Exhibit 10.1

NORTHERN OIL AND GAS, INC.
 
 
2009 EQUITY INCENTIVE PLAN
 
(Adopted by the Board of Directors on January 30, 2009)
 

 

ARTICLE I. 
 
PURPOSE
 
The purpose of this Plan is to provide a means whereby Northern Oil and Gas,
Inc. (the “Company”) may be able, by granting stock options (”Options”) and
shares of restricted stock (“Restricted Stock”), to attract, retain and motivate
capable and loyal employees, non-employee directors, consultants and advisors of
the Company and its subsidiaries, for the benefit of the Company and its
shareholders.  Options granted under the Plan may be either Incentive Stock
Options which qualify for favorable tax treatment under Section 422 of the
Internal Revenue Code (the “Code”), or Nonqualified Stock Options which do not
qualify for favorable tax treatment.  Options and Restricted Stock are referred
to collectively in this Plan as “Awards”.
 
ARTICLE II. 
 
RESERVATION OF SHARES
 
A total of 3,000,000 shares  (“Shares”) of the Company’s common stock, par value
$0.001 per share (the “Common Stock”) are reserved for issuance pursuant to
Awards granted under the Plan.  If any Shares included in an Award are not
purchased or are forfeited, or if an Award otherwise terminates without delivery
of any Shares, then the number of Shares included in the Award, to the extent of
any such forfeiture or termination, shall again be available for granting Awards
under the Plan.  Shares reserved for issue as provided herein shall cease to be
reserved upon termination of the Plan.
 
The maximum number of Shares for which any person may be granted Awards under
the Plan in any calendar year shall be limited to 500,000 Shares.  The maximum
number of Shares for which Awards may be granted under the Plan to all persons
in any calendar year shall be limited to ten percent (10%) of the total
outstanding Shares.
 
ARTICLE III. 
 
ADMINISTRATION
 
(a) The Plan shall be administered by the Compensation Committee of the Board of
Directors of the Company (the “Committee”).  The Committee shall be appointed by
the Board of Directors and shall be comprised solely of two or more
“non-employee directors” within the meaning of SEC Rule 16b-3 or any successor
rule or regulation.  Each member of the Committee
 

 
 

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(b) shall also be an “outside director” within the meaning of Internal Revenue
Code Section 162(m) or any successor provision.  Vacancies in the Committee
shall be filled by the Board.
 
(c) The Committee shall have full power to construe and interpret the Plan and
to establish and amend rules and regulations for its administration, subject to
the express provisions of the Plan.
 
(d) The Committee shall determine which persons shall be granted Awards under
the Plan, the types of Awards to be granted, the number of Shares included in
each Award, any limitations on the exercise or vesting of Awards in addition to
those imposed by this Plan, and any other terms and conditions of Awards.  The
Committee may also approve amendments to outstanding Awards, provided there is
no conflict with the terms of the Plan, applicable law, or applicable stock
market rules and regulations.
 
ARTICLE IV. 
 
ELIGIBILITY
 
An Option may be granted to any employee, non-employee director, consultant or
advisor of the Company or its subsidiaries, except that no consultant or advisor
shall be granted Awards in connection with the offer and sale of securities in a
capital raising transaction on behalf of the Company.  Restricted Stock may only
be granted to employees and any non-employee director.  A person who has
received an Award of an Option or Restricted Stock is referred to in this Plan
as a “Participant.”
 
ARTICLE V.
 
CHANGES IN PRESENT STOCK AND EFFECT OF CHANGE OF CONTROL
 
(a)           In the event of a recapitalization, merger, consolidation,
reorganization, stock dividend, stock split or other change in capitalization
affecting the Company’s present capital stock, appropriate adjustment may be
made by the Committee in the number and kind of shares included in any Award,
and the exercise or purchase price of any Award.
 
(b)           All outstanding Options shall immediately vest and become
immediately exercisable in full and all grants of Restricted Stock shall become
immediately fully-vested and free of all forfeiture and transfer restrictions
upon any “change in control” of the Company.  Any of the following shall
constitute a “change in control” for the purposes hereof:
 
(i)           The consummation of a reorganization, merger, share exchange,
consolidation or similar transaction, the acquisition of a majority of the
outstanding Common Stock by a person or group acting in concert or the sale or
disposition of all or substantially all of the assets of the Company, unless, in
any case, the persons beneficially owning the voting securities of the Company
immediately before that transaction beneficially own, directly or indirectly,
immediately after the transaction, at least seventy-five percent (75%) of the
voting securities of the Company or any other corporation or other entity
resulting from
 

 
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or surviving the transaction in substantially the same proportion as their
respective ownership of the voting securities of the Company immediately prior
to the transaction;
 
(ii)           Individuals who constitute the incumbent Board of Directors cease
for any reason to constitute at least a majority of the Board of Directors; or
 
(iii)           The Company’s shareholders approve a complete liquidation or
dissolution of the Company.
 
ARTICLE VI.
 
OPTIONS
 
(a)           Option Exercise Price.  The per share exercise price for each
Option shall be determined by the Committee at the time of grant, provided that
the per share exercise price for any Incentive Stock Option shall be not less
than the fair market value of the Common Stock on the date the Option is
granted.  The “fair market value” of the Common Stock as of any date shall be
the closing sale price for the Common Stock on the most recent day on which the
Common stock traded prior to the grant date.  If there is no closing sale price
for the Common Stock, the Committee shall use such other information deemed
appropriate by the Committee to determine the fair market value of the Common
Stock on the date of any grant.  No Incentive Stock Option shall be granted to
any employee who at the time directly or indirectly owns more than ten percent
(10%) of the combined voting power of all classes of stock of the Company or of
a subsidiary, unless the exercise price is not less than 110 percent (110%) of
the fair market value of the Common Stock on the date of grant, and unless the
Option is not exercisable more than five (5) years after the date of grant.
 
(b)           Exercise of Options.  An optionee shall exercise an Option by
delivery of a signed, written notice to the Company, specifying the number of
Shares to be purchased, together with payment of the full purchase price for the
Shares.  The Company may accept payment from a broker on behalf of the optionee
and may, upon receipt of signed, written instructions from the optionee, deliver
the Shares directly to the broker.  The date of receipt by the Company of the
final item required under this paragraph shall be the date of exercise of the
Option.
 
(c)           Option Agreement Provisions.  Each Option granted under the Plan
shall be evidenced by a Stock Option Agreement executed by the Company and the
optionee, and shall be subject to the following terms and conditions, and such
other terms and conditions as may be prescribed by the Committee:
 
(i)           Incentive Stock Option Dollar Limitation.  Each Option grant to an
employee shall constitute an Incentive Stock Option eligible for favorable tax
treatment under Section 422 of the Code, provided that no more than $100,000 of
such Options (based upon the fair market value of the underlying Shares as of
the date of grant) can first become exercisable for any employee in any calendar
year.  To the extent any Option grant exceeds the $100,000 dollar limitation, it
shall constitute a Nonqualified Stock Option.  Each stock option agreement shall
specify the extent to which it is an
 

 
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Incentive and/or a Nonqualified Stock Option.  For purposes of applying the
$100,000 limitation, options granted under this Plan and under all other plans
of the Company and its subsidiaries which are qualified under Section 422 of the
Code shall be included.
 
(ii)           Payment.  The full purchase price of the Shares acquired upon
exercise of any Option shall be paid in cash, by certified or cashier’s check,
or in the form of Shares of the Company’s Common Stock with a fair market value
equal to the full purchase price and free and clear of all liens and
encumbrances.
 
The Committee in its sole discretion may also permit the “cashless exercise” of
an Option.  In the event of a cashless exercise, the optionee shall surrender
the Option to the Company, and the Company shall issue the optionee the number
of Shares determined as follows:
 
 
X = Y (A-B) /A where:

 
 
X = the number of Shares to be issued to the optionee.

 
Y = the number of Shares with respect to which the Option is being exercised.
 
A = the closing sale price of the Common Stock on the date of exercise, or in
the absence thereof, the fair market value on the date of exercise.
 
 
B = the Option exercise price.

 
(iii)           Exercise Period.  The period within which an Option must be
exercised shall be determined by the Committee at the time of grant.  The
exercise period for an Incentive Stock Option or a Nonqualified Stock Option
shall be subject to a maximum of ten (10) years, or five (5) years for an
Incentive Stock Option granted to an employee who directly or indirectly owns
more than ten percent (10%) of the combined voting power of all classes of stock
of the Company or a subsidiary.  Unless modified by the Committee, each Option
shall become exercisable to the extent of twenty-five percent (25%) of the
shares on each of the first four (4) anniversaries of the date of grant.  To the
extent exercisable, an Option may be exercised in whole or in part.  The
Committee may impose different or additional conditions with respect to length
of service or attainment of specified performance goals which must be satisfied
prior to exercise of all or any part of an option.
 
(iv)           Rights of Optionee Before Exercise.  The holder of an Option
shall not have the rights of a shareholder with respect to the Shares covered by
his or her Option until such Shares have been issued to him or her upon exercise
of the Option.
 
(v)           Termination of Employment.  If an optionee is an employee, and his
or her employment is terminated other than by death, disability, or for conduct
which is contrary to the employer’s best interests, the optionee may, within
ninety (90) days of
 

 
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such termination (or longer, if approved by the Committee), exercise any
unexercised portion of his or her Option to the extent he or she was entitled to
do so at the time of such termination.
 
If termination of employment is effected by death or disability of the optionee,
the Option, or any portion thereof, may be exercised to the extent the optionee
was entitled to do so at the time of his or her death or disability, by the
optionee or his or her personal representative, at any time within one year
subsequent to the date of his or her termination of employment.
 
If an optionee’s employment is terminated by his or her employer for conduct
which is contrary to the best interests of the employer, as determined by the
employer in its sole discretion, the unexercised portion of the optionee’s
Option shall expire automatically on the date of termination of his or her
employment.
 
The Committee may, in its discretion, amend or eliminate any one or more of the
provisions of this paragraph (v) in connection with the grant of any individual
Option(s).
 
Notwithstanding the foregoing, no Option shall be exercisable subsequent to the
date of expiration of the Option term and no Option shall be exercisable
subsequent to the termination of the optionee’s employment except as
specifically provided in this paragraph (v).
 
(vi)           Termination of Service by Directors, Consultants and
Advisors.  If an optionee is a director, consultant, or advisor, and his or her
position with the Company terminates for any reason, the optionee may, within
ninety (90) days of such termination, or within one (1) year of such termination
if the optionee is a director (or longer in either case, if approved by the
Committee), exercise any unexercised portion of his or her Option to the extent
he or she was entitled to do so at the time of such termination.  If termination
is effected by death of the optionee, the Option may be exercised for the
applicable period to the extent the optionee was entitled to do so at the time
of his or her death by the optionee’s personal representative.  No Option shall
be exercisable subsequent to the date of expiration of the Option term and no
Option shall be exercisable subsequent to the termination of the optionee’s
position with the Company, except as specifically provided in this paragraph
(vi).
 
(vii)           Non-transferability of Option.  No Option shall be transferable
by the optionee otherwise than by will or by the laws of descent and
distribution, and each Option shall be exercisable during the optionee’s
lifetime only by the optionee.  No Option may be attached or subject to levy by
an optionee’s creditors.
 
(viii)                      Date of Grant.  The date on which the exercise price
becomes fixed for an Option shall be considered the date on which the Option is
granted.
 

 
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ARTICLE VII.
 
RESTRICTED STOCK
 
(a)           Grant of Restricted Stock.  Each grant of Restricted Stock made
under the Plan shall be for such number of Shares as shall be determined by the
Committee and set forth in the agreement containing the terms of such
grant.  The agreement for each grant shall set forth any objective performance
goals which must be satisfied in order for the Restricted Stock to vest and the
forfeiture and transfer restrictions to lapse.  The Committee may base
performance goals on factors which the Committee determines appropriate from
time to time, including but not limited to the Company’s stock price, market
share, revenues, net income, and return on equity.  The agreement may also set
forth a period of time during which the employee must remain in the continuous
employment of the Company in order for the forfeiture and transfer restrictions
to lapse.  If the Committee so determines, the restrictions may lapse during
such restricted period in installments with respect to specified portions of the
shares covered by the Restricted Stock grant.
 
(b)           Agreements.  Awards of Restricted Stock shall be evidenced by
agreements in such form as the Committee shall from time to time approve, which
agreements shall be subject to the terms and conditions contained in the Plan
and any additional terms and conditions established by the Committee that are
consistent with the Plan.
 
(c)           Delivery of Common Stock and Restrictions.  At the time of a
Restricted Stock grant, a certificate representing the number of Shares awarded
thereunder shall be registered in the name of the Participant.  Such certificate
shall be held by an escrow agent appointed by the Company for the account of the
Participant until vested subject to the terms and conditions of the Plan, and
shall bear such a legend setting forth the restrictions imposed thereon as the
Committee, in its discretion, may determine.  The Participant shall have all
rights of a shareholder with respect to the Shares, including the right to
receive dividends and the right to vote such shares, subject to the following
restrictions:
 
(i)           the Participant shall not be entitled to delivery of a stock
certificate until the expiration of the restricted period and the fulfillment of
any other restrictive conditions set forth in the agreement with respect to such
Shares;
 
(ii)           none of the Shares may be sold, assigned, transferred, pledged,
hypothecated or otherwise encumbered or disposed of during such restricted
period or until after the fulfillment of any such other restrictive conditions;
and
 
(iii)           except as otherwise determined by the Committee, all of the
Shares to the extent not vested shall be forfeited and all rights of the
Participant to such Shares shall terminate, without further obligation on the
part of the Company, unless the Participant remains in the continuous employment
of the Company for the entire restricted period in relation to which such Common
Stock was granted and unless any other restrictive conditions relating to the
Restricted Stock Award are met.
 

 
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Any Common Stock, any other securities of the Company and any other property
(except for cash dividends) distributed with respect to the Shares subject to
Restricted Stock Awards shall be subject to the same restrictions, terms and
conditions as such Restricted Stock.
 
(d)           Termination of Restrictions.  At the end of the applicable
restricted period and provided that any other restrictive conditions of the
grant of Restricted Stock are met, or at such earlier time as otherwise
determined by the Committee, the Shares shall be considered vested and all
restrictions set forth in the agreement relating to the grant of Restricted
Stock or in the Plan shall lapse as to the Restricted Stock subject thereto, and
a stock certificate for the appropriate number of Shares, free of the
restrictions and the Restricted Stock legend, shall be delivered to the
Participant or his or her beneficiary or estate, as the case may be.
 
ARTICLE VIII.
 
 
GENERAL
 
(a)           No Cash Consideration for Awards.  Awards shall be granted for no
cash consideration or for such minimal cash consideration as may be required by
applicable law.
 
(b)           Awards May Be Granted Separately or Together.  Awards may, in the
discretion of the Committee, be granted either alone or in addition to, in
tandem with or in substitution for any other Award.  Awards granted in addition
to or in tandem with other Awards may be granted either at the same time as or
at a different time from the grant of such other Awards.
 
(c)           Term of Awards.  The term of each Award shall be for such period
as may be determined by the Committee.
 
(d)           Restrictions; Stock Market Listing.  All certificates for Shares
or other securities delivered under the Plan pursuant to any Award or the
exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan, or the rules,
regulations and other requirements of the Securities and Exchange Commission and
any applicable federal or state securities laws, and the Committee may cause a
legend or legends to be placed on any such certificates to make appropriate
reference to such restrictions.  If the Shares are traded on a securities
market, the Company shall not be required to deliver any Shares covered by an
Award unless and until such Shares have been admitted for trading on such
securities market.
 
(e)           No Right to Continued Employment.  Nothing in the Plan or in any
Award document shall be construed to confer upon any employee any right to
continue in the employ of the Company or a subsidiary, or to interfere in any
way with the right of the Company or a subsidiary as employer to terminate his
or her employment at any time, nor to derogate from the terms of any written
employment agreement between such corporation and the optionee.
 
(f)           Section 16 Compliance.  The Plan is intended to comply in all
respects with SEC Rule 16b-3, as amended, and in all events the Plan shall be
construed in accordance with the requirements of Rule 16b-3.  If any Plan
provision does not comply with Rule 16b-3, the provision shall be deemed
inoperative.  The Board of Directors, in its absolute discretion, may
 

 
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bifurcate the Plan so as to restrict, limit or condition the use of any
provision of the Plan with respect to persons who are officers or directors
subject to Section 16 of the Securities and Exchange Act of 1934, as amended,
without so restricting, limiting or conditioning the Plan with respect to other
Participants.
 
 
ARTICLE IX.
 
 
WITHHOLDING OF TAXES; TAX BONUSES
 
The Company shall make such provisions and take such steps as it may deem
necessary or appropriate for the withholding of any taxes that the Company is
required by any law or regulation to withhold in connection with any Award
including, but not limited to, withholding a portion of the Shares issuable
pursuant to the Award, or requiring the Participant to pay to the Company, in
cash, an amount sufficient to cover the Company’s withholding obligations.
 
The Committee, in its discretion, shall have the authority, at the time of grant
of any Award under this Plan or at any time thereafter, to approve cash bonuses
to designated Participants to be paid upon their exercise or receipt of (or the
lapse of restrictions relating to) Awards in order to provide funds to pay all
or a portion of federal and state taxes due as a result of such exercise or
receipt (or the lapse of such restrictions).  The Committee shall have full
authority in its discretion to determine the amount of any such tax bonus and
the Company shall have the authority to withhold and pay such tax bonuses over
to the appropriate taxing authorities on the Participants’ behalf.
 
ARTICLE X.
 
EFFECTIVE DATE OF PLAN
 
The effective date of the Plan shall be the date of its original adoption by the
Board of Directors of the Company as indicated on the first page hereof.
 
ARTICLE XI.
 
 
DURATION OF THE PLAN
 
The Plan shall terminate January 30, 2019, which is ten years after the date of
its approval by the Board of Directors, unless sooner terminated by issuance of
all Shares reserved for issuance hereunder.  No Award shall be granted under the
Plan after such termination date.
 
ARTICLE XII.
 
TERMINATION OR AMENDMENT OF THE PLAN
 
The Board of Directors of the Company may at any time terminate the Plan, or
make such modifications of the Plan as it shall deem advisable, subject to
shareholder approval to the extent required by applicable law or stock market
rule or regulation.  No termination or amendment of the Plan may, without the
consent of the Participants to whom any Awards shall previously have been
granted, adversely affect the rights of such Participants under such Awards.
 

 
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ARTICLE XIII.
 
 
SHAREHOLDER APPROVAL
 
The Board of Directors shall submit the Plan to the shareholders for their
approval within 12 months of the date of its adoption by the Board.  Awards
granted prior to such approval are contingent on receipt of such approval, and
shall automatically lapse and become null and void ab initio if such approval is
not granted.  If any grants of Restricted Stock lapse due to failure to obtain
shareholder approval, the Company shall pay to the affected Participants, in
cash, an amount equal to the total fair market value of the Shares of Restricted
Stock granted to the Participant as of the grant date or the date the
shareholders fail to approve the Plan, whichever is greater.  The Board shall
also submit any amendments to the shareholders for approval if required by
applicable law or stock market rule or regulation.
 
ARTICLE XIV.
 
INTERPRETATION
 
The Plan shall be interpreted in accordance with Minnesota law.
 
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