Form of Employee Stock Option Award Agreement

EX-10.2 3 exh102stockoption.htm EXHIBIT 10.2 - FORM OF EMPLOYEE STOCK OPTION AWARD AGREEMENT. Exhibit 10.2 - Form of Employee Stock Option Award Agreement.

Exhibit 10.2

INCENTIVE PLAN

CARRIZO OIL & GAS, INC.

NON-QUALIFIED STOCK OPTION AGREEMENT

THIS AGREEMENT (“Agreement”) is made as of the day of [month, year] (the “Grant Date”), by and between Carrizo Oil & Gas, Inc., a Texas corporation (the “Company”), and [employee name] (the “Grantee”).

The Company has adopted the Incentive Plan of Carrizo Oil & Gas, Inc. (the “Plan”), a copy of which is appended to this Agreement as Exhibit A and by this reference made a part hereof, for the benefit of eligible employees, directors and independent contractors of the Company and its Subsidiaries. Capitalized terms used and not otherwise defined herein shall have the meaning ascribed thereto in the Plan.

Pursuant to the Plan, the Committee, which has generally been assigned responsibility for administering the Plan, has determined that it would be in the interest of the Company and its stockholders to grant the options provided herein in order to provide Grantee with additional remuneration for services rendered, to encourage Grantee to remain in the employ of the Company or its Subsidiaries and to increase Grantee’s personal interest in the continued success and progress of the Company.

The Company and Grantee therefore agree as follows:

1. GRANT OF OPTION. Subject to the terms and conditions herein, the Company grants to the Grantee during the period commencing on date and expiring at 5 p.m. Houston, Texas time (“Close of Business”) on date (the “Option Term”), subject to earlier termination pursuant to paragraph 6 below, an option to purchase from the Company, at the price per share set forth on Schedule 1 hereto (the “Option Price”), the number of shares of Company Common Stock (“Common Stock”) set forth on said Schedule 1 (the “Option Shares”). The Option Price and Option Shares are subject to adjustment pursuant to paragraph 9 below. This option is a “Nonqualified Stock Option” and is hereinafter referred to as the “Option.”

2. CONDITIONS OF EXERCISE. The Option is exercisable only in accordance with the conditions stated in this paragraph.

(a) Except as otherwise provided in this subparagraph (a), the Option may only be exercised to the extent the Option Shares have become available for purchase in accordance with the following schedule

Date	Percentage of Option Shares Available for Purchase
First Anniversary of Grant Date	33 1/3%
Second Anniversary of Grant Date	33 1/3%
Third Anniversary of Grant Date	33 1/3%

Notwithstanding the foregoing, subject to the provisions of any applicable written employment agreement between the Grantee and the Company or any Subsidiary, no additional Option Shares shall become available for purchase if Grantee has not remained in the continuous employment of the Company and its Subsidiaries through the applicable date. A change of employment is continuous employment within the meaning of this paragraph 2 provided that, after giving effect to such change, the Grantee continues to be an employee of the Company or any Subsidiary.

(b) To the extent the Option becomes exercisable, such Option may be exercised in whole or in part (at any time or from time to time, except as otherwise provided herein) until expiration of the Option Term or earlier termination thereof.

(c) Notwithstanding the foregoing, upon a Change of Control while the Grantee remains in continuous employment, the Option may be exercised with respect to one-hundred percent (100%) of all Option Shares. Notwithstanding anything in this Agreement to the contrary, the aggregate present value of all parachute payments payable to or for the benefit of the Grantee under this Agreement shall be limited so that when combined with any other parachute payments made to the Grantee in connection with a change in control of the Company such amounts will not exceed three times the Grantee’s base amount less one dollar and, to the extent necessary, the acceleration of exercisability under this Agreement shall be reduced in order that this limitation not be exceeded. For purposes of this Section, the terms "parachute payment," "base amount" and "present value" shall have the meanings assigned thereto under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”). It is the intention of this Section to avoid excise taxes on the Grantee under Code Section 4999 or the disallowance of a deduction to the Company pursuant to Code Section 280G.

3. MANNER OF EXERCISE. The Option shall be considered exercised (as to the number of Option Shares specified in the notice referred to in subparagraph (a) below) on the latest of (i) the date of exercise designated in the written notice referred to in subparagraph (a) below, (ii) if the date so designated is not a business day, the first business day following such date or (iii) the earliest business day by which the Company has received all of the following:

(a) Written notice, in such form as the Committee may require, designating, among other things, the date of exercise and the number of Option Shares to be purchased;

(b) If the Option is to be exercised, payment of the Option Price for each Option Share to be purchased in cash, Common Stock or in such other form (or combination of forms) of payment contemplated by Section 11 of the Plan as the Committee or the provisions of Section 11 of the Plan may permit; provided, however, that any shares of Common Stock delivered in payment of the Option Price that are or were the subject of an Employee Award or Independent Contractor Award must be shares that the Grantee has owned for a period of at least six months prior to the date of exercise; and

4. MANDATORY WITHHOLDING FOR TAXES. Grantee acknowledges and agrees that the Company shall deduct from the cash and/or shares of Common Stock otherwise payable or deliverable upon exercise of the Option an amount of cash and/or number of shares of Common Stock (valued at their Fair Market Value on the date of exercise) that is equal to the amount of all federal, state and local taxes required to be withheld by the Company upon such exercise, as determined by the Committee.

5. DELIVERY BY THE COMPANY. As soon as practicable after receipt of all items referred to in paragraph 3, and subject to the withholding referred to in paragraph 4, the Company shall deliver to the Grantee certificates issued in Grantee’s name for the number of Option Shares purchased by exercise of the Option. If delivery is by mail, delivery of shares of Common Stock shall be deemed effected for all purposes when a stock transfer agent of the Company shall have deposited the certificates in the United States mail, addressed to the Grantee, and any cash payment shall be deemed effected when a Company check, payable to Grantee and in an amount equal to the amount of the cash payment, shall have been deposited in the United States mail, addressed to the Grantee.

6. TERMINATION OF EMPLOYMENT. Unless otherwise determined by the Committee in its sole discretion, the Option shall terminate, prior to the expiration of the Option Term, at the time specified below:

(a) If Grantee terminates employment with the Company and its Subsidiaries voluntarily without Good Reason (as defined below), then the Option shall terminate at the Close of Business on the first business day following the expiration of the 90 day period which began on the date of termination of Grantee’s employment; or

(b) If Grantee’s employment with the Company and its Subsidiaries is terminated by the Company or a Subsidiary for Cause (as defined below), then the Option shall terminate immediately upon termination of Grantee’s employment.

In any event in which the Option remains exercisable for a period of time following the date of termination of Grantee’s employment, the Option may be exercised during such period of time only to the extent it is or becomes exercisable as provided in paragraph 2. Notwithstanding any period of time referenced in this paragraph 6 or any other provision of this paragraph that may be construed to the contrary, the Option shall in any event terminate upon the expiration of the Option Term.

“Cause” for purposes of the Agreement shall mean cause as defined in any written employment agreement between the Grantee and the Company or a Subsidiary in effect at the time of the Grantee’s termination of employment or, in the absence of any such employment agreement, any of the following: (a) conviction of the Grantee by a court of competent jurisdiction of any felony or a crime involving moral turpitude; (b) the Grantee’s knowing failure or refusal to follow reasonable instructions of the Board or reasonable policies, standards and regulations of the Company or its Subsidiaries; (c) the Grantee’s continued failure or refusal to faithfully and diligently perform the usual, customary duties of his employment with the Company or a Subsidiary; (d) the Grantee continuously conducting himself in an unprofessional, unethical, immoral or fraudulent manner; or (e) the Grantee’s conduct discredits the Company or a Subsidiary or is detrimental to the reputation, character and standing of the Company or a Subsidiary.

“Good Reason” for purposes of the Agreement shall mean good reason as defined in any written employment agreement between the Grantee and the Company or a Subsidiary in effect at the time of the Grantee’s termination of employment or, in the absence of any such employment agreement, shall be deemed to have occurred upon the happening of any of the following:

(i) any reduction in Grantee’s annual rate of salary;

(ii) either (x) a failure of the Company to continue in effect any employee benefit plan in which Grantee was participating or (y) the taking of any action by the Company that would adversely affect Grantee’s participation in, or materially reduce Grantee’s benefits under, any such employee benefit plan, unless such failure or such taking of any action adversely affects the senior members of the corporate management of the Company generally;

(iii) the assignment to Grantee of duties and responsibilities that are materially more oppressive or onerous than those attendant to Grantee’s position immediately after the date hereof;

(iv) the relocation of the office location as assigned to Grantee by the Company to a location more than 20 miles from Grantee’s current location without Grantee’s consent; or

(v) the failure of the Company to obtain, prior to the time of any reorganization, merger, consolidation, disposition of all or substantially all of the assets of the Company or similar transaction effective after the date hereof, in which the Company is not the surviving person, the unconditional assumption in writing or by operation of law of the Company’s obligations to Grantee under this Agreement by each direct successor to the Company in any such transaction.

7. NONTRANSFERABILITY OF OPTION. During Grantee’s lifetime, the Option is not transferable (voluntarily or involuntarily) other than pursuant to a domestic relations order and, except as otherwise required pursuant to a domestic relations order, is exercisable only by the Grantee or Grantee’s court appointed legal representative. The Grantee may designate a

beneficiary or beneficiaries to whom the Option shall pass upon Grantee’s death and may change such designation from time to time by filing a written designation of beneficiary or beneficiaries with the Committee on the form annexed hereto as Exhibit B or such other form as may be prescribed by the Committee, provided that no such designation shall be effective unless so filed prior to the death of Grantee. If no such designation is made or if the designated beneficiary does not survive the Grantee’s death, the Option shall pass by will or the laws of descent and distribution. Following Grantee’s death, the Option, if otherwise exercisable, may be exercised by the person to whom such option passes according to the foregoing and such person shall be deemed the Grantee for purposes of any applicable provisions of this Agreement.

8. NO STOCKHOLDER RIGHTS. The Grantee shall not be deemed for any purpose to be, or to have any of the rights of, a stockholder of the Company with respect to any shares of Common Stock as to which this Agreement relates until such shares shall have been issued to Grantee by the Company. Furthermore, the existence of this Agreement shall not affect in any way the right or power of the Company or its stockholders to accomplish any corporate act, including, without limitation, the acts referred to in Section 15 of the Plan.

9. ADJUSTMENTS. As provided in Section 15 of the Plan, certain adjustments may be made to the Option upon the occurrence of events or circumstances described in Section 15 of the Plan.

10. RESTRICTIONS IMPOSED BY LAW. Without limiting the generality of Section 16 of the Plan, the Grantee agrees that Grantee will not exercise the Option and that the Company will not be obligated to deliver any shares of Common Stock, if counsel to the Company determines that such exercise, or delivery would violate any applicable law or any rule or regulation of any governmental authority or any rule or regulation of, or agreement of the Company with, any securities exchange or association upon which the Common Stock is listed or quoted. The Company shall in no event be obligated to take any affirmative action in order to cause the exercise of the Option or the resulting delivery of shares of Common Stock to comply with any such law, rule, regulation or agreement.

11. NOTICE. Unless the Company notifies the Grantee in writing of a different procedure, any notice or other communication to the Company with respect to this Agreement shall be in writing and shall be (a) delivered personally to the following address:

Carrizo Oil & Gas, Inc.

1000 Louisiana St.,

Suite 1500

Houston, Texas 77002

or (b) sent by first class mail, postage prepaid and addressed as follows:

Carrizo Oil & Gas, Inc.

1000 Louisiana St.,

Suite 1500

Houston, Texas 77002

Attention: Payroll/Benefits Manager

Any notice or other communication to the Grantee with respect to this Agreement shall be in writing and shall be delivered personally, or shall be sent by first class mail, postage prepaid, to Grantee’s address as listed in the records of the Company on the Grant Date, unless the Company has received written notification from the Grantee of a change of address.

12. AMENDMENT. Notwithstanding any other provisions hereof, this Agreement may be supplemented or amended from time to time as approved by the Committee as contemplated by Section 6 of the Plan. Without limiting the generality of the foregoing, without the consent of the Grantee,

(a) this Agreement may be amended or supplemented (i) to cure any ambiguity or to correct or supplement any provision herein which may be defective or inconsistent with any other provision herein, or (ii) to add to the covenants and agreements of the Company for the benefit of Grantee or surrender any right or power reserved to or conferred upon the Company in this Agreement, subject, however, to any required approval of the Company’s stockholders and, provided, in each case, that such changes or corrections shall not adversely affect the rights of Grantee with respect to the Award evidenced hereby without the Grantee’s consent, or (iii) to make such other changes as the Company, upon advice of counsel, determines are necessary or advisable because of the adoption or promulgation of, or change in or of the interpretation of, any law or governmental rule or regulation, including any applicable federal or state securities laws; and

(b) subject to Section 6 of the Plan and any required approval of the Company’s stockholders, the Award evidenced by this Agreement may be canceled by the Committee and a new Award made in substitution therefor, provided that the Award so substituted shall satisfy all of the requirements of the Plan as of the date such new Award is made and no such action shall adversely affect the Option to the extent then exercisable without the Grantee’s consent.

13. GRANTEE EMPLOYMENT. Nothing contained in this Agreement, and no action of the Company or the Committee with respect hereto, shall confer or be construed to confer on the Grantee any right to continue in the employ of Company or any of its Subsidiaries or interfere in any way with the right Company or any employing Subsidiary to terminate the Grantee’s employment time, with or without cause; subject, however, to the provisions of any employment agreement between the Grantee and the Company or any Subsidiary.

14. GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of Texas.

15. CONSTRUCTION. References in this Agreement to “this Agreement” and the words “herein,” “hereof,” “hereunder” and similar terms include all Exhibits and Schedules appended hereto, including the Plan. This Agreement is entered into, and the Award evidenced hereby is granted, pursuant to the Plan and shall be governed by and construed in accordance with the Plan and the administrative interpretations adopted by the Committee thereunder. All decisions of the Committee upon questions regarding the Plan or this Agreement shall be conclusive. Unless otherwise expressly stated herein, in the event of any inconsistency between

the terms of the Plan and this Agreement, the terms of the Plan shall control. The headings of the paragraphs of this Agreement have been included for convenience of reference only, are not to be considered a part hereof and shall in no way modify or restrict any of the terms or provisions hereof.

16. DUPLICATE ORIGINALS. The Company and the Grantee may sign any number of copies of this Agreement. Each signed copy shall be an original, but all of them together represent the same agreement.

17. RULES BY COMMITTEE. The rights of the Grantee and obligations of the Company hereunder shall be subject to such reasonable rules and regulations as the Committee may adopt from time to time hereafter.

18. ENTIRE AGREEMENT. Subject to the provisions of any applicable written employment agreement between the Grantee and the Company or any Subsidiary, Grantee and the Company hereby declare and represent that no promise or agreement not herein expressed has been made and that this Agreement contains the entire agreement between the parties hereto with respect to the Option and replaces and makes null and void any prior agreements, oral or written, between Grantee and the Company regarding the Option.

19. GRANTEE ACCEPTANCE. Grantee shall signify acceptance of the terms and conditions of this Agreement by signing in the space provided at the end hereof and returning a signed copy to the Company.

ATTEST:		Carrizo Oil & Gas, Inc.


		By:
Secretary Date		Name: S. P. Johnson Date
		Title: President


		ACCEPTED:



		[Grantee] Date

Schedule 1 to Non-Qualified Stock Option Agreement dated as of date

INCENTIVE PLAN

CARRIZO OIL & GAS, INC.

Grantee:	[Employee Name]
Grant Date:	[Date]
Option Price:	[$_____] per share
Option Shares:	[______] shares of Common Stock, par value $ 0.01 per share.

Exhibit B to Non-Qualified Stock Option Agreement dated as of [date]

INCENTIVE PLAN

CARRIZO OIL & GAS, INC.

DESIGNATION OF BENEFICIARY

I, ________________________________ (the “Grantee”), hereby declare that upon my death _______________________________ (the “Beneficiary”) of ______________________________________________________________________________ who is my ____________________________, shall be entitled to the Option and all other rights accorded the Grantee by the above-referenced agreement (the “Agreement”).

It is understood that this Designation of Beneficiary is made pursuant to the Agreement and is subject to the conditions stated herein, including the Beneficiary’s survival of the Grantee’s death. If any such condition is not satisfied, such rights shall devolve according to the Grantee’s will or the laws of descent and distribution.

It is further understood that all prior designations of beneficiary under the Agreement are hereby revoked and that this Designation of Beneficiary may only be revoked in writing, signed by the Grantee, and filed with the Company prior to the Grantee’s death.


Date		Grantee