JUHL ENERGY, INC. STOCK OPTION AGREEMENT

 

(a)

Subject to the terms of the Plan, the terms regarding “Vesting” below and the other terms set forth below, the Company hereby grants to the Optionee the option to acquire from the Company up to                                      (                            ) shares of Common Stock (each individually, a “Share,” and, collectively, the “Shares”) of the Company at the price of                           Dollars ($                           ) per Share (the “Option Price”; and such option sometimes referred to as the “Option” or “Options”).  This agreement is intended to grant options that qualify as Incentive Stock Options within the provisions of Code Section 422.

 

(a)

Notwithstanding the foregoing provisions of this Section 2, the Committee may in its sole discretion at any time after the grant of an Option accelerate vesting of such Option in whole or in part.

 

(b)

If the Optionee’s service as an Employee, Director, or Consultant, of the Company, an Affiliate or Subsidiary terminates for any reason, the provisions of Section 3(b) shall govern the exercisability and lapse of Optionee’s Options, and no further vesting shall occur following the time of termination. Optionee acknowledges the provisions of Section 3(b) provide for certain rights in the Company to purchase Shares held by Optionee, whether pursuant to Optionee’s exercise of Option or otherwise.

 

(a)

Unless earlier terminated in accordance with the provisions of the Plan, the Option will terminate on [ten years following Grant Date].

 

(b)

Subject to the provisions of Section 2, if the Optionee’s service as an Employee, Director or Consultant of the Company, an Affiliate or Subsidiary terminates for any reason, the following provisions shall govern the exercisability and lapse of Optionee’s Options, and no further vesting shall occur following the time of termination. Optionee acknowledges the following provisions provide for certain rights in the Company to purchase Shares held by Optionee, whether pursuant to Optionee’s exercise of Option or otherwise.

 

i.

Options issued by the Company in favor of Optionee to acquire Shares of the Company are referred to as “Options.”

 

ii.

In the event of termination of Optionee’s service as an Employee, Director or Consultant of the Company by Optionee for any reason or by Company with Cause (as defined herein), any and all Options which are not vested and exercisable at the time of termination shall immediately lapse, expire and terminate upon such termination by Optionee or the Company’s provision of notice of such termination, as the case may be.

 

iii.

In the event of termination, prior to the two year anniversary of this Agreement, of Optionee’s service as an Employee, Director or Consultant of the Company by Company with Cause, (A) any and all outstanding Options shall immediately lapse, expire and terminate and (B) Shares which have been purchased by Optionee pursuant to the exercise of a vested Option may be repurchased by Company during the period commencing on the termination date and continuing for a period of six (6) months thereafter, at a repurchase price equal to the amount paid by Optionee to the Company therefor, on the terms of repurchase provided in subsection v of this Section 3b.

 

iv.

However, if Optionee’s service as an Employee, Director or Consultant of the Company hereunder is terminated following the two year anniversary of this Agreement, whether by the Company with or without Cause, by Optionee for any reason, or by reason of Optionee’s death or Permanent Disability, then (A) any vested Options must be exercised with the exercise price therefor paid, each within 90 days of the date of termination, and to the extent they are not so exercised, such unexercised and vested Options shall lapse, expire and terminate; and (B) Shares issued pursuant to such exercise and any other Shares of Optionee may be repurchased by the Company, by notice provided during the period commencing on the termination date and continuing for a period of six (6) months thereafter, at a repurchase price equal to the Fair Market Value (as herein defined), on the terms of repurchase provided in subsection v of this Section 3b.

 

v.

The repurchase price (as prescribed in accordance with the terms of this Section 3(b) in the event of a Company repurchase of Shares) shall be paid by issuance of a promissory note in form reasonably provided by the Company, bearing interest at the lowest applicable federal rate on the date of the issuance of the promissory note. Principal and interest under the note shall be payable in equal, quarterly installments over a period of years determined by the Company’s Board of Directors and not to exceed five (5) years (provided that in the event that more than one-third (1/3) of the total shares of the Company are being repurchased at any time, the period attributable to any remaining installments shall be extended so that the total installment payments for any such shares shall be paid over a period of seven (7) years). For example, if installments have been paid under a note pursuant to a repurchase of Shares of the Company from Optionee for three (3) years at the time a repurchase of shares of the Company from another person commences, where the total of the shares repurchased from Optionee and such other person are more than one-third (1/3) of the total shares of the Company (if measured at the time of commencement of the repurchase of shares in either instance), the remaining amounts payable to the Optionee will be paid in equal installments over four (4) years and the other person shall receive all installments over seven (7) years.

 

(c)

Subject to the provisions of Section 2 hereof, following Optionee’s termination, and if no provision of Section 3 specifies a period within which vested options must be exercised or that they lapse, expire and/or terminate, the vested portion of the Option will remain in effect for a period of ninety (90) days following such termination (but in no event later than the date specified in paragraph 3(a) above), or, if such termination is on account of death or Permanent Disability, for a period of one (1) year following such termination (but in no event later than the date specified in paragraph 3(a) above) and if such termination is on account of Permanent Disability and Optionee dies during the one year period following termination, the later of such one-year period or three (3) months after the date of such death (but in no event later than the date specified in paragraph 3(a) above), at the end of which period, to the extent it has not been exercised, the Option will terminate.

 

(d)

Notwithstanding any other provision of this Agreement to the contrary, whether express or implied, the Committee may, in its sole discretion, by providing at least 30 days’ prior written notice to the Optionee, elect to (i) accelerate the date of expiration of the Option to the effective date of the Change in Control (as such term in defined in the Plan) and (ii) require that in lieu of the exercise of the Option, the Optionee be provided with a net payment as set forth in this Section 3(d).  Any payments to be made to Optionee under this Section 3(d) shall be in an amount equal to the excess, if any, of (i) the Fair Market Value of a share of Common Stock on the effective date of the Change in Control over (ii) the exercise price per Share, multiplied by the number of Shares with respect to which this Option is exercisable as of the effective date of such Change in Control, less any required withholding taxes. Payments under this Section 3(d) shall be made, in the sole discretion of the Company, (i) in cash, (ii) in the form of the consideration being paid to holders of Shares in connection with such Change in Control, or (iii) any combination of the foregoing.

 

(a)

deliver to the Company a written notice, in the form attached as Exhibit A hereto, specifying the number of Shares for which the Option is being exercised;

 

(b)

deliver to the Company the consideration to be paid for the Shares to be issued upon exercise of an Option or portion thereof. The consideration may consist of one or more of the following:  (i) cash or equivalent, (ii) promissory note (if permitted by the Committee or the Plan), (iii) any combination of the foregoing methods of payment as permitted by the Committee, or (v) such other consideration and method of payment for the issuance of Shares to the extent permitted under applicable laws and approved by the Committee; and

 

(c)

execute and deliver to the Company any other documents reasonably required from time to time by the Committee in order to effect compliance with the Securities Act of 1933, as amended (the “1933 Act”), applicable state securities laws, or any other applicable law, rule or regulation.

 

(a)

The Optionee agrees to comply with and be bound by all of the provisions of the Plan and this Agreement. The Optionee acknowledges receipt of a copy of the Plan, an understanding of its terms, and the opportunity to discuss those terms with an appropriate representative of the Company.

 

(b)

The Optionee recognizes, agrees and acknowledges that no registration statement under the 1933 Act, or under any state securities laws, has been filed with respect to the Option or any Shares that may be acquired upon exercise of the Option, the Company is not required to and has no present intention of preparing and filing such a registration statement.  Accordingly, Shares acquired pursuant to the Option may be required to be held indefinitely.

 

(c)

The Optionee represents and warrants that the Option and any Shares acquired upon exercise of the Option will be acquired and held by the Optionee for the Optionee’s own account, for investment purposes only, and not with a view towards the distribution or public offering thereof nor with any present intention of reselling or distributing the same at any particular future time.

 

(d)

The Optionee agrees not to sell, transfer or otherwise dispose of any Shares that may be acquired upon exercise of the Option unless (i) there is in effect a registration statement under the 1933 Act covering the proposed disposition and compliance with governing state securities laws, (ii) the Optionee delivers to the Company, at the Optionee’s expense, a “no-action” letter or similar interpretative opinion, satisfactory in form and substance to the Company, from the staff of each appropriate securities agency, to the effect that such shares may be disposed of by the Optionee in the manner proposed, or (iii) the Optionee delivers to the Company, at the Optionee’s expense, a legal opinion, satisfactory in form and substance to the Company, of legal counsel designated by the Optionee and satisfactory to the Company, to the effect that the proposed disposition is exempt from registration under the 1933 Act and governing state securities laws.

 

(e)

The Optionee acknowledges and consents to the appearance of a restrictive legend, referring to the transfer and other restrictions imposed by the Plan or this Agreement, on each certificate representing Shares issued upon exercise of the Option.

 

(f)

The Optionee agrees not to sell, transfer or otherwise dispose of the Option or any Shares acquired upon exercise of the Option, except as specifically permitted by this Agreement, any applicable other agreement with the Company and any applicable securities laws. Optionee acknowledges that he, she or it bears sole responsibility for consulting with his, her or its own legal and tax advisors regarding ownership of Shares, and the Company undertakes no responsibility to do so.

 

o

Purchase                                Shares of the Company (the “Shares”), pursuant to the Option.  This notice is accompanied by full payment of the Option Price for the Shares in cash or by check or in another manner permitted by the Agreement.

 

o

Surrender the right to purchase                                  Shares upon exercise of the Option and receive                               Shares by reason of a “cashless” exercise pursuant to the Agreement if permitted by the Committee.  [THIS METHOD OF EXERCISE IS ONLY AVAILABLE WITH ADVANCE COMMITTEE APPROVAL]