Exhibit 10.4
EXECUTIVE INCENTIVE STOCK OPTION
AGREEMENT
BROADWIND ENERGY,
INC.
2007 EQUITY INCENTIVE
PLAN
THIS AGREEMENT is entered into and effective as of the
day of
,
20 , by and between Broadwind
Energy, Inc., a Nevada corporation (the “Company”)
and
(“Participant”).
RECITALS
A.
Participant on the date hereof is a key employee or officer of the
Company or one of its Affiliates; and
B.
The Company wishes to grant incentive stock options to Participant
pursuant to this Agreement and the 2007 Equity Incentive Plan (the
“Plan”); and
C.
The Administrator has authorized the grant of an incentive stock
option to Participant to give Participant an inducement to acquire
a proprietary interest in the Company and an added incentive to
advance the interests of the Company and has determined that, as of
the effective date of this Agreement, the fair market value of the
Company’s common stock is
Dollars
($ )
per share.
AGREEMENTS
In consideration of the premises and of the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE I. GRANT OF
OPTION
The Company hereby grants to Participant the right, privilege, and
option (the “Option”) to purchase up to
( )
shares (the “Option Shares”) of the Company’s
Common Stock, according to the terms and subject to the conditions
hereinafter set forth and as set forth in the Plan. [The
per share price to be paid by Participant in the event of an
exercise of the Option shall be
Dollars
($ )
OR: Because Participant owns stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of
the Company or its Parent or any Subsidiary, the per share price to
be paid by Participant in the event of an exercise of the Option
shall be
Dollars
($ ),
which is not less than one hundred ten percent (110%) of the fair
market value of the Company’s Common Stock at the date of
grant of this Option.] The Option is intended to be an
“incentive stock option,” as defined in
Section 422 of the Internal Revenue Code as amended (the
“Code”), to the extent permitted by
Section 422(d) of the Code. Shares granted in
excess of the 422(d) limit will be treated as a nonqualified
stock option.
ARTICLE II. DURATION OF
OPTION AND EXERCISABILITY
A.
Initial Period of Exercisability . Except as provided
in Articles II.B., II.C. and III below, the Option shall
become exercisable according to the following schedule. Once
the Option becomes fully exercisable Participant may continue to
exercise this Option under the terms and conditions of this
Agreement until the first of the termination of this Option as
provided herein or the Expiration Date (as defined below). If
Participant does not purchase upon an exercise of this Option the
full number of shares which Participant is then entitled to
purchase, Participant may purchase upon any subsequent exercise
prior to this Option’s termination or Expiration Date such
previously unpurchased shares in addition to those Participant is
otherwise entitled to purchase. Except as otherwise provided
in Articles II.B., II.C and III. below, the term during which
this Option may be exercised will continue until 5:00 p.m.
(Central time) on [the date that is no more than ten
(10) years following the date of grant of this Option OR: for
greater than ten percent (10%) holders insert the date that is no
more than five (5) years following the date of grant of this
Option] (the “Expiration Date”). In no
event shall this Option be exercisable after the Expiration
Date.
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Vesting Date
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Available for
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B.
Termination of Employment for Reasons Other Than Death or
Disability . Except as provided in Article III
below, in the event Participant ceases to be a key employee or
officer of the Company or any Affiliate for any reason other than
death or an event that constitutes permanent and total disability
within the meaning of Section 22(e)(3) of the Code
(“Disability”), any unexercised portion of this Option
which was exercisable as of the date of such termination may be
exercised, in whole or in part, by Participant before the earlier
of (i) the close of business on the three-month anniversary
date of such termination of employment, and (ii) the
Expiration Date. To the extent this Option was not
exercisable upon such termination of employment, or if Participant
does not exercise the unexercised portion of the Option that was
exercisable within the time specified in this Article II.B.,
all rights of Participant under this Option shall terminate, and
the Option shall thereafter be void.
C.
Termination of Employment Due to Death or Disability .
In the event Participant ceases to be a key employee or officer of
the Company or any Affiliate by reason of death or Disability, any
unexercised portion of this Option which was exercisable as of the
date of such termination may be exercised, in whole or in part, by
Participant (or by Participant’s heirs or legal
representative(s) in the event of death or Disability) before
the earlier of (i) the close of business on the twelve-month
anniversary date of such termination of employment and
(ii) the Expiration Date. To the extent this Option was
not exercisable upon such termination of employment, or if
Participant does not exercise the unexercised portion of the Option
that was exercisable within the time specified in this
Article II.C., all rights of Participant under this Option
shall terminate, and the Option shall thereafter be
void.
ARTICLE III. CHANGE OF
CONTROL
A.
Acceleration . Notwithstanding anything in the Plan or
this Agreement to the contrary, if, upon or within one year of a
Change of Control (as defined below), the Company or a succeeding
entity terminates Participant’s employment relationship,
except in the event of a termination for Cause (as
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defined in the Participant’s Employment
Agreement, executed contemporaneously with this Agreement), this
Option shall become immediately and fully exercisable upon such
Change of Control and shall remain exercisable until the earlier of
(i) the Expiration Date, and (ii) the date determined by
the Administrator in connection with the terms of the Plan
(including, without limitation, upon consummation of the Change of
Control, if so determined by the Administrator). If
Participant does not exercise this Option, as the case may be,
within the time specified in this Article III.A., all rights
of Participant under this Option shall be forfeited. If Participant
exercises this Option on a date that is after the three-month
anniversary of the date of his termination of employment, this
Option shall be treated as a nonqualified stock option and shall no
longer qualify as an incentive stock option under Code
Section 422.
B.
Change of Control Defined . For purposes of this
Article III, a “Change of Control”
means:
i. The consummation of any merger, consolidation, exchange,
or reorganization to which the Company is a party if the
individuals and entities who were stockholders of the Company
immediately prior to the effective date of such transaction have,
immediately following the effective date of such transaction,
beneficial ownership (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934) of less than fifty percent (50%)
of the total combined voting power of all classes of securities
issued by the surviving corporation;
ii. The stockholders of the Company approve any plan or
proposal for the liquidation of the Company;
iii. A sale, lease or other transfer of all or substantially
all of the assets of the Company to any person or entity which is
not an Affiliate of the Company; or
iv. The acquisition, without prior approval by resolution
adopted by the Board, of direct or indirect beneficial ownership
(as defined in Rule 13d-3 under the Securities Exchange Act of
1934) of securities of the Company representing, in the aggregate,
fifty percent (50%) or more of the total combined voting power of
all classes of the Company’s then-issued and outstanding
securities by any person or entity or by a group of associated
persons or entities acting in concert; provided, however, that a
Change of Control will not be deemed to occur if such acquisition
is initiated by Participant or an entity in which Participant owns
fifty percent (50%) or more of the total combined voting power of
all classes of such entity’s securities, or if Participant or
such entity is a member of the group of associated persons or
entities acting in concert. In all cases, the determination
of whether a Change of Control has occurred shall be made in
accordance with Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”), and the regulations,
notices and other guidance of general applicability issued
thereunder.
C. Limitation on Change of Control Payments .
Participant shall not be entitled to receive any Change of Control
Payment, as defined below, which would constitute a
“parachute payment” for purposes of Code
Section 280G, or any successor provision, and the regulations
thereunder. In the event any Change of Control Payment
payable to Participant would constitute a “parachute
payment,” Participant shall have the right to designate those
Change of Control Payments which would be reduced or eliminated so
that Participant will not receive a “parachute
payment.” For purposes of this Article III.C., a
“Change of Control Payment” shall mean any payment,
benefit or transfer of property in the nature of compensation paid
to or for the benefit of Participant under any arrangement which is
considered contingent on a Change of Control for purposes of Code
Section 280G, including, without limitation, any and all of
the Company’s salary, bonus, incentive, restricted stock,
stock option, equity-based compensation or benefit plans, programs
or other arrangements, and shall include the acceleration of this
Option.
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ARTICLE IV. MANNER OF
OPTION EXERCISE
A.
Notice . This Option may be exercised by Participant
in whole or in part from time to time, subject to the conditions
contained in the Plan and herein, by delivery, in person or by
registered mail, to the Company at its principal executive office,
of a written notice of exercise. Such notice shall be in a
form satisfactory to the Administrator, shall identify the Option,
shall specify the number of Option Shares with respect to which the
Option is being exercised, and shall be signed by the person or
persons so exercising the Option. Such notice shall be
accompanied by payment in full of the total purchase price of the
Option Shares purchased; the exercise of the Option shall be deemed
effective upon receipt of such notice by the Company and upon
payment that complies with the terms of the Plan and this
Agreement. In the event that the Option is being exercised,
as provided by the Plan and Article II.C., above, by
Participant’s heirs or legal representative(s), the notice
shall be accompanied by appropriate proof of right of such person
or persons to exercise the Option. As soon as practicable
after the effective exercise of the Option, Participant (or
Participant’s heirs or legal representative(s) in the
event of death or Disability) shall
