Exhibit 10.29
SONTERRA RESOURCES, INC.
2008 EQUITY COMPENSATION PLAN
ARTICLE I.
PURPOSE, ADOPTION AND TERM OF THE
PLAN
1.01
Purpose . The purpose of the Sonterra Resources,
Inc. 2008 Equity Compensation Plan (hereinafter referred to as the
“Plan”) is to advance the interests of the Company as
hereinafter defined) and its Subsidiaries as hereinafter defined)
by encouraging and providing for the acquisition of an equity
interest in the Company by non-employee directors, officers, key
employees, and other persons that provide consulting services to us
or to our subsidiaries through grants and awards of
Equity Compensation (as hereinafter defined). The Plan
will enable the Company to retain the services of non-employee
directors, officers, key employees, and other persons
that provide consulting services to us or to our subsidiaries and
upon whose judgment, interest, and special effort the successful
conduct of our operations is largely dependent and to compete
effectively with other enterprises for the services of such
non-employee directors, officers, key employees, and other persons
that provide consulting services to us or to our subsidiaries as
may be needed for the continued improvement of its business. All
Grants and Awards of Equity Compensation made under the Plan shall
be based upon attainment of specified Performance Objectives as set
forth in Section 5.02 and may qualify as performance-based
compensation under Section 162(m) of the Code.
1.02
Adoption and Term . The Plan shall become
effective on March 31, 2009, and no Equity Compensation shall be
awarded after the tenth anniversary of the Plan. The term of each
Grant or Award of Equity Compensation shall terminate ten (10)
years from the date of such Grant or Award, or such earlier date as
shall be determined in the Option Agreement (as hereinafter
defined) approved by the Board ( as hereinafter
defined).
ARTICLE II.
DEFINITIONS
For purposes of the Plan, capitalized terms
shall have the meanings prescribed therefore in the body of the
Plan or, if not prescribed herein, shall have the following
meanings:
2.01 “Applicable
Law” means any federal, state, or local laws, rules, and
regulations that apply to the person or subject matter under the
relevant circumstances.
2.02 “Award”
means an award of Performance Stock Options.
2.03 “Beneficiaries”
means an individual, trust or estate that, by will or the laws of
descent and distribution, succeeds to the rights and obligations of
the Participant under the Plan and a Option Agreement upon the
Participant's death.
2.04 “Board”
means the Board of Directors of the Company.
2.05 “Code”
means the Internal Revenue Code of 1986, as amended from time to
time, or any successor thereto. References to a section of the Code
shall include that section and any comparable section or sections
of any future legislation that amends, supplements, or supersedes
said section.
2.06 “Committee”
means a committee of the Board as may be appointed, from time to
time, by the Board to administer the Plan.
(a) The
Board may appoint more than one Committee to administer the
Plan. If it appoints more than one Committee, one
Committee (the “Compensation Committee”) shall have the
authority to grant Options to a Participant who is either, at the
Date of Grant of the Option, a “covered employee” as
defined in Section 162(m) or who is subject to Section 16 of the
Exchange Act; however, such Committee shall also have the authority
to grant Options to other Participants. The Compensation Committee
shall be composed of at least two directors of the Company, each of
whom is a “non-employee director” as defined in Rule
16b-3 and an “outside director” within the meaning of
Section 162(m). If, however, at least two of the Company's
directors are not both “non-employee directors” and
“outside directors,” the Board may grant Options to a
Participant who is either a “covered employee” or
subject to Section 16 of the Exchange Act, in which case the Board
may also administer the Plan and the term “Committee”
as used herein shall also include the Board. The other Committee
(the “Select Committee”) shall be composed of at least
one director, who may be an officer of the Company. The Select
Committee shall have authority to grant Options to a Participant
who is not, at the Date of Grant, either a “covered
employee” as defined in Section 162(m) or subject to Section
16 of the Exchange Act. Awards may only be made to “covered
employees” by joint action of the Compensation Committee and
the Select Committee.
(b) The
Board may, from time to time, appoint members of each Committee in
substitution for those members who were previously appointed and
may fill vacancies, however caused, in the Committee.
(c) The
Compensation Committee and the Select Committee shall each have the
power and authority to administer the Plan in accordance with
Article III with respect to particular classes of Participants as
specified in Section 2.04(a)) and, when used herein, the term
“Committee” shall mean either the Compensation
Committee or the Select Committee if the Board appoints more than
one Committee to administer the Plan. If, however, there is a
conflict between the determinations made by the Compensation
Committee and the Select Committee, the determinations made by the
Compensation Committee shall control.
2.07 “Common
Stock” means the Common Stock, par value $.001 per share, of
the Company.
2.08 “Company”
means Sonterra Resources, Inc. (fka River Capital Group, Inc.), a
corporation organized under the laws of the State of Delaware, and
its successors.
2.09 “Date
of Grant” means the date designated by the Committee as the
date as of which it makes an Option Grant, which shall not be
earlier than the date on which the Committee approves the granting
of such Grant or Award.
2.10 “Disability”
has the meaning specified in Section 22(e) (3) of the
Code.
2.11 “Disability
Date” means the date, as determined by the Committee, as of
which an Employee Participant has a Disability.
2.12 “Employee
Participant” means a Participant who is not a Non-Employee
Director.
2.13 “Equity
Compensation” means Performance Option Grants.
2.14 “ERISA”
means the Employee Retirement Income Security Act of 1974, as
amended.
2.15 “Exchange
Act” means the Securities Exchange Act of 1934, as
amended.
2.16 “Fair
Market Value” of a share of Common Stock means, as of any
given date, the closing sales price of a share of Common Stock on
such date on the principal national securities exchange on which
the Common Stock is then traded or, if the Common Stock is not then
traded on a national securities exchange, the closing sales price
or, if none, the average of the bid and asked prices of the Common
Stock on such date as reported on the Over-The-Counter Bulletin
Board (the “OTCBB”); provided, however, that, if there
were no sales reported as of such date, Fair Market Value shall be
computed as of the last date preceding such date on which a sale
was reported; provided, further, that, if any such exchange or
quotation system is closed on any day on which Fair Market Value is
to be determined, Fair Market Value shall be determined as of the
first date immediately preceding such date on which such exchange
or quotation system was open for trading. If the Common Stock is
not admitted to trade on a securities exchange or quoted on OTCBB,
the Fair Market Value of a share of Common Stock as of any given
date shall be as determined in good faith by the Committee, in its
sole and absolute discretion, which determination may be based on,
among other things, the opinion of one or more independent
and
reputable
appraisers qualified to value companies in the Company's line of
business. Notwithstanding the foregoing, the Fair Market
Value of a share of Common Stock shall never be less than par value
per share.
2.17 “Grant”
means the grant of Options to a Participant under the Plan as set
forth in an Option Agreement.
2.18 “Initial
Option Price” means the option price of $1.04 per share of
Common Stock. Notwithstanding the foregoing, the option price per
share of common stock shall never be less than the Fair Market
Value on the date of the Option Grant.
2.19 “Non-Employee
Director” means each member of the Board or of the Board of
Directors of a Subsidiary, in each case who is not an employee of
the Company or of any of its Subsidiaries.
2.20 “Option
Agreement” means a written agreement between the Company and
a Participant specifically setting forth the terms and conditions
of Options granted to a Participant under the Plan.
2.21 “Option
Grant” means the grant of Options to a Participant under the
Plan as set forth in an Option Agreement.
2.22 “Option”
means any option to purchase Common Stock granted under the Plan to
an Employee Participant or to a Non-Employee Director. All Options
granted under the Plan shall be performance-based Options that do
not qualify as incentive stock options under Section 422 of the
Code.
2.23 “Participant”
means any employee, Non-Employee Director, or other person that
provides consulting services to us or to our subsidiaries of the
Company or any of its Subsidiaries selected by the Committee to
receive an Option Grant under the Plan in accordance with Articles
V and/or VI.
2.24 “Plan”
means the Sonterra Resources, Inc. 2008 Equity Compensation Plan as
set forth herein, and as the same may be amended from time to
time.
2.25 “Option
Agreement” means an Option Agreement.
2.26 “Rule
16b-3” means Rule 16b-3 promulgated by the SEC under Section
16 of the Exchange Act and any successor rule.
2.27 “SEC”
means the Securities and Exchange Commission.
2.28 “Section
162(m)” means Section 162(m) of the Code and the regulations
thereunder.
2.29 “Section
409A” means Section 409A of the Code and the regulations
thereunder.
2.30 “Securities
Act” means the Securities Act of 1933, as amended.
2.31 “Securities
Exchange Agreement” means the Securities Exchange and
Additional Note Purchase Agreement dated August 3, 2007, entered
into by and between the Company and The Longview Fund, L.P., as may
be amended from time to time hereafter and/or the Securities
Exchange Agreement dated November 10, 2008, entered into by and
between the Company and Longview Marquis Master Fund, L.P., as the
context indicates.
2.32 “Subsidiary”
means a company more than 50% of the equity interests of which are
beneficially owned, directly or indirectly, by the
Company.
2.33 “Termination
of Employment” means, with respect to an Employee
Participant, the voluntary or involuntary termination of a
Participant's employment with the Company or any of its
Subsidiaries for any reason, including, without limitation, death,
Disability, retirement or as the result of the sale or other
divestiture of the Participant's employer or any similar
transaction in which the Participant's employer ceases to be the
Company or one of its Subsidiaries. Whether entering military or
other government service shall constitute Termination of
Employment, and whether a Termination of Employment is a result of
Disability, shall be determined in each case by the Committee in
its sole and absolute discretion, subject to ERISA and other
Applicable Law.
ARTICLE III.
ADMINISTRATION
3.01
Committee . The Plan shall be administered by the
Committee, which shall have exclusive and final authority in each
determination, interpretation, or other action affecting the Plan
and its Participants. The Committee shall have the sole and
absolute discretion to interpret the Plan, to establish and modify
administrative rules for the Plan, to select the Non-Employee
Directors, officers, key employees, and other persons that provide
consulting services to us or to our subsidiaries to whom Options
may be granted, to determine the terms and provisions
of Option Grants and Option Agreements (which need not
be identical), to determine all claims for benefits under the Plan,
to impose such conditions and restrictions on Equity Compensation
as it determines appropriate, to determine whether the shares
delivered on the exercise of Options will be treasury shares or
will be authorized but previously unissued shares, and to take such
steps in connection with the Plan and Equity Compensation granted
hereunder as it may deem necessary or advisable. No action of the
Committee will be effective if it contravenes or amends the Plan in
any respect.
3.02
Actions of the Committee . Except when the
“Committee” is the “Board” in the
circumstance described in the fourth sentence of Section 2.04(a),
all determinations of the Committee shall be made by a majority
vote of its members. A majority of a Committee's members shall
constitute a quorum. Any decision or determination reduced to
writing and signed
by all of the
members shall be fury as effective as if it had been made by a
majority vote at a meeting duly called and held. The Committee
shall also have express authorization to hold Committee meetings by
conference telephone, or similar communication equipment by means
of which all persons participating in the meeting can hear each
other.
ARTICLE IV.
SHARES OF COMMON
STOCK
4.01
Options on Shares of Common Stock Issuable
. Subject to adjustments as provided in Section 9.05,
the maximum number of options available for Grants under the Plan
shall be three million (3,000,000). Employee
Participants, Non-Employee Directors, and other persons that
provide consulting services to us or to our subsidiaries are
eligible for Option Grants under the Plan. The Common Stock to be
offered under the Plan shall be authorized and unissued Common
Stock or issued Common Stock that shall have been reacquired by the
Company and held in its treasury.
4.02
Number of Shares of Common Stock Awarded to any Participant
. In the event the purchase price of an Option is paid,
or related tax or withholding payments are satisfied, in whole or
in part through the delivery of shares of Common Stock issuable in
connection with the exercise of the Option, a Participant will be
deemed to have received an Option with respect to those shares of
Common Stock.
4.03
Shares of Common Stock Subject to Terminated Options
. The Common Stock covered by any unexercised portions
of terminated Options may again be subject to new Options under the
Plan.
ARTICLE V.
PARTICIPATION
5.01
Eligible Participants . Employee Participants
shall be such officers and other key employees of the Company or
its Subsidiaries, whether or not directors of the Company, as the
Committee, in its sole and absolute discretion, may designate from
time to time. Non-Employee Director Participants shall be such
Non-Employee Directors as the Committee, in its sole and absolute
discretion, may designate from time to time. Consulting
Participants shall be such persons who render consulting services
to the Company or its subsidiaries as the Committee, in its sole
and absolute discretion, may designate from time to
time. In making such designations, the Committee may
take into account the nature of the services rendered by the
officers, key employees and Non-Employee Directors, their present
and potential contributions to the success of the Company and its
Subsidiaries, and such other factors as the Committee, in its sole
and absolute discretion, may deem relevant. The Committee's
designation of a Participant in any year shall not require the
Committee to designate such person to receive Equity Compensation
in any other year. The Committee shall consider such factors as it
deems pertinent in selecting Participants and in determining the
amounts of their respective Option Grants. A Participant may hold
more than one Option Grant awarded under the Plan. Subject to
adjustments as provided in Section 9.05, during the term of the
Plan, no Employee Participant may receive Options to purchase more
than 400,000 shares of Common Stock under the Plan in any given
year, and the total number of Options awarded to all Employee
Participants shall not exceed 1,300,000 in any given
year.
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5.01
Performance Objectives Necessary for Options to Vest
. Vesting of Options granted to all Participants in a
given year shall be based upon the achievement of each performance
objective set forth in the following table (“Performance
Objective”):
|
Percentage
of Options That Vest Each Year for Shares Earned Under
the Option Agreement*
|
|
Compounded Annual Net
Reserve Growth Performance Objective**
|
|
Maximum Number of
Options that Vest Each Year Based on Achievement
of Reserve Growth Performance Objective
|
|
Maximum Number of
Options That Vest Each Year Based on Achievement of 75% of Reserve
Growth Performance Objective
|
|
Maximum Number of
Options That Vest Each Year Based on
Achievement of 50% of Reserve Growth
Performance Objective
|
|
Maximum Number of
Options That Vest Each Year Based on Achieveme
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