EXHIBIT 10.3
INCENTIVE STOCK OPTION
GRANT AGREEMENT UNDER
MISSION RESOURCES CORPORATION
2004 INCENTIVE PLAN
THIS AGREEMENT is entered into this_____ day of ____, 2004, between
Mission Resources Corporation, a Delaware corporation (the "Company"), and
________________, an employee of the Company ("Grantee"), pursuant to the
provisions of the Mission Resources Corporation 2004 Incentive Plan (Effective
March 4, 2004) (the "Plan").
WHEREAS, the Committee has authorized and approved the grant of this
Incentive Stock Option to Grantee subject to the terms and conditions provided
herein.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties do hereby agree as follows:
1. SECTION 1. GRANT OF OPTION. Subject to all of the terms, conditions and
provisions of the Plan and of this Agreement, the Company hereby grants to
Grantee an Incentive Stock Option (the "Option") under the Plan pursuant to
which Grantee shall have the right and option under the Plan to purchase from
the Company all or any part of an aggregate of _________ Shares of the Common
Stock of the Company, par value $0.01 per share ("Option Shares"). The Shares,
when issued to Grantee upon the exercise of the Option, shall be fully paid and
nonassessable. The Option is an "incentive stock option" as defined in Section
422 of the Internal Revenue Code of 1986, as amended. This Option is being
granted in consideration of the employment of Grantee with the Company. All
capitalized terms used herein shall have the meanings set forth in the Plan
unless otherwise provided herein.
SECTION 2.OPTION PRICE. The purchase price payable by Grantee to the
Company in exercise of this Option shall be $_______ per Share (the "Option
Price"), being the Fair Market Value on ________, 2004 (the "Grant Date"). The
Option Term shall be from the Grant Date until the tenth (10th) anniversary of
the Grant Date.
SECTION 3. EXERCISE PERIOD AND EXERCISE OF OPTION. The Option shall vest
and become exercisable as to 33 1/3% of the Common Stock covered hereby on 6
months after the grant date; as 66 2/3% of the Common Stock one (1) year
following the Grant Date and as to 100% of the Common Stock covered hereby two
(2) years following the Grant Date. Any Option Shares which remain unexcercised
on the tenth (10th) anniversary of the Grant Date shall expire. Unless
specifically provided otherwise in the Plan or this Agreement, the Option may be
exercised at any time with respect to the vested portion as long as Grantee has
been continuously employed by the Company, its parent, or a subsidiary from the
Grant Date until the Option is exercised. In the event the Company terminates
Grantee's employment other than for Cause (as defined in the Employment
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Agreement between the Grantee and the Company dated _________________ (the
"Employment Agreement")) or death or disability (as defined in the Employment
Agreement) or Grantee terminates his employment for Good Reason (as defined in
the Employment Agreement) before or within twelve (12) months after a Change in
Control (as defined in the Employment Agreement), Grantee shall be 100% vested
in any non-vested outstanding Option hereunder. Other terms and conditions under
which the Option may be exercised on the period in which an Option may be
exercised are specifically provided in the Plan.
SECTION 4. NO EMPLOYMENT COMMITMENT. Grantee acknowledges that neither the
grant of this Option nor the execution of this Agreement by the Company shall be
interpreted or construed as imposing upon the Company an obligation to retain
his services on behalf of the Company or its affiliates for any stated period of
time, which employment shall continue to be at the pleasure of the Company at
such compensation as it shall determine.
SECTION 5. GRANTEE'S AGREEMENT. Grantee expressly and specifically agrees
that:
(a) The grant of the options is special incentive compensation
which shall not be taken into account as "wages" or "salary" in
determining the amount of payment or benefit to the Grantee under any
pension, thrift, stock or deferred compensation plan of the Company or any
affiliate, as the case may be; and
(b) On behalf of the Grantee's beneficiary, such grant shall not
affect the amount of any life insurance coverage available to such
beneficiary under any life insurance plan covering employees of the
Company or any affiliate.
SECTION 6.PLAN. As previously provided, the Option herein granted by the
Company to Grantee is granted subject to all of the terms, conditions and
provisions of the Plan. Grantee hereby acknowledges receipt of a copy of the
Plan and the parties agree that the entire text of such Plan be, and it hereby
is, incorporated herein by reference as fully as if here copied in full. The
terms of the Plan shall control with respect to the effect of Grantee's
termination of employment, the adjustments to be made in the event of changes in
the capital structure of the Company, Change in Control, and of all of the other
provisions, terms and conditions of the Plan applicable to the Option granted
herein. If any of the provisions of this Agreement conflict with the Plan, the
provisions of the Plan shall be controlling. The Grantee hereby agrees to accept
as binding, conclusive and final all decisions or interpretations of the
Committee, the Company or the Board, as appropriate, upon any questions arising
under the Plan or this Agreement.
SECTION 7.NON-TRANSFERABILITY. The Option granted hereunder is not
transferable or assignable by Grantee except by will or by the laws of descent
and distribution. No right or benefit hereunder shall in any manner be liable
for or subject to any debts, contracts, liabilities, obligations or torts of
Grantee.
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SECTION 8. NO GUARANTEE OF TAX CONSEQUENCES. The Company and the Committee
make no commitment or guarantee that any federal or state tax treatment will
apply or be available to any person eligible for benefits under the Option. The
Grantee has been advised and been provided the opportunity to obtain independent
legal and tax advice regarding the grant and exercise of the Option and the
disposition of any Shares acquired thereby.
SECTION 9. NO RIGHTS IN SHARES. Grantee shall have no rights as a
stockholder in respect of the Shares until the Grantee becomes the record holder
of such Shares.
SECTION 10. WITHHOLDING OF TAXES.
(a) TAX WITHHOLDING. The Company shall have the power and the
right to deduct or withhold, or require an Grantee to remit to the Company, an
amount sufficient to satisfy federal, state, and local taxes, domestic or
foreign, required by law or regulation to be withheld with respect to any
taxable event arising as a result of the Option or its exercise hereunder.
(b) SHARE WITHHOLDING. With respect to tax withholding required
upon the exercise of Option Shares, Grantee may elect, subject to the approval
of the Committee in its sole discretion, to satisfy the withholding requirement,
in whole or in part, by having the Company withhold Shares having a Fair Market
Value on the date the tax is to be determined equal to the statutory total tax
which could be imposed on the transaction. All such elections shall be made in
writing, signed by the Grantee, and shall be subject to any restrictions or
limitations that the Committee, in its discretion, deems appropriate. Any
fraction of a Share required to satisfy such obligation shall be disregarded and
the amount due shall instead be paid in cash by the Grantee.
The Company shall have the right to take such other action as may be
necessary or appropriate to satisfy any such tax withholding obligations.
SECTION 11. QUALIFICATION AS AN INCENTIVE STOCK OPTION. Grantee
understands that the Option is intended to qualify as an "incentive stock
option" within the meaning of Section 422 of the Code. Grantee acknowledges and
understands that Grantee must meet certain holding periods under Section 422(a)
of the Code to obtain the federal income tax treatment applicable to the
exercise of incentive stock options and the disposition of shares acquired
thereby. Grantee further understands and acknowledges that the exercise price of
Shares subject to this Option has been set by the Committee at a price that the
Committee determined to be not less than 100% (or, if the Grantee, at the Grant
Date, owned more than 10% of the total combined voting power of the Company's
outstanding voting securities, 110%) of the Fair Market Value, as determined in
accordance with the Plan, of Common Stock on the Grant Date. The Grantee further
understands and agrees, however, that the Company shall not be liable or
responsible for any additional tax liability incurred by the Grantee in the
event that the Internal Revenue Service for any reason determines that this
Option does not qualify as an "incentive stock option" within the meaning of the
Code.
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SECTION 12. RESTRICTIONS ON EXERCISE. The Option may not be exercised if
the issuance of such Option Shares or the exercise thereof (including but not
limited to the method of payment of the consideration for such Shares) would
constitute a violation of any applicable federal or state securities or other
laws or regulations, any rules or regulations of any stock exchange on which the
Common Stock may be listed or Company policies.
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SECTION 13. GENERAL.
(a) NOTICES. All notices under this Agreement shall be mailed or
delivered by hand to the parties at their respective addresses set forth beneath
their signatures below or at such other address as may be designated in writing
by either of the parties to one another. Notices shall be effective upon
receipt.
(b) AMENDMENT AND TERMINATION. No amendment, modification or
termination of the Option or this Agreement shall be made at any time without
the written consent of Grantee and Company.
(c) SEVERABILITY. In the event that any provision of this
Agreement shall be held illegal, invalid, or unenforceable for any reason, such
provision shall be fully severable, but shall not affect the remaining
provisions of the Agreement, and the Agreement shall be construed and enforced
as if the illegal, invalid, or unenforceable provision had not been included
herein.
(d) SUPERSEDES PRIOR AGREEMENTS. This Agreement shall supersede
and replace all prior agreements and understandings, oral or written, between
the Company and the Grantee regarding the grant of the Options covered hereby.
(e) GOVERNING LAW. The Option shall be construed in accordance
with the laws of the State of Texas without regard to its conflict of law
provisions, to the extent federal law does not supersede and preempt Texas law.
(f) COMMUNITY PROPERTY. Each spouse individually is bound by, and
such spouse's interest, if any, in any Shares is subject to, the terms of this
Agreement. Nothing in this Agreement shall create a community property interest
where none otherwise exists.
[Signature page follows.]
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IN WITNESS WHEREOF, this Agreement is executed and entered into effective
on the day and year first above written.
MISSION RESOURCES CORPORATION
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____________________________ By: ________________________________
Name:
Title:
_____________________________________
Grantee
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