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EXHIBIT 99.4
NONSTATUTORY STOCK OPTION AGREEMENT
AGREEMENT made as of the 23rd day of November, 1993, between HUGOTON ENERGY
CORPORATION, a Kansas corporation (the "Company") and JOHN T. MCNABB, II
("Optionee")
In consideration of the services rendered by Optionee to the Company and
the mutual agreements and other matters set forth herein, the Company and
Optionee hereby agree as follows:
1. GRANT OF OPTION. The Company hereby irrevocably grants to Optionee the
right and option ("Option") to purchase all or any part of an aggregate of
50,000 shares of common stock of the Company ("Stock"), on the terms and
conditions set forth herein. This Option shall not be treated as an incentive
stock option within the meaning of section 422(b) of the Internal Revenue Code
of 1986, as amended.
2. PURCHASE PRICE. The purchase price of Stock purchased pursuant to the
exercise of this Option shall be $10.00 per share.
3. VESTING AND EXERCISE OF OPTION. This Option shall vest immediately, upon
the date of this Agreement. The Option may be exercised, by written notice to
the Company at its principal executive office addressed to the attention of its
Chief Executive Officer, as follows:
Optionee may exercise his option with regard to ten percent (10%) of the
shares subject to this Option nine (9) months after the initial public
offering of the Stock of the Company (the "IPO"); and thereafter the
Optionee may exercise ten percent (10%) per quarter beginning twelve months
after the IPO.
The options granted hereunder must be exercised within thirty-six (36)
months after they become exercisable, or they will expire worthless, i.e.
options relating to the ten percent (10%) of the shares that become exercisable
two (2) years after the IPO must be exercised within five (5) years from the
date of the IPO.
This Option is not transferable by Optionee otherwise than by will or the
laws of descent and distribution, and may be exercised only by Optionee during
Optionee's lifetime. This Option may be exercised whether or not Optionee
remains a member of the Board of Directors of the Company. If Optionee dies
while a member of the Board, Optionee'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 Optionee, may exercise this Option at any time during the period of
one (1) year following the date of Optionee's death.
The purchase price of shares as to which this Option is exercised shall be
paid in full at the time of exercise in cash (including check, bank draft or
money order payable to the order of the Company). No fraction of a share of
Stock shall be issued by the Company upon exercise of an
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Option; rather, Optionee shall provide a cash payment for such amount as is
necessary to effect the issuance of only whole shares of Stock. Unless and until
a certificate or certificates representing such shares shall have been issued by
the Company to Optionee, Optionee (or the person permitted to exercise this
Option in the event of Optionee'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. RECAPITALIZATION. If, and whenever, prior to the expiration of this
Option, 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 this Option may thereafter be exercised (a) 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 (b) in the event
of a reduction in the number of outstanding shares shall be proportionately
reduce and the purchase price per share shall be proportionately increased. If
the Company recapitalizes or otherwise changes its capital structure, thereafter
upon any exercise hereunder, Optionee shall be entitled to purchase, in lieu of
the number of shares of Stock as to which this Option shall then be exercisable,
the number and class of shares of stock and securities to which he would have
been entitled pursuant to the terms of the recapitalization if, immediately
prior to such recapitalization, he had been the holder of record of the number
of shares of Stock as to which this Option is then exercisable.
5. 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 Optionee for federal or state income tax purposes,
Optionee 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
Optionee fails to do so, the Company is authorized to withhold from any cash or
Stock remuneration then or thereafter payable to Optionee any tax required to be
withheld by reason of such resulting compensation income. 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
Optionee upon such exercise.
6. STATUS OF STOCK. The Company intends to register for issuance under the
Securities Act of 1933, as amended (the "Act") the shares of Stock acquirable
upon exercise of this Option, and to keep such registration effective throughout
the period this Option is exercisable. In the absence of such effective
registration or an available exemption from registration under the Act issuance
of shares of Stock acquirable upon exercise of this Option will be delayed until
registration of such shares is 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, Optionee (or the person permitted
to exercise this Option in the event of Optionee'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.
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Optionee agrees that the shares of Stock which Optionee 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. Optionee also agrees (i) that the certificates representing
the shares of Stock purchased under this Option may bear such legend or legends
as the Company deems appropriate in order to assure compliance with applicable
securities laws, (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
law 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.
7. WAIVER AND RELEASE. In consideration of the Company's grant to Optionee
of an option to purchase Stock as set forth in this Agreement Optionee hereby
waives and releases all rights, claims, charges, demands and causes of action
against (a) the Company, its subsidiaries and affiliates, and their respective
officers, directors, employees and agents, and (b) Floyd C. Wilson ("Wilson")
and his affiliates, successors and assigns, which relate to any prior agreement,
representation or commitment by any of the foregoing entities or individuals to
grant Optionee an option to purchase Stock.
8. AGREEMENT REGARDING OPTIONS. The parties agree that the Company's
obligation to transfer the shares subject to this Option Agreement is solely
dependent and contingent upon Wilson fulfilling his obligations under a certain
Agreement Regarding Options of even date herewith by and between the Company and
Floyd C. Wilson.
9. 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
Optionee.
10. 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 Optionee has executed
this Agreement all as of the day and year first above written.
HUGOTON ENERGY CORPORATION
By: /s/ FLOYD C. WILSON
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Floyd C. Wilson
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/s/ JOHN T. McNABB, II
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John T. McNabb, II
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