EX-10.1 2 exhibit10.1.txt EXHIBIT 10.1 Exhibit 10.1: FORM OF NON-QUALIFIED OPTION AGREEMENT POWER REIT 2012 EQUITY INCENTIVE PLAN NON-QUALIFIED OPTION AGREEMENT Power REIT, a Maryland real estate investment trust (the "Company"), hereby grants an option to purchase shares of its common stock, par value $0.001 (the "Option"), to the Grantee named below, subject to the vesting and other conditions set forth below. Additional terms and conditions of the grant are set forth in this cover sheet and in the attachment (collectively, the "Agreement"), and in the Company's 2012 Equity Incentive Plan (as amended from time to time, the "Plan"). Grant Date: _______________________ Name of Grantee: _______________________ Number of Shares Covered by Option: _______________________ Option Price per Share: $_______________________ Vesting Schedule The Option shall vest on each vesting date set forth below*: --------- *Vesting shall be rounded to the nearest whole share and in no event shall the cumulative number of options vested exceed the shares covered by this grant. By your signature below, you agree to all of the terms and conditions described herein, in the attached Agreement and in the Plan, a copy of which is also attached. You acknowledge that you have carefully reviewed the Plan, and agree that the Plan will control in the event any provision of this cover sheet or Agreement should appear to be inconsistent. Grantee: _____________ Date: _____________ (Signature) Company: _____________ Date: _____________ (Signature) Title: _____________________________ Attachment This is not a stock certificate or a negotiable instrument. ----------------------------------------------------------------------- POWER REIT 2012 EQUITY INCENTIVE PLAN NON-QUALIFIED OPTION AGREEMENT Non-qualified Option This Agreement evidences an award of an Option exercisable for that number of shares of Stock set forth on the cover sheet and subject to the vesting and other conditions set forth herein, in the Plan and on the cover sheet. This option is not intended to be an incentive option under Section 422 of the Internal Revenue Code and will be interpreted accordingly. Transfer of Option During your lifetime, only you (or, in the event of your legal incapacity, incompetency or death, your guardian or legal representative) may exercise the Option. The Option may not be sold, assigned, transferred, pledged, hypothecated or otherwise encumbered, whether by operation of law or otherwise, nor may the Option be made subject to execution, attachment or similar process. If you attempt to do any of these things, this Option will immediately become forfeited. Notwithstanding these restrictions on transfer, the Plan administrator may authorize, in its sole discretion, the transfer of a vested Option (in whole or in part) to a member of your immediate family or a trust for the benefit of your immediate family. Vesting Your Option shall vest in accordance with the vesting schedule shown on the cover sheet so long as you continue in Service on the vesting dates set forth on the cover sheet and is exercisable only as to its vested portion. Notwithstanding your vesting schedule, your Option will become 100% vested upon termination of your Service due to your death, Disability or Involuntary Termination. "Involuntary Termination" means termination of your Service by reason of your involuntary dismissal by the Company or its successor for reasons other than Cause[; or your voluntary resignation for Good Reason as defined in any applicable employment or severance agreement, plan, or arrangement between you and the Company, or if none, then following (x) a substantial adverse alteration in your title or responsibilities from those in effect immediately prior to such alteration; (y) a reduction in your annual base salary or consulting fee (or as the same may be increased from time to time) or a material reduction in your annual target bonus opportunity; or (z) the relocation of your principal place of employment to a location more than 35 miles from your principal place of employment or the Company's requiring you to be based anywhere other than such principal place of employment (or permitted relocation thereof) except for required travel on the Company's business to an extent substantially consistent with your business travel obligations prior to such new travel requirements. To qualify as an "Involuntary Termination" you must provide notice to the Company of any of the foregoing occurrences within 120 days of the initial occurrence and the Company shall have 30 days to remedy such occurrence]. [Include bracketed section for senior management and other individuals so designated by the Board] Change in Control Notwithstanding the vesting schedule set forth above, upon the consummation of a Change in Control, this option will become 100% vested (i) if it is not assumed, or equivalent options are not substituted for the options, by the Company or its successor, or (ii) if assumed or substituted for, upon your Involuntary Termination following the consummation of the Change in Control. Forfeiture of Unvested Options / Term Unless the termination of your Service triggers accelerated vesting or other treatment of your Option pursuant to the terms of this Agreement, the Plan, or any other written agreement between an Applicable Entity and you, you will automatically forfeit to the Company those portions of the Option that have not yet vested in the event your Service terminates for any reason. Your option will expire in any event at the close of business at Company headquarters on the day before the 10th anniversary of the Grant Date, as shown on the cover sheet. Your option will expire earlier if your Service terminates, as described below. Expiration of Vested Options After Service Terminates If your Service terminates for any reason, other than death, Disability, Involuntary Termination or Cause, then the vested portion of your Option will expire at the close of business at Company headquarters on the 120th day after your termination date. If your Service terminates for death, Disability or Involuntary Termination, then the vested portion of your Option will expire at the close of business at the Company headquarters on the date twelve (12) months from such death, Disability or Involuntary Termination. If your Service terminates for death or Disability, during that twelve (12) month period, your estate / heirs, personal representative or assign may exercise the vested portion of your Option. If your Service is terminated for Cause, then you shall immediately forfeit all rights to your entire Option and the Option shall immediately expire. Forfeiture of Rights If you should take actions in violation or breach of or in conflict with any non-competition agreement, any agreement prohibiting solicitation of employees or clients of the Company or any Affiliate or any confidentiality obligation with respect to the Company or any Affiliate or otherwise directly in competition with the Company or any Affiliate or if you are terminated for Cause ("Forfeiture Actions"), the Company has the right to cause an immediate forfeiture of your rights to this Option and the Option shall immediately expire. In addition, if you have exercised any options during the one (1) year period prior to receiving a forfeiture notice from Company, you will owe the Company a cash payment (or forfeiture of shares of such Stock) in an amount determined as follows: (1) for any shares of Stock acquired through this Agreement that you have sold prior to receiving notice from the Company, the amount will be the proceeds received from the sale(s) of such Stock, less the option exercise price, and (2) for any shares of Stock that you have acquired through this Agreement that you still own, the amount will be the number of shares of such Stock owned times the Fair Market Value of the shares of Stock on the date you receive notice from the Company, less the option exercise price (provided, that the Company may require you to satisfy your payment obligations hereunder either by forfeiting and returning to the Company such shares or making a cash payment or a combination of these methods as determined by the Company in its sole discretion). Leaves of Absence For purposes of this Agreement, your Service does not terminate when you go on a bona fide leave of absence that was approved by the Company in writing if the terms of the leave provide for continued Service crediting, or when continued Service crediting is required by applicable law. Your Service terminates in any event when the approved leave ends unless you immediately return to active employee work. The Company may determine, in its discretion, which leaves count for this purpose, and when your Service terminates for all purposes under the Plan in accordance with the provisions of the Plan. Notice of Exercise The Option may be exercised, in whole or in part, to purchase a whole number of vested shares of Stock of not less than 100 shares, unless the number of vested shares purchased is the total number available for purchase under the option, by following the procedures set forth in the Plan and in this Agreement. When you wish to exercise this Option, you must exercise in a manner required or permitted by the Company. If someone else wants to exercise this Option after your death, that person must prove to the Company's satisfaction that he or she is entitled to do so. Restrictions on Exercise and REIT Compliance It is intended that any exercise of the vested portion of this Option shall not result, on a pro-forma basis, in the Company failing to qualify as a real estate investment trust. Therefore, the vested portion of this Option may only be exercised to purchase Stock if, after giving effect to such purchase, (i) you do not beneficially or constructively exceed the Ownership Limit under the Company's declaration of trust, as may be amended from time to time ("Declaration"), or (ii) the Board of Trustees have provided you a written waiver from the Ownership Restrictions pursuant to the Declaration. If it is determined that there is a conflict between this Agreement and the company's compliance with REIT concentration tests, the company shall reserve the right to amend this Agreement, only to the minimum extent necessary, to remain in compliance with such REIT concentration rules. Form of Payment When you exercise your Option, you must include payment of the option price indicated on the cover sheet for the shares you are purchasing. Payment may be made in one (or a combination) of the following forms: - Cash, your personal check, a cashier's check, a money order or another cash equivalent acceptable to the Company; or - Shares of Stock which are owned by you and which are surrendered to the Company. The Fair Market Value of the shares as of the effective date of the option exercise will be applied to the option price; or - By delivery (on a form prescribed by the Company) of an irrevocable direction to a licensed securities broker acceptable to the Company to sell Stock and to deliver all or part of the sale proceeds to the Company in payment of the aggregate option price and any withholding taxes (if approved in advance by the Committee of the Board if you are either an executive officer or a director of the Company); or - Or another form approved by the Company, in its sole discretion, which form of payment results in the same economic result as the three forms of payment listed above. Evidence of Issuance The issuance of the shares upon exercise of this Option shall be evidenced in such a manner as the Company, in its discretion, will deem appropriate, including, without limitation, book-entry, registration or issuance of one or more share certificates. Withholding Taxes You agree as a condition of this grant that you will make acceptable arrangements to pay any withholding or other taxes that may be due as a result of the Option exercise or sale of Stock acquired under this Option. In the event that any Applicable Entity determines that any federal, state, local or foreign tax or withholding payment is required relating to the exercise of this Option or sale of Stock arising from this Option, the Applicable Entity shall have the right to require such payments from you, or withhold such amounts from other payments due to you from the Applicable Entity (including withholding the delivery of vested shares of Stock otherwise deliverable under this Agreement). Retention Rights This Agreement and this Option do not give you the right to be retained by any Applicable Entity in any capacity. Unless otherwise specified in an employment or other written agreement between the Applicable Entity and you, the Applicable Entity reserves the right to terminate your Service at any time and for any reason. Stockholder Rights You, or your estate or heirs, have no rights as a shareholder of the Company until the Stock has been issued upon exercise of your Option and either a certificate evidencing your Stock has been issued or an appropriate entry has been made on the Company's books. No adjustments are made for dividends, distributions or other rights if the applicable record date occurs before your certificate is issued (or an appropriate book entry is made), except as described in the Plan. Your Option shall be subject to the terms of any applicable agreement of merger, liquidation or reorganization in the event the Company is subject to such corporate activity. Clawback This Award is subject to mandatory repayment by you to the Company to the extent you are or in the future become subject to any Company "clawback" or recoupment policy that requires the repayment by you to the Company of compensation paid by the Company to you in the event that you fail to comply with, or violate, the terms or requirements of such policy. If the Company is required to prepare an accounting restatement due to the material noncompliance of the Company, as a result of misconduct, with any financial reporting requirement under the securities laws, and you are subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002 and you knowingly engaged in the misconduct, were grossly negligent in engaging in the misconduct, knowingly failed to prevent the misconduct or were grossly negligent in failing to prevent the misconduct, you shall reimburse the Company the amount of any payment in settlement of this Award earned or accrued during the 12-month period following the first public issuance or filing with the United States Securities and Exchange Commission (whichever first occurred) of the financial document that contained such material noncompliance. [Notwithstanding any other provision of the Plan or any provision of this Agreement, if the Company is required to prepare an accounting restatement, then you shall forfeit any cash or Stock received in connection with this Award (or an amount equal to the fair market value of such Stock on the date of delivery if you no longer hold the shares of Stock) if pursuant to the terms of this Agreement, the amount of the Award earned or the vesting in the Award was explicitly based on the achievement of pre-established performance goals set forth in this Agreement (including earnings, gains, or other criteria) that are later determined, as a result of the accounting restatement, not to have been achieved.] [Include if any performance goals are included in award] Applicable Law This Agreement will be interpreted and enforced under the laws of the State of Maryland, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction. The Plan The text of the Plan is incorporated in this Agreement by reference. Certain capitalized terms used in this Agreement are defined in the Plan, and have the meaning set forth in the Plan. This Agreement and the Plan constitute the entire understanding between you and the Company regarding this Option. Any prior agreements, commitments or negotiations concerning this grant are superseded; except that any written employment, consulting, confidentiality, non-competition, non-solicitation and/or severance agreement between you and any Applicable Entity shall supersede this Agreement with respect to its subject matter. Data Privacy In order to administer the Plan, the Company may process personal data about you. Such data includes, but is not limited to, information provided in this Agreement and any changes thereto, other appropriate personal and financial data about you such as your contact information, payroll information and any other information that might be deemed appropriate by the Company to facilitate the administration of the Plan. By accepting this grant, you give explicit consent to the Company to process any such personal data. Code Section 409A It is intended that this Award comply with Section 409A of the Code ("Section 409A") or an exemption to Section 409A. To the extent that the Company determines that you would be subject to the additional 20% tax imposed on certain non-qualified deferred compensation plans pursuant to Section 409A as a result of any provision of this Agreement, such provision shall be deemed amended to the minimum extent necessary to avoid application of such additional tax. The nature of any such amendment shall be determined by the Company. For purposes of this Award, a termination of Service only occurs upon an event that would be a Separation from Service within the meaning of Section 409A. By signing this Agreement, you agree to all of the terms and conditions described above and in the Plan.