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Exhibit 10.2    
    

 
 

INDEMNITY AGREEMENT    
    

        This Agreement made and entered into as of this    day
of                        , 2005, by and between Stroud Energy, Inc., a Delaware corporation
(the "Company"), and                        ("Indemnitee"), who is currently serving the Company in the capacity of a director
and/or officer thereof; 

 
 

W I T N E S S E T H:    
    

        WHEREAS, the Company and Indemnitee recognize that the interpretation of ambiguous statutes, regulations and court opinions and of the Certificate of
Incorporation and Bylaws of the Company, and the vagaries of public policy, are too uncertain to provide the directors and officers of the Company with adequate or reliable advance knowledge or
guidance with respect to the legal risks and potential liabilities to which they become personally exposed as a result of performing their duties in good faith for the Company; and 

        WHEREAS,
the Company and the Indemnitee are aware that highly experienced and capable persons are often reluctant to serve as directors or officers of a corporation unless they are
protected to the fullest extent permitted by law by comprehensive insurance and indemnification, especially since the legal risks and potential liabilities, and the very threat thereof, associated
with lawsuits filed against the officers and directors of a corporation, and the resultant substantial time, expense, harassment, ridicule, abuse and anxiety spent and endured in defending against
such lawsuits, whether or not meritorious, bear no reasonable or logical relationship to the amount of compensation received by the directors or officers from the corporation; and 

        WHEREAS,
Section 145 of the General Corporation Law of the State of Delaware and the Certificate of Incorporation of the Company, which set forth certain provisions relating to
the mandatory and permissive indemnification of, and advancement of expenses to, officers and directors (among others) of a Delaware corporation by such corporation, are specifically not exclusive of
other rights to which
those indemnified thereunder may be entitled under any bylaw, agreement, vote of stockholders or disinterested directors or otherwise; and 

        WHEREAS,
after due consideration and investigation of the terms and provisions of this Agreement and the various other options available to the Company and the Indemnitee in lieu
thereof, the Board of Directors of the Company has determined that the following Agreement is not only reasonable and prudent but necessary to promote and ensure the best interests of the Company and
its stockholders; and 

        WHEREAS,
the Company desires to have Indemnitee serve or continue to serve as an officer and/or director of the Company, free from undue concern for unpredictable, inappropriate or
unreasonable legal risks and personal liabilities by reason of his acting in good faith in the performance of his duty to the Company; and Indemnitee desires to serve, or to continue to serve
(provided that he is furnished the indemnity provided for hereinafter), in either or both of such capacities; 

        NOW,
THEREFORE, in consideration of the premises and the mutual agreements herein set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Indemnitee, intending to be legally bound, do hereby agree as follows: 

        1.     Agreement to Serve. Indemnitee agrees to serve or continue to serve as director and/or officer of the Company and as
Indemnitee and the Company may agree, as a director, officer, trustee, general partner, managing member, fiduciary, employee or agent of another Enterprise, for so long as he is duly elected or
appointed and qualified in accordance with the provisions of the General Corporation Law of the State of Delaware and the Certificate of Incorporation and Bylaws of the Company or until such time as
he tenders his resignation. The Company acknowledges that the Indemnitee is relying on this Agreement in so serving. 

 

        2.     Definitions. As used in this Agreement: 

        (a)   "Change
in Control" means a change in control of the Company of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of
Regulation 14A (or in response to any similar
item on any similar schedule or form) promulgated under the Securities Exchange Act of 1934 (the "Act"), whether or not the Company is then subject to such reporting requirement; provided, however,
that, without limitation, such a Change in Control shall be deemed to have occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Act) other than a trustee
or other fiduciary holding securities under an employee benefit plan of the Company or a corporation owned directly or indirectly by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Act), directly or indirectly, of securities of the
Company representing 15% or more of the combined voting power of the Company's then outstanding securities without the prior approval of at least two-thirds of the members of the Board of
Directors of the Company in office immediately prior to such person attaining such percentage interest; (ii) there occurs a proxy contest, or the Company is a party to a merger, consolidation,
sale of assets, plan of liquidation or other reorganization not approved by at least two-thirds of the members of the Board of Directors of the Company then in office, as a consequence of
which members of the Board of Directors in office immediately prior to such transaction or event constitute less than a majority of the Board of Directors thereafter; or (iii) during any period
of two consecutive years, other than as a result of an event described in clause (ii) of this subsection (a), individuals who at the beginning of such period constituted the Board of
Directors of the Company (including for this purpose any new director whose election or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of such period) cease for any reason to constitute at least a majority of the Board of Directors. 

        (b)   "Disinterested
Director" means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification is sought by Indemnitee. 

        (c)   "Enterprise"
shall mean any other corporation, limited liability company, partnership, joint venture, trust, employee benefit plan, organization or other enterprise of
which Indemnitee is or was serving at the request of the Company as a director, officer, trustee, general partner, managing member, fiduciary, employee or agent. 

        (d)   The
term "Expenses" includes, without limitation, all reasonable attorneys' fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements or expenses of the types customarily incurred in connection with
prosecuting, defending, preparing to prosecute or defend, investigating, or being or preparing to be a witness in, or otherwise involved in, a Proceeding. Should any payments by the Company under this
Agreement be determined to be subject to any federal, state or local income or excise tax, Expenses will also include such amounts as are necessary to place Indemnitee in the same
after-tax position, after giving effect to all applicable taxes, Indemnitee would have been in had such tax not have been determined to apply to those payments. Expenses also shall include
(i) Expenses incurred in connection with any appeal resulting from any Proceeding, including, without limitation, the premium, security for, and other costs relating to any cost bond,
supersedeas bond, or other appeal bond or its equivalent and (ii) Expenses incurred by Indemnitee in connection with the interpretation, enforcement or defense of Indemnitee's rights under this
Agreement, by litigation or otherwise. 

        (e)   "Independent
Counsel" means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither presently is, nor in the past five years
has been, retained to represent: (i) the Company or Indemnitee in any matter material to either such party (other 

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than
with respect to matters concerning the Indemnitee under this Agreement, or of other indemnitees under similar indemnification agreements), or (ii) any other party to the Proceeding giving
rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term "Independent Counsel" shall not include any person who, under the applicable standards of professional conduct
then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee's rights under this Agreement. The Company agrees to pay the
reasonable fees and expenses of the Independent Counsel referred to above and to fully indemnify such counsel against any and all Expenses, claims, liabilities and damages arising out of or relating
to this Agreement or its engagement pursuant hereto. 

        (f)    "Proceeding"
shall mean any threatened, pending or completed action, suit, or proceeding, whether civil, criminal, administrative, arbitrative or investigative, any
appeal in such an action, suit, or proceeding, and any inquiry or investigation that could lead to such an action, suit or proceeding irrespective of the initiator thereof. The final disposition of a
Proceeding shall be as determined by a settlement or the judgment of a court or other investigative or administrative body. The Board of Directors shall not make a determination as to the final
disposition of a Proceeding. 

        (g)   References
to "fines" shall include any (i) excise taxes assessed with respect to any employee benefit plan and (ii) penalties; references to "serving at
the request of the Company" shall include any service as a director, officer, trustee, general partner, managing member, fiduciary, employee or agent which imposes duties on, or involves services by,
such director, officer, trustee, general partner, managing member, fiduciary, employee or agent with respect to an Enterprise; and a person who acts in good faith and in a manner he reasonably
believed to be in the interest of the Enterprise shall be deemed to have acted in a manner "not opposed to the best interests of the Company" as referred to in this Agreement. 

        3.     Indemnity in Third Party Proceedings. The Company shall indemnify Indemnitee in accordance with the provisions of this
Section 3 if Indemnitee is a party to or is threatened to be made a party to or is otherwise involved in any Proceeding (other than a Proceeding by or in the right of the Company to procure a
judgment in its favor) by reason of the fact that Indemnitee is or was a director and/or officer of the Company, or was serving at the request of the Company as a director, officer, trustee, general
partner, managing member, fiduciary, employee or agent of an Enterprise, against all Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee (or on his
behalf) in connection with such Proceeding or any claim, issue or matter therein, provided it is determined pursuant to Section 8 of this Agreement or by the court having jurisdiction in the
matter, that Indemnitee acted in good faith and in a manner that he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal Proceeding, had
no reasonable cause to believe his conduct was unlawful. The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of
nolo contendere or its equivalent, shall not, of itself, adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner
that he reasonably believed to be in or not opposed to the best interests of the Company, or, with respect to any criminal Proceeding, had reasonable cause to believe that his conduct was unlawful.
Indemnitee shall have the right to employ Indemnitee's own legal counsel in any Proceeding for which indemnification is available under this Section 3. 

        4.     Indemnity in Proceedings By or In the Right of the Company. The Company shall indemnify Indemnitee in accordance with the
provisions of this Section 4 if Indemnitee is a party to or is threatened to be made a party to or otherwise involved in any Proceeding by or in the right of the Company to procure a judgment
in its favor by reason of the fact that Indemnitee is or was a director and/or officer of the Company, or is or was serving at the request of the Company as a director, officer, trustee, general
partner, managing member, fiduciary, employee or agent of an Enterprise, 

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against
all Expenses actually and reasonably incurred by Indemnitee (or on his behalf) in connection with such Proceeding provided it is determined pursuant to Section 8 of this Agreement or by
the court having jurisdiction in the matter, that Indemnitee acted in good faith and in a manner that he reasonably believed to be in or not opposed to the best interests of the Company, except that
no indemnification shall be made under this Section 4 in respect of any claim, issue or matter as to which Indemnitee shall have been adjudged to be liable to the Company unless and only to the
extent that the Delaware Court of Chancery or the court in which such Proceeding was brought or is pending, shall determine upon application that, despite the adjudication of liability but in view of
all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such Expenses as the Delaware Court of Chancery or such other court shall deem proper. Indemnitee shall
have the right to employ Indemnitee's own legal counsel in any Proceeding for which indemnification is available under this Section 4. 

        5.     Indemnification for Expenses of a Witness. Notwithstanding any other provision of this Agreement, to the extent that
Indemnitee is, by reason of the fact that Indemnitee is or was a director and/or officer of the Company, or is or was serving at the request of the Company as a director, officer, trustee, general
partner, managing member, fiduciary, employee or agent of an Enterprise, a witness in any Proceeding to which Indemnitee is not a party, he shall be indemnified against all Expenses actually and
reasonably incurred by Indemnitee (or on his behalf) in connection therewith. 

        6.     Indemnification for Expenses of Successful Party. Notwithstanding any other provision of this Agreement to the contrary,
to the extent that Indemnitee has been successful on the merits or otherwise in defense of any Proceeding referred to in Sections 3 and/or 4 of this Agreement, or in defense of any claim, issue
or matter therein, including dismissal with or without prejudice, Indemnitee shall be indemnified against all Expenses actually and reasonably incurred by Indemnitee (or on his behalf) in connection
therewith. If Indemnitee is not wholly successful in any Proceeding referred to in Sections 3 and/or 4 of this Agreement, but is successful on the merits or otherwise (including dismissal with
or without prejudice) as to one or more, but less than all claims, issues or matters therein, including dismissal without prejudice, Indemnitee shall be indemnified against all Expenses actually and
reasonably incurred by Indemnitee (or on his behalf) in connection with each successfully resolved claim, issue or matter. For purposes of this Section 6, and without limitation, the
termination of any claim, issue or matter in any Proceeding referred to in Sections 3 and/or 4 of this Agreement by dismissal, with or without prejudice, shall be deemed to be a successful
result as to such claim, issue or matter. 

        7.     Advances of Expenses. To the fullest extent permitted by applicable law, the Expenses incurred by Indemnitee pursuant to
Sections 3 and/or 4 of this Agreement in connection with any Proceeding or any claim, issue or matter therein shall be paid by the Company currently and in advance of the final disposition of
such Proceeding or any claim, issue or matter therein no later than 10 days after receipt by the Company of a request for an Expense advancement with appropriate documentation. The undersigned
Indemnitee hereby undertakes to repay the advanced Expenses to the Company to the extent that it is ultimately determined pursuant to Section 8, or, in the event the Indemnitee elects to pursue
other remedies pursuant to Section 10, that the undersigned Indemnitee is not entitled to be indemnified therefor by the Company. This agreement of Indemnitee to repay is unsecured and interest
free. 

        8.     Procedure for Determination of Entitlement to Indemnification.

        (a)   To
obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request. 

        (b)   Upon
written request by Indemnitee for indemnification pursuant to Section 8(a) hereof, a determination, if required by applicable law, with respect to
Indemnitee's entitlement thereto shall be made in the specific case: (i) if a Change in Control shall have occurred, the Disinterested 

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Directors
shall direct Independent Counsel to make such determination in a written opinion to the Board of Directors of the Company, a copy of which shall be delivered to Indemnitee; or (ii) if
a Change in Control shall not have occurred, (A) by a majority vote of the Disinterested Directors, even though less than a quorum of the Board of Directors of the Company, or (B) by a
committee of the Disinterested Directors designated by a majority vote of Disinterested Directors, even though less than a quorum, or (C) if there are no Disinterested Directors or, if the
Disinterested Directors so direct, by Independent Counsel in a written opinion to the Board of Directors of the Company, a copy of which shall be delivered to Indemnitee; and, if it is so determined
that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within 10 days after such determination. Any costs or expenses (including attorneys' fees and disbursements)
incurred by Indemnitee in cooperating with the person, persons or entity making the determination discussed in this Section 8(b) with respect to Indemnitee's entitlement to indemnification,
shall be borne by the Company (irrespective of the determination as to Indemnitee's entitlement to indemnification) and the Company hereby indemnifies and agrees to hold Indemnitee harmless therefrom. 

        (c)   In
the event the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 8(b) hereof, the Independent Counsel
shall be selected as provided in this Section 8(c). If a Change in Control shall not have occurred, the Independent Counsel shall be selected by the Board of Directors of the Company, and the
Company shall give written notice to Indemnitee advising him of the identity of the Independent Counsel so selected. If a Change in Control shall have occurred, the Independent Counsel shall be
selected by Indemnitee (unless Indemnitee shall request that such selection be made by the Board of Directors of the Company, in which event the preceding sentence shall apply), and Indemnitee shall
give written notice to the Company advising it of the identity of the Independent Counsel so selected. In either event, Indemnitee or the Company, as the case may be, may, within 10 days after
such written notice of selection shall have been given, deliver to the Company or to Indemnitee, as the case may be, a written objection to such selection; provided, however, that such objection may
be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of "Independent Counsel" as defined in this Agreement, and the objection shall set forth with
particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If such written objection is so made and
substantiated, the Independent Counsel so selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has determined that such objection is without merit. If,
within 20 days after submission by Indemnitee of a written request for indemnification pursuant to Section 8(b) hereof, no Independent Counsel shall have been selected and not objected
to, either the Company or Indemnitee may petition the Delaware Court of Chancery or other court of competent jurisdiction for resolution of any objection which shall have been made by the Company or
Indemnitee to the other's selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the Court or by such other person as the Court shall designate, and
the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 8(a) hereof. 

        (d)   Indemnitee
will be deemed a party to a Proceeding for all purposes hereof if Indemnitee is named as a defendant or respondent in a complaint or petition for relief in
that Proceeding, regardless of whether Indemnitee is ever served with process or makes an appearance in that Proceeding. 

        9.     Presumptions and Effect of Certain Provisions.

        (a)   In
making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that
Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in 

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accordance
with Section 8(a) of this Agreement, and the Company shall have the burden of proof in overcoming such presumption by clear and convincing evidence. Neither the failure of the
Company (including its Board of Directors or independent legal counsel) to have made a determination prior to the commencement of such action pursuant to this Agreement that indemnification is proper
in the circumstances because Indemnitee has met the applicable standard of conduct, nor an actual determination by the Company (including its Board of Directors or independent legal counsel) that
Indemnitee has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that Indemnitee has not met the applicable standard of conduct. 

        (b)   If
the person, persons or entity empowered or selected under Section 8 of this Agreement to determine whether Indemnitee is entitled to indemnification shall not
have made a determination within 30 days after receipt by the Company therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee
shall be entitled to such indemnification, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee's statement not materially
misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law; provided, however, that such 30-day period may be
extended for a reasonable time, not to exceed an additional 15 days, if the person, persons or entity making the determination with respect to entitlement to indemnification in good faith
requires such additional time for the obtaining or evaluating of documentation and/or information relating thereto. 

        (c)   For
purposes of any determination of whether Indemnitee acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal Proceeding, Indemnitee had no reasonable cause to believe his conduct was unlawful (collectively, "Good Faith"), Indemnitee shall be deemed to have acted in
Good Faith if Indemnitee's action is based on the records or books of account of the Company and any other Enterprise of which Indemnitee is or was serving at the request of the Company as a director,
officer, trustee, general partner, managing member, fiduciary, employee or agent or information, opinions, reports or statements, including financial statements and other financial information,
concerning the Company and any other Enterprise of which Indemnitee is or was serving at the request of the Company as a director, officer, trustee, general partner, managing member, fiduciary,
employee or agent or any other person which were prepared or supplied to Indemnitee by: (i) one or more officers or employees of the Company and any Enterprise of which Indemnitee is or was
serving at the request of the Company as a
director, officer, trustee, general partner, managing member, fiduciary,employee or agent; (ii) appraisers, engineers, investment bankers, legal counsel or other persons as to matters
Indemnitee reasonably believed were within the professional or expert competence of those persons; and (iii) any committee of the Board of Directors or equivalent managing body of the Company
and any other Enterprise of which Indemnitee is or was serving at the request of the Company as a director, officer, trustee, general partner, managing member, fiduciary, employee or agent of which
Indemnitee is or was, at the relevant time, not a member. The provisions of this Section 9(c) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the
Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement. 

        (d)   The
knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Company and any other Enterprise of which Indemnitee is or was
serving at the request of the Company as a director, officer, trustee, general partner, managing member, fiduciary, employee or agent shall not be imputed to Indemnitee for purposes of determining the
right to indemnification under this Agreement. 

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        10.   Remedies of Indemnitee.

        (a)   In
the event that (i) a determination is made pursuant to Section 8(b) of this Agreement that Indemnitee is not entitled to indemnification under this
Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 7 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made
pursuant to Section 8(b) of this Agreement within the time period provided in Section 9(b) after receipt by the Company of the request for indemnification, (iv) payment of
indemnification is not made pursuant to Section 5, Section 6, the last sentence of Section 8(b), or the last sentence of Section 2(d) of this Agreement within
10 days after receipt by the Company of a written request therefor, or (v) payment of indemnification pursuant to Section 3 or Section 4 of this Agreement is not made
within 10 days after a determination has been made that Indemnitee is entitled to indemnification, Indemnitee shall be entitled to an adjudication by the Delaware Court of Chancery of his
entitlement to such indemnification or advancement of Expenses and appeals therefrom, concluding in a final and unappealable judgment by the Delaware Supreme Court. The Board of Directors shall not
make a determination as to the final disposition of such adjudication. The Company shall not oppose Indemnitee's right to seek any such adjudication. 

        (b)   In
the event that a determination shall have been made pursuant to Section 8(b) of this Agreement that Indemnitee is not entitled to indemnification, any judicial
proceeding commenced pursuant to this Section 10 shall be conducted in all respects as a de novo trial on the merits and Indemnitee shall not be prejudiced by reason of that adverse
determination. 

        (c)   If
a determination shall have been made pursuant to Section 8(b) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by
such determination in any judicial
proceeding commenced pursuant to this Section 10, absent (i) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee's statement
not materially misleading, in connection with the request for indemnification, or (ii) a prohibition of such indemnification under applicable law. 

        (d)   In
the event that Indemnitee, pursuant to this Section 10, seeks a judicial adjudication of his rights under, or to recover damages for breach of, this Agreement,
Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the Company against, any and all expenses (of the types described in the definition of Expenses in
Section 2(d) of this Agreement) actually and reasonably incurred by him in such judicial adjudication regardless of whether Indemnitee ultimately is determined to be entitled to such
indemnification. 

        (e)   The
Company shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 10 that the procedures and presumptions of this
Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement. 

        11.   Indemnification and Advancement of Expenses Under this Agreement Not Exclusive; Survival of Rights. The rights of
indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may be entitled under the Certificate of
Incorporation or Bylaws of the Company, any other agreement, any vote of stockholders or disinterested directors, the General Corporation Law of the State of Delaware, or otherwise. No amendment,
alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee
prior to such amendment, alteration or repeal. To the extent that a change in the General Corporation Law of the State of Delaware, whether by statute or judicial decision, permits greater
indemnification or advancement of Expenses than would be afforded currently under the Certificate of Incorporation of the Company and this Agreement, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change. No 

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right
or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other right or remedy. 

        12.   Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification or to receive
advancement by the Company for a portion of the Expenses, judgments, fines, penalties or amounts paid in settlement actually and reasonably incurred by Indemnitee (or on his behalf) in connection with
such Proceeding, or any claim, issue or matter therein, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion thereof to which Indemnitee
is entitled. 

        13.   Rights Continued. The rights of indemnification and to receive advancement of Expenses as provided by this Agreement
shall continue as to Indemnitee even though Indemnitee may have ceased to be a director or officer of the Company and shall inure to the benefit of Indemnitee's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and legatees. 

        14.   No Construction as an Employment Agreement or Any Other Commitment. Nothing contained in this Agreement shall be
construed as giving Indemnitee any right to be retained in the employ or as an officer of the Company or any of its subsidiaries, if Indemnitee currently serves as an officer of the Company, or to be
renominated or reelected as a director of the Company, if Indemnitee currently serves as a director of the Company. 

        15.   Liability Insurance. To the extent the Company maintains an insurance policy or policies providing liability insurance
for directors, officers, trustees, general partners, managing members, fiduciaries, employees or agents of the Company or any other Enterprise which such person serves at the request of the Company,
Indemnitee shall be covered by such policy or policies in accordance with its or their terms, to the maximum extent of the coverage available for any director, officer, trustee, general partner,
managing member, fiduciary, employee or agent under such policy or policies. 

        16.   No Duplication of Payments. The Company shall not be liable under this Agreement to make any payment of amounts otherwise
indemnifiable under this Agreement if, and to the extent that, Indemnitee has otherwise actually received such payment under any contract, agreement or insurance policy, the Certificate of
Incorporation or Bylaws of the Company, or otherwise. 

        17.   Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment
to all the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including without limitation the execution of
such documents as may be necessary to enable the Company effectively to bring suit to enforce such rights. 

        18.   Exceptions. Notwithstanding any other provision in this Agreement, the Company shall not be obligated pursuant to the
terms of this Agreement, to (i) indemnify or advance Expenses to Indemnitee with respect to any claim, issue or matter therein, brought or made by Indemnitee by way of cross-claim, counter
claim or the like, or (ii) indemnify Indemnitee with respect to any Proceeding in which final judgment is rendered against Indemnitee for an accounting of profits made from the purchase and
sale or the sale and purchase by Indemnitee of securities of the Company pursuant to the provisions of Section 16(b) of the Act. 

        19.   Notices. Any notice or other communication required or permitted to be given or made to the Company or Indemnitee
pursuant to this Agreement shall be given if made in writing and deposited in the United States mail, with postage thereon prepaid, addressed to the person to whom such notice or communication is
directed at the address of such person on the records of the Company, and such notice or communication shall be deemed given or made at the time when the same shall be so 

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deposited
in the United States mail. Any such notice or communication to the Company shall be addressed to the Secretary of the Company. 

        20.   Contractual Rights. The right to be indemnified or to receive advancement of Expenses under this Agreement (i) is
a contract right based upon good and valuable consideration, pursuant to which Indemnitee may sue, (ii) is and is intended to be retroactive and shall be available as to events occurring prior
to the date of this Agreement and (iii) shall continue after any rescission or restrictive modification of this Agreement as to events occurring prior thereto. 

        21.   Severability. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for
any reason whatsoever, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby; to the fullest extent possible, the provisions of
this Agreement shall be construed so as to give effect to the intent manifested by the provisions held invalid, illegal or unenforceable; and those provision or provisions held to be invalid, illegal
or unenforceable for any reason whatsoever shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto. 

        22.   Successors; Binding Agreement. The Company shall require and cause any successor (whether direct or indirect) by
purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company, by written agreement in form and substance reasonably satisfactory to Indemnitee, to
expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. As used in this
Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid that executes and delivers the agreement provided for in this
Section 22 or that otherwise becomes bound by the terms and provisions of this Agreement by operation of law. This Agreement shall be binding upon the Company and its successors and assigns
(including, without limitation, any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company) and will inure to
the benefit of Indemnitee (and Indemnitee's spouse, if Indemnitee resides in Texas or another community property state), heirs, executors and administrators. 

        23.   Counterparts, Modification, Headings, Gender.

        (a)   This
Agreement may be executed in counterparts, each of which shall constitute one and the same instrument, and either party hereto may execute this Agreement by signing
any such counterpart. 

        (b)   No
provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by Indemnitee and
an appropriate officer of the Company. No waiver by any party at any time of any breach by any other party of, or compliance with, any condition or provision of this Agreement to be performed by any
other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or at any prior or subsequent time. 

        (c)   Section
headings are not to be considered part of this Agreement, are solely for convenience of reference, and shall not affect the meaning or interpretation of this
Agreement or any provision set forth herein. 

        (d)   Pronouns
in masculine, feminine and neuter genders shall be construed to include any other gender, and words in the singular form shall be construed to include the
plural and vice versa, unless the context otherwise requires. 

        24.   Exclusive Jurisdiction; Governing Law. The Company and Indemnitee agree that all disputes in any way relating to or
arising under this Agreement, including, without limitation, any action for advancement of Expenses or indemnification, shall be litigated, if at all, exclusively in the Delaware 

9

 

Court
of Chancery, and if necessary, the corresponding appellate courts. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware applicable
to contracts made and to be performed in such state without giving effect to the principles of conflicts of laws. The Company and Indemnitee (i) expressly submit themselves to the personal
jurisdiction of the Delaware Court of Chancery for purposes of any action or proceeding arising out of or in connection with this Agreement, (ii) irrevocably appoint, to the extent such party
is not a resident of the State of Delaware, The Corporation Trust Company, 1209 Orange Street, Wilmington, Delaware 19801 as its agent in the State of Delaware as such party's agent for acceptance of
legal process in connection with any such action or proceeding against such party with the same legal force and validity as if served upon such party personally within the State of Delaware,
(iii) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court of Chancery, and (iv) waive, and agree not to plead or to make, any claim that any
such action or proceeding brought in the Delaware Court of Chancery has been brought in an improper or otherwise inconvenient forum. 

        25.   Duration of Agreement. This Agreement shall continue until and terminate upon the later of: (a) 10 years
after the date that Indemnitee shall have ceased to serve as a director and/or officer of the Company or director, officer, trustee, general partner, managing member, fiduciary, employee or agent of
any other Enterprise which Indemnitee served at the request of the Company; or (b) one year after the final, nonappealable termination of any Proceeding then pending in respect of which
Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to Section 10 of this Agreement relating thereto. 

        26.   Contribution. If it is established, under Section 8 or otherwise, that Indemnitee has the right to be indemnified
under this Agreement in respect of any claim, but that right is unenforceable by reason of applicable law or public policy, then, to the fullest extent applicable law permits, the Company, in lieu of
indemnifying or causing the indemnification of Indemnitee under this Agreement, will contribute to the amount Indemnitee has incurred, whether for judgments, fines, penalties, excise taxes, amounts
paid or to be paid in settlement or for Expenses reasonably incurred, in connection with that Proceeding, in such proportion as is deemed fair and reasonable in light of all the circumstances of that
Proceeding in order to reflect: 

        (a)   the
relative benefits Indemnitee and the Company have received as a result of the event(s) or transactions(s) giving rise to that Proceeding; or 

        (b)   the
relative fault of Indemnitee and of the Company and its other functionaries in connection with those event(s) or transaction(s). 

10

 

        IN
WITNESS WHEREOF, the Company and Indemnitee have executed this Agreement as of the date and year first above written. 

	 	 	STROUD ENERGY, INC.
	

 	
 	

BY:	

 
	 	 	 	 	

	 	 	 	Name:	 
	 	 	 	 	

	 	 	 	Title:	 
	 	 	 	 	

	

 	
 	

INDEMNITEE
	 	
 	
 	

11

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Exhibit 10.2

INDEMNITY AGREEMENT

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Exhibit 10.3    
    

 
 

STROUD ENERGY, INC.
  2005 STOCK INCENTIVE PLAN    
    

 
  ARTICLE I. ESTABLISHMENT AND PURPOSE    
    

        1.1   Establishment. Stroud Energy, Inc. ("SEI") hereby establishes the Stroud Energy, Inc. 2005 Stock Incentive
Plan, as set forth in this document. In connection with the transactions contemplated by that certain Combination Agreement between SEI, Stroud Energy Management, Ltd., Stroud
Energy, Ltd., Stroud Oil Properties, Inc. and the other parties thereto dated August 1, 2005 (the "Combination Agreement"), the Stroud Oil Properties, Inc. 2001 Stock
Incentive Plan (the "SOP Plan") will be assumed and adopted by SEI and restated into the form of this Plan, and outstanding options under the SOP Plan will be assumed by SEI and adjusted to become
options to purchase shares of SEI's Common Stock in accordance with the rules set forth in Treasury Regulations Section 1.424-1(a). 

        1.2   Purpose. The purposes of the Plan are to attract and retain highly qualified individuals to perform services for SEI and
its Affiliates and to align the interests of those individuals with those of the stockholders of SEI. SEI is committed to creating long-term stockholder value. SEI's compensation
philosophy is based on a belief that SEI can best create stockholder value if key employees, directors, and certain others providing services to the Company act and are rewarded as business owners.
SEI believes that an equity stake through equity compensation programs effectively aligns employee and stockholder interests by motivating and rewarding long-term performance that will
enhance stockholder value. 

        1.3   Effectiveness and Term. This Plan shall become effective as of September 23, 2005, (the "Effective Date"), which
is the date of approval of the Plan by the holders of at least a majority of the shares of Common Stock either (i) present or represented and entitled to vote at a special meeting of the
stockholders of SEI duly held in accordance with applicable law or (ii) by written action in lieu of a meeting in accordance with applicable law. Unless terminated earlier by the Board pursuant
to Section 14.1, this Plan shall terminate on the day prior to the tenth anniversary of the Effective Date. 

 
 

ARTICLE II. DEFINITIONS    
    

        2.1   "Affiliate" means (i) with respect to Incentive Stock Options, a
"parent corporation" or a "subsidiary corporation" of SEI, as those terms are defined in sections 424(e) and (f) of the Code, respectively, and (ii) with respect to other Awards,
(A) a "parent corporation" or a subsidiary corporation" of SEI as defined in (i) above or (B) any other corporation, organization, association, partnership, sole proprietorship or
other type of entity, whether incorporated or unincorporated, directly or indirectly controlling or controlled by or under direct or indirect common control with SEI. 

        2.2   "Award" means an award granted to a Participant in the form of Options,
SARs, Restricted Stock, Restricted Stock Units, Performance Awards, Stock Awards or Other Incentive Awards, whether granted singly or in combination. 

        2.3   "Award Agreement" means a written agreement between SEI and a Participant
that sets forth the terms, conditions, restrictions and limitations applicable to an Award. 

        2.4   "Board" means the Board of Directors of SEI. 

        2.5   "Cash Dividend Right" means a contingent right, granted in tandem with a
specific Restricted Stock Unit Award, to receive an amount in cash equal to the cash distributions made by SEI with respect to a share of Common Stock during the period such Award is outstanding. 

        2.6   "Cause" means (i) any material violation by the Participant of any
employment agreement between the Participant and SEI or an Affiliate, (ii) any act or omission by the Participant involving fraud, willful misconduct or gross negligence on the part of the
Participant that is materially injurious 

 

to
SEI, or (iii) the Participant's conviction of, or entry of a plea agreement or consent decree or similar arrangement with respect to any felony involving fraud, moral turpitude or any
violation of federal or state securities law. 

        2.7   "Change of Control" means any of the following events: 

        (a)   the
acquisition by any "person" (including a "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), but excluding SEI or an existing
stockholder of SEI who, upon closing of the Private Placement, holds 5% or more of the Common Stock) of "beneficial ownership" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of SEI representing more than 20% of the combined voting power of SEI's then outstanding securities entitled to vote generally in the election of directors; or 

        (b)   the
consummation of a reorganization, merger, consolidation or other form of business transaction or series of business transactions, in each case, with respect to which
persons who were stockholders of SEI immediately prior to such reorganization, merger or consolidation or other transaction do not, immediately thereafter, own more than 50% of the combined voting
power entitled to vote generally in the election of directors of the reorganized, merged or consolidated company's then outstanding voting securities; or 

        (c)   the
sale, lease or disposition (in one or a series of related transactions) by SEI of all or substantially all of SEI's assets (including those of its subsidiaries) to
any person or its Affiliates, other than SEI or its Affiliates; or 

        (d)   the
members of the Board at the beginning of any consecutive 24-calendar-month period (the "Incumbent Directors") cease for any reason other than death to
constitute at least a majority of the members of the Board, provided that any director whose election, or nomination for election by SEI's stockholders, was approved by a vote of at least a majority
of the members of the Board then still in office who were members of the Board at the beginning of such 24-calendar-month period, shall be deemed to be an Incumbent Director; or 

        (e)   the
approval by the Board or the stockholders of SEI of a complete or substantially complete liquidation or dissolution of SEI; or 

        (f)    any
event similar to the foregoing that the Committee determines in its absolute discretion would, if consummated, materially alter the structure or business SEI. 

Notwithstanding
the foregoing, (i) a Change of Control shall not include any acquisition, merger, or reorganization by SEI in which the stockholders of SEI immediately prior to such
acquisition, merger, or reorganization will have substantially the same proportionate ownership of common stock of the surviving corporation immediately thereafter or which would be considered a
Change of Control only due to the acquisition of Common Stock by any employee benefit plan (or related trust) sponsored or maintained by SEI or any parent or subsidiary of SEI, and (ii) a
Change of Control shall not include the transactions contemplated by the Combination Agreement, the Private Placement, or the initial public offering of the Common Stock. 

        2.8   "Code" means the Internal Revenue Code of 1986, as amended from time to
time, including regulations thereunder and successor provisions and regulations. 

        2.9   "Committee" means the Compensation Committee of the Board or such other
committee of the Board as may be designated by the Board to administer the Plan, which committee shall consist of two or more members of the Board; provided, however, that with respect to the
application of the Plan to Awards made to Outside Directors, the "Committee" shall be the Board. During such time as the Common Stock is registered under Section 12 of the Exchange Act, each
member of the Committee shall be an Outside Director. To the extent that no Committee exists that has the authority to administer the Plan, the functions of the Committee shall be exercised by the
Board. 

2

 

        2.10 "Common Stock" means the common stock of SEI, $.001 par value per share,
or any stock or other securities of hereafter issued or issuable in substitution or exchange for the Common Stock. 

        2.11 "Company" means SEI and any Affiliate. 

        2.12 "Dividend Unit Right" means a contingent right, granted in tandem with a
specific Restricted Stock Unit Award, to have an additional number of Restricted Stock Units credited to a Participant in respect of the Award equal to the number of shares of Common Stock that could
be purchased at Fair Market Value with the amount of each cash distribution made by SEI with respect to a share of Common Stock during the period such Award is outstanding. 

        2.13 "Effective Date" means the date this Plan becomes effective as provided
in Section 1.3. 

        2.14 "Employee" means an employee of the Company; provided, however, that the
term "Employee" does not include an Outside Director or an individual performing services for the Company who is treated for tax purposes as an independent contractor at the time of performance of the
services. 

        2.15 "Exchange Act" means the Securities Exchange Act of 1934, as amended. 

        2.16 "Fair Market Value" means the fair market value of the Common Stock, as
determined in good faith by the Committee or (i) if the Common Stock is traded in the over-the-counter market, the average of the representative closing bid and asked
prices as reported by NASDAQ for the date the Award is granted (or if there was no quoted price for such date of grant, then for the last preceding business day on which there was a quoted price), or
(ii) if the Common Stock is traded in the NASDAQ National Market System, the average of the highest and lowest selling prices for such stock as quoted on the NASDAQ National Market System for
the date the Award is granted (or if there are no sales for such date of grant, then for the last preceding business day on which there were sales), or (iii) if the Common Stock is listed on
any national stock exchange, the average of the highest and lowest selling prices for such stock as quoted on such exchange for the date the Award is granted (or if there are no sales for such date of
grant, then for the last preceding business day on which there were sales). 

        2.17 "Grant Date" means the date an Award is determined to be effective by
the Committee upon the grant of such Award. 

        2.18 "Incentive Stock Option" means an Option that is intended to meet the
requirements of section 422(b) of the Code. 

        2.19 "NASDAQ" means The NASDAQ Stock Market, Inc. 

        2.20 "Nonqualified Stock Option" means an Option that is not an Incentive
Stock Option. 

        2.21 "Option" means an option to purchase shares of Common Stock granted to a
Participant pursuant to Article VII. An Option may be either an Incentive Stock Option or a Nonqualified Stock Option, as determined by the Committee. 

        2.22 "Other Incentive Award" means an incentive award granted to a
Participant pursuant to Article XII. 

        2.23 "Outside Director" means a member of the Board who: (i) meets the
independence requirements of the principal exchange or quotation system upon which the shares of Common Stock are listed or quoted, (ii) from and after the date on which the remuneration paid
pursuant to the Plan becomes subject to the deduction limitation under Section 162(m) of the Code, qualifies as an "outside director" under Section 162(m) of the Code,
(iii) qualifies as a "non-employee director" of SEI under Rule 16b-3, and (iv) satisfies independence criteria under any other applicable laws or
regulations relating to the issuance of shares of Common Stock to Employees. 

3

 

        2.24 "Participant" means an Employee, director, or other individual or entity
who performs services for the Company that has been granted an Award; provided, however, that no Award that may be settled in Common Stock may be issued to a Participant that is not a natural person. 

        2.25 "Performance Award" means an Award granted to a Participant pursuant to
Article XI to receive cash or Common Stock conditioned in whole or in part upon the satisfaction of specified performance criteria. 

        2.26 "Permitted Transferee" shall have the meaning given such term in
Section 15.4. 

        2.27 "Plan" means the Stroud Energy, Inc. 2005 Stock Incentive Plan,
as in effect from time to time. 

        2.28 "Private Placement" means the private placement of shares of the Common
Stock to accredited investors, qualified institutional buyers and non-U.S. persons involving SEI and/or its stockholders scheduled to close on or about the Effective Date. 

        2.29 "Purchased Restricted Stock" shall have the meaning given such term in
Section 9.2. 

        2.30 "Restricted Period" means the period established by the Committee with
respect to an Award of Restricted Stock or Restricted Stock Units during which the Award remains subject to forfeiture. 

        2.31 "Restricted Stock" means a share of Common Stock granted to a
Participant pursuant to Article IX that is subject to such terms, conditions, and restrictions as may be determined by the Committee. 

        2.32 "Restricted Stock Unit" means a fictional share of Common Stock granted
to a Participant pursuant to Article X that is subject to such terms, conditions, and restrictions as may be determined by the Committee. 

        2.33 "Rule 16b-3" means Rule 16b-3
promulgated by the Securities and Exchange Commission under the Exchange Act, or any successor rule or regulation that may be in effect from time to time. 

        2.34 "SEI" means Stroud Energy, Inc., a Delaware corporation, or any
successor thereto. 

        2.35 "SOP Plan" means the Stroud Oil Properties, Inc. 2001 Stock
Incentive Plan. 

        2.36 "Stock Appreciation Right" or
"SAR" means a right granted to a Participant pursuant to Article VIII with respect to a share of Common Stock to receive upon exercise cash,
Common Stock or a combination of cash and Common Stock, equal to the appreciation in value of a share of Common Stock. 

 
 

ARTICLE III. PLAN ADMINISTRATION    
    

        3.1   Plan Administrator and Discretionary Authority. The Plan shall be administered by the Committee. The Committee shall have
total and exclusive responsibility to control, operate, manage and administer the Plan in accordance with its terms. The Committee shall have all the authority that may be necessary or helpful to
enable it to discharge its responsibilities with respect to the Plan. Without limiting the generality of the preceding sentence, the Committee shall have the exclusive right to: (i) interpret
the Plan and the Award Agreements executed hereunder; (ii) decide all questions concerning eligibility for, and the amount of, Awards granted under the Plan; (iii) construe any ambiguous
provision of the Plan or any Award Agreement; (iv) prescribe the form of Award Agreements; (v) correct any defect, supply any omission or reconcile any inconsistency in the Plan or any
Award Agreement; (vi) issue administrative guidelines as an aid to administering the Plan and make changes in such guidelines as the Committee from time to time deems proper; (vii) make
regulations for carrying out the Plan and make changes in such regulations as the Committee from time to time deems proper; (viii) determine whether Awards should be granted singly or in 

4

 

combination;
(ix) to the extent permitted under the Plan, grant waivers of Plan terms, conditions, restrictions and limitations; (x) accelerate the exercise, vesting or payment of an
Award when such action or actions would be in the best interests of the Company; (xi) require Participants to hold a stated number or percentage of shares of Common Stock acquired pursuant to
an Award for a stated period; and (xii) take any and all other actions the Committee deems necessary or advisable for the proper operation or administration of the Plan. The Committee shall
have authority in its sole discretion with respect to all matters related to the discharge of its responsibilities and the exercise of its authority under the Plan, including without limitation its
construction of the terms of the Plan and its determination of eligibility for participation in, and the terms of Awards granted under, the Plan. The decisions of the Committee and its actions with
respect to the Plan shall be final, conclusive and binding on all persons having or claiming to have any right or interest in or under the Plan, including without limitation Participants and their
respective Permitted Transferees, estates, beneficiaries and legal representatives. 

        3.2   Liability; Indemnification. No member of the Committee, nor any person to whom it has delegated authority, shall be
personally liable for any action, interpretation or determination made in good faith with respect to the Plan or Awards granted hereunder, and each member of the Committee (or delegatee of the
Committee) shall be fully indemnified and protected by SEI with respect to any liability he may incur with respect to any such action, interpretation or determination, to the maximum extent permitted
by applicable law. 

 
 

ARTICLE IV. SHARES SUBJECT TO THE PLAN    
    

        4.1   Available Shares.

        (a)   Subject
to adjustment as provided in Section 4.2, the maximum number of shares of Common Stock that shall be available for grant of Awards under the Plan shall be
1,500,000 shares of Common Stock. 

        (b)   The
maximum number of shares of Common Stock that may be subject to Incentive Stock Options granted under the Plan is 1,500,000 shares. The maximum number of shares of
Common Stock that may be subject to Nonqualified Stock Options and SARs granted under the Plan to any one Participant during a calendar year is 500,000 shares. The maximum number of shares of Common
Stock that may be subject to all Awards granted under the Plan to any one Participant during a calendar year is 750,000 shares. The limitations provided in this Section 4.1(b) shall be subject
to adjustment as provided in Section 4.2. 

        (c)   Shares
of Common Stock issued pursuant to the Plan may be original issue or treasury shares or a combination of the foregoing, as the Committee, in its sole discretion,
shall from time to time determine. SEI will, during the term of this Plan, will at all times reserve and keep available such number of shares of Common Stock as shall be sufficient to satisfy the
requirements of the Plan. 

        4.2   Adjustments for Recapitalizations and Reorganizations. Subject to Article XIII, if there is any change in the
number or kind of shares of Common Stock outstanding (i) by reason of a stock dividend, spin-off, recapitalization, stock split, or combination or exchange of shares, (ii) by
reason of a merger, reorganization, or consolidation, (iii) by reason of a reclassification or change in par value, or (iv) by reason of any other extraordinary or unusual event
affecting the outstanding Common Stock as a class without SEI's receipt of consideration, or if the value of outstanding shares of Common Stock is reduced as a result of a spin-off or
SEI's payment of an extraordinary cash dividend, or distribution or dividend or distribution consisting of any assets of SEI other than cash, the maximum number and kind of shares of Common Stock
available for issuance under the Plan, the maximum number and kind of shares of Common Stock available for issuance under the Plan as Incentive Stock Options, the maximum number and kind of shares of
Common Stock for which any individual may receive Awards 

5

 

of
Nonqualified Stock Options and SARs in any calendar year, the number and kind of shares of Common Stock covered by outstanding Awards, and the price per share or the applicable market value or
performance target of such Awards may be appropriately adjusted by the Committee to reflect any increase or decrease in the number of, or change in the kind or value of, issued shares of Common Stock
to preclude, to the extent practicable, the enlargement or dilution of rights under such Awards; provided, however, that any fractional shares resulting from such adjustment shall be eliminated. 

        4.3   Adjustments for Awards. The Committee shall have sole discretion to determine the manner in which shares of Common Stock
available for grant of Awards under the Plan are counted. Without limiting the discretion of the Committee under this Section 4.3, unless otherwise determined by the Committee, the following
rules shall apply for the purpose of determining the number of shares of Common Stock available for grant of Awards under the Plan: 

        (a)   Options, Restricted Stock and Stock Awards. The grant of Options, Restricted Stock or Stock Awards shall reduce the
number of shares of Common Stock available for grant of Awards under the Plan by the number of shares of Common Stock subject to such an Award. 

        (b)   SARs. The grant of SARs that may be paid or settled (i) only in Common Stock or (ii) in either cash or
Common Stock shall reduce the number of shares available for grant of Awards under the Plan by the number of shares subject to such an Award; provided, however, that upon the exercise of SARs, the
excess of the number of shares of Common Stock with respect to which the Award is exercised over the number of shares of Common Stock issued upon exercise of the Award shall again be available for
grant of Awards under the Plan. The grant of SARs that may be paid or settled only for cash shall not affect the number of shares available for grant of Awards under the Plan. 

        (c)   Restricted Stock Units. The grant of Restricted Stock Units (including those credited to a Participant in respect of a
Dividend Unit Right) that may be paid or settled (i) only in Common Stock or (ii) in either cash or Common Stock shall reduce the number of shares available for grant of Awards under the
Plan by the number of shares subject to such an Award; provided, however, that upon settlement of the Award, the excess, if any, of the number of shares of Common Stock that had been subject to such
Award over the number of shares of Common Stock issued upon its settlement shall again be available for grant of Awards under the Plan. The grant of Restricted Stock Units that may be paid or settled
only for cash shall not affect the number of shares available for grant of Awards under the Plan. 

        (d)   Other Incentive Awards. The grant of a Performance Award or Other Incentive Award in the form of Common Stock or that may
be paid or settled (i) only in Common Stock or (ii) in either Common Stock or cash shall reduce the number of shares available for grant of Awards under the Plan by the number of shares
subject to such an Award; provided, however, that upon settlement of the Award, the excess, if any, of the number of shares of Common Stock that had been subject to such Award over the number of
shares of Common Stock issued upon its settlement shall again be available for grant of Awards under the Plan. The grant of a Performance Award or Other Incentive Award that may be paid or settled
only for cash shall not affect the number of shares available for grant of Awards under the Plan. 

        (e)   Cancellation, Forfeiture and Termination. If any Award referred to in Sections 4.3(a), (b), (c), or (d) (other
than an Award that may be paid or settled only for cash) is canceled or forfeited, or terminates, expires or lapses, for any reason, the shares then subject to such Award shall again be available for
grant of Awards under the Plan. 

        (f)    Payment of Exercise Price and Withholding Taxes. If previously acquired shares of Common Stock are used to pay the
exercise price of an Award, the number of shares available for grant of Awards under the Plan shall be increased by the number of shares delivered as payment 

6

 

of
such exercise price. If previously acquired shares of Common Stock are used to pay withholding taxes payable upon exercise, vesting or payment of an Award, or shares of Common Stock that would be
acquired upon exercise, vesting or payment of an Award are withheld to pay withholding taxes payable upon exercise, vesting or payment of such Award, the number of shares available for grant of Awards
under the Plan shall be increased by the number of shares delivered or withheld as payment of such withholding taxes. 

 
 

ARTICLE V. ELIGIBILITY    
    

        The Committee shall select Participants from those Employees, directors and other individuals or entities providing services to the Company that, in the opinion
of the Committee, are in a position to make a significant contribution to the success of the Company. Once a Participant has been selected for an Award by the Committee, the Committee shall determine
the type and size of Award to be granted to the Participant and shall establish in the related Award Agreement the terms, conditions, restrictions and limitations applicable to the Award, in addition
to those set forth in the Plan and the administrative guidelines and regulations, if any, established by the Committee. 

 
 

ARTICLE VI. FORM OF AWARDS    
    

        6.1   Form of Awards. Awards may be granted under the Plan, in the Committee's sole discretion, in the form of Options pursuant
to Article VII, SARs pursuant to Article VIII, Restricted Stock pursuant to Article IX, Restricted Stock Units pursuant to Article X, Performance Awards pursuant to
Article XI, and Stock Awards and Other Incentive Awards pursuant to Article XII, or a combination thereof. All Awards shall be subject to the terms, conditions, restrictions and
limitations of the Plan. The Committee may, in its sole discretion, subject any Award to such other terms, conditions, restrictions and/or limitations (including without limitation the time and
conditions of exercise, vesting or payment of an Award and restrictions on transferability of any shares of Common Stock issued or delivered pursuant to an Award), provided they are not inconsistent
with the terms of the Plan. The Committee may, but is not required to, subject an Award to such conditions as it determines are necessary or appropriate to ensure than an Award constitutes "qualified
performance based compensation" within the meaning of section 162(m) of the Code and the regulations thereunder. Awards under a particular Article of the Plan need not be uniform, and Awards
under more than one Article of the Plan may be combined in a single Award Agreement. Any combination of Awards may be granted at one time and on more than one occasion to the same Participant. Subject
to compliance with applicable tax law, an Award Agreement may provide that a Participant may elect to defer receipt of income attributable to the exercise or vesting of an Award. 

        6.2   No Repricing. Except for adjustments made pursuant to Section 4.2, no Award may be repriced, replaced, regranted
through cancellation or otherwise modified without stockholder approval, if the effect would be to reduce the exercise price for the shares underlying such Award; and, the Committee may not cancel an
outstanding Option that is under water for the purpose of granting a replacement Award of a different type. 

        6.3   Loans. The Committee may, in its sole discretion, approve the extension of a loan by the Company to a Participant who is
an Employee to assist the Participant in paying the exercise price or purchase price of an Award; provided, however, that no loan shall be permitted if the extension of such loan would violate any
provision of applicable law. Any loan will be made upon such terms and conditions as the Committee shall determine. 

7

 

 
 

ARTICLE VII. OPTIONS    
    

        7.1   General. Awards may be granted in the form of Options that may be Incentive Stock Options or Nonqualified Stock Options,
or a combination of both; provided, however, that Incentive Stock Options may be granted only to Employees. 

        7.2   Terms and Conditions of Options. An Option shall be exercisable in whole or in such installments and at such times as may
be determined by the Committee. The price at which a share of Common Stock may be purchased upon exercise of an Option shall be determined by the Committee, but such exercise price shall not be less
than 100% of the Fair Market Value per share of Common Stock on the Grant Date unless the Option was granted through the assumption of, or in substitution for, outstanding awards previously granted to
individuals who became Employees as a result of a merger, consolidation, acquisition, or other corporate transaction involving the Company. Except as otherwise provided in Section 7.3, the term
of each Option shall be as specified by the Committee; provided, however, that no Options shall be exercisable later than ten years after the Grant Date. Options may be granted with respect to
Restricted Stock or shares of Common Stock that are not Restricted Stock, as determined by the Committee in its sole discretion. 

        7.3   Restrictions Relating to Incentive Stock Options.

        (a)   Options
granted in the form of Incentive Stock Options shall, in addition to being subject to the terms and conditions of Section 7.2, comply with
section 422(b) of the Code. To the extent the aggregate Fair Market Value (determined as of the times the respective Incentive Stock Options are granted) of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by an individual during any calendar year under all incentive stock option plans of SEI and its Affiliates exceeds $100,000, such excess
Incentive Stock Options shall be treated as options that do not constitute Incentive Stock Options. The Committee shall determine, in accordance with the applicable provisions of the Code, which of a
Participant's Incentive Stock Options will not constitute Incentive Stock Options because of such limitation and shall notify the Participant of such determination as soon as practicable after such
determination. The price at which a share of Common Stock may be purchased upon exercise of an Incentive Stock Option shall be determined by the Committee, but such exercise price shall not be less
than 100% of the Fair Market Value of a share of Common Stock on the Grant Date. No Incentive Stock Option shall be granted to an Employee under the Plan if, at the time such Option is granted, such
Employee owns stock possessing more than 10% of the total combined voting power of all classes of stock of SEI or an Affiliate, within the meaning of section 422(b)(6) of the Code, unless
(i) on the Grant Date of such Option, the exercise price of such Option is at least 110% of the Fair Market Value of the Common Stock subject to the Option and (ii) such Option by its
terms is not exercisable after the expiration of five years from the Grant Date of the Option. 

        (b)   Each
Participant awarded an Incentive Stock Option shall notify SEI in writing immediately after the date he or she makes a disqualifying disposition of any shares of
Common Stock acquired pursuant to the exercise of such Incentive Stock Option. A disqualifying disposition is any disposition (including any sale) of such Common Stock before the later of
(i) two years after the Grant Date of the Incentive Stock Option or (ii) one year after the date of exercise of the Incentive Stock Option. 

        7.4   Exercise of Options.

        (a)   Subject
to the terms and conditions of the Plan, Options shall be exercised by the delivery of a written notice of exercise to SEI, setting forth the number of whole
shares of Common Stock with respect to which the Option is to be exercised, accompanied by full payment for such shares. 

        (b)   Upon
exercise of an Option, the exercise price of the Option shall be payable to SEI in full either: (i) in cash or an equivalent acceptable to the Committee, or
(ii) in the sole discretion 

8

 

of
the Committee and in accordance with any applicable administrative guidelines established by the Committee, by tendering one or more previously acquired nonforfeitable, unrestricted shares of
Common Stock that have been held by the Participant for at least six months having an aggregate Fair Market Value at the time of exercise equal to the total exercise price, or (iii) in a
combination of the forms of payment specified in clauses (i) and (ii) above. 

        (c)   During
such time as the Common Stock is registered under Section 12 of the Exchange Act, to the extent permissible under applicable law, payment of the exercise
price of an Option may also be made, in the absolute discretion of the Committee, by delivery to SEI or its designated agent of an executed irrevocable option exercise form together with irrevocable
instructions to a broker-dealer to sell or margin a sufficient portion of the shares with respect to which the Option is exercised and deliver the sale or margin loan proceeds directly to SEI to pay
the exercise price and any required withholding taxes. 

        (d)   As
soon as reasonably practicable after receipt of written notification of exercise of an Option and full payment of the exercise price and any required withholding
taxes, SEI shall (i) deliver to the Participant, in the Participant's name or the name of the Participant's designee, a stock certificate or certificates in an appropriate aggregate amount
based upon the number of shares of Common Stock purchased under the Option, or (ii) cause to be issued in the Participant's name or the name of the Participant's designee, in
book-entry form, an appropriate number of shares of Common Stock based upon the number of shares purchased under the Option. 

        7.5   Termination of Employment or Service. Each Award Agreement embodying the Award of an Option shall set forth the extent to
which the Participant shall have the right to exercise the Option following termination of the Participant's employment or service with the Company. Such provisions shall be determined by the
Committee in its absolute discretion, need not be uniform among all Options granted under the Plan and may reflect distinctions based on the reasons for termination of employment or service. In the
event a Participant's Award Agreement embodying the award of an Option does not set forth such termination provisions, the following termination provisions shall apply with respect to such Award: 

        (a)   Termination Other Than For Cause. If the employment or service of a Participant shall terminate for any reason other than
Cause, each outstanding Option held by the Participant may be exercised, to
the extent then vested, until the earlier of (i) the expiration of one year from the date of such termination of employment or service or (ii) the expiration of the term of such Option. 

        (b)   Termination for Cause. Notwithstanding paragraphs (a) above, if the employment or service of a Participant shall
terminate for Cause, each outstanding Option held by the Participant may be exercised, to the extent then vested, until the earlier of (i) the expiration of 30 days from the date of such
termination of employment or service or (ii) the expiration of the terms of such Option. 

Notwithstanding
the foregoing, an Option will not be treated as an Incentive Stock Option unless at all times beginning on the Grant Date and ending on the day three months (one year in the case of a
Participant who is "disabled" within the meaning of Section 22(e)(3) of the Code) before the date of exercise of the Option, the Participant is an employee of SEI or an Affiliate (or a
corporation or a parent or subsidiary corporation of such corporation issuing or assuming an option in a transaction to which Section 424(a) of the Code applies). 

9

 
 
 

ARTICLE VIII. STOCK APPRECIATION RIGHTS    
    

        8.1   General. The Committee may grant Awards in the form of SARs in such numbers and at such times as it shall determine. SARs
shall vest and be exercisable in whole or in such installments and at such times as may be determined by the Committee. The price at which SARs may be exercised shall be determined by the Committee
but shall not be less than 100% of the Fair Market Value per share of Common Stock on the Grant Date unless the SARs were granted through the assumption of, or in substitution for, outstanding awards
previously granted to individuals who became Employees as a result of a merger, consolidation, acquisition, or other corporate transaction involving the Company. The term of each SAR shall be as
specified by the Committee; provided, however, that no SARs shall be exercisable later than seven years after the Grant Date. At the time of an Award of SARs, the Committee may, in its sole
discretion, prescribe additional terms, conditions, restrictions and limitations applicable to the SARs, including without limitation rules pertaining to the termination of employment or service (by
reason of death, permanent and total disability, or otherwise) of a Participant prior to exercise of the SARs, as it determines are necessary or appropriate, provided they are not inconsistent with
the Plan. 

        8.2   Exercise of SARs. SARs shall be exercised by the delivery of a written notice of exercise to SEI, setting forth the
number of whole shares of Common Stock with respect to which the Award is being exercised. Upon the exercise of SARs, the Participant shall be entitled to receive an amount equal to the excess of the
aggregate Fair Market Value of the shares of Common Stock with respect to which the Award is exercised (determined as of the date of such exercise) over the aggregate exercise price of such shares.
Such amount shall be payable to the Participant in cash or in shares of Common Stock, as provided in the Award Agreement; provided, however, that if SARs are to be settled in cash, the SARs shall be
structured to avoid negative tax consequences to the Participant under Section 409A of the Code. 

 
 

ARTICLE IX. RESTRICTED STOCK    
    

        9.1   General. Awards may be granted in the form of Restricted Stock in such numbers and at such times as the Committee shall
determine. The Committee shall impose such terms, conditions and restrictions on Restricted Stock as it may deem advisable, including without limitation providing for vesting upon the achievement of
specified performance goals pursuant to a Performance Award and restrictions under applicable Federal or state securities laws. A Participant shall not be required to make any payment for Restricted
Stock unless required by the Committee pursuant to Section 9.2. 

        9.2   Purchased Restricted Stock. The Committee may in its sole discretion require a Participant to pay a stipulated purchase
price for each share of Restricted Stock ("Purchased Restricted Stock"). 

        9.3   Restricted Period. At the time an Award of Restricted Stock is granted, the Committee shall establish a Restricted Period
applicable to such Restricted Stock. Each Award of Restricted Stock may have a different Restricted Period in the sole discretion of the Committee. 

        9.4   Other Terms and Conditions. Restricted Stock shall constitute issued and outstanding shares of Common Stock for all
corporate purposes. Restricted Stock awarded to a Participant under the Plan shall be registered in the name of the Participant or, at the option of SEI, in the name of a nominee of SEI, and shall be
issued in book-entry form or represented by a stock certificate. Subject to the terms and conditions of the Award Agreement, a Participant to whom Restricted Stock has been awarded shall
have the right to receive dividends thereon during the Restricted Period, to vote the Restricted Stock and to enjoy all other stockholder rights with respect thereto, except that (i) SEI shall
retain custody of any certificates evidencing the Restricted Stock during the Restricted Period, and (ii) the Participant may not sell, transfer, pledge, exchange, hypothecate or otherwise
dispose of the Restricted Stock during the Restricted Period. A breach of the terms and conditions established by the Committee pursuant to the Award of the Restricted Stock may result in a forfeiture
of the Restricted Stock. At the 

10

 

time
of an Award of Restricted Stock, the Committee may, in its sole discretion, prescribe additional terms, conditions, restrictions and limitations applicable to the Restricted Stock, including
without limitation rules pertaining to the termination of employment or service (by reason of death, permanent and total disability, retirement, cause or otherwise) of a Participant prior to
expiration of the Restricted Period. 

        9.5   Miscellaneous. Nothing in this Article shall prohibit the exchange of shares of Restricted Stock pursuant to a plan of
merger or reorganization for stock or other securities of SEI or another corporation that is a party to the reorganization, provided that the stock or securities so received in exchange for shares of
Restricted Stock shall, except as provided in Article XIII, become subject to the restrictions applicable to such Restricted Stock. Any shares of Common Stock received as a result of a stock
split or stock dividend with respect to shares of Restricted Stock shall also become subject to the restrictions applicable to such Restricted Stock. 

 
 

ARTICLE X. RESTRICTED STOCK UNITS    
    

        10.1 General. Awards may be granted in the form of Restricted Stock Units in such numbers and at such times as the Committee
shall determine. The Committee shall impose such terms, conditions and restrictions on Restricted Stock Units as it may deem advisable, including without limitation prescribing the period over which
and the conditions upon which a Restricted Stock Unit may become vested or be forfeited, and providing for vesting upon the achievement of specified performance goals pursuant to a Performance Award.
Upon the lapse of restrictions with respect to each Restricted Stock Unit, the Participant shall be entitled to receive from the Company one share of Common Stock or an amount of cash equal to the
Fair Market Value of one share of Common Stock, as provided in the Award Agreement. A Participant shall not be required to make any payment for Restricted Stock Units. Restricted Stock Units shall be
structured to avoid negative tax consequences to the Participant under Section 409A of the Code. 

        10.2 Restricted Period. At the time an Award of Restricted Stock Units is granted, the Committee shall establish a Restricted
Period applicable to such Restricted Stock Units. Each Award of Restricted Stock Units may have a different Restricted Period in the sole discretion of the Committee. 

        10.3 Cash Dividend Rights and Dividend Unit Rights. To the extent provided by the Committee in its sole discretion, a grant
of Restricted Stock Units may include a tandem Cash Dividend Right or Dividend Unit Right grant. A grant of Cash Dividend Rights may provide that such Cash Dividend Rights shall be paid directly to
the Participant at the time of payment of related dividend, be credited to a bookkeeping account subject to the same vesting and payment provisions as the tandem Award (with or without interest in the
sole discretion of the Committee), or be subject to such other provisions or restrictions as determined by the Committee in its sole discretion. A grant of Dividend Unit Rights may provide that such
Dividend Unit Rights shall be subject to the same vesting and payment provisions as the tandem Award or be subject to such other provisions and restrictions as determined by the Committee in its sole
discretion. 

        10.4 Other Terms and Conditions. At the time of an Award of Restricted Stock Units, the Committee may, in its sole
discretion, prescribe additional terms, conditions, restrictions and limitations applicable to the Restricted Stock Units, including without limitation rules pertaining to the termination of
employment or service (by reason of death, permanent and total disability, retirement, cause or otherwise) of a Participant prior to expiration of the Restricted Period. 

 
 

ARTICLE XI. PERFORMANCE AWARDS    
    

        11.1 General. Awards may be granted in the form of Performance Awards that may be payable in the form of cash, shares of
Common Stock, or a combination of both, in such amounts and at such times as the Committee shall determine. Performance Awards shall be conditioned upon the level of 

11

 

achievement
of one or more stated performance goals over a specified performance period that shall not be shorter than one year. Performance Awards may be combined with other Awards to impose
performance criteria as part of the terms of such other Awards. 

        11.2 Terms and Conditions. Each Award Agreement embodying a Performance Award shall set forth (i) the amount,
including a target and maximum amount if applicable, a Participant may earn in the form of cash or shares of Common Stock or a formula for determining such amount, (ii) the performance criteria
and level of achievement versus such criteria that shall determine the amount payable or number of shares of Common Stock to be granted, issued, retained and/or vested, (iii) the performance
period over which performance is to be measured, (iv) the timing of any payments to be made, (v) restrictions on the transferability of the Award, and (vi) such other terms and
conditions as the Committee may determine that are not inconsistent with the Plan. 

        11.3 Code Section 162(m) Requirements. From and after the date on which remuneration paid pursuant to the Plan becomes
subject to the deduction limitation under Section 162(m) of the Code, the Committee shall determine in its sole discretion whether all or any portion of a Performance Award shall be intended to
satisfy the requirements for "performance-based compensation" under section 162(m) of the Code (the "162(m) Requirements"). The performance criteria for any Performance Award that is intended
to satisfy the 162(m) Requirements shall be established in writing by the Committee based on one or more performance goals as set forth in Section 11.4 not later than 90 days after
commencement of the performance period with respect to such Award, provided that the outcome of the performance in respect of the goals remains substantially uncertain as of such time. The maximum
amount that may be paid in cash pursuant to Performance Awards granted to a Participant with respect to a calendar year that are intended to satisfy the 162(m) Requirements is $1,000,000.00; provided,
however, that such maximum amount with respect to a Performance Award that provides for a performance period longer than one calendar year shall be the foregoing limit multiplied by the number of full
calendar years in the performance period. At the time of the grant of a Performance Award and to the extent permitted under Code section 162(m) and regulations thereunder for a Performance
Award intended to satisfy the 162(m) Requirements, the Committee may provide for the manner in which the performance goals will be measured in light of specified corporate transactions, extraordinary
events, accounting changes and other similar occurrences. 

        11.4 Performance Goals. The performance measure(s) to be used for purposes of Performance Awards may be described in terms of
objectives that are related to the individual Participant or objectives that are Company-wide or related to a subsidiary, division, department, region, function or business unit of the
Company in which the Participant is employed or with respect to which the Participant performs services, and may consist of one or more or any combination of the following criteria:
(i) earnings or earnings per share (whether on a pre-tax, after-tax, operational or other basis), (ii) return on equity, (iii) return on assets or net
assets, (iv) return on capital or invested capital and other related financial measures, (v) cash flow, (vi) revenues, (vii) income or operating income,
(viii) expenses or expense levels, (ix) one or more operating ratios, (x) stock price, (xi) total stockholder return, (xii) market share, (xiii) operating
profit, (xiv) profit margin, (xv) growth in production, (xvi) capital expenditures, (xvii) net borrowing, debt leverage levels, credit quality or debt ratings,
(xviii) the accomplishment of mergers, acquisitions, dispositions, public offerings or similar extraordinary business transactions, (xix) net asset value per share, (xx) economic
value added, (xxi) individual business objectives and (xxii) added reserves. The performance goals based on these performance measures may be made relative to the performance of other
business entities. 

        11.5 Certification and Negative Discretion. Prior to the payment of any compensation pursuant to a Performance Award that is
intended to satisfy the 162(m) Requirements, the Committee shall certify the extent to which the performance goals and other material terms of the Award have been achieved or satisfied. The Committee
in its sole discretion shall have the authority to reduce, but not to increase, 

12

 

the
amount payable and the number of shares to be granted, issued, retained or vested pursuant to a Performance Award. 

 
 

ARTICLE XII. STOCK AWARDS AND OTHER INCENTIVE AWARDS    
    

        12.1 Stock Awards. Stock Awards may be granted to Participants upon such terms and conditions as the Committee may determine.
Shares of Common Stock issued pursuant to Stock Awards may be issued for cash consideration or for no cash consideration. The Committee shall determine the number of shares of Common Stock to be
issued pursuant to a Stock Award. 

        12.2 Other Incentive Awards. Other Incentive Awards may be granted in such amounts, upon such terms and at such times as the
Committee shall determine. Other Incentive Awards may be granted based upon, payable in or otherwise related to, in whole or in part, shares of Common Stock if the Committee, in its sole discretion,
determines that such Other Incentive Awards are consistent with the purposes of the Plan. Each grant of an Other Incentive Award shall be evidenced by an Award Agreement that shall specify the amount
of the Other Incentive Award and the terms, conditions, restrictions and limitations applicable to such Award. Payment of Other Incentive Awards shall be made at such times and in such form, which may
be cash, shares of Common Stock or other property (or a combination thereof), as established by the Committee, subject to the terms of the Plan. 

 
 

ARTICLE XIII. CHANGE OF CONTROL    
    

        13.1 Awards Other Than Restricted Stock. Unless otherwise determined by the Committee at the time of grant of an Award or
unless otherwise provided in the applicable Award Agreement, if the stockholders of SEI shall approve a transaction which upon consummation would constitute a Change of Control of SEI, or in the event
of any Change of Control of SEI not subject to stockholder approval, then, no later than the effective time of such Change of Control, each Participant holding an Award (other than a Restricted Stock
Award) shall be required to surrender such Award in exchange for (i) with respect to each share of Common Stock subject to an Option or SAR (whether or not vested), payment by the Company (or a
successor), in cash, of an amount equivalent to the excess of the value of the consideration received for each share of Common Stock by holders of Common Stock in connection with such Change of
Control (the "Change of Control Consideration") over the exercise price or grant price per share; (ii) with respect to each share of Common Stock subject to an Award of Restricted Stock Units
or Other Incentive Awards, and related Cash Dividend Rights and Dividend Unit Rights (if applicable), payment by the Company (or a successor), in cash, of an amount equivalent to the value of any such
Cash Dividend Rights and Dividend Unit Rights plus the value of the Change of Control Consideration for each share covered by the Award, assuming all restrictions or limitations (including risks of
forfeiture) have lapsed; and (iii) with respect to a Performance Award, payment by the Company (or a successor), in cash, of an amount equivalent to the value of such Award, as determined by
the Committee, taking into account, to the extent applicable, the Change of Control Consideration, and assuming all performance criteria and other conditions to payment of such Awards are achieved or
fulfilled to the maximum extent possible. Except as provided below, cash payments made upon a Change of Control pursuant to this Article shall be made no later than the date on which the Change of
Control occurs. With respect to an Award that consists of deferred compensation under Section 409A of the Code, if a corporate event occurs that would otherwise constitute a Change of Control
under Section 2.7(a)-(f), but does not satisfy the requirements for a change of control or change in control under Section 409A of the Code and Treasury guidance and Regulations related
to Section 409A of the Code, including but not limited to Notice 2005-1 and such other Treasury guidance or Regulations issued after the Effective Date, then such Award shall be
fully vested, all restrictions or limitations shall lapse, or all performance criteria or other conditions related to such Awards shall be deemed to be achieved or fulfilled to the maximum extent
possible as of the date of such corporate event, as applicable, as provided above in this Article XIII, but the cash payment with respect to such 

13

 

Award
shall be delayed until payment may be made to the Participant without negative tax consequences to the Participant under Section 409A of the Code. 

        13.2 Restricted Stock Awards. Unless otherwise determined by the Committee at the time of grant of an Award or unless
otherwise provided in the applicable Award Agreement, if the stockholders of SEI shall approve a transaction which upon consummation would constitute a Change of Control of SEI, or in the event of any
Change of Control of SEI not subject to stockholder approval, then effective immediately prior to the Change of Control, all Awards shall be fully vested, all restrictions and limitations shall lapse
and all performance criteria or other conditions related to such Awards shall be deemed to be achieved or fulfilled to the maximum extent possible. 

 
 

ARTICLE XIV. AMENDMENT AND TERMINATION    
    

        14.1 Plan Amendment and Termination. The Board may at any time suspend, terminate, amend or modify the Plan, in whole or in
part; provided, however, that no amendment or modification of the Plan shall become effective without the approval of such amendment or modification by the holders of at least a majority of the shares
of Common Stock if (i) such amendment or modification increases the maximum number of shares subject to the Plan (except as provided in Article IV) or changes the designation or class of
persons eligible to receive Awards under the Plan, or (ii) counsel for SEI determines that such approval is otherwise required by or necessary to comply with applicable law or the listing
requirements of NASDAQ or such other exchange or association on which the Common Stock is then listed or quoted. An amendment to the Plan shall not require stockholder approval if it curtails rather
than expands the scope of the Plan, nor if it is made to conform the Plan to new statutory or regulatory requirements that arise after submission of the Plan to stockholders for their approval, such
as, without limitation, changes to section 409A of the Code, or regulations issued thereunder. Upon termination of the Plan, the terms and provisions of the Plan shall, notwithstanding such
termination, continue to apply to Awards granted prior to such termination. Except as otherwise provided herein, no suspension, termination, amendment or modification of the Plan shall adversely
affect in any material way any Award previously granted under the Plan, without the consent of the Participant (or the Permitted Transferee) holding such Award. 

        14.2 Award Amendment and Cancellation. The Committee may amend the terms of any outstanding Award granted pursuant to the
Plan, but except as otherwise provided herein, no such amendment shall adversely affect in any material way the Participant's (or a Permitted Transferee's) rights under an outstanding Award without
the consent of the Participant (or the Permitted Transferee) holding such Award. 

 
 

ARTICLE XV. MISCELLANEOUS    
    

        15.1 Award Agreements. After the Committee grants an Award under the Plan to a Participant, SEI and the Participant shall
enter into an Award Agreement setting forth the terms, conditions, restrictions and limitations applicable to the Award and such other matters as the Committee may determine to be appropriate. The
Committee may permit or require a Participant to defer receipt of the payment of cash or the delivery of shares of Common Stock that would otherwise be due to the Participant in connection with any
Award; provided, however, that any permitted deferrals shall be structured to avoid negative tax consequences to the Participant under Section 409A of the Code. The terms and provisions of the
respective Award Agreements need not be identical. All Award Agreements shall be subject to the provisions of the Plan, and in the event of any conflict between an Award Agreement and the Plan, the
terms of the Plan shall govern. Options, restricted stock and other awards granted pursuant to the SOP Plan shall continue to be governed by the terms of the SOP Plan as in effect at the time of the
award. 

14

 

        15.2 Listing; Suspension.

        (a)   As
long as the Common Stock is listed on a national securities exchange or system sponsored by a national securities association, the issuance of any shares of Common
Stock pursuant to an Award shall be conditioned upon such shares being listed on such exchange or system. SEI shall have no obligation to issue such shares unless and until such shares are so listed,
and the right to exercise any Option or other Award with respect to such shares shall be suspended until such listing has been effected. 

        (b)   If
at any time counsel to SEI or its Affiliates shall be of the opinion that any sale or delivery of shares of Common Stock pursuant to an Award is or may in the
circumstances be unlawful or result in the imposition of excise taxes on SEI or its Affiliates under the laws of any applicable jurisdiction, SEI or its Affiliates shall have no obligation to make
such sale or delivery, or to make any application or to effect or to maintain any qualification or registration under the Securities Act of 1933, as amended, or otherwise, with respect to shares of
Common Stock or Awards, and the right to exercise any Option or other Award shall be suspended until, in the opinion of such counsel, such sale or delivery shall be lawful or will not result in the
imposition of excise taxes on SEI or its Affiliates. 

        (c)   Upon
termination of any period of suspension under this Section, any Award affected by such suspension that shall not then have expired or terminated shall be reinstated
as to all shares available before such suspension and as to shares that would otherwise have become available during the period of such suspension, but no such suspension shall extend the term of any
Award unless otherwise determined by the Committee in its sole discretion. 

        15.3 Additional Conditions. Notwithstanding anything in the Plan to the contrary: (i) the Committee may, if it shall
determine it necessary or desirable in its sole discretion, at the time of grant of any Award or the issuance of any shares of Common Stock pursuant to any Award, require the recipient of the Award or
such shares of Common Stock, as a condition to the receipt thereof, to deliver to SEI a written representation of present intention to acquire the Award or such shares of Common Stock for his own
account for investment and not for distribution, (ii) the certificate for shares of Common Stock issued to a Participant may include any legend that the Committee deems appropriate to reflect
any restrictions on transfer, and (iii) all certificates for shares of Common Stock delivered under the Plan shall be subject to such stop transfer orders and other restrictions as the
Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange or association upon which the Common Stock is then listed
or quoted, any applicable federal or state securities law, and any applicable corporate law, and the Committee may cause a legend or legends to be placed on any such certificates to make appropriate
reference to such restrictions. 

        15.4 Transferability.

        (a)   All
Awards granted to a Participant shall be exercisable during his lifetime only by such Participant, or if applicable, a Permitted Transferee as provided in subsection
(c) of this Section; provided, however, that in the event of a Participant's legal incapacity, an Award may be exercised by his guardian or legal representative. When a Participant dies, the
personal representative, beneficiary, or other person entitled to succeed to the rights of the Participant may acquire the rights under an Award. Any such successor must furnish proof satisfactory to
SEI of the successor's entitlement to receive the rights under an Award under the Participant's will or under the applicable laws of descent and distribution. 

        (b)   Except
as otherwise provided in this Section, no Award shall be subject to execution, attachment or similar process, and no Award may be sold, transferred, pledged,
exchanged, hypothecated or otherwise disposed of, other than by will or pursuant to the applicable laws of 

15

 

descent
and distribution. Any attempted sale, transfer, pledge, exchange, hypothecation or other disposition of an Award not specifically permitted by the Plan or the Award Agreement shall be null and
void and without effect. 

        (c)   If
provided in the Award Agreement, Nonqualified Stock Options may be transferred by a Participant to a Permitted Transferee. For purposes of the Plan, "Permitted
Transferee" means (i) a member of a Participant's immediate family, (ii) any person sharing the Participant's household (other than a tenant or employee of the Participant),
(iii) trusts in which a person listed in (i) or (ii) above has more than 50% of the beneficial interest, (iv) a foundation in which the Participant or a person listed in
(i) or (ii) above controls the management of assets, (v) any other entity in which the Participant or a person listed in (i) or (ii) above owns more than 50% of the
voting interests, provided that in the case of the preceding clauses (i) through (v), no consideration is provided for the transfer, and (vi) any transferee permitted under applicable
securities and tax laws as determined by counsel to SEI. In
determining whether a person is a "Permitted Transferee," immediate family members shall include a Participant's child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse,
sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships. 

        (d)   Incident
to a Participant's divorce, the Participant may request that SEI agree to observe the terms of a domestic relations order which may or may not be part of a
qualified domestic relations order (as defined in Code section 414(p)) with respect to all or a part of one or more Awards made to the Participant under the Plan to the Participant's alternate
payee. SEI's decision regarding such a request shall be made by the Committee, in its sole and absolute discretion, based upon the best interests of SEI. The Committee's decision need not be uniform
among Participants. As a condition of participation, a Participant agrees to hold SEI harmless from any claim that may arise out of SEI's observance of the terms of any such domestic relations order. 

        15.5 Withholding Taxes. The Company shall be entitled to deduct from any payment made under the Plan, regardless of the form
of such payment, the amount of all applicable income and employment taxes required by law to be withheld with respect to such payment, may require the Participant to pay to the Company such
withholding taxes prior to and as a condition of the making of any payment or the issuance or delivery of any shares of Common Stock under the Plan, and shall be entitled to deduct from any other
compensation payable to the Participant any withholding obligations with respect to Awards. In accordance with any applicable administrative guidelines it establishes, the Committee may allow a
Participant to pay the amount of taxes required by law to be withheld from or with respect to an Award by (i) withholding shares of Common Stock from any payment of Common Stock due as a result
of such Award, or (ii) permitting the Participant to deliver to the Company previously acquired shares of Common Stock, in each case having an aggregate Fair Market Value equal to the amount of
such required withholding taxes. No payment shall be made and no shares of Common Stock shall be issued pursuant to any Award unless and until the applicable tax withholding obligations have been
satisfied. 

        15.6 No Fractional Shares. No fractional shares of Common Stock shall be issued or delivered pursuant to the Plan or any
Award granted hereunder, provided that the Committee in its sole discretion may round fractional shares down to the nearest whole share or settle fractional shares in cash. 

        15.7 Notices. All notices required or permitted to be given or made under the Plan or pursuant to any Award Agreement (unless
provided otherwise in such Award Agreement) shall be in writing and shall be deemed to have been duly given or made if (i) delivered personally, (ii) transmitted by first class
registered or certified United States mail, postage prepaid, return receipt requested, (iii) sent by prepaid overnight courier service, or (iv) sent by telecopy or facsimile
transmission, with confirmation 

16

 

receipt,
to the person who is to receive it at the address that such person has theretofore specified by written notice delivered in accordance herewith. Such notices shall be effective (i) if
delivered personally or sent by courier service, upon actual receipt by the intended recipient, (ii) if mailed, upon the earlier of five days after deposit in the mail or the date of delivery
as shown by the return receipt therefor, or (iii) if sent by telecopy or facsimile transmission, when the answer back is received. SEI or a Participant may change, at any time and from time to
time, by written notice to the other, the address that it or such Participant had theretofore specified for receiving notices. Until such address is changed in accordance herewith, notices hereunder
or under an Award Agreement shall be delivered or sent (i) to a Participant at his address as set forth in the records of the Company or (ii) to SEI at the principal executive offices of
SEI clearly marked "Attention: General Counsel." 

        15.8 Compliance with Law and Stock Exchange or Association Requirements. In addition, it is the intent of the SEI that
Options designated as Incentive Stock Options comply with the applicable provisions of Section 422 of the Code, and that Awards intended to constitute "qualified performance-based awards"
comply with the applicable provisions of Section 162(m) of the Code and that any deferral of the receipt of the payment of cash or the delivery of shares of Common Stock that the Committee may
permit or require, and any Award granted that is subject to Section 409A of the Code, comply with the requirements of Section 409A of the Code. 

To
the extent that any legal requirement of Section 16 of the Exchange Act or Sections 422, 162(m) or 409A of the Code as set forth in the Plan ceases to be required under Section 16 of
the Exchange Act or Sections 422, 162(m) or 409A of the Code, that Plan provision shall cease to apply. Any provision of this Plan to the contrary notwithstanding, the Committee may revoke any Award
if it is contrary to law, governmental regulation, or stock exchange or association requirements or modify an Award to bring it into compliance with any government regulation or stock exchange or
association requirements. The Committee may agree to limit its authority under this Section. 

        15.9 Binding Effect. The obligations of SEI under the Plan shall be binding upon any successor corporation or organization
resulting from the merger, consolidation or other reorganization of SEI, or upon any successor corporation or organization succeeding to all or substantially all of the assets and business of SEI. The
terms and conditions of the Plan shall be binding upon each Participant and his Permitted Transferees, heirs, legatees, distributees and legal representatives. 

        15.10 Severability. If any provision of the Plan or any Award Agreement is held to be illegal or invalid for any reason, the
illegality or invalidity shall not affect the remaining provisions of the Plan or such agreement, as the case may be, but such provision shall be fully severable and the Plan or such agreement, as the
case may be, shall be construed and enforced as if the illegal or invalid provision had never been included herein or therein. 

        15.11 No Restriction of Corporate Action. Nothing contained in the Plan shall be construed to prevent SEI or any Affiliate
from taking any corporate action (including any corporate action to suspend, terminate, amend or modify the Plan) that is deemed by SEI or such Affiliate to be appropriate or in its best interest,
whether or not such action would have an adverse effect on the Plan or any Awards made or to be made under the Plan. No Participant or other person shall have any claim against SEI or any Affiliate as
a result of such action. 

        15.12 Governing Law. The Plan shall be governed by and construed in accordance with the internal laws (and not the principles
relating to conflicts of laws) of the State of Texas except as superseded by applicable federal law. 

        15.13 No Right, Title or Interest in Company Assets. No Participant shall have any rights as a stockholder of SEI as a result
of participation in the Plan until the date of issuance of Common Stock in his name and, in the case of Restricted Stock, unless and until such rights are granted to the Participant pursuant to the
Plan. To the extent any person acquires a right to receive payments from 

17

 

the
Company under the Plan, such rights shall be no greater than the rights of an unsecured general creditor of the Company, and such person shall not have any rights in or against any specific assets
of the Company. All Awards shall be unfunded. 

        15.14 Risk of Participation. Nothing contained in the Plan shall be construed either as a guarantee by SEI or the Affiliates,
or their respective stockholders, directors, officers or employees, of the value of any assets of the Plan or as an agreement by SEI or the Affiliates, or their respective stockholders, directors,
officers or employees, to indemnify anyone for any losses, damages, costs or expenses resulting from participation in the Plan. 

        15.15 No Guarantee of Tax Consequences. No person connected with the Plan in any capacity, including without limitation SEI
and the Affiliates and their respective directors, officers, agents and employees, makes any representation, commitment or guarantee that any tax treatment, including without limitation federal, state
and local income, estate and gift tax treatment, will be applicable with respect to any Awards or payments thereunder made to or for the benefit of a Participant under the Plan or that such tax
treatment will apply to or be available to a Participant on account of participation in the Plan. 

        15.16 Continued Employment or Service. Nothing contained in the Plan or in any Award Agreement shall confer upon any
Participant the right to continue in the employ or service of the Company, or interfere in any way with the rights of the Company to terminate a Participant's employment or service at any time, with
or without cause. The loss of existing or potential profit in Awards will not constitute an element of damages in the event of termination of employment or service for any reason, even if the
termination is in violation of an obligation of SEI or an Affiliate to the Participant. 

        15.17 Miscellaneous. Headings are given to the articles and sections of the Plan solely as a convenience to facilitate
reference. Such headings shall not be deemed in any way material or relevant to the construction of the Plan or any provisions hereof. The use of the masculine gender shall also include within its
meaning the feminine. Wherever the context of the Plan dictates, the use of the singular shall also include within its meaning the plural, and vice versa. 

        IN
WITNESS WHEREOF, this Plan has been executed as of the Effective Date. 

	 	 	STROUD ENERGY, INC.
	

 	
 	

By:	

/s/  PATRICK J. NOYES      
 Name: Patrick J. Noyes

Title: President & Chief Executive Officer

18

QuickLinks

Exhibit 10.3

STROUD ENERGY, INC. 2005 STOCK INCENTIVE PLAN

ARTICLE I. ESTABLISHMENT AND PURPOSE

ARTICLE II. DEFINITIONS

ARTICLE III. PLAN ADMINISTRATION

ARTICLE IV. SHARES SUBJECT TO THE PLAN

ARTICLE V. ELIGIBILITY

ARTICLE VI. FORM OF AWARDS

ARTICLE VII. OPTIONS

ARTICLE VIII. STOCK APPRECIATION RIGHTS

ARTICLE IX. RESTRICTED STOCK

ARTICLE X. RESTRICTED STOCK UNITS

ARTICLE XI. PERFORMANCE AWARDS

ARTICLE XII. STOCK AWARDS AND OTHER INCENTIVE AWARDS

ARTICLE XIII. CHANGE OF CONTROL

ARTICLE XIV. AMENDMENT AND TERMINATION

ARTICLE XV. MISCELLANEOUS

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00101-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00101-of-00352.parquet"}]]