CALLOWAY-BRIGGS RENEWABLES INC.
STOCK OPTION AGREEMENT
Granted Under the 2022 Omnibus Equity Incentive Plan
This Stock Option Agreement (this "Agreement") is entered into as of the Grant Date set forth in the Grant Notice below, by and between Calloway-Briggs Renewables Inc., a Delaware corporation (the "Company"), and the individual identified in the Grant Notice below (the "Participant").
This Agreement is subject to, and governed by, the terms and conditions of the Calloway-Briggs Renewables Inc. 2022 Omnibus Equity Incentive Plan (as amended and restated from time to time, the "Plan"). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Plan. To the extent that any provision of this Agreement conflicts with the terms of the Plan, the terms of the Plan shall control.
The Plan authorizes the issuance of awards with respect to a share reserve of 12,727,273 shares of Common Stock, which represents ten percent (10%) of the Company's post-IPO fully diluted outstanding shares of 127,272,727. The Option granted hereunder is made pursuant to, and draws upon, such share reserve.
SECTION 1
GRANT NOTICE
The following Grant Notice sets forth the material terms applicable to the Option granted to the Participant. This Grant Notice is incorporated into, and forms a part of, this Agreement. In the event of any inconsistency between the terms of this Grant Notice and the body of this Agreement (other than the Plan), the terms of this Grant Notice shall control.
By signing below (or accepting this Agreement electronically), the Participant acknowledges receipt of this Agreement and the Plan, confirms that the Participant has reviewed both documents in their entirety, and agrees to be bound by all of the terms and conditions set forth in this Agreement and the Plan. The Participant further acknowledges that the Option granted hereunder does not confer any right to continued employment or service with the Company or any of its subsidiaries.
CALLOWAY-BRIGGS RENEWABLES INC.
By: ________
Name:
Title:
Date: ________
PARTICIPANT:
Signature: ________
Printed Name:
Date: ________
SECTION 2
GRANT OF OPTION
2.1 Grant. Subject to the terms and conditions of this Agreement and the Plan, the Company hereby grants to the Participant an option (the "Option") to purchase the number of shares of Common Stock set forth in the Grant Notice (the "Option Shares"), at the Exercise Price Per Share set forth in the Grant Notice (the "Exercise Price"). The Option is granted pursuant to the authority of the Compensation Committee of the Board of Directors of the Company (the "Committee") under the Plan, and is evidenced by this Agreement and the Grant Notice.
2.2 Designation as ISO or NSO. The Option is designated as an Incentive Stock Option ("ISO") or a Nonqualified Stock Option ("NSO") as indicated in the Grant Notice. If the Grant Notice designates the Option as an ISO, the Option is intended to qualify as an "incentive stock option" within the meaning of Section 422 of the Code, to the maximum extent permitted thereunder. Notwithstanding the foregoing, the Option (or any portion thereof) shall be treated as an NSO to the extent that it fails to satisfy the requirements of Section 422 of the Code, including, without limitation, as a result of the limitations described in Section 2.3 below. The Participant acknowledges that the tax treatment of the Option will depend upon, among other things, the Participant's particular circumstances and the designation of the Option as an ISO or NSO, and the Company makes no representation or warranty regarding the tax treatment of the Option.
2.3 ISO Limitations. If the Option is designated as an ISO, the Option shall be subject to the limitations set forth in Section 422 of the Code. In particular, to the extent that the aggregate Fair Market Value (determined as of the Grant Date) of the shares of Common Stock with respect to which ISOs first become exercisable by the Participant during any calendar year (under the Plan and all other equity incentive plans of the Company and its subsidiaries and affiliates) exceeds One Hundred Thousand Dollars ($100,000), such excess Options shall automatically be treated as NSOs. For purposes of applying the foregoing limitation, ISOs shall be taken into account in the order in which they were granted. The Participant understands and acknowledges that any portion of the Option that is treated as an NSO pursuant to this Section 2.3 shall be governed by the provisions of this Agreement applicable to NSOs.
2.4 Common Stock. The Common Stock issuable upon exercise of the Option is the Company's common stock, par value $0.01 per share, which is listed (or, upon the completion of the Company's initial public offering, will be listed) on the New York Stock Exchange under the ticker symbol "CBRI." The Company shall take all actions reasonably necessary to maintain such listing for so long as any other shares of Common Stock are listed on the New York Stock Exchange.
SECTION 3
VESTING
3.1 Vesting Schedule
Unless a different vesting schedule is expressly set forth in the Grant Notice, the Option shall vest and become exercisable in accordance with the following four-year ratable vesting schedule:
(a) Twenty-five percent (25%) of the total number of Option Shares shall vest and become exercisable on the first (1st) anniversary of the Vesting Commencement Date;
(b) An additional twenty-five percent (25%) of the total number of Option Shares shall vest and become exercisable on the second (2nd) anniversary of the Vesting Commencement Date;
(c) An additional twenty-five percent (25%) of the total number of Option Shares shall vest and become exercisable on the third (3rd) anniversary of the Vesting Commencement Date; and
(d) The remaining twenty-five percent (25%) of the total number of Option Shares shall vest and become exercisable on the fourth (4th) anniversary of the Vesting Commencement Date.
Vesting of each installment described above is subject to the Participant's continued employment with, or service to, the Company or any of its subsidiaries through each applicable vesting date. For the avoidance of doubt, if the Participant's employment or service terminates for any reason prior to an applicable vesting date, no vesting shall occur with respect to the installment that would otherwise have vested on such date (except as may be expressly provided in this Agreement, the Plan, or a separate written agreement between the Company and the Participant).
In the event that the application of the vesting schedule set forth above would result in the vesting of a fractional share on any vesting date, the number of Option Shares vesting on such date shall be rounded down to the nearest whole share. Any fractional share that is not vested as a result of such rounding shall be aggregated with and shall vest on the final vesting date, such that the total number of vested Option Shares following the final vesting date shall equal one hundred percent (100%) of the total number of Option Shares set forth in the Grant Notice.
3.2 No Proportional Vesting
No partial or proportional vesting of the Option shall occur between the scheduled vesting dates set forth in Section 3.1 above (or in the Grant Notice, as applicable). Vesting shall occur only on the specific anniversary dates designated in the vesting schedule, and the Participant shall not earn or accrue any right to vesting on a daily, weekly, monthly, or other incremental basis between such dates. The Participant acknowledges that this "cliff" vesting structure on each anniversary date is an integral part of the Option's design and that employment or service for a period of less than a full year between vesting dates shall not entitle the Participant to any pro rata vesting with respect to the next installment.
3.3 Acceleration Upon Change of Control
The Option may be subject to accelerated vesting in connection with a "Change of Control" (as defined in the Plan). If the Plan, or any separate agreement between the Participant and the Company (including, without limitation, any employment agreement, offer letter, change-of-control agreement, or severance plan), provides for the acceleration of vesting of the Option upon or following a Change of Control, such terms shall govern the acceleration of vesting of the Option to the extent applicable.
Without limiting the generality of the foregoing, to the extent that any such agreement between the Participant and the Company provides for "double-trigger" acceleration — that is, acceleration that is contingent upon both (i) the occurrence of a Change of Control and (ii) the termination of the Participant's employment or service by the Company (or its successor) without Cause or by the Participant for Good Reason within a specified period following such Change of Control (typically twelve (12) or twenty-four (24) months) — the terms of such double-trigger provision shall control. In the absence of any such separate agreement providing for acceleration, the Committee shall retain its authority under the Plan to determine the treatment of outstanding, unvested Options in connection with a Change of Control, including, without limitation, the authority to provide for the assumption or substitution of the Option by a successor entity, accelerated vesting, or cash-out of the Option, in each case as more fully described in the Plan.
SECTION 4
EXERCISE PRICE
4.1 Exercise Price. The Exercise Price Per Share for the Option is as set forth in the Grant Notice. The aggregate exercise price payable upon exercise of all or any portion of the Option shall be equal to the product of the Exercise Price Per Share multiplied by the number of Option Shares as to which the Option is being exercised.
4.2 Minimum Exercise Price. The Exercise Price Per Share shall not be less than one hundred percent (100%) of the Fair Market Value of a share of Common Stock on the Grant Date, as determined by the Committee in accordance with the Plan and the applicable provisions of Section 409A of the Code and the Treasury Regulations promulgated thereunder. In the case of an ISO granted to a Participant who, at the time of grant, owns (or is deemed to own by reason of the attribution rules under Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any of its parent or subsidiary corporations (a "10% Stockholder"), the Exercise Price Per Share shall not be less than one hundred ten percent (110%) of the Fair Market Value of a share of Common Stock on the Grant Date.
4.3 Section 409A Compliance and Valuation. The Company shall determine Fair Market Value in accordance with the procedures set forth in the Plan and in compliance with Section 409A of the Code and Treasury Regulation § 1.409A-1(b)(5). For periods during which the Common Stock is traded on the New York Stock Exchange (or another established securities market), the Fair Market Value of a share of Common Stock on any given date shall be the closing sale price of a share of Common Stock as reported on such exchange on such date (or, if no sales are reported on such date, on the last preceding date on which sales were reported). For periods prior to the Company's initial public offering or during which the Common Stock is not traded on an established securities market, Fair Market Value shall be determined by the Committee in good faith and in a manner consistent with the valuation principles set forth in Treasury Regulation § 1.409A-1(b)(5)(iv), which may include reliance on an independent third-party valuation conducted by a qualified appraiser. The Company has engaged, and may from time to time engage, independent third-party valuation firms to provide 409A-compliant valuations of the Common Stock, and the Committee shall give due consideration to such valuations in determining Fair Market Value.
4.4 No Repricing. Except as provided in Section 11 of this Agreement (relating to equitable adjustments), the Exercise Price Per Share may not be reduced, and the Option may not be cancelled and replaced with a new award having a lower exercise price, without the approval of the Company's stockholders, in each case consistent with the terms of the Plan and applicable New York Stock Exchange listing standards.
SECTION 5
METHOD OF EXERCISE
5.1 Exercise Notice
The Option may be exercised, in whole or in part (but only with respect to vested Option Shares), by the Participant (or, in the event of the Participant's death, by the Participant's estate, beneficiary, or legal representative, as applicable) delivering a written notice of exercise to the Company (or its designee) substantially in the form attached hereto as Exhibit A (the "Exercise Notice"), or in such other form as may be prescribed by the Company or the Committee from time to time.
The Exercise Notice shall be delivered to:
Calloway-Briggs Renewables Inc.
Attn: General Counsel (Sandra Haverford)
4200 Ridgeline Parkway, Suite 1100 Austin, TX 78746
or, if designated by the Company, to:
Continental Shareowner Services, Inc. 1 Ashbury Asset Advisors Plaza, 30th Floor New York, NY 10004
The Company may, in its discretion, designate an electronic platform, online portal, or third-party plan administrator through which the Participant may submit an Exercise Notice, and any such electronic submission shall be deemed to satisfy the requirements of this Section 5.1.
The Exercise Notice shall specify (i) the number of Option Shares with respect to which the Option is being exercised, (ii) the method of payment of the aggregate Exercise Price elected by the Participant from among the methods set forth in Section 5.2, and (iii) such other information as the Company may reasonably require. The exercise of the Option shall be effective as of the date on which a properly completed Exercise Notice and full payment of the aggregate Exercise Price (and any applicable tax withholding amounts) are received by the Company or its designee.
5.2 Payment Methods
Payment of the aggregate Exercise Price for the Option Shares being purchased upon exercise may be made by one or more of the following methods, as permitted by the Plan and as determined by the Committee in its discretion:
(a) Cash or Cash Equivalent. Payment in cash, by certified or personal check payable to the order of the Company, by wire transfer of immediately available funds to an account designated by the Company, or by any other cash equivalent acceptable to the Company.
(b) Delivery of Previously Owned Shares. Delivery (either by actual delivery or attestation) of shares of Common Stock previously owned by the Participant having an aggregate Fair Market Value on the date of exercise equal to the aggregate Exercise Price; provided, that such previously owned shares shall have been held by the Participant for at least six (6) months prior to the date of exercise (or such other minimum holding period as may be established by the Committee from time to time) and shall not have been subject to any pledge, security interest, or other encumbrance at the time of delivery.
(c) Broker-Assisted Cashless Exercise. A broker-assisted "cashless exercise" effected through a broker-dealer selected or approved by the Company, in which the broker-dealer, on behalf of the Participant, simultaneously exercises the Option and sells a sufficient number of the Option Shares on the open market to cover the aggregate Exercise Price and any applicable tax withholding obligations, and remits the net proceeds (if any) to the Participant. The Participant acknowledges that the Company shall not be responsible for any broker commissions, transaction fees, or market fluctuations associated with a cashless exercise.
(d) Net Exercise / Stock Withholding. If and to the extent permitted under the Plan and approved by the Committee, a "net exercise" in which the Company withholds from the Option Shares otherwise issuable upon exercise a number of shares having an aggregate Fair Market Value on the date of exercise equal to the aggregate Exercise Price (and, if applicable, the applicable tax withholding amount). The number of shares withheld shall be determined based on the Fair Market Value of the Common Stock on the date of exercise, as determined by the Committee.
(e) Combination. Any combination of the foregoing methods, subject to the approval of the Company or the Committee.
All exercises of the Option are subject to the satisfaction of applicable tax withholding obligations as set forth in Section 9 of this Agreement. The Committee may restrict or eliminate any payment method at any time, in its sole discretion, to the extent permitted by the Plan and applicable law.
5.3 Issuance of Shares
Upon valid exercise of the Option in accordance with this Section 5, including receipt by the Company (or its designee) of a properly completed Exercise Notice, full payment of the aggregate Exercise Price, and satisfaction of all applicable tax withholding obligations, the Company shall cause the appropriate number of shares of Common Stock to be issued and delivered to the Participant (or the Participant's brokerage account, as designated in the Exercise Notice). Shares of Common Stock issued upon exercise of the Option shall be evidenced by book-entry registration through Continental Shareowner Services, Inc. (or any successor transfer agent and registrar appointed by the Company), and the Company shall instruct the transfer agent to credit the Participant's account accordingly.
All shares of Common Stock issued upon exercise of the Option shall be duly authorized, validly issued, fully paid, and non-assessable. The Company shall at all times during the term of the Option reserve and keep available such number of shares of Common Stock as shall be sufficient to satisfy the requirements of this Agreement, subject to adjustment as provided in Section 11.
SECTION 6
TERM AND EXPIRATION
6.1 Expiration Date. The Option shall expire at 11:59 p.m. (Eastern Time) on the Expiration Date set forth in the Grant Notice, which shall be the tenth (10th) anniversary of the Grant Date, unless earlier terminated in accordance with Section 7 of this Agreement or the provisions of the Plan. After the Expiration Date, the Option shall have no further force or effect, and the Participant shall have no further rights with respect to the Option.
6.2 Five-Year Term for 10% Stockholders. Notwithstanding Section 6.1, if the Option is designated as an ISO and the Participant is a 10% Stockholder (as defined in Section 4.2) at the time of grant, the Option shall expire no later than the fifth (5th) anniversary of the Grant Date, and the Expiration Date set forth in the Grant Notice shall be deemed to be modified accordingly.
6.3 Forfeiture of Unvested Shares. Any portion of the Option that is not vested and exercisable as of the applicable termination, expiration, or forfeiture date (as determined in accordance with Section 7 below) shall be immediately and automatically forfeited and cancelled for no consideration, and the Participant shall have no further rights, claims, or interests with respect to such forfeited portion.
SECTION 7
TERMINATION OF EMPLOYMENT / SERVICE
7.1 Termination Without Cause or Voluntary Resignation (Other Than for Good Reason)
If the Participant's employment with, or service to, the Company or any of its subsidiaries terminates (i) by the Company without Cause (as defined in the Plan or, if applicable, the Participant's employment agreement with the Company) or (ii) due to the Participant's voluntary resignation (other than a resignation for Good Reason, as defined in the Plan or the Participant's employment agreement, if applicable), the vested and exercisable portion of the Option as of the date of such termination of employment or service (the "Termination Date") may be exercised by the Participant for a period of ninety (90) days following the Termination Date; provided, however, that in no event shall the Option be exercisable after the Expiration Date set forth in the Grant Notice (as may be modified pursuant to Section 6.2).
Any portion of the Option that is not vested as of the Termination Date shall be immediately and automatically forfeited and cancelled for no consideration upon such termination, and the Participant shall have no further rights, claims, or interests with respect to such unvested portion. For the avoidance of doubt, if the Participant fails to exercise the vested portion of the Option within the ninety (90)-day post-termination exercise period, the entire remaining Option shall expire and be forfeited and cancelled without any payment or consideration to the Participant.
7.2 Termination for Cause
If the Participant's employment with, or service to, the Company or any of its subsidiaries is terminated by the Company for Cause, the entire Option — including both the vested and unvested portions thereof — shall be immediately and automatically forfeited and cancelled as of the Termination Date, and the Participant shall have no further rights, claims, or interests with respect to the Option. No portion of the Option shall be exercisable following a termination for Cause.
For purposes of this Agreement, "Cause" shall have the meaning ascribed to such term in the Plan or, if the Participant is a party to an employment agreement or similar agreement with the Company that contains a definition of "Cause," the definition set forth in such agreement shall apply. If no such definition exists in the Plan or any such agreement, "Cause" shall mean (i) the Participant's commission of, indictment for, conviction of, or plea of guilty or nolo contendere to, a felony or any crime involving fraud, dishonesty, or moral turpitude; (ii) the Participant's willful misconduct or gross negligence in the performance of the Participant's duties; (iii) the Participant's material breach of any written agreement with the Company or any of its subsidiaries, including any non-competition, non-solicitation, confidentiality, or proprietary information agreement; (iv) the Participant's material violation of any material Company policy; or (v) the Participant's willful failure or refusal to perform the Participant's duties, which failure or refusal continues for a period of fifteen (15) days after written notice from the Company specifying the nature of such failure or refusal.
7.3 Death. If the Participant's employment with, or service to, the Company or any of its subsidiaries terminates by reason of the Participant's death, the vested and exercisable portion of the Option as of the date of the Participant's death may be exercised by the Participant's estate, designated beneficiary, or duly authorized legal representative for a period of twelve (12) months following the date of death; provided, however, that in no event shall the Option be exercisable after the Expiration Date set forth in the Grant Notice (as may be modified pursuant to Section 6.2).
Any portion of the Option that is not vested as of the date of the Participant's death shall be immediately and automatically forfeited and cancelled for no consideration upon such death, unless otherwise expressly provided in the Plan or a separate written agreement between the Company and the Participant (including, without limitation, any employment agreement or offer letter that provides for post-death acceleration of vesting).
7.4 Disability. If the Participant's employment with, or service to, the Company or any of its subsidiaries terminates by reason of the Participant's "Disability" (as defined in the Plan), the vested and exercisable portion of the Option as of the date of such termination may be exercised by the Participant (or the Participant's legal representative) for a period of twelve (12) months following the Termination Date; provided, however, that in no event shall the Option be exercisable after the Expiration Date set forth in the Grant Notice (as may be modified pursuant to Section 6.2).
Any portion of the Option that is not vested as of the Termination Date shall be immediately and automatically forfeited and cancelled for no consideration upon such termination, unless otherwise expressly provided in the Plan or a separate written agreement between the Company and the Participant.
7.5 Retirement. To the extent that the Plan, the Company's retirement policy, or any separate written agreement between the Company and the Participant provides for special vesting, continued vesting, or extended post-termination exercise provisions in the event of the Participant's retirement (as defined in the applicable Plan, policy, or agreement), such terms shall govern the treatment of the Option upon the Participant's retirement. In the absence of any such provisions, the Participant's retirement shall be treated as a voluntary resignation under Section 7.1, and the Option shall be subject to the ninety (90)-day post-termination exercise period applicable to such terminations.
7.6 Clawback. The Option and any shares of Common Stock acquired upon exercise of the Option (and any proceeds, gains, or other economic benefit actually or constructively received by the Participant upon any exercise or disposition of the Option or the shares of Common Stock acquired thereunder) shall be subject to the provisions of any clawback, recoupment, or forfeiture policy adopted by the Company from time to time, including, without limitation, any such policy adopted to comply with applicable law, regulation, or stock-exchange listing standards. Without limiting the generality of the foregoing, the Option and any shares acquired upon exercise shall be subject to clawback and recoupment to the extent required by (i) the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations promulgated thereunder, (ii) the listing standards of the New York Stock Exchange (including NYSE Listed Company Manual Section 303A.14), and (iii) any clawback or recoupment policy adopted by the Company in compliance with the foregoing. By accepting the Option, the Participant agrees to be bound by the terms of any such policy, as it may be amended from time to time, and to cooperate fully with the Company in connection with any such clawback or recoupment.
SECTION 8
LOCK-UP RESTRICTION
8.1 Lock-Up Period. The Participant acknowledges and agrees that the shares of Common Stock acquired upon exercise of the Option may be subject to lock-up restrictions applicable in connection with the Company's initial public offering of Common Stock (the "IPO"). In particular, the Participant agrees that, to the extent required by the Company, the underwriters of the IPO, or applicable law, the Participant shall not, during the period commencing on the date of the final prospectus relating to the IPO and ending one hundred eighty (180) days thereafter (the "Lock-Up Period"), directly or indirectly:
(a) offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale, or otherwise transfer or dispose of any shares of Common Stock acquired upon exercise of the Option (or any securities convertible into, or exercisable or exchangeable for, shares of Common Stock);
(b) enter into any swap, hedge, or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of such shares; or
(c) make any demand for, or exercise any right with respect to, the registration of any shares of Common Stock under the Securities Act of 1933, as amended (the "Securities Act").
8.2 Reference to Lock-Up Agreement. The restrictions set forth in Section 8.1 are consistent with, and supplemental to, the Form of Lock-Up Agreement entered into by certain stockholders, officers, and directors of the Company in connection with the IPO, with Hargrove Keating & Co., as representative of the several underwriters. To the extent that the Participant has entered into, or is required to enter into, such a Lock-Up Agreement, the terms of such Lock-Up Agreement shall govern and, in the event of any conflict with this Section 8, the more restrictive provision shall control.
8.3 Permitted Transfers During Lock-Up Period. Notwithstanding the foregoing, the restrictions set forth in this Section 8 shall not apply to:
(a) transfers of shares to affiliates of the Participant, provided that the transferee agrees in writing to be bound by the same lock-up restrictions;
(b) bona fide estate-planning transfers, including transfers to trusts for the benefit of the Participant or the Participant's immediate family members, provided that the trustee agrees in writing to be bound by the same lock-up restrictions;
(c) the adoption (but not execution of trades under) a trading plan that complies with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended; and
(d) pledges of shares to lending institutions as collateral for bona fide indebtedness, provided that any foreclosure or other disposition by the lending institution shall remain subject to the lock-up restrictions during the Lock-Up Period.
8.4 Stop-Transfer Instructions and Legends. The Company and its transfer agent (Continental Shareowner Services, Inc., or any successor transfer agent) are hereby authorized to decline to make any transfer of shares and to place or cause to be placed stop-transfer instructions and restrictive legends on any certificates or book-entry positions representing shares of Common Stock acquired upon exercise of the Option, to the extent necessary or appropriate to enforce the lock-up restrictions set forth in this Section 8 or in any applicable Lock-Up Agreement. The Participant agrees not to take any action to circumvent or avoid such stop-transfer instructions or legends.
SECTION 9
TAX WITHHOLDING
9.1 Participant's Tax Obligations. The Participant shall be solely responsible for all federal, state, local, and foreign tax obligations arising from or relating to the grant, vesting, exercise, and disposition of the Option and the shares of Common Stock acquired upon exercise of the Option, including, without limitation, any income tax, employment tax (including FICA and FUTA), or other tax obligation. The Company makes no representation or warranty regarding the tax treatment of the Option and shall not be liable for any tax, interest, or penalty imposed on the Participant in connection with the Option.
9.2 Company's Right to Withhold. The Company (and any subsidiary employing or retaining the services of the Participant) shall have the right and obligation to withhold from any amounts otherwise payable to the Participant, or to require the Participant to remit to the Company, an amount sufficient to satisfy all applicable federal, state, local, and foreign income and employment tax withholding obligations arising in connection with the exercise of the Option or any other taxable event related to the Option. The Participant shall not be entitled to receive shares of Common Stock upon exercise of the Option until all applicable withholding obligations have been satisfied in full.
9.3 Methods of Satisfying Withholding. Tax withholding obligations may be satisfied by one or more of the following methods, as permitted by the Plan and the Committee:
(a) Payment in cash, by check, or by wire transfer of the applicable withholding amount to the Company;
(b) Withholding from the Participant's salary, wages, bonus, or other compensation payable by the Company or any of its subsidiaries;
(c) Withholding of shares of Common Stock otherwise issuable upon exercise of the Option (net share settlement), with such shares valued at their Fair Market Value on the date of exercise; provided, that the number of shares withheld shall not exceed the amount necessary to satisfy the Company's maximum statutory withholding obligations (or such lesser amount as may be necessary to avoid adverse accounting treatment); or
(d) Any other method of satisfying withholding obligations as may be permitted by the Plan and applicable law.
The Company may, in its discretion, require the Participant to satisfy withholding obligations by a particular method or combination of methods.
9.4 Special Provisions for ISOs. If the Option is designated as an ISO, the Participant is hereby reminded that favorable tax treatment under Section 422 of the Code (including the deferral of ordinary income recognition until the date of disposition of the shares) requires, among other things, that the Participant hold the shares of Common Stock acquired upon exercise of the Option for at least (i) two (2) years from the Grant Date and (ii) one (1) year from the date of exercise (the "ISO Holding Periods"). If the Participant disposes of such shares before satisfying both ISO Holding Periods (a "Disqualifying Disposition"), the Participant will recognize ordinary income in the year of such disposition in an amount equal to the excess of the Fair Market Value of the shares on the exercise date (or, if less, the amount realized on the disposition) over the Exercise Price, and the Company may be entitled to a corresponding deduction. The Participant agrees to promptly notify the Company in writing of any Disqualifying Disposition of shares acquired upon exercise of the Option.
9.5 State Tax Considerations. The Participant acknowledges that the Company conducts operations and may have tax reporting and withholding obligations in multiple states, including, without limitation, Texas, New Mexico, Arizona, California, and Oklahoma. The Participant understands that the exercise of the Option and the acquisition or disposition of shares may give rise to income tax obligations in one or more of these states (or other states in which the Participant resides or has performed services for the Company), and the Company shall comply with its withholding obligations under applicable state tax laws.
SECTION 10
TRANSFERABILITY
10.1 General Restriction. The Option is personal to the Participant and is non-transferable. The Participant may not sell, assign, transfer, pledge, hypothecate, encumber, or otherwise dispose of the Option or any interest therein, whether voluntarily, involuntarily, by operation of law, or otherwise, except as expressly permitted by this Section 10.
10.2 Permitted Transfers. Notwithstanding the general restriction set forth in Section 10.1, the Option may be transferred in the following limited circumstances:
(a) By Will or the Laws of Descent and Distribution. The Option may be transferred upon the death of the Participant by will or by the laws of descent and distribution. Upon any such transfer, the transferee shall be subject to all of the terms and conditions of this Agreement and the Plan as if such transferee were the Participant.
(b) Gifts to Family Members (NSOs Only). If the Option is designated as an NSO, the Participant may, subject to the prior written approval of the Committee, transfer all or a portion of the Option by gift to a "Family Member" (as defined in the Plan). Any such transfer shall be irrevocable and shall be subject to all of the terms and conditions of this Agreement and the Plan. The transferee shall execute a written agreement in a form acceptable to the Company acknowledging that the transferred Option remains subject to the terms of this Agreement and the Plan.
10.3 ISO Transfer Restriction. If the Option is designated as an ISO, the Option shall not be transferable by the Participant other than by will or by the laws of descent and distribution, and during the lifetime of the Participant, the Option shall be exercisable only by the Participant (or by the Participant's legal representative in the event of the Participant's Disability). Any attempted transfer of an ISO in violation of this Section 10.3 shall result in such Option being treated as an NSO for federal income tax purposes.
10.4 Void Transfers. Any attempted transfer, assignment, pledge, hypothecation, or other disposition of the Option in violation of this Section 10, or any levy, attachment, or similar process upon the Option, shall be null and void and without effect, and the Company shall not be required to give effect to any such attempted transfer or recognize any purported transferee as the holder of the Option for any purpose.
SECTION 11
ADJUSTMENTS
In the event of any stock split, reverse stock split, stock dividend, recapitalization, reclassification, reorganization, merger, consolidation, combination, exchange of shares, spin-off, extraordinary dividend or distribution, or other similar corporate transaction or event affecting the Common Stock (whether or not constituting a Change of Control), the Committee shall, in accordance with the terms of the Plan and in such manner as the Committee deems equitable and appropriate, adjust one or more of the following in order to prevent the dilution or enlargement of the benefits or potential benefits intended to be made available under the Option: (i) the number and kind of shares of Common Stock (or other securities or property) subject to the Option; and (ii) the Exercise Price Per Share.
Any such adjustment shall be made by the Committee in its sole discretion, acting in good faith, and the determination of the Committee shall be final, binding, and conclusive upon the Participant. The Committee's authority to make such adjustments is set forth in Article IV (or such other applicable provision) of the 2022 Omnibus Equity Incentive Plan, and this Section 11 is subject to, and shall be interpreted consistently with, such provisions of the Plan.
No adjustment under this Section 11 shall be made in a manner that would result in the Option being treated as providing for a deferral of compensation subject to Section 409A of the Code, unless such adjustment is made in accordance with the requirements of Section 409A and the Treasury Regulations promulgated thereunder. In no event shall any adjustment result in the Exercise Price Per Share being less than the par value of a share of Common Stock.
SECTION 12
NO RIGHTS AS STOCKHOLDER
The Participant shall have no rights as a stockholder of the Company with respect to any shares of Common Stock subject to the Option unless and until such shares have been duly issued and delivered to the Participant upon valid exercise of the Option in accordance with Section 5 of this Agreement. Without limiting the generality of the foregoing, no dividend (whether in cash, stock, or other property), voting right, or other right or privilege of a stockholder of the Company shall accrue to the Participant with respect to any shares of Common Stock underlying unexercised Options. The Participant acknowledges that the holding of the Option does not entitle the Participant to any dividends or other distributions declared or paid on the Common Stock, and that the Participant shall not have any right to vote or otherwise participate as a stockholder with respect to any matters submitted to the stockholders of the Company, in each case unless and until the Option is validly exercised and the underlying shares are issued.
SECTION 13
SECURITIES LAW COMPLIANCE
13.1 General Compliance. The Option and the shares of Common Stock issuable upon exercise of the Option are subject to compliance with all applicable federal and state securities laws, rules, and regulations, including, without limitation, the Securities Act, the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Securities and Exchange Commission and the New York Stock Exchange. The Company shall not be obligated to issue or deliver any shares of Common Stock upon exercise of the Option if such issuance or delivery would, in the opinion of counsel to the Company, violate any applicable law, regulation, or rule, or any applicable rule or listing requirement of the New York Stock Exchange.
13.2 Investment Representations. The Participant represents and warrants to the Company that, unless a registration statement under the Securities Act is then in effect covering the resale of the shares of Common Stock issuable upon exercise of the Option, any shares acquired upon exercise of the Option will be acquired for the Participant's own account, for investment purposes only, and not with a view to the distribution or resale thereof. The Participant further represents that the Participant has sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of an investment in the Common Stock. The Participant understands that the shares of Common Stock may not be registered under the Securities Act or any state securities law at the time of exercise, and that such shares may constitute "restricted securities" within the meaning of Rule 144 under the Securities Act.
13.3 Restrictive Legends. The Company may cause any certificates or book-entry positions representing shares of Common Stock issued upon exercise of the Option to bear such restrictive legends as the Company, in its discretion, deems necessary or appropriate to comply with applicable securities laws, including, without limitation, the following legend (or a legend of substantially similar import):
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS."
Such legends shall be removed at the Participant's written request when, in the opinion of counsel to the Company, such legends are no longer required under applicable securities laws.
SECTION 14
GOVERNING LAW; JURISDICTION
14.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to principles of conflicts of law that would cause the application of the laws of any other jurisdiction.
14.2 Exclusive Forum. Any and all disputes, claims, or causes of action arising out of or relating to this Agreement, the Option, or the Plan shall be brought exclusively in the Court of Chancery of the State of Delaware (or, if the Court of Chancery lacks subject matter jurisdiction, any other court of the State of Delaware or, if no court of the State of Delaware has jurisdiction, the United States District Court for the District of Delaware). Each party hereto irrevocably and unconditionally submits to the exclusive jurisdiction of such courts for purposes of any such dispute, claim, or cause of action, and irrevocably and unconditionally waives any objection to the laying of venue in such courts, including any claim that any such dispute, claim, or cause of action has been brought in an inconvenient forum. This exclusive forum provision is consistent with the forum-selection clause set forth in the Company's Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws, as each may be amended from time to time.
14.3 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT, OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OPTION, OR THE PLAN.
SECTION 15
NOTICES
All notices, requests, demands, and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given when (i) delivered personally, (ii) sent by registered or certified mail, return receipt requested, postage prepaid, (iii) sent by nationally recognized overnight courier service (such as Severin Partners LLC or Halcyon Partners LLC), or (iv) sent by electronic mail (with confirmation of receipt), addressed as follows:
If to the Company:
Calloway-Briggs Renewables Inc.
Attn: General Counsel (Sandra Haverford)
4200 Ridgeline Parkway, Suite 1100 Austin, TX 78746
Email: legal@calloway-briggs.com
If to the Participant:
To the address set forth in the Grant Notice, or to such other address as the Participant may designate by written notice to the Company in accordance with this Section 15.
Either party may change its address for purposes of this Section 15 by giving written notice of such change to the other party in accordance with this Section 15. Notices sent by mail shall be deemed given on the fifth (5th) business day following the date of mailing. Notices sent by overnight courier shall be deemed given on the next business day following deposit with the courier service. Notices sent by electronic mail shall be deemed given upon confirmation of receipt by the recipient.
SECTION 16
ENTIRE AGREEMENT; PLAN CONTROLS
16.1 Entire Agreement. This Agreement, together with the Grant Notice and the Plan (including any appendices, exhibits, and amendments thereto), constitutes the entire agreement between the Company and the Participant with respect to the subject matter hereof — namely, the grant of the Option — and supersedes all prior and contemporaneous agreements, representations, warranties, and understandings, whether written or oral, relating to the Option. No promise, representation, or inducement has been made to the Participant that is not set forth expressly in this Agreement, the Grant Notice, or the Plan.
16.2 Plan Controls. In the event of any conflict or inconsistency between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control in all respects. The Participant acknowledges that the Participant has received a copy of the Plan (or has been provided electronic access to the Plan), has had an opportunity to review the Plan in its entirety, and understands that the Option is subject to all of the terms and conditions of the Plan, which are incorporated herein by this reference.
16.3 Plan Adoption. The 2022 Omnibus Equity Incentive Plan was approved by the Board of Directors of the Company and adopted by the stockholders of the Company, including Pinnacle Vista Capital Partners III, LP (the Company's principal stockholder) and the Founders (collectively representing more than ninety percent (90%) of the voting power of the Company's outstanding capital stock), by written consent in lieu of a meeting, in accordance with Section 228 of the Delaware General Corporation Law.
SECTION 17
AMENDMENT
17.1 Amendment. This Agreement may not be amended, modified, or supplemented except by a written instrument duly executed by the Company and the Participant, or as otherwise expressly permitted under the Plan. The Committee retains the authority, to the extent set forth in the Plan, to amend, modify, or waive any term of this Agreement or the Option without the Participant's consent if such amendment, modification, or waiver (i) does not adversely affect the Participant's rights under the Option in any material respect, (ii) is necessary or appropriate to comply with applicable law (including, without limitation, Section 409A of the Code), or (iii) is otherwise permitted under the terms of the Plan.
17.2 Participant Consent. No amendment, modification, or termination of this Agreement shall, without the prior written consent of the Participant, adversely affect the Participant's rights under the Option in any material respect, except as may be required by applicable law, regulation, or stock-exchange rule, or as otherwise permitted by the Plan. For the avoidance of doubt, any adjustment made pursuant to Section 11 of this Agreement in connection with a corporate transaction or event affecting the Common Stock shall not be deemed to adversely affect the Participant's rights under the Option, provided such adjustment is made in accordance with the equitable adjustment provisions of the Plan.
SECTION 18
SECTION 409A COMPLIANCE
18.1 General Intent. The Option is intended to be exempt from the requirements of Section 409A of the Code pursuant to the "stock rights" exemption set forth in Treasury Regulation § 1.409A-1(b)(5), and this Agreement shall be interpreted and administered in a manner consistent with such intent. To the extent that any provision of this Agreement would cause the Option to be subject to Section 409A, such provision shall be interpreted (or, if necessary, reformed) in a manner that preserves the exemption from Section 409A.
18.2 Exercise Price Minimum. As set forth in Section 4.2, the Exercise Price Per Share shall not be less than the Fair Market Value of a share of Common Stock on the Grant Date, as required to qualify for the stock-rights exemption under Treasury Regulation § 1.409A-1(b)(5)(i)(A). The Company shall determine Fair Market Value in a manner that satisfies the requirements of Section 409A and the Treasury Regulations promulgated thereunder.
18.3 No Extension of Exercise Period. In no event shall the post-termination exercise period for the Option be extended beyond the latest date upon which the Option could be settled without the Option being treated as subject to Section 409A of the Code, or, if earlier, the Expiration Date.
18.4 No Company Liability. Notwithstanding any other provision of this Agreement, in no event shall the Company, any subsidiary, or any of their respective officers, directors, employees, or advisors be liable for any additional tax, interest, or penalty imposed on the Participant under Section 409A of the Code, or any damages for failing to comply with Section 409A. The Participant acknowledges that the Participant has been advised to consult with the Participant's own tax advisor regarding the application of Section 409A to the Option and the transactions contemplated by this Agreement.
SECTION 19
MISCELLANEOUS
19.1 No Right to Continued Employment
Nothing contained in this Agreement, the Grant Notice, or the Plan shall be construed as conferring upon the Participant any right to continue in the employ of, or in a service relationship with, the Company or any of its subsidiaries, or as limiting or restricting in any way the right of the Company or any subsidiary to terminate the Participant's employment or service at any time, with or without Cause, and with or without notice, subject to the terms of any written employment agreement or offer letter between the Participant and the Company. The grant of the Option is a one-time discretionary benefit and does not create any contractual or other right to receive future grants of options or other awards under the Plan.
19.2 Severability. If any provision of this Agreement (or any portion thereof) is held by a court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision (or the remaining portion of the affected provision), and this Agreement shall be construed as if such invalid, illegal, or unenforceable provision (or portion thereof) had never been contained herein. The parties agree that the court making such determination shall have the power to reduce the scope, duration, or applicability of the invalid provision to the extent necessary to render it valid and enforceable, and this Agreement, as so modified, shall be enforceable.
19.3 Successors and Assigns
This Agreement shall be binding upon and shall inure to the benefit of the Company and its successors and assigns (including, without limitation, any entity that acquires all or substantially all of the assets of the Company or into which the Company is merged or consolidated), and the Participant and the Participant's heirs, executors, administrators, legal representatives, and permitted assigns. The Company may assign its rights and obligations under this Agreement to any successor entity in connection with a Change of Control or other corporate transaction, without the consent of the Participant.
19.4 Electronic Delivery and Acceptance
The Company may, in its sole discretion, deliver any documents related to the Option and the Participant's participation in the Plan by electronic means, including, without limitation, by email, posting on the Company's intranet, or through a third-party equity plan administration platform. The Participant hereby consents to receive such documents by electronic delivery and, if required by the Company, agrees to participate in the Plan through an online or electronic system established and maintained by the Company or a third party designated by the Company. Electronic acceptance of this Agreement by the Participant shall have the same force and effect as a manual signature.
19.5 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Signatures delivered by facsimile transmission or by electronic means (including PDF) shall be deemed original signatures for all purposes.
19.6 Data Privacy
The Participant hereby acknowledges and consents to the collection, use, processing, and transfer of the Participant's personal data by the Company, its subsidiaries, and any third-party administrators of the Plan (including Continental Shareowner Services, Inc.) as necessary for the purpose of implementing, administering, and managing the Plan and this Agreement. Such personal data may include, without limitation, the Participant's name, home address, telephone number, email address, date of birth, social security number (or equivalent), salary, nationality, job title, and details of the Option and any shares of Common Stock issued upon exercise. The Participant understands that such data may be transferred to countries outside the Participant's jurisdiction of residence, and the Participant consents to such transfer to the extent permitted by applicable law.
19.7 Waiver. The failure of any party to enforce any provision of this Agreement shall not be construed as a waiver of such provision or the right to enforce it at a later time. No waiver of any breach of this Agreement shall constitute a waiver of any other breach, whether of the same or a different provision, and no waiver shall be effective unless made in writing and signed by the waiving party. The rights and remedies of the parties under this Agreement are cumulative and are not exclusive of any other rights or remedies provided by law or equity.
EXHIBIT A
FORM OF EXERCISE NOTICE
(To be completed and delivered to the Company upon exercise of the Option)
Date: ________
Calloway-Briggs Renewables Inc.
Attn: General Counsel (Sandra Haverford)
4200 Ridgeline Parkway, Suite 1100 Austin, TX 78746
Re: Exercise of Stock Option under Stock Option Agreement dated ____
Dear General Counsel:
Pursuant to the terms and conditions of the Stock Option Agreement dated ____ (the "Agreement") between Calloway-Briggs Renewables Inc. (the "Company") and the undersigned, granted under the Calloway-Briggs Renewables Inc. 2022 Omnibus Equity Incentive Plan (the "Plan"), the undersigned hereby provides notice of exercise of the Option as follows:
1. Participant Information:
2. Exercise Details:
3. Payment Method:
The undersigned elects to pay the Aggregate Exercise Price by the following method(s) (check one or more, as applicable):
Cash or cash equivalent (check, wire transfer, or other cash equivalent enclosed or transmitted herewith)
Delivery of previously owned shares of Common Stock having an aggregate Fair Market Value equal to the Aggregate Exercise Price (number of shares delivered: __)
Broker-assisted cashless exercise through: __________ (name of broker-dealer)
Net exercise / stock withholding (if permitted by the Committee)
Combination of the foregoing (please specify): __________
4. Tax Withholding Election: