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Exhibit 10.14
 
 
 
 
 
 
 

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NON QUALIFIED STOCK OPTION AGREEMENT
BETWEEN
BAYOU CITY EXPLORATION, INC.
AND
 

 
Kevin Cline
 

 
 
 
 
May 18, 2009
 
 
 
 
 
 

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TABLE OF CONTENTS
 
Section
 
Page
1. Grant of Option; Option Price
1
   
2.Term and Time of Exercise of Option
1
   
3. Option Exercisable In Installments
1
3.1 Option Date
2
3.2 One Years
2
3.3 Two Years
2
   
4. Conditions to Exercise of Options
2
4.1 Exercise of Option
2
4.2 Payment of Option Price
2
4.3 Withholding Taxes
2
4.4 Delivery of Stock on Exercise
2
4.5 Option Not Transferable
3
   
5. Early Termination of Option
3
5.1 Termination of Option if Employee Optionee
3
5.2 Termination of Option if Non-Employee Director
3
   
6. Vesting upon Change in Control
4
   
7. Adjustment to the Number of Shares of Option Stock
4
   
8. Agreement Does Not Grant Employment Rights
4
   
9. No Registration Rights
4
   
10. Restrictions of Transfer
4
10.1 Restriction on Grant of the Option and Issuance of Shares
4
10.2 Legends
4
10.3 Investment Intent
5
   
11. Miscellaneous Provisions
5
11.1 No Rights as a Shareholder
5
11.2 Option Terminates Upon Termination Date
5
11.3 Incorporation of Plan
5
11.4 Headings
5
11.5  Governing Law
5
11.6  Not an Incentive Stock Option
  5

 
 
 
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GLOSSARY OF DEFINED TERMS

Defined Term.
 
Section
Agreement
Introduction
Common Stock
Recital B
Company
Introduction
Exercise Notice
4.1
Exercise Price
 4.2
Option
.1
Option Date
1
Option Price
1
Option Stock
.1
Optionee
Introduction
Plan
Recital A
Securities Act
4.4
Termination Date
2

 
 
 
 
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NON QUALIFIED STOCK OPTION AGREEMENT
 
THIS NON QUALIFIED STOCK OPTION AGREEMENT ("Agreement") is made and entered into
as of May 18, 2009 by and between Bayou City Exploration, Inc., a Nevada
corporation; formerly known as Blue Ridge Energy, Inc. ("Company"), and Kevin
Cline, an employee and director of the Company ("Optionee").
 
RECITALS:
 
A.           The Company has adopted the Bayou City Exploration, Inc. 2005 Stock
Option Plan (the "Plan") (i) to promote the interests of the Company and its
shareholders by encouraging employees who will largely be responsible for the
long term success and development of the Company, (ii) to facilitate the
Company's attraction, retention and motivation of employees and non-employee
directors and (iii) to provide employees and Non-Employee Directors with an
interest in the Company parallel to that of the Company's shareholders.
 
B.           Optionee is one of the individuals for whom the Plan was adopted
and the Company desires to grant Optionee an Option to acquire shares of the
Company's common Stock, $.005 par value (the "Common Stock") pursuant to the
terms and conditions of the Plan and this Agreement.
 
C.           All defined terms used herein shall have the same meaning as set
forth in the Plan, unless the context clearly requires a different meaning.
 
AGREEMENT:
 
NOW, THEREFORE, the parties hereby agree as follows:
 
1.           GRANT OF OPTION; OPTION PRICE. The Company hereby grants to
Optionee, the right and Option to purchase ("Option") all or any part of an
aggregate of 500,000 shares of Common Stock ("Option Stock") on the teens and
conditions set forth herein and in the Plan, subject to adjustment as provided
in Section 7 hereof, at a purchase price of $0.01 per share ("Option Price").
The Company and Optionee consider the Option Price to be not less than the Fair
Market Value of the Common Stock on the date hereof, which is the date on which
the Option was granted to Optionee ("Option Date").
 
2.           TERM AND TIME OF EXERCISE OF OPTION. This Option shall continue for
a term ending May 18, 2019 ("Termination Date"), and, unless sooner terminated
as provided in Section 5 hereof, may be exercised in full or in part from time
to time at any time after the date hereof and prior to the Termination Date as
to the number of shares of Option Stock which may be exercised as provided in
Section 3.
 
3.     OPTION EXERCISABLE IN INSTALLMENTS. Subject to the other terms and
conditions stated herein, the right to exercise the Option shall accrue in
installments as follows:
 
 
 
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3.1 Option Date. Commencing on the "Option Date" (which is the date hereof), the
Option may be exercised to the extent of 33% of the Option Stock.
 
3.2  One Year. Commencing one year after the Option Date, the Option may be
exercised to the extent of an additional 33% of the Option Stock, plus the
Option Stock as to which the right to exercise had previously accrued but had
not been exercised.
 
3.3  Two Years. Commencing two years after the Option Date, the Option may be
exercised to the extent of an additional 33% of the Option Stock, plus the
Option Stock as to which the right to exercise had previously accrued but had
not been exercised.
 
4.           CONDITIONS TO EXERCISE OF OPTIONS.
 
4.1  Exercise of Option. Subject to the provisions of Section 3, the Optionee
may exercise  the Option by delivering to the Company a notice of the exercise
("Exercise Notice") stating the number of shares of Option Stock for which the
Option is being exercised, accompanied by payment of the Option Price in the
manner provided in Section 4.2.
 
4.2  Payment of Option Price. The Exercise price shall, at the Option of the
holder, be payable in (i) cash or cash equivalents (ii) by surrendering of
attesting to the ownership of share already owned by the Optionee or (iii) in
any other form acceptable to the Company. If previously issued share are
surrendered, such shares shall be surrendered to the Company in good form for
transferral and should be valued at their Fair Market Value on the date when the
Option is exercised. The Optionee shall not surrender, or attest to the
ownership of, share in payment of the Exercise Price if such action would cause
the Company to recognize compensation expense (or additional compensation
expense) with respect to the Option for financial reporting purposes.
 
4.3  Withholding Taxes. If the Company determines that it is required to
withhold any tax as a result of the exercise of this Option, the Optionee, as a
condition the exercise of this Option, shall make arrangement satisfactory to
the Company to enable it to satisfy all withholding requirements. The Optionee
shall also make arrangements to the Company to enable it to satisfy any
withholding requirements that may arise in connection with the vesting or
disposition of Option Stock.
 
4.4  Delivery of Stock in Exercise. As soon as practicable after receipt of the
Exercise Notice and payment of the Exercise price, the Company shall deliver to
Optionee, without transfer of issuance tax or other incidental expense to
Optionee, at the office of the Company, or at such other place as may be
mutually acceptable, or, at the election of the Company, by certified mail
addressed to Optionee at Optionee's address as shown in the employment records
of the Company, a certificate or certificates for the number of shares of Common
Stock set forth in the Exercise Notice and for which the Company has received
payment in the manner prescribed herein. The company may postpone such delivery
until it receives satisfactory proof that the issuance of transfer of such
shares of Common Stock will not violate any to the Provisions of the Securities
Exchange Act of 1933, as amended (the "Securities Act"), or the Securities
Exchange Act of 1934, as amended, any rules or regulations of the Securities and
Exchange Commission promulgated thereunder, or the requirements of the
applicable state law relating to authorization, issuance or sale of securities,
or until there has been compliance with the provisions of such acts or rules or
the requirements of the regulations. If Optionee fails to accept delivery of all
or any part of the number of shares of Common Stock specified in the Exercise
Notice upon tender of delivery thereof, Optionee's right to exercise this Option
with respect to such undelivered shares may be terminated by the Company.
 
 
 
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4.5  Option Not Transferable. The Option shall not be transferable by the
Optionee otherwise than by bequest or the laws of descent and distribution, and
shall be exercisable during the Optionee's lifetime only by the Optionee.
 
5.           EARLY TERMINATION OF OPTION.
 
5.1  Termination of Option if Employee Optionee.
 
(a)  If the Optionee's employment by the Company shall terminate for any reason
other than death, Disability or termination for Cause, the Option shall
terminate six months after the Optionee's employment terminates (unless the
Optionee dies during such period), or on the Termination Date, if earlier, and
shall be exercisable during such period after termination of employment only
with respect to the number of shares with the Optionee was entitled to purchase
on the date preceding the termination of the Optionee's employment, except that
the Committee may in specific cases, and in its sole discretion, permit the
exercise by an Option of all, or a part of the unexercised Option within the
period referred to above after the Optionee's employment terminates.
 
(b)  If the Optionee's employment shall terminate because of discharge for
Cause, the Optionshall terminate on the date of the Optionee's discharge.
 
(c)  In the event of the Optionee's death of Disability while in the employ of
the Company, or the Optionee's death within six months after the termination of
the Optionee's employment (other than by reason of discharge for cause), the
Option shall terminate upon the earliest to occur or (i) 12 months after the
date of the Optionee's death or disability or (ii) the Termination Date. The
Option shall be exercisable during such period after the Optionee's death or
Disability with respect to the number of share as to which the Option shall have
been exercisable in the day preceding the Optionee's death or Disability, as the
case may be.
 
5.2 Termination of Option if Non-Employee Director. If Non-employee Director
Optionee ceases to serve as a director of the Company, for any reason, the
Optionee may exercise the Option regarding the number of shares of Option Stock
as to which the Option shall have been exercisable on the day immediately
preceding the Optionee's termination as director, at any time within a period
ending on the earlier of (a) 90 days after the termination of Optionee's
termination as director or (b) the Termination Date.
 
6.           VESTING UPON A CHANGE IN CONTROL. Upon a Change in Control, any
then outstanding Options held by Optionee shall become fully vested and
immediately exercisable.
 
7.           ADJUSTMENT TO THE NUMBER OF SHARES OF OPTION STOCK. The number of
shares of Option Stock shall be subject to adjustment as provided in Section 8
of the plan.
 
 
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8.           AGREEMENT DOES NOT GRANT EMPLOYMENT RIGHTS. Neither the granting of
the Option, nor the exercise thereof, shall be construed as granting to Optionee
any right to employment by the Company. The right of the Company to terminate
Optionee's employment at any time, whether by dismissal, discharge, retirement
or otherwise, is specifically reserved.
 
9.           NO REGISTRATION RIGHTS. The Company may, but shall not be obligated
to, register or qualify the sale of Option Stock under the Securities Act or any
other applicable law. The Company shall not be obligated to take any affirmative
action in order to cause the sale of Option Stock under this Agreement to comply
with any law.
 
10.         RESTRICTIONS ON TRANSFER.
 
10.1 Restriction on Grant of the Option and Issuance of Shares. The grant of the
Option and the issuance of the Option Stock shall be subject to compliance with
all applicable requirements or federal, state or foreign law with respect to
such securities. The Option may not be exercised if the issuance of Option Stock
would constitute a violation of any applicable federal, state or foreign
securities laws or other law or regulations of the requirements of any Stock
exchange or market system upon which the Common Stock may then be listed. In
addition, the Option may not be exercised unless (i) a registration statement
under the Securities Act shall at the time of exercise of the Option be in
effect with respect to the shares issuable upon exercise of the Option or (ii)
in the opinion of legal counsel to the Company, the share issuable upon exercise
of the Option may be issued in accordance with the terms of an applicable
exemption from the registration requirements of the Securities Act. THE OPTIONEE
IS CAUTIONED THAT THE OPTION MAY NOT BE EXERCISED UNLESS THE FOREGOING
CONDITIONS ARE SATISFIED. ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE TO EXERVISE
THE OPTION WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED. The inability of the
Company to obtain from any regulatory body having jurisdiction the authority, if
any, deemed by the company's legal counsel to be necessary to the lawful
issuance and sale of any share subject to the Option shall relieve the Company
of any liability in respect to the failure to issue or sell such shares as to
which such requisite authority shall not have been obtained. As a condition to
the exercise of the Option, the Company may require the Optionee to satisfy any
qualifications that may be necessary or appropriate, to evidence compliance with
any applicable law or regulation and to make any representation or warranty with
respect thereto as may be requested by the company.
 
10.2 Legends. The Company may at any time place legends referencing any
applicable federal state or foreign securities law restrictions on all
certificates representing shares of Stock subject to the provisions of this
Option Agreement. The Optionee shall, at the request of the Company, promptly
present to the Company any and all certificates representing shares acquired
pursuant to the Option in the possession of the Optionee in order to carry out
the provisions of this Section. Unless otherwise specified by the Company,
legends placed on such certificates may include, but shall not be limited to,
the following:
 
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECUTITIES ACT OF 1933 OR
ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE,
PLEDGED,HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAW OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED TO EFFECTUATE
SUCH TRANSACTION.
 
 
 
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10.3 Investment Intent. If the Company, in its discretion, issues Option stock
which has not been registered under the Securities Act, Optionee shall acquire
such Stock for investment purposes and not with a view towards resale,
distribution or other disposition.
 
11.MISCELLANEOUS PROVISIONS.
 
11.1 No Rights as a Shareholder. Neither Optionee, nor any person entitled to
exercise Optionee's rights upon Optionee's death, shall have any of the rights
of a shareholder regarding the shares of Option Stock, except to the extent that
certificate(s) for shares of Common Stock shall have been issued upon the
exercise of the Option as provided herein.
 
11.2. Option Terminated Upon Termination Date. Notwithstanding any provision
contained herein to the contrary, the Option shall terminate and become null and
void and of no effect after the Termination Date.
 
11.3 Incorporation of Ham This agreement is, and shall be in all respects,
subject to the terms and condition of the plan, a copy of which Optionee
acknowledges receiving prior to the execution hereof.
 
11.4 Headings. The heading used herein are included for purposes of convenience
only and shall not be considered part of the Agreement in construing or
interpreting any provision hereof.
 
11.5 Governing Law. The provisions of the Agreement shall be construed,
administered and enforced according to the law of the Commonwealth of Kentucky
without giving effect to any conflict of law, rule or principle that might
require the application of the laws of another jurisdiction.
 
11.6  Not an Incentive Stock Option. This Option is not intended to qualify as
an "incentive Stock Option" within the meaning of section 422 of the code.
 
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date
first written above.
 
 
Bayou City Exploration, Inc.
 
By:  /s/ Robert D. Burr
Title:  CEO
Kevin Cline
 
By:  /s/ Kevin Cline
("Optionee")

 
 
 
 
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BAYOU CITY EXPLORATION, INC
2005 STOCK OPTION PLAN
NON QUALIFIED STOCK OPTION AGREEMENT
 
Instructions for Completion of the Form of the Agreement
 
1. 
The Agreement should be dated the date of the grant and should be between Bayou
City Exploration, Inc. and the individual receiving the grant.

 
2. 
Indicate, in the introductory paragraph, whether the individual is an employee
or a non employee director.

 
3. 
The number of shares (the first blank in Section 1) is determined by the
Committee.

 
4. 
The purchase price per share (the second blank in Section 1) is Fair Market
Value as determined by the Option Committee based upon the trading price of the
share at the time of the grant.

 
5. 
The blank in Section 2 is to be completed with the date that is no longer that
ten years from the date of the grant.

 
6. 
The vesting schedule (Section 3) is determined by the Option Committee.

 
 
 
 
 
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