FORM OF NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT entered into on [ ], but effective as of[ ] by and between
Vulcan Minerals & Energy, Inc., a Texas corporation (the "Company"), and [ ]
(the "Option Holder"), relating to an option to purchase [ ] shares of the
Company's common stock, par value $0.01 per share (the "Common Stock").
1. Grant of Option. The Company hereby grants to the Option Holder
effective as of June 2, 2000 (the "Grant Date") an option (the "Option") to
purchase 40,000 shares of Common Stock. The Option shall be exercisable, in
whole or in part as to any vested portion thereof, at an exercise price of $[ ]
per share (the "Option Price"). The Option shall be exercisable in increments
ratably as set forth in Exhibit A hereto (the "Vesting Schedule") determined by
the number of full years of service as an employee or director of the Company
from the date of grant to the date of exercise.
Notwithstanding anything in this Agreement to the contrary, the Vesting
Schedule is subject to Section 4 herein. The Board of Directors, in its sole
discretion, may waive the Vesting Schedule and, upon written notice to the
Option Holder, accelerate the earliest date or dates in which any of the Options
granted hereunder are exercisable. This Agreement and the purchase of the shares
of Common Stock hereunder is not intended and should not be interpreted to
qualify as an Incentive Stock Option as that term is used in Section 422 of the
Internal Revenue Code of 1986, as it may be amended from time to time (the
"Internal Revenue Code").
2. Method for Exercising the Option. The vested portion of the option may
be exercised in whole or in part only by delivery in person or through certified
or registered mail to the Company at its principal office in Houston, Texas
(attention: Corporate Secretary) of written notice specifying the Option that is
being exercised and the number of shares of Common Stock with respect to which
the Option is being exercised. The notice must be accompanied by payment of the
total Option Price.
The total Option Price for the Common Stock to be acquired pursuant to the
Option shall be paid in full by any of the following methods or any combination
of the following methods:
(a) In cash or by certified or cashier's check payable to the order of Vulcan
Minerals & Energy, Inc.;
(b) The delivery to the Company of certificates representing the number of
shares of Common Stock then owned by the Option Holder, the Designated
Value (defined below) of which equals the Option Price of the Common Stock
purchased pursuant to the Option, properly endorsed for transfer to the
Company; provided, however, that no Option may be exercised by delivery to
the Company of certificates representing Common Stock unless such Common
Stock has been held by the Option Holder for more than six months. (For
purposes of this Agreement, the Designated Value of any shares of Common
Stock delivered in payment of the Option Price upon exercise of the Option
shall be the Designated Value as of the exercise date, and the exercise
date shall be the day of delivery of the certificates for the Common Stock
used as payment of the Option Price);
(c) By delivery to the Company of a properly executed notice of exercise,
together with irrevocable instructions to a broker to delivery promptly to
the Company, in payment of the Option Price, the amount of the cash
proceeds of the sale of shares of Common Stock or a loan from the broker to
the Option Holder sufficient, in each case, to pay the Option Price, and in
a form satisfactory to the Corporate Secretary; or
(d) By delivery to the Company of sufficient Options, properly endorsed for
transfer to the Company, having a value sufficient to pay the Option Price
with respect to the other Options that are to be exercised under this
Agreement. The value of each Option to be surrendered in payment of the
Option Price shall be determined by subtracting the Option Price from the
Designated Value as of the date of receipt of notice of the exercise of the
Options by the Corporate Secretary.
Upon such notice to the Corporate Secretary and payment of the total Option
Price, the exercise of the Option shall be deemed to be effective, and a
properly executed certificate or certificates representing the Common Stock so
purchased shall be issued by the Company and delivered to the Option Holder.
For purposes of this Agreement, the "Designated Value" of the shares of
Common Stock on a given date shall mean (i) if the Common Stock is listed or
admitted for trading on any national securities exchange or the National Market
System of the National Association of Securities Dealers, Inc. Automated
Quotation System, the last sale price, or if no sale occurred, the mean between
the closing high bid and low asked quotations for such date of the Common Stock
on the principal securities exchange on which shares of Common Stock are listed,
(ii) if Common Stock is not traded on any national securities exchange but is
quoted on the National Association of Securities Dealers, Inc. Automated
Operations System, or any similar system of automated dissemination of
quotations or securities prices in common use, the mean between the closing high
bid and low asked quotations for such day of the Common Stock on such system,
(iii) if neither clause (i) nor (ii) is applicable, the mean between the high
bid and low asked quotations for the Common Stock as reported by the National
Quotation Bureau Incorporated if at least two securities deals have inserted
both bid and asked quotations for shares of the Common Stock on at least five
(5) of the ten (10) preceding days, or (iv) if none of the conditions set forth
above is met, the fair market value of shares of Common Stock as determined by
the Board. Provided, for purposes of determining "fair market value" of the
Common Stock of the Company, such value shall be determined without regard to
any restriction other than a restriction which will never lapse. In no event
shall the fair market value of the Common Stock be less than its par value.
3. Adjustment of the Option.
(a) Adjustment by Stock Split, Stock Dividend, Etc. If at anytime the
Company increases or decreases the number of its outstanding shares of
Common Stock, or changes in any way the rights and privileges of its Common
Stock by means of
(i) the payment of a stock dividend or the making of any other
distribution on such shares payable in Common Stock;
(ii) through a stock split or subdivision of shares of Common stock,
or a consolidation or combination of shares of Common Stock; or
(iii)through a reclassification or recapitalization involving the
Common Stock,
then the numbers, rights and privileges of the shares of Common Stock
included in the Option shall be increased, deceased or changed in like manner as
if such shares of Common Stock had been issued and outstanding, fully paid and
non-assessable at the time of such occurrence.
(b) Other Changes in Stock. In the event there is any change, other
than as specified in the preceding subsection 3(a) in the number or kind of
outstanding shares of Common Stock or of any stock or other securities into
which the Common Stock is changed or for which it has been exchanged, then
and if the Board of Directors of the Company, in its discretion, determines
that such change equitably requires an adjustment in the number or kind of
shares subject to the Option, such adjustments shall be made by the Board
of Directors and shall be effective for all purposes as of this Agreement.
(c) Apportionment of Option Price. Upon any occurrence described in
the preceding subsections 3(a) and (b), the aggregate Option Price for the
shares of Common Stock then subject to the Option shall remain unchanged
and shall be apportioned ratably over the increased or decreased number or
changed kinds of securities or other properties subject to the Option.
4. Change of Control; Termination with Cause; Corporate Transactions.
(a) In the event of a Change of Control (as defined in the Company's
1997 Incentive Stock Option Plan (the "Plan")), all outstanding Options,
whether exercisable or not, shall immediately vest and become exercisable
in accordance with Section 6(c) of the Plan.
(b) In the event the Option Holder's service as [ ] of the Company
terminates due to: (i) Option Holder being convicted of a crime involving
fraud against the Company or any of its affiliates or the theft or
embezzlement by Option Holder of assets of the Company or any of its
affiliates; or (ii) the conviction of, or the entering of a guilty plea or
no contest plea by Option Holder for a crime involving felony by a court of
competent jurisdiction; then, in any such event, all outstanding Options,
whether exercisable or not, shall expire on the date of termination.
(c) If the Company recapitalizes or otherwise changes its capital
structure, or merges, consolidates, sells all of its assets or dissolves,
and such transaction is not a Change of Control, then thereafter upon any
exercise of the Option hereunder, the Option Holder shall be entitled to
purchase under the Option, in lieu of the number of shares of Common Stock
covered by this Option then exercisable, the number and class of shares of
stock and securities to which the Option Holder would have been entitled
pursuant to the terms of the agreement of merger, consolidation, sale of
assets or dissolution, if, immediately prior to such agreement of merger,
consolidation, sale of assets or dissolution, the Option Holder had been
the holder of record of the number of shares of Common Stock as to which
the Option is then exercisable.
5. Expiration and Termination of the Option. The Option shall expire at
5:00 p.m. Houston, Texas, time on the tenth anniversary of the Grant Date (the
period from the date of this Agreement to the expiration date is defined as the
"Option Period") or prior to such time as follows:
Upon termination of Option Holder's services to the Company by reason of
the death of the Option Holder, the Options shall be exercisable as of the date
of the Option Holder's death and may be exercised by the Option Holder's estate
or by the person who acquired the right to exercise the Option by bequest or
inheritance. Such Options shall not be exercisable after the date they expire or
more than one year from the date of the Option Holder's death, whichever first
occurs.
6. Transferability. The Option may not be transferred except by will or
pursuant to the laws of descent and distribution, and it shall be exercisable
during the Option Holder's life only by him, or in the event of his disability
or incapacity, by his personal representative, and after his death, only by his
estate or by the person who acquired the right to exercise the Option by bequest
or inheritance.
7. Compliance with Securities Laws. Upon the acquisition of any shares
pursuant to the exercise of the Option herein granted, Option Holder or any
person acting under Section 5(b) will enter into such written representations,
warranties and agreements as the company may reasonably request in order to
comply with applicable securities laws or with this Agreement.
8. Legends on Certificates. The Certificates representing the shares of
Common Stock purchased by exercise of an Option will be stamped or otherwise
imprinted with legends in such form as the Company or its counsel may require
with respect to any applicable restrictions on sale or transfer and the stock
transfer records of the Company will reflect stock-transfer instructions with
respect to such shares.
9. Withholding.
(a) Arrangement for Withholding. The Option Holder hereby agrees to
make appropriate arrangements with the Company to provide for the amount of
tax withholding, if any, under applicable federal and state income tax laws
resulting from the exercise of the Option. If such arrangements are not
made, the Company may refuse to issue any Common Stock to the Option
Holder.
(b) Withholding Election. The Option Holder may elect to pay all such
amounts of tax withholding, or any part thereof, by electing to transfer to
the Company, or to have the Company withhold from shares otherwise issuable
to the Option Holder, shares of Common Stock having a value equal to the
amount required to be withheld or such lesser amount as may be elected by
the Option Holder. All elections shall be subject to the approval or
disapproval of the Board of Directors. The value of shares of Common Stock
to be withheld shall be based on the Designated Value of the Common Stock
on the date that the amount of tax to be withheld is to be determined (the
"Tax Date"). Any such election by the Option Holder to have shares of
Common Stock withheld for this purpose will be subject to the following
restrictions:
(i) All elections must be made prior to the Tax Date.
(ii) All elections shall be irrevocable.
(iii)If the Option Holder is an officer or director of the Company
within the meaning of Section 16 of the Securities Exchange Act of 1934, as
amended, ("Section 16"), the Option Holder must satisfy the requirements of
such Section 16 and any applicable rules thereunder with respect to the use
of Common Stock as consideration to satisfy such tax withholding
obligation.
10. Registration of Common Stock.
Should Vulcan become a publicly traded entity, the Company will undertake
to register the Common Stock to be acquired pursuant to this Option Agreement
for trading on a national securities exchange or the National Market Securities
Dealers, Inc. If, at the time Options under this Agreement become vested, and
the Company has not completed the registration process, the Company, upon
written notice, will purchase in cash within five (5) days of receipt of notice
from Option Holder, the Common Stock acquired by the Option Holder at the
"Designated Value" as set forth in paragraph 2 of this Agreement.
11. Miscellaneous.
(a) Notices. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be given by first class registered
or certified mail, postage prepaid, or by personal delivery to the
appropriate party, addressed;
(i) If to the Company, to the Company at its principal place of
business (as of the date hereof, 650 N. Sam Houston Parkway, East,
Suite 500, Houston, Texas 77060, telephone (281) 931-3800 (Attention:
Corporate Secretary) or at such other address as may have been
furnished to the Option Holder in writing by the Company; or
(ii) If to the Option Holder, to the Option Holder at his address
on file with the Company or at such other address as may have been
furnished to the Company by the Option Holder.
Any such notice shall be deemed to have been given as of the fourth day
after deposit in the United States Postal Service, postage prepaid, properly
addressed as set forth above, in the case of mailed notice, or as of the date
delivered in the case of personal delivery.
(b) Amendment. The Board of Directors may make any adjustment in the
Option Price, the number of shares of Common Stock subject to, or the terms
of the Option by amendment or by substitution of an outstanding Option.
Such amendment or substitution may result in terms and conditions
(including Option Price, the number of shares of Common Stock covered,
Vesting Schedule or Option Period) that differ from the terms and
conditions of this Option. The Board of Directors may not, however,
adversely affect the rights of the Option Holder without the consent of the
Option Holder. If such action is effective by amendment, the effective date
of such amendment will be the date of the original grant of this Option.
Except as provided herein, this Agreement may not be amended or otherwise
modified unless evidenced in writing and signed by the Company and the
Option Holder.
(c) Severability. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement, and each other provision of this
Agreement shall be severable and enforceable to the extent permitted by
law.
(d) Waiver. Any provision contained in this Agreement may be waived,
either generally or in any particular instance, by the Company.
(e) Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the Company and the Option Holder and their respective
heirs, executors, administrators, legal representatives, successors and
assigns.
(f) Rights to Employment. Nothing contained in this Agreement shall be
construed as giving the Option Holder any right to be retained in the
employ of the Company and this Agreement is limited solely to governing the
rights and obligations of the Option Holder with respect to the Common
Stock and the Option.
(g) Gender and Number. Except when otherwise indicated by the context,
the masculine gender shall also include the feminine gender, and the
definition of any term herein in the singular shall also include the
plural.
(h) Governing law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas without giving effect to
the conflicts of law provisions thereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
VULCAN MINERALS & ENERGY, INC.
By:
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Michael V. Ronca
Chairman of the Board
OPTION HOLDER
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[Name]
EXHIBIT "A"
Vesting Schedule
Conditions to Vesting Amount Exercisable
Upon the continuous employment of Cumulative proportion of the Stock as to
Option Holder by Employer through all or part of which the Option can be
the applicable date indicated below: exercised after satisfaction of the
respective conditions to vesting.
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1. The Six Month Anniversary of
the Grant Date 100 percent