ex1023.htm


    
      
         


      

      
        
          

        

      

       

    


    Exhibit
10.23

    NON-QUALIFIED
STOCK OPTION AGREEMENT

    


    
      	
              OPTION
      NO. _____

            	
              TO
      PURCHASE  ________

            
	 
      	
              SHARES
      OF COMMON STOCK

            
	 
      	
              ($0.01
      PAR VALUE)

            


    

    


    TXCO
RESOURCES INC.

    


    INCORPORATED
UNDER THE LAWS OF

    


    THE STATE
OF DELAWARE

    


    For valuable consideration, receipt of
which is hereby acknowledged, TXCO RESOURCES INC., a Delaware
corporation  (hereinafter called the "Corporation"), hereby grants to
__________  (hereinafter called the
"Optionee"), a non-qualified stock option (hereinafter called the "Option"),
subject to the terms and conditions thereof, and subject to the terms and
conditions of the 2005 Stock Incentive Plan of the Corporation (hereinafter
called the "Plan") which Plan is hereby incorporated herein by
reference.  In the event of any conflict between the terms of the Plan
and this Agreement, the terms of the Plan shall govern.

    


    A.Basic
Terms.  This
certifies that, for value received, the registered owner is entitled, subject to
the terms and conditions of this Option and the 2005 Stock Incentive Plan, until
the expiration date, to purchase up to the number of shares of the Common Stock,
par value $.01 (the "Common Stock") from the Corporation at the purchase price
shown below, on delivery of this Option to the Corporation with the exercise
form duly executed and payment of the Purchase
Price:  (a)  in United States dollars in cash or by
check, bank draft or money order payable to the order of the
Corporation,  (b)  by delivering Common Stock already owned
by the Optionee with an aggregate Fair Market Value on the date of exercise
equal to the Option Price, or  (c)  by a combination of the
above methods of payment, together with payment or arrangement for payment of
any federal income tax required to be withheld by the Corporation.  If
Common Stock is to be delivered as a payment of part or all of the Option Price,
it must be tendered in accordance with methods determined by the Committee to be
acceptable and appropriate as considered in Section 5.2(b) of the
Plan.  As soon as practicable after receipt of such notice and
payment, the Corporation shall, without transfer or issue tax or other
incidental expense to the Optionee, deliver to Optionee at the office of the
Corporation, or such other place as may be mutually acceptable, or, at the
election of the Corporation, by first class mail addressed to the Optionee at
the address shown in the records of the Corporation, a certificate or
certificates for such shares out of theretofore authorized but unissued shares
or reacquired shares of its Common Stock, as the Corporation may
elect.

    


    
      	
               
      

            	
              Registered
      Owner:__________ 

            


    

                                    __________ 

                                   
__________ 

    


    
      	
               
      

            	
              Purchase
      Price:$ _____ per Common Share

            


    

    


    
      	
               
      

            	
              Expiration
      Date:__________ ,
      unless earlier terminated pursuant to this paragraph, the paragraph
      immediately following or Paragraph K of this Option.  If, prior
      to the Expiration Date, the Optionee ceases to serve as a director of the
      Corporation, this Option shall terminate as to any portion of the Option
      not fully vested.  This Option shall be void and of no effect
      after the Expiration Date.

            


    

    


    
      	
               
      

            	
              Vesting
      Schedule:This Option is intended as an incentive to retain the Optionee as
      a director of the Corporation.  Therefore, the Optionee shall
      become fully vested as to one third (1/3) of the Option, __________  shares,
      after one year of continuous service as a director from the date
      hereof.  The Optionee shall become fully vested as to an
      additional one-third (1/3) of the Option, __________  shares,
      after two years of continuous service as a director from the date
      hereof.  The Optionee shall become fully invested as to the
      remaining one-third (1/3) of the Option, __________  shares,
      after three years of continuous service as a director from the date
      hereof.  Should the Optionee’s service as a director be
      terminated, either voluntarily or involuntarily, any portion of the Option
      that has not been fully vested shall be immediately
      forfeited.  Any portion of the Option that has been fully vested
      shall be subject to the terms and conditions of this Option and the
      Plan.

            


    


    
      
         


      

      
        
          

        

      

       

    


    B.Corporation's Covenants as
to Common Stock.  Shares deliverable on the exercise of this
Option shall, at delivery, be fully paid and non-assessable, free from taxes,
liens and charges with respect to their purchase.  The Corporation
shall take any necessary steps to assure that the par value per share of the
Common Stock is at all times equal to or less than the then current Option
purchase price per share of the Common Stock issuable pursuant to this
Option.  The Corporation shall at all times reserve and hold available
sufficient shares of Common Stock to satisfy all conversion and purchase rights
of outstanding convertible securities, options and warrants.

    


    C.Method
of Exercise.  The purchase
rights represented by this Option are exercisable at the option of the
registered owner in whole at any time, on or prior to the expiration date, by
payment of the Purchase Price in a manner specified in Paragraph A for each
share purchased.  The Corporation may postpone the time of
delivery of certificates for shares for such additional time as the Corporation
shall deem necessary or desirable to enable it to comply with all applicable
laws, regulations, rules, orders and approvals which shall then be in effect and
required by any governmental entities or any stock exchanges on which the Common
Stock is traded.

    


    D.Adjustment of Shares
Purchasable.  The number of shares purchasable hereunder and
the purchase price per share are subject to adjustment from time to time as
specified in this Option.

    


    E.Limited Rights of
Owner.  This Option does not entitle the owner to any voting
rights or other rights as a shareholder of the Corporation, or to any other
rights whatsoever except the rights herein expressed.  No dividends
are payable or will accrue on this Option or the shares purchasable hereunder
until, and except to the extent that, this Option is exercised.

    


    F.Transfer.  This
Option shall, during the Optionee's lifetime, be exercisable only by the
registered owner and neither it nor any right hereunder shall be transferable
other than by will or the laws of descent and distribution or be subject to
attachment, execution or other similar process.

    


    G.Recognition of Registered
Owner.  Prior to due presentment for registration of transfer
of this Option, the Corporation may treat the registered owner as the person
exclusively entitled to receive notices and otherwise to exercise rights
hereunder.

    


    H.Effect of Stock Split,
etc.  If the Corporation, through stock dividend, split,
reverse split or reclassification of shares, changes as a whole the outstanding
Common Stock into a different number of class of shares,
then:  (1)  the number and class of shares so changed shall,
for the purposes of this Option, replace the shares outstanding immediately
prior to the change; and  (2)  the Option purchase price in
effect, and the number of shares purchasable under this Option, immediately
prior to the date upon which the change becomes effective, shall be
proportionately adjusted  (the price to the nearest
cent).  Irrespective of any adjustment or change in the Option
purchase price or the number of shares that were purchasable under this or any
other Option of like tenor, the Options theretofore and thereafter issued may
continue to express the Option purchase price per share and the number of shares
that were purchasable were expressed in the Options when initially
issued.

    


    I.Effect of Merger,
etc.  If the Corporation consolidates with or merges into
another corporation, the registered owner shall thereafter be entitled on
exercise to purchase, with respect to each share of Common Stock purchasable
hereunder immediately before the consolidation or merger becomes effective, the
securities or other consideration to which a holder of one share of Common Stock
is entitled in the consolidation or the merger without any change in or payment
in addition to the Option purchase price in effect immediately prior to the
merger or consolidation.  The Corporation shall take any necessary
steps in connection with a consolidation or merger to assure that all the
provisions of the Option shall thereafter be applicable, as nearly as reasonably
may be, to any securities or other consideration so deliverable on exercise of
this Option.  A sale or lease of all or substantially all the assets
of the Corporation for a consideration  (apart from the assumption of
obligations)  consisting primarily of securities is a consolidation or
merger for the foregoing purposes.

    


    J.Notice of
Adjustment.  On the happening of an event requiring an
adjustment of the Option purchase price or the shares purchasable hereunder, the
Corporation shall forthwith give written notice to the registered owner stating
the adjusted Option purchase price and the adjusted number and kind of
securities or other property purchasable hereunder resulting from the event and
setting forth in reasonable detail the method of calculation and the facts upon
which the calculation is based.  The Board of Directors of the
Corporation, acting in good faith, shall determine the calculation.

    


     

    
      
         


      

      
        
          

        

      

       

    


    K.Notice and Effect of
Dissolution, etc.  In case a voluntary or involuntary
dissolution, liquidation, or winding up of the Corporation  (other
than in connection with a consolidation or merger covered by Paragraph I
above)  is at any time proposed, the Corporation shall give at least
30 days prior written notice to the registered owner.  Such notice
shall contain:  (1)  the date on which the transaction is to
take place;  (2)  the record date  (which shall be
at least 30 days after the giving of the notice)  as of which holders
of Common Stock will be entitled to receive distributions as a result of the
transaction;  (3)  a brief description of the
transaction;  (4)  a brief description of the distributions
to be made to holders of Common Stock as a result of the
transaction;  and  (5)  an estimate of the fair
value of the distributions.  On the date of the transaction, if it
actually occurs, this Option and all rights hereunder shall
terminate.

    


    L.Method of Giving Notice;
Extent Required.  Notices shall be given by first class mail,
postage prepaid, addressed to the registered owner at the address of the owner
appearing in the records of the Corporation.  No notice to Option
holders is required except as specified in Paragraph J, K and N.

    


    M.THE REGISTERED OWNER HAS REPRESENTED
TO THE CORPORATION THAT THE SECURITIES REPRESENTED BY THIS OPTION ARE BEING
ACQUIRED BY THE REGISTERED OWNER FOR INVESTMENT.  SUCH SECURITIES MAY
NOT BE REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT").  SUCH SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED AT
ANY TIME WHATSOEVER UNLESS REGISTERED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE, EXCEPT UPON
DELIVERY TO THE CORPORATION OF AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT REGISTRATION IS NOT REQUIRED FOR SUCH TRANSFER OR THE
SUBMISSION TO THE CORPORATION OF SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO
THE CORPORATION TO THE EFFECT THAT ANY SUCH TRANSFER WILL NOT BE IN VIOLATION OF
THE ACT OR APPLICABLE STATE SECURITIES LAWS OR ANY RULE OR REGULATION
PROMULGATED THEREUNDER.

    


    N.Registration
Rights.  As the shares issued under this Option may not be
registered and may be restricted pursuant to the rules and regulations of the
Securities and Exchange Commission (“SEC”), the Corporation agrees that in the
event it files to register shares under the Plan, it will include these
shares.  If the Corporation files any registration statement with the
SEC it will, upon the timely written request of the Registered Owner, include,
in the first registration statement filed after the shares have been purchased,
shares of its Common Stock that have been previously purchased under the terms
of this Option.  Any such written request shall be delivered to the
Corporation within no more than 10 days following the Registered Owner’s receipt
of written notice from the Corporation that it intends to file a registration
statement with the SEC.

    


    IN WITNESS WHEREOF, this Option has
been executed as of this         day
of __________  .

    


    
      
        	 
      	
                TXCO
      RESOURCES INC.

              
	 
      	 
      
	 
      	
                By: _____________

              
	 
      	
                       James
      E. Sigmon,

              
	 
      	
                       Chief
      Executive Officer

              


      

    


    
      
         


      

      
        
          

        

      

       

    


    EXERCISE
FORM

    


    TXCO
Resources Inc.

    777 E.
Sonterra Blvd., Suite 350

    San
Antonio, Texas  78258

    


    Ladies
and Gentlemen:

    


    The undersigned
hereby:  (1)  irrevocably subscribes for __________________________
shares of your Common Stock pursuant to this Option, and enclosed payment
of  $_____________
therefor;  (2)  requests that a certificate for the shares
be issued in the name of the undersigned and delivered to the undersigned at the
address below;  and  (3)  if such number of shares
is not all of the shares purchasable hereunder, that a new Option of like tenor
for the balance of the remaining shares purchasable hereunder be issued in the
name of the undersigned and delivered to the undersigned at the address
below.

    


    
      
        	 
      	
                ________________________________ 

              
	
                Date:___________________

              	
                (Please
      sign exactly as name

              
	 
      	
                 appears
      on Option)

              
	 
      	
                Address:___________________________

              
	 
      	
                __________________________________

              
	 
      	
                Taxpayer
      ID No.____________________

              


      

    

    


                               
__________  __________  __________  __________  __________  __________  __________  __________  __________  __________  ____

    


    NOTE:  Options,
substantially in the form shown above, under TXCO's 2005 Stock Incentive Plan
(the "Plan") may be granted to directors, management and other employees, from
time to time, at the discretion of TXCO's Board of Directors
("Board").  The number of options awarded and the vesting terms are
set by the Board at the time of grant.  Options typically have a
ten-year life. Options granted to employees and management generally are
considered Incentive Stock Options, while those granted to the Board under this
Plan will be Non-Qualified Options. 

    


    The Board
granted the first options under the Plan at its meeting on December 5,
2008.  Each non-employee director was granted options to purchase
50,000 shares of TXCO's common stock at an exercise price of $2.05, 110% of the
closing price on that date for the Company's common stock.  These
options become exercisable one-third per year on the anniversary date of the
grant.