GIANT OIL & GAS INC.
STOCK OPTION AGREEMENT
This Stock Option Agreement (this "Agreement") is entered into as of
_____, 2007 by and between Giant Oil & Gas Inc., a Canadian corporation (the
"Corporation"), and ______ (the "Optionee").
WHEREAS, the Corporation desires to afford the Optionee an opportunity
to purchase certain shares of the Corporation's common stock so as to acquire a
proprietary interest as a shareholder of the Corporation and to provide the
Optionee with an incentive to use his best efforts in the service of the
NOW, THEREFORE, in consideration of the premises and mutual covenants
set forth below, the parties agree as follows:
(1) Grant of Option.
The Corporation hereby grants to Optionee the right to purchase up to
the aggregate number of Shares set forth in Exhibit A attached hereto at the
exercise price per Share stated therein. The right to purchase such Shares shall
be subject to all of the provisions, terms and conditions set forth in this
Agreement and in the Giant Oil & Gas Inc. 2006 Stock Option (the "Plan"), a copy
of which is annexed hereto and made a part hereof. Unless defined in this
Agreement, capitalized terms used herein shall have the meaning ascribed to them
in the Plan.
This Option is intended to be and shall be treated as an Incentive
Stock Option under Section 422 of the Code unless this sentence has been
manually crossed out and its deletion is followed by the signature of the
corporate officer who signed this Option on behalf of the Corporation
____________(check if applicable).
(2) Vesting Schedule and Expiration.
This Option shall not be exercisable prior to the vesting date set
forth in Exhibit A attached hereto or subsequent to the expiration date set
forth therein unless extended by the Board of Directors or the Option Committee.
During the exercise period, the Option may be exercised by the Optionee (or such
other person or persons authorized to exercise Options under the Plan), in whole
or in part, from time to time, subject to the maximum percentage of Options then
exercisable in accordance with the schedule set forth in Exhibit A attached
hereto. The Corporation agrees to maintain during such exercise period a
sufficient number of Shares (which may be authorized and unissued Shares or
issued Shares that have been reacquired by the Corporation) corresponding to the
number of unexercised Options granted to the Optionee after taking into account
any Share adjustment under the Plan.
(3) Restrictions on Transferability of Options.
This Option may not be transferred by the Optionee other than by will
or the laws of descent and distribution and may be exercised during the
Optionee's lifetime only by the Optionee or the Optionee's guardian or legal
representative. A transfer of an Option by will or the laws of descent and
distribution shall not be effective unless the Option Committee shall have been
furnished with such evidence as it may deem necessary to establish the validity
and effectiveness of the transfer.
(4) Termination Provisions.
Except as provided in paragraphs (2), and (3) below, if an
Optionee's employment by, or relationship with, the Corporation is terminated
voluntarily or, by the Corporation, whether such termination is for Cause or for
no reason whatsoever, any Option heretofore granted which remains unexercised at
the time of such termination shall expire immediately, provided, however, that
the Option Committee may, in its sole and absolute discretion, within thirty
(30) days of such termination, waive the expiration of any Option awarded under
the Plan, by giving written notice of such waiver to the Optionee at such
Optionee's last known address. In the event of such waiver, the Optionee may
exercise any such Options only to such extent, for such time, and upon such
terms and conditions set forth in subparagraph (i) above. The determination as
to whether a termination is voluntary or for Cause shall be made by the Option
Committee, whose decision shall be final and conclusive.
If an Optionee ceases to be employed by or ceases to perform
services to the Corporation by reason of death or Disability, the aggregate
amount of unexercised Options granted hereunder shall thereupon become fully
vested and immediately exercisable and shall expire no later than one (1) year
thereafter unless such Options by their terms expire before such date. During
such one (1) year period, the Optionee, or, in the case of death, the Optionee's
estate or the person or persons to whom the Option was transferred by will or
the laws of descent and distribution, may exercise any such Options, and if not
exercised, shall expire at the end of such one (1) year period unless such
Options by their terms expire before such date.
If the Optionee ceases to be employed by, or ceases to provide
services to the Corporation by reason of Retirement, the aggregate amount of
unexercised Options granted hereunder shall thereupon become fully vested and
immediately exercisable and shall expire, in the case of an Incentive Stock
Option, no later than three (3) months following such Retirement, or in the case
of a Nonqualifying Stock Option one (1) year following Retirement, unless, in
either case, the Options by their terms expire prior to such date.
(5) Exercise, Payment for and Delivery of Stock.
This Option may be exercised by the Optionee or other person then
entitled to exercise it by delivery of a written notice to the Secretary of the
Corporation together with this Option Agreement specifying the number of Options
intended to be exercised and the exercise price and accompanied by payment in
full of the exercise price for the number of Shares with respect to which the
Option is exercised.
If the Corporation is required to withhold any federal, state or local
tax as a result of such exercise, the notice shall also be accompanied by a
check payable to the Corporation in payment of the applicable amount required to
be withheld, unless alternate arrangements have been agreed to between the
parties to satisfy any applicable withholding obligations.
Payment for Shares may be made in cash, or with the approval of the
Option Committee (which may be withheld in its sole discretion) with Shares
having a fair market value on the date of exercise equal to the exercise price,
or a combination of cash and Shares. In addition, subject to the approval of the
Option Committee (which may be withheld in its sole discretion), payment may be
effected wholly or partly by monies borrowed from the Corporation pursuant to
the terms of a promissory note, the terms and conditions of which shall be
determined from time to time by the Option Committee. An Optionee may purchase
less than the total numbers of Shares for which Options are then exercisable,
provided, however, that any partial exercise shall not be for less than 100
Shares and shall not include any fractional Shares. No Optionee, legal
representative of such Optionee, as the case may be, shall be, or shall be
deemed to be, the owner of any Shares covered by an Option unless and until
certificates for the Shares are issued to the Optionee or such Optionee's
representative under the Plan.
In the event that there is any change in the Shares of the Corporation
arising through merger, consolidation, reorganization, recapitalization, stock
dividend, stock split or combination thereof, the Board of Directors shall make
such adjustments in the aggregate number of Options subject to this Agreement
and/or the price per share of such Options in order to prevent dilution or
enlargement of the Optionee's rights and of the value represented by the
Options; provided however, no such adjustments will be made to the extent that
such adjustments cause the Plan to be treated as a "nonqualified deferred
compensation plan" within the meaning of Code Section 409A or any Options issued
thereunder as being issued under a "nonqualified deferred compensation plan"
within the meaning of Code Section 409A. Upon any adjustment in the number or
exercise price of Shares subject to an Option, a new Option may be granted in
place of such Option which has been so adjusted. In the event of a dissolution
or liquidation of the Corporation or a merger, consolidation, sale of all or
substantially all of the Corporation's assets, or other corporate reorganization
in which the Corporation is not the surviving corporation, or any merger in
which the Corporation is the surviving corporation but the holders of Shares
receive securities of another corporation, outstanding Options shall terminate,
provided that the holder of each Option shall, in such event, if no provision
has been made for the substitution of a new option for such outstanding option,
have the right immediately prior to such event to exercise the holder's Options
in whole or in part without regard to the date on which the Options otherwise
would be first exercisable.
(7) Compliance with Laws and Regulations.
The Optionee represents and warrants to the Corporation that the
services rendered by him to the Corporation shall under no circumstance include
(a) any activities which could be deemed by the Securities and Exchange
Commission ("SEC") to constitute investment banking or any other activities
requiring the Optionee to register as a broker-dealer under the Securities
Exchange Act of 1934; (b) any activities which could be deemed by the SEC to be
in connection with the offer or sale of securities; or (c) any activities which
directly or indirectly promote or maintain a market for the Corporation's
By accepting this Option, the Optionee represents and agrees for
himself and his transferees by will or the laws of descent and distribution
that, unless a registration statement under Securities Act of 1933 is in effect
as to Shares purchased upon any exercise of this Option, (a) any and all Shares
so purchased shall be acquired for his personal account and not with a view to
or for sale in connection with distribution, and (b) each notice of exercise of
all or any portion of this Option shall, if the Option Committee so requests, be
accompanied by a representation and warranty in writing, signed by the person
entitled to exercise the same, that the Shares are being so acquired in good
faith for his or her personal account and not with a view to or for sale in
connection with any distribution.
No certificates for Shares purchased upon exercise of this Option shall
be issued and delivered unless and until, in the opinion of legal counsel for
the Corporation, such securities may be issued and delivered without causing the
Corporation to be in violation of or incur any liability under any federal,
state or other securities law or any other requirement of law or of any
regulatory body having jurisdiction over the Corporation. Without limiting the
generality of the foregoing, the Optionee acknowledges and understands that the
Shares subject to the Options granted hereunder have not been registered under
the Securities Act of 1933, as amended, or under the blue sky or securities laws
of any state, that the Corporation has no obligation to so register any of such
Shares and that, except to the extent the Shares are so registered, the Shares
will be restricted securities and may be sold, transferred or otherwise disposed
of only if an exemption from such registration is available. Unless the Shares
have been so registered, there shall be noted conspicuously upon each stock
certificate representing such Shares, the following statement:
"The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 (1933 Act) nor under any
applicable state securities act and may not be offered or sold except
pursuant to (i) an effective registration statement relating to such
stock under the 1933 Act and any applicable state securities act, (ii)
to the extent applicable, Rule 144 under the 1933 Act (or any similar
rule under such act or acts relating to the disposition of securities),
or (iii) an opinion of counsel satisfactory to the Corporation that an
exemption from registration under Act or Acts is available."
(8) Invalidity; Severability.
If any clause or provision of this Agreement shall be adjudged invalid,
the same shall not affect the validity of any other clause or provision of this
Agreement, or of any other document pertaining to the subject matter thereof, or
constitute by reason thereof, any claim or cause of action in favor of Optionee
as against the Corporation. In addition, the provisions of this Agreement shall
be read and construed and shall have effect as separate, severable and
independent provisions or restrictions, and shall be enforceable accordingly.
(9) Entire Agreement; No Waiver; Remedies.
This Agreement contains the entire agreement of the parties and
incorporates and supersedes any and all prior or contemporaneous oral or written
agreements with respect to the matters referred to in it. No waiver of any
breach or default hereunder shall be considered valid unless in writing and
signed by the party giving such waiver, and no such waiver shall be deemed a
waiver of any subsequent breach or default of the same or similar nature. No
failure on the part of any party to exercise, and no delay in exercising any
right, remedy, power or privilege hereunder shall operate as a waiver thereof;
no waiver whatever shall be valid unless in writing signed by the party or
parties to be charged and then only to the extent specifically set forth in such
writing. All remedies, rights, powers and privileges, either under this
Agreement or by law or otherwise afforded the parties to this Agreement, shall
be cumulative and shall not be exclusive of any remedies, rights, powers and
privileges provided by law.
(10) Successors and Assigns.
The rights and obligations of the Corporation under this Agreement
shall inure to the benefit of and shall be binding upon the successors and
assigns of the Corporation.
(11) Headings; Counterparts; Governing Law.
The headings in this Agreement are for convenience of reference only
and are not intended to define or limit the contents of any section or
paragraph. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. This Agreement shall in all respects be governed by
the laws (without reference to conflicts of laws principles) of Canada
applicable to contracts made and performed within Canada.
The grant of the Option hereunder shall be binding and
effective only if this Agreement is duly executed by or on behalf of the
Corporation and by the Optionee, and a signed copy is returned to the
The Optionee acknowledges that no assurances or
representations are made by the Corporation as to the present or future market
value of the Shares or as to the business, affairs, financial condition or
prospects of the Corporation.
(13) Governing Provisions.
In the event of any conflict between the terms and provisions
contained in this Agreement and the terms and provisions contained in the Plan,
the terms, provisions and conditions set forth in the Plan shall govern.
(14) Optionee Bound by Plan.
OPTIONEE ACKNOWLEDGES RECEIPT OF THE ATTACHED COPY OF THE GIANT OIL & GAS INC.
2006 STOCK OPTION PLAN AND AGREES TO BE BOUND BY ALL THE TERMS AND PROVISIONS
AGREED AND ACCEPTED:
GIANT OIL & GAS INC.
AGREEMENT dated as of ______
PURSUANT TO THE GIANT OIL & GAS INC.
2006 STOCK OPTION PLAN
_____ (the OPTIONEE)
_______(check if applicable) The Option awarded under this Agreement is
intended to be a Nonqualifying Stock Option.
_______(check if applicable) The Option awarded under this Agreement is
intended to qualify as an Incentive Stock Option pursuant to Section
422 of the Code.
Number of shares of the Common Stock covered by the Option: ______ Shares
Exercise price per share: $_________
Vesting Schedule: ______________