NONSTATUTORY STOCK OPTION AGREEMENT
PURSUANT TO THE
1998 STOCK OPTION AND INCENTIVE PLAN
OF
PENNACO ENERGY, INC.
THIS NONSTATUTORY STOCK OPTION AGREEMENT (the "Agreement"), is made as of
March 24, 1998 (the "Effective Date") by and between PENNACO ENERGY, INC., a
Nevada corporation, (the "COMPANY") and XXXXXXX X. XXXXXX (the "OPTIONEE"),
pursuant to the COMPANY's 1998 Stock Option and Incentive Plan (the "Plan").
WHEREAS, the Board of Directors of the COMPANY has adopted the Plan as of
March 24, 1998, subject to Shareholders approval, to which this Agreement and
the Option granted hereunder are subject; and
WHEREAS, the Board of Directors of the COMPANY has determined that it is to
the advantage and in the best interest of the COMPANY and its shareholders to
grant the Option provided for herein to OPTIONEE to afford additional incentive
to consultants, vendors, customers, and others to increase their efforts in
providing significant services to the COMPANY.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. GRANT OF OPTION. The Company grants to OPTIONEE the right and Option
to purchase from the COMPANY, on the terms and conditions hereinafter set forth,
all or any part of an aggregate of 400,000 shares of the authorized $.001 par
value common stock of the COMPANY, at the purchase price of $1.25 per share
(being not less than the fair market value per share of said stock on the date
hereof) as OPTIONEE may from time to time elect, exercisable on or after the
Effective Date hereof for a period of 10 years (the latter date hereinafter
referred to as the "Terminal Date"), all in accordance with the schedule
attached hereto and marked Exhibit "A." No partial exercise of such Option may
be for less than 100 full shares, unless the number purchased is the total
number at the time purchasable under the option. In no event shall the COMPANY
be required to transfer fractional shares to OPTIONEE. This Agreement and the
Option granted hereunder are subject to the Plan, a copy of which is attached
hereto and incorporated herein by reference as Exhibit "B."
2. METHOD OF EXERCISE. The Option granted hereunder shall be
exercisable, from time to time, as hereinabove provided, by written notice which
shall;
(a) state the election to exercise the Option, the number of shares
in respect of which it is being exercised, the person in whose name the shares
are to be issued (if the shares are issued to individuals), the names, addresses
and Social Security Numbers of such persons;
(b) contain such representations and agreements as to the holder's
investment intent with respect to such shares of Common Stock as are required by
law dor as may be satisfactory to the COMPANY's counsel;
(c) be signed by the person or persons entitled to exercise the
Option and, if the Option is being exercised by any person or persons other than
the OPTIONEE, be accompanied by proof, satisfactory to counsel for the COMPANY,
of the right of such person or persons to exercise the Option; and
(d) be accompanied by a payment for the purchase price of those
shares with respect to which the Option is being exercised in the form of cash
or check or the purchase price may be paid (i) by the surrender of Shares in
good form for transfer, owned by the OPTIONEE and having a Fair Market Value on
the date of exercise equal to the purchase price, or in any combination of cash
and Shares, as long as the sum of the cash so paid and the Fair Market Value of
the Shares so surrendered equal the purchase price, (ii) by cancellation of
indebtedness owed by the Company to the OPTIONEE, (iii) with a full recourse
promissory note executed by the OPTIONEE, or (iv) any combination of the
foregoing. The interest rate and other terms and conditions of such note shall
be determined by the Board or the Committee. The OPTIONEE shall pledge his
Shares to the Company for the purpose of securing the payment of such note.
3. ISSUING OF STOCK CERTIFICATES. The certificate or certificates for
shares of Common Stock as to which the Option shall be exercised shall be
registered in the name of the person or persons exercising the Option. The
COMPANY shall not be required to transfer or deliver any certificate or
certificates for the shares purchased upon exercise of the Option granted
hereunder until (a) compliance with the terms of this Agreement, (b) compliance
with all then applicable requirements of law; and (c) admission of such shares
for trading privileges on any stock exchange on which the stock may then be
listed.
4. TERMINATION OF OPTION. The Option and all rights granted hereunder to
the extent such rights shall not have been exercised, shall terminate and become
null and void on the Terminal Date.
5. TRANSFERABILITY OF OPTION. This Option may be transferred by will or
the laws of descent or distribution and may be exercised during the lifetime of
the OPTIONEE or by an assignee of the OPTIONEE pursuant to the terms of Sections
7.5 and 8.3 of the Plan.
6. STOCK SUBJECT TO THE OPTION. The COMPANY shall set aside the number
of shares of Common Stock of the COMPANY subject to be granted upon exercise of
this Option which it now holds as authorized and unissued shares. If the Option
should expire or become unexercisable for any reason without having been
exercised in full, the unpurchased shares which were subject thereto shall be
free from any restrictions occasioned by this Option Agreement. If the COMPANY
has been listed on a stock exchange, the COMPANY will not be required to issue
or deliver any certificate or certificates for shares to be issued hereunder
until such shares have been listed (or authorized for listing upon official
notice of issuance) upon each stock exchange on which outstanding shares of the
same class may then be listed and until the COMPANY has taken such steps as may,
in the opinion of counsel for the COMPANY, be required by law and applicable
regulations, including the rules and regulations of the Securities and Exchange
Commission, and state blue sky laws and regulations, in connection with the
issuance or sale of such shares, and the listing of such shares on each such
exchange. The COMPANY will use its best efforts to comply with any such
requirements forthwith upon the exercise of the Option.
7. RECLASSIFICATION, CONSOLIDATION, OR MERGER. In the event of any
change in the common stock of the COMPANY subject to the Option granted
hereunder, through merger, consolidation, reorganization, recapitalization,
stock split, stock dividend, or other change in the corporate structure,
appropriate adjustment shall be made by the COMPANY in the number of shares
subject to such Option and the price per share; provided, however, that in
accordance with the provisions of Section 425(a) of the Code, a new Option may
be substituted for the Option granted hereunder or such Option may be assumed by
an employer corporation, or a parent or subsidiary of such corporation, in
connection with any transaction to which such Section is applicable. Upon the
dissolution or liquidation of the COMPANY other than in connection with a
transaction to which such Section is applicable, the Option granted hereunder
shall terminate and become null and void, but OPTIONEE shall have the right
immediately prior to such dissolution or liquidation to exercise the Option
granted hereunder to the full extent not before exercised.
8. RIGHT AS SHAREHOLDER. Neither OPTIONEE nor his executors,
administrators, heirs or legatees, shall be or have any rights or privileges of
a stock holder of the COMPANY in respect of the shares transferable upon
exercise of the Option granted hereunder, unless and until certificates
representing such shares shall have been endorsed, transferred, and delivered
and the transferee has caused his name to be entered as the shareholder of
record on the books of the COMPANY.
9. NOTICES. Any notice to be given under the terms of this Agreement
shall be addressed to the COMPANY in care of its Secretary at the main offices
for the transaction of its business, and any notice to be given to OPTIONEE
shall be addressed to OPTIONEE at his current residential address set forth
above, or at such other place as either party may hereafter designate in writing
to the other. Any such notice shall be deemed duly given when enclosed in a
properly sealed envelope or wrapper addressed as herein required, certified and
deposited (postage and certification prepaid) in a post office regularly
maintained by the United States Government.
10. BENEFITS OF AGREEMENT. This Agreement shall inure to the benefit of
and be binding upon each successor of the COMPANY. All obligations imposed upon
the OPTIONEE and all rights granted to the COMPANY under this Agreement shall be
binding upon the OPTIONEE's heirs, legal representatives, and successors. This
Agreement shall be the sole and exclusive source of any and all rights which the
OPTIONEE, OPTIONEE's heirs, legal representatives, or successors may have in
respect to the Plan or any options or Common Stock granted or issued thereunder,
whether to OPTIONEE, or to any other person.
11. RESOLUTION OF DISPUTES. Any dispute or disagreement which should
arise under, or as a result of, or in any way relate to, the interpretation,
construction or application of this Agreement will be determined by the Board of
Directors of the COMPANY. Any determination made hereunder shall be final,
binding, and conclusive for all purposes.
IN WITNESS WHEREOF, the COMPANY has caused these presents to be
executed on its behalf by its President and attested by its Secretary, and
OPTIONEE has hereunto set his hand the date and year first above written, which
is the time of the granting of the Option hereunder.
"COMPANY" "OPTIONEE"
PENNACO ENERGY, INC.
a Nevada corporation
By:
-------------------------------- ---------------------------------------
Xxxxxxx X. Xxxxxx, PRESIDENT Xxxxxxx X. Xxxxxx
ATTEST:
By:
--------------------------------
Xxxxxxx X. Xxxxxx, SECRETARY
EXHIBIT "A"
NONSTATUTORY STOCK OPTION AGREEMENT
PURSUANT TO THE
1998 STOCK OPTION AND INCENTIVE PLAN
OF
PENNACO ENERGY, INC.
--------------------
EXERCISE SCHEDULE
Option Period Number of Exercisable Option Shares
------------- -----------------------------------
1. On or after the Effective Date 400,000
through the Terminal Date
