EXHIBIT 10.2
STOCK OPTION SUBSCRIPTION AGREEMENT
Stock Option Subscription Agreement made and entered this 1st day
of April, 2003 by and between Arena Resources, Inc., a Nevada
Corporation of 0000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000, Xxxxx, XX 00000
("Arena" or the "Company") with ____________________________________,
_________________, an employee, director or agent of Arena ( hereafter
generically "Optionee"). Whenever both Arena and the Optionee are
collectively described in this agreement they shall be designated as
the "Parties".
1.0 Purpose of Option. Arena herewith grants to Optionee those
specific stock option rights described by this agreement and
exercisable strictly in accordance with the terms and provisions of
this agreement as additional incentive compensation to the Optionee
awarded by the company for exceptional service and as a means to
insure the continued affiliation and loyalty of the Optionee to the
company.
2.0 Specific Option Granted. Arena herewith assigns, sets-over and
grants to Optionee the within stock option allowing the Optionee the
right to acquire up to _______ shares of the restricted common stock
of Arena at an exercise price of $3.70 per share through April 1,
2008, but subject to the specific exercise rights, divestment and
other terms outlined below:
2.1 Option rights may be issued in series and over time, shall
be vested upon execution of this or any subsequent similar
subscription agreement, but subject to the right of exercise and
divestment set-out in this subscription.
2.2 No option rights created by this agreement shall be
transferable in any manner without the prior written authorization of
the company. It is understood and agreed between the Parties that
Arena takes the position that the option rights should generally not
be transferred and Arena will not generally grant transfer rights to
the option or any stock issued upon exercise of this option, in whole
or in part.
2.3 The option rights created hereunder are not being issued
pursuant to a plan and are not deemed to be "qualified" option rights
pursuant to applicable portions of the Internal Revenue Code. The
options granted herein are specifically excluded from the provisions
of 26 USC Sec. 422.
2.4 The option rights created hereunder shall not be used for
security or subject to consensual or voluntary liens or encumbrances.
2.5 The option rights created hereunder may be exercised, in
whole or in part, specifically and only as set-out in paragraph 3.0,
and subparts, and are subject to divestment pursuant to such
paragraph.
2.6 The company reserves the right, but is under no obligation,
to register all or any portion of the shares issued pursuant to this
or related option agreements.
2.7 In the event of the voluntary or involuntary termination of
the Optionee from the company, the Optionee will be required to
exercise all earned and vested option rights subject to exercise
within 30 days of the effective date of termination or the options
will be automatically terminated and extinguished. In the event of
the death or disability of the Optionee, the estate or any duly
constituted trustee, conservator or guardian of the Optionee shall be
required to exercise any exercisable option rights on behalf of the
Optionee within 120 days of death or disability as a trustee, personal
representative, guardian or conservator, or any person otherwise
acting for the estate within 120 days of the death or disability of
Optionee.
2.8 The company will and does hereby reserve the right to
unilaterally alter the terms of this subscription to require the
option rights and resulting shares to be issued as "qualified stock
incentive shares" pursuant to a qualified IRS stock incentive plan at
its sole election and shall so inform Optionee of any such
modification of terms. Except as specifically required by such plan,
no other term or provision of this stock subscription will be modified
by the adoption of qualified plan; provided, however, any term or
provision of such qualified plan inconsistent with the terms of this
subscription shall be given primary definition and control. If this
qualification occurs, then the Optionee acknowledges and agrees that
the option price for any shares may be altered.
2.9 No term or provision of this subscription right shall
constitute any guarantee of employment or in any way modify any
employment contract or any terms of existing employment, including
rights of termination or release between the Optionee and Arena.
3.0 Exercise and Divestment. The stock options granted herein
shall be exercisable based upon services of the Optionee to the
company and subject to divestment for any unexercised portion upon
death, termination of employment or disassociation of Optionee as
follows:
3.1 No shares shall be acquired pursuant to the exercise of this
option unless the Optionee shall continue in full employment or
affiliation as a director for eleven consecutive months after the
month in which this option agreement is initially executed (first
exercise date). At the event of the first exercise date, Optionee may
acquire up to twenty percent (20%) of the stock subject to this
option. Thereafter, commencing on each successive annual anniversary
date of the first exercise date, the Optionee may acquire an
additional twenty percent (20%) of the stock subject to this option at
the exercise price of $0.50/share provided the Optionee remains in
continuous employment or affiliated as a director with the company
during the entire preceding exercise period. Unless the Optionee
terminates his relationship as outlined in paragraph 2.7, infra., all
option rights shall be cumulative and Optionee may elect to accrue
such rights and exercise all option rights at the last exercise
period, or for six months thereafter, if he is employed by or
affiliated as a director by the company.
3.2 If Optionee's employment or affiliation is terminated with
the company at any time prior to the end of an option exercise period,
as described above, the option rights to be acquired during such
period under this agreement will fully terminate and divest and
Optionee shall have no further option rights for that period.
3.3 The Optionee shall give notice of his or her intent to
exercise the option within sixty (60) days of the end of an option
exercise period, or other period required by paragraph 2.7, in writing
and shall accompany such written notice describing the number of
shares to be purchased with a payment check for the full purchase
price. Notice of any fully earned and vested options can be given at
anytime in accordance with the provisions of paragraphs 2.7, 3.1 and
3.2. Arena agrees to promptly issue shares pursuant to such notice
and payment in accordance with this agreement.
4.0 No Tax Representations. While Arena believes that the current
treatment of the options will be that the options may create a taxable
event to the Optionee as a non-qualified option at the time of
exercise of the option and that the taxable gain may, most likely, be
the difference between the exercise price of the option and the then
prevailing market price, if any, of the company's stock; no warranty
of tax results or tax events is made or implied in any manner by
Arena. Each Optionee further represents that he or she has and will
rely fully and exclusively upon his or her own independent tax
information and advisors as to the tax implications and results of the
granting or exercise of this option and agrees to comply fully with
all required federal, state or local tax reporting and payment
requirements incurred through the granting or exercise of this option.
5.0 Restricted Securities. Each Optionee understands and
covenants that unless registered at the option of Arena, the shares
granted under this stock subscription will be restricted securities;
that is, securities issued without registration under state or federal
laws. Each Optionee further understands, agrees and stipulates that
the nature of restricted securities are that they are not generally
freely tradable, that substantial holding periods may apply before
such shares, after the exercise of the option, may be traded and that
various requirements, such as current public information being
available for the company, are usually required and applicable to the
subsequent transfer and sale of the securities. The undersigned
further represents and states that he or she is generally familiar
with the current provisions of federal SEC Rule 144 and that this is
the general safe harbor provision and rule under which restricted
securities are currently resold. In all events, the undersigned
Optionee understands and agrees that he will be required in most
instances to obtain prior written consent of Arena to the resale of a
restricted security and may be required to obtain formal opinion of
counsel as to the tradability and availability of such restricted
shares for resale satisfactory to Arena. In complying with any resale
provisions for restricted securities, the undersigned Optionee agrees
and consents that he will rely exclusively and fully at his own cost
and election upon independent legal counsel.
6.0 Miscellaneous.
6.1 This option agreement shall be applied and construed in
accordance with Oklahoma law as to all state issues. Any action which
may or could be brought to enforce any term or provision or rights
under this option agreement shall be brought in a court of general
jurisdiction within the state of Oklahoma and in the county where the
principal business of Arena is located.
6.2 This agreement shall be binding upon and inure to the
benefit of any assign, heir or successor in interest to any party
hereto.
6.3 Should any term or provision of this agreement be found void
or voidable, the balance shall be given reasonable application and
applied so far as possible to achieve the intent of the parties. In
like manner, any error in grammar, syntax, spelling or usage shall be
given reasonable application and applied to achieve the intent of the
parties.
6.4 This subscription constitutes a final agreement between the
parties and shall not be amended or altered by parole evidence and may
only be amended in a written amendment signed by the parties and
attached hereto.
6.5 Should any action at law or equity be necessary to enforce
any term or provision of this agreement, the prevailing party shall be
entitled to all reasonable costs of court and attorney fees and
judgment and interest on any actual monetary damages from the date of
loss at the rate of 12% per annum.
6.6 The undersigned President of Arena represents that he has
been duly and fully authorized to execute this subscription agreement
for and on behalf of the corporation pursuant to resolution of its
Board of Directors.
Dated the day and date first above written.
OPTIONEE:
ARENA RESOURCES, INC.:
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Print Name: By: Xxxxx X. Xxxxxxxx
Date of Execution: Its President
Social Security No. _________
(The facsimile signature of the
President shall be given the same
force and affect as the original
signature to this document)
