Document:

Exhibit
4.3

 

BERRY PETROLEUM COMPANY

 

2010 EQUITY INCENTIVE PLAN

 

1.            Purpose of
the Plan . The purpose of this Plan is to encourage
ownership in the Company by key personnel whose long term service is considered
essential to the Company’s continued progress and, thereby, encourage
recipients to act in the stockholders’ interest and share in the Company’s
success.

 

2.            Definitions . As used
herein, the following definitions shall apply:

 

“Administrator” shall mean
the Board, any Committees or such delegates as shall be administering the Plan
in accordance with Section 4 of the Plan.

 

“Affiliate” shall mean any
entity that is directly or indirectly controlled by the Company or any entity
in which the Company has a significant ownership interest as determined by the
Administrator.

 

“Applicable Laws” shall mean
the requirements relating to the administration of stock plans under federal
and state laws, any stock exchange or quotation system on which the Company has
listed or submitted for quotation the Common Stock to the extent provided under
the terms of the Company’s agreement with such exchange or quotation system
and, with respect to Awards subject to the laws of any foreign jurisdiction
where Awards are, or will be, granted under the Plan, to the laws of such
jurisdiction.

 

“Award” shall mean,
individually or collectively, a grant under the Plan of Options, Stock Awards,
SARs, or Cash Awards.

 

“Awardee” shall mean a
Service Provider who has been granted an Award under the Plan.

 

“Award Agreement” shall mean
an Option Agreement, Stock Award Agreement, SAR Award Agreement, and/or Cash
Award Agreement, which may be in written or electronic format, in such form and
with such terms as may be specified by the Administrator, evidencing the terms
and conditions of an individual Award. Each Award Agreement is subject to the
terms and conditions of the Plan.

 

“Board” shall mean the Board
of Directors of the Company.

 

“Cash Award” shall mean a
bonus opportunity awarded under Section 14 pursuant to which a Participant
may become entitled to receive an amount based on the satisfaction of such
performance criteria as are specified in the agreement or other documents
evidencing the Award (the “Cash Award Agreement”).

 

“Change in Control” shall
mean and shall be deemed to have occurred if and when any one of the following
four events occurs: (i) within the meaning of Section 13(d) of
the Exchange Act, any person or group becomes a beneficial owner, directly or
indirectly, of securities of the Company representing 35% or more of the
combined voting power of the Company’s then outstanding securities, without the
prior approval of the Company; (ii) an election of Directors not in accord
with the recommendations of the majority of the Directors who were in office
prior to the pending election; (iii) the consummation of an agreement to
merge or consolidate, or otherwise reorganize, with or into one or more
entities which are not subsidiaries, as a result of which less than 50% of the
outstanding securities of the surviving or resulting entity are, or are to be,
owned by former stockholders of the Company (excluding from the term “former
stockholders” a stockholder who is, or as a result of the transaction in
question, becomes an “affiliate,” as that term is used in the Exchange Act and
the Rules promulgated thereunder, of any party to such merger,
consolidation or reorganization); or (iv) the sale of substantially all of
the Company’s business and/or assets (in one transaction or a series of related
transactions) to a person or entity which is not a subsidiary.

 

 

“Committee” shall mean a
committee of Directors appointed by the Board in accordance with Section 4
of the Plan.

 

“Common Stock” shall mean
the common stock of the Company.

 

“Company” shall mean Berry
Petroleum Company, a Delaware corporation, or its successor.

 

“Consultant” shall mean any
person engaged by the Company or any Affiliate to render services to such
entity as an advisor or consultant.

 

“Conversion Award” has the
meaning set forth in Section 4(b)(xii) of the Plan. “Director” shall
mean a member of the Board.

 

“Dividend Equivalent” shall
mean a credit, made at the discretion of the Administrator subject to the
provisions of Section 15(f) hereof, to the account of a Participant
in an amount equal to the cash dividends paid on one Share for each Share
represented by an Award held by such Participant.

 

“Employee” shall mean a
regular, active employee of the Company or any Affiliate, including an Officer
and/or Director. Within the limitations of Applicable Law, the Administrator
shall have the discretion to determine the effect upon an Award and upon an
individual’s status as an Employee in the case of (i) any individual who
is classified by the Company or its Affiliate as leased from or otherwise
employed by a third party or as intermittent or temporary, even if any such
classification is changed retroactively as a result of an audit, litigation or
otherwise, (ii) any leave of absence approved by the Company or an
Affiliate, (iii) any transfer between locations of employment with the
Company or an Affiliate or between the Company and any Affiliate or between any
Affiliates, (iv) any change in the Awardee’s status from an employee to a
Consultant or Director, and (v) at the request of the Company or an
Affiliate an employee becomes employed by any partnership, joint venture or
corporation not meeting the requirements of an Affiliate in which the Company
or an Affiliate is a party.

 

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

 

“Fair Market Value” shall
mean, as of any date, the closing sales price for such Common Stock as of such
date (or if no sales were reported on such date, the closing sales price on the
last preceding day on which a sale was made), as reported in such source as the
Administrator shall determine, or such other valuation as the Administrator
determines reflects fair market value and is consistent with the applicable
requirements of IRC Section 409A.

 

“Grant Date” shall mean the
date upon which an Award is granted to an Awardee pursuant to this Plan.

 

“Incentive Stock Option”
shall mean an Option intended to qualify as an incentive stock option within
the meaning of IRC Section 422 and the regulations promulgated thereunder.

 

“IRC” shall mean the
Internal Revenue Code of 1986, as amended.

 

“Nonstatutory Stock Option”
shall mean an Option not intended to qualify as an Incentive Stock Option.

 

“Officer” shall mean 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” shall mean a right
granted under Section 8 and/or 11 of the Plan to purchase a certain number
of Shares at such exercise price, at such times, and on such other terms and
conditions as are specified in the agreement or other documents evidencing the
Award (the “Option Agreement”). Both Options intended to qualify as Incentive
Stock Options and Nonstatutory Stock Options may be granted under the Plan.

 

 

“Outside Director” shall
mean a Director who is not an Employee.

 

“Participant” shall mean the
Awardee or any person (including any estate) to whom an Award has been assigned
or transferred as permitted hereunder.

 

“Plan” shall mean this Berry
Petroleum Company 2010 Equity Incentive Plan.

 

“Qualifying Performance
Criteria” shall have the meaning set forth in Section 15(b) of the
Plan.

 

“Related Corporation” shall
mean any parent or subsidiary (as defined in IRC Sections 424(e) and (f))
of the Company.

 

“Section 409A Change in
Control” shall mean and shall be deemed to have occurred if and when a Change
in Control occurs that meets the requirements of IRC Section 409A(a)(2)(A)(v) and
any related regulations or pronouncements.

 

“Service Provider” shall
mean an Employee, Director, or Consultant.

 

“Share” shall mean a share
of the Common Stock, as adjusted in accordance with Section 16 of the
Plan.

 

“Stock Award” shall mean an
award or issuance of Shares or Stock Units made under Section 11 and/or 12
of the Plan, the grant, issuance, retention, vesting and/or transferability of
which is subject during specified periods of time to such conditions (including
continued service or performance conditions) and terms as are expressed in the
agreement or other documents evidencing the Award (the “Stock Award Agreement”).

 

“Stock Appreciation Right”
or “SAR” shall mean an Award, granted alone or in connection with an Option,
that pursuant to Section 13 of the Plan is designated as a SAR. The terms
of the SAR are expressed in the agreement or other documents evidencing the
Award (the “SAR Agreement”).

 

“Stock Unit” shall mean a
bookkeeping entry representing an amount equivalent to the fair market value of
one Share, payable in cash, property or Shares. Stock Units represent an
unfunded and unsecured obligation of the Company, except as otherwise provided
for by the Administrator.

 

“10% Stockholder” shall mean
the owner of stock (as determined under IRC Section 424(d)) possessing
more than 10% of the total combined voting power of all classes of stock of the
Company (or any Related Corporation).

 

“Termination of Service”
shall mean ceasing to be a Service Provider. However, for Incentive Stock
Option purposes, Termination of Service will occur when the Awardee ceases to
be an employee (as determined in accordance with IRC Section 3401(c) and
the regulations promulgated thereunder) of the Company or one of its Related
Corporations. The Administrator shall determine whether any corporate
transaction, such as a sale or spin off of a division or business unit, or a
joint venture, shall be deemed to result in a Termination of Service.

 

“Total and Permanent
Disability” shall have the meaning set forth in IRC Section 22(e)(3).

 

3.             Stock
Subject to the Plan .

 

(a)           Aggregate Limits .

 

(i)       
Subject to the adjustments provided for in Section 16 of the Plan, the
maximum aggregate number of Shares that may be issued under the Plan through
Awards is 1,000,000 

 

 

Shares. Notwithstanding the
foregoing, the maximum aggregate number of Shares that may be issued under the
Plan through Incentive Stock Options is 1,000,000 Shares.

 

(ii)      
Upon payment in Shares pursuant to the settlement of an Award, the number of
Shares available for issuance under the Plan shall be reduced by (i) with
respect to Options or SARs, the total number of Shares exercised and (ii) with
respect to Stock Awards, the total number of shares issued. If any outstanding
Award expires or is terminated or canceled without having been exercised or
settled in full, or if Shares acquired pursuant to an Award subject to
forfeiture are forfeited to the Company, the Shares allocable to the terminated
portion of such Award or such forfeited Shares shall again be available to
grant under the Plan; provided, however, that the aggregate number of shares of
Common Stock that may be issued under the Plan upon the exercise of Incentive
Stock Options shall not be increased for Stock Awards that are forfeited or
repurchased. Notwithstanding the foregoing, the aggregate number of shares of
Common Stock that may be issued under the Plan shall not be increased by (A) any
Shares used or withheld from an Award to pay withholding taxes with respect to
an Award, (B) any Shares tendered to satisfy the exercise price or
purchase price of an Award, or (C) any Shares repurchased by the Company
on the open market with the proceeds of the exercise price or purchase price of
an Award. Notwithstanding anything in the Plan, or in any Award Agreement, to
the contrary, (x) Shares attributable to Awards transferred pursuant to Section 15(a) shall
not be again available for grant under the Plan and (y) the number of
Shares available for issuance under the Plan shall not be reduced by Conversion
Awards. The Shares subject to the Plan may be either Shares reacquired by the
Company, including Shares purchased in the open market, or authorized but
unissued Shares.

 

(b)     
IRC Section 162(m) Limit . Subject to the provisions of Section 16
of the Plan, the aggregate number of Shares subject to Awards granted under
this Plan during any calendar year to any one Awardee shall not exceed 400,000,
except that in connection with his or her initial service, an Awardee may be
granted Stock Awards covering up to an additional 400,000 Shares or Options or
SARs covering up to an additional 600,000 Shares. Notwithstanding anything to
the contrary in the Plan, the limitations set forth in this Section 3(b) shall
be subject to adjustment under Section 16 of the Plan only to the extent
that such adjustment will not affect the status of any Award intended to
qualify as “performance based compensation” under IRC Section 162(m).

 

4.             Administration of the Plan .

 

(a)           Procedure .

 

(i)            Multiple Administrative
Bodies. The Plan shall be administered by the Board, a Committee and/or their
delegates.

 

(ii)           Section 162. To the
extent that the Administrator determines it to be desirable to qualify Awards
granted hereunder as “performance based compensation” within the meaning of IRC
Section 162(m), Awards to “covered employees” within the meaning of IRC Section 162(m) or
Employees that the Committee determines may be “covered employees” in the
future shall be made by a Committee of two or more “outside directors” within
the meaning of IRC Section 162(m).

 

(iii)          Rule 16b 3. To the
extent desirable to qualify transactions hereunder as exempt under Rule 16b
3 promulgated under the Exchange Act (“Rule 16b 3”), Awards to Officers
and Directors shall be made in such a manner to satisfy the requirement for
exemption under Rule 16b 3.

 

(iv)          Other Administration. The
Board or a Committee may delegate to an authorized Officer or Officers of the
Company the power to approve Awards to persons eligible to receive 

 

 

Awards under the Plan who
are not (A) subject to Section 16 of the Exchange Act or (B) at
the time of such approval, “covered employees” under IRC Section 162(m).

 

(v)           Delegation of Authority for
the Day to Day Administration of the Plan. Except to the extent prohibited by
Applicable Law, the Administrator may delegate to one or more individuals the
day to day administration of the Plan and any of the functions assigned to it
in this Plan. Such delegation may be revoked at any time.

 

(b)           Powers of the Administrator . Subject to
the provisions of the Plan and, in the case of a Committee or delegates acting
as the Administrator, subject to the specific duties delegated to such
Committee or delegates, the Administrator shall have the authority, in its
discretion:

 

(i)            to select the Service
Providers of the Company or its Affiliates to whom Awards are to be granted
hereunder;

 

(ii)           to determine the number of
shares of Common Stock to be covered by each Award granted hereunder;

 

(iii)          to determine the type of
Award to be granted to the selected Service Provider;

 

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

 

(v)           to determine the terms and
conditions of any Award granted hereunder, including, but not limited to, the
exercise and/or purchase price, the time or times when an Award may be
exercised (which may or may not be based on performance criteria), the vesting
schedule, any vesting and/or exercisability, acceleration or waiver of
forfeiture restrictions, the acceptable forms of consideration, the term, 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, shall determine and may be established at the time an Award is
granted or thereafter, provided that any determination of such terms and
conditions hereunder is not inconsistent with the terms of the Plan;

 

(vi)          to correct administrative errors;

 

(vii)         to construe and interpret
the terms of the Plan (including sub plans and Plan addenda) and Awards granted
pursuant to the Plan;

 

(viii)        to adopt rules and
procedures relating to the operation and administration of the Plan to
accommodate the specific requirements of local laws and procedures. Without
limiting the generality of the foregoing, the Administrator is specifically
authorized (A) to adopt the rules and procedures regarding the
conversion of local currency, withholding procedures and handling of stock
certificates which vary with local requirements and (B) to adopt sub plans
and Plan addenda as the Administrator deems desirable, to accommodate foreign
laws, regulations and practice;

 

(ix)           to prescribe, amend and
rescind rules and regulations relating to the Plan, including rules and
regulations relating to sub plans and Plan addenda;

 

(x)             to modify or amend each
Award, including, but not limited to, the acceleration of vesting and/or
exercisability of an Award, provided, however, that (A) any such amendment
is subject to Section 17 of the Plan and may not impair any outstanding
Award unless agreed to in writing by the Participant and (B) any
acceleration of the vesting of a Stock Award shall be subject to the vesting
requirements set forth in Sections 11(d) and 12(b);

 

 

(xi)          to allow
Participants to satisfy withholding tax amounts by electing to have the Company
withhold from the Shares to be issued pursuant to an Award that number of
Shares having a Fair Market Value equal to the amount required to be withheld
calculated using the minimum statutory withholding rates interpreted in
accordance with applicable accounting requirements. The Fair Market Value of
the Shares to be withheld shall be determined in such manner and on such date that
the Administrator shall determine or, in the absence of provision otherwise, on
the date that the amount of tax to be withheld is to be determined. All
elections by a Participant to have Shares withheld for this purpose shall be
made in such form and under such conditions as the Administrator may provide;

 

(xii)         to authorize
conversion or substitution under the Plan of any or all stock options, stock
appreciation rights or other stock awards held by service providers of an
entity acquired by the Company (the “Conversion Awards”). Any conversion or
substitution shall be effective as of the close of the merger or acquisition.
The Conversion Awards may be Nonstatutory Stock Options or Incentive Stock
Options, as determined by the Administrator, with respect to options granted by
the acquired entity. Unless otherwise determined by the Administrator at the
time of conversion or substitution, all Conversion Awards shall have the same
terms and conditions as Awards generally granted by the Company under the Plan;

 

(xiii)        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;

 

(xiv)        to determine whether Awards
will be adjusted for Dividend Equivalents;

 

(xv)         to establish a program
whereby Service Providers designated by the Administrator can reduce
compensation otherwise payable in cash in exchange for Awards under the Plan;

 

(xvi)        to impose such restrictions,
conditions or limitations as it determines appropriate as to the timing and
manner of any resales by a Participant or other subsequent transfers by the
Participant of any Shares issued as a result of or under an Award, including,
without limitation, (A) restrictions under an insider trading policy and (B) restrictions
as to the use of a specified brokerage firm for such resales or other
transfers;

 

(xvii)       to provide, either at the
time an Award is granted or by subsequent action, that an Award shall contain
as a term thereof, a right, either in tandem with the other rights under the
Award or as an alternative thereto, of the Participant to receive, without
payment to the Company, a number of Shares, cash or a combination thereof, the
amount of which is determined by reference to the value of the Award; and

 

(xviii)      to make all other
determinations deemed necessary or advisable for administering the Plan and any
Award granted hereunder.

 

(c)            Effect of Administrator’s
Decision. All decisions, determinations and interpretations by the
Administrator regarding the Plan, any rules and regulations under the Plan
and the terms and conditions of any Award granted hereunder, shall be final and
binding on all Participants. The Administrator shall consider such factors as
it deems relevant, in its sole and absolute discretion, to making such
decisions, determinations and interpretations, including, without limitation,
the recommendations or advice of any officer or other employee of the Company
and such attorneys, consultants and accountants as it may select.

 

5.
            Eligibility . Awards may be granted to
Service Providers of the Company or any of its Affiliates.

 

6.
            Term of Plan . The Plan shall become
effective upon the effective date of approval of the Plan by stockholders of
the Company and shall continue in effect until terminated under Section 17
of the Plan.

 

 

7.
            Term of Award . The term of each Award
shall be determined by the Administrator and stated in the Award Agreement. In
the case of an Option, the term shall be determined by the Administrator and
stated in the Option Agreement; provided, that such term may not exceed ten
years from the Grant Date.

 

8.
            Options . The Administrator may grant an
Option or provide for the grant of an Option, either from time to time in the discretion
of the Administrator or automatically upon the occurrence of specified events,
including, without limitation, the achievement of performance goals and for the
satisfaction of an event or condition within the control of the Awardee or
within the control of others.

 

(a)          
Option Agreement . Each Option Agreement shall contain provisions
regarding (i) the number of Shares that may be issued upon exercise of the
Option, (ii) the type of Option, (iii) the exercise price of the
Shares and the means of payment for the Shares, (iv) the term of the
Option, which shall not exceed ten years, (v) such terms and conditions on
the vesting and/or exercisability of an Option as may be determined from time
to time by the Administrator, (vi) restrictions on the transfer of the
Option and forfeiture provisions, and (vii) such further terms and
conditions, in each case not inconsistent with this Plan, as may be determined
from time to time by the Administrator.

 

(b)          
Exercise Price . The per share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:

 

(i)       
In the case of an Incentive Stock Option, the per Share exercise price shall be
no less than 100% of the Fair Market Value per Share on the Grant Date.
Notwithstanding the foregoing, if any Employee to whom an Incentive Stock
Option is granted is a 10% Stockholder, then the exercise price shall not be
less than 110% of the Fair Market Value of a share of Common Stock on the Grant
Date.

 

(ii)      
In the case of a Nonstatutory Stock Option, the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on the Grant Date. The
per Share exercise price may also vary according to a predetermined formula;
provided, that the exercise price never falls below 100% of the Fair Market
Value per Share on the Grant Date. In the case of a Nonstatutory Stock Option
intended to qualify as “performance based compensation” within the meaning of
IRC Section 162(m), the per Share exercise price shall be no less than
100% of the Fair Market Value per Share on the Grant Date.

 

(iii)     
Notwithstanding the foregoing, at the Administrator’s discretion, Conversion
Awards may be granted in substitution and/or conversion of options of an
acquired entity, with a per Share exercise price of less than 100% of the Fair
Market Value per Share on the date of such substitution and/or conversion.

 

(c)          
Vesting Period and Exercise Dates . Options granted under this Plan
shall vest and/or be exercisable at such time and in such installments during
the period prior to the expiration of the Option’s term as determined by the
Administrator. The Administrator shall have the right to make the timing of the
ability to exercise any Option granted under this Plan subject to continued
service, the passage of time and/or such performance requirements as deemed
appropriate by the Administrator. At any time after the grant of an Option, the
Administrator may reduce or eliminate any restrictions surrounding any
Participant’s right to exercise all or part of the Option.

 

 

(d)          
Form of Consideration . The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment, either through the terms of the Option Agreement or at the time of
exercise of an Option. Acceptable forms of consideration may include:

 

(i)       
cashier’s check, check or wire transfer;

 

(ii)      
subject to any conditions or limitations established by the Administrator,
other Shares which have a Fair Market Value on the date of surrender or
attestation that does not exceed the aggregate exercise price of the Shares as
to which said Option shall be exercised;

 

(iii)     
consideration received by the Company (A) under a broker assisted sale and
remittance program acceptable to the Administrator or (B) pursuant to a
net settlement authorizing the Company to withhold whole Shares which would
otherwise be delivered having an aggregate Fair Market Value, determined as of
the date of exercise, equal to the amount necessary to satisfy such obligation,
provided that the Administrator determines that such withholding of Shares does
not cause the Company to recognize an increased compensation expense under
applicable accounting principles;

 

(iv)    
such other consideration and method of payment for the issuance of Shares to
the extent permitted by Applicable Laws; or

 

(v)      
any combination of the foregoing methods of payment.

 

9.             Incentive
Stock Option Limitations .

 

(a)      
Eligibility . Only employees (as determined in accordance with IRC Section 3401(c) and
the regulations promulgated thereunder) of the Company or any of its Related
Corporations may be granted Incentive Stock Options.

 

(b)     
$100,000 Limitation . Notwithstanding the designation “Incentive Stock
Option” in an Option Agreement, if the aggregate Fair Market Value of the
Shares with respect to which Incentive Stock Options are exercisable for the
first time by the Awardee during any calendar year (under all plans of the
Company and any of its Related Corporations) exceeds $100,000, then the portion
of such Options that exceeds $100,000 shall be treated as Nonstatutory Stock
Options. An Incentive Stock Option is considered to be first exercisable during
a calendar year if the Incentive Stock Option will become exercisable at any
time during the year, assuming that any condition on the Awardee’s ability to
exercise the Incentive Stock Option related to the performance of services is
satisfied. If the Awardee’s ability to exercise the Incentive Stock Option in
the year is subject to an acceleration provision, then the Incentive Stock
Option is considered first exercisable in the calendar year in which the
acceleration provision is triggered. For purposes of this Section 9(b), Incentive
Stock Options shall be taken into account in the order in which they were
granted. However, because an acceleration provision is not taken into account
prior to its triggering, an Incentive Stock Option that becomes exercisable for
the first time during a calendar year by operation of such provision does not
affect the application of the $100,000 limitation with respect to any Incentive
Stock Option (or portion thereof) exercised prior to such acceleration. The
Fair Market Value of the Shares shall be determined as of the Grant Date.

 

(c)      
Leave of Absence . For purposes of Incentive Stock Options, no leave of
absence may exceed three months, unless reemployment upon expiration of such
leave is provided by statute or contract. If reemployment upon expiration of a
leave of absence approved by the Company or a Related Corporation is not so
provided by statute or contract, an Awardee’s employment with the Company shall
be deemed terminated on the first day immediately following such three month
period of leave for Incentive Stock Option purposes and any Incentive Stock
Option granted to the Awardee shall cease to be treated as an Incentive Stock
Option and shall terminate upon the expiration of the three month period
following the date the employment relationship is deemed terminated.

 

 

 

(d)     
Transferability . The Option Agreement must provide that an Incentive
Stock Option cannot be transferable by the Awardee otherwise than by will or
the laws of descent and distribution, and, during the lifetime of such Awardee,
must not be exercisable by any other person. Notwithstanding the foregoing, the
Administrator, in its sole discretion, may allow the Awardee to transfer his or
her Incentive Stock Option to a trust where under IRC Section 671 and
other Applicable Law, the Awardee is considered the sole beneficial owner of
the Option while it is held in the trust. If the terms of an Incentive Stock
Option are amended to permit transferability, the Option will be treated for
tax purposes as a Nonstatutory Stock Option.

 

(e)      
Exercise Price . The per Share exercise price of an Incentive Stock
Option shall be determined by the Administrator in accordance with Section 8(b)(i) of
the Plan.

 

(f)      
10% Stockholder . If any Employee to whom an Incentive Stock Option is
granted is a 10% Stockholder, then the Option term shall not exceed five years
measured from the date of grant of such Option.

 

(g)     
Other Terms . Option Agreements evidencing Incentive Stock Options shall
contain such other terms and conditions as may be necessary to qualify, to the
extent determined desirable by the Administrator, under the applicable
provisions of IRC Section 422.

 

10.          Exercise of
Option .

 

(a)           Procedure for Exercise;
Rights as a Stockholder .

 

(i)       
Any Option granted hereunder shall 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 respective Award Agreement.

 

(ii)      
An Option shall be deemed exercised when the Company receives (A) written
or electronic notice of exercise (in accordance with the Award Agreement) from
the person entitled to exercise the Option; (B) full payment for the
Shares with respect to which the related Option is exercised; and (C) with
respect to Nonstatutory Stock Options, payment of all applicable withholding
taxes.

 

(iii)     
Shares issued upon exercise of an Option shall be issued in the name of the
Participant or, if requested by the Participant, in the name of the Participant
and his or her spouse. Unless provided otherwise by the Administrator or
pursuant to this Plan, 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 shall exist with respect to the Shares subject to an Option,
notwithstanding the exercise of the Option.

 

(iv)    
The Company shall issue (or cause to be issued) such Shares as soon as
administratively practicable after the Option is exercised. An Option may not
be exercised for a fraction of a Share.

 

(b)           Effect of Termination of
Service on Options .

 

(i)       
Generally. Unless otherwise provided for by the Administrator, if a Participant
ceases to be a Service Provider, other than upon the Participant’s death or
Total and Permanent Disability, the Participant may exercise his or her Option
within such period of time as is specified in the Award Agreement to the extent
that the Option is vested on the date of termination (but in no event later
than the expiration of the term of such Option as set forth in the Award
Agreement). 

 

 

In the absence of a
specified time in the Award Agreement, the vested portion of the Option will
remain exercisable for four months following the Participant’s termination.
Unless otherwise provided by the Administrator, if on the date of termination
the Participant is not vested as to his or her entire Option, the Shares
covered by the unvested portion of the Option will revert to the Plan. If after
termination the Participant does not exercise his or her Option within the time
specified by the Administrator, the Option will terminate, and the Shares
covered by such Option will revert to the Plan.

 

(ii)      
Disability of Awardee. Unless otherwise provided for by the Administrator, if a
Participant ceases to be a Service Provider as a result of the Participant’s
Total and Permanent Disability, the Participant may exercise his or her Option
within such period of time as is specified in the Award Agreement to the extent
the Option is vested on the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Award Agreement). In
the absence of a specified time in the Award Agreement, the Option will remain
exercisable for twelve months following the Participant’s termination. Unless
otherwise provided by the Administrator, if at the time of disability the
Participant is not vested as to his or her entire Option, the Shares covered by
the unvested portion of the Option will immediately revert to the Plan on the
date of the Participant’s disability. If the Option is not so exercised within
the time specified herein, the Option will terminate, and the Shares covered by
such Option will revert to the Plan.

 

(iii)     
Death of Awardee. Unless otherwise provided for by the Administrator, if a
Participant dies while a Service Provider, the Option may be exercised
following the Participant’s death within such period of time as is specified in
the Award Agreement to the extent that the Option is vested on the date of
death (but in no event may the Option be exercised later than the expiration of
the term of such Option as set forth in the Award Agreement), by the
Participant’s designated beneficiary, provided such beneficiary has been
designated prior to Participant’s death in a form acceptable to the
Administrator. If no such beneficiary has been designated by the Participant,
then such Option may be exercised by the personal representative of the
Participant’s estate or by the person(s) to whom the Option is transferred
pursuant to the Participant’s will or in accordance with the laws of descent
and distribution. In the absence of a specified time in the Award Agreement,
the Option will remain exercisable for twelve months following Participant’s
death. Unless otherwise provided by the Administrator, if at the time of death
Participant is not vested as to his or her entire Option, the Shares covered by
the unvested portion of the Option will immediately revert to the Plan on the
date of the Participant’s death. If the Option is not so exercised within the
time specified herein, the Option will terminate, and the Shares covered by
such Option will revert to the Plan.

 

11.          Grants To
Outside Directors .

 

(a)          
Grants . The Administrator may grant Awards to Outside Directors. The
Administrator shall determine the type of Award, the actual number of Shares
that are covered by each such Award, and the Grant Date of such Award.

 

(b)          
Initial Grant . Each Outside Director who first becomes a Director after
the effective date of the Plan may be eligible to receive a one time grant of
either a Nonstatutory Stock Option or a Stock Award. The Administrator shall
determine whether the Outside Director shall receive a one time grant, and if
so granted, determine the type of Award, the actual number of Shares that are
covered by such Award, and the Grant Date of such Award.

 

(c)          
Exercise Price . The Exercise Price of the Options granted to the
Outside Directors under this Article shall be equal to 100% of the Fair
Market Value of the Shares on the date of grant of such Option.

 

 

(d)          
Vesting . The Administrator shall determine whether and to what extent
Awards to Outside Directors under this Article are subject to vesting
requirements. No more than 5% of the total number of Shares that may be issued
under the Plan may be granted as Stock Awards to Outside Directors which vest
within less than one year after the Grant Date. With respect to Stock Awards to
Outside Directors in excess of such 5% limitation, the vesting period shall be
no less than one year after the Grant Date; provided, however, that (A) the
Administrator may provide for earlier vesting upon a Change in Control or the
Outside Director’s death, disability or retirement and (B) such
restriction on vesting shall not apply to an Award that is granted in lieu of
compensation (provided that the Outside Director is given the opportunity to
accept cash in lieu of such Award).

 

(e)          Other
Terms. Except as otherwise provided for above, the other terms of the Awards
granted to the Outside Directors under this Article shall be determined by
the Administrator in accordance with the terms of the Plan. Notwithstanding any
provision of the Plan to the contrary, the Administrator with respect to Awards
made pursuant to this Article shall be a committee composed solely of
Outside Directors.

 

12.          Stock Awards .

 

(a)          
Stock Award Agreement . Each Stock Award Agreement shall contain
provisions regarding

 

(i) the
number of Shares subject to such Stock Award or a formula for determining such
number, (ii) the purchase price of the Shares, if any, and the means of
payment for the Shares, (iii) the performance criteria, if any, and level
of achievement versus these criteria that shall determine the number of Shares
granted, issued, retained and/or vested, (iv) such terms and conditions on
the grant, issuance, vesting and/or forfeiture of the Shares as may be
determined from time to time by the Administrator, (v) restrictions on the
transferability of the Stock Award and (vi) such further terms and
conditions in each case not inconsistent with this Plan as may be determined
from time to time by the Administrator.

 

(b)          
Restrictions and Performance Criteria . The grant, issuance, retention
and/or vesting of each Stock Award may be subject to such performance criteria
and level of achievement versus these criteria as the Administrator shall
determine, which criteria may be based on financial performance, personal
performance evaluations and/or completion of service by the Awardee.
Notwithstanding anything to the contrary herein, the performance criteria for
any Stock Award that is intended to satisfy the requirements for “performance
based compensation” under IRC Section 162(m) shall be established by
the Administrator based on one or more Qualifying Performance Criteria selected
by the Administrator and specified in writing. Any Stock Award granted to a
Participant other than an Outside Director that (i) is not conditioned
upon or subject to achievement of performance criteria shall vest no sooner
than one-third on each of the first three anniversaries of the date of grant
and (ii) is conditioned upon or subject to achievement of performance
criteria shall vest no sooner than one year after the date of grant; provided,
however, that (A) the Administrator may provide for earlier vesting upon a
Change in Control or the Awardee’s death, disability or retirement and (B) such
restriction on vesting shall not apply to a Stock Award that is granted in lieu
of salary or bonus (provided that the Awardee is given the opportunity to
accept cash in lieu of such Award).

 

(c)          
Forfeiture . Unless otherwise provided for by the Administrator, upon
the Awardee’s Termination of Service, the unvested Stock Award and the Shares
subject thereto shall be forfeited.

 

(d)          
Rights as a Stockholder . Unless otherwise provided by the
Administrator, the Participant shall have the rights equivalent to those of a
stockholder and shall be a stockholder only after 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) to the Participant. Unless otherwise
provided by the Administrator and subject to 

 

 

the provisions of Section 15(f) hereof,
a Participant holding Stock Units shall be entitled to receive Dividend
Equivalents.

 

13.
          Stock Appreciation Rights . Subject to the
terms and conditions of the Plan, a SAR may be granted to a Service Provider at
any time and from time to time as determined by the Administrator in its sole
discretion.

 

(a)          
Number of SARs . The Administrator shall have complete discretion to
determine the number of SARs granted to any Service Provider.

 

(b)          
Exercise Price and Other Terms . The per SAR exercise price shall be no
less than 100% of the Fair Market Value per Share on the Grant Date and the
term of a SAR shall be for no longer than ten years after the Grant Date. The
Administrator, subject to the provisions of the Plan, shall have complete
discretion to determine the other terms and conditions of SARs granted under
the Plan.

 

(c)          
Exercise of SARs . SARs shall be exercisable on such terms and
conditions as the Administrator, in its sole discretion, shall determine.

 

(d)          
SAR Agreement . Each SAR grant shall be evidenced by a SAR Agreement
that will specify the exercise price, the term of the SAR, the conditions of
exercise, and such other terms and conditions as the Administrator, in its sole
discretion, shall determine.

 

(e)          
Expiration of SARs . A SAR granted under the Plan shall expire upon the
date determined by the Administrator, in its sole discretion, and set forth in
the SAR Agreement. Notwithstanding the foregoing, the rules of Section 10(b) will
also apply to SARs.

 

(f)          
Payment of SAR  Amount . Upon exercise of a SAR, the Participant
shall be entitled to receive a payment from the Company in an amount equal to
the difference between the Fair Market Value of a Share on the date of exercise
over the exercise price of the SAR. This amount shall be paid in cash or in
Shares of equivalent value, as determined by the Administrator.

 

14.
          Cash Awards . Each Cash Award will confer
upon the Participant the opportunity to earn a future payment tied to the level
of achievement with respect to one or more performance criteria established for
a performance period.

 

(a)          
Cash Award . Each Cash Award shall contain provisions regarding (i) the
performance goal(s) and maximum amount payable to the Participant as a
Cash Award, (ii) the performance criteria and level of achievement versus
these criteria which shall determine the amount of such payment, (iii) the
period as to which performance shall be measured for establishing the amount of
any payment, (iv) the timing of any payment earned by virtue of
performance, (v) restrictions on the alienation or transfer of the Cash
Award prior to actual payment, (vi) forfeiture provisions, and (vii) such
further terms and conditions, in each case not inconsistent with the Plan, as
may be determined from time to time by the Administrator. The maximum amount
payable as a Cash Award that is settled for cash may be a multiple of the
target amount payable, but the maximum amount payable pursuant to that portion
of a Cash Award granted under this Plan for any fiscal year to any Awardee that
is intended to satisfy the requirements for “performance based compensation”
under IRC Section 162(m) shall not exceed $3,000,000.

 

(b)          
Performance Criteria . The Administrator shall establish the performance
criteria and level of achievement versus these criteria which shall determine
the target and the minimum and maximum amount payable under a Cash Award, which
criteria may be based on financial performance and/or personal performance
evaluations. The Administrator may specify the percentage of the target Cash
Award that is intended to satisfy the requirements for “performance based
compensation” under IRC Section 162(m). Notwithstanding anything to the
contrary herein, the performance criteria for any portion of a Cash Award that
is intended to satisfy the requirements for “performance based compensation”
under IRC 

 

 

Section 162(m) shall
be a measure established by the Administrator based on one or more Qualifying
Performance Criteria selected by the Administrator and specified in writing.

 

(c)          
Timing and Form of Payment . The Administrator shall determine the
timing of payment of any Cash Award. The Administrator may specify the form of
payment of Cash Awards, which may be cash or other property, or may provide for
an Awardee to have the option for his or her Cash Award, or such portion
thereof as the Administrator may specify, to be paid in whole or in part in
cash or other property.

 

(d)          
Termination of Service . The Administrator shall have the discretion to
determine the effect of a Termination of Service on any Cash Award due to (i) disability,
(ii) retirement, (iii) death, (iv) participation in a voluntary
severance program, or (v) participation in a work force restructuring;
provided, however, that if the Cash Award is intended to satisfy the
requirements for “performance based compensation” under IRC Section 162(m),
the Administrator’s determination under this Section shall be in
compliance with IRC Section 162(m).

 

15.          Other Provisions Applicable to Awards .

 

(a)          
Non 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 beneficiary
designation, will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Participant, only by the Participant. The
Administrator may make an Award transferable to an Awardee’s family member or
any other person or entity. If the Administrator makes an Award transferable,
either at the time of grant or thereafter, such Award shall contain such
additional terms and conditions as the Administrator deems appropriate, and any
transferee shall be deemed to be bound by such terms upon acceptance of such
transfer.

 

(b)          
Qualifying Performance Criteria . For purposes of this Plan, the term “Qualifying
Performance Criteria” shall mean any one or more of the following performance
criteria, either individually, alternatively or in any combination, applied to
either the Company as a whole or to a business unit, Affiliate or business
segment, either individually, alternatively or in any combination, and measured
either annually or cumulatively over a period of years, on an absolute basis or
relative to a pre established target, to previous years’ results or to a
designated comparison group, in each case as specified by the Committee in the
Award: (i) cash flow; (ii) earnings (including gross margin, earnings
before interest and taxes, earnings before taxes, and net earnings); (iii) earnings
per share; (iv) growth in earnings, earnings per share or cash flow (v) stock
price; (vi) return on equity or average stockholders’ equity; (vii) total
stockholder return; (viii) return on capital; (ix) return on assets
or net assets; (x) return on investment; (xi) revenue; (xii) income
or net income; (xiii) operating income or net operating income; (xiv) operating
profit or net operating profit; (xv) operating margin; (xvi) return
on operating revenue; (xvii) reserve replacement; (xviii) production
volume or growth; (xix) overhead or other expense reduction; (xx) growth
in stockholder value relative to the moving average of the S&P 500 Index or
a peer group index; (xxi) credit rating; (xxii) strategic plan
development and implementation; (xxiii) improvement in workforce
diversity; (xxiv) EBITDA; (xxv) finding and development cost; (xxvi) steam
and non steam operating cost; (xxvii) environmental, health and safety
record; (xxviii) reserve growth; (xxix) finding, development and
acquisition costs (FD&A); (xxx) operating cash flow; (xxxi) net
operating profit after tax (NOPAT); (xxxii) economic profit; (xxxiii) dividend
measures; (xxxiv) compliance with debt covenants; and (xxxv) any
other similar criteria. The Committee may appropriately adjust any evaluation
of performance under a Qualifying Performance Criteria to exclude any of the
following events that occurs during a performance period: (A) asset write
downs; (B) litigation or claim judgments or reserves for litigation or
claim judgments or settlements; (C) the effect of changes in tax law,
accounting principles or other such laws or provisions affecting reported
results; (D) accruals for reorganization and restructuring programs; and (E) any
extraordinary non recurring items as described in Accounting Principles Board
Opinion No. 30 and/or in management’s discussion and analysis of financial
condition and results of operations appearing in the Company’s annual report to
stockholders for the applicable year.

 

 

(c)          
Certification . Prior to the payment of any compensation under an Award
intended to qualify as “performance based compensation” under IRC Section 162(m),
the Committee shall certify the extent to which any Qualifying Performance
Criteria and any other material terms under such Award have been satisfied
(other than in cases where such relate solely to the increase in the value of
the Common Stock).

 

(d)          
Discretionary Adjustments Pursuant to Section 162(m) .
Notwithstanding satisfaction or any completion of any Qualifying Performance
Criteria, to the extent specified at the time of grant of an Award to “covered
employees” within the meaning of IRC Section 162(m), the number of Shares,
Options or other benefits granted, issued, retained and/or vested under an
Award on account of satisfaction of such Qualifying Performance Criteria may be
reduced by the Committee on the basis of such further considerations as the
Committee in its sole discretion shall determine.

 

(e)          
Section 409A . Notwithstanding anything in the Plan to the
contrary, it is the intent of the Company that all Awards granted under this
Plan shall not cause an imposition of the additional taxes provided for in IRC Section 409A(a)(1)(B).

 

(f)          
Dividend Equivalents . The Administrator, in its sole discretion, may
provide for the payment of Dividend Equivalents with respect to any Award;
provided, however, that Dividend Equivalents may only be paid with respect to
Shares actually earned under an Award that is conditioned upon or subject to
achievement of performance criteria.

 

16.          Adjustments upon Changes in Capitalization, Dissolution, Merger or Asset
Sale .

 

(a)          
Changes in Capitalization . Subject to any required action by the
stockholders of the Company, (i) the number and kind of Shares covered by
each outstanding Award, and the number and kind of shares of Common Stock which
have been authorized for issuance under the Plan but as to which no Awards have
yet been granted or which have been returned to the Plan upon cancellation or
expiration of an Award, (ii) the price per Share subject to each such
outstanding Award, and (iii) the Share limitations set forth in the Plan,
shall be proportionately adjusted for any increase or decrease in the number or
kind of issued shares resulting from a stock split, reverse stock split,
spin-off, any distribution to holders of Shares of securities or property (other
than normal cash dividends or dividends payable in Shares), combination,
subdivision or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without
receipt of consideration by the Company; provided, however, that conversion of
any convertible securities of the Company shall not be deemed to have been “effected
without receipt of consideration.” Such adjustment shall be made by the
Administrator, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Award.

 

(b)          
Dissolution or Liquidation . In the event of the proposed dissolution or
liquidation of the Company, the Administrator shall notify each Participant as
soon as practicable prior to the effective date of such proposed transaction.
The Administrator in its discretion may provide for an Option to be fully
vested and exercisable until ten days prior to such transaction. In addition,
the Administrator may provide that any restrictions on any Award shall lapse
prior to the transaction, provided the proposed dissolution or liquidation
takes place at the time and in the manner contemplated. To the extent it has
not been previously exercised, an Award will terminate immediately prior to the
consummation of such proposed transaction.

 

(c)          
Change in Control . In the event there is a Change in Control of the
Company, as determined by the Board or a Committee, the Board or Committee may,
in its discretion, (i) provide for the assumption or substitution of, or
adjustment to, each outstanding Award; (ii) accelerate the vesting of
Options and SARs and terminate any restrictions on Stock Awards or Cash Awards;
and (iii) provide for 

 

 

the cancellation of Awards
for a cash payment to the Participant. Notwithstanding the foregoing, in no
event shall any award that is non-qualified deferred compensation subject to
IRC Section 409A be paid or settled due to the occurrence of a Change in
Control that is not a Section 409A Change in Control.

 

(d)          
Section 409A Adjustments . No adjustment or substitution pursuant
to this Section 16 shall be made in a manner that results in noncompliance
with the requirements of IRC Section 409A , to the extent applicable.

 

17.          Amendment and Termination of the Plan .

 

(a)          
Amendment and Termination . The Administrator may amend, alter or
discontinue the Plan or any Award Agreement, but any such amendment shall be
subject to approval of the stockholders of the Company in the manner and to the
extent required by Applicable Law. Except as provided in Section 16, the
terms of outstanding Awards may not be amended to reduce the exercise price of
outstanding Options or outstanding SARs or cancel outstanding Options or SARs
in exchange for cash, other awards or Options or SARs with an exercise price
that is less than the exercise price of the original Options or SARs without
shareholder approval.

 

(b)          
Effect of Amendment or Termination . No amendment, suspension or termination
of the Plan shall impair the rights of any Award, 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 shall 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.

 

(c)          
Effect of the Plan on Other Arrangements . Neither the adoption of the
Plan by the Board or a Committee nor the submission of the Plan to the
stockholders of the Company for approval shall be construed as creating any
limitations on the power of the Board or any Committee to adopt such other
incentive arrangements as it or they may deem desirable, including, without
limitation, the granting of restricted stock or stock options otherwise than
under the Plan, and such arrangements may be either generally applicable or
applicable only in specific cases.

 

18.          Designation of Beneficiary .

 

(a)          An
Awardee may file a written designation of a beneficiary who is to receive the
Awardee’s rights pursuant to Awardee’s Award or the Awardee may include his or
her Awards in an omnibus beneficiary designation for all benefits under the Plan.
To the extent that Awardee has completed a designation of beneficiary such
beneficiary designation shall remain in effect with respect to any Award
hereunder until changed by the Awardee to the extent enforceable under
Applicable Law.

 

(b)          Such
designation of beneficiary may be changed by the Awardee at any time by written
notice. In the event of the death of an Awardee and in the absence of a
beneficiary validly designated under the Plan who is living at the time of such
Awardee’s death, the Company shall allow the executor or administrator of the
estate of the Awardee to exercise the Award, or if no such executor or
administrator has been appointed (to the knowledge of the Company), the
Company, in its discretion, may allow the spouse or one or more dependents or
relatives of the Awardee to exercise the Award to the extent permissible under
Applicable Law.

 

19.
          No Right to Awards or to Service . No
person shall have any claim or right to be granted an Award and the grant of
any Award shall not be construed as giving an Awardee the right to continue in
the service of the Company or its Affiliates. Further, the Company and its
Affiliates expressly reserve the right, at any time, to dismiss any Service
Provider or Awardee at any time without liability or any claim under the Plan,
except as provided herein or in any Award Agreement entered into hereunder.

 

 

20.
          Legal Compliance . Shares shall not be
issued pursuant to the exercise of an Award unless the exercise of such Award
and the issuance and delivery of such Shares shall comply with Applicable Laws
and shall be further subject to the approval of counsel for the Company with
respect to such compliance. Notwithstanding anything in the Plan to the
contrary, it is the intent of the Company that the Plan shall be administered
so that the additional taxes provided for in IRC Section 409A(a)(1)(B) are
not imposed.

 

21.
          Inability to Obtain Authority . To the
extent the Company is unable to or the Administrator deems that it is not
feasible 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, the Company shall be relieved
of any liability with respect to the failure to issue or sell such Shares as to
which such requisite authority shall not have been obtained.

 

22.
          Reservation of Shares . The Company, during
the term of this Plan, will at all times reserve and keep available such number
of Shares as shall be sufficient to satisfy the requirements of the Plan.

 

23.
          Notice . Any written notice to the Company
required by any provisions of this Plan shall be addressed to the Secretary of
the Company and shall be effective when received.

 

24.          Governing
Law; Interpretation of Plan and Awards .

 

(a)          This
Plan and all determinations made and actions taken pursuant hereto shall be
governed by the substantive laws, but not the choice of law rules, of the state
of Colorado.

 

(b)          In
the event that any provision of the Plan or any Award granted under the Plan is
declared to be illegal, invalid or otherwise unenforceable by a court of
competent jurisdiction, such provision shall be reformed, if possible, to the
extent necessary to render it legal, valid and enforceable, or otherwise
deleted, and the remainder of the terms of the Plan and/or Award shall not be
affected except to the extent necessary to reform or delete such illegal,
invalid or unenforceable provision.

 

(c)          The
headings preceding the text of the sections hereof are inserted solely for
convenience of reference, and shall not constitute a part of the Plan, nor
shall they affect its meaning, construction or effect.

 

(d)          The
terms of the Plan and any Award shall inure to the benefit of and be binding
upon the parties hereto and their respective permitted heirs, beneficiaries,
successors and assigns.

 

(e)          All
questions arising under the Plan or under any Award shall be decided by the
Administrator in its total and absolute discretion. In the event the
Participant believes that a decision by the Administrator with respect to such
person was arbitrary or capricious, the Participant may request arbitration
with respect to such decision. The review by the arbitrator shall be limited to
determining whether the Administrator’s decision was arbitrary or capricious.
This arbitration shall be the sole and exclusive review permitted of the
Administrator’s decision, and the Awardee shall as a condition to the receipt
of an Award be deemed to explicitly waive any right to judicial review.

 

25.
          Limitation on Liability . The Company and
any Affiliate which is in existence or hereafter comes into existence shall not
be liable to a Participant, an Employee, an Awardee or any other persons as to:

 

(a)          
The Non Issuance of Shares . The non issuance or sale of Shares as to
which the Company has been unable to obtain from any regulatory body having
jurisdiction the authority deemed by the Company’s counsel to be necessary to
the lawful issuance and sale of any shares hereunder; and

 

(b)          
Tax Consequences . Any tax consequence expected, but not realized, by
any Participant, Employee, Awardee or other person due to the receipt, exercise
or settlement of any Option or other Award granted hereunder.

 

 

26.
          Unfunded Plan . Insofar as it provides for
Awards, the Plan shall be unfunded. Although bookkeeping accounts may be
established with respect to Awardees who are granted Stock Awards under this
Plan, any such accounts will be used merely as a bookkeeping convenience. The
Company shall not be required to segregate any assets which may at any time be
represented by Awards, nor shall this Plan be construed as providing for such
segregation, nor shall the Company nor the Administrator be deemed to be a
trustee of stock or cash to be awarded under the Plan. Any liability of the
Company to any Participant with respect to an Award shall be based solely upon
any contractual obligations which may be created by the Plan; no such
obligation of the Company shall be deemed to be secured by any pledge or other
encumbrance on any property of the Company. Neither the Company nor the
Administrator shall be required to give any security or bond for the
performance of any obligation which may be created by this Plan.Exhibit 4.4

 

BERRY PETROLEUM COMPANY

2010 EQUITY INCENTIVE PLAN

RESTRICTED STOCK UNIT AWARD AGREEMENT

 

Unless
otherwise defined herein, the terms defined in the Berry Petroleum Company 2010
Equity Incentive Plan shall have the same defined meanings in this Restricted
Stock Unit Award Agreement.

 

I.              NOTICE
OF RESTRICTED STOCK UNIT GRANT

 

You
have been granted restricted Stock Units, subject to the terms and conditions
of the Plan and this Restricted Stock Unit Award Agreement, as follows:

 

Name of Awardee:

 

Total Number of Stock
Units Granted:

 

Grant Date:

 

Vesting Schedule:                                                                                                                                                                                                [                               ]

 

II.            AGREEMENT

 

A.            Grant of Stock Units.  Pursuant to the terms and conditions set
forth in this Restricted Stock Unit Award Agreement (including Section I
above) and the Plan, the Administrator hereby grants to the Awardee named in Section I
above, on the Grant Date set forth in Section I above, the number of Stock
Units set forth in Section I above.

 

B.            Purchase of Stock Units.  No payment of cash is required for the Stock
Units.

 

C.            Vesting/Delivery of Shares.  The Awardee shall vest in the granted Stock
Units in accordance with the vesting schedule provided for in Section I
above.  Within 60 days following the date
on which the Awardee becomes vested in a Stock Unit, the Company shall deliver
to the Awardee one share of Common Stock for each Stock Unit the Awardee
becomes vested in, net of any Shares withheld, if any, for tax obligations as
noted in subsection I below.  In
addition, the Stock Units become vested in full if the Company is subject to a
Change in Control before the Awardee’s Termination of Service, and the Awardee
is subject to an Involuntary Termination (defined below) within 12 months after
the Change in Control.  The Stock Units
may also vest in accordance with Section M. below.

 

D.            The term “Involuntary
Termination” shall mean the Awardee’s Termination of Service by reason of:  (i) the involuntary discharge of the
Awardee by the Company (or the Affiliate employing him or her) for reasons
other than Cause (defined below); or (ii) the voluntary resignation of the
Awardee following (A) a material adverse change in his or her title,
stature, authority or responsibilities with the Company (or the Affiliate
employing him or her), (B) a material reduction in his or her base salary
or annual bonus opportunity or (C) receipt of 

 

1

 

notice that his or her principal workplace will be
relocated by more than 50 miles.  The
term “Cause” shall mean any of the following acts or omissions on the part of
the Awardee:  any act of dishonesty, any
disclosure of confidential information, negligence or misconduct, failure to
perform duties to the standards required by the Company (or the Affiliate
employing him or her) or neglect of his or her duties, as determined in the
Administrator’s sole and absolute discretion, any illegal act, drug, alcohol or
other substance abuse, or any act or omission which has an adverse effect on
the Company or any Affiliate’s reputation or business operations.

 

E.             Forfeiture of Stock Units.  The unvested Stock Units shall automatically
be forfeited upon the Awardee’s Termination of Service  unless
the Administrator determines otherwise in writing.

 

F.             No Interest in Company
Assets.  The Awardee shall not have any
interest in any fund or specific asset of the Company by reason of the Stock
Units.

 

G.            No Rights as a Stockholder
Prior to Delivery.  The Awardee
shall not have any right, title or interest in, or be entitled to vote in
respect of, or otherwise be considered the owner of, any of the shares of
Common Stock covered by the Stock Units. 
The Awardee shall not be entitled to receive distributions from the
shares of Common Stock covered by the Stock Units.

 

H.            Dividend Equivalents.  The Awardee will not be entitled to receive a
cash payment equal to the dividends paid with respect to Common Stock covered
by the Stock Units.

 

I.              Regulatory Compliance.  The issuance of Common Stock pursuant to this
Restricted Stock Unit Award Agreement shall be subject to full compliance with
all applicable requirements of law and the requirements of any stock exchange
or interdealer quotation system upon which the Common Stock may be listed or
traded.

 

J.             Withholding Tax.  The Company’s obligation to deliver any
Shares upon vesting of Stock Units shall be subject to the satisfaction of all
applicable federal, state, local and foreign income, and employment tax
withholding requirements.  The Awardee
shall pay to the Company an amount equal to the withholding amount (or the
Company may withhold such amount from the Awardee’s salary) in cash.  At the Administrator’s election, the Awardee
may pay the withholding amount with Shares; provided, however, that payment in
Shares shall be limited to the withholding amount calculated using the minimum
statutory withholding rates.

 

K.            Plan.  This Restricted Stock Unit Award Agreement is
subject to all of the terms and provisions of the Plan, receipt of a copy of
which is hereby acknowledged by the Awardee. 
The Awardee hereby agrees to accept as binding, conclusive, and final
all decisions and interpretations of the Administrator upon any questions
arising under the Plan and this Restricted Stock Unit Award Agreement.

 

L.             Successors.  This Restricted Stock Unit Award Agreement
shall inure to the benefit of and be binding upon the parties hereto and their
legal representatives, heirs, and permitted successors and assigns.

 

M.           Restrictions on Transfer.  Except as set otherwise provided for in
Subsection L above, and the Plan, the Stock Units may not be sold, assigned,
transferred, pledged or otherwise 

 

2

 

encumbered, whether voluntarily or involuntarily, by
operation of law or otherwise.  No right
or benefit under this Agreement shall be subject to transfer, anticipation,
alienation, sale, assignment, pledge, encumbrance or charge, whether voluntary,
involuntary, by operation of law or otherwise, and any attempt to transfer,
anticipate, alienate, sell, assign, pledge, encumber or charge the same shall
be void.  No right or benefit hereunder
shall in any manner be liable for or subject to any debts, contracts,
liabilities or torts of the person entitled to such benefits.  Any assignment in violation of this Section L
shall be void.

 

N.            Change in Control.    In the event of
a Change in Control prior to the Awardee’s Termination of Service, the Stock
Units will be assumed or an equivalent stock unit or right substituted by the
successor corporation or a parent or subsidiary of the successor
corporation.  In the event that the
successor corporation refuses to assume or substitute for the Stock Units, the
Awardee will fully vest in and have the right to exercise the Stock Units.  In addition, if the Stock Units become fully
vested and exercisable in lieu of assumption or substitution in the event of a
Change in Control, the Administrator will notify the Awardee in writing or
electronically that the Stock Units will be fully vested and exercisable for a
period of time determined by the Administrator in its sole discretion, and the
Stock Units will terminate upon the expiration of such period.

 

O.            Restrictions on Resale.  The Awardee agrees not to sell any Shares
that have been issued pursuant to the vested Stock Units at a time when
Applicable Laws, Company policies or an agreement between the Company and its
underwriters prohibit a sale.  This
restriction shall apply as long as the Awardee is a Service Provider and for
such period of time after the Awardee’s Termination of Service as the
Administrator may specify.

 

P.             Entire Agreement; Governing
Law.  This Restricted Stock Unit
Award Agreement and the Plan constitute the entire agreement of the parties
with respect to the subject matter hereof and supersede in their entirety all
prior undertakings and agreements of the Company and the Awardee with respect
to the subject matter hereof, and may not be modified adversely to the Awardee’s
interest except by means of a writing signed by the Company and the
Awardee.  This Restricted Stock Unit
Award Agreement is governed by the internal substantive laws, but not the
choice of law rules, of Colorado.

 

Q.            NO GUARANTEE OF CONTINUED
SERVICE.  THE AWARDEE ACKNOWLEDGES AND
AGREES THAT THE VESTING OF THE STOCK UNITS PURSUANT TO THE VESTING SCHEDULE
HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE
COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED OR BEING GRANTED STOCK
UNITS).  THE AWARDEE FURTHER ACKNOWLEDGES
AND AGREES THAT THIS RESTRICTED STOCK UNIT AWARD AGREEMENT, THE TRANSACTIONS
CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT
CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE
PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT
INTERFERE WITH AWARDEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE AWARDEE’S
RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.

 

3

 

By
the Awardee’s signature and the signature of the Company’s representative
below, the Awardee and the Company agree that this Award is granted under and
governed by the terms and conditions of this Restricted Stock Unit Award
Agreement and the Plan.  The Awardee has
reviewed this Restricted Stock Unit Award Agreement and the Plan in their
entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Restricted Stock Unit Award Agreement and fully understands all
provisions of this Restricted Stock Unit Award Agreement and the Plan.  The Awardee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions relating to this Restricted Stock Unit Award
Agreement and the Plan.

 

The
Awardee further agrees that the Company may deliver by email all documents
relating to the Plan or this Award (including, without limitation, prospectuses
required by the Securities and Exchange Commission) and all other documents
that the Company is required to deliver to its security holders (including,
without limitation, annual reports and proxy statements).  The Awardee also agrees that the Company may
deliver these documents by posting them on a web site maintained by the Company
or by a third party under contract with the Company.

 

 

	
  AWARDEE:  

  	
   

  	
  BERRY
  PETROLEUM COMPANY  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Signature
  

  	
   

  	
  Signature
  

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Printed
  Name

  	
   

  	
  Printed
  Name 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title

  

 

4

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