Document:

ex4_2.htm

EXHIBIT 4.2

 

 

Stock Option Agreement Terms and Conditions

 

 

The Management Succession and Compensation Committee has authorized the issuance of common shares of Talisman Energy Inc. ("Talisman") under the provisions of an Employee Stock Option Plan (the "Plan") for certain employees of Talisman or of companies that are currently direct or indirect subsidiaries of Talisman (collectively the "Company").

 

Under the provisions of the Plan, Talisman hereby grants to you that number of options (individually an "Option" and collectively, the "Options") listed under the heading "Total Options" above, with a subscription price of $ • CAD per share (the "Subscription Price") and an expiry date of • (the "Expiry Date") which Options are exercisable and will vest on a cumulative basis, on those dates (individually a "Vest Date" and collectively the "Vest Dates" listed under the heading "Total Options" above. The Options are granted to you on the following terms:

 

	
  

	
1.

	
Subject to the terms hereinafter set out, in respect of each Option you will have the right, at your sole discretion, to select one of the following two choices on or after, but not before the applicable Vest Date:

 

	
  

	
a.

	
You may exercise the Options, in whole or in part, to purchase common shares of Talisman ("Optioned Shares") at the Subscription Price provided all applicable withholding obligations are satisfied in accordance with paragraph 9 below, OR

 

	
  

	
b.

	
You may surrender the Options to Talisman, in whole or in part, to receive a direct cash payment from Talisman. With respect to each Option you surrender, the direct cash payment payable to you will equal the amount by which the fair market value of a Talisman common share on the day of surrender exceeds the Subscription Price. "Fair market value" means the fair market value as determined in accordance with the method set by Talisman from time to time. Talisman will withhold from the cash payment amounts required by applicable laws to be withheld. All Options you surrender for a cash payment will then terminate and will not be available for you to exercise.

 

	
  

	
2.

	
Subject to the terms hereinafter set out, at the close of business on the Expiry Date, all Options that you have not exercised or surrendered will terminate.

 

	
  

	
3.

	
If you retire from the Company and such retirement is accepted pursuant to a letter from the Company granting you retirement status and confirming your date of retirement (your "Retirement Date"):

 

	
  

	
a.

	
any unvested Options will accelerate and vest on your Retirement Date, and

 

	
  

	
b.

	
you will be entitled to exercise or surrender for a cash payment, in whole or in part, the Options you hold at any time up to and including, but not after, the earlier of the Expiry Date and the date which is twenty-four months after your Retirement Date, after which time all your Options will terminate.

 

	
  

	
4.

	
If you die while in the employment of the Company:

 

	
  

	
a.

	
any unvested Options will accelerate and immediately vest, and

 

	
  

	
b.

	
your legal representative will be entitled to exercise or surrender for a cash payment your Options, in whole or in part, at any time up to and including, but not after the earlier, of the Expiry Date and that date which is twelve months after your death, after which time all Options will terminate.

 

	
  

	
5.

	
If, before the Expiry Date, you initiate termination of your employment with the Company for any reason other than retirement or death pursuant to paragraphs 3 or 4 above, all your Options will terminate on the earlier of the Expiry Date and the close of business on the last business day you are actively at work.

 

	
  

	
6.

	
If the Company terminates your employment for cause before the Expiry Date, all Options will terminate on the earlier of the Expiry Date and the close of business on the fifth business day after the date on which notice of termination is given.

 

	
  

	
7.

	
If the Company terminates your employment prior to the Expiry Date other than for cause or retirement pursuant to paragraph 6 or 3 above, respectively, and you receive notice of termination:

 

	
  

	
a.

	
prior to a Vest Date or Vest Dates, all applicable Options will terminate on the date the Company gives you notice of termination. Notwithstanding the foregoing, if a Vest Date occurs within the period of notice, as that period is determined by the Company at the time notice of termination is given, then the applicable Options will vest on the Vest Date and you will be entitled to exercise or surrender for a cash payment your Options, in whole or in part, up to and including, but not after, the earlier of the Expiry Date, and that date which is six months after the Vest Date, after which time all Options will terminate; or

 

	
  

	
b.

	
on or after the Vest Date, you will be entitled to exercise or surrender for a cash payment all Options, in whole or in part, at any time up to and including, but not after, the earlier of the Expiry Date and that date which is six months from the day the Company gives you notice of termination, after which time all Options will terminate.

 

	
  

	
8.

	
Subject to the foregoing paragraphs, you or your legal representative will be entitled to exercise or surrender for a cash payment the Options, in whole or in part, by following Talisman's procedures for exercising or surrendering stock options, and in the case of exercising the Options, by paying for the Optioned Shares. Exercising or surrendering stock options should be completed through online procedures accessed through your Solium Inc. account. Talisman may change these procedures from time to time.

 

	
  

	
9.

	
Talisman may withhold from any amount payable to you, either under the Plan or otherwise, such amount as may be necessary to enable Talisman to comply with the applicable requirements of any federal or provincial tax law or 

 

1 of 2

  

  

	
  

	
 

	
authority relating to the withholding of tax or any other required deductions with respect to options.  Talisman may also satisfy any liability for any such withholding obligations, on such terms and conditions as Talisman may determine in its discretion, by (a) selling on your behalf, or requiring you to sell, any Option Shares, or retaining any amount payable, which would otherwise be provided or paid to you in connection with any such sale, or (b) requiring, as a condition to the exercise of any of your Options, that you make such arrangements as Talisman may require so that Talisman can satisfy such withholding obligations, including, without limitation, requiring you to remit to Talisman in advance, or reimburse Talisman for, any such withholding obligations.

 

	 	
10.

	
If the common shares of Talisman are consolidated, subdivided or reclassified or if any dividend is paid in common shares of Talisman or if any other action of a similar nature is taken, then the number of Optioned Shares and Subscription Price per Optioned Share will be correspondingly adjusted without any change in the total price applicable to the Optioned Shares as so adjusted.

 

	 	
11.

	
You will have no rights whatsoever as a shareholder of Talisman in respect of any of the Optioned Shares (including any right to receive dividends or other distributions in respect thereof) except in respect of those Optioned Shares that have been taken up and paid for in full pursuant hereto and issued.

 

	 	
12.

	
Notwithstanding any other provisions of this Agreement, if any person or any two or more persons acting in concert acquire more than fifty percent of the issued voting common shares of Talisman, or if a resolution is passed or an order is made for the dissolution of Talisman, all unvested Options will accelerate and vest immediately and, subject to paragraphs 3, 4, 5, 6 and 7 above, you may exercise, in whole or in part, the Options at any time thereafter until the Expiry Date, after which time the Options will terminate.

 

	 	
13.

	
Time will be of the essence of this Agreement.

 

	 	
14.

	
This Agreement shall be governed by and construed in accordance with the laws of the Province of Alberta and the laws of Canada applicable therein, without regard to the principles of conflicts of law. You irrevocably and unconditionally attorn to the exclusive jurisdiction of the courts of the Province of Alberta and all courts competent to hear appeals therefrom.

 

	 	
15.

	
This Agreement will enure to the benefit of and will be binding upon Talisman and its successors and will also enure to the benefit of and be binding upon you and your legal representative. This Agreement is not assignable by Talisman or by you or your legal representative.

 

	 	
16.

	
Acceptance of the terms and conditions of this Agreement constitutes your consent for the collection, use, processing and disclosure of personal information and data about you which is reasonably necessary for the Company and its nominated representative, which at the date hereof is Solium Capital Inc., to implement the terms of this Agreement.

 

 

	
TALISMAN ENERGY INC.

	  
	Per:
	   
	
             John A. Manzoni

             President and CEO

 

	
 

2 of 2ex4_2.htm

EXHIBIT 4.2

 

 

 

Talisman Energy Inc.

 

Performance Share Unit

Grant Agreement for U.S. Participants and

Eligible Employees of Talisman Energy USA Inc.

Talisman Energy Inc. (“Talisman”) has established the Performance Share Unit Plan for Eligible Employees of Talisman Energy Inc. and its Affiliates effective April 1, 2009 (the “Plan”) under which Grants of performance share units (“PSUs”) may be made to Eligible Employees of Talisman and its Affiliates at the discretion of the Human Resources Committee (the “Committee”).

 

The Committee has authorized the issuance of PSUs under the Plan for certain Eligible Employees of Talisman and its Affiliates.

 

Pursuant to the Plan and in respect of services to be provided to Talisman Energy USA Inc. or Talisman by you, you have been granted the PSUs listed under the heading "Total PSUs" above, effective ____________, 20__ (the “Grant Date”).   Capitalized terms not defined herein shall have the meanings given to those terms in the Plan. The PSUs are granted to you subject to your acceptance of this Grant Agreement and the following terms:

 

	
1.

	
Grant of PSUs

 

	
1.1  

	
The granting and vesting of the PSUs and the delivery to you of any Shares in respect of any Vested PSU (as defined in Section 2.1 of this Grant Agreement) are subject to the terms and conditions of this Grant Agreement including, without limitation, any schedule to this Grant Agreement, and the terms and conditions of the Plan, all of which are incorporated into and form an integral part of this Grant Agreement. In the event of a conflict between the terms and conditions of the Plan and this Grant Agreement, the terms of this Grant Agreement will prevail.

 

	
1.2  

	
Neither the granting of PSUs nor the crediting of Dividend Equivalent PSUs entitles you to any benefits until the PSUs and Dividend Equivalent PSUs become Vested PSUs.

 

	
2.

	
Vesting of PSUs

 

	
2.1 

	
Subject to the provisions of the Plan and the provisions of Section 4 of this Grant Agreement, provided you remain Employed throughout the Performance Period specified in Schedule A attached hereto, the PSUs and Dividend Equivalent PSUs subject to this Grant Agreement will become Vested PSUs on such date following the end of the Performance Period (the “Determination Date”) that the Committee: (A) determines the extent to which the conditions set out in Schedule A (the “Performance Conditions”) have been satisfied, or waives such Performance Conditions; and (B) specifies the number or proportion of PSUs that have become Vested PSUs.  The Determination Date will be as soon as administratively feasible following the last day of the Performance Period.

 

	
3.

	
Settlement of Awards

 

	
3.1  

	
Vested PSUs shall be settled in Shares in accordance with the Plan in the first calendar year beginning after the last day of the Performance Period, and settlement will occur as soon as administratively feasible following the Determination Date.  Notwithstanding the foregoing, PSUs that become Vested PSUs as a result of a change in control as defined in Section 3.3 below will be settled on a date that is within 90 days following the date of such change in control, provided that the Eligible Employee shall have no ability to designate or influence the taxable year in which the payment/settlement will occur.  In no event will Vested PSUs be settled later than December

 

 

Revised September 2011

1 of 5

  

  

 

	
 

	
31, 2014.  The settlement of PSUs is subject to payment or other satisfaction of all related withholding obligations in accordance with Section 5.1 of this Grant Agreement.

 

	
3.2  

	
With respect to the settlement of PSUs in Shares, Talisman, or an Affiliate, may enter into an arrangement with a financial institution or broker that is independent of Talisman and any Affiliates (the “Agent”) in accordance with Stock Exchange Rules and that is a member of the Stock Exchange, pursuant to which the Agent will purchase Shares on the open market on your behalf.  Talisman or the Affiliate will notify the Agent as to the number of Common Shares to be purchased by the Agent on your behalf on the basis of one Share for each Vested PSU, subject to provision for applicable taxes and other source deductions in accordance with Section 10.4 of the Plan.  As soon as practicable thereafter, the Agent shall purchase on the open market the number of Shares specified in the notice from Talisman Energy USA Inc.or Talisman and shall advise you, or your Beneficiary, as applicable, and Talisman Energy USA Inc. or Talisman, of (i) the aggregate purchase price of the Shares; (ii) the purchase price per Share or, if the Shares were purchased at different prices, the average purchase price (computed on a weighted average basis) per Share; (iii) the amount of any related brokerage commission; and (iv) the settlement date for the purchase of the Shares. On the settlement date in respect of the Shares purchased, following payment of the aggregate purchase price and related brokerage commission by Talisman or an Affiliate on your behalf, or on your Beneficiary’s behalf, as applicable, the Agent shall credit such Shares to an account with the Agent in your name, or your Beneficiary’s name, as applicable.  For greater clarity, and not withstanding Sections 7.1 and 7.2 of the Plan, in no event will you be a beneficiary of, nor will your right to payment with respect to your PSUs be funded out of, any Share Purchase Trust as contemplated by Section 7.1 of the Plan unless such trust is a U.S. situs trust meeting the requirements of a “rabbi trust” (as generally understood under U.S. federal income tax principles).

 

	
3.3  

	
For purposes of this grant of PSUs, and not withstanding anything to the contrary in the Plan (including but not limited to Sections 1.3.7 and 6.9 of the Plan), a “change in control” is an event that meets the definition of Change in Control under Section 1.3.7 of the Plan, and that also constitutes a “change in the ownership,” a “change in effective control,” and/or a “change in the ownership of a substantial portion of the assets” as defined under U.S. Treasury Regulation § 1.409A-3(i)(5).

 

	
3.4  

	
For greater certainty, PSUs and Dividend Equivalent PSUs which do not become Vested PSUs shall be forfeited by you, you will have no further right, title or interest in such PSUs and Dividend Equivalent PSUs and neither you nor your Beneficiary shall have any right to receive any Shares or payment, and no payment shall be made as compensation, damages, or otherwise, with respect to any PSUs or Dividend Equivalent PSUs that are forfeited or otherwise do not become Vested PSUs in accordance with the Plan and this Grant Agreement.

 

	
4.

	
Termination of Employment or Change in Conrol

 

	
4.1  

	
Unless otherwise determined by the Committee:

 

	
4.1.1 

	
        In the event your employment is terminated for Cause by Talisman Energy USA Inc., Talisman, or an Affiliate, as applicable at any time prior to the Settlement Date of your PSUs none of the PSUs set out above, nor any Dividend Equivalent PSUs in respect of such PSUs, shall vest, and all such PSUs and Dividend Equivalent PSUs shall be forfeited in accordance with Section 3.4 of this Grant Agreement.

 

	
4.1.2  

	
        In the event you resign from your employment with Talisman Energy USA Inc., Talisman or an Affiliate, as applicable, prior to the end of the Performance Period, none of the PSUs set out above, nor any Dividend Equivalent PSUs in respect of such PSUs, shall vest, and all such PSUs and Dividend Equivalent PSUs shall be forfeited in accordance with Section 3.4 of this Grant Agreement.

 

 

Revised September 2011

2 of 5

  

  

 

	
4.1.3  

	
        In the event your employment is terminated without Cause by Talisman Energy USA Inc., Talisman or an Affiliate, as applicable, prior to the end of the Performance Period, the number of PSUs determined by the formula A x B/C (the “Pro Rated PSUs”), where

 

	
  

	
A

	
equals the total number of PSUs and Dividend Equivalent PSUs recorded in your PSU Account as at the date on which you cease to be Employed;

 

	
  

	
B

	
equals the total number of days between the first day of the Performance Period and the date on which you cease to be Employed (rounded up to the nearest whole number of days);

 

	
  

	
C

	
equals total number of days (rounded up to the nearest whole number of days) between the first day of the Performance Period and the date on which the Performance Period ends,

 

shall, subject to Section 4.1.7, be eligible to become Vested PSUs following the end of the Performance Period (on the Determination Date), subject to satisfaction or waiver by the Committee of the Performance Conditions relating to this Grant.

 

	
4.1.4  

	
        In the event you cease to be Employed by reason of death prior to the end of the Performance Period, notwithstanding Section 2.1 but subject to Section 4.1.7, the number of PSUs and Dividend Equivalent PSUs that become Vested PSUs on the Determination Date shall be the number of PSUs that would have become Vested PSUs in accordance with Section 2.1 had you remained Employed until the end of the Performance Period.

 

	
4.1.5  

	
        In the event that you cease to be Employed by reason of Retirement prior to the end of the Performance Period, the number of PSUs determined by the formula A x B/C (the “Pro Rated PSUs”), where

 

	
  

	
A

	
equals the total number of PSUs and Dividend Equivalent PSUs recorded in your PSU Account as at the effective date of your Retirement;

 

	
  

	
B

	
equals the total number of days between the first day of the Performance Period and the Eligible Employee’s date of Retirement (rounded up to the nearest whole number of days) plus the lesser of 365 days and the number of days remaining in the Performance Period on such date of Retirement; and

 

	
  

	
C

	
equals the total number of days (rounded up to the nearest whole number of days) between the first day of the Performance Period and the date on which the Performance Period ends,

 

shall, subject to Section 4.1.7, be eligible to become Vested PSUs following the end of the Performance Period (on the Determination Date), subject to satisfaction or waiver by the Committee of the Performance Conditions relating to this Grant.

 

	
4.1.6  

	
        In the event that Talisman disposes of all or substantially all of its ownership interest in an Affiliate or Talisman or an Affiliate disposes of all or substantially all of the assets of a business unit of Talisman or the Affiliate, as applicable, and, in connection with any such disposition, you cease to be Employed prior to the end of the Performance Period (other than in circumstances in which Section 4.1.1 applies), the number of PSUs determined by the formula A x B/C (the “Pro Rated PSUs”), where

 

 

Revised September 2011

3 of 5

  

  

 

 

	
  

	
A

	
equals the total number of PSUs and Dividend Equivalent PSUs recorded in your PSU Account at the date on which you cease to be Employed;

 

	
  

	
B

	
equals the total number of days between the first day of the Performance Period and the date on which you cease to be Employed (rounded up to the nearest whole number of days); and

 

	
  

	
C

	
equals total number of days (rounded up to the nearest whole number of days) between the first day of the Performance Period and the date on which the Performance Period ends,

 

shall, subject to Section 4.1.7, be eligible to become Vested PSUs following the end of the Performance Period (on the Determination Date), subject to satisfaction or waiver by the Committee of the Performance Conditions relating to this Grant.

 

	
4.1.7  

	
In the event of a change in control as defined in Section 3.3 of this Grant Agreement prior to the end of the Performance Period:

 

	
(a)  

	
the Committee shall determine the extent to which the Performance Conditions applicable to the PSUs granted to you under this Grant Agreement have been satisfied during the portion of the Performance Period completed prior to such change in control; and

 

	
(b)  

	
if, having regard to the determination contemplated in paragraph (a) above, the Committee determines that the number of PSUs granted to you under this Grant Agreement that are eligible to become Vested PSUs in connection with the change in control exceeds the Target Award in respect of this Grant, PSUs in respect of this Grant and any Dividend Equivalent PSUs in respect of such PSUs recorded in your PSU Account as at the effective date of the change in control, increased by the appropriate multiplier under Schedule A, as determined by the Committee, shall become Vested PSUs effective at the time of the change in control;

 

	
(c)  

	
if, having regard to the determination contemplated in paragraph (a) above, the Committee determines that the number of PSUs granted to you under this Grant Agreement that are eligible to become Vested PSUs in connection with the change in control does not exceed the Target Award in respect of this Grant, no less than such Target Award and any Dividend Equivalent PSUs in respect of such Target Award shall become Vested PSUs effective at the time of the change in control.

 

PSUs and Dividend Equivalent PSUs in respect hereof which vest pursuant to this Section 4.1.7 shall be settled as soon as practicable after the effective date of the change in control, but in all events by the 90th day following such change in control, provided that the Eligible Employee shall have no ability to designate or influence the taxable year in which the payment/settlement will occur.

 

	
5.

	
Tax

 

	
5.1  

	
Talisman Energy USA Inc., Talisman, any Affiliate or the Trustee may withhold from any amount payable to you, either under this Grant Agreement or otherwise, such amount as may be necessary so as to ensure that Talisman Energy USA Inc., Talisman, Affiliate, or the Trustee, as the case may be, will be able to comply with the applicable provisions of Applicable Law relating to the withholding of tax or that any other required deductions are paid or otherwise satisfied, including withholding of the amount, if any, includable in your income.  Talisman Energy USA Inc., Talisman or any Affiliate, as applicable, and the Trustee shall also have the right in its discretion to satisfy any such liability for withholding or other required deduction amounts that become payable as a result of the settlement of PSUs by selling or requiring you to sell Shares which would otherwise be delivered or provided to you hereunder.  Talisman Energy USA Inc. or Talisman may require you, as a condition to the settlement of any Vested PSUs, to pay or

 

 

Revised September 2011

4 of 5

  

  

 

 

	
 

	
reimburse, or to indemnify, Talisman Energy USA Inc., Talisman, an Affiliate or the Trustee for any such withholding or other required deduction of amounts related to the settlement of your Vested PSUs.

 

	
6.

	
Personal Information

 

	
6.1  

	
You consent to the holding, processing and transferring of personal data provided by you to Talisman Energy USA Inc., Talisman, any Affiliate, the Trustee, the Agent or to any third party service provider for all purposes relating to the operation of the Plan, including (i) administering and maintaining records in respect of you; (ii) providing information to Talisman Energy USA Inc., Talisman, any Affiliate, their respective agents, the Trustee, the Agent or any third party service provider in respect of the Plan; (iii) providing information to future purchasers of Talisman Energy USA Inc., Talisman, any Affiliate or the business in which you work; and (iv) transferring information about you to a country or territory outside the United States that may not provide the same statutory protection for the information as the United States does.

 

	
7.

	
Binding Agreement

 

	
7.1  

	
This Grant Agreement shall be binding upon you, your Beneficiary, the legal representatives of your estate and your heirs.

 

	
8.

	
Compliance with the Internal Revenue Code

 

	
8.1  

	
To the extent that PSUs awarded hereunder may be subject to the provisions of Section 409A (“Section 409A”) of the Internal Revenue Code of 1986, as amended (the “Code”), the provisions of the Plan and this Grant Agreement shall be administered, interpreted and construed in accordance with Section 409A, its accompanying regulations, and other guidance, so as to comply with Section 409A or an exception thereto.   Notwithstanding the foregoing, neither Talisman Energy USA Inc., Talisman, nor an Affiliate, nor any of the officers, directors, or agents of such entities, shall be obligated, directly or indirectly, to any person for any taxes, penalties, interest, or like amounts that may be imposed on account of any benefits under this Plan or on account of any failure to comply with Section 409A or any other provision of the Code.

 

 

Revised September 2011

5 of 5

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00197-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00197-of-00352.parquet"}]]