Exhibit 10.2
INFINITY ENERGY RESOURCES, INC.
2006 EQUITY INCENTIVE PLAN
FORM OF INCENTIVE STOCK OPTION AGREEMENT
     This Incentive Stock Option Agreement (the “Agreement”), made as of the
___day of ___, 200___, and between Infinity Energy Resources, Inc., a
corporation duly formed and existing under the laws of Delaware (the “Company”),
and ___(the “Participant”).
     WHEREAS, the Company desires to encourage and enable the Participant to
acquire a proprietary interest in the Company through the ownership of the
Company’s common stock, par value US$0.0001 per share (the “Common Stock”)
pursuant to the terms and conditions of the 2006 Equity Incentive Plan (the
“Plan”) and this Agreement. Such ownership will provide the Participant with a
more direct stake in the future of the Company and encourage the Participant to
remain with the Company and/or its Affiliates, as applicable.
     NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the parties agree as
follows:
     1. DEFINITIONS. For purposes of this Agreement, all capitalized terms used
herein and not otherwise defined herein shall have the meanings ascribed to them
in the Plan.
     2. GRANT OF OPTION. The Company hereby grants to the Participant an
Incentive Stock Option (the “Option”) to purchase ___Shares at the exercise
price (the “Exercise Price”) of $  per share, subject to the terms and
conditions of this Agreement and the Plan.
     3. OPTION TERM. The Option granted hereby shall expire on ___, 201___(the
“Expiration Date”), unless sooner terminated or modified under the provisions of
this Agreement or the Plan. Except as otherwise set forth herein, the Option may
not be exercised after the Expiration Date.
     4. WHEN VESTED AND EXERCISABLE. The Option shall vest and be exercisable by
the Participant on the one year anniversary of the grant date, ___, 200_.
5. EMPLOYMENT TERMINATION: DEATH; DISABILITY; RETIREMENT; CAUSE.
     (a) If the services of the Participant are terminated for any reason other
than death, disability, retirement, Change in Control, or cause (in each case

 

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as defined below), the portion of this Option to purchase Common Stock that is
not vested on the date of such termination of service shall terminate and be
forfeited on such date of termination; however, the vested portion of this
Option shall be exercisable by the Participant at any time on or prior to the
earlier of (i) the Expiration Date or (ii) the three month anniversary of the
date of such termination of service. Any portion of this Option not exercised
within the period described in the preceding sentence, for whatever reason,
shall terminate.
     (b) In the event of the death or disability (as defined in Section 6(f) of
the Plan) of the Participant, the unvested portion of this Option shall
immediately terminate and be forfeited, and the vested portion of the Option on
such date shall be exercisable at any time on or prior to the 12 month
anniversary of such date by the beneficiary designated by the Participant for
such purpose (the “Designated Beneficiary”) or if no Designated Beneficiary
shall be appointed or if the Designated Beneficiary shall predecease the
Participant, by the Participant’s personal representatives, heirs or legatees.
Any portion of the Option not exercised within the period described in the
preceding sentence, for whatever reason, shall terminate.
     (c) In the event of the retirement of the Participant pursuant to Section
6(e) of the Plan, this Option shall be exercisable by such Participant at any
time on or prior to the earlier of (i) the stated expiration date of the Option,
or (ii) the three month anniversary of the date of such retirement.
     (d) In the event the service of the Participant is terminated for cause as
defined in Section 6(i) of the Plan, this Option (including any vested portion)
shall be forfeited as of the date of termination.
     6. CHANGE IN CONTROL. In the event of a Change in Control, the Company
shall give the Participant notice thereof and this Option, whether or not
currently vested and exercisable, shall become immediately vested and
exercisable immediately prior to the effective date of the Change in Control,
and the Board shall have the power and discretion to provide alternatives
regarding the terms and conditions for the exercise of, or modification of, this
Option in accordance with the Plan.
     “Change in Control” as used in this Agreement shall mean the first to occur
of the following events specified in (i), (ii), (iii), (iv), (v) or (vi) (but no
event other than the specified events): (i) any person becomes the beneficial
owner, directly or indirectly, of securities of the Company representing
thirty-five percent (35%) or more of the combined voting power of the Company’s
then outstanding voting securities (other than (x) the Company, (y) any
subsidiary of the Company, (z) one or more employee benefit plans maintained by
the Company), or (xx) any noteholders or warrantholders under the Securities
Purchase Agreement dated as of January 13, 2005 among Infinity, Inc., the
predecessor of the Company, and HFTP Investment L.L.C., AG Domestic
Convertibles, L.P. and AG Offshore Convertibles Ltd., as further amended,
supplemented and modified (the “Promethean Purchase Agreement”)); (ii) any
noteholders or warrantholders under the Promethean Purchase Agreement, whether
individually or as a group (as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, as

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amended (the “Exchange Act”)) become the owner, directly or indirectly, of
outstanding voting securities (including voting securities acquired on
conversion of notes or exercise of warrants) of the Company representing
thirty-five percent (35%) or more of the combined voting power of the Company’s
then outstanding voting securities; (iii) three or more Directors of the
Company, whose election or nomination for election is not approved by a majority
of the applicable Incumbent Board, are elected within any single twelve month
period to serve on the Board; (iv) members of the applicable Incumbent Board
cease to constitute a majority of the Board; (v) the consummation of a merger or
consolidation of the Company with or into any other corporation or entity or
person, or any other corporate reorganization, in which the stockholders of the
Company immediately prior to such consolidation, merger or reorganization own
less than 50% of the outstanding voting securities of the surviving entity (or
its parent) following the consolidation, merger or reorganization or (vi) the
consummation of a sale, lease or other disposition of all or substantially all
of the assets of the Company. For purposes of this Section, the terms “person”
and “beneficial owner” shall have the meanings set forth in Rule 13d-3 of the
Exchange Act and in the regulations promulgated thereunder. For purposes of this
paragraph, “Incumbent Board” shall mean (i) members of the Board of Directors of
the Company as of the date hereof, to the extent that they continue to serve as
members of the Board, and (ii) any individual who becomes a member of the Board
after the date hereof, if such individual’s election or nomination for election
as a Director was approved by a vote of at least seventy-five percent (75%) of
the then applicable Incumbent Board.
     7. INCENTIVE STOCK OPTION TAX MATTERS.
     (a) This Option is intended to qualify as an incentive stock option within
the meaning of Section 422 of the Code. The Board may take all appropriate
action to achieve this result. The Exercise Price has been determined to be
equal to or greater than the fair market value per Share at the time of grant.
     (b) To the extent the aggregate fair market value (determined at the time
of grant in accordance with Section 5(c) of the Plan) of the Common Stock with
respect to which the Option plus all other incentive stock options Participant
holds that are exercisable for the first time by Participant during any calendar
year exceeds one hundred thousand dollars ($100,000), Participant’s option(s) or
portions thereof that exceed such limit (according to the order in which they
were granted) shall be treated as Non-Statutory Options.
     8. NON-ASSIGNABILITY. The Option granted hereby and any right arising
thereunder may not be transferred, assigned, pledged or hypothecated (whether by
operation of law or otherwise), except by will or the applicable laws of descent
and distribution, and the Option and any right arising thereunder shall not be
subject to execution, attachment or similar process. Any attempted assignment,
transfer, pledge, hypothecation or other disposition of an Option not
specifically permitted herein or in the Plan shall be null and void and without
effect. An Option may be exercised

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solely by the Participant during his or her lifetime, or following his or her
death pursuant to Section 5(b) hereof.
     9. MODE OF EXERCISE. The Option may be exercised in whole or in part.
Common Stock purchased upon the exercise of the Option shall be paid for in full
at the time of such purchase. Such payment shall be made in cash or by wire
transfer in immediately available funds in either event denominated in U.S.
dollars. Upon receipt of notice of exercise and payment in accordance with
procedures to be established by the Board, the Company or its agent shall
deliver to the person exercising the Option (or his or her designee) a
certificate for such Common Stock.
     10. RECAPITALIZATION. The number of shares of Common Stock covered by this
Option and the exercise price shall be proportionately adjusted for any increase
or decrease in the number of issued shares of Common Stock as set forth in the
Plan; provided, however, that any fractional shares resulting from any such
adjustment shall be eliminated. The Board may also make any other changes,
including changes in the classes of securities available, to the extent it is
deemed necessary or desirable to preserve the intended benefits of the Plan for
the Company and the Participants in the event of any other reorganization,
recapitalization, merger, consolidation, spin-off, extraordinary dividend or
other distribution or similar transaction. Notwithstanding any other provision
of the Plan or this Agreement, the Board may cause the Option granted hereunder
to be canceled in consideration of a cash payment or alternative stock award
made to the holder of such canceled Option equal in value to the fair market
value of such canceled Option.
     11. PLAN CONTROLLING. This Agreement is intended to conform in all respects
with the requirements of the Plan. Inconsistencies between the requirements of
this Agreement and the Plan shall be resolved according to the terms of the
Plan. The Participant acknowledges receipt of a copy of the Plan.
     12. RIGHTS PRIOR TO EXERCISE OF OPTION. The Participant shall not have any
rights as a stockholder with respect to any Common Stock subject to the Option
prior to the date on which he is recorded as the holder of such Common Stock on
the records of the Company.
     13. WITHHOLDING TAXES. The Company shall have the right to require
Participants or their beneficiaries or legal representatives to remit to the
Company an amount sufficient to satisfy any United States federal, state and
local withholding tax requirements, including upon the grant, vesting or
exercise of this Option. Whenever payments under the Plan or this Agreement are
to be made to any Participant in cash, such payments shall be net of any amounts
sufficient to satisfy all applicable taxes, including without limitation, all
applicable United States federal, state and local withholding tax requirements
to be withheld or submitted by the Company concerning such payments. The Board
may, in its sole discretion, permit a Participant to satisfy his or her tax
withholding obligation either by (i) surrendering Common Stock owned by the
Participant or (ii) having the Company withhold from Common Stock otherwise
deliverable to the Participant. Common Stock surrendered or withheld shall be
valued at

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its Fair Market Value as of the date on which income is required to be
recognized for income tax purposes.
     14. NO LIABILITY OF BOARD COMMITTEE MEMBERS. No member of the Board or any
Committee or their designees shall be personally liable by reason of any
contract or other instrument executed by such member or on his behalf in his
capacity as a member of the Board or a Committee nor for any mistake of judgment
made in good faith.
     15. GOVERNING LAW. This Agreement and all rights arising hereunder shall be
governed by, and construed and interpreted in accordance with, the laws of the
Delaware.
     NEITHER THE PLAN NOR THIS AGREEMENT SHALL BE CONSTRUED AS GIVING THE
PARTICIPANT THE RIGHT TO BE RETAINED IN THE EMPLOY OR SERVICE OF THE COMPANY OR
ANY AFFILIATE THEREOF, NOR SHALL THEY INTERFERE IN ANY WAY WITH THE RIGHT OF THE
COMPANY OR ANY AFFILIATE THEREOF, AS APPLICABLE, TO TERMINATE THE PARTICIPANT’S
EMPLOYMENT OR SERVICE AT ANY TIME WITH OR WITHOUT CAUSE.
* * * * *
     Executed as of the day and year first above written.

            INFINITY ENERGY RESOURCES, INC.
      By:           Name:           Title:        

            PARTICIPANT
      By:           Name:                

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