ECOTALITY, INC. 2007 EQUITY INCENTIVE PLAN INCENTIVE STOCK OPTION AGREEMENT

 

a.

The Option shall be exercised, and payment by the Holder of the Option price shall be made, pursuant to the terms of the Plan.

 

b.

All or any part of the Option may be exercised by the Holder no later than ten (10) years from date of grant (or five (5) years if the Holder is a ten percent (10%) or greater shareholder of the Company as described in Section 5 (b) of the Plan on the date of this Agreement).

 

c.

Except as otherwise may be provided in Section 10 of this Agreement, this Agreement and the Option shall terminate on the earlier of (i) 3 years from date of grant or (ii) the date the Option is fully exercised (the “Expiration Date”).

As of this Anniversary Date of Grant:

Grant Date:

0%

January 22, 2012:

100%

 

a.

The Option shall become exercisable at such time as provided herein or in the Plan and shall be exercisable by written notice of such exercise, in the form of Appendix A hereto (an “Exercise Notice”).  The Exercise Notice shall, among other things, specify the number of Shares for which the Option is being exercised.

 

b.

Shares purchased pursuant to the Option shall be paid for in full at the time of such purchase by one or more of the methods described below.

 

(i)

in cash, by certified check or bank check, or other instrument acceptable to the Committee, in U.S. funds, payable to the order of the Company in an amount equal to the purchase price of such Shares; or

 

(ii)

by the Holder delivering to the Company a properly executed Exercise Notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company to pay the Option purchase price, provided that in the event the Holder chooses to pay the Option purchase price as so provided, the Holder and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Committee shall prescribe as a condition of such payment procedure, or

 

(iii)

a combination of paragraphs (i) and (ii) above.

 

c.

Certificates for the Shares so purchased will be issued and delivered to the Holder upon compliance to the satisfaction of the Committee with all requirements under applicable laws or regulations in connection with such issuance.  Until the Holder shall have complied with the requirements hereof and of the Plan, the Company shall be under no obligation to issue the Shares subject to this Option, and the determination of the Committee as to such compliance shall be final and binding on the Holder.  The Holder shall not be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Common Stock subject to this Option unless and until this Option shall have been exercised pursuant to the terms hereof, the Company shall have issued and delivered the Shares to the Holder, and the Holder’s name shall have been entered as a stockholder of record on the books of the Company.  Thereupon, the Holder shall have full dividend and other ownership rights with respect to such Shares, subject to the terms of this Agreement.

 

d.

Notwithstanding any other provision hereof or of the Plan, no portion of this Option shall be exercisable after the Expiration Date.

 

e.

It is understood and intended that this Option is intended to qualify as an “incentive stock option” as defined in Section 422 of the Code to the extent permitted under applicable law.  Accordingly, the Holder understands and acknowledges that, in order to obtain the benefits of an incentive stock option under Section 422 of the Code, no sale or other disposition may be made of Shares for which incentive stock option treatment is desired within the one-year period beginning on the day after the day of the transfer of such Shares to him or her, nor within the two-year period beginning on the day after the grant of this Option and further that this Option must be exercised within three (3) months after termination of employment as an employee (or twelve (12) months in the case of death or disability) to qualify as an incentive stock option.  If the Holder disposes (whether by sale, gift, transfer or otherwise) of any such Shares within either of these periods, he or she will notify the Company within thirty (30) days after such disposition.  The Holder also agrees to provide the Company with any information concerning any such dispositions required by the Company for tax purposes.  Further, to the extent the Shares underlying the Option and any other incentive stock options of the Holder having an aggregate Fair Market Value in excess of $100,000 (determined as of the Grant Date) vest in any year, such options will not qualify as incentive stock options.

 

a.

The Holder shall have no rights as a shareholder with respect to Shares subject to the Option until certificates for Shares of Common Stock are issued to the Holder.  Following the purchase of Shares, the Holder (or any successor in interest) shall have all the rights of a stockholder (including voting, dividend and liquidation rights) with respect to the purchased Shares, subject, however, to the transfer restrictions set forth in this Agreement and the Plan.

 

b.

Restricted Securities.  The Shares that are subject to this Option have not been registered under the Securities Act of 1933 (the “1933 Act”) and are being issued to the Holder in reliance upon the exemption from such registration provided by SEC Rule 701 for stock issuances under compensatory benefit plans such as the Plan.  The Holder hereby confirms that the Holder has been informed that the Purchased Shares are restricted securities under the 1933 Act and may not be resold or transferred unless the Purchased Shares are first registered under the Federal securities laws or unless an exemption from such registration is available.  Accordingly, the Holder hereby acknowledges that the Holder is prepared to hold any Shares that the Holder may purchase upon exercise of this Option for an indefinite period and that the Holder is aware that SEC Rule 144 issued under the 1933 Act that exempts certain resales of unrestricted securities is not presently available to exempt the resale of the Shares the Holder may purchase upon exercise of this Option from the registration requirements of the 1933 Act.

 

c.

Restrictions on Disposition of Purchased Shares.  Notwithstanding any Plan provision or Agreement provision to the contrary, the Holder shall make no disposition of the Shares that the Holder may purchase upon exercise of this Option (other than a permitted transfer), unless and until there is compliance with all of the following requirements:

 

(i)

The Holder shall have provided the Company with a written summary of the terms and conditions of the proposed disposition.

 

(ii)

The Holder shall have complied with all requirements of this Agreement applicable to the disposition of the purchased Shares.

 

(iii)

The Holder shall have provided the Company with written assurances, in form and substance satisfactory to the Company, that (A) the proposed disposition does not require registration of the Purchased Shares under the 1933 Act or (B) all appropriate action necessary for compliance with the registration requirements of the 1933 Act or any exemption from registration available under the 1933 Act (including Rule 144) has been taken.

 

(iv)

Such disposition does not violate the terms and conditions set forth in this Agreement.

 

d.

Restrictive Legends.  The stock certificates for the Shares that the Holder may purchase upon the exercise of this Option shall be endorsed with the following restrictive legend:

ECOTALITY, INC.

By:

Barry S. Baer

Its:

Secretary

HOLDER

 Donald Karner

Printed Name

/s/ Donald Karner

Signature

Date of Grant: 

¨

Cash (in U.S. funds)

¨

Certified check or bank check, payable to “ECOTALITY, INC” (in U.S. funds)

¨

Other instrument (specify):  ____________________________ (must be acceptable to the Committee and must be in U.S. funds payable to the order of the Company in an amount equal to the purchase price of such Shares)

¨

Delivery of an irrevocable instruction to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company to pay the Option purchase price, provided that in the event I choose to pay the Option purchase price in this manner, I and my broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Committee shall prescribe as a condition of this payment procedure.

1.

I understand that all sales of Purchased Shares are subject to compliance with the Company’s policy on securities trades and the restrictions on resale provisions of the Option Agreement and the Plan.  I also understand that the Purchased Shares and any proceeds from the sale of Purchased Shares may be subject to forfeiture pursuant to the terms of the Option Agreement and the Plan.

2.

I hereby acknowledge that I received and read a copy of the 2007 ECOTALITY, INC. EQUITY INCENTIVE PLAN and that I understand the tax consequences of my exercise.

3.

In the case of my exercise of a non-qualified stock option, I understand that I must recognize ordinary income equal to the spread between the fair market value of the Purchased Shares on the date of exercise and the exercise price.  I further understand that I am required to pay withholding taxes at the time of exercising a non-qualified stock option.

4.

I acknowledge that the Purchased Shares may remain subject to the Company’s right of repurchase at the exercise price in accordance with the applicable Option Agreement.  I acknowledge that I am acquiring the Purchased Shares subject to all other terms of the Option Agreement and the Plan.

5.

I acknowledge that I have received information regarding the federal income tax consequences of an option exercise and the tax election under section 83(b) of the Internal Revenue Code.  In the event that I choose to make a section 83(b) election, I acknowledge that it is my responsibility — and not the Company’s responsibility — to file the election in a timely manner, even if I ask the Company or its agents to make the filing on my behalf.  I acknowledge that the Company has encouraged me to consult my own adviser to determine the tax consequences of acquiring the Purchased Shares at this time.

6.

I understand that the terms of the Plan and Option Agreement regarding treatment of the Purchased Shares shall continue to apply to any shares that I may receive as a result of this exercise.  I agree to execute such other agreements related to this option exercise that the Committee may reasonably require.

By:

Printed Name

Date