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EXHIBIT 10.17
SOUTHERN MINERAL CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
SOUTHERN MINERAL CORPORATION, a Nevada corporation (the "COMPANY"),
hereby grants to X.X. Xxxxxx (the "OPTIONEE") an incentive stock option (the
"INCENTIVE OPTION") to purchase a total of 15,000 shares (the "SHARES") of the
Company's common stock, par value $.01 per share (the "COMMON STOCK"), at the
price determined as provided herein, and in all respects subject to the terms
and conditions of the Company's 1996 Stock Option Plan (the "Plan"), which is
incorporated herein in its entirety by reference. Capitalized terms not
otherwise defined in this agreement (the "INCENTIVE OPTION AGREEMENT ") shall
have the meaning given to such terms in the Plan.
1. NATURE OF OPTION. This Incentive Option is intended to
qualify as an Incentive Stock Option as defined in Section 422 of the Internal
Revenue Code of 1986, as amended (the "CODE").
2. EXERCISE PRICE. The exercise price of this Incentive Option is
$5.00 per share of Common Stock acquired on exercise, which price is not less
than 100% (or, if the Optionee, at the date of the grant of this Incentive
Option, owns more than 10% of the total combined voting power of all the
Company's outstanding voting securities, 110%) of the Fair Market Value, as
determined in accordance with the Plan, of a share of Common Stock on the date
of grant of this Incentive Option.
3. TERM OF OPTION. This Incentive Option may not be exercised prior to
six months from the date of grant of this Incentive Option as set forth herein
nor after the expiration of five years from such date of grant; provided, that
this Incentive Option may be exercised during such term only in accordance with
the terms and conditions of the Plan. and this Incentive Option Agreement,
subject specifically to Section 6 of the Plan-
4. EXERCISE OF OPTION. This Incentive Option shall be exercisable
during its term, subject to the provisions of Section 3 hereof and Section 6 of
the Plan, as follows;
(i) Vesting. For as long as the Optionee remains an Employee,
this Incentive Option shall vest cumulatively as follows: 5,000 Shares shall
vest on August 26, 1998, an additional 5,000 Shares shall vest on August 26,
1999 and an additional 5,000 Shares shall vest on August 26, 2000.
(ii) Right of Exercise. This Incentive Option is exercisable
at any time during the term of this Incentive Option Agreement, in whole or in
part, to acquire those Shares that have vested in accordance with this
Incentive Option Agreement; provided, however, that this Incentive Option may
only be exercisable to acquire whole shares of Common Stock.
(iii) Method of Exercise. This Incentive Option is
exercisable by delivery of this Incentive Option Agreement and a written notice
to the attention of the Secretary of the Company, no fewer than five business
days prior to the proposed effective date of exercise, signed by the Optionee,
specifying the number of Shares to be acquired on, and the effective date of,
such exercise. The Optionee may withdraw notice of exercise of this Incentive
Option at any time prior to close of business on the business day preceding the
proposed exercise date, and in this instance, the Company will return this
Incentive Option Agreement to the Optionee.
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(iv) Method of Payment. Payment of the exercise price for the
Shares purchased under this Incentive Option shall be delivered, by certified
mail to the attention of the Secretary of the Company, on the effective date of
exercise either (i) in cash, or by certified check, bank cashier's check, or
wire transfer, or (ii) -subject to the approval of the Committee, in whole or
in part in shares of Common Stock owned by the Optionee and valued at their
Fair Market Value on the effective date of exercise. If the payment of the
exercise price is remitted partly in shares of Common Stock, the balance of the
payment of the exercise price shall be paid in either cash, certified check,
bank cashiers' check, or by wire transfer. Such shares must be delivered to the
Secretary, duly endorsed in blank or accompanied by stock powers duly executed
in blank, and any other documents that the Secretary may require,
5. RESTRICTIONS ON EXERCISE. This Incentive Option may not be
exercised if the issuance of such Shares or the method of payment of the
consideration for such Shares would constitute a violation of any applicable
federal or state securities or other laws or regulations, including any rule
under Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G")
as promulgated by the Federal Reserve Board, or any rules or regulations of any
stock exchange on which the Common Stock may be listed.
This Incentive Option may only be exercised in accordance with the
terms and conditions of the Plan and this Incentive Option Agreement. If a
conflict exists between any term or provision of this Incentive Option
Agreement and a term or provision of the Plan, the applicable terms and
provisions of the Plan shall govern and prevail.
6. NON-TRANSFERABILITY OF OPTION. During the lifetime of the Optionee,
this Incentive Option may only be exercised by the Optionee. This Incentive
Option is not assignable or transferable otherwise than by will or by the laws
of descent and distribution. The terms of this Incentive Option Agreement shall
be binding on the Optionee's heirs and successors and on the administrators and
executors of the Optionee's estate.
7. QUALIFICATION AS AN INCENTIVE STOCK OPTION. The Optionee
understands that this Incentive Option is intended to qualify as an "incentive
stock option" within the meaning of Section 422 of the Code. The Optionee must
meet certain holding periods under Section 422(a) of the Code to obtain the
federal income tax treatment applicable to the exercise of Incentive Stock
Options and the disposition of shares acquired thereby, The Optionee further
understands that the exercise price of the Shares subject to this Incentive
Option has been set by the Committee of the Board of Directors at a price that
such Committee determined to be not less than 100% (or, if the Optionee, at the
date of grant of this Incentive Option, owned more than 10% of the total
combined voting power of the Company's outstanding voting securities, 110%) of
the Fair Market Value, as determined in accordance with the Plan, of a share of
Common Stock on. the date of grant. The Optionee further understands and
agrees, however, that the Company shall not be liable or responsible for any
additional tax liability incurred by the Optionee in the event that the
Internal Revenue Service for any reason determines that this Incentive Option
does not qualify as an Incentive Stock Option within the meaning of the Code.
8. INDEPENDENT LEGAL AND TAX ADVICE. Optionee acknowledges that
the Company has advised him to obtain independent legal and tax advice
regarding the grant and exercise of this Incentive Option and the disposition
of any Shares acquired thereby.
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9. AMENDMENT. This Incentive Option Agreement may not be amended,
modified or waived except by a written instrument signed by the party against
whom enforcement of any such modification, amendment or waiver is sought.
10. GOVERNING LAW. This Incentive Option Agreement shall be
governed by and shall be construed and enforced in accordance with the internal
laws, and not the laws of conflict, of the State of Texas.
11. SUPERSEDES PRIOR AGREEMENTS. This Incentive Option Agreement
shall supersede and replace all prior agreements and understandings, oral or
written, between the Company and the Optionee regarding the grant of the
Incentive Option covered hereby.
IN WITNESS WHEREOF, the Company has, as of August 26,1997, caused this
Incentive Option Agreement to be executed on its behalf by its President or any
Vice President and Optionee has hereunto set his hand as of the same date,
which date is the date of grant of this Incentive Option.
SOUTHERN MINERAL CORPORATION
By: /s/ XXXXXX X. XXXXX
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Xxxxxx X. Xxxxx, President
OPTIONEE
/s/ X.X. XXXXXX
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X.X. Xxxxxx
