Document:

Exhibit 10.7

 

BLACK RAVEN ENERGY, INC. 

EQUITY COMPENSATION PLAN

 

The
Board of Directors (the “Board”) of Black Raven Energy, Inc.  desires to adopt the Black Raven Energy, Inc.
Compensation Plan (the “Plan”),  as set
forth herein, effective as of the Effective Date.

 

The
purpose of the Plan is to provide (i) designated employees of the Company
and its subsidiaries and eligible affiliates (a “related entity”), (ii) certain
consultants and advisors who perform services for the Company or its related
entities, and (iii) non-employee members of the Board with the opportunity
to receive grants of nonqualified stock options, stock appreciation rights,
stock awards or other equity-based awards. The Company believes that the Plan
will encourage the participants to contribute materially to the growth of the
Company, thereby benefiting the Company’s stockholders, and will align the
economic interests of the participants with those of the stockholders.

 

1.
Administration

 

(a)    Committee.    The
Plan shall be administered and interpreted by a committee consisting of members
of the Board, which shall be appointed by the Board (the “Committee”) or by the
full Board. The Committee shall consist of two or more persons who are “non-employee
directors” as defined under Rule 16b-3 under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”). However, the Board may ratify or
approve any grants as it deems appropriate, and the Board shall approve and
administer all grants made to Non-Employee Directors. To the extent consistent
with Company corporate governance documents and applicable law, the Committee
may delegate authority to one or more subcommittees or officers, as it deems
appropriate. To the extent the Board or a subcommittee administers the Plan,
references in the Plan to the “Committee” shall be deemed to refer to the Board
or subcommittee.

 

(b)    Committee Authority.    Except
as provided in section 1(a) and section 3(a), the Committee
shall have the sole authority to (i) determine the individuals to whom
grants shall be made under the Plan, (ii) determine the type, size and
terms of the grants to be made to each such individual, (iii) determine
the time when the grants will be made and the duration of any applicable
exercise or restriction period, including the criteria for exercisability and
the acceleration of exercisability, (iv) amend the terms of any previously
issued grant, and (v) deal with any other matters arising under the Plan.
Notwithstanding anything herein to the contrary, the Board shall approve and
administer all grants made to Non-Employee Directors.

 

(c)    Committee Determinations.    The
Committee shall have full power and authority to administer and interpret the
Plan, to make factual determinations and to adopt or amend such rules, regulations,
agreements and instruments for implementing the Plan and for the conduct of its
business as it deems necessary or advisable, in its sole discretion. The
Committee’s interpretations of the Plan and all determinations made by the
Committee pursuant to the powers vested in it hereunder shall be conclusive and
binding on all persons having any interest in the Plan or in any awards granted
hereunder. All powers of the Committee shall be executed in its sole
discretion, in the best interest of the Company, not as a fiduciary, and in
keeping with the objectives of the Plan and need not be uniform as to similarly
situated individuals.

 

2.
Grants

 

Awards
under the Plan may consist of grants of nonqualified stock options as described
in Section 5 (“Nonqualified Stock Options” or “Options”), stock
appreciation rights as described in Section 6 (“Stock Appreciation Rights”
or “SARs”), stock awards as described in Section 7 (“Stock Awards) and
other equity-based awards as described in Section 8 (“Other Equity Awards”),
(hereinafter collectively referred to as “Grants”). All Grants shall be subject
to the terms and conditions set forth herein and to such other terms and
conditions consistent with this Plan as the Committee deems appropriate and as
are specified in writing by the Committee to the individual in a grant
instrument or an amendment to the grant instrument (the “Grant Instrument”).
The Committee shall approve the form and provisions of each Grant Instrument.
Grants under a particular Section of the Plan need not be uniform as among
the grantees.

 

 

3.
Shares Subject to the Plan

 

(a)    Shares Authorized.    Subject
to adjustment as described below, the aggregate number of shares of common
stock of the Company (“Company Stock”) that may be issued or transferred under
the Plan is 3,791,666 shares (the “Share Amount”). On each anniversary of the
Effective date during the term of the Plan, the Share Amount shall be increased
without further action by the Board or the Committee, and without further
approval by the Company’s stockholders, in such amount as shall cause the Share
Amount to equal 25% of the sum of (i) the Company’s issued and outstanding
common shares as of such anniversary date, and (ii) any Company common
shares issuable pursuant to the conversion of any then outstanding convertible
preferred stock.   If, and to the extent
Options or SARs granted under the Plan terminate, expire, or are canceled,
forfeited, exchanged or surrendered without having been exercised or if any
other Grants are forfeited, the shares subject to such Grants shall again be
available for purposes of the Plan. If shares of Company Stock are used to pay
the exercise price of an Option, only the net number of shares received by the
grantee pursuant to such exercise shall be considered to have been issued or
transferred under the Plan with respect to such Option, and the remaining
number of shares subject to the Option shall again be available for purposes of
the Plan. To the extent any Grants are paid in cash, those Grants shall not
reduce the shares of Company stock available for issuance or transfer under the
Plan.

 

(b)    Adjustments.    If
there is any change in the number or kind of shares of Company Stock
outstanding (i) by reason of a stock dividend, spinoff, recapitalization,
stock split, or combination or exchange of shares, (ii) by reason of a
merger, reorganization or consolidation in which the Company is the surviving
corporation, (iii) by reason of a reclassification or change in par value,
or (iv) by reason of any other extraordinary or unusual event affecting
the outstanding Company Stock as a class without the Company’s receipt of
consideration, or if the value of outstanding shares of Company Stock is
substantially reduced as a result of a spinoff or the Company’s payment of an
extraordinary dividend or distribution, the maximum number of shares of Company
Stock available for Grants, the maximum number of shares of Company Stock that
any individual participating in the Plan may be granted in any year, the number
of shares covered by outstanding Grants, the kind of shares issued under the
Plan, and the price per share of such Grants shall be appropriately adjusted by
the Committee to reflect any increase or decrease in the number of, or change
in the kind or value of, issued shares of Company Stock to preclude, to the
extent practicable, the enlargement or dilution of rights and benefits under
such Grants; provided, however, that any fractional shares resulting from such
adjustment shall be eliminated. Any adjustments determined by the Committee
shall be final, binding and conclusive.

 

4.
Eligibility for Participation

 

(a)    Eligible Persons.    All
employees of the Company and its subsidiaries (“Employees”), including
Employees who are officers, members of the Board who are not Employees (“Non-Employee
Directors”) and consultants or advisors who perform services for the Company or
any of its related entities (“Key Advisors”) shall be eligible to participate
in the Plan. Key Advisors shall be eligible
to participate in the Plan if the Key Advisors render bona fide services to the
Company or its subsidiaries, the services are not in connection with the offer
and sale of securities in a capital-raising transaction, and the Key Advisors
do not directly or indirectly promote or maintain a market for the Company’s
securities.

 

(b)    Selection of Grantees.    Except
as provided in Section 1(a), the Committee shall select the Employees,
Non-Employee Directors and Key Advisors to receive Grants and shall determine
the number of shares of Company Stock subject to a particular Grant in such
manner as the Committee determines. Employees, Key Advisors and Non-Employee
Directors who receive Grants under this Plan shall hereinafter be referred to
as “Grantees”.

 

5.
Granting of Options

 

(a)    Number of Shares.    The
Committee shall determine the number of shares of Company Stock that will be
subject to each Grant of Options to Employees, Non-Employee Directors and Key
Advisors.

 

(b)    Type of Option and Price.

 

 

(i)                                     The Committee may grant Nonqualified
Stock Options in accordance with the terms and conditions set forth herein.
Nonqualified Stock Options may be granted to Employees, Non-Employee Directors
and Key Advisors.

 

(ii)                                  The purchase price (the “Exercise Price”)
of Company Stock subject to an Option shall be determined by the Committee and
shall be equal to or greater than the Fair Market Value (as defined below) of a
share of Company Stock on the date the Option is granted, except in the case of
substitute Option Grants made in accordance with Section 22(a).

 

(iii)                               “Fair Market Value” means the fair market
value of a share of Company Stock determined as follows: (x) if the Shares
are readily tradable on an established securities market (as determined under Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”)), then Fair
Market Value will be the closing or last sales price for a share of Company
Stock on the principal securities market on which it trades on the date for
which it is being determined, or if no sale of such shares occurred on that
date, on the next preceding date on which a sale of such shares occurred, as
reported in The Wall Street Journal or such other
source as the Committee deems reliable; or (y) if the shares of Company
Stock are not then readily tradable on an established securities market (as
determined under Code Section 409A), then Fair Market Value will be
determined by the Committee as the result of a reasonable application of a
reasonable valuation method that satisfies the requirements of Code Section 409A.

 

(c)    Option Term.    The
Committee shall determine the term of each Option. The term of any Option shall
not exceed ten years from the date of grant.

 

(d)    Exercisability of Options.    Options
shall become exercisable in accordance with such terms and conditions,
consistent with the Plan, as may be determined by the Committee and specified
in the Grant Instrument. The Committee may accelerate the exercisability of any
or all outstanding Options at any time for any reason.

 

(e)    Termination of Employment,
Disability or Death.

 

(i)                                     Except as provided below, an Option may
only be exercised while the Grantee is employed by, or providing service to,
the Company as an Employee, Key Advisor or Non-Employee Director. In the event
that a Grantee ceases to be employed by, or provide service to, the Company for
any reason other than Disability, death, or termination for Cause, any Option
which is otherwise exercisable by the Grantee shall terminate unless exercised
within 90 days after the date on which the Grantee ceases to be employed
by, or provide service to, the Company (or within such other period of time as
may be specified by the Committee), but in any event no later than the date of
expiration of the Option term. Except as otherwise provided by the Committee,
any of the Grantee’s Options that are not otherwise exercisable as of the date
on which the Grantee ceases to be employed by, or provide service to, the
Company shall terminate as of such date.

 

(ii)                                  In the event the Grantee ceases to be
employed by, or provide service to, the Company on account of a termination for
Cause by the Company, any Option held by the Grantee shall terminate as of the
date the Grantee ceases to be employed by, or provide service to, the Company.
In addition, notwithstanding any other provisions of this Section 5, if
the Committee determines that the Grantee has engaged in conduct that
constitutes Cause at any time while the Grantee is employed by, or providing
service to, the Company or after the Grantee’s termination of employment or
service, any Option held by the Grantee shall immediately terminate, and the
Grantee shall automatically forfeit all shares underlying any exercised portion
of an Option for which the Company has not yet delivered the share
certificates, upon refund by the Company of the Exercise Price paid by the
Grantee for such shares. Upon any exercise of an Option, the Company may
withhold delivery of share certificates pending resolution of an inquiry that
could lead to a finding resulting in forfeiture.

 

 

(iii)                               In the event the Grantee ceases to be
employed by, or provide service to, the Company because the Grantee has a
Disability, any Option which is otherwise exercisable by the Grantee shall
terminate unless exercised within one year after the date on which the Grantee
ceases to be employed by, or provide service to, the Company (or within such
other period of time as may be specified by the Committee), but in any event no
later than the date of expiration of the Option term. Except as otherwise
provided by the Committee, any of the Grantee’s Options which are not otherwise
exercisable as of the date on which the Grantee ceases to be employed by, or
provide service to, the Company shall terminate as of such date.

 

(iv)                              If the Grantee dies while employed by, or
providing service to, the Company or within 90 days after the date on
which the Grantee ceases to be employed or provide service on account of a
termination specified in Section 5(e)(i) above (or within such other
period of time as may be specified by the Committee), any Option that is
otherwise exercisable by the Grantee shall terminate unless exercised within
one year after the date on which the Grantee ceases to be employed by, or
provide service to, the Company (or within such other period of time as may be
specified by the Committee), but in any event no later than the date of
expiration of the Option term. Except as otherwise provided by the Committee,
any of the Grantee’s Options that are not otherwise exercisable as of the date
on which the Grantee ceases to be employed by, or provide service to, the
Company shall terminate as of such date.

 

(v)                                 For purposes of this Section 5(e) and
Sections 6, 7 and 8: 

 

(A)                              The term “Company” shall mean the Company
and its parent and related entities to the extent consistent with applicable
laws.

 

(B)                                “Employed by, or provide service to, the
Company” shall mean employment or service as an Employee, Key Advisor or
Non-Employee Director (so that, for purposes of exercising Options and satisfying
conditions with respect to Stock Awards, a Grantee shall not be considered to
have terminated employment or service until the Grantee ceases to be an
Employee, Key Advisor and Non-Employee Director), unless the Committee
determines otherwise.

 

(C)                                “Disability” shall mean a Grantee’s
becoming disabled within the meaning of section 22(e)(3) of the Code.

 

(D)                               “Cause” shall mean, except to the extent
specified otherwise by the Board and/or Committee, a finding by the Board
and/or Committee that the Grantee (i) has breached his or her employment
or service contract with the Company, (ii) has engaged in disloyalty to
the Company, including, without limitation, fraud, embezzlement, theft,
commission of a felony or proven dishonesty in the course of his or her
employment or service, (iii) has disclosed trade secrets or confidential
information of the Company to persons not entitled to receive such information
or (iv) has engaged in such other behavior detrimental to the interests of
the Company as the Board and/or Committee determines.

 

(f)    Exercise of Options.    A
Grantee may exercise an Option that has become exercisable, in whole or in
part, by delivering a notice of exercise to the Company with payment of the
Exercise Price. The Grantee shall pay the Exercise Price for an Option as
specified by the Committee (x) in cash, (y) with the approval of the
Committee, by delivering shares of Company Stock owned by the Grantee
(including Company Stock acquired in connection with the exercise of an Option,
subject to such restrictions as the Committee deems appropriate) and having a
Fair Market Value on the date of exercise equal to the Exercise Price or by
attestation (on a form prescribed by the Committee) to ownership of shares of

 

 

Company Stock having a
Fair Market Value on the date of exercise equal to the Exercise Price, or (z) by
such other method as the Committee may approve, including a broker-assisted
cashless exercise program in accordance with procedures permitted by
Regulation T of the Federal Reserve Board. The Committee may authorize
loans by the Company to Grantees in connection with the exercise of an Option,
to the extent permitted by applicable law and upon such terms and conditions as
the Committee, in its sole discretion, deems appropriate. The Grantee shall pay
the Exercise Price and the amount of any withholding tax due (pursuant to Section 13)
at the time of exercise.

 

6. Stock
Appreciation Rights

 

The
Committee may grant stock appreciation rights (“SARs”) to an Employee,
Non-Employee Director or Key Advisor separately or in tandem with any Option.
The following provisions are applicable to SARs:

 

(a)    Base Amount.    The
Committee shall establish the base amount of the SAR at the time the SAR is
granted. The base amount of each SAR shall be equal to or greater than the Fair
Market Value of a share of Company Stock as of the date of Grant of the SAR,
except in the case of substitute SAR Grants made in accordance with Section 22(a) and
except as provided in Section 6(b).

 

(b)    Tandem SARs.    The
Committee may grant tandem SARs either at the time the related Option is
granted or at any time thereafter while the Option remains outstanding;
provided, however, that, if a tandem SAR is granted after the related Option
was granted, the base amount per share of the SAR may be equal to the exercise
price per share of the related Option only if the terms of the SAR are
identical in all respects to the terms of the related Option except for the
medium of payment. In the case of tandem SARs, the number of SARs granted to a
Grantee that shall be exercisable during a specified period shall not exceed
the number of shares of Company Stock that the Grantee may purchase upon the
exercise of the related Option during such period. Upon the exercise of an Option,
the SARs relating to the Company Stock covered by such Option shall terminate.
Upon the exercise of SARs, the related Option shall terminate to the extent of
an equal number of shares of Company Stock.

 

(c)    Exercisability.    An
SAR shall be exercisable during the period specified by the Committee in the
Grant Instrument and shall be subject to such vesting and other restrictions as
may be specified in the Grant Instrument or in the Grantee’s employment
agreement, if any, with the Employer. The Committee may accelerate the
exercisability of any or all outstanding SARs at any time for any reason. SARs
may only be exercised while the Grantee is employed by, or providing service
to, the Employer or during the applicable period after termination of employment
or service as described in Section 5(e). A tandem SAR shall be exercisable
only during the period when the Option to which it is related is also
exercisable.

 

(d)    Grants to Non-Exempt Employees.    Notwithstanding
the foregoing provisions of Sections 5 and 6, Options and SARs granted to
persons who are non-exempt employees under the Fair Labor Standards Act of
1938, as amended, may not be exercisable for at least six months after the date
of grant (except that such Options and SARs may become exercisable, as
determined by the Committee, upon the Grantee’s death, Disability or
retirement, or upon a Change of Control or other circumstances permitted by
applicable regulations).

 

(e)    Value of SARs.    When
a Grantee exercises SARs, the Grantee shall receive in settlement of such SARs
an amount equal to the value of the stock appreciation for the number of SARs
exercised, payable in cash, Company Stock or a combination thereof. The stock
appreciation for an SAR is the amount by which the Fair Market Value of the
underlying Company Stock on the date of exercise of the SAR exceeds the base
amount of the SAR as described in subsection (a).

 

(f)    Form of Payment.    The
Committee shall determine whether the appreciation in an SAR shall be paid in
the form of cash, shares of Company Stock, or a combination of the two, in such
proportion as the Committee deems appropriate. For purposes of calculating the
number of shares of Company Stock to be received, shares of Company Stock shall
be valued at their Fair Market Value on the date of exercise of the SAR. If
shares of Company Stock are to be received upon exercise of an SAR, cash shall
be delivered in lieu of any fractional share.

 

 

7. Stock
Awards

 

The
Committee may issue or transfer shares of Company Stock to an Employee,
Non-Employee Director or Key Advisor under a Stock Award, upon such terms as
the Committee deems appropriate. The following provisions are applicable to
Stock Awards:

 

(a)    General Requirements.    Shares
of Company Stock issued or transferred pursuant to Stock Awards may be issued
or transferred for cash, other property and/or for consideration in the form of
services, and subject to restrictions or no restrictions, as determined by the
Committee. The Committee may establish conditions under which restrictions on
Stock Awards shall lapse over a period of time or according to such other
criteria as the Committee deems appropriate. The period of time during which
the Stock Award will remain subject to restrictions will be designated in the Grant
Instrument as the “Restriction Period.”

 

(b)    Number of Shares.    The
Committee shall determine the number of shares of Company Stock to be issued or
transferred pursuant to a Stock Award and the restrictions applicable to such
shares.

 

(c)    Requirement of Employment or
Service.    If the Grantee ceases to be employed
by, or provide service to, the Company (as defined in Section 5(e)) during
a period designated in the Grant Instrument as the Restriction Period, or if
other specified conditions are not met, the Stock Award shall terminate as to
all shares covered by the award as to which the restrictions have not lapsed,
and those shares of Company Stock must be immediately returned to the Company.
The Committee may, however, provide for complete or partial exceptions to this
requirement as it deems appropriate.

 

(d)    Restrictions on Transfer and Legend
on Stock Certificate.    During the Restriction
Period, a Grantee may not sell, assign, transfer, pledge or otherwise dispose
of the shares of the Stock Award except to a Successor Grantee under Section 12(a).
Each certificate for Stock Awards shall contain a legend giving appropriate
notice of the restrictions in the Grant. The Grantee shall be entitled to have
the legend removed from the stock certificate covering the shares subject to
restrictions when all restrictions on such shares have lapsed. The Committee
may determine that the Company will not issue certificates for Stock Awards
until all restrictions on such shares have lapsed, or that the Company will
retain possession of certificates for Stock Awards until all restrictions on
such shares have lapsed.

 

(e)    Right to Vote and to Receive
Dividends.    During the Restriction Period, the
Grantee shall have the right to vote shares subject to Stock Awards and to
receive any dividends or other distributions paid on such shares, subject to
any restrictions deemed appropriate by the Committee.

 

(f)    Lapse of Restrictions.    All
restrictions imposed on Stock Awards shall lapse upon the expiration of the
applicable Restriction Period and the satisfaction of all conditions imposed by
the Committee. The Committee may determine, as to any or all Stock Awards, that
the restrictions shall lapse without regard to any Restriction Period.

 

8. Other
Equity Awards

 

The
Committee may grant Other Equity Awards, which are awards (other than those
described in Sections 5, 6, 7, 8 and 10 of the Plan) that are based on,
measured by or payable in Company Stock to any Employee, Non-Employee Director
or Key Advisor, on such terms and conditions as the Committee shall determine.
Other Equity Awards may be awarded subject to the achievement of performance
goals or other conditions and may be payable in cash, Company Stock or any
combination of the foregoing, as the Committee shall determine.

 

9.
Dividend Equivalents

 

The
Committee may include in a Grant Instrument with respect to any Grant a
dividend equivalent right (“Dividend Equivalents”) entitling the Grantee to
receive amounts equal to the ordinary dividends that would be paid, during the
time the Grant is outstanding and unexercised, on the shares of Company Stock
covered by the Grant as if such shares were then outstanding. The Committee
shall determine whether

 

 

Dividend Equivalents
shall be paid currently or credited to a bookkeeping account as a dollar
amount. The Committee shall determine whether Dividend Equivalents shall be
paid in cash, in shares of Company Stock or in a combination, whether they
shall be conditioned upon the exercise, vesting or payment of the Grant to
which they relate, and such other terms and conditions as the Committee deems
appropriate.  To the extent any Option or
SAR Grant is intended to avoid the application of Code Section 409A, the
right to any Dividend Equivalent in connection therewith shall not be
contingent, directly or indirectly, upon the exercise of the related Option or
SAR.

 

10.
Right of Recapture

 

The
Committee may provide in a Grant Instrument that if at any time within the one
year period after the date on which a Grantee exercises an Option or SAR, or on
which a Stock Award, Stock Unit or Other Equity Award vests, is paid or is
disposed of (each of which events is referred to as a “Realization Event”), the
Grantee (a) is terminated for Cause or (b) engages in any activity that
constitutes Cause, the Grantee shall be required to pay to the Company any gain
realized by the Grantee from the Realization Event, upon notice from the
Company. Such gain shall be determined as of the date of the Realization Event,
without regard to any subsequent change in the Fair Market Value of Company
Stock. The Company shall have the right to offset such gain against any amounts
otherwise owed to the Grantee by the Company (whether as wages, vacation pay,
or pursuant to any benefit plan or other compensatory arrangement or
otherwise), to the extent permitted by applicable law.

 

11.
Withholding of Taxes

 

(a)    Required Withholding.    All
Grants under the Plan shall be subject to applicable federal (including FICA),
state and local tax withholding requirements. The Company may require that the
Grantee or other person receiving or exercising Grants pay to the Company the
amount of any federal, state or local taxes that the Company is required to
withhold with respect to such Grants, or the Company may deduct from other
wages paid by the Company the amount of any withholding taxes due with respect
to such Grants.

 

(b)    Election to Withhold Shares.    If
the Committee so permits, a Grantee may elect to satisfy the Company’s income
tax withholding obligation with respect to a Grant by having shares withheld up
to an amount that does not exceed the Grantee’s minimum applicable withholding
tax rate for federal (including FICA), state and local tax liabilities. The
election must be in a form and manner prescribed by the Committee and may be
subject to the prior approval of the Committee.

 

12.
Transferability of Grants

 

(a)    Nontransferability of Grants.    Except
as provided below, only the Grantee may exercise rights under a Grant during
the Grantee’s lifetime. A Grantee may not transfer those rights except by will
or by the laws of descent and distribution or if permitted in any specific case
by the Committee, pursuant to a domestic relations order (as defined under the
Code or Title I of the Employee Retirement Income Security Act of 1974, as
amended, or the regulations thereunder). When a Grantee dies, the personal
representative or other person entitled to succeed to the rights of the Grantee
(“Successor Grantee”) may exercise such rights. A Successor Grantee must
furnish proof satisfactory to the Company of his or her right to receive the
Grant under the Grantee’s will or under the applicable laws of descent and
distribution.

 

(b)    Transfer of Options.    Notwithstanding
the foregoing, the Committee may provide, in a Grant Instrument, that a Grantee
may transfer Options to family members, or one or more trusts or other entities
for the benefit of or owned by family members, consistent with applicable
securities laws, according to such terms as the Committee may determine;
provided that the Grantee receives no consideration for the transfer of an
Option and the transferred Option shall continue to be subject to the same
terms and conditions as were applicable to the Option immediately before the
transfer.

 

13.
Change of Control of the Company

 

As
used herein, a “Change of Control” shall be deemed to have occurred if:

 

 

(a)                                  Any “person” (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) (other than persons who
are stockholders on the effective date of the Plan) becomes a “beneficial owner”
(as defined in Rule 13d-3 under the Exchange Act), directly or indirectly,
of securities of the Company representing more than 50% of the voting power of
the then outstanding securities of the Company; provided that a Change of
Control shall not be deemed to occur as a result of a change of ownership
resulting from the death of a stockholder or the reduction below 50% of the
voting power of the then outstanding securities of the Company held by West
Coast Opportunity Fund, LLC and its affiliates, provided that their reduction
in equity ownership is associated with capital raises, and a Change of Control
shall not be deemed to occur as a result of a transaction in which the Company
becomes a subsidiary of another corporation and in which the stockholders of
the Company immediately prior to the transaction will beneficially own,
immediately after the transaction, shares entitling such stockholders to more
than 50% of all votes to which all stockholders of the parent corporation would
be entitled in the election of directors (without consideration of the rights
of any class of stock to elect directors by a separate class vote); or

 

(b)                                 The stockholders of the Company approve
(or, if stockholder approval is not required, the Board approves)  an agreement providing for (i) the
merger or consolidation of the Company with another corporation where the
stockholders of the Company immediately prior to the merger or consolidation
will not beneficially own, immediately after the merger or consolidation,
shares entitling such stockholders to more than 50% of all votes to which all
stockholders of the surviving corporation would be entitled in the election of
directors (without consideration of the rights of any class of stock to elect
directors by a separate class vote), (ii) the sale or other disposition of
all or substantially all of the assets of the Company, or (iii) a
liquidation or dissolution of the Company.

 

Notwithstanding the
foregoing, for purposes of Grants hereunder that are subject to the provisions
of Code Section 409A and the regulations promulgated thereunder, no Change
of Control shall be deemed to have occurred upon an event described in
Subsections (a) or (b) above that would have the effect of changing
the time or form of payment of such Grant unless such event would also
constitute a change in the ownership or effective control of, or a change in
the ownership of a substantial portion of the assets of, the Company for
purposes of Code Section 409A.

 

14.
Consequences of a Change of Control

 

(a)    Notice and Acceleration.    Upon
a Change of Control, unless the Committee determines otherwise, (i) the
Company shall provide each Grantee with outstanding Grants written notice of
such Change of Control, (ii) all outstanding Options and SARs shall
automatically accelerate and become fully exercisable, and (iii) the
restrictions and conditions on all outstanding Stock Awards, or Other Equity
Awards shall immediately lapse.

 

(b)    Assumption of Grants.    Upon
a Change of Control where the Company is not the surviving corporation (or
survives only as a subsidiary of another corporation), unless the Committee
determines otherwise, all outstanding Options that are not exercised shall be
assumed by, or replaced with comparable options by, the surviving corporation.

 

(c)    Other Alternatives.    Notwithstanding
the foregoing, subject to subsection (d) below, in the event of a Change
of Control, the Committee may take one or both of the following actions: the Committee
may (i) require that Grantees surrender their outstanding Options and
Other Equity Awards in exchange for a payment by the Company, in cash or
Company Stock as determined by the Committee, in an amount equal to the amount
by which the then Fair Market Value of the shares of Company Stock subject to
the Grantee’s unexercised Options exceeds the Exercise Price of the Options, or
(ii) after giving Grantees an opportunity to exercise their outstanding
Options and SARs, terminate any or all unexercised Options at such time as the
Committee deems appropriate. Such surrender or termination shall take place as
of the date of the Change of Control or such other date as the Committee may
specify.

 

 

(d)    Limitations.    Notwithstanding
anything in the Plan to the contrary, in the event of a Change of Control, (i) the
Committee shall not have the right to take any actions described in the Plan
(including without limitation actions described in Subsection (a) above)
that would make the Change of Control ineligible for desired tax treatment if,
in the absence of such right, the Change of Control would qualify for such
treatment and the Company intends to use such treatment with respect to the
Change of Control; and (ii) the Committee shall not be obligated to treat
all Grants similarly in connection with the Change of Control transaction..

 

15.
Requirements for Issuance or Transfer of Shares

 

(a)    Stockholder’s Agreement.    The
Committee may require that a Grantee execute a stockholder’s agreement, with
such terms as the Committee deems appropriate, with respect to any Company
Stock issued or distributed pursuant to this Plan.

 

(b)    Limitations on Issuance or Transfer
of Shares.    No Company Stock shall be issued
or transferred in connection with any Grant hereunder unless and until all
legal requirements applicable to the issuance or transfer of such Company Stock
have been complied with to the satisfaction of the Committee. The Committee
shall have the right to condition any Grant made to any Grantee hereunder on
such Grantee’s undertaking in writing to comply with such restrictions on his
or her subsequent disposition of such shares of Company Stock as the Committee
shall deem necessary or advisable, and certificates representing such shares
may be legended to reflect any such restrictions. Certificates representing
shares of Company Stock issued or transferred under the Plan will be subject to
such stop-transfer orders and other restrictions as may be required by
applicable laws, regulations and interpretations, including any requirement
that a legend be placed thereon.

 

16. Amendment and Termination of the Plan

 

(a)    Amendment.    The
Board may amend or terminate the Plan at any time; provided, however, that the
Board shall not amend the Plan without stockholder approval if such approval is
required in order to comply with the Code or applicable laws or to comply with
applicable stock exchange requirements.

 

(b)    Termination of Plan.    The
Plan shall terminate on the day immediately preceding the tenth anniversary of
the Effective Date, unless the Plan is terminated earlier by the Board or is
extended by the Board.

 

(c)    Termination and Amendment of
Outstanding Grants.    A termination or
amendment of the Plan that occurs after a Grant is made shall not materially
impair the rights of a Grantee unless the Grantee consents or unless the
Committee acts under Section 22(b). The termination of the Plan shall not
impair the power and authority of the Committee with respect to an outstanding
Grant. Whether or not the Plan has terminated, an outstanding Grant may be
terminated or amended under Section 22(b) or may be amended by
agreement of the Company and the Grantee consistent with the Plan.

 

(e)    Governing Document.    The
Plan shall be the controlling document. No other statements, representations,
explanatory materials or examples, oral or written, may amend the Plan in any
manner. The Plan shall be binding upon and enforceable against the Company and
its successors and assigns.

 

17.
Funding of the Plan

 

This
Plan shall be unfunded. The Company shall not be required to establish any
special or separate fund or to make any other segregation of assets to assure
the payment of any Grants under this Plan. In no event shall interest be paid
or accrued on any Grant, including unpaid installments of Grants.

 

18.
Rights of Participants

 

Nothing
in this Plan shall entitle any Employee, Key Advisor, Non-Employee Director or
other person to any claim or right to be granted a Grant under this Plan.
Neither this Plan nor any action taken hereunder

 

 

shall be construed as
giving any individual any rights to be retained by or in the employ of the
Company or any other employment rights.

 

19. No
Fractional Shares

 

No
fractional shares of Company Stock shall be issued or delivered pursuant to the
Plan or any Grant. The Committee shall determine whether cash, other awards or
other property shall be issued or paid in lieu of such fractional shares or
whether such fractional shares or any rights thereto shall be forfeited or otherwise
eliminated.

 

20.
Headings

 

Section headings
are for reference only. In the event of a conflict between a title and the
content of a Section, the content of the Section shall control.

 

21.
Effective Date.

 

(a)    Effective Date.    The
Plan, as set forth herein, shall be adopted and become effective upon approval
by the Board.

 

22.
Miscellaneous

 

(a)    Grants in Connection with Corporate
Transactions and Otherwise.    Nothing contained
in this Plan shall be construed to (i) limit the right of the Committee to
make Grants under this Plan in connection with the acquisition, by purchase,
lease, merger, consolidation or otherwise, of the business or assets of any
corporation, firm or association, including Grants to employees thereof who
become Employees of the Company, or for other proper corporate purposes, or (ii) limit
the right of the Company to grant stock options or make other awards outside of
this Plan. Without limiting the foregoing, the Committee may make a Grant to an
employee of another corporation who becomes an Employee by reason of a
corporate merger, consolidation, acquisition of stock or property,
reorganization or liquidation involving the Company or any of its subsidiaries
in substitution for stock option or stock award grant made by such corporation.
The terms and conditions of the substitute grants may vary from the terms and
conditions required by the Plan and from those of the substituted stock
incentives. The Committee shall prescribe the provisions of the substitute
grants.

 

(b)    Compliance with Law.    The
Plan, the exercise of Options and the obligations of the Company to issue or
transfer shares of Company Stock under Grants shall be subject to all
applicable laws and to approvals by any governmental or regulatory agency as may
be required. With respect to persons subject to section 16 of the Exchange
Act, it is the intent of the Company that the Plan and all transactions under
the Plan comply with all applicable provisions of Rule 16b-3 or its
successors under the Exchange Act. To the extent that any legal requirement of
section 16 of the Exchange Act as set forth in the Plan ceases to be
required under section 16 of the Exchange Act, that Plan provision shall
cease to apply. The Board and the Committee also intend that the Plan and its
operations shall conform at all times to any applicable requirements imposed by
the Sarbanes-Oxley Act of 2002, as it may be amended. The Committee may revoke
any Grant if it is contrary to law or modify a Grant to bring it into
compliance with any valid and mandatory government regulation. The Committee
may also adopt rules regarding the withholding of taxes on payments to
Grantees. The Committee may, in its sole discretion, agree to limit its
authority under this Section.

 

(c)    Modification to Price of Grants.    
The Committee or the Board may determine to revise the exercise price or other
economic price provision of any Grant without obtaining stockholder approval
for such action, including but not limited to Option repricings, Option exchanges
or similar offers.

 

(d)    Governing Law.    The
validity, construction, interpretation and effect of the Plan and Grant
Instruments issued under the Plan shall be governed and construed by and
determined in accordance with the laws of the State of Nevada, without giving
effect to the conflict of laws provisions thereof.

 

 

(e)     Compliance with Code Section 409A.  If any amount shall be payable with respect
to any Grant hereunder as a result of a Grantee’s termination of employment or
other service and such amount is subject to the provisions of Code Section 409A,
then notwithstanding any other provision of this Plan, a termination of
employment or other service will be deemed to have occurred only at such time
as the Grantee has experienced a “separation from service” as such term is
defined for purposes of Code Section 409A. 
If any amount shall be payable with respect to any Grant hereunder as a
result of a Grantee’s “separation from service” at such time as the Grantee is
a “specified employee” and such amount is subject to the provisions of Code Section 409A,
then notwithstanding any other provision of this Plan, no payment shall be
made, except as permitted under Code Section 409A, prior to the first day
of the seventh (7th) calendar month beginning after the Grantee’s separation
from service (or the date of his or her earlier death).Exhibit 10.8

 

Black Raven Energy, Inc.

EQUITY COMPENSATION PLAN

FORM OF OPTION GRANT

 

To:

 

Black
Raven Energy, Inc. (the “Company”), pursuant to its Equity Compensation
Plan (the “Plan”), has granted to you, the Optionee named above, an option to
purchase shares of the Common Stock of the Company (“Common Stock”).
Capitalized terms used herein and not otherwise defined shall have the meaning
ascribed to such terms under the Plan..

 

The
details of the Option are as follows:

 

1.                                       TOTAL NUMBER OF SHARES
SUBJECT TO THIS OPTION. The total number of shares of Common Stock subject to
this Option is                                 
(    ,000).

 

2.                                       VESTING. Subject to the
limitations contained herein, this Option will vest (become exercisable)                                       .

 

3.                                       EXERCISE PRICE
AND METHOD OF PAYMENT.

 

(a)                                  EXERCISE PRICE.
The exercise price of this Option is           
dollars and             
cents ($ .    ) per share.

 

(b)                                 METHOD OF
PAYMENT. Payment of the exercise price per share is due in full upon exercise
of all or any part of each installment that has accrued to you. You may elect,
to the extent permitted by applicable statutes and regulations, to make payment
of the exercise price under one of the following alternatives:

 

(i)                                   Payment of the
exercise price per share in cash (including check) at the time of exercise.

 

(ii)                                Payment
pursuant to a program developed under Regulation T as promulgated by the
Federal Reserve Board which, prior to the issuance of Common Stock, results in
either the receipt of cash (or check) by the Company or the receipt of
irrevocable instructions to pay the aggregate exercise price to the Company
from the sales proceeds;

 

(iii)                             Provided that
at the time of exercise the Company’s Common Stock is publicly traded and quoted
regularly in the Wall Street Journal, payment by delivery of already-owned
shares of Common Stock, held for the period required to avoid a charge to the
Company’s reported earnings, and owned free and clear of any liens, claims,
encumbrances or security interests, which Common Stock shall be valued at its
Fair Market Value on the date of exercise; or

 

(iv)                            Payment by a
combination of the methods of payment permitted by subsection 3(b) (i) through
3(b) (iii) above.

 

4.                                       WHOLE SHARES. This Option
may not be exercised for any number of shares that 

 

 

would require the issuance of anything other than whole shares.

 

5.                                       SECURITIES LAW
COMPLIANCE. Notwithstanding anything to the contrary contained herein, this
Option may not be exercised unless the shares issuable upon exercise of this
Option are then registered under the Securities Act of 1933, as amended (the “Securities
Act”), or if such shares are not then so registered, the Company has determined
that such exercise and issuance would be exempt from the registration
requirements of the Securities Act.

 

6.                                       TERM. The term of this
Option commences on                           
xx, 200x, the date of grant, and expires at midnight on                             
xx, 200xx (the “Expiration Date” which is the day before the             
(xth) anniversary from the date of grant), unless
this Option expires sooner as set forth below or in the Plan. In no event may
this Option be exercised on or after the Expiration Date. This Option shall
terminate prior to the Expiration Date of its term as follows: three (3) months
after the termination of your Continuous Service as an Employee, Director or
Consultant (as defined in the Plan) with the Company or an Affiliate of the
Company unless your termination of Continuous Status as an Employee, Director
or Consultant is due to your permanent disability (within the meaning of Section 422(c) (6) of
the Code), or death, then this Option will expire on the earlier of the
Expiration Date set forth above or twelve (12) months following such
termination.

 

7.                                       EXERCISE.

 

(a)                                  This Option may
be exercised, to the extent specified above, by delivering a notice of exercise
(in a form designated by the Company) together with the exercise price to the
Secretary of the Company, or to such other person as the Company may designate,
during regular business hours, together with such additional documents as the
Company may then require pursuant to subsection 10(e) of the Plan.

 

(b)                                 By exercising
this Option you agree that, as a precondition to the completion of any exercise
of this Option, the Company may require you to enter an agreement providing for
the payment by you to the Company of any tax withholding obligation of the
Company arising by reason of (1) the exercise of this Option; (2) the
lapse of any substantial risk of forfeiture to which the shares are subject at
the time of exercise; or (3) the disposition of shares acquired upon such
exercise.

 

8.                                       ACCELERATED VESTING UPON
CHANGE OF CONTROL.  Notwithstanding Section 2
hereof, the Options shall vest immediately upon a Change of Control if you have
been continuously employed by the Company through the date immediately prior to
the occurrence of a Change of Control.

 

9.                                       TRANSFERABILITY.
This Option is not transferable, except by will or by the laws of descent and distribution
and is exercisable during your life only by you. Notwithstanding the foregoing,
by delivering written notice to the Company, in a form satisfactory to the
Company, you may designate a third party who, in the event of your death, shall
thereafter be entitled to exercise this Option.

 

2

 

10.                                 OPTION NOT A
SERVICE CONTRACT. This Option is not an employment contract and nothing in this
Option shall be deemed to create in any way whatsoever any obligation on your
part to continue in the employment of the Company or an Affiliate, or of the
Company or an Affiliate to continue your employment. In addition, nothing in
this Option shall obligate the Company or any Affiliate of the Company, or
their respective stockholders, Board of Directors, officers or employees to
continue any relationship that you might have as a Director or Consultant for
the Company or Affiliate.

 

11.                                 NOTICES. Any
Notices provided for in this Option or the Plan shall be given in writing and
shall be deemed effectively given upon receipt or, in the case of notices
delivered by the Company to you, five (5) days after deposit in the United
States mail, postage prepaid, addressed to you at the address specified below
or at such other address as you hereafter designate by written notice to the
Company.

 

12.                                 GOVERNING PLAN
DOCUMENT. This Option is subject to all the provisions of the Plan, a copy of
which is attached hereto and its provisions are hereby made a part of this Option.

 

Dated
this xx day of                           ,
200x.

 

 

	
   

  	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  	
   

  
	
  ACCEPTED:

  	
   

  	
  Black
  Raven Energy, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Date:

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Duly
  Authorized on Behalf of the Board of Directors

  
					

 

3

 

ATTACHMENTS:

 

Black Raven Energy, Inc.

EQUITY COMPENSATION PLAN

 

NOTICE OF EXERCISE

 

The
Undersigned:

 

(a)                                  Acknowledges
receipt of the foregoing Option and the attachments referenced therein and
understands that all rights and liabilities with respect to this Option are set
forth in the Option and the Plan; and

 

(b)                                 Acknowledges
that as of the date of grant of this Option, it sets forth the entire
understanding between the undersigned Optionee and the Company and its Affiliates
regarding the acquisition of stock in the Company under this Option and
supersedes all prior oral and written agreements on that subject with the
exception of (i) the options previously granted and delivered to the
undersigned under stock option plans of the Company, and (ii) the
following agreements only:

 

	
  None

  	
   

  	
   

  
	
   

  	
  (Initial)

  	
   

  
	
   

  	
   

  	
   

  
	
  Other

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated this
             day of
                                          
  , 20          .

  	
   

  

 

	
   

  	
  OPTIONEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Print Name

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

Black Raven Energy, Inc.

EQUITY COMPENSATION PLAN

 

ELECTION TO EXERCISE

 

The
Optionee hereby exercises Option to purchase                                         
shares of the Company’s Common Stock at $                     
per share.

 

Dated
this            day of                                         
, 20          .

 

 

	
   

  	
  OPTIONEE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Print Name

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

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