EXHIBIT 10.12
EXHIBIT A
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FORM OF STOCK OPTION AGREEMENT
THE SECURITIES REPRESENTED BY THIS DOCUMENT HAVE NOT BEEN REGISTERED WITH THE
UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE U.S. SECURITIES ACT
OF 1933, AS AMENDED (THE "1933 ACT"), AND ARE "RESTRICTED SECURITIES" AS THAT
TERM IS DEFINED IN RULE 144 UNDER THE 1933 ACT. THE SECURITIES MAY NOT BE
OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE 1933 ACT.
SIBERIAN ENERGY GROUP INC.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") is made and entered into
effective as of the 1st day of January, 2004 by and between Siberian Energy
Group Inc., a Nevada corporation (the "Company"), and Xxxxxxxx X. Xxxx (the
"Optionee").
WITNESSETH:
WHEREAS, the Company agreed to issue to Optionee options to purchase shares
of the $0.001 par value restricted common stock of the Company ("Common Stock"),
said options to be for the number of shares, at the price per share and on the
terms set forth in this Agreement; and
WHEREAS, the Optionee desires to receive the options on the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, the parties agree as follows:
1. Terms. Terms not otherwise defined herein shall have the meaning given
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to such terms in the Employment Agreement by and between the Company and the
Optionee, dated as of January 1, 2003 (the "Employment Agreement").
2. Grant of Options; Option Prices. During the term of the Agreement, the
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Company agrees to do the following:
(a) To grant to Optionee the additional option to purchase under the terms and
conditions of the Company 2004 Stock Option Plan (the "Plan") all or any
part of 14,000 shares of Common Stock as of January 1, 2004 and 14,000
shares of the authorized and unissued $0.001 par value common stock of the
Company ("Common Stock"), on the first date of each month of the year
ended December 31, 2004, up to an aggregate of 168,000 shares (the
"2004 Option Shares"), subject to, and in accordance with, the terms and
conditions set forth in this Agreement (the "2004 Option"), at an
exercise price of $0.10 per share.
(b) To grant to Optionee the additional option to purchase under the terms and
conditions of the Plan all or any part of 14,000 shares of Common Stock as
of January 1, 2005 and 14,000 shares of Common Stock on the first date of
each month of the year ended December 31, 2005, up to an aggregate of
168,000 shares (the "2005 Option Shares"), subject to, and in accordance
with, the terms and conditions set forth in this Agreement (the "2005
Option"), at an exercise price of $0.30 per share.
(c) To grant to Optionee the additional option to purchase under the terms and
conditions of the Plan all or any part of 14,000 shares of Common Stock as
of January 1, 2006 and 14,000 shares of Common Stock on the first date of
each month of the year ended December 31, 2006, up to an aggregate of
168,000 shares (the "2006 Option Shares"), subject to, and in accordance
with, the terms and conditions set forth in this Agreement (the "2006
Option"), at an exercise price of $0.30 per share.
(d) To grant to Optionee the additional option to purchase under the terms and
conditions of the Plan all or any part of 14,000 shares of Common Stock as
of January 1, 2007 and on January 1st of every subsequent year (the
"Subsequent Option Shares, together with the 2004 Option Shares, the 2005
Option Shares and the 2006 Option Shares, the "Option Shares") and 14,000
shares of Common Stock on the first date of each month of the year ended
December 31, 2007 and on the first day of each month of each subsequent
year ended December 31st (the "Subsequent Option Shares, together with the
2004 Option Shares, the 2005 Option Shares and the 2006 Option Shares, the
"Option Shares") up to an aggregate of 168,000 shares per year, subject to,
and in accordance with, the terms and conditions set forth in this
Agreement (each a "Subsequent Option", together with the 2004 Option, the
2005 Option, the 2006 Option and each Subsequent Option, the "Options"), at
an exercise price of 110% of the average closing prices for the three
months prior to each grant date.
3. Exercise Periods. Each Option shall terminate at 5:00 p.m. (Eastern
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standard time) on the [fourth] anniversary of December 31st of each year in
which the Options were granted.
4. Exercise Of Options.
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(a) Each Option shall become vested and exercisable on the applicable grant
date.
(b) Subject to the terms and conditions of this Agreement, each Option may be
exercised in whole at any time, or in part, from time to time, by delivery
of written notice to the Company, at its principal executive office. The
notice shall state which Option(s) the Optionee is electing to exercise and
the number of Option Shares being exercised and shall be signed by the
Optionee.
(c) The notice of exercise described in Section 4(b) hereof shall be
accompanied by the full purchase price for the Option Shares being
exercised, in cash or by check or (subject to the Company's consent)
instructions from the Optionee to the Company directing the Company to
deliver a specified number of Option Shares directly to a designed broker
or dealer pursuant to a cashless exercise election which is made in
accordance with such requirements and procedures as are acceptable to the
Company in its sole discretion and full payment of all applicable
withholding taxes pursuant to Section 5 hereof.
(d) Upon receipt of notice of exercise and full payment for the Option Shares
being exercised, the Company shall take such action as may be necessary to
affect the transfer to the Optionee of the number of Options Shares as to
which such exercise was effective.
(e) The Optionee shall not be deemed to be the holder of, or to have any of the
rights of a holder with respect to any Option Shares until (i) the Option
shall have been exercised pursuant to the terms of this Agreement and the
Optionee shall have paid the full purchase price for the number of Option
Shares exercised, (ii) the Company shall have issued and delivered the
Option Shares to the Optionee, and (iii) the Optionee's name shall have
been entered as a stockholder of record on the books of the Company,
whereupon the Optionee shall have full ownership rights with respect to
such the Option Shares.
5. Withholding Taxes. The Company may take such steps as it deems
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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
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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. The Optionee shall acknowledge, represent, warrant and agree in
writing to the Company as follows:
(a) Optionee is acquiring the Option Shares for investment purposes only and
the Option Shares that Optionee is acquiring will be held by Optionee
without sale, transfer or other disposition for an indefinite period unless
the transfer of those securities is subsequently registered under the
federal securities laws or unless exemptions from registration are
available;
(b) Optionee's overall commitment to investments that are not readily
marketable is not disproportionate to Optionee's net worth and Optionee's
investment in the Option Shares will not cause such overall commitments to
become excessive;
(c) Optionee's financial condition is such that Optionee is under no present or
contemplated future need to dispose of any portion of the Option Shares to
satisfy any existing or contemplated undertaking, need or indebtedness;
(d) Optionee has sufficient knowledge and experience in business and financial
matters to evaluate, and Optionee has evaluated, the merits and risks of an
investment in the Option Shares;
(e) The address set forth on the signature page to this Agreement is Optionee's
true and correct residence, and Optionee has no present intention of
becoming a resident of any other state or jurisdiction;
(f) Optionee confirms that all documents, records and books pertaining to an
investment in the Option and the Option Shares that have been requested by
Optionee have been made available or delivered to Optionee. Optionee has
had the opportunity to discuss the acquisition of the Warrant and the
Option Shares with the Company, and Optionee has obtained or been given
access to all information concerning the Company that Optionee has
requested;
(g) Optionee has had the opportunity to ask questions of, and receive the
answers from, the Company concerning the terms of the investment in the
Option Shares and to receive additional information necessary to verify the
accuracy of the information delivered to Optionee, to the extent that the
Company possesses such information or can acquire it without unreasonable
effort or expense;
(h) Optionee understands that the Options have not, and the Option Shares
issuable upon exercise of the Options will not be, registered under the
1933 Act or any state securities laws in reliance on an exemption for
private offerings, and no federal or state agency has made any finding or
determination as to the fairness of this investment or any recommendation
or endorsement of the sale of the Option Shares;
(i) The Option Shares that Optionee is acquiring will be solely for Optionee's
own account, for investment, and are not being purchased with a view to or
for the resale, distribution, subdivision or fractionalization thereof.
Optionee has no agreement or arrangement for any such resale, distribution,
subdivision or fractionalization thereof;
(j) Optionee acknowledges and is aware of the following:
(i) The Option Shares constitute a speculative investment and involve a
high degree of risk of loss by Optionee of Optionee's total investment in
the Option Shares.
(ii) There are substantial restrictions on the transferability of the
Option Shares. The Option is not transferable except by will or the laws of
descent and distribution, and any attempt to do so shall void the Option.
The Option Shares cannot be transferred, pledged, hypothecated, sold or
otherwise disposed of unless they are registered under the 1933 Act or an
exemption from such registration is available and established to the
satisfaction of the Company; investors in the Company have no rights to
require that the Option Shares be registered except as set forth in Section
9 of this Agreement; there is no right of presentment of the Option Shares
and there is no obligation by the Company to repurchase any of the Option
Shares; and, accordingly, Optionee may have to hold the Option Shares
indefinitely and it may not be possible for Optionee to liquidate
Optionee's investment in the Company.
(iii) Each certificate issued representing the Option Shares shall be
imprinted with a legend that sets forth a description of the restrictions
on transferability of those securities, which legend will read
substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), AND ARE 'RESTRICTED
SECURITIES' AS THAT TERM IS DEFINED IN RULE 144 UNDER THE 1933 ACT. THE
SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS
SET FORTH IN A STOCK OPTION AGREEMENT, DATED JANUARY 1, 2004, BETWEEN THE
COMPANY AND XXXXXXXX X. XXXX AND MAY NOT BE TRANSFERRED EXCEPT IN COMPLIANCE
WITH THE TERMS OF SUCH STOCK OPTION AGREEMENT. THE COMPANY WILL FURNISH WITHOUT
CHARGE TO EACH SHAREHOLDER WHO SO REQUESTS A COPY OF THE STOCK OPTION
AGREEMENT."
(k) The Optionee will not sell, assign, transfer, exchange, encumber, pledge or
otherwise dispose of any of the Option Shares acquired pursuant to the
Options, or grant any option or right to purchase such shares or any legal
or beneficial interest in such shares, except in accordance with the
requirements set forth below:
(i) Prior to the consummation of the first public offering of Common Stock
pursuant to a registration statement (other than on Form S-8 or successor
forms) filed with, and declared effective by, the Securities and Exchange
Commission (an "Initial Public Offering"), Optionee may transfer shares of
Common Stock only if the following conditions are satisfied: (a) the
proposed transfer must be pursuant to an exemption from registration in
compliance with the Securities Act, and any applicable state securities
laws, and the transferring Optionee must provide a written opinion from
counsel acceptable to the Company to the effect that no such registration
is required under the applicable securities laws; (b) the proposed transfer
must be permissible under the provisions of all other applicable laws,
rules, regulations and licenses and the transferring Optionee must satisfy
all pre-conditions and comply with all other requirements pertaining to the
transfer; and (c) the Company must consent to the proposed transfer, which
consent will not be unreasonably withheld.
(ii) After an Initial Public Offering, and after any applicable restricted
period related to the Initial Public Offering, Optionee may transfer shares
of Common Stock as follows: (a) Optionee may sell shares of Common Stock
pursuant to an effective registration statement under the Securities Act,
in compliance with any applicable state securities laws or blue sky laws;
(b) Optionee may sell shares of Common Stock pursuant to, and in accordance
with, the provisions of Rule 144; and (c) Optionee may transfer shares of
Common Stock in any transaction that satisfies the conditions discussed in
Section 6(k)(i) above.
The restrictions described in this Section 6 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. Adjustment By Stock Split, Stock Dividend, Etc. If at any time the
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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, and the exercise price shall be adjusted accordingly.
8. Merger Or Consolidation. Upon the occurrence of any of the following
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events, the Option shall automatically terminate and be of no further force or
effect whatever: (i) the merger or consolidation of the Company with one or more
other corporations, regardless of which entity survives the transaction; (ii)
the dissolution or liquidation of the Company; (iii) the appointment of a
receiver for all, or substantially all, of the Company's assets or business;
(iv) the appoint-ment of a trustee for the Company after a petition has been
filed for the Company's reorganization under applicable statutes; or (v) the
sale, lease or exchange of all, or substantially all, of the Company's assets
and business. However, under these circumstances and prior to consummation of
said event, all optionees will be granted either and/or (a) the right to
exercise all outstanding options, or (b) will be substituted by equivalent
option in such surviving corporation (or other entity) or a parent or subsidiary
of such surviving corporation in case of merger or acquisition.
The foregoing adjustments shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive.
9. Common Stock To Be Received Upon Exercise. Optionee understands
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that (a) the Company is under no obligation to register the issuance or transfer
of the Option Shares, and (b) in the absence of any such registration, the
Option Shares cannot be sold unless they are sold pursuant to an exemption from
registration under the 1933 Act. Thus, the Option Shares will have to be held
indefinitely in the absence of registration under the Act or an exemption from
registration.
Furthermore, the Optionee fully understands that issuance of the Option
Shares will not be registered under the Act and that, because the issuance of
the Option Shares will not be registered, the Option Shares will be issued in
reliance upon an exemption which is available only if Optionee acquires such
shares for investment and not with a view to distribution. Optionee is familiar
with the phrase "acquired for investment and not with a view to distribution" as
it relates to the Act and the special meaning given to such term in various
releases of the Securities and Exchange Commission.
10. Privilege Of Ownership. Optionee shall not have any of the rights
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of a stockholder with respect to the shares covered by the Option except to the
extent that one or more certificates for such shares shall be delivered to him
upon exercise of the Option.
11. Relationship To Engagement. Nothing contained in this Agreement (i)
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shall confer upon the Optionee any right with respect to continuance of
Optionee's engagement by, 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 engagement by, position or affiliation with, or
relationship to, the Company.
12. Notices. All notices, requests, demands, directions and other
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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 12. 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 12,
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 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 Notice is sent. Each
such Notice shall be addressed to the party to be notified as shown below:
(a) if to the Company: Siberian Energy Group Inc.
000 Xxxxxxx Xxxxxx, 0xx xxxxx
Xxx Xxxx, XX 00000
Attn: Chairman of the Compensation Committee
Facsimile:
(b) if to the Optionee: Xxxxxxxx X. Xxxx
At the address set forth on the signature
page of this Agreement
Either party may change its respective address for purposes of this Section
12 by giving the other party Notice of the new address in the manner set forth
above.
13. General Provisions. This instrument (a) contains the entire
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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 the laws of ________, 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.
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date written above.
SIBERIAN ENERGY GROUP INC.
By:
/s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx - Chairman
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Printed Name and Title
OPTIONEE
/s/ Xxxxxxxx Xxxx
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Xxxxxxxx Xxxx
#00 - 00x Xxxxxxx Xx
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Xxxxxxx
Xxxxxx xxxx, Xxxxxx, 000000
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City, State and Zip Code
