AMERICAN OIL & GAS, INC. STOCK OPTION AGREEMENT (Incentive Stock Option)
EXHIBIT 10.2
THIS STOCK OPTION AGREEMENT (this “Agreement”) is made and entered into as of the 29th day of
June, 2006, by and between American Oil & Gas, Inc., a Nevada corporation (the “Company”), and
Xxxxxx X. Xxxxxx (the “Optionee”).
WITNESSETH:
WHEREAS, pursuant to this Agreement, the Company grants to the Optionee an incentive stock
option to purchase shares of the Company’s common stock, par value $.001 per share (the “Common
Stock”), pursuant to the Company’s 2004 Stock Option Plan (the “Plan”) in order to provide the
Optionee with an opportunity for investment in the Company and additional incentive to pursue the
success of the Company, and this option is to be for the number of shares, at the price per share
and on the other terms and conditions set forth in this Agreement;
WHEREAS, the Company intends that a portion of the stock option granted pursuant to this
Agreement qualify as an incentive stock option pursuant to Section 422 of the Internal Revenue Code
of 1986, as amended (the “Code”); and
WHEREAS, the Optionee desires to receive an option on the terms and conditions set forth in
this Agreement,
NOW, THEREFORE, the parties agree as follows:
1. Grant Of Option. The Company hereby grants to the Optionee, as a matter of
separate agreement and not in lieu of salary or any other compensation for services, the right and
option (the “Option”) to purchase all or any part of an aggregate of 250,000 shares of the
authorized and unissued Common Stock (the “Option Shares”) pursuant to the terms and conditions set
forth in this Agreement.
2. Option Price. At any time that shares are to be purchased pursuant to the Option,
the purchase price for each Option Share shall be $4.95 (the “Option Price”), subject to adjustment
as provided in this Agreement.
3. Exercise Period. The right to acquire 50,000 Option Shares vests and becomes
exercisable on June 29, 2006. On each June 29 anniversary from June 29, 2007 through June 29, 2011,
the right to acquire 40,000 Option Shares shall vest and become exercisable. Unless terminated
earlier as provided in this Agreement, each portion of the Option will expire and terminate, if not
exercised sooner, at 5:00 p.m., Denver, Colorado time, on June 29, 2016, the tenth anniversary of
the date of grant.
4. Exercise Of Option.
(a) The Option may be exercised in whole or in part by delivering to the treasurer of the
Company (i) a Notice And Agreement Of Exercise Of Option, substantially in the form attached hereto
as Exhibit A, specifying the number of Option Shares with respect to which the Option is
exercised, and (ii) full payment of the Option Price for such shares. Payment shall be made by
certified check or cleared funds. The Option may not be exercised in part unless the purchase
price for the Option Shares purchased is at least $1,000 or unless the entire remaining portion of
the Option is being exercised.
(b) Promptly upon receipt of the Notice And Agreement Of Exercise Of Option, together with the
full payment of the Option Price, the Company shall deliver to the Optionee a properly executed
certificate or certificates representing the Option Shares being purchased. The Company shall use
commercially reasonable efforts to have an effective registration statement under the 1933 Act (as
defined below) with the U.S. Securities and Exchange Commission covering the exercise by the
Optionee of the Option.
(c) During the lifetime of the Optionee, the Option shall be exercisable only by the Optionee;
provided, that in the event of the death of the Optionee, the personal representative or estate of
the Optionee may exercise the Option; provided further, that in the event of legal disability of
the Optionee, the guardian or personal representative of the Optionee may exercise the Option if
such guardian or personal representative obtains a ruling from the Internal Revenue Service or an
opinion of counsel to the effect that neither the grant nor the exercise of such power is violative
of Section 422(b)(5), or its successor provision, of the Code. Any opinion of counsel must be
acceptable to the Company’s Board of Directors (the “Board”), or committee formed by the Board to
administer the Plan, both with respect to the counsel rendering the opinion and with respect to the
form of opinion.
(d) If for any reason (other than the termination of the Optionee’s employment by the Company
because of the Optionee’s death or legal disability or the termination of the Optionee’s employment
by the Company for cause (as defined below)), the Optionee ceases to be employed by the Company,
then any Option held by the Optionee at the time the Optionee’s employment ceases may be exercised
within three months after the date the Optionee’s employment ceases or, if the Optionee dies during
the three-month period immediately following such termination, within one year after the Optionee’s
death, but, in each case, only to the extent that (i) the Option was exercisable according to its
terms on the date of termination of the Optionee’s employment, and (ii) the period for exercise of
the Option, as defined in Section 3 of this Agreement, has not terminated as of the date of
exercise. Upon termination of the respective periods set forth in the previous sentence, any
unexercised portion of the Option shall expire. If the Optionee’s employment by the Company is
terminated because of the Optionee’s death or legal disability, the Option held by the Optionee may
be exercised within one year after termination, but only to the extent that (i) the Option was
exercisable according to its terms on the date of termination of the Optionee’s employment, and
(ii) the period of exercise of the Option, as defined
in Section 3 of this Agreement, has not terminated as of the date of exercise. If the Optionee’s employment by the Company is terminated
for cause, (i) the Option held by the Optionee at the time the Optionee’s employment is terminated shall expire upon delivery to the Optionee of notice
of termination, which may be oral or in writing, and all rights to purchase shares pursuant to the
Option shall terminate immediately. As used in this Section 4(d), “for cause” means discharge by
the Company on any of the following grounds: (i) the Optionee’s conviction or plea of nolo
contendere in a court of law of any crime or offense, excluding traffic violations and other minor
offenses; (ii) willful misconduct which materially adversely affects the reputation or business
activities of the Company and which continues after written notice thereof from the Board to the
Optionee stating with specificity the alleged misconduct and, if requested by the Optionee within
ten days thereafter, the Optionee is afforded a reasonable opportunity to be heard before the
Board; (iii) substance abuse, including abuse of alcohol or use of illegal narcotics, and other
drugs or substances, for which the Optionee fails to undertake and maintain treatment after 15 days
after requested by the Company; (iv) misappropriation of funds or other material acts of dishonesty
involving the Company; and (v) the Optionee’s continued material failure or refusal to perform his
duties or to carry out in all material respects the lawful directives of the Board.
5. Withholding Taxes. The Company may take such steps as it deems necessary or
appropriate for the withholding of any taxes which the Company is required by any law or regulation
or any governmental authority, whether federal, state or local, domestic or foreign, to withhold in
connection with the Option, including, but not limited to, the withholding of all or any portion of
any payment owed by the Company to the Optionee or the withholding of issuance of Option Shares to
be issued upon the exercise of the Option.
6. Securities Laws Requirements. No Option Shares shall be issued unless and until,
in the opinion of the Company, there has been full compliance with, or an exemption from, any
applicable registration requirements of the Securities Act of 1933, as amended (the “1933 Act”),
any applicable listing requirements of any securities exchange on which stock of the same class has
been listed, and any other requirements of law or any regulatory bodies having jurisdiction over
such issuance and delivery, or applicable exemptions are available and have been complied with.
Pursuant to the terms of the Notice And Agreement Of Exercise Of Option (Exhibit A) that shall be
delivered to the Company upon each exercise of the Option, the Optionee shall acknowledge,
represent, warrant and agree, among other things, as follows:
(a) The address set forth on the signature page to this Agreement is the
Optionee’s true and correct residence, and the Optionee has no present intention of
becoming a resident of any other state or jurisdiction;
(b) The Optionee confirms that all documents, records and books pertaining to
an investment in the Option and the Option Shares that have been requested by the
Optionee have been made available or delivered to the Optionee. Without limiting
the foregoing, the Optionee has received and reviewed the Company’s periodic reports
as filed with the Securities and Exchange Commission, and the Optionee has had the
opportunity to discuss the acquisition
of the Option and the Option Shares with the
Company, and the Optionee has obtained or been given access to all information
concerning the Company that the Optionee has requested;
(c) For two years subsequent to the exercise of any part or all of the Option,
the Optionee shall report all sales of Option Shares to the Company in writing on a
form prescribed by the Company.
(d) If and so long as the Optionee is subject to reporting requirements under
Section 16(a) of the Securities Exchange Act of 1934, as amended (the “1934 Act”),
the Optionee shall (i) consult with the Optionee’s counsel regarding the application
of Section 16(b) of the 1934 Act prior to any exercise of the Option, and prior to
any sale of shares of the Company’s common stock or the Option Shares, (ii) furnish
the Company with a copy of each Form 4 filed by the Optionee, and (iii) timely file
all reports required under the federal securities laws.
The restrictions described above, or notice thereof, may be placed on the certificates
representing the Option Shares purchased pursuant to the Option, and the Company may refuse to
issue the certificates or to transfer the shares on its books unless it is satisfied that no
violation of such restrictions will occur.
7. Transferability Of Option. The Option shall not be transferable except by will or
the laws of descent and distribution, and any attempt to do so shall void the Option.
8. Adjustment By Stock Split, Stock Dividend, Etc. If at any time the Company
increases or decreases the number of its outstanding shares of common stock, or changes in any way
the rights and privileges of such shares, by means of the payment of a stock dividend or the making
of any other distribution on such shares payable in its common stock, or through a stock split or
subdivision of shares, or a consolidation or combination of shares, or through a reclassification
or recapitalization involving its common stock, the numbers, rights and privileges of the shares of
common stock included in the Option shall be increased, decreased or changed in like manner as if
such shares had been issued and outstanding, fully paid and nonassessable at the time of such
occurrence. Whenever the number or kind of shares comprising the Option Shares or the Option Price
is adjusted, the Company shall promptly give written notice and a certificate of the Chief
Financial Officer or President of the Company to the Optionee, stating that such an adjustment has
been effected and setting forth the number and kind of shares purchasable and the amount of the
then-current Option Price, and stating in reasonable detail the facts requiring such adjustment and
the calculation of such adjustment.
9. Effect Of Changes In Control And Certain Reorganizations.
(a) In event of a Change In Control (as defined below) of the Company, then all Options
granted pursuant to this Agreement shall become exercisable immediately at the time of such Change
In Control, and, in addition, the Option Committee (as defined below), in its sole discretion,
shall have the right, but not the obligation, to do any or all of the following:
(i) provide for the Optionee to surrender the Option (or portion thereof) and
to receive in exchange a cash payment, for each Option Share underlying the
surrendered Option, equal to the excess of the aggregate Fair Market Value (as
defined below) of the Option Share on the date of surrender over the exercise price
for the Option Share. To the extent any Option is surrendered pursuant to this
Section 9(a)(i), it shall be deemed to have been exercised for purposes of Section 4
of the Plan; and
(ii) make any other adjustments, or take any other action, as the Option
Committee, in its discretion, shall deem appropriate provided that any such
adjustments or actions would not result in the Optionee receiving less value than
pursuant to Section 9(a)(i) above.
For purposes of this Section 9, a “Change In Control” of the Company shall mean a change in
control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A
of Regulation 14A promulgated under the 1934 Act regardless of whether the Company is then subject
to such reporting requirement.
For purposes of this Section 9, the Fair Market Value of the Common Stock shall be determined
as follows: (i) if there is a public market for the Common Stock, the last reported sale price for
the Common Stock on that date (or on the preceding stock market business day if such date is a
Saturday, Sunday or a holiday), on the New York Stock Exchange (“NYSE”), the American Stock
Exchange (“AMEX”), or the Nasdaq Stock Exchange (“Nasdaq”), as reported by such exchange or market,
as the case may be, or, if not reported by such exchange or market, as reported in The Wall
Street Journal, or if not reported in The Wall Street Journal, as reported in The
Denver Post, Denver, Colorado or, if no last sale price for the NYSE, AMEX or Nasdaq is
available, then the last reported sale price on either another stock exchange or on a national or
local over-the-counter market, as reported by such exchange or market or, if not reported by such
exchange or market, as reported by The Wall Street Journal, or if not available there, in
The Denver Post; provided, that if no such published last sale price is available
and a published bid price is available from one of those sources, then Fair Market Value shall be
determined by such last reported bid price for the Common Stock, and if no such published bid price
is available, then Fair Market Value shall be determined by the average of the bid prices quoted as
of the close of business by any two (2) independent persons or entities making a market for the
Common Stock, such persons or entities to be selected by the Option Committee, or (i) if there is
no public market for the Common Stock, as determined by the unanimous resolution of all directors
of the Board; provided, that if the Board does not or is unable to make such a
determination, Fair Market Value
shall be made by an investment banking firm of recognized national
standing selected by the Board, which firm shall be engaged and paid by the Company and the
determination of Fair Market Value of such investment banking firm (or, if such investment bank
determines a range of fair market values, the mid-point of such range) shall be final and binding
on all parties.
For purposes of this Agreement, “Option Committee” shall mean a committee composed of the
Board or by a committee selected by the Board, consisting of two (2) or more directors, each of
whom is a Non-Employee Director (as defined below).
For purposes of this Agreement, a “Non-Employee Director” means a director of the Company who
(a) is not currently an officer of the Company or a parent or subsidiary of the Company, or
otherwise currently employed by the Company or a parent or subsidiary of the Company, (b) does not
receive compensation, either directly or indirectly, from the Company or a parent or subsidiary of
the Company, for services rendered as a consultant or in any capacity other than as a director,
except for an amount that does not exceed the dollar amount for which disclosure would be required
pursuant to Regulation S-K, Item 404(a), under the 1933 Act, (c) does not possess an interest in
any other transaction for which disclosure by the Company would be required pursuant to Regulation
S-K, Item 404(a), and (d) is not engaged in a business relationship for which disclosure by the
Company would be required pursuant to Regulation S-K, Item 404(a).
(b) In the event that the Company enters into, or the Board shall propose that the Company
enter into, a Reorganization Event (as defined below), then all Options granted pursuant to this
Agreement shall become exercisable immediately at the time of such Reorganization Event, except
that this acceleration would not occur with respect to any of the Options for which the advance
would result in a violation of Section 17 of the Plan, and, in addition, the Option Committee, in
its sole discretion, may make any or all of the following adjustments:
(i) by written notice to the Optionee provide that the Optionee’s Options shall
be terminated or cancelled, unless exercised within 30 days (or such longer period
as the Option Committee shall determine) after the date of such notice;
(ii) provide for termination or cancellation of the Option in exchange for
payment to the Optionee of an amount in cash or securities equal to the excess, if
any, over the exercise price of that Option of the Fair Market Value of the Option
Shares subject to the Option at the time of such termination or cancellation; and
(iii) make any other adjustments, or take any other action, as the Option
Committee, in its discretion, shall deem appropriate; provided, that any
such adjustments or actions shall not result in the Optionee receiving less value
than is possible pursuant to any or all of Sections 9(b)(i) and 9(b)(ii) above. Any
action taken by the Option Committee may be made conditional upon the consummation
of the applicable Reorganization Event.
For purposes of this Section 9, a “Reorganization Event” shall be deemed to occur if (A) the
Company is merged or consolidated with another corporation, (B) one person becomes the beneficial
owner of all of the issued and outstanding equity securities of the Company (for purposes of this
Section 9(b), the terms “person” and “beneficial owner” shall have the meanings assigned to them in
Section 13(d) of the 1934 Act and the rules and regulations promulgated thereunder), (C) a division
or subsidiary of the Company is acquired by another corporation, person or entity, (D) all or
substantially all the assets of the Company are acquired by another corporation, or (E) the Company
is reorganized, dissolved or liquidated.
10. Common Stock To Be Received Upon Exercise. The Optionee understands that in the
absence of registration of the Option Shares, the Option Shares cannot be sold unless they are sold
pursuant to an exemption from registration under the 1933 Act. The Optionee also understands that
routine sales of securities made in reliance upon Rule 144 can be made only in limited amounts in
accordance with the terms and conditions of the Rule, and that in cases in which the Rule is
inapplicable, compliance with another exemption under the 1933 Act will be required.
11. Privilege Of Ownership. The Optionee shall not have any of the rights of a
stockholder with respect to the shares covered by the Option except to the extent that one or more
certificates for those shares shall be delivered to him upon exercise of the Option.
12. Relationship To Employment Or Position. Nothing contained in this Agreement (i)
shall confer upon the Optionee any right with respect to continuance of the Optionee’s employment
by, or position or affiliation with, or relationship to, the Company, or (ii) shall interfere in
any way with the right of the Company at any time to terminate the Optionee’s employment by,
position or affiliation with, or relationship to, the Company.
13. Notices. All notices, requests, demands, directions and other communications
(“Notices”) concerning this Agreement shall be in writing and shall be mailed or delivered
personally or sent by telecopier or facsimile to the applicable party at the address of such party
set forth below in this Section 13. When mailed, each such Notice shall be sent by first class,
certified mail, return receipt requested, enclosed in a postage prepaid wrapper, and shall be
effective on the fifth business day after it has been deposited in the mail. When delivered
personally, each such Notice shall be effective when delivered to the address for the respective
party set forth in this Section 13, provided that it is delivered on a business day and further
provided that it is delivered prior to 5:00 p.m., local time of the party to whom the notice is
being delivered, on that business day; otherwise, each such Notice shall be effective on the first
business day occurring after the date on which the Notice is delivered. When sent by telecopier or
facsimile, each such Notice shall be effective on the day on which it is sent provided that it is
sent on a business day and further provided that it is sent prior to 5:00 p.m., local time of the
party to whom the Notice is being sent, on that business day; otherwise, each such Notice shall be
effective on the first business day occurring after the date on which the Notice is sent. Each
Notice shall be addressed to the party to be notified as shown below:
(a)
|
if to the Company: | American Oil & Gas, Inc. | ||
| 0000 00xx Xxxxxx, Xxxxx 0000 | ||||
| Xxxxxx, Xxxxxxxx 00000 | ||||
| Facsimile No. (000) 000-0000 | ||||
| Attention: Xx. Xxxxxx X. Xxxxxxxx | ||||
(b)
|
if to the Optionee: | Xxxxxx X. Xxxxxx | ||
| At the address set forth on the signature page of | ||||
| this Agreement |
Either party may change its respective address for purposes of this Section 13 by giving the
other party Notice of the new address in the manner set forth above.
14. General Provisions. This instrument (a) contains the entire agreement between the
parties, (b) may not be amended nor may any rights hereunder be waived except by an instrument in
writing signed by the party sought to be charged with such amendment or waiver, (c) shall be
construed in accordance with, and governed by and determined exclusively and solely in accordance
with the laws of Nevada, and (d) shall be binding upon and shall inure to the benefit of the
parties and their respective personal representatives and assigns, except as above set forth. All
pronouns contained herein and any variations thereof shall be deemed to refer to the masculine,
feminine or neuter, singular or plural as the identity of the parties hereto may require.
*****
(signature page follows)
IN WITNESS WHEREOF, the parties have executed this Agreement on the dates set forth below to
be effective on the date set forth in the first paragraph of this Agreement.
| AMERICAN OIL & GAS, INC. |
||||
| Date: 7/31/06 | By: | /s/ Xxxxxx X. Xxxxxxxx | ||
| Xxxxxx X. Xxxxxxxx, President | ||||
| OPTIONEE |
||||
| Date: 7/31/06 | /s/ Xxxxxx X. Xxxxxx | |||
| Xxxxxx X. Xxxxxx | ||||
| Address | ||||
| City, State and Zip Code | ||||
AMERICAN OIL & GAS, INC.
NOTICE AND AGREEMENT OF EXERCISE OF OPTION
The undersigned, Xxxxxx X. Xxxxxx (the “Optionee”) hereby exercises the Optionee’s stock
Option pursuant to the Stock Option Agreement (the “Option Agreement”) dated as of June 29, 2006
between Optionee and American Oil & Gas, Inc. (the “Company”) as to ___shares of the $.001
par value common stock (the “Option Shares”) of the Company at a purchase price of $4.95 per share.
The total exercise price for these Option Shares is $___.
Enclosed is the payment specified in Section 4 of the Option Agreement.
Optionee understands that no Option Shares will be issued unless and until, in the opinion of
the Company, there has been full compliance with any applicable registration requirements of the
Securities Act of 1933, as amended (the “1933 Act”), any applicable listing requirements of any
securities exchange on which stock of the same class is then listed, and any other requirements of
law or any regulatory bodies having jurisdiction over such issuance and delivery. Optionee hereby
acknowledges, represents, warrants and agrees to and with the Company as follows:
(a) The address set forth on the signature page of this Agreement is the
Optionee’s true and correct residence, and the Optionee has no
present intention of becoming a resident of any other state or jurisdiction;
(b) The Optionee confirms that all documents, records and books pertaining to
an investment in the Option and the Option Shares that have been requested by the
Optionee have been made available or delivered to the Optionee. Without limiting
the foregoing, the Optionee has received and reviewed the Company’s periodic reports
as filed with the Securities and Exchange Commission, and the Optionee has had the
opportunity to discuss the acquisition of the Option and Option Shares with the
Company, and the Optionee has obtained or been given access to all information
concerning the Company that the Optionee has requested;
(c) For two years subsequent to the exercise of any part or all of the Option,
the Optionee shall report all sales of Option Shares to the Company in writing on a
form prescribed by the Company;
(d) If and so long as Optionee is subject to reporting requirements under
Section 16(a) of the Securities Exchange Act of 1934, as amended (the “1934 Act”),
Optionee shall (i) consult with Optionee’s counsel regarding the application of
Section 16(b) of the 1934 Act prior to any exercise of the Option, and prior to any
sale of shares of the Company’s common stock or the Option Shares, (ii) furnish the
Company with a copy of each Form 4 filed by Optionee, (iii) and timely file all
reports required to file under the federal securities laws.
The restrictions described above, or notice thereof, may be placed on the certificates
representing the Option Shares purchased pursuant to the Option, and the Company may refuse to
issue the certificates or to transfer the shares on its books unless it is satisfied that no
violation of such restrictions will occur.
(Print Your Name)
|
Signature | |
(Optionee — Print Name of Spouse
|
Address | |
if you wish joint registration) |
||
| City, State and Zip Code |
