INCENTIVE STOCK OPTION AGREEMENT
PURSUANT TO THE
1998 STOCK OPTION AND INCENTIVE PLAN
OF
PENNACO ENERGY, INC.
THIS INCENTIVE STOCK OPTION AGREEMENT (the "Agreement"), is made as of
____________________________ (the "Effective Date") by and between PENNACO
ENERGY, INC. , a Nevada corporation, (the "COMPANY") and __________________
_________________ (the "EMPLOYEE"), residing at ___________________________
_________________, pursuant to the COMPANY's 1998 Stock Option and Incentive
Plan (the "Plan").
WHEREAS, the Board of Directors of the COMPANY has adopted the Plan as
of March 24, 1998 to which this Agreement and the option granted hereunder
("Option") are subject; and
WHEREAS, the Board of Directors of the COMPANY has determined that it is
to the advantage and in the best interest of the COMPANY and its shareholders
to grant the Option provided for herein to EMPLOYEE as an inducement to
remain in the employ of the COMPANY, and as an incentive for increased effort
during such service.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
1. GRANT OF OPTION. The Company grants to EMPLOYEE the right and
option to purchase from the COMPANY, on the terms and conditions hereinafter
set forth, all or any part of an aggregate of __________ shares of the
authorized no par value common stock of the COMPANY, at the purchase price of
$2.00 per share (being not less than the fair market value per share of said
stock on the date hereof) as EMPLOYEE may from time to time elect,
exercisable on or after the Effective Date hereof for a period of 10 years
(the latter date hereinafter referred to as the "Terminal Date"), all in
accordance with the schedule attached hereto and marked Exhibit "A." No
partial exercise of such Option may be for less than 250 full shares, unless
the number purchased is the total number at the time purchasable under the
Option. In no event shall the COMPANY be required to transfer fractional
shares to EMPLOYEE. This Agreement and the Option granted hereunder are
subject to the Plan, a copy of which is attached hereto and incorporated
herein by reference as Exhibit "B."
2. METHOD OF EXERCISE. The Option granted hereunder shall be
exercisable, from Effective Date, as hereinabove provided, by written notice
which shall;
(a) state the election to exercise the Option, the number of
shares in respect of which it is being exercised, the person in whose name
the shares are to be issued (if the shares are issued to individuals), the
names, addresses and Social Security Numbers of such persons;
(b) contain such representations and agreements as to the holder's
investment intent with respect to such shares of Common Stock as are required
by law or as may be satisfactory to the COMPANY's counsel;
(c) be signed by the person or persons entitled to exercise the
Option and, if the Option is being exercised by any person or persons other
than the EMPLOYEE, be accompanied by proof, satisfactory to counsel for the
COMPANY, of the right of such person or persons to exercise the Option; and
(d) be accompanied by a payment for the purchase price of those
shares with respect to which the Option is being exercised in the form of
cash or check.
3. ISSUING OF STOCK CERTIFICATES. The certificate or certificates for
shares of Common Stock as to which the Option shall be exercised shall be
registered in the name of the person or persons exercising the Option. The
COMPANY shall not be required to transfer or deliver any certificate or
certificates for the shares purchased upon exercise of the Option granted
hereunder until (a) compliance with the terms of this Agreement, (b)
compliance with all then applicable requirements of law; and (c) admission of
such shares for trading privileges on any stock exchange on which the stock
may then be listed.
4. STOCK SUBJECT TO THE OPTION. The COMPANY shall set aside the
number of shares of Common Stock of the COMPANY subject to be granted upon
exercise of this Option which it now holds as authorized and unissued shares.
If the Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased shares which were subject
thereto shall be free from any restrictions occasioned by this Option
Agreement. If the COMPANY has been listed on a stock exchange, the COMPANY
will not be required to issue or deliver any certificate or certificates for
shares to be issued
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hereunder until such shares have been listed (or authorized for listing upon
official notice of issuance) upon each stock exchange on which outstanding
shares of the same class may then be listed and until the COMPANY has taken
such steps as may, in the opinion of counsel for the COMPANY, be required by
law and applicable regulations, including the rules and regulations of the
Securities and Exchange Commission, and state blue sky laws and regulations,
in connection with the issuance or sale of such shares, and the listing of
such shares on each such exchange. The COMPANY will use its best efforts to
comply with any such requirements forthwith upon the exercise of the Option.
5. TERMINATION OF OPTION. The Option and all rights granted hereunder
to the extent such rights shall not have been exercised, shall terminate and
become null and void on the Terminal Date or sooner if EMPLOYEE ceases to be
in the continuous employ of the COMPANY (whether by resignation, retirement,
dismissal, or otherwise), except that: (a) in the event of termination of
such employment for any reason other than the permanent disability of
EMPLOYEE, as defined in Section 22(e)(3) of the Internal Revenue Code, as
amended and as presently in effect (the "Code"), EMPLOYEE may at any time
within a period of three months thereafter exercise the Option granted
hereunder to the extent such Option was exercisable by EMPLOYEE on the date
of the termination of such employment; and (b) in the event of the permanent
disability of EMPLOYEE while in the employ of the COMPANY, the Option granted
hereunder, to the extent that EMPLOYEE was entitled to exercise such Option
on the date of EMPLOYEE's disability, may be exercised within one year after
such termination as a result of disability by EMPLOYEE or the person or
persons to whom EMPLOYEE's rights under the Option granted hereby shall pass
by will or by the applicable laws of descent and distribution.
Notwithstanding anything herein to the contrary, however, the Option and all
rights herein granted shall in all events terminate and become null and void
10 years from the date of this Agreement.
6. LIMITATION UPON TRANSFER. During the lifetime of EMPLOYEE, the
Option and all rights granted hereunder shall be exercisable only by
EMPLOYEE, and except as in paragraph 4 otherwise provided, the Option and all
rights granted hereunder shall not be transferred, assigned, pledged, or
hypothecated in any way (whether by operation of law or otherwise), and shall
not be subject to execution, attachment, or similar process. Upon any
attempt to transfer, assign, pledge, hypothecate, or otherwise dispose of
such Option or of such rights contrary to the provisions hereof, or upon the
levy of any attachment or similar process upon such Option or such rights,
such Option and such rights shall immediately become null and void.
7. CONDITION OF EMPLOYMENT. In order to be entitled to exercise the
Option granted hereunder as to the first increment of shares as shown in
Exhibit "A," EMPLOYEE must remain in the continuous employ of the COMPANY for
the period of at least six months from the date hereof.
8. STOCK AS INVESTMENT. By accepting this Option, the EMPLOYEE
acknowledges for EMPLOYEE or any heirs and legatees, that any and all shares
purchased hereunder shall be acquired for investment and not for
distribution, and upon the transfer of any or all of the shares subject to
the Option granted hereunder, the EMPLOYEE, or heirs or legatees receiving
such shares, shall deliver to the COMPANY a representation in writing that
such shares are being acquired in good faith for investment and not for
distribution. The EMPLOYEE shall not dispose (whether by sale, exchange,
gift, or any other transfer) of any shares of stock acquired pursuant to the
exercise of the Option granted hereunder, within two years after the grant of
this Option or one year after the transfer of such shares to him upon his
exercise of such Option. EMPLOYEE further recognizes that any disposition
(whether a sale, exchange, gift, or any other transfer) of any shares of
stock prior to the aforementioned periods will not only be a breach of this
Agreement, but will also disqualify the Option as a incentive stock Option
under Section 422A of the Code.
9. RECLASSIFICATION, CONSOLIDATION, OR MERGER. In the event of any
change in the common stock of the COMPANY subject to the Option granted
hereunder, through merger, consolidation, reorganization, recapitalization,
stock split, stock dividend, or other change in the corporate structure,
appropriate adjustment shall be made by the COMPANY in the number of shares
subject to such Option and the price per share; provided, however, that in
accordance with the provisions of Section 425(a) of the Code, a new Option
may be substituted for the Option granted hereunder or such Option may be
assumed by an employer corporation, or a parent or subsidiary of such
corporation, in connection with any transaction to which such Section is
applicable. Upon the dissolution or liquidation of the COMPANY other than in
connection with a transaction to which such Section is applicable, the Option
granted hereunder shall terminate and become null and void, but EMPLOYEE
shall have the right immediately prior to such dissolution or liquidation to
exercise the Option granted hereunder to the full extent not before exercised.
10. RIGHT AS SHAREHOLDER. Neither EMPLOYEE nor his executors,
administrators, heirs or legatees, shall be or have any rights or privileges
of a stock holder of the COMPANY in respect of the shares transferable upon
exercise of the Option granted hereunder, unless and until certificates
representing such shares shall have been endorsed, transferred, and delivered
and the transferee has caused his name to be entered as the shareholder of
record on the books of the COMPANY.
11. NOTICES. Any notice to be given under the terms of this Agreement
shall be addressed to the COMPANY in care of its Secretary at the main
offices for the transaction of its business, and any notice to be given to
EMPLOYEE shall be addressed to EMPLOYEE at the address set forth above, or at
such other place as either party may hereafter designate in writing to the
other. Any such notice shall be deemed duly given when enclosed in a
properly sealed envelope or wrapper addressed as herein required, certified
and deposited (postage and certification prepaid) in a post office regularly
maintained by the United States Government.
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12. BENEFITS OF AGREEMENT. This Agreement shall inure to the benefit
of and be binding upon each successor of the COMPANY. All obligations
imposed upon the EMPLOYEE and all rights granted to the COMPANY under this
Agreement shall be binding upon the EMPLOYEE's heirs, legal representatives,
and successors. This Agreement shall be the sole and exclusive source of any
and all rights which the EMPLOYEE, EMPLOYEE's heirs, legal representatives,
or successors may have in respect to the Plan or any options or Common Stock
granted or issued thereunder, whether to EMPLOYEE, or to any other person.
13. INTERNAL REVENUE CODE. All Options granted hereunder are granted
pursuant to the Internal Revenue Code, as amended, as it is in force and
effect at the date of grant.
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14. RESOLUTION OF DISPUTES. Any dispute or disagreement which should
arise under, or as a result of, or in any way relate to, the interpretation,
construction or application of this Agreement will be determined by the Board
of Directors of the COMPANY. Any determination made hereunder shall be
final, binding, and conclusive for all purposes.
IN WITNESS WHEREOF, the COMPANY has caused these presents to be executed
on its behalf by its President, to be sealed by its corporate seal, and
attested by its Secretary, and EMPLOYEE has hereunto set his hand the date
and year first above written, which is the time of the granting of the Option
hereunder.
"COMPANY" "EMPLOYEE"
PENNACO ENERGY, INC.
a Nevada corporation
By:
---------------------------------- -----------------------------------
Xxxxxxx X. Xxxxxx, PRESIDENT
-----------------------------------
Corporate Seal
ATTEST:
By: ----------------------------------
Xxxxxxx X. Xxxxxx, Secretary
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EXHIBIT "A"
INCENTIVE STOCK OPTION AGREEMENT
PURSUANT TO THE
1998 INCENTIVE STOCK OPTION AND INCENTIVE PLAN
OF
PENNACO ENERGY, INC.
--------------------
EXERCISE SCHEDULE
Option Period Number of Exercisable Option Shares
------------- -----------------------------------
1. On or after the Effective Date
through Terminal Date
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