EXHIBIT A
TO
NOTICE OF GRANT OF STOCK OPTIONS
TEJAS GAS CORPORATION
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") is between Tejas Gas Corporation,
a Delaware corporation ("Tejas"), and the Optionee named in the Notice of Grant
of Stock Options to which this EXHIBIT A is attached, which attached Notice of
Grant of Stock Options is incorporated herein and is an integral part hereof.
WHEREAS, Optionee and Tejas have executed the attached Notice of Grant of
Stock Options which constitutes execution of this Agreement by reference thereto
and incorporation herein;
WHEREAS, Tejas desires, by affording the Optionee an opportunity to
purchase shares of its common stock ("Common Stock"), as hereinafter provided,
to carry out the purpose of the Tejas Employee Stock Option Plan, as it may be
amended from time to time and hereinafter referred to as the "Plan"; and
WHEREAS, the Stock Option Committee of Tejas has granted this stock option;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the parties hereto agree as
follows:
1. GRANT OF OPTION. Tejas hereby grants to Optionee the option (the
"Option") to purchase, on terms and conditions hereinafter set forth, shares of
its Common Stock as indicated in the attached Notice of Grant of Stock Options.
2. TYPE OF OPTION. This option is granted as a Non-Qualified Stock Option
in accordance with the terms and conditions of the Plan.
3. TIME TO EXERCISE. Except as provided elsewhere herein, this Option shall
be exercisable in installments as indicated in the attached Notice of Grant of
Stock Options. To the extent not exercised, installments shall accumulate and be
exercisable, in whole or in part, in any subsequent period. No part of the
Option may be exercised after the date set forth in paragraph 5.
4. SUBJECT TO PLAN. This Option and the exercise hereof is subject to the
terms and conditions of the Plan which is incorporated herein by reference and
is made part hereof. If there is any inconsistency between this Agreement and
the Plan, the Plan will govern.
5. TERM. This Option shall terminate at 5:00 p.m., Houston time, on
_______.
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6. MANNER OF EXERCISE. To exercise this Option, Optionee shall give written
notice to Tejas of the number of shares being purchased and the purchase price
to be paid therefor accompanied by the following:
(a) full payment in cash or its equivalent (including the assignment of the
Common Stock of Tejas valued at its then fair market value) of the purchase
price for the shares of Common Stock being purchased;
(b) an amount required by the appropriate taxing authorities to be
collected for withholding taxes on the difference between the fair market value
of the shares on the date of exercise and the purchase price; provided if Tejas
shall be required to withhold any amounts by reason of any federal, state or
local tax rules or regulations in respect of the payment of cash or the issuance
of Common Stock pursuant to the exercise of an Option, then Tejas shall be
entitled to deduct and withhold such amounts from any cash payments to be made,
or Common Stock to be issued, to Optionee. In any event, Optionee shall make
available to Tejas, promptly when requested by Tejas, sufficient funds to meet
the requirements of such withholding, and Tejas shall be entitled to take and
authorize such steps as it may deem advisable in order to have such funds made
available to Tejas out of any funds or property (including, without limitation,
Common Stock) due or to become due to Optionee; and
(c) an undertaking to furnish or execute such documents as Tejas in its
reasonable discretion shall deem necessary, (1) to evidence the exercise, in
whole or in part, of the Option evidenced by this Agreement, (2) to determine
whether registration is then required under the Securities Act of 1933, as then
in effect, and (3) to comply with or satisfy the requirements of the Securities
Act of 1933, or any other law, as then in effect.
7. REGISTRATION. Tejas shall endeavor, but shall not be obligated, to
register the Common Stock to be issued upon exercise of the Option under the
Securities Act of 1933, as amended, as well as any applicable state statutes. In
the event that the Common Stock to be issued upon exercise of the Option is not
so registered, Tejas may, as a condition precedent to the exercise of the
Option, require from Optionee (or, in the event of his death, his legal heirs,
legatees or distributees) such written representations as, in the opinion of
counsel for Tejas, may be necessary to ensure that such exercise and subsequent
disposition will not involve a violation of the Securities Act of 1933, as
amended, or any other applicable federal or state statute as then in effect.
8. LAW GOVERNING. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the state of Delaware.
9. DEATH, DISABILITY, RETIREMENT, OF OR OTHER TERMINATION OF OPTIONEE. In
the event of the death, disability, resignation, termination for any reason
(with or without cause) or retirement of Optionee, Optionee or his heirs or
administrators shall be entitled to exercise any remaining vested options, as
follows:
(a) DEATH. If Optionee's employment by Tejas and its Subsidiaries (as
defined in Section 425 of the Internal Revenue Code of 1986, as amended)
terminates by reason of death, the Option shall be exercisable only to the
extent exercisable as of the date of death at any time prior to the expiration
date of the Option or within twelve (12) months after the date of death,
whichever
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period is shorter. Tejas may extend the exercise period beyond twelve (12)
months as it deems appropriate, but in no event shall the exercise period exceed
the expiration date of the Option. Options which were not exercisable as of the
date of death shall be forfeited and no longer subject to any right to exercise.
(b) DISABILITY. If Optionee's service to Tejas and its Subsidiaries
terminates by reason of disability (as defined under the Federal Social Security
Act of 1935, as amended), the Option shall be exercisable only to the extent
exercisable as of the date of such disability prior to the expiration date of
the Option or within three (3) months after the date of such disability,
whichever period is shorter. Options which were not exercisable as of the date
of disability shall be forfeited and no longer subject to any right to exercise.
(c) RETIREMENT. In the event the service of Optionee is terminated by
reason of normal or early retirement (as defined under the Tejas Pension Plan),
the Option shall be exercisable only to the extent exercisable as of the date of
such retirement prior to the expiration date of the Option or within thirty (30)
calendar days after the date of such retirement, whichever is shorter. Options
which were not exercisable as of the date of such retirement shall be forfeited
and no longer subject to any right to exercise.
(d) OTHER TERMINATION. If Optionee's employment shall terminate for any
reason (with or without cause) other than death, disability, or retirement (as
defined in Subsection 10 (a), (b) and (c) above), any Options which are
unexercised as of the date of such termination shall be forfeited and no longer
subject to any right to exercise.
10. PRIVILEGES. Optionee or any person entitled to exercise an Option
hereunder shall have no rights as a stockholder with respect to any shares
covered by this Option until the date of issuance of a certificate for such
shares.
11. NON-TRANSFERABILITY. The Option granted hereunder shall not be
transferable other than by laws of descent and distribution or by will.
12. EMPLOYMENT. Nothing in the Plan shall interfere with or limit in any
way the right of Tejas to terminate any Optionee's service at any time, nor
confer upon Optionee any right to continue in the employ of Tejas.
13. REQUIREMENTS OF LAW. The granting of the Option herein and the issuance
of shares of Common Stock upon the exercise of such Option shall be subject to
all applicable rules, laws, regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required. Tejas
shall make a good faith effort to take such reasonable actions as may be
necessary to comply with such rules, laws or regulations and to receive such
approvals as may be required.
END OF EXHIBIT A
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