STOCK OPTION SUBSCRIPTION AGREEMENT
Stock Option Subscription Agreement made and entered this ___ day of
_____________, 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_____________________________of _______________________________,
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 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 $3.70/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.:
_________________________________ ______________________________
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)
