administration of the Plan.
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3.2 Committee
Decisions . Unless strictly and expressly prohibited by law,
all determinations and decisions made by the Committee pursuant to
the provisions of this Plan shall be final, conclusive, and binding
upon all persons, including Participants, Designated Beneficiaries,
the Company, its shareholders and employees.
3.3
Rule 16b-3 and Section 162(m) Requirements .
Notwithstanding any other provision of the Plan, the Committee may
impose such conditions on any Award as it may deem to be advisable
or required to satisfy the requirements of Rule 16b-3 or
Section 162(m).
4.1
Selection . The Committee shall have sole and complete
discretion in determining those Persons who shall participate in
the Plan. Except as otherwise provided in the Plan, Participants
may be Key Employees of the Company or a Subsidiary, directors of
the Company or any Subsidiary, consultants or other independent
contractors or other providers of goods and services. The Committee
may request recommendations for individual awards from the
Company’s Chief Executive Officer and may delegate to the
Chief Executive Officer the authority to make Awards to
Participants who are not Executive Officers of the
Company.
4.2
Notification and Acceptance of Grant . After the Committee
approves the grant of an Award to a Participant, it shall promptly
so notify the Participant and make a copy of the Plan available to
the Participant. The Participant so notified must indicate his
acceptance of the Award by delivering to the Company an executed
Award Agreement and such other documents and instruments as the
Committee may require within 30 days after receipt of the
documentation to be executed or such longer time as specified by
the Committee. The Award otherwise granted shall automatically
lapse at the expiration of such period if the documents required by
the Committee have not been executed and returned.
Section 5. Shares Subject to the
Plan
5.1 Number of
Shares . Subject to adjustment as provided for in
Section 5.4 below, the maximum aggregate number of Shares that
may be issued pursuant to Awards made under the Plan shall not
exceed 2,000,000 Shares of the Company’s common stock, $.001
par value, which may be in any combination of Options, Restricted
Stock, Restricted Stock Units, Performance Shares, Bonus Shares, or
Other Stock Unit Award. Shares of Common Stock may be available
from the authorized but unissued Shares, Shares issued and
reacquired by the Company or Shares purchased in the open market
for purposes of the Plan. Except as provided in Sections 5.2
and 5.3 herein, the issuance of Shares in connection with the
exercise of, or as other payment for, Awards under the Plan shall
reduce the number of Shares available for future Awards under the
Plan.
5.2 Lapsed
Awards or Forfeited Shares . In the event that: (i) any
Option or other Award granted under the Plan terminates, expires,
or lapses for any reason without having been exercised in
accordance with its terms; (ii) Shares issued pursuant to the
Awards are canceled or
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forfeited for
any reason; or (iii) Awards are paid in cash, the Shares
subject to such Award shall thereafter be again available for grant
of an Award under the Plan.
5.3 Delivery of
Shares as Payment . In the event a Participant pays for any
Option or other Award granted under the Plan through the delivery
of previously acquired shares of Common Stock, the number of shares
of Common Stock available for Awards under the Plan shall be
decreased only by the difference between the number of Shares
issued upon the exercise of such Option or Award and the number of
shares surrendered by the Participant. Any increase in the number
of shares issuable under the Plan as a result of such payment shall
not apply to Incentive Stock Options.
5.4 Capital
Adjustments . The number and class of Shares subject to each
outstanding Award, the Option Price and the aggregate number, type
and class of Shares for which Awards thereafter may be made shall
be subject to adjustment, if any, as the Committee deems
appropriate, based on the occurrence of a number of specified and
non-specified events. Such specified events are discussed in this
Section 5.4, but such discussion is not intended to provide an
exhaustive list of such events which may necessitate
adjustments.
(a) If the
outstanding Shares are increased, decreased or exchanged through
merger, consolidation, sale of all or substantially all of the
property of the Company, reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split
or other distribution in respect to such Shares, for a different
number or type of Shares, or if additional Shares or new or
different Shares are distributed with respect to such Shares, an
appropriate and proportionate adjustment shall be made in:
(i) the maximum number of shares of Stock available for the
Plan as provided in Section 5.1 herein; (ii) the type of
shares or other securities available for the Plan; (iii) the
number of shares of Stock subject to any then outstanding Awards
under the Plan; and (iv) the price (including Exercise Price)
for each share of Stock (or other kind of shares or securities)
subject to then outstanding Awards, but without change in the
aggregate purchase price as to which such Options remain
exercisable or Restricted Stock releasable.
(b) In the event
other events not specified above in this Section 5.4, such as
any extraordinary cash dividend, split-up, reverse split, spin-off,
combination, exchange of shares, warrants or rights offering to
purchase Common Stock, or other similar corporate event, affect the
Common Stock such that an adjustment is necessary to maintain the
benefits or potential benefits intended to be provided under this
Plan, then the Committee in its discretion may make adjustments to
any or all of: (i) the number and type of shares which
thereafter may be optioned and sold or awarded or made subject to
Stock Appreciation Rights under the Plan; (ii) the grant,
exercise or conversion price of any Award made under the Plan
thereafter; and (iii) the number and price (including Exercise
Price) of each share of Stock (or other kind of shares or
securities) subject to the then outstanding Awards. Any increase in
the number of shares issuable under the Plan as a result of such
adjustments shall not apply to Incentive Stock Options.
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