ENCORE ACQUISITION COMPANY FORM OF NON-QUALIFIED STOCK OPTION AGREEMENT
Exhibit 10.4
This Non-Qualified Stock Option Agreement (“Agreement”) is made and entered into as of the date of
grant set forth below (the “Date of Grant”) by and between Encore Acquisition Company, a Delaware
corporation (the “Company”), and the optionee named below (“Optionee”). Capitalized terms not
defined herein shall have the meaning ascribed to them in the Company’s 2000 Incentive Stock Plan,
as amended and restated effective March 18, 2004, and as such plan may be thereafter amended (the
“Plan”).
Optionee: | |||||||
Social Security Number: | |||||||
Address: | |||||||
Total Option Shares: | |||||||
Exercise Price Per Share: | $ | ||||||
Date of Grant: | |||||||
Expiration Date for Exercise of Options: |
(1) This Option shall vest and be exercisable based on the following schedule:
(i) | 1/3 of the total Shares subject to this Option shall vest and be exercisable by Optionee 12 months after the Date of Grant; | ||
(ii) | Another 1/3 of the total Shares subject to this Option shall vest and be exercisable by Optionee 24 months after the Date of Grant; and | ||
(iii) | The final 1/3 of the total Shares subject to this Option shall vest and be exercisable by Optionee 36 months after the Date of Grant. |
(2) This Option may not be exercised for a fraction of a Share, but instead, the number
of Shares, which shall vest and be exercisable hereunder, shall be rounded up to the next
whole number of Shares.
(3) In the event of Optionee’s death, disability, or other termination of employment,
the exercisability of the Option is governed by Sections 4, 5 and 6 below.
(4) In no event may this Option be exercised after the date of expiration of the term
of this Option as set forth in Section 8 below.
No Shares will be issued pursuant to the exercise of an Option unless such issuance and such
exercise shall comply with all relevant provisions of law and the requirements of any stock
exchange upon which the Common Stock may then be listed. Assuming such compliance, for income tax
purposes the Shares shall be considered transferred to Optionee on the date on which the Option is
exercised with respect to such Shares.
The Company will, as soon as reasonably practicable, notify Optionee of the amount of
withholding tax, if any, that must be paid under federal, state and local law due to the exercise
of the Option. Optionee shall, prior to receiving the Shares purchased under this Option, satisfy
the amount of withholding tax specified in the Company’s notice by (i) cash or check, (ii)
assignment and delivery to the Company of shares of Common Stock owned by Optionee (without regard
to the length of time held by Optionee) having a Fair Market Value of such amount, (iii) notice to
the Company of Optionee’s election to have the Company withhold whole Shares otherwise deliverable
to Optionee from the exercise of the Option, which Shares have a Fair Market Value of such amount
or (iv) a combination of (i), (ii) or (iii).
Certificates for any shares of Common Stock delivered in satisfaction of all or a portion of
the Exercise Price and any withholding tax shall be appropriately endorsed for transfer and
assignment to the Company. For purposes of determining the amount, if any, of the Exercise Price
satisfied by delivery of shares of Common Stock or the amount of tax withholding satisfied by
delivery of shares of Common Stock or withholding of Shares from the exercise of the Option, such
shares shall be valued at Fair Market Value on the date of exercise.
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Sections 5 or 6 of this Agreement, Optionee may exercise this Option to the extent exercisable at
the date of such termination until the earlier of (i) the date three (3) months after the date of
such termination or (ii) the date of expiration of the term of this Option as set forth in Section
8 below. To the extent that Optionee was not entitled to exercise this Option at the date of such
termination, or if Optionee does not exercise this Option within the time specified herein, this
Option shall terminate.
“Continuous Status as an Employee” shall mean the absence of any interruption or termination
of service as an employee of the Company or any subsidiary or affiliate, as applicable. Continuous
Status as an Employee shall not be considered interrupted in the case of sick leave, military
leave, or any other leave of absence approved by the Board; provided that such leave is for a
period of not more than 90 days or reemployment upon the expiration of such leave is guaranteed by
contract or statute.
(a) during the term of this Option while an Employee of the Company and having been in
Continuous Status as an Employee since the date of grant of this Option or during the two (2) year
period specified in Section 5 following the termination of Optionee’s Continuous Status as an
Employee as a result of total and permanent disability, then this Option may be exercised with
respect to all Shares subject to this Option (to the extent not previously exercised) by Optionee’s
estate or by a person who acquired the right to exercise the Option by bequest or inheritance until
the earlier of (i) the date two (2) years following the date of death or (ii) the date of
expiration of the term of this Option as set forth in Section 8 below; or
(b) within the three (3) month period specified in Section 4 after the termination of
Optionee’s Continuous Status as an Employee, then this Option may be exercised to the extent
exercisable at termination by Optionee’s estate or by a person who acquired the right to exercise
this Option by bequest or inheritance until the earlier of (i) the date two (2) years following the
date of death or (ii) the date of expiration of the term of this Option as set forth in Section 8
below.
To the extent that such estate or other person does not exercise such Option within the two (2)
year time period specified in this Section 6, this Option shall terminate.
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OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER
ACKNOWLEDGES AND AGREES THAT THIS OPTION, THE COMPANY’S PLAN WHICH IS INCORPORATED HEREIN BY
REFERENCE, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT
CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED EMPLOYMENT AS AN EMPLOYEE FOR THE VESTING
PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH OPTIONEE’S RIGHT OR THE COMPANY’S
RIGHT TO TERMINATE OPTIONEE’S EMPLOYMENT RELATIONSHIP AT ANY TIME, WITH OR WITHOUT CAUSE.
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Optionee acknowledges receipt of a copy of the Plan, represents that Optionee is familiar with
the terms and provisions thereof, and hereby accepts this Option subject to all of the terms and
provisions thereof. Optionee has reviewed the Plan and this Option in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option and fully understands
all provisions of this Option. Optionee hereby agrees to accept as binding, conclusive and final
all decisions or interpretations of the Board or of the Committee upon any questions arising under
the Plan.
Date:
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_____________________________ |
THE COMPANY:
ENCORE ACQUISITION COMPANY, a Delaware corporation
By:
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_____________________________ | |
Name:
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_____________________________ | |
Title:
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_____________________________ |
OPTIONEE:
_____________________________ | ||
_____________________________ |
Consent of Spouse. The undersigned spouse of Optionee acknowledges receipt of a copy of
the Plan and this Non-Qualified Stock Option Agreement, represents that he/she is familiar with the
terms and provisions thereof, has had an opportunity to obtain the advice of counsel prior to
executing this consent and fully understands all provisions of this Option and consent. The
undersigned spouse hereby agrees to accept as binding, conclusive and final all decisions or
interpretations of the Board or of the Committee upon any questions arising under the Plan.
Signature of Spouse:
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_______________________________ | |
Printed or Typed Name:
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_______________________________ | |
Address:
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_______________________________ | |
____________________________________________________ |
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