EXHIBIT 10.18
NON-QUALIFIED STOCK OPTION AGREEMENT
This NON-QUALIFIED STOCK OPTION AGREEMENT, dated as of this 1st day of
July, 2004, by and between Energy West, Incorporated, a Montana corporation (the
"Company"), and Xxxxx X. Xxxxxxxx (the "Optionee").
Pursuant to the Energy West, Incorporated 2002 Stock Option Plan (the
"Plan"), the Optionee is to be granted a Non-Qualified Stock Option (the
"Option") to purchase shares of the Company's common stock, on the terms and
conditions set forth herein. It is intended that the Option shall not constitute
an "Incentive Stock Option" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"). Any capitalized terms not defined
herein shall have the meaning set forth in the Plan.
1. Number of Shares and Option Price. The Option entitles the Optionee to
purchase 10,000 shares of the Company's common stock, par value $.15 per share
(the "Option Shares"), at a price of $6.47 per share (the "Option Price").
2. Period of Option. The term of the Option and of this Option Agreement
shall commence on the date hereof (the "Grant Date") and terminate upon the
earlier of (i) the expiration of 10 years from the Grant Date, or (ii) the date
set forth in Section 6 hereof. Upon termination of the Option, all rights of the
Optionee hereunder shall cease.
3. Vesting of Options.
For so long as the Optionee is employed by or provides services to the
Company or a Subsidiary, the Option Shares granted hereunder shall vest as
follows:
(a) Twenty-five percent (25%) of the Option Shares (rounded down to
the nearest whole number of shares) on the Grant Date;
(b) An additional twenty-five percent (25%) of the Option Shares
(rounded down to the nearest whole number of shares) on the first
anniversary of the Grant Date;
(c) An additional twenty-five percent (25%) of the Option Shares
(rounded down to the nearest whole number of shares) on the second
anniversary of the Grant Date; and
(d) The remainder of the Option Shares on the third anniversary of
the Grant Date.
Notwithstanding the foregoing, if the Optionee incurs a Termination of
Service during the term of the Employment Agreement between Optionee and the
Company dated as of June 23, 2004 (the "Employment Agreement") by the Company
without "Cause" or by the Optionee with "Good Reason," or if, during the term of
the Employment Agreement, Optionee voluntarily terminates his employment within
the 30-day period commencing on the first anniversary of a change of control of
the Company (for purposes of this Option Agreement, "Cause," "Good
Reason" and "change of control" all having the definitions set forth in the
Employment Agreement), all unvested Option Shares shall immediately vest in
full.
The right of the Optionee to purchase shares with respect to which this
Option has become vested as herein provided may be exercised in whole or in part
at any time or from time to time up to the expiration of the stated term of such
Option as set forth under Section 2 above.
4. Non-transferability of Option. The Option and this Option Agreement
shall not be transferable otherwise than by will or by laws of descent and
distribution; and the Option may be exercised, during the lifetime of the
Optionee, only by the Optionee or by the Optionee's legal representative.
5. Exercise of Option. The Option shall be exercised in the following
manner: the Optionee, or the person or persons having the right to exercise the
Option upon the death or Disability of the Optionee, shall deliver to the
Company written notice specifying the number of vested Option Shares which the
Optionee elects to purchase, together with either (i) cash, (ii) shares of
Company common stock having Fair Market Value determined as of the date of
exercise, or (iii) any combination of the above, the sum of which equals the
total price to be paid upon the exercise of the Option, and the stock purchased
shall thereupon be promptly delivered. The Optionee will not be deemed to be a
holder of any shares pursuant to exercise of the Option until the date of
issuance to the Optionee of a stock certificate for such shares and until the
shares are paid in full.
6. Termination of Service. If during the term of the Employment Agreement
the Optionee incurs a Termination of Service (i) by the Company without Cause,
(ii) by the Optionee with Good Reason, or (iii) by the Optionee within the
30-day period commencing on the first anniversary of a change of control, the
Optionee may exercise his or her unexercised and vested Option Shares for the
remaining term of this Option or a period of one (1) year following the
Optionee's Termination of Service, whichever is shorter. If the Optionee incurs
a Termination of Service for any other reason during the term of the Employment
Agreement, or for any reason after the term of the Employment Agreement, the
Optionee may exercise his or her unexercised and vested Option Shares for the
remaining term of this Option or the period set forth in Section 6.8 of the
Plan, whichever is shorter.
7. Notices. Any notice required or permitted under this Option Agreement
shall be deemed given when delivered personally, or when deposited in a United
States Post Office, postage prepaid, addressed, as appropriate, to the Optionee
either at the Optionee's address set forth below or such other address as the
Optionee may designate in writing to the Company, or the Company: Attention:
Board of Directors/Corporate Secretary, at the Company's address or such other
address as the Company may designate in writing to the Optionee.
8. Withholding of Taxes. As a condition to the issuance of the Option
Shares, the Optionee shall (a) remit to the Company at the time of any exercise
of the Option any taxes required to be withheld by the Company under federal,
state or local laws as a result of the exercise of the Option; or (b) instruct
the Company to withhold in accordance with applicable law from any compensation
payable to the Optionee the taxes required to be held by the Company under
federal, state or local laws as a result of the exercise of the Option; or (c)
instruct the Company to withhold such number of shares as are necessary for the
fair market value of such shares to equal the amount of taxes required to be
withheld by the Company, under federal, state, or local laws as a result of the
exercise of the Option. The determination of the amount of any such withholding
shall be made by the Company.
9. Failure to Enforce Not a Waiver. The failure of the Company to enforce
at any time any provision of this Option Agreement shall in no way be construed
to be a waiver of such provision or of any other provision hereof.
10. Incorporation of Plan. The Plan is hereby incorporated by reference
and made a part hereof, and the Option and this Option Agreement are subject to
all terms and conditions of the Plan.
11. Amendments. This Option Agreement may be amended or modified at any
time by an instrument in writing signed by the parties hereto.
12. Successors and Assigns. This Option Agreement shall inure to the
benefit of and be binding upon the heirs, legatees, legal representatives,
successors and assigns of the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Option Agreement on the
day and year first above written.
COMPANY: ENERGY WEST, INCORPORATED
By:/s/ XxXxx X. Xxxxx
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Title: Vice President
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The undersigned hereby accepts and
agrees to all the terms and provisions
of the foregoing Option Agreement and
to all the terms and provisions of the
Plan herein incorporated by reference.
OPTIONEE: /s/ Xxxxx X. Xxxxxxxx
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Xxxxx X. Xxxxxxxx
