EXHIBIT 10.3
KCS ENERGY, INC.
2005 EMPLOYEE AND DIRECTORS STOCK PLAN
SUPPLEMENTAL STOCK OPTION AGREEMENT
This Stock Option Agreement (the "AGREEMENT") is made and entered into as
of the date of grant set forth below (the "DATE OF GRANT") by and between KCS
Energy, Inc., a Delaware corporation (together with its Subsidiaries, if any,
the "COMPANY"), and the participant named below, including where appropriate the
beneficiaries, executors, administrators, or person or persons to whom the
Option may be transferred by will or by the laws of descent and distribution
(the "PARTICIPANT"). Capitalized terms not defined herein shall have the meaning
ascribed to them in the KCS Energy, Inc. 2005 Employee and Directors Stock Plan
(the "PLAN").
Participant:
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Address:
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Total Option Shares:
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Exercise Price Per Share:
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Date of Grant:
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Expiration Date:
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Type of Stock Option: Supplemental Stock Option
1. GRANT OF OPTION. The Company hereby grants to Participant an option
(this "OPTION") to purchase the total number of shares of Common Stock of the
Company set forth above as Total Option Shares (the "SHARES") at the Exercise
Price Per Share set forth above (the "EXERCISE PRICE"), subject to all of the
terms and conditions of this Agreement and the Plan. This Option is not intended
to qualify as an "incentive stock option" within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended (the "CODE").
2. EXERCISE PERIOD; VESTING. Unless expired as provided in Section 3 of
this Agreement, this Option may be exercised from time to time after the Date of
Grant set forth above (the "DATE OF GRANT") to the extent the Option has vested
in accordance with the vesting schedule set forth below. The Shares issued upon
exercise of the Option will be subject to the restrictions on transfer set forth
in Section 9 below. Provided Participant continues to provide Continuous Service
to the Company or any Subsidiary, the Option will become vested and exercisable
with respect to one-third (1/3) of the Shares on the first anniversary of the
Date of Grant set forth above and thereafter at the end of each full succeeding
year from the Date of
KCS ENERGY, INC. STOCK OPTION AGREEMENT Page 1
Grant the Option will become vested and exercisable as to an additional
one-third (1/3) of the Shares until the Option is vested and exercisable with
respect to one hundred percent (100%) of the Shares. A vested Option may not be
exercised for less than a full share. If application of the vesting percentage
causes a fractional Share to otherwise become exercisable, such Share shall be
rounded down to the nearest whole Share for each year except for the last year
in such vesting period, at the end of which vesting period this Option shall
become exercisable for the full remainder of the unexercised Shares subject to
the Option. If the Participant shall cease Continuous Service on account of the
Participant's death, Total and Permanent Disability or Retirement (as such terms
are defined in the Plan), the Option shall become 100% vested and exercisable.
Upon the occurrence of an involuntary termination of Participant's Continuous
Service with the Company (other than for Cause) at any time within 12 months
following a Change in Control, the Option shall become 100% vested and
exercisable.
3. EXPIRATION. The Option shall expire on the Expiration Date set
forth above or earlier as provided in Section 4 below.
4. TERMINATION OF CONTINUOUS SERVICE.
4.1. Forfeiture of Unvested Options. If the Participant's Continuous
Service is terminated for any reason, the unvested portion of the Option shall
terminate immediately and the Participant may exercise the vested portion as
provided in this Section 4. Outstanding Options that are not exercisable at the
time a Participant's Continuous Service terminates for any reason other than
Cause (including upon the Participant's death or Total and Permanent Disability)
shall be forfeited and expire at the close of business on the date of such
termination. Outstanding Options at the time a Participant's Continuous Service
terminates for Cause shall be forfeited and expire at the beginning of business
on the date of such termination.
4.2. Termination for Any Reason Except Death, Disability or Cause.
Unless otherwise provided in an employment agreement the terms of which have
been approved by the Administrator, if Participant's Continuous Service is
terminated for any reason, except death, Disability or Cause (including
Retirement, or an involuntary termination by the Company without Cause at any
time within 12 months following a Change in Control), the Option, to the extent
(and only to the extent) that it would have been exercisable by Participant
immediately prior to termination of Continuous Service (subject to any
acceleration events provided in Section 2), may be exercised by Participant
until the earlier of the expiration of the Option Period or, except as set forth
below, the date that is three (3) months following the termination of the
Participant's Continuous Service, and the Option shall thereafter terminate and
cease to be exercisable.
4.3. Termination Because of Death or Disability. If Participant's
Continuous Service is terminated because of death or Disability of Participant
(or Participant dies within three (3) months of the date of termination when
such termination is for any reason other than Participant's Disability or for
Cause), the Option, to the extent that it is exercisable by Participant on the
date of termination (subject to any acceleration events provided in Section 2),
may be exercised by Participant (or Participant's legal representative) no later
than twelve (12) months after the date of termination, but in any event no later
than the Expiration Date.
KCS ENERGY, INC. STOCK OPTION AGREEMENT Page 2
4.4. Termination for Cause. If the Participant's Continuous Service
is terminated as a result of the Participant's termination of Continuous Service
for Cause, all outstanding Options granted to such Participant shall expire as
of the commencement of business on the date of such termination of Continuous
Service.
4.5. Extension of Termination Date. If the exercise of the Option
following the termination of the Participant's Continuous Service (other than
upon the Participant's death or Total and Permanent Disability) would be
prohibited at any time solely because the exercise of the Option or issuance of
Shares of Common Stock would violate the registration requirements under the
Securities Act or any other state or federal securities law requirement, then
the Option shall terminate on the earlier of (a) the expiration of the Option
Period or (b) the expiration of a period after termination of the Participant's
Continuous Service that is three (3) months after the end of the period during
which the exercise of the Option would be in violation of such registration or
other securities law requirements.
4.6. No Obligation to Employ. Nothing in the Plan or this Agreement
shall confer on Participant any right to continue in the employ of, or other
relationship with, the Company or any Subsidiary, or limit in any way the right
of the Company or any Subsidiary to terminate Participant's employment or other
relationship at any time, with or without Cause.
5. MANNER OF EXERCISE.
5.1. Stock Option Exercise Agreement. To exercise this Option,
Participant (or in the case of exercise after Participant's death or incapacity,
Participant's executor, administrator, heir or legatee, as the case may be) must
deliver to the Company an executed stock option exercise agreement in the form
attached hereto as Exhibit A, or in such other form as may be approved by the
Administrator from time to time (the "EXERCISE AGREEMENT"), which shall set
forth, inter alia, (a) Participant's election to exercise the Option, (b) the
number of Shares being purchased, (c) any restrictions imposed on the Shares and
(d) any representations warranties and agreements regarding Participant's
investment intent and access to information as may be required by the Company to
comply with applicable securities laws. If someone other than Participant
exercises the Option, then such person must submit documentation reasonably
acceptable to the Company verifying that such person has the legal right to
exercise the Option.
5.2. Limitations on Exercise. The Option may not be exercised unless
such exercise is in compliance with all applicable federal and state securities
laws, as they are in effect on the date of exercise. The Option may not be
exercised for fewer than one (1) Share or for a fractional Share. If a
fractional Share would otherwise become exercisable, such Share shall be rounded
down to the nearest whole Share for each year except for the last year of the
applicable vesting period, at the end of which vesting period this Option shall
become exercisable for the full remainder of the unexercised Shares subject to
the Option.
5.3. Payment. The entire Exercise Price of this Option to purchase
Shares issued under the Plan shall be payable in full by cash (by check) for an
amount equal to the aggregate Exercise Price Per Share for the number of Shares
being purchased. Alternatively, in the sole discretion of the Plan Administrator
and upon such terms as the Plan Administrator shall approve, the Exercise Price
may be paid by:
KCS ENERGY, INC. STOCK OPTION AGREEMENT Page 3
(a) paying all or a portion of the aggregate Exercise Price
Per Share for the number of Shares being purchased by delivery to the Company of
other Shares, duly endorsed for transfer to the Company, with a Fair Market
Value on the date of delivery equal to the exercise price (or portion thereof)
due for the number of Shares being acquired, or by means of attestation whereby
the Participant identifies for delivery specific shares of Common Stock where
such shares have a Fair Market Value on the date of attestation equal to the
exercise price (or portion thereof) and receives a number of Shares equal to the
difference between the number of Shares thereby purchased and the number of
identified attestation shares of Common Stock (collectively a "STOCK FOR STOCK
EXERCISE"); provided, however, that the shares of Common Stock used in such
Stock for Stock Exercise (i) have either (1) been held for more than six (6)
months (or such longer or shorter period of time required to avoid a charge to
earnings for financial accounting purposes) and have been paid for within the
meaning of SEC Rule 144; or (2) were obtained by Participant in the open public
market; and (ii) are clear of all liens, claims, encumbrances or security
interests. Payment of the Exercise Price by a Participant who is an officer,
director or other "insider" subject to Section 16(b) of the Exchange Act in the
form of a Stock for Stock Exercise is subject to pre-approval by the
Administrator, in its sole discretion, in a manner that complies with the
specificity requirements of Rule 16b-3 under the Exchange Act, including the
name of the Participant involved in the transaction, the nature of the
transaction, the number of shares to be acquired or disposed of by the
Participant and the material terms of the Options involved in the transaction.
(b) during any period for which the Common Stock is publicly
traded (i.e., the Common Stock is listed on any established stock exchange or a
national market system, including without limitation the New York Stock
Exchange, the Nasdaq National Market, or if the Common Stock is quoted on the
Nasdaq System (but not on the Nasdaq National Market) or any similar system
whereby the Common Stock is regularly quoted by a recognized securities dealer
but closing sale prices are not reported), (i) a copy of instructions to a
broker-dealer that is a member of the National Association of Securities Dealers
(an "NASD DEALER") directing such broker to sell the Shares for which this
option is exercised, and to remit to the Company the aggregate Exercise Price of
such option or (ii) through a "margin" commitment from Participant and an NASD
Dealer whereby Participant irrevocably elects to exercise the Option and to
pledge the Shares so purchased to the NASD Dealer in a margin account as
security for a loan from NASD Dealer in the amount of the total Exercise Price,
and whereby the NASD Dealer irrevocably commits upon receipt of such Shares to
forward the total Exercise Price directly to the Company (collectively referred
to as a "CASHLESS EXERCISE"); provided, however, a Cashless Exercise by a
Director or executive officer that involves or may involve a direct or indirect
extension of credit or arrangement of an extension of credit by the Company, a
Parent or Subsidiary in violation of Section 402(a) of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act
(codified as Section 13(k) of the Securities Exchange Act of 1934, 15 U.S.C.
Section 78m(k)) shall be prohibited;
(c) by any other form of legal consideration that may be
acceptable to the Administrator. Exercise by a Director or executive officer
that involves or may involve a direct or indirect extension of credit or
arrangement of an extension of credit by the Company, or a Subsidiary in
violation of Section 402(a) of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act (codified as Section 13(k)
of the Securities Exchange Act of 1934, 15 U.S.C. Section 78m(k)) shall be
prohibited; or
KCS ENERGY, INC. STOCK OPTION AGREEMENT Page 4
(d) by any combination of the foregoing that may be acceptable
to the Administrator.
5.4. Tax Withholding. Prior to the issuance of the Shares upon
exercise of the Option, Participant must pay or provide for any applicable
federal, state and local withholding obligations of the Company. If the
Administrator permits, Participant also may provide for payment of withholding
taxes upon exercise of the Option by one or more of the following means: (a)
tendering a cash payment; (b) a broker assisted Cashless Exercise, (c) tendering
previously acquired shares of Common Stock with a Fair Market Value equal to or
less than the minimum statutory amount of taxes required to be withheld by law,
or (d) by requesting that the Company retain Shares from the Shares otherwise
issuable to the Participant as a result of the exercise of this Option, provided
that no Shares are withheld with a Fair Market Value exceeding the minimum
statutory amount of taxes required to be withheld by law ("SHARE WITHHOLDING").
In such case, the Company shall issue the net number of Shares to the
Participant by deducting the Shares retained from the Shares issuable upon
exercise. Payment of the tax withholding by a Participant who is an officer,
director or other "insider" subject to Section 16(b) of the Exchange Act by a
tender of Common Stock or in the form of Share Withholding is subject to
pre-approval by the Administrator, in its sole discretion, in a manner that
complies with the specificity requirements of Rule 16b-3 under the Exchange Act,
including the name of the Participant involved in the transaction, the nature of
the transaction, the number of shares to be acquired or disposed of by the
Participant and the material terms of the Options involved in the transaction.
5.5. Issuance of Shares. Provided that the Exercise Agreement and
payment are in form and substance satisfactory to counsel for the Company, the
Company shall issue the Shares registered in the name of Participant or
Participant's legal representative, and shall deliver certificates representing
the Shares with the appropriate legends affixed thereto.
6. COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of the Option and
the issuance and transfer of Shares shall be subject to compliance by the
Company and Participant with all applicable requirements of federal and state
securities laws and with all applicable requirements of any stock exchange on
which the Company's Common Stock may be listed at the time of such issuance or
transfer. Participant understands that the Company is under no obligation to
register or qualify the Shares with the SEC, any state securities commission or
any stock exchange to effect such compliance.
7. NONTRANSFERABILITY OF OPTION. The Option may not be transferred in any
manner other than by will or by the laws of descent and distribution and may be
exercised during the lifetime of Participant only by Participant or in the event
of Participant's incapacity, by Participant's legal representative. The terms of
the Option shall be binding upon the executors, administrators, successors and
assigns of Participant.
8. PRIVILEGES OF STOCK OWNERSHIP. Participant shall not have any of the
rights of a Stockholder with respect to any Shares until the Shares are issued
to Participant.
9. RESTRICTIONS ON TRANSFER.
KCS ENERGY, INC. STOCK OPTION AGREEMENT Page 5
9.1. Securities Law Restrictions. Regardless of whether the offering
and sale of Shares under the Plan have been registered under the Securities Act
or have been registered or qualified under the securities laws of any state, the
Company at its discretion may impose restrictions upon the sale, pledge or other
transfer of such Shares (including the placement of appropriate legends on stock
certificates or the imposition of stop-transfer instructions) if, in the
judgment of the Company, such restrictions are necessary or desirable in order
to achieve compliance with the Securities Act, the securities laws of any state
or any other law.
9.2. Market Stand-Off. If an underwritten public offering by the
Company of its equity securities pursuant to an effective registration statement
filed under the Securities Act, including the Company's initial public offering
occurs, the Optionee shall not sell, make any short sale of, loan, hypothecate,
pledge, grant any option for the repurchase of, transfer the economic
consequences of ownership or otherwise dispose or transfer for value or
otherwise agree to engage in any of the foregoing transactions with respect to
any Shares without the prior written consent of the Company or its underwriters,
for such period of time from and after the effective date of such registration
statement as may be requested by the Company or such underwriters (the "MARKET
STAND-OFF"). In order to enforce the Market Stand-Off, the Company may impose
stop-transfer instructions with respect to the Shares acquired under this
Agreement until the end of the applicable stand-off period. If there is any
change in the number of outstanding Shares by reason of a stock split, reverse
stock split, stock dividend, recapitalization, combination, reclassification,
dissolution or liquidation of the Company, any corporate separation or division
(including, but not limited to, a split-up, a split-off or a spin-off), a merger
or consolidation; a reverse merger or similar transaction, then any new,
substituted or additional securities which are by reason of such transaction
distributed with respect to any Shares subject to the Market Stand-Off, or into
which such Shares thereby become convertible, shall immediately be subject to
the Market Stand-Off.
9.3. Administration. Any determination by the Company and its
counsel in connection with any of the matters set forth in this Section 9 shall
be conclusive and binding on the Optionee and all other persons.
10. GENERAL.
10.1. Interpretation. Any dispute regarding the interpretation of
this Agreement shall be submitted by Participant or the Company to the
Administrator for review. The resolution of such a dispute by the Administrator
shall be final and binding on the Company and Participant.
10.2. Entire Agreement. The Plan is incorporated herein by
reference. This Agreement and the Plan constitute the entire agreement of the
parties and supersede all prior undertakings and agreements with respect to the
subject matter hereof. If any inconsistency should exit between the
nondiscretionary terms and conditions of this Agreement and the Plan, the Plan
shall govern and control.
10.3. Notices. Any notice required to be given or delivered to the
Company under the terms of this Agreement shall be in writing and addressed to
the Corporate Secretary of the Company at its principal corporate offices. Any
notice required to be given or delivered to
KCS ENERGY, INC. STOCK OPTION AGREEMENT Page 6
Participant shall be in writing and addressed to Participant at the address
indicated above or to such other address as such party may designate in writing
from time to time to the Company. All notices shall be deemed to have been given
or delivered upon: (a) personal delivery; (b) five (5) days after deposit in the
United States mail by certified or registered mail (return receipt requested);
(c) two (2) business day after deposit with any return receipt express courier
(prepaid); or (d) one (1) business day after transmission by facsimile.
10.4. Successors and Assigns. The Company may assign any of its
rights under this Agreement. This Agreement shall be binding upon and inure to
the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer set forth herein, this Agreement shall be binding upon
Participant and Participant's heirs, executors, administrators, legal
representatives, successors and assigns.
10.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without giving
effect to its conflict of law principles. If any provision of this Agreement is
determined by a court of law to be illegal or unenforceable, then such provision
will be enforced to the maximum extent possible and the other provisions will
remain fully effective and enforceable.
11. ACCEPTANCE. Participant hereby acknowledges receipt of a copy of the
Plan and this Agreement. Participant has read and understands the terms and
provisions thereof, and accepts the Option subject to all the terms and
conditions of the Plan and this Agreement. Participant acknowledges that there
may be adverse tax consequences upon exercise of the Option or disposition of
the Shares and that Participant should consult a tax advisor prior to such
exercise or disposition.
12. SECTION 409A LIMITATION. In the event the Administrator determines at
any time that this Option has been granted with an exercise price less than Fair
Market Value of the Shares subject to the Option on the date the Option is
granted (regardless of whether or not such exercise price is intentionally or
unintentionally priced at less than Fair Market Value, or is materially modified
at a time when the Fair Market Value exceeds the exercise price), or is
otherwise determined to constitute "nonqualified deferred compensation" within
the meaning of Section 409A of the Code, notwithstanding any provision of the
Plan or this Option Agreement to the contrary, the Option shall satisfy the
additional conditions applicable to nonqualified deferred compensation under
Section 409A of the Code, in accordance with Section 7 of the Plan. The
specified exercise date and term shall be the default date and term specified in
Section 7 of the Plan. Notwithstanding the foregoing, the Company shall have no
liability to any Participant or any other person if this Option is determined to
constitute "nonqualified deferred compensation" within the meaning of Section
409A of the Code and the terms of such Option do not satisfy the additional
conditions applicable to nonqualified deferred compensation under Section 409A
of the Code and Section 7 of the Plan.
[SIGNATURE PAGE FOLLOWS]
KCS ENERGY, INC. STOCK OPTION AGREEMENT Page 7
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized representative and Participant has executed this
Agreement, effective as of the Date of Grant.
KCS ENERGY, INC.
By:
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Name:
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Title:
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PARTICIPANT
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(Signature)
Printed Name:
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KCS ENERGY, INC. STOCK OPTION AGREEMENT Page 8
EXHIBIT A
FORM OF STOCK OPTION EXERCISE AGREEMENT
KCS ENERGY, INC. STOCK OPTION AGREEMENT
KCS ENERGY, INC.
2005 EMPLOYEE AND DIRECTORS STOCK PLAN
SUPPLEMENTAL STOCK OPTION EXERCISE AGREEMENT
This Stock Option Exercise Agreement (the "EXERCISE AGREEMENT") is made and
entered into as of _________________ (the "EFFECTIVE DATE"), by and between KCS
Energy, Inc., a Delaware corporation (the "COMPANY"), and the purchaser named
below (the "PURCHASER"). Capitalized terms not defined herein shall have the
meanings ascribed to them in the KCS Energy, Inc. 2005 Employee And Directors
Stock Plan (the "PLAN") or the Stock Option Agreement.
Participant:
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Address:
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Option Shares Being Purchased:
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Exercise Price Per Share:
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Date of Grant:
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Expiration Date:
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Type of Stock Option: Supplemental (Nonqualified) Stock Option
1. EXERCISE OF OPTION.
1.1. Exercise. Pursuant to exercise of that certain option (the
"OPTION") granted to Purchaser under the Plan and the Stock Option Agreement and
subject to the terms and conditions of this Exercise Agreement, Purchaser hereby
purchases from the Company, and the Company hereby sells to Purchaser, the Total
Number of Shares set forth above (the "SHARES") of the Company's Common Stock at
the Exercise Price Per Share set forth above (the "EXERCISE PRICE"). As used in
this Exercise Agreement, the term "SHARES" refers to the Shares purchased under
this Exercise Agreement and includes all securities received (a) in replacement
of the Shares, (b) as a result of stock dividends or stock splits with respect
to the Shares, and (c) all securities received in replacement of the Shares in a
merger, recapitalization, reorganization or similar corporate transaction.
1.2. Title to Shares. The exact spelling of the name(s) under
which Purchaser will take title to the Shares is:
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Purchaser desires to take title to the Shares as follows:
[ ] Individual, as separate property
[ ] Husband and wife, as community property
[ ] Joint Tenants
[ ] Other; please specify:
1.3. Payment. Purchaser hereby delivers payment of the Exercise
Price:
[ ] in cash (by check) in the amount of $_________, receipt of
which is acknowledged by the Company;
[ ] by a broker assisted cashless exercise procedure that has
been approved by the Company;
[ ] by tender (including by attestation) of _______ shares of
the Company's Common Stock that has been owned for at least six months in a
Stock-for-Stock Exercise, subject to pre-approval by the Administrator, in its
sole discretion. Payment of the Exercise Price by a Participant who is an
officer, director or other "insider" subject to Section 16(b) of the Exchange
Act in the form of a Stock for Stock Exercise other than cash is subject to
pre-approval by the Administrator, in its sole discretion, in a manner that
complies with the specificity requirements of Rule 16b-3 under the Exchange Act,
including the name of the Participant involved in the transaction, the nature of
the transaction, the number of shares to be acquired or disposed of by the
Participant and the material terms of the Options involved in the transaction.
[ ] other method or form of consideration that is acceptable to
the Plan Administrator in its sole discretion.
Payment of the Exercise Price in any form other than cash is
subject to pre-approval by the Administrator, in its sole discretion.
2. DELIVERY.
2.1. Deliveries by Purchaser. Purchaser hereby delivers to the
Company (a) this Exercise Agreement, (b) the Exercise Price in the manner
specified above, and (c) payment or other provision for any applicable tax
obligations in the form of a check, or other method or form of consideration
that is permitted under the Option Agreement and acceptable to the Plan
Administrator.
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2.2. Deliveries by the Company. Upon its receipt of the Exercise
Price, payment or other provision for any applicable tax obligations and all the
documents to be executed and delivered by Purchaser to the Company under Section
2.1 hereof, the Company will issue a duly executed stock certificate evidencing
the Shares in the name of Purchaser in the manner designated in Section 1.2
hereof.
3. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and
warrants to the Company that:
3.1. Agrees to Terms of the Plan. Purchaser has received a copy
of the Plan and the Stock Option Agreement, has read and understands the terms
of the Plan, the Stock Option Agreement and this Exercise Agreement, and agrees
to be bound by their terms and conditions. Purchaser acknowledges that there may
be adverse tax consequences upon exercise of the Option or disposition of the
Shares, and that Purchaser should consult a tax advisor prior to such exercise
or disposition.
3.2. SEC Rule 144. Purchaser understands that Rule 144
promulgated under the Securities Act may indefinitely restrict transfer of the
Shares so long as Purchaser remains an "affiliate" of the Company or if "current
public information" about the Company (as defined in Rule 144) is not publicly
available.
4. COMPLIANCE WITH SECURITIES LAWS. Purchaser understands and
acknowledges that, notwithstanding any other provision of the Stock Option
Agreement to the contrary, the exercise of any rights to purchase any Shares is
expressly conditioned upon compliance with the Securities Act and all applicable
state securities laws. Purchaser agrees to cooperate with the Company to ensure
compliance with such laws.
5. RIGHTS AS A STOCKHOLDER. Subject to the terms and conditions of this
Exercise Agreement, Purchaser will have all of the rights of a stockholder of
the Company with respect to the Shares from and after the date that Shares are
issued to Purchaser until such time as Purchaser disposes of the Shares.
6. TAX CONSEQUENCES. PURCHASER UNDERSTANDS THAT PURCHASER MAY SUFFER
ADVERSE TAX CONSEQUENCES AS A RESULT OF PURCHASER'S PURCHASE OR DISPOSITION OF
THE SHARES. PURCHASER REPRESENTS: (a) THAT PURCHASER HAS CONSULTED WITH ANY TAX
ADVISOR THAT PURCHASER DEEMS ADVISABLE IN CONNECTION WITH THE PURCHASE OR
DISPOSITION OF THE SHARES AND (b) THAT PURCHASER IS NOT RELYING ON THE COMPANY
FOR ANY TAX ADVICE. IN ADDITION TO THE FOREGOING, THE COMPANY SHALL HAVE NO
LIABILITY TO ANY PARTICIPANT OR ANY OTHER PERSON IF AN OPTION IS DETERMINED TO
CONSTITUTE "NONQUALIFIED DEFERRED COMPENSATION" WITHIN THE MEANING OF SECTION
409A OF THE CODE AND THE TERMS OF SUCH OPTION DO NOT SATISFY THE ADDITIONAL
CONDITIONS APPLICABLE TO NONQUALIFIED DEFERRED COMPENSATION UNDER SECTION 409A
OF THE CODE AND SECTION 7 OF THE PLAN.
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7. COMPLIANCE WITH LAWS AND REGULATIONS. The issuance and transfer of
the Shares will be subject to and conditioned upon compliance by the Company and
Purchaser with all applicable state, local and U.S. Federal laws and regulations
and with all applicable requirements of any stock exchange or automated
quotation system on which the Company's Common Stock may be listed or quoted at
the time of such issuance or transfer.
8. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Exercise Agreement. This Exercise Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the Company. This exercise
Agreement will be binding upon Purchaser and Purchaser's heirs, executors,
administrators, legal representatives, successors and assigns.
9. GOVERNING LAW; SEVERABILITY. This Exercise Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware
without giving effect to its conflict of law principles. If any provision of
this Exercise Agreement is determined by a court of law to be illegal or
unenforceable, then such provision will be enforced to the maximum extent
possible and the other provisions will remain fully effective and enforceable.
10. NOTICES. Any notice required to be given or delivered to the Company
shall be in writing and addressed to the Corporate Secretary of the Company at
its principal corporate offices. Any notice required to be given or delivered to
Purchaser shall be in writing and addressed to Purchaser at the address
indicated above or to such other address as Purchaser may designate in writing
from time to time to the Company. All notices shall be deemed effectively given
upon personal delivery, (a) five (5) days after deposit in the United States
mail by certified or registered mail (return receipt requested), (b) two (2)
business day after its deposit with any return receipt express courier
(prepaid), or (c) one (1) business day after transmission by facsimile.
11. FURTHER INSTRUMENTS. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Exercise Agreement.
12. HEADINGS. The captions and headings of this Exercise Agreement are
included for ease of reference only and will be disregarded in interpreting or
construing this Exercise Agreement.
13. ENTIRE AGREEMENT. The Plan, the Stock Option Agreement, this
Exercise Agreement, together with all Exhibits thereto constitute the entire
agreement and understanding of the parties with respect to the subject matter of
this Exercise Agreement, and supersede all prior understandings and agreements,
whether oral or written, between the parties hereto with respect to the specific
subject matter hereof. If there is any inconsistency between the terms of this
Exercise Agreement and the terms of the Plan and Stock Option Agreement, the
terms of the Plan and Stock Option Agreement shall govern and control.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Company has caused this Exercise Agreement to be
executed in duplicate by its duly authorized representative and Purchaser has
executed this Exercise Agreement in triplicate as of the Effective Date,
indicated above.
KCS ENERGY, INC.
By:
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Name:
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Title:
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PARTICIPANT
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(Signature)
Printed Name:
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