As filed with the Securities and Exchange Commission on May 26, 1994
Registration No. 33-
______________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
HONDO OIL & GAS COMPANY
(Exact name of registrant as specified in its charter)
Delaware 95-1998768
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
410 East College Boulevard, Roswell, New Mexico 88201
(Address of principal executive offices) (Zip Code)
HONDO OIL & GAS COMPANY 1993 STOCK INCENTIVE PLAN
(Full title of the Plan)
Charles B. McDaniel
Hondo Oil & Gas Company
410 East College Boulevard
Roswell, New Mexico 88201
(Name and address of agent for service)
(505) 625-8700
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered Per Share Price Fee
______________________________________________________________________
Common Stock,
$1.00 par value 350,000 (1) $11.31 (2) $3,958,500 $1,365
(1) This Registration Statement covers, in addition to the number of
shares of Common Stock stated above, options or rights to purchase or
acquire the shares of Common Stock that may be granted under the Plan,
and, pursuant to Rule 416, an additional indeterminate number of
shares which by reason of certain events specified in the Plan may
become subject to the Plan.
(2) Pursuant to Rule 457(h), the maximum offering price was calculated
based upon the average of the high and low sales prices of the Common
Stock as reported on the American Stock Exchange as of May 24, 1994.
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The documents containing the information specified in this Part
I (plan information and registrant information) will be sent or given
to employees as specified by Rule 428(b)(1) promulgated under the
Securities Act of 1933, as amended (the "Securities Act"). Such
documents need not be filed with the Securities and Exchange
Commission (the"Commission") either as part of this Registration
Statement or as prospectuses or prospectus supplements pursuant to
Rule 424. These documents and the documents incorporated by reference
in this Registration Statement pursuant to Item 3 of Part II of this
form, taken together, constitute a prospectus that meets the
requirements of Section 10(a) of the Securities Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3 Incorporation of Documents by Reference
The following documents filed with the Commission by
Registrant are incorporated by reference herein:
(a) Annual Report on Form 10-K for the fiscal year ended
September 30, 1993.
(b) Quarterly Reports on Form 10-Q for the quarters ended
December 31, 1993 and March 31, 1994 and Current Report on
Form 8-K dated October 12, 1993.
(c) The Company's Form 8A dated September 3, 1985, with
respect to the Company's Common Stock and any amendment or
report filed for the purpose of updating such description.
All documents filed by Registrant pursuant to sections 13(a),
13(c), 14 and 15(d) of the Exchange Act subsequent to the date of the
Registration Statement, and prior to the filing of a post-effective
amendment which indicates that all securities offered have been sold
or which deregisters all securities then remaining unsold, shall be
deemed to be incorporated by reference in the Registration Statement
and to be part hereof from the respective dates of filing. Any
statement contained herein or in a document, all or a portion of which
is incorporated or deemed to be incorporated by reference herein,
shall be deemed to be modified or superseded for purposes of this
Registration Statement to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or amended, to constitute a part of this
Registration Statement.
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ITEM 4 Description of Securities
The Common Stock of Registrant is registered under Section 12
of the Exchange Act, and, therefore, the description of securities is
omitted.
ITEM 5 Interests of Named Experts and Counsel
Certain matters with respect to the validity of the Common
Stock offered hereby have been passed upon for Registrant by C.B.
McDaniel. Mr. McDaniel is an officer and a director of Registrant,
and has been granted options under the 1993 Stock Incentive Plan.
ITEM 6 Indemnification of Directors and Officers
Section 145 of the General Corporation Law of Delaware empowers
Registrant to indemnify, subject to the standards and exceptions set
forth therein, any person in connection with any action, suit or
proceeding brought or threatened by reason of the fact that the person
is or was a director, officer, employee or agent of Registrant, or is
or was serving as such with respect to another corporation at the
request of Registrant. Article XII of Registrant's Bylaws provides
that Registrant shall (and may with respect to agents and employees of
Registrant) indemnify and hold harmless to the fullest extent
permitted by the laws of Delaware any and all persons who serve or who
have served at any time as directors or officers of Registrant, or who
at the request of Registrant serve or at any time have served as
directors, officers, employees or agents of another corporation or of
a partnership, joint venture, trust or other enterprise, including
service with respect to employee benefit plans, and their respective
heirs, executors and administrators against all costs, expenses,
liabilities and losses (including attorney's fees, judgments, fines,
ERISA excise taxes or penalties and amounts paid in settlement)
reasonably incurred or suffered by such persons in connection
therewith whether the basis of such proceeding is alleged action or
inaction in an official capacity or in any other capacity seeking
indemnification in connection with a proceeding (or part thereof)
initiated by such person only if such proceeding (or part thereof) was
authorized by the Board of Directors of Registrant. The Registrant
has purchased an insurance policy or policies insuring directors and
officers of the Registrant and its subsidiaries against certain of the
liabilities described in this Item.
Article Fifteenth of Registrant's Certificate of Incorporation
limits the liability of Registrant's directors to the full extent
permitted under Delaware law. Directors are not liable for monetary
damages for breach of fiduciary duty as a director except (i) for any
breach of the director's duty of loyalty to the Registrant or its
stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii)
for unlawful payment of a dividend or unlawful stock purchase or
redemption, or (iv) for any transaction from which the director
derived an improper personal benefit.
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Lonrho Plc, an indirect beneficial owner of the Registrant, has
indemnified the directors of the Registrant against certain
environmental liabilities that are excluded from the liability
insurance policy or policies insuring the Registrant's directors and
officers.
ITEM 7 Exemption from Registration Claimed
Not applicable.
ITEM 8 Exhibits
Exhibits required by Item 601 of Regulation S-K are
incorporated by reference. Refer to Exhibit Index on
page 7.
4 Hondo Oil & Gas Company 1993 Stock Incentive Plan.
5 Opinion of C.B. McDaniel as to the legality of the
shares of Common Stock being registered, including
consent.
23.1 Consent of Ernst & Young.
23.2 Consent of Charles B. McDaniel included in his
opinion filed as Exhibit 5.
ITEM 9 Undertakings
A) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(a) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1993;
(b) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement;
(c) To include any material information with respect to
the plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement;
Provided, however, that paragraphs (A)(1)(a) and (A)(1)(b) do
not apply if the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic
reports filed by the registrant pursuant to Section 13 or Section
15(d) of the Exchange Act that are incorporated by reference in the
Registration Statement.
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(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
B) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to section 13(a) or
section 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Securities Exchange Act of 1934) that
is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
C) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Roswell, State
of New Mexico, on May 26, 1994.
HONDO OIL & GAS COMPANY
By:/s/ J.J. Hoey
-------------------------------------
John J. Hoey
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons
in the capacities and on the dates indicated.
Signatures Title Date
------------------------ ---------------------- ---------------
/s/ Robert O. Anderson Chairman of the Board, May 26, 1994
Robert O. Anderson Director
/s/ I.P. Brownlow Vice President, Chief May 26, 1994
I.P. Brownlow Financial Officer and
Treasurer
/s/ J.J. Hoey President, Chief May 26, 1994
J.J. Hoey Executive Officer, Director
/s/ C.B. McDaniel Secretary, Director May 26, 1994
C.B. McDaniel
/s/ D.G. McNair Director* May 26, 1994
D.G. McNair
/s/ John F. Price Director* May 26, 1994
John F. Price
/s/ R.W. Rowland Director May 26, 1994
R.W. Rowland
/s/ P.G.B. Spicer Director* May 26, 1994
P.G.B. Spicer
/s/ Stanton J. Urquhart Vice President, Controller May 26, 1994
Stanton J. Urquhart
/s/ R.E. Whitten Director May 26, 1994
R.E. Whitten
--------------
* Member of Compensation and Benefits Committee
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EXHIBIT INDEX
HONDO OIL & GAS COMPANY
REGISTRATION STATEMENT ON FORM S-8
EXHIBIT SUBJECT
------- --------
4 Hondo Oil & Gas Company 1993
Stock Incentive Plan.
5 Opinion of C.B. McDaniel as to
the legality of the shares of
Common Stock being registered,
including consent.
23.1 Consent of Ernst & Young.
23.2 Consent of Charles B. McDaniel
included in his opinion filed
as Exhibits 5.
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HONDO OIL & GAS COMPANY
1993 STOCK INCENTIVE PLAN
I. THE PLAN
1.1 Purpose
The purpose of this Plan is to attract, motivate, retain and reward
key employees, including officers, whether or not directors, of the Company
and certain other eligible persons by providing incentives related to
equity interests in and the financial performance of the Company. In
addition, the purpose of the Plan is to attract, motivate and retain
experienced and knowledgeable independent directors through the benefits
provided under Article VI. Capitalized terms are defined in Article V.
1.2 Administration and Authorization; Power and Procedure.
(a) Committee. This Plan shall be administered by and all Awards
to Eligible Employees shall be authorized by the Committee. Action of the
Committee with respect to the administration of this Plan shall be taken
pursuant to a majority vote or by written consent of its members.
(b) Plan Awards; Interpretation; Powers of Committee. Subject to
the express provisions of this Plan, the Committee shall have the
authority:
(i) to determine from among those persons eligible the particular
Eligible Employees who will receive any Awards;
(ii) to grant Awards to Eligible Employees, determine the price at
which securities will be offered or awarded and the amount of securities
to be offered or awarded to any of such persons, and determine the other
specific terms and conditions of such Awards consistent with the express
limits of this Plan, and establish the installments (if any) in which
such Awards shall become exercisable, or determine that no delayed
exercisability is required, and establish the events of termination of
such Awards;
(iii) to approve the forms of Award Agreements (which need not be
identical either as to type of award or among Eligible Employees);
(iv) to construe and interpret this Plan and any agreements
defining the rights and obligations of the Company and Eligible
Employees under this Plan, further define the terms used in this Plan,
and prescribe, amend and rescind rules and regulations relating to the
administration of this Plan;
(v) to cancel, modify, or waive the Corporation's rights with
respect to, or modify, discontinue, suspend, or terminate any or all
outstanding Awards held by Eligible Employees, subject to any required
consent under Section 4.6;
(vi) to accelerate or extend the exercisability or extend the term
of any or all such outstanding Awards (including, without limitation, in
the event of termination of employment, death, a change in control,
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reorganization or other circumstances deemed appropriate by the
Committee) within the maximum five-year term of Awards under Section
1.6; and
(vii) to make all other determinations and take such other action
as contemplated by this Plan or as may be necessary or advisable for the
administration of this Plan and the effectuation of its purposes.
Notwithstanding the foregoing, the provisions of Article VI relating to
Non-Employee Director Awards shall be automatic and, to the maximum extent
possible, self-effectuating, and the discretion of the Committee shall not
extend to such Awards in any manner that would be impermissible under Rule
16b-3(c)(2).
(c) Binding Determinations. Any action taken by, or inaction of,
the Corporation, any Subsidiary, the Board or the Committee relating or
pursuant to this Plan shall be within the absolute discretion of that
entity or body and shall be conclusive and binding upon all persons. No
member of the Board or Committee, or officer of the Corporation or any
Subsidiary, shall be liable for any such action or inaction of the entity
or body, of another person or, except in circumstances involving bad faith,
of himself or herself. Subject only to compliance with the express
provisions hereof, the Board and Committee may act in their absolute
discretion in matters within their authority related to this Plan.
(d) Reliance on Experts. In making any determination or in
taking or not taking any action under this Plan, the Committee or the
Board, as the case may be, may obtain and may rely upon the advice of
experts, including professional advisors to the Corporation. No director,
officer or agent of the Company shall be liable for any such action or
determination taken or made or omitted in good faith.
(e) Delegation. The Committee may delegate ministerial, non-
discretionary functions to individuals who are officers or employees of the
Company.
1.3 Participation.
Awards may be granted by the Committee only to those persons that
the Committee determines to be Eligible Employees. An Eligible Employee
who has been granted an Award may, if otherwise eligible, be granted
additional Awards if the Committee shall so determine, subject to the
limitations of Section 1.4. Non-Employee Directors shall not be eligible
to receive any Awards except for Non-Qualified Stock Options granted
automatically without action of the Committee under the provisions of
Article VI.
1.4 Shares Available for Awards.
Subject to the provisions of Section 4.2, the capital stock that
may be delivered under this Plan shall be shares of the Corporation's
authorized but unissued Common Stock and any shares of its Common Stock
held as treasury shares.
(a) Number of Shares; Individual Limit. The maximum number of
shares of Common Stock that may be delivered pursuant to Awards granted to
Eligible Employees under this Plan shall not exceed 305,000 shares, and the
maximum number of shares of Common Stock that may be delivered under the
2
provisions of Article VI shall not exceed 45,000 shares, in each case
subject to adjustments contemplated by Section 4.2. The maximum number of
shares of Common Stock which may be delivered pursuant to Awards granted
during any one-year period to any individual Eligible Employee under this
Plan shall not exceed 100,000, subject to adjustments contemplated by
Section 4.2.
(b) Calculation of Available Shares and Replenishment. Shares
subject to outstanding Awards of derivative securities (as defined in Rule
16a-1(c) under the Exchange Act) shall be reserved for issuance. If any
option or other right to acquire shares of Common Stock under an Award
shall expire or be cancelled or terminated without having been exercised in
full, the unpurchased shares subject thereto shall again be available for
the purposes of the Plan, subject to any applicable limitations under Rule
16b-3. If a Stock Appreciation Right or similar right is exercised, the
number of shares of Common Stock to which such exercise relates under the
applicable Award shall be charged against the maximum amount of Common
Stock that may be delivered pursuant to Awards under this Plan and, if
applicable, such Award. If the Corporation withholds shares of Common
Stock pursuant to Section 4.5, the number of shares that would have been
deliverable with respect to an Award but that are withheld pursuant to the
provisions of Section 4.5 may in effect not be issued, but the aggregate
number of shares issuable with respect to the applicable Award and under
the Plan shall be reduced by the number of shares withheld and such shares
shall not be available for additional Awards under this Plan.
1.5 Grant of Awards.
Subject to the express provisions of this Plan, the Committee shall
determine the number of shares of Common Stock subject to each Award, and
the price (if any) to be paid for the shares or the Award. Each Award
shall be evidenced by an Award Agreement signed by the Corporation and, if
required by the Committee, by the Participant.
1.6 Award Period.
Each Award and all executory rights or obligations under the
related Award Agreement shall expire on such date (if any) as shall be
determined by the Committee, but not later than five (5) years after the
Award Date.
1.7 Limitations on Exercise and Vesting of Awards.
(a) Provisions for Exercise.
No Award shall be exercisable until at least six months after the
initial Award Date, and once exercisable an Award shall remain exercisable
until the expiration or earlier termination of the Award, unless the
Committee otherwise provides.
(b) Procedure. Any exercisable Award shall be deemed to be
exercised when the Secretary of the Corporation receives written notice of
such exercise from the Eligible Employee, together with any required
payment made in accordance with Section 2.2.
(c) Fractional Shares/Minimum Issue. Fractional share interests
shall be disregarded, but may be accumulated. The Committee, however, may
determine in the case of Eligible Employees that cash, other securities, or
3
other property will be paid or transferred in lieu of any fractional share
interests. No fewer than 100 shares may be purchased on exercise of any
Award at one time unless the number purchased is the total number at the
time available for purchase under the Award.
1.8 Acceptance of Notes to Finance Exercise.
The Corporation may, with the Committee's approval, accept one or
more notes from any Eligible Employee in connection with the exercise or
receipt of any outstanding Award; provided that any such note shall be
subject to the following terms and conditions:
(a) The principal of the note shall not exceed the amount required
to be paid to the Corporation upon the exercise or receipt of one or
more Awards under the Plan and the note shall be delivered directly to
the Corporation in consideration of such exercise or receipt.
(b) The initial term of the note shall be determined by the
Committee; provided that the term of the note, including extensions,
shall not exceed a period of five (5) years.
(c) The note shall provide for full recourse to the Eligible
Employee and shall bear interest at a rate determined by the Committee
but not less than the applicable imputed interest rate specified by the
Code.
(d) If the employment of the Eligible Employee terminates, the
unpaid principal balance of the note shall become due and payable on the
10th business day after such termination; provided, however, that if a
sale of such shares would cause such Eligible Employee to incur
liability under Section 16(b) of the Exchange Act, the unpaid balance
shall become due and payable on the 10th business day after the first
day on which a sale of such shares could have been made without
incurring such liability assuming for these purposes that there are no
other transactions by the Eligible Employee subsequent to such
termination.
(e) If required by the Committee or by applicable law, the note
shall be secured by a pledge of any shares or rights financed thereby in
compliance with applicable law.
(f) The terms, repayment provisions, and collateral release
provisions of the note and the pledge securing the note shall conform with
applicable rules and regulations of the Federal Reserve Board as then in
effect.
1.9 No Transferability. Awards may be exercised only by, and
amounts payable or shares issuable pursuant to an Award shall be paid only
to (or registered only in the name of), the Eligible Employee or, if the
Eligible Employee has died, the Eligible Employee's Beneficiary or, if the
Participant has suffered a Disability, the Eligible Employee's Personal
Representative, if any, or if there is none, the Eligible Employee, or (to
the extent, if any, permitted by applicable law and Rule 16b-3) to a third
party pursuant to such conditions and procedures as the Committee may
establish in the Award Agreement or by amendment thereto. Other than by
will or the laws of descent and distribution or pursuant such other
exceptions to transfer restrictions under Rule 16b-3 and applicable law as
may hereafter be so authorized (and, in the case of an Incentive Stock
4
Option, consistent therewith), no right or benefit under this Plan or any
Award shall be transferrable by the Eligible Employee or shall be subject
in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge (other than to the Corporation) and any such
attempted action shall be void. The Corporation shall disregard any
attempt at transfer, assignment or other alienation prohibited by the
preceding sentences and shall pay or deliver any cash or shares of Common
Stock issuable on exercise of an Award in accordance with the provisions of
this Plan. The designation of a Beneficiary hereunder shall not constitute
a transfer for these purposes. The restrictions set forth herein shall not
apply to shares actually issued on exercise of Awards, except as to the
extent required by Section 4.4 or by the Committee in the Award Agreement.
II. OPTIONS.
2.1 Grants.
One or more Options may be granted under this Article to any
Eligible Employee. Each Option granted may be either an Option intended to
be an Incentive Stock Option, or not so intended, and such intent shall be
indicated in the applicable Award Agreement.
2.2 Option Price.
(a) Pricing Limits. The purchase price per share of the Common
Stock covered by each Option shall be determined by the Committee at the
time of the Award, but shall not be less than 100% (110% in the case of an
Incentive Stock Option granted to an Eligible Employee who owns or is
deemed to own under Section 424(d) of the Code more than 10% of the total
combined voting power of all classes of stock of the Corporation) of the
Fair Market Value of the Common Stock on the date of grant.
(b) Payment Provisions. The purchase price of any shares purchased
on exercise of an Option granted under this Article shall be paid in full
at the time of each purchase in one or a combination of the following
methods: (i) in cash or by electronic funds transfer; (ii) by check
payable to the order of the Corporation; (iii) if authorized by the
Committee or specified in the applicable Award Agreement, by a promissory
note of the Eligible Employee consistent with the requirements of Section
1.8; (iv) by notice and third party payment in such manner as may be
authorized by the Committee; or (v) by the delivery of shares of Common
Stock of the Corporation already owned by the Eligible Employee, provided,
however, that the Committee may in its absolute discretion limit the
Eligible Employee's ability to exercise an Award by delivering such shares.
Shares of Common Stock used to satisfy the exercise price of an Option
shall be valued at their Fair Market Value on the date of exercise.
2.3 Limitations on Grant and Terms of Incentive Stock Options.
(a) $100,000 Limit. To the extent that the aggregate "fair market
value" of stock with respect to which incentive stock options first become
exercisable by a Eligible Employee in any calendar year exceeds $100,000,
taking into account both Common Stock subject to Incentive Stock Options
under this Plan and stock subject to incentive stock options under all
other plans of the Company or any parent corporation, such options shall be
treated as nonqualified stock options. For this purpose, the "fair market
value" of the stock subject to options shall be determined as of the date
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the options were awarded. In reducing the number of options treated as
incentive stock options to meet the $100,000 limit, the most recently
granted options shall be reduced first. To the extent a reduction of
simultaneously granted options is necessary to meet the $100,000 limit, the
Committee may, in the manner and to the extent permitted by law, designate
which shares of Common Stock are to be treated as shares acquired pursuant
to the exercise of an Incentive Stock Option.
(b) Option Period. Each Option and all rights thereunder shall
expire no later than five (5) years after the Award Date.
(c) Other Code Limits. There shall be imposed in any Award
Agreement relating to Incentive Stock Options such terms and conditions as
from time to time are required in order that the Option be an "incentive
stock option" as that term is defined in Section 422 of the Code.
2.4 Option Repricing/Cancellation and Regrant/Waiver
of Restrictions.
Subject to Section 1.4 and Section 4.6 and the specific limitations
on Awards contained in this Plan, the Committee from time to time may
authorize, generally or in specific cases only, for the benefit of any
Eligible Employee any adjustment in the exercise or purchase price, the
number of shares subject to, the restrictions upon or the term of, an Award
granted under this Article by cancellation of an outstanding Award and a
subsequent regranting of an Award, by amendment, by substitution of an
outstanding Award, by waiver or by other legally valid means. Such
amendment or other action may result among other changes in an exercise or
purchase price which is higher or lower than the exercise or purchase price
of the original or prior Award, provide for a greater or lesser number of
shares subject to the Award, or provide for a longer or shorter vesting or
exercise period. Notwithstanding the preceding sentence, if the exercise
or purchase price of an Award is reduced by amendment, such price shall not
be less than the Fair Market Value of the shares subject to the Award on
the date of such amendment.
III. LIMITED STOCK APPRECIATION RIGHTS.
3.1 Grants.
In its discretion, the Committee may grant Stock Appreciation
Rights to any Eligible Employee either concurrently with the grant of an
Option or in respect of an outstanding Option, in whole or in part. Any
Stock Appreciation Right granted in connection with an Incentive Stock
Option shall contain such terms as may be required to comply with the
provisions of Section 422 of the Code and the regulations promulgated
thereunder, unless the Eligible Employee otherwise agrees.
3.2 Exercise of Stock Appreciation Rights.
(a) Exercisability. The exercisability provisions of a Stock
Appreciation Right shall be subject to Section 3.4. Unless the Award
Agreement or the Committee otherwise provides, a Stock Appreciation Right
shall be exercisable at such time or times, and to the extent, that the
related Option shall be exercisable.
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(b) Effect on Available Shares. In the event that a Stock
Appreciation Right is exercised, the number of shares of Common Stock
subject to a related Option shall be charged against the maximum amount of
Common Stock that may be delivered pursuant to Awards under this Plan. The
number of shares subject to the Stock Appreciation Right and the related
Option of the Eligible Employee shall also be reduced by such number of
shares.
3.3 Payment.
(a) Amount. Unless the Committee otherwise provides, upon
exercise of a Stock Appreciation Right and surrender of an exercisable
portion of any related Award, the Eligible Employee shall be entitled to
receive payment of an amount determined by multiplying
(i) the difference obtained by subtracting the exercise price
per share of Common Stock under the related Award (if applicable) or the
initial share value specified in the Award from the Fair Market Value of
a share of Common Stock on the date of exercise of the Stock
Appreciation Right, by
(ii) the number of shares with respect to which the Stock
Appreciation Right shall have been exercised.
(b) Form of Payment. The Committee, in its sole discretion, shall
determine the form in which payment shall be made of the amount determined
under paragraph (a) above, either solely in cash, solely in shares of
Common Stock (valued at Fair Market Value on the date of exercise of the
Stock Appreciation Right), or partly in such shares and partly in cash,
provided that the Committee shall have determined that such exercise and
payment are consistent with applicable law. If the Committee permits the
Participant to elect to receive cash or shares (or a combination thereof)
on such exercise, any such election shall be subject to such conditions as
the Committee may impose and, in the case of any Section 16 Person, any
election to receive cash shall be subject to any applicable limitations
under Rule 16b-3.
3.4 Limited Stock Appreciation Rights.
Stock Appreciation Rights shall be exercisable only upon or in
respect of one or more specified event, (including but not limited to a
change in control), shall relate to or operate in tandem with or
substitution for Options, may be payable in cash or in shares of equivalent
value on the date of exercise, and shall be exercisable only at a specified
time or during a specified period not more than six months and 10 days
before, after or including such event.
IV. OTHER PROVISIONS.
4.1 Rights of Eligible Employees and Beneficiaries.
(a) Employment Status. Status as an Eligible Employee shall not
be construed as a commitment that any Award will be made under this Plan to
an Eligible Employee or to Eligible Employees generally.
(b) No Employment Contract. Nothing contained in this Plan (or in
any other documents related to this Plan or to any Award) shall confer upon
7
any Eligible Employee any right to continue in the employ or other service
of the Company or constitute any contract or agreement of employment or
other service, nor shall interfere in any way with the right of the Company
to change such person's compensation or other benefits or to terminate the
employment of such person, with or without cause, but nothing contained in
this Plan or any document related hereto shall adversely affect any
independent contractual right of such person without his or her consent
thereto.
(c) Plan Not Funded. Awards payable under this Plan shall be
payable in shares or from the general assets of the Corporation, and no
special or separate reserve, fund or deposit shall be made to assure
payment of such Awards. No Eligible Employee, Beneficiary or other person
shall have any right, title or interest in any fund or in any specific
asset (including shares of Common Stock, except as expressly otherwise
provided) of the Company by reason of any Award hereunder. Neither the
provisions of this Plan (or of any related documents), nor the creation or
adoption of this Plan, nor any action taken pursuant to the provisions of
this Plan shall create, or be construed to create, a trust of any kind or a
fiduciary relationship between the Company and any Eligible Employee,
Beneficiary or other person. To the extent that an Eligible Employee,
Beneficiary or other person acquires a right to receive payment pursuant to
any Award hereunder, such right shall be no greater than the right of any
unsecured general creditor of the Company.
4.2 Adjustments; Acceleration.
(a) Adjustments. If there shall occur any extraordinary dividend
or other extraordinary distribution in respect of the Common Stock (whether
in the form of cash, Common Stock, other securities, or other property), or
any recapitalization, stock split (including a stock split in the form of a
stock dividend), reverse stock split, reorganization, merger, combination,
consolidation, split-up, spin-off, combination, repurchase, or exchange of
Common Stock or other securities of the Corporation, or there shall occur
any other like corporate transaction or event in respect of the Common
Stock or a sale of substantially all the assets of the Corporation as an
entirety, then the Committee shall, in such manner and to such extent (if
any) as it deems appropriate and equitable (1) proportionately adjust any
or all of (a) the number and type of shares of Common Stock (or other
securities) which thereafter may be made the subject of Awards (including
the specific maxima and numbers of shares set forth elsewhere in this
Plan), (b) the number, amount and type of shares of Common Stock (or other
securities or property) subject to any or all outstanding Awards, (c) the
grant, purchase, or exercise price of any or all outstanding Awards, (d)
the securities, cash or other property deliverable upon exercise of any
outstanding Awards, or (2) in the case of an extraordinary dividend or
other distribution, merger, reorganization, consolidation, combination,
sale of assets, split up, exchange, or spin off, make provision for a cash
payment or for the substitution or exchange of any or all outstanding
Awards or the cash, securities or property deliverable to the holder of any
or all outstanding Awards based upon the distribution or consideration
payable to holders of the Common Stock of the corporation upon or in
respect of such event; provided, however, in each case, that with respect
to Awards of Incentive Stock Options, no such adjustment shall be made
which would cause the Plan to violate Section 424(a) of the Code or any
successor provisions thereto.
8
(b) Acceleration of Awards Upon Change in Control. As to any
Eligible Employee, unless prior to a Change in Control Event the Committee
determines that, upon its occurrence, there shall be no acceleration of
benefits under Awards or determines that only certain or limited benefits
under Awards shall be accelerated and the extent to which they shall be
accelerated, and/or establishes a different time in respect of such Event
for such acceleration, then upon the occurrence of a Change in Control
Event each Option and Stock Appreciation Right shall become immediately
exercisable; provided, however, that in no event shall any Award be
accelerated as to any Section 16 Person to a date less than six months
after the Award Date of such Award. The Committee may override the
limitations on acceleration in this Section 4.2(b) by express provision in
the Award Agreement and may accord any Eligible Employee a right to refuse
any acceleration, whether pursuant to the Award Agreement or otherwise, in
such circumstances as the Committee may approve. Any acceleration of
Awards shall comply with applicable regulatory requirements, including
without limitation Section 422 of the Code.
(c) Possible Early Termination of Accelerated Awards. If any
Option or other right to acquire Common Stock under this Plan (other than
under Article VI) has been fully accelerated as permitted by Section 4.2(b)
but is not exercised prior to (i) a dissolution of the Corporation, or (ii)
a reorganization event described in Section 4.2(a) that the Corporation
does not survive, or (iii) the consummation of reorganization event
described in Section 4.2(a) that results in a Change of Control approved by
the Board, and no provision has been made for the survival, substitution,
exchange or other settlement of such Option or right, such Option or right
shall thereupon terminate.
4.3 Effect of Termination of Employment.
The Committee shall establish in respect of each Award granted to
an Eligible Employee the effect of a termination of employment on the
rights and benefits thereunder and in so doing may make distinctions based
upon the cause of termination.
4.4 Compliance with Laws.
This Plan, the granting and vesting of Awards under this Plan and
the issuance and delivery of shares of Common Stock and/or the payment of
money under this Plan or under Awards granted hereunder are subject to
compliance with all applicable federal and state laws, rules and
regulations (including but not limited to state and federal securities law
and federal margin requirements) and to such approvals by any listing,
regulatory or governmental authority as may, in the opinion of counsel for
the Corporation, be necessary or advisable in connection therewith. Any
securities delivered under this Plan shall be subject to such restrictions,
and the person acquiring such securities shall, if requested by the
Corporation, provide such assurances and representations to the Corporation
as the Corporation may deem necessary or desirable to assure compliance
with all applicable legal requirements.
4.5 Tax Withholding.
(a) Cash or Shares. Upon any exercise or payment of any Award,
the Company shall have the right at its option to (i) require the Eligible
Employee (or Personal Representative or Beneficiary, as the case may be) to
pay or provide for payment of the amount of any taxes which the Company may
9
be required to withhold with respect to such transaction or (ii) deduct
from any amount payable in cash the amount of any taxes which the Company
may be required to withhold with respect to such cash amount. In any case
where a tax is required to be withheld in connection with the delivery of
shares of Common Stock under this Plan, the Committee may grant (either at
the time of the Award or thereafter) to the Eligible Employee the right to
elect, pursuant to such rules and subject to such conditions as the
Committee may establish, to have the Corporation reduce the number of
shares to be delivered by (or otherwise reacquire) the appropriate number
of shares valued at their then Fair Market Value, to satisfy such
withholding obligation.
(b) Tax Loans. The Company may, in its discretion, authorize a
loan to an Eligible Employee in the amount of any taxes which the Company
may be required to withhold with respect to shares of Common Stock received
(or disposed of, as the case may be) pursuant to a transaction described in
subsection (a) above. Such a loan shall be for a term, at a rate of
interest and pursuant to such other terms and conditions as the Company,
under applicable law may establish and such loan need not comply with the
provisions of Section 1.8.
4.6 Plan Amendment, Termination and Suspension.
(a) Board Authorization. The Board may, at any time, terminate
or, from time to time, amend, modify or suspend this Plan, in whole or in
part. No Awards may be granted during any suspension of this Plan or after
termination of this Plan, but the Committee shall retain jurisdiction as to
Awards then outstanding in accordance with the terms of this Plan.
(b) Shareholder Approval. If any amendment would (i) materially
increase the benefits accruing to Eligible Employees under this Plan, (ii)
materially increase the aggregate number of securities that may be issued
under this Plan, or (iii) materially modify the requirements as to
eligibility for participation in this Plan, then to the extent then
required by Rule 16b-3 to secure benefits thereunder or to avoid liability
under Section 16 of the Exchange Act (and Rules thereunder) or required
under Section 425 of the Code or any other applicable law, or deemed
necessary or advisable by the Board, such amendment shall be subject to
shareholder approval.
(c) Amendments to Awards. Without limiting any other express
authority of the Committee under but subject to the express limits of this
Plan, the Committee by agreement or resolution may waive conditions of or
limitations on Awards to Eligible Employees that the Committee in the prior
exercise of its discretion has imposed, without the consent of an Eligible
Employee, and may make other changes to the terms and conditions of Awards
that do not affect in any manner materially adverse to the Eligible
Employee, his or her rights and benefits under an Award.
(d) Limitations on Amendments to Plan and Awards. No amendment,
suspension or termination of the Plan or change of or affecting any
outstanding Award shall, without written consent of the Eligible Employee,
affect in any manner materially adverse to the Participant any rights or
benefits of the Eligible Employee or obligations of the Corporation under
any Award granted under this Plan prior to the effective date of such
change. Changes contemplated by Section 4.2 shall not be deemed to
constitute changes or amendments for purposes of this Section 4.6.
10
4.7 Privileges of Stock Ownership.
Except as otherwise expressly authorized by the Committee or this
Plan, an Eligible Employee shall not be entitled to any privilege of stock
ownership as to any shares of Common Stock not actually delivered to and
held of record by him or her. No adjustment will be made for dividends or
other rights as a shareholders for which a record date is prior to such
date of delivery.
4.8 Effective Date of the Plan.
This Plan shall be effective as of November 15, 1993, the date of
Board approval, subject to shareholder approval within 12 months
thereafter.
4.9 Term of the Plan.
No Award shall be granted more than ten years after the effective
date of this Plan (the "termination date"). Unless otherwise expressly
provided in this Plan or in an applicable Award Agreement, any Award
theretofore granted may extend beyond such date, and all authority of the
Committee with respect to Awards hereunder shall continue during any
suspension of this Plan and in respect of outstanding Awards on such
termination date.
4.10 Governing Law/Construction/Severability.
(a) Choice of Law. This Plan, the Awards, all documents
evidencing Awards and all other related documents shall be governed by, and
construed in accordance with the laws of the state of incorporation of the
Corporation.
(b) Severability. If any provision shall be held by a court of
competent jurisdiction to be invalid and unenforceable, the remaining
provisions of this Plan shall continue in effect.
(c) Plan Construction. It is the intent of the Corporation that
this Plan and Awards hereunder satisfy and be interpreted in a manner that
in the case of Participants who are or may be subject to Section 16 of the
Exchange Act satisfies the applicable requirements of Rule 16b-3 so that
such persons will be entitled to the benefits of Rule 16b-3 or other
exemptive rules under Section 16 of the Exchange Act and will not be
subjected to avoidable liability thereunder. If any provision of this Plan
or of any Award would otherwise frustrate or conflict with the intent
expressed above, that provision to the extent possible shall be interpreted
and deemed amended so as to avoid such conflict.
4.11 Captions.
Captions and headings are given to the sections and subsections of
this Plan solely as a convenience to facilitate reference. Such headings
shall not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
4.12 Effect of Change of Subsidiary Status.
For purposes of this Plan and any Award hereunder, if an entity
ceases to be a Subsidiary a termination of employment shall be deemed to
11
have occurred with respect to each employee of such Subsidiary who does not
continue as an employee of another entity within the Company.
4.13 Non-Exclusivity of Plan.
Nothing in this Plan shall limit or be deemed to limit the
authority of the Board or the Committee to grant awards or authorize any
other compensation, with or without reference to the Common Stock, under
any other plan or authority.
V. DEFINITIONS.
5.1 Definitions.
(a) "Award" shall mean an award of any Option or Stock
Appreciation Right, or any combination thereof, whether alternative or
cumulative, authorized by and granted under this Plan.
(b) "Award Agreement" shall mean any writing setting forth the
terms of an Award that has been authorized by the Committee.
(c) "Award Date" shall mean the date upon which the Committee took
the action granting an Award or such later date as the Committee designates
as the Award Date at the time of the Award or, in the case of Awards under
Article VI, the applicable dates set forth therein.
(d) "Award Period" shall mean the period beginning on an Award
Date and ending on the expiration date of such Award.
(e) "Beneficiary" shall mean the person, persons, trust or trusts
entitled by will or the laws of descent and distribution to receive the
benefits specified in the Award Agreement and under this Plan in the event
of a Participant's death, and shall mean the Participant's executor or
administrator if no other Beneficiary is identified and able to act under
the circumstances.
(f) "Board" shall mean the Board of Directors of the Corporation.
(g) "Change in Control Event" shall mean any of the following:
(1) Approval by the shareholders of the Corporation of the
dissolution or liquidation of the Corporation;
(2) Approval by the shareholders of the Corporation of an
agreement to merge or consolidate, or otherwise reorganize, with or into
one or more entities that are not Subsidiaries, as a result of which
less than 50% of the outstanding voting securities of the surviving or
resulting entity immediately after the reorganization are, or will be,
owned by shareholders of the Corporation immediately before such
reorganization (assuming for purposes of such determination that there
is no change in the record ownership of the Corporation's securities
from the record date for such approval until such reorganization but
taking into consideration securities of the other parties to such
reorganization held by such record holders);
12
(3) Approval by the shareholders of the Corporation of the
sale of substantially all of the Corporation's business and/or assets to
a person or entity which is not a Subsidiary; or
(4) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) (other than a person having beneficial
ownership of the securities of the Corporation at the time of adoption
of this Plan or an affiliate of such person, or any successor, heir,
descendent or related party of or to any of them) becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Corporation representing
more than 50% of the combined voting power of the Corporation's then
outstanding securities entitled to then vote generally in the election
of directors of the Corporation.
(h) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(i) "Commission" shall mean the Securities and Exchange
Commission.
(j) "Committee" shall mean the entire Board or a committee
appointed by the Board to administer this Plan, which committee shall be
comprised only of two directors or such greater number of directors as may
be required under Rule 16b-3 or applicable law, each of whom, during such
time as one or more Eligible Employees may be subject to Section 16 of the
Exchange Act, shall unless the Board otherwise provides be Disinterested.
(k) "Common Stock" shall mean the Common Stock of the Corporation
and such other securities or property as may become the subject of Awards,
or become subject to Awards, pursuant to an adjustment made under Section
4.2 of this Plan.
(l) "Company" shall mean, collectively, the Corporation and its
Subsidiaries.
(m) "Corporation" shall mean Hondo Oil & Gas Company, a Delaware
corporation, and its successors.
(n) "Disinterested" shall mean disinterested within the meaning of
any applicable regulatory requirements, including Rule 16b-3.
(o) "Eligible Employee" shall mean an officer (whether or not a
director) or key executive, administrative, managerial, production,
marketing or sales employee of the Company, or any Other Eligible Person.
(p) "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
(q) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended from time to time.
(r) "Fair Market Value" shall mean (i) if the stock is listed or
admitted to trade on a national securities exchange, the closing price of
the stock on the Composite Tape, as published in the Western Edition of The
Wall Street Journal, of the principal national securities exchange on which
the stock is so listed or admitted to trade, on such date, or, if there is
no trading of the stock on such date, then the closing price of the stock
13
as quoted on such Composite Tape on the next preceding date on which there
was trading in such shares; (ii) if the stock is not listed or admitted to
trade on a national securities exchange, the last price for the stock on
such date, as furnished by the National Association of Securities Dealers,
Inc. ("NASD") through the NASDAQ National Market Reporting System or a
similar organization if the NASD is no longer reporting such information;
(iii) if the stock is not listed or admitted to trade on a national
securities exchange and is not reported on the National Market Reporting
System, the mean between the bid and asked price for the stock on such
date, as furnished by the NASD or a similar organization; or (iv) if the
stock is not listed or admitted to trade on a national securities exchange,
is not reported on the National Market Reporting System and if bid and
asked prices for the stock are not furnished by the NASD or a similar
organization, the value as established by the Committee at such time for
purposes of this Plan.
(s) "Incentive Stock Option" shall mean an Option which is
designated as an incentive stock option within the meaning of Section 422
of the Code, the award of which contains such provisions as are necessary
to comply with that section.
(t) "Nonqualified Stock Option" shall mean an Option that is
designated as a Nonqualified Stock Option and shall include any Option
intended as an Incentive Stock Option that fails to meet the applicable
legal requirements thereof. Any Option granted hereunder that is not
designated as an incentive stock option shall be deemed to be designated a
nonqualified stock option under this Plan and not an incentive stock option
under the Code.
(u) "Non-Employee Director" shall mean a member of the Board of
Directors of the Corporation who is not an officer or employee of the
Company or any holder of more than 10 percent of the Common Stock of the
Corporation.
(v) "Option" shall mean an option to purchase Common Stock under
this Plan. The Committee shall designate any Option granted to an Eligible
Employee as a Nonqualified Stock Option or an Incentive Stock Option.
Options granted under Article VI shall be Nonqualified Stock Options.
(w) "Other Eligible Person" shall mean any other person (including
significant agents and consultants) who performs substantial services for
the Company of a nature similar to those performed by key employees and who
would not compromise the Corporation's ability to register the shares on
Form S-8, selected to participate in this Plan by the Committee from time
to time; provided that in no event shall a Director be selected as an Other
Eligible Person.
(x) "Personal Representative" shall mean the person or persons
who, upon the disability or incompetence of an Eligible Employee, shall
have acquired on behalf of the Participant, by legal proceeding or
otherwise, the power to exercise the rights or receive benefits under this
Plan and who shall have become the legal representative of the Eligible
Employee.
(y) "Plan" shall mean this 1993 Stock Incentive Plan.
14
(z) "Rule 16b-3" shall mean Rule 16b-3 as promulgated by the
Commission pursuant to the Exchange Act, as amended from time to time but
subject to any applicable transition rules.
(aa) "Section 16 Person" shall mean a person subject to Section
16(a) of the Exchange Act.
(bb) "Securities Act" shall mean the Securities Act of 1933, as
amended from time to time.
(cc) "Stock Appreciation Right" shall mean a right to receive a
number of shares of Common Stock or an amount of cash, or a combination of
shares and cash, the aggregate amount or value of which is determined by
reference to a change in the Fair Market Value of the Common Stock that is
authorized under this Plan.
(dd) "Subsidiary" shall mean any corporation or other entity a
majority of whose outstanding voting stock or voting power is beneficially
owned directly or indirectly by the Corporation.
(ee) "Total Disability" shall mean a "permanent and total
disability" within the meaning of Section 22(e)(3) of the Code and (except
in the case of a Non-Employee Director) such other disabilities,
infirmities, afflictions or conditions as the Committee by rule may
include.
VI. NON-EMPLOYEE DIRECTOR OPTIONS.
6.1 Participation.
Awards under this Article VI shall be made only to Non-Employee
Directors.
6.2 Option Grants.
(a) Time of Award. Persons who are Non-Employee Directors in
office on November 15, 1993 shall be granted, subject to approval of this
Plan by the shareholders of the Corporation, without further corporate
action an Option to purchase 15,000 shares of Common Stock at $7.50 per
share, subject to adjustment as set forth in the form of Award Agreement
attached hereto as Exhibit A. After November 15, 1993 and subject to the
approval of this Plan by the shareholders of the Corporation, if any person
who is not then an officer or employee of the Company shall become an
eligible Non-Employee Director of the Corporation, there shall be granted
automatically to such person (without any action by the Board or Committee)
a Nonqualified Stock Option (the Award Date of which shall be the date such
person takes office) to purchase 15,000 shares of Common Stock.
(b) Maximum Number of Awards. A Non-Employee Director shall not
receive more than one Nonqualified Stock Option under this Section 6.2.
6.3 Option Price.
The purchase price per share of the Common Stock covered by each
Option granted after November 15, 1993 pursuant to Section 6.2 hereof shall
15
be 100 percent of the Fair Market Value of the Common Stock on the Award
Date.
6.4 Option Period and Exercisability.
Each Option granted under this Article VI and all rights or
obligations thereunder shall commence on the Award Date and expire five
years thereafter and shall be subject to earlier termination as provided
below. Each Option granted under Section 6.2 shall become exercisable in
two equal installments commencing six months and eighteen months after the
Award Date. Each person granted an option hereunder shall exercise and
deliver to the Corporation an agreement in such form, duly completed by an
officer of the Corporation.
6.5 Other Option Terms.
Other terms, conditions, and provisions of the Options granted
pursuant to Section 6.2 hereof are set forth in the form of Non-Employee
Director Award Agreement which is attached hereto as Exhibit A and
incorporated herein by this reference.
6.6 Limitation on Amendments.
The provisions of this Article VI shall not be amended more than
once every six months (other than as may be necessary to conform to any
applicable changes in the Code or the rules thereunder), unless such
amendment would be consistent with the provisions of Rule 16b-3(c)(2)(ii)
(or any successor provision).
16
EXHIBIT A
HONDO OIL & GAS COMPANY
NONEMPLOYEE DIRECTOR
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT dated as of the ___ day of ______________, 199_, between
Hondo Oil & Gas Company, a Delaware corporation (the "Corporation"), and
"Director").
W I T N E S S E T H
WHEREAS, the Corporation has granted to the Director effective as of the __
day of _________, 199_ (the "Award Date") a nonqualified stock option to
purchase all or any part of 15,000 authorized but unissued or treasury
shares of Common Stock, $1.00 par value, of the Corporation upon the terms
and conditions set forth herein and under the terms of Article VI of the
Hondo Oil & Gas Company 1993 Stock Incentive Plan (the "Plan").
NOW, THEREFORE, in consideration of services rendered and to be rendered by
the Director, the parties agree as follows:
1. Grant of Option. This Agreement evidences the Corporation's grant to
the Director of the right and option to purchase, on the terms and
conditions set forth herein, all or any part of an aggregate of 15,000
shares of the Common Stock at the price of $ ____ per share (the "Option"),
exercisable from time to time, subject to the provisions of this Agreement,
prior to the close of business on the day before the fifth anniversary of
the Award Date (the "Expiration Date"). Such price is not less than the
fair market value of the Common Stock as of the Award Date.
2. Exercisability of Option. The Option shall become exercisable in
installments as to 50% of the aggregate number of shares set forth in
Section 1 hereof (subject to adjustment) on and after _______, 199_(1) and
as to the remaining 50% of such aggregate number of shares (subject to
adjustment) on ______, 199_.(2) To such extent the Option may be
exercised, in whole or in part, from time to time, until its expiration or
earlier termination.
To the extent the Director does not in any period purchase all or any part
of the shares to which the Director is entitled, the Director has the right
cumulatively thereafter to purchase any shares not so purchased and such
right shall continue until the Option terminates or expires. Fractional
share interests shall be disregarded, but may be cumulated. No fewer than
100 shares may be purchased at any one time, unless the number purchased is
the total number at the time available for purchase under the Option.
___________________
(1) (Insert date which is 6 months after Award Date)
(2) (Insert date which is 18 months after Award Date)
17
3. Method of Exercise of Option. The Option shall be exercisable by the
delivery to the Corporation of a written notice stating the number of
shares to be purchased pursuant to the Option and accompanied by payment
made
(a) in cash or by check payable to the order of the Corporation;
(b) by exchange of Common Stock of the Corporation, then having been
owned by the Director for at least six months, having a then fair
market value (as determined by the Board) equal to such purchase
price; or
(c) in any combination of the consideration permitted by the
foregoing subsections;
subject to such further limitations, rules and procedures as the Committee
may from time to time establish as to any noncash payment by persons
exercising options.
4. No Service Commitment. Nothing contained in this Agreement (or in any
other documents related to this Agreement) shall confer upon Director any
right to continue to serve as a director of the Corporation nor shall
interfere in any way with any right of the Corporation to terminate the
Director's service as a director, with or without cause. Nothing contained
in this Agreement shall influence the construction or interpretation of the
Corporation's Articles of Incorporation or Bylaws regarding service on the
Board.
5. Effect of Termination of Service. If the Director dies or becomes
disabled while serving as a director, the Option shall immediately become
and shall remain fully exercisable for twelve (12) months after the date
the Director becomes disabled or dies or until the expiration of the stated
term of this Option, whichever first occurs, and shall thereafter
terminate. If the Director's services as a member of the Board terminate
for any other reason, then any portion of this Option which is not then
exercisable shall terminate and any portion of this Option which is then
exercisable may be exercised for three (3) months after the date of such
termination (provided that if the Director dies or becomes disabled during
such period, then such period shall be extended an additional twelve (12)
months) or until the expiration of the stated term, whichever first occurs,
and shall thereafter terminate.
6. Termination of Option Under Certain Events. The Option to the extent
not previously exercised shall terminate upon an event or transaction which
the Corporation does not survive provided that (1) the Director shall have
at least ten (10) days advance notice of any such termination, and the
Director shall have had the right prior to or simultaneously with the
consummation of the event or other transaction to exercise this Option, or
(2) the Board (or the terms of such transaction) shall have provided for
and the stockholders shall have approved an adjustment pursuant to the
provisions of Section 8 below of the securities or other property
deliverable upon exercise of the Option, to the extent then exercisable in
accordance with the terms hereof or by acceleration similarly approved.
7. Non-Transferability of Option. This Option may be exercised only by,
and shares issuable pursuant to this Option shall be paid only to the
Director or, if the Director has died, the Director's beneficiary or, if
the Director has suffered a disability, the Director's personal
18
representative, if any, or if there is none, the Director or (to the extent
permitted by applicable law and Rule 16b-3 under the Securities and
Exchange Act of 1934) to a third party pursuant to such conditions and
procedures as the Board of Directors of the Corporation may establish.
Other than by will or the laws of descent and distribution or pursuant to
an exception (by rule or interpretation) to transfer restrictions under
Rule 16b-3, no right or benefit under this Option shall be transferrable by
the Director or shall be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance or charge and any such
attempted action shall be void. The Director's designation of a
beneficiary shall not constitute a transfer for these purposes.
8. Adjustments. If there shall occur any extraordinary distribution in
respect of the Common Stock (whether in the form of Common Stock, other
securities, or other property), or any recapitalization, stock split
(including a stock split in the form of a stock dividend), reverse stock
split, reorganization, merger, combination, consolidation, split-up,
spin-off, combination, or exchange of Common Stock or other securities of
the Corporation, or a sale of substantially all of the assets of the
Corporation as an entirety, the Board shall, in such manner and to such
extent (if any) as may be appropriate and equitable (1) proportionately
adjust any and all of (a) the number, amount and type of shares of Common
Stock subject to this Option, (b) the vesting provisions of this Option,
and (c) the exercise price of this option, or (2) in the case of an
extraordinary distribution, merger, reorganization, consolidation,
combination, sale of assets, split up, exchange, or spin off, make
provision for a substitution or exchange of this Option or for a change in
the Common Stock deliverable upon exercise of this Option, based upon the
distribution or consideration payable to holders of the Common Stock of the
Corporation upon or in respect of such event; provided, however, that (i)
such adjustment and the Board's actions in respect thereof are based on
objective criteria and (ii) such adjustment is consistent with adjustments
to comparable options (if any) held by persons other than directors of the
Corporation.
9. Compliance with Laws. This Option and the issuance and delivery of
shares of Common Stock pursuant this Option are subject to compliance with
all applicable federal and state laws, rules and regulations (including but
not limited to state and federal tax and securities laws) and to such
approvals by any listing, regulatory or governmental authority as may, in
the opinion of counsel for the Corporation, be necessary or advisable in
connection therewith. Any securities delivered under this Option shall be
subject to such restrictions, and the Director shall, if requested by the
Corporation, provide such assurances and representations to the Corporation
as the Corporation may deem necessary or desirable to assure such
compliance.
10. Modification or Cancellation. Any modification of any of the
provisions of this Agreement or cancellation or replacement of this
Agreement shall not be valid unless in writing and signed by both parties.
11. Notices. Any notice to be given under the terms of this Agreement
shall be in writing and addressed to the Corporation at its principal
office, to the attention of the Corporate Secretary and to the Director at
the address given beneath the Director's signature hereto, or at such other
address as either party may hereafter designate in writing to the other.
19
12. Director not a Shareholder. Neither the Director nor any other person
entitled to exercise the Option shall have any of the rights or privileges
of a shareholder of the Corporation as to any shares of Common Stock not
actually issued and delivered to him prior to delivery of the exercise
price and satisfaction of all other conditions precedent to the due
exercise of the Option and delivery of shares.
13. Effect of Award Agreement. This Agreement shall be binding upon and
inure to the benefit of any successor or successors of the Corporation
except to the extent the Board determines otherwise.
14. Laws Applicable to Construction. The Option has been granted,
executed and delivered as of the day and year first above written, and the
interpretation, performance and enforcement of the Option and this
Agreement shall be governed by the laws of the State of Delaware.
15. Stockholder Approval. Notwithstanding anything else contained herein
to the contrary, this Agreement and the Option granted hereunder are
subject to stockholder approval in accordance with the Corporation's
By-Laws and applicable law.
16. Plan. The Option is subject to, and the Director agrees to be bound
by, all of the terms and conditions of the provisions of Articles I, IV, V
and VI of the Plan. The Director acknowledges receipt of a copy of the
Plan, which is made a part hereof by this reference.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed on its behalf by a duly authorized officer and the Optionee has
hereunto set his hand.
HONDO OIL & GAS COMPANY
(a Delaware corporation)
By_________________________
Title_________________
DIRECTOR
___________________________
(Signature)
___________________________
(Print Name)
___________________________
(Address)
___________________________
(City, State, Zip Code)
20
CONSENT OF SPOUSE
In consideration of the execution of the foregoing Nonqualified Stock
Option Agreement by Hondo Oil & Gas Company, I, ____________________, the
spouse of the Director herein named, do hereby join with my spouse in
executing the foregoing Nonqualified Stock Option Agreement and do hereby
agree to be bound by all of the terms and provisions thereof.
DATED: _______________, 19 _. __________________________
Signature of Spouse
21
[LETTERHEAD OF HONDO OIL & GAS COMPANY APPEARS HERE]
May 26, 1994
Hondo Oil & Gas Company
410 East College Boulevard
Roswell, NM 88201
Re: Registration Statement on Form S-8
Gentlemen:
At your request, I have examined the form of Registration
Statement on Form S-8 (the "Registration Statement") which you propose
to file with the Securities and Exchange Commission in connection with
the registration under the Securities Act of 1933, as amended, of
350,000 shares of your common stock, $1.00 par value (the "Common
Stock") issuable pursuant to your 1993 Stock Incentive Plan. I have
examined the proceedings heretofore taken and am familiar with the
proceedings proposed to be taken by you in connection with the
authorization and issuance of the Common Stock to be sold in a manner
described in the Registration Statement.
It is my opinion that, subject to the completion of the
proceedings referred to above, the Common Stock, when issued and sold
by you in accordance with the terms of your 1993 Stock Incentive Plan
will be legally and validly issued, fully paid and non-assessable.
I am a member of the State Bar of Texas and express no opinion
herein as to the effect that the laws and decisions of courts of any
jurisdiction other than the United States of America and the State of
Texas may have upon such opinions, except to the extent that the
opinions expressed above may relate to the general corporation laws of
the State of Delaware. The foregoing opinion is subject to and is
qualified in all respects by the statements in this paragraph.
I hereby consent to the use of this opinion as an Exhibit to the
Registration Statement.
Respectively submitted,
/s/ C.B. McDaniel
C.B. McDaniel
CBM/th
[LETTERHEAD OF ERNST & YOUNG APPEARS HERE]
CONSENT OF ERNST & YOUNG INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement on Form S-8 pertaining to the 1993 Stock Incentive Plan of
Hondo Oil & Gas Company of our report dated December 17, 1993 with
respect to the consolidated financial statements and schedules of
Hondo Oil & Gas Company included in the Annual Report on Form 10-K for
the year ended September 30, 1993, filed with the Securities and
Exchange Commission.
/s/ Ernst & Young
Denver, Colorado
May 25, 1994
