Exhibit 10.8

 

SANDRIDGE ENERGY, INC.

 

 

2016 OMNIBUS INCENTIVE PLAN

 

 

ARTICLE I

PURPOSE

The purpose of this SandRidge Energy, Inc. 2016 Omnibus Incentive Plan is to
enhance the profitability and value of the Company for the benefit of its
stockholders by enabling the Company to offer Eligible Individuals cash and
stock-based incentives in order to attract, retain and reward such individuals
and strengthen the mutuality of interests between such individuals and the
Company’s stockholders. The Plan is effective as of the date set forth in
Article XIV.

ARTICLE II

DEFINITIONS

For purposes of the Plan, the following terms shall have the following meanings:

2.1    “Affiliate” means each of the following: (a) any Subsidiary; (b) any
Parent; (c) any corporation, trade or business (including, without limitation, a
partnership or limited liability company) that is directly or indirectly
controlled 50% or more (whether by ownership of stock, assets or an equivalent
ownership interest or voting interest) by the Company or one of its Affiliates;
(d) any trade or business (including, without limitation, a partnership or
limited liability company) that directly or indirectly controls 50% or more
(whether by ownership of stock, assets or an equivalent ownership interest or
voting interest) of the Company; and (e) any other entity in which the Company
or any of its Affiliates has a material equity interest and which is designated
as an “Affiliate” by resolution of the Committee; provided that, unless
otherwise determined by the Committee, the Common Stock subject to any Option
constitutes “service recipient stock” for purposes of Section 409A of the Code
or otherwise does not subject the Option to Section 409A of the Code.

2.2    “Award” means any award under the Plan of any Stock Option, Restricted
Stock Award, Performance Award, Other Stock-Based Award or Other Cash-Based
Award. All Awards shall be granted by, confirmed by, and subject to the terms
of, an Award Agreement issued by the Company.

2.3    “Award Agreement” means the written or electronic agreement setting forth
the terms and conditions applicable to an Award.

2.4    “Board” means the Board of Directors of the Company.

2.5    “Cause” means, unless otherwise determined by the Committee in the
applicable Award Agreement, with respect to a Participant’s Termination of
Employment or Termination of Consultancy, the following: (a) in the case where
there is no employment agreement, consulting

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agreement, change in control agreement or similar agreement in effect between
the Company or an Affiliate and the Participant at the time of the grant of the
Award (or where there is such an agreement but it does not define “cause” (or
words of like import)), termination due to a Participant’s: (i) willful and
continued failure to perform Participant’s duties with the Company; (ii) willful
and continued failure to follow and comply with the written policies of the
Company as in effect from time to time; (iii) willful commission of an act of
fraud or dishonesty resulting in economic or financial injury to the Company;
(iv) willful engagement in illegal conduct or gross misconduct; (v) willful
breach of any agreement with the Company or an Affiliate; or (vi) indictment
for, conviction of, or a plea of guilty or nolo contendere to any felony or
other crime involving moral turpitude. No act or failure to act will be treated
as willful if it is done, or omitted to be done, by the Participant in good
faith and with a good faith belief that such act or omission was in the best
interests of the Company; or (b) in the case where there is an employment
agreement, consulting agreement, change in control agreement or similar
agreement in effect between the Company or an Affiliate and the Participant at
the time of the grant of the Award that defines “cause” (or words of like
import), “cause” as defined under such agreement; provided, however, that with
regard to any agreement under which the definition of “cause” only applies on
occurrence of a change in control, such definition of “cause” shall not apply
until a change in control actually takes place and then only with regard to a
termination thereafter. With respect to a Participant’s Termination of
Directorship, “cause” means an act or failure to act that constitutes cause for
removal of a director under applicable Delaware law.

2.6    “Change in Control” has the meaning set forth in Section 10.2.

2.7    “Change in Control Price” has the meaning set forth in Section 10.1.

2.8    “Code” means the Internal Revenue Code of 1986, as amended. Any reference
to any section of the Code shall also be a reference to any successor provision
and any Treasury Regulation and other official guidance and regulations
promulgated thereunder.

2.9    “Committee” means any committee of the Board duly authorized by the Board
to administer the Plan. If no committee is duly authorized by the Board to
administer the Plan, the term “Committee” shall be deemed to refer to the Board
for all purposes under the Plan.

2.10    “Common Stock” means the common stock, $0.01 par value per share, of the
Company.

2.11    “Company” means SandRidge Energy, Inc., a Delaware corporation, and its
successors by operation of law.

2.12    “Consultant” means any natural person who is an advisor or consultant to
the Company or its Affiliates.

2.13    “Disability” means, unless otherwise determined by the Committee in the
applicable Award Agreement, with respect to a Participant’s Termination, a
permanent and total disability as defined in Section 22(e)(3) of the Code. The
Committee shall determine when a Disability has occurred. Notwithstanding the
foregoing, for Awards that are subject to Section 409A of the Code, Disability
shall mean that a Participant is disabled under Section 409A(a)(2)(C)(i) or (ii)
of the Code.

 

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2.14    “Effective Date” means the effective date of the Plan as defined in
Article XIV.

2.15    “Eligible Employees” means each employee of the Company or an Affiliate.

2.16    “Eligible Individual” means an Eligible Employee, Non-Employee Director
or Consultant who is designated by the Committee in its discretion as eligible
to receive Awards subject to the conditions set forth herein.

2.17    “Exchange Act” means the Securities Exchange Act of 1934, as
amended. Reference to a specific section of the Exchange Act or regulation
thereunder shall include such section or regulation, any valid regulation or
interpretation promulgated under such section, and any comparable provision of
any future legislation or regulation amending, supplementing or superseding such
section or regulation.

2.18    “Fair Market Value” means, for purposes of the Plan, unless otherwise
provided in an Award Agreement or as required by any applicable provision of the
Code or any regulations issued thereunder, as of any date and except as provided
below: (a) if the Common Stock is traded, listed or otherwise reported or quoted
on a national securities exchange, the last sales price reported for the Common
Stock on the applicable date on the principal national securities exchange in
the United States on which it is then traded, listed or otherwise reported or
quoted; or (b) if the Common Stock is not traded, listed or otherwise reported
or quoted on a national securities exchange, the Committee shall determine in
good faith the Fair Market Value in whatever manner it considers appropriate,
taking into account the requirements of Section 409A of the Code and any other
applicable laws, rules or regulations. For purposes of the grant of any Award,
the applicable date shall be the trading day immediately prior to the date on
which the Award is granted. For purposes of the exercise of any Award, the
applicable date shall be the date a notice of exercise is received by the
Committee or, if not a day on which the applicable market is open, the next day
that it is open.

2.19    “Family Member” means “family member” as defined in Section A.1.(a)(5)
of the general instructions of Form S-8 of the United States Securities and
Exchange Commission.

2.20    “Good Reason” means, unless otherwise determined by the Committee in the
applicable Award Agreement, the following: (a) in the case where there is no
employment agreement, consulting agreement, change in control agreement or
similar agreement in effect between the Company or an Affiliate and the
Participant at the time of the grant of the Award (or where there is such an
agreement but it does not define “good reason” (or words of like import)), the
occurrence, without the Participant’s consent, of either of the following
events: (i) any material diminution of the Participant’s title, duties,
responsibilities or authorities; or (ii) any breach by the Company or the
employing Affiliate, as applicable, of any of its material obligations to the
Participant. Prior to resigning for Good Reason, the Participant shall give
written notice to the Company or the employing Affiliate, as applicable, of the
facts and circumstances claimed to provide a basis for such resignation not more
than sixty (60) days following the Participant’s knowledge of such facts and
circumstances, and the Company or the employing Affiliate, as applicable, shall
have ten (10) business days after receipt of such notice to cure (and if so
cured, the Participant shall not be permitted to resign for Good Reason in
respect thereof) and the Participant shall resign within ten (10) business days
following the Company’s or the employing

 

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Affiliate’s, as applicable, failure to cure; or (b) in the case where there is
an employment agreement, consulting agreement, change in control agreement or
similar agreement in effect between the Company or an Affiliate and the
Participant at the time of the grant of the Award that defines “good reason” (or
words of like import), “good reason” as defined under such agreement; provided,
however, that with regard to any agreement under which the definition of “good
reason” only applies on occurrence of a change in control, such definition of
“good reason” shall not apply until a change in control actually takes place and
then only with regard to a termination thereafter.

2.21    “Incentive Stock Option” means any Stock Option awarded to an Eligible
Employee of the Company, its Subsidiaries and its Parents (if any) under the
Plan intended to be and designated as an “Incentive Stock Option” within the
meaning of Section 422 of the Code.

2.22    “Lead Underwriter” has the meaning set forth in Section 13.19.

2.23    “Lock-Up Period” has the meaning set forth in Section 13.19.

2.24    “Non-Employee Director” means a director or a member of the Board of the
Company or any Affiliate who is not a then current employee of the Company or
any Affiliate.

2.25    “Non-Qualified Stock Option” means any Stock Option awarded under the
Plan that is not an Incentive Stock Option.

2.26    “Other Cash-Based Award” means an Award granted pursuant to Section 9.3
of the Plan and payable in cash at such time or times and subject to such terms
and conditions as determined by the Committee in its sole discretion.

2.27    “Other Stock-Based Award” means an Award under Article IX of the Plan
that is valued in whole or in part by reference to, or is payable in or
otherwise based on, Common Stock, including, without limitation, an Award valued
by reference to an Affiliate.

2.28    “Parent” means any parent corporation of the Company within the meaning
of Section 424(e) of the Code.

2.29    “Participant” means an Eligible Individual to whom an Award has been
granted pursuant to the Plan.

2.30    “Performance Award” means an Award granted to a Participant pursuant to
Article VIII hereof contingent upon achieving certain Performance Goals.

2.31    “Performance Goals” means goals established by the Committee as
contingencies for Awards to vest and/or become exercisable or distributable
based on one or more of the performance goals set forth in Exhibit A hereto.

2.32    “Performance Period” means the designated period during which the
Performance Goals must be satisfied with respect to the Award to which the
Performance Goals relate.

 

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2.33    “Plan” means this SandRidge Energy, Inc. 2016 Omnibus Incentive Plan, as
amended from time to time.

2.34    “Proceeding” has the meaning set forth in Section 13.8.

2.35    “Reorganization” has the meaning set forth in Section 4.2(b)(ii).

2.36    “Restricted Stock” means an Award of shares of Common Stock under the
Plan that is subject to restrictions under Article VII.

2.37    “Restriction Period” has the meaning set forth in Section 7.3(a) with
respect to Restricted Stock.

2.38    “Rule 16b-3” means Rule 16b-3 under Section 16(b) of the Exchange Act as
then in effect or any successor provision.

2.39    “Section 162(m) of the Code” means the exception for performance-based
compensation under Section 162(m) of the Code and any applicable Treasury
Regulations thereunder.

2.40    “Section 409A of the Code” means the nonqualified deferred compensation
rules under Section 409A of the Code and any applicable Treasury Regulations and
other official guidance thereunder.

2.41    “Securities Act” means the Securities Act of 1933, as amended and all
rules and regulations promulgated thereunder. Reference to a specific section of
the Securities Act or regulation thereunder shall include such section or
regulation, any valid regulation or interpretation promulgated under such
section, and any comparable provision of any future legislation or regulation
amending, supplementing or superseding such section or regulation.

2.42    “Stock Option” or “Option” means any option to purchase shares of Common
Stock granted to Eligible Individuals granted pursuant to Article VI.

2.43    “Subsidiary” means any subsidiary corporation of the Company within the
meaning of Section 424(f) of the Code.

2.44    “Ten Percent Stockholder” means a person owning stock possessing more
than ten percent (10%) of the total combined voting power of all classes of
stock of the Company, its Subsidiaries or its Parent.

2.45    “Termination” means a Termination of Consultancy, Termination of
Directorship or Termination of Employment, as applicable.

2.46    “Termination of Consultancy” means: (a) that the Consultant is no longer
acting as a consultant to the Company or any of its Affiliates; or (b) when an
entity (other than the Company) that is retaining a Participant as a Consultant
ceases to be an Affiliate, unless the Participant otherwise is, or thereupon
becomes, a Consultant to the Company or another Affiliate at the time the entity
ceases to be an Affiliate. In the event that a Consultant becomes an Eligible

 

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Employee or a Non-Employee Director upon the termination of such Consultant’s
consultancy, unless otherwise determined by the Committee, in its sole
discretion, no Termination of Consultancy shall be deemed to occur until such
time as such Consultant is no longer a Consultant, an Eligible Employee or a
Non-Employee Director. Notwithstanding the foregoing, the Committee may
otherwise define Termination of Consultancy in the Award Agreement or, if no
rights of a Participant are reduced, may otherwise define Termination of
Consultancy thereafter, provided that any such change to the definition of the
term “Termination of Consultancy” does not subject the applicable Award to
Section 409A of the Code.

2.47    “Termination of Directorship” means: (a) that the Non-Employee Director
has ceased to be a director of the Company or any of its Affiliates; or (b) when
an entity (other than the Company) for which the Participant is serving as a
Non-Employee Director ceases to be an Affiliate, unless the Participant
otherwise is, or thereupon becomes, a Non-Employee Director of the Company or
another Affiliate at the time the entity ceases to be an Affiliate.In the event
that a Non-Employee Director becomes an Eligible Employee or a Consultant upon
the termination of such Non-Employee Director’s directorship, unless otherwise
determined by the Committee, in its sole discretion, such Non-Employee
Director’s ceasing to be a director of the Company or an Affiliate shall not be
treated as a Termination of Directorship, unless and until the Participant has a
Termination of Employment or Termination of Consultancy, as the case may be.

2.48    “Termination of Employment” means: (a) a termination of employment (for
reasons other than a military or personal leave of absence granted by the
Company) of a Participant from the Company and all of its Affiliates; or
(b) when an entity (other than the Company) which is employing a Participant
ceases to be an Affiliate, unless the Participant otherwise is, or thereupon
becomes, employed by the Company or another Affiliate at the time the entity
ceases to be an Affiliate. In the event that an Eligible Employee becomes a
Consultant or a Non-Employee Director upon the termination of such Eligible
Employee’s employment, unless otherwise determined by the Committee, in its sole
discretion, no Termination of Employment shall be deemed to occur until such
time as such Eligible Employee is no longer an Eligible Employee, a Consultant
or a Non-Employee Director. Notwithstanding the foregoing, the Committee may
otherwise define Termination of Employment in the Award Agreement or, if no
rights of a Participant are reduced, may otherwise define Termination of
Employment thereafter, provided that any such change to the definition of the
term “Termination of Employment” does not subject the applicable Award to
Section 409A of the Code.

2.49    “Transfer” means: (a) when used as a noun, any direct or indirect
transfer, sale, assignment, pledge, hypothecation, encumbrance or other
disposition (including the issuance of equity in any entity), whether for value
or no value and whether voluntary or involuntary (including by operation of
law), and (b) when used as a verb, to directly or indirectly transfer, sell,
assign, pledge, encumber, charge, hypothecate or otherwise dispose of (including
the issuance of equity in any entity) whether for value or for no value and
whether voluntarily or involuntarily (including by operation of
law). “Transferred” and “Transferable” shall have a correlative meaning.

 

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ARTICLE III

ADMINISTRATION

3.1    The Committee. The Plan shall be administered and interpreted by the
Committee. Each member of the Committee shall qualify as (a) a “non-employee
director” under Rule 16b-3, (b) an “outside director” under Section 162(m) of
the Code and (c) an “independent director” under the rules of any national
securities exchange or national securities association, as applicable. If it is
later determined that one or more members of the Committee do not so qualify,
actions taken by the Committee prior to such determination shall be valid
despite such failure to qualify.

3.2    Grants of Awards. The Committee shall have full authority to grant,
pursuant to the terms of the Plan, to Eligible Individuals: (i) Stock Options,
(ii) Restricted Stock, (iii) Performance Awards; (iv) Other Stock-Based Awards;
and (v) Other Cash-Based Awards. In particular, the Committee shall have the
authority:

(a)    to select the Eligible Individuals to whom Awards may from time to time
be granted hereunder;

(b)    to determine whether and to what extent Awards, or any combination
thereof, are to be granted hereunder to one or more Eligible Individuals;

(c)    to determine the number of shares of Common Stock to be covered by each
Award granted hereunder;

(d)    to determine the terms and conditions, not inconsistent with the terms of
the Plan, of any Award granted hereunder (including, but not limited to, the
exercise or purchase price (if any), any restriction or limitation, any vesting
schedule or acceleration thereof, or any forfeiture restrictions or waiver
thereof, regarding any Award and the shares of Common Stock relating thereto,
based on such factors, if any, as the Committee shall determine, in its sole
discretion);

(e)    to determine the amount of cash to be covered by each Award granted
hereunder;

(f)    to determine whether, to what extent and under what circumstances grants
of Options and other Awards under the Plan are to operate on a tandem basis
and/or in conjunction with or apart from other awards made by the Company
outside of the Plan;

(g)    to determine whether and under what circumstances a Stock Option may be
settled in cash, Common Stock and/or Restricted Stock under Section 6.4(d);

(h)    to determine whether a Stock Option is an Incentive Stock Option or
Non-Qualified Stock Option;

(i)    to impose a “blackout” period during which Options may not be exercised;

 

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(j)    to determine whether to require a Participant, as a condition of the
granting of any Award, to not sell or otherwise dispose of shares of Common
Stock acquired pursuant to the exercise of an Award for a period of time as
determined by the Committee, in its sole discretion, following the date of the
acquisition of such Award;

(k)    to modify, extend or renew an Award, subject to Article XI and Section
6.4(l), provided, however, that such action does not subject the Award to
Section 409A of the Code without the consent of the Participant; and

(l)    solely to the extent permitted by applicable law, to determine whether,
to what extent and under what circumstances to provide loans (which may be on a
recourse basis and shall bear interest at the rate the Committee shall provide)
to Participants in order to exercise Options under the Plan.

For the sake of clarity and to the extent permitted by applicable law, the Board
or the Committee may delegate to an officer of the Company the authority to make
Awards hereunder.

3.3    Guidelines. Subject to Article XI hereof, the Committee shall have the
authority to adopt, alter and repeal such administrative rules, guidelines and
practices governing the Plan and perform all acts, including the delegation of
its responsibilities (to the extent permitted by applicable law and applicable
stock exchange rules), as it shall, from time to time, deem advisable; to
construe and interpret the terms and provisions of the Plan and any Award issued
under the Plan (and any Award Agreements relating thereto); and to otherwise
supervise the administration of the Plan. The Committee may correct any defect,
supply any omission or reconcile any inconsistency in the Plan or in any
agreement relating thereto in the manner and to the extent it shall deem
necessary to effectuate the purpose and intent of the Plan. The Committee may
adopt special guidelines and provisions for persons who are residing in or
employed in, or subject to, the taxes of, any domestic or foreign jurisdictions
to comply with applicable tax and securities laws of such domestic or foreign
jurisdictions. Notwithstanding the foregoing, no action of the Committee under
this Section 3.3 shall impair the rights of any Participant without the
Participant’s consent. To the extent applicable, the Plan is intended to comply
with the applicable requirements of Rule 16b-3, and with respect to Awards
intended to be “performance-based,” the applicable provisions of Section 162(m)
of the Code, and the Plan shall be limited, construed and interpreted in a
manner so as to comply therewith.

3.4    Decisions Final. Any decision, interpretation or other action made or
taken in good faith by or at the direction of the Company, the Board or the
Committee (or any of its members) arising out of or in connection with the Plan
shall be within the absolute discretion of all and each of them, as the case may
be, and shall be final, binding and conclusive on the Company and all employees
and Participants and their respective heirs, executors, administrators,
successors and assigns.

3.5    Delegations and Designations/Liability.

(a)    The Committee may designate employees of the Company and professional
advisors to assist the Committee in the administration of the Plan and (to the
extent permitted by applicable law and applicable exchange rules) may grant
authority to officers to grant Awards and/or execute agreements or other
documents on behalf of the Committee.

 

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(b)    The Committee may employ such legal counsel, consultants and agents as it
may deem desirable for the administration of the Plan and may rely upon any
opinion received from any such counsel or consultant and any computation
received from any such consultant or agent. Expenses incurred by the Committee
or the Board in the engagement of any such counsel, consultant or agent shall be
paid by the Company. The Committee, its members and any person designated or
granted authority pursuant to sub-section (a) above shall not be liable for any
action or determination made in good faith with respect to the Plan. To the
maximum extent permitted by applicable law, no officer or employee of the
Company or its Affiliates or member or former member of the Committee or of the
Board shall be liable for any action or determination made in good faith with
respect to the Plan or any Award granted under it.

ARTICLE IV

SHARE LIMITATION

4.1    Shares. (a) The aggregate number of shares of Common Stock that may be
issued or used for reference purposes or with respect to which Awards may be
granted under the Plan shall not exceed 4,597,163 shares (subject to any
increase or decrease pursuant to Section 4.2) (the “Share Reserve”), which may
be either authorized and unissued Common Stock or Common Stock held in or
acquired for the treasury of the Company or both. The maximum number of shares
of Common Stock with respect to which Incentive Stock Options may be granted
under the Plan shall be equal to the Share Reserve. If any Option or Other
Stock-Based Award granted under the Plan expires, terminates or is canceled for
any reason without having been exercised in full, the number of shares of Common
Stock underlying any unexercised Award shall again be available for the purpose
of Awards under the Plan. If any shares of Restricted Stock, Performance Awards
or Other Stock-Based Awards denominated in shares of Common Stock awarded under
the Plan to a Participant are forfeited for any reason, including in connection
with the satisfaction of minimum withholding tax obligations as described in
Section 13.4 below, the number of forfeited shares of Restricted Stock,
Performance Awards or Other Stock-Based Awards denominated in shares of Common
Stock shall again be available for purposes of Awards under the Plan. Any Award
under the Plan settled in cash shall not be counted against the foregoing
maximum share limitation. The maximum grant date fair value of all Awards
granted to any director during any calendar year shall not exceed $750,000.

(b)    Individual Participant Limitations. To the extent required by Section
162(m) of the Code for Awards under the Plan to qualify as “performance-based
compensation,” the following individual Participant limitations shall apply:

(i)    The maximum number of shares of Common Stock subject to any Award of
Stock Options, or shares of Restricted Stock, or Other Stock-Based Awards for
which the grant of such Award or the lapse of the relevant Restriction Period is
subject to the attainment of Performance Goals in accordance with Section
7.3(a)(ii) which may be granted under the Plan during any fiscal year of the
Company to any Participant shall be 500,000 shares per type of Award (which
shall be subject to increase or decrease pursuant to Section 4.2), provided that
the maximum number of shares of Common Stock for all such types of Awards to any
Participant does not exceed 500,000 shares (which shall be subject to increase
or decrease pursuant to Section 4.2) during any fiscal year of the Company.

 

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(ii)    There are no annual individual share limitations applicable to
Participants on Restricted Stock or Other Stock-Based Awards for which the
grant, vesting or payment (as applicable) of any such Award is not subject to
the attainment of Performance Goals.

(iii)    The maximum number of shares of Common Stock subject to any Performance
Award that may be granted under the Plan during any fiscal year of the Company
to any Participant shall be 500,000 shares (which shall be subject to any
further increase or decrease pursuant to Section 4.2) with respect to any fiscal
year of the Company.

(iv)    The maximum value of a cash payment made under a Performance Award which
may be granted under the Plan with respect to any fiscal year of the Company to
any Participant shall be $2,000,000, if the Performance Period is limited to a
single fiscal year, and $6,000,000, if the Performance Period spans multiple
fiscal years.

(v)    The individual Participant limitations set forth in this Section 4.1(b)
(other than Section 4.1(b)(iii)) shall be cumulative; that is, to the extent
that shares of Common Stock for which Awards are permitted to be granted to a
Participant during a fiscal year are not covered by an Award to such Participant
in a fiscal year, the number of shares of Common Stock available for Awards to
such Participant shall automatically increase in the subsequent fiscal years
during the term of the Plan until used.

4.2    Changes.

(a)    The existence of the Plan and the Awards granted hereunder shall not
affect in any way the right or power of the Board or the stockholders of the
Company to make or authorize (i) any adjustment, recapitalization,
reorganization or other change in the Company’s capital structure or its
business, (ii) any merger or consolidation of the Company or any Affiliate,
(iii) any issuance of bonds, debentures, preferred or prior preference stock
ahead of or affecting the Common Stock, (iv) the dissolution or liquidation of
the Company or any Affiliate, (v) any sale or transfer of all or part of the
assets or business of the Company or any Affiliate or (vi) any other corporate
act or proceeding.

(b)    Subject to the provisions of Section 10.1:

(i)    If the Company at any time subdivides (by any split, recapitalization or
otherwise) the outstanding Common Stock into a greater number of shares of
Common Stock, or combines (by reverse split, combination or otherwise) its
outstanding Common Stock into a lesser number of shares of Common Stock, then
the respective exercise prices for outstanding Awards that provide for a
Participant elected exercise and the number of shares of Common Stock covered by
outstanding Awards shall be appropriately adjusted by the Committee to prevent
dilution or enlargement of the rights granted to, or available for, Participants
under the Plan.

(ii)    Excepting transactions covered by Section 4.2(b)(i), if the Company
effects any merger, consolidation, statutory exchange, spin-off, reorganization,
sale or

 

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transfer of all or substantially all the Company’s assets or business, or other
corporate transaction or event in such a manner that the Company’s outstanding
shares of Common Stock are converted into the right to receive (or the holders
of Common Stock are entitled to receive in exchange therefor), either
immediately or upon liquidation of the Company, securities or other property of
the Company or other entity (each, a “Reorganization”), then, subject to the
provisions of Section 10.1, (A) the aggregate number or kind of securities that
thereafter may be issued under the Plan, (B) the number or kind of securities or
other property (including cash) to be issued pursuant to Awards granted under
the Plan (including as a result of the assumption of the Plan and the
obligations hereunder by a successor entity, as applicable), or (C) the purchase
price thereof, shall be appropriately adjusted by the Committee to prevent
dilution or enlargement of the rights granted to, or available for, Participants
under the Plan.

(iii)    If there shall occur any change in the capital structure of the Company
other than those covered by Section 4.2(b)(i) or 4.2(b)(ii), including by reason
of any extraordinary dividend (whether cash or equity), any conversion, any
adjustment, any issuance of any class of securities convertible or exercisable
into, or exercisable for, any class of equity securities of the Company, then
the Committee shall adjust any Award and make such other adjustments to the Plan
to prevent dilution or enlargement of the rights granted to, or available for,
Participants under the Plan.

(iv)    Any such adjustment determined by the Committee pursuant to this Section
4.2(b) shall be final, binding and conclusive on the Company and all
Participants and their respective heirs, executors, administrators, successors
and permitted assigns. Any adjustment to, or assumption or substitution of, an
Award under this Section 4.2(b) shall be intended to comply with the
requirements of Section 409A of the Code and Treasury Regulation §1.424-1 (and
any amendments thereto), to the extent applicable. Except as expressly provided
in this Section 4.2 or in the applicable Award Agreement, a Participant shall
have no additional rights under the Plan by reason of any transaction or event
described in this Section 4.2.

(v)    Fractional shares of Common Stock resulting from any adjustment in Awards
pursuant to Section 4.2(a) or this Section 4.2(b) shall be aggregated until, and
eliminated at, the time of exercise or payment by rounding-down for fractions
less than one-half and rounding-up for fractions equal to or greater than
one-half. No cash settlements shall be required with respect to fractional
shares eliminated by rounding. Notice of any adjustment shall be given by the
Committee to each Participant whose Award has been adjusted and such adjustment
(whether or not such notice is given) shall be effective and binding for all
purposes of the Plan.

4.3    Minimum Purchase Price. Notwithstanding any provision of the Plan to the
contrary, if authorized but previously unissued shares of Common Stock are
issued under the Plan, such shares shall not be issued for a consideration that
is less than as permitted under applicable law.

 

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ARTICLE V

ELIGIBILITY

5.1    General Eligibility. All current and prospective Eligible Individuals are
eligible to be granted Awards. Eligibility for the grant of Awards and actual
participation in the Plan shall be determined by the Committee in its sole
discretion.

5.2    Incentive Stock Options. Notwithstanding the foregoing, only Eligible
Employees of the Company, its Subsidiaries and its Parent (if any) are eligible
to be granted Incentive Stock Options under the Plan. Eligibility for the grant
of an Incentive Stock Option and actual participation in the Plan shall be
determined by the Committee in its sole discretion.

5.3    General Requirement. The vesting and exercise of Awards granted to a
prospective Eligible Individual are conditioned upon such individual actually
becoming an Eligible Employee, Consultant or Non-Employee Director,
respectively.

ARTICLE VI

STOCK OPTIONS

6.1    Options. Stock Options may be granted alone or in addition to other
Awards granted under the Plan. Each Stock Option granted under the Plan shall be
of one of two types: (a) an Incentive Stock Option or (b) a Non-Qualified Stock
Option.

6.2    Grants. The Committee shall have the authority to grant to any Eligible
Employee one or more Incentive Stock Options, Non-Qualified Stock Options, or
both types of Stock Options, in each case, pursuant to an Award Agreement. The
Committee shall have the authority to grant any Consultant or Non-Employee
Director one or more Non-Qualified Stock Options. To the extent that any Stock
Option does not qualify as an Incentive Stock Option (whether because of its
provisions or the time or manner of its exercise or otherwise), such Stock
Option or the portion thereof which does not so qualify shall constitute a
separate Non-Qualified Stock Option.

6.3    Incentive Stock Options. Notwithstanding anything in the Plan to the
contrary, no term of the Plan relating to Incentive Stock Options shall be
interpreted, amended or altered, nor shall any discretion or authority granted
under the Plan be so exercised, so as to disqualify the Plan under Section 422
of the Code, or, without the consent of the Participants affected, to disqualify
any Incentive Stock Option under such Section 422.

6.4    Terms of Options. Options granted under the Plan shall be subject to the
following terms and conditions and shall be in such form and contain such
additional terms and conditions, not inconsistent with the terms of the Plan, as
the Committee shall deem desirable, including those set forth in an Award
Agreement:

(a)    Exercise Price. The exercise price per share of Common Stock subject to a
Stock Option shall be determined by the Committee at the time of grant, provided
that the per share exercise price of a Stock Option shall not be less than 100%
(or, in the case of an Incentive Stock Option granted to a Ten Percent
Stockholder, 110%) of the Fair Market Value of the Common Stock at the time of
grant.

 

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(b)    Stock Option Term. The term of each Stock Option shall be fixed by the
Committee, provided that no Stock Option shall be exercisable more than 10 years
after the date the Option is granted; and provided further that the term of an
Incentive Stock Option granted to a Ten Percent Stockholder shall not exceed
five years.

(c)    Exercisability. Unless otherwise provided by the Committee in accordance
with the provisions of this Section 6.4, Stock Options granted under the Plan
shall be exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee at the time of grant. If the
Committee provides, in its discretion, that any Stock Option is exercisable
subject to certain limitations (including, without limitation, that such Stock
Option is exercisable only in installments or within certain time periods), the
Committee may waive such limitations on the exercisability at any time at or
after the time of grant in whole or in part (including, without limitation,
waiver of the installment exercise provisions or acceleration of the time at
which such Stock Option may be exercised), based on such factors, if any, as the
Committee shall determine, in its sole discretion.

(d)    Method of Exercise. Subject to whatever installment exercise and waiting
period provisions apply under Section 6.4(c), to the extent vested, Stock
Options may be exercised in whole or in part at any time during the Option term,
by giving written notice of exercise to the Company (or to its agent
specifically designated for such purpose) specifying the number of shares of
Common Stock to be purchased (which notice may be provided in an electronic form
to the extent acceptable to the Committee and the Company). Such notice shall be
accompanied by payment in full of the purchase price as follows: (i) in cash or
by check, bank draft or money order payable to the order of the Company; (ii)
solely to the extent permitted by applicable law, if the Common Stock is traded
on a national securities exchange, and the Committee authorizes, through a
procedure whereby the Participant delivers irrevocable instructions to a broker
reasonably acceptable to the Committee to deliver promptly to the Company shares
of Common Stock with an aggregate value equal to the purchase price; (iii) by
having the Company withhold shares of Common Stock issuable upon exercise of the
Stock Option; or (iv) on such other terms and conditions as may be acceptable to
the Committee (including, without limitation, with the consent of the Committee,
by payment in full or in part in the form of Common Stock owned by the
Participant, based on the Fair Market Value of the Common Stock on the payment
date as determined by the Committee). No shares of Common Stock shall be issued
until payment therefor, as provided herein, has been made or provided for.

(e)    Non-Transferability of Options. No Stock Option shall be Transferable by
the Participant other than by will or by the laws of descent and distribution,
and all Stock Options shall be exercisable, during the Participant’s lifetime,
only by the Participant. Notwithstanding the foregoing, the Committee may
determine, in its sole discretion, at the time of grant or thereafter that a
Non-Qualified Stock Option that is otherwise not Transferable pursuant to this
Section is Transferable to a Family Member in whole or in part and in such
circumstances, and under such conditions, as specified by the Committee. A
Non-Qualified Stock Option that is Transferred to a Family Member pursuant to
the preceding sentence (i) may not be subsequently Transferred other than by
will or by the laws of descent and distribution; (ii) remains subject to the
terms of the Plan and the applicable Award Agreement; and (iii) may be exercised
by such Family Member. Any shares of Common Stock acquired upon the exercise of
a Non-Qualified Stock Option by a permissible transferee of a Non-Qualified
Stock Option or a permissible transferee pursuant to a Transfer after the
exercise of the Non-Qualified Stock Option shall be subject to the terms of the
Plan and the applicable Award Agreement.

 

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(f)    Termination by Death or Disability. Unless otherwise determined by the
Committee at the time of grant, or if no rights of the Participant are reduced,
thereafter, if a Participant’s Termination is by reason of death or Disability,
all Stock Options that are held by such Participant that are vested and
exercisable at the time of the Participant’s Termination may be exercised by the
Participant (or in the case of the Participant’s death, by the legal
representative of the Participant’s estate) at any time within a period of one
(1) year from the date of such Termination, but in no event beyond the
expiration of the stated term of such Stock Options; provided, however, that, in
the event of a Participant’s Termination by reason of Disability, if the
Participant dies within such exercise period, all unexercised Stock Options held
by such Participant shall thereafter be exercisable, to the extent to which they
were exercisable at the time of death, for a period of one (1) year from the
date of such death, but in no event beyond the expiration of the stated term of
such Stock Options.

(g)    Involuntary Termination Without Cause. Unless otherwise determined by the
Committee at the time of grant, or if no rights of the Participant are reduced,
thereafter, if a Participant’s Termination is by involuntary termination by the
Company without Cause, all Stock Options that are held by such Participant that
are vested and exercisable at the time of the Participant’s Termination may be
exercised by the Participant at any time within a period of ninety (90) days
from the date of such Termination, but in no event beyond the expiration of the
stated term of such Stock Options.

(h)    Voluntary Resignation. Unless otherwise determined by the Committee at
the time of grant, or if no rights of the Participant are reduced, thereafter,
if a Participant’s Termination is voluntary (other than a voluntary termination
described in Section 6.4(i)(y) hereof), all Stock Options that are held by such
Participant that are vested and exercisable at the time of the Participant’s
Termination may be exercised by the Participant at any time within a period of
thirty (30) days from the date of such Termination, but in no event beyond the
expiration of the stated term of such Stock Options.

(i)    Termination for Cause. Unless otherwise determined by the Committee at
the time of grant, or if no rights of the Participant are reduced, thereafter,
if a Participant’s Termination (x) is for Cause or (y) is a voluntary
Termination (as provided in Section 6.4(h)) after the occurrence of an event
that would be grounds for a Termination for Cause, all Stock Options, whether
vested or not vested, that are held by such Participant shall thereupon
terminate and expire as of the date of such Termination.

(j)    Unvested Stock Options. Unless otherwise determined by the Committee at
the time of grant, or if no rights of the Participant are reduced, thereafter,
Stock Options that are not vested as of the date of a Participant’s Termination
for any reason shall terminate and expire as of the date of such Termination.

(k)    Incentive Stock Option Limitations. To the extent that the aggregate Fair
Market Value (determined as of the time of grant) of the Common Stock with
respect to which Incentive Stock Options are exercisable for the first time by
an Eligible Employee during any

 

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calendar year under the Plan and/or any other stock option plan of the Company,
any Subsidiary or any Parent exceeds $100,000, such Options shall be treated as
Non-Qualified Stock Options.In addition, if an Eligible Employee does not remain
employed by the Company, any Subsidiary or any Parent at all times from the time
an Incentive Stock Option is granted until three months prior to the date of
exercise thereof (or such other period as required by applicable law), such
Stock Option shall be treated as a Non-Qualified Stock Option. Should any
provision of the Plan not be necessary in order for the Stock Options to qualify
as Incentive Stock Options, or should any additional provisions be required, the
Committee may amend the Plan accordingly, without the necessity of obtaining the
approval of the stockholders of the Company.

(l)    Form, Modification, Extension and Renewal of Stock Options. Subject to
the terms and conditions and within the limitations of the Plan, including those
set forth in the following sentence, Stock Options shall be evidenced by such
form of agreement or grant as is approved by the Committee, and the Committee
may (i) modify, extend or renew outstanding Stock Options granted under the Plan
(provided that the rights of a Participant are not reduced without such
Participant’s consent and provided, further, that such action does not subject
the Stock Options to Section 409A of the Code without the consent of the
Participant), and (ii) accept the surrender of outstanding Stock Options (to the
extent not theretofore exercised) and authorize the granting of new Stock
Options or other Awards in substitution therefor (to the extent not theretofore
exercised). Notwithstanding the foregoing, except in connection with a corporate
transaction involving the Company in accordance with Section 4.2 (including,
without limitation, any stock dividend, stock split, extraordinary cash
dividend, recapitalization, reorganization, merger, consolidation, split-up,
spin-off, combination, or exchange of shares), an outstanding Stock Option may
not be modified to reduce the exercise price thereof nor may a new Stock Option
at a lower price be substituted for a surrendered Stock Option, unless such
action is approved by the stockholders of the Company.

(m)    Early Exercise. The Committee may provide that a Stock Option include a
provision whereby the Participant may elect at any time before the Participant’s
Termination to exercise the Stock Option as to any part or all of the shares of
Common Stock subject to the Stock Option prior to the full vesting of the Stock
Option, and such shares shall be subject to the provisions of Article VII and be
treated as Restricted Stock, which will remain subject to the original vesting
schedule applicable to the predecessor Stock Option. Unvested shares of Common
Stock so purchased may be subject to a repurchase option in favor of the Company
or to any other restriction the Committee determines to be appropriate.

(n)    Other Terms and Conditions. The Committee may include a provision in an
Award Agreement providing for the automatic exercise of a Non-Qualified Stock
Option on a cashless basis on the last day of the term of such Option if the
Participant has failed to exercise the Non-Qualified Stock Option as of such
date, with respect to which the Fair Market Value of the shares of Common Stock
underlying the Non-Qualified Stock Option exceeds the exercise price of such
Non-Qualified Stock Option on the date of expiration of such Option, subject to
Section 13.4. Stock Options may contain such other provisions, which shall not
be inconsistent with any of the terms of the Plan, as the Committee shall deem
appropriate. The recipient of a Stock Option under this Article VI shall not be
entitled to receive, currently or on a deferred basis, dividends or dividend
equivalents in respect of the number of shares of Common Stock covered by the
Stock Option. The Company will evidence each Participant’s ownership of Common
Stock

 

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issued upon exercise of a Stock Option pursuant to a designated system, such as
book entries by the transfer agent; if a stock certificate for such shares of
Common Stock is issued, it will be substantially in the form set forth in
Section 7.2(c).

ARTICLE VII

RESTRICTED STOCK

7.1    Awards of Restricted Stock. Shares of Restricted Stock may be issued
either alone or in addition to other Awards granted under the Plan. The
Committee shall determine the Eligible Individuals, to whom, and the time or
times at which, grants of Restricted Stock shall be made, the number of shares
to be awarded, the price (if any) to be paid by the Participant (subject to
Section 7.2), the time or times within which such Awards may be subject to
forfeiture, the vesting schedule and rights to acceleration thereof, and all
other terms and conditions of the Awards.

The Committee may condition the grant or vesting of Restricted Stock upon the
attainment of specified performance targets (including, the Performance Goals)
or such other factor as the Committee may determine in its sole discretion,
including to comply with the requirements of Section 162(m) of the Code.

7.2    Awards and Certificates. If required by the Award Agreement, Eligible
Individuals selected to receive Restricted Stock shall not have any right with
respect to such Award, unless and until such Participant has complied with all
of the applicable terms and conditions of such Award. Further, such Award shall
be subject to the following conditions:

(a)    Purchase Price. The purchase price of Restricted Stock shall be fixed by
the Committee. Subject to Section 4.3, the purchase price for shares of
Restricted Stock may be zero to the extent permitted by applicable law, and, to
the extent not so permitted, such purchase price may not be less than par value.

(b)    Acceptance. Awards of Restricted Stock must be accepted within a period
of 60 days (or such shorter period as the Committee may specify at grant) after
the grant date, by the Participant executing the Restricted Stock Award
Agreement (if required by the Committee) and paying whatever price (if any) the
Committee has designated thereunder.

(c)    Legend. The Company will evidence each Participant’s ownership of
Restricted Stock pursuant to a designated system, such as book entries by the
transfer agent. If a stock certificate for such shares of Restricted Stock is
issued, such certificate shall be registered in the name of such Participant,
and shall, in addition to such legends required by applicable securities laws,
bear an appropriate legend referring to the terms, conditions, and restrictions
applicable to such Award, substantially in the following form:

“The anticipation, alienation, attachment, sale, transfer, assignment, pledge,
encumbrance or charge of the shares of stock represented hereby are subject to
the terms and conditions (including forfeiture) of the SandRidge Energy, Inc.
(the “Company”) 2016 Omnibus Incentive Plan (the “Plan”) and an Agreement
entered into between the registered owner and the Company dated
                . Copies of such Plan and Agreement are on file at the principal
office of the Company.”

 

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(d)    Custody. If stock certificates are issued in respect of shares of
Restricted Stock, the Committee may require that any stock certificates
evidencing such shares be held in custody by the Company until the restrictions
thereon shall have lapsed, and that, as a condition of any grant of Restricted
Stock, the Participant shall have delivered a duly signed stock power or other
instruments of assignment (including a power of attorney), each endorsed in
blank with a guarantee of signature if deemed necessary or appropriate by the
Company, which would permit transfer to the Company of all or a portion of the
shares subject to the Restricted Stock Award in the event that such Award is
forfeited in whole or part or otherwise transferred to the Company.

7.3    Restrictions and Conditions. The shares of Restricted Stock awarded
pursuant to the Plan shall be subject to the following restrictions and
conditions:

(a)    Restriction Period. (i) The Participant shall not be permitted to
Transfer shares of Restricted Stock awarded under the Plan during the period or
periods set by the Committee (the “Restriction Period”) commencing on the date
of such Award, as set forth in the Restricted Stock Award Agreement and such
agreement shall set forth a vesting schedule and any event that would accelerate
vesting of the shares of Restricted Stock. Within these limits, based on
service, attainment of Performance Goals pursuant to Section 7.3(a)(ii) and/or
such other factors or criteria as the Committee may determine in its sole
discretion, the Committee may condition the grant or provide for the lapse of
such restrictions in installments in whole or in part, or may accelerate the
vesting of all or any part of any Restricted Stock Award and/or waive the
deferral limitations for all or any part of any Restricted Stock Award.

(ii)    If the grant of shares of Restricted Stock or the lapse of restrictions
is based on the attainment of Performance Goals, the Committee shall establish
the objective Performance Goals and the applicable vesting percentage of the
Restricted Stock applicable to each Participant or class of Participants in
writing prior to the beginning of the applicable fiscal year or at such later
date as otherwise determined by the Committee and while the outcome of the
Performance Goals are substantially uncertain. Such Performance Goals may
incorporate provisions for disregarding (or adjusting for) changes in accounting
methods, corporate transactions (including, without limitation, dispositions and
acquisitions) and other similar type events or circumstances. With regard to a
Restricted Stock Award that is intended to comply with Section 162(m) of the
Code, to the extent that any such provision would create impermissible
discretion under Section 162(m) of the Code or otherwise violate Section 162(m)
of the Code, such provision shall be of no force or effect.

(b)    Rights as a Stockholder. Except as provided in Section 7.3(a) and this
Section 7.3(b) or as otherwise determined by the Committee in an Award
Agreement, the Participant shall have, with respect to the shares of Restricted
Stock, all of the rights of a holder of shares of Common Stock of the Company,
including, without limitation, the right to receive dividends (the payment of
which may be deferred until, and conditioned upon, the expiration of the
applicable Restriction Period, as determined in the Committee’s sole
discretion), the right to vote such shares and, subject to and conditioned upon
the full vesting of shares of Restricted Stock, the right to tender such shares.

 

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(c)    Termination. Unless otherwise determined by the Committee at grant or, if
no rights of the Participant are reduced, thereafter, subject to the applicable
provisions of the Award Agreement and the Plan, upon a Participant’s Termination
for any reason during the relevant Restriction Period, all Restricted Stock
still subject to restriction will be forfeited in accordance with the terms and
conditions established by the Committee at grant or thereafter.

(d)    Lapse of Restrictions. If and when the Restriction Period expires without
a prior forfeiture of the shares of Restricted Stock, such earned shares (and to
the extent ownership of such shares is evidenced by stock certificates, the
stock certificates for such shares) shall be delivered to the Participant. All
legends shall be removed from said certificates at the time of delivery to the
Participant, except as otherwise required by applicable law or other limitations
imposed by the Committee.

ARTICLE VIII

PERFORMANCE AWARDS

8.1    Performance Awards. The Committee may grant a Performance Award to a
Participant payable upon the attainment of specific Performance Goals. The
Committee may grant Performance Awards that are intended to qualify as
“performance-based compensation” under Section 162(m) of the Code, as well as
Performance Awards that are not intended to qualify as “performance-based
compensation” under Section 162(m) of the Code. If the Performance Award is
payable in shares of Restricted Stock, such shares shall be transferable to the
Participant only upon attainment of the relevant Performance Goal in accordance
with Article VII. If the Performance Award is payable in cash, it may be paid
upon the attainment of the relevant Performance Goals either in cash or in
shares of Restricted Stock (based on the then current Fair Market Value of such
shares), as determined by the Committee, in its sole and absolute
discretion. Each Performance Award shall be evidenced by an Award Agreement in
such form that is not inconsistent with the Plan and that the Committee may from
time to time approve. With respect to Performance Awards that are intended to
qualify as “performance-based compensation” under Section 162(m) of the Code,
the Committee shall condition the right to payment of any Performance Award upon
the attainment of objective Performance Goals established pursuant to
Section 8.2(c).

8.2    Terms and Conditions. Performance Awards awarded pursuant to this Article
VIII shall be subject to the following terms and conditions:

(a)    Earning of Performance Award. At the expiration of the applicable
Performance Period, the Committee shall determine the extent to which the
Performance Goals established pursuant to Section 8.2(c) are achieved and the
percentage of each Performance Award that has been earned.

(b)    Non-Transferability. Subject to the applicable provisions of the Award
Agreement and the Plan, Performance Awards may not be Transferred during the
Performance Period.

(c)    Objective Performance Goals, Formulae or Standards. With respect to
Performance Awards that are intended to qualify as “performance-based
compensation” under

 

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Section 162(m) of the Code, the Committee shall establish the objective
Performance Goals for the earning of Performance Awards based on a Performance
Period applicable to each Participant or class of Participants in writing prior
to the beginning of the applicable Performance Period or at such later date as
permitted under Section 162(m) of the Code and while the outcome of the
Performance Goals are substantially uncertain. Such Performance Goals may
incorporate, if and only to the extent permitted under Section 162(m) of the
Code, provisions for disregarding (or adjusting for) changes in accounting
methods, corporate transactions (including, without limitation, dispositions and
acquisitions) and other similar type events or circumstances. To the extent that
any such provision would create impermissible discretion under Section 162(m) of
the Code or otherwise violate Section 162(m) of the Code, such provision shall
be of no force or effect, with respect to Performance Awards that are intended
to qualify as “performance-based compensation” under Section 162(m) of the Code.

(d)    Dividends. To the extent determined by the Committee, Participants shall
be entitled to receive an amount equal to the dividends paid on the number of
shares of Common Stock covered by the Performance Award; provided that the
Committee may, in its sole discretion, provide for either of the following at
the time of grant: (i) dividends or dividend equivalents will be paid as accrued
but will be subject to the same vesting terms and conditions as the underlying
Performance Award; or (ii) payment of dividends or dividend equivalents shall be
deferred until, and conditioned upon, settlement of the underlying Performance
Award.

(e)    Payment. Following the Committee’s determination in accordance with
Section 8.2(a), the Company shall settle Performance Awards, in such form
(including, without limitation, in shares of Common Stock or in cash) as
determined by the Committee, in an amount equal to such Participant’s earned
Performance Awards. Notwithstanding the foregoing, the Committee may, in its
sole discretion, award an amount less than the earned Performance Awards and/or
subject the payment of all or part of any Performance Award to additional
vesting, forfeiture and deferral conditions as it deems appropriate.

(f)    Termination. Subject to the applicable provisions of the Award Agreement
and the Plan, upon a Participant’s Termination for any reason during the
Performance Period for a given Performance Award, the Performance Award in
question will vest or be forfeited in accordance with the terms and conditions
established by the Committee at grant.

(g)    Accelerated Vesting. Based on service, performance and/or such other
factors or criteria, if any, as the Committee may determine, the Committee may,
at or after grant, accelerate the vesting of all or any part of any Performance
Award.

ARTICLE IX

OTHER STOCK-BASED AND CASH-BASED AWARDS

9.1    Other Stock-Based Awards. The Committee is authorized to grant to
Eligible Individuals Other Stock-Based Awards that are payable in, valued in
whole or in part by reference to, or otherwise based on or related to shares of
Common Stock, including but not limited to, shares of Common Stock awarded
purely as a bonus and not subject to restrictions or conditions, shares of
Common Stock in payment of the amounts due under an incentive or performance
plan sponsored or maintained by the Company or an Affiliate, stock equivalent
units, restricted stock

 

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units, and Awards valued by reference to book value of shares of Common
Stock. Other Stock-Based Awards may be granted either alone or in addition to or
in tandem with other Awards granted under the Plan.

Subject to the provisions of the Plan, the Committee shall have authority to
determine the Eligible Individuals, to whom, and the time or times at which,
such Awards shall be made, the number of shares of Common Stock to be awarded
pursuant to such Awards, and all other conditions of the Awards. The Committee
may also provide for the grant of Common Stock under such Awards upon the
completion of a specified Performance Period.

The Committee may condition the grant or vesting of Other Stock-Based Awards
upon the attainment of specified Performance Goals as the Committee may
determine, in its sole discretion; provided that to the extent that such Other
Stock-Based Awards are intended to comply with Section 162(m) of the Code, the
Committee shall establish the objective Performance Goals for the grant or
vesting of such Other Stock-Based Awards based on a Performance Period
applicable to each Participant or class of Participants in writing prior to the
beginning of the applicable Performance Period or at such later date as
permitted under Section 162(m) of the Code and while the outcome of the
Performance Goals are substantially uncertain. Such Performance Goals may
incorporate, if and only to the extent permitted under Section 162(m) of the
Code, provisions for disregarding (or adjusting for) changes in accounting
methods, corporate transactions (including, without limitation, dispositions and
acquisitions) and other similar type events or circumstances. To the extent that
any such provision would create impermissible discretion under Section 162(m) of
the Code or otherwise violate Section 162(m) of the Code, such provision shall
be of no force or effect, with respect to Performance Awards that are intended
to qualify as “performance-based compensation” under Section 162(m) of the Code.

9.2    Terms and Conditions. Other Stock-Based Awards made pursuant to this
Article IX shall be subject to the following terms and conditions:

(a)    Non-Transferability. Subject to the applicable provisions of the Award
Agreement and the Plan, shares of Common Stock subject to Awards made under this
Article IX may not be Transferred prior to the date on which the shares are
issued, or, if later, the date on which any applicable restriction, performance
or deferral period lapses.

(b)    Dividends. To the extent determined by the Committee, Participants shall
be entitled to receive an amount equal to the dividends paid on the number of
shares of Common Stock covered by Awards made under this Article IX; provided
that the Committee may, in its sole discretion, provide for either of the
following at the time of grant: (i) dividends or dividend equivalents will be
paid as accrued but will be subject to the same vesting terms and conditions as
the underlying Award; or (ii) payment of dividends or dividend equivalents shall
be deferred until, and conditioned upon, settlement of the underlying Award.

(c)    Vesting. Any Award under this Article IX and any Common Stock covered by
any such Award shall vest or be forfeited to the extent so provided in the Award
Agreement, as determined by the Committee, in its sole discretion.

 

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(d)    Price. Common Stock issued on a bonus basis under this Article IX may be
issued for no cash consideration. Common Stock purchased pursuant to a purchase
right awarded under this Article IX shall be priced, as determined by the
Committee in its sole discretion.

9.3    Other Cash-Based Awards. The Committee may from time to time grant Other
Cash-Based Awards to Eligible Individuals in such amounts, on such terms and
conditions, and for such consideration, including no consideration or such
minimum consideration as may be required by applicable law, as it shall
determine in its sole discretion. Other Cash-Based Awards may be granted subject
to the satisfaction of vesting conditions or may be awarded purely as a bonus
and not subject to restrictions or conditions, and if subject to vesting
conditions, the Committee may accelerate the vesting of such Awards at any time
in its sole discretion. The grant of an Other Cash-Based Award shall not require
a segregation of any of the Company’s assets for satisfaction of the Company’s
payment obligation thereunder.

ARTICLE X

CHANGE IN CONTROL PROVISIONS

10.1    Benefits. In the event of a Change in Control of the Company (as defined
below), and except as otherwise provided by the Committee in an Award Agreement,
a Participant’s unvested Awards shall not vest automatically and a Participant’s
Awards shall be treated in accordance with one or more of the following methods
as determined by the Committee:

(a)    Awards, whether or not then vested, shall be continued, assumed, or have
new rights substituted therefor, as determined by the Committee in a manner
consistent with the requirements of Section 409A of the Code, and restrictions
to which shares of Restricted Stock or any other Award granted prior to the
Change in Control are subject shall not lapse upon a Change in Control and the
Restricted Stock or other Award shall, where appropriate in the sole discretion
of the Committee, receive the same distribution as other Common Stock on such
terms as determined by the Committee; provided that the Committee may decide to
award additional Restricted Stock or other Awards in lieu of any cash
distribution. Notwithstanding anything to the contrary herein, for purposes of
Incentive Stock Options, any assumed or substituted Stock Option shall comply
with the requirements of Treasury Regulation Section 1.424-1 (and any amendment
thereto).

(b)    The Committee, in its sole discretion, may provide for the purchase of
any Awards by the Company or an Affiliate for an amount of cash equal to the
excess (if any) of the Change in Control Price (as defined below) of the shares
of Common Stock covered by such Awards, over the aggregate exercise price of
such Awards. For purposes hereof, “Change in Control Price” shall mean the
highest price per share of Common Stock paid in any transaction related to a
Change in Control of the Company.

(c)    The Committee may, in its sole discretion, terminate all outstanding and
unexercised Stock Options or any Other Stock-Based Award that provides for a
Participant elected exercise, effective as of the date of the Change in Control,
by delivering notice of termination to each Participant at least twenty (20)
days prior to the date of consummation of the Change in Control, in which case
during the period from the date on which such notice of termination is delivered
to the consummation of the Change in Control, each such Participant shall

 

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have the right to exercise in full all of such Participant’s Awards that are
then outstanding (without regard to any limitations on exercisability otherwise
contained in the Award Agreements), but any such exercise shall be contingent on
the occurrence of the Change in Control, and, provided that, if the Change in
Control does not take place within a specified period after giving such notice
for any reason whatsoever, the notice and exercise pursuant thereto shall be
null and void.

(d)    The Committee may, in its sole discretion, make any other determination
as to the treatment of Awards in connection with such Change in Control as the
Committee may determine. Any escrow, holdback, earnout or similar provisions in
the definitive agreement(s) relating to such transaction may apply to any
payment to the holders of Awards to the same extent and in the same manner as
such provisions apply to the holders of shares of Common Stock.

Notwithstanding any other provision herein to the contrary, the Committee may,
in its sole discretion, provide for accelerated vesting or lapse of
restrictions, of an Award at any time.

10.2    Change in Control. Unless otherwise determined by the Committee in the
applicable Award Agreement or other written agreement with a Participant
approved by the Committee, a “Change in Control” shall be deemed to occur if:

(a)    any “person,” as such term is used in Sections 13(d) and 14(d) of the
Exchange Act (other than the Company, any trustee or other fiduciary holding
securities under any employee benefit plan of the Company, or any company owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of Common Stock of the Company), becoming
the beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company’s then outstanding securities;

(b)    during any period of 24 consecutive calendar months, individuals who were
directors of the Company on the first day of such period (the “Incumbent
Directors”) cease for any reason to constitute a majority of the Board;
provided, however, that any individual becoming a director subsequent to the
first day of such period whose election, or nomination for election, by the
Company’s stockholders was approved by a vote of at least two-thirds of the
Incumbent Directors will be considered as though such individual were an
Incumbent Director, but excluding, for purposes of this proviso, any such
individual whose initial assumption of office occurs as a result of an actual or
threatened proxy contest with respect to election or removal of directors or
other actual or threatened solicitation of proxies or consents by or on behalf
of a “person” (as used in Section 13(d) of the Exchange Act), in each case,
other than the Board, which individual, for the avoidance of doubt, shall not be
deemed to be an Incumbent Director for purposes of this Section 10.2(b),
regardless of whether such individual was approved by a vote of at least
two-thirds of the Incumbent Directors;

(c)    consummation of a reorganization, merger, consolidation or other business
combination (any of the foregoing, a “Business Combination”) of the Company or
any direct or indirect subsidiary of the Company with any other corporation, in
any case with respect to which the Company voting securities outstanding
immediately prior to such Business Combination do not, immediately following
such Business Combination, continue to represent (either by

 

22

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remaining outstanding or being converted into voting securities of the Company
or any ultimate parent thereof) more than 50% of the then outstanding voting
securities entitled to vote generally in the election of directors of the
Company (or its successor) or any ultimate parent thereof after the Business
Combination; or

(d)    a complete liquidation or dissolution of the Company or the consummation
of a sale or disposition by the Company of all or substantially all of the
Company’s assets other than the sale or disposition of all or substantially all
of the assets of the Company to a person or persons who beneficially own,
directly or indirectly, 50% or more of the combined voting power of the
outstanding voting securities of the Company at the time of the sale.

Notwithstanding the foregoing, with respect to any Award that is characterized
as “nonqualified deferred compensation” within the meaning of Section 409A of
the Code, an event shall not be considered to be a Change in Control under the
Plan for purposes of payment of such Award unless such event is also a “change
in ownership,” a “change in effective control” or a “change in the ownership of
a substantial portion of the assets” of the Company within the meaning of
Section 409A of the Code.

ARTICLE XI

TERMINATION OR AMENDMENT OF PLAN

Notwithstanding any other provision of the Plan, the Board may at any time, and
from time to time, amend, in whole or in part, any or all of the provisions of
the Plan (including any amendment deemed necessary to ensure that the Company
may comply with any regulatory requirement referred to in Article XIII or
Section 409A of the Code), or suspend or terminate it entirely, retroactively or
otherwise; provided, however, that, unless otherwise required by law or
specifically provided herein, the rights of a Participant with respect to Awards
granted prior to such amendment, suspension or termination, may not be impaired
without the consent of such Participant, including as set forth in Section
6.3. Notwithstanding anything herein to the contrary, the Board may amend the
Plan or any Award Agreement at any time without a Participant’s consent to
comply with applicable law, including Section 409A of the Code. The Committee
may amend the terms of any Award theretofore granted, prospectively or
retroactively, but, subject to Article IV or as otherwise specifically provided
herein, no such amendment or other action by the Committee shall impair the
rights of any holder without the holder’s consent.

ARTICLE XII

UNFUNDED STATUS OF PLAN

The Plan is intended to constitute an “unfunded” plan for incentive and deferred
compensation. With respect to any payment as to which a Participant has a fixed
and vested interest but which are not yet made to a Participant by the Company,
nothing contained herein shall give any such Participant any right that is
greater than those of a general unsecured creditor of the Company.

 

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ARTICLE XIII

GENERAL PROVISIONS

13.1    Legend. The Committee may require each person receiving shares of Common
Stock pursuant to a Stock Option or other Award under the Plan to represent to
and agree with the Company in writing that the Participant is acquiring the
shares without a view to distribution thereof. In addition to any legend
required by the Plan, the certificates for such shares (if any) may include any
legend that the Committee deems appropriate to reflect any restrictions on
Transfer. All certificates for shares of Common Stock (to the extent such shares
are certificated) delivered under the Plan shall be subject to such stop
transfer orders and other restrictions as the Committee may deem advisable under
the rules, regulations and other requirements of the Securities and Exchange
Commission, any stock exchange upon which the Common Stock is then listed or any
national securities exchange system or over-the-counter market upon whose system
the Common Stock is then quoted, any applicable federal or state securities law,
and any applicable corporate law, and the Committee may cause a legend or
legends to be put on any such certificates to make appropriate reference to such
restrictions.

13.2    Other Plans. Nothing contained in the Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to stockholder
approval if such approval is required, and such arrangements may be either
generally applicable or applicable only in specific cases.

13.3    No Right to Employment/Directorship/Consultancy. Neither the Plan nor
the grant of any Option or other Award hereunder shall give any Participant or
other employee, Consultant or Non-Employee Director any right with respect to
continuance of employment, consultancy or directorship by the Company or any
Affiliate, nor shall the Plan nor the grant of any Option or other Award
hereunder limit in any way the right of the Company or any Affiliate by which an
employee is employed or a Consultant or Non-Employee Director is retained to
terminate such employment, consultancy or directorship at any time.

13.4    Withholding of Taxes. The Company shall have the right to deduct from
any payment to be made pursuant to the Plan, or to otherwise require, prior to
the issuance or delivery of shares of Common Stock or the payment of any cash
hereunder, payment by the Participant of, any federal, state or local taxes
required by law to be withheld. Upon the vesting of Restricted Stock (or other
Award that is taxable upon vesting), or upon making an election under Section
83(b) of the Code, a Participant shall pay all required withholding to the
Company. Any minimum statutorily required withholding obligation with regard to
any Participant may be satisfied, subject to the consent of the Committee, by
reducing the number of shares of Common Stock otherwise deliverable or by
delivering shares of Common Stock already owned. Any fraction of a share of
Common Stock required to satisfy such tax obligations shall be disregarded and
the amount due in respect of such fraction of a share shall be paid instead in
cash by the Participant.

13.5    No Assignment of Benefits. No Award or other benefit payable under the
Plan shall, except as otherwise specifically provided by law or permitted by the
Committee, be Transferable in any manner, and any attempt to Transfer any such
benefit shall be void, and any such benefit shall not in any manner be liable
for or subject to the debts, contracts, liabilities, engagements or torts of any
person who shall be entitled to such benefit, nor shall it be subject to
attachment or legal process for or against such person.

 

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13.6    Listing and Other Conditions.

(a)    Unless otherwise determined by the Committee, as long as the Common Stock
is listed on a national securities exchange, system sponsored by a national
securities association or recognized over-the-counter market, the issuance of
shares of Common Stock pursuant to an Award shall be conditioned upon such
shares being listed on such exchange, system or market. The Company shall have
no obligation to issue such shares unless and until such shares are so listed,
and the right to exercise any Option or other Award with respect to such shares
shall be suspended until such listing has been effected.

(b)    If at any time counsel to the Company shall be of the opinion that any
sale or delivery of shares of Common Stock pursuant to an Option or other Award
is or may in the circumstances be unlawful or result in the imposition of excise
taxes on the Company under the statutes, rules or regulations of any applicable
jurisdiction, the Company shall have no obligation to make such sale or
delivery, or to make any application or to effect or to maintain any
qualification or registration under the Securities Act or otherwise, with
respect to shares of Common Stock or Awards, and the right to exercise any
Option or other Award shall be suspended until, in the opinion of said counsel,
such sale or delivery shall be lawful or will not result in the imposition of
excise taxes on the Company.

(c)    Upon termination of any period of suspension under this Section 13.6, any
Award affected by such suspension which shall not then have expired or
terminated shall be reinstated as to all shares available before such suspension
and as to shares which would otherwise have become available during the period
of such suspension, but no such suspension shall extend the term of any Award.

(d)    A Participant shall be required to supply the Company with certificates,
representations and information that the Company requests and otherwise
cooperate with the Company in obtaining any listing, registration,
qualification, exemption, consent or approval the Company deems necessary or
appropriate.

13.7    Governing Law. The Plan and actions taken in connection herewith shall
be governed and construed in accordance with the laws of the State of Delaware
(regardless of the law that might otherwise govern under applicable Delaware
principles of conflict of laws).

13.8    Jurisdiction; Waiver of Jury Trial. Any suit, action or proceeding with
respect to the Plan or any Award Agreement, or any judgment entered by any court
of competent jurisdiction in respect of any thereof, shall be resolved only in
the courts of the State of Delaware or the United States District Court for the
District of Delaware and the appellate courts having jurisdiction of appeals in
such courts. In that context, and without limiting the generality of the
foregoing, the Company and each Participant shall irrevocably and
unconditionally (a) submit in any proceeding relating to the Plan or any Award
Agreement, or for the recognition and enforcement of any judgment in respect
thereof (a “Proceeding”), to the exclusive jurisdiction of the courts of the
State of Delaware, the court of the United States of America for the District of

 

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Delaware, and appellate courts having jurisdiction of appeals from any of the
foregoing, and agree that all claims in respect of any such Proceeding shall be
heard and determined in such Delaware State court or, to the extent permitted by
law, in such federal court, (b) consent that any such Proceeding may and shall
be brought in such courts and waives any objection that the Company and each
Participant may now or thereafter have to the venue or jurisdiction of any such
Proceeding in any such court or that such Proceeding was brought in an
inconvenient court and agree not to plead or claim the same, (c) waive all right
to trial by jury in any Proceeding (whether based on contract, tort or
otherwise) arising out of or relating to the Plan or any Award Agreement,
(d) agree that service of process in any such Proceeding may be effected by
mailing a copy of such process by registered or certified mail (or any
substantially similar form of mail), postage prepaid, to such party, in the case
of a Participant, at the Participant’s address shown in the books and records of
the Company or, in the case of the Company, at the Company’s principal offices,
attention General Counsel, and (e) agree that nothing in the Plan shall affect
the right to effect service of process in any other manner permitted by the laws
of the State of Delaware.

13.9    Construction. Wherever any words are used in the Plan or an Award
Agreement in the masculine gender they shall be construed as though they were
also used in the feminine gender in all cases where they would so apply, and
wherever words are used herein in the singular form they shall be construed as
though they were also used in the plural form in all cases where they would so
apply.

13.10    Other Benefits. No Award granted or paid out under the Plan shall be
deemed compensation for purposes of computing benefits under any retirement plan
of the Company or its Affiliates nor affect any benefit under any other benefit
plan now or subsequently in effect under which the availability or amount of
benefits is related to the level of compensation.

13.11    Costs. The Company shall bear all expenses associated with
administering the Plan, including expenses of issuing Common Stock pursuant to
Awards hereunder.

13.12    No Right to Same Benefits. The provisions of Awards need not be the
same with respect to each Participant, and such Awards to individual
Participants need not be the same in subsequent years.

13.13    Death/Disability. The Committee may in its discretion require the
transferee of a Participant to supply it with written notice of the
Participant’s death or Disability and to supply it with a copy of the will (in
the case of the Participant’s death) or such other evidence as the Committee
deems necessary to establish the validity of the transfer of an Award. The
Committee may also require that the agreement of the transferee to be bound by
all of the terms and conditions of the Plan and the applicable Award Agreement.

13.14    Section 16(b) of the Exchange Act. All elections and transactions under
the Plan by persons subject to Section 16 of the Exchange Act involving shares
of Common Stock are intended to comply with any applicable exemptive condition
under Rule 16b-3. The Committee may establish and adopt written administrative
guidelines, designed to facilitate compliance with Section 16(b) of the Exchange
Act, as it may deem necessary or proper for the administration and operation of
the Plan and the transaction of business thereunder.

 

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13.15    Section 409A of the Code. The Plan is intended to comply with the
applicable requirements of Section 409A of the Code and shall be limited,
construed and interpreted in accordance with such intent. To the extent that any
Award is subject to Section 409A of the Code, it shall be paid in a manner that
will comply with Section 409A of the Code, including proposed, temporary or
final regulations or any other guidance issued by the Secretary of the Treasury
and the Internal Revenue Service with respect thereto. Notwithstanding anything
herein to the contrary, any provision in the Plan that is inconsistent with
Section 409A of the Code shall be deemed to be amended to comply with Section
409A of the Code and to the extent such provision cannot be amended to comply
therewith, such provision shall be null and void. The Company shall have no
liability to a Participant, or any other party, if an Award that is intended to
be exempt from, or compliant with, Section 409A of the Code is not so exempt or
compliant or for any action taken by the Committee or the Company and, in the
event that any amount or benefit under the Plan becomes subject to penalties
under Section 409A of the Code, responsibility for payment of such penalties
shall rest solely with the affected Participants and not with the
Company. Notwithstanding any contrary provision in the Plan or Award Agreement,
any payment(s) of “nonqualified deferred compensation” (within the meaning of
Section 409A of the Code) that are otherwise required to be made under the Plan
to a “specified employee” (as defined under Section 409A of the Code) as a
result of such employee’s separation from service (other than a payment that is
not subject to Section 409A of the Code) shall be delayed for the first six (6)
months following such separation from service (or, if earlier, the date of death
of the specified employee) and shall instead be paid (in a manner set forth in
the Award Agreement) upon expiration of such delay period.

13.16    Successors and Assigns. The Plan and any applicable Award Agreement(s)
shall be binding on all successors and permitted assigns of a Participant,
including, without limitation, the estate of such Participant and the executor,
administrator or trustee of such estate.

13.17    Severability of Provisions. If any provision of the Plan or any Award
Agreement shall be held invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provisions hereof, and the Plan
and/or Award Agreement shall be construed and enforced as if such provisions had
not been included.

13.18    Payments to Minors, Etc. Any benefit payable to or for the benefit of a
minor, an incompetent person or other person incapable of receipt thereof shall
be deemed paid when paid to such person’s guardian or to the party providing or
reasonably appearing to provide for the care of such person, and such payment
shall fully discharge the Committee, the Board, the Company, its Affiliates and
their officers, directors/managers, employees, agents and representatives with
respect thereto.

13.19    Lock-Up Agreement. As a condition to the grant of an Award, if
requested by the Company and the lead underwriter of any public offering of
Common Stock (the “Lead Underwriter”), a Participant shall irrevocably agree not
to sell, contract to sell, grant any option to purchase, transfer the economic
risk of ownership in, make any short sale of, pledge or otherwise transfer or
dispose of, any interest in any Common Stock or any securities convertible into,
derivative of, or exchangeable or exercisable for, or any other rights to
purchase or acquire Common Stock (except Common Stock included in such public
offering or acquired on the public market after such offering) during such
period of time following the effective date of a registration

 

27

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statement of the Company filed under the Securities Act that the Lead
Underwriter shall specify (the “Lock -Up Period”).The Participant shall further
agree to sign such documents as may be requested by the Lead Underwriter to
effect the foregoing and agree that the Company may impose stop-transfer
instructions with respect to Common Stock acquired pursuant to an Award until
the end of such Lock-Up Period.

13.20    Headings and Captions. The headings and captions herein are provided
for reference and convenience only, shall not be considered part of the Plan,
and shall not be employed in the construction of the Plan.

13.21    Section 162(m) of the Code. Notwithstanding any other provision of the
Plan to the contrary, the provisions of the Plan requiring compliance with
Section 162(m) of the Code shall not apply to Awards granted under the Plan that
are not intended to qualify as “performance-based compensation” under Section
162(m) of the Code.

13.22    Company Recoupment of Awards. A Participant’s rights with respect to
any Award hereunder shall in all events be subject to (i) any right that the
Company may have under any Company recoupment policy or other agreement or
arrangement with a Participant, or (ii) any right or obligation that the Company
may have regarding the clawback of “incentive-based compensation” under Section
10D of the Exchange Act and any applicable rules and regulations promulgated
thereunder from time to time by the U.S. Securities and Exchange Commission.

ARTICLE XIV

EFFECTIVE DATE OF PLAN

The Plan shall become effective upon its adoption by the Board.

ARTICLE XV

TERM OF PLAN

No Award shall be granted pursuant to the Plan on or after the tenth anniversary
of the earlier of the date that the Plan is adopted or the date of stockholder
approval, but Awards granted prior to such tenth anniversary may extend beyond
that date; provided that no Award (other than a Stock Option) that is intended
to be “performance-based compensation” under Section 162(m) of the Code shall be
granted on or after the fifth anniversary of the stockholder approval of the
Plan unless the Performance Goals are re-approved (or other designated
Performance Goals are approved) by the stockholders no later than the first
stockholder meeting that occurs in the fifth year following the year in which
stockholders approve the Performance Goals. For purposes of the Plan, approval
by the bankruptcy court shall serve as stockholder approval, unless otherwise
prohibited by law.

ARTICLE XVI

NAME OF PLAN

The Plan shall be known as the “SandRidge Energy, Inc. 2016 Omnibus Incentive
Plan.”

 

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EXHIBIT A

PERFORMANCE GOALS

To the extent permitted under Section 162(m) of the Code, performance goals
established for purposes of Awards intended to be “performance-based
compensation” under Section 162(m) of the Code, shall be based on the attainment
of certain target levels of, or a specified increase or decrease (as applicable)
in one or more of the following:

 

  ● Production growth;

 

  ● Reserve growth;

 

  ● Reserve replacement;

 

  ● Lease operating expense;

 

  ● Revenue growth;

 

  ● Finding/development costs;

 

  ● Net sales;

 

  ● Operating income;

 

  ● Pre- or after-tax income;

 

  ● Operating profit minus capital charges;

 

  ● Cash flow, including operating cash flow, free cash flow, cash flow return
on equity and cash flow return on investment;

 

  ● Net income;

 

  ● Earnings per share;

 

  ● Earnings before interest and taxes;

 

  ● Earnings before interest, taxes, depreciation and/or amortization;

 

  ● Return on equity;

 

  ● Return on invested capital;

 

  ● Return on assets;

 

  ● Economic value added (or an equivalent measure);

 

  ● Share price performance;

 

  ● Total stockholder return;

 

  ● Improvement in or achievement of expense levels;

 

  ● Improvement in or achievement of working capital levels;

 

  ● Innovation as measured by a percentage of sales of new products;

 

  ● Market share;

 

  ● Productivity ratios;

 

  ● Completion and/or integration of acquisitions of businesses or companies;

 

  ● Completion of divestitures and asset sales; and

 

  ● Any combination of any of the foregoing business criteria.

With respect to Awards that are intended to qualify as “performance-based
compensation” under Section 162(m) of the Code, to the extent permitted under
Section 162(m) of the Code, the Committee may, in its sole discretion, also
exclude, or adjust to reflect, the impact of an event or occurrence that the
Committee determines should be appropriately excluded or adjusted, including:

 

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(a)    restructurings, discontinued operations, extraordinary items or events,
and other unusual or non-recurring charges as described in Accounting Standards
Codification 225-20, “Extraordinary and Unusual Items,” and/or management’s
discussion and analysis of financial condition and results of operations
appearing or incorporated by reference in the Company’s Form 10-K for the
applicable year;

(b)    an event either not directly related to the operations of the Company or
not within the reasonable control of the Company’s management;

(c)    a change in tax law or accounting standards required by generally
accepted accounting principles; or

(d)    a decision to accelerate or defer capital expenditures or expenses
contrary to the timing reflected in the Company’s annual financial plan.

Performance goals may also be based upon individual participant performance
goals, as determined by the Committee, in its sole discretion. In addition,
Awards that are not intended to qualify as “performance-based compensation”
under Section 162(m) of the Code may be based on the performance goals set forth
herein or on such other performance goals as determined by the Committee in its
sole discretion or without regard to any performance goals.

In addition, such performance goals may be based upon the attainment of
specified levels of Company (or subsidiary, division, other operational unit,
administrative department or product category of the Company) performance under
one or more of the measures described above relative to the performance of one
or more other companies or one or more groups of companies (e.g. an index). With
respect to Awards that are intended to qualify as “performance-based
compensation” under Section 162(m) of the Code, to the extent permitted under
Section 162(m) of the Code, but only to the extent permitted under Section
162(m) of the Code (including, without limitation, compliance with any
requirements for stockholder approval), the Committee may also:

(a)    designate additional business criteria on which the performance goals may
be based; or

(b)    adjust, modify or amend the aforementioned business criteria.

 

A-2