Exhibit 10.5
INCENTIVE STOCK OPTION
AGREEMENT
THE
EXCO RESOURCES, INC.
2005
LONG-TERM INCENTIVE PLAN
1.
Grant of Option . Pursuant to the EXCO Resources, Inc. 2005
Long-Term Incentive Plan (the “Plan”) for key employees
of EXCO Resources, Inc., a Texas corporation (the
“Company”), the Company grants to
(the
“Participant”),
who is an employee of
the Company, an option to purchase shares of Common Stock, par
value $.001 per share (“Common Stock”), of the Company
as follows:
On the date hereof, the
Company grants to the Participant an option (the
“Option” or “Stock Option”) to purchase
( )
full shares (the “Optioned Shares”) of Common Stock at
an Option Price equal to
$
per share (being the Fair Market Value per share of the Common
Stock on this Date of Grant or 110% of such Fair Market Value, in
the case of a ten percent (10%) or more stockholder as provided in
Code Section 422). The Date of Grant of this Stock Option is
,
20 .
The “Option
Period” shall commence on the Date of Grant and shall expire
on the date immediately preceding the tenth (10 th )
anniversary of the Date of Grant (or the date immediately preceding
the fifth (5 th ) anniversary of the Date of Grant, in
the case of a ten percent (10%) or more stockholder as provided in
Code Section 422). The Stock Option is intended to be an Incentive
Stock Option.
2.
Subject to Plan . The Stock Option and its exercise are
subject to the terms and conditions of the Plan, and the terms of
the Plan shall control to the extent not otherwise inconsistent
with the provisions of this Agreement. The capitalized terms used
herein that are defined in the Plan shall have the same meanings
assigned to them in the Plan. The Stock Option is subject to any
rules promulgated pursuant to the Plan by the Board or the
Committee and communicated to the Participant in writing. In
addition, if the Plan previously has not been approved by the
Company’s stockholders, the Stock Option is granted subject
to such stockholder approval.
3.
Vesting; Time of Exercise . Except as specifically provided
in this Agreement and subject to certain restrictions and
conditions set forth in the Plan, the Optioned Shares shall be
vested and exercisable as follows:
a.
Twenty-five percent (25%) of the total Optioned Shares shall be
fully vested on the Date of Grant, provided the Participant is
employed by the Company or a Subsidiary on that date.
b.
Twenty-five percent (25%) of the total Optioned Shares shall be
fully vested on the first anniversary of the Date of Grant,
provided the Participant is employed by the Company or a Subsidiary
on that date.
c.
An additional twenty-five percent (25%) of the total Optioned
Shares shall be fully vested on the second anniversary of the Date
of Grant, provided the Participant is employed by the Company or a
Subsidiary on that date.
d.
An additional twenty-five percent (25%) of the total Optioned
Shares shall be shall be fully vested on the third anniversary of
the Date of Grant, provided the Participant is employed by the
Company or a Subsidiary on that date.
Notwithstanding the
above, the Optioned Shares shall be fully vested automatically upon
a Change in Control (as defined in Section 2.6 of the Plan)
or upon the death of the Participant or the Total and Permanent
Disability (as defined in Section 2.41 of the Plan) of the
Participant, provided the Participant is still employed by the
Company as of the date of one of such specified events.
4.
Term; Forfeiture .
a.
Except as otherwise provided in this Agreement,
the unexercised portion of the Stock Option that relates to
Optioned Shares which are vested will terminate and be forfeited at
the first of the following to occur:
i.
5 p.m. on the date the Option Period terminates;
ii.
5 p.m. on the date which is one hundred eighty (180) days following
the date of the Participant’s Termination of Service due to
death or Total and Permanent Disability;
iii.
5 p.m. on the date which is ninety (90) days from the date of the
Participant’s Retirement;
iv.
5 p.m. on the date of the Participant’s Termination of
Service by the Company for cause (as defined herein);
v.
5 p.m. on the date which is thirty (30) days following the date of
the Participant’s Termination of Service for any reason not
otherwise specified in this Section 4.a. ;
vi.
5 p.m. on the date the Company causes any portion of the Option to
be forfeited pursuant to Section 7 hereof.
vii.
For purposes hereof, “cause” shall mean that the
Participant shall have committed (i) an intentional material act of
fraud or embezzlement in connection with his duties in the course
of his employment with the Company; (ii) intentional wrongful
material damage to property of the Company; or (iii) intentional
wrongful disclosure of material secret processes or material
confidential information of the Company. For the purposes of this
Agreement, no act, or failure to act, on the part of the
Participant shall be deemed “intentional” unless done,
or omitted to be done, by the Participant not in good faith and
without reasonable belief that his action or omission was in the
best interest of the Company.
5.
Who May Exercise . Subject to the terms and conditions set
forth in Sections 3 and 4 above, during the lifetime of the
Participant, the Stock Option may be exercised only by the
Participant, or by the Participant’s guardian or personal or
legal representative. If the Participant’s Termination of
Service is due to his death prior to the date specified in
Section 4.a.i. hereof, or Participant dies prior to the
termination dates specified in Sections 4.a.i., ii., iii., iv.,
v. or vi. hereof, and the Participant has not exercised the
Stock Option as to the maximum number of vested Optioned Shares as
set forth in Section 3 hereof as of the date of death,
the
2
following persons may
exercise the exercisable portion of the Stock Option on behalf of
the Participant at any time prior to the earliest of the dates
specified in Section 4 hereof: the personal
representative of his estate, or the person who acquired the right
to exercise the Stock Option by bequest or inheritance or by reason
of the death of the Participant; provided that the Stock Option
shall remain subject to the other terms of this Agreement, the
Plan, and applicable laws, rules, and regulations.
6.
No Fractional Shares . The Stock Option may be exercised
only with respect to full shares, and no fractional share of stock
shall be issued.
7.
Manner of Exercise . Subject to such administrative
regulations as the Committee may from time to time adopt, the Stock
Option may be exercised by the delivery of written notice to the
Committee setting forth the number of shares of Common Stock with
respect to which the Stock Option is to be exercised, the date of
exercise thereof (the “Exercise Date”) which shall be
at least three (3) days after giving such notice unless an earlier
time shall have been mutually agreed upon, and whether the Optioned
Shares to be exercised will be considered as deemed granted under
an Incentive Stock Option as provided in Section 11 . On the
Exercise Date, the Participant shall deliver to the Company
consideration with a value equal to the total Option Price of the
shares to be purchased, payable as follows: (a) cash, check,
bank draft, or money order payable to the order of the Company, (b)
Common Stock (including Restricted Stock) owned by the Participant
on the Exercise Date, valued at its Fair Market Value on the
Exercise Date, and which the Participant has not acquired from the
Company within six (6) months prior to the Exercise Date; provided,
that the six (6)-month holding requirement shall only apply to a
Reporting Participant at any time following an IPO, (c) if the
Company has completed an IPO, by delivery (including by FAX) to the
Company or its designated agent of an executed irrevocable option
exercise form together with irrevocable instructions from the
Participant to a broker or dealer, reasonably acceptable to the
Company, to sell certain of the shares of Common Stock purchased
upon exercise of the Stock Option or to pledge such shares as
collateral for a loan and promptly deliver to the Company the
amount of sale or loan proceeds necessary to pay such purchase
price, and/or (d) in any other form of valid consideration that is
acceptable to the Committee in its sole discretion. In the event
that shares of Restricted Stock are tendered as consideration for
the exercise of a Stock Option, a number of shares of Common Stock
issued upon the exercise of the Stock Option equal to the number of
shares of Restricted Stock used as consideration therefor shall be
subject to the same restrictions and provisions as the Restricted
Stock so tendered.
Upon payment of
all amounts due from the Participant, the Company shall cause
certificates for the Optioned Shares then being purchased to be
delivered to the Participant (or the person exercising the
Participant’s Stock Option in the event of his death) at its
principal business office within ten (10) business days after the
Exercise Date. The obligation of the Company to deliver shares of
Common Stock shall, however, be subject to the condition that if at
any time the Company shall determine in its discretion that the
listing, registration, or qualification
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