Exhibit 10.6
Form of
2005 STOCK INCENTIVE PLAN
STOCK OPTION AGREEMENT
This Stock Option Agreement (the "Agreement") is made and entered into as
of the date of grant set forth below (the "Date of Grant") by and between
Crimson Exploration Inc. a Delaware corporation (the "Company"), and the
participant named below (the "Participant"). Capitalized terms not defined
herein shall have the meaning ascribed to them in the Company's 2005 Stock
Incentive Plan (the "Plan").
Participant:
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Social Security Number:
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Address:
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Total Option Shares
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Exercise Price Per Share:
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Date of Grant:
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Expiration Date: [10 years from date of grant]
Type of Stock Option: |_| Incentive Stock Option
|_| Nonqualified Stock Option
1. Grant of Option. The Company hereby grants to Participant an option
(this "Option") to purchase the total number of shares of Common Stock of the
Company set forth above as Total Option Shares (the "Shares") at the Exercise
Price Per Share set forth above (the "Exercise Price"), subject to all of the
terms and conditions of this Agreement and the Plan. If designated as an
Incentive Stock Option above, the Option is intended to qualify as an "incentive
stock option" (an "ISO") within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), although the Company makes no
representation or guarantee that such Option will qualify as an ISO.
2. Exercise Period; Vesting.
2.1. Regular Vesting. Unless expired as provided in Section 3 of
this Agreement, this Option may be exercised from time to time after the Date of
Grant set forth above (the "Date of Grant") to the extent the Option has vested
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in accordance with the vesting schedule set forth below. The Shares issued upon
exercise of the Option will be subject to the restrictions on transfer set forth
in Sections 8 and 10 below. Provided Participant continues to provide Continuous
Service to the Company or any Affiliate, the Option will become vested and
exercisable with respect to [insert vesting schedule], at which time the Option
will be vested and exercisable with respect to one hundred percent (100%) of the
Shares. A vested Option may not be exercised for less than a full share unless
the currently exercisable portion of such Option is less than a whole share.
2.2. Change of Control. [In the event of a Change of Control (as
such term is defined in the Employment Agreement between the Participant and the
Company), vesting shall be accelerated and this Option shall become immediately
vested and exercisable with respect to one hundred percent (100%) of the Shares
without regard to the Participant's number of years of Continuous Service.]
2.3. Termination Without Cause or for Good Reason. [In the
event Participant's Continuous Service is terminated by the Company without
Cause or by Participant for Good Reason (as such terms are defined in the
Employment Agreement between the Participant and the Company), vesting shall be
accelerated and this Option shall become immediately vested and exercisable with
respect to one hundred percent (100%) of the Shares without regard to the
Participant's number of years of Continuous Service.]
2.4. Death or Disability. In the event Participant's Continuous
Service is terminated on account of death or Disability, for purposes of
determining vesting under Section 2.1, Participant shall be deemed to continue
Continuous Service through the date that is the anniversary of the Date of Grant
coincident with or next following the date of such termination.
3. Expiration. The Option shall expire on the Expiration Date set forth
above or earlier as provided in Section 4 below or, if applicable, pursuant to
Section 10 of the Plan.
4. Termination of Continuous Service.
4.1. Termination for Cause or Participant's Voluntary Resignation.
Unless otherwise provided in an employment agreement the terms of which have
been approved by the Administrator, if Participant's Continuous Service is
terminated by Company for Cause or by the Participant's voluntary resignation,
the Option, to the extent (and only to the extent) that it would have been
exercisable by Participant on the date of termination, may be exercised by
Participant no later than 30 days after the date of termination, but in any
event no later than the Expiration Date. Outstanding Options that are not
exercisable at the time Participant's Continuous Service terminates shall be
forfeited and expire at the close of business on the date of such termination.
4.2. Termination Because of Death or Disability. If Participant's
Continuous Service is terminated because of death or Disability of Participant,
the Option, to the extent exercisable by Participant on the date of termination
(subject to Section 2.4), may be exercised by Participant (or Participant's
legal representative) no later than the Expiration Date.
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Outstanding Options that are not exercisable at the time Participant's
Continuous Service terminates shall be forfeited and expire at the close of
business on the date of such termination.
4.3. Change of Control. If Participant's Continuous Service is
terminated by the Company without Cause or by the Participant for Good Reason
within one year following a Change of Control, the Option may be exercised by
Participant (or Participant's legal representative) no later than three years
after the date of termination, but in any event no later than the Expiration
Date.
4.4. Termination Without Cause or for Good Reason. In
the event Participant's Continuous Service is terminated by the Company without
Cause or by Participant for Good Reason, the Option may be exercised by
Participant (or Participant's legal representative) no later than twelve months
after the date of termination, but in any event no later than the Expiration
Date.
4.5. No Obligation to Employ. Nothing in the Plan or this
Agreement shall confer on Participant any right to continue in the employ of, or
other relationship with, the Company or any Affiliate, or limit in any way the
right of the Company or any Affiliate to terminate Participant's employment or
other relationship at any time, with or without Cause.
5. Manner of Exercise.
5.1. Stock Option Exercise Agreement. To exercise this Option,
Participant (or in the case of exercise after Participant's death or incapacity,
Participant's executor, administrator, heir or legatee, as the case may be) must
deliver to the Company an executed stock option exercise agreement in the form
attached hereto as Exhibit A, or in such other form as may be approved by the
Administrator from time to time (the "Exercise Agreement"), which shall set
forth, inter alia, (a) Participant's election to exercise the Option, (b) the
number of Shares being purchased, (c) any restrictions imposed on the Shares and
(d) any representations warranties and agreements regarding Participant's
investment intent and access to information as may be required by the Company to
comply with applicable securities laws. If someone other than Participant
exercises the Option, then such person must submit documentation reasonably
acceptable to the Company verifying that such person has the legal right to
exercise the Option.
5.2. Limitations on Exercise. The Option may not be exercised unless
such exercise is in compliance with all applicable federal and state securities
laws, as they are in effect on the date of exercise. The Option may not be
exercised for fewer than one (1) Share unless it is exercised as to all Shares
as to which the Option is then exercisable.
5.3. Payment. The entire Exercise Price of this Option to purchase
shares of Common Stock issued under the Plan shall be payable in full by cash or
check for an amount equal to the aggregate exercise price for the number of
shares being purchased. Alternatively, in the sole discretion of the Plan
Administrator and upon such terms as the Plan Administrator shall approve, the
Exercise Price may be paid by:
(a) paying all or a portion of the aggregate exercise price
for the number of shares of Common Stock being purchased by delivery to the
Company of other shares of Common Stock, duly endorsed for transfer to the
Company, with a Fair Market Value on the date of delivery equal to the exercise
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price (or portion thereof) due for the number of shares being acquired, or by
means of attestation whereby the Participant identifies for delivery specific
shares of Common Stock where such shares have a Fair Market Value on the date of
attestation equal to the exercise price (or portion thereof) and receives a
number of shares of Common Stock equal to the difference between the number of
shares thereby purchased and the number of identified attestation shares of
Common Stock (collectively a "Stock For Stock Exercise"); provided, however,
that the shares of Common Stock used in such Stock for Stock Exercise (i) have
either (1) been held for more than six (6) months (or such longer or shorter
period of time required to avoid a charge to earnings for financial accounting
purposes) and have been paid for within the meaning of SEC Rule 144 (and, if
such shares were purchased from the Company by use of a promissory note, such
note has been fully paid with respect to such shares); or (2) were obtained by
Participant in the open public market; and (ii) are clear of all liens, claims,
encumbrances or security interests.
(b) during any period for which the Common Stock is publicly
traded (i.e., the Stock is listed on any established stock exchange or a
national market system, including without limitation the Nasdaq National Market,
or if the Stock is quoted on the Nasdaq System (but not on the Nasdaq National
Market) or any similar system whereby the stock is regularly quoted by a
recognized securities dealer but closing sale prices are not reported), (i) a
copy of instructions to a broker-dealer that is a member of the National
Association of Securities Dealers (an "NASD Dealer") directing such broker to
sell the shares of Stock for which this option is exercised, and to remit to the
Company the aggregate Exercise Price of such option or (ii) through a "margin"
commitment from Participant and an NASD Dealer whereby Participant irrevocably
elects to exercise the Option and to pledge the Shares so purchased to the NASD
Dealer in a margin account as security for a loan from NASD Dealer in the amount
of the total Exercise Price, and whereby the NASD Dealer irrevocably commits
upon receipt of such Shares to forward the total Exercise Price directly to the
Company (collectively referred to as a "Cashless Exercise"); provided, however,
a Cashless Exercise by a Director or executive officer that involves or may
involve a direct or indirect extension of credit or arrangement of an extension
of credit by the Company, a Parent or Subsidiary in violation of Section 402(a)
of the Xxxxxxxx-Xxxxx Act (codified as Section 13(k) of the Securities Exchange
Act of 1934, 15 U.S.C. ss. 78m(k)) shall be prohibited;
(c) by cancellation of indebtedness of the Company to the
Participant;
(d) by waiver of compensation due or accrued to Participant
for services rendered;
(e) by any other form of legal consideration that may be
acceptable to the Administrator, including without limitation with a
full-recourse promissory note. However, if there is a stated par value of the
shares and applicable law requires, the par value of the shares, if newly
issued, shall be paid in cash or cash equivalents. The shares shall be pledged
as security for payment of the principal amount of the promissory note and
interest thereon. The interest rate payable under the terms of the promissory
note shall not be less than the minimum rate (if any) required to avoid the
imputation of additional interest under the Code. Subject to the foregoing, the
Administrator (in its sole discretion) shall specify the term, interest rate,
amortization requirements (if any) and other provisions of such note. Unless the
Administrator determines otherwise, shares of Common Stock having a Fair Market
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Value at least equal to the principal amount of the loan shall be pledged by the
holder to the Company as security for payment of the unpaid balance of the loan
and such pledge shall be evidenced by a pledge agreement, the terms of which
shall be determined by the Administrator, in its discretion; provided, however,
that each loan shall comply with all applicable laws, regulations and rules of
the Board of Governors of the Federal Reserve System and any other governmental
agency having jurisdiction. Exercise with a promissory note or other transaction
by a Director or executive officer that involves or may involve a direct or
indirect extension of credit or arrangement of an extension of credit by the
Company, or an Affiliate in violation of section 402(a) of the Xxxxxxxx-Xxxxx
Act (codified as Section 13(k) of the Securities Exchange Act of 1934, 15 U.S.C.
ss. 78m(k)) shall be prohibited; or
(f) by any combination of the foregoing.
5.4. Tax Withholding. Prior to the issuance of the Shares upon
exercise of the Option, Participant must pay or provide for any applicable
federal, state and local withholding obligations of the Company. If the
Administrator permits, Participant may provide for payment of withholding taxes
upon exercise of the Option by requesting that the Company retain Shares with a
Fair Market Value that does not exceed the minimum statutory amount of taxes
required to be withheld. In such case, the Company shall issue the net number of
Shares to the Participant by deducting the Shares retained from the Shares
issuable upon exercise.
5.5. Issuance of Shares. Provided that the Exercise Agreement and
payment are in form and substance satisfactory to counsel for the Company, the
Company shall issue the Shares registered in the name of Participant,
Participant's authorized assignee, or Participant's legal representative, and
shall deliver certificates representing the Shares with the appropriate legends
affixed thereto.
6. Notice of Disqualifying Disposition of ISO Shares. If the Option is an
ISO, and if Participant sells or otherwise disposes of any of the Shares
acquired pursuant to the ISO on or before the later of (a) the date two (2)
years after the Date of Grant, and (b) the date one (1) year after transfer of
such Shares to Participant upon exercise of the Option, Participant shall
immediately notify the Company in writing of such disposition. Participant
agrees that Participant will satisfy any obligation in the event any such
disposition causes Participant to be subject to income tax withholding by the
Company on the compensation income recognized by Participant from the early
disposition by payment in cash or out of the current wages or other compensation
payable to Participant.
7. Compliance with Laws and Regulations. The exercise of the Option and
the issuance and transfer of Shares shall be subject to compliance by the
Company and Participant with all applicable requirements of federal and state
securities laws and with all applicable requirements of any stock exchange on
which the Company's Common Stock may be listed at the time of such issuance or
transfer. Participant understands that the Company is under no obligation to
register or qualify the Shares with the SEC, any state securities commission or
any stock exchange to effect such compliance.
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8. Nontransferability of Option. If the Option is an ISO, the Option may
not be transferred in any manner other than by will or by the laws of descent
and distribution and may be exercised during the lifetime of Participant only by
Participant or in the event of Participant's incapacity, by Participant's legal
representative. The terms of the Option shall be binding upon the executors,
administrators, successors and assigns of Participant. If the Option is not an
ISO, upon written approval by the Administrator, it may be transferred by gift
or domestic relations order to a member of the Participant's immediate family
(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, any person sharing the Participant's household (other than a
tenant or employee), a trust in which these persons have more than 50% of the
beneficial interest, a foundation in which these persons (or the Participant)
control the management of assets, and any other entity in which these persons
(or the Participant) own more than 50% of the voting interests.
9. Privileges of Stock Ownership. Participant shall not have any of the
rights of a Stockholder with respect to any Shares until the Shares are issued
to Participant.
10. Obligation To Sell. Notwithstanding anything herein to the contrary,
if at any time following Optionee's acquisition of shares of Stock hereunder,
stockholders of the Company owning 51% or more of the shares of the Company (on
a fully diluted basis) (the "Control Sellers") enter into an agreement
(including any agreement in principal) to transfer all of their shares to any
person or group of persons who are not affiliated with the Control Sellers, such
Control Sellers may require each stockholder who is not a Control Seller (a
"Non-Control Seller") to sell all of their shares to such person or group of
persons at a price and on terms and conditions the same as those on which such
Control Sellers have agreed to sell their shares, other than terms and
conditions relating to the performance or non-performance of services. For the
purposes of the preceding sentence, an affiliate of a Control Seller is a person
who controls, which is controlled by, or which is under common control with, the
Control Seller.
11. Restrictions On Transfer.
11.1. Securities Law Restrictions. Regardless of whether the
offering and sale of shares of Stock under the Plan have been registered under
the Securities Act or have been registered or qualified under the securities
laws of any state, the Company at its discretion may impose restrictions upon
the sale, pledge or other transfer of such shares of Stock (including the
placement of appropriate legends on stock certificates or the imposition of
stop-transfer instructions) if, in the judgment of the Company, such
restrictions are necessary or desirable in order to achieve compliance with the
Securities Act, the securities laws of any state or any other law.
11.2. Market Stand-Off. If an underwritten public offering by the
Company of its equity securities pursuant to an effective registration statement
filed under the Securities Act, the Optionee shall not sell, make any short sale
of, loan, hypothecate, pledge, grant any option for the repurchase of, transfer
the economic consequences of ownership or otherwise dispose or transfer for
value or otherwise agree to engage in any of the foregoing transactions with
respect to any Stock without the prior written consent of the Company or its
underwriters, for such period of time from and after the effective date of such
registration statement as may be requested by the Company or such underwriters
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(the "Market Stand-Off"). In order to enforce the Market Stand-Off, the Company
may impose stop-transfer instructions with respect to the shares of Stock
acquired under this Agreement until the end of the applicable stand-off period
If there is any change in the number of outstanding shares of Stock by reason of
a stock split, reverse stock split, stock dividend, recapitalization,
combination, reclassification, dissolution or liquidation of the Company, any
corporate separation or division (including, but not limited to, a split-up, a
split-off or a spin-off), a merger or consolidation; a reverse merger or similar
transaction, then any new, substituted or additional securities which are by
reason of such transaction distributed with respect to any shares of Stock
subject to the Market Stand-Off, or into which such shares of Stock thereby
become convertible, shall immediately be subject to the Market Stand-Off.
11.3. Transfer of Stock Acquired Under Plan. Notwithstanding
anything to the contrary herein, if the Shares acquired upon exercise of this
Option are not readily tradable on an established securities market, Participant
may not transfer Shares acquired under this Plan within six months after the
purchase of such Shares (the "Six Months Holding Period"), other than, if
permitted by the Administrator in its discretion: (a) to satisfy minimum tax
withholding requirements, or (b) to a Permitted Transferee.
11.4. Investment Intent at Grant. If the grant of this option under
the Plan is not registered under federal or state securities laws, but an
exemption is available which requires an investment representation or other
representation, the Optionee shall represent and agree, at the time of grant of
this option, that the security being acquired upon the grant of this option is
being acquired for investment, and not with a view to the sale or distribution
thereof, and shall make such other representations as are deemed necessary or
appropriate by the Company and its counsel.
11.5. Investment Intent at Exercise. If the sale of shares of Stock
under the Plan is not registered under federal or state securities laws, but an
exemption is available which requires an investment representation or other
representation, the Optionee shall represent and agree at the time of exercise
that the shares of Stock being acquired upon exercise of this option are being
acquired for investment, and not with a view to the sale or distribution
thereof, and shall make such other representations as are deemed necessary or
appropriate by the Company and its counsel.
11.6. Legends. All certificates evidencing shares of Stock purchased
under this Agreement in an unregistered transaction shall bear the following
legend (and such other restrictive legends as are required or deemed advisable
under the provisions of any applicable law):
"THE SHARES OF COMMON STOCK EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO AND
TRANSFERABLE ONLY IN ACCORDANCE WITH THAT CERTAIN 2005 STOCK INCENTIVE PLAN, THE
OPTION AGREEMENT AND THE EXERCISE AGREEMENT PURSUANT TO WHICH THE SHARES
EVIDENCED BY THIS CERTIFICATE WERE ISSUED, COPIES OF WHICH ARE ON FILE AT THE
PRINCIPAL OFFICE OF THE COMPANY. NO TRANSFER OR PLEDGE OF THE SHARES EVIDENCED
HEREBY MAY BE MADE EXCEPT IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF
SAID PLAN AND OPTION AGREEMENT AND THE TERMS OF THE EXERCISE AGREEMENT."
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11.7. Removal of Legends. If, in the opinion of the Company and its
counsel, any legend placed on a stock certificate representing shares of Stock
sold under this Agreement no longer is required, the holder of such certificate
shall be entitled to exchange such certificate for a certificate representing
the same number of shares of Stock but without such legend.
11.8. Administration. Any determination by the Company and its
counsel in connection with any of the matters set forth in this Section 11 shall
be conclusive and binding on the Optionee and all other persons.
12. General.
12.1. Interpretation. Any dispute regarding the interpretation of
this Agreement shall be submitted by Participant or the Company to the
Administrator for review. The resolution of such a dispute by the Administrator
shall be final and binding on the Company and Participant.
12.2. Entire Agreement. The Plan is incorporated herein by
reference. This Agreement and the Plan constitute the entire agreement of the
parties and supercede all prior undertakings and agreements with respect to the
subject matter hereof. If any inconsistency should exit between the
nondiscretionary terms and conditions of this Agreement and the Plan, the Plan
shall govern and control.
12.3. Notices. Any notice required to be given or delivered to the
Company under the terms of this Agreement shall be in writing and addressed to
the Corporate Secretary of the Company at its principal corporate offices. Any
notice required to be given or delivered to Participant shall be in writing and
addressed to Participant at the address indicated above or to such other address
as such party may designate in writing from time to time to the Company. All
notices shall be deemed to have been given or delivered upon: (a) personal
delivery; (b) five (5) days after deposit in the United States mail by certified
or registered mail (return receipt requested); (c) two (2) business day after
deposit with any return receipt express courier (prepaid); or (d) one (1)
business day after transmission by facsimile.
12.4. Successors and Assigns. The Company may assign any of its
rights under this Agreement. This Agreement shall be binding upon and inure to
the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer set forth herein, this Agreement shall be binding upon
Participant and Participant's heirs, executors, administrators, legal
representatives, successors and assigns.
12.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas without giving
effect to its conflict of law principles. If any provision of this Agreement is
determined by a court of law to be illegal or unenforceable, then such provision
will be enforced to the maximum extent possible and the other provisions will
remain fully effective and enforceable.
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13. Acceptance. Participant hereby acknowledges receipt of a copy of the
Plan and this Agreement. Participant has read and understands the terms and
provisions thereof, and accepts the Option subject to all the terms and
conditions of the Plan and this Agreement. Participant acknowledges that there
may be adverse tax consequences upon exercise of the Option or disposition of
the Shares and that Participant should consult a tax advisor prior to such
exercise or disposition.
14. Section 409A Limitation. In the event the Administrator determines at
any time that this Option has been granted with an exercise price less than Fair
Market Value of the Common Stock subject to the Option on the date the Option is
granted (regardless of whether or not such exercise price is intentionally or
unintentionally priced at less than Fair Market Value, or is materially modified
at a time when the Fair Market Value exceeds the exercise price), or is
otherwise determined to constitute "nonqualified deferred compensation" within
the meaning of Section 409A of the Code, notwithstanding any provision of the
Plan or this Option Agreement to the contrary, the Option shall satisfy the
additional conditions applicable to nonqualified deferred compensation under
Section 409A of the Code, in accordance with Section 7 of the Plan. The
specified exercise date and term shall be the default date and term specified in
Section 7 of the Plan. Notwithstanding the foregoing, the Company shall have no
liability to any Participant or any other person if an Option designated as an
Incentive Stock Option fails to qualify as such at any time or if an Option is
determined to constitute "nonqualified deferred compensation" within the meaning
of Section 409A of the Code and the terms of such Option do not satisfy the
additional conditions applicable to nonqualified deferred compensation under
Section 409A of the Code and Section 7 of the Plan.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized representative and Participant has executed this Agreement,
effective as of the Date of Grant.
CRIMSON EXPLORATION INC.
By:
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Name:
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Title:
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PARTICIPANT
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(Signature)
Printed Name:
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EXHIBIT A
FORM OF STOCK OPTION EXERCISE AGREEMENT
2005 STOCK INCENTIVE PLAN
STOCK OPTION EXERCISE AGREEMENT
This Stock Option Exercise Agreement (the "Exercise Agreement") is made and
entered into as of _________________ (the "Effective Date"), by and between
Crimson Exploration Inc., a Delaware corporation (the "Company"), and the
purchaser named below (the "Purchaser"). Capitalized terms not defined herein
shall have the meanings ascribed to them in the Company's 2005 Stock Incentive
Plan (the "Plan") or the Stock Option Agreement.
Participant:
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Social Security Number:
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Address:
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Option Shares Being Purchased:
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Exercise Price Per Share:
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Date of Grant:
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Expiration Date:
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Type of Stock Option: |_| Incentive Stock Option
|_| Nonqualified Stock Option
1. Exercise of Option.
1.1. Exercise. Pursuant to exercise of that certain option
(the "Option") granted to Purchaser under the Plan and the Stock Option
Agreement and subject to the terms and conditions of this Exercise Agreement,
Purchaser hereby purchases from the Company, and the Company hereby sells to
Purchaser, the Total Number of Shares set forth above (the "Shares") of the
Company's Common Stock at the Exercise Price Per Share set forth above (the
"Exercise Price"). As used in this Exercise Agreement, the term "Shares" refers
to the Shares purchased under this Exercise Agreement and includes all
securities received (a) in replacement of the Shares, (b) as a result of stock
dividends or stock splits with respect to the Shares, and (c) all securities
received in replacement of the Shares in a merger, recapitalization,
reorganization or similar corporate transaction.
1.2. Title to Shares. The exact spelling of the name(s) under
which Purchaser will take title to the Shares is:
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Stock Option Exercise Agreement Page 1
Purchaser desires to take title to the Shares as follows:
|_| Individual, as separate property
|_| Husband and wife, as community property
|_| Joint Tenants
|_| Other; please specify:
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1.3. Payment. Purchaser hereby delivers payment of the
Exercise Price:
1.1 |_| in cash (by check), whether or not acquired
through a loan from the Company, in the amount of $_________, receipt of which
is acknowledged by the Company;
|_| by a broker assisted cashless exercise procedure that
has been approved by the Company;
|_| by tender of _______ shares of the Company's Common
Stock that has been owned for at least six months in a Stock-for-Stock exercise;
|_| by delivery of a promissory note payable to the
Company, in the amount of $_________; or
|_| other method or form of consideration that is
acceptable to the Plan Administrator in its sole discretion.
Payment of the Exercise Price in any form other than cash is
subject to the advance approval of the Plan Administrator in its sole
discretion.
2. Delivery.
2.1. Deliveries by Purchaser. Purchaser hereby delivers to
the Company (a) this Exercise Agreement, (b) if Purchaser is married, a consent
of spouse in the form of Exhibit A attached hereto executed by Purchaser's
spouse, (c) the Exercise Price and payment or other provision for any applicable
tax obligations in the form of a check, or, if permitted under applicable law
and permitted by the Administrator, a secured full recourse promissory note
("Note") and (d) if the Purchaser has provided a Note for exercise of the
Shares, a stock pledge agreement executed by Purchaser ("Pledge Agreement") and
two (2) copies of a blank stock power ("Stock Power"), both executed by
Purchaser (and Purchaser's spouse, if any).
Stock Option Exercise Agreement Page 2
2.2. Deliveries by the Company. Upon its receipt of the
Exercise Price, payment or other provision for any applicable tax obligations
and all the documents to be executed and delivered by Purchaser to the Company
under Section 2.1 hereof, the Company will issue a duly executed stock
certificate evidencing the Shares in the name of Purchaser, provided, however,
if the Purchaser has provided a Note for exercise of the Shares, such stock
certificate shall be placed in escrow as provided in Section 10 hereof to secure
payment of Purchaser's obligation under the Note.
3. Representations and Warranties of Purchaser. Purchaser
represents and warrants to the Company that:
3.1. Agrees to Terms of the Plan. Purchaser has received a
copy of the Plan and the Stock Option Agreement, has read and understands the
terms of the Plan, the Stock Option Agreement and this Exercise Agreement, and
agrees to be bound by their terms and conditions. Purchaser acknowledges that
there may be adverse tax consequences upon exercise of the Option or disposition
of the Shares, and that Purchaser should consult a tax advisor prior to such
exercise or disposition.
3.2. SEC Rule 144. Purchaser understands that Rule 144
promulgated under the Securities Act may indefinitely restrict transfer of the
Shares so long as Purchaser remains an "affiliate" of the Company or if "current
public information" about the Company (as defined in Rule 144) is not publicly
available.
4. Compliance with Securities Laws. Purchaser understands and
acknowledges that, notwithstanding any other provision of the Stock Option
Agreement to the contrary, the exercise of any rights to purchase any Shares is
expressly conditioned upon compliance with the Securities Act and all applicable
state securities laws. Purchaser agrees to cooperate with the Company to ensure
compliance with such laws.
5. Rights as a Stockholder. Subject to the terms and conditions
of this Exercise Agreement, Purchaser will have all of the rights of a
stockholder of the Company with respect to the Shares from and after the date
that Shares are issued to Purchaser until such time as Purchaser disposes of the
Shares.
6. Escrow. If the Purchaser has provided a Note for exercise of
the Shares, as security for Purchaser's faithful performance of this Exercise
Agreement, Purchaser agrees, immediately upon receipt of the stock
certificate(s) evidencing the Shares, to deliver such certificate(s), together
with the Stock Powers executed by Purchaser and by Purchaser's spouse, if any
(with the date and number of Shares left blank), to the Secretary of the Company
or other designee of the Company (the "Escrow Holder"), who is hereby appointed
to hold such certificate(s) and Stock Powers in escrow and to take all such
actions and to effectuate all such transfers and/or releases of such Shares as
are in accordance with the terms of this Exercise Agreement. Purchaser and the
Company agree that Escrow Holder will not be liable to any party to this
Exercise Agreement (or to any other party) for any actions or omissions unless
Escrow Holder is grossly negligent or intentionally fraudulent in carrying out
the duties of Escrow Holder under this Exercise Agreement. Escrow Holder may
rely upon any letter, notice or other document executed with any signature
purported to be genuine and may rely on the advice of counsel and obey any order
of any court with respect to the transactions contemplated by this Exercise
Agreement. The Shares will remain in escrow so long as they are subject to the
Pledge Agreement.
Stock Option Exercise Agreement Page 3
7. Tax Consequences. PURCHASER UNDERSTANDS THAT PURCHASER MAY
SUFFER ADVERSE TAX CONSEQUENCES AS A RESULT OF PURCHASER'S PURCHASE OR
DISPOSITION OF THE SHARES. PURCHASER REPRESENTS: (a) THAT PURCHASER HAS
CONSULTED WITH ANY TAX ADVISOR THAT PURCHASER DEEMS ADVISABLE IN CONNECTION WITH
THE PURCHASE OR DISPOSITION OF THE SHARES AND (b) THAT PURCHASER IS NOT RELYING
ON THE COMPANY FOR ANY TAX ADVICE. IN ADDITION TO THE FOREGOING, THE COMPANY
SHALL HAVE NO LIABILITY TO ANY PARTICIPANT OR ANY OTHER PERSON IF AN OPTION
DESIGNATED AS AN INCENTIVE STOCK OPTION FAILS TO QUALIFY AS SUCH AT ANY TIME OR
IF AN OPTION IS DETERMINED TO CONSTITUTE "NONQUALIFIED DEFERRED COMPENSATION"
WITHIN THE MEANING OF SECTION 409A OF THE CODE AND THE TERMS OF SUCH OPTION DO
NOT SATISFY THE ADDITIONAL CONDITIONS APPLICABLE TO NONQUALIFIED DEFERRED
COMPENSATION UNDER SECTION 409A OF THE CODE AND SECTION 7 OF THE PLAN.
8. Compliance with Laws and Regulations. The issuance and
transfer of the Shares will be subject to and conditioned upon compliance by the
Company and Purchaser with all applicable state, local and U.S. Federal laws and
regulations and with all applicable requirements of any stock exchange or
automated quotation system on which the Company's Common Stock may be listed or
quoted at the time of such issuance or transfer.
9. Obligation To Sell. Notwithstanding anything herein to the
contrary, if at any time following Optionee's acquisition of shares of Stock
hereunder, stockholders of the Company owning 51% or more of the shares of the
Company (on a fully diluted basis) (the "Control Sellers") enter into an
agreement (including any agreement in principal) to transfer all of their shares
to any person or group of persons who are not affiliated with the Control
Sellers, such Control Sellers may require each stockholder who is not a Control
Seller (a "Non-Control Seller") to sell all of their shares to such person or
group of persons at a price and on terms and conditions the same as those on
which such Control Sellers have agreed to sell their shares, other than terms
and conditions relating to the performance or non-performance of services. For
the purposes of the preceding sentence, an affiliate of a Control Seller is a
person who controls, which is controlled by, or which is under common control
with, the Control Seller.
10. Successors and Assigns. The Company may assign any of its
rights under this Exercise Agreement. This Exercise Agreement shall be binding
upon and inure to the benefit of the successors and assigns of the Company. This
exercise Agreement will be binding upon Purchaser and Purchaser's heirs,
executors, administrators, legal representatives, successors and assigns.
Stock Option Exercise Agreement Page 4
11. Governing Law; Severability. This Exercise Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware
without giving effect to its conflict of law principles. If any provision of
this Exercise Agreement is determined by a court of law to be illegal or
unenforceable, then such provision will be enforced to the maximum extent
possible and the other provisions will remain fully effective and enforceable.
12. Notices. Any notice required to be given or delivered to the
Company shall be in writing and addressed to the Corporate Secretary of the
Company at its principal corporate offices. Any notice required to be given or
delivered to Purchaser shall be in writing and addressed to Purchaser at the
address indicated above or to such other address as Purchaser may designate in
writing from time to time to the Company. All notices shall be deemed
effectively given upon personal delivery, (a) five (5) days after deposit in the
United States mail by certified or registered mail (return receipt requested),
(b) two (2) business day after its deposit with any return receipt express
courier (prepaid), or (c) one (1) business day after transmission by facsimile.
13. Further Instruments. The parties agree to execute such
further instruments and to take such further action as may be reasonably
necessary to carry out the purposes and intent of this Exercise Agreement.
14. Headings. The captions and headings of this Exercise
Agreement are included for ease of reference only and will be disregarded in
interpreting or construing this Exercise Agreement.
15. Entire Agreement. The Plan, the Stock Option Agreement,this
Exercise Agreement, together with all Exhibits thereto constitute the entire
agreement and understanding of the parties with respect to the subject matter of
this Exercise Agreement, and supersede all prior understandings and agreements,
whether oral or written, between the parties hereto with respect to the specific
subject matter hereof. If there is any inconsistency between the terms of this
Exercise Agreement and the terms of the Plan and Stock Option Agreement, the
terms of the Plan and Stock Option Agreement shall govern and control.
[SIGNATURE PAGE FOLLOWS]
Stock Option Exercise Agreement Page 5
1.2 IN WITNESS WHEREOF, the Company has caused this Exercise Agreement
to be executed in triplicate by its duly authorized representative and Purchaser
has executed this Exercise Agreement in triplicate as of the Effective Date,
indicated above.
CRIMSON EXPLORATION INC.
By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
PARTICIPANT
--------------------------------------------
(Signature)
Printed Name:
------------------------------
Stock Option Exercise Agreement Page 6
EXHIBIT A
SPOUSE CONSENT
Stock Option Exercise Agreement Page 7
SPOUSE CONSENT
The undersigned spouse of ____________________________ (the "Purchaser")
has read, understands, and hereby approves the Stock Option Exercise Agreement
(the "Agreement") between Purchaser and Crimson Exploration Inc., a Delaware
corporation (the "Company"). In consideration of the Company's granting my
spouse the right to purchase the Shares as set forth in the Agreement, the
undersigned hereby agrees to be irrevocably bound by the Agreement and further
agrees that any community property interest I may have in the Shares shall
similarly be bound by the Agreement. The undersigned hereby appoints Purchaser
as my attorney-in-fact with respect to any amendment or exercise of any rights
under the Agreement.
Dated:
----------------------------------
SPOUSE
-----------------------------------------
(Signature)
-----------------------------------------
Printed Name
Address:
--------------------------------
-----------------------------------------
-----------------------------------------
Stock Option Exercise Agreement Page 8
