SCHEDULE
14A
(RULE
14a-101)
INFORMATION
REQUIRED IN PROXY STATEMENT
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the
Registrant [X]
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Filed by a Party
other than the Registrant [_]
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Check the
appropriate box:
[_]
Preliminary Proxy Statement
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[_]
Confidential, For Use of the Commission Only
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[X]
Definitive Proxy Statement
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[_]
Definitive Additional Materials
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[_]
Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
INDEX
OIL AND GAS INC.
___________________________________________________________________________________________________
(Name of
Registrant as Specified In Its Charter)
___________________________________________________________________________________________________
(Name of
Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
[X] No
fee required
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computed on table below per Exchange Act Rules 14a-6(i)(1) and
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and identify the filing for which the offsetting fee was paid previously.
Identify the previous filing by registration statement number, or the form or
schedule and the date of its filing.
(1)
Amount Previously Paid:
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Schedule or Registration Statement No.:
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Filing Party:
(4) Date
Filed:
Dear
Stockholder,
You are
invited to attend the Annual General Meeting of the stockholders of Index Oil
and Gas Inc. (the “Company”), which will be held at 10:00 a.m. on the 9
th
of December 2008 in Houston, Texas. In the event you cannot attend the meeting,
it is very important that you vote on the matters being presented as they are
necessary for the Company’s continued growth and to meet Nevada State and SEC
regulatory requirements.
The
enclosed Proxy Statement outlines the proposals recommended and approved by the
Board of Directors of the Company, which require stockholder approval. Your vote
will become effective by execution and mailing of the Proxy Card or by attending
the Annual General Meeting at the time and location set forth in the Proxy
Statement and voting on the proposals in person. The Proxy Card should be mailed
using the enclosed self addressed envelope for the attention of:
Index
Oil and Gas Inc.
c/o
Continental Stock Transfer & Trust Company
17
Battery Place, 8
th
Floor
New
York, NY 10004 USA
Alternatively,
you can vote by telephone or via the internet. Instructions for these voting
methods are included on the Proxy Card or in the Proxy Statement.
A summary
of the proposals is as follows:
Proposal (1) to elect four
(4) Directors of the Company.
Proposal (2) to ratify the
appointment of RBSM LLP as auditors of the Company for the fiscal year
endingMarch 31, 2009.
Proposal (3) to approve
the adoption of the 2008 Stock Incentive Plan.
I would
be happy to speak with you if you have any questions or need any additional
information regarding these proposed resolutions. Please contact me at your
convenience by telephone at +44 1883 346 942, or +44 7860 104 136.
Index Oil
and Gas greatly appreciates your past and continuing support. The Company has
been working hard to build value for stockholders during very challenging market
conditions, and we look forward to continuing our efforts and announcing our
progress over the coming months.
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Sincerely,
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/s/ Daniel
L Murphy
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Daniel
L Murphy
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Chairman
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October
25, 2008
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INDEX OIL
AND GAS INC.
10000
Memorial Drive, Suite 440
Houston,
Texas 77024
(Tel)
(713)
683-0800
TO THE
STOCKHOLDERS OF INDEX OIL AND GAS INC.
NOTICE IS
HEREBY GIVEN that the Annual General Meeting of Stockholders (the "Meeting") of
Index Oil and Gas Inc., a Nevada corporation (the "Company" or "Index"), will be
held on December 9, 2008 at 10:00 a.m. Central Standard Time at Houston Marriot
(West Loop by the Galleria), 1750 West Loop South, Houston, Texas 77027, for the
following purposes:
1.
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To
elect four (4) directors of the
Company;
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2.
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To
ratify the appointment of RBSM LLP (“RBSM”) as our independent auditors
for the fiscal year ending March 31,
2009;
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3.
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To
adopt the 2008 Stock Incentive Plan;
and
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4.
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To
transact such other business as may properly come before the Meeting and
any adjournment or postponement
thereof.
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Only
stockholders who own shares of our common stock at the close of business on
October 21, 2008 are entitled to notice of and to vote at the Annual General
Meeting. You may vote your shares by:
·
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marking,
signing and dating the enclosed proxy card as promptly as possible and
returning it in the enclosed postage-paid envelope;
or
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·
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exercising
your vote via the dedicated internet website;
or
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·
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exercising
your vote by telephone via a dedicated telephone
number.
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You may
also vote in person at the Annual General Meeting, even if you use the options
listed above.
We have
enclosed with this Notice of Annual General Meeting, a proxy statement and a
form of Proxy Card.
Whether
or not you expect to attend the meeting in person, please submit a proxy as soon
as possible. You may withdraw your proxy and vote in person if you choose to
attend in person.
By Order
of the Board of Directors
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/s/ Lyndon
West
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Lyndon
West
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Houston
Texas
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President
& Chief Executive Officer
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October
25, 2008
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IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR
THE
2008 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON DECEMBER 9, 2008.
Index’s
Proxy Statement for the 2008 Annual General Meeting of Stockholders, the Annual
Report on Form 10-K, as amended, for the year ended March 31, 2008, and the
Quarterly Report on Form 10-Q for the quarter ended June 30, 2008 are also
available at
http://www.indexoil.com
under
the tab labeled “Investor Relations – Filings”.
INDEX
OIL AND GAS INC.
10000
Memorial Drive, Suite 440
Houston,
Texas 77024
(Tel)
(713)
683-0800
PROXY
STATEMENT FOR 2008 ANNUAL GENERAL MEETING OF STOCKHOLDERS
The board
of directors is soliciting proxies to be used at our December 9, 2008 Annual
General Meeting of stockholders. Please read and carefully consider the
information presented in this proxy statement and vote by completing, dating,
signing and returning the enclosed proxy in the enclosed postage-paid envelope
or by voting in accordance with the instructions on your Proxy
Card.
This
proxy statement and the form of Proxy Card will be mailed to all stockholders on
or about October 26, 2008.
INFORMATION
ABOUT THE ANNUAL GENERAL MEETING
WHEN
IS THE ANNUAL GENERAL MEETING?
December
9, 2008, 10:00 a.m. Central Standard Time
WHERE
WILL THE ANNUAL GENERAL MEETING BE HELD?
The
meeting will be held at Houston Marriot (West Loop by the Galleria); 1750 West
Loop South, Houston, Texas 77027.
WHAT
ITEMS WILL BE VOTED UPON AT THE ANNUAL GENERAL MEETING?
You will
be voting on the following matters:
1.
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ELECTION
OF FOUR (4) DIRECTORS OF THE
COMPANY.
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2.
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RATIFICATION
OF AUDITORS. To ratify the appointment of RBSM LLP (“RBSM”) as independent
auditors of the Company for the fiscal year ending March 31,
2009;
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3.
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ADOPTION
OF 2008 STOCK INCENTIVE PLAN. To consider adopting the 2008 Stock
Incentive Plan; and
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4.
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OTHER
BUSINESS. To transact such other business as may properly come before the
Annual General Meeting or any adjournment of the Annual General
Meeting.
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WHO
CAN VOTE?
Only
holders of record of our common stock at the close of business on October 21,
2008 (the “Record Date”) will be entitled to notice of and to vote at the Annual
General Meeting and any adjournments of the Annual General Meeting. You are
entitled to one vote for each share of common stock held on that date. On
October 21, 2008, there were 71,510,889 shares of our common stock outstanding
and entitled to vote at the stockholders meeting.
YOUR
BOARD OF DIRECTORS HAS APPROVED EACH OF THE PROPOSALS SET FORTH
HEREIN.
ACCORDINGLY,
THE BOARD RECOMMENDS A VOTE “FOR” THE ELECTION OF THE NOMINEES FOR DIRECTORS OF
THE COMPANY, THE RATIFICATION OF THE APPOINTMENT OF RBSM AS AUDITORS, AND THE
ADOPTION OF THE 2008 STOCK INCENTIVE PLAN.
HOW
DO I VOTE BY PROXY?
You may
vote your shares by mail by marking, signing and dating the enclosed proxy card
as promptly as possible and returning it in the enclosed postage-paid envelope.
Proxies should
not
be sent by the stockholder to the Company, but to Index Oil and Gas Inc. c/o
Continental Stock Transfer & Trust Company, Proxy Department, 17 Battery
Place, New York, NY 10004 USA. A pre-addressed, postage-paid envelope is
provided for this purpose. You may also vote your shares via the dedicated
internet website or by telephone via a dedicated telephone number in accordance
with the instructions set forth on your Proxy Card.
For each
item of business, you may vote “FOR” or “AGAINST" or you may “WITHHOLD” or
“ABSTAIN” from voting.
If you
return your signed proxy card but do not specify how you want to vote your
shares, we will vote them:
·
“FOR” the election of the nominees for directors to the board of
the company
·
“FOR” the ratification of the appointment of RBSM LLP as our
independent auditors; and
·
“FOR” the adoption of the 2008 Stock Incentive
Plan.
If any
matters other than those set forth above are properly brought before the Annual
General Meeting, the individuals named in your proxy card may vote your shares
in accordance with their best judgment.
HOW
DO I CHANGE OR REVOKE MY PROXY?
You can
change or revoke your proxy at any time before it is voted at the Annual General
Meeting by:
1.
Submitting another proxy by mail with a more recent date than that of the proxy
first given;
2.
Sending written notice of revocation to Index Oil and Gas Inc. c/o Continental
Stock Transfer & Trust Company, Proxy Department, 17 Battery Place, New
York, NY 10004 USA; or
3.
Attending the Annual General Meeting and voting in person. If your shares are
held in the name of a bank, broker or other holder of record, you must obtain a
legal proxy, executed in your favor, from the holder of record to be able to
vote at the meeting. Contact your bank, broker or other holder of record well in
advance of the meeting for specific information on how to obtain a legal proxy
or to attend and vote your shares at the meeting.
WHAT
CONSTITUTES A "QUORUM" FOR THE ANNUAL GENERAL MEETING?
A
majority of the outstanding shares of the Company’s common stock entitled to
vote at the Annual General Meeting present or represented by proxy, constitutes
a quorum. A quorum is necessary to conduct business at the Annual General
Meeting. You will be considered part of the quorum if you have voted by proxy.
Abstentions, broker non-votes and votes withheld from director nominees count as
"shares present" at the Annual General Meeting for purposes of determining a
quorum. However, abstentions and broker non-votes do not count in the voting
results. See below under “How Many Votes Are Required?” for a discussion of
broker non-votes. If a quorum is not present, in person or by proxy, the
majority of the votes present may vote to adjourn the meeting to a later date at
which a quorum is present.
HOW
MANY VOTES ARE REQUIRED?
·
An affirmative vote of a plurality of the votes cast is required
for the election of nominees for directors at the Annual General Meeting,
provided that a quorum is present, in person or by proxy, at the Annual General
Meeting.
·
The ratification of the directors’ appointment of RBSM LLP as the
Company's independent auditors will require an affirmative vote of the majority
of the votes cast in person or by proxy, provided that a quorum is present at
the Annual General Meeting.
·
The adoption of the 2008 Stock Incentive Plan will require an
affirmative vote of the majority of the votes cast in person or by proxy,
provided that a quorum is present at the Annual General
Meeting.
The
record date with respect to this solicitation is October 21, 2008. All holders
of record of our common stock as of the close of business on October 21, 2008
are entitled to vote at the meeting and any adjournment or postponement thereof.
As of October 21, 2008, we had 71,510,889 shares of common stock outstanding.
Each share of common stock is entitled to one vote. Our stockholders do not have
cumulative voting rights.
With the
election of directors by a plurality, the director nominee with the most
affirmative votes for a particular slot is elected for that slot. Any shares not
voted (whether by withholding the vote, broker non-vote or otherwise) have no
impact in the election of directors, except to the extent that the failure to
vote for an individual results in another candidate receiving a larger number of
votes in person and represented by proxy at the meeting.
Our
bylaws provide that, on all other matters, except to the extent otherwise
required by our certificate of incorporation, our bylaws or applicable law, the
affirmative vote of a majority of the shares of common stock present in person
or represented by proxy at the meeting and voting on the matter is required for
approval. Therefore, the ratification of the appointment of RBSM as our
independent auditor and the approval of the 2008 Stock Incentive Plan require
the affirmative vote of a majority of the shares of common stock present in
person or represented by proxy at the meeting and voting on the matter.
Accordingly, assuming there is a quorum present and that the total votes cast at
the annual meeting or our stockholders represent more than 50% of all our common
stock entitled to vote at the meeting, the failure of an Index stockholder to
vote will have no effect in determining whether this proposal is
approved.
If you
hold shares beneficially in street name and do not provide your broker with
voting instructions, your shares may constitute “broker non-votes.” Generally,
broker non-votes occur on a matter when a broker is not permitted to vote on
that matter without instructions from the beneficial owner and instructions are
not given. Brokers that have not received voting instructions from their clients
cannot vote on their clients’ behalf on “non-routine” proposals, although they
may vote their clients’ shares on “routine proposals” such as the election of
directors and the ratification of the appointment of independent auditors. In
tabulating the voting result for any particular proposal, shares that constitute
broker non-votes are not considered voting on that proposal. Thus, broker
non-votes will not affect the outcome of any matter being voted on at the
meeting, assuming that a quorum is obtained, except to the extent of reducing
the number of “for” votes for any proposal. Abstentions are counted as “shares
present” at the meeting for purposes of determining the presence of a quorum and
with respect to any matters being voted upon at the meeting. Accordingly,
abstentions will have no effect on the outcome of the election of directors,
assuming the presence of a quorum, but, with respect to any other proposal,
including the ratification of the appointment of RBSM and the adoption of the
2008 Stock Incentive Plan, will operate to prevent the approval of such proposal
to the same extent as a vote against such proposal. Proxies received but marked
as abstentions and broker non-votes will be counted for quorum
purposes.
WHO
PAYS FOR THE SOLICITATION OF PROXIES?
We will
pay the cost of preparing, printing and mailing material in connection with this
solicitation of proxies. We will, upon request, reimburse brokerage firms, banks
and others for their reasonable out-of-pocket expenses in forwarding proxy
material to beneficial owners of stock or otherwise in connection with this
solicitation of proxies. Proxies may be solicited by officers, directors and
employees personally, by mail or be telephone, facsimile transmissions or other
electronic means.
WHEN ARE STOCKHOLDER
PROPOSALS FOR THE 2009 ANNUAL GENERAL MEETING DUE?
Any
proposal by a shareholder intended to be presented at the annual meeting of
shareholders must be received at our offices a reasonable amount of time prior
to the date on which the information or proxy statement for that meeting is
mailed to shareholders in order to be included in the information or proxy
statement relating to that meeting. See “Submission of Stockholder Proposals for
our 2009 Annual General Meeting of Shareholders” on page 26 for more
information.
STOCKHOLDER
DIRECT COMMUNICATION WITH THE BOARD
In the
event a stockholder wishes to have direct communication with the Board, the
stockholder is encouraged to call or email the Chairman at +44 7860 104 136 or
dan.murphy@indexoil.com
.
PROPOSALS
FOR CONSIDERATION AT THE ANNUAL GENERAL MEETING OF STOCKHOLDERS
PROPOSAL
1:
TO
ELECT THE NOMINEES FOR DIRECTORS TO THE COMPANY’S
BOARD
(ITEM
1 ON THE PROXY CARD:
ELECTION
OF DIRECTORS)
Our
bylaws specify that we shall not have less than one (1) nor more than nine (9)
directors, and each director holds office until the annual general meeting of
stockholders at which such director class is up for re-election and until the
director’s successor is duly elected and qualified, or until such director’s
earlier death, resignation or removal. As of the date of this proxy statement,
our board of directors consists of four (4) directors, one (1) of whom has been
determined to be an independent director in accordance with the corporate
governance rules of the American Stock Exchange (“AMEX”), which Index uses as a
guideline and which are followed even though Index currently is not a listed
company on AMEX. As discussed more fully under “Our Board of
Directors and Its Committees” starting on page 6, all of our current directors
have been nominated for reelection at the 2008 annual general meeting of our
stockholders.
If any
nominee should for any reason become unable to serve prior to the date of the
annual general meeting in lieu of our annual meeting, the shares represented by
all valid proxies will be voted for the election of such other person as the
Board may designate as a replacement following recommendation by our Board,
acting as a nominating and corporate governance committee, or the Board may
reduce the number of directors to eliminate the vacancy.
Directors
are elected by a plurality vote of the shares present at the annual general
meeting, meaning that the director nominee with the most affirmative votes for a
particular slot is elected for that slot. Any shares not voted (whether by
withholding the vote, broker non-vote or otherwise) have no impact in the
election of directors, except to the extent the failure to vote for an
individual results in another candidate receiving a larger number of votes in
person and represented by proxy at the annual general meeting. If you sign your
Proxy Card, but do not give instructions with respect to the voting of
directors, your shares will be voted for all of the nominees for the Board of
Directors.
Additional
information regarding all of our directors can be found under “Our Board of
Directors and Its Committees” starting on page 6 of this proxy statement, under
“Director Compensation” starting on page 11 and under “Security Ownership of
Certain Beneficial Owners and Management and Related Stockholder Matters”
starting on page 13.
THE
BOARD OF DIRECTORS UNANIMOUSLY PROPOSES AND RECOMMENDS THAT YOU VOTE “FOR” EACH
OF THE NOMINEES FOR THE
BOARD
OF DIRECTORS.
Our
Board of Directors and Its Committees
Our
bylaws specify that the Company shall not have less than one (1), nor more than
nine (9) directors. The Board currently has four (4) directors whose details are
below. During fiscal year 2008, the Index Board of Directors met four (4) times.
Attendance by all board members at the Board meetings was greater than 75%
during fiscal year ending March 31, 2008.
A plan
has been presented to the Board, which the Board has approved, to develop the
Board to be a majority of independent directors. The Board is considering the
time-table that the plan will be implemented over depending on several factors
such as the rate of Company growth and the timing of our plan to seek listing of
our common stock on a stock exchange.
There is
currently one active committee to the Board; however additional committees are
planned in the future when the Company’s size and complexity and the need to
meet stock exchange and regulatory requirements dictate. The Board of Directors
has agreed the principle of establishing a minimum of four (4) committees, when
the size, complexity, regulatory and exchange requirements dictate it, to
consider and make recommendations to the Board of Directors on various areas of
decision-making and control. The Company plans to evolve the Board
committee structure to:
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Committee
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Current
Status
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Chairman
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Member
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1.
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Remuneration
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Active
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Daniel
Murphy
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David
Jenkins
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2.
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Audit
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Planned
(Priority
1)
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3.
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Nominating
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Planned
(Priority
2)
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4.
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Risk
Management
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Planned
(Priority 3)
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To
be Determined
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Remuneration
Committee
The
Company’s Remuneration Committee, which operates under Board approved Terms of
Reference, acts as the Company’s compensation committee. These terms require the
Committee to be ideally comprised of three (3) independent directors but at a
minimum; one Executive Director and one Independent Director or two (2)
Independent Directors or 2/3rds of the appointed members, whichever is the
greater number. In the event of a two (2) member quorum, a voting majority will
only be achieved by a unanimous vote. A minimum of four (4) meetings per annum
are held. Ad hoc meetings can also be called, as required, at the request of the
Chairman of the Company, a Committee member or the Company’s Chief Executive.
These coincide with annual review of Remuneration Policy, bonus program, salary
review, new stock option programs recommendations/requests and executive
performance reviews. Refer to Appendix A for a copy of the Remuneration
Committee’s Terms of Reference. The committee independently met three (3) times
so far in this calendar year and has also had ad hoc meetings to coincide with
certain Board Meetings. All members were in attendance for all of the
meetings.
Audit
Committee
The
Company does not have an audit committee. The full Board of Directors acts as
the audit committee for all purposes relating to communications with the
auditors and responsibility for oversight of the audit. Because the financial
statements of the Company are not overly complex, the Board of Directors
currently does not require a separate audit committee. The Board has not adopted
any written charter governing its activity as the de facto audit committee. The
Board of Directors does not currently contain an independent financial expert.
Andrew Boetius, our Chief Financial Officer, although not independent, acts as
the Board’s financial expert.
Nominating
Committee
The
Company has prepared and sent to the Board of Directors for review and approval
at its next meeting a Nominating Committee Policy and Procedure for use in the
selection and appointment of new directors. Although there currently is not
an established Nominating Committee, the Board of Directors has agreed to carry
out any future Independent Director selection and appointment in general
accordance with the draft or Approved Policy and Procedures that is in place at
the time. When appointing new Directors, Index looks for individuals
who are leaders in their field and who have a commitment to excellence. Several
of the Company’s current Directors have spent their working lives in the oil and
gas industry, and this experience is invaluable to Index. Index also looks for
Directors who have exceptional qualifications or experience in other relevant
areas with a view to ensuring that the Board consists of the best available
talent in as many relevant areas as possible.
Risk
Management Committee
The
Company exists to provide value for its stockholders
but
recognizes that management is to determine how much uncertainty to accept as it
strives to grow stockholder value. It will be the responsibility of the Risk
Management Committee to monitor and advise the Board on matters that relate to
the risks inherent to the oil and gas business as well as securities markets and
related global economic matters. The purpose of the committee is to guide the
Board and management so that value is maximized by management through the
setting of strategy and objectives which strike an optimal balance between
growth and return, goals and related risks. The committee will focus on the
business risks associated with the Company’s finance, investment, operations,
regulatory compliance and commercial transactions to ensure that action is taken
by the Company to mitigate those risks to the best of its ability.
Executive
Officers and Directors
Name
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Age
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Position(s)
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Director
or Officer Since
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Lyndon
West (1)
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49
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Director,
President and Chief Executive Officer
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January
2006
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Andrew
Boetius (1)
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45
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Director,
Treasurer and Chief Financial Officer (Principal Accounting Officer and
Principal Financial Officer)
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January
2006
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Daniel
Murphy (1)
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65
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Chairman
of the Board of Directors and Director
Chairman
of the Remuneration Committee
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January
2006
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David
Jenkins (1)
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58
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Director,
Remuneration Committee Member
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January
2006
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Ronald
Bain (2)
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62
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Chief
Operating Officer
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July
2008
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(1)
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Each
of these respective directors and officers of the Company was appointed to
his position effective as of January 20,
2006.
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(2)
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Ron
Bain was initially appointed as Senior Vice President of Exploration and
Production on February 1, 2008 and was appointed to his current position
as Chief Operating Officer effective as of July 1,
2008.
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Background
of Executive Officers and Directors
The
following sets forth biographical information about our executive officers and
directors as provided to us by each respective individual:
Mr.
Lyndon West
, who founded Index Oil & Gas Limited (“Index Ltd”) in
February of 2003, has been the Managing director of Index Ltd since February
2003 and the Chief Executive Officer (“CEO”) of the Company since January 20,
2006 and President since August 12, 2008. Mr. West has 25 years experience in
the oil and natural gas Industry. Prior to the foundation of Index Ltd, Mr. West
was New Venture Services Practice Director and previously CEO of the
International Division of IHS Energy where he was responsible for the
development of business relationships worldwide. Mr. West joined IHS Energy from
IEDS Limited, a venture capital backed company he co-founded and managed from
start-up through to the eventual acquisition by IHS Energy in
1998.
Mr.
Andrew Boetius
, a founding director of Index Ltd, has been the Finance
Director of Index Ltd since February 2003 and the Chief Financial Officer
(“CFO”) and a Director of the Company since January 20, 2006 and Treasurer since
August 12, 2008. Mr. Boetius, a qualified UK Chartered Management Accountant,
has spent the majority of his career in the exploration, production, and energy
sectors. He held a number of roles during a 14 year career with Amerada Hess
Corporation, both in its upstream and downstream businesses. In his last role
Mr. Boetius held the role of Finance Director for its United Kingdom (“UK”)
energy marketing and trading business, and was a member of the management team
that successfully sold this division to the TXU group. Prior to joining Index he
performed an interim management role for Fortum Group, successfully achieving
the divestment of their UK energy marketing business.
Mr.
Daniel Murphy
has been the Chairman of the Board of Directors
(“Chairman”) and Secretary of the Company since January 20, 2006. Mr. Murphy
joined Index in early 2005 and shortly afterward, was appointed Chairman of
Index Ltd and then, Chairman of Index in January 2006. Mr. Murphy has
over 40 years of experience in energy sector industries. He has held management
and executive positions (career roles have included Chairman, CEO, President,
Company and Non-executive Director and Project Director) in major international
operating and contracting companies such as Shell Oil, IIAPCO, Occidental
Petroleum, Intrepid Energy (North Sea) Ltd, Santa Fe International, Brown &
Root, Kvaerner H&G, and Aker Maritime (UK) Ltd. Mr. Murphy’s worldwide
operational experience includes the Gulf of Mexico, South East Asia, Middle
East, South America, North Africa, Poland and the North Sea. Until the sale of
Intrepid Energy (North Sea) Ltd. in 2004, Mr. Murphy served as Engineering and
Production Director for over seven years where he was instrumental in the
development and delineation of the giant Buzzard field, a 500 million plus
(recoverable) barrel oil find.
Mr.
David Jenkins
has been a founding Director of Index Ltd and the Company
since January 20, 2006. Mr. Jenkins has 34 years experience in global
hydrocarbon exploration. He joined Conoco in 1974 where he was instrumental in
developing the integrated exploration process that resulted in Conoco being an
industry leader in terms of commercial success rate and the number of
significant discoveries of a size greater than 100 million barrels of oil
equivalent. In addition Mr. Jenkins was responsible for the analysis
and opinion that led to major discoveries in the Gulf of Paria (Venezuela) and
the Cuu Long basin in Vietnam. Projects for ConocoPhillips included the
evaluation and ranking of over 50 basins and 100+ plays to develop a high-grade,
focused exploration program. Mr. Jenkins left ConocoPhillips in 2002 and stared
his own consultancy company, Exploration Performance LLC, and provided technical
advice to many large E&P companies and to Index Ltd from its inception. He
joined the Board of Index Ltd in 2003. From 2005 to May 2008, Mr. Jenkins headed
up the International New Ventures Group within Marathon Oil.
Dr.
Ron Bain
spent much of his 34 year career with Anadarko Petroleum
Corporation. From 1983 to his retirement from Anadarko in 2001, Dr. Bain held
numerous management positions in technology and exploration, both in the
domestic United States and finally as Manager of International Exploration.
Prior to joining Index, from January 2004 to December 2007, Dr. Bain was
Corporate Exploration Advisor and Vice President of Geosciences of Houston-based
Endeavour International Corporation, an independent energy company established
to find and develop oil and gas reserves in the North Sea. Dr. Bain provided
independent risk assessment of drilling opportunities and was responsible for
characterizing exploration inventories. Dr. Bain is President of ConRon
Consulting Inc., a consultancy he founded in 2002 specializing in strategic
decision support and geotechnologies.
All
current directors hold office until the next annual meeting of our stockholders
and until their successors have been duly elected and qualified or until such
director’s earlier death, resignation or removal. Our executive officers are
elected by, and serve at the designation and appointment of the Board of
Directors. Some of our directors and executive officers also serve in various
capacities with our subsidiaries.
Family
Relationships
There are
no family relationships among any of our directors and executive
officers.
Code
of Ethics
On March
31, 2006, our Board of Directors adopted a formal Code of Ethics and Business
Conduct that applies to its Chief Executive Officer and Chief Financial Officer,
as well as to the directors, officers and employees of the Company. A copy of
our Code of Ethics was filed as Exhibit 14.1 to its Annual Report filed with the
SEC on Form 10-K for year ending March 31, 2008 and is available on our website
at
www.indexoil.com
under “Investor Relations - Corporate Governance.”
Section
16(a) Beneficial Ownership Compliance
Section
16(a) of the Securities Exchange Act of 1934 requires our directors and
executive officers and persons who beneficially own more than ten percent of a
registered class of our equity securities to file with the SEC initial reports
of ownership and reports of change in ownership of common stock and other equity
securities of our Company. Officers, directors and greater than ten percent
stockholders are required by SEC regulations to furnish us with copies of all
Section 16(a) forms they file. To our knowledge, the following persons have
failed to file, on a timely basis, the identified reports required by Section
16(a) of the Exchange Act for the fiscal year ending March 31,
2008:
Name
and Relationship(1)
|
Number
of Late Reports
|
Transactions
Not Timely Reported
|
Known
Failures to File a Required Form
|
|
|
|
|
Lyndon
West
|
0
|
0
|
0
|
Andrew
Boetius
|
0
|
0
|
0
|
Daniel
Murphy
|
0
|
0
|
0
|
David
Jenkins
|
0
|
0
|
0
|
|
|
|
|
(1)
Ronald A. Bain became our Chief Operating Officer on July, 1 2008 and
began filing Section 16 reports from that
date.
|
COMPENSATION
DISCUSSION AND ANALYSIS
Executive
Compensation
The
following table sets forth information concerning the total compensation that
the Company has paid or that has accrued on behalf of our chief executive
officer, our chief financial officer and other named executive officers and
directors with annual compensation exceeding $100,000 during the fiscal year
ended March 31, 2008.
SUMMARY
COMPENSATION TABLE
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($) (5)
|
Stock
Awards ($)
|
Option
Awards ($)
|
Non-Equity
Incentive Plan Compensation ($)
|
Change
in Pension Value and Non-Qualified Deferred Compensation Earnings
($)
|
All
Other Compensation ($) (1)
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
Lyndon
West
CEO
and Director (2)
|
2008
|
169,930
(4)
|
--
|
--
|
--
(5)
|
--
|
--
|
16,993
(6)
|
186,923
|
|
2007
|
118,501
(4)
|
73,553
|
--
|
--
(5)
|
--
|
--
|
--
|
192,054
|
Andrew
Boetius
CFO
and Director (3)
|
2008
|
158,603
(4)
|
--
|
--
|
--
(5)
|
--
|
--
|
15,860
(6)
|
174,463
|
|
2007
|
114,415
(4)
|
68,649
|
--
|
--
(5)
|
--
|
--
|
--
|
183,064
|
Daniel
Murphy
|
2008
|
158,603
(4)
|
--
|
--
|
--
(5)
|
--
|
--
|
20,267
(6)
|
178,870
|
Chairman
|
2007
|
114,415
(4)
|
68,649
|
--
|
--
(5)
|
--
|
--
|
--
|
183,064
|
(1)
|
With
the exception of reimbursement of expenses incurred by our named executive
officers during the scope of their employment, none of the named executive
officers received any other compensation, perquisites or personal benefits
in excess of $10,000 in the year ended March 31,
2007.
|
(2)
|
Appointed
as the Company’s CEO and a director in January of
2006.
|
(3)
|
Appointed
as the Company’s CFO and a director in January of
2006.
|
(4)
|
From
April 1, 2006 to October 30, 2006, Mr. West, Mr. Boetius and Mr. Murphy
received an annual salary of $98,070 each. Effective as of November 1,
2006, their annual salaries were increased to $147,105, $137,298 and
$137,298, respectively. On April 1, 2007, their annual salaries increased
to 169,930, $158,603 and $158,603, respectively. The amounts
stated for fiscal year 2007 (ended March 31, 2007) represent their
aggregate salaries paid based on a pro rata basis of the applicable annual
base salary amounts.
|
(5)
|
The
remaining 370,916 stock options out of the original grant by the Company
of 1,482,584 stock options made on January 20, 2006 to each of Mr. West
and Mr. Boetius vested during the fiscal year ended March 31, 2008. The
remaining 277,717 stock options out of the original grant by the Company
of 1,110,870 stock options made on January 20, 2006 to Mr. Murphy vested
during the fiscal year ended March 31, 2008. During the fiscal
year ended March 31, 2007, 370,916 stock options out of the original grant
by the Company of 1,482,584 stock options made on January 20, 2006 to each
of Mr. West and Mr. Boetius vested. In addition, 277,717 stock options out
of the original grant by the Company of 1,110,870 stock options made on
January 20, 2006 to Mr. Murphy vested during the fiscal year ended March
31, 2007.
|
(6)
|
Represents
an annual pension contribution equal to ten percent of base annual salary
for Mr. West, Mr. Boetius and Mr. Murphy. It also includes a
pro rata portion for seven months of annual contribution by the Company to
Mr. Murphy’s medical and life insurance in the combined amount of
$4,407.
|
|
All
2008 and 2007 British pound-denominated executive compensation amounts
were translated into U.S. dollars based on March 31, 2008 and March 30,
2007 exchange rates of U.S. $1.9875 and $1.9614 to one British pound,
respectively.
|
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
The
following table sets forth information for the named executive officers and
directors regarding the number of shares subject to both exercisable and
unexercisable stock options, as well as the exercise prices and expiration dates
thereof, as of March 31, 2008:
|
Option
Awards
|
Stock
Awards
|
|
|
|
Name
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
(#)
|
Market
Value
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
($)
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
(#)
|
Equity
Incentive
Plan
Awards:
Market
or Payout
Value
of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
($)
|
|
|
|
|
|
|
|
|
|
|
Lyndon
West
|
1,482,584
|
--
|
--
|
0.35
|
1/20/11
|
N/A
|
N/A
|
N/A
|
N/A
|
|
|
|
|
|
|
|
|
|
|
Andrew
Boetius
|
1,482,584
|
--
|
--
|
0.35
|
1/20/11
|
N/A
|
N/A
|
N/A
|
N/A
|
|
|
|
|
|
|
|
|
|
|
Daniel
Murphy
|
1,110,871
|
|
--
|
0.35
|
1/20/11
|
N/A
|
N/A
|
N/A
|
N/A
|
|
|
|
|
|
|
|
|
|
|
David
Jenkins
|
301,375
|
--
|
--
|
0.35
|
1/20/11
|
N/A
|
N/A
|
N/A
|
N/A
|
|
|
|
|
|
|
|
|
|
|
DIRECTOR
COMPENSATION
Name
(a)
|
Fees
Earned or Paid in Cash
($)
(b)
|
Stock
Awards
($)
(c)
|
Option
Awards
($)
(d)(1)
|
Non-Equity
Incentive Plan Compensation
($)
(e)
|
Change
in Pension Value and Nonqualified Deferred Compensation
Earnings
(f)
|
All
Other Compensation
($)
(g)
|
Total
($)
(h)
|
Lyndon
West
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
Andrew
Boetius
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
Daniel
Murphy
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
John
Williams
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
David
Jenkins
|
18,900
(1)
|
--
|
--
|
--
|
--
|
--
|
18,900
|
|
|
|
|
|
|
|
|
(1)
|
The
salary for Mr. Jenkins in the fiscal year ending March 31, 2008 was $1,575
per month.
|
With the
exception of David Jenkins, we do not currently pay our directors for attending
meetings of our Board of Directors, although we expect to adopt a policy for
compensating directors for attending meetings of our Board of Directors in the
future. Several of our directors, who are also our officers, receive
compensation for the services rendered to us pursuant to their employment
agreements entered into with either the Company or Index Ltd, our wholly owned
subsidiary.
Employment
Agreements
Index Ltd
had initially entered into employment and non-executive agreements, with the
initial directors of Index Ltd, which became effective as of January 1, 2006.
Subsequently, Mr. Jenkins’ non-executive agreement was assigned and transferred
from Index Ltd, to Index. In connection with these agreements, Mr. West, Mr.
Boetius, Mr. Murphy and Mr. Scrutton (until December 2007, deceased) served as
directors and/or officers of our Company and are compensated for the provision
of services to us pursuant to the agreements entered into with Index
Ltd. Mr. Jenkins serves as a non-executive director of our Company
and is compensated for the provision of his services to us pursuant to his
employment agreement as assigned by Index Ltd. The following are the material
terms of these agreements:
|
•
|
Full
time Employment Agreements with Mr. West and Mr. Boetius. The agreements
initially provided for Mr. West and Mr. Boetius to receive each an annual
salary of $90,909 per year. Effective as of April 1, 2007, Mr. West’s
annual salary was $169,930 and Mr. Boetius’ annual salary was
$158,600. On April 1, 2008, Mr. West’s and Mr. Boetius’
salaries were increased to $187,097 and $171,824 respectively. Mr. West’s
and Mr. Boetius’ employment agreements provide for continuous employment
without a set date of termination. Index Ltd may terminate Mr. West’s or
Mr. Boetius’ employment when Mr. West or Mr. Boetius, respectively reach
such age as Index’s Board of Directors determines as the appropriate
retirement age for the senior employees of our Company. Mr. West and Mr.
Boetius may terminate their employment with Index Ltd upon not less than
three (3) months notice. Additionally, Index Ltd may terminate Mr. West’s
and/or Mr. Boetius’ employment agreement upon not less than six (6) months
notice. Pursuant to Termination of Control protection, upon termination of
Mr. West’s or Mr. Boetius’ employment due to a change of control of Index
Ltd, Mr. West and/or Mr. Boetius are entitled to severance pay. The
severance pay is equal to four times the amount of Mr. West’s or Mr.
Boetius’ compensation package, respectively, as defined in the
agreements;
|
|
•
|
A
full time Employment Agreement with Mr. Murphy. The agreement initially
provided for Mr. Murphy to receive an annual salary of $75,000 per year,
which effective as of April 1, 2007, was $158,600. On April 1, 2008 Mr.
Murphy’s salary was increased to $171,824. On July 1, 2008 Mr. Murphy
reduced his commitment to the Company to 3 days per week and accordingly
his annual salary was reduced to $103,930. Mr. Murphy’s is employed
continuously by Index Ltd without a set date of termination; however, his
employment is terminated immediately upon his death or permanent
disability. Index Ltd may also terminate Mr. Murphy’s employment upon six
months notice. Mr. Murphy may terminate his employment upon three months
notice to Index Ltd. Pursuant to his employment agreement,
Index Ltd provides Mr. Murphy with Directors Liability Insurance and
contributes to his private pension plan. Furthermore, the employment
agreement provides for a Termination of Control Protection which entitles
Mr. Murphy to receive an amount equivalent to four times his annual
compensation amount; and
|
|
•
|
A
non executive director Service Agreement with Mr. Jenkins, whose
non-executive director Service Agreement was subsequently assigned to
Index Oil and Gas Inc. by Index Oil & Gas Limited. Under
the Agreement during the year ended March 31, 2008 Mr. Jenkins received a
salary of $1,575 per month. Effective April 1, 2008, Mr. Jenkins’ salary
was increased to $1,733 per month. Mr. Jenkins’ employment is
terminated immediately upon his death or permanent disability. Mr.
Jenkins’ employment may also be terminated by Index or Index Ltd, as
applicable, upon three months written notice. Mr. Jenkins may terminate
his employment upon three months written notice to the applicable entity.
Pursuant to his employment agreement, as an alternative to serving notice,
Index or Index Ltd, as applicable, may, in its absolute discretion,
terminate his employment without prior notice and make a payment in
compensation for loss of employment equal to the salaries which he would
otherwise have received during his notice period. Furthermore, his
employment agreement provides for a Termination of Control Protection
which entitles Mr. Jenkins to achieve vesting of his unvested stock
options up to the date of
termination.
|
|
•
|
Effective
July 1, 2008, Ronald Bain Ph.D. was appointed to the newly created
position of Chief Operating Officer of Index. Dr. Bain joined
the Company as its Senior Vice President of Exploration and Production on
February 1, 2008. Dr. Bain provides exploration, production and
strategic business services to the Company pursuant to the terms of an
Agreement for Exploration, Production and Strategic Services between the
Company and ConRon Consulting Inc., as amended by Addendum #1 dated June
1, 2008 (the “Consulting
Agreement”).
|
The
Company and Dr. Bain entered into a second amendment to the Consulting Agreement
dated as of July 1, 2008 to provide that Dr. Bain will serve as the Chief
Operating Officer of the Company. The remaining terms and conditions
of the Consulting Agreement did not change. Under the Consulting
Agreement, Dr. Bain receives $2,000 per day, to a maximum of 10 working days
equivalent per calendar month, and any additional days will be supplied at a fee
of $1,500 per working day equivalent supplied per month. Dr. Bain
also receives 715 shares of common stock of the Company for each day worked at
the rate of $2,000 per day and 1,250 shares of common stock of the Company for
each day worked at the rate of $1,500 per day. The term of the
Consulting Agreement expires on May 30, 2009.
Certain
compensation amounts are based on salaries that are to be paid in British
pounds. All year end 2008 and 2007 British pound-denominated executive
compensation amounts were translated into U.S. dollars based on March 31, 2008
and March 31, 2007 exchange rates of U.S. $1.9875 and $1.9614 to one British
pound, respectively. The April 1, 2008 and July 1, 2008 British pound dominated
executive compensation amounts were translated into U.S. dollars based on
exchange rates of U.S. $1.9754 and $1.9914 to one British pound,
respectively.
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Daniel
Murphy and David Jenkins served as members of our Remuneration Committee, which
is our compensation committee, during the fiscal year that ended March 31, 2008.
Lyndon West, Andrew Boetius and Daniel Murphy, who are officers of Index, all
participated in discussions regarding the remuneration of our executive
officers. During fiscal year ended March 31, 2008, none of our
executive officers served as a director or as a member of the compensation
committee of a company which employs any of our directors, and none of our
executive officers served as a director or as a member of the compensation
committee of a company whose executive officers served as a director of
Index.
COMPENSATION
COMMITTEE REPORT
Our
Remuneration Committee, which is our compensation committee, has reviewed and
discussed the Compensation Discussion and Analysis required by Item 402(b)
of Regulation S-K, starting on page 9 of this proxy statement, with management.
Based on our review and discussion with management, we recommended to the Board
of Directors that the Compensation Discussion and Analysis be included in this
proxy statement.
Remuneration
Committee
Daniel
Murphy
David
Jenkins
Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
The
following table sets forth the number of and percent of the Company's common
stock beneficially owned by:
|
|
•
|
all
directors and nominees, naming
them,
|
|
|
•
|
our
named executive officers,
|
|
|
•
|
our
directors and executive officers as a group, without naming them,
and
|
|
|
•
|
persons
or groups known by us to own beneficially 5% or more of our Common Stock
or our Preferred Stock having voting
rights:
|
The
percentages in the table have been calculated on the basis of treating as
outstanding for a particular person, all shares of our capital stock outstanding
on September 30, 2008, and all shares of our common stock issuable to that
person in the event of the exercise of outstanding options and other derivative
securities owned by that person which are exercisable within 60 days of
September 30, 2008. Except as otherwise indicated, the persons listed below have
sole voting and investment power with respect to all shares of our capital stock
owned by them.
Name
and Address of Owner
|
Title
of Class
|
Capacity
with Company
|
Number
of Shares Beneficially Owned
(1)
(2)
|
Percentage
of Class
|
|
|
|
|
|
Lyndon
West
c/o
Index Oil & Gas Ltd.,
Lawrence
House, Lower Bristol Road,
Bath
BA2 9ET, United Kingdom
|
Common
Stock
|
CEO
and Director
|
5,801,671
(3)
|
7.92%
|
|
|
|
|
|
Andrew
Boetius
c/o
Index Oil & Gas Ltd.,
Lawrence
House, Lower Bristol Road,
Bath
BA2 9ET, United Kingdom
|
Common
Stock
|
Chief
Financial Officer and Director
|
2,740,553
(4)
|
3.75%
|
|
|
|
|
|
Daniel
Murphy
c/o
Index Oil & Gas Ltd.,
Lawrence
House, Lower Bristol Road,
Bath
BA2 9ET, United Kingdom
|
Common
Stock
|
Chairman
of the Board and Secretary
|
1,548,924
(5)
|
2.13%
|
|
|
|
|
|
David
Jenkins
c/o
Index Oil & Gas Ltd.,
Lawrence
House, Lower Bristol Road,
Bath
BA2 9ET, United Kingdom
|
Common
Stock
|
Director
|
1,303,228
(6)
|
1.82%
|
|
|
|
|
|
Douglas
Wordsworth
44
Heath Lane,
Little
Sutton, Ellesmere Port, Cheshire, UK CH66 NT
|
Common
Stock
|
--
|
3,829,433
(7)
|
5.35%
|
|
|
|
|
|
Ronald
A Bain
9406
Fenchurch Drive
Houston,
Texas 77379
|
Common
Stock
|
Chief
Operating Officer
|
98,152
(8)
|
0.14%
|
|
|
|
|
|
All
officers and Directors as a Group (5 persons)
|
Common
Stock
|
--
|
11,492,528
|
15.08%
|
(1)
|
This
column represents the total number of votes each named stockholder is
entitled to cast on matters presented to the stockholders for a
vote.
|
(2)
|
Applicable
percentage ownership is based on 71,510,889 shares of Common Stock
outstanding as of September 30, 2008, together with securities exercisable
or convertible into shares of Common Stock within 60 days of September 30,
2008, for each stockholder. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission and
generally includes voting or investment power with respect to securities.
Shares of Common Stock that are currently exercisable or exercisable
within 60 days of September 30, 2008, are deemed to be beneficially owned
by the person holding such securities for the purpose of computing the
percentage of ownership of such person, but are not treated as outstanding
for the purpose of computing the percentage ownership of any other
person.
|
(3)
|
Includes
(i) warrants to purchase 266,380 shares of Common Stock of the Company
exercisable at $0.14 per share, and (ii) options to purchase 1,482,584
shares of Common Stock of the Company exercisable at $0.35 per share,
which are presently exercisable or exercisable within 60
days.
|
(4)
|
Includes
(i) warrants to purchase 124,488 shares of Common Stock of the Company
exercisable at $0.14 per share, and (ii) options to purchase 1,482,584
shares of Common Stock of the Company exercisable at $0.35 per share,
which are presently exercisable or exercisable within 60
days.
|
(5)
|
Includes
(i) options to purchase 1,110,871 shares of Common Stock of the Company
exercisable at $0.35 per share, which are presently exercisable or
exercisable within 60 days.
|
(6)
|
Includes
(i) warrants to purchase 12,539 shares of Common Stock of the Company
exercisable at $0.14 per share, and (ii) options to purchase 200,112
shares of Common Stock of the Company exercisable at $0.35 per share,
which are presently exercisable or exercisable within 60
days.
|
(7)
|
Includes
warrants to purchase 42,126 shares of Common Stock of the Company
exercisable at $0.14 per share which are presently exercisable or
exercisable within 60 days.
|
(8)
|
Represents
shares issuable under the consulting agreement with ConRon Consulting Inc.
through September 30, 2008.
|
2006
Incentive Stock Option Plan
On March
14, 2006, and effective as of January 20, 2006, we adopted the 2006 Incentive
Stock Option Plan (the “Plan”) providing for the issuance of up to 5,225,000
shares of Common Stock underlying the incentive stock options, to be awarded to
our Company’s and/or its subsidiaries’ officers, directors, employees and
consultants. Pursuant to the Plan, (i) during the 2006 fiscal year, we granted
options to purchase an aggregate of 4,577,526 shares of our Common Stock
exercisable at $0.35 per share to the newly appointed directors and officers
that held options to purchase ordinary shares of Index Ltd prior to the
completion of the reverse merger, as well as to our newly appointed directors
and officers; (ii) during the 2007 fiscal year, we granted options to purchase
500,000 shares of our Common Stock exercisable at $1.42 per share to a former
executive officer, of which 250,000 options to purchase shares of our Common
Stock expire on July 31, 2008 and 250,000 options to purchase shares of our
Common Stock were forfeited upon his resignation effective November 1, 2007; and
(iii) during the 2008 fiscal year, we granted options to purchase 375,000 shares
of our Common Stock to employees and consultants exercisable at prices ranging
from $0.51 to $0.83. The total number of shares that have been granted and
awarded to October 21, 2008 under the plan is 5,080,026 shares of which
4,952,526 are unexercised options. This results in only 144,974 shares left in
the current plan for future incentive purposes.
The
principal terms and conditions of the stock options granted under the Plan are
that vesting of the options granted occurs in three stages (unless otherwise
agreed to by the board of directors): (1) 50% on the date of the grant; (2) 25%
on the first anniversary of the grant date; and (3) 25% on the second
anniversary of the grant date. The stock options granted under the Plan are
generally non transferable other than to a legal or beneficial holder of the
options upon the option holder’s death. The rights to vested but unexercised
stock options cease to be effective: (1) 18 months after death of the stock
options holder; (2) 6 months after change of control of the Company; 12 months
after loss of office due to health related incapacity or redundancy; or (5) 12
months after the retirement of the options holder from a position with
Index.
Of the
options to purchase an aggregate of 4,952,526 shares of Common Stock that were
granted and are currently outstanding under the Plan, the following stock
options have been granted to our directors and/or officers:
Lyndon
West
|
1,482,584
options
|
Andrew
Boetius
|
1,482,584
options
|
Daniel
Murphy
|
1,110,871
options
|
David
Jenkins
|
200,112
options
|
Stock
Grants
Effective
as of January 20, 2006, we granted bonus awards, in the form of shares of our
common stock as follows: 101,265 to Mr. Lyndon West and 101,264 to each of
Messrs. Andrew Boetius and David Jenkins, in consideration of Index Ltd reaching
certain performance objectives. On March 31, 2007, in consideration of the
Company reaching certain performance objectives, we granted bonus awards, in the
form of 37,500 shares of our common stock to a former executive officer, of
which 25,000 shares of common stock were forfeited upon his resignation. A grant
of 50,000 shares was awarded to a former executive officer at the time of his
employment as a retention incentive. A grant of 25,000 shares was awarded to a
senior manager at the time of his employment as a retention
incentive.
Certain
Relationships and Related Transactions, and Director Independence
Transactions
with Related Persons
None in
the fiscal year ended March 31, 2008.
Board
of Directors Determination of Independence
Our Board
of Directors has determined that Mr. David Jenkins is an “independent” director.
Although Index currently is not a listed company on any stock exchange, our
Board of Directors uses
the
AMEX company rules as a guideline in its determination of director independence.
Under those rules, no director would qualify as independent unless our Board of
Directors affirmatively determines that the director does not have a
relationship that would interfere with the exercise of independent judgment in
carrying out the responsibilities of a director. Specifically, no director would
qualify as independent if (a) during the past three years, the director or
family member was employed by the Company, (b) the director accepted or has an
immediate family member who accepted any compensation from the Company in excess
of $120,000 during any period of twelve consecutive months within the three
preceding years, or (c) the director is, or has an immediate family member who
is, a current partner of the Company's outside auditor, or was a partner or
employee of the Company's outside auditor who worked on the Company's audit at
any time during any of the past three years.
PROPOSAL
2: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
(ITEM 2
ON THE PROXY CARD)
The Board
of Directors has appointed the firm of RBSM LLP as independent auditors of the
Company for the year ending March 31, 2009, subject to ratification of the
appointment by the Company's stockholders. The Board recommends that our
shareholders ratify this appointment. RBSM LLP has served as the Company's
independent auditors since May 12, 2006. In the event that ratification of this
selection of auditors is not approved by a majority of the shares of Common
Stock voting at the Annual General Meeting in person or by proxy, the Board will
reconsider its selection of auditors. RBSM LLP has no interest, financial or
otherwise, in the Company.
A
representative of RBSM LLP is not expected to attend the Annual General
Meeting.
Additional
information regarding the amount of audit and other fees paid by the Company to
RBSM LLP are disclosed in the Company’s Annual Report on Form 10-K/A filed with
the SEC.
All fees
for 2008 and 2007 set forth in the table below were pre-approved by the Board of
Directors which determined that such services would not impair the independence
of the auditor and are consistent with the SEC’s rules on auditor
independence.
Fees
Paid to RBSM LLP for Fiscal Years 2008 and 2007:
|
|
|
FYE
2008
|
|
|
|
FYE
2007
|
|
|
|
|
$
|
|
|
|
%
|
|
|
|
$
|
|
|
|
%
|
|
Audit
Fees
|
|
|
104,850
|
|
|
|
88.3
|
|
|
|
222,000
|
|
|
|
87.4
|
|
Audit-Related
Fees
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Tax
Fees
|
|
|
10,525
|
|
|
|
8.9
|
|
|
|
15,000
|
|
|
|
5.9
|
|
All
Other Fees (1)
|
|
|
3,350
|
|
|
|
2.8
|
|
|
|
17,000
|
|
|
|
6.7
|
|
______________________
(1)
|
Fees
for other professional services related to our Registration Statements
that we filed with the SEC on Form SB-2 and on Form S-8 rendered by our
principal accountants during the fiscal years ended March 31, 2007 and
March 31, 2008.
|
The proxy
holders intend to vote the shares represented by proxies to ratify the Board of
Directors' selection of RBSM LLP as the Company's independent auditors for
the fiscal year ending March 31, 2009.
Approval
of this proposal requires the affirmative vote of the majority of the shares
present in person or represented by proxy and entitled to vote at the Annual
Meeting.
RECOMMENDATION
OF THE BOARD:
THE
BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE RATIFICATION OF
THE APPOINTMENT OF RBSM LLP
AS
AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING MARCH 31,
2009.
PROPOSAL
3:
APPROVAL
OF THE 2008 INCENTIVE STOCK OPTION PLAN
(ITEM 3
ON THE PROXY CARD)
As
stockholders, you are being asked to vote in favor of the adoption of the Index
Oil and Gas Inc. 2008 Stock Incentive Plan, which was approved by the Board of
Directors on October 7, 2008. If approved by stockholders, the plan will amend
and restate the existing Index Oil and Gas Inc. 2006 Incentive Stock Option
Plan, which was established effective January 20, 2006, and become the sole plan
for providing equity-based incentive compensation to the Company’s employees,
non-employee directors and other service providers. A copy of the 2008 Stock
Incentive Plan, as adopted by the Board of Directors, is set forth in Appendix
B.
The
primary purpose of the 2008 Stock Incentive Plan is to provide a benefit that
will attract and retain the best available personnel to meet the Company’s
needs. The Board of Directors believes that an equity stake through equity
compensation programs effectively aligns service provider and shareholder
interests by motivating and rewarding long-term performance that will enhance
stockholder value and recommends that shareholders approve the adoption of the
plan. Because non-employee directors and executive officers of the Company are
eligible to receive awards under the plan, they have a personal interest in the
approval of the adoption of the plan.
In the
event that the 2008 Stock Incentive Plan is not adopted the Company may have
considerable difficulty in attracting and retaining qualified personnel,
officers, directors and consultants or the Company may have to resort to terms
of remuneration less beneficial to the Company and the
stockholders.
The plan is intended to
promote and advance the interests of the Company by providing employees,
non-employee directors and other service providers of the Company and its
affiliates added incentive to continue in the service of the Company through a
direct interest in the future success of the Company’s operations. The Board of
Directors believes that employees, non-employee directors and other service
providers who have an investment in the Company are more likely to meet and
exceed performance goals.
General
The Board
of Directors has initially reserved 5,500,000 shares of Common Stock for
issuance under the 2008 Stock Incentive Plan. Under the 2008 Stock Incentive
Plan, options may be granted that are intended to qualify as Incentive Stock
Options ("ISOs") under Section 422 of the Internal Revenue Code of 1986 (the
"Code") or which are not ("Non-ISOs") intended to qualify as Incentive Stock
Options thereunder.
The 2008
Incentive Stock Plan and the right of participants to make purchases thereunder
are intended to qualify as an "employee stock purchase plan" under Section 423
of the Code. The 2008 Stock Incentive Plan is not a qualified deferred
compensation plan under Section 401(a) of the Code and is not subject to the
provisions of the Employee Retirement Income Security Act of 1974
("ERISA").
Members of the Board of
Directors who are eligible employees are permitted to participate in the 2008
Stock Incentive Plan and may vote on any matter affecting the administration of
the 2008 Stock Incentive Plan or the grant of any stock or option pursuant to
it. In the event that any member of the Board of Directors is at any time not a
"disinterested person" to the extent that such member is the recipient of a
grant under the 2008 Stock Incentive Plan, then such grant under the plan shall
not be administered by said member of the Board of Directors, and may only by
administered by a Committee where all the members are disinterested persons, as
so defined or by the remaining members of the Board of Directors who are not
recipients of the grant in question.
Description
of the 2008 Stock Incentive Plan
The
following is a summary of the 2008 Stock Incentive Plan. This summary is
qualified in its entirety by reference to the full text of the plan, as adopted
by the Board of Directors, as set forth in Appendix B.
Purposes.
The
plan allows for the grant of incentive and nonqualified stock options,
restricted stock, restricted stock units, stock appreciation rights, performance
awards, stock awards and other incentive awards to employees, non-employee
directors and other service providers of the Company and its affiliates who are
in a position to make a significant contribution to the success of the Company.
Awards under the plan are used to attract and retain highly qualified
individuals to perform services for the Company and to align the interests of
those individuals with those of the shareholders of the Company. The plan will
provide an essential component of the total compensation package, reflecting the
importance that the Company places on aligning the interests of service
providers with those of our shareholders.
Administration.
The plan provides for administration by the Remuneration Committee or
another committee of the Board of Directors. The Board of Directors has
appointed a Remuneration Committee (the "Committee") of at least two members of
the Board of Directors, and delegate to the Committee the certain authority of
the Board of Directors to administer the Plan. Upon such appointment and
delegation, the Committee has the responsibility and duty to propose to the
Board of Directors, its recommendations in respect of the grants and awards
under the plan and shall act for the Board of Directors within its terms of
reference, in the administration of the Plan, subject to certain
limitations.
All
awards will be subject to the approval by the Company's Board of Directors, as
the Board of Directors may be composed from time to time. All questions of
interpretation of the 2008 Stock Incentive Plan are determined by the Board of
directors, and its decisions are final and binding upon all participants. Any
determination by a majority of the members of the Board of Directors at any
meeting, or by written consent in lieu of a meeting, shall be deemed to have
been made by the whole Board of Directors.
For
awards granted to non-employee directors, the committee will be the Board of
Directors.
The
committee has the authority to –
1.
|
operate,
interpret and administer the plan,
|
2.
|
determine
eligibility for and the amount and nature of
awards,
|
3.
|
establish
rules and regulations for the plan’s
operation,
|
4.
|
accelerate
the exercise, vesting or payment of an award if the acceleration is in the
best interest of the Company,
|
5.
|
provide
for the extension of exercisability of options subject to certain
limitations,
|
6.
|
require
participants to hold shares acquired under an award for a stated period of
time, and
|
7.
|
establish
other terms and conditions of awards made under the
plan.
|
The
committee has authority on all matters relating to the discharge of its
responsibilities and the exercise of its authority under the plan. The plan
provides for indemnification of committee members for personal liability
incurred related to any action, interpretation, or determination made in good
faith related to the plan and awards made under the plan.
Eligibility
. Under
the 2008 Stock Incentive Plan, Employees, non-employee directors and other
service providers of the Company and our affiliates who, in the opinion of the
committee, are in a position to make a significant contribution to the success
of the Company and our affiliates are eligible to participate in the plan. The
committee determines the type and size of awards and sets the terms, conditions,
restrictions and limitations on awards within the confines of the plan’s terms.
As of October 7, 2008, there were approximately three (3) employees, one (1)
non-employee director and seven (7) other individual employees and service
providers who would be eligible to participate in the plan.
Available
Shares
. The maximum number of shares of Common Stock available
for grant under the plan is 5,500,000 shares, plus all shares that remain
available for grant under the 2006 Incentive Stock Option Plan as of the
effective date of the 2008 Stock Incentive Plan, plus any shares subject to
outstanding awards under the 2006 Incentive Stock Option Plan that later cease
to be subject to the awards for any reason other than the awards having been
exercised. In addition, if an award granted under the plan ceases to be subject
to the award for any reason other than exercise, the undelivered shares subject
to the award will become available for future awards under the plan. The
committee has discretion to determine the manner of counting shares of Common
Stock available for award under the plan, but the plan provides default share
counting rules the committee may choose to apply. Shares of Common Stock issued
under the plan may be shares of original issuance or treasury shares or a
combination of those shares.
The
maximum number of shares of Common Stock available for grant of awards under the
plan to any one participant each fiscal year is 500,000 shares. The maximum
number of shares of Common Stock that may be subject to nonqualified stock
options and stock appreciation rights granted to any one participant in a fiscal
year is 500,000. The maximum number of shares of Common Stock that may be
granted as incentive stock options is 5,500,000.
The
number of shares available for award under the plan and maximum number of share
grants are subject to adjustment for certain corporate changes in accordance
with the provisions of the plan.
Stock
Options
. The plan provides for the grant of incentive stock
options intended to meet the requirements of Section 422 of the Code and
nonqualified stock options that are not intended to meet those requirements.
Incentive stock options may be granted only to employees of the Company and its
affiliates. Options will be subject to terms, conditions, restrictions and
limitations established by the committee, as long as they are consistent with
the terms of the plan.
The
committee will determine when an option will vest and become exercisable. No
option will be exercisable more than ten years after the date of grant. Unless
otherwise provided in the option award agreement, options terminate within a
certain period of time following a participant’s termination of employment or
service by reason of death (18 months) or disability (12 months), by reason
other than death, disability, or cause (6 months) or for cause
(immediately).
Generally,
the exercise price of a stock option granted under the plan may not be less than
the fair market value of the Common Stock on the date of grant. However, the
exercise price may be less if the option is granted in connection with certain
transactions and complies with special rules under Section 409A of the Code.
Incentive stock options must be granted at 100% of fair market value (or, in the
case of an incentive stock option granted to a 10 percent shareholder, 110% of
fair market value). The fair market value of our Common Stock on October 7, 2008
was $0.21.
The
exercise price of a stock option may be paid –
|
•
|
in
the discretion of the committee,
|
|
|
|
|
•
|
by
surrendering a sufficient portion of the option shares being exercised
having a fair market value at the time of exercise equal to the total
exercise price, or
|
|
|
|
|
•
|
with
previously acquired non-forfeitable, unrestricted shares of Common Stock
that have an aggregate fair market value at the time of exercise equal to
the total exercise price or by surrendering option shares having a fair
market value at the time of exercise equal to the total exercise price;
or
|
|
|
|
|
•
|
a
combination of those shares and
cash.
|
In
addition, in the discretion of the committee, the exercise price may be paid by
delivery to the Company 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 option shares and deliver the sale
or margin loan proceeds directly to the Company to pay the exercise price and
any required withholding taxes.
Stock
Appreciation Rights (SARs)
. A stock appreciation right (or
SAR) entitles the participant to receive an amount in cash and/or shares of
Common Stock, as determined by the committee, equal to the amount by which the
Common Stock appreciates in value after the date of the award. The committee
will determine when the SAR vests and becomes exercisable. Generally, the
exercise price of a SAR will not be less than the fair market value of the
Common Stock on the date of grant. However, the exercise price may be less if
the stock is granted in connection with certain transactions and complies with
special rules under Section 409A of the Code. No SAR will be exercisable later
than ten years after the date of the grant. The committee will set other terms,
conditions, restrictions and limitations on SARs, including rules as to
exercisability after termination of employment or service.
Restricted
Stock and Restricted Stock Units (RSUs).
Restricted stock is shares of
Common Stock that must be returned to the Company if certain conditions are not
satisfied. The committee will determine the restriction period and may impose
other terms, conditions and restrictions on restricted stock, including vesting
upon achievement of performance goals under a performance award and restrictions
under applicable securities laws. The committee also may require the participant
to pay for restricted stock. Subject to the terms and conditions of the award
agreement related to restricted stock, a participant holding restricted stock
will have the right to receive dividends on the shares of restricted stock
during the restriction period, vote the restricted stock and enjoy all other
shareholder rights related to the shares of Common Stock. Upon expiration of the
restriction period, the participant is entitled to receive shares of common
stock not subject to restriction.
Restricted
stock units (or RSUs) are fictional shares of Common Stock. The committee will
determine the restriction period and may impose other terms, conditions and
restrictions on RSUs. Upon the lapse of restrictions, the participant is
entitled to receive 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. An award of restricted stock units may include the grant of a tandem
cash dividend right or dividend unit right. A cash dividend right is a
contingent right to receive an amount in cash equal to the cash distributions
made during the period the RSU is outstanding. A dividend unit right is a
contingent right to have additional RSUs credited to the participant equal to
the number of shares of Common Stock (at fair market value) that may be
purchased with the cash dividends. Restricted stock unit awards may be
considered nonqualified deferred compensation subject to Section 409A of the
Code.
Performance
Awards
. A performance award is an award payable in cash or
Common Stock (or a combination) upon the achievement of certain performance
goals over a performance period. Performance awards may be combined with other
awards to impose performance criteria as part of the terms of the other awards.
For each performance award, the committee will determine –
|
•
|
the
amount a participant may earn in the form of cash or shares of Common
Stock or a formula for determining the amount payable to the
participant,
|
|
•
|
the
performance criteria and level of achievement versus performance criteria
that will determine the amount payable or number of shares of Common Stock
to be granted, issued, retained and/or
vested,
|
|
•
|
the
performance period over which performance is to be measured, which may not
be shorter than one year,
|
|
•
|
the
timing of any payments to be made,
|
|
•
|
restrictions
on the transferability of the award,
and
|
|
•
|
other
terms and conditions that are not inconsistent with the
plan.
|
The
maximum amount that may be paid in cash under a performance award each fiscal
year is $350,000. If an award provides for a performance period longer than one
fiscal year, the limit will be multiplied by the number of full fiscal years in
the performance period. 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, and may consist of one or more or
any combination of the following criteria:
•
Earnings
or earnings per share
(whether
on a pre-tax, after-tax, operational or other basis)
|
•
Accomplishment
of mergers, acquisitions, dispositions, public offerings or similar
extraordinary business transactions
|
•
Return
on equity
|
•
One
or more operating ratios
|
•
Return
on assets or net assets
|
•
Stock
price
|
•
Revenues
|
•
Total
shareholder return
|
•
Income
or operating income
|
•
Market
share
|
•
Expenses
or expense levels
|
•
Cash
flow or EBITDA or EBITDAX
|
•
Return
on capital or invested capital or other related financial
measures
|
•
Net
borrowing, debt leverage levels, credit quality or debt
ratings
|
•
Capital
expenditures
•
Growth
in production
•
Reserve
replacement ratio
|
•
Net
asset value per share
•
Growth
in reserves
•
Finding
and development cost per unit
|
•
Economic
value added
|
•
Profit
margin
|
•
Individual
business objectives
|
•
Operating
profit
|
Performance
awards may be designed to comply with Code Section 162(m) performance-based
compensation requirements. Section 162(m) of the Code limits the Company’s
income tax deduction for compensation paid to each of the CEO and certain other
highest paid officers of the Company to $1 million each year. There is an
exception to the $1 million deduction limitation for performance-based
compensation. To the extent that awards are intended to qualify as
"performance-based compensation" under Code Section 162(m), the performance
criteria will be established in writing by the committee not later than 90 days
after the commencement of the performance period, based on one or more, or any
combination, of the performance criteria listed above. The committee may reduce,
but not increase, the amount payable and the number of shares to be granted,
issued, retained or vested under a performance award. Prior to payment of
compensation under a performance award intended to comply with the Code Section
162(m) performance-based compensation exception, the committee will certify the
extent to which the performance goals and other criteria are
achieved.
Stock
Awards and Other Incentive Awards.
A stock award is an award
of unrestricted Common Stock. Stock awards may be granted upon terms and
conditions determined by the committee. Shares of Common Stock issued under
stock awards may be issued for cash consideration or for no cash consideration.
The committee may also grant other incentive awards under the plan based upon,
payable in or otherwise related to, shares of Common Stock if the committee
determines that the other incentive awards are consistent with the purposes of
the plan. Other incentive awards will be subject to any terms, conditions,
restrictions or limitations established by the committee. Payment of other
incentive awards will be made at the times and in the forms, which may be cash,
shares of Common Stock or other property, established by the
committee.
New
Plan Benefits.
The number of awards that will be received by
or allocated to our executive officers, non-employee directors, employees and
other service providers under the 2008 Stock Incentive Plan is undeterminable at
this time.
Change
of Control.
Unless an award agreement provides otherwise, in
the event of a “change in control” (as defined in the plan), any time periods,
conditions or contingencies relating to exercise or realization of, or lapse of
restrictions under awards granted under the plan will be automatically
accelerated or waived so that:
|
•
|
if
no exercise of the award is required, the award may be realized in full at
the time of the occurrence of the change in control (the “change effective
time”), or
|
|
•
|
if
exercise of the award is required, the award may be exercised in full as
of the change effective time.
|
In the
event of a change in control where the company is not a surviving entity, unless
the committee determines otherwise, all options that are not exercised at or
before the change effective time will be assumed or replaced with comparable
options or rights in the surviving entity in accordance with Code Section 424 or
Code Section 409A, and other outstanding wards will be converted in similar
awards of the surviving entity. In addition, upon a change in
control, the committee has the right to require participants to surrender their
awards in exchange for a payment.
In
general, a “change in control” will occur when (i) an acquisition of the
Company’s common stock constitutes more than 50% of the total fair market value
or voting power of such stock, (ii) an acquisition of the Company’s common stock
constitutes 50% or more of the total voting power of such stock, (iii) a
majority of the Company’s Board members are replaced during a 12 month period,
or (iv) there is an acquisition of the Company’s assets that have a total gross
fair market value of 50% or more of the of the total gross fair market value of
all the Company’s assets immediately before such acquisition.
Withholding
Taxes
. All applicable withholding taxes will be deducted from
any payment made under the plan, withheld from other compensation payable to the
participant or the participant will be required to pay the taxes before the
Company makes any payment of cash or Common Stock under the plan. Payment of
withholding taxes may be made by withholding shares of Common Stock from any
payment of Common Stock due or by delivery to the Company of previously acquired
shares of Common Stock, in either case having an aggregate fair market value
equal to the amount of the required withholding taxes.
Transferability.
No
award will 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 under applicable laws of 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 will
be null and void and without effect. If provided in the award agreement,
nonqualified stock options may be transferred by a participant to a permitted
transferee. A participant may request that the Company observe the terms of a
domestic relations order in relation to the division of a plan
award.
Amendment.
The
Board of Directors may suspend, terminate, amend or modify the plan, but may not
without approval by our shareholders, make any alteration or amendment that
–
|
•
|
increases
the total number of shares of Common Stock that may be issued under the
plan (other than adjustments in connection with certain corporate
reorganizations and other events),
|
|
•
|
changes
the designation or class of persons eligible to receive awards under the
plan, or
|
|
•
|
effects
any change for which shareholder approval is required by or necessary to
comply with applicable law or the listing requirements of an exchange or
association on which the Common Stock is then listed or
quoted.
|
An
amendment to the plan will not require shareholder approval if it is made to
conform the plan to statutory or regulatory requirements.
Effectiveness.
The plan will become effective on the date of its adoption by our Board
of Directors (the “effective date”), provided that the plan is approved within
12 months following such date by the holders of at least a majority of the
shares of the common stock of the company. If the plan is not so approved by the
Company’s shareholders, the plan will terminate and any awards granted under the
plan will be null and void. Unless terminated earlier by the Board of Directors,
the plan will terminate on the day prior to the tenth anniversary of the
effective date.
United
States Federal Income Tax Consequences
The
following summary is based on an analysis of the Internal Revenue Code of 1986,
as amended (the “Code”) as currently in effect, existing laws, judicial
decisions, administrative rulings, regulations and proposed regulations, all of
which are subject to change.
As
required by United States Treasury Regulations, the following summary is not
intended or written to be used, and cannot be used, by any person for the
purpose of avoiding penalties that may be imposed under United States federal
tax laws.
Incentive
Stock Options
. No income will be recognized by a participant for federal
income tax purposes upon the grant or exercise of an incentive stock option. The
basis of shares transferred to a participant upon exercise of an incentive stock
option is the price paid for the shares. If the participant holds the shares for
at least one year after the transfer of the shares to the participant and two
years after the grant of the option, the participant will recognize long-term
capital gain or loss upon sale of the shares received upon exercise equal to the
difference between the amount realized on the sale and the basis of the stock.
Generally, if the shares are not held for that period, the participant will
recognize ordinary income upon disposition in an amount equal to the excess of
the fair market value of the shares on the date of exercise over the amount paid
for the shares, or if less (and if the disposition is a transaction in which
loss, if any, will be recognized), the gain on disposition. The participant’s
additional gain or any loss upon disposition will be a capital gain or loss,
which will be long-term or short-term depending of whether the stock was held
for more than one year.
The
excess of the fair market value of shares received upon the exercise of an
incentive stock option over the option price for the shares is an item of
adjustment for the participant for purposes of the alternative minimum tax.
Therefore, although no income is recognized upon exercise of an incentive stock
option, a participant may be subject to alternative minimum tax as a result of
the exercise.
If a
participant uses already owned shares of common stock to pay the exercise price
for shares under an incentive stock option, the resulting tax consequences will
depend upon whether the already owned shares of common stock are “statutory
option stock,” and, if so, whether the statutory option stock has been held by
the participant for the applicable holding period referred to in Section
424(c)(3)(A) of the Code. In general, “statutory option stock” (as defined in
Section 424(c)(3)(B) of the Code) is any stock acquired through the exercise of
an incentive stock option or an option granted under an employee stock purchase
plan, but not stock acquired through the exercise of a nonqualified stock
option. If the stock is statutory option stock and the applicable holding period
has been satisfied, or if the stock is not statutory option stock, no income
will be recognized by the participant upon the transfer of the stock in payment
of the exercise price of an incentive stock option. If the stock used to pay the
exercise price of an incentive stock option is statutory option stock and the
applicable holding period has not been satisfied, the transfer of the stock will
be a disqualifying disposition which will result in the recognition of ordinary
income by the participant in an amount equal to the excess of the fair market
value of the statutory option stock at the time the incentive stock option
covering the stock was exercised over the amount paid for the
stock.
Nonqualified
Stock Options
. No income will be recognized by a participant
for federal income tax purposes upon the grant of a nonqualified stock option.
Upon exercise of a nonqualified stock option, the participant will recognize
ordinary income in an amount equal to the excess of the fair market value of the
shares on the date of exercise over the amount paid for the shares. If the
participant is an employee, income recognized upon the exercise of a
nonqualified stock option will be considered compensation subject to withholding
at the time the income is recognized, and, therefore, the participant’s employer
must make the necessary arrangements with the participant to ensure that the
amount of the tax required to be withheld is available for payment. Nonqualified
stock options are designed to provide the employer with a deduction equal to the
amount of ordinary income recognized by the participant at the time of the
recognition by the participant, subject to the deduction limitations described
below.
Upon sale
of the shares, the participant will have capital gain or loss equal to the
difference between the sales proceeds and the value of the shares on the day the
option was exercised. This capital gain or loss will be long-term if the
participant has held the shares for more than one year and otherwise will be
short-term.
If a
participant uses already owned shares of common stock to pay the exercise price
for shares under a nonqualified stock option, the number of shares received
under the nonqualified stock option which is equal to the number of shares
delivered in payment of the exercise price will be considered received in a
nontaxable exchange, and the fair market value of the remaining shares received
by the participant upon the exercise will be taxable to the participant as
ordinary income. If the already owned shares of common stock are not “statutory
option stock” or are statutory option stock and the applicable holding period
referred to in Section 424(c)(3)(A) of the Code has been satisfied, the shares
received upon exercise of the nonqualified stock option will not be statutory
option stock. However, if the already owned shares of common stock are statutory
option stock and the applicable holding period has not been satisfied, it is not
presently clear whether the exercise will be considered a disqualifying
disposition of the statutory option stock, whether the shares received upon the
exercise will be statutory option stock, or how the participant’s basis will be
allocated among the shares received.
Stock
Appreciation Rights.
There will be no federal income tax
consequences to either the participant or the employer upon the grant of Stock
Appreciation Rights (or SARs). Generally, the participant will recognize
ordinary income subject to withholding upon the receipt of payment under SARs in
an amount equal to the aggregate amount of cash and the fair market value of any
common stock received. Subject to the deduction limitations described below, the
employer generally will be entitled to a corresponding tax deduction equal to
the amount includible in the participant’s income.
Restricted
Stock
. If the restrictions on an award of shares of restricted
stock are of a nature that the shares are both subject to a substantial risk of
forfeiture and are not freely transferable (within the meaning of Section 83 of
the Code), the participant will not recognize income for federal income tax
purposes at the time of the award unless the participant affirmatively elects to
include the fair market value of the shares of restricted stock on the date of
the award, less any amount paid for the shares, in gross income for the year of
the award under Section 83(b) of the Code. In the absence of this election, the
participant will be required to include in income for federal income tax
purposes on the date the shares either become freely transferable or are no
longer subject to a substantial risk of forfeiture (within the meaning of
Section 83 of the Code), the fair market value of the shares of restricted stock
on that date, less any amount paid for the shares. The employer will be entitled
to a deduction at the time of income recognition to the participant in an amount
equal to the amount the participant is required to include in income, subject to
the deduction limitations described below. If a Section 83(b) election is made
within 30 days after the date the restricted stock is received, the participant
will recognize ordinary income at the time of the receipt of the restricted
stock, and the employer will be entitled to a corresponding deduction, equal to
the fair market value of the shares at the time, less the amount paid, if any,
by the participant for the restricted stock. If a Section 83(b) election is
made, no additional income will be recognized by the participant upon the lapse
of restrictions on the restricted stock, but, if the restricted stock is
subsequently forfeited, the participant may not deduct the income that was
recognized pursuant to the Section 83(b) election at the time of the receipt of
the restricted stock.
Dividends
paid to a participant holding restricted stock before the expiration of the
restriction period will be additional compensation taxable as ordinary income to
the participant subject to withholding, unless the participant made an election
under Section 83(b). Subject to the deduction limitations described below, the
employer generally will be entitled to a corresponding tax deduction equal to
the dividends includible in the participant’s income as compensation. If the
participant has made a Section 83(b) election, the dividends will be dividend
income, rather than additional compensation, to the participant.
If the
restrictions on an award of restricted stock are not of a nature that the shares
are both subject to a substantial risk of forfeiture and not freely
transferable, within the meaning of Section 83 of the Code, the participant will
recognize ordinary income for federal income tax purposes at the time of the
transfer of the shares in an amount equal to the fair market value of the shares
of restricted stock on the date of the transfer, less any amount paid. The
employer will be entitled to a deduction at that time in an amount equal to the
amount the participant is required to include in income, subject to the
deduction limitations described below.
Restricted
Stock Units (or RSUs)
. There will be no federal income tax
consequences to either the participant or the employer upon the grant of RSUs.
Generally, the participant will recognize ordinary income subject to withholding
upon the receipt of cash and/or transfer of shares of Common Stock in payment of
the RSUs in an amount equal to the aggregate of the cash received and the fair
market value of the common stock so transferred. Subject to the deduction
limitations described below, the employer generally will be entitled to a
corresponding tax deduction equal to the amount includible in the participant’s
income.
Performance
Awards.
In general, there will be no federal income tax
consequences to either the participant or the employer upon the grant of
performance awards. Generally, the participant will recognize ordinary income
subject to withholding upon the receipt of cash and/or shares of Common Stock in
payment of performance awards in an amount equal to the aggregate of the cash
received and the fair market value of the common stock so transferred. If a
performance award is performance-based compensation under Code Section 162(m),
the employer will be entitled to a corresponding tax deduction equal to the
amount includible in the participant’s income. Otherwise, the employer’s
deduction may be limited by Code Section 162(m) as described
below.
Stock
Awards and Other Incentive Awards.
The participant will
recognize ordinary income for federal income tax purposes at the time of the
stock award and, subject to the deduction limitations described below, the
employer will be entitled to a corresponding deduction. The tax
treatment of other incentive awards will depend on the type of
award. As a general rule, taxation generally will be imposed at the
time of vesting of the award, and ordinary income will generally equal the fair
market value of the award at the time of vesting. Subject to the
deduction limitations described below, the participant’s employer will be
entitled to a tax deduction at the same time and for the same
amount. If the participant is an employee, the participant will be
subject to income tax withholding at the time when the ordinary income is
recognized.
Dividend
Equivalents.
Generally, a participant will recognize ordinary
income subject to withholding upon the payment of any dividend equivalents paid
in relation to an award in an amount equal to the cash the participant receives.
Subject to the deduction limitations described below, the employer generally
will be entitled to a corresponding tax deduction equal to the amount includible
in the participant’s income.
Limitations
on the Employer’s Compensation Deduction.
Section 162(m) of
the Code limits the deduction certain employers may take for otherwise
deductible compensation payable to certain executive officers of the employer to
the extent the compensation paid to the officer for the year exceeds $1 million,
unless the compensation is performance-based, is approved by the employer’s
shareholders, and meets certain other criteria.
In
addition, Section 280G of the Code limits the deduction which the employer may
take for otherwise deductible compensation payable to certain individuals if the
compensation constitutes an “excess parachute payment.” Excess
parachute payments arise from payments made to disqualified individuals which
are in the nature of compensation and are contingent on changes in ownership or
control of the employer or certain affiliates. Accelerated vesting or payment of
awards under the Plan upon a change in ownership or control of the employer or
its affiliates could result in excess parachute payments. In addition to the
deduction limitation applicable, a disqualified individual receiving an excess
parachute payment will be subject to a 20 percent excise tax.
Application
of Code Section 409A.
Section 409A of the Code imposes an
additional 20% tax and interest on an individual receiving nonqualified deferred
compensation under a plan that fails to satisfy certain requirements. For
purposes of Section 409A of the Code, “nonqualified deferred compensation”
includes equity-based incentive programs, including some stock options, stock
appreciation rights and restricted stock unit programs. Generally speaking,
Section 409A of the Code does not apply to incentive stock options, nonqualified
stock options and stock appreciation rights granted at fair market value if no
deferral is provided beyond exercise, or restricted stock.
Awards
made under the plan will be designed to comply with the requirements of Code
section 409A to the extent the awards granted under the Plan are not exempt from
coverage. However, if the Plan fails to comply with Section 409A of
the Code in operation, a participant could be subject to the additional taxes
and interest.
Awards
made under the plan are not subject to the Employee Retirement Income Security
Act of 1974, as amended.
Required
Vote
The
approval of the 2008 Stock Incentive Plan and the reservation of 5,500,000
shares for issuance requires the affirmative vote of the holders of a majority
of the shares of the Company's Common Stock present at the Annual General
Meeting in person or by proxy and entitled to vote and constituting at least a
majority of the required quorum.
RECOMMENDATION
OF THE BOARD:
THE
BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE PROPOSAL TO APPROVE THE ADOPTION
OF THE 2008 STOCK INCENTIVE PLAN. PROXIES SOLICITED BY THE BOARD OF DIRECTORS
WILL BE VOTED IN FAVOR OF THE PROPOSAL UNLESS STOCKHOLDERS SPECIFY
OTHERWISE.
ANNUAL REPORT ON FORM
10-K
The
Company will provide upon request and without charge to each stockholder
receiving this Proxy Statement, and is providing with this Proxy Statement, a
copy of the Company's Annual Report on Form 10-K, as amended, for the fiscal
year ended March 31, 2008, including the financial statements and financial
statement schedule information included therein, as filed with the SEC on June
30, 2008 with Amendment #1 filed on July 29, 2008. The Company’s Annual Report
and subsequently filed 10-Q is available via the Company’s web site
www.indexoil.com
under
the tab labeled “Investor Relations – Filings”.
SUBMISSION OF STOCKHOLDER
PROPOSALS FOR OUR 2009 ANNUAL GENERAL MEETING OF
STOCKHOLDERS
Stockholder
proposals intended to be presented under Rule 14a-8 under the Securities
Exchange Act of 1934 for inclusion in our proxy statement and accompanying proxy
for our 2009 annual meeting of stockholders, including nomination of an
individual for election as a director at the 2009 annual general meeting of
stockholders, must be received at our principal executive offices in Houston,
Texas, on or before May 18, 2009, and must meet all the requirements of Rule
14a-8. Although the 2008 Annual General Meeting of stockholders is being held in
December, we intend to hold the 2009 Annual General Meeting of stockholders on
September 16, 2009. If a stockholder intends to present a proposal at our 2009
Annual General Meeting but has not sought the inclusion of such proposal in our
proxy materials, we must receive the proposal on or before June 30, 2009, or our
management proxies for the 2009 annual meeting will be entitled to use their
discretionary voting authority if the proposal is then raised at the meeting,
without any discussion of the matter in our proxy materials, in accordance with
Rule 14a-4(c) under the 1934 Act.
Proposals
and other notices should be sent to:
Lyndon
West, Chief Executive Officer
10000
Memorial Drive, Suite 440
Houston,
Texas 77024
The use
of certified mail, return receipt requested, is suggested.
OTHER
BUSINESS
The Board
of Directors is not aware of any matter other than the matters described above
to be presented for action at the Meeting. However, if any other proper items of
business should come before the Meeting, it is the intention of the individuals
named on your proxy card as the proxy holders to vote in accordance with their
best judgment on such matters.
By
Order of the Board of Directors
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By:
|
/s/
Lyndon
West
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Chief Executive Officer
|
Dated:
October 25, 2008
Houston,
Texas
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Appendix
A
REMUNERATION
COMMITTEE
TERMS
OF REFERENCE
COMMITTEE
MEMBERS:
The
Committee should ideally comprise 3 independent directors but as a
minimum
One
Executive Director and
One
Independent Directors or
Two
Independent Directors
QUORUM:
Minimum
of two members or 2/3rds of the Appointed members whichever is the greater
number. In the event of a two member quorum a voting majority will only be
achieved by a unanimous vote.
MEETINGS:
A minimum
of four meetings per annum are held. Ad hoc meetings can be called, as required,
at the request of the Chairman of the Company, a Committee member or the Company
Chief Executive. These coincide with annual review of Remuneration Policy, bonus
program, salary review, new stock option programs recommendation / requests and
executive performance reviews.
CHAIRMAN:
The
Chairman of the committee will be appointed by the Board of Directors and if
possible be an Independent Director.
SECRETARY:
Independent
Director
MAIN
RESPONSIBILITIES:
The
Remuneration Committee is responsible for considering the Company’s Policy on
Executive Remuneration and, as required, making recommendations to the Company
Board in respect of the remuneration arrangements of the Executive and
Independent Directors of the Company.
DETAILED
RESPONSIBILITIES:
The
detailed responsibilities of the Company Remuneration Committee cover, in
particular, the following:
1.
Remuneration Policy and Remuneration Arrangements
(a) To
determine and develop the Company’s Executive Remuneration Policy;
(b) To
make recommendations to the Company Board on the total individual remuneration
package of each Executive Director; including, where appropriate, salaries,
annual and longer term incentive targets and payments, share options, pension
rights, service contracts and compensation payments. In determining such
packages and arrangements, the Committee will have regard to relevant market
comparisons and practice as well as any other relevant guidance;
(c) To
make recommendations to the Company Board on termination payments for Executive
(i)
Contractual terms on termination, and any payments made, are fair both to the
Executive Director and to the Company
(ii)
Failure is not rewarded; and
(iii) The
duty to mitigate loss is fully recognized.
(d) To
consider proposals from the Chairman in respect of the remuneration arrangements
of Non-executive Directors of the Company and to make recommendations to the
Main Board in this respect;
(e) To
approve proposals from the Company Chief Executive in respect of the
remuneration arrangements of senior executives below Board level
and;
(f) To
review all long term incentive arrangements operated in the
Company;
2.
Reporting and Disclosure
(a) To
prepare an Annual Report to Company shareholders or Regulatory Filing which will
form part of the Annual Report and Accounts of the Company and will include all
relevant information in respect of the Company's Executive Remuneration Policy
and full details of each Director's remuneration package; and
(b) To
account directly to Company shareholders for decisions of the Company
Remuneration Committee through the attendance of the Chairman of the Company
Remuneration Committee at the Company’s Annual General Meeting to answer Company
shareholders' questions on Directors' remuneration.
3.
Share Schemes
(a) To
keep under review the Company's employee share schemes in light of legislative
and market developments and the overall remuneration policy of the
Company;
(b) To
decide, on an annual basis, whether grants of options or awards should be made
in terms of the Company's employee share schemes; and
(c) To
determine, on an annual basis, the staff profit share in terms of any Company’s
Profit Sharing Scheme.
4.
External Advice
(a) To
select, appoint and set the terms of reference for any remuneration consultants
who advise the Remuneration Committee; and
(b) To
obtain internal or external legal or other professional advice on matters within
the terms of reference of the Remuneration Committee.
These
Terms of Reference were last amended by the Remuneration Committee of Index Oil
and Gas, Inc. and Approved by the Board of Directors on 11 March
2008.
Chairman
of Remuneration Committee
Signed
by Daniel L Murphy
_______________________________
Daniel L
Murphy
Appendix
B
INDEX
OIL AND GAS INC.
2008
STOCK INCENTIVE PLAN
ARTICLE
I. ESTABLISHMENT AND PURPOSE
1.1
Establishment.
Index
Oil and Gas Inc. (“
Index
”)
hereby establishes the Index Oil and Gas Inc. 2008 Stock Incentive Plan for the
benefit of certain key employees, officers, directors and others performing
services for Index and its Affiliates, as set forth in this document, as an
amendment and restatement of and successor to the Index Oil and Gas Inc. 2006
Incentive Stock Option Plan (the “
Prior
Plan
”). Grants made pursuant to the Prior Plan shall continue
to be governed by the terms of such plan as in effect at the time of the award
and the terms of the related grant agreement.
1.2
Purpose.
The
purposes of this Plan are to attract and retain highly qualified individuals to
perform services for the Company, to further align the interests of those
individuals with those of the stockholders of Index, and to more closely link
compensation with Company performance. Index is committed to creating
long-term stockholder value. Index’s compensation philosophy is based
on the belief that Index can best create stockholder value if key employees,
officers, directors and others performing services for Index and its Affiliates
act and are rewarded as business owners. Index believes that an
equity stake through equity compensation programs effectively aligns service
provider and stockholder interests by motivating and rewarding performance that
will enhance stockholder value.
1.3
Effectiveness
and Term.
This Plan shall become effective on the date of its
adoption by the Board (the “
Effective
Date
”), provided that the Plan is approved within 12 months following
such date by the holders of at least a majority of the shares of Common Stock
either (a) present or represented and entitled to vote at an annual or special
meeting of the stockholders of Index duly held in accordance with applicable law
or (b) by written action in lieu of a meeting in accordance with applicable
law. If the Plan is not so approved by Index’s stockholders, the Plan
will terminate and any Awards granted hereunder will be null and
void. 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 any corporation, partnership, limited liability Company, association,
trust or other organization which, directly or indirectly, controls, is
controlled by, or is under common control with, Index. For purposes
of the preceding sentence, “control” (including, with correlative meanings, the
terms “controlled by” and “under common control with”), as used with respect to
any entity or organization, shall mean the possession, directly or indirectly,
of the power (a) to vote more than 50% of the securities having ordinary
voting power for the election of directors of the controlled entity or
organization, or (b) to direct or cause the direction of the management and
policies of the controlled entity or organization, whether through the ownership
of voting securities or by contract or otherwise.
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 Index 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 Index.
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 Index with respect to a share of Common Stock during
the period such Award is outstanding.
2.6
“
Cause
”
means, unless otherwise defined in an Employee Agreement entered into by the
Participant, any of the following: (a) a Participant’s conviction of, or
plea of nolo contendere to, any felony or to any crime or offense causing
substantial harm to the Company or involving acts of theft, fraud, embezzlement,
moral turpitude or similar conduct; (b) a Participant’s repeated
intoxication by alcohol or drugs during the performance of his duties in a
manner that materially and adversely affects the Participant’s performance of
such duties; (c) malfeasance in the conduct of the Participant’s duties,
including, but not limited to (i) willful and intentional misuse or diversion of
funds of the Company, (ii) embezzlement or (iii) fraudulent or willful
and material misrepresentations or concealments on any written reports submitted
to the Company; (d) a Participant’s material violation of any provision of any
employment, nonsolicitation, noncompetition or other agreement with the Company;
or (e) a Participant’s material failure to perform the duties of the
Participant’s employment or material failure to follow or comply with the
reasonable and lawful written directives of the Board or senior officers of
Index, in any case under clause (d) or (e) only after the Participant shall have
been informed in writing of such material failure and given a period of not more
than 30 days to remedy same.
2.7
“
Change
in Control
” means the occurrence of a “change in the ownership,” a
“change in the effective control” or a “change in the ownership of a substantial
portion of the assets” of Index, as determined in accordance with this
definition. For an event to constitute a Change in Control
that is a “change in the ownership,” a “change in the effective control” or a
“change in the ownership of a substantial portion of the assets” of Index with
respect to a Participant, except as otherwise provided in subparagraph (ii)(B)
of this definition, Index must be (a) the entity for whom the Participant is
providing services at the time of the Change in Control; (b) the entity that is
liable for payment in respect of an Award but only if either the payment is
attributable to the performance of service by the Participant for the entity or
there is a bona fide business purpose for the entity to be liable for the
payment and, in either case, no significant purpose of making the entity liable
for the payment is the avoidance of Federal income tax; or (c) an entity that is
a majority equity holder, meaning an equity holder owning more than 50% of the
total fair market value and total voting power, of an entity identified in (a)
or (b) or any entity in a chain of entities in which each entity is a majority
equity holder of another entity in the chain, ending in an entity identified in
(a) or (b).
In determining whether an event is a “change in the ownership,” a “change in the
effective control” or a “change in the ownership of a substantial portion of the
assets” of Index, the following provisions apply:
(i) A
“change in the ownership” of Index will occur on the date on which any one
person, or more than one person acting as a group, acquires ownership of stock
of Index that, together with stock held by such person or group, constitutes
more than 50% of the total fair market value or total voting power of the stock
of Index, as determined in accordance with Treasury Regulation §
1.409A-3(i)(5)(v). If a person or group is considered either to own
more than 50% of the total fair market value or total voting power of the stock
of Index, or to have effective control of Index within the meaning of
subparagraph (ii) of this definition, and such person or group acquires
additional stock of Index, the acquisition of additional stock by such person or
group shall not be considered to cause a “change in the ownership” of
Index.
(ii) A
“change in the effective control” of Index shall occur on either of the
following dates:
(A) The
date on which any one person, or more than one person acting as a group,
acquires (or has acquired during the 12-month period ending on the date of the
most recent acquisition by such person or persons) ownership of stock of Index
possessing 50% or more of the total voting power of the stock of Index, as
determined in accordance with Treasury Regulation §
1.409A-3(i)(5)(vi). If a person or group is considered to possess 50%
or more of the total voting power of the stock of Index, and such person or
group acquires additional stock of Index, the acquisition of additional stock by
such person or group shall not be considered to cause a “change in the effective
control” of Index; or
(B) The
date on which a majority of the members of the Board is replaced during any
12-month period by directors whose appointment or election is not endorsed by a
majority of the members of the Board before the date of the appointment or
election, as determined in accordance with Treasury Regulation §
1.409A-3(i)(5)(vi). The event described in the preceding sentence
will not constitute a “change in effective control” unless no other corporation
is a majority shareholder of Index within the meaning of Code Section
409A.
(iii) A
“change in the ownership of a substantial portion of the assets” of Index shall
occur on the date on which any one person, or more than one person acting as a
group, acquires (or has acquired during the 12-month period ending on the date
of the most recent acquisition by such person or persons) assets from Index that
have a total gross fair market value equal to or more than 50% of the total
gross fair market value of all of the assets of Index immediately before such
acquisition or acquisitions, as determined in accordance with Treasury
Regulation § 1.409A-3(i)(5)(vii). A transfer of assets shall not be
treated as a “change in the ownership of a substantial portion of the assets”
when the transfer is made to an entity that is controlled by the shareholders of
Index, as determined in accordance with Treasury Regulation §
1.409A-3(i)(5)(vii)(B).
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 Remuneration 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. 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. If possible based on
the composition of 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; provided, however, that with respect to the application of the
Plan to Awards made to Outside Directors, the “Committee” shall be the
Board. If for any reason the appointed Committee does not meet the
requirements of Rule 16b-3 or Section 162(m) of the Code (to the extent
applicable), such noncompliance with such requirements shall not affect the
validity of Awards, grants, interpretations or other actions of the
Committee.
2.10
“
Common
Stock
” means the common stock of Index, $.001 par value per share, or any
stock or other securities hereafter issued or issuable in substitution or
exchange for the Common Stock.
2.11
“
Company
”
means Index and any Affiliate.
2.12
“
Disability
”
means (a) the Participant is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
that can be expected to result in death or can be expected to last for a
continuous period of not less than 12 months or (b) if the Company has an
accident or health plan covering its employees, the Participant is, by reason of
any medically determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, receiving income replacement benefits for a period of not less
than three months under an accident or health plan covering employees of the
Company; provided, however, that with respect to Options and SARs that are not
subject to Code Section 409A, “Disability” shall mean disabled within the
meaning of Code Section 22(e)(3).
2.13
“
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 Index with respect to a share of Common
Stock during the period such Award is outstanding.
2.14
“
Effective
Date
” means the date this Plan becomes effective as provided in Section
1.3.
2.15
“
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 services.
2.16
“
Employee
Agreement
” means any agreement between the Company and an Employee
containing one or more of the following agreements or covenants by the
Employee: (i) an employment agreement, (ii) an agreement by the
Employee to keep confidential certain information, (iii) an agreement or
covenant to refrain from competing with the Company, (iv) an agreement or
covenant to refrain from soliciting employees or customers of the Company, or
(v) an agreement to disclose and assign to the Company certain intellectual
property, including without limitation, ideas, inventions, discoveries,
processes, designs, methods, substances, articles, computer programs, and
improvements.
2.17
“
Exchange
Act
” means the Securities Exchange Act of 1934, as
amended.
2.18
“
Fair
Market Value
” means (a) if the Common Stock is listed on any established
stock exchange or a national market system, including without limitation Nasdaq
Global Select Market, Nasdaq Global Market, Nasdaq Capital Market, the American
Stock Exchange and the New York Stock Exchange, the closing sales price for such
stock (or the closing bid, if no sales were reported) as quoted on such exchange
or system for the date of the determination (or if there was no quoted price for
such date, then for the last preceding business day on which there was a quoted
price), as reported in
The
Wall Street Journal
or such other source as the Committee deems reliable;
(b) if the Common Stock is regularly quoted by a recognized securities
dealer but selling prices are not reported, the mean between the high bid and
low asked prices for the Common Stock for the date of the determination, as
reported in
The
Wall Street Journal
or such other source as the Committee deems reliable;
or (c) if the Common Stock is not reported or quoted by any such organization,
(i) with respect to Incentive Stock Options, the fair market value of the Common
Stock as determined in good faith by the Committee within the meaning of Section
422 of the Code or (ii) with respect to other Awards, fair market value of the
Common Stock as determined in good faith by the Committee using a “reasonable
application of a reasonable valuation method” within the meaning of Treasury
Regulation § 1.409A-1(b)(5)(iv)(B).
2.19
“
Grant
Date
” means the date an Award is determined to be effective by the
Committee upon the grant of such Award.
2.20
“
Incentive
Stock Option
” means an Option that is intended to meet the requirements
of Section 422(b) of the Code.
2.21
“
Index
”
means Index Oil and Gas Inc., a Nevada corporation, or any successor
thereto.
2.22
“
Nonqualified
Stock Option
” means an Option that is not an Incentive Stock
Option.
2.23
“
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.
2.24
“
Other
Incentive Award
” means an incentive award granted to a Participant
pursuant to Article XII.
2.25
“Outside
Director”
means a member of the Board who (a) meets the independence
requirements of the principal exchange or quotation system upon which the shares
of Common Stock are listed or quoted, (b) qualifies as an “outside director”
under Section 162(m) of the Code, (c) qualifies as a “non-employee director” of
Index under Rule 16b-3, and (d) satisfies independence criteria under any other
applicable laws or regulations relating to the issuance of shares of Common
Stock to Employees.
2.26
“
Participant
”
means an Employee, Outside Director or other individual performing 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.
2.27
“
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.
2.28
“
Permitted
Transferee
” shall have the meaning given such term in Section
15.4.
2.29
“
Plan
”
means the Index Oil and Gas Inc. 2008 Stock Incentive Plan, as in effect from
time to time.
2.30
“
Prior
Plan
” means the Index Oil and Gas Inc. 2006 Incentive Stock Option
Plan.
2.31
“
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.
2.32
“
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.
2.33
“
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.
2.34
“
Rule
16b-3
” means Rule 16b-3 promulgated by the SEC under the Exchange Act, or
any successor rule or regulation that may be in effect from time to
time.
2.35
“
SEC
”
means the United States Securities and Exchange Commission, or any successor
agency or organization.
2.36
“
Securities
Act
” means the Securities Act of 1933, as amended.
2.37
“
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.
2.38
“
Stock
Award
” means
an award of common stock pursuant to section 12.1.
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 (a)
interpret the Plan and the Award Agreements executed hereunder, (b) decide all
questions concerning eligibility for, and the amount of, Awards granted under
the Plan, (c) construe any ambiguous provision of the Plan or any Award
Agreement, (d) prescribe the form of Award Agreements, (e) correct any defect,
supply any omission or reconcile any inconsistency in the Plan or any Award
Agreement, (f) 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, (g) make regulations for carrying out the Plan and make changes in
such regulations as the Committee from time to time deems proper, (h) determine
whether Awards should be granted singly or in combination, (i) to the extent
permitted under the Plan, grant waivers of Plan terms, conditions, restrictions
and limitations, (j) accelerate the exercise, vesting or payment of an Award
when such action or actions would be in the best interests of the Company, (k)
provide for the extension of the exercisability of an Option to the extent such
extension does not result in a modification of the Option for purposes of Code
Section 409A, (l) require Participants to hold a stated number or percentage of
shares of Common Stock acquired pursuant to an Award for a stated period, and
(m) 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. In the
case of an Award intended to be eligible for the performance-based compensation
exemption under section 162(m) of the Code, the Committee shall exercise its
discretion consistent with qualifying the Award for such
exemption.
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 Index 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 Sections 4.2, the maximum number of shares of
Common Stock that shall be available for grant of Awards under the Plan shall be
(i) 5,500,000 shares, plus (ii) shares of Common Stock, if any, that, as of the
Effective Date, remain available for grants under the Prior Plan, plus (iii)
shares of Common Stock subject to outstanding grants under the Prior Plan on the
Effective Date, that later expire, are forfeited or otherwise cease to be
subject to such grants for any reason other than such grants having been
exercised or paid. If an Award granted under this Plan expires, is
forfeited or otherwise ceases to be subject to such Award for any reason other
than such Awards having been exercised or paid, the undelivered shares of Common
Stock which were subject to the Award shall, unless the Plan shall have been
terminated, become available for future Awards under the
Plan.
(b) The
maximum aggregate number of shares of Common Stock that may be issued pursuant
to Incentive Stock Options is 5,500,000
1
. The maximum number of shares of Common Stock
that may be subject to all Awards granted under the Plan to any one Participant
each fiscal year is 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 fiscal year is 500,000
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. During the term of
this Plan, Index 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. If, after reasonable efforts, which efforts shall not include
registration of the Plan or Awards under the Securities Act, Index is unable to
obtain authority from any applicable regulatory body, which authorization is
deemed necessary by legal counsel for Index for the lawful issuance of shares
under the Plan, Index shall be relieved of any liability with respect to its
failure to issue and sell the shares for which such requisite authority was so
deemed necessary unless and until such authority is
obtained.
(d) Notwithstanding
any provision of this Plan to the contrary, the Board or the Committee shall
have the right to substitute or assume awards in connection with mergers,
reorganizations, separations or other transactions to which Section 424(a) of
the Code applies, provided such substitutions or assumptions are permitted by
Section 424 of the Code (or, if applicable, Section 409A of the Code) and the
regulations promulgated thereunder.
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 (a) by reason of a stock dividend, spin-off, recapitalization, stock
split or combination or exchange of shares, (b) by reason of a merger,
reorganization or consolidation, (c) by reason of a reclassification or change
in par value or (d) by reason of any other extraordinary or unusual event
affecting the outstanding Common Stock as a class without Index’s receipt of
consideration, or if the value of outstanding shares of Common Stock is reduced
as a result of a spin-off or Index’s payment of an extraordinary cash dividend,
or distribution, or dividend or distribution consisting of any assets of Index
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 for which any individual may receive Awards in any fiscal year or under
the Plan, 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 will 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. Notwithstanding the provisions of this Section 4.2, (i)
the number and kind of shares of Common Stock available for issuance as
Incentive Stock Options under the Plan shall be adjusted only in accordance with
Sections 422 and 424 of the Code and the regulations thereunder and (ii)
outstanding Awards and Award Agreements shall be adjusted in accordance with (A)
Sections 422 and 424 of the Code and the regulations thereunder with respect to
Incentive Stock Options and (B) Section 409A of the Code and the regulations
thereunder with respect to Nonqualified Stock Options and, to the extent
applicable, other Awards.
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)
Performance
Awards and 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 any Awards under the Plan.
(f)
Payment
of Exercise Price and Withholding Taxes.
If 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 of such exercise price. If 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, Outside 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. Notwithstanding the foregoing, Employees, Outside
Directors and other individuals or entities that provide services to Affiliates
that are not considered a single employer with Index under Code Section 414(b)
or Code Section 414(c) shall not be eligible to receive Awards which are subject
to Code Section 409A until the Affiliate adopts this Plan as a participating
employer in accordance with Section 15.19.
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 that 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
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 made to any officer of the Company or to any other person if the
extension of such loan would violate any provision of applicable law (including,
without limitation, the Sarbanes-Oxley Act of 2002). Any loan will be
made upon such terms and conditions as the Committee shall
determine.
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. Incentive Stock
Options may be granted only to employees of Index or a “parent corporation” or a
“subsidiary corporation” of Index, as those terms are defined in Sections 424(e)
and (f) of the Code, respectively. Nonqualified Stock Options may be
granted only to Employees, Outside Directors or other individuals performing
services for Index or a corporation or other type of entity in a chain of
corporations or other entities in which each corporation or other entity has a
“controlling interest” in another corporation or entity in the chain, starting
with Index and ending with the corporation or other entity for which the
Employee performs services. For purposes of this Section,
“controlling interest” means (a) in the case of a corporation, ownership of
stock possessing at least 50% of total combined voting power of all classes of
stock entitled to vote of such corporation or at least 50% of the total value of
shares of all classes of stock of such corporation; (b) in the case of a
partnership, ownership of at least 50% of the profits interest or capital
interest of such partnership; (c) in the case of a sole proprietorship,
ownership of the sole proprietorship; or (d) in the case of a trust or estate,
ownership of an actuarial interest (as defined in Treasury Regulation §
1.414(c)-2(b)(2)(ii)) of at least 50% of such trust or
estate.
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, provided that an Option granted to an Employee shall become
exercisable over a period of no longer than five years and no less than 20% of
the shares covered by such Option shall become exercisable
annually. To the extent not exercised, installments (if more than
one) shall accumulate, but shall be exercisable, in whole or in part, only
during the period of exercise stated in the Award Agreement, whether or not
other installments are then exercisable. No portion of an Option
shall be exercisable, in whole or in part, prior to one year from the Grant Date
unless the Award Agreement provides otherwise. 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,
with respect to a Nonqualified Stock Option, (a) the Option is granted through
the assumption of, or in substitution for, outstanding awards previously granted
to individuals who became Employees (or other service providers) as a result of
a merger, consolidation, acquisition or other corporate transaction involving
the Company which complies with Treasury Regulation § 1.409A-1(b)(5)(v)(D) or
(b) the Option is otherwise structured to be exempt from or comply with Section
409A of the Code. 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 10 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 dates 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 Index and its parent and subsidiary corporations 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 Index or of its parent or subsidiary corporations,
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 Index 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 Index, 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
Index in full either (i) in cash or an equivalent acceptable to the
Committee, (ii) in the sole discretion of the Committee and in accordance
with any applicable administrative guidelines established by the Committee, (A)
by tendering one or more previously acquired nonforfeitable, unrestricted shares
of Common Stock having an aggregate Fair Market Value at the time of exercise
equal to the total exercise price or (B) by surrendering a sufficient portion of
the shares with respect to which the Option is exercised 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 specified in (i) or (ii) of this subsection;
provided, however, that payment of the exercise price by means of tendering or
surrendering shares of Common Stock shall not be permitted when the same may, in
the reasonable opinion of the Committee, cause Index to record a loss or expense
as a result thereof.
(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 Index 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 Index 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, Index 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
For Cause.
If the employment or service of a Participant shall
terminate for Cause, each outstanding Option held by the Participant shall
automatically terminate as of the date of such termination
of
employment or
service, and the right to exercise the Option shall immediately
terminate.
(b)
Termination
By Reason of Death or Disability.
In the event of a
Participant’s death or Disability while employed by or in the service of Index
or an Affiliate, each outstanding Option shall remain outstanding and may be
exercised by the person who acquires the Option by will or the laws of descent
and distribution, or by the Participant, as the case may be, but only (i) within
18 months following the date of death or 12 months following the date of
Disability, as applicable (in each case, if otherwise prior to the date of
expiration of the Option), and not thereafter, and (ii) to purchase the number
of shares of Common Stock, if any, that could be purchased upon exercise of the
Option at the time of death or Disability.
(c)
Termination
For Reasons Other Than Cause, Death or Disability.
If a
Participant’s employment or service with the Company is terminated voluntarily
by the Participant or by action of Index or an Affiliate for reasons other than
for Cause, an Option may be exercised, but only (i) within six months after
such termination (if otherwise prior to the date of expiration of the Option),
and not thereafter, and (ii) to purchase the number of shares of Common
Stock, if any, that could be purchased upon exercise of the Option at the date
of termination of the Participant’s employment or service.
Notwithstanding
the foregoing, except in the case of a Participant’s death, 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 Index or a “parent corporation” or a “subsidiary corporation” of Index, as
those terms are defined in Sections 424(e) and (f) of the Code, respectively (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).
ARTICLE
VIII. STOCK APPRECIATION RIGHTS
8.1 General.
(a)
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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 (i) the
SARs are granted through the assumption of, or in substitution for,
outstanding awards previously granted to individuals who became Employees
(or other service providers) as a result of a merger, consolidation,
acquisition or other corporate transaction involving the Company which
complies with Treasury Regulation § 1.409A-1(b)(5)(v)(D) or (ii) the SARs
are otherwise structured to be exempt from or comply with Section 409A of
the Code. The term of each SAR shall be as specified by the
Committee; provided, however, that no SAR shall be exercisable later than
10 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.
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(b)
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SARs
may be granted only to Employees, Outside Directors or other individuals
performing services for Index or a corporation or other type of entity in
a chain of corporations or other entities in which each corporation or
other entity has a “controlling interest” in another corporation or entity
in the chain, starting with Index and ending with the corporation or other
entity for which the Employee performs services. For purposes
of this Section, “controlling interest” means (a) in the case of a
corporation, ownership of stock possessing at least 50% of total combined
voting power of all classes of stock entitled to vote of such corporation
or at least 50% of the total value of shares of all classes of stock of
such corporation; (b) in the case of a partnership, ownership of at least
50% of the profits interest or capital interest of such partnership; (c)
in the case of a sole proprietorship, ownership of the sole
proprietorship; or (d) in the case of a trust or estate, ownership of an
actuarial interest (as defined in Treasury Regulation §
1.414(c)-2(b)(2)(ii)) of at least 50% of such trust or
estate.
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8.2
Exercise
of SARs.
SARs shall be exercised by the delivery of a written
notice of exercise to Index, 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.
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 prescribing the period over which and the
conditions upon which the Restricted Stock may become vested or be forfeited
and/or providing for vesting upon the achievement of specified performance goals
pursuant to a Performance Award. 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.
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 Index,
in the name of a nominee of Index, 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 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 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
Index 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/or 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 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.
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, total and permanent 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 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 (a) 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, (b) 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,
(c) the performance period over which performance is to be measured, (d) the
timing of any payments to be made, (e) restrictions on the transferability of
the Award and (f) 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 (or Awards granted) pursuant to the Plan becomes subject to
the deduction limitation of 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 an Index’s fiscal
year that are intended to satisfy the 162(m) Requirements is $1,000,000;
provided, however, that such maximum amount with respect to a Performance Award
that provides for a performance period longer than one fiscal year shall be the
foregoing limit multiplied by the number of full fiscal 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: (a) earnings or earnings per share
(whether on a pre-tax, after-tax, operational or other basis), (b) return on
equity, (c) return on assets or net assets, (d) return on capital or invested
capital and other related financial measures, (e) cash flow or EBITDA or
EBITDAX, (f) revenues, (g) income or operating income, (h) expenses or costs or
expense levels or cost levels (absolute or per unit), (i) one or more operating
ratios, (j) stock price, (k) total stockholder return, (l) operating profit, (m)
profit margin, (n) capital expenditures, (o) net borrowing, debt leverage
levels, credit quality or debt ratings, (p) the accomplishment of mergers,
acquisitions, dispositions, public offerings, move to a senior market or similar
extraordinary business transactions, (q) net asset value per share, (r) economic
value added, (s) individual business objectives, (t) growth in production, (u)
growth in reserves, (v) reserve replacement ratio and/or (w) finding and
development cost per unit. 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, 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. The
Committee may in its sole discretion require a Participant to pay a stipulated
purchase price for each share of Common Stock covered by 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
Vesting
of Awards.
Except as provided otherwise in an Award Agreement
at the time an Award is granted, notwithstanding any provision of this Plan to
the contrary, in the event of a Change in Control, any time periods, conditions
or contingencies relating to the exercise or realization of, or lapse of
restrictions under, an Award granted hereunder shall be accelerated or waived
(assuming with respect to any Performance Awards, all performance criteria and
other conditions are achieved or fulfilled to the maximum extent possible) so
that:
(a) if
no exercise of the Award is required, the Award may be realized in full at the
time of the occurrence of the Change in Control (the “Change Effective Time”),
or
(b) if
exercise of the Award is required, the Award may be exercised in full as of the
Change Effective Time.
13.2
Assumption
of Awards.
Upon a Change in Control where Index is not the
surviving entity (or survives only as a subsidiary of another entity), unless
the Committee determines otherwise, all outstanding Options that are not
exercised at or before the Change Effective Time will be assumed by or replaced
with comparable options or rights in the surviving entity (or a parent of the
surviving entity) in accordance with Section 424 or Section 409A of the Code and
the Treasury Regulations and other guidance thereunder, as applicable, and other
outstanding Awards will be converted into similar awards of the surviving entity
(or a parent of the surviving entity).
13.3
Cancellation
of Awards.
Notwithstanding the foregoing, in the event of a
Change in Control of Index, then the Committee, in its discretion, may, no later
than the Change Effective Time, require any Participant holding an Award to
surrender such Award in exchange for (a) 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 in Control (the “Change in Control
Consideration”) over the exercise price or grant price per share, (b) 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 in Control Consideration for
each share covered by the Award, assuming all restrictions or limitations
(including risks of forfeiture) have lapsed and (c) 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 in Control
Consideration, and assuming all performance criteria and other conditions to
payment of such Awards are achieved or fulfilled to the maximum extent
possible. Payments made upon a Change in Control pursuant to this
Section shall be made no later than the Change Effective
Time.
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 (a) 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 (b) counsel for Index determines that such approval is
otherwise required by or necessary to comply with applicable law or the listing
requirements of an exchange or association on which the Common Stock is then
listed or quoted. An amendment to the Plan generally will 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 statutory or regulatory requirements,
such as, without limitation, Code Section 409A, 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. Notwithstanding the foregoing, Index may amend
any Award Agreement to be exempt from Code Section 409A or to comply with the
requirements of Code Section 409A or to modify any provision that causes an
Award that is intended to be classified as an “equity instrument” under FAS 123R
to be classified as a liability on Index’s financial
statements.
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. Unless an Award Agreement specifies otherwise,
the Committee may cancel any unexpired, unpaid or deferred Stock Award or
Restricted Stock Award at any time if the Participant is not in compliance with
all applicable provisions of the Plan, the Award Agreement, any Employee
Agreement, and the following conditions:
(a) The
Participant shall not render services for any organization or engage directly or
indirectly in any business which, in the judgment of the chief executive officer
of the Company or other senior officer designated by the Committee, is or
becomes competitive with the Company, or which organization or business, or the
rendering of services to such organization or business, is or becomes otherwise
prejudicial to or in conflict with the interests of the Company. For
Participants whose employment has terminated, the judgment of the chief
executive officer shall be based on the Participant’s position and
responsibilities while employed by the Company, the Participant’s
post-employment responsibilities and position with the other organization or
business, the extent of past, current and potential competition or conflict
between the Company and the other organization or business, the effect on the
Company’s customers, suppliers and competitors and such other considerations as
are deemed relevant given the applicable facts and circumstances. A
Participant who has retired shall be free, however, to purchase as an investment
or otherwise, stock or other securities of such organization or business so long
as they are listed upon a recognized securities exchange or traded
over-the-counter, and such investment does not represent a substantial
investment to the Participant or a greater than 10% equity interest in the
organization or business.
(b) A
Participant shall not, without prior written authorization from the Company,
disclose to anyone outside the Company, or use in other than the Company’s
business, any confidential information or material, as defined in the Company’s
Proprietary Information and Invention Agreement or similar agreement regarding
confidential information and intellectual property, relating to the business of
the Company, acquired by the Participant either during or after employment with
the Company.
(c) A
Participant, pursuant to the Company’s Proprietary Information and Invention
Agreement or similar Agreement or Policy, shall disclose promptly and assign to
the Company all right, title and interest in any invention or idea, patentable
or not, made or conceived by the Participant during employment by the Company,
relating in any manner to the actual or anticipated business, research or
development work of the Company and shall do anything reasonably necessary to
enable the Company to secure a patent where appropriate in the United States and
in foreign countries.
(d) Upon
exercise, payment or delivery pursuant to any Award, the Participant shall
certify on a form acceptable to the Committee that he or she is in compliance
with the terms and conditions of the Plan and any other Employee
Agreement. Failure to comply with all of the provisions of this
Section 14.2 prior to, or during the six months after, any exercise, payment or
delivery pursuant to an Award shall cause such exercise, payment or delivery to
be rescinded. Index shall notify the Participant in writing of any such
rescission within two years after such exercise, payment or
delivery. Within 10 days after receiving such a notice from Index,
the Participant shall pay to Index the amount of any gain realized or payment
received as a result of the rescinded exercise, payment or delivery pursuant to
an Award. Such payment shall be made either in cash or by returning to Index the
number of shares of Common Stock that the Participant received in connection
with the rescinded exercise, payment or delivery.
ARTICLE
XV. MISCELLANEOUS
15.1
Award
Agreements.
After the Committee grants an Award under the Plan
to a Participant, Index 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 meet the
requirements of Section 409A of the Code and regulations
thereunder. Awards that are not paid currently shall be recorded as
payable on Index’s records for the Plan. 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. All Awards under the Plan are intended to be structured
in a manner that will either comply with or be exempt from Section 409A of the
Code.
15.2 Listing;
Suspension.
(a) If
and 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. Index 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 Index 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 Index
or its Affiliates under the laws of any applicable jurisdiction, Index 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, 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 Index 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 (a) 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 Index 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, (b) 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 (c) 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 SEC,
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 Index 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 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) trusts in which a person listed in (i) above has more than 50% of the
beneficial interest, (iii) a foundation in which the Participant or a person
listed in (i) above controls the management of assets, (iv) any other entity in
which the Participant or a person listed in (i) above owns more than 50% of the
voting interests, provided that in the case of the preceding clauses (i) through
(iv), no consideration is provided for the transfer and (v) any transferee
permitted under applicable securities and tax laws as determined by counsel to
Index. 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 Index 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. Index’s decision regarding such a request shall be made by the
Committee, in its sole and absolute discretion, based upon the best interests of
Index. The Committee’s decision need not be uniform among
Participants. As a condition of participation, a Participant agrees
to hold Index harmless from any claim that may arise out of Index’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 (a) withholding shares of
Common Stock from any payment of Common Stock due as a result of such Award, or
(b) 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
(a) delivered personally, (b) transmitted by first class registered or
certified United States mail, postage prepaid, return receipt requested,
(c) sent by prepaid overnight courier service or (d) sent by telecopy
or facsimile transmission, with confirmation 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 (a) if delivered personally or sent by courier service, upon
actual receipt by the intended recipient, (b) if mailed, upon the earlier
of five days after deposit in the mail or the date of delivery as shown by the
return receipt therefore or (c) if sent by telecopy or facsimile
transmission, when the answer back is received. Index 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 (a) to a Participant at his address as set forth in the records of the
Company or (b) to Index at the principal executive offices of Index clearly
marked “Attention: Chief Executive
Officer.”
15.8
Compliance
with Law and Stock Exchange or Association Requirements.
It is
the intent of Index that Options designated 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 all Awards either be exempt from Code Section 409A
or, if not exempt, 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 Index under the Plan shall be
binding upon any successor corporation or organization resulting from the
merger, consolidation or other reorganization of Index, or upon any successor
corporation or organization succeeding to all or substantially all of the assets
and business of Index. 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 Index or any Affiliate from taking any corporate
action (including any corporate action to suspend, terminate, amend or modify
the Plan) that is deemed by Index 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 Index 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 Nevada 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 Index 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 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 Index or its Affiliates, or their respective
stockholders, directors, officers or employees, of the value of any assets of
the Plan or as an agreement by Index or its 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 Index 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 Index 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.
15.18
Participating
Affiliates.
With the consent of the Committee, any Affiliate
that is not considered a single employer with Index under Code Section 414(b) or
Code Section 414(c) may adopt the Plan for the benefit of its Employees by
written instrument delivered to the Committee before the grant to the
Affiliate’s Employees under the Plan of any Award subject to Code Section
409A.
1
As discussed, this number will be the same as the number entered in Section
4.1(a)(i).
IN
WITNESS WHEREOF, this Plan has been executed as of October 7, 2008.
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INDEX
OIL AND GAS INC.
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By:
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/s/
Signed
by Lyndon West
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Name:
Lyndon
West
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Title:
President
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VOTE
BY INTERNET OR TELEPHONE
QUICK
***
EASY
***
IMMEDIATE
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As a
stockholder of Index Oil and Gas Inc., you have the option of voting your shares
electronically through the Internet or on the telephone, eliminating the need to
return the proxy card. Your electronic vote authorizes the named proxies to vote
your shares in the same manner as if you marked, signed, dated and returned the
proxy card. Votes submitted electronically over the Internet or by telephone
must be received by 7:00 p.m., Eastern Standard time, on December 8,
2008.
Vote Your Proxy on the
Internet:
Go to
www.continentalstock.com
Have your proxy
card available when you access the above website. Follow the prompts to
vote your shares.
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Vote Your Proxy by Phone:
Call
1 (866) 894-0537
Use
any touch-tone telephone to vote
your
proxy. Have your proxy card
available
when you call. Follow the
voting
instructions to vote your shares.
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Vote Your Proxy by mail:
Mark,
sign, and date your proxy card, then detach it, and return it in the
postage-paid envelope provided.
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PLEASE
DO NOT RETURN THE PROXY CARD IF YOU ARE
VOTING
ELECTRONICALLY OR BY PHONE
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▼
FOLD AND DETACH HERE
AND READ THE REVERSE SIDE
▼
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FOR
all
Nominees
listed
Below
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WITHHOLD
AUTHORITY
for
all nominees listed below
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*EXCEPT
For all Nominees (see instructions
below)
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Please
mark
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x
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FOR
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AGAINST
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ABSTAIN
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1.
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Elect the
proposed Directors to the Board of the
C
ompany
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o
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o
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o
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2.
Ratify the appointment of RBSM LLP as auditors
of
the Company for the fiscal year ending March
31,
2009
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o
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o
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o
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FOR
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AGAINST
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ABSTAIN
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NOMINEES:
(01)
Daniel L Murphy, (02) Lyndon West,
(03)
Andrew Boetius,
and
(04) David Jenkins
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3.
Approve the adoption of the 2008 Stock Incentive Plan
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o
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o
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o
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*INSTRUCTION:
To withhold authority to vote for any individual nominee, mark “EXCEPT For
all” and write the name of such individual for whom you wish your vote to
be withheld below:
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The
shares represented by this proxy will be voted as directed by the
stockholder, but if no instructions are specified, this proxy will be
voted for proposals (1), (2), and (3). If any other business is presented
at the Meeting, this proxy will be voted by those named in this proxy in
their best judgment. At the present time, the Board of Directors knows of
no other business to be presented at the Meeting.
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The
undersigned acknowledges receipt from the Company, prior to the execution
of this proxy, of the Notice of Annual General Meeting and accompanying
Proxy Statement relating to the Meeting.
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THE
BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" IN SUPPORT OF EACH OF THE
LISTED PROPOSALS.
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COMPANY
ID:
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PROXY
NUMBER:
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ACCOUNT
NUMBER:
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Signature
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Signature
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Date__________________,
2008
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NOTE:
PLEASE MARK, DATE AND SIGN AS YOUR NAME(S) APPEAR(S) HEREON AND RETURN IN THE
ENCLOSED ENVELOPE. IF ACTING AS AN EXECUTORS, ADMINISTRATORS, TRUSTEES,
GUARDIANS, ETC., YOU SHOULD SO INDICATE WHEN SIGNING. IF THE SIGNER IS
CORPORATION, PLEASE SIGN THE FULL CORPORATE NAME, BY DULY AUTHORIZED OFFICER. IF
SHARES ARE HELD JOINTLY, EACH SHAREHOLDER SHOULD SIGN.
IMPORTANT
WHETHER
OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND RETURN THE ENCLOSED PROXY
CARD AS PROMPTLY AS POSSIBLE IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE. IF A
QUORUM IS NOT REACHED, THE COMPANY WILL HAVE THE ADDED EXPENSE OF RE-ISSUING
THESE PROXY MATERIALS. IF YOU ATTEND THE MEETING AND SO DESIRE, YOU MAY WITHDRAW
YOUR PROXY AND VOTE IN PERSON.
THANK
YOU FOR ACTING PROMPTLY
▼
FOLD AND DETACH HERE
AND READ THE REVERSE SIDE
▼
PROXY
INDEX
OIL AND GAS INC.
ANNUAL
GENERAL MEETING OF STOCKHOLDERS - TO BE HELD
December
9, 2008
THIS
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
The
undersigned, revoking all prior proxies, hereby appoints LYNDON WEST and DANIEL
MURPPHY and each of them, with full power of substitution in each, as proxies
for the undersigned, to represent the undersigned and to vote all the shares of
Common Stock of the Company which the undersigned would be entitled to vote, as
fully as the undersigned could vote and act if personally present, at the Annual
General Meeting of Stockholders (the "Meeting") to be held on December 9, 2008,
at 10:00 am, Central Standard time, at Houston Marriot (West Loop by the
Galleria) 1750 West Loop South, Houston, Texas 77027, or at any adjournments or
postponements thereof.
Should
the undersigned be present and elect to vote at the Meeting or at any
adjournments or postponements thereof, and after notification to the Secretary
of the Company at the Meeting of the stockholder's decision to terminate this
proxy, then the power of such attorneys or proxies shall be deemed terminated
and of no further force and effect. This proxy may also be revoked by filing a
written notice of revocation with the Secretary of the Company or by duly
executing a proxy bearing a later date.
(Continued,
and to be marked, dated and signed, on the other side)