ENCORE ACQUISITION COMPANY
NON-QUALIFIED STOCK OPTION AGREEMENT
This
Non-Qualified Stock Option Agreement (“Agreement”) is
made and entered into as of the date of grant set forth below (the
“Date of Grant”) by and between Encore Acquisition
Company, a Delaware corporation (the “Company”), and
the optionee named below (“Optionee”). Capitalized
terms not defined herein shall have the meaning ascribed to them in
the Company’s 2000 Incentive Stock Plan, as amended and
restated effective March 18, 2004, and as such plan may be
thereafter amended (the “Plan”).
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Exercise Price per
Share:
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February 12,
2007
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Expiration Date for Exercise of
Options:
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February 11,
2017
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1. Grant
of Option . The Company hereby grants to Optionee an option
(the “Option”) to purchase the total number of shares
of Common Stock of the Company (the “Common Stock”) set
forth above (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 intended to be a nonqualified stock option subject
to the provisions of Section 83 of the Internal Revenue Code
of 1986, as amended (the “Code”).
2.
Exercise of Option . This Option shall be exercisable
during its term in accordance with the terms and provisions of the
Plan as follows:
(1) This Option
shall vest and be exercisable based on the following
schedule:
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(i)
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1/3
of the total Shares subject to this Option shall vest and be
exercisable by Optionee 12 months after the Date of
Grant;
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(ii)
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Another 1/3 of the total Shares
subject to this Option shall vest and be exercisable by Optionee
24 months after the Date of Grant; and
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(iii)
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The
final 1/3 of the total Shares subject to this Option shall vest and
be exercisable by Optionee 36 months after the Date of
Grant.
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(2) This Option
may not be exercised for a fraction of a Share, but instead, the
number of Shares, which shall vest and be exercisable hereunder,
shall be rounded up to the next whole number of Shares.
(3) In the event
of Optionee’s death, disability, or other termination of
employment, the exercisability of the Option is governed by
Sections 4, 5 and 6 below.
(4) In no
event may this Option be exercised after the date of expiration of
the term of this Option as set forth in Section 8
below.
(b)
Method of Exercise . This Option shall be exercisable
by written notice, which shall state the election to exercise the
Option and the number of Shares in respect of which the Option is
being exercised. Such written notice shall be signed by Optionee
and shall be delivered in person or by certified mail to the
Corporate Secretary of the Company. The written notice shall be
accompanied by payment of the Exercise Price.
No Shares will be
issued pursuant to the exercise of an Option unless such issuance
and such exercise shall comply with all relevant provisions of law
and the requirements of any stock exchange upon which the Common
Stock may then be listed. Assuming such compliance, for income tax
purposes the Shares shall be considered transferred to Optionee on
the date on which the Option is exercised with respect to such
Shares.
3. Method
of Payment . Payment of the purchase price of Shares shall
be made by cash, check or, in the sole discretion of the Committee
at any time prior to exercise, promissory notes or the assignment
and delivery to the Company of shares of Common Stock owned by
Optionee without restriction for the preceding six months having a
Fair Market Value equal to the aggregate purchase price of the
Shares purchased.
The Company will,
as soon as reasonably practicable, notify Optionee of the amount of
withholding tax, if any, that must be paid under federal, state and
local law due to the exercise of the Option. Optionee shall, prior
to receiving the Shares purchased under this Option, satisfy the
amount of withholding tax specified in the Company’s notice
by (i) cash or check, (ii) assignment and delivery to the
Company of shares of Common Stock owned by Optionee (without regard
to the length of time held by Optionee) having a Fair Market Value
of such amount, (iii) notice to the Company of
Optionee’s election to have the Company withhold whole Shares
otherwise deliverable to Optionee from the exercise of the Option,
which Shares have a Fair Market Value of such amount or (iv) a
combination of (i), (ii) or (iii).
Certificates for
any shares of Common Stock delivered in satisfaction of all or a
portion of the Exercise Price and any withholding tax shall be
appropriately endorsed for transfer and assignment to the Company.
For purposes of determining the amount, if any, of the Exercise
Price satisfied by delivery of shares of Common Stock or the amount
of tax withholding satisfied by delivery of shares of Common Stock
or withholding of Shares from the exercise of the Option, such
shares shall be valued at Fair Market Value on the date of
exercise.
4.
Termination of Status as an Employee . In the event
of termination of Optionee’s “Continuous Status as an
Employee” for any reason other than death or disability as
provided in Sections 5 or 6 of this Agreement, Optionee may
exercise this Option to the extent exercisable
-2-
at the date of
such termination until the earlier of (i) the date three
(3) months after the date of such termination or (ii) the
dat
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