Exhibit 10.9
 
INCENTIVE PLAN
 
OF
 
CARRIZO OIL & GAS, INC.
 
STOCK APPRECIATION RIGHTS AGREEMENT
 
THIS AGREEMENT (“Agreement”) is made as of the 3rd day of June, 2009 (the “Grant
Date”), by and between Carrizo Oil & Gas, Inc., a Texas corporation (the
“Company”), and employee name (the “Grantee”).
 
The Company has adopted the Incentive Plan of Carrizo Oil & Gas, Inc., as
amended and restated effective April 30, 2009 (the “Plan”), a copy of which is
appended to this Agreement as Exhibit A and by this reference made a part
hereof, for the benefit of eligible employees, directors and independent
contractors of the Company and its Subsidiaries.  Capitalized terms used and not
otherwise defined herein shall have the meaning ascribed thereto in the Plan.
 
Pursuant to the Plan, the Committee, which has generally been assigned
responsibility for administering the Plan, has determined that it would be in
the interest of the Company and its stockholders to grant the stock appreciation
rights provided herein in order to provide Grantee with additional remuneration
for services rendered, to encourage Grantee to remain in the employ of the
Company or its Subsidiaries and to increase Grantee’s personal interest in the
continued success and progress of the Company.
 
The Company and Grantee therefore agree as follows:
 
1. Grant of SAR.  Subject to the terms and conditions herein, the Company grants
to the Grantee during the period commencing on June 3, 2009 and expiring at
5 p.m. Houston, Texas time  (“Close of Business”) on June 3, 2016 (the “SAR
Term”), subject to earlier termination pursuant to paragraph 6 below, a stock
appreciation right with respect to the number of shares of Company Common Stock
(“Common Stock”) set forth on Schedule 1 hereto (the “SAR Shares”) with an
exercise price set forth on Schedule 1 (the “Exercise Price”).  The Exercise
Price and SAR Shares are subject to adjustment pursuant to paragraph 9
below.  This stock appreciation right is hereinafter referred to as the “SAR.”
 
2. Conditions of Exercise.  The SAR is exercisable only in accordance with the
conditions stated in this paragraph.
 
(a) Except as otherwise provided in this subparagraph (a), the SAR may only be
exercised to the extent the SAR has become available for exercise in accordance
with the following schedule, provided, however, that the SAR shall not be
exercisable unless the average daily production of the Company for the calendar
quarter ended September 30, 2009 (“3Q09”) is at least (i) 54,764 thousand
standard cubic feet equivalent per day (“Mcfe/d”), if the Company’s weighted
average realized natural gas price (excluding the impact of cash settled
 
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hedges) for 3Q09 is greater than or equal to $3/Mcf or (ii) 43,811 Mcfe/d, if
the Company’s weighted average realized natural gas price (excluding the impact
of cash settled hedges) for 3Q09 is less than $3/Mcf:

 

Date  
 Percentage of SAR
Shares Available for Exercise
     
 May 28, 2010 
 
 33.3%
 May 28, 2011
   33.3%
 May 28, 2012
 
 33.3%

 
Notwithstanding the foregoing, subject to the provisions of any applicable
written employment agreement between the Grantee and the Company or any
Subsidiary, the SAR will not be exercisable with respect to any additional SAR
Shares if (i) Grantee has not remained in the continuous employment of the
Company and its Subsidiaries through the applicable date.  A change of
employment is continuous employment within the meaning of this paragraph 2
provided that, after giving effect to such change, the Grantee continues to be
an employee of the Company or any Subsidiary.
 
(b) To the extent the SAR becomes exercisable, the SAR may be exercised in whole
or in part (at any time or from time to time, except as otherwise provided
herein) until expiration of the SAR Term or earlier termination thereof.
 
3. Manner of Exercise.  The SAR shall be considered exercised (as to the number
of SAR Shares specified in the notice referred to in subparagraph (a) below) on
the latest of (i) the date of exercise designated in the written notice referred
to in subparagraph (a) below, (ii) if the date so designated is not a business
day, the first business day following such date or (iii) the earliest business
day by which the Company has received all of the following:
 
(a) Written notice, in such form as the Committee may require, designating,
among other things, the date of exercise and the number of SAR Shares with
respect to which the SAR is to be exercised; and
 
(b) Any other documentation that the Committee may reasonably require.
 
4. Mandatory Withholding for Taxes.  Grantee acknowledges and agrees that the
Company shall deduct from the cash and/or shares of Common Stock otherwise
payable or deliverable upon exercise of the SAR an amount of cash and/or number
of shares of Common Stock (valued at their Fair Market Value on the date of
exercise) that is equal to the amount of all federal, state and local taxes
required to be withheld by the Company upon such exercise, as determined by the
Committee.  In the event the Company, in its sole discretion, determines that
the Grantee's tax obligations will not be satisfied under the methods otherwise
expressly described above, the Grantee authorizes the Company or the Company's
Stock Plan
 
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Administrator, currently UBS Financial Services Inc., to (i) sell a number of
shares of Common Stock issued or outstanding pursuant to the Award, which number
of shares of Common Stock the Company determines has at least the market value
sufficient to meet the tax withholding obligations, plus additional shares of
Common Stock to account for rounding and market fluctuations and (ii) pay such
tax withholding to the Company.   The shares of Common Stock may be sold as part
of a block trade with other Participants such that all Participants receive an
average price.
 
5. Payment by the Company.  As soon as practicable after receipt of all items
referred to in paragraph 3, and subject to the withholding referred to in
paragraph 4, the Company shall deliver to the Grantee an amount, in cash or
shares of Common Stock or any combination thereof as determined by the Committee
in its sole discretion, equal to the product of (i) the number of SAR Shares
with respect to which the SAR was exercised and (ii) the difference between (A)
the Fair Market Value per share of Common Stock on the date of exercise and (B)
the Exercise Price.
 
6. Termination of Employment.  Unless otherwise determined by the Committee in
its sole discretion, the SAR shall terminate, prior to the expiration of the SAR
Term, at the time specified below:
 
(a) If Grantee terminates employment with the Company and its Subsidiaries
voluntarily without Good Reason (as defined below), then the SAR shall terminate
at the Close of Business on the first business day following the expiration of
the 90 day period which began on the date of termination of Grantee’s
employment; or
 
(b) If Grantee’s employment with the Company and its Subsidiaries is terminated
by the Company or a Subsidiary for Cause (as defined below), then the SAR shall
terminate immediately upon termination of Grantee’s employment.
 
In any event in which the SAR remains exercisable for a period of time following
the date of termination of Grantee’s employment, the SAR may be exercised during
such period of time only to the extent it is or becomes exercisable as provided
in paragraph 2.  Notwithstanding any period of time referenced in this
paragraph 6 or any other provision of this paragraph that may be construed to
the contrary, the SAR shall in any event terminate upon the expiration of the
SAR Term.
 
“Cause” for purposes of the Agreement shall mean cause as defined in any written
employment agreement between the Grantee and the Company or a Subsidiary in
effect at the time of the Grantee’s termination of employment or, in the absence
of any such employment agreement, any of the following: (a) conviction of the
Grantee by a court of competent jurisdiction of any felony or a crime involving
moral turpitude; (b) the Grantee’s knowing failure or refusal to follow
reasonable instructions of the Board or reasonable policies, standards and
regulations of the Company or its Subsidiaries; (c) the Grantee’s continued
failure or refusal to faithfully and diligently perform the usual, customary
duties of his employment with the Company or a Subsidiary; (d) the Grantee
continuously conducting himself in an unprofessional,
 
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unethical, immoral or fraudulent manner; or (e) the Grantee’s conduct discredits
the Company or a Subsidiary or is detrimental to the reputation, character and
standing of the  Company or a Subsidiary.
 
“Good Reason” for purposes of the Agreement shall mean good reason as defined in
any written employment agreement between the Grantee and the Company or a
Subsidiary in effect at the time of the Grantee’s termination of employment or,
in the absence of any such employment agreement, shall be deemed to have
occurred upon the happening of any of the following:
 
(i) any reduction in Grantee’s annual rate of salary;
 
(ii) either (x) a failure of the Company to continue in effect any employee
benefit plan in which Grantee was participating or (y) the taking of any action
by the Company that would adversely affect Grantee’s participation in, or
materially reduce Grantee’s benefits under, any such employee benefit plan,
unless such failure or such taking of any action adversely affects the senior
members of the corporate management of the Company generally;
 
(iii) the assignment to Grantee of duties and responsibilities that are
materially more oppressive or onerous than those attendant to Grantee’s position
immediately after the date hereof;
 
(iv) the relocation of the office location as assigned to Grantee by the Company
to a location more than 20 miles from Grantee’s current location without
Grantee’s consent; or
 
(v) the failure of the Company to obtain, prior to the time of any
reorganization, merger, consolidation, disposition of all or substantially all
of the assets of the Company or similar transaction effective after the date
hereof, in which the Company is not the surviving person, the unconditional
assumption in writing or by operation of law of the Company’s obligations to
Grantee under this Agreement by each direct successor to the Company in any such
transaction.
 
Notwithstanding any provision to the contrary, in order for any event(s) in
subparagraph (i) through (v) above to constitute “Good Reason” for purposes of
this Agreement, (A) the Grantee must notify the Company within 90 days following
the initial occurrence of the event(s) that the Grantee intends to terminate his
employment with the Company because of the occurrence of Good Reason (which
event must be described by the Executive in reasonable detail) and (B) within 60
days after receiving such notice from the Grantee (the “Correction Period”), the
Company must fail to reinstate the Grantee to the position he was in, or
otherwise cure the circumstances giving rise to Good Reason.  The Grantee’s
termination for Good Reason may occur only within 60 days following the
expiration of the Correction Period.
 
7. Nontransferability of SAR.  During Grantee’s lifetime, the SAR is not
transferable (voluntarily or involuntarily) other than pursuant to a qualified
domestic relations order as defined by the Code or Title I of the Employee
Retirement Income Security Act, or the
 
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rules thereunder (a “QDRO”), and, except as otherwise required pursuant to a
QDRO, is exercisable only by the Grantee or Grantee’s court appointed legal
representative.  The Grantee may designate a beneficiary or beneficiaries to
whom the SAR shall pass upon Grantee’s death and may change such designation
from time to time by filing a written designation of beneficiary or
beneficiaries with the Committee on the form annexed hereto as Exhibit B or such
other form as may be prescribed by the Committee, provided that no such
designation shall be effective unless so filed prior to the death of
Grantee.  If no such designation is made or if the designated beneficiary does
not survive the Grantee’s death, the SAR shall pass by will or the laws of
descent and distribution.  Following Grantee’s death, the SAR, if otherwise
exercisable, may be exercised by the person to whom such SAR passes according to
the foregoing and such person shall be deemed the Grantee for purposes of any
applicable provisions of this Agreement.
 
Notwithstanding the foregoing, the SAR is transferable by the Grantee to (i) the
children or grandchildren of the Grantee (“Immediate Family Members”), (ii) a
trust or trusts for the exclusive benefit of such Immediate Family Members
(“Immediate Family Member Trusts”), or (iii) a partnership or partnerships in
which such Immediate Family Members have at least ninety‑nine percent (99%) of
the equity, profit and loss interests (“Immediate Family Member
Partnerships”).  Subsequent transfers of a transferred SAR shall be prohibited
except by will or the laws of descent and distribution or pursuant to a QDRO,
unless such transfers are made to the original Grantee or a person to whom the
original Grantee could have made a transfer in the manner described herein.  No
transfer shall be effective unless and until written notice of such transfer is
provided to the Committee, in the form and manner prescribed by the
Committee.  Following transfer, the SAR shall continue to be subject to the same
terms and conditions as were applicable immediately prior to transfer, and,
except as otherwise provided herein, the term “Grantee” shall be deemed to refer
to the transferee.  The consequences of termination of employment shall continue
to be applied with respect to the original Grantee, following which the SAR
shall be exercisable by the transferee only to the extent and for the periods
specified in the Plan and this Agreement.
 
8. No Stockholder Rights.  The Grantee shall not be deemed for any purpose to
be, or to have any of the rights of, a stockholder of the Company with respect
to any shares of Common Stock as to which this Agreement relates unless and
until shares shall have been issued to Grantee by the Company pursuant to
paragraph 5.  Furthermore, the existence of this Agreement shall not affect in
any way the right or power of the Company or its stockholders to accomplish any
corporate act, including, without limitation, the acts referred to in Section 15
of the Plan.
 
9. Adjustments.  As provided in Section 15 of the Plan, certain adjustments may
be made to the SAR upon the occurrence of events or circumstances described in
Section 15 of the Plan.
 
10. Restrictions Imposed by Law.  Without limiting the generality of Section 16
of the Plan, the Grantee agrees that Grantee will not exercise the SAR and that
the Company will not be obligated to deliver any payment or shares of Common
Stock, if counsel to the Company determines that such exercise, payment or
delivery would violate any applicable law or any rule or regulation of any
governmental authority or any rule or regulation of, or agreement of the
 
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Company with, any securities exchange or association upon which the Common Stock
is listed or quoted.  The Company shall in no event be obligated to take any
affirmative action in order to cause the exercise of the SAR or the resulting
payment or delivery of shares of Common Stock to comply with any such law, rule,
regulation or agreement.
 
11. Notice.  Unless the Company notifies the Grantee in writing of a different
procedure, any notice or other communication to the Company with respect to this
Agreement shall be in writing and shall be (a) delivered personally to the
following address:
 
Carrizo Oil & Gas, Inc.
1000 Louisiana St., Suite 1500
Houston, Texas 77002
 
or (b) sent by first class mail, postage prepaid and addressed as follows:
 
Carrizo Oil & Gas, Inc.
1000 Louisiana St, Suite 1500
Houston, Texas 77002
Attention: Payroll/Benefits Manager
 
Any notice or other communication to the Grantee with respect to this Agreement
shall be in writing and shall be delivered personally, or shall be sent by first
class mail, postage prepaid, to Grantee’s address as listed in the records of
the Company on the Grant Date, unless the Company has received written
notification from the Grantee of a change of address.
 
12. Amendment.  Notwithstanding any other provisions hereof, this Agreement may
be supplemented or amended from time to time as approved by the Committee as
contemplated by Section 6 of the Plan.  Without limiting the generality of the
foregoing, without the consent of the Grantee,
 
(a) this Agreement may be amended or supplemented (i) to cure any ambiguity or
to correct or supplement any provision herein which may be defective or
inconsistent with any other provision herein, or (ii) to add to the covenants
and agreements of the Company for the benefit of Grantee or surrender any right
or power reserved to or conferred upon the Company in this Agreement, subject,
however, to any required approval of the Company’s stockholders and, provided,
in each case, that such changes or corrections shall not adversely affect the
rights of Grantee with respect to the Award evidenced hereby without the
Grantee’s consent, or (iii) to make such other changes as the Company, upon
advice of counsel, determines are necessary or advisable because of the adoption
or promulgation of, or change in or of the interpretation of, any law or
governmental rule or regulation, including any applicable federal or state
securities laws; and
 
(b) subject to Section 6 of the Plan and any required approval of the Company’s
stockholders, the Award evidenced by this Agreement may be canceled by the
Committee and a new Award made in substitution therefor,
 
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provided that the Award so substituted shall satisfy all of the requirements of
the Plan as of the date such new Award is made and no such action shall
adversely affect the SAR to the extent then exercisable without the Grantee’s
consent.
 
13. Grantee Employment.  Nothing contained in this Agreement, and no action of
the Company or the Committee with respect hereto, shall confer or be construed
to confer on the Grantee any right to continue in the employ of the Company or
any of its Subsidiaries or interfere in any way with the right of the Company or
any employing Subsidiary to terminate the Grantee’s employment at any time, with
or without cause; subject, however, to the provisions of any employment
agreement between the Grantee and the Company or any Subsidiary.
 
14. Governing Law.  This Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of Texas.
 
15. Construction.  References in this Agreement to “this Agreement” and the
words “herein,” “hereof,” “hereunder” and similar terms include all Exhibits and
Schedules appended hereto, including the Plan.  This Agreement is entered into,
and the Award evidenced hereby is granted, pursuant to the Plan and shall be
governed by and construed in accordance with the Plan and the administrative
interpretations adopted by the Committee thereunder.  All decisions of the
Committee upon questions regarding the Plan or this Agreement shall be
conclusive.  Unless otherwise expressly stated herein, in the event of any
inconsistency between the terms of the Plan and this Agreement, the terms of the
Plan shall control.  The headings of the paragraphs of this Agreement have been
included for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
 
16. Duplicate Originals.  The Company and the Grantee may sign any number of
copies of this Agreement.  Each signed copy shall be an original, but all of
them together represent the same agreement.
 
17. Rules by Committee.  The rights of the Grantee and obligations of the
Company hereunder shall be subject to such reasonable rules and regulations as
the Committee may adopt from time to time hereafter.
 
18. Entire Agreement.  Subject to the provisions of any applicable written
employment agreement between the Grantee and the Company or any Subsidiary,
Grantee and the Company hereby declare and represent that no promise or
agreement not herein expressed has been made and that this Agreement contains
the entire agreement between the parties hereto with respect to the SAR and
replaces and makes null and void any prior agreements, oral or written, between
Grantee and the Company regarding the SAR.
 
19. Grantee Acceptance.  Grantee shall signify acceptance of the terms and
conditions of this Agreement by signing in the space provided at the end hereof
and returning a signed copy to the Company.
 
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ATTEST:                                                                           CARRIZO
OIL & GAS, INC.
 
_________________________________                        By: 
_________________________________
Secretary                          Date                                          Name:  S.
P. Johnson             Date
   Title:    President
 
 
ACCEPTED:

______________________________
 
 
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Schedule 1 to Stock Appreciation Rights
Agreement dated as of June 3, 2009
 
Incentive Plan of Carrizo Oil & Gas, Inc.
 
Grantee:                                [Employee Name]

Grant Date:                            June 3, 2009

Exercise Price:                       $20.22 per share

SAR Shares:
         ______ shares of Common Stock.

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Exhibit B to Stock Appreciation Rights
  Agreement dated as of June 3, 2009
 
 
Incentive Plan of Carrizo Oil & Gas, Inc.
 
 
Designation of Beneficiary
 
 
I, ___________________________________________ (the “Grantee”), hereby declare
that upon my death

 
 ________________________________________________________________________ (the
“Beneficiary”) of
Name
__________________________________________________________________________________________,
Street
Address                               City                                State                                Zip
Code

who is my _________________________________________________, shall be entitled
to the SAR and all other rights
Relationship to Grantee

accorded the Grantee by the above-referenced agreement (the “Agreement”).
 
It is understood that this Designation of Beneficiary is made pursuant to the
Agreement and is subject to the
conditions stated herein, including the Beneficiary’s survival of the Grantee’s
death.  If any such condition is not satisfied,
such rights shall devolve according to the Grantee’s will or the laws of descent
and distribution.
 
It is further understood that all prior designations of beneficiary under the
Agreement are hereby revoked and that
this Designation of Beneficiary may only be revoked in writing, signed by the
Grantee, and filed with the Company prior to the
Grantee’s death.
 
 

         
 
 
 
 Date
 
Grantee
           

 

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