KAL ENERGY, INC. STOCK OPTION AGREEMENT
Option
No.____
KAL
ENERGY, INC.
Type
of Option (check one): o Incentive o Nonqualified
This
Stock Option Agreement (the “Agreement”) is entered into as of
__________________________, 20___, by and between KAL Energy, Inc., a Delaware
corporation (the “Company”), and ____________________________________ (the
“Optionee”) pursuant to the Company’s 2007 Stock Incentive Plan (the “Plan”).
Any capitalized term not defined herein shall have the same meaning ascribed
to
it in the Plan.
1. Grant
of Option.
The
Company hereby grants to Optionee an option (the “Option”) to purchase all or
any portion of a total of _____________________________ (__________) shares
(the
“Shares”) of the Common Stock of the Company at a purchase price of
_________________________ ($__________) per share (the “Exercise Price”),
subject to the terms and conditions set forth herein and the provisions of
the
Plan. If the box marked “Incentive” above is checked, then this Option is
intended to qualify as an “incentive stock option” as defined in
Section 422 of the Internal Revenue Code of l986, as amended (the “Code”).
If this Option fails in whole or in part to qualify as an incentive stock
option, or if the box marked “Nonqualified” is checked, then this Option shall
to that extent constitute a nonqualified stock option.
2. Vesting
of Option.
The
right to exercise this Option shall vest in installments, and this Option shall
be exercisable from time to time in whole or in part as to any vested
installment, as follows:
|
Upon
the Attainment of the following Performance Goals
|
This
Option shall be Exercisable as to
|
|
[Performance
Goal]
|
___________
(__________) Shares
|
|
[Performance
Goal]
|
___________
(__________) Shares
|
|
[Performance
Goal]
|
___________
(__________) Shares
|
No
additional Shares shall vest after the date of termination of Optionee’s
“Continuous Service” (as defined below) regardless of whether or not the
relevant Performance Goal is subsequently achieved, but this Option shall
continue to be exercisable in accordance with Section 3 hereof with respect
to that number of shares that have vested as of the date of termination of
Optionee’s Continuous Service.
As
used
herein, the term “Continuous Service” means (i) employment by either the
Company or any parent or subsidiary corporation of the Company, or by a
corporation or a parent or subsidiary of a corporation issuing or assuming
a
stock option in a transaction to which Section 424(a) of the Code applies,
which is uninterrupted except for vacations, illness (except for permanent
disability, as defined in Section 22(e)(3) of the Code), or leaves of
absence which are approved in writing by the
-1-
Company
or any of such other employer corporations, if applicable, (ii) service as
a member of the Board of Directors of the Company until Optionee resigns, is
removed from office, or Optionee’s term of office expires and he or she is not
reelected, or (iii) so long as Optionee is engaged as a Service Provider to
the Company or other corporation referred to in clause (i)
above.
3. Term
of Option.
The
right of the Optionee to exercise this Option shall terminate upon the first
to
occur of the following:
(a) the
expiration of ten (10) years from the date of this Agreement;
(b) the
expiration of three (3) months from the date of termination of Optionee’s
Continuous Service if such termination occurs for any reason other than
permanent disability, death or voluntary resignation; provided, however, that
if
Optionee dies during such three-month period the provisions of Section 3(e)
below shall apply;
(c) the
expiration of one (1) month from the date of termination of Optionee’s
Continuous Service if such termination occurs due to voluntary resignation;
provided, however, that if Optionee dies during such one-month period the
provisions of Section 3(e) below shall apply;
(d) the
expiration of one (1) year from the date of termination of Optionee’s Continuous
Service if such termination is due to permanent disability of the Optionee
(as
defined in Section 22(e)(3) of the Code);
(e) the
expiration of one (1) year from the date of termination of Optionee’s Continuous
Service if such termination is due to Optionee’s death or if death occurs during
either the three-month or one-month period following termination of Optionee’s
Continuous Service pursuant to Section 3(b) or 3(c) above, as the case may
be;
or
(f) upon
the
consummation of a “Change in Control” (as defined in Section 2.4 of the
Plan), unless such Option is otherwise assumed or replaced with a new option
of
comparable value or other New Incentives pursuant to Section 8
below.
4. Exercise
of Option.
On or
after the vesting of any portion of this Option in accordance with Sections
2 or
8 hereof, and until termination of the right to exercise this Option in
accordance with Section 3 above, the portion of this Option which has
vested may be exercised in whole or in part by the Optionee (or, after his
or
her death, by the person designated in Section 5 below) upon delivery of
the following to the Company at its principal executive offices:
(a) a
written
notice of exercise which identifies this Agreement and states the number of
Shares then being purchased (but no fractional Shares may be
purchased);
(b) a
check
or cash in the amount of the Exercise Price (or payment of the Exercise Price
in
such other form of lawful consideration as the Administrator may approve from
time to time under the provisions of Section 5.4 of the Plan);
(c) a
check
or cash in the amount reasonably requested by the Company to satisfy the
Company’s withholding obligations under federal, state or other applicable tax
laws with respect to the taxable income, if any, recognized by the Optionee
in
connection with the exercise of this Option (unless the Company and Optionee
shall have made other arrangements for
-2-
deductions
or withholding from Optionee’s wages, bonus or other compensation payable to
Optionee, or by the withholding of Shares issuable upon exercise of this Option
or the delivery of Shares owned by the Optionee in accordance with
Section 11.1 of the Plan, provided such arrangements satisfy the
requirements of applicable tax laws); and
(d) a
letter,
if requested by the Company, in such form and substance as the Company may
require, setting forth the investment intent of the Optionee, or person
designated in Section 5 below, as the case may be.
5. Death
of Optionee; No Assignment.
The
rights of the Optionee under this Agreement may not be assigned or transferred
except by will or by the laws of descent and distribution, and may be exercised
during the lifetime of the Optionee only by such Optionee. Any attempt to sell,
pledge, assign, hypothecate, transfer or dispose of this Option in contravention
of this Agreement or the Plan shall be void and shall have no effect. If the
Optionee’s Continuous Service terminates as a result of his or her death, and
provided Optionee’s rights hereunder shall have vested pursuant to
Section 2 hereof, Optionee’s legal representative, his or her legatee, or
the person who acquired the right to exercise this Option by reason of the
death
of the Optionee (individually, a “Successor”) shall succeed to the Optionee’s
rights and obligations under this Agreement. After the death of the Optionee,
only a Successor may exercise this Option.
6. Representation
of Optionee.
Optionee
acknowledges receipt of a copy of the Plan and understands that all rights
and
obligations connected with this Option are set forth in this Agreement and
the
Plan.
7. Adjustments
Upon Changes in Capital Structure.
In the
event that the outstanding shares of Common Stock of the Company are hereafter
increased or decreased or changed into or exchanged for a different number
or
kind of shares or other securities of the Company by reason of a
recapitalization, stock split, reverse stock split, reclassification, stock
dividend or other similar change in the capital structure of the Company, then
appropriate adjustment shall be made by the Administrator to the number of
Shares subject to the unexercised portion of this Option and to the Exercise
Price per share, in order to preserve, as nearly as practical, but not to
increase, the benefits of the Optionee under this Option, in accordance with
the
provisions of Section 4.2 of the Plan.
8. Change
in Control.
In the
event of a Change in Control (as defined in Section 2.4 of the
Plan):
(a) The
right
to exercise this Option shall accelerate automatically and vest in full
(notwithstanding the provisions of Section 2 above) effective as of
immediately prior to the consummation of the Change in Control unless
this
Option is to be assumed by the acquiring or successor entity (or parent thereof)
or a new option or New Incentives are to be issued in exchange therefor, as
provided in subsection (b) below. If vesting of this Option will accelerate
pursuant to the preceding sentence, the Administrator in its discretion may
provide, in connection with the Change in Control transaction, for the purchase
or exchange of this Option for an amount of cash or other property having a
value equal to the difference (or “spread”) between: (x) the value of the
cash or other property that the Optionee would have received pursuant to the
Change in Control transaction in exchange for the Shares issuable upon exercise
of this Option had this Option been exercised immediately prior to the Change
in
Control, and (y) the aggregate Exercise Price for such Shares. If the
vesting of this Option will accelerate pursuant to this subsection (a),
then the Administrator shall
-3-
cause
written notice of the Change in Control transaction to be given to the Optionee
not less than fifteen (15) days prior to the anticipated effective date of
the
proposed transaction.
(b) The
vesting of this Option shall not
accelerate if and to the extent that: (i) this Option (including the
unvested portion thereof) is to be assumed by the acquiring or successor entity
(or parent thereof) or a new option of comparable value is to be issued in
exchange therefor pursuant to the terms of the Change in Control transaction,
or
(ii) in the event the consideration to be received by the stockholders of
the Company in connection with the Change in Control does not consist of
securities, this Option (including the unvested portion thereof) is to be
replaced by the acquiring or successor entity (or parent thereof) with other
incentives of comparable value under a new incentive program (“New Incentives”)
containing such terms and provisions as the Administrator in its discretion
may
consider equitable. If this Option is assumed, or if a new option of comparable
value is issued in exchange therefor, then this Option or the new option shall
be appropriately adjusted, concurrently with the Change in Control, to apply
to
the number and class of securities or other property that the Optionee would
have received pursuant to the Change in Control transaction in exchange for
the
Shares issuable upon exercise of this Option had this Option been exercised
immediately prior to the Change in Control, and appropriate adjustment also
shall be made to the Exercise Price such that the aggregate Exercise Price
of
this Option or the new option shall remain the same as nearly as
practicable.
(c) If
the
provisions of subsection (b) above apply, then this Option, the new option
or the New Incentives shall continue to vest in accordance with the provisions
of Section 2 hereof and shall continue in effect for the remainder of the
term of this Option in accordance with the provisions of Section 3 hereof.
However, in the event of an Involuntary Termination (as defined below) of
Optionee’s Continuous Service within twelve (12) months following such Change in
Control, then vesting of this Option, the new option or the New Incentives
shall
accelerate in full automatically effective upon such Involuntary
Termination.
(d) For
purposes of this Section 8, the following terms shall have the meanings set
forth below:
(i) “Involuntary
Termination” shall mean the termination of Optionee’s Continuous Service by
reason of:
(A) Optionee’s
involuntary dismissal or discharge by the Company, or by the acquiring or
successor entity (or parent or any subsidiary thereof employing the Optionee)
for reasons other than Misconduct (as defined below), or
(B) Optionee’s
voluntary resignation following (x) a change in Optionee’s position with
the Company, the acquiring or successor entity (or parent or any subsidiary
thereof) which materially reduces Optionee’s duties and responsibilities or the
level of management to which Optionee reports, (y) a reduction in
Optionee’s level of compensation (including base salary, fringe benefits and
target bonus under any performance based bonus or incentive programs) by more
than ten percent (10%), or (z) a relocation of Optionee’s principal place
of employment by more than thirty (30) miles, provided and only if such change,
reduction or relocation is effected without Optionee’s written
consent.
-4-
(ii) “Misconduct”
shall mean (A) the commission of any act of fraud, embezzlement or
dishonesty by Optionee which materially and adversely affects the business
of
the Company, the acquiring or successor entity (or parent or any subsidiary
thereof), (B) any unauthorized use or disclosure by Optionee of
confidential information or trade secrets of the Company, the acquiring or
successor entity (or parent or any subsidiary thereof), (C) the continued
refusal or omission by the Optionee to perform any material duties required
of
him if such duties are consistent with duties customary for the position held
with the Company, the acquiring or successor entity (or parent or any subsidiary
thereof), (D) any material act or omission by the Optionee involving
malfeasance or gross negligence in the performance of Optionee’s duties to, or
material deviation from any of the policies or directives of, the Company or
the
acquiring or successor entity (or parent or any subsidiary thereof),
(E) conduct on the part of Optionee which constitutes the breach of any
statutory or common law duty of loyalty to the Company, the acquiring or
successor entity (or parent or any subsidiary thereof), or (F) any illegal
act by Optionee which materially and adversely affects the business of the
Company, the acquiring or successor entity (or parent or any subsidiary
thereof), or any felony committed by Optionee, as evidenced by conviction
thereof. The provisions of this Section shall not limit the grounds for the
dismissal or discharge of Optionee or any other individual in the service of
the
Company, the acquiring or successor entity (or parent or any subsidiary
thereof).
9. No
Employment Contract Created.
Neither
the granting of this Option nor the exercise hereof shall be construed as
granting to the Optionee any right with respect to continuance of employment
by
the Company or any of its subsidiaries. The right of the Company or any of
its
subsidiaries to terminate at will the Optionee’s employment at any time (whether
by dismissal, discharge or otherwise), with or without cause, is specifically
reserved.
10. Rights
as Stockholder.
The
Optionee (or transferee of this option by will or by the laws of descent and
distribution) shall have no rights as a stockholder with respect to any Shares
covered by this Option until such person has duly exercised this Option, paid
the Exercise Price and become a holder of record of the Shares
purchased.
11. “Market
Stand-Off” Agreement.
Optionee
agrees that, if requested by the Company or the managing underwriter of any
proposed public offering of the Company’s securities, Optionee will not sell or
otherwise transfer or dispose of any Shares held by Optionee without the prior
written consent of the Company or such underwriter, as the case may be, during
such period of time, not to exceed 180 days following the effective date of
the
registration statement filed by the Company with respect to such offering,
as
the Company or the underwriter may specify.
12. Interpretation.
This
Option is granted pursuant to the terms of the Plan, and shall in all respects
be interpreted in accordance therewith. The Administrator shall interpret and
construe this Option and the Plan, and any action, decision, interpretation
or
determination made in good faith by the Administrator shall be final and binding
on the Company and the Optionee. As used in this Agreement, the term
“Administrator” shall refer to the committee of the Board of Directors of the
Company appointed to administer the Plan, and if no such committee has been
appointed, the term Administrator shall mean the Board of
Directors.
13. Limitation
of Liability for Nonissuance.
During
the term of the Plan, the Company agrees at all times to reserve and keep
available, and to use its reasonable best efforts to obtain from any regulatory
body having jurisdiction any requisite authority in order to issue and sell,
such number of shares of its Common Stock as shall be sufficient to satisfy
its
obligations hereunder and
-5-
the
requirements of the Plan. Inability of the Company to obtain, from any
regulatory body having jurisdiction, authority deemed by the Company's counsel
to be necessary for the lawful issuance and sale of any shares of its Common
Stock hereunder and under the Plan shall relieve the Company of any liability
in
respect of the nonissuance or sale of such shares as to which such requisite
authority shall not have been obtained.
14. Notices. Any
notice, demand or request required or permitted to be given under this Agreement
shall be in writing and shall be deemed given when delivered personally or
three
(3) days after being deposited in the United States mail, as certified or
registered mail, with postage prepaid, (or by such other method as the
Administrator may from time to time deem appropriate), and addressed, if to
the
Company, at its principal place of business, Attention: the Chief Financial
Officer, and if to the Optionee, at his or her most recent address as shown
in
the employment or stock records of the Company.
15. Governing
Law.
The
validity, construction, interpretation, and effect of this Option shall be
governed by and determined in accordance with the laws of the State of
California except for matters related to corporate law, in which case the
provisions of the Delaware corporation law shall govern.
16. Severability.
Should
any provision or portion of this Agreement be held to be unenforceable or
invalid for any reason, the remaining provisions and portions of this Agreement
shall be unaffected by such holding.
17. Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original and all of which together shall be deemed one
instrument.
[Remainder
of page intentionally blank]
-6-
18. Tax
Consequences and Reporting Obligation Upon Sale of
Shares.
If this
Option is an “incentive stock option,” the tax benefits afforded to incentive
stock options will be obtained by the Optionee only if the Shares received
upon
exercise of this Option are held for at least one year after the date of
exercise of this Option and two years after the date this Option was granted
to
the Optionee. If the Optionee sells or otherwise transfers the Shares before
the
expiration of either of these one- or two-year periods, the sale or transfer
will be treated for tax purposes as a “disqualifying disposition,” resulting in
the following tax consequences: (a) the Optionee will not obtain the tax
benefits afforded to incentive stock options, (b) the “spread” as of the date of
exercise will be taxed to the Optionee at ordinary income tax rates, and (c)
the
amount of ordinary income resulting from the disqualifying disposition will
be
included in the Optionee’s W-2. These tax consequences are described in more
detail in the prospectus that relates to the Company’s 2006 Stock Incentive
Plan, as amended, a copy of which was delivered to the Optionee with this
Option. To assure that the Company has the information necessary to comply
with
its tax reporting obligations, Optionee
agrees to promptly notify the Company if any Shares are sold or transferred
less
than one year after the date of exercise or less than two years after the date
this Option was granted, and report information regarding the disqualifying
disposition in accordance with procedures established by the Company for this
purpose.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first
above written.
|
KAL
ENERGY, INC.
|
OPTIONEE
|
||
|
a
Delaware corporation
|
|||
|
By:_____________________________
|
____________________________ | ||
|
(Signature)
|
|||
|
Name:___________________________
|
|||
|
(Type
or print name)
|
_____________________________ | ||
| _____________________________ | |||
|
Its:_____________________________
|
Address:
|
||
-7-
