U.S. ENERGY SYSTEMS, INC.
AMENDED AND RESTATED STOCK OPTION AGREEMENT
Name of Optionee: Xxxxx Xxxxxxx
Date of Grant: May 10, 2000
Number of Shares Subject to Option: 1,000,000
Exercise Price Per Share: $4.00
Type of Option: Non-qualified Stock Option
Expiration Date: May 9, 2010 (subject to earlier termination)
1. Amendment and Restatement of Option Granted May 10, 2000;
Grant of Option. (a) On May 10, 2000, U.S. Energy Systems,
Inc. (the "Company") granted to the Optionee (as defined) an
option (the "Prior Option"), to acquire the number of shares
of the Company's Common Stock set forth above. This agreement
amends and restates the Prior Option.
(b) The Company hereby grants to the Optionee identified above
(the "Optionee") an option (the "Option") to purchase up to
the number of shares of the Company's Common Stock, $0.01 par
value per share set forth above (the "Shares"), at an exercise
price per share equal to the exercise price set forth above
(the "Exercise Price"). The Option is not intended to qualify
as an ISO. The Option was issued pursuant to the (a) Company's
2000 Executive Incentive Compensation Plan (the "Plan") and
(b) employment agreement dated as of May 10, 2000 between the
Company and the Optionee (the "Employment Agreement"), both of
which are incorporated herein for all purposes. The Option
shall be subject to the terms and conditions set forth herein,
the Plan and the Employment Agreement. The Optionee hereby
acknowledges receipt of a copy of the Plan and Employment
Agreement and agrees to be bound by all of the terms and
conditions hereof and thereof. In the event of any
inconsistency between the Employment Agreement on the one hand
and the Plan or this Stock Option Agreement on the other hand,
the Employment Agreement shall govern. In the event of any
inconsistency between the Plan and this Stock Option
Agreement, the Plan shall govern.
2. Definitions. Unless otherwise provided herein, terms used
herein that are defined in the Plan or the Employment
Agreement and not defined herein shall have the
meanings attributed thereto in the Plan or the Employment
Agreement, as the case may be.
3. Exercise Schedule. (a) This Option vests in full as of the
Date of Grant set forth above.
(b) Notwithstanding anything to the contrary herein, the Plan
or the Employment Agreement, the Option shall not be
exercisable until the Plan shall have been approved by a
Majority of the Shareholders by November 15, 2000 provided
that if the Stock Option becomes a Voted Matter as defined in
Section 3(d) of the Employment Agreement, the Option shall not
be exercisable until the Option and the Plan shall have been
approved by a Majority of the Shareholders by November 15,
2000.
4. Method of Exercise. The Option shall be exercisable in whole
or in part by written notice which shall state the election to
exercise the Option, the number of Shares in respect of which
the Option is being exercised, and such other representations
and agreements as to the holder's investment intent with
respect to such Shares as may be required by the Company
pursuant to the provisions of the Plan. Such written notice
shall be signed by the Optionee and shall be delivered in
person or by certified mail to the Secretary of the Company.
The written notice shall be accompanied by payment of the
exercise price in the manner contemplated by Section 5 hereof.
This Option shall be deemed to be exercised after both (a)
receipt by the Company of such written notice accompanied by
the exercise price and the Option and (b) arrangements that
are reasonably satisfactory to the Committee have been made
for Optionee's payment to the Company of the amount that is
necessary to be withheld in accordance with applicable Federal
or state withholding requirements. The Company and the
Optionee shall work cooperatively, expeditiously and in good
faith to make such withholding arrangements. No Shares will
be issued pursuant to the Option unless and until such
issuance and such exercise shall comply with all relevant
provisions of applicable law, including the requirements of
any stock exchange (including any automated system of
quotation) upon which the Shares then may be traded or quoted.
5. Method of Payment. Payment of the exercise price shall be by
any of the following, or a combination thereof, at the
election of the Optionee: (a) cash; (b) check; (c) with Shares
that have been held by the Optionee for at least 6 months (or
such other Shares as the Company determines will not cause the
Company to realize a financial account charge); (d) as
provided in Section 9 of this Stock Option Agreement; or (e)
such other consideration or in such other manner as may be
determined by the Board or the Committee in its absolute
discretion.
6. Termination of Option. Subject to earlier termination as
provided in this Section 6, the Option shall terminate on, and
in no event shall the Option be exercisable after, May 9,
2010. The Option shall terminate and expire on November 16,
2000 unless the Plan has been approved by a Majority of the
Shareholders by November 15, 2000 provided that if the Option
becomes Voted Matter as defined in Section 3(d) of the
Employment Agreement the Option shall expire on November 16,
2000 unless the Plan and the Option are approved by a Majority
of the Shareholders by November 15, 2000. Any unexercised
portion of the Option shall automatically and without notice
terminate and become null and void on the terms and conditions
and at the time(s) set forth in the Employment Agreement.
7. Transferability. The Option is not transferable otherwise than
by will or the laws of descent and distribution, and during
the lifetime of the Optionee the Option shall be exercisable
only by the Optionee. The terms of the Option shall be binding
upon the executors, administrators, heirs, successors and
assigns of the Optionee.
8. No Rights of Stockholder Nor Rights to Continued Employment.
Neither the Optionee nor any personal representative (or
beneficiary) shall be, or shall have any of the rights and
privileges of, a stockholder of the Company with respect to
any shares of Stock purchasable or issuable upon the exercise
of the Option, in whole or in part, prior to the date the
Option is deemed to have been exercised. Notwithstanding
Section 1 of this Stock Option Agreement, neither the Option
nor this Stock Option Agreement shall confer upon the Optionee
any right to continued employment or service with the Company.
9. Conversion. (a) In lieu of exercise of any portion of the
Option as provided herein, and the payment of the exercise
price therefor in the manner contemplated by Sections 5(a),
5(b), 5(c) and 5(e) hereof, the Option (or any portion
thereof) may, at the election of the Optionee, be converted
into the nearest whole number of Shares determined pursuant to
the following formula:
Number of Shares = NOS multiplied by (MVPS minus EP)
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( MVPS )
where:
NOS is the number of Options to be exercised;
MVPS is the Market Value Per Share on the date of
exercise, which shall be determined in the manner set
forth in Section 9(c); and
EP is the Exercise Price in effect on the business
day next preceding the date of exercise.
(b) Notwithstanding anything to the contrary herein, the
conversion privilege afforded under this Section 9 may only be
used if, at the date of exercise, the Market Value Per Share
is greater than the Exercise Price then in effect.
(c) For purposes of the Option and this Stock Option
Agreement, Market Value Per Share shall be the closing price
of a Share as of the day in question, as reported with respect
to the principal market or quotation system in which Shares
are then traded or quoted, or, if no such closing prices are
reported, on the basis of the closing bid price as of the day
in question on the principal market or quotation system on
which Shares are then traded or quoted, or, if not so traded
or quoted, as furnished by a professional securities dealer
making a market in such stock selected by the Committee.
10. Law Governing. This Agreement shall be governed in accordance
with and governed by the internal laws of the State of
Delaware.
11. Notices. Any notice under this Agreement shall be in writing
and shall be given in the manner specified in Section 13 of
the Employment Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of May 10,
2000.
COMPANY:
U.S. ENERGY SYSTEMS, INC.
By:Xxxxxxxx X. Xxxxxxxxx
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Xxxxxxxx X. Xxxxxxxxx,
Chief Executive Officer
Optionee acknowledges receipt of a copy of the Plan and represents that
he or she is familiar with the terms and provisions thereof, and hereby accepts
this Option subject to all of the terms and provisions thereof. Optionee has
reviewed the Plan and this Option in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option, and fully
understands all provisions of the Option.
OPTIONEE:
/s/ Goron Mornhead
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Xxxxx Xxxxxxx
