FORM OF STOCK OPTION AGREEMENT
Grantee:__________________________ Grant Date:_______________________
Address:__________________________ Expiration Date:__________________
Number of Shares:_________________
Exercise Price Per Share: $_______
MILLER EXPLORATION COMPANY
STOCK OPTION AND RESTRICTED STOCK PLAN OF 1997
STOCK OPTION AGREEMENT
This Stock Option Agreement (the "AGREEMENT") is made
as of the Grant Date set forth above between MILLER EXPLORATION
COMPANY, a Delaware corporation (the "COMPANY"), and the grantee
named above ("GRANTEE").
The Miller Exploration Company Stock Option and
Restricted Stock Plan of 1997 (the "PLAN") is administered by the
Stock Plan Committee of the Company's Board of Directors or such
other committee (the "COMMITTEE") as the Board of Directors shall
designate to administer the Plan, which shall consist of at least
two members of the Board, all of who are Non-Employee Directors,
as defined in Rule 16b-3 under the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"). The Committee has
determined that Grantee [, a[n] [officer] [and] [director] of the
Company,] is eligible to participate in the Plan. The Committee
has granted stock options to Grantee, subject to the terms and
conditions contained in this Agreement and in the Plan.
Grantee acknowledges receipt of a copy of the Plan and
accepts these options subject to all of the terms, conditions,
and provisions of this Agreement and the Plan.
1. GRANT. The Company grants to Grantee an option to
purchase shares of the Company's Common Stock, $.01 par value
("COMMON STOCK"), as set forth above, to be issued upon exercise
of this option in accordance with the terms and conditions set
forth in this Agreement. This option is [not] an incentive stock
option as defined in Section 422(b) of the Internal Revenue Code
of 1986, as amended.
2. TERM AND DELAYED VESTING. Grantee's conditional right
to exercise this option shall vest at a rate of one-fifth per
year beginning on the first anniversary of the Grant Date set
forth above, in each case appropriately rounded to the closest
whole share except that the total shall be as set forth above.
The Committee may, in its sole discretion, accelerate the vesting
of the option at any time before full vesting. Grantee's right to
exercise this option shall terminate on the Expiration Date set
forth above, unless earlier terminated as set forth in the Plan
or this Agreement.
3. PAYMENT BY GRANTEE. The Exercise Price per share shall
be the amount set forth above, which shall not be less than the
Market Value on the date of the grant (as defined in the Plan),
subject to adjustment as provided in the Plan and this Agreement.
Grantee may pay the purchase price in cash or, if the Committee
consents, in shares of the Company's Common Stock (including
Common Stock to be received upon a simultaneous exercise). With
Grantee's consent, the Committee may amend the time and terms of
payment before or after the exercise of the option, but any such
amendment shall not reduce the option price. The Committee may
authorize payment of all or a portion of the option price in the
form of a promissory note or installments according to such terms
as the Committee may approve. The Board of Directors may
restrict or suspend the power of the Committee to permit such
loans and may require that adequate security be provided.
4. REGISTRATION AND LISTING. The stock options granted
under this Agreement are conditional upon the effective
registration or exemption of the Plan and the options granted
under the Plan and the stock to be received upon exercise of
options pursuant to the Plan under the Securities Act of 1933, as
amended (the "SECURITIES ACT") and applicable state or foreign
5. EXERCISE OF OPTION. Grantee may exercise this option
by giving the Company written notice of the exercise of this
option. The notice shall set forth the number of shares to be
purchased, and shall be effective when received by the corporate
Secretary at the Company's main office, accompanied by full
payment of the option price. The Company will deliver to Grantee
a certificate or certificates for such shares out of previously
authorized but unissued shares or reacquired shares of its Common
Stock, as it may elect; PROVIDED, HOWEVER, that the time of
delivery shall be postponed for such period as may be required
for the Company with reasonable diligence to comply with any
registration requirements under the Securities Act, the Exchange
Act, and any requirements under any other law, regulation, or
agreement applicable to the issuance, listing, or transfer of
such shares. If Grantee fails to accept delivery of and pay for
all or any part of the number of shares specified in the notice
upon tender or delivery of the shares, Grantee's right to
exercise the option with respect to such undelivered shares shall
terminate. In such event, Grantee's remaining options not yet
exercised or terminated shall continue in force.
6. TERMINATION OF EMPLOYEE STATUS.
(a) TERMINATION FOR GOOD REASON. If Grantee
ceases to be an employee of the Company or a subsidiary
for good reason (as defined in any agreement between
the Company and Grantee), all of Grantee's unvested
options immediately will vest. Grantee may exercise
the option for a period of 90 days after the date
Grantee ceases to be an employee, but only to the
extent that Grantee was entitled to exercise the option
on the date Grantee ceased to be an employee unless the
Committee otherwise consents. If Grantee terminates
employment with the Company for good reason (as defined
in any agreement between Grantee and the Company), all
of Grantee's unvested options will be deemed to have
vested on the day immediately preceding such
(b) DISABILITY OR DEATH. If Grantee dies or
becomes disabled, Grantee or his or her personal
representative may exercise the option for a period of
one year after the date Grantee ceases to be an
employee, but only to the extent that Grantee was
entitled to exercise the option on the date Grantee
ceased to be an employee unless the Committee otherwise
(c) TERMINATION FOR CAUSE. If the Committee
determines that Grantee has entered into competition
with the Company or any of its subsidiaries, Grantee's
right to exercise any outstanding options shall
terminate as of the date of entry into competition.
The Committee shall have sole discretion in making such
7. ADJUSTMENT PROVISIONS. If the number of shares of
Common Stock outstanding changes by reason of any stock dividend,
stock split, recapitalization, merger, consolidation,
combination, exchange of shares, or any other change in the
corporate structure or shares of the Company, the aggregate
number and class of shares available under this Agreement and
subject to each option, together with the exercise price, shall
be adjusted appropriately by the Committee. No fractional shares
shall be issued pursuant to the Plan, and any fractional shares
resulting from adjustments shall be eliminated from the
respective option award, with an appropriate cash adjustment for
the value of any option eliminated. If an option is canceled,
surrendered, modified, expired, or terminated during the term of
the Plan but prior to the exercise or vesting of the option in
full, the shares subject to but not delivered under the option
shall be available for other option awards.
8. STOCKHOLDER RIGHTS. Grantee shall have no rights as a
stockholder with respect to any shares covered by this option
until exercise of the option and payment for such shares.
Grantee shall have no claim to be granted any stock option, and
there is no obligation of uniformity of treatment among Grantees
or holders or beneficiaries of options.
9. TRANSFERABILITY. Unless the Committee otherwise
consents, no option granted under the Plan and this Agreement may
be sold, transferred, pledged, assigned, or otherwise alienated
or hypothecated, other than by will or by the laws of descent and
distribution. All options granted to Grantee during Grantee's
lifetime shall be exercisable during Grantee's lifetime only by
such Grantee, his or her guardian, or legal representative. The
Committee may impose such other restrictions on any shares
acquired pursuant to this option as it may deem advisable,
including, without limitation, restrictions under applicable
federal and state securities laws.
10. CERTIFICATIONS. Grantee hereby represents and warrants
that Grantee is acquiring the option granted under this Agreement
for Grantee's own account and investment and without any intent
to resell or distribute the shares upon exercise of the option.
Grantee shall not resell or distribute the shares received upon
exercise of the option except in compliance with such conditions
as the Company reasonably may specify to ensure compliance with
federal and state securities laws.
11. EFFECTIVE DATE. This option shall be effective as of
the Grant Date set forth above.
12. BINDING EFFECT; AMENDMENT. This Agreement shall be
binding upon, and shall inure to the benefit of, the parties to
this Agreement and their respective heirs, successors, and
permitted assigns. This option shall not be modified except in a
writing executed by the parties to this Agreement.
13. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
14. PLAN CONTROLS. The Plan is incorporated by reference
into this Agreement. Capitalized terms not defined in this
Agreement shall have those meanings provided in the Plan. In the
event of any conflict between the terms of this Agreement and the
terms of the Plan, the provisions of the Plan shall control.
MILLER EXPLORATION COMPANY
I have received a copy of the Stock Option Agreement
concerning the grant of_______________________________ shares on
________________, 19__ and agree to receive stock options
according to the terms of such agreement.
(Please detach this page after signing and return to Miller