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EXHIBIT 10.23
QUEEN SAND RESOURCES, INC.
INCENTIVE STOCK OPTION AGREEMENT
1. GRANT OF OPTION. Pursuant to the QUEEN SAND RESOURCES, INC. 1997
Incentive Equity Plan (the "PLAN") for employees of QUEEN SAND RESOURCES, INC.,
a Delaware corporation (the "COMPANY"), and its Subsidiaries, the Company grants
to
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(the "PARTICIPANT")
an option to purchase from the Company a total of _________ full shares
("OPTIONED SHARES") of Common Stock ("COMMON STOCK") of the Company at $______
per share (being the Fair Market Value per share of the Common Stock on this
Date of Grant, or 110% of the Fair Market Value in the case of a 10% or more
stockholder), in the amounts, during the periods, and upon the terms and
conditions set forth in this Agreement. The Date of Grant of this Stock Option
is _____________________, 19___.
This Stock Option is an Incentive Stock Option.
2. SUBJECT TO PLAN. The Plan is a separate legal document that contains
the general terms and conditions applicable to this Stock Option. This Stock
Option and its exercise are subject to the terms and conditions of the Plan, but
the terms of the Plan shall not be considered an enlargement of any benefits
under this Agreement. This Stock Option is subject to any rules promulgated
pursuant to the Plan by the Board or the Committee and communicated to the
Participant in writing.
3. DEFINITIONS. The capitalized terms used herein that are defined in
the Plan shall have the same meanings assigned to them in the Plan. For the
purpose of this Stock Option Agreement, "CAUSE" means, with respect to
Participant (i) acts of fraud or dishonesty in the course of his employment with
or service to the Company or any of its Subsidiaries, (ii) substance abuse
causing harm to the Company or any of its Subsidiaries or impairing the
Participant's performance of his regular duties, (iii) conviction of a felony
involving moral turpitude, or (iv) insubordination, dereliction of duties,
habitual absenteeism, materially deficient performance after (solely in the case
of this clause (iv)) notice to Participant and Participant's failure to correct
same within the time period specified in the notice, which time period shall be
not less than 10 business days, or (v) any event described as "cause" (or in any
other term or phrase having similar import) in any written
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employment agreement between the Option Holder and the Company (or any
Subsidiary).
4. VESTING; TIME OF EXERCISE. Except as specifically provided in this
Agreement and subject to certain restrictions and conditions set forth in the
Plan, this Stock Option is vested and exercisable in the following cumulative
installments:
FIRST INSTALLMENT. [_______________(__)] of the total Optioned Shares
on or after the first anniversary following the Date of Grant and until
the date specified in SECTION 6, provided that the Participant is still
employed by the Company or one of its Subsidiaries or serving as a
director of the Company on such first anniversary.
SECOND INSTALLMENT. An additional [______________ (__)] of the total
Optioned Shares on or after the second anniversary of the Date of Grant
and until the date specified in SECTION 6, provided that the
Participant is still employed by the Company or one of its Subsidiaries
or serving as a director of the Company on such second anniversary.
THIRD INSTALLMENT. An additional [_______________ (__)] of the total
Optioned Shares on or after the third anniversary of the Date of Grant
and until the date specified in SECTION 6, provided that the
Participant is still employed by the Company or one of its Subsidiaries
or serving as a director of the Company on such third anniversary.
5. ACCELERATION OF VESTING. Notwithstanding the provisions of SECTION 4
of this Stock Option Agreement, unvested Optioned Shares shall automatically
vest upon the occurrence of any of the following:
(a) a Change of Control in the Company;
[(b) Participant's death;]
[(c) Participant's Termination of Service due to
Retirement or the Disability;] or
[(d) the Company's termination of the Participant's
employment or service as a director without Cause.]
6. TERM; FORFEITURE. This Stock Option, and all unexercised Optioned
Shares granted to the Participant hereunder, will terminate and be forfeited at
the first of the following to occur:
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(a) 5:00 p.m. on _________________, 19__ [maximum 10 years
from Date of Grant, or 5 years for a 10% or more stockholder];
(b) 5:00 p.m. on the date which is one hundred eighty (180)
days following the Participant's Termination of Service due to death or
Disability;
(c) 5:00 p.m. on the date which is ninety (90) days following
the Participant's Termination of Service due to Retirement; or
(d) 5:00 p.m. on the date which is ninety (90) days following
the date of any other Termination of Service of the Participant.
7. WHO MAY EXERCISE. Subject to the terms and conditions set forth in
SECTIONS 4, 5 AND 6 above, during the lifetime of the Participant, this Stock
Option may be exercised only by the Participant or the Participant's guardian.
If a Termination of Service of the Participant occurs as a result of death or
Disability prior to the termination date specified in SECTION 6(A) hereof and
the Participant has not exercised this Stock Option as to the maximum percentage
of Optioned Shares set forth in SECTION 4 hereof as of the date of death or
Disability, the following persons may exercise the exercisable portion of this
Stock Option on behalf of the Participant at any time prior to the earlier of
the dates specified in SECTIONS 6(A) OR (B) hereof: (i) if the Participant is
disabled, the guardian of the Participant; or (ii) if the Participant dies, the
personal representative of his estate, or the person who acquired the right to
exercise this Stock Option by bequest or inheritance or by reason of the death
of the Participant; provided that this Stock Option shall remain subject to the
other terms of this Agreement, the Plan, and applicable laws, rules, and
regulations.
8. NO FRACTIONAL SHARES. This Stock Option may be exercised only with
respect to full shares of Common Stock, and no fractional share of Common Stock
shall be issued.
9. MANNER OF EXERCISE. Subject to such administrative regulations as
the Board or the Committee may from time to time adopt, this Stock Option may be
exercised by the delivery of written notice to the Secretary of the Company
setting forth the number of shares of Common Stock with respect to which the
Stock Option is to be exercised and the date of exercise thereof (the "EXERCISE
DATE") which shall be at least three (3) days after giving such notice unless an
earlier time shall have been mutually agreed upon. On the Exercise Date, the
Participant shall deliver to the Company consideration with a value equal to the
total Option Price of the shares to be purchased, payable as follows: (a) cash,
check, bank draft, or money order payable to the order of the Company, (b)
Common Stock (including Restricted Stock) owned by the Participant on the
Exercise Date, valued at its Fair Market Value on the Exercise Date, (c) by
delivery to the Company or its designated agent of an executed
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irrevocable option exercise form together with irrevocable instructions from the
Participant to a broker or dealer, reasonably acceptable to the Company, to sell
certain of the shares of Common Stock purchased upon exercise of the Stock
Option or to pledge such shares as collateral for a loan and promptly deliver to
the Company the amount of sale or loan proceeds necessary to pay such purchase
price, and/or (d) in any other form of valid consideration that is acceptable to
the Committee in its sole discretion.
Upon payment of all amounts due from the Participant, the Company shall
cause certificates for the Optioned Shares then being purchased to be delivered
as directed by the Participant (or the person exercising the Participant's Stock
Option pursuant to SECTION 7) at its principal business office promptly after
the Exercise Date. The obligation of the Company to deliver shares of Common
Stock shall, however, be subject to the condition that if at any time the
Committee shall determine in its discretion that the listing, registration,
quotation or qualification of the Stock Option or the Optioned Shares upon any
securities exchange or inter-dealer quotation system or under any state or
federal law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the Stock
Option or the issuance or purchase of shares of Common Stock thereunder, then
the Stock Option may not be exercised in whole or in part unless such listing,
registration, qualification, consent, or approval shall have been effected or
obtained free of any conditions not acceptable to the Committee.
If the Participant fails to pay for any of the Optioned Shares
specified in such notice or fails to accept delivery thereof, then the
Participant's right to purchase such Optioned Shares may be terminated by the
Company.
10. NON-ASSIGNABILITY. This Stock Option is not assignable or
transferable by the Participant except (i) by will or by the laws of descent and
distribution or (ii) pursuant to the terms of a qualified domestic relations
order (as defined in Section 411(a) (13) of the Code or Section 206(d) (3) of
the Employee Retirement Income Act of 1974, as amended), provided that in the
case of an Incentive Stock Option, such transfer or assignment may occur only to
the extent it will not result in disqualifying such option as an incentive stock
option under Section 422 of the Code, or any other successor provision.
11. RIGHTS AS STOCKHOLDER. The Participant will have no rights as a
stockholder with respect to any shares covered by this Stock Option until the
issuance of a certificate or certificates to the Participant for the shares.
Except as otherwise provided in SECTION 12 hereof, no adjustment shall be made
for dividends or other rights for which the record date is prior to the issuance
of such certificate or certificates.
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12. ADJUSTMENT OF NUMBER OF SHARES AND RELATED MATTERS. The number of
shares of Common Stock covered by this Stock Option, and the Option Price
thereof, shall be subject to adjustment in accordance with ARTICLES 13, 14, AND
15 of the Plan.
13. PARTICIPANT'S REPRESENTATIONS. Notwithstanding any of the
provisions hereof, the Participant hereby agrees that he or she will not
exercise the Stock Option granted hereby, and that the Company will not be
obligated to issue any shares to the Participant hereunder, if the exercise
thereof or the issuance of such shares shall constitute a violation by the
Participant or the Company of any provision of any law or regulation of any
governmental authority. Any determination in this connection by the Committee
shall be final, binding, and conclusive. The obligations of the Company and the
rights of the Participant are subject to all applicable laws, rules, and
regulations.
14. INVESTMENT REPRESENTATION. Unless the Common Stock is issued to him
in a transaction registered under applicable federal and state securities laws,
by his or her execution hereof, the Participant represents and warrants to the
Company that all Common Stock which may be purchased hereunder will be acquired
by the Participant for investment purposes for his or her own account and not
with any intent for resale or distribution in violation of federal or state
securities laws. Unless the Common Stock is issued to him in a transaction
registered under the applicable federal and state securities laws, all
certificates issued with respect to the Common Stock shall bear an appropriate
restrictive investment legend.
15. DISQUALIFYING DISPOSITION. In the event that Common Stock acquired
upon exercise of a Stock Option pursuant to this Agreement is disposed of by an
Participant prior to the expiration of either two years from the Date of Grant
of such Stock Option or one year from the issuance of shares to the Participant
pursuant to the exercise of such Stock Option, such Participant shall notify the
Company in writing of the date and terms of such disposition.
16. PARTICIPANT'S ACKNOWLEDGMENTS. The Participant acknowledges receipt
of a copy of the Plan, which is annexed hereto, and represents that he or she is
familiar with the terms and provisions thereof, and hereby accepts this Stock
Option subject to all the terms and provisions thereof. The Participant hereby
agrees to accept as binding, conclusive, and final all decisions or
interpretations of the Board, as that term is defined in the Plan, upon any
questions arising under the Plan or this Agreement.
17. GOVERNING LAW: FORUM. This Agreement shall be governed by,
construed, and enforced in accordance with the laws of the State of Texas
(excluding any conflict of laws rule or principle of Texas law that might refer
the governance,
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construction, or interpretation of this agreement to the laws of another state).
The parties agree that any proceeding regarding any dispute arising out of the
subject matter hereof shall be exclusively brought in federal or state courts
sitting in Dallas, Texas, U.S.A., and the parties hereto irrevocably waive any
objection to such venue based on forum nonconveniens or similar principle
18. NO RIGHT TO CONTINUE EMPLOYMENT. Nothing herein shall be construed
to confer upon the Participant the right to continue in the employment of the
Company or any Subsidiary or interfere with or restrict in any way the right of
the Company or any Subsidiary to discharge the Participant at any time (subject
to any contract rights of the Participant).
19. LEGAL CONSTRUCTION. In the event that any one or more of the terms,
provisions, or agreements that are contained in this Agreement shall be held by
a Court of competent jurisdiction to be invalid, illegal, or unenforceable in
any respect for any reason, the invalid, illegal, or unenforceable term,
provision, or agreement shall not affect any other term, provision, or agreement
that is contained in this Agreement and this Agreement shall be construed in all
respects as if the invalid, illegal, or unenforceable term, provision, or
agreement had never been contained herein.
20. COVENANTS AND AGREEMENTS AS INDEPENDENT AGREEMENTS. Each of the
covenants and agreements that is set forth in this Agreement shall be construed
as a covenant and agreement independent of any other provision of this
Agreement. The existence of any claim or cause of action of the Participant
against the Company, whether predicated on this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Company of the covenants and
agreements that are set forth in this Agreement.
21. ENTIRE AGREEMENT. This Agreement together with the Plan supersede
any and all other prior understandings and agreements, either oral or in
writing, between the parties with respect to the subject matter hereof and
constitute the sole and only agreements between the parties with respect to the
said subject matter. All prior negotiations and agreements between the parties
with respect to the subject matter hereof are merged into this Agreement. Each
party to this Agreement acknowledges that no representations, inducements,
promises, or agreements, orally or otherwise, have been made by any party or by
anyone acting on behalf of any party, which are not embodied in this Agreement
or the Plan and that any agreement, statement or promise that is not contained
in this Agreement or the Plan shall not be valid or binding or of any force or
effect.
22. PARTIES BOUND. The terms, provisions, representations, warranties,
covenants, and agreements that are contained in this Agreement shall apply to,
be binding upon, and inure to the benefit of the parties and their respective
heirs,
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executors, administrators, legal representatives, and permitted successors and
assigns.
23. MODIFICATION. No change or modification of this Agreement shall be
valid or binding upon the parties unless the change or modification is in
writing and signed by the parties. Notwithstanding the preceding sentence, the
Company may amend the Plan or revoke this Stock Option to the extent permitted
in the Plan.
24. HEADINGS. The headings that are used in this Agreement are used for
reference and convenience purposes only and do not constitute substantive
matters to be considered in construing the terms and provisions of this
Agreement.
25. GENDER AND NUMBER. Words of any gender used in this Agreement shall
be held and construed to include any other gender, and words in the singular
number shall be held to include the plural, and vice versa, unless the context
requires otherwise.
26. NOTICE. Any notice required or permitted to be delivered hereunder
shall be deemed to be delivered only when actually received by the Company or by
the Participant, as the case may be, at the addresses set forth below, or at
such other addresses as they have theretofore specified by written notice
delivered in accordance herewith:
(A) Notice to the Company shall be addressed and delivered as
follows:
QUEEN SAND RESOURCES, INC.
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Attention:
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(B) Notice to the Participant shall be addressed and delivered
as follows:
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer, and the Participant, to evidence his or
her consent and approval of all the terms hereof, has duly executed this
Agreement, as of the date specified in SECTION 1 hereof.
QUEEN SAND RESOURCES, INC.
By:
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Title:
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PARTICIPANT:
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