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EXHIBIT 4.3
NONSTATUTORY STOCK OPTION AGREEMENT
This Nonstatutory Stock Option Agreement (the "AGREEMENT") is made and
entered into on this 8th day of September, 1995, by and between HUGOTON ENERGY
CORPORATION, a Kansas corporation (THE "COMPANY"), and XXX X. XXXXXX
("EMPLOYEE").
In consideration of the mutual agreements and other matters set forth
herein, the Company and Employee hereby agree as follows:
1. GRANT OR OPTION. The Company hereby irrevocably grants to
Employee the right and option ("OPTION") to purchase all or any part of an
aggregate of 125,000 shares of common stock of the Company ("STOCK"), on the
terms and conditions set forth herein. Exercise of this Option is subject to,
and contingent upon, approval of this Agreement by the stockholders of the
Company on or before twelve (12) months after the date this Agreement is
approved by the Board of Directors of the Company (the "BOARD"). This Option
shall not be treated as an incentive stock option within the meaning of section
422(b) of the Internal Revenue Code of 1986, as amended (the "CODE").
2. PURCHASE PRICE. The purchase price of Stock purchased
pursuant to the exercise of this Option shall be $8.25 per share.
3. VESTING AND EXERCISE OF OPTION. The Option granted hereunder
shall vest as follows:
(a) the option to purchase 25% of the shares covered herein shall
vest immediately;
(b) the option to purchase 25% of the shares covered herein shall
vest twelve (12) months after the date of this Agreement;
(c) the option to purchase 25% of the shares covered herein shall
vest twenty-four (24) months after the date of this Agreement;
and
(d) the option to purchase 25% of the shares covered herein shall
vest thirty-six (36) months after the date of this Agreement.
Subject to the earlier expiration of this Option as herein provided,
this Option may be exercised by written notice to the Company at its principal
executive office addressed to the attention of its Chief Executive Officer.
The options granted hereunder must be exercised within thirty-six (36) months
after the date they become vested or they will expire worthless.
This Option is not transferable by Employee otherwise than by will or
the laws of descent and distribution, and may be exercised only by Employee
during Employee's lifetime. This option may be exercised only while Employee
remains an employee of the Company and will terminate and cease to be
exercisable upon Employee's termination of employment with the Company, except
that:
(a) If Employee's employment with the Company terminates by
reason of disability (within the meaning of section 22(e)(3) of the
Code), this Option may be exercised in full (whether or not the option
is fully vested) by Employee (or Employee's estate or the person who
acquires this Option by will or the laws of descent and
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distribution or otherwise by reason of the death of Employee) at any
time during the period of one (1) year following such termination.
(b) If Employee dies while in the employ of the Company,
Employee's estate, or the person who acquires this Option by will or
the laws of descent and distribution or otherwise by reason of the
death of Employee, may exercise this Option in full (whether or not
the option is fully vested) at any time during the period of one (1)
year following the date of Employee's death.
(c) If Employee's employment with the Company terminates for
any reason other than as described in (a) or (b) above, unless
Employee voluntarily terminates without the written consent of the
Company or is terminated for cause, this Option may be exercised by
Employee at any time during the period of three (3) months following
such termination, or by Employee's estate (or the person who acquires
this Option by will or the laws of descent and distribution or
otherwise by reason of the death of Employee) during a period of one
(1) year following Employee's death if Employee dies during such
three-month period, but in each case only to the extent the Option was
vested and only as to the number of shares Employee was entitled to
purchase hereunder as of the date Employee's employment so terminates.
For purposes of this Agreement, "CAUSE" shall mean the inability of
Employee, through sickness or other incapacity, to perform his duties
under his employment agreement for a period of six (6) months,
dishonesty, theft, conviction of a crime involving moral turpitude or
commission of a material act of fraud against the Company or its
subsidiaries, failure of Employee to observe or perform his material
duties and obligations as an employee of the Company or a material
breach of his employment agreement.
The purchase price of shares as to which this Option is exercised
shall be paid in full at the time of exercise (a) in cash (including check,
bank draft or money order payable to the order of the Company), or (b) by
delivering to the Company shares of Stock having a fair market value equal to
the purchase price, or (c) a combination of cash and Stock. No fraction of a
share of Stock shall be issued by the Company upon exercise of an Option or
accepted by the Company in payment of the exercise price thereof, rather,
Employee shall provide a cash payment for such amount as is necessary to effect
the issuance and acceptance of only whole shares of Stock. Unless and until a
certificate or certificates representing such shares shall have been issued by
the Company to Employee, Employee (or the person permitted to exercise this
Option in the event of Employee's death) shall not be or have any of the rights
or privileges of a stockholder of the Company with respect to shares acquirable
upon an exercise of this Option.
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4. RECAPITALIZATION.
(a) The shares with respect to which this Option is granted are
shares of Stock as presently constituted but if, and whenever, prior to the
expiration of this Option, the Company shall effect a subdivision or
consolidation of shares of Stock or the payment of a stock dividend on Stock
without receipt of consideration by the Company, the number of shares of Stock
with respect to which this Option may thereafter be exercised (a) in the event
of an increase in the number of outstanding shares shall be proportionately
increased, and the purchase price per share shall be proportionately reduced
and (b) in the event of a reduction in the number of outstanding shares shall
be proportionately reduced and the purchase price per share shall be
proportionately increased. If the Company recapitalizes or otherwise changes
its capital structure, thereafter upon any exercise hereunder, Employee shall
be entitled to purchase, in lieu of the number of shares of Stock as to which
this Option shall be exercisable, the number and class of shares of stock and
securities to which he would have been entitled pursuant to the terms of the
recapitalization if, immediately prior to such recapitalization, he had been
the holder of record of the number of shares of Stock as to which this Option
is then exercisable.
The existence of the Options granted hereunder shall not affect in any
way the right or power of the Board or the stockholders of the Company to make
or authorize any adjustment, recapitalization, reorganization or other change
in the Company's capital structure or its business, any merger or consolidation
of the Company, any issue of debt or equity securities, the dissolution or
liquidation of the Company or any sale, lease, exchange or other disposition of
all or any part of its assets or business or any other corporate act or
proceeding.
(b) If the Company recapitalizes, reclassifies its capital stock, or
otherwise changes its capital structure (a "recapitalization"), the number and
class of shares of Stock covered by this Option shall be adjusted so that such
Option shall thereafter cover the number and class of shares of stock and
securities to which Employee would have been entitled pursuant to the terms of
the recapitalization if, immediately prior to the recapitalization, Employee
had been the holder of record of the number of shares of Stock then covered by
this Option. If (i) the Company shall not be the surviving entity in any
merger, consolidation or other reorganization (or survives only as a subsidiary
of an entity other than a previously wholly-owned subsidiary of the Company),
(ii) the Company sells, leases or exchanges substantially all of its assets to
any other person or entity (other than a wholly-owned subsidiary of the
Company), (iii) the Company is to be dissolved and liquidated, (iv) any person
or entity, including a "group" as contemplated by Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended, acquires or gains ownership or
control (including, without limitation, power to vote) of more than 50% of the
outstanding shares of the Company's voting stock (based upon voting power), or
(v) as a result of or in connection with a contested election of directors, the
persons who were directors of the Company before such election shall cease to
constitute a majority of the Board (each such event is referred to herein as a
"Corporate Change"), no later than (a) ten (10) days after the approval by the
stockholders of the Company of such merger, consolidation, reorganization,
sale, lease or exchange of assets or dissolution or such election of directors
or (b) thirty (30) days after a change of control of the type described in
clause (iv) the Board, acting in its sole discretion without the consent or
approval of Employee, shall act to effect one or more of the following
alternatives, which may vary: (1) accelerate the time at which this Option
may be exercised so that this Option may be exercised in full for a limited
period of time on or before a specified date
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(before or after such Corporate Change) fixed by the Board, after which
specified date all unexercised portions of this Option and all rights of
Employee thereunder shall terminate, (2) require that mandatory surrender to
the Company by Employee of this Option (irrespective of whether this Option is
then exercisable) as of a date, before or after such Corporate Change,
specified by the Board, in which event the Board shall thereupon cancel this
Option and the Company shall pay to Employee an amount of cash per share equal
to the excess, if any, of the amount calculated in subparagraph (d) below (the
"Change of Control Value") of the shares subject to this Option over the
exercise price(s) under this Option for such shares, (3) make such adjustments
to this Option as the Board deems appropriate to reflect such Corporate Change
(provided, however, that the Board may determine in its sole discretion that no
adjustment is necessary to this Option) or (4) provide that the number and
class of shares of Stock covered by this Option shall be adjusted so that this
Option shall thereafter cover the number and class of shares of stock or other
securities or property (including, without limitation, cash) to which Employee
would have been entitled pursuant to the terms of the agreement of merger,
consolidation or sale of assets and dissolution if, immediately prior to such
merger, consolidation or sale of assets and dissolution Employee had been the
holder of record of the number of shares of Stock then covered by this Option.
(c) For the purposes of clause (2) in subparagraph (b) above, the
"Change of Control Value" shall equal the amount determined in clause (i), (ii)
or (iii), whichever is applicable, as follows: (i) the per share price offered
to stockholders of the Company in any such merger, consolidation,
reorganization, sale of assets or dissolution transaction, (ii) the price per
share offered to stockholders of the Company in any tender offer or exchange
offer whereby a Corporate Change takes place, or (iii) if such Corporate Change
occurs other than pursuant to a tender or exchange offer, the fair market value
per share of the shares into which this Option, if being surrendered are
exercisable, as determined by the Board as of the date determined by the Board
to be the date of cancellation and surrender of this Option. In the event that
the consideration offered to stockholders of the Company in any transaction
described in this subparagraph (c) or subparagraph (b) above consists of
anything other than cash, the Board shall determine the fair cash equivalent of
the portion of the consideration offered which is other than cash.
(d) Any adjustment provided for in subparagraph (a) or (b) above
shall be subject to any required stockholder action.
(e) Except as hereinbefore expressly provided, the issuance by the
Company of shares of stock of any class or securities convertible into shares
of stock of any class, for cash, property, labor or services, upon direct sale,
upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, and in any case whether or not for fair value, shall not
affect, and no adjustment by reason therefor shall be made with respect to, the
number of shares of Stock subject to this Option or the purchase price per
share.
5. WITHHOLDING OF TAX. To the extent that the exercise of this
Option or the disposition of shares of Stock acquired by exercise of this
Option results in compensation income to Employee for federal or state income
tax purposes, Employee shall deliver to the Company at the time of such
exercise or disposition such amount of money or shares of Stock as the
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Company may require to meet its obligation under applicable tax laws or
regulations, and, if Employee fails to do so, the Company is authorized to
withhold from any cash or Stock remuneration then or thereafter payable to
Employee any tax required to be withheld by reason of such resulting
compensation income. Upon an exercise of this Option, the Company is further
authorized in its discretion to satisfy any such withholding requirement out of
any cash or shares of Stock distributable to Employee upon such exercise.
6. STATUS OF STOCK. Following approval of this Agreement by the
stockholders of the Company, the Company intends to register for issuance under
the Securities Act of 1933, as amended (the "Act") the shares of Stock
acquirable upon exercise of this Option, and to keep such registration
effective throughout the period this Option is exercisable. In the absence of
such effective registration or an available exemption from registration under
the Act, issuance of shares of Stock acquirable upon exercise of this Option
will be delayed until registration of such shares is effective or an exemption
from registration under the Act is available. In the event exemption from
registration under the Act is available upon an exercise of this Option,
Employee (or the person permitted to exercise this Option in the event of
Employee's death or incapacity), if requested by the Company to do so, will
execute and deliver to the Company in writing an agreement containing such
provisions as the Company may require to assure compliance with applicable
securities laws.
Employee agrees that the shares of Stock which Employee may acquire by
exercising this Option will not be sold or otherwise disposed of in any manner
which would constitute a violation of any applicable securities laws, whether
federal or state. Employee also agrees (i) that the certificates representing
the shares of Stock purchased under this Option may bear such legend or legends
as the Company deems appropriate in order to assure compliance with applicable
securities laws, and (ii) that the Company may refuse to register the transfer
of the shares of Stock purchased under this Option on the stock transfer
records of the Company if such proposed transfer would in the opinion of
counsel satisfactory to the Company constitute a violation of any applicable
securities laws and (iii) that the Company may give related instructions to its
transfer agent, if any, to stop registration of the transfer of the shares of
Stock purchased under this Option.
7. EMPLOYMENT RELATIONSHIP. For purposes of this Agreement,
Employee shall be considered to be in the employment of the Company as long as
Employee remains an employee of either the Company, a parent or subsidiary
corporation (as defined in section 424 of the Code) of the Company, or a
corporation or a parent or subsidiary of such corporation assuming or
substituting a new option for this Option. Any question as to whether and when
there has been a termination of such employment, and the cause of such
termination, shall be determined by the Board and its determination shall be
final.
8. PLAN. This Agreement is intended to constitute an employee
benefit plan within the meaning of Rule 405 of the Act.
9. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of any successors to the Company and all persons lawfully
claiming under Employee.
10. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Kansas.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed, by its officer thereunto duly authorized, and Employee has executed
this Agreement, all as of the day and year first above written.
HUGOTON ENERGY CORPORATION
By:
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Name:
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Title:
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XXX X. XXXXXX
"EMPLOYEE"
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