Document:

NON-QUALIFIED STOCK OPTION AWARD AGREEMENT

OF

CROSS BORDER RESOURCES, INC.

A Nevada Corporation

THIS NON-QUALIFIED STOCK OPTION AWARD AGREEMENT (this “Agreement”) is made between CROSS BORDER RESOURCES, INC., a Nevada corporation (hereinafter referred to as the "Company"), and P. MARK STARK (hereinafter referred to as the “Optionee”), an executive of the Company, effective as of the 31st day of January, 2011 (the “Grant Date”).

The Options described below are being granted in connection with Optionee’s Employment Agreement dated January 31, 2011 (the “Employment Agreement”).

1.           Options Granted.

The Company hereby grants the Optionee non-qualified stock options (the “Options”) to purchase Six Hundred Fifty Thousand (650,000) shares of the Company’s Common Stock at the purchase prices per share set out below for a term commencing on the vesting dates set out below (the “Vesting Date”) and expiring at 5:00 pm (Pacific Time) on the expiration dates set out below (the “Expiration Date”), subject to termination as set forth herein.

Subject to a vote of a majority of the members of the Compensation Committee of the Company’s Board of Directors, or if there are no active members of the Compensation Committee, a majority of the Company’s Board of Directors not including the Optionee, determining that the Optionee has, from the Grant Date to the respective vesting dates set out below, reasonably fulfilled his duties and obligations as a director of the Company, the Options will vest on the following schedule:

	
Number of Options to

Vest

	 	
Purchase Price Per

Share

	 	
Vesting Date

	 	
Expiration Date

	 
	
100,000

	 	$	4.80	 	
January 31, 2011

	 	
January 30, 2016

	 
	
100,000

	 	$	5.28	 	
January 31, 2012

	 	
January 30, 2017

	 
	
50,000

	 	$	5.80	 	
January 31, 2013

	 	
January 30, 2018

	 
	
50,000

	 	$	6.38	 	
January 31, 2014

	 	
January 30, 2019

	 

No Option may be exercised unless the Option has vested.  The vesting of all Options will be cumulative.  All Options which have not vested will terminate on the date of termination of the Options in accordance with this Agreement.

2.           Method of Exercise.  These Options may be exercised to the extent they have vested (and have not yet been forfeited or terminated) by delivering written notice to the Company at its principal place of business, stating the number of shares for which the Option is being exercised. The notice must be accompanied by a check or other methods of payment acceptable to the Plan Administrator for the amount of the purchase price, and comply with all the requirements of the Company’s Amended and Restated 2009 Stock Incentive Plan dated July 28, 2010, a copy of which has been provided to the Optionee.

3.           Capital Adjustments.  The existence of the Options shall not affect in any way the right or power of the Company or its stockholders to: (1) make or authorize any or all adjustments, recapitalizations, reorganizations, or other changes in the Company's capital structure or its business;  (2) enter into any merger or consolidation; (3) issue any bonds, debentures, preferred or prior preference stocks ahead of or affecting the common stock or the rights thereof, (4) issue any securities convertible into any common stock, (5) issue any rights, options, or warrants to purchase any common stock, (6) dissolve or liquidate the Company, (7) sell or transfer all or any part of its assets or business, or (8) take any other corporate act or proceedings, whether of a similar character or otherwise.

4.           Adjustments for Reorganizations and Recapitalizations.  If there shall, prior to the exercise of any of the Options provided for by this Agreement, be any stock dividend, stock split, spin-off, combination or exchange of shares, recapitalization, merger, consolidation, distribution to stockholders (other than a normal cash dividend) or other change in the Company’s corporate or capital structure that results in (a) the Company’s outstanding shares of common stock (or any securities exchanged therefore or received in their place) being exchanged for a different number or kind of securities of the Company or any other corporation, or (b) new, different or additional securities of the Company or of any other corporation being received by the holders of shares of the Company’s common stock, then there shall automatically be an adjustment in either the number of shares which may be purchased pursuant hereto, the type of shares which may be purchased pursuant hereto or the price at which such shares may be purchased, or any combination thereof, so that the rights evidenced hereby shall thereafter as reasonably as possible be equivalent to those originally granted hereby.  The Company shall have the sole and exclusive power to make such adjustments as it considers necessary and desirable.

 

  

 

 

5.           Transfer of the Options.  During the Optionee's lifetime, the Options shall be exercisable only by the Optionee. The Options shall not be transferable by the Optionee other than by the laws of descent and distribution upon the Optionee's death. In the event of the Optionee's death during the term of this Agreement, the Optionee's personal representatives may exercise any portion of the Options that remains vested and unexercised at the time of the Optionee's death, provided that any such exercise must be made, if at all, during the period within six (6) months after the Optionee's death, and subject to the Option termination date specified in Section 7.

6.           Corporate Transaction.  Notwithstanding any other provision in this Agreement to the contrary, all unvested Options outstanding under this Agreement shall immediately vest and become exercisable upon the occurrence of a Corporate Transaction (as that term is defined in the Optionee’s Employment Agreement) and Optionee’s employment with the Company is terminated within twelve (12) months thereafter other than for Cause by the Company or without Good Reason by Optionee (as such terms are defined in the Optionee’s Employment Agreement).

 

7.           Termination of Option.

	
(a)

	
The Optionee’s right to exercise any Options that have vested and are exercisable shall terminate on the earliest of the following dates:

	
  

	
(i)

	
The Expiration Date; or

	
  

	
(ii)

	
In the event of the termination of the Optionee’s Employment Agreement for Cause or without Good Reason (as such terms are defined in Optionee’s Employment Agreement).

	
  

	
(iii)

	
The date which is six (6) months from the date of the Optionee’s death.

8.           Rights as Shareholder.  The Optionee will not be deemed to be a holder of any shares pursuant to the exercise of these Options until he or she pays the Option price and a stock certificate is delivered to him or her for those shares. No adjustment shall be made for dividends or other rights for which the record date is prior to the date the stock certificate is delivered.

9.           Integration with the Company’s Amended and Restated 2009 Stock Incentive Plan.  All of the terms and conditions of the Company’s Amended and Restated 2009 Stock Incentive Plan, a copy of which has been provided to the Optionee, are specifically made a part of this Agreement and shall control with regard to the interpretation or construction of any provision that is inconsistent herewith.  This Agreement will be governed by and construed in accordance with the laws of the State of Nevada.

10.         Withholding Taxes.  The Optionee authorizes the Company to withhold from any payments due to the Optionee by the Company, whether pursuant to this Agreement or otherwise, any amounts required to be withheld and remitted by the Company on account of any income and employment taxes resulting from this Agreement.

11.         Miscellaneous.

	
  

	
(a)

	
Any notice required or permitted to be given under this Agreement shall be in writing and may be delivered personally or by fax, or by prepaid registered post addressed to the parties at such address of which notice may be given by either of such parties.  Any notice shall be deemed to have been received, if personally delivered or by fax, on the date of delivery, and, if mailed as aforesaid, then on the fifth business day after and excluding the day of mailing.

 

  

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(b)

	
This agreement and the rights and obligations and relations of the parties shall be governed by and construed in accordance with the laws of the State of Nevada and the federal laws of the United States applicable therein (but without giving effect to any conflict of laws rules). The parties agree that the courts of the State of Nevada shall have jurisdiction to entertain any action or other legal proceedings based on any provisions of this agreement. Each party attorns to the jurisdiction of the courts of the State of Nevada.

	
  

	
(c)

	
Time shall be of the essence of this agreement and of every part of it and no extension or variation of this agreement shall operate as a waiver of this provision.

	
  

	
(d)

	
This Agreement may be executed in one or more counterparts, each of which so executed shall constitute an original and all of which together shall constitute one and the same agreement.

[signature page attached]

  

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IN WITNESS WHEREOF, the parties hereto have executed this NON-QUALIFIED STOCK OPTION AWARD AGREEMENT as of the 31st day of January, 2011.

	  	  	
CROSS BORDER RESOURCES, INC.

	  	  	  
	  	  	
By:

	
/s/ Everett Willard “Will” Gray II

	  	  	  	
Everett Willard “Will” Gray II

	  	  	  	
Chief Executive Officer and Chairman

	  	  	  	  
	  	  	
OPTIONEE

	  	  	  
	  	  	
/s/ P. Mark Stark

	  	  	
P. MARK STARK

	  	  	  	  
	
300,000

	  	  	  
	
AGGREGATE NUMBER OF OPTIONS

	  	  	  

 

  

- 4 -Unassociated Document

 

CONSULTING AGREEMENT

 

THIS CONSULTING AGREEMENT (this “Agreement”), is entered into as of January 31st, 2011 by and between Cross Border Resources, Inc. (the “Company”) and BDR, Inc. (“Consultant”).

WHEREAS, the Company is an oil and gas exploration and production company headquartered in San Antonio, Texas focused on drilling exploratory and developmental wells in the Permian Basin region of the United States; and

 

WHEREAS, Consultant has expertise in the Company’s business and the Company desires to engage Consultant to perform certain services for the Company, and Consultant desires to be engaged by the Company, pursuant to the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the above recitals, and for and in consideration of the mutual promises set forth below and in the Merger Agreement, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.           Consulting Services.  Effective as of the date hereof and continuing until for a period of two (2) years thereafter (the “Term”), the Company hereby engages Consultant, and Consultant hereby accepts such engagement, on the terms and conditions set forth herein.  Consultant shall render such consulting and advisory services (the “Consulting Services”) during the Term as the Company may reasonably request from time to time upon reasonable prior notice. During the Term, Consultant shall devote his efforts and attention to the business of the Company as requested by the Company.

2.           Consulting Fee and Option Grant.

 

2.1           As compensation for the Consulting Services, Consultant shall receive a fee of $15,000 per month (the “Consulting Fee”), which shall be paid in substantially equal semi-monthly installments during the Consulting Period, subject to Consultant’s continued services as a consultant hereunder as of each payment date and compliance with the covenants under Section 10, unless otherwise provided herein.

2.2           The Company shall cause the Plan Administrator (as defined in the Plan) to grant Consultant an Option Award (as defined in the Plan) to purchase an aggregate of two hundred fifty thousand (250,000) shares (the “Option Award Shares”) of the Company’s common stock.  The Option Award Shares shall vest and be exercisable in accordance with the provisions of the Company’s 2009 Stock Incentive Plan, as may be amended from time to time (the “Plan”), and any instrument or agreement governing the Option Award (the form of which is attached hereto as Exhibit A) granted to Executive.

 

3.           Benefits. During the Consulting Period, Jim Swink, the executive officer of Consultant, shall be entitled to occupy an office in the Company’s headquarters and receive administrative assistant services of the same type and to the same extent as such services were provided to him immediately prior the date hereof.

 

  

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4.           Expenses. Upon presentation of documentation reasonably acceptable to the Company with a copy to the Company officer charged with expense review, the Company shall reimburse Consultant for all reasonable expenses incurred by Consultant in connection with the performance of the Consulting Services in accordance with the Company’s expense reimbursement policy in effect from time to time.

 

5.           Termination of Consultant.  Consultant may be terminated for any reason at any time; provided, however, that (i) Consultant shall be entitled to receive the Consulting Fee for the remainder of the Consulting Period (as if he remained as a Consultant through the end of the Consulting Period) in one lump sum on the date of such termination and (ii) all Option Award Shares shall immediately vest and become immediately exercisable by Consultant.  Consultant shall not be required to mitigate damages or the amount of any payment provided for under this Agreement by seeking employment, a consulting arrangement or otherwise, and the amount of any payment or other benefit provided for under this Agreement shall not be reduced by any compensation earned by Consultant as the result of employment or consulting arrangement after the termination of the Consulting Period, or otherwise.

6.           Section 409A of the Code; Delay of Payments; 280G Payments. The terms of this Agreement have been designed to comply with or be exempt from the requirements of Section 409A of the Code, where applicable, and shall be interpreted and administered in a manner consistent with such intent. Notwithstanding anything to the contrary in this Agreement, (i) if upon the Date of Termination, Consultant is a “specified employee” within the meaning of Section 409A of the Code, and the deferral of any amounts otherwise payable under this Agreement as a result of Consultant’s termination is necessary in order to prevent any accelerated or additional tax to Consultant under Section 409A of the Code, then the Company will defer the payment of any such amounts hereunder until the date that is six (6) months following the Date of Termination, at which time any such delayed amounts will be paid to Consultant in a lump sum, with interest from the date otherwise payable at the prime rate as published in The Wall Street Journal on the Date of Termination and (ii) if any other payments of money or other benefits due to Consultant hereunder could cause the application of an accelerated or additional tax under Section 409A of the Code, such payments or other benefits shall be deferred if deferral will make such payment or other benefits compliant under Section 409A of the Code. To the extent required to avoid an accelerated or additional tax under Section 409A of the Code, amounts reimbursable to Consultant under this Agreement shall be paid to Consultant on or before the last day of the year following the year in which the expense was incurred and the amount of expenses eligible for reimbursement (and in-kind benefits provided to Consultant) during any one year may not affect amounts reimbursable or provided in any subsequent year. Notwithstanding anything to the contrary contained in this Agreement, if and to the extent that any payments and rights provided under this Agreement would cause Consultant to be subject to excise tax under Section 280G or Section 4999 of the Code, then the amount of the payments shall be reduced to the extent necessary to avoid imposition of any such excise tax.   

 

  

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7.

	
Confidentiality.

7.1           Consultant shall maintain the confidentiality of all trade secrets, (whether owned or licensed by the Company) and related or other interpretative materials and analyses of the Company’s projects, or knowledge of the existence of any material, information, analyses, projects, proposed joint ventures, mergers, acquisitions, divestitures and other such anticipated or contemplated business ventures of the Company, and other confidential or proprietary information of the Company (“Confidential Information”) obtained by Consultant as result of this Agreement during the term of the Agreement and for two (2) years following termination of the Consulting Period.

 

7.2           Upon expiration or termination of this Agreement, Consultant shall turn over to a designated representative of the Company all property in Consultant’s possession and custody and belonging to the Company.  Consultant shall not retain any copies or reproductions of correspondence, memoranda, reports, notebooks, drawings, photographs or other documents relating in any way to the affairs of the Company and containing Confidential Information which came into Consultant’s possession at any time during the term of this Agreement.

  

7.3           Consultant acknowledges that the Company is a public company registered under the Exchange Act, and that this Agreement may be subject to the filing requirements of the Exchange Act.  Consultant acknowledges and agrees that the applicable insider trading rules and limitations on disclosure of non-public information set forth in the Exchange Act and rules and regulations promulgated by the Securities and Exchange Commission (the “SEC”) shall apply to this Agreement and Consultant’s engagement with the Company.  Consultant absolutely and unconditionally agrees to indemnify and hold harmless the Company and all of its past, present and future affiliates, executors, heirs, administrators, shareholders, employees, officers, directors, attorneys, accountants, agents, representatives, predecessors, successors and assigns from any and all claims, debts, demands, accounts, judgments, causes of action, equitable relief, damages, costs, charges, complaints, obligations, controversies, actions, suits, proceedings, expenses, responsibilities and liabilities of every kind and character whatsoever (including, but not limited to, reasonable attorneys’ fees and costs) in the event of Consultant’s breach or alleged breach of any obligation under the Exchange Act, any rules promulgated by the SEC and any other applicable federal or state laws, rules, regulations, or orders.

 

7.4           The parties agree that the provisions of this Section 7 shall survive any termination of this Agreement.

8.           Violation of Securities Laws. As a material inducement to the Company to enter into this Agreement, Consultant agrees to promptly inform the Company if Consultant is the subject of any regulatory agency’s investigation for violation of state or federal securities law or has a judgment against him for violation of these laws in any civil action in any court.

9.           Notices.  Any notice required or permitted under this Agreement shall be personally delivered or sent by recognized overnight courier or by certified mail, return receipt requested, postage prepaid, and shall be effective when received (if personally delivered or sent by recognized overnight courier) or on the third day after mailing (if sent by certified mail, return receipt requested, postage prepaid) to Consultant at the address indicated on the signature page of this Agreement and to the Company at the address above.  Either party may designate a different person to whom notices should be sent at any time by notifying the other party in writing in accordance with this Agreement.

 

  

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10.        Survival of Certain Provisions.  Those provisions of this Agreement which by their terms extend beyond the termination or non-renewal of this Agreement (including all representations, warranties, and covenants of the parties) shall remain in full force and effect and survive such termination or non-renewal.

 

11.        Severability.  Each provision of this Agreement shall be considered severable such that if any one provision or clause conflicts with existing or future applicable law, or may not be given full effect because of such law, this shall not affect any other provision which can be given effect without the conflicting provision or clause.

 

12.        Entire Agreement.  Other than that certain Option Award agreement, this Agreement, the exhibits and any addendum hereto contain the entire agreement and understanding between the parties, and supersede all prior agreements and understandings relating to the subject matter hereof. There are no understandings, conditions, representations or warranties of any kind between the parties except as expressly set forth herein.

 

13.        Assignability.  Consultant may not assign this Agreement to any third party for whatever purpose without the express written consent of the Company.  The Company may not assign this Agreement to any third party without the express written consent of Consultant except by operation of law, or through a change in control.  The provisions of this Agreement shall inure to the benefit of and be binding upon the parties and their respective representatives, successors, and assigns.

 

14.        Headings.  The headings of the paragraphs and sections of this Agreement are inserted solely for the convenience of reference.  They shall in no way define, limit, extend, or aid in the construction of the scope, extent, or intent of this Agreement.

 

15.        Waiver.  The failure of a party to enforce the provisions of this Agreement shall not be construed as a waiver of any provision or the right of such party thereafter to enforce each and every provision of this Agreement.

 

16.        Amendments.  No amendments of this Agreement shall be binding upon the Company or Consultant unless made in writing, signed by the parties hereto, and delivered to the parties at the addresses provided herein.

 

17.        Governing Law.  This Agreement shall be governed by and construed under the internal laws of the State of Texas, without regard to the principles of comity and/or the applicable conflicts of laws of any state that would result in the application of any laws other than the State of Texas.

 

  

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18.        Jurisdiction.  Consultant and the Company agree and consent that any legal action, suit or proceeding seeking to enforce any provision of this Agreement shall be instituted and adjudicated solely and exclusively in any court of general jurisdiction in Texas, or in the United States District Court having jurisdiction in Texas and Consultant and the Company agree that venue will be proper in such courts and waive any objection which they may have now or hereafter to the venue of any such suit, action or proceeding in such courts, and each hereby irrevocably consents and agrees to the jurisdiction of said courts in any such suit, action or proceeding.

 

19.         Independent Contractor Status.  Consultant shall be an independent contractor in providing the Consulting Services and has no authority to bind the Company.

20.        Counterparts and Electronic Signatures.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same Agreement.  Electronic signatures shall have the same effect as originals.

 

[Signature page follows]

  

5

  

 

IN WITNESS WHEREOF, the Company and Consultant have executed and delivered this Agreement as of the date written above.

 

	  	
CROSS BORDER RESOURCES, INC.

	  
	  	  	  	  
	  	
By:

	
/s/ Lawrence J. Risley

	  
	  	  	
Lawrence J. Risley

	  
	  	  	
President and COO

	  
	  	  	  	  
	  	
CONSULTANT

	  
	  	  	  	  
	  	
BDR, INC.

	  
	  	  	  	  
	  	
By:

	
/s/ Jim D. Swink Jr.

	  
	  	  	
Jim D. Swink Jr.

	  
	  	  	
President

	  

 

  

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EXHIBIT A

Form of Option Award Agreement

[see attached]

 

  

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