arena_def14a2009.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
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the Registrant [ X ]
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a Party other than the Registrant [ ]
Check the
appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ X ]
Definitive Proxy Statement
[ ]
Definitive Addition Materials
[ ]
Soliciting Material Pursuant to §240.14a-12
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Arena Resources,
Inc. |
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(Name
of Registrant as specified in Its Charter) |
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(Name
of Person(s) Filing Proxy Statement if other than the
Registrant) |
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Payment
of Filing Fee (Check the appropriate box):
[ X ]
No fee required.
[ ]
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
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applies: |
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Aggregate number of
securities to which transaction applies: |
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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4) |
Proposed maximum
aggregate value of transaction: |
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
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Previously Paid: |
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Registration Statement No.: |
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ARENA
RESOURCES, INC.
Notice
of
Annual
Meeting
December
11, 2009
and
Proxy
Statement
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
TO
BE HELD ON DECEMBER 11, 2009
Notice is
hereby given that the Annual Meeting of Stockholders of Arena Resources, Inc.
(the “Company”), will be held at the Doubletree Hotel, Warren Place, 6110 South
Yale, Tulsa, Oklahoma, on December 11, 2009, at 9:00 A.M. (Local Time), for the
following purposes:
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1.
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To
elect Directors for terms ending in
2010;
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2.
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To
approve the Company’s Restricted Stock Award
Plan;
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3.
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To
increase the number of shares of common stock that may be awarded under
the Company’s Stock Option Plan (and, if approved by the shareholders, the
Restricted Stock Award Plan) from 5,500,000 to 6,000,000;
and
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4.
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To
transact such other business as may properly come before the meeting or
any adjournment thereof.
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IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING
TO BE HELD ON DECEMBER 11, 2009.
In
accordance with new rules approved by the Securities and Exchange Commission, we
are providing this notice to our shareholders to advise them of the availability
on the Internet of our proxy materials related to our Annual
Meeting. The new rules allow companies to provide access to proxy
materials in one of two ways. Because we have elected to utilize the
“full set delivery” option, we are delivering our proxy materials to our
shareholders under the “traditional” method, by providing paper copies, as well
as providing access to our proxy materials on a publicly accessible Web
site.
Our
Proxy Statement, including our Annual Report on Form 10-K,
is
available at www.edocumentview.com/ARD.
We hope
that you will be able to attend this meeting, but if you do not plan to do so,
please date, sign and return the enclosed Proxy as promptly as
possible.
By Order
of the Board of Directors
/s/
William R. Broaddrick
Secretary
October
26, 2009
ARENA RESOURCES, INC.
6555 S.
Lewis Avenue
Tulsa,
Oklahoma 74136
PROXY
STATEMENT
This
statement is furnished in connection with the solicitation by the Board of
Directors of Arena Resources, Inc., for proxies to be used at the Annual Meeting
of Stockholders of the Company to be held on December 11, 2009, at the time and
place set forth in the Notice of Annual Meeting accompanying this Proxy
Statement.
Pursuant
to provisions of the Bylaws of the Company and action of its Board of Directors,
the close of business on October 23, 2009, has been established as the time and
record date for determining the stockholders entitled to notice of and to vote
at this annual meeting. The stock transfer books will not be
closed.
Stockholders
of record on the record date are entitled to cast their votes in person or by
properly executed proxy at the Annual Meeting. The presence, in
person or by proxies, of greater than fifty percent (50%) of the Common Stock
outstanding on the record date is necessary to constitute a quorum at the Annual
Meeting. If a quorum is not present at the time the Annual Meeting is
convened, the Company may adjourn or postpone the meeting. A majority
of the Common Stock present at any meeting at which a quorum is present is
sufficient to approve any matter to be acted upon by the stockholders at the
Annual Meeting. Directors are elected by a plurality
vote.
The
enclosed Proxy may be revoked at any time prior to the voting thereof, either by
giving notice to the Secretary of the Company or by personal attendance at the
meeting. All Proxies received in advance of the meeting may be
revoked prior to exercise.
This
Proxy Statement, the Notice of Annual Meeting and accompanying proxy card will
be first mailed to stockholders on or about October 28, 2009. The
Company’s 2008 Annual Report on Form 10-K for the year ended December 31, 2008,
including audited financial statements, as well as the Company’s Quarterly
Report on Form 10-Q for the quarter ended June 30, 2009 are enclosed with this
Proxy Statement. These Annual and Quarterly Reports can also be found
at the Company’s website (www.arenaresourcesinc.com). Copies
of exhibits omitted from the enclosed Annual Report on Form 10-K are available
without charge upon written request to William R. Broaddrick, 6555 S. Lewis
Avenue, Tulsa, Oklahoma 74136, or may also be obtained at the Securities and
Exchange Commission’s website at www.sec.gov.
VOTING
SECURITIES AND PRINCIPAL HOLDERS THEREOF
As of
October15, 2009, we had issued a total of 38,458,737 shares of $.001 par value
Common Stock, our only class of stock outstanding. Each share is
entitled to one vote on all matters submitted to a vote by
stockholders.
Beneficial
Owners of Greater than Five Percent
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Name
and address
of
beneficial owner
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Amount
and nature of beneficial ownership
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Percent
of
class
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Neuberger
Berman Group LLC (1)
605
Third Avenue
New
York, New York 10158
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4,354,384
(1)
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11.32%
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Wellington
Management Company, LLP (2)
75
State Street
Boston,
Massachusetts 02109
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2,102,505
(2)
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5.47%
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Barclays
Global Investors NA
400
Howard Street
San
Francisco, California
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2,005,783
(3)
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5.22%
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____________________________
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(1)
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This
share ownership information was provided by a Schedule 13G filed June 11,
2009, which discloses that Neuberger Berman Group LLC, possesses shared
power to dispose or direct the disposition of 4,354,384 shares, and shared
power to vote 3,621,388 shares. The Schedule 13G is filed on
behalf of Neuberger Berman Group LLC and its direct and indirect
affiliates, including Neuberger Berman Holdings LLC, Neuberger Berman LLC
and Neuberger Berman Management
LLC.
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(2)
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This
share ownership information was provided by a Schedule 13G filed February
17, 2009, which discloses that Wellington Management Company, LLP in its
capacity as an investment advisor may be deemed to beneficially own
2,102,505 shares, and possesses shared power to dispose or direct the
disposition of 2,074,205 shares, and shared power to vote or direct the
vote of 1,516,285 shares.
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(3)
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This
share ownership information was provided by a Schedule 13G filed February
5, 2009, which discloses that Barclay’s Global Investors NA, through
Barclays Global Investors (Deutschland) AG, possesses sole power to
dispose or direct the disposition of 2,005,783 shares, and sole power to
vote 1,825,371 shares.
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Ownership
of Officers and Directors
The
following table sets forth as of October 15, 2009, the aggregate number of
shares of our Common Stock owned of record or beneficially by each director of
the Company and by each executive officer, and by all directors and such
officers as a group:
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Amount and nature of beneficial ownership |
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Name
and address of each Executive
Officer
and Director
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Number
of shares (1)
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Percent
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Lloyd
T. Rochford
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650,200
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(2)
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1.7%
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6555
S. Lewis Avenue
Tulsa,
Oklahoma 74136
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Phillip
W. Terry
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230,000
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(3)
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*%
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6555
S. Lewis Avenue
Tulsa,
Oklahoma 74136
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Stanley
M. McCabe
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350,000
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(4)
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1%
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6555
S. Lewis Avenue
Tulsa,
Oklahoma 74136
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William
R. Broaddrick
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211,200
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(5)
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*%
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6555
S. Lewis Avenue
Tulsa,
Oklahoma 74136
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Clayton
E. Woodrum
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15,000
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(6)
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*%
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6555
S. Lewis Avenue
Tulsa,
Oklahoma 74136
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Anthony
B. Petrelli
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97,000
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(7)
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*%
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6555
S. Lewis Avenue
Tulsa,
Oklahoma 74136
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Carl
H. Fiddner
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64,736
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(8)
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*%
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6555
S. Lewis Avenue
Tulsa,
Oklahoma 74136
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David
R. Ricks
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30,000
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(9)
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*%
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6555
S. Lewis Avenue
Tulsa,
Oklahoma 74136
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All
directors and executive officers
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1,648,136
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(10)
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4.3%
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_________________________
| (1) |
All
shares are held beneficially and of record and the owner has sole voting
and investment power with respect thereto, except as otherwise
noted. |
| (2) |
500,200
of these shares are held of record in the name of The Rochford Living
Trust, Lloyd T. Rochford, Trustee. Mr. Rochford is the
beneficial owner of such shares and has sole voting and investment power
with respect thereto. The remaining 150,000 shares are issuable
upon the exercise of stock options held by Mr. Rochford individually, all
of which are currently exercisable or are exercisable within 60 days of
the date of our annual meeting. |
| (3) |
Includes
140,000 shares issuable upon the exercise of stock options that are
currently exercisable or are exercisable within 60 days of the date of our
annual meeting. |
| (4) |
All
shares are issuable upon the exercise of stock options that are currently
exercisable or are exercisable within 60 days of our annual
meeting. |
| (5) |
Includes
80,000 shares issuable upon the exercise of stock options that are
currently exercisable or are exercisable within 60 days of the date of our
annual meeting. |
| (6) |
Includes
10,000 shares issuable upon the exercise of stock options that are
currently exercisable or are exercisable within 60 days of the date of our
annual meeting. |
| (7) |
Includes
70,000 shares issuable upon the exercise of stock options that are
currently exercisable or are exercisable within 60 days of the date of our
annual meeting. |
| (8) |
Includes
8,736 shares held in Mr. Fiddner’s IRAs and 30,000 shares issuable upon
the exercise of stock options that are currently exercisable or are
exercisable within 60 days of the date of our annual
meeting. |
| (9) |
All
shares are issuable upon the exercise of stock options that are currently
exercisable or are exercisable within 60 days of our annual
meeting. |
| (10) |
Includes
860,000 shares issuable upon the exercise of stock options that are
currently exercisable or are exercisable within 60 days of the date of our
annual meeting. |
| * |
Represents
beneficial ownership of less than
1% |
PROPOSAL
1:
ELECTION
OF DIRECTORS
General
Our Board
of Directors currently consists of five members. Our Bylaws provide
that the Board shall consist of not less than three or more than nine members,
with the exact number (which shall be an odd number) to be fixed by a resolution
of the Directors. Each Director serves for a term of one year, or
until their successor is elected and qualified. It is intended that
the names of the nominees listed below will be placed in nomination and that the
persons named in the proxy will vote for their election. Each nominee
has consented to being named in this Proxy Statement and to serve if
elected. If any nominee becomes unavailable for any reason, the
shares represented by the proxies will be voted for such other person, if any,
as may be designated by the Board of Directors. However, management
has no reason to believe that any nominee will be unavailable.
Nominees:
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Name
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Age
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Position
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Lloyd
T. Rochford
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63
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Chairman
of the Board
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Stanley
M. McCabe
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77
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Director
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Clayton
E. Woodrum
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69
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Director
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Anthony
B. Petrelli
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57
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Director
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Carl
H. Fiddner
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64
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Director
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Biographical
Information
Set forth
below is a description of the background of each of our directors and executive
officers. The term of office of each officer ends on the date of the
Annual Meeting, subject to extension upon reelection.
Directors
Lloyd T. Rochford has served
as Chairman of the Board since May, 2008. Prior to that time Mr.
Rochford served as Chief Executive Officer and a Director of the Company since
our inception in August 2000. In addition, from our inception until
February 1, 2007, Mr. Rochford also served as our President. From
June, 1997, until co-founding the Company, Mr. Rochford primarily devoted his
time to individual oil and gas acquisitions and development. From
1990 until June 1997, Mr. Rochford served as a director and officer of Magnum
Petroleum, Inc., a company which he also co-founded and which was listed on the
New York Stock Exchange.
Stanley M. McCabe has served
as a Director of the Company since our inception in August 2000. In
addition, from our inception until May 2008, Mr. McCabe also served as the
Chairman of the Board, and from our inception until February 1, 2007, Mr. McCabe
served as Secretary and Treasurer. From January 1997 until
co-founding the Company, Mr. McCabe was involved as an independent investor and
developer of oil and natural gas properties. From 1990 through
December 1996, Mr. McCabe served as an officer and director of Magnum Petroleum,
Inc., which he co-founded with Mr. Rochford.
Clayton E. Woodrum was
elected to the Board in 2003 to fill a vacancy that arose upon the retirement of
a previous Director. Mr. Woodrum, who is also currently the Chairman
of our Audit Committee and a member of our Compensation Committee, is a
certified public accountant and has, from 1984 to present, been a principal
shareholder in the accounting firm of Woodrum, Kemendo & Cuite, P.C., and
has been an owner of Computer Data Litigation Services, LLC and First Capital
Management, LLC.
Anthony B. Petrelli was
elected to the Board by the remaining members of the Board of Directors in
January 2007 to fill the vacancy left by the death of Mr. Chris V. Kemendo, Jr.,
and was re-elected by the shareholders at the 2007 Annual
Meeting. Since 1987 Mr. Petrelli has been with the firm of Neidiger
Tucker Bruner, Inc., which firm served as one of the lead underwriters in our
secondary registration of our common stock in August of 2004. Mr.
Petrelli is currently a Director and Senior Vice President of such
firm.
Carl H. Fiddner was elected
to the Board by the remaining members of the Board of Directors on May 1, 2007,
to fill the vacancy left by the resignation of Charles Crawford, and was
re-elected by the shareholders at the 2007 Annual Meeting. Mr.
Fiddner is a certified public accountant, practicing with the firm of Regier,
Carr & Monroe, in Tulsa, Oklahoma, since December 2005. Prior to joining
this firm, Mr. Fiddner managed his own public accounting firm for 25
years.
Executive
Officers
Phillip W. Terry has served
as President and Chief Operating Officer since February 1, 2007, and as our
Chief Executive Officer since May, 2008. Mr. Terry joined the Company
in April 2003, and since that time he has been in charge of all engineering and
field operations. Immediately prior to joining the Company, Mr. Terry owned and
operated an independent petroleum engineering consulting firm. The Company was
one of his clients. In 2001 and 2002, Mr. Terry was Vice President of Drilling
and Production for Bird Creek Resources, Inc. Mr. Terry received his Bachelor of
Science degree in Mechanical Engineering from Oklahoma State University in 1970,
and is a registered Professional Petroleum Engineer. Mr. Terry began his
career in 1970 and has experience in engineering, production, drilling,
completions, reservoir engineering, property evaluations and corporate
management in the oil and gas industry.
William R. Broaddrick has
served as Vice President and Chief Financial Officer since February 1, 2002, and
as Secretary and Treasurer since February 1, 2007. During 2000, Mr.
Broaddrick was employed by Duke Energy Field Services, LLC performing state
production tax functions. Mr. Broaddrick was employed from 1997 to
2000 with Amoco Production Company, performing lease revenue accounting and
state production tax regulatory reporting functions.
David R. Ricks has served as
Vice President of Operations since November 2007. Mr. Ricks is a
professional petroleum engineer with over 25 years of industry experience. Mr.
Ricks began his career in 1982 as a production engineer in Southeast New Mexico
for Gulf Oil Co. Since then he has served in various engineering capacities for
Chevron USA, Amerada Hess Corp., Citation Oil and Gas Corp., Newfield
Exploration Mid-Continent, Inc., Apache Corp., and Latigo Petroleum, Inc. His
duties ranged from maintaining production, designing workovers and recompletions
and facility installation, to field supervision of both primary and secondary
production, including waterfloods and CO2 floods, primarily in Oklahoma, North
and West Texas and Southeast New Mexico.
Compensation
of Directors and Executive Officers
A complete discussion of the
compensation paid to our directors and executive officers can be found under
Item 11 of our Annual Report on Form 10-K which accompanies these proxy
materials.
BOARD
AND COMMITTEE MATTERS
Our
business and affairs are managed under the direction of our Board of
Directors. The Board of Directors met six times during 2008, and has
met four times thus far in 2009. Each director participated in all
Board and applicable committee meetings held in 2008. Actions taken
by the Board of Directors outside of Board meetings were consented to in writing
by a memorandum of action in lieu of a meeting, to which all incumbent Directors
subscribed. Directors meet their responsibilities not only by
attending Board and committee meetings but also through communication with
members of management on matters affecting the Company. All Directors
are currently paid a stipend of $1,500 per month, and receives $1,000 for each
meeting of the Board attended. No Director receives a salary as a
Director.
We
strongly encourage our Directors to attend our Annual Meeting of
stockholders. In 2008, all five Board members attended the Annual
Meeting.
Shareholders
may communicate with the Board of Directors, including the non-management
Directors, by sending a letter to the Board of Directors of Arena Resources,
Inc., c/o Corporate Secretary, 6555 S. Lewis, Tulsa, Oklahoma
74136. The Corporate Secretary has the authority to disregard any
inappropriate communications. If deemed an appropriate communication,
the Corporate Secretary will submit your correspondence to the Board or to any
specific Director to whom the correspondence is directed.
The Board
of Directors has a Compensation Committee, a Nominating and Corporate Governance
Committee and an Audit Committee, the functions, membership and activities of
which are described below.
In
accordance with the provisions of Rule 303A.02 of the listing standards
applicable to the New York Stock Exchange (on which our shares are listed), the
Board of Directors has affirmatively determined that Messrs. Woodrum, Petrelli
and Fiddner qualify as “independent” directors. In addition to the
specific standards for independence set forth in Rule 303A.02, the Board of
Directors reviewed all relationships between each of these three directors and
the Company apart from their position on our Board, and made the determination
that each such individual could act independently and free from any conflict in
conducting their duties on the Board and the various committees on which they
serve.
Compensation
Committee
The Board
of Directors appointed a Compensation Committee in September,
2004. The Compensation Committee is currently comprised of Messrs.
Woodrum, Petrelli and Fiddner, all of the Company’s independent
Directors. The Compensation Committee met one time in
2008.
The basic
purpose of the Compensation Committee is to develop an executive compensation
system which is competitive with the Company’s peers and encourages both short-
and long-term performance in a manner beneficial to the Company and its
operations. In achieving these objectives, the Committee has the
following responsibilities:
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Establish
compensation policies that effectively attract, retain and motivate
executive officers to successfully lead and manage the
Company;
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·
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Review
and approve corporate goals and objectives relevant to CEO compensation,
evaluate the CEO’s performance in light of those goals and objectives, and
set the CEO’s compensation level based on this
evaluation;
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·
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Consider
the Company’s performance and relative stockholder return, the value of
similar incentive award to CEO’s at comparable companies, and the awards
given to the Company’s CEO in past years when determining the long-term
component of the CEO’s
compensation;
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·
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Review,
evaluate and approve all compensation of directors and executive officers,
including salary adjustments, bonuses, stock awards, stock option grants,
and other benefits;
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·
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Review
and make recommendations to the Board with respect to the adoption,
amendment and termination of the Company’s compensation plans, oversee
their administration and discharge any duties imposed on the Committee by
any such plans;
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·
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Establish
and monitor compliance with stock ownership guidelines for directors and
executive officers;
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·
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Review,
evaluate and make recommendations to the Board with respect to the
approval of the employment agreements of executive
officers;
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·
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Review
and approve the Committee’s annual report on executive compensation for
inclusion in the Company’s proxy statement, in accordance with applicable
rules and regulations;
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·
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Perform
any other activities consistent with this charter, the Company’s bylaws
and governing law as the Committee or the Board deems
appropriate.
|
A copy of
the charter of the Compensation Committee can be found at the Company’s website,
www.arenaresourcesinc.com. A
written copy of the charter of the Compensation Committee will also be provided
to a stockholder upon request. Any such request should be directed to
Mr. William Parsons, Vice President of Investor Relations. Mr.
Parsons can be contacted at (480) 947-1589.
Nominating and Corporate
Governance Committee
We have a
Nominating and Corporate Governance Committee, which was established in the
summer of 2006. The Nominating and Corporate Governance Committee is
currently comprised of Messrs. Woodrum, Petrelli and Fiddner, our independent
directors.
The
Nominating and Corporate Governance Committee has the following
responsibilities:
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·
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Develop
and recommend to the Board criteria for Board membership and selection of
new directors, including independence standards and the necessary
portfolio of skills, experience, perspective and background required for
the effective functioning of the
Board;
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·
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Search
for, recruit, screen, interview and select qualified director candidates
to fill vacancies or the additional needs of the Board, including the
consideration of candidates recommended to and deemed appropriate by the
Committee;
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·
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Evaluate
the qualifications and performance of incumbent directors and determine
whether to recommend them for re-election to the
Board;
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·
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Recommend
to the Board nominees to fill vacancies on the Board as they
occur;
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·
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Recommend
to the Board, annually in advance of the annual meeting of stockholders, a
slate of nominees to be submitted to the stockholders for election or
re-election as directors at the annual
meeting;
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·
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Recommend
to the Board the removal of a director where
appropriate;
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·
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Review,
evaluate and periodically make recommendations to the Board with respect
to the size of the Board;
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Recommend
to the Board the directors to be appointed to the committees of the
Board;
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Monitor
and evaluate the orientation and training needs of directors and make
recommendations to the Board where
appropriate;
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Develop,
periodically review and recommend to the Board a set of corporate
governance principles applicable to the Company and make recommendations
to the Board regarding corporate governance matters and
practices;
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Review
and approve, prior to acceptance, the CEO’s service on any other public
company Board;
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Oversee
the annual evaluation of the performance and effectiveness of the Board
and its committees;
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Oversee
and evaluate compliance by the Board and management with the Company’s
corporate governance principles and its Code of Business Conduct and
Ethics;
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Perform
any other activities consistent with this charter, the Company’s bylaws
and governing law as the Committee or the Board deem
appropriate.
|
The
Committee will also conduct an evaluation of the Committee’s performance and
charter at least annually, and will report to the Board the results of such
evaluation and any recommended changes to this charter.
The Committee has not established any
specific, minimum qualifications that the Committee believes must be met by a
Committee-recommended nominee for a position on our Board of
Directors. The Committee is of the opinion that any nominee should
have a substantial amount of general business managerial experience, with
significant financial acumen and ability to understand financial statements in
general. Further, although not a definitive requisite, general
experience and working knowledge of the oil and gas industry in general is
considered as a positive factor in any potential nominee.
A copy of
the charter of the Nominating and Corporate Governance Committee can be found at
our website, www.arenaresourcesinc.com. The
Company’s website also contains our Code of Business Conduct (which applies to
both employees and directors) and our Corporate Governance
Guidelines. A written copy of the charter of the Nominating and
Corporate Governance Committee and/or the Code of Business Conduct and Corporate
Governance Guidelines will also be provided to a stockholder upon
request. Any such request should be directed to Mr. William Parsons,
Vice President of Investor Relations. Mr. Parsons can be contacted at
(480) 947-1589.
Audit
Committee
The Audit Committee is currently
comprised of Messrs. Woodrum, Petrelli and Fiddner, all of whom are
“independent” directors, as required by Rule 303A.02 of the New York Stock
Exchange Stock Exchange. The Board has determined that Messrs.
Woodrum and Fiddner qualify as “audit committee financial experts” under the
rules of the Securities and Exchange Commission adopted pursuant to the
Sarbanes-Oxley Act of 2002. Mr. Woodrum has served on the Committee
since August of 2003, and currently serves as the Chairman of the
Committee.
The
primary responsibility of the Audit Committee is to oversee our financial
reporting process on behalf of the Board and report the results of its
activities to the Board. The Audit Committee meets with the
accountants to review their effectiveness during the annual audit and to discuss
our internal control policies and procedures. The Audit Committee and
the independent public accountants met and discussed the audit of the financial
statements for the year ended December 31, 2008; the Audit Committee and the
auditors further discussed the financial statements for the first three quarters
of 2008. Thus far in 2009, on four occasions the Audit Committee has
met or discussed with the auditors our financial statements.
A copy of
the charter of the Audit Committee charter can be found at the Company’s
website, “www.arenaresourcesinc.com”. A written copy of the charter
of the Audit will also be provided to a stockholder upon request. Any
such request should be directed to Mr. William Parsons, Vice President of
Investor Relations. Mr. Parsons can be reached at (480)
947-1589. The audit committee report for the fiscal year ended 2008
is set forth below.
Audit
Committee Report
The Audit Committee assists the Board
of Directors in its oversight of the integrity of the Company’s financial
statements and the Company’s accounting and financial reporting processes and
systems of internal control. Management has primary responsibility
for the Company’s internal controls and the preparation of financial statements
in accordance with generally accepted accounting principles. The
Committee also reviews the qualifications, independence and performance of the
Company’s independent accountants, who are in turn responsible for performing an
audit of the Company’s financial statements in accordance with generally
accepted auditing standards and issuing a report thereon. The
Committee has received the written disclosures and the letter from the
independent accountants required by Independence Standards Board Standard No. 1,
and has discussed with the independent accountant the independent accountant’s
independence. Members of the Committee should not be assumed to be
accounting experts and are not deemed to have accepted a duty of care greater
than other members of the Board of Directors. In discharging their
responsibilities, the Committee members rely on the representations made, and
information provided to them, by management and the independent
accountants.
The Committee reviewed with management
and the independent accountants the following financial
statements: Year ended December 31, 2008 and quarters ended September
30, 2008, June 30, 2008 and March 31, 2008, and the Committee has discussed with
the independent accountants the matters required to be discussed by the
Statement on Auditing Standards No. 61, as amended.
The Committee recommended to the Board
of Directors that these financial statements be accepted.
The Committee performed all procedures
described in its Charter, as amended, including review and approval of all press
releases made by management prior to their release.
Clayton E. Woodrum,
Chairman
Anthony B. Petrelli
Carl H. Fiddner
No member
of the Audit Committee is or has been a former or current officer of the Company
or had any relationships requiring disclosure by us under the SEC’s rules
requiring disclosure of certain relationships and related-party transactions.
None of our officers identified herein served as a director or a member of a
compensation committee (or other committee serving an equivalent function) of
any other entity.
Executive Sessions of
Non-Management Directors
In accordance with the rules of the New
York Stock Exchange, the independent members of the Board of Directors, who are
our only “non-management” Directors, meet separately following each regularly
scheduled meeting of the Board of Directors, without management
participation. The current non-management Directors (Messrs. Woodrum,
Petrelli and Fiddner) have chosen to informally rotate which of such Directors
will preside at their meetings.
Any shareholder who wishes to make any
concern known to the non-management directors can do so by providing a sealed
writing addressed to the “Non-Management Directors of Arena Resources” c/o
either William R. Broaddrick, our Secretary, or William Parsons, Vice President
of Investor Relations, at our principal offices, and such individuals shall see
that the communication is delivered, unopened, to each of the non-management
Directors.
Certification With New York
Stock Exchange.
In fulfillment of certain rules of the
New York Stock Exchange, each year our Chief Executive Officer must certify in
writing to such Exchange that such officer is not aware of the existence of any
discrepancies between the Company’s policies and any corporate governance
listing standards adopted by the Exchange, or “qualify” such certification if
any discrepancies exist. No qualifications were contained in our
certification submitted in December 2008.
BOARD
OF DIRECTORS INTERLOCKS AND INSIDER
PARTICIPATION
IN COMPENSATION DECISIONS
There
have been no “interlocks” or “insider participation” [as those terms are defined
in Item 402(j) of S.E.C. Regulation S-K] in compensation
decisions. There were no reportable business relationships between
the Company (or any other corporation that requires specific disclosure under
this heading) and the members of the Board of Directors in 2008.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
There
have been no transactions between us and any related persons, promoters or
control persons since January 1, 2008, and no such transactions are currently
proposed.
PROPOSAL
2:
APPROVAL
OF A NEW RESTRICTED STOCK AWARD PLAN
The Board of Directors is proposing
that stockholders adopt the Arena, Inc. Restricted Stock Award Plan (the
“Restricted Stock Plan”). If the stockholders vote to adopt the
Restricted Stock Plan we will have the ability to include restricted stock
awards in addition to granting stock options currently allowed under our
existing Stock Option Plan
A summary description of the
Restricted Stock Plan is set forth below. You are being asked to vote
in favor of adopting the Restricted Stock Plan as it has been approved by the
Board of Directors. The full text of the Restricted Stock Plan is set
forth in Appendix A to this Proxy Statement.
Our currently existing Stock Option
Plan provides for 5,500,000 shares that may be issued pursuant to its
terms. Of those shares, options have previously been issued and
exercised covering 2,530,000 shares, and options entitling the holders thereof
to an additional 1,965,000 shares upon exercise are currently
outstanding. These options shall remain outstanding. This
currently leaves 1,005,000 shares available for issuance under the Stock Option
Plan.
IF APPROVED, RESTRICTED STOCK AWARDS
THAT MAY BE GRANTED UNDER THE RESTRICTED STOCK PLAN WILL BE ISSUED FROM THE SAME
POOL OF SHARES THAT ARE CURRENTLY AVAILABLE ONLY FOR THE GRANT OF STOCK
OPTIONS. PURSUANT TO A SEPARATE AND DISTINCT PROPOSAL BEING PRESENTED
TO THE SHAREHOLDERS, WE ARE ALSO ASKING STOCKHOLDERS TO INCREASE THE NUMBER OF
SHARES THAT MAY BE AVAILABLE JOINTLY UNDER THE STOCK OPTION PLAN AND THE
RESTRICTED STOCK PLAN, FROM 5,500,000 TO 6,000,000.
The Board of Directors recommends
that the stockholders vote “FOR” the adoption of the Restricted Stock Award
Plan.
Summary Description of
Restricted Stock Award Plan.
General
The Restricted Stock Plan is named
the “Arena, Inc. Restrict Stock Award Plan.” The purpose of the
Restricted Stock Plan is to provide an incentive for our employees, directors
and certain consultants and advisors to remain in our service, to extend to them
the opportunity to acquire a proprietary interest in us so that they will apply
their best efforts for our benefit and to aid us in attracting able persons to
enter our service or the service of our subsidiaries. To accomplish
this purpose, the Restricted Stock Plan offers an ownership interest in us
through the distribution of awards of restricted stock (“Awards”).
No Awards may be made under the
Restricted Stock Plan after the date that is ten years from the date of
stockholder approval of the last amendment to the Restricted Stock
Plan.
Administration of the
Restricted Stock Plan
The Board of Directors has appointed
the Compensation Committee (the “Committee”) to administer the Restricted Stock
Plan. The Committee has broad discretion to administer the Restricted
Stock Plan, interpret its provisions, and adopt policies for implementing the
Restricted Stock Plan. This discretion includes the ability to select
the recipient of an Award, determine the type and amount of each Award,
establish the terms of each Award, accelerate restrictions applicable to an
Award, waive conditions and provisions of an Award, permit the transfer of an
Award to family trusts and other persons and otherwise modify or amend any Award
under the Restricted Stock Plan.
Persons Who May Participate
in the Restricted Stock Plan
Any person (a “Participant”) may
participate in the Restricted Stock Plan if he or she is (i) an employee of
Arena or any of our subsidiaries, including officers and directors who are also
employees of Arena or of any of our subsidiaries, (ii) a non-employee director,
or (iii) any other person that the Committee designates as eligible for an Award
because the person performs bona fide consulting or advisory services for us or
any of our subsidiaries (other than services in connection with the offer and
sale of securities in a capital-raising transaction).
Types of
Awards
Shares Subject to the
Restricted Stock Plan. The shares of Common Stock in respect
of which awards may be granted for all purposes under the Restricted Stock Plan
will be drawn from the pool of shares available for issuance under our existing
Stock Option Plan. This pool of shares currently consists of
5,500,000 shares, although the Board of Directors is recommending, by a separate
proposal, that the shareholders approve an increase of the number of shares in
this pool to 6,000,000. As of October 1, 2009, there were outstanding
options to acquire an aggregate of 1,965,000 shares of Common Stock under our
existing Stock Option Plan. These options shall remain
outstanding. As of October 1, 2009, there remained 1,005,000 shares
available for issuance under the Stock Option Plan. If the Restricted
Stock Award Plan is approved by the stockholders, such shares (and, if the
separate proposal to increase the number of shares in the pool by 500,000 is
approved, such additional shares) shall be available for issuance under either
the Stock Option Plan or the Restricted Stock Award Plan.
If Common Stock subject to any Award
is not issued or transferred, or ceases to be issuable or transferable for any
reason, including (but not exclusively) because an Award is forfeited,
terminated, expires unexercised, is settled in cash in lieu of Common Stock or
is exchanged for other awards, the shares of Common Stock that were subject to
that Award will again be available for issue, transfer or exercise pursuant to
Awards under the Restricted Stock Plan (and the Stock Option Plan) to the extent
of such forfeiture, termination, expiration, settlement or
exchange. The Common Stock issued under the Restricted Stock Plan may
be shares originally issued by us, shares held by us in treasury, shares which
have been reacquired by us or shares which have been bought on the market for
the purposes of the Restricted Stock Plan. There are no fees,
commissions or other charges applicable to the receipt of Common Stock under the
Restricted Stock Plan.
Restricted
Stock. A Restricted Stock Award is a grant of shares of Common
Stock that are nontransferable and subject to risk of forfeiture until specific
conditions are met. The restrictions will lapse in accordance with a
schedule or other conditions as the Committee determines. During the
restriction period, the holder of a Restricted Stock Award may, in the
Committee's discretion, have certain rights as a stockholder, including the
right to vote the stock subject to the award or receive dividends on that
stock.
Merger, Recapitalization or
Change of Control. If any change is made to our capitalization, such as a
stock split, stock combination, stock dividend, exchange of shares or other
recapitalization, merger or otherwise, which results in an increase or decrease
in the number of outstanding shares of Common Stock, appropriate adjustments
will be made by the Committee in the shares subject to an Award under the
Restricted Stock Plan. In general, upon a change in control of Arena,
if approved by the Compensation Committee, the restriction period on all awards
of restricted stock will immediately be accelerated and the restrictions will
expire. In the event that a change in control involves a merger or
consolidation in which Arena is not the surviving entity or in which all of our
outstanding shares of capital stock are exchanged for shares of capital stock in
another entity, or in the event a change in control involves a sale of
substantially all of our assets, and in connection with the change in control
securities, cash or property are issuable or deliverable in exchange for our
capital stock, then the holders of Awards granted under the Restricted Stock
Plan will be entitled to receive the amount of securities, cash or property to
which they would be entitled as if all restrictions on their Award had
lapsed. The Committee has discretion to determine whether an Award
under the Restricted Stock Plan will have change-of-control
features. The Committee also has discretion to vary the
change-of-control features as it deems appropriate.
Amendment. The
Board of Directors may (insofar as permitted by law and applicable regulations
of the New York Stock Exchange, or any exchange or inter-dealer quotation system
on which our stock may then be listed) with respect to any shares which, at the
time, are not subject to Awards, suspend, discontinue, revise, or amend the
Restricted Stock Plan in any respect whatsoever, and may amend any provision of
the Restricted Stock Plan or any Award Agreement to make the Restricted Stock
Plan or the Award Agreement, or both, comply with Section 16(b) of the Exchange
Act of 1934 (the “Exchange Act”) and the exemptions therefrom, the Internal
Revenue Code, ERISA, or any other law, rule or regulation that may affect the
Restricted Stock Plan. The Board of Directors may also amend, modify,
suspend or terminate the Restricted Stock Plan for the purpose of meeting or
addressing any changes in other legal requirements applicable to Arena or the
Restricted Stock Plan or for any other purpose permitted by
law. However, the Restricted Stock Plan may not be amended without
stockholder approval to increase materially the aggregate number of shares of
Common Stock that may be issued under the Restricted Stock Plan, or in any other
respect if such material amendment requires stockholder approval under
applicable law or the regulations of the New York Stock Exchange (or any
exchange or inter-dealer quotation system on which our stock may then be
listed).
A copy of the Restricted Stock Plan is
attached as Appendix A.
PROPOSAL
3:
AMENDMENT
OF THE OUR STOCK OPTION PLAN TO INCREASE THE NUMBER OF SHARES COVERED BY THE
PLAN FROM 5,500,000 TO 6,000,000
In 2003
we adopted the Stock Option Plan (“Option Plan”) for certain of our directors,
officers, employees and consultants. The purpose of the Plan is to enable the
Company and its stockholders to secure the benefits of common stock ownership,
or increased ownership, by key personnel of the Company and our subsidiaries.
The Board believes that the granting of options under the Plan has fostered our
ability to attract, retain and motivate those individuals who will be largely
responsible for our continued profitability and long-term future
growth. The Option Plan was last amended at the 2008 annual
shareholders meeting to increase the shares eligible for award thereunder from
5,000,000 to 5,500,000.
As of
October 15, 2009, options had been granted to 21 individuals, for a total of
4,495,000 shares. As a result, only 1,005,000 shares remain eligible under the
Option Plan for issuance.
In
addition, the shareholders at this annual meeting are being asked to approve the
Restricted Stock Award Plan. Under the terms of the Restricted Stock
Award Plan, shares currently available for issuance under the Option Plan would
also serve as the same “pool” of shares available for issuance as restricted
stock under the Restricted Stock Plan. Therefore, the Board of
Directors believes an increase of 500,000 shares available for grant or issuance
under either the Option Plan or the Restricted Stock Plan is in the best
interest of the Company, and consistent with the overall purpose of both the
Option Plan and the Restricted Stock Award Plan.
In the
event the shareholders approve the proposal for the Restricted Stock Award Plan
but not this proposal, then the number of shares that may be subject to either
grants of options under the Option Plan or restricted stock awards under the
Restricted Stock Award Plan will remain at 5,500,000. In the event
the shareholders approve this proposal, but reject the proposal for the creation
of the Restricted Stock Award Plan, then the number of shares for which options
may be granted under the Option Plan will be increased to
6,000,000. No other change to the terms of the Option Plan will be
made if this proposal is approved.
The Board of Directors recommends
that the stockholders vote “FOR” the amendment to the Stock Option
Plan.
STOCK
PERFORMANCE GRAPH
The following graph compares the
cumulative total shareholder return of the Company, the S&P 500 and its peer
group named below as of the end of each year indicated. The graph
assumes a $100 investment at the closing price on December 31, 2003, and
reinvestment of dividends on the date of payment without
commissions. This table is not intended to forecast future
performance of our common stock.
Comparison
of Five-Year Cumulative Total Return
Among
Arena Resources, Inc., S&P 500 and Peer Group*
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2003
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2004
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2005
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2006
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2007
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2008
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Arena
Resources, Inc.
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$100.00
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$140.26
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$455.45
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$704.62
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$1,376.57
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$927.06
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S&P
500
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$100.00
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$108.99
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$112.26
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$127.55
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$132.06
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$81.23
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Peer
Group
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$100.00
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$145.82
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$282.76
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$304.62
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$335.72
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$226.98
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*The peer group consists of Clayton
Williams Energy, Inc., Goodrich Petroleum Corporation, Berry Petroleum Company,
GMX Resources, Inc. and Carrizo Oil and Gas, Inc., all of which are in the oil
and gas production industry. In prior years the peer group included
Parallel Petroleum Corporation and Edge Petroleum Corp., rather than Clayton
Williams Energy, Inc. and Berry Petroleum Company. Edge Petroleum
Corp. has been replaced in the peer group because it has filed for
bankruptcy. Parallel Petroleum has been replaced because it is in the
process of being acquired by a larger corporation, no longer making it suitable
for peer group comparison.
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
A
disclosure of directors, officers or beneficial owners of more than ten percent
of our common stock who failed to file on a timely basis reports of beneficial
ownership as required by Section 16(a) of the Securities Exchange Act of 1934,
as amended, is contained in Item 10 of our Annual Report on Form 10-K, which
accompanies these proxy materials.
INDEPENDENT
PUBLIC ACCOUNTANTS
The firm
of Hansen, Barnett & Maxwell, (“HBM”) has served as our independent auditors
since 2000. The Audit Committee selected HBM as the independent
auditors of the Company for the fiscal year ending December 31, 2008 and the
Audit Committee has selected HBM to serve in the same capacity for the fiscal
year ending December 31, 2009. The Audit Committee has adopted a
policy that requires advance approval of all audit, audit-related, tax services
and other services performed by the independent
auditor. Representatives of HBM are not expected to be present at the
Annual Meeting. A complete description of the fees paid to HBM over
each of the last two years is contained in Item 14 of our Annual Report on Form
10-K which accompanies these proxy materials.
STOCKHOLDER
PROPOSALS FOR 2010 ANNUAL MEETING
Stockholder
proposals intended to be presented at the 2010 Annual Meeting and to be included
in our Proxy Statement must be received at our executive offices, 6555 South
Lewis Avenue, Tulsa, Oklahoma 74136, no later than July 7, 2010.
OTHER
MATTERS
Management
knows of no business which will be presented at the Annual Meeting other than to
elect directors for the ensuing year and to vote on adoption of the Company’s
Restricted Stock Award Plan.
The cost
of preparing, assembling and mailing all proxy solicitation materials will be
paid by the Company. It is contemplated that the solicitation will be
conducted only by use of the mails. We will, upon request, reimburse
brokers for the costs incurred by them in forwarding solicitation materials to
such of their customers as are the beneficial holders of our common stock
registered in the names of such brokers.
By Order of the Board of
Directors
/s/ Phillip W. Terry,
President
October
26, 2009
Appendix
A
ARENA
RESOURCES, INC.
RESTRICTED
STOCK AWARD PLAN
(proposed
for adoption at the December 11, 2009 Annual Meeting of
Shareholders)
Scope
and Purpose of the Plan
Arena,
Inc., a Nevada, corporation (the “Corporation”),
has adopted this Restricted Stock Award Plan (the “Plan”)
to provide for the granting of Restricted Stock Awards to certain Employees and
other persons.
The
purpose of the Plan is to provide an incentive for Employees and directors of
the Corporation or its Subsidiaries to remain in the service of the Corporation
or its Subsidiaries, to extend to them the opportunity to acquire a proprietary
interest in the Corporation so that they will apply their best efforts for the
benefit of the Corporation, and to aid the Corporation in attracting able
persons to enter the service of the Corporation and its
Subsidiaries.
SECTION
1. DEFINITIONS
As used in
this Plan, the following terms have the meanings set forth below:
1.1 “Award”
means the grant of any form of Restricted Stock Award under the Plan, whether
granted singly, in combination, or in tandem with other awards, to a Holder
pursuant to the terms, conditions, and limitations that the Committee may
establish in order to fulfill the objectives of the Plan.
1.2 “Award
Agreement” means the written document or agreement delivered to Holder
evidencing the terms, conditions and limitations of an Award that the
Corporation granted to that Holder.
1.3 “Board
of Directors” means the board of directors of the Corporation.
1.4 “Business
Day” means any day other than a Saturday, a Sunday or a day on which banking
institutions in the State of Oklahoma are authorized or obligated by law or
executive order to close.
1.5 “Cause,”
with respect to any Holder that is an Employee, means termination of the
Holder’s employment by the Corporation because of: (a) the Holder’s
conviction of, or plea of nolo contendere to, a felony or crime involving moral
turpitude; (b) the Holder’s personal dishonesty, incompetence, willful
misconduct, willful violation of any law, rule or regulation (other than minor
traffic violations or similar offenses) or breach of fiduciary duty which
involves personal profit; (c) the Holder’s commission of material mismanagement
in the conduct of the Holder’s duties as assigned to him or her by the Board of
Directors or the Holder’s supervising officer or officers of the Corporation or
any Subsidiary; (d) the Holder’s willful failure to execute or comply with the
policy of the Corporation or any of its Subsidiaries or the Holder’s stated
duties as established by the Board of Directors or the Holder’s supervising
officer or officers of the Corporation or any Subsidiary or the Holder’s
intentional failure to perform the Holder’s stated duties; or (e) substance
abuse or addiction on the part of the Holder. Notwithstanding the foregoing, in
the case of any Holder who, subsequent to the effective date of this Plan,
enters into an employment agreement with the Corporation or any Subsidiary that
contains the definition of “cause” (or any similar definition), then during the
term of such employment agreement the definition contained in such Employment
Agreement shall be the applicable definition of “cause” under the Plan as to
such Holder if such Employment Agreement expressly so provides.
1.6 “Change
in Control” means the occurrence of any of the following events:
(i) The
acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”)
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 50% or more of either (x) the then outstanding shares of Common
Stock of the Corporation (the “Outstanding
Corporation Common Stock”) or (y) the combined voting power of the then
outstanding voting securities of the Corporation entitled to vote generally in
the election of directors (the “Outstanding
Corporation Voting Securities”); provided,
however,
that for purposes of this subsection (i), the following acquisitions shall not
constitute a Change of Control: (A) any acquisition directly from the
Corporation, (B) any acquisition by the Corporation, (C) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the
Corporation or any corporation controlled by the Corporation or (D) any
acquisition by any corporation pursuant to a transaction which complies with
clauses (A), (B) and (C) of paragraph (iii) below; or
(ii) Individuals
who constitute the Incumbent Board cease for any reason to constitute at least a
majority of the Board of Directors; or
(iii) Consummation
of a reorganization, merger or consolidation or sale or other disposition of all
or substantially all of the assets of the Corporation or an acquisition of
assets of another corporation (a “Business
Combination”), in each case, unless,
following such Business Combination, (A) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Corporation Common Stock and Outstanding Corporation Voting
Securities immediately prior to such Business Combination beneficially own,
directly or indirectly, more than 50% of, respectively, the then outstanding
shares of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as
the case may be, of the corporation resulting from such Business Combination
(including, without limitation, a corporation which as a result of such
transaction owns the Corporation, or all or substantially all of the
Corporation’s assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior to such
Business Combination, of the Outstanding Corporation Common Stock and
Outstanding Corporation Voting Securities, as the case may be, (B) no Person
(excluding any employee benefit plan (or related trust) of the Corporation or
the corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, 20% or more of, respectively, the then outstanding
shares of common stock of the corporation resulting from such Business
Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership of the
Corporation existed prior to the Business Combination and
(C) at least a majority of the members of the board of directors of the
corporation resulting from such Business Combination were members of the
Incumbent Board at the time of the execution of the initial agreement, or
of the action of the Board, providing for such Business Combination;
or
(iv) Approval
by the stockholders of the Corporation of a complete liquidation or dissolution
of the Corporation.
1.7 “Code”
means the Internal Revenue Code of 1986, as amended.
1.8 “Committee”
means the Compensation Committee of the Corporation or a subcommittee appointed
pursuant to Section 3 by either the Compensation Committee or by the Board of
Directors to administer this Plan.
1.9 “Common
Stock” means the authorized common stock, par value $.001 per share, as
described in the Corporation’s Articles of Incorporation.
1.10 “Common
Stock Equivalent” means (without duplication with any other Common Stock or
Common Stock Equivalents) rights, warrants, options, convertible securities,
exchangeable securities or indebtedness, or other rights, exercisable for or
convertible or exchangeable into, directly or indirectly, Common Stock or
securities convertible or exchangeable into Common Stock, whether at the time
(or within sixty days of that date) the number of shares of Common Stock
Equivalents are determined, and that are traded or are of the same class as
securities that are traded on the New York Stock Exchange, a national securities
exchange or quoted on the NASDAQ National Market System, NASDAQ, or National
Quotation Bureau Incorporated. The number of shares of Common Stock Equivalents
outstanding shall equal the number of shares of Common Stock plus the number of
shares of Common Stock issuable upon exercise, conversion or exchange of all
other Common Stock Equivalents.
1.11 “Corporation”
means Arena, Inc., a Nevada corporation.
1.12 “Date
of Grant” has the meaning given it in Paragraph 4.3.
1.13 “Disability”
has the meaning given it in Paragraph 7.5.
1.14 “Effective
Date” means the date upon which this Plan shall be approved by the Board of
Directors and stockholders of the Corporation. The Plan will be
deemed to be approved by the stockholders if it receives the affirmative vote of
the holders of a majority of the shares of stock of the Corporation present or
represented and entitled to vote at a meeting at which a quorum representing a
majority of all outstanding voting stock is, either in person or by proxy,
present and voting and duly held in accordance with the applicable provisions of
the Corporation’s Bylaws
1.15 “Eligible
Individuals” means (a) Employees, (b) Non employee Directors and (c) any other
Person that the Committee designates as eligible for an Award because the Person
performs bona fide consulting or advisory services for the Corporation or any of
its Subsidiaries (other than services in connection with the offer or sale of
securities in a capital raising transaction).
1.16 “Employee”
means any employee of the Corporation or of any of its Subsidiaries, including
officers and directors of the Corporation who are also employees of the
Corporation or of any of its Subsidiaries.
1.17 “Exchange
Act” means the Securities Exchange Act of 1934, as amended.
1.18 “Fair
Market Value” means, for a particular day:
(a) If
shares of Stock of the same class are listed or admitted to unlisted trading
privileges on the New York Stock Exchange or any other national or regional
securities exchange at the date of determining the Fair Market Value, then the
last reported sale price, regular way, on the composite tape of that exchange on
the last Business Day before the date in question or, if no such sale takes
place on that Business Day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
unlisted trading privileges on that securities exchange; or
(b) If
shares of Stock of the same class are not listed or admitted to unlisted trading
privileges as provided in Subparagraph 1.18(a) and if sales prices for shares of
Stock of the same class in the over-the-counter market are reported by the
NASDAQ National Market System (or a similar system then in use) at the date of
determining the Fair Market Value, then the last reported sales price so
reported on the last Business Day before the date in question or, if no such
sale takes place on that Business Day, the average of the high bid and low asked
prices so reported; or
(c) If
shares of Stock of the same class are not listed or admitted to unlisted trading
privileges as provided in Subparagraph 1.18(a) and sales prices for shares of
Stock of the same class are not reported by the NASDAQ National Market System
(or a similar system then in use) as provided in Subparagraph 1.18(b), and if
bid and asked prices for shares of Stock of the same class in the
over-the-counter market are reported by NASDAQ (or, if not so reported, by the
National Quotation Bureau Incorporated) at the date of determining the Fair
Market Value, then the average of the high bid and low asked prices on the last
Business Day before the date in question; or
(d) If
shares of Stock of the same class are not listed or admitted to unlisted trading
privileges as provided in Subparagraph 1.18(a) and sales prices or bid and asked
prices therefor are not reported by NASDAQ (or the National Quotation Bureau
Incorporated) as provided in Subparagraph 1.18(b) or Subparagraph 1.18(c) at the
date of determining the Fair Market Value, then the value determined in good
faith by the Committee, which determination shall be conclusive for all
purposes; or
(e) If
shares of Stock of the same class are listed or admitted to unlisted trading
privileges as provided in Subparagraph 1.18(a) or sales prices or bid and asked
prices therefor are reported by NASDAQ (or the National Quotation Bureau
Incorporated) as provided in Subparagraph 1.18(b), 1.18(c) or 1.18(d) at the
date of determining the Fair Market Value, but the volume of trading is so low
that the Board of Directors determines in good faith that such prices are not
indicative of the fair value of the Stock, then the value determined in good
faith by the Committee, which determination shall be conclusive for all purposes
notwithstanding the provisions of Subparagraphs 1.18(a), (b), (c) or
(d).
1.19 “Holder”
means an Eligible Individual to whom an Award has been granted.
1.20 “Incumbent
Board” means the individuals who, as of the Effective Date, constitute the Board
of Directors and any other individual who becomes a director of the Corporation
after that date and whose election was approved by stockholders holding a
majority of the Voting Securities or (in the case of a vacancy in the board) by
appointment by the Board of Directors, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an actual or
threatened election contest with respect to the election or removal of directors
or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Incumbent Board.
1.21 “NASDAQ”
means the National Association of Securities Dealers, Inc. Automated Quotations,
Inc.
1.22 “Non-employee
Director” means a director of the Corporation who while a director is not an
Employee.
1.23 “Non-Surviving
Event” means an event of Restructure as described in either subparagraph (b) or
(c) of Paragraph 1.27.
1.24 “Person”
means any person or entity of any nature whatsoever, specifically including (but
not limited to) an individual, a firm, a company, a corporation, a limited
liability company, a partnership, a trust or other entity. A Person, together
with that Person’s affiliates and associates (as those terms are defined in Rule
12b-2 under the Exchange Act for purposes of this definition only), and any
Persons acting as a partnership, limited partnership, joint venture,
association, syndicate or other group (whether or not formally organized), or
otherwise acting jointly or in concert or in a coordinated or consciously
parallel manner (whether or not pursuant to any express agreement), for the
purpose of acquiring, holding, voting or disposing of securities of the
Corporation with that Person, shall be deemed a single “Person.”
1.25 “Plan”
means the Arena, Inc. Restricted Stock Award Plan, as it may be amended from
time to time.
1.26 “Restricted
Stock Award” means the grant or purchase, on the terms and conditions that the
Committee determines or on the terms and conditions of Section 5, of Stock that
is nontransferable or subject to substantial risk of forfeiture until specific
conditions are met.
1.27 “Restructure”
means the occurrence of any one or more of the following:
(a) The
merger or consolidation of the Corporation with any Person, whether effected as
a single transaction or a series of related transactions, with the Corporation
remaining the continuing or surviving entity of that merger or consolidation and
the Stock remaining outstanding and not changed into or exchanged for stock or
other securities of any other Person or of the Corporation, cash or other
property;
(b) The
merger or consolidation of the Corporation with any Person, whether effected as
a single transaction or a series of related transactions, with (i) the
Corporation not being the continuing or surviving entity of that merger or
consolidation or (ii) the Corporation remaining the continuing or surviving
entity of that merger or consolidation but all or a part of the outstanding
shares of Stock are changed into or exchanged for stock or other securities of
any other Person or the Corporation, cash, or other property; or
(c) The
transfer, directly or indirectly, of all or substantially all of the assets of
the Corporation (whether by sale, merger, consolidation, liquidation or
otherwise) to any Person whether effected as a single transaction or a series of
related transactions.
1.28 “Retirement”
means the separation of the Holder from employment with the Corporation and its
Subsidiaries on account of retirement.
1.29 “Rule
16b-3” means Rule 16b-3 under Section 16(b) of the Exchange Act, or any
successor rule, as it may be amended from time to time.
1.30 “Securities
Act” means the Securities Act of 1933, as amended.
1.31 “Stock”
means Common Stock, or any other securities that are substituted for Stock as
provided in Section 6.
1.32 “Subsidiary”
means, with respect to any Person, any corporation, limited partnership, limited
liability company or other entity of which a majority of the voting power of the
voting equity securities or equity interest is owned, directly or indirectly, by
that Person.
1.33 “Voting
Securities” means any securities that are entitled to vote generally in the
election of directors, in the admission of general partners, or in the selection
of any other similar governing body.
SECTION
2. SHARES OF STOCK SUBJECT TO THE
PLAN
2.1 Maximum
Number of Shares. Subject to the provisions of Section 6 of
the Plan, the maximum aggregate number of shares of Stock in respect of which
Awards may be granted for all purposes under the Plan shall be limited to the
number of shares of Stock that are authorized for issuance under the
Corporation’s Stock Option Plan (as such Stock Option Plan may be amended from
time to time); and provided, further, that if any shares of Stock subject to an
Award are forfeited or if any Award based on shares of Stock is otherwise
terminated without issuance of such shares of Stock, the shares of Stock subject
to such Award shall to the extent of such forfeiture or termination, again be
available for Awards under the Plan.
2.2 Description
of Shares. The shares to be delivered under the Plan shall be
made available from (a) authorized but unissued shares of Stock, (b) Stock held
in the treasury of the Corporation, or (c) previously issued shares of Stock
reacquired by the Corporation, including shares purchased on the open market, in
each situation as the Board of Directors or the Committee may determine from
time to time at its sole option.
2.3 Registration
and Listing of Shares. From time to time, the Board of
Directors and appropriate officers of the Corporation shall be, and are,
authorized to take whatever actions are necessary to file required documents
with governmental authorities, stock exchanges and other appropriate Persons to
make shares of Stock available for issuance pursuant to Awards.
SECTION
3. ADMINISTRATION OF THE PLAN
3.1 Committee. The
Committee shall administer the Plan with respect to all Eligible Individuals or
may delegate all or part of its duties under this Plan to a subcommittee or any
executive officer of the Corporation, subject in each case to such conditions
and limitations as the Board of Directors may establish, the Committee’s Charter
and subject to the following additional requirements: (a) the
Committee shall be constituted in a manner that satisfies the requirements of
Rule 16b-3.1, (i.e., composed solely of “non-employee directors” as defined in
such Rule) and shall administer the Plan with respect to all Eligible
Individuals who are subject to the “short-swing profits” provisions of Section
16 of the Exchange Act in a manner that satisfies the exemption from Section 16
pursuant to the requirements of Rule 16b-3; and (b) the Committee shall be
constituted in a manner that satisfies the requirements of Section 162(m) (i.e.,
composed of two or more “outside directors”), which Committee shall administer
the Plan with respect to “performance-based compensation” for all Eligible
Individuals who are reasonably expected to be “covered employees” as those terms
are defined in Section 162(m), in order to insure the deductibility of
compensation paid as provided in such Section.
3.2 Committee’s
Powers. Subject to the Charter of the Compensation Committee,
the rules and regulations of the New York Stock Exchange or any other exchange
on which the Corporation’s stock may be listed from time to time (including,
without limitation, rules requiring the approval of the stockholders with
respect to any material amendment to the Plan), and subject also to the express
provisions of the Plan and any applicable law with which the Corporation intends
the Plan to comply, the Committee shall have the authority, in its sole and
absolute discretion, (a) to adopt, amend and rescind administrative and
interpretive rules and regulations relating to the Plan, including without
limitation to adopt and observe such procedures concerning the counting of
Awards against the Plan and individual maximums as it may deem appropriate from
time to time; (b) to determine the Eligible Individuals to whom, and the time or
times at which, Awards shall be granted; (c) to determine the shares of Stock
that will be the subject of each Restricted Stock Award; (d) to determine the
terms and provisions of each Award Agreement (which need not be identical),
including provisions defining or otherwise relating to (i) the term and the
period or periods of any restrictions or forfeitures, (ii) the extent to which
the transferability of shares of Stock issued or transferred pursuant to any
Award is restricted, (iii) the effect of termination of employment on the Award,
and (iv) the effect of approved leaves of absence (consistent with any
applicable regulations of the Internal Revenue Service); (e) to accelerate,
pursuant to Section 6, the restriction period of any Restricted Stock Award; (f)
to construe the respective Award Agreements and the Plan; (g) to make
determinations of the Fair Market Value of the Stock pursuant to the Plan; (h)
to delegate its duties under the Plan to such agents as it may appoint from time
to time, subject to Paragraph 3.1; and (i) to make all other determinations,
perform all other acts, and exercise all other powers and authority necessary or
advisable for administering the Plan, including the delegation of those
ministerial acts and responsibilities as the Committee deems appropriate. The
Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan, in any Award, or in any Award Agreement in the manner
and to the extent it deems necessary or desirable to carry the Plan into effect,
and the Committee shall be the sole and final judge of that necessity or
desirability. The determinations of the Committee on the matters referred to in
this Paragraph 3.2 shall be final and conclusive. The Committee shall not have
the power to terminate or materially modify or materially amend the Plan. Those
powers are vested in the Board of Directors, subject to requisite approval of
the stockholders of the Corporation.
3.3 Transferability
of Awards. Notwithstanding any limitation on a Holder’s right
to transfer an Award, the Committee may (in its sole discretion) permit a Holder
to transfer an Award, or may cause the Corporation to grant an Award that
otherwise would be granted to an Eligible Individual, in any of the following
circumstances: (a) pursuant to a qualified domestic relations order,
(b) to a trust established for the benefit of the Eligible Individual or one or
more of the children, grandchildren or spouse of the Eligible Individual; (c) to
a limited partnership in which all the interests are held by the Eligible
Individual and that Person’s children, grandchildren or spouse; or (d) to
another Person in circumstances that the Committee believes will result in the
Award continuing to provide an incentive for the Eligible Individual to remain
in the service of the Corporation or its Subsidiaries and apply his or her best
efforts for the benefit of the Corporation or its Subsidiaries. If the Committee
determines to allow such transfers or issuances of Awards, any Holder or
Eligible Individual desiring such transfers or issuances shall make application
therefor in the manner and time that the Committee specifies and shall comply
with such other requirements as the Committee may require to assure compliance
with all applicable laws, including securities laws, and to assure fulfillment
of the purposes of this Plan. The Committee shall not authorize any such
transfer or issuance if it may not be made in compliance with all applicable
federal, state and foreign securities laws. The granting of permission for such
an issuance or transfer shall not obligate the Corporation to register the
shares of Stock to be issued under the applicable Award.
SECTION
4. ELIGIBILITY AND
PARTICIPATION
4.1 Eligible
Individuals. Awards may be granted pursuant to the Plan only
to persons who are Eligible Individuals at the time of the grant thereof or in
connection with the severance or retirement of Eligible
Individuals.
4.2 Grant of
Awards. Subject to the express provisions of the Plan, the
Committee shall determine which Eligible Individuals shall be granted Awards
from time to time. In making grants, the Committee shall take into consideration
the contribution the potential Holder has made or may make to the success of the
Corporation or its Subsidiaries and such other considerations as the Board of
Directors may from time to time specify. The Committee shall also determine the
number of shares or cash amounts subject to each of the Awards and shall
authorize and cause the Corporation to grant Awards in accordance with those
determinations.
4.3 Date of
Grant. The date on which an Award is granted (the “Date
of Grant”) shall be the date specified by the Committee as the effective
date or date of grant of an Award or, if the Committee does not so specify,
shall be the date as of which the Committee adopts the resolution approving the
offer of an Award to an individual, including the specification of the number
(or method of determining the number) of shares of Stock, even though certain
terms of the Award Agreement may not be determined at that time and even though
the Award Agreement may not be executed or delivered until a later time. In no
event shall a Holder gain any rights in addition to those specified by the
Committee in its grant, regardless of the time that may pass between the grant
of the Award and the actual execution or delivery of the Award Agreement by the
Corporation or the Holder. The Committee may invalidate an Award at any time
before the Award Agreement is signed by the Holder (if signature is required) or
is delivered to the Holder (if signature is not required), and such Award shall
be treated as never having been granted.
4.4 Award
Agreements. Each Award granted under the Plan shall be
evidenced by an Award Agreement that incorporates those terms that the Committee
shall deem necessary or desirable. More than one Award may be granted under the
Plan to the same Eligible Individual and be outstanding
concurrently.
4.5 No Right to
Award. The adoption of the Plan shall not be deemed to give
any person a right to be granted an Award.
SECTION
5. RESTRICTED STOCK AWARDS
All
Restricted Stock Awards granted under the Plan shall comply with, and the
related Award Agreements shall be deemed to include, and be subject to the terms
and conditions set forth in this Section 5 and also to the terms and conditions
set forth in Paragraph 6.1 and Section 7; provided, however,
that the Committee may authorize an Award Agreement relating to a Restricted
Stock Award that expressly contains terms and provisions that differ from the
terms and provisions of Section 7. The Committee may also authorize
an Award Agreement relating to a Restricted Stock Award that contains any or all
of the terms and provisions of Paragraphs 6.2 and 6.3 or that contains terms and
provisions dealing with similar subject matter differently than do those
Paragraphs; nevertheless, no term or provision of Paragraph 6.2 or 6.3 (or any
such differing term or provision) shall apply to an Award Agreement relating to
a Restricted Stock Award unless the Award Agreement expressly states that such
term or provision applies.
5.1 Restrictions. All
shares of Restricted Stock Awards granted or sold pursuant to the Plan shall be
subject to the following conditions:
(a) Transferability. The
shares may not be sold, transferred or otherwise alienated or hypothecated until
the restrictions are removed or expire.
(b) Conditions
to Removal of Restrictions. Conditions to removal or
expiration of the restrictions may include, but are not required to be limited
to, continuing employment or service as a director, officer, consultant or
advisor or achievement of performance objectives described in the Award
Agreement.
(c) Legend. Each
certificate representing Restricted Stock Awards granted pursuant to the Plan
shall bear a legend making appropriate reference to the restrictions
imposed.
(d) Possession. At
its sole discretion, the Committee may (i) authorize issuance of a certificate
for shares in the Holder’s name only upon lapse of the applicable restrictions,
(ii) require the Corporation, transfer agent or other custodian to retain
physical custody of the certificates representing Restricted Stock Awards during
the restriction period and may require the Holder of the Award to execute stock
powers, endorsed or in blank, for those certificates and deliver those stock
powers to the Corporation, transfer agent or custodian, or (iii) may require the
Holder to enter into an escrow agreement providing that the certificates
representing Restricted Stock Awards granted or sold pursuant to the Plan shall
remain in the physical custody of an escrow holder until all restrictions are
removed or expire. The Corporation may issue shares subject to
stop-transfer restrictions or may issue such shares subject only to the
restrictive legend described in subparagraph 8.1(c).
(e) Other
Conditions. The Committee may impose other conditions on any
shares granted or sold as Restricted Stock Awards pursuant to the Plan as it may
deem advisable, including, without limitation, (i) restrictions under the
Securities Act or Exchange Act, (ii) the requirements of any securities exchange
upon which the shares or shares of the same class are then listed, and (iii) any
state securities law applicable to the shares.
5.2 Expiration
of Restrictions. The restrictions imposed in Paragraph 5.1 on
Restricted Stock Awards shall lapse as determined by the Committee and set forth
in the applicable Award Agreement, and the Corporation shall promptly cause to
be delivered to the Holder of the Restricted Stock Award a certificate
representing the number of shares for which restrictions have lapsed, free of
any restrictive legend relating to the lapsed restrictions. Each
Restricted Stock Award may have a different restriction period, in the
discretion of the Committee. The Committee may, in its discretion,
prospectively reduce the restriction period applicable to a particular
Restricted Stock Award. The foregoing notwithstanding, no restriction
not required by law shall remain in effect for more than ten years after the
date of the Award.
5.3 Changes in
Accounting Rules. Notwithstanding any other provision of the
Plan to the contrary, if, during the term of the Plan, any changes in the
financial or tax accounting rules applicable to Restricted Stock Awards shall
occur that, in the sole judgment of the Board of Directors, may have a material
adverse effect on the reported earnings, assets, or liabilities of the
Corporation, the Committee shall have the right and power to modify as necessary
any then outstanding Restricted Stock Awards as to which the applicable
restrictions have not been satisfied.
5.4
Rights
as Stockholder. Subject to the provisions of Paragraphs 5.1
and 7.10, the Committee may, in its discretion, determine what rights, if any,
the Holder shall have with respect to the Restricted Stock Awards granted or
sold, including the right to vote the shares and receive all dividends and other
distributions paid or made with respect thereto.
5.5 Other
Agreement Provisions. The Award Agreements relating to
Restricted Stock Awards shall contain such provisions in addition to those
required by the Plan as the Committee may deem advisable.
SECTION
6. ADJUSTMENT PROVISIONS
The
Committee may authorize an Award that contains any or all of the terms and
provisions of this Section 6 or, with respect to Paragraphs 6.2 and 6.3, that
contains terms and provisions dealing with similar subject matter differently
than do those Paragraphs; nevertheless, no term or provision of Paragraph 6.2 or
6.3 (or any such differing term or provision) shall apply to an Award Agreement
unless the Award Agreement expressly states that such term or provision
applies.
6.1 Adjustment
of Awards and Authorized Stock. The terms of an Award and the
number of shares of Stock authorized pursuant to Paragraph 2.1 for issuance
under the Plan shall be subject to adjustment, from time to time, in accordance
with the following provisions:
(a) If
at any time or from time to time, the Corporation shall subdivide as a whole (by
reclassification, by a Stock split, by the issuance of a distribution on Stock
payable in Stock or otherwise) the number of shares of Stock then outstanding
into a greater number of shares of Stock, then (i) the maximum number of shares
of Stock available for the Plan as provided in Paragraph 2.1 shall be increased
proportionately, and the kind of shares or other securities available for the
Plan shall be appropriately adjusted, and (ii) the number of shares of Stock (or
other kind of shares or securities) that may be acquired under any Award shall
be increased proportionately, without changing the aggregate value as to which
outstanding Awards remain subject to restrictions.
(b) If
at any time or from time to time the Corporation shall consolidate as a whole
(by reclassification, reverse Stock split, or otherwise) the number of shares of
Stock then outstanding into a lesser number of shares of Stock, (i) the maximum
number of shares of Stock available for the Plan as provided in Paragraph 2.1
shall be decreased proportionately, and the kind of shares or other securities
available for the Plan shall be appropriately adjusted, and (ii) the number of
shares of Stock (or other kind of shares or securities) that may be acquired
under any Award shall be decreased proportionately, without changing the
aggregate value as to which outstanding Awards remain subject to
restrictions.
(c) Whenever
the number of shares of Stock subject to outstanding Awards are required to be
adjusted as provided in this Paragraph 6.1, the Committee shall promptly prepare
a notice setting forth, in reasonable detail, the event requiring adjustment,
the amount of the adjustment, the method by which such adjustment was
calculated, and the change in the number of shares of Stock subject to each
Award after giving effect to the adjustments. The Committee shall
promptly give each Holder such a notice.
(d) Adjustments
under Paragraph 6(a) and (b) shall be made by the Committee, and its
determination as to what adjustments shall be made and the extent thereof shall
be final, binding and conclusive. No fractional interest shall be
issued under the Plan on account of any such adjustments.
6.2 Changes in
Control. Upon the occurrence of a Change in Control, but only
if approved by the Committee, for Awards held by Participants who are employees
or directors of the Corporation (and their permitted transferees pursuant to
Paragraph 3.3), the restriction period of any Restricted Stock Award shall
immediately be accelerated and the restrictions shall expire. If a
Change in Control involves a Restructure or occurs in connection with a series
of related transactions involving a Restructure and if such Restructure is in
the form of a Non-Surviving Event and as a part of such Restructure shares of
stock, other securities, cash or property shall be issuable or deliverable in
exchange for Stock, then the Holder of an Award shall be entitled to receive (in
lieu of the shares of Stock that the Holder would otherwise be entitled to
receive), the number of shares of stock, other securities, cash or property to
which that number of shares of Stock would have been entitled in connection with
such Restructure.
6.3 Restructure
and No Change in Control. In the event a Restructure should
occur at any time while there is any outstanding Award hereunder and that
Restructure does not occur in connection with a Change in Control or in
connection with a series of related transactions involving a Change in Control,
then the restriction period of any Restricted Stock Award shall not immediately
be accelerated nor shall the restrictions expire merely because of the
occurrence of the Restructure. The Corporation shall promptly notify
each Holder of any election or action taken by the Corporation under this
Paragraph 6.3. In the event of any election or action taken by the
Corporation pursuant to this Paragraph 6.3 that requires the amendment or
cancellation of any Award Agreement as may be specified in any notice to the
Holder thereof, that Holder shall promptly deliver that Award Agreement to the
Corporation in order for that amendment or cancellation to be implemented by the
Corporation and the Committee. The failure of the Holder to deliver
any such Award Agreement to the Corporation as provided in the preceding
sentence shall not in any manner affect the validity or enforceability of any
action taken by the Corporation and the Committee under this Paragraph 6.3,
including, without limitation, any redemption of an Award as of the consummation
of a Restructure. Any cash payment to be made by the Corporation
pursuant to this Paragraph 6.3 in connection with the redemption of any
outstanding Awards shall be paid to the Holder thereof currently with the
delivery to the Corporation of the Award Agreement evidencing that Award;
provided, however, that any such redemption shall be effective upon the
consummation of the Restructure notwithstanding that the payment of
the redemption price may occur subsequent to the consummation. If all
or any portion of an outstanding Award is to be accelerated upon or after the
consummation of a Restructure that is in the form of a Non-Surviving Event and
as a part of that Restructure shares of stock, other securities, cash or
property shall be issuable or deliverable in exchange for Stock, then the Holder
of the Award shall thereafter be entitled to purchase or receive (in lieu of the
number of shares of Stock that the Holder would otherwise be entitled to
receive) the number of shares of stock, other securities, cash or property to
which such number of shares of Stock would have been entitled in connection with
the Restructure.
6.4 Notice of
Change in Control or Restructure. The Corporation shall
attempt to keep all Holders informed with respect to any Change in Control or
Restructure or of any potential Change in Control or Restructure to the same
extent that the Corporation’s stockholders are informed by the Corporation of
any such event or potential event.
SECTION
7. ADDITIONAL PROVISIONS
7.1 Termination
of Employment. If a Holder is an Eligible Individual because
the Holder is an Employee and if that employment relationship is terminated for
any reason other than Retirement or that Holder’s death or Disability, then the
following provisions shall apply to all Awards held by that Holder that were
granted because that Holder was an Employee:
(a) If
the termination is by the Holder’s employer, then the following provisions shall
apply: (i) if the termination is for Cause, then that portion, if any, of any
and all Awards held by that Holder for which restrictions have not lapsed as of
the date of termination shall become null and void; provided, however, that the
portion, if any, of any and all Awards held by that Holder for which
restrictions have lapsed as of the date of such termination shall survive such
termination.
(b) If
such termination is by the Holder, then, unless otherwise agreed to by the
Corporation, any and all Awards held by that Holder with respect to which
restrictions thereon have not lapsed, shall become null and void as of the date
of the termination.
7.2 Other Loss
of Eligibility. If a Holder is an Eligible Individual because
the Holder is serving in a capacity other than as an Employee and if that
capacity is terminated for any reason other than the Holder’s death, then that
portion, if any, of any and all Awards held by the Holder that were granted
because of that capacity for which restrictions have not lapsed as of the date
of the termination shall become null and void as of the date of the termination;
provided,
however, that
the portion, if any, of any and all of the Awards held by the Holder for which
restrictions have lapsed as of the date of the termination shall survive the
termination.
7.3 Death. Upon
the death of a Holder, then any and all Awards held by the Holder, including
those portions of the Awards that pursuant to the terms and provisions of the
applicable Award Agreement the restrictions thereon have not yet lapsed, the
restriction period of any Restricted Stock Award shall immediately be
accelerated and the restrictions shall expire.
7.4 Retirement. If
a Holder is an Eligible Individual because the Holder is an Employee and if that
employment relationship is terminated by reason of the Holder’s Retirement, then
the portion, if any, of any and all Awards held by the Holder for which
restrictions have not lapsed as of the date of that retirement shall become null
and void as of the date of retirement.
7.5 Disability. If
a Holder is an Eligible Individual because the Holder is an Employee and if that
employment relationship is terminated by reason of the Holder’s Disability, then
with respect to any and all Awards held by the Holder for which restrictions had
not lapsed, the restriction period of any Restricted Stock Award shall
immediately be accelerated and the restrictions shall
expire. “Disability” shall have the meaning given it in the
employment agreement of the Holder; provided,
however, that
if that Holder has no employment agreement, “Disability” shall mean a physical
or mental impairment of sufficient severity that, in the opinion of the
Corporation, either the Holder is unable to continue performing the duties he
performed before such impairment or the Holder’s condition entitles him to
disability benefits under any insurance or employee benefit plan of the
Corporation or its Subsidiaries and that impairment or condition is cited by the
Corporation as the reason for termination of the Holder’s
employment.
7.6 Leave of
Absence. With respect to an Award, the Committee may, in its
sole discretion, determine that any Holder who is on leave of absence for any
reason will be considered to still be in the employ of the Corporation, provided
that rights to that Award during a leave of absence will be limited to the
extent to which those rights were earned or vested when the leave of absence
began.
7.7 Forfeiture
and Restrictions on Transfer. Each Award Agreement may contain
or otherwise provide for conditions giving rise to the forfeiture of the Stock
acquired pursuant to an Award or otherwise and may also provide for those
restrictions on the transferability of shares of the Stock acquired pursuant to
an Award or otherwise that the Committee in its sole and absolute discretion may
deem proper or advisable. The conditions giving rise to forfeiture
may include, but need not be limited to, the requirement that the Holder render
substantial services to the Corporation or its Subsidiaries for a specified
period of time. The restrictions on transferability may include, but need not be
limited to, options and rights of first refusal in favor of the Corporation and
stockholders of the Corporation other than the Holder of such shares of Stock
who is a party to the particular Award Agreement or a subsequent holder of the
shares of Stock who is bound by that Award Agreement.
7.8 Delivery of
Certificates of Stock. Subject to Paragraph 7.9, the
Corporation shall promptly issue and deliver a certificate representing the
number of shares of Stock as to which restrictions have lapsed with respect to a
Restricted Stock Award and upon receipt by the Corporation of any tax
withholding as may be requested. The value of the shares of Stock
transferable because of an Award under the Plan shall not bear any interest
owing to the passage of time, except as may be otherwise provided in an Award
Agreement.
7.9 Conditions
to Delivery of Stock. Nothing herein or in any Award granted
hereunder or any Award Agreement shall require the Corporation to issue any
shares with respect to any Award if that issuance would, in the opinion of
counsel for the Corporation, constitute a violation of the Securities Act or any
similar or superseding statute or statutes, any other applicable statute or
regulation, or the rules of any applicable securities exchange or securities
association, as then in effect. At the time of any grant of a
Restricted Stock Award, the Corporation may, as a condition precedent to the
vesting of any Restricted Stock Award, require from the Holder of the Award (or
in the event of his or her death, his or her legal representatives, heirs,
legatees, or distributees) such written representations, if any, concerning the
Holder’s intentions with regard to the retention or disposition of the shares of
Stock being acquired pursuant to the Award and such written covenants and
agreements, if any, as to the manner of disposal of such shares as, in the
opinion of counsel to the Corporation, may be necessary to ensure that any
disposition by that Holder (or in the event of the Holder’s death, his legal
representatives, heirs, legatees, or distributees) will not involve a violation
of the Securities Act or any similar or superseding statute or statutes, any
other applicable state or federal statute or regulation, or any rule of any
applicable securities exchange or securities association, as then in
effect.
7.10 Certain
Directors and Officers. With respect to Awards granted to
Holders who are directors or officers of the Corporation or any Subsidiary and
who are subject to potential liability for “short-swing profits” under Section
16(b) of the Exchange Act, Awards shall contain such other terms and conditions
as may be required by Rule 16b-3 unless the majority of the Board of Directors
or the Holder has determined not to have the Award comply with the potential
exemption from the provisions of 16(b) provided by Rule 16b-3.
7.11 Securities
Act Legend. Certificates for shares of Stock, when issued, may
have the following legend, or statements of other applicable restrictions
endorsed thereon and may not be immediately transferable:
THE SHARES
OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS. THE SHARES MAY NOT BE
OFFERED FOR SALE, SOLD, PLEDGED, TRANSFERRED, OR OTHERWISE DISPOSED OF UNTIL THE
HOLDER HEREOF PROVIDES EVIDENCE SATISFACTORY TO THE ISSUER (WHICH, IN THE
DISCRETION OF THE ISSUER, MAY INCLUDE AN OPINION OF COUNSEL SATISFACTORY TO THE
ISSUER) THAT SUCH OFFER, SALE, PLEDGE, TRANSFER, OR OTHER DISPOSITION WILL NOT
VIOLATE APPLICABLE FEDERAL OR STATE LAWS.
This
legend shall not be required for shares of Stock issued pursuant to an effective
registration statement under the Securities Act.
7.12 Legend for
Restrictions on Transfer. Each certificate representing shares
issued to a Holder pursuant to an Award granted under the Plan shall, if such
shares are subject to any transfer restriction, including a right of first
refusal, provided for under this Plan or an Award Agreement, bear a legend that
complies with applicable law with respect to the restrictions on transferability
contained in this Paragraph 7.12, such as:
THE SHARES
OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY IMPOSED BY THAT CERTAIN INSTRUMENT ENTITLED “ARENA, INC.
RESTRICTED STOCK AWARD PLAN” AS ADOPTED BY ARENA, INC. (THE “CORPORATION”)
ON DECEMBER __, 2009, AND AN AGREEMENT THEREUNDER BETWEEN THE CORPORATION AND
[HOLDER]
DATED ___________, ______, AND MAY NOT BE TRANSFERRED, SOLD, OR OTHERWISE
DISPOSED OF EXCEPT AS THEREIN PROVIDED. THE CORPORATION WILL FURNISH
A COPY OF SUCH INSTRUMENT AND AGREEMENT TO THE RECORD HOLDER OF THIS CERTIFICATE
WITHOUT CHARGE ON REQUEST TO THE CORPORATION AT ITS PRINCIPAL PLACE OF BUSINESS
OR REGISTERED OFFICE.
7.13 Rights as a
Stockholder. A Holder shall have no right as a stockholder
with respect to any shares covered by his or her Award until a certificate
representing those shares is issued in his or her name. No adjustment
shall be made for dividends (ordinary or extraordinary, whether in cash or other
property) or distributions or other rights for which the record date is before
the date that certificate is issued, except as contemplated by Section
6. Nevertheless, dividends and dividend equivalent rights may be
extended to and made part of any Award denominated in Stock or units of Stock,
subject to such terms, conditions, and restrictions as the Committee may
establish. The Committee may also establish rules and procedures for
the crediting of interest on deferred cash payments and dividend equivalents for
deferred payment denominated in Stock or units of Stock.
7.14 Information. Each
Holder shall furnish to the Corporation all information requested by the
Corporation to enable it to comply with any reporting or other requirement
imposed upon the Corporation by or under any applicable statute or
regulation.
7.15 Remedies. The
Corporation shall be entitled to recover from a Holder reasonable attorneys’
fees incurred in connection with the enforcement of the terms and provisions of
the Plan and any Award Agreement whether by an action to enforce specific
performance or for damages for its breach or otherwise.
7.16 Information
Confidential. As partial consideration for the granting of
each Award hereunder, the Holder shall agree with the Corporation that the
Holder will keep confidential all information and knowledge that the Holder has
relating to the manner and amount of his or her participation in the Plan; provided,
however, that
such information may be disclosed as required by law and may be given in
confidence to the Holder’s spouse, tax and financial advisors, or to a financial
institution to the extent that such information is necessary to secure a loan.
In the event any breach of this promise comes to the attention of the Committee,
it shall take into consideration that breach in determining whether to recommend
the grant of any future Award to that Holder, as a factor militating against the
advisability of granting any such future Award to that individual.
7.17 Consideration. No
restriction on any Restricted Stock Award shall lapse with respect to a Holder
unless and until the Holder shall have paid cash or property to, or performed
services for, the Corporation or any of its Subsidiaries that the Committee
believes is equal to or greater in value then the par value of the Stock subject
to such Award.
SECTION
8. DURATION AND AMENDMENT OF
PLAN
8.1 Duration. No
Awards may be granted hereunder after the date that is ten (10) years from the
date the last amendment to this Plan involving an increase in authorized shares
is approved by the stockholders of the Corporation.
8.2 Amendment. The
Board of Directors may (insofar as permitted by law and applicable regulations
of any exchange or inter-dealer quotation system on which the Company’s stock
may be listed), with respect to any shares which, at the time, are not subject
to Awards, suspend or discontinue the Plan or revise or amend it in any respect
whatsoever, and may amend any provision of the Plan or any Award Agreement to
make the Plan or the Award Agreement, or both, comply with Section 16(b) of the
Exchange Act and the exemptions therefrom, the Code, the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”),
the regulations promulgated under the Code or ERISA, or any other law, rule or
regulation that may affect the Plan. The Board of Directors may also
amend, modify, suspend or terminate the Plan for the purpose of meeting or
addressing any changes in other legal requirements applicable to the Corporation
or the Plan or for any other purpose permitted by law. The Plan may
not be amended without the consent of the holders of a majority of the shares of
Stock then outstanding to increase materially the aggregate number of shares of
Stock that may be issued under the Plan (except for adjustments pursuant to
Section 6 of the Plan).
SECTION
9. GENERAL
9.1 Right of the
Corporation and Subsidiaries to Terminate Employment. Nothing
contained in the Plan or in any Award Agreement shall confer upon any Holder the
right to continue in the employ of the Corporation or any Subsidiary, or
interfere in any way with the rights of the Corporation or any Subsidiary to
terminate his or her employment at any time.
9.2 No Liability
for Good Faith Determinations. Neither the members of the
Board of Directors nor any member of the Committee shall be liable for any act,
omission or determination taken or made in good faith with respect to the Plan
or any Award granted under it, and members of the Board of Directors and the
Committee shall be entitled to indemnification and reimbursement by the
Corporation in respect of any claim, loss, damage or expense (including
attorneys’ fees, the costs of settling any suit, provided such settlement is
approved by independent legal counsel selected by the Corporation, and amounts
paid in satisfaction of a judgment, except a judgment based on a finding of bad
faith) arising therefrom to the full extent permitted by law and under any
directors and officers liability or similar insurance coverage that may from
time to time be in effect. This right to indemnification shall be in
addition to, and not a limitation on, any other indemnification rights any
member of the Board of Directors or the Committee may have.
9.3 Other
Benefits. Participation in the Plan shall not preclude the
Holder from eligibility in any other stock or stock option plan of the
Corporation or any Subsidiary or any old age benefit, insurance, pension, profit
sharing, retirement, bonus or other extra compensation plans that the
Corporation or any Subsidiary has adopted or may, at any time, adopt for the
benefit of its Employees. Neither the adoption of the Plan by the
Board of Directors nor the submission of the Plan to the stockholders of the
Corporation for approval shall be construed as creating any limitations on the
power of the Board of Directors to adopt such other incentive arrangements as it
may deem desirable, including, without limitation, the granting of stock options
and the awarding of stock and cash otherwise than under the Plan, and such
arrangements may be either generally applicable or applicable only in specific
cases.
9.4 Exclusion
from Pension and Profit-Sharing Compensation. By acceptance of
an Award (whether in Stock or cash), as applicable, each Holder shall be deemed
to have agreed that the Award is special incentive compensation that will not be
taken into account in any manner as salary, compensation or bonus in determining
the amount of any payment under any pension, retirement or other employee
benefit plan of the Corporation or any Subsidiary. In addition, each
beneficiary of a deceased Holder shall be deemed to have agreed that the Award
will not affect the amount of any life insurance coverage, if any, provided by
the Corporation or a Subsidiary on the life of the Holder that is payable to the
beneficiary under any life insurance plan covering employees of the Corporation
or any Subsidiary.
9.5 Execution of
Receipts and Releases. Any payment of cash or any issuance or
transfer of shares of Stock or other property to the Holder, or to his legal
representative, heir, legatee or distributee, in accordance with the provisions
hereof, shall, to the extent thereof, be in full satisfaction of all claims of
such persons hereunder. The Committee may require any Holder, legal
representative, heir, legatee or distributee, as a condition precedent to such
payment, to execute a release and receipt therefor in such form as it shall
determine.
9.6 Unfunded
Plan. Insofar as it provides for Awards of Stock, the Plan
shall be unfunded. Although bookkeeping accounts may be established
with respect to Holders who are entitled to Stock, other property or rights
thereto under the Plan, any such accounts shall be used merely as a bookkeeping
convenience. The Corporation shall not be required to segregate any
assets that may at any time be represented by Stock, other property or rights
thereto, nor shall the Plan be construed as providing for such segregation, nor
shall the Corporation nor the Board of Directors nor the Committee be deemed to
be a trustee of any Stock, other property or rights thereto to be granted under
the Plan. Any liability of the Corporation to any Holder with respect
to a grant of Stock, other property or rights thereto under the Plan shall be
based solely upon any contractual obligations that may be created by the Plan
and any Award Agreement; no such obligation of the Corporation shall be deemed
to be secured by any pledge or other encumbrance on any property of the
Corporation. Neither the Corporation nor the Board of Directors nor the
Committee shall be required to give any security or bond for the performance of
any obligation that may be created by the Plan.
9.7 No Guarantee
of Interests. The Board of Directors, the Committee and the
Corporation do not guarantee the Stock of the Corporation from loss or
depreciation.
9.8 Payment of
Expenses. All expenses incident to the administration,
termination or protection of the Plan, including, but not limited to, legal and
accounting fees, shall be paid by the Corporation or its Subsidiaries; provided,
however, the
Corporation or a Subsidiary may recover any and all damages, fees, expenses and
costs arising out of any actions taken by the Corporation to enforce its right
to purchase Stock under this Plan.
9.9 Corporation
Records. Records of the Corporation or its Subsidiaries
regarding the Holder’s period of employment, termination of employment and the
reason therefor, leaves of absence, re-employment, and other matters shall be
conclusive for all purposes hereunder, unless determined by the Committee to be
incorrect.
9.10 Information. The
Corporation and its Subsidiaries shall, upon request or as may be specifically
required hereunder, furnish or cause to be furnished, all of the information or
documentation which is necessary or required by the Committee to perform its
duties and functions under the Plan.
9.11 Corporation
Action. Any action required of the Corporation shall be by
resolution of its Board of Directors or by a person authorized to act by
resolution of the Board of Directors.
9.12 Severability. If
any provision of this Plan is held to be illegal or invalid for any reason, the
illegality or invalidity shall not affect the remaining provisions hereof, but
such provision shall be fully severable and the Plan shall be construed and
enforced as if the illegal or invalid provision had never been included herein.
If any of the terms or provisions of this Plan conflict with the requirements of
Rule 16b-3 (as those terms or provisions are applied to Eligible Individuals who
are subject to Section 16(b) of the Exchange Act,) or the Code, then those
conflicting terms or provisions shall be deemed inoperative to the extent they
so conflict with the requirements of Rule 16b-3 or the Code unless the Committee
has determined that the Plan should not comply with such
requirements.
9.13 Notices. Whenever
any notice is required or permitted hereunder, such notice must be in writing
and personally delivered or sent by mail. Any such notice required or permitted
to be delivered hereunder shall be deemed to be delivered on the date on which
it is personally delivered, or, whether actually received or not, on the third
Business Day after it is deposited in the United States mail, certified or
registered, postage prepaid, addressed to the person who is to receive it at the
address which such person has theretofore specified by written notice delivered
in accordance herewith. The Corporation or a Holder may change, at any time and
from time to time, by written notice to the other, the address which it or he
had previously specified for receiving notices. Until changed in
accordance herewith, the Corporation and each Holder shall specify as its and
his address for receiving notices the address set forth in the Award Agreement
pertaining to the shares to which such notice relates.
9.14 Waiver of
Notice. Any person entitled to notice hereunder may waive such
notice.
9.15 Successors. The
Plan shall be binding upon the Holder, his legal representatives, heirs,
legatees and distributees, upon the Corporation, its successors and assigns, and
upon the Committee and its successors.
9.16 Headings. The
titles and headings of Sections and Paragraphs are included for convenience of
reference only and are not to be considered in construction of the provisions
hereof.
9.17 Governing
Law. All questions arising with respect to the provisions of
the Plan shall be determined by application of the laws of the State of Nevada
except to the extent Nevada law is preempted by federal law. Questions arising
with respect to the provisions of an Award Agreement that are matters of
contract law shall be governed by the laws of the state specified in the Award
Agreement, except to the extent Nevada corporate law conflicts with the contract
law of such state, in which event Nevada corporate law shall
govern. The obligation of the Corporation to sell and deliver Stock
hereunder is subject to applicable laws and to the approval of any governmental
authority required in connection with the authorization, issuance, sale, or
delivery of such Stock.
9.18 Word
Usage. Words used in the masculine shall apply to the feminine
where applicable, and wherever the context of this Plan dictates, the plural
shall be read as the singular and the singular as the plural.
IN WITNESS
WHEREOF, Arena, Inc., acting by and through its officer hereunto duly
authorized, has executed this Arena, Inc. Restricted Stock Award Plan this _____
day of December, 2009.
ARENA,
INC.
By: ___________________________________________
Phillip W. Terry
President and Chief Executive
Officer
| Arena Resources,
Inc.
6555 S. Lewis Avenue
Tulsa,
Oklahoma 74136
|
PROXY
THIS PROXY IS SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS.
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The undersigned stockholder of Arena Resources, Inc., a Nevada
corporation, hereby constitutes and appoints Stanley M. McCabe and Lloyd
T. Rochford, and each of them, with full power of substitution, as
attorneys and proxies to appear and vote all shares of stock of the
Company standing in the name of the undersigned, at the Annual Meeting of
Stockholders of the Company to be held at the Doubletree Hotel, Warren
Place, 6110 South Yale, Tulsa, Oklahoma, on Friday, December 11, 2009, at
9:00 A..M. (Local Time), and at any adjournment thereof, with all powers
that the undersigned would possess if personally present, hereby revoking
all previous proxies. |
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| 1. |
Election of
Directors: |
FOR each of the nominees
listed below (except as shown to the contrary below) |
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o |
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WITHHOLD AUTHORITY to
vote for the nominees listed below |
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o |
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Lloyd T.
Rochford |
Stanley M.
McCabe |
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Clayton E.
Woodrum |
Anthony B.
Petrelli |
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Carl H.
Fiddner |
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(INSTRUCTION: To
withhold authority to vote for any nominee, write that nominee's name on
the space provided below.)
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| 2. |
Adoption of the Restricted
Stock Award Plan: To
adopt the Restricted Stock Award Plan |
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FOR the
adoption |
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o |
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AGAINST the
adoption |
|
o |
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| 3. |
Adoption of the Amendment to
the Stock Option Plan (increasing the number of shares subject
thereto from 5,500,000 to 6,000,000) |
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FOR the
amendment |
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o |
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AGAINST the
amendment |
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o |
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| 4. |
In their discretion,
upon any other matters as may properly come before the
meeting. |
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| (over) |
This
proxy when properly executed will be voted in the manner directed herein by the
undersigned stockholder. If no direction is made, this proxy will be
voted FOR management's nominees for director, FOR the adoption of the Restricted
Stock Award Plan and FOR the amendment to the Stock Option Plan.
The undersigned hereby acknowledge(s)
receipt of the Notice of the aforesaid Annual Meeting and the Proxy Statement
accompanying the same, both dated October 26,
2009.
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| Dated: |
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, 2009 |
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(Please
sign exactly as your name appears at left. When shares are held
in the names of two or more persons, all should sign
individually. Executors, administrators, trustees, etc., should
so indicate when signing. When shares are held in the name of a
corporation, the name of the corporation should be written first and then
an authorized officer should sign on behalf of the corporation, showing
the office held.)
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PLEASE
COMPLETE, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY, USING
THE ENCLOSED ENVELOPE.
|
(over)