Document:

Exhibit 10.19

 

THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAVE NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM QUALIFICATION BY SECTION 25100, 25102, OR 25105 OF THE CALIFORNIA CORPORATIONS CODE.  THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.

 

THE SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.  NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

 

VOEX, INC.

NON-PLAN FULLY VESTED STOCK OPTION AGREEMENT

 

Voex, Inc. has granted to the Participant named in the Notice of Grant of Stock Option (the “Grant Notice”) to which this Non-Plan Fully Vested Stock Option Agreement (this “Option Agreement”) is attached an option (the “Option”) to purchase certain shares of Stock upon the terms and conditions set forth in the Grant Notice and this Option Agreement.  The Option has not been granted pursuant to the Voex, Inc. Amended and Restated 2003 Stock Option and Restricted Stock Plan (the “Plan”).  However, this Option Agreement shall be governed by the terms and conditions of the Plan, as amended to the Date of Grant, that would be applicable to the Option had the Option been granted pursuant to the Plan (the “Applicable Plan Provisions”) and such terms and conditions are hereby incorporated by reference in this Option Agreement.  By signing the Grant Notice, the Participant: (a) acknowledges receipt of, and represents that the Participant has read and is familiar with the terms and conditions of, the Grant Notice, this Option Agreement and the Applicable Plan Provisions, (b) accepts the Option subject to all of the terms and conditions of the Grant Notice, this Option Agreement and the Applicable Plan Provisions, and (c) agrees to accept as binding, conclusive and final all decisions or interpretations of the Board upon any questions arising under the Grant Notice, this Option Agreement or the Applicable Plan Provisions.

 

1.                                       DEFINITIONS AND CONSTRUCTION.

 

1.1                                 Definitions.  Unless otherwise defined herein, capitalized terms shall have the meanings assigned to such terms in the Grant Notice or the Plan.

 

1.2                                 Construction.  Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of this Option

 

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Agreement.  Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular.  Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise.

 

2.                                       TAX CONSEQUENCES.

 

2.1                                 Tax Status of Option.  This Option is intended to be a Nonstatutory Stock Option and shall not be treated as an Incentive Stock Option within the meaning of Section 422(b) of the Code.

 

3.                                       ADMINISTRATION.

 

All questions of interpretation concerning the Grant Notice, this Option Agreement and the Applicable Plan Provisions shall be determined by the Board.  All determinations by the Board shall be final and binding upon all persons having an interest in the Option.  Any Officer shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, or election which is the responsibility of or which is allocated to the Company herein, provided the Officer has apparent authority with respect to such matter, right, obligation, or election.

 

4.                                       EXERCISE OF THE OPTION.

 

4.1                                 Right to Exercise.  Except as otherwise provided herein, the Option shall be exercisable on and after the Initial Vesting Date and prior to the termination of the Option (as provided in Section 6) in an amount not to exceed the number of Vested Shares, subject to the Company’s repurchase rights set forth in Section 10.

 

4.2                                 Method of Exercise.  Exercise of the Option shall be by means of electronic or written notice (the “Exercise Notice”) in a form authorized by the Company.  An electronic Exercise Notice must be digitally signed or authenticated by the Participant in such manner as required by the notice and transmitted to the Company or an authorized representative of the Company (including a third-party administrator designated by the Company).  In the event that the Participant is not authorized or is unable to provide an electronic Exercise Notice, the Option shall be exercised by a written Exercise Notice addressed to the Company, which shall be signed by the Participant and delivered in person, by certified or registered mail, return receipt requested, by confirmed facsimile transmission, or by such other means as the Company may permit, to the Company, or an authorized representative of the Company (including a third-party administrator designated by the Company).  Each Exercise Notice, whether electronic or written, must state the Participant’s election to exercise the Option, the number of whole shares of Stock for which the Option is being exercised and such other representations and agreements as to the Participant’s investment intent with respect to such shares as may be required pursuant to the provisions of this Option Agreement.  Further, each Exercise Notice must be received by the Company prior to the termination of the Option as set forth in Section 6 and must be accompanied by full payment of the aggregate Exercise Price for the number of shares of Stock being purchased.  The Option shall be deemed to be exercised upon receipt by the Company of such electronic or written Exercise Notice and the aggregate Exercise Price.

 

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4.3                                 Payment of Exercise Price.

 

(a)                                  Forms of Consideration Authorized.  Except as otherwise provided below, payment of the aggregate Exercise Price for the number of shares of Stock for which the Option is being exercised shall be made (i) in cash or by check or cash equivalent, (ii) if permitted by the Company, by tender to the Company, or attestation to the ownership, of whole shares of Stock owned by the Participant having a Fair Market Value not less than the aggregate Exercise Price, (iii) by means of a Cashless Exercise, as defined in Section 4.3(b), (iv) if permitted by the Company, by means of a Net-Exercise, or (v) by any combination of the foregoing.

 

(b)                                 Limitations on Forms of Consideration.

 

(i)                                     Tender of Stock.  Notwithstanding the foregoing, the Option may not be exercised by tender to the Company, or attestation to the ownership, of shares of Stock to the extent such tender or attestation would constitute a violation of the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock.  If required by the Company, the Option may not be exercised by tender to the Company, or attestation to the ownership, of shares of Stock unless such shares either have been owned by the Participant for more than six (6) months or such other period, if any, required by the Company (and not used for another option exercise by attestation during such period) or were not acquired, directly or indirectly, from the Company.

 

(ii)                                  Cashless Exercise.  A “Cashless Exercise” means the delivery of a properly executed notice together with irrevocable instructions to a broker in a form acceptable to the Company providing for the assignment to the Company of the proceeds of a sale or loan with respect to some or all of the shares of Stock acquired upon the exercise of the Option pursuant to a program or procedure approved by the Company (including, without limitation, through an exercise complying with the provisions of Regulation T as promulgated from time to time by the Board of Governors of the Federal Reserve System).  The Company reserves, at any and all times, the right, in the Company’s sole and absolute discretion, to establish, decline to approve, or terminate any such program or procedure, including with respect to the Participant notwithstanding that such program or procedures may be available to others.

 

4.4                                 Tax Withholding.  At the time the Option is exercised, in whole or in part, or at any time thereafter as requested by the Company, the Participant hereby authorizes withholding from payroll and any other amounts payable to the Participant, and otherwise agrees to make adequate provision for (including by means of a Cashless Exercise to the extent permitted by the Company), any sums required to satisfy the federal, state, local and foreign tax withholding obligations of the Participating Company Group, if any, which arise in connection with the Option.  The Company shall have no obligation to deliver shares of Stock until the tax withholding obligations of the Participating Company Group have been satisfied by the Participant.

 

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4.5                                 Certificate Registration.  Except in the event the Exercise Price is paid by means of a Cashless Exercise, the certificate for the shares as to which the Option is exercised shall be registered in the name of the Participant, or, if applicable, in the names of the heirs of the Participant.

 

4.6                                 Restrictions on Grant of the Option and Issuance of Shares.  The grant of the Option and the issuance of shares of Stock upon exercise of the Option shall be subject to compliance with all applicable requirements of federal, state or foreign law with respect to such securities.  The Option may not be exercised if the issuance of shares of Stock upon exercise would constitute a violation of any applicable federal, state or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which the Stock may then be listed.  In addition, the Option may not be exercised unless (i) a registration statement under the Securities Act shall at the time of exercise of the Option be in effect with respect to the shares issuable upon exercise of the Option or (ii) in the opinion of legal counsel to the Company, the shares issuable upon exercise of the Option may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act.  THE PARTICIPANT IS CAUTIONED THAT THE OPTION MAY NOT BE EXERCISED UNLESS THE FOREGOING CONDITIONS ARE SATISFIED.  ACCORDINGLY, THE PARTICIPANT MAY NOT BE ABLE TO EXERCISE THE OPTION WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED.  The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any shares subject to the Option shall relieve the Company of any liability in respect of the failure to issue or sell such shares as to which such requisite authority shall not have been obtained.  As a condition to the exercise of the Option, the Company may require the Participant to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company.

 

4.7                                 Fractional Shares.  The Company shall not be required to issue fractional shares upon the exercise of the Option.

 

5.                                       NONTRANSFERABILITY OF THE OPTION.

 

During the lifetime of the Participant, the Option shall be exercisable only by the Participant or the Participant’s guardian or legal representative.  The Option shall not be subject in any manner to anticipation, alienation, sale, exchange, transfer, assignment, pledge, encumbrance, or garnishment by creditors of the Participant or the Participant’s beneficiary, except transfer by will or by the laws of descent and distribution.  Following the death of the Participant, the Option, may be exercised by the Participant’s legal representative or by any person empowered to do so under the deceased Participant’s will or under the then applicable laws of descent and distribution.

 

6.                                       TERMINATION OF THE OPTION.

 

The Option shall terminate and may no longer be exercised after the first to occur of (a) the close of business on the Option Expiration Date, or (b) a Change in Control to the extent provided in Section 7.

 

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7.                                       EFFECT OF CHANGE IN CONTROL.

 

In the event of a Change in Control, the surviving, continuing, successor, or purchasing entity or parent thereof, as the case may be (the “Acquiror”), may, without the consent of the Participant, assume or continue in full force and effect the Company’s rights and obligations under the Option or any portion thereof or substitute for the Option or any portion thereof a substantially equivalent option for the Acquiror’s stock.  For purposes of this Section, the Option shall be deemed assumed if, following the Change in Control, the Option confers the right to receive, subject to the terms and conditions of the Plan and this Option Agreement, for each share of Stock subject to the Option immediately prior to the Change in Control, the consideration (whether stock, cash, other securities or property or a combination thereof) to which a holder of a share of Stock on the effective date of the Change in Control was entitled; provided, however, that if such consideration is not solely common stock of the Acquiror, the Board may, with the consent of the Acquiror, provide for the consideration to be received upon the exercise of the Option, for each share of Stock subject to the Option, to consist solely of common stock of the Acquiror equal in Fair Market Value to the per share consideration received by holders of Stock pursuant to the Change in Control.  If any portion of such consideration may be received by holders of Stock pursuant to the Change in Control on a contingent or delayed basis, the Board may, in its sole discretion, determine such Fair Market Value per share as of the time of the Change in Control on the basis of the Board’s good faith estimate of the present value of the probable future payment of such consideration.  The Option shall terminate and cease to be outstanding effective as of the time of consummation of the Change in Control to the extent that the Option is neither assumed or continued by the Acquiror in connection with the Change in Control nor exercised as of the date of the Change in Control.  Notwithstanding the foregoing, shares acquired upon exercise of the Option prior to the Change in Control and any consideration received pursuant to the Change in Control with respect to such shares shall continue to be subject to all applicable provisions of this Option Agreement except as otherwise provided herein.

 

8.                                       ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE.

 

Subject to any required action by the stockholders of the Company, in the event of any change in the Stock effected without receipt of consideration by the Company, whether through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of shares, or similar change in the capital structure of the Company, or in the event of payment of a dividend or distribution to the stockholders of the Company in a form other than Stock (excepting normal cash dividends) that has a material effect on the Fair Market Value of shares of Stock, appropriate and proportionate adjustments shall be made in the number, Exercise Price and kind of shares subject to the Option, in order to prevent dilution or enlargement of the Participant’s rights under the Option.  For purposes of the foregoing, conversion of any convertible securities of the Company shall not be treated as “effected without receipt of consideration by the Company.”  Any fractional share resulting from an adjustment pursuant to this Section shall be rounded down to the nearest whole number and the Exercise Price shall be rounded up to the nearest whole cent.  In no event may the Exercise Price be

 

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decreased to an amount less than the par value, if any, of the stock subject to the Option.  Such adjustments shall be determined by the Board, and its determination shall be final, binding and conclusive.

 

9.                                       RIGHTS AS A STOCKHOLDER, DIRECTOR, EMPLOYEE OR CONSULTANT.

 

The Participant shall have no rights as a stockholder with respect to any shares covered by the Option until the date of the issuance of the shares for which the Option has been exercised (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company).  No adjustment shall be made for dividends, distributions or other rights for which the record date is prior to the date the shares are issued, except as provided in Section 8.  If the Participant is an Employee, the Participant understands and acknowledges that, except as otherwise provided in a separate, written employment agreement between a Participating Company and the Participant, the Participant’s employment is “at will” and is for no specified term.  Nothing in this Option Agreement shall confer upon the Participant any right to continue in the Service of a Participating Company or interfere in any way with any right of the Participating Company Group to terminate the Participant’s Service as a Director, an Employee or Consultant, as the case may be, at any time.

 

10.                                 RIGHT OF FIRST REFUSAL.

 

10.1                           Grant of Right of First Refusal.  Except as provided in Section 10.7 and Section 15 below, in the event the Participant, the Participant’s legal representative, or other holder of shares acquired upon exercise of the Option proposes to sell, exchange, transfer, pledge, or otherwise dispose of any Vested Shares (the “Transfer Shares”) to any person or entity, including, without limitation, any stockholder of a Participating Company, the Company shall have the right to repurchase the Transfer Shares under the terms and subject to the conditions set forth in this Section 10 (the “Right of First Refusal”).

 

10.2                           Notice of Proposed Transfer.  Prior to any proposed transfer of the Transfer Shares, the Participant shall deliver written notice (the “Transfer Notice”) to the Company describing fully the proposed transfer, including the number of Transfer Shares, the name and address of the proposed transferee (the “Proposed Transferee”) and, if the transfer is voluntary, the proposed transfer price, and containing such information necessary to show the bona fide nature of the proposed transfer.  In the event of a bona fide gift or involuntary transfer, the proposed transfer price shall be deemed to be the Fair Market Value of the Transfer Shares, as determined by the Board in good faith.  If the Participant proposes to transfer any Transfer Shares to more than one Proposed Transferee, the Participant shall provide a separate Transfer Notice for the proposed transfer to each Proposed Transferee.  The Transfer Notice shall be signed by both the Participant and the Proposed Transferee and must constitute a binding commitment of the Participant and the Proposed Transferee for the transfer of the Transfer Shares to the Proposed Transferee subject only to the Right of First Refusal.

 

10.3                           Bona Fide Transfer.  If the Company determines that the information provided by the Participant in the Transfer Notice is insufficient to establish the bona fide nature of a proposed voluntary transfer, the Company shall give the Participant written notice of the Participant’s failure to comply with the procedure described in this Section 10, and the

 

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Participant shall have no right to transfer the Transfer Shares without first complying with the procedure described in this Section 10.  The Participant shall not be permitted to transfer the Transfer Shares if the proposed transfer is not bona fide.

 

10.4                           Exercise of Right of First Refusal.  If the Company determines the proposed transfer to be bona fide, the Company shall have the right to purchase all, but not less than all, of the Transfer Shares (except as the Company and the Participant otherwise agree) at the purchase price and on the terms set forth in the Transfer Notice by delivery to the Participant of a notice of exercise of the Right of First Refusal within thirty (30) days after the date the Transfer Notice is delivered to the Company.  The Company’s exercise or failure to exercise the Right of First Refusal with respect to any proposed transfer described in a Transfer Notice shall not affect the Company’s right to exercise the Right of First Refusal with respect to any proposed transfer described in any other Transfer Notice, whether or not such other Transfer Notice is issued by the Participant or issued by a person other than the Participant with respect to a proposed transfer to the same Proposed Transferee.  If the Company exercises the Right of First Refusal, the Company and the Participant shall thereupon consummate the sale of the Transfer Shares to the Company on the terms set forth in the Transfer Notice within sixty (60) days after the date the Transfer Notice is delivered to the Company (unless a longer period is offered by the Proposed Transferee); provided, however, that in the event the Transfer Notice provides for the payment for the Transfer Shares other than in cash, the Company shall have the option of paying for the Transfer Shares by the present value cash equivalent of the consideration described in the Transfer Notice as reasonably determined by the Company.  For purposes of the foregoing, cancellation of any indebtedness of the Participant to any Participating Company shall be treated as payment to the Participant in cash to the extent of the unpaid principal and any accrued interest canceled.

 

10.5                           Failure to Exercise Right of First Refusal.  If the Company fails to exercise the Right of First Refusal in full (or to such lesser extent as the Company and the Participant otherwise agree) within the period specified in Section 10.4 above, the Participant may conclude a transfer to the Proposed Transferee of the Transfer Shares on the terms and conditions described in the Transfer Notice, provided such transfer occurs not later than ninety (90) days following delivery to the Company of the Transfer Notice.  The Company shall have the right to demand further assurances from the Participant and the Proposed Transferee (in a form satisfactory to the Company) that the transfer of the Transfer Shares was actually carried out on the terms and conditions described in the Transfer Notice.  No Transfer Shares shall be transferred on the books of the Company until the Company has received such assurances, if so demanded, and has approved the proposed transfer as bona fide.  Any proposed transfer on terms and conditions different from those described in the Transfer Notice, as well as any subsequent proposed transfer by the Participant, shall again be subject to the Right of First Refusal and shall require compliance by the Participant with the procedure described in this Section 10.

 

10.6                           Transferees of Transfer Shares.  All transferees of the Transfer Shares or any interest therein, other than the Company, shall be required as a condition of such transfer to agree in writing (in a form satisfactory to the Company) that such transferee shall receive and hold such Transfer Shares or interest therein subject to all of the terms and conditions of this Option Agreement, including this Section 10 providing for the Right of First Refusal with

 

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respect to any subsequent transfer.  Any sale or transfer of any shares acquired upon exercise of the Option shall be void unless the provisions of this Section 10 are met.

 

10.7                           Transfers Not Subject to Right of First Refusal.  The Right of First Refusal shall not apply to any transfer or exchange of the shares acquired upon exercise of the Option if such transfer or exchange is in connection with an Ownership Change Event.  If the consideration received pursuant to such transfer or exchange consists of stock of a Participating Company, such consideration shall remain subject to the Right of First Refusal unless the provisions of Section 10.9 below result in a termination of the Right of First Refusal.

 

10.8                           Assignment of Right of First Refusal.  The Company shall have the right to assign the Right of First Refusal at any time, whether or not there has been an attempted transfer, to one or more persons as may be selected by the Company.

 

10.9                           Early Termination of Right of First Refusal.  The other provisions of this Option Agreement notwithstanding, the Right of First Refusal shall terminate and be of no further force and effect upon (a) the occurrence of a Change in Control, unless the Acquiror assumes the Company’s rights and obligations under the Option or substitutes a substantially equivalent option for the Acquiror’s stock for the Option, or (b) the existence of a public market for the class of shares subject to the Right of First Refusal.  A “public market” shall be deemed to exist if (i) such stock is listed on a national securities exchange (as that term is used in the Exchange Act) or (ii) such stock is traded on the over-the-counter market and prices therefor are published daily on business days in a recognized financial journal.

 

11.                                 STOCK DISTRIBUTIONS SUBJECT TO OPTION AGREEMENT.

 

If, from time to time, there is any stock dividend, stock split or other change, as described in Section 8, in the character or amount of any of the outstanding stock of the corporation the stock of which is subject to the provisions of this Option Agreement, then in such event any and all new, substituted or additional securities to which the Participant is entitled by reason of the Participant’s ownership of the shares acquired upon exercise of the Option shall be immediately subject to the Right of First Refusal with the same force and effect as the shares subject to the Right of First Refusal immediately before such event.

 

12.                                 LEGENDS.

 

The Company may at any time place legends referencing the Right of First Refusal and any applicable federal, state or foreign securities law restrictions on all certificates representing shares of stock subject to the provisions of this Option Agreement.  The Participant shall, at the request of the Company, promptly present to the Company any and all certificates representing shares acquired pursuant to the Option in the possession of the Participant in order to carry out the provisions of this Section.  Unless otherwise specified by the Company, legends placed on such certificates may include, but shall not be limited to, the following:

 

12.1                           “THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT

 

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COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.”

 

12.2                           “THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER, INCLUDING A RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE CORPORATION OR ITS ASSIGNEE SET FORTH IN AN AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER, OR SUCH HOLDER S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THIS CORPORATION.”

 

13.                                 LOCK-UP AGREEMENT.

 

The Participant hereby agrees that in the event of any underwritten public offering of stock, including an initial public offering of stock, made by the Company pursuant to an effective registration statement filed under the Securities Act, the Participant shall not offer, sell, contract to sell, pledge, hypothecate, grant any option to purchase or make any short sale of, or otherwise dispose of any shares of stock of the Company or any rights to acquire stock of the Company for such period of time from and after the effective date of such registration statement as may be established by the underwriter for such public offering; provided, however, that such period of time shall not exceed one hundred eighty (180) days from the effective date of the registration statement to be filed in connection with such public offering.  The foregoing limitation shall not apply to shares registered in the public offering under the Securities Act.  The Participant hereby agrees to enter into any agreement reasonably required by the underwriters to implement the foregoing within a reasonable timeframe if so requested by the Company.

 

14.                                 RESTRICTIONS ON TRANSFER OF SHARES.

 

No shares acquired upon exercise of the Option may be sold, exchanged, transferred (including, without limitation, any transfer to a nominee or agent of the Participant), assigned, pledged, hypothecated or otherwise disposed of, including by operation of law in any manner which violates any of the provisions of this Option Agreement, and any such attempted disposition shall be void.  The Company shall not be required (a) to transfer on its books any shares which will have been transferred in violation of any of the provisions set forth in this Option Agreement or (b) to treat as owner of such shares or to accord the right to vote as such owner or to pay dividends to any transferee to whom such shares will have been so transferred.

 

15.                                 MISCELLANEOUS PROVISIONS.

 

15.1                           Further Instruments.  The parties hereto agree to execute such further instruments and to take such further action as may reasonably be necessary to carry out the intent of this Option Agreement.

 

15.2                           Binding Effect.  Subject to the restrictions on transfer set forth herein, this Option Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and assigns.

 

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15.3                           Termination or Amendment.  The Board may terminate or amend the Plan or the Option at any time; provided, however, that except as provided in Section 7 in connection with a Change in Control, no such termination or amendment may adversely affect the Option or any unexercised portion hereof without the consent of the Participant unless such termination or amendment is necessary to comply with any applicable law or government regulation.  No amendment or addition to this Option Agreement shall be effective unless in writing.

 

15.4                           Delivery of Documents and Notices.  Any document relating to participation in the Plan, or any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given (except to the extent that this Option Agreement provides for effectiveness only upon actual receipt of such notice) upon personal delivery electronic delivery at the e-mail address, if any, provided for the Participant by the Participating Company, or, upon deposit in the U.S. Post Office or foreign postal service, by registered or certified mail, or with a nationally recognized overnight courier service with postage and fees prepaid, addressed to the other party at the address of such party set forth in the Grant Notice or at such other address as such party may designate in writing from time to time to the other party.

 

(a)                                  Description of Electronic Delivery.  The Plan documents, which may include but do not necessarily include: the Plan, the Grant Notice, this Option Agreement, and any reports of the Company provided generally to the Company’s shareholders, may be delivered to the Participant electronically.  In addition, if permitted by the Company, the Participant may deliver electronically the Grant Notice and Exercise Notice called for by Section 4.2 to the Company or to such third party involved in administering the Plan as the Company may designate from time to time.  Such means of electronic delivery may include but do not necessarily include the delivery of a link to a Company intranet or the internet site of a third party involved in administering the Plan, the delivery of the document via e-mail or such other means of electronic delivery specified by the Company.

 

(b)                                 Consent to Electronic Delivery.  The Participant acknowledges that the Participant has read Section 15.4(a) of this Option Agreement and consents to the electronic delivery of the Plan documents and, if permitted by the Company, the delivery of the Grant Notice and Exercise Notice, as described in Section 15.4(a).  The Participant acknowledges that he or she may receive from the Company a paper copy of any documents delivered electronically at no cost to the Participant by contacting the Company by telephone or in writing.  The Participant further acknowledges that the Participant will be provided with a paper copy of any documents if the attempted electronic delivery of such documents fails.  Similarly, the Participant understands that the Participant must provide the Company or any designated third party administrator with a paper copy of any documents if the attempted electronic delivery of such documents fails.  The Participant may revoke his or her consent to the electronic delivery of documents described in Section 15.4(a) or may change the electronic mail address to which such documents are to be delivered (if Participant has provided an electronic mail address) at any time by notifying the Company of such revoked consent or revised e-mail address by telephone, postal service or electronic mail.  Finally, the Participant understands that he or she is not required to consent to electronic delivery of documents described in Section 15.4(a).

 

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15.5                           Integrated Agreement.  The Grant Notice, this Option Agreement and the Plan, together with any employment, service or other agreement with the Participant and a Participating Company referring to the Option, shall constitute the entire understanding and agreement of the Participant and the Participating Company Group with respect to the subject matter contained herein or therein and supersede any prior agreements, understandings, restrictions, representations, or warranties among the Participant and the Participating Company Group with respect to such subject matter.  To the extent contemplated herein or therein, the provisions of the Grant Notice, the Option Agreement and the Plan shall survive any exercise of the Option and shall remain in full force and effect.

 

15.6                           Applicable Law.  This Option Agreement shall be governed by the laws of the State of California as such laws are applied to agreements between California residents entered into and to be performed entirely within the State of California.

 

15.7                           Counterparts.  The Grant Notice may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

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Participant:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Date:
    	
 
    
					

 

 

STOCK OPTION EXERCISE NOTICE

Nonstatutory Stock Option

 

Voex, Inc.

Attention: Chief Financial Officer

950 Tower Lane, Suite 450

Foster City, CA 94404

 

 

Ladies and Gentlemen:

 

1.                                       Option.  I was granted an option (the “Option”) to purchase shares of the common stock (the “Shares”) of Voex, Inc. (the “Company”) pursuant to my Notice of Grant of Stock Option (the “Grant Notice”) and my Stock Option Agreement (the “Option Agreement”) as follows:

 

	
Date   of Grant:
    	
 
    
	
 
    	
 
    
	
Number   of Option Shares:
    	
 
    
	
 
    	
 
    
	
Exercise   Price per Share:
    	
$
    	
 
    

 

2.                                       Exercise of Option.  I hereby elect to exercise the Option to purchase the following number of Shares, all of which are Vested Shares, in accordance with the Grant Notice and the Option Agreement:

 

	
Total   Shares Purchased:
    	
 
    
	
 
    	
 
    
	
Total   Exercise Price (Total Shares X Price per Share)
    	
$
    	
 
    

 

3.                                       Payments.  I enclose payment in full of the total exercise price for the Shares in the following form(s), as authorized by my Option Agreement:

 

	
TM Cash:
    	
$
    	
 
    
	
 
    	
 
    
	
TM Check:
    	
$
    	
 
    
	
 
    
	
TM Tender of   Company Stock:
    	
Contact Plan Administrator
    
				

 

4.                                       Tax Withholding.  I enclose payment in full of my withholding taxes, if any, as follows:

 

(Contact Plan Administrator for amount of tax due.)

 

	
TM Cash:
    	
$
    	
 
    
	
 
    	
 
    
	
TM   Check:
    	
$
    	
 
    

 

 

5.                                       Participant Information.

 

	
My   address is:
    
	
 
    
	
 
    
	
My   Social Security Number is:
    

 

6.                                       Binding Effect.  I agree that the Shares are being acquired in accordance with and subject to the terms, provisions and conditions of the Grant Notice, the Option Agreement, including the Right of First Refusal set forth therein, to all of which I hereby expressly assent.  This Agreement shall inure to the benefit of and be binding upon my heirs, executors, administrators, successors and assigns.

 

7.                                       Transfer.  I understand and acknowledge that the Shares have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and that consequently the Shares must be held indefinitely unless they are subsequently registered under the Securities Act, an exemption from such registration is available, or they are sold in accordance with Rule 144 or Rule 701 under the Securities Act.  I further understand and acknowledge that the Company is under no obligation to register the Shares.  I understand that the certificate or certificates evidencing the Shares will be imprinted with legends which prohibit the transfer of the Shares unless they are registered or such registration is not required in the opinion of legal counsel satisfactory to the Company.

 

I am aware that Rule 144 under the Securities Act, which permits limited public resale of securities acquired in a nonpublic offering, is not currently available with respect to the Shares and, in any event, is available only if certain conditions are satisfied.  I understand that any sale of the Shares that might be made in reliance upon Rule 144 may only be made in limited amounts in accordance with the terms and conditions of such rule and that a copy of Rule 144 will be delivered to me upon request.

 

I understand that I am purchasing the Shares pursuant to the terms of the Grant Notice and my Option Agreement, copies of which I have received and carefully read and understand.

 

	
 
    	
 
    	
Very   truly yours,
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(Signature)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Receipt   of the above is hereby acknowledged.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Voex, Inc.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Title:
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Dated:exhibit10a.htm

Exhibit 10.A

 

 

 

EL PASO CORPORATION –

EP ENERGY EMPLOYEE RETENTION PLAN

 

 

El Paso Corporation (the “Company”) considers it essential and in the best interests of the Company and its Affiliates (as defined herein) to foster the continuous dedication and employment of employees of the Company and its Affiliates who primarily provide support to the Company’s exploration and production business unit (the “EP Energy Business”), and to incentivize certain key employees of the EP Energy Business to maximize the sale price of the EP Energy Business in connection with the anticipated acquisition of the Company by Kinder Morgan, Inc., a Delaware corporation (“Purchaser”).  Therefore, this El Paso Corporation – EP Energy Employee Retention Plan (the “Retention Plan”) has been established pursuant to Section 5.13(c) of the Agreement and Plan of Merger among Purchaser, Sherpa Merger Sub, Inc., Sherpa Acquisition, LLC, Sirius Holdings Merger Corporation, Sirius Merger Corporation and the Company, dated as of October 16, 2011 (the “Transaction Agreement”), effective November 15, 2011 (the “Effective Date”).

 

Section 1. Certain Definitions.  Except as set forth otherwise in the preamble to this Retention Plan or below, each capitalized but undefined term used in this Retention Plan shall have the meaning set forth in the Transaction Agreement.

 

(a) “Affiliate” means any entity controlled by, controlling or under common control with the Company or Purchaser, as the case may be, as determined at the applicable time.

 

(b) “Asset” means any asset of the Company or any of its Affiliates primarily dedicated to the EP Energy Business designated as such in writing by the Company (subject to Purchaser’s written approval, which approval shall not be unreasonably withheld).

 

(c) “Award Letter” means the document distributed to each Participant by the Company which sets forth the amount of the Participant’s Tier I Retention Bonus and/or minimum percentage interest in the Tier II-A Pool or Tier II-B Pool, as the case may be, that may be earned pursuant to the terms and conditions of this Retention Plan.

 

(d) “Base Salary” means a Participant’s annualized base salary or wages as of the Effective Date, taking into account, to the extent necessary to ensure that the Tier I Pool shall provide no more than an aggregate of $20 million in Tier I Retention Bonuses, any overtime calculations as required by law under applicable wage and hour regulations.

 

(e) “Cause” means the occurrence of any of the following events as determined by the Committee: (A) the willful and continued failure by a Participant to substantially perform the Participant’s duties and obligations to the Company (other than any such failure resulting from the Participant’s incapacity due to physical or mental illness), (B) the engaging by a Participant in conduct that is materially injurious to the Company or in material violation of written Company or, following the Closing, Purchaser policy, (C) the conviction of a Participant of, or pleading guilty or no contest by a Participant to, a felony or a crime of theft, dishonesty, fraud or embezzlement, in each case involving the property of the Company, or (D) the Participant’s misconduct or gross negligence that prevents the Participant from performing the Participant’s duties to the Company.

 

  

  

  

 

(f) “Code” means the Internal Revenue Code of 1986, as amended, including Treasury regulations promulgated thereunder.

 

(g) “Committee” means Brent J. Smolik (“Smolik”) or (i) prior to Closing, such other person or persons as are appointed by the Compensation Committee of the Board of Directors of the Company (the “Compensation Committee”) and (ii) at and following Closing, and only if Smolik is no longer employed with the Company or any of its Affiliates, such other person or persons as are appointed by the two members of the Board of Directors of Purchaser appointed by the Company in connection with the Transaction (the “Company Appointees”); provided that, notwithstanding the above, as to Smolik’s own participation in this Retention Plan, the Committee shall be (A) prior to Closing, the Compensation Committee and (B) at and following Closing, the Company Appointees.

 

(h) “Early Sale Date” means the date that is thirty (30) calendar days after the Closing Date.

 

(i) “Full Release” means a general release of claims in a form determined by the Committee (subject to the Purchaser’s prior written approval, which shall not be unreasonably withheld) against the Company, Purchaser, and their respective Affiliates, successors, assigns, officers, directors, and representatives.

 

(j) “Gross Sale Proceeds” means the sum of (A) any cash or the fair market value of other assets received by the Company, Purchaser, or any of their respective Affiliates in consideration for the sale or other disposition of all or any portion of the Assets on or prior to the Tier II Designated Date, whether occurring before, on, or after the Closing Date, including for this purpose any debt of the Company, Purchaser, or any of their respective Affiliates which is assumed by the buyer or transferee of any Asset in connection with such sale or disposition, and (B) free cash flow generated by the Assets for the period commencing on the Closing Date and ending on the earlier of (1) the Tier II Designated Date and (2), as to any particular Asset, the date of its sale or disposition.

 

(k) “Limited Release” means a release of claims in a form determined by the Committee (subject to the Purchaser’s prior written approval, which shall not be unreasonably withheld) against the Company, Purchaser, and their respective Affiliates, successors, assigns, officers, directors, and representatives providing that the payment of the Participant’s Retention Bonus (if any) is in full satisfaction of all claims for payment against such parties arising out of, relating to, or with respect to, the participation of such Participant in this Retention Plan.

 

(l) “Officer” means any officer of the EP Energy Business as determined by the Company.

 

(m) “Participant” means any Tier I Participant, Tier II-A Participant, or Tier II-B Participant.

 

(n) “Retention Bonus” means a Tier I Retention Bonus and/or Tier II Retention Bonus, as applicable.

 

(o) “Tier I Designated Date” means the earlier of (A) the first anniversary of the Closing Date, (B) the earliest date upon which at least 85% of the Assets have been sold or divested (calculated based on the relative values of the Assets as determined by the Committee and subject to Purchaser’s prior written approval, which shall not be unreasonably withheld), and (C) as to certain Tier I Participants, the date upon which the particular Asset or, if such Participant is assigned more than one Asset, the earliest date upon which the last of such assigned Assets, for which such a Participant is, as of the date of the Participant’s Award Letter (as designated in the Participant’s Award Letter), assigned the responsibility to facilitate a sale or divestiture under this Retention Plan is sold or divested.

 

 

  

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(p) “Tier II Designated Date” means the first anniversary of the Closing Date.

 

(q) “Tier I Participant” means any full-time employee of the EP Energy Business (including, for the avoidance of doubt, any Tier II-B Participant but excluding, for the avoidance of doubt, any Tier II-A Participant) selected for participation in the Tier I Pool prior to the Effective Date by senior management of the Company who manage the EP Energy Business in accordance with Section 2, subject to Purchaser’s prior written confirmation of each such employee’s full-time employment status, which confirmation shall not be unreasonably withheld.

 

(r) “Tier II-A Participant” means any full-time employee of the EP Energy Business who has certain skills necessary or helpful to facilitate the sale or disposition of the Assets or is needed to continue to manage the Assets prior to their sale or disposition and who is (A) an Officer selected for participation in the Tier II-A Pool prior to the Effective Date by senior management of the Company who manage the EP Energy Business or (B) a new hire or promoted EP Energy Business employee designated to participate in the Tier II-A Pool on or after the Effective Date by senior management of the Company who manage the EP Energy Business (in each case of (A) and (B) subject to prior written approval by Purchaser, which approval shall not be unreasonably withheld), in each case in accordance with Section 2.

 

(s) “Tier II-B Participant” means any full-time employee of the EP Energy Business (including, for the avoidance of doubt, any Tier I Participant who is not a Tier II-A Participant) who has certain skills necessary or helpful to facilitate the sale or disposition of the Assets or is needed to continue to manage the Assets prior to their sale or disposition and who is (A) a key employee (excluding an Officer) selected for participation in the Tier II-B Pool prior to the Effective Date by senior management of the Company who manage the EP Energy Business or (B) a new hire or promoted EP Energy Business employee designated to participate in the Tier II-B Pool on or after the Effective Date by senior management of the Company who manage the EP Energy Business (in each case of (A) and (B) subject to prior written approval by Purchaser, which approval shall not be unreasonably withheld), in each case in accordance with Section 2.

 

(t) “Tier I Pool” means the retention bonus pool established pursuant to Section 3(a) of this Retention Plan.

 

(u) “Tier II-A Pool” means the retention bonus pool established pursuant to Section 3(b) of this Retention Plan, which provides for an aggregate value of Tier II Retention Bonuses eligible to be earned by Tier II-A Participants in amounts set forth in Exhibit A.

 

(v) “Tier II-B Pool” means the retention bonus pool established pursuant to Section 3(c) of this Retention Plan, which provides for an aggregate value of Tier II Retention Bonuses eligible to be earned by Tier II-B Participants in amounts set forth in Exhibit B.

 

 

  

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(w) “Tier I Retention Bonus” means the amount identified as the Tier I Retention Bonus in each Tier I Participant’s Award Letter.

 

(x) “Tier II Retention Bonus” means, subject to the terms and conditions of Section 3(b) or 3(c), as the case may be, the retention bonus award opportunity (expressed as a minimum percentage interest in the Tier II-A Pool or Tier II-B Pool, as the case may be; provided, that notwithstanding anything in Sections 3(b) or 3(c) to the contrary, the minimum percentage interests shall be subject to prior written approval by Purchaser, which approval shall not be unreasonably withheld) designated by senior management of the Company who manage the EP Energy Business and identified as the Tier II Retention Bonus in each Tier II-A Participant’s or Tier II-B Participant’s Award Letter, as the case may be.

 

(y) “Transaction” means the indirect acquisition of the Company by Purchaser pursuant to the terms and conditions of the Transaction Agreement.

 

Section 2. Participation.  Each full-time employee of the Company or any of its Affiliates who primarily provides support for the EP Energy Business shall become a Participant and be eligible to receive a Tier I Retention Bonus or Tier II Retention Bonus (or both, as the case may be) upon (i) being selected by senior management of the Company who manage the EP Energy Business as a Tier I Participant, Tier II-A Participant, or Tier II-B Participant (or both a Tier I Participant and a Tier II-B Participant), subject to the prior written approval or confirmation of Purchaser, as applicable, and (ii) receiving an Award Letter from the Company.

 

                        Section 3. Tier I Pool and Tier II Pool Retention Bonuses.

 

(a) Tier I Pool.

 

(1) Amount and Allocation.  The Tier I Pool shall provide an aggregate of $20 million in Tier I Retention Bonuses to Tier I Participants.  Each Tier I Participant’s Tier I Retention Bonus shall equal an amount (as set forth in the Participant’s Award Letter) equal to the product of (A) $20 million and (B) a fraction, the numerator of which is such Tier I Participant’s Base Salary and the denominator of which is the sum of all Tier I Participants’ Base Salaries.  For the avoidance of doubt, the Committee may correct any scrivener’s errors in the Tier I Retention Bonuses set forth in the Award Letters for Tier I Participants pursuant to its administrative powers.

 

(2) Payment.  Each Tier I Participant’s Tier I Retention Bonus shall be earned on the Tier I Designated Date and, subject to Section 12, paid in a single lump sum on or as soon as practicable after (but not later than seventy-four (74) calendar days after) the Tier I Designated Date, subject to the Tier I Participant’s continuous active employment with the Company or any of its Affiliates from the Effective Date through the Tier I Designated Date (except as provided otherwise in Section 4(b)).

 

(3) Forfeitures.  Except as provided otherwise in Section 4(b), if a Tier I Participant’s employment is terminated for any reason prior to the Tier I Designated Date, such Participant’s Tier I Retention Bonus shall be forfeited in its entirety and the Tier I Pool shall be reduced by such Tier I Retention Bonus.

 

 

  

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(b) Tier II-A Pool.

 

(1) Amount and Allocation.

 

(A) Funding.  The Tier II-A Pool shall provide Tier II-A Participants with the opportunity to receive payments in respect of Tier II Retention Bonuses in amounts that are contingent upon the level of attainment of Gross Sale Proceeds, with the amount of the Tier II-A Pool being determined in accordance with Exhibit A.  A sale or other disposition of at least 85% of the Assets (calculated based on the relative values of the Assets as determined by the Committee and subject to the Purchaser’s prior written approval, which shall not be unreasonably withheld) on or prior to the Early Sale Date shall result in an additional amount being added to the Tier II-A Pool, as set forth in Exhibit A.

 

(B) Interest in Pool; Unallocated Amounts. Each Tier II-A Participant’s Tier II Retention Bonus shall constitute an award opportunity (expressed as a minimum percentage interest in the Tier II-A Pool) set forth in such Participant’s Award Letter.  Each such Tier II-A Participant’s percentage interest in the Tier II-A Pool may be increased after the Effective Date by senior management of the Company who manage the EP Energy Business, subject to prior written approval from Purchaser, which approval shall not be unreasonably withheld.  Any portion of the Tier II-A Pool that remains unallocated as of the Tier II Designated Date shall, without any action on behalf of the Company, Purchaser, or any Participant, automatically be allocated on the Tier II Designated Date to Tier II-A Participants in an amount, as to each Tier II-A Participant, equal to the product of such portion and a fraction, the numerator of which is such Tier II-A Participant’s Tier II Retention Bonus without regard to this sentence, and the denominator of which is the sum of all Tier II Retention Bonuses allocated to Tier II-A Participants without regard to this sentence (which, for the avoidance of doubt, shall include such Tier II-A Participant’s Tier II Retention Bonus).  Notwithstanding anything in this Section 3(b)(1)(B) to the contrary, Tier II Retention Bonuses granted to Tier II-A Participants may not, in the aggregate, exceed 100% of the Tier II-A Pool and, to the extent that the aggregate Tier II Retention Bonuses granted to Tier II-A Participants exceed 100% of the Tier II-A Pool, either (i) each Tier II-A Participant’s Tier II Retention Bonus shall, automatically and without any action on behalf of such Tier II-A Participant, be proportionately adjusted downward such that, immediately after such adjustment, the aggregate Tier II Retention Bonuses granted to Tier II-A Participants equal 100% of the Tier II-A Pool or (ii) with respect to any scrivener’s errors, the Committee may correct such errors pursuant to its administrative powers so that the aggregate Tier II Retention Bonuses granted to Tier II-A Participants equal 100% of the Tier II-A Pool.

 

(2) Payment.  Each Tier II-A Participant’s Tier II Retention Bonus shall be earned on the Tier II Designated Date and, subject to Section 12, payment (if any) of each Tier II Retention Bonus shall be made in a single lump sum on or as soon as practicable after (but not later than seventy-four (74) calendar days after) the Tier II Designated Date, subject to the Tier II-A Participant’s continuous active employment with the Company or any of its Affiliates from the Effective Date through the Tier II Designated Date (except as provided otherwise in Section 4(b)).

 

 

  

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(3) Forfeitures.  Except as provided otherwise in Section 4(b), if the employment of any Tier II-A Participant is terminated for any reason prior to the Tier II Designated Date, the amount (if any) of such Participant’s Tier II Retention Bonus shall be forfeited in its entirety and shall, without any action on behalf of the Company, Purchaser, or any Participant, automatically be allocated on the Tier II Designated Date to each other Tier II-A Participant in an amount equal to the product of the forfeited amount in respect of such Tier II Retention Bonus and a fraction, the numerator of which is each such Tier II-A Participant’s Tier II Retention Bonus without regard to this sentence, but after the application of the third sentence of Section 3(b)(1)(B), and the denominator of which is the sum of all Tier II Retention Bonuses allocated to Tier II-A Participants without regard to this sentence, but after application of the third sentence of Section 3(b)(1)(B) (which, for the avoidance of doubt, shall include such Tier II-A Participant’s Tier II Retention Bonus).

 

(c) Tier II-B Pool.

 

(1) Amount and Allocation.

 

(A) Funding.  The Tier II-B Pool shall provide Tier II-B Participants with the opportunity to receive payments in respect of Tier II Retention Bonuses in amounts that are contingent upon the level of attainment of Gross Sale Proceeds, with the amount of the Tier II-B Pool being determined in accordance with Exhibit B.  A sale or other disposition of at least 85% of the Assets (calculated based on the relative values of the Assets as determined by the Committee and subject to the Purchaser’s prior written approval, which shall not be unreasonably withheld) on or prior to the Early Sale Date shall result in an additional amount being added to the Tier II-B Pool, as set forth in Exhibit B.

 

(B) Interest in Pool; Unallocated Amounts. Each Tier II-B Participant’s Tier II Retention Bonus shall constitute an award opportunity (expressed as a minimum percentage interest in the Tier II-B Pool) set forth in such Participant’s Award Letter.  Each such Tier II-B Participant’s percentage interest in the Tier II-B Pool may be increased after the Effective Date by senior management of the Company who manage the EP Energy Business, subject to prior written approval from Purchaser, which approval shall not be unreasonably withheld.  Any portion of the Tier II-B Pool that remains unallocated as of the Tier II Designated Date shall, without any action on behalf of the Company, Purchaser, or any Participant, automatically be allocated on the Tier II Designated Date to Tier II-B Participants in an amount, as to each Tier II-B Participant, equal to the product of such portion and a fraction, the numerator of which is such Tier II-B Participant’s Tier II Retention Bonus without regard to this sentence, and the denominator of which is the sum of all Tier II Retention Bonuses allocated to Tier II-B Participants without regard to this sentence (which, for the avoidance of doubt, shall include such Tier II-B Participant’s Tier II Retention Bonus).  Notwithstanding anything in this Section 3(c)(1)(B) to the contrary, Tier II Retention Bonuses granted to Tier II-B Participants may not, in the aggregate, exceed 100% of the Tier II-B Pool and, to the extent that the aggregate Tier II Retention Bonuses granted to Tier II-B Participants exceed 100% of the Tier II-B Pool, either (i) each Tier II-B Participant’s Tier II Retention Bonus shall, automatically and without any action on behalf of such Tier II-B Participant, be proportionately adjusted downward such that, immediately after such adjustment, the aggregate Tier II Retention Bonuses granted to Tier II-B Participants equal 100% of the Tier II-B Pool or (ii) with respect to any scrivener’s errors, the Committee may correct such errors pursuant to its administrative powers so that the aggregate Tier II Retention Bonuses granted to Tier II-B Participants equal 100% of the Tier II-B Pool.

 

 

  

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(2) Payment.  Each Tier II-B Participant’s Tier II Retention Bonus shall be earned on the Tier II Designated Date and, subject to Section 12, payment (if any) of each Tier II Retention Bonus shall be made in a single lump sum on or as soon as practicable after (but not later than seventy-four (74) calendar days after) the Tier II Designated Date, subject to the Tier II-B Participant’s continuous active employment with the Company or any of its Affiliates from the Effective Date through the Tier II Designated Date (except as provided otherwise in Section 4(b)).

 

(3) Forfeitures.  Except as provided otherwise in Section 4(b), if the employment of any Tier II-B Participant is terminated for any reason prior to the Tier II Designated Date, the amount (if any) of such Participant’s Tier II Retention Bonus shall be forfeited in its entirety and shall, without any action on behalf of the Company, Purchaser, or any Participant, automatically be allocated on the Tier II Designated Date to each other Tier II-B Participant in an amount equal to the product of the forfeited amount in respect of such Tier II Retention Bonus and a fraction, the numerator of which is each such Tier II-B Participant’s Tier II Retention Bonus without regard to this sentence, but after the application of the third sentence of Section 3(c)(1)(B), and the denominator of which is the sum of all Tier II Retention Bonuses allocated to Tier II-B Participants without regard to this sentence, but after the application of the third sentence of Section 3(c)(1)(B) (which, for the avoidance of doubt, shall include such Tier II-B Participant’s Tier II Retention Bonus).

 

Section 4. Termination of Employment.

 

(a) In General.  Except as set forth in Section 4(b), a Participant must be continuously employed from the Effective Date through the Tier I Designated Date or the Tier II Designated Date in order to receive payment in respect of the Participant’s Tier I Retention Bonus or Tier II Retention Bonus, as the case may be.

 

(b) Termination Without Cause.  Notwithstanding anything to the contrary in Sections 3 and 4(a), if a Participant’s employment is terminated by the Company or any of its Affiliates (including for this purpose, for the avoidance of doubt, Purchaser or any of its Affiliates) without Cause on or after the Closing Date but prior to payment of the Participant’s Tier I Retention Bonus (if any) or Tier II Retention Bonus (if any), as the case may be, the Participant (or the Participant’s beneficiary, in the event of the Participant’s death after such termination but prior to such payment) will (subject to Section 12) receive payment of the Participant’s Tier I Retention Bonus (if any) or Tier II Retention Bonus (if any), as the case may be, in a single lump sum (A) in the case of a Tier I Retention Bonus, on or as soon as reasonably practicable after (but not later than seventy-four (74) calendar days after) the effective date of the termination of the Participant’s employment, and (B) in the case of a Tier II Retention Bonus, on or as soon as practicable after (but not later than seventy-four (74) calendar days after) the Tier II Designated Date.

 

           Section 5. Administration.  Except as otherwise herein expressly provided, the Committee shall construe, interpret, and administer this Retention Plan and shall, subject to the limitations described in Section 9, have the power to amend or terminate this Retention Plan.  The Committee shall (upon the advice of its advisers, including its financial advisers and legal counsel, and senior management) make any valuations and calculations pursuant to this Retention Plan in good faith and may at any time adopt, amend, modify, suspend or terminate such rules, regulations, policies or practices as it shall determine to be necessary or appropriate for the administration of, or the performance of its respective responsibilities under, this Retention Plan, so long as any such action is consistent with the provision of benefits to Participants as described herein.  The determinations and interpretations under this Retention Plan of the Committee need not be uniform and may be made by it selectively among Participants (whether or not any Participants are similarly situated).  The Committee may delegate any of its powers or authorities hereunder to any person or group of its choosing.

 

 

  

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           Section 6. Successors.

 

(a) The right to payments pursuant to this Retention Plan is personal to each Participant and, without the prior written consent of the Company, shall not be assignable by a Participant other than by will or the laws of descent and distribution.  A Participant’s rights under this Retention Plan shall inure to the benefit of and be enforceable by a Participant’s legal representatives.

 

(b) This Retention Plan shall inure to the benefit of and be binding upon the Company and its successors and assigns, including but not limited to Purchaser.

 

           Section 7. No Claim or Right to Retention Plan Participation; No Right to Continued Employment.  No employee or other person shall have any claim or right to be selected as a Participant under this Retention Plan.  Nothing contained in this Retention Plan shall (A) confer upon any Participant any right with respect to continued employment with the Company, Purchaser, or any of their respective Affiliates or successors and assigns, (B) interfere with the right of the Company, Purchaser, or any of their respective Affiliates or successors and assigns to terminate a Participant’s employment at any time, or (C) confer upon any Participant or other person any claim or right to any payment under this Retention Plan except in accordance with the terms hereof.

 

          Section 8. Payments to Persons Other Than the Participant.  If the Committee shall find that any Participant to whom any amount is payable under this Retention Plan is unable to care for his or her affairs because of incapacity, illness or accident or is a minor, or in the event of the Participant’s death after a termination of the Participant’s employment without Cause, then any payment due to such person (unless a prior claim therefor has been made by a duly appointed legal representative) may, if the Committee so directs, be paid to his or her spouse, a child, a relative, an institution maintaining or having custody of such person, beneficiary, estate or any other person deemed by the Committee, in its sole discretion, to be a proper recipient on behalf of such person otherwise entitled to payment.  Any such payment shall be a complete discharge of the liability of the Company therefor.

 

          Section 9. Termination, Expiration or Amendment of Retention Plan.  The Committee may amend this Retention Plan at any time, provided that, subject to Section 10, (i) no amendment which is adverse in any manner to a Participant shall be effective without the written consent of such Participant and (ii) this Retention Plan may be suspended or terminated only with the written consent of all Participants who are employed by the Company or any of its Affiliates at the time of such suspension or termination and who have not been paid, or forfeited the right to receive, their Tier I Retention Bonus and Tier II Retention Bonus.  Notwithstanding anything in this Retention Plan to the contrary, Section 13 of this Retention Plan shall survive the termination or expiration of this Retention Plan.

 

 

  

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          Section 10. Code Section 409A.  This Retention Plan is intended to comply with Section 409A of the Code or an exemption thereto, and, to the extent necessary in order to avoid the imposition of a penalty tax on any Participant under Section 409A of the Code, payments may be made under this Retention Plan only upon an event and in a manner permitted by Section 409A of the Code.  For purposes of Section 409A of the Code, the right to a series of installment payments under this Retention Plan shall be treated as a right to a series of separate payments.  Any payments or benefits that are provided upon a termination of a Participant’s employment shall, to the extent necessary in order to avoid the imposition of a penalty or other tax on the Participant under Section 409A of the Code, not be provided unless such termination constitutes a “separation from service” within the meaning of Section 409A of the Code.  Any payments that qualify for the “short-term deferral” exception or another exception under Section 409A of the Code shall be paid under the applicable exception.  Notwithstanding anything in this Retention Plan to the contrary, if a Participant is considered a “specified employee” (as defined in Section 409A of the Code), any amounts paid under this Retention Plan shall, to the extent necessary in order to avoid the imposition of a penalty tax on the Participant under Section 409A of the Code, be delayed for six months after the Participant’s “separation from service” within the meaning of Section 409A of the Code, and the accumulated amounts shall be paid in a lump sum within ten days after the end of such six-month period.  If the Participant dies during the six-month postponement period prior to the payment of amounts, the amounts the payment of which is deferred pursuant to the immediately preceding sentence shall be paid to the personal representative of the Participant’s estate within sixty (60) calendar days after the date of the Participant’s death.  Notwithstanding any provision of this Retention Plan to the contrary, the Company may, after consultation with Purchaser, take any action, without the consent of any Participant, which it determines is necessary to avoid the imposition of penalty or other taxes under Section 409A of the Code with respect to any amount awarded pursuant to this Retention Plan.

 

          Section 11. Funding.  This Retention Plan is not intended to be subject to the Employee Retirement Income Security Act of 1974, as amended.  (A) Participants shall have no right, title, or interest whatsoever in or to any investments which the Company may make to aid it in meeting its obligations under this Retention Plan, (B) nothing contained in this Retention Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any Participant, beneficiary, legal representative, or any other person, (C) to the extent that any person acquires a right to receive payments from the Company under this Retention Plan, such right shall be no greater than the right of an unsecured general creditor of the Company, and (D) all payments to be made hereunder shall be paid from the general funds of the Company, no special or separate fund shall be established, and no segregation of assets shall be made to assure payment of such amounts.

 

          Section 12. Receipt and Release; Full Settlement.  In order to receive payment of a Retention Bonus, each Participant (or, to the extent applicable, such other person who is entitled to a Retention Bonus pursuant to Section 8) must execute (and, where applicable, not revoke) a release of claims according to the following terms and conditions.

 

 

  

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(a) Subject to Section 12(b) (if applicable), payment of any Participant’s Retention Bonus shall be subject to the Participant (or, to the extent applicable, such other person who is entitled to a Retention Bonus pursuant to Section 8), no later than fifty-seven (57) calendar days after the Tier I Designated Date and/or Tier II Designated Date, as the case may be, and according to the terms and conditions of the Participant’s Award Letter, signing and delivering to the Company, and not revoking within the applicable seven (7)-calendar-day revocation period, a Full Release; provided that in each case the Committee must, by no later than two (2) business days after the Tier I Designated Date and/or Tier II Designated Date, as the case may be, deliver the Full Release to the Participant (or, to the extent applicable, such other person who is entitled to a Retention Bonus pursuant to Section 8).

 

(b) Notwithstanding anything to the contrary in Section 12(a), if (i) a Participant’s employment is terminated by the Company or any of its Affiliates (including for this purpose, for the avoidance of doubt, Purchaser or any of its Affiliates) without Cause on or after the Closing Date but prior to payment of the Participant’s Retention Bonus (if any), and (ii) the Participant, in connection with such termination, signs and delivers to the Company, and does not revoke within the applicable seven (7)-calendar-day revocation period, a Full Release or other general release of claims reasonably acceptable to Purchaser, then payment of the Participant’s Retention Bonus (if any) shall be subject to the Participant (or, to the extent applicable, such other person who is entitled to a Retention Bonus pursuant to Section 8), no later than fifty-seven (57) calendar days after (A) in the case of a Tier I Retention Bonus, the effective date of the termination of the Participant’s employment, and (B) in the case of a Tier II Retention Bonus, the Tier II Designated Date, and in each case according to the terms and conditions of the Participant’s Award Letter, signing and delivering to the Company a Limited Release; provided that in each case the Committee must, by no later than two (2) business days after the effective date of the termination of the Participant’s employment, deliver the Limited Release to the Participant (or, to the extent applicable, such other person who is entitled to a Retention Bonus pursuant to Section 8).

 

(c) Notwithstanding anything to the contrary contained in Sections 3 or 4 of this Retention Plan, if the seventy-four (74)-calendar-day period during which payment of the Participant’s Tier II Retention Bonus (if any) must be made begins in one taxable year of the Participant and ends in the immediately subsequent taxable year of the Participant, such Participant’s Tier II Retention Bonus (if any) shall be paid in the immediately subsequent taxable year and otherwise in accordance with the terms of Section 12 of this Retention Plan.

 

(d) The Company’s obligation to make the payments provided for in this Retention Plan and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense, or other claim, right or action that the Company or any of its Affiliates may have against a Participant or others.  In no event shall a Participant be obligated to seek other employment, or take any other action by way of mitigation of the amounts payable to the Participant under any of the provisions of this Retention Plan, and such amounts shall not be reduced whether or not the Participant obtains other employment.

 

  

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          Section 13. Governing Law; Dispute Resolution.

 

(a) This Retention Plan shall be governed by and construed in accordance with the laws of the State of Texas, without reference to the principles of conflict of laws thereof or those of any other jurisdiction which could cause the application of the law of any jurisdiction other than the State of Texas.

 

(b) Any action to enforce any of the provisions of this Retention Plan shall be brought in any state or federal court located in the State of Texas.  The parties consent to the jurisdiction of such courts and to the service of process in any manner provided by Texas law.  Each party irrevocably waives any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in such court and any claim that such suit, action or proceeding brought in such court has been brought in an inconvenient forum and agrees that service of process in accordance with the foregoing sentences shall be deemed in every respect effective and valid personal service of process upon such party.

 

(c) TO THE FULLEST EXTENT PERMITTED BY LAW, THE COMPANY AND EACH PARTICIPANT WAIVE ANY AND ALL RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS RETENTION PLAN AND THE APPLICABLE AWARD LETTER.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS RETENTION PLAN AND THE APPLICABLE AWARD LETTER, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.  THE COMPANY AND EACH PARTICIPANT ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO THE PARTICIPANT’S PARTICIPATION IN THIS RETENTION PLAN, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN CONNECTION WITH THE PARTICIPANT’S PARTICIPATION IN THIS RETENTION PLAN AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS.  THE COMPANY AND EACH PARTICIPANT FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS OR HIS OR HER, AS THE CASE MAY BE, LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS RETENTION PLAN OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE RETENTION PLAN, INCLUDING THE APPLICABLE AWARD LETTER.  IN THE EVENT OF LITIGATION, THIS RETENTION PLAN MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

 

  

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Section 14. Miscellaneous.

 

(a) The captions of this Retention Plan are not part of the provisions hereof and shall have no force or effect.

 

(b) All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, or by nationally recognized overnight courier, addressed as follows:

 

If to a Participant:

 

At the most recent home address on file at the Company.

 

If to the Company:

 

El Paso Corporation

1001 Louisiana Street

Houston, TX 77002

Attention:  General Counsel

Facsimile: (713) 420-5043

 

or to such other address as either party shall have furnished to the other in writing in accordance herewith.  Notice and communications shall be effective when actually received by the addressee.

 

(c) No Tier I Retention Bonus or Tier II Retention Bonus shall count toward, be substituted in lieu of, or be considered in determining payments or benefits due to a Participant under any other plan, program or agreement of the Company, Purchaser or any of their respective Affiliates.

 

(d) The invalidity or unenforceability of any provision of this Retention Plan shall not affect the validity or enforceability of any other provision of this Retention Plan.

 

(e) The Company will withhold from any amounts payable under this Retention Plan such United States federal, state or local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation.

 

(f) The Participant’s or the Company’s failure to insist upon strict compliance with any provision of this Retention Plan or the failure to assert any right the Participant or the Company may have hereunder, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Retention Plan.

 

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