TELEGEN CORPORATION STOCK OPTION AGREEMENT
TELEGEN
CORPORATION
Option
No. _____
This
Stock Option Agreement (“Agreement”) is made and entered into as of the date of
grant set forth below (the “Date of Grant”) by and between Telegen Corporation,
a California corporation (the “Company”), and the participant named below
(“Participant”). Capitalized terms not defined herein shall have the respective
meanings ascribed to them in the Company’s 2007 Stock Incentive Plan (the
“Plan”).
| Participant: | |||
| Social Security Number: | |||
| Address: | |||
| Total Option Shares: | |||
| Exercise Price Per Share (US$): | |||
| Date of Grant: | |||
| Expiration Date: | |||
| Type of Stock Option | |||
| (Check one): | [ ] Incentive Stock Option | ||
| [ ] Nonqualified Stock Option |
1. Grant
of Option.
The
Company hereby grants to Participant an option (the “Option”) to purchase the
total number of shares of Common Stock of the Company set forth above (the
“Shares”) at the Exercise Price Per Share set forth above (the “Exercise
Price”), subject
to all of the terms and conditions of this Agreement and the Plan. If designated
as an Incentive Stock Option above, the Option is intended to qualify as
an
“incentive stock option” (“ISO”) within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the “Code”); if designated as a
Nonqualified Stock Option above, the Option is not intended to qualify as
an ISO
under the Code.
2. Exercise
of Option.
2.1 Exercise
Period of Option.
Provided Participant continues to provide services to the Company throughout
the
specified period, the Option will become exercisable at the following rate:
[describe
vesting schedule]
2.2 Expiration.
The
Option shall expire on the Expiration Date set forth above and must be
exercised, if at all, on or before the Expiration Date.
3. Termination.
3.1 Termination
for Any Reason Except Death or Disability.
If
Participant’s services are terminated for any reason, except death, disability
or Cause, the Option, to the extent (and only to the extent) that it would
have
been exercisable by Participant on the date of termination, may be exercised
by
Participant no later than 90 days months after the date of termination, but
in
any event no later than the Expiration Date.
-1-
3.2 Termination
Because of Death or Disability.
If
Participant’s services are terminated because of death or disability of
Participant, the Option, to the extent (and only to the extent) that it is
exercisable by Participant on the date of termination, may be exercised by
Participant (or Participant’s legal representative) no later than one year after
the date of Termination (or, if required by the policies of the Canadian
Venture
Exchange applicable to the Company, not more than 90 days in the event of
disability), but in any event no later than the Expiration Date.
3.3 Termination
for Cause.
If
Participant’s services are terminated for Cause, the Option shall automatically
and fully terminate upon the first notification to Participant of such
termination.
3.4 No
Obligation to Employ.
Nothing
in the Plan or this Agreement shall confer on Participant any right to continue
in the employ of, or other relationship (whether as an officer, director,
consultant or otherwise) with, the Company or any parent, subsidiary or
affiliate of the Company, or limit in any way the right of the Company (or
any
parent, subsidiary or affiliate of the Company) to terminate Participant’s
employment or other relationship at any time, with or without
Cause.
4. Manner
of Exercise.
4.1 Stock
Option Exercise Agreement.
To
exercise this Option, Participant (or in the case of exercise after
Participant’s death, Participant’s executor, administrator, heir or legatee, as
the case may be) must deliver to the Company an executed stock option exercise
agreement in the form attached hereto as Exhibit
A,
or in
such other form as may be approved by the Company from time to time (the
“Exercise Agreement”), which shall set forth Participant’s election to exercise
the Option, the number of Shares being purchased, any restrictions imposed
on
the Shares and any representations, warranties and agreements regarding
Participant’s investment intent and access to information as may be required by
the Company to comply with applicable securities laws. If someone other than
Participant exercises the Option, then such person must submit documentation
reasonably acceptable to the Company that such person has the right to exercise
the Option.
4.2 Limitations
on Exercise.
The
Option may not be exercised unless such exercise is in compliance with all
applicable federal and state securities laws, as they are in effect on the
date
of exercise. The Option may not be exercised as to fewer than 100 Shares
unless
it is exercised as to all Shares as to which the Option is then exercisable,
and
the Option may be exercised only for whole shares.
4.3 Payment.
The
Exercise Agreement shall be accompanied by full payment of the Exercise Price
for the Shares being purchased in cash (by check) payable to the Company.
Payment may also be made as permitted in the Plan, to the extent deemed
acceptable by the Company.
4.4 Tax
Withholding.
Prior
to the issuance of the Shares upon exercise of the Option, Participant must
pay
or provide for any applicable federal or state withholding obligations of
the
Company. If the Committee permits, Participant may provide for payment of
withholding taxes upon exercise of the Option by requesting that the Company
retain Shares with a Fair Market Value equal to the minimum amount of taxes
required to be withheld. In such case, the Company shall issue the net number
of
Shares to the Participant by deducting the Shares retained from the Shares
issuable upon exercise.
4.5 Issuance
of Shares.
Provided that the Exercise Agreement and payment are in form and substance
satisfactory to counsel for the Company, and provided that the requirements
of
any stock
exchange upon which the Shares may then be listed are satisfied, the
Company shall issue the Shares registered in the name of Participant,
Participant’s authorized assignee, or Participant’s legal representative, and
shall deliver certificates representing the Shares with the appropriate legends
affixed thereto.
-2-
5. Notice
of Disqualifying Disposition of ISO Shares.
If the
Option is intended to qualify as an ISO, and if Participant sells or otherwise
disposes of any of the Shares acquired pursuant to the Option on or before
the
later of (a) the date two years after the Date of Grant, and (b) the
date one year after issuance of such Shares to Participant upon exercise
of the
Option, Participant shall immediately notify the Company in writing of such
disposition. Participant acknowledges that Participant may be subject to
income
tax withholding by the Company on the compensation income recognized by
Participant from the early disposition by payment in cash or out of the current
wages or other compensation payable to Participant.
6. Compliance
with Laws and Regulations.
The
exercise of the Option and the issuance and transfer of Shares shall be subject
to compliance by the Company and Participant with all applicable requirements
of
federal and state securities laws and with all applicable requirements of
any
stock exchange on which the Company’s Common Stock may be listed at the time of
such issuance or transfer. Participant understands that the Company is under
no
obligation to register or qualify the Shares with the Securities and Exchange
Commission, any state securities commission or any stock exchange to effect
such
compliance.
7. Nontransferability
of Option.
The
Option may not be transferred in any manner other than by will or by the
laws of
descent and distribution and may be exercised during the lifetime of Participant
only by Participant. The terms of the Option shall be binding upon the
executors, administrators, successors and assigns of Participant.
8. Tax
Consequences.
If the
Option is granted intending to qualify as an ISO under federal income tax
law,
but the Company does not represent or guarantee that the Option qualifies
as
such. Participant agrees and acknowledges that there are or may be federal
and
state income tax consequences to Participant as a result of the exercise
of the
Option and disposition of the Shares. PARTICIPANTS ARE URGED TO CONSULT THEIR
OWN TAX ADVISERS BEFORE EXERCISING THE OPTION OR DISPOSING OF THE
SHARES.
9. Privileges
of Stock Ownership.
Participant shall not have any of the rights of a shareholder with respect
to
any Shares until Participant exercises the Option and pays the Exercise
Price.
10. Interpretation.
Any
dispute regarding the interpretation of this Agreement shall be submitted
by
Participant or the Company to the Committee for review. The resolution of
such a
dispute by the Committee shall be final and binding on the Company and
Participant.
11. Entire
Agreement.
The
Plan is incorporated herein by reference. This Agreement and the Plan constitute
the entire agreement of the parties and supersede all prior undertakings
and
agreements with respect to the subject matter hereof.
12. Notices.
Any
notice required to be given or delivered to the Company under the terms of
this
Agreement shall be in writing and addressed to the Corporate Secretary of
the
Company at its principal corporate offices. Any notice required to be given
or
delivered to Participant shall be in writing and addressed to Participant
at the
address indicated above or to such other address as such party may designate
in
writing from time to time to the Company. All notices shall be deemed to
have
been given or delivered upon: personal delivery; three days after deposit
in the
United States mail by certified or registered mail (return receipt requested);
one business day after deposit with any return receipt express courier
(prepaid); or one business day after transmission by facsimile (transmission
confirmed).
-3-
13. Successors
and Assigns.
The
Company may assign any of its rights under this Agreement. This Agreement
shall
be binding upon and inure to the benefit of the successors and assigns of
the
Company. Subject to the restrictions on transfer set forth herein, this
Agreement shall be binding upon Participant and Participant’s heirs, executors,
administrators, legal representatives, successors and assigns.
14. Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws
of the
State of Washington, without regard to its provisions regarding conflicts
of
laws.
15. Limitation
on Rights; No Right to Future Grants; Extraordinary Item of
Compensation.
By
entering into this Agreement and accepting the grant of the Option evidenced
hereby, you acknowledge: (a) that the Plan is discretionary in nature and
may be suspended or terminated by the Company at any time; (b) that the
grant of the Option is a one-time benefit which does not create any contractual
or other right to receive future grants of options, or benefits in lieu of
options; (c) that all determinations with respect to any such future
grants, including, but not limited to, the times when options will be granted,
the number of shares subject to each option, the option price, and the time
or
times when each option will be exercisable, will be at the sole discretion
of
the Company; (d) that your participation in the Plan is voluntary;
(e) that the value of the Option is an extraordinary item of compensation
which is outside the scope of your employment contract, if any; (f) that
the Option is not part of normal or expected compensation for purposes of
calculating any severance, resignation, redundancy, end of service payments,
bonuses, long-service awards, pension or retirement benefits or similar
payments; (g) that the vesting of the Option ceases upon termination of
employment or service relationship with the Company for any reason except
as may
otherwise be explicitly provided in the Plan or this Agreement; (h) that
the future value of the underlying Shares is unknown and cannot be predicted
with certainty; and (i) that if the underlying Shares do not increase in
value, the Option will have no value.
16. Employee
Data Privacy.
By
entering this Agreement, you (a) authorize the Company and any agent of the
Company administering the Plan or providing Plan recordkeeping services,
to
disclose to the Company or any of its affiliates any information and data
the
Company requests in order to facilitate the grant of the Option and the
administration of the Plan; (b) waive any data privacy rights you may have
with respect to such information; and (c) authorize the Company and its
agents to store and transmit such information in electronic form.
17. Acceptance.
Participant hereby acknowledges receipt of a copy of the Plan and this
Agreement. Participant has read and understands the terms and provisions
thereof, and accepts the Option subject to all the terms and conditions of
the
Plan and this Agreement. Participant acknowledges that there may be adverse
tax
consequences upon exercise of the Option or disposition of the Shares and
that
Participant should consult a tax adviser prior to such exercise or
disposition.
-4-
DATED
as
of the Date of Grant set forth above.
| TELEGEN CORPORATION | ||
| |
|
|
| By: | ||
| Its: | ||
| Name: | ||
Participant
acknowledges receipt of a copy of the Plan, a copy of which is annexed hereto;
represents that Participant is familiar with the terms and provisions of
the
Plan and this Agreement; and hereby accepts this Option subject to all of
the
terms and provisions of the Plan and this Agreement. Participant further
acknowledges that if the Plan has not been approved by the Company’s
shareholders as of the Date of Grant of this Option, this Option shall not
be
exercisable until such approval has been obtained.
| Participant: | ||
|
(Signature)
|
||
|
(Print
Name)
|
||
| Date signed: __________________________ |
-5-
EXHIBIT
A
STOCK
OPTION EXERCISE NOTICE
AND
INVESTMENT
REPRESENTATION STATEMENT
| To: |
Telegen
Corporation
|
| __________________________________ |
| __________________________________ |
| Attn: Secretary |
This
Notice of Exercise is made and entered into as of _____________, 20___ (the
“Effective Date”) by the purchaser named below (the “Purchaser”) in connection
with stock options granted to Purchaser by Telegen Corporation, a California
corporation (the “Company”). Capitalized terms not defined herein shall have the
respective meanings ascribed to them in the Company’s 2007 Stock Incentive Plan
(the “Plan”).
| Purchaser: | |||
| Total Number of Shares: | |||
| Purchase Price Per Share: | |||
| Total Purchase Price: | |||
| Option Date of Grant: |
1. Exercise
of Option.
1.1 Exercise.
Pursuant to exercise of that certain option (“Option”) granted to Purchaser
under the Plan and subject to the terms and conditions of this Agreement,
Purchaser hereby elects to purchases from the Company the total number of
shares
set forth above (“Shares”) of the Company’s Common Stock at a purchase price per
share set forth above for a total purchase price set forth above (the “Purchase
Price”).
1.2 Title
to Shares.
The
exact spelling of the name(s) under which Purchaser will take title to the
Shares is:
Purchaser
desires to take title to the Shares as follows:
|
[
]
|
Individual,
as separate property
|
|
[
]
|
Husband
and wife, as community property
|
|
[
]
|
Joint
Tenants
|
|
[
]
|
Alone
or with spouse as trustee(s) of the following trust (including
date):
|
| [ ] | Other; please specify: |
-1-
1.3 Payment.
Purchaser hereby delivers payment of the Purchase Price in the manner permitted
in the Stock Option Agreement by delivery of a check for the full Purchase
Price.
2. Representations
and Warranties of Purchaser.
Purchaser represents and warrants to the Company that:
2.1 Agrees
to Terms of the Plan.
Purchaser has received a copy of the Plan and the Stock Option Agreement,
has
read and understands the terms of the Plan, the Stock Option Agreement and
this
Exercise Agreement, and agrees to be bound by their terms and conditions.
Purchaser acknowledges that there may be adverse tax consequences upon exercise
of the Option or disposition of the Shares, and that Purchaser should consult
a
tax adviser prior to such exercise or disposition.
2.2 Purchase
for Own Account for Investment.
For as
long as the Shares have not been registered under the Securities Act of 1933,
as
amended (the “Securities Act”), Purchaser makes the following representations:
(a) Purchaser is purchasing the Shares for Purchaser’s own account for
investment purposes only and not with a view to, or for sale in connection
with,
a distribution of the Shares within the meaning of the Securities Act; and
(b) Purchaser has no present intention of selling or otherwise disposing of
all or any portion of the Shares and no one other than Purchaser has any
beneficial ownership of any of the Shares.
2.3 Access
to Information.
Purchaser has had access to all information regarding the Company and its
present and prospective business, assets, liabilities and financial condition
that Purchaser reasonably considers important in making the decision to purchase
the Shares. Purchaser has had ample opportunity to ask questions of the
Company’s representatives concerning such matters and this investment and all
such questions have been answered to Purchaser’s full satisfaction.
2.4 Understanding
of Risks.
Purchaser is fully aware of (i) the highly speculative nature of the
investment in the Shares, (ii) the financial hazards involved,
(iii) the potential lack of liquidity of the Shares and the restrictions on
transferability of the Shares (e.g., that Purchaser may not be able to sell
or
dispose of the Shares or use them as collateral for loans), (iv) the
qualifications and backgrounds of the management of the Company; and
(v) the tax consequences of investment in the Shares. Purchaser is capable
of evaluating the merits and risks of this investment, has the ability to
protect Purchaser’s own interests in this transaction and is financially capable
of bearing a total loss of this investment.
2.5 Compliance
with Securities Laws.
Purchaser understands that the Shares have not been registered under the
Securities Act in reliance upon a specific exemption therefrom, which exemption
depends upon, among other things, the bona fide nature of his or her investment
intent as expressed herein. In this connection, Purchaser understands that,
in
the view of the Securities and Exchange Commission (“SEC”), the statutory basis
for such exemption may be unavailable if his or her representation was
predicated solely upon a present intention to hold these Securities for the
minimum capital gains period specified under tax statutes, for a deferred
sale,
for or until an increase or decrease in the market price of the Securities,
or
for a period of one year or any other fixed period in the future.
3. Restricted
Securities.
3.1 No
Transfer Unless Registered or Exempt.
Purchaser understands that Purchaser may not transfer any Shares and must
hold
the Shares indefinitely unless such Shares are registered under the Securities
Act or qualified under applicable state securities laws or unless, in the
opinion of counsel to the Company, exemptions from such registration and
qualification requirements are available. Purchaser understands that only
the
Company may file a registration statement with the SEC and that the Company
is
under no obligation to do so with respect to the Shares. Purchaser has also
been
advised that exemptions from registration and qualification may not be available
or may not permit Purchaser to transfer all or any of the Shares in the amounts
or at the times proposed by Purchaser.
-2-
3.2 Legends.
Purchaser understands and agrees that until
or
unless the Shares are registered under the Securities Act, the certificate
evidencing the Shares will be imprinted with a legend that prohibits the
transfer of the Shares unless they are registered or such registration is
not
required in the opinion of counsel for the Purchaser satisfactory to the
Company.
4. Tax
Consequences.
PURCHASER UNDERSTANDS THAT PURCHASER MAY SUFFER ADVERSE FEDERAL OR STATE
TAX
CONSEQUENCES AS A RESULT OF PURCHASER’S PURCHASE OR DISPOSITION OF THE SHARES.
PURCHASER ACKNOWLEDGES THAT SHE/HE HAS BEEN ADVISED TO CONSULT WITH HER/HIS
OWN
TAX ADVISER IN CONNECTION WITH THE PURCHASE OR DISPOSITION OF THE SHARES
AND
THAT PURCHASER HAS HAD AN OPPORTUNITY TO DO SO. PURCHASER IS NOT RELYING
ON THE
COMPANY OR ITS AGENTS FOR ANY TAX ADVICE.
5. Compliance
with Laws and Regulations.
The
issuance and transfer of the Shares will be subject to and conditioned upon
compliance by the Company and Purchaser with all applicable state and federal
laws and regulations and with all applicable requirements of any stock exchange
or automated quotation system on which the Company’s Common Stock may be listed
or quoted at the time of such issuance or transfer.
6. Governing
Law; Severability.
This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of Washington, without regard to conflicts of laws. If
any
provision of this Agreement is determined by a court of law to be illegal
or
unenforceable, then such provision will be enforced to the maximum extent
possible and the other provisions will remain fully effective and
enforceable.
7. Entire
Agreement.
The
Plan and this Agreement, together with all its Exhibits, constitute the entire
agreement and understanding of the parties with respect to the subject matter
of
this Agreement, and supersede all prior understandings and agreements, whether
oral or written, between the parties hereto with respect to the specific
subject
matter hereof.
EXECUTED
as of the Effective Date.
PARTICIPANT
| SSN: | |||
|
(Signature)
|
|||
| Address: | |||
|
(Please
print name)
|
-3-