Document:

Filed by Bowne Pure Compliance

 

Exhibit 10.1

TERRA INDUSTRIES INC.

EXCESS BENEFIT PLAN

(As Amended and Restated Effective as of January 1, 2008)

SECTION 1

General

1.1. Purpose and Effective Date. Terra Industries Inc. (the “Company”) maintains the
Terra Industries Inc. Excess Benefit Plan (the “Plan”) for the purpose of providing eligible
employees who participate in the Terra Industries Inc. Employees’ Retirement Plan, as amended from
time to time (the “Qualified Plan”), with additional benefits not payable under the Qualified Plan
solely by reason of the compensation limitation of section 401(a)(17) or the benefit limitations of
section 415 of the Internal Revenue Code of 1986, as amended from time to time (the “Code”), or by
reason of elective deferrals made under the Supplemental Deferred Compensation Plan. The
provisions set forth herein constitute an amendment, restatement and continuation of the Plan as in
effect immediately prior to January 1, 2008 (the “Effective Date”), subject to the following:

	 	(a)	 	The Plan as set forth herein shall apply to benefits under the Plan, the
payment of which commences on or after the Effective Date. Benefits for which payments
commenced prior to the Effective Date will be determined in accordance with and be
subject to the terms and conditions of the Plan as in effect prior to the Effective
Date.
	 
	 	(b)	 	It is the intention that all amounts deferred under the Plan will be subject to
the provisions of section 409A of the Code and applicable guidance issued thereunder
(“Section 409A”), regardless of whether such amounts were deferred (within the meaning
of Section 409A) on, prior to, or after January 1, 2005; provided, however, that
amounts deferred as of December 31, 2004 with respect to Participants who terminated
employment on or before December 31, 2004 and for whom no amounts are deferred after
December 31, 2004 are not intended to be subject to the provisions of Section 409A, and
such amounts shall continue to be subject to the terms and conditions of the Plan as in
effect prior to January 1, 2005.

 

 

 

1.2. No Funding. The Plan is intended to constitute an unfunded “excess benefit plan”
within the meaning of section 3(36) of the Employee Retirement Income Security Act of 1974 as
amended (“ERISA”); provided, however, that, to the extent, if any, that the Plan provides benefits which cannot be provided by an excess benefit plan, the Plan shall
constitute an unfunded plan maintained primarily for the purpose of providing deferred compensation
for a select group of management or highly compensated employees within the meaning of section
301(a)(3) of ERISA. The amount of any benefit payable under the Plan shall be paid from the
general revenues of the Company; provided, however, that the Company’s obligations under the Plan
shall be reduced to the extent that any amounts due under the Plan are paid from one or more
trusts, the assets of which are subject to the claims of general creditors of the Company or any
affiliate thereof. Nothing in the Plan shall require the Company to establish any trust to provide
benefits under the Plan, and no Participant shall have any interest in or claim to any assets of
any such trust as the Company may, from time to time, establish or maintain for such purpose.

1.3. Administration. The Plan shall be administered, interpreted and construed by the
Committee established to administer the Qualified Plan. All decisions and interpretations of the
Committee shall be conclusive and binding on the Company and Participants and their eligible
spouses, contingent annuitants and beneficiaries, and on all persons claiming under or through any
of them.

1.4. Definitions. Terms used frequently with the same meaning are indicated by
initial capital letters, and are defined throughout the Plan. Unless the context clearly requires
otherwise, or except as otherwise provided by the Committee from time to time, any word, term or
phrase used in the Plan shall have the same meaning as is assigned to it under the Qualified Plan.

1.5. Gender and Number. Where the context admits, words in one gender shall include
the other gender, words in the singular shall include the plural and the plural shall include the
singular.

1.6. Applicable Laws. The Plan shall be construed and administered in accordance with
the laws of the State of Iowa to the extent that such laws are not preempted by the laws of the
United States of America.

1.7. Claims and Review Procedures. The claims procedure applicable to claims and
appeals of denied claims under the Qualified Plan shall apply to any claims for benefits under the
Plan and appeals of any such denied claims.

 

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SECTION 2

Participation

2.1. Participation. Subject to the terms and conditions of the Plan, each person who
was a “Participant” in the Plan immediately prior to the Effective Date shall continue as a
Participant in the Plan from and after the Effective Date. Subject to the terms and conditions of
the Plan, an employee of an Employer shall become a “Participant” in the Plan when he has satisfied
the following conditions:

	 	(a)	 	he is a participant in the Qualified Plan; and
	 
	 	(b)	 	either (i) he is an officer or director of the Company or of Terra
International, Inc. or the president of any other subsidiary or affiliate of the
Company and his benefits under the Qualified Plan are limited by provisions of the
Qualified Plan adopted pursuant to section 401(a)(17) or 415(b) of the Code (the “Code
Limitations”); or (ii) he is a participant in the Terra Industries Inc. Supplemental
Deferred Compensation Plan.

Each Participant shall be entitled to receive the Excess Retirement Benefit, if any, determined in
accordance with Section 3 hereof and the surviving Spouse of a Participant may be entitled to a
Survivor Benefit in accordance with Section 4 hereof.

2.2. Plan Not Contract of Employment. The Plan does not constitute a contract of
employment, and participation in the Plan will not give any employee the right to be retained in
the employ of an Employer nor any right or claim to any benefit under the Plan, unless such right
or claim has specifically accrued under the terms of the Plan.

SECTION 3

Amount and Payment of Excess Retirement Benefit

3.1. Amount of Excess Retirement Benefit. Subject to the terms and conditions of the
Plan, each Participant (other than a Participant whose benefits are determined pursuant to
subsection 1.1 above in accordance with the terms and conditions of the Plan as in effect prior to
the Effective Date or prior to January 1, 2005) will be entitled to an “Excess Retirement Benefit”
under the Plan commencing as of his Benefit Commencement Date (as defined in subsection 3.4 below)
in an amount expressed as a single life annuity equal to:

	 	(a)	 	the amount of the retirement benefit (expressed as a single life annuity) which
the Participant would be entitled to receive under the Qualified Plan commencing on
such Benefit Commencement Date (or would have been entitled to receive commencing on
such date if the Participant’s benefits under the Qualified Plan had not commenced
prior thereto), if:

 

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	 	(i)	 	the Qualified Plan benefit were determined without regard to
the Code Limitations, and
	 
	 	(ii)	 	the Participant’s Average Monthly Compensation for purposes of
determining the Qualified Plan benefit included amounts deferred under the
Supplemental Deferred Compensation Plan;

REDUCED BY

	 	(b)	 	the amount of the retirement benefit (expressed as a single life annuity) which
the Participant would be entitled to receive under the Qualified Plan commencing on
such Benefit Commencement Date (or would have been entitled to receive commencing on
such date if the Participant’s benefits under the Qualified Plan had not commenced
prior thereto);

FURTHER REDUCED, FROM TIME TO TIME, BY

	 	(c)	 	the actuarial equivalent (using such reasonable actuarial assumptions and
methods as the Committee may determine for such purposes) of any increase in the
benefit to which the Participant is entitled or will become entitled under the
Qualified Plan solely because of an increase in the limitation on benefits under
section 415 of the Code.

3.2. Vesting. A Participant’s benefits under this Plan shall be nonforfeitable and
fully vested at all times on and after the date on which the Participant is vested with respect to
his benefits under the Qualified Plan; provided, however, that notwithstanding any other provision
of the Plan to the contrary, the Committee, in its sole discretion, may cease any or all future
payments of any benefits accrued under this Plan on or after January 1, 1989 if, prior to the date
such payment is made, the Participant shall have engaged in grossly negligent, reckless or willful
conduct that the Committee determines, in the reasonable exercise of its discretion, caused serious
injury to the Company, a subsidiary or affiliate, including, without limitation, competition with
the Company, a subsidiary or affiliate in any of the businesses in which it was engaged at any time
during the Participant’s employment with the Company, a subsidiary or affiliate.

 

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3.3. Election of Benefit Commencement Date. Subject to the terms of the Plan, a
Participant who accrued an Excess Retirement Benefit under the Plan on or after January 1, 2005 but
before December 31, 2007 may elect the time at which benefits will commence by filing an election
with the Plan Administrator, no later than December 31, 2007, in a form and manner as is determined
by the Company in its sole discretion; provided, however, that the earliest date that such benefits
may commence shall be the first day of the seventh calendar month after the calendar month in which
the Participant’s Separation from Service occurs. The term “Separation from Service” means a “separation from service” within the meaning of Section 409A. For
purposes of determining the date of a Separation from Service, the employment relationship will be
deemed to have ended at the time the Participant and his employer reasonably anticipate that the
bona fide level of services the Participant will perform for the Company and any employer (within
the meaning of Section 409A) after such date (whether as an employee or independent contractor, but
not as a director) will be permanently reduced to a level that is less than 50% of the average
level of bona fide services the employee performed over the immediately preceding 36-month period.
Any individual who first becomes eligible to participate in the Plan on or after January 1, 2008
shall not be entitled to elect the time at which benefits will commence.

3.4. Commencement of Benefits. Subject to the terms and conditions of the Plan,
payment of a Participant’s Excess Retirement Benefit shall commence on the “Benefit Commencement
Date,” which, for purposes of this Plan, shall be (i) the date elected by the Participant in
accordance with subsection 3.3 or (ii) if the Participant fails to timely file, or is not eligible
to file, an election as to the time of payment in accordance with subsection 3.3, the later of the
first day of the calendar month following the calendar month in which the Participant attains age
60 or the first day of the seventh calendar month following the calendar month in which the
Participant’s Separation from Service occurs.

3.5. Form of Payment. Subject to the terms and conditions of the Plan, a
Participant’s Excess Retirement Benefit will be distributed in accordance with the following:

	 	(a)	 	If a Participant is not married on the Benefit Commencement Date, payment will
be made in the form of a single life annuity, unless the Participant elects, in
accordance with subsection 3.5(c), to have his benefit paid in another actuarially
equivalent form of life annuity.
	 
	 	(b)	 	If a Participant is married on the Benefit Commencement Date, payment will be
made in the form of a Qualified Joint and Survivor Annuity (with a 50% survivor
benefit) which is actuarially equivalent to the Participant’s single life annuity,
unless the Participant elects, in accordance with subsection 3.5(c) to have his benefit
paid in another form of actuarially equivalent life annuity.
	 
	 	(c)	 	A Participant may, at any time before the date any annuity payment has been
made, elect that his Excess Retirement Benefit be paid in any other form of life
annuity available under the Qualified Plan that is actuarially equivalent to the
Participant’s single life annuity and/or may choose a different beneficiary for such
forms of payment that allow the Participant to designate a beneficiary; provided that
if at the time such election is filed, (I) the Participant is married, and (II) a
Qualified Joint and Survivor Annuity Form of payment is then in effect with respect to
the Participant by reason of the provisions of paragraph (b) above or by reason of a
previously filed election under this paragraph (c), then any change to the form of
annuity, other than to an annuity that would provide a 75% or 100% survivor annuity to
the Participant’s spouse, shall be subject to spousal consent.

 

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Any election made, or spousal consent required, pursuant to this subsection 3.5(c) shall be
made in such form and manner, and subject to such rules and limitations, as may be
prescribed by the Committee from time to time. The determination of the actuarial
equivalence of different forms of life annuities shall be made using such reasonable
actuarial assumptions and methods as the Committee may establish from time to time for such
purposes. In no event shall a Participant be entitled to change the Benefit Commencement
Date, other than pursuant to an election made on or before December 31, 2007 in accordance
with subsection 3.3.

3.6. Distribution of Small Amounts. Notwithstanding any provision of this Section 3
to the contrary, if the value of the Excess Retirement Benefit does not exceed the applicable
dollar amount under section 402(g)(1)(B) of the Code, determined as of the Participant’s Benefit
Commencement Date using reasonable actuarial assumptions and methods established by the Committee
for such purposes, the Committee may, in its sole discretion, direct that such Excess Retirement
Benefit be paid to the Participant in a lump sum on the date on which his annuity payments
otherwise would have commenced.

3.7. Beneficiary Designation. Determination of the Participant’s beneficiary for
purposes of the Plan shall be subject to the following:

	 	(a)	 	To the extent that a Participant’s benefit is paid in a form that requires or
allows the Participant to designate a beneficiary, the Participant may do so, subject
to such terms and conditions as the Committee may, from time to time establish, by
signing a form furnished by the Company for such purpose. A beneficiary designation
will be effective only when a signed beneficiary designation form is filed with the
Company while the Participant is alive and will cancel all beneficiary designation
forms signed earlier.
	 
	 	(b)	 	If there is any question as to the status of any person as a designated
beneficiary or the right of any beneficiary to receive a distribution under the Plan,
the Committee may, in its sole discretion, direct payment to be made to the legal
representative of the Participant’s estate.

3.8. Distributions To Persons Under Disability. In the event any person entitled to
payments under the Plan is declared incompetent and a conservator or other person legally charged
with the care of his person or of his estate is appointed, any benefits to which such person is
entitled under the Plan shall be paid to such conservator or other person legally charged with the
care of his person or of his estate.

3.9. Nonassignability. No Participant shall have the right to assign, pledge or
otherwise dispose of any benefits payable to the Participant hereunder nor shall any such
Participant’s benefit be subject to garnishment, attachment, transfer by operation of law, or any
legal process.

 

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3.10. Legal Fees or Expenses. The Company shall reimburse the Participant for any
legal fees and expenses reasonably incurred in connection with the enforcement of Participant’s rights under this Plan; provided that the Company shall not be required to reimburse for such
fees or expenses unless the resolution of any enforcement action taken by the Participant is
substantially in favor of the Participant, whether by adjudication, settlement or otherwise. Any
amounts which the Company is obligated to reimburse pursuant to this subsection 3.10 shall be paid
not later than December 31 of the calendar year in which the right to such reimbursement arises.

3.11. Reemployment. If a Participant is reemployed by the Company or an employer
(within the meaning of Section 409A) after incurring a Separation from Service, any benefits
accrued by the Participant prior to the initial Separation from Service shall be distributed
without regard to such reemployment. Any benefit to which the Participant becomes entitled under
the Plan by reason of a subsequent Separation from Service shall be actuarially adjusted, using
such reasonable actuarial assumptions and methods as the Committee shall determine for such
purposes, to reflect the value of payments which the Participant has received and will receive
under the Plan and the Qualified Plan due to a prior Separation from Service.

SECTION 4

Survivor Benefit

4.1. Eligibility. If a Participant dies prior to his Benefit Commencement Date and
would otherwise have been eligible for a benefit under the Plan, his surviving Spouse will be
entitled to a Survivor Benefit. The Survivor Benefit shall be a monthly payment to the surviving
Spouse:

	 	(a)	 	in the case of a Participant who dies after attaining age 60 (or such other age
elected by the Participant as his earliest Benefit Commencement Date pursuant to an
election under subsection 3.3), commencing as of the first day of the month after the
Participant’s death equal to the amount which would have been payable under the Plan as
a survivor annuity under the Qualified Joint and Survivor Annuity form if such
Participant had retired with an immediate Qualified Joint and Survivor Annuity under
the Plan on the day before the Participant’s death (disregarding any otherwise
applicable restriction to defer commencement to the first day of the seventh month
after a Separation from Service); or
	 
	 	(b)	 	in the case of a Participant who dies on or before attaining age 60 (or such
other age elected by the Participant as his earliest Benefit Commencement Date pursuant
to an election under subsection 3.3), commencing as of the first day of the month after
the date the Participant would have attained age 60 (or such other applicable age)
equal to the amount which would have been payable under the Plan as a survivor annuity
under the Qualified Joint and Survivor Annuity form if such Participant had terminated
employment on the date of death (if he had not yet terminated employment), survived to
age 60 (or such other applicable age), commenced receiving an immediate Qualified Joint
and Survivor Annuity under the Plan (disregarding any otherwise applicable restriction
to defer commencement to the first day of the seventh month after a Separation from Service),
and died immediately thereafter;

 

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provided, however, that if a Participant has elected, in accordance with subsection 3.5(c), that
his Excess Retirement Benefit be paid in the form of an annuity that would provide a 75% or 100%
survivor annuity to the Participant’s spouse, then the Survivor Benefit shall be based on the
survivorship annuity option elected by the Participant rather than the Qualified Joint and Survivor
Annuity. Provided further that, for purposes of this subsection 4.1, the amount which would have
been payable under the Plan to a Participant with a deferred vested benefit under the Qualified
Plan shall be calculated using the reduction factors, if any, that would be used to calculate an
early retirement benefit under the Qualified Plan.

4.2. Time of Payment. Payment of the Survivor Benefit to a surviving Spouse shall
commence as of the first day of the calendar month following the later of the Participant’s date of
death or the date on which the Participant would have attained age 60 (or such other age elected by
the Participant as his earliest Benefit Commencement Date pursuant to an election under subsection
3.3), and shall continue until and including the month in which the surviving Spouse dies.

SECTION 5

Amendment and Termination

5.1. Amendment and Termination. The Company may, at any time, amend or terminate the
Plan; provided, however, that neither an amendment or termination of the Plan shall reduce or
impair the interests of Participants or other persons entitled to benefits under the Plan in
benefits being paid under the Plan as of the date of any such amendment or termination or in
benefits to which they would be entitled under the Plan if all Participants incurred a Separation
from Service as of the date of the amendment or termination. Notwithstanding the preceding
sentence:

	 	(a)	 	the Company may amend or terminate the Plan, at any time, to take effect
retroactively or otherwise, as deemed necessary or advisable for purposes of conforming
the Plan to any present or future law, regulations or rulings relating to plans of this
or a similar nature;
	 
	 	(b)	 	no such amendment, modification, or termination shall be adopted or effective
if it would result in accelerated recognition of income or imposition of additional tax
under Section 409A.

 

8Filed by Bowne Pure Compliance

 

EX. 10.9

PACIFIC FUEL CELL CORP.

2008 STOCK INCENTIVE PLAN

This 2008 STOCK INCENTIVE PLAN (the “Plan”) is hereby established by Pacific Fuel Cell Corp., a
Nevada corporation (the “Company”), as adopted by its Board of Directors as of February 29, 2008
(the “Effective Date”) and as amended from time to time.

1 PURPOSES OF THE PLAN.

The purposes of the Plan are (a) to enhance the Company’s ability to attract and retain the
services of qualified employees, officers and directors (including non-employee officers and
directors), and consultants and other service providers upon whose judgment, initiative and efforts
the successful conduct and development of the Company’s business largely depends, and (b) to
provide additional incentives to such persons or entities to devote their utmost effort and skill
to the advancement and betterment of the Company, by providing them an opportunity to participate
in the ownership of the Company and thereby have an interest in the success and increased value of
the Company.

2 DEFINITIONS.

For purposes of this Plan, the following terms shall have the meanings indicated:

2.1 Administrator.

“Administrator” means the Board or, if the Board delegates responsibility for any matter to the
Committee, the term Administrator shall mean the Committee.

2.2 Affiliated Company.

“Affiliated Company” means any “parent corporation” or “subsidiary corporation” of the Company,
whether now existing or hereafter created or acquired, as those terms are defined in Sections
424(e) and 424(f) of the Code, respectively.

2.3 Board.

“Board” means the Board of Directors of the Company.

2.4 Change in Control.

“Change in Control” shall mean (i) the acquisition, directly or indirectly, by any person or group
(within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) of the
beneficial ownership of securities of the Company possessing more than fifty percent (50%) of the
total combined voting power of all outstanding securities of the Company; (ii) a merger or
consolidation in which the Company is not the surviving entity, except for a transaction in which
the holders of the outstanding voting securities of the Company immediately prior to such merger or
consolidation hold, in the aggregate, securities possessing more than fifty percent (50%) of the
total combined voting power of all outstanding voting securities of the surviving entity
immediately after such merger or consolidation; (iii) a reverse merger in which the Company is the
surviving entity but in which securities possessing more than fifty percent (50%) of the total
combined voting power of all outstanding voting securities of the Company are transferred to or
acquired by a person or persons different from the persons holding those securities immediately
prior to such merger; (iv) the sale, transfer or other disposition (in one transaction or a series
of related transactions) of all or substantially all of the assets of the Company; or (v) the
approval by the shareholders of a plan or proposal for the liquidation or dissolution of the
Company.

2.5 Code.

“Code” means the Internal Revenue Code of 1986, as amended from time to time.

2.6 Committee.

“Committee” means a committee of two or more members of the Board appointed to administer the Plan,
as set forth in Section 7.1 hereof.

 

 

 

2.7 Common Stock.

“Common Stock” means the Common Stock, par value $0.001 per share, of the Company, subject to
adjustment pursuant to Section 4.2 hereof.

2.8 Continuous Service.

“Continuous Service” shall mean—

	 	(a)	 	employment by either the Company or any parent or subsidiary corporation of the
Company, or by a corporation or a parent or subsidiary of a corporation issuing or
assuming a stock option in a transaction to which Section 424(a) of the Code applies,
which is uninterrupted except for vacations, illness (except for permanent disability,
as defined in Section 22(e)(3) of the Code), or leaves of absence which are approved in
writing by the Company or any of such other employer corporations, if applicable,
	 
	 	(b)	 	service as a member of the Board of Directors of the Company until Participant
resigns, is removed from office, or Participant’s term of office expires and he or she
is not reelected, or
	 
	 	(c)	 	so long as Participant is engaged as a consultant or service provider to the
Company or any corporation referred to in clause (a) above, or
	 
	 	(d)	 	so long as Participant is granted and continues to hold the status of a “friend
of the Company” pursuant to action by the Administrator or the Board.

2.9 Disability.

“Disability” means permanent and total disability as defined in Section 22(e)(3) of the Code. The
Administrator’s determination of a Disability or the absence thereof shall be conclusive and
binding on all interested parties.

2.10 Effective Date.

“Effective Date” means the date on which the Plan is adopted by the Board, as set forth on the first page hereof.

2.11 Exercise Price.

“Exercise Price” means the purchase price per share of Common Stock payable upon exercise of an Option.

2.12 Fair Market Value.

“Fair Market Value” on any given date means the value of one share of Common Stock, determined as
follows:

	 	(a)	 	If the Common Stock is then listed or admitted to trading on the Nasdaq Stock
Market or a stock exchange which reports closing sale prices, the Fair Market Value
shall be the closing sale price on the date of valuation as so reported by the
principal system or exchange on which the Common Stock is traded, or, if no closing
sale price is reported on such day, then the Fair Market Value shall be the closing
sale price of the Common Stock as so reported on the next preceding day on which a
closing sale price is reported.
	 
	 	(b)	 	If the Common Stock is not then listed or admitted to trading on the Nasdaq
Stock Market or a stock exchange which reports closing sale prices, the Fair Market
Value shall be the average of the reported closing bid and asked prices of the Common
Stock in the over-the-counter market on the date of valuation.
	 
	 	(c)	 	If neither (a) nor (b) is applicable as of the date of valuation, then the
Fair Market Value shall be determined by the Administrator in good faith using any
reasonable method of evaluation, which determination shall be conclusive and binding on
all interested parties.

 

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2.13 Hostile Takeover.

“Hostile Takeover” shall mean either of the following events effecting a change in control or
ownership of the Company:

	 	(a)	 	the acquisition, directly or indirectly, by any person or related group of
persons (other than the Company or a person that directly or indirectly controls, is
controlled by, or is under common control with, the Company) of beneficial ownership
(within the meaning of Rule 13d-3 of the 1934 Act) of
securities possessing more than fifty percent (50%) of the total combined voting power
of the Company’s outstanding securities pursuant to a tender or exchange offer made directly to
the Company’s shareholders which the Board does not recommend such shareholders to
accept, or
	 
	 	(b)	 	a change in the composition of the Board over a period of thirty-six (36)
consecutive months or less such that a majority of the Board members ceases, by reason
of one or more contested elections for Board membership, to be comprised of individuals
who either (A) have been Board members continuously since the beginning of such period
or (B) have been elected or nominated for election as Board members during such period
by at least a majority of the Board members described in clause (A) who were still in
office at the time the Board approved such election or nomination.

2.14 Incentive Option.

“Incentive Option” means any Option designated and qualified as an “incentive stock option” as
defined in Section 422 of the Code.

2.15 NASD Dealer.

“NASD Dealer” means a broker-dealer that is a member of the National Association of Securities Dealers, Inc.

2.16 Nonqualified Option.

“Nonqualified Option” means any Option that is not an Incentive Option. To the extent that any
Option designated as an Incentive Option fails in whole or in part to qualify as an Incentive
Option, including, without limitation, for failure to meet the limitations applicable to a 10%
Shareholder or because it exceeds the annual limit provided for in Section 5.6 below, it shall to
that extent constitute a Nonqualified Option.

2.17 Offeree.

“Offeree” means a Participant to whom a Right to Purchase has been offered or who has acquired
Restricted Stock under the Plan.

2.18 Option.

“Option” means any option to purchase Common Stock granted pursuant to the Plan.

2.19 Option Agreement.

“Option Agreement” means the written agreement entered into between the Company and the Optionee
with respect to an Option granted under the Plan.

2.20 Optionee.

“Optionee” means a Participant who holds an Option.

2.21 Participant.

“Participant” means an individual or entity that holds an Option, a Right to Purchase or Restricted
Stock under the Plan.

2.22 Purchase Price.

“Purchase Price” means the purchase price per share of Restricted Stock payable upon acceptance of
a Right to Purchase.

 

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2.23 Restricted Stock.

“Restricted Stock” means shares of Common Stock issued, subject to any restrictions and conditions
as are established, pursuant to Section 6.

2.24 Restricted Stock Purchase Agreement.

“Restricted Stock Purchase Agreement” means the written agreement entered into between the Company
and the Offeree with respect to a Right to Purchase offered under the Plan.

2.25 Right to Purchase.

“Right to Purchase” means a right to purchase Restricted Stock granted to an Offeree pursuant to
Section 6 hereof.

2.26 Service Provider.

“Service Provider” means a consultant or other person or entity that provides advice or other
services to the Company or an Affiliated Company and who the Administrator authorizes to become a
Participant in the Plan.

2.27 10% Shareholder.

“10% Shareholder” means a person who, as of a relevant date, owns or is deemed to own (by reason of
the attribution rules applicable under Section 424(d) of the Code) stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company or of an Affiliated
Company.

2.28 Vest.

The terms “vest” and “vested” shall mean (a) with respect to an Option, the Option becoming
exercisable with respect to one or more shares of Common Stock pursuant to the terms of the
applicable Option Agreement, or (b) with respect to shares of Restricted Stock or shares of Common
Stock acquired upon exercise of an Option, the shares becoming no longer subject to a right of the
Company to repurchase the shares for less than Fair Market Value pursuant to the terms of the
applicable Restricted Stock Purchase Agreement or Option Agreement.

3 ELIGIBILITY.

3.1 Incentive Options.

Officers and other key employees of the Company or of an Affiliated Company (including members of
the Board if they are employees of the Company or of an Affiliated Company) are eligible to receive
Incentive Options under the Plan.

3.2 Nonqualified Options and Rights to Purchase.

Officers and other key employees of the Company or of an Affiliated Company, members of the Board
(whether or not employed by the Company or an Affiliated Company), and Service Providers are
eligible to receive Nonqualified Options or Rights to Purchase under the Plan.

3.3 Limitation on Shares.

In no event shall any Participant be granted Options or Rights to Purchase in any one calendar year
pursuant to which more than 1,000,000 shares of Common Stock may be acquired.

 

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4 PLAN SHARES.

4.1 Shares Subject to the Plan.

A total of 16 million shares of Common Stock may be issued under the Plan (and any sub-plan or
other plan whose reserved shares are at a future date taken from the reserve under this plan,
aggregately), subject to adjustment as to the number and kind of shares pursuant to Section 4.2
hereof. For purposes of this limitation, in the event that

	 	(a)	 	all or any portion of any Option or Right to Purchase granted or offered under
the Plan can no longer under any circumstances be exercised, or
	 
	 	(b)	 	any shares of Common Stock are reacquired by the Company pursuant to an Option
Agreement or Restricted Stock Purchase Agreement, the shares of Common Stock allocable
to the unexercised portion of such Option or such Right to Purchase, or the shares so
reacquired, shall again be available for grant or issuance under the Plan.

4.2 Changes in Capital Structure.

If the then outstanding shares of Common Stock are increased or decreased or changed into or
exchanged for a different number or kind of shares or other securities of the Company by reason of
a recapitalization, stock split, combination of shares, reclassification, stock dividend, or other
similar change in the capital structure of the Company, then appropriate adjustments shall be made
by the Administrator to the aggregate number and kind of shares subject to this Plan, and the
number and kind of shares and the price per share subject to outstanding Option Agreements, Rights
to Purchase and Restricted Stock Purchase Agreements in order to preserve, as nearly as practical,
but not to increase, the benefits to Participants.

5 OPTIONS.

5.1 Option Agreement.

Each Option granted pursuant to this Plan shall be evidenced by an Option Agreement which shall
specify the number of shares subject thereto, the Exercise Price per share, and whether the Option
is an Incentive Option or Nonqualified Option. As soon as is practical following the grant of an
Option, an Option Agreement shall be duly executed and delivered by or on behalf of the Company to
the Optionee to whom such Option was granted. Each Option Agreement shall be in such form and
contain such additional terms and conditions, not inconsistent with the provisions of this Plan, as
the Administrator shall, from time to time, deem desirable, including, without limitation, the
imposition of any rights of first refusal and resale obligations upon any shares of Common Stock
acquired pursuant to an Option Agreement. Each Option Agreement may be different from each other
Option Agreement.

5.2 Exercise Price.

The Administrator, subject to the following, shall determine the Exercise Price per share of Common
Stock covered by each Option:

	 	(a)	 	the Exercise Price of an Incentive Option shall not be less than 100% of Fair
Market Value on the date the Incentive Option is granted,
	 
	 	(b)	 	the Exercise Price of a Nonqualified Option shall not be less than 90% of Fair
Market Value on the date the Nonqualified Option is granted (or 100% as to a
Nonqualified Option granted to a 10% Holder”), and
	 
	 	(c)	 	if the person to whom an Incentive Option is granted is a 10% Shareholder on
the date of grant, the Exercise Price shall not be less than 110% of Fair Market Value
on the date the Option is granted.

 

5

 

	5.3	 	Payment of Exercise Price.

Payment of the Exercise Price shall be made upon exercise of an Option and may be made, in the
discretion of the Administrator, subject to any legal restrictions, by—

	 	(a)	 	cash;
	 
	 	(b)	 	check (considered payment only when honored by the bank against which it is
drawn upon first presentment);
	 
	 	(c)	 	the surrender of shares of Common Stock owned by the Optionee that have been
held by the Optionee for at least six (6) months, which surrendered shares shall be
valued at Fair Market Value as of the date of such exercise;
	 
	 	(d)	 	the Optionee’s promissory note in a form and on terms acceptable to the
Administrator;
	 
	 	(e)	 	the cancellation of indebtedness of the Company to the Optionee;
	 
	 	(f)	 	the waiver of compensation due or accrued to the Optionee for services rendered;
	 
	 	(g)	 	provided that a public market for the Common Stock exists, a “same day sale”
commitment from the Optionee and an NASD Dealer whereby the Optionee irrevocably elects
to exercise the Option and to sell a portion of the shares so purchased to pay for the
Exercise Price and whereby the NASD Dealer irrevocably commits upon receipt of such
 shares to forward the Exercise Price directly to the Company;
	 
	 	(h)	 	provided that a public market for the Common Stock exists, a “margin”
commitment from the Optionee and an NASD Dealer whereby the Optionee irrevocably elects
to exercise the Option and to pledge the shares so purchased to the NASD Dealer in a
margin account as security for a loan from the NASD Dealer in the amount of the
Exercise Price, and whereby the NASD Dealer irrevocably commits upon receipt of such
 shares to forward the Exercise Price directly to the Company; or
	 
	 	(i)	 	any combination of the foregoing methods of payment or any other consideration
or method of payment as shall be permitted by applicable corporate law.

5.4 Term and Termination of Options.

The term and provisions for termination of each Option shall be as fixed by the Administrator, but
no Option may be exercisable more than ten (10) years after the date it is granted. An Incentive
Option granted to a person who is a 10% Shareholder on the date of grant shall not be exercisable
more than five (5) years after the date it is granted.

5.5 Vesting and Exercise of Options.

Each Option shall vest and become exercisable in one or more installments at such time or times and
subject to such conditions, including without limitation the achievement of specified performance
goals or objectives, as shall be determined by the Administrator and set forth in an Option
Agreement; provided, however that Options granted to employees who are not officers, directors or
Service Providers shall vest and become exercisable in installments at a minimum rate of 20% per
year over a period of five (5) years from the date the Option is granted.

5.6 Annual Limit on Incentive Options.

To the extent required for “incentive stock option” treatment under Section 422 of the Code, the
aggregate Fair Market Value (determined as of the time of grant) of the Common Stock shall not,
with respect to which Incentive Options granted under this Plan and any other plan of the Company
or any Affiliated Company become exercisable for the first time by an Optionee during any calendar
year, exceed $100,000. To the extent such dollar limitation is exceeded, the excess portion of
such Option shall be exercisable as a Nonqualified Option under the Federal tax laws.

 

6

 

	5.7	 	Limited Transferability.

No Incentive Option or Nonqualified Option shall be assignable or transferable except by will or
the laws of descent and distribution, and during the life of the Optionee shall be exercisable only
by such Optionee. Notwithstanding the foregoing, shares purchased upon exercise of Options may be
transferred or assigned in whole or in part during the Optionee’s lifetime, provided that the
Participant obtains the prior written approval of the Administrator to such transfer or assignment
and the transferee agrees to be bound by the same transfer restrictions applicable to the
Participant, either (a) in connection with the Optionee’s estate plan to one or more members of the
Optionee’s immediate family, including any parent, descendant, spouse, brother, sister,
grandparent, grandchild, dependent, or member of their immediate families, or to a trust
established exclusively for one or more such persons, or (b) in a transfer described in Section
1041(a) of the Code between spouses or incident to divorce. The terms applicable to the assigned
portion of the shares shall be the same as those in effect for the option immediately prior to such
assignment and shall be set forth in such documents issued to the assignee as the Administrator may
deem appropriate. A Participant shall provide prior written notice to the Administrator of any
proposed transfer or assignment of shares purchased upon exercise of Options.

5.8 No Rights as Shareholder.

An Optionee or permitted transferee of an Option shall have no rights or privileges as a
shareholder with respect to any shares covered by an Option until such Option has been duly
exercised and certificates representing shares purchased upon such exercise have been issued to
such person.

5.9 Company’s Repurchase Rights.

In the event of termination of a Participant’s Continuous Service for any reason whatsoever
(including death or disability), the Option Agreement may provide, in the discretion of the
Administrator or upon events specified in the discretion of the Administrator, that the Company, or
its assignee, shall have the right, exercisable at the discretion of the Administrator, to
repurchase shares of Common Stock acquired pursuant to the exercise of an Option at any time, at
any price, and on any terms as set forth in the Option Agreement evidencing such Options.

5.10 Other Restrictions on Underlying Shares of Common Stock.

Shares of Common Stock issued pursuant to the exercise of an Option may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as specifically provided in the
Option Agreement.

6 RIGHTS TO PURCHASE.

6.1 Nature of Right to Purchase.

A Right to Purchase granted to an Offeree entitles the Offeree to purchase, for a Purchase Price
determined by the Administrator, shares of Common Stock subject to such terms, restrictions and
conditions as the Administrator may determine at the time of grant (“Restricted Stock”). Such
conditions may include, but are not limited to, Continuous Service or the achievement of specified
performance goals or objectives. The Administrator shall have the discretion to grant options, or
amend outstanding options, such that the unvested portion of options is exercisable for Restricted
Stock.

6.2 Acceptance of Right to Purchase.

An Offeree shall have no rights with respect to the Restricted Stock subject to a Right to Purchase
unless the Offeree shall have accepted the Right to Purchase within ten (10) days (or such longer
or shorter period as the Administrator may specify) following the grant of the Right to Purchase by
making payment of the full Purchase Price to the Company in the manner set forth in Section 6.3
hereof and by executing and delivering to the Company a Restricted Stock Purchase Agreement. Each
Restricted Stock Purchase Agreement shall be in such form, and shall set forth the Purchase Price
and such other terms, conditions and restrictions of the Restricted Stock, not inconsistent with
the provisions of this Plan, as the Administrator shall, from time to time, deem desirable. Each
Restricted Stock Purchase Agreement may be different from each other Restricted Stock Purchase
Agreement.

 

7

 

6.3 Payment of Purchase Price.

Subject to any legal restrictions, payment of the Purchase Price upon acceptance of a Right to
Purchase Restricted Stock may be made, in the discretion of the Administrator, by—

	 	(a)	 	cash;
	 
	 	(b)	 	check (considered payment only when honored by the bank against which it is
drawn upon first presentment);
	 
	 	(c)	 	the surrender of shares of Common Stock owned by the Offeree that have been
held by the Offeree for at least six (6) months, which surrendered shares shall be
valued at Fair Market Value as of the date of such exercise;
	 
	 	(d)	 	the Offeree’s promissory note in a form and on terms acceptable to the Administrator;
	 
	 	(e)	 	the cancellation of indebtedness of the Company to the Offeree;
	 
	 	(f)	 	the waiver of compensation due or accrued to the Offeree for services rendered; or
	 
	 	(g)	 	any combination of the foregoing methods of payment or any other consideration
or method of payment as shall be permitted by applicable corporate law.

6.4 Rights as a Shareholder.

Upon complying with the provisions of Section 6.2 hereof, an Offeree shall have the rights of a
shareholder with respect to the Restricted Stock purchased pursuant to the Right to Purchase,
including voting and dividend rights, subject to the terms, restrictions and conditions as are set
forth in the Restricted Stock Purchase Agreement. Unless the Administrator shall determine
otherwise, certificates evidencing shares of Restricted Stock shall remain in the possession of the
Company in accordance with the terms of the Restricted Stock Purchase Agreement until such shares
have vested.

6.5 Restrictions.

Shares of Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered
or disposed of except as specifically provided in the Restricted Stock Purchase Agreement or by the
Administrator; provided that the Administrator provides prior written consent to such sale,
assignment, transfer or other disposition. In the event of termination of a Participant’s
employment, service as a director of the Company or Service Provider status for any reason
whatsoever (including death or disability), the Restricted Stock Purchase Agreement may provide, in
the discretion of the Administrator, that the Company shall have the right, exercisable at the
discretion of the Administrator or upon events specified in the discretion of the Administrator, to
repurchase

	 	(i)	 	at the original Purchase Price, any shares of Restricted Stock which have not
vested as of the date of termination, and
	 
	 	(ii)	 	at Fair Market Value (or at the original Purchase Price in specified events),
any shares of Restricted Stock which have vested as of such date, on such terms as may
be provided in the Restricted Stock Purchase Agreement;

provided that, for Restricted Stock granted to employees who are not officers, directors or Service
Providers, the Company’s Repurchase Right at the original purchase price lapses at a minimum rate
of 20% per year over a period of five (5) years from the date the Right to Purchase was granted. A
Participant shall provide prior written notice to the Administrator of any proposed transfer or
assignment of Restricted Stock.

6.6 Vesting of Restricted Stock.

Each Restricted Stock Purchase Agreement shall specify the date or dates, the performance goals or
objectives which must be achieved, and any other conditions on which the Restricted Stock may vest,
as may be established in the discretion of the Administrator.

6.7 Dividends.

If payment for shares of Restricted Stock is made by promissory note, any cash dividends paid with
respect to the Restricted Stock may be applied, in the discretion of the Administrator, to
repayment of such note.

 

8

 

	6.8	 	Limited Assignability of Rights.

No Right to Purchase shall be assignable or transferable except by will or the laws of descent and
distribution. Restricted Stock may, in connection with the Participant’s estate plan, be assigned
in whole or in part during the Participant’s lifetime to one or more members of the Participant’s
immediate family, including any parent, descendant, spouse, brother, sister, grandparent,
grandchild, dependent, or member of their immediate families, or to a trust established exclusively
for one or more such persons, or to a trust established exclusively for one or more such family
members; provided that the Participant obtains the prior written approval of the Administrator to
such assignment. A Participant shall provide prior written notice to the Administrator of any
proposed assignment of a Right to Purchase. The terms applicable to the assigned portion shall be
the same as those in effect for the Restricted Stock immediately prior to such assignment and shall
be set forth in such documents issued to the assignee as the Plan Administrator may deem
appropriate. In the event that applicable tax laws and securities laws permit transferability of
Restricted Stock in any other particular case, then with the consent of the Administrator in such
case, Restricted Stock may be transferred consistent with restrictions under law and subject to any
terms or restrictions imposed by the Administrator.

7 ADMINISTRATION OF THE PLAN.

7.1 Administrator.

Authority to control and manage the operation and administration of the Plan shall be vested in the
Board, which may delegate such responsibilities in whole or in part to a committee consisting of
two (2) or more members of the Board (the “Committee”). Members of the Committee may be appointed
from time to time by, and shall serve at the pleasure of, the Board. As used herein, the term
“Administrator” means the Board or, with respect to any matter as to which responsibility has been
delegated to the Committee, the term Administrator shall mean the Committee.

7.2 Powers of the Administrator.

In addition to any other powers or authority conferred upon the Administrator elsewhere in the Plan
or by applicable law, the Administrator shall have full power and authority, at any time and from
time to time, in any or each particular instance or circumstance, as to each Option Agreement or
Restricted Stock Purchase Agreement, Optionee or Purchaser, independently of any other or others,
as determined in any or each instance in the sole and absolute discretion of the Administrator:

	 	(a)	 	to determine the persons to whom, and the time or times at which, Incentive
Options or Nonqualified Options shall be granted and Rights to Purchase shall be
offered, the number of shares to be represented by each Option and Right to Purchase
and the consideration to be received by the Company upon the exercise thereof;
	 
	 	(b)	 	to interpret the Plan;
	 
	 	(c)	 	to create, amend or rescind rules and regulations relating to the Plan;
	 
	 	(d)	 	to determine the terms, conditions and restrictions contained in, and the form
of, any or all Option Agreements and Restricted Stock Purchase Agreements;
	 
	 	(e)	 	to determine the identity or capacity of any persons who may be entitled to
exercise a Participant’s rights under any Option or Right to Purchase under the Plan;
	 
	 	(f)	 	to correct any defect or supply any omission or reconcile any inconsistency in
the Plan or in any Option Agreement or Restricted Stock Purchase Agreement;
	 
	 	(g)	 	to extend the exercise date or any relevant date of any Option or acceptance
date or other relevant date of any Right to Purchase, or to waive any other right of
the Company to insist on prompt performance;
	 
	 	(h)	 	to provide for any rights of first refusal and/or any repurchase rights and the
terms, provisions and conditions thereof, if any, and their performance, waiver,
modification or termination, or any of the above in combination;

 

9

 

	 	(i)	 	to effect, with the consent of the affected Participant or pursuant to the
terms of the Plan, the cancellation of any or all outstanding Options and to grant, in
respect of any or all thereof in substitution, new options covering the same or
different number of shares of Common Stock but with an exercise price per share based
on the Fair Market Value on the new grant date with any or all adjustments thereto, in
either case in any such manner as the Administrator deems to be reasonable, equitable ,
appropriate or advisable;
	 
	 	(j)	 	to amend any outstanding Option Agreements and any outstanding Restricted Stock
Purchase Agreements, and by way of example but not limitation to provide for, among
other things, any change or modification to a provision thereof which the Administrator
could have provided for upon the grant of an Option or Right to Purchase or upon the
issuance of Restricted Stock or could have otherwise done in furtherance of the powers
or discretion provided for herein; and
	 
	 	(k)	 	to make all other determinations and take all other actions, or refrain
therefrom, as considered necessary or advisable for the administration of the Plan, or
the performance of its terms in the name of the Company or its successors, but only to
the extent not contrary to the express provisions of the Plan, in the sole and absolute
discretion of the Administrator.

Any action, decision, interpretation or determination made in good faith by the Administrator in
the exercise of its authority conferred upon it under the Plan shall be final and binding on the
Company and all Participants. Notwithstanding anything to the contrary, the Administrator’s
discretion under this Plan extends to and includes the authorization to deal with any one or more
individual Option Agreements or individual Restricted Stock Purchase Agreements independently of
any or all others then outstanding under the Plan in the discretion of the Administrator, and such
authority and discretion are not intended to be limited by, and there is no actual or implied
requirement of, consistency among various Option Agreements or Restricted Stock Purchase
Agreements, respectively, under any circumstances.

7.3 Limitation on Liability.

No employee of the Company or member of the Board or Committee shall be subject to any liability
with respect to duties under the Plan unless the person acts fraudulently or in bad faith. To the
extent permitted by law, the Company shall indemnify each member of the Board or Committee, and any
employee of the Company with duties under the Plan, who was or is a party, or is threatened to be
made a party, to any threatened, pending or completed proceeding, whether civil, criminal,
administrative or investigative, by reason of such person’s conduct in the performance of duties
under the Plan.

8 MERGERS AND OTHER REORGANIZATIONS.

8.1 Mergers and Other Reorganizations.

An Option Agreement or Restricted Stock Purchase Agreement may make provision for what, if
anything, shall happen in the event that the Company at any time proposes to enter into any
transaction approved by the Board to dissolve, liquidate, sell substantially all of its assets,
merge or consolidate, acquire property or shares, separate or reorganize, with any other entity or
entities, corporate or otherwise, as a result of which either the Company is not the surviving
corporation or the Company is the surviving corporation. The Plan and outstanding Options, Rights
of Purchase, and Restricted Stock shall in no way affect the right of the Company to adjust,
reclassify, reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

8.2 Change in Control.

An Option Agreement or Restricted Stock Purchase Agreement may make provision for what, if
anything, shall happen to the terms of any or every outstanding Option Agreement or Restricted
Stock Purchase Agreement in the event that the Company at any time proposes to enter into any
transaction that results in a Change of Control.

 

10

 

8.3 Hostile Takeover.

The Administrator shall have the discretionary authority to structure Option Agreements and
Restricted Stock Purchase Agreements such that the Company’s Repurchase Rights shall terminate and
such shares shall vest automatically upon the consummation of a Hostile Take-Over, to condition the
automatic acceleration of one or more Options and the termination of one or more of the Company’s
Repurchase Rights under Restricted Stock Purchase Agreements upon the involuntary termination of
the Participant’s Continuous Service within a designated period (not to exceed eighteen (18)
months) following the effective date of a Hostile Take-Over, and to make provision that each Option
so accelerated shall remain exercisable for fully-vested shares until a date not later than the
expiration of the option term.

9 AMENDMENT AND TERMINATION OF THE PLAN.

9.1 Amendments.

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. No such alteration,
amendment, suspension or termination shall be made which shall substantially affect or impair the
rights of any Participant under an outstanding Option Agreement or Restricted Stock Purchase
Agreement without such Participant’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 this 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.

9.2 Plan Termination.

Unless the Plan shall theretofore have been terminated, the Plan shall terminate on the tenth
(10th) anniversary of the Effective Date and no Options or Rights to Purchase may be
granted under the Plan thereafter, but Option Agreements, Restricted Stock Purchase Agreements and
Rights to Purchase then outstanding shall continue in effect in accordance with their respective
terms.

10 CANCELLATION & RESCISSION

10.1 Non-Competition.

Unless a particular Option Agreement or a particular Restricted Stock Purchase Agreement specifies
otherwise, the Administrator may cancel, rescind, suspend, withhold or otherwise limit or restrict
any Options or Common Stock at any time if the Participant engages in any “Adverse Activity.” For
purposes of this Section 10, “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 the Participant 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 the Participant 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 Participant’s Continuous Service for “cause,” defined herein to mean any
willful breach of duty by the Participant in the course of his or her employment or provision of
services to the Company, or the Participant’s habitual neglect of his or her duty or continued
incapacity to perform it; (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.

 

11

 

10.2 Agreement Upon Exercise.

In the event a Participant fails to comply with the provisions of paragraphs (i)-(vi) of Section
10.1 prior to, or during the six (6) months after, any exercise pursuant to an Option Agreement or
a purchase pursuant to a Restricted Stock Purchase Agreement, such exercise or purchase may be
rescinded at the Company’s sole election within two years thereafter. In the event of any such
rescission, the Participant shall pay to the Company the amount of any gain realized or payment
received as a result of the disposition of Options or Common Stock acquired pursuant to such
exercise or purchase, 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
Participant by the Company.

11 TAX WITHHOLDING.

The Company shall have the power to withhold, or require a Participant to remit to the Company, an
amount sufficient to satisfy any applicable U.S. federal, state, or local tax withholding
requirements with respect to any Options exercised or Restricted Stock issued under the Plan. The
Company’s obligation to deliver shares of Common Stock upon the exercise of Options or the issuance
or vesting of Common Stock under the Plan shall be subject to the satisfaction of all applicable
U.S. federal, state and local income and employment tax withholding requirements. To the extent
permissible under applicable tax, securities and other laws, the Administrator may, in its sole
discretion and upon such terms and conditions as it may deem appropriate, permit a Participant to
satisfy his or her obligation to pay any such tax, in whole or in part, up to an amount determined
on the basis of the highest marginal tax rate applicable to such Participant, by—

	 	(a)	 	directing the Company to apply shares of Common Stock to which the Participant
is entitled as a result of the exercise of an Option or as a result of the purchase of
or lapse of restrictions on Restricted Stock or
	 
	 	(b)	 	delivering to the Company shares of Common Stock owned by the Participant.

The shares of Common Stock so applied or delivered in satisfaction of the Participant’s tax
withholding obligation shall be valued at their Fair Market Value as of the date of
measurement of the amount of income subject to withholding.

12 MISCELLANEOUS.

12.1 Benefits Not Alienable.

Other than as provided above, benefits under the Plan may not be transferred, assigned or
alienated, whether voluntarily or involuntarily or by operation of law. Any unauthorized attempt
at assignment, transfer, pledge or other disposition shall be void and without force or effect
whatsoever.

12.2 No Creation or Enlargement of Participant’s Rights to Continue in any Capacity.

This Plan is strictly a voluntary undertaking on the part of the Company and shall not be deemed to
constitute a contract between the Company and any Participant for, or to be consideration for, or
an inducement to, or a condition of, the continuation of any Participant’s services to the Company
in any capacity. Nothing contained in the Plan shall be deemed to give the right to any
Participant to be retained in the service of the Company or any Affiliated Company or to interfere
with the right of the Company or any Affiliated Company (which rights are hereby expressly reserved
by each) to discharge or discontinue the services of any Participant at any time for any reason,
with or without cause.

12.3 Application of Funds.

The proceeds received by the Company from the sale of Common Stock pursuant to Option Agreements
and Restricted Stock Purchase Agreements, except as otherwise provided herein, will be used for
general corporate purposes.

 

12

 

12.4 Annual and Other Periodic Reports.

The Company shall make available to Participants or cause to be made available to Participants,
either electronically or in the form of paper copies, all annual and other periodic financial and
informational reports that the Company distributes generally to its shareholders, except if
Participants are key employees with duties that assure the equivalent access to information.

12.5 Action to Enforce

In the event that a Participant brings an action to enforce the terms of the Plan or any Option
Agreement or Restricted Stock Purchase Agreement and the Company prevails, the Participant shall
pay all costs and expenses incurred by the Company in connection with that action, including
reasonable attorney’s fees and costs, including reasonable attorney’s fees and costs incurred by
the Company in connection with collection.

12.6 Severability and Interpretation

If any provision of the Plan is or becomes or is deemed invalid, illegal or unenforceable in any
jurisdiction, or would disqualify the Plan or any Option Agreement or Restricted Stock Purchase
Agreement under any law deemed applicable by the Administrator, such provision shall be construed
or deemed amended or limited in scope to conform to applicable laws or, in the discretion of the
Administrator, it shall be stricken and the remainder of the Plan shall remain in full force and
effect.

12.7 Governing Law

The Plan and each Option Agreement or Restricted Stock Purchase Agreement 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. Unless otherwise provided in the Option Agreement or
Restricted Stock Purchase Agreement, Participants are deemed 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 the Plan or any Option Agreement or Restricted Stock
Purchase Agreement.

12.8 Effective Date

The Plan shall become effective on the Effective Date.

 

13

 

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 “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:

	 	
 _____ 

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

	 	
 _____ 

% 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                      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.

 

2

 

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

 

3

 

	 	(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.

 

4

 

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.

 

5

 

	 	(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.

 

6

 

	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.

 

7

 

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.

 

8

 

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:
	 	 
	 	 	 	 	 
	 

	 	 	 	 
	 	 	 	 	 

 

9

 

RSPA No.

PACIFIC FUEL CELL CORP.

RESTRICTED STOCK PURCHASE AGREEMENT

UNDER 2008 STOCK INCENTIVE PLAN

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

1 Purchase and Sale of Shares.

The Purchaser hereby agrees to purchase from the Company, and the Company hereby agrees to sell to
the Purchaser,                      (                    ) shares of its Common Stock (the “Shares”) for a purchase
price of                      (                    ) per share. The Shares shall be duly issued and a certificate or
certificates for the Shares are concurrently herewith being issued in the name of Purchaser.
Purchaser shall thereupon be a shareholder with respect to all of the Shares represented by such
certificate(s) and shall have all of the rights of a shareholder with respect to all of the Shares,
including the right to vote the Shares and to receive all dividends and other distributions paid
with respect to the Shares, subject to the transfer restrictions provided in this Agreement. The
purchase price is payable as follows:

	 	(a)	 	by delivery of cash,
	 
	 	(b)	 	by check (considered payment only when honored by the bank against which it is drawn
upon first presentment);
	 
	 	(c)	 	by delivery of a promissory note payable to the Company, bearing interest from the
date hereof and substantially in the form attached as Exhibit A; or
	 
	 	(d)	 	any combination of cash, check and promissory note, so long as the total consideration
equals the aggregate purchase price as set forth above.

In the event payment of any portion or all of the purchase price is to be made by delivery of a
promissory note, Purchaser shall deliver to the Company a pledge of the Shares or other
securities or assets that may be listed in the Pledge Agreement dated the date hereof and
substantially in the form attached as Exhibit B. If the note is to be unsecured by the
Shares or other collateral, the Pledge Agreement shall so indicate.

The Purchaser’s rights to acquire the Shares hereunder are nontransferable other than by will or
the laws of descent and distribution, and Purchaser’s legal representative, his or her legatee, or
the person who acquired the Purchaser rights to acquire the Shares by reason of the death of the
Purchaser shall succeed to the Purchaser’s rights and obligations under this Agreement. The rights
of the Purchaser under this Agreement also may be assigned and transferred by the Purchaser (a) for
estate planning purposes to members of the immediate family of the Purchaser, including for this
purpose, but not limited to, spouses, parents, descendants, brothers and sisters, or to trusts
established for the benefit of such persons, and (b) in a transfer described in Section 1041(a) of
the Code between spouses or incident to divorce.

2 Internal Revenue Code § 83(b) Election.

Purchaser hereby agrees to file the election provided under § 83(b) of the Internal Revenue Code of
1986, as amended (herein called the “Code”), within thirty (30) days of the transfer of the Shares,
substantially in the form attached as Exhibit C hereto and, if required, a comparable form
of election with the appropriate state. The parties hereto acknowledge and agree that the total
fair market value of the Shares on the date hereof is $                     per Share, or an aggregate of
$                     for                      shares.

 

 

 

3 Company Repurchase Option.

In addition to all other restrictions imposed by this Agreement or applicable caw, the Shares
acquired by the Purchaser pursuant to this Agreement shall be subject to the following restrictions
and repurchase options.

3.1 Vesting Schedule.

Vesting will be measured from                     , 2008 (the “Vesting Measurement Date”). The Shares
acquired hereunder shall vest and become “Vested Shares” in accordance with the following vesting
schedule:

	 	 	 
	On or After:	 	Shares Vested As To:
	The first anniversary of Vesting Measurement Date:

	 	
 _____ 

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

	 	
 _____ 

% of the Shares

The vesting schedule of this Agreement would result, assuming Continuous Service shall have
theretofore not terminated, in One Hundred Percent (100%) of the Restricted Shares being Vested
Shares at the end of the calendar month in which the                      anniversary of the Vesting Measurement
Date falls. Shares that have not yet become vested are herein called “Unvested Shares.” In the
event the Continuous Service of the Purchaser ceases (the “Service Termination Date”), all vesting
shall cease unless otherwise determined by the Board of Directors. As used herein, the term
“Continuous Service” has the meaning given in the Plan.

In the event of a Change in Control of the Company, the Administrator in its discretion may take
one or more of the following actions with respect to the Shares (whether Vested Shares or Unvested
Shares):

	 	(a)	 	provide for the purchase or exchange of any Vested Shares for an amount of cash or
other property having a value equal to the value of the cash or other property that the
Purchaser would have received pursuant to such Change in Control transaction in exchange
for the Vested Shares and provide for the repurchase by the Company of Unvested Shares at
the repurchase price provided in this Agreement,
	 
	 	(b)	 	adjust the terms of this Agreement in a manner determined by the Administrator to
reflect the Change in Control,
	 
	 	(c)	 	cause this Agreement to be assumed, or new rights substituted therefor, by another
entity, through the continuance of the Plan and the assumption of this Agreement, or the
substitution for this Agreement of a new agreement of comparable value covering shares of a
successor or parent corporation, with appropriate adjustments as to the number and kind of
 shares, in which event the Plan and this Agreement, or the new agreement substituted
therefor, shall continue in the manner and under the terms so provided, or
	 
	 	(d)	 	make such other provision as the Administrator may consider equitable.

If the Administrator does not take any of the forgoing actions, this Agreement 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 Purchaser not less than fifteen (15) days prior to the
anticipated effective date of the proposed transaction.

3.2 Company Option to Repurchase Shares following Termination of Continuous Service.

Concurrent with the Service Termination Date and for the period and under the procedures set forth
in Section 3.3 below, the Company shall have the option to repurchase (the “Repurchase Option”) all
or any portion of the Purchaser’s Unvested Shares on the terms and subject to the limitations set
forth herein.

3.3 Procedures for Exercise of Repurchase Option.

For sixty (60) days after the Service Termination Date or other event described in this Section 3,
the Company may exercise its Repurchase Option by giving Purchaser and/or any other person
obligated to sell written notice of the number of Shares that the Company desires to purchase. The
Company shall pay for such Shares by the delivery of its check in the aggregate amount of the
repurchase price determined pursuant to Section 3.5 below against delivery of the certificate(s)
representing the Shares.

 

2

 

3.4 Deposit of Shares.

In aid of the repurchase provisions set forth herein, Purchaser shall, immediately upon receipt of
the certificate or certificates representing the Shares, deposit the certificate or certificates,
together with a stock power or other instrument of transfer appropriately endorsed in blank, with
the Company as escrow holder of the certificate(s). Upon Shares becoming Vested Shares, and in the
event that the repurchase rights with respect to any Shares are not exercised by the Company
following any Service Termination Date, the Company shall cause the certificate or certificates
representing such Shares to be delivered into the possession of Purchaser.

3.5 Repurchase Price.

The per share price for the Unvested Shares (“Unvested Stock Repurchase Price”) repurchased by the
Company pursuant to this Section 3 shall be an amount equal to the per share purchase price paid
for the Shares by the Purchaser pursuant to Section 1 above.

3.6 Repurchase in the Event of Personal Bankruptcy.

If the Purchaser:

	 	(a)	 	files a voluntary petition under any bankruptcy or insolvency law or a petition for the
appointment of a receiver or makes an assignment for the benefit of creditors;
	 
	 	(b)	 	is subjected involuntarily to such a petition or assignment or to an attachment or
other legal or equitable interest with respect to the Shares and such involuntary petition
or assignment or attachment is not discharged within sixty (60) days after its date; or
	 
	 	(c)	 	is required to transfer the Shares by operation of law or by order or decree of any
court,

then the Company shall have the option to exercise the Repurchase Right, exercisable at any time
during the period of 60 days after receiving notice thereof, to purchase all of the Unvested Shares
owned by the Purchaser upon the terms set forth in this Section 3, whether or not the Continuous
Service of the Purchaser has terminated.

3.7 Assignment of Rights.

The Company may assign its rights under this Section 3 and Section 4.

4 Breach and Non-Competition.

The Administrator may cancel, rescind, suspend, withhold or otherwise limit or restrict any Shares
or rights of Purchaser under this Agreement at any time if the Purchaser engages in any “Adverse
Activity.” For purposes of this Section 5, “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 Purchaser
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 Purchaser 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 Purchaser’s employment for “cause,” defined as any willful
breach of duty by the employee in the course of his employment, or in case of his habitual neglect
of his duty or continued incapacity to perform it; (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. At the request of the Administrator, the Purchaser shall certify in a manner acceptable
to the Company that he or she is in compliance with the terms and conditions of this Section 5. In
the event Purchaser 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

 

3

 

of the Company within two years thereafter. In the event of any such rescission, the Purchaser
shall pay to the Company the amount of any gain realized or payment received as a result of the
disposition of Shares, 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
Purchaser by the Company.

5 Recapitalization.

In the event that, as the result of a stock split or stock dividend or combination of shares or any
other change, or exchange for other securities, by reclassification, or recapitalization of the
Shares, Purchaser shall be entitled to new or additional or different shares of stock or
securities, the certificate or certificates for, or other evidences of, such new or additional or
different shares or securities shall be imprinted with the legend(s) provided in Section 6, and
shall be deposited with the Company as escrow holder under the terms and conditions provided in
Section 3.4 herein, together with a stock power or other instrument or transfer appropriately
endorsed. In such event, any and all new, substituted or additional securities or other property
(other than cash) to which the Purchaser is entitled by reason of his ownership of the Shares shall
be immediately subject to the Repurchase Right and First Right of Refusal and be included in the
word “Shares” for all purposes of the Repurchase Right and First Right of Refusal with the same
force and effect as the Shares subject to the Repurchase Right and the First Right of Refusal under
the terms of Section 3 and Section 4. While the total Vested Stock Repurchase Price and Unvested
Stock Repurchase Price shall remain the same after each such event, the per share price shall be
appropriately adjusted. Shares acquired as provided in this Section 6 shall be deemed to have been
acquired at the time of acquisition of the Shares on which such Shares were distributed.

6 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, whether Vested Shares or
Unvested Shares, purchased pursuant to this Agreement shall bear substantially the following
legend:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE (INCLUDING ANY SECURITIES ISSUABLE
WITH RESPECT TO ANY 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.

 

4

 

Until such time as the Company’s Repurchase Rights terminate pursuant to Section 3.6, the stock
certificates for the Shares purchased pursuant to this Agreement shall be endorsed with
substantially the following legend:

ANY DISPOSITION OF ANY INTEREST IN THE SECURITIES REPRESENTED BY THIS CERTIFICATE
(INCLUDING ANY SECURITIES ISSUABLE WITH RESPECT TO ANY RIGHT CONNECTED HEREWITH) IS
SUBJECT TO RESTRICTIONS, AND THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO REPURCHASE RIGHTS, RIGHTS OF RESCISSION AND OTHER RIGHTS CONTAINED IN A
RESTRICTED STOCK PURCHASE AGREEMENT BETWEEN THE REGISTERED HOLDER (OR HIS
PREDECESSOR IN INTEREST) AND THE CORPORATION. THESE SECURITIES ARE NOT TRANSFERABLE
EXCEPT BY WILL OR PURSUANT TO THE LAWS OF DESCENT AND DISTRIBUTION, OR AS EXPRESSLY
PERMITTED IN THE RESTRICTED STOCK PURCHASE AGREEMENT AND THE PLAN AS DEFINED
THEREIN. A COPY OF SUCH AGREEMENT AND SUCH PLAN ARE ON FILE AT THE PRINCIPAL OFFICE
OF THE COMPANY, AND A COPY THEREOF WILL BE MAILED TO ANY HOLDER OF THIS CERTIFICATE
WITHOUT CHARGE WITHIN 5 DAYS OF RECEIPT BY THE CORPORATION OF A WRITTEN REQUEST
THEREFOR.

7 Stop-Transfer Notices.

Purchaser 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.

8 Representations and Warranties of Purchaser.

The Purchaser warrants and represents to the Company as follows:

	 	(a)	 	The Purchaser is purchasing the Shares solely for the Purchaser’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 Purchaser also
represents that the entire legal and beneficial interest of the Shares the Purchaser is
purchasing is being purchased for, and will be held for the account of, the Purchaser only
and neither in whole nor in part for any other person.
	 
	 	(b)	 	The Purchaser has heretofore discussed the Company and its plans, operations and
financial condition with its officers, has heretofore received all such information as the
Purchaser deems necessary and appropriate to enable the Purchaser 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 Purchaser realizes that the purchase of the Shares will be a highly speculative
investment.
	 
	 	(d)	 	The Purchaser is able, without impairing the Purchaser’s financial condition, to hold
the Shares for an indefinite period of time and to suffer a complete loss on the
investment.

 

5

 

	 	(e)	 	The Purchaser 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. The Purchaser
hereby acknowledges that:

	 	(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; and
	 
	 	(iii)	 	the Company will make a notation in its records of the aforementioned
restrictions on transfer and legends.

	 	(f)	 	The Purchaser 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 Purchaser, 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 Purchaser has been the
beneficial owner and the Purchaser 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, the
Purchaser further agrees that the Purchaser shall in no event make any disposition of all
or any portion of the Shares which the Purchaser 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 Purchaser 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 Purchaser 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
Purchaser of such concurrence.

	 	(h)	 	The Purchaser represents and warrants that he or she has not engaged in any Adverse
Activity as defined in Section 5.
	 
	 	(i)	 	The Purchaser acknowledges that the Purchaser 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 Purchaser is a citizen or permanent resident of the United States.

9 Unauthorized Transfers.

The Company shall not be required (a) to transfer on its books any Shares of the Company which
shall have been sold or transferred in violation of any of the provisions set forth in this
Agreement or (b) to treat as owner of such shares or to accord the right to vote as such owner or
to pay dividends to any transferee to whom such shares shall have been so transferred. In the
event of a sale of Shares by the Purchaser pursuant to Section 4, the Purchaser shall furnish to
the Company proof that such sale was made in compliance with the provisions of Section 4 as to
price and general terms of such sale. Notwithstanding any other provisions of this Agreement,
Shares may only be transferred, assigned, pledged or otherwise encumbered with the prior written
approval of the Company. The Purchaser 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 Shares without the prior written approval of the Company
shall be void and ineffectual.

10 “Market Stand-Off” Agreement.

Purchaser agrees that, if requested by the Company or the managing underwriter of any proposed
Public Offering of the Company’s securities, Purchaser will not sell or otherwise transfer or
dispose of any Shares held by Purchaser 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 Public
Offering, as the Company or the underwriter may specify.

 

6

 

11 Entire Agreement.

This Agreement and the Plan constitutes the entire agreement between the parties pertaining to its
subject matter and supersedes all contemporaneous written or oral agreements and understandings of
the parties, either express or implied. The parties agree to execute such further instruments and
to take such further action as may reasonably be necessary to carry out the intent of this
Agreement.

12 No Creation or Enlargement of Participant’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 Purchaser’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 Purchaser’s Continuous Service for any reason, with or
without cause.

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 Purchaser, at his or her most recent address as shown in the records of the Company.

14 Successors and Assigns.

This Agreement shall inure to the benefit of the successors and assigns of the Company and be
binding upon the Purchaser and his heirs, executors, administrators, successors and assigns.

15 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.

16 Interpretation.

This Agreement is entered into pursuant to the terms of the Plan, and shall in all respects be
interpreted in accordance therewith. The Administrator shall interpret and construe this Agreement
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 Purchaser. 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.

17 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.

 

7

 

18 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.

19 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 Purchaser’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 Purchaser under an outstanding Restricted
Stock Purchase Agreement without such Purchaser’s consent.

[SIGNATURE PAGE]

IN WITNESS WHEREOF, the parties have executed this Restricted Stock Purchase Agreement as of the
day and year first above written.

	 	 	 	 	 
	 	 	“COMPANY”
 
Pacific Fuel Cell Corp.
	 
	 	 	 	 
	 

	 	By:
	 	 
	 	 	 	 	 
	 

	 	Name:
	 	 
	 	 	 	 	 
	 

	 	Title:
	 	 
	 	 	 	 	 

	 	 	 	 	 
	 	 	“PURCHASER”
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 	 	(Signature)
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 	 	(Type or Print Name)
	 
	 	 	 	 
	 

	 	Address:
	 	 
	 	 	 	 	 
	 

	 	 	 	 
	 	 	 	 	 

 

8

 

CONSENT OF SPOUSE

I acknowledge that I have read the foregoing Agreement and that I know its contents. I am aware
that by its provisions, my spouse agrees, among other things, to a first right of refusal, to the
granting of rights to repurchase and to the imposition of certain restrictions on the transfer of
the shares of Pacific Fuel Cell Corp., a Nevada corporation (the “Company”), including my community
interest therein (if any), which rights and restrictions may survive my spouse’s death. I hereby
consent to such rights and restrictions and approve of the provisions of the Agreement.

I further agree that in the event of a dissolution of the marriage between myself and my spouse, in
connection with which I secure or am awarded shares of the common stock of the Company, or any
interest therein through property settlement agreement or otherwise, I shall receive and hold said
shares subject to all the provisions and restrictions contained in the foregoing Agreement,
including any option of a shareholder or the Company to purchase such shares or interest from me.

I also acknowledge that I have been advised to obtain independent counsel to represent my interests
with respect to this Agreement but that I have declined to do so and I hereby expressly waive my
right to such independent counsel.

	 	 	 
	 	 	Date:                                                            
	 
	 	 
	 
	 	 
	 	 	 
	 	 	(Signature)
	 
	 	 
	 
	 	 
	 	 	 
	 	 	(Type or Print Name)
	 
	 	 
	 

	 	Spouse of                                                             

 

9

 

EXHIBIT A

TO RESTRICTED STOCK PURCHASE AGREEMENT

PROMISSORY NOTE

(_____ YEAR, [_____]%* Interest)

			
	 	 	 
	                                        ,
 _____ 

	 	                    , Nevada

For value received, the undersigned promises to pay Pacific Fuel Cell Corp., a Nevada
Corporation (the “Company”), at the address of its principal office, the sum of                                                              Dollars ($                    ) in
full by or before the                      anniversary date of the date hereof, together with interest thereon
as hereinafter provided.

The undersigned shall have the right to prepay said principal amount at any time in whole or in
part without penalty. Simple annual interest at the rate 1 of                                          percent
(                    %) per annum on unpaid principal shall be paid annually on each anniversary of the date
hereof and upon each prepayment of principal, if any.

The entire outstanding principal and interest shall be due and payable if any one or more of the
following events shall have occurred:

	 	(a)	 	The making by the undersigned of any assignment for the benefit of creditors or the
filing by or against the undersigned of any petition in bankruptcy if such proceeding not
be discharged within ninety (90) days of any such making or filing.
	 
	 	(b)	 	The occurrence of any termination of Continuous Service as set forth in the Restricted
Stock Purchase Agreement of even date herewith between the undersigned and the Company.

If any installment of principal and/or interest is not paid when due, the holder hereof may, at its
option, declare the entire amount of this note immediately due and payable.

All payments hereon shall be credited first to accrued but unpaid interest, and the balance, if
any, shall be credited to principal.

If legal action is instituted for the collection of this note, the undersigned promises to pay such
sum as the Court may adjudge reasonable as attorneys’ fees.

This note is given pursuant to that certain Restricted Stock Purchase Agreement of even date
herewith, between the Company and the undersigned and is subject to all of the terms, rights and
remedies set forth therein. This note is secured by a Pledge Agreement of even date herewith
between the Company and the undersigned.

	 	 	 
	 

	 	 
	 	 	 
	 

	 	(Signature)
	 
	 	 
	 

	 	 
	 	 	 
	 

	 	(Type or Print Name)

*A fixed rate of interest is to be determined from time to time by action of the Board of Directors
in accordance with prevailing rates and the Internal Revenue Service prescribed interest rules.

 

A-1

 

EXHIBIT B

TO RESTRICTED STOCK PURCHASE AGREEMENT

PLEDGE AGREEMENT

THIS PLEDGE AGREEMENT (“Agreement’) is executed as of this
 _____ day of                     ,
 _____, between
Pacific Fuel Cell Corp., a Nevada corporation (the “Company”), and (“Purchaser”).

WITNESSETH:

For the considerations and undertakings set forth herein, the parties do hereby agree as follows:

	 	1.	 	To secure payment to the Company of a promissory note (“Note”) in the face amount of
                                             Dollars ($                    ), and extensions or renewals thereof, which
was executed concurrently with the execution of this Pledge Agreement pursuant to a
Restricted Stock Purchase Agreement of even date herewith between the Company and
Purchaser, Purchaser hereby assigns and grants to the Company a security interest in
                                                             (                    ) shares (“Shares”) of the Common Stock of the Company acquired
under the Restricted Stock Purchase Agreement, together with securities or other collateral
(if any) other than such Shares, all described as follows:
	 
	 	 	 	Issuer:                                                                                  
	 
	 	 	 	Certificate Number:                                                            
	 
	 	 	 	Number of Shares:                                                              
	 
	 	 	 	Registered Owner:                                                              
	 
	 	 	 	Purchaser does hereby deposit with the Company, as pledge holder, such certificates,
together with duly executed stock transfer powers.
	 
	 	2.	 	Subject to any obligations of Purchaser under the Restricted Stock Purchase Agreement,
the Company agrees that within a reasonable time after all or any portion of the Note is
paid by Purchaser, the Company shall release and deliver to Purchaser the number of Shares
held hereunder for which such payment was received. The Company, in its discretion, may
release portions of the Shares upon periodic principal payments or deposit of other or
additional security under the Note. All Shares released and delivered to Purchaser shall
be free and clear of the restrictions of this Pledge Agreement.
	 
	 	3.	 	Unless and until Purchaser defaults in his performance under the terms of the Note, the
terms of this Pledge Agreement and/or the terms of the Restricted Stock Purchase Agreement,
the Shares held by the Company at any time under this Pledge Agreement shall remain
registered in the name of Purchaser on the records of the Company, and Purchaser may vote
the Shares on all corporate questions (if the same shall be entitled to voting rights) and
shall be entitled to receive all dividends and other amounts accruing as a result of his
ownership of the Shares.
	 
	 	4.	 	In the event the Purchaser defaults in the performance of any of the terms of the Note,
this Pledge Agreement or the Restricted Stock Purchase Agreement, the Company may exercise
any and all rights which it may have under the Nevada Uniform Commercial Code or any other
applicable statute, case, ruling regulation or law; subject, however, to all permits,
orders, consents, rules and regulations of the Nevada Secretary of State and the Securities
and Exchange Commission and the Federal Reserve Board relating hereto, to which Purchaser
agrees to be bound.

 

B-1

 

	 	5.	 	If during the term of this Pledge Agreement the Company should become a party to any
merger, consolidation or other reorganization, this Pledge Agreement shall be adjusted so
as to apply to the securities to which a holder of the Shares subject to this Pledge
Agreement would have been entitled upon such merger, consolidation or reorganization; and,
if during the term of this Pledge Agreement the Company shall be dissolved or its existence
otherwise terminated, then that portion of the assets and consideration to which a holder
of the Shares subject to this Pledge Agreement would have been entitled in such transaction
shall be the subject matter of this Pledge Agreement for the remainder of its term. This
shall in no way limit the right of the Company to repurchase shares under the Restricted
Stock Purchase Agreement.
	 
	 	6.	 	This Pledge Agreement shall inure to the benefit of and be binding upon the heirs,
executors and administrators of the parties hereto.
	 
	 	7.	 	The rights, powers and remedies given to the Company by this Agreement shall be in
addition to all rights, powers and remedies given to the Company under the Restricted Stock
Purchase Agreement or any statute or rule of law. Any forbearance or failure or delay by
the Company in exercising any right, power or remedy hereunder shall not be deemed to be a
waiver of such right, power or remedy, nor shall any single or partial exercise of any
right, power or remedy preclude the further exercise thereof.
	 
	 	8.	 	The Board of Directors may demand and receive payment or additional security if for any
reason the collateral hereunder is insufficient to meet minimum requirements established
under federal or state securities or banking regulations or as may be necessary to bring
the Note and the security into compliance with any such law or regulations. Any failure of
Purchaser to meet any such demand shall be deemed a default under this Pledge Agreement and
under the note secured hereby.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above
written.

	 	 	 	 	 
	 	 	“COMPANY”
 
Pacific Fuel Cell Corp.
	 
	 	 	 	 
	 

	 	By:
	 	 
	 	 	 	 	 
	 

	 	Name:
	 	 
	 	 	 	 	 
	 

	 	Title:
	 	 
	 	 	 	 	 

	 	 	 	 	 
	 	 	“PURCHASER”
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 	 	(Signature)
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 	 	(Type or Print Name)
	 
	 	 	 	 
	 

	 	Address:
	 	 
	 	 	 	 	 
	 

	 	 	 	 
	 	 	 	 	 

 

B-2

 

EXHIBIT C

TO RESTRICTED STOCK PURCHASE AGREEMENT

SECTION 83(b) ELECTION

Date:                                         ,                     

Internal Revenue Service Center

Re: Election Under Section 83(b) of the Internal Revenue Code

Dear Sir or Madam:

The undersigned performed services in connection with which property was transferred to the
undersigned that, at the time of transfer, was not transferable by the undersigned and was subject
to a substantial risk of forfeiture. The undersigned hereby makes this election pursuant to
Section 83(b) of the Internal Revenue Code.

In connection with this election, the undersigned hereby provides you with the following
information:

	 	1.	 	The undersigned’s name, address, social security number, and the taxable year of the
person who performed the services are as follows:

	 	 	 	 	 	 	 	 	 
	 	 	Name and Address:	 	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Social Security No.:	 	 	 	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Taxable Year:	 	Calendar Year	 	 

	 	2.	 	A description of the property with respect to which the election is being made:
	 
	 	 	 	                     shares of Common Stock (the “Shares”) of Pacific Fuel Cell Corp., a Nevada
corporation (the “Company”).
	 
	 	3.	 	The date on which the property was transferred:                                                            
	 
	 	4.	 	A description of the nature of the restrictions to which the property is subject:

The Company may reacquire all or any part of the Shares from the undersigned in accordance with a
repurchase schedule set forth in a Restricted Stock Purchase Agreement (the “Agreement”) between
the undersigned and the Company. In the event the undersigned should cease to be a service
provider to the Company at any time, the Company may repurchase unvested Shares at the original
price paid by the undersigned. The Shares acquired under the Agreement shall vest and become
“Vested Shares” from and after (the “Vesting Measurement Date”) in accordance with the following
vesting schedule:

	 	 	 
	On or After:	 	Shares Vested As To:
	The first anniversary of Vesting Measurement Date:

	 	
 _____ 

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

	 	
 _____ 

% of the Shares

 

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The vesting schedule of this Agreement would result, assuming Continuous Service shall have
theretofore not terminated, in One Hundred Percent (100%) of the Restricted Shares being Vested
Shares at the end of the calendar month in which the                      anniversary of the Vesting Measurement
Date falls. Shares that have not yet become vested are herein called “Unvested Shares.” In the
event Purchaser ceases his employment or service provider status with the Company, all vesting
shall cease unless otherwise determined by the Board of Directors. Concurrent with the Service
Termination Date, the Company shall have the option to repurchase (the “Repurchase Option”) all or
any portion of the Purchaser’s Unvested Shares.

	 	6.	 	The fair market value at the time of transfer (determined without regard to any
restriction other than a restriction which by its terms will never lapse) of the property
with respect to which the election is being made:

$                     per share, which equals an aggregate fair market value of $                                        .

	 	7.	 	The amount paid for such property:

$                     per share, which equals an aggregate fair market value of $                                        .

There are enclosed herewith two copies of this written statement for filing. Please stamp the
third copy enclosed herewith as having been received and return it to the undersigned in the
enclosed, self-addressed, postage-paid envelope.

The undersigned has also submitted a copy of this statement to the person for whom the services
were performed.

If you have any questions or comments, or if any additional information is required, please do not
hesitate to contact:

	 	 	 	 	 
	 

	 	 
	 	 
	 	 	 	 	 
	 
	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 
	 	 	(     )       -           	 	 

	 	 	 
	 

	 	Very truly yours,
	 
	 	 
	 
	 	 
	 

	 	 
	 	 	 
	 

	 	(Signature)
	 
	 	 
	 
	 	 
	 	 	 
	 

	 	(Type or Print Name)

 

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