Spinnaker Exploration Company 2003 Stock Option Plan

Exhibit 10.1


SPINNAKER EXPLORATION COMPANY


2003 STOCK OPTION PLAN


TABLE OF CONTENTS


1. Purpose..................................................... 1


2. Definitions................................................. 1


3. Administration.............................................. 3
(a) Authority of the Committee.............................. 3
(b) Manner of Exercise of Committee Authority............... 3
(c) Limitation of Liability................................. 4


4. Stock Subject to Plan....................................... 4
(a) Overall Number of Shares Available for Delivery......... 4
(b) Application of Limitation to Grants of Options.......... 4
(c) Availability of Shares Not Delivered under Options...... 4
(d) Stock Offered........................................... 5


5. Eligibility................................................. 5


6. Options..................................................... 5
(a) General................................................. 5
(b) Terms and Conditions.................................... 5
(c) Stand-Alone, Additional, Tandem, and Substitute Options. 6
(d) Term of Options......................................... 6
(e) Form and Timing of Payment under Options; Deferrals..... 6
(f) Exemptions from Section 16(b) Liability................. 6
(g) Non-Competition Agreement............................... 6


7. Recapitalization or Reorganization.......................... 6
(a) Existence of Plans and Options.......................... 6
(b) Subdivision or Consolidation of Shares.................. 7
(c) Recapitalizations and Corporate Changes................. 7
(d) Additional Issuances.................................... 8


8. General Provisions.......................................... 8
(a) Transferability......................................... 8
(b) Taxes................................................... 9
(c) Changes to this Plan and Options........................ 9
(d) Limitation on Rights Conferred under Plan............... 9
(e) Nonexclusivity of this Plan............................. 10
(f) Payments in the Event of Forfeitures; Fractional Shares. 10
(g) Severability............................................ 10
(h) Governing Law........................................... 10
(i) Conditions to Delivery of Stock......................... 10
(j) Plan Effective Date and Stockholder Approval............ 11
(k) Term of Plan............................................ 11


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SPINNAKER EXPLORATION COMPANY


2003 STOCK OPTION PLAN


1. Purpose. The purpose of the Spinnaker Exploration Company 2003 Stock Option Plan (the "Plan") is to provide a means through which Spinnaker Exploration Company, a Delaware corporation (the "Company"), and its Subsidiaries may attract and retain able persons as employees, Directors and consultants of the Company and to provide a means whereby those persons upon whom the responsibilities of the successful administration and management of the Company rest, and whose present and potential contributions to the welfare of the Company are of importance, can acquire and maintain stock ownership thereby strengthening their concern for the welfare of the Company and their desire to remain in its employ. A further purpose of this Plan is to provide such employees and Directors with additional incentive and reward opportunities designed to enhance the profitable growth of the Company. Accordingly, this Plan provides for granting Incentive Stock Options, options which do not constitute Incentive Stock Options or a combination of both, as is best suited to the circumstances of the particular individual as provided herein.


2. Definitions. For purposes of this Plan, the following terms shall be defined as set forth below, in addition to such terms defined in Section 1 hereof:


(a) "Beneficiary" means one or more persons, trusts or other entities
which have been designated by a Participant in his or her most recent
written beneficiary designation filed with the Committee to receive the
benefits specified under this Plan upon such Participant's death or to which
Options or other rights are transferred if and to the extent permitted under
Section 8(a) hereof. If, upon a Participant's death, there is no designated
Beneficiary or surviving designated Beneficiary, then the term Beneficiary
means the persons, trusts or other entities entitled by will or the laws of
descent and distribution to receive such benefits.


(b) "Board" means the Company's Board of Directors.


(c) "Business Day" means any day other than a Saturday, a Sunday, or a
day on which banking institutions in the state of Texas are authorized or
obligated by law or executive order to close.


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


(e) "Committee" means a committee of two or more Directors designated by
the Board to administer this Plan; provided, however, that, unless otherwise
determined by the Board, the Committee shall consist solely of two or more
Directors, each of whom shall be (i) a "non-employee director" within the
meaning of Rule 16b-3 under the Exchange Act, and (ii) an "outside director"
as defined under section 162(m) of the Code, unless administration of this
Plan by "outside directors" is not then required in order to qualify for tax
deductibility under section 162(m) of the Code.


(f) "Director" means an individual elected to the Board by the
stockholders of the Company or by the Board under applicable corporate law
who is serving on the Board on the Effective Date or is elected to the Board
after such date.


(g) "Effective Date" means March 24, 2003, provided the Plan is approved
by the stockholders of the Company within twelve months thereafter.


(h) "Eligible Person" means all officers and employees of the Company or
any of its Subsidiaries, and other persons who provide services to the
Company or any of its Subsidiaries, including Directors and consultants. An
employee on leave of absence may be considered as still in the employ of the
Company or a Subsidiary of the Company for purposes of eligibility for
participation in this Plan.


(i) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, including rules thereunder and successor provisions and
rules thereto.


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(j) "Fair Market Value" means, for a particular day:


(i) if shares of Stock of the same class are listed or admitted to
unlisted trading privileges on any national or regional securities
exchange at the date of determining the Fair Market Value, then the mean
of the high and the low reported sales price, regular way, on the
composite tape of that exchange on that Business Day or, if no such sale
takes place on that Business Day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities
listed or admitted to unlisted trading privileges on that securities
exchange or, if no such closing prices are available for that day, the
last reported sales price, regular way, on the composite tape of that
exchange on the last Business Day before the date in question; or


(ii) if shares of Stock of the same class are not listed or admitted
to unlisted trading privileges as provided in subparagraph (i) and if
sales prices for shares of Stock of the same class in the
over-the-counter market are reported by the National Association of
Securities Dealers, Inc. Automated Quotations, Inc. ("NASDAQ") National
Market System as of the date of determining the Fair Market Value, then
the last reported sales price so reported on that Business Day or, if no
such sale takes place on that Business Day, the average of the high bid
and low asked prices so reported or, if no such prices are available for
that day, the last reported sales price so reported on the last Business
Day before the date in question; or


(iii) if shares of Stock of the same class are not listed or
admitted to unlisted trading privileges as provided in subparagraph (i)
and sales prices for shares of Stock of the same class are not reported
by the NASDAQ National Market System (or a similar system then in use)
as provided in subparagraph (ii), and if bid and asked prices for shares
of Stock of the same class in the over-the-counter market are reported
by NASDAQ (or, if not so reported, by the National Quotation Bureau
Incorporated) as of the date of determining the Fair Market Value, then
the average of the high bid and low asked prices on that Business Day
or, if no such prices are available for that day, the average of the
high bid and low asked prices on the last Business Day before the date
in question; or


(iv) if shares of Stock of the same class are not listed or admitted
to unlisted trading privileges as provided in subparagraph (i) and sales
prices or bid and asked prices therefor are not reported by NASDAQ (or
the National Quotation Bureau Incorporated) as provided in subparagraph
(ii) or subparagraph (iii) as of the date of determining the Fair Market
Value, then the value determined in good faith by the Committee, which
determination shall be conclusive for all purposes; or


(v) if shares of Stock of the same class are listed or admitted to
unlisted trading privileges as provided in subparagraph (i) or sales
prices or bid and asked prices therefor are reported by NASDAQ (or the
National Quotation Bureau Incorporated) as provided in subparagraph (ii)
or subparagraph (iii) as of the date of determining the Fair Market
Value, but the volume of trading is so low that the Committee determines
in good faith that such prices are not indicative of the fair value of
the Stock, then the value determined in good faith by the Committee,
which determination shall be conclusive for all purposes notwithstanding
the provisions of subparagraphs (i), (ii) or (iii).


For purposes of valuing Incentive Stock Options, the Fair Market Value of
Stock shall be determined without regard to any restriction other than one
that, by its terms, will never lapse.


(k) "Incentive Stock Option" or "ISO" means any Option intended to be
and designated as an incentive stock option within the meaning of section
422 of the Code or any successor provision thereto.


(l) "Option" means a right, granted to a Participant under Section 6(b)
hereof, to purchase Stock at a specified price during specified time periods.


(m) "Participant" means a person who has been granted an Option under
this Plan which remains outstanding, including a person who is no longer an
Eligible Person.


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(n) "Person" means any person or entity of any nature whatsoever,
specifically including an individual, a firm, a company, a corporation, a
partnership, a limited liability company, a trust or other entity; a Person,
together with that Person's Affiliates and Associates (as those terms are
defined in Rule 12b-2 under the Exchange Act), and any Persons acting as a
partnership, limited partnership, joint venture, association, syndicate or
other group (whether or not formally organized), or otherwise acting jointly
or in concert or in a coordinated or consciously parallel manner (whether or
not pursuant to any express agreement), for the purpose of acquiring,
holding, voting or disposing of securities of the Company with such Person,
shall be deemed a single "Person."


(o) "Qualified Member" means a member of the Committee who is a
"non-employee director" within the meaning of Rule 16b-3(b)(3) and an
"outside director" within the meaning of regulation 1.162-27 under section
162(m) of the Code.


(p) "Rule 16b-3" means Rule 16b-3, promulgated by the Securities and
Exchange Commission under section 16 of the Exchange Act, as from time to
time in effect and applicable to this Plan and Participants.


(q) "Securities Act" means the Securities Act of 1933 and the rules and
regulations promulgated thereunder, or any successor law, as it may be
amended from time to time.


(r) "Stock" means the Company's common stock, par value $.01 per share,
and such other securities as may be substituted (or resubstituted) for Stock
pursuant to Section 7.


(s) "Subsidiary" means with respect to any Person, any corporation or
other entity of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by that
Person.


3. Administration.


(a) Authority of the Committee. This Plan shall be administered by the Committee except to the extent the Board elects, in order to comply with Rule 16b-3 or for any other reason, to administer this Plan, in which case references herein to the "Committee" shall be deemed to include references to the "Board." Subject to the express provisions of the Plan and Rule 16b-3, the Committee shall have the authority, in its sole and absolute discretion, to (i) adopt, amend, and rescind administrative and interpretive rules and regulations relating to the Plan; (ii) determine the Eligible Persons to whom, and the time or times at which, Options shall be granted; (iii) determine the number of shares of Stock that shall be the subject of each Option; (iv) determine the terms and provisions of each Option agreement (which need not be identical), including provisions defining or otherwise relating to (A) the term and the period or periods and extent of exercisability of the Options, (B) the effect of termination of employment of a Participant on the Option, and (C) the effect of approved leaves of absence (consistent with any applicable regulations of the Internal Revenue Service); (v) accelerate the time of exercisability of any Option that has been granted; (vi) construe the respective Option agreements and the Plan; (vii) make determinations of the Fair Market Value of the Stock pursuant to the Plan; (viii) delegate its duties under the Plan to such agents as it may appoint from time to time, provided that the Committee may not delegate its duties with respect to making Options to, or otherwise with respect to Options granted to, Eligible Persons who are subject to section 16(b) of the Exchange Act or section 162(m) of the Code; (ix) subject to ratification by the Board, terminate, modify, or amend the Plan; and (x) make all other determinations, perform all other acts, and exercise all other powers and authority necessary or advisable for administering the Plan, including the delegation of those ministerial acts and responsibilities as the Committee deems appropriate. Subject to Rule 16b-3 and section 162(m) of the Code, the Committee may correct any defect, supply any omission, or reconcile any inconsistency in the Plan, in any Option, or in any Option agreement in the manner and to the extent it deems necessary or desirable to carry the Plan into effect, and the Committee shall be the sole and final judge of that necessity or desirability. The determinations of the Committee on the matters referred to in this Section 3(a) shall be final and conclusive.


(b) Manner of Exercise of Committee Authority. At any time that a member of the Committee is not a Qualified Member, any action of the Committee relating to an Option granted or to be granted to a Participant


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who is then subject to section 16 of the Exchange Act in respect of the Company, or relating to an Option intended by the Committee to qualify as "performance-based compensation" within the meaning of section 162(m) of the Code and the regulations thereunder, may be taken either (i) by a subcommittee designated by the Committee, composed solely of two or more Qualified Members, or (ii) by the Committee but with each such member who is not a Qualified Member abstaining or recusing himself or herself from such action; provided, however, that, upon such abstention or re ...