EXHIBIT 99.04
EL PASO ELECTRIC COMPANY
STOCK OPTION AGREEMENT
(NON-QUALIFIED STOCK OPTIONS)
El Paso Electric Company, a Texas corporation (the "Company"), hereby
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grants to David H. Wiggs, Jr. (the "Optionee") as of June 11, 1996 (the "Option
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Date"), pursuant to the provisions of the El Paso Electric Company 1996 Long-
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Term Incentive Plan (the "Plan"), a non-qualified option to purchase from the
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Company 200,000 shares of its Common Stock, no par value ("Stock"), at the price
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of $5.56 per share and a non-qualified option to purchase from the Company
300,000 shares of Stock at the price of $7.00 per share (the "Options") upon and
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subject to the terms and conditions set forth below.
1. Options Subject to Acceptance of Agreement. The Options shall be null
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and void unless (i) the Optionee shall accept this Agreement by executing it in
the space provided below and returning such original execution copy to the
Company, (ii) the Plan is approved by the affirmative vote of a majority of the
shares of Stock present in person or represented by proxy at the Special Meeting
of Shareholders on November 14, 1996 and (iii) the Plan is approved by all
necessary regulatory authorities.
2. Time and Manner of Exercise of Option.
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2.1. Maximum Term of Option. In no event may the Options be exercised, in
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whole or in part, after June 10, 2006 (the "Expiration Date").
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2.2. Exercise of Option. (a) The Options shall become exercisable
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immediately upon the receipt of the approvals described in Section 1 above.
(b) If the Consulting Agreement dated as of May 1, 1996 between the
Optionee and the Company (the "Consulting Agreement") is terminated by the
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Company for "cause" (as defined therein), or is terminated voluntarily by the
Optionee, or is terminated by the Company by reason of the Optionee's "Total
Disability" (as defined therein) or death, the Option may thereafter be
exercised by the Optionee or his Legal Representative or Permitted Transferees,
as the case may be, until the date which is 120 days after the date of
termination of the Consulting Agreement.
2.3 Method of Exercise. Subject to the limitations set forth in this
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Agreement, any Option may be exercised by the Optionee (1) by giving written
notice to the Company specifying the number of whole shares of Stock to be
purchased and accompanied by payment therefor in full (or arrangement made for
such payment to the Company's satisfaction) either (i) in cash, (ii) by delivery
of previously owned whole shares of Stock (which the Optionee has held for at
least six months prior to the delivery of such shares or which the Optionee
purchased on the open market and for which the Optionee has good title, free and
clear of all liens and encumbrances) having a Fair Market Value, determined as
of the
date of exercise, equal to the aggregate purchase price payable pursuant to the
Option by reason of such exercise, (iii) in cash by a broker-dealer acceptable
to the Company to whom the Optionee has submitted an irrevocable notice of
exercise or (iv) a combination of (i) and (ii), and (2) by executing such
documents as the Company may reasonably request. The Committee may disapprove
an election pursuant to any of clauses (ii) - (iv) if the Committee determines,
based on the opinion of recognized securities counsel, that the method of
exercise so elected would result in liability to the Optionee under Section
16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
or the regulations promulgated thereunder. Any fraction of a share of Stock
which would be required to pay such purchase price shall be disregarded and the
remaining amount due shall be paid in cash by the Optionee. No certificate
representing a share of Stock shall be delivered until the full purchase price
therefor has been paid.
2.4 Termination of Option. (a) In no event may any Option be exercised
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after it terminates as set forth in this Section 2.4. The Options shall
terminate, to the extent not exercised pursuant to Section 2.3 or earlier
terminated pursuant to Section 2.2, on the Expiration Date.
(b) In the event that rights to purchase all or a portion of the shares of
Stock subject to the Options expire or are exercised, cancelled or forfeited,
the Optionee shall, upon the Company's request, promptly return this Agreement
to the Company for full or partial cancellation, as the case may be. Such
cancellation shall be effective regardless of whether the Optionee returns this
Agreement. If the Optionee continues to have rights to purchase shares of Stock
hereunder, the Company shall, within 10 days of the Optionee's delivery of this
Agreement to the Company, either (i) mark this Agreement to indicate the extent
to which any Option has expired or been exercised, cancelled or forfeited or
(ii) issue to the Optionee a substitute option agreement applicable to such
rights, which agreement shall otherwise be substantially similar to this
Agreement in form and substance.
3. Additional Terms and Conditions of Options.
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3.1. Nontransferability of Options. The Options may not be transferred by
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the Optionee other than (i) by will or the laws of descent and distribution or
pursuant to beneficiary designation procedures approved by the Company or (ii)
as otherwise permitted under Rule 16b-3 under the Exchange Act as may be set
forth in an amendment to this Agreement. Except to the extent permitted by the
foregoing sentence, during the Optionee's lifetime the Options are exercisable
only by the Optionee or the Optionee's Legal Representative. Except to the
extent permitted by the foregoing, the Options may not be sold, transferred,
assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by
operation of law or otherwise) or be subject to execution, attachment or similar
process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate,
encumber or otherwise dispose of the Options, the Options and all rights
hereunder shall immediately become null and void.
3.2. Investment Representation. The Optionee hereby represents and
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covenants that (a) any share of Stock purchased upon exercise of the Option will
be purchased for investment and not with a view to the distribution thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
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Act"), unless such purchase has been registered under the Securities Act and any
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applicable state securities laws; (b) any subsequent sale of any such shares
shall be made either pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws, or pursuant to an
exemption from registration under the Securities Act and such state securities
laws; and (c) if requested by the Company, the Optionee shall submit a written
statement, in form satisfactory to the Company, to the effect that such
representation (x) is true and correct as of the date of purchase of any shares
hereunder or (y) is true and correct as of the date of any sale of any such
shares, as applicable. As a further condition precedent to any exercise of any
Option, the Optionee shall comply with all regulations and requirements of any
regulatory authority having control of or supervision over the issuance or
delivery of the shares and, in connection therewith, shall execute any documents
which the Board or the Committee shall in its sole discretion deem necessary or
advisable.
3.3. Withholding Taxes. (a) As a condition precedent to the delivery of
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Stock upon exercise of an Option, the Optionee may, upon request by the Company,
pay to the Company in addition to the purchase price of the shares, such amount
of cash as the Company may be required, under all applicable federal, state,
local or other laws or regulations, to withhold and pay over as income or other
withholding taxes (the "Required Tax Payments") with respect to such exercise of
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the Option. If the Optionee shall fail to advance the Required Tax Payments
after request by the Company, the Company may, in its discretion, deduct any
Required Tax Payments from any amount then or thereafter payable by the Company
to the Optionee.
(b) The Optionee may elect to satisfy his or her obligation to advance the
Required Tax Payments by any of the following means: (1) a cash payment to the
Company pursuant to Section 3.3(a), (2) delivery to the Company of previously
owned whole shares of Stock (which the Optionee has held for at least six months
prior to the delivery of such shares or which the Optionee purchased on the open
market and for which the Optionee has good title, free and clear of all liens
and encumbrances) having a Fair Market Value, determined as of the date the
obligation to withhold or pay taxes first arises in connection with the Option
(the "Tax Date"), equal to the Required Tax Payments, (3) authorizing the
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Company to withhold whole shares of Stock which would otherwise be delivered to
the Optionee upon exercise of an Option having a Fair Market Value, determined
as of the Tax Date, equal to the Required Tax Payments, (4) a cash payment by a
broker-dealer acceptable to the Company to whom the Optionee has submitted an
irrevocable notice of exercise or (5) any combination of (1), (2) and (3). The
Committee may disapprove an election pursuant to any of clauses (2)-(5) if the
Committee determines, based on the opinion of recognized securities counsel,
that the method so elected would result in liability to the Optionee under
Section 16(b) of the Exchange Act or the regulations promulgated thereunder.
Shares of Stock to be delivered or withheld may not have a Fair Market Value in
excess of the minimum amount of the Required Tax
Payments. Any fraction of a share of Stock which would be required to satisfy
any such obligation shall be disregarded and the remaining amount due shall be
paid in cash by the Optionee. No certificate representing a share of Stock
shall be delivered until the Required Tax Payments have been satisfied in full.
3.4 Adjustment. In the event of any stock split, stock dividend,
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recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Stock other than a regular cash
dividend, the number and class of securities subject to the Options and the
purchase price per security shall be appropriately adjusted by the Committee
without an increase in the aggregate purchase price. If any adjustment would
result in a fractional security being subject to the Options, the Company shall
pay the Optionee, in connection with the first exercise of any such Options, in
whole or in part, occurring after such adjustment, an amount in cash determined
by multiplying (i) the fraction of such security (rounded to the nearest
hundredth) by (ii) the excess, if any, of (A) the Fair Market Value on the
exercise date over (B) the exercise price of the Option. The decision of the
Committee regarding any such adjustment shall be final, binding and conclusive.
3.5. Compliance with Applicable Law. The Options are subject to the
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condition that if the listing, registration or qualification of the shares
subject to the Options upon any securities exchange or under any law, or the
consent or approval of any governmental body, or the taking of any other action
is necessary or desirable as a condition of, or in connection with, the purchase
or delivery of shares hereunder, the Options may not be exercised, in whole or
in part, unless such listing, registration, qualification, consent or approval
shall have been effected or obtained, free of any conditions not acceptable to
the Company. The Company agrees to use reasonable efforts to effect or obtain
any such listing, registration, qualification, consent or approval.
3.6. Delivery of Certificates. Upon the exercise of an Option, in whole
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or in part, the Company shall deliver or cause to be delivered one or more
certificates representing the number of shares purchased against full payment
therefor. The Company shall pay all original issue or transfer taxes and all
fees and expenses incident to such delivery, except as otherwise provided in
Section 3.3.
3.7. Options Confer No Rights as Stockholder. The Optionee shall not
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be entitled to any privileges of ownership with respect to shares of Stock
subject to the Options unless and until purchased and delivered upon the
exercise of an Option, in whole or in part, and the Optionee becomes a
stockholder of record with respect to such delivered shares; and the Optionee
shall not be considered a stockholder of the Company with respect to any such
shares not so purchased and delivered.
3.8. Decisions of Board or Committee. The Board or the Committee shall
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have the right to resolve all questions which may arise in connection with the
Options or their
exercise. Any interpretation, determination or other action made or taken by
the Board or the Committee regarding the Plan or this Agreement shall be final,
binding and conclusive.
3.9. Company to Reserve Shares. The Company shall at all times prior to
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the expiration or termination of the Options reserve and keep available, either
in its treasury or out of its authorized but unissued shares of Stock, the full
number of shares subject to the Options from time to time.
3.10. Agreement Subject to the Plan. This Agreement is subject to the
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provisions of the Plan and shall be interpreted in accordance therewith. The
Optionee hereby acknowledges receipt of a copy of the Plan.
4. Miscellaneous Provisions.
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4.1. Designation as Nonqualified Stock Option. The Options are hereby
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designated as not constituting an "incentive stock option" within meaning of
section 422 of the Internal Revenue Code of 1986, as amended (the "Code"); this
Agreement shall be interpreted and treated consistently with such designation.
4.2. Meaning of Certain Terms. As used herein, the term "Legal
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Representative" shall include an executor, administrator, legal representative,
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guardian or similar person and the term "Permitted Transferee" shall include any
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transferee (i) pursuant to a transfer permitted under Section 6.4 of the Plan
and Section 3.1 hereof or (ii) designated pursuant to beneficiary designation
procedures approved by the Company.
4.3. Successors. This Agreement shall be binding upon and inure to the
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benefit of any successor or successors of the Company and any person or persons
who shall, upon the death of the Optionee, acquire any rights hereunder in
accordance with this Agreement or the Plan.
4.4. Notices. All notices, requests or other communications provided for
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in this Agreement shall be made, if to the Company, to Kayser Building, 100
North Stanton, El Paso, Texas 79901, Attention: Corporate Secretary, and if to
the Optionee, to 603 Ocean Avenue, 2 South, Santa Monica, California 90402. All
notices, requests or other communications provided for in this Agreement shall
be made in writing either (a) by personal delivery to the party entitled
thereto, (b) by facsimile with confirmation of receipt, (c) by mailing in the
United States mails to the last known address of the party entitled thereto or
(d) by express courier service. The notice, request or other communication
shall be deemed to be received upon personal delivery, upon confirmation of
receipt of facsimile transmission or upon receipt by the party entitled thereto
if by United States mail or express courier service; provided, however, that if
a notice, request or other communication is not received during regular business
hours, it shall be deemed to be received on the next succeeding business day of
the Company.
4.5. Governing Law. This Agreement, the Options and all determinations
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made and actions taken pursuant hereto and thereto, to the extent not governed
by the laws of the United States, shall be governed by the laws of the State of
Texas and construed in accordance therewith without giving effect to principles
of conflicts of laws.
4.6. Counterparts. This Agreement may be executed in two counterparts
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each of which shall be deemed an original and both of which together shall
constitute one and the same instrument.
EL PASO ELECTRIC COMPANY
By: /s/ KENNETH R. HEITZ
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Name: Kenneth R. Heitz
Title: Director
Accepted this 17th day of
January, 1997
/s/ DAVID H. WIGGS, JR.
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Optionee