**Exhibit 10.7**

 

**STOCK APPRECIATION RIGHTS AGREEMENT**

 

**BROADWIND ENERGY, INC.**

**2007 EQUITY INCENTIVE PLAN**

 

THIS AGREEMENT, madeeffective as of this              day of                              , 20    , by and between Broadwind Energy, Inc., aDelaware corporation (the “**Company**”), and                                         (“**Participant**”).

 

**RECITALS**

 

A.            Participanton the date hereof is a key employee, officer or director of, or consultant oradvisor to, the Company or one of its Affiliates; and

 

B.            TheCompany wishes to grant a stock appreciation right to Participant to pursuantto the Company’s 2007 Equity Incentive Plan (the “**Plan**”); and

 

C.            TheAdministrator of the Plan has authorized the grant of a stock appreciationright to Participant and has determined that, as of the effective date of thisAgreement, the fair market value of the Company’s Common Stock is                                  Dollars($                    )per share (the “**Exercise Price**”).

 

**AGREEMENTS**

 

In consideration of the premisesand of the mutual covenants herein contained, the parties hereto agree asfollows:

 

**ARTICLE I.  GRANTOF SAR**

 

The Company hereby grants toParticipant on the date set forth above (the “**Date ofGrant**”), stock appreciation rights (the “**SAR**”)with respect to an aggregate of                                  (                   )shares of Common Stock at the Exercise Price on the terms and conditions setforth herein, and subject to adjustment pursuant to Section 14 of thePlan.

 

**ARTICLE II.  DURATION AND EXERCISABILITY**

 

A.            General. The term during which the SAR may be exercised shall terminate on                                                   ,                            except as otherwise provided in **Article II.B**and **Article****II.C** below.  The SAR shall vest andbecome exercisable according to the following schedule:

 
| **Vesting Date** | ** ** | **Cumulative  Percentage of  Shares** |
|------------------|------------|---------------------------------------|
| ** **       | ** ** | ** **                            |
| ,20              | ** ** | ** **                            |
| ,20              |       |                                  |
| ,20              |       |                                  |
| ,20              |       |                                  |

 

Once the SAR becomes fullyexercisable, Participant may continue to exercise the SAR under the terms andconditions of this Agreement until the termination of the SAR as providedherein.  If Participant does not exercise the SAR with respect to the fullnumber of shares for which Participant is then entitled, Participant

 

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may, upon any subsequentexercise prior to the SAR’s termination, exercise the SAR for such previouslyunexercised portion.

 

B.            Terminationof Employment for Reasons Other Than Death or Disability.  In theevent Participant ceases to be**[a keyemployee or officer] [a consultant or advisor] [a director]**  of the Company or any Affiliate for anyreason other than death or an event that constitutes permanent and totaldisability within the meaning of Section 22(e)(3) of the Code (“**Disability**”), any unexercised portion ofthis SAR which was exercisable as of the date of such termination may beexercised, in whole or in part, by Participant before the earlier of(i) the close of business on the three-month anniversary date of suchtermination of employment, and (ii) the Expiration Date.  To theextent this SAR was not exercisable upon such termination of employment, or ifParticipant does not exercise the unexercised portion of the SAR that wasexercisable within the time specified in this **ArticleII.B**, all rights of Participant under this SAR shall terminate, andthe SAR shall thereafter be void.

 

C.            Terminationof Employment Due to Death or Disability.  In the event Participantceases to be**[a key employee or officer] [aconsultant or advisor] [a director]** of the Company or any Affiliate by reason of death or Disability, anyunexercised portion of this SAR which was exercisable as of the date of suchtermination may be exercised, in whole or in part, by Participant (or byParticipant’s heirs or legal representative(s) in the event of death orDisability) before the earlier of (i) the close of business on thetwelve-month anniversary date of such termination of employment and(ii) the Expiration Date.  To the extent this SAR was not exercisableupon such termination of employment, or if Participant does not exercise theunexercised portion of the SAR that was exercisable within the time specifiedin this **Article II.C**, allrights of Participant under this SAR shall terminate, and the SAR shallthereafter be void.

 

**ARTICLE III.  MANNEROF EXERCISE AND PAYMENT**

 

A.            General. The SAR may be exercised only by Participant (or other proper party in theevent of death or incapacity), subject to the conditions of the Plan andsubject to such other administrative rules as the Administrator may deemadvisable, by delivering written notice of exercise to the Company at itsprincipal office. The notice shall state the number of shares as to which theSAR is being exercised.  The exercise of the SAR shall be deemed effectiveupon receipt of such notice by the Company, and the date of such receipt shallbe the “date of exercise” for all purposes under this Agreement.  The SARmay be exercised with respect to some or all of the exercisable shares and, ifpartially exercised, may be so exercised as to the unexercised shares anynumber of times during the term of the SAR as provided herein.

 

B.            Form ofPayment.  Upon the exercise of all or a portion of the SAR,Participant shall be entitled to (1) that number of shares of Stock havingan aggregate Fair Market Value equal to (i) the excess of (A) the pershare Fair Market Value of the Company’s Common Stock as of the date ofexercise over (B) the per share exercise price specified in **Article I** above, multiplied by(ii) the number of shares specified in the Participant’s notice ofexercise; (2) a cash payment equal to (i) the excess of (A) theper share Fair Market Value of the Company’s Common Stock as of the date ofexercise over (B) the per share exercise price specified in **Article I**above, multiplied by(ii) the number of shares specified in the Participant’s notice ofexercise; OR  (3) acombination of cash and shares of stock having a value equal to (i) theexcess of (A) the per share Fair Market Value of the Company’s CommonStock as of the date of exercise over (B) the per share exercise pricespecified in **Article I** above,multiplied by (ii) the number of shares specified in the Participant’snotice of exercise.  Participant may indicate his or her preference forthe form of settlement of the SAR, however the Administrator shall make thefinal determination of whether the SAR is settled in Common Stock, cash, or acombination thereof.

 

C.            StockTransfer Records.  As soon as practicable after the effective exerciseof all or any part of the SAR, Participant shall be recorded on the stocktransfer books of the Company as the owner of the shares

 

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purchased,and the Company may deliver to Participant one or more duly issued stockcertificates evidencing such ownership.  All requisite original issue ortransfer documentary stamp taxes shall be paid by the Company.

 

**ARTICLE IV.  NONTRANSFERABILITY**

 

This SAR shall not betransferable, in whole or in part, by Participant, other than by will or by thelaws of descent and distribution, prior to the date the risks of forfeituredescribed in this Agreement have lapsed.  If Participant shall attempt anytransfer of this SAR prior to such date, such transfer shall be void and thisSAR shall terminate.

 

**ARTICLE V.  WITHHOLDINGTAXES**

 

To permit the Company tocomply with all applicable federal and state income tax laws or regulations,the Company may take such action as it deems appropriate to ensure that, ifnecessary, all applicable federal and state payroll, income or other taxes arewithheld from any amounts payable by the Company to Participant.  If theCompany is unable to withhold such federal and state taxes, for whateverreason, Participant hereby agrees to pay to the Company an amount equal to theamount the Company would otherwise be required to withhold under federal orstate law.  Subject to such rules as the Administrator may adopt, theAdministrator may, in its sole discretion, permit Participant to satisfy suchwithholding tax obligations, in whole or in part (i) by delivering sharesof common stock, or (ii) by electing to have the Company withhold sharesof Common Stock otherwise issuable to Participant as a result of the exerciseof this SAR, in either case having a Fair Market Value, as of the date theamount of tax to be withheld is determined under applicable tax law, equal tothe minimum amount required to be withheld for tax purposes based on theminimum statutory withholding rates for federal and state tax purposes,including payroll taxes, that are applicable to the supplemental incomeresulting from such exercise.  Participant’s request to deliver shares orto have shares withheld for purposes of such withholding tax obligations shallbe made on or before the date that triggers such obligations or, if later, thedate that the amount of tax to be withheld is determined under applicable taxlaw.  Participant’s request shall be approved by the Administrator andotherwise comply with such rules as the Administrator may adopt to assurecompliance with Rule 16b-3 or any successor provision, as then in effect,of the General Rules and Regulations under the Securities and Exchange Actof 1934, if applicable.

 

**ARTICLE VI.  CAPITAL ADJUSTMENTS**

 

Except as otherwisespecifically provided in any employment, change of control, severance orsimilar agreement executed by Participant and the Company, pursuant and subjectto Section 14 of the Plan, certain changes in the number or character ofthe Common Stock of the Company (through sale, merger, consolidation, exchange,reorganization, divestiture (including a spin-off), liquidation,recapitalization, stock split, stock dividend or otherwise) may result in anadjustment, reduction or enlargement, as appropriate, in the number of sharessubject to this SAR.  Any additional shares that are credited pursuant tosuch adjustment shall be subject to the same restrictions as are applicable tothe shares with respect to which the adjustment relates.

 

**ARTICLE VII.  BINDING EFFECT**

 

This Agreement shall bebinding upon the heirs, executors, administrators and successors of the partieshereto.

 

**ARTICLE VIII.  2007EQUITY INCENTIVE PLAN**

 

The SAR represented by thisAgreement has been granted under, and is subject to the terms of, thePlan.  The terms of the Plan are hereby incorporated by reference hereinin their entirety and Participant, by execution hereof, acknowledges havingreceived a copy of the Plan.  Capitalized terms not defined herein shallhave the

 

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meaning set forth in thePlan.  The provisions of this Agreement shall be interpreted as to beconsistent with the Plan and any ambiguities herein shall be interpreted byreference to the Plan.  In the event that any provision hereof isinconsistent with the terms of the Plan, the latter shall prevail.

 

**ARTICLE IX.  NON-SOLICITATION**

 

A.            Restrictive Covenant.  During the period beginning on the date ofthis SAR and ending on the later of (i) one year following the termination ofParticipant’s employment with, or service to, the Company or an Affiliatepursuant to **Article II.B** or (ii)the expiration of this SAR pursuant to **Article****II.A** or **Article****II.C**,Participant shall not, except with the express prior written consent of theCompany:  (i) directly or indirectly,either for Participant, or on behalf of any of the Company’s or any Affiliate’scompetitors (“**Competitors**”): (1)induce or attempt to induce any employee, independent contractor or consultantof the Company or any Affiliate to leave the employ of, or terminate itsengagement with, the Company or any Affiliate; or (2) in any way interfere withthe relationship between the Company or any Affiliate and any employee,independent contractor or consultant of the Company or any affiliate; or (ii)directly or indirectly, either for Participant, or on behalf of any of theCompetitors, solicit the business of any person or entity known to Participantto be a customer of the Company or any of its Affiliates, where Participant, orany person reporting to Participant, had an ongoing business relationship orhad made substantial efforts with respect to such customer during Participant’semployment with, or service to, the Company or an Affiliate.

 

B.            Violationof Restrictive Covenant. Participant, by accepting this SAR, agrees that the foregoing covenantsare reasonable with respect to their duration and scope.  Participant further acknowledges that therestrictions are reasonable and necessary for the protection of the legitimatebusiness interests of the Company and its Affiliates, that they create no unduehardships, that any violation of these restrictions would cause substantialinjury to the Company and its Affiliates, and that such restrictions were amaterial inducement to the Company to grant this SAR.  In the event of any violation or threatenedviolation of these restrictions, any and all rights of Participant under thisSAR, whether unvested or vested, shall be forfeited and shall immediatelyterminate and shall thereafter be void.

 

**ARTICLE X.  MISCELLANEOUS**

 

A.            Employmentor Other Relationship; Rights as a Stockholder.  Nothing in thisAgreement shall be construed to (a) limit in any way the right of theCompany or any Affiliate to terminate the status of Participant as an employeeof the Company at any time, or (b) be evidence of any agreement orunderstanding, express or implied, that the Company or any Affiliate willemploy Participant in any particular position, at any particular rate ofcompensation or for any particular period of time.  Participant shall haveno rights as a stockholder with respect to shares issued under this Agreementuntil such shares have been issued to Participant.  No adjustment shall bemade for dividends (ordinary or extraordinary, whether in cash, securities orother property), distributions or other rights for which the record date isprior to the date such shares are issued, except as provided in Section 14of the Plan.

 

B.            SecuritiesLaw Compliance.  Participant shall not transfer or otherwise disposeof the shares of Stock received pursuant to this Agreement until such time ascounsel to the Company shall have determined that such transfer or otherdisposition will not violate any state or federal securities laws. Participant may be required by the Company, as a condition of the effectivenessof this SAR, to agree in writing that all Stock subject to this Agreement shallbe held, until such time that such Stock is registered and freely tradableunder applicable state and federal securities laws, for Participant’s ownaccount without a view to any further distribution thereof, that thecertificates for such shares shall bear an appropriate legend to that effectand that such shares will be not transferred or disposed of except incompliance with applicable state and federal securities laws.

 

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C.            LockupPeriod Limitation.  Participant agrees that in the event the Companyadvises Participant that it plans an underwritten public offering of its CommonStock in compliance with the Securities Act of 1933, as amended, and that theunderwriter(s) seek to impose restrictions under which certainstockholders may not sell or contract to sell or grant any option to buy orotherwise dispose of part or all of their stock purchase rights of theunderlying Common Stock, Participant hereby agrees that for a period not toexceed 180 days from the prospectus, Participant will not sell or contract tosell or grant an option to buy or otherwise dispose of this SAR or any of theunderlying shares of Common Stock without the prior written consent of the ofthe underwriter(s) or its representative(s).

 

D.            BlueSky Limitation.  Notwithstanding anything in this Agreement to thecontrary, in the event the Company makes any public offering of its securitiesand determines, in its sole discretion, that it is necessary to reduce thenumber of issued but unexercised stock purchase rights so as to comply with anystate securities or Blue Sky law limitations with respect thereto, theAdministrator of the Company shall accelerate the vesting of this restrictedstock award, provided that the Company gives Participant 15 days’ prior writtennotice of such acceleration.  Notice shall be deemed given when deliveredpersonally or when deposited in the United States mail, first class postageprepaid and addressed to Participant at the address of Participant on file withthe Company.

 

E.             AccountingCompliance.  Participant agrees that, if a “transaction” (as definedin Section 14 of the Plan) occurs, and Participant is an “affiliate” ofthe Company or any Affiliate (as defined in applicable legal and accountingprinciples) at the time of such transaction, Participant will comply with allrequirements of Rule 145 of the Securities Act of 1933, as amended, andthe requirements of such other legal or accounting principles, and will executeany documents necessary to ensure such compliance.

 

F.             StockLegend.  The Administrator may require that the certificates for anyshares of Common Stock issued to Participant (or, in the case of death,Participant’s successors)  under this Agreement shall bear an appropriatelegend to reflect the restrictions of this Article; provided, however, thatfailure to so endorse any of such certificates shall not render invalid orinapplicable this **Article X**.

 

G.            SharesReserved.  The Company shall at all times during the term of this SARreserve and keep available such number of shares as will be sufficient tosatisfy the requirements of this Agreement.

 

H.            Arbitration. Any dispute arising out of or relating to this Agreement or the alleged breachof it, or the making of this Agreement, including claims of fraud andinducement, shall be discussed between the disputing parties in a good faitheffort to arrive at a mutual settlement of any such controversy.  If,notwithstanding, such dispute cannot be resolved, such dispute shall be settledby binding arbitration.  Judgment upon the award rendered by thearbitrator may be entered in any court having jurisdiction thereof.  Thearbitrator shall be a retired state or federal judge or an attorney who haspracticed securities or business litigation for at least ten(10) years.  If the parties cannot agree on an arbitrator withintwenty (20) days, any party may request that a judge of the Circuit Court ofCook County, Illinois select an arbitrator.  Arbitration will be conductedpursuant to the provisions of this Agreement and the commercial arbitrationrules of the American Arbitration Association, unless such rules areinconsistent with the provisions of this Agreement.  Limited civildiscovery shall be permitted for the production of documents and taking ofdepositions.  Unresolved discovery disputes may be brought to theattention of the arbitrator who may dispose of such disputes.  Thearbitrator shall have the authority to award any remedy or relief that a courtof this state could order or grant; provided, however, that punitive orexemplary damages shall not be awarded.  The arbitrator may award to theprevailing party, if any, as determined by the arbitrator, all of its costs andfees, including the arbitrator’s fee, administrative fees, travel expenses,out-of-pocket expenses and reasonable attorney’s fees.  Unless otherwiseagreed by the parties, the place of any arbitration proceedings shall beChicago, Illinois.

 

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**ARTICLE XI.  GOVERNING LAW**

 

This Agreement and allrights and obligations hereunder shall be construed in accordance with the Planand governed by the laws of the State of Delaware.

 

*[Signature page  follows]*

 

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IN WITNESS WHEREOF, theparties hereto have executed this Agreement effective the day and year firstabove written.

 
| ** **                                                                              | **BROADWIND ENERGY INC.** |
|-----------------------------------------------------------------------------------------|---------------------------|
| ** **                                                                              | ** **                |
| ** **                                                                              | ** **                |
| ** **                                                                              | ** **                |
| ** **                                                                              | By:                       |
| ** **                                                                              | Its:                      |
| ** **                                                                              |                      |
| ** **                                                                              |                      |
| By execution hereof, the Participant  acknowledges having received a copy of the  Plan. | **PARTICIPANT**           |
|                                                                                    | ** **                |

 

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