Unassociated Document


    Option
      No.____

     

    KAL
      ENERGY, INC.

     

    STOCK
      OPTION AGREEMENT

     

    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

      
        
           

        

        
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    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

     


    
      
         

      

      
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    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

     


    
      
         

      

      
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    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.

     


    
      
         

      

      
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    (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

     


    
      
         

      

      
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    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.

     

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    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:

              	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 


      

    

     

    
      
         

      

      
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