EXHIBIT 10.4

 

CIMAREX ENERGY CO.

1700 Lincoln Street, Suite 1800

Denver, Colorado 80203-4518

 

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NOTICE OF GRANT OF NONQUALIFIED STOCK OPTION

AND AWARD AGREEMENT

 

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Name:

Plan:      2011 Equity Incentive Plan

Address:

ID:          [Participant ID #]

City:

 

State:

 

Zip Code:

 

 

 

No. Shares Granted:

Option Price:

 

 

Date of Grant:

Type of option: Nonqualified

 

 

Expiration Date: 7 years from Date of Grant

 

 

Vesting schedule:  Subject to the provisions of the Award Agreement, the Plan
and your continuous employment (or other service) with the Company, the Option
vests and becomes exercisable to purchase shares of Common Stock as set forth
below:

 

Employment
Vesting Date

 

Percentage of
Shares That Vest

 

Number of
Shares That Vest

 

 

 

33 1/3

%

 

 

 

 

33 1/3

%

 

 

 

 

33 1/3

%

 

 

 

By accepting this agreement online, you and Cimarex Energy Co. (the “Company”)
agree that this Option is granted under and governed by the terms and conditions
of the Company’s 2011 Equity Incentive Plan and the Award Agreement (the
“Agreement”), both of which are attached and made a part of this document.  In
the event of a conflict between the terms and conditions of the Plan and the
terms and conditions of the Agreement, the terms and conditions of the Plan will
prevail.

 

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AWARD AGREEMENT

 

1.             Grant of Option.  The Company grants you a Nonqualified stock
option (the “Option”) to purchase the number of shares of Common Stock as set
forth in the attached Notice of Grant, at the exercise price per share set forth
in the Notice of Grant (the “Option Price”).  The Option is not intended to
qualify as an incentive stock option under Section 422 of the Internal Revenue
Code of 1986, as amended (the “Code”).

 

2.             Option Term; Expiration Date.  The term of the Option is seven
(7) years measured from the Date of Grant, unless sooner terminated under this
Agreement or the Plan (the “Expiration Date”).

 

3.             Vesting.  The Option is only exercisable, in whole or in part, on
or before the Expiration Date and then only with respect to the vested portion
of the Option.

 

(a)           Except as otherwise provided in this Agreement and the Plan, the
Option vests and becomes exercisable to purchase shares of Common Stock as set
forth in the Notice of Grant.  Shares scheduled to vest on a certain date or
upon the occurrence of a certain condition will not vest in accordance with any
of the provisions of this Agreement unless you have been an employee (or other
service provider) of the Company, a Subsidiary or an Affiliated Entity
continuously from the Date of Grant until the date such vesting occurs.

 

(b)           Upon the occurrence of one of the following events, the Option
will become immediately and automatically vested:

 

(i)            A Change of Control Event under the conditions described in the
Plan; or

 

(ii)           Upon your death or Disability (as defined in the Plan).

 

4.             Termination of Employment — Option Exercise.  Except as otherwise
set forth in this Agreement, the Option may be exercised upon termination of
employment (or other service) on or before the Expiration Date as follows:

 

(a)           Upon your death or Disability, the vested portion of the Option
may be exercised by you (or your personal representative in the case of death)
during the remaining term of the Option, but in no event after the Expiration
Date.

 

(b)           Upon your termination of employment (or other service) for any
reason other than Cause, whether voluntary or involuntary, you may exercise the
vested portion of the Option within three (3) months following the date of such
termination, but in no event after the Expiration Date.

 

If your employment (or other service) with the Company is terminated for Cause
prior to the Expiration Date, the entire Option, whether or not vested, shall
become void, shall be forfeited and shall terminate immediately upon your
termination of employment (or other service).  For this purpose, Cause shall
mean a conviction (or pleading nolo contendere) of a felony or termination of
employment (or other service) due to a violation of the Company’s Code of
Business Conduct and Ethics, as determined by the Committee (or its designee) in
good faith (“Cause”).

 

5.             Exercising the Option.  The Option may be exercised on or before
the Expiration Date in accordance with the Plan and the terms of this
Agreement.  The Option may be exercised by delivery of a Notice of Exercise to
the Company’s Corporate Secretary (or his or her designee) and full payment of

 

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the Option Price and satisfaction of applicable tax withholding.  The Notice of
Exercise must identify the Option being exercised, the number of shares of
Common Stock to be purchased and include any other information, and be in the
form required by the Committee (or its designee) from time to time (the “Notice
of Exercise”).

 

6.             Tax Withholding.  The issuance of Common Stock pursuant to the
exercise of the Option is subject to the requirement that you make appropriate
arrangements with the Company to provide for the amount of additional income and
other tax withholding applicable to the exercise of the Option.  Subject to any
election procedures and other requirements determined by the Company, you may
pay the amount of taxes required by law to be withheld by directing the Company
to withhold a number of shares of Common Stock having a Fair Market Value on the
date of payment equal to the amount of the required tax withholding.

 

7.             Method of Payment.  The Option Price and tax withholding for
shares of Common Stock purchased upon the exercise of the Option may be paid by
the following methods:

 

(a)           in cash or by check, bank draft or money order payable to the
order of the Company;

 

(b)           by delivering shares of Common Stock with a Fair Market Value on
the date of payment equal to the amount of the Option Price, subject to such
additional requirements determined by the Committee (or its designee);

 

(c)           payment through a transaction involving a licensed broker or
dealer (acceptable to the Company) acting on your behalf to sell shares and
deliver all or part of the sales proceeds to the Company in payment of the
Option Price and applicable tax withholding, subject to such additional
requirements determined by the Committee (or its designee);

 

(d)           payment of the exercise price and required tax withholding with
shares of Common Stock acquired pursuant to the exercise (the Common Stock being
valued at Fair Market Value on the date of exercise);

 

(e)           a combination of the foregoing; or

 

(f)            any other method of payment adopted by the Company in connection
with the Plan and approved by the Committee prior to the time of exercise.

 

8.             Transferability.  You may not transfer the Option except by will
or pursuant to the laws of descent and distribution, nor may you pledge,
hypothecate or otherwise dispose of the Option, by operation of law or
otherwise.  The Option may be exercised during your life only by you, or in the
event of your Disability or incapacity, by your guardian or legal representative
and after your death, only by those entitled to do so under your will or the
applicable laws of descent and distribution.

 

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9.             Rights as Stockholder.  Neither you nor your successor shall have
any right as a stockholder with respect to the shares of Common Stock covered by
this Option prior to your purchase of the shares of Common Stock by exercise of
the Option, including, but not limited to, the right to vote the shares or
receive dividends or dividend equivalents.

 

10.           Miscellaneous.Adjustments.  Article IX of the Plan provides for
certain adjustments to the number of shares of Common Stock covered by the
Option, the Option Price and other changes in connection with a reorganization
or other changes to the Common Stock.

 

(b)           Change of Control.  Section 5.2 of the Plan describes the actions
that may be taken by the Committee with respect to the Option upon the
occurrence of a Change of Control Event.

 

(c)           Restrictions on Common Stock.  Any shares of Common Stock acquired
under the Option or otherwise by you are subject to the Company’s Insider
Trading Policy and may be subject to other restrictions on resale.  Any sale or
other disposition of shares by you must be made in compliance with the Company’s
Insider Trading Policy, in effect from time to time, securities law and other
applicable legal requirements.

 

(d)           Electronic Delivery.  The Company may, in its sole discretion,
decide to deliver any documents related to Options awarded under the Plan or
future Options that may be awarded under the Plan by electronic means.  You
hereby consent to receive such documents by electronic delivery and agree to
participate in the Plan through any on-line or electronic system established and
maintained by the Company or another third party designated by the Company.

 

(e)           Amendment or Modifications to the Agreement.  This Agreement
constitutes the entire understanding of the parties on the subjects covered. 
You expressly warrant that you are not accepting this Agreement in reliance on
any promises, representations, or inducements other than those contained
herein.  Modifications to this Agreement or the Plan may only be made in writing
and signed by a duly authorized officer of the Company.  Notwithstanding
anything to the contrary in the Plan or this Agreement, the Company reserves the
right to revise this Agreement as it deems necessary or advisable, in its sole
discretion and without your consent, to comply with Section 409A of the Code or
to otherwise avoid imposition of any additional tax or income recognition under
Section 409A of the Code in connection with this Option.

 

(f)            Amendment or Termination of the Plan.  By accepting this Option,
you expressly warrant that you have received an Option under the Plan, and have
received, read and are familiar with the terms of the Plan.  You understand that
the Plan is discretionary in nature and that it may be amended, suspended or
terminated by the Company at any time.

 

(g)           Defined Terms.  Capitalized terms have the meaning set forth in
the Plan or herein, as the case may be.

 

(h)           Compliance with Securities Laws.  This Agreement shall be subject
to the requirement that if at any time counsel to the Company determines that
the listing, registration or qualification of the shares of Common Stock subject
to the Option upon any securities exchange or under any state or federal law, or
the consent or approval of any governmental or regulatory body, is necessary as
a condition of, or in connection with, the issuance or purchase of such shares
thereunder, the Option may not be exercised in whole or in part unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained on conditions acceptable to the Committee.  Nothing herein
shall be deemed to require the Company to apply for, obtain, or keep current,
any such listing, registration or qualification.

 

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(i)            Construction; Severability.  The section headings contained
herein are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.  The invalidity or unenforceability
of any provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, and each other
provision of this Agreement shall be severable and enforceable to the extent
permitted by law.

 

(j)            Waiver.  Any provision contained in this Agreement may be waived,
either generally or in any particular instance, by the Committee appointed under
the Plan, but only to the extent permitted under the Plan.

 

(k)           Binding Effect.  Subject to the limits on the transferability of
the Option, this Agreement shall be binding upon and inure to the benefit of the
Company and you and their respective heirs, executors, administrators, legal
representatives, successors and assigns.

 

(l)            No Right to Continued Employment.  Nothing contained in this
Agreement or the Plan shall be construed as giving you any right to remain
employed by (or provide other service to) the Company, any Subsidiary or any
Affiliated Entity.  The Company reserves the right to terminate your employment
(or other service) at any time.

 

(m)          Notices.  Any notice required or permitted to be given under this
Agreement shall be in writing and shall be delivered electronically, personally
or mailed (U.S. Mail) by the Company to you at your then current address as
maintained by the Company or such other address as you may advise the Company in
writing.  Any such notice shall be deemed to have been given as of the second
day after deposit in the United States mails, postage prepaid, properly
addressed as set forth in this paragraph, in the case of a mailed notice, or as
of the date delivered in the case of electronic or personal delivery.

 

(n)           Governing Law.  This Agreement and the Plan shall be governed by
and construed in accordance with the laws of the State of Delaware except as
superseded by applicable Federal law.

 

Attachments:

 

2011 Equity Incentive Plan
Plan Prospectus
Insider Trading Policy

 

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