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EXHIBIT 10(v)
INCENTIVE STOCK OPTION AGREEMENT
AGREEMENT made this 19th day of August, 1996, between K N ENERGY,
INC., a Kansas corporation (the "Company"), and ______________ ("Employee").
To carry out the purposes of the 1994 K N ENERGY, INC. LONG-TERM
INCENTIVE PLAN (the "Plan"), by affording Employee the opportunity to purchase
shares of the common stock of the Company ("Stock"), and in consideration of
the mutual agreements and other matters set forth herein and in the Plan, the
Company and Employee hereby agree as follows:
1. GRANT OF OPTION. The Company hereby irrevocably grants to
Employee the right and option ("Option") to purchase all or any part of an
aggregate of ______ shares of Stock, on the terms and conditions set forth
herein and in the Plan, which Plan is incorporated herein by reference as a
part of this Agreement. This Option is intended to constitute 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 $________ per share, which has
been determined to be not less than the fair market value of the Stock at the
date of grant of this Option. For all purposes of this Agreement, fair market
value of Stock shall be determined in accordance with the provisions of the
Plan.
3. EXERCISE OF OPTION. Subject to the remaining provisions of
this Paragraph and 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 at
any time and from time to time after the date of grant hereof. The aggregate
number of shares offered by this Option shall be divided into equal [one-third]
[one-fifth] increments to correspond with each year of the [three-] [five-]
year period following the grant hereof (the "Increments") and a portion of the
shares in each Increment shall be exercisable based on the Company's compounded
annual increase in earnings per share for the corresponding year in accordance
with the following schedule:
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COMPOUNDED ANNUAL INCREASE PORTION OF SHARES IN INCREMENT
IN EARNINGS PER SHARE THAT MAY BE PURCHASED
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15% or more 100%
10% but less than 15% 50%
less than 10% 0%
Notwithstanding anything in this Agreement to the contrary, this Option shall
be fully exercisable with respect to the aggregate number of shares offered by
the Option as of the earlier of: (a) the occurrence of a Change in Control of
the Company (as such term is defined in the Plan) or (b) nine years and six
months after the date of grant hereof. 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:
4. 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 by Employee (or 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) at any time during the period of one year following such
termination.
5. 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 at any time during
the period of one year following the date of Employee's death.
6. If Employee's employment with the Company terminates
for any reason other than as described in (a) or (b) above, this
Option may be exercised by Employee at any time during the period of
three 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 year following Employee's death if Employee dies during
such three-month period, but in each case only as to the number of
shares Employee was entitled to purchase hereunder as of the date
Employee's employment so terminates unless such termination was by
reason of normal retirement at or after age sixty-five in which case
this Option shall be exercisable in full.
This Option shall not be exercisable in any event after the expiration of ten
years from the date of grant hereof. Except as provided in Paragraph 4, 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), (b) by delivering to the Company
shares of Stock having a fair market value equal to the purchase price, (c) any
combination of cash or Stock or (d) any other arrangement satisfactory to the
Committee. 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 purchase
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 shareholder of the Company with
respect to shares acquirable upon an exercise of this Option.
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7. 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, state, or local
income tax purposes, Employee shall pay to the Company, or make arrangements
satisfactory to the Committee regarding payment of any federal, state, or local
taxes of any kind required by law to be withheld with respect to such income.
The Committee may permit payment of such taxes to be made through the tender of
cash or Stock, the withholding of Stock out of the shares distributable upon
the exercise or any other arrangement satisfactory to the Committee. The
Company shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment of any kind otherwise due to the Employee.
8. STATUS OF STOCK. The Company has registered for issuance
under the Securities Act of 1933, as amended (the "Act") the shares of Stock
acquirable upon exercise of this Option, and intends 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. The Company intends to use its
best efforts to ensure that no such delay will occur. 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 Committee deems appropriate in order to assure compliance with
applicable securities laws, (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.
9. 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 Committee and its determination shall
be final.
10. 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.
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11. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Colorado.
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 effective as of the day and year first above written.
K N ENERGY, INC.
BY:
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EMPLOYEE
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