Energen 1988 Stock Option Plan

ENERGEN CORPORATION
1988 STOCK OPTION PLAN
(AS AMENDED NOVEMBER 25, 1997)


The purpose of this Plan is to provide a means whereby Energen Corporation may, through the grant of stock options, stock appreciation rights, and dividend equivalents to key employees, attract and retain persons of ability as employees and motivate such employees to exert their best efforts on behalf of Energen Corporation and its subsidiaries.


1. DEFINITIONS. Unless otherwise indicated, as used herein the following terms shall have the respective meanings set forth below:


"Board" means the Board of Directors of Energen Corporation.


"Code" means the Internal Revenue Code of 1986, as amended from time to time.


"Committee" means the Officer Review Committee of the Board consisting of not less than three members appointed by the Board and serving at the Board's pleasure.


"Company" means Energen Corporation and any successor corporation by merger or other reorganization.


"Expiration Date" means the last day on which an option issued under the Plan may be exercised, as such date may be extended pursuant to Section 5(a).


"Fair Market Value" means, (i) with respect to a share of Stock, the closing price of the Stock on the New York Stock Exchange (or such other exchange or system on which the Stock then trades or is quoted) on the most recent trading date preceding the date of payment, cancellation or withholding for which such valuation is made, and (ii) with respect to other consideration means fair market value as may be reasonably determined by the Committee.


"Incentive Stock Options" means options granted under the Plan to purchase Stock which at the time of grant qualify as "incentive stock options" within the meaning of Section 422A of the Code.


"Key Employees" means those employees (including officers and inside directors) of the Company or any Subsidiary who, in the judgment of the Committee are of special importance to the success or prospects of the Company.


"Nonqualified Stock Options" means options granted under the Plan to purchase Stock which are not Incentive Stock Options.


"Plan" means this Energen Corporation 1988 Stock Option Plan.


"Stock" means the common stock, par value $.01 per share of the Company.


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"Subsidiary" means any corporation which at the time an option is granted under the Plan qualifies as a subsidiary of the Company under the definition of "subsidiary corporation" contained in Section 425(f) of the Code, or any similar provision hereinafter enacted, except that such term shall not include any corporation which is classified as a foreign corporation pursuant to Section 7701 of the Code.


"Ten Percent Stockholder" means an individual who, at the time of grant, owns stock possessing more than 10 percent of the total combined voting power of all classes of stock of the Company.


2. SHARES SUBJECT TO THE PLAN. Options may be granted by the Company from time to time to Key Employees to purchase an aggregate of 180,000 shares of Stock, and such amounts of shares shall be reserved for options granted under the Plan (subject to adjustment as provided in Section 5(h)). The shares issued upon exercise of options granted under the Plan may be authorized and unissued shares or shares held by the Company in its treasury. If any option granted under the Plan shall terminate or expire, other than pursuant to Section 5(j), as to any shares, new options may thereafter be granted covering such shares. If any option granted under the Plan shall be cancelled as to any shares pursuant to Section 5(j) (stock appreciation rights), then new options may not thereafter be granted covering such shares.


3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the Committee. Each member of the Committee shall be both a member of the Board who is not eligible to receive any option under the Plan and a "disinterested person" within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934 or any successor rule or regulation. Any vacancy occurring in the membership of the Committee shall be filled by appointment by the Board.


The Committee may interpret the Plan, prescribe, amend, and rescind any rules and regulations necessary or appropriate for the administration of the Plan, or for the continued qualification of any Incentive Stock Options granted thereunder and make such other determinations and take such other actions as it deems necessary or advisable, except as otherwise expressly reserved to the Board in the Plan. Without limiting the generality of the foregoing sentence, the Committee may, in its discretion, treat all or any portion of any period during which an optionee is on military or on an approved leave of absence from the Company or a Subsidiary as a period of employment of such optionee by the Company or such Subsidiary as the case may be, for purposes of accrual of his rights under the Plan. Any interpretation, determination or other action made or taken by the Committee shall be final, binding and conclusive.


4. GRANT OF OPTIONS. Subject to the provisions of the Plan, the Committee shall (a) determine and designate from time to time those Key Employees to whom options are to be granted and the number of shares of Stock to be optioned to each employee; (b) authorize the granting of Incentive Stock Options, Nonqualified Stock Options, or combination of Incentive Stock Options and Nonqualified Stock Option; (c) determine the number of shares subject to each option; (d) determine the time or times when and the manner in which each option shall contain a stock appreciation right and/or dividend equivalents; provided, however, that (i) no Incentive Stock Option shall be granted after the expiration of ten years from the effective date of the Plan specified in Section 8, below and (ii) the aggregate fair market value (determined as of the date the option is granted) of the Stock with respect to which Incentive Stock Options are exercisable for the first time


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by any employee during any calendar year (under all plans of the Company and its Subsidiaries) shall not exceed $100,000.


5. TERMS AND CONDITIONS OF OPTIONS. Each option granted under the Plan shall be evidenced by an agreement, in a form approved by the Committee. Such agreement shall be subject to the following express terms and conditions and to such other terms and conditions as the Committee may deem appropriate:


(a) Option Period. Each option agreement shall specify the
period for which the option thereunder is granted and shall provide
that the option shall expire at the end of such period. The Committee
may extend such period provided that, in the case of an Incentive Stock
Option, such extensions shall not in any way disqualify the option as
an Incentive Stock Option. In no case shall such period for an
Incentive Stock Option, including any such extensions, exceed ten years
from the date of grant, provided, however that, in the case of an
Incentive Stock Option granted to a Ten Percent Stockholder, such
period, including extensions, shall not exceed five years from the date
of grant.


(b) Option Price. The option price per share shall be
determined by the Committee at the time any option is granted, and
shall be not less than (i) the fair market value, or (ii) in the case
of an Incentive Stock Option granted to a Ten Percent Stockholder, 110
percent of the fair market value (but in no event less than the par
value) of one share ...