Exhibit
10.40


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 4th day of May,  2009 (“Grant date”) by and between Siberian
Energy Group Inc., a Nevada corporation (the “Company”), and David Zaikin (the
“Optionee”).




WITNESSETH:




WHEREAS,
the Company agreed to grant to Optionee options to purchase shares of the $0.001
par value 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.           Grant of
Option.  The Company hereby grants to Optionee the right and
option (the “Option”) to purchase an aggregate of 300,000 shares of the
authorized and unissued  $0.001 par value common stock of the Company
(the “Stock”)(such number being subject to adjustment as set forth herein) on
the terms and conditions herein set forth.  This Option may be
exercised in whole or in part and from time to time as hereinafter
provided.




2.           Vestingof
Option.  Subject to the provisions set forth in this Agreement,
the Option shall vest and become exercisable in accordance with the following
schedule:




·
            1/4th
      (75,000 option shares) exercisable immediately upon signing of this
      Agreement;




·
            1/4th
      (75,000 option shares) shall be exercisable on the last day of each fiscal
      quarter for the period from the Grant Date to December 31,
      2009.




3.           Purchase Price. The
price at which Optionee shall be entitled to purchase the Stock covered by the
Option shall be $0.055 per share, which the Board has determined to be the Fair
Market Value (as defined herein) as of the Grant Date.  “Fair Market
Value” means, as of any given date, the fair market value of Stock determined as
follows:  (i) where there exists a public market for the Stock, the
Fair Market Value shall be (A) the closing price for the Stock for the last
market trading day prior to the time of the determination (or, if no closing
price was reported on that date, on the last trading date on which a closing
price was reported) on the stock exchange determined by the Board to be the
primary market for the Stock or the Nasdaq National Market, whichever is
applicable, or (B) if the Stock is not traded on any such exchange or national
market system, the average of the closing bid and asked prices of the Stock on
the Nasdaq Small Cap Market for the day prior to the time of the determination
(or, if no such prices were reported on that date, on the last date on which
such prices were reported), in each case, as reported in The Wall Street Journal
or such other source as the Board deems reliable; or (ii) in the absence of an
established market for the Stock of the type described in (i) above, the Fair
Market Value shall be determined by the Board in accordance with the
requirements set forth in Treasury Regulation Section 1.409A-1(b)(5)(iv)(B) or
any successor provision thereof.





4.           Exercise
Periods.  The Option granted under this Agreement shall expire,
unless otherwise exercised, three years from the Grant Date (“Expiration Date”),
subject to earlier termination as provided in paragraph 8 hereof.




5.           Exercise Of
Options.




(a)           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.




(b)           The
notice of exercise described in Section 5(a) 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
as described below and full payment of all applicable withholding taxes pursuant
to Section 5 hereof.




(c)           A
cashless exercise shall occur when the Optionee delivers to the Company an
exercise notice that requests the Company issue to the Optionee the number of
Option Shares as to which the Option (or a portion thereof) is then exercisable,
less the number of shares that have an aggregate Fair Market Value at the time
of exercise, equal to the aggregate purchase price of the Option Shares to which
such exercise relates.  This method of exercise allows the Optionee to
use a portion of the Option Shares issuable at the time of exercise as payment
for the Option Shares to which the Option relates and is often referred to as a
"cashless exercise."




(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 Option 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 Option Shares.


-2-


6.           Termination of Employment or
Service.




6.1           General.  If
the Optionee’s employment or service as a member of the Board is terminated for
any reason other than Cause (as defined below), then the Optionee may at any
time within 60 days after the effective date of termination of employment or
service exercise the vested portion of the Option to the extent that the
Optionee was entitled to exercise the Option at the date of
termination.  Upon the Optionee’s termination of employment or service
with the Company for any reason, the non-vested portion of the Option will lapse
upon the date of such termination.  In no event shall the Option be
exercisable after the Expiration Date.  If the Company terminates the
Optionee’s employment or service for Cause, any and all Options then held by the
Optionee (both exercisable and not exercisable) shall immediately
lapse.





6.2           Definition of
Cause.  “Cause” means termination of employment or service as a
result of any of the following events:  (1) the commission of an act
of dishonesty, fraud, embezzlement, theft or other similar acts of misconduct by
Optionee, whether within or outside the scope of the Optionee’s employment or
service with the Company, (ii) the breach of duty by the Optionee in the course
of employment or service, unless waived in writing by the Company, (iii) the
neglect by the Optionee of the Optionee’s duties with the Company, unless waived
in writing by the Company, (iv) the Optionee’s disobedience or refusal or
failure to discharge the Optionee’s duties to the Company under any employment
agreement or otherwise, (v) the breach of obligations of the Optionee to the
Company under this Agreement or any employment or other agreement with the
Company, unless waived in writing by the Company, (vi) the breach by the
Optionee of any fiduciary duty to the Company involving personal gain or profit,
including acceptance of gifts, gratuities, honorarium, lodging, and other items
of direct economic value in excess of One Hundred Dollars ($100.00) from any one
source, provided that this paragraph does not apply to gifts or items received
from family members or other non-business or professional persons, (vii) the
violation by Optionee of any law, rule, regulation, court order (other than a
law, rule, or regulation relating to a traffic violation or similar offense) or
a final cease and desist order, or (viii) Optionee economically committing the
Company beyond the Optionee’s expressly approved authority as communicated to
the Optionee by the Company from time to time.





7.           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.




8.           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.  The Optionee shall acknowledge, represent, warrant and
agree in writing to the Company as follows:


-3-


(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 Option 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:


-4-


(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, unless otherwise waived or modified by the Board in its sole
discretion, 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 MAY 4, 2009, BETWEEN THE COMPANY AND DAVID
ZAIKIN 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.”




9.           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 exercise price shall be adjusted accordingly.


-5-


10.         Merger Or
Consolidation.  Upon the occur­rence of any of the
following 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 appoint­ment 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.




11.         Common Stock To Be Received
Upon Exercise.  Optionee understands 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.




12.         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.




13.         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.




14.         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 14.  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:


-6-


(a)
                if
      to the Company:
                Siberian
      Energy Group Inc.275
      Madison Avenue6th
      Floor · New York, NY  10016Attn:
      Chairman of the Compensation CommitteeFacsimile:(b)
                if
      to the Optionee:
                David
      ZaikinAt
      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.




15.         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 the State of Nevada, 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. This Agreement may be executed in several counterparts, each
of which is an original.  It shall not be necessary in making proof of
this Agreement or any counterpart hereof to produce or account for any of the
other counterparts.  A copy of this Agreement signed by one party and
faxed or scanned and emailed to another party (as a PDF or similar image file)
shall be deemed to have been executed and delivered by the signing party as
though an original.  A photocopy or PDF of this Agreement shall be
effective as an original for all purposes.


-7-


IN
WITNESS WHEREOF, the parties have executed this Agreement to be effective as of
the date written above.




SIBERIAN
      ENERGY GROUP INC.By: /s/ Elena PochapskiIts:  Chief
      Financial OfficerPrinted
      Name: Elena PochapskiCorresponding
      Signature(s):OPTIONEE/s/ David ZaikinDavid ZaikinAddress:XX XXXXXXXXXXX XXXXXXXXXXXX, XX, XXX
  XXXXXXXXX


-8-