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EXHIBIT 10.17
INLAND RESOURCES INC.
STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") is entered into effective as
of February 1, 2001 between Inland Resources Inc., a Washington corporation (the
"Company"), and Bill I. Pennington, an employee of the Company (the "Employee").
Recitals:
The Company desires to grant to the Employee a Nonqualified Stock
Option to purchase shares of its Common Stock, $0.001 par value, pursuant to the
terms and conditions of this Agreement.
The parties agree as follows:
1. Grant of option. The Company hereby grants to the Employee the right
and option (the "Option") to purchase all or any part of an aggregate of 150,000
shares (the "Shares") of its Common Stock, $0.001 par value, on the terms and
conditions and subject to all the limitations set forth herein.
2. Purchase Price. The purchase price of the Shares covered by the
Option shall be $1.625 per share for 90,000 of the Shares (the "First Stage
Shares") and $2.84 per share for 60,000 of the Shares (the "Second Stage
Shares").
3. Vesting of Option. Subject to the other terms and conditions of this
Agreement, the First Stage Shares and the Second Stage Shares exercisable upon
exercise of the Option granted hereby shall vest in accordance with the
following schedule: one-twelfth (1/12th) of each of the First Stage Shares and
the Second Stage Shares shall vest on March 1, 2001 and one-twelfth (1/12th) of
each of the First Stage Shares and the Second Stage Shares shall vest on each
successive June 1, September 1, December 1 and March 1 until fully vested,
subject to the following conditions concerning Employee's continued employment
by the Company on each such vesting date. If Employee's employment by the
Company is voluntarily terminated by Employee or terminated by the Company for
"Cause", as such term is defined in the Employment Agreement between Employee
and the Company entered into effective as of the same effective date of this
Agreement (the "Employment Agreement"), any non-vested Shares under the Option
shall be immediately terminated and withdrawn from the Option and Employee shall
have no further right to acquire any such non-vested Shares. Any non-vested
Shares under the Option granted hereby shall be deemed to have immediately and
automatically vested on (i) a "Change of Control" or (ii) a termination of
Employee's employment by the Company without "Cause", as such terms are defined
in the Employment Agreement.
4. Exercise Period. Subject to the other terms and conditions of this
Agreement, the vested Shares granted pursuant to this Option may be exercised at
any time during the "Exercise Period". For purposes of this Agreement, the
"Exercise Period" shall mean (i) if the Company remains a reporting company
under the Securities Exchange Act of 1934, as amended (the "Act"), a period
beginning with the effective date of this Agreement and ending on the fifth
anniversary of the date the last Shares vested hereunder; and (ii) if the
Company ceases to be a reporting company under the Act at any time during the
period set forth in subsection (i), a period beginning with the effective date
of this Agreement and ending on the earlier of the date upon which substantially
all of
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the assets of the Company are sold or the fifth anniversary of the date the
Company again becomes a reporting company under the Act.
5. Term of Option. The Option shall terminate on the expiration of the
Exercise Period, but shall be subject to earlier termination as provided herein.
6. Non-Assignability. The Option shall not be transferable by the
Employee otherwise than by will or by the laws of descent and distribution and
shall be exercisable, during the Employee's lifetime, only by the Employee or
his or her guardian or legal representative. The Option shall not be assigned,
pledged or hypothecated in any way (whether by operation of law or otherwise)
and shall not be subject to execution, attachment or similar process. Any
attempted transfer, assignment, pledge, hypothecation or other disposition of
the Option or of any rights granted hereunder contrary to the provisions of this
paragraph 6, or the levy of any attachment or similar process upon the Option or
such rights, shall be null and void.
7. Manner of Exercising Option and Issue of Shares. The Option relating
to vested Shares may be exercised in whole or in part by giving written notice
to the Company, together with the tender of the Option purchase price. Such
written notice shall be signed by the person exercising the Option, shall state
the number of Shares with respect to which the Option is being exercised, shall
contain any representation required by paragraph 8 below and shall otherwise
comply with the terms and conditions of this Agreement. The Company shall pay
all transfer or original issue taxes with respect to the issue of the Shares
pursuant hereto and all other fees and expenses necessarily incurred by the
Company in connection herewith. Except as specifically set forth herein,
Employee acknowledges that any income or other taxes due from him with respect
to this Option or the Shares issuable pursuant to this Option shall be the
responsibility of Employee and that the Company may, in accordance with the
Internal Revenue Code, require Employee to pay additional withholding taxes in
respect of the amount that is considered compensation includable in Employee's
gross income. Employee shall have rights as a shareholder only with respect to
any Shares covered by the Option after due exercise of the Option and tender of
the full exercise price for the Shares being purchased pursuant to such
exercise.
8. Purchase for Investment. Unless the offering and sale of the Shares
to be issued upon the particular exercise of the Option shall have been
effectively registered under the Securities Act of 1933, as amended, or any
successor legislation (the "Act"), the Company shall be under no obligation to
issue the Shares covered by such exercise unless and until the following
conditions have been fulfilled:
The person(s) who exercise the Option shall represent to the Company,
at the time of such exercise, that such person(s) are, acquiring such Shares for
his or her own account, for investment and not with a view to, or for sale in
connection with, the distribution of any such Shares, in which event the
person(s) acquiring such Shares shall be bound by the provisions of the
following legend which shall be endorsed upon the certificate(s) evidencing
their option Shares issued pursuant to such exercise:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE. WITHOUT SUCH REGISTRATION, SUCH SECURITIES MAY NOT BE SOLD,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED, EXCEPT UPON DELIVER TO
THE COMPANY
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OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION
IS NOT REQUIRED FOR SUCH TRANSFER OR THE SUBMISSION TO THE COMPANY OF
SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO THE COMPANY TO THE EFFECT
THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE SECURITIES ACT
OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS OR ANY RULE OR
REGULATION PROMULGATED THEREUNDER."
Without limiting the generality of the foregoing, the Company may delay
issuance of the Shares until completion of any action or obtaining of any
consent, which the Company deems necessary under any applicable law (including
without limitation state securities or "blue sky" laws).
9. Notices. Any notice to be given under this Agreement shall be deemed
sufficient if addressed in writing, and delivered by registered or certified
mail or delivered personally, in the case of the Company to its principal
business office and in the case of the Employee, to his address appearing on the
records of the Company, or to such other address as he may have designated in
writing to the Company.
10. Governing Law. This Agreement shall be construed and enforced in
accordance with the internal laws, and not the laws of conflict, of the State of
Colorado.
11. Benefit of Agreement. This Agreement shall be for the benefit of
and shall be binding upon the heirs, executors, administers and successors of
the parties hereto.
12. Adjustment of Shares. Wherever this Agreement specifies a number of
shares of Common Stock or a purchase price per share, the specified number of
Shares of Common Stock to be received on exercise and the applicable purchase
price per share shall be changed to reflect adjustments (which may require that
additional securities or other property be delivered on exercise) required by
this paragraph 12, as follows:
(a) If an increase has been effected in the number of
outstanding shares of the same class of securities of the Company as is
issuable upon exercise of this Option by reason of a subdivision of
such shares, the number of Shares which may thereafter be purchased
upon exercise of this Option shall be increased with respect to each
Share issuable upon exercise of this Option by the number of Shares
which could have been received by Employee at the time of such
subdivision had he been the holder of record of such issuable Shares at
the record and/or effective date of the subdivision. In such event, the
purchase price per Share under this Option shall be proportionately
reduced.
(b) If a decrease has been effected in the number of
outstanding shares of the same class of securities of the Company as is
issuable upon exercise of this Option by reason of a reverse stock
split, the number of Shares which may thereafter be purchased upon
exercise of this Option shall be changed with respect to each Share
issuable upon exercise of this Option to the number of Shares which
would have been held by Employee at the time of said reverse stock
split had Employee been the holder of such issuable Share at the record
and/or effective date of the reverse stock split. In such event, the
purchase price per Share shall be proportionately increased.
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(c) If the Company issues any additional shares of its Common
Stock after the effective date of this Agreement, the number of First
Stage Shares subject to the Option shall be automatically increased by
the product of multiplying (i) the number of Shares then subject to the
Option and (ii) the quotient created by dividing the number of shares
of Common Stock outstanding immediately after such issuance by the
number of shares of Common Stock outstanding immediately before such
issuance. The exercise price for the new Shares subject to the Option
shall be the same as the issue price of the additional shares issued by
the Company.
EXECUTED effective as of the date and year first above written.
COMPANY:
INLAND RESOURCES INC.
By: /s/ Marc MacAluso
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Marc MacAluso, Chief Executive
Officer
EMPLOYEE:
/s/ Bill I. Pennington
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Bill I. Pennington
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