Blueprint




 EXHIBIT 4.1







PEDEVCO
CORP.

 

2012
EQUITY INCENTIVE PLAN

 (As Amended)

 

1. Purposes
of the Plan. PEDEVCO
Corp., a Texas corporation (the “Company”) hereby
establishes the PEDEVCO CORP. 2012 EQUITY INCENTIVE PLAN (the
“Plan”). The purposes of
this Plan is to attract and retain the best available personnel for
positions of substantial responsibility, to provide additional
incentive to Employees, Directors and Consultants, and to promote
the long-term growth and profitability of the Company. The Plan
permits the grant of Incentive Stock Options, Nonstatutory Stock
Options, Restricted Stock, Restricted Stock Units, Stock
Appreciation Rights, Performance Units and Performance Shares as
the Administrator may determine.

 

2. Definitions.
The following definitions will apply to the terms in the
Plan:

 

“Administrator” means the
Board or any of its Committees as will be administering the Plan,
in accordance with Section 4.

 

“Applicable Laws” means
the requirements relating to the administration of equity-based
awards under U.S. state corporate laws, U.S. federal and state
securities laws, the Code, any stock exchange or quotation system
on which the Common Stock is listed or quoted and the applicable
laws of any foreign country or jurisdiction where Awards are, or
will be, granted under the Plan.

 

“Award” means,
individually or collectively, a grant under the Plan of Options,
SARs, Restricted Stock, Restricted Stock Units, Performance Units
or Performance Shares.

 

“Award Agreement” means
the written or electronic agreement setting forth the terms and
provisions applicable to each Award granted under the Plan. The
Award Agreement is subject to the terms and conditions of the
Plan.

 

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

 

“Change in Control” means
the occurrence of any of the following events:

 

(i) Any
“person” (as such term is
used in Sections 13(d) and 14(d) of the Exchange Act) becomes the
“beneficial
owner” (as defined in Rule 13d-3 of the Exchange Act),
directly or indirectly, of securities of the Company representing
fifty percent (50%) or more of the total voting power represented
by the Company’s then outstanding voting securities; provided
however, that for purposes of this subsection (i) any acquisition
of securities directly from the Company shall not constitute a
Change in Control;

 

(ii) The
consummation of the sale or disposition by the Company of all or
substantially all of the Company’s assets;

 

(iii) A change
in the composition of the Board occurring within a two-year period,
as a result of which fewer than a majority of the directors are
Incumbent Directors. “Incumbent Directors”
means directors who either (A) are Directors as of the effective
date of the Plan, or (B) are elected, or nominated for election, to
the Board with the affirmative votes of at least a majority of the
Incumbent Directors at the time of such election or nomination (but
will not include an individual whose election or nomination is in
connection with an actual or threatened proxy contest relating to
the election of directors to the Company); or

 

(iv) The
consummation of a merger or consolidation of the Company with any
other corporation, other than a merger or consolidation which would
result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities
of the surviving entity or its parent) at least fifty percent (50%)
of the total voting power represented by the voting securities of
the Company or such surviving entity or its parent outstanding
immediately after such merger or consolidation.

 



 






 





 

 

For avoidance of
doubt, a transaction will not constitute a Change in Control if:
(i) its sole purpose is to change the state of the Company’s
incorporation, or (ii) its sole purpose is to create a holding
company that will be owned in substantially the same proportions by
the persons who held the Company’s securities immediately
before such transaction.

 

“Code” means the Internal
Revenue Code of 1986, as amended. Any reference in the Plan to a
section of the Code will be a reference to any successor or amended
section of the Code.

 

“Committee” means a
committee of Directors or of other individuals satisfying
Applicable Laws appointed by the Board in accordance with Section 4
hereof.

 

“Common Stock” means the
common stock of the Company.

 

“Company” means PEDEVCO
Corp., a Texas corporation, or any successor thereto.

 

“Consultant” means any
person, including an advisor, engaged by the Company or a Parent or
Subsidiary to render services to such entity.

 

“Director” means a member
of the Board.

 

“Disability” means a
medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a
continuous period of not less than 12 months, and that either (1)
renders a Participant unable to engage in any substantial gainful
activity or (2) results in a Participant receiving income
replacement benefits for a period of not less than three months
under an employee accident and health plan covering the
Participant.

 

“Employee” means any
person, including Officers and Directors, employed by the Company
or any Parent or Subsidiary of the Company. Neither service as a
Director nor payment of a director’s fee by the Company will
be sufficient to constitute “employment” by the
Company.

 

“Exchange Act” means the
Securities Exchange Act of 1934, as amended.

 

“Fair Market Value” means,
as of any date, the value of Common Stock determined as
follows:

 

(i) If the
Common Stock is listed on any established stock exchange or a
national market system, including without limitation any division
or subdivision of the Nasdaq Stock Market, its Fair Market Value
will be the closing sales price for such stock (or the closing bid,
if no sales were reported) as quoted on such exchange or system on
the day of determination, as reported in The Wall Street Journal or
such other source as the Administrator deems reliable;

 

(ii) If the
Common Stock is regularly quoted by a recognized securities dealer
but selling prices are not reported, including without limitation
quotation through the over the counter bulletin board
(“OTCQB®”) quotation
service administered by the Financial Industry Regulatory Authority
(“FINRA”), the Fair Market
Value of a Share will be the closing price for the Common Stock on
the day of determination, as reported in The Wall Street Journal or
such other source as the Administrator deems reliable;
or

 

 (iii) In
the absence of an established market for the Common Stock, the Fair
Market Value will be determined in good faith by the Administrator,
and to the extent Section 15 applies (a)
with respect to ISOs, the Fair Market Value shall be determined in
a manner consistent with Code section 422 or (b) with respect to
NSOs or SARs, the Fair Market Value shall be determined in a manner
consistent with Code section 409A.

 

“Fiscal Year” means the
fiscal year of the Company.

 

“Grant Date” means, for
all purposes, the date on which the Administrator determines to
grant an Award, or such other later date as is determined by the
Administrator, provided that the Administrator cannot grant an
Award prior to the date the material terms of the Award are
established. Notice of the Administrator’s determination to
grant an Award will be provided to each Participant within a
reasonable time after the Grant Date.

 



 

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“Incentive Stock Option”
or “ISO” means an Option that
by its terms qualifies and is otherwise intended to qualify as an
incentive stock option within the meaning of Section 422 of the
Code and the regulations promulgated thereunder.

 

“Nonstatutory Stock
Option” or “NSO” means an Option that
by its terms does not qualify or is not intended to qualify as an
ISO.

 

“Officer” means a person
who is an officer of the Company within the meaning of Section 16
of the Exchange Act and the rules and regulations promulgated
thereunder.

 

“Option” means a stock
option granted pursuant to the Plan.

 

“Optioned Shares” means
the Common Stock subject to an Option.

 

“Optionee” means the
holder of an outstanding Option.

 

“Parent” means a
“parent
corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code.

 

“Participant” means the
holder of an outstanding Award.

 

“Performance Share” means
an Award denominated in Shares which may vest in whole or in part
upon attainment of performance goals or other vesting criteria as
the Administrator may determine pursuant to Section
10.

 

“Performance Unit” means
an Award which may vest in whole or in part upon attainment of
performance goals or other vesting criteria as the Administrator
may determine and which may be settled for cash, Shares or other
securities or a combination of the foregoing pursuant to Section
10.

 

“Period of Restriction”
means the period during which Shares of Restricted Stock are
subject to forfeiture or restrictions on transfer pursuant to
Section 7.

 

“Plan” means this 2012
Equity Incentive Plan.

 

“Restricted Stock” means
Shares awarded to a Participant which are subject to forfeiture and
restrictions on transferability in accordance with Section
7.

 

“Restricted Stock Unit”
means the right to receive one Share at the end of a specified
period of time, which right is subject to forfeiture in accordance
with Section 8 of the Plan.

 

“Rule 16b-3” means Rule
16b-3 of the Exchange Act or any successor to Rule
16b-3.

 

“Section” means a
paragraph or section of this Plan.

 

“Section 16(b)” means
Section 16(b) of the Exchange Act.

 

“Service Provider” means
an Employee, Director or Consultant.

 

“Share” means a share of
the Common Stock, as adjusted in accordance with Section
13.

 

“Stock Appreciation Right”
or “SAR” means the right to
receive payment from the Company in an amount no greater than the
excess of the Fair Market Value of a Share at the date the SAR is
exercised over a specified price fixed by the Administrator in the
Award Agreement, which shall not be less than the Fair Market Value
of a Share on the Grant Date. In the case of a SAR which is granted
in connection with an Option, the specified price shall be the
Option exercise price.



 

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“Subsidiary” means a
“subsidiary
corporation,” whether now or hereafter existing, as
defined in Section 424(f) of the Code.

 

“Ten Percent Owner” means
any Service Provider who is, on the grant date of an ISO, the owner
of Shares (determined with application of ownership attribution
rules of Code Section 424(d)) possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any
of its Subsidiaries.

 

3. Stock
Subject to the Plan.

 

(a) Stock
Subject to the Plan. Subject to the provisions of Section
13, the maximum aggregate number of Shares that may be issued under
the Plan is fifteen million (15,000,000) Shares. The Shares may be
authorized but unissued, or reacquired Common Stock.

 

(b) Lapsed
Awards. If an Award expires or becomes unexercisable without
having been exercised in full or, with respect to Restricted Stock,
Restricted Stock Units, Performance Shares or Performance Units, is
forfeited in whole or in part to the Company, the unpurchased
Shares (or for Awards other than Options and SARs, the forfeited or
unissued Shares) which were subject to the Award will become
available for future grant or sale under the Plan (unless the Plan
has terminated). With respect to SARs, only Shares actually issued
pursuant to a SAR will cease to be available under the Plan; all
remaining Shares subject to the SARs will remain available for
future grant or sale under the Plan (unless the Plan has
terminated). Shares that have actually been issued under the Plan
under any Award will not be returned to the Plan and will not
become available for future distribution under the Plan; provided,
however, that if Shares issued pursuant to Awards of Restricted
Stock, Restricted Stock Units, Performance Shares or Performance
Units are forfeited to the Company, such Shares will become
available for future grant under the Plan. Shares withheld by the
Company to pay the exercise price of an Award or to satisfy tax
withholding obligations with respect to an Award will become
available for future grant or sale under the Plan. To the extent an
Award under the Plan is paid out in cash rather than Shares, such
cash payment will not result in reducing the number of Shares
available for issuance under the Plan.

 

(c) Share
Reserve. The Company, during the term of this Plan, will at
all times reserve and keep available such number of Shares as will
be sufficient to satisfy the requirements of the Plan.

 

4. Administration
of the Plan.

 

(a) Procedure.
The Plan shall be administered by the Board or a Committee (or
Committees) appointed by the Board, which Committee shall be
constituted to comply with Applicable Laws. If and so long as the
Common Stock is registered under Section 12(b) or 12(g) of the
Exchange Act, the Board shall consider in selecting the
Administrator and the membership of any committee acting as
Administrator the requirements regarding: (i) “nonemployee directors”
within the meaning of Rule 16b-3 under the Exchange Act; (ii)
“independent
directors” as described in the listing requirements
for any stock exchange on which Shares are listed; and
(iii) Section
15(b)(i) of the Plan, if the Company pays salaries for
which it claims deductions that are subject to the Code section
162(m) limitation on its U.S. tax returns. The Board may delegate
the responsibility for administering the Plan with respect to
designated classes of eligible Participants to different committees
consisting of two or more members of the Board, subject to such
limitations as the Board or the Administrator deems appropriate.
Committee members shall serve for such term as the Board may
determine, subject to removal by the Board at any
time.

 

(b) Powers
of the Administrator. Subject to the provisions of the Plan
and the approval of any relevant authorities, and in the case of a
Committee, subject to the specific duties delegated by the Board to
such Committee, the Administrator will have the authority, in its
discretion:

 

(i) to
determine the Fair Market Value;

 

(ii) to select
the Service Providers to whom Awards may be granted
hereunder;



 

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(iii) to
determine the number of Shares to be covered by each Award granted
hereunder;

 

(iv) to
approve forms of agreement for use under the Plan;

 

(v) to
determine the terms and conditions, not inconsistent with the terms
of the Plan, of any Award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the
time or times when Awards may be exercised (which may be based on
continued employment, continued service or performance criteria),
any vesting acceleration (whether by reason of a Change of Control
or otherwise) or waiver of forfeiture restrictions, and any
restriction or limitation regarding any Award or the Shares
relating thereto, based in each case on such factors as the
Administrator, in its sole discretion, will determine;

 

(vi) to
construe and interpret the terms of the Plan and Awards granted
pursuant to the Plan, including the right to construe disputed or
doubtful Plan and Award provisions;

 

(vii) to
prescribe, amend and rescind rules and regulations relating to the
Plan;

 

(viii) to
modify or amend each Award (subject to Section 19(c)) to the extent
any modification or amendment is consistent with the terms of the
Plan. The Administrator shall have the discretion to extend the
exercise period of Options generally provided the exercise period
is not extended beyond the earlier of the original term of the
Option or 10 years from the original grant date, or specifically
(1) if the exercise period of an Option is extended (but to no more
than 10 years from the original grant date) at a time when the
exercise price equals or exceeds the fair market value of the
Optioned Shares or (2) an Option cannot be exercised because such
exercise would violate Applicable Laws, provided that the exercise
period is not extended more than 30 days after the exercise of the
Option would no longer violate Applicable Laws.

 

(ix) to allow
Participants to satisfy withholding tax obligations in such manner
as prescribed in Section 14;

 

(x) to
authorize any person to execute on behalf of the Company any
instrument required to effect the grant of an Award previously
granted by the Administrator;

 

(xi) to delay
issuance of Shares or suspend Participant’s right to exercise
an Award as deemed necessary to comply with Applicable Laws;
and

 

(xii) to make
all other determinations deemed necessary or advisable for
administering the Plan.

 

(c) Effect
of Administrator’s Decision. The Administrator’s
decisions, determinations and interpretations will be final and
binding on all Participants and any other holders of Awards. Any
decision or action taken or to be taken by the Administrator,
arising out of or in connection with the construction,
administration, interpretation and effect of the Plan and of its
rules and regulations, shall, to the maximum extent permitted by
Applicable Laws, be within its absolute discretion (except as
otherwise specifically provided in the Plan) and shall be final,
binding and conclusive upon the Company, all Participants and any
person claiming under or through any Participant.

 

5. Eligibility.
NSOs, Restricted Stock, Restricted Stock Units, SARs, Performance
Units and Performance Shares may be granted to Service Providers.
ISOs may be granted as specified in Section 15(a).

 

6. Stock
Options.

 

(a) Grant
of Options. Subject to the terms and conditions of the Plan,
the Administrator, at any time and from time to time, may grant
Options to Service Providers in such amounts as the Administrator
will determine in its sole discretion. For purposes of the
foregoing sentence, Service Providers shall include prospective
employees or consultants to whom Options are granted in connection
with written offers of employment or engagement of services,
respectively, with the Company; provided that no Option granted to
a prospective employee or consultant may be exercised prior to the
commencement of employment or services with the Company. The
Administrator may grant NSOs, ISOs, or any combination of the two.
ISOs shall be granted in accordance with Section 15(a) of the
Plan.



 

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(b) Option
Award Agreement. Each Option shall be evidenced by an Award
Agreement that shall specify the type of Option granted, the Option
price, the exercise date, the term of the Option, the number of
Shares to which the Option pertains, and such other terms and
conditions (which need not be identical among Participants) as the
Administrator shall determine in its sole discretion. If the Award
Agreement does not specify that the Option is to be treated as an
ISO, the Option shall be deemed a NSO.

 

(c) Exercise
Price. The per Share exercise price for the Shares to be
issued pursuant to exercise of an Option will be no less than the
Fair Market Value per Share on the Grant Date.

 

(d) Term
of Options. The term of each Option will be stated in the
Award Agreement. Unless terminated sooner in accordance with the
remaining provisions of this Section 6, each Option shall expire
either ten (10) years after the Grant Date, or after a shorter term
as may be fixed by the Board.

 

(e) Time
and Form of Payment.

 

(i) Exercise
Date. Each Award Agreement shall specify how and when Shares
covered by an Option may be purchased. The Award Agreement may
specify waiting periods, the dates on which Options become
exercisable or “vested” and, subject to
the termination provisions of this section, exercise periods. The
Administrator may accelerate the exercisability of any Option or
portion thereof.

 

(ii) Exercise
of Option. Any Option granted hereunder will be exercisable
according to the terms of the Plan and at such times and under such
conditions as determined by the Administrator and set forth in the
Award Agreement. An Option may not be exercised for a fraction of a
Share. An Option will be deemed exercised when the Company
receives: (1) notice of exercise (in such form as the Administrator
shall specify from time to time) from the person entitled to
exercise the Option, and (2) full payment for the Shares with
respect to which the Option is exercised (together with all
applicable withholding taxes). Full payment may consist of any
consideration and method of payment authorized by the Administrator
and permitted by the Award Agreement and the Plan (together with
all applicable withholding taxes). Shares issued upon exercise of
an Option will be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or
her spouse. Until the Shares are issued (as evidenced by the
appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company), no right to vote or
receive dividends or any other rights as a stockholder will exist
with respect to the Optioned Shares, notwithstanding the exercise
of the Option. The Company will issue (or cause to be issued) such
Shares promptly after the Option is exercised. No adjustment will
be made for a dividend or other right for which the record date is
prior to the date the Shares are issued, except as provided in
Section 13.

 

(iii) Payment.
The Administrator will determine the acceptable form of
consideration for exercising an Option, including the method of
payment. Such consideration may consist entirely of:

 

(1) cash;

 

(2) check;

 

(3) to the
extent not prohibited by Section 402 of the Sarbanes-Oxley Act of
2002, a promissory note;

 

(4) other
Shares, provided Shares have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to
which said Option will be exercised;

 

(5) to the
extent not prohibited by Section 402 of the Sarbanes-Oxley Act of
2002, in accordance with any broker-assisted cashless exercise
procedures approved by the Company and as in effect from time to
time;

 



 

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(6) by asking
the Company to withhold Shares from the total Shares to be
delivered upon exercise equal to the number of Shares having a
value equal to the aggregate Exercise Price of the Shares being
acquired;

 

(7) any
combination of the foregoing methods of payment; or

 

(8) such other
consideration and method of payment for the issuance of Shares to
the extent permitted by Applicable Laws.

 

(f) Forfeiture
of Options. All unexercised Options shall be forfeited to
the Company in accordance with the terms and conditions set forth
in the Award Agreement and again will become available for grant
under the Plan.

 

7. Restricted
Stock.

 

(a) Grant
of Restricted Stock. Subject to the terms and conditions of
the Plan, the Administrator, at any time and from time to time, may
grant Shares of Restricted Stock to Service Providers in such
amounts as the Administrator will determine in its sole
discretion.

 

(b) Restricted
Stock Award Agreement. Each Award of Restricted Stock will
be evidenced by an Award Agreement that will specify the Period of
Restriction, the number of Shares granted, and such other terms and
conditions (which need not be identical among Participants) as the
Administrator will determine in its sole discretion. Unless the
Administrator determines otherwise, the Company as escrow agent
will hold Shares of Restricted Stock until the restrictions on such
Shares have lapsed.

 

(c) Vesting
Conditions and Other Terms.

 

(i) Vesting
Conditions. The Administrator, in its sole discretion, may
impose such conditions on the vesting of Shares of Restricted Stock
as it may deem advisable or appropriate, including but not limited
to, achievement of Company-wide, business unit, or individual goals
(including, but not limited to, continued employment or service),
or any other basis determined by the Administrator in its
discretion. The Administrator, in its discretion, may accelerate
the time at which any restrictions will lapse or be removed. The
Administrator may, in its discretion, also provide for such
complete or partial exceptions to an employment or service
restriction as it deems equitable.

 

(ii) Voting
Rights. During the Period of Restriction, Service Providers
holding Shares of Restricted Stock granted hereunder may exercise
full voting rights with respect to those Shares, unless the
Administrator determines otherwise.

 

(iii) Dividends
and Other Distributions. During the Period of Restriction,
Service Providers holding Shares of Restricted Stock will be
entitled to receive all dividends and other distributions paid with
respect to such Shares, unless the Administrator determines
otherwise. If any such dividends or distributions are paid in
Shares, the Shares will be subject to the same restrictions on
transferability and forfeitability as the Shares of Restricted
Stock with respect to which they were paid.

 

(iv) Transferability.
Except as provided in this Section, Shares of Restricted Stock may
not be sold, transferred, pledged, assigned, or otherwise alienated
or hypothecated until the end of the applicable Period of
Restriction.

 

(d) Removal
of Restrictions. All restrictions imposed on Shares of
Restricted Stock shall lapse and the Period of Restriction shall
end upon the satisfaction of the vesting conditions imposed by the
Administrator. Vested Shares of Restricted Stock will be released
from escrow as soon as practicable after the last day of the Period
of Restriction or at such other time as the Administrator may
determine, but in no event later than the 30th day following the
date on which vesting occurred.



 

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(e) Forfeiture
of Restricted Stock. On the date set forth in the Award
Agreement, the Shares of Restricted Stock for which restrictions
have not lapsed will be forfeited and revert to the Company and
again will become available for grant under the Plan.

 

8. Restricted
Stock Units.

 

(a) Grant
of Restricted Stock Units. Subject to the terms and
conditions of the Plan, the Administrator, at any time and from
time to time, may grant Restricted Stock Units to Service Providers
in such amounts as the Administrator will determine in its sole
discretion.

 

(b) Restricted
Stock Units Award Agreement. Each Award of Restricted Stock
Units will be evidenced by an Award Agreement that will specify the
number of Restricted Stock Units granted, vesting criteria, form of
payout, and such other terms and conditions (which need not be
identical among Participants) as the Administrator will determine
in its sole discretion.

 

(c) Vesting
Conditions. The Administrator shall set vesting criteria in
its discretion, which, depending on the extent to which the
criteria are met, will determine the number of Restricted Stock
Units that will be paid out to the Participant. The Administrator
may set vesting criteria based upon the achievement of
Company-wide, business unit, or individual goals (including, but
not limited to, continued employment or service), or any other
basis determined by the Administrator in its discretion. At any
time after the grant of Restricted Stock Units, the Administrator,
in its sole discretion, may reduce or waive any vesting criteria
that must be met to receive a payout.

 

(d) Time
and Form of Payment. Upon satisfaction of the applicable
vesting conditions, payment of vested Restricted Stock Units shall
occur in the manner and at the time provided in the Award
Agreement, but in no event later than the 15th day of the third
month following the end of the year in which vesting occurred.
Except as otherwise provided in the Award Agreement, Restricted
Stock Units may be paid in cash, Shares, or a combination thereof
at the sole discretion of the Administrator. Restricted Stock Units
that are fully paid in cash will not reduce the number of Shares
available for issuance under the Plan.

 

            (e) Forfeiture
of Restricted Stock Units. All unvested Restricted Stock
Units shall be forfeited to the Company on the date set forth in
the Award Agreement and again will become available for grant under
the Plan.

 

9. Stock
Appreciation Rights.

 

(a) Grant
of SARs. Subject to the terms and conditions of the Plan,
the Administrator, at any time and from time to time, may grant
SARs to Service Providers in such amounts as the Administrator will
determine in its sole discretion.

 

(b) Award
Agreement. Each SAR grant will be evidenced by an Award
Agreement that will specify the exercise price, the number of
Shares underlying the SAR grant, the term of the SAR, the
conditions of exercise, and such other terms and conditions (which
need not be identical among Participants) as the Administrator will
determine in its sole discretion.

 

(c) Exercise
Price and Other Terms. The per Share exercise price for the
exercise of an SAR will be no less than the Fair Market Value per
Share on the Grant Date.

 

(d) Time
and Form of Payment of SAR Amount. Upon exercise of a SAR, a
Participant will be entitled to receive payment from the Company in
an amount no greater than: (i) the difference between the Fair
Market Value of a Share on the date of exercise over the exercise
price; times (ii) the number of Shares with respect to which the
SAR is exercised. An Award Agreement may provide for a SAR to be
paid in cash, Shares of equivalent value, or a combination
thereof.

 



 

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(e) Forfeiture
of SARs. All unexercised SARs shall be forfeited to the
Company in accordance with the terms and conditions set forth in
the Award Agreement and again will become available for grant under
the Plan.

 

10. Performance
Units and Performance Shares.

 

(a) Grant
of Performance Units and Performance Shares. Performance
Units or Performance Shares may be granted to Service Providers at
any time and from time to time, as will be determined by the
Administrator, in its sole discretion. The Administrator will have
complete discretion in determining the number of Performance Units
and Performance Shares granted to each Participant.

 

(b) Award
Agreement. Each Award of Performance Units and Shares will
be evidenced by an Award Agreement that will specify the initial
value, the Performance Period, the number of Performance Units or
Performance Shares granted, and such other terms and conditions
(which need not be identical among Participants) as the
Administrator will determine in its sole discretion.

 

(c) Value
of Performance Units and Performance Shares. Each
Performance Unit will have an initial value that is established by
the Administrator on or before the Grant Date. Each Performance
Share will have an initial value equal to the Fair Market Value of
a Share on the Grant Date.

 

(d) Vesting
Conditions and Performance Period. The Administrator will
set performance objectives or other vesting provisions (including,
without limitation, continued status as a Service Provider) in its
discretion which, depending on the extent to which they are met,
will determine the number or value of Performance Units or
Performance Shares that will be paid out to the Service Providers.
The time period during which the performance objectives or other
vesting provisions must be met will be called the
“Performance
Period.” The Administrator may set performance
objectives based upon the achievement of Company-wide, divisional,
or individual goals or any other basis determined by the
Administrator in its discretion.

 

(e) Time
and Form of Payment. After the applicable Performance Period
has ended, the holder of Performance Units or Performance Shares
will be entitled to receive a payout of the number of vested
Performance Units or Performance Shares by the Participant over the
Performance Period, to be determined as a function of the extent to
which the corresponding performance objectives or other vesting
provisions have been achieved. Vested Performance Units or
Performance Shares will be paid as soon as practicable after the
expiration of the applicable Performance Period, but in no event
later than the 15th day of the third month following the end of the
year the applicable Performance Period expired. An Award Agreement
may provide for the satisfaction of Performance Unit or Performance
Share Awards in cash or Shares (which have an aggregate Fair Market
Value equal to the value of the vested Performance Units or
Performance Shares at the close of the applicable Performance
Period) or in a combination thereof.

 

(f) Forfeiture
of Performance Units and Performance Shares. All unvested
Performance Units or Performance Shares will be forfeited to the
Company on the date set forth in the Award Agreement, and again
will become available for grant under the Plan.

 

11. Leaves
of Absence/Transfer Between Locations. Unless the
Administrator provides otherwise or as required by Applicable Laws,
vesting of Awards will be suspended during any unpaid leave of
absence. An Employee will not cease to be an Employee in the case
of (i) any leave of absence approved by the Company or (ii)
transfers between locations of the Company or between the Company,
its Parent, or any Subsidiary. 

 

12. Transferability
of Awards. Unless determined otherwise by the Administrator,
an Award may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by
the laws of descent or distribution and may be exercised, during
the lifetime of the Participant, only by the Participant. If the
Administrator makes an Award transferable, such Award will contain
such additional terms and conditions as the Administrator deems
appropriate. 

 

13. Adjustments;
Dissolution or Liquidation; Merger or Change in
Control.

 



 

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(a) Adjustments.
In the event that any dividend or other distribution (whether in
the form of cash, Shares, other securities, or other property),
recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase,
or exchange of Shares or other securities of the Company, or other
change in the corporate structure of the Company affecting the
Shares occurs, the Administrator, in order to prevent diminution or
enlargement of the benefits or potential benefits intended to be
made available under the Plan, shall appropriately adjust the
number and class of Shares that may be delivered under the Plan
and/or the number, class, and price of Shares covered by each
outstanding Award.

 

(b) Dissolution
or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Administrator will notify each
Participant as soon as practicable prior to the effective date of
such proposed transaction. To the extent it has not been previously
exercised, an Award will terminate immediately prior to the
consummation of such proposed action.

 

(c) Change
in Control. In the event of a merger or Change in Control,
any or all outstanding Awards may be assumed by the successor
corporation, which assumption shall be binding on all Participants.
In the alternative, the successor corporation may substitute
equivalent Awards (after taking into account the existing
provisions of the Awards). The successor corporation may also
issue, in place of outstanding Shares of the Company held by the
Participant, substantially similar shares or other property subject
to vesting requirements and repurchase restrictions no less
favorable to the Participant than those in effect prior to the
merger or Change in Control.

 

In the event that
the successor corporation does not assume or substitute for the
Award, unless the Administrator provides otherwise, the Participant
will fully vest in and have the right to exercise all of his or her
outstanding Options and SARs, including Shares as to which such
Awards would not otherwise be vested or exercisable, all
restrictions on Restricted Stock and Restricted Stock Units will
lapse, and, with respect to Performance Shares and Performance
Units, all Performance Goals or other vesting criteria will be
deemed achieved at target levels and all other terms and conditions
met. In addition, if an Option or SAR is not assumed or substituted
in the event of a Change in Control, the Administrator will notify
the Participant in writing or electronically that the Option or SAR
will be exercisable for a period of time determined by the
Administrator in its sole discretion, and the Option or SAR will
terminate upon the expiration of such period.

 

For the purposes of
this Section 13(c), an Award will be considered assumed if,
following the Change in Control, the Award confers the right to
purchase or receive, for each Share subject to the Award
immediately prior to the Change in Control, the consideration
(whether stock, cash, or other securities or property) or, in the
case of a SAR upon the exercise of which the Administrator
determines to pay cash or a Performance Share or Performance Unit
which the Administrator can determine to pay in cash, the fair
market value of the consideration received in the merger or Change
in Control by holders of Common Stock for each Share held on the
effective date of the transaction (and if holders were offered a
choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided,
however, that if such consideration received in the Change in
Control is not solely common stock of the successor corporation or
its Parent, the Administrator may, with the consent of the
successor corporation, provide for the consideration to be received
upon the exercise of an Option or SAR or upon the payout of a
Restricted Stock Unit, Performance Share or Performance Unit, for
each Share subject to such Award (or in the case of Restricted
Stock Units and Performance Units, the number of implied shares
determined by dividing the value of the Restricted Stock Units and
Performance Units, as applicable, by the per share consideration
received by holders of Common Stock in the Change in Control), to
be solely common stock of the successor corporation or its Parent
equal in fair market value to the per share consideration received
by holders of Common Stock in the Change in Control.

 

Notwithstanding
anything in this Section 13(c) to the contrary, an Award that
vests, is earned or paid-out upon the satisfaction of one or more
performance goals will not be considered assumed if the Company or
its successor modifies any of such performance goals without the
Participant’s consent; provided, however, a modification to
such performance goals only to reflect the successor
corporation’s post-Change in Control corporate structure will
not be deemed to invalidate an otherwise valid Award
assumption.

 

14. Tax
Withholding.

 



 

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(a) Withholding
Requirements. Prior to the delivery of any Shares or cash
pursuant to an Award (or exercise thereof), the Company will have
the power and the right to deduct or withhold, or require a
Participant to remit to the Company, an amount sufficient to
satisfy federal, state, local, foreign or other taxes required by
Applicable Laws to be withheld with respect to such Award (or
exercise thereof).

 

(b) Withholding
Arrangements. The Administrator, in its sole discretion and
pursuant to such procedures as it may specify from time to time,
may permit a Participant to satisfy such tax withholding
obligation, in whole or in part by (without limitation) (i) paying
cash, (ii) electing to have the Company withhold otherwise
deliverable Shares having a Fair Market Value equal to the amount
required to be withheld, or (iii) delivering to the Company
already-owned Shares having a Fair Market Value equal to the amount
required to be withheld. The amount of the withholding requirement
will be deemed to include any amount which the Administrator agrees
may be withheld at the time the election is made. The Fair Market
Value of the Shares to be withheld or delivered will be determined
as of the date that the taxes are required to be
withheld.

 

15. Provisions
Applicable In the Event the Company or the Service Provider is
Subject to U.S. Taxation.

 

(a) Grant
of Incentive Stock Options. If the Administrator grants
Options to Employees subject to U.S. taxation, the Administrator
may grant such Employee an ISO and the following terms shall also
apply:

 

(i) Maximum
Amount. Subject to the provisions of Section 13, to the
extent consistent with Section 422 of the Code, not more than an
aggregate of fifteen million (15,000,000) Shares may be issued as
ISOs under the Plan.

 

(ii) General
Rule. Only Employees shall be eligible for the grant of
ISOs.

 

(iii) Continuous
Employment. The Optionee must remain in the continuous
employ of the Company or its Subsidiaries from the date the ISO is
granted until not more than three months before the date on which
it is exercised. A leave of absence approved by the Company may
exceed ninety (90) days if reemployment upon expiration of such
leave is guaranteed by statute or contract. If reemployment upon
expiration of a leave of absence approved by the Company is not so
guaranteed, then three (3) months following the ninety-first (91st)
day of such leave any ISO held by the Optionee will cease to be
treated as an ISO.

 

(iv) Award
Agreement.

 

(1) The
Administrator shall designate Options granted as ISOs in the Award
Agreement. Notwithstanding such designation, to the extent that the
aggregate Fair Market Value of the Shares with respect to which
ISOs are exercisable for the first time by the Optionee during any
calendar year (under all plans of the Company and any Parent or
Subsidiary) exceeds one hundred thousand dollars ($100,000),
Options will not qualify as an ISO. For purposes of this section,
ISOs will be taken into account in the order in which they were
granted. The Fair Market Value of the Shares will be determined as
of the time the Option with respect to such Shares is
granted.

 

(2) The Award
Agreement shall specify the term of the ISO. The term shall not
exceed ten (10) years from the Grant Date or five (5) years from
the Grant Date for Ten Percent Owners.

 

(3) The Award
Agreement shall specify an exercise price of not less than the Fair
Market Value per Share on the Grant Date or one hundred ten percent
(110%) of the Fair Market Value per Share on the Grant Date for Ten
Percent Owners.

 

(4) The Award
Agreement shall specify that an ISO is not transferable except by
will, beneficiary designation or the laws of descent and
distribution.

 

(v) Form
of Payment. The consideration to be paid for the Shares to
be issued upon exercise of an ISO, including the method of payment,
shall be determined by the Administrator at the time of grant in
accordance with Section 6(e)(iii).



 

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(vi) “Disability,”
for purposes of an ISO, means total and permanent disability as
defined in Section 22(e)(3) of the Code. 

 

(vii) Notice.
In the event of any disposition of the Shares acquired pursuant to
the exercise of an ISO within two years from the Grant Date or one
year from the exercise date, the Optionee will notify the Company
thereof in writing within thirty (30) days after such disposition.
In addition, the Optionee shall provide the Company with such
information as the Company shall reasonably request in connection
with determining the amount and character of Optionee’s
income, the Company’s deduction, and the Company’s
obligation to withhold taxes or other amounts incurred by reason of
a disqualifying disposition, including the amount
thereof.

 

(b) Performance-based
Compensation. If the Company pays salaries for which it
claims deductions that are subject to the Code section 162(m)
limitation on its U.S. tax returns, then the following terms shall
be applied in a manner consistent with the requirements of, and
only to the extent required for compliance with, the exclusion from
the limitation on deductibility of compensation under Code Section
162(m):

 

(i) Outside
Directors. The Board shall consider in selecting the
Administrator and the membership of any committee acting as
Administrator the provisions regarding “outside directors” within
the meaning of Code Section 162(m).

 

                     
(ii) Maximum
Amount.

 

(1) Subject to
the provisions of Section 13, the maximum number of Shares that can
be awarded to any individual Participant in the aggregate in any
one fiscal year of the Company is fifteen million (15,000,000)
Shares;

 

(2) For Awards
denominated in Shares and satisfied in cash, the maximum Award to
any individual Participant in the aggregate in any one fiscal year
of the Company is the Fair Market Value of fifteen million
(15,000,000) Shares on the Grant Date; and

 

(3) The
maximum amount payable pursuant to any cash Awards to any
individual Participant in the aggregate in any one fiscal year of
the Company is the Fair Market Value of fifteen million
(15,000,000) Shares on the Grant Date.

 

(iii) Performance
Criteria. All performance criteria must be objective and be
established in writing prior to the beginning of the performance
period or at later time as permitted by Code Section 162(m).
Performance criteria may include alternative and multiple
performance goals and may be based on one or more business and/or
financial criteria. In establishing the performance goals, the
Committee in its discretion may include one or any combination of
the following criteria in either absolute or relative terms, for
the Company or any Subsidiary:

 

(1) Increased
revenue;

 

(2) Net income
measures (including but not limited to income after capital costs
and income before or after taxes);

 

(3) Stock
price measures (including but not limited to growth measures and
total stockholder return);

 

(4) Market
share;

 

(5) Earnings
per Share (actual or targeted growth);

 

(6) Earnings
before interest, taxes, depreciation, and amortization
(“EBITDA”);

 

(7) Cash flow
measures (including but not limited to net cash flow and net cash
flow before financing activities);

 



 

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(8) Return
measures (including but not limited to return on equity, return on
average assets, return on capital, risk-adjusted return on capital,
return on investors’ capital and return on average
equity);

 

(9) Operating
measures (including operating income, funds from operations, cash
from operations, after-tax operating income, sales volumes,
production volumes, and production efficiency);

 

(10) Expense
measures (including but not limited to overhead cost and general
and administrative expense);

 

(11) Margins;

 

(12) Stockholder
value;

 

(13) Total
stockholder return;

 

(14) Proceeds
from dispositions;

 

(15) Production
volumes;

 

(16) Total
market value; and

 

(17) Corporate
values measures (including but not limited to ethics compliance,
environmental, and safety).

 

(c) Stock
Options and SARs Exempt from Code section 409A. If the
Administrator grants Options or SARs to Employees subject to U.S.
taxation the Administrator may not modify or amend the Options or
SARs to the extent that the modification or amendment adds a
feature allowing for additional deferral within the meaning of Code
section 409A.

 

16. No
Effect on Employment or Service. Neither the Plan nor any
Award will confer upon any Participant any right with respect to
continuing the Participant’s relationship as a Service
Provider with the Company or any Parent or Subsidiary of the
Company, nor will they interfere in any way with the
Participant’s right or the Company’s or its
Parent’s or Subsidiary’s right to terminate such
relationship at any time, with or without cause, to the extent
permitted by Applicable Laws.

 

17. Effective
Date. The Plan’s effective date is the date on which
it is adopted by the Board, so long as it is approved by the
Company’s stockholders at any time within twelve (12) months
of such adoption. Upon approval of the Plan by the stockholders of
the Company, all Awards issued pursuant to the Plan on or after the
Effective Date shall be fully effective as if the stockholders of
the Company had approved the Plan on the Effective Date. If the
stockholders fail to approve the Plan within one year after the
Effective Date, any Awards made hereunder shall be null and void
and of no effect. 

 

18. Term
of Plan. The Plan will terminate 10 years following the
earlier of (i) the date it was adopted by the Board or (ii) the
date it became effective upon approval by stockholders of the
Company, unless sooner terminated by the Board pursuant to Section
19. 

 

19. Amendment
and Termination of the Plan.

 

(a) Amendment
and Termination. The Board may at any time amend, alter,
suspend or terminate the Plan.

 

(b) Stockholder
Approval. The Company will obtain stockholder approval of
any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.

 

(c) Effect
of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan will impair the rights of any
Participant, unless mutually agreed otherwise between the
Participant and the Administrator, which agreement must be in
writing and signed by the Participant and the Company. Termination
of the Plan will not affect the Administrator’s ability to
exercise the powers granted to it hereunder with respect to Awards
granted under the Plan prior to the date of such
termination.

 



 

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20. Conditions
Upon Issuance of Shares.

 

(a) Legal
Compliance. The Administrator may delay or suspend the
issuance and delivery of Shares, suspend the exercise of Options or
SARs, or suspend the Plan as necessary to comply with Applicable
Laws. Shares will not be issued pursuant to the exercise of an
Award unless the exercise of such Award and the issuance and
delivery of such Shares will comply with Applicable Laws and will
be further subject to the approval of counsel for the Company with
respect to such compliance.

 

(b) Investment
Representations. As a condition to the exercise of an Award,
the Company may require the person exercising such Award to
represent and warrant at the time of any such exercise that the
Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is
required.

 

21. Inability
to Obtain Authority. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which
authority is deemed by the Company’s counsel to be necessary
to the lawful issuance and sale of any Shares hereunder, will
relieve the Company of any liability in respect of the failure to
issue or sell such Shares as to which such requisite authority will
not have been obtained. 

 

22. Repricing
Prohibited; Exchange And Buyout of Awards. The
repricing of Options or SARs is prohibited without prior
stockholder approval. The Administrator may authorize the Company,
with prior stockholder approval and the consent of the respective
Participants, to issue new Option or SAR Awards in exchange for the
surrender and cancellation of any or all outstanding Awards. The
Administrator may at any time repurchase Options with payment in
cash, Shares or other consideration, based on such terms and
conditions as the Administrator and the Participant shall
agree.

 

23. Substitution
and Assumption of Awards. The Administrator may make Awards
under the Plan by assumption, substitution or replacement of
performance shares, phantom shares, stock awards, stock options,
stock appreciation rights or similar awards granted by another
entity (including a Parent or Subsidiary), if such assumption,
substitution or replacement is in connection with an asset
acquisition, stock acquisition, merger, consolidation or similar
transaction involving the Company (and/or its Parent or Subsidiary)
and such other entity (and/or its affiliate). The Administrator may
also make Awards under the Plan by assumption, substitution or
replacement of a similar type of award granted by the Company prior
to the adoption and approval of the Plan. Notwithstanding any
provision of the Plan (other than the maximum number of shares of
Common Stock that may be issued under the Plan), the terms of such
assumed, substituted or replaced Awards shall be as the
Administrator, in its discretion, determines is
appropriate.

 

24. Governing
Law. The Plan and all Agreements shall be construed in
accordance with and governed by the laws of the State of
Texas. 

 

Adopted by the
Board of Directors on June 26, 2012.

 

Amended by the
stockholders of the Company on June 27, 2014, October 7, 2015 and
December 28, 2016

 

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