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EXHIBIT 99.3
INCENTIVE STOCK OPTION AGREEMENT
AGREEMENT made this 23rd day of November, 1993, between HUGOTON
ENERGY CORPORATION, a Kansas corporation (the "Company"), and W. MARK WOMBLE
("Employee").
To carry out the purposes of the HUGOTON ENERGY CORPORATION
1993 STOCK OPTION PLAN (the "Plan"), by affording Employee the opportunity to
purchase shares of the common stock of the Company ("Stock"), and in
consideration of the mutual agreements and other matters set forth herein and
in the Plan, the Company and Employee hereby agree as follows:
1. Grant or Option. The Company hereby irrevocably grants to
Employee the right and option ("Option") to purchase all or any part of an
aggregate of 30,000 shares of Stock, on the terms and conditions set forth
herein and in the Plan, which Plan is incorporated herein by reference as a
part of this Agreement. Exercise of this Option is subject to, and contingent
upon, approval of the Plan by the stockholders of the Company on or before 12
months after the date the Plan was adopted by the Board of Directors of the
Company. This Option is intended to constitute an incentive stock option,
within the meaning of section 422(b) of the Internal Revenue Code of 1986, as
amended (the "Code").
2. Purchase Price. The purchase price of Stock purchased
pursuant to the exercise of this Option shall be $10.00 per share, which has
been determined to be the fair market value of the Stock at the date of grant
of this Option. For all purposes of this Agreement, fair market value of Stock
shall be determined in accordance with the provisions of the Plan.
3. Vesting and Exercise of Option. The Option granted hereunder
shall vest as follows:
(a) the option to purchase 25% of the shares covered
herein shall vest six (6) months after the initial
public offering of the Stock of the Company (the
"IPO");
(b) the option to purchase 25% of the shares covered
herein shall vest twelve (12) months after the IPO;
(c) the option to purchase 25% of the shares covered
herein shall vest twenty-four (24) months after the
IPO; and
(d) the option to purchase 25% of the shares covered
herein shall vest thirty-six (36) months after the
IPO.
Subject to the earlier expiration of this Option as herein
provided, this Option may be exercised by written notice to the Company at its
principal executive office addressed to the attention of its Chief Executive
Officer. The options granted hereunder must be exercised within eighteen (18)
months after the date they become vested or they will expire worthless, i.e.
options relating to the twenty-five percent (25%) of the shares that become
vested six (6) months after the IPO must be exercised within twenty-four (24)
months after the IPO.
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This Option is not transferable by Employee otherwise than by
will or the laws of descent and distribution. and may be exercised only by
Employee during Employee's lifetime. This option may be exercised only while
Employee remains an employee of the Company and will terminate and cease to be
exercisable upon Employee's termination of employment with the Company, except
that:
(a) If Employee's employment with the Company terminates
by reason of disability (within the meaning of section 22(c)(3) of the Code),
this Option may be exercised in full (whether or not the option is fully
vested) by Employee (or Employee'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 Employee) at any time during the period of one year following
such termination.
(b) If Employee dies while in the employ of the Company,
Employee'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 Employee,
may exercise this Option in full (whether or not the option is fully vested) at
any time during the period of one year following the date of Employee's death.
(c) If Employee's employment with the Company terminates
for any reason other than as described in (a) or (b) above, unless Employee
voluntarily terminates without the written consent of the Company or is
terminated for cause, this Option may be exercised by Employee at any time
during the period of three months following such termination, or by Employee'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 Employee) during a
period of one year following Employee's death if Employee dies during such
three-month period, but in each case only to the extent the Option was vested
and only as to the number of shares Employee was entitled to purchase hereunder
as of the date Employee's employment so terminates. For purposes of this
Agreement, "CAUSE" shall mean Employee's gross negligence or willful misconduct
in performance of the duties of his employment, or Employee's final conviction
of a felony or of a misdemeanor involving moral turpitude.
The purchase price of shares as to which this Option is
exercised shall be paid in full at the time of exercise (a) in cash (including
check, bank draft or money order payable to the order of the Company), or (b)
by delivering to the Company shares of Stock having a fair market value equal
to the purchase price, or (c) a combination of cash and Stock. No fraction of
a share of Stock shall be issued by the Company upon exercise of an Option or
accepted by the Company in payment of the exercise price thereof, rather,
Employee shall provide a cash payment for such amount as is necessary to effect
the issuance and acceptance of only whole shares of Stock. Unless and until a
certificate or certificates representing such shares shall have been issued by
the Company to Employee, Employee (or the person permitted to exercise this
Option in the event of Employee'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. 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 Employee
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for federal or state income tax purposes, Employee 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 Employee fails to do so, the Company is authorized
to withhold from any cash or Stock remuneration then or thereafter payable to
Employee 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 Employee upon such exercise.
5. 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,
Employee (or the person permitted to exercise this Option in the event of
Employee'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.
Employee agrees that the shares of Stock which Employee 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. Employee also agrees (i) that the certificates
representing the shares of Stock purchased under this Option may bear such
legend or legends as the Committee deems appropriate in order to assure
compliance with applicable securities laws, and (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 laws 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.
6. Employment Relationship. For purposes of this Agreement,
Employee shall be considered to be in the employment of the Company as long as
Employee remains an employee of either the Company, a parent or subsidiary
corporation (as defined in section 424 of the Code) of the Company, or a
corporation or a parent or subsidiary of such corporation assuming or
substituting a new option for this Option. Any question as to whether and when
there has been a termination of such employment, and the cause of such
termination, shall be determined by the Committee and its determination shall
be final.
7. 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 Employee.
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8. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Kansas.
IN WITNESS WHEREOF, the Company has caused this Agreement to
be duly executed, by its officer thereunto duly authorized, and Employee 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/ W. MARK WOMBLE
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W. Mark Womble
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