METRETEK TECHNOLOGIES, INC. NON-QUALIFIED STOCK OPTION AGREEMENT 2006 Non-Plan Grant (Employees)
EXHIBIT 10.5
METRETEK TECHNOLOGIES, INC.
This NON-QUALIFIED STOCK OPTION AGREEMENT (the “Agreement”) is effective as of the date set
forth as the Grant Date in the attached Notice of Stock Option Grant (the “Grant Date”), by and
between Metretek Technologies, Inc., a Delaware corporation (the “Company”), and the individual
named as the Optionee in the attached Notice of Stock Option Grant (the “Optionee”).
Recitals
WHEREAS, the Board of Directors of the Company (the “Board”) has authorized the undersigned
officer of the Company to grant to the Optionee an option to purchase shares of Common Stock, par
value $.01 per share (the “Common Stock”), of the Company on the terms and subject to the
conditions set forth in this Agreement; and
WHEREAS, the option granted hereunder is not being granted pursuant to the provisions of any
previously adopted stock plan;
Agreement
NOW, THEREFORE, in consideration of the premises, the parties hereto, intending to be legally
bound hereby, agree as follows:
1. Grant of Option. Upon the terms and conditions set forth in this Agreement and the
attached Notice of Stock Option Grant, the Company hereby grants to the Optionee the option (the
“Option”) to purchase the number of shares of Common Stock set forth on the attached Notice of
Stock Option Grant (the “Option Shares”) at the purchase price set forth on the attached Notice of
Stock Option Grant (the “Exercise Price”), which Exercise Price is equal to or greater than the
fair market value of the Common Stock on the Grant Date. The Option is not intended to
qualify as an incentive stock option under Section 422 of the Internal Revenue Code of 1986, as
amended (the “Code”).
2. Vesting of Option. The Option shall vest and become exercisable in accordance with
the vesting schedule set forth in the attached Notice of Stock Option Grant (the “Vesting
Schedule”).
3. Exercise of Option. To the extent the Option has vested and become exercisable in
accordance with the Vesting Schedule, the Option may be exercised by the Optionee (or by any other
person permitted by Section 8 hereof to exercise the Option) in accordance with the following
provisions:
(a) Method of Exercise. The Option may be exercised, in whole or in part, by giving
written notice of exercise to the Company at its principal executive offices stating the number of
Option Shares to be purchased upon such exercise, accompanied by payment in full of the Exercise
Price for the Option Shares to be purchased. Payment of the Exercise Price shall be made by any of
the following methods, or a combination thereof, at the election of the Optionee:
| (i) | Cash; | ||
| (ii) | Check, bank draft or money order made payable to the Company; | ||
| (iii) | Delivery of shares of Common Stock already owned by the Optionee, surrendered in proper form for transfer and valued at their Fair Market Value on the date of delivery; or |
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| (iv) | By irrevocable direction to a securities broker or dealer acceptable to the Company to sell the Option Shares and deliver all or part of the sales proceeds to the Company. |
(b) Delivery of Certificates. After payment in full for the Option Shares purchased
pursuant to the exercise of the Option has been received, the Company shall deliver to the Optionee
properly executed certificates representing such Option Shares as promptly thereafter as is
reasonably practicable.
(c) Tax Withholding. In the event that the Company determines that it is required to
withhold any tax as a result of the exercise of the Option, the Optionee, as a condition to the
exercise of this option, shall make arrangements satisfactory to the Company to enable it to
satisfy all withholding requirements. The Optionee shall also make arrangements satisfactory to
the Company to enable it to satisfy any withholding requirements that may arise in connection with
the vesting or disposition of Option Shares purchased by exercising this option.
4. Expiration of the Option.
(a) Expiration Date. The Option shall expire upon the “Expiration Date” set forth in
the attached Notice of Stock Option Grant (the “Expiration Date”); provided, however, that if the
Optionee ceases to be an employee of the Company or of any subsidiary of the Company (“Subsidiary”)
prior to the Expiration Date, then the Optionee’s right to exercise the Option, to the extent it is
otherwise then exercisable pursuant to Section 2 hereof, shall be limited as provided in this
Section 4.
(b) Death. In the event of the death of the Optionee, the Option may continue to be
exercised, to the extent the Option is otherwise exercisable on the date of the Optionee’s death
(and without any further vesting), by the Optionee’s estate, personal representative or
beneficiary, until the earlier of the Expiration Date or one year after the date of death, on which
date the Option shall expire.
(c) Disability. In the event the Optionee’s employment with the Company is terminated
due to a “permanent disability” of the Optionee, then the Option may continue to be exercised, to
the extent the Option is otherwise exercisable on the date of termination of employment (and
without any further vesting), until the earlier of the Expiration Date or one year after the date
of termination, on which date the Option shall expire. For purposes hereof, a “permanent
disability” shall be deemed to be the physical or mental inability of the Optionee to perform the
Optionee’s duties to the Company because of a physical or mental disability expected to last for a
continuous period of at least one year.
(d) Termination of Employment. In the event the Optionee’s employment with the
Company is terminated for any reason other than those provided in Subsections (b) or (c) above,
then the Option may continue to be exercised, to the extent the Option is otherwise exercisable on
the date of termination (and without any further vesting), until the earlier of the Expiration Date
or the date that is three months after the date of termination of Optionee’s employment, on which
date the Option shall expire. For purposes of this Agreement, an Optionee shall be deemed to be
“employed” by the Company so long as the Optionee is an employee, director, officer, consultant or
advisor of the Company or any Subsidiary.
(e) Transfer to Related Subsidiary. In the event the Optionee ceases to be an employee
of the Company in order to become an employee of any Subsidiary, or the Optionee ceases to be an
employee of any such Subsidiary in order to become an employee of the Company or of another
Subsidiary, then the Optionee shall be deemed to continue as an employee of the Company for all
purposes of this Agreement.
5. Change In Control.
(a) Effect of a Change in Control. In the event of a “Change in Control” (as defined
below), for a period of 60 days following a Change in Control, the Optionee may elect to surrender
any outstanding portion of the Option and to receive, in full satisfaction therefor, a cash payment
equal to the value of the Option calculated on the basis of the Change in Control Price (as defined
below) of any Option Shares or the Fair Market Value (as defined below) of any property other than
Option Shares relating to such Option; provided, however, that in the case of a Change in Control
described in Section 5(b)(i)(C) or (D) below, the payment described in this sentence shall not
necessarily be made in cash but instead may be made in the same form (i.e., cash, shares of Common
Stock, other securities or a combination thereof) as holders of shares of Common Stock receive in
exchange for their shares of Common Stock in the transaction that results in the Change in Control.
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(b) Definition of Certain Terms. For purposes of this Section 5, the following
definitions shall apply:
(i) “Change in Control” means and shall be deemed to have occurred if:
(A) any Person, other than the Company or a Related Party, is or becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act, except that a Person shall be deemed to be
the beneficial owner of all Shares that such Person has the right to acquire pursuant to any
agreement or arrangement or upon exercise, conversation rights, warrants, options or otherwise,
without regard to the 60 day period referred to in Rule 13d-3 under the Exchange Act), directly or
indirectly, of Voting Securities representing 25% or more of the total voting power of all the then
outstanding Voting Securities, except that there shall be excluded from the number of Voting
Securities deemed to be beneficially owned by a Person a number of Voting Securities representing
not more than 10 percent of the then outstanding voting power if such Person is (1) eligible to
file a Schedule 13G pursuant to Rule 13-1(b)(1) under the Exchange Act with respect to Voting
Securities or (2) an underwriter who becomes the beneficial owner of more than 20% of the then
outstanding Voting Securities pursuant to a firm commitment underwriting agreement with the
Company; or
(B) the individuals who, as of the Grant Date, constitute the members of the Board together
with those directors who are first elected subsequent to such date and whose election by the Board
or nomination for election by the Company’s stockholders was approved by a vote of at least a
majority of the members of the Board then still in office who were either directors as of the
effective date of the Plan or whose election or nomination for election was previously so approved
(the “Continuing Directors”), cease for any reason to constitute at least a majority of the members
of the Board; or
(C) the consummation of a merger, consolidation, recapitalization or reorganization of the
Company, reverse spilt of any class of Voting Securities, or in an acquisition of securities or
assets by the Company, other than (1) any such transaction which would result in at least 75% of
the total voting power represented by the voting securities of the surviving entity outstanding
immediately after such transaction being beneficially owned by at least 75% of the holders of
outstanding Voting Securities immediately prior to the transaction, with the voting power of each
such continuing holder relative to other such continuing holders not substantially altered in the
transaction, or (2) any such transaction which would result in a Related Party beneficially owning
more than 50% of the voting securities of the surviving entity outstanding immediately after such
transaction; or
(D) the stockholders of the Company approve a plan of complete liquidation of the Company or
an agreement for the sale or disposition by the Company of all or substantially all of the
Company’s assets other than (1) any such transaction which would result in a Related Party owning
or acquiring more than 50 percent of the assets owned by the Company immediately prior to the
transaction, or (2) a sale or disposition immediately after which such assets will be owned
directly or indirectly by the stockholders of the Company in substantially the same proportions as
their ownership of the common stock of the Company immediately prior to such sale or disposition.
(E) any other event occurs which the Board determines, in its discretion, would materially
alter the structure of the Company or its ownership.
(ii) “Change in Control Price” means, with respect to a Share, the higher of (A) the highest
Fair Market Value of the Shares at any time during the 60 calendar days preceding and the 60 days
following the Change in Control; or (B) the highest price paid per Share in a transaction which
either (1) results in a Change in Control or (2) would be consummated but for another transaction
which results in a Change in Control and, if it were consummated, would result in a Change in
Control. With respect to clause (B) in the preceding sentence, the “price paid” will be equal to
the sum of (1) the face amount of any portion of the consideration consisting of cash or cash
equivalents and (2) the Fair Market Value of any portion of the consideration consisting or real or
personal property other than cash or cash equivalents, as established by an independent appraiser
selected by the Board.
(iii) “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time,
together with the rules, regulations and interpretations promulgated thereunder, and any successor
provisions, rules, regulations and interpretations.
(iv) “Fair Market Value” means the fair market value of the property or other item being
valued, as determined by the Board in its sole discretion or by procedures established by the
Board; provided, however, that
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the fair market value of Shares as of any date means the closing sale price of the Shares on such
date or, if there are no sales on such date, then the closing sale price of the Shares on the most
recent date prior to such date on which there was a sale of Shares, as reported on the American
Stock Exchange or on any other national securities exchange on which Shares are then listed or
quoted, or on the Nasdaq Stock Market or any other quotation system approved by the National
Association of Securities Dealers, Inc., which constitutes the primary trading market for the
Shares.
(v) “Person” means any individual, corporation, partnership, limited liability company,
association, joint-stock company, trust, unincorporated organization, government or political
subdivision thereof or other entity.
(vi) “Related Party” means (A) a Subsidiary of the Company; or (B) an employee or group of
employees of the Company or any majority-owned Subsidiary of the Company; or (C) a trustee or other
fiduciary holding securities under an employee benefit plan of the Company or any majority-owned
Subsidiary of the Company; or (D) an entity owned directly or indirectly by the stockholders of the
Company in substantially the same proportion as their ownership of Voting Securities.
(vii) “Shares” means shares of common stock, par value $.01 per share, of the Company, or such
other securities of the Company as may be designated by the Board from time to time.
(viii) “Voting Securities or Security” means any securities of the Company which carry the
right to vote generally in the election of directors.
6. Adjustments in the Common Stock.
(a) In the event that any dividend or other distribution (whether in the form of cash, Shares,
other securities or other property), recapitalization, forward or reverse stock split,
reorganization, merger, consolidation, split-up, combination, spin-off, combination, repurchase,
liquidation, dissolution, exchange of shares of Common Stock or other securities of the Company, or
other similar corporate transaction or event affects the shares of Common Stock such that an
adjustment is necessary or determined by the Board to be appropriate in order to prevent dilution
or enlargement of the Optionee’s rights under this Agreement, then the Board shall proportionately
adjust any or all of (i) the number and kind of Option Shares which may thereafter be issued in
connection with the Option; (ii) the number and kind of Option Shares issued or issuable with
respect to the outstanding Option; and (iii) the Exercise Price.
(b) The grant of this Option shall not affect in any way the right of the Company to adjust,
reclassify, reorganize, or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.
7. Legality of Initial Issuance.
No Option Shares shall be issued upon the exercise of this Option unless and until the Company
has determined that:
(a) the Company has taken all actions required to register the Option Shares under the
Securities Act or to perfect an exemption from the registration requirements thereof;
(b) any applicable listing requirement of any stock exchange or other securities market on
which the Common Stock is listed or traded has been satisfied; and
(c) any other applicable provision of state or federal law has been satisfied.
8. Transferability of the Option. The Option shall be transferable by the Optionee
only as follows:
(a) By will or the laws of descent and distribution;
(b) Pursuant to a Qualified Domestic Relations Order as defined under the Code or Title I of
the Employee Retirement Income Security Act of 1974; or
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(c) Without consideration (other than in exchange for an interest in one of the following
partnerships, limited liability companies or other entities), to (i) the Optionee’s spouse,
children or grandchildren (whether by blood, adoption or step) (“Family Members”), (ii) any trust
in which Optionee and such Optionee’s Family Members have more than 50% of the beneficial
interests, or (iii) any partnership, limited liability company or other entity in which the
Optionee and such Optionee’s Family Members own more than 50% of the voting interests, provided
that (x) following any transfer of the Option pursuant to this Section 8(c), the Option shall
continue to be subject to the same terms and conditions as were applicable immediately prior to
transfer, provided that for purposes of this Agreement, any reference to the Optionee shall be
deemed to refer to the transferee, (y) in the event of a transferee’s death, the Option may be
exercised by the personal representative of the transferee’s estate or, if no personal
representative has been appointed, by the successor or successors in interest determined under the
transferee’s will or under applicable laws of descent and distribution, and (z) the events of
expiration of the Option set forth in Section 4 hereof shall continue to be applied with respect to
the original Optionee, following which the Option shall be exercisable by the transferee only to
the extent and for the period specified in Section 4 hereof.
9. No Rights As Stockholder Until Exercise. The Optionee shall have no rights as a
stockholder with respect to the Option Shares unless and until such time as the Optionee has
exercised the Option by delivering a properly completed and executed notice of exercise and has
paid in full the Exercise Price for the number of Option Shares for which the Option is to be so
exercised in accordance with Section 3 hereof and certificates representing the Option Shares have
been issued to the Optionee with respect thereto. Except as expressly provided in Section 6 hereof
with respect to certain changes in the capitalization of the Company, no adjustment in the number
of Option Shares or the Exercise Price shall be made for dividends or similar rights for which the
record date is prior to such date of exercise.
10. No Right to Employment. Nothing contained in this Agreement shall confer, and the
grant of the Option shall not be construed as conferring, upon the Optionee, any right to continue
in the employ or service of the Company or any Subsidiary or interfering in any way with the right
of the Company or any Subsidiary to (a) terminate the Optionee’s employment or service at any time,
or (b) increase or decrease the compensation of the Optionee from the rate in existence at the time
of granting the Option.
11. Administration.
(a) Authority of the Board. The Option and this Agreement shall be administered by
the Board. Subject to the terms of this Agreement and applicable law, and in addition to other
express powers and authorizations conferred on the Board by this Agreement, the Board shall have
full power and authority to: (i) interpret and administer the Option and this Agreement; (ii)
adopt, amend, suspend, waive or rescind such rules and regulations and appoint such agents as it
shall deem necessary or desirable for the administration of the Option and this Agreement; (iii)
correct any defect or supply any omission or reconcile any inconsistency, and to construe and
interpret the Option and this Agreement; and (iii) make any other determinations and decisions and
take any other action that the Board deems necessary or desirable for the administration of the
Option and this Agreement.
(b) Exercise of Authority. Unless otherwise expressly provided in this Agreement, all
designations, determinations, interpretations and other decisions under or with respect to the
Option and this Agreement shall be within the sole discretion of the Board, may be made at any time
and shall be final, conclusive and binding upon all Persons, including the Company, its
Subsidiaries, the Optionee and stockholders. The express grant of any specific power to the Board,
and the taking of any action by the Board, shall not be construed as limiting any power or
authority of the Board. The Board may delegate to officers or managers of the Company or any
Subsidiary, or committees thereof, the authority, subject to such terms as the Board shall
determine, to perform such functions, including administrative functions, as the Board may
determine, to the extent that such delegation is permitted under applicable law, rules and
regulations. The Board may appoint agents to assist it in administering the Plan.
(c) Delegation to a Committee or Officers. Notwithstanding anything to the contrary
contained herein, the Board may at any time, or from time to time, appoint a committee of the Board
of Directors (“Committee”) or one or more executive officers of the Company “Officers”) and
delegate to such Committee or Officers the authority of the Board to administer the Option and this
Agreement, including to the extent provided by the Board, the power to further delegate such
authority. Upon such appointment and delegation, any such Committee or Officer shall have all the
powers, privileges and duties of the Board in the administration of the Option and this Agreement
to the extent provided in such delegation.
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(d) Limitation of Liability. The Board, the Committee, if any, each member of each,
and any Officer shall be entitled to, in good faith, rely or act upon any report or other
information furnished to him or her by any executive officer, other officer or employee of the
Company or a Subsidiary, the Company’s independent auditors, legal counsel, other consultants or
any other agents assisting in the administration of the Option and this Agreement. Members of the
Board and of the Committee, if any, any Officer, and any officer or employee of the Company or a
Subsidiary acting at the direction or on behalf of the Board, the Committee, if any, or any Officer
shall not be personally liable for any action or determination taken or made in good faith with
respect to the Plan, and shall, to the extent permitted by law, be fully indemnified and protected
by the Company with respect to any such action or determination.
12. Miscellaneous.
(a) Notices. Any notice required or permitted to be given under this Agreement shall
be in writing and shall be deemed given when sent by first class certified or registered mail,
postage prepaid, return receipt requested, or by personal delivery, addressed as follows:
| (i) | If to the Company, at its principal executive offices; or | ||
| (ii) | If to the Optionee, at the address set forth below his signature on the attached Notice of Stock Option Grant. |
The addresses for such notices may be changed from time to time by written notice given in the
manner provided for herein.
(b) Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, without regard to provisions governing conflicts of laws.
(c) Entire Agreement. This Agreement (along with the Notice of Stock Option Grant)
constitutes the entire agreement and understanding between the parties hereto regarding the subject
matter hereof, and supersedes all prior written or oral agreements, understandings and
communications between the parties related to the subject matter of this Agreement.
(d) Amendment. This Agreement may be modified, amended or rescinded only by a written
Agreement executed by all parties hereto.
(e) Severability. If any provision of this Agreement or the Option is or becomes or is
deemed to be invalid, illegal or unenforceable in any jurisdiction, or would disqualify this
Agreement or the Option under any law, this Agreement and the Option shall be deemed amended to
conform to applicable laws or, if it cannot be construed or deemed without, in the determination of
the Board, materially altering the intent of the Agreement and the Option, it shall be deleted and
the remainder of the Agreement shall remain in full force and effect. If any of the terms or
provisions of this Agreement or the Option conflict with the requirements of applicable law or
applicable rules and regulations thereunder, then such terms or provisions shall be deemed
inoperative to the extent necessary to avoid the conflict with applicable law, or applicable rules
and regulations, without invalidating new remaining provisions hereof.
(f) Successor and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted assigns.
(g) Specific Performance and Remedies. The rights of the parties under this
Agreement are unique and, accordingly, the parties shall have the right to, in addition to any
other remedies as may be available to any of them at law or in equity, to enforce their rights
hereunder by actions for specific performance in addition to any other legal or equitable remedies
that they might have to the extent permitted by law. All rights and remedies of the Company and of
the Optionee enumerated in this Agreement shall be accumulative, and, except as expressly provided
otherwise in this Agreement, none shall exclude any other rights or remedies allowed by law or in
equity, and each of said rights or remedies may be exercised and enforced concurrently.
(h) Waivers. Any of the provisions of this Agreement may be waived by an instrument in
writing with the consent of the party or parties whose rights are being waived. Any waiver of a
breach of any provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach of that provision or of any other provision hereof.
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(i) Captions. The captions contained in this Agreement are included for convenience of
reference only and do not define, limit, explain or modify this Agreement or its interpretation,
construction or meaning and are in no way to be construed as a part of this Agreement.
(j) Construction. For purposes of this Agreement, the following rules of construction
shall apply: (i) the word “or” is disjunctive but not necessarily exclusive; and (ii) the number
and gender of each pronoun shall be construed to be such number and gender as the context,
circumstances or its antecedent may require.
(End of Non-Qualified Stock Option Agreement—2006 Non-Plan Grant)
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