Document:

exv10w75

 

Exhibit 10.75

CATALYTICA ENERGY SYSTEMS, INC.

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     This Amended and Restated Employment Agreement (the “Agreement”) by and between Robert Zack
(the “Employee”) and Catalytica Energy Systems, Inc. (the “Company”), is amended and restated
effective as of the latest date set forth by the signatures of the parties hereto below (the
“Effective Date”).

     1. Duties and Scope of Employment.

          (a) Positions and Duties. As of the Effective Date, Employee will continue to serve
as President and Chief Executive Officer and Chief Financial Officer of the Company. Employee will
render such business and professional services in the performance of his duties, consistent with
Employee’s position within the Company, as shall reasonably be assigned to him, by the Board of
Directors of the Company (the “Board”); provided, however that at the Board’s discretion it may
appoint another President and Chief Executive Officer in which case Employee will continue to serve
as Chief Financial Officer. The period of Employee’s employment under this Agreement is referred
to herein as the “Employment Term.”

          (b) Obligations. During the Employment Term, Employee will perform his duties
faithfully and to the best of his ability and will devote his full business efforts and time to the
Company. For the duration of the Employment Term, Employee agrees not to actively engage in any
other employment, occupation or consulting activity for any direct or indirect remuneration without
the prior approval of the Board.

     2. At-Will Employment. The Company and the Employee acknowledge that the Employee’s
employment is and shall continue to be at-will, as defined under applicable law. If the Employee’s
employment terminates for any reason, including (without limitation) any termination after an
announcement of Change of Control and prior to twenty-four (24) months following a Change of
Control or the announcement of a Change of Control, whichever comes later, the Employee shall not
be entitled to any payments, benefits, damages, awards or compensation other than as provided by
this Agreement.

     3. Compensation.

          (a) Base Salary. During 2007, and retroactive to January 1, 2007, the Company will
pay Employee as compensation for his services a base salary at the annualized rate of $300,000
(“Base Salary”). In 2008 and subsequent years, the Base Salary may be increased by the Board or
its Compensation Committee, in its sole discretion and may only be decreased with the consent of
Employee. The Base Salary will be paid periodically in accordance with the Company’s normal
payroll practices and be subject to the usual, required withholding.

 

 

          (b) Annual Bonus. Employee shall be eligible to receive a annual bonus on account of
the Company’s 2007 fiscal year with a target payment equal to 125% of Base Salary based upon
criteria developed by the Board or its Compensation Committee (the “Target Bonus”). In 2008 and
subsequent years, the Target Bonus may be increased by the Board or its Compensation Committee, in
its sole discretion and may only be decreased with the consent of Employee. The Target Bonus may
be paid to Employee in a mixture of cash and equity compensation, as determined by the Compensation
Committee in its sole discretion; provided, however, that the cash component shall be no less than
50% of the Target Bonus; provided, further, that for the 2007 fiscal year, the mixture shall be 50%
cash and 75% equity compensation. In the event that the equity compensation component is paid in
stock options, the number of options shall be determined by dividing the dollar amount by the
Black-Scholes value of Company options (or by such other reasonable method of valuing Company
options as the Compensation Committee shall determine), and such options shall be subject to a
four-year vesting schedule, with 1/8th of the covered shares vesting six months
following the grant date and 1/48th of the covered shares vesting each month thereafter,
so as to be 100% vested on the four year anniversary of the grant date, subject to Employee
remaining a Service Provider, as such term is defined in the Company’s 1995 Stock Plan (“Service
Provider”) on each vesting date.

     4. Employee Benefits. During the Employment Term, Employee will be entitled to
participate in the employee benefit plans currently and hereafter maintained by the Company of
general applicability to other senior executives of the Company. The Company reserves the right to
cancel or change the benefit plans and programs it offers to its employees at any time.

     5. Severance Benefits.

          (a) Termination Not in Connection with a Change of Control. If the Employee’s
employment terminates as a result of Involuntary Termination (as defined below) other than for
Cause at any time prior to an announcement of a Change of Control or on or after the date that is
twenty-four (24) months following a Change of Control or the announcement of a Change of Control,
whichever comes later (a “Non-Change of Control Severance Termination”), then, subject to Employee
(i) executing and not revoking a standard release of claims in favor of the Company; provided,
however, that such release shall preserve all indemnification rights of Employee and all other
rights of Employee under the currently existing indemnification agreement or similar agreement with
the Company (a “Release”), and (ii) not breaching the provisions of Section 7 hereof, then Employee
shall be entitled to receive the following severance and non-competition benefits:

               (i) Severance Payment. Following the Employment Termination Date the Company shall
pay Employee an aggregate cash amount equal to two hundred percent (200%) of his Annual
Compensation, plus a pro rata cash payment of the current year Target Bonus, less applicable taxes,
paid ratably over the remaining payroll periods in the same calendar year in which Employee
terminated.

               (ii) Subsidized COBRA. Subject to Employee timely electing continuation coverage
under Title X of the Consolidated Budget Reconciliation Act of 1985 (“COBRA”), the Company shall
subsidize Employee and his eligible dependent’s COBRA

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premiums so that Employee pays the same premium as an active employee of the Company for a
period equal to the lesser of (i) eighteen months following the Employee’s termination date, or
(ii) the date upon which Employee becomes covered under the group health plans of another employer
with comparable group health benefits and levels of coverage.

          (b) Termination in Connection with a Change of Control. If the Employee’s employment
terminates as a result of Involuntary Termination (as defined below) other than for Cause at any
time after an announcement of a Change of Control and prior to twenty-four (24) months following a
Change of Control or the announcement of a Change of Control, whichever comes later (the “Change of
Control Period”) (a “Change of Control Severance Termination”), then, subject to Employee (i)
executing and not revoking a Release, (ii) not breaching the provisions of Section 7 hereof, and
(iii) the provisions of Section 9 hereof, the Employee shall be entitled to receive the following
severance benefits:

               (i) Severance and Non-Competition Payment. A cash payment in an amount equal to two
hundred percent (200%) of the Employee’s Annual Compensation plus a pro rata cash payment of the
current year Target Bonus, less any Change of Control Retention Payments (as defined in Section 6
hereof) already paid to Employee. Of this amount, one hundred percent (100%) of Employee’s Annual
Compensation is paid specifically in exchange for Employee entering into and not breaching the
non-competition provisions of Section 7 hereof.

               (ii) Continued Employee Benefits. One hundred percent (100%) Company-paid health,
dental and life insurance coverage at the same level of coverage as was provided to such employee
immediately prior to the Change of Control Severance Termination (the “Company-Paid Coverage”). If
such coverage included the Employee’s dependents immediately prior to the Change of Control
Severance Termination, such dependents shall also be covered at Company expense. Company-Paid
Coverage shall continue until the earlier of (i) two years from the date of the Involuntary
Termination or (ii) the date that the Employee and his dependents become covered under another
employer’s group health, dental or life insurance plans that provide Employee and his dependents
with comparable benefits and levels of coverage. For purposes of COBRA, the date of the
“qualifying event” for Employee and his dependents shall be the date upon which the Company-Paid
Coverage terminates.

               (iii) Option and Restricted Stock Accelerated Vesting. One Hundred percent (100%) of
the unvested portion of any stock option or restricted stock (including restricted stock units)
held by the Employee shall automatically be accelerated in full so as to become completely vested.
Of this amount, fifty percent (50%) of such acceleration is made specifically in exchange for
Employee entering into and not breaching the non-competition provisions of Section 7 hereof.

               (iv) Timing of Severance & Non-Competition Payments. Any Change of Control Severance
and non-competition payments to which Employee is entitled under Section 5(b)(1) shall be paid by
the Company to the Employee (or to the Employee’s successor in interest, pursuant to Section 11(b))
in cash and in full, not later than thirty (30) calendar days following the Termination Date,
subject to Section 13(f).

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          (c) Voluntary Resignation; Termination For Cause. If the Employee’s employment
terminates by reason of the Employee’s voluntary resignation (and is not an Involuntary
Termination), or if the Employee is terminated for Cause, then the Employee shall not be entitled
to receive severance or other benefits except for those (if any) as may then be established under
the Company’s then existing option, severance and benefits plans and practices.

          (d) Disability; Death. If the Company terminates the Employee’s employment as a
result of the Employee’s Disability, or such Employee’s employment is terminated due to the death
of the Employee, then the Employee shall not be entitled to receive severance or other benefits
except for those (if any) as may then be established under the Company’s then existing severance
and benefits plans and practices or pursuant to other agreements with the Company.

     6. Retention Payments. In the event of a Change of Control (other than a liquidation
or dissolution of the Company) wherein Employee is employed by the acquiring entity in the position
of Chief Financial Officer or a greater position, then Employee shall receive cash retention
payments (the “Change of Control Retention Payments”) as to 1/3 of Annual Compensation on the date
of the Change of Control, another 1/3 of Annual Compensation on the date that is six months
following the Change of Control, and a final 1/3 of Annual Compensation on the one year anniversary
of the Change of Control, subject to his remaining employed by the acquiring entity through such
dates.

     7. Conditional Nature of Section 5 and 6 Payments.

          (a) Noncompete. Employee acknowledges that the nature of the Company’s business is
such that if Employee were to become employed by, or substantially involved in, the business of a
competitor of the Company during the 12 months following the termination of Employee’s employment
with the Company, it would be very difficult for Employee not to rely on or use the Company’s trade
secrets and confidential information. Thus, to avoid the inevitable disclosure of the Company’s
trade secrets and confidential information, Employee agrees and acknowledges that Employee’s right
to receive the payments set forth in Section 5 or 6 (to the extent Employee is otherwise entitled
to such payments) shall be conditioned upon Employee not directly or indirectly engaging in
(whether as an employee, consultant, agent, proprietor, principal, partner, stockholder, corporate
officer, director or otherwise), nor having any ownership interested in or participating in the
financing, operation, management or control of, any person, firm, corporation or business that
competes with the Company or is a customer or client of the Company during the one year period
following the Employment Termination Date (“Competition”); provided, however, that nothing in this
Section 7 shall prevent Employee from performing services for the acquirer of the Company’s Diesel
business following a Sale of the Diesel Business; provided, further, that following his termination
of employment with the Company, Employee shall be permitted to work for an entity in Competition
with the Company whose primary business is not providing products or services competitive with the
products or services of the Company, so long Employee does not engage in a business that makes such
entity in Competition with the Company. Notwithstanding the foregoing, Employee may, without
violating this Section 7, own, as a passive investment, shares of capital stock of a publicly-held
corporation that engages in Competition where the number of shares of such corporation’s capital
stock that are owned by Employee represent less than three percent of the total number of shares of
such corporation’s capital stock outstanding.

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          (b) Non-Solicitation. Until the date 12 months after the termination of Employee’s
employment with the Company for any reason, Employee agrees and acknowledges that Employee’s right
to receive the severance and retention payments set forth in Section 5 and 6 (to the extent
Employee is otherwise entitled to such payments) shall be conditioned upon Employee not either
directly or indirectly soliciting, inducing, recruiting or encouraging an employee to leave his or
her employment either for Employee or for any other entity or person with which or whom Employee
has a business relationship.

          (c) Understanding of Covenants. Employee represents that he (i) is familiar with the
foregoing covenants not to compete and not to solicit, and (ii) is fully aware of his obligations
hereunder, including, without limitation, the reasonableness of the length of time, scope and
geographic coverage of these covenants.

          (d) Remedy for Breach. Upon any breach of this section by Employee, all severance and
retention payments pursuant to Section 5 or 6 shall immediately cease, and that shall be the sole
remedy available to the Company for such breach.

     8. Attorney Fees, Costs and Expenses. With respect to any Change of Control Severance
Termination only, the Company shall reimburse Employee for the reasonable attorney fees, costs and
expenses incurred by the Employee in connection with any action brought by Employee to enforce his
rights hereunder, provided such action is not decided in favor of the Company.

     9. Golden Parachute Excise Tax – Capped Gross-Up. In the event that the benefits
provided for in this agreement or otherwise (a) constitute “parachute payments” within the meaning
of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), (b) would be subject
to the excise tax imposed by Section 4999 of the Code, and (c) the aggregate value of such
parachute payments, as determined in accordance with Section 280G of the Code and the Treasury
Regulations thereunder is less than the product obtained by multiplying 3.59 by Employee’s “base
amount” within the meaning of Code Section 280G(b)(3), then such benefits shall be reduced to the
extent necessary (but only to that extent) so that no portion of such benefits will be subject to
excise tax under Section 4999 of the Code. Alternatively, in the event that the benefits provided
for in this agreement (a) constitute “parachute payments” within the meaning of Section 280G of the
Code, (b) would be subject to the excise tax imposed by Section 4999 of the Code, and (c) the
aggregate value of such parachute payments, as determined in accordance with Section 280G of the
Code and the Treasury Regulations thereunder is equal to or greater than the product obtained by
multiplying 3.59 by Employee’s “base amount” within the meaning of Code Section 280G(b)(3), then
Employee shall receive (i) a payment from the Company sufficient to pay such excise tax plus any
interest or penalties incurred by Employee with respect to such excise tax, plus (ii) an additional
payment from the Company sufficient to pay the excise tax and federal and state income and
employment taxes arising from the payments made by the Company to Employee pursuant to this
sentence; provided, however, that the Company shall not be required to pay Employee more than
$150,000 (less applicable withholding) in such gross-up payments under this Section 9. Unless
Employee and the Company agree otherwise in writing, the determination of Employee’s excise tax
liability and the amount required to be paid or reduced under this Section 9 shall be made in
writing by the Company’s outside tax advisors who are primarily used by the Company immediately
prior to the

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Change of Control (the “Accountants”). For purposes of making the calculations required by
this Section 9, the Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations concerning the application
of Sections 280G and 4999 of the Code. Employee and the Company shall furnish to the Accountants
such information and documents as the Accountants may reasonably request in order to make a
determination under this section 9. The Company shall bear all costs the Accountants may
reasonably incur in connection with any calculations contemplated by this section 9.

     10. Definition of Terms. The following terms referred to in this Agreement shall have
the following meanings:

          (a) Annual Compensation. “Annual Compensation” means an amount equal to the greater
of (i) Employee’s Base Salary for the twelve (12) months preceding the Change of Control plus the
employee’s target bonus for the same period, or (ii) Employee’s Base Salary on an annualized basis
and the employee’s target bonus as of the Termination Date.

          (b) Cause. “Cause” shall mean (i) any act of personal dishonesty taken by the
Employee in connection with his responsibilities as an employee and intended to result in
substantial personal enrichment of the Employee, (ii) the conviction of or plea of nolo
contendere to a felony, (iii) a willful act by the Employee that constitutes gross misconduct
and that is injurious to the Company, or (iv) for a period of not less than thirty (30) days
following delivery to the Employee of a written demand for performance from the Company that
describes the basis for the Company’s belief that the Employee has not substantially performed his
duties, continued violations by the Employee of the Employee’s obligations to the Company that are
demonstrably willful and deliberate on the Employee’s part. Any dismissal for cause must be
approved by the Company’s Board of Directors prior to the dismissal date.

          (c) Change of Control. “Change of Control” means the occurrence of any of the
following events:

               (i) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended) becomes the “beneficial owner” (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing fifty percent (50%) or more of
the total voting power represented by the Company’s then outstanding voting securities;

               (ii) A change in the composition of the Board occurring within a twelve-month period, as a
result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent
Directors” shall mean directors who either (A) are directors of the Company as of the date hereof,
or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least
a majority of the Incumbent Directors at the time of such election or nomination (but shall not
include an individual whose election or nomination is in connection with an actual or threatened
proxy contest relating to the election of directors to the Company);

               (iii) The consummation of a merger or consolidation of the Company with any other corporation,
other than a merger or consolidation that would result in the voting securities

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of the Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the surviving entity or such
surviving entity’s parent) at least fifty percent (50%) of the total voting power represented by
the voting securities of the Company or such surviving entity or such surviving entity’s parent
outstanding immediately after such merger or consolidation;

               (iv) The consummation of the sale or disposition by the Company of all or seventy-five percent
(75%) or more of the Company’s assets.

          (d) Disability. “Disability” shall mean that the Employee has been unable to perform
his Company duties as the result of his incapacity due to physical or mental illness, and such
inability, at least twenty-six (26) weeks after its commencement, is determined to be total and
permanent by a physician selected by the Company or its insurers and acceptable to the Employee or
the Employee’s legal representative (such Agreement as to acceptability not to be unreasonably
withheld). Termination resulting from Disability may only be effected after at least thirty (30)
days’ written notice by the Company of its intention to terminate the Employee’s employment. In
the event that the Employee resumes the performance of substantially all of his duties hereunder
before the termination of his employment becomes effective, the notice of intent to terminate shall
automatically be deemed to have been revoked.

          (e) Involuntary Termination. “Involuntary Termination” shall mean (i) without the
Employee’s express written consent, the significant reduction of the Employee’s duties, authority
or responsibilities, relative to the Employee’s duties, authority or responsibilities as in effect
immediately prior to such reduction, or the assignment to Employee of such reduced duties,
authority or responsibilities; provided, however, that so long as Employee’s title, duties,
authority and responsibility are at the level of Chief Financial Officer or greater, whether at the
Company or at an acquirer following a Change of Control, then that will not constitute an
Involuntary Termination under this clause (i), (ii) without the Employee’s express written consent,
a substantial reduction, without good business reasons, of the facilities and perquisites
(including office space and location) available to the Employee immediately prior to such
reduction; (iii) a reduction by the Company in the base salary or target bonus of the Employee as
in effect immediately prior to such reduction; (iv) a material reduction by the Company in the kind
or level of employee benefits to which the Employee was entitled immediately prior to such
reduction with the result that the Employee’s overall benefits package is significantly reduced;
(v) the relocation of the Employee to a facility or a location more than twenty-five (25) miles
from the Employee’s then present location, without the Employee’s express written consent; (vi) any
purported termination of the Employee by the Company that is not effected for Disability or for
Cause, or, during the Change of Control Period only, any purported termination for which the
grounds relied upon are not valid; (vii) the failure of the Company to obtain the assumption of
this Agreement by any successors contemplated in Section 11(a) below; (viii) requiring Executive to
work outside of Arizona on more than [50%] of the business days in any [90] consecutive day period
or (viii) during the Change of Control Period only, any act or set of facts or circumstances that
would, under California case law or statute constitute a constructive termination of the Employee.
However, with respect to any Non-Change of Control Severance Termination, an Involuntary
Termination shall not be deemed to have occurred unless Employee provides written notice to the
Company describing the nature of the event that he

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believes forms the basis for Involuntary Termination and the Company does not cure such event
within ten (10) days following receipt of such notice.

          (f) Termination Date. “Termination Date” shall mean (i) if this Agreement is
terminated by the Company for Disability, thirty (30) days after notice of termination is given to
the Employee (provided that the Employee shall not have returned to the performance of the
Employee’s duties on a full-time basis during such thirty (30)-day period), (ii) if the Employee’s
employment is terminated by the Company for any other reason, the date on which a notice of
termination is given, provided that if within thirty (30) days after the Company gives the Employee
notice of termination, the Employee notifies the Company that a dispute exists concerning the
termination or the benefits due pursuant to this Agreement, then the Termination Date shall be the
date on which such dispute is finally determined, either by mutual written agreement of the
parties, or a by final judgment, order or decree of a court of competent jurisdiction (the time for
appeal therefrom having expired and no appeal having been perfected), or (iii) if the Agreement is
terminated by the Employee, the date on which the Employee delivers the notice of termination to
the Company.

     11. Successors.

          (a) Company’s Successors. Any successor to the Company (whether direct or indirect
and whether by purchase, merger, consolidation, liquidation or otherwise) to all or substantially
all of the Company’s business and/or assets shall assume the obligations under this Agreement and
agree expressly to perform the obligations under this Agreement in the same manner and to the same
extent as the Company would be required to perform such obligations in the absence of a succession.
For all purposes under this Agreement, the term “Company” shall include any successor to the
Company’s business and/or assets which executes and delivers the assumption agreement described in
this Section 11(a) or which becomes bound by the terms of this Agreement by operation of law.

          (b) Employee’s Successors. The terms of this Agreement and all rights of the Employee
hereunder shall inure to the benefit of, and be enforceable by, the Employee’s personal or legal
representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

     12. Notice.

          (a) General. Notices and all other communications contemplated by this Agreement
shall be in writing and shall be deemed to have been duly given when personally delivered or when
mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the
case of the Employee, mailed notices shall be addressed to him at the home address which he most
recently communicated to the Company in writing. In the case of the Company, mailed notices shall
be addressed to its corporate headquarters, and all notices shall be directed to the attention of
its Secretary.

          (b) Notice of Termination. Any termination by the Company for Cause or by the
Employee as a result of a voluntary resignation or an Involuntary Termination shall be communicated
by a notice of termination to the other party hereto given in accordance with Section 12 (a) of
this Agreement. Such notice shall indicate the specific termination provision in

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this Agreement relied upon, shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination under the provision so indicated, and shall specify the
termination date (which shall be not more than thirty (30) days after the giving of such notice).
The failure by the Employee to include in the notice any fact or circumstance which contributes to
a showing of Involuntary Termination shall not waive any right of the Employee hereunder or
preclude the Employee from asserting such fact or circumstance in enforcing his rights hereunder.

     13. Miscellaneous Provisions.

          (a) No Duty to Mitigate. The Employee shall not be required to mitigate the amount of
any payment contemplated by this Agreement, nor shall any such payment be reduced by any earnings
that the Employee may receive from any other source.

          (b) Waiver. No provision of this Agreement shall be modified, waived or discharged
unless the modification, waiver or discharge is agreed to in writing and signed by the Employee and
by an authorized officer of the Company (other than the Employee). No waiver by either party of
any breach of, or of compliance with, any condition or provision of this Agreement by the other
party shall be considered a waiver of any other condition or provision or of the same condition or
provision at another time.

          (c) Whole Agreement. This Agreement and any outstanding stock option agreements
represent the entire understanding of the parties hereto with respect to the subject matter hereof
and supersedes in their entirety all prior arrangements and understandings regarding same,
including the Change of Control Severance Agreement previously entered into by and between Employee
and the Company and any offer letter, promotion letter, employment agreement or other agreement
regarding Employee’s employment terms with the Company. Other than the agreements described in the
preceding sentence, no agreements, representations or understandings (whether oral or written and
whether express or implied) which are not expressly set forth in this Agreement have been made or
entered into by either party with respect to the subject matter hereof.

          (d) Choice of Law. The validity, interpretation, construction and performance of this
Agreement shall be construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of Arizona without regard to principles of conflicts of laws.

          (e) Severability. The invalidity or unenforceability of any provision or provisions
of this Agreement shall not affect the validity or enforceability of any other provision hereof,
which shall remain in full force and effect.

          (f) Withholding. All payments made pursuant to this Agreement will be subject to
withholding of applicable income and employment taxes.

          (g) Counterparts. This Agreement may be executed in counterparts, each of which shall
be deemed an original, but all of which together will constitute one and the same instrument.

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     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the
Company by its duly authorized officer, as of the day and year set forth below.

	 	 	 	 	 	 	 
	COMPANY	 	CATALYTICA ENERGY SYSTEMS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Ricardo Levy	 	 
	 

	 	 	 	 

	 	 
	 	 	Date: February 27, 2007	 	 
	 
	 	 	 	 	 	 
	EMPLOYEE	 	/s/ Robert Zack	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Date: March 23 , 2007	 	 

-10-exh101.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

Exhibit 10.1

BIG CAT ENERGY CORPORATION

2007 NONQUALIFIED STOCK OPTION PLAN

ARTICLE I 

Purpose of Plan

     This 2007 NONQUALIFIED STOCK OPTION PLAN (the “Plan”) of Big Cat Energy Corporation (the “Company”) for persons employed or associated with the Company, including without limitation any employee, director, general partner, officer, attorney, accountant, consultant or advisor, is intended to advance the best interests of the Company by providing additional incentive to those persons who have a substantial responsibility for its management, affairs, and growth by increasing their proprietary interest in the success of the Company, thereby encouraging them to maintain their relationships with the Company. Further, the availability and offering of Stock Options under the Plan supports and increases the Company's ability to attract, engage and retain individuals of exceptional talent upon whom, in large measure, the sustained progress growth and profitability of the Company for the shareholders depends. 

ARTICLE II

Definitions 

     For Plan purposes, except where the context might clearly indicate otherwise, the following terms shall have the meanings set forth below:

     “Board” shall mean the Board of Directors of the Company.

     “Code” shall mean the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

     “Committee” shall mean the Compensation Committee, or such other committee appointed by the Board, which shall be designated by the Board to administer the Plan. The Company shall be composed of two or more persons as from time to time are appointed to serve by the Board and may be members of the Board or the entire Board. 

     “Common Shares” shall mean the Company's Common Shares $0.0001 par value per share, or, in the event that the outstanding Common Shares are hereafter changed into or exchanged for different shares or securities of the Company, such other shares or securities.

     “Company” shall mean Big Cat Energy Corporation, a Nevada corporation, and any parent or subsidiary corporation of Big Cat Energy Corporation, as such terms are defined in Section 425(e) and 425(f), respectively of the Code.

 

1

     “Optionee” shall mean any person employed or associated with the affairs of the Company who has been granted one or more Stock Options under the Plan.

     “Stock Option” or “NQSO” shall mean a stock option granted pursuant to the terms of the Plan.

     “Stock Option Agreement” shall mean the agreement between the Company and the Optionee under which the Optionee may purchase Common Shares hereunder. 

ARTICLE III

Administration of the Plan

	1.      	
The Committee shall administer the plan and accordingly, it shall have full power to grant Stock Options, construe and interpret the Plan, establish rules and regulations and perform all other acts, including the delegation of administrative responsibilities, it believes reasonable and proper.

	 
	2.      	
The determination of those eligible to receive Stock Options, and the amount, price, type and timing of each Stock Option and the terms and conditions of the respective stock option agreements shall rest in the sole discretion of the Committee, subject to the provisions of the Plan.

	 
	3.      	
The Committee may cancel any Stock Options awarded under the Plan if an Optionee conducts himself in a manner which the Committee determines to be inimical to the best interest of the Company and its shareholders as set forth more fully in paragraph 8 of Article X of the Plan.

	 
	4.      	
The Board, or the Committee, may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any granted Stock Option, in the manner and to the extent it shall deem necessary to carry it into effect.

	 
	5.      	
Any decision made, or action taken, by the Committee or the Board arising out or in connection with the interpretation and administration of the Plan shall be final and conclusive.

	 
	6.      	
Meetings of the Committee shall be held at such times and places as shall be determined by the Committee. A majority of the members of the Committee shall constitute a quorum for the transaction of business, and the vote of a majority of those members present at any meeting shall decide any question brought before that meeting. In addition, the Company may take any action otherwise proper under the Plan by the affirmative vote, taken without a meeting, of a majority of its members.

	 
	7.      	
No member of the Committee shall be liable for any act or omission of any other member of the Committee or for any act or omission on his own part, including, but not limited to, the exercise of any power or discretion given to him under the Plan except those resulting form his own gross negligence or willful misconduct.

	 

 

2

	8.      	
The Company, through its management, shall supply full and timely information to the Committee on all matters relating to the eligibility of Optionees, their duties and performance, and current information on any Optionee's death, retirement, disability or other termination of association with the Company, and such other pertinent information as the Committee may require. The Company shall furnish the Committee with such clerical and other assistance as is necessary in the performance of its duties hereunder.

	 

ARTICLE IV 

Shares Subject to the Plan

	1.      	
The total number of shares of the Company available for grants of Stock Options under the Plan shall be 5,000,000 Common Shares, subject to adjustment as herein provided, which shares may be either authorized but unissued or reacquired Common Shares of the Company.

	 
	2.      	
If a Stock Option or portion thereof shall expire or terminate for any reason without having been exercised in full, the unpurchased shares covered by such NQSO shall be available for future grants of Stock Options.

	 

ARTICLE V 

Stock Option Terms and Conditions

	1.      	
Consistent with the Plan's purpose, Stock Options may be granted to any person who is performing or who has been engaged to perform services of special importance to management in the operation, development and growth of the Company.

	 
	2.      	
Determination of the option price per share for any stock option issues hereunder shall rest in the sole and unfettered discretion of the Committee.

	 
	3.      	
All Stock Options granted under the Plan shall be evidenced by agreements which shall be subject to applicable provisions of the Plan, and such other provisions as the Committee may adopt, including the provisions set forth in paragraphs 2 through 11 of this Article V.

	 
	4.      	
All Stock Options granted hereunder must be granted within ten years from the date this Plan is adopted.

	 
	5.      	
No Stock Option granted hereunder shall be exercisable after the expiration of ten years from the date such NQSO is granted. The Committee, in its discretion, may provide that an option shall be exercisable during such ten year period or during any lesser period of time. The Committee may establish installment exercise terms for a Stock Option such that the NQSO becomes fully exercisable in a series of cumulating portions. If an Optionee shall not, in any given installment period, purchase all the Common Shares which such Optionee is entitled to purchase within such installment period, such Optionee's right to purchase any Common Shares not purchased in such installment period shall continue until the expiration or sooner termination of such NQSO. The Committee may also accelerate the exercise of any NQSO.

	

3

	6.      	
A Stock Option, or portion thereof, shall be exercised by deliver of (i) a written notice of exercise to the Company specifying the number of Common Shares to be purchased, and (ii) payment of the full price of such Common Shares, as fully set forth in paragraph 7 of this Article V. No NQSO or installment thereof shall be reusable except with respect to whole shares, and fractional share interests shall be disregarded. Not less than 100 Common Shares may be purchased at one time unless the number purchased is the total number at the time available for purchase under the NQSO.

	 
	 	
Until the Common Shares represented by an exercised NQSO are issued to an Optionee, he shall have none of the rights of a shareholder.

	 
	7.      	
The exercise price of a Stock Option, or portion thereof, may be paid:

	 
	 	A.      	
In United States dollars, in cash or by cashier's check, certified check, bank draft or money order,

	 
	 	
payable to the order of the Company in an amount equal to the option price; or,

	 
	 	B.      	
At the discretion of the Committee, through the delivery of fully paid and nonassessable Common

	 
	 	
Shares, with an aggregate fair market value (determined as the average of the highest and lowest reported sales prices on the Common Shares as of the date of exercise of the NQSO, as reported by such responsible reporting service as the Committee may select, or if there were not transactions in the Common Shares on such day, then the last preceding day on which transactions took place), as of the date of the NQSO exercise equal to the option price, provided such tendered shares, or any derivative security resulting in the issuance of Common Shares, have been owned by he Optionee for at least 30 days prior to such exercise; or,

	 
	 	C.      	
By a combination of both A and B above.

	 
	8.      	
The Committee shall determine acceptable methods for tendering Common Shares as payment upon exercise of a Stock Option and may impose such limitations and prohibitions on the use of Common Shares to exercise an NQSO as it deems appropriate.

	 
	9.      	
With the Optionee's consent, the Committee may cancel any Stock Option issued under this Plan and issue a new NQSO to such Optionee.

	 
	10.      	
Except by will, the laws of descent and distribution, or with the written consent of the Committee, no right or interest in any Stock Option granted under the Plan shall be assignable or transferable, and no right or interest of any Optionee shall be liable for, or subject to, any lien, obligation or liability of the Optionee. Upon petition to, and thereafter with the written consent of the Committee, an Optionee may assign or transfer all or a portion of the Optionee's rights and interest in any stock option granted hereunder. Stock Options shall be exercisable during the Optionee's lifetime only by the Optionee or assignees, or the duly appointed legal representative of an incompetent Optionee, including following an assignment consented to by the Committee herein.

	
 

 

 

4

	11.      	
No NQSO shall be exercisable while there is outstanding any other NQSO which was granted to the Optionee before the grant of such option under the Plan or any other plan which gives the right to the Optionee to purchase stock in the Company or in a corporation which is a parent corporation (as defined in Section 425(e) of the Code) of the Company, or any predecessor corporation of any of such corporations at the time of the grant. An NQSO shall be treated as outstanding until it is either exercised in full or expires by reason of lapse of time.

	 
	12.      	
Any Optionee who disposes of Common Shares acquired on the exercise of a NQSO by sale or exchange either (i) within two years after the date of the grant of the NQSO under which the stock was acquired, or (ii) within one year after the acquisition of such Shares, shall notify the Company of such disposition and of the amount realized upon such disposition. The transfer of Common Shares may also be restricted by applicable provisions of the Securities Act of 1933, as amended.

	 

ARTICLE VI

Adjustments or Changes in Capitalization

	1.      	
In the event that the outstanding Common Shares of the Company are hereafter changed into or exchanged for a different number of kinds of shares or other securities of the Company by reason of merger, consolidation, other reorganization, recapitalization, reclassification, combination of shares, stock split-up or stock dividend:

	 
	 	A.      	
Prompt, proportionate, equitable, lawful and adequate adjustment shall be made of the aggregate

	 
	 	
number and kind of shares subject to Stock Options which may be granted under the Plan, such that the Optionee shall have the right to purchase such Common Shares as may be issued in exchange for the Common Shares purchasable on exercise of the NQSO had such merger, consolidation, other reorganization, recapitalization, reclassification, combination of shares, stock split-up or stock dividend not taken place;

	 
	 	B.      	
Rights under unexercised Stock Options or portions thereof granted prior to any such change,

	 
	 	
both as to the number or kind of shares and the exercise price per share, shall be adjusted appropriately, provided that such adjustments shall be made without change in the total exercise price applicable to the unexercised portion of such NQSO's but by an adjustment in the price for each share covered by such NQSO's; or,

	 
	 	C.      	
Upon any dissolution or liquidation of the Company or any merger or combination in which the Company is not a surviving corporation, each outstanding Stock Option granted hereunder shall terminate, but the Optionee shall have the right, immediately prior to such dissolution, liquidation, merger or combination, to exercise his NQSO in whole or in part, to the extent that it shall not have been exercised, without regard to any installment exercise provisions in such NQSO.

	 

 

 

5

	2.      	
The foregoing adjustment and the manner of application of the foregoing provisions shall be determined solely by the Committee, whose determination as to what adjustments shall be made and the extent thereof, shall be final, binding and conclusive. No fractional Shares shall be issued under the Plan on account of any such adjustments.

	 

ARTICLE VII

Merger, Consolidation or Tender Offer

	1.      	
If the Company shall be a party to a binding agreement to any merger, consolidation or reorganization or sale of substantially all the assets of the Company, each outstanding Stock Option shall pertain and apply to the securities and/or property which a shareholder of the number of Common Shares of the Company subject to the NQSO would be entitled to receive pursuant to such merger, consolidation or reorganization or sale of assets.

	 
	2.      	
In the event that:

	 
	 	A.      	
Any person other than the Company shall acquire more than 20% of the Common Shares of the Company through a tender offer, exchange offer or otherwise;

	 
	 	B.      	
A change in the “control” of the Company occurs, as such term is defined in Rule 405 under the Securities Act of 1933;

	 
	 	C.      	
There shall be a sale of all or substantially all of the assets of the Company; any then outstanding Stock Option held by an Optionee, who is deemed by the Committee to be a statutory officer (“insider”) for purposes of Section 16 of the Securities Exchange Act of 1934 shall be entitled to receive, subject to any action by the Committee revoking such an entitlement as provided for below, in lieu of exercise of such Stock Option, to the extent that it is then exercisable, a cash payment in an amount equal to the difference between the aggregate exercise price of such NQSO, or portion thereof, and, (i) in the event of an offer or similar event, the final offer price per share paid for Common Shares, or such lower price as the Committee may determine to conform an option to preserve its Stock Option status, times the number of Common Shares covered by the NQSO or portion thereof, or (ii) in the case of an event covered by B or C above, the aggregate fair market value of the Common Shares covered by the Stock Option, as determined by the Committee at such time.

	 
	3.      	
Any payment which the Company is required to make pursuant to paragraph 2 of this Article VII, shall be made within 15 business days, following the event which results in the Optionee's right to such payment. In the event of a tender offer in which fewer than all the shares which are validity tendered in compliance with such offer are purchased or exchanged, then only that portion of the shares covered by an NQSO as results from multiplying such shares by a fraction, the numerator of which is the number of Common Shares acquired purchase to the offer and the denominator of which is the number of Common Shares tendered in compliance with such offer, shall be used to determine the payment thereupon. To the extent that all or any portion of a Stock Option shall be affected by this provision, all or such portion of the NQSO shall be terminated.

	 

 

6

	4.      	
Notwithstanding paragraphs 1 and 3 of this Article VII, the Company may, by unanimous vote and resolution, unilaterally revoke the benefits of the above provisions; provided, however, that such vote is taken no later than ten business days following public announcement of the intent of an offer of the change of control, whichever occurs earlier.

	 

ARTICLE VIII 

Amendment and Termination of Plan

	1.      	
The Board may at any time, and from time to time, suspend or terminate the Plan in whole or in part or amend it from time to time in such respects as the Board may deem appropriate and in the best interest of the Company.

	 
	2.      	
No amendment, suspension or termination of this Plan shall, without the Optionee's consent, alter or impair any of the rights or obligations under any Stock Option theretofore granted to him under the Plan.

	 
	3.      	
The Board may amend the Plan, subject to the limitations cited above, in such manner as it deems necessary to permit the granting of Stock Options meeting the requirements of future amendments or issued regulations, if any, to the Code.

	 
	4.      	
No NQSO may be granted during any suspension of the Plan or after termination of the Plan.

	 

ARTICLE IX 

Government and Other Regulations

     The obligation of the Company to issue, transfer and deliver Common Shares for Stock Options exercised under the Plan shall be subject to all applicable laws, regulations, rules, orders and approval which shall then be in effect and required by the relevant stock exchanges on which the Common Shares are traded and by government entities as set forth below or as the Committee in its sole discretion shall deem necessary or advisable. Specifically, in connection with the Securities Act of 1933, as amended, upon exercise of any Stock Option, the Company shall not be required to issue Common Shares unless the Committee has received evidence satisfactory to it to the effect that the Optionee will not transfer such shares except pursuant to a registration statement in effect under such Act or unless an opinion of counsel satisfactory to the Company has been received by the Company to the effect that such registration is not required. Any determination in this connection by the Committee shall be final, binding and conclusive. The Company may, but shall in no event be obligated to take any other affirmative action in order to cause the exercise of a Stock Option or the issuance of Common Shares purchase thereto to comply with any law or regulation of any government authority. 

 

 

 

7

ARTICLE X 

Miscellaneous Provisions

	1.      	
No person shall have any claim or right to be granted a Stock Option under the Plan, and the grant of an NQSO under the Plan shall not be construed as giving an Optionee the right to be retained by the Company. Furthermore, the Company expressly reserves the right at any time to terminate its relationship with an Optionee with or without cause, free from any liability, or any claim under the Plan, except as provided herein, in an option agreement, or in any agreement between the Company and the Optionee.

	 
	2.      	
Any expenses of administering this Plan shall be borne by the Company.

	 
	3.      	
The payment received from Optionee from the exercise of Stock Options under the Plan shall be used for the general corporate purposes of the Company.

	 
	4.      	
The place of administration of the Plan shall be in the State of Nevada, and the validity, contraction, interpretation, administration and effect of the Plan and its rules and regulations, and rights relating to the Plan, shall be determined solely in accordance with the laws of the State of Nevada.

	 
	5.      	
Without amending the Plan, grants may be made to persons who are foreign nationals or employed outside the United States, or both, on such terms and conditions, consistent with the Plan's purpose, different from those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable to create equitable opportunities given differences in tax laws in other countries.

	 
	6.      	
In addition to such other rights of indemnification as they may have as members of the Board or Committee, the members of the Committee shall be indemnified by the Company against all costs and expenses reasonably incurred by them in connection with any action, suite or proceeding to which they or any of them may be party by reason of any action taken or failure to act under or in connection with the Plan or any Stock Option granted thereunder, an against all amount paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except a judgment based upon a finding of bad faith; provided that upon the institution of any such action, suit or proceeding a Committee member shall in writing, give the Company notice thereof and an opportunity, at its own expense, to handle and defend the same before such Committee member undertakes to handle and defend it on his own behalf.

	 
	7.      	
Stock Options may be granted under this Plan form time to time, in substitution for stock options held by employees of other corporations who are about to become employees of the Company as the result of a merger or consolidation of the employing corporation with the Company or the acquisition by the Company of the assets of the employing corporation or the acquisition by the Company of stock of the employing corporation as a result of which it become a subsidiary of the Company. The terms and conditions of such substitute stock options so granted my vary from the terms and conditions set forth in this Plan to such extent as the Board of Director of the Company at the time of grant may deem appropriate to conform, in whole or in part, to the provisions of the stock options in substitution for which they are granted, but no such variations shall be such as to affect the status of any such substitute stock options as a stock option under Section 422A of the Code.

	

8

	8.      	
Notwithstanding anything to the contrary in the Plan, if the Committee finds by a majority vote, after full consideration of the facts presented on behalf of both the Company the Optionee, that the Optionee has been engaged in fraud, embezzlement, theft, commission of a felony or proven dishonesty in the course of his association with the Company or any subsidiary corporation which damaged the Company or any subsidiary corporation, or for disclosing trade secrets of the Company or any subsidiary corporation, the Optionee shall forfeit all unexercised Stock Options and all exercised NQSO's under which the Company has not yet delivered the certificates and which have been earlier granted the Optionee by the Committee. The decision of the Committee as to the case of an Optionee's discharge and the damage done to the Company shall be final. No decision of the Committee, however, shall affect the finality of the discharge of such Optionee by the Company or any subsidiary corporation in any manner. Further, if Optionee voluntarily terminates employment with the Company, the Optionee shall forfeit all unexercised stock options.

	 

ARTICLE XI 

Written Agreement

     Each Stock Option granted hereunder shall be embodied in a written Stock Option Agreement which shall be subject to the terms and conditions prescribed above and shall be signed by the Optionee and by the President or any Vice President of the Company, for and in the name and on behalf of the Company. Such Stock Option Agreement shall contain such other provisions as the Committee, in its discretion shall deem advisable. 

ARTICLE XII

Effective Date 

     This Plan shall become unconditionally effective as of the effective date of approval of the Plan by the Board of Directors of the Company. No Stock Option may be granted later than ten (10) years from the effective date of the Plan; provided, however, that the Plan and all outstanding Stock Options shall remain in effect until such NQSO's have expired or until such options are cancelled. 

 

 

 

 

 

9

	Number of Shares: __________________ 	Date of Grant: _______________ 

NONQUALIFIED STOCK OPTION AGREEMENT 

     AGREEMENT made this _____ day of __________________, 200___, between ____________________________ (the “Optionee”), and Big Cat Energy Corporation, a Nevada corporation (the “Company”).

     1. Grant of Option. The Company, pursuant to the provisions of the 2007 Big Cat Energy Corporation Nonqualified Stock Option Plan (the “2007 Plan”), set forth as Attachment A hereto, hereby grants to the Optionee, subject to the terms and conditions set forth or incorporated herein, an Option and Purchase from the Company all or any part of an aggregate of _______________ Common Shares, as such Common Shares are now constituted, at the purchase price of $ _______________ per share. The provisions of the 2007 Plan governing the terms and conditions of the Option granted hereby are incorporated in full herein by reference. 

     2. Exercise. The Option evidenced hereby shall be exercisable in whole or in part (but only in multiples of 100 Shares unless such exercise is as to the remaining balance of this Option) on or after __________________, 20___ and on or before _________________, 20___, provided that the cumulative number of Common Shares as to which this Option may be exercised (except as provided in paragraph 1 of Article VI of this 2007 Plan) shall not exceed the following amounts:

	Cumulative Number of Shares  	Prior to Date (Not Inclusive of)  

 

The Option evidenced hereby shall be exercisable by the deliver to and receipt by the Company of (i) a written notice of election to exercise, in the form set forth in Attachment B hereto, specifying the number of shares to be purchased; (ii) accompanied by payment of the full purchase price thereof in case or certified check payable to the order of the Company, or by fully-paid and nonassessable Common Shares of the Company properly endorsed over to the Company, or by a combination thereof; and, (iii) by return of this Stock Option Agreement for endorsement of exercise by the Company on Schedule I hereof. In the event fully paid and nonassessable Common Shares are submitted as whole or partial payment for Shares to be purchased hereunder, such Common Shares will be valued at their Fair Market Value (as defined in the 2007 Plan) on the date such Shares are received by the Company and applied to payment of the exercise price. 

 

 

 

 

10

	3.      	
Transferability. The Option evidenced hereby is NOT assignable or transferable by the Optionee other than by the Optionee's will, by the laws of descent and distribution, as provided in paragraph 9 of Article V of the 2007 Plan. The Option shall be exercisable only by the Optionee during his lifetime.

	 

	BIG CAT ENERGY CORPORATION  
	  
	  
	  
	BY:  _______________________________________       
	         Timothy Barritt, President and Principal Executive  
	         Officer  

ATTEST:

________________________________________

Secretary 

Optionee hereby acknowledges receipt of a copy of the 2007 Plan, attached hereto and accepts this Option subject to each and every term and provision of such Plan. Optionee hereby agrees to accept as binding, conclusive and final, all decisions or interpretations of the Compensation Committee of the Board of Directors administering the 2007 Plan on any questions arising under such Plan. Optionee recognizes that if Optionee's employment with the Company or any subsidiary thereof shall be terminated with cause, or by the Optionee, all of the Optionee's rights hereunder shall thereupon terminate; and that, pursuant to paragraph 10 of Article V of the 2007 Plan, this Option may not be exercised while there is outstanding to Optionee any unexercised Stock Option, granted to Optionee before the date of grant of this Option, to purchase Common Shares of the Company or any parent or subsidiary thereof.

Dated: _________________________________

___________________________________

Optionee 

___________________________________

Type or Print Name 

___________________________________

Address 

___________________________________

Social Security No.

 

 

11

Attachment B

Date:

Secretary

Big Cat Energy Corporation

201 West Lakeway

Suite 1000

Gillette, WY 82718

Dear Sir:

     In accordance with paragraph 2 of the Nonqualified Stock Option Agreement evidencing the Option granted to me on _____________________ under the 2007 Big Cat Energy Corporation Nonqualified Stock Option Plan, I hereby elect to exercise this Option to the extent of ________________ Common Shares.

     Enclosed are (i) Certificate(s) No.(s) ____________________ representing fully-paid common shares of Big Cat Energy Corporation endorsed to the Company with signature guaranteed, and/or a certified check payable to the order of Big Cat Energy Corporation in the amount of $______________ as the balance of the purchase price of $______________ for the Shares which I have elected to purchase and (ii) the original Stock Option Agreement for endorsement by the Company as to exercise on Schedule I thereof. I acknowledge that the Common Shares (if any) submitted as part payment for the exercise price due hereunder will be valued by the Company at their Fair Market Value (as defined in the 2007 Plan) on the date this Option exercise is effected by the Company. In the event I hereafter sell any Common Shares issued pursuant to this option exercise within one year from the date of exercise or within two years after the date of grant of this Option, I agree to notify the Company promptly of the amount of taxable compensation realized by me by reason of such sale for federal income tax purposes. 

     When the certificate for Common Shares which I have elected to purchase has been issued, please deliver it to me, along with my endorsed Stock Option Agreement in the event there remains an unexercised balance of Shares under the Option, at the following address:

Include Optionee's address here.

__________________________________

Signature of Optionee 

__________________________________

Type or Print Name 

 

 

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