ex102.htm


    Exhibit
10.2

     

    


     

    TXCO
Resources Inc. Overriding Royalty Purchase Plan

     

    1.           Purpose

     

    The
purpose of the Overriding Royalty Purchase Plan is to allow the Company to
purchase the overriding royalty interests of James E. Sigmon, the Company's
Chairman, President and Chief Executive Officer, in the Company's oil and gas
leases, in exchange for cash, shares of the Company's common stock or a
combination thereof, if and when purchase terms are agreed upon by the Board of
Directors and Mr. Sigmon.

     

    The Board
of Directors and Mr. Sigmon intend, from time to time, to jointly select a
third-party appraiser to provide an appraisal report and/or fairness opinion, as
they mutually deem appropriate, to the Company and Mr. Sigmon to aid in their
negotiations with respect to the purchase price of any overriding royalty
interests, although Mr. Sigmon is not obligated to accept any appraisal of his
overriding royalty interests.  Any purchase price will be mutually
agreed upon by Mr. Sigmon and the Board of Directors (with Mr. Sigmon abstaining
from any Board discussions and vote(s) relating thereto).  For the
avoidance of doubt and notwithstanding any other provision of the plan to the
contrary, the Company may purchase some or all of Mr. Sigmon's overriding
royalty interests in the Company's existing or future oil and gas leases, in one
or more transactions, over the term of this plan.

     

    Any
shares of the Company's common stock issued in exchange for the overriding
royalty interests may or may not be registered for resale by the Company, with
the terms of any such registration rights to be mutually agreed upon by Mr.
Sigmon and the Board of Directors.

     

    The Plan
shall be effective on the date it is approved by the Company's
stockholders.

     

    The Plan
shall be administered by the Board of Directors and, except as otherwise
expressly provided for herein, all questions of interpretation and application
of the Plan shall be subject to the determination of a majority of the Board of
Directors.

     

    2.           Shares
Reserved for Issuance

     

    The
Overriding Royalty Purchase Plan has 3,000,000 shares of the Company's common
stock, $0.01 par value per share, reserved for issuance in connection with the
Company's purchase(s), if any, of Mr. Sigmon's overriding royalty
interests.  As of March 25, 2008, the closing sale price of the
Company's common stock on the Nasdaq Global Select Market was
$11.87.  The number of shares of the Company's common stock reserved
for issuance under the plan will not be increased without first obtaining
stockholder approval of such increase.  Shares that may be issued
under the plan may either be authorized and unissued shares of the Company's
common stock, or authorized and issued shares of the Company's common stock held
in the Company's treasury, or any combination of the foregoing.  Any
purchase price paid with shares of the Company's common stock shall be issued
from shares reserved for issuance under the plan, and be based upon the "fair
market value" (as defined below) of the Company's common stock as of the
effective date of such purchase.

     

    Dividends
will be paid on shares of the common stock issued under the plan at the same
rate dividends are paid to holders of the Company's common stock
generally.  The Company is not currently paying dividends on its
common stock.

     


    
      
         


      

      
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    "Fair
market value" means, as of any date, (i) if the principal market for the
Company's common stock is a national securities exchange, the closing sales
price of the common stock (or the closing bid, if no sales were reported) on
that date (or, if no closing sales price or closing bid was reported on that
date, on the last trading date such closing sales price or closing bid was
reported) on the principal exchange on which the common stock is then listed; or
(ii) if the principal market for the common stock is not a national securities
exchange, the average of the highest bid and lowest asked prices for the common
stock on such day as quoted on an automated quotation system (including the OTC
Bulletin Board) or by a recognized securities dealer (or if no such prices were
quoted on that date, on the last trading date such prices were quoted); or (iii)
in the absence of an established market for the common stock of the type
described in (i) and (ii) above, the fair market value thereof will be
determined in good faith by the Company's Board of Directors.

     

    3.           Adjustments
in Authorized Shares

     

    In the
event of any recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, spin-off, combination, repurchase, share exchange, or
other similar corporate transaction or event, or any partial or complete
liquidation of the Company, such adjustments will be made in the number and
class of shares of the Company's common stock available for issuance under the
plan, as may be determined to be appropriate and equitable by the Board of
Directors, in its discretion, to prevent dilution or enlargement of the benefits
available under the plan.

     

    4.           Amendments
to the Plan

     

    The Board
of Directors may, at any time and from time to time, alter, amend, suspend, or
terminate the Overriding Royalty Purchase Plan in whole or in part; provided,
that any amendment that would cause the plan to fail to comply with any
requirement of applicable law, regulation, or rule if such amendment were not
approved by the stockholders of the Company shall not be effective unless and
until stockholder approval is obtained.  Upon termination of the plan,
the Company may not transfer any remaining shares authorized for issuance under
the plan to another stock incentive plan or other equity plan maintained by the
Company.

     

    5.           Term

     

    Unless
earlier terminated, the Overriding Royalty Purchase Plan will terminate on the
third anniversary of the date of its adoption by the Company's
stockholders.

     

    


     


    
      
         


      

      
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