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EXHIBIT 4.1
HUGOTON ENERGY CORPORATION
AMENDED AND RESTATED
1995 STOCK OPTION PLAN
On January 31, 1995, the HUGOTON ENERGY CORPORATION 1995 STOCK OPTION
PLAN (the "ORIGINAL PLAN") was adopted. Effective April 17, 1997, the Original
Plan is amended and restated in its entirety.
I. PURPOSE OF PLAN
The HUGOTON ENERGY CORPORATION 1995 STOCK OPTION PLAN (the "PLAN") is
intended to provide a means whereby certain employees of HUGOTON ENERGY
CORPORATION, a Kansas corporation (the "COMPANY"), and its subsidiaries may
develop a sense of proprietorship and personal involvement in the development
and financial success of the Company, and to encourage them to remain with and
devote their best efforts to the business of the Company, thereby advancing the
interests of the Company and its stockholders. Accordingly, the Company may
grant to certain employees ("OPTIONEES") the option ("OPTION") to purchase
shares of the common stock of the Company ("STOCK"), as hereinafter set forth.
Options granted under the Plan may be either incentive stock options, within
the meaning of section 422(b) of the Internal Revenue Code, as amended (the
"CODE"), ("INCENTIVE STOCK OPTIONS") or options which do not constitute
Incentive Stock Options.
II. ADMINISTRATION
The Plan shall be administered by the Compensation Committee (the
"COMMITTEE") of the Board of Directors of the Company (the "BOARD"), and the
Committee shall be (a) comprised solely of two or more outside directors
(within the meaning of section 162(m) of the Code and applicable interpretive
authority thereunder), and (b) constituted so as to permit the Plan to comply
with Rule 16b-3, as currently in effect or as hereinafter modified or amended
("RULE 16B-3"), promulgated under the Securities Exchange Act of 1934, as
amended (the "1934 ACT"). The Committee shall have sole authority to select
the Optionees from among those individuals eligible hereunder and to establish
the number of shares which may be issued under each Option; provided, however,
that, notwithstanding any provision in the Plan to the contrary, the maximum
number of shares that may be subject to Options granted under the Plan to an
individual Optionee during any calendar year may not exceed 250,000 (subject to
adjustment in the same manner as provided in Paragraph VIII hereof with respect
to shares of Stock subject to Options then outstanding). The limitation set
forth in the preceding sentence shall be applied in a manner which will permit
compensation generated under the Plan to constitute "performance-based"
compensation for purposes of section 162(m) of the Code, including, without
limitation, counting against such maximum number of shares, to the extent
required under section 162(m) of the Code and applicable interpretive authority
thereunder, any shares subject to Options that are cancelled or repriced. In
selecting the Optionees from among individuals eligible hereunder and in
establishing the number of shares that may be issued under each Option, the
Committee may take into account the nature of the services rendered by such
individuals, their present and potential contributions to the Company's success
and such other factors as the
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Committee in its discretion shall deem relevant. The Committee is authorized
to interpret the Plan and may from time to time adopt such rules and
regulations, consistent with the provisions of the Plan, as it may deem
advisable to carry out the Plan. All decisions made by the Committee in
selecting the Optionees, in establishing the number of shares which may be
issued under each Option and in construing the provisions of the Plan shall be
final.
II. OPTION AGREEMENTS
(a) Each Option shall be evidenced by a written agreement between the
Company and the Optionee ("OPTION AGREEMENT") which shall contain such terms
and conditions as may be approved by the Committee. The terms and conditions
of the respective Option Agreements need not be identical. Specifically, an
Option Agreement may provide for the surrender of the right to purchase shares
under the Option in return for a payment in cash or shares of Stock or a
combination of cash and shares of Stock equal in value to the excess of the
fair market value of the shares with respect to which the right to purchase is
surrendered over the option price therefor ("STOCK APPRECIATION RIGHTS"), on
such terms and conditions as the Committee in its sole discretion may
prescribe; provided, that with respect to Stock Appreciation Rights granted to
employees who are subject to Section 16 of the 1934 Act, except as provided in
Subparagraph VII(c) hereof, the Committee shall retain final authority (i) to
determine whether an Optionee shall be permitted, or (ii) to approve an
election by an Optionee, to receive cash in full or partial settlement of Stock
Appreciation Rights. Moreover, an Option Agreement may provide for the payment
of the option price, in whole or in part, by the delivery of a number of shares
of Stock (plus cash if necessary) having a fair market value equal to such
option price.
(b) For all purposes under the Plan, the fair market value of a share
of Stock on a particular date shall be equal to the mean of the reported high
and low sales price of the Stock (i) reported by the National Market System or
NASDAQ on that date or (ii) if the Stock is listed on a national stock
exchange, reported on the stock exchange composite tape on that date; or, in
either case, if no prices are reported on that date, on the last preceding date
on which such prices of the Stock are so reported. If the Stock is traded over
the counter at the time a determination of its fair market value is required to
made hereunder, its fair market value shall be deemed to be equal to the
average between the reported high and low or closing bid and asked prices of
Stock on the most recent date on which Stock was publicly traded. In the event
Stock is not publicly traded at the time a determination of its value is
required to be made hereunder, the determination of its fair market value shall
be made by the Committee in such manner as it deems appropriate.
(c) Each Option and all rights granted thereunder shall not be
transferable other than by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Code or
Title I of the Employee Retirement Income Security Act of 1974, as amended, or
the rules thereunder, and shall be exercisable during the Optionee's lifetime
only by the Optionee or the Optionee's guardian or legal representative.
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IV. ELIGIBILITY OF OPTIONEE
Options may be granted only to individuals who are employees
(including officers and directors who are also employees) of the Company or any
parent or subsidiary corporation (as defined in section 424 of the Code) of the
Company at the time the Option is granted; provided, however, that members of
the Committee shall not be eligible to be granted Options. Options may be
granted to the same individual on more than one occasion. No Incentive Stock
Option shall be granted to an individual if, at the time the Option is granted,
such individual owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or its parent or subsidiary
corporation, within the meaning of section 422(b) of the Code, unless (i) at
the time such Option is granted the option price is 110% of the fair market
value of the Stock subject to the Option and (ii) such Option by its terms is
not exercisable after the expiration of five years from the date of grant. To
the extent that the aggregate fair market value (determined at the time the
respective Incentive Stock Option is granted) of stock with respect to which
Incentive Stock Options are exercisable for the first time by an individual
during any calendar year under all incentive stock option plans of the Company
and its parent and subsidiary corporations exceeds $100,000, such excess
Incentive Stock Options shall be treated as Options which do not constitute
Incentive Stock Options. The Committee shall determine, in accordance with
applicable provisions of the Code, Treasury Regulations and other
administrative pronouncements, which of an Optionee's Incentive Stock Options
will not constitute Incentive Stock Options because of such limitation and
shall notify the Optionee of such determination as soon as practicable after
such determination.
V. SHARES SUBJECT TO PLAN
The aggregate number of shares which may be issued under Options
granted under the Plan shall not exceed 1,000,000 shares of Stock. Such shares
may consist of authorized but unissued shares of Stock or previously issued
shares of Stock reacquired by the Company. Any of such shares which remain
unissued and which are not subject to outstanding Options at the termination of
the Plan shall cease to be subject to the Plan, but, until termination of the
Plan, the Company shall at all times make available a sufficient number of
shares to meet the requirements of the Plan. Should any Option hereunder
expire or terminate prior to its exercise in full, the shares theretofore
subject to such Option may again be subject to an Option granted under the Plan
to the extent permitted under Rule 16b-3. The aggregate number of shares which
may be issued under the Plan shall be subject to adjustment in the same manner
as provided in Paragraph VIII hereof with respect to shares of Stock subject to
Options then outstanding. Exercise of an Option in any manner, including an
exercise involving a Stock Appreciation Right, shall result in a decrease in
the number of shares of Stock which may thereafter be available, both for
purposes of the Plan and for sale to any one individual, by the number of
shares as to which the Option is exercised. Separate stock certificates shall
be issued by the Company for those shares acquired pursuant to the exercise of
any Option which does not constitute an Incentive Stock Option.
VI. OPTION PRICE
The purchase price of Stock issued under each Option shall be equal to
the fair market value of Stock subject to the Option on the date the Option is
granted; provided, however, that this
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limitation shall not apply to Incentive Stock Options for which a greater
purchase price is required pursuant to Paragraph IV hereof.
VII. TERM OF PLAN
The Plan shall be effective upon the date of its adoption by the
Board, provided the Plan is approved by the stockholders of the Company within
twelve months thereafter. Notwithstanding any provision in this Plan or in any
Option Agreement, no Option shall be exercisable prior to such stockholder
approval. Except with respect to Options then outstanding, if not sooner
terminated under the provisions of Paragraph IX, the Plan shall terminate upon
and no further Options shall be granted after March 31, 2007.
VIII. RECAPITALIZATION OR REORGANIZATION
(a) The existence of the Plan and the Options granted hereunder
shall not affect in any way the right or power of the Board or the stockholders
of the Company to make or authorize any adjustment, recapitalization,
reorganization or other change in the Company's capital structure or its
business, any merger or consolidation of the Company, any issue of debt or
equity securities, the dissolution or liquidation of the Company or any sale,
lease, exchange or other disposition of all or any part of its assets or
business or any other corporate act or proceeding.
(b) The shares with respect to which Options may be granted are
shares of Stock as presently constituted, but if, and whenever, prior to the
expiration of an Option theretofore granted, the Company shall effect a
subdivision or consolidation of shares of Stock or the payment of a stock
dividend on Stock without receipt of consideration by the Company, the number
of shares of Stock with respect to which such Option may thereafter be
exercised (i) in the event of an increase in the number of outstanding shares
shall be proportionately increased, and the purchase price per share shall be
proportionately reduced, and (ii) in the event of a reduction in the number of
outstanding shares shall be proportionately reduced, and the purchase price per
share shall be proportionately increased.
(c) If the Company recapitalizes, reclassifies its capital stock, or
otherwise changes its capital structure (a "recapitalization"), the number and
class of shares of Stock covered by an Option theretofore granted shall be
adjusted so that such Option shall thereafter cover the number and class of
shares of stock and securities to which the Optionee would have been entitled
pursuant to the terms of the recapitalization if, immediately prior to the
recapitalization, the Optionee had been the holder of record of the number of
shares of Stock then covered by such Option. If (i) the Company shall not be
the surviving entity in any merger, consolidation or other reorganization (or
survives only as a subsidiary of an entity other than a previously wholly-owned
subsidiary of the Company), (ii) the Company sells, leases or exchanges
substantially all of its assets to any other person or entity (other than a
wholly- owned subsidiary of the Company), (iii) the Company is to be dissolved
and liquidated, (iv) any person or entity, including a "group" as contemplated
by Section 13(d)(3) of the 1934 Act acquires or gains ownership or control
(including, without limitation, power to vote) of more than 50% of the
outstanding shares of the Company's voting stock (based upon voting power),
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or (v) as a result of or in connection with a contested election of directors,
the persons who were directors of the Company before such election shall cease
to constitute a majority of the Board (each such event is referred to herein as
a "Corporate Change"), no later than (a) ten days after the approval by the
stockholders of the Company of such merger, consolidation, reorganization,
sale, lease or exchange of assets or dissolution or such election of directors
or (b) thirty days after a change of control of the type described in Clause
(iv), the Committee, acting in its sole discretion without the consent or
approval of any Optionee, shall act to effect one or more of the following
alternatives, which may vary among individual Optionees and which may vary
among Options held by any individual Optionee: (1) accelerate the time at
which Options then outstanding may be exercised so that such Options may be
exercised in full for a limited period of time on or before a specified date
(before or after such Corporate Change) fixed by the Committee, after which
specified date all unexercised Options and all rights of Optionees thereunder
shall terminate, (2) require that mandatory surrender to the Company by
selected Optionees of some or all of the outstanding Options held by such
Optionees (irrespective of whether such Options are then exercisable under the
provisions of the Plan) as of a date, before or after such Corporate Change,
specified by the Committee, in which event the Committee shall thereupon cancel
such Options and the Company shall pay to each Optionee an amount of cash per
share equal to the excess, if any, of the amount calculated in Subparagraph (d)
below (the "Change of Control Value") of the shares subject to such Option over
the exercise price(s) under such Options for such shares, (3) make such
adjustments to Options then outstanding as the Committee deems appropriate to
reflect such Corporate Change (provided, however, that the Committee may
determine in its sole discretion that no adjustment is necessary to Options
then outstanding) or (4) provide that the number and class of shares of Stock
covered by an Option theretofore granted shall be adjusted so that such Option
shall thereafter cover the number and class of shares of stock or other
securities or property (including, without limitation, cash) to which the
Optionee would have been entitled pursuant to the terms of the agreement of
merger, consolidation or sale of assets and dissolution if, immediately prior
to such merger, consolidation or sale of assets and dissolution the Optionee
had been the holder of record of the number of shares of Stock then covered by
such Option.
(d) For the purposes of clause (2) in Subparagraph (c) above, the
"CHANGE OF CONTROL VALUE" shall equal the amount determined in clause (i), (ii)
or (iii), whichever is applicable, as follows: (i) the per share price offered
to stockholders of the Company in any such merger, consolidation,
reorganization, sale of assets or dissolution transaction, (ii) the price per
share offered to stockholders of the Company in any tender offer or exchange
offer whereby a Corporate Change takes place, or (iii) if such Corporate Change
occurs other than pursuant to a tender or exchange offer, the fair market value
per share of the shares into which such Options being surrendered are
exercisable, as determined by the Committee as of the date determined by the
Committee to be the date of cancellation and surrender of such Options. In the
event that the consideration offered to stockholders of the Company in any
transaction described in this Subparagraph (d) or Subparagraph (c) above
consists of anything other than cash, the Committee shall determine the fair
cash equivalent of the portion of the consideration offered which is other than
cash.
(e) Any adjustment provided for in Subparagraph (b) or (c) above
shall be subject to any required stockholder action.
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(f) Except as hereinbefore expressly provided, the issuance by the
Company of shares of stock of any class or securities convertible into shares
of stock of any class, for cash, property, labor or services, upon direct sale,
upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, and in any case whether or not for fair value, shall not
affect, and no adjustment by reason therefor shall be made with respect to, the
number of shares of Stock subject to Options theretofore granted or the
purchase price per share.
IX. AMENDMENT OR TERMINATION OF THE PLAN
The Board in its discretion may terminate the Plan at any time with
respect to any shares for which Options have not theretofore been granted. The
Board shall have the right to alter or amend the Plan or any part thereof from
time to time; provided, that no change in any Option theretofore granted may be
made which would impair the rights of the Optionee without the consent of such
Optionee (unless such change is required in order to cause the benefits under
the Plan to qualify as performance-based compensation within the meaning of
section 162(m) of the Code and applicable interpretive authority thereunder);
and provided, further, that (i) the Board may not make any alteration or
amendment which would decrease any authority granted to the Committee hereunder
in contravention of Rule 16b-3 and (ii) the Board may not make any alteration
or amendment which would materially increase the benefits accruing to
participants under the Plan, increase the aggregate number of shares which may
be issued pursuant to the provisions of the Plan, change the class of
individuals eligible to receive Options under the Plan or extend the term of
the Plan, without the approval of the stockholders of the Company.
X. SECURITIES LAWS
(a) The Company shall not be obligated to issue any Stock pursuant
to any Option granted under the Plan at any time when the offering of the
shares covered by such Option have not been registered under the Securities Act
of 1933 and such other state and federal laws, rules or regulations as the
Company or the Committee deems applicable and, in the opinion of legal counsel
for the Company, there is no exemption from the registration requirements of
such laws, rules or regulations available for the offering and sale of such
shares.
(b) It is intended that the Plan and any grant of an Option made to
a person subject to Section 16 of the 1934 Act meet all of the requirements of
Rule 16b-3. If any provision of the Plan or any such Option would disqualify
the Plan or such Option under, or would otherwise not comply with, Rule 16b-3,
such provision or Option shall be construed or deemed amended to conform to
Rule 16b-3.
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