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SONTERRA RESOURCES, INC. 2008 EQUITY COMPENSATION PLAN

Executive Compensation Plan Agreement

SONTERRA RESOURCES, INC. 2008 EQUITY COMPENSATION PLAN | Document Parties: VELOCITY ENERGY INC. | SONTERRA RESOURCES, INC You are currently viewing:
This Executive Compensation Plan Agreement involves

VELOCITY ENERGY INC. | SONTERRA RESOURCES, INC

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Title: SONTERRA RESOURCES, INC. 2008 EQUITY COMPENSATION PLAN
Governing Law: Delaware     Date: 5/8/2009
Industry: Conglomerates     Sector: Conglomerates

SONTERRA RESOURCES, INC. 2008 EQUITY COMPENSATION PLAN, Parties: velocity energy inc. , sonterra resources  inc
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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.

 

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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.

 

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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.

 

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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.

 

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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.

 

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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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