NONE OF THE SECURITIES TO WHICH THIS SUBSCRIPTION
AGREEMENT (THE "AGREEMENT") RELATES HAVE BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"),
OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE
MAY BE OFFERED OR SOLD IN THE UNITED STATES OR TO U.S. PERSONS (AS
DEFINED HEREIN) EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS.
STOCK OPTION AND SUBSCRIPTION
AGREEMENT
For U.S. Persons
This AGREEMENT is entered into as of the 4th day of
June, 2008 (the "Date of Grant").
BETWEEN:
SOUTHERN STAR ENERGY INC. , with an office at Suite 152, 110 Cypress Station Drive,
Houston, TX 77090 (the "Company")
AND:
WILLIAM DAVID GIBBS , a
person with a business address at 18491 Linda’s Place,
Montgomery, Texas, U.S.A. 77316 (the "Optionee")
WHEREAS:
A.
The Company's board of directors (the "Board") has
approved a Stock Option Plan (the "Plan"), whereby the Board
is authorized to grant stock options to purchase common shares of
the Company pursuant to the Plan to the directors, officers,
employees, management company employees and consultants of the
Company;
B.
The Optionee provides services to the Company as
president, chief executive officer, secretary, treasurer and
director of the Company (the “Services”);
and
C.
The Company seeks to grant stock options to purchase
a total of ONE MILLION (1,000,000) shares of Common Stock to the
Optionee as an incentive for the provision of the
Services.
NOW THEREFORE THIS AGREEMENT WITNESSES that in
consideration of the covenants and agreements set forth herein and
for other good and valuable consideration, the receipt and
sufficiency whereof is hereby acknowledged, the parties hereto
agree as follows:
1.1
In this Agreement, the following terms shall have
the following meanings:
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(a)
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" Common Stock
" means the shares of common stock of the
Company;
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(b)
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" Exercise
Payment " means the amount of money equal
to the Exercise Price multiplied by the number of Optioned Shares
specified in the Notice of Exercise;
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(c)
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" Exercise Price
" means $1.00;
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(d)
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" Expiry Date
" means June 4, 2013;
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(e)
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" Notice of
Exercise " means a notice in writing
addressed to the Company at its address first recited (or such
other address of the Company as may from time to time be notified
to the Optionee in writing), substantially in the form attached as
Appendix "A" hereto, which notice shall specify therein the number
of Optioned Shares in respect of which the Options are being
exercised;
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(f)
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" Options
" means the irrevocable right and option to
purchase, from time to time, all, or any part of the Optioned
Shares granted to the Optionee by the Company pursuant to
Section 1.2 of this Agreement;
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(g)
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" Optioned
Shares " means the shares of Common
Stock, subject to the Options;
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(h)
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" Securities
" means, collectively, the Options and the Optioned
Shares;
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(i)
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" Shareholders
" means holders of record of the shares of Common
Stock;
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(j)
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" U.S. Person
" shall have the meaning ascribed thereto in
Regulation S under the 1933 Act, and for the purpose of this
Agreement includes any person in the United States; and
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(k)
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" Vested Options
" means the Options that have vested in accordance
with Section 1.3 of this Agreement.
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1.2
The Company hereby grants to the Optionee, on the
terms and conditions set out in this Agreement and in the Plan,
Options to purchase a total of ONE MILLION (1,000,000) Optioned
Shares at the Exercise Price.
1.3
The ONE MILLION (1,000,000) Options shall vest in
accordance with the following schedule:
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(a)
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THREE HUNDRED THIRTY THREE THOUSAND THREE HUNDRED
THIRTY FOUR (333,334) Options shall vest on the first anniversary
of the Date of Grant,
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(b)
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THREE HUNDRED THIRTY THREE THOUSAND THREE HUNDRED
THIRTY THREE (333,333) Options shall vest on the second anniversary
of the Date of Grant, and
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(c)
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THREE HUNDRED THIRTY THREE THOUSAND THREE HUNDRED
THIRTY THREE (333,333) Options shall vest on the third anniversary
of the Date of Grant.
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1.4
Notwithstanding any provisions of the Plan, the
Agreement dated November 9, 2007 between the Optionee and the
Company (the "Services Agreement") or this Agreement, Vesting
Options may only be exercised if the Optionee is a director and/or
officer at the time of the exercise of any such Options.
1.5
The Options shall, at 5:00 p.m. (Vancouver time) on
the Expiry Date, expire and be of no further force or effect
whatsoever.
1.6
Vested Options shall terminate, to the extent not
previously exercised, in accordance with Section 5(g) of the Plan.
Unless the Company undergoes a Change of Control, as defined in the
Services Agreement, each unvested Option granted pursuant hereto
shall terminate immediately upon termination of or resignation from
the Optionee's employment or contractual relationship with the
Company for any
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reason whatsoever. Upon a Change of Control, each
unvested Option will immediately vest in accordance with the
Services Agreement.
1.7
Subject to the provisions of this Agreement and the
Plan and subject to compliance with any applicable securities laws,
the Options shall be exercisable, in full or in part, at any time
after vesting, until termination; provided, however, that if the
Optionee is subject to the reporting and liability provisions of
Section 16 of the Securities Exchange
Act of 1934 with respect to the Common
Stock, the Optionee shall be precluded from selling, transferring
or otherwise disposing of any Common Stock underlying any Options
during the six (6) months immediately following the grant of that
Option. If less than all of the shares included in the vested
portion of any Options are purchased, the remainder may be
purchased at any subsequent time prior to the Expiry Date. Only
whole shares may be issued pursuant to the exercise of any Options,
and to the extent that any Options covers less than one (1) share,
it is unexercisable.
Each exercise of the Options shall be by means of
delivery of a Notice of Exercise (which may be in the form attached
hereto as Appendix A) to the President of the Company at its
principal executive office, specifying the number of shares of
Common Stock to be purchased and accompanied by payment in cash by
certified check or cashier's check in the amount of the full
exercise price for the Common Stock to be purchased. In addition to
payment in cash by certified check or cashier's check, an Optionee
or transferee of the Options may pay for all or any portion of the
aggregate exercise price by complying with one or more of the
following alternatives:
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(a)
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by delivering a properly executed Notice of Exercise
together with irrevocable instructions to a broker promptly to sell
or margin a sufficient portion of the Common Stock and deliver
directly to the Company the amount of sale or margin loan proceeds
to pay the exercise price; or
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(b)
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by complying with any other payment mechanism
approved by the Board at the time of exercise.
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It is a condition precedent to the issuance of
Optioned Shares that the Optionee execute and/or deliver to the
Company all documents and withholding taxes required in accordance
with applicable laws.
1.8
Nothing in this Agreement shall obligate the
Optionee to purchase any Optioned Shares except those Optioned
Shares in respect of which the Optionee shall have exercised the
Options in the manner provided in this Agreement.
1.9
Reference is made to the Plan and the Services
Agreement for particulars of the rights and obligations of the
Optionee and the Company in respect of:
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(a)
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the terms and conditions on which the Options are
granted; and
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(b)
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a consolidation or subdivision of the Company's
share capital or an amalgamation or merger;
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all to the same effect as if the provisions of the
Plan were set out in this Agreement and to all of which the
Optionee assents.
1.10
The terms of the Options are subject to the
provisions of the Plan, as the same may from time to time be
amended, and any inconsistencies among this Agreement, the Services
Agreement and the Plan, as the same may be from time to time
amended, shall be governed by the provisions of the
Plan.
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2.
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Documents Required from
Optionee
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2.1
The Optionee must complete, sign and return an
executed copy of this Agreement to the Company.
2.2
The Optionee shall complete, sign and return to the
Company as soon as possible, on request by the Company, any
documents, questionnaires, notices and undertakings as may be
required by regulatory authorities, and applicable law.
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3.
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Acknowledgements of the
Optionee
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3.1
The Optionee acknowledges and agrees
that:
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(a)
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the Optionee is a director and executive officer of
the Company;
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(b)
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the Securities have not been registered under the
1933 Act or under any state securities or "blue sky" laws of any
state of the United States, and are being offered only in a
transaction not involving any public offering within the meaning of
the 1933 Act, and, unless so registered, may not be offered or sold
in the United States or to U.S. Persons (as defined herein), except
pursuant to an effective registration statement under the 1933 Act,
or pursuant to an exemption from, or in a transaction not subject
to, the registration requirements of
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