Exhibit 10.4
BRIGHAM EXPLORATION COMPANY
NON-QUALIFIED STOCK OPTION AGREEMENT
     THIS NON-QUALIFIED STOCK OPTION AGREEMENT (this “Agreement”), made and
entered into effective as of the                      day of
                     20___, by and between Brigham Exploration Company, a
Delaware corporation (the “Company”), and                                 
(“Director”);
W I T N E S S E T H:
     WHEREAS, the Compensation Committee of the Board of Directors of the
Company (the “Board”) has approved the grant of non-qualified stock options to
Director;
     WHEREAS, the stockholders of the Company have also approved the grant of
the non-qualified stock options to Director; and
     WHEREAS, subject to the terms and conditions herein provided, this
Agreement evidences the grant of an option to Director;
     NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound, do hereby agree as follows:
     1. Grant of Option and Option Period. The Company hereby grants to Director
as of the effective date of this Agreement (the “Grant Date”), subject to the
provisions of Section 2 hereof and as hereinafter set forth, an option (the
“Option”) to purchase                      shares of Common Stock, par value
$.01 per share, of the Company (“Common Stock”) at the price of
$                     per share (such price being 100% of the Fair Market Value
of a share of Common Stock as of the date of grant), at any time or (with
respect to partial exercises) from time to time during a period commencing on
the first anniversary of the Grant Date and ending on                      ,
20___ (the “Option Period”), provided that the number of shares purchasable
hereunder in any period or periods of time during which the Option is exercised
shall be limited as follows:
     (a) only 20% of such shares are purchasable, in whole at any time or in
part from time to time, commencing                     , 20___, if the Director
serves as director until that date;
     (b) an additional 20% of such shares are purchasable, in whole at any time
or in part from time to time, commencing                     , 20___, if the
Director serves as director until that date;
     (c) an additional 20% of such shares are purchasable, in whole at any time
or in part from time to time, commencing                     , 20___, if the
Director serves as director until that date;
     (d) an additional 20% of such shares are purchasable, in whole at any time
or in part from time to time, commencing                     , 20___, if the
Director serves as director until that date; and
     (e) the remainder of such shares are purchasable, in whole at any time or
in part from time to time, commencing                     , 20___, if the
Director serves as director until that date.
     This option is a nonqualified stock option and is not intended to qualify
as an incentive stock option under Section 422 of the Code.
     2. Termination of Service. Any provision of Section 1 hereof to the
contrary notwithstanding:
     (a) If Director ceases to be a member of the Board on account of Director’s
(i) fraud or intentional misrepresentation or (ii) embezzlement,
misappropriation or conversion of assets or opportunities of the Company or

 

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any direct or indirect majority-owned subsidiary of the Company, then the Option
shall automatically terminate and be of no further force or effect as of the
date Director ceases to be a member of the Board;
     (b) If Director shall die during the Option Period while a member of the
Board (or during the additional three-month period provided by Section 2(c)
hereof), the Option may be exercised, to the extent that Director was entitled
to exercise it at the date of Director’s death, only within one year after such
death (but not beyond the Option Period), by the executor or administrator of
the estate of Director or by the person or persons who shall have acquired the
Option directly from Director by bequest or inheritance; and
     (c) If Director ceases to be a member of the Board for any reason (other
than the circumstances specified in paragraphs (a) and (b) of this Section 2)
within the Option Period, including the failure of the stockholders of the
Company to reelect Director as a director, the Option may be exercised, to the
extent Director was able to do so at the date of termination of the
directorship, only within three months after such termination (but not beyond
the Option Period).
     3. Agreement of Director. As consideration for the Company’s grant of the
Option, Director agrees to continue to serve the Company as a director at the
pleasure of the Company’s stockholders for a continuous period of one year from
the Grant Date at the retainer rate and fee schedule, if any, in effect as of
the date hereof or at such changed rate or schedule as the Company from time to
time may establish; provided, that nothing in this Agreement shall confer upon
Director any right to continue as a member of the Board.
     4. Exercise of Option. Subject to the provisions of Section 2, the Option
may be exercised, in whole or in part, by Director at any time or (with respect
to partial exercises) from time to time during the Option Period and the method
for exercising an Option shall be by the personal delivery to the Secretary of
the Company of, or by the sending by United States registered or certified mail,
postage prepaid, addressed to the Company (to the attention of its Secretary),
of, written notice signed by Director specifying the number of shares of Common
Stock with respect to which such Option is being exercised. Such notice shall be
accompanied by the full amount of the purchase price of such shares, in cash
and/or by delivery of shares of Common Stock already owned by Director having an
aggregate Fair Market Value (determined as of the date of exercise) equal to the
purchase price, including an actual or deemed multiple series of exchanges of
such shares. Any such notice shall be deemed to have been given on the date of
receipt thereof (in the case of personal delivery as above-stated) or on the
date on which the same was deposited in a regularly maintained receptacle for
the deposit of United States mail, addressed and sent as above-stated. In
addition to the foregoing, promptly after demand by the Company, Director shall
pay to the Company an amount equal to applicable withholding taxes, if any, due
in connection with such exercise. No shares of Common Stock shall be issued upon
exercise of an Option until full payment therefor and for all applicable
withholding taxes has been made, and Director shall have none of the rights of a
shareholder until shares of Common Stock are issued to Director.
     5. Delivery of Certificates Upon Exercise of the Option. Delivery of a
certificate or certificates representing the purchased shares of Common Stock
shall be made promptly after receipt of notice of exercise and payment of the
purchase price and the amount of any withholding taxes to the Company, if
required, provided that the Company shall have such time as it reasonably deems
necessary to qualify or register such shares under any law or governmental rule
or regulation that it deems desirable or necessary.
     6. Adjustments Upon Changes in Common Stock. In the event that before
delivery by the Company of all the shares in respect of which the Option is
granted, the Company shall have effected a Common Stock split or dividend
payable in Common Stock, or the outstanding Common Stock of the Company shall
have been combined into a smaller number of shares, the shares still subject to
the Option shall be increased or decreased to reflect proportionately the
increase or decrease in the number of shares outstanding, and the purchase price
per share shall be decreased or increased so that the aggregate purchase price
for all the then optioned shares shall remain the same as immediately prior to
such split, dividend or combination. In the event of a reclassification of
Common Stock not covered by the foregoing, or in the event of a liquidation,
separation or reorganization, including a merger, consolidation or sale of
assets, the Board shall make such adjustments, if any, as it may deem
appropriate in the number, purchase price and kind of shares still subject to
the Option.
     If any “person,” as that term is defined in Section 3(a)(9) of the
Securities Exchange Act of 1934 (the “Exchange Act”) (other than the Company,
any of its subsidiaries, any employee benefit plan of the Company or any of its
subsidiaries, or any entity organized, appointed or established by the Company
for or pursuant to the terms of such a plan), together with

 

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all “affiliates” and “associates” (as such terms are defined in Rule 12b-2 under
the Exchange Act) of such person, or any “Person” or “group” (as those terms are
used in Sections 13(d) and 14(d) of the Exchange Act), will become the
“beneficial owner” or “beneficial owners” (as defined in Rules 13d-3 and 13d-5
under the Exchange Act), directly or indirectly, of securities of the Company
representing in the aggregate forty-nine percent (49%) or more of either the
then outstanding shares of Common Stock of the Company or the voting power of
the Company (a “Fundamental Change”), then immediately before and contingent
upon the consummation of the Fundamental Change, any portion of the Option which
is not then vested and exercisable shall become fully vested and exercisable, so
that Director shall have an opportunity to exercise the Option prior to and
contingent upon the consummation of the Fundamental Change. The Company shall
provide to Director at least 30 days’ notice of any pending Fundamental Change
during which period Director may elect to exercise the Option effective
immediately before and contingent upon consummation of such Fundamental Change.
     7. Transferability. The Option evidenced hereby is not transferable
otherwise than by will or by the laws of descent and distribution or with the
consent of the Board, and during the lifetime of Director is exercisable only by
Director or his or her guardian or legal representative or by transferees of the
Director in such circumstance as the Board may approve.
     8. Defined Terms. “Fair Market Value” of a share of Common Stock means, as
of a particular date, (i) if shares of Common Stock are listed on a national
securities exchange, the mean between the highest and lowest sales price per
share of Common Stock on the consolidated transaction reporting system for the
principal national securities exchange on which shares of Common Stock are
listed on that date, or, if there shall have been no such sale so reported on
that date, on the last preceding date on which such a sale was so reported,
(ii) if the Common Stock is not so listed, the mean between the closing bid and
asked price on that date, or, if there are no quotations available for such
date, on the last preceding date on which such quotations shall be available, as
reported by the Nasdaq Stock Market, or, if not reported by the Nasdaq Stock
Market, by Pink OTC Markets Inc. (or its successor, or if Pink OTC Markets Inc.
or its successor does not then exist, such over-the-counter quotation service as
the Board shall determine), or (iii) if shares of Common Stock are not publicly
traded, the most recent value determined in good faith by the Board using a
“reasonable application of a reasonable valuation method” within the meaning of
Treasury Regulation Section 1.409A-1(b)(5)(iv)(B).
     9. Applicable Law. All questions arising with respect to the provisions of
this Agreement shall be determined by application of the internal laws (and not
the principles relating to conflicts of laws) of the State of Texas except to
the extent preempted by Federal law.
     10. Entirety and Modification. This Agreement contains the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes any and all prior agreements, whether written or oral, between such
parties relating to such subject matter. No modification, alteration, amendment
or supplement to this Agreement shall be valid or effective unless the same is
in writing and signed by the party against whom it is sought to be enforced.

 

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first above written.

            The “Company”

BRIGHAM EXPLORATION COMPANY
      By:           Ben M. Brigham        President and CEO   

            “Director”