**Exhibit10.5**

 

EXHIBIT C-3

 

**STOCKOPTION AGREEMENT**

 

1.               Grant of Option.  GT SolarInternational, Inc., a Delaware corporation (the “Company”), grantsto [                    ](the “Optionee”), effective                           (the “Grant Date”), an option (the “Option”) to purchase anaggregate of [                        ]shares of the Company’s common stock, par value $0.01 per share (“Shares”of “Stock”), at a price of $    per Share (the “OptionPrice”).  The Option is grantedpursuant to the Company’s 2008 Equity Incentive Plan, dated June 30, 2008,(the “Plan”), and is subject to the terms and conditions of this StockOption Agreement (this “Agreement”) and of the Plan. The Shares subjectto the Option are referred to collectively as the “Option Shares.” Thegrant of the Option by the Company is subject to the Optionee’s execution anddelivery of the Employee Non-Competition, Non-Disclosure, ProprietaryInformation and Patent and Invention Assignment Agreement between the Optioneeand either the Company or GT Solar Incorporated, a Delaware corporation and awholly-owned subsidiary of the Company (“GT Solar”) (or, at thediscretion of the Committee, a similar agreement containing such terms as theCommittee shall determine) (the “Optionee Non-Disclosure Agreement”),and the Option and all Option Shares shall be subject to the terms andconditions of the Optionee Non-Disclosure Agreement.  **This Optionis not intended to qualify as an incentive stock option within the meaning of Section 422of the Internal Revenue Code of 1986, as amended (the “Code”).**  All capitalized terms not defined hereinshall have the meanings ascribed to them in the Plan.

 

2.               Basic Terms of Option.

 

(a)          Term.  The term ofthe Option shall continue from the Grant Date until the date immediatelypreceding the tenth anniversary of the Grant Date (the “Expiration Date”),provided the Option shall only be exercisable as permitted in Sections 2(b), 2(d) and2(f) below.

 

(b)         Vesting.  Only thevested portion of the Option may be exercised. Except as otherwise specifically provided in this Agreement and subjectto the continuous employment or engagement of the Optionee with the Company orany subsidiary or affiliate of the Company (the Company and its subsidiariesand affiliates are referred to collectively as the “Group” and eachindividually as a “Group Company”) until the date on which the Option orapplicable portion thereof is scheduled to become vested, the Option shallbecome vested with respect to (i) 1/4th of the Option Shares on the firstanniversary of the Grant Date, and (ii) 1/48th of the Option Shares uponthe passing of each full month thereafter (such that, subject to the otherterms and conditions of this Agreement, the Option shall be vested with respectto all Option Shares on the fourth anniversary of the Grant Date).  The Option, to the extent vested, shallbecome exercisable only as provided in Section 2(d) below, and onceexercisable, shall thereafter remain exercisable until the Expiration Date,subject to Section 2(f) below. The Committee, in its discretion, may accelerate the vesting orexercisability of the Option or any part thereof at any time and from time totime. Unless sooner terminated in accordance with the terms of this Agreement,the entire Option shall expire on the Expiration Date and may not be exercisedin whole or in any part at any time thereafter.

 

(c)          Change inControl. In additionto Section 2(b) above, upon a termination by the Company (or any ofits direct or indirect wholly owned subsidiaries, as applicable) without Cause(as defined in the Employment Agreement) or by Optionee with Good Reason (asdefined 

 

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in the EmploymentAgreement) of Employee’s employment with the Company (or any of its direct orindirect wholly owned Subsidiaries, as applicable) that also constitutes a “separationfrom service” within the meaning of Code Section 409A within twelve monthsfollowing a Change in Control (as defined below) of the Company (a “Change inControl Termination”), all of the unvested portion of this Option shall vest(for the avoidance of doubt, the vesting described in this Section 2(c) isin addition to, and not in lieu of, any vesting described in Section 2(b) above).

 

(d)         Timing of Exercise. No portion ofthe Option may be exercised until such portion has vested.

 

(e)          Definitions. For thepurposes of this Agreement, the following terms shall be defined as follows:

 

(i)                                     the term “Cause” shall have themeaning set forth in Employee’s Employment Agreement. If Employee does not havean Employment Agreement or if such Employment Agreement does not contain adefinition of “Cause” then “Cause” shall mean with respect to Employee one ormore of the following:  (i) thecommission of a felony or other crime involving moral turpitude or thecommission of any other act or omission involving dishonesty, disloyalty orfraud with respect to the Company or any of its Subsidiaries or any of theircustomers or suppliers, (ii) repeatedly reporting to work under theinfluence of alcohol or illegal drugs, the use of illegal drugs in theworkplace or other repeated conduct causing the Company or any of itsSubsidiaries substantial public disgrace or disrepute or substantial economicharm, (iii) substantial and repeated failure to perform duties asreasonably directed by the Board, (iv) any act or omission aiding orabetting a competitor, supplier or customer of the Company or any of itsSubsidiaries to the material disadvantage or detriment of the Company and itsSubsidiaries, (v) breach of fiduciary duty, gross negligence or willfulmisconduct with respect to the Company or any of its Subsidiaries, or (vi) anybreach of the Optionee Non-Disclosure Agreement between the Company and GTSolar Incorporated, or any material breach of any other agreement between theCompany and Employee.

 

(ii)                                  the term “Change in Control” means (1) theconsummation of any transaction or series of transactions resulting in a ThirdParty (or group of affiliated third parties) owning, directly or indirectly,securities of the Company possessing the voting power to elect a majority ofthe Company’s board of directors (whether by merger, consolidation or sale ortransfer of the Company’s securities) or (2) the sale, transfer or otherdisposition of all or substantially all of the business and assets of theCompany, whether by sale of assets, merger or otherwise (determined on aconsolidated basis) to a Third Party (or group of affiliated third parties);

 

(iii)                               the term “Employment Agreement”means, if Employee is party to an employment agreement with the Company (or asubsidiary of the Company), the employment agreement between Employee and theCompany (or a subsidiary of the Company, as applicable) as currently in effecton the date of this Agreement.

 

(iv)                              the term “Good Reason” shall have themeaning set forth in Employees’s Employment Agreement.  If Employee does not have an EmploymentAgreement or if such 

 

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Employment Agreement doesnot contain a definition of “Good Reason” then “Good Reason” shall mean ifEmployee resigns from employment with the Company and its Subsidiaries prior tothe end of the employment period as a result of the occurrence of one or moreof the following events:  (i) theCompany reduces the amount of the base salary (other than as a result of ageneral across-the-board salary reduction applicable to all senior executivesof the Company) [or elects to eliminate the Executive Incentive Program of theCompany (“EIP”) without permitting Participant to participate in anannual incentive bonus plan in place of the EIP which offers a potential bonuspayment comparable to that earnable at 100% of plan target by Participant underthe EIP](1), (ii) the Company changes Employee’s title and reduces hisresponsibilities or authority in a manner materially inconsistent with that ofthe position of [                    ]or (iii) the Company changes Employee’s place of work to a locationoutside of [                    ];provided that in order for Employee’s resignation for Good Reason to beeffective hereunder, Employee must provide written notice to the Companystating Employee’s intent to resign for Good Reason and the grounds thereforwithin thirty (30) days after such grounds exist and grant the Companythirty (30) days from receipt of such notice to remedy or otherwise removethe grounds supporting Employee’s resignation for Good Reason.

 

the term “Third Party” means any person or entity whoor which (1) does not own any of the Company’s securities as of June 30,2008, (2) is not controlling, controlled by or under common control withany person or entity that owns any of the Company’s securities as of June 30,2008, and (3) is not the spouse or descendent (by birth or adoption) ofany person who directly or indirectly owns or controls any of the Company’ssecurities as of June 30, 2008.

 

(f)            Exercise Following Termination of Employment orEngagement.

 

(i)                                     General.  Except asotherwise provided in this Section 2(f), if the Optionee ceases to beemployed or engaged with the Group for any reason, the portion of the Optionwhich has not then become vested (the “Unvested Portion”) shallautomatically expire and the portion of the Option, if any, which has becomevested and has not yet been exercised (the “Vested Portion”) shall beand continue to be exercisable until the earlier of (x) the date that issixty (60) days after the date of termination of employment or engagement or (y) theExpiration Date, whereupon the Vested Portion shall automatically expire to theextent not then exercised.

 

(ii)                                  Cause.  If theOptionee’s employment or engagement is terminated for Cause (as defined in theEmployment Agreement including any termination if it is later determined thatCause existed at the time of termination), the entire Option, including theVested Portion shall expire immediately upon such termination.

 

(iii)                               Death or Disability. If the Optionee’s employment or engagement is terminated by reason ofthe Optionee’s death or Disability (defined below), then upon such terminationthe Unvested Portion shall automatically expire and the Vested Portion shall beand continue to be exercisable until the earlier of (A) the one hundredand eightieth (180th) day after the date of such termination or (B) theExpiration Date, whereupon the Vested Portion shall 

 

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(1) Include if Participant is a participant in the EIP.

 

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automatically expire tothe extent not then exercised. A termination for “Disability” means anytermination (x) that is for Disability pursuant to the Optionee’semployment agreement, if any, or (y) in the absence of such an agreementdefining Disability, if at the time of termination the Optionee is eligible toreceive long-term disability benefits under any applicable Group plan orprogram or Group disability insurance policy, or any other termination that theCommittee, in its discretion, determines is a termination for Disability.

 

(iv)                              Committee Discretion. Notwithstanding anything to the contrary in Section 2(f), theCommittee, in its discretion may extend the period following termination duringwhich the Vested Portion may be exercised, but not later than the ExpirationDate.

 

(v)                                 Violations of Optionee Non-DisclosureAgreement.  Notwithstanding anything to the contrary in Section 2above or elsewhere, and without limiting any rights or remedies of the Companyor GT Solar under the Optionee Non-Disclosure Agreement or otherwise, upon anyviolation of the Optionee Non-Disclosure Agreement, the Option shall becancelled and immediately forfeited by the Optionee. The foregoing is inaddition to any other rights and remedies the Company may have under theOptionee Non-Disclosure Agreement or otherwise, including equitable relief andthe recovery of damages from the Optionee.

 

3.               Exercise of Option.

 

(a)          Exercise Notice.  The VestedPortion may be exercised with respect to all or any part of the Vested Portionby written notice from the Optionee to the Company (“Exercise Notice”)specifying the number of whole Option Shares with respect to which the Optionis being exercised (the “Exercise Shares”), and the aggregate OptionPrice for such Exercise Shares.  TheOption may not be exercised for any fractional Share unless the Committeedetermines otherwise.  The Exercise Noticeshall be accompanied by payment of the aggregate Per Share Exercise Pricespecified above the such number of the Option Shares to be acquired upon suchexercise.  Such payment shall be made inthe manner set forth in Section 5.6 of the Plan.

 

(b)         Delivery of Shares.  Upon payment ofthe Exercise Price, the Company shall make or arrange for prompt delivery of acertificate or certificates or book-entry interests representing the ExerciseShares, registered in the name of the Optionee; provided however, that if theCompany or its counsel determines that compliance with any applicable law orregulation requires that the Company take any action prior to the issuance ofthe Exercise Shares to the Optionee, then the Exercise Date shall be extendedfor such period as may be necessary to complete such action and no Shares shallbe issued unless and until the Company’s counsel has determined that theCompany has complied with all applicable securities laws, the listingrequirements of any securities exchange on which stock of the same class as theStock is then listed, and any other law or regulation applicable to suchissuance. The Company may require that the Optionee furnish or execute suchother documents as the Company shall reasonably deem necessary to (i) evidencesuch exercise, (ii) determine whether registration is then required underapplicable securities law, and (iii) comply with or satisfy therequirements of applicable securities law or other applicable law.

 

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4.               Nontransferability of Option.

 

(a)          Restrictions Generally.  This Optionis personal to the Optionee and neither the Option nor any of the rights of theOptionee hereunder may be transferred, assigned, pledged or hypothecated in anyway (whether by operation of law or otherwise) except by the laws of descentand distribution, nor shall the Option or any rights with respect thereto besubject to execution, attachment or similar process. Upon any attemptedtransfer, assignment, pledge, hypothecation or other disposition of the Optionor of any rights with respect thereto contrary to the provisions of thisAgreement, or upon the placement or levy of any attachment or similar processon the Option or any of the Optionee’s rights hereunder, the Option and allsuch rights shall expire and become null and void, unless the Committee, in itsdiscretion, determines otherwise.

 

(b)         Permitted Transfers.  Employeeshall only be permitted to transfer, sell, exchange, assign or otherwisedispose of all or any portion of the Option in accordance with Section 9.5of the Plan.

 

(c)          No Special Rights.  The Optioneeshall have no rights as a stockholder with respect to any Option Shares unlessand until a certificate or book-entry interest representing such Option Sharesis duly issued and delivered to the Optionee and the Optionee joins in andbecomes a party to the Stockholders Agreement. Employee shall not be entitled to receive a cash or Share payment inrespect of the Option Shares underlying this Option on any dividend paymentdate for the Shares and noadjustment shall be made for dividends or other rights for which the recorddate is prior to the date such stock certificate or book-entry interest isissued.  The Optionee, if an employee ofany Group Company, hereby acknowledges that Optionee is an “at will” employee,director, consultant or advisor, as applicable, and that Optionee’s employmentor engagement may be terminated at any time, before or after exercise of theOption, by either Optionee or the Group, with or without cause.  Nothing herein or in the Plan shall be deemedto confer on the Optionee any right to continued employment or engagement bythe Group or limit in any way the right of the Group to terminate suchemployment or engagement at any time.

 

5.               Adjustment Transactions.  The Optionand all rights and obligations under this Agreement are subject to Section 10of the Plan, the terms of which are incorporated herein by this reference.

 

6.               Withholding Taxes.  The Companyshall be entitled to withhold from any amounts due and payable by the Companyand/or any of its subsidiaries to Optionee the amount of any federal, state,local or other tax which, in the opinion of the Company, is required to bewithheld in connection with the vesting of the Option, the delivery of theOption Shares as provided in Section 3. To the extent that theamounts available to the Company for such withholding are insufficient, itshall be a condition to the delivery or vesting, as applicable, of the OptionShares that Optionee make arrangements satisfactory to the Company for thepayment of the balance of such taxes required to be withheld. Optionee maysatisfy all or part of the tax obligations in connection with the vesting ofthe Option or the delivery of the Option Shares by (i) having the Companywithhold otherwise deliverable shares, or (ii) delivering to the Companyshares that have been held by Optionee for at least six months, in each havinga Fair Market Value (as defined in the Plan) equal to the amount sufficient tosatisfy such tax obligations.

 

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7.               Miscellaneous.

 

(a)          Except as provided herein, this Option may not beamended or otherwise modified unless evidenced in writing and signed by theCompany and the Optionee.

 

(b)         Any notices or other communications required orpermitted under this Option Agreement (“Notices”) shall be in writingand shall be either personally delivered, sent by express or first class mailpostage prepaid), return receipt requested, or sent by nationally recognizedovernight courier service (overnight delivery, charges prepaid), addressed asfollows:

 
| If to the Company:  |   | GT Solar  International, Inc.                                                |
|---------------------|--------|-----------------------------------------------------------------------------------|
|                |   | 243 Daniel Webster  Highway                                                       |
|                |   | Merrimack, New  Hampshire 03054                                                   |
|                |   | Attention:  General  Counsel                                            |
|                |   |                                                                              |
| If to the Optionee: |   | To the Optionee’s  address as set forth in the Group’s payroll records. |

 

Either party maychange its address for Notices by written Notice to the other given inaccordance with this Section 8(b). Notices shall be deemed given whendelivered personally, three days after deposit in the U.S. mail, or twobusiness days after deposit with a nationally recognized overnight courierservice, as applicable.

 

(c)          The Option and the rights and obligations of theCompany and the Optionee hereunder are subject to the terms and conditions ofthe Plan, all of which terms and provisions are made a part of and incorporatedin this Agreement as if they were each expressly set forth herein. In the eventof any conflict between the terms of the Plan and the terms of this Agreement,the terms of the Plan shall govern. Capitalized terms used and not otherwisedefined herein shall have the meanings given such terms in the Plan.

 

(d)         Any Committee interpretation of the provisions of thePlan or this Agreement shall be final and binding on all parties.

 

(e)          This Agreement shall be governed by, and construed inaccordance with,  the laws of the Stateof Delaware, without giving effect to any choice of law or conflict of law rules orprovisions (whether of the State of Delaware or any other jurisdiction) thatwould cause the application of the laws of any jurisdiction other than theState of Delaware.  Any dispute relatingto this Agreement shall be heard in the state or federal courts of the State ofDelaware, and the parties agree to jurisdiction and venue therein.

 

(f)            The Optionee shall keep the terms of this Agreementstrictly confidential other than as may be necessary to enforce his or herrights hereunder or as otherwise required by law.

 

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|   | GT SOLAR INTERNATIONAL,  INC. |
|--------|-------------------------------|
|   |                          |
|   |                          |
|   | By:                           |   |
|   |                          | Name: |
|   |                          | Title: |

 

OPTIONEE’S ACCEPTANCE

 

The undersigned herebyaccepts the foregoing Option, acknowledges receipt of a copy of the Company’s2008 Equity Incentive Plan, dated June 30, 2008, and agrees to the termsthereof.

 
|   |                                                                                                                                                   |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | Optionee Name:  [                      ] |
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|   |                                                                                                                                                   |
|   | Address:                                                                                                                                               |   |

 

 

[*Signature Page to Second Amendedand Restated Stock Option Plan*]

 

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