STOCK OPTION AGREEMENT UNDER THE MOGUL ENERGY INTERNATIONAL, INC. (Nonqualified Stock Option)
UNDER
THE MOGUL ENERGY
INTERNATIONAL, INC.
2007
STOCK INCENTIVE PLAN
(Nonqualified
Stock Option)
To: _____________________________
You
have
been granted a nonqualified stock option (your “Option”) under the Mogul Energy
International, Inc. Stock Incentive Plan (the “Plan”), a copy of which Plan is
attached. The key terms of your Option are as follows:
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1.
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Number
of
Shares: .
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2.
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Exercise
Price: $
per share.
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3.
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Types
of Option: Nonqualified Stock Option
(NQSO).
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4.
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Option
Grant Date: ,
200_.
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5.
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Expiration
Date: ,
201_, unless sooner terminated.
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6.
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Vesting: Your
Option vests and become exercisable according to the following
schedule,
beginning with the Vesting Start Date of
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200_:
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Years
of Continuous Employment or other Service Relationship From Vesting
Start
Date
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Portion
of Total Option That is Exercisable
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Less
than 3 months
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20%
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3
months
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40%
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6
months
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60%
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9
months
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80%
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12
months
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100%
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The
above
six points summarize the key features of your Option. Your Option is
also governed by the terms of the Plan and the attached Appendix of Terms
and
Conditions, both of which are incorporated into this Option Agreement by
reference. Please acknowledge your receipt and acceptance of these
items by signing and returning the attached Acceptance and
Acknowledgement.
| Very truly yours, | ||
| MOGUL ENERGY INTERNATIONAL, INC. | ||
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By:
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| , Chief Executive Officer |
APPENDIX
OF TERMS AND CONDITIONS
Your
Option is subject to all the terms and provisions of the Plan, as tailored
by
your Option Agreement and this Appendix of Terms and
Conditions. Capitalized terms not defined in your Option Agreement
and this Appendix have the meanings provided in the Plan.
A. Termination
of Employment. Upon
your termination of employment or other service relationship with the Company,
the unvested portion of your Option expires. You may continue to
exercise the vested portion of your Option for a period of three months
following your termination, unless the termination was for Cause, or
attributable to your death or Total Disability, as described
below. If your employment or other service relationship terminates
for Cause (as defined in the Plan), the unexercised portion of your Option
expires immediately, both unvested and vested portions.
If
your
employment or other service relationship with the Company terminates because
of
your Total Disability, you may continue to exercise the vested portion of
your
Option for 12 months (instead of the regular three months) following the
termination, but in no event beyond the original Expiration
Date. Similarly, if you die while still working for the Company, your
heirs or estate may exercise the vested portion of your Option for a period
of
12 months following your death. Upon your death within three months
following a termination of employment or other service relationship (or within
12 months, if termination is due to Total Disability), your estate or heirs
will
have 12 months following the date of your death to exercise the vested portion
of your Option.
B. Option
Exercise. You
may exercise your Option by giving written notice to the Company, using the
attached sample form or other documentation substantially similar and
satisfactory to the Company. Your written exercise notice must be
accompanied by full payment of the exercise price for the number of shares
you
are purchasing. It is the Company’s intent that the exercise price be
the Fair Market Value of the Company’s stock as of the date the Option is
issued. If it is later determined under the valuation methods used
for Code § 409A that the exercise price is less than the Fair Market Value, the
exercise price will be adjusted in accordance with Code § 409A to be the Fair
Market Value at the date of issue.
C. Form
of Payment. You
may pay your Option exercise price in cash, with a cashier’s check, or a
personal check, unless the Plan Administrator determines at the time of exercise
not to accept a personal check.
D. Tax
Consequences. Your
Option is intended as a Nonqualified Stock Option (NQSO). Upon
exercise of your Option, and receipt of shares of Common Stock, you will
have
taxable income for federal income tax reporting purposes, in an amount equal
to
the Fair Market Value of the shares, measured at the time of exercise, less
the
Exercise Price you paid. The income constitutes compensation, taxed
at ordinary income rates. Upon your ultimate sale of the shares, the
resulting gain or loss will constitute capital gain or loss, taxed at short
or
long-term capital gain rates, depending on whether you have held the shares
for
at least a year. The tax rules associated with options can be
complex. The Company is not providing tax advice, and the preceding
is provided only as background information. You should consider
obtaining personal tax consulting before exercising your Option or selling
the
resulting shares. Further, the tax laws generally described above are
in effect as of your Option Grant Date and are subject to change.
A-1
E. Withholding
Taxes. To
the extent the exercise of your Option generates taxable income, the income
may
trigger withholding tax obligations for the Company. The Company has
the right to retain, without notice, sufficient shares to satisfy these
obligations, as well as withhold other amounts the Company may owe
you. Alternatively, the Company may refrain from issuing shares to
you until acceptable arrangements have been made to enable the Company to
satisfy its withholding obligation.
F. Nontransferability
of Option. During
your lifetime only you can exercise your Option. Your Option is not
transferable, except by will or by the applicable laws of descent and
distribution. Following your death, the Plan provides that your
Option may be exercised by your heirs or the personal representative of your
estate.
G. Effect
of Sale, Merger or Exchange. In
connection with the completion of a liquidation of the Company, a sale of
substantially all of the Company’s property, or a merger or sale of the
Company’s stock, after which voting control of the Company belongs to
individuals or entities who were not shareholders of the Company prior to
the
transaction (collectively referred to as a “Sales Event”), your Option will
expire and terminate, provided the Company will afford you advance notice
and an
opportunity prior to the Sales Event to exercise the vested portion of your
Option.
In
the
alternative, the Company may (i) determine to cash out your Option by paying
you
an amount equal to the Fair Market Value of a share of Common Stock (as
determined for purposes of the Sales Event), multiplied by the number of
shares
of Common Stock available under your Option, and reduced by the aggregate
Exercise Price associated with your Option; (ii) continue your
Option, subject to the same terms and conditions (including the vesting
schedule, if any), that applied prior to the Sales Event, modified as deemed
appropriate by the Administrator in conjunction with the Sales Event; or
(iii)
if the Sales Event involves a merger in which the shareholders of the Company
exchange their shares of Common Stock for shares of the surviving corporation,
then at the discretion of the Administrator and the surviving corporation,
the
Company may convert your Option to an option to purchase shares of stock
in the
surviving corporation (referred to as “Exchange Stock”). Your option
for Exchange Stock will possess terms and restrictions substantially identical
to your Option, adjusted as deemed appropriate by the
Administrator. Unless determined otherwise by the Administrator, your
Option vesting will not accelerate in connection with a Sales
Event.
H. Registration
/ Stock Legend. As
described in Section 13 of the Plan, various federal and state securities
laws
must be satisfied before the Company can issue shares to you upon the exercise
of your Option. By signing below, you acknowledge that you have read
Section 13 and understand this condition. Also, the certificates you
receive for shares upon exercise of your Option may possess the following
legend
or its equivalent:
The
securities represented by this certificate have not been registered under
the
Securities Act of 1933, as amended (the “Act”), and may not be sold,
assigned, offered or otherwise transferred unless (a) there is an effective
registration statement under the Act, or (b) the Company receives an
opinion of legal counsel for the holder of these securities (concurred in
by
legal counsel for the Company) stating that the transaction is exempt from
registration or the Company otherwise satisfies itself that the transaction
is
exempt from registration.
A-2
I. Effect
on Employment. By
signing below and acknowledging receipt of your Option Agreement, you
acknowledge that the Plan is discretionary in nature, and the Company may
suspend or terminate it at any time, and that your Option does not entitle
you
to additional option grants or continued employment or service with the Company,
or limit the Company’s ability (or your ability) to terminate employment or
services at any time. You also acknowledge that the future value of
the underlying shares is unknown and cannot be predicted with certainty,
and if
the underlying shares do not increase in value, then your Option may have
no
value.
J. Governing
Law; Attorneys Fees. The
Plan, this Option Agreement and this Appendix are governed by the laws of
the
State of Washington. If any provision of these documents is held to
be invalid by a court having jurisdiction, the remaining terms will remain
in
full force and effect. In the event of any arbitration or litigation
concerning your Option, each party will pay its own court costs and attorney
fees, and the prevailing party shall not be entitled to recover those costs
and
fees from the non-prevailing party.
K. Binding
Effect. The
terms and conditions expressed in this Option Agreement and corresponding
Appendix will inure to the benefit of the successors and assigns of the Company
and will be binding upon you and your heirs, executors, administrators,
successors and assigns.
A-3
ACCEPTANCE
AND ACKNOWLEDGEMENT
I,
as
resident of the State of ____________________, accept the Nonqualified Stock
Option described in the Option Agreement dated
,
20__ the corresponding Appendix of Terms and Conditions and the Mogul Energy
International, Inc. 2007 Stock Incentive Plan (all of which are collectively
referred to as the “Option Documents”). I also acknowledge receipt of a copy of
the Option Documents. I have reviewed the Option Documents and am
aware of their terms, particularly Section H. of the Appendix entitled,
“Registration / Stock Legend.”
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Dated:
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Signature of Optionee |
By
his or
her signature below, the spouse of the Optionee, if such Optionee is legally
married as of the date of this Agreement, acknowledges that having read this
Agreement and the Plan, and being familiar with the terms and provisions
thereof, agrees to be bound by all the terms and conditions of this Agreement
and the Plan.
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Dated:
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Spouse’s Signature | |||
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Printed Name |
By
his or
her signature below, the Optionee represents that he or she is not legally
married as of the date of this Agreement.
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Dated:
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Signature of Optionee |
Notice
of Exercise of Nonqualified Stock Option
I,
a
resident of the State
of ,
hereby exercise my Nonqualified Stock Option granted pursuant to the Option
Agreement, dated
. Specifically,
I am notifying the Company of my desire to purchase
shares of Common Stock (or a successor class of stock) of the Company at
the
exercise price of
$
per share.
I
hereby
represent and agree that the exercise of my Option, and the shares I receive,
are subject to the provisions the Option Agreement, the corresponding Appendix
of Terms and Conditions and the Mogul Energy International, Inc. 2007 Stock
Incentive Plan (all of which are collectively referred to as the “Option
Documents”).
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Dated:
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Taxpayer
I.D. Number
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Signature of Optionee | ||
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Address: | |||
