Exhibit 10.7


 





SOLUNA HOLDINGS, INC.


 


Second Amended and Restated 2021 Stock
Incentive Plan


 


Option Agreement


 


This Option Agreement,
including the Terms and Conditions attached hereto (this “Agreement”), evidences the award of an Option pursuant
to the Soluna Holdings, Inc. Second Amended and Restated 2021 Stock Incentive Plan, as amended and in effect from time to time
(the “Plan”), made as of the date set forth below by and between Soluna Holdings, Inc. (the “Company”)
and the individual identified below the optionee (the “Optionee”).


 


	Name of the Optionee:	 
	Date of this option award (the “Grant Date”):	 
	Number of Shares (the “Option Shares”) available pursuant to this option:	 
	Exercise price per Share (the “Exercise Price”):	 
	Grant Type:	Nonstatutory Option
	Vesting Schedule:	[25% on first anniversary of Grant Date and monthly thereafter for next 36 months]
	Date of expiration of option (“Expiration Date”)	 



 





	 	 	SOLUNA HOLDINGS, INC.
	 	 	 	 
	Signature of Optionee	 	By:	 
	[Address]	 	 	Name:
	 	 	 	Title:


 



    


     


    

 


SOLUNA
HOLDINGS, INC.


 


Second Amended and Restated 2021 Stock
Incentive Plan


 


Option Agreement – Terms and
Conditions


 


The Company agrees
to award to the Optionee, and the Optionee agrees to accept from the Company, an Option for the number of Option Shares specified
on the cover page hereof.


 


1.           
Grant Under Plan. This award is subject to the terms and conditions of this Agreement and the Plan, which are incorporated
herein by this reference. Capitalized terms used in this Agreement but not defined herein have the respective meanings specified
in the Plan or in any employment or similar agreement between the Optionee and the Company or a Subsidiary (as defined below),
as applicable.


 


2.           
Term and Exercisability of Option. This Option shall expire at 5:00 p.m. Eastern Time on the Expiration Date shown
on the cover page hereof, unless the Option expires earlier pursuant to this Section 2 or any provision of the Plan. At any time
before its expiration, this Option may be exercised to the extent vested, as shown on the cover page hereof, provided that:


 


(a)           
the Optionee’s Business Relationship must be in effect on a given date in order for any scheduled increment in vesting,
as set forth in the Vesting Schedule, to become effective;


 


(b)           
this Option may not be exercised more than 90 days following the date of termination of the Business Relationship; and


 


(c)           
in the event the Business Relationship is terminated for any reason (whether voluntary or involuntary), (i) the Optionee’s
right to vest in the Option will, except as explicitly provided by the Committee, terminate as of the date of termination of the
Business Relationship (and such right shall not be extended by any notice period mandated under local law) and (ii) the Optionee’s
continuing right (if any) to exercise the Option after termination of the Relationship will be measured from the date of termination
of the Business Relationship (and such right will not be extended by any notice period mandated under local law). The Committee
shall have the exclusive discretion to determine when the Business Relationship has terminated for purposes of this Option (including
determining when the Optionee is no longer considered to be providing active service while on a leave of absence).


 


For purposes
of this Section 2, the term “Company” refers to the Company and its subsidiaries (each a “Subsidiary”
and collectively, the “Subsidiaries”).


 


“Business
Relationship” means service to the Company or its Subsidiaries in the capacity of an employee, officer, director, consultant
or advisor, unless specified otherwise in a written agreement between the Optionee and the Company or a Subsidiary. For purposes
hereof, a Business Relationship shall not be considered as having terminated during any military leave, sick leave or other leave
of absence if approved in writing by the Company (or a Subsidiary) and if such written approval, or applicable law, contractually
obligates the Company (or a Subsidiary) to continue the Business Relationship of the Optionee after the approved period of absence
(an “Approved Leave of Absence”). In the event of an Approved Leave of Absence, vesting of this Option shall
continue in accordance with the original Vesting Schedule unless otherwise provided in the Company’s (or Subsidiary’s)
written approval of the leave of absence that specifically refers to this Agreement.


 



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It is the Optionee’s responsibility
to be aware of the date that the Option expires.


 


(d)          
Acceleration.


 


		(i)	The Committee may at any time provide that all or any portion of this Option awarded pursuant to
this Agreement shall become free of some or all restrictions, or otherwise realizable in full or in part, as the case may be, despite
the fact that the foregoing actions may cause the application of Sections 280G and 4999 of the Internal Revenue Code if there is
a “change in ownership or control” (within the meaning of those Sections) of the Company.



 


		(ii)	Notwithstanding the other sections of this Section 2, if there is a Change in Control, all remaining
unvested portions of this Option shall be immediately vested upon the Change in Control. A “Change in Control” for
purposes of this Section 2(d)(ii) shall mean a merger or consolidation in which securities constituting more than 50% of the total
combined voting power of the Company’s outstanding securities are transferred to a person or persons that do not own more
than 50% of the combined voting power of the Company’s securities immediately prior to such transaction, or the sale, transfer
or other disposition of all or substantially all of the Company’s assets to a non-affiliate of the Company.



 


3.           
Method of Exercise. Prior to its expiration and to the extent that the right to purchase Option Shares has vested
hereunder, this Option may be exercised in whole or in part from time to time by notice provided in a manner consistent with the
requirements of Section 5(d) of the Plan, accompanied by payment in full of the Exercise Price by means of payment acceptable to
the Company in accordance with Section 5(f) of the Plan.


 


As soon as practicable
after its receipt of notice, the Company shall, without transfer or issue tax to the Optionee (or other person entitled to exercise
this Option), (a) deliver to the Optionee (or other person entitled to exercise this Option), at the principal executive offices
of the Company or such other place as shall be mutually acceptable, a stock certificate or certificates for such Option Shares
out of theretofore authorized but unissued shares or treasury shares of its Common Stock as the Company may elect or (b) issue
shares of its Common Stock in book entry form; provided, however, that the time of delivery or issuance may be postponed by the
Company for such period as may be required for it with reasonable diligence to comply with any applicable requirements of law;
and provided, further, that any Option Shares delivered or issued shall remain subject to any applicable securities laws or trading
restrictions imposed pursuant to the terms of this Agreement and the Plan.


 



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If the Optionee (or
other person entitled to exercise this Option) fails to pay for and accept delivery of all of the Option Shares specified in the
notice upon tender of delivery thereof, his or her right to exercise this Option with respect to such Option Shares not paid for
may be terminated by the Company.


 


4.            
Withholding Taxes. The Company or an employing Subsidiary may withhold any and all applicable income and employment
taxes required to be withheld from the Optionee in connection with the grant and/or exercise of the Option by the Optionee, as
provided in the Plan.


 


5.            
Non-assignability of Option. This Option shall not be assignable or transferable by the Optionee except by will or
by the laws of descent and distribution or as permitted by the Committee in its discretion pursuant to the terms of the Plan. During
the life of the Optionee, this Option shall be exercisable only by him or her, by a conservator or guardian duly appointed for
him or her by reason of the Optionee’s incapacity or by the person appointed by the Optionee in a durable power of attorney
acceptable to the Company’s counsel.


 


6.            
Compliance with Securities Act; Lock-Up Agreement. The Company shall not be obligated to issue any Option Shares
or other securities pursuant to the exercise of this Option unless the Option Shares or other securities with respect to which
this Option is being exercised are at that time effectively registered or exempt from registration under the Securities Act and
applicable state or provincial securities laws/any applicable securities laws. In the event Option Shares or other securities shall
be issued that shall not be so registered, the Optionee hereby represents, warrants and agrees that he or she will receive such
Option Shares or other securities for investment and not with a view to their resale or distribution, and will execute an appropriate
investment letter satisfactory to the Company and its counsel. The Optionee further hereby agrees that as a condition to the purchase
of Option Shares upon exercise of this Option, he or she will execute an agreement in a form acceptable to the Company to the effect
that the Option Shares shall be subject to any underwriter’s lock-up agreement in connection with a public offering of any
securities of the Company that may from time to time apply to shares held by officers and employees of the Company, and such agreement
or a successor agreement must be in full force and effect.


 


7.            
Legends. The Optionee hereby acknowledges that the stock certificate or certificates (or entries in the case of book
entry form) evidencing Option Shares or other securities issued pursuant to any exercise of this Option may bear a legend (or provide
a restriction) setting forth the restrictions on their transferability described in Section 6 hereof, if such restrictions are
then in effect.


 


8.            
Rights as Stockholder. The Optionee shall have no rights as a stockholder with respect to any Option Shares until
the date of issuance of a stock certificate (or appropriate entry is made in the case of book entry form) to him or her for such
Option Shares. No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock
certificate is issued (or appropriate entry is made in the case of book entry form).


 



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9.            
Effect upon Employment and Performance of Services. Nothing in this Agreement or the Plan shall be construed to impose
any obligation upon the Company or any Subsidiary to employ or utilize the services of the Optionee or to retain the Optionee in
its employ or to engage or retain the services of the Optionee.


 


10.         
Time for Acceptance. Unless the Optionee shall evidence his or her acceptance of this Option by electronic or other
means prescribed by the Committee within 60 days after its delivery, the Option shall be null and void (unless waived by the Committee).


 


11.          
Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to current
or future participation in the Plan by electronic means. The Optionee consents to receive such documents by electronic delivery
and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third
party designated by the Company.


 


12.         
Company Policies. This Option and any Option Shares issued on exercise shall be subject to any applicable clawback
or recoupment policies, share trading policies, and other policies that may be implemented by the Board from time to time, in accordance
with applicable law.


 


13.          
Provision of Documentation to Optionee. By signing the cover page of this Agreement, the Optionee acknowledges receipt
of a copy of this entire Agreement, a copy of the Plan and a copy of the Plan’s related prospectus.


 


14.          
Section 409A of the Internal Revenue Code. The Option granted hereunder is intended to avoid the potential adverse
tax consequences to the Optionee of Section 409A of the Internal Revenue Code and the Committee may make such modifications to
this Agreement as it deems necessary or advisable to avoid such adverse tax consequences.


 


15.          
Nature of Award. By accepting this Option, the Optionee acknowledges, understands and agrees that:


 


(a)           
the Plan is established voluntarily by the Company, is discretionary in nature and may be modified, amended, suspended or
terminated by the Company at any time, to the extent permitted by the Plan and this Agreement;


 


(b)           
the grant of this Option is voluntary and occasional and does not create any contractual or other right to receive future
awards under the Plan or benefits in lieu of Plan awards, even if Options or other Plan awards have been granted in the past;


 


(c)           
all decisions with respect to future Option grants or Plan awards will be at the sole discretion of the Committee;


 


(d)           
he or she is voluntarily participating in the Plan;


 


(e)           
the future value of Option Shares is unknown and cannot be predicted with certainty;


 



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(f)           
if the Option Shares do not increase in value, the Option, as measured by the difference between the Fair Market Value of
the Option Shares and the Exercise Price, will have no value;


 


(g)          
if the Optionee exercises the Option and acquires Option Shares, the value of such Option Shares may increase or decrease
in value;


 


(h)          
if the Optionee resides and/or works outside the United States, the following additional provisions shall apply:


 


		(i)	the Option and any Option Shares acquired under the Plan do not replace any pension or retirement
rights or compensation;



 


		(ii)	the Option and any Option Shares acquired under the Plan (including the value attributable to each)
do not constitute compensation of any kind for services of any kind rendered to the Company and/or any Subsidiary thereof and are
outside the scope of the Optionee’s employment contract, if any;



 


		(iii)	the Option and any Option Shares acquired under the Plan (including the value attributable to each)
are not part of normal or expected compensation or salary, including, but not limited to, for purposes of calculating any severance,
resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, service awards, pension or retirement or welfare
benefits or similar payments unless such other arrangement explicitly provides to the contrary;



 


		(iv)	no claim or entitlement to compensation or damages shall arise from forfeiture of the Option resulting
from a termination of the Business Relationship for any reason and in consideration of the grant of the Option, the Optionee irrevocably
agrees never to institute a claim against the Company and/or any Subsidiary, waives his or her ability to bring such claim and
releases the Company and/or its Subsidiaries from any claim; if, notwithstanding the foregoing, such claim is allowed by a court
of competent jurisdiction, then by accepting this Option, the Optionee is deemed irrevocably to have agreed not to pursue such
claim and agrees to execute any and all documents necessary to request dismissal or withdrawal of such claims; and



 


		(v)	neither the Company nor any Subsidiary shall be liable for any foreign exchange rate fluctuation
between the Optionee’s local currency and the United States dollar that may affect the value of the Option or any amounts
due pursuant to the exercise of the Option or the subsequent sale of any shares of Common Stock acquired upon settlement.



 



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16.          
General Provisions.


 


(a)           Amendment;
Waivers. This Agreement, including the Plan, contains the full and complete understanding and agreement of the parties hereto
as to the subject matter hereof, and except as otherwise permitted by the express terms of the Plan, this Agreement and applicable
law, it may not be modified or amended nor may any provision hereof be waived without a further written agreement duly signed
by each of the parties; provided, however, that a modification or amendment that does not materially diminish the rights of the
Optionee hereunder, as they may exist immediately before the effective date of the modification or amendment, shall be effective
upon written notice of its provisions to the Optionee, to the extent permitted by applicable law. The waiver by either of the
parties hereto of any provision hereof in any instance shall not operate as a waiver of any other provision hereof or in any other
instance. The Optionee shall have the right to receive, upon request, a written confirmation from the Company information set
forth in the table on the cover page of this Agreement.


 


(b)          
Severability. The invalidity, illegality or unenforceability of any provision of this Agreement shall in no way affect
the validity, legality or enforceability of any other provision.


 


(c)          
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, subject to the limitations set forth herein.


 


(d)          
Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Nevada
without giving effect to the principles of the conflicts of laws thereof.


 


(e)          
Construction. This Agreement is to be construed in accordance with the terms of the Plan. In case of any conflict
between the Plan and this Agreement, the Plan shall control. The titles of the sections of this Agreement and of the Plan are included
for convenience only and shall not be construed as modifying or affecting their provisions. The masculine gender shall include
both sexes; the singular shall include the plural and the plural the singular unless the context otherwise requires.


 


(f)           
Data Privacy. By entering into this Agreement and except as otherwise provided in any data transfer agreement
entered into by the Company, the Optionee: (i) authorizes the Company, and any agent of the Company administering the Plan or providing
Plan recordkeeping services, to disclose to the Company such information and data as the Company shall request in order to facilitate
the grant of Options and the administration of the Plan; (ii) waives any data privacy rights he or she may have with respect to
such information; and (iii) authorizes the Company to store and transmit such information in electronic form. For purposes of this
Section 16(f), the term “Company” refers to the Company, its Subsidiaries and any other affiliate.


 






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(g)         
Notices. All notices hereunder shall be in writing and shall be deemed given when sent by certified or registered
mail, postage prepaid, return receipt requested, if to the Optionee, to the address set forth on the cover page hereof or at the
address shown on the records of the Company, and if to the Company, to the Company’s principal executive offices, attention
of the Corporate Secretary.


 






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