Exhibit 10.2 - Form of Employee Stock Option Award Agreement.


    Exhibit
      10.2

     

    

      INCENTIVE
        PLAN

      OF
        

      CARRIZO
        OIL & GAS, INC.

      NON-QUALIFIED
        STOCK OPTION AGREEMENT

      


      


      THIS
        AGREEMENT (“Agreement”) is made as of the day of [month,
        year]
        (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. (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 options 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 OPTION.  Subject
        to the terms and conditions herein, the Company grants to the Grantee during
        the
        period commencing on date and expiring at 5 p.m. Houston, Texas time (“Close of
        Business”) on date (the “Option Term”), subject to earlier termination pursuant
        to paragraph 6 below, an option to purchase from the Company, at the price
        per
        share set forth on Schedule 1 hereto (the “Option Price”), the number of shares
        of Company Common Stock (“Common Stock”) set forth on said Schedule 1 (the
“Option Shares”). The Option Price and Option Shares are subject to adjustment
        pursuant to paragraph 9 below. This option is a “Nonqualified Stock Option” and
        is hereinafter referred to as the “Option.”

       

      2.  CONDITIONS
        OF EXERCISE. 
        The Option is exercisable only in accordance with the conditions stated in
        this
        paragraph.

       

      (a)  Except
        as
        otherwise provided in this subparagraph (a), the Option may only be exercised
        to
        the extent the Option Shares have become available for purchase in accordance
        with the following schedule

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    
      	
              Date

               

            	
              Percentage
                of Option Shares Available for Purchase

               

            
	
              First
                Anniversary of Grant Date

               

            	
              33
                1/3%

               

            
	
              Second
                Anniversary of Grant Date

               

            	
              33
                1/3%

               

            
	
              Third
                Anniversary of Grant Date

               

            	
              33
                1/3%

               

            


    

    
       

      Notwithstanding
        the foregoing, subject to the provisions of any applicable written employment
        agreement between the Grantee and the Company or any Subsidiary, no additional
        Option Shares shall become available for purchase if 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 Option becomes exercisable, such Option 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 Option Term or earlier termination thereof.

       

      (c)   Notwithstanding
        the foregoing, upon a Change of Control while the Grantee remains in continuous
        employment, the Option may be exercised with respect to one-hundred percent
        (100%) of all Option Shares.  Notwithstanding
        anything in this Agreement to the contrary, the aggregate present value of
        all
        parachute payments payable to or for the benefit of the Grantee under this
        Agreement shall be limited so that when combined with any other parachute
        payments made to the Grantee in connection with a change in control of the
        Company such amounts will not exceed three times the Grantee’s base amount less
        one dollar and, to the extent necessary, the acceleration of exercisability
        under this Agreement shall be reduced in order that this limitation not be
        exceeded. For purposes of this Section, the terms "parachute payment," "base
        amount" and "present value" shall have the meanings assigned thereto under
        Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”).
        It is the intention of this Section to avoid excise taxes on the Grantee
        under
        Code Section 4999 or the disallowance of a deduction to the Company
        pursuant to Code Section 280G.

       

      3.  MANNER
        OF EXERCISE.  The
        Option shall be considered exercised (as to the number of Option 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 Option Shares to be
        purchased;

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

       

      (b)  If
        the
        Option is to be exercised, payment of the Option Price for each Option Share
        to
        be purchased in cash, Common Stock or in such other form (or combination
        of
        forms) of payment contemplated by Section 11 of the Plan as the Committee
        or the
        provisions of Section 11 of the Plan may permit; provided, however, that
        any
        shares of Common Stock delivered in payment of the Option Price that are
        or were
        the subject of an Employee Award or Independent Contractor Award must be
        shares
        that the Grantee has owned for a period of at least six months prior to the
        date
        of exercise; and

       

      (c)  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 Option 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.

    

    
       

      5.  DELIVERY
        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 certificates issued in Grantee’s name for the number of
        Option Shares purchased by exercise of the Option. If delivery is by mail,
        delivery of shares of Common Stock shall be deemed effected for all purposes
        when a stock transfer agent of the Company shall have deposited the certificates
        in the United States mail, addressed to the Grantee, and any cash payment
        shall
        be deemed effected when a Company check, payable to Grantee and in an amount
        equal to the amount of the cash payment, shall have been deposited in the
        United
        States mail, addressed to the Grantee.

       

      6.  TERMINATION
        OF EMPLOYMENT. 
        Unless otherwise determined by the Committee in its sole discretion, the
        Option
        shall terminate, prior to the expiration of the Option 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 Option 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 Option shall
        terminate immediately upon termination of Grantee’s employment.

       

      In
        any
        event in which the Option remains exercisable for a period of time following
        the
        date of termination of Grantee’s employment, the Option 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 Option shall in any event terminate upon the expiration of
        the
        Option Term.

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

       

      “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, 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.

     

    7.  NONTRANSFERABILITY
      OF OPTION. 
      During Grantee’s lifetime, the Option is not transferable (voluntarily or
      involuntarily) other than pursuant to a domestic relations order and, except
      as
      otherwise required pursuant to a domestic relations order, is exercisable only
      by the Grantee or Grantee’s court appointed legal representative. The Grantee
      may designate a 

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    beneficiary
      or beneficiaries to whom the Option 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 Option shall pass by will or the laws of
      descent and distribution. Following Grantee’s death, the Option, if otherwise
      exercisable, may be exercised by the person to whom such option passes according
      to the foregoing and such person shall be deemed the Grantee for purposes of
      any
      applicable provisions of 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 until such shares shall have been
      issued to Grantee by the Company. 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 Option 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 Option and that the Company will not be
        obligated to deliver any shares of Common Stock, if counsel to the Company
        determines that such exercise, 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 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 Option or the resulting 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

       

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

       

      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, 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 Option
      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 Company or any of its
      Subsidiaries or interfere in any way with the right Company or any employing
      Subsidiary to terminate the Grantee’s employment 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
      

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    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 Option and replaces and makes null and
        void
        any prior agreements, oral or written, between Grantee and the Company regarding
        the Option.

       

      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.

       

       

      
        	 ATTEST:	 	 Carrizo Oil & Gas, Inc.
	 	 	 
	 	 	 
	 	 	 By:
	 Secretary                                Date	 	 Name: S. P. Johnson                          Date
	 	 	 Title: President
	 	 	 
	 	 	 
	 	 	 ACCEPTED:
	 	 	 
	 	 	 
	 	 	 
	 	 	 [Grantee]                                Date
	 	 	 


      

       

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

    


    Schedule
      1 to Non-Qualified Stock Option Agreement dated as of date

     

    INCENTIVE
      PLAN 

     

    OF
      

     

    CARRIZO
      OIL & GAS, INC.

     

     

    
      	 Grantee:	[Employee
              Name]
	 Grant Date:	[Date]
	 Option Price:	[$_____] per
              share
	 Option Shares:	[______]
              shares
              of Common Stock, par value $ 0.01 per share.
	 	 
	 	 


    

     

     

     

     

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    Exhibit
      B
      to Non-Qualified Stock Option Agreement dated as of [date]

     

    INCENTIVE
      PLAN

     

    OF

     

    CARRIZO
      OIL & GAS, INC.

     

    DESIGNATION
      OF BENEFICIARY

     

    I,
      ________________________________ (the “Grantee”), hereby declare that upon my
      death _______________________________ (the “Beneficiary”) of
      ______________________________________________________________________________
      who is my ____________________________, shall be entitled to the Option and
      all
      other rights 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