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EXHIBIT 10.6
INCENTIVE STOCK OPTION AGREEMENT
THIS INCENTIVE STOCK OPTION AGREEMENT made this 19th day of December,
1994 between ENERGY CORPORATION OF AMERICA, a Colorado corporation,
(hereinafter called the "Company"), and RICHARD E. HEFFELFINGER (hereinafter
called "Heffelfinger").
WHEREAS, the Company is the parent company of Eastern American Energy
Corporation, a West Virginia corporation, ("Eastern"), and
WHEREAS, Heffelfinger is the President of Eastern and a valuable
employee of Eastern and the Company considers it desirable and in its best
interest that Heffelfinger be given an added incentive to advance the interests
of Eastern and the Company and remain employed by Eastern;
NOW THEREFORE, in consideration of the mutual promises herein
contained, the parties agree as follows:
1. Grant of Option. The Company hereby grants to Heffelfinger
the right, privilege, and option to purchase 6400 shares of its common stock at
$40.00 per share. Heffelfinger may elect to exercise the option at the times
and for the number of shares indicated as follows:
a. On and after January 1, 1994, to and including
December 31, 1994, 1600 shares;
b. On and after January 1, 1995, to and including
December 31, 1995, 1600 shares;
c. On and after January 1, 1996, to and including
December 31, 1996, 1600 shares.
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d. On and after January 1, 1997, to and including
December 31, 1997, 1600 shares.
In order to be entitled to exercise the options granted hereunder,
Heffelfinger must remain in the continuous employ of Eastern during the option
period. If Heffelfinger's employment with Eastern is terminated for any reason
during the option period, all unexercised options shall become null and void on
the date his employment is terminated.
Failure to exercise the options by December 31 of each year specified
above shall result in the termination of the options granted during that time
period and such options shall become null and void.
2. Method of Exercise. The option shall be exercised by written
notice directed to the Company at its principal place of business accompanied
by check and payment of the option price for the number of shares specified.
3. Limitation Upon Transfer. All rights granted in this
Agreement shall be exercisable only by Heffelfinger. The option rights granted
under this contract 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 rights contrary
to the provisions in this Agreement, or upon the levy of any attachment or
similar process upon such option rights, such option rights shall immediately
become null and void.
4. Restriction. All shares acquired by Heffelfinger shall be
subject to the following restrictions.
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a. If Heffelfinger's employment with Eastern is
terminated for any reason whatsoever within four years from the date
of purchase of the shares, Heffelfinger agrees to immediately resell
to the Company all shares which are acquired by exercise of the
options granted by this Agreement at the price of $40.00 per share;
provided, however, that in the event Heffelfinger should die within
four years from the date of purchase of the shares and while still
employed by Eastern, his heirs or devisees shall resell all shares to
the Company at the price established in paragraph 5 below.
b. If Heffelfinger's employment with Eastern is
terminated for any reason whatsoever from and after four years from
the date of purchase of the shares, Heffelfinger agrees to immediately
resell to the Company all shares which are acquired by exercise of the
options granted by this Agreement at the value of such shares as
determined in paragraph 5 below.
c. All share certificates representing shares acquired
by the exercise of the options provided herein shall have endorsed
thereon the following legend:
The shares represented by this certificate are subject to the
requirement that they be resold to Energy Corporation of
America at the value determined pursuant to that certain
Incentive Stock Option Agreement dated December 19, 1994
by and between Energy Corporation of America and Richard E.
Heffelfinger.
5. Value. For purposes of resale to the Company, from and after
four years from the date of acquisition of the shares, the value of the shares
shall be equal to six (6) times the average per share earnings for the most
recent three (3) fiscal years of the Company. In the absence of financial
statements for the Company, the financial statements of Eastern will be
substituted thereof.
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"Earnings" shall mean the Company's earnings and in the
absence thereof Eastern's earning (net of extraordinary items,
Windfall Profits Taxes, and other similar and/or substituted taxes,
and state and local taxes, but before provisions for federal income
taxes) as determined in accordance with generally accepted accounting
principles consistently applied by the Company's regularly engaged
accountants, which determination shall be final and binding upon
Heffelfinger and the Company.
6. Rights as Shareholder. Heffelfinger shall not have any rights
or privileges as a shareholder of the Company in the option shares until
payment of the option price and delivery to him of such shares.
7. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of any successor or successors of the Company.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the day and year first above written.
ENERGY CORPORATION OF AMERICA
By: /s/ JOHN MORK
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Its: CEO
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/s/ RICHARD E. HEFFELFINGER
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RICHARD E. HEFFELFINGER
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