Employee Stock Option Agreement
Exhibit 10.5
This Employee Stock Option Agreement (this “Agreement”) is made this 30th day of June,
2006, between Electric City Corp., a Delaware corporation (the “Company”) and Xxxxxx Xxxxx
(the “Holder”).
WHEREAS, Holder is an employee of Xxxxx Industries, LLC, a subsidiary of the Company, and the
Company desires, by affording Holder an opportunity to purchase its common shares of $0.0001 par
value common stock (the “Common Stock”) as hereinafter provided, to help align the long-term
economic interests of the Holder with the long-term economic interests of the Company.
NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good
and valuable consideration, the parties hereto agree as follows:
1. Grant of Option. The Company hereby agrees to grant to the Holder, on the date hereof
(the “Grant Date”), options (the “Options”) to purchase up to an aggregate of
46,667 shares (the “Option Shares”) of the Company’s common stock, par value $0.001 (the
“Common Stock”), subject to the terms and conditions set forth herein.
2. Exercise Price. The exercise price per Option Share, subject to adjustment as
hereinafter provided (the “Exercise Price”) under the Options shall be equal to the closing
market price of the Company’s common stock on [the date immediately following the date of this
Agreement].
3. Vesting. The Options shall vest according to the following schedule:
| Vesting Date | Number of Shares | |||
The Grant Date |
15,555 | |||
The First Anniversary of the Grant Date (except as
otherwise provided in that certain Employment Agreement
dated as of the date hereof between the Holder and Xxxxx
Industries, LLC) |
15,556 | |||
The Second Anniversary of the Grant Date
(except as otherwise provided in that certain Employment
Agreement dated as of the date hereof between the Holder
and Xxxxx Industries, LLC) |
15,556 | |||
Reference is made to the Employment Agreement dated as of the date hereof between Holder and
Xxxxx Industries, LLC (the “Employment Agreement”) for additional terms and conditions
relating to the vesting of any unvested Stock Options in the event that Holder ceases to be
employed by Xxxxx Industries, LLC.
- 1 -
4. Exercise of the Option. Any vested Options may be exercised at any time after vesting by
delivering the Exercise Price, paid in cash, along with a notice of exercise to the Company. The
Exercise Price of the shares as to which Option shall be exercised shall be paid in full, in cash
at the time of exercise, provided, that if the Fair Market Value of one share of Common Stock is
greater than the Exercise Price (at the date of calculation as set forth below), in lieu of
exercising this Option for cash, the Holder may elect to receive shares equal to the value (as
determined below) of this Option (or the portion thereof being exercised) by surrender of this
Option at the principal office of the Company together with the properly endorsed Exercise Notice
in which event the Company shall issue to the Holder a number of shares of Common Stock computed
using the following formula:
| X | = | Y | (A-B)
|
Where:
|
X = the number of shares of Common Stock to be issued to the Holder; | |
| Y = the number of shares of Common Stock purchasable under the Option or, if only a portion of the Option is being exercised, the portion of the Option being exercised (at the date of such calculation); | ||
| A = the Fair Market Value of one share of the Company’s Common Stock (at the date of such calculation); and | ||
| B = Exercise Price (as adjusted to the date of such calculation) |
5. Transferability. Except as otherwise provided in the Employment Agreement, the
Options shall not be transferable except by will or the laws of dissent and distribution, and the
Options will only be exercised during the lifetime of Holder, and only by Holder.
6. Expiration of the Options. The Options will expire on the earlier of the tenth
anniversary of the date of this Agreement or as provided in the Employment Agreement if the Holder
ceases to be a full time employee of the Xxxxx Industries, LLC or the Company.
7. Adjustments. The number of shares issuable as a result of the exercise of any
unexercised Options, and the purchase price payable therefore, may be adjusted from time to time to
give effect to stock splits, both forward and reverse, and any stock dividends which may be
declared payable to the holders of the outstanding Common Stock.
8. Terms Governing Stock Options. Except to the extent otherwise expressly provided herein,
the terms of the Options shall be governed in accordance with the provisions of the Company’s 2001
Employee Stock Incentive Plan (the “Plan”), as it may be amended and in effect from time to
time. The Options shall be incentive stock options to the extent permitted by law and the terms of
the Plan, and the balance shall be non-qualified options.
- 2 -
9. Taxes. The Company will have the right to deduct from all cash or property payments made
to the Holder upon exercise of the Option, any and all federal, state or local taxes required to be
withheld with respect to such payments.
10. Trading Restrictions. The Company shall have the right at any time to impose trading
restrictions on the shares issuable pursuant to the exercise of the Options (the “Option
Shares”) which may limit the number of shares that can be sold on any trading day or during any
90 day period and/or prohibit the sale of the Option Shares on any trading day, not to exceed
thirty (30) trading days a year.
[Balance of page intentionally left blank; signature page follows.]
- 3 -
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed as of the date first
written above.
| ELECTRIC CITY CORP. | HOLDER | |||||||
By: Name: |
/s/ Xxxxxxx Xxxxxxx
|
/s/ Xxxxxx Xxxxx
|
||||||
Title:
|
Chief Financial Officer | |||||||
- 4 -
