Document:

Filed by Bowne Pure Compliance

 

EXHIBIT 10.5

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY
NOT BE RESOLD OR HYPOTHECATED BY THE HOLDER UNLESS SUCH TRANSFER COMPLIES WITH AN EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF SAID ACT. ACCEPTANCE OF THIS NOTE CONSTITUTES THE HOLDER’S
REPRESENTATION THAT THE HOLDER TAKES THIS NOTE FOR INVESTMENT AND NOT WITH A VIEW TO RESALE OR
DISTRIBUTION.

Note No. ___

SECURED CONVERTIBLE

PROMISSORY NOTE

			
	 	 	 
	 
	 	Orange County, California
	Original Principal Amount: U.S. $                    
	 	Issuance Date:                                         

For value received, PACIFIC FUEL CELL CORP., a Nevada corporation (the “Maker”), hereby
unconditionally promises to pay to the order of George Suzuki, an individual (the “Holder”) the
principle sum of                                          ($                    ), with interest from the date hereof at the rate
of ten percent (10%) per annum on the then outstanding principal balance. The outstanding
principal balance, together with all accrued but unpaid interest shall all be due and payable in
full on or before 4:00 p.m., California time, on                                          (the “Maturity Date”), unless
otherwise accelerated due to the occurrence of an Event of Default, Change of Control or Qualified
Equity Financing.

1. Payments. Principal and interest shall be payable in lawful money of the United
States of America, by wire transfer to a bank account designated by the Holder or by bank check
delivered to the Holder at such place as the Holder may designate from time to time in writing to
the Maker. Interest will be calculated based on the actual number of days that principal is
remaining over a year of 365 days. Unpaid interest and charges shall be compounded annually and
added to principal. On the Maturity Date all outstanding principal and accrued but unpaid interest
shall be due and payable in full.

2. Security Interest. Maker hereby transfers, assigns and grants to Holder, as
security for the payment and performance of the Maker under this Note, a continuing, first
priority, perfected security interest in and to all of Maker’s assets and property, excluding real
property, now owned or hereafter acquired (the “Collateral”). Maker represents and warrants to
Holder that Maker owns all right, title and interest in the Collateral free and clear of all
adverse claims or encumbrances. Holder shall have all rights and remedies of a secured party under
the California Uniform Commercial Code. In addition, Holder may exercise any and all other rights
and remedies Holder has at law, in equity or otherwise. All remedies are cumulative. No single or
partial exercise of Holder of any right hereunder shall preclude any other or further exercise
thereof or the exercise of any other right.

 

 

 

3. Power of Attorney. Maker hereby irrevocably constitutes and appoints Holder as
Maker’s attorney-in-fact, with full power of substitution, to execute any financing statements,
agreements, documents and instruments to perfect the Holder’s security interest in the Collateral
and to transfer any or all of the Collateral in the event of foreclosure thereon, with the power to
endorse Maker’s name on all applications, documents, papers and instruments deemed necessary or
appropriate, in Holder’s discretion, for the Holder to assign, pledge, convey or otherwise transfer
title in or dispose of the Collateral. This power of attorney shall be irrevocable and in full
force and effect until this Note is paid and satisfied in full.

4. Waivers. Maker hereby waives diligence, presentment for payment, demand, protest,
notice of nonpayment, notice of dishonor, notice of protest, and any and all other notices and
demands whatsoever. Maker agrees to remain bound until the entire principal balance is paid in
full, notwithstanding any extensions or renewals granted with respect to this Note or the release
of any party liable hereunder. Maker and any and all endorsers hereof, also waive the right to
plead any and all statutes of limitations as a defense to any demand on this Note or any and all
obligations or liabilities arising out of or in connection with this Note, to the fullest extent
permitted by law.

5. Default. If any of the following events (each hereinafter called individually an
“Event of Default”) shall occur:

(a) If Maker shall default in the payment of any amount on this Note when the same shall
become due and payable, whether at maturity or by acceleration or otherwise, or otherwise default
under this Note; or

(b) If Maker shall make an assignment for the benefit of creditors; or

(c) If Maker shall file a voluntary petition in bankruptcy, or shall be adjudicated a bankrupt
or insolvent under the present or any future Federal Bankruptcy Act or other applicable federal,
state or other statute, law or regulation;

then, and in each and every such case, the Holder of this Note may by notice in writing to the
Maker declare all amounts under this Note to be forthwith due and payable (except that, in the case
of an Event of Default under either Section 5(b) or Section 5(c), this Note shall become
immediately due and payable without notice) and thereupon the balance shall become so due and
payable, without presentation, protest or further demand or notice of any kind, all of which are
hereby expressly waived. The Maker shall give promptly a written notice to Holder of the
occurrence or the approval by the Maker of any and all of the foregoing events. In addition, upon
an Event of Default, Holder may exercise any and all other rights and remedies Holder has at law,
in equity or otherwise. All remedies are cumulative. No single or partial exercise of Holder of
any right hereunder shall preclude any other or further exercise thereof or the exercise of any
other right.

6. Change of Control. If any of the following events (each hereinafter called
individually a “Change of Control”) shall occur:

 

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(a) the acquisition (other than from the Company) by any person, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(“Exchange Act”)), other than the Company, a subsidiary of the Company or any employee benefit plan
or plans sponsored by the Company or any subsidiary of the Company, directly or indirectly, of
beneficial ownership (within the meaning of Exchange Act Rule 13d-3) of thirty-three percent (33%)
or more of the then outstanding shares of common stock of the Company or voting securities
representing thirty-three percent (33%) or more of the combined voting power of the Company’s then
outstanding voting securities ordinarily entitled to vote in the election of directors unless the
Incumbent Board (defined below), before such acquisition or within thirty (30) days thereafter,
deems such acquisition not to be a Change of Control; or

(b) individuals who, as of the Issuance Date of this Note, constitute the Board (as of such
date, “Incumbent Board”) ceasing for any reason to constitute at least a majority of such Board;
provided, however, that any person becoming a director subsequent to the date of this Agreement
whose election, or nomination for election by the shareholders of the Company, was approved by a
vote of at least a majority of the directors then comprising the Incumbent Board shall be for
purposes of this Agreement, considered as though such person were a member of the Incumbent Board
but excluding, for this purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest which was (or, if threatened, would have been)
subject to Exchange Act Rule 14a-12(c); or

(c) the consummation of any merger, consolidation or share exchange of the Company with any
other corporation, other than a merger, consolidation or share exchange which results in more than
fifty percent (50%) of the outstanding shares of the common stock, and voting securities
representing more than fifty percent (50%) of the combined voting power of then outstanding voting
securities entitled to vote generally in the election of directors, of the surviving, consolidated
or resulting corporation being then beneficially owned, directly or indirectly, by the persons who
were the Company’s shareholders immediately prior to such transaction in substantially the same
proportions as their ownership, immediately prior to such transaction, of the Company’s then
outstanding Common Stock or then outstanding voting securities, as the case may be; or

(d) the consummation of any liquidation or dissolution of the Company or a sale or other
disposition of all or substantially all of the assets of the Company;

then, and in each and every such case, the Holder of this Note may by notice in writing to the
Maker declare all amounts under this Note to be forthwith due and payable and thereupon the balance
shall become so due and payable, without presentation, protest or further demand or notice of any
kind, all of which are hereby expressly waived.

7. Qualified Equity Financing. Upon the closing of any Qualified Equity Financing (as
defined below) the Holder of this Note may by notice in writing to the Maker declare all amounts
under this Note to be forthwith due and payable and thereupon the balance shall become so due and
payable, without presentation, protest or further demand or notice of any kind, all of which are
hereby expressly waived. The term “Qualified Equity Financing” shall mean the sale by the Company of its equity securities, including securities convertible into equity
securities, to one or more investors for aggregate gross proceeds to the Company of at least Two
Hundred and Fifty Thousand Dollars ($250,000), the primary purpose of which is to raise capital for
the Company, provided, however, that a Qualified Equity Financing shall not be deemed to include
the following issuances: (1) shares of common stock issuable or issued to employees, independent
contractors, consultants, directors or vendors of this Company directly or pursuant to a stock
option plan, restricted stock plan or other agreement approved by the Board of Directors of this
Company; or (2) shares of common stock issued for the purpose of (I) a joint venture, technology
licensing or research and development activity, (II) distribution or manufacture of the Company’s
products or services, or (III) any other transaction involving a corporate partner that is
primarily for a purpose other than raising capital through the sale of equity securities.

 

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8. No Deduction or Offset. Maker shall have no right to offset any amount due under
this Note for any reason whatsoever.

9. Binding Nature. The provisions of this Note shall be binding upon and inure to the
benefit of the successors and assigns of Maker and Holder.

10. Prepayment. Maker may prepay the full unpaid principal balance due under this
Note without penalty or other charge, at any time and from time to time.

11. Conversion. The Holder shall have the right to convert (the “Conversion Right”),
on the terms and conditions hereinafter set forth, the principal amount and accrued interest, costs
or other charges of this Note that is then unpaid and outstanding, in whole or in part, into a
number of shares of Common Stock, par value $0.001 per share, of the Maker (“Stock”) equal to the
result obtained by dividing the amount that the holder elects to convert by $0.10 per share,
subject to adjustment as described below (the “Conversion Price”). The period during which the
Holder shall be entitled to elect to convert the amount unpaid under this Note, or any portion
thereof, into Stock of Maker pursuant hereto shall be from the date of this Note until the date of
payment of this Note in full (the “Conversion Period”). If Holder fails to make such election to
convert, in the manner hereinafter set forth, within the Conversion Period, the Conversion Right
granted hereunder shall terminate automatically and be of no further force or effect. If the
Holder desires to convert all or part of this Note, on the terms set forth in this Section, into
Stock, then, during the Conversion Period, the Holder must give written notice to Maker of such
Holder’s election to convert this Note as aforesaid, which election shall be irrevocable. Then,
the Maker will cause one or more stock certificates evidencing the Holder’s ownership of the number
of shares of Stock into which this Note has been converted as aforesaid to be delivered promptly to
the Holder against surrender to Maker of the original of this Note marked cancelled as to the full
amount of portion converted. If this Note is converted as to a portion of the outstanding balance,
the Maker shall issue Holder a replacement Note of like tenor representing the unconverted balance.
The Maker shall cause the Conversion Price to be adjusted from time to time in case Maker shall (i)
pay a dividend or other distribution of shares of the Stock to the holders of the outstanding
shares of such class of Stock, (ii) subdivide the outstanding shares of the class of Stock into
which this Note is convertible into a greater number of shares, (iii) combine the outstanding
shares of Stock into which this Note is convertible into a smaller
number of shares, or (iv) merge or otherwise reorganize or reclassify the Stock. In the event of
each of the foregoing, the Conversion Price in effect immediately prior thereto shall be adjusted
so that the Holder of the Note thereafter surrendered for conversion shall be entitled to receive
the number of shares of Stock, or other shares or property, which he would have owned or have been
entitled to receive had the Note been converted immediately prior to the happening of such event at
the same aggregate Conversion Price. An adjustment made pursuant to this Section shall become
effective immediately after the record date in the case of a dividend or distribution and shall
become effective immediately after the effective date in the case of subdivision or combination.
Such adjustments will be made sequentially upon the happening of more than one of the events
described above.

 

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12. Transfer. Subject to the restrictions and limitations on transfer under federal
or state securities laws, upon surrender of this Note for transfer or exchange, a new Note or new
Notes of the same tenor, dated the date to which interest has been paid on the surrendered Note and
in an aggregate principal amount equal to the unpaid principal amount of the Note so surrendered,
will be issued to and registered in the name of the transferee or transferees.

13. Note Register. This Note is transferable only upon the books of the Maker that
Maker shall maintain for such purpose. The Maker may treat the registered holder of this Note as
he or it appears on the Maker’s books at any time as the Holder for all purposes.

14. Loss, Etc., of Note. Upon receipt of evidence satisfactory to the Maker of the
loss, theft, destruction or mutilation of this Note, and of indemnity reasonably satisfactory to
the Maker if lost, stolen or destroyed, and upon surrender and cancellation of this Note if
mutilated, the Maker shall execute and deliver to the Holder a new Note of like date, tenor and
denomination.

15. California Law. This Note shall be governed by, and construed in accordance with,
the internal laws of the State of California. In the event of a dispute or legal action between
the parties, they agree to waive any objections to personal jurisdiction, and agree to service of
process and venue in the Federal District Court for the Central District, Santa Ana Division or
California Superior Court of Orange County.

16. Interpretation. No provision of this Note is to be interpreted for or against
either party because that party or that party’s legal representative drafted such provision. Time
is of the essence as to all matters in this Note.

17. No Waiver by Holder. No delay or omission on the part of Holder to exercise any
of its remedies hereunder, including without limitation the acceleration of the due date of this
Note, shall be deemed a continuing waiver of that right or any other right. The acceptance by
Holder of any payment pursuant to the terms of this Note which is less than payment in full of all
amounts due and payable at the time of such payment shall not constitute a waiver of the right to
exercise any of the foregoing options at that time or at any subsequent time or nullify any prior
exercise of any such option without the express consent of Holder, except as and to the extent
otherwise provided by law.

 

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18. Costs of Enforcement. If Maker fails to pay any amounts due hereunder when due,
or if Maker otherwise defaults under this Note, then Maker shall pay all costs of enforcement and
collection, including without limitation reasonable attorneys’ fees and costs, whether or not
enforcement and collection includes the filing of a lawsuit, and whether or not that lawsuit is
prosecuted to judgment

19. Severability. All provisions hereof are severable. If any provision hereof is
declared invalid for any reason, that invalidity shall not affect any other provision of this Note,
all of which shall remain in full force and effect.

20. Cumulative Rights. All rights and remedies granted to Holder hereunder shall be
separate and cumulative, and in addition to any other rights Holder may have at law or in equity.

21. Usury Savings. Maker and Holder intend to contract in compliance with all state
and federal usury laws governing the loan evidenced by this Note. Holder and Maker agree that none
of the terms of this Note shall be construed as a contract for or a requirement to pay interest at
a rate in excess of the maximum interest rate allowed by any applicable state or federal usury
laws. If Holder receives sums which constitute interest that would otherwise increase the
effective interest rate on this Note to a rate in excess of that permitted by any applicable law,
then all such sums constituting interest in excess of the maximum lawful rate shall at Holder’s
option either be credited to the payment of principal or returned to Maker. The provisions of this
paragraph control those other provisions of this Note and any other agreement between Maker and
Holder.

22. Counterparts. This Note may be executed by the Maker hereto on any number of
separate counterparts, and all such counterparts taken together shall constitute one and the same
instrument. Delivery of this Note and other documents contemplated hereby by electronic means or
facsimile shall be deemed delivery of an original. It shall not be necessary in making proof of
this Note to produce or account for more than one counterpart signed by the party to be charged.

IN WITNESS WHEREOF, Maker has caused this Note to be duly executed and delivered as of the day
and year first above written.

	 	 	 	 	 
	 	PACIFIC FUEL CELL CORP.

 	 
	 	By:  	                                      /s/ George Suzuki
 	 
	 	 	George Suzuki 	 
	 	 	President & CEO 	 
	 

 

6Filed by Bowne Pure Compliance

 

EXHIBIT 10.6

Option No.

PACIFIC FUEL CELL CORP.

STOCK OPTION AGREEMENT

Type of Option (check one):
      o Incentive
      oNonqualified

This
Stock Option Agreement (the “Agreement”) is entered into as
of                , by and
between Pacific Fuel Cell Corp., a Nevada corporation (the “Company”) and                      (the
“Optionee”) pursuant to the Company’s 2008 Stock Incentive Plan (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 1986, 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.

2.1 Vesting Schedule.

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. Vesting will be measured from
the date of this Agreement (the “Vesting Measurement Date”). No additional Shares shall vest after
the date of termination of Optionee’s “Continuous Service” (the “Service Termination Date”). As
used herein, the term “Continuous Service” has the meaning given in the Plan. Except as may
otherwise be provided in this Agreement, the vesting schedule is as follows:

	 	 	 
	On or After:	 	Option Exercisable As To:
	First anniversary of Vesting Measurement Date:

	 	50 % of the Shares
	Last day of each calendar month after such first anniversary

	 	4.17 % of the Shares

The vesting schedule of this Option would result, assuming the Service Termination Date shall not
have theretofore occurred, in this Option being exercisable as to One Hundred Percent (100%) of the
Shares covered by this Option at the end of the calendar month in which the second anniversary of
the Vesting Measurement Date falls.

2.2 Change in Control.

In the event of a Change in Control (as defined in the Plan), the Administrator in its discretion
may take one or more of the following actions with respect to this Option (whether or not then
exercisable or vested):

	 	(i)	 	provide 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 such Change in Control transaction in exchange for any shares issuable upon
exercise of this Option, in the amount that the Optionee would have received had the
then exercisable portion, if any, of this Option been exercised immediately prior to
such Change in Control transaction, and
	 
	 	(y)	 	the Exercise Price,

	 	(ii)	 	adjust the terms of this Option in a manner determined by the Administrator to reflect
the Change in Control,

 

 

 

	 	(iii)	 	cause this Option to be assumed, or new rights substituted therefor, by another
entity, through the continuance of the Plan and the assumption of this Option, or the
substitution for this Option of a new option of comparable value covering shares of a
successor or parent corporation, with appropriate adjustments as to the number and kind of
 shares and Exercise Price, in which event the Plan and this Option, or the new option
substituted therefor, shall continue in the manner and under the terms so provided,
	 
	 	(iv)	 	cancel this Option if this Option is deemed to have no net value on the basis
described in paragraph 2.2(i) above or if the Option is not then exercisable by virtue of
this Agreement, as then in effect, or
	 
	 	(v)	 	make such other provision as the Administrator may consider equitable.

If the Administrator does not take any of the forgoing actions, this Option shall terminate upon
the consummation of the Change in Control and the Administrator shall cause written notice of the
proposed transaction to be given to the Optionee not less than fifteen (15) days prior to the
anticipated effective date of the proposed transaction.

3 Term of Option.

Optionee’s right to exercise any vested portion of this Option shall terminate upon the first to
occur of the following:

3.1 Maximum Term.

the expiration of five (5) years from the date of this Agreement;

3.2 Involuntary Termination without Cause.

the expiration of three (3) months from the Service Termination Date if such termination occurs for
any reason other than permanent disability, death, voluntary resignation; or for “cause;”
provided, however, that if Optionee dies during such three-month period the provisions of
subsection 3.5 below shall apply;

3.3 Voluntary Resignation.

the expiration of one (1) month from the Service Termination Date if such termination occurs due to
voluntary resignation; provided, however, that if Optionee dies during such one-month period the
provisions of subsection 3.5 below shall apply;

3.4 Permanent Disability.

the expiration of one (1) year from the Service Termination Date if such termination is due to
permanent disability of the Optionee (as defined in Section 22(e)(3) of the Code);

3.5 Death.

the expiration of one (1) year from the Service Termination Date if such termination is due to
Optionee’s death or if death occurs during either the three-month or one-month period following the
Service Termination Date pursuant to subsection 3.2 or subsection 3.3 above, as the case may be;

3.6 Change in Control.

upon the consummation of a “Change in Control” (as defined in the Plan), unless otherwise provided
by the Administrator pursuant to Section 2.2 above; and

3.7 Termination for Cause.

upon termination of Optionee’s Continuous Service by the Company for “cause,” defined herein to
mean any willful breach of duty by the Optionee in the course of his or her employment or provision
of services to the Company, or the Optionee’s habitual neglect of his or her duty or continued
incapacity to perform it; at which time this Option, whether or not exercisable on the Service
Termination Date, shall terminate immediately and become void and of no effect.

 

 

 

3.8 Breach and Non-Competition.

Notwithstanding the foregoing, the Administrator may cancel, rescind, suspend, withhold or
otherwise limit or restrict any Options or Common Stock, or the exercise or purchase of any Options
or Common Stock, at any time if the Optionee engages in any “Adverse Activity.” For purposes of this Section 3.8, “Adverse
Activity” shall include: (i) the rendering of services for any organization or engaging directly or
indirectly in any business which is or becomes competitive with the Company, or which organization
or business, or the rendering of services to such organization or business, is or becomes otherwise
prejudicial to or in conflict with the interests of the Company; (ii) the disclosure to anyone
outside the Company, or the use in other than the Company’s business, without prior written
authorization from the Company, of any confidential information or material relating to the
business of the Company, acquired by Optionee either during or after employment with the Company;
(iii) the failure or refusal to disclose promptly and to assign to the Company, all right, title
and interest in any invention or idea, patentable or not, made or conceived by Optionee during
employment by the Company, relating in any manner to the actual or anticipated business, research
or development work of the Company; (iv) activity that results in termination of Optionee’s
Continuous Service for “cause” as defined in Section 3.7 of this Agreement; (v) any material
violation of any terms or provisions of this Agreement; or (vi) any attempt directly or indirectly
to induce any employee of the Company to be employed or perform services elsewhere or any attempt
directly or indirectly to solicit the trade or business of any current or prospective customer,
supplier or partner of the Company. In the event Optionee engages in Adverse Activity prior to, or
during the six (6) months after, any exercise, payment or delivery pursuant to an Option Agreement,
such exercise, payment or delivery may be rescinded at the sole election of the Company within two
years thereafter. In the event of any such rescission, the Optionee shall pay to the Company the
amount of any gain realized or payment received as a result of the disposition of Shares or
Options, in such manner and on such terms and conditions as may be required, and the Company shall
be entitled to set-off against the amount of any such gain any amount owed to the Optionee by the
Company.

4 Exercise of Option.

4.1 Persons Permitted to Exercise Option.

This Option may be exercised in whole or in part only by the Optionee or by a Successor designated
in Section 5 below.

4.2 Exercise as to Vested Portion of Option.

This Option may be exercised only on or after the vesting of any portion of this Option in
accordance with Section 2 above, and only as to the cumulative amount vested at the date of
exercise, except pursuant to provisions made, if any, by the Administrator pursuant to subsection
4.5 below.

4.3 No Exercise after Termination.

This Option may not be exercised at the time of, or any time after, termination of this Option in
accordance with Section 3 above.

4.4 Mechanics of Exercise.

Exercise of this Option shall be made by 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 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 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 the provisions 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 of a Successor designated
in Section 5, as the case may be.

A check shall be considered payment only when honored by the bank against which it is drawn upon
first presentment.

 

 

 

4.5 Exercise Prior to Vesting; Purchase of Restricted Stock.

The Administrator also has discretion, but not the obligation, to permit this Option to be
exercised as to the unvested portion prior to vesting, and in that case to deliver Restricted
Shares to the Optionee upon exercise of this Option. The Administrator’s determination to permit
exercise of the unvested portion of this Option shall be evidenced by the Company’s and the
Optionee’s mutual execution and delivery of a Restricted Stock Purchase Agreement in form and
substance determined by the Administrator, having the same or a different Vesting Measurement Date
and vesting schedule, as the Administrator and the Optionee may agree.

5 Transfers on Death of Optionee; Restrictions on Lifetime Assignments.

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.

5.1 No Assignment of Incentive Stock Options.

If and to the extent that this Option comprises an incentive stock option, this Option can be
assigned or transferred (subject to all other restrictions in this Agreement) only as follows:

	 	(a)	 	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,
	 
	 	(b)	 	this Option may be exercised during the lifetime of the Optionee only by such
Optionee;
	 
	 	(c)	 	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 (with regard
to incentive stock options, each individually, a “Successor”) shall succeed to the
Optionee’s rights and obligations under this Agreement; and
	 
	 	(d)	 	after the death of the Optionee, only a Successor may exercise this Option.

In the context of incentive stock options, the term “Successor” refers to each of the
transferees, successors or assigns described in this subsection 5.1.

5.2 Limited Assignability of Nonqualified Stock Options.

If and to the extent that this Option comprises a nonqualified stock option, this Option can be
assigned or transferred (subject to all other restrictions in this Agreement) only as follows:

	 	(a)	 	the rights of the Optionee under this Agreement may be assigned or transferred
by will or by the laws of descent and distribution, and 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 shall succeed to the Optionee’s
rights and obligations under this Agreement, and
	 
	 	(b)	 	the rights of the Optionee under this Agreement also may be assigned and
transferred by the Optionee for estate planning purposes to members of the immediate
family of the Optionee, including for this purpose, but not limited to, spouses,
parents, descendants, brothers and sisters, or to trusts established for the benefit of
such persons.

In the context of nonqualified stock options, the term “Successor” refers to each of the
transferees, successors or assigns described in this subsection 5.2.

5.3 Additional Limitations on Transfer of Options and Shares

Notwithstanding the foregoing, this Option and Shares acquired upon exercise of this Option may
only be transferred, assigned, pledged or otherwise encumbered with the prior written approval of
the Company. The Optionee or any holder of Shares shall provide advance written notice of any
proposed transfer, assignment or pledge of this Option or any Shares. Any transfer, assignment,
pledge or other encumbrance of this Option or Shares acquired upon exercise of this Option without
the prior written approval of the Company shall be void and ineffectual.

 

 

 

6 Representations and Warranties of Optionee.

6.1 Investment Intent as to Options.

Optionee represents and warrants that Optionee is acquiring this Option for Optionee’s personal
account, for investment purposes only, and not with a view to the distribution, resale or other
disposition thereof.

6.2 Investment Intent as to Shares.

Optionee acknowledges that the Company may issue Shares upon the exercise of the Option without
registering such Shares under the Securities Act of 1933, as amended (the “Act”), on the basis of
certain exemptions from such registration requirement. Accordingly, Optionee agrees that his or
her exercise of the Option may be expressly conditioned upon his or her delivery to the Company of
an investment certificate and agreement including such representations and undertakings as the
Company may reasonably require in order to assure the availability of such exemptions, including
representations, warranties and agreements that—

	 	(a)	 	The Optionee is purchasing the Shares solely for the Optionee’s own account for
investment and not with a view to or for sale or distribution of the Shares or any portion
thereof and not with any present intention of selling, offering to sell or otherwise
disposing of or distributing the Shares or any portion thereof. The Optionee also
represents that the entire legal and beneficial interest of the Shares the Optionee is
purchasing is being purchased for, and will be held for the account of, the Optionee only
and neither in whole nor in part for any other person.
	 
	 	(b)	 	The Optionee has discussed the Company and its plans, operations and financial
condition with its officers and that the Optionee has received all such information as the
Optionee deems necessary and appropriate to enable the Optionee to evaluate the financial
risk inherent in making an investment in the Shares of the Company, and has received
satisfactory and complete information concerning the business and financial condition of
the Company in response to all inquiries in respect thereof.
	 
	 	(c)	 	The Optionee realizes that the purchase of the Shares will be a highly speculative
investment.
	 
	 	(d)	 	The Optionee is able, without impairing the Optionee’s financial condition, to hold
the Shares for an indefinite period of time and to suffer a complete loss on the
investment.
	 
	 	(e)	 	The Optionee acknowledges that he is aware that the Shares to be issued to him by the
Company pursuant to this Agreement have not been registered under the Act, and—

	 	(i)	 	the Shares must be held indefinitely unless a transfer of them is subsequently
registered under the Act or an exemption from such registration is available;
	 
	 	(ii)	 	the share certificate(s) representing the Shares will be stamped with the
legends restricting transfer as specified in this Agreement in Section 13 below; and
	 
	 	(iii)	 	the Company will make a notation in its records of the aforementioned
restrictions on transfer and legends as described in Section 14 below.

	 	(f)	 	The Optionee understands that the Shares are restricted securities within the meaning
of Rule 144 promulgated under the Act; that the exemption from registration under Rule 144
will not be available in any event for at least one year from the date of sale of the
Shares to the Optionee, and even then will not be available unless (i) a public trading
market then exists for the Shares of the Company, (ii) adequate current public information
concerning the Company is then available to the public, (iii) the Optionee has been the
beneficial owner and the Optionee has paid the full purchase price for the Shares at least
one year prior to the sale, and (iv) other terms and conditions of Rule 144 are complied
with; and that any sale of the Shares may be made by it only in limited amounts in
accordance with such terms and conditions of Rule 144, as amended from time to time.
	 
	 	(g)	 	Without in any way limiting any of the other provisions of this Agreement, Optionee’s
further agreement that the Optionee shall in no event make any disposition of all or any
portion of the Shares which the Optionee is purchasing unless and until:

	 	(i)	 	there is then in effect a Registration Statement under the Act covering such
proposed disposition and such disposition is made in accordance with said Registration
Statement; or
	 
	 	(ii)	 	(A) the Optionee shall have notified the Company of the proposed disposition
and shall have furnished the Company with a detailed statement of the circumstances
surrounding the proposed disposition, (B) the Optionee shall have furnished the Company
with an opinion of counsel to the effect that such disposition will not require
registration of such shares under the Act, and (C) such opinion of counsel
shall have been concurred in by counsel for the Company and the Company shall have
advised the Optionee of such concurrence.

 

 

 

	 	(h)	 	The Optionee represents and warrants that he or she has not engaged in any Adverse
Activity as defined in Section 3.8.
	 
	 	(i)	 	The Optionee acknowledges that the Optionee has been furnished with a copy of the Plan,
has read the Plan and this Agreement, and understands that all rights and obligations
connected with this Agreement are set forth in this Agreement and in the Plan.
	 
	 	(j)	 	The Optionee is a citizen or permanent resident of the United States.

6.3 Adjustments Upon Changes in Capital Structure.

In the event that the outstanding shares of Common Stock of the Company are hereafter 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, combination of shares, reclassification, stock dividend (in
excess of two percent (2%)) or other change in the capital structure of the Company, then
appropriate adjustments 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 the Plan. No fractional share shall be issued under this Option
or upon any such adjustment.

7 No Creation or Enlargement of Optionee’s Rights to Continue in any Capacity.

The right of the Company and any Affiliated Company (as defined in the Plan) to terminate at will
the Optionee’s services to the Company or any Affiliated Company at any time (whether by dismissal,
discharge or otherwise), with or without cause, is specifically reserved. Nothing in this
Agreement shall diminish or impair in any manner whatsoever the right or power of the Company or
any Affiliated Company to terminate the Optionee’s Continuous Service for any reason, with or
without cause.

8 Rights as Shareholder.

The Optionee (or transferee of this option by will or by the laws of descent and distribution)
shall have no rights as a shareholder with respect to any Shares covered by this Option until the
date of the issuance of a stock certificate or certificates to him or her for such Shares,
notwithstanding the exercise of this Option.

9 “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.

10 Restrictive Legends.

In addition to all other legends that the Company or its legal counsel consider appropriate under
applicable securities laws, the certificates representing any Shares purchased pursuant to this
Agreement shall bear substantially the following legend:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE (INCLUDING ANY SECURITIES ISSUABLE ON
EXERCISE OR WITH RESPECT TO ANY OTHER RIGHT CONNECTED HEREWITH) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933; THEY HAVE BEEN ACQUIRED BY THE HOLDER
FOR INVESTMENT AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF
EXCEPT AS MAY BE AUTHORIZED UNDER THE SECURITIES ACT OF 1933, AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER. IN ADDITION ANY TRANSFEREE OR ISSUEE OF SUCH
SECURITIES MAY BE REQUIRED TO PROVIDE APPROPRIATE INVESTMENT REPRESENTATIONS PRIOR
TO ANY SUCH TRANSFER OR ISSUANCE. ANY TRANSFER OR DISPOSITION WITHOUT THE APPROVAL
OF THE ISSUER’S 2008 STOCK INCENTIVE PLAN ADMINISTRATOR IS VOID AND OF NO FORCE OR
EFFECT.

 

 

 

11 Stop-Transfer Notices.

Optionee understands and agrees that, in order to ensure compliance with the restrictions referred
to herein, the Company may issue appropriate “stop-transfer” instructions to its transfer agent, if
any, and that, if the Company transfers its own securities, it may make appropriate notations to
the same effect in its own records.

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 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, 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 records of the Company.

14 Governing Law.

The validity, construction, interpretation, and effect of this Option shall be governed by the laws
of the State of Nevada, excluding any conflicts of law or choice of law rule or principle that
might otherwise refer construction and interpretation of the plan and such agreements to the
substantive law of another jurisdiction. Optionee hereby agrees to submit to the exclusive
jurisdiction and venue of federal or state courts of Washoe County, Nevada, to resolve any and all
issues that may arise out of or relate to this Option.

15 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.

16 Entire Agreement.

This Agreement and the Plan constitute the entire agreement between the parties with respect to the
subject matter hereof and supersede all prior or contemporaneous written or oral agreements and
understandings of the parties, either express or implied. The option evidenced hereby may, in the
discretion of the Company, also be evidenced by
a certificate in such form as the Company may approve, in which case such option certificate and
this Agreement shall evidence one and the same option, which shall be governed by and construed in
accordance with this Agreement and the Plan.

 

 

 

17 Amendment.

The Board shall have full power and authority (subject to certain amendments requiring shareholder
approval pursuant to applicable laws or regulations) from time to time to alter, amend, suspend or
terminate the Plan in any or all respects as the Board may deem advisable, and to alter this
Agreement in ways which shall not substantially adversely affect or impair the Optionee’s rights
under this Agreement No such alteration, amendment, suspension or termination shall be made which
shall substantially affect or impair the rights of any Optionee under an outstanding Option
Agreement without such Optionee’s consent. The Board may alter or amend the Plan to comply with
requirements under the Code relating to Incentive Options or other types of options that give
Optionees more favorable tax treatment than that applicable to Options granted under the Plan.
Upon any such alteration or amendment, any outstanding Option granted hereunder may, if the
Administrator so determines and if permitted by applicable law, be subject to the more favorable
tax treatment afforded to an Optionee pursuant to such terms and conditions.

18 Counterparts.

This Agreement may be executed in any number of counterparts, each of which shall be deemed to be
an original, but all of which together shall constitute one and the same instrument. Execution and
delivery of this Agreement or any notices, certificates or instruments contemplated herein by fax,
facsimile, or telecopier shall be deemed the execution and delivery of an originally signed
agreement, notice or instrument, as the case may be.

IN WITNESS WHEREOF, the parties have executed this Stock Option Agreement as of the date first
above written.

	 	 	 	 	 
	 	 	“COMPANY”
	 
	 	 	 	 
	 	 	Pacific Fuel Cell Corp.
	 
	 	 	 	 
	 

	 	By:
	 	 
	 	 	 	 
	 

	 	Name:
	 	 
	 	 	 	 
	 

	 	Title:
	 	 
	 	 	 	 
	 
	 	 	 	 
	 	 	“OPTIONEE”
	 
	 	 	 	 
	 	 	 
	 	 	 
	 	 	(Signature)
	 
	 	 	 	 
	 	 	 
	 	 	 
	 	 	(Type or Print Name)
	 
	 	 	 	 
	 

	 	Address:

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