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.
DOUBLE EAGLE PETROLEUM AND MINING CO.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement") is made and entered into as
of the 16th day of October 1998 by and between Double Eagle Petroleum And Mining
Co., a Wyoming corporation (the "Company"), and Xxxxxx X. Vessels (the
"Optionee").
WITNESSETH:
WHEREAS, pursuant to the Consulting Agreement dated as of October 16, 1998
between the Company and Optionee (the "Consulting Agreement"), the Company
agreed to issue to Optionee an option to purchase shares of the $.01 par value
common stock of the Company ("Common Stock"), said option 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 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 the right and
option (the "Option") to purchase all or any part of an aggregate of 36,500
shares of the authorized and unissued $.10 par value common stock of the Company
(the "Option Shares") pursuant to the terms and conditions set forth in this
Agreement.
2. Option Price. At any time when shares are to be purchased pursuant to
the Option, the purchase price for each Option Share shall be $1.375 (the
"Option Price"), subject to adjustment as provided in this Agreement.
3. Exercise Period. The period for the exercise of the Option shall
commence on the date of this Agreement and shall terminate at 5:00 p.m., Denver,
Colorado time on October 16, 2001 unless terminated earlier as provided in this
Agreement. Notwithstanding the foregoing, to the extent not earlier terminated,
the Option shall terminate three months after the termination of the Consulting
Agreement (a) by the Company for cause, or (b) by the Optionee.
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.
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 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 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 Warrant and the Option Shares that have been requested
by Optionee have been made available or delivered to Optionee. Without limiting
the foregoing, Optionee has received and reviewed the Company's Annual Report on
Form 10-KSB for the year ended August 31, 1997 and Quarterly Reports on Form
10-QSB for each of the quarters ended November 30, 1997, February 28, 1998 and
May 31, 1998, and the other documents included with the letter from the Company
to the Optionee dated November 19, 1998, and the Company's press releases dated
each of September 19, 1997, September 26, 1997, October 1, 1997, December 3,
1997, January 13, 1998, February 11, 1998, March 11, 1998, July 21, 1998, August
13, 1998 and August 27, 1998, and 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 Company has a history of losses. 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 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
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 Option Price shall be correspondingly decreased, increased or
otherwise changed. 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 each holder of record of the outstanding Options, 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 Warrant Price, and stating in
reasonable detail the facts requiring such adjustment and the calculation of
such adjustment.
8. Reorganization And Reclassification. In case of any capital
reorganization or any reclassification of the capital stock of the Company while
the Options remain outstanding, the holder of the Options shall thereafter be
entitled to purchase pursuant to the Options (in lieu of the kind and number of
shares of Common Stock comprising Option Shares that such holder would have been
entitled to purchase or acquire immediately before such reorganization or
reclassification) the kind and number of shares of stock of any class or classes
or other securities or property for or into which such shares of Common Stock
would have been exchanged, converted, or reclassified if the Option Shares had
been purchased immediately before such reorganization or reclassification. In
case of any such reorganization or reclassification, appropriate provision (as
determined by resolutions of the Board of Directors of the Company) shall be
made with respect to the rights and interest thereafter of the holder of the
Options, to the end that all the provisions of this Option Agreement (including
adjustment provisions) shall thereafter be applicable, as nearly as reasonably
practicable, in relation to such stock or other securities or property.
9. Registration Rights. Optionee shall have the right to include the Option
Shares in any registration statement filed on behalf of the purchasers of Units
of the Company's Common Stock and Warrants pursuant to the same terms, including
with respect to the payment of expenses, as set forth in Section 3 of the
Subscription Agreement dated November 24, 1998 between the Company and each of
the purchasers, including Optionee.
10. Common Stock To Be Received Upon Exercise. Optionee understands that
(a) the Company is under no obligation to register the issuance of the Option
Shares, (b) the Company's obligation to register the resale of the Option Shares
under the 1933 Act is as set forth in Section 9 of this Agreement, and (c) 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.
Optionee also understands that with respect to Rule 144, routine sales of
securities made in reliance upon such Rule 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 either Regulation A or another
disclosure exemption under the 1933 Act will be required. 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.
11. Privilege Of Ownership. 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 such shares shall be delivered to him
upon exercise of the Option.
12. Relationship To Engagement. Nothing contained in this Agreement (i)
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.
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 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:
Double Eagle Petroleum And Mining Co.
000 Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxx 00000
Facsimile No. (000) 000-0000
Attention: President
(b) if to the Optionee:
Xxxxxx X. Vessels
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 the laws of Colorado, 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 on the dates
set forth below.
DOUBLE EAGLE PETROLEUM AND
MINING CO.
Date:____________________ By:___________________________
------------------------------
Printed Name And Title
OPTIONEE
Date:____________________ ______________________________
Xxxxxx X. Vessels
Address: 0000 Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Facsimile No. (000) 000-0000
EXHIBIT A
(To Double Eagle Petroleum And Mining Co.
Stock Option Agreement)
DOUBLE EAGLE PETROLEUM AND MINING CO.
NOTICE AND AGREEMENT OF EXERCISE OF OPTION
I hereby exercise my Double Eagle Petroleum And Mining Co. Stock Option
dated as of October 16, 1998 as to ________ shares of the $.01 par value common
stock (the "Option Shares") of Double Eagle Petroleum And Mining Co. (the
"Company") at a purchase price of $1.375 per share. The total exercise price for
these Option Shares is $________. Enclosed is payment in the form of
___________________.
Enclosed is the payment specified in Paragraph 4 of my Option Agreement.
I understand that no Option Shares will 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 is then listed, and any other
requirements of law or any regulatory bodies having jurisdiction over such
issuance and delivery. I hereby acknowledge, represent, warrant and agree, to
and with 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 of this Notice 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 Shares that have been requested by Optionee have
been made available or delivered to Optionee. Without limiting the foregoing,
Optionee has received and reviewed the Company' s Annual Report on Form 10-KSB
for the year ended August 31, 1997 and Quarterly Reports on Form 10-QSB for each
of the quarters ended November 30, 1997, February 28, 1998 and May 31, 1998, and
the other documents included with the letter from the Company to the Optionee
dated November 19, 1998, and the Company's press releases dated each of
September 19, 1997, September 26, 1997, October 1, 1997, December 3, 1997,
January 13, 1998, February 11, 1998, March 11, 1998, July 21, 1998, August 13,
1998 and August 27, 1998, and 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 Company has a history of losses. 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 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 the Option 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 number of Option Shares specified above are to be issued in the name or
names set forth below in the left-hand column.
(Print Your Name) Signature
(Optionee - Print Name of Spouse Address
if you wish joint registration)
City, State and Zip Code
