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EXHIBIT 4.2
INCENTIVE STOCK OPTION AGREEMENT
AGREEMENT made this ___ day of ____________, 19___, between HUGOTON
ENERGY CORPORATION, a Kansas corporation (THE "COMPANY"), and ____________
___________________ ("EMPLOYEE").
To carry out the purposes of the HUGOTON ENERGY CORPORATION 1995
AMENDED AND RESTATED STOCK OPTION 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 OR 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 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. VESTING AND EXERCISE OF OPTION. The Option granted hereunder
shall vest as follows:
(a) the option to purchase 25% of the shares covered herein shall
vest immediately;
(b) the option to purchase 25% of the shares covered herein shall
vest twelve (12) months after the date of this Agreement;
(c) the option to purchase 25% of the shares covered herein shall
vest twenty-four (24) months after the date of this Agreement;
and
(d) the option to purchase 25% of the shares covered herein shall
vest thirty-six (36) months after the date of this Agreement.
Subject to 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.
The options granted hereunder must be exercised within thirty-six (36) months
after the date they become vested or they will expire worthless.
This Option is not transferable by Employee otherwise than by will or
the laws of descent and distribution, and may be exercised only by Employee
during Employee's lifetime. 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:
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(a) If Employee's employment with the Company terminates by
reason of disability (within the meaning of section 22(c)(3) of the
Code), this Option may be exercised in full (whether or not the option
is fully vested) 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.
(b) 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 (whether or not
the option is fully vested) at any time during the period of one year
following the date of Employee's death.
(c) If Employee's employment with the Company terminates for
any reason other than as described in (a) or (b) above, unless
Employee voluntarily terminates without the written consent of the
Company or is terminated for cause, 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 to the extent the Option was vested and only as to
the number of shares Employee was entitled to purchase hereunder as of
the date Employee's employment so terminates. For purposes of this
Agreement, "CAUSE" shall mean Employee's gross negligence or willful
misconduct in performance of the duties of his employment, or
Employee's final conviction of a felony or of a misdemeanor involving
moral turpitude.
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), or (b) by
delivering to the Company shares of Stock having a fair market value equal to
the purchase price, or (c) a combination of cash and Stock. 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 exercise 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 stockholder of the Company with respect to shares acquirable
upon an exercise of this Option.
4. 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 or state income
tax purposes, Employee shall deliver to the Company at the time of such
exercise or disposition such amount of money or shares of Stock as the Company
may require to meet its obligation under applicable tax laws or regulations,
and, if Employee fails to do so, the Company is authorized to withhold from any
cash or Stock remuneration then or thereafter payable to Employee any tax
required to be withheld by reason of such resulting compensation income.
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Upon an exercise of this Option, the Company is further authorized in its
discretion to satisfy any such withholding requirement out of any cash or
shares of Stock distributable to Employee upon such exercise.
5. STATUS OF STOCK. The Company plans to file a Form S-8
Registration Statement under the Securities Act of 1933, as amended (the "ACT")
and include the shares of Stock acquirable upon exercise of this Option, and
the Company intends to keep such registration effective throughout the period
this Option is exercisable. In the absence of such effective registration
statement or an available exemption from registration under the Act, issuance
of shares of Stock acquirable upon exercise of this Option will be delayed
until a registration statement is made 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, and (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.
6. 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.
7. 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.
8. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Kansas.
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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 as of the day and year first above written.
HUGOTON ENERGY CORPORATION
By:
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Name:
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Title:
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"EMPLOYEE"
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